hsbcmalta-2024-12-31-en

HSBC Bank Malta p.l.c.

Annual Report and Accounts 2024

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: 356 2380 2380

www.hsbc.com.mt

HSBC Holdings plc

Registered Office and Group Head Office:

8 Canada Square

London E14 5HQ

United Kingdom

Telephone: 44 020 7991 8888

www.hsbc.com


HSBC Bank Malta p.l.c. Annual Report and Accounts 2024	1


Contents
Contents
2	Chairman’s Statement
8	Chief Executive Officer’s review
18	Board of Directors and Company Secretary
20	Executive Committee and Head of Internal Audit
23	Report of the Directors
84	Directors’ Responsibilities Statement
85	Statement of compliance with the Code of Principles of Good Corporate Governance
94	Remuneration Report
103	Financial Statements
103	Income statements
104	Statements of comprehensive income
105	Statements of financial position
106	Statements of changes in equity
108	Statements of cash flows
109	Notes on the financial statements
217	Five-Year comparison: Income statements and statements of comprehensive Income
218	Five-Year comparison: Statements of financial position
219	Five-Year comparison: Statements of cash flows
219	Five-Year Comparison: Accounting ratios
220	Branches and offices


2	HSBC Bank Malta p.l.c. Annual Report and Accounts 2024

Chairman’s Statement

Manfred Galdes, HSBC Bank Malta p.l.c. Chairman

We are pleased to be reporting record profits for 2024, an achievement that is clearly attributable to the relentless support and dedication of our

people and the trust and loyalty of our customers.

During 2024, our priority and focus was to continue providing an excellent service to our customers, and a healthy and state-of-the-art working

environment for our employees. We continued to invest in our people and infrastructure to upskill and retain talent, which in turn ensures that

we meet and exceed our customers’ expectations.

Our promise is to continue to be faithful to our core values of integrity, excellence and inclusivity, strengthening our sustainability efforts. We

are resolute in our unwavering commitment to remain a safe and compliant bank and are determined to continue adopting the highest standards

to combat financial crime to safeguard the bank, our customers, our shareholders, our people and the market.

We take great pride in our achievements as we continue to connect Malta to the global stage, embracing world-class banking standards and

values, and excelling in customer service. Our Board members continue to place our shareholders’ interest in the decisions we take to protect

and add value to their investment.

On 11 September 2024, we announced that HSBC Group is reviewing its strategic options with respect to its majority shareholding in HSBC

Bank Malta p.l.c. We also communicated that the review process will consider a full range of options, and that no decisions have yet been

made. Although we are still at the initial phase of this process and the outcome remains unknown, the Board of Directors remains committed to

adhering to the applicable rules and regulations throughout this process, with the objective of reaching the best outcome for the bank, its

people, client and its shareholders.

We remain steadfast in our commitment to place our customers, shareholders and the community we serve at the centre of our focus. Even as

we navigate through the stages of the strategic review being carried out by our majority shareholder and a changing interest rate landscape, we

will continue to work towards delivering tangible results, embracing the challenges and opportunities ahead with optimism and determination.


HSBC Bank Malta p.l.c. Annual Report and Accounts 2024	3

Results

The reported profit before tax for the year ended 31 December 2024 was €154.5m, reflecting a 15% growth (equivalent to €20.6m) when

compared to prior year. The bank’s improvement in performance was driven by an increase in revenue across all businesses, release of

expected credit losses and higher profits from the insurance subsidiary. Operating cost increased mainly driven by investment in technology,

people and real estate.

Profit attributable to shareholders amounted to €100.1m, resulting in earnings per share of 27.8 cent compared with 24.1 cent in 2023.

The bank’s capital ratios improved with CET1 increasing from 20.6% to 22.6% and the total capital ratio increasing from 23.5% to 25.6%. This

improvement was driven by increased profits for the year, higher revaluation reserves on our Hold-to-Collect and Sell investment portfolio and

lower capital deductions for non-performing loans. The bank continues to maintain a strong capital base and is fully compliant with the regulatory

capital requirements.

While we continue to strengthen our capital base, we recognise the importance of paying dividends to our shareholders. The Board has thus

recommended a dividend pay-out ratio of 51% on reported profits.

The proposed final gross dividend will be 12.0 cents per share (7.8 cents per share net of tax).

More details on the financial results can be found in the CEO’s review.

Our regulatory environment

During the course of 2024, the focus on prudential risk management by the regulatory and supervisory authorities continued, focusing mainly on

the bank’s internal governance and risk management activities as well as credit risk. The bank’s business model remained aligned to the

principle of sustainable growth, strict but safer prudential risk buffers, and robust compliance standards.

The regulatory engagement with the bank’s principal regulators has continued in a transparent manner, covering various risk themes and

assessments, including internal governance, which was undertaken as a result of the European Central Bank’s direct supervision and its

supervisory priorities. During this period, regulatory engagement was mainly focused on ensuring that governance and prudential risk

management structures, procedures and internal controls are operating effectively. This work continues to be pivotal to the regulators’

supervisory evaluation process.

Throughout the year, there have been material developments to ensure compliance with new EU Regulations in relation to payments, namely,

Instant Payments, as well as the Digital Operational Resilience Act.

Throughout 2024, the bank remained in close engagement with regulators and industry bodies during the consultation and ongoing

implementation processes of other regulatory changes. The bank will continue to observe and monitor all of the upcoming relevant regulatory

developments in order to fully adhere to its legal and regulatory obligations, and to contribute to the European and local jurisdiction’s evolving

regulatory agenda and consultation process.

Our responsibility towards the community

Through the HSBC Malta Foundation, the bank seeks to engage with numerous stakeholders in the community, contributing to a sustainable

future. Philanthropy contributes to the efforts in addressing climate change issues. Since 2024, we have directed our philanthropy funding to

Non-Governmental Organisations (‘NGOs’) partners supporting projects that have the potential to make significant impacts towards achieving a

net zero, resilient and sustainable future. We work with both global and local NGOs and seek to target specific challenges and opportunities to

help unlock finance at scale (Net Zero Transition Plan 2024). The philanthropy strategy has been designed to align with the organisation’s

strategic pillars of ‘transition to net zero’ (‘E’) and building inclusion and resilience’ (‘S’). The aim is to support initiatives for public good, that do

not generate commercial benefits, perceived or actual, for HSBC.

The main initiatives are:

– Net Zero Transition (‘NZT’): Supporting the global transition to net zero through acceleration and scaling of low carbon technologies,

addressing barriers to finance mobilisation, advance climate innovation and nature-based solutions.

– Inclusion & Resilience (‘I&R’): Investing in future skills, building financial capabilities, enhancing employability and entrepreneurship, and

supporting vulnerable communities thereby advancing social inclusion (age, abilities, gender, ethnicity, sexual and socio-economic

background).

– Disaster Relief: Addressing natural calamities and humanitarian crisis.

We also remain committed to making a difference in other areas, such as, but not limited to, youth education and the protection of our

environment and heritage. We take pride in encouraging HSBC colleagues who contribute to charities and causes that they feel passionate

about. In this regard, we grant all our employees a paid day to volunteer for work in the community. The Foundation is, furthermore, immensely

grateful for the support and guidance of our highly experienced HSBC Malta Foundation Board members.


4	HSBC Bank Malta p.l.c. Annual Report and Accounts 2024

Chairman’s Statement

HSBC employees during the CSR Day 2024 which was held at the San Blas Rehab Centre in the limits of Żebbuġ

We encourage our customers and clients to also focus on creating a more sustainable planet and society, both locally and internationally. HSBC

Bank Malta p.l.c. is also one of the founding members of the Malta ESG Alliance (‘MESGA’). The objectives of MESGA are to share a common

vision for societal change and a competitive Malta; bring benefits to the community; commit to credible, tangible and quantifiable initiatives; tap

ESG market opportunities for businesses and the Maltese Islands; regularly measure and report progress on initiatives; and motivate businesses

sharing the same values to follow and join this vision.

Currently the HSBC Malta Foundation is sponsoring two major transformative projects in line with its strategic priorities.

The first project is linked to Future Skills, which is aimed at looking into the skills required in the future of work. This three-year research project

aims to identify the skills needed for the future of work in Malta and to embed these skills in the national curriculum.


HSBC Bank Malta p.l.c. Annual Report and Accounts 2024	5

Matthew Mamo, Deputy Head of Human Resources at HSBC Malta (far left) welcoming the summer interns during future skills programme


6	HSBC Bank Malta p.l.c. Annual Report and Accounts 2024

Chairman’s Statement

The second project that the HSBC Malta Foundation is supporting a research initiative aimed at strengthening the sustainability and growth of

the freight and logistics sector in Malta. In collaboration with the University of Malta and the Research, Innovation & Development Trust (‘RIDT’),

this ambitious project marks a significant step forward in addressing the challenges and opportunities in this vital industry of logistics and

transport. For more details, please refer to the Non-Financial Reporting disclosures on page 27.

Every year, the HSBC Malta Foundation earmarks part of its funding for causes that are important to our community. During 2024, the

Foundation supported a number of projects including the King’s Trust (former Prince’s Trust) International Achieve Programme, the JAYE (Young

Enterprise) Malta Foundation, The Malta Chamber of Commerce, the Malta Community Chest Fund Foundation, Inspire Malta and Fondazzjoni

Patrimonju Malti amongst others. I take this opportunity to thank all our employees whose support and dedication towards these initiatives and

projects for the benefit of the community we serve.

We concluded 2024 with another demonstration of community spirit and holiday generosity, thus bringing essential support and festive cheer to

those in need. Collaborating with 25 NGOs across Malta, the Foundation has ensured that the joy and warmth of the festive season reach many,

particularly those who are most vulnerable. The collective effort of HSBC employees, alongside contributions from some of our top clients and

various local schools was a testament to the power of community involvement.

HSBC Malta Foundation spreads Christmas cheer to over 30 NGOs


HSBC Bank Malta p.l.c. Annual Report and Accounts 2024	7

Our Board of Directors

During 2024, John Bonello retired from the bank, with effect from April 2024. After serving on the Board of the bank as Non-Executive Director

since 2021, I replaced John Bonello as Chairman in April 2024. Alexiei Dingli was formally appointed as Non-Executive Director of the bank in

January 2024, replacing Yiannos Michaelides who had reached the end of his tenure with the bank. Malcolm Miller was appointed as Board

Member in March 2024 and Louis Cassar Pullicino in June 2024. In June 2024, Terecina Kwong also relinquished her post of Non-Executive

Director of the bank.

In December 2024, Michel Cordina retired from his role as Executive Director and was replaced by Charlotte Cilia who was appointed to the

Board in February 2025. Elvia George was appointed Non-Executive Director of the bank in January 2025, replacing Ingrid Azzopardi who

resigned from the Board of Directors in October 2024.

The Board of Directors of the bank is composed of colleagues with different areas of expertise and experience, thus ensuring the right level of

challenge and debate on the varied agenda items discussed during meetings throughout the year. The Board’s inclusion and collective

knowledge in an inclusive environment, ensures that decisions taken by the Board are in the bank’s best interest and based on the highest

ethical standards.

I feel privileged to serve as the Chairman of a Board of Directors that is made up of such high calibre individuals. I take this opportunity to

express my gratitude for their dedication and their work.

Our People

Our people are the backbone of our bank, and our success is largely credited to their dedication, hard work and professionalism.

Our bank is led by a committed and highly professional management team. We are fortunate to have leaders who are professional, have

international experience and are committed to high standards.

I would therefore like to express my gratitude and that of our Board to all our people who work diligently every day to deliver excellent customer

service, in compliance with the highest standards. I also congratulate the bank’s management team for their outstanding leadership throughout

the year.

Looking ahead

As we reflect on the past year’s achievements and challenges, we remain confident and well-positioned to deliver long-term value to all our

stakeholders. With a clear vision, we are determined to achieve sustainable growth, deliver excellent customer service, while strengthening our

role in the community that we serve. We are confident we can achieve this by building on our strong foundations, with prudent risk

management and efforts for innovation while ensuring compliance in a highly regulated environment.

I conclude by expressing my sincere thanks and appreciation to our loyal customers, and our shareholders, for their trust and unwavering

support.

Signed by Manfred Galdes (Chairman) on 19 February 2025.


8	HSBC Bank Malta p.l.c. Annual Report and Accounts 2024

CEO’s Statement

Chief Executive Officer’s review

Geoffrey Fichte, CEO, HSBC Bank Malta p.l.c.

I'm proud to report record 2024 annual results for HSBC Bank Malta p.l.c., representing the highest levels of revenue, profit, returns, dividends

and investment in over a decade.

Looking back at 2024, the global landscape was dominated by economic and geopolitical uncertainties. While financial stability risks remain

contained, the potential for adverse shocks exposing existing vulnerabilities, remains a risk factor.

Locally, the diverse Maltese economy has shown resilience, continuing its high growth trajectory driven by strong domestic demand and export

performance. Tourism to Malta remains robust; the combination of strong employment and recovering real wages has supported consumer

spending.

Malta continues to outperform Europe with 5.0% GDP growth in 2024. The European Commission forecasts continued expansion at 4.3% in

2025 and 2026. Export sectors, particularly tourism and services like IT, finance, and professional services, are expected to outpace imports,

making a positive contribution to GDP growth.

Investment is expected to recover in 2025 after a slowdown in 2023, with growth projected at 4.5%, slightly higher than 2024’s 4.4%.

Employment growth, largely driven by immigration, was over 4% in 2024 and is forecasted to moderate but remain strong at 3.1% in 2025 and

2.8% in 2026. Unemployment is expected to stay low, and the government deficit, which declined to 4.0% of GDP in 2024, is forecasted to

shrink further in the coming years, reflecting strong revenue growth and a low-risk debt profile. Inflation averaged 2.5% in 2024 and is forecast

at 2.2% in 2025 and 2.0% in 2026, with food and services inflation set to be the main contributors of inflation.

Malta continues to attract people and business from around the world based on its unique features. Malta’s economy is balanced, with both

traditional and new industries. Tourism is a major player, attracting millions and boosting the economy. The tech sector is on a steep growth

trajectory, not least thanks to Malta’s skilled and multilingual workforce. Other sectors like finance, sustainable energy, and manufacturing,

complement Malta’s industrial diversity. These sectors make Malta’s economy strong and attractive for growth and development.

While this positive outlook is largely encouraging, one must be aware of risks from external factors.


HSBC Bank Malta p.l.c. Annual Report and Accounts 2024	9

Entering the third year of our turnaround strategy, HSBC Bank Malta p.l.c. has strengthened its position as a leading player in Malta’s banking

and financial services sector. As the Chairman has noted, we continue to be a pillar of support for our shareholders, customers, employees and

the local economy.

HSBC Bank Malta p.l.c. marks its origins in 1864 as an Anglo-Egyptian bank, with many shareholders both foreign and local over a period of 160

years, including Barclays, Mid-Med and HSBC to name a few.

HSBC Bank Malta p.l.c. is proud to be Malta’s leading international financial institution, upholding high standards and international connectivity,

which are critical for Malta’s continued success. We are committed to investing in our people, products, and services, ensuring that we stay

competitive in a dynamic industry.

All of our business lines reported growth in revenues and customers in 2024. We are focused on leveraging sustainable finance opportunities,

harnessing our international network, maintaining disciplined cost management, and adhering to high standards. Through these efforts, we are

helping to drive growth and competition in Malta by supporting local businesses and facilitating cross-border trade and investment.

In our ongoing efforts to support the growth and internationalisation of Maltese businesses, we renewed our sponsorship agreements with

various bodies, including TradeMalta, Finance Malta and the Malta Chamber of Commerce. We also renewed our collaboration with the Malta

Development Bank.

HSBC Malta Renews Commitment to Supporting Maltese Businesses’ Global Expansion with TradeMalta Agreement L-R: Anton Buttigieg, CEO, TradeMalta and

Geoffrey Fichte, CEO, HSBC Malta

Thanks to the collaboration across all areas of our bank, we have introduced a range of innovative solutions for our customers, including a new

mortgage system, upgrades to our card offerings, the launch of group life insurance policies for company employees, and improvements to our

digital platforms for both individuals and companies. We are replacing our entire ATM network, with half of ATMs already upgraded and the

remainder set for completion by the end of 2025. Once again, we are proud to have been recognised as the Market Leader and Best Service

Provider for Trade Finance in Malta, further demonstrating our strength and competitive advantage. This award is a testament to the dedication

and professionalism of our employees. Their hard work has helped us deliver strong results, improved customer service and generate market-

leading returns for our shareholders.

Our people are the heart of HSBC Bank Malta p.l.c., and we continue to invest in their training and development, ensuring they can reach their

full potential and offer the best service to our customers. In 2024, we signed an ambitious and ground-breaking three-year collective agreement

to energise our talent on customer service excellence.

As mentioned by the Chairman, our majority shareholder is currently reviewing its strategic options regarding its stake in HSBC Bank Malta p.l.c.

No decisions have been made at this stage, but we will continue to keep the market informed in accordance with local Capital Markets Rules.

HSBC Bank Malta p.l.c. has 360,306,099 ordinary shares listed on the Malta Stock Exchange, with HSBC Continental Europe (‘HBCE’) holding

70% of the shares, and the remaining 30% held by c. 8,900 public shareholders locally.

The team and I are proud to demonstrate through these record 2024 results that our business remains strong with new customers, new loans

and new investments occurring every week. Our liquidity and capital remain stronger than ever.

Looking ahead, we remain focused on growing and improving our business to support the dynamic needs of our customers and the community,

while delivering strong returns to shareholders. We continue to invest in continuous improvements to make banking easier and simpler for our

customers.

I would like to take this opportunity to thank the Board of Directors and my colleagues for their dedication and hard work throughout 2024.

For me, it is an honour to lead this successful company, and I would like to thank our customers for their business, trust and confidence.


10	HSBC Bank Malta p.l.c. Annual Report and Accounts 2024

CEO’s Statement

Performance

Financial Performance

We delivered exceptional results driven by strong revenue growth across all our businesses and revenue lines. We experienced continued

improvement in the credit quality of the loan portfolio resulting in a significant release of expected credit losses. The reported profit before tax

for the year ended 31 December 2024 was €154.5m. This represents an increase of €20.6m or 15% compared to prior year. The reported

profits include a notable item of €6.1m relating to the re-assessment of the tax estimate of the with-profit portfolio within the insurance

subsidiary.

Reported profit attributable to shareholders was €100.1m, resulting in earnings per share of 27.8 cents compared with 24.1 cents in the same

period in 2023.

Net interest income increased by 5% to €206.1m compared to prior year due to the higher interest rate environment. While the ECB started to

lower rates in June 2024, the average prevailing interest rates in 2024 were still higher than 2023. The increase in net interest income is largely

driven by higher interest on placement of excess liquidity, due to higher interest rates as well as higher average deposits balances held

throughout the year.

Net fee income increased by €1.4m compared to 2023 to €20.9m. This was driven by an increase in lending and commitment fees as well as

higher returns from our asset management subsidiary. We have reported growth in transaction banking and higher volumes of international

payments.

Net trading income increased by 27% to €9.7m. As the leading international bank in the market, we grew volume of transactions and helped

more clients to manage foreign exchange and interest rate risk.

Operating costs for the year increased by 10% and amounted to €112.8m. The increase in expenses was mainly attributable to our investment

in people, the IT infrastructure and real estate. In 2024, we signed an ambitious and ground-breaking three-year collective agreement to

energise our talent on customer service excellence. During the year, we also implemented a new mortgage system, made good progress on

the roll-out of new ATMs and inaugurated our new headquarters, HSBC Hub, in Qormi.

During the year, we reported a release of expected credit losses (‘ECLs’) of €14.6m, compared to a release of €4.6m in 2023. The 2024 release

is across retail and commercial banking. It is mainly driven by recovery on wholesale non-performing loans, a release of retail provisions held for

inflationary pressures which did not materialise, general improvement in the credit quality of the book as well as improved forward economic

outlook. We also saw an increase in recoveries of amounts written off in prior years, as we progressed claims and recoveries in a diligent

manner.

The effective tax rate was 35.2%. This translated into a tax expense of €54.4m, €7.3m higher than the expense for 2023. The increase in tax

expense resulted mainly from increased profits.

HSBC Life Assurance (Malta) Ltd reported a profit before tax of €14.4m compared to a profit of €6.2m in 2023. The positive variance in

profitability of €8.2m is mainly attributable to a re-assessment of the tax obligation estimate on the with-profit run off portfolio, which resulted in

a one-off expense release of €6.1m. 2024 profits also include a reversal of losses on onerous insurance contracts of €1.3m booked in 2023. In

2023, a proportion of insurance contracts were loss making leading to the booking of losses on onerous contracts. These losses were reversed

in 2024 as the contracts became profitable mainly as a result of positive market movements.

Financial Position and Capital

Net loans and advances to customers decreased by €210.7m to €2,873m. We continued to improve asset quality by reducing non-performing

loans by 35% while retaining a prudent credit policy.

Customer deposits increased by €16.8m to €6,158m. The increase was predominantly driven by an increase in retail deposits. While commercial

deposits as at 31 December 2024 were at the same level as those reported as at 31 December 2023, we saw an increase in the average level

of corporate deposits held throughout the year. The liquidity ratios remained well in excess of regulatory requirements.

The financial investments portfolio increased by 74% to €2,291m. In 2024, the bank continued to increase the size and duration of the structural

hedges to reduce the sensitivity of banking net interest income to interest rate movement and stabilise future earnings. As a result, we

managed to reduce the one-year interest sensitivity relating to a 100bps negative movement in rates from €24.5m to €18.1m.

The bank’s common equity tier 1 capital was 22.6% at 31 December 2024, compared to 20.6% at the end of 2023. The total capital ratio

increased to 25.6% compared to 23.5% at 31 December 2023. The improvement in the capital ratios was driven by increased profits, higher

revaluation reserves on our Hold-to-Collect and Sell investment portfolio and lower capital deductions for non-performing loans as a result of the

improvement in credit quality. The bank maintained a strong capital base and is well in excess of the regulatory capital requirements.

The bank is determined to continue maintaining a strong capital base, whilst at the same time recognising the importance of dividends to our

shareholders. In view of the strong results, the Board has recommended a dividend pay-out ratio of 51% on reported profits. The final proposed

gross dividend will be 12.0 cents per share (7.8 cents per share net of tax) which brings the total dividend for 2024 to 22.0 cents (14.3 cents net

of tax). This is the highest annual dividend paid in the last decade. The final proposed dividend will be paid on 20 May 2025 to shareholders who

are on the bank’s register of shareholders on 13 April 2025, subject to approval at the Annual General Meeting scheduled for 13 May 2025.


HSBC Bank Malta p.l.c. Annual Report and Accounts 2024	11

Wealth and Personal Banking (‘WPB’)

In 2024, we continued to focus on customer acquisition growth through our leading premium propositions, Premier and Advance, supporting our

customers’ personal banking and wealth needs, complemented by our best-in-class Wealth product manufacturing capabilities in Asset

Management and Insurance.

Muriel Rutland, Head of Wealth and Personal Banking Designate, addressing the HSBC Premier Mastercard competition winners at the HSBC Premier Lounge in

Mill Street Qormi

In an era of heightened customer expectations, due to increasing standardised financial services, we recognise the importance of cultivating and

deepening the relationships with our customers. During the year, we have launched various initiatives to strengthen our customer service which

have resulted in improved customer feedback scores. Whilst we strive to grow our business, we are also focused on managing our risks and

implementing controls and platforms to protect our business and our customers.

2024 was a successful year for our Wealth business as we aimed to support more customers on their protection, regular savings and

investment needs. Indeed, we saw an increase of 7.5% in Assets under Management and Distribution, also enabled by the launch of new

Wealth products. Product launches include a new Fixed Maturity Portfolio investment fund and an HSBC Responsible Investment Fund,

enhancing our sustainability investment product shelf. During Q4’24, HSBC Life launched the Group Life Plan, a product that complements our

existing product suite aimed at helping our corporate customers meet their growing employee well-being needs. These initiatives were

complemented by marketing campaigns throughout the year which have contributed to enhanced activity and visibility in the market.


12	HSBC Bank Malta p.l.c. Annual Report and Accounts 2024

CEO’s Statement

Two of the images used for the new campaign, "Live life prepared" reflecting the joy when saving for one’s future

We continued to help our customers in providing them with best-in-class credit facilities whilst retaining a prudent pricing and credit risk policy

for both secured and unsecured lending to ensure the long-term sustainability of our service proposition. We have also launched the Energy

Efficient Loans aimed at enticing our customers to finance purchasing of energy saving products and services for personal use.

We continue to invest in our business through several transformational and regulatory projects. We have deployed a new mortgage system

delivering improved offering with online access for customers to view related transactions. We have also continued to invest in our Card

Management System, completed the full roll-out of Contactless cards, and by the end of 2024, we have replaced 30% of our ATM fleet with

new machines, with replacements for the rest of the fleet planned for completion within 2025. We have also implemented the deployment of

instant SEPA payments whereby our customers are able to receive euro SEPA payments within seconds as from January 2025 and we are also

working to deploy same journey on the payment origination side in 2025.

This is all being done in consideration of our commitment for long term sustainability, with further initiatives, including the issuance of 100%

recycled PVC cards and the reduction of paper documents. HSBC Malta was a pioneer in implementing an automated advisory journey, taking

the customer sustainability preferences into account to filter products that potentially meet these preferences. This gave us a strong footing in

sustainable investments and helped in mitigating ESG and greenwashing risks.

We continue to invest in the development and well-being of our people, which remains the pillar of our performance and success, and during

the year we have sustained this through continued technical and soft-skills training, leveraging on HSBC Group training resources. We have also

continued to recognise achievements of our employees through various initiatives throughout the year, both locally and as part of HSBC Group,

which is essential to the continued motivation and engagement of our teams.

As we look ahead to 2025, we remain focused on growing our bank sustainably for the future, centred around our customers and our

employees, connecting them to opportunities.


HSBC Bank Malta p.l.c. Annual Report and Accounts 2024	13

Commercial Banking (‘CMB’)

In a year characterised by concerns about inflation, increasing market interest rates and threats of global recession, businesses across the world

continued to face uncertain times. These were compounded by an unprecedented number of elections held around the world in the year, of

which the US election was the most impactful on the global economy. In this environment, we remained close to our customers with a view to

understanding their needs, supporting them with any financing and hedging needs and giving them access to the wealth of knowledge and

resources offered by the HSBC Group.

Through our various services and products, we helped customers find ways of addressing these challenges and exploit opportunities. Our

ongoing activity to engage with our customers and prospects resulted in a strong financial performance, with all revenue lines ahead of plan.

Despite this, we saw a decrease in the total advances to customers given the competitive environment and due in part to a further reduction in

our non-performing loans book, which is now at record low levels. We were however pleased to record a notable increase in the total value of

new loans and other facilities approved to customers, which grew by over 130%, which was the best performance in recent years. We expect

drawdown of these facilities in coming months.

Performance of our Global Trade Solutions area (formerly Global Trade and Receivables Finance) remained strong. Our customers continue to

benefit from our award-winning solutions and products that allow them to trade internationally and domestically. Underlying revenue in this area

(after accounting for a one-off recovery in 2023) was flat despite reduced margins in view of competitor pressures. We saw strong performance

in guarantees which generated higher revenue than in previous year. Funded balances under our Trade Loan and Receivables Finance portfolios

increased by c. 6%, following strong growth in 2023, thanks to our continued focus on these forms of structured lending. We have continued to

leverage on our strength as members of the HSBC Group, which was named Global Best Bank for Trade Finance for the 7th consecutive year in

the Euromoney Trade Finance Survey 2024. We were delighted to be awarded Market Leader and best service provider for Trade Finance in

Malta in the same survey and are grateful to our customers who participated and expressed their views. Foreign exchange revenue grew

materially by c. 35%, thanks to a growth in volumes resulting from a strong collaboration with our Global Markets team and close interactions

with our customers. HSBC’s international connectivity and invaluable market insight have, over the years, been instrumental in supporting

hundreds of Maltese businesses in their international ambitions. The performance registered in this area also underscores the competitiveness

and attractiveness of our products and solutions.

In the past year, we continued to focus on maintaining and growing deposit balances held with us, by giving our customers a high standard of

service and ensuring efficient payment processing. We also continued to onboard new customers. While total onboarding was flat on prior year,

we saw strong growth of c. 35% in our key target segments, i.e. Mid-Market Enterprises and Large Corporates, particularly International

Subsidiary Banking customers. All these factors, coupled with the confidence placed by our customers in our bank, resulted in a robust

performance in deposits with year-end balances remaining flat on prior year and average balances throughout the year at c. 15% higher than in

2023. The volume of payments routed through our customers’ accounts continued to increase, driving up related revenues. International

payments were up by c. 10% while we processed c. 6% more SEPA outward payments than prior year. HSBC Group was named Global Best

Bank for Payments and Treasury in the 2024 Euromoney Cash Management Awards, highlighting our capabilities in this area. We launched

additional functionality through our award winning online and mobile banking platform HSBCnet, aimed at simplifying processes and giving our

customers more control over their accounts and visibility of payments. This functionality included Central Beneficiary Account Validation

(‘CBAV’), the ability to initiate SEPA classic payments via mobile for trusted beneficiaries, ability to report fraudulent payments on HSBCnet via

track payment and Track Payments functionality for SEPA payments.

During the year we continued to focus on adding value to our customers and giving them access to HSBC Group resources. Once again, we

organised an in-person event for our customers in collaboration with our colleagues in Global Markets, where a senior HSBC Global Economist

gave insights on the World economy in 2024. This proved highly popular with excellent feedback received. Another well-attended event was a

webinar during which an HSBC Group expert delivered information about common fraud and scams that could impact their business and

provided practical steps they can take to prevent falling victim to fraudsters. We also provided various other opportunities for our customers to

attend webinars organised by the HSBC Group on a broad range of topical subjects. We can only do this thanks to our dedicated and

professional Relationship Managers and other team members, who are committed to help their customers address challenges and take their

businesses forward. We continue to provide our teams with the required tools and with the ongoing training needed to enable them to

understand customer needs and stay informed about issues that have an impact on the ever-changing business environment.


14	HSBC Bank Malta p.l.c. Annual Report and Accounts 2024

CEO’s Statement

Geoffrey Fichte (right), CEO of HSBC Malta introducing HSBC Group Economist James Pomeroy (left)

In early 2024, the HSBC Group published its initial Net Zero Transition Plan. Sustainability teams across the group subsidiaries, including Malta,

lead the bank’s work to support sustainable growth in a global economy, including an ambitious plan to prioritise financing that supports the

transition to net zero. During the year, our Commercial Banking team in Malta has supported a number of customers with sustainable financing.

We also provided online and classroom training and workshops to all our Relationship Managers to help them navigate the sustainability

landscape and upskill on the various concepts and products. Customer workshops on related subjects are planned for 2025. We foresee that,

given that under 11% of power generation in Malta comes from renewable sources according to NSO statistics, there is scope for further

material investment in sectors such as wind and solar energy in coming years. We are therefore ensuring that we are fully prepared to meet

these needs.

As we did in previous years, we worked with various organisations that operate to support local businesses. These included the Malta

Development Bank, where we participate in a number of schemes, which we were pleased to see were extended to 2027. We look forward to

co-operate with them in future schemes that are currently being considered. In our ongoing efforts to support the growth and

internationalisation of Maltese businesses, we renewed our sponsorship agreement with TradeMalta for another 3 years. This entity has been

playing a vital role in helping Maltese businesses internationalise by providing expert advice, training and support since its inception in 2015. We

also supported TradeMalta with the third edition of the Malta International Business Awards which give Malta-based companies the opportunity

to showcase their capabilities. This event was a great success. We also continued supporting the Malta Chamber’s ongoing operations,

following the renewal of a Gold Partnership agreement for a further three years. We are pleased to have the opportunity to further support local

businesses and the economy through these activities and sponsorships.


HSBC Bank Malta p.l.c. Annual Report and Accounts 2024	15

HSBC Malta Renews Commitment to Supporting Maltese Businesses’ Global Expansion with TradeMalta Agreement

L-R: Nathalie Camilleri Sultana, Media and PR Manager, TradeMalta; Richard Scerri, Head Trade Promotion, TradeMalta; Anton Buttigieg, CEO, TradeMalta; Geoffrey

Fichte, CEO, HSBC Malta; Joyce Grech, Head of Commercial Banking, HSBC Malta; Tonio Mallia, Head of Marketing, HSBC Malta

Global Markets (‘GM’) and Corporate Centre (‘CC’)

Global Markets continues to successfully deliver on its strategy to offer best in class services to our local and international customers. The

Global Markets team has seen a substantial increase in foreign exchange activity as it leverages the HSBC Group’s global network, drawing

upon expertise and leading-edge technologies. Throughout the year GM has organised a number of seminars for our clients, inviting industry

leading specialists. The highlight for the year was the one delivered by our Global Economist.

We also continued to invest in our people, as it is only through them that we can deliver an excellent customer experience. Our Markets team is

constantly undergoing training and continuous professional development to ensure we deliver the best quality service to our customers.

Markets Treasury (Corporate Centre), which manages cash, liquidity, funding and interest rate risk for the entity, delivered a strong performance.

This has been achieved through prudent management of the bank’s investments and market risks. The bank continues to have surplus liquidity

which is mainly invested in securities and money market placements. The Hold-to-Collect and the Hold-to-Collect and Sell securities portfolios

are mainly invested in very high-quality liquid assets rated A- or better, reflecting our conservative risk appetite. Markets Treasury continued to

reduce the interest rate sensitivity by deploying excess funds into longer dated securities.

Chief Operating Office and Digital Business Services (‘COO’ and ‘DBS’)

COO and DBS continued playing a pivotal role in supporting our business to deliver on the strategic commitments by managing the day-to-day

operations, enabling uninterrupted services to our customers, driving transformation and regulatory changes through digital solutions, focusing

on improving customer journeys and internal processes, and safeguarding our customers and business operational resilience through a robust

framework of controls and monitoring.

Achievements for 2024 included the deployment of the new Mortgage system which enabled modern digital capabilities for our customers;

upgrades to the Cards system and the roll-out of contactless credit cards to every customer to further enhance customer experience and

comply with regulatory requirements; new ATM machines installation, with 30% completed in 2024 and to be completed throughout 2025;

implementation of the Instant Payment programme first phase which allows customers to receive Single Euro Payments Area (‘SEPA’)

payments in under 10 seconds and available 24 hours per day as from 6 January 2025; enhancements to our digital operational resilience

capabilities with the aim of preventing, responding and recovering from potential operational disruptions; and continuous improvement of our

internal processes to allow our colleagues to focus on value adding activities.

The HSBC HUB project to transform our office buildings in Qormi is the largest capital expenditure project for HSBC in Europe, creating

innovative, sustainable, and modern space for our customers and HSBC colleagues, with one of the largest single floor office spaces in Malta

(over 2,330sqm). The project has successfully progressed with 70% completed in 2024. With the support of the HSBC Malta Foundation, on

25th March 2024, we presented to the Prime Minister the report entitled ‘Establishing a Framework for Net Zero Buildings in Malta’ which uses

the HSBC HUB project as a case study to retrofit offices to more efficient buildings, and ultimately, guide Malta towards achieving its climate

goals by tackling the building and construction sector with particular focus on the emissions of carbon dioxide and other global warming gases.


16	HSBC Bank Malta p.l.c. Annual Report and Accounts 2024

CEO’s Statement

HSBC Hub

COO and DBS teams are at the forefront of driving the Sustainability and Net Zero initiatives for the bank. During 2024, we saw a reduction of

Carbon Emissions, Energy Consumption and Water Consumption, through ongoing HSBC HUB project initiatives such as using low carbon

materials for construction, using reservoirs on-site for concrete production, reusing of existing HSBC furniture from other sites, and introducing

energy and water saving installations. Other measures include our active property portfolio management and further reducing the service

running in the local data centres. The reduction in Paper Consumption was due to our continuous drive to promote digital channels upon

onboarding new customers, encourage existing customers to switch from paper correspondence to using digital channels, and replacing paper

forms with digital signature forms.

During 2024, we have invested in training, development and recognition initiatives as part of COO and DBS People plan. Future Skills

programme delivered upskilling and mentoring programme to 9 colleagues. Throughout the year, 2 COO and DBS Malta colleagues were

recognised at a European level with awards for their achievements in the categories of ‘Exceptional Individual’ and ‘Innovation’. Another 2

colleagues were runner-up for awards in the ‘Rising Star’ and ‘Team of the Year’.

Looking ahead to 2025, the COO and DBS Malta strategy remains unchanged and will continue to focus on supporting the growth of our

business by running efficient and resilient operations, delivering innovative, digital customer journeys, delivering on Net Zero ambitions, and

supporting our people by maintaining an engaging and motivating work environment. Key deliverables in plan for 2025 are the completion of the

HSBC HUB and ATM fleet projects and continue with our ongoing projects related to Card system upgrades and SEPA Instant Payments.

Our people

Our people and the community we serve remain at the heart of our business. We champion the highest professional standards of meritocracy

and inclusion and firmly believe that employee engagement and personal growth are key drivers for the provision of excellent customer service.

As envisaged, the 11 September announcement of the Strategic Review of the Group’s shareholding in HSBC Bank Malta p.l.c. had an

inevitable impact on general employee sentiment. Nevertheless, we have continued to focus on employee engagement and growth, key drivers

for the provision of excellent customer service. We continue to provide our people with opportunities to realise their career aspirations and the

knowledge and tools to safeguard their well-being.

In 2024, we hosted three senior leadership full day conferences. Senior managers actively discussed and provided feedback on people-related

issues and collaborated with colleagues from different areas of the bank during interesting team building activities.

Attrition levels throughout 2024 averaged 5.8% confirming a stable 18-month trend. Attrition continues to be closely monitored in the light of

uncertainty generated by the Strategic Review.

In agreement with the Malta Union of Bank Employees (‘MUBE’), we implemented a comprehensive salary benchmarking exercise to ensure

fair compensation levels for our people. Approximately 220 colleagues benefited directly from this exercise, which is ongoing, as we continue to

monitor compensation levels across the market to ensure competitiveness.

In 2024 we also introduced a new simplified performance ratings structure based on a 3-point scale. We also ensured appropriate correlation

between performance and reward in the true spirit of meritocracy.


HSBC Bank Malta p.l.c. Annual Report and Accounts 2024	17

As approved by the Board, as from December 2024, the bank’s maximum matching contribution to the employee pension plan increased from

1.5% to 5%. Aggregate employee participation in the Pension Plan has now increased to 63%.

The bank-wide Snapshot Survey ran across the HSBC Group between 10 to 25 September. Participation and overall engagement results are

encouraging and reflect a dedicated and loyal workforce committed to the bank and our customers. Level of trust in management remains very

high which is important especially at this sensitive time.

Our values are the foundation of how we operate by valuing differences, succeeding together, taking responsibility and getting it done. We are

committed to an inclusive culture where our people can be confident that their views matter, their workplace is an environment free from bias,

discrimination and harassment, and where they can see that advancement is based on merit. Our Diversity & Inclusion Committee continues to

ensure that we drive our Diversity and Inclusion policies and principles through all activities including recruitment processes, learning

programmes and various initiatives across the bank and Malta. This year the bank was once again a proud sponsor of Pride, where again we

showed our commitment to promoting and supporting the LGBTI+ community.

Throughout the year we organised various sessions for our employees, focusing on topics of interest including mental, physical and financial

wellbeing. Flexible (including remote) working have been engrained in our work practice, thereby facilitating a healthy work/life balance for our

people. More employees availed themselves of the enhanced “wellbeing allowance” through which employees can claim reimbursement for

expenditure related to wellbeing initiatives.

We continued to capitalise on our employee platforms and tools to facilitate employee personal development and the enhancing of skills and

abilities. This was achieved through various virtual-led programs including career progression sessions, HSBC’s Degreed platform, and future

skills training. Opportunities for career development continued throughout 2024 with employees applying for job opportunities across the bank

and its subsidiaries. Many were promoted in the process. Succession planning for key roles is also ongoing.

The attraction and retention of quality employees was high on our agenda throughout 2024. Our Internship proposition was again successfully

implemented in collaboration with the University of Malta and other educational institutions to recruit students and provide them with a rich

working experience. Once again, we welcomed back several students who returned to HSBC as full-time employees after completing their

studies. We strongly believe in the importance of engaging with future talent, thereby providing future pipeline for the business.

Majority shareholder

HSBC Continental Europe (‘HBCE’) holds a direct shareholding of c. 70.03% in HSBC Bank Malta p.l.c. Ultimate control of the HSBC Malta

Group remains vested in HSBC Holdings plc.

Outlook

Whist remaining cautiously optimistic in view of the current global uncertainty and ongoing strategic review, HSBC Bank Malta p.l.c. is

committed to the local economy and will continue to invest to provide its customers, employees, shareholders and the community at large the

highest standards in banking services.

To conclude, I want to sincerely thank our colleagues for their fortitude, dedication and commitment and in particular for giving our esteemed

customers the best advice, products and services in the market.

Signed by Geoffrey Fichte (Chief Executive Officer) on 19 February 2025


18	HSBC Bank Malta p.l.c. Annual Report and Accounts 2024

Board of Directors and Company Secretary

Board of Directors and Company

Secretary



		Manfred Galdes, CHAIRMAN AND NON-EXECUTIVE DIRECTOR Appointed Director of the bank in January 2021. Dr Galdes is the Chairman of the bank and a Member of the bank’s Remuneration and Nomination Committee. He is the managing partner of the ARQ Group, a multi-disciplinary advisory firm. After graduating as a lawyer (LL.D.) from the University of Malta, he obtained a Masters Degree (LL.M.) in European (Commercial) Law at the University of Leicester. Dr Galdes has spent the last 24 years practicing in the area of regulatory and financial crime compliance having held various leading roles both in the private and public sector. Between 2008 and 2016, Dr Galdes headed the FIAU, Malta’s financial intelligence unit and principal AML/CFT supervisory authority.


Geoffrey Fichte, EXECUTIVE DIRECTOR and CHIEF EXECUTIVE OFFICER Appointed CEO and Executive Director of HSBC Bank Malta p.l.c. in May 2023. He is also Chairman of HSBC Life Assurance (Malta) Ltd and HSBC Global Asset Management (Malta) Limited. Mr Fichte has over 20 years of experience in financial services: banking, insurance, asset management and global strategy across Hong Kong, London, New York and Mexico City. He previously held several senior international positions within the HSBC Group, including President and CEO of HSBC Bank Uruguay; Head of Business Banking, HSBC Mexico; Senior Executive, Corporate Development & Global Strategy, HSBC Group, London; and Senior Manager International (Asia), Hong Kong. He holds a Bachelor of Science in Economics (Magda Cum Laude) from Wharton School, University of Pennsylvania, Philadelphia, USA.


		Charlotte Cilia, EXECUTIVE DIRECTOR and CHIEF FINANCIAL OFFICER Appointed Chief Financial Officer in December 2020 and Executive Director in February 2025. Ms Cilia is a certified public accountant and auditor with over 25 years of varied experience across audit and banking finance. She joined the HSBC Finance team as a senior manager in 2010 where she worked for four years and re-joined the bank in 2018 as Chief Accounting Officer and Deputy Chief Financial Officer. She served as Deputy Chief Financial Officer during her four years at MeDirect Group until 2018. Previously an auditor at KPMG in Malta and the UK where she performed key roles on various international engagements. She is a Director on the Board of HSBC Life Assurance (Malta) Ltd.


Louis Cassar Pullicino, NON-EXECUTIVE DIRECTOR Appointed as Director in June 2024, Dr Louis Cassar Pullicino is presently the bank’s Risk Committee Chairman. He obtained his Doctor of Laws (LL.D) in 1986 from the University of Malta. He is an experienced litigator specialising in commercial litigation, who is particularly active in admiralty and shipping, banking, corporate, insolvency, insurance, telecommunications, pensions and contractual disputes with an international dimension. For over 35 years, Louis has been advising numerous banking institutions and has been involved in the market’s most complex marine and commercial litigation cases. In June 2015, Dr Cassar Pullicino was appointed Managing Partner with a local law firm. As the role of Managing Partner came to an end in March 2021, Dr Louis Cassar Pullicino continues to focus exclusively on litigation and international arbitration.


HSBC Bank Malta p.l.c. Annual Report and Accounts 2024	19


		Alexiei Dingli, NON-EXECUTIVE DIRECTOR Appointed Director of the bank in January 2024. Presently Member of the bank’s Risk Committee and Chairman of the bank’s Remuneration and Nomination Committee. He is a Professor of Artificial Intelligence (AI) at the University of Malta. He has been conducting research and working in the field of AI for more than two decades, assisting different companies to implement AI solutions. His work has been rated World Class by international experts and he has won various local and international awards. He has also published several peer-reviewed publications and formed part of the Malta AI task-force which was setup by the Maltese government, aimed at making Malta one of the top AI countries in the world. He is a B.Sc.IT (honours) graduate, which degree was obtained in 2001, from the University of Malta, has a Ph.D in Artificial Intelligence from the University of Sheffield, UK and an MBA in Technology Management from the Grenoble Business School, France.


Elvia George, NON-EXECUTIVE DIRECTOR Appointed Director of the bank on 22 January 2025. She is also a Member of the bank’s Audit Committee and Risk Committee. She was previously a Director on the HSBC Global Asset Management (Malta) Limited. Ms George holds a BA Hons (Accountancy) degree from the University of Malta. She is a Certified Public Accountant and a Fellow of the Malta Institute of Accountants. Ms George has been working within the banking and financial services industry since 1981 and has held senior positions with one of the systemic banks in Malta (Bank of Valletta plc) including that of Chief Financial Officer. She was also a Director and a member of the Risk committee within BOV Fund Services Limited. Ms George was also a part time lecturer within the Faculty of Economics, Management and Accountancy of the University of Malta.


		Maria Micallef, NON-EXECUTIVE DIRECTOR Appointed as Director in December 2022. Currently, Ms Micallef is the Chairperson of the bank’s Audit Committee, and Member of the bank’s Remuneration and Nomination Committee. She was the Managing Partner at RSM Malta until her retirement in December 2020. Ms Micallef specialised in business advisory services including mergers and acquisitions, corporate finance, valuations and investment appraisals. Currently Ms Micallef is pursuing a Degree in Humanities at the University of Malta. Ms Micallef has a B.A. Hons Accountancy degree and is a Certified Public Accountant. She is a fellow of the Malta Institute of Accountants, a member of the US Institute of Internal Auditors and a member of the Association of Certified Fraud Examiners. Ms Micallef served as President of the Malta Institute of Accountants during the period 2013 to 2015.


Malcolm Miller, NON-EXECUTIVE DIRECTOR Appointed as Director in March 2024. Presently Mr Miller is a member of the bank’s Audit Committee. Mr Miller is an established entrepreneur, a seasoned and motivated business leader with 50 years’ experience in start-ups and running businesses in Malta and overseas. He has set up and run businesses in seven European territories. His extensive experience includes raising funding, building new teams, setting and measuring realistic objectives and using clear and simple benchmarks for motivating teams. He is also an experienced board member, having sat on State, University, family-owned and internationally-owned Boards. His operational experience includes new business set-ups, logistics - both within his own group of companies as well as third-party services - media, publishing, print, retail, e-commerce and vertical integration to consumer solutions.


