18th Feb 2008 11:35
HSBC Holdings PLC18 February 2008 The following is the text of an announcement which is to be published in thepress in Malta on 19 February 2008 by HSBC Bank Malta p.l.c., a 70.03 per centindirectly 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 ofthe MFSA Listing Authority and Article 4 (2) (b) of the Prevention of FinancialMarkets Abuse (Disclosure and Notification) Regulations, 2005. Figures have beenextracted from HSBC Bank Malta p.l.c.'s Annual Report and Accounts which havebeen audited by KPMG. These financial statements have been prepared and presented in accordance withthe provisions of the Banking Act, 1994 and the Companies Act, 1995 whichrequires adherence to International Financial Reporting Standards. All figures are stated in Maltese lira, the functional currency of HSBC BankMalta p.l.c. during the year under review. The euro exchange rate ruling on31 December 2007 was €1 = Lm0.4293. The US dollar and sterling exchange ratesruling on the same day were US$1 = Lm0.2912 and £1 = Lm0.5817. Average exchangerates 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 itssubsidiaries generated a profit on ordinary activities before tax of Lm49.2million (€114.7 million), an increase of Lm7.8 million (€18.3 million) or 19.0per cent, compared to 2006. Profit attributable to shareholders was Lm32.8 million (€76.4 million), anincrease of Lm6.0 million (€13.9 million) or 22.2 per cent over prior yearfigures. Earnings per share increased to 11.2 cents (€0.262) from a 2006 figure of 9.2cents (€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 volumesof business activity across all customer groups and businesses led to excellentresults, and at the same time, the successful implementation of major projectsand structural changes mean that the bank is well-positioned for the future. "We continued to invest in our brand. As part of our Corporate Responsibilityprogramme 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 globalmarket conditions, Malta's fuller membership of the EU and Eurozone, and theresulting increase in competition. In facing these challenges, we have anexcellent position. We have a superb customer base, unparalleled local andglobal distribution network, a strong brand and the global advantages of theHSBC Group. We are confident that we are well-positioned to grow our businessfurther in the future." Performance Review Net interest income grew by Lm7.2 million (€16.8 million) or 15.4 per cent overprior year to Lm54.2 million (€126.2 million). Growth was driven by increasedcustomer loans of 7.6 per cent and customer deposits of 17.5 per cent. Growth incustomer loans resulted from increased residential mortgages and commerciallending. There was a strong increase in deposits of Lm258.7 million (€602.6million) to Lm1,734.2 million (€4,039.5 million) attributable both to increasedlocal demand for savings products and international corporate deposit growthintroduced through the HSBC International Banking Centre network. Non-interest income levels grew by Lm2.5 million (€5.8 million) or 8.7 per centto Lm31.1 million (€72.5 million), driven by growth in business activity andvolumes which were well-spread across the group's core products and servicelines. Revenues increased through growth in lending, Trust services, cardissuance and usage fees, and retail brokerage. Commission earned on account andtransfer services reduced due to increased usage of automated services which aremore efficient and less costly for our customers. Life insurance activities were a significant contributor to group profitsgenerating 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 customerdemand was supported by new launches of regular premium products and increasedvolumes of single premium products. Other operating income benefited from thegrowth in new insurance business by Lm3.3 million (€7.6 million). During the year revaluation gains on the group's investment properties generatedLm1.3 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) fromLm34.3 million (€80.0 million) in 2006. Employee compensation and benefits wasunchanged at Lm21.4 million (€49.8 million) in spite of a 2.5 per cent increasein wages and salaries as higher staff turnover and lower voluntary retirementbenefits costs offset the effect of the increase. General and administrativeexpenses increased by Lm1.7 million (€4.0 million) to Lm11.5 million (€26.7million) largely as a result of investment in a large number of mandatoryprojects including euro conversion and adoption of SEPA legislation, as well asthe cost of increased business volumes and increased regulatory fees. Overall the group's cost income ratio improved to 42.1 per cent in 2007 from45.5 per cent in 2006. The tax charge for the year increased by 13.0 per cent to Lm16.5 million and theeffective tax rate fell marginally to 33.4 per cent. Loans and advances to customers increased by Lm85.5 million (€199.1 million) toLm1,211.6 million (€2,822.3 million) with growth spread across both personal andcommercial sectors. The advances to deposits ratio improved to 69.9 per centfrom 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 fromgood credit management and bad debt recovery against favourable economicconditions. 