Malta’s earnings season

The earnings season is well-underway in the US, UK and Europe with companies issuing their Q4 financials and providing details on their guidance for the year ahead. One of the main focal points over recent days was the news of the expected sharp increase in capital expenditure plans by the so-called hyperscalers amounting to USD660 billion. The other important theme through most of last week was the heightened anxiety over the outlook for the technology sector with specific focus on software companies as new tools by the AI firm Anthropic could lead to a severe disruption to the business models of the software industry. This resulted in steep declines in the share prices of a number of software and data analytical firms listed in the US, Europe and also the UK.

Meanwhile in Malta, the earnings season has yet to begin and in the run-up to the publication of financial statements, in what is a new initiative for Maltese companies (but is standard across the more developed markets), most companies whose equity is listed on the MSE issued a corporate calendar providing the planned dates for the publication of financial results. While this may not be the type of reform or initiative that may lead to an improvement in investor sentiment, these calendars help in giving clarity on the planned publication dates as opposed to having companies issue their notice of publication at times just a few days or hours before the actual issuance.

From the calendars published in recent weeks, it is unfortunately evident that few companies plan to increase the frequency of reporting to include quarterly statements as opposed to sticking to the statutory obligations of semi-annual reporting.

So far, only a few companies have felt the need to publish financial information on a quarterly basis namely APS Bank, Bank of Valletta plc, HSBC Bank Malta plc, Malta International Airport plc and MedservRegis plc. The publication of quarterly information is common across the international capital markets and this is an initiative which I feel should be replicated by all issuers in Malta if they wish to attract the attention of the investor community and lead to the possibility of increased activity on the secondary market which should be a key goal for all companies whose shares are listed on a stock exchange. Increased frequency of reporting helps the investing community to keep abreast of all developments since the publication of results on a semi-annual basis leads to a long vacuum of information between the interim financial statements and the annual results.

The upcoming earnings season in Malta is due to commence on 25th February with the publication of the 2025 annual financial statements by HSBC Bank Malta plc. This is undoubtedly an important date for the investing community given the upcoming change in the majority shareholder of the bank after the announcement on 23rd December that HSBC Continental Europe (70 per cent shareholder of HSBC Malta) and CrediaBank S.A. entered into a definitive agreement for the sale and purchase of the 70 per cent stake in HSBC Malta.

The bank’s market share in loans and deposits should be a key area of focus by the investor community to gauge any material movements taking place across the banking sector in view of the transitional phase from HSBC to CrediaBank. This is likely to continue to be a central theme ahead of the change in shareholder and the subsequent mandatory takeover offer for the remaining shares held by the minority shareholders at a pre-established price of €1.44 per share. This had been communicated to the market at the time of the initial announcement of the planned transaction with CrediaBank in mid-September 2025. At the time, it was also revealed that during 2026, HSBC Malta will resort to quarterly dividend payment dates. In the corporate calendar issued by HSBC Malta last month, the planned dividend payment dates were determined as follows: 6th May, 30th June, 23rd September and 11th December.

Given the structure of Malta’s equity market, company-specific developments remain the determining factor behind price movements and trading activity. One of the main highlights in the coming months will undoubtedly be further news on the planned sale of a majority stake by International Hotel Investments plc in the Corinthia Hotel Lisbon and the expected disbursement of the eventual proceeds. Moreover, news on the continuation or otherwise of the share buyback programmes in place within the two largest companies on the MSE (Bank of Valletta plc and Malta International Airport plc) will also be important considerations for market dynamics in the months ahead.

Ahead of the upcoming earnings season, it was very interesting that APS Bank plc and Computime Holdings plc took the liberty of providing updated information to the market on their 2025 performance and expectations for 2026 well-before the planned publication of their annual report.

Essentially, the main takeouts from the announcement and market briefing organised by APS for 2026 are the following (i) projected loan growth of between 5 per cent and 10 per cent (implying additional loans of between €175 to €350 million) resulting in a total loan book of between €3.7 billion and €3.85 billion; (ii) expected return on equity (after tax) for 2026 of between 6 per cent and 7 per cent; (iii) expected net profit of between €22 million and €25.8 million based on the ROE target.

Although Computime was only admitted to the equity market just over 12 months ago, the level of communication surpasses that of most other companies including many which have been listed for over a decade. Computime explained that based on unaudited management information, it is expected to have registered record revenue and profit before tax, exceeding the profit projections published in the Prospectus dated 31st October 2024. The company also confirmed that the profitability and cash flow generation is sufficient to support the payment of a final dividend for FY2025 in line with the projections contained in the Prospectus. Computime also provided an update on the main business divisions which is indeed beneficial for the investing community to become accustomed to their business model.

Although the very subdued sentiment and investor apathy is unlikely to be reversed with any of these small initiatives, all companies should do their utmost to communicate in a more open manner to help restore trust and credibility across the market.

Improved activity and sentiment across the equity market can only take place if major reforms are enacted including better mobilisation of savings lying idle in the banking system into productive investments which is the central theme of the Savings and Investment Union across the EU. This would serve multiple objectives in Malta and would clearly support growth across the economy. The capital market can be used to partly finance a number of major investments that the country needs to embark upon to remain competitive, improve its infrastructure and tourism offering and also regenerate large parcels of land.

The latest ambitious reiteration of the Grand Harbour regeneration plan is another clear case study of how the intermediation function of the capital markets can enable investors mobilise their liquidity to fund sizeable projects for public and private initiatives. But then, this requires the impetus and vision of the policy makers which has been truly lacking from a capital markets perspective. Although the Maltese equity market has been a source of recurring disappointment over recent years for most investors, only bold action and major reforms could reignite appetite towards the market.

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