HSBC Malta plc the largest company by market capitalisation in Malta has just announced very strong results for the period January to June 2006. They have succeeded to register growth in all product lines and higher profits than the same period last year.
The profit before tax reached Lm20.6 million for the period January to June 2006. This is equivalent to Lm114,000 per day so far. This interim profit before tax exceeded that registered in June 2005 by 11.3%.
The profit after tax available for shareholders is Lm13.4 million which is 11% more than the previous year. These positive results came about as the net interest income increased by 7.1% over that of the previous year and now reached Lm22.8 million. Through its other banking operations HSBC increased the income by 24.8% thus contributing Lm15.1 million to the net operating income.
The administrative expenses increased by 8.8% because of staff costs but an important key performance indicator for the Group is the cost to income ratio that decreased to a level of 45.5%.
Impaired loans have reduced to Lm58.8 million, without the Bank revising any of its conservative policies. This means that there has been an improvement in this area.
HSBC’s clients are showing more trust in the Bank as now the deposits continued to increase and reach Lm1,407 million. On the other hand the bank found more projects to fund and the loans and advances are now at Lm1,075 million, being a 5.8% increase compared to interim 2005. The balance sheet continued to get stronger with total assets reaching Lm1.71 billion
It has to be reminded that in April this year there was a three-for-one bonus issue so the figures were adjusted for comparative purposes.
The earnings per share for the first 6 months of this financial year increased to 4c6 as against the 4c1 of interim 2005.Investors would be glad to know that the return after tax on the capital employed increased to 10.9% as against the 8.3% for 2005.
The CEO and Board Director of HSBC Bank Malta plc stated that the results continue to reflect business growth in all product lines and remains optimistic about economic activity and the bank’s business prospects in Malta.
The Board is recommending a generous gross dividend of 5c3 per share which is 11% more than last year’s interim. Also the earnings per share at 4c6 is 12% more than that of last year at 4c1. The Dividend shall be paid to those shareholders on the company’s books on 4/8/06 and it will be settled on 17/8/06.The dividend cash payment is Lm10.1 million which is 75% of the profit after tax figure.
The segmental accounts reveal that personal finance provided Lm18.8 million in operating income, the commercial banking contributed Lm12.9 million and the corporate, investment banking and markets contributed Lm6.1 million in operating income.
These results will be welcomed by HSBC investors that experienced a high demand for their shares just after the announcement earlier this year of the full financials for 2005 and who lately saw their share price was trading within a thin margin and low turnover. At least they will be satisfied that their investment is yet again giving them a good dividend. On the other hand the exchequer will get his share of tax from profits being Lm7.1 million.
Practically the profits before tax are being shared as follows: 35% in tax and from the remaining the shareholders get 75%of the profits as dividend, whilst what is left will go to retained earnings to strengthen the shareholders’ funds in the balance sheet.