HSBC Bank Malta has reported a pre-tax profit of €27.9 million for the first quarter of 2025 — a 29% decline from the same period last year, as the bank faces pressure from a changing interest rate environment

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In a company announcement issued on Tuesday, the bank said the drop in profits was primarily driven by a €6.7 million (10%) decline in revenue, mostly due to lower net interest income. Average interest rates in the first quarter of 2025 were notably below those recorded in Q1 2024, resulting in a €8.6 million year-on-year drop in interest-related earnings.

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Despite this, HSBC Malta recorded growth across all other income lines — including net fees, foreign exchange and insurance — which together added €1.9 million to the top line.

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Expected credit losses (ECL) stood at €0.6 million, in contrast to a €1.8 million release during the same period last year. The net ECL charge reflects increased global uncertainty and geopolitical risk, although the bank said it remains confident in Malta’s resilience and underlying economic strength.

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Operating costs rose by €2.3 million, or 8%, compared to Q1 2024. The increase was attributed to higher personnel costs and continued investment in technology, underscoring the bank’s focus on digital transformation and long-term service improvement.

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Net loans, customer deposits, and liquidity levels were reported to be broadly stable compared to Q4 2024, with capital ratios continuing to exceed regulatory requirements.

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Commenting on the results, HSBC Malta CEO Geoffrey Fichte said the bank had still delivered “sizeable profits” despite the impact of the European Central Bank’s interest rate cuts, which began in June 2024 and are expected to continue throughout the year.

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Fichte emphasised the bank’s commitment to investing in people and technology in order to improve customer service and deliver sustainable returns to shareholders.

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“I would like to thank our customers for their business and my colleagues for their patience and resilience as we progress through the strategic review process,” he said, referencing the bank’s ongoing strategic evaluation first announced in September 2024. “We remain open for business and committed to high standards in support of growth in the Maltese market.”