RNS Number:2014O
HSBC Holdings PLC
18 February 2008
The following is the text of an announcement which is to be published in the
press in Malta on 19 February 2008 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.
PRELIMINARY PROFITS STATEMENT
FOR THE YEAR ENDED 31 DECEMBER 2007
The preliminary profit statement is published pursuant to Listing Rule 9.35 of
the MFSA Listing Authority and Article 4 (2) (b) of the Prevention of Financial
Markets Abuse (Disclosure and Notification) Regulations, 2005. Figures have been
extracted from HSBC Bank Malta p.l.c.'s Annual Report and Accounts which have
been audited by KPMG.
These financial statements have been prepared and presented in accordance with
the provisions of the Banking Act, 1994 and the Companies Act, 1995 which
requires adherence to International Financial Reporting Standards.
All figures are stated in Maltese lira, the functional currency of HSBC Bank
Malta p.l.c. during the year under review. The euro exchange rate ruling on
31 December 2007 was €1 = Lm0.4293. The US dollar and sterling exchange rates
ruling on the same day were US$1 = Lm0.2912 and £1 = Lm0.5817. Average exchange
rates for 2007 for euro, US dollar and sterling were €1 = Lm0.4293, US$1=
Lm0.3132 and £1 = Lm0.6274.
Overview
During the year ended 31 December 2007, HSBC Bank Malta p.l.c. and its
subsidiaries generated a profit on ordinary activities before tax of Lm49.2
million (€114.7 million), an increase of Lm7.8 million (€18.3 million) or 19.0
per cent, compared to 2006.
Profit attributable to shareholders was Lm32.8 million (€76.4 million), an
increase of Lm6.0 million (€13.9 million) or 22.2 per cent over prior year
figures.
Earnings per share increased to 11.2 cents (€0.262) from a 2006 figure of 9.2
cents (€0.214).
Commentary by Shaun Wallis, Director and Chief Executive Officer, HSBC Bank Malta
"2007 has been a transformational year for HSBC Bank Malta p.l.c. Record volumes
of business activity across all customer groups and businesses led to excellent
results, and at the same time, the successful implementation of major projects
and structural changes mean that the bank is well-positioned for the future.
"We continued to invest in our brand. As part of our Corporate Responsibility
programme we donated Lm0.45 million (€1.0 million) towards our Children,
Environment and Malta's Heritage initiatives.
"2008 will be another challenging year, given the backdrop of current global
market conditions, Malta's fuller membership of the EU and Eurozone, and the
resulting increase in competition. In facing these challenges, we have an
excellent position. We have a superb customer base, unparalleled local and
global distribution network, a strong brand and the global advantages of the
HSBC Group. We are confident that we are well-positioned to grow our business
further in the future."
Performance Review
Net interest income grew by Lm7.2 million (€16.8 million) or 15.4 per cent over
prior year to Lm54.2 million (€126.2 million). Growth was driven by increased
customer loans of 7.6 per cent and customer deposits of 17.5 per cent. Growth in
customer loans resulted from increased residential mortgages and commercial
lending. There was a strong increase in deposits of Lm258.7 million (€602.6
million) to Lm1,734.2 million (€4,039.5 million) attributable both to increased
local demand for savings products and international corporate deposit growth
introduced through the HSBC International Banking Centre network.
Non-interest income levels grew by Lm2.5 million (€5.8 million) or 8.7 per cent
to Lm31.1 million (€72.5 million), driven by growth in business activity and
volumes which were well-spread across the group's core products and service
lines. Revenues increased through growth in lending, Trust services, card
issuance and usage fees, and retail brokerage. Commission earned on account and
transfer services reduced due to increased usage of automated services which are
more efficient and less costly for our customers.
Life insurance activities were a significant contributor to group profits
generating a 43.0 per cent increase in profitability over the prior year,
reaching a profit before tax of Lm5.6 million (€13.0 million). Strong customer
demand was supported by new launches of regular premium products and increased
volumes of single premium products. Other operating income benefited from the
growth in new insurance business by Lm3.3 million (€7.6 million).
During the year revaluation gains on the group's investment properties generated
Lm1.3 million (€3.0 million) and are included in other operating income.
Operating expenses grew by 4.5 per cent to Lm35.9 million (€83.6 million) from
Lm34.3 million (€80.0 million) in 2006. Employee compensation and benefits was
unchanged at Lm21.4 million (€49.8 million) in spite of a 2.5 per cent increase
in wages and salaries as higher staff turnover and lower voluntary retirement
benefits costs offset the effect of the increase. General and administrative
expenses increased by Lm1.7 million (€4.0 million) to Lm11.5 million (€26.7
million) largely as a result of investment in a large number of mandatory
projects including euro conversion and adoption of SEPA legislation, as well as
the cost of increased business volumes and increased regulatory fees.
