HSBC Bnk Canada 2Q & Interims
HSBC HOLDINGS PLC
22 July 1999
HSBC BANK CANADA
SECOND QUARTER 1999 RESULTS - HIGHLIGHTS
* Consolidated net income was C$40 million for the quarter ended 30 June
1999, an increase of 3.0 per cent over the comparative quarter ended
31 July 1998.
* Return on equity was 18.4 per cent for the three months ended 30 June 1999.
* Total assets of C$25.5 billion at 30 June 1999.
* Total capital ratio of 10.1 per cent, tier 1 capital ratio of 5.6 per cent
at 30 June 1999.
* Funds under management of C$10.6 billion at 30 June 1999.
HSBC Bank Canada reports net income of C$40 million
HSBC Bank Canada's net income was C$40 million for the three months ended
30 June 1999, an increase of 3.0 per cent over the comparative quarter
ended 31 July 1998.
The retention of capital to finance growth following recent acquisitions and
to increase the bank's capital ratios resulted in a fall in the return on
equity compared to the comparative periods in 1998. Capital ratios were raised
to help meet the higher industry-wide standards required by the Office of the
Superintendent of Financial Institutions.
Net interest income for the second quarter of 1999 was higher than the
equivalent quarter ended 31 July 1998, as a result of loan growth and higher
levels of interest recoveries on non-performing loans which was offset by a
fall in net interest margin. The growth in the bank's loan portfolio,
particularly in commercial and personal consumer loans, was driven by a
combination of factors. These included new business gained, particularly in
the latter part of 1998, through previously-proposed consolidations in
Canadian financial services, and the acquisition of National Westminster Bank
of Canada.
The fall in net interest margin was due to a narrowing in spread as a result
of continuing competitive pressures and a change in funding mix. These were
only partially offset by an increased contribution from higher levels of net
free funds, mainly as a result of the acquisitions of Gordon Capital
Corporation and Moss, Lawson. In addition, a further C$383 million of
residential mortgages and personal loans were securitised during the quarter.
Other income was significantly higher than the comparative periods in 1998.
This was the result of the acquisitions which helped increase equity trading
income and securities transfer fees. Revenues generated from credit services
such as bankers' acceptances, letters of credit and guarantees remained
strong. Volatility in the financial markets contributed to the increase in
equity and foreign exchange revenues but had an adverse impact on the level of
corporate finance fees earned when measured against the comparative periods in
1998.
Higher operating expenses reflected the growth in HSBC Bank Canada's
operations, acquisitions made during the year and increased investment in new
business and delivery channels. In addition, costs were incurred in the
centralisation of some of the bank's operating functions which should provide
increased efficiencies and help improve customer services in the future.
On 21 June 1999, Hongkong Bank of Canada was renamed HSBC Bank Canada as part
of the global initiative by the HSBC Group to create a unified brand, using
the name HSBC and the Group's hexagon symbol as its marketing name everywhere
it operates.
Youssef Nasr, President and Chief Executive Officer, said: 'We are generally
satisfied with our results for the second quarter of 1999. Our name change
reflects the building of a global brand by HSBC and gives us a competitive
advantage in addition to our reputation for superior customer service. As a
full-service Canadian bank with access to HSBC's global resources, we can
bring the world to our customers.'
HSBC Bank Canada, an indirectly-held, wholly-owned subsidiary of HSBC Holdings
plc, has more than 140 offices. With over 5,000 offices in 79 countries and
territories and assets of US$483 billion at 31 December 1998, the HSBC Group
is one of the world's largest banking and financial services organisations.
HSBC Bank Canada Highlights
___________________________________________________________________________
Quarter ended Six months ended
30 June 31 July* 30 June 31 July*
1999 1998 1999 1998
Earnings (C$ millions)
Net interest income 130 127 263 255
Net income 40 39 78 81
Financial ratios (%) % % % %
Return on average equity
(annualised) 18.4 21.0 18.4 22.4
Return on average assets
(annualised) 0.60 0.61 0.60 0.65
Cost:income 69.7 67.3 69.4 66.8
Provision for credit
losses/average assets 0.2 0.2 0.2 0.4
Other income/total income 43.7 36.2 42.5 35.9
At At
30 June 31 July
1999 1998
Financial position (C$ millions)
Total assets 25,473 24,813
Shareholder's equity 895 754
Capital ratios (%) % %
Total capital 10.1 9.5
Tier 1 5.6 5.0
Other
Number of employees (full-time equivalent basis) 4,931 4,537
* 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 three or six month period ended 31 July 1998.
HSBC Bank Canada Consolidated Statement of Income (Unaudited)
____________________________________________________________________
Figures in C$ Quarter ended Six months ended
millions (except 30 June 31 July 30 June 31 July
per share amounts) 1999 1998 1999 1998
Net interest income 130 127 263 255
Provision for credit
losses (12) (11) (28) (48)
118 116 235 207
Other income 101 72 194 143
Net interest and other
income 219 188 429 350
Non-interest expenses (161) (134) (317) (266)
Net income before
provision for
income taxes 58 54 112 84
Provision for income
taxes (18) (15) (34) (3)
Net income 40 39 78 81
Average number of
shares outstanding
(in millions) 280 280 280 280
Net income per common
share 0.14 0.14 0.28 0.29
HSBC Bank Canada Condensed Consolidated Balance Sheet
(Unaudited)
______________________________________________________________________
Figures in C$ At 30 June At 31 July
millions 1999 1998
Cash resources 1,429 1,443
Securities 3,311 3,668
Loans 17,679 17,333
Other assets 3,054 2,369
Total assets 25,473 24,813
Demand 827 905
Notice 3,864 3,614
Fixed date 15,803 16,417
Total deposits 20,494 20,936
Other liabilities 3,470 2,505
Subordinated debt 614 618
Capital and reserves 895 754
4,979 3,877
Total liabilities 25,473 24,813
HSBC Bank Canada Condensed Consolidated Statement of Changes in
Financial Position (Unaudited)
_______________________________________________________________________
Figures in C$ millions Quarter ended Six months ended
30 June 31 July 30 June 31 July
1999 1998 1999 1998
Cash resources provided
from (used in) operating
activities:
Net income 40 39 78 81
Adjustments:
Provision for credit losses 12 11 28 48
Depreciation and amortisation 7 6 16 12
Other items, net (67) (254) (142) (207)
(8) (198) (20) (66)
Cash resources provided
from (used in) financing
activities:
Net change in deposits (751) (175) (56) 334
Net change in advances from
Bank of Canada - (129) - (3)
Dividends paid - (36) - (36)
(751) (340) (56) 295
Cash resources provided
from(used in) investing
activities:
Businesses acquired - (125) (75) (125)
Net change in securities 543 (472) 193 (529)
Net change in loans 33 80 (248) (56)
Net change in land,
buildings and equipment (7) (10) (16) (16)
569 (527) (146) (726)
Net increase (decrease) in
cash resources (190) (1,065) (222) (497)
Cash resources in business
acquired at date of
acquisition - 80 14 80
Cash resources at beginning
of period 1,619 2,428 1,637 1,860
Cash resources at end of
period 1,429 1,443 1,429 1,443
Certain prior period amounts have been reclassified to conform
with the current period's presentation.