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 aggregateamount of non-performing loans improved to 2.8 per cent of gross loans andadvances 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 April2008 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 finaldividend 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 22August 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 Lm000Interest 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 9,209Interest 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 10,831Fees 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 2,169Trading profits 7,206 7,335 7,206 7,335Net 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 2,719Net earned insurance premiums 31,446 16,536 - -Other operating income 6,802 2,308 1,837 715Total 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 36,137Net impairment (18) 181 (18) 141Provisions for liabilities and other charges (146) (7) (131) (7)Profit before tax 49,240 41,395 44,831 36,271Tax 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 Lm000AssetsBalances with Central Bank of Malta, Treasury bills and cash 202,688 130,569 202,688 130,569Cheques in course of collection 1,332 10,535 1,332 10,535Financial assets held for trading 6,860 10,396 6,860 10,399Financial assets designated at fair value through profit or loss 118,356 112,476 - -Financial investments 196,305 168,138 194,345 168,123Loans and advances to banks 270,896 256,060 270,861 256,042Loans and advances to customers 1,211,620 1,126,126 1,211,620 1,126,126Shares in subsidiary companies - - 12,682 9,682Intangible assets 15,502 10,899 585 794Property and equipment 33,408 28,612 33,424 28,632Investment property 5,532 3,417 4,500 2,456Assets held for sale 5,118 3,978 5,182 4,042Current tax recoverable - 806 - 780Deferred tax assets - - 5,033 724Other assets 11,099 10,713 3,837 2,984Prepayments and accrued income 16,990 14,589 15,700 13,630Total assets 2,095,706 1,887,314 1,968,649 1,765,518 LiabilitiesFinancial liabilities held for trading 6,458 10,643 6,542 10,693Amounts owed to banks 37,410 126,328 37,410 126,328Amounts owed to customers 1,734,154 1,475,450 1,763,562 1,487,906Provision 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 13,003Accruals and deferred income 22,816 18,147 22,484 17,936Provisions for liabilities and other charges 178 32 163 32Subordinated liabilities 24,883 - 24,883 -Total liabilities 1,976,905 1,760,945 1,868,853 1,655,898 EquityCalled up share capital 36,480 36,480 36,480 36,480Revaluation reserves 10,554 10,629 10,620 10,629Other reserves 339 242 315 227Retained earnings 71,428 79,018 52,381 62,284Total equity 118,801 126,369 99,796 109,620Total liabilities and equity 2,095,706 1,887,314 1,968,649 1,765,518 Memorandum itemsContingent liabilities 55,797 59,578 55,807 59,588Commitments 492,851 456,899 492,851 456,899 The financial statements were approved by the Board of Directors on 18 February2008 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 Lm000GroupAt 1Jan06 9,120 13,105 4,242 104,906 131,373 328 131,701Release 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 - 6Income and expenses recognised directly in equity - (2,476) - (955) (3,431) - (3,431)Share capital of subsidiary - - - - - 91 91Disposal of subsidiary company - - - - - (432) (432)Bonus share issue 27,360 - (4,242) (23,118) - - -Profit for the year - - - 26,810 26,810 13 26,823Share based payments - - 242 493 735 - 735Dividends - - - (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 - 126,369Release 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 - 3,698Income and expenses recognised directly in equity - (75) - (211) (286) - (286)Profit for the year - - - 32,779 32,779 - 32,779Share based payments - - 97 57 154 - 154Dividends - - - (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 Lm000Bank At 1Jan06 9,120 13,041 4,242 93,103 119,506Release 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 6Income 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 23,905Share based payments - - 227 462 689Dividends - - - (29,118) (29,118)At 31Dec06 36,480 10,629 227 62,284 109,620 At 1Jan07 36,480 10,629 227 62,284 109,620Release 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 - - 3,698Income and expenses recognised directly in equity - (9) - (211) (220)Profit for the year - - - 30,459 30,459Share based payments - - 88 64 152Dividends - - - (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 activitiesInterest and commission receipts 144,854 109,797 109,992 87,824Interest 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 173,919 198,053 190,955 196,360Other 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 activitiesDividends received 98 74 3,248 1,874Interest received from financial investments 9,020 11,333 9,020 11,752Proceeds from sale and maturity of financial investments 83,747 88,891 83,747 118,877Proceeds on sale of property and equipment 26 80 26 80Purchase 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) 450Net cash (used in)/from investing activities (31,069) 60,666 (28,806) 92,893Cash flows from financing activitiesDividends 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 158,547 136,468 158,529 175,915Cash 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 Lm000Group Profit before taxSegment operating income 40,149 38,552 30,012 26,592 15,138 10,424 85,299 75,568Segment impairment allowances (633) (144) 615 325 - - (18) 181Common costs (36,041) (34,354)Profit before tax 49,240 41,395 AssetsSegment total assets 767,424 679,457 659,961 651,948 668,321 555,909 2,095,706 1,887,314Average total assets 723,440 630,984 655,955 631,396 612,115 509,214 1,991,510 1,771,594Total 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 segmentsor other material concentrations. Key Financials in Euros Group Bank 2007 2006 2007 2006 €000 €000 €000 €000Profit before tax 114,698 96,425 104,428 84,489Profit attributable to shareholders of the bank 76,355 62,481 70,950 55,684Earnings per share 26.2c 21.4c 24.3c 19.1c Total assets 4,881,682 4,396,259 4,585,719 4,112,551Total equity 276,732 294,361 232,462 255,346 HSBC Bank Malta p.l.c. is a member of the HSBC Group, whose ultimate parentcompany is HSBC Holdings plc. Headquartered in London, HSBC Holdings plc is oneof the largest banking and financial services organisations in the world. TheHSBC Group's international network comprises around 10,000 offices in 83countries and territories in Europe, the Asia-Pacific region, the Americas, theMiddle East and Africa. This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
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