HSBC Malta posts record €134m profit for 2023

HSBC Malta posted record pre-tax profits of €133.9 million in 2023 with directors recommending one of the highest dividend pay-outs in 10 years.

Shareholders will receive a final gross dividend of 9c per share, which brings the total dividend for 2023 to 15c per share, the bank announced on Wednesday.

The dividend pay-out ratio is of 40% on reported profits.

HSBC’s pre-tax profits represent an increase of €78.3 million or 141% on the previous year. It comes on the back of higher interest rates. The bank will pay €47.1 million in tax, €27.7 million more than 2022.

Reported profit after tax attributable to shareholders is of €86.8 million, resulting in earnings per share of 24.1c, compared with 10c in the same period in 2022.

The annual report and accounts approved by the board of directors show that the higher profits were driven by higher interest rates and higher profits from the insurance subsidiary.

The bank had a return on equity of 17.1%, up from 7.7% in 2022.

Net loans and advances to customers decreased by €91.3 million to €3 billion compared to December 2022. Customer deposits increased by 3% to €6.1 billion driven by an increase in commercial deposits. The bank maintained a healthy advances-to-deposits ratio of 50.2%.

Operating costs for 2023 increased by 3% and amounted to €102.4 million. Higher expenses were mainly attributable to an increase in staff costs of €3.7 million. This was partially offset by an insurance refund received in 2023 and cost savings on the bank’s real estate portfolio.

The bank’s common equity tier 1 capital stood at 20.6% in December 2023, compared to 18.5% at the end of 2022. The total capital ratio increased to 23.5% compared to 21.3%.

Geoffrey Fichte, CEO at HSBC Bank Malta, said the record profit performance in 2023 reflected the “inherent strength” of the bank’s business and balance sheet.

“Our lines of business, commercial banking, wealth and personal banking and global markets, continue to grow from their respective areas of strength and are looking to grow by supporting customers and maximising sustainable finance opportunities, leveraging our international advantage, maintaining proactive cost management and a robust risk management culture,” Fichte said.

He added that the dividend pay-out for the interim financial results in August was higher than the full dividend paid in 2022. “Our share price was the top performer in the Malta Stock Exchange in 2023, increasing by over 80%. Today we announced one of the highest annual dividend paid in the last decade.”