HSBC Malta H1 2007 Results
HSBC Holdings PLC
30 July 2007
The following is the text of an advertisement which is to be published in the
press in Malta on 31 July 2007 by HSBC Bank Malta p.l.c., a 70.03 per cent
indirectly held subsidiary of HSBC Holdings plc.
HSBC BANK MALTA p.l.c.
FIRST HALF 2007 RESULTS - HIGHLIGHTS
The condensed financial statements have been extracted from HSBC Bank Malta
p.l.c.'s unaudited group management accounts for the six months ended 30 June
2007. The bank's financial statements have been prepared in accordance with IAS
34 'Interim Financial Reporting'. In the case of the group, consolidated
financial statements are prepared in accordance with accounting standards
adopted for use in the EU for interim financial statements (adopted IAS 34
'Interim Financial Reporting'). The half-yearly results are being published in
terms of Chapters 8 and 9 of the Listing Rules of the Listing Authority - Malta
Financial Services Authority and the Prevention of Financial Markets Abuse Act
2005. These figures have been drawn up according to the accounting policies used
in the preparation of the annual audited accounts. Related party transactions
with other members of the HSBC Group were at a similar level to the prior
period.
All figures are stated in Maltese lira, the functional currency of HSBC Bank
Malta p.l.c. The euro exchange rate ruling on 30 June 2007 was €1 = Lm0.4293.
The US dollar and sterling exchange rates ruling on the same day were US$1 =
Lm0.3189 and £1 = Lm0.6345. Average exchange rates for 2007 for euro, US dollar
and sterling were €1 = Lm0.4293, US$1 = Lm0.3230 and £1 = Lm0.6364.
Review of Performance
•Profit before tax of Lm25.3 million (EUR58.9 million) for the six months
ended 30 June 2007 - up Lm4.7 million (EUR10.9 million), or 23.1 per cent,
compared with Lm20.6 million (EUR48.0 million) for the same period in 2006.
•Profit attributable to shareholders up 24.9 per cent, or Lm3.4 million
(EUR7.9 million), to Lm16.8 million (EUR39.1 million), compared with Lm13.4
million (EUR31.2 million) over the comparable period in 2006.
•Net operating income increased by Lm4.5 million (EUR10.5 million) to
Lm42.3 million (EUR98.5 million), up 11.8 per cent compared with same six
month period in 2006.
•Costs down Lm0.2 million (EUR0.5 million), or 1.3 per cent, compared with
same period in 2006, to Lm17.0 million (EUR39.6 million).
•Earnings per share up 24.9 per cent to 5.7 cents (13.3 euro cents), from
4.6 cents (10.7 euro cents) for the same period in 2006.
•Customer deposits of Lm1,518.3 million (EUR3,536.7 million) at 30 June
2007 - up Lm42.8 million (EUR99.7 million), or 2.9 per cent, compared with
31 December 2006.
•Loans and advances to customers of Lm1,175.4 million (EUR2,737.9 million)
at 30 June 2007 - up Lm49.2 million (EUR114.6 million), or 4.4 per cent,
compared with 31 December 2006.
•Total assets to Lm2,031.4 million (EUR4,731.8 million), up Lm144.1
million (EUR335.6 million), or 7.6 per cent, compared with 31 December 2006.
•Annualised return on capital employed of 27.6 per cent for the six months
ended 30 June 2007, compared to 21.2 per cent in the first half of 2006.
Commentary by Shaun Wallis, Director and Chief Executive Officer, HSBC Malta:
"HSBC Malta continues to experience strong growth across all of its customer
group businesses.
"Increases in loans and advances and customer deposits, together with improved
margins, generated a 19.1 per cent increase in net interest income. Sales of
products and services, including insurance and brokerage, and trading profits
resulted in an 8.4 per cent increase in revenues arising from these activities.
"Our overall cost base was again flat and consequently the cost efficiency ratio
improved strongly from 45.5 per cent to 40.1 per cent.
"Costs continue to be driven down by investment in new systems to improve
automation, operational processes and in direct channels to increase customer
sales and service. All of this is 'joining up' the company more effectively and
improving its productivity and profitability.
"Malta will convert to the euro on 1 January and will implement and be prepared
for SEPA, 'Chip and Pin' card functionality, MIFID, and Basel 2 by the end of
2007. All key projects related to these events are on track.
"Investment has also been made in a new 'retail look and feel' branch
refurbishment with the dual objective of driving our aim to make HSBC the Best
Place to Bank and the Best Place to Work. Customer and staff satisfaction survey
levels continue to improve.
"HSBC also continues to maintain good liquidity and a strong capital position.
HSBC has a conservative policy to keep sufficient capital to meet normal
regulatory and prudential levels and to fund balance sheet and business growth.
It is our policy to pay any surplus capital to shareholders.
