HSBC Bank Canada Second Quarter 2013 Results

VANCOUVER, Aug. 5, 2013 /CNW/ - 


    --  Profit was C$130m for the quarter ended 30 June 2013, a
        decrease of 35% compared with the same period in 2012. Profit
        was C$319m for the first half of 2013, a decrease of 24%
        compared with the same period in 2012.
    --  Profit attributable to common shareholders was C$113m for the
        quarter ended 30 June 2013, a decrease of 39% compared with the
        same period in 2012. Profit attributable to common shareholders
        was C$284m for the first half of 2013, a decrease of 26%
        compared with the same period in 2012.
    --  Return on average common equity was 10.6% for the quarter ended
        30 June 2013 and 13.4% for the first half of 2013 compared with
        18.4% and 19.1% respectively for the same periods in 2012.
    --  The cost efficiency ratio was 50.1% for the quarter ended 30
        June 2013 and 47.4% for the first half of 2013 compared with
        45.4% and 48.1% respectively for the same periods in 2012.
    --  Total assets were C$84.3bn at 30 June 2013 compared with
        C$82.1bn at 30 June 2012.
    --  Total assets under administration increased to C$20.3bn at 30
        June 2013 from C$18.3bn at 30 June 2012.
    --  Common equity tier 1 capital ratio was 10.8%, tier 1 ratio
        13.6% and the total capital ratio 15.5% at 30 June 2013
        determined using regulatory guidelines in accordance with the
        Basel III capital adequacy framework adopted with effect from 1
        January 2013.

The abbreviations "C$m" and "C$bn" represent millions and billions of Canadian 
dollars, respectively.

Overview

HSBC Bank Canada recorded profit of C$130m for the second quarter of 2013, a 
decrease of C$71m, or 35%, compared with the second quarter of 2012, and a 
decrease of C$59m, or 31%, compared with the first quarter of 2013. Profit for 
the first half of 2013 was C$319m, a decrease of C$101m, or 24% compared with 
the first half of 2012. Profit attributable to common shareholders was C$113m 
for the second quarter of 2013, a decrease of C$71m, or 39%, compared with the 
second quarter of 2012, and a decrease of C$58m, or 34%, compared with the 
first quarter of 2013. Profit attributable to common shareholders was C$284m 
for the first half of 2013, a decrease of C$101m, or 26% compared with the 
first half of 2012.

The decrease in profit compared with the same quarter last year and the prior 
quarter is mainly due to lower other operating income as result of a reduction 
in fair value of an investment property held for sale, higher loan impairment 
charges from increased specific provisions, and lower gains on the disposal of 
available-for-sale financial investments. In addition, profit decreased 
compared with the same quarter last year due to lower net interest income from 
narrowing net interest spread, partially offset by lower operating expenses as 
a result of cost control and continued delivery of our organizational 
effectiveness programmes, which resulted in sustainable cost savings.

The first half of 2012 included a gain on the sale of the full service 
brokerage business of C$84m and a restructuring charge of C$36m mostly 
relating to the wind-down of the consumer finance business. Excluding the 
impact of these items and their effect on income tax expense, profit for the 
first half of 2013 decreased by C$54m, or 11%, compared with the same period 
last year mainly due to lower net interest income from narrowing net interest 
spread and lower other operating income as result of a reduction in fair value 
of an investment property held for sale. The decrease is partially offset by 
lower operating expenses as a result of cost control and continued delivery of 
our organizational effectiveness programmes, which resulted in sustainable 
cost savings, higher net trading income as a result of a change in valuation 
methodology on derivatives to reflect evolving market practises and higher net 
fee income from growth in commercial credit facilities and funds under 
management.

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

"The bank continues to report a good level of profitability amid a challenging 
interest rate environment as a result of our focus on building our core 
businesses, deepening client relationships, and continued improvements in the 
efficiency of our operations in Canada, consistent with HSBC's global 
strategy. The growth of commercial credit facilities and funds under 
management in the first half of 2013, in a low growth economy, demonstrates 
the value our customers place on our ability to connect internationally-minded 
Canadians to opportunities around the world."

