HSBC Bank Malta Results -Pt 2

HSBC Holdings PLC
19 July 2001



Cash Flow Statement for the period 1 January to 30 June 2001

                                                  Group             Bank

                                             6 mths   6 mths   6 mths   6 mths
                                                 to       to       to       to
                                            30/6/01  30/6/00  30/6/01  30/6/00
                                              Lm000    Lm000    Lm000    Lm000

Cash flows from operating activities
Interest and commission receipts             36,238   43,658   33,219   37,037
Interest and commission payments           (26,430) (25,284) (25,137) (26,183)
Payments to employees and suppliers        (12,624) (12,197) (12,986) (10,998)
Operating profit before changes
 in operating assets and liabilities        (2,816)    6,177  (4,904)    (144)

(Increase)/decrease in operating assets:
Non-investment securities                       (4)    4,800    1,979    7,524
Reserve deposits with Central Bank of       (2,501)  (2,638)  (2,521)  (2,699)
Malta
Loans and advances to banks                (15,784)  (3,879) (57,652) (21,012)
Loans and advances to customers            (29,569) (21,805) (18,015) (11,188)
Other receivables                           (1,897) (18,579)  (3,727) (17,360)
Increase/(decrease) in operating
liabilities:
Amounts owed to banks                        16,530    7,907   14,519    9,679
Amounts owed to customers                    25,490   13,102   17,827  (5,471)
Other payables                                4,122    2,715      973    2,591
Net cash used in operating activities
before tax                                  (6,429) (12,200) (51,521) (38,080)
Tax paid                                      (640)  (1,429)    (420)  (1,249)
Net cash used in operating activities       (7,069) (13,629) (51,941) (39,329)

Cash flows from investing activities
Dividends received                               72      354       72    1,798
Interest received from investment             9,268    7,048   10,151    7,251
securities
Proceeds on maturity/disposal of
investment securities                        90,599   46,188  101,224   36,957
Proceeds on disposal of associated
 companies                                        -      360        -      360
Proceeds on disposal of tangible fixed           69      133       55       30
assets
Purchase of investment securities          (93,184) (63,656) (89,425) (60,143)
Purchase of tangible fixed assets           (2,573)  (1,779)  (2,495)  (1,748)
Net cash from/(used in) investing             4,251 (11,352)   19,582 (15,495)
activities

Cash flows from financing activities
Dividends paid                              (1,422)    (474)  (1,422)    (474)
Decrease in debt securities in issue       (16,110)      (2)        -        -
Net cash used in financing activities      (17,532)    (476)  (1,422)    (474)

Decrease in cash and cash equivalents      (20,350) (25,457) (33,781) (55,298)

Effect of exchange rate changes
 on cash and cash equivalents                 1,079  (1,183)    (680)  (1,652)
Net decrease in cash and cash equivalents  (21,429) (24,274) (33,101) (53,646)
Decrease in cash and cash equivalents      (20,350) (25,457) (33,781) (55,298)
Cash and cash equivalents at 1 January       44,589   94,915 (27,241)   16,961
Cash and cash equivalents at 30 June         24,239   69,458 (61,022) (38,337)
Segmental Analysis

A By class of
business
                     Commercial       Investment           Other         Group
                        Banking          Banking       Companies         Total

                   6  6 mths to     6  6 mths to     6 6 mths to       6       6
                mths             mths             mths              mths    mths
                  to               to               to                to      to
               30/6/    30/6/00 30/6/    30/6/00 30/6/   30/6/00   30/6/   30/6/
                  01               01               01                01      00
               Lm000      Lm000 Lm000      Lm000 Lm000     Lm000   Lm000   Lm000
Profit before
tax
Segment
operating
income        21,239     23,401   932        805    71       339  22,242  24,545

Common costs                                                    (15,052)(15,150)

Profit on
ordinary
activities
before
Taxation                                                           7,190   9,395


             30/6/01   30/6/00 30/6/01 30/6/00 30/6/01 30/6/00  30/6/01  30/6/00
              Lm000     Lm000   Lm000   Lm000   Lm000   Lm000    Lm000     Lm000
Assets
Segment    1,436,034 1,368,054    993   1,653  19,548 13,847 1,456,575 1,383,554
total
assets

Average    1,415,852 1,331,333    992   2,274  17,945 11,575 1,434,789 1,345,182
total
assets

Net assets    95,774    87,852  1,938   1,323     845  1,133    98,557    90,308


b By geographical region

The group's activities are carried out within Malta. There are no identifiable
geographical segments or other material concentrations.



Review of Performance

The published figures, which are in compliance with IAS34, 'Interim Financial
Reporting', have been extracted from the HSBC Bank Malta p.l.c.'s unaudited
group management accounts for the six months ended 30 June 2001. These figures
are being published in terms of the Bye-Laws of the Malta Stock Exchange,
section 6.05.06(i). The format used conforms with that specified in the
Banking Directive BD/07/1994.01 issued by the Central Bank of Malta.

The financial information has been drawn up in accordance with the accounting
policies used in the preparation of the 2000 audited financial statements,
except for the adoption of IAS39, 'Financial Instruments - Recognition and
Measurement', which is operative for financial statements covering financial
years beginning on or after 1 January 2001.

The principal effect of IAS39 on these interim financial statements relates to
the basis of the valuation of certain classes of financial instruments.

Previously, long term debt securities were valued at amortised cost less
provision for impairment. Subsequent to the implementation of IAS39, such
securities were reclassified as either 'held to maturity' or 'available for
sale' and those classified as 'available for sale' were remeasured to fair
value.


The net effect on remeasurement to fair value was taken to profit and loss
account reserves on 1 January 2001 and is disclosed within the Statement of
Changes in Equity.

HSBC Bank Malta p.l.c. and its subsidiaries (the group) generated a profit
before tax of Lm7.2 million during the six month period ended 30 June 2001.
This represents a decrease of Lm2.2 million over the same period in 2000
reflecting subdued market conditions both locally and internationally.

Operating Income at Lm22.2 million was Lm2.3 million lower than 2000. Net
Interest Income at Lm14.3 million was Lm0.7 million lower than 2000 reflecting
lower margins on lending and investments. Dealing profits reported reasonable
growth with a 5.1% increase over the comparative period and commission
revenues returned a 2.8% increase. Other operating income was Lm1.5 million
lower than 2000 as a result of one off gains from sale of investments in the
prior period.

Administrative Expenses increased 5.7% to Lm13.1 million due to higher staff
related costs.

Net Provisions for Bad and Doubtful Debts amounted to Lm0.5 million (June
2000: Lm1.4 million).

Earnings per share reduced to 14.5 cents (June 2000: 18.6 cents) and the
pre-tax return on average shareholders' funds fell to 14.8% (June 2000:
21.5%).

Customers' deposits increased by Lm25.5 million to Lm1.209 billion (December
2000: Lm1.183 billion). Net customer advances rose Lm29.0 million to Lm876.6
million (December 2000: Lm847.6 million). Shareholders' funds rose by Lm4.8
million to Lm98.6 million. This represents an increase of 5.1% and includes
the retention of Lm5.3 million of group profits, and movements on revaluation
and dividend reserves.

An interim dividend of 5 cents (gross) per ordinary share has been proposed by
the directors. This is unchanged on the previous interim dividend payment and
will be paid to all shareholders who are registered on the Company's register
at the Central Securities Depository of the Malta Stock Exchange on 25 July
2001.