HSBC Bank Canada Second Quarter 2015 Results
- Profit before income tax expense for the quarter ended 30 June 2015 was C$227m, a decrease of 6.2% compared with the same period in 2014. Profit before income tax expense was C$458m for the half year ended 30 June 2015, a decrease of 3.6% compared with the same period in 2014.
- Profit attributable to the common shareholder was C$161m for the quarter ended 30 June 2015, a decrease of 6.4% compared with the same period in 2014. Profit attributable to the common shareholder was C$324m for the half year ended 30 June 2015, a decrease of 2.4% compared with the same period in 2014.
- Return on average common equity was 14.0% for the quarter ended 30 June 2015 and 14.3% for the half year ended 30 June 2015 compared with 15.6% and 15.3% respectively for the same periods in 2014.
- The cost efficiency ratio was 53.8% and 53.9% respectively for the quarter and half year ended 30 June 2015 compared with 51.1% and 51.6% for the same periods in 2014.
- Total assets were C$89.4bn at 30 June 2015 compared with C$88.2bn at 31 December 2014.
- Common equity tier 1 capital ratio was 10.5%, tier 1 ratio 12.5% and total capital ratio 13.8% at 30 June 2015 compared with 10.6%, 12.0% and 13.5% respectively at 31 December 2014.
The abbreviations ‘C$m’ and ‘C$bn’ represent millions and billions of Canadian dollars, respectively.
HSBC Bank Canada reported a profit before income tax expense of C$227m for the second quarter of 2015, a decrease of C$15m, or 6.2%, compared with the second quarter of 2014 and a decrease of C$4m or 1.7% compared with the first quarter of 2015. Profit before income tax expense for the first half of 2015 was C$458m, a decrease of C$17m, or 3.6% compared with the first half of 2014. Compared to the second quarter of 2014, profit before tax was lower, mainly as a result of margin compression, lower gains on financial investments and higher costs, partially offset by increased credit facility and corporate finance fees. For the half year ended 30 June 2015, in addition to the factors note above, profit before tax was lower due to lower trading income from derivative fair value movements that were recycled to the income statement as a result of hedge accounting criteria not having been met. This was offset by increased fee income from wealth product sales and lower loan impairment charges, mainly from the planned consumer finance portfolio run-off.
Commercial Banking continues to make progress in growing our business and streamlining processes. We continued to see strong increases in new-to-bank customers but this was tempered by a low utilisation rate of recently authorised credit facilities. Initiatives to streamline credit application and client on-boarding processes helped to improve relationship manager productivity allowing further business development activities.
By more fully leveraging our global network on behalf of our clients, Global Banking and Markets saw increases in advisory and capital markets fees as well as lending and credit activities while the Capital Financing business had increased activity in closing significant deals during the quarter.
During the quarter, Retail Banking and Wealth Management continued to benefit from growth in residential mortgages, deposits and wealth balances, with a key focus on revenue in a highly competitive low interest rate environment.
Commenting on the results, Sandra Stuart, President and Chief Executive Officer of HSBC Bank Canada, said: “We are focused on growing our business in Canada, however, we do expect current challenges to continue including pressure on the oil sector and related industries and prevailing low interest rates. There was growth in all three business lines, with Global Banking and Markets making a particularly strong showing. Clearly customers see value in the unique expertise we bring to doing business internationally and helping internationally minded individuals to manage their finances. We are continuing to invest in making our operations more efficient, implementing HSBC’s Global Standards and developing new products and services - all to ensure a better experience for our clients across all business lines.”
About HSBC Bank Canada
HSBC Bank Canada, a subsidiary of HSBC Holdings plc, is the leading international bank in the country. We help companies and individuals across Canada to do business and manage their finances internationally through three global business lines: Commercial Banking, Global Banking and Markets, and Retail Banking and Wealth Management. Canada is a priority market for the HSBC Group – one of the world’s largest banking and financial services groups with assets of US$2,572bn at 30 June 2015. Linked by advanced technology, HSBC serves customers worldwide through an international network of around 6,100 offices in 72 countries and territories in Europe, Asia, North and Latin America, and the Middle East and North Africa.
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