HSBC Bank Canada Second Quarter 2016 Results
Profit before income tax expense for the quarter ended 30 June 2016 was $168m, a decrease of 26.0% compared with the same period in 2015. Profit before income tax expense was $326m for the half-year ended 30 June 2016, a decrease of 28.8% compared with the same period in 2015.
Profit attributable to the common shareholder was $111m for the quarter ended 30 June 2016, a decrease of 31.1% compared with the same period in 2015. Profit attributable to the common shareholder was $217m for the half-year ended 30 June 2016, a decrease of 33.0% compared with the same period in 2015.
Return on average common equity was 9.8% for the quarter ended 30 June 2016 compared with 14.0% for the same period in 2015. Return on average common equity was 9.6% for the half-year ended 30 June 2016 compared with 14.3% for the same period in 2015.
The cost efficiency ratio was 57.3% for the quarter ended 30 June 2016 compared with 53.8% for the same period in 2015. The cost efficiency ratio was 56.3% for the half-year ended 30 June 2016 compared with 53.9% for the same period in 2015.
Total assets were $93.3bn at 30 June 2016 compared with $94.0bn at 31 December 2015.
Common equity tier 1 capital ratio was 10.4%, tier 1 ratio 12.4% and total capital ratio 13.5% at 30 June 2016 compared with 10.1%, 12.1% and 13.5% respectively at 31 December 2015.
The abbreviations‘$m’ and ‘$bn’ represent millions and billions of Canadian dollars, respectively.
HSBC Bank Canada reported a profit before income tax expense of $168m for the second quarter of 2016, a decrease of $59m, or 26.0%, compared with the second quarter of 2015. Profit before income tax expense was $326m for the first half of 2016, a decrease of $132m, or 28.8%, compared with the first half of 2015. The decreases are in part due to higher loan impairment charges largely reflecting charges related to the oil and gas sectors, increased investment in HSBC’s Global Standards, risk and compliance activities, and other strategic initiatives to deliver future savings.
Commercial banking continues to focus on international subsidiary banking and leverage our global trade and cash management product platform to drive new-to-bank client acquisition and growth through NAFTA and China trade corridors, despite headwinds from sustained low energy and commodity prices.
Global Banking and Markets increased trading revenues as well as lending and credit activities by leveraging HSBC’s global network on behalf of its clients, while leverage and acquisition finance revenues decreased.
Retail Banking and Wealth Management benefited from growth in residential mortgages and deposits during the first half of 2016, with a key focus on revenue in a highly competitive low interest rate market environment.
Commenting on the results, Sandra Stuart, President and Chief Executive Officer of HSBC Bank Canada, said:
“We are encouraged by the improvements we are seeing in the first half of 2016: In the second quarter, while profit before tax is down 26% compared to Q2 last year, it is up 6.3% compared with the previous quarter. Leveraging our global network led to increased trading revenues in Global Banking and Markets and drove client acquisition and growth along both the NAFTA and China trade corridors in Commercial Banking. We see a different picture when comparing to our results from a year ago: In Commercial Banking, loan impairment charges and two Bank of Canada rate cuts had a negative impact. Similarly, in Global Banking and Markets, there was a decrease in leveraged and acquisition finance activities and lower disposals of available-for-sale financial investments compared to the second quarter of 2015. Our Retail Banking and Wealth Management business continued to grow residential mortgages and deposits - with net operating income increasing 7.0% over last quarter and 4.3% over the second quarter of 2015.
“Loan impairment charges are lower again this quarter as we continue to carefully manage our exposure to the energy sector. Costs are unchanged from last quarter and down 3.2% from the fourth quarter of 2015 - even as we continued to invest to improve efficiency, combat financial crime and deliver the digitised services and global connectivity our customers demand. We are maintaining our strategy to invest in ever better products and services for our commercial, institutional and retail customers in Canada.”
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$2,608bn at 30 June 2016. Linked by advanced technology, HSBC serves customers worldwide through an international network of around 4,400 offices in 71 countries and territories in Europe, Asia, North and Latin America, and the Middle East and North Africa.
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