HSBC Bank Canada Third Quarter 2012 Results

VANCOUVER, Nov. 7, 2012 /CNW/ - 


    --  Profit for the quarter ended 30 September 2012 was C$181m, a
        decrease of 10% compared with the same period in 2011. Profit
        for the nine months ended 30 September 2012 was C$604m, an
        increase of 6% compared with the same period in 2011.
    --  Profit attributable to common shareholders was C$162m for the
        quarter ended 30 September 2012, a decrease of 11% compared
        with the same period in 2011. Profit attributable to common
        shareholders was C$550m for the nine months ended 30 September
        2012, an increase of 7% compared with the same period in 2011.
    --  Return on average common equity was 15.8% for the quarter ended
        30 September 2012 and 18.0% for the nine months ended 30
        September 2012 compared with 18.9% for the same periods in
        2011.
    --  The cost efficiency ratio improved to 44.8% for the quarter
        ended 30 September 2012 and 46.8% for the nine months ended 30
        September 2012 compared with 48.7% and 51.1% respectively for
        the same periods in 2011.
    --  Total assets were C$84.5bn at 30 September 2012 compared with
        C$80.7bn at 30 September 2011.
    --  Total assets under administration decreased to C$19bn at 30
        September 2012 from C$30bn at 30 September 2011 primarily due
        to the sale of the bank's full service retail brokerage
        business. Excluding the impact of this sale, total assets under
        administration increased by C$2.5bn from 30 September 2011.
    --  Tier 1 capital ratio was 13.5% and the total capital ratio was
        15.8% at 30 September 2012 compared with 13.4% and 16.0%
        respectively at 31 December 2011.
        The abbreviations "C$m" and "C$bn" represent millions and
        billions of Canadian dollars, respectively.

HSBC                                                                                                      Financial
Bank                                                                                                      Commentary
Canada
                                                                                                           

Overview

HSBC Bank Canada recorded profit of C$181m for the third quarter of 2012, a 
decrease of C$20m, or 10%, compared with C$201m for the third quarter of 2011, 
and a decrease of C$22m, or 11%, compared with the second quarter of 2012. 
Profit for the nine months ended 30 September 2012 was C$604m, an increase of 
C$35m, or 6%, compared with the nine months ended 30 September 2011. Profit 
attributable to common shareholders was C$162m for the third quarter of 2012, 
a decrease of C$20m, or 11%, compared with C$182m for the third quarter of 
2011, and a decrease of C$24m, or 13%, compared with the second quarter of 
2012. Profit attributable to common shareholders for the nine months ended 30 
September 2012 was C$550m, an increase of C$35m, or 7%, compared with the nine 
months ended 30 September 2011.

The decrease in profit this quarter compared with the same quarter last year 
and the prior quarter is primarily due to continued pressure on net interest 
margin in a prolonged low interest rate environment. The decrease is partially 
offset by reduced operating expenses. The increase in profit for the nine 
months ended 30 September 2012 compared with the same period in 2011 was 
primarily due to revenue growth in the Global Banking and Markets business of 
10% and Commercial Banking business of 5% as well as reduced operating 
expenses as a result of the wind-down of the bank's consumer finance business, 
the sale of the full service retail brokerage business and cost reduction 
efforts.

Commenting on the results, Lindsay Gordon, President and Chief Executive 
Officer of HSBC Bank Canada, said:

"The bank's results year-to-date continue to show solid progress. We have 
refocused the bank around our core businesses while improving the efficiency 
of our operations. Our initiatives have created a strong platform to deliver 
on our strategic objective of being the leading international bank in Canada 
and to ensure we continue to meet our customers' needs."

Analysis of Consolidated Financial Results for the Third Quarter of 2012

Net interest income for the third quarter of 2012 was C$357m, a decrease of 
C$34m, or 9%, compared with the third quarter of 2011, and a decrease of 
C$15m, or 4%, compared with the second quarter of 2012. Net interest income 
was C$1,127m for the nine months ended 30 September 2012, a decrease of C$36m, 
or 3%, compared with the nine months ended 30 September 2011. The decrease is 
due to continued pressure on net interest margin in a prolonged low interest 
rate environment.

Net fee income for the third quarter of 2012 was C$157m, a decrease of C$5m, 
or 3%, compared with the third quarter of 2011, and an increase of C$10m, or 
7%, compared with the second quarter of 2012. Net fee income was C$447m for 
the nine months ended 30 September 2012, a decrease of C$40m, or 8%, compared 
with the nine months ended 30 September 2011. The sale of the full service 
retail brokerage business resulted in reductions in fees from funds under 
management and brokerage commissions in 2012. Excluding 2011 fees from the 
full service retail brokerage business, net fee income increased by C$19m and 
C$31m compared with the third quarter and year-to-date periods of 2011 
respectively, resulting from increases in fees from credit facilities and the 
Immigrant Investor Program as a result of an increase in volume. The increase 
compared with the prior quarter is mainly due to higher fees from credit 
facilities and corporate finance.