Analysis of Consolidated Financial Results for the Second Quarter of 2013

Net interest income for the second quarter of 2013 was C$340m, a decrease of 
C$32m, or 9%, compared with the second quarter of 2012, and an increase of 
C$4m, or 1%, compared with the first quarter of 2013. Net interest income was 
C$676m for the first half of 2013, a decrease of C$94m, or 12%, compared with 
the same period in 2012. Net interest income decreased compared with 2012 
mainly due to declining loan balances in connection with the wind-down of the 
consumer finance business and lower net interest spread, partially offset by 
growth in average customer deposits. Net interest income increased compared to 
the prior quarter mainly due to deposit growth, partially offset by lower net 
interest spread and declining loan balances in connection with the wind-down 
of the consumer finance business.

Net fee income for the second quarter of 2013 was C$154m, an increase of C$7m, 
or 5%, compared with the second quarter of 2012, and an increase of C$8m, or 
6%, compared with the first quarter of 2013. Net fee income was C$300m for the 
first half of 2013, an increase of C$10m, or 3%, compared with the same period 
in 2012. The increases in net fee income were mainly due to a growth in 
commercial credit facilities and funds under management, partially offset by 
lower trustee fees.

Net trading income for the second quarter of 2013 was C$45m, a decrease of 
C$2m, or 4% compared with the second quarter of 2012, and a decrease of C$12m, 
or 21%, compared with the first quarter of 2013. Net trading income was C$102m 
for the first half of 2013, an increase of C$15m, or 17%, compared with the 
same period in 2012. The decreases compared with the same quarter in 2012 and 
the prior quarter is mainly due to declining customer spreads and trading 
volume related to foreign exchange products. In the first quarter of 2013, the 
bank implemented changes in the methodology in respect of credit and debit 
valuation adjustments on derivative contracts to reflect evolving market 
practises. The change in methodology, contributed to a further decrease 
compared with the prior quarter.Net trading income increased compared with the 
first half of 2012, mainly as a result of the change in methodology previously 
noted. In addition, net trading income in the first half of 2012 was adversely 
impacted by losses caused by the narrowing of credit spreads on our own debt 
instruments.

Net expense from financial instruments designated at fair value for the second 
quarter of 2013 was nil, a decrease of C$2m and C$3m respectively compared 
with the second quarter of 2012 and the first quarter of 2013. Net expense 
from financial instruments designated at fair value was C$3m for the first 
half of 2013, a decrease of C$13m, compared with the same period in 2012. The 
bank designates certain of its own subordinated debentures to be recorded at 
fair value. Income and expense are largely as a result of the widening or 
narrowing of credit spreads decreasing or increasing the fair value of these 
subordinated debentures, respectively.

Gains less losses from financial investments for the second quarter of 2013 
were C$15m, a decrease of C$13m and C$20m respectively compared with the 
second quarter of 2012 and first quarter of 2013. Gains less losses from 
financial investments were C$50m for the first half of 2013, an increase of 
C$5m, or 11% compared with the same period in 2012. Gains less losses from 
financial investments decreased compared with the same quarter in 2012 and the 
prior quarter due to lower total gains realized from disposals of 
available-for-sale financial investments driven by balance sheet management 
activities. Gains less losses from financial investments increased compared 
with the first half of 2012 for similar reasons.

Other operating income for the second quarter of 2013 was a loss of C$23m, a 
decrease of C$45m and C$36m respectively compared with the second quarter of 
2012, and the first quarter of 2013. Other operating income was a loss of 
C$10m for the first half of 2013, a decrease of C$45m compared with the same 
period in 2012. The decreases are primarily due to a reduction in fair value 
of an investment property held for sale recorded in the second quarter of 2013.

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 as reported in the first half of 2012.

Loan impairment charges and other credit risk provisions for the second 
quarter of 2013 were C$84m, an increase of C$25m, or 42%, compared with the 
second quarter of 2012, and an increase of C$28m, or 50%, compared with the 
first quarter of 2013. Loan impairment charges and other credit provisions 
were C$140m for the first half of 2013, an increase of C$33m, or 31%, compared 
with the same period in 2012. The increases are primarily due to higher 
specific provisions notably in the energy and real estate sectors.