		Paula Mamo, COMPANY SECRETARY Company Secretary of HSBC Bank Malta p.l.c. since May 2022. Dr Mamo joined the bank in February 2018 as Deputy Company Secretary supporting the Company Secretary. She was appointed Company Secretary for the two subsidiary companies of the bank, HSBC Life Assurance (Malta) Ltd and HSBC Global Asset Management (Malta) Limited in May 2018. Prior to joining HSBC, Dr Mamo progressed through a number of senior roles primarily within legal, regulatory compliance and financial crime compliance, with other licensed financial institutions. She graduated as Doctor of Laws from the University of Malta in 2010.


20	HSBC Bank Malta p.l.c. Annual Report and Accounts 2024

Executive Committee and Head of Internal Audit

Executive Committee and Head of

Internal Audit



		Geoffrey Fichte, EXECUTIVE DIRECTOR AND CHIEF EXECUTIVE OFFICER Appointed CEO and Executive Director of HSBC Bank Malta p.l.c. in May 2023. He is also Chairman of HSBC Life Assurance (Malta) Ltd and HSBC Global Asset Management (Malta) Limited. Mr Fichte has over 20 years of experience in financial services: banking, insurance, asset management and global strategy across Hong Kong, London, New York and Mexico City. He previously held several senior international positions within the HSBC Group, including President and CEO of HSBC Bank Uruguay; Head of Business Banking, HSBC Mexico; Senior Executive, Corporate Development & Global Strategy, HSBC Group, London; and Senior Manager International (Asia), Hong Kong. He holds a Bachelor of Science in Economics (Magda Cum Laude) from Wharton School, University of Pennsylvania, Philadelphia, USA.


Charlotte Cilia, EXECUTIVE DIRECTOR and CHIEF FINANCIAL OFFICER Appointed Chief Financial Officer in December 2020 and Executive Director in February 2025. Ms Cilia is a certified public accountant and auditor with over 25 years of varied experience across audit and banking finance. She joined the HSBC Finance team as a senior manager in 2010 where she worked for four years and re-joined the bank in 2018 as Chief Accounting Officer and Deputy Chief Financial Officer. She served as Deputy Chief Financial Officer during her four years at MeDirect Group until 2018. Previously an auditor at KPMG in Malta and the UK where she performed key roles on various international engagements. She is a Director on the Board of HSBC Life Assurance (Malta) Ltd.


		Jesmond Apap, HEAD OF GLOBAL MARKETS Appointed Head of Global Markets in April 2020. Joined the bank in 1989, then Mid-Med Bank. During his career Mr Apap has held a number of key roles that have seen him successfully drive transformation and performance. Mr Apap started his career in Operations before moving to Markets. Prior to his role as Head of Global Markets, Mr Apap headed Markets Treasury, managing cash, liquidity, funding and the structural interest rate risk for the bank.


Carine Arpa, HEAD OF COMMUNICATIONS Ms Arpa was appointed Head of Communications in January 2019, bringing over 15 years of experience in the fields of communications, marketing and media relations. Ms Arpa has undertaken a number of different roles in the course of her career, including leading communications and marketing campaigns for the National Euro Changeover Committee, the European Commission Representation in Malta, KPMG and EY. She holds a Bachelor of Arts in Psychology and Communication Studies (Honours), a Master's Degree in European Studies and an MBA (Henley).


HSBC Bank Malta p.l.c. Annual Report and Accounts 2024	21


		Steven Beddow, CHIEF RISK OFFICER Mr Beddow was appointed Chief Risk Officer in November 2022. Mr Beddow holds a Bachelor and Master’s Degree from the University of Oxford in Modern Languages. He has over 20 years of experience within the HSBC Group and has worked in a number of locations across Europe, Asia, the Middle East and the Americas. Mr Beddow has previously held a number of banking related Director positions, served on different country level executive committees, led transformation work, and co-sponsored a country level diversity and inclusion committee. He is passionate about staff development and mentoring.


Morgan Carabott, HEAD OF INTERNAL AUDIT In September 2021, the Bank announced the appointment of Morgan Carabott as Head of Internal Audit. Ms Carabott joined the Bank as Deputy Head of Internal Audit in 2018. Prior to joining the Bank she spent seven years as a Senior Internal Auditor within the Insurance industry and was an external auditor with one of the big four audit firms. Ms Carabott is a warranted Accountant and Auditor and is also a Certified Information Systems Auditor and Certified Anti-Money Laundering Specialist. She is a Fellow of the Malta Institute of Accountants and a member of the Information Systems Audit and Control Association (‘ISACA’) and Association of Certified Anti-Money Laundering Specialists (‘ACAMS’). She has strong auditing and risk management skills, sound industry and regulatory knowledge coupled with extensive experience in leading and managing numerous audits across different sectors.


		Chantelle Coleiro, GENERAL COUNSEL Appointed General Counsel in August 2024. Dr Coleiro joined the Bank in 2007 after her legal traineeship at Ganado Advocates, a Maltese law firm focusing on commercial and corporate legal matters. She holds a Doctor of Laws (LL.D.) and Magister Juris (EU Law) from the University of Malta. At the Bank’s Legal Office she has worked in the legal advisory team serving different lines of business. Since 2021 she was entrusted with leading the legal advisory team. In 2022/23, she served as non-executive Director for Tigne Mall plc, a company listed on the Malta Stock Exchange and operating one of Malta’s largest shopping malls.


Michel Cordina, HEAD OF BUSINESS DEVELOPMENT Served as Executive Director from 2019 until 2024. Mr Cordina, formerly Head of Commercial Banking, is presently Head of Business Development and also heads the bank’s Corporate Sustainability arm and is the Deputy Chair of the HSBC Foundation. Mr Cordina is a seasoned banker and has a wealth of experience having started his banking career over 40 years ago. He has worked in various areas of banking in both Personal Banking and Commercial Banking. He has also led a number of operational and support functions of the bank. He has occupied various executive roles within HSBC Bank Malta including Deputy Head of Operations and Head of Business Transformation. During his career Michel was seconded to HSBC Commercial Banking in London where he performed the role of Head of Sales Performance. He is an Associate of the Chartered Institute of Bankers (‘ACIB’).


		Mandy Falzon, CHIEF COMPLIANCE OFFICER Appointed as Chief Compliance Officer in March 2021, leading the Regulatory Compliance and Financial Crime Compliance teams at HSBC Bank Malta p.l.c. She graduated as a Doctor of Laws from the University of Malta in 2005, and has 19 years’ experience in banking and financial services at HSBC. Dr Falzon held managerial positions within the HSBC Malta Legal Office prior to joining the Regulatory Compliance function in 2015 in a senior management position. She is a Director on the Board of HSBC Global Asset Management (Malta) Limited.


22	HSBC Bank Malta p.l.c. Annual Report and Accounts 2024

Executive Committee and Head of Internal Audit


		Joyce Grech, HEAD OF COMMERCIAL BANKING Ms Grech has been leading Commercial Banking team for 5 years. During her time in the role she was responsible for reshaping the team which continues to evolve in line with customer needs. She has a 28- year career with HSBC, of which 11 as part of the bank’s EXCO. Before her current role, she served as the bank’s Chief Risk Officer for 6 years, leading teams across various areas of Risk management. In previous roles, she gained experience in a number of Risk areas, including 4 years as Deputy Head of Credit. She also worked in the Personal Banking area, leading Customer Value Management for a number of years. She had started her career with HSBC in the Trade Finance and Commercial Banking areas. Aside from her role, Ms Grech has served as the chairperson of the bank’s Diversity and Inclusion Committee for the past 5 years, ensuring that the bank continues to seek ways of embracing diversity in all its forms. She is particularly interested and involved in gender representation activities and initiatives.


Paula Mamo, COMPANY SECRETARY Company Secretary of HSBC Bank Malta p.l.c. since May 2022. Dr Mamo joined the bank in February 2018 as Deputy Company Secretary of the bank. She was appointed Company Secretary for the two subsidiary companies of the bank, HSBC Life Assurance (Malta) Ltd and HSBC Global Asset Management (Malta) Limited in May 2018. Prior to joining HSBC, Dr Mamo progressed through a number of roles primarily within legal, regulatory compliance and financial crime compliance, with other licensed financial institutions. She graduated as Doctor of Laws from the University of Malta in 2010.


		Svetlana Maslova, CHIEF OPERATING OFFICER Ms Maslova joined HSBC Bank Malta p.l.c. in July 2023. She has 17 years’ experience with the Group and has worked in several Group entities across Europe and Asia. Svetlana has held a number of key roles in Retail and Wealth Management and Digital Business Services, and previously worked in Malta for 8 years. Svetlana holds a Bachelor’s Degree in Philology and English Language. She also holds certificates for Financial Advice and Management Accounting. Through HSBC, Svetlana is also an accredited career coach.


David Perotti, HEAD OF HUMAN RESOURCES Mr Perotti was appointed Head of Human Resources in August 2023. He has 43 years’ experience in banking, 25 of which within virtually all areas in HR. During the past few years, David has headed Employee & Industrial Relations for HBMT, working closely with our union stakeholders. He is an active member of HSBC’s Global Employee Relations (‘ER’) Forum and has supported Regional ER on a number of important projects.


		Muriel Rutland, Designate HEAD OF WEALTH AND PERSONAL BANKING Ms Rutland was appointed as Head of Wealth and Personal Banking in June 2024. She has 23 years’ experience in the Wealth and Personal Banking business at HSBC Bank Malta p.l.c., previously occupying various senior management positions including CEO of HSBC Life Insurance (Malta) Ltd, Chief Operating Officer – WPB and Managing Director of HSBC Global Asset Management (Malta) Limited. She graduated in Bachelor of Commerce Honours in Banking & Finance from the University of Malta in 2001.


HSBC Bank Malta p.l.c. Annual Report and Accounts 2024	23

Report of the Directors

The bank provides a comprehensive range of banking and financial

related services. The bank is authorised to carry on the business of

banking, under the Banking Act, 1994 as a credit institution. It is also a

licensed financial intermediary in terms of the Financial Markets Act,

1990. The bank is also licensed by the Malta Financial Services

Authority to carry out investment services in terms of the Investment

Services Act, 1994. These licences authorise the bank to provide

investment services to third parties and custodian services for

collective investment schemes respectively. As at 31 December 2024

the bank had 12 branches in Malta, one of which is located in Gozo.

The local group comprised the following subsidiaries at

31 December 2024: HSBC Life Assurance (Malta) Ltd and HSBC

Global Asset Management (Malta) Limited.

Principal activities of subsidiaries

HSBC Life Assurance (Malta) Ltd is authorised by the Malta Financial

Services Authority to carry on the business of insurance in Malta

under the Insurance Business Act (chapter 403, Laws of Malta). It

offers a range of protection and investment life assurance products

distributed through HSBC Bank Malta p.l.c. which is enrolled as a tied

insurance intermediary for HSBC Life Assurance (Malta) Ltd under the

Insurance Distribution Act (chapter 487, Laws of Malta).

HSBC Global Asset Management (Malta) Limited is regulated by the

Malta Financial Services Authority. It has an Investment Services

Licence and is principally engaged in the asset management of

Collective Investment Schemes and Discretionary Portfolio Mandates.

About HSBC Group

HSBC Malta is part of HSBC Group, which has an unrivalled global

position which serves customers worldwide from offices in 58

countries and territories. With assets of US$ 3 trillion at 31 December

2024, HSBC is one of the largest banking and financial services

organisations. Approximately 41 million customers bank with the

HSBC Group and the HSBC Group employs around 211,000 full-time

equivalent staff.

Business and strategy

HSBC Group’s purpose and ambition

Guided by the HSBC Group’s purpose of opening up a world of

opportunity, HSBC’s ambition is to be the preferred and most trusted

international financial partner and create shareholder value..

HSBC Group’s business focus and

strategic priorities

During 2024, the HSBC Group has refocused around four new

businesses based on its core strengths, while also setting three

overarching strategic priorities that will guide the HSBC Group.

HSBC Group’s business focus

In 2024, the HSBC Group served its customers through three global

businesses (Wealth and Personal Banking, Commercial Banking and

Global Banking and Markets) which focused on delivering growth in

areas where the HSBC Group has distinctive capabilities and

significant opportunities.

Effective 1 January 2025, the HSBC Group will operate through four

new businesses:

– Hong Kong

– UK

– Corporate and Institutional Banking

– International Wealth and Premier Banking

HSBC Group’s priorities

HSBC Group will be guided by three overarching priorities:

– Focus on our customers, delivering high satisfaction;

– Drive long-term growth by focusing on our strengths, increasing

our leadership and market share in the areas where we can

generated attractive returns;

– Simplify our structure and operating model. Reshape and

rationalise our portfolio, to meet the needs of a fast-changing

world.

HSBC Group’s values

HSBC's values help define who we are as an organisation and are key

to our long-term success.

– We value difference

– We succeed together

– We take responsibility

– We get it done

HSBC Bank Malta p.l.c.’s strategy and

progress on our 2024 commitments

Our local strategy is aimed at growing safely whilst sustaining a

robust risk management environment and maintaining a strong

financial crime compliance culture. We take a long term view in terms

of our customer relationships and we aim to build a bank that is fit for

the future which is centred around our customers. Our Growth

strategy is aligned and consistent with the HSBC Group’s strategy.

We aim to generate stable returns for our shareholders, increase

operational efficiency and simplify processes making it easier for our

customers to do business with us and for our staff to serve our

customers.

Our customers range from individual borrowers and investors to large

international companies. We aim to connect our customers to

opportunities and help them to achieve their ambitions. The products

and services we offer vary widely according to customers’ needs. We

provide individuals and families with mortgages that help them buy

their own home, other lending solutions to finance their own needs,

as well as savings accounts, insurance solutions and wealth

management products that help personal banking customers to plan

and invest for the future. For our commercial customers, we offer

loans to invest in growth, and transaction banking products such as

foreign exchange, trade financing and cash management services that

enable businesses to expand both locally and internationally.

In 2024, the retail banking business has continued to focus on

customer acquisition growth through our leading premium

propositions, as well as launched new products, such as the Energy

Efficient Loans aimed at enticing our customers to finance purchasing

of energy saving products and services for personal use. In the

Wealth space, a new Fixed Maturity Portfolio investment fund was

launched as well as a HSBC Responsible Investment Fund enhancing

our sustainability investment product shelf, and supported by an

automated advisory journey taking the customer sustainability

preferences into account to filter products that potentially meet these

preferences. Additionally, HSBC Life launched the Group Life Plan, a

product that complements our existing product suite aimed at helping

our corporate customers meet their growing employee well-being

needs.

We have continued to embed our Environmental, Social and

Governance strategy through the acceleration of Retail sustainable

solutions by rolling out PVC cards made up of 100% recycled

material, the migration of more customer documentation from paper

to digital, as well as through the strong growth in digital service

adoption.


24	HSBC Bank Malta p.l.c. Annual Report and Accounts 2024

Report of the Directors

In 2024, the bank continued to support its commercial customers

through its various products and services. We continued to onboard

new customers and deepen our relationships with existing ones. Our

new lending activity was materially higher than prior year, with various

loans and other facilities approved to support local business in their

growth plans. In early 2024 the HSBC Group published its initial Net

Zero Transition Plan. Sustainability teams across the group

subsidiaries, including Malta, lead the bank’s work to support

sustainable growth in a global economy, including an ambitious plan

to prioritise financing that supports the transition to net zero.

Following the launch of a full suite of Green and Sustainability Linked

lending products in 2022 and 2023, we supported a number of

customers with sustainable financing products. In addition, we

launched additional functionality through our online and mobile

banking platform aimed at simplifying processes and giving our

customers more control over their accounts and visibility of

payments. Our teams continue to receive ongoing training to improve

their knowledge and skills, enabling them to meet customers’ needs.

This banking model is designed to enable the local group to

effectively meet clients’ diverse financial needs, support a strong

capital and funding base and further reduce the risk profile and

volatility.

Research and development

Operating in the financial sector, the bank does not consider Research

and Development as a main area of activity.

Events occurring after the end of the

accounting period

There were no significant events affecting the bank or any of its

subsidiary undertakings which have occurred after 31 December

2024.

Conduct

Within HSBC, best practice consists of taking actions and making

decisions that are fair for our customers and do not disrupt the proper

and transparent operation of financial markets. These principles are

essential to ensure long-term success and provide the best service to

our customers. To achieve this, the bank has clear directives, risk

frameworks, guidance, such as Purpose-led Conduct Approach and

governance principles covering its culture, its behaviour, the design of

products and services, training and remuneration of employees,

interactions with customers and internal communication.

The HSBC’s Conduct Approach guides employees to do the right

thing and to focus on the impact on customers and the financial

markets in which HSBC operates. It complements HSBC’s purpose

and values.

The Purpose-led Conduct Approach is designed to capture how our

risk management arrangements impact our customers and the

financial markets we operate. The approach is supported by technical

materials and tools, which collectively seek to provide guide for risk

owners and stewards as to where conduct impacts need to be

considered, and what must be evidential in our interactions with

customers and markets. The Purpose-led Conduct approach is aligned

to one of the HSBC four values “We Take Responsibility”. All HSBC

employees have to act with integrity, take responsibility and

accountability as detailed in HSBC Conduct Approach.

In 2024, all lines of business and functions performed a conduct in

governance exercise to understand the way Conduct is considered in

Governance and validate its embeddedness within the company.

Employees completed a Group mandatory conduct training "Conduct

in Action" launched during the last quarter of 2024, achieving a rate of

completion of 99 per cent.

Throughout this year, regulatory engagement has continued to be

conducted with high professional competence, representing trust,

respect and full transparency that facilitated an ongoing value-adding

constructive dialogue, which is a trademark of the local group’s robust

governance and oversight culture.

Results for 2024

HSBC Bank Malta p.l.c. (‘the bank’) and its subsidiaries (collectively

referred to as the local group), reported a profit before tax of €154.5m

for the year under review. The local group’s profit attributable to

shareholders was €100.1m.

The Directors have proposed a gross final dividend of 12.0 cent per

ordinary share. The proposed final dividend will be payable to

shareholders on the bank’s register as at 13 April 2025.

Further information about the results of the local group is provided

in the Income Statements and the Statements of Comprehensive

Income on pages 103 and 104 respectively.

A detailed review of the financial performance including important

events affecting the local group’s results and an indication of future

developments are included in the Chief Executive Officer’s Review.

Key performance indicators

The Board of Directors tracks the local group’s progress in

implementing its strategy with a range of financial measures or Key

Performance Indicators (‘KPIs’). Progress is assessed by comparison

with the local group strategic priorities, operating plan targets and

historical performance. The local group reviews its KPIs regularly in

light of its strategic objectives and may adopt new or refined

measures to better align the KPIs to HSBC’s strategy and strategic

priorities.


	2024	2023
Profit before tax (reported) (€m)	154.5	133.9
Profit before tax (excluding notable items) (€m)	148.4	133.9
Cost efficiency ratio (reported) (%)	44.6	44.2
Cost efficiency ratio (excluding notable items) (%)	45.7	44.2
Post-tax return on equity (reported) (%)	17.5	17.1
Post-tax return on equity (excluding notable items) (%)	16.9	17.1
Common Equity Tier 1 ratio (%)	22.6	20.6

Profit before tax : Reported profit before tax is the profit as reported

under IFRS. Profit before tax (excluding notable items) excludes the

impact of notable items as detailed in the Chief Executive Officer’s

Review.

Outcome (reported and excluding notable items): Reported profit

before tax was higher year-on-year as a result of revenue growth

across all three global businesses, supported by a higher interest rate

environment and a significant release on expected credit losses .

Cost efficiency ratio (reported): is measured as total operating

expenses divided by net operating income before changes in

expected credit losses and provisions.

Outcome (reported): The cost efficiency ratio increased slightly from

44.2% in 2023 to 44.6% in 2024. This is due to the fact that while

costs increased by 10% year on year, revenue increased by 9% .

Outcome (excluded notable items): The cost efficiency ratio

increased from 44.2% in 2023 to 45.7% in 2024. This is due to the

fact that while costs increased by 10% year on year, revenue

excluding notable item increased by 6%.

Post-tax return on equity (reported/excluding notable items): is

measured as post-tax profit divided by average equity.

Outcome (reported): The reported return on equity is higher than

that reported last year in view of the increase in profits.

Outcome (excluding notable items): The return on equity (excluding

notable items) is slightly lower than 2023 as the average equity

increased as a result of higher profits.

Common Equity Tier 1 capital ratio (‘CET1’): represents the ratio of

Common Equity Tier 1 capital comprising shareholders’ equity less

regulatory deductions and adjustments, to total risk-weighted assets.


HSBC Bank Malta p.l.c. Annual Report and Accounts 2024	25

The group seeks to maintain a strong capital base to support the

development of its business and meet regulatory capital requirements

at all times.

Outcome: The Common Equity Tier 1 ratio improved compared to

2023 due to increased profits, higher revaluation reserves and lower

capital deductions for non-performing loans as a result of the

improvement in credit quality.

From a non-financial perspective, Directors evaluate the outcomes of

surveys and reviews undertaken on a regular basis in respect of

customers, people, culture and values including customer service

satisfaction, employee involvement and engagement, and inclusion

and sustainability.

Employees

We firmly believe our people are at the heart of our business.

Employee engagement and personal growth are key drivers for the

delivery of excellent customer service. As such, we continue to

provide our people with the knowledge, tools and opportunities to

realise their career aspirations.

– Employee Turnover: Attrition levels averaged 5.8% throughout

2024 confirming a stable 18 month trend.

– Salary Benchmarking: Approximately 220 colleagues have already

benefited as a direct outcome of an important salary benchmarking

which is being conducted to ensure fair compensation for our

people against market rates.

– Performance Management: We believe in meritocracy and ensure

a direct link between individual performance and reward. Variable

Pay (Bonus) is discretionary and has a direct correlation with both

the bank’s and the individual’s performance, using a total

compensation approach.

– Employee Pension Plan: As approved by the Board in 2023, as

from December 2024, the bank’s maximum matching contribution

increased from 1.5% to 5%. Aggregate employee participation in

the Pension Plan has increased to 63% which is indeed positive.

– Listening to our people: Feedback collated from the early bank

wide Snapshot Surveys formed the basis for discussions focused

on “our people” held at three senior leadership conferences.

These full day events also included team building activities aimed

at fostering networking and collaboration across the bank.

– Gender Pay Gap: A gender pay gap analysis undertaken in 2024

shows no notable gender-based pay gaps thereby confirming

HSBC Bank Malta p.l.c. as an equal opportunities employer

regardless of gender.

– Inclusion: We value differences, succeeding together, taking

responsibility and getting it done. We are committed to an

inclusive culture where our people can be confident that their

views matter, their workplace is an environment free from bias,

discrimination and harassment, and where they can see that

advancement is based on merit. Our Diversity and Inclusion

Committee continues to ensure that we drive our Inclusion

policies and principles through all activities including recruitment

processes, learning programmes and various initiatives across the

bank and Malta. Throughout 2024, in addition to Maltese

Nationals, 5.5% of our employee complement was spread across

no less than 25 different nationalities. This is testament to a truly

diverse and inclusive culture at the heart of HSBC values. In 2024,

64% of our senior executive roles were held by women.

– Overall wellbeing: Throughout the year we organised various

sessions for our employees focusing on topics of interest including

mental, physical and financial wellbeing. Flexible (including remote)

working have been engrained in our work practice thereby

facilitating a healthy work/life balance for our people. More

employees availed themselves of the enhanced “wellbeing

allowance” through which employees can claim reimbursement

for expenditure related to wellbeing initiatives.

– Conduct: We continue to ensure adoption of the highest standards

of employee conduct across HSBC Bank Malta p.l.c. and are fully

aligned to HSBC Continental Europe’s values and principles and

the HSBC Group Global Code of Conduct.

– Learning and Development: Various virtual-led programs, career

sessions and future skills training have been delivered to support

employee development and career progression, with employees

applying for job opportunities across the bank and its subsidiaries.

Many were promoted in the process.

– Attraction of future talent: Our Internship proposition was again

successfully implemented in collaboration with the University of

Malta and other educational institutions to recruit students and

provide them with a rich working experience. Once again, we

welcomed back students who returned to HSBC as full time

employees after completing their studies. We strongly believe in

the importance of engaging with future talent, thereby providing

future pipeline for the business.

– Industrial Relations: A new Collective Agreement covering the

period 2024-2026 was signed on 22 January 2024 with the Malta

Union of Bank Employees (‘MUBE’). The agreement, which

governs a comprehensive range of employment conditions and

benefits is considered as groundbreaking in terms of the scale and

range of enhancements. An equally groundbreaking Collective

Agreement covering the bank’s small complement of non clerical

employees was signed a few weeks later with the General

Workers’ Union (‘GWU’).

– Guiding Principles: HSBC Bank Malta p.l.c., as part of HSBC

Group, is committed to respect its employees’ human rights, as

set out in HSBC’s Human Rights Statement and subject to local

law and regulation. More broadly, fostering an inclusive and

responsible culture, which enables its people to thrive, is a core

element of HSBC Bank Malta p.l.c.’s people strategy. HSBC Bank

Malta p.l.c. requires its employees to treat colleagues with dignity

and respect, further embedding an inclusive environment.

Employees are made aware of their employment rights and duties

through a variety of channels, including written employment

contracts and policies, procedures in employee handbooks,

information on bank’s intranet and a code of conduct. HSBC Bank

Malta p.l.c.’s dedication to upholding human rights within its

operations is guided by the United Nations guiding principles on

Business and Human Rights (‘UNGPs’) and the Organisation for

Economic Co-operation and Development (‘OECD’) Guidelines for

Multinational Enterprises on Responsible Business Conduct.


26	HSBC Bank Malta p.l.c. Annual Report and Accounts 2024

Report of the Directors

Whistleblowing and ‘Speak-up’

culture

HSBC Bank Malta p.l.c. is committed to fostering a ‘Speak-up’ culture.

The goal of the speak-up culture is to enable all employees to work in

a safe environment where individuals feel comfortable and able to

speak-up and raise concerns about wrongdoing or unethical conduct

without fear of reprisal or retaliation. One of the biggest advantages

of open communication and a speak-up culture is the ability to reduce

risks and prevent potential breaches of the bank’s code of conduct.

When employees feel empowered to raise concerns, organisations

can act on them before a problem becomes a greater threat.

Speak-up Culture and Channels

The bank has established speak-up channels to implement its speak-

up culture. These channels are available to all employees via an

internal web portal. The bank actively promotes our full range of

speak-up channels to colleagues to help ensure their concerns are

handled through the most effective route.

HSBC Confidential

The bank recognizes that in certain circumstances it may be

necessary for individuals to raise concerns through more targeted and

confidential channels such as HSBC Confidential. Our whistleblowing

channel, HSBC Confidential Malta allows colleagues to raise concerns

in line with local laws.

HSBC Confidential Malta together with the Global HSBC Confidential

lines are always available to all employees.

Policy to endure safe access to

whistleblowing channels

HSBC Bank Malta p.l.c. follows the Group Whistleblowing Policy

which aims to prevent and correct all instances of unethical and illegal

behaviours. The Policy establishes minimum risk management and

control requirements to report unethical and illegal activities; sets out

procedures to ensure that reporting channels are operated in a secure

manner that ensure that identity of the reporting person and any third

party mentioned in the report is protected, and prevent access

thereto by non-authorised staff members; and defines procedures to

investigate whistleblowing reports; and, report the whistleblowing

alerts to competent authorities where it is deemed as required.

In addition to the Global Policy, a local Whistleblowing Reporting

policy is in place, which provides for the Local Whistleblowing

Reporting officer and a local confidential channel for whistleblowing in

line with local laws. The oversight of the policy and arrangements falls

within the remit of the bank’s Audit Committee.

The Global and local Whistleblowing Policies are available to all

employees via HSBC Group’s intranet.

Investigations into credible reports

All whistleblowing reports received are investigated in a detailed and

independent manner and remedial action is taken where appropriate.

When issues are identified through an investigation, appropriate

actions are taken to address them. Investigations will not just look at

what has gone wrong but also how it can be prevented in the future.

Health and safety

The maintenance of a safe place of work and business for our

employees, customers and visitors is a key responsibility for all

managers. The local group is committed to proactively manage health

and safety risk through the identification, assessment and mitigation

of hazards that may otherwise result in injury, fire events and

operational failure.

Group policies, standards and guidance for the management of health

and safety are set by the Global Corporate Services function.

Achieving these in the local group is the responsibility of the Chief

Operating Officer, with support and coordination provided by the

Health and Safety Coordinator, together with Global and Regional

Corporate Services.

Global Protective Security continuously monitors potential threats

from terrorism and violent crime and ensures that HSBC maintains

effective measures to protect its staff, customers, buildings, assets

and information.

The local group remains committed to maintaining its readiness for

emerging and foreseeable risks in ensuring health and safety

compliance.


HSBC Bank Malta p.l.c. Annual Report and Accounts 2024	27

Non-Financial Reporting

Strategy, business model and value creation

Strategy

Incorporating sustainability into our strategy

HSBC Bank Malta p.l.c.’s approach to sustainability is aligned with

that of the HSBC Group, focusing on creating long-term value for its

customers and wider stakeholders.

Transition to net zero

In October 2020, HSBC Group announced its ambition to become a

net zero bank by 2050. The HSBC Group believes supporting its

customers’ transition both benefits its business and helps generate

long-term financial returns for its shareholders.

HSBC Group is further developing its approach to nature, which builds

on the outline that was set out in its net zero transition plan. This

includes considering how to: understand our exposure to nature;

manage nature-related risks and impacts; support our customers,

including financing and investing in nature-related solutions; and build

nature-related skills, data capacities and partnerships.

Building inclusion and resilience

To help create long-term value for all stakeholders, HSBC Group

focuses on fostering inclusion and building resilience for its

employees, its customers and the communities it operates within.

For employees, HSBC Group focuses on creating an inclusive, healthy

and rewarding environment as this helps to attract, develop and retain

the best talent and supports its resilience through access to well-

being and learning resources.

HSBC Group strives to provide an inclusive and accessible banking

experience for its customers. HSBC Group does this by providing

resources that help manage customers’ finances and services that

help customers protect what they value.

Acting responsibly

HSBC Group is focused on operating a strong and sustainable

business that puts the customer first, values good governance, and

gives its stakeholders confidence in how HSBC Group does what it

does. Its conduct approach guides the HSBC Group to do the right

thing and to focus on the impact it has on its customers and the

financial markets in which it operates.

Customer experience is at the heart of how HSBC Group operates.

HSBC Group aims to act responsibly and with integrity across the

value chain.

Business Model

The business model for HSBC Bank Malta p.l.c. showing its scope,

main resources, main business areas and activities, its strategy and

its prospects is set out in the Business and Strategy section on page

23.

Value Creation

HSBC Bank Malta p.l.c. aims to create value for all stakeholders by

harnessing its resources to deliver responsible and innovative financial

solutions for its clients.

HSBC Bank Malta p.l.c. recognises that its ability to succeed and

create long-term value is interconnected with the interests and views

of key stakeholder groups across all parts of its value chain.

Governance and oversight of the

Board and Senior Management

Sustainability matters are integral to monitoring and guiding the

strategy, to ensure the long-term viability of the business model. As

such, the Board of Directors and the Senior Management integrate

sustainability considerations into strategy setting, business decisions,

and risk management processes.

HSBC Bank Malta p.l.c.’s Board of Directors and Senior Management

provide the foundation for its commitment to strong governance and

oversight of sustainability matters. By bringing together a diverse mix

of expertise, perspectives, and experiences, these bodies define and

ensure effective oversight of the strategy and operations while

fostering accountability and innovation.

The experience of the members of the bank’s Board and Senior

Management covers all sectors and products of the bank. The Board

is regularly engaged on sustainability topics through Board meetings

and training sessions to stay at the forefront of evolving global topics.

For a detailed description of the experience of each Board member

and the duties of the Board, refer to the “Disclosures in Terms of

Article 435 of the Capital Requirements Regulation” on page 82.

The responsibilities of the Senior Management are exercised through

the Climate and ESG Committee. This Committee is responsible for

the management of Climate & ESG risks and Corporate Sustainability

Reporting, to ensure adequate focus on the risks (physical and

transitional, nature risks) associated with climate change, ESG criteria,

and compliance with HSBC Group policies, European Union

requirements, ECB Regulations and guidance, any specific local

legislation and any HSBC Bank Malta p.l.c. policies. This Committee

informs two sub-committees of the Board – the Risk Committee and

the Audit Committee as applicable.

The Senior management engages with the HSBC Continental Europe,

Sustainability function and the sustainability experts in HSBC Group’s

Centre of Excellence.


28	HSBC Bank Malta p.l.c. Annual Report and Accounts 2024

Report of the Directors

Our approach to Sustainability

Our HSBC Malta Foundation is supporting a number of projects which

focus on building inclusion and resilience – Future Skills. The objective

of Future Skills is to help people develop their employability and

financial skills in order to thrive in the modern world.

In 2024, we supported a number of Future Skills Projects. The Human

Capital Research Project together with the Ministry for Education and

the Malta Chamber of Commerce is assisting to review the local

curriculum. The HSBC Malta Foundation is supporting the Human

Capital Research Project through a donation of €135,000. The three-

year long research project, which will come to an end in 2025, is

focusing to identify current and future skills in financial services and

banking, information technology, communication, professional,

scientific and technical services. Once concluded, the project will

contribute to Malta’s ongoing competitiveness in the global economy

by delivering a series of evidence-based policy recommendations.

Since 2024 we have directed our philanthropy funding to Non-

Governmental Organisation (‘NGO’) partners supporting projects with

the potential to make impacts towards achieving a net zero, resilient

and sustainable future. We work with both global and local NGOs and

seek to target specific challenges and opportunities to help unlock

finance at scale (Net Zero Transition Plan – 2024).

We continued to support the King’s (ex Prince’s) Trust International

Achieve Programme which is in it’s 10th year of delivery and

continues to surpass our targeted reach this year supporting newly

enrolled students.

In March 2024, the research project supported by the HSBC Malta

Foundation – The Maximising Energy Efficiency Through Building

Renovation: HSBC Case Study project with a donation of €120,000

was concluded and presented to the Prime Minister of Malta during a

visit to the HSBC Hub. Through this foundational study, HSBC Bank

Malta p.l.c. paved the way for more advanced research and

policymaking and is leading the transition towards more sustainable

Maltese buildings. This project sets a precedent locally, where data

on utility usage and building efficiency has been scarce compared to

other European countries. Featuring its offices in Qormi as a pivotal

case study, HSBC took a leadership role in the transition to high

energy efficiency and low-carbon office buildings in Malta.

Additionally, HSBC Bank Malta p.l.c. is one of the 13 founding

members of the Malta ESG Alliance. The Alliance has the aim of

acting as a platform for Maltese businesses to collaborate and work

together in order to lead and drive national ESG goals and ultimately

act as catalysts while leading by example.

During the year, the bank continued to support the Climate Action

Network (‘CAN’). This is a network led by employees of the bank

where different teams from across business lines and functions drive

sustainable projects inside and outside the bank. Thanks to the

commitment of our employees, we had two CAN teams in 2024 that

organised activities related to environmental and future skills topics.

The CAN teams drive various internal learning initiatives to increase

the capabilities of our own employees and also within the community.

In 2024, three of our employees facilitated seven Climate Fresk

workshops both internally and externally. Climate Fresk is a unique

and interactive game about climate change. The best part about

Climate Fresk is that it's not just a game, but also an opportunity for

those who attend to think, discuss, and debate with the team while

on the other hand it acts as a personal development exercise. All

those who attended found this session really insightful and helped

them to enhance their knowledge about climate change.

The HSBC Malta Foundation is also supporting a three-year University

of Malta (‘UM’) Research Project through the Research, Innovation &

Development Trust (‘RIDT’). This research initiative is aimed at

strengthening the sustainability and growth of the freight and logistics

sector in Malta. In collaboration with the RIDT and the University of

Malta, this ambitious project marks a significant step forward in

addressing the challenges and opportunities in this vital industry of

logistics and transport. Situated strategically in the Mediterranean

Sea, the Maltese islands have played a pivotal role in facilitating the

expansion of local and international freight and logistics operations.

Despite this, a noticeable gap exists in research and data availability,

hindering further progress and optimization within the sector.

Recognizing the urgency and importance of addressing these gaps,

UM, RIDT, and the HSBC Malta Foundation have united to embark on

a comprehensive research project. With a substantial donation of

€150,000 from the HSBC Malta Foundation, the project aims to

explore the sustainability of freight transport while emphasising its

critical role in the economic development of the islands. The

“Sustainable Freight Transport” multi-year initiative will delve into

various facets of the sector, including Malta's potential as a regional

transshipment hub for high-end goods, local freight sector mapping,

and the formulation of actionable recommendations for sustainable

sectoral development. Led by academics Prof. Maria Attard from the

Institute for Climate Change and Sustainable Development (‘ICCSD’),

Prof. Alexander Micallef from the Faculty of Engineering, and Dr

Enrico Dagostini from the Faculty of Economics, Management and

Accountancy (‘FEMA’), the project represents a collaborative effort

across diverse disciplines.

In 2024, the HSBC Malta Foundation has also announced a donation

of €150,000 to the Jesuits’ Church Foundation, supporting the

restoration of 16 historic paintings found at the Jesuits’ Church in

Valletta. This contribution will help preserve these culturally and

spiritually important works, which have been part of Malta’s heritage

for centuries. The announcement was made during a visit that the

Prime Minister Robert Abela had at the Jesuits’ Church in the run-up

to Notte Bianca. The project involves the disinfestation and

conservation of several transept paintings, including those located in

the Chapel of Saint Ignatius and the Chapel of Our Lady of

Montserrat, together with their gilt decorative frames, as well as two

oval paintings in the sanctuary. The restoration will be carried out in

three phases, from 2024 to 2026, with each phase focusing on a

selection of paintings to ensure their complete conservation.

Wholesale banking activity

HSBC Bank Malta p.l.c. forms part of HSBC Continental Europe and

adopts the same policies and practices insofar as they are applicable

to its business model. There is no Global Banking activity in Malta, all

wholesale/corporate banking activity is carried out by Commercial

Banking.

Through its downstream financing activities HSBC Bank Malta p.l.c

has exposure to high-emitting sectors, such as fossil fuels, power

utilities, infrastructure, transportation, and heavy industry. The

emissions from these sectors result in adverse climate impacts,

accelerating global warming and complicating efforts to cap global

temperature rises. These sectors have a fossil fuel driven energy mix

which can be a challenge to transition and could have a negative

impact on the overall transition to a more sustainable energy mix.

Climate related transition and physical risks may affect HSBC Bank

Malta p.l.c. wholesale activities and result in challenges related to

transition to a net zero economy, disruption of businesses, stranded

assets and threatening the long-term feasibility of its business model,

impacting its reputation, credit worthiness and capital.

HSBC Bank Malta p.l.c. uses a Transition Engagement Questionnaire

(‘TEQ’) to gather and assess information about the alignment of its

clients’ business models to net zero and their exposure to physical

and transition risk. Responses to the questionnaire are used to create

a climate risk score.

This questionnaire contains specific, climate-focused questions to

support HSBC Bank Malta p.l.c. in understanding the level of climate

risk to their business and transition strategy. During 2024, the TEQ

was completed for all of the bank’s in-scope corporate clients and will

continue to be reviewed on an annual basis. Nature-related questions

were also introduced into the TEQ to cover topics including pollution,

water, biodiversity, resource use and circular economy. Commercial

Banking is using the data collected to further engage with its clients

and identify any additional business opportunities that could support

clients in their transition to net zero.


HSBC Bank Malta p.l.c. Annual Report and Accounts 2024	29

To identify and assess material climate-related financial risks, a

qualitative assessment was performed by wholesale business with

the support of the relevant Risk Stewards. This is supported by the

climate score and insights coming from climate scenario analysis with

a quantitative assessment of potential exposures to risks and

vulnerabilities under a range of climate scenarios.

HSBC Bank Malta p.l.c. applies, where relevant, HSBC Group

sustainability risk policies to mitigate adverse environmental impacts

within specific sectors on people and the environment. These policies

are comprised of core net zero-aligned policies (Thermal Coal Phase-

out and Energy) and broader sustainability risk policies, which cover

agricultural commodities, forestry, mining and metals, and World

Heritage Sites and Ramsar-designated wetlands. These policies apply

to corporate clients, managed within Commercial Banking in HSBC

Bank Malta p.l.c.

For further details of the HSBC sustainability risk policies see https://

www.hsbc.com/who-we-are/esg-and-responsible-business/esg-

reporting-centre?tab=tab-1

Energy policy

HSBC Group’s Energy Policy outlines the Group’s ambition to support

and finance the energy transition. This policy covers oil and gas

(including conventional and unconventional oil and gas, methane

emissions, and activities in environmentally and socially critical areas),

hydrogen, power generation, nuclear, renewables and hydropower,

biomass energy and energy from waste. The policy seeks to achieve

three inter-related primary objectives:

– Driving global greenhouse gas emissions reductions, both to

achieve a net zero HSBC Group portfolio and to support the

transition to a net zero global energy future.

– Enabling a resilient and orderly energy transition, helping to build

energy security in the long term.

– Supporting a just and affordable transition, recognising the local

realities in all the communities served.

For further details on the Energy Policy, see https://www.hsbc.com/

who-we-are/esg-and-responsible-business/esg-reporting-centre?

tab=tab-1

Thermal Coal Phase-out policy

HSBC Group’s Thermal Coal Phase-Out Policy aims to support

thermal coal phase-out aligned to science-based pathways. The policy

seeks to achieve two primary objectives:

– Phasing out the financing of thermal coal-fired power and thermal

coal mining by 2030 in markets in the EU and the Organisation of

Economic Cooperation and Development (‘OECD’), and by 2040 in

other markets.

– Supporting HSBC Group’s clients, including emerging economy

clients, to meet growing energy demand whilst transitioning

energy systems from coal towards a clean energy future.

For further details on the Thermal Coal Policy, see https://

www.hsbc.com/who-we-are/esg-and-responsible-business/esg-

reporting-centre?tab=tab-1

HSBC Bank Malta p.l.c. is in scope of this reporting but it has no

exposure to this sector.

Building employees' expertise in sustainable

finance

Commercial Banking has maintained the region-wide Sustainable

Finance Country Representative Network. These representatives

obtain access to information, training and external certification, and

specific events. In turn, they are expected to drive the strategy on the

ground and act as local experts within their countries and teams. For

all employees, Commercial Banking also introduced additional support

materials, an interactive instructor-led workshop, and a 'Commercial

Banking Sustainability Leader Certification' scheme to further support

and recognise employee upskilling.

Retail banking activity

Retail banking have accelerated the roll out of PVC cards made up of

100% recycled material, issuing them to customers needing new or

replacement cards. The recycled PVC plastic card action is expected

to reduce CO2 emissions and save plastic waste as part of our net

zero strategy.

In addition, investment in our digital platforms supported strong

growth in digital service adoption with 95% of retail transactions

executed through online banking channels. We continued to migrate

more customer documentation from paper to digital with 45,000

statements migrated from paper to digital statements.

Contribution from Retail banking to

sustainable financing

HSBC Bank Malta p.l.c. has been active in sustainable finance for

almost 20 years and offers lower rates on Energy Efficiency Loans.

From 2023, the Retail Credit Risk function incorporated ongoing

assessment of climate risk for the Retail real estate portfolio in

consideration of the European Central Bank’s: Guide on climate

related and environmental risks. For physical risks, HSBC Bank Malta

p.l.c. incorporated flood risk monitoring for both sea level rise and

flash floods in its efforts to mitigate climate risk. Additionally, flash

flood risk-based metric is being reported since 2023 into the regular

internal reporting. For transition risk, the property energy performance

details were integrated into the information recording process and

now allow for monitoring of the Energy Performance Certificate

Rating distribution within new lending. For both risks, the policy was

enhanced to take into consideration these risks.

The local group also offers a range of Socially Responsible

Investments (‘SRI’). The funds in the HSBC Responsible Investment

Fund (‘HSBC RIF’) range which are offered locally are housed in a

single French registered SICAV. They cater for various risk profiles

and are all certified with the French SRI label.

Through our Investments and Wealth Solutions team, HSBC Bank

Malta p.l.c. implemented a new financial advisory solution to ensure

more granular sustainability preferences are taken into consideration

during the provision of investment advice. The Strategic Financial

Planning tool, which is used during the provision of financial advice

has been enabled to automatically filter ESG products that meet

customer sustainability preferences. HSBC Bank Malta p.l.c. is

actively campaigning through letters, emails, social media etc., to

encourage customers to undertake a financial planning review and

provide us with their sustainability preferences. Investments into

sustainable funds continued to grow, and as of 31 December 2024,

Assets Under Management in Sustainable Funds have exceeded €33

million.

In addition, HSBC Bank Malta p.l.c. offers funds, such as the HSBC

GIF Global Lower Carbon and Equity Funds, with the aim of reducing

exposure to intensive carbon activities and reducing the carbon

footprint. The investment process enables the assessment of a

portfolio of companies, the identification and classification of the most

attractive firms in the investment world.

Insurance activity

HSBC Life Assurance (Malta) Ltd (“HSBC Life”) adheres to the HSBC

Insurance Sustainability Procedures (the “Sustainability Procedures”)

set out at the level of HSBC Group Insurance which are reflected in

the Company’s Investment Policy (“Investment Policy”). The

Investment Policy is geared towards ensuring that sustainability risks

are integrated into the investment decision-making process.

In so far as direct investments are being made by HSBC Life and/or

HSBC Global Asset Management (Malta) Limited (“HSBC Asset

Management”) for and on behalf of HSBC Life pursuant to an

investment management agreement entered into to this effect

(thereby excluding mutual funds, or passive strategies replicating an

index, etc.), HSBC Life adopts and implements negative screening

practices which are intended to restrict or prohibit investments in

selected securities where these do not meet the sustainability

standards established in the Sustainability Procedures.


30	HSBC Bank Malta p.l.c. Annual Report and Accounts 2024

Report of the Directors

These restrictions/prohibitions in turn align with the HSBC Group’s

stand-alone Sustainability Risk Sector Policies which relate to:

Agricultural Commodities, Energy, Forestry, Mining and Metals,

Thermal Coal Phase Out, World Heritage Sites and Ramsar Wetlands

and Defence Equipment Policies.

In addition, HSBC Life’s appointed asset manager, HSBC Asset

Management itself abides by the Responsible Investment Policy

which outlines its approach to responsible investing; focusing on the

ten principles of the UN Global Compact (‘UNGC’). The UNGC sets

out key areas of non-financial risk which are to be considered as part

of the investment process i.e., human rights, labour, environment and

anti-corruption. Also, HSBC Asset Management abides to the

Engagement Policy, which outlines the approach to monitor and

engage with issuers, and applicable voting guidelines/restrictions

implemented. Engagement with companies and effective use of

voting rights incentivise positive corporate development, drive

behavioural change and follow up ESG issues as part of their research

and discussions.

As for those instances where HSBC Life is directly investing in

collective investment schemes (which are in turn administered by

asset managers exercising exclusive discretion to invest in other

underlying securities and/or funds), HSBC Life seeks to primarily, but

not necessarily exclusively, engage and work with those asset

managers who are signatories to the Principles for Responsible

Investment (‘PRI’) and/or others who have sustainability integration

and investment stewardship practices in place. These asset managers

need to be able to demonstrate, the adoption and implementation of

sustainability principles and standards in the course of their respective

investment decision-making processes.

