The HSBC Group HSBC Bank Malta p.l.c. is a member of the HSBC Group, whose ultimate parent company is HSBC Holdings plc. Headquartered in London, HSBC Holdings plc is one of the largest banking and financial services organisations in the world. The HSBC Group’s international network is spread across 64 countries and territories in Europe, Asia, North America, Latin America, and the Middle East and North Africa. |
HSBC Bank Malta p.l.c. Registered in Malta: C3177 Registered Office and Head Office: 116 Archbishop Street Valletta VLT 1444 Malta Telephone: 356 2380 2380 www.hsbc.com.mt HSBC Holdings plc Registered Office and Group Head Office: 8 Canada Square London E14 5HQ United Kingdom Telephone: 44 020 7991 8888 www.hsbc.com |
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Chairman’s Statement | 2 |
Chief Executive Officer’s review | 5 |
Board of Directors and Company Secretary | 12 |
Executive Committee and Head of Internal Audit | 14 |
Report of the Directors | 17 |
Directors’ Responsibilities Statement | 30 |
Statement of compliance with the Code of Principles of Good Corporate Governance | 31 |
Remuneration Report | 39 |
Income statements | 46 |
Statements of comprehensive income | 47 |
Statements of financial position | 48 |
Statements of changes in equity | 49 |
Statements of cash flows | 51 |
Notes on the financial statements | 52 |
Five-Year comparison: Income statements and statements of comprehensive Income | 150 |
Five-Year comparison: Statements of financial position | 151 |
Five-Year comparison: Statements of cash flows | 151 |
Five-Year Comparison: Accounting ratios | 152 |
Branches and offices | 153 |
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John Bonello, CHAIRMAN AND NON-EXECUTIVE DIRECTOR Appointed Director of the bank in July 2013 and Chairman in August 2019. Member of the bank’s Remuneration and Nomination Committee, former Chairman of the bank’s Audit Committee and former Member of the bank’s Risk Committee. Mr Bonello is a Chartered Accountant and a Certified Public Accountant. He was formerly the Chairman and Senior Partner of PricewaterhouseCoopers in Malta from where he retired in December 2009. He is a Fellow of the Malta Institute of Accountants, Chairman of the Disciplinary Committee of the Institute and a Member of the Joint Disciplinary Board of the Accountancy Board. He is also a fellow member of the Institute of Chartered Accountants in England and Wales. |
Simon Vaughan Johnson, DIRECTOR AND CHIEF EXECUTIVE OFFICER Appointed Chief Executive Officer and Executive Director in July 2020. Chairman of HSBC Life Assurance (Malta) Ltd and of HSBC Global Asset Management (Malta) Limited. Joined HSBC Group in 1986. Mr Vaughan Johnson has broad and deep international banking experience as a Country Head, also working across Commercial Banking, Wealth and Personal Banking, and Global Markets. Additionally, he has worked in Financial Crime Risk, Trade Services, Payments and Cash Management, and e-Commerce. His postings span nine countries and four regions. Prior to taking up his appointment in Malta, Mr Vaughan Johnson was Head of the Remediation Management Office, HSBC France. He graduated with Honours from the University of Stirling, majoring in English and French. He is an Associate of the Chartered Institute of Bankers (‘ACIB’) and a Member of the Chartered Institute of Linguists. He is a Certified Anti-Money Laundering Specialist. |
Michel Cordina, EXECUTIVE DIRECTOR Appointed Executive Director in April 2019. Mr Cordina, formerly Head of Commercial Banking, is presently Head of Business Development and also heads the bank’s Corporate Sustainability arm and is the Deputy Chair of the HSBC Foundation. Mr Cordina is a seasoned banker and has a wealth of experience having started his banking career 41 years ago. He has worked in various areas of banking in both Personal Banking and Commercial Banking. He has also led a number of operational and support functions of the bank. He has occupied various executive roles within HSBC Bank Malta including Deputy Head of Operations and Head of Business Transformation. He was also the Programme Manager responsible for bringing the HSBC Contact Centre to Malta. In 2010, he was seconded to HSBC Commercial Banking in London where he performed the role of Head of Sales Performance. He is an Associate of the Chartered Institute of Bankers (‘ACIB’). |
Henri Mizzi, NON-EXECUTIVE DIRECTOR Appointed Director of the bank in October 2022. Member of the bank’s Audit Committee and Remuneration and Nomination Committee. Dr Mizzi is an Independent Arbitrator and Mediator and a Member of the International Chambers for Arbitrators, Mediators, Adjudicators and Dispute Board Members. He was an Associate at Camilleri Preziosi Advocates between 1989 and 1994 and became Partner in 1995 till 2020. In 1988 he obtained his Doctor of Laws Degree from the University of Malta. He then obtained his Master Degree from the University of Cambridge (Trinity Hall) in 1988 and became a CEDR Accredited Member in 2021. |
Yiannos Michaelides, NON-EXECUTIVE DIRECTOR Appointed Director of the bank in May 2017. Presently Member of the bank’s Risk Committee. Mr Michaelides has over 28 years of international business experience involving telecoms and media as CEO and holder of other Executive positions. He is currently CEO of Cablenet Communication Systems Ltd. Till 31 March 2017, Mr Michaelides occupied the post of Group CEO of GO p.l.c. Before joining GO p.l.c. he was Senior Executive at EITL Dubai (a Dubai Holding subsidiary), with responsibilities including portfolio management and value creation at EITL portfolio companies. Prior to that, he worked as Vice- president of Strategic Marketing at du in Dubai, the new integrated telecoms operator in the UAE, Areeba, the second mobile operator in Cyprus and Nortel Networks in North America and EMEA. Mr Michaelides holds a B.Eng. (Honours), M.Eng. from McGill University (Montreal, Canada) and an M.B.A. with distinction from Warwick Business School (UK). |
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Ingrid Azzopardi, NON-EXECUTIVE DIRECTOR Appointed Director of the bank in August 2019. She is a Chartered Director and is the Chairperson of the bank’s Audit Committee and Member of the bank’s Risk Committee. A former Director of HSBC Life Assurance (Malta) Ltd and former Chairperson of the Audit and Risk Committee of said company. Ms Azzopardi is presently the Group Internal Auditor of GO p.l.c., a position she has occupied since November 2000. She has chaired various committees at GO p.l.c., including the Group Fraud Forum and the Gender Equality Committee. She is a Certified Public Accountant and Auditor, a Fellow of the Malta Institute of Accountants, a Fellow of the UK Institute of Directors, and also a Member of the Institute of Internal Auditors. |
Maria Micallef, NON-EXECUTIVE DIRECTOR Appointed as Director in December 2022. Currently, Ms Micallef is the Chairperson of the bank’s Remuneration and Nomination Committee, and Member of the bank’s Audit Committee. She was the Managing Partner at RSM Malta until her retirement in December 2020. Ms Micallef specialised in business advisory services including mergers and acquisitions, corporate finance, valuations and investment appraisals. She is a visiting lecturer at the University of Malta. Currently Ms Micallef is pursuing a Degree in Humanities at the same University. Ms Micallef has a B.A. Hons Accountancy degree and is a Certified Public Accountant. She is a fellow of the Malta Institute of Accountants, a member of the US Institute of Internal Auditors and a member of the Association of Certified Fraud Examiners. Ms Micallef served as President of the Malta Institute of Accountants during the period 2013 to 2015. |
Manfred Galdes, NON-EXECUTIVE DIRECTOR Appointed Director of the bank in January 2021. Dr Galdes is the Chairman of the bank’s Risk Committee. He is the managing partner of the ARQ Group, a multi-disciplinary advisory firm. After graduating as a lawyer (LL.D.) from the University of Malta, he obtained a Masters Degree (LL.M.) in European (Commercial) Law at the University of Leicester. Dr Galdes has spent the last 22 years practicing in the area of regulatory and financial crime compliance having held various leading roles both in the private and public sector. Between 2008 and 2016, Dr Galdes headed the FIAU, Malta’s financial intelligence unit and principal AML/CFT supervisory authority. |
Terecina Kwong, NON-EXECUTIVE DIRECTOR Appointed as Director in December 2022. Ms Kwong started her career at the HSBC Group via the Hong Kong Management Associate Programme in 2000. She has held several senior positions within HSBC including Global Head of Channels Distribution, Global Commercial Banking Chief Risk and Administration Officer, Global Control Office Chief Operating Officer and Head of Centre of Excellence, Group Head of Operational Management and Chief Operating Office at HSBC China. She is currently Chief Operating Officer, HSBC Bank plc and HSBC Europe and a Non-Executive Director of HSBC Armenia. In 1997 she obtained a Bachelor of Arts Degree (Economics) from the University of British Columbia, Vancouver, Canada. In 1999 she graduated with Master of Business Administration from the Chinese University of Hong Kong. She also graduated in 2007 with a Bachelor of Law from the University of London and is a Fellow CPA, CPA Australia. |
Paula Mamo, COMPANY SECRETARY Company Secretary of HSBC Bank Malta p.l.c. since May 2022. Dr Mamo joined the bank in February 2018 as Deputy Company Secretary supporting the Company Secretary. She was appointed Company Secretary for the two subsidiary companies of the bank, HSBC Life Assurance (Malta) Ltd and HSBC Global Asset Management (Malta) Limited in May 2018. Prior to joining HSBC, Dr Mamo progressed through a number of roles primarily within legal, regulatory compliance and financial crime compliance, with other licensed financial institutions. She graduated as Doctor of Laws from the University of Malta in 2010. |
HSBC Bank Malta p.l.c. Annual Report and Accounts 2022 | 13 |
Simon Vaughan Johnson, DIRECTOR AND CHIEF EXECUTIVE OFFICER Appointed Chief Executive Officer and Executive Director in July 2020. Chairman of HSBC Life Assurance (Malta) Ltd and of HSBC Global Asset Management (Malta) Limited. Joined HSBC Group in 1986. Mr Vaughan Johnson has broad and deep international banking experience as a Country Head, also working across Commercial Banking, Wealth and Personal Banking, and Global Markets. Additionally, he has worked in Financial Crime Risk, Trade Services, Payments and Cash Management, and e-Commerce. His postings span nine countries and four regions. Prior to taking up his appointment in Malta, Mr Vaughan Johnson was Head of the Remediation Management Office, HSBC France. He graduated with Honours from the University of Stirling, majoring in English and French. He is an Associate of the Chartered Institute of Bankers (‘ACIB’) and a Member of the Chartered Institute of Linguists. He is a Certified Anti-Money Laundering Specialist. |
Elizabeth Hardy, CHIEF OPERATING OFFICER Appointed Chief Operating Officer in February 2021. In 2022, Mrs Hardy celebrated 40 years of international experience within the HSBC Group. She joined Midland Bank in the UK in 1982 and has held a variety of managerial roles in Personal Banking, Audit, Risk, Human Resources and Operations. Mrs Hardy held the position of Chief Operating Officer for Kazakhstan, Russia and Italy prior to taking up her role in Malta. |
Charlotte Cilia, CHIEF FINANCIAL OFFICER Appointed Chief Financial Officer in December 2020. Mrs Cilia is a certified public accountant and auditor with over 20 years of varied experience across audit and banking finance. She joined the HSBC Finance team as a senior manager in 2010 where she worked for four years and re-joined the bank in 2018 as Chief Accounting Officer and Deputy Chief Financial Officer. She served as Deputy Chief Financial Officer during her four years at MeDirect Group until 2018. Previously an auditor at KPMG in Malta and the UK where she performed key roles on various international engagements. She is a Director on the Board of HSBC Life Assurance (Malta) Ltd. |
Alvaro Luis Teixeira, HEAD OF WEALTH AND PERSONAL BANKING Mr. Teixeira was appointed Head of Wealth and Personal Banking in June 2022, pending regulatory approvals, and has a career spanning 30 years, 7 countries and many different areas of both wholesale and retail banking and wealth management. He joined HSBC in 2010 and has had roles in Brazil, Hong Kong, Mexico, USA and UK, managing large business units, such as Wealth and Private Clients in Mexico as well as large global programs, such as Wealth Transformation. He also served in the boards of some of HSBC’s Insurance, Asset Management and Private Banking subsidiaries. Previously he spent nearly 20 years in trading desks in Brazil, USA and Canada. Mr Teixeira was trained as an economist in Brazil and then studied organisational behaviour in France and the UK. |
Michel Cordina, EXECUTIVE DIRECTOR AND HEAD OF BUSINESS DEVELOPMENT Appointed Executive Director in April 2019. Mr Cordina, formerly Head of Commercial Banking, is presently Head of Business Development and also heads the bank’s Corporate Sustainability arm and is the Deputy Chair of the HSBC Foundation. Mr Cordina is a seasoned banker and has a wealth of experience having started his banking career 41 years ago. He has worked in various areas of banking in both Personal Banking and Commercial Banking. He has also led a number of operational and support functions of the bank. He has occupied various executive roles within HSBC Bank Malta including Deputy Head of Operations and Head of Business Transformation. He was also the Programme Manager responsible for bringing the HSBC Contact Centre to Malta. In 2010, he was seconded to HSBC Commercial Banking in London where he performed the role of Head of Sales Performance. He is an Associate of the Chartered Institute of Bankers (‘ACIB’). |
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Jesmond Apap, HEAD OF GLOBAL MARKETS Appointed Head of Global Markets in April 2020. Joined the bank in 1989, then Mid-Med Bank. During his career Mr Apap has held a number of key roles that have seen him successfully drive transformation and performance. Mr Apap started his career in Operations before moving to Markets. Prior to his role as Head of Global Markets, Mr Apap headed Markets Treasury, managing cash, liquidity, funding and the structural interest rate risk for the bank. |
Caroline Buhagiar Klass, HEAD OF HUMAN RESOURCES Appointed Head of Human Resources in April 2018. In 2022, in addition to her HR responsibilities in Malta, she took over regional HR responsibilities for Commercial Banking across HSBC Europe. Ms Buhagiar Klass began her HR career with ST Microelectronics in Malta in the 1990s before moving overseas in 2004 to work for ST in Italy and then France. In 2010 she moved to Singapore, initially with ST before becoming the Head of Talent and Leadership Development for AXA Insurance. Towards the end of 2015 she returned to Malta and established her own HR consultancy, working with a range of local businesses before joining HSBC Bank Malta p.l.c. |
Joyce Grech, HEAD OF COMMERCIAL BANKING Ms Grech has occupied a number of roles, primarily in Malta, during her 26 year career with HSBC. She has been heading Commercial Banking team for three years, during which she has implemented a number of changes, reshaping the team to ensure there is a focus on customer needs. Prior to her current role, she gained experience in various areas of Risk through a number of positions within the Risk department, and became the Bank’s Chief Risk Officer in 2013, a role she occupied for 6 years. In previous roles, she led Customer Value Management within the bank’s Personal Banking area for a number of years. She had also worked in the Trade Finance and Commercial Banking areas. A strong supporter of diversity and inclusion in its various forms, she is the chairperson of the bank’s Diversity and Inclusion Committee. She is particularly involved in gender diversity and aims to support female colleagues through mentoring and other initiatives and activities. |
Steven Beddow, CHIEF RISK OFFICER Mr Beddow was appointed Chief Risk Officer in November 2022. Mr Beddow holds a Bachelor and Master’s Degree from the University of Oxford in Modern Languages. He has over 20 years of experience within the HSBC Group and has worked in a number of locations across Europe, Asia, the Middle East and the Americas. Mr Beddow has previously held a number of banking related Director positions, served on different country level executive committees, led transformation work, and co- sponsored a country level diversity and inclusion committee. He is passionate about staff development and mentoring. |
Joseph Sammut, GENERAL COUNSEL Appointed General Counsel in July 2016. Joined the bank in 1981, then Mid-Med Bank, and subsequently read law at the University of Malta, where he graduated in 1988. He obtained his postgraduate degree in European Law at the College of Europe in Bruges in 1989. At the bank’s Legal Office he worked for some years as a contracts lawyer and subsequently focused mainly on financial services. Since 1999, he was entrusted with leading the legal advice team and in 2010 worked at HSBC Head Office in London on a short-term legal assignment. He was appointed Deputy General Counsel in 2012. |
HSBC Bank Malta p.l.c. Annual Report and Accounts 2022 | 15 |
Mandy Falzon, CHIEF COMPLIANCE OFFICER Appointed as Chief Compliance Officer in March 2021, leading the Regulatory Compliance and Financial Crime Compliance teams at HSBC Malta. She graduated as a Doctor of Laws from the University of Malta in 2005, and has 16 years’ experience in banking and financial services at HSBC. Dr Falzon held managerial positions within the HSBC Malta Legal Office prior to joining the Regulatory Compliance function in 2015 in a senior management position. She is a Director on the Board of HSBC Global Asset Management (Malta) Limited. |
Carine Arpa, HEAD OF COMMUNICATIONS Ms Arpa was appointed Head of Communications in January 2019, bringing over 15 years of experience in the fields of communications, marketing and media relations. Ms Arpa has undertaken a number of different roles in the course of her career, including leading communications and marketing campaigns for the National Euro Changeover Committee, the European Commission Representation in Malta, KPMG and EY. She holds a Bachelor of Arts in Psychology and Communication Studies (Honours), a Master's Degree in European Studies and an MBA (Henley). |
Paula Mamo, COMPANY SECRETARY Company Secretary of HSBC Bank Malta p.l.c. since May 2022. Dr Mamo joined the bank in February 2018 as Deputy Company Secretary supporting the Company Secretary. She was appointed Company Secretary for the two subsidiary companies of the bank, HSBC Life Assurance (Malta) Ltd and HSBC Global Asset Management (Malta) Limited in May 2018. Prior to joining HSBC, Dr Mamo progressed through a number of roles primarily within legal, regulatory compliance and financial crime compliance, with other licensed financial institutions. She graduated as Doctor of Laws from the University of Malta in 2010. |
Morgan Carabott, HEAD OF INTERNAL AUDIT In September 2021, the Bank announced the appointment of Morgan Carabott as Head of Internal Audit. Ms Carabott joined the Bank as Deputy Head of Internal Audit in 2018. Prior to joining the Bank she spent seven years as a Senior Internal Auditor within the Insurance industry and was an external auditor with one of the big four audit firms. Ms Carabott is a warranted Accountant and Auditor and is also a Certified Information Systems Auditor and Certified Anti-Money Laundering Specialist. She is a Member of the Malta Bankers Association Executive Committee and a Fellow of the Malta Institute of Accountants. She has strong auditing skills and sound industry knowledge coupled with extensive experience in managing numerous audit assignments across different sectors. |
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HSBC Bank Malta p.l.c. Annual Report and Accounts 2022 | 17 |
2022 | 2021 | |
Profit before tax (reported) (€m) | 57.3 | 26.9 |
Profit before tax (adjusted) (€m) | 58.8 | 29.7 |
Cost efficiency ratio (reported) (%) | 68.4 | 80.3 |
Cost efficiency ratio (adjusted) (%) | 67.4 | 78.2 |
Post-tax return on equity (reported) (%) | 7.6 | 3.7 |
Post-tax return on equity (adjusted) (%) | 7.8 | 4.0 |
Common Equity Tier 1 ratio (%) | 18.5 | 18.4 |
18 | HSBC Bank Malta p.l.c. Annual Report and Accounts 2022 |
HSBC Bank Malta p.l.c. Annual Report and Accounts 2022 | 19 |
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31 Dec 2022 | 31 Dec 2021 | |||
Mandatory as proportion of total assets | Voluntary as proportion of total assets | Mandatory as proportion of total assets | Voluntary as proportion of total assets | |
% | % | % | % | |
Exposures towards taxonomy relevant sectors (Taxonomy eligible) | 33 | 33 | 35 | 35 |
Exposures towards taxonomy non-relevant sectors (Taxonomy non-eligible) | 5 | 5 | 2 | 2 |
Exposures to Counterparties not subject to NFRD3 disclosure obligations | 13 | 13 | 18 | 18 |
Exposures to central governments, central banks and supranational issuers and derivatives | 19 | 19 | 20 | 20 |
Trading portfolio and On-demand interbank loans | 5 | 5 | 4 | 4 |
Other assets | 25 | 25 | 21 | 21 |
Total Assets | 100 | 100 | 100 | 100 |
HSBC Bank Malta p.l.c. Annual Report and Accounts 2022 | 21 |
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HSBC Bank Malta p.l.c. Annual Report and Accounts 2022 | 23 |
HSBC Values and risk culture | ||||||||||
Risk governance | Non-executive risk governance | The Board approves the bank’s risk appetite, plans and performance targets. It sets the ‘tone from the top’ and is advised by the Risk Committee. | ||||||||
Executive risk governance | Our executive risk governance structure is responsible for the enterprise- wide management of all risks, including key policies and frameworks for the management of risk within the bank. | |||||||||
Roles and responsibilities | Three lines of defence model | Our ‘three lines of defence’ model defines roles and responsibilities for risk management. An independent Risk function helps ensure the necessary balance in risk/return decisions. | ||||||||
Processes and tools | Risk appetite | The local group has processes in place to identify/assess, monitor, manage and report risks to help ensure we remain within our risk appetite. | ||||||||
Enterprise-wide risk management tools | ||||||||||
Active risk management: identification/assessment, monitoring, management and reporting | ||||||||||
Internal controls | Policies and procedures | Policies and procedures define the minimum requirements for the controls required to manage our risks. | ||||||||
Control activities | Operational and resilience risk management defines minimum standards and processes for managing operational risks and internal controls. | |||||||||
Systems and infrastructure | HSBC has systems and/or processes that support the identification, capture and exchange of information to support risk management activities. | |||||||||
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HSBC Bank Malta p.l.c. Annual Report and Accounts 2022 | 25 |
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HSBC Bank Malta p.l.c. Annual Report and Accounts 2022 | 27 |
At 31 Dec 2022 | |
No. of shares | |
John Bonello | 40,742 |
Michel Cordina | 4,198 |
At 31 Jan 2023 | ||
Total shareholders | Shares | |
Range of shareholding | ||
1 – 500 | 1,495 | 447,558 |
501 – 1,000 | 1,147 | 864,050 |
1,001 – 5,000 | 3,794 | 9,694,406 |
5,001 and over | 2,656 | 349,300,085 |
Total shareholding | 9,092 | 360,306,099 |
John Bonello |
Simon Vaughan Johnson |
Andrew Muscat (resigned on 13th April 2022) |
Henri Mizzi (appointed on 24th October 2022) |
Sue Vella (resigned on 1st December 2022) |
Maria Micallef (appointed on 1st December 2022) |
Yiannos Michaelides |
Michel Cordina |
Ingrid Azzopardi |
Manfred Galdes |
Matthew Colebrook (resigned on 28th February 2022) |
Terecina Kwong (appointed on 6th December 2022) |
John Bonello | 1 Non-Executive chairmanship |
Simon Vaughan Johnson | 1 Executive Directorship and 2 Non-Executive directorships all within the same Group |
Michel Cordina | 1 Executive Directorship |
Henri Mizzi | 3 Non-Executive Directorships within the same Group and 2 Non-Executive Directorships. |
Terecina Kwong | |
Ingrid Azzopardi | 1 Non-Executive Directorship |
Maria Micallef | 1 Executive Directorship and 2 Non-Executive Directorships |
Yiannos Michaelides | 1 Executive Directorship and 1 Non-Executive Directorship |
Manfred Galdes | 2 Executive Directorships within the same Group and 2 Non-Executive Directorships. |
28 | HSBC Bank Malta p.l.c. Annual Report and Accounts 2022 |
John Bonello | Accountancy and Audit |
Simon Vaughan Johnson | Banking and Finance |
Michel Cordina | Banking and Finance |
Terecina Kwong | Banking and Finance |
Henri Mizzi | Commercial and Finance Law |
Ingrid Azzopardi | Accountancy and Audit |
Maria Micallef | Accountancy and Audit |
Yiannos Michaelides | Information Technology |
Manfred Galdes | Financial and Anti-Money Laundering Legislation |
Simon Vaughan Johnson | Chief Executive Officer |
Elizabeth Hardy | Chief Operating Officer |
Charlotte Cilia | Chief Financial Officer |
Alvaro L Teixeira | Head of Wealth and Personal Banking |
Michel Cordina | Head of Business Development |
Jesmond Apap | Head of Global Markets |
Caroline Buhagiar Klass | Head of Human Resources CMB Europe and Malta |
Joyce Grech | Head of Commercial Banking |
Joseph Sammut | General Counsel |
Steven M Beddow | Chief Risk Officer |
Mandy Falzon | Chief Compliance Officer |
Carine Arpa | Head of Communications |
Paula Mamo | Company Secretary |
Morgan Carabott | Head of Internal Audit |
HSBC Bank Malta p.l.c. Annual Report and Accounts 2022 | 29 |
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HSBC Bank Malta p.l.c. Annual Report and Accounts 2022 | 31 |
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Attended | |
Ingrid Azzopardi | 5 out of 5 |
Andrew Muscat | 2 out of 2 |
Sue Vella | 5 out of 5 |
Henri Mizzi | 1 out of 1 |
Maria Micallef | Not applicable |
HSBC Bank Malta p.l.c. Annual Report and Accounts 2022 | 33 |
Attended | |
Manfred Galdes | 8 out of 8 |
Ingrid Azzopardi | 8 out of 8 |
Yiannos Michaelides | 5 out of 8 |
34 | HSBC Bank Malta p.l.c. Annual Report and Accounts 2022 |
Attended | |
John Bonello | 10 out of 10 |
Simon Vaughan Johnson | 10 out of 10 |
Michel Cordina | 10 out of 10 |
Yiannos Michaelides | 7 out of 10 |
Andrew Muscat | 3 out of 3 |
Manfred Galdes | 10 out of 10 |
Sue Vella | 8 out of 8 |
Ingrid Azzopardi | 10 out of 10 |
Matthew Colebrook | 3 out of 3 |
Henri Mizzi | 2 out of 2 |
Maria Micallef | 2 out of 2 |
Terecina Kwong | 1 out of 2 |
HSBC Bank Malta p.l.c. Annual Report and Accounts 2022 | 35 |
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HSBC Bank Malta p.l.c. Annual Report and Accounts 2022 | 37 |
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Attended | |
Sue Vella | 9 out of 9 |
John Bonello | 9 out of 9 |
Andrew Muscat | 5 out of 5 |
Henri Mizzi | Not applicable |
Maria Micallef | Not applicable |
HSBC Bank Malta p.l.c. Annual Report and Accounts 2022 | 39 |
Description | Purpose, relevant features and link to strategy |
Fixed Pay | Fixed pay reflects the individual’s role, experience and responsibility. It comprises the base salary and in some cases a fixed pay allowance and/or a pension. |
Base salary | |
Base salaries are paid in cash on a monthly basis and are benchmarked on an annual basis against relevant comparator groups. | |
Fixed pay allowance | |
This is typically paid in cash on a monthly basis. | |
Pensions | |
These consist of cash allowances in lieu of personal/occupational pension arrangements of international assignees appointed to Executive Director or Senior Management positions. An employee pension plan scheme is offered to all local employees subject to the terms and conditions of the scheme. | |
Benefits | Benefits take account of local market practices and include the provision of medical insurance, health assessment, life assurance, and tax assistance where appropriate. |
Variable Pay – annual incentive | Variable pay award is discretionary, and is determined and paid in line with internal bank policies and procedures. Variable pay awards are made to drive and reward performance against annual financial and non-financial measures and adherence to HSBC Values which are consistent with the medium to long-term strategy and aligns to shareholder interests. |
Performance targets are set taking into account the economic environment, strategic priorities and risk appetite. The bank has two rating scales to measure performance of employees: a four rating scale measuring performance targets achieved and another four rating scale measuring and assessing the behaviour of employees in line with the HSBC values. All employees receive a behaviour rating as well as a performance rating, which ensures performance is assessed not only on what is achieved but also how it is achieved. Each department comes together every year to calibrate the ratings given to employees to ensure a fair, consistent and bias free assessment. This exercise ensures that the process is transparent and fair across the bank. Performance reporting tools are available to all line managers for the purpose of undertaking an analytical review of the variable pay decisions for them. Variable pay is delivered in the form of cash and shares in HSBC Bank Holdings plc. | |
