‘HSBC’s financial performance in 2022 exceeded expectations’ – CEO Simon Vaughan Johnson

HSBC Bank Malta plc outgoing CEO Simon Vaughan Johnson has acknowledged that the group’s performance in 2022 “exceeded expectations”, yet remained cautious for the coming year amid heightened inflationary pressures.

This came as HSBC Malta released its Annual Report for 2022 on Tuesday, in which it stated that it registered a profit before tax of €57.3 million during the year, representing an increase of €30.4 million or 113 per cent from the previous one. The group’s profit attributable to shareholders stood at €37.6 million, resulting in earnings per share of 10.4 per cent, compared to 4.9 per cent in the same period in 2021. Its financial investments portfolio also notably increased by 19 per cent to €1 billion, largely driven by higher liquidity as a result of a six per cent increase in customer deposits. It also recommended a dividend of €13.1 million, the highest it has paid in the last four years.

The bank recently made headlines for raising its interest rates for first-time buyers from 2.7 per cent to 3.1 per cent, with an increased minimum down payment requirement of 20 per cent. It has since backtracked on the decision, bringing the down payment requirement back to its standard 10 per cent.

Mr Vaughan Johnson noted that the financial performance was largely a result of “rising interest rates, a significant credit recovery, increase in trading income and rigorous cost management actions”.

“In 2022, the positive interest rate environment made an accretive contribution to our profitability, after many years of operating in a negative interest rate environment,” he said.

He also made reference to the increased revenue that HSBC Malta’s insurance subsidiary, HSBC Life Assurance (Malta) Ltd registered, leading to a pre-tax profit of €4.8 million, compared to 2021’s €3 million loss. This was mainly due to “favourable market conditions, together with increased foreign exchange income,” he said.

Additionally, Mr Vaughan Johnson also highlighted that the group is making “good progress” on the transformation of its offices at 80 Mill Street, Qormi, which is currently the “largest real estate project of its kind for HSBC in Europe”. “This important capital investment in Malta will create a modern, fit-for-purpose business environment for all who work in or visit the campus and will facilitate a number of carbon net-zero initiatives that are full aligned to our published targets,” he explained.

“We continued to launch new products for our customers as well as delivering on the digitisation journey,” he said, including the launch of the new cards platform in the first quarter, which provides customers with “enhanced features, services and security”, along with an upgrade to the card fraud management system that offers more protection to its customers and the bank as a whole. He also made reference to the “enhancements” that were made during the year to its HSBCnet and mobile banking application.

“In January 2023, HSBC Life launched the HSBC Key FIVE Critical Illness Cover plan which is 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,” he added.

He also stated that HSBC Malta’s inclusion in the Malta ESG Alliance as a founding member highlights its “ongoing commitment” to decarbonise its operations and “promote the transition in Malta to a net-zero economy”. “The bank has made significant progress on a study, being carried out in collaboration with the Malta Chamber of Commerce, to make our campus on 80 Mill Street, Qormi a net-zero building and to use the experience and learnings to establish a blueprint for transitioning commercial buildings across Malta into more sustainable environments,” he added.

He noted how HSBC Bank Malta was named as the winner of the National Corporate Voluntary Organisations Award during the Malta Council for the Voluntary Sector’s National Volunteer Awards for 2022, with this reflecting the “outstanding work” the bank’s employees are doing to “support the community” beyond offering banking services.

“While the interest rate outlook is now more positive, the outlook for 2023 remains uncertain in view of heightened levels of inflationary pressures and continued geopolitical tensions. HSBC remains strategically focused on growing our business in Malta through the Safe Growth programme, which is delivering tangible benefits to our customers, shareholders and the wider community,” Mr Vaughan Johnson said.

He concluded by adding that HSBC “remains fully committed to pursuing the digitalisation journey and to offering local and global products and services” to its customers, while also supporting them to “realise opportunities to grow both locally and internationally”.

This marks Mr Vaughan Johnson’s final full financial year as HSBC Malta’s CEO, having been appointed in the role in 2020. He will be retiring from the bank on 30th April 2023 after serving for 36 years with HSBC, and will be replaced by Geoffrey Fichte, who is currently President and CEO of HSBC Bank Uruguay.