HSBC Bank Canada 1999 Results - Highlights

HSBC Hldgs PLC
1 February 2000


The following text is a news release issued locally by HSBC
Holdings plc's subsidiary company.
                              

                         HSBC BANK CANADA
                     1999 RESULTS - HIGHLIGHTS

* Net income was C$165 million for the year ended 31 December 1999
  compared to C$182 million for the 14 months^ ended 31 December
  1998, an annualised increase of 5.8 per cent.

* Return on equity was 18.4 per cent for the year ended 31 December
  1999 compared to 21.0 per cent annualised for the 14 months^ ended
  31 December 1998.

* Total assets of C$25.1 billion at 31 December 1999.

* Total capital ratio of 10.9 per cent, tier 1 capital ratio of 7.9
  per cent at 31 December 1999.

* Funds under management of C$13.0 billion at 31 December 1999.

^    As a result of the change in year-end from 31 October to 31
December, effective from 1998, the comparative figures are those
for the 14 month period ended 31 December 1998.

HSBC BANK CANADA REPORTS INCREASED NET INCOME

HSBC Bank Canada's net income was C$165 million for the year ended
31 December 1999, an annualised increase of 5.8 per cent over the
14 months ended 31 December 1998.

Tier 1 and total capital ratios were 7.9 and 10.9 per cent
respectively at 31 December 1999. This reflects increased capital
to finance growth following the bank's 1999 acquisitions, and to
meet the higher industry-wide requirements of the Office of the
Superintendent of Financial Institutions. The increase in capital
ratios was achieved through a combination of retained earnings,
asset securitisation, and the redemption and replacement to an HSBC
Group company on 22 December 1999 of C$270 million of debentures
with C$270 million of non-cumulative preferred shares. In addition,
C$50 million of subordinated debentures were also issued by way of
a private placement.

As a result of the increased capital requirements and a slower rate
of earnings growth than in prior periods, return on average common
equity was 18.4 per cent for the year ended 31 December 1999,
compared with an annualised 21.0 per cent for the 14 months ended
31 December 1998.

Net interest income increased C$21 million or 4.0 per cent on an
annualised basis over 1998 due to steady growth in both the bank's
retail and commercial loan portfolios, despite increased market
pressures on interest spreads during 1999. Asset securitisation of
C$1.4 billion of residential mortgages and personal auto loans
helped actively manage this balance sheet growth and contributed to
the improvement in the bank's capital ratios. At 31 December 1999,
the bank had high liquidity in line with industry-wide preparations
for the millennium changeover period, which was not ultimately
required. The net interest margin on average interest-earnings
assets also improved year on year from 2.27 to 2.32 per cent due to
bankwide efforts to increase loan margins, through value-added
relationship management. Higher loan fees and interest recoveries
on non-performing loans further enhanced 1999 net interest income.

Provisions for credit losses were lower in 1999 than in 1998, as
1998 saw a significant increase in general loan loss provisions,
combined with the effect of a 14 month accounting period.

Other income was C$99 million or 34.7 per cent higher than the
comparative period of 1998 on an annualised basis. Securities
commissions increased significantly year on year, following the
acquisition of Gordon Capital Corporation, a major Canadian
institutional investment dealer, in January 1999 and the
acquisition of Moss Lawson in July 1998. Strong contributions were
recorded by the bank's equity structured trading operations and
discount brokerage businesses. Additional revenues from foreign
exchange trading and higher than expected volume in banker's
acceptances and guarantees were partially offset by lower fee
income from mutual funds. The decline was due to lower net sales
combined with a customer shift from equities into money market
products. Funds under management grew from C$10.0 billion to C$13.0
billion during 1999.

Non-interest expenses rose during the year ended 31 December 1999.
The Gordon Capital and Moss Lawson acquisitions resulted in higher
staff, services and other acquisition-related costs. Growth of the
bank's core retail operations and investment in new delivery
channels also added to total employee, premises and equipment
costs. A focus on improving the efficiency of operational processes
and other customer service initiatives began in 1999 will continue
during 2000.

The effective tax rate for 1999 is higher than the comparative
period in 1998, as the 1998 income tax provision included the
benefits from utilisation of losses carried forward relating to
acquisitions made in prior years.

