NEWS | Wednesday, 20 February 2008

Another record year for HSBC Bank Malta in 2007

HSBC Bank Malta p.l.c. has registered another record financial year, registering a profit on ordinary activities before tax of Lm49.2 million (€114.7 million) for the year ended 31 December 2007.
This marked an increase of Lm7.8 million (€18.3 million) over the previous year. Profit after Tax was Lm32.8 million (€76.4 million), an increase of Lm6 million (€13.9 million) over 2006.
Earnings per share increased to 11.2 cents (€0.262) from a 2006 figure of 9.2 cents (€0.214), with the post-tax return on average shareholders’ funds increasing to 26.7% from 20.8% in 2006.
The Board of Directors recommended to the Annual General Meeting to be held on 4 April a final ordinary dividend of €0.148 (Lm0.064) gross per share, which translates into €0.096 (Lm0.041) net profit per share scheduled to be paid on 29 April this year.
The final dividend will be payable to shareholders on the bank’s register as at 29 February this year.
This, together with the gross interim ordinary dividend of €0.154 (Lm0.066) and gross interim special dividends of €0.093 (Lm0.040), paid on 22 August 2007, produces a total gross dividend for the year of €0.395 (Lm0.170) per share resulting in a cash payout of €75.0 million (Lm32.2 million).
This dividend is in excess of 2006 gross payout, which amounted to €0.370 (Lm0.159) per share, which resulted in a cash payout of Lm30.2 million (€70.3 million).
Announcing the results during a briefing for media and stockbrokers on Monday, Shaun Wallis, Chief Executive Officer (CEO) of HSBC Malta said: “The year 2007 has been transformational for HSBC Bank Malta p.1.c. Record volumes of business activity across all customer groups and businesses led to excellent results, and at the same time, the successful implementation of major projects and structural changes mean that the bank is well-positioned for the future. All shareholders will also benefit from a continuing high dividend payout policy.”
Net interest income grew by Lm7.2 million (€16.8 million), or 15.4% over the previous year. Growth was driven by increased lending volumes of 7.6% and deposits of 17.5%. Growth in customer loans was primarily driven by residential mortgages and commercial lending.
There was strong deposit growth of Lm258.7 million (€602.6 million) to Lm1,734.2 million (€4,039.5 million). This also included attracting substantial new institutional and corporate business to Malta from international customers.
Contribution to profits from business brought into Malta from international banking amounted to Lm3.75 million (€8.74 million). The HSBC Global Call Centre also contributed Lm0.70 million (€1.63 million) to HSBC Bank Malta for rental of premises and local services provided.
Non-interest income levels grew by Lm2.5 million (€5.8 million), or 8.7%, driven by growth in business activity and volumes which were well spread across the group’s core products and service lines.
Revenues increased through more lending activity, more cards issued and increased card usage, trust services and through new equity and bond listings to the market.
At the same time, commission on account and transfer services reduced due to increased usage of automated services which are more efficient and less costly for our customers.
Life insurance activities were a significant contributor to group profits generating a 43.0% increase in profitability over the prior year, reaching a profit before tax of Lm5.6 million (€13.0 million).
Strong customer demand was supported by new launches of regular premium products and increased volumes of single premium products. Other operating income benefited from the growth in new insurance business by Lm3.3 million (€7.6 million).
The group’s cost to income ratio improved to 42.1% last year from 45.5 per cent in 2006. The capital solvency ratio stands at 11.3% and is in excess of regulatory and HSBC Group capital requirements. The advances to deposits ratio improved to 69.9% from 76.3% in 2006 as a result of strong growth in deposits.
An overall improvement in the credit quality of the lending book resulted from good credit management and bad debt recovery against favourable economic conditions. Furthermore, the good quality of the mortgage book was reaffirmed through a stress-testing exercise conducted by HSBC Group.
HSBC Bank’s strong performance also contributed to the Maltese economy, incurring an increased tax charge of Lm16.5 million (€38.3 million), another Lml.l million (€2.7 million) charged in Value Added Tax (VAT) and a further Lml.l million (€2.7 million) in employers’ national insurance contributions.
Furthermore, HSBC Bank paid out employee compensation and benefits of Lm21.4 million (€49.8 million).
Employees paid an equivalent amount of national insurance contribution of Lm1.1 million (€2.7 million) and Pay-As-You-Earn (PAYE) tax of Lm3.6 million (€8.4 million). HSBC is a major employer in Malta with some 1500 full time staff in the Bank and 520 at the Call Centre whose own payroll was around €7.8 million in 2007.
HSBC also contributed around Lm0.45 million (€1.0 million) to the local community during the year as part of its Corporate Social Responsibility. HSBC’s ‘Cares For’ Funds have supported disadvantaged Children to improve their quality of life; helped to raise awareness on society’s impact on the Environment; and spearheaded schemes for the conservation of Malta’s heritage wealth. Funds were also pledged to boost cultural and sport events.
“This year will be another challenging year, given the backdrop of current global markets conditions, Malta’s fuller membership of the EU and Eurozone, and the resulting increase in competition,” said Wallis.
“In spite of all this, we have an excellent bank. We have a superb customer base and a strong distribution network of 41 Branches and offices, a strong brand, the backing of the HSBC Group and, most of all, a super staff who were the drivers behind our excellent performance. All this confirms our position as leaders in the financial services.”