Individuals in control functions are assessed according to the objectives specific to the functional role they undertake, to ensure their remuneration is determined independent of the performance of the business areas they control. | |
Where variable pay for Identified Staff is more than €50,000 or where variable pay is greater than 33% of Total Compensation, a minimum of 50% of awards are made in shares. Variable pay is restricted to a maximum of 100% of fixed pay. | |
A substantial portion, and in any event at least 40 %, of the variable remuneration component, are subject to deferral and vested over a period which is not less than four years for Non Senior Management and not less than five years for Senior Management. This portion is correctly aligned with the nature of the business, its risks and the activities of the staff members concerned. | |
The award is non-pensionable. |
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Type of action | Type of variable pay awarded affected | Circumstances where action may apply (including, but not limited to): |
Adjustment | Current year variable pay | •Detrimental conduct or conduct which brings the business into disrepute. |
•Involvement in Group-wide events resulting in significant operational losses, including events which have caused or have the potential to cause significant harm to HSBC. | ||
•Non-compliance with HSBC Values and other mandatory requirements. | ||
•Failure to complete mandatory learning. | ||
Malus | Unvested deferred awards granted in prior years | •Detrimental conduct or conduct which brings the business into disrepute. |
•Past performance being materially worse than originally reported. | ||
•Restatement, correction or amendment of any financial statements. | ||
•Improper or inadequate risk management. | ||
Clawback | Vested or paid awards | •Participation in or responsibility for conduct which results in significant losses. |
•Failing to meet appropriate standards of fitness and propriety. | ||
•Reasonable evidence of misconduct or material error that would justify, or would have justified, summary termination of a contract of employment. | ||
•HSBC or a business unit suffers a material failure of risk management within the context of Group risk management standards, policies and procedures. |
280,826,046 votes (99.82%) | |
255,305 votes (0.09%) | |
257,296 votes (0.09%) |
HSBC Bank Malta p.l.c. Annual Report and Accounts 2022 | 41 |
Simon Vaughan Johnson | Michel Cordina | |||
2022 | 2021 | 2022 | 2021 | |
€ | € | € | € | |
Fixed pay | 452,998 | 446,692 | 147,467 | 147,666 |
Variable pay: | ||||
– Immediate Cash | 66,932 | 70,454 | 43,000 | 34,850 |
– Immediate Shares* | 66,932 | 70,454 | — | — |
– Deferred Cash | 44,621 | 46,970 | — | — |
– Deferred Shares* | 44,621 | 46,970 | — | — |
Benefits | 124,542 | 130,510 | 12,253 | 12,184 |
Aggregate | 800,646 | 812,050 | 202,720 | 194,700 |
Effective period | 01/01/22- 31/12/22 | 01/01/21- 31/12/21 | 01/01/22- 31/12/22 | 01/01/21- 31/12/21 |
2021/2022 | 2020/2021 | |
Percentage annual change in remuneration | ||
Simon Vaughan Johnson1 | (1)% | 9% |
Michel Cordina2 | 4% | 10% |
Percentage annual change of the bank’s performance3 | 76% | 47% |
Percentage annual change of the average remuneration of the bank’s employees, on a full-time equivalent basis4 | 6% | 5% |
Grant Date | Share Value € | Number of Shares | Performance Period | |
Immediate Shares | 01/03/2022 | 70,454 | 11,286 | 2021 |
Deferred Shares* | 01/03/2022 | 46,970 | 8,719 | 2021 |
Value of Total Variable Pay | Deferral % of variable pay is subject to variance and is split between cash and shares |
Up to €50,000, provided that total variable pay does not exceed total fixed pay. | 0% |
Above €50,000 up to €500,000 or amounts below €50,000 where variable pay is greater than 33% of Total Compensation. | 40% |
Above €500,000 | 60% |
42 | HSBC Bank Malta p.l.c. Annual Report and Accounts 2022 |
2022 Fees | 2021 Fees | |
€ | € | |
John Bonello | 74,400 | 74,400 |
Andrew Muscat | 13,024 | 45,600 |
Sue Vella | 42,900 | 46,800 |
Yiannos Michaelides | 39,600 | 39,600 |
Ingrid Azzopardi | 59,700 | 59,700 |
Manfred Galdes | 50,400 | 50,400 |
Henri Mizzi | 32,523 | N/A |
Maria Micallef | 8,231 | N/A |
Total | 320,778 | 316,500 |
HSBC Bank Malta p.l.c. Annual Report and Accounts 2022 | 43 |
MB Supervisory function | MB Management function | Other senior management | Other Identified Staff | |||
1 | Fixed remuneration | Number of Identified Staff | 6 | 2 | 12 | 36 |
2 | Total fixed remuneration (€000) | 321 | 737 | 1,925 | 2,556 | |
3 | – of which: cash-based (€000) | 321 | 597 | 1,766 | 2,279 | |
EU-5x | – of which: other instruments (€000) | — | 3 | 11 | 74 | |
7 | – of which: other forms (€000) | — | 137 | 148 | 203 | |
9 | Variable remuneration | Number of Identified Staff | 6 | 2 | 12 | 36 |
10 | Total variable remuneration (€000) | — | 266 | 466 | 282 | |
11 | – of which: cash-based (€000) | — | 109 | 277 | 282 | |
12 | – of which: deferred (€000) | — | 45 | 54 | — | |
EU-13a | – of which: shares or equivalent ownership interests (€000) | — | 67 | 81 | — | |
EU-14a | – of which: deferred (€000) | — | 45 | 54 | — | |
17 | Total remuneration for the year ended 31 December 2022 (€000) | 321 | 1,003 | 2,391 | 2,838 |
44 | HSBC Bank Malta p.l.c. Annual Report and Accounts 2022 |
Deferred and retained remuneration | Total amount of deferred remuneration awarded for previous performance periods | Of which due to vest in the financial year | Of which vesting in subsequent financial years | Amount of performance adjustment made in the financial year to deferred remuneration that was due to vest in the financial year | Amount of performance adjustment made in the financial year to deferred remuneration that was due to vest in future performance years | Total amount of adjustment during the financial year due to ex post implicit adjustments (i.e. changes of value of deferred remuneration due to the changes of prices of instruments) | Total amount of deferred remuneration awarded before the financial year actually paid out in the financial year | Total of amount of deferred remuneration awarded for previous performance period that has vested but is subject to retention periods | |
€000 | €000 | €000 | €000 | €000 | €000 | €000 | €000 | ||
7 | MB Management function | ||||||||
8 | Cash-based | 132 | 41 | 91 | — | — | — | 42 | — |
9 | Shares or equivalent ownership interests | 171 | 63 | 108 | — | — | 8 | 64 | 24 |
13 | Other senior management | ||||||||
14 | Cash-based | 22 | 2 | 20 | — | — | — | 2 | — |
15 | Shares or equivalent ownership interests | 90 | 26 | 64 | — | — | 2 | 27 | 2 |
18 | Other forms | — | — | — | — | — | — | — | — |
25 | Total amount as at 31 December 2022 | 415 | 132 | 283 | — | — | 10 | 135 | 26 |
Management body remuneration | Business areas | All other | Total as at 31 December 2022 | ||||||||
MB Supervisory function | MB Management function | Total MB | Investment banking | Retail banking | Asset management | Corporate functions | Independent internal control functions | ||||
1 | Total number of Identified Staff | 6 | 2 | 8 | 2 | 5 | 9 | 17 | 13 | 2 | 56 |
2 | – of which: members of the MB (€000) | 6 | 2 | 8 | — | — | — | — | — | — | 8 |
3 | – of which: other senior management (€000) | — | — | — | 1 | 2 | — | 6 | 2 | 1 | 12 |
4 | – of which: other Identified Staff (€000) | — | — | — | 1 | 3 | 9 | 11 | 11 | 1 | 36 |
5 | Total remuneration of Identified Staff (€000) | 321 | 1,003 | 1,324 | 194 | 1,084 | 569 | 1,937 | 1,096 | 349 | 6,553 |
6 | – of which: variable remuneration (€000) | — | 266 | 266 | 42 | 264 | 53 | 232 | 147 | 10 | 1,014 |
7 | – of which: fixed remuneration (€000) | 321 | 737 | 1,058 | 152 | 820 | 516 | 1,705 | 949 | 339 | 5,539 |
HSBC Bank Malta p.l.c. Annual Report and Accounts 2022 | 45 |
Group | Bank | ||||
2022 | 2021 | 2022 | 2021 | ||
Notes | €000 | €000 | €000 | €000 | |
Interest and similar income | |||||
– on loans and advances to banks and customers and other financial assets | 7 | 113,947 | 103,593 | ||
– on debt and other fixed income instruments | 7 | 2,692 | 2,117 | ||
Interest expense | 8 | ( | ( | (8,397) | (7,952) |
Net interest income | 108,242 | 97,758 | |||
Fee income | 22,390 | 22,380 | |||
Fee expense | ( | ( | (3,213) | (1,234) | |
Net fee income | 9 | 19,177 | 21,146 | ||
Net trading income | 10 | 7,689 | 5,534 | ||
Net (expense)/income from financial instruments of insurance operations measured at fair value through profit or loss | ( | — | — | ||
Dividend income from subsidiaries | 11 | 1,308 | 1,462 | ||
Net insurance premium income | 12 | — | — | ||
Movement in present value of in-force long-term insurance business | ( | — | — | ||
Other operating income | 13 | 1,514 | 1,402 | ||
Total operating income | 137,930 | 127,302 | |||
Net insurance claims and benefits paid and movement in liabilities to policyholders | 14 | ( | — | — | |
Net operating income before change in expected credit losses and other credit impairment charges | 137,930 | 127,302 | |||
Change in expected credit losses and other credit impairment charges | 15 | 9,643 | 995 | ||
Net operating income | 147,573 | 128,297 | |||
Employee compensation and benefits | 16 | ( | ( | (37,784) | (39,843) |
General and administrative expenses | 17 | ( | ( | (49,172) | (51,157) |
Depreciation of property, plant and equipment and right-of-use assets | 32,31 | ( | ( | (3,300) | (3,675) |
Amortisation and impairment of intangible assets | 33 | ( | ( | (4,757) | (3,801) |
Total operating expenses | ( | ( | (95,013) | (98,476) | |
Profit before tax | 17 | 52,560 | 29,821 | ||
Tax expense | 18 | ( | ( | (18,053) | (10,158) |
Profit for the year | 34,507 | 19,663 | |||
Earnings per share | 19 | € | € |
46 | HSBC Bank Malta p.l.c. Annual Report and Accounts 2022 |
Group | Bank | ||||
2022 | 2021 | 2022 | 2021 | ||
Notes | €000 | €000 | €000 | €000 | |
Profit for the year | 34,507 | 19,663 | |||
Other comprehensive income | |||||
Items that will be reclassified subsequently to profit or loss when specific conditions are met: | |||||
Debt instruments measured at fair value through other comprehensive income: | ( | ( | (23,177) | (6,095) | |
– fair value losses | 46 | ( | ( | (35,657) | (9,377) |
– income taxes | 46 | 12,480 | 3,282 | ||
Items that will not be reclassified subsequently to profit or loss: | |||||
Properties: | 166 | 2,150 | |||
– surplus arising on revaluation | 46 | 185 | 2,389 | ||
– income taxes | 46 | ( | ( | (19) | (239) |
Post employment benefit obligations: | 893 | 292 | |||
– remeasurement of post employment benefit obligations | 41 | 1,374 | 450 | ||
– income taxes | ( | ( | (481) | (158) | |
Equity instruments designated at fair value through other comprehensive income: | 1 | 1 | |||
– fair value gains | 46 | 2 | 2 | ||
– income taxes | 46 | ( | ( | (1) | (1) |
Other comprehensive income for the year, net of tax | ( | ( | (22,117) | (3,652) | |
Total comprehensive income for the year | 12,390 | 16,011 |
HSBC Bank Malta p.l.c. Annual Report and Accounts 2022 | 47 |
Group | Bank | ||||
2022 | 2021 | 2022 | 2021 | ||
Notes | €000 | €000 | €000 | €000 | |
Assets | |||||
Balances with Central Bank of Malta, Treasury Bills and cash | 20 | 1,584,861 | 1,496,407 | ||
Items in the course of collection from other banks | 6,921 | 4,453 | |||
Financial assets mandatorily measured at fair value through profit or loss | 21 | — | — | ||
Derivatives | 22 | 25,745 | 4,640 | ||
Loans and advances to banks | 23 | 726,217 | 613,062 | ||
Loans and advances to customers | 24 | 3,175,167 | 3,196,725 | ||
Financial investments | 25 | 1,004,768 | 845,733 | ||
Prepayments and accrued income | 26 | 17,535 | 17,591 | ||
Current tax assets | 1,363 | 1,353 | |||
Reinsurance assets | 27 | — | — | ||
Other non-current assets held for sale | 28 | 5,173 | 6,673 | ||
Investments in subsidiaries | 29 | 30,859 | 30,859 | ||
Investment property | 30 | — | — | ||
Right-of-use assets | 31 | 2,459 | 2,569 | ||
Property, plant and equipment | 32 | 44,623 | 41,921 | ||
Intangible assets | 33 | 18,604 | 16,022 | ||
Deferred tax assets | 34 | 35,620 | 29,119 | ||
Other assets | 35 | 9,965 | 4,848 | ||
Total assets | 6,689,880 | 6,311,975 | |||
Liabilities | |||||
Deposits by banks | 36 | 2,861 | 1,397 | ||
Customer accounts | 37 | 6,010,392 | 5,657,681 | ||
Items in the course of transmission to other banks | 27,397 | 21,573 | |||
Derivatives | 22 | 10,252 | 4,592 | ||
Accruals and deferred income | 38 | 22,279 | 17,634 | ||
Current tax liabilities | 2,104 | — | |||
Liabilities under investment contracts | 39 | — | — | ||
Liabilities under insurance contracts | 40 | — | — | ||
Provisions | 41 | 18,830 | 20,122 | ||
Deferred tax liabilities | 34 | 3,569 | 3,722 | ||
Borrowings from a group undertaking | 42 | 60,000 | 60,000 | ||
Subordinated liabilities | 43 | 62,000 | 62,000 | ||
Other liabilities | 44 | 11,067 | 8,395 | ||
Total liabilities | 6,230,751 | 5,857,116 | |||
Equity | |||||
Called up share capital | 45 | 108,092 | 108,092 | ||
Revaluation reserve | 46 | 64 | 24,330 | ||
Retained earnings | 46 | 350,973 | 322,437 | ||
Total equity | 459,129 | 454,859 | |||
Total liabilities and equity | 6,689,880 | 6,311,975 | |||
Memorandum items | |||||
Contingent liabilities | 47 | 134,126 | 143,066 | ||
Commitments | 48 | 877,820 | 967,739 |
48 | HSBC Bank Malta p.l.c. Annual Report and Accounts 2022 |
Group | |||||
Share capital | Revaluation reserve | Retained earnings | Total equity | ||
Notes | €000 | €000 | €000 | €000 | |
At 1 January 2022 | |||||
Profit for the year | — | — | |||
Other comprehensive income | |||||
Financial investments measured at fair value through other comprehensive income: | |||||
– fair value losses, net of tax | 46 | — | ( | — | ( |
Properties: | |||||
– surplus arising on revaluation, net of tax | 46 | — | — | ||
Post employment benefit obligations: | |||||
– remeasurement of post employment benefit obligations, net of tax | — | — | |||
Total other comprehensive income | — | ( | ( | ||
46 | |||||
Transactions with owners, recognised directly in equity | |||||
Contributions by and distributions to owners: | |||||
– share-based payment arrangements, net of tax | — | — | ( | ( | |
– dividends | 50 | — | — | ( | ( |
Total contributions by and distributions to owners | — | — | ( | ( | |
At 31 December 2022 | |||||
At 1 January 2021 | |||||
Profit for the year | — | — | |||
Other comprehensive income | |||||
Financial investments measured at fair value through other comprehensive income: | |||||
– fair value losses, net of tax | 46 | — | ( | — | ( |
Properties: | |||||
– surplus arising on revaluation, net of tax | 46 | — | — | ||
Post employment benefit obligations: | |||||
– remeasurement of post employment benefit obligations, net of tax | — | — | |||
Total other comprehensive income | — | ( | ( | ||
Total comprehensive income for the year | — | ( | |||
Other movements | |||||
Properties: | |||||
– transfer of revaluation surplus on disposal of property to retained earnings, net of tax | 46 | — | ( | — | |
Transactions with owners, recognised directly in equity | |||||
Contributions by and distributions to owners: | |||||
– share-based payment arrangements, net of tax | — | — | ( | ( | |
– dividends | 50 | — | — | ( | ( |
Total contributions by and distributions to owners | — | — | ( | ( | |
At 31 December 2021 |
HSBC Bank Malta p.l.c. Annual Report and Accounts 2022 | 49 |
Bank | |||||
Share capital | Revaluation reserve | Retained earnings | Total equity | ||
Notes | €000 | €000 | €000 | €000 | |
At 1 January 2022 | 108,092 | 24,330 | 322,437 | 454,859 | |
Profit for the year | — | — | 34,507 | 34,507 | |
Other comprehensive income | |||||
Financial investments measured at fair value through other comprehensive income: | |||||
– fair value losses, net of tax | 46 | — | (23,176) | — | (23,176) |
Properties: | |||||
– surplus arising on revaluation, net of tax | 46 | — | 166 | — | 166 |
Post employment benefit obligations: | |||||
– remeasurement of post employment benefit obligations, net of tax | — | — | 893 | 893 | |
Total other comprehensive income | — | (23,010) | 893 | (22,117) | |
Total comprehensive income for the year | — | (23,010) | 35,400 | 12,390 | |
Other movements | |||||
Properties: | |||||
– transfer of revaluation surplus on disposal of property to retained earnings, net of tax | 46 | — | (1,256) | 1,256 | — |
Transactions with owners, recognised directly in equity | |||||
Contributions by and distributions to owners: | |||||
– share-based payment arrangements, net of tax | — | — | (110) | (110) | |
– dividends | 50 | — | — | (8,010) | (8,010) |
Total contributions by and distributions to owners | — | — | (8,120) | (8,120) | |
At 31 December 2022 | 108,092 | 64 | 350,973 | 459,129 | |
At 1 January 2021 | 108,092 | 32,718 | 300,818 | 441,628 | |
Profit for the year | — | — | 19,663 | 19,663 | |
Other comprehensive income | |||||
Financial investments measured at fair value through other comprehensive income: | |||||
– fair value losses, net of tax | 46 | — | (6,094) | — | (6,094) |
Properties: | |||||
– surplus arising on revaluation, net of tax | 46 | — | 2,150 | — | 2,150 |
Post employment benefit obligations: | |||||
– remeasurement of post employment benefit obligations, net of tax | — | — | 292 | 292 | |
Total other comprehensive income | — | (3,944) | 292 | (3,652) | |
Total comprehensive income for the year | — | (3,944) | 19,955 | 16,011 | |
Other movements | |||||
Properties: | |||||
– transfer of revaluation surplus on disposal of property to retained earnings, net of tax | 46 | — | (4,444) | 4,444 | — |
Transactions with owners, recognised directly in equity | |||||
Contributions by and distribution to owners: | |||||
– share-based payment arrangements, net of tax | — | — | (63) | (63) | |
– dividends | 50 | — | — | (2,717) | (2,717) |
Total contributions by and distributions to owners | — | — | (2,780) | (2,780) | |
At 31 December 2021 | 108,092 | 24,330 | 322,437 | 454,859 |
50 | HSBC Bank Malta p.l.c. Annual Report and Accounts 2022 |
Group | Bank | ||||
2022 | 2021 | 2022 | 2021 | ||
Notes | €000 | €000 | €000 | €000 | |
Cash flows from operating activities | |||||
Interest, fees, loan recoveries and premium receipts | 149,702 | 135,492 | |||
Interest, fees and claims payments | ( | ( | (10,823) | (8,756) | |
Payments to employees and suppliers | ( | ( | (79,550) | (78,713) | |
Cash flows from operating activities before changes in operating assets and liabilities | 59,329 | 48,023 | |||
(Increase)/decrease in operating assets: | |||||
– financial assets mandatorily measured at fair value through profit or loss | — | — | |||
– reserve deposit with Central Bank of Malta | ( | ( | (4,072) | (5,192) | |
– loans and advances to banks and customers | 20,592 | 335,070 | |||
– Treasury Bills | 161,352 | 41,109 | |||
– other assets | ( | (1,673) | 11,439 | ||
(Decrease)/increase in operating liabilities: | |||||
– deposits by banks and customer accounts | 350,304 | 328,165 | |||
– other liabilities | ( | ( | (2,163) | (4,372) | |
Net cash from operating activities before tax | 583,669 | 754,242 | |||
– tax paid | ( | ( | (10,116) | (9,961) | |
Net cash from operating activities | 573,553 | 744,281 | |||
Cash flows from investing activities | |||||
Dividends received | 850 | 950 | |||
Interest received from financial investments | 6,142 | 11,897 | |||
Purchase of financial investments | ( | ( | (464,793) | (221,697) | |
Proceeds from sale and maturity of financial investments | 255,296 | 249,667 | |||
Purchase of property, plant and equipment, investment property and intangible assets | ( | ( | (12,726) | (8,502) | |
Proceeds from sale of property, plant and equipment, investment property and intangible assets | — | 50 | |||
Net cash from investing activities | ( | (215,231) | 32,365 | ||
Cash flows from financing activities | |||||
Dividends paid | ( | ( | (8,010) | (2,717) | |
Proceeds from borrowings from a group undertaking | — | 60,000 | |||
Net cash from financing activities | ( | (8,010) | 57,283 | ||
Net increase in cash and cash equivalents | 350,312 | 833,929 | |||
Cash and cash equivalents at beginning of year | 1,593,517 | 776,884 | |||
Effect of exchange rate changes on cash and cash equivalents | ( | ( | (11,481) | (17,296) | |
Cash and cash equivalents at end of year | 51 | 1,932,348 | 1,593,517 |
HSBC Bank Malta p.l.c. Annual Report and Accounts 2022 | 51 |
52 | HSBC Bank Malta p.l.c. Annual Report and Accounts 2022 |
HSBC Bank Malta p.l.c. Annual Report and Accounts 2022 | 53 |
54 | HSBC Bank Malta p.l.c. Annual Report and Accounts 2022 |
HSBC Bank Malta p.l.c. Annual Report and Accounts 2022 | 55 |
56 | HSBC Bank Malta p.l.c. Annual Report and Accounts 2022 |
Origination CRR | Significance trigger – PD to increase by |
0.1-1.2 | 15bps |
2.1-3.3 | 30bps |
Origination CRR | Additional significance criteria – number of CRR grade notches deterioration required to identify as significant credit deterioration (stage 2) (>or equal to) |
0.1 | 5 notches |
1.1-4.2 | 4 notches |
4.3-5.1 | 3 notches |
5.2-7.1 | 2 notches |
7.2-8.1 | 1 notch |
8.3 | 0 notch |
HSBC Bank Malta p.l.c. Annual Report and Accounts 2022 | 57 |
58 | HSBC Bank Malta p.l.c. Annual Report and Accounts 2022 |
HSBC Bank Malta p.l.c. Annual Report and Accounts 2022 | 59 |
60 | HSBC Bank Malta p.l.c. Annual Report and Accounts 2022 |
HSBC Bank Malta p.l.c. Annual Report and Accounts 2022 | 61 |
62 | HSBC Bank Malta p.l.c. Annual Report and Accounts 2022 |
HSBC Bank Malta p.l.c. Annual Report and Accounts 2022 | 63 |
64 | HSBC Bank Malta p.l.c. Annual Report and Accounts 2022 |
HSBC Bank Malta p.l.c. Annual Report and Accounts 2022 | 65 |
66 | HSBC Bank Malta p.l.c. Annual Report and Accounts 2022 |
HSBC Bank Malta p.l.c. Annual Report and Accounts 2022 | 67 |
68 | HSBC Bank Malta p.l.c. Annual Report and Accounts 2022 |
2022 | 2021 | |
€000 | €000 | |
Balances with Central Bank of Malta and Treasury Bills | 1,555,361 | 1,469,626 |
Items in course of collection from other banks | 6,921 | 4,453 |
Loans and advances to banks | 726,217 | 613,062 |
Loans and advances to customers | 3,175,167 | 3,196,725 |
Debt instruments measured at fair value through other comprehensive income | 637,709 | 845,700 |
Debt instruments measured at amortised cost | 367,024 | — |
Accrued income and other assets | 18,174 | 17,655 |
Off-balance sheet: | ||
– financial guarantee and similar contracts | 131,816 | 140,359 |
– loan and other credit related commitments | 877,820 | 967,739 |
At 31 December | 7,496,209 | 7,255,319 |
2022 | 2021 | |
€000 | €000 | |
Derivatives | 25,745 | 4,640 |
HSBC Bank Malta p.l.c. Annual Report and Accounts 2022 | 69 |
At 31 December 2022 | At 31 December 2021 | |||
Gross carrying/ nominal amount | Allowance for ECL | Gross carrying/ nominal amount | Allowance for ECL | |
€000 | €000 | €000 | €000 | |
Loans and advances to customers at amortised cost | 3,222,901 | (47,734) | 3,254,757 | (58,032) |
– personal | 2,286,234 | (24,710) | 2,290,194 | (24,470) |
– corporate and commercial | 872,673 | (20,669) | 839,153 | (29,835) |
– non-bank financial institutions | 63,994 | (2,355) | 125,410 | (3,727) |
Loans and advances to banks at amortised cost | 726,218 | (1) | 613,064 | (2) |
Other financial assets measured at amortised cost | 1,710,784 | (5,596) | 1,273,258 | (9,696) |
– balances at central banks | 1,270,880 | (13) | 1,241,462 | (8) |
– items in the course of collection from other banks | 6,921 | — | 4,453 | — |
– debt instruments measured at amortised cost | 367,042 | (18) | — | — |
– Treasury Bills measured at amortised cost | 42,203 | (1) | — | — |
– accrued income and other assets | 23,738 | (5,564) | 27,343 | (9,688) |
Total gross carrying amount on balance sheet | 5,659,903 | (53,331) | 5,141,079 | (67,730) |
Loan and other credit-related commitments | 877,820 | (1,187) | 967,739 | (1,173) |
– personal | 361,245 | (26) | 406,384 | (15) |
– corporate and commercial (including non-bank financial institutions) | 514,199 | (1,161) | 552,613 | (1,158) |
– banks | 2,376 | — | 8,742 | — |
Financial guarantee and similar contracts | 131,816 | (557) | 140,359 | (597) |
– personal | 6,403 | (30) | 5,712 | (31) |
– corporate and commercial (including non-bank financial institutions) | 125,413 | (527) | 134,647 | (566) |
Total nominal amount off balance sheet | 1,009,636 | (1,744) | 1,108,098 | (1,770) |
Total | 6,669,539 | (55,075) | 6,249,177 | (69,500) |
Fair value | Allowance for ECL | Fair value | Allowance for ECL | |
€000 | €000 | €000 | €000 | |
Debt instruments measured at fair value through other comprehensive income | 637,709 | (60) | 845,700 | (69) |
Treasury Bills measured at fair value through other comprehensive income | 242,292 | (4) | 228,172 | (7) |
Total | 880,001 | (64) | 1,073,872 | (76) |
70 | HSBC Bank Malta p.l.c. Annual Report and Accounts 2022 |
Gross loans and advances to customers | Gross loans by business segment as a % of total gross loans | Credit impaired loans and advances to customers | Credit impaired loans by business segment as a % of sector gross loans | |
€000 | % | €000 | % | |
At 31 December 2022 | ||||
Personal lending | ||||
– first lien residential mortgages | 2,100,009 | 65.2 | 53,032 | 2.5 |
– other personal lending | 186,225 | 5.8 | 10,120 | 5.4 |
Wholesale lending | ||||
– commercial real estate and other property related | 182,077 | 5.6 | 32,852 | 18.0 |
– state-owned entities | 303,387 | 9.4 | — | — |
– other commercial | 451,203 | 14.0 | 23,006 | 5.1 |
Total | 3,222,901 | 100 | 119,010 | 3.7 |
At 31 December 2021 | ||||
Personal lending | ||||
– first lien residential mortgages | 2,087,153 | 64.1 | 75,272 | 3.6 |
– other personal lending | 203,041 | 6.2 | 13,962 | 6.9 |
Wholesale lending | ||||
– commercial real estate and other property related | 221,084 | 6.8 | 43,000 | 19.4 |
– state-owned entities | 286,875 | 8.8 | — | — |
– other commercial | 456,604 | 14.1 | 36,177 | 7.9 |
Total | 3,254,757 | 100 | 168,411 | 5.2 |
HSBC Bank Malta p.l.c. Annual Report and Accounts 2022 | 71 |
Gross on- balance sheet exposure | Collateral | Net maximum exposure | ||||
Residential property | Commercial property | Securities/ cash | Other | |||
€000 | €000 | €000 | €000 | €000 | €000 | |
As at 31 December 2022 | ||||||
Electricity, gas, water supply and waste management | 111,046 | 62 | 1 | 3,325 | 53,736 | 53,922 |
Accommodation and food service | 79,168 | 784 | 44,618 | 6 | — | 33,760 |
Construction, real estate activities | 108,445 | 10,250 | 66,495 | 1,919 | 5,453 | 24,328 |
Wholesale and retail trade and repairs | 179,956 | 4,577 | 42,785 | 3,744 | 18,162 | 110,688 |
Services | 396,817 | 4,902 | 84,126 | 8,257 | 205,981 | 93,551 |
Manufacturing, agriculture and fishing | 62,196 | 2,948 | 19,574 | 317 | 779 | 38,578 |
Households and individuals | 2,285,273 | 2,153,777 | 305 | 10,106 | 4,570 | 116,515 |
3,222,901 | 2,177,300 | 257,904 | 27,674 | 288,681 | 471,342 | |
As at 31 December 2021 | ||||||
Electricity, gas, water supply and waste management | 108,674 | 131 | 1,406 | 1,735 | 51,100 | 54,302 |
Accommodation and food service | 92,554 | 1,577 | 35,096 | 108 | 10 | 55,763 |
Construction, real estate activities | 134,828 | 8,448 | 86,651 | 1,744 | 120 | 37,865 |
Wholesale and retail trade and repairs | 211,075 | 4,382 | 38,225 | 4,165 | 77,544 | 86,759 |
Services | 373,509 | 3,262 | 91,601 | 10,105 | 157,230 | 111,311 |
Manufacturing, agriculture and fishing | 54,748 | 5,214 | 9,187 | 501 | 733 | 39,113 |
Households and individuals | 2,279,369 | 2,130,321 | 476 | 12,053 | 5,260 | 131,259 |
3,254,757 | 2,153,335 | 262,642 | 30,411 | 291,997 | 516,372 |
Quality classification definitions ‘Strong’ exposures demonstrate a strong capacity to meet financial commitments, with negligible or low probability of default and/or low levels of expected loss. Personal accounts operate within product parameters. ‘Good’ exposures demonstrate good capacity to meet financial commitments, with low to moderate default risk. Personal accounts typically show only short periods of delinquency. For residential mortgages losses are expected to be minimal following the adoption of recovery processes. ‘Satisfactory’ exposures require closer monitoring and demonstrate an average to fair capacity to meet financial commitments, with moderate default risk. Personal accounts typically show only short periods of delinquency. For residential mortgages, losses are expected to be minor following the adoption of recovery processes. ‘Sub-standard’ exposures require varying degrees of special attention and default risk is of greater concern. Personal portfolio segments show longer delinquency periods of generally up to 89 days past due. ‘Credit impaired’ exposures have been assessed as impaired, where the borrower is either 90 or more days past due or is facing significant financial difficulty such that a detrimental impact on the future estimated cash flows has occurred. |
Sovereign debt securities and bills – External credit rating | Other debt securities and bills – External credit rating | Wholesale lending | Personal lending – First lien residential mortgages | Personal lending – Other | |
Quality classification | |||||
Strong | BBB and above | A- and above | CRR1 to CRR2 | Not past due with LTV lower than 50% | Not past due facilities with no delinquency in the last 12 months |
