HSBC Bank Canada Fourth Quarter 2012 Results

VANCOUVER, March 4, 2013 /CNW/ - 


    --  Profit before income tax expense for the quarter ended 31
        December 2012 was C$221m, an increase of 19.5% compared with
        the same period in 2011. Profit for the year ended 31 December
        2012 was C$1,038m, an increase of 8.6% compared with the year
        ended 31 December 2011.
    --  Profit for the quarter ended 31 December 2012 was C$157m, an
        increase of 16.3% compared with the same period in 2011. Profit
        for the year ended 31 December 2012 was C$761m, an increase of
        8.1% compared with the year ended 31 December 2011.
    --  Profit attributable to common shareholders was C$140m for the
        quarter ended 31 December 2012, an increase of 18.6% compared
        with the same period in 2011. Profit attributable to common
        shareholders was C$690m for the year ended 31 December 2012, an
        increase of 9.0% compared with the year ended 31 December 2011.
    --  Return on average common equity was 13.1% for the quarter ended
        31 December 2012 and 16.8% for the year ended 31 December 2012
        compared with 11.8% and 17.0% respectively for the same periods
        in 2011.
    --  The cost efficiency ratio improved to 52.3% for the quarter
        ended 31 December 2012 and 48.0% for the year ended 31 December
        2012 compared with 57.5% and 52.6% respectively for the same
        periods in 2011.
    --  Total assets were C$80.7bn at 31 December 2012 compared with
        C$80.1bn at 31 December 2011.
    --  Total assets under administration decreased to C$19.5bn at 31
        December 2012 from C$27.4bn at 31 December 2011 primarily due
        to the sale of the full service retail brokerage business on 1
        January 2012. Excluding the impact of this sale, total assets
        under administration increased by C$2.7bn from 31 December
        2011.
    --  Tier 1 capital ratio and the total capital ratio were 13.8% and
        16.0% respectively at 31 December 2012 compared with 13.4% and
        16.0% respectively at 31 December 2011.
        The abbreviations "C$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$157m for the fourth quarter of 2012, an 
increase of C$22m, or 16.3%, compared with the fourth quarter of 2011, and a 
decrease of C$24m, or 13.3%, compared with the third quarter of 2012. Profit 
for 2012 was C$761m, an increase of C$57m, or 8.1%, compared with 2011. Profit 
attributable to common shareholders was C$140m for the fourth quarter of 2012, 
an increase of C$22m, or 18.6%, compared with the fourth quarter of 2011, and 
a decrease of C$22m, or 13.6%, compared with the third quarter of 2012. Profit 
attributable to common shareholders for 2012 was C$690m, an increase of C$57m, 
or 9%, compared with 2011.

The increase in profit compared with the same quarter of 2011 is mainly due to 
lower operating expenses as a result of the sale of the full service retail 
brokerage business and wind-down of the consumer finance business, lower loan 
impairment charges from a release of collectively assessed loan impairment 
allowances and lower specific loan impairment charges and higher net trading 
income from rates and credit products. The increase in profit was partially 
offset by a reduction in net interest income resulting from a decrease in 
average loan balances and lower net interest margin. The decrease compared 
with the prior quarter is mainly due to lower operating income as a result of 
a write down in the value of investment property, higher operating expenses 
driven by the write off of internally developed software costs, and a 
reduction in net interest income resulting from a decrease in average loan 
balances as well as lower net interest margin. The decrease was partially 
offset by lower loan impairment charges from a release of collectively 
assessed loan impairment allowances and lower specific loan impairment charges.

The increase in profit compared with the prior year is primarily due the gain 
realized on the sale of the full service retail brokerage business. Excluding 
this sale and restructuring costs on the closure of the Consumer Finance 
business, profits increased over the prior year from strong net fee income on 
sales of mutual fund and World Selection portfolios, as well as increased 
commercial credit facility and debt underwriting fees, and reduced costs from 
organizational effectiveness initiatives. The increase in profit was partially 
offset by a reduction in net interest income due to lower average retail and 
consumer finance loan balances following the strategic refocus of these 
businesses and lower net interest margin.

