HSBC Bank Malta’s ‘strong’ start to 2023 driven by increase in interest rates, says CEO

HSBC Bank Malta plc CEO Geoffrey Fichte on Tuesday described the bank’s performance in the opening three months of 2023 as “strong”, boosted by an increase in interest rates and improvement in the credit quality of its loan book.

This came as the bank announced that it registered €26.5 million in pre-tax profit during the first quarter of 2023, a €21.7 million increase from the €4.8 million that were registered in the same period last year.

This was driven by a 60 per cent (€18.8 million) increase in revenue when compared to the figures reported in last year’s opening quarter, with interest rate rises driving higher net interest income.

The bank stated that this was primarily the case because it placed its excess liquidity at positive rates when compared to the negative rates in the same period in 2022.

Insurance income was also on the rise given the improved equity markets at the start of 2023. On 1st January 2023, the bank adopted IFRS 17 Insurance Contracts, under which there is no present value of in-force businesses asset recognised up front. Instead, the measurement of the insurance contract liability takes into account fulfilment cash flows and a contractual service margin that represents the unearned profit.

The bank also recorded an improvement in the credit quality of its loan book, resulting in a release of expected credit losses of €3.7 million in 2023’s first quarter when compared to a release of €0.3 million in the corresponding period in 2022. HSBC stated that this year’s release reflected the upgrade of facilities and a “favourable change” in the probability weightings of economic scenarios.

HSBC added that it continued to prioritise investment in technology, automation and people, which when coupled with the impact of rising inflation, prompted an increase of €0.5 million in operating expenses.

Net loans and advances to customers and customer deposits remained “broadly in line” with end-of-2022 levels, while the bank’s liquidity position remained “strong”, with regulatory capital ratios continuing to “exceed” regulatory capital requirements.

Commenting on HSBC Bank Malta’s performance, Mr Fichte, who only joined as CEO at the start of the month, said that the bank reported “strong” results during the first quarter, “driven by an increase in interest rates and improvement in the credit quality” of its loan book.

“We remain focused on improving our customer service and investing in technology while maintaining cost discipline,” he added.

“We continue to innovate and respond to the evolving needs of our customers,” Mr Fichte said, before making reference to the launch of the HSBC Key FIVE Critical Illness Cover plan during the first quarter. He described the plan as a “market-leading and standalone critical illness insurance policy which is designed to support policyholders in the event of being diagnosed with any of the five most common critical illnesses”.

“As the leading international bank in Malta with an ambitious net zero agenda, HSBC is actively focused on channelling finance and investment to where it can have the greatest impact, in close partnership with our clients,” he explained. Mr Fichte added that the material investment in its Qormi campus “continues at pace” and will help the bank achieve its net zero ambition “by 2030”.

He concluded by highlighting how HSBC Bank Malta was voted as the “Market Leader” and “Best Service Provider” in the Euromoney Trade Finance Survey 2023, an event that serves as “recognition of the bank’s outstanding performance and commitment to providing its clients with high-quality trade finance solutions”, before thanking HSBC Bank Malta’s customers for their business.