Good | BBB- to BB | BBB+ to BBB- | CRR3 | Not past due with LTV between 50% and 90% | Not past due facilities with less than 30 days delinquency in the last 12 months |
Satisfactory | BB- to B and unrated | BB+ to B and unrated | CRR4 to CRR5 | Not past due with LTV between 90% and 100% Not past due with unperfected collateral | Not past due facilities with 30 days delinquency or more in the last 12 months |
Sub-standard | B- to C | B- to C | CRR6 to CRR8 | Past due, history of delinquency in prior 12 months, or performing forborne | Past due |
Credit impaired | Default | Default | CRR9 to CRR10 | Past due by 90 days or more, forborne, under legal action or connected to other facilities with credit impaired status | Past due by 90 days or more, forborne, under legal action or connected to other facilities with credit impaired status |
72 | HSBC Bank Malta p.l.c. Annual Report and Accounts 2022 |
As at 31 December 2022 | ||||||||
Gross carrying/nominal amount | Allowance for ECL | Net | ||||||
Strong | Good | Satisfactory | Sub- standard | Credit impaired | Total | |||
€000 | €000 | €000 | €000 | €000 | €000 | €000 | €000 | |
In scope for IFRS 9 impairments | ||||||||
Loans and advances to customers held at amortised cost: | 938,415 | 1,188,418 | 743,387 | 233,671 | 119,010 | 3,222,901 | (47,734) | 3,175,167 |
– personal | 637,076 | 1,186,794 | 294,342 | 104,870 | 63,152 | 2,286,234 | (24,710) | 2,261,524 |
– corporate and commercial | 301,326 | 1,624 | 396,841 | 121,996 | 50,886 | 872,673 | (20,669) | 852,004 |
– non-bank financial institutions | 13 | — | 52,204 | 6,805 | 4,972 | 63,994 | (2,355) | 61,639 |
Loans and advances to banks held at amortised cost | 726,218 | — | — | — | — | 726,218 | (1) | 726,217 |
Other financial assets held at amortised cost: | ||||||||
Balances at central banks | 1,270,880 | — | — | — | — | 1,270,880 | (13) | 1,270,867 |
Items in the course of collection from other banks | 6,921 | — | — | — | — | 6,921 | — | 6,921 |
Debt instruments measured at amortised cost | 367,042 | — | — | — | — | 367,042 | (18) | 367,024 |
Treasury Bills measured at amortised cost | 42,203 | — | — | — | — | 42,203 | (1) | 42,202 |
Accrued income and other assets | 7,138 | 2,169 | 4,375 | 1,300 | 8,756 | 23,738 | (5,564) | 18,174 |
– endorsements and acceptances | — | — | 1,500 | — | — | 1,500 | (5) | 1,495 |
– accrued income | 7,138 | 2,169 | 2,875 | 1,300 | 8,756 | 22,238 | (5,559) | 16,679 |
Total gross carrying amount on balance sheet | 3,358,817 | 1,190,587 | 747,762 | 234,971 | 127,766 | 5,659,903 | (53,331) | 5,606,572 |
Percentage of total credit quality | 59.3% | 21.0% | 13.2% | 4.2% | 2.3% | 100% | ||
Loan and other credit-related commitments | 422,905 | 84,595 | 310,566 | 50,856 | 8,898 | 877,820 | (1,187) | 876,633 |
Financial guarantees and similar contracts | 19,668 | 4,185 | 91,960 | 15,169 | 834 | 131,816 | (557) | 131,259 |
Total nominal amount off balance sheet | 442,573 | 88,780 | 402,526 | 66,025 | 9,732 | 1,009,636 | (1,744) | 1,007,892 |
At 31 December 2022 | 3,801,390 | 1,279,367 | 1,150,288 | 300,996 | 137,498 | 6,669,539 | (55,075) | 6,614,464 |
Fair value | ||||||||
Strong | Good | Satisfactory | Sub- standard | Credit impaired | Total | Allowance for ECL | ||
€000 | €000 | €000 | €000 | €000 | €000 | €000 | ||
Debt instruments measured at fair value through other comprehensive income | 637,709 | — | — | — | — | 637,709 | (60) | |
Treasury Bills measured at fair value through other comprehensive income | 242,292 | — | — | — | — | 242,292 | (4) | |
At 31 December 2022 | 880,001 | — | — | — | — | 880,001 | (64) |
HSBC Bank Malta p.l.c. Annual Report and Accounts 2022 | 73 |
As at 31 December 2021 | ||||||||
Gross carrying/nominal amount | Allowance for ECL | Net | ||||||
Strong | Good | Satisfactory | Sub- standard | Credit impaired | Total | |||
€000 | €000 | €000 | €000 | €000 | €000 | €000 | €000 | |
In scope for IFRS 9 impairments | ||||||||
Loans and advances to customers held at amortised cost: | 1,044,946 | 1,285,585 | 547,430 | 208,385 | 168,411 | 3,254,757 | (58,032) | 3,196,725 |
– personal | 762,593 | 1,282,772 | 115,147 | 40,448 | 89,234 | 2,290,194 | (24,470) | 2,265,724 |
– corporate and commercial | 282,339 | 374 | 360,458 | 121,277 | 74,705 | 839,153 | (29,835) | 809,318 |
– non-bank financial institutions | 14 | 2,439 | 71,825 | 46,660 | 4,472 | 125,410 | (3,727) | 121,683 |
Loans and advances to banks held at amortised cost | 613,064 | — | — | — | — | 613,064 | (2) | 613,062 |
Other financial assets held at amortised cost: | ||||||||
Balances at central banks | 1,241,462 | — | — | — | — | 1,241,462 | (8) | 1,241,454 |
Items in the course of collection from other banks | 4,453 | — | — | — | — | 4,453 | — | 4,453 |
Debt instruments measured at amortised cost | — | — | — | — | — | — | — | — |
Treasury Bills measured at amortised cost | — | — | — | — | — | — | — | — |
Accrued income and other assets | 6,160 | 2,438 | 2,766 | 1,148 | 14,831 | 27,343 | (9,688) | 17,655 |
– endorsements and acceptances | — | — | 842 | — | — | 842 | — | 842 |
– accrued income | 6,160 | 2,438 | 1,924 | 1,148 | 14,831 | 26,501 | (9,688) | 16,813 |
Total gross carrying amount on balance sheet | 2,910,085 | 1,288,023 | 550,196 | 209,533 | 183,242 | 5,141,079 | (67,730) | 5,073,349 |
Percentage of total credit quality | 56.6% | 25.0% | 10.7% | 4.1% | 3.6% | 100% | ||
Loan and other credit-related commitments | 486,619 | 109,327 | 302,620 | 59,702 | 9,471 | 967,739 | (1,173) | 966,566 |
Financial guarantees and similar contracts | 19,731 | 2,286 | 101,612 | 14,996 | 1,734 | 140,359 | (597) | 139,762 |
Total nominal amount off balance sheet | 506,350 | 111,613 | 404,232 | 74,698 | 11,205 | 1,108,098 | (1,770) | 1,106,328 |
At 31 December 2021 | 3,416,435 | 1,399,636 | 954,428 | 284,231 | 194,447 | 6,249,177 | (69,500) | 6,179,677 |
Fair value | ||||||||
Strong | Good | Satisfactory | Sub- standard | Credit impaired | Total | Allowance for ECL | ||
€000 | €000 | €000 | €000 | €000 | €000 | €000 | ||
Debt instruments measured at fair value through other comprehensive income | 845,700 | — | — | — | — | 845,700 | (69) | |
Treasury Bills measured at fair value through other comprehensive income | 228,172 | — | — | — | — | 228,172 | (7) | |
At 31 December 2021 | 1,073,872 | — | — | — | — | 1,073,872 | (76) |
74 | HSBC Bank Malta p.l.c. Annual Report and Accounts 2022 |
HSBC Bank Malta p.l.c. Annual Report and Accounts 2022 | 75 |
Gross carrying/nominal amount | Allowance for ECL | ECL coverage % | ||||||||||
Stage 1 | Stage 2 | Stage 3 | Total | Stage 1 | Stage 2 | Stage 3 | Total | Stage 1 | Stage 2 | Stage 3 | Total | |
€000 | €000 | €000 | €000 | €000 | €000 | €000 | €000 | % | % | % | % | |
Loans and advances to customers at amortised cost | 2,812,374 | 291,517 | 119,010 | 3,222,901 | (10,177) | (18,744) | (18,813) | (47,734) | 0.4 | 6.4 | 15.8 | 1.5 |
– personal | 2,112,941 | 110,141 | 63,152 | 2,286,234 | (6,671) | (8,716) | (9,323) | (24,710) | 0.3 | 7.9 | 14.8 | 1.1 |
– corporate and commercial | 682,367 | 139,420 | 50,886 | 872,673 | (3,272) | (8,168) | (9,229) | (20,669) | 0.5 | 5.9 | 18.1 | 2.4 |
– non-bank financial institutions | 17,066 | 41,956 | 4,972 | 63,994 | (234) | (1,860) | (261) | (2,355) | 1.4 | 4.4 | 5.2 | 3.7 |
Loans and advances to banks at amortised cost | 726,218 | — | — | 726,218 | (1) | — | — | (1) | — | — | — | — |
Other financial assets measured at amortised cost | 1,700,443 | 1,585 | 8,756 | 1,710,784 | (37) | — | (5,559) | (5,596) | — | — | 63.5 | 0.3 |
Loan and other credit-related commitments | 793,226 | 75,696 | 8,898 | 877,820 | (392) | (141) | (654) | (1,187) | — | 0.2 | 7.3 | 0.1 |
– personal | 352,216 | 8,648 | 381 | 361,245 | (26) | — | — | (26) | — | — | — | — |
– corporate and commercial (including non- bank financial institutions) | 438,634 | 67,048 | 8,517 | 514,199 | (366) | (141) | (654) | (1,161) | 0.1 | 0.2 | 7.7 | 0.2 |
– banks | 2,376 | — | — | 2,376 | — | — | — | — | — | — | — | — |
Financial guarantee and similar contracts | 105,440 | 25,542 | 834 | 131,816 | (226) | (101) | (230) | (557) | 0.2 | 0.4 | 27.6 | 0.4 |
– personal | 6,403 | — | — | 6,403 | (30) | — | — | (30) | 0.5 | — | — | 0.5 |
– corporate and commercial (including non- bank financial institutions) | 99,037 | 25,542 | 834 | 125,413 | (196) | (101) | (230) | (527) | 0.2 | 0.4 | 27.6 | 0.4 |
At 31 December 2022 | 6,137,701 | 394,340 | 137,498 | 6,669,539 | (10,833) | (18,986) | (25,256) | (55,075) | 0.2 | 4.8 | 18.4 | 0.8 |
Gross exposure | Allowance for ECL | ECL coverage % | |||||||
Stage 2 | of which: | of which: | Stage 2 | of which: | of which: | Stage 2 | of which: | of which: | |
<30 DPD | >30 DPD | <30 DPD | >30 DPD | <30 DPD | >30 DPD | ||||
€000 | €000 | €000 | €000 | €000 | €000 | % | % | % | |
Loans and advances to customers at amortised cost: | 291,517 | 288,474 | 3,043 | (18,744) | (18,300) | (444) | 6.4 | 6.3 | 14.6 |
– personal | 110,141 | 107,228 | 2,913 | (8,716) | (8,276) | (440) | 7.9 | 7.7 | 15.1 |
– corporate and commercial | 139,420 | 139,290 | 130 | (8,168) | (8,164) | (4) | 5.9 | 5.9 | 3.1 |
– non-bank financial institutions | 41,956 | 41,956 | — | (1,860) | (1,860) | — | 4.4 | 4.4 | — |
Other financial assets measured at amortised cost | 1,585 | 1,568 | 17 | — | — | — | — | — | — |
76 | HSBC Bank Malta p.l.c. Annual Report and Accounts 2022 |
Gross carrying/nominal amount | Allowance for ECL | ECL coverage % | ||||||||||
Stage 1 | Stage 2 | Stage 3 | Total | Stage 1 | Stage 2 | Stage 3 | Total | Stage 1 | Stage 2 | Stage 3 | Total | |
€000 | €000 | €000 | €000 | €000 | €000 | €000 | €000 | % | % | % | % | |
Loans and advances to customers at amortised cost | 2,830,787 | 255,559 | 168,411 | 3,254,757 | (14,740) | (15,615) | (27,677) | (58,032) | 0.5 | 6.1 | 16.4 | 1.8 |
– personal | 2,151,181 | 49,779 | 89,234 | 2,290,194 | (11,933) | (4,386) | (8,151) | (24,470) | 0.6 | 8.8 | 9.1 | 1.1 |
– corporate and commercial | 641,574 | 122,874 | 74,705 | 839,153 | (2,466) | (8,129) | (19,240) | (29,835) | 0.4 | 6.6 | 25.8 | 3.6 |
– non-bank financial institutions | 38,032 | 82,906 | 4,472 | 125,410 | (341) | (3,100) | (286) | (3,727) | 0.9 | 3.7 | 6.4 | 3.0 |
Loans and advances to banks at amortised cost | 613,064 | — | — | 613,064 | (2) | — | — | (2) | — | — | — | — |
Other financial assets measured at amortised cost | 1,257,175 | 1,252 | 14,831 | 1,273,258 | (8) | — | (9,688) | (9,696) | — | — | 65.3 | 0.8 |
Loan and other credit- related commitments | 876,295 | 81,973 | 9,471 | 967,739 | (455) | (374) | (344) | (1,173) | 0.1 | 0.5 | 3.6 | 0.1 |
– personal | 397,997 | 8,268 | 119 | 406,384 | (15) | — | — | (15) | — | — | — | — |
– corporate and commercial (including non-bank financial institutions) | 469,556 | 73,705 | 9,352 | 552,613 | (440) | (374) | (344) | (1,158) | 0.1 | 0.5 | 3.7 | 0.2 |
– banks | 8,742 | — | — | 8,742 | — | — | — | — | — | — | — | — |
Financial guarantee and similar contracts | 111,606 | 27,019 | 1,734 | 140,359 | (187) | (119) | (291) | (597) | 0.2 | 0.4 | 16.8 | 0.4 |
– personal | 5,702 | 10 | — | 5,712 | (31) | — | — | (31) | 0.5 | — | — | 0.5 |
– corporate and commercial (including non-bank financial institutions) | 105,904 | 27,009 | 1,734 | 134,647 | (156) | (119) | (291) | (566) | 0.1 | 0.4 | 16.8 | 0.4 |
At 31 December 2021 | 5,688,927 | 365,803 | 194,447 | 6,249,177 | (15,392) | (16,108) | (38,000) | (69,500) | 0.3 | 4.4 | 19.5 | 1.1 |
Gross exposure | Allowance for ECL | ECL coverage % | |||||||
Stage 2 | of which: | of which: | Stage 2 | of which: | of which: | Stage 2 | of which: | of which: | |
<30 DPD | >30 DPD | <30 DPD | >30 DPD | <30 DPD | >30 DPD | ||||
€000 | €000 | €000 | €000 | €000 | €000 | % | % | % | |
Loans and advances to customers at amortised cost: | 255,559 | 246,339 | 9,220 | (15,615) | (14,837) | (778) | 6.1 | 6.0 | 8.4 |
– personal | 49,779 | 41,169 | 8,610 | (4,386) | (3,614) | (772) | 8.8 | 8.8 | 9.0 |
– corporate and commercial | 122,874 | 122,264 | 610 | (8,129) | (8,123) | (6) | 6.6 | 6.6 | 1.0 |
– non-bank financial institutions | 82,906 | 82,906 | — | (3,100) | (3,100) | — | 3.7 | 3.7 | — |
Other financial assets measured at amortised cost | 1,252 | 1,099 | 153 | — | — | — | — | — | — |
HSBC Bank Malta p.l.c. Annual Report and Accounts 2022 | 77 |
Gross carrying/nominal amount | Allowance for ECL | Net | ||||||
Strong | Good | Satisfactory | Sub- standard | Credit impaired | Total | |||
€000 | €000 | €000 | €000 | €000 | €000 | €000 | €000 | |
Loans and advances to customers at amortised cost | 938,415 | 1,188,418 | 743,387 | 233,671 | 119,010 | 3,222,901 | (47,734) | 3,175,167 |
– stage 1 | 938,172 | 1,188,340 | 671,025 | 14,837 | — | 2,812,374 | (10,177) | 2,802,197 |
– stage 2 | 243 | 78 | 72,362 | 218,834 | — | 291,517 | (18,744) | 272,773 |
– stage 3 | — | — | — | — | 119,010 | 119,010 | (18,813) | 100,197 |
Loans and advances to banks at amortised cost | 726,218 | — | — | — | — | 726,218 | (1) | 726,217 |
– stage 1 | 726,218 | — | — | — | — | 726,218 | (1) | 726,217 |
– stage 2 | — | — | — | — | — | — | — | — |
– stage 3 | — | — | — | — | — | — | — | — |
Other financial assets measured at amortised cost | 1,694,184 | 2,169 | 4,375 | 1,300 | 8,756 | 1,710,784 | (5,596) | 1,705,188 |
– stage 1 | 1,694,182 | 2,168 | 4,056 | 37 | — | 1,700,443 | (37) | 1,700,406 |
– stage 2 | 2 | 1 | 319 | 1,263 | — | 1,585 | — | 1,585 |
– stage 3 | — | — | — | — | 8,756 | 8,756 | (5,559) | 3,197 |
Loan and other credit-related commitments | 422,905 | 84,595 | 310,566 | 50,856 | 8,898 | 877,820 | (1,187) | 876,633 |
– stage 1 | 422,893 | 84,525 | 276,428 | 9,380 | — | 793,226 | (392) | 792,834 |
– stage 2 | 12 | 70 | 34,138 | 41,476 | — | 75,696 | (141) | 75,555 |
– stage 3 | — | — | — | — | 8,898 | 8,898 | (654) | 8,244 |
Financial guarantees and similar contracts | 19,668 | 4,185 | 91,960 | 15,169 | 834 | 131,816 | (557) | 131,259 |
– stage 1 | 17,008 | 4,185 | 78,867 | 5,380 | — | 105,440 | (226) | 105,214 |
– stage 2 | 2,660 | — | 13,093 | 9,789 | — | 25,542 | (101) | 25,441 |
– stage 3 | — | — | — | — | 834 | 834 | (230) | 604 |
At 31 December 2022 | 3,801,390 | 1,279,367 | 1,150,288 | 300,996 | 137,498 | 6,669,539 | (55,075) | 6,614,464 |
Fair value | Allowance for ECL | |||||||
Strong | Good | Satisfactory | Sub- standard | Credit impaired | Total | |||
€000 | €000 | €000 | €000 | €000 | €000 | €000 | ||
Debt instruments measured at fair value through other comprehensive income | 637,709 | — | — | — | — | 637,709 | (60) | |
– stage 1 | 637,709 | — | — | — | — | 637,709 | (60) | |
– stage 2 | — | — | — | — | — | — | — | |
– stage 3 | — | — | — | — | — | — | — | |
Treasury Bills measured at fair value through other comprehensive income | 242,292 | — | — | — | — | 242,292 | (4) | |
– stage 1 | 242,292 | — | — | — | — | 242,292 | (4) | |
– stage 2 | — | — | — | — | — | — | — | |
– stage 3 | — | — | — | — | — | — | — | |
At 31 December 2022 | 880,001 | — | — | — | — | 880,001 | (64) |
Gross carrying/nominal amount | Allowance for ECL | Net | ||||||
Strong | Good | Satisfactory | Sub- standard | Credit impaired | Total | |||
€000 | €000 | €000 | €000 | €000 | €000 | €000 | €000 | |
Loans and advances to customers at amortised cost | 1,044,946 | 1,285,585 | 547,430 | 208,385 | 168,411 | 3,254,757 | (58,032) | 3,196,725 |
– stage 1 | 1,039,912 | 1,280,424 | 481,569 | 28,882 | — | 2,830,787 | (14,740) | 2,816,047 |
– stage 2 | 5,034 | 5,161 | 65,861 | 179,503 | — | 255,559 | (15,615) | 239,944 |
– stage 3 | — | — | — | — | 168,411 | 168,411 | (27,677) | 140,734 |
Loans and advances to banks at amortised cost | 613,064 | — | — | — | — | 613,064 | (2) | 613,062 |
– stage 1 | 613,064 | — | — | — | — | 613,064 | (2) | 613,062 |
– stage 2 | — | — | — | — | — | — | — | — |
– stage 3 | — | — | — | — | — | — | — | — |
Other financial assets measured at amortised cost | 1,252,075 | 2,438 | 2,766 | 1,148 | 14,831 | 1,273,258 | (9,696) | 1,263,562 |
– stage 1 | 1,252,067 | 2,411 | 2,514 | 183 | — | 1,257,175 | (8) | 1,257,167 |
– stage 2 | 8 | 27 | 252 | 965 | — | 1,252 | — | 1,252 |
– stage 3 | — | — | — | — | 14,831 | 14,831 | (9,688) | 5,143 |
Loan and other credit-related commitments | 486,619 | 109,327 | 302,620 | 59,702 | 9,471 | 967,739 | (1,173) | 966,566 |
– stage 1 | 486,513 | 106,262 | 273,236 | 10,284 | — | 876,295 | (455) | 875,840 |
– stage 2 | 106 | 3,065 | 29,384 | 49,418 | — | 81,973 | (374) | 81,599 |
– stage 3 | — | — | — | — | 9,471 | 9,471 | (344) | 9,127 |
Financial guarantees and similar contracts | 19,731 | 2,286 | 101,612 | 14,996 | 1,734 | 140,359 | (597) | 139,762 |
– stage 1 | 18,230 | 2,286 | 87,146 | 3,944 | — | 111,606 | (187) | 111,419 |
– stage 2 | 1,501 | — | 14,466 | 11,052 | — | 27,019 | (119) | 26,900 |
– stage 3 | — | — | — | — | 1,734 | 1,734 | (291) | 1,443 |
At 31 December 2021 | 3,416,435 | 1,399,636 | 954,428 | 284,231 | 194,447 | 6,249,177 | (69,500) | 6,179,677 |
78 | HSBC Bank Malta p.l.c. Annual Report and Accounts 2022 |
Fair value | Allowance for ECL | ||||||
Strong | Good | Satisfactory | Sub- standard | Credit impaired | Total | ||
€000 | €000 | €000 | €000 | €000 | €000 | €000 | |
Debt instruments measured at fair value through other comprehensive income | 845,700 | — | — | — | — | 845,700 | (69) |
– stage 1 | 845,700 | — | — | — | — | 845,700 | (69) |
– stage 2 | — | — | — | — | — | — | — |
– stage 3 | — | — | — | — | — | — | — |
Treasury Bills measured at fair value through other comprehensive income | 228,172 | — | — | — | — | 228,172 | (7) |
– stage 1 | 228,172 | — | — | — | — | 228,172 | (7) |
– stage 2 | — | — | — | — | — | — | — |
– stage 3 | — | — | — | — | — | — | — |
At 31 December 2021 | 1,073,872 | — | — | — | — | 1,073,872 | (76) |
HSBC Bank Malta p.l.c. Annual Report and Accounts 2022 | 79 |
Non-credit impaired | Credit impaired | Total | ||||||
Stage 1 | Stage 2 | Stage 3 | ||||||
Gross carrying/ nominal amount | Allowance for ECL | Gross carrying/ nominal amount | Allowance for ECL | Gross carrying/ nominal amount | Allowance for ECL | Gross carrying/ nominal amount | Allowance for ECL | |
€000 | €000 | €000 | €000 | €000 | €000 | €000 | €000 | |
As at 1 January 2022 | 3,817,513 | (15,382) | 365,803 | (16,108) | 194,447 | (38,000) | 4,377,763 | (69,490) |
Transfers of financial instruments | (78,443) | (374) | 90,471 | (1,927) | (12,028) | 2,301 | — | — |
– transfers from stage 1 to stage 2 | (116,822) | 580 | 116,822 | (580) | — | — | — | — |
– transfers from stage 2 to stage 1 | 40,580 | (744) | (40,580) | 744 | — | — | — | — |
– transfers from stage 3 | 3,111 | (238) | 20,919 | (2,527) | (24,030) | 2,765 | — | — |
– transfers to stage 3 | (5,312) | 28 | (6,690) | 436 | 12,002 | (464) | — | — |
Net remeasurement of ECL arising from stage transfers | — | 708 | — | (5,461) | — | (436) | — | (5,189) |
Changes in risk parameters | — | 3,470 | — | 1,608 | — | (5,831) | — | (753) |
Net new and further lending/repayments | (21,819) | 778 | (61,934) | 2,902 | (29,717) | 1,506 | (113,470) | 5,186 |
Assets written off | — | — | — | — | (15,204) | 15,204 | (15,204) | 15,204 |
As at 31 December 2022 | 3,717,251 | (10,800) | 394,340 | (18,986) | 137,498 | (25,256) | 4,249,089 | (55,042) |
ECL change for the year | 14,448 | |||||||
Assets written off | (15,204) | |||||||
Change in expected credit losses excluding effect of write-offs | (756) | |||||||
Recoveries | 9,359 | |||||||
Other | 1,051 | |||||||
Change in expected credit losses and other credit impairment charges | 9,654 |
At 31 December 2022 | 12 months ended 31 December 2022 | ||
Gross carrying/ nominal amount | Allowance for ECL | ECL (charge)/ release | |
€000 | €000 | €000 | |
As above | 4,249,089 | (55,042) | 9,654 |
Balances at central banks | 1,270,880 | (13) | (5) |
Loans and advances to banks measured at amortised cost | 726,218 | (1) | 1 |
Debt instruments and Treasury Bills measured at amortised cost | 409,245 | (19) | (19) |
Items in course of collection | 6,921 | — | — |
Accrued interest on debt instruments and other accrued income | 4,810 | — | — |
Loan and other credit related commitments - banks | 2,376 | — | — |
Summary of financial instruments to which the impairment requirements in IFRS 9 are applied through the Income Statement | 6,669,539 | (55,075) | 9,631 |
Debt instruments and Treasury Bills measured at fair value through other comprehensive income | 880,001 | (64) | 12 |
Total allowance for ECL/total income statement ECL release for the year | N/A | (55,139) | 9,643 |
80 | HSBC Bank Malta p.l.c. Annual Report and Accounts 2022 |
Non-credit impaired | Credit impaired | Total | ||||||
Stage 1 | Stage 2 | Stage 3 | ||||||
Gross carrying/ nominal amount | Allowance for ECL | Gross carrying/ nominal amount | Allowance for ECL | Gross carrying/ nominal amount | Allowance for ECL | Gross carrying/ nominal amount | Allowance for ECL | |
€000 | €000 | €000 | €000 | €000 | €000 | €000 | €000 | |
As at 1 January 2021 | 3,912,437 | (14,294) | 491,409 | (20,327) | 148,477 | (37,541) | 4,552,323 | (72,162) |
Transfers of financial instruments: | (36,284) | (2,998) | (35,553) | 7,215 | 71,837 | (4,217) | — | — |
– transfers from stage 1 to stage 2 | (83,796) | 590 | 83,796 | (590) | — | — | — | — |
– transfers from stage 2 to stage 1 | 66,557 | (3,480) | (66,557) | 3,480 | — | — | — | — |
– transfers from stage 3 | 1,546 | (189) | 3,932 | (555) | (5,478) | 744 | — | — |
– transfers to stage 3 | (20,591) | 81 | (56,724) | 4,880 | 77,315 | (4,961) | — | — |
Net remeasurement of ECL arising from stage transfers | — | 3,395 | — | (1,904) | — | (3,405) | — | (1,914) |
Changes in risk parameters | — | (1,317) | — | (2,902) | — | 29 | — | (4,190) |
Net new and further lending/repayments | (58,640) | (168) | (90,053) | 1,810 | (21,559) | 2,826 | (170,252) | 4,468 |
Assets written off | — | — | — | — | (4,308) | 4,308 | (4,308) | 4,308 |
As at 31 December 2021 | 3,817,513 | (15,382) | 365,803 | (16,108) | 194,447 | (38,000) | 4,377,763 | (69,490) |
ECL change for the year | 2,672 | |||||||
Assets written off | (4,308) | |||||||
Change in expected credit losses excluding effects of write- offs | (1,636) | |||||||
Recoveries | 1,114 | |||||||
Other | 1,215 | |||||||
Change in expected credit losses and other credit impairment charges | 693 | |||||||
Changes in expected credit losses for the period comprise the reclassification of the discount unwind element to interest income, amounting to €1.1m for the year ended 31 December 2021 and included in ‘Other’ along with the effects of foreign exchange adjustments in the above reconciliation. | ||||||||
At 31 December 2021 | 12 months ended 31 December 2021 | |||||||
Gross carrying/ nominal amount | Allowance for ECL | ECL (charge)/release | ||||||
€000 | €000 | €000 | ||||||
As above | 4,377,763 | (69,490) | 693 | |||||
Balances at central banks | 1,241,462 | (8) | 2 | |||||
Loans and advances to banks measured at amortised cost | 613,064 | (2) | 6 | |||||
Debt instruments measured at amortised cost | — | — | — | |||||
Items in course of collection | 4,453 | — | — | |||||
Accrued interest on debt instruments and other accrued income | 3,693 | — | — | |||||
Loan and other credit related commitments - banks | 8,742 | — | — | |||||
Summary of financial instruments to which the impairment requirements in IFRS 9 are applied through the Income Statement | 6,249,177 | (69,500) | 701 | |||||
Debt instruments and Treasury Bills measured at fair value through other comprehensive income | 1,073,872 | (76) | 294 | |||||
Total allowance for ECL/total income statement ECL charge for the year | N/A | (69,576) | 995 |
Stage 1 | Stage 2 | Stage 3 | Total | |
Loans and advances to customers | €000 | €000 | €000 | €000 |
WPB | 6,682 | 8,705 | 9,320 | 24,707 |
CMB | 3,495 | 10,039 | 9,493 | 23,027 |
At 31 December 2022 | 10,177 | 18,744 | 18,813 | 47,734 |
Loan and other credit-related commitments and financial guarantee and similar contracts | ||||
WPB | 56 | — | — | 56 |
CMB | 562 | 242 | 884 | 1,688 |
At 31 December 2022 | 618 | 242 | 884 | 1,744 |
HSBC Bank Malta p.l.c. Annual Report and Accounts 2022 | 81 |
Stage 1 | Stage 2 | Stage 3 | Total | |
€000 | €000 | €000 | €000 | |
Loans and advances to customers | ||||
WPB | 11,940 | 4,388 | 8,148 | 24,476 |
CMB | 2,800 | 11,227 | 19,529 | 33,556 |
At 31 December 2021 | 14,740 | 15,615 | 27,677 | 58,032 |
Loan and other credit-related commitments and financial guarantee and similar contracts | ||||
WPB | 46 | — | — | 46 |
CMB | 596 | 493 | 635 | 1,724 |
At 31 December 2021 | 642 | 493 | 635 | 1,770 |
82 | HSBC Bank Malta p.l.c. Annual Report and Accounts 2022 |
Stage 1 | Stage 2 | Stage 3 | Total | |
€000 | €000 | €000 | €000 | |
Gross carrying amount | ||||
Personal | ||||
– first lien residential mortgages | — | 27,403 | 23,048 | 50,451 |
– other personal lending | — | 3,352 | 4,252 | 7,604 |
Wholesale | ||||
– corporate and commercial | — | 20,314 | 44,469 | 64,783 |
– non-bank financial institutions | — | 7,473 | 4,972 | 12,445 |
At 31 December 2022 | — | 58,542 | 76,741 | 135,283 |
Allowance for ECL | ||||
Personal | ||||
– first lien residential mortgages | — | (1,798) | (2,883) | (4,681) |
– other personal lending | — | (278) | (516) | (794) |
Wholesale | ||||
– corporate and commercial | — | (2,465) | (6,246) | (8,711) |
– non-bank financial institutions | — | (584) | (261) | (845) |
At 31 December 2022 | — | (5,125) | (9,906) | (15,031) |
Gross carrying amount | ||||
Personal | ||||
– first lien residential mortgages | — | 16,260 | 40,190 | 56,450 |
– other personal lending | — | 1,544 | 6,911 | 8,455 |
Wholesale | ||||
– corporate and commercial | 79 | 24,823 | 63,472 | 88,374 |
– non-bank financial institutions | — | 26,155 | 4,459 | 30,614 |
At 31 December 2021 | 79 | 68,782 | 115,032 | 183,893 |
Allowance for ECL | ||||
Personal | ||||
– first lien residential mortgages | — | (1,188) | (3,913) | (5,101) |
– other personal lending | — | (28) | (766) | (794) |
Wholesale | ||||
– corporate and commercial | (1) | (4,107) | (15,583) | (19,691) |
– non-bank financial institutions | — | (1,194) | (279) | (1,473) |
At 31 December 2021 | (1) | (6,517) | (20,541) | (27,059) |
2022 | 2021 | |
€000 | €000 | |
Total renegotiated loans and advances to customers as a percentage of total gross loans and advances to customers | 4.2% | 5.6% |
Interest income recognised in respect of forborne/renegotiated assets | 5,860 | 7,173 |
Movement in forbearance activity during the year: | ||
At 1 January | 183,893 | 103,799 |
Loans renegotiated without derecognition | 8,978 | 96,491 |
Repayments | (49,870) | (13,097) |
Amounts written off | (7,718) | (3,300) |
At 31 December | 135,283 | 183,893 |
HSBC Bank Malta p.l.c. Annual Report and Accounts 2022 | 83 |
Gross carrying amount | Allowance for ECL | |||||||
Stage 1 | Stage 2 | Stage 3 | Total | Stage 1 | Stage 2 | Stage 3 | Total | |
€000 | €000 | €000 | €000 | €000 | €000 | €000 | €000 | |
Corporate and commercial | 682,367 | 139,420 | 50,886 | 872,673 | (3,272) | (8,168) | (9,229) | (20,669) |
– agriculture, forestry and fishing | 51 | 128 | 97 | 276 | (1) | (2) | (6) | (9) |
– manufacture | 50,050 | 8,182 | 3,541 | 61,773 | (362) | (309) | (496) | (1,167) |
– electricity, gas, steam and air-conditioning supply | 85,018 | 2,056 | — | 87,074 | (204) | (132) | — | (336) |
– water supply, sewerage, waste management and remediation | 23,746 | 217 | — | 23,963 | (5) | (1) | — | (6) |
– construction | 18,311 | 1,686 | 2,102 | 22,099 | (177) | (60) | (1,521) | (1,758) |
– wholesale and retail trade, repair of motor vehicles and motorcycles | 135,304 | 36,384 | 7,948 | 179,636 | (611) | (806) | (2,944) | (4,361) |
– transportation and storage | 5,170 | 547 | 8 | 5,725 | (21) | (22) | (8) | (51) |
– accommodation and food | 17,494 | 40,648 | 20,984 | 79,126 | (347) | (3,207) | (2,353) | (5,907) |
– information and communication | 23,522 | 4,122 | 1 | 27,645 | (268) | (970) | (1) | (1,239) |
– real estate | 71,443 | 5,041 | 9,765 | 86,249 | (745) | (355) | (299) | (1,399) |
– professional, scientific and technical activities | 90,225 | 17,927 | 13 | 108,165 | (373) | (1,110) | (12) | (1,495) |
– administrative and support services | 5,875 | 7,338 | 413 | 13,626 | (93) | (463) | (2) | (558) |
– education | 530 | 18 | 3,188 | 3,736 | (8) | — | (726) | (734) |
– health and care | 1,666 | 14,748 | 2,435 | 18,849 | (20) | (724) | (787) | (1,531) |
– arts, entertainment and recreation | 197 | 23 | 68 | 288 | — | (1) | — | (1) |
– other services | 1,263 | 355 | 323 | 1,941 | (18) | (6) | (74) | (98) |
– public administration and defence, compulsory social security | 152,502 | — | — | 152,502 | (19) | — | — | (19) |
Non-bank financial institutions | 17,066 | 41,956 | 4,972 | 63,994 | (234) | (1,860) | (261) | (2,355) |
At 31 December 2022 | 699,433 | 181,376 | 55,858 | 936,667 | (3,506) | (10,028) | (9,490) | (23,024) |
Other financial assets measured at amortised cost | ||||||||
– endorsements and acceptances | 1,500 | — | — | 1,500 | (5) | — | — | (5) |
– accrued income | 3,055 | 1,084 | 4,754 | 8,893 | — | — | (2,424) | (2,424) |
At 31 December 2022 | 4,555 | 1,084 | 4,754 | 10,393 | (5) | — | (2,424) | (2,429) |
Corporate and commercial | 641,574 | 122,874 | 74,705 | 839,153 | (2,466) | (8,129) | (19,240) | (29,835) |
– agriculture, forestry and fishing | 203 | 304 | 99 | 606 | (3) | (2) | (8) | (13) |
– manufacture | 35,012 | 9,638 | 8,051 | 52,701 | (293) | (278) | (2,696) | (3,267) |
– electricity, gas, steam and air-conditioning supply | 75,396 | — | — | 75,396 | (184) | — | — | (184) |
– water supply, sewerage, waste management and remediation | 33,269 | — | — | 33,269 | (7) | — | — | (7) |
– construction | 17,714 | 1,325 | 3,305 | 22,344 | (114) | (7) | (739) | (860) |