"HSBC Malta will continue to follow its strong dividend payout policy in
line with our objective of making HSBC Malta the Best Company for Shareholders."
The Board is declaring an interim gross dividend of 6.6 cents per share (4.3
cents net of tax) and a special gross dividend of 4.0 cents per share (2.6 cents
net of tax), giving a total interim gross dividend of 10.6 cents. This will be
paid on 22 August 2007 to shareholders who are on the bank's register of
shareholders as at 8 August 2007.
HSBC Bank Malta p.l.c. is a member of the HSBC Group, whose ultimate parent
company is HSBC Holdings plc. Headquartered in London, HSBC Holdings plc is one
of the largest banking and financial services organisations in the world. The
HSBC Group's international network comprises over 10,000 offices in 83 countries
and territories in Europe, the Asia-Pacific region, the Americas, the Middle
East and Africa.
Income Statement for the period 1 January 2007 to 30 June 2007
Group Bank
6 mths to 6 mths to 6 mths to 6 mths to
30/06/07 30/06/06 30/06/07 30/06/06
Lm000 Lm000 Lm000 Lm000
Interest receivable and similar income
- on loans and advances, balances with Central
Bank of Malta and Treasury Bills 45,858 32,542 45,860 31,736
- on debt and other fixed income instruments 3,640 4,729 3,640 5,155
Interest payable (22,335) (14,464) (22,575) (14,685)
Net interest income 27,163 22,807 26,925 22,206
Fees and commissions receivable 7,183 6,738 5,693 5,167
Fees and commissions payable (476) (445) (329) (338)
Net fee and commission income 6,707 6,293 5,364 4,829
Dividend income 87 32 164 357
Trading profits 3,628 3,525 3,628 3,525
Net income from financial instruments
designated at fair value through profit or loss 299 1,147 - -
Net gains on sale of financial investments 1,280 2,293 1,280 2,293
Net earned insurance premiums 13,336 7,327 - -
Other operating income 3,117 1,415 119 508
Total operating income 55,617 44,839 37,480 33,718
Net insurance claims incurred and movement
in policyholders' liabilities (13,270) (6,965) - -
Net operating income 42,347 37,874 37,480 33,718
Employee compensation and benefits (10,305) (10,668) (9,838) (10,198)
General and administrative expenses (5,190) (5,088) (4,855) (4,815)
Depreciation (1,308) (1,188) (1,302) (1,176)
Amortisation of intangible assets (199) (286) (144) (243)
Net operating income before impairment
reversals and provisions 25,345 20,644 21,341 17,286
Net impairment reversals 25 54 25 14
Provisions for liabilities and other charges (61) (130) (61) -
Profit before tax 25,309 20,568 21,305 17,300
Tax expense (8,543) (7,136) (7,138) (5,712)
Profit for the period 16,766 13,432 14,167 11,588
Profit attributable to shareholders of the bank 16,766 13,419 14,167 11,588
Profit attributable to minority interest - 13 - -
Earnings per share 5.7c 4.6c 4.9c 4.0c
Balance Sheet at 30 June 2007
Group Bank
30/06/07 31/12/06 30/06/07 31/12/06
Lm000 Lm000 Lm000 Lm000
Assets
Balances with Central Bank of Malta,
Treasury bills and cash 163,673 130,569 163,673 130,569
Cheques in course of collection 11,498 10,535 11,498 10,535
Financial assets held for trading 11,379 10,396 11,379 10,399
Financial assets designated at fair value
through profit or loss 118,601 112,476 - -
Financial investments 200,279 168,138 199,262 168,123
Loans and advances to banks 268,654 256,060 268,654 256,042
Loans and advances to customers 1,175,367 1,126,126 1,175,367 1,126,126
Investments in subsidiary undertakings - - 9,682 9,682
Intangible assets 13,711 10,899 661 794
Property, plant and equipment 28,069 28,612 28,093 28,632
Investment property 3,417 3,417 2,456 2,456
Assets held for sale 4,546 3,978 4,610 4,042
Current tax recoverable - 806 - 780
Deferred tax asset - - 2,054 724
Other assets 16,025 10,713 5,874 2,984
Prepayments and accrued income 16,159 14,589 15,183 13,630
Total assets 2,031,378 1,887,314 1,898,446 1,765,518
Liabilities
Financial liabilities held for trading 10,556 10,643 10,648 10,693
Amounts owed to banks 176,995 126,328 176,995 126,328
Amounts owed to customers 1,518,255 1,475,450 1,534,534 1,487,906
Provision for current tax 5,208 - 4,834 -
Deferred tax liabilities 4,240 4,606 - -
Liabilities to customers under investment
contracts 9,365 9,153 - -