Overall the group's cost income ratio improved to 42.1 per cent in 2007 from
45.5 per cent in 2006.
The tax charge for the year increased by 13.0 per cent to Lm16.5 million and the
effective tax rate fell marginally to 33.4 per cent.
Loans and advances to customers increased by Lm85.5 million (€199.1 million) to
Lm1,211.6 million (€2,822.3 million) with growth spread across both personal and
commercial sectors. The advances to deposits ratio improved to 69.9 per cent
from 76.3 per cent in 2006 as a result of strong growth in deposits.
An overall improvement in the credit quality of the lending book resulted from
good credit management and bad debt recovery against favourable economic
conditions. This led to a reduction in non-performing loans from Lm43.7 million
(€101.9 million) to Lm35.0 million (€81.6 million). As a result, the aggregate
amount of non-performing loans improved to 2.8 per cent of gross loans and
advances from 3.8 per cent at the end of 2006.
The solvency ratio stands at 11.3 per cent.
The Board is recommending to the Annual General Meeting to be held on 4 April
2008 a final ordinary dividend of €0.148 (Lm0.064) gross per share (€0.096
(Lm0.041) net per share) scheduled to be paid on 29 April 2008. The final
dividend will be payable to shareholders on the bank's register as at 29 February
2008. This, together with the gross interim ordinary dividend of €0.154
(Lm0.066) and gross interim special dividend of €0.093 (Lm0.040), paid on 22
August 2007, produces a total gross dividend for the year of €0.395 (Lm0.170).
Income Statement for the year 1 January 2007 to 31 December 2007
Group Bank
2007 2006 2007 2006
Lm000 Lm000 Lm000 Lm000
Interest receivable and similar income
- on loans and advances, balances
with Central Bank of
Malta, Treasury Bills and derivatives 93,410 72,103 93,446 71,285
- on debt and other fixed income instruments 8,583 8,772 8,583 9,209
Interest payable (47,799) (33,913) (48,557) (34,378)
Net interest income 54,194 46,962 53,472 46,116
Fees and commissions receivable 14,291 13,848 11,579 10,831
Fees and commissions payable (985) (1,175) (776) (987)
Net fee and commission income 13,306 12,673 10,803 9,844
Dividend income 141 113 4,145 2,169
Trading profits 7,206 7,335 7,206 7,335
Net income from financial instruments
designated at fair value through profit or
loss 15 4,768 - -
Net gains on sale of available-for-sale
financial assets 1,519 2,719 1,519 2,719
Net earned insurance premiums 31,446 16,536 - -
Other operating income 6,802 2,308 1,837 715
Total operating income 114,629 93,414 78,982 68,898
Net insurance claims incurred and
movement in policyholders' liabilities (29,330) (17,846) - -
Net operating income 85,299 75,568 78,982 68,898
Employee compensation and benefits (21,371) (21,511) (20,381) (20,619)
General and administrative expenses (11,476) (9,774) (10,701) (9,281)
Depreciation (2,587) (2,406) (2,572) (2,388)
Amortisation of intangible assets (448) (547) (335) (464)
Other operating charges (13) (109) (13) (9)
Net operating income before impairment and
provisions 49,404 41,221 44,980 36,137
Net impairment (18) 181 (18) 141
Provisions for liabilities and other charges (146) (7) (131) (7)
Profit before tax 49,240 41,395 44,831 36,271
Tax expense (16,461) (14,572) (14,372) (12,366)
Profit for the year 32,779 26,823 30,459 23,905
Profit attributable to shareholders of the
bank 32,779 26,810 30,459 23,905
Profit attributable to minority interest - 13 - -
Earnings per share 11.2c 9.2c 10.4c 8.2c
Balance Sheet at 31 December 2007
Group Bank
2007 2006 2007 2006
Lm000 Lm000 Lm000 Lm000
Assets
Balances with Central Bank of Malta,
Treasury bills and cash 202,688 130,569 202,688 130,569
Cheques in course of collection 1,332 10,535 1,332 10,535
Financial assets held for trading 6,860 10,396 6,860 10,399
Financial assets designated at fair value
through profit or loss 118,356 112,476 - -
Financial investments 196,305 168,138 194,345 168,123
Loans and advances to banks 270,896 256,060 270,861 256,042
Loans and advances to customers 1,211,620 1,126,126 1,211,620 1,126,126
Shares in subsidiary companies - - 12,682 9,682
Intangible assets 15,502 10,899 585 794
Property and equipment 33,408 28,612 33,424 28,632