– wholesale and retail trade, repair of motor vehicles and motorcycles | 162,146 | 33,814 | 14,068 | 210,028 | (466) | (1,211) | (3,369) | (5,046) |
– transportation and storage | 7,026 | 6,911 | 16 | 13,953 | (42) | (127) | (16) | (185) |
– accommodation and food | 17,793 | 48,975 | 25,758 | 92,526 | (247) | (4,056) | (6,040) | (10,343) |
– information and communication | 28,558 | 3,521 | 1 | 32,080 | (248) | (1,449) | (1) | (1,698) |
– real estate | 85,930 | 6,346 | 13,937 | 106,213 | (641) | (464) | (1,930) | (3,035) |
– professional, scientific and technical activities | 4,770 | 1,111 | 20 | 5,901 | (17) | (8) | (20) | (45) |
– administrative and support services | 1,881 | 1,914 | 454 | 4,249 | (22) | (295) | (34) | (351) |
– education | 385 | — | 3,549 | 3,934 | (4) | — | (550) | (554) |
– health and care | 11,077 | 8,795 | 5,056 | 24,928 | (116) | (230) | (3,705) | (4,051) |
– arts, entertainment and recreation | 173 | 19 | 105 | 297 | (1) | — | (19) | (20) |
– other services | 3,156 | 201 | 286 | 3,643 | (30) | (2) | (113) | (145) |
– public administration and defence, compulsory social security | 157,085 | — | — | 157,085 | (31) | — | — | (31) |
Non-bank financial institutions | 38,032 | 82,906 | 4,472 | 125,410 | (341) | (3,100) | (286) | (3,727) |
At 31 December 2021 | 679,606 | 205,780 | 79,177 | 964,563 | (2,807) | (11,229) | (19,526) | (33,562) |
Other financial assets measured at amortised cost | ||||||||
– endorsements and acceptances | 842 | — | — | 842 | — | — | — | — |
– accrued income | 2,282 | 883 | 10,221 | 13,386 | — | — | (7,682) | (7,682) |
At 31 December 2021 | 3,124 | 883 | 10,221 | 14,228 | — | — | (7,682) | (7,682) |
84 | HSBC Bank Malta p.l.c. Annual Report and Accounts 2022 |
Nominal amount | Allowance for ECL | |||||||
Stage 1 | Stage 2 | Stage 3 | Total | Stage 1 | Stage 2 | Stage 3 | Total | |
€000 | €000 | €000 | €000 | €000 | €000 | €000 | €000 | |
Corporate and commercial | 519,602 | 84,429 | 7,924 | 611,955 | (542) | (236) | (883) | (1,661) |
Non-bank financial institutions | 18,069 | 8,161 | 1,427 | 27,657 | (20) | (6) | (1) | (27) |
At 31 December 2022 | 537,671 | 92,590 | 9,351 | 639,612 | (562) | (242) | (884) | (1,688) |
Corporate and commercial | 546,574 | 74,044 | 11,086 | 631,704 | (542) | (453) | (635) | (1,630) |
Non-bank financial institutions | 28,886 | 26,670 | — | 55,556 | (54) | (40) | — | (94) |
At 31 December 2021 | 575,460 | 100,714 | 11,086 | 687,260 | (596) | (493) | (635) | (1,724) |
Non-credit impaired | Credit impaired | Total | ||||||||||||||
Stage 1 | Stage 2 | Stage 3 | ||||||||||||||
Gross carrying/ nominal amount | Allowance for ECL | Gross carrying/ nominal amount | Allowance for ECL | Gross carrying/ nominal amount | Allowance for ECL | Gross carrying/ nominal amount | Allowance for ECL | |||||||||
€000 | €000 | €000 | €000 | €000 | €000 | €000 | €000 | |||||||||
As at 1 January 2022 | 1,258,190 | (3,403) | 307,377 | (11,722) | 100,484 | (27,843) | 1,666,051 | (42,968) | ||||||||
Transfers of financial instruments | (18,750) | (54) | 17,633 | 87 | 1,117 | (33) | — | — | ||||||||
– transfers from stage 1 to stage 2 | (51,304) | 237 | 51,304 | (237) | — | — | — | — | ||||||||
– transfers from stage 2 to stage 1 | 33,265 | (295) | (33,265) | 295 | — | — | — | — | ||||||||
– transfers from stage 3 | — | — | 15 | — | (15) | — | — | — | ||||||||
– transfers to stage 3 | (711) | 4 | (421) | 29 | 1,132 | (33) | — | — | ||||||||
Net remeasurement of ECL arising from stage transfers | — | 218 | — | (1,582) | — | (28) | — | (1,392) | ||||||||
Changes in risk parameters | — | (769) | — | 1,264 | — | (594) | — | (99) | ||||||||
Net new and further lending/ repayments | 2,219 | (65) | (49,960) | 1,683 | (18,196) | 2,258 | (65,937) | 3,876 | ||||||||
Assets written off | — | — | — | — | (13,442) | 13,442 | (13,442) | 13,442 | ||||||||
As at 31 December 2022 | 1,241,659 | (4,073) | 275,050 | (10,270) | 69,963 | (12,798) | 1,586,672 | (27,141) | ||||||||
ECL change for the year | 15,827 | |||||||||||||||
Assets written off | (13,442) | |||||||||||||||
Change in expected credit losses excluding effect of write- offs | 2,385 | |||||||||||||||
Recoveries | 8,880 | |||||||||||||||
Other | 1,070 | |||||||||||||||
Change in expected credit losses and other credit impairment charges | 12,335 |
HSBC Bank Malta p.l.c. Annual Report and Accounts 2022 | 85 |
Non - credit impaired | Credit impaired | Total | ||||||||||||||
Stage 1 | Stage 2 | Stage 3 | ||||||||||||||
Gross carrying/ nominal amount | Allowance for ECL | Gross carrying/ nominal amount | Allowance for ECL | Gross carrying/ nominal amount | Allowance for ECL | Gross carrying/ nominal amount | Allowance for ECL | |||||||||
€000 | €000 | €000 | €000 | €000 | €000 | €000 | €000 | |||||||||
As at 1 January 2021 | 1,296,899 | (4,646) | 425,321 | (14,875) | 59,685 | (26,748) | 1,781,905 | (46,269) | ||||||||
Transfers of financial instruments : | (13,692) | (1,455) | (36,361) | 5,668 | 50,053 | (4,213) | — | — | ||||||||
– transfers from stage 1 to stage 2 | (62,843) | 515 | 62,843 | (515) | — | — | — | — | ||||||||
– transfers from stage 2 to stage 1 | 50,173 | (1,978) | (50,173) | 1,978 | — | — | — | — | ||||||||
– transfers from stage 3 | 37 | — | 12 | (12) | (49) | 12 | — | — | ||||||||
– transfers to stage 3 | (1,059) | 8 | (49,043) | 4,217 | 50,102 | (4,225) | — | — | ||||||||
Net remeasurement of ECL arising from stage transfers | — | 1,785 | — | (539) | — | (1,484) | — | (238) | ||||||||
Changes in risk parameters | — | 1,154 | — | (3,187) | — | (2) | — | (2,035) | ||||||||
Net new and further lending/ repayments | (25,017) | (241) | (81,583) | 1,211 | (5,734) | 1,084 | (112,334) | 2,054 | ||||||||
Assets written off | — | — | — | — | (3,520) | 3,520 | (3,520) | 3,520 | ||||||||
As at 31 December 2021 | 1,258,190 | (3,403) | 307,377 | (11,722) | 100,484 | (27,843) | 1,666,051 | (42,968) | ||||||||
ECL change for the year | 3,301 | |||||||||||||||
Assets written off | (3,520) | |||||||||||||||
Change in expected credit losses excluding effect of write-offs | (219) | |||||||||||||||
Recoveries | 409 | |||||||||||||||
Other | 1,322 | |||||||||||||||
Change in expected credit losses and other credit impairment charges | 1,512 |
Gross exposure/nominal amount | Allowance for ECL | Net | ||||||
Strong | Good | Satisfactory | Sub- standard | Credit Impaired | Total | |||
€000 | €000 | €000 | €000 | €000 | €000 | €000 | €000 | |
Corporate and commercial | 170,398 | 12,442 | 364,036 | 57,155 | 7,924 | 611,955 | (1,660) | 610,295 |
Non-bank financial institutions | 2,000 | — | 18,816 | 5,414 | 1,427 | 27,657 | (28) | 27,629 |
At 31 December 2022 | 172,398 | 12,442 | 382,852 | 62,569 | 9,351 | 639,612 | (1,688) | 637,924 |
Corporate and commercial | 194,435 | 13,217 | 358,989 | 53,977 | 11,086 | 631,704 | (1,630) | 630,074 |
Non-bank financial institutions | — | 2,900 | 33,010 | 19,646 | — | 55,556 | (94) | 55,462 |
At 31 December 2021 | 194,435 | 16,117 | 391,999 | 73,623 | 11,086 | 687,260 | (1,724) | 685,536 |
86 | HSBC Bank Malta p.l.c. Annual Report and Accounts 2022 |
Gross carrying amount | Allowance for ECL | ||||||||
Stage 1 | Stage 2 | Stage 3 | Total | Stage 1 | Stage 2 | Stage 3 | Total | ECL Coverage | |
€000 | €000 | €000 | €000 | €000 | €000 | €000 | €000 | % | |
Corporate and Commercial | 682,367 | 139,420 | 50,886 | 872,673 | (3,272) | (8,168) | (9,229) | (20,669) | 2.4 |
CRR1 | 145,974 | — | — | 145,974 | (16) | — | — | (16) | — |
CRR2 | 155,352 | — | — | 155,352 | (32) | — | — | (32) | — |
CRR3 | 1,576 | 48 | — | 1,624 | (3) | — | — | (3) | 0.2 |
CRR4 | 194,632 | 2,167 | — | 196,799 | (875) | (10) | — | (885) | 0.4 |
CRR5 | 170,003 | 30,039 | — | 200,042 | (1,978) | (1,081) | — | (3,059) | 1.5 |
CRR6 | 14,773 | 66,079 | — | 80,852 | (367) | (3,156) | — | (3,523) | 4.4 |
CRR7 | 57 | 36,070 | — | 36,127 | (1) | (2,719) | — | (2,720) | 7.5 |
CRR8 | — | 5,017 | — | 5,017 | — | (1,202) | — | (1,202) | 24.0 |
CRR9/10 | — | — | 50,886 | 50,886 | — | — | (9,229) | (9,229) | 18.1 |
Non-bank financial institutions | 17,066 | 41,956 | 4,972 | 63,994 | (234) | (1,860) | (261) | (2,355) | 3.7 |
CRR1 | 13 | — | — | 13 | — | — | — | — | — |
CRR2 | — | — | — | — | — | — | — | — | — |
CRR3 | — | — | — | — | — | — | — | — | — |
CRR4 | 2,919 | — | — | 2,919 | (20) | — | — | (20) | 0.7 |
CRR5 | 14,128 | 35,157 | — | 49,285 | (214) | (1,347) | — | (1,561) | 3.2 |
CRR6 | 6 | 1,638 | — | 1,644 | — | (338) | — | (338) | 20.6 |
CRR7 | — | 5,161 | — | 5,161 | — | (175) | — | (175) | 3.4 |
CRR8 | — | — | — | — | — | — | — | — | — |
CRR9/10 | — | — | 4,972 | 4,972 | — | — | (261) | (261) | 5.2 |
At 31 December 2022 | 699,433 | 181,376 | 55,858 | 936,667 | (3,506) | (10,028) | (9,490) | (23,024) | 2.5 |
Corporate and Commercial | 641,574 | 122,874 | 74,705 | 839,153 | (2,466) | (8,129) | (19,240) | (29,835) | 3.6 |
CRR1 | 223,653 | — | — | 223,653 | (29) | — | — | (29) | — |
CRR2 | 58,686 | — | — | 58,686 | (12) | — | — | (12) | — |
CRR3 | 374 | — | — | 374 | (2) | — | — | (2) | 0.5 |
CRR4 | 134,286 | — | — | 134,286 | (435) | — | — | (435) | 0.3 |
CRR5 | 201,950 | 24,222 | — | 226,172 | (1,653) | (577) | — | (2,230) | 1.0 |
CRR6 | 21,036 | 58,925 | — | 79,961 | (285) | (2,580) | — | (2,865) | 3.6 |
CRR7 | 1,589 | 33,958 | — | 35,547 | (50) | (3,160) | — | (3,210) | 9.0 |
CRR8 | — | 5,769 | — | 5,769 | — | (1,812) | — | (1,812) | 31.4 |
CRR9/10 | — | — | 74,705 | 74,705 | — | — | (19,240) | (19,240) | 25.8 |
Non-bank financial institutions | 38,032 | 82,906 | 4,472 | 125,410 | (341) | (3,100) | (286) | (3,727) | 3.0 |
CRR1 | 14 | — | — | 14 | — | — | — | — | — |
CRR2 | — | — | — | — | — | — | — | — | — |
CRR3 | 2,439 | — | — | 2,439 | (4) | — | — | (4) | 0.2 |
CRR4 | 1,053 | — | — | 1,053 | (4) | — | — | (4) | 0.4 |
CRR5 | 34,519 | 36,253 | — | 70,772 | (333) | (778) | — | (1,111) | 1.6 |
CRR6 | 7 | 39,472 | — | 39,479 | — | (2,270) | — | (2,270) | 5.7 |
CRR7 | — | 7,181 | — | 7,181 | — | (52) | — | (52) | 0.7 |
CRR8 | — | — | — | — | — | — | — | — | — |
CRR9/10 | — | — | 4,472 | 4,472 | — | — | (286) | (286) | 6.4 |
At 31 December 2021 | 679,606 | 205,780 | 79,177 | 964,563 | (2,807) | (11,229) | (19,526) | (33,562) | 3.5 |
HSBC Bank Malta p.l.c. Annual Report and Accounts 2022 | 87 |
Gross carrying amount | Allowance for ECL | |||||||
Stage 1 | Stage 2 | Stage 3 | Total | Stage 1 | Stage 2 | Stage 3 | Total | |
€000 | €000 | €000 | €000 | €000 | €000 | €000 | €000 | |
By portfolio | ||||||||
First lien residential mortgages | 1,954,743 | 92,233 | 53,033 | 2,100,009 | (6,161) | (6,566) | (7,698) | (20,425) |
Other personal lending | 158,198 | 17,908 | 10,119 | 186,225 | (510) | (2,150) | (1,625) | (4,285) |
– second lien residential mortgages | 79,905 | 8,271 | 9,029 | 97,205 | (208) | (326) | (927) | (1,461) |
– credit cards | 24,792 | 3,143 | 88 | 28,023 | (227) | (1,260) | (56) | (1,543) |
– other | 53,501 | 6,494 | 1,002 | 60,997 | (75) | (564) | (642) | (1,281) |
At 31 December 2022 | 2,112,941 | 110,141 | 63,152 | 2,286,234 | (6,671) | (8,716) | (9,323) | (24,710) |
Other financial assets measured at amortised cost | ||||||||
– accrued income | 4,032 | 501 | 4,002 | 8,535 | — | — | (3,135) | (3,135) |
At 31 December 2022 | 4,032 | 501 | 4,002 | 8,535 | — | — | (3,135) | (3,135) |
By portfolio | ||||||||
First lien residential mortgages | 1,974,558 | 37,323 | 75,272 | 2,087,153 | (10,896) | (2,835) | (6,799) | (20,530) |
Other personal lending | 176,623 | 12,456 | 13,962 | 203,041 | (1,037) | (1,551) | (1,352) | (3,940) |
– second lien residential mortgages | 92,943 | 4,318 | 12,230 | 109,491 | (412) | (168) | (220) | (800) |
– credit cards | 27,666 | 985 | 94 | 28,745 | (178) | (360) | (57) | (595) |
– other | 56,014 | 7,153 | 1,638 | 64,805 | (447) | (1,023) | (1,075) | (2,545) |
At 31 December 2021 | 2,151,181 | 49,779 | 89,234 | 2,290,194 | (11,933) | (4,386) | (8,151) | (24,470) |
Other financial assets measured at amortised cost | ||||||||
– accrued income | 4,443 | 369 | 4,610 | 9,422 | — | — | (2,006) | (2,006) |
At 31 December 2021 | 4,443 | 369 | 4,610 | 9,422 | — | — | (2,006) | (2,006) |
Nominal amount | Allowance for ECL | |||||||
Stage 1 | Stage 2 | Stage 3 | Total | Stage 1 | Stage 2 | Stage 3 | Total | |
€000 | €000 | €000 | €000 | €000 | €000 | €000 | €000 | |
Personal | 358,619 | 8,648 | 381 | 367,648 | (56) | — | — | (56) |
At 31 December 2022 | 358,619 | 8,648 | 381 | 367,648 | (56) | — | — | (56) |
Personal | 403,699 | 8,278 | 119 | 412,096 | (46) | — | — | (46) |
At 31 December 2021 | 403,699 | 8,278 | 119 | 412,096 | (46) | — | — | (46) |
88 | HSBC Bank Malta p.l.c. Annual Report and Accounts 2022 |
Non-credit impaired | Credit impaired | Total | ||||||||||||||
Stage 1 | Stage 2 | Stage 3 | ||||||||||||||
Gross carrying/ nominal amount | Allowance for ECL | Gross carrying/ nominal amount | Allowance for ECL | Gross carrying/ nominal amount | Allowance for ECL | Gross carrying/ nominal amount | Allowance for ECL | |||||||||
€000 | €000 | €000 | €000 | €000 | €000 | €000 | €000 | |||||||||
As at 1 January 2022 | 2,559,323 | (11,979) | 58,426 | (4,386) | 93,963 | (10,157) | 2,711,712 | (26,522) | ||||||||
Transfers of financial instruments | (59,693) | (320) | 72,838 | (2,014) | (13,145) | 2,334 | — | — | ||||||||
– transfers from stage 1 to stage 2 | (65,518) | 343 | 65,518 | (343) | — | — | — | — | ||||||||
– transfers from stage 2 to stage 1 | 7,315 | (449) | (7,315) | 449 | — | — | — | — | ||||||||
– transfers from stage 3 | 3,111 | (238) | 20,904 | (2,527) | (24,015) | 2,765 | — | — | ||||||||
– transfers to stage 3 | (4,601) | 24 | (6,269) | 407 | 10,870 | (431) | — | — | ||||||||
Net remeasurement of ECL arising from stage transfers | — | 490 | — | (3,879) | — | (408) | — | (3,797) | ||||||||
Changes in risk parameters | — | 4,239 | — | 344 | — | (5,237) | — | (654) | ||||||||
Net new and further lending/ repayments | (24,038) | 843 | (11,974) | 1,219 | (11,521) | (752) | (47,533) | 1,310 | ||||||||
Assets written off | — | — | — | — | (1,762) | 1,762 | (1,762) | 1,762 | ||||||||
As at 31 December 2022 | 2,475,592 | (6,727) | 119,290 | (8,716) | 67,535 | (12,458) | 2,662,417 | (27,901) | ||||||||
ECL change for the year | (1,379) | |||||||||||||||
Assets written off | (1,762) | |||||||||||||||
Change in expected credit losses excluding effect of write-offs | (3,141) | |||||||||||||||
Recoveries | 479 | |||||||||||||||
Other | (19) | |||||||||||||||
Change in expected credit losses and other credit impairment charges | (2,681) | |||||||||||||||
As at 1 January 2021 | 2,615,538 | (9,648) | 66,088 | (5,452) | 88,792 | (10,793) | 2,770,418 | (25,893) | ||||||||
Transfers of financial instruments : | (22,592) | (1,543) | 808 | 1,547 | 21,784 | (4) | — | — | ||||||||
– transfers from stage 1 to stage 2 | (20,953) | 75 | 20,953 | (75) | — | — | — | — | ||||||||
– transfers from stage 2 to stage 1 | 16,384 | (1,502) | (16,384) | 1,502 | — | — | — | — | ||||||||
– transfers from stage 3 | 1,509 | (189) | 3,920 | (543) | (5,429) | 732 | — | — | ||||||||
– transfers to stage 3 | (19,532) | 73 | (7,681) | 663 | 27,213 | (736) | — | — | ||||||||
Net remeasurement of ECL arising from stage transfers | — | 1,610 | — | (1,365) | — | (1,921) | — | (1,676) | ||||||||
Changes in risk parameters | — | (2,471) | — | 285 | — | 31 | — | (2,155) | ||||||||
Net new and further lending/ repayments | (33,623) | 73 | (8,470) | 599 | (15,825) | 1,742 | (57,918) | 2,414 | ||||||||
Assets written off | — | — | — | — | (788) | 788 | (788) | 788 | ||||||||
As at 31 December 2021 | 2,559,323 | (11,979) | 58,426 | (4,386) | 93,963 | (10,157) | 2,711,712 | (26,522) | ||||||||
ECL change for the year | (629) | |||||||||||||||
Assets written off | (788) | |||||||||||||||
Change in expected credit losses for the year | (1,417) | |||||||||||||||
Recoveries | 705 | |||||||||||||||
Other | (107) | |||||||||||||||
Change in expected credit losses and other credit impairment charges | (819) |
HSBC Bank Malta p.l.c. Annual Report and Accounts 2022 | 89 |
Gross carrying amount | Allowance for ECL | ||||||||
Stage 1 | Stage 2 | Stage 3 | Total | Stage 1 | Stage 2 | Stage 3 | Total | ECL Coverage | |
€000 | €000 | €000 | €000 | €000 | €000 | €000 | €000 | % | |
First lien residential mortgages | 1,954,743 | 92,233 | 53,033 | 2,100,009 | (6,161) | (6,566) | (7,698) | (20,425) | 1.0 |
Not past due | 1,954,653 | 73,316 | 16,316 | 2,044,285 | (6,161) | (5,366) | (2,400) | (13,927) | 0.7 |
Past due by: | |||||||||
less than 30 days | 90 | 16,569 | 11,113 | 27,772 | — | (918) | (1,258) | (2,176) | 7.8 |
30 to 59 days | — | 1,819 | 4,439 | 6,258 | — | (137) | (480) | (617) | 9.9 |
60 to 89 days | — | 529 | 2,187 | 2,716 | — | (145) | (243) | (388) | 14.3 |
90 days and more | — | — | 18,978 | 18,978 | — | — | (3,317) | (3,317) | 17.5 |
Other personal lending | 158,198 | 17,908 | 10,119 | 186,225 | (510) | (2,150) | (1,625) | (4,285) | 2.3 |
Not past due | 156,572 | 14,512 | 3,133 | 174,217 | (494) | (1,703) | (307) | (2,504) | 1.4 |
Past due by: | |||||||||
less than 30 days | 1,626 | 2,801 | 1,187 | 5,614 | (16) | (285) | (81) | (382) | 6.8 |
30 to 59 days | — | 332 | 687 | 1,019 | — | (72) | (135) | (207) | 20.3 |
60 to 89 days | — | 263 | 246 | 509 | — | (90) | (24) | (114) | 22.4 |
90 days and more | — | — | 4,866 | 4,866 | — | — | (1,078) | (1,078) | 22.2 |
At 31 December 2022 | 2,112,941 | 110,141 | 63,152 | 2,286,234 | (6,671) | (8,716) | (9,323) | (24,710) | 1.1 |
First lien residential mortgages | 1,974,558 | 37,323 | 75,272 | 2,087,153 | (10,896) | (2,835) | (6,799) | (20,530) | 1.0 |
Not past due | 1,971,017 | 21,394 | 38,226 | 2,030,637 | (10,878) | (1,637) | (3,967) | (16,482) | 0.8 |
Past due by: | |||||||||
less than 30 days | 3,541 | 8,046 | 6,923 | 18,510 | (18) | (553) | (781) | (1,352) | 7.3 |
30 to 59 days | — | 5,968 | 4,960 | 10,928 | — | (350) | (540) | (890) | 8.1 |
60 to 89 days | — | 1,915 | 2,007 | 3,922 | — | (295) | (170) | (465) | 11.9 |
90 days and more | — | — | 23,156 | 23,156 | — | — | (1,341) | (1,341) | 5.8 |
Other personal lending | 176,623 | 12,456 | 13,962 | 203,041 | (1,037) | (1,551) | (1,352) | (3,940) | 1.9 |
Not past due | 175,690 | 9,816 | 4,731 | 190,237 | (1,032) | (1,227) | (516) | (2,775) | 1.5 |
Past due by: | |||||||||
less than 30 days | 933 | 1,743 | 1,742 | 4,418 | (5) | (177) | (138) | (320) | 7.2 |
30 to 59 days | — | 650 | 914 | 1,564 | — | (80) | (66) | (146) | 9.3 |
60 to 89 days | — | 247 | 328 | 575 | — | (67) | (22) | (89) | 15.5 |
90 days and more | — | — | 6,247 | 6,247 | — | — | (610) | (610) | 9.8 |
At 31 December 2021 | 2,151,181 | 49,779 | 89,234 | 2,290,194 | (11,933) | (4,386) | (8,151) | (24,470) | 1.1 |
90 | HSBC Bank Malta p.l.c. Annual Report and Accounts 2022 |
Gross carrying amount | Allowance for ECL | ECL coverage | |
€000 | €000 | % | |
Stage 1 | |||
Not collateralised | 169,622 | (1,026) | 0.6 |
Fully collateralised | 457,924 | (1,992) | 0.4 |
– less than or equal to 50% | 162,217 | (1,608) | 1.0 |
– 51% to 75% | 29,657 | (284) | 1.0 |
– 76% to 90% | 2,106 | (8) | 0.4 |
– 91% to 100% | 263,944 | (92) | — |
Partially collateralised | |||
– greater than 100% LTV | 71,887 | (488) | 0.7 |
– of which: Collateral value | 13,460 | ||
Total | 699,433 | (3,506) | 0.5 |
Stage 2 | |||
Not collateralised | 45,793 | (1,274) | 2.8 |
Fully collateralised | 123,503 | (8,180) | 6.6 |
– less than or equal to 50% | 115,287 | (7,854) | 6.8 |
– 51% to 75% | 6,521 | (308) | 4.7 |
– 76% to 90% | 1,480 | (10) | 0.7 |
– 91% to 100% | 215 | (8) | 3.7 |
Partially collateralised | |||
– greater than 100% LTV | 12,080 | (574) | 4.8 |
– of which: Collateral value | 3,441 | ||
Total | 181,376 | (10,028) | 5.5 |
Stage 3 | |||
Not collateralised | 34,581 | (6,173) | 17.9 |
Fully collateralised | 19,299 | (2,243) | 11.6 |
– less than or equal to 50% | 18,102 | (2,049) | 11.3 |
– 51% to 75% | 1,188 | (185) | 15.6 |
– 76% to 90% | — | — | — |
– 91% to 100% | 9 | (9) | 100.0 |
Partially collateralised | |||
– greater than 100% LTV | 1,978 | (1,074) | 54.3 |
– of which: Collateral value | 678 | ||
Total | 55,858 | (9,490) | 17.0 |
At 31 December 2022 | 936,667 | (23,024) | 2.5 |
HSBC Bank Malta p.l.c. Annual Report and Accounts 2022 | 91 |
Gross carrying amount | Allowance for ECL | ECL coverage | |
€000 | €000 | % | |
Stage 1 | |||
Not collateralised | 171,258 | (966) | 0.6 |
Fully collateralised | 472,699 | (1,482) | 0.3 |
– less than or equal to 50% | 156,130 | (1,177) | 0.8 |
– 51% to 75% | 15,996 | (177) | 1.1 |
– 76% to 90% | 10,009 | (62) | 0.6 |
– 91% to 100% | 290,564 | (66) | — |
Partially collateralised | |||
– greater than 100% LTV | 35,649 | (359) | 1.0 |
– of which: Collateral value | 9,080 | ||
Total | 679,606 | (2,807) | 0.4 |
Stage 2 | |||
Not collateralised | 83,195 | (4,531) | 5.4 |
Fully collateralised | 119,473 | (6,643) | 5.6 |
– less than or equal to 50% | 112,255 | (6,447) | 5.7 |
– 51% to 75% | 2,073 | (77) | 3.7 |
– 76% to 90% | 58 | — | — |
– 91% to 100% | 5,087 | (119) | 2.3 |
Partially collateralised | |||
– greater than 100% LTV | 3,112 | (55) | 1.8 |
– of which: Collateral value | 434 | ||
Total | 205,780 | (11,229) | 5.5 |
Stage 3 | |||
Not collateralised | 43,677 | (9,632) | 22.1 |
Fully collateralised | 24,838 | (5,107) | 20.6 |
– less than or equal to 50% | 18,544 | (4,780) | 25.8 |
– 51% to 75% | 5,571 | (98) | 1.8 |
– 76% to 90% | 658 | (171) | 26.0 |
– 91% to 100% | 65 | (58) | 89.2 |
Partially collateralised | |||
– greater than 100% LTV | 10,662 | (4,787) | 44.9 |
– of which: Collateral value | 3,276 | ||
Total | 79,177 | (19,526) | 24.7 |
At 31 December 2021 | 964,563 | (33,562) | 3.5 |
Gross carrying amount | Allowance for ECL | ECL coverage | |
€000 | €000 | % | |
CRR 1 to 8 | |||
Not collateralised | 215,415 | (2,300) | 1.1 |
Fully collateralised | 581,427 | (10,172) | 1.7 |
– less than or equal to 50% | 277,504 | (9,462) | 3.4 |
– 51% to 75% | 36,178 | (592) | 1.6 |
– 76% to 90% | 3,586 | (18) | 0.5 |
– 91% to 100% | 264,159 | (100) | — |
Partially collateralised | |||
– greater than 100% LTV | 83,967 | (1,062) | 1.3 |
– of which: Collateral value | 16,901 | ||
Total | 880,809 | (13,534) | 1.5 |
CRR 9 to 10 | |||
Not collateralised | 34,581 | (6,173) | 17.9 |
Fully collateralised | 19,299 | (2,243) | 11.6 |
– less than or equal to 50% | 18,102 | (2,049) | 11.3 |
– 51% to 75% | 1,188 | (185) | 15.6 |
– 76% to 90% | — | — | — |
– 91% to 100% | 9 | (9) | 100.0 |
Partially collateralised | |||
– greater than 100% LTV | 1,978 | (1,074) | 54.3 |
– of which: Collateral value | 678 | ||
Total | 55,858 | (9,490) | 17.0 |
At 31 December 2022 | 936,667 | (23,024) | 2.5 |
92 | HSBC Bank Malta p.l.c. Annual Report and Accounts 2022 |
Gross carrying amount | Allowance for ECL | ECL coverage | |
€000 | €000 | % | |
CRR 1 to 8 | |||
Not collateralised | 254,453 | (5,497) | 2.2 |
Fully collateralised | 592,172 | (8,125) | 1.4 |
– less than or equal to 50% | 268,385 | (7,624) | 2.8 |
– 51% to 75% | 18,069 | (254) | 1.4 |
– 76% to 90% | 10,067 | (62) | 0.6 |
– 91% to 100% | 295,651 | (185) | 0.1 |
Partially collateralised | |||
– greater than 100% LTV | 38,761 | (414) | 1.1 |
– of which: Collateral value | 9,514 | ||
Total | 885,386 | (14,036) | 1.6 |
CRR 9 to 10 | |||
Not collateralised | 43,677 | (9,632) | 22.1 |
Fully collateralised | 24,838 | (5,107) | 20.6 |
– less than or equal to 50% | 18,544 | (4,780) | 25.8 |
– 51% to 75% | 5,571 | (98) | 1.8 |
– 76% to 90% | 658 | (171) | 26.0 |
– 91% to 100% | 65 | (58) | 89.2 |
Partially collateralised | |||
– greater than 100% LTV | 10,662 | (4,787) | 44.9 |
– of which: Collateral value | 3,276 | ||
Total | 79,177 | (19,526) | 24.7 |
At 31 December 2021 | 964,563 | (33,562) | 3.5 |
Gross carrying amount | Allowance for ECL | ECL coverage | |
€000 | €000 | % | |
Stage 1 | |||
Not collateralised | 72,884 | (296) | 0.4 |
Fully collateralised | 2,036,266 | (6,370) | 0.3 |
– less than or equal to 50% | 910,869 | (2,674) | 0.3 |
– 51% to 75% | 852,590 | (2,773) | 0.3 |
– 76% to 90% | 271,060 | (921) | 0.3 |
– 91% to 100% | 1,747 | (2) | 0.1 |
Partially collateralised : | |||
– greater than 100% LTV | 3,791 | (5) | 0.1 |
– of which: Collateral value | 969 | ||
Total | 2,112,941 | (6,671) | 0.3 |
Stage 2 | |||
Not collateralised | 8,379 | (1,762) | 21.0 |
Fully collateralised | 101,395 | (6,932) | 6.8 |
– less than or equal to 50% | 66,286 | (2,937) | 4.4 |
– 51% to 75% | 30,812 | (3,491) | 11.3 |
– 76% to 90% | 3,919 | (480) | 12.2 |
– 91% to 100% | 378 | (24) | 6.3 |
Partially collateralised: | |||
– greater than 100% LTV | 367 | (22) | 6.0 |
– of which: Collateral value | 137 | ||
Total | 110,141 | (8,716) | 7.9 |
Stage 3 | |||
Not collateralised | 1,005 | (647) | 64.4 |
Fully collateralised | 62,122 | (8,659) | 13.9 |
– less than or equal to 50% | 48,289 | (4,798) | 9.9 |
– 51% to 75% | 11,507 | (3,137) | 27.3 |
– 76% to 90% | 1,932 | (519) | 26.9 |
– 91% to 100% | 394 | (205) | 52.0 |
Partially collateralised: | |||
– greater than 100% LTV | 25 | (17) | 68.0 |
– of which: Collateral value | 4 | ||
Total | 63,152 | (9,323) | 14.8 |
At 31 December 2022 | 2,286,234 | (24,710) | 1.1 |
HSBC Bank Malta p.l.c. Annual Report and Accounts 2022 | 93 |
Gross carrying amount | Allowance for ECL | ECL coverage | |
€000 | €000 | % | |
Stage 1 | |||
Not collateralised | 77,847 | (571) | 0.7 |
Fully collateralised | 2,069,865 | (11,335) | 0.5 |
– less than or equal to 50% | 867,098 | (4,257) | 0.5 |
– 51% to 75% | 860,947 | (4,926) | 0.6 |
– 76% to 90% | 339,720 | (2,051) | 0.6 |
– 91% to 100% | 2,100 | (101) | 4.8 |
Partially collateralised : | |||
– greater than 100% LTV | 3,469 | (27) | 0.8 |
– of which: Collateral value | 1,192 | ||
Total | 2,151,181 | (11,933) | 0.6 |
Stage 2 | |||
Not collateralised | 6,696 | (1,203) | 18.0 |
Fully collateralised | 42,705 | (3,139) | 7.4 |
– less than or equal to 50% | 27,378 | (779) | 2.9 |
– 51% to 75% | 13,484 | (2,013) | 14.9 |
– 76% to 90% | 1,443 | (296) | 20.5 |
– 91% to 100% | 400 | (51) | 12.8 |
Partially collateralised: | |||
– greater than 100% LTV | 378 | (44) | 11.6 |
– of which: Collateral value | 104 | ||
Total | 49,779 | (4,386) | 8.8 |
Stage 3 | |||
Not collateralised | 1,570 | (1,025) | 65.3 |
Fully collateralised | 87,635 | (7,105) | 8.1 |
– less than or equal to 50% | 57,437 | (1,515) | 2.6 |
– 51% to 75% | 24,397 | (3,842) | 15.7 |
– 76% to 90% | 5,068 | (1,386) | 27.3 |
– 91% to 100% | 733 | (362) | 49.4 |
Partially collateralised: | |||
– greater than 100% LTV | 29 | (21) | 72.4 |
– of which: Collateral value | 20 | ||
Total | 89,234 | (8,151) | 9.1 |
At 31 December 2021 | 2,290,194 | (24,470) | 1.1 |
94 | HSBC Bank Malta p.l.c. Annual Report and Accounts 2022 |
Gross carrying amount | Allowance for ECL | ECL coverage | |
€000 | €000 | % | |
Less than 30 days past due | |||
Not collateralised | 81,096 | (2,095) | 2.6 |
Fully collateralised | 2,166,637 | (16,869) | 0.8 |
– less than or equal to 50% | 999,672 | (7,418) | 0.7 |
– 51% to 75% | 888,503 | (7,606) | 0.9 |
– 76% to 90% | 276,138 | (1,727) | 0.6 |
– 91% to 100% | 2,324 | (118) | 5.1 |
Partially collateralised | |||
– greater than 100% LTV | 4,155 | (25) | 0.6 |
– of which: Collateral value | 1,106 | ||
Total | 2,251,888 | (18,989) | 0.8 |
30 days to 89 days past due | |||
Not collateralised | 506 | (178) | 35.2 |
Fully collateralised | 9,977 | (1,136) | 11.4 |
– less than or equal to 50% | 7,739 | (716) | 9.3 |
– 51% to 75% | 1,902 | (339) | 17.8 |
– 76% to 90% | 336 | (81) | 24.1 |
– 91% to 100% | — | — | — |
Partially collateralised | |||
– greater than 100% LTV | 19 | (12) | 63.2 |
– of which: Collateral Value | 2 | ||
Total | 10,502 | (1,326) | 12.6 |
90 days past due or more | |||
Not collateralised | 666 | (431) | 64.7 |
Fully collateralised | 23,170 | (3,958) | 17.1 |
– less than or equal to 50% | 18,034 | (2,272) | 12.6 |
– 51% to 75% | 4,504 | (1,462) | 32.5 |
– 76% to 90% | 437 | (111) | 25.4 |
– 91% to 100% | 195 | (113) | 57.9 |
Partially collateralised | |||
– greater than 100% LTV | 8 | (6) | 75.0 |
– of which: Collateral value | 2 | ||
Total | 23,844 | (4,395) | 18.4 |
At 31 December 2022 | 2,286,234 | (24,710) | 1.1 |
Less than 30 days past due | |||
Not collateralised | 84,543 | (2,045) | 2.4 |
Fully collateralised | 2,155,389 | (18,796) | 0.9 |
– less than or equal to 50% | 921,528 | (5,840) | 0.6 |
– 51% to 75% | 886,852 | (9,313) | 1.1 |
– 76% to 90% | 344,331 | (3,273) | 1.0 |
– 91% to 100% | 2,678 | (370) | 13.8 |
Partially collateralised : | |||
– greater than 100% LTV | 3,870 | (88) | 2.3 |
– of which: Collateral value | 1,314 | ||
Total | 2,243,802 | (20,929) | 0.9 |
30 days to 89 days past due | |||
Not collateralised | 696 | (213) | 30.6 |
Fully collateralised | 16,293 | (1,377) | 8.5 |
– less than or equal to 50% | 10,077 | (235) | 2.3 |
– 51% to 75% | 4,824 | (796) | 16.5 |
– 76% to 90% | 1,155 | (272) | 23.6 |
– 91% to 100% | 237 | (74) | 31.2 |
Partially collateralised | |||
– greater than 100% LTV | — | — | — |
– of which: Collateral value | — | ||
Total | 16,989 | (1,590) | 9.4 |
90 days past due or more | |||
Not collateralised | 874 | (541) | 61.9 |
Fully collateralised | 28,523 | (1,406) | 4.9 |
– less than or equal to 50% | 20,308 | (476) | 2.3 |
– 51% to 75% | 7,152 | (672) | 9.4 |
– 76% to 90% | 745 | (188) | 25.2 |
– 91% to 100% | 318 | (70) | 22.0 |
Partially collateralised | |||
– greater than 100% LTV | 6 | (4) | 66.7 |
– of which: Collateral value | 2 | ||
Total | 29,403 | (1,951) | 6.6 |
At 31 December 2021 | 2,290,194 | (24,470) | 1.1 |
HSBC Bank Malta p.l.c. Annual Report and Accounts 2022 | 95 |
96 | HSBC Bank Malta p.l.c. Annual Report and Accounts 2022 |
