HSBC Malta has registered a substantial drop in pre-tax profits, by €19.1m to €1.8m, in the first six months of 2020 as a result of COVID-19.

In a statement, the bank said the economic impact of the Covid-19 pandemic had been the main driver of “the change in our financial performance”, which resulted in an increase in credit losses and “a material fall” in  reported pre-tax profit. It also laid blame at the turmoil being experienced by the markets, which, it said had impacted their insurance business.

Elaborating, the bank said that revenue was down 16 per cent, “largely driven by revaluation losses within the Life Insurance subsidiary as a result of adverse market movements (equity and interest rates). Excluding the insurance subsidiary, revenue declined by 1 per cent.”

Credit losses increased by €9.7m to €8.7m due to the impact of the pandemic, while costs were 5 per cent below the same period in 2019, “reflecting strong progress on the strategy announced in 2019.”

During the first six months, lending increased by €32m (1%) and deposits grew by €168m (3%), while the profit attributable to shareholders  -  amounting to €1.2m for the six months ending on the 30th June 2020 - resulted in earnings per share of 0.3 cents compared with 3.8 cents in the same period in 2019.

Moreover, common equity Tier 1 capital ratio was of 16.6 per cent as of the 30th June 2020, up from 16.4 per cent at the end of 2019, which they described as “well above regulatory requirements.” The return on equity was of 0.5 per cent over the same period, compared with 5.8 per cent in the first six months of 2019.  

Finally, no interim dividend is being declared, “in line with the European Central Bank recommendation that eurozone banks should not make dividend payments at this time, regardless of capital strength.”

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