HSBC Bank Canada Third Quarter 2014 Results

  • Profit before income tax expense for the quarter ended 30 September 2014 was C$231m, a decrease of 8.0% compared with the same period in 2013. Profit before income tax expense was C$706m for the nine months ended 30 September 2014, little changed from the same period in 2013.
  • Profit attributable to the common shareholder was C$163m for the quarter ended 30 September 2014, a decrease of 3.0% compared with the same period in 2013. Profit attributable to the common shareholder was C$495m for the nine months ended 30 September 2014, an increase of 9.5% compared with the same period in 2013.
  • Return on average common equity was 14.5% for the quarter ended 30 September 2014 and 15.0% for the nine months ended 30 September 2014 compared with 16.0% and 14.3% respectively for the same periods in 2013.
  • The cost efficiency ratio was 52.3% for the quarter ended 30 September 2014 and 51.8% for the nine months ended 30 September 2014 compared with 51.1% and 48.9% respectively for the same periods in 2013.
  • Total assets were C$84.7bn at 30 September 2014 compared with C$84.3bn at 31 December 2013.
  • Common equity tier 1 capital ratio was 10.8%, tier 1 ratio 12.1% and total capital ratio 13.7% at 30 September 2014 compared with 11.1%, 14.1% and 16.0% respectively at 30 September 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$231m for the third quarter of 2014, a decrease of C$20m, or 8%, compared with the third quarter of 2013 and a decrease of C$11m or 5% compared with the second quarter of 2014. Profit before income tax expense for the nine months ended 30 September 2014 was C$706m, an increase of C$4m, or 1% compared with the same period in 2013.

The decrease in profit before income tax expense for the third quarter of 2014 compared with the same period last year was primarily due to lower net interest income from the continued planned run-off of the consumer finance portfolio, lower net trading income from foreign exchange products, lower income from associates and higher loan impairment charges, arising from a release of specific provisions in the comparative period. This was partially offset by increased fees from credit and wealth products and an increase in other income arising from a reduction in the fair value of investment property held for sale recorded in the third quarter of 2013. The increase in profit before income tax expense for the nine months ended 30 September 2014 compared with the same period last year was primarily due to increased fees from credit and wealth products, lower loan impairment charges as a result of lower specific allowances for commercial customers and an increase in other income arising from a reduction in the fair value of investment property held for sale recorded in 2013. This was partially offset by lower net interest income from the continued planned run-off of the consumer finance portfolio, lower net trading income from foreign exchange products and increased operating expenses as we invest in HSBC Group’s global standards as well as risk and compliance activities.

Commenting on the results, Paulo Maia, President and Chief Executive Officer of HSBC Bank Canada, said: “Consistent with the HSBC Group, we continue to make progress towards our three strategic priorities: growing our business, making it more efficient and implementing global standards within Canada. We continued to make investments to grow all three of our business lines in Canada, enhancing our Payments and Cash Management and Project Export Finance offerings, and introducing new mobile capabilities for retail customers.

“As a result of increased residential mortgage business, the ongoing Retail Banking and Wealth Management business recorded strong growth in profit before tax over both the same quarter last year and the immediately preceding quarter. However, this was offset somewhat by increased investments in HSBC Group’s global standards as well as risk and compliance activities which continue to impact results.”

Media enquiries to:

Kimberly Flood
416-868-8001

Fabrice de Dongo
416-868-8282

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