HSBC Bank reported pre-tax profit of 10.4 million euros for the year, down 66% year-on-year.
This was disclosed in their financial performance report covering the year ended December 31, 2020.
Net interest income, from interest income and expenses, decreased by 4% to 105.9 million euros compared to the previous year. This is explained by lower interest payments to customers, resulting from price revision exercises and changes in the composition of deposits, offset by lower average yields on debt securities, market investments. monetary policy and declining credit card overdrafts and balances resulting from current economic conditions.
The bank’s net commission income fell by € 1.8 million from 209 figures, which the bank said was largely due to reduced activity due to COVID-19 on cards, games, insurance and credit facilities.
Operating expenses also fell to € 97.4 million compared to € 120.7 million in 2019, the latter including a restructuring provision of € 16 million.
Excluding this provision, the bank said it allowed a cost reduction of 7.3 million euros, or 7%, while absorbing inflationary and other expenses related to COVID-19.
The expected credit losses and other credit impairments for the year stand at 25.6 million euros, an increase of 25.2 million euros compared to 2019. The bank indicated that this increase was due to expected losses, rather than losses incurred.
The bank raised the possibility of future defaults linked to prolonged moratorium measures, and said it had been considered.
The tax charge amounted to 2.9 million euros in 2020, at an effective tax rate of 27.5%. This is € 7.7 million less than the expenses incurred in 2019, which amounted to € 10.5 million.
The bank’s insurance intermediary, HSBC Life Assurance, recorded a pre-tax loss of € 9.1 million – a significant drop from the pre-tax profit of € 3.1 million reported in 2019. The bank indicated that this unfavorable difference is largely attributable to a decline in the markets and the continued deterioration of the yield curve negatively impacting turnover by 3 million euros.
Actuarial losses of 8.4 million euros, as modeled parameters such as lapses and interest rates, were worse than those estimated in 2019.
Financial situation and capital
Net loans and advances to customers increased by € 7.2 million to € 3,265 million with trade balances up 1% and trade balances down 1% compared to December 2019.
Customer deposits held in banks rose 6% to 5,273 million euros, driven by retail deposits, whose trade balances were stable overall.
The bank’s advance / deposit ratio was maintained at 62% and its liquidity ratios remained “well above regulatory requirements”.
HSBC’s financial investment portfolio fell 7% to € 877 million, linked to the investment of debt securities maturing in Treasury bills.
The HSBC Board of Directors has recommended a dividend payout ratio of 15% on cumulative declared earnings for 2019 and 2020, after deducting any dividends paid during the same period.
The final gross dividend will be 1.16 cents per share, with the final dividend to be paid on April 26, 2021 to persons registered in the bank’s shareholders register on March 23, 2021.
Digital banking trends
Simon Vaughan Johnson, CEO of HSBC Bank Malta, said trends in customer behavior have shown that digital transactions have more than doubled since the launch of their mobile banking app for personal customers in late 2019.
“This investment will soon be completed by the opening of a new modern branch which will offer our private banking clients a one-stop-shop for advice on all major life events. Bank branches and our ATM network will continue to be an essential part of our customer service offering, ”he said.