Liabilities under insurance contracts issued 114,933 102,770 - -
Other liabilities 22,668 13,816 21,921 13,003
Accruals and deferred income 22,744 18,147 22,449 17,936
Provisions for liabilities and other charges 92 32 92 32
Subordinated liabilities 25,000 - 25,000 -
Total liabilities 1,910,056 1,760,945 1,796,473 1,655,898
Equity
Called up share capital 36,480 36,480 36,480 36,480
Revaluation reserves 8,937 10,629 8,945 10,629
Other reserves 370 242 346 227
Retained earnings 75,535 79,018 56,202 62,284
Total equity 121,322 126,369 101,973 109,620
Total liabilities and equity 2,031,378 1,887,314 1,898,446 1,765,518
Memorandum items
Contingent liabilities 62,723 59,578 62,733 59,588
Commitments 471,909 456,899 471,909 456,899
Statement of Changes in Equity for the period 1 January 2007 to 30 June 2007
Attributable to shareholders of the bank
Called up Revaluation Other Retained Minority Total
share capital reserves reserves earnings Total interest equity
Lm000 Lm000 Lm000 Lm000 Lm000 Lm000 Lm000
Group
At 01Jan06 9,120 13,105 4,242 104,906 131,373 328 131,701
Release of net gains on
available-for-sale assets
transferred to the income
statement on disposal - (1,490) - - (1,490) - (1,490)
Net fair value adjustments
on investments - (1,035) - - (1,035) - (1,035)
Release of revaluation reserve
on disposal of property - (12) - 18 6 - 6
Income and expenses recognised
directly in equity - (2,537) - 18 (2,519) - (2,519)
Bonus share issue 27,360 - (4,242) (23,118) - - -
Share capital of subsidiary - - - - - 91 91
Disposal of subsidiary - - - - - (432) (432)
Profit for the period - - - 13,419 13,419 13 13,432
Dividends - - - (19,064) (19,064) - (19,064)
At 30Jun06 36,480 10,568 - 76,161 123,209 - 123,209
At 01Jan07 36,480 10,629 242 79,018 126,369 - 126,369
Release of net gains on available-
for-sale assets transferred to the
income statement on disposal - (619) - (211) (830) - (830)
Net fair value adjustments on investments - (1,073) - - (1,073) - (1,073)
Income and expenses recognised directly in
equity - (2,537) - 18 (2,519) - (2,519)
Profit for the period - - - 16,766 16,766 - 16,766
Share based payments - - 128 70 198 - 198
Dividends - - - (20,108) (20,108) - (20,108)
At 30Jun07 36,480 8,937 370 75,535 121,322 - 121,322
Called up Revaluation Other Retained Total
share capital reserves reserves earnings equity
Lm000 Lm000 Lm000 Lm000 Lm000
Bank
At 01Jan06 9,120 13,041 4,242 93,103 119,506
Release of net gains on
available-for-sale assets
transferred to the income
statement on disposal - (1,490) - - (1,490)
Net fair value adjustments
on investments - (971) - - (971)
Release of revaluation reserve
on disposal of properties - (12) - 18 6
Income and expenses recognised
directly in equity - (2,473) - 18 (2,455)
Bonus share issue 27,360 - (4,242) (23,118) -
Effect of amalgamation of subsidiary - - - (1,995) (1,995)
Profit for the period - - - 11,588 11,588
Dividends - - - (19,064) (19,064)
At 30Jun06 36,480 10,568 - 60,532 107,580
At 01Jan07 36,480 10,629 227 62,284 109,620
Release of net gains on
available-for-sale assets
transferred to the income
statement on disposal - (619) - (211) (830)
Net fair value adjustments
on investments - (1,065) - - (1,065)
Income and expenses
recognised directly in equity - (1,684) - (211) (1,895)
Profit for the period - - - 14,167 14,167
Share based payments - - 119 70 189
Dividends - - - (20,108) (20,108)
At 30Jun07 36,480 8,945 346 56,202 101,973
Cash Flow Statement for the period 1 January 2007 to 30 June 2007
Group Bank
6 mths to 6 mths to 6 mths to 6 mths to
30/06/07 30/06/06 30/06/07 30/06/06
Lm000 Lm000 Lm000 Lm000
Cash flows (used in)/from operating
activities
Interest, commission and premium receipts 69,671 50,101 54,478 39,289
Interest, commission and claims payments (22,270) (13,966) (19,048) (12,911)
Payments to employees and suppliers (15,636) (16,791) (14,826) (15,030)
Operating profit before changes in operating
assets/liabilities 31,765 19,344 20,604 11,348
(Increase)/decrease in operating assets:
Trading instruments (6,596) (8,818) (685) (392)
Reserve deposit with Central Bank of Malta 7,794 214 7,794 214
Loans and advances to customers and banks (48,301) (55,948) (48,301) (60,328)
Treasury bills with contractual maturity of over
three months (37,570) 2,000 (37,570) 2,000