HSBC Life has taken steps to comply with the Sustainable Finance

Disclosure Regulation (‘SFDR’), by updating the SFDR Entity

disclosure and published the Principal Adverse Impact (‘PAI’)

statement. The PAI statement provides detailed insights into our

approach, metrics, impacts, explanations, and any planned actions for

each adverse sustainability indicator identified. This comprehensive

disclosure covers a wide range of environmental, social, and

governance risks, with particular emphasis on climate and

environment-related concerns, employee well-being, human rights,

and anti-corruption measures.

HSBC Asset Management

HSBC Global Asset Management (Malta) Limited as part of HSBC

Asset Management continues to strengthen its sustainability

proposition, globally driven by the Sustainability Office and

Responsible Investment teams across both traditional assets and

Alternatives.

The Sustainability Office, established in 2021, is responsible for the

delivery of HSBC Asset Management’s global sustainability strategy

including voluntary commitments, policy, implementation, assurance

and the business-wide transition to sustainable investing.

Within the investments function, the Responsible Investment team

oversees the integration of ESG risks and opportunities into the

investment process (as applicable depending on the product), the

climate investment strategy, as well as the firm’s Stewardship and

Engagement activity for investment management teams globally. It

also leads the development of new ESG, climate change and thematic

products and solutions, working closely with the Sustainability Office

and the investment platform. The Sustainable Investment Solutions

Lab (‘SISL’), created in 2024, co-ordinates and leads the development

of sustainability and climate metrics and tools supporting solutions for

clients and products.

In addition to ESG-focused governance meetings for traditional asset

classes, sustainability is included in the agenda of global and local

forums such as Executive Committees, Risk Management Meetings

and New Business Committees.

Policies

HSBC Asset Management’s Energy and Thermal Coal Policies have

been developed in support of HSBC Group’s net zero ambition. Under

its Energy Policy, HSBC Asset Management engages and assesses

the transition plans of the largest oil and gas, and power and utilities

companies for listed issuers responsible for around 70 per cent of

relevant emissions, in its capacity as a discretionary investment

manager. Its Thermal Coal Policy is developed in support of the

transition from coal-fired power and thermal coal mining (‘thermal

coal’) as set out in the HSBC Thermal Coal Phase-Out Policy and is

intended to help meet the dual objectives of phasing out thermal coal

within science-based timeframes and of energy transition in more

coal-reliant economies. The Energy Policy and Thermal Coal Policy

complement one another and are reviewed at least annually.

For further details of the energy policy, see https://

www.assetmanagement.hsbc.com.mt/-/media/files/attachments/

common/energy-policy-en.pdf

For further details of the thermal coal policy, see https://

www.assetmanagement.hsbc.com.mt/-/media/files/attachments/

common/coal-policy-en.pdf

HSBC Asset Management’s sustainable investment offerings

HSBC Asset Management is committed to supporting its clients in

achieving their financial objectives. Its vision is to be the trusted asset

management partner to its clients, with a focus on investment

innovation and excellence. Its presence in local markets positions it to

assess material risks as they arise and to capitalise on emerging

global investment opportunities.

Recognising that its clients’ investment objectives are evolving, and

sustainability preferences may vary, it offers a broad range of

sustainable investing solutions across asset classes, in both traditional

and alternative areas of investment. Its sustainable investing product

range offers clients with solutions relating to environmental themes

or social factors – providing clients with investment solutions that not

only aim to generate long-term returns, but also contribute to more

sustainable outcomes.

Stewardship & Engagement

HSBC Asset Management recognises that climate-related risks may

impact the operational and financial performance of investee

companies. The impact of these risks will vary depending on

characteristics such as asset class, sector, business model and

geography. It continues to integrate climate analysis into its actively

managed product offerings and seeks to assess climate-related risks

that could impact investment performance, where applicable and

relevant.

As part of its stewardship activities, HSBC Asset Management

engages with investee companies on a priority list, as defined in its

Stewardship Plan, on climate change issues. It encourages

companies with high carbon exposure to make net zero commitments

for 2050 and develop climate action plans and ambitions.

Human rights

HSBC Asset Management acknowledges the important role that

business plays in respecting human rights. If mismanaged or left

unaddressed, human rights violations may materialise as business

risks, negatively impacting investee companies’ operations, supply

chain or brand. These may in turn present risk both to client

investments and reputation.

HSBC Asset Management engages with companies prioritised under

its Stewardship Plan on ESG issues, including human rights, that may

be material to its investment. Engagements may be on a one-on-one

basis, or collaboratively with other investors. In 2024, it has developed

engagement guidelines, highlighting its expectations of good practice

for companies where human rights may be material. Further details

can be found in its Stewardship Plan. The Global Voting Guidelines

provide an overview of its approach to exercising its shareholder

rights in respect of ESG issues, including human rights.

In 2024, HSBC Asset Management joined the Investor Initiative on

Human Rights Data (II-HRD), a collaborative engagement initiative that

aims to improve the depth and breadth of corporate human rights

data available to investors and the transparency of human rights

assessment criteria. [1] This initiative seeks to address the industry-

wide challenges commonly cited, including lack of transparent ESG


HSBC Bank Malta p.l.c. Annual Report and Accounts 2024	31

ratings methodologies by commercial data providers and insufficient

inclusion of human rights data.

[1] https://www.churchofengland.org/sites/default/files/2024-03/ii-hrd-

terms-of-reference-14mar2024.pdf

Operational carbon footprint and

pathway to net zero

In 2020, HSBC Group announced its ambition to become a net zero

bank by 2050. During 2024, HSBC Bank Malta continued to support

the HSBC Group's ambition by taking actions to reduce its carbon

footprint. During the past year we have continued major works on

the HSBC HUB project which is transforming our office buildings in

Qormi. The HSBC HUB project aims to create innovative, sustainable,

and modern environment for our customers and HSBC colleagues.

As part of this project, we are delivering a number of Net Zero

initiatives, such as using low carbon materials for construction, using

reservoirs on-site for concrete production, reusing existing furniture

from other HSBC sites, energy saving installations including ambient

temperature control setting, LED lighting, sensors across the floors

and meeting rooms, double glazing windows, measures to reduce

water consumption through the installation of flow restrictors, auto-

taps and low or zero flush sanitary fittings, waste reducing initiatives

and electric car charging facilities. The project has successfully

progressed with 70% completed in 2024. As a result, we achieved a

reduction of 6% year-on-year on Energy Consumption.

Other measures implemented during 2024 include our active property

portfolio management and further reducing the service running in the

local data centres. The reduction of 32% year on year in Paper

Consumption was due to our continuous drive to promote digital

channels upon onboarding new customers, encourage existing

customers to switch from paper correspondence to using digital

channels, and replacing paper forms with digital signature forms.

HSBC Bank Malta p.l.c.’s workforce

As in the preceding year, HSBC Bank Malta p.l.c.’s sustainability

programs ranged from raising awareness, to developing technical

skills for front line and specialist roles within our control functions and

business lines. The programs also focused on building a network for

participants to promote intra Group collaboration in transforming

HSBC into a net zero bank.

Leadership and Soft Skills training was also delivered throughout 2024

in addition to technical training related to specific roles. Furthermore,

the bank also continues to support the upskilling of its people through

external education.

In a rapidly changing banking landscape, HSBC Bank Malta p.l.c. aims

to respond to the shift in employment patterns by attracting,

recruiting, and integrating the best talent. To support its development

and the creation of a stronger workforce, the bank hires employees

from a variety of backgrounds to contribute to the bank’s various

business lines. Attrition rate for HSBC Bank Malta p.l.c. has stabilised

at just below 6% throughout 2024 which is within the bank’s attrition

ambition rate of 7% for HSBC Continental Europe. In this context,

strong succession plans are reviewed on an annual basis for senior

management/critical roles and talent future leaders.

Job opportunities are initially advertised internally, in line with the

Collective Agreement with the recognised union, enabling employees

to develop their career across HSBC Bank Malta p.l.c., its subsidiaries

or the HSBC Group.

In 2024 we continued to offer internships in collaboration with the

Malta College of Arts, Science and Technology (‘MCAST’), University

of Malta and JA Malta Foundation. These programmes encourage

students to discover various roles within our various business areas

while acquiring cutting-edge skills.

Flexible working culture across HSBC Bank Malta p.l.c. intends to

continue taking broader initiatives to foster a hybrid working culture

across all the countries in which it operates. The ambition for the bank

is to cultivate flexibility, collaboration, learning and staff wellbeing in

on-site and remote workplaces, while ensuring that the social and

collaborative bond within the team is preserved and developed.

As one of the leading employers, our main aim is to build an HR policy

that helps to develop the employability of staff members, while

helping them to achieve their full potential for the bank. In an

environment where potential expresses itself in many ways, HSBC

Bank Malta p.l.c. is convinced that managing difference and

integrating it into the organisation can truly add value. It places a

particular emphasis on inclusion in all its various forms, particularly

regarding gender, age, skin colour, social origin, religion, disability,

sexual orientation, appearance, and opinions. All employees should be

able to be themselves, in an organisation that values different profiles

and opinions.

HSBC Bank Malta p.l.c. believes that gender representation and

inclusion makes our business stronger. The challenge is to foster and

make the most of those differences with the aim of creating internal

cohesion, increasing motivation and engagement, and making

employees proud to be part of the HSBC Group.

Integrating sustainability criteria into

compensation

HSBC Bank Malta p.l.c.’s approach to remuneration seeks to

incentivise its employees to deliver on its business strategy, including

key sustainability matters. As a subsidiary of HSBC Continental

Europe, HSBC Bank Malta p.l.c.’s remuneration policy, which applies

to all employees, is aligned with the broader framework approved by

the HSBC Group’s remuneration committee, while also ensuring

compliance with local regulations.

In 2024, all employees were required to complete a minimum of two

Sustainability training modules. Furthermore, they were encouraged

to personally participate in any one sustainability initiative to

effectively connect theory with hands-on experience.

Greenwashing and unfair business

practices

Greenwashing approach

The risk of greenwashing is considered as an important evolving risk

which is likely to increase over time in an evolving regulatory

environment context mainly in Europe resulting from an increase of

expectations and scrutiny in relation to ESG risk. The risk of

greenwashing is defined as knowingly, or unknowingly misleading

stakeholders in relation to the bank's sustainability ambition, products

or services offered to clients stated sustainability objectives, or the

climate commitments or performance of HSBC customers which are

not aligned to HSBC’s ambitions. It can materialise across all

businesses, and functions and can lead to reputational damage,

regulatory censure and/or litigation.

Preventing the risk of corruption

HSBC is committed to high standards of ethical behaviour and

operates a zero-tolerance approach to bribery and corruption. We

consider such activity to be unethical and contrary to good corporate

governance and require compliance with all anti-bribery and corruption

laws in all markets and jurisdictions in which we operate. We have a

Global Anti-Bribery and Corruption Policy which gives practical effect

to global initiatives such as the OECD Convention on Combating

Bribery of Foreign Public Officials in International Business

Transactions and Principle 10 of the United Nations Global Compact.

In regard to combating corruption, as part of HSBC Continental

Europe, HSBC Bank Malta p.l.c. is committed to complying with

France's Sapin 2 Law and to adopting a zero-tolerance attitude to

corruption.

HSBC Bank Malta p.l.c. has implemented a Compliance programme

applying to all its activities with the objective to strengthen the HSBC

Bank Malta p.l.c.’s anti-bribery and corruption (‘AB&C’) framework and

align it with the requirements established by the Law. The


32	HSBC Bank Malta p.l.c. Annual Report and Accounts 2024

Report of the Directors

programme enabled the enhancement of the HSBC Bank Malta

p.l.c.’s corruption risk mapping, the identification and deployment of

accounting controls to prevent and detect bribery and corruption, the

implementation of AB&C Customer and Third-Party Due

Diligences,the update of local Policy and procedures or the publication

of specific Codes of conduct.

For more information about HSBC anti-bribery and corruption policies

see,

https://www.hsbc.com/who-we-are/esg-and-responsible-business/

fighting-financial-crime/financial-crime-risk-policies

Preventing the risk related to tax

evasion

HSBC Group is committed to complying with the letter and spirit of all

acceptable tax laws. The Global Anti-Tax Evasion Facilitation Policy

sets out the key principles and minimum control requirements to

apply a consistent and standardised approach to managing the risk of

customer tax evasion. In this regard HSBC has reasonable procedures

in place designed to prevent tax evasion facilitation by any third party

acting on behalf of HSBC.

HSBC Bank Malta p.l.c. is committed to acting with integrity and

conducting activities in accordance with all applicable laws and

regulations relating to financial crime risks as well as the standards

set out by HSBC Group in its Global Tax Anti-Facilitation Policy.

The bank’s Risk Management Framework ('RMF') sets out the

responsibilities of employees, depending on whether they are Risk

Owners, Control Owners, Risk Stewards, or other, for managing risk,

including tax evasion risk. The RMF makes it clear that there must be

a clear segregation between risk ownership, i.e. First Line of Defence,

risk oversight and stewardship, and independent assurance to help

support effective identification, assessment, management, and

reporting of risks. The material tax evasion risks that the bank faces

are:

– Customer tax evasion – the risk that the bank’s products or

services are associated with customer tax evasion and the risk

that employees facilitate customer tax evasion;

– Facilitation by third parties and Associated Persons ('APs') – The

risk that third party APs (excluding employees) facilitate tax

evasion while acting for or on behalf of the bank;

– Product risk – The risk that the bank’s products or services are

designed, or could be seen as designed, to facilitate customer tax

evasion;;

– Payments to employees – The risk that the bank (or the bank

acting through its third party APs assists in structuring

remuneration, allowances, benefits or business expenses in a way

which facilitates evasion of tax by the employee;

– Payments to third parties – The risk that the bank (or the bank

acting through its third party APs assists in structuring payments

to third parties for products or services in a way which facilitates

the third party (including non-APs) to evade tax. The scope

includes contractors, personal service companies, and ‘umbrella’

companies;

– Strategic transactions including acquisitions or disposals of shares,

securities or partnership interests by HSBC Group entities – The

risk that employees or other APs appointed by the bank assist in

structuring a transaction in a way which facilitates tax evasion by a

counterparty.

The bank’s Global Anti-Tax Evasion Facilitation Policy aims to ensure

that HSBC’s banking services are not associated with any

arrangement known or suspected to be designed to facilitate tax

evasion.

Key controls to mitigate these risks include assessing the integrity of

customers, third parties, new or significantly modified products, and

strategic transactions to identify and assess these risks; the drafting

of contractual clauses in contracts with third parties, the

implementation of controls on supplier processes, the training of

employees at the global level supplemented, where appropriate, by

training of local teams, and incentives for whistleblowers. In addition,

the bank maintains a dashboard dedicated to the risk of tax evasion to

monitor the management of this risk. This dashboard includes a series

of control indicators and key risk indicators related to tax evasion and

is monitored on a monthly basis.

Supplier Code of Conduct

HSBC Bank Malta p.l.c. strives to ensure that contractors, consultants

and external service providers employed by third parties act in

accordance with the bank’s culture and strategic priorities. This is

primarily managed through the Supplier Code of Conduct, a group

wide code which defines the minimum standards to all entities

globally. Commitment to this Supplier Code of Conduct is formalised

with clauses in supplier contracts which support the right to audit and

act if breach is discovered. The bank’s suppliers are required to

reiterate their adherence intervals or at least when renewing the

contract. Suppliers unable to approve the Code of Conduct are

required to provide HSBC Bank Malta p.l.c. with an eligible alternative.

Safeguarding data – Cybersecurity

HSBC Bank Malta p.l.c. operates in an extensive and complex

technology landscape. Cyberattacks may be directed at the bank or at

its suppliers and contractors. The bank follows internal policies and

procedures, as well as applicable data protection, electronic

communications and confidentiality laws and regulations to ensure a

consistent, accountable, global approach to cybersecurity.

Cybersecurity Framework

All employees are required to abide by the group-wide Cybersecurity

Framework, which defines the minimum standards and controls to

safeguard customers, colleagues, and connected persons, including:

the group-wide ‘defence in depth’ approach involving multiple security

layers; minimum business and technical controls to help prevent,

detect and mitigate cyber threats; procedures for the prompt

assessment of the severity of data breaches where such breaches

occur, with rapid notification of the impacted individuals and

competent authorities in compliance with all applicable law; and the

procedures for cybersecurity incident response.

HSBC Bank Malta p.l.c.’s Chief Information Security Officer (‘CISO’) is

responsible for making sure the Group Cyber Framework is properly

implemented across the bank. The Cybersecurity Framework is

available to all employees on HSBC Group’s intranet.

Regular updates on key performance indicators, control effectiveness,

and other matters related to cybersecurity, including cyber incidents,

are presented to the country Risk Management Meeting and the Risk

Committee to facilitate ongoing awareness of the cybersecurity

control framework.

Preventative cybersecurity measures

and controls

HSBC Bank Malta p.l.c. has adopted preventative measures to

minimise cybersecurity risks, with which all staff are expected to

comply, in particular staff in the three Lines of Defence.

HSBC Bank Malta p.l.c. works in partnership with group-wide teams

to upgrade relevant IT systems and invest in mitigating the potential

threats of emerging technologies. The bank engages with HSBC

Group to improve and adapt its software solutions to the local

Maltese context, including Cloud security, identity and access

management, metrics and data analytics, and third-party security

reviews. The bank’s cyber intelligence and threat analysis team

continually evaluates threat levels for the most prevalent cyber-attack

types and their potential outcomes, and tests controls to help reduce

the likelihood and impact of advanced malware, data leakage,

exposure through third parties and security vulnerabilities. In addition,

HSBC Bank Malta p.l.c., in collaboration with HSBC Continental

Europe, proactively collaborates with regulators to participate in

regular testing activities.


HSBC Bank Malta p.l.c. Annual Report and Accounts 2024	33

HSBC Bank Malta p.l.c. actively participates in the group-wide annual

Cyber Awareness Month, which covers topics such as online safety

at home, social media safety, safe hybrid working, and cyber incidents

and response. HSBC Group’s dedicated cybersecurity training and

awareness team provides a wide range of education and guidance to

both customers and HSBC Bank Malta p.l.c. staff about how to

identify and prevent online fraud.

HSBC Bank Malta p.l.c. has developed a series of metrics to manage

its compliance objectives and to measure its cybersecurity controls’

performance, among which is the number of cyber incidents that

occur over a period of 12 months. In 2024, no significant cyber

incidents1 were recorded.

Where performance on key metrics is unsatisfactory or would put the

bank at risk of non-compliance with regulatory obligations, the issue is

escalated by the country CISO to the country Chief Information

Officer (‘CIO’), and the country Risk Management Meeting. In

addition, HSBC Group reports and reviews Cybersecurity risk and

control effectiveness at a group-wide executive level as well as at the

HSBC Group non-executive Board level to help ensure there is

appropriate visibility and governance of the risk and its mitigating

actions.

Response to cyber threats

The country CISO coordinates responses to serious identity theft,

misappropriation of funds, damage to personal or professional

reputation, threats to personal security and discrimination resulting

from cyber-attacks in partnership with dedicated teams at the HSBC

Group level. In the event of incidents, the bank’s CISO is informed by

the security operations team and engage in cybersecurity incident

response protocols. To date, none of these attacks have had a

material impact on the bank’s business or operations.

1Significant cybersecurity incidents are the ones classified as moderate,

major or extreme according to the HSBC Group Risk Prioritization Matrix.

EU Taxonomy economic performance

indicators1,3

Climate change mitigation and

climate change adaptation objectives

and the non-climate environmental

objectives1,3

In order to meet the European Union’s (‘EU’) climate and energy

ambition for 2030, the European Commission (‘EC’) has created the

EU Taxonomy classification system for environmentally sustainable

economic activities. The EU Taxonomy provides companies, investors

and policymakers with appropriate definitions for which economic

activities can be considered environmentally sustainable. In 2021, the

EC adopted the Delegated Act Supplementing Article 8 of the

Taxonomy Regulation (‘the Disclosures Delegated Act’)2,3 followed by

an amendment to the Delegated Act in 2022 to include certain energy

sectors and in 2023 the EC amended the Disclosures Delegated Act

to align the disclosure requirements with the Environmental

Delegated Act. Under these regulations, HSBC Bank Malta p.l.c. is

therefore required to provide information to investors about the

environmental performance of its assets and economic activities.

In this disclosure, as required from 1 January 2024, i.e. the prior

reporting period, information is presented on Taxonomy-alignment of

economic activities (i.e. disclosure of key performance indicators)

where Taxonomy ‘eligible’ economic activities are assessed to

determine whether they are environmentally sustainable (i.e.

Taxonomy ‘aligned’) against technical screening criteria. Comparative

information is also published, where required, given the second year

of reporting in line with Annex VI of the Disclosures Delegated Act.

Whilst the Disclosures Delegated Act indicates comparative

templates to be disclosed, the local group reports comparatives

wherever Taxonomy KPIs are disclosed as part of its Taxonomy

information.

Scope of consolidation

The Taxonomy KPIs in the templates presented are calculated based

on exposures and balances within the local group’s prudential scope

of consolidation as at 31 December 2024. Therefore, the bank’s EU

Taxonomy KPIs comprise assets and activities relating to HSBC Bank

Malta p.l.c. and HSBC Global Asset Management (Malta) Limited.

HSBC Life Assurance (Malta) Ltd is excluded from the scope of

prudential consolidation.

EU Taxonomy KPIs disclosed and

Reporting Limitations

The following KPIs are reported in the templates presented.

The green asset ratio (‘GAR’) is a ratio calculated as the percentage of

EU Taxonomy-aligned assets as a proportion of total covered assets.

– The numerator of the GAR includes loans and advances, debt

securities, equities and repossessed collateral financing taxonomy-

aligned economic activities based on turnover KPI and CapEx KPI

of underlying assets.

– The denominator of the GAR includes total loans and advances,

total debt securities, total equities and total repossessed

collaterals and all other covered on-balance sheet assets.

The calculation of KPIs for off-balance sheet exposures includes

financial guarantees granted by the bank and assets under

management, reported both in Template 1 relating to GAR as off-

balance sheet items and also in Template 5 as off-balance sheet

items in their own right. Other off-balance sheet exposures such as

commitments are excluded from both KPIs.

The green ratio for financial guarantees to financial and non-financial

undertakings (‘FinGuar KPI’) is calculated as the percentage of

guarantees supporting loans and advances and debt securities

financing Taxonomy-aligned economic activities as a proportion of

total financial guarantees.

The green ratio for assets under management (‘AuM KPI’) is

calculated as a percentage of assets under management from

undertakings financing Taxonomy-aligned economic activities.

In this respect, the bank has considered all complementary guidance,

in the form of Frequently Asked Questions (‘FAQs’) to the EU

Taxonomy and its delegated acts, officially published by the European

Commission (‘EC’).

In particular, the EC Draft Commission Notice issued on 21 December

2023, in the form of a set of FAQs specific to financial undertakings’

EU Taxonomy reporting, has since been finalised and adopted as the

third Commission Notice.

This notice includes a number of clarifications on and for the

implementation of the requirements provided for by the Disclosures

Delegated Act. These requirements have been complied with as far

as possible, however, certain aspects of the notice have not been

implemented in this reporting period, given data limitations. Namely,

Taxonomy information of parents of counterparties subject to

disclosures of Taxonomy information is not considered.

Furthermore, the following KPIs are excluded from this report, given

that the local group considers such KPIs to be applicable to financial

conglomerates; the group not being considered as such by its

financial supervisor:

– Separate KPIs for the local group’s respective asset management,

investment firm, and insurance activities, pertaining to Annex III ,

VII, and and IX of the Disclosures Delegated Act respectively, in

addition to the bank’s activities as a credit institution.

– The inclusion of a consolidated group-level KPI in the form of a

weighted average of the corresponding KPIs for each business

segment in the contextual disclosures.

In addition, disclosures emanating from Annex XII relating to nuclear

and fossil gas related activities are not published on a ‘flow’ basis.


34	HSBC Bank Malta p.l.c. Annual Report and Accounts 2024

Report of the Directors

KPI: Green Asset Ratio

Total covered assets

The calculation of the Taxonomy on-balance sheet KPIs include on-

balance exposures covering loans and advances, debt securities and

equity instruments not held for trading and repossessed collateral.

This includes exposures to undertakings such as large EU banks,

asset managers, insurance companies and issuers that are in scope of

Articles 19a or 29a of Directive 2013/34/EU4 (‘NFRD/CSRD’).

Retail exposures except for the mortgage lending portfolios, credit

consumption loans for cars and building renovations loans are

excluded from the Taxonomy framework and not assessed for

Taxonomy eligibility. On this basis, these exposures are included

within the category of “Other assets’’.

Taxonomy-eligible and aligned

economic activities.

Taxonomy-eligible economic activities are those activities which can

be assessed as environmentally sustainable. Taxonomy-aligned

economic activities are those activities which have been assessed as

environmentally sustainable.

Eligibility and alignment of general purpose lending where the use of

proceeds is unknown, have been assessed using the turnover and

CapEx eligibility and alignment ratios published in the most recently

available annual reports by the bank’s counterparties in scope of

NFRD/CSRD.

Eligibility and alignment of specific purpose lending, where the use of

proceeds is known, such as retail loans collateralised by residential

immovable property, building renovation loans, and motor vehicle

loans, have been assessed in line with the technical screening criteria

established in the EU Taxonomy, comprising ‘substantial contribution’

and ‘do no significant harm’ criteria, along with compliance with

minimum safeguards, the latter not applicable to households and

public authorities.

In all templates, ‘Environmentally sustainable assets’ refers to

Taxonomy aligned assets.

Taxonomy non-eligible economic

activities

Taxonomy non-eligible economic activities are those activities which

cannot be assessed as environmentally sustainable. This relates to

exposures towards activities which are not covered by the EU

Taxonomy framework.

Assets excluded from the numerator

for GAR calculation (covered in the

denominator)

Exposures to undertakings not in scope of

NFRD/CSRD

Exposures to undertakings that are not obliged to publish non-financial

or sustainability information, under NFRD or CSRD respectively, have

been excluded from the assessment of Taxonomy-eligible economic

activities. These exposures are excluded from the numerator of the

GAR but included in the denominator.

Derivatives

Derivatives in the banking book are excluded from the numerator but

included in the denominator of the total GAR.

On demand interbank loans

On demand interbank loans are on-demand loan exposures with other

credit institutions. These are excluded from the numerator but

included in the denominator of the total GAR.

Cash and cash-related assets

Cash and cash-related assets are excluded from the numerator but

included in the denominator except for cash with central banks which

is not covered by the GAR calculation.

Other assets

Other assets include other retail exposures not covered by the

Taxonomy framework, cash, tangible and intangible assets, all of

which are excluded from the Taxonomy framework and therefore

cannot be assessed for Taxonomy eligibility. Exposures towards local

governments where the use of proceeds is unknown (i.e. general

purpose lending) is also excluded from the numerator and the

denominator of the GAR and these exposures have been included as

part of other assets in this reporting period.

Other assets are included in the denominator for the calculation of the

GAR.

Assets not covered for GAR

calculation

Assets not covered in the GAR calculation are excluded from both the

numerator and denominator.

Central governments and Supranational

issuers

Exposures to central governments and supranational issuers are out

of scope for the GAR calculation.

Central banks

Exposures to central banks includes cash held and all other banking

exposures with central banks. These are out of scope for the GAR

calculation.

Trading book

Trading derivatives are included in the Trading book, as are trading

exposures to central governments, central banks and supranational

issuers. These are out of scope for the GAR calculation.

Data limitations

HSBC Bank Malta p.l.c. is dependent on several data sources to

determine exposures towards counterparties subject to NFRD/CSRD

and subsequently determine Taxonomy information to be reported.

Availability of data and improvements in data quality over time, as

entities adopt the Taxonomy requirements for their own disclosures,

could lead to differences in the data reported in future years when

compared to the current reporting period.

The local group will continue to engage with customers, market data

providers and standard setters to improve the quality and

completeness of its Taxonomy data as it develops its capabilities to

assess the Taxonomy alignment of its portfolios.

Eligibility by environmental objective.

Non-financial undertakings reported initial Taxonomy eligibility of their

economic activities by non-climate environmental objective in the

prior reporting period. Given that this was the initial disclosure for

such counterparties, the local group is reporting initial Taxonomy

eligibility of by non-climate environmental objective in the current

reporting period.

For the local group’s financial counterparties, the eligibility split by

environmental objective is based on counterparty reported data where

relevant counterparty information is available.

Where Taxonomy information by environmental objective is not

available, Taxonomy eligibility and alignment reported by the

counterparty is considered to be eligible, or aligned, to Climate

Change Mitigation (‘CCM’), except in the case of counterparties

which are insurance undertakings, where it is considered eligible or

aligned in terms of Climate Change Adaptation (‘CCA’).


HSBC Bank Malta p.l.c. Annual Report and Accounts 2024	35

Non-financial counterparty eligibility and

alignment data

HSBC Bank Malta p.l.c. is highly reliant on published counterparty

eligibility and alignment ratios to assess eligibility and alignment of

exposures. The bank places reliance on 3rd party data vendors to

collect the majority of the eligibility and alignment data used in KPI

calculations. A number of checks and controls are operated to validate

any data used and this has identified that counterparty data quality

and consistency is variable. Controls in place include checking for

template mathematical accuracy, checking enabling and transitional

activities reported are consistent with the EU Taxonomy framework,

checking for incomplete data, and checking for consistency of

calculations across counterparties. For issues identified with

incomplete data, where sufficient data is available, reasonable

assumptions are made. Otherwise reporting is simplified where

required or, as a last resort, the data is not used. Where there is

sufficient information to identify the cause of a mathematical error, or

a reasonable assumption can be taken, mathematical errors are

corrected. Some counterparties calculate ratios using a different

calculation methodology and, in these cases, where sufficient

information is available to do so, the data is normalised so that data

between counterparties is comparable and can be used consistently

across calculations.

Financial counterparty eligibility and

alignment data

In accordance with the requirements of the EU Taxonomy, insurance

undertakings, investment firms and financial conglomerates are

required to disclose weighted average KPIs which should be used by

the bank in assessing the Taxonomy eligibility and alignment of

exposures to relevant counterparties.

Where the disclosure of weighted average KPIs by financial

counterparties was not available or where more than one set of KPIs

has been reported, the approach towards which data was considered

is set out below. In addition, the sector classification of counterparties

is reported in accordance with the local group’s FINREP reporting.

In the case of financial conglomerates, the local group considers the

Green Asset Ratio; if not available, non-life underwriting KPIs; if not

available, the Green Investment Ratio is considered.

In the case of credit institutions, the Green Asset Ratio.

In the case of insurance undertakings, the local group considers non-

life underwriting KPIs; if not available, it considers Green Investment

Ratios.

In the case of investment companies, the local group considers the

Green Asset Ratio related to investment services dealt on own

account.

In the case of asset managers, the local group considers the Green

Investment Ratio.

Where weighted average KPIs were disclosed by counterparties, they

were not sufficiently granular for the local group to satisfy its

disclosure requirements. For example, in the case that only total

Taxonomy alignment may be reported with no split by objective. In

these cases, the weighted average KPIs are used but the same

assumptions are applied as for other cases of missing counterparty

data, as described above.

Exposures subject to the Non Financial

Reporting Directive/Corporate Sustainability

Reporting Directive2,4

The CSRD entered into force in January 2023, strengthening the

existing rules on non-financial or sustainability reporting introduced in

the Accounting Directive by the NFRD/CSRD. It also broadened the

scope from EU entities to include non-EU entities, subject to meeting

certain criteria. Under the CSRD, entities that satisfy the criteria for

the first year of reporting, i.e. entities subject to NFRD/CSRD, such as

the local group, were expected to report in the 2024 financial year

end.

Due to data limitations, in the case of certain counterparties, it has not

been possible to assess all the criteria required to determine their

NFRD/CSRD status. Instead, reliance has been placed upon

simplification of available internal data, as well as data provided by

third party vendors. Where counterparties have been identified as

reporting voluntary Taxonomy information only, or where the data

vendor can only provide estimated data, the counterparty is treated as

non-NFRD/CSRD.

In the case of NFRD/CSRD counterparties which avail of the

exemption to report Taxonomy information at subsidiary level

because they are included in the consolidated reporting of their

parent, the parent’s Taxonomy information has not been relied upon,

unless the parent undertaking has clearly stated that the relevant

subsidiary has availed of the exemption to report Taxonomy

information.

Household exposures

Loans to households collateralised by residential property and loans to

households for building renovations have been assessed as eligible

under the Climate Change Mitigation objective in accordance with the

definition of activities 7.1 to 7.7 in the Climate Delegated Act. Loans

to households for the purchase of motor vehicles, where granted

after 1 January 2022, have been assessed as eligible under the

Climate Change Mitigation objective in accordance with the definition

of activity 6.5 of the Climate Delegated Act. However, there is

insufficient data available to fully assess any of these exposures for

alignment against the technical screening criteria and in particular, the

Do No Significant Harm criteria.

Business strategy

The HSBC Group recognises the important role it has to play in

supporting the transition to a net zero global economy. In October

2020, the Group announced its ambition to become a net zero bank

by 2050 and in 2021 included the transition to net zero as one of the

four key pillars of its corporate strategy.

The Group’s climate ambition requires continued enhancement of its

capabilities including governance, processes, systems and controls. In

addition, there is a heightened need for subject matter experts for

climate and environmental-related topics as well as upskilling of key

colleague groups who are supporting customers through their net

zero transition. New sources of data are also required, some of which

may be difficult to assure using traditional verification techniques. This

challenge, coupled with diverse external data sources and structures,

further complicates data consolidation.

The Group’s starting point in the transition to net zero is one of a

heavy financed emissions footprint. HSBC’s history means its balance

sheet is weighted towards the sectors and regions which matter the

most in terms of emissions, and whose transitions are therefore key

to the world’s ability to reach net zero on time. This means the Group

has a complex transition, with markets and sectors at different

starting points and moving at different speeds. However, it also

provides an opportunity to work with customers to help make an

impact – in both the emissions challenge and the financing challenge.

The Group is working to embed net zero into the way that customers

are supported, both through customer engagement and the provision

of financing solutions.

HSBC Bank Malta p.l.c. is in the early stages of integrating EU

Taxonomy considerations into the broader climate strategy. The bank

aims to support customers who are at differing stages in their

transition journey focusing first on the sectors and customers with

the highest emissions and transition risks, and evolving and

expanding efforts over time; for example, supporting clients in high

emissive sectors to reduce their GHG emissions. Consequently, not

all sustainable finance provided by the bank, and in particular

transition finance, will meet the strict criteria for EU Taxonomy

alignment.

The composition of the local group’s banking book is a key driver of

the GAR. With NFRD/CSRD counterparties only making up a small

fraction of the overall book, the majority of wholesale exposures are

outside the scope of eligibility assessment under the EU Taxonomy


36	HSBC Bank Malta p.l.c. Annual Report and Accounts 2024

Report of the Directors

framework. Furthermore, for those exposures where the use of

proceeds is known to be applied to eligible activities, such as green

bonds and property-related lending, data limitations result in limited

ability to comprehensively assess against the alignment criteria.

As described under data limitations, exposures to non NFRD/CSRD

counterparties include those counterparties who do not report at

subsidiary level and rely on the consolidated reporting of their parent

where it has not been possible to verify the counterparties' NFRD/

CSRD status.

As the scope of the EU Taxonomy expands to cover counterparties

reporting under the CSRD, and as data capabilities and market data

availability improves, it is expected that reporting and strategy will

evolve.

Non-climate environmental objectives

In 2023, the EC enacted into law the Commission Delegated

Regulation (EU) 2023/2486 (‘Environmental Delegated Act’) and

amendments to the Disclosures Delegated Act introducing new

reporting requirements non-climate for the four remaining

environmental objectives i.e. i) sustainable use and protection of

water and marine resources (‘WTR’); ii) transition to a circular

economy (‘CE’); iii) pollution prevention and control (‘PPC’); iv)

protection and restoration of biodiversity and ecosystems (‘BIO’). This

requires both financial and non-financial undertakings to disclose

Taxonomy-eligibility information for the remaining environmental

objectives from 1 January 2024.

Consequently the ‘Total’ column in the reported templates includes

exposures towards Taxonomy relevant sectors (Taxonomy-eligible) for

all six environmental objectives (CCM, CCA, WTR, CE, PPC and BIO)

and includes environmentally sustainable exposures (Taxonomy-

aligned) for the two climate objectives only (CCM and CCA).

In accordance with Article 8 (4) of the Disclosure Delegated Act,

financial undertakings shall use the most recently available data and

key performance indicators of their counterparties to calculate their

own key performance indicators. Although non-financial undertakings

are required to disclose the proportion of Taxonomy eligible and

Taxonomy-aligned economic activities for the four non-climate

environmental objectives, in practice the data is often in a non-

standardised format or incomplete. In the case of financial

counterparties, the timing for the introduction of such disclosure

requirement coincides with that of the local group, in which case the

required counterparty data was not available at the time of reporting.

In order to ensure counterparty data is standardised and there is no

double counting across objectives, the local group has only used

Taxonomy eligibility data for the four non-climate environmental

objectives where it has been populated within the EU Taxonomy

templates of the bank’s non-financial counterparties. The bank’s

exposures to Taxonomy-eligible economic activities for the four non-

climate environmental objectives have been presented in the relevant

eligibility columns of the tables. The total eligible amount across all six

environmental objectives is presented in the total Taxonomy-eligible

column.

Financial undertakings are required to disclose KPIs for Taxonomy

aligned activities covering the economic activities set out in the

Environmental Delegated Act from 1 January 2026. Therefore, the

columns requiring alignment information related to the remaining

environmental objectives have been excluded in all tables.

In all tables presented, the total columns report eligible exposures

across all six environmental objectives. The total columns for

environmentally sustainable (aligned) exposures, only report against

the Climate Change Mitigation and Climate Change Adaptation

objectives.

1Taxonomy Regulation (EU) 2020/852.

2Commission Delegated Regulation (EU) 2021/2178.

3Commission Delegated Regulation (EU) 2023/2486 supplementing

Taxonomy Regulation and amending Disclosures Delegated Act.

4The CSRD amends the Non-Financial Reporting Directive (NFRD/CSRD) –

Directive 2013/34/EU.

Summary of KPIs (Template 0)

This template sets out a summary of KPIs required to be disclosed by

HSBC Bank Malta p.l.c. as a credit institution, under Article 8 of the

Taxonomy regulation. The template disclosed is provided in Annex VI

to the Disclosures Delegated Act but has been modified by adding

additional columns and clarifying column headings to clearly

distinguish KPIs calculated using counterparty Turnover ratios versus

KPIs calculated using counterparty CapEx ratios, both of which are

required to be reported by credit institutions.

As the Trading book KPI and Fees and Commissions KPI are required

to be disclosed from 1 January 2026, the applicable rows for these

KPIs have not been included in the Summary template.


Summary of KPIs to be disclosed by credit institutions under Article 8 Taxonomy Regulation
		Total environmentally sustainable assets (Based on Turnover)	KPI Based on Turnover KPI of the counterparty	Total environmen tally sustainable assets (Based on CapEx)	KPI Based on CapEx KPI of the counterparty	% coverage (over total assets)	% of assets excluded from the numerator of the GAR (Article 7 (2) and (3) and Section 1.1.2. of Annex V)	% of assets excluded from the denominator of the GAR (Article 7 (1)) and Section 1.2.4 of Annex V)
At 31 Dec 2024		€000	%	€000	%	%	%	%
Main KPI	Green asset ratio (GAR) stock	1,920	0.05	1,860	0.05	57.48	26.38	42.52
		Total environmentally sustainable activities	KPI		KPI	% coverage (over total assets)	% of assets excluded from the numerator of the GAR (Article 7 (2) and (3) and Section 1.1.2. of Annex V)	% of assets excluded from the denominator of the GAR (Article 7 (1)) and Section 1.2.4 of Annex V)
		€000	%	€000	%	%	%	%
Addition al KPIs	GAR (flow)	1.91	—	1.85	—	0.16	0.35	0.49
	Financial guarantees	—	—	—	—
	Assets under management	6,650	1.70	7,100	1.82


HSBC Bank Malta p.l.c. Annual Report and Accounts 2024	37


Summary of KPIs to be disclosed by credit institutions under Article 8 Taxonomy Regulation (continued)
		Total environmentally sustainable assets (Based on Turnover)	KPI Based on Turnover KPI of the counterparty	Total environment ally sustainable assets (Based on CapEx)	KPI Based on CapEx KPI of the counterparty	% coverage (over total assets)	% of assets excluded from the numerator of the GAR (Article 7 (2) and (3) and Section 1.1.2. of Annex V)	% of assets excluded from the denominator of the GAR (Article 7 (1)) and Section 1.2.4 of Annex V)
At 31 Dec 2023		€000	%	€000	%	%	%	%
Main KPI	Green asset ratio (GAR) stock	—	—	—	—	61.57	25.40	38.43
		Total environmentally sustainable activities	KPI		KPI	% coverage (over total assets)	% of assets excluded from the numerator of the GAR (Article 7 (2) and (3) and Section 1.1.2. of Annex V)	% of assets excluded from the denominator of the GAR (Article 7 (1)) and Section 1.2.4 of Annex V)
		€000	%	€000	%	%	%	%
Additional KPIs	Financial guarantees	—	—	—	—
	Assets under management	2,294	0.58	—	—

Assets for the calculation of GAR – Covered assets (GAR,off-bal) (Template 1)

This template presents assets used in the calculation of the GAR

disaggregated by counterparty type and asset class. Total assets are

further categorised between covered assets in the numerator,

covered assets in the denominator, and assets excluded from the

GAR calculation, with eligible and aligned covered assets presented

by environmental objective. This template is provided in Annex VI to

the Disclosures Delegated Act but has been modified by omitting ‘Of

which environmentally sustainable (Taxonomy-aligned)' columns

relating to non-climate environmental objectives, which are not yet

applicable to the local group.

Row 1 of Template 1 ‘Loans and advances, debt securities and equity

instruments not HfT eligible for GAR calculation' relates to the

numerator of the GAR, whilst row 48 of Template 1 ‘Total GAR

assets’ relates to the denominator of the GAR.

This template has been duplicated to present the information based

on each of Turnover and CapEx KPIs reported by HSBC Bank Malta

p.l.c.’s counterparties.

The gross carrying amount column excludes impairment allowances

for all banking exposures. As a result, Total Assets reported in this

template is not equal to Total Assets reported in HSBC Bank Malta

p.l.c.’s balance sheet with the difference due to impairment

allowances on banking exposures.

The ‘of which: Use of Proceeds’ subset column of the ‘of which:

environmentally sustainable (Taxonomy-aligned)’ column under each

environmental objective is not populated given limitations in obtaining

such data.

Row 34 'SMEs and NFCs (other than SMEs) not subject to NFRD/

CSRD disclosure obligations' includes non-NFRD/CSRD financial and

non-financial undertakings in the EU, whether or not they are

classified as SMEs.

Financial guarantees represent financial guarantees granted by HSBC

Bank Malta p.l.c. to support an underlying loan or debt security. The

assessment of eligibility and alignment is based on the reported KPIs

of the obligor in relation to the underlying loan since information on

specific use of proceeds for these loans is not available.

The gross carrying amount presented for Financial Guarantees and

Assets Under Management forms the denominator of the respective

KPIs and includes exposures with both NFRD/CSRD and non-NFRD/

CSRD counterparties while excluding exposures to central

governments, central banks and supranational issuers.


