HSBC Bank Malta has announced that its parent company, HSBC Holdings plc, is undertaking a strategic review of its 70.03% ownership stake in the Maltese bank.
This development comes just over a year after HSBC Malta dismissed reports about its possible exit from the Maltese market as ‘speculative.’
In a company announcement issued in compliance with the Capital Markets Rules, HSBC Bank Malta stated, “HSBC Holdings plc yesterday evening informed the Board of Directors that it will undertake a strategic review of its indirect 70.03% shareholding in the Bank.” The bank however acknowledged its important role in Malta’s economy and society, pledging to make further announcements as required.
This strategic review could potentially lead to significant changes, including the sale of HSBC Holdings’ shares or alterations to its involvement in the Maltese bank.
The news of the bank’s possible exit will inevitably send ripples through Malta’s financial sector, raising questions about the future of one of the country’s major banks.
The announcement is particularly noteworthy in light of HSBC Malta’s previous denials of exit rumors. In June 2023, just 15 months ago, HSBC Malta dismissed reports of a possible exit from Malta as ‘speculative’. This came after HSBC’s global Chief Financial Officer, Georges Elhedery, told Reuters that the bank was reviewing a possible exit from as many as 12 countries.
At that time, when asked by Newsbook Malta whether Malta was one of the countries under review, HSBC Malta stated it “does not comment on rumours or speculations.” The bank had maintained a similar stance in 2020 when faced with reports of potentially winding down its Malta operations as part of Covid-19 restructuring.
The current announcement marks a significant shift from these previous denials, confirming that HSBC’s global strategy is indeed impacting its Maltese operations. It aligns with HSBC’s ongoing shift towards Asia, which has already led to planned sales or restructuring of its businesses in several countries including France, Greece, Russia, and Canada over the past two years.
Despite these strategic shifts at the global level, HSBC Malta has been performing well financially. In 2022, it reported a profit before tax of €57.3 million, a substantial increase of 113% over 2021. This followed a 157% profit rise in 2021 compared to 2020.
In 2023, the HSBC Malta achieved significant financial success, reporting a profit before tax of €133.9 million, a 141% increase from the previous year. Profits were driven by a robust 81% rise in net interest income, reaching €195.8 million, largely due to higher interest rates. The reported profit attributable to shareholders was €86.8 million, with earnings per share climbing to 24.1 cents from 10.0 cents in 2022. The bank’s return on equity improved to 17.1%, its best in over a decade. Shareholders are set to receive a total dividend of 15.0 cents per share, reflecting one of the highest payouts in ten years.
But the strategic review of HSBC Malta raises important questions about the future of the bank in Malta and the potential impacts on the local economy.
