HSBC Malta said on Monday it had registered a lower profit in the first half of the year, but it would sustain its dividend and focus on growth.  

The bank reported a profit before tax of €16.2m for the six months ended June 30, 2018, a decrease of €9.8m or 38% compared with the same period last year. It said this was due to the continuing impact of negative interest rates and the impact of risk management actions taken during 2017.

Profit attributable to shareholders was of €14.3m resulting in earnings per share of four cents compared with 4.7 cents in the same period in 2017.

The directors have proposed to maintain the current dividend pay-out ratio of 65% and recommended an interim gross dividend of 4.0 cents per share (2.6 cents per share net of tax). The interim dividend will be paid on September 18 to shareholders who are on the bank's register as at August 17. 

The bank said its common equity tier 1 capital ratio was 14% as at June 30, up from 13.9% at the end of 2017.

HSBC CEO Andrew Beane

It achieved a cost efficiency ratio of 74% for the six months ended June 30, compared with a ratio of 63% for the same period in 2017.

Customer deposits climbed to €4,832m, up €66m compared with December 31, 2017

The return on equity was 6.1% compared with 7.1% for the same period in 2017.

Net loans and advances to customers were €3,141m, up €12m compared with 31 December 2017.

Customer deposits climbed to €4,832m, up €66m compared with December 31, 2017.

The advances to deposits liquidity ratio was marginally lower at 65%.  

All three main business lines, Retail Banking and Wealth Management, Commercial Banking, and Global Markets, continued to be profitable during the six month period under review.

Andrew Beane, director and chief executive officer, said: “Our profitability in the first half of 2018 was lower than the prior year reflecting four main factors: The impact of essential de-risking actions taken during 2017; The ongoing effect of negative interest rates; Loan impairments arising where the sale of assets pledged as security by corporate borrowers in default for many years have been delayed by lengthy judicial processes which make the recovery of liabilities a very protracted exercise; From investment in regulatory and risk programmes such as GDPR and customer due diligence.”

He added: “HSBC is proud of the progress we have made to achieve the highest level of financial crime compliance standards within our bank which can give confidence to our customers as they use HSBC's services.

Mr Beane said the substantive elements of HSBC's business model transformation are now complete which is enabling the bank to move into a new strategic phase characterised by a return to growth and value creation.

"Over time, and without increasing our risk appetite, HSBC Malta will focus on growing revenue faster than costs in order to increase our return on tangible equity and, subject to our ongoing capital management processes, sustain our signature dividend.”

“The early signs of this new phase are encouraging with significant increases in our commercial banking business pipeline which has led to a stabilisation of loans and advances which we expect to steadily increase over time. HSBC’s plans to deliver market-leading customer service standards enabled by new digital innovations are a particular opportunity and represent a key focus for us in the second half of 2018 and beyond."