Net trading income for the third quarter of 2012 was C$48m, which marginally 
increased compared with both the third quarter of 2011 and the second quarter 
of 2012. Net trading income was C$135m for the nine months ended 30 September 
2012, an increase of C$16m, or 13%, compared with the nine months ended 30 
September 2011. The year-to-date increase is due to improved trading 
performance in rates products, reduced volume of derivatives used to manage 
foreign currency denominated deposits resulting in lower carrying costs and 
positive hedge ineffectiveness, partially offset by the adverse impact of 
narrowing credit spreads on the carrying value of our own debt instruments 
classified as trading.

Net gain/(loss) from financial instruments designated at fair value for the 
third quarter of 2012 was a net loss of C$8m, compared with a gain of C$22m in 
the third quarter of 2011, and a loss of C$2m compared with the second quarter 
of 2012. Year-to-date, the net loss from financial instruments designated at 
fair value was C$24m, compared with a net gain of C$16m for the same period in 
2011. The bank designates certain subordinated debentures and other 
liabilities to be recorded at fair value. Gains and losses are largely as a 
result of the widening or narrowing of credit spreads decreasing or increasing 
the fair value of these liabilities, respectively.

Gains less losses from financial investments for the third quarter of 2012 
were C$3m, a decrease of C$17m and C$25m respectively compared with the third 
quarter of 2011 and second quarter of 2012. Net gains from the sale of 
financial investments were C$48m for the nine months ended 30 September 2012, 
an increase of C$8m, or 20%, compared with the nine months ended 30 September 
2011. The decrease in gains less losses from financial investments compared 
with the same quarter last year and compared with the previous quarter is due 
to reduced gains on the disposal of available-for-sale financial investments. 
On a year-to-date basis, gains less losses from financial investments 
increased due to higher gains on the disposal of available-for-sale financial 
investments.

Other operating income for the third quarter of 2012 was C$15m, an increase of 
C$3m, or 25%, compared with the third quarter of 2011, and a decrease of C$7m, 
or 32%, compared with the second quarter of 2012. Other operating income was 
C$50m for the nine months ended 30 September 2012, an increase of C$15m, or 
43%, compared with the nine months ended 30 September 2011. The second quarter 
of 2012 included a C$6m recovery of investment property taxes. Included in 
other operating income for the nine months ended 30 September 2011 is a C$17m 
charge resulting from the decline in fair value of investment property.

Gain on the sale of the full service retail brokerage business. The sale of 
the full service retail brokerage business closed on 1 January 2012 and 
resulted in a gain of C$84m, net of assets written off and directly related 
costs.

Loan impairment charges and other credit risk provisions for the third quarter 
of 2012 were C$71m, an increase of C$8m, or 13%, compared with the third 
quarter of 2011, and an increase of C$12m, or 20%, compared with the second 
quarter of 2012. Loan impairment charges and other credit risk provisions were 
C$178m for the nine months ended 30 September 2012, an increase of C$35m, or 
24%, compared with the nine months ended 30 September 2011. The increases are 
primarily due to higher specific provisions notably in the energy sector in 
the second quarter of 2012 and in the real estate sector in the third quarter 
of 2012 as well as higher collective provisions in the bank's consumer finance 
business.

Total operating expenses (excluding restructuring charges) for the third 
quarter of 2012 were C$256m, a decrease of C$62m, or 19%, compared with the 
third quarter of 2011, and a decrease of C$20m, or 7%, compared with the 
second quarter of 2012. Total operating expenses were C$838m for the nine 
months ended 30 September 2012, a decrease of C$112m, or 12%, compared with 
the nine months ended 30 September 2011. The decrease in total operating 
expenses is due to cost reductions relating to the sale of the full service 
retail brokerage business (C$79m) and wind-down of the bank's consumer finance 
business (C$47m) in the nine months ended 30 September 2012. Additionally, as 
a result of cost management initiatives, employee compensation and benefits as 
well as activities and expenses related to the delivery of technology services 
to HSBC Group companies were reduced. The reduction is partially offset by a 
C$47m recovery of fees from an HSBC affiliate in the nine months ended 30 
September 2011.

Restructuring charges of C$36m were recognized in the first quarter of 2012 
mainly relating to the wind-down of the bank's consumer finance business.