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

"I am very pleased to report that in 2012 HSBC Bank Canada reached an 
important milestone, for the first time reporting profit before tax of over 
C$1 billion. Over the course of the last two years, HSBC has been refocusing 
our businesses to better serve our core clients. Growth in our strategic areas 
of focus, founded on deeper relationships with our customers, along with a 
reduction in costs are largely responsible for our results in 2012. My thanks 
to Lindsay Gordon who retired at the beginning of 2013 after nine successful 
years as President and CEO. I look forward to continuing to grow HSBC's 
businesses and brand in Canada as the premier bank for internationally minded 
businesses and individuals."

Analysis of Consolidated Financial Results for the Fourth Quarter of 2012

Net interest income for the fourth quarter of 2012 was C$348m, a decrease of 
C$45m, or 11.5%, compared with the fourth quarter of 2011, and a decrease of 
C$9m, or 2.5%, compared with the third quarter of 2012. Net interest income 
was C$1,475m for 2012, a decrease of C$81m, or 5.2%, compared with 2011. The 
decreases are primarily due to lower average retail and consumer finance loan 
balances following the strategic refocus of these businesses and reduced net 
interest margin.

Net fee income for the fourth quarter of 2012 was C$154m, decreases of C$3m, 
or 1.9%, compared with the fourth quarter of 2011 and third quarter of 2012. 
Net fee income for 2012 was C$601m, a decrease of C$43m, or 6.7% compared with 
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 fees from the full service retail brokerage business, net fee income 
for the fourth quarter of 2012 and full year 2012 increased by C$14m and C$47m 
respectively compared with the same periods last year, as a result of 
customers investing an additional C$1.4bn through our wealth management 
business, and higher fees from credit facilities driven by growth in 
authorized commercial credit facilities and transaction volume. The decrease 
compared with the prior quarter is due to higher credit card reward program 
costs associated with increased utilization.

Net trading income for the fourth quarter of 2012 was C$45m, an increase of 
C$14m, or 45.2%, compared with the fourth quarter of 2011, and a decrease of 
C$3m, or 6.3%, compared with the third quarter of 2012. Net trading income for 
2012 was C$180m, an increase of C$30m, or 20.0% compared with 2011.

The increase compared with the same quarter last year is due to improved 
trading performance in rates and credit products, partially offset by a 
decrease in foreign exchange revenues driven on lower volume in a less 
volatile market.

The increase in net trading income compared with the prior year is due to 
improved trading performance in rates and credit products, 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 
fourth quarter of 2012 was a net loss of C$3m, compared with C$nil for the 
fourth quarter of 2011, and compared with a net loss of C$8m for the third 
quarter of 2012. Net loss from financial instruments designated at fair value 
for 2012 was C$27m, compared with a net gain of C$l6m for 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. The losses represent the narrowing 
of credit spreads in 2012 which increased the fair value of these liabilities.

Gains less losses from financial investments for the fourth quarter of 2012 
was C$4m, marginally higher compared with the fourth quarter of 2011 and the 
third quarter of 2012. Gains less losses from financial investments for 2012 
were C$52m, an increase of C$9m, or 20.9% compared with 2011, due to a higher 
net gain on the disposals of available-for-sale financial investments.

Other operating income for the fourth quarter of 2012 was a loss of C$26m, 
compared to a loss of C$22m for the fourth quarter of 2011, and compared with 
an income of C$15m for the third quarter of 2012. Other operating income for 
2012 was C$24m, an increase of C$11m compared with 2011.

The decrease in other operating income compared with the prior quarter is due 
to a write down in the value of investment property of C$42m in the fourth 
quarter of 2012. The increase compared with the prior year is mainly due to a 
higher write down by C$17m in the value of investment property in 2011.

Gain on the sale of the full service retail brokerage business. The sale of 
the full service retail brokerage business closed effective 1 January, 2012. 
The bank recorded a gain of C$84m in the first quarter of 2012, net of assets 
disposed of and directly related costs. In the fourth quarter of 2012, the 
bank satisfied certain conditions relating to the sale which allowed the 
recognition of a further amount of C$4m.

Loan impairment charges and other credit risk provisions for the fourth 
quarter of 2012 were C$33m, a decrease of C$21m, or 38.9% compared with the 
fourth quarter of 2011, and a decrease of C$38m, or 53.5%, compared with the 
third quarter in 2012. Loan impairment charges and other credit risk 
provisions for the year ended 31 December 2012 were C$211m, an increase of 
C$14m, or 7.1% compared with 2011.

