Issue link: https://maltatoday.uberflip.com/i/1454280
NEWS 5 maltatoday | WEDNESDAY • 23 FEBRUARY 2022 PAUL COCKS HSBC Bank Malta has reported a profit before tax of €26.9 million for the year ended 31 December 2021, an increase of €16.4m or 157% over the previous year. In its End of Year Financial Results for 2021, the bank re- ports improved profitability driven by small release of ex- pected credit losses compared to significant charges booked in 2020, as a result of the COV- ID-19 pandemic. Insurance subsidiary revenues positively impacted by favoura- ble market movements. Howev- er, performance was negatively impacted by higher actuarial losses of €3.4m. The board of HSBC Malta has recommended gross final div- idend of 3.42 cents per share (2.22 cents per share net of tax). Profit after tax attributable to shareholders stood at €17.8m resulting in earnings per share of 4.9 cents, compared with 2.1 cents in the same period in 2020. Net interest income decreased by 8% to €97.8m compared to the prior year. The decrease was mainly driven by lower average yields on debt securities, tighter margins and placement of sur- plus liquidity at negative rates. This was partially offset by lower interest paid on customer deposits and changes in depos- it composition towards short- term placements. Net fee income increased by €3.1m compared to 2020, driv- en by increased activity across cards, payments and credit fa- cilities, as well as new fees in- troduced during the year to par- tially offset the increased cost of providing our services and prod- ucts to customers. Net trading income decreased by €3.0m, mainly due to fair val- ue gains on equity investments reported in 2020. These equity investments were fully disposed of in 2020. HSBC Malta's operating costs for 2021 amounted to €105.4m, compared to €97.4m report- ed in 2020. 2021 operating ex- penses include a restructuring provision of €2.8m. Excluding the restructuring provision, ex- penses increased by €5.2m or 5% compared to the previous year. Non-staff costs increased by €9.5m, driven by compliance costs due to increased monitor- ing, transformation expenses, regulatory fees, fraud losses, as well as higher investment in digitalisation. HSBC Life Assurance (Malta) Ltd reported a loss before tax of €3 million compared to a loss of €9.1m reported in 2020. The positive variance in prof- itability of €6.1m is mainly at- tributable to better market con- ditions, whereby fears of rising inflation led to increased inter- est rates that positively impact- ed revenues by €7.7m. Growth was also achieved due to higher new business and low- er expenses incurred of €1.2m, mainly in relation to the imple- mentation of IFRS17. However, performance was negatively impacted by higher actuarial losses of €3.3m, main- ly driven by the prediction of future negative experience for a legacy product. HSBC Malta reports €26.9 million in profit before tax for 2021 • Reported profit before tax of €26.9m for the year ended 31 December 2021, an increase of €16.4m or 157%. • Adjusted profit before tax of €29.7m for the year ended 31 December 2021, which excludes the impact of a one-off restructuring provision of €2.8m, an increase of €19.2m, or 184%, compared with prior year. • Improved profitability driven by a small release of expected credit losses compared to significant charges booked in 2020, as a result of the Covid-19 pandemic. • Insurance subsidiary revenues positively impacted by favourable market movements. However, performance was negatively impacted by higher actuarial losses of €3.4m. • Decrease in net interest income driven by the negative interest rate environment and excess liquidity. • Increase in the cost base as a result of a restructuring provision, tighter regulatory monitoring, transformation expenses, increased regulatory fees and continued investment in digitalised solutions. • Recommended gross final dividend of 3.42 cents per share (2.22 cents per share net of tax). • Reported profit after tax attributable to shareholders of €17.8m for the year ended 31 December 2021, resulting in earnings per share of 4.9 cents, compared with 2.1 cents in the same period in 2020. • Strong capital base with a common equity tier 1 ratio of 18.4% and total capital ratio of 21.1%, up from 18.0% and 20.7% respectively at 31 December 2020. • Adjusted return on equity of 4.0% compared with 1.6% for 2020. • Net loans and advances to customers decreased marginally by €67.9m compared to 31 December 2020. • Customer deposits increased by 7% to €5,621m at 31 December 2021. • Strong liquidity position with advances to deposits ratio at 57%. HSBC 2021 End of Year Financial Results highlights