The condensed financial statements have been extracted from HSBC Bank Malta p.l.c.'s unaudited group management accounts for the six months ended 30 June 2007. The bank's financial statements have been prepared in accordance with IAS 34 'Interim Financial Reporting'. In the case of the group, consolidated financial statements are prepared in accordance with accounting standards adopted for use in the EU for interim financial statements (adopted IAS 34 'Interim Financial Reporting'). The half-yearly results are being published in terms of Chapters 8 and 9 of the Listing Rules of the Listing Authority - Malta Financial Services Authority and the Prevention of Financial Markets Abuse Act 2005. These figures have been drawn up according to the accounting policies used in the preparation of the annual audited accounts. Related party transactions with other members of the HSBC Group were at a similar level to the prior period.

All figures are stated in Maltese lira, the functional currency of HSBC Bank Malta p.l.c. The euro exchange rate ruling on 30 June 2007 was €1 = Lm0.4293. The US dollar and sterling exchange rates ruling on the same day were US$1 = Lm0.3189 and £1 = Lm0.6345. Average exchange rates for 2007 for euro, US dollar and sterling were €1 = Lm0.4293, US$1= Lm0.3230 and £1 = Lm0.6364.

Review of Performance

• Profit before tax of Lm25.3 million (EUR58.9 million) for the six months ended 30 June 2007 - up Lm4.7 million (EUR10.9 million), or 23.1 per cent, compared with Lm20.6 million (EUR48.0 million) for the same period in 2006.
  
• Profit attributable to shareholders up 24.9 per cent, or Lm3.4 million (EUR7.9 million), to Lm16.8 million (EUR39.1 million), compared with Lm13.4 million (EUR31.2 million) over the comparable period in 2006.
  
• Net operating income increased by Lm4.5 million (EUR10.5 million) to Lm42.3 million (EUR98.5 million), up 11.8 per cent compared with same six month period in 2006.
  
• Costs down Lm0.2 million (EUR0.5 million), or 1.3 per cent, compared with same period in 2006, to Lm17.0 million (EUR39.6 million).
  
• Earnings per share up 24.9 per cent to 5.7 cents (13.3 euro cents), from 4.6 cents (10.7 euro cents) for the same period in 2006.
  
• Customer deposits of Lm1,518.3 million (EUR3,536.7 million) at 30 June 2007 - up Lm42.8 million (EUR99.7 million), or 2.9 per cent, compared with 31 December 2006.
  
• Loans and advances to customers of Lm1,175.4 million (EUR2,737.9 million) at 30 June 2007 - up Lm49.2 million (EUR114.6 million), or 4.4 per cent, compared with 31 December 2006.
  
• Total assets to Lm2,031.4 million (EUR4,731.8 million), up Lm144.1 million (EUR335.6 million), or 7.6 per cent, compared with 31 December 2006.
  
• Annualised return on capital employed of 27.6 per cent for the six months ended 30 June 2007, compared to 21.2 per cent in the first half of 2006.

Commentary by Shaun Wallis, Director and Chief Executive Officer, HSBC Malta:

"HSBC Malta continues to experience strong growth across all of its customer group businesses.

"Increases in loans and advances and customer deposits, together with improved margins, generated a 19.1 per cent increase in net interest income. Sales of products and services, including insurance and brokerage, and trading profits resulted in an 8.4 per cent increase in revenues arising from these activities.

"Our overall cost base was again flat and consequently the cost efficiency ratio improved strongly from 45.5 per cent to 40.1 per cent.

"Costs continue to be driven down by investment in new systems to improve automation, operational processes and in direct channels to increase customer sales and service. All of this is 'joining up' the company more effectively and improving its productivity and profitability.

"Malta will convert to the euro on 1 January and will implement and be prepared for SEPA, 'Chip and Pin' card functionality, MIFID, and Basel 2 by the end of 2007. All key projects related to these events are on track.

"Investment has also been made in a new 'retail look and feel' branch refurbishment with the dual objective of driving our aim to make HSBC the Best Place to Bank and the Best Place to Work. Customer and staff satisfaction survey levels continue to improve.

"HSBC also continues to maintain good liquidity and a strong capital position. HSBC has a conservative policy to keep sufficient capital to meet normal regulatory and prudential levels and to fund balance sheet and business growth. It is our policy to pay any surplus capital to shareholders.

"HSBC Malta will continue to follow its strong dividend payout policy in line with our objective of making HSBC Malta the Best Company for Shareholders."

The Board is declaring an interim gross dividend of 6.6 cents per share (4.3 cents net of tax) and a special gross dividend of 4.0 cents per share (2.6 cents net of tax), giving a total interim gross dividend of 10.6 cents. This will be paid on 22 August 2007 to shareholders who are on the bank's register of shareholders as at 8 August 2007.

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 comprises over 10,000 offices in 83 countries and territories in Europe, the Asia-Pacific region, the Americas, the Middle East and Africa.