The decreases in loan impairment charges and other credit risk provisions 
compared with the same quarter last year and the prior quarter was mainly due 
to a release of collectively assessed loan impairment allowances due to 
improved credit quality. Also contributing to the decrease compared with the 
prior quarter were lower levels of specific loan impairment charges within the 
commercial loan portfolio.

The increase compared with the prior year was due to higher levels of specific 
loan impairment charges within retail loan portfolios and the reversal of 
impairment charges relating to an available-for-sale investment within 2011.

Total operating expenses (excluding restructuring charges) for the fourth 
quarter of 2012 were C$275m, a decrease of C$48m, or 14.9%, compared with the 
fourth quarter of 2011, and an increase of C$19m, or 7.4% compared with the 
third quarter of 2012. Total operating expenses for 2012 were C$1,113m, a 
decrease of C$146m, or 11.6% compared with 2011.

The decrease compared with the same quarter last year is mainly due to cost 
reductions relating to the sale of the full service retail brokerage business 
and wind-down of the consumer finance business in 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 increase compared with the prior 
quarter is mainly due to a write off of internally developed software costs of 
C$5m and product support costs in the fourth quarter of 2012.

The decrease compared with the prior year is due to cost reductions relating 
to the sale of the full service retail brokerage business and wind-down of the 
consumer finance business in 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 2011.

Restructuring charges of C$36m were recognized in 2012 mainly relating to the 
wind-down of the consumer finance business compared with C$14m in 2011 
relating to sale of the full service retail brokerage business.

Income tax expense. The effective tax rate in the fourth quarter of 2012 was 
29.5%, compared with 27.0% in the fourth quarter of 2011 and 26.4% in the 
third quarter of 2012. The effective tax rate for the year ended 31 December 
2012 was 26.9%, compared with 26.4% in 2011.

The higher effective tax rates for the fourth quarter of 2012 and full year 
2012 were mainly due to the negative impact of temporary differences reversing 
at a lower rate following a decrease in the statutory tax rate in 2012. In 
addition, the increase in the full year 2012 effective tax rate was partially 
offset by a lower statutory tax rate and a lower effective tax rate applied to 
the gain of the sale of the full service retail brokerage business.

Statement of Financial Position

Total assets at 31 December 2012 were C$80.7bn, an increase of C$0.6bn from 
C$80.1bn at 31 December 2011, mainly due to increases of C$1.2bn in financial 
investments, C$1.2bn in loans and advances to customers, C$0.7bn in trading 
assets, and C$0.6bn in acceptances offset by a decrease in loans and advances 
to banks of C$3bn. 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$1.0bn respectively.

Liquid assets comprise high grade financial investments and reverse repurchase 
agreements. Liquid assets increased to C$24.3bn at 31 December 2012, compared 
with C$23.1bn at 31 December 2011 mainly as a result of growth in financial 
investments.

Total customer accounts at 31 December 2012 were C$48.3bn, an increase of 
C$1.7bn from C$46.6bn at 31 December 2011, mainly due to increases in 
repurchase agreements. Debt securities in issue at 31 December 2012 were 
C$12bn, a decrease of C$1.3bn from C$13.3bn at 31 December 2011, primarily due 
to lower balances held in bearer note deposits of C$1.7bn, partially offset by 
an increase of C$0.5bn in wholesale funding.

Total assets under administration

Total assets under administration were C$19.5bn at 31 December 2012, a 
decrease of C$7.9bn from C$27.4bn at 31 December 2011, primarily due to sale 
of the full service retail brokerage business. Excluding the full service 
retail brokerage business' funds under management, total assets under 
administration increased by C$2.7bn compared with 31 December 2011.

Business Performance in the Fourth Quarter of 2012

Commercial Banking

Profit before income tax expense for the fourth quarter of 2012 was C$121m, an 
increase of C$11m compared with the fourth quarter of 2011, and a decrease of 
C$24m compared with the third quarter of 2012. Profit before income tax 
expense increased compared with the fourth quarter of 2011 due to lower loan 
impairment charges from a release of collectively assessed loan impairment 
allowances and lower specific loan impairment charges following improved 
credit quality within loan portfolios, higher net fee income driven by growth 
in authorized credit facilities and transaction volume, partially offset by 
lower net interest income as a result of lower net interest margin in a 
prolonged low interest rate environment, and increased operating expenses 
driven by higher marketing and product support costs. Profit before income tax 
expense decreased compared with the prior quarter due a write down of the 
value of an investment property and increased operating expenses driven by 
higher marketing and product support costs, partially offset by a reduction in 
loan impairment charges from a release of collectively assessed loan 
impairment provisions and lower specific loan impairment charges following 
improved credit quality within loan portfolios.