38	HSBC Bank Malta p.l.c. Annual Report and Accounts 2024

Report of the Directors


Assets for the calculation of GAR-Based on Counterparty Turnover
		a	b	c	d	e	f	g	h	i	j	k	o	s	w	ab	ac	ad	ae	af
At 31 Dec 2024		€000
		Total [gross] carrying amount	Climate Change Mitigation (CCM)					Climate Change Adaptation (CCA)				Water and marine resources (WTR)	Circular economy (CE)	Pollution (PPC)	Biodiversity and Ecosystems (BIO)	TOTAL (CCM + CCA + WTR + CE + PPC + BIO)
			of which: towards taxonomy relevant sectors (Taxonomy- eligible)					of which: towards taxonomy relevant sectors (Taxonomy- eligible)				of which: towards taxonomy relevant sectors (Taxonomy- eligible)				of which: towards taxonomy relevant sectors (Taxonomy- eligible)
				of which: environmentally sustainable (Taxonomy-aligned)					of which: environmentall y sustainable (Taxonomy- aligned)								of which: environmentally sustainable (Taxonomy-aligned)
					of which: Use of Proceeds	of which: transitional	of which: enabling			of which: Use of Proceeds	of which: enabling							of which: Use of Proceeds	of which: transitional	of which: enabling
	GAR – Covered assets in both numerator and denominator
1	Loans and advances, debt securities and equity instruments not HfT eligible for GAR calculation	2,199,687	2,015,891	1,920	—	1,727	—	136	—	—	—	—	17	—	870	2,016,914	1,920	—	1,727	—
2	Financial undertakings	171,426	20,753	193	—	—	—	6	—	—	—	—	—	—	—	20,759	193	—	—	—
3	Credit institutions	171,426	20,753	193	—	—	—	6	—	—	—	—	—	—	—	20,759	193	—	—	—
4	Loans and advances	152,233	1,560	193	—	—	—	6	—	—	—	—	—	—	—	1,566	193	—	—	—
5	Debt securities, including UoP	19,193	19,193	—	—	—	—	—	—	—	—	—	—	—	—	19,193	—	—	—	—
6	Equity instruments	—	—	—		—	—	—	—		—	—	—	—	—	—	—		—	—
7	Other financial corporations	—	—	—	—	—	—	—	—	—	—	—	—	—	—	—	—	—	—	—
8	– of which: investment firms	—	—	—	—	—	—	—	—	—	—	—	—	—	—	—	—	—	—	—
9	Loans and advances	—	—	—	—	—	—	—	—	—	—	—	—	—	—	—	—	—	—	—
10	Debt securities, including UoP	—	—	—	—	—	—	—	—	—	—	—	—	—	—	—	—	—	—	—
11	Equity instruments	—	—	—		—	—	—	—		—	—	—	—	—	—	—		—	—
12	– of which: management companies	—	—	—	—	—	—	—	—	—	—	—	—	—	—	—	—	—	—	—
13	Loans and advances	—	—	—	—	—	—	—	—	—	—	—	—	—	—	—	—	—	—	—
14	Debt securities, including UoP	—	—	—	—	—	—	—	—	—	—	—	—	—	—	—	—	—	—	—
15	Equity instruments	—	—	—		—	—	—	—		—	—	—	—	—	—	—		—	—
16	– of which: insurance undertakings	—	—	—	—	—	—	—	—	—	—	—	—	—	—	—	—	—	—	—


HSBC Bank Malta p.l.c. Annual Report and Accounts 2024	39


Assets for the calculation of GAR-Based on Counterparty Turnover (continued)
		a	b	c	d	e	f	g	h	i	j	k	o	s	w	ab	ac	ad	ae	af
At 31 Dec 2024		€000
		Total [gross] carrying amount	Climate Change Mitigation (CCM)					Climate Change Adaptation (CCA)				Water and marine resources (WTR)	Circular economy (CE)	Pollution (PPC)	Biodiversity and Ecosystems (BIO)	TOTAL (CCM + CCA + WTR + CE + PPC + BIO)
			of which: towards taxonomy relevant sectors (Taxonomy- eligible)					of which: towards taxonomy relevant sectors (Taxonomy- eligible)				of which: towards taxonomy relevant sectors (Taxonomy- eligible)				of which: towards taxonomy relevant sectors (Taxonomy- eligible)
				of which: environmentally sustainable (Taxonomy-aligned)					of which: environmentall y sustainable (Taxonomy- aligned)								of which: environmentally sustainable (Taxonomy-aligned)
					of which: Use of Proceeds	of which: transitional	of which: enabling			of which: Use of Proceeds	of which: enabling							of which: Use of Proceeds	of which: transitional	of which: enabling
17	Loans and advances	—	—	—	—	—	—	—	—	—	—	—	—	—	—	—	—	—	—	—
18	Debt securities, including UoP	—	—	—	—	—	—	—	—	—	—	—	—	—	—	—	—	—	—	—
19	Equity instruments	—	—	—		—	—	—	—		—	—	—	—	—	—	—		—	—
20	Non-financial undertakings	29,665	2,230	1,727	—	1,727	—	130	—	—	—	—	17	—	870	3,247	1,727	—	1,727	—
21	Loans and advances	29,665	2,230	1,727	—	1,727	—	130	—	—	—	—	17	—	870	3,247	1,727	—	1,727	—
22	Debt securities, including UoP	—	—	—	—	—	—	—	—	—	—	—	—	—	—	—	—	—	—	—
23	Equity instruments	—	—	—		—	—	—	—		—	—	—	—	—	—	—		—	—
24	Households	1,877,857	1,872,569	—	—	—	—	—	—	—	—		—		—	1,872,569	—	—	—	—
25	– of which: loans collateralised by residential immovable property	1,855,396	1,855,396	—	—	—	—	—	—	—	—		—		—	1,855,396	—	—	—	—
26	– of which: building renovation loans	2,546	2,546	—	—	—	—	—	—	—	—		—		—	2,546	—	—	—	—
27	– of which: motor vehicle loans	19,915	14,627	—	—	—	—	—	—	—	—		—		—	14,627	—	—	—	—
28	Local governments financing	117,879	117,879	—	—	—	—	—	—	—	—	—	—	—	—	117,879	—	—	—	—
29	Housing financing	—	—	—	—	—	—	—	—	—	—	—	—	—	—	—	—	—	—	—
30	Other local government financing	117,879	117,879	—	—	—	—	—	—	—	—	—	—	—	—	117,879	—	—	—	—
31	Collateral obtained by taking possession: residential and commercial immovable properties	2,860	2,460	—	—	—	—	—	—	—	—	—	—	—	—	2,460	—	—	—	—


40	HSBC Bank Malta p.l.c. Annual Report and Accounts 2024

Report of the Directors

Assets for the calculation of GAR-Based on Counterparty Turnover (continued)

At 31 Dec 2024

€000

Total

[gross]

carrying

amount

Climate Change Mitigation

(CCM)

Climate Change

Adaptation (CCA)

Water and marine

resources (WTR)

Circular economy

(CE)

Pollution (PPC)

Biodiversity and

Ecosystems (BIO)

TOTAL (CCM + CCA + WTR + CE

+ PPC + BIO)

of which: towards taxonomy

relevant sectors (Taxonomy-

eligible)

of which: towards

taxonomy relevant

sectors (Taxonomy-

eligible)

of which: towards

taxonomy relevant

sectors (Taxonomy-

eligible)

of which: towards taxonomy

relevant sectors (Taxonomy-

eligible)

of which:

environmentally

sustainable

(Taxonomy-aligned)

of which:

environmentall

y sustainable

(Taxonomy-

aligned)

of which:

environmentally

sustainable

(Taxonomy-aligned)

of which: Use

of Proceeds

of which:

transitional

of which:

enabling

of which: Use

of Proceeds

of which:

enabling

of which: Use

of Proceeds

of which:

transitional

of which:

enabling

Assets

excluded from

the numerator

for GAR

calculation

(covered in the

denominator)

1,865,228

Financial and

Non-financial

undertakings

1,016,780

SMEs and NFCs

(other than

SMEs) not

subject to NFRD

disclosure

obligations

682,062

Loans and

advances

653,439

– of which:

loans

collateralised

commercial

immovable

property

252,503

– of which:

building

renovation

loans

7,640

Debt securities

—

Equity

instruments

28,623

Non-EU country

counterparties

not subject to

NFRD disclosure

obligations

334,718

Loans and

advances

1,088

Debt securities

333,630

Equity

instruments

—

Derivatives

3,153

On demand

interbank loans

453,120


HSBC Bank Malta p.l.c. Annual Report and Accounts 2024	41


Assets for the calculation of GAR-Based on Counterparty Turnover (continued)
		a	b	c	d	e	f	g	h	i	j	k	o	s	w	ab	ac	ad	ae	af
At 31 Dec 2024		€000
		Total [gross] carrying amount	Climate Change Mitigation (CCM)					Climate Change Adaptation (CCA)				Water and marine resources (WTR)	Circular economy (CE)	Pollution (PPC)	Biodiversity and Ecosystems (BIO)	TOTAL (CCM + CCA + WTR + CE + PPC + BIO)
			of which: towards taxonomy relevant sectors (Taxonomy- eligible)					of which: towards taxonomy relevant sectors (Taxonomy- eligible)				of which: towards taxonomy relevant sectors (Taxonomy- eligible)				of which: towards taxonomy relevant sectors (Taxonomy- eligible)
				of which: environmentally sustainable (Taxonomy-aligned)					of which: environmentall y sustainable (Taxonomy- aligned)								of which: environmentally sustainable (Taxonomy-aligned)
					of which: Use of Proceeds	of which: transitional	of which: enabling			of which: Use of Proceeds	of which: enabling							of which: Use of Proceeds	of which: transitional	of which: enabling
46	Cash and cash- related assets	30,158
47	Other categories of assets (e.g. Goodwill, commodities etc.)	362,017
48	Total GAR assets (in the denominator)	4,064,915	2,015,891	1,920	—	1,727	—	136	—	—	—	—	17	—	870	2,016,914	1,920	—	1,727	—
49	Assets not covered for GAR calculation	3,006,399
50	Central governments and Supranational issuers	2,183,166
51	Central banks exposure	809,144
52	Trading book	14,089
53	Total assets	7,071,314	2,015,891	1,920	—	1,727	—	136	—	—	—	—	17	—	870	2,016,914	1,920	—	1,727	—

Off-balance sheet exposures – Undertakings subject to NFRD disclosure obligations
54	Financial guarantees	12,788	1	—	—	—	—	1	—	—	—	—	—	—	—	2	—	—	—	—
55	Assets under management	390,924	23,367	6,649	—	4,138	626	1,076	1	—	—	—	1,095	—	6,417	31,955	6,650	—	4,138	626
56	– of which: debt securities	251,334	15,830	6,638	—	4,138	626	581	1	—	—	—	1,095	—	4,910	22,416	6,639	—	4,138	626
57	– of which: equity instruments	117,358	7,537	11	—	—	—	495	—	—	—	—	—	—	1,507	9,539	11	—	—	—


42	HSBC Bank Malta p.l.c. Annual Report and Accounts 2024

Report of the Directors


Assets for the calculation of GAR-Based on Counterparty Turnover (continued)
		a	b	c	d	e	f	g	h	i	j	ab	ac	ad	ae	af
At 31 Dec 2023		€000
		Total [gross] carrying amount	Climate Change Mitigation (CCM)					Climate Change Adaptation (CCA)				TOTAL (CCM + CCA)
			of which: towards taxonomy relevant sectors (Taxonomy-eligible)					of which: towards taxonomy relevant sectors (Taxonomy- eligible)				of which: towards taxonomy relevant sectors (Taxonomy-eligible)
				of which: environmentally sustainable (Taxonomy-aligned)					of which: environmentally sustainable (Taxonomy-aligned)				of which: environmentally sustainable (Taxonomy-aligned)
					of which: Use of Proceeds	of which: transitional	of which: enabling			of which: Use of Proceeds	of which: enabling			of which: Use of Proceeds	of which: transitional	of which: enabling
	GAR – Covered assets in both numerator and denominator
1	Loans and advances, debt securities and equity instruments not HfT eligible for GAR calculation	2,544,575		—	—	—	—		—	—	—	2,294,676	—	—	—	—
2	Financial undertakings	229,300		—	—	—	—		—	—	—	22,257	—	—	—	—
3	Credit institutions	229,300		—	—	—	—		—	—	—	22,257	—	—	—	—
4	Loans and advances	207,043		—	—	—	—		—	—	—	—	—	—	—	—
5	Debt securities, including UoP	22,257		—	—	—	—		—	—	—	22,257	—	—	—	—
6	Equity instruments	—		—	—	—	—		—	—	—	—	—	—	—	—
7	Other financial corporations	—		—	—	—	—		—	—	—	—	—	—	—	—
8	– of which: investment firms	—		—	—	—	—		—	—	—	—	—	—	—	—
9	Loans and advances	—		—	—	—	—		—	—	—	—	—	—	—	—
10	Debt securities, including UoP	—		—	—	—	—		—	—	—	—	—	—	—	—
11	Equity instruments	—		—	—	—	—		—	—	—	—	—	—	—	—
12	– of which: management companies	—		—	—	—	—		—	—	—	—	—	—	—	—
13	Loans and advances	—		—	—	—	—		—	—	—	—	—	—	—	—
14	Debt securities, including UoP	—		—	—	—	—		—	—	—	—	—	—	—	—
15	Equity instruments	—		—	—	—	—		—	—	—	—	—	—	—	—
16	– of which: insurance undertakings	—		—	—	—	—		—	—	—	—	—	—	—	—
17	Loans and advances	—		—	—	—	—		—	—	—	—	—	—	—	—
18	Debt securities, including UoP	—		—	—	—	—		—	—	—	—	—	—	—	—
19	Equity instruments	—		—	—	—	—		—	—	—	—	—	—	—	—
20	Non-financial undertakings	33,928		—	—	—	—		—	—	—	1,444	—	—	—	—
21	Loans and advances	33,928		—	—	—	—		—	—	—	1,444	—	—	—	—
22	Debt securities, including UoP	—		—	—	—	—		—	—	—	—	—	—	—	—


HSBC Bank Malta p.l.c. Annual Report and Accounts 2024	43


Assets for the calculation of GAR-Based on Counterparty Turnover (continued)
		a	b	c	d	e	f	g	h	i	j	ab	ac	ad	ae	af
At 31 Dec 2023		€000
		Total [gross] carrying amount	Climate Change Mitigation (CCM)					Climate Change Adaptation (CCA)				TOTAL (CCM + CCA)
			of which: towards taxonomy relevant sectors (Taxonomy-eligible)					of which: towards taxonomy relevant sectors (Taxonomy- eligible)				of which: towards taxonomy relevant sectors (Taxonomy-eligible)
				of which: environmentally sustainable (Taxonomy-aligned)					of which: environmentally sustainable (Taxonomy-aligned)				of which: environmentally sustainable (Taxonomy-aligned)
					of which: Use of Proceeds	of which: transitional	of which: enabling			of which: Use of Proceeds	of which: enabling			of which: Use of Proceeds	of which: transitional	of which: enabling
23	Equity instruments	—		—		—	—		—		—	—	—		—	—
24	Households	2,160,409		—	—	—	—		—	—	—	2,150,436	—	—	—	—
25	– of which: loans collateralised by residential immovable property	2,137,020		—	—	—	—		—	—	—	2,137,020	—	—	—	—
26	– of which: building renovation loans	2,291		—	—	—	—		—	—	—	2,291	—	—	—	—
27	– of which: motor vehicle loans	21,098		—	—	—	—		—	—	—	11,125	—	—	—	—
28	Local governments financing	117,717		—	—	—	—		—	—	—	117,717	—	—	—	—
29	Housing financing	—		—	—	—	—		—	—	—	—	—	—	—	—
30	Other local government financing	117,717		—	—	—	—		—	—	—	117,717	—	—	—	—
31	Collateral obtained by taking possession: residential and commercial immovable properties	3,221		—	—	—	—		—	—	—	2,822	—	—	—	—
32	Assets excluded from the numerator for GAR calculation (covered in the denominator)	1,786,860
33	Financial and Non-financial undertakings	1,018,640
34	SMEs and NFCs (other than SMEs) not subject to NFRD disclosure obligations	1,017,091
35	Loans and advances	726,008
36	– of which: loans collateralised by commercial immovable property	293,476
37	– of which: building renovation loans	4,679


44	HSBC Bank Malta p.l.c. Annual Report and Accounts 2024

Report of the Directors


Assets for the calculation of GAR-Based on Counterparty Turnover (continued)
		a	b	c	d	e	f	g	h	i	j	ab	ac	ad	ae	af
At 31 Dec 2023		€000
		Total [gross] carrying amount	Climate Change Mitigation (CCM)					Climate Change Adaptation (CCA)				TOTAL (CCM + CCA)
			of which: towards taxonomy relevant sectors (Taxonomy-eligible)					of which: towards taxonomy relevant sectors (Taxonomy- eligible)				of which: towards taxonomy relevant sectors (Taxonomy-eligible)
				of which: environmentally sustainable (Taxonomy-aligned)					of which: environmentally sustainable (Taxonomy-aligned)				of which: environmentally sustainable (Taxonomy-aligned)
					of which: Use of Proceeds	of which: transitional	of which: enabling			of which: Use of Proceeds	of which: enabling			of which: Use of Proceeds	of which: transitional	of which: enabling
38	Debt securities	291,040
39	Equity instruments	43
40	Non-EU country counterparties not subject to NFRD disclosure obligations	1,549
41	Loans and advances	629
42	Debt securities	920
43	Equity instruments	—
44	Derivatives	7,483
45	On demand interbank loans	518,531
46	Cash and cash- related assets	33,582
47	Other categories of assets (e.g. Goodwill, commodities etc.)	208,624
48	Total GAR assets (in the denominator)	4,331,435		—	—	—	—		—	—	—	2,294,676	—	—	—	—
49	Assets not covered for GAR calculation	2,703,804
50	Central governments and Supranational issuers	1,439,811
51	Central banks exposure	1,257,899
52	Trading book	6,094
53	Total assets	7,035,239		—	—	—	—		—	—	—	2,294,676	—	—	—	—

Off-balance sheet exposures – Undertakings subject to NFRD disclosure obligations
54	Financial guarantees	10,279		—	—	—	—		—	—	—	3	—	—	—	—
55	Assets under management	395,000		2,294	—	880	—		—	—	—	8,623	2,294	—	880	—
56	– of which: debt securities	254,057		2,294	—	880	—		—	—	—	7,731	2,294	—	880	—
57	– of which: equity instruments	87,225		—	—	—	—		—	—	—	892	—	—	—	—


HSBC Bank Malta p.l.c. Annual Report and Accounts 2024	45


Assets for the calculation of GAR-Based on Counterparty CapEx
		a	b	c	d	e	f	g	h	i	j	k	o	s	w	ab	ac	ad	ae	af
At 31 Dec 2024		€000
		Total [gross] carrying amount	Climate Change Mitigation (CCM)					Climate Change Adaptation (CCA)				Water and marine resources (WTR)	Circular economy (CE)	Pollution (PPC)	Biodiversity and Ecosystems (BIO)	TOTAL (CCM + CCA + WTR + CE + PPC + BIO)
			of which: towards taxonomy relevant sectors (Taxonomy- eligible)					of which: towards taxonomy relevant sectors (Taxonomy- eligible)				of which: towards taxonomy relevant sectors (Taxonomy- eligible)				of which: towards taxonomy relevant sectors (Taxonomy- eligible)
				of which: environmentally sustainable (Taxonomy-aligned)					of which: environmental ly sustainable (Taxonomy- aligned)								of which: environmentally sustainable (Taxonomy-aligned)
					of which: Use of Proceeds	of which: transitional	of which: enabling			of which: Use of Proceeds	of which: enabling							of which: Use of Proceeds	of which: transitional	of which: enabling
1	Loans and advances, debt securities and equity instruments not HfT eligible for GAR calculation	2,199,687	2,022,458	1,860	—	1,439	—	228	—	—	—	—	2	—	93	2,022,781	1,860	—	1,439	—
2	Financial undertakings	171,426	20,968	421	—	—	—	—	—	—	—	—	—	—	—	20,968	421	—	—	—
3	Credit institutions	171,426	20,968	421	—	—	—	—	—	—	—	—	—	—	—	20,968	421	—	—	—
4	Loans and advances	152,233	1,775	421	—	—	—	—	—	—	—	—	—	—	—	1,775	421	—	—	—
5	Debt securities, including UoP	19,193	19,193	—	—	—	—	—	—	—	—	—	—	—	—	19,193	—	—	—	—
6	Equity instruments	—	—	—		—	—	—	—		—	—	—	—	—	—	—		—	—
7	Other financial corporations	—	—	—	—	—	—	—	—	—	—	—	—	—	—	—	—	—	—	—
8	– of which: investment firms	—	—	—	—	—	—	—	—	—	—	—	—	—	—	—	—	—	—	—
9	Loans and advances	—	—	—	—	—	—	—	—	—	—	—	—	—	—	—	—	—	—	—
10	Debt securities, including UoP	—	—	—	—	—	—	—	—	—	—	—	—	—	—	—	—	—	—	—
11	Equity instruments	—	—	—		—	—	—	—		—	—	—	—	—	—	—		—	—
12	– of which: management companies	—	—	—		—	—	—	—		—	—	—	—	—	—	—		—	—
13	Loans and advances	—	—	—	—	—	—	—	—	—	—	—	—	—	—	—	—	—	—	—
14	Debt securities, including UoP	—	—	—	—	—	—	—	—	—	—	—	—	—	—	—	—	—	—	—
15	Equity instruments	—	—	—		—	—	—	—		—	—	—	—	—	—	—		—	—
16	– of which: insurance undertakings	—	—	—		—	—	—	—		—	—	—	—	—	—	—		—	—
17	Loans and advances	—	—	—	—	—	—	—	—	—	—	—	—	—	—	—	—	—	—	—
18	Debt securities, including UoP	—	—	—	—	—	—	—	—	—	—	—	—	—	—	—	—	—	—	—
19	Equity instruments	—	—	—		—	—	—	—		—	—	—	—	—	—	—		—	—
20	Non-financial undertakings	29,665	8,581	1,439	—	1,439	—	228	—	—	—	—	2	—	93	8,904	1,439	—	1,439	—


46	HSBC Bank Malta p.l.c. Annual Report and Accounts 2024

Report of the Directors


Assets for the calculation of GAR-Based on Counterparty CapEx (continued)
		a	b	c	d	e	f	g	h	i	j	k	o	s	w	ab	ac	ad	ae	af
At 31 Dec 2024		€000
		Total [gross] carrying amount	Climate Change Mitigation (CCM)					Climate Change Adaptation (CCA)				Water and marine resources (WTR)	Circular economy (CE)	Pollution (PPC)	Biodiversity and Ecosystems (BIO)	TOTAL (CCM + CCA + WTR + CE + PPC + BIO)
			of which: towards taxonomy relevant sectors (Taxonomy- eligible)					of which: towards taxonomy relevant sectors (Taxonomy- eligible)				of which: towards taxonomy relevant sectors (Taxonomy- eligible)				of which: towards taxonomy relevant sectors (Taxonomy- eligible)
				of which: environmentally sustainable (Taxonomy-aligned)					of which: environmental ly sustainable (Taxonomy- aligned)								of which: environmentally sustainable (Taxonomy-aligned)
					of which: Use of Proceeds	of which: transitional	of which: enabling			of which: Use of Proceeds	of which: enabling							of which: Use of Proceeds	of which: transitional	of which: enabling
21	Loans and advances	29,665	8,581	1,439	—	1,439	—	228	—	—	—	—	2	—	93	8,904	1,439	—	1,439	—
22	Debt securities, including UoP	—	—	—	—	—	—	—	—	—	—	—	—	—	—	—	—	—	—	—
23	Equity instruments	—	—	—		—	—	—	—		—	—	—	—	—	—	—		—	—
24	Households	1,877,857	1,872,570	—	—	—	—	—	—	—	—		—		—	1,872,570	—	—	—	—
25	– of which: loans collateralised by residential immovable property	1,855,396	1,855,396	—	—	—	—	—	—	—	—		—		—	1,855,396	—	—	—	—
26	– of which: building renovation loans	2,546	2,546	—	—	—	—	—	—	—	—		—		—	2,546	—	—	—	—
27	– of which: motor vehicle loans	19,915	14,628	—	—	—	—	—	—	—	—		—		—	14,628	—	—	—	—
28	Local governments financing	117,879	117,879	—	—	—	—	—	—	—	—	—	—	—	—	117,879	—	—	—	—
29	Housing financing	—	—	—	—	—	—	—	—	—	—	—	—	—	—	—	—	—	—	—
30	Other local government financing	117,879	117,879	—	—	—	—	—	—	—	—	—	—	—	—	117,879	—	—	—	—
31	Collateral obtained by taking possession: residential and commercial immovable properties	2,860	2,460	—	—	—	—	—	—	—	—	—	—	—	—	2,460	—	—	—	—
32	Assets excluded from the numerator for GAR calculation (covered in the denominator)	1,865,228
33	Financial and Non-financial undertakings	1,016,780


HSBC Bank Malta p.l.c. Annual Report and Accounts 2024	47


Assets for the calculation of GAR-Based on Counterparty CapEx (continued)
		a	b	c	d	e	f	g	h	i	j	k	o	s	w	ab	ac	ad	ae	af
At 31 Dec 2024		€000
		Total [gross] carrying amount	Climate Change Mitigation (CCM)					Climate Change Adaptation (CCA)				Water and marine resources (WTR)	Circular economy (CE)	Pollution (PPC)	Biodiversity and Ecosystems (BIO)	TOTAL (CCM + CCA + WTR + CE + PPC + BIO)
			of which: towards taxonomy relevant sectors (Taxonomy- eligible)					of which: towards taxonomy relevant sectors (Taxonomy- eligible)				of which: towards taxonomy relevant sectors (Taxonomy- eligible)				of which: towards taxonomy relevant sectors (Taxonomy- eligible)
				of which: environmentally sustainable (Taxonomy-aligned)					of which: environmental ly sustainable (Taxonomy- aligned)								of which: environmentally sustainable (Taxonomy-aligned)
					of which: Use of Proceeds	of which: transitional	of which: enabling			of which: Use of Proceeds	of which: enabling							of which: Use of Proceeds	of which: transitional	of which: enabling

34	SMEs and NFCs (other than SMEs) not subject to NFRD disclosure obligations	682,062
35	Loans and advances	653,439
36	– of which: loans collateralised by commercial immovable property	252,503
37	– of which: building renovation loans	7,640
38	Debt securities	—
39	Equity instruments	28,623
40	Non-EU country counterparties not subject to NFRD disclosure obligations	334,718
41	Loans and advances	1,088
42	Debt securities	333,630
43	Equity instruments	—
44	Derivatives	3,153
45	On demand interbank loans	453,120
46	Cash and cash- related assets	30,158
47	Other categories of assets (e.g. Goodwill, commodities etc.)	362,017
48	Total GAR assets (in the denominator)	4,064,915	2,022,458	1,860	—	1,439	—	228	—	—	—	—	2	—	93	2,022,781	1,860	—	1,439	—
49	Assets not covered for GAR calculation	3,006,399


48	HSBC Bank Malta p.l.c. Annual Report and Accounts 2024

Report of the Directors


Assets for the calculation of GAR-Based on Counterparty CapEx (continued)
		a	b	c	d	e	f	g	h	i	j	k	o	s	w	ab	ac	ad	ae	af
At 31 Dec 2024		€000
		Total [gross] carrying amount	Climate Change Mitigation (CCM)					Climate Change Adaptation (CCA)				Water and marine resources (WTR)	Circular economy (CE)	Pollution (PPC)	Biodiversity and Ecosystems (BIO)	TOTAL (CCM + CCA + WTR + CE + PPC + BIO)
			of which: towards taxonomy relevant sectors (Taxonomy- eligible)					of which: towards taxonomy relevant sectors (Taxonomy- eligible)				of which: towards taxonomy relevant sectors (Taxonomy- eligible)				of which: towards taxonomy relevant sectors (Taxonomy- eligible)
				of which: environmentally sustainable (Taxonomy-aligned)					of which: environmental ly sustainable (Taxonomy- aligned)								of which: environmentally sustainable (Taxonomy-aligned)
					of which: Use of Proceeds	of which: transitional	of which: enabling			of which: Use of Proceeds	of which: enabling							of which: Use of Proceeds	of which: transitional	of which: enabling

50	Central governments and Supranational issuers	2,183,166
51	Central banks exposure	809,144
52	Trading book	14,089
53	Total assets	7,071,314	2,022,458	1,860	—	1,439	—	228	—	—	—	—	2	—	93	2,022,781	1,860	—	1,439	—

Off-balance sheet exposures – Undertakings subject to NFRD disclosure obligations
54	Financial guarantees	12,788	1	—	—	—	—	2	—	—	—	—	—	—	—	3	—	—	—	—
55	Assets under management	390,924	30,673	7,100	—	4,024	1,078	1,786	—	—	—	—	19	—	685	33,163	7,100	—	4,024	1,078
56	– of which: debt securities	251,334	23,283	7,085	—	4,024	1,078	974	—	—	—	—	13	—	524	24,794	7,085	—	4,024	1,078
57	– of which: equity instruments	117,358	7,390	15	—	—	—	812	—	—	—	—	6	—	161	8,369	15	—	—	—


HSBC Bank Malta p.l.c. Annual Report and Accounts 2024	49


Assets for the calculation of GAR-Based on Counterparty CapEx (continued)
		a	b	c	d	e	f	g	h	i	j	ab	ac	ad	ae	af
At 31 Dec 2023		€000
		Total [gross] carrying amount	Climate Change Mitigation (CCM)					Climate Change Adaptation (CCA)				TOTAL (CCM + CCA)
			of which: towards taxonomy relevant sectors (Taxonomy-eligible)					of which: towards taxonomy relevant sectors (Taxonomy- eligible)
				of which: environmentally sustainable (Taxonomy-aligned)					of which: environmentally sustainable (Taxonomy- aligned)				of which: environmentally sustainable (Taxonomy-aligned)
					of which: Use of Proceeds	of which: transitional	of which: enabling			of which: Use of Proceeds	of which: enabling			of which: Use of Proceeds	of which: transitional	of which: enabling
	GAR – Covered assets in both numerator and denominator
1	Loans and advances, debt securities and equity instruments not HfT eligible for GAR calculation	2,544,575		—	—	—	—		—	—	—	2,297,626	—	—	—	—
2	Financial undertakings	229,300		—	—	—	—		—	—	—	22,257	—	—	—	—
3	Credit institutions	229,300		—	—	—	—		—	—	—	22,257	—	—	—	—
4	Loans and advances	207,043		—	—	—	—		—	—	—	—	—	—	—	—
5	Debt securities, including UoP	22,257		—	—	—	—		—	—	—	22,257	—	—	—	—
6	Equity instruments	—		—	—	—	—		—	—	—	—	—	—	—	—
7	Other financial corporations	—		—	—	—	—		—	—	—	—	—	—	—	—
8	– of which: investment firms	—		—	—	—	—		—	—	—	—	—	—	—	—
9	Loans and advances	—		—	—	—	—		—	—	—	—	—	—	—	—
10	Debt securities, including UoP	—		—	—	—	—		—	—	—	—	—	—	—	—
11	Equity instruments	—		—		—	—		—		—	—	—		—	—
12	– of which: management companies	—		—	—	—	—		—	—	—	—	—	—	—	—
13	Loans and advances	—		—	—	—	—		—	—	—	—	—	—	—	—
14	Debt securities, including UoP	—		—	—	—	—		—	—	—	—	—	—	—	—
15	Equity instruments	—		—		—	—		—		—	—	—		—	—
16	– of which: insurance undertakings	—		—	—	—	—		—	—	—	—	—	—	—	—
17	Loans and advances	—		—	—	—	—		—	—	—	—	—	—	—	—
18	Debt securities, including UoP	—		—	—	—	—		—	—	—	—	—	—	—	—
19	Equity instruments	—		—		—	—		—		—	—	—		—	—
20	Non-financial undertakings	33,928		—	—	—	—		—	—	—	4,394	—	—	—	—
21	Loans and advances	33,928		—	—	—	—		—	—	—	4,394	—	—	—	—
22	Debt securities, including UoP	—		—	—	—	—		—	—	—	—	—	—	—	—
23	Equity instruments	—		—	—	—	—		—	—	—	—	—	—	—	—


50	HSBC Bank Malta p.l.c. Annual Report and Accounts 2024

Report of the Directors


Assets for the calculation of GAR-Based on Counterparty CapEx (continued)
		a	b	c	d	e	f	g	h	i	j	ab	ac	ad	ae	af
At 31 Dec 2023		€000
		Total [gross] carrying amount	Climate Change Mitigation (CCM)					Climate Change Adaptation (CCA)				TOTAL (CCM + CCA)
			of which: towards taxonomy relevant sectors (Taxonomy-eligible)					of which: towards taxonomy relevant sectors (Taxonomy- eligible)
				of which: environmentally sustainable (Taxonomy-aligned)					of which: environmentally sustainable (Taxonomy- aligned)				of which: environmentally sustainable (Taxonomy-aligned)
					of which: Use of Proceeds	of which: transitional	of which: enabling			of which: Use of Proceeds	of which: enabling			of which: Use of Proceeds	of which: transitional	of which: enabling
24	Households	2,160,409		—	—	—	—		—	—	—	2,150,436	—	—	—	—
25	– of which: loans collateralised by residential immovable property	2,137,020		—	—	—	—		—	—	—	2,137,020	—	—	—	—
26	– of which: building renovation loans	2,291		—	—	—	—		—	—	—	2,291	—	—	—	—
27	– of which: motor vehicle loans	21,098		—	—	—	—		—	—	—	11,125	—	—	—	—
28	Local governments financing	117,717		—	—	—	—		—	—	—	117,717	—	—	—	—
29	Housing financing	—		—	—	—	—		—	—	—		—	—	—	—
30	Other local government financing	117,717		—	—	—	—		—	—	—	117,717	—	—	—	—
31	Collateral obtained by taking possession: residential and commercial immovable properties	3,221		—	—	—	—		—	—	—	2,822	—	—	—	—
32	Assets excluded from the numerator for GAR calculation (covered in the denominator)	1,786,860
33	Financial and Non-financial undertakings	1,018,864
34	SMEs and NFCs (other than SMEs) not subject to NFRD disclosure obligations	1,017,091
35	Loans and advances	726,008
36	– of which: loans collateralised by commercial immovable property	293,476
37	– of which: building renovation loans	4,679


HSBC Bank Malta p.l.c. Annual Report and Accounts 2024	51


Assets for the calculation of GAR-Based on Counterparty CapEx (continued)
		a	b	c	d	e	f	g	h	i	j	ab	ac	ad	ae	af
At 31 Dec 2023		€000
		Total [gross] carrying amount	Climate Change Mitigation (CCM)					Climate Change Adaptation (CCA)				TOTAL (CCM + CCA)
			of which: towards taxonomy relevant sectors (Taxonomy-eligible)					of which: towards taxonomy relevant sectors (Taxonomy- eligible)
				of which: environmentally sustainable (Taxonomy-aligned)					of which: environmentally sustainable (Taxonomy- aligned)				of which: environmentally sustainable (Taxonomy-aligned)
					of which: Use of Proceeds	of which: transitional	of which: enabling			of which: Use of Proceeds	of which: enabling			of which: Use of Proceeds	of which: transitional	of which: enabling
38	Debt securities	291,040
39	Equity instruments	43
40	Non-EU country counterparties not subject to NFRD disclosure obligations	1,549
41	Loans and advances	629
42	Debt securities	920
43	Equity instruments	—
44	Derivatives	7,483
45	On demand interbank loans	518,531
46	Cash and cash- related assets	33,582
47	Other categories of assets (e.g. Goodwill, commodities etc.)	208,624
48	Total GAR assets (in the denominator)	4,331,435		—	—	—	—		—	—	—	2,297,626	—	—	—	—
49	Assets not covered for GAR calculation	2,703,804
50	Central governments and Supranational issuers	1,439,811
51	Central banks exposure	1,257,899
52	Trading book	6,094
53	Total assets	7,035,239		—	—	—	—		—	—	—	2,297,626	—	—	—	—

Off-balance sheet exposures – Undertakings subject to NFRD disclosure obligations
54	Financial guarantees	10,279		—	—	—	—		—	—	—	3	—	—	—	—
55	Assets under management	395,000		4,558	—	2,356	—		—	—	—	21,213	4,558	—	2,356	—
56	– of which: debt securities	254,057		4,558	—	2,356	—		—	—	—	17,525	4,558	—	2,356	—
57	– of which: equity instruments	87,225		—	—	—	—		—	—	—	3,688	—	—	—	—


52	HSBC Bank Malta p.l.c. Annual Report and Accounts 2024

Report of the Directors

GAR Sector information (Template 2)

This template presents eligible and aligned exposures in the banking

book to non-financial counterparties, broken down by sector of

economic activities based on NACE code of the principal activity of

the immediate counterparty. The values reported under gross carrying

amount represents the taxonomy-eligible amount. The NACE code

determining the sector classification of the counterparty represents

the principal activity of the counterparty whether Taxonomy eligible or

not.

Consequently, there may be inclusion of economic activities with a

NACE code which is associated with a non-eligible activity, but where

the counterparty reports Taxonomy alignment based on non-principal

activities.

The template has been duplicated to present the information

separately based on Turnover and CapEx KPIs as reported by the

bank's counterparties.


GAR sector information - Based on Counterparty Turnover
		a	b	c	d	e	f	g	h	i	m	q	u	y	z	aa	ab
		€000
	Breakdown by sector - NACE 4 digits level (code and label) At 31 Dec 2024	Climate Change Mitigation (CCM)				Climate Change Adaptation (CCA)				Water and marine resources (WTR)	Circular economy (CE)	Pollution (PPC)	Biodiversity and Ecosystems (BIO)	TOTAL (CCM + CCA + WTR + CE + PPC + BIO)
		Non- Financial corporates (Subject to NFRD)		SMEs and other NFC not subject to NFRD		Non- Financial corporates (Subject to NFRD)		SMEs and other NFC not subject to NFRD		Non-Financial corporates (Subject to NFRD)				Non-Financial corporates (Subject to NFRD)		SMEs and other NFC not subject to NFRD
		[Gross] carrying amount		[Gross] carrying amount		[Gross] carrying amount		[Gross] carrying amount		[Gross] carrying amount				[Gross] carrying amount		[Gross] carrying amount
			of which: environmentally sustainable (CCM)		of which: environmentally sustainable (CCM)		of which: environmentally sustainable (CCA)		of which: environmentally sustainable (CCA)						of which: environmentally sustainable (CCM + CCA + WTR + CE + PPC + BIO)		of which: environmentally sustainable (CCM + CCA + WTR + CE + PPC + BIO)
1	C11.05 - Manufacture of beer	4	—			—	—			—	—	—	—	4	—
2	J61.10 - Wired telecommunications activities	85	—			130	—			—	—	—	—	215	—
3	M70.10 - Activities of head offices	2,142	1,727			—	—			—	17	—	870	3,029	1,727

GAR sector information - Based on Counterparty Turnover (continued)

€000

Breakdown by sector - NACE

4 digits level (code and label)

At 31 Dec 2023

Climate Change Mitigation (CCM)

Climate Change Adaptation (CCA)

TOTAL (CCM + CCA)

Non-Financial

corporates

(Subject to NFRD)

SMEs and other

NFC not subject to

NFRD

Non-Financial

corporates

(Subject to NFRD)

SMEs and other

NFC not subject

to NFRD

Non-Financial

corporates (Subject

to NFRD)

SMEs and other

NFC not subject to

NFRD

[Gross] carrying

amount

[Gross] carrying

amount

[Gross] carrying

amount

[Gross] carrying

amount

[Gross] carrying

amount

[Gross] carrying

amount

of which:

environ-

mentally

sustain-

able

(CCM)

of which:

environ-

mentally

sustain-

able

(CCM)

of which:

environ-

mentally

sustain-

able

(CCA)

of which:

environ-

mentally

sustain-

able

(CCA)

of which:

environ-

mentally

sustain-

able (CCM

+ CCA)

of which:

environ-

mentally

sustain-

able (CCM

+ CCA )

C11.05 - Manufacture

of beer

—

J61.10 - Wired

telecommunications

activities

—

1,302

—

M70.10 - Activities of

head offices

—

136

—


HSBC Bank Malta p.l.c. Annual Report and Accounts 2024	53


GAR sector information - Based on Counterparty CapEx
		a	b	c	d	e	f	g	h	i	m	q	u	y	z	aa	ab
		€000
	Breakdown by sector - NACE 4 digits level (code and label) At 31 Dec 2024	Climate Change Mitigation (CCM)				Climate Change Adaptation (CCA)				Water and marine resources (WTR)	Circular economy (CE)	Pollution (PPC)	Biodi-versity and Ecosystems (BIO)	TOTAL (CCM + CCA + WTR + CE + PPC + BIO)
		Non- Financial corporates (Subject to NFRD)		SMEs and other NFC not subject to NFRD		Non- Financial corporates (Subject to NFRD)		SMEs and other NFC not subject to NFRD		Non-Financial corporates (Subject to NFRD)				Non-Financial corporates (Subject to NFRD)		SMEs and other NFC not subject to NFRD
		[Gross] carrying amount		[Gross] carrying amount		[Gross] carrying amount		[Gross] carrying amount		[Gross] carrying amount				[Gross] carrying amount		[Gross] carrying amount
			of which: environmentally sustainable (CCM)		of which: environmentally sustainable (CCM)		of which: environmentally sustainable (CCA)		of which: environmentally sustainable (CCA)								of which: environmentally sustainable (CCM + CCA + WTR + CE + PPC + BIO)
1	C11.05 - Manufacture of beer	853	—			—	—			—	—	—	—	853	—
2	J61.10 - Wired telecommunications activities	74	—			228	—			—	2	—	—	304	—
3	M70.10 - Activities of head offices	7,654	1,439			—	—			—	—	—	93	7,747	1,439

GAR sector information - Based on Counterparty CapEx (continued)

€000

Breakdown by sector - NACE 4

digits level (code and label)

At 31 Dec 2023

Climate Change Mitigation (CCM)

Climate Change Adaptation (CCA)

TOTAL (CCM + CCA)

Non-Financial

corporates

(Subject to NFRD)

SMEs and other

NFC not subject to

NFRD

Non-Financial

corporates

(Subject to NFRD)

SMEs and other

NFC not subject

to NFRD

Non-Financial

corporates

(Subject to NFRD)

SMEs and other

NFC not subject

to NFRD

[Gross] carrying

amount

[Gross] carrying

amount

[Gross] carrying

amount

[Gross] carrying

amount

[Gross] carrying

amount

[Gross] carrying

amount

of which:

environ-

mentally

sustain-

able

(CCM)

of which:

environ-

mentally

sustain-

able

(CCM)

of which:

environ-

mentally

sustain-

able

(CCA)

of which:

environ-

mentally

sustain-

able

(CCA)

of which;

environ-

mentally

sustain-

able

(CCM +

CCA)

of which:

environ-

mentally

sustain-

able

(CCM +

CCA)

C11.05 - Manufacture of

beer

—

1,466

—

J61.10 - Wired

telecommunications

activities

—

1,610

—

M70.10 - Activities of head

offices

—

1,318

—


54	HSBC Bank Malta p.l.c. Annual Report and Accounts 2024

Report of the Directors

GAR KPI stock (Template 3)

This template presents eligible and aligned exposures as a proportion

of total covered assets by Taxonomy environmental objective. The

template has been duplicated to present information separately based

on Turnover and CapEx KPIs as reported by the bank's counterparties.

The bank's approach towards disclosing GAR KPI ratios in this

template is based on the amounts of covered assets disclosed in

Template 1, whereby each ratio's denominator is equal to the bank's

total covered assets.

This is in line with both guidance provided in the headers to Template

3, and also in line with section 1.2.1.1 of the Disclosures Delegated

Act, applicable to exposures to non-financial undertakings. In this

respect, it is specified that the denominator of the GAR should be

extended to include "all other covered on-balance sheet assets". This

approach has been applied throughout Template 3 towards all

relevant ratios disclosed.


