At a meeting held yesterday, the Board of Directors of HSBC Bank Malta p.l.c. approved the Group and Bank Interim Accounts for the six-month period up to the 30th of June 2008.

"The first half of 2008 has been challenging. Profit before tax for the six months ended the 30th of June 2008 of €46.6 million is disappointing," said Alan Richards, HSBC's CEO. "This result represents a decline of €12.4 million, or 21.1 per cent compared to €49.0 million for the same period last year. However, comparisons with 2007 need some qualification due to a number of one-off factors. The prior period included significantly stronger revenue flows from pre euro conversion foreign exchange and investment dealing activities and significant interest recoveries from non-performing loans. Furthermore, market conditions in 2008 have been softer and business towards the start of the year was slower due to the euro conversion and General Elections. In spite of this, overall profitability relative to history, peers and industry benchmark remains strong with a return on equity of 22.0 per cent."

Operating expenses of €42.0 million are 6.1 per cent higher compared to the same period in 2007 with a cost efficiency ratio of 47.2 per cent compared to 40.1 per cent for the same period in 2007. Expense growth in the first half was primarily driven by non-recurring costs related to the euro conversion, increased staff costs and information technology investment.

Increases in loans and advances generated a steady growth in interest receivable. Loans and advances to customers stood at €2,968.9 million at the 30th of June 2008, up €146.6 million, or 5.2 per cent, compared with the 31st of December 2007. This was offset by the increase in interest payable on retail deposits and margin compression from heightened competition and euro conversion.

Core customer deposits were €3,394.5 million at 30 June 2008, up €18.8 million compared with 31 December 2007.

Net interest income of €60.8 million represents a decline of 3.9 per cent compared to €63.3 million during the prior year period.

Fees and commission income of €15.5 million was in line with the first half of 2007, despite reduced levels of business activity during the first quarter of 2008 due to Malta's adoption of the euro on the 1st of January 2008, and the general elections. Adopting the euro also affected foreign exchange dealing income which, at €3.7 million, was significantly lower than the €8.5 million earned in the six months to the 30th of June 2007. Life insurance business generated a profit before tax of €6.4 million, up 5.6 per cent on the same period of the previous year.

Tax on profits was €16.5 million.

Total Assets stood at €4,100.8 million, up €205.8 million, or 4.2 per cent higher, compared with the 31st of December 2007. Total liabilities were €4,828.0 million, up €209.2 million or 4.5 per cent, compared with the 31st of December 2007.

The Board is declaring an interim gross dividend of 11.9 euro cents per share (7.7 euro cents net of tax). The ordinary dividend payment of €22.6 million is 75 per cent of current profits attributable to the Bank's circa 10,000 shareholders. This will be paid on the 22nd of August 2008 to shareholders who are on the bank's register of shareholders as at the 6th of August 2008.