Profit before income tax expense for 2012 was C$573m, an increase of C$42m, or 
7.9%, compared with 2011. Profit before income tax expense increased due to 
higher net fee income from credit facilities, higher net operating income as a 
result of a larger write down by C$17m in the value of investment property in 
2011 and reduced operating expenses driven by cost reduction efforts. The 
increase was partially offset by reduced net interest income as a result of 
lower net interest margin in a prolonged low interest rate environment.

Global Banking and Markets

Profit before income tax expense for the fourth quarter of 2012 was C$69m, an 
increase of C$2m compared with the fourth quarter of 2011, and little changed 
compared with the third quarter of 2012. Profit before income tax expense 
increased compared with the same quarter of 2011 due to improved trading 
performance in rates and credit products, partially offset by a decrease in 
foreign exchange revenues driven by lower volume in a less volatile market and 
higher operating expenses resulting from increased product support costs.

Profit before income tax expense for 2012 was C$309m, an increase of C$35m, or 
12.8%, compared with 2011. The increase in profit before income tax expense is 
due to higher net trading income driven by improved trading performance in 
rates and credit products, higher gains on the disposal of available-for-sale 
financial investments, improved net fee income driven by higher debt 
underwriting and derivative sales fees, partially offset by increased 
operating expenses resulting from increased product support costs.

Retail Banking and Wealth Management

Profit before income tax expense for the fourth quarter of 2012 was C$4m, an 
increase of C$11m compared with the fourth quarter of 2011, and a decrease of 
C$10m compared with the third quarter of 2012. Profit before income tax 
expense increased compared with the same quarter of 2011 due to the inclusion 
of a C$14m restructuring provision for the sale of the full service retail 
brokerage business in the fourth quarter of 2011. The increase in profit was 
offset by lower net interest income as a result of lower net interest margin 
in a prolonged low interest rate environment and higher net interest income 
and net fee income in the fourth quarter of 2011 attributable to the full 
service retail brokerage business. Profit before income tax expense decreased 
compared with the prior quarter primarily as a result of a C$5m write off of 
internally developed software costs.

Profit before income tax expense for 2012 was C$118m, an increase of C$44m, or 
59.5%, compared with 2011. Profit before income tax for 2012 included a gain 
on sale of C$80m and restructuring charges of C$2m attributable to the full 
service retail brokerage business, and a write off of internally developed 
software costs of C$4m. Profit before income tax expense for 2011 included a 
recovery of fees from an HSBC affiliate of C$28m, restructuring charges of 
C$14m and an operating loss of C$3m attributable to the full service retail 
brokerage business, and a write off of internally developed software costs of 
C$16m. Excluding the effect of these items, profit before income tax expense 
for 2012 was C$44m, a decrease of C$35m compared with 2011 mainly due a 
reduction in net interest income as a result of lower average retail loan 
balances following the strategic refocus of the business and lower net 
interest margin.

Consumer Finance

In March 2012, HSBC Financial Corporation Limited announced the wind-down of 
its 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 and other 
staff related costs, onerous leases as well as other contracts, and impairment 
of fixed assets including leasehold improvements.

Profit before income tax expense was C$30m for the fourth quarter of 2012, an 
increase of C$13m, or 76.5%, compared with the fourth quarter of 2011 and an 
increase of C$2m, or 7.1%, compared with the third quarter of 2012. Profit 
before income tax expense increased compared with the fourth quarter of 2011 
mainly as a result of lower operating expenses driven by the wind-down of the 
business including reduced staff, infrastructure charges and other overhead 
expenses and lower loan impairment charges, partially offset by lower net 
interest income on declining customer loan balances. Profit before income tax 
expense increased compared with the prior quarter mainly due to reduced loan 
impairment charges driven by an improvement in credit quality, offset by lower 
net interest income and net fee income as a result of declining customer loan 
balances and diminishing business activity.