Total operating expenses (excluding restructuring charges) for the second 
quarter of 2013 were C$266m, a decrease of C$13m, or 5%, compared with the 
second quarter of 2012, and an increase of C$3m, or 1%, compared with the 
first quarter of 2013. Total operating expenses were C$529m for the first half 
of 2013, a decrease of C$58m, or 10%, compared with the same period in 2012. 
The decrease in total operating expenses compared with 2012 is as a result of 
cost control and continued delivery of our organizational effectiveness 
programmes, which resulted in sustainable cost savings of C$17m in the first 
half of 2013. Cumulative sustainable cost savings from 2011 to the end of 
the first half of 2013 are in excess of C$100m. The increase in total 
operating expenses compared with the prior quarter is due to a reduction in 
incentive provisions and software license credits recorded in the first 
quarter of 2013.

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 second quarter of 2013 was 
28.8%, compared with 27.5% in the second quarter of 2012 and 30.0% in the 
first quarter of 2013. The effective tax rate was 29.5% for the first half of 
2013, compared with 26.1% for the same period in 2012. The higher effective 
tax rates compared with the prior year was due to an increase in the statutory 
corporate income tax rate and a tax adjustment relating to prior periods in 
2013. Income tax expense in the first quarter 2013 included a tax adjustment 
relating to prior periods that resulted in a higher effective tax rate 
compared with the second quarter of 2013.

Statement of Financial Position

Total assets at 30 June 2013 were C$84.3bn, an increase of C$3.6bn from 
C$80.7bn at 31 December 2012, mainly due to increases of C$2.2bn in both 
trading assets and loans and advances to banks, and C$0.3bn in derivative 
assets. The increase was partially offset by a decrease of C$0.6bn in loans 
and advances to customers and C$0.6bn in financial investments. The growth in 
trading assets is due to a higher holding of government and agency bonds as a 
result of increased trading activity in the rates business and a higher 
holding of pending settlement trading accounts. The growth in loans and 
advances to banks is due to a higher holding of reverse repurchase agreements 
from increased liquidity and balance sheet management activities. Excluding 
reverse repurchase agreements, loans and advances to banks decreased 
marginally by C$0.2bn. Loans and advances to customers decreased by C$1.3bn 
mainly as a result of declining mortgage balances and consumer finance loan 
balances as a result of the decision to wind-down the consumer finance 
business in Canada, partially offset by an increase of C$0.7bn in reverse 
repurchase agreements from increased liquidity and balance sheet management 
activities.

Liquid assets increased to C$26.8bn at 30 June 2013, compared to C$24.3bn at 
31 December 2012 mainly as a result of deposit growth, debt issuance and 
declining mortgage and consumer finance loan balances. Refer to the 'Use of 
non-IFRS financial measures' for a definition of liquid assets.

Total liabilities at 30 June 2013 were C$79.0bn, an increase of C$3.7bn from 
C$75.3bn at 31 December 2012, mainly due to increases of C$1.5bn in trading 
liabilities, C$1.3bn in debt securities in issue and C$1.2bn in customer 
accounts, partially offset by a decrease of C$0.6bn in deposits by banks. The 
increase in trading liabilities is as a result of increased activity in the 
rates business. The increase in debt securities in issue is due to C$2.5bn 
wholesale term funding issuance during the first half of 2013, partially 
offset by $1.1bn in secured funding maturities. The increase in customer 
accounts is mainly due to growth in savings, deposits and current accounts, 
partially offset by lower repurchase agreements from balance sheet management 
activities. The decrease in deposit by banks is mainly due to lower repurchase 
agreements and treasury money market deposits from balance sheet management 
activities.

Business Performance in the Second Quarter of 2013

Commercial Banking

Profit before income tax expense was C$70m for the second quarter of 2013, a 
decrease of C$78m, or 53%, compared with the second quarter of 2012, and a 
decrease of C$53m, or 43%, compared with the first quarter of 2013. Profit 
before income tax expense was C$193m for the first half of 2013, a decrease of 
C$112m, or 37%, compared with the same period in 2012. The decrease in profit 
before income tax is mainly due to lower operating income from a reduction in 
fair value of an investment property held for sale, higher loan impairment 
charges and other credit risk provisions, notably in the energy and real 
estate sectors as well as a decline in net interest income from lower net 
interest spread. The decrease is partially offset by higher net fee income 
resulting from growth in credit facilities and transaction volume.

