HSBC Holdings Regulatory News (HSBA)

16 Feb 2007 11:00

HSBC Holdings PLC16 February 2007 The following is the text of an announcement which is to be published in thepress in Malta on 17 February 2007 by HSBC Bank Malta p.l.c., a 70.03 per centindirectly held subsidiary of HSBC Holdings plc. HSBC Bank Malta p.l.c. Preliminary Profit Statement for the year ended 31 December 2006 The preliminary profit statement is published pursuant to Listing Rule 9.39 ofthe MFSA Listing Authority and Article 4 (2) (b) of the Prevention of FinancialMarkets Abuse (Disclosure and Notification) Regulations, 2005. Figures have beenextracted from HSBC Bank Malta p.l.c.'s Annual Report and Accounts which havebeen audited by KPMG. These financial statements have been prepared and presented in accordance withthe provisions of the Banking Act, 1994 and the Companies Act, 1995 whichrequires adherence to International Financial Reporting Standards. All figures are stated in Maltese lira, the functional currency of HSBC BankMalta p.l.c. The euro exchange rate ruling on 31 December 2006 was €1 =Lm0.4293. The US dollar and sterling exchange rates ruling on the same day wereUS$1 = Lm0.3258 and £1 = Lm0.6397. Average exchange rates for 2006 for euro, USdollar and sterling were €1 = Lm0.4293, US$1= Lm0.3418 and £1 = Lm0.6296. Review of Performance During the year ended 31 December 2006, HSBC Bank Malta p.l.c. and itssubsidiaries generated a profit before tax on ordinary activities of Lm41.4million, an increase of Lm4.7 million, or 12.8 per cent compared with 2005. Profit attributable to shareholders was Lm26.8 million, an increase of Lm2.8million, or 11.4 per cent, over prior year figures. Earnings per share increased to 9.2 cents from a 2005 figure of 8.2 cents, withthe pre-tax return on average shareholders' funds increasing to 32.1 per centfrom 27.6 per cent in 2005. Net interest income grew by 5.4 per cent over the prior year and contributedLm47.0 million to total operating income driven by growth in lending volumes of10 per cent. Principal areas of growth in the lending portfolios were in thehigher yielding personal and non-public sector customer segments and with areduction in lower yielding public sector debt. This was partly offset by ahigher interest rate environment for new customer deposits which pushed upinterest payable costs. Non-interest income levels grew by 18.8 per cent, contributing Lm28.6 million tototal operating income. Net fees and commissions grew by 14.7 per cent astransactional activity on credit card payments and debit card EPOS machine usagegrew substantially; funds under management, stockbroking sales and lifeassurance business also grew significantly. Against a background of stronger income flows, operating expenses were Lm34.3million, an increase of Lm2.3 million over prior year figures. Employeecompensation grew by 5.5 per cent, driven largely by performance-related paybenefits due to the higher sales and profits of the bank. Whilst generalexpenses increased by Lm1.0 million, there were significant investments ininfrastructure and branch network, which substantially improved automation andoperational efficiencies. This has enabled the bank to absorb larger volumes ofbusiness and positioned it for future growth. As a result, the group's cost to income ratio improved to 45.5 per cent from46.7 per cent in 2005. Total assets increased by Lm231.4 million to Lm1,887.3 million. Loans and advances to customers increased by Lm110.0 million, supported bygrowth in both the personal and commercial sectors. New product lines wereintroduced with a diversification in mortgage product choice as well as newfinancing proposals for the SME and larger corporate markets. Credit qualityremained sound. Advances to deposits ratio increased to 76.3 per cent from a prior year endlevel of 74.3 per cent. Amounts owed to customers increased by Lm108.2 million to Lm1,475.5 milliondriven by competitive pricing and the investment in automated bank channelswhich strengthened the growth in deposit volumes and contributed tosignificantly higher transaction activity. The capital solvency ratio was at 10.9 per cent. Shaun