HSBC Malta Interim Results

HSBC Holdings PLC
25 July 2002


The following is the text of an advertisement which is being issued locally by HSBC's
subsidiary.

HSBC Bank Malta plc - Half-Yearly Results for 2002

Profit and Loss Account for the period 1 January 2002 to 30 June 2002

                                                                            Group                       Bank

                                                                      6 mths to     6 mths to    6 mths to    6 mths to
                                                                        30/6/02       30/6/01      30/6/02      30/6/01
                                                                          Lm000         Lm000        Lm000        Lm000
Interest receivable and similar income
- on loans and advances, balances with Central Bank of
 Malta and Treasury Bills                                               28,897        31,615       26,413       28,803
- on debt and other fixed income instruments                             8,422         9,527        8,541        9,274
Interest payable                                                       (21,412)      (26,970)     (22,475)     (27,011)
Net interest income                                                     15,907        14,172       12,479       11,066

Fees and commissions receivable                                          4,809         4,547        3,844        3,408
Fees and commissions payable                                              (256)         (233)        (224)        (198)
Dividend income                                                             28            72           28           72
Trading profits                                                          2,976         3,644        2,718        3,420
Net gains on disposal of non-trading financial instruments                   8            44            8             -
Other operating income                                                     760            58           10             -
Operating income                                                        24,232        22,304       18,863       17,768

Administrative expenses                                                (12,274)      (13,111)     (11,603)     (12,331)
Depreciation                                                            (1,294)       (1,269)      (1,247)      (1,222)
Net amortisation of goodwill                                              (146)         (146)        (103)        (103)
Other operating charges                                                    (83)          (96)         (74)         (86)
Operating profit before impairment losses and
provisions                                                              10,435         7,682        5,836        4,026
Net impairment losses                                                     (900)         (492)        (972)        (366)
Provisions for contingent liabilities and other charges                    (56)             -         (56)            -
Profit on ordinary activities before tax                                 9,479         7,190        4,808        3,660
Tax on profit on ordinary activities                                    (2,456)       (1,883)      (1,499)      (1,102)
Profit for the financial period attributable to
shareholders                                                             7,023         5,307        3,309        2,558

Earnings per share                                                        19.3c         14.5c         9.1c         7.0c




Exchange rates ruling on 30 June 2002 against the Maltese Lira were as follows:
GBP1.5534, EUR2.3921, USD2.3839.


Balance Sheet at 30 June 2002

                                                                              Group                     Bank
                                                                      30/6/02      31/12/01     30/6/02      31/12/01
                                                                       Lm000        Lm000        Lm000        Lm000
Assets
Balances with Central Bank of Malta, Treasury Bills and cash             111,244      119,862      110,671      119,049
Financial assets held for trading                                          2,317        5,580        2,317        5,580
Investments                                                              293,540      295,524      288,158      277,443
Loans and advances to banks                                              147,895       76,523      236,156      173,121
Loans and advances to customers                                          872,671      878,329      733,062      732,745
Shares in subsidiary companies                                                 -            -       49,982       46,669
Intangible fixed assets                                                      775          921          496          599
Tangible fixed assets                                                     27,246       26,688       27,053       26,458
Deferred tax asset                                                         6,130        6,705        5,085        5,385
Other assets                                                              31,958       26,332        1,036        3,005
Prepayments and accrued income                                            18,328       19,807       16,602       18,714
Total assets                                                           1,512,104    1,456,271    1,470,618    1,408,768

Liabilities
Financial liabilities held for trading                                     3,111          405        3,111          405
Amounts owed to banks                                                     35,654       60,615      182,859      187,721
Amounts owed to customers                                              1,289,387    1,223,077    1,128,938    1,068,970
Debt securities in issue                                                      12           12            -            -
Other liabilities                                                         33,674       29,687        7,284        9,558
Accruals and deferred income                                              18,906       18,204       18,431       18,107
Provisions for liabilities and other charges                               1,361          229          745          229
Subordinated liabilities                                                  20,000       20,000       20,000       20,000
                                                                       1,402,105    1,352,229    1,361,368    1,304,990