Global Banking and Markets

Profit before income tax expense was C$67m for the second quarter of 2013, a 
decrease of C$17m, or 20%, compared with the second quarter of 2012 and a 
decrease of C$36m, or 35%, compared with the first quarter of 2013. Profit 
before income tax expense was C$170m for the first half of 2013, unchanged 
compared with the same period in 2012. The decrease in profit before income 
tax compared with both the same quarter last year and the prior quarter is due 
to lower total gains realized from disposals of available-for-sale financial 
investments and lower net trading income as a result of lower foreign exchange 
customer revenue and a change in valuation methodology on derivatives in the 
first quarter of 2013.

Retail Banking and Wealth Management

Profit before income tax expense for the second quarter of 2013 was C$18m, an 
increase of C$12m compared with second quarter of 2012, and an increase of 
C$4m, or 29%, compared with the first quarter of 2013. Profit before income 
tax expense was C$32m for the first half of 2013, a decrease of C$66m, or 67%, 
compared with the same period in 2012. Profit before income taxes increased 
compared with the same quarter last year mainly due to lower total operating 
expenses as a result of cost control and continued delivery of our 
organizational effectiveness programmes. Profit before income taxes increased 
compared with the prior quarter mainly due to higher net fee income driven by 
sustained growth in customer investment through our wealth management 
business. Profit before income tax in the first half of 2012 benefitted from a 
gain on the sale of the full service retail brokerage business partially 
offset by related restructuring charges. Excluding these items, profit before 
income tax expense increased by C$8m compared with the first half of 2012 
mainly due to fee income growth and lower operating expenses as a result of 
cost control and continued delivery of our organizational effectiveness 
programmes, partially offset by lower net interest income due to a decline in 
average loan balances and lower net interest spread.

Consumer Finance

Profit before income tax expense was C$27m for the second quarter of 2013, a 
decrease of C$9m, or 25%, compared with the second quarter of 2012, and a 
decrease of C$8m, or 23%, compared with the first quarter of 2013. Profit 
before income tax expense was C$62m for the half year ended 30 June 2013, an 
increase of C$43m compared with the same period in 2012. Profit before income 
tax decreased compared with both the same quarter last year and the prior 
quarter due to lower net interest income driven by lower average loan balances 
following the decision in March 2012 to wind-down the consumer finance 
business in Canada. In the first half of 2012, $34m in restructuring costs 
were incurred relating to the wind-down. Excluding the restructuring costs, 
profit before income tax expense increased by $9m compared with the first half 
of 2012 mainly due to lower operating expenses and loan impairment charges, 
partially offset by lower net interest income as a result of declining average 
loan balances.

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 
subordinated debentures designated at fair value and 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 second quarter 
of 2013 was nil, compared with a profit of C$3m in the second quarter of 2012 
and a loss of C$6m in the first quarter of 2013. Profit before income tax 
expense was a loss of C$6m for the first half of 2013 compared with a loss of 
C$25m for the first half of 2012. The variances from comparative periods are 
primarily due to the impact of the items noted above.

Dividends

During the second quarter of 2013, the bank declared and paid C$90m in 
dividends on HSBC Bank Canada common shares, an increase of C$8m from the same 
period in 2012. The bank declared and paid C$180m in dividends on common 
shares during the first half of 2013, an increase of C$15m from the same 
period in 2012.

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 30 September 2013, for 
shareholders of record on 13 September 2013.

Use of non-IFRS financial measures

HSBC Bank Canada uses certain non-IFRS financial measures to assess its 
performance. Non-IFRS financial measures are not defined by IFRS and do not 
have standardized meanings that would ensure consistency and comparability 
between companies using these measures. The following non-IFRS financial 
measures are used throughout this document and are defined below:

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 and other credit risk 
positions for the period.

Assets under administration - These are assets administered by the bank on 
behalf of our customers. The bank does not recognise these assets on its 
consolidated statement of financial position because our customers are the 
beneficial owners.

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.

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.

Liquid assets - These assets include high grade financial investments and 
reverse repurchase agreements, of which a certain amount is pledged as 
collateral to secure recognized liabilities, and contingent obligations within 
payment and depository clearing systems.

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.

