HSBC Bank Canada third quarter 2015 results
- Profit before income tax expense for the quarter ended 30 September 2015 was C$187m, a decrease of 19.0% compared with the same period in 2014. Profit before income tax expense was C$645m for the nine months ended 30 September 2015, a decrease of 8.6% compared with the same period in 2014.
- Profit attributable to the common shareholder was C$128m for the quarter ended 30 September 2015, a decrease of 21.5% compared with the same period in 2014. Profit attributable to the common shareholder was C$452m for the nine months ended 30 September 2015, a decrease of 8.7% compared with the same period in 2014.
- Return on average common equity was 11.0% for the quarter ended 30 September 2015 and 13.1% for the nine months ended 30 September 2015 compared with 14.5% and 15.0% respectively for the same periods in 2014.
- The cost efficiency ratio was 57.5% for the quarter ended 30 September 2015 and 55.1% for the nine months ended 30 September 2015 compared with 52.3% and 51.8% respectively for the same periods in 2014.
- Total assets were C$93.6bn at 30 September 2015 compared with C$88.2bn at 31 December 2014.
- Common equity tier 1 capital ratio was 10.3%, tier 1 ratio 12.3% and total capital ratio 13.5% at 30 September 2015 compared with 10.6%, 12.0% and 13.5% respectively at 31 December 2014.
The abbreviations ’C$m’ and ’C$bn’ represent millions and billions of Canadian dollars, respectively.
HSBC Bank Canada reported a profit before income tax expense of C$187m for the third quarter of 2015, a decrease of C$44m, or 19%, compared with the third quarter of 2014 and a decrease of C$40m, or 18%, compared with the second quarter of 2015. Profit before income tax expense for the year to date was C$645m, a decrease of C$61m, or 9% compared with the same period in 2014.
Profit before tax was lower, mainly as a result of lower net interest margins, lower gains on financial investments, higher loan impairment charges and higher planned costs, partially offset by increased credit facility and corporate finance fees from the comparative periods in 2014.
Commercial Banking continues to make progress in growing our business and streamlining processes. Strong momentum in new-to-bank activities continued increasing 47% year-over-year. However, the current environment has tempered utilization of authorized credit facilities and capital spending. Initiatives to streamline credit application and client on-boarding processes helped to improve front-line productivity and increase focus on our customers’ needs.
By more fully leveraging our global network on behalf of our clients, Global Banking and Markets lending and credit activities and capital market fees continued to increase.
During the quarter, Retail Banking and Wealth Management continued to achieve sustainable and balanced growth in residential mortgages and deposits, and benefitted from increases in wealth balances during the first half of the year. The business continues to deliver a resilient performance given the highly competitive low interest rate environment with spread compression impacting liability margins.
Commenting on the results, Sandra Stuart, President and Chief Executive Officer of HSBC Bank Canada, said: “While the continued slow growth, low rate environment is challenging our revenue line, the prudent approach we have taken to managing our business and the risks in our portfolio has ensured that we remain profitable and well capitalized. In Retail Banking and Wealth Management, core retail banking products including mortgages continued to grow, as did wealth balances, and Commercial Banking has grown its customer base. We have had a strong performance in Global Banking and Markets attributed to capital finance, expansion of our multinational business and new mandates. In fact, year over year, we have increased our overall commitments to customers by 10%. Aside from planned investments in the risk and compliance areas, there has also been good cost discipline across all of our businesses and functions this year. On balance, our strategy to leverage our unique global network on behalf of our customers is delivering largely as expected in a difficult environment. Looking ahead, we are focused on growing our business in Canada; however, we do expect current headwinds to continue including pressure on the oil sector and related industries, and prevailing low interest rates.”
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