The results for the quarter ended 31 December 1999 reflected
increases in the Canadian prime and US base rates and strong
capital markets in the final months of 1999. Security commissions
were higher due to an increase in both full service and discount
brokerage trading volumes due to the volatility in equity markets.
Corporate finance fees also improved as a result of the completion
of several large deals in the quarter, and insurance underwriting
income was higher due to the recognition of income under a new
quota share reinsurance agreement, which was retroactive to January
1999. Non-interest expenses were also higher due to additional
costs associated with the integration of Gordon Capital
Corporation.

HSBC acquired Republic New York Corporation and Safra Republic
Holdings on 31 December 1999. Subject to regulatory approval, it is
anticipated that HSBC Bank Canada will merge with Republic National
Bank of New York (Canada) in the Spring of 2000.

Martin Glynn, President and Chief Executive Officer, said: 'Our
results for 1999 are in line with our expectations. We made good
progress in our fee income businesses last year and are
particularly pleased with the strong performance of our loan
portfolio, despite economic uncertainties in British Columbia
during 1999.

'Looking ahead, the integration of recently acquired businesses
offers us new opportunities in private and personal banking,
particularly in Toronto and Montreal. It will enable us to further
our goal of increasing cross-border initiatives between HSBC Bank
Canada and HSBC Bank USA. Taking advantage of the recent global re-
branding of HSBC, we will continue to use the global strengths of
the HSBC Group to offer superior service and value to our clients.'

HSBC Bank Canada, an indirectly-held, wholly-owned subsidiary of
HSBC Holdings plc, has more than 140 offices. With more than 5,000
offices in 82 countries and territories and assets of US$497
billion at 30 June 1999, the HSBC Group is one of the world's
largest banking and financial services organisations.

                                                             Highlights
 

                                            Two                 Fourteen 
                           Quarter       months                   months 
                             ended        ended Year ended         ended 
                           31Dec99      31Dec98    31Dec99       31Dec98 ^
                                                                      
Earnings (C$ millions)                                                   
Net interest income            141           86        540           606 
Net income                      42           25        165           182 
                                                                        
Financial ratios (%)                                                    
Return on average common                                                
  equity (annualised)        17.32^^      18.58      18.36 ^^      20.98 
                                  
Return on average assets                                                
  (annualised)                0.64         0.60       0.63          0.63 
Net interest margin                                                     
  (annualised)                2.41         2.29       2.32          2.27 
Cost:income ratio             69.9         65.4       68.9          66.5 
Provision for credit                                                    
losses/average loans and                                                
acceptances (annualised)      0.15         0.69       0.22          0.42 
Other income/total                                                      
  income                      40.0         39.4       41.6          35.4 
                                                                         

                                                At 31Dec99    At 31Dec98    
                                                                         
Financial position (C$ millions)                                       
Total assets                                        25,051        24,836 
Shareholders' equity                                 1,252           817 
                                                                          
Capital ratios (%)                                                       
Total capital                                         10.9          10.0 
Tier 1                                                 7.9           5.4 
Other                                                                     
Number of employees (full-                                                
  time equivalent basis)                             4,926         4,720 

^    As a result of the change in year-end from 31 October to 31
     December, effective from 1998, the comparative figures are
     those for the 14 month period  ended 31 December 1998.

^^   Had a dividend been declared on the preferred shares on 31
     December, 1999 the return on average common equity would have
     been 17.06 per cent for the quarter and 18.29 per cent for the
     year. The return on average assets and net income per common
     share would be unchanged for the quarter and the year.

                Condensed Consolidated Statement of Income (Unaudited)

                                           Two                 Fourteen 
Figures in C$             Quarter       months                   months 
millions                    ended        ended  Year ended        ended 
(except per share         31Dec99      31Dec98     31Dec99      31Dec98  
amounts)                                                               
                                                                            
Net interest income           141           86         540          606 
Provision for credit                                                    
  losses                       (7)         (22)        (43)        (90)
                              134           64         497          516 
                                                                        
Other income                   95           56         384          332 
                                                                        
Net interest and other                                                  
  income                      229          120         881          848 
                                                                        
Non-interest expenses        (165)         (93)       (637)        (624)
                                                                        
Net income before                                                       
  provision for                                                         
  income taxes                 64           27         244          224 
                                                                         
Provision for income                                                    
  taxes                       (22)          (2)        (79)         (42)
                                                                        
