Malta has weathered the financial crisis thanks to the collective thrift of the people of Malta, HSBC’s Head of Global Banking & Markets in Malta yesterday told a business breakfast.

Speaking at the Portomaso Hilton, Mr Bond showed how in real GDP growth over the past 10 years, Malta has consistently averaged above EU levels. So too as regards government debt and deficit, which was last reported to be 2.6% and falling, while Malta’s debt figure is around 67% of GDP. On the other hand, the euro zone’s debt figure is at 80%.

Malta has low unemployment – 6.4% compared to a euro zone average of 11.7%.

Asking the audience why these successes have been achieved, Mr Bond said it was the behaviour and the values of the Maltese people that saved the day. Maltese work ethic is very strong; people save before they spend, they put aside money for a rainy day, in preparation for their retirement, and so on. Furthermore, 98% of the government debt is held by locals.

The people of Malta in general do not want to overreach themselves: most mortgages are of less than 50% of the value of a property.

The banks are liquid and have not faced any crisis situation.

The Maltese economy has meanwhile changed its composition: where 10 years ago manufacturing and transport contributed most to gross value added, this has now shifted to ICT, health products and financial services. There is now a better balance in the economy.

The banking system in Malta is based on very traditional banking models and the relationship between assets and equity is far better than what one finds in the rest of the euro zone. The latter are based on more risky models while Malta’s traditional banking model is a low-risk one.

While most of the euro zone countries are starved of credit, Malta’s credit levels are rising and rising.

As regards liquidity, the traditional behaviour of most banks in Malta has ensured a plentiful supply of liquidity. In Malta, only around 80% of banking deposits are loaned out while in many countries in Europe the percentage goes up to 100% or even 120%.

As to the forecasts regarding the Maltese economy, the Commission is forecasting a 0.4% growth this year, followed by 1.6% growth next year while the forecast for the euro zone as a whole is 0.1%. As to 2014, the Commission is forecasting growth in Malta to be 2.1% while that in the euro zone will be of 1.4% and that of Greece is forecast to be 0.6%.

Mr Bond outlined the challenges facing the Maltese economy. The main challenge is that the main trading partners of the Maltese economy are forecast to have two more years of stagnant growth.

According to the IMF and to most rating agencies, Malta’s banking sector is high risk since it is estimated at 800% of GDP. Mr Bond disputed this and said the real figure is nearer 300% of GDP and this is mainly held by banks operating according to traditional banking models.

A third challenge regards the labour market which must keep producing people with the right skills.

An Ernst & Young attractiveness survey has recently shown that Malta’s financial services sector registered a 90% attractiveness score. This sector still offers big opportunities for Malta.

Another big opportunity lies in shipping: in 2012, Malta has become the largest shipping registration in Europe.

Malta’s geographic location places it near the countries which had the Arab Spring and with the opportunities they offer.

In conclusion, while in what were the boom years for the rest of the world, Malta did not register high growth rates as some other countries, the frugal habits of the Maltese have led Malta to outperform most of the euro zone and to be ready to face up to the challenges of the coming years, Mr Bond concluded.