Other receivables (2,064) 3,904 (2,158) 4,779
Increase/(decrease) in operating liabilities:
Customer accounts and amounts owed to banks 40,490 52,748 44,405 51,417
Other payables 6,701 (4,409) 7,116 (3,720)
Net cash (used in)/from operating activities
before tax (7,781) 9,035 (8,795) 5,318
Net tax paid (1,765) (454) (1,821) (436)
Net cash (used in)/from operating activities (9,546) 8,581 (10,616) 4,882
Cash flows (used in)/from investing
activities
Dividends received 63 12 113 512
Interest received from financial investments 3,476 6,561 3,476 6,972
Proceeds from sale and maturity of financial
investments 65,031 47,600 65,031 77,588
Proceeds on sale of property,
plant and equipment and intangible assets 24 56 24 56
Purchase of financial
investments and assets held
for sale (98,848) (11,967) (97,848) (11,967)
Purchase of property, plant and equipment,
investment property and intangible assets (844) (932) (806) (923)
Proceeds on sale of investment
in subsidiary undertaking - 450 - 450
Net cash (used in)/from investing
activities (31,098) 41,780 (30,010) 72,688
Cash flows (used in)/from financing activities
Dividends paid (20,108) (19,064) (20,108) (19,064)
Maturity of debt securities in issue - (12) - -
Issue of subordinated loan stock 25,000 - 25,000 -
Issue of units to minority interest - 91 - -
Net cash from/(used in)financing activities 4,892 (18,985) 4,892 (19,064)
Effect of amalgamation of subsidiary undertaking
on cash and cash equivalent - - - (65,840)
(Decrease)/increase in cash and cash equivalents (35,752) 31,376 (35,734) (7,334)
Effect of exchange rate changes on cash and cash
equivalents (1,744) (5,447) (1,744) (5,447)
Net (decrease)/increase in cash and cash equivalents (34,008) 36,823 (33,990) (1,887)
(35,752) 31,376 (35,734) (7,334)
Cash and cash equivalents at beginning of period 158,547 136,468 158,529 175,915
Cash and cash equivalents at end of period 122,795 167,844 122,795 168,581
Segmental Information
a Class of business
Personal financial Commercial Corporate, Total
services banking investment banking
and markets
6 mths 6 mths 6 mths 6 mths 6 mths 6 mths 6 mths 6 mths
to to to to to to to to
30/06/07 30/06/06 30/06/07 30/06/06 30/06/07 03/06/06 30/06/07 30/06/06
Lm000 Lm000 Lm000 Lm000 Lm000 Lm000 Lm000 Lm000
Group
Profit before tax
Segment operating
income 20,739 18,814 15,452 12,920 6,156 6,140 42,347 37,874
Segment impairment allowances (230) 110 255 (56) - - 25 54
Common costs (17,063) (17,360)
Profit before tax 25,309 20,568
30/06/07 31/12/06 30/06/07 31/12/06 30/06/07 31/12/06 30/06/07 31/12/06
Lm000 Lm000 Lm000 Lm000 Lm000 Lm000 Lm000 Lm000
Assets
Segment total assets 731,133 679,457 663,791 651,948 636,454 555,909 2,031,378 1,887,314
Average total assets 705,295 630,984 657,869 631,396 596,182 509,214 1,959,346 1,771,594
Total equity 40,320 37,191 66,868 77,605 14,134 11,573 121,322 126,369
b Geographical segments
The group's activities are carried out within Malta. There are no identifiable geographical segments or other material
concentrations.
Key Financials in Euros
Group Bank
6 mths to 6 mths to 6 mths to 6 mths to
30/06/07 30/06/06 30/06/07 30/06/06
€000 €000 €000 €000
Profit before tax 58,954 47,911 49,627 40,298
Profit attributable to shareholders of the bank 39,054 31,258 33,000 26,993
Earnings per share 13.4c 10.7c 11.3c 9.2c
Group Bank
30/06/07 31/12/06 30/06/07 31/12/06
€000 €000 €000 €000
Total assets 4,731,838 4,396,259 4,422,190 4,112,551
Total equity 282,604 294,361 237,533 255,346
Statement pursuant to Listing Rule 9.44.3 issued by the Listing Authority
I confirm that to the best of my knowledge:
• the condensed interim financial statements give a true and fair view of the
financial position as at 30 June 2007, financial performance and cash flows for the
period then ended, in accordance with accounting standards adopted for use in the
EU for interim financial statements (adopted IAS 34 'Interim Financial Reporting')
for the group, and in accordance with IAS 34 'Interim Financial Reporting' for the
bank; and
• the interim Directors' report includes a fair review of the information
required in terms of Listing Rule 9.44.2.
Shaun Wallis, Chief Executive Officer
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