Net income                     42           25         165          182 
                                                                        
Average number of common                                                
  shares outstanding (in                                                
  millions)                   280          280         280          280 
Net income per common                                                   
  share                      0.15         0.09        0.59         0.65 
                                                                        

                                   Condensed Consolidated Balance Sheet
                                                             (Unaudited)

      Figures in C$                At 31Dec99   At 31Dec98
      millions                                                           
                                                   
      Cash resources                   2,295         1,637
      Securities                       2,847         3,342
      Loans                           17,130        17,459
      Acceptances                      1,705         1,267
      Other assets                     1,074         1,131
                                                          
      Total assets                    25,051        24,836
                                                          
      Regulated financial                                 
        institutions                   1,303         1,893
      Individuals                     10,858        10,213
      Businesses and governments       8,009         8,444
                                                          
      Total deposits                  20,170        20,550
                                                          
      Acceptances                      1,705         1,267
      Other liabilities                1,532         1,582
      Subordinated debt                  392           620
      Shareholders' equity             1,252           817
                                                          
                                       4,881         4,286
                                                          
      Total liabilities and equity    25,051        24,836
                                                   


Certain prior year amounts have been reclassified to conform to
the current year's presentation.

                               Condensed Consolidated Statement of Cash
                                                       Flows (Unaudited)


                                       Two                     Fourteen 
                      Quarter       months                       months 
 Figures in C$          ended        ended     Year ended         ended 
   millions           31Dec99      31Dec98        31Dec99       31Dec98 
                                                                         
 Cash flows provided                                                     
   by (used in)                                                          
   operating                                                             
   activities:                                                           
 Net income                42           25            165           182 
 Adjustments to net                                                     
   income to determine                                                  
   net cash provided by                                                 
   (used in) operating                                                  
   activities:                                                          
 Provision for credit                                                   
   losses                   8           22             43            90 
 Depreciation and                                                       
   amortisation             9            7             31            27 
 Net (increase)                                                         
   decrease in trading                                                  
   securities              91          162            (85)          241 
 Other items, net        (211)         (55)           (26)           65 
                          (61)         161            128           605 
 
Cash flows provided by                                                 
   (used in) financing                                                  
   activities:                                                           
 Deposits                (486)          67           (380)           160 
 Issuance of preferred                                                   
   shares                 270            -            270              - 
 Issuance of debentures    50            -             50             60 
 Redemption of                                                           
   debentures            (270)           -           (270)             - 
 Dividends declared         -            -              -            (36)
                         (436)          67           (330)           184 
 
Cash flows provided by                                                  
   (used in) investing                                                   
   activities:                                                           
 Loans, excluding                                                        
   securitisations       (372)      (1,051)         (1,278)       (3,376)
 Proceeds from loans                                                     
   securitised            543          640           1,566         2,531 
 Investment securities      3          197             686          (318)
 Net (increase)decrease                                                  
 in deposits with other                                                  
 banks, non-operating      84           (6)            (2)           151 
 Businesses acquired      (10)           -            (88)         (125)
 Less cash and cash                                                      
   equivalents at date                                                   
   of acquisition          11            -             16             80 
 Net increase in land,                                                   
   buildings and                                                         
   equipment              (15)         (12)           (42)           (48)
                          244         (232)           858         (1,105)

                                         Two                    Fourteen
                      Quarter         months        Year          months
                        ended          ended       ended           ended
                      31Dec99        31Dec98     31Dec99         31Dec98
 (Decrease) increase                                                    
   in cash and cash     
   equivalents          (253)            (4)         656           (316)
 Cash and cash                                                          
   equivalents,                                                         
   beginning of period  2,345          1,440       1,436           1,752 
 Cash and cash                                                          
 equivalents, end                                                       
 of period              2,092          1,436       2,092           1,436 
                                                                        
 Represented by:                                                        
 Cash resources per                                                     
   consolidated                                                         
   balance sheet:       2,295          1,637       2,295           1,637 
 Less deposits with                                                 
   other banks,                                                     
   non-operating        (203)          (201)       (203)           (201)
 Cash and cash                                                          
   equivalents, end                                                     
   of period            2,092          1,436       2,092           1,436   
                                                                        
 Cash disbursements                                                     
   made for:                                                            
 Interest                 210           151        1,046          1,130 
 Income taxes               4             7           98             52 

Certain prior period amounts have been reclassified to conform to
the current year's presentation.