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 OSFI in accordance with the Basel III 
capital adequacy framework (2012: Risk weighted assets are calculated using 
the guidelines issued by OSFI in accordance with the Basel II capital adequacy 
framework).

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

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.

Caution concerning forward-looking statements

This document contains 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. By their very 
nature, these statements require us to make a number of assumptions and are 
subject to a number of inherent risks and uncertainties that may cause actual 
results to differ materially from those contemplated by the forward-looking 
statements. We caution you to not place undue reliance on these statements as 
a number of risk factors could cause our actual results to differ materially 
from the expectations expressed in such forward-looking statements. These risk 
factors - many of which are beyond our control and the effects of which are 
difficult to predict - that could cause such differences include: capital 
management, credit, liquidity and funding, market, structural, and operational 
risks all of which are discussed in the Risk Management section in 
Management's Discussion and Analysis of our Annual Report and Accounts 2012. 
Additional risk factors include: the impact of changes in laws and regulations 
including relating to the Dodd-Frank Wall Street Reform and Consumer 
Protection Act and the regulations issued and to be issued thereunder, the 
Basel Committee on Banking Supervision's global standards for capital and 
liquidity reform, over-the-counter derivatives reform in Canada; technological 
changes and security; global capital market activity; the effects of changes 
in government monetary and economic policies; changes in prevailing interest 
rates; inflation levels; and the general business and economic market 
conditions in Canada and in geographic areas where we operate. Canada is an 
extremely competitive banking environment, and pressures on our net interest 
spread 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 our revenues. 
We caution you that the risk factors disclosed above are not exhaustive, and 
there could be other uncertainties and potential risk factors not considered 
here which may adversely affect our results and financial condition. Any 
forward-looking statements in this document speak only as of the date of this 
document. We do not undertake any obligation to, and expressly disclaim any 
obligation to, update or alter our forward-looking statements, whether as a 
result of new information, subsequent events or otherwise, except as required 
under applicable securities legislation.

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 80 countries and 
territories and assets of US$2,645bn at 30 June 2013, the HSBC Group is one of 
the world's largest banking and financial services organizations.

Copies of HSBC Bank Canada's second quarter 2013 interim report will be sent 
to shareholders in August 2013.

HSBC Bank Canada                                               Summary
                       
                       
                                 Quarter ended        Half-year ended
                      30 June   30 June   31 March   30 June   30 June
                         2013      2012       2013      2013      2012

For the period (C$m)                                                  

Profit before income      182       277        269       451       567
tax expense 

Net operating income      531       614        584     1,115     1,295
before loan
impairment charges
and other credit risk
provisions 

Profit attributable       113       184        171       284       385
to common
shareholders 
                                                                      

At period-end (C$m)                                                   

Shareholders' equity    5,074     5,096      5,218                    

Loan and advances to   44,946    46,126     46,003                    
customers (net of
impairment
allowances) 

Customer accounts      49,505    47,097     48,184                    
                                                                      

Capital measures(1)                                                   

Common equity tier 1     10.8       n/a       11.1                    
capital ratio (%) 

Tier 1 ratio (%)         13.6      13.8       13.9                    

Total capital ratio      15.5      16.1       15.9                    
(%) 

Assets-to-capital        14.5      13.3       14.1                    
multiple 

Risk-weighted assets   36,467    35,637     36,171                    
(C$m) 
                                                                      

Performance ratios                                                    
(%)(2)

Return on average        10.6      18.4       16.3      13.4      19.1
common equity 

Post-tax return on       0.53      0.89       0.82      0.67      0.94
average total assets 

Post-tax return on        1.3       2.0        1.9       1.6       2.1
average risk-weighted
assets(1) 
                                                                      

Credit coverage                                                       
ratios (%)

Loan impairment          15.8       9.6        9.6      12.6       8.3
charges as a
percentage of total
operating income 

Loan impairment           0.7       0.5        0.4       0.5       0.4
charges as a
percentage of average
gross customer
advances and
acceptances 

Total impairment         58.4      47.6       50.1      58.4      47.6
allowances
outstanding as a
percentage of
impaired loans and
acceptances at the
period end 
                                                                      

Efficiency and                                                        
revenue mix ratios
(%)(2)