Consensus scenarios | Downside 2 scenario | ||||
Central | Upside | Downside | |||
2022: Annual average growth rate (%) | 5.0 | 5.0 | 5.0 | 5.0 | |
2023: Annual average growth rate (%) | 3.2 | 4.5 | 1.7 | (2.2) | |
2024: Annual average growth rate (%) | 3.1 | 4.7 | 1.5 | (1.7) | |
2025: Annual average growth rate (%) | 2.8 | 3.7 | 2.1 | 4.6 | |
2026: Annual average growth rate (%) | 2.8 | 2.8 | 2.8 | 4.8 | |
Five year average growth rate (%) | 2.9 | 3.7 | 2.2 | 1.7 |
Consensus scenarios | Downside 2 scenario | |||
Central | Upside | Downside | ||
2021: Annual average growth rate (%) | 5.5 | 5.5 | 5.5 | 5.5 |
2022: Annual average growth rate (%) | 4.9 | 6.5 | 3.2 | (1.5) |
2023: Annual average growth rate (%) | 3.3 | 4.7 | 2.0 | 1.3 |
2024: Annual average growth rate (%) | 2.6 | 3.3 | 2.0 | 4.1 |
2025: Annual average growth rate (%) | 2.7 | 2.7 | 2.7 | 3.8 |
Five year average growth rate (%) | 3.2 | 4.0 | 2.5 | 2.2 |
HSBC Bank Malta p.l.c. Annual Report and Accounts 2022 | 97 |
Consensus scenarios | Downside 2 scenario | ||||
Central | Upside | Downside | |||
2022: Annual average rate (%) | 3.3 | 3.3 | 3.3 | 3.3 | |
2023: Annual average rate (%) | 3.5 | 2.2 | 4.7 | 4.7 | |
2024: Annual average rate (%) | 3.5 | 2.2 | 4.9 | 5.1 | |
2025: Annual average rate (%) | 3.6 | 3.0 | 4.1 | 4.8 | |
2026: Annual average rate (%) | 3.5 | 3.5 | 3.5 | 4.2 | |
Five year average rate (%) | 3.5 | 2.9 | 4.2 | 4.6 |
Consensus scenarios | Downside 2 scenario | |||
Central | Upside | Downside | ||
2021: Annual average rate (%) | 4.0 | 4.0 | 4.0 | 4.0 |
2022: Annual average rate (%) | 4.0 | 2.7 | 5.5 | 6.5 |
2023: Annual average rate (%) | 3.8 | 2.4 | 5.6 | 8.0 |
2024: Annual average rate (%) | 3.9 | 3.0 | 4.7 | 8.1 |
2025: Annual average rate (%) | 3.8 | 3.8 | 3.8 | 6.4 |
Five year average rate (%) | 3.9 | 3.1 | 4.7 | 6.9 |
Consensus scenarios | Downside 2 scenario | ||||
Central | Upside | Downside | |||
2022: Annual average growth rate (%) | 5.9 | 5.9 | 5.9 | 5.9 | |
2023: Annual average growth rate (%) | 3.2 | 2.5 | 4.6 | 7.2 | |
2024: Annual average growth rate (%) | 1.9 | 1.4 | 1.9 | (1.4) | |
2025: Annual average growth rate (%) | 1.9 | 2.1 | 0.8 | 0.3 | |
2026: Annual average growth rate (%) | 2.0 | 2.0 | 2.0 | 1.3 | |
Five year average growth rate (%) | 2.2 | 2.0 | 2.2 | 1.8 |
Consensus scenarios | Downside 2 scenario | |||
Central | Upside | Downside | ||
2021: Annual average % change | 0.7 | 0.7 | 0.7 | 0.7 |
2022: Annual average % change | 1.7 | 2.1 | 1.3 | (0.6) |
2023: Annual average % change | 1.7 | 2.3 | 1.0 | 0.2 |
2024: Annual average % change | 1.8 | 2.0 | 1.6 | 1.4 |
2025: Annual average % change | 1.8 | 1.8 | 1.8 | 1.3 |
Five year average % change | 1.7 | 2.0 | 1.5 | 0.8 |
Consensus scenarios | Downside 2 scenario | ||||
Central | Upside | Downside | |||
2022: Annual average growth rate (%) | 5.9 | 5.9 | 5.9 | 5.9 | |
2023: Annual average growth rate (%) | 7.0 | 8.3 | 5.4 | 3.5 | |
2024: Annual average growth rate (%) | 6.7 | 8.3 | 5.0 | (10.7) | |
2025: Annual average growth rate (%) | 3.9 | 4.7 | 3.1 | (13.0) | |
2026: Annual average growth rate (%) | 3.9 | 3.9 | 3.9 | (3.1) | |
Five year average growth rate (%) | 5.2 | 6.0 | 4.4 | (3.8) |
Consensus scenarios | Downside 2 scenario | |||
Central | Upside | Downside | ||
2021: Annual average % change | 1.4 | 1.4 | 1.4 | 1.4 |
2022: Annual average % change | 3.8 | 4.9 | 2.8 | (0.6) |
2023: Annual average % change | 5.6 | 7.6 | 2.9 | (0.6) |
2024: Annual average % change | 6.2 | 6.9 | 5.4 | 4.2 |
2025: Annual average % change | 6.0 | 6.0 | 6.0 | 7.0 |
Five year average % change | 5.5 | 6.3 | 4.6 | 3.5 |
Consensus scenarios | Downside 2 scenario | ||||
Central | Upside | Downside | |||
2022: Annual average rate (%) | 0.4 | 0.4 | 0.4 | 0.4 | |
2023: Annual average rate (%) | 2.8 | 2.5 | 3.0 | 4.8 | |
2024: Annual average rate (%) | 2.7 | 2.4 | 1.5 | 2.1 | |
2025: Annual average rate (%) | 2.3 | 2.3 | 0.6 | 0.7 | |
2026: Annual average rate (%) | 2.3 | 2.3 | 0.9 | 0.6 | |
Five year average rate (%) | 2.5 | 2.4 | 1.5 | 1.8 |
98 | HSBC Bank Malta p.l.c. Annual Report and Accounts 2022 |
Consensus scenarios | Downside 2 scenario | |||
Central | Upside | Downside | ||
2021: Annual average rate (%) | (0.5) | (0.5) | (0.5) | (0.5) |
2022: Annual average rate (%) | (0.5) | (0.4) | (0.6) | (0.1) |
2023: Annual average rate (%) | (0.3) | 0.1 | (0.6) | (0.6) |
2024: Annual average rate (%) | (0.1) | 0.3 | (0.6) | (0.6) |
2025: Annual average rate (%) | 0.0 | 0.3 | (0.6) | (0.6) |
Five year average rate (%) | (0.2) | 0.1 | (0.6) | (0.5) |
Consensus Scenarios | Downside 2 scenario | |||
Central | Upside | Downside | ||
Probability (%) – 31 December 2022 | 60 | 5 | 25 | 10 |
Probability (%) – 31 December 2021 | 60 | 10 | 15 | 15 |
HSBC Bank Malta p.l.c. Annual Report and Accounts 2022 | 99 |
100 | HSBC Bank Malta p.l.c. Annual Report and Accounts 2022 |
Weighted average ECL | Consensus scenarios | Downside 2 scenario | |||
Central | Upside | Downside | |||
€000 | €000 | €000 | €000 | €000 | |
Wholesale lending | 14,343 | 12,108 | 10,003 | 15,419 | 25,997 |
Personal lending | 27,901 | 22,321 | 21,664 | 23,187 | 29,987 |
Weighted average ECL | Consensus scenarios | Downside 2 scenario | |||
Central | Upside | Downside | |||
€000 | €000 | €000 | €000 | €000 | |
Wholesale lending | 15,125 | 13,443 | 11,070 | 15,828 | 26,813 |
Personal lending | 26,522 | 25,488 | 25,066 | 27,168 | 35,981 |
Weighted average ECL | |
€000 | |
Unemployment 80% : Real GDP growth rate 20% | 24,867 |
Unemployment 50% : Real GDP growth rate 50% | 21,549 |
Unemployment 20% : Real GDP growth rate 80% | 21,188 |
HSBC Bank Malta p.l.c. Annual Report and Accounts 2022 | 101 |
Treasury Bills | Debt securities | Total | |
€000 | €000 | €000 | |
AAA | — | 101,233 | 101,233 |
AA- to AA+ | — | 70,818 | 70,818 |
A- | 242,292 | 465,658 | 707,950 |
– measured at amortised cost | 42,202 | 367,024 | 409,226 |
AAA | — | 227,655 | 227,655 |
AA- to AA+ | — | 118,910 | 118,910 |
A- | 42,202 | 20,459 | 62,661 |
As at 31 December 2022 | 284,494 | 1,004,733 | 1,289,227 |
– measured at fair value through other comprehensive income | 228,172 | 845,700 | 1,073,872 |
AAA | — | 213,878 | 213,878 |
AA- to AA+ | — | 111,294 | 111,294 |
A- | 228,172 | 520,528 | 748,700 |
As at 31 December 2021 | 228,172 | 845,700 | 1,073,872 |
102 | HSBC Bank Malta p.l.c. Annual Report and Accounts 2022 |
31 Dec | 31 Dec | |
2022 | 2021 | |
% | % | |
Actual LCR | 468 | 379 |
Regulatory Minimum | 100 | 100 |
31 Dec | 31 Dec | |
2022 | 2021 | |
% | % | |
Actual NSFR | 208 | 199 |
Regulatory Minimum | 100 | 100 |
HSBC Bank Malta p.l.c. Annual Report and Accounts 2022 | 103 |
Group | |||||||
At 31 December 2022 | |||||||
Not more than 3 months | Between 3 and 6 months | Between 6 months and 1 year | Between 1 year and 5 years | More than 5 years | No maturity date | Total | |
€000 | €000 | €000 | €000 | €000 | €000 | €000 | |
Assets | |||||||
Cash | 29,500 | — | — | — | — | — | 29,500 |
Balances with Central Bank of Malta and Treasury Bills | 1,452,279 | 22,765 | 19,437 | — | — | 60,880 | 1,555,361 |
Items in the course of collection from other banks | 6,921 | — | — | — | — | — | 6,921 |
Derivatives | 982 | 920 | 1,232 | 20,162 | 2,449 | — | 25,745 |
Loans and advances to banks | 548,524 | 10,564 | 67,129 | 100,000 | — | — | 726,217 |
Loans and advances to customers | 283,203 | 7,479 | 25,984 | 359,203 | 2,499,298 | — | 3,175,167 |
Financial investments | 9,226 | 78,980 | 129,492 | 761,219 | 25,816 | 37 | 1,004,770 |
Other assets | 26,234 | — | — | — | — | — | 26,234 |
Total assets | 2,356,869 | 120,708 | 243,274 | 1,240,584 | 2,527,563 | 60,917 | 6,549,915 |
Liabilities | |||||||
Deposits by banks | 2,861 | — | — | — | — | — | 2,861 |
Customer accounts | 5,541,374 | 131,912 | 242,138 | 55,534 | — | — | 5,970,958 |
Items in course of transmission to other banks | 27,397 | — | — | — | — | — | 27,397 |
Derivatives | 925 | 865 | 1,164 | 4,854 | 2,444 | — | 10,252 |
Borrowings from a group undertaking | — | — | — | — | 60,000 | — | 60,000 |
Subordinated liabilities | — | — | — | — | 62,000 | — | 62,000 |
Other liabilities | 7,288 | 355 | 1,013 | 1,069 | 920 | — | 10,645 |
Total liabilities | 5,579,845 | 133,132 | 244,315 | 61,457 | 125,364 | — | 6,144,113 |
Liquidity gap | (3,222,976) | (12,424) | (1,041) | 1,179,127 | 2,402,199 | ||
Cumulative liquidity gap | (3,222,976) | (3,235,400) | (3,236,441) | (2,057,314) | 344,885 | ||
At 31 December 2021 | |||||||
Assets | |||||||
Cash | 26,781 | — | — | — | — | — | 26,781 |
Balances with Central Bank of Malta and Treasury Bills | 1,350,729 | 56,076 | 6,013 | — | — | 56,808 | 1,469,626 |
Items in the course of collection from other banks | 4,453 | — | — | — | — | — | 4,453 |
Derivatives | 1,205 | 777 | 1,128 | 1,525 | 5 | — | 4,640 |
Loans and advances to banks | 385,200 | 141,908 | 35,954 | 50,000 | — | — | 613,062 |
Loans and advances to customers | 194,794 | 16,850 | 13,345 | 408,577 | 2,563,159 | — | 3,196,725 |
Financial investments | 60,615 | 37,973 | 129,039 | 512,496 | 105,577 | 35 | 845,735 |
Other assets | 21,475 | 100 | — | — | — | — | 21,575 |
Total assets | 2,045,252 | 253,684 | 185,479 | 972,598 | 2,668,741 | 56,843 | 6,182,597 |
Liabilities | |||||||
Deposits by banks | 1,397 | — | — | — | — | — | 1,397 |
Customer accounts | 5,152,851 | 140,737 | 248,715 | 78,892 | — | — | 5,621,195 |
Items in course of transmission to other banks | 21,573 | — | — | — | — | — | 21,573 |
Derivatives | 1,144 | 739 | 1,105 | 1,525 | 79 | — | 4,592 |
Borrowings from a group undertaking | — | — | — | — | 60,000 | — | 60,000 |
Subordinated liabilities | — | — | — | — | 62,000 | — | 62,000 |
Other liabilities | 4,055 | 923 | 546 | 756 | 838 | — | 7,118 |
Total liabilities | 5,181,020 | 142,399 | 250,366 | 81,173 | 122,917 | — | 5,777,875 |
Liquidity gap | (3,135,768) | 111,285 | (64,887) | 891,425 | 2,545,824 | ||
Cumulative liquidity gap | (3,135,768) | (3,024,483) | (3,089,370) | (2,197,945) | 347,879 |
104 | HSBC Bank Malta p.l.c. Annual Report and Accounts 2022 |
Bank | |||||||
At 31 December 2022 | |||||||
Not more than 3 months | Between 3 and 6 months | Between 6 months and 1 year | Between 1 year and 5 years | More than 5 years | No maturity date | Total | |
€000 | €000 | €000 | €000 | €000 | €000 | €000 | |
Assets | |||||||
Cash | 29,500 | — | — | — | — | — | 29,500 |
Balances with Central Bank of Malta and Treasury Bills | 1,452,279 | 22,765 | 19,437 | — | — | 60,880 | 1,555,361 |
Items in the course of collection from other banks | 6,921 | — | — | — | — | — | 6,921 |
Derivatives | 982 | 920 | 1,232 | 20,162 | 2,449 | — | 25,745 |
Loans and advances to banks | 548,524 | 10,564 | 67,129 | 100,000 | — | — | 726,217 |
Loans and advances to customers | 283,203 | 7,479 | 25,984 | 359,203 | 2,499,298 | — | 3,175,167 |
Financial investments | 9,226 | 78,980 | 129,492 | 761,219 | 25,816 | 35 | 1,004,768 |
Other assets | 26,140 | — | — | — | — | — | 26,140 |
Total assets | 2,356,775 | 120,708 | 243,274 | 1,240,584 | 2,527,563 | 60,915 | 6,549,819 |
Liabilities | |||||||
Deposits by banks | 2,861 | — | — | — | — | — | 2,861 |
Customer accounts | 5,580,808 | 131,912 | 242,138 | 55,534 | — | — | 6,010,392 |
Items in course of transmission to other banks | 27,397 | — | — | — | — | — | 27,397 |
Derivatives | 925 | 865 | 1,164 | 4,854 | 2,444 | — | 10,252 |
Borrowings from a group undertaking | — | — | — | — | 60,000 | — | 60,000 |
Subordinated liabilities | — | — | — | — | 62,000 | — | 62,000 |
Other liabilities | 7,288 | 355 | 1,013 | 1,069 | 920 | — | 10,645 |
Total liabilities | 5,619,279 | 133,132 | 244,315 | 61,457 | 125,364 | — | 6,183,547 |
Liquidity gap | (3,262,504) | (12,424) | (1,041) | 1,179,127 | 2,402,199 | ||
Cumulative liquidity gap | (3,262,504) | (3,274,928) | (3,275,969) | (2,096,842) | 305,357 | ||
At 31 December 2021 | |||||||
Assets | |||||||
Cash | 26,781 | — | — | — | — | — | 26,781 |
Balances with Central Bank of Malta and Treasury Bills | 1,350,729 | 56,076 | 6,013 | — | — | 56,808 | 1,469,626 |
Items in the course of collection from other banks | 4,453 | — | — | — | — | — | 4,453 |
Derivatives | 1,205 | 777 | 1,128 | 1,525 | 5 | — | 4,640 |
Loans and advances to banks | 385,200 | 141,908 | 35,954 | 50,000 | — | — | 613,062 |
Loans and advances to customers | 194,794 | 16,850 | 13,345 | 408,577 | 2,563,159 | — | 3,196,725 |
Financial investments | 60,615 | 37,973 | 129,039 | 512,496 | 105,577 | 33 | 845,733 |
Other assets | 21,067 | 100 | — | — | — | — | 21,167 |
Total assets | 2,044,844 | 253,684 | 185,479 | 972,598 | 2,668,741 | 56,841 | 6,182,187 |
Liabilities | |||||||
Deposits by banks | 1,397 | — | — | — | — | — | 1,397 |
Customer accounts | 5,189,337 | 140,737 | 248,715 | 78,892 | — | — | 5,657,681 |
Items in course of transmission to other banks | 21,573 | — | — | — | — | — | 21,573 |
Derivatives | 1,144 | 739 | 1,105 | 1,525 | 79 | — | 4,592 |
Borrowings from a group undertaking | — | — | — | — | 60,000 | — | 60,000 |
Subordinated liabilities | — | — | — | — | 62,000 | — | 62,000 |
Other liabilities | 4,055 | 923 | 546 | 756 | 838 | — | 7,118 |
Total liabilities | 5,217,506 | 142,399 | 250,366 | 81,173 | 122,917 | — | 5,814,361 |
Liquidity gap | (3,172,662) | 111,285 | (64,887) | 891,425 | 2,545,824 | ||
Cumulative liquidity gap | (3,172,662) | (3,061,377) | (3,126,264) | (2,234,839) | 310,985 |
HSBC Bank Malta p.l.c. Annual Report and Accounts 2022 | 105 |
Group | ||||||
At 31 December 2022 | ||||||
Due within 3 months | Due between 3 and 12 months | Due between 1 and 5 years | Due after 5 years | Gross nominal outflow | Carrying amount | |
€000 | €000 | €000 | €000 | €000 | €000 | |
Financial liabilities | ||||||
Deposits by banks | 2,861 | — | — | — | 2,861 | 2,861 |
Customer accounts | 5,541,903 | 374,463 | 57,345 | — | 5,973,711 | 5,970,958 |
Borrowings from a group undertaking | 488 | 1,463 | 7,802 | 67,802 | 77,555 | 60,000 |
Subordinated liabilities | 637 | 1,912 | 10,198 | 64,549 | 77,296 | 62,000 |
Other liabilities | 7,312 | 1,428 | 1,293 | 989 | 11,022 | 10,645 |
5,553,201 | 379,266 | 76,638 | 133,340 | 6,142,445 | 6,106,464 | |
Commitments and Contingent Liabilities | 1,011,946 | — | — | — | 1,011,946 | 1,011,946 |
At 31 December 2021 | ||||||
Financial liabilities | ||||||
Deposits by banks | 1,397 | — | — | — | 1,397 | 1,397 |
Customer accounts | 5,153,143 | 391,319 | 79,621 | — | 5,624,083 | 5,621,195 |
Borrowings from a group undertaking | 85 | 254 | 1,356 | 61,695 | 63,390 | 60,000 |
Subordinated liabilities | 228 | 684 | 3,651 | 63,825 | 68,388 | 62,000 |
Other liabilities | 4,008 | 1,514 | 852 | 955 | 7,329 | 7,118 |
5,158,861 | 393,771 | 85,480 | 126,475 | 5,764,587 | 5,751,710 | |
Commitments and Contingent Liabilities | 1,110,803 | — | — | — | 1,110,803 | 1,110,803 |
Bank | ||||||
At 31 December 2022 | ||||||
Financial liabilities | ||||||
Deposits by banks | 2,861 | — | — | — | 2,861 | 2,861 |
Customer accounts | 5,581,337 | 374,463 | 57,345 | — | 6,013,145 | 6,010,392 |
Borrowings from a group undertaking | 488 | 1,463 | 7,802 | 67,802 | 77,555 | 60,000 |
Subordinated liabilities | 637 | 1,912 | 10,198 | 64,549 | 77,296 | 62,000 |
Other liabilities | 6,753 | 1,570 | 1,438 | 989 | 10,750 | 10,645 |
5,592,076 | 379,408 | 76,783 | 133,340 | 6,181,607 | 6,145,898 | |
Commitments and Contingent Liabilities | 1,011,946 | — | — | — | 1,011,946 | 1,011,946 |
At 31 December 2021 | ||||||
Financial liabilities | ||||||
Deposits by banks | 1,397 | — | — | — | 1,397 | 1,397 |
Customer accounts | 5,189,630 | 391,319 | 79,621 | — | 5,660,570 | 5,657,681 |
Borrowings from a group undertaking | 85 | 254 | 1,356 | 61,695 | 63,390 | 60,000 |
Subordinated liabilities | 228 | 684 | 3,651 | 63,825 | 68,388 | 62,000 |
Other liabilities | 4,008 | 1,514 | 852 | 955 | 7,329 | 7,118 |
5,195,348 | 393,771 | 85,480 | 126,475 | 5,801,074 | 5,788,196 | |
Commitments and Contingent Liabilities | 1,110,805 | — | — | — | 1,110,805 | 1,110,805 |
Group/Bank | |||||
At 31 December 2022 | |||||
Less than 3 months | Between 3 months and 1 year | Between 1 year and 5 years | Over 5 years | Total | |
€000 | €000 | €000 | €000 | €000 | |
Inflows | 70,051 | 142,061 | 117,931 | 128 | 330,171 |
Outflows | (69,828) | (140,854) | (113,337) | (128) | (324,147) |
223 | 1,207 | 4,594 | — | 6,024 | |
At 31 December 2021 | |||||
Inflows | 57,492 | 130,786 | 1,226 | 241 | 189,745 |
Outflows | (57,447) | (130,719) | (1,226) | (241) | (189,633) |
45 | 67 | — | — | 112 |
106 | HSBC Bank Malta p.l.c. Annual Report and Accounts 2022 |
Group | Bank | |||
2022 | 2021 | 2022 | 2021 | |
€000 | €000 | €000 | €000 | |
Total assets at 31 December | 7,418,333 | 7,174,805 | 6,689,880 | 6,311,975 |
Less: | ||||
Debt securities pledged in terms of the Depositor Compensation Scheme | 11,105 | 20,021 | 11,105 | 20,021 |
Less: | ||||
Cash pledged in terms of the Recovery and Resolution Regulations | 1,513 | 1,272 | 1,513 | 1,272 |
Less: | ||||
Other assets that cannot be pledged as collateral | 901,774 | 996,892 | 182,188 | 143,235 |
Assets available to support funding and collateral needs at 31 December | 6,503,941 | 6,156,620 | 6,495,074 | 6,147,447 |
HSBC Bank Malta p.l.c. Annual Report and Accounts 2022 | 107 |
2022 | 2021 | |
€000 | €000 | |
At 31 December | 1,215 | 974 |
Average | 978 | 1,097 |
Minimum | 649 | 848 |
Maximum | 1,827 | 1,250 |
108 | HSBC Bank Malta p.l.c. Annual Report and Accounts 2022 |
Group/Bank | ||
Impact on future one year net income | Impact on future one year net income | |
2022 | 2021 | |
€000 | €000 | |
+ 100 basis points | 32,596 | 20,629 |
- 100 basis points | (35,621) | (19,217) |
Group | ||||||
At 31 December 2022 | ||||||
Not more than 3 months | Between 3 and 6 months | Between 6 months and 1 year | Between 1 year and 5 years | More than 5 years | Total | |
€000 | €000 | €000 | €000 | €000 | €000 | |
Balances with Central bank of Malta and Treasury Bills | 1,453,792 | 22,765 | 19,437 | — | — | 1,495,994 |
Loans and advances to banks | 698,525 | 10,564 | 17,128 | — | — | 726,217 |
Loans and advances to customers | 2,795,616 | 48,961 | 103,703 | 226,887 | — | 3,175,167 |
Financial investments | 14,196 | 78,980 | 125,478 | 760,263 | 25,816 | 1,004,733 |
Total assets | 4,962,129 | 161,270 | 265,746 | 987,150 | 25,816 | 6,402,111 |
Deposits by banks | 2,861 | — | — | — | — | 2,861 |
Customer accounts | 5,541,374 | 131,912 | 242,138 | 55,534 | — | 5,970,958 |
Borrowings from a group undertaking | 60,000 | — | — | — | — | 60,000 |
Subordinated liabilities | 62,000 | — | — | — | — | 62,000 |
Total liabilities | 5,666,235 | 131,912 | 242,138 | 55,534 | — | 6,095,819 |
Interest rate sensitivity gap | (704,106) | 29,358 | 23,608 | 931,616 | 25,816 | |
Cumulative interest rate sensitivity gap | (704,106) | (674,748) | (651,140) | 280,476 | 306,292 | |
At 31 December 2021 | ||||||
Balances with Central bank of Malta and Treasury Bills | 1,352,001 | 56,076 | 6,013 | — | — | 1,414,090 |
Loans and advances to banks | 335,200 | 11,908 | 180,000 | 85,954 | — | 613,062 |
Loans and advances to customers | 2,627,456 | 200,450 | 329,838 | 23,364 | 15,617 | 3,196,725 |
Financial investments | 77,666 | 37,973 | 116,032 | 508,452 | 105,577 | 845,700 |
Total assets | 4,392,323 | 306,407 | 631,883 | 617,770 | 121,194 | 6,069,577 |
Deposits by banks | 1,397 | — | — | — | — | 1,397 |
Customer accounts | 5,152,851 | 140,737 | 248,715 | 78,892 | — | 5,621,195 |
Borrowings from a group undertaking | 60,000 | — | — | — | — | 60,000 |
Subordinated liabilities | 62,000 | — | — | — | — | 62,000 |
Total liabilities | 5,276,248 | 140,737 | 248,715 | 78,892 | — | 5,744,592 |
Interest rate sensitivity gap | (883,925) | 165,670 | 383,168 | 538,878 | 121,194 | |
Cumulative interest rate sensitivity gap | (883,925) | (718,255) | (335,087) | 203,791 | 324,985 |
HSBC Bank Malta p.l.c. Annual Report and Accounts 2022 | 109 |
Bank | ||||||
At 31 December 2022 | ||||||
Balances with Central bank of Malta and Treasury Bills | 1,453,792 | 22,765 | 19,437 | — | — | 1,495,994 |
Loans and advances to banks | 698,525 | 10,564 | 17,128 | — | — | 726,217 |
Loans and advances to customers | 2,795,616 | 48,961 | 103,703 | 226,887 | — | 3,175,167 |
Financial investments | 14,196 | 78,980 | 125,478 | 760,263 | 25,816 | 1,004,733 |
Total assets | 4,962,129 | 161,270 | 265,746 | 987,150 | 25,816 | 6,402,111 |
Deposits by banks | 2,861 | — | — | — | — | 2,861 |
Customer accounts | 5,580,808 | 131,912 | 242,138 | 55,534 | — | 6,010,392 |
Borrowings from a group undertaking | 60,000 | — | — | — | — | 60,000 |
Subordinated liabilities | 62,000 | — | — | — | — | 62,000 |
Total liabilities | 5,705,669 | 131,912 | 242,138 | 55,534 | — | 6,135,253 |
Interest rate sensitivity gap | (743,540) | 29,358 | 23,608 | 931,616 | 25,816 | |
Cumulative interest rate sensitivity gap | (743,540) | (714,182) | (690,574) | 241,042 | 266,858 | |
At 31 December 2021 | ||||||
Balances with Central bank of Malta and Treasury Bills | 1,352,001 | 56,076 | 6,013 | — | — | 1,414,090 |
Loans and advances to banks | 335,200 | 11,908 | 180,000 | 85,954 | — | 613,062 |
Loans and advances to customers | 2,627,456 | 200,450 | 329,838 | 23,364 | 15,617 | 3,196,725 |
Financial Investments | 77,666 | 37,973 | 116,032 | 508,452 | 105,577 | 845,700 |
Total assets | 4,392,323 | 306,407 | 631,883 | 617,770 | 121,194 | 6,069,577 |
Deposits by banks | 1,397 | — | — | — | — | 1,397 |
Customer accounts | 5,189,337 | 140,737 | 248,715 | 78,892 | — | 5,657,681 |
Borrowings from a group undertaking | 60,000 | — | — | — | — | 60,000 |
Subordinated liabilities | 62,000 | — | — | — | — | 62,000 |
Total liabilities | 5,312,734 | 140,737 | 248,715 | 78,892 | — | 5,781,078 |
Interest rate sensitivity gap | (920,411) | 165,670 | 383,168 | 538,878 | 121,194 | |
Cumulative interest rate sensitivity gap | (920,411) | (754,741) | (371,573) | 167,305 | 288,499 |
110 | HSBC Bank Malta p.l.c. Annual Report and Accounts 2022 |
Group | |||||
2022 | |||||
Reporting currency | In USD | In GBP | Other currencies | Total | |
€000 | €000 | €000 | €000 | €000 | |
Assets | |||||
Balances with Central Bank of Malta, Treasury Bills and cash | 1,583,419 | 545 | 455 | 442 | 1,584,861 |
Items in the course of collection from other banks | 6,902 | 5 | 14 | — | 6,921 |
Derivatives | 19,493 | 6,252 | — | — | 25,745 |
Financial investments | 958,304 | 17,455 | 21,156 | 7,855 | 1,004,770 |
Loans and advances to banks | 241,726 | 302,840 | 107,469 | 74,182 | 726,217 |
Loans and advances to customers | 3,136,510 | 38,528 | 129 | — | 3,175,167 |
Other assets | 23,511 | 2,578 | 68 | 77 | 26,234 |
Total assets | 5,969,865 | 368,203 | 129,291 | 82,556 | 6,549,915 |
Liabilities | |||||
Deposits by banks | 2,392 | — | — | 469 | 2,861 |
Customer accounts | 5,411,004 | 349,824 | 123,597 | 86,533 | 5,970,958 |
Items in the course of transmission to other banks | 27,397 | — | — | — | 27,397 |
Derivatives | 4,382 | 5,870 | — | — | 10,252 |
Borrowings from a group undertaking | 60,000 | — | — | — | 60,000 |
Subordinated liabilities | 62,000 | — | — | — | 62,000 |
Other liabilities | 7,913 | 2,075 | 647 | 10 | 10,645 |
Total liabilities | 5,575,088 | 357,769 | 124,244 | 87,012 | 6,144,113 |
Net open position | 394,777 | 10,434 | 5,047 | (4,456) | |
2021 | |||||
Assets | |||||
Balances with Central Bank of Malta, Treasury Bills and cash | 1,453,967 | 319 | 40,875 | 1,246 | 1,496,407 |
Items in the course of collection from other banks | 4,410 | 27 | 16 | — | 4,453 |
Derivatives | 1,837 | 2,782 | 4 | 17 | 4,640 |
Financial investments | 703,257 | 89,007 | 42,592 | 10,879 | 845,735 |
Loans and advances to banks | 391,528 | 102,287 | 90,843 | 28,404 | 613,062 |
Loans and advances to customers | 3,169,632 | 27,056 | 37 | — | 3,196,725 |
Other assets | 20,382 | 984 | 109 | 100 | 21,575 |
Total assets | 5,745,013 | 222,462 | 174,476 | 40,646 | 6,182,597 |
Liabilities | |||||
Deposits by banks | 898 | — | — | 499 | 1,397 |
Customer accounts | 5,193,510 | 215,727 | 172,069 | 39,889 | 5,621,195 |
Items in the course of transmission to other banks | 21,573 | — | — | — | 21,573 |
Derivatives | 1,715 | 2,852 | 4 | 21 | 4,592 |
Borrowings from a group undertaking | 60,000 | — | — | — | 60,000 |
Subordinated liabilities | 62,000 | — | — | — | 62,000 |
Other liabilities | 5,982 | 569 | 556 | 11 | 7,118 |
Total liabilities | 5,345,678 | 219,148 | 172,629 | 40,420 | 5,777,875 |
Net open position | 399,335 | 3,314 | 1,847 | 226 |
HSBC Bank Malta p.l.c. Annual Report and Accounts 2022 | 111 |
Bank | |||||
2022 | |||||
Reporting currency | In USD | In GBP | Other currencies | Total | |
€000 | €000 | €000 | €000 | €000 | |
Balances with Central Bank of Malta, Treasury Bills and cash | 1,583,419 | 545 | 455 | 442 | 1,584,861 |
Items in the course of collection from other banks | 6,902 | 5 | 14 | — | 6,921 |
Derivatives | 19,493 | 6,252 | — | — | 25,745 |
Financial investments | 958,302 | 17,455 | 21,156 | 7,855 | 1,004,768 |
Loans and advances to banks | 241,726 | 302,840 | 107,469 | 74,182 | 726,217 |
Loans and advances to customers | 3,136,510 | 38,528 | 129 | — | 3,175,167 |
Other assets | 23,417 | 2,578 | 68 | 77 | 26,140 |
Total assets | 5,969,769 | 368,203 | 129,291 | 82,556 | 6,549,819 |
Deposits by banks | 2,392 | — | — | 469 | 2,861 |
Customer accounts | 5,438,715 | 355,354 | 129,790 | 86,533 | 6,010,392 |
Items in the course of transmission to other banks | 27,397 | — | — | — | 27,397 |
Derivatives | 4,382 | 5,870 | — | — | 10,252 |
Borrowings from a group undertaking | 60,000 | — | — | — | 60,000 |
Subordinated liabilities | 62,000 | — | — | — | 62,000 |
Other liabilities | 7,913 | 2,075 | 647 | 10 | 10,645 |
Total liabilities | 5,602,799 | 363,299 | 130,437 | 87,012 | 6,183,547 |
Net open position | 366,970 | 4,904 | (1,146) | (4,456) | |
2021 | |||||
Balances with Central Bank of Malta, Treasury Bills and cash | 1,453,967 | 319 | 40,875 | 1,246 | 1,496,407 |
Items in the course of collection from other banks | 4,410 | 27 | 16 | — | 4,453 |
Derivatives | 1,837 | 2,782 | 4 | 17 | 4,640 |
Financial investments | 703,255 | 89,007 | 42,592 | 10,879 | 845,733 |
Loans and advances to banks | 391,528 | 102,287 | 90,843 | 28,404 | 613,062 |
Loans and advances to customers | 3,169,632 | 27,056 | 37 | — | 3,196,725 |
Other assets | 19,974 | 984 | 109 | 100 | 21,167 |
Total assets | 5,744,603 | 222,462 | 174,476 | 40,646 | 6,182,187 |
Deposits by banks | 898 | — | — | 499 | 1,397 |
Customer accounts | 5,224,408 | 218,957 | 174,427 | 39,889 | 5,657,681 |
Items in the course of transmission to other banks | 21,573 | — | — | — | 21,573 |
Derivatives | 1,715 | 2,852 | 4 | 21 | 4,592 |
Borrowings from a group undertaking | 60,000 | — | — | — | 60,000 |
Subordinated liabilities | 62,000 | — | — | — | 62,000 |
Other liabilities | 5,982 | 569 | 556 | 11 | 7,118 |
Total liabilities | 5,376,576 | 222,378 | 174,987 | 40,420 | 5,814,361 |
Net open position | 368,027 | 84 | (511) | 226 |
112 | HSBC Bank Malta p.l.c. Annual Report and Accounts 2022 |
2022 | 2021 | |
€000 | €000 | |
Life insurance (non-linked) | ||
Insurance contracts with discretionary participation feature | 223,262 | 270,591 |
Term assurance and other long-term contracts | 87,792 | 122,648 |
Total non-linked | 311,054 | 393,239 |
Life insurance (linked) | 233,192 | 264,958 |
Liabilities under insurance contracts | 544,246 | 658,197 |
HSBC Bank Malta p.l.c. Annual Report and Accounts 2022 | 113 |
Impact on profits for the year and net assets | ||
2022 | 2021 | |
€000 | €000 | |
+100 basis points shift in yield curves | (197) | 3,582 |
-100 basis points shift in yield curves | (2,893) | (6,032) |
+10 per cent increase in equity prices | 644 | 789 |
-10 per cent decrease in equity prices | (644) | (789) |
Debt securities – Unit linked | Debt securities – Others | Total | ||||
2022 | 2021 | 2022 | 2021 | 2022 | 2021 | |
€000 | €000 | €000 | €000 | €000 | €000 | |
AAA | — | — | 5,633 | 3,868 | 5,633 | 3,868 |
AA+ to AA- | — | — | 30,791 | 23,803 | 30,791 | 23,803 |
A+ to A- | 457 | 554 | 131,237 | 157,777 | 131,694 | 158,331 |
BBB+ to BBB- | 734 | 1,554 | 44,433 | 61,629 | 45,167 | 63,183 |
BB+ to B- | 240 | 1,353 | — | — | 240 | 1,353 |
Unrated | 1,841 | 959 | 15,699 | 19,309 | 17,540 | 20,268 |
Total | 3,272 | 4,420 | 227,793 | 266,386 | 231,065 | 270,806 |
114 | HSBC Bank Malta p.l.c. Annual Report and Accounts 2022 |
At 31 December 2022 | ||||||
No fixed maturity | Due within 3 months | Due between 3 and 12 months | Due between 1 year and 5 years | Due after 5 years | Total | |
€000 | €000 | €000 | €000 | €000 | €000 | |
Financial assets mandatorily measured at fair value through profit or loss | 429,189 | 2,002 | 16,602 | 103,133 | 109,356 | 660,282 |
Reinsurance assets | 49,792 | — | — | — | — | 49,792 |
Cash | 6,276 | — | — | — | — | 6,276 |
485,257 | 2,002 | 16,602 | 103,133 | 109,356 | 716,350 | |
At 31 December 2021 | ||||||
Financial assets mandatorily measured at fair value through profit or loss | 497,003 | — | 4,874 | 119,013 | 146,918 | 767,808 |
Reinsurance assets | 77,972 | — | — | — | — | 77,972 |
Cash | 6,211 | — | — | — | — | 6,211 |
581,186 | — | 4,874 | 119,013 | 146,918 | 851,991 |
At 31 December 2022 | ||||||
On demand | Due within 3 months | Due between 3 and 12 months | Due between 1 year and 5 years | Due after 5 years | Total | |
€000 | €000 | €000 | €000 | €000 | €000 | |
Liabilities to customers: | ||||||
– insurance contracts | — | 12,741 | 32,929 | 151,727 | 350,295 | 547,692 |
– investment contracts | 104,755 | 379 | 1,121 | 12,750 | 43,671 | 162,676 |
104,755 | 13,120 | 34,050 | 164,477 | 393,966 | 710,368 | |
At 31 December 2021 | ||||||
Liabilities to customers: | ||||||
– insurance contracts | — | 17,604 | 47,467 | 196,592 | 413,300 | 674,963 |