Income tax expense. The effective tax rate in the third quarter of 2012 was 
26.4%, compared with 26.6% in the third quarter of 2011 and 27.2% in the 
second quarter of 2012. The effective tax rate was 26.1% for the nine months 
ended 30 September 2012, compared with 26.2% for the nine months ended 30 
September 2011. The decrease in the third quarter of 2012 compared with the 
prior quarter was due to additional income from international business 
activities that are subject to a lower tax rate.

Statement of Financial Position

Total assets at 30 September 2012 were C$84.5bn, an increase of C$4.4bn from 
C$80.1bn at 31 December 2011, mainly due to increases of C$2.4bn in financial 
investments, C$2bn in trading assets, C$2bn in loans and advances to customers 
and C$1bn in acceptances offset by a decrease in loans and advances to banks 
of C$2.9bn. The increase in trading assets is driven by higher activity and 
holdings in our rates and credit products at 30 September 2012. Loans and 
advances to banks decreased by C$2.9bn and loans and advances to customers 
increased by C$2bn mainly as a result of a decrease and an increase 
respectively in reverse repurchase agreements. Excluding the movement in 
reverse repurchase agreements, loans and advances to banks and loans and 
advances to customers decreased by C$0.8bn and C$0.5bn respectively.

Liquid assets which include high grade financial investments and reverse 
repurchase agreements, increased to C$25.8bn at 30 September 2012, compared 
with C$23.1bn at 31 December 2011.

Total customer accounts at 30 September 2012 were C$47.7bn, an increase of 
C$1.1bn from C$46.6bn at 31 December 2011, mainly due to increases in 
repurchase agreements, commercial notice and current accounts, partially 
offset by decreases in commercial fixed date and personal notice deposits. 
Debt securities in issue at 30 September 2012 were C$14.1bn from, an increase 
of C$0.8bn from C$13.3bn at 31 December 2011, primarily due to additional 
funding through the net issuance of C$1.2bn in medium term notes, partially 
offset by reduced mortgage securitization funding of C$0.3bn.

Total assets under administration

Total assets under administration were C$19bn at 30 September 2012, a decrease 
of C$8.4bn from C$27.4bn at 31 December 2011, primarily due to sale of the 
bank's full service retail brokerage business. Excluding the full service 
retail brokerage business' funds under management, total assets under 
administration increased by C$2.2bn compared with 31 December 2011.

Business Performance in the Third Quarter of 2012

Retail Banking and Wealth Management

Profit before income tax expense for the third quarter of 2012 was C$14m, a 
decrease of C$5m compared with the third quarter of 2011, and an increase of 
C$7m compared with the second quarter of 2012. On a year-to-date basis, profit 
before income tax expense was C$114m, an increase of C$33m compared with the 
same period in 2011. Profit before income tax expense for the nine months 
ended 30 September 2012 included a C$76m gain on the sale of the full service 
retail brokerage business and restructuring charges of C$2m. Profit before 
income tax expense for the comparative period last year included a C$28m 
recovery of fees from an HSBC affiliate partially offset by a C$7m write-off 
of internally developed software costs. Excluding the effect of these items, 
profit before income tax expense for the nine months ended 30 September 2012 
was C$40m, a decrease of C$20m compared with the same period in 2011 mainly 
due to continued pressure on net interest margin in a prolonged low interest 
rate environment.

Commercial Banking

Profit before income tax expense was C$145m for the third quarter of 2012, an 
increase of C$9m, compared with the third quarter of 2011, and a decrease of 
C$4m compared with the second quarter of 2012. Profit before income tax 
expense was C$452m for the nine months ended 30 September 2012, an increase of 
C$31m compared with the nine months ended 30 September 2011. Profit before 
income tax expense increased compared with the same quarter last year due to 
reduced operating expenses as a result of cost reduction efforts, partially 
offset by higher specific impairment provisions. Profit before income tax 
expense decreased compared with the prior quarter due to higher specific 
impairment provisions, partially offset by reduced operating expenses as a 
result of cost reduction efforts. On a year-to-date basis, profit before 
income tax expense increased due to higher net fee income from credit 
facilities, higher net operating income due to a C$17m charge resulting from 
the decline in fair value of investment property in 2011, reduced operating 
expenses as a result of cost reduction efforts, partially offset by higher 
specific impairment provisions.

