HSBC Bank Canada third quarter 2009 results

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11 November 2009

• Net income attributable to common shares was C$101 million for the quarter ended 30 September 2009, a decrease of 15.8 per cent over the same period in 2008.*
• Net income attributable to common shares was C$300 million for the nine months ended 30 September 2009, a decrease of 34.5 per cent over the same period in 2008.*
• Return on average common equity was 11.8 per cent for the quarter ended 30 September 2009 and 11.7 per cent for the nine months ended 30 September 2009 compared with 13.6 per cent and 17.8 per cent respectively for the same periods in 2008.*
• The cost efficiency ratio was broadly stable at 52.2 per cent for the quarter ended 30 September 2009 and 50.0 per cent for the nine months ended 30 September 2009 compared with 53.0 per cent and 49.7 per cent respectively for the same periods in 2008.*
• Total assets were C$71.6 billion at 30 September 2009 compared with C$71.5 billion at 30 September 2008.*
• Total funds under management increased to C$27.0 billion at 30 September 2009 compared with C$24.6 billion at 30 September 2008.
• Tier 1 capital ratio of 11.7 per cent and a total capital ratio of 14.4 per cent at 30 September 2009 compared to 10.6 per cent and 13.2 per cent respectively at 30 September 2008.**

Results are prepared in accordance with Canadian generally accepted accounting principles.

*Restated to reflect accounting for the acquisition of HSBC Financial Corporation Limited ("HSBC Financial") on 30 November 2008. Results for the quarter and nine months ended 30 September 2008 have been restated to combine the previously reported results of the bank with those of HSBC Financial to reflect the continuity of interests method of accounting, as detailed in note 2 to the consolidated financial statements in the 2008 Annual Report. References in this news release to "banking operations" relate to those excluding HSBC Financial and "Consumer Finance" refers to the businesses of HSBC Financial. 

**Calculated using guidelines issued by the Office of the Superintendent of Financial Institutions in accordance with Basel II capital adequacy framework. Tier 1 and total capital ratios at 30 September 2008 have not been restated to include HSBC Financial.

Overview

HSBC Bank Canada recorded net income attributable to common shares for the three months ended 30 September 2009 of C$101 million, a decrease of C$19 million, or 15.8 per cent compared to C$120 million in the same quarter in 2008. Compared to the C$114 million achieved in the second quarter of 2009, net income attributable to common shares for the three months ended 30 September 2009 decreased by C$13 million, or 11.4 per cent. This includes the results of the Consumer Finance business which incurred a net loss attributable to common shares of C$10 million in the third quarter of 2009 compared to a net loss attributable to common shares of C$1 million for the same quarter of 2008 and a net loss attributable to common shares of C$17 million in the second quarter of the current year.

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

"Thanks to higher revenues from core banking and capital market activities, continued tight cost control and a fall in quarterly credit losses, HSBC Bank Canada has delivered improved underlying quarterly results through the year-to-date. Overall results were down compared to the same quarter in 2008 primarily due to a reduction in net interest margin and the second quarter of 2009 primarily as a result of a write down of a portion of our non-bank Asset Backed Commercial Paper portfolio both caused by market factors.

"Both HSBC Bank Canada and the HSBC Group maintain strong capital bases, with tier 1 capital ratios increasing further during the quarter.  Our financial strength and strong liquidity position have enabled us to continue supporting our customers through the difficult economic environment.  Although the economic outlook in Canada remains uncertain there are positive signs that the recession may be nearing an end and we will continue to leverage the HSBC Group's global capabilities to support our core customer relationships while managing costs and risks closely".

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