– investment contracts | 121,858 | 587 | 1,162 | 13,442 | 43,329 | 180,378 |
121,858 | 18,191 | 48,629 | 210,034 | 456,629 | 855,341 |
HSBC Bank Malta p.l.c. Annual Report and Accounts 2022 | 115 |
116 | HSBC Bank Malta p.l.c. Annual Report and Accounts 2022 |
Group | ||||
At 31 December 2022 | ||||
Valuation techniques | ||||
Quoted market price | Using observable inputs | With significant unobservable inputs | Total | |
Level 1 | Level 2 | Level 3 | ||
€000 | €000 | €000 | €000 | |
Assets | ||||
Treasury Bills | — | 242,292 | — | 242,292 |
Derivatives | — | 25,745 | — | 25,745 |
Financial assets mandatorily measured at fair value through profit or loss | 652,302 | — | 7,980 | 660,282 |
Financial investments | 637,709 | — | 37 | 637,746 |
1,290,011 | 268,037 | 8,017 | 1,566,065 | |
Liabilities | ||||
Derivatives | — | 10,252 | — | 10,252 |
Liabilities under investment contracts | 162,676 | — | — | 162,676 |
162,676 | 10,252 | — | 172,928 | |
At 31 December 2021 | ||||
Assets | ||||
Treasury Bills | — | 228,172 | — | 228,172 |
Derivatives | — | 4,640 | — | 4,640 |
Financial assets mandatorily measured at fair value through profit or loss | 759,325 | 3,873 | 4,610 | 767,808 |
Financial investments | 845,700 | — | 35 | 845,735 |
1,605,025 | 236,685 | 4,645 | 1,846,355 | |
Liabilities | ||||
Derivatives | — | 4,592 | — | 4,592 |
Liabilities under investment contracts | 185,137 | — | — | 185,137 |
185,137 | 4,592 | — | 189,729 | |
Bank | ||||
At 31 December 2022 | ||||
Assets | ||||
Treasury Bills | — | 242,292 | — | 242,292 |
Derivatives | — | 25,745 | — | 25,745 |
Financial investments | 637,709 | — | 35 | 637,744 |
637,709 | 268,037 | 35 | 905,781 | |
Liabilities | ||||
Derivatives | — | 10,252 | — | 10,252 |
— | 10,252 | — | 10,252 | |
At 31 December 2021 | ||||
Assets | ||||
Treasury Bills | — | 228,172 | — | 228,172 |
Derivatives | — | 4,640 | — | 4,640 |
Financial assets mandatorily measured at fair value through profit or loss | — | — | — | — |
Financial investments | 845,700 | — | 33 | 845,733 |
845,700 | 232,812 | 33 | 1,078,545 | |
Liabilities | ||||
Derivatives | — | 4,592 | — | 4,592 |
— | 4,592 | — | 4,592 |
HSBC Bank Malta p.l.c. Annual Report and Accounts 2022 | 117 |
Group | Bank | |||
2022 | 2021 | 2022 | 2021 | |
€000 | €000 | €000 | €000 | |
Level 3 | ||||
Financial assets mandatorily measured at fair value through profit or loss | ||||
At 1 January | 4,610 | 5,374 | — | — |
Disposal/redemptions | (738) | (529) | — | — |
Acquisitions | — | 96 | — | — |
Transfer from Level 2 to Level 3 | 4,077 | — | — | — |
Changes in fair value (recognised in profit or loss) | 31 | (331) | — | — |
At 31 December | 7,980 | 4,610 | — | — |
Group | Bank | |||
2022 | 2021 | 2022 | 2021 | |
€000 | €000 | €000 | €000 | |
Assets | ||||
Property | 38,092 | 34,422 | 38,092 | 34,422 |
Investment property | — | 1,600 | — | — |
38,092 | 36,022 | 38,092 | 34,422 |
118 | HSBC Bank Malta p.l.c. Annual Report and Accounts 2022 |
At 31 December 2022 | ||||
Fair value | Valuation technique | Significant unobservable input | Range of unobservable inputs (weighted average) | |
Description by class based on highest and best use | €000 | € per square metre | ||
Current use as commercial branches, bank offices and other related premises | 38,092 | Capitalised rental approach | Rental rate per square metre | 43 – 217 (130) |
At 31 December 2021 | ||||
Current use as commercial branches, bank offices and other related premises | 34,422 | Capitalised rental approach | Rental rate per square metre | 40 – 220 (129) |
Currently held for rental yield and capital appreciation purposes | 1,600 | Capitalised rental approach | Rental rate per square metre | (300) |
Group | Bank | |||
2022 | 2021 | 2022 | 2021 | |
€000 | €000 | €000 | €000 | |
Assets | ||||
Balances with Central Bank of Malta, Treasury Bills and cash | 1,342,569 | 1,268,235 | 1,342,569 | 1,268,235 |
Items in course of collection from other banks | 6,921 | 4,453 | 6,921 | 4,453 |
Loans and advance to banks | 732,493 | 619,273 | 726,217 | 613,062 |
Loans and advance to customers | 3,175,167 | 3,196,725 | 3,175,167 | 3,196,725 |
Financial investments measured at amortised cost | 367,024 | — | 367,024 | — |
Accrued interest | 18,134 | 17,772 | 15,639 | 15,281 |
Other assets | 10,595 | 6,479 | 10,501 | 5,886 |
5,652,903 | 5,112,937 | 5,644,038 | 5,103,642 | |
Liabilities | ||||
Deposits by banks | 2,861 | 1,397 | 2,861 | 1,397 |
Customer accounts | 5,970,958 | 5,621,195 | 6,010,392 | 5,657,681 |
Items in the course of transmission to other banks | 27,397 | 21,573 | 27,397 | 21,573 |
Borrowings from a group undertaking | 60,000 | 60,000 | 60,000 | 60,000 |
Subordinated liabilities | 62,000 | 62,000 | 62,000 | 62,000 |
Accrued interest | 1,864 | 1,431 | 1,677 | 1,215 |
Other liabilities | 14,193 | 9,751 | 8,968 | 5,903 |
6,139,273 | 5,777,347 | 6,173,295 | 5,809,769 |
HSBC Bank Malta p.l.c. Annual Report and Accounts 2022 | 119 |
2022 | 2021 | |
€000 | €000 | |
Common Equity Tier 1 capital | ||
Called up share capital | 108,092 | 108,092 |
Retained earnings | 388,915 | 357,315 |
Revaluation reserve | 64 | 24,330 |
Adjustments | ||
– depositor compensation scheme | (11,111) | (20,193) |
– intangible assets | (8,283) | (5,062) |
– expected final dividend | (13,139) | (8,010) |
– retained earnings – HSBC Life Assurance (Malta) Ltd | (37,936) | (34,804) |
– prudential valuation adjustment | (918) | (1,083) |
– IFRS 9 transitional adjustments | 9,279 | 14,831 |
– single resolution fund | (1,513) | (1,272) |
– non-performing loans | (22,596) | (21,720) |
– amount exceeding the 17.65% threshold | (704) | — |
Total Tier 1 capital | 410,150 | 412,424 |
Tier 2 capital | ||
Subordinated liabilities | 62,000 | 62,000 |
Total Tier 2 capital | 62,000 | 62,000 |
Total own funds | 472,150 | 474,424 |
120 | HSBC Bank Malta p.l.c. Annual Report and Accounts 2022 |
Group/Bank | ||
2022 | 2021 | |
€000 | €000 | |
On balances with Central Bank of Malta | 5,062 | 89 |
On Treasury Bills | 690 | — |
On loans and advances to banks | 7,041 | 558 |
On loans and advances to customers | 101,154 | 102,946 |
On loans and advances to banks and customers and other financial assets | 113,947 | 103,593 |
Interest on debt instruments | 6,384 | 10,237 |
Amortisation of net premiums on debt instruments | (3,551) | (8,120) |
Net loss representing ineffective portion of fair value hedges | (141) | — |
On debt and other fixed income instruments | 2,692 | 2,117 |
Group/Bank | ||
2022 | 2021 | |
€000 | €000 | |
On balances with Central Bank of Malta | 2,663 | 205 |
On Treasury Bills | 441 | 1,019 |
On loans and advances to banks | 182 | 2,795 |
On deposits by banks | 74 | 58 |
On customer accounts | 2,953 | 2,816 |
On lease liabilities | 38 | 92 |
On subordinated liabilities and borrowings from a group undertaking | 2,046 | 967 |
8,397 | 7,952 |
Group | Bank | |||
2022 | 2021 | 2022 | 2021 | |
€000 | €000 | €000 | €000 | |
Fee income by product: | ||||
Funds under management | 4,291 | 4,673 | — | — |
Cards | 4,967 | 3,896 | 4,967 | 3,896 |
Credit facilities | 1,582 | 1,953 | 1,582 | 1,953 |
Broking income | 1,022 | 1,086 | 1,022 | 1,086 |
Account services | 5,345 | 6,253 | 5,345 | 6,253 |
Global custody | 47 | 50 | 47 | 50 |
Remittances | 2,003 | 1,786 | 2,003 | 1,786 |
Imports/exports | 1,373 | 1,088 | 1,373 | 1,088 |
Receivables finance | 869 | 548 | 869 | 548 |
Insurance agency commission | 1,690 | 1,765 | — | — |
Other | 2,576 | 2,842 | 5,182 | 5,720 |
Fee income | 25,765 | 25,940 | 22,390 | 22,380 |
Less: fee expense | (3,711) | (1,831) | (3,213) | (1,234) |
Net fee income | 22,054 | 24,109 | 19,177 | 21,146 |
Group/Bank | ||
2022 | 2021 | |
€000 | €000 | |
Net income from foreign exchange activities | 6,854 | 5,370 |
Net income from trading activities | 835 | 164 |
7,689 | 5,534 |
HSBC Bank Malta p.l.c. Annual Report and Accounts 2022 | 121 |
Group | |||
Non-linked life insurance | Linked life insurance | Total | |
€000 | €000 | €000 | |
Gross insurance premium income | 26,270 | 30,177 | 56,447 |
Reinsurers’ share of gross premium income | (5,756) | — | (5,756) |
Year ended 31 December 2022 | 20,514 | 30,177 | 50,691 |
Gross insurance premium income | 28,318 | 28,286 | 56,604 |
Reinsurers’ share of gross premium income | (5,738) | — | (5,738) |
Year ended 31 December 2021 | 22,580 | 28,286 | 50,866 |
Group | Bank | |||
2022 | 2021 | 2022 | 2021 | |
€000 | €000 | €000 | €000 | |
Operating income | ||||
Gains arising on disposal of re-possessed properties | 749 | 38 | 749 | 38 |
Gains arising on disposal of owned properties classified as non-current assets held for sale | 440 | 517 | 440 | 517 |
Other income | 328 | 851 | 325 | 847 |
1,517 | 1,406 | 1,514 | 1,402 |
Group | ||
2022 | 2021 | |
€000 | €000 | |
Claims, benefits and surrenders paid | (54,599) | (58,904) |
Movement in liabilities | 113,951 | (10,167) |
Gross claims, benefits paid and movement in liabilities | 59,352 | (69,071) |
Reinsurers’ share of claims, benefits and surrenders paid | 975 | 2,566 |
Reinsurers’ share of movement in liabilities | (26,650) | (2,127) |
Reinsurers’ share of claims, benefits paid and movement in liabilities | (25,675) | 439 |
33,677 | (68,632) |
Group/Bank | ||
2022 | 2021 | |
€000 | €000 | |
Change in expected credit losses: | ||
– loans and advances to customers including accrued interest | (15,478) | (3,230) |
– loans and advances to banks | (1) | (6) |
– balances with Central Bank of Malta | 5 | (2) |
– debt instruments and Treasury Bills measured at amortised cost | 19 | — |
– loan commitments and guarantees | (26) | (650) |
– other financial assets | 5 | (7) |
– debt instruments and Treasury Bills measured at fair value through other comprehensive income | (12) | (294) |
Other credit impairment charges: | ||
– bad debts written off | 15,204 | 4,308 |
– bad debts recovered | (9,359) | (1,114) |
(9,643) | (995) |
122 | HSBC Bank Malta p.l.c. Annual Report and Accounts 2022 |
Group | Bank | |||
2022 | 2021 | 2022 | 2021 | |
€000 | €000 | €000 | €000 | |
Wages, salaries and allowances | 35,451 | 36,224 | 33,287 | 33,920 |
Social security costs | 2,144 | 2,170 | 2,004 | 2,033 |
Termination benefits | 1,558 | 3,208 | 1,558 | 3,208 |
Defined contribution benefits | 499 | 522 | 466 | 486 |
Post employment and other long-term employee benefits | 275 | (31) | 275 | (31) |
Share-based payments | 176 | 233 | 194 | 227 |
40,103 | 42,326 | 37,784 | 39,843 | |
Average number of employees: | ||||
– executive and senior managerial | 253 | 256 | 233 | 236 |
– other managerial, supervisory and clerical | 672 | 709 | 634 | 669 |
– others | 6 | 6 | 6 | 6 |
931 | 971 | 873 | 911 |
HSBC Bank Malta p.l.c. Annual Report and Accounts 2022 | 123 |
Group | Bank | |||
2022 | 2021 | 2022 | 2021 | |
€000 | €000 | €000 | €000 | |
Premises and equipment costs | 4,192 | 4,964 | 4,175 | 4,948 |
IT support and telecommunication costs | 9,206 | 10,435 | 8,593 | 9,692 |
Insurance, security and maintenance costs | 2,159 | 2,243 | 2,159 | 2,243 |
Investment management and administrator fees | 721 | 825 | — | — |
Actuarial services | 1,601 | 1,028 | — | — |
Service contracted out costs | 13,037 | 11,317 | 12,072 | 10,445 |
Regulatory fees | 5,923 | 6,637 | 5,777 | 6,521 |
Professional fees | 1,655 | 2,090 | 1,280 | 1,721 |
Other administrative expenses | 16,287 | 15,990 | 15,116 | 15,587 |
54,781 | 55,529 | 49,172 | 51,157 |
Group | Bank | |||
2022 | 2021 | 2022 | 2021 | |
€000 | €000 | €000 | €000 | |
Current tax: | 13,328 | 10,755 | 12,668 | 9,543 |
– for this year | 13,340 | 11,317 | 12,680 | 10,105 |
– adjustments in respect of prior years | (12) | (562) | (12) | (562) |
Deferred tax: | 6,352 | (1,628) | 5,385 | 615 |
– origination and reversal of temporary differences | 6,352 | (2,184) | 5,385 | 59 |
– adjustments in respect of prior years | — | 556 | — | 556 |
19,680 | 9,127 | 18,053 | 10,158 |
Group | Bank | |||
2022 | 2021 | 2022 | 2021 | |
€000 | €000 | €000 | €000 | |
Profit before tax | 57,251 | 26,882 | 52,560 | 29,821 |
Tax at the applicable rate of 35% | 20,038 | 9,409 | 18,396 | 10,437 |
Tax effect of: | ||||
– non-taxable income | (7) | (8) | — | — |
– income taxed at different rates | (434) | (405) | (434) | (405) |
– non-deductible expenses | 62 | 37 | 62 | 37 |
– disallowed expense arising from depreciation of property, plant and equipment | 117 | 159 | 117 | 159 |
– further allowances on rental income | — | (1) | — | (1) |
– current tax adjustments in respect of prior years | (12) | (562) | (12) | (562) |
– deferred tax not previously recognised | — | 556 | — | 556 |
– tax credit on pension contribution | (111) | (109) | (111) | (109) |
– loss on disposal of property, plant and equipment | — | 36 | — | 36 |
– others | 27 | 15 | 35 | 10 |
Tax expense | 19,680 | 9,127 | 18,053 | 10,158 |
Group/Bank | ||||||
2022 | 2021 | |||||
Before tax | Tax (charge)/ credit | Net of tax | Before tax | Tax (charge)/ credit | Net of tax | |
€000 | €000 | €000 | €000 | €000 | €000 | |
Fair valuation of financial investments: | ||||||
– net changes in fair value | (35,655) | 12,479 | (23,176) | (9,375) | 3,281 | (6,094) |
Fair valuation of properties: | ||||||
– net changes in fair value | 185 | (19) | 166 | 2,389 | (239) | 2,150 |
Remeasurement of defined benefit obligation: | ||||||
– net remeasurement | 1,374 | (481) | 893 | 450 | (158) | 292 |
(34,096) | 11,979 | (22,117) | (6,536) | 2,884 | (3,652) |
124 | HSBC Bank Malta p.l.c. Annual Report and Accounts 2022 |
Group/Bank | ||
2022 | 2021 | |
€000 | €000 | |
Balances with Central Bank of Malta | 1,270,867 | 1,241,454 |
Malta Government Treasury Bills | ||
– measured at fair value through other comprehensive income | 242,292 | 228,172 |
– measured at amortised cost | 42,202 | — |
Cash | 29,500 | 26,781 |
1,584,861 | 1,496,407 |
Group | ||
2022 | 2021 | |
€000 | €000 | |
Debt securities and other fixed income instruments | 231,065 | 270,806 |
Equity and other non-fixed income instruments | 429,217 | 497,002 |
660,282 | 767,808 |
Group | ||
2022 | 2021 | |
€000 | €000 | |
Issued by public bodies: | ||
– local government | 74,083 | 92,699 |
– foreign governments | 46,647 | 52,860 |
Issued by other bodies: | ||
– local banks | 6,122 | 7,072 |
– foreign banks | 18,834 | 24,586 |
– other local issuers | 9,578 | 10,152 |
– other foreign issuers | 75,801 | 83,437 |
231,065 | 270,806 | |
Listing status: | ||
– listed on the Malta Stock Exchange | 89,783 | 109,923 |
– listed on other recognised exchanges | 82,398 | 158,056 |
– unlisted | 58,884 | 2,827 |
231,065 | 270,806 | |
At 1 January | 270,806 | 275,080 |
Acquisitions | 42,324 | 34,969 |
Disposals/redemptions | (48,423) | (30,739) |
Changes in fair value | (33,642) | (8,504) |
At 31 December | 231,065 | 270,806 |
HSBC Bank Malta p.l.c. Annual Report and Accounts 2022 | 125 |
Group | ||
2022 | 2021 | |
€000 | €000 | |
Issued by other bodies: | ||
– local banks | — | 1,331 |
– foreign banks | 3,259 | 3,589 |
– other local issuers | 96,849 | 100,589 |
– other foreign issuers | 329,109 | 391,493 |
429,217 | 497,002 | |
Listing status: | ||
– listed on the Malta Stock Exchange | 14,306 | 15,240 |
– listed on other recognised exchanges | 40,068 | 46,667 |
– local unlisted | 82,543 | 86,680 |
– foreign unlisted | 292,300 | 348,415 |
429,217 | 497,002 | |
At 1 January | 497,002 | 458,590 |
Acquisitions | 23,102 | 31,003 |
Disposals | (27,857) | (40,320) |
Changes in fair value | (63,030) | 47,729 |
At 31 December | 429,217 | 497,002 |
126 | HSBC Bank Malta p.l.c. Annual Report and Accounts 2022 |
Group/Bank | ||||||||
Notional contract amount | Fair value - Assets | Fair value - Liabilities | ||||||
Trading | Hedging | Trading | Hedging | Total | Trading | Hedging | Total | |
€000 | €000 | €000 | €000 | €000 | €000 | €000 | €000 | |
Foreign exchange derivatives | ||||||||
Foreign exchange | 318,988 | — | 6,273 | — | 6,273 | 5,879 | — | 5,879 |
Interest rate derivatives | ||||||||
Interest rate swaps | 117,173 | 271,000 | 4,382 | 15,090 | 19,472 | 4,373 | — | 4,373 |
At 31 Dec 2022 | 436,161 | 271,000 | 10,655 | 15,090 | 25,745 | 10,252 | — | 10,252 |
Foreign exchange derivatives | ||||||||
Foreign exchange | 188,010 | — | 2,960 | — | 2,960 | 2,852 | — | 2,852 |
Interest rate derivatives | ||||||||
Interest rate swaps | 173,680 | — | 1,680 | — | 1,680 | 1,740 | — | 1,740 |
At 31 Dec 2021 | 361,690 | — | 4,640 | — | 4,640 | 4,592 | — | 4,592 |
Group/Bank | |||||
Notional1 | Fair value movements since hedge inception2 | Balance sheet presentation | Hedge ineffectiveness recognised in profit and loss | Profit or loss presentation | |
€000 | €000 | €000 | |||
Hedging instrument | 271,000 | 15,173 | Derivatives | (141) | Net loss representing ineffective portion of fair value hedges |
Hedged item | N/A | (15,314) | Financial investments | ||
At 31 Dec 2022 | 271,000 | (141) | (141) |
Group | Bank | |||
2022 | 2021 | 2022 | 2021 | |
€000 | €000 | €000 | €000 | |
Repayable on call and at short notice | 355,766 | 288,682 | 349,490 | 282,471 |
Term loans and advances | 376,727 | 330,591 | 376,727 | 330,591 |
732,493 | 619,273 | 726,217 | 613,062 |
Group/Bank | ||
2022 | 2021 | |
€000 | €000 | |
Repayable on call and at short notice | 199,523 | 160,166 |
Term loans and advances | 3,023,378 | 3,094,591 |
Gross loans and advances to customers | 3,222,901 | 3,254,757 |
Allowance for ECL | (47,734) | (58,032) |
Net loans and advances to customers | 3,175,167 | 3,196,725 |
Allowance for ECL | ||
– allowances booked under stage 1 | 10,177 | 14,740 |
– allowances booked under stage 2 | 18,744 | 15,615 |
– allowances booked under stage 3 | 18,813 | 27,677 |
47,734 | 58,032 |
HSBC Bank Malta p.l.c. Annual Report and Accounts 2022 | 127 |
Group | Bank | |||
2022 | 2021 | 2022 | 2021 | |
€000 | €000 | €000 | €000 | |
Measured at fair value through other comprehensive income: | ||||
Debt instruments | 637,709 | 845,700 | 637,709 | 845,700 |
Equity and other non-fixed income instruments | 37 | 35 | 35 | 33 |
Measured at amortised cost: | ||||
Debt instruments | 367,024 | — | 367,024 | — |
1,004,770 | 845,735 | 1,004,768 | 845,733 |
Group | Bank | |||
2022 | 2021 | 2022 | 2021 | |
€000 | €000 | €000 | €000 | |
Issued by public bodies: | ||||
– local government | 465,658 | 520,528 | 465,658 | 520,528 |
– foreign governments | 106,943 | 203,734 | 106,943 | 203,734 |
Issued by other bodies: | ||||
– other foreign issuers | 65,108 | 121,438 | 65,108 | 121,438 |
637,709 | 845,700 | 637,709 | 845,700 | |
Listing status: | ||||
– listed on the Malta Stock Exchange | 465,658 | 520,528 | 465,658 | 520,528 |
– listed on other recognised exchanges | 172,051 | 325,172 | 172,051 | 325,172 |
637,709 | 845,700 | 637,709 | 845,700 | |
At 1 January | 845,700 | 877,452 | 845,700 | 877,452 |
Exchange adjustments | 3,889 | 13,409 | 3,889 | 13,409 |
Amortisation of premium/discount | (5,166) | (8,120) | (5,166) | (8,120) |
Acquisitions | 99,384 | 221,697 | 99,384 | 221,697 |
Disposals/redemptions | (255,296) | (249,667) | (255,296) | (249,667) |
Changes in fair value | (50,802) | (9,071) | (50,802) | (9,071) |
At 31 December | 637,709 | 845,700 | 637,709 | 845,700 |
Group | Bank | |||
2022 | 2021 | 2022 | 2021 | |
€000 | €000 | €000 | €000 | |
Issued by public bodies: | ||||
– local government | 20,459 | — | 20,459 | — |
– foreign governments | 173,650 | — | 173,650 | — |
Issued by other bodies: | ||||
– other foreign issuers | 172,915 | — | 172,915 | — |
367,024 | — | 367,024 | — | |
Listing status: | ||||
– listed on the Malta Stock Exchange | 20,459 | — | 20,459 | — |
– listed on other recognised exchanges | 346,565 | — | 346,565 | — |
367,024 | — | 367,024 | — | |
At 1 January | — | — | — | — |
Acquisitions | 365,409 | — | 365,409 | — |
Amortisation of premium/discount | 1,615 | — | 1,615 | — |
At 31 December | 367,024 | — | 367,024 | — |
128 | HSBC Bank Malta p.l.c. Annual Report and Accounts 2022 |
Group | Bank | |||
2022 | 2021 | 2022 | 2021 | |
€000 | €000 | €000 | €000 | |
Issued by issuers other than public bodies and banks: | ||||
– local issuers | 7 | 7 | 5 | 5 |
– foreign issuers | 30 | 28 | 30 | 28 |
37 | 35 | 35 | 33 | |
Listing status: | ||||
– unlisted | 37 | 35 | 35 | 33 |
37 | 35 | 35 | 33 |
Group | Bank | |||
2022 | 2021 | 2022 | 2021 | |
€000 | €000 | €000 | €000 | |
Gross accrued interest | 23,693 | 27,460 | 21,198 | 24,969 |
Allowance for ECL | (5,559) | (9,688) | (5,559) | (9,688) |
Net accrued interest | 18,134 | 17,772 | 15,639 | 15,281 |
Other accrued income | 434 | 2,001 | 1,040 | 1,532 |
Prepayments | 858 | 785 | 856 | 778 |
19,426 | 20,558 | 17,535 | 17,591 |
Group | ||
2022 | 2021 | |
€000 | €000 | |
Life insurance assets (non-linked) | ||
Long-term insurance contracts | 50,838 | 77,175 |
Claims outstanding | 1,777 | 2,090 |
Other payables | (2,823) | (1,293) |
49,792 | 77,972 |
Group/Bank | ||
2022 | 2021 | |
€000 | €000 | |
Assets acquired in satisfaction of debt | 3,269 | 3,876 |
Assets held for sale attributable to closed branches | 1,904 | 2,797 |
5,173 | 6,673 |
HSBC Bank Malta p.l.c. Annual Report and Accounts 2022 | 129 |
Bank | ||||
Nature of business | Equity interest | 2022 | 2021 | |
% | €000 | €000 | ||
HSBC Life Assurance (Malta) Ltd | Life insurance | 99.99 | 28,578 | 28,578 |
HSBC Global Asset Management (Malta) Limited | Portfolio management services | 99.99 | 2,281 | 2,281 |
30,859 | 30,859 |
Group | ||||
Fair value | Cost | Fair value | Cost | |
2022 | 2022 | 2021 | 2021 | |
€000 | €000 | €000 | €000 | |
Freehold land and buildings | ||||
As at 1 January | 1,600 | 1,720 | 1,600 | 1,720 |
Disposals | (1,600) | (1,720) | — | — |
At 31 December | — | — | 1,600 | 1,720 |
Group/Bank | ||
2022 | 2021 | |
Right-of-use assets | €000 | €000 |
At 1 January | 2,569 | 4,200 |
Additions | 875 | 1,010 |
Terminations | — | (71) |
Decreases | — | (1,311) |
Depreciation | (985) | (1,259) |
At 31 December | 2,459 | 2,569 |
Lease liabilities at 31 December | ||
Current | 435 | 856 |
Non-current | 1,991 | 1,594 |
2,426 | 2,450 |
Group/Bank | ||
2022 | 2021 | |
€000 | €000 | |
The income statement reflects the following amounts relating to leases: | ||
Depreciation charge of right-of-use assets | 985 | 1,259 |
Interest expense | 39 | 92 |
Expense relating to short-term leases (included in administrative expenses) | 10 | 10 |
Expense relating to leases of low-value assets that are not shown above as short-term leases (included in administrative expenses) | 287 | 276 |
130 | HSBC Bank Malta p.l.c. Annual Report and Accounts 2022 |
Group | ||||
Land and buildings | Computer equipment | Others | Total | |
€000 | €000 | €000 | €000 | |
Cost/revaluation | ||||
At 1 January 2022 | 36,292 | 18,093 | 37,861 | 92,246 |
Additions | 4,309 | 500 | 580 | 5,389 |
Revaluation | (63) | — | — | (63) |
Disposals/Write offs | (45) | — | (1,986) | (2,031) |
Transfers (refer to Note 28) | (609) | — | (175) | (784) |
At 31 December 2022 | 39,884 | 18,593 | 36,280 | 94,757 |
Accumulated depreciation and impairment losses | ||||
At 1 January 2022 | 1,870 | 16,677 | 31,776 | 50,323 |
Depreciation charge for the year | 274 | 488 | 1,553 | 2,315 |
Revaluation | (248) | — | — | (248) |
Disposals/Write offs | (45) | — | (1,985) | (2,030) |
Transfers (refer to Note 28) | (59) | — | (171) | (230) |
At 31 December 2022 | 1,792 | 17,165 | 31,173 | 50,130 |
Carrying amount at 1 January 2022 | 34,422 | 1,416 | 6,085 | 41,923 |
Carrying amount at 31 December 2022 | 38,092 | 1,428 | 5,107 | 44,627 |
Cost/revaluation | ||||
At 1 January 2021 | 37,966 | 20,265 | 38,232 | 96,463 |
Additions | 67 | 79 | 1,687 | 1,833 |
Revaluation | 2,384 | — | — | 2,384 |
Disposals/Write offs | (20) | (2,251) | (1,663) | (3,934) |
Transfers (refer to Note 28) | (4,105) | — | (395) | (4,500) |
At 31 December 2021 | 36,292 | 18,093 | 37,861 | 92,246 |
Accumulated depreciation and impairment losses | ||||
At 1 January 2021 | 1,760 | 18,361 | 32,136 | 52,257 |
Depreciation charge for the year | 290 | 567 | 1,559 | 2,416 |
Revaluation | (5) | — | — | (5) |
Disposals/Write offs | (20) | (2,251) | (1,592) | (3,863) |
Transfers (refer to Note 28) | (155) | — | (327) | (482) |
At 31 December 2021 | 1,870 | 16,677 | 31,776 | 50,323 |
Carrying amount at 1 January 2021 | 36,206 | 1,904 | 6,096 | 44,206 |
Carrying amount at 31 December 2021 | 34,422 | 1,416 | 6,085 | 41,923 |
HSBC Bank Malta p.l.c. Annual Report and Accounts 2022 | 131 |
Bank | ||||
Land and buildings | Computer equipment | Others | Total | |
€000 | €000 | €000 | €000 | |
Cost/revaluation | ||||
At 1 January 2022 | 36,292 | 17,855 | 37,652 | 91,799 |
Additions | 4,309 | 500 | 578 | 5,387 |
Revaluation | (63) | — | — | (63) |
Disposals/Write offs | (45) | — | (1,986) | (2,031) |
Transfers (refer to Note 28) | (609) | — | (175) | (784) |
At 31 December 2022 | 39,884 | 18,355 | 36,069 | 94,308 |
Accumulated depreciation and impairment losses | ||||
At 1 January 2022 | 1,870 | 16,439 | 31,569 | 49,878 |
Depreciation charge for the year | 274 | 488 | 1,553 | 2,315 |
Revaluation | (248) | — | — | (248) |
Disposals/Write offs | (45) | — | (1,985) | (2,030) |
Transfers (refer to Note 28) | (59) | — | (171) | (230) |
At 31 December 2022 | 1,792 | 16,927 | 30,966 | 49,685 |
Carrying amount at 1 January 2022 | 34,422 | 1,416 | 6,083 | 41,921 |
Carrying amount at 31 December 2022 | 38,092 | 1,428 | 5,103 | 44,623 |
Cost/revaluation | ||||
At 1 January 2021 | 37,966 | 20,027 | 38,025 | 96,018 |
Additions | 67 | 79 | 1,685 | 1,831 |
Revaluation | 2,384 | — | — | 2,384 |
Disposals/Write offs | (20) | (2,251) | (1,663) | (3,934) |
Transfers (refer to Note 28) | (4,105) | — | (395) | (4,500) |
At 31 December 2021 | 36,292 | 17,855 | 37,652 | 91,799 |
Accumulated depreciation and impairment losses | ||||
At 1 January 2021 | 1,760 | 18,123 | 31,929 | 51,812 |
Depreciation charge for the year | 290 | 567 | 1,559 | 2,416 |
Revaluation | (5) | — | — | (5) |
Disposals/Write offs | (20) | (2,251) | (1,592) | (3,863) |
Transfers (refer to Note 28) | (155) | — | (327) | (482) |
At 31 December 2021 | 1,870 | 16,439 | 31,569 | 49,878 |
Carrying amount at 1 January 2021 | 36,206 | 1,904 | 6,096 | 44,206 |
Carrying amount at 31 December 2021 | 34,422 | 1,416 | 6,083 | 41,921 |
Group/Bank | ||
2022 | 2021 | |
€000 | €000 | |
At 31 December | ||
Cost | 11,827 | 7,563 |
Accumulated depreciation | (2,040) | (1,875) |
Carrying amount | 9,787 | 5,688 |
132 | HSBC Bank Malta p.l.c. Annual Report and Accounts 2022 |
Group | Bank | |||
2022 | 2021 | 2022 | 2021 | |
€000 | €000 | €000 | €000 | |
Software | 19,127 | 16,561 | 18,604 | 16,022 |
PVIF | 36,340 | 33,565 | — | — |
Deferred acquisition costs | 42 | 42 | — | — |
55,509 | 50,168 | 18,604 | 16,022 |
Group | Bank | |||
2022 | 2021 | 2022 | 2021 | |
Cost | €000 | €000 | €000 | €000 |
At 1 January | 52,449 | 45,819 | 50,238 | 43,612 |
Additions | 7,419 | 6,675 | 7,339 | 6,671 |
Write offs | — | (45) | — | (45) |
At 31 December | 59,868 | 52,449 | 57,577 | 50,238 |
Accumulated amortisation | ||||
At 1 January | 35,888 | 32,057 | 34,216 | 30,460 |
Amortisation and impairment charge for the year | 4,853 | 3,876 | 4,757 | 3,801 |
Write offs | — | (45) | — | (45) |
At 31 December | 40,741 | 35,888 | 38,973 | 34,216 |
Carrying amount at 1 January | 16,561 | 13,762 | 16,022 | 13,152 |
Carrying amount at 31 December | 19,127 | 16,561 | 18,604 | 16,022 |
Group | ||
2022 | 2021 | |
€000 | €000 | |
At 1 January | 33,565 | 40,538 |
Addition from current year new business | 4,036 | 4,925 |
Movement from in-force business | (1,261) | (11,898) |
At 31 December | 36,340 | 33,565 |
2022 | 2021 | |
% | % | |
Risk free rate | EIOPA yield curve | EIOPA yield curve |
Risk adjusted discount rate | EIOPA yield curve with no margin | EIOPA yield curve with no margin |
Expenses inflation | Wage inflation and French Inflation Swap Curve modified for Malta | Wage inflation and French Inflation Swap Curve modified for Malta |
Lapse rate | Different rates for different products and duration in-force | Different rates for different products and duration in-force |
Group | |||
PVIF Impact | |||
2022 | 2021 | ||
Assumptions | Movement | €000 | €000 |
Risk free rate | +100 basis points | 2,579 | 4,226 |
Risk free rate | -100 basis points | (4,345) | (7,000) |
Expenses inflation | +10% | (1,619) | (1,305) |
Expenses inflation | -10% | 1,694 | 1,424 |
Lapse rate | + 50 basis points | 1,298 | 5,207 |
Lapse rate | - 50 basis points | (2,341) | (8,344) |
Group | ||
2022 | 2021 | |
€000 | €000 | |
At 1 January | 42 | 42 |
Amortisation | — | — |
At 31 December | 42 | 42 |
HSBC Bank Malta p.l.c. Annual Report and Accounts 2022 | 133 |
Group | Bank | |||
2022 | 2021 | 2022 | 2021 | |
€000 | €000 | €000 | €000 | |
Deferred tax assets | 35,620 | 29,119 | 35,620 | 29,119 |
Deferred tax liabilities | (15,819) | (15,005) | (3,569) | (3,722) |
19,801 | 14,114 | 32,051 | 25,397 |
Group | Bank | |||
2022 | 2021 | 2022 | 2021 | |
€000 | €000 | €000 | €000 | |
Depreciation of property, plant and equipment | (2,116) | (1,653) | (2,140) | (1,658) |
Expected credit loss allowances | 19,299 | 24,352 | 19,299 | 24,352 |
Fair valuation of properties | (3,569) | (3,850) | (3,569) | (3,722) |
Fair value gains on financial instruments | 12,086 | (393) | 12,086 | (393) |
Value of in-force life insurance business | (12,719) | (11,748) | — | — |
Provisions for liabilities and other charges | 6,418 | 6,819 | 5,980 | 6,423 |
Other | 402 | 587 | 395 | 395 |
19,801 | 14,114 | 32,051 | 25,397 |
Group | |||||
At 1 Jan 2022 | Recognised in profit or loss | Recognised in OCI | Recognised directly in equity | At 31 Dec 2022 | |
€000 | €000 | €000 | €000 | €000 | |
Depreciation of property, plant and equipment | (1,653) | (463) | — | — | (2,116) |