Global Banking and Markets

Profit before income tax expense was C$70m for the third quarter of 2012, a 
decrease of C$5m compared with the third quarter of 2011 and a decrease of 
C$14m compared with the second quarter of 2012. Profit before income tax 
expense was C$240m in the nine months ended 30 September 2012, an increase of 
C$33m compared with the nine months ended 30 September 2011. The decrease in 
profit before income tax expense compared with the same quarter last year and 
compared with the prior quarter is due to reduced gains on the disposal of 
available-for-sale financial investments, partially offset by reduced 
operating expenses as a result of cost reduction efforts. The increase in 
profit before income tax expense compared with the nine months ending 30 
September 2011 is due to higher gains on the disposal of available-for-sale 
financial investments, the gain on the sale of the full service brokerage 
business, improved net fee income driven by higher debt underwriting and 
derivative sales fees and higher net trading income driven by improved trading 
performance in rates products.

Consumer Finance

In March 2012, HSBC Financial Corporation Limited announced the wind-down of 
the consumer finance business in Canada and, except for existing commitments, 
ceased origination of loans. Accordingly, C$34m in restructuring costs were 
incurred in the first quarter of 2012 relating to employee severance, pension 
curtailment and changes in benefits plans, uneconomic contracts, onerous 
leases and impairment of fixed assets including leasehold improvements.

Profit before income tax expense was C$28m for the third quarter of 2012, an 
increase of C$7m compared with the third quarter of 2011, and a decrease of 
C$8m compared with the second quarter of 2012. Profit before income tax 
expense was C$47m for the nine months ended 30 September 2012, an increase of 
C$3m compared with the nine months ended 30 September 2011.

Profit before income tax expense increased compared with the same quarter last 
year mainly as a result of lower operating expenses driven by reduced staff, 
infrastructure charges and other overhead expenses, partially offset by lower 
net interest income on declining customer loan balances. Profit before income 
tax expense decreased compared with the prior quarter mainly due to lower net 
interest income on declining customer loan balances. Excluding the 
restructuring costs, profit before income tax expense was C$81m for the nine 
months ended 30 September 2012, an increase of C$37m compared with the same 
period last year. The increase is mainly as a result of lower operating 
expenses driven by reduced staff, infrastructure charges and other overhead 
expenses, which is partially offset by an increase in loan impairment charges.

Other

Activities or transactions which do not relate directly to the above business 
segments are reported in Other. The main items reported under Other include 
gains and losses from the impact of changes in credit spreads on our own debt 
designated at fair value, revenue and expense related to information 
technology services provided to HSBC Group companies on an arm's length basis. 
Profit before income tax expense for the third quarter of 2012 was a loss of 
C$11m, compared with a profit of C$23m for the third quarter of 2011 and a 
profit of C$3m in the second quarter of 2012. Profit before income tax expense 
was a loss of C$36m for the nine months ended 30 September 2012, compared with 
a profit of C$18m for the nine months ended 30 September 2011. The variances 
from comparative periods are primarily due to the impact of the items noted 
above.

Dividends

During the third quarter of 2012, the bank declared and paid C$83m in 
dividends on HSBC Bank Canada common shares, an increase of C$8m from the same 
period in 2011. The bank declared and paid C$248m in dividends on common 
shares during the nine months ended 30 September 2012, an increase of C$23m 
from the same period in 2011.

Regular quarterly dividends of 31.875 cents per share have been declared on 
HSBC Bank Canada Class 1 Preferred Shares - Series C, 31.25 cents per share on 
Class 1 Preferred Shares - Series D, 41.25 cents per share on Class 1 
Preferred Shares - Series E and 7.75 cents per share on Class 2 Preferred 
Shares - Series B. Dividends will be paid on 31 December 2012, for 
shareholders of record on 14 December 2012.

IFRS and related non-IFRS measures

The bank uses both IFRS and certain non-IFRS financial measures to assess 
performance. Securities regulators require that companies caution readers that 
earnings and other measures that have been adjusted to a basis other than IFRS 
do not have a standardized meaning under IFRS and are therefore unlikely to be 
comparable to similar measures used by other companies. The following outlines 
various non-IFRS measures that are regularly monitored by management:

Return on average common equity - Profit attributable to common shareholders 
on an annualized basis divided by average common equity, which is calculated 
using month-end balances of common equity for the period.

Post-tax return on average assets - Profit attributable to common shareholders 
on an annualized basis divided by average assets, which is calculated using 
average daily balances for the period.

Post-tax return on average risk weighted assets - Profit attributable to 
common shareholders on an annualized basis divided by the average monthly 
balances of risk weighted assets for the period. Risk weighted assets are 
calculated using guidelines issued by the Office of the Superintendent of 
Financial Institutions Canada in accordance with the Basel II capital adequacy 
framework.

Cost efficiency ratio - Calculated as total operating expenses for the period 
divided by net operating income before loan impairment charges and other 
credit risk provisions for the period.