Cost efficiency          50.1      45.4       45.0      47.4      48.1
ratio 

Adjusted cost            50.1      45.3       44.8      47.3      47.5
efficiency ratio 

As a percentage of                                                    
total operating
income:

 - net interest          64.0      60.6       57.5      60.6      59.5
 income 

 - net fee income        29.0      23.9       25.0      26.9      22.4

 - net trading income     8.5       7.7        9.8       9.1       6.7
                                                                      

Financial ratios (%)                                                  
(2)

Ratio of customer        90.8      97.9       95.5                    
advances to customer
accounts 

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

Total assets under                                                    
administration (C$m)
(2)

Funds under            19,220    17,339     19,290                    
management 

Custodial accounts      1,106       949      1,121                    

Total assets under     20,326    18,288     20,411                    
administration 

1  Effective 1 January 2013, regulatory information is determined using
   regulatory guidelines in accordance with the Basel III capital
   adequacy framework. Comparative regulatory information for 2012
   periods, were not restated and are determined using regulatory
   guidelines in accordance with the Basel II capital adequacy
   framework.

2  Refer to the 'Use of non-IFRS financial measures' section of this
   document for a discussion of non-IFRS financial measures.

HSBC Bank Canada              Consolidated Income Statement (Unaudited)
    

Figures in C$m                    Quarter ended        Half-year ended

(except per share      30 June   30 June   31 March   30 June   30 June
amounts)
                          2013      2012       2013      2013      2012
                                                                       

Interest income            534       565        517     1,051     1,151

Interest expense         (194)     (193)      (181)     (375)     (381)
    Net interest income        340       372        336       676       770
                                                                          

Fee income                 181       168        166       347       336

Fee expense               (27)      (21)       (20)      (47)      (46)
    Net fee income             154       147        146       300       290
                                                                       

Trading income              33        39         47        80        71
excluding net interest
income

Net interest income on      12         8         10        22        16
trading activities
    Net trading income          45        47         57       102        87
                                                                       

Net expense from             -       (2)        (3)       (3)      (16)
financial instruments
designated at fair
value

Gains less losses from      15        28         35        50        45
financial investments

Other operating           (23)        22         13      (10)        35
income/(expense)

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


Net operating income       531       614        584     1,115     1,295
before loan impairment
charges and other
credit risk provision 
Loan impairment           (84)      (59)       (56)     (140)     (107)
charges and other
credit risk provisions 
Net operating income       447       555        528       975     1,188 
                                                                    
Employee compensation    (158)     (167)      (156)     (314)     (358)
and benefits 
General and               (96)      (99)       (95)     (191)     (204)
administrative
expenses 
Depreciation of            (8)       (8)        (9)      (17)      (17)
property, plant and
equipment 
Amortization and           (4)       (5)        (3)       (7)       (8)
impairment of
intangible assets 
Restructuring charges        -         -          -         -      (36) 
Total operating          (266)     (279)      (263)     (529)     (623)
expenses 
Operating profit           181       276        265       446       565 
Share of profit in           1         1          4         5         2
associates 
Profit before income       182       277        269       451       567
tax expense 
Income tax expense        (52)      (76)       (80)     (132)     (147) 
Profit for the period      130       201        189       319       420 
                                                                    
Profit attributable to     113       184        171       284       385
common shareholders 
Profit attributable to      15        15         15        30        30
preferred shareholders 
Profit attributable to     128       199        186       314       415
shareholders 
Profit attributable to       2         2          3         5         5
non-controlling
interests 


                                                                       

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

Basic earnings per        0.23      0.37       0.34      0.57      0.77
common share

Effective 1 January 2013, HSBC Bank Canada adopted the revised IAS 19 Employee 
benefits on a retrospective basis and comparative information has been 
restated accordingly. More information relating to the restatement will be 
made available in our second quarter 2013 interim report.