Profit before income tax expense for 2012 was C$77m, an increase of C$16m, or 
26.2%, compared with 2011. Excluding the restructuring costs, profit before 
income tax expense was C$111m, an increase of C$50m compared with 2011. The 
increase is mainly due to lower operating expenses driven by reduced staff, 
infrastructure charges and other overhead expenses, which is partially offset 
by lower net interest income on declining customer loan balances and higher 
loan impairment charges.

Other

Activities or transactions which do not relate directly to the above global 
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. A loss before income tax expense of C$3m was recorded for the 
fourth quarter of 2012, compared with a loss of C$2m for the fourth quarter of 
2011 and a loss of C$11m for the third quarter of 2012. Profit before income 
tax expense for 2012 was a loss of C$39m, compared with a profit of C$16m for 
2011. The variances from comparative periods are primarily due to the impact 
of the items noted above.

Dividends

During the fourth quarter of 2012, the bank declared and paid C$82m in 
dividends on HSBC Bank Canada common shares, an increase of C$7m from the same 
period in 2011. The bank declared and paid C$330m in dividends on common 
shares during the year ended 31 December 2012, an increase of C$30m 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 March 2013, to shareholders of 
record on 15 March 2013.

IFRS and related non-IFRS measures

HSBC Bank Canada 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 6,600 offices in 81 countries and 
territories and assets of US$2,693bn at 31 December 2012, the HSBC Group is 
one of the world's largest banking and financial services organizations.

Copies of HSBC Bank Canada's Annual Report and Accounts 2012 will be sent to 
shareholders in March 2013.

 HSBC Bank                                                    Summary
Canada
                                                              
                            
                             Quarter ended              Year ended
                      31         31          30         31         31
                December   December   September   December   December
                    2012       2011        2012       2012       2011

For the period                                              
(C$m)                                                                

Profit before                                               
income tax
expense              221        185         246      1,038        956

Net operating                                               
income before
loan impairment
charges


and other
credit risk
provisions           526        562         572      2,393      2,422 
Profit                                                      
attributable to
common
shareholders         140        118         162        690        633 
                                                                  
At period-end                                               
(C$m)                                                                 
Shareholders'                                               
equity             5,132      4,973       5,118                       
Core tier 1                                                 
capital ((1))      3,877      3,555       3,798                       
Risk-weighted                                               
assets            36,668     35,322      36,818                       
Loans and                                                   
advances to
customers (net
of impairment 
allowances)   45,572     44,357      46,309                       
Customer                                                    
accounts          48,304     46,614      47,713                       
                                                                  
Capital ratios                                              
(%)                                                                   
Tier 1 ratio (                                              
(2))                13.8       13.4        13.5       13.8       13.4 
Total capital                                               
ratio ((2))         16.0       16.0        15.8       16.0       16.0 
Core tier 1                                                 
capital ratio (
(1))                10.6       10.1        10.3       10.6       10.1 
                                                                  
Performance                                                 
ratios (%) (
(1))                                                                  
Return on                                                   
average common
equity              13.1       11.8        15.8       16.8       17.0 
Post-tax return                                             
on average
total assets        0.67       0.57        0.77       0.80       0.77 
Post-tax return                                             
on average
risk-weighted
assets               1.5        1.3         1.8        1.9        1.8 
                                                                  
Credit coverage                                             
ratio (%)                                                             
Loan impairment                                             
charges as a
percentage of
total 
operating
income               6.3        9.6        12.4        8.8        8.1 
Loan impairment                                             
charges as a
percentage of
average 
gross
customer
advances and
acceptances          0.3        0.4         0.5        0.4        0.4 
Total                                                       
impairment
allowances
outstanding as
a 
percentage
of impaired
loans and
acceptances at
the 
period end      59.9       61.3        62.8       59.9       61.3 
                                                                  
Efficiency and                                              
revenue mix
ratios (%) (
(1))                                                                  
Cost efficiency                                             
ratio               52.3       57.5        44.8       48.0       52.6 
Adjusted cost                                               
efficiency
ratio               52.0       57.5        44.1       47.5       52.9 
As a percentage                                             
of total
operating
income:                                                               
- net                                                     
interest income     66.2       69.9        62.4       61.6       64.2 
- net fee                                                 
income              29.3       27.9        27.4       25.1       26.6 
- net trading                                             
income               8.6        5.5         8.4        7.5        6.2 