Wallis, Director and Chief Executive Officer of HSBC Bank Malta p.l.c.said: "2006 has been a record year for HSBC Bank Malta p.l.c. with record salesvolumes across all product groups, record customer service satisfaction levelsand strong staff engagement levels, all contributing to improved financialresults. "We achieved this by having a clear customer focus, by investing in our staffand upgrading our systems. We have also benefited from being able to leveragethe HSBC brand. "With good customer relationships, strong, recurrent business streams, excellentresources and the backing of the HSBC Group, we are confident we will continueto grow our business successfully and in a sustainable manner and remain Malta'sleading provider of financial services." The Board is recommending to the Annual General Meeting to be held on 19 April2007 a final ordinary dividend of 5.3 cents gross per share and a specialdividend of 5.3 cents gross per share, giving a total final dividend of 10.6cents gross per share scheduled to be paid on 21 April 2007. The total finaldividend will be payable to shareholders on the bank's register as at 2 March2007. This, together with the interim dividend of 5.3 cents gross, produces atotal dividend for the year of 15.9 cents gross. HSBC Bank Malta p.l.c. is a member of the HSBC Group, whose ultimate parentcompany is HSBC Holdings plc. Headquartered in London, HSBC Holdings plc is oneof the largest banking and financial services organisations in the world. TheHSBC Group's international network comprises over 9,500 offices in 81 countriesand territories in Europe, the Asia-Pacific region, the Americas, the MiddleEast and Africa. Income Statement for the year 1 January 2006 to 31 December 2006 Group Bank 2006 2005 2006 2005 Lm000 Lm000 Lm000 Lm000Interest receivable and similar income- on loans and advances, balances with Central Bank of Malta and Treasury Bills 72,103 60,994 71,285 58,048- on debt and other fixed income instruments 8,772 10,890 9,209 12,196Interest payable (33,913) (27,327) (34,378) (27,648)Net interest income 46,962 44,557 46,116 42,596Fees and commissions receivable 13,848 11,866 10,831 9,342Fees and commissions payable (1,175) (814) (987) (686)Net fee and commission income 12,673 11,052 9,844 8,656Dividend income 113 142 2,169 22,604Trading profits 7,335 7,206 7,335 7,215Net income from insurance financial instruments designated at fair value through profit or loss 4,768 11,169 - -Net gains on sale of financial investments 2,719 1,204 2,719 1,266Net earned insurance premium 16,536 16,236 - -Other operating income 2,308 723 715 24Total operating income 93,414 92,289 68,898 82,361Net insurance claims incurred and movement in policyholders' liabilities (17,846) (23,661) - - Net operating income 75,568 68,628 68,898 82,361Employee compensation and benefits (21,249) (20,132) (20,357) (19,203)General and administrative expenses (10,036) (9,075) (9,543) (8,527)Depreciation (2,406) (2,197) (2,388) (2,157)Amortisation of intangible assets (547) (635) (464) (556)Other operating charges (109) (26) (9) (6)Net operating income before impairment reversals and provisions 41,221 36,563 36,137 51,912Net impairment reversals 181 142 141 121(Provisions)/reversals of provisions for liabilities and other charges (7) 1 (7) 1Profit before tax 41,395 36,706 36,271 52,034Tax expense (14,572) (12,642) (12,366) (17,854)Profit for the year 26,823 24,064 23,905 34,180 Profit attributable to shareholders of the bank 26,810 24,057 23,905 34,180 Profit attributable to minority interest 13 7 - - Earnings per share 9.2c 8.2c 8.2c 11.7c Balance Sheet at 31 December 2006 Group Bank 2006 2005 2006 2005 Lm000 Lm000 Lm000 Lm000AssetsBalances with Central Bank of Malta, Treasury Bills and cash 130,569 77,121 130,569 77,118Cheques in course of collection 10,535 9,727 10,535 9,727Financial assets held for trading 10,396 3,907 10,399 3,907Financial assets designated at fair value through profit or loss 112,476 93,131 - -Financial investments 168,138 224,500 168,123 254,468Loans and advances to banks 256,060 162,882 256,042 202,332Loans and advances to customers 1,126,126 1,016,084 1,126,126 937,813Shares