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05 Nov 2013

HSBC Bank Canada third quarter 2013 results

  • Profit before income tax expense was C$251m for the quarter ended 30 September 2013, an increase of 3% compared with the same period in 2012. Profit before income tax expense was C$702m for the nine months ended 30 September 2013, a decrease of 13% compared with the same period in 2012.
  • Profit attributable to common shareholders was C$168m for the quarter ended 30 September 2013, an increase of 4% compared with the same period in 2012. Profit attributable to common shareholders was C$452m for the nine months ended 30 September 2013, a decrease of 17% compared with the same period in 2012.
  • Return on average common equity was 16% for the quarter ended 30 September 2013 and 14.3% for the nine months ended 30 September 2013 compared with 15.7% and 17.9% respectively for the same periods in 2012.
  • The cost efficiency ratio was 51.9% for the quarter ended 30 September 2013 and 48.9% for the nine months ended 30 September 2013 compared with 45.1% and 47.2% respectively for the same periods in 2012.
  • Total assets were C$85.6bn at 30 September 2013 compared with C$84.5bn at 30 September 2012.
  • Total assets under administration increased to C$20.9bn at 30 September 2013 from C$19bn at 30 September 2012.
  • Common equity tier 1 capital ratio was 11.1%, tier 1 ratio 14.1% and the total capital ratio 16% at 30 September 2013 determined using regulatory guidelines in accordance with the Basel III capital adequacy framework adopted with effect from 1 January 2013.

Overview

HSBC Bank Canada reported a profit before income tax expense of C$251m for the third quarter of 2013, an increase of C$7m, or 3%, compared with the third quarter of 2012, and an increase of C$69m, or 38%, compared with the second quarter of 2013. Profit before income tax expense for the nine months ended 30 September 2013 was C$702m, a decrease of C$109m, or 13%, compared with the same period in 2012.

The increase in profit before income tax expense compared with the same quarter last year and the prior quarter is mainly due to lower loan impairment charges from lower specific provisions. Higher other operating income as a result of a reduction in fair value in the second quarter of 2013 of an investment property held for sale, partially offset by lower gains from the sale of financial investments, further contributed to the increase in profit before income tax expense compared with the prior quarter.

Profit before income tax expense for the nine months ended 30 September 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, profit before income tax expense for the nine months ended 30 September 2013 decreased by C$61m, or 8%, compared with the same period last year mainly due to lower net interest income from declining loan balances in connection with the wind-down of the consumer finance business 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 our on-going organizational effectiveness programmes, which resulted in sustainable cost savings as well as widening credit spreads on our own subordinated debentures designated at fair value. In addition offsetting the decrease were lower loan impairment charges from a reduction in collectively assessed provisions driven by lower average loan balances following the wind-down of the bank’s consumer finance business.

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

“The growth in our commercial loan portfolio in the third quarter and our success in continued sustainable operating expense savings within our operations in Canada are bright spots. We continue to face pressure from lower interest spreads. However, our continued focus on growing our core businesses by connecting our customers to international markets and business, consistent with HSBC's global strategy, has positioned us well for future growth.”

Read the full media release.

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