HSBC Bank Malta p.l.c. and its subsidiaries on Wednesday reported strong results in the first half of the year, with profit before tax of  €58.7m despite a lower interest rate environment, the bank said.

As a result of our continued strong profit generation, the directors are recommending a gross interim dividend of 10 cents per share, the same level as that paid in the same period last year, the bank added

The local group remains highly profitable with a return on equity of 12.7% for the six months ended 30 June 2025.

HSBC Bank Malta p.l.c. said it @maintained its robust balance sheet and strong risk management with a Liquidity Coverage Ratio of 537% and Tier 1 Capital of 22.5% as at 30 June 2025, well above regulatory requirements. The bank continued investing in technology, people and customer service, including recent mortgage campaigns. The bank is positive on the Maltese economy despite global uncertainty.@

Financial Performance

Profit before tax for the six months ended 30 June 2025 was €58.7m, a decrease of €19.9m over the same period in 2024. Lower profits were driven by the lower interest rate environment and lower recovery of expected credit losses.

Net interest income decreased by €16.8m to €89.8m compared with €106.6m in the same period in 2024. The sustained rate cuts since June 2024 led to narrower interest spreads and lower yields on investment portfolios.

Non-funds income (fees and commissions and trading income) increased by €0.5m as we reported improvement in both transactional and trading income. We continue seeing growth in our key strength area of transactional banking within Commercial Banking and Retail Banking. Of particular note, we achieved another record performance in foreign exchange sales to customers as well as the issuance of both domestic and international guarantees, with totals up 9% on prior year. The Wealth business continued to see steady growth, with assets under distribution increasing by 4% in the first six months of the year despite the volatile global market environment.

Operating expenses increased by €2.3m to €58.4m, compared with €56.1m in the same period in 2024. The main drivers were higher staff related costs, increased amortisation and depreciation and higher costs to ensure compliance with new regulatory requirements. Thus, increased costs reflect our continued investment in people, technology and infrastructure.

During the six months, we reported a release of expected credit losses (‘ECL’) of €3.0m, compared to a release of €7.0m reported in the same period last year.  The net release of €3.0m is made up of a release of €3.3m in the retail business partially offset by a charge of €0.3m in the commercial business. The release in the retail business is mainly driven by a re-assessment of the loss rate and loss given default parameters used to calculate ECL on mortgages. On the other hand, a higher weighting was given to the downside scenario of both retail and commercial models in view of the heightened uncertainty in the global macroeconomic environment driven by tariff concerns and geopolitical uncertainty. Other movements in ECL relate to changes in the credit quality of individual customers.

HSBC Life Assurance (Malta) Ltd reported a profit of €6.5m compared to €4.5m in the same period last year. The increase in profits was a result of an improvement in the yield curve partially offset by a non-recurring reversal of losses on onerous insurance contracts reported last year. New business generation on protection and long-term savings, tracked favourably in the first half of the year amid intense competition. The insurance company continued to maintain a very strong capital position with a Solvency ratio as at 30 June 2025 of 247%.

The effective tax rate was 35% in both periods. This translated into an interim tax expense of €20.4m.

Financial Position and Capital

Net loans and advances to customers amounted to €2,791m, a decrease of €82m or 3% when compared to 31 December 2024. The loan portfolio showed stronger credit performance, with declining delinquency and default rates resulting in further releases of ECL.

The bank’s investment portfolio increased by €197m to €2,488m as the bank continues to invest in the long term to mitigate interest rate risk inherent in the balance sheet. The investment portfolio is composed of highly rated securities and remains conservatively positioned with the lowest investment grade of A-.

Customer deposits stood at €6,203m as at 30 June 2025, an increase of €45m compared to 31 December 2024. While commercial customer balances decreased marginally when compared to 31 December 2024, average commercial deposits for 1H 2025 were higher than 1H 2024. Retail deposits increased by 2%.

The bank continued to maintain very strong capital ratios which exceed regulatory capital requirements. The bank’s common equity tier 1 capital was 22.5% as at 30 June 2025, compared to 22.6% at the end of 2024. The total capital ratio was 25.4% compared to 25.6% as at 31 December 2024. 

The bank maintained its commitment to rewarding shareholders with high dividends. We decided to maintain the same level of dividend as last year despite the lower profit in view of the bank’s capital strength. The Board has thus recommended a gross interim dividend of 10 cents per share which amounts to a gross dividend of €36.0m. The interim dividend will be paid on 23 September 2025 to shareholders who are on the bank’s register of shareholders on 20 August 2025.

Geoffrey Fichte, Chief Executive Officer of HSBC Malta, said:

“We achieved strong results with profit before tax of €58.7m reflecting the strength of our business despite lower interest rates.  As a result of our continued strong profit generation in the first half of the year, the directors are recommending a gross interim dividend of 10 cents per share. I would like to thank our customers for their business and my colleagues for their unwavering support to our customers.

We continue to invest in technology, people and customer service while promoting our services through ongoing marketing efforts.  We remain committed to helping our customers achieve their aspirations and have recently launched competitive new mortgage campaigns designed to support our customers, both current and future. We renewed important commercial agreements with the Malta Development Bank, Trade Malta, Chamber of Commerce and others in order to grow our commercial banking business.

We are positive on the Maltese economy despite global uncertainty. Malta’s robust and diversified economic growth is well positioned for future success given global trends.

The local group remains highly profitable with a return on equity of 12.7% for the six months ended 30 June 2025.  The bank maintained its solid balance sheet and strong risk management underpinned by robust liquidity and excess capital position as at 30 June 2025 with a Liquidity Coverage Ratio of 537% and Tier 1 Capital of 22.5%, well above regulatory requirements. 

Our main shareholder continues its strategic review of their shareholding. We are committed to informing the market of any developments aligned to capital market listing rules.”