Shareholders' funds
Called up issued share capital                                             9,120        9,120        9,120        9,120
Revaluation reserves                                                       7,280        6,420       36,222       32,133
Other reserve                                                              4,242        4,242        4,242        4,242
Profit and loss account                                                   87,460       82,363       57,769       56,386
Dividend reserve                                                           1,897        1,897        1,897        1,897
                                                                         109,999      104,042      109,250      103,778

Total liabilities                                                      1,512,104    1,456,271    1,470,618    1,408,768

The financial statements were approved by the Board of Directors on 25 July 2002 and signed on its behalf by:

Albert Mizzi, Chairman                                            Tom Robson, Chief Executive Officer



Statement of Changes in Equity for the period 1 January 2002 to 30 June 2002

                                                                            Group
                                             Share     Revaluation Other Reserve    Profit and      Dividend       Total
                                           Capital        Reserves                Loss Account       Reserve
                                             Lm000           Lm000         Lm000         Lm000         Lm000       Lm000

At 1 January 2001                            9,120          7,790         4,242        70,095         1,422      92,669
Impact of adoption of
  IAS39                                          -           (481)             -        3,000              -      2,519
At 1 January 2001 as
  restated                                   9,120          7,309         4,242        73,095         1,422      95,188
Net fair value adjustments
  on investments                                 -         (1,623)             -             -             -     (1,623)
Release of net gains on
 available-for-sale assets
 transferred to the income
 statement on disposal                           -           (112)             -             -             -       (112)
Transfer between reserves
 on disposal of property                         -              4              -           (6)             -         (2)
Net losses not recognised in
 the profit and loss account                     -         (1,731)             -           (6)             -     (1,737)
Profit attributable to
 shareholders                                    -               -             -        5,307              -      5,307
Dividends paid                                   -               -             -             -       (1,422)     (1,422)
Dividends                                        -               -             -       (1,186)        1,186            -
At 30 June 2001                              9,120          5,578         4,242        77,210         1,186      97,336

At 1 January 2002                            9,120          6,420         4,242        82,363         1,897     104,042
Net fair value adjustments
 on investments                                  -            841              -             -             -        841
Transfer between reserves
  on disposal of property                        -             19              -          (29)             -        (10)
Net gains/(losses) not
recognised in the profit and
loss account                                     -            860              -          (29)             -        831
Profit attributable to
 shareholders                                    -               -             -        7,023              -      7,023
Dividends paid                                   -               -             -             -       (1,897)     (1,897)
Dividends                                        -               -             -       (1,897)        1,897            -
At 30 June 2002                              9,120          7,280         4,242        87,460         1,897     109,999



Statement of Changes in Equity for the period 1 January 2002 to 30 June 2002 (Cont.)



                                                                             Bank
                                                                                    Profit and
                                            Share     Revaluation         Other           Loss      Dividend
                                          Capital        Reserves       Reserve        Account       Reserve       Total
                                            Lm000           Lm000         Lm000          Lm000         Lm000       Lm000

At 1 January 2001                           9,120          25,914         4,242        53,025         1,422      93,723
Impact of adoption of IAS39                     -               -             -         2,403              -      2,403
At 1 January 2001 as restated               9,120          25,914         4,242        55,428         1,422      96,126
Net fair value adjustments on
 investments                                    -             692             -              -             -        692
Transfer between reserves on
 disposal of property                           -               4             -            (6)             -         (2)
Net gains/(losses) not
 recognised in the profit and
 loss account                                   -             696             -            (6)             -        690
Profit attributable to
 shareholders                                   -               -             -         2,558              -      2,558
Dividends paid                                  -               -             -              -       (1,422)     (1,422)
Dividends                                       -               -             -        (1,186)        1,186            -
At 30 June 2001                             9,120          26,610         4,242        56,794         1,186      97,952