Adjusted cost efficiency ratio - Cost efficiency ratio adjusted to exclude 
gains and losses from financial instruments designated at fair value from net 
operating income before loan impairment charges.

Net interest income, net fee income and net trading income as a percentage of 
total operating income - Net interest income, net fee income and net trading 
income for the period divided by net operating income before loan impairment 
charges and other credit risk provisions for the period.

Ratio of customer advances to customer accounts - Loans and advances to 
customers divided by customer accounts, using period-end balances.

Average total shareholders' equity to average total assets - average 
shareholders' equity is calculated using month-end balances of total 
shareholders' equity for the period and average total assets are calculated 
using average daily balances for the period.

Core tier 1 capital - Tier 1 capital less non-controlling interests and 
preferred shares.

Core tier 1 capital ratio - Core tier 1 capital as a percentage of 
risk-weighted assets.

Caution concerning forward-looking statements

This document may contain forward-looking information, including statements 
regarding the business and anticipated actions of HSBC Bank Canada. These 
statements can be identified by the fact that they do not pertain strictly to 
historical or current facts. Forward-looking statements often include words 
such as "anticipates," "estimates," "expects," "projects," "intends," "plans," 
"believes," and words and terms of similar substance in connection with 
discussions of future operating or financial performance. These statements are 
subject to a number of risks and uncertainties that may cause actual results 
to differ materially from those contemplated by the forward-looking 
statements. Some of the factors that could cause such differences include 
legislative or regulatory developments, technological change, global capital 
market activity, changes in government monetary and economic policies, changes 
in prevailing interest rates, inflation levels and general economic conditions 
in geographic areas where HSBC Bank Canada operates. Canada is an extremely 
competitive banking environment and pressures on the bank's net interest 
margin may arise from actions taken by individual banks or other financial 
institutions acting alone. Varying economic conditions may also affect equity 
and foreign exchange markets, which could also have an impact on the bank's 
revenues. The factors disclosed above are not exhaustive and there could be 
other uncertainties and potential risk factors not considered here which may 
impact the bank's results and financial condition. Any forward-looking 
statements speak only as of the date of this document. The bank undertakes no 
obligation to, and expressly disclaims any obligation to, update or alter our 
forward-looking statements, whether as a result of new information, subsequent 
events or otherwise, except as required by law.

About HSBC Bank Canada

HSBC Bank Canada, a subsidiary of HSBC Holdings plc, is the leading 
international bank in Canada. With around 6,900 offices in over 80 countries 
and territories and assets of US$2,721bn at 30 September 2012, the HSBC Group 
is one of the world's largest banking and financial services organizations.

Copies of HSBC Bank Canada's third quarter 2012 report will be sent to 
shareholders in November 2012.  

HSBC Bank                                                      Summary
Canada
                                      
                            Quarter ended           Nine months ended
                      30          30                    30          30
               September   September   30 June   September   September
                    2012        2011      2012        2012        2011

For the period                                              
(C$m)                                                                 

Profit before                                               
income tax
expense              246         274       279         817         771

Net operating                                               
income before
loan
impairment
charges and
other credit
risk
provisions           572         653       614       1,867       1,860

Profit                                                      
attributable
to common
shareholders         162         182       186         550         515
                                                                      

At period-end                                               
(C$m)                                                                 

Shareholders'                                               
equity             5,118       4,933     5,080                        

Core tier 1                                                 
capital ((2))      3,798       3,497     3,737                        

Risk-weighted                                               
assets            36,818      34,786    35,637                        

Loans and                                                   
advances to
customers (net
of impairment
allowances)       46,309      43,697    46,126                        

Customer                                                    
accounts          47,713      45,500    47,097                        
                                                                      

Capital ratios                                              
(%)                                                                   

Tier 1 ratio (                                              
(1))                13.5        13.4      13.8                        

Total capital                                               
ratio ((1))         15.8        16.1      16.1                        

Core tier 1                                                 
capital ratio
((2))               10.3        10.1      10.5                        
                                                                      

Performance                                                 
ratios (%) (
(2))                                                                  

Return on                                                   
average common
equity              15.8        18.9      18.4        18.0        18.9

Post-tax                                                    
return on
average total
assets              0.77        0.87      0.88        0.89        0.84

Post-tax                                                    
return on
average
risk-weighted
assets               1.8         2.1       2.1         2.0         2.0
                                                                      

Credit                                                      
coverage ratio
(%)                                                                   

Loan                                                        
impairment
charges as a
percentage of
total
operating
income              12.4         9.6       9.6         9.5         7.6

Loan                                                        
impairment
charges as a
percentage of
average gross
customer
advances and
acceptances          0.6         0.5       0.5         0.5         0.4

