HSBC Malta Sustains Dividend, Shifts Focus To Growth

6th August 2018

The performance during the first six months of 2018 mainly reflected the continuing impact of low interest rates and prioritisation of risk management actions during 2017.

The profit before tax for the six months ended 30 June 2018 of HSBC Bank Malta p.l.c. amounted to €16.2m, a decrease of €9.8m or 38 per cent compared with the same period last year. The performance during the first six months of 2018 mainly reflected the continuing impact of low interest rates and prioritisation of risk management actions during 2017.

Profit attributable to shareholders amounted to €14.3m resulting in earnings per share of 4 cents compared with 4.7 cents in the first half of 2017. The board proposes to maintain the current dividend pay-out ratio of 65 per cent and recommends an interim gross dividend of 4 cents per share (2.6 cents per share net of tax). The interim dividend will be paid on 18th September 2018 to shareholders who are on the bank’s register as at 17th August 2018.

All three main business lines, Retail Banking and Wealth Management, Commercial Banking, and Global Markets, continued to be profitable during the six month period under review.

Andrew Beane, Director and Chief Executive Officer of HSBC Malta, said: “Our profitability in the first half of 2018 was lower than the prior year reflecting four main factors: (1) The impact of essential de-risking actions taken during 2017. (2) The ongoing effect of negative interest rates. (3) Loan impairments arising where the sale of assets pledged as security by corporate borrowers in default for many years have been delayed by lengthy judicial processes which make the recovery of liabilities a very protracted exercise. (4) From investment in regulatory and risk programmes such as GDPR and customer due diligence.”

He added: “HSBC is proud of the progress we have made to achieve the highest level of financial crime compliance standards within our bank which can give confidence to our customers as they use HSBC’s services. It is essential that the financial system as a whole is able to demonstrate full and effective compliance with European Union standards.”

“Looking to the future, the substantive elements of HSBC’s business model transformation are now complete which is enabling the bank to move into a new strategic phase characterised by a return to growth and value creation. Over time, and without increasing our risk appetite, HSBC Malta will focus on growing revenue faster than costs in order to increase our return on tangible equity and, subject to our ongoing capital management processes, sustain our signature dividend.”

HSBC Malta’s CEO continued: “The early signs of this new phase are encouraging with significant increases in our commercial banking business pipeline which has led to a stabilisation of loans and advances which we expect to steadily increase over time. We are also seeing increased volumes in parts of our retail banking and wealth management business as we re-allocate capacity into sales and service activity, including insurance sales. HSBC’s plans to deliver market leading customer service standards enabled by new digital innovations are a particular opportunity and represent a key focus for us in the second half of 2018 and beyond.”

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