GAR KPI stock – Based on Counterparty Turnover
% (compared to total covered assets in the denominator) At 31 Dec 2024		a	b	c	d	e	f	g	h	i	j	n	r	v	aa	ab	ac	ad	ae	af
		Climate Change Mitigation (CCM)					Climate Change Adaptation (CCA)				Water and marine resources (WTR)	Circular economy (CE)	Pollution (PPC)	Biodiversity and Ecosystems (BIO)	TOTAL (CCM + CCA + WTR + CE + PPC + BIO)
		Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy- eligible)					Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy-eligible)				Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy-eligible)	Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy-eligible)	Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy-eligible)	Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy-eligible)	Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy-eligible)					Proportion of total assets covered
			Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy- aligned)					Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy- aligned)								Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy-aligned)
				of which: Use of Proceeds	of which: transitional	of which: enabling			of which: Use of Proceeds	of which: enabling							of which: Use of Proceeds	of which: transitional	of which: enabling
		%	%	%	%	%	%	%	%	%	%	%	%	%	%	%	%	%	%	%
	GAR – Covered assets in both numerator and denominator
1	Loans and advances, debt securities and equity instruments not HfT eligible for GAR calculation	49.59	0.05	—	0.04	—	—	—	—	—	—	—	—	0.02	49.61	0.05	—	0.04	—	31.11
2	Financial undertakings	0.51	—	—	—	—	—	—	—	—	—	—	—	—	0.51	—	—	—	—	2.42
3	Credit institutions	0.51	—	—	—	—	—	—	—	—	—	—	—	—	0.51	—	—	—	—	2.42
4	Loans and advances	0.04	—	—	—	—	—	—	—	—	—	—	—	—	0.04	—	—	—	—	2.15
5	Debt securities, including UoP	0.47	—	—	—	—	—	—	—	—	—	—	—	—	0.47	—	—	—	—	0.27
6	Equity instruments	—	—		—	—	—	—		—	—	—	—	—	—	—		—	—	—
7	Other financial corporations	—	—	—	—	—	—	—	—	—	—	—	—	—	—	—	—	—	—	—
8	– of which: investment firms	—	—	—	—	—	—	—	—	—	—	—	—	—	—	—	—	—	—	—
9	Loans and advances	—	—	—	—	—	—	—	—	—	—	—	—	—	—	—	—	—	—	—
10	Debt securities, including UoP	—	—	—	—	—	—	—	—	—	—	—	—	—	—	—	—	—	—	—
11	Equity instruments	—	—		—	—	—	—		—	—	—	—	—	—	—		—	—	—
12	– of which: management companies	—	—		—	—	—	—		—	—	—	—	—	—	—		—	—	—
13	Loans and advances	—	—	—	—	—	—	—	—	—	—	—	—	—	—	—	—	—	—	—
14	Debt securities, including UoP	—	—	—	—	—	—	—	—	—	—	—	—	—	—	—	—	—	—	—
15	Equity instruments	—	—		—	—	—	—		—	—	—	—	—	—	—		—	—	—


HSBC Bank Malta p.l.c. Annual Report and Accounts 2024	55


GAR KPI stock – Based on Counterparty Turnover (continued)
% (compared to total covered assets in the denominator) At 31 Dec 2024		a	b	c	d	e	f	g	h	i	j	n	r	v	aa	ab	ac	ad	ae	af
		Climate Change Mitigation (CCM)					Climate Change Adaptation (CCA)				Water and marine resources (WTR)	Circular economy (CE)	Pollution (PPC)	Biodiversity and Ecosystems (BIO)	TOTAL (CCM + CCA + WTR + CE + PPC + BIO)
		Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy- eligible)					Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy-eligible)				Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy-eligible)	Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy-eligible)	Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy-eligible)	Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy-eligible)	Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy-eligible)					Proportion of total assets covered
			Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy- aligned)					Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy- aligned)								Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy-aligned)
				of which: Use of Proceeds	of which: transitional	of which: enabling			of which: Use of Proceeds	of which: enabling							of which: Use of Proceeds	of which: transitional	of which: enabling
		%	%	%	%	%	%	%	%	%	%	%	%	%	%	%	%	%	%	%
16	– of which: insurance undertakings	—	—		—	—	—	—		—	—	—	—	—	—	—		—	—	—
17	Loans and advances	—	—	—	—	—	—	—	—	—	—	—	—	—	—	—	—	—	—	—
18	Debt securities, including UoP	—	—	—	—	—	—	—	—	—	—	—	—	—	—	—	—	—	—	—
19	Equity instruments	—	—		—	—	—	—		—	—	—	—	—	—	—		—	—	—
20	Non-financial undertakings	0.05	0.05	—	0.04	—	—	—	—	—	—	—	—	0.02	0.07	0.05	—	0.04	—	0.42
21	Loans and advances	0.05	0.05	—	0.04	—	—	—	—	—	—	—	—	0.02	0.07	0.05	—	0.04	—	0.42
22	Debt securities, including UoP	—	—	—	—	—	—	—	—	—	—	—	—	—	—	—	—	—	—	—
23	Equity instruments	—	—		—	—	—	—		—	—	—	—	—	—	—		—	—	—
24	Households	46.07	—	—	—	—	—	—	—	—	—	—	—	—	46.07	—	—	—	—	26.56
25	– of which: loans collateralised by residential immovable property	45.65	—	—	—	—	—	—	—	—	—	—	—	—	45.65	—	—	—	—	26.24
26	– of which: building renovation loans	0.06	—	—	—	—	—	—	—	—	—	—	—	—	0.06	—	—	—	—	0.04
27	– of which: motor vehicle loans	0.36	—	—	—	—	—	—	—	—	—	—	—	—	0.36	—	—	—	—	0.28
28	Local governments financing	2.90	—	—	—	—	—	—	—	—	—	—	—	—	2.90	—	—	—	—	1.67
29	Housing financing	—	—	—	—	—	—	—	—	—	—	—	—	—	—	—	—	—	—	—
30	Other local government financing	2.90	—	—	—	—	—	—	—	—	—	—	—	—	2.90	—	—	—	—	1.67
31	Collateral obtained by taking possession: residential and commercial immovable properties	0.06	—	—	—	—	—	—	—	—	—	—	—	—	0.06	—	—	—	—	0.04
32	Total GAR assets (In the numerator)	49.59	0.05	—	0.04	—	—	—	—	—	—	—	—	0.02	49.61	0.05	—	0.04	—	57.48


56	HSBC Bank Malta p.l.c. Annual Report and Accounts 2024

Report of the Directors


GAR KPI stock – Based on Counterparty Turnover (continued)
% (compared to total covered assets in the denominator) At 31 Dec 2023		a	b	c	d	e	f	g	h	i	aa	ab	ac	ad	ae	af
		Climate Change Mitigation (CCM)					Climate Change Adaptation (CCA)				TOTAL (CCM + CCA)
		Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy-eligible)					Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy- eligible)				Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy- eligible)					Proportion of total assets covered
			Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy- aligned)					Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy- aligned)				Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy- aligned)
				of which: Use of Proceeds	of which: transitional	of which enabling			of which: Use of Proceeds	of which: enabling			of which: Use of Proceeds	of which: transitional	of which: enabling
		%	%	%	%	%	%	%	%	%	%	%	%	%	%	%
	GAR – Covered assets in both numerator and denominator
1	Loans and advances, debt securities and equity instruments not HfT eligible for GAR calculation		—	—	—	—		—	—	—	52.98	—	—	—	—	36.17
2	Financial undertakings		—	—	—	—		—	—	—	0.51	—	—	—	—	3.26
3	Credit institutions		—	—	—	—		—	—	—	0.51	—	—	—	—	3.26
4	Loans and advances		—	—	—	—		—	—	—	—	—	—	—	—	2.94
5	Debt securities, including UoP		—	—	—	—		—	—	—	0.51	—	—	—	—	0.32
6	Equity instruments		—		—	—		—		—	—	—		—	—	—
7	Other financial corporations		—	—	—	—		—	—	—	—	—	—	—	—	—
8	– of which: investment firms		—	—	—	—		—	—	—	—	—	—	—	—	—
9	Loans and advances		—	—	—	—		—	—	—	—	—	—	—	—	—
10	Debt securities, including UoP		—	—	—	—		—	—	—	—	—	—	—	—	—
11	Equity instruments		—		—	—		—		—	—	—		—	—	—
12	– of which: management companies		—	—	—	—		—	—	—	—	—	—	—	—	—
13	Loans and advances		—	—	—	—		—	—	—	—	—	—	—	—	—
14	Debt securities, including UoP		—	—	—	—		—	—	—	—	—	—	—	—	—
15	Equity instruments		—		—	—		—		—	—	—		—	—	—
16	– of which: insurance undertakings		—	—	—	—		—	—	—	—	—	—	—	—	—
17	Loans and advances		—	—	—	—		—	—	—	—	—	—	—	—	—
18	Debt securities, including UoP		—	—	—	—		—	—	—	—	—	—	—	—	—
19	Equity instruments		—		—	—		—		—	—	—		—	—	—
20	Non-financial undertakings		—	—	—	—		—	—	—	0.03	—	—	—	—	0.48
21	Loans and advances		—	—	—	—		—	—	—	0.03	—	—	—	—	0.48
22	Debt securities, including UoP		—	—	—	—		—	—	—	—	—	—	—	—	—
23	Equity instruments		—		—	—		—		—		—		—	—	—
24	Households		—	—	—	—		—	—	—	49.65	—	—	—	—	30.71


HSBC Bank Malta p.l.c. Annual Report and Accounts 2024	57


GAR KPI stock – Based on Counterparty Turnover (continued)
% (compared to total covered assets in the denominator) At 31 Dec 2023		a	b	c	d	e	f	g	h	i	aa	ab	ac	ad	ae	af
		Climate Change Mitigation (CCM)					Climate Change Adaptation (CCA)				TOTAL (CCM + CCA)
		Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy-eligible)					Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy- eligible)				Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy- eligible)					Proportion of total assets covered
			Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy- aligned)					Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy- aligned)				Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy- aligned)
				of which: Use of Proceeds	of which: transitional	of which enabling			of which: Use of Proceeds	of which: enabling			of which: Use of Proceeds	of which: transitional	of which: enabling
		%	%	%	%	%	%	%	%	%	%	%	%	%	%	%
25	– of which: loans collateralised by residential immovable property		—	—	—	—		—	—	—	49.34	—	—	—	—	30.38
26	– of which: building renovation loans		—	—	—	—		—	—	—	0.05	—	—	—	—	0.03
27	– of which: motor vehicle loans		—	—	—	—
28	Local governments financing		—	—	—	—		—	—	—	2.72	—	—	—	—	1.67
29	Housing financing		—	—	—	—		—	—	—	—	—	—	—	—	—
30	Other local government financing		—	—	—	—		—	—	—	2.72	—	—	—	—	1.67
31	Collateral obtained by taking possession: residential and commercial immovable properties		—	—	—	—		—	—	—	0.07	—	—	—	—	0.05
32	Total GAR assets (in the numerator)		—	—	—	—		—	—	—	52.98	—	—	—	—	61.57


58	HSBC Bank Malta p.l.c. Annual Report and Accounts 2024

Report of the Directors


GAR KPI stock – Based on Counterparty CapEx
% (compared to total covered assets in the denominator) At 31 Dec 2024		a	b	c	d	e	f	g	h	i	j	n	r	v	aa	ab	ac	ad	ae	af
		Climate Change Mitigation (CCM)					Climate Change Adaptation (CCA)				Water and marine resources (WTR)	Circular economy (CE)	Pollution (PPC)	Biodiversity and Ecosystems (BIO)	TOTAL (CCM + CCA + WTR + CE + PPC + BIO)
		Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy-eligible)					Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy-eligible)				Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy-eligible)	Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy-eligible)	Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy-eligible)	Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy-eligible)	Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy-eligible)					Proportion of total assets covered
			Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy-aligned)					Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy- aligned)								Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy-aligned)
				of which: Use of Proceeds	of which: transitional	of which: enabling			of which: Use of Proceeds	of which: enabling							of which: Use of Proceeds	of which: transitional	of which: enabling
		%	%	%	%	%	%	%	%	%	%	%	%	%	%	%	%	%	%	%
	GAR – Covered assets in both numerator and denominator
1	Loans and advances, debt securities and equity instruments not HfT eligible for GAR calculation	54.11	0.05	—	0.04	—	0.01	—	—	—	—	—	—	—	54.12	0.05	—	0.04	—	31.11
2	Financial undertakings	4.21	0.01	—	—	—	—	—	—	—	—	—	—	—	4.21	0.01	—	—	—	2.42
3	Credit institutions	4.21	0.01	—	—	—	—	—	—	—	—	—	—	—	4.21	0.01	—	—	—	2.42
4	Loans and advances	3.74	0.01	—	—	—	—	—	—	—	—	—	—	—	3.74	0.01	—	—	—	2.15
5	Debt securities, including UoP	0.47	—	—	—	—	—	—	—	—	—	—	—	—	0.47	—	—	—	—	0.27
6	Equity instruments	—	—		—	—	—	—		—	—	—	—	—	—	—		—	—	—
7	Other financial corporations	—	—	—	—	—	—	—	—	—	—	—	—	—	—	—	—	—	—	—
8	– of which: investment firms	—	—	—	—	—	—	—	—	—	—	—	—	—	—	—	—	—	—	—
9	Loans and advances	—	—	—	—	—	—	—	—	—	—	—	—	—	—	—	—	—	—	—
10	Debt securities, including UoP	—	—	—	—	—	—	—	—	—	—	—	—	—	—	—	—	—	—	—
11	Equity instruments	—	—		—	—	—	—		—	—	—	—	—	—	—		—	—	—
12	– of which: management companies	—	—		—	—	—	—		—	—	—	—	—	—	—		—	—	—
13	Loans and advances	—	—	—	—	—	—	—	—	—	—	—	—	—	—	—	—	—	—	—
14	Debt securities, including UoP	—	—	—	—	—	—	—	—	—	—	—	—	—	—	—	—	—	—	—
15	Equity instruments	—	—		—	—	—	—		—	—	—	—	—	—	—		—	—	—
16	– of which: insurance undertakings	—	—		—	—	—	—		—	—	—	—	—	—	—		—	—	—
17	Loans and advances	—	—	—	—	—	—	—	—	—	—	—	—	—	—	—	—	—	—	—
18	Debt securities, including UoP	—	—	—	—	—	—	—	—	—	—	—	—	—	—	—	—	—	—	—
19	Equity instruments	—	—	—	—	—	—	—	—	—	—	—	—	—	—	—	—	—	—	—
20	Non-financial undertakings	0.73	0.04	—	0.04	—	0.01	—	—	—	—	—	—	—	0.74	0.04	—	0.04	—	0.42
21	Loans and advances	0.73	0.04	—	0.04	—	0.01	—	—	—	—	—	—	—	0.74	0.04	—	0.04	—	0.42
22	Debt securities, including UoP	—	—	—	—	—	—	—	—	—	—	—	—	—	—	—	—	—	—	—


HSBC Bank Malta p.l.c. Annual Report and Accounts 2024	59


GAR KPI stock – Based on Counterparty CapEx (continued)
% (compared to total covered assets in the denominator) At 31 Dec 2024		a	b	c	d	e	f	g	h	i	j	n	r	v	aa	ab	ac	ad	ae	af
		Climate Change Mitigation (CCM)					Climate Change Adaptation (CCA)				Water and marine resources (WTR)	Circular economy (CE)	Pollution (PPC)	Biodiversity and Ecosystems (BIO)	TOTAL (CCM + CCA + WTR + CE + PPC + BIO)
		Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy-eligible)					Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy-eligible)				Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy-eligible)	Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy-eligible)	Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy-eligible)	Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy-eligible)	Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy-eligible)					Proportion of total assets covered
			Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy-aligned)					Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy- aligned)								Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy-aligned)
				of which: Use of Proceeds	of which: transitional	of which: enabling			of which: Use of Proceeds	of which: enabling							of which: Use of Proceeds	of which: transitional	of which: enabling
		%	%	%	%	%	%	%	%	%	%	%	%	%	%	%	%	%	%	%

23	Equity instruments	—	—		—	—	—	—		—	—	—	—	—	—	—		—	—	—
24	Households	46.20	—	—	—	—	—	—	—	—		—			46.20	—	—	—	—	26.56
25	– of which: loans collateralised by residential immovable property	45.65	—	—	—	—	—	—	—	—		—			45.65	—	—	—	—	26.24
26	– of which: building renovation loans	0.06	—	—	—	—	—	—	—	—		—			0.06	—	—	—	—	0.04
27	– of which: motor vehicle loans	0.49	—	—	—	—	—	—	—	—					0.49					0.28
28	Local governments financing	2.90	—	—	—	—	—	—	—	—	—	—	—	—	2.90	—	—	—	—	1.67
29	Housing financing	—	—	—	—	—	—	—	—	—	—	—	—	—	—					—
30	Other local government financing	2.90	—	—	—	—	—	—	—	—	—	—	—	—	2.90	—	—	—	—	1.67
31	Collateral obtained by taking possession: residential and commercial immovable properties	0.07	—	—	—	—	—	—	—	—	—	—	—	—	0.07	—	—	—	—	0.04
32	Total GAR assets (in the numerator)	54.11	0.05	—	0.04	—	0.01	—	—	—	—	—	—	—	54.12	0.05	—	0.04	—	57.48


60	HSBC Bank Malta p.l.c. Annual Report and Accounts 2024

Report of the Directors


GAR KPI stock – Based on Counterparty CapEx (continued)
% (compared to total covered assets in the denominator) At 31st Dec 2023		a	b	c	d	e	f	g	h	i	aa	ab	ac	ad	ae	af
		Climate Change Mitigation (CCM)					Climate Change Adaptation (CCA)				TOTAL (CCM + CCA)
		Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy-eligible)					Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy-eligible)				Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy-eligible)					Proportion of total assets covered
			Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy- aligned)					Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy- aligned)				Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy- aligned)
				of which: Use of Proceeds	of which: transitional	of which: enabling			of which: Use of Proceeds	of which: enabling			of which: Use of Proceeds	of which: transitional	of which: enabling
		%	%	%	%	%	%	%	%	%	%	%	%	%	%	%
	GAR – Covered assets in both numerator and denominator
1	Loans and advances, debt securities and equity instruments not HfT eligible for GAR calculation		—	—	—	—		—	—	—	53.05	—	—	—	—	36.17
2	Financial undertakings		—	—	—	—		—	—	—	0.51	—	—	—	—	3.26
3	Credit institutions		—	—	—	—		—	—	—	0.51	—	—	—	—	3.26
4	Loans and advances		—	—	—	—		—	—	—	—	—	—	—	—	2.94
5	Debt securities, including UoP		—	—	—	—		—	—	—	0.51	—	—	—	—	0.32
6	Equity instruments		—		—	—		—		—	—	—		—	—	—
7	Other financial corporations		—	—	—	—		—	—	—	—	—	—	—	—	—
8	– of which: investment firms		—	—	—	—		—	—	—	—	—	—	—	—	—
9	Loans and advances		—	—	—	—		—	—	—	—	—	—	—	—	—
10	Debt securities, including UoP		—	—	—	—		—	—	—	—	—	—	—	—	—
11	Equity instruments		—		—	—		—		—	—	—		—	—	—
12	– of which: management companies		—	—	—	—		—	—	—	—	—	—	—	—	—
13	Loans and advances		—	—	—	—		—	—	—	—	—	—	—	—	—
14	Debt securities, including UoP		—	—	—	—		—	—	—	—	—	—	—	—	—
15	Equity instruments		—		—	—		—		—	—	—		—	—	—
16	– of which: insurance undertakings		—	—	—	—		—	—	—	—	—	—	—	—	—
17	Loans and advances		—	—	—	—		—	—	—	—	—	—	—	—	—
18	Debt securities, including UoP		—	—	—	—		—	—	—	—	—	—	—	—	—
19	Equity instruments		—		—	—		—		—	—	—		—	—	—
20	Non-financial undertakings		—	—	—	—		—	—	—	0.10	—	—	—	—	0.48
21	Loans and advances		—	—	—	—		—	—	—	0.10	—	—	—	—	0.48
22	Debt securities, including UoP		—	—	—	—		—	—	—	—	—	—	—	—	—
23	Equity instruments		—		—	—		—		—	—	—		—	—	—
24	Households	—	—	—	—		—	—	—	—	49.65	—	—	—	—	30.71
25	– of which: loans collateralised by residential immovable property	—	—	—	—		—	—	—	—	49.34	—	—	—	—	30.38
26	– of which: building renovation loans	—	—	—	—		—	—	—	—	0.05	—	—	—	—	0.03
27	– of which: motor vehicle loans	—	—	—	—
28	Local governments financing	—	—	—	—		—	—	—	—	2.72	—	—	—	—	1.67
29	Housing financing	—	—	—	—		—	—	—	—	—	—	—	—	—	—
30	Other local government financing	—	—	—	—		—	—	—	—	2.72	—	—	—	—	1.67


HSBC Bank Malta p.l.c. Annual Report and Accounts 2024	61


GAR KPI stock – Based on Counterparty CapEx (continued)
% (compared to total covered assets in the denominator) At 31st Dec 2023		a	b	c	d	e	f	g	h	i	aa	ab	ac	ad	ae	af
		Climate Change Mitigation (CCM)					Climate Change Adaptation (CCA)				TOTAL (CCM + CCA)
		Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy-eligible)					Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy-eligible)				Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy-eligible)					Proportion of total assets covered
			Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy- aligned)					Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy- aligned)				Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy- aligned)
				of which: Use of Proceeds	of which: transitional	of which: enabling			of which: Use of Proceeds	of which: enabling			of which: Use of Proceeds	of which: transitional	of which: enabling
		%	%	%	%	%	%	%	%	%	%	%	%	%	%	%
31	Collateral obtained by taking possession: residential and commercial immovable properties	—	—	—	—		—	—	—	—	0.07	—	—	—	—	0.05
32	Total GAR assets (in the numerator)	—	—	—	—		—	—	—	—	53.05	—	—	—	—	61.57

GAR KPI flow (Template 4)

This template presents the flow of eligible and aligned exposures as a

proportion of total new covered assets by Taxonomy environmental

objective.

In accordance with applicable Taxonomy guidance, flow is defined as

the gross carrying amount of newly incurred exposures (i.e. new

loans and advances, debt securities, equity instruments) that have

been incurred during the year, without deducting the amounts of loan

repayments or disposals of debt securities or equity instruments that

have occurred during the year. Such guidance also clarifies that banks

should not compute the numerator and the denominator of the flow

KPI as exposures on the disclosure reference date (T) minus

exposures on the disclosure reference date (T-1).

Data challenges for certain asset classes mean that, in the case of the

current reporting period, a calculation of the flow in line with

Taxonomy regulatory text and guidance mentioned above is not

entirely practicable, considering challenges around sourcing loan

origination dates for certain products and legal entities.

The flow is calculated for each line item based on a hierarchy of

preference. Firstly, where loan signature dates and origination

amounts are available, the gross carrying amount of newly incurred

exposures by transaction or customer is calculated without deducting

repayments or disposals. As the starting point to identify new loans

granted during the year is the stock of loans at 31 December 2024, it

is possible that some loans both granted and repaid during 2024 have

not been accounted for in the flow. To identify the date that loans

have been granted, the signature date currently available is used.

Some renegotiated loans may have a different signature date than the

original loan.

Where signature dates and origination amounts are not available, flow

is calculated as the exposure at date (T) minus the exposure at date

(T-1) by individual transaction or customer or internal sub-classification

level, defaulting to zero where the result is negative. This approach is

also used for overdrafts and other revolving credit facilities, as

multiple drawings and repayments in the period could result in a

disproportionately high gross flow which is a multiple of that of the

stock, and in any case, it is not practicable or possible to identify

every individual drawing through the year.

To calculate total new covered assets and total new assets, it is

necessary to calculate the flow for items that are not explicit line

items in the flow template such as derivatives. For such items, the

flow is calculated based on the exposure at date (T) minus exposure

at date (T-1) at a total asset class level, defaulting to zero where the

result is negative.

The proportion of new assets covered by the Green Asset Ratio

arising during the year to 31 December 2024 as a proportion of total

new assets for the same period is reported in column af.

Comparative tables for the year end 2023 have not been reported due

to data and operational limitations.


62	HSBC Bank Malta p.l.c. Annual Report and Accounts 2024

Report of the Directors


GAR KPI Flow – Based on Counterparty Turnover
% (compared to total covered assets in the denominator) At 31 Dec 2024		a	b	c	d	e	f	g	h	i	j	n	r	v	aa	ab	ac	ad	ae	af
		Climate Change Mitigation (CCM)					Climate Change Adaptation (CCA)				Water and marine resources (WTR)	Circular economy (CE)	Pollution (PPC)	Biodiversity and Ecosystems (BIO)	TOTAL (CCM + CCA + WTR + CE + PPC + BIO)
		Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy- eligible)					Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy-eligible)				Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy-eligible)	Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy-eligible)	(continued)	Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy-eligible)	Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy- eligible)					Proportion of total assets covered
			Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy- aligned)					Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy- aligned)								Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy- aligned)
				of which: Use of Proceeds	of which: transitional	of which: enabling			of which: Use of Proceeds	of which: enabling							of which: Use of Proceeds	of which: transitional	of which: enabling
		%	%	%	%	%	%	%	%	%	%	%	%	%	%	%	%	%	%	%
	GAR – Covered assets in both numerator and denominator
1	Loans and advances, debt securities and equity instruments not HfT eligible for GAR calculation	10.12	0.25	—	0.22	—	0.02	—	—	—	—	—	—	—	10.14	0.25	—	0.22	—	15.80
2	Financial undertakings	0.03	0.03	—	—	—	—	—	—	—	—	—	—	—	0.03	0.03	—	—	—	9.71
3	Credit institutions	0.03	0.03	—	—	—	—	—	—	—	—	—	—	—	0.03	0.03	—	—	—	9.71
4	Loans and advances	0.03	0.03	—	—	—	—	—	—	—	—	—	—	—	0.03	0.03	—	—	—	9.71
5	Debt securities, including UoP	—	—	—	—	—	—	—	—	—	—	—	—	—	—	—	—	—	—	—
6	Equity instruments	—	—		—	—	—	—		—	—	—	—	—	—	—		—	—	—
7	Other financial corporations	—	—	—	—	—	—	—	—	—	—	—	—	—	—	—	—	—	—	—
8	– of which: investment firms	—	—	—	—	—	—	—	—	—	—	—	—	—	—	—	—	—	—	—
9	Loans and advances	—	—	—	—	—	—	—	—	—	—	—	—	—	—	—	—	—	—	—
10	Debt securities, including UoP	—	—	—	—	—	—	—	—	—	—	—	—	—	—	—	—	—	—	—
11	Equity instruments	—	—		—	—	—	—		—	—	—	—	—	—	—		—	—	—
12	– of which: management companies	—	—	—	—	—	—	—	—	—	—	—	—	—	—	—	—	—	—	—
13	Loans and advances	—	—	—	—	—	—	—	—	—	—	—	—	—	—	—	—	—	—	—
14	Debt securities, including UoP	—	—	—	—	—	—	—	—	—	—	—	—	—	—	—	—	—	—	—
15	Equity instruments	—	—		—	—	—	—		—	—	—	—	—	—	—		—	—	—
16	– of which: insurance undertakings	—	—	—	—	—	—	—	—	—	—	—	—	—	—	—	—	—	—	—
17	Loans and advances	—	—	—	—	—	—	—	—	—	—	—	—	—	—	—	—	—	—	—
18	Debt securities, including UoP	—	—	—	—	—	—	—	—	—	—	—	—	—	—	—	—	—	—	—
19	Equity instruments	—	—		—	—	—	—		—	—	—	—	—	—	—		—	—	—


HSBC Bank Malta p.l.c. Annual Report and Accounts 2024	63


GAR KPI Flow – Based on Counterparty Turnover (continued)
% (compared to total covered assets in the denominator) At 31 Dec 2024		a	b	c	d	e	f	g	h	i	j	n	r	v	aa	ab	ac	ad	ae	af
		Climate Change Mitigation (CCM)					Climate Change Adaptation (CCA)				Water and marine resources (WTR)	Circular economy (CE)	Pollution (PPC)	Biodiversity and Ecosystems (BIO)	TOTAL (CCM + CCA + WTR + CE + PPC + BIO)
		Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy- eligible)					Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy-eligible)				Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy-eligible)	Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy-eligible)	(continued)	Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy-eligible)	Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy- eligible)					Proportion of total assets covered
			Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy- aligned)					Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy- aligned)								Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy- aligned)
				of which: Use of Proceeds	of which: transitional	of which: enabling			of which: Use of Proceeds	of which: enabling							of which: Use of Proceeds	of which: transitional	of which: enabling
		%	%	%	%	%	%	%	%	%	%	%	%	%	%	%	%	%	%	%

20	Non-financial undertakings	0.26	0.22	—	0.22	—	0.02	—	—	—	—	—	—	—	0.28	0.22	—	0.22	—	1.10
21	Loans and advances	0.26	0.22	—	0.22	—	0.02	—	—	—	—	—	—	—	0.28	0.22	—	0.22	—	1.10
22	Debt securities, including UoP	—	—	—	—	—	—	—	—	—	—	—	—	—	—	—	—	—	—	—
23	Equity instruments	—	—		—	—	—	—		—	—	—	—	—	—	—		—	—	—
24	Households	9.83	—	—	—	—	—	—	—	—		—			9.83	—	—	—	—	4.99
25	– of which: loans collateralised by residential immovable property	8.95	—	—	—	—	—	—	—	—		—			8.95	—	—	—	—	4.55
26	– of which: building renovation loans	0.04	—	—	—	—	—	—	—	—		—			0.04	—	—	—	—	0.02
27	– of which: motor vehicle loans	0.84	—	—	—	—									0.84	—	—	—	—	0.42
28	Local governments financing	—	—	—	—	—	—	—	—	—	—	—	—	—	—	—	—	—	—	—
29	Housing financing	—	—	—	—	—	—	—	—	—	—	—	—	—	—	—	—	—	—	—
30	Other local government financing	—	—	—	—	—	—	—	—	—	—	—	—	—	—	—	—	—	—	—
31	Collateral obtained by taking possession: residential and commercial immovable properties	—	—	—	—	—	—	—	—	—	—	—	—	—	—	—	—	—	—	—
32	Total GAR assets (in the numerator)	10.12	0.25	—	0.22	—	0.02	—	—	—	—	—	—	—	10.14	0.25	—	0.22	—	15.80


64	HSBC Bank Malta p.l.c. Annual Report and Accounts 2024

Report of the Directors


GAR KPI Flow – Based on Counterparty CapEx
% (compared to total covered assets in the denominator) At 31 Dec 2024		a	b	c	d	e	f	g	h	i	j	k	l	m	aa	ab	ac	ad	ae	af
		Climate Change Mitigation (CCM)					Climate Change Adaptation (CCA)				Water and marine resources (WTR)	Circular economy (CE)	Pollution (PPC)	Biodiversity and Ecosystems (BIO)	TOTAL (CCM + CCA + WTR + CE + PPC + BIO)
		Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy- eligible)					Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy-eligible)				Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy-eligible)	Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy-eligible)	Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy-eligible)	Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy-eligible)	Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy- eligible)					Proportion of total assets covered
			Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy-aligned)					Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy- aligned)								Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy- aligned)
				of which: Use of Proceeds	of which: transitional	of which: enabling			of which: Use of Proceeds	of which: enabling							of which: Use of Proceeds	of which: transitional	of which: enabling
		%	%	%	%	%	%	%	%	%	%	%	%	%	%	%	%	%	%	%
	GAR – Covered assets in both numerator and denominator
1	Loans and advances, debt securities and equity instruments not HfT eligible for GAR calculation	10.49	0.24	—	0.19	—	0.03	—	—	—	—	—	—	—	10.52	0.24	—	0.19	—	15.80
2	Financial undertakings	0.06	0.05	—	—	—	—	—	—	—	—	—	—	—	0.06	0.05	—	—	—	9.71
3	Credit institutions	0.06	0.05	—	—	—	—	—	—	—	—	—	—	—	0.06	0.05	—	—	—	9.71
4	Loans and advances	0.06	0.05	—	—	—	—	—	—	—	—	—	—	—	0.06	0.05	—	—	—	9.71
5	Debt securities, including UoP	—	—	—	—	—	—	—	—	—	—	—	—	—	—	—	—	—	—	—
6	Equity instruments	—	—		—	—	—	—	—	—	—	—	—	—	—	—		—	—	—
7	Other financial corporations	—	—	—	—	—	—	—	—	—	—	—	—	—	—	—	—	—	—	—
8	– of which: investment firms	—	—	—	—	—	—	—	—	—	—	—	—	—	—	—	—	—	—	—
9	Loans and advances	—	—	—	—	—	—	—	—	—	—	—	—	—	—	—	—	—	—	—
10	Debt securities, including UoP	—	—	—	—	—	—	—	—	—	—	—	—	—	—	—	—	—	—	—
11	Equity instruments	—	—		—	—	—	—	—	—	—	—	—	—	—	—		—	—	—
12	– of which: management companies	—	—	—	—	—	—	—	—	—	—	—	—	—	—	—	—	—	—	—
13	Loans and advances	—	—	—	—	—	—	—	—	—	—	—	—	—	—	—	—	—	—	—
14	Debt securities, including UoP	—	—	—	—	—	—	—	—	—	—	—	—	—	—	—	—	—	—	—
15	Equity instruments	—	—		—	—	—	—	—	—	—	—	—	—	—	—		—	—	—
16	– of which: insurance undertakings	—	—	—	—	—	—	—	—	—	—	—	—	—	—	—	—	—	—	—
17	Loans and advances	—	—	—	—	—	—	—	—	—	—	—	—	—	—	—	—	—	—	—
18	Debt securities, including UoP	—	—	—	—	—	—	—	—	—	—	—	—	—	—	—	—	—	—	—
19	Equity instruments	—	—		—	—	—	—	—	—	—	—	—	—	—	—		—	—	—


HSBC Bank Malta p.l.c. Annual Report and Accounts 2024	65


GAR KPI Flow – Based on Counterparty CapEx (continued)
% (compared to total covered assets in the denominator) At 31 Dec 2024		a	b	c	d	e	f	g	h	i	j	k	l	m	aa	ab	ac	ad	ae	af
		Climate Change Mitigation (CCM)					Climate Change Adaptation (CCA)				Water and marine resources (WTR)	Circular economy (CE)	Pollution (PPC)	Biodiversity and Ecosystems (BIO)	TOTAL (CCM + CCA + WTR + CE + PPC + BIO)
		Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy- eligible)					Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy-eligible)				Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy-eligible)	Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy-eligible)	Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy-eligible)	Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy-eligible)	Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy- eligible)					Proportion of total assets covered
			Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy-aligned)					Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy- aligned)								Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy- aligned)
				of which: Use of Proceeds	of which: transitional	of which: enabling			of which: Use of Proceeds	of which: enabling							of which: Use of Proceeds	of which: transitional	of which: enabling
		%	%	%	%	%	%	%	%	%	%	%	%	%	%	%	%	%	%	%
20	Non-financial undertakings	0.60	0.19	—	0.19	—	0.03	—		—	—	—	—	—	0.63	0.19	—	0.19	—	1.10
21	Loans and advances	0.60	0.19	—	0.19	—	0.03	—	—	—	—	—	—	—	0.63	0.19	—	0.19	—	1.10
22	Debt securities, including UoP	—	—	—	—	—	—	—	—	—	—	—	—	—	—	—	—	—	—	—
23	Equity instruments	—	—		—	—	—	—		—	—		—	—	—	—		—	—	—
24	Households	9.83	—	—	—	—	—	—	—	—		—			9.83	—	—	—	—	4.99
25	– of which: loans collateralised by residential immovable property	8.95	—	—	—	—	—	—	—	—		—			8.95	—	—	—	—	4.55
26	– of which: building renovation loans	0.04	—	—	—	—	—	—	—	—		—			0.04	—	—	—	—	0.02
27	– of which: motor vehicle loans	0.84	—	—	—	—									0.84	—	—	—	—	0.42
28	Local governments financing	—	—	—	—	—	—	—	—	—	—	—	—	—	—	—	—	—	—	—
29	Housing financing	—	—	—	—	—	—	—	—	—	—	—	—	—	—	—	—	—	—	—
30	Other local government financing	—	—	—	—	—	—	—	—	—	—	—	—	—	—	—	—	—	—	—
31	Collateral obtained by taking possession: residential and commercial immovable properties	—	—	—	—	—	—	—	—	—	—	—	—	—	—	—	—	—	—	—
32	Total GAR assets (in the numerator)	10.49	0.24	—	0.19	—	0.03	—	—	—	—	—	—	—	10.52	0.24	—	0.19	—	15.80


66	HSBC Bank Malta p.l.c. Annual Report and Accounts 2024

Report of the Directors

KPI off-balance sheet exposures (Template 5)

This template presents eligible and aligned off-balance sheet

exposures as a proportion of all financial guarantees or total assets

under management as applicable.

In the case of managed funds, look-through to the underlying

investments has been undertaken to identify those investments that

are subject to NFRD/CSRD where eligibility and alignment can be

assessed. Where the underlying investments are themselves funds

and where information regarding these underlying investments is not

available, these funds are treated as non-NFRD/CSRD.

For the majority of managed funds, the proportion of debt and equity,

as well as the eligibility and alignment assessment, has been

performed based on the underlying investments as at 31 December

2024. However, where information is not available, the underlying

investments as at 30 September 2024 have been leveraged to assess

the proportion of debt and equity, as well as the proportion of eligible

and aligned exposures within those funds.

The template has been duplicated to present the information

separately based on both the stock and flow for both Turnover and

CapEx KPIs as reported by the bank's counterparties.

As for the on-balance sheet flow presented in Template 4, the

methodology to calculate flow for assets under management aims to

calculate new exposures by gross carrying amount, and not compute

the flow as exposures on the disclosure reference date (T) minus

exposures on the disclosure reference date (T-1). The methodology

applied is dependent on data availability across the funds being

managed by HSBC Bank Malta p.l.c. For the majority of funds, where

data availability allows, flow has been calculated as units purchased

through the year by individual ISIN or legal entity identifier, multiplied

by actual purchase price for each respective unit. Where this is not

possible, the next approach applied is to calculate flow as total units

purchased through the year by individual ISIN or legal entity identifier

multiplied by a proxy price based on the year end market value. For a

small number of funds, where the previous two approaches were not

possible, flow has been calculated as number of units at (T) minus

number of units at (T-1), multiplied by a proxy price based on the year

end market value.

For funds where data for the full year was not available at the time of

reporting, data was extrapolated by grossing up to 12 months of flow

based on a minimum of 9 months actual flow data.


KPI off-balance sheet exposures – Based on Counterparty Turnover – (Stock)
% (compared to total eligible off- balance sheet assets) At 31 Dec 2024		a	b	c	d	e	f	g	h	i	j	n	r	v	aa	ab	ac	ad	ae
		Climate Change Mitigation (CCM)					Climate Change Adaptation (CCA)				Water and marine resources (WTR)	Circular economy (CE)	Pollution (PPC)	Biodiversity and Ecosystems (BIO)	TOTAL (CCM + CCA + WTR + CE + PPC + BIO)
		Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy- eligible)					Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy- eligible)				Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy- eligible)	Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy- eligible)	Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy- eligible)	Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy- eligible)	Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy- eligible)
			Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy- aligned)					Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy- aligned)								Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy- aligned)
				of which: Use of Proceeds	of which: transitional	of which: enabling			of which: Use of Proceeds	of which: enabling							of which: Use of Proceeds	of which: transitional	of which: enabling
		%	%	%	%	%	%	%	%	%	%	%	%	%	%	%	%	%	%
1	Financial guarantees (FinGuar KPI)	0.01	—	—	—	—	0.01	—	—	—	—	—	—	—	0.02	—	—	—	—
2	Assets under management (AuM KPI)	5.98	1.70	—	1.06	0.16	0.28	—	—	—	—	0.28	—	1.64	8.18	1.70	—	1.06	0.16


HSBC Bank Malta p.l.c. Annual Report and Accounts 2024	67


KPI off-balance sheet exposures – Based on Counterparty Turnover – (Stock) (continued)
% (compared to total eligible off- balance sheet assets) At 31 Dec 2023		a	b	c	d	e	f	g	h		aa	ab	ac	ad	ae
		Climate Change Mitigation (CCM)					Climate Change Adaptation (CCA)				TOTAL (CCM + CCA)
		Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy- eligible)					Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy-eligible)				Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy-eligible)
			Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy-aligned)					Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy- aligned)				Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy-aligned)
				of which: Use of Proceeds	of which: transitional	of which: enabling			of which: Use of Proceeds	of which: enabling			of which: Use of Proceeds	of which: transitional	of which: enabling
		%	%	%	%	%	%	%	%	%	%	%	%	%	%
1	Financial guarantees (FinGuar KPI)		—	—	—	—		—	—	—	0.03	—	—	—	—
2	Assets under management (AuM KPI)		0.58	—	—	—		—	—	—	2.18	0.58	—	—	—


KPI off-balance sheet exposures – Based on Counterparty CapEx – (Stock)
% (compared to total eligible off-balance sheet assets) At 31 Dec 2024		a	b	c	d	e	f	g	h	i	j	k	l	m	aa	ab	ac	ad	ae
		Climate Change Mitigation (CCM)					Climate Change Adaptation (CCA)				Water and marine resources (WTR)	Circular economy (CE)	Pollution (PPC)	Biodiversity and Ecosystems (BIO)	TOTAL (CCM + CCA+ WTR + CE + PPC + BIO)
		Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy- eligible)					Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy- eligible)				Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy- eligible)	Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy- eligible)	Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy- eligible)	Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy- eligible)	Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy- eligible)
			Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy- aligned)					Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy- aligned)								Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy- aligned)
				of which: Use of Proceeds	of which: transitional	of which: enabling			of which: Use of Proceeds	of which: enabling							of which: Use of Proceeds	of which: transitional	of which: enabling
		%	%	%	%	%	%	%	%	%	%	%	%	%	%	%	%	%	%
1	Financial guarantees (FinGuar KPI)	—	—	—	—	—	0.02	—	—	—	—	—	—	—	0.02	—	—	—	—
2	Assets under management (AuM KPI)	7.85	1.82	—	1.03	0.28	0.46	—	—	—	—	—	—	0.18	8.49	1.82	—	1.03	0.28


68	HSBC Bank Malta p.l.c. Annual Report and Accounts 2024

Report of the Directors


KPI off-balance sheet exposures – Based on Counterparty CapEx – (Stock) (continued)
% (compared to total eligible off- balance sheet assets) At 31 Dec 2023		a	b	c	d	e	f	g	h	i	aa	ab	ac	ad	ae
		Climate Change Mitigation (CCM)					Climate Change Adaptation (CCA)				TOTAL (CCM + CCA)
		Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy- eligible)					Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy-eligible)				Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy-eligible)
			Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy-aligned)					Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy- aligned)				Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy-aligned)
				of which: Use of Proceeds	of which: transitional	of which: enabling			of which: Use of Proceeds	of which: enabling			of which: Use of Proceeds	of which: transitional	of which: enabling
		%	%	%	%	%	%	%	%	%	%	%	%	%	%
1	Financial guarantees (FinGuar KPI)		—	—	—	—		—	—	—	0.03	—	—	—	—
2	Assets under management (AuM KPI)		1.15	—	0.60	—		—	—	—	5.37	1.15	—	0.60	—


KPI off-balance sheet exposures – Based on Counterparty Turnover – (Flow)
% (compared to total eligible off-balance sheet assets) At 31 Dec 2024		a	b	c	d	e	f	g	h	i	j	k	l	m	aa	ab	ac	ad	ae
		Climate Change Mitigation (CCM)					Climate Change Adaptation (CCA)				Water and marine resources (WTR)	Circular economy (CE)	Pollution (PPC)	Biodiversity and Ecosystems (BIO)	TOTAL (CCM + CCA+ WTR + CE + PPC + BIO)
		Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy- eligible)					Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy- eligible)				Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy- eligible)	Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy- eligible)	Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy- eligible)	Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy- eligible)	Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy- eligible)
			Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy- aligned)					Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy- aligned)								Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy- aligned)
				of which: Use of Proceeds	of which: transitional	of which: enabling			of which: Use of Proceeds	of which: enabling							of which: Use of Proceeds	of which: transitional	of which: enabling
		%	%	%	%	%	%	%	%	%	%	%	%	%	%	%	%	%	%
1	Financial guarantees (FinGuar KPI)	—	—	—	—	—	—	—	—	—	—	—	—	—	—	—	—	—	—
2	Assets under management (AuM KPI)	2.36	0.11	—	0.01	—	0.13	—	—	—	—	—	—	—	2.49	0.11	—	0.01	—


HSBC Bank Malta p.l.c. Annual Report and Accounts 2024	69


KPI off-balance sheet exposures – Based on Counterparty CapEx – (Flow)
% (compared to total eligible off- balance sheet assets) At 31 Dec 2024		a	b	c	d	e	f	g	h	i	j	k	l	m	aa	ab	ac	ad	ae
		Climate Change Mitigation (CCM)					Climate Change Adaptation (CCA)				Water and marine resources (WTR)	Circular economy (CE)	Pollution (PPC)	Biodiversity and Ecosystems (BIO)	TOTAL (CCM + CCA+ WTR + CE + PPC + BIO)
		Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy- eligible)					Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy-eligible)				Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy-eligible)	Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy-eligible)	Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy-eligible)	Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy-eligible)	Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy- eligible)
			Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy- aligned)					Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy- aligned)								Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy- aligned)
				of which: Use of Proceeds	of which: transitional	of which: enabling			of which: Use of Proceeds	of which: enabling							of which: Use of Proceeds	of which: transitional	of which: enabling
		%	%	%	%	%	%	%	%	%	%	%	%	%	%	%	%	%	%
1	Financial guarantees (FinGuar KPI)	—	—	—	—	—	—	—	—	—	—	—	—	—	—	—	—	—	—
2	Assets under management (AuM KPI)	3.49	0.19	—	0.01	—	0.21	—	—	—	—	—	—	—	3.70	0.19	—	0.01	—

Nuclear and fossil gas – related activities (Template 1)

This template indicates whether, or not, the local group has exposures to nuclear and gas activities, based on non-financial counterparties’

Nuclear and Gas disclosures. As at 31 December 2024, HSBC Bank Malta p.l.c. only has off-balance sheet exposures, in the form of assets

under management, in relation to nuclear and fossil gas activities. As at 31 December 2023, the local group did not have any exposures to non-

financial counterparties which carry out nuclear energy and fossil gas related activities which were required to disclose templates introduced by

the Complementary Climate Delegated Act.


Template 1 Nuclear and fossil gas related activities At 31 Dec 2024
Row	Nuclear energy related activities
1	The undertaking carries out, funds or has exposures to research, development, demonstration and deployment of innovative electricity generation facilities that produce energy from nuclear processes with minimal waste from the fuel cycle.	NO
2	The undertaking carries out, funds or has exposures to construction and safe operation of new nuclear installations to produce electricity or process heat, including for the purposes of district heating or industrial processes such as hydrogen production, as well as their safety upgrades, using best available technologies.	YES
3	The undertaking carries out, funds or has exposures to safe operation of existing nuclear installations that produce electricity or process heat, including for the purposes of district heating or industrial processes such as hydrogen production from nuclear energy, as well as their safety upgrades.	YES
	Fossil gas related activities
4	The undertaking carries out, funds or has exposures to construction or operation of electricity generation facilities that produce electricity using fossil gaseous fuels.	YES
5	The undertaking carries out, funds or has exposures to construction, refurbishment, and operation of combined heat/cool and power generation facilities using fossil gaseous fuels	YES
6	The undertaking carries out, funds or has exposures to construction, refurbishment and operation of heat generation facilities that produce heat/cool using fossil gaseous fuels.	NO


70	HSBC Bank Malta p.l.c. Annual Report and Accounts 2024

Report of the Directors


Template 1 Nuclear and fossil gas related activities: At 31 Dec 2023
Row	Nuclear energy related activities
1	The undertaking carries out, funds or has exposures to research, development, demonstration and deployment of innovative electricity generation facilities that produce energy from nuclear processes with minimal waste from the fuel cycle.	NO
2	The undertaking carries out, funds or has exposures to construction and safe operation of new nuclear installations to produce electricity or process heat, including for the purposes of district heating or industrial processes such as hydrogen production, as well as their safety upgrades, using best available technologies.	NO
3	The undertaking carries out, funds or has exposures to safe operation of existing nuclear installations that produce electricity or process heat, including for the purposes of district heating or industrial processes such as hydrogen production from nuclear energy, as well as their safety upgrades.	NO
	Fossil gas related activities
4	The undertaking carries out, funds or has exposures to construction or operation of electricity generation facilities that produce electricity using fossil gaseous fuels.	NO
5	The undertaking carries out, funds or has exposures to construction, refurbishment, and operation of combined heat/cool and power generation facilities using fossil gaseous fuels	NO
6	The undertaking carries out, funds or has exposures to construction, refurbishment and operation of heat generation facilities that produce heat/cool using fossil gaseous fuels.	NO

Nuclear and fossil gas – related activities (Template 2)

The following templates present the local group’s exposures to nuclear and gas activities 4.26 to 4.31, as defined in Commission Delegated

Regulation (EU) 2022/1214, covering Taxonomy aligned activities in the denominator in relation to assets under management.

The templates have been duplicated to present the information separately based on Turnover and CapEx KPIs as reported by the bank’s

counterparties.


Template 2 Taxonomy-aligned economic activities (denominator) – Based on Counterparty Turnover- Assets under management-Stock
		At 31 Dec 2024
Row	Economic activities	Amount and proportion
		CCM + CCA		Climate change mitigation (CCM)		Climate change adaptation (CCA)
		Amount (€000)	%	Amount (€000)	%	Amount (€000)	%
1	Amount and proportion of taxonomy-aligned economic activity referred to in Section 4.26 of Annexes I and II to Delegated Regulation 2021/2139 in the denominator of the applicable KPI	—	—	—	—	—	—
2	Amount and proportion of taxonomy-aligned economic activity referred to in Section 4.27 of Annexes I and II to Delegated Regulation 2021/2139 in the denominator of the applicable KPI	—	—	—	—	—	—
3	Amount and proportion of taxonomy-aligned economic activity referred to in Section 4.28 of Annexes I and II to Delegated Regulation 2021/2139 in the denominator of the applicable KPI	1,060	0.27	1,060	0.27	—	—
4	Amount and proportion of taxonomy-aligned economic activity referred to in Section 4.29 of Annexes I and II to Delegated Regulation 2021/2139 in the denominator of the applicable KPI	—	—	—	—	—	—
5	Amount and proportion of taxonomy-aligned economic activity referred to in Section 4.30 of Annexes I and II to Delegated Regulation 2021/2139 in the denominator of the applicable KPI	—	—	—	—	—	—
6	Amount and proportion of taxonomy-aligned economic activity referred to in Section 4.31 of Annexes I and II to Delegated Regulation 2021/2139 in the denominator of the applicable KPI	—	—	—	—	—	—
7	Amount and proportion of other taxonomy-aligned economic activities not referred to in rows 1 to 6 above in the denominator of the applicable KPI	5,590	1.43	5,589	1.43	1	—
8	Total applicable KPI	390,924	100.00	390,924	100.00	390,924	100.00


HSBC Bank Malta p.l.c. Annual Report and Accounts 2024	71


Template 2 Taxonomy-aligned economic activities (denominator) – Based on Counterparty Capex- Assets under management-Stock
		At 31 Dec 2024
Row	Economic activities	Amount and proportion
		CCM + CCA		Climate change mitigation (CCM)		Climate change adaptation (CCA)
		Amount (€000)	%	Amount (€000)	%	Amount (€000)	%
1	Amount and proportion of taxonomy-aligned economic activity referred to in Section 4.26 of Annexes I and II to Delegated Regulation 2021/2139 in the denominator of the applicable KPI	—	—	—	—	—	—
2	Amount and proportion of taxonomy-aligned economic activity referred to in Section 4.27 of Annexes I and II to Delegated Regulation 2021/2139 in the denominator of the applicable KPI	152	0.04	152	0.04	—	—
3	Amount and proportion of taxonomy-aligned economic activity referred to in Section 4.28 of Annexes I and II to Delegated Regulation 2021/2139 in the denominator of the applicable KPI	911	0.23	911	0.23	—	—
4	Amount and proportion of taxonomy-aligned economic activity referred to in Section 4.29 of Annexes I and II to Delegated Regulation 2021/2139 in the denominator of the applicable KPI	—	—	—	—	—	—
5	Amount and proportion of taxonomy-aligned economic activity referred to in Section 4.30 of Annexes I and II to Delegated Regulation 2021/2139 in the denominator of the applicable KPI	—	—	—	—	—	—
6	Amount and proportion of taxonomy-aligned economic activity referred to in Section 4.31 of Annexes I and II to Delegated Regulation 2021/2139 in the denominator of the applicable KPI	—	—	—	—	—	—
7	Amount and proportion of other taxonomy-aligned economic activities not referred to in rows 1 to 6 above in the denominator of the applicable KPI	6,037	1.54	6,037	1.54	—	—
8	Total applicable KPI	390,924	100.00	390,924	100.00	390,924	100.00


72	HSBC Bank Malta p.l.c. Annual Report and Accounts 2024

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Nuclear and fossil gas – related activities (Template 3)

The following templates present the local group exposures to nuclear and gas activities 4.26 to 4.31, as defined in Commission Delegated

Regulation (EU) 2022/1214, covering Taxonomy aligned activities in the numerator in relations to assets under management.

The templates have been duplicated to present the information separately based on Turnover and CapEx KPIs as reported by the bank’s

counterparties.


