HSBC Bank Canada Third Quarter 2017 Results
- Profit before income tax expense for the quarter ended 30 September 2017 was $218m, an increase of 58% compared with the same period in 2016.
- Profit attributable to the common shareholder was $153m for the quarter ended 30 September 2017, an increase of 68% compared with the same period in 2016.
- Return on average common shareholder’s equity was 12.7% for the quarter ended 30 September 2017 compared with 7.7% for the same period in 2016.
- The cost efficiency ratio was 61.9% for the quarter ended 30 September 2017 compared with 66.0% for the same period in 2016.
- Total assets were $93.2bn at 30 September 2017 compared with $94.7bn at 31 December 2016.
- Common equity tier 1 capital ratio was 10.8%, tier 1 ratio 12.7% and total capital ratio 15.1% at 30 September 2017.
- HSBC InvestDirect ranked 5th in the J.D. Power customer satisfaction ranking – a significant improvement over 2016 and evidence that HSBC's continued investments in making the bank better for our customers is working.
- HSBC Bank Canada climbed 20 spots to place third overall in the annual Canada’s Best 50 Corporate Citizens by Corporate Knights. HSBC was also the first company to be recognized as a top performer in gender diversity within the financial services sector.
- For the second year in a row HSBC has received an Outstanding Commitment to Employment Equity award from the Government of Canada. This award recognizes employers who have demonstrated outstanding commitment in implementing their employment equity plans.
HSBC Bank Canada reported a profit before income tax expense of $218m for the third quarter of 2017, an increase of $80m, or 58%, compared with the third quarter of 2016. The increase in profit before tax is driven by net loan impairment recoveries of $14m, an improvement of $43m compared to the same period in the prior year, as a result of improving credit conditions mainly in the oil and gas industry. In addition, trading income increased by $12m, or 41%, primarily due to the impact of negative mark to market in the prior period from economic hedges not qualifying for hedge accounting. Net interest income increased due to higher outstanding loans and advances, interest recovered on impaired loans and the impact of the Bank of Canada rate changes in July and September. Profit before tax for the first nine months of the year was $689m, an increase of $225m, or 48%, versus the same period in the prior year. The increase is primarily due to net loan impairment recoveries for the year-to-date of $109m, an improvement of $277m versus the prior year. This was partially offset by a reduction in trading income due to a one-off novation transaction and credit and funding valuation adjustments that favourably impacted trading income in the prior period.
The Commercial Banking strategic plan is focused on growing market share through expansion in eastern Canada, increasing productivity by deepening product penetration, streamlining processes, leveraging our differentiated product suite in Global Trade and Receivable Finance (GTRF) and Global Liquidity and Cash Management (GLCM), and building on our position as the leading international bank with improved positioning in the US-Canada trade corridor. After weathering the energy sector downturn in previous years, we have regained momentum in 2017 with $800m of lending balance growth since December 2016, driven mainly by new-to-bank loans and acceptances. Our international connectivity continues to be a key driver of growth, as evidenced by double-digit revenue growth rate in both our International Subsidiary Banking (ISB) and Greater-China trade corridor.
Global Banking and Markets generated higher event fee revenues through increased advisory and debt capital markets activities by leveraging HSBC’s global network on behalf of its clients. Growth has been focused on the North American and Canada - China trade corridors with double digit growth achieved year-to-date. This included the revival of the Maple bond market, with HSBC acting as a lead manager for several US-based clients issuing debt into the Canadian market.
Retail Banking and Wealth Management had another quarter of strong sales momentum leading to record year-to-date growth in total relationship balances (lending, deposits and wealth balances) across the core products. In the last quarter, we continued to make strategic investments to make our bank simpler, faster and better for our clients. For example, we introduced mobile cheque deposit, live chat for online banking, and the new HSBC Premier World Elite® Mastercard®. The new card offers Canadian travellers some of the richest and most flexible travel rewards available today, and is the latest in a range of new, innovative products and services available from HSBC Bank Canada. Customers are clearly pleased with the impact of these investments - which is showing up in another quarter of strong results in our customer experience survey.
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