HSBC Malta reports 24% drop in profits in first three months of 2026

HSBC Bank Malta p.l.c. reported a strong start to the year reflecting customer confidence and growth in business volumes supported by capital and liquidity ratios that remain among the highest in Europe and Malta.

Profit before tax was €21.3m for the first quarter of 2026, representing a 24% decrease compared to Q1 2025. The reduction in profitability was mainly driven by the lower interest rate environment and reduced returns from the Bank’s insurance subsidiary, reflecting volatility in market prices of international investments. This was partly offset by the progress in the recovery of legacy non-performing loans, with a material recovery reported during Q1 2026.

As previously announced, the Bank will start announcing dividends each quarter. As a result, the directors are recommending a gross interim dividend of 3.6 cents per share representing a 60% payout. The dividend will be paid on 30 June 2026 to shareholders who are on the Bank’s register of shareholders on 19 May 2026.

Revenue decreased by €8.1m or 14% when compared to Q1 2025. This decrease was mainly driven by lower net interest income (€3.4m), reflecting reduced average market interest rates in Q1 2026 compared to Q1 2025, and lower Net Investment Return from the insurance subsidiary (€4.2m) due to significant market fluctuations during the quarter. However, from an underlying business perspective, the insurance subsidiary reported higher gross written premium compared to Q1 2025. This is in line with the strong sales growth achieved across the retail and commercial businesses. The Bank also experienced strong growth in Wealth sales, notwithstanding the market volatility and its impact on investor sentiment.

The Bank reported a release of expected credit losses (“ECL”) of €4.6m, compared to a charge of €0.6m in Q1 2025. The ECL release in Q1 2026 was mainly driven by a recovery on a long-outstanding non-performing corporate loan. A marginal increase in ECL charge was booked to reflect heightened global uncertainty and geopolitical risks, while locally the economy remains robust and resilient.

Costs increased by €3.7m (12%), compared to Q1 2025, primarily due to higher salaries and employee benefits and legal provisions as well as accelerated amortisation of intangible assets in view of the change in their estimated useful lives. The Bank remains committed to investing in its people, while maintaining disciplined cost management.

Net loans and advances to customers remained broadly in line with balances as at 31 December 2025. Loans to corporates were 4% higher than balances as at 31 December 2025. New loans to corporates approved in Q1 2026 were up 86% when compared to Q1 2025. Despite a slight decline in overall retail lending balances when compared to balances as at 31 December 2025, the Bank delivered 4% growth in mortgage sales and 41% growth in personal unsecured loan sales compared to Q1 2025, enabled by marketing campaigns during the quarter.

Customer deposits decreased by €200m when compared to balances as at 31 December 2025, reflecting mainly a decrease in corporate deposits due to seasonality. Deposits were, however, €120m higher than those reported as at 31 March 2025.

The Bank’s liquidity position remained strong and capital ratios continued to exceed regulatory capital requirements by significant margins.

Geoffrey Fichte, Chief Executive Officer of HSBC Bank Malta p.l.c., said: “Our strong results in Q1 2026 reflect growing customer confidence in the future. I am pleased to report growth in both new retail and commercial lending, wealth management and insurance. Our team is motivated about building the bank of the future, supported by our strong capital and liquidity. Continuing to deliver for our customers and shareholders while upgrading digital infrastructure, is our top priority. Malta's economy is strong and resilient presenting many opportunities for growth.”