HSBC Malta reports €26.9 million in profit before tax for 2021

HSBC Bank Malta has reported a profit before tax of €26.9 million for the year ended 31 December 2021, an increase of €16.4m or 157% over the previous year.

In its End of Year Financial Results for 2021, the bank reports improved profitability driven by small release of expected credit losses compared to significant charges booked in 2020, as a result of the COVID-19 pandemic.

Insurance subsidiary revenues positively impacted by favourable market movements. However, performance was negatively impacted by higher actuarial losses of €3.4m.

The board of HSBC Malta has recommended gross final dividend of 3.42 cents per share (2.22 cents per share net of tax).

Profit after tax attributable to shareholders stood at €17.8m resulting in earnings per share of 4.9 cents, compared with 2.1 cents in the same period in 2020.

Net interest income decreased by 8% to €97.8m compared to the prior year. The decrease was mainly driven by lower average yields on debt securities, tighter margins and placement of surplus liquidity at negative rates. 

This was partially offset by lower interest paid on customer deposits and changes in deposit composition towards short-term placements. 

Net fee income increased by €3.1m compared to 2020, driven by increased activity across cards, payments and credit facilities, as well as new fees introduced during the year to partially offset the increased cost of providing our services and products to customers.

Net trading income decreased by €3.0m, mainly due to fair value gains on equity investments reported in 2020. These equity investments were fully disposed of in 2020.

HSBC Malta’s operating costs for 2021 amounted to €105.4m, compared to €97.4m reported in 2020. 2021 operating expenses include a restructuring provision of €2.8m. Excluding the restructuring provision, expenses increased by €5.2m or 5% compared to the previous year. 

Non-staff costs increased by €9.5m, driven by compliance costs due to increased monitoring, transformation expenses, regulatory fees, fraud losses, as well as higher investment in digitalisation.

HSBC Life Assurance (Malta) Ltd reported a loss before tax of €3 million compared to a loss of €9.1m reported in 2020. 

The positive variance in profitability of €6.1m is mainly attributable to better market conditions, whereby fears of rising inflation led to increased interest rates that positively impacted revenues by €7.7m. 

Growth was also achieved due to higher new business and lower expenses incurred of €1.2m, mainly in relation to the implementation of IFRS17. 

However, performance was negatively impacted by higher actuarial losses of €3.3m, mainly driven by the prediction of future negative experience for a legacy product.