HSBC Bank Malta plc registered a pre-tax profit of €100.8 million in the nine-month period ended 30th September 2023, the bank announced on Monday.

This represents an increase of €67.9 million when compared to the €32.9 million pre-tax profit recorded in the same period last year, following the restatement of IFRS 17, a standard that provides a consistent basis for financial reporting for insurance. The bank stated that the increase in profitability is mainly attributable to strong interest income, improved credit quality of the loan book and continued focus on cost management, while also “continuing to invest in the future of our business”.

Revenues were up by €64.2 million (60 per cent) when compared to the same period last year, with this largely being driven by higher net interest income due to interest rate rises. HSBC Bank Malta’s Directors stated that this reflects the “strength and diversification” of its customer base.

The bank recorded an improvement in the credit quality of its loan book, resulting in a release of expected credit losses of €3.7 million when compared to the €10 million recorded in the third quarter of 2022. This reflects the bank’s upgrade in facilities which were granted moratoria during the COVID-19 pandemic, as well as the general improvement in the Maltese economy. The release in 2022 was primarily attributable to a “significant recovery” on a commercial non-performing loan which was largely provided for in prior years.

Costs decreased by €10 million from the same period in 2022, largely due to higher regulatory fees being booked in 2022’s third quarter as a result of a change in legislation regulating cash contributions towards the Depositor Compensation Scheme, a rescue fund for depositors of failed banks licensed by the Malta Financial Services Authority (MFSA). This was also the case due to restructuring provisions booked in 2022, as well as an insurance refund received in 2023.

“We continue to invest in our people, technology, and our property, which are key to enhancing our capabilities to better serve customers and building the bank of the future,” Directors stated.

Net loans and advances to customers and customer deposits remained “broadly in line” with levels as at the end of 2022, with the bank retaining a “strong” liquidity position with regulatory capital ratios continuing to “exceed” regulatory capital requirements.

HSBC Bank Malta paid its highest interim cash dividend in seven years last September, higher than the full year gross dividend paid out for 2022. “We manage the bank for long-term value creation while recognising the importance of paying dividends to our shareholders,” the Directors continued.

HSBC Bank Malta CEO Geoffrey Fichte / LinkedIn

Commenting on the results, CEO Geoffrey Fichte said that the bank’s “record” third-quarter results reflect the “strength” of HSBC Bank Malta and the “confidence” that customers have in it even in a volatile world.

“These results demonstrate that our turnaround strategy is working. Our robust risk management is protecting and supporting customers while delivering value for shareholders,” he continued.

Mr Fichte, who only joined the bank’s Malta operations last May, said HSBC Bank Malta is “positive” and will “continue to invest to improve its customer experience”. He concluded by thanking the bank’s team for the “strong performance” and its customers for their business.