Expected credit loss allowances | 24,352 | (5,053) | — | — | 19,299 |
Fair valuation of properties | (3,850) | 300 | (19) | — | (3,569) |
Fair value movements on financial instruments | (393) | — | 12,479 | — | 12,086 |
Value of in-force life insurance business | (11,748) | (971) | — | — | (12,719) |
Provisions for liabilities and other charges | 6,819 | 80 | (481) | — | 6,418 |
Other | 587 | (245) | — | 60 | 402 |
14,114 | (6,352) | 11,979 | 60 | 19,801 | |
At 1 Jan 2021 | Recognised in profit or loss | Recognised in OCI | Recognised directly in equity | At 31 Dec 2021 | |
€000 | €000 | €000 | €000 | €000 | |
Depreciation of property, plant and equipment | (684) | (969) | — | — | (1,653) |
Expected credit loss allowances | 25,392 | (1,040) | — | — | 24,352 |
Fair valuation of properties | (4,164) | 553 | (239) | — | (3,850) |
Fair value movements on financial instruments | (3,674) | — | 3,281 | — | (393) |
Value of in-force life insurance business | (14,188) | 2,440 | — | — | (11,748) |
Provisions for liabilities and other charges | 6,646 | 331 | (158) | — | 6,819 |
Other | 240 | 313 | — | 34 | 587 |
9,568 | 1,628 | 2,884 | 34 | 14,114 |
134 | HSBC Bank Malta p.l.c. Annual Report and Accounts 2022 |
Bank | |||||
At 1 Jan 2022 | Recognised in profit or loss | Recognised in OCI | Recognised directly in equity | At 31 Dec 2022 | |
€000 | €000 | €000 | €000 | €000 | |
Depreciation of property, plant and equipment | (1,658) | (482) | — | — | (2,140) |
Expected credit loss allowances | 24,352 | (5,053) | — | — | 19,299 |
Fair valuation of properties | (3,722) | 172 | (19) | — | (3,569) |
Fair value movements on financial instruments | (393) | — | 12,479 | — | 12,086 |
Provisions for liabilities and other charges | 6,423 | 38 | (481) | — | 5,980 |
Other | 395 | (60) | — | 60 | 395 |
25,397 | (5,385) | 11,979 | 60 | 32,051 | |
At 1 Jan 2021 | Recognised in profit or loss | Recognised in OCI | Recognised directly in equity | At 31 Dec 2021 | |
€000 | €000 | €000 | €000 | €000 | |
Depreciation of property, plant and equipment | (711) | (947) | — | — | (1,658) |
Expected credit loss allowances | 25,392 | (1,040) | — | — | 24,352 |
Fair valuation of properties | (4,036) | 553 | (239) | — | (3,722) |
Fair value movements on financial instruments | (3,674) | — | 3,281 | — | (393) |
Provisions for liabilities and other charges | 5,922 | 659 | (158) | — | 6,423 |
Other | 201 | 160 | — | 34 | 395 |
23,094 | (615) | 2,884 | 34 | 25,397 |
Group | Bank | |||
2022 | 2021 | 2022 | 2021 | |
€000 | €000 | €000 | €000 | |
Committed letters of credit | 1,495 | 842 | 1,495 | 842 |
Other | 9,797 | 4,671 | 8,470 | 4,006 |
11,292 | 5,513 | 9,965 | 4,848 |
Group/Bank | ||
2022 | 2021 | |
€000 | €000 | |
Term deposits | — | 499 |
Repayable on demand | 2,861 | 898 |
2,861 | 1,397 |
Group | Bank | |||
2022 | 2021 | 2022 | 2021 | |
€000 | €000 | €000 | €000 | |
Term deposits | 694,071 | 710,487 | 694,071 | 710,487 |
Repayable on demand | 5,276,887 | 4,910,708 | 5,316,321 | 4,947,194 |
5,970,958 | 5,621,195 | 6,010,392 | 5,657,681 |
Group | Bank | |||
2022 | 2021 | 2022 | 2021 | |
€000 | €000 | €000 | €000 | |
Accrued interest | 1,864 | 1,431 | 1,677 | 1,215 |
Accrued expenses | 25,163 | 20,334 | 20,444 | 16,363 |
Deferred income | 273 | 211 | 158 | 56 |
27,300 | 21,976 | 22,279 | 17,634 |
HSBC Bank Malta p.l.c. Annual Report and Accounts 2022 | 135 |
Group | ||
2022 | 2021 | |
€000 | €000 | |
At 1 January | 185,137 | 170,865 |
Premiums received | 6,144 | 7,489 |
Amounts paid on surrender and other terminations during the year | (12,064) | (12,707) |
Changes in unit prices and other movements | (16,541) | 19,490 |
At 31 December | 162,676 | 185,137 |
Group | ||
Gross | Gross | |
2022 | 2021 | |
€000 | €000 | |
Life insurance (non-linked) | ||
Provisions for policyholders | 308,493 | 391,627 |
Outstanding claims | 2,561 | 1,612 |
Total non-linked | 311,054 | 393,239 |
Life insurance (linked) | ||
Provisions for policyholders | 231,406 | 264,186 |
Outstanding claims | 1,786 | 772 |
Total linked | 233,192 | 264,958 |
Total liabilities under insurance contracts | 544,246 | 658,197 |
Group | ||||
Non-linked business | Linked business | All business | Total | |
Provisions for policy-holders | Provisions for policy-holders | Outstanding claims | ||
€000 | €000 | €000 | €000 | |
At 1 January 2022 | 391,627 | 264,186 | 2,384 | 658,197 |
Premiums received | — | 29,999 | — | 29,999 |
Other movements for the year | (83,134) | (40,566) | 1,963 | (121,737) |
Account balances paid on surrender and other terminations during the year | — | (22,213) | — | (22,213) |
At 31 December 2022 | 308,493 | 231,406 | 4,347 | 544,246 |
At 1 January 2021 | 403,097 | 240,164 | 4,767 | 648,028 |
Premiums received | — | 27,723 | — | 27,723 |
Other movements for the year | (11,470) | 22,267 | (2,383) | 8,414 |
Account balances paid on surrender and other terminations during the year | — | (25,968) | — | (25,968) |
At 31 December 2021 | 391,627 | 264,186 | 2,384 | 658,197 |
136 | HSBC Bank Malta p.l.c. Annual Report and Accounts 2022 |
Group | |||||
Termination benefits | Litigation provision | Post employment and other long- term employee benefits | Other provisions | Total | |
€000 | €000 | €000 | €000 | €000 | |
Provisions (excluding contractual commitments) | |||||
At 31 December 2021 | 2,042 | 1,207 | 13,293 | 2,940 | 19,482 |
Additions | 1,558 | 963 | 729 | 623 | 3,873 |
Amounts utilised | (1,814) | (2) | (376) | (754) | (2,946) |
Unused amounts reversed | — | (60) | (305) | (186) | (551) |
Remeasurement of post employment and other long-term employee benefits | — | — | (1,522) | — | (1,522) |
At 31 December 2022 | 1,786 | 2,108 | 11,819 | 2,623 | 18,336 |
Contractual commitments | |||||
At 31 December 2021 | 1,770 | ||||
Change in expected credit loss provision | (26) | ||||
At 31 December 2022 | 1,744 | ||||
Total Provisions | |||||
At 31 December 2021 | 21,252 | ||||
At 31 December 2022 | 20,080 |
Bank | |||||
Provisions (excluding contractual commitments) | |||||
At 31 December 2021 | 2,042 | 1,207 | 13,293 | 1,810 | 18,352 |
Additions | 1,558 | 843 | 729 | 623 | 3,753 |
Amounts utilised | (1,814) | (2) | (376) | (754) | (2,946) |
Unused amounts reversed | — | (60) | (305) | (186) | (551) |
Remeasurement of post employment and other long-term employee benefits | — | — | (1,522) | — | (1,522) |
At 31 December 2022 | 1,786 | 1,988 | 11,819 | 1,493 | 17,086 |
Contractual commitments | |||||
At 31 December 2021 | 1,770 | ||||
Change in expected credit loss provision | (26) | ||||
At 31 December 2022 | 1,744 | ||||
Total Provisions | |||||
At 31 December 2021 | 20,122 | ||||
At 31 December 2022 | 18,830 |
Group | |||||
Termination benefits | Litigation provision | Post employment and other long-term employee benefits | Other provisions | Total | |
€000 | €000 | €000 | €000 | €000 | |
Provisions (excluding contractual commitments) | |||||
At 31 December 2020 | 566 | 1,303 | 14,186 | 2,556 | 18,611 |
Additions | 3,208 | 60 | 787 | 1,917 | 5,972 |
Amounts utilised | (1,732) | (5) | (412) | (952) | (3,101) |
Unused amounts reversed | — | (151) | (431) | (581) | (1,163) |
Remeasurement of post employment and other long-term employee | — | — | (837) | — | (837) |
At 31 December 2021 | 2,042 | 1,207 | 13,293 | 2,940 | 19,482 |
Contractual commitments | |||||
At 31 December 2020 | 2,420 | ||||
Change in expected credit loss provision | (650) | ||||
At 31 December 2021 | 1,770 | ||||
Total Provisions | |||||
At 31 December 2020 | 21,031 | ||||
At 31 December 2021 | 21,252 |
HSBC Bank Malta p.l.c. Annual Report and Accounts 2022 | 137 |
Bank | |||||
€000 | €000 | €000 | €000 | €000 | |
Provisions (excluding contractual commitments) | |||||
At 31 December 2020 | 566 | 1,303 | 14,186 | 866 | 16,921 |
Additions | 3,208 | 60 | 787 | 1,917 | 5,972 |
Amounts utilised | (1,732) | (5) | (412) | (952) | (3,101) |
Unused amounts reversed | — | (151) | (431) | (21) | (603) |
Remeasurement of post employment and other long-term employee benefits | — | — | (837) | — | (837) |
At 31 December 2021 | 2,042 | 1,207 | 13,293 | 1,810 | 18,352 |
Contractual commitments | |||||
At 31 December 2020 | 2,420 | ||||
Change in expected credit loss provision | (650) | ||||
At 31 December 2021 | 1,770 | ||||
Total Provisions | |||||
At 31 December 2020 | 19,341 | ||||
At 31 December 2021 | 20,122 |
138 | HSBC Bank Malta p.l.c. Annual Report and Accounts 2022 |
Group | Bank | |||
2022 | 2021 | 2022 | 2021 | |
€000 | €000 | €000 | €000 | |
Committed letters of credit | 1,500 | 842 | 1,500 | 842 |
Lease liabilities (refer to Note 31) | 2,426 | 2,450 | 2,426 | 2,450 |
Other | 11,643 | 8,953 | 7,141 | 5,103 |
15,569 | 12,245 | 11,067 | 8,395 |
Group/Bank | ||
2022 | 2021 | |
€000 | €000 | |
Authorised | ||
470,000,000 ordinary shares of 30 cent each | 141,000 | 141,000 |
Issued and fully paid up | ||
360,306,099 ordinary shares of 30 cent each | 108,092 | 108,092 |
HSBC Bank Malta p.l.c. Annual Report and Accounts 2022 | 139 |
Group/Bank | |
€000 | |
On land and buildings | |
1 January 2021 | 25,893 |
– surplus arising on revaluation | 2,389 |
– deferred tax on revaluation loss | (239) |
– transfer to retained earnings upon realisation through disposal | (4,938) |
– deferred tax on transfer upon realisation through disposal | 494 |
31 December 2021 | 23,599 |
– surplus arising on revaluation | 185 |
– deferred tax on revaluation surplus | (19) |
– transfer to retained earnings upon realisation through disposal | (1,396) |
– deferred tax on transfer upon realisation through disposal | 140 |
31 December 2022 | 22,509 |
On financial investments | |
1 January 2021 | 6,825 |
– fair value adjustments | (9,375) |
– deferred tax on fair value adjustments | 3,281 |
31 December 2021 | 731 |
– fair value adjustments | (35,655) |
– deferred tax on fair value adjustments | 12,479 |
31 December 2022 | (22,445) |
Total revaluation reserve | |
Total as at 31 December 2021 | 24,330 |
Total as at 31 December 2022 | 64 |
Group Contract amount | Bank Contract amount | |||
2022 | 2021 | 2022 | 2021 | |
€000 | €000 | €000 | €000 | |
Guarantees | 113,686 | 123,127 | 113,686 | 123,129 |
Standby letters of credit | 18,130 | 17,230 | 18,130 | 17,230 |
Other contingent liabilities | 2,310 | 2,707 | 2,310 | 2,707 |
134,126 | 143,064 | 134,126 | 143,066 |
140 | HSBC Bank Malta p.l.c. Annual Report and Accounts 2022 |
Group/Bank Contract amount | ||
2022 | 2021 | |
€000 | €000 | |
Documentary credits | 17,816 | 16,862 |
Undrawn formal standby facilities, credit lines and other commitments to lend | 860,004 | 950,877 |
877,820 | 967,739 |
Group | ||||
2022 | 2021 | 2022 | 2021 | |
EUR per share | EUR per share | €000 | €000 | |
Gross of income tax | ||||
– prior year’s final dividend | 0.03 | 0.01 | 12,323 | 4,180 |
– current year’s interim dividend | — | — | — | — |
0.03 | 0.01 | 12,323 | 4,180 | |
Net of income tax | ||||
– prior year’s final dividend | 0.02 | 0.01 | 8,010 | 2,717 |
– current year’s interim dividend | — | — | — | — |
0.02 | 0.01 | 8,010 | 2,717 |
Group | ||
2022 | 2021 | |
€000 | €000 | |
Proposed dividend | ||
Profit for the year | 37,571 | 17,755 |
Proposed dividend | 13,139 | 8,010 |
Less: interim dividend paid | — | — |
Available for distribution | 13,139 | 8,010 |
Proposed final dividend | ||
Issued and fully paid up shares (Note 45) | 360,306,099 | 360,306,099 |
EUR per share | EUR per share | |
Proposed final dividend | ||
– gross of income tax per share | 0.06 | 0.03 |
– net of income tax per share |
HSBC Bank Malta p.l.c. Annual Report and Accounts 2022 | 141 |
Group | Bank | |||
2022 | 2021 | 2022 | 2021 | |
€000 | €000 | €000 | €000 | |
Balances of cash and cash equivalents are analysed below: | ||||
Cash | 29,500 | 26,781 | 29,500 | 26,781 |
Malta Government Treasury Bills of three months or less | 232,346 | 14,010 | 232,346 | 14,010 |
Balances with Central Bank of Malta (excluding reserve deposit and restricted cash) of three months or less | 1,209,987 | 1,184,648 | 1,209,987 | 1,184,648 |
Loans and advances to banks of three months or less | 487,267 | 391,352 | 480,991 | 385,198 |
Items in course of collection from other banks | 6,921 | 4,453 | 6,921 | 4,453 |
Items in course of transmission to other banks | (27,397) | (21,573) | (27,397) | (21,573) |
Per Statements of Cash Flows | 1,938,624 | 1,599,671 | 1,932,348 | 1,593,517 |
Adjustment to reflect balances with contractual maturity of more than three months | 358,253 | 498,889 | 358,253 | 498,832 |
Per Statements of Financial Position | 2,296,877 | 2,098,560 | 2,290,601 | 2,092,349 |
Analysed as follows: | ||||
Cash and balances with Central Bank of Malta | 1,300,366 | 1,268,235 | 1,300,366 | 1,268,235 |
Malta Government Treasury Bills | 284,494 | 228,172 | 284,494 | 228,172 |
Loans and advances to banks | 732,493 | 619,273 | 726,217 | 613,062 |
Items in course of collection from other banks | 6,921 | 4,453 | 6,921 | 4,453 |
Items in course of transmission to other banks | (27,397) | (21,573) | (27,397) | (21,573) |
2,296,877 | 2,098,560 | 2,290,601 | 2,092,349 |
142 | HSBC Bank Malta p.l.c. Annual Report and Accounts 2022 |
Group | ||||
2022 | ||||
Wealth and Personal Banking | Commercial Banking | Global Markets | Group Total | |
€000 | €000 | €000 | €000 | |
Net interest income | 75,821 | 32,421 | — | 108,242 |
– external | 75,894 | 32,348 | — | 108,242 |
– internal | (73) | 73 | — | — |
Net non-interest income | 25,318 | 13,286 | 3,799 | 42,403 |
Net operating income before loan impairment charges | 101,139 | 45,707 | 3,799 | 150,645 |
Change in expected credit losses and other credit impairment charges | (2,680) | 12,323 | — | 9,643 |
Net operating income | 98,459 | 58,030 | 3,799 | 160,288 |
Employee compensation and benefits | (29,523) | (8,588) | (434) | (38,545) |
General and administrative expenses | (41,731) | (12,687) | (363) | (54,781) |
Depreciation of property, plant and equipment and right-of-use assets | (2,634) | (654) | (12) | (3,300) |
Amortisation of intangible assets | (3,465) | (1,364) | (24) | (4,853) |
Total operating expenses | (77,353) | (23,293) | (833) | (101,479) |
Adjusted profit before tax | 21,106 | 34,737 | 2,966 | 58,809 |
Reported balance sheet data | ||||
Loans and advances to customers (net) | 2,264,031 | 911,136 | — | 3,175,167 |
Total external assets | 5,731,297 | 1,660,474 | 26,562 | 7,418,333 |
Customer accounts | 4,545,286 | 1,425,672 | — | 5,970,958 |
2021 | ||||
Net interest income | 68,271 | 29,487 | — | 97,758 |
– external | 68,466 | 29,292 | — | 97,758 |
– internal | (195) | 195 | — | — |
Net non-interest income | 17,767 | 13,134 | 2,634 | 33,535 |
Net operating income before loan impairment charges | 86,038 | 42,621 | 2,634 | 131,293 |
Change in expected credit losses and other credit impairment charges | (598) | 1,593 | — | 995 |
Net operating income | 85,440 | 44,214 | 2,634 | 132,288 |
Employee compensation and benefits | (30,293) | (8,904) | (352) | (39,549) |
General and administrative expenses | (41,034) | (14,221) | (274) | (55,529) |
Depreciation of property, plant and equipment and right-of-use assets | (2,897) | (766) | (12) | (3,675) |
Amortisation of intangible assets | (2,737) | (1,123) | (16) | (3,876) |
Total operating expenses | (76,961) | (25,014) | (654) | (102,629) |
Adjusted/reported profit before tax | 8,479 | 19,200 | 1,980 | 29,659 |
Reported balance sheet data | ||||
Loans and advances to customers (net) | 2,268,268 | 928,457 | — | 3,196,725 |
Total external assets | 5,510,516 | 1,658,929 | 5,360 | 7,174,805 |
Customer accounts | 4,380,261 | 1,240,934 | — | 5,621,195 |
During 2022, the performance results reported internally were adjusted for significant items. | ||||
A reconciliation of reported and adjusted profit by global business in respect of the financial year ended 31 December 2022 is shown in the table below. | ||||
Group | ||||
2022 | ||||
Wealth and Personal Banking | Commercial Banking | Global Markets | Group Total | |
€000 | €000 | €000 | €000 | |
Adjusted profit before tax | 21,106 | 34,737 | 2,966 | 58,809 |
Significant item: | (1,288) | (252) | (18) | (1,558) |
– Restructuring provision | (1,288) | (252) | (18) | (1,558) |
Reported profit before tax | 19,818 | 34,485 | 2,948 | 57,251 |
Group | ||||
2021 | ||||
Wealth and Personal Banking | Commercial Banking | Global Markets | Group Total | |
€000 | €000 | €000 | €000 | |
Adjusted profit before tax | 8,479 | 19,200 | 1,980 | 29,659 |
Significant item: | (2,375) | (372) | (30) | (2,777) |
– Restructuring provision | (2,375) | (372) | (30) | (2,777) |
Reported profit before tax | 6,104 | 18,828 | 1,950 | 26,882 |
HSBC Bank Malta p.l.c. Annual Report and Accounts 2022 | 143 |
Group/Bank | ||||
Highest balance during the year | Balance at end of year | Highest balance during the year | Balance at end of year | |
2022 | 2022 | 2021 | 2021 | |
€000 | €000 | €000 | €000 | |
Credit card balances | 13 | 8 | 7 | 7 |
Commitments to lend | 571 | 562 | 700 | 579 |
Group | Bank | |||
2022 | 2021 | 2022 | 2021 | |
€000 | €000 | €000 | €000 | |
Directors’ emoluments (including Non-Executive Directors) | ||||
Salaries and other emoluments | 2,033 | 1,905 | 1,271 | 1,264 |
Benefits | 124 | 124 | 117 | 118 |
Share-based payments | 32 | 14 | 32 | 14 |
2,189 | 2,043 | 1,420 | 1,396 | |
Other key management personnel | ||||
Salaries and other emoluments | 1,434 | 1,283 | 950 | 947 |
Benefits | 122 | 121 | 117 | 118 |
Share-based payments | 32 | 14 | 32 | 14 |
1,588 | 1,418 | 1,099 | 1,079 |
144 | HSBC Bank Malta p.l.c. Annual Report and Accounts 2022 |
Group | Bank | |||
2022 | 2021 | 2022 | 2021 | |
€000 | €000 | €000 | €000 | |
Assets | ||||
Derivatives | 20,161 | — | 20,161 | — |
Loans and advances to banks | 659,843 | 334,378 | 659,843 | 334,378 |
Prepayments and accrued income | 921 | 6 | 921 | 6 |
Liabilities | ||||
Deposits by banks | — | 499 | — | — |
Accruals and deferred income | 438 | 219 | 438 | 219 |
Income statement | ||||
Interest income | 6,126 | 97 | 6,126 | 97 |
Interest expense | 230 | 2,634 | 230 | 2,634 |
Fee income | 112 | 56 | 112 | 56 |
Fee expense | 78 | 97 | 84 | 43 |
Net trading income | 9,006 | — | 9,006 | — |
Other income | 24 | 27 | 24 | 27 |
General and administrative expenses | 696 | 327 | 696 | 327 |
Group | Bank | |||
2022 | 2021 | 2022 | 2021 | |
€000 | €000 | €000 | €000 | |
Assets | ||||
Derivatives | 3,925 | 2,372 | 3,925 | 2,372 |
Loans and advances to banks | 53,322 | 143,425 | 51,494 | 140,953 |
Prepayments and accrued income | 189 | 25 | 189 | 25 |
Liabilities | ||||
Derivatives | 1,587 | 2,268 | 1,587 | 2,268 |
Deposits by banks | 1,074 | 880 | 1,074 | 880 |
Borrowings from a group undertaking | 60,000 | 60,000 | 60,000 | 60,000 |
Subordinated liabilities | 62,000 | 62,000 | 62,000 | 62,000 |
Accruals and deferred income | 1,157 | 344 | 219 | 163 |
Income statement | ||||
Interest income | 343 | 86 | 343 | 86 |
Interest expense | 2,048 | 1,174 | 2,048 | 1,174 |
Fee expense | 2 | 3 | 2 | 3 |
Net trading income | 15,664 | 3,388 | 15,664 | 3,388 |
Other income | 22 | 89 | 22 | 89 |
General and administrative expenses | 485 | 617 | 41 | 246 |
Group | Bank | |||
2022 | 2021 | 2022 | 2021 | |
€000 | €000 | €000 | €000 | |
Assets | ||||
Loans and advances to banks | 15,392 | 136,449 | 13,717 | 134,789 |
Prepayments and accrued income | 476 | 183 | 311 | 13 |
Other assets | 600 | 937 | 600 | 937 |
Liabilities | ||||
Deposits by banks | 469 | — | 469 | — |
Customer accounts | 3,266 | 2,789 | 3,266 | 2,789 |
Accruals and deferred income | 10,468 | 9,658 | 8,116 | 7,112 |
Income statement | ||||
Interest income | 566 | 375 | 566 | 375 |
Interest expense | 5 | 1 | 5 | 1 |
Fee income | 1,504 | 1,528 | — | — |
Fee expense | 154 | 162 | 5 | 4 |
Net trading income | 2 | 10 | 2 | 10 |
Other income | 266 | 696 | 266 | 696 |
General and administrative expenses | 27,400 | 26,402 | 25,859 | 24,032 |
HSBC Bank Malta p.l.c. Annual Report and Accounts 2022 | 145 |
Bank | ||
2022 | 2021 | |
€000 | €000 | |
Assets | ||
Prepayments and accrued income | 340 | 287 |
Investment in subsidiaries | 30,859 | 30,859 |
Other assets | 747 | — |
Liabilities | ||
Customer accounts | 39,434 | 36,486 |
Income statement | ||
Fee income | 2,678 | 2,891 |
Net trading income | 14 | 77 |
Dividend income | 1,308 | 1,462 |
Type of structured entity | Nature and purpose | Interest held by the group |
Investment funds | •These vehicles are financed through the issue of units to investors. | •Investments in units issued by the fund |
•To generate fees from managing assets on behalf of third party investors. | •Management fees |
2022 | 2021 | |
€000 | €000 | |
Carrying amount of units in HSBC managed investment funds - classified as financial investments measured at fair value through profit or loss | 82,543 | 86,680 |
Total assets of HSBC managed funds | 301,919 | 375,114 |
146 | HSBC Bank Malta p.l.c. Annual Report and Accounts 2022 |
HSBC Bank Malta p.l.c. Annual Report and Accounts 2022 | 147 |
148 | HSBC Bank Malta p.l.c. Annual Report and Accounts 2022 |
HSBC Bank Malta p.l.c. Annual Report and Accounts 2022 | 149 |
2022 | 2021 | 2020 | 2019 | 2018 | |
€000 | €000 | €000 | €000 | €000 | |
Interest receivable and similar income | 116,639 | 105,710 | 113,598 | 120,573 | 118,943 |
Interest expense | (8,397) | (7,952) | (7,696) | (10,462) | (10,321) |
Net interest income | 108,242 | 97,758 | 105,902 | 110,111 | 108,622 |
Net non-interest income | 42,403 | 33,535 | 27,521 | 41,672 | 41,779 |
Change in expected credit losses and other credit impairment charges | 9,643 | 995 | (25,589) | (389) | (3,488) |
Operating expenses | (103,037) | (105,406) | (97,391) | (120,685) | (108,357) |
Profit before tax | 57,251 | 26,882 | 10,443 | 30,709 | 38,556 |
Tax expense | (19,680) | (9,127) | (2,871) | (10,541) | (9,860) |
Profit for the year | 37,571 | 17,755 | 7,572 | 20,168 | 28,696 |
Earnings per share | €10.43 | €0.05 | €0.02 | €0.06 | €0.08 |
2022 | 2021 | 2020 | 2019 | 2018 | |
€000 | €000 | €000 | €000 | €000 | |
Profit for the year | 37,571 | 17,755 | 7,572 | 20,168 | 28,696 |
Other comprehensive income | |||||
Items that will be reclassified subsequently to profit or loss when specific conditions are met: | |||||
Debt instruments measured at fair value through other comprehensive income/ available-for-sale investments: | (23,177) | (6,095) | 753 | 311 | (3,592) |
– fair value (losses)/gains | (35,657) | (9,377) | 1,159 | 478 | (5,527) |
– income taxes | 12,480 | 3,282 | (406) | (167) | 1,935 |
Items that will not be reclassified subsequently to profit or loss: | |||||
Properties: | 166 | 2,150 | 304 | (475) | 382 |
– surplus/(loss) arising on revaluation | 185 | 2,389 | 338 | (528) | 424 |
– income taxes | (19) | (239) | (34) | 53 | (42) |
Post employment benefit obligations: | 893 | 292 | (446) | (619) | (334) |
– remeasurement of post employment benefit obligations | 1,374 | 450 | (686) | (952) | (514) |
– income taxes | (481) | (158) | 240 | 333 | 180 |
Equity instruments designated at fair value through other comprehensive income: | 1 | 1 | 2 | — | 1,045 |
– fair value gains | 2 | 2 | 3 | — | 1,608 |
– income taxes | (1) | (1) | (1) | — | (563) |
Other comprehensive income, net of tax | (22,117) | (3,652) | 613 | (783) | (2,499) |
Total comprehensive income | 15,454 | 14,103 | 8,185 | 19,385 | 26,197 |
150 | HSBC Bank Malta p.l.c. Annual Report and Accounts 2022 |
2022 | 2021 | 2020 | 2019 | 2018 | |
€000 | €000 | €000 | €000 | €000 | |
Assets | |||||
Balances with Central Bank of Malta, Treasury Bills and cash | 1,584,861 | 1,496,407 | 996,679 | 586,072 | 190,768 |
Items in course of collection from other banks | 6,921 | 4,453 | 4,959 | 3,436 | 5,404 |
Financial assets mandatorily measured at fair value through profit or loss | 660,282 | 767,808 | 733,670 | 754,020 | 694,081 |
Derivatives | 25,745 | 4,640 | 6,574 | 5,320 | 4,956 |
Loans and advances to banks | 732,493 | 619,273 | 589,259 | 676,031 | 1,097,714 |
Loans and advances to customers | 3,175,167 | 3,196,725 | 3,264,664 | 3,257,433 | 3,110,412 |
Financial investments | 1,004,770 | 845,735 | 877,485 | 943,603 | 904,920 |
Prepayments and accrued income | 20,126 | 20,558 | 24,148 | 23,578 | 27,312 |
Current tax assets | 3,496 | 3,669 | 1,813 | 1,719 | 16,728 |
Reinsurance assets | 49,792 | 77,972 | 80,083 | 78,945 | 85,205 |
Other non-current assets held for sale | 5,173 | 6,673 | 8,919 | 8,422 | 5,908 |
Investment property | — | 1,600 | 1,600 | 9,788 | 9,714 |
Property, plant and equipment | 44,627 | 41,923 | 44,206 | 47,403 | 55,413 |
Intangible assets | 55,509 | 50,168 | 54,342 | 61,518 | 59,136 |
Right-of-use assets | 2,459 | 2,569 | 4,200 | 4,685 | — |
Deferred tax assets | 35,620 | 29,119 | 27,130 | 22,427 | 21,509 |
Other assets | 11,292 | 5,513 | 10,728 | 13,217 | 21,814 |
Total assets | 7,418,333 | 7,174,805 | 6,730,459 | 6,497,617 | 6,310,994 |
Liabilities | |||||
Deposits by banks | 2,861 | 1,397 | 3,754 | 840 | 2,542 |
Customer accounts | 5,970,958 | 5,621,195 | 5,272,961 | 4,976,580 | 4,887,473 |
Items in the course of transmission to other banks | 27,397 | 21,573 | 21,372 | 23,473 | 15,206 |
Derivatives | 10,252 | 4,592 | 6,551 | 5,190 | 4,991 |
Accruals and deferred income | 27,300 | 21,976 | 14,843 | 20,335 | 19,151 |
Current tax liabilities | 2,104 | 499 | 88 | 2,489 | 538 |
Liabilities under investment contracts | 162,676 | 185,137 | 170,865 | 183,706 | 166,347 |
Liabilities under insurance contracts | 544,246 | 658,197 | 648,028 | 658,470 | 620,781 |
Provisions | 20,080 | 21,252 | 21,031 | 33,271 | 20,689 |
Deferred tax liabilities | 15,819 | 15,005 | 17,562 | 22,443 | 23,427 |
Borrowings from a group undertaking | 60,000 | 60,000 | — | — | — |
Subordinated liabilities | 62,000 | 62,000 | 62,000 | 62,000 | 62,000 |
Other liabilities | 15,569 | 12,245 | 12,990 | 38,854 | 29,071 |
Total liabilities | 6,921,262 | 6,685,068 | 6,252,045 | 6,027,651 | 5,852,216 |
Total equity | 497,071 | 489,737 | 478,414 | 469,966 | 458,778 |
Total liabilities and equity | 7,418,333 | 7,174,805 | 6,730,459 | 6,497,617 | 6,310,994 |
Memorandum items | |||||
Contingent liabilities | 134,126 | 143,064 | 152,296 | 158,654 | 149,783 |
Commitments | 877,820 | 967,739 | 1,071,319 | 1,075,524 | 1,433,773 |
2022 | 2021 | 2020 | 2019 | 2018 | |
€000 | €000 | €000 | €000 | €000 | |
Net cash from/(used in) operating activities | 574,291 | 745,603 | 158,480 | (204,056) | (71,376) |
Cash flows from investing activities | |||||
Dividends received | — | — | 33 | 29 | 18 |
Interest received from financial investments | 6,142 | 11,897 | 14,746 | 16,229 | 20,091 |
Purchase of financial investments | (464,793) | (221,697) | (214,787) | (315,277) | (242,523) |
Proceeds from sale and maturity of financial investments | 255,296 | 249,667 | 263,519 | 270,965 | 254,972 |
Purchase of property, plant and equipment, investment property and intangible assets | (12,808) | (8,508) | (7,677) | (6,980) | (5,194) |
Proceeds on sale of property, plant and equipment, investment property and intangible assets | 1,600 | 56 | 7,903 | 1,865 | 1,300 |
Net cash flows from/(used in) investing activities | (214,563) | 31,415 | 63,737 | (33,169) | 28,664 |
Cash flows from financing activities | |||||
Dividends paid | (8,010) | (2,717) | — | (8,197) | (38,409) |
Proceeds from borrowings from a group undertaking | — | 60,000 | — | — | — |
Issue of subordinated liabilities | — | — | — | — | 62,000 |
Repayment of subordinated liabilities | — | — | — | — | (29,277) |
Net cash from/(used in) financing activities | (8,010) | 57,283 | — | (8,197) | (5,686) |
Net increase/(decrease) in cash and cash equivalents | 351,718 | 834,301 | 222,217 | (245,422) | (48,398) |
HSBC Bank Malta p.l.c. Annual Report and Accounts 2022 | 151 |
2022 | 2021 | 2020 | 2019 | 2018 | |
% | % | % | % | % | |
Net operating income before loan impairment charges to total assets | 2.0 | 1.8 | 2.0 | 2.3 | 2.4 |
Operating expenses to total assets | 1.4 | 1.5 | 1.4 | 1.9 | 1.7 |
Cost efficiency ratio | 68.4 | 80.3 | 73.0 | 80.2 | 73.0 |
Profit before tax to total assets | 0.8 | 0.4 | 0.2 | 0.5 | 0.6 |
Profit before tax to equity | 11.6 | 5.6 | 2.2 | 6.5 | 8.4 |
Profit after tax to equity | 7.6 | 3.7 | 1.6 | 4.3 | 6.1 |
2022 | 2021 | 2020 | 2019 | 2018 | |
Shares in issue (millions) | 360.3 | 360.3 | 360.3 | 360.3 | 360.3 |
Net assets per 30 cent share (euro) | 1.4 | 1.4 | 1.3 | 1.3 | 1.3 |
Earnings per 30 cent share (euro) | 10.40 | 0.05 | 0.02 | 0.06 | 0.08 |
Dividend per 30 cent share (euro) | |||||
– gross | 0.06 | 0.03 | 0.01 | 0.02 | 0.06 |
– net | 0.04 | 0.02 | 0.01 | 0.01 | 0.04 |
Dividend cover | 2.9 | 2.2 | 2.8 | 5.1 | 2.1 |
152 | HSBC Bank Malta p.l.c. Annual Report and Accounts 2022 |
HSBC Bank Malta p.l.c. Annual Report and Accounts 2022 | 153 |
© Copyright HSBC Bank Malta p.l.c. 2022 All rights reserved No part of this publication may be reproduced, stored in a retrieval system, or transmitted, in any form or by any means, electronic, mechanical, photocopying, recording, or otherwise, without the prior written permission of HSBC Bank Malta p.l.c. Published by HSBC Bank Malta p.l.c., Valletta. Cover designed by Superunion (formerly Addison Group), London; text pages designed by Group Communications (Asia), The Hongkong and Shanghai Banking Corporation Limited, Hong Kong, and Global Finance, HSBC Holdings plc, London. ISSN 1811-7570 ISBN 978 -99932-12-24-9 |
Photography Page [2]: Jean-Marc Zerafa Pages [3,4]: Andrew Gauci Attard Pages [6, 8,10]: Rene Rossignaud Page [11]: Axis Architecture Page [12]: Claire Farrugia |
HSBC Bank Malta p.l.c. 116 Archbishop Street Valletta VLT 1444 Malta Telephone: 356 2380 2380 www.hsbc.com.mt |
Independent auditor’s report
To the Shareholders of HSBC Bank Malta p.l.c.
