Anti-Money Laundering Standards In Malta Need To Be Fully Implemented – HSBC Malta CEO

19th February 2019

Reported profit before tax for the year ended 31 December 2018 decreased by €11.3m or 23 per cent, compared to the previous year.

Andrew Beane, Chief Executive Officer at HSBC Bank Malta p.l.c., said that 2018 was a difficult year for the Maltese financial services sector which suffered further reputational damage.

“It is essential that all market participants ensure anti money-laundering standards are fully implemented without delay in order to avoid more significant long-term risks. We welcome new initiatives announced by the local authorities which the industry must fully embrace and support.”

The reported profit before tax for the year ended 31 December 2018 of HSBC Bank Malta p.l.c. amounted to €38.6m, representing a decrease of €11.3m or 23 per cent compared to the previous year.

The adjusted profit before tax was €36.5m, a decrease of €19.1m or 34 per cent compared to 2017. The adjusted results exclude the impact of the following notable items: a collective agreement provision charge of €7.6m in 2017; and a provision release relating to the brokerage remediation of €1.8m in 2017 with an additional €2m release in 2018.

Andrew Beane, CEO, HSBC Malta

Andrew Beane, CEO, HSBC Malta

Profit attributable to shareholders was €28.7m resulting in earnings per share of 8 cents compared with 8.6 cents in 2017.

The year under review was characterised by broadly stable but persistently low interest rates and excess liquidity in the market while attractive investment opportunities continued to remain limited.

“The local economy continues to perform strongly and, as we enter 2019, HSBC is now able to re-focus our business to be able to deliver measured growth,” Mr Beane continued.

“Our retail and wealth management business is trading well and this year we are also in a position to return our commercial division to measured growth following completion of an extensive restructuring process. New digital innovations will create enduring competitive advantage for HSBC as we bring a range of new world class solutions to benefit our customers and our new account opening process is delivering record volumes.”

He added: “However, it is also now clear that the new ECB requirements relating to the treatment of non-performing loans (NPL) mean that Malta’s current framework for the recovery of security in the event of default requires reform. Banks will be required to hold additional capital against fully secured NPLs as a direct result of the long time to recover through current legal processes. For HSBC, the expected impact relates to loans where the Bank does not expect to incur additional losses even though the recovery process currently takes years.

Looking to the future, the Board is focused on enabling the Bank to generate growth for shareholders in this next phase while also ensuring full compliance with the new ECB requirements. Accordingly, whilst we will sustain the Bank’s position as a strong dividend generating company, the Board has recommended a final dividend pay-out ratio of 30 per cent in order to allocate additional capital to grow the business and meet the new ECB NPL requirements in the event that reforms to the current system are not forthcoming.”

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Anti-Money Laundering Standards In Malta Need To Be Fully Implemented – HSBC Malta CEO