                                                                     

Financial                                                   
ratios (%) (
(1))                                                                 

Ratio of                                                    
customer
advances to
customer
accounts            94.3       95.2        97.1                      

Average total                                               
shareholders'
equity to
average total
    assets           6.2        6.0         6.0                      
                                                                     

Total assets                                                
under
administration
(C$m)                                                                

Funds under                                                 
management (
(3))              18,327     26,383      18,097                      

Custodial                                                   
accounts           1,133        967         854                      

Total assets                                                
under
administration    19,460     27,350      18,951                      

1   These are non-IFRS amounts or non-IFRS measures. Please refer to
    the discussion outlining the use of non-IFRS measures in the "IFRS
    and related non-IFRS measures" section of this document.

2   Calculated using guidelines issued by the Office of the
    Superintendent of Financial Institutions Canada in accordance with
    the Basel II capital adequacy framework.

3   Funds under management at 31 December 2011include funds managed in
    the full service retail brokerage business which was sold on 1
    January 2012 of C$10.6bn.
     
                                       

HSBC Bank                              Consolidated Income Statement
Canada                                                    (Unaudited)
                                                                     
                            
                             Quarter ended              Year ended

Figures in C$m        31         31          30         31         31
(except per     December   December   September   December   December
share amounts)      2012       2011        2012       2012       2011
                                                              

Interest income      534        585         551      2,236      2,366

Interest                                                    
expense            (186)      (192)       (194)      (761)      (810)
                                                              

Net interest                                                
income               348        393         357      1,475      1,556
                                                              

Fee income           178        185         175        689        734

Fee expense         (24)       (28)        (18)       (88)       (90)
                                                              

Net fee income       154        157         157        601        644
                                                              

Trading income                                              
excluding net
interest income       34         23          38        143        130

Net interest                                                
income on
trading
activities            11          8          10         37         20
                                                              

Net trading                                                 
income                45         31          48        180        150
                                                              

Net gain/(loss)                                             
from financial
instruments
designated at
fair
    value            (3)          -         (8)       (27)         16

Gains less                                                  
losses from
financial
investments            4          3           3         52         43

Other operating                                             
income              (26)       (22)          15         24         13

Gain on the                                                 
sale of the
full service
retail
brokerage
business               4          -           -         88          -

Net operating                                               
income before
loan impairment


charges and
other credit
risk provisions      526        562         572      2,393      2,422 
Loan impairment                                             
charges and
other credit
risk provisions     (33)       (54)        (71)      (211)      (197) 
                                                           
Net operating                                               
income               493        508         501      2,182      2,225 
Employee                                                    
compensation
and benefits       (150)      (178)       (147)      (650)      (790) 
General and                                                 
administrative
expenses           (109)      (109)        (96)      (409)      (396) 
Depreciation of                                             
property, plant
and equipment        (8)        (4)        (10)       (35)       (33) 
Amortization of                                             
intangible
assets               (8)       (18)         (3)       (19)       (40) 
Restructuring                                               
charges                -       (14)           -       (36)       (14) 
                                                           
Total operating                                             
expenses           (275)      (323)       (256)    (1,149)    (1,273) 
                                                           
Operating                                                   
profit               218        185         245      1,033        952 
Share of profit                                             
in associates          3          -           1          5          4 
                                                           
Profit before                                               
income tax
expense              221        185         246      1,038        956 
Income tax                                                  
expense             (64)       (50)        (65)      (277)      (252) 
                                                           
Profit for the                                              
period               157        135         181        761        704 
                                                                  
Profit                                                      
attributable to
common
shareholders         140        118         162        690        633 
Profit                                                      
attributable to
preferred
shareholders          15         15          16         61         61 
Profit                                                      
attributable to
shareholders         155        133         178        751        694 
Profit                                                      
attributable to
non-controlling
interests              2          2           3         10         10 


                                                              

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

Basic earnings                                              
per common
share               0.28       0.24        0.33       1.38       1.27
                                                              
                           

HSBC Bank Canada          Consolidated Statement of Financial Position
                          (Unaudited)
                                                