At 1 January 2002                           9,120          32,133         4,242        56,386         1,897     103,778
Net fair value adjustments on
 investments                                    -           4,070             -              -             -      4,070
Transfer between reserves on
 disposal of property                           -              19             -           (29)             -        (10)
Net gains/(losses) not
 recognised in the profit and
  loss account                                  -           4,089             -           (29)             -      4,060
Profit attributable to
 shareholders                                   -               -             -         3,309              -      3,309
Dividends paid                                  -               -             -              -       (1,897)     (1,897)
Dividends                                       -               -             -        (1,897)        1,897            -
At 30 June 2002                             9,120          36,222         4,242        57,769         1,897     109,250




Cash Flow Statement for the period 1 January 2002 to 30 June 2002


                                                                Group                                 Bank
                                                     6 months to    6 months to 30        6 months to    6 months to 30
                                                         30/6/02             /6/01            30/6/02             /6/01

                                                           Lm000             Lm000              Lm000             Lm000
Cash flows from operating activities
Interest and commission receipts                          40,342            36,238             37,297            33,219
Interest and commission payments                        (21,373)          (26,430)           (22,636)          (25,137)
Payments to employees and suppliers                     (11,938)          (12,624)           (11,423)          (12,986)
Operating profit/(loss) before changes in
 operating assets/liabilities                              7,031           (2,816)              3,238           (4,904)

(Increase)/decrease in operating assets:
Non-investment securities                                 3,344                (4)             3,344             1,979
Reserve deposits with Central Bank of
 Malta                                                   (1,479)           (2,501)            (1,527)           (2,521)
Loans and advances to banks                             (11,545)          (15,784)           (11,345)          (57,652)
Loans and advances to customers                           4,859           (29,569)            (1,189)          (18,015)
Other receivables                                       (16,245)           (1,897)           (12,414)           (3,727)
Increase/(decrease) in operating
 liabilities:
Amounts owed to banks                                   (28,014)           16,530            (27,560)           14,519
Amounts owed to customers                                66,310            25,490             59,968            17,827
Other payables                                            4,704             4,122             (2,274)              973
Net cash flows from/(used in)
 operating activities before tax                         28,965            (6,429)            10,241           (51,521)
Tax paid                                                   (666)             (640)              (425)             (420)
Net cash flows from/(used in)
 operating activities                                    28,299            (7,069)             9,816           (51,941)

Cash flows from investing activities
Dividends received                                           28                72                 28                72
Interest received from investment
 securities                                               8,830             9,268              8,747            10,151
Proceeds on maturity/disposal of
 investment securities                                   56,080            90,599             46,972           101,224
Proceeds on disposal of tangible fixed
 assets                                                      52                69                 52                55
Purchase of investment securities                       (57,541)          (93,184)           (57,484)          (89,425)
Purchase of tangible fixed assets                        (1,897)           (2,573)            (1,871)           (2,495)
Net cash flows from/(used in)
 investing activities                                     5,552             4,251             (3,556)           19,582

Cash flows from financing activities
Dividends paid                                           (1,897)           (1,422)            (1,897)           (1,422)
Decrease in debt securities in issue                           -          (16,110)                  -                 -
Cash used in financing activities                        (1,897)          (17,532)            (1,897)           (1,422)
Increase/(decrease) in cash and cash
 equivalents                                             31,954           (20,350)             4,363           (33,781)
Effect of exchange rate changes
 on cash and cash equivalents                               658             1,079             (1,037)             (680)
Net increase/(decrease) in cash and cash
 equivalents                                             31,296           (21,429)             5,400           (33,101)
                                                         31,954           (20,350)             4,363           (33,781)
Cash and cash equivalents at beginning
 of period                                              107,130            44,589            131,234           (27,241)
Cash and cash equivalents at end of
 period                                                 139,084            24,239            135,597           (61,022)


Segmental information

a Class of business

                            Commercial               Investment                  Other                    Group
                             Banking                  Banking                  Companies                  Total

