All the business feelers in HSBC say this is a booming economy heading in the right direction.

This was the analysis given by the top levels of HSBC Malta when asked a direct question last Friday: are the bank’s good results an indication of a booming economy?

HSBC’s CEO, Shaun Wallis, had already said as much when explaining the bank’s annual results to stockbrokers and the media.

January, he said, saw a record number of house loans taken out. This verged on the incredible, considering people must have spent so much over the Christmas period, for them to go and buy a property in January.

All over Europe, and now in Malta as well, people are investing in property rather than leaving their money deposited in banks.

The Maltese are very good when it comes to paying their dues, Mr Wallis added. First of all, they do not borrow everything they require from the bank: it has been established that people in Malta borrow only around 54 per cent of the value of their property: they get the rest from their family or their own earnings.

Furthermore, the delinquency rate in Malta is minimal: the bank has lost only some Lm10,000 in the past years and only around Lm800,000 are overdue on loans of Lm410 million. Many have two, three, five properties and even when interest rates go up, people still pay.

C. J. Farrugia, head of Corporate, Investment Banking and Markets, added that the amount of Foreign Direct Investment coming to Malta is having a ripple effect on the economy. Many companies will be announcing good results and others are undergoing profound restructuring that will lead to increased profitability in the future.

The bank announced record results for the year for the sixth consecutive year: profit before tax amounting to Lm41.4 million, a 12.8 per cent increase compared to 2005.

Net interest income grew by 5.4 per cent while non-interest income grew by 18.8 per cent due to increased credit card and point of sale usage as well as increases in funds under management, stockbroking sales and the life assurance business.

But in no way was income increased due to higher charges, the bank insisted, reacting sharply to some recent statements in the media. On the contrary, the bank offered discounts and fee free periods to its customers in a number of campaigns during the year.

The bank boasted that 86 per cent of all transactions are now done out of the branch, thus freeing up to 90 per cent of the branch staff to have face-to-face dealing with customers. This is helped by 97.2 per cent attendance of staff, which is equivalent to having more people working. HSBC is also committed to increase the number of mobile phone transactions since 50,000 customers already do so. This has turned out to be an incredible tool to fight credit card fraud, Mr Wallis said, since it warns customers at any time that a considerable sum is being withdrawn from the account and there have been many cases when fraud was uncovered just in time.

A shareholder pointed out that with some Maltese having Lm400 million in cash stashed away in mattresses and wardrobes, and with the increasingly urgent need to convert it into euros, the bank could create some incentives to get them to invest more in shares and bonds.

He was told that the introduction of the euro offers the bank a number of opportunities to help people with their concerns (even while fully implementing anti-money laundering regulations).

The most recent example was the bank’s most recent Lm25 million bond offer, which was not just over-subscribed but also did not see people withdrawing their deposits to invest them in the bonds. In the coming months, more financial institutions will be doing the same.