HSBC Bank Canada          Consolidated Statement of Financial Position
                                                            (Unaudited)
    

Figures in C$m            At 30 June   At 30 June        At 31 December
                                2013         2012                  2012
                                                                       

ASSETS                                                                 
                                                                       

Cash and balances at              66           70                    56
central bank  

Items in the course of           110          142                    90
collection from other
banks  

Trading assets                 7,522        6,009                 5,272

Derivatives                    2,096        2,158                 1,810

Loans and advances to          3,656        1,919                 1,480
banks  

Loans and advances to         44,946       46,126                45,572
customers  

Financial investments         19,841       20,105                20,410

Other assets                     891          668                   911

Prepayments and accrued          218          240                   165
income 

Customers' liability           4,785        4,459                 4,737
under acceptances 

Property, plant and              137          128                   140
equipment 

Goodwill and intangible           70           75                    71
assets 
                                                     

Total assets                  84,338       82,099                80,714
                                                                       

LIABILITIES AND EQUITY                                                 
                                                                       

Liabilities                                                            

Deposits by banks              1,579        1,747                 2,173

Customer accounts             49,505       47,097                48,304

Items in the course of           149          374                    71
transmission to other
banks  

Trading liabilities            4,241        3,280                 2,672

Financial liabilities            428        1,011                   436
designated at fair value
 

Derivatives                    1,737        1,730                 1,415

Debt securities in issue      13,240       13,961                11,980
 

Other liabilities              2,259        1,964                 2,389

Acceptances                    4,785        4,459                 4,737

Accruals and deferred            487          504                   528
income 

Retirement benefit               295          320                   309
liabilities 

Subordinated liabilities         329          326                   324
                                                        

Total liabilities             79,034       76,773                75,338
                                                     
                                                                       

Equity                                                                 

Common shares                  1,225        1,225                 1,225

Preferred shares                 946          946                   946

Other reserves                   101          364                   281

Retained earnings              2,802        2,561                 2,694

Total shareholders'            5,074        5,096                 5,146
equity  

Non-controlling interests        230          230                   230
                                                        

Total equity                   5,304        5,326                 5,376
                                                     

Total equity and              84,338       82,099                80,714
liabilities  

Effective 1 January 2013, HSBC Bank Canada adopted the revised IAS 19 Employee 
benefits on a retrospective basis and comparative information has been 
restated accordingly. More information relating to the restatement will be 
made available in our second quarter 2013 interim report.

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

Figures in C$m               Quarter ended        Half-year ended
                  30 June   30 June   31 March   30 June   30 June
                     2013      2012       2013      2013      2012
                                                                  

Cash flows                                                        
generated from/
(used in):

 - operating        1,786      (49)        887     2,673   (1,590)
 activities

 - investing           33       243        426       459   (1,087)
 activities

 - financing        (107)      (99)      (108)     (215)     (200)
 activities

Net increase/       1,712        95      1,205     2,917   (2,877)
(decrease) in
cash and cash
equivalents

Cash and cash       2,958     1,905      1,753     1,753     4,877
equivalents,
beginning of
period


Cash and cash       4,670     2,000      2,958     4,670     2,000
equivalents, end
of period 
                                                               
Represented by:                                                    
 - Cash and            66        70         62        66        70
 balances at
 central bank 
 - Items in the      (39)     (232)         66      (39)     (232)
 course of
 transmission to
 other banks, net 
 - Loans and        3,656     1,919      2,742     3,656     1,919
 advances to
 banks of one
 month or less 
 - Treasury bills     987       243         88       987       243
 and certificates
 of deposits of
 three months or
 less 
Cash and cash       4,670     2,000      2,958     4,670     2,000
equivalents, end
of period 
Effective 1 January 2013, HSBC Bank Canada adopted the revised IAS 19 Employee 
benefits on a retrospective basis and comparative information has been 
restated accordingly. More information relating to the restatement will be 
made available in our second quarter 2013 interim report. 
HSBC Bank Canada               Global Business Segmentation (Unaudited) 


                                                                       
    We manage and report our operations according to our global businesses.
                                     Quarter ended        Half-year ended

Figures in C$m         30 June   30 June   31 March   30 June   30 June
                          2013      2012       2013      2013      2012
                                                                       

Commercial Banking                                                     

Net interest income        171       177        161       332       357

Net fee income              77        72         75       152       143

Net trading income           8         8          8        16        16

Other operating           (35)         7          2      (33)        12
income/(expense)

Net operating income       221       264        246       467       528
before loan impairment
charges and other
credit risk provisions

Loan impairment           (61)      (26)       (39)     (100)      (37)
charges and other
credit risk provisions

