HSBC Bank Malta p l c : Annual Reports and Accounts 2022

HSBC Bank Malta p.l.c.

Annual Report and Accounts 2022

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: [phone]www.hsbc.com.mt

HSBC Holdings plc

Registered Office and Group Head Office: 8 Canada Square

London E14 5HQ

United Kingdom

Telephone: [phone]www.hsbc.com

HSBC Bank Malta p.l.c.

HSBC

Head Office,

116, Archbishop Street, Valletta VLT1444 Malta

Tel: [phone]

www.hsbc.commt

21 February 2023

DIRECTORS' DECLARATION

ON ESEF ANNUAL REPORT AND ACCOUNTS 2022

We, John Bonello and Simon Vaughan Johnson, in our capacity as Directors of C3177 HSBC Bank Malta p.l.c., hereby certify:

i. That the Annual Report and Accounts 2022 ("ARA") for the year ended 31 December 2022 has been approved by the Board of Directors of the Company and is hereby being made available to the public.

ii. That the ARA has been prepared in terms of the applicable rules and regulations, including the Commission Delegated Regulation on the European Single Electronic Format ("ESEF")1 and the Capital Markets Rules' .

That the Audit Report on the ESEF ARA is an exact copy of the original signed by the auditor and that no alterations have been made to the audited elements of the ARA including the annual financial statements.

iv. That the ARA shall serve as the official document for the purposes of the Capital Markets Rules and the Companies Act (Chapter 386 of the Laws of Malta).

John Bonello ChairmanSimon Vaughan Johnson Director / Chief Executive Officer

Commission Delegated Regulation 2019/815 on the European Single Electronic Format, as may be further amended from time to time.

2 Capital Markets Rules as issued by the Malta Financial Services Authority (MFSA).

HSBC Bank Malta p.l.c.

Registered Office: 116 Archbishop Street, Valletta, VLT1444 Malta Registration Number: C3177

HSBC Bank Malta p.l.c. is authorised by the Malta Financial Services Authority to provide investment services under the Investment Services Act 1994.

HSBC Bank Malta p.l.c. is enrolled as a tied insurance intermediary fcr HSBC Life Assurance (Malta) Ltd under the Insurance Distribution Act (Cap. 487 of the Laws of Malta)

Contents
Page
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
Independent auditor's report to the Shareholders of HSBC Bank Malta p.l.c.	154

Readers are reminded that the official statutory Annual Report and Accounts 2022, authorised for issue by the Board of Directors, is in European Single Electronic Format (ESEF) and is published onhttps://www.about.hsbc.com.mt/investor-relations. A copy of the Independent auditor's report issued on the official statutory Annual Report and Accounts 2022 is included within this printed document and comprises the auditor's 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.

HSBC Bank Malta p.l.c. Annual Report and Accounts 2022

1

Chairman's Statement

Chairman's Statement

John Bonello, HSBC Bank Malta p.l.c. Chairman

2022 saw the beginning of a recovery in our economy, particularly in the tourism sector, despite the considerable economic headwinds that persist internationally. The adverse effects of Covid-19 have largely been replaced by worsening geopolitical events, in particular the war in Ukraine, energy costs, supply chain issues and inflation. Uncertainty continues to be the dominant sentiment.

Malta's removal from the so-called FATF 'Grey List' in a short time is testament to the commitment by the authorities and the wider financial community to address the shortcomings that had been identified. It is, of course, essential that our guard is not allowed to slip and that the advances that have been made are retained and the commitment to fight financial crime continues to increase. There is no room for complacency in this space. At HSBC we will continue to strive to be a safe and compliant bank working to the highest international standards whilst pursuing safe growth.

Our results for the year were considerably better than the previous year, largely driven by the removal of the negative interest rate environment and the recovery of a commercial debt for which we had fully provided in previous years. We also benefitted from the hard work that was put in to re-structure our operations and costs.

We also remain at our clients' disposal to assist in their efforts to reduce emissions and transition to net zero, as we work to reduce our own, and to provide the market with sustainable and responsible investment opportunities.

Results

The reported profit before tax for the year ended 31 December 2022 was €57.3m. This represents an increase of €30.4m when compared with the prior year. The bank's improvement in performance was driven by rising interest rates and a significant recovery on a commercial non-performing loan which was largely provided for in prior years. In 2022, the underlying results of the insurance company were impacted positively by an improvement in the yield curve. We also maintained effective cost management resulting in cost savings.

The adjusted profit before tax increased to €58.8m, or 98% compared to 2021. The adjusted profit before tax for 2022 and 2021 excludes a restructuring provision of €1.5m and €2.8m respectively. More details on the financial results can be found in the CEO's review.

Profit attributable to shareholders amounted to €37.6m, resulting in earnings per share of 10.4 cent compared with 4.9 cent in 2021.

The bank's capital ratios improved marginally with CET1 increasing from 18.4% to 18.5% and the total capital ratio increasing from 21.1% to 21.3%. This improvement was driven by the profits for the year partially offset by the reduction in revaluation reserves of €23.2m as a result of the decrease in the market prices of financial instruments. The bank continues to maintain a strong capital base and is fully compliant with the regulatory capital requirements.

Whilst we continue to strengthen our capital base, we recognise the importance of dividends to our shareholders. The Board has thus recommended a dividend pay-out ratio of 35% on reported profits.

The final gross dividend will be 5.61 cent per share (3.64 cent per share net of tax).

2

HSBC Bank Malta p.l.c. Annual Report and Accounts 2022