Investment property 5,532 3,417 4,500 2,456
Assets held for sale 5,118 3,978 5,182 4,042
Current tax recoverable - 806 - 780
Deferred tax assets - - 5,033 724
Other assets 11,099 10,713 3,837 2,984
Prepayments and accrued income 16,990 14,589 15,700 13,630
Total assets 2,095,706 1,887,314 1,968,649 1,765,518
Liabilities
Financial liabilities held for trading 6,458 10,643 6,542 10,693
Amounts owed to banks 37,410 126,328 37,410 126,328
Amounts owed to customers 1,734,154 1,475,450 1,763,562 1,487,906
Provision for current tax 3,626 - 1,034 -
Deferred tax liabilities 266 4,606 - -
Liabilities to customers under investment
contracts 8,134 9,153 - -
Liabilities under insurance contracts
issued 124,902 102,770 - -
Other liabilities 14,078 13,816 12,775 13,003
Accruals and deferred income 22,816 18,147 22,484 17,936
Provisions for liabilities and other
charges 178 32 163 32
Subordinated liabilities 24,883 - 24,883 -
Total liabilities 1,976,905 1,760,945 1,868,853 1,655,898
Equity
Called up share capital 36,480 36,480 36,480 36,480
Revaluation reserves 10,554 10,629 10,620 10,629
Other reserves 339 242 315 227
Retained earnings 71,428 79,018 52,381 62,284
Total equity 118,801 126,369 99,796 109,620
Total liabilities and equity 2,095,706 1,887,314 1,968,649 1,765,518
Memorandum items
Contingent liabilities 55,797 59,578 55,807 59,588
Commitments 492,851 456,899 492,851 456,899
The financial statements were approved by the Board of Directors on 18 February
2008 and signed on its behalf by:
Albert Mizzi, Chairman Shaun Wallis, Chief Executive Officer
Statement of Changes in Equity for the year 1 January 2007 to 31 December 2007
Attributable to shareholders of the bank
Called up
share Revaluation Other Retained Minority Total
capital reserves reserves earnings Total interest equity
Lm000 Lm000 Lm000 Lm000 Lm000 Lm000 Lm000
Group
At 1Jan06 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 - (796) - (973) (1,769) - (1,769)
Net fair value adjust-
ments on financial
investments - (1,668) - - (1,668) - (1,668)
Release of revaluation
reserve on disposal
of properties - (12) - 18 6 - 6
Income and expenses
recognised directly
in equity - (2,476) - (955) (3,431) - (3,431)
Share capital of
subsidiary - - - - - 91 91
Disposal of subsidiary
company - - - - - (432) (432)
Bonus share issue 27,360 - (4,242) (23,118) - - -
Profit for the year - - - 26,810 26,810 13 26,823
Share based payments - - 242 493 735 - 735
Dividends - - - (29,118) (29,118) - (29,118)
At 31Dec06 36,480 10,629 242 79,018 126,369 - 126,369
At 1Jan07 36,480 10,629 242 79,018 126,369 - 126,369
Release of net gains
on available-for-
sale assets trans-
ferred to the income
Statement on disposal - (776) - (211) (987) - (987)
Net fair value adjust-
ments on financial
investments - (2,997) - - (2,997) - (2,997)
Net surplus on revalua-
tion of freehold and
long leasehold
properties - 3,698 - - 3,698 - 3,698
Income and expenses
recognised directly
in equity - (75) - (211) (286) - (286)
Profit for the year - - - 32,779 32,779 - 32,779
Share based payments - - 97 57 154 - 154
Dividends - - - (40,215) (40,215) - (40,215)
At31Dec07 36,480 10,554 339 71,428 118,801 - 118,801
Called up
share Revaluation Other Retained Total
capital reserves reserves earnings equity
Lm000 Lm000 Lm000 Lm000 Lm000
Bank
At 1Jan06 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 - (796) - (973) (1,769)
Net fair value adjustments
on financial investments - (1,604) - - (1,604)
Release of revaluation reserve
on disposal of properties - (12) - 18 6
Income and expenses recognised
directly in equity - (2,412) - (955) (3,367)
Bonus share issue 27,360 - (4,242) (23,118) -
Effect of amalgamation of
subsidiary - - - (1,995) (1,995)
Profit for the year - - - 23,905 23,905
Share based payments - - 227 462 689
Dividends - - - (29,118) (29,118)
At 31Dec06 36,480 10,629 227 62,284 109,620
At 1Jan07 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 - (776) - (211) (987)
Net fair value adjustments
on financial investments - (2,931) - - (2,931)
Net surplus on revaluation of
freehold and long leasehold
properties - 3,698 - - 3,698
Income and expenses recognised
directly in equity - (9) - (211) (220)
Profit for the year - - - 30,459 30,459