Net operating income       160       238        207       367       491

Total operating           (91)      (91)       (88)     (179)     (188)
expenses

Operating profit            69       147        119       188       303

Share of profit in           1         1          4         5         2
associates


Profit before income        70       148        123       193       305
tax expense 
Global Banking and                                                     
Markets 
Net interest income         40        40         42        82        86 
Net fee income              20        19         18        38        38 
Net trading income          24        28         37        61        50 
Gains less losses from      13        28         33        46        45
financial investments 
Other operating income       1         2          -         1         1 
Gain on the sale of          -         -          -         -         8
the full service
retail brokerage
business 
Net operating income        98       117        130       228       228
before loan impairment
charges and other
credit risk provisions 
Loan impairment            (2)         -          2         -         -
(charges)/reversals
and other credit risk
provisions 
Net operating income        96       117        132       228       228 
Total operating           (29)      (33)       (29)      (58)      (58)
expenses 
Profit before income        67        84        103       170       170
tax expense 
Retail Banking and                                                     
Wealth Management 
Net interest income         86        92         89       175       197 
Net fee income              48        44         43        91        86 
Net trading income           7         3          4        11         6 
Other operating income       2         3          3         5         5 
Gain on the sale of          -         -          -         -        76
the full service
retail brokerage
business 
Net operating income       143       142        139       282       370
before loan impairment
charges and other
credit risk provisions 
Loan impairment            (7)       (7)        (7)      (14)      (13)
charges and other
credit risk provisions 
Net operating income       136       135        132       268       357 
Total operating          (118)     (129)      (118)     (236)     (257)
expenses (excluding
restructuring charges) 
Restructuring charges        -         -          -         -       (2) 
Profit before income        18         6         14        32        98
tax expense 
Effective 1 January 2013, HSBC Bank Canada adopted the revised IAS 19 Employee 
benefits on a retrospective basis and comparative information has been 
restated accordingly. More information relating to the restatement will be 
made available in our second quarter 2013 interim report. 
HSBC Bank Canada               Global Business Segmentation (Unaudited) 
                                                        (continued) 


                                     Quarter ended        Half-year ended

Figures in C$m         30 June   30 June   31 March   30 June   30 June
                          2013      2012       2013      2013      2012
                                                                       

Consumer Finance                                                       

Net interest income         49        72         52       101       145

Net fee income               9        12         10        19        23

Gains less losses from       2         -          2         4         -
financial investments

Other operating income       1         -          1         2         2


Net operating income        61        84         65       126       170
before loan impairment
charges and other
credit risk provisions 
Loan impairment           (14)      (26)       (12)      (26)      (57)
charges and other
credit risk provisions 
Net operating income        47        58         53       100       113 
Total operating           (20)      (22)       (18)      (38)      (60)
expenses (excluding
restructuring charges) 
Restructuring charges        -         -          -         -      (34) 
Profit before income        27        36         35        62        19
tax expense 
                                                                    
Other                                                                   
Net interest expense       (6)       (9)        (8)      (14)      (15) 
Net trading income           6         8          8        14        15 
Net expense from             -       (2)        (3)       (3)      (16)
financial instruments
designated at fair
value 
Other operating income       8        10          7        15        15 
Net operating income/        8         7          4        12       (1)
(expense) 
Total operating            (8)       (4)       (10)      (18)      (24)
expenses 
Profit/(loss) before         -         3        (6)       (6)      (25)
income tax expense 
Effective 1 January 2013, HSBC Bank Canada adopted the revised IAS 19 Employee 
benefits on a retrospective basis and comparative information has been 
restated accordingly. More information relating to the restatement will be 
made available in our second quarter 2013 interim report.
 

SOURCE  HSBC Bank Canada 
Media enquiries to: 
Sharon Wilks 416-868-3878  Fabrice de Dongo 416-868-8282 
To view this news release in HTML formatting, please use the following URL: 
http://www.newswire.ca/en/releases/archive/August2013/05/c4008.html 
CO: HSBC Bank Canada
ST: British Columbia
NI: FIN ERN DIV  
-0- Aug/05/2013 08:15 GMT
 
 
Press spacebar to pause and continue. Press esc to stop.