Report on the audit of the financial statements
Our opinion
In our opinion:
● The Group financial statements and Parent Company financial statements (the “financial statements”) give a true and fair view of the Group and the Parent Company’s financial position of HSBC Bank Malta p.l.c. as at 31 December 2022, and of the Group’s and the Parent Company’s financial performance and cash flows for the year then ended in accordance with International Financial Reporting Standards (‘IFRSs’) as adopted by the EU; and
● The financial statements have been prepared in accordance with the requirements of the Maltese Banking Act (Cap. 371) and the Maltese Companies Act (Cap. 386).
HSBC Bank Malta p.l.c.’s financial statements comprise:
● the Consolidated and Parent Company income statements and statements of comprehensive income for the year ended 31 December 2022;
● the Consolidated and Parent Company statements of financial position as at 31 December 2022;
● the Consolidated and Parent Company statements of changes in equity for the year then ended;
● the Consolidated and Parent Company statements of cash flows for the year then ended; and
● the notes to the financial statements, which include significant accounting policies and other explanatory information.
Basis for opinion
We conducted our audit in accordance with International Standards on Auditing (ISAs). Our responsibilities under those standards are further described in the Auditor’s Responsibilities for the Audit of the Financial Statements section of our report.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
We are independent of the Group and the Parent Company in accordance with the International Code of Ethics for Professional Accountants (including International Independence Standards) issued by the International Ethics Standards Board for Accountants (IESBA Code) together with the ethical requirements of the Accountancy Profession (Code of Ethics for Warrant Holders) Directive issued in terms of the Accountancy Profession Act (Cap. 281) that are relevant to our audit of the financial statements in Malta. We have fulfilled our other ethical responsibilities in accordance with these Codes.
To the best of our knowledge and belief, we declare that non-audit services that we have provided to the bank and its subsidiaries are in accordance with the applicable law and regulations in Malta and that we have not provided non-audit services that are prohibited under Article 18A of the Accountancy Profession Act (Cap. 281).
The non-audit services that we have provided to the bank and its subsidiaries, in the period from 1 January 2022 to 31 December 2022, are disclosed in note 17 to the financial statements.
Our audit approach
|
● Overall group materiality: €2.3 million, which represents approximately 5% of profit before tax adjusted for non-recurring items. |
· The audit carried out by the group engagement team covered all the components within the local group as at and for the year ended 31 December 2022 comprising HSBC Bank Malta p.l.c. and its subsidiaries HSBC Life Assurance (Malta) Ltd and HSBC Global Asset Management (Malta) Limited, which are all based in Malta. |
|
● Credit loss allowances in respect of loans and advances to customers of the local group and bank ● Measurement of non-linked life insurance contract liabilities and of the present value of in-force business (PVIF) |
As part of designing our audit, we determined materiality and assessed the risks of material misstatement in the consolidated financial statements. In particular, we considered where the directors made subjective judgements; for example, in respect of significant accounting estimates that involved making assumptions and considering future events that are inherently uncertain. As in all of our audits, we also addressed the risk of management override of internal controls, including among other matters consideration of whether there was evidence of bias that represented a risk of material misstatement due to fraud.
The scope of our audit was influenced by our application of materiality. An audit is designed to obtain reasonable assurance whether the financial statements are free from material misstatement. Misstatements may arise due to fraud or error. They are considered material if individually or in aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of the consolidated financial statements.
Based on our professional judgement, we determined certain quantitative thresholds for materiality, including the overall group materiality for the consolidated financial statements as a whole as set out in the table below. These, together with qualitative considerations, helped us to determine the scope of our audit and the nature, timing and extent of our audit procedures and to evaluate the effect of misstatements, both individually and in aggregate on the financial statements as a whole.
Overall group materiality |
€2,300,000 |
How we determined it |
5% of profit before tax adjusted for non-recurring items |
Rationale for the materiality benchmark applied |
We chose the profit before tax adjusted for non-recurring items as the benchmark because in our view it is the benchmark against which the performance of the local group is most commonly measured by users and is a generally accepted benchmark. We chose 5% which is within the range of quantitative materiality thresholds that we consider acceptable. |
In relation to the audit of the financial statements of HSBC Life Assurance (Malta) Ltd for the year ended 31 December 2022, we have applied a higher materiality of €3,000,000 solely for the purpose of identifying and evaluating the effect of misstatements that are likely only to lead to a reclassification between line items within assets and liabilities.
We agreed with the Audit Committee that we would report to them misstatements identified during our audit above €115,000 as well as misstatements below that amount that, in our view, warranted reporting for qualitative reasons.
Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the financial statements of the current period. These matters were addressed in the context of our audit of the financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.
Key audit matter |
How our audit addressed the Key audit matter |
Credit loss allowances in respect of loans and advances to customers of the local group and bank Credit loss allowances in respect of loans and advances to customers represent management’s best estimate of expected credit losses (‘ECLs’) within the loan portfolios at the balance sheet date. The development of the models designed to estimate ECLs on loans measured at amortised cost in accordance with the requirements of IFRS 9 requires a considerable level of judgement since the determination of ECLs is subject to a high degree of estimation uncertainty. The outbreak of the Covid-19 pandemic, followed by the ensuing global macroeconomic uncertainties driven by the Russia-Ukraine conflict, have resulted in supply chain disruptions and significant inflationary pressures. These realities have exacerbated the level of uncertainty around the calculation of ECLs, giving rise to heightened subjectivity in the determination of model assumptions used to estimate key model risk parameters and hence necessitating a higher level of expert judgement. In general, the bank calculates ECL by using the following key inputs: probability of default (‘PD’), loss given default (‘LGD’) and exposure at default (‘EAD’). The maximum period considered when measuring ECL is the maximum period over which the bank is exposed to credit risk. The bank also applies overlays where management’s view is that the calculated ECLs based on these key inputs do not fully capture the risks within the bank’s portfolios. Credit loss allowances relating to all loans and advances within the Wholesale portfolio are determined at an instrument level. For non-defaulted (Stages 1 and 2) exposures, the bank uses an ECL model that relies on risk parameters, specifically proxy PDs, determined at HSBC Group level. Through-The-Cycle (‘TTC’) PDs are determined by reference to a Global Master Scale which captures historical default rates at credit rating level observed in respect of similar portfolios held by the HSBC Group across a number of countries. TTC PDs are converted to Point-in-Time (‘PiT’) PDs on the basis of correlations attributable to the proxy country/portfolio within the HSBC Group that has the credit risk characteristics which are most similar to those of the bank’s portfolio. In addition, the output proxy PD is further adjusted using a scalar to reflect local macroeconomic conditions. Staging is determined on the basis of both quantitative criteria and qualitative criteria. In respect of the former, for the Wholesale portfolio, the bank’s ECL model captures Significant Increase in Credit Risk (“SICR”) events at an individual borrower level through a quantitative comparison of changes in PiT PDs at reporting date with the equivalent estimation at origination date. In respect of the latter, a Customer Risk Rating (“CRR”) is assigned at individual borrower level on the basis of a qualitative credit risk assessment performed at least annually to assess the default risk by reference to a defined set of criteria, with pre-established notch deteriorations in CRR grades representing a SICR event. The application of the SICR criteria used by management therefore involves a significant level of judgement. The LGD used for the Wholesale portfolio is driven by the loan-to-value ratio of the individual facilities and takes into account other assumptions, including market value haircut (which includes costs to sell), time to sell and the impact of discounting the collateral from the date of realisation back to the date of default. The LGD modelling methodology utilises historical experience, which might result in limitations in its reliability to appropriately estimate ECLs especially during periods characterised by unprecedented economic conditions such as those currently experienced as a result of the Covid-19 pandemic and the ensuing supply chain disruptions and global inflationary pressures. In order to address these modelling limitations, the bank has applied overlays based on expert judgement to reflect the risks that downturn LGD materialises, which risks are not captured by the model. For defaulted (Stage 3) exposures within the Wholesale portfolio, discounted cash flow models are utilised in order to estimate ECLs. Judgement is required to determine when a default has occurred and then to estimate the expected future cash flows related to that loan which are dependent on parameters or assumptions such as the valuation of collateral (including forced sale discounts and assumed realisation period) or forecasted operating cash flows. The bank is also required to assess multiple scenarios in this respect, which scenarios will have probabilities attached. Credit loss allowances relating to all loans and advances within the Retail portfolio (Stages 1, 2 and 3), comprising mortgages, personal loans and overdrafts as well as credit cards are determined through the use of ECL models. During the financial year ended 31 December 2022, the bank redeveloped the model used to estimate ECL in respect of exposures classified within the Mortgage portfolio, which inherently required a significant level of judgement to be applied by management in the determination of key assumptions and calibration of key model parameters. The models are used to calculate ECLs based on key assumptions, such as loss rates (reflecting a combined impact of PDs and EADs) and loss severities (including the impact of implied cure rates, valuation haircuts of collateral in the case of mortgages, and recovery rates). Loss rates and LGDs are estimated using internally developed statistical models and historical model development data based on the bank’s own experience as available at the reporting date. The LGD for the mortgage portfolio is also driven by the loan-to-value ratio of exposures, taking into account similar assumptions as those applied for the Wholesale portfolio, as well as the status of the perfection of collateral and the vintage years in default. The model for loss severities in respect of the mortgage portfolio takes into consideration multiple work-out options. The loss severities for the remaining Retail portfolios are based on the bank’s recovery history. Staging in respect of Retail portfolios is determined at segment level in view of the homogeneity in nature and relatively low value of retail exposures. Segmentation is determined on the basis of the relevant identified credit risk characteristics for each portfolio. Exposures classified within the Mortgage portfolio are segmented by reference to delinquency status, past delinquency in the previous 12 months, as well as a behavioural score in case of exposures with no history of delinquency throughout the previous 12 months. Segmentation in respect of the other retail portfolios is based on current delinquency status. A SICR threshold is determined in respect of each retail portfolio by reference to the average PD twelve months prior to exposures falling more than 30 days past due. In this respect, PDs are estimated in respect of each segment and segments with a PD in excess of the SICR threshold are classified as stage 2 exposures. The local impact of supply chain disruptions and the resultant inflation pressures being experienced in the local economy has increased the level of uncertainty around judgements made in determining the timing of defaults and in respect of staging, particularly within the Mortgage portfolio. In this respect, these inflationary pressures might be reasonably expected to impact the affordability of repayments within the Mortgage portfolio due to the rapid rise in the cost of living being experienced locally together with the potential resultant impact on market interest rates. Such inflationary pressures are deemed to be partially mitigated by government support measures, including subsidies on energy prices and foodstuffs. For the purposes of avoiding the cliff edge effect on ECLs upon the unwinding of government support schemes, as well as to capture risks which are not fully captured by the selected macroeconomic variables applied in the ECL model, an overlay was applied by the bank determined on the basis of quantitative assumptions in respect of borrower affordability and levels of net disposable income to enable the identification of significant increase in credit risk (‘SICR’) or Unlikeliness-to-Pay (‘UTP’) events as early as possible. Under IFRS 9, the bank is also required to formulate and incorporate multiple forward-looking economic conditions, reflecting management’s view of potential future economic variables and environments, into the ECL estimates. A number of macroeconomic scenarios based on the selected macroeconomic variables are considered to capture non-linearity across credit portfolios. The complexity attributable to this factor requires management to develop multiple macroeconomic scenarios involving the use of significant judgements. The bank utilises a methodology to generate the economic inputs applied within the ECL models. The outbreak of Covid-19 and the ensuing macroeconomic uncertainty induced by the Russia-Ukraine conflict and related supply chain disruptions have significantly impacted macroeconomic factors such as Gross Domestic Product (‘GDP'), unemployment, inflation and interest rates, increasing the uncertainty around judgements made in determining the severity and likelihood of macroeconomic forecasts across the different economic scenarios used in ECL models. Overly sensitive ECL modelled outcomes can be observed when current conditions fall outside the range of historical experience. During the financial year ended 31 December 2022, the bank also redeveloped the macroeconomic model used to reflect the impact of multiple forward-looking economic conditions on the ECL modelled in respect of the Mortgage portfolio. In this respect, the selection of the macroeconomic variables applied to modelled PDs as well as the methodology used to calibrate the sensitivity of PDs to changes in macroeconomic conditions require a significant level of expert judgement. Data used in the impairment calculation is sourced from a number of systems, including systems that are not necessarily used for the preparation of accounting records. This increases risk around completeness and accuracy of certain data used to create assumptions and operate the models. In some cases, data is unavailable and reasonable alternatives have been applied to allow calculations to be performed. Since the estimation of ECLs is subjective in nature and inherently judgemental, the bank’s application of the IFRS 9 impairment requirements is deemed to be an area of focus, especially in the context of the unprecedented macroeconomic conditions being experienced, which have significantly increased the level of estimation uncertainty around the calculation of credit loss allowances. We focused on credit loss allowances due to the subjective nature of specific data inputs into the calculation and the subjective judgements involved in both timing of recognition of impairment and the estimation of the size of any such impairment. Accordingly, summarising the key areas relevant to the bank’s measurement of ECLs would include: · Allocation of assets to stage 1, 2, or 3 using criteria in accordance with IFRS 9; · Accounting interpretations and modelling assumptions used to build the models that calculate the ECL; · Completeness and accuracy of data used to calculate the ECL; · Inputs and assumptions used to estimate the impact of multiple macroeconomic scenarios; and · Measurements of individually assessed provisions including the assessment of multiple scenarios.
Relevant references in the financial statements: · Accounting policies: Note 3(b); · Credit risk management: Note 4(b); · Note on Change in expected credit losses and other credit impairment charges: Note 15; · Note on Loans and advances to customers: Note 24; and · Critical accounting estimates and judgements: Note 58(a).
|
During our audit of the financial statements for the year ended 31 December 2022, we continued to focus on the key drivers of the estimation of ECL. Apart from assessing the continuing appropriateness of management assumptions, updates to key parameters and new assumptions and enhancements were evaluated and tested. The redevelopment of the Mortgage ECL model represented a significant update to the methodology used by management to estimate ECLs. Accordingly, the underlying assumptions and key judgements around the redevelopment of the model used to estimate ECLs in respect of the Mortgage portfolio were reviewed, assessed and tested to evaluate the reasonableness of the modelled ECLs. Discussions with the Audit Committee included: · inputs, assumptions and adjustments to ECLs within the bank’s models, for which we provided updates on the results of our testing procedures; · observations in respect of changes to the key assumptions and judgements applied by management in the redevelopment of the Mortgage ECL model, together with the impact of the model change on ECLs; · the application of forward economic guidance, particularly in the context of the estimated impact of the macroeconomic challenges characterising the aftermath of the Covid-19 pandemic and the escalation of the military conflict between Russia and Ukraine; · considerations around post model adjustments, mainly in response to the impact of the inflationary pressures and interest rate environment being experienced in the aftermath of the Covid-19 pandemic and the escalation of the military conflict between Russia and Ukraine, and the estimation uncertainty involved in determining ECLs on the basis of historical experience; · observations in relation to the control processes around the estimation of ECLs in respect of individually significant loans classified within the Wholesale portfolio, including the inputs to the calculations; and · considerations in respect of the governance framework around the implementation of model changes. ECL calculation for non-defaulted Wholesale exposures and for all Retail exposures We understood and critically assessed the models used for ECL estimation in both Wholesale and Retail portfolios. Since modelling assumptions and parameters are based on historic data, we assessed the impact of the unprecedented circumstances we are currently experiencing on the adequacy of key model parameters, since these are based on historical experience that is not necessarily reflective of the current level of credit risk within the portfolios. The appropriateness of management’s judgements was also independently considered in respect of calculation methodologies, calibration of PDs/loss rates and LGDs, segmentation, selection of macroeconomic variables and post-model overlays. Model calculations were also tested independently. The design and operating effectiveness of key controls management has established across the processes relevant to the ECL models were tested as follows: · Model performance monitoring, including reconciliation of model parameters against approved models. · Review and challenge of multiple economic scenarios by an expert panel and internal governance committee. · Inputs of critical data into source systems, and the flow and transformation of data between source systems to the impairment calculation engine. · Testing over the automated calculation of ECLs, in case of the redevelopment of the Mortgage model, to ensure it is performed in line with business requirements. · Review and challenge to assess ECL output and approval of overlays.
We determined that we could rely on these controls for the purposes of our audit.
Substantive procedures were performed as follows: · Performed an overall assessment of the ECL provision levels by stage to determine if they were reasonable considering the bank’s portfolios, risk profile, credit risk management practices and the macroeconomic environment. · Tested a sample of loans within the Wholesale portfolio to independently review the borrower’s financial performance and ability to meet loan repayments and assess the appropriateness of the credit rating assigned by management, taking into consideration the impact of the current macroeconomic environment on the repayment capabilities of the sampled borrowers. · Challenged the criteria used to allocate an exposure to stage 1, 2 or 3 in accordance with IFRS 9 and tested exposures in stage 1, 2 and 3 to verify that they were allocated to the appropriate stage. · Tested the completeness and accuracy of the critical data, extracted from the underlying systems, that is utilised within the models for the purposes of the year end ECL calculation. · In respect of the redevelopment of the ECL model for the Mortgage portfolio, reviewed the script codes for the impairment engine against business requirements and our expectations of how the calculation should operate. · Risk based testing of models, including a review of the continuing appropriateness of model assumptions. We tested the assumptions, inputs and formulas used in ECL models on a sample basis. This included assessing the appropriateness of model design and formulas used, and recalculating PDs, LGDs and EADs on a sample basis. · Specifically in the context of the redevelopment of the model used to estimate ECL in respect of exposures classified within the Mortgage portfolio, challenged and tested the assumptions and judgements applied by management to estimate the key ECL parameters. In particular, we assessed the appropriateness of judgements around segmentation methods; data periods used for model development purposes (in the context of calibration of loss rates and loss severities); the calibration of staging criteria; the definition of default; assessment of appropriateness of rank ordering of PDs across segments; and LGD assumptions applied within the model. · For the Wholesale portfolio, assessed the reasonableness of modelled PDs through a comparison of historically predicted and observed default rates, and the adequacy of modelled LGDs in light of the potential impact of the current macroeconomic environment on local property prices. · For the Mortgage portfolio, assessed the reasonableness of market value haircuts and time to sell assumptions used as inputs to modelled LGDs, in light of the potential impact of the current macroeconomic environment on local property prices. Additionally, we assessed the appropriateness of the post model overlay intended to address early identification of SICR events in respect of those exposures which are deemed to be more susceptible to inflationary pressures. · For the Mortgage portfolio, tested the newly implemented modelling approach which takes into consideration the status of perfection of collateral for the purposes of modelling loss severities. In addition, we tested the accuracy of the bank’s data in respect of the status of perfection of collateral and assessed the key judgements applied by management to identify exposures with unperfected collateral which are deemed to carry a higher level of risk in the estimation of ECL. · Independent testing of model calculations in the event of changes to key parameters or model development data, such as in the case of the redevelopment of the ECL model for the Mortgage portfolio. · Tested the multiple macroeconomic scenarios and variables using our experts to assess their reasonableness. We assessed the appropriateness of changes effected to factor the impact of the current macroeconomic environment, including the recalibration of probability weights. We assessed whether the severity of the forecasted macroeconomic variables was appropriate in view of the high level of uncertainty surrounding the current macroeconomic conditions, which is highly characterised by significant inflationary pressures and an increasing interest rate environment. We challenged the correlation and impact of the macroeconomic factors on the ECL. · For the Mortgage portfolio, we assessed the reasonableness and appropriateness of assumptions applied by management to model forward-looking point-in-time loss rates within the redeveloped ECL model. Specifically, we challenged and reviewed the appropriateness of the selection of macroeconomic variables used within the model, as well as the reasonableness of the relative weighting applied to each macroeconomic variable. Our testing of models and model assumptions did not highlight material differences. Based on the evidence obtained, we found that the model assumptions, data used within the models and overlays to be reasonable.
ECL calculation for defaulted Wholesale exposures For defaulted exposures within the Wholesale portfolio, the appropriateness of the methodology and policy used to calculate ECLs was independently assessed. We understood and evaluated the processes for identifying default events within loan portfolios, as well as the impairment assessment processes. In respect of defaulted exposures, the design and operating effectiveness of key controls established by management were tested over: · The timeliness of the performance and review of the credit file review processes. · The determination of which loans and advances are credit-impaired, including the timely identification of such defaulted exposures. We determined that we could rely on these controls for the purposes of our audit. Substantive procedures were performed in respect of identification of defaults as follows: · Assessed critically the criteria used by management for identifying borrowers whose financial performance is deemed to be particularly susceptible to the potential impact of the significant inflationary pressures being experienced and for determining whether a UTP/default event had occurred by testing a sample of loans to challenge whether default events had actually occurred and to assess whether default events had been identified by management in a timely manner. · Selected a sample of performing loans, including from within those sectors that we consider to be particularly impacted by the current macroeconomic environment, which had not been identified by management as potentially defaulted, to form our own judgement as to whether management’s judgement was appropriate and to further challenge whether all relevant events had been identified by management. Substantive procedures were performed on defaulted exposures in respect of the estimation of the size of the respective ECL provisions, as follows: · Reviewed the credit files of a selected sample of corporate loans to understand the latest developments at the level of the borrower and the basis of measuring the ECL provisions and considered whether key judgements (such as market value haircuts and time to sell for gone concern assessments) were appropriate given the borrowers’ circumstances taking cognisance of the current macroeconomic environment, particularly supply chain disruptions, inflationary pressures and an increasing interest rate environment. · Challenged the appropriateness of the scenarios being applied for the exposures referred to above, particularly in respect of the extent to which they consider the potential impact of the current macroeconomic environment on the local property market, together with their respective probability weights, by forming an independent view of the market value haircuts and time to sell assumptions used by the bank under different scenarios in determining the recoverability of the selected corporate loans. · Challenged the reasonableness of the use of a going concern assessment in respect of a sample of individually significant defaulted exposures, as well as the appropriateness of the methodology applied by management to estimate ECL under a going concern scenario. · Tested key inputs to and reperformed the impairment calculation used to derive expected cash flows under different scenarios. · Assessed the appropriateness of a sample of property valuations securing impaired loans through our experts. · Tested the perfection of security in line with the bank’s policy.
In the case of some impairment provisions, we formed a different view from that of management, but in our view the differences were within a reasonable range of outcomes. |
Measurement of non-linked life insurance contract liabilities and of the present value of in-force business (PVIF) Management’s valuation of the provisions for the settlement of future non-linked claims attributable to life insurance contracts and of the PVIF involves complex and subjective judgements about future events, both internal and external to the business, for which small changes in assumptions can result in material impacts to the valuation of these items. We focused on this area due to the materiality and subjectivity of the judgements made. Economic assumptions (investment return and associated discount rates) and non-economic assumptions (mortality, lapse rates and expenses associated with servicing policies), including the respective margins applied, are the key inputs to which the carrying amounts of these long-term liabilities and intangible assets are highly sensitive. Changes to assumptions can materially impact the local group’s estimates. Estimation uncertainty is heightened as a result of the current macroeconomic environment. Relevant references in the financial statements are: · Accounting policies: Notes 3(i) and 3(o); · Note on Intangible assets: Note 33 · Note on Liabilities under insurance contracts: Note 40; and · Critical accounting estimates and judgements: Note 58(b) and Note 58(c).
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Our audit procedures addressing the valuation of the local group’s non-linked life insurance contract liabilities and of the PVIF including the following procedures using our actuarial expert team members: · we tested the accuracy of the underlying data utilised for the purposes of measurement by reference to its source; · we applied our industry knowledge and experience in comparing the methodology, models and assumptions used to recognised actuarial practices; · we tested management’s controls in respect of the valuation and assumption setting processes, · we tested the reasonableness of certain calculations performed by management, by validating whether these are aligned with internal documentation and our expectations; and · we assessed management’s key judgements throughout the processes.
In respect of the assumptions underlying the measurement of the non-linked life insurance contract liabilities, we performed the following procedures using our actuarial expert team members: · we assessed the assumptions for investment mix and projected investment returns by reference to local group specific and market observable data (EIOPA curve); · we considered the appropriateness of the mortality assumptions by reference to local group and industry data on historical mortality experience and expectations of future mortality; and · we tested the future expenses assumption by understanding and challenging the basis on which expenses are projected and allocated between new business and renewals, and by reference to market observable data (inflation curve). We further understood the main drivers of the increase in per policy expenses (disclosed in Note 33) and challenged management’s intent to carry out certain future actions linked to renewal expenses by inter alia confirming that these actions were approved by the board. The following procedures in relation to the assumptions underlying the valuation of the PVIF were performed, also through the involvement of our actuarial expert team members: · we leveraged the testing performed in relation to those assumptions that are aligned with the insurance contract liability valuation, reviewing the difference in margins applied between the two; and · we considered the appropriateness of the lapse rate assumptions by reference to local group data, considering the results of management’s analysis of recent lapse experience. In respect of all the assumptions referred to above, we have reviewed management’s approach to setting the assumptions, assessed the assumptions’ appropriateness based on internal and external data, and tested management’s governance and controls over the assumption basis review. We also reviewed the modelled results and manual adjustments, and we assessed the reasonableness of management’s analysis of the changes in the carrying amounts. We further considered the extent of related disclosures to the financial statements. Based on the work performed we found the valuation of the non-linked life insurance contract liabilities and the present value of in-force business to be consistent with the explanations and evidence obtained. |
How we tailored our group audit scope
The local group is composed of three components: HSBC Bank Malta p.l.c. (the “Parent Company” or “bank”), and its subsidiaries HSBC Life Assurance (Malta) Ltd, which is determined to be a financially significant entity, and HSBC Global Asset Management (Malta) Limited.
We tailored the scope of our audit in order to perform sufficient work to enable us to provide an opinion on the financial statements as a whole, taking into account the structure of the local group, the accounting processes and controls, and the industry in which the local group operates.
The audit team of the local group performed all of this work by applying the overall materiality at the level of the local group’s consolidated financial statements, together with additional procedures performed on the consolidation. This gave us sufficient appropriate audit evidence for our opinion on the local group financial statements as a whole.
Other information
The directors are responsible for the other information. The other information comprises all of the information presented in the Annual Report and Accounts 2022 (but does not include the financial statements and our auditor’s report thereon).
Our opinion on the financial statements does not cover the other information and we do not express any form of assurance conclusion thereon except as explicitly stated within the Report on other legal and regulatory requirements.
In connection with our audit of the financial statements, our responsibility is to read the other information identified above and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the audit, or otherwise appears to be materially misstated.
If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard.
The directors are responsible for the preparation of financial statements that give a true and fair view in accordance with IFRSs as adopted by the EU and the requirements of the Maltese Banking Act (Cap. 371) and the Maltese Companies Act (Cap. 386), and for such internal control as the directors determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.
In preparing the financial statements, the directors are responsible for assessing the local group’s and the bank’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the directors either intend to liquidate the local group or the bank or to cease operations, or have no realistic alternative but to do so.
Those charged with governance are responsible for overseeing the local group’s financial reporting process.
Auditor’s responsibilities for the audit of the financial statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.
As part of an audit in accordance with ISAs, we exercise professional judgement and maintain professional scepticism throughout the audit. We also:
● Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.
● Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the local group’s and the bank’s internal control.
● Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by the directors.
● Conclude on the appropriateness of the directors’ use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the local group’s or the bank’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s report to the related disclosures in the financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor’s report. However, future events or conditions may cause the local group or the bank to cease to continue as a going concern.
● Evaluate the overall presentation, structure and content of the financial statements, including the disclosures, and whether the financial statements represent the underlying transactions and events in a manner that achieves fair presentation.
● Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the local group to express an opinion on the consolidated financial statements. We are responsible for the direction, supervision and performance of the group audit. We remain solely responsible for our audit opinion.
We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.
We also provide those charged with governance with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, actions taken to eliminate threats or safeguards applied.
From the matters communicated with those charged with governance, we determine those matters that were of most significance in the audit of the financial statements of the current period and are therefore the key audit matters. We describe these matters in our auditor’s report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication.
Report on other legal and regulatory requirements
Report on compliance with the requirements of the European Single Electronic Format Regulatory Technical Standard (the “ESEF RTS”), by reference to Capital Markets Rule 5.55.6
We have undertaken a reasonable assurance engagement in accordance with the requirements of Directive 6 issued by the Accountancy Board in terms of the Accountancy Profession Act (Cap. 281) - the Accountancy Profession (European Single Electronic Format) Assurance Directive (the “ESEF Directive 6”) on the Annual Financial Report of HSBC Bank Malta p.l.c. for the year ended 31 December 2022, entirely prepared in a single electronic reporting format.
Responsibilities of the directors
The directors are responsible for the preparation of the Annual Financial Report, including the consolidated financial statements and the relevant mark-up requirements therein, by reference to Capital Markets Rule 5.56A, in accordance with the requirements of the ESEF RTS.
Our responsibilities
Our responsibility is to obtain reasonable assurance about whether the Annual Financial Report, including the consolidated financial statements and the relevant electronic tagging therein, complies in all material respects with the ESEF RTS based on the evidence we have obtained. We conducted our reasonable assurance engagement in accordance with the requirements of ESEF Directive 6.
Our procedures included:
● Obtaining an understanding of the entity's financial reporting process, including the preparation of the Annual Financial Report, in accordance with the requirements of the ESEF RTS.
● Obtaining the Annual Financial Report and performing validations to determine whether the Annual Financial Report has been prepared in accordance with the requirements of the technical specifications of the ESEF RTS.
● Examining the information in the Annual Financial Report to determine whether all the required taggings therein have been applied and whether, in all material respects, they are in accordance with the requirements of the ESEF RTS.
We believe that the evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Opinion
In our opinion, the Annual Financial Report for the year ended 31 December 2022 has been prepared, in all material respects, in accordance with the requirements of the ESEF RTS.
Other reporting requirements
The Annual Report and Accounts 2022 contains other areas required by legislation or regulation on which we are required to report. The Directors are responsible for these other areas.
The table below sets out these areas presented within the Annual Financial Report, our related responsibilities and reporting, in addition to our responsibilities and reporting reflected in the Other information section of our report. Except as outlined in the table, we have not provided an audit opinion or any form of assurance.
Area of the Annual Report and Accounts 2022 and the related Directors’ responsibilities |
Our responsibilities |
Our reporting |
Report of the Directors The Maltese Companies Act (Cap. 386) requires the directors to prepare a Directors’ report, which includes the contents required by Article 177 of the Act and the Sixth Schedule to the Act. |
We are required to consider whether the information given in the Directors’ report for the financial year for which the financial statements are prepared is consistent with the financial statements.
We are also required to express an opinion as to whether the Directors’ report has been prepared in accordance with the applicable legal requirements.
In addition, we are required to state whether, in the light of the knowledge and understanding of the bank and its environment obtained in the course of our audit, we have identified any material misstatements in the Directors’ report, and if so to give an indication of the nature of any such misstatements.
With respect to the information required by paragraphs 8 and 11 of the Sixth Schedule to the Act, our responsibility is limited to ensuring that such information has been provided. |
In our opinion: ● the information given in the Directors’ report for the financial year for which the financial statements are prepared is consistent with the financial statements; and ● the Directors’ report has been prepared in accordance with the Maltese Companies Act (Cap. 386).
We have nothing to report to you in respect of the other responsibilities, as explicitly stated within the Other information section.
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Statement of Compliance with the Code of Principles of Good Corporate Governance The Capital Markets Rules issued by the Malta Financial Services Authority require the directors to prepare and include in the Annual Financial Report a Statement of Compliance with the Code of Principles of Good Corporate Governance within Appendix 5.1 to Chapter 5 of the Capital Markets Rules. The Statement’s required minimum contents are determined by reference to Capital Markets Rule 5.97. The Statement provides explanations as to how the bank has complied with the provisions of the Code, presenting the extent to which the bank has adopted the Code and the effective measures that the Board has taken to ensure compliance throughout the accounting period with those Principles.
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We are required to report on the Statement of Compliance by expressing an opinion as to whether, in light of the knowledge and understanding of the bank and its environment obtained in the course of the audit, we have identified any material misstatements with respect to the information referred to in Capital Markets Rules 5.97.4 and 5.97.5, giving an indication of the nature of any such misstatements.
We are also required to assess whether the Statement of Compliance includes all the other information required to be presented as per Capital Markets Rule 5.97.
We are not required to, and we do not, consider whether the Board’s statements on internal control included in the Statement of Compliance cover all risks and controls, or form an opinion on the effectiveness of the bank’s corporate governance procedures or its risk and control procedures. |
In our opinion, the Statement of Compliance has been properly prepared in accordance with the requirements of the Capital Markets Rules issued by the Malta Financial Services Authority.
We have nothing to report to you in respect of the other responsibilities, as explicitly stated within the Other information section. |
Remuneration report The Capital Markets Rules issued by the Malta Financial Services Authority require the directors to prepare a Remuneration report, including the contents listed in Appendix 12.1 to Chapter 12 of the Capital Markets Rules. |
We are required to consider whether the information that should be provided within the Remuneration report, as required in terms of Appendix 12.1 to Chapter 12 of the Capital Markets Rules, has been included. |
In our opinion, the Remuneration report has been properly prepared in accordance with the requirements of the Capital Markets Rules issued by the Malta Financial Services Authority. |
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Other matters prescribed by the Maltese Banking Act (Cap. 371) In terms of the requirements of the Maltese Banking Act (Cap. 371), we are also required to report whether: ● we have obtained all the information and explanations which to the best of our knowledge and belief were necessary for the purpose of our audit; ● proper books of account have been kept by the bank, so far as appears from our examination of those books; ● the bank’s financial statements are in agreement with the books of account; ● in our opinion, and to the best of our knowledge and according to the explanations given to us, the financial statements give the information required by any law which may from time to time be in force in the manner so required. |
In our opinion: ● we have obtained all the information and explanations which to the best of our knowledge and belief were necessary for the purpose of our audit; ● proper books of account have been kept by the bank, so far as appears from our examination of those books; ● the bank’s financial statements are in agreement with the books of account; and ● to the best of our knowledge and according to the explanations given to us, the financial statements give the information required by any law in force in the manner so required.
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Other matters on which we are required to report by exception We also have responsibilities under the Maltese Companies Act (Cap. 386) to report to you if, in our opinion, adequate accounting records have not been kept, or returns adequate for our audit have not been received from branches not visited by us.
We also have responsibilities under the Capital Markets Rules to review the statement made by the directors that the business is a going concern together with supporting assumptions or qualifications as necessary. |
We have nothing to report to you in respect of these responsibilities. |
Other matter – use of this report
Our report, including the opinions, has been prepared for and only for the bank’s shareholders as a body in accordance with Article 179 of the Maltese Companies Act (Cap. 386) and for no other purpose. We do not, in giving these opinions, accept or assume responsibility for any other purpose or to any other person to whom this report is shown or into whose hands it may come save where expressly agreed by our prior written consent.
Appointment
We were first appointed as auditors of the local group and bank on 22 April 2015. Our appointment has been renewed annually by shareholder resolution representing a total period of uninterrupted engagement appointment of 8 years.
PricewaterhouseCoopers
78, Mill Street
Zone 5, Central Business District
Qormi
Malta
Norbert Paul Vella
Partner
21 February 2023