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BUSINESSTODAY 28 March 2019

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28.03.19 10 INTERVIEW HSBC has seen its profits drop by 23% for the financial year which ended in December 2018. While the results were blamed on low interest rates and excess liquidity in the market, you, as CEO, also warned about the dangers to the local financial services sector due to reputational damage to Malta. Do you believe Malta's reputation has been damaged severely? What would you like to see improving when it comes to the upholding of anti-money laundering standards in the financial industry? HSBC Malta's 2018 results re- flected the impact of planned investments in compliance, the full year effect of associated risk management actions, positive reductions in non-perform- ing loans and the impact of a low interest rate environment. HSBC Malta is well placed to navigate the current and future operating environment. We believe that HSBC Malta's high standards give confidence to our shareholders, customers and employees and although, as expected, profitability has reduced, these strengths have enabled the bank to continue the generation of dividends for shareholders. More broadly, the banking in- dustry operates on an agreed set of international compliance standards that determine, not only how accounts are opened but also the manner in which domestic and international trade and capital flows are facil- itated. Where regulatory standards are met, the economic flows and activities facilitated by banks are smooth and predicta- ble. Where there are gaps in the achievement of these standards, there can be consequences both to reputation and to the orderly operation of the financial sys- tem. It is therefore essential that all market participants operate to the requisite standards and that these are robustly monitored and enforced. HSBC Malta wel- comes recent announcements by the MFSA to strengthen the local supervisory framework in this regard. In recent months, local banks have been the subject of criticism – including from the Prime Minister – regarding their reluctance to open corporate bank accounts for foreign companies. Joseph Muscat pointedly said that banks had to be "agents for growth, not safety deposit boxes". How do you respond to this criticism? Are you planning on addressing the situation whereby foreign companies are encountering significant problems in conducting their business due to local High standards protect reputation for the long-term HSBC Malta's high standards give confidence to our shareholders, customers and employees and although, as expected, profitability has reduced, these strengths have enabled the bank to continue the generation of dividends for shareholders HSBC Malta registered a pre-tax prot of €38.6 million as at year- end 2018 – a decrease of 23%, or €11.3 million, compared to 2017. Chief Executive Ocer Andrew C. Beane acknowledged 2018 was a dicult one for the Maltese nancial services sector, saying it had suered further reputational damage. And yet, he believes HSBC Malta's high standards will continue to give condence to shareholders, customers and sta alike MASSIMO COSTA

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