Share based payments - - 88 64 152
Dividends - - - (40,215) (40,215)
At 31Dec07 36,480 10,620 315 52,381 99,796
Cash Flow Statement for the year 1 January 2007 to 31 December 2007
Group Bank
2007 2006 2007 2006
Lm000 Lm000 Lm000 Lm000
Cash flows from operating activities
Interest and commission receipts 144,854 109,797 109,992 87,824
Interest and commission payments (52,604) (36,601) (45,162) (33,491)
Payments to employees and suppliers (32,815) (31,952) (31,168) (28,770)
Operating profit before changes in
operating assets/liabilities 59,435 41,244 33,662 25,563
(Increase)/decrease in operating
assets:
Trading instruments (6,675) (16,832) (579) (724)
Reserve deposit with
Central Bank of Malta (350) (6,618) (350) (6,618)
Loans and advances to customers
and banks (48,370) (198,898) (48,370) (203,229)
Treasury bills with contractual
maturity of over three months (23,567) (12,089) (23,567) (12,089)
Other receivables 7,894 (844) 8,040 (1,070)
Increase/(decrease) in operating
liabilities:
Customer accounts and amounts owed
to banks 173,919 198,053 190,955 196,360
Other payables (516) (2,588) (500) (2,674)
Net cash from/(used in) operating
activities before tax 161,770 1,428 159,291 (4,481)
Tax paid (14,518) (10,976) (14,319) (10,840)
Net cash from/(used in) operating
activities 147,252 (9,548) 144,972 (15,321)
Cash flows from investing
activities
Dividends received 98 74 3,248 1,874
Interest received from financial
investments 9,020 11,333 9,020 11,752
Proceeds from sale and maturity of
financial investments 83,747 88,891 83,747 118,877
Proceeds on sale of property and
equipment 26 80 26 80
Purchase of financial investments (119,675) (37,851) (117,673) (37,851)
Purchase of property and equipment,
investment property and intangible
assets (4,285) (2,311) (4,174) (2,289)
Proceeds on sale/(purchase) of shares
in subsidiary company - 450 (3,000) 450
Net cash (used in)/from investing
activities (31,069) 60,666 (28,806) 92,893
Cash flows from financing activities
Dividends paid (40,215) (29,118) (40,215) (29,118)
Decrease in debt securities in issue - (12) - -
Issue of subordinated loan stock 25,000 - 25,000 -
Issue of units to minority interest - 91 - -
Subordinated loan stock issue costs (130) - (130) -
Net cash used in financing activities(15,345) (29,039) (15,345) (29,118)
Effect of amalgamation of subsidiary
company on cash and cash
equivalents - - - (65,840)
Increase/(Decrease) in cash and
cash equivalents 100,838 22,079 100,821 (17,386)
Effect of exchange rate
changes on cash and cash
equivalents (11,702) (7,014) (11,702) (7,014)
Net increase/(decrease) in cash
and cash equivalents 112,540 29,093 112,523 (10,372)
100,838 22,079 100,821 (17,386)
Cash and cash equivalents
at beginning of year 158,547 136,468 158,529 175,915
Cash and cash equivalents
at end of year 259,385 158,547 259,350 158,529
Segmental Information
a Class of business
Personal Financial Commercial Global Banking and
Services Banking Markets Total
2007 2006 2007 2006 2007 2006 2007 2006
Lm000 Lm000 Lm000 Lm000 Lm000 Lm000 Lm000 Lm000
Group
Profit before tax
Segment operating income 40,149 38,552 30,012 26,592 15,138 10,424 85,299 75,568
Segment impairment
allowances (633) (144) 615 325 - - (18) 181
Common costs (36,041) (34,354)
Profit before tax 49,240 41,395
Assets
Segment total assets 767,424 679,457 659,961 651,948 668,321 555,909 2,095,706 1,887,314
Average total assets 723,440 630,984 655,955 631,396 612,115 509,214 1,991,510 1,771,594
Total equity 44,774 47,051 63,308 66,506 10,719 12,812 118,801 126,369
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
2007 2006 2007 2006
€000 €000 €000 €000
Profit before tax 114,698 96,425 104,428 84,489
Profit attributable to shareholders of
the bank 76,355 62,481 70,950 55,684
Earnings per share 26.2c 21.4c 24.3c 19.1c
Total assets 4,881,682 4,396,259 4,585,719 4,112,551
Total equity 276,732 294,361 232,462 255,346
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 around 10,000 offices in 83
countries and territories in Europe, the Asia-Pacific region, the Americas, the
Middle East and Africa.
This information is provided by RNS
The company news service from the London Stock Exchange
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