                        6 months     6 months     6 months    6 months     6 months     6 months    6 months    6 months
                      to 30/6/02   to 30/6/01   to 30/6/02  to 30/6/01   to 30/6/02   to 30/6/01  to 30/6/02  to 30/6/01
                           Lm000        Lm000        Lm000       Lm000        Lm000        Lm000       Lm000       Lm000

Profit before tax
Segment operating
 income                   22,910       21,325          630         943          692           36     24,232      22,304
Common costs                                                                                        (14,753)    (15,114)
Profit on ordinary
 activities before                                                                                     9,479      7,190
tax

                         30/6/02      30/6/01      30/6/02     30/6/01      30/6/02      30/6/01     30/6/02     30/6/01
                           Lm000        Lm000        Lm000       Lm000        Lm000        Lm000       Lm000       Lm000
Assets

Segment total assets   1,473,162    1,436,034        7,422         993       31,520       19,548   1,512,104   1,456,575
Average total assets   1,446,963    1,415,852        7,245         992       29,980       17,945   1,484,188   1,434,789
Net assets               104,062       95,198        4,380       1,922        1,557          216     109,999      97,336


b Geographical segments
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 International Accounting
Standard 34 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 2002. These figures are being published in terms of the Bye-Laws of the
Malta Stock Exchange, section 6.05.06 (i).



HSBC Bank Malta p.l.c. recorded a profit before tax of Lm9.5 million for the six
months ended 30 June 2002. This represents an increase of Lm2.3 million or 31.8
per cent over profit before tax earned in the same period in 2001. Financial
highlights are:

* Profit after tax attributable to shareholders of Lm7.0 million for the six
months ended 30 June 2002 - up Lm1.7 million or 32.3 per cent over the same
period in 2001.

* Net interest income of Lm15.9 million - up Lm1.7 million or 12.2 percent over
2001.

* Other operating income of Lm0.8 million - up Lm0.7 million due to operating
profits generated by the life assurance business.

* Operating income of Lm24.2 million - up Lm1.9 million or 8.6 per cent over
2001.

* Administrative expenses decreased by 6.4 per cent over the same period in 2001
as a result of lower staff related expenditure, lower IT system conversion costs
and general cost containment policies in the current period.

* Net impairment losses increased to Lm0.9 million (June 2001: Lm0.5 million).

* Earnings per share of 19.3 cents for the six months ended 30 June 2002 - up
from 14.5 cents over the same period in 2001.

* A gross interim dividend per share of 8 cents - up from previous gross interim
dividend payment of 5 cents.

* Loans and advances to customers were Lm872.7 million at 30 June 2002 lower by
Lm5.7 million at 31 December 2001 as subdued market conditions continued to
impact on personal and corporate credit growth.

* Amounts owed to customers increased to Lm1,289.4 million at 30 June 2002 from
Lm1,223.1 million at 31 December 2001 - reflecting both customer preferences for
more traditional deposit related products and a build up of liquidity in the
retail deposit market.

* Shareholders' funds increased by Lm6.0 million to Lm110.0 million. This
represents an increase of 5.7 per cent and includes retention of Lm5.1 million
of group profits and movements on revaluation reserves.

Tom Robson, Chief Executive Officer, said: "Our results for the first six months
are encouraging. Operating revenues continue to grow despite the low interest
rate environment, operating costs were contained and our capital and liquidity
ratios remain sound. We are grateful for the support of our customers and the
contribution of our staff over this period. The Directors have approved the
payment of a gross interim dividend per share of 8 cents which represents an
increase of 60 per cent when compared to the previous interim dividend. The
total net interim dividend payout of Lm1.9 million will be paid to all
shareholders on the Company's register on 31 July 2002".

HSBC Bank Malta plc is licensed as a credit institution and provider of
investment services by the Malta Financial Services Centre.

Registered Office: 233, Republic Street, Valletta, VLT 05, Malta. Telephone:
[phone]

Company Registration Number: C3177




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