HSBC Bank Canada 2003 Interim Results

28 July 2003

• Net income* was C$146 million for the half-year ended 30 June 2003, an increase of 24.8 per cent over the same period in 2002.
• Net income was C$73 million for the quarter ended 30 June 2003, an increase of 78.0 per cent over the second quarter of 2002.
• Return on average common equity was 19.1 per cent for the six months and for the quarter ended 30 June 2003 compared to 14.8 per cent and 10.1 per cent, respectively, for the same periods in 2002.
• The cost:income ratio was 56.3 per cent for the half-year ended 30 June 2003 and 57.1 per cent for the quarter ended 30 June 2003.
• Total assets of C$36.1 billion at 30 June 2003 compared to C$35.1 billion at 30 June 2002.
• Total assets under administration were C$15.8 billion at 30 June 2003, of which C$12.4 billion were funds under management and C$3.4 billion were custody and administration accounts.

*HSBC Bank Canada acquired Merrill Lynch HSBC Canada Inc. (‘MLHSBC’) on 31 October 2002.  For financial reporting, the income and expenses of MLHSBC were accounted for effective 1 July 2002, the date HSBC Group acquired full ownership of MLHSBC, and were recorded in the results for the fourth quarter of 2002.

HSBC Bank Canada recorded net income of C$146 million for the six months ended 30 June 2003, an increase of C$29 million, or 24.8 per cent, from C$117 million for the comparable period in 2002.  Net income for the quarter ended 30 June 2003 was C$73 million compared to C$41 million for the second quarter of 2002, an increase of 78.0 per cent. Excluding a C$28 million restructuring charge in the second quarter of 2002, the increase would have been 8.5 per cent and 23.9 per cent, respectively, for the six months and quarter ended 30 June 2003 compared to the same periods in 2002.  The improvement in net income resulted from higher net interest income and lower levels of provisions for credit losses.

Martin Glynn, President and Chief Executive Officer, said: “Results were satisfactory given the mixed economic conditions we have experienced.  While there was an improvement in the equity markets during the second quarter, the uncertain outlook continues to have an adverse impact on capital markets and mutual fund revenues.  However, record low interest rates and high consumer confidence continued to fuel an active housing market in Canada.  Growth in residential mortgages and consumer loans benefited net interest income.  Credit losses for the six months and quarter ended 30 June 2003 were lower than in the same periods in 2002 as provisions in the prior periods covered an exposure in the telecommunications sector. 

“The current strength of the Canadian dollar relative to the US dollar and the ongoing uncertainty of the economy in the United States is expected to dampen the future demand for Canadian goods and services.  In addition, near-term domestic activity, primarily in the travel and hospitality sectors, has been weakened by SARS.   We are continually monitoring direct exposures to the affected business sectors to mitigate the impact, if any, that these economic factors may have on the bank.

“We are continuing to align our services for customers in Canada with those of our colleagues in the United States, including Household International, and GF Bital in Mexico, to create a seamless North American service proposition. By establishing a broader range of services and products to offer our retail and commercial clients in Canada, we should be better positioned to gain market share and benefit when economic conditions improve.”

The full text of the news release can be downloaded using the link on the right.