Total                                                       
impairment
allowances
outstanding as
a percentage
of impaired
loans and
acceptances at
the period end      62.8        71.8      70.7        62.8        71.8
                                                                      

Efficiency and                                              
revenue mix
ratios (%) (
(2))                                                                  

Cost                                                        
efficiency
ratio               44.8        48.7      45.0        46.8        51.1

Adjusted cost                                               
efficiency
ratio               44.1        50.4      44.8        46.2        51.5

As a                                                        
percentage of
total
operating
income:                                                               

  - net
interest                                                    
income              62.4        59.9      60.6        60.3        62.5

  - net fee                                                 
income              27.4        24.8      23.9        23.9        26.2

  - net                                                     
trading income       8.4         7.0       7.7         7.2         6.4
                                                                      

Financial                                                   
ratios (%) (
(2))                                                                  

Ratio of                                                    
customer
advances to
customer
accounts            97.1        96.0      97.9                        

Average total                                               
shareholders'
equity to
average total
assets               6.0         5.7       5.9                        
                                                                      

Total assets                                                
under
administration
(C$m)                                                                 

Funds under                                                 
management (
(3))              18,097      28,927    17,339                        

Custodial                                                   
accounts             854       1,033       949                        

Total assets                                                
under
administration    18,951      29,960    18,288                        


Calculated using guidelines issued by the Office of the
1  Superintendent of Financial Institutions Canada in accordance with 
the Basel II capital adequacy framework. 
These are non-IFRS amounts or non-IFRS measures. Please refer to the
2  discussion outlining the use of non-IFRS measures in the "IFRS and 
related non-IFRS measures" section of this document. 
The comparative figure for the quarter ended 30 September 2011
3  includes funds managed in the full service retail brokerage business 
which was sold on 1 January 2012 of C$13.5bn. 
                      


                         

HSBC Bank
Canada                        Consolidated Income Statement (Unaudited)
                         
                             Quarter ended           Nine months ended

Figures in C$m         30          30                    30          30
(except per     September   September   30 June   September   September
share amounts)       2012        2011      2012        2012        2011

Interest income       551         579       565       1,702       1,781

Interest                                                     
expense             (194)       (188)     (193)       (575)       (618)

Net interest                                                 
income                357         391       372       1,127       1,163

Fee income            175         183       168         511         549

Fee expense          (18)        (21)      (21)        (64)        (62)

Net fee income        157         162       147         447         487

Trading income                                               
excluding net
interest income        38          41        39         109         107

Net interest                                                 
income on
trading
activities             10           5         8          26          12

Net trading                                                  
income                 48          46        47         135         119

Net gain/(loss)                                              
from financial
instruments
designated at
fair value            (8)          22       (2)        (24)          16

Gains less                                                   
losses from
financial
investments             3          20        28          48          40

Other operating                                              
income                 15          12        22          50          35

Gain on the                                                  
sale of the
full service
retail
brokerage
business                -           -         -          84           -

Net operating                                                
income before
loan impairment
charges and
other credit
risk provisions       572         653       614       1,867       1,860

Loan impairment                                              
charges and
other credit
risk provisions      (71)        (63)      (59)       (178)       (143)

Net operating                                                
income                501         590       555       1,689       1,717

Employee                                                     
compensation
and benefits        (147)       (196)     (163)       (500)       (612)

General and                                                  
administrative
expenses             (96)       (108)     (100)       (300)       (287)

Depreciation of                                              
property, plant
and equipment        (10)        (10)       (8)        (27)        (29)

Amortization of                                              
intangible
assets                (3)         (4)       (5)        (11)        (22)

Restructuring                                                
charges                 -           -         -        (36)           -

Total operating                                              
expenses            (256)       (318)     (276)       (874)       (950)

Operating                                                    
profit                245         272       279         815         767

Share of profit                                              
in associates           1           2         -           2           4

Profit before                                                
income tax
expense               246         274       279         817         771

Income tax                                                   
expense              (65)        (73)      (76)       (213)       (202)

Profit for the                                               
period                181         201       203         604         569
                                                                       

Profit                                                       
attributable to
common
shareholders          162         182       186         550         515

Profit                                                       
attributable to
preferred
shareholders           16          16        15          46          46

Profit                                                       
attributable to
shareholders          178         198       201         596         561

Profit                                                       
attributable to
non-controlling
interests               3           3         2           8           8

Average number                                               
of common
shares
outstanding
(000's)           498,668     498,668   498,668     498,668     498,668

Basic earnings                                               
per common
share                0.33        0.36      0.37        1.10        1.03
                                                                       

