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24 Feb 2014

HSBC Bank Canada fourth quarter and full year 2013 results

  • Profit before income tax expense was C$232m for the quarter ended 31 December 2013, an increase of 6.4% compared with the same period in 2012. Profit before income tax expense was C$934m for the year ended 31 December 2013, a decrease of 9.2% compared with 2012.
  • Profit attributable to common shareholders was C$164m for the quarter ended 31 December 2013, an increase of 20.6% compared with the same period in 2012. Profit attributable to common shareholders was C$616m for the year ended 31 December 2013, a decrease of 9.8% compared with 2012.
  • Return on average common equity was 15.1% for the quarter ended 31 December 2013 and 14.5% for the year ended 31 December 2013 compared with 12.9% and 16.6% respectively for the same periods in 2012
  • The cost efficiency ratio was 51.5% for the quarter ended 31 December 2013 and 49.5% for the year ended 31 December 2013 compared with 52.7% and 48.4% respectively for the same periods in 2012.
  • Total assets were C$84.3bn at 31 December 2013 compared with C$80.7bn at 31 December 2012.
  • Total assets under administration increased to C$21.4bn at 31 December 2013 from C$19.5bn at 31 December 2012.
  • Common equity tier 1 capital ratio was 11.0%, the tier 1 ratio was 13.2% and the total capital ratio was 15.0% at 31 December 2013, determined using regulatory guidelines in accordance with the Basel II and Basel III capital adequacy frameworks 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 reported a profit before income tax expense of C$232m for the fourth quarter of 2013, an increase of C$14m, or 6%, compared with the fourth quarter of 2012, and a decrease of C$19m, or 8%, compared with the third quarter of 2013. Profit before income tax expense for the year ended 31 December 2013 was C$934m, a decrease of C$95m, or 9%, compared with 2012.

Profit before income tax expense in the fourth quarter of 2012 included a C$42m write down in the value of investment property. Excluding the impact of the write down, profit before income tax expense decreased by C$28m, or 11%, compared with the same quarter last year primarily due to lower net interest income from the declining run-off consumer finance portfolio. The decrease in profit before income tax expense compared with the prior quarter is primarily due to higher levels of specific provisions within Commercial Banking.

Profit before income tax expense for the prior year included a gain on the sale of the full service brokerage business of C$88m and a restructuring charge of C$36m mostly relating to the wind-down of the bank’s consumer finance business. Excluding the impact of these items, profit before income tax expense for the year decreased by C$43m, or 4%, compared with the prior year primarily due to lower net interest income from the declining loan balances of the run-off consumer finance portfolio as well as a reduction in net interest spread. The decrease is partially offset by lower operating expenses as a result of our on-going organisational effectiveness programs, which resulted in sustainable cost savings as well as an increase in value of the bank’s investment in private equity funds. Also partially offsetting the decrease were lower loan impairment charges primarily from a reduction in collectively assessed provisions driven by declining loan balances of the run-off consumer finance portfolio, as well as tightening credit spreads on our own subordinated debentures designated at fair value.

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

“In my first year as President and CEO of HSBC Bank Canada, I have been privileged to meet many of our customers and see the many ways in which we are working together to fulfil their hopes and dreams and realise their ambitions while supporting the Canadian economy. Our continued focus on growing our core businesses by connecting our customers to international markets and business, and making sustainable cost savings, consistent with HSBC's global strategy, leaves us well positioned for future growth. A 10% growth in customer accounts - a clear vote of confidence from our clients - and a significant decrease in our operating expenses are bright spots for the year.”

About HSBC Bank Canada

HSBC Bank Canada, a subsidiary of HSBC Holdings plc, is the leading international bank in Canada. With around 6,300 offices in 75 countries and territories and assets of US$2,671bn at 31 December 2013, the HSBC Group is one of the world’s largest banking and financial services organisations.

Copies of HSBC Bank Canada’s Annual Report and Accounts 2013 will be sent to shareholders in March 2014.

Media enquiries to:
Sharon Wilks
+416 868 3878

Fabrice de Dongo
+416 868 8282

Read the full media release.

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