                                                

Figures in C$m                At 31 December             At 31 December
                                        2012                       2011
                                                                       

ASSETS                                                                 
                                                                       

Cash and balances at                      56                         77
central bank

Items in the course of                    90                        104
collection from other
banks

Trading assets                         5,272                      4,587

Derivatives                            1,810                      2,203

Loans and advances to                  1,480                      4,530
banks

Loans and advances to                 45,572                     44,357
customers

Financial investments                 20,411                     19,168

Other assets                             910                        559

Prepayments and accrued                  165                        225
income

Customers' liability                   4,737                      4,059
under acceptances

Property, plant and                      140                        123
equipment

Goodwill and intangibles                  71                         76
assets
                                                

Total assets                          80,714                     80,068
                                                                       

LIABILITIES AND EQUITY                                                 
                                                                       

Liabilities                                                            

Deposits by banks                      2,173                      1,329

Customer accounts                     48,304                     46,614

Items in the course of                    71                        110
transmission to other
banks

Trading liabilities                    2,672                      2,996

Financial liabilities                    436                      1,006
designated at fair value

Derivatives                            1,415                      1,746

Debt securities in issue              11,980                     13,327

Other liabilities                      2,384                      2,485

Acceptances                            4,737                      4,059

Accruals and deferred                    528                        566
income

Retirement benefit                       328                        301
liabilities

Subordinated liabilities                 324                        326
                                                

Total liabilities                     75,352                     74,865
                                                                       

Equity                                                                 

Preferred shares                         946                        946

Common shares                          1,225                      1,225

Other reserves                           281                        439

Retained earnings                      2,680                      2,363
                                                

Total shareholders'                    5,132                      4,973
equity

Non-controlling interests                230                        230
                                                

Total equity                           5,362                      5,203
                                                

Total equity and                      80,714                     80,068
liabilities
                                                



HSBC Bank               Condensed Consolidated Statement of Cash Flows
Canada                                                      (Unaudited) 


                                                                       
                         
                            Quarter ended                 Year ended

Figures in C$m       31         31          30         31  
               December   December   September   December   31 December
                   2012       2011        2012       2012          2011
                                                                       

Cash flows                                                 
generated
from/(used
in):                                                                   

  - operating                                              
  activities    (1,088)      (334)       1,398    (1,277)         1,694

  - investing                                              
  activities      1,113        959     (1,469)    (1,446)       (3,049)

  - financing                                              
  activities       (99)       (92)       (102)      (401)         (371)
                                                           

Net increase/                                              
(decrease) in
cash and cash
equivalents        (74)        533       (173)    (3,124)       (1,726)

Cash and cash                                              
equivalents,
beginning of
period            1,827      4,344       2,000      4,877         6,603
                                                             

Cash and cash                                              
equivalents,
end of period     1,753      4,877       1,827      1,753         4,877
                                                                       

Represented                                                
by:                                                                    

  - Cash and                                               
  balances at
  central bank       56         77          62         56            77

  - Items in                                               
  the course
  of
  transmission
  to other
  banks, net         19        (6)       (217)         19           (6)

  - Loans and                                              
  advances to
  banks of one
  month or
  less            1,480      4,530       1,627      1,480         4,530

  - Treasury                                               
  bills and
  certificates
  of deposits
  of three
  months or
  less              198        276         355        198           276
                                                             

Cash and cash                                              
equivalents,
end of period     1,753      4,877       1,827      1,753         4,877
                                                           
                                 

HSBC Bank               
Canada                        Global Business Segmentation (Unaudited)
                                                                      
                                                            

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

Figures in          31         31          30         31  
C$m           December   December   September   December   31 December
                  2012       2011        2012       2012          2011
                                                                      

Commercial                                                
Banking                                                               

Net interest                                              
income             177        189         175        709           727

Net fee                                                   
income              77         66          78        298           268

Net trading                                               
income               6          5           9         31            24

Other                                                     
operating
income/
(expense) (
(1))              (40)       (36)           3       (25)          (41)