Template 3 Taxonomy-aligned economic activities (numerator) - Based on Counterparty Turnover- Assets under management-Stock
		At 31 Dec 2024
Row	Economic activities	Amount and proportion
		CCM + CCA		Climate change mitigation (CCM)		Climate change adaptation (CCA)
		Amount	%	Amount	%	Amount	%
1	Amount and proportion of taxonomy-aligned economic activity referred to in Section 4.26 of Annexes I and II to Delegated Regulation 2021/2139 in the numerator of the applicable KPI	—	—	—	—	—	—
2	Amount and proportion of taxonomy-aligned economic activity referred to in Section 4.27 of Annexes I and II to Delegated Regulation 2021/2139 in the numerator of the applicable KPI	—	—	—	—	—	—
3	Amount and proportion of taxonomy-aligned economic activity referred to in Section 4.28 of Annexes I and II to Delegated Regulation 2021/2139 in the numerator of the applicable KPI	1,060	15.94	1,060	15.94	—	—
4	Amount and proportion of taxonomy-aligned economic activity referred to in Section 4.29 of Annexes I and II to Delegated Regulation 2021/2139 in the numerator of the applicable KPI	—	—	—	—	—	—
5	Amount and proportion of taxonomy-aligned economic activity referred to in Section 4.30 of Annexes I and II to Delegated Regulation 2021/2139 in the numerator of the applicable KPI	—	—	—	—	—	—
6	Amount and proportion of taxonomy-aligned economic activity referred to in Section 4.31 of Annexes I and II to Delegated Regulation 2021/2139 in the numerator of the applicable KPI	—	—	—	—	—	—
7	Amount and proportion of other taxonomy-aligned economic activities not referred to in rows 1 to 6 above in the numerator of the applicable KPI	5,590	84.06	5,589	84.06	1	—
8	Total amount and proportion of taxonomy-aligned economic activities in the numerator of the applicable KPI	6,650	100.00	6,649	100.00	1	—


Template 3 Taxonomy-aligned economic activities (numerator) - Based on Counterparty Capex- Assets under management-Stock
		At 31 Dec 2024
Row	Economic activities	Amount and proportion
		CCM + CCA		Climate change mitigation (CCM)		Climate change adaptation (CCA)
		Amount	%	Amount	%	Amount	%
1	Amount and proportion of taxonomy-aligned economic activity referred to in Section 4.26 of Annexes I and II to Delegated Regulation 2021/2139 in the numerator of the applicable KPI	—	—	—	—	—	—
2	Amount and proportion of taxonomy-aligned economic activity referred to in Section 4.27 of Annexes I and II to Delegated Regulation 2021/2139 in the numerator of the applicable KPI	152	2.14	152	2.14	—	—
3	Amount and proportion of taxonomy-aligned economic activity referred to in Section 4.28 of Annexes I and II to Delegated Regulation 2021/2139 in the numerator of the applicable KPI	911	12.83	911	12.83	—	—
4	Amount and proportion of taxonomy-aligned economic activity referred to in Section 4.29 of Annexes I and II to Delegated Regulation 2021/2139 in the numerator of the applicable KPI	—	—	—	—	—	—
5	Amount and proportion of taxonomy-aligned economic activity referred to in Section 4.30 of Annexes I and II to Delegated Regulation 2021/2139 in the numerator of the applicable KPI	—	—	—	—	—	—
6	Amount and proportion of taxonomy-aligned economic activity referred to in Section 4.31 of Annexes I and II to Delegated Regulation 2021/2139 in the numerator of the applicable KPI	—	—	—	—	—	—
7	Amount and proportion of other taxonomy-aligned economic activities not referred to in rows 1 to 6 above in the numerator of the applicable KPI	6,037	85.03	6,037	85.03	—	—
8	Total amount and proportion of taxonomy-aligned economic activities in the numerator of the applicable KPI	7,100	100.00	7,100	100.00	—	—


HSBC Bank Malta p.l.c. Annual Report and Accounts 2024	73

Nuclear and fossil gas – related activities (Template 4)

The following templates present the local group exposures to nuclear and gas activities 4.26 to 4.31, as defined in Commission Delegated

Regulation (EU) 2022/1214, covering Taxonomy eligible but not aligned activities respectively in relation to assets under management. They

have been prepared based on the bank’s counterparties’ Nuclear and Gas disclosures.

The tables have been duplicated to present the information separately based on Turnover and CapEx KPIs as reported by the bank’s

counterparties.


Template 4 Taxonomy-eligible but not taxonomy-aligned economic activities - Based on Counterparty Turnover- Assets under management Stock
		At 31 Dec 2024
Row	Economic activities	proportion (the information is to be presented in monetary amounts and as percentages)
		CCM + CCA		Climate change mitigation (CCM)		Climate change adaptation (CCA)
		Amount	%	Amount	%	Amount	%
1	Amount and proportion of taxonomy-eligible but not taxonomy-aligned economic activity referred to in Section 4.26 of Annexes I and II to Delegated Regulation2021/2139 in the denominator of the applicable KPI	—	—	—	—	—	—
2	Amount and proportion of taxonomy-eligible but not taxonomy-aligned economic activity referred to in Section 4.27 of Annexes I and II to Delegated Regulation 2021/2139 in the denominator of the applicable KPI	—	—	—	—	—	—
3	Amount and proportion of taxonomy-eligible but not taxonomy-aligned economic activity referred to in Section 4.28 of Annexes I and II to Delegated Regulation 2021/2139 in the denominator of the applicable KPI	—	—	—	—	—	—
4	Amount and proportion of taxonomy-eligible but not taxonomy-aligned economic activity referred to in Section 4.29 of Annexes I and II to Delegated Regulation 2021/2139 in the denominator of the applicable KPI	179	—	179	—	—	—
5	Amount and proportion of taxonomy-eligible but not taxonomy-aligned economic activity referred to in Section 4.30 of Annexes I and II to Delegated Regulation 2021/2139 in the denominator of the applicable KPI	3	—	3	—	—	—
6	Amount and proportion of taxonomy-eligible but not taxonomy-aligned economic activity referred to in Section 4.31 of Annexes I and II to Delegated Regulation 2021/2139 in the denominator of the applicable KPI	—	—	—	—	—	—
7	Amount and proportion of other taxonomy-eligible but not taxonomy- aligned economic activities not referred to in rows 1 to 6 above in the denominator of the applicable KPI	17,611	0.44	16,536	0.41	1,075	0.03
8	Total amount and proportion of taxonomy eligible but not taxonomy- aligned economic activities in the denominator of the applicable KPI	17,793	0.44	16,718	0.41	1,075	0.03


Template 4 Taxonomy-eligible but not taxonomy-aligned economic activities - Based on Counterparty Capex- Assets under management-Stock
		At 31 Dec 2024
Row	Economic activities	proportion (the information is to be presented in monetary amounts and as percentages)
		CCM + CCA		Climate change mitigation (CCM)		Climate change adaptation (CCA)
		Amount	%	Amount	%	Amount	%
1	Amount and proportion of taxonomy-eligible but not taxonomy-aligned economic activity referred to in Section 4.26 of Annexes I and II to Delegated Regulation 2021/2139 in the denominator of the applicable KPI	—	—	—	—	—	—
2	Amount and proportion of taxonomy-eligible but not taxonomy-aligned economic activity referred to in Section 4.27 of Annexes I and II to Delegated Regulation 2021/2139 in the denominator of the applicable KPI	—	—	—	—	—	—
3	Amount and proportion of taxonomy-eligible but not taxonomy-aligned economic activity referred to in Section 4.28 of Annexes I and II to Delegated Regulation 2021/2139 in the denominator of the applicable KPI	—	—	—	—	—	—
4	Amount and proportion of taxonomy-eligible but not taxonomy-aligned economic activity referred to in Section 4.29 of Annexes I and II to Delegated Regulation 2021/2139 in the denominator of the applicable KPI	75	—	75	—	—	—
5	Amount and proportion of taxonomy-eligible but not taxonomy-aligned economic activity referred to in Section 4.30 of Annexes I and II to Delegated Regulation 2021/2139 in the denominator of the applicable KPI	9	—	9	—	—	—
6	Amount and proportion of taxonomy-eligible but not taxonomy-aligned economic activity referred to in Section 4.31 of Annexes I and II to Delegated Regulation 2021/2139 in the denominator of the applicable KPI	—	—	—	—	—	—
7	Amount and proportion of other taxonomy-eligible but not taxonomy- aligned economic activities not referred to in rows 1 to 6 above in the denominator of the applicable KPI	25,276	0.62	23,490	0.58	1,786	0.04
8	Total amount and proportion of taxonomy eligible but not taxonomy- aligned economic activities in the denominator of the applicable KPI	25,360	0.62	23,574	0.58	1,786	0.04


74	HSBC Bank Malta p.l.c. Annual Report and Accounts 2024

Report of the Directors

Nuclear and fossil gas – related activities (Template 5)

This table presents HSBC Bank Malta p.l.c.’s exposures to non-eligible nuclear and gas activities.

The template has been duplicated to present the information separately based on Turnover and CapEx KPIs as reported by the bank's

counterparties.


Template 5 Taxonomy non-eligible economic activities – Based on Counterparty Turnover - Assets under management- Stock
		At 31 Dec 2024
Row	Economic activities	Amount	%
1	Amount and proportion of economic activity referred to in row 1 of Template 1 that is taxonomy-non-eligible in accordance with Section 4.26 of Annexes I and II to Delegated Regulation 2021/2139 in the denominator of the applicable KPI	—	—
2	Amount and proportion of economic activity referred to in row 2 of Template 1 that is taxonomy-non-eligible in accordance with Section 4.27 of Annexes I and II to Delegated Regulation 2021/2139 in the denominator of the applicable KPI	—	—
3	Amount and proportion of economic activity referred to in row 3 of Template 1 that is taxonomy-non-eligible in accordance with Section 4.28 of Annexes I and II to Delegated Regulation 2021/2139 in the denominator of the applicable KPI	124	—
4	Amount and proportion of economic activity referred to in row 4 of Template 1 that is taxonomy-non-eligible in accordance with Section 4.29 of Annexes I and II to Delegated Regulation 2021/2139 in the denominator of the applicable KPI	—	—
5	Amount and proportion of economic activity referred to in row 5 of Template 1 that is taxonomy-non-eligible in accordance with Section 4.30 of Annexes I and II to Delegated Regulation 2021/2139 in the denominator of the applicable KPI	—	—
6	Amount and proportion of economic activity referred to in row 6 of Template 1 that is taxonomy-non-eligible in accordance with Section 4.31 of Annexes I and II to Delegated Regulation 2021/2139 in the denominator of the applicable KPI	—	—
7	Amount and proportion of other taxonomy-non-eligible economic activities not referred to in rows 1 to 6 above in the denominator of the applicable KPI	358,845	8.83
8	Total amount and proportion of taxonomy-non-eligible economic activities in the denominator of the applicable KPI	358,969	8.83


Template 5 Taxonomy non-eligible economic activities – Based on Counterparty Capex - Assets under management- Stock
		At 31 Dec 2024
Row	Economic activities	Amount	%
1	Amount and proportion of economic activity referred to in row 1 of Template 1 that is taxonomy-non-eligible in accordance with Section 4.26 of Annexes I and II to Delegated Regulation 2021/2139 in the denominator of the applicable KPI	—	—
2	Amount and proportion of economic activity referred to in row 2 of Template 1 that is taxonomy-non-eligible in accordance with Section 4.27 of Annexes I and II to Delegated Regulation 2021/2139 in the denominator of the applicable KPI	953	0.02
3	Amount and proportion of economic activity referred to in row 3 of Template 1 that is taxonomy-non-eligible in accordance with Section 4.28 of Annexes I and II to Delegated Regulation 2021/2139 in the denominator of the applicable KPI	124	—
4	Amount and proportion of economic activity referred to in row 4 of Template 1 that is taxonomy-non-eligible in accordance with Section 4.29 of Annexes I and II to Delegated Regulation 2021/2139 in the denominator of the applicable KPI	—	—
5	Amount and proportion of economic activity referred to in row 5 of Template 1 that is taxonomy-non-eligible in accordance with Section 4.30 of Annexes I and II to Delegated Regulation 2021/2139 in the denominator of the applicable KPI	—	—
6	Amount and proportion of economic activity referred to in row 6 of Template 1 that is taxonomy-non-eligible in accordance with Section 4.31 of Annexes I and II to Delegated Regulation 2021/2139 in the denominator of the applicable KPI	—	—
7	Amount and proportion of other taxonomy-non-eligible economic activities not referred to in rows 1 to 6 above in the denominator of the applicable KPI	356,683	8.78
8	Total amount and proportion of taxonomy-non-eligible economic activities in the denominator of the applicable KPI	357,760	8.80

Financial Crime Compliance

In 2024, the bank continued to apply a strong financial crime risk

management control framework, and sustain its capability through

ongoing training, oversight and governance. We believe that the

enforcement of high compliance standards is a competitive

advantage, and is essential to our success and that of the jurisdiction.

Anti-bribery and corruption

HSBC Malta and the wider HSBC Group remain committed to

maintaining high standards of ethical behaviour and have zero

tolerance towards bribery and corruption. HSBC complies with all anti-

bribery and corruption laws in all markets and jurisdictions including

the UK Bribery Act, US Foreign Corrupt Practices and Hong Kong

Prevention of Bribery Ordnance.

HSBC Malta adheres to the HSBC Group Anti-Bribery and Corruption

compliance programme and policies which are overseen by the HSBC

Holdings plc Board. HSBC requires all employees, including the Board

of Directors and Associated Persons, to comply with the principles in

the policy in the performance of their services for or on behalf of

HSBC.

All HSBC entities and individuals are required by Group Policy to apply

controls in order to protect against bribery and corruption risks. All

HSBC staff undergo mandatory Anti-Bribery and Corruption training

annually. HSBC also maintains clear whistle blowing policies and

processes, to ensure that individuals can confidentially report

concerns with no fear of retribution, confident that they will be

investigated and remediated appropriately.


HSBC Bank Malta p.l.c. Annual Report and Accounts 2024	75

As part of its risk management, HSBC Malta performs an annual

assessment of the anti-bribery and corruption inherent and residual

risk to understand if any new risks have been identified and ratings

revisited accordingly. Risk evaluation takes into consideration various

pillars related to anti-bribery and corruption including Employee, Third

Party, Strategic and Customer Risks.

Risk management

Our Approach to Risk Management

We recognise the importance of a strong risk culture, which refers to

our shared attitudes, values and standards that shape behaviours

related to risk awareness, risk taking and risk management. All our

people are responsible for the management of risk, with the ultimate

accountability residing with the Board.

We seek to build our business for the long term by balancing social,

environmental and economic considerations in the decisions we

make. Our strategic priorities are underpinned by our endeavour to

operate in a sustainable way. This helps us to carry out our social

responsibility and manage the risk profile of the business. We are

committed to managing and mitigating climate-related risks, both

physical and transitional, and continue to incorporate consideration of

these into how we manage and oversee risks internally and with our

customers.

The following principles guide the local group’s overarching appetite

for risk and determine how our businesses and risks are managed.

Financial position

We aim to maintain a strong capital position, defined by regulatory

and internal capital ratios. We carry out liquidity and funding

management on a stand-alone basis.

Operating model

We seek to generate returns in line with our risk appetite and strong

risk management capability. We aim to deliver sustainable and

diversified earnings as well as consistent returns for shareholders.

Business practice

We have zero tolerance for any of our people knowingly engaging in

any business, activity or association where foreseeable reputational

risk or damage has not been considered and/or mitigated. We have no

appetite for deliberately or knowingly causing detriment to consumers

or incurring a breach of the letter or spirit of regulatory requirements.

We have no appetite for inappropriate market conduct by any

member of staff. We are committed to managing the climate risks

that have an impact on our financial position and delivering on our net

zero ambition.

Enterprise-wide application

Our risk appetite includes consideration of financial and non-financial

risks and is expressed in both quantitative and qualitative terms.

The Risk Appetite Statement is approved by the Board following

advice from the Risk Committee and is a key component of the risk

management framework, with the Risk Map and the Emerging risk

reports.

Setting out a risk appetite statement ensures that planned business

activities provide an appropriate balance of return for the risk being

taken, and that a suitable level of risk for our strategy is defined. In

this way, a risk appetite statement facilitates the financial planning

process and helps senior management of the bank to allocate capital

to business activities, services and products.

The business performance against these risk appetite metrics is

reviewed on a frequent basis in the Risk Management Meeting and

quarterly in the Risk Committee and Board. Details of metrics that

have fallen outside of the appetite/tolerance are provided, along with

remediating actions. This reporting allows risks to be promptly

identified and mitigated.

Risk Management

We recognise that the primary role of risk management is to protect

our customers, business, colleagues, shareholders and the

communities that we serve, while ensuring we are able to support

our strategy and provide sustainable growth. This is supported by our

three lines of defence model.

We aim to use a comprehensive risk management approach across

the organisation and across all risk types, underpinned by our culture

and values. This is outlined in our risk management framework,

including the key principles, policies and practices that we employ in

managing material risks, both financial and non-financial. The

framework fosters continual monitoring, promotes risk awareness,

and encourages a sound operational and strategic decision-making

and escalation process. It also supports a consistent approach to

defining, identifying, assessing, managing, and reporting the risks we

accept and incur in our activities, with clear accountabilities. We

continue to actively review and develop our risk management

framework and enhance our approach to managing risk, through our

activities with regard to people and capabilities; governance; reporting

and management information; credit risk management models; and

data.

Risk and Compliance is independent from the global businesses,

including our sales and trading functions, to provide challenge,

oversight, and appropriate balance in risk/reward decisions.

The local group is exposed to a mixed blend of risks and hence

operates a risk management strategy with the objective of controlling

and minimising their impact on the financial performance and position

of the local group. An established risk governance framework and

ownership structure ensures oversight of accountability for the

effective management of risk. This framework fosters the continuous

monitoring of the risk environment and an integrated evaluation of

risks and their interactions. This framework is designed to provide

appropriate risk monitoring and assessment.

Risk appetite

Our risk appetite defines our desired forward-looking risk profile and

informs the strategic and financial planning process. It provides an

anchor between our lines of business and the Risk and Finance

functions, helping to enable our senior management to allocate

capital, funding and liquidity optimally to finance growth, while

monitoring exposure and the cost impacts of managing non-financial

risks. It also helps to develop aligned people and system capabilities.

The Board sets the local group’s strategy, risk appetite, operating

plans and performance ambitions, thereby playing an essential role in

embedding a risk culture within the organisation. The Board delegates

the day-to-day risk management responsibilities to individuals within

the senior management team. These individuals are accountable for

their assigned risks, and report and escalate as necessary through the

risk governance structures.

Our risk appetite is expressed in both quantitative and qualitative

terms.

The Board reviews and approves the bank’s risk appetite to make

sure it remains fit for purpose. Risk appetite is considered, developed

and enhanced through:

– risks that we accept as part of doing business, such as credit risk,

market risk, and treasury risk, which are controlled through both

active risk management and our risk appetite;

– risks that we incur as part of doing business, such as non-financial

risks, which are actively managed to remain within an acceptable

appetite;

– an alignment with our strategy, purpose, values and customer

needs;

– trends highlighted in other risk reports;

– communication with risk stewards on the developing risk

landscape;

– strength of our capital, liquidity and balance sheet;


76	HSBC Bank Malta p.l.c. Annual Report and Accounts 2024

Report of the Directors

– compliance with applicable laws and regulations;

– effectiveness of the applicable control environment to mitigate

risk, informed by risk ratings from risk control assessments;

– functionality, capacity and resilience of available systems to

manage risk; and

– the level of available staff with the required competencies to

manage risks.

We formally articulate our risk appetite through our risk appetite

statement (‘RAS’). Setting out our risk appetite ensures that we agree

a suitable level of risk for our strategy. In this way, risk appetite

informs our financial planning process and helps senior management

to allocate capital to business activities, services and products.

The RAS consists of qualitative statements and quantitative metrics,

covering financial and non-financial risks. It is applied to the

development of business line strategies, strategic and business

planning and remuneration and reported to the Risk Management

Meeting (‘RMM’) alongside key risk indicators to support ambition

insight and discussion on breaches of risk appetite and associated

mitigating actions. This reporting allows risks to be promptly identified

and mitigated, and escalated to the Risk Committee and Board.

Top and emerging risks

HSBC Malta uses a top and emerging risks process to provide a

forward looking view of issues with the potential to threaten the

execution of its strategy or operations over the medium to long term.

We proactively assess the internal and external risk environment, as

well as review the themes identified for any risks that may require

escalation. The bank updates its top and emerging risks as necessary.

Our risk management framework

The following diagram and descriptions summarise key aspects of the

risk management framework, including governance, structure, risk

management tools and our culture, which together help align

employee behaviour with risk appetite.


Key components of our risk management framework
HSBC Values and risk culture

Risk governance	Non-executive risk governance	The Board approves the bank’s risk appetite, plans and performance ambitions. It sets the ‘tone from the top’ and is advised by the Risk Committee.

	Executive risk governance	Our executive risk governance structure is responsible for the enterprise-wide management of all risks, including key policies and frameworks for the management of risk within the bank.


Roles and responsibilities	Three lines of defence model	Our ‘three lines of defence’ model defines roles and responsibilities for risk management. An independent Risk function helps ensure the necessary balance in risk/ return decisions.


Processes and tools	Risk appetite	The local group has processes in place to identify/assess, monitor, manage and report risks to help ensure we remain within our risk appetite.

	Enterprise-wide risk management tools

	Active risk management: identification/assessment, monitoring, management and reporting


Internal controls	Policies and procedures	Policies and procedures define the minimum requirements for the controls required to manage our risks.

	Control activities	Operational and resilience risk management defines minimum standards and processes for managing operational risks and internal controls.

	Systems and infrastructure	HSBC has systems and/or processes that support the identification, capture and exchange of information to support risk management activities.

Risk governance

The Risk Committee is a committee of the Board and has

responsibility for oversight and advice to the Board, amongst other

things, the bank’s risk appetite, tolerance and strategy, systems of

risk management, internal control and compliance.

In carrying out its responsibilities, the Risk Committee is closely

supported by the Chief Risk Officer, the Chief Financial Officer, the

Head of Internal Audit and the Chief Compliance Officer with other

business/ functions present for the discussion of risks within their

respective areas of responsibility.

In addition to the Risk Committee, the Risk Management Meeting

(‘RMM’), is the overarching executive management meeting for both

financial and non-financial risk management.

Chaired by the Chief Risk Officer, the Risk Management Meeting

gathers the members of the Executive Committee in order to

examine major risks faced by HSBC Bank Malta p.l.c. During 2024 the

Risk Management Meeting met nine times to examine these risks.


HSBC Bank Malta p.l.c. Annual Report and Accounts 2024	77

It reviews financial and non-financial risks for the whole HSBC Bank

Malta p.l.c. perimeter, including the risks linked to Digital Business

Services, and the evolution of action plans put in place in order to

mitigate identified risks. The HSBC Bank Malta p.l.c. Risk

Management Meeting reports functionally to the HSBC Continental

Europe Risk Management Meeting, and to the HBMT Risk

Committee.

This framework is completed by dedicated risk forums and working

groups for specific risks in businesses and functions combining the

various levels of internal control, in order to manage, monitor and

control all HSBC activities within HSBC Bank Malta p.l.c.

Responsibility for managing both financial and non-financial risk lies

with all HSBC Bank Malta p.l.c. employees. They are required to

manage the risks of the business and operational activities for which

they are responsible. The bank maintains oversight of its risks through

various Risk Stewards, as well as the accountability held by the Chief

Risk Officer.

Non-financial risk includes some of the most material risks HSBC

Bank Malta p.l.c. faces, such as cyber attacks, poor customer

outcomes and loss of data. Actively managing non-financial risk is

crucial to serve our customers effectively and in having a positive

impact in the social environment.

Our responsibilities

All our people are responsible for identifying and managing risk within

the scope of their roles. Roles are defined using the three lines of

defence model, which takes into account our business and functional

structures as described below.

Three lines of defence

To create a robust control environment to manage risks, we use an

activity-based three lines of defence model. This model delineates

management accountabilities and responsibilities for risk

management and the control environment.

The model underpins our approach to risk management by clarifying

responsibility and encouraging collaboration, as well as enabling

efficient coordination of risk and control activities. The three lines of

defence are summarised below:

– The first line of defence owns the risks and is responsible for

identifying, recording, reporting and managing them in line with

risk appetite, and ensuring that the right controls and assessments

are in place to mitigate them.

– The second line of defence challenges the first line of defence on

effective risk management, and provides advice, guidance and

assurance of the first line of defence to ensure it is managing risk

effectively.

– The third line of defence is our Internal Audit function, which

provides independent assurance that our risk management

approach, governance and internal control processes are designed

and operating effectively.

Risk and Compliance

Our Risk and Compliance functions are responsible for the local

group’s risk management framework. This responsibility includes

establishing local policy, monitoring risk profiles, and identifying and

managing forward-looking risk. Risk and Compliance is made up of

sub-functions covering all risks to our business. Forming part of the

second line of defence, the Risk and Compliance function is

independent from the global business lines, including sales and

trading functions, to provide challenge, appropriate oversight and

balance in risk/return decisions.

Responsibility for minimising both financial and non-financial risk lies

with our people. They are required to manage the risks of the

business and operational activities for which they are responsible. We

maintain adequate oversight of our risks through our various specialist

risk stewards and the collective accountability held by the Chief Risk

Officer.

We have continued to strengthen the control environment and our

approach to the management of risk, as set out in our risk

management framework. Our ongoing focus is on helping to ensure

more effective oversight and better end-to-end identification and

management of of financial and non-financial risks. This is overseen

by the Operational and Resilience Risk function and Enterprise Risk

Management Function, reporting to the Chief Risk Officer.

Stress testing and recovery planning

Our stress testing programme assesses our capital and liquidity

strength through a rigorous examination of our resilience to external

shocks and forms part of our risk management and capital and

liquidity planning. As well as undertaking regulatory-driven stress

tests, we conduct our own internal stress tests to understand the

nature and level of all material risks, quantify the impact of such risks

and develop plausible mitigating actions. The outcome of stress test

provides management with key insights into the impact of severely

adverse events on the bank and provides and indication of resilience

to regulators on our financial stability.

Internal stress tests

Our internal capital assessment uses a range of stress scenarios that

explore risks identified by management. They include potential

adverse macroeconomic, geopolitical, climate and operational risk

events, as well as other potential events that are specific to HSBC.

The selection of stress scenarios is based upon the output of our

identified top and emerging risks and our risk appetite. Stress testing

analysis helps management understand the nature and extent of

vulnerabilities to which the bank is exposed. Using this information,

management decides whether risks can or should be mitigated

through management actions or, if they were to crystallise, be

absorbed through capital and liquidity. This in turn informs decisions

about preferred capital and liquidity levels and allocations.

During 2024, we conducted a range of internal stress tests and

sensitivity analysis. These included stress tests to assess shocks on

the property market, shocks on certain sectors , geopolitical crises,

climate stress tests, cyber attacks and other operational risk events

and assessment of the resilience of key balance sheet metrics

including capital adequacy. We regularly review key macro - economic

variables and their impact on key sectors to understand potential

vulnerabilities in our balance sheet and to identify appropriate

mitigating actions. We continue to monitor emerging geopolitical,

idiosyncratic, economic, and environmental risks impacting the local

group’s capital adequacy and liquidity. Our balance sheet and capital

adequacy remain resilient based on internal stress test outcomes.

We also conduct reverse stress tests to understand potential extreme

conditions that would make our business model non-viable. Reverse

stress testing identifies potential stresses and vulnerabilities we

might face, and helps inform early warning triggers, management

actions and contingency plans designed to mitigate risks.

Recovery and resolution plans

Recovery and resolution plans form part of the integral framework

safeguarding the bank’s financial stability. The recovery plan together

with the stress testing help HSBC Bank Malta p.l.c. to generate

business insights to identify credible recovery options that can be

implemented under a range of idiosyncratic and market-wide stress

scenarios. The aim is to mitigate the potential shortfall in capital and

liquidity pressures. The bank is committed to further developing its

recovery and resolution capabilities to ensure it meets current and

future requirements as well as integrates the evolution of its

business.

Key developments in 2024

We actively managed the risks related to macroeconomic and

geopolitical uncertainties and developed risk management capabilities

through the continued enhancement of the risk management

framework. We retained our focus on risk transformation and financial

crime and continued to assess operational resilience capability whilst

prioritising the most significant enterprise risks. including the

evolution of geopolitical environment inflation, higher interest rates,

slower GDP growth and internal events. In addition, we enhanced our

risk management in the following areas:


78	HSBC Bank Malta p.l.c. Annual Report and Accounts 2024

Report of the Directors

– We continue to maintain a focus on our technology and

cybersecurity controls to improve the resilience and security of our

technology services in response to the heightened threat

environment.

– We enhanced our processes, framework and controls to improve

the oversight of our material third parties with respect to financial

stability to better manage supply chain and operational resilience.

We will continue to assess and manage our operational resilience.

– Through our climate risk programme, there has been progress in

embedding climate considerations throughout all of the entity and

its lines of businesses, including through risk policy updates. We

developed enhanced risk metrics to monitor our exposures to

climate events. HSBC Bank Malta p.l.c. has expanded its risk

management and started to consider environmental risks in its

materiality assessment. We will continue with our climate risk

programme and make changes to policies,processes, capabilities

to better embed climate considerations throughout the

organisation.

– The approach for managing and mitigating the risk of

greenwashing has been enhanced.

– We deployed industry-leading technology and advanced analytics

capabilities to improve our ability to identify suspicious activities

and prevent financial crime. We will continue to evaluate

technological solutions to improve our capabilities in the detection

and prevention of financial crime.

Strategic Review by HSBC Holdings plc

On 11 September 2024 HSBC Bank Malta p.l.c. announced that HSBC

Holdings plc had informed the local Board of Directors that it will

undertake a strategic review of its indirect 70.03% shareholding in the

bank. (Please refer to the General Meetings section of the Annual

Report and Accounts for more detail). Shortly following this

development HSBC Bank Malta p.l.c. refreshed its holistic risk

assessment by considering which risks within its risk taxonomy were

heightened by the announcement.

Strategic Risk (in terms of both direction and execution), Reputational

Risk and People Risk were the key risks which were considered to

have been elevated as a result of the announcement. These risks, as

well as others which may become elevated in the future, continue to

be monitored.

Key Risks

The most important types of financial risk comprise credit risk, market

risk and liquidity risk. Owing to the insurance operation, the local

group is also exposed to insurance risk. A key emerging risk is that of

climate change, and how this will shape risk management in the

coming years.

Credit risk

Credit risk is the risk of financial loss if a customer or counterparty

fails to meet an obligation under a contract. It arises principally from

lending, trade finance and treasury business, mainly through the

holdings of debt securities, but also from off-balance sheet products

such as guarantees. The local group has standards, policies and

procedures dedicated to control and monitor the risk arising from all

such activities. Within the overall framework of the local policy, an

established risk management process is in place, encompassing

credit approvals, the control of exposures, credit policy direction to

business units, and the monitoring and reporting of exposures both

on an individual and a portfolio basis (which includes the management

of adverse trends). Management is responsible for the quality of its

credit portfolios and follows a credit process involving delegated

approval authorities and credit procedures, the objective of which is to

build and maintain risk assets of high quality. Regular reviews are

undertaken to assess and evaluate levels of risk concentrations by

market sector and product.

The bank’s credit risk rating systems and processes differentiate

exposures to highlight those with greater risk factors and higher

potential severity of loss. In the case of individually significant

accounts, risk ratings are reviewed regularly and any amendments are

implemented promptly.

Concentrations of credit risk arise when a number of counterparties or

exposures have comparable economic characteristics, or such

counterparties are engaged in similar activities, or operate in the same

geographical areas or industry sectors, so that their collective ability to

meet contractual obligations is uniformly affected by changes in

economic, political or other conditions. The bank uses a number of

controls and measures to minimise undue concentration of exposure

in its portfolios across industry, country and customer groups. These

include portfolio and counterparty limits, approval and review controls,

and stress testing.

Liquidity risk

Liquidity risk is the risk that the local group does not have sufficient

financial resources to meet its financial obligations when they fall due

or will have to do so at excessive cost. This risk principally arises from

mismatches in the timing of cash flows. Funding risk (a form of

liquidity risk) arises when the liquidity needed to fund illiquid asset

positions cannot be obtained on the expected terms and when

required. The objective of the local group’s liquidity and funding

management is to ensure that all foreseeable funding commitments

and deposit withdrawals can be met when due. To this end, the local

group maintains a diversified and stable funding base. The funding

base comprises core personal and corporate customer deposits and a

portfolio of highly liquid assets with the objective of enabling the local

group to respond quickly and smoothly to unforeseen liquidity

requirements.

The bank maintains strong liquidity positions and manages the

liquidity profiles of assets, liabilities and commitments with the

objective of ensuring that cash flows are balanced appropriately and

that all anticipated obligations can be met when due.

Insurance risk

HSBC Malta operates an integrated bancassurance model which

provides wealth and protection insurance products to customers with

whom the local group has a banking relationship. Insurance products

are sold by the Wealth and Personal Banking business through the

bank’s branches. The insurance contracts HSBC Malta sells relate to

the underlying needs of the local group’s banking customers, which it

can identify from its point-of-sale contacts and customer knowledge.

Where HSBC Life Assurance (Malta) does not have the risk appetite

or operational scale to be an effective manufacturer, a handful of

leading external insurance companies are engaged in order to provide

insurance products to the local group’s customers through its banking

network. The local subsidiary sets its own control procedures in

addition to complying with guidelines issued by the HSBC Group

Insurance. Country level oversight is exercised by the subsidiary’s

local Risk Management Meeting.

In addition, HSBC Life Assurance (Malta)’s Asset and Liabilities

Committee monitors and reviews the matching over time of the

expected cash flows of insurance assets and liabilities. All insurance

products, whether manufactured internally or by a third party, are

subjected to a product approval process prior to introduction.

HSBC Life Assurance (Malta) is exposed to lapse risk, particularly to a

one-event mass lapse. Lapses on the Protection business could be

driven by the inflationary environment thus impacting HSBC Life

Assurance (Malta) customer’s behaviour toward allocating wealth

toward insurance. The Unit-linked book is more sensitive to the

volatility of the market and low return. Mass lapses on this profitable

business would reduce the expected profit.

Execution risk

In order to deliver our strategic objectives and meet mandatory

regulatory requirements we maintain a strong focus on change

execution risk. The scale, complexity and pace of regulatory change

elevates our level of change execution risk.


HSBC Bank Malta p.l.c. Annual Report and Accounts 2024	79

Data risk

We use multiple systems and growing quantities of data to support

our customers. Risks arise if data is incorrect, unavailable, misused, or

unprotected. Along with other banks and Financial Institutions, we are

subject to external regulatory obligations and laws that cover data,

such as the Basel Committee on Banking Supervision’s 239

guidelines and the General Data Protection Regulation (‘GDPR’).

Mitigating actions

– Using a global data management framework, we monitor the

quality, availability and security of data that supports our

customers and internal processes. We work towards resolving any

identified data issues in a timely manner.

– We continue to make improvements to our data policies and to our

control framework, which includes trusted sources, data flows and

data quality, in order to enhance the end-to-end management of

data risk.

– We seek to protect customer data through our data privacy

framework, which established practices, design principles and

guidelines that enable us to demonstrate compliance with data

privacy laws and regulations.

– We continue to modernise our data and analytics infrastructure

through investments in Cloud technology, data visualisation,

machine learning and AI.

– We continue to educate our employees on data risk and data

management. Mandatory training has been rolled out.

Risks arising from the receipt of

services from third parties

HSBC Bank Malta p.l.c. utilises a number of internal and external third

parties for the provision of a range of services, some in common with

other Financial Institutions. Risks arising from the use of third-party

service providers may be less transparent and therefore more

challenging to manage or influence.

We have appropriate risk management policies, processes, controls

and practices over the selection, governance and oversight of third

parties and their supply chain particularly for key activities that could

impact upon our operational resilience, including (i) internal third

parties which are located in different continents, and (ii) Cloud

Outsourcing, with even greater focus in the context of a

strengthening regulatory environment.

Any deficiency in the management of risks arising from the use of

third parties could affect our ability to meet strategic, regulatory or

client expectations.

Externally driven risks

Geopolitical and macroeconomic risks

A busy election year in 2024 has created uncertainty in some markets

in response to shifting domestic and foreign policy priorities. The

outcome of the US election in particular will bring about changes to

economic and foreign policy that will have broader geographical

implications.

The Israel-Hamas conflict continues [albeit a 42-day ceasefire has

been agreed], but the regional economic impact was relatively limited

throughout 2024. The US and UK imposed additional sanctions on Iran

in 2024 in response to activities including the increase in tensions

between Israel and Iran. Further sanctions, which could increase the

risk within our operations, remain a threat.

While supply chains have largely adapted to the Russia-Ukraine war

and conflict in the Middle East, the disruption of key logistical routes,

particularly through the Red Sea continues to impact global supply

cost. Escalation of, or other changes in, the conflicts and ongoing

geopolitical instability could have implications for the local group and

its customers. Moreover, the Russia-Ukraine war and the Middle East

conflict, and their potential escalation or resurgence may impact

economic activity for a prolonged period and this could have material

adverse effect on the local group’s business, financial condition,

results of operations, prospects, liquidity, capital position and credit

ratings. HSBC Bank Malta p.l.c. actively monitors and responds to

financial sanctions and trade restrictions that have been adopted in

response to the war. Locally, through 2024, the government

continued to step in to reduce the impact of the increased price of

energy on local consumers and the economy.

Mitigating actions

– We closely monitor geopolitical and economic developments in

key markets and sectors and undertake scenario analysis where

appropriate. This helps us to take portfolio actions where

necessary, including enhanced monitoring, amending our risk

appetite and/or reducing limits and exposures.

– We stress test portfolios of particular concern to identify

sensitivity to loss under a range of scenarios, with management

actions being taken to rebalance exposures and manage risk

appetite where necessary.

– We apply management judgemental adjustments where modelled

ECL does not full reflect the identified risks and related

uncertainty, or to capture significant late - breaking events.

– We regularly review key portfolios to help ensure that individual

customer or portfolio risks are understood and our ability to

manage the level of facilities offered through any downturn is

appropriate.

– We continue to seek to manage sanctions and trade restrictions

through the use of reasonably-designed policies, procedures and

controls, which are subject to ongoing testing and enhancements.

Technology and cybersecurity risk

Like other organisations, we operate in an extensive and complex

technology landscape. We need to remain resilient in order to support

customers, our colleagues and financial markets globally. Risks arise

where, for example, technology is not understood, maintained or

developed appropriately. We also continue to operate in an

increasingly complex cyber threat environment globally. These threats

include potential unauthorised access to systems including access to

customer data, whether ours or that of our third-party suppliers.

These threats require ongoing investment in business and technical

controls to defend against them.

– We continue to upgrade many of our technology systems and are

transforming how software solutions are developed, delivered and

maintained to improve operational resilience capabilities to seek to

meet the expectations of our customers and regulators, and to

help prevent disruptions to our services.

– The HSBC Cyber intelligence and threat analysis team continually

evaluates threat levels for the most prevalent cyber-attack types

and their potential outcomes. To further protect the bank and its

customers and help ensure the safe expansion of our global

businesses, HSBC Malta continues to strengthen its controls to

help reduce the likelihood and impact of advanced malware, data

leakage, exposure through third parties and security vulnerabilities.

– We continue to enhance cybersecurity capabilities, including Cloud

security, identity and access management, metrics and data

analytics, and third-party security reviews. An important part of our

defence strategy is conducting cybersecurity training and

awareness campaigns so that employees remain aware of

cybersecurity issues and know how to report incidents.

– We respond to attempts to compromise our cybersecurity in

accordance with our cybersecurity framework. To date, none of

these attacks have had a material impact on our business or

operations.


80	HSBC Bank Malta p.l.c. Annual Report and Accounts 2024

Report of the Directors

Climate Risk and ESG Risks

Climate-related risks

We are subject to financial and non-financial risks associated with

environmental, social and governance (‘ESG’) related matters. Our

current areas of focus are climate risk, nature-related and human

rights risks. These can impact us both directly and indirectly through

our business and relationships.

The assessment of climate risks covers three distinct time periods,

comprising: short term, which is up to 2026; medium term, which is

between 2027 and 2035; and long term, which is between 2036 and

2050. These time periods are aligned to the Climate Action 100+

framework V2.

The following risks resulting from climate change and the move to a

net zero economy may be faced:

– Credit losses, if customers’ business models fails to align to a net

zero economy or if its customers face disruption to their

operations or deterioration to their assets as a result of extreme

weather.

– Liquidity impacts in the form of deposit outflows due to changes

in customer behaviours driven by impacts to profitability/ wealth or

due to reputational concerns relating to the progress we make

towards our net zero and ESG-related commitments.

– Impacts from physical risk on HSBC Bank Malta p.l.c.’s own

operations, owing to the increase in frequency and severity of

weather events and chronic shifts in weather patterns, which

could affect our ability to conduct our day-to-day operations.

– Increased reputational, legal, and regulatory risk if the bank fails to

make sufficient progress towards its net zero ambition, if the bank

fails to meet evolving regulatory expectations and requirements on

climate risk management, or if HSBC knowingly or unknowingly

makes inaccurate, unclear, misleading, or unsubstantiated claims

regarding sustainability to stakeholders.

– Impacts on resilience risk through physical climate risk impacts on

buildings supporting service provision, or through physical and/or

transition disruption to our third party supply chain relationships.

– Financial reporting risk in relation to ESG disclosures, as any data,

methodologies and standards used may evolve over time in line

with market practice, regulation or developments in climate

science. Any changes could result in revisions to HSBC internal

frameworks and reported data and could mean that reported

figures are not reconcilable or comparable year on year.

– Model risk, as the uncertain impacts of climate change and data

and methodology limitations present challenges to creating reliable

and accurate model outputs.

– Climate related litigation risks.

HSBC Bank Malta p.l.c. may also be exposed to nature related risks

beyond climate change, so HSBC continues to engage with investors,

regulators and customers on nature-related risks to evolve its

approach and understand best practice risk mitigation. Since 2021 the

HSBC Group joined several industry working groups dedicated to

helping in assessing and managing nature-related risks such as the

Taskforce on Nature-related Financial Disclosures (’TNFD’).

Mitigating actions

To enhance the monitoring of Climate and ESG risks, HSBC is

engaged through:

– A dedicated governance committee, responsible for shaping and

overseeing HSBC Bank Malta p.l.c.’s approach and providing

support in managing climate & ESG risks. The governance

committee has expanded its responsibilities and covers also CSRD

requirements, beyond climate risk management.

– The climate risk programme, which continues to support the

development of climate risk management capabilities across four

key pillars: governance and risk appetite, risk management, stress

testing & scenario analysis, and disclosures.; in addition, the

approach and mitigation to the risk of greenwashing continue to be

enhanced.

– During 2024, we have been monitoring the exposures of our

customers to ten high risk sectors, where our wholesale credit

customers have the highest climate risk, based on their CO2

emissions. These are oil and gas, building and construction,

chemicals, automotive, power and utilities, metals and mining,

transportation/airlines/shipping, agriculture, manufacturing and real

estate. For retail banking, we monitor exposures to physical risks

regularly. For our own operations, we monitor metrics around

waste management, water reduction and other key metrics in

support of transitioning to net zero.

– The Climate Risk specific governance committee met eight times

during 2024, which monitored progress against climate and

environmental risks. Progress is also reported to the Risk

Management Meeting, Risk Committee, and the Board.

– In January 2024, the energy policy was updated at Group level

covering broader energy systems including upstream oil and gas,

oil and gas power generation, coal, hydrogen, renewables and

hydropower, nuclear, biomass and energy from waste. The

thermal coal policy has also been updated at Group level. HSBC

Bank Malta p.l.c does not have any exposures to this sector. We

take a risk-based approach when identifying transactions and

clients to which our policies apply, and when reporting on relevant

exposures, adopting approaches proportionate to risk and

materiality.

– We have started to use the tools developed by the Group and

approaches to embed nature considerations alongside net zero.

This includes understanding our exposures to nature-related risks,

impact and opportunities.

– Climate stress tests and scenarios are being used to further

improve our understanding of our risk exposures for use in risk

management and business decision making.

– We continue to engage with our customers, proactively on the

management of climate risks as transition risks are assessed and

monitored by the client facing and the credit teams for high

transition risk sectors.

Financial crime risk

The risk of financial crime remains intrinsically high and requires

continuous work to strengthen the system for preventing, detecting

and reporting criminal activities. We believe that the enforcement of

high compliance standards is a competitive advantage, and is

essential to our success and that of the jurisdiction. The management

of Financial Crime Risk is a key area of focus at the HSBC Bank Malta

p.l.c. Risk Management Meeting, as well as at the Board and Risk

Committee.

HSBC Bank Malta p.l.c. continues to support its clients in the context

of complex geopolitical, socio-economic and technological challenges,

including the implementation of an unprecedented volume and

diverse set of sanctions, notably as a result of the Russia-Ukraine war.

The bank continues to monitor direct and indirect impacts of the

Russia-Ukraine war and continues to respond to new sanctions

regulations, taking into account the challenges that arise in

implementing the complex, new and ambiguous aspects of some of

these regulations.

Mitigating actions

We continue to manage sanctions and trade restrictions through the

use of, and enhancements to, existing controls.

– The bank also continues to develop its fraud controls, and invest in

capabilities to fight financial crime through the application of

advanced analytics and artificial intelligence.

– The bank is looking at the impact of a rapidly changing payments

ecosystem, as well as risks associated with direct and indirect

exposure to digital assets and currencies, to ensure its financial

crime controls remain appropriate.

– The bank engages with regulators, policymakers and relevant

international bodies, seeking to address data privacy challenges

through international standards, guidance and legislation.


HSBC Bank Malta p.l.c. Annual Report and Accounts 2024	81

Interest rate increases

The combined pressure of inflation and interest rate rises may lead to

affordability pressures for customers and their ability to repay debt.

These risks are considered during underwriting and estimated credit

loss assessment.

Market risk

Market risk is the risk that movements in market risk factors,

including foreign exchange rates, interest rates and market prices will

impact the local group’s income or the value of its portfolios.

Exposure to market risk arises from positions that primarily emanate

from the interest rate management of the local group’s retail and

commercial banking assets and liabilities and financial investments.

The objective of the local group’s market risk management is to

manage and control market risk exposures in order to optimise return

on risk while maintaining a market profile consistent with the local

group’s status as a premier provider of financial products and

services. Market risk is managed and controlled through risk appetite

setting and limits. The bank has an independent market risk

management and control function which is responsible for measuring

market risk exposures in accordance with policies, and monitoring and

reporting these exposures against the prescribed limits daily.

Branches and offices

A list of branches and offices is found on page 220.

Additional regulatory disclosures

Banking Rule 07 (BR07/2024) (Publication of Annual Report and

Audited Financial Statements of Credit Institutions Authorised under

the Banking Act 1994) partly repealed by certain provisions in the

Capital Requirements Regulation (EU) No 575/2013 on prudential

requirements for credit institutions and investment firms (‘CRR’) is

related to market discipline and aims to make credit institutions more

transparent by requiring them to publish specific disclosures on the

credit institution’s risk and capital management under the Basel III

framework. However, the local group is a large subsidiary of HSBC

Holdings plc and is therefore exempt, in terms of Article 24 of the

revised BR 07 and Article 13 of the CRR, from certain risk disclosure

requirements under Pillar 3, on the basis that equivalent disclosures

are performed at the consolidated level which is at the HSBC

Holdings plc level. HSBC Holdings plc publishes full Pillar 3

disclosures as a separate document on the HSBC Group Investor

Relations website.

Shareholder register information

pursuant to Capital Markets Rule 5.64

The bank’s authorised share capital is €141,000,000. The issued and

fully paid up capital is €108,091,830 divided into 360,306,099 ordinary

shares of a nominal value of 30 cent each. The issued share capital

consists of one class of ordinary shares with equal voting rights

attached and are freely transferable.

The largest single shareholder of the bank, provided it holds at least

thirty three per cent (33%) of the ordinary issued share capital of the

bank, shall be entitled to appoint the Chairman from amongst the

Directors appointed or elected to the Board.

