FORM 6-K
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Report of Foreign Private Issuer
Pursuant to Rule 13a - 16 or 15d - 16
of
the Securities Exchange Act of 1934
For the month of February, 2009
HSBC Holdings plc
42nd Floor, 8 Canada Square, London E14 5HQ, England
(Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F).
Form 20-F X Form 40-F ......
(Indicate by check mark whether the registrant by furnishing the information contained in this Form is also thereby furnishing the information to the Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934).
Yes....... No X
(If "Yes" is marked, indicate below the file number assigned to the registrant in connection with Rule 12g3-2(b): 82- ..............).
20 February 2009
HSBC BANK CANADA
RESULTS
FOR THE FOURTH QUARTER AND
YEAR ENDED 31 DECEMBER
2008W
- HIGHLIGHTS
|
· |
Net income attributable to common shares was C$115 million for the quarter ended 31 December 2008, a decrease of 3.4 per cent compared to the same period in 2007WW . |
|
· |
Net income attributable to common shares was C$573 million for the year ended 31 December 2008, a decrease of 4.2 per cent compared with C$598 million for the year ended 31 December 2007WW . |
|
· |
Return on average common equity was 12.8 per cent for the quarter ended 31 December 2008 and 16.6 per cent for the year ended 31 December 2008 compared with 14.6 per cent and 19.6 per cent, respectively, for the same periods in 2007WW . |
|
· |
The cost efficiency ratio was 49.3 per cent for the quarter ended 31 December 2008 and 49.6 per cent for the year ended 31 December 2008 compared with 54.1 per cent and 50.9 per cent, respectively, for the same periods in 2007WW . |
|
· |
Total assets were C$72.0 billion at 31 December 2008, an increase of C$3.9 billion, or 5.7 per cent, from C$68.1 billion at 31 December 2007WW . |
|
· |
Total funds under management were C$21.3 billion at 31 December 2008, a decrease of C$4.9 billion, or 18.7 per cent, from C$26.2 billion at 31 December 2007WW . |
|
· |
Tier 1 capital ratio of 10.1 per cent and a total capital ratio of 12.5 per cent at 31 December 2008 compared to 8.8 per cent and 11.3 per cent respectively at 31 December 2007 WWW. |
W Results are prepared in accordance with Canadian generally accepted accounting principles.
WW Restated to reflect accounting for the acquisition of HSBC Financial Corporation Limited.
WWW
The capital ratios for the year ended 31 December 2008 have been calculated in
accordance with
the new Basel II capital adequacy
framework, while those for the previous period were calculated
in accordance with the previous Basel I
framework.
Effective 30 November 2008, the bank completed the acquisition of HSBC Financial Corporation Limited (HSBC Financial). Results for 2008 and prior years have been restated to combine the previously reported results of the bank with those of HSBC Financial to reflect the continuity of interests method of accounting. Information on the acquisition, including the impact on previously reported financial results of the bank is included as Appendix I. References in this news release to ‘ banking operations’ relate to those excluding the ‘ consumer finance’ business of HSBC Financial.
|
HSBC Bank Canada |
Financial Commentary |
Overview
HSBC Bank Canada (‘
the bank’
) recorded net income attributable
to common shares of C$115 million for the fourth quarter ended 31 December 2008, a
decrease of C$4 million, or 3.4 per cent, from
C$119 million on a restated basis
for the fourth quarter of 2007. Net income attributable to common shares for the year
ended 31 December 2008 was C$573 million, a decrease of $25 million or 4.2 per cent
compared with C$598 million on a restated basis for 2007.
Net income attributable to common shares for the year ended 31 December 2008 from banking operations was C$524 million, C$6 million or 1.1 per cent worse than 2007 and from consumer finance was C$49 million, C$19 million or 27.9 per cent worse than 2007.
The following individually
significant items are relevant in an assessment of underlying performance. During the
fourth quarter of 2008, the bank recorded an additional impairment charge in respect of
its holdings of Canadian non-bank sponsored Asset Backed Commercial Paper
(‘ non-bank
ABCP’ ) of C$39
million, net of related income taxes of C$19 million, compared to a charge of C$27
million, net of related taxes of C$15 million for the fourth quarter of 2007. For the
year ended 31 December 2008, the charge amounted to C$49 million, net of income taxes
of C$24 million, compared to C$30 million for 2007. In the third quarter of 2008, a
loss of C$24 million, net of related income taxes of C$12 million, was recorded arising
from the sale of the automobile loan portfolio, of which C$4 million related to the
portion of the portfolio previously held by HSBC Financial. In 2007 a gain of C$21
million was recorded after related income taxes on disposal of shares in the Montreal
Stock Exchange.
Commenting on the results, Lindsay Gordon, President and Chief Executive Officer,
said:
“Following a year marked by extreme market volatility and recessionary pressures, as well as a number of decisive actions we have taken to position the bank for the future, the results for the year as a whole as well as the fourth quarter showed resilience reflecting our prudent and diversified model and our strong customer proposition. Our underlying banking franchise remains strong and we continue to support our customers during these difficult economic conditions.
“
We anticipate that 2009 will be a
challenging year for both the Canadian economy and the bank with pressures on financial
margins combined with a weakening credit quality environment quality. However with a
strong capital base, diversified income stream and strong liquidity we will continue to
focus on serving our customers and positioning the bank to benefit when economic
conditions improve.”
Net interest income
As a result of the wider interest