Net operating                                             
income before
loan
impairment
charges


and other
credit risk
provisions         220        224         265      1,013           978 
Loan                                                      
impairment
charges and
other credit
risk
provisions         (6)       (23)        (36)       (79)          (78) 
Net operating                                             
income             214        201         229        934           900 
Total                                                     
operating
expenses (
(1))              (96)       (91)        (85)      (366)         (373) 
Operating                                                 
profit             118        110         144        568           527 
Share of                                                  
profit in
associates           3          -           1          5             4 
                                                         
Profit before                                             
income tax
expense            121        110         145        573           531 
                                                                   
Global
Banking and                                               
Markets                                                                
Net interest                                              
income              40         38          41        167           165 
Net fee                                                   
income              24         23          25         87            79 
Net trading                                               
income              28         17          28        106            90 
Gains less
losses from                                               
financial
investments          3          3           3         51            40 
Other
operating                                                 
income               1          -           -          2             2 
Gain on the
sale of the
full service                                              
retail
brokerage
business             -          -           -          8             - 
Net operating
income before
loan
impairment                                                
charges 
and other
credit risk
provisions          96         81          97        421           376 
Loan
impairment
charges and                                               
other credit
risk
provisions           -          1           -          -             1 
Net operating                                             
income              96         82          97        421           377 
Total
operating                                                 
expenses          (27)       (15)        (27)      (112)         (103) 
                                                         
Profit before
income tax                                                
expense             69         67          70        309           274 
                                                                   
Retail
Banking and                                               
Wealth
Management                                                             
Net interest                                              
income              82         98          85        364           399 
Net fee                                                   
income              44         57          42        172           255 
Net trading                                               
income               3          4           3         12            20 
Other
operating                                                 
income               4          3           3         12             9 
Gain on the
sale of the
full service                                              
retail
brokerage
business             4          -           -         80             - 
Net operating
income before
loan
impairment                                                
charges 
and other
credit risk
provisions         137        162         133        640           683 
Loan
impairment
charges and                                               
other credit
risk
provisions         (8)        (7)         (7)       (28)          (20) 
Net operating                                             
income             129        155         126        612           663 
Total
operating
expenses                                                  
(excluding
restructuring
charges)         (125)      (148)       (112)      (492)         (575) 
Restructuring                                             
charges              -       (14)           -        (2)          (14) 
                                                         
Profit/(loss)
before income                                             
tax expense          4        (7)          14        118            74 
                                                         
Consumer                                                              
Finance 
Net interest        57         74          64        266           282
income 
Net fee              9         11          12         44            42
income 
Gains less           1          -           -          1             3
losses from
financial
investments 
Other                1          -           1          4             5
operating
income 
Net operating
income before
loan
impairment
charges 
and other
credit risk
provisions          68         85          77        315           332 
Loan              (19)       (25)        (28)      (104)         (100)
impairment
charges and
other credit
risk
provisions 
Net operating       49         60          49        211           232
income 
Total             (19)       (43)        (21)      (100)         (171)
operating
expenses
(excluding
restructuring
charges) 
Restructuring        -          -           -       (34)             -
charges 
                                                         
Profit before       30         17          28         77            61
income tax
expense 
                                                                   
Other                                                                  
Net interest       (8)        (6)         (8)       (31)          (17)
expense 
Net trading          8          5           8         31            16
income 
Net gain/          (3)          -         (8)       (27)            16
(loss) from
financial
instruments
designated at
fair value 
Other                8         11           8         31            38
operating
income ((1)) 
Net operating        5         10           -          4            53
income/
(expense) 
Total              (8)       (12)        (11)       (43)          (37)
operating
expenses (
(1)) 


                                                            

Profit/(loss)      (3)        (2)        (11)       (39)            16
before income
tax expense

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' global business segment. Effective
    for the third quarter of 2012, the call center expenses and related
    recharge income have been reclassified from the 'Other' global
    business segment to the 'Commercial Banking' global business
    segment in order to more appropriately reflect these transactions
    within the global business segment benefitting from these services.
    Comparative data has been reclassified to conform with current
    presentation. Accordingly, expenses included in 'Total operating
    expenses' of C$4m and C$15m for the quarter ended 31 December 2011
    and for the year ended 31 December 2011 respectively, were
    reclassified. In addition, recharge income included in 'Other
    operating income' of C$4m and C$14m for the quarter ended 31
    December 2011 and for the year ended 31 December 2011 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/March2013/04/c9837.html

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

-0- Mar/04/2013 09:15 GMT


 
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