in subsidiary companies - - 9,682 20,350Intangible assets 10,899 9,433 794 829Property, plant and equipment 28,612 29,746 28,632 29,755Investment property 3,417 961 2,456 -Assets held for sale 3,978 4,918 4,042 5,864Current tax recoverable 806 1,895 780 1,607Deferred tax assets - - 724 -Other assets 10,713 8,701 2,984 2,699Prepayments and accrued income 14,589 12,868 13,630 12,945Total assets 1,887,314 1,655,874 1,765,518 1,559,414 LiabilitiesFinancial liabilities held for trading 10,643 4,050 10,693 4,050Amounts owed to banks 126,328 22,667 126,328 22,667Amounts owed to customers 1,475,450 1,367,214 1,487,906 1,381,683Debt securities in issue - 12 - -Deferred tax liabilities 4,606 3,843 - 349Liabilities to customers under investment contracts 9,153 8,297 - -Liabilities under insurance contracts issued 102,770 86,275 - -Other liabilities 13,816 16,755 13,003 16,192Accruals and deferred income 18,147 15,035 17,936 14,942Provisions for liabilities and other charges 32 25 32 25Total liabilities 1,760,945 1,524,173 1,655,898 1,439,908 EquityCalled up share capital 36,480 9,120 36,480 9,120Revaluation reserves 10,629 13,105 10,629 13,041Other reserve 242 4,242 227 4,242Retained earnings 79,018 104,906 62,284 93,103Equity attributable to shareholders 126,369 131,373 109,620 119,506Minority interest - 328 - -Total equity 126,369 131,701 109,620 119,506Total liabilities and equity 1,887,314 1,655,874 1,765,518 1,559,414 Memorandum itemsContingent liabilities 59,578 51,513 59,588 51,523Commitments 456,899 401,216 456,899 412,044 Statement of Changes in Equity for the year 1 January 2006 to 31 December 2006 Attributable to shareholders of the bank Called up Reval- share uation Other Retained Minority Total capital reserves reserve earnings Total interest equity Lm000 Lm000 Lm000 Lm000 Lm000 Lm000 Lm000GroupAt 1 January 2005 9,120 11,473 4,242 109,419 134,254 - 134,254Release of net gains on available-for-sale assets transferred to the income statement on disposal - (783) - - (783) - (783)Net fair value adjustments on investments - 757 - - 757 - 757Release of revaluation reserve on disposal of property - 30 - (45) (15) - (15)Movement in deferred tax onrevaluation of property - 1,628 - - 1,628 - 1,628Income and expenses recognised directly in equity - 1,632 - (45) 1,587 - 1,587Share capital of subsidiary - - - - - 321 321Profit for the year - - - 24,057 24,057 7 24,064Dividends - - - (28,525) (28,525) - (28,525)At 31 December 2005 9,120 13,105 4,242 104,906 131,373 328 131,701 At 1 January 2006 9,120 13,105 4,242 104,906 131,373 328 131,701Release of net gains on available-for-sale assets transferred to the income statement on disposal - (796) - (973) (1,769) - (1,769)Net fair value adjustments on investments - (1,668) - - (1,668) - (1,668)Release of revaluation reserve on disposal of property - (12) - 18 6 - 6Income and expenses recognised directly in equity - (2,476) - (955) (3,431) - (3,431)Share capital of subsidiary - - - - - 91 91Disposal of subsidiary company - - - - - (432) (432)Bonus share issue 27,360 - (4,242) (23,118) - - -Profit for the year - - - 26,810 26,810 13 26,823Share-based payments - - 242 493 735 - 735Dividends - - - (29,118) (29,118) - (29,118)At 31 December 2006 36,480 10,629 242 79,018 126,369 - 126,369 Called up share Revaluation Other Retained Total capital reserves reserve earnings equity Lm000 Lm000 Lm000 Lm000 Lm000BankAt 1 January 2005 9,120 11,479 4,242 87,493 112,334Release of net gains on available-for-sale assets transferred to the income statement on disposal - (823) - - (823)Net fair value adjustments on investments - 727 - - 727Release of revaluation reserve on disposal of properties - 30 - (45) (15)Movement in deferred tax on revaluation of property - 1,628 - - 1,628Income and expenses recognised directly in equity - 1,562 - (45) 1,517Profit for the year - - - 34,180 34,180Dividends - - - (28,525) (28,525)At 31 December 2005 9,120 13,041 4,242 93,103 119,506 At 1 January 2006 9,120 13,041 4,242 93,103 119,506Release of net gains on available-for-sale assets transferred to the income statement on disposal - (796) - (973) (1,769)Net fair value adjustments on