“Both BOV and HSBC report a strong profit for the first half of 2024…”

BOV reports profit before tax of €148.2 million for first half of 2024

In the first half of 2024, the Bank of Valletta Group delivered a strong financial performance, with pre-tax profits of €148.2 million, representing an increase of 40.9% over the same period last year. The increase in profitability resulted from strong growth in interest income, and to a lesser extent, from net fee and commission streams, underpinned by sustained efforts to improve cost effectiveness and efficiency.

The Bank registered Net Interest Income (NII) of €193.6 million, representing an increase of 21.1% when compared with the same period last year. Net Fee and Commission Income increased by 6.5%, reaching €36.7 million, with positive results registered in core income areas including credit-related and trade finance business, as well as brokerage and other investment related activities.

Operating costs registered a decrease of €2.3 million, down to €90.7 million, with costs of human capital the primary driver, followed by technology-related expenses. The Bank’s efforts to manage its costs resulted in cost reductions in the majority of cost categories, with the Cost-to-Income ratio reducing sharply from 47.9% in June 2023 to 40.7% in June 2024.

The Group’s strategy to optimise the balance sheet continued to be centred on its core financing business and management of excess liquidity. The Group’s treasury continued to perform well on the strength of increased volumes and improvements in the net interest margin on the investment portfolio, as well as interest being derived on the cash deposits held with the Central Bank. While cash and short-term funds decreased by €1.1 billion compared to end December 2023, investments in the treasury portfolio increased by €723.2 million.

Loans and advances to customers amounted to €6.6 billion at the end of the first half, resulting in a net increase of €374 million, with high growth levels on both business and retail advances. On the liabilities side, customer deposits experienced a marginal increase of €14.9 million, reaching €12.2 billion. This led to a favourable increase in the Group’s gross loan-to-deposits ratio from 51.7% at end 2023 to 54.7% at end of June 2024, in line with the Bank’s long-term direction.

“I am pleased to report yet another strong financial performance by the BOV Group for the first six months of 2024. This is all the more significant within the context of a weak international economic scenario clouded with uncertainty. BOV’s profitability continued to benefit from the environment of high international interest rates and our decision to maintain interest rates unchanged for most clients while maintaining a very strong capital base.”

HSBC Bank Malta reports record profits of €78.6m for 2024 interim results

HSBC Bank Malta reported record half year profits reflecting revenue growth, investment in people and technology as well as strong credit quality of the loan book. A record profit performance of €78.6m in the first half of the year has enabled us to continue the trend of rewarding our shareholders with the highest interim dividend over the last 10 years. The Directors are recommending a gross interim dividend of 10 cents per share.

Financial performance

• Profit before tax increased by €19.3m to €78.6m, mainly driven by an increase in revenue due to the higher interest rate environment and higher credit recovery which was partially offset by higher costs as the bank continued to invest.
• Revenue increased by €21.5m or 20% driven by rising interest rates and a 34% increase in trading income. Progress was also reported in net fee income and income from the insurance subsidiary.
• A release of €7.0m was reported on expected credit losses (‘ECL’) in view of curing of non-performing loans and releases of overlays held by the bank in relation to inflationary pressures.
• Costs are €6.6m higher than the same period in 2023. This increase was largely driven by the investment in people, technology as well as the new headquarters in Qormi, ‘HSBC Hub’.
• During the first six months, loans to customers and deposits were slightly lower than those reported at 31 December 2023.  
• Profit attributable to shareholders of €50.7m for the six months ended 30 June 2024 resulted in earnings per share of 14.1 cents which compared favourably with 10.7 cents in the same period in 2023.
• An interim gross dividend of 10 cents per share is being recommended.
• Return on equity of 18.3% for the six months ended 30 June 2024 compared favourably with 16.2% for the same period in 2023.
• Cost efficiency ratio (‘CER’) improved to 43.9% from 46.6% in the same period last year as the increase in revenue outweighed the increase in costs.
• The bank maintained a strong liquidity and capital position as at 30 June 2024, with a   Liquidity Coverage Ratio of 552% and Tier 1 Capital of 21.1%.

Financial performance

Profit before tax for the six months ended 30 June 2024 was €78.6m, an increase of €19.3m from the same period in 2023. Higher profits reflect an improvement in all revenue lines as well as a higher recovery of expected credit losses (‘ECL’). These positive variances were partially offset by higher costs as the bank continued to invest.

HSBC Life Assurance (Malta) Ltd reported a profit of €4.5m compared to €1.6m reported in the same period last year. The increase in profits is a result of an improvement in the composition and volume of new business together with yield curve and positive movements on the financial securities’ prices.

The bank continued its trend in rewarding its shareholders with the highest interim dividend over the last 10 years. The Board has thus recommended an interim gross dividend of 10 cents per share which amounts to a gross dividend of €36.0m. The interim dividend will be paid on 17 September 2024 to shareholders who are on the bank’s register of shareholders on 16 August 2024.

Geoffrey Fichte, the Chief Executive Officer of HSBC Malta, said: “HSBC is celebrating 25 years in Malta. Our results for the first half of the year reflect the strong relationship with customers built over these years as part of Malta’s economic transformation, as well as the continued success of our turn-around strategy announced early last year. We’re growing revenue across all of our businesses and continue to invest for the long term. HSBC’s robust management of risk and focus on high-quality and long-term customer relationships continues to deliver results.

“This year we signed an ambitious and ground-breaking three-year collective agreement to energise our talent on customer service excellence. We inaugurated our new headquarters, HSBC Hub, in Qormi, a €30m investment in the future of work. We accelerated investments in technology, sustainability and new ATMs to support customers.

“We thank our customers and shareholders for their support and are recommending a gross interim dividend of 10 cents per share which is the highest dividend over the last 10 years. Our capital and liquidity remain strong, and we continue to pursue growth opportunities in Malta.”

Malta Company Announcements:

Grand Harbour Marina plc

The Directors of the Company are pleased to announce the long term licencing of a super-yacht berth with a net value of €2.2million (excluding VAT). This licence, on a new agreement for a different term, follows the agreed early termination of the same super-yacht berth by its former licensee against which the Company paid a settlement amount. This transaction is expected to have a positive effect on both profit and cash flow for the Company.

Plaza Centres plc

The Directors have also resolved to declare an interim net dividend to shareholders of €250,000 equivalent to €0.0098 per share. The cut-off date for eligibility to dividends shall be the 14 August 2024 and that accordingly only shareholders on the register of members on that date shall be eligible to receive the dividend which will be paid on the 28 August 2024.

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