HSBC Bank Canada    Consolidated Statement of Financial Position
                    (Unaudited)
                                                         


                At 30 September   At 30 September   At 31 December
Figures in C$m                 2012              2011             2011 
                                                                   
ASSETS                                                                 
                                                                   
Cash and balances                62                62               77
at central bank 
Items in the course             123               127              104
of collection from
other banks 
Trading assets                6,610             4,143            4,587 
Derivatives                   2,042             2,634            2,203 
Loans and advances            1,627             3,737            4,530
to banks 
Loans and advances           46,309            43,768           44,357
to customers 
Financial                    21,571            20,181           19,168
investments 
Other assets                    620               707              559 
Prepayments and                 262               254              225
accrued income 
Customers'                    5,040             4,895            4,059
liability under
acceptances 
Property, plant and             130               110              123
equipment 
Goodwill and                     75                83               76
intangibles assets 
Total assets                 84,471            80,701           80,068 
                                                                   
LIABILITIES AND                                                       
EQUITY 
                                                                   
Liabilities                                                            
Deposits by banks             2,359               976            1,377 
Customer accounts            47,713            45,500           46,614 
Items in the course             340               210              288
of transmission to
other banks 
Trading liabilities           3,588             2,633            2,996 
Financial                       999               993            1,006
liabilities
designated at fair
value 
Derivatives                   1,628             2,256            1,746 
Debt securities in           14,063            14,500           13,327
issue 
Other liabilities             2,110             2,333            2,260 
Acceptances                   5,040             4,895            4,059 
Accruals and                    591               588              566
deferred income 
Retirement benefit              369               326              300
liabilities 
Subordinated                    323               328              326
liabilities 
Total liabilities            79,123            75,538           74,865 
                                                                   
Equity                                                                 
Preferred shares                946               946              946 
Common shares                 1,225             1,225            1,225 
Other reserves                  346               455              439 
Retained earnings             2,601             2,307            2,363 
Total shareholders'           5,118             4,933            4,973
equity 
Non-controlling                 230               230              230
interests 
Total equity                  5,348             5,163            5,203 
Total equity and             84,471            80,701           80,068
liabilities 


                                                         

HSBC Bank             Condensed Consolidated Statement of Cash Flows
Canada                                                    (Unaudited)
                                                
                          Quarter ended           Nine months ended

Figures in          30          30   30 June          30          30
C$m          September   September      2012   September   September
                  2012        2011                  2012        2011
                                                                    

Cash flows                                                          
generated
from/(used
in):

 - operating     1,398         220      (49)        (13)       1,951
activities

 - investing   (1,469)     (2,222)       243     (2,557)     (4,008)
activities

 - financing     (102)        (94)      (99)       (302)       (279)
activities

Net              (173)     (2,096)        95     (2,872)     (2,336)
increase/
(decrease)
in cash and
cash
equivalents

Cash and         2,000       6,440     1,905       4,699       6,680
cash
equivalents,
beginning of
period

Cash and         1,827       4,344     2,000       1,827       4,344
cash
equivalents,
end of
period
                                                                    

Represented                                                         
by:

 - Cash and         62          62        70          62          62
balances at
central bank

 - Items in      (217)        (83)     (232)       (217)        (83)
the course
of
transmission
to other
banks, net

 - Loans and     1,627       3,737     1,919       1,627       3,737
advances to
banks of one
month or
less

 - Treasury        355         628       243         355         628
bills and
certificates
of deposits
of three
months or
less

Cash and         1,827       4,344     2,000       1,827       4,344
cash
equivalents,
end of
period
                                                            

HSBC Bank
Canada                       Global Business Segmentation (Unaudited)

We manage and report our operations according to our global
businesses.
                           Quarter ended           Nine months ended

Figures in           30          30                    30          30
C$m           September   September   30 June   September   September
                   2012        2011      2012        2012        2011
                                                                     

Retail                                                     
Banking and
Wealth
Management                                                           

Net interest                                               
income               85         100        92         282         301

Net fee                                                    
income               42          62        44         128         198

Net trading                                                
income                3           6         3           9          16

Other                                                      
operating
income                3           2         3           8           6

Gain on the                                                
sale of the
full service
retail
brokerage
business              -           -         -          76           -

Net operating                                              
income before
loan
impairment
charges and
other credit
risk
provisions          133         170       142         503         521

Loan                                                       
impairment
charges and
other credit
risk
provisions          (7)         (7)       (7)        (20)        (13)

Net operating                                              
income              126         163       135         483         508

Total                                                      
operating
expenses
(excluding
restructuring
charges)          (112)       (144)     (128)       (367)       (427)

