15 February 2006
Highlights
• Net income attributable to common shares was C$457 million for the year ended 31 December 2005, an increase of 32.5 per cent over 2004.
• Net income attributable to common shares was C$132 million for the quarter ended 31 December 2005, an increase of 53.5 per cent over the same period in 2004.
• Return on average common equity was 21.3 per cent for the year ended 31 December 2005 and 23.8 per cent for the quarter ended 31 December 2005 compared with 18.3 per cent and 16.6 per cent, respectively, for the same periods in 2004.
• The cost:income ratio improved to 52.2 per cent for the year ended 31 December 2005 and 50.0 per cent for the quarter ended 31 December 2005 compared with 56.0 per cent and 55.6 per cent, respectively, for the same periods in 2004.
• Total assets were C$49.2 billion at 31 December 2005, an increase of C$5.9 billion, or 13.6 per cent, from C$43.3 billion at 31 December 2004.
• Total funds under management were C$20.5 billion at 31 December 2005, an increase of C$2.8 billion, or 15.8 per cent, from C$17.7 billion at 31 December 2004.
Results are prepared in accordance with Canadian generally accepted accounting principles.
Overview
HSBC Bank Canada recorded net income attributable to common shares of C$457 million for the year ended 31 December 2005, an increase of C$112 million, or 32.5 per cent, from C$345 million for 2004. Net income attributable to common shares for the quarter ended 31 December 2005 was C$132 million, an increase of C$46 million, or 53.5 per cent, compared with C$86 million for the same period in 2004.
Net income in the fourth quarter of 2005 benefited from a C$14 million reversal from the general allowance for credit losses and a C$14 million adjustment to other expenses, both before income taxes. Excluding these items and the related income tax adjustments, net income attributable to common shares would have been C$432 million for the year ended 31 December 2005, an increase of C$87 million, or 25.2 per cent, over 2004. For the fourth quarter of 2005, net income attributable to common shares would have been C$107 million, an increase of C$21 million, or 24.4 per cent, over the same period last year.
Commenting on the results, Lindsay Gordon, President and Chief Executive Officer, said: “Results for the fourth quarter and for the year were good and reflected the robust Canadian economy and the strength of our customers. Each of our customer groups contributed to a strong increase in revenues. Net interest income was higher from continued growth in our balance sheet. Non-interest revenues were higher on increased investment administration fees, credit fees, and foreign exchange revenue. Total non-interest expenses increased as our business grew, however, the rate of expense increase was less than the revenue growth, which resulted in a decrease in the non-interest expenses:total revenue ratio. Lastly, the stable credit environment in Canada throughout much of 2005 meant lower provisions for credit losses and resulted in a reversal in the fourth quarter from our general allowance for credit losses.
“Our focus for next year will be to continue to achieve strong growth in revenues and control of our costs, while continuing to reinvest in our businesses. We expect to fully leverage our marketing efforts to help generate even more awareness of the HSBC brand within Canada to deliver sustainable organic growth.”
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