HSBC registers €62.2 million pre-tax profit in 2016

HSBC Bank Malta has registered a pre-tax profit of €62.2 million in 2016, representing a 33% jump from the previous year’s comparable figure and the highest in the last three years.

Excluding the effects of the provision for early voluntary retirement in 2015 (€14.7 million) and the gains on the sale of VISA Europe shares as well as the provision for brokerage remediation costs (net €2.8 million), adjusted pre-tax profits of HSBC Malta fell by 3.3% to €59.4 million from €61.4 million in 2015.

Taxes of €22 million led to a net profit of €40 million, compared to €29.5 million in 2015.

Assets climbed by 0.9% to €7,306 million. Net loans and advances to customers rose by 1% to €3,320 million mainly reflecting continued growth in mortgages. Conversely, early prepayments in both retail and corporate loan books remained at a high level creating a pressure on the margin and offsetting the effect of the record gross new loans sanctioned. Loan quality improved further in 2016 with non-performing exposures decreasing to 6.4% of gross loans and advances to customers compared to 7.0% in 2015.

Similarly, total liabilities advanced by 0.8% to €6,832 million as customer deposits grew by a further 1% to €5,000 million. The advances-to-deposits ratio remained flat at 66%.

Shareholders’ funds increased by 2.7% to €473.5 million reflecting the profit registered during the year. This translates into a net asset value per share of €1.314 (FY2015: €1.280). During the year, HSBC Malta continued to build its regulatory capital base as its common equity Tier 1 capital increased to 13.0% from 12.4% as at the end of 2015.

The Board of Directors recommended a final gross dividend of €0.041 per share (€0.027 per share net of tax), representing an increase of 57.7% over last year’s final dividend. Together with the gross interim dividend €0.071 per share (net: €0.0462) paid on 9 September 2016, the total gross dividend for the year amounts to €0.112 per share (€0.0728 per share net of tax), representing a 45.5% increase compared to the dividend declared with respect to 2015.

HSBC Malta CEO Andrew Beane said profitability was in line with expectations, and highlighted cost-reduction efforts during 2016 that offset rising regulatory costs.

Beane said the bank would be facing a more challenging environment driven by negative interest rates, increased regulatory expectations for higher levels of capital adequacy and for compliance with the highest global standards of financial crime risk management and the need to concurrently invest into new digital technology.

“HSBC Malta is uniquely well positioned with capital levels exceeding regulatory requirements, transformational investments undertaken in financial crime risk management as well as plans to bring new digital innovation to Malta,” Beane said.