Restructuring                                              
charges               -           -         -         (2)           -

Profit before                                              
income tax
expense              14          19         7         114          81
                                                                     

Commercial                                                 
Banking                                                              

Net interest                                               
income              175         188       177         532         538

Net fee                                                    
income               78          66        72         221         202

Net trading                                                
income                9           7         8          25          19

Other                                                      
operating
income/
(expense) (
(1))                  3           3         7          15         (5)

Net operating                                              
income before
loan
impairment
charges and
other credit
risk
provisions          265         264       264         793         754

Loan                                                       
impairment
charges and
other credit
risk
provisions         (36)        (32)      (26)        (73)        (55)

Net operating                                              
income              229         232       238         720         699

Total                                                      
operating
expenses (
(1))               (85)        (98)      (89)       (270)       (282)

Operating                                                  
profit              144         134       149         450         417

Share of                                                   
profit in
associates            1           2         -           2           4

Profit before                                              
income tax
expense             145         136       149         452         421
                                                                     

Global                                                     
Banking and
Markets                                                              

Net interest                                               
income               41          38        40         127         127

Net fee                                                    
income               25          23        19          63          56

Net trading                                                
income               28          29        28          78          73

Gains less                                                 
losses from
financial
investments           3          17        28          48          37

Other                                                      
operating
income                -           -         2           1           2

Gain on the                                                
sale of the
full service
retail
brokerage
business              -           -         -           8           -

Net operating                                              
income               97         107       117         325         295

Total                                                      
operating
expenses           (27)        (32)      (33)        (85)        (88)

Profit before                                              
income tax
expense              70          75        84         240         207
                                   
                                   
                           Quarter ended           Nine months ended

Figures in           30          30                    30          30
C$m           September   September   30 June   September   September
                   2012        2011      2012        2012        2011
                                                                     

Consumer                                                   
Finance                                                              

Net interest                                               
income               64          69        72         209         208

Net fee                                                    
income               12          11        12          35          31

Gains less                                                 
losses from
financial
investments           -           3         -           -           3

Other                                                      
operating
income                1           3         -           3           5

Net operating                                              
income before
loan
impairment
charges and
other credit
risk
provisions           77          86        84         247         247

Loan                                                       
impairment
charges and
other credit
risk
provisions         (28)        (24)      (26)        (85)        (75)

Net operating                                              
income               49          62        58         162         172

Total                                                      
operating
expenses
(excluding
restructuring
charges)           (21)        (41)      (22)        (81)       (128)

Restructuring                                              
charges               -           -         -        (34)           -

Profit/(loss)                                              
before income
tax expense          28          21        36          47          44
                                                                     

Other                                                                

Net interest                                               
expense             (8)         (4)       (9)        (23)        (11)

Net trading                                                
income                8           4         8          23          11

Net gain/                                                  
(loss) from
financial
instruments
designated at
fair value          (8)          22       (2)        (24)          16

Other                                                      
operating
income ((1))          8           4        10          23          27

Net operating                                              
income/
(expense)             -          26         7         (1)          43

Total                                                      
operating
expenses (
(1))               (11)         (3)       (4)        (35)        (25)

Profit/(loss)                                              
before income
tax expense        (11)          23         3        (36)          18

1      The bank operates a call center which exclusively services the
       global Commercial Banking business. In prior periods, expenses
       and related recharge income from other HSBC Group companies have
       been included in Total operating expenses and Other operating
       income respectively, within the 'Other' segment. Effective for
       the third quarter of 2012, the call center expenses and related
       recharge income have been reclassified from the 'Other' segment
       to the 'Commercial Banking' segment in order to more
       appropriately reflect these transactions within the segment
       benefitting from these services. Comparative data has been
       reclassified to conform with current presentation. Accordingly,
       expenses included in Total operating expenses of C$3m, C$4m and
       C$11m for the quarter ended 30 September 2011, 30 June 2012 and
       for the nine months ended 30 September 2012 respectively, were
       reclassified. In addition, recharge income included in Other
       operating income of C$3m, C$4m and C$10m for the quarter ended
       30 September 2011, 30 June 2012 and for the nine months ended 30
       September 2012 respectively, was reclassified. The consolidated
       income statement was not affected by the reclassification.





Media enquiries to:  Ernest Yee 604-641-2973  Sharon Wilks 416-868-3878

SOURCE: HSBC Bank Canada

To view this news release in HTML formatting, please use the following URL: 
http://www.newswire.ca/en/releases/archive/November2012/07/c5628.html

CO: HSBC Bank Canada
ST: British Columbia
NI: FIN ERN DIV 

-0- Nov/07/2012 09:15 GMT


 
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