investments - (1,604) - - (1,604)Release of revaluation reserve on disposal of properties - (12) - 18 6Income and expenses recognised directly in equity - (2,412) - (955) (3,367)Bonus share issue 27,360 - (4,242) (23,118) -Effect of amalgamation of subsidiary - - - (1,995) (1,995)Profit for the year - - - 23,905 23,905Share-based payments - - 227 462 689Dividends - - - (29,118) (29,118)At 31 December 2006 36,480 10,629 227 62,284 109,620 Cash Flow Statement for the year 1 January 2006 to 31 December 2006 Group Bank 2006 2005 2006 2005 Lm000 Lm000 Lm000 Lm000 Cash flows from operating activities Interest and commission receipts 112,416 103,910 87,824 77,419Interest and commission payments (36,601) (30,381) (33,491) (28,359)Payments to employees and suppliers (31,952) (29,547) (28,770) (27,938)Operating profit before changes in operating assets/liabilities 43,863 43,982 25,563 21,122(Increase)/decrease in operating assets:Trading instruments (19,451) (11,329) (724) 419Reserve deposit with Central Bank of Malta (6,618) (1,823) (6,618) (1,823)Loans and advances to customers and banks (198,898) (46,366) (203,229) (59,490)Treasury Bills with contractual maturity of over three months (12,089) 42,144 (12,089) 42,144Other receivables (1,035) (5,475) (1,070) (5,511) Increase/(decrease) in operating liabilities:Customer accounts and amounts owed to banks 198,053 44,564 196,360 50,963Other payables (2,397) 2,444 (2,674) 3,002Net cash from/(used in) operating activities before tax 1,428 68,141 (4,481) 50,826 Tax paid (10,976) (9,784) (10,840) (8,953)Net cash flows (used in)/ from operating activities (9,548) 58,357 (15,321) 41,873Cash flows from investing activitiesDividends received 74 93 1,874 14,798Interest received from financial investments 11,333 11,799 11,752 13,149Proceeds from sale and maturity of financial investments 88,891 57,205 118,877 57,061Proceeds on sale of property, plant and equipment and intangible assets 80 264 80 255Purchase of financial investments (37,851) (37,330) (37,851) (37,330)Purchase of property, plant and equipment, investment property and intangible assets (2,311) (2,855) (2,289) (1,974)Proceeds on sale of shares in subsidiary company 450 - 450 -Purchase of shares in subsidiary companies - - - (1,500) Net cash flows from investing activities 60,666 29,176 92,893 44,459 Cash flows from financing activitiesDividends paid (29,118) (28,525) (29,118) (28,525)Decrease in debt securities in issue (12) - - -Maturity of subordinated loan stock - (19,914) - (20,000)Issue of units to minority interest 91 321 - -Cash used in financing activities (29,039) (48,118) (29,118) (48,525)Effect of amalgamation of subsidiary company on cash and cash equivalents - - (65,840) -Increase/(decrease) in cash and cash equivalents 22,079 39,415 (17,386) 37,807Effect of exchange rate changes on cash and cash equivalents (7,014) 2,558 (7,014) 2,558Net increase/(decrease) in cash and cash equivalents 29,093 36,857 (10,372) 35,249 22,079 39,415 (17,386) 37,807Cash and cash equivalents at beginning of year 136,468 97,053 175,915 138,108Cash and cash equivalents at end of year 158,547 136,468 158,529 175,915 Segmental Information a Class of business Corporate, Personal Commercial Investment Banking Financial Services Banking and Markets Total 2006 2005 2006 2005 2006 2005 2006 2005 Lm000 Lm000 Lm000 Lm000 Lm000 Lm000 Lm000 Lm000Group Profit before tax for the year ended 31 DecemberSegment operating income 38,552 33,732 26,592 23,517 10,424 11,379 75,568 68,628Segment impairment allowances (144) (507) 325 649 - - 181 142Common costs (34,354) (32,064) Profit before tax 41,395 36,706 Assets at 31December Segment total assets 679,457 582,512 651,948 610,844 555,909 462,518 1,887,314 1,655,874 Average total assets 630,984 526,728 631,396 631,983 509,214 466,209 1,771,594 1,624,920 Total equity at 31 December 37,191 38,261 77,605 79,806 11,573 13,634 126,369 131,701 b Geographical segments The group's activities are carried out within Malta. There are no identifiable geographicalsegments or other material concentrations. This information is provided by RNS The company news service from the London Stock Exchange