Every shareholder owning eleven per cent (11%) of the ordinary

issued share capital, shall be entitled to appoint one Director for each

and every eleven per cent (11%) of the ordinary issued share capital

of the bank owned by such shareholder. Any fractional shareholding

not so utilised in the appointment of Director(s) shall be entitled to

participate in the voting for the election of further Directors.

There is a Restricted Share Awards scheme in existence whereby

employees can be awarded shares in HSBC Holdings plc. Share

awards will be released to the individual staggered over three years,

provided the participant remains continuously employed within the

Group.

Vesting of these awards are generally not subject to performance

conditions. During the vesting period the employee has no voting

rights whatsoever.

The rules governing the appointment of Board Members are

contained in Articles 77 to 80 of the bank’s Articles of Association. An

extraordinary resolution approved by the shareholders in the general

meeting is required to amend the Articles of Association.

The powers of the Directors are outlined in Articles 73, 74 and 85 of

the bank’s Articles of Association. In terms of Article 12 of the said

Articles of Association, the bank may, subject to the provisions of the

Companies Act, 1995, acquire or hold any of its shares.

The Collective Agreement and relevant bank policies regulate

redundancies, early retirement, resignation or termination of

employment of employees. There are no contracts between the bank

and the Directors on the bank’s Board providing for compensation on

resignation or termination of directorship.

It is hereby declared that the requirements pursuant to Capital

Markets Rules 5.64.7 and 5.64.10 that deal with agreements which

may result in restrictions on the transfer of securities and/or voting

rights and agreements pertaining to changes in control of the bank did

not apply to the bank as at 31 December 2024.

Standard licence conditions and

Investment Services Rules applicable

under the Investment Services Act,

1994

In accordance with the Malta Financial Services Authority (‘MFSA’)

Investment Services Rules for Investment Services Providers (Part BI

R1-2.2.3) and the Standard Licence Conditions (‘SLCs’) of the

Investment Services Rules applicable to Investment Services Licence

Holders which qualify as Depositaries (Part BIV SLC 2.30), and

regulated by the MFSA, the Directors confirm that there were no

breaches of the MFSA Investment Services Rules, the Standard

Licence Conditions, or other regulatory requirements which occurred

during the reporting period, and which were subject to an

administrative penalty or other regulatory sanction.

Board of Directors

The Directors who served during the year and up till the date of the

drawing up of this report are as follows:

John Bonello (retired 23 April 2024)

Manfred Galdes (appointed Chairman 23 April 2024)

Geoffrey Fichte

Michel Cordina (resigned 10 December 2024)

Charlotte Cilia (appointed 10 February 2025)

Ingrid Azzopardi (resigned 1 October 2024)

Louis Cassar Pullicino (appointed 11 June 2024)

Alexiei Dingli (appointed 24 January 2024)

Elvia George (appointed 22 January 2025)

Terecina Kwong (resigned 11 June 2024)

Maria Micallef

Yiannos Michaelides (resigned 23 January 2024)

Malcolm Miller (appointed 8 March 2024)


82	HSBC Bank Malta p.l.c. Annual Report and Accounts 2024

Report of the Directors

Disclosures in Terms of Article 435 of

Capital Requirements Regulations

Disclosure on Governance Arrangements

Number of directorships held by the Members of the Board of

Directors (including the Directorship with the bank).


Manfred Galdes	2 Executive Directorships within the same Group and 2 Non-Executive Directorships.
Geoffrey Fichte	1 Executive Directorship and 2 Non-Executive directorships all within the same Group and 1 Non-Executive Directorship
Charlotte Cilia	1 Executive Directorship and 1 Non-Executive directorship all within the same Group
Louis Cassar Pullicino	2 Non-Executive Directorships
Alexiei Dingli	1 Executive Directorship and 2 Non-Executive Directorships
Elvia George	3 Non-Executive Directorships
Maria Micallef	1 Executive Directorship and 2 Non-Executive Directorships
Malcolm Miller	10 Executive Directorships all within the same Group and 1 Non-Executive Directorship.

None of the Directors required approval from the Competent

Authority regarding the number of directorships held.

Board Fit and Proper Policy

The Disclosures herein are also being made in terms of Banking Rule

07 (BR07/2024) paragraph 28.

The Board’s Fit and Proper Policy is recommended for Board approval

by the Remuneration and Nomination (‘RemNom’) Committee at least

annually. It was last reviewed and approved by the Board in July

2024. This policy includes principles on the selection, appointment,

monitoring, re-appointment of and succession planning of members

of the Board of Directors and Key Function Holders. The policy also

refers and describes the criteria used in the assessment for the Board

members and Key Function Holders.

In carrying out the fit and proper assessment, the criteria against

which the Board members and Key Function Holders are assessed

using various criteria, including skills, knowledge and experience,

reputation, honesty and integrity, conflicts of interest, independence

and time commitment.

Without prejudice to the Shareholders’ right to appoint and replace

members of the Board, in line with the local Code of Principles of

Good Corporate Governance, the Board has delegated to the bank’s

Remuneration and Nomination Committee with the power to lead the

process in filling vacancies on the Board of Directors and make

recommendations thereon for the Board’s approval or the general

meeting’s approval, as the case may be. RemNom has been

empowered by the Company’s Articles of Association to conduct a fit

and proper assessment when seeking qualified candidates for board

directorships, in line with local regulatory guidance on the topic.

A Fit and Proper assessment for Directors is carried out before

appointment, and at least annually thereafter and at other instances

as outlined within the Fit and Proper Policy. This assessment is

carried out both individually and collectively by the RemNom

Committee and reported to the Board of Directors accordingly. The

individual and collective fit and proper criteria broadly outline a set of

qualities and competences that are sought for the bank’s Board of

Directors.

When carrying out the fit and proper assessment, consideration is

also given to the Board’s Diversity Policy and to the Board’s Conflicts

of Interest Policy. Before appointment, the potential member

undergoes thorough vetting and is required to submit a number of

supporting documents. Any appointment requires regulatory approval

for it to be effective.


Knowledge, Skills and Expertise of the Board Members
Manfred Galdes	Financial and Anti-Money Laundering Legislation
Geoffrey Fichte	Banking and Finance, Economics
Charlotte Cilia	Accountancy, Audit, Banking and Finance
Louis Cassar Pullicino	Legal and Litigation
Alexiei Dingli	Information Technology & Artificial Intelligence
Elvia George	Accountancy, Banking and Finance
Maria Micallef	Accountancy and Audit
Malcolm Miller	Business acumen

In terms of the Board Succession Policy, the Board acknowledges

that robust succession planning contributes to the long-term success

of the bank. The objective of this policy is to ensure continuity of

decision-making and prevent, where possible, too many Board

Members having to be replaced simultaneously. The policy aims to

have the bank prepared for any planned or unplanned vacancies.

Moreover, it ensures that future Directors will be individually and

collectively fit and proper to form part of the bank’s Board of

Directors, committing to its vision, values, objectives and to meet

their statutory and regulatory obligations.

The objective of the Board Diversity and Inclusion Policy is to ensure

diversity and inclusion is taken into consideration in the succession

planning, selection, nomination, operation, and evaluation of the

Board. Consideration is given to a wide range of backgrounds

including the gender, ethnicity, age, geographical, educational and

professional backgrounds of candidates.

The bank remains committed to an inclusive culture in the Boardroom

where Directors believe that their views are heard, their concerns are

attended to and they serve in an environment where bias,

discrimination and harassment on any matter are not tolerated.

With regard to the bank’s diversity target, in 2024 this ambition was

updated to:

– 40% female (being the under-represented gender) non-executive

directors on its Board or

– 33% female (being the under-represented gender) representation

of executive and non-executive directors on its board.

This amendment to the bank’s Diversity Policy was made to align to

Chapter 13.1 of the Capital Markets Rules, whereby Listed entities

are to aim to reach the above-mentioned ambitions by 30 June 2026.

As at the date of publication of this report, there are three female and

five male Directors on the Board. There is one female and one male

executive Directors out of these eight Directors. Therefore, the bank

has achieved both above-mentioned targets, while aspiring to

maintain and improve the gender diversity on the Board for the long-

term, and this while abiding by the principle of meritocracy.

A Director’s appointment on the Board is only effective when

regulatory approval is obtained. As a result, due to the resignation of

two female Directors (Terecina Kwong and Ingrid Azzopardi)

throughout the course of 2024, albeit for a short period of time, the

Board had less than the desired female representation on its Board.

Upon Terecina Kwong’s resignation, the Board had two female Board

Members out of eight. Upon Ingrid Azzopardi’s resignation, the Board

had one female representation out of seven Board Members. With

Michel Cordina’s resignation in December 2024, the Board had one

female representation out of six Board Members.

Thanks to the RemNom Committee’s and the bank’s robust

succession planning, this was quickly remediated by January 2025,

through Elvia George’s appointment. This was followed by another

female appointment to the Board (Charlotte Cilia) in February 2025,

highlighting the bank’s commitment to achieving and surpassing its

diversity target.


HSBC Bank Malta p.l.c. Annual Report and Accounts 2024	83

The RemNom Committee recommends to the Board, the ambition for

the representation of the underrepresented gender on the Board of

Directors as part of the Board Diversity and Inclusion Policy and

monitors its implementation on an ongoing basis.

Details regarding the bank’s Risk Committee are included under

Principle 4 of the Statement of Compliance with the Code of Principle

of Good Corporate Governance.

Executive Committee and Head of

Internal Audit

As at 31 December 2024, the bank’s Executive Committee of the

local group was composed of the following:


Geoffrey Fichte	Chief Executive Officer
Svetlana Maslova	Chief Operating Officer
Charlotte Cilia	Chief Financial Officer
Muriel Rutland	Head of Wealth and Personal Banking
Michel Cordina	Head of Business Development
Jesmond Apap	Head of Global Markets
David Perotti	Head of Human Resources
Joyce Grech	Head of Commercial Banking
Chantelle Coleiro	General Counsel
Steven Beddow	Chief Risk Officer
Mandy Falzon	Chief Compliance Officer
Carine Arpa	Head of Communications
Paula Mamo	Company Secretary
Morgan Carabott	Head of Internal Audit

Auditors

PricewaterhouseCoopers have expressed their willingness to

continue in office as auditors of the bank and the local group and a

resolution proposing their reappointment will be put at the

forthcoming Annual General Meeting.

Going concern

As required by Capital Markets Rule 5.62, upon due consideration of

the bank’s profitability and statement of financial position, capital

adequacy and solvency, the Directors confirm the bank’s ability to

continue operating as a going concern for the foreseeable future.

Statement by the Directors Pursuant

to Capital Markets Rule 5.70.1

Pursuant to Capital Markets Rule 5.70.1 there were no material

contracts to which the bank, or anyone of its subsidiary undertakings,

was party to and in which anyone of the Directors was directly or

indirectly interested.

Statement by the Directors Pursuant

to Capital Markets Rule 5.68

We, the undersigned, declare that to the best of our knowledge, the

financial statements prepared in accordance with the requirements of

International Financial Reporting Standards as adopted by the EU, give

a true and fair view of the assets, liabilities, financial position and

profit or loss of the bank and its subsidiaries and that this report

includes a fair review of the development and performance of the

business and the position of the bank and its subsidiaries, included in

the consolidation taken as a whole, together with a description of the

principal risks and uncertainties that they face.

Signed on behalf of the bank's Board of Directors on 19 February 2025 by

Manfred Galdes (Chairman) and Geoffrey Fichte (Chief Executive Officer) as per

the Directors' Declaration on ESEF Annual Financial Report submitted in

conjunction with the Annual Report and Accounts 2024.


84	HSBC Bank Malta p.l.c. Annual Report and Accounts 2024

Directors’ Responsibilities Statement

Directors’ Responsibilities

Statement

The Companies Act, 1995 requires the Directors of HSBC Bank Malta p.l.c. to prepare financial statements which give a true and fair view of

the financial position of the local group and the bank as at the end of each period and of the profit or loss for that period. In preparing the

financial statements, the Directors are responsible for:

– ensuring that the financial statements have been drawn up in accordance with the requirements of International Financial Reporting

Standards as adopted by the EU;

– ensuring that the financial statements have been properly prepared in accordance with the provisions of the Companies Act, 1995 and the

Banking Act, 1994;

– selecting and applying consistently suitable accounting policies;

– making accounting judgements and estimates that are reasonable; and

– ensuring that the financial statements are prepared on the going concern basis unless it is inappropriate to presume that the local group and

the bank will continue in business as a going concern.

– The Directors are also responsible for safeguarding the assets of the local group and hence for taking reasonable steps for the prevention

and detection of fraud and other irregularities.

Through oversight of management, the Directors are responsible for ensuring that the local group and the bank establish and maintain internal

controls to provide reasonable assurance with regard to reliability of financial reporting, effectiveness and efficiency of operations, compliance

with applicable laws and regulations, and as far as possible, the orderly and efficient conduct of the local group’s business. This responsibility

includes establishing and maintaining controls pertaining to the preparation of financial statements and for managing risks that may give rise to

material misstatements in those financial statements, whether due to fraud or error.

The financial statements of HSBC Bank Malta p.l.c. for the year ended 31 December 2024 are included in the Annual Report 2024, which is

being published in printed form and made available on the bank’s website. The Directors are responsible for the maintenance and integrity of

the Annual Report on the website in view of their responsibility for the controls over, and the security of, the website. Access to information

published on the bank’s website is available in other countries and jurisdictions, where legislation governing the preparation and dissemination

of financial statements may differ from requirements or practice in Malta.

Signed on behalf of the bank's Board of Directors on 19 February 2025 by Manfred Galdes (Chairman) and Geoffrey Fichte (Chief Executive

Officer) as per the Directors' Declaration on ESEF Annual Financial Report submitted in conjunction with the Annual Report and Accounts 2024.


HSBC Bank Malta p.l.c. Annual Report and Accounts 2024	85

Statement of Compliance with the

Code of Principles of Good

Corporate Governance

The Board of Directors (the ‘Board’) of HSBC Bank Malta p.l.c. (the

‘bank’) acknowledges that effective corporate governance is critical to

the proper functioning of the banking sector and the economy as a

whole. Hence, it is committed to the HSBC global values of valuing

difference, succeeding together, taking responsibility and getting it

done. The Board ensures that each employee, through ongoing

training, is aware of the obligation to ensure that his or her conduct

consistently matches the bank’s values.

The Board is proud of its solid corporate governance framework that

is built around the principles of control and accountability. This culture

stems from a philosophy that puts the protection of investors and the

interest of customers at the forefront. The Board further believes that

good corporate governance has a positive impact on the bank’s

performance.

Corporate governance is subject to regulation by the Malta Financial

Services Authority. As a company whose equity securities are listed

on a regulated market, the bank endeavours to adopt the Code of

Principles of Good Corporate Governance (the ‘Code’ or ‘Principles’)

embodied in Appendix 5.1 of the Capital Markets Rules. In terms of

Capital Markets Rule 5.94 and the Code’s Preamble, the bank is

obliged to disclose how it has complied with the provisions of the

said Code. In terms of paragraph 28 of Banking Rule 07 (BR/07/2024),

the bank is also obliged to explain how it complies with the

requirements of paragraphs 14 to 18, and paragraph 86 of Banking

Rule 24 on Internal Governance. Some of the disclosures made in

this Statement of Compliance are being made in virtue of this

obligation.

The bank strives to maintain the highest standards of disclosure in

reporting the effective measures adopted to ensure compliance with

the Principles, and to explain instances of non-compliance.

Compliance with the Code

Principle 1: The Board

The Board plays a key role in effective governance as it lies at the

top-end of a system of control that is focused on overseeing and

challenging management and control functions in order to ensure

effective and prudent management of the bank.

The bank is headed by an effective Board that leads the bank, directs

the business and promotes the company’s values and standards. It

reinforces the tone from the top by setting corporate values. It

creates expectations that all business should be conducted in a legal

and ethical manner.

The Board is composed of members who are honest, competent and

solvent, and have been considered to be fit and proper to direct the

business of the bank. The criteria considered when carrying out the

individual fit and proper assessment relate to time commitment,

knowledge, skills and experience, independence and reputation,

honesty and integrity. Directors, individually and collectively, are

deemed to be of the appropriate calibre, having the necessary skills

and experience to provide leadership, integrity and judgement in

directing the bank. The courageous integrity, honesty and diligence of

the Directors guarantee that the bank adheres to HSBC Group’s (the

‘Group’) highly ethical business values and this is reflected in the

bank’s decision and policy-making process. Through their

knowledgeable contribution, Directors enhance shareholder value,

protect the bank’s assets and safeguard the interest of third parties.

The letter of appointment issued to Non-Executive Directors

stipulates the minimum time commitment expected to be dedicated

to the bank. Non-Executive Directors undertake to have sufficient

time to meet what is expected of them. Any other significant

commitments are disclosed to the Board before their appointment

and subsequent changes are notified as they arise.

All Directors ensure that they are informed about the overall activity,

financial and risk situation of the bank, taking into account the

economic environment. They are also cognisant of decisions that

have a major impact on the bank’s business.

Board Members are accountable for their performance and that of

their delegates to shareholders and other relevant stakeholders.

Besides having a broad knowledge of the bank’s business, they are

also conversant with the statutory and regulatory requirements

regulating this business. Directors regularly attend Board meetings

and allocate sufficient time to perform their duties. An annual

assessment on time commitment of each Board member is

undertaken to determine this.

The Board determines and oversees the implementation of the

bank’s strategic objectives and risk strategy and internal governance.

It regularly reviews management performance and ensures that the

bank has the appropriate financial and human resources to meet its

objectives.

Moreover, it exercises prudent and effective controls, which enable

risk to be appropriately assessed and managed in order to achieve

the short- and long-term sustainability of the business. As part of a

larger international Group, the Board assesses the compatibility of

Group policy with local legal and regulatory requirements, and where

appropriate, adapts those policies.

The Board ensures the integrity of the bank’s accounting and financial

reporting systems, including financial and operational controls and

compliance with the law and relevant standards.

During the year, the Board delegated specific responsibilities to a

number of Committees, namely the Audit Committee, the Risk

Committee and the Remuneration and Nomination Committee.

Further detail in relation to the Committees and their responsibilities

can be found under Principle 4 of this Statement.

The process of appointment of Directors is conducted in terms of the

company’s Memorandum and Articles of Association. It states that

the Board is to consist of not more than nine Directors who are

appointed/elected by the shareholders, or appointed by the Board

members in the event of a Board vacancy. Every shareholder owning

11% of the Ordinary Share Capital is entitled to appoint one Director

for each 11% shareholding. The majority shareholder therefore has

the right to appoint six Directors. Furthermore, any excess fractional

shareholding not so utilised may be used to participate in the voting

for the election of further Directors. Shareholders who own less than

11% of the ordinary share capital participate in the election of the

remaining three Directors. The largest single shareholder (subject to a

minimum 33% holding of the ordinary issued share capital of the

bank) is entitled to appoint a Chairman from among the Directors

appointed or elected to the Board.


86	HSBC Bank Malta p.l.c. Annual Report and Accounts 2024

Statement of compliance with the Code of Principles of Good Corporate Governance

Principle 2: Chairman and Chief

Executive Officer

The positions of the Chairman and of the Chief Executive Officer

(‘CEO’) are occupied by different individuals. There is a clear division

of responsibilities between the running of the Board and the Chief

Executive Officer’s responsibility in managing the bank’s business.

This separation of roles of the Chairman and Chief Executive Officer

avoids concentration of authority and power in one individual. It

differentiates the function of leadership of the Board from that of

running the business.

The Chairman and the CEO acknowledge that it is imperative to have

a constructive relationship with each other and that a certain level of

independence is maintained.

The letter of appointment of the Chairman clearly establishes the

responsibilities of the Chairman, including the time commitment

expected. A description of the responsibilities of the Chairman and

the CEO are incorporated in the bank’s Internal Governance Policy.

This Policy, together with the Corporate Governance Framework

define the bank’s internal governance arrangements that ensure

effective and prudent management of the bank, including the

segregation of duties in the organisation, the bank’s strategic

objectives and risk strategy. Both policies, including the description of

responsibilities of the Chairman and the CEO are reviewed and

approved by the Board of Directors annually.

The Chairman, who was independent on appointment and still meets

the independence criteria, leads the Board. The Chairman sets the

Board’s meeting agenda and ensures that decisions of the Board are

taken on a sound and well-informed basis. The Chairman ensures that

the Directors receive precise, timely and objective information and at

the same time ensures effective communication with shareholders.

During Board meetings, the Chairman encourages active engagement

by all Board Members and ensures that Directors constructively

challenge senior management. The Chairman also facilitates the

effective contribution of Non-Executive Directors thus ensuring

constructive relations between Executive and Non-Executive

Directors.

The Chairman encourages and promotes open and critical discussion,

ensuring that any dissenting views are expressed and discussed

within the decision-making process. Moreover, the Chairman

contributes to the efficient flow of information within the Board, as

well as between the Board and its Committees. The Chairman is

responsible for an effective overall functioning of the Board.

The Chief Executive Officer advises the Board, formulates policies

and makes recommendations to the Board. The Chief Executive

Officer develops, drives and delivers performance within strategic

ambitions, commercial objectives and business plans agreed by the

Board. The Chief Executive Office is responsible for executing

strategy and implementing plans. The Chief Executive Office

effectively leads the senior management in the day-to-day running of

the bank, ensures compliance with appropriate policies and

procedures and maintains an effective framework of internal controls

over risk in relation to the business. The Chief Executive Office

makes decisions on all matters affecting the operations, performance

and strategy of the business, except for those matters reserved for

the Board or specifically delegated by the Board to its Committees.

The Chief Executive Office interfaces between the Board and

employees and between the bank and other stakeholders.

Principle 3: Composition of the Board

Experience has shown that the size of the Board is appropriate to

facilitate effective oversight over the bank’s operations. Each of the

Directors is skilful, competent, knowledgeable and experienced to

fulfil his/her role diligently. The Directors who held office during the

year, possess the requisite ability to assess business risk, to identify

key performance indicators and participate in critical debate in the

decision-making process.

Ethnicity, age, culture, and gender diversity, underpinned by

meritocracy, are areas of strategic focus for the employee base. The

same principle is applied to the composition of the Board in

accordance with the Board Diversity Policy.

The benefits of diversity, including that in educational and

professional backgrounds, continue to influence the Remuneration

and Nomination Committee’s Board succession planning and Board

candidates’ selection process. This has resulted in a diverse Board

composition which meets the diversity criteria in its widest aspect of

ethnicity, age, culture, gender and educational and professional

backgrounds. The right mix of Board Members ensures diverse

perspectives, experience and knowledge.

By the end of 2024, the Board was composed of a Non-Executive

Chairman, an Executive Director and five independent Non-Executive

Directors.

Whereas the Executive Directors are involved in the day-to-day

running of the business, ensuring adherence to the four-eye principle,

the Non-Executive Directors bring an external perspective to the

Board when they constructively challenge and help develop proposals

on strategy, scrutinise the performance of management, and monitor

the risk profile and the reporting of performance.

They are proactive in ensuring that financial controls and risk

management systems are well established and in satisfying

themselves with the integrity of financial information.

The appointment of Directors requires the ‘no objection’ of the

European Central Bank. This non-objection has been granted to all of

the bank’s appointed Directors.

Apart from the minimum time commitment expected to be dedicated

to the bank being stipulated in the letter of appointment and which is

assessed on an annual basis, each Director annually confirms that he/

she is able to commit sufficient time to effectively fulfil the

responsibilities as a Director of the bank.

In accordance with the Code Provision 3.2, the independent Non-

Executive Directors as at 31 December 2024 were the following:

Manfred Galdes, Maria Micallef, Louis Cassar Pullicino, Alexiei Dingli

and Malcolm Miller.

In determining the independence or otherwise of its Directors, the

Board has considered, inter alia, the principles relating to

independence embodied in the Code, the local group’s own practice

as well as general principles of good practice. The Board has

concluded that the above-mentioned Directors are independent in

character and judgement and that none have relationships or

circumstances that are likely to affect or could appear to affect the

director’s judgement.

Manfred Galdes is a partner in a firm which has provided limited

consultancy services to the bank from time-to-time. However, the

Board has determined that this business relationship is not a

significant business relationship.

Malcolm Miller is an Executive Chairman of a group of entities, some

of which are customers of the bank. However, after following the

guidance set out in the Board Conflicts of Interest Policy, the Board

determined that this was not a significant business relationship

neither for the bank nor the customer.

Furthermore, these relationships have been declared, included and

recorded in the Board’s Conflict of Interest Register together with the

relevant controls that are in place.

In accordance with Code Provision 3.2.1, the Board had decided that

the employment of Terecina Kwong with the Group rendered her

non-independent from the bank. This did not however, in any manner,

detract from this Director’s ability to maintain independence of free

judgement and character at all times. She was deemed able to make

her own sound, objective judgement and independent decisions

when performing her functions and responsibilities.


HSBC Bank Malta p.l.c. Annual Report and Accounts 2024	87

In terms of Principle 3.4, each Non-Executive Director has confirmed

in writing to the Board that he/she undertook:

– to maintain in all circumstances his/her independence of analysis,

decision and action;

– not to seek or accept any unreasonable advantages that could be

considered as compromising his/her independence; and

– to clearly express his/her opposition in the event that he/she finds

that a decision of the Board may harm the bank.

Principle 4: The Responsibilities of the

Board

The Board sets and reviews the bank’s strategy, major operational

and financial plans, policies and business plans and performance

objectives. Strategy is discussed on a regular basis at Board

meetings. The Board of Directors monitors the implementation by

management of strategy and corporate performance within the

parameters of all relevant laws, regulations and codes of best

practice. The Board ensures that a balance is maintained between

enterprise and control. The Board recognises and supports innovation

within the management of the bank and it remains accountable to the

shareholders for its performance and also ensures effective

communication with the different groups of stakeholders.

The Board actively oversees the affairs of the bank and stays attuned

to material changes in the bank’s business and the external

environment, as well as acts in a timely manner to protect the long-

term interests of the bank. It plays a leading role in establishing the

bank’s corporate culture and values. The Board, after considering

senior management and the Chief Risk Officer advice, establishes the

bank’s risk appetite, taking into account the commercial and

regulatory landscape and the bank’s long-term interests, risk

exposure and ability to manage risk effectively. It also oversees the

bank’s adherence to the Risk Appetite Statement, risk policy and risk

limits.

The Board is also responsible for approving the approach and

overseeing the implementation of key policies pertaining to the

bank’s capital adequacy assessment process, capital and liquidity

plans, compliance policies and obligations and the internal control

system. The Board, oversees the integrity, independence and

effectiveness of the bank’s policies and procedures for

Whistleblowing. Whistleblowing also falls under the remit of the

Audit Committee.

The regular evaluation of management’s implementation of corporate

strategy and financial obligations is based on the use of key

performance indicators enabling the bank to adopt expedient

corrective measures. These key business risk and performance

indicators are benchmarked against industry norms to ensure that the

bank’s performance is effectively evaluated.

The Board ensures that the bank has appropriate policies and

procedures in place that guarantee that the bank and its employees

adhere to the highest standards of corporate conduct and comply

with the applicable laws, regulations, business and ethical standards.

The Board has approved a Fit and Proper Policy for Board Members

and Key Function Holders, which includes a succession policy. The

Remuneration and Nomination Committee has also reviewed and

approved a succession plan for the future composition of the Board.

An effective reporting system that enables the Directors to have

relevant and timely information, such that the Board can discharge its

duties, exercise objective judgement and take pertinent decisions, is

implemented through:

– presentations delivered by senior management during Board

meetings;

– updates provided by the CEO and senior management during

intervals between Board/Committees’ meetings; and

– accessibility to a common electronic platform hosting bank

information, including Board/Committees’ documentation and

minutes of meetings.

The Board ensures that its level of authority is known by all Directors

and the senior management of the bank. Any delegation of

responsibility and function is clearly documented.

The Board delegates specific responsibilities to its Committees,

which operate under their respective formal Terms of Reference

which are embodied in the Corporate Governance Framework which

the Board reviews and approves on an annual basis.

Audit Committee

The Terms of Reference of this Committee are compliant with the

Capital Markets Rules and Banking Rule 12, the European Banking

Authority Guidelines on Internal Governance.

The Committee protects the interests of the bank’s shareholders and

assists Directors in conducting their role effectively so that the bank’s

decision-making capability and the accuracy of its reporting and

financial results are always maintained at the highest level. It ensures

that the bank maintains a robust finance function responsible for

accounting and financial data. This Committee has non-executive

responsibility for oversight of, and advice to, the Board on matters

relating to financial reporting. Hence, it monitors and critically

assesses the integrity of the bank’s financial statements, and any

formal announcements/disclosures and supplementary regulatory

information (including Environment, Social and Governance (‘ESG’)-

related disclosures) relating to the bank’s financial performance.

This Committee reviews, inter alia, the bank’s annual financial

resource plan, capital expenditure and the capital plan. Moreover, it

reviews and considers changes to significant accounting policies and

disclosure practices, as applicable. Significant accounting judgements

and adjustments are reviewed and reported to the Board. It considers

the effectiveness of model risk management for financial reporting

and reviews the going concern assumptions, any qualifications and

provides confirmation to the Board of the bank’s profitability.

An important function of the Audit Committee is to monitor and

assess the effectiveness, performance, resourcing, independence

and standing of the Internal Audit Function, consider significant

findings of internal investigations and management’s response, and

other matters as advised by internal audit, any other function or the

external auditor.

With regard to the annual report and accounts, the Audit Committee

reviews any significant or unusual items that may need to be

highlighted and advises whether, taken as a whole, it is fair, balanced

and understandable and provides the information necessary for

shareholders to assess the Company’s position and performance.

This Committee reviews the internal audit charter and approves the

internal audit work plan, which is a rolling plan, ensuring it is aligned

to the key risks of the business.

The Audit Committee also has the responsibility to review and

monitor the external auditor’s independence, objectivity and the

quality and effectiveness of the audit, considering relevant

professional, regulatory and other requirements. In this regard, the

Committee also has to satisfy itself that there is the appropriate co-

ordination between the internal and external auditors.

With regard to internal controls, the Audit Committee, reviews the

effectiveness of the bank’s internal controls, to ensure the effective

embedding and maintaining of a strong control environment. It

considers and follows through on any findings of major investigations

of internal controls.

This Committee reviews related party transactions and obtains

sufficient comfort that these transactions are carried out on an arm’s

length basis and that the bank is adhering to the requirement

stipulated in the Capital Markets Rules as applicable.

The Committee annually reviews the operation and effectiveness of

the bank’s Whistleblower Policy to ensure confidentiality, protection

and fair treatment of whistleblowers. It reviews any reports setting

out local cases, the key themes and trends, and actions taken to

address these.


88	HSBC Bank Malta p.l.c. Annual Report and Accounts 2024

Statement of compliance with the Code of Principles of Good Corporate Governance

The Committee met eight times during 2024 and is currently

composed of Maria Micallef as Chairperson, Malcolm Miller and Elvia

George as Members. During the financial year ended 31 December

2024, Malcolm Miller was appointed Member with effect from

8 March 2024, while Ingrid Azzopardi relinquished her position as

Director and Member of the Committee with effect from 1 October

2024. Elvia George joined the Audit Committee as a member on

22 January 2025


Attendance at Audit Committee meetings
	Attended
Maria Micallef	8 out of 8
Malcolm Miller (appointed 8 March 2024)	7 out of 7
Ingrid Azzopardi (resigned 1 October 2024))	5 out of 5
John Bonello (as interim member)	1 out of 1

During the year, regular informal meetings were held between the

Chairperson/Members of this Committee and Members of Senior

Management especially the Head of Internal Audit, the Chief Financial

Officer and the external auditors.

Senior Managers of the bank are invited to attend any of the Audit

Committee’s meetings as directed by the Committee’s Chairperson.

The Chief Executive Officer, the Chief Risk Officer, the Chief

Financial Officer and representatives of the external auditors are

invited to attend all the meetings. In line with Capital Markets Rule

5.131, the Head of Internal Audit is present for all the Audit

Committee meetings and always has a right of direct access to the

Chairperson of the Committee.

In terms of Capital Markets Rule 5.117, the bank has established and

maintained an Audit Committee that is composed of three non-

executive Directors, all of whom have been deemed to be

independent. Maria Micallef was appointed by the Board as the

Chairperson of the Committee. She is independent and competent in

accounting and auditing on the basis that she holds a Bachelor of

Accountancy and is also a Member of the Institute of Internal

Auditors, and her career experience.

In terms of Capital Markets Rule 5.127.5, the Audit Committee is

responsible for developing and implementing policy on the

engagement of the external auditor to supply non-audit services. The

provision of non-audit services to EU Public Interest Entities (‘PIEs’)

and to parent and controlled undertakings in the EU are regulated in

terms of EU rules.

In addition, since HSBC Holdings plc is a Securities Exchange

Commission (‘SEC’) registered company, non-audit services provided

by the external auditor are also regulated in terms of the SEC rules.

Risk Committee

This Committee is responsible for overseeing and advising the Board

on risk-related matters, comprising both financial and non-financial

risks, impacting the bank and its subsidiaries. In providing such

oversight and advice to the Board, the Committee reviews and

provides independent challenge on risk management reports,

including the bank’s enterprise risk reports. Through this, the

Committee is able to assess the bank’s risk exposure, risk profile of

the bank and how such risks are controlled, monitored and mitigated

by management. The Committee looks at current and forward-looking

risks to assess the bank’s vulnerability and resiliency to potential

risks.

The Risk Committee reviews the effectiveness of the bank’s conduct

framework designed to deliver fair outcomes for customers, preserve

the orderly and transparent operation of financial markets, and protect

the bank against adverse outcomes (including reputational damage)

to the bank’s financial and non-financial condition and prospects.

The Risk Committee also reviews and advises the Board on risk

appetite framework, risk appetite statement and risk tolerance related

matters, the bank’s risk data aggregation and risk reporting

framework.

The Committee reviews and recommends material regulatory

submissions to the Board for approval, including the Internal Capital

Adequacy Assessment Process and the Internal Liquidity Adequacy

Assessment Process, satisfying itself with regards to the

completeness of the submissions and their consistency with the

principles of the bank’s Risk Appetite.

The Committee reviews and advises the Board on the effective

management of risk relating to the bank’s Operational and IT

Resilience, including risks relating to the execution of the technology

aspects of the approved HSBC Group or bank strategy, cyber security

and serious, large scale, organised crime relating to information

security.

The Committee also reviews and satisfies itself that the bank’s stress

testing framework, governance and related internal controls are

robust. It reviews, challenges and where appropriate approves the

key assumptions, vulnerabilities and scenario themes identified and

expanded metrics to be used in both internal and regulatory bank-

wide stress tests and regulatory submissions.

The Risk Committee reviews how effectively management is

embedding and maintaining effective risk management and control

systems culture to foster compliance with HSBC Group and bank

policies and compliance requirements, by also considering any

material findings from regulators relating to risk governance, conduct

of business, risk assessment or management processes.

The Committee reviews the bank’s controls relating to compliance

risks and satisfies itself that they are adequate and that the bank is

maintaining an appropriate relationship with its regulators. It

considers risk management reports and internal Audit reports relating

to weaknesses in risk management and control systems.

The Risk Committee is tasked with monitoring the effectiveness and

independence of the Chief Risk and Compliance Officers and with

reviewing the composition and effectiveness of the Risk and

Compliance functions including that they are of sufficient stature,

independent of the business and adequately resourced.

With regard to the Annual Report and Accounts, the Risk Committee

reviews and endorses the content of the Risk Committee report in

the annual report and accounts, such as any risk-related disclosures.

The Committee met eight times during 2024 and is currently

composed of Louis Cassar Pullicino as Chairperson, and Alexiei Dingli

and Elvia George as Members. During the financial year ended

31 December 2024, Manfred Galdes chaired the Committee until

23 April 2024, this being the date where he was appointed Chairman

of the Board. Ingrid Azzopardi replaced Manfred Galdes as

Chairperson of the Risk Committee until 1 October 2024. Following

Ingrid’s resignation, Louis Cassar Pullicino was appointed Chairman

of the Risk Committee. Elvia George was appointed member on 22

January 2025.


Attendance at Risk Committee meetings
	Attended
Louis Cassar Pullicino (appointed 11 June 2024)	5 out of 5
Alexiei Dingli (appointed 24 January 2024)	8 out of 8
Manfred Galdes (resigned 23 April 2024)	3 out of 3
Ingrid Azzopardi (resigned 1 October 2024)	6 out of 6

During the year, regular informal meetings were held between the

Chairperson/Members of this Committee and Members of Senior

Management especially the Head of Internal Audit, the Chief Risk

Officer, the Chief Compliance Officer and the external auditors.

Senior managers of the bank are invited to attend any of the

meetings as directed by the Committee.

The Chief Executive Officer, the Chief Risk Officer, the Chief

Financial Officer, the Chief Compliance Officer and the Head of

Internal Audit are standing attendees at the meetings.


HSBC Bank Malta p.l.c. Annual Report and Accounts 2024	89

Remuneration and Nomination Committee

(‘RemNom’ Committee)

The remuneration aspect of this Committee, its composition and

information relating to its meetings during 2024 are dealt with under

the Remuneration Report, which also includes, inter alia, the

Remuneration Statement in terms of Code Provision 8.A.4 and

information required in terms of Appendix 12.1 of the Capital Markets

Rules.

In its nomination function, the Committee is primarily tasked with

assisting the bank’s Chairman in keeping the composition of the

Board and its Committees under review and to lead the process for

nominations to the Board and its committees. It oversees a

continuous and proactive process for planning and assessment of

candidates to ensure plans are in place for the orderly succession for

executive and non-executive directors and other senior appointments

within the bank and its subsidiaries. In so doing, the Committee

reviews the structure and composition of the Board and its

committees and makes recommendations to the Board on

appointments based on merit and against objective criteria,

promoting diversity of gender, social and ethnic backgrounds,

cognitive and personal strengths. This, bearing in mind the ambition

for the representation of the underrepresented gender in the board.

The Committee continued to perform its role regarding ‘fit and

proper’ assessments of present and prospective Board Members,

with power of rejection of any proposed Board candidate on the basis

of unsuitability.

The Committee assesses the knowledge, skills and experience of

individual members of the Board and of the Board collectively at least

on an annual basis, and report to the Board accordingly. The suitability

of Key Function Holders is also carried out at least annually, thereby

ensuring regular oversight of senior management. The process of the

fit and proper assessment exercises for both the Board and Key

Function Holders is documented within the bank’s Fit and Proper

Policy, which is reviewed annually by RemNom and the Board.

The Committee also assesses the independence of the non-

executive directors and reviews and monitors the training and

continuous professional development of directors.

Letters of appointment issued to Non-Executive Directors set out the

expected time commitment and by their acceptance thereof the

Directors undertake that they will have sufficient time to discharge

their duties as Directors. For the attendance details please refer to

the Remuneration report.

Time commitment is also considered when carrying out the fit and

proper assessment of the Board members. Furthermore, each

Director is requested to confirm his commitment on an annual basis

through a declaration.

Executive Committee (‘ExCo’)

This Committee is a management meeting and its purpose is to

support the bank’s Chief Executive Officer (‘CEO’) in the performance

of the CEO’s duties and exercise of powers, authorities and

discretions in relation to the management and day-to-day running of

the bank and its subsidiaries and to support the CEO in the discharge

of responsibilities to the Board. This Committee is designed to

strengthen decision making by ensuring collective input to decisions.

The members of the Committee have individual responsibility for the

development and implementation of the strategy for the business or

function they represent in accordance with their role profiles and

powers delegated to them, directly or indirectly by the CEO and

subject to any limitations on their authority.

In terms of its Terms of Reference, this Committee is chaired by the

Chief Executive Officer and its membership is composed of: the

Head of Business Development, the Head of Wealth and Personal

Banking, the Head of Commercial Banking, the Head of Global

Markets, the Chief Financial Officer, the Chief Operating Officer, the

Chief Risk Officer, the General Counsel, the Chief Compliance

Officer, the Head of Human Resources, the Head of Communications

and the Company Secretary. As the Head of Internal Audit is

independent from management, the holder of said role is not a

member of the Committee but is a standing attendee.

Meetings are held with such frequency and at such times as the

Chairman may determine. However, it is expected that the

Committee formally meets at least six times per annum.

Decision-making authority in relation to all matters considered by the

Committee remains with the Chief Executive Officer of the bank

pursuant to the authority delegated by the Board.

Whilst oversight remains the responsibility of ExCo, the Committee

may delegate management of any matter within the scope of its

authority to another Committee or individual. It has in fact delegated

authority to the following Committees:

The Risk Management Meeting (‘RMM’)

The RMM met nine times during the year. It is chaired by the Chief

Risk Officer, with the Chief Executive Officer, or any member

designated by the Chief Risk Officer as alternate chairperson, in his/

her absence. During 2024, all the meetings were chaired by the Chief

Risk Officer. The objective of the RMM is to exercise oversight of the

risk/reward framework for the bank and its subsidiaries.

The RMM is a formal governance meeting that provides

recommendations and advice to the bank Chief Risk Officer (“CRO”)

on enterprise-wide management of all risks, including key policies

and frameworks for the management of risk within the bank. It

supports the CRO’s individual accountability for the oversight of

enterprise risk as set out in the Group’s Risk Management

Framework (“RMF”). The management of risk in the context of all

three lines of defence is covered in the RMM. First line of defence

risk management issues are owned by Risk Owners and Control

Owners, and therefore the respective business head will be the

Accountable Executive for first line of defence decision making at the

RMM. The RMM serves as the governance body for enterprise-wide

risk management with particular focus on risk culture, risk appetite,

risk profile and integration of risk management into the bank’s

strategic objectives, including the management of all financial crime

risks. Additionally, this governance meeting considers and manages

any reputational risks referred to the committee. The Chief Risk

Officer is also invited to attend Board meetings and meetings of the

Audit and Risk Committees in which representations are made about

the overall risk profile associated with the business including a

comprehensive assessment of the bank’s management of risk.

Climate & Environmental Social and

Governance (‘ESG’) Steering Committee

Previously Climate and ESG Risk Oversight Forum has been renamed

to Climate and ESG Steering Committee to streamline governance

and incorporate Corporate Sustainability Reporting Directive (‘CSRD’)

requirements.

The Committee met eight times in 2024. It is co-chaired by the CRO

and the CFO and was established to provide recommendations and

make decisions as and when necessary, working in conjunction with

Lines of Business and make any necessary escalations and

submissions to the bank’s RMM. It supports the CRO’s and CFO’s

individual accountability for the oversight of enterprise risks and

disclosures as set out in the Group’s RMF.

The bank’s Climate & ESG Steering Committee is responsible for the

management of Climate and ESG risks, including CSRD, to ensure

adequate focus on the risks (physical and transitional, nature risks)

associated with climate change, ESG criteria, and compliance with

Group policies, European Union requirements, ECB Regulations and

guidance, any specific Local legislation and any bank policies.


90	HSBC Bank Malta p.l.c. Annual Report and Accounts 2024

Statement of compliance with the Code of Principles of Good Corporate Governance

The Asset and Liability Management

Committee (‘ALCO’)

ALCO is responsible for managing the balance sheet with a view to

achieve efficient allocation and utilisation of all resources.

This Committee, which is chaired by the Chief Financial Officer,

reviews the asset and liability risks of the local group and oversees

the prudent management of interest rate risk, liquidity and funding

risk, capital, foreign exchange risk, and solvency risk. Furthermore,

ALCO monitors the external environment and measures the impact

on profitability of factors such as interest rate volatility, market

liquidity, exchange rate volatility, monetary and fiscal policies and

competitor banks’ activity. ALCO monitors the funding and capital

adequacy, making use of forecasts as well as stress tests to ensure

the sustainability of the business model and ensuring that sufficient

resources are available at all times to meet the demand arising from

business activities and regulation.

ALCO is responsible for ensuring that the local group has the

appropriate recovery plan in place so that it is prepared to restore

viability in a timely manner under stress. It is also responsible for

resolution planning, detailing the bank’s preferred resolution strategy

and approving the respective plans.

The Chief Executive Officer has primary responsibility for ensuring an

efficient deployment of the bank’s Asset and Liability Management

strategy. Membership consists of senior executives with

responsibility for the following functions: Commercial Banking,

Wealth and Personal Banking, Markets Treasury, Finance, Asset and

Liability Capital Management, Customer Value Management and

Global Payments Services. ALCO, met eleven times in 2024 and is

chaired by the Chief Financial Officer and deputised by the Chief

Executive Officer.

Principle 5: Board meetings

The Board meets as often and as frequently required to discharge its

duties effectively. During the period under review, the Board met

twenty-eight times: nineteen were formal Board meetings and nine

were for structured training purposes.

The Chairman ensures that all relevant issues are on the agenda and

supported by all the available information. The agenda strikes a

balance between long-term strategic objectives and short-term

performance issues. Notice of the dates of Board meetings together

with supporting materials are circulated to the Directors in advance of

the meetings, giving enough time for Directors to review the

material.

During the meetings, Board Members are given the opportunity to

discuss issues set on the Board agenda, convey their opinions and

constructively challenge management. The Chairman facilitates

presentation of views pertinent to the relevant issues on the agenda

by promoting a culture of openness and debate. Moreover, Directors

are encouraged to discuss any issue, which they deem appropriate.

Minutes are taken during Board meetings that faithfully record

attendance, discussed matters, tracked actions and decisions. These

minutes are subsequently circulated to all the Directors as soon as

practicable after the meeting. Besides attending formal Board

meetings and Committee meetings of which they form part,

Directors attend, on a frequent and regular basis, meetings where

their presence is required for the proper discharge of their duties. All

the Directors dedicate the necessary time and attention to their

duties as Directors of the bank. The holding of other directorships in

other companies is in line with regulatory provisions.


Directors’ attendance at Board Meetings in 2024
	Attended
John Bonello	4 out of 4
Manfred Galdes	19 out of 19
Geoffrey Fichte	19 out of 19
Michel Cordina	17 out of 18
Yiannos Michaelides	1 out of 1
Ingrid Azzopardi	13 out of 14


Directors’ attendance at Board Meetings in 2024 (continued)
	Attended
Malcolm Miller	15 out of 16
Maria Micallef	18 out of 19
Terecina Kwong	2 out of 5
Alexiei Dingli	18 out of 18
Louis Cassar Pullicino	11 out of 14

Principle 6: Information and

professional development

The Board appoints the Chief Executive Officer of the bank upon

guidance and recommendation by HSBC Group and by the RemNom

Committee. The Board, through the RemNom Committee, is actively

involved in the appointment of members of senior management,

including the Chief Executive Officer. In this regard, the bank benefits

from the vast wealth of competence, talent and experience found

across the Group.

Full, formal and tailored induction programmes, with particular

emphasis on the systems of risk management and internal controls,

are arranged for newly appointed Directors. The programmes consist

of a series of meetings with senior executives to enable new

Directors to familiarise themselves with the bank’s strategy, risk

appetite, operations and internal controls. Directors also receive

comprehensive guidance on Directors’ duties and liabilities. Directors

are also given the opportunity to request further training on specific

topics. Relevant materials are made available and regularly updated

for Directors’ reference throughout their tenure.

A structured Board training and development programme is organised

for the Directors and facilitated by members of Executive Committee.

Training organised by external parties is also provided. The key

objective of the programme is to improve the Board’s awareness in

risk, regulation, and compliance developments in the financial

services sector.

Topics covered during these awareness sessions related to interest

rates risk, cybersecurity, CSRD and capital requirements for the bank.

Directors also participate in the Group’s mandatory training, which

covers health safety and wellbeing, risk management, cybersecurity,

sustainability, financial crime compliance topics, data literacy,

workplace harassment and data privacy.

Directors are given opportunities to update and develop their skills

and knowledge through briefings by senior executives and externally-

run seminars throughout their directorship. Moreover, Directors have

access to independent professional advice, at the bank’s expense.

Directors also have access to the advice and services of the

Company Secretary who is responsible for advising the Board

through the Chairman on all governance matters and for adherence to

Board procedures as well as for effective information flows within the

Board, its Committees and with senior management.

The Chairman of the Board and Chairpersons of the Audit and Risk

Committees attend a number of Chairpersons’ fora organised

throughout the year by the HSBC Group. In 2024, Group also

launched the Bank Chair Programme. The bank’s Audit Committee

and Risk Committee Chairpersons also attended engagement

sessions together with other HSBC Audit Committee and Risk

Committee Chairpersons. During these meetings the Directors are

updated on the latest topical issues.

To enable the Company Secretary to organise such training sessions,

including induction training, for the Board of Directors, adequate

human and financial resources are made available.

The succession plan for senior management is discussed with

RemNom. As part of succession planning and talent management,

the Board and the Chief Executive Officer ensure that the bank

implements appropriate schemes to recruit, retain and motivate high-

quality executive officers. They also encourage members of

management to move to the higher ranks within the organisation and

seek to maintain high engagement and morale among the bank’s

personnel.


HSBC Bank Malta p.l.c. Annual Report and Accounts 2024	91

Principle 7: Evaluation of the Board

performance

During the year, the Board engaged the HSBC Bank plc Company

Secretary to undertake an evaluation of its own performance, the

Chairman’s performance and that of its Committees through a

thorough document review, Board and Committee meetings

observation sessions and interviews/meetings with Board Members

and regular Board and Committee meetings attendees. Through this

evaluation, the Board monitors and assesses the effectiveness of the

bank’s governance arrangements. Through this exercise, the

Directors are also requested to reflect and assess the structure, size,

composition and performance of the Board of Directors, including the

Chairman.

This process was driven and overseen by the RemNom Committee

through the support of the Company Secretary. Based on the

outcome of this evaluation, the Board and Committees review and

agree on recommendations for improvement. The bank’s governance

arrangements were deemed effective and no material changes in the

governance structures and organisation resulted from this Board

evaluation exercise.

Principle 8: Committees

Details on the Committees is covered under Principle 4. The

Remuneration and Nomination Committee is covered under Principle

4 and in the Remuneration Report, which also includes the

Remuneration Statement in terms of Code provisions 8.A.4.

Principles 9 and 10: Relations with

the shareholders, with the market

and with institutional shareholders

The Board oversees the process of disclosures to and

communications with external stakeholders. The bank maintains on-

going communication with its shareholders and the market on its

strategy and performance in order to enhance trust and confidence in

the bank. During the period under review, the bank issued various

company announcements and media releases to explain ongoing

corporate developments and material events and transactions that

have taken place and their impact on the financial position of the

bank.

The bank (overseen by the Board) communicates with shareholders

in the following ways:

– through the ‘Annual Report and Accounts’ which is made available

on the bank’s website, a printed version of which is provided to

shareholders upon request;

– through the publication of company announcements and media

releases; and

– at the Annual General Meeting and Extraordinary General

Meetings (further detail is provided under the section ‘General

Meetings’).

The bank also holds meetings for stockbrokers, financial

intermediaries, the Malta Association of Small Shareholders and the

media to explain the salient features of the interim and annual

financial results.

The bank maintains an open channel of communication with its

shareholders through the Corporate Governance and Secretariat

Function and its General Meetings. Meetings have also been held

between the Chief Executive Officer and the Malta Association of

Small Shareholders.

As the Board always endeavours to protect the interests of both the

bank and its shareholders, present and future, the Board takes into

account the fact that shareholders are constantly changing. This is

reflected in the Board’s decisions on long-term sustainability

objectives to safeguard the interests of future shareholders. The

Chairman ensures that the views of shareholders are communicated

to the Board. Moreover, Board members are available to answer

questions during the Annual General Meeting. The conduct of the

meeting is conducive to valid discussion and appropriate decision

making. In terms of the bank’s Articles of Association, the Directors

shall, on the request of members of the company holding not less

than one-tenth of the paid-up share capital, duly proceed to convene

an Extraordinary General Meeting of the bank.

Principle 11: Conflicts of interests

Directors are aware that their primary responsibility is always to act in

the interest of the bank and its shareholders as a whole, irrespective

of who appointed them to the Board. This requires that Directors

avoid conflicts of interest at all times and that their personal interests

never take precedence over those of the bank and its shareholders.

In line with HSBC Group best practice, the Board defines and

oversees a Board Conflicts of Interest Policy. In terms of this policy, a

Director is to avoid situations in which he or she has or could have, a

direct or indirect interest that conflicts, or possibly may conflict, with

the interest of the bank. Without prejudice to Articles 136A (3)(C) and

143 of the Companies Act, this policy stipulates that a director must

obtain an authorisation from the Board before a situational conflict

arises. Notably, in accordance with this policy, all directorships and

other non-bank appointments should be authorised by the Board.

Furthermore, the bank’s policies and procedures in relation to loans

and transactions also apply to Directors and their connected parties,

which includes having all loans and advances at arms’ length and not

given on favourable terms and conditions. All loans and transactions

above the threshold established by the Board, always require Board

approval.

By virtue of the bank’s Articles of Association, a Director is bound not

to vote at a Board meeting on any contract or arrangement or any

other proposal in which such Director has a material interest, either

directly or indirectly. Moreover, in terms of the Board’s Conflicts of

Interest Policy, a Director having a continuing material interest that

conflicts with the interests of the bank, should take effective steps to

eliminate the grounds for conflict. In the event that such steps do not

eliminate the grounds for conflict then the Director should consider

resigning.

On joining the Board and regularly thereafter, Directors are informed

and reminded of their obligations on dealing in securities of the bank

within the parameters of law and the Capital Markets Rules and the

Market Abuse Regulations. A proper procedure of reporting advance

notices to the Chairman by a Director who intends to deal in the

bank’s shares has been endorsed by the Board in line with the

Principles, the Capital Markets Rules and the internal Code of

Dealing.

Furthermore, the bank has a Conflicts of Interest Policy and controls

in place to identify, and prevent or manage Conflicts of Interests, and

this to ensure effective and prudent management of the bank. The

Board is also presented with the Staff Conflicts of Interest Policy on

an annual basis for their consideration and approval.

Principle 12: Corporate Social

Responsibility

The bank’s Corporate Sustainability (‘CS’) strategy takes into account

the Group-wide strategy. The Board continues to recognise that the

bank has a responsibility towards people and the planet. The bank

has continued to utilise its resources in order to carry out a series of

initiatives and projects designed to provide value to various sectors

for the bank’s key stakeholders (i.e. customers, employees, and the

community). In Malta, the bank fulfils the Group’s CS strategy

primarily through its Corporate Sustainability function and the HSBC

Malta Foundation (the ‘Foundation’). The HSBC Malta Foundation

seeks to unlock the full potential of individuals and the community to

shape a sustainable future. Drawing from the HSBC Group resources

and a network of partners, the bank works to tackle critical problems

in sustainable finance, climate ambition and inclusion and resilience.

Locally, the bank remains committed to making a difference in the

areas of child welfare and education, the environment and heritage.

The bank has pledged long-term support to help people access


92	HSBC Bank Malta p.l.c. Annual Report and Accounts 2024

Statement of compliance with the Code of Principles of Good Corporate Governance

education and training, so as to acquire the skills needed to succeed

today and in the future at the place of work. There is close

collaboration with several stakeholders including governmental

organisations, policymakers, local businesses, other banks and

financial institutions, charities, non-profit organisations and non-

governmental organisations. Through these partnerships, the bank

encourages sustainable business and communities. The bank takes

pride in HSBC colleagues who contribute to the charities and causes

they feel passionate about and staff members are encouraged to take

an active role in initiatives supported by the HSBC Malta Foundation.

HSBC Bank Malta p.l.c. is also one of the founding members of the

Malta ESG Alliance.

Through the Sustainability function, a focus is placed on creating a

sustainable future that leaves a positive impact on society, the

environment and the economy. The HSBC Group has been working

relentlessly on shaping its Corporate Sustainability agenda for future

generations to come. HSBC;s ambition is to become a net zero bank

with the aim to reduce its carbon footprint. This will be achieved by

ensuring that the bank’s operations are net zero by 2030 and that the

financed emissions are aligned to achieve net zero by 2050 or sooner.

Customers will be supported in this journey by dedicating up to $1

trillion of financing and investment globally by 2030. With this

ambition in mind, the bank has been very active locally during 2024 to

drive initiatives aligned with this strategy.

Non-compliance with the Code

Principle 9 (Code Provision 9.3 and

Code Provision 9.4)

This Code Provision recommends the bank to have in place a

mechanism to resolve conflicts between minority shareholders and

controlling shareholders. Although the bank does not have such a

mechanism in place, there is ongoing open dialogue between the

bank’s senior management and the Non-Executive Directors to

ensure that no such conflicts arise.

In terms of Code Provision 9.4, minority shareholders should be

allowed to formally present an issue to the Board of Directors. The

bank does not have a policy in terms of this code provision. However,

the bank maintains an open dialogue with the Malta Association of

Small Shareholders.

Internal control Capital Markets Rule

5.97.4

The Board is ultimately responsible for the bank’s system of internal

control and for reviewing its effectiveness. Such procedures are

designed to achieve business objectives and to manage and mitigate,

rather than to eliminate, the risk of failure. They can only provide

reasonable and not absolute assurance against material error, losses

or fraud.

The Group has established the risk management and internal control

structure referred to as the ‘Three Lines of Defence’ to ensure they

achieve the commercial aims while meeting regulatory, legal, as well

as Group requirements. It is a key part of the local group operational

risk management framework.

The First Line of Defence has ultimate ownership of risk and controls,

including read across assessments of identified issues, events, and

near misses, and the delivery of good conduct outcomes. Risk

Owners are accountable for identifying, assessing, managing and

reporting key existing and emerging risks that they own for their

business or function in line with the risk appetite set by the Board.

The Second Line of Defence reviews and challenges the First Line of

Defence’s activities to help ensure that risk management decisions

and actions are appropriate, within risk appetite, and supports the

delivery of conduct outcomes. The Second Line of Defence is

independent of the risk-taking activities undertaken by the First Line

of Defence and includes CROs, Risk Stewards and the Operational

and Resilience Risk function. Risk Stewards are accountable for

setting policy and control standards to manage risks, providing advice

and guidance to support these policies, and challenging the First Line

of Defence to ensure it is managing risk effectively.

The Third Line of Defence is Internal Audit, which provides

independent assurance to management and the non-executive Risk

and Audit Committees that the bank’s risk management, governance

and internal control processes are designed and operating effectively.

The local group’s key risk management and internal control

procedures include the following:

– Global standards: Functional, operating, financial reporting and

certain management reporting standards are established by global

function management Committees, for application throughout

HSBC globally. These are supplemented by operating standards

set by functional and local management as required for the type of

business and geographical location of each subsidiary.

– Delegation of authority within limits set by the Board: The Board

has delegated specific, clear and unequivocal authority to the

Chief Executive Officer to manage the day-to-day affairs of the

business for which he is accountable within limits set by the

Board. Delegation of authority from the Board requires the CEO to

maintain appropriate apportionment of significant responsibilities

and to oversee the establishment and maintenance of systems of

control that are appropriate to the business.

– Risk identification and monitoring: Systems and procedures are in

place to identify, control and report on the major risks facing the

bank including, credit, market, liquidity, capital, financial

management, model, reputational, strategic, sustainability and

operational (including accounting, tax, legal, compliance, fiduciary,

information, external fraud, internal fraud, political, physical,

business continuity, systems operations, project and people risk).

Exposure to these risks is monitored by the Risk Management

Meeting, Asset and Liability Committee and Executive

Committee.

– Changes in market conditions/practices: Processes are in place to

identify new risks arising from changes in market conditions/

practices or customer behaviours, which could expose the bank to

heightened risk of loss or reputational damage. Further

improvements have been, and will continue to be, implemented to

combat the inherent challenges posed by financial crime. In

addition, the focus has remained on regulatory developments and

engagement, including the ongoing supervisory review and

evaluation process under the ECB’s Single Supervisory

Mechanism; challenges to balance business growth and risk

management imperatives; internet crime and fraud; level of

change creating operational complexity and heightened execution

risk; and information security risk.

– IT operations: Centralised Regional and Group functional reporting

and governance is exercised over all IT operations, with

overarching local HBMT Reporting and Governance.

– In order to ensure consistency and benefit from economies of

scale, common Group systems are employed for similar business

processes, wherever practicable.

– Various Controls and Key Controls Indicators are applied in order

to assess and monitor IT Operational and Cyber resilience in order

to assess effectiveness on a regular basis, and, where needed,

define and oversee remediation activities.

– Comprehensive annual financial plans are prepared, reviewed and

approved by the Board. Results are monitored and progress

reports are prepared on a monthly basis to enable comparisons

with plan. Financial accounting and management reporting

standards have been established.

– Responsibilities for financial performance against plans and for

capital expenditure, credit exposures and market risk exposures

are delegated with limits to executive management. In addition,

functional management in the bank has been given the

responsibility to implement HSBC policies, procedures and

standards for business and product lines and functions, including:

legal, financial crime and regulatory compliance, internal audit,

human resources, credit risk, market risk, operational risk,

computer systems and operations, and property management.


HSBC Bank Malta p.l.c. Annual Report and Accounts 2024	93

– The Chief Risk Officer is responsible for the management of

specific risks within the bank, including credit risk in the wholesale

and retail portfolios, market risk and operational risk. Risks are

monitored via the Risk Management Meeting, which meets

regularly, and via reporting to the Executive Committee, the Risk

Committee and the Board.

– Internal Audit: The establishment and maintenance of appropriate

systems of risk management and internal control is primarily the

responsibility of management. The Internal Audit function reports

to the Audit Committee and to the Board. It provides independent

and objective assurance in respect of the adequacy of the design

and operating effectiveness of the bank’s framework of risk

management, control and governance processes, using a risk-

based approach. The Head of Internal Audit also reports to the

Audit Committee on matters concerning the operation of the

Internal Audit function, including independence and resourcing and

approval of the Annual Audit Plan.

– Internal Audit issues: Executive management is responsible for

ensuring that any issues raised by the Internal Audit function are

remediated within an appropriate and agreed timeframe.

Confirmation to this effect must be provided to Internal Audit,

which subsequently independently validates the remediation.

– The bank’s Compliance Department undertakes Regulatory

Compliance and Financial Crime Compliance. From a regulatory

perspective it ensures that the local group continues to maintain

the highest standards of corporate conduct, including compliance

with all the local and international regulatory obligations and HSBC

Group ethical standards and regulations. With regard to financial

crime compliance, it is responsible for the oversight of Anti-Money

Laundering and Terrorist Financing, Sanctions, Anti-Bribery and

Corruption, Fraud and Tax Evasion risks. Particular attention is

given to the proactive management of identified Financial Crime

Compliance risk issues. Routine governance is managed via the

Executive Committee and reported to the Risk Committee and to

the Board.

– Through the Audit Committee and the Risk Committee, the Board

reviews the processes and procedures to ensure the

effectiveness of the system of internal control of the bank and its

subsidiaries, which are subject to periodic Third Line of Defence

review by Internal Audit.

Capital Markets Rule 5.97.5

The information relating to the Shareholders’ Register required by this

Capital Markets Rule is found in the Directors’ Report.

General meetings

The General Meeting is the highest decision-making body of the

bank. A General Meeting is called by 21 days’ notice and it is

conducted in accordance with the Articles of Association of the bank.

The Annual General Meeting deals with what is termed as ‘ordinary

business’, namely the receiving or adoption of the annual financial

statements, the declaration of a dividend, the appointment and

remuneration of the Board (which may or may not involve an

election), the appointment of the external auditors, and the granting

of the authority to the Board to fix the external auditors’ emoluments.

Other business which may be transacted at a General Meeting will be

dealt with as Special Business.

All shareholders registered in the Shareholders’ Register on the

record date as defined in the Capital Markets Rules, have the right to

attend, participate and vote in the General Meeting. A shareholder or

shareholders holding not less than 5% in nominal value of all the

shares entitled to vote at the General Meeting may request the bank

to include items on the agenda of a General Meeting and/or table

draft resolutions for items included in the agenda of a General

Meeting. Such requests are to be received by the bank at least 46

calendar days before the date set for the relative General Meeting. A

shareholder who is unable to participate in the General Meeting can

appoint a proxy by written or electronic notification to the bank. Every

shareholder represented in person or by proxy is entitled to ask

questions which are pertinent and related to items on the agenda of

the General Meeting and to have such questions answered by the

Directors or such persons as the Directors may delegate for that

purpose.

In 2024, the Annual General Meeting was held on 18 April 2024. By

means of a company announcement dated 11 September 2024, the

bank announced that it had been informed by HSBC Holdings plc

(“HSBC Holdings”) that HSBC Holdings would be undertaking a

strategic review of its indirect 70.03% shareholding in the bank.

Subsequently, on the 28 November 2024 the bank announced that it

had been advised by HSBC Continental Europe, its majority

shareholder, that HSBC Holdings has been contacted by a number of

parties who expressed an interest in its shareholding, requesting to

conduct due diligence prior to confirming such interest. In this

respect, HSBC Continental Europe requested the bank to seek

authorisation from its shareholders as would enable the bank to

furnish information, including unpublished price-sensitive information,

to bona fide offeror(s), the corresponding bona fide transferor and

their respective advisers in connection with a potential transaction

involving a substantial shareholding in the bank. In the said

announcement, the bank further announced that for such purpose,

and in accordance with the Capital Market Rules, the bank would be

required to convene an extraordinary general meeting (‘EGM’). For

this purpose, an EGM was convened on 13 February 2025 and the

following Ordinary Resolution - Special Business was approved:

“That the Company be and is hereby authorised and empowered, in

connection with a potential transaction involving a Substantial

Shareholding (as defined in Capital Markets Rule 5.174) (a

“Substantial Shareholding”) in the Company, to furnish, in

confidence,information, including unpublished price sensitive

information, to a bona fide offeror(s), the corresponding bona fide

transferor, as may be necessary to enable the bona fide offeror(s) and

the bona fide transferor and their respective advisers to make,

confirm, withdraw or or modify any offer(s) for a Substantial

Shareholding.”


94	HSBC Bank Malta p.l.c. Annual Report and Accounts 2024

Remuneration Report

Governance

Role of the Remuneration Committee

The bank’s Remuneration and Nomination Committee (the

‘Committee’ or ‘RemNom’) within its remuneration oversight remit, is

responsible for overseeing the implementation and operation of the

bank’s remuneration framework. It also assures that the remuneration

framework is aligned with local law, rules or regulations, as well as

with the risk appetite, business strategy, culture and values, and long-

term interests of the bank. The Committee also seeks to satisfy itself

that the remuneration framework is appropriate to attract, retain and

motivate individuals of the quality required to support the success of

the bank. It ensures that the remuneration policy is consistent with

and promotes sound and effective risk management. The Committee

carries out its role in line with The Code of Principles of Good

Corporate Governance, as presented within Appendix 5.1 to the

Capital Markets Rules and Banking Rule 21 (BR21/2022) –

Remuneration Policies and Practices – issued by the Malta Financial

Services Authority. The disclosures presented herein are also being

made in terms of the requirements emanating from paragraph 28 of

Banking Rule 07 (BR07/2024).

The Committee is responsible for recommending to the HSBC Bank

Malta p.l.c. Board of Directors (the ‘Board’) approvals of the total

compensation spend within the Financial Resource Plan. The

Committee works in conjunction with the HSBC Group Remuneration

Committee. However, it has its own Terms of Reference, which sets

out its key responsibilities.

The Chief Risk Officer attends meetings as necessary to report to the

Committee on the alignment of the bank’s remuneration policy and

proposals with the bank’s risk profile and risk management. Other

members of senior management who are sometimes in attendance

are the Chief Financial Officer and the Head of Human Resources.

The Chief Financial Officer reports on the alignment of the bank’s

Remuneration Policy and proposals with the bank’s capital profile. The

Head of Human Resources attends meetings when the Remuneration

Policy or remuneration matters are considered.

The Committee seeks advice from the bank’s Risk Committee and

the bank’s Chief Risk Officer, on the alignment of risk and

remuneration and, as necessary, any relevant adjustments for risk to

be considered in respect of the variable pay pool and remuneration

outcomes. The Board, via the Committee’s recommendation, uses

these updates when considering the risk-related adjustments

necessary when setting the variable pay pool, to ensure that return,

risk and remuneration are aligned.

Membership and meetings

The Committee met eight times during 2024 and was initially

composed of Maria Micallef as Chairperson, John Bonello as Member

and Manfred Galdes as interim Member.

During the financial year ended 31 December 2024, John Bonello

retired from his position as Chairman of the bank as well as Member

of the Committee with effect from 23 April 2024. Following John

Bonello’s retirement, and with effect from the same date, Manfred

Galdes was appointed Member of the RemNom Committee; Maria

Micallef stepped down from the position of Chairperson of the

RemNom Committee, staying on as a member of the RemNom

Committee and taking up the role of Chairperson of the Audit

Committee; and Louis Cassar Pullicino was appointed as Chairperson

of the RemNom Committee (appointed 11 June 2024 and remaining

in this position until 19 November 2024).

Following a reshuffle of all the Board Committees on 19 November

2024, Alexiei Dingli was appointed as RemNom Chairperson

(replacing Louis Cassar Pullicino, who was appointed as Chairperson

of the Risk Committee).


Attendance at Remuneration and Nomination Committee meetings
	Attended
Maria Micallef	8 out of 8
John Bonello (retired 23 April 2024)	3 out of 3
Manfred Galdes	8 out of 8
Louis Cassar Pullicino (11 June 2024 - 19 November 2024)	4 out of 4
Alexiei Dingli (Designate Chairperson from 19 November 2024)1	1 out of 1

1Alexei Dingli was appointed Chairperson on 30 January 2025.

During the year, the Chief Executive Officer, the Head of Human

Resources, the Chief Risk Officer and the Chief Financial Officer

attended some of the meetings of the Committee when deemed

appropriate.

None of the executives participated in the discussion regarding their

own remuneration.

In 2024 the Committee did not engage any external advisor. It only

seeks specific legal and/or remuneration advice independently as and

when it considers this to be necessary.

Remuneration Statement

HSBC Bank Malta p.l.c. Remuneration

Policy

The bank’s remuneration strategy is designed to competitively reward

the achievement of sustainable performance and to attract, retain and

motivate the very best people, regardless of gender, ethnicity, age,

disability or any other factor unrelated to performance or experience

in line with the bank’s Diversity and Inclusion Policy. The aim is to

retain those who are committed to a long-term career with the HSBC

Group in the long-term interests of our shareholders. It is also aligned

with the EU’s Capital Requirements Directive (‘CRD’) V, particularly

with respect to those employees identified as having a material

impact on the bank’s risk profile, hereinafter referred to as ‘Identified

Staff’, in accordance with Commission Delegated Regulation (EU)

2021/923, which came into effect during 2021 following its

publication in the Official Journal of the European Union. Accordingly,

the classification of Identified Staff within the bank’s Remuneration

Policy is aligned with this regulation.

During 2024 the bank’s Remuneration Policy has been updated with

expanded General Principles and the introduction of the Behaviour

Gateway which directly impacts the eligibility for variable pay and also

the change in performance ratings from a four-point to a simpler

three- point scale. Clauses requiring yearly comparative analysis for

gender pay gap and salary benchmarking have also been included.

In determining remuneration levels for 2024 the Committee applied

the bank’s Remuneration Policy, which takes into account the

interests of shareholders, the HSBC Group and the broader external

context.


HSBC Bank Malta p.l.c. Annual Report and Accounts 2024	95

Key principles of the remuneration framework include the following:

– Assessment of performance with reference to clear and relevant

objectives set within a performance scorecard framework;

– The use of Behaviour Gateway (a framework requiring minimum

behaviour and conduct expectations) and performance ratings for

all employees which directly influence pay outcomes;

– Positive adjustments to variable pay for individuals who have

exhibited exemplary conduct and who went the extra mile to

courageously do the right thing;

– Negative adjustment to variable pay for individuals who do not

complete mandatory learnings or do not demonstrate the right

values and behaviours which may put the bank, its customers and

stakeholders at risk;

– A global recognition program, where the employees can recognise

peers and reward positive behaviour in real-time;

– A focus on total compensation (fixed plus variable pay) with

variable pay (namely annual bonus) differentiated by performance

and adherence to HSBC values;

– The use of discretion to assess the extent to which performance

has been achieved; and

– Deferral of a significant proportion of variable pay (where

appropriate) to tie recipients to the future performance of the bank

and align the relationship between risk and reward.

Within this framework, risk alignment of the remuneration structure is

achieved through the following measures

– Assessment of risk and compliance is a critical part of the process

to determine the performance of all employees, especially

Identified Staff.

– Adherence to HSBC values is a prerequisite for any employee to

be considered for variable pay. HSBC values are key to the running

of a sound, sustainable bank. Employees have a separate HSBC

values rating which directly influences their overall performance

rating, and is therefore considered for their variable pay

determinations.

– For Executive Directors, Senior Management and certain Identified

Staff, part of their variable pay is deferred (where appropriate) and

thereby subject to malus, which allows unvested/unpaid deferred

awards to be reduced or cancelled if warranted. Similarly, for paid/

vested awards, these are subject to clawback for a minimum

period of seven years from date of grant.

– Employees must not use personal hedging strategies or

remuneration or liability-related contracts of insurance in

connection with any unvested deferred remuneration awards or

any vested awards subject to a retention period.

– Instances of non-compliance with risk procedures or with

expected behaviours are escalated for consideration in variable pay

decisions, including variable pay adjustments for that performance

year and malus of unpaid awards granted in prior years. For

Identified Staff, the Committee and the Board have oversight of

such decisions and can make recommendations to the HSBC

Group Remuneration Committee to reduce or cancel all or part of

any unpaid deferred award.

The Remuneration Policy is available in full on the bank’s website:

https://www.about.hsbc.com.mt/investor-relations

The bank’s reward strategy

To attract, retain and motivate the very best people, HSBC’s reward

package comprises three key elements:

– Fixed Remuneration;

– Benefits; and

– Variable Remuneration.

These elements are designed to ensure that the bank attains its

ambitions by including both short-term and long-term incentives in the

reward package. This strategy promotes the employees’

remuneration with the bank’s risk alignment of framework, risk

outcomes and values. The personal conduct of the bank’s people is

critical to the bank’s ability to live up to these commitments. The bank

recognises and rewards exceptional conduct demonstrated by its

employees. Poor conduct and inappropriate behaviour not in line with

HSBC values, or which exposes the bank to financial, regulatory or

reputational risk, is strongly discouraged and may attract

consequence.

For senior employees, where appropriate, part of their reward is

deferred, and thereby subject to malus, that is, it can be cancelled if

warranted by events. In order to ensure alignment between what the

bank pays its employees and the bank’s business strategy, individual

performance is assessed against annual and long-term financial and

non-financial objectives summarised in performance scorecards. This

assessment also takes into account adherence to the HSBC values as

follows: ‘We value difference; We succeed together; We take

responsibility and We get it done’. Altogether, performance is

therefore judged not only on what is achieved over the short- and

long-term but also importantly on how it is achieved, as the bank

believes the latter contributes to the soundness and sustainability of

the business.

Structure of remuneration

The following table shows the purpose and relevant features of each

of the three key elements of HSBC’s reward package. The following

structure applies to all employees including Executive Directors and

Senior Management (i.e. members of the Executive Committee).


96	HSBC Bank Malta p.l.c. Annual Report and Accounts 2024

Remuneration Report


Description	Purpose, relevant features and link to strategy
Fixed Pay	Fixed pay reflects the individual’s role, experience and responsibility. It comprises the base salary and in some cases a fixed pay allowance and/or a pension.
	Base salary
	Base salaries are paid in cash on a monthly basis and are benchmarked on an annual basis against relevant comparator groups.
	Fixed pay allowance
	This is typically paid in cash on a monthly basis.
	Pensions
	These consist of cash allowances in lieu of personal/occupational pension arrangements of international assignees appointed to Executive Director or Senior Management positions. An employee pension plan scheme is offered to all local employees subject to the terms and conditions of the scheme.
Benefits	Benefits take account of local market practices and include the provision of medical insurance, health assessment, life assurance, and tax assistance where appropriate.
Variable Pay – annual incentive	Variable pay award is discretionary, and is determined and paid in line with internal bank policies and procedures. Variable pay awards are made to drive and reward performance against annual financial and non-financial measures and adherence to HSBC values which are consistent with the medium to long-term strategy and aligns to shareholder interests.
	Performance ambitions are set taking into account the economic environment, strategic priorities and risk appetite. The bank has two rating scales to measure performance of employees: a three-point rating scale measuring performance targets achieved and another two-point rating scale measuring and assessing whether (or not) employees achieved HSBC’s behavioural standards and values. Performance is therefore assessed not only on what is achieved but also how it is achieved. Different areas of the bank come together every year to ensure a fair, consistent and bias free employee assessment. This exercise ensures that the process is transparent and fair across the bank. Performance reporting tools are available to all line managers for the purpose of undertaking an analytical review of the variable pay decisions for them. Variable pay is delivered in the form of cash and shares in HSBC Bank Holdings plc.
	Individuals in control functions are assessed according to the objectives specific to the functional role they undertake, to ensure their remuneration is determined independent of the performance of the business areas they control.
	Where variable pay for Identified Staff is more than €50,000 or where variable pay is greater than 33% of Total Compensation, a minimum of 50% of awards are made in shares. Variable pay is restricted to a maximum of 100% of fixed pay.
	If Variable Pay is more than €50,000 or greater than 33% of Total Compensation, 40 %, of the variable remuneration component, is subject to deferral and vested over a period which is not less than four years for Non Senior Management and not less than five years for Senior Management. This portion is correctly aligned with the nature of the business, its risks and the activities of the staff members concerned.
	The award is non-pensionable.

Variable pay funding

Funding of the bank’s annual variable pay pool is determined in the

context of profitability and affordability. The Committee considers

many factors in approving the overall variable pay pool. These include,

but are not limited to, individual performance, the performance of the

bank and the performance of the HSBC Group. These are all

considered within the context of the bank’s risk appetite. The variable

pay pool is also shaped by risk considerations and factors that may

arise from any local or Group-wide notable events. The commercial

requirement to remain competitive in the market is also taken into

account in line with the bank’s Financial Resource Plan. Through the

variable pay, the bank aims to attract, retain and motivate the very

best people in a competitive market while at the same time acting in

the best interest of customers and stakeholders.

Performance measurement and risk

adjustment

Under the bank’s remuneration framework, decisions relating to

remuneration of individuals are based on a combination

of:performance against objectives, general individual performance of

the role, and adherence to the HSBC values, business principles,

Group risk-related policies and procedures and Global Standards.

In order to reward genuine performance, individual awards are made

on the basis of a risk-adjusted view of both financial and non-financial

performance. In light of this, the bank has discretion to adjust an

employee’s current year variable pay in such cases as set out in the

following table.

The Committee can also seek advice from the Group Remuneration

Committee, at the level of HSBC Holdings plc, to reduce or cancel all

or part of any unvested deferred award under the applicable malus

and clawback provisions. Appropriate circumstances include (but are

not limited to) the examples set out in the table below. The Group

Remuneration Committee can also recommend the forfeiture of

unvested awards granted in prior years.

Adjustments would generally be made to the current year variable pay

before application of malus and clawback is considered. Details of the

circumstances where an adjustment, malus and/or clawback will be

considered are set out in the following table:


HSBC Bank Malta p.l.c. Annual Report and Accounts 2024	97


Type of action	Type of variable pay award affected	Circumstances where action may apply (including, but not limited to):
Adjustment	Current year variable pay	– Detrimental conduct, including conduct that brings HSBC into disrepute.
		– Involvement in events resulting in significant operational losses, or events that have caused or have the potential to cause significant harm to HSBC.
		– Non-compliance with the values-aligned behaviours and other mandatory requirements or policies.
		– Rewarding positive conduct may take the form of use of our global recognition programme, At Our Best, or positive adjustments to variable pay awards.
Malus	Unvested deferred awards granted in prior years	– Detrimental conduct, including conduct that brings the business into disrepute.
	Unvested deferred awards granted in prior years	– Past performance being materially worse than originally reported.
		– Restatement, correction or amendment of any financial statements.
		– Improper or inadequate risk management.
Clawback	Vested or paid awards	– Participation in or responsibility for conduct which results in significant losses.
	Vested or paid awards	– Failing to meet appropriate standards of fitness and propriety.
		– Reasonable evidence of misconduct or material error that would justify, or would have justified, summary termination of a contract of employment.
		– a material failure of risk management within the context of Group risk management standards, policies and procedures.

Directors’ Remuneration Report in

terms of Chapter 12 of the Capital

Markets Rules

A Directors’ Remuneration Policy was approved by the shareholders

at the Annual General Meeting of the bank held on 18 April 2024. The

Resolution relating to the Directors’ Remuneration Policy was passed

by show of hands. The Meeting voted all in favour, with no

abstentions, except for one shareholder voting against. The Chairman

declared the resolution approved.

The Policy is divided into three major sections; one relating to

Executive Directors, another dedicated to Non-Executive Directors

and the other containing provisions common to all directors. The said

Policy and its implementation are reviewed annually by RemNom. Any

material amendments to the Policy shall be submitted to a vote by the

General Meeting before their adoption and in any case at least every

four years- therefore, unless there are material changes proposed, the

Directors’ Remuneration Policy shall be next presented for approval at

the 2028 General Meeting (Ordinary Resolution - Special Business).

There were no material changes to the policy this year.

The Directors’ Remuneration Policy is available in full on https://

www.about.hsbc.com.mt/investor-relations/annual-general-meetings.

There were no deviations from the procedure for the implementation

of the Directors’ Remuneration Policy.

Information on Directors’

Remuneration in terms of Appendix

12.1 of the Capital Markets Rules

Executive Directors

As stated in the Directors’ Remuneration Policy, Executive Directors’

total remuneration as salaried employees is regulated in terms of the

bank’s Remuneration Policy and Group’s Standard Employment

Contracts. Therefore, Executive Directors are treated in a similar

manner to all other employees. Hence, their remuneration is

comprised of fixed remuneration, variable remuneration and other

benefits as outlined above. These elements of remuneration support

the achievement of the bank’s objectives through balancing reward

for both short-term and long-term sustainable performance.

Remuneration is designed to reward success and is aligned with the

bank’s risk framework and risk outcomes. Executive Directors are

expected to reflect the bank’s values in their behaviour and business

conduct. Personal conduct is critical to the ability of living up to these

commitments. Exceptional conduct and behaviour are recognised and

at the same time poor conduct and inappropriate behaviour which

may expose the bank to financial, regulatory, or reputational risk are

strongly discouraged and where necessary attracts consequence.

Total awards of Executive Directors are subject to deferral and vest

over a period of not less than five years or such other period as

determined by the Committee, and hence subject to malus or

clawback provisions as outlined earlier.On termination of an executive

directorship, Executive Directors are not entitled to any retirement

benefits, supplementary pensions or termination benefits related to

the said termination as Directors. Upon retirement from their

employment, local Executive Directors shall be subject to the same

conditions of any employee’s Early/Voluntary Retirement Scheme.

Remuneration of Executive Directors for the year ended

31 December 2024:


	Geoffrey Fichte 1		Simon V Johnson2	Michel Cordina3
	2024	2023	2023	2024	2023
	€	€	€	€	€
Fixed pay	415,666	310,163	127,135	158,556	150,804
Variable pay:
– Immediate Cash	75,000	74,986	—	—	50,000
– Immediate Shares4	75,000	74,986	—	—	—
– Deferred Cash	50,000	49,991	—	—	—
– Deferred Shares4	50,000	49,991	—	—	—
Benefits	2,769	20,966	74,263	13,780	13,158
Aggregate	668,435	581,083	201,398	172,336	213,962
Effective period	01/01/24 - 31/12/24	01/05/23- 31/12/23	01/01/23 - 30/04/23	01/01/24 - 10/12/24	01/01/23- 31/12/23

1Geoffrey Fichte was appointed as an Executive Director and Chief Executive

Officer of the bank effective from 1 May 2023. In this respect, the figures in

the table above reflect the remuneration as from that date.

2Simon Vaughan Johnson retired with effect from 1 May 2023. In this

respect, the figures in the table above reflect the remuneration until that

date.

3Michel Cordina resigned from the Board of Directors with effect from

10 December 2024. No variable remuneration was awarded to Michel

Cordina in respect of the financial year ended 31 December 2024, explaining

the decrease in remuneration compared to the prior year.

4The value of shares awarded to Geoffrey Fichte relating to performance year

2024 amounts to €125,000. The number of shares to be awarded in this

respect will be formally communicated on 1 March 2025 and determined on

the share price as at that date.

Charlotte Cilia was appointed Executive Director, replacing Michel

Cordina, with effect from 10 February 2025 (which represents the

date of regulatory approval). Since appointment took place

subsequent to 31 December 2024, the remuneration payable to

Charlotte Cilia is not presented in the table above.

The number of shares awarded during 2024 in relation to performance

year 2023 are disclosed in a subsequent table ‘Share Awards and

Share Options awarded in 2024.


98	HSBC Bank Malta p.l.c. Annual Report and Accounts 2024

Remuneration Report

In terms of the requirements within Appendix 12.1 of the Capital

Markets Rules the following table presents the annual change of

remuneration of the executive directors, of the bank’s performance,

and of average remuneration on a full-time equivalent basis of the

bank’s employees (other than directors) over the four most recent

financial years.


	2023/ 2024	2022/ 2023	2021/ 2022	2020/ 2021
Percentage annual change in remuneration
Geoffrey Fichte1	(5)%	N/A	N/A	N/A
Simon Vaughan Johnson2	N/A	(43)%	(1)%	9%
Michel Cordina3	(19)%	6%	4%	10%
Percentage annual change of the bank’s performance4	9%	144%	76%	47%
Percentage annual change of the average remuneration of the bank’s employees, on a full-time equivalent basis5	8%	8%	6%	5%

1Geoffrey Fichte was appointed as an Executive Director and Chief Executive

Officer of the bank part way during 2023. In this respect, for the purpose of

the table above, the aggregate remuneration paid to him in respect of the

financial year ended 31 December 2023 was annualised to allow for a

meaningful comparison. The reduction observed is due to a relocation

benefit and long term incentive which have been awarded in 2023 but not in

2024.

2Simon Vaughan Johnson was appointed as an Executive Director part way

during 2020 and retired with effect from 1 May 2023. In this respect, for the

purposes of the table above, the aggregate remuneration paid to him in

respect of the financial years ended 31 December 2020 and 31 December

2023 was annualised to allow for a meaningful comparison. However, given

that Simon Vaughan Johnson resigned part way throughout 2023, he was

not awarded variable pay for performance year 2023 and, as such, the

annualisation of the Total Compensation for 2023 is not directly comparable

to the Total Compensation for 2022.

3Michel Cordina resigned from the Board of Directors with effect from

10 December 2024. No variable remuneration was awarded to Michel

Cordina in respect of the financial year ended 31 December 2024, explaining

the decrease in remuneration compared to the prior year.

4The percentage annual change of the bank’s performance included in the

above table is based on the bank’s profit before tax, as this is deemed by

management to be the most appropriate basis for measuring performance.

5In order to allow for a meaningful comparison, new joiners employed during

the second year of each two-year comparative period are excluded from the

calculation; the remuneration paid to terminated employees during the

second year of each two-year comparative period is being annualised to

enable comparison with the annual remuneration paid in the first year; and

the remuneration paid to new joiners employed during the first year of each

two-year comparative period is annualised to enable comparison with the

annual remuneration paid in the second year. The annual remuneration paid

to employees who were in employment for the full calendar years across

each two-year comparative period is compared as normal.

Shares and Share Options awarded in

2024


	Grant Date	Share Value €	Number of Shares	Performance Period
Immediate Shares	1/3/2024	74,986	10,721	2023
Deferred Shares*	1/3/2024	49,991	8,589	2023

*The exact value of shares awarded will only be established on the date of

issuance. The value of shares is indicative at the time of the award being

reported. The deferred shares will vest in 2029.

None of the Executive Directors received any remuneration from the

bank’s subsidiaries or the HSBC Group.

Determining Executive Directors’

performance

Awards made to Executive Directors reflected the assessment of

each of their performance against scorecard objectives and the

strategic priorities and risk appetite of the bank. This assessment was

conducted by the bank’s RemNom after considering inputs from the

Group General Manager and Chief Executive Officer, HSBC Europe.

The performance assessment of the Chief Executive Officer involved

the evaluation of the targets achieved against a number of pre-set

objectives. These objectives align with the bank’s strategy and

commitments with clear measurable targets. The objectives for the

Chief Executive Officer include driving business growth, customer

satisfaction, employee engagement, driving the Climate Ambition

Program, effective management of risk and compliance and

implementation of the bank’s digital strategy. The extent to which the

Chief Executive Officer would have reached each objective is

discussed and reviewed by the bank’s RemNom following an

evaluation by the Group General Manager and Chief Executive

Officer, HSBC Europe. These objectives are reviewed on a quarterly

basis to ensure ongoing review and alignment with expected

performance.

The variable pay of the Chief Executive Officer is reviewed and

approved by the bank’s RemNom on a discretionary basis taking into

account the performance and behaviours demonstrated during the

year in relation to the achievement of the objectives referred to

above. This is also approved by the HSBC Group Remuneration

Committee with due consideration of the bank’s and individual

performance results, with the focus on total compensation

comparative to the internal peer group and the external market where

appropriate.

In line with the bank’s Remuneration Policy, the percentage of

variable pay received by Geoffrey Fichte during 2024, which amounts

to 60% of his fixed pay (excluding benefits), is lower than the 100%

fixed pay threshold. In addition, 50% of the variable remuneration is

made in shares in line with the bank’s policy and the HSBC Group

deferral requirements applied for all variable pay awards are explained

in the table below.


Value of Total Variable Pay	Deferral % of variable pay is subject to variance and is split between cash and shares
Up to €50,000, provided that total variable pay does not exceed 33% of the Total Compensation.	0%
Above €50,000 up to €500,000 or amounts below €50,000 where variable pay is greater than 33% of Total Compensation.	40%
Above €500,000	60%

The deferred remuneration of Geoffrey Fichte represents 40% of the

variable pay component and vests over a period of not less than five

years. As explained in previous sections, variable pay is subject to

malus and clawback provisions in certain circumstances, which allow

unvested/unpaid deferred remuneration awards and vested

remuneration awards to be reduced or cancelled if warranted. No use

has been made of provisions allowing the bank to reclaim variable

remuneration during the financial year ended 31 December 2024. This

mechanism ensures that the remuneration of the bank’s Executive

Directors aligns with achieving the long-term objectives of the bank.

Non-Executive Directors

Non-Executive Directors are not employees of the bank and are not

eligible to receive a base salary, fixed pay allowance, benefits,

pension or any variable pay. Non-Executive Directors receive a fee for

their services and may be reimbursed for reasonable and documented

expenses incurred in performing their role. The appointment of Non-

Executive Directors is governed by a letter of appointment that sets

out the terms of the appointment. This appointment is not a contract

of employment and is subject to all the terms and conditions of the

Company’s Memorandum and Articles of Association. Non-Executive

Directors do not receive any retirement benefits, supplementary

pension or termination payments for termination or loss of office,

whether in terms of the letter of appointment or otherwise. The

appointment may be terminated before expiry of the term, by either

party giving to the other party at least one month’s prior written

notice, where possible, or in any manner allowed by law.


HSBC Bank Malta p.l.c. Annual Report and Accounts 2024	99

The fee levels payable reflect the time commitment and

responsibilities required of a Non-Executive Director. Fees are

determined by reference to other Maltese companies and comparable

entities within the HSBC Group.

The Non-Executive Directors’ fees are approved in aggregate by the

shareholders at the Annual General Meeting. The aggregate Directors’

fee pool, as approved by a simple majority at the last Annual General

Meeting held on 18 April 2024 by way of Ordinary Resolution –

Special Business, amounted to €480,000. No change will be proposed

at the forthcoming Annual General meeting to this aggregate amount.

None of the said Directors received any remuneration from HSBC Life

Assurance (Malta) Ltd, HSBC Global Asset Management (Malta)

Limited, or HSBC Group.

The Board reviews each component of the fees periodically to assess

whether, individually and in aggregate, they remain competitive and

appropriate in light of changes in roles, responsibilities, and/or the

time commitment required for the Non-Executive Directors and to

ensure that individuals of the appropriate calibre are retained or

appointed. The Board may approve changes to the fees within the

aggregate amount approved by shareholders at the Annual General

Meeting. The Board may also introduce any new fee component for

Non-Executive Directors subject to the principles, parameters and

other requirements set out in the Directors’ Remuneration Policy. No

RemNom Member is present while their remuneration is being

discussed.

Details of Non-Executive Directors’ Committee and Board fees for the

financial years ended 31 December 2024 and 2023 were as follows:


	2024 Fees	2023 Fees
	€	€
John Bonello1	27,109	75,761
Yiannos Michaelides2	3,300	39,600
Ingrid Azzopardi3	44,743	59,700
Manfred Galdes4	75,143	50,916
Henri Mizzi	N/A	38,000
Maria Micallef5	56,796	46,800
Alexiei Dingli	37,998	N/A
Malcolm Miller	32,267	N/A
Louis Cassar Pullicino	30,169	N/A
Total	307,525	310,777

1John Bonello retired from the position of Chairman and Board member on

23 April 2024.

2Yiannos Michaelides resigned on 23 January 2024.

3Ingrid Azzopardi resigned on 1 October 2024.

4Manfred Galdes was appointed bank Chairman on 23 April 2024.

5Maria Micallef moved from RemNom Committee Chairperson on 23 April

2024.


	2024/ 2023	2023/ 2022	2022/ 2021	2021/ 2020
Percentage annual change in remuneration
John Bonello1	7%	2	—%	—%
Yiannos Michaelides2	—%	—%	—%	(17)%
Ingrid Azzopardi3	—%	—%	—%	—%
Manfred Galdes	48%	1%	—%	n/a
Henri Mizzi	n/a	—%	n/a	n/a
Maria Micallef	21%	—%	n/a	n/a
Percentage annual change of the bank’s performance4	9%	144%	76%	47%
Percentage annual change of the average remuneration of the bank’s employees, on a full-time equivalent basis5	8%	8%	6%	5%

1 John Bonello retired from the position of Chairman and Board member in

April 2024. and therefore the percentage change is based an an annualised

figure for 2024.

2Yiannos Michaelides resigned in January 2024 and therefore the percentage

change is based an an annualised figure for 2024.

3Ingrid Azzopardi resigned in October 2024 and therefore the percentage

change is based an an annualised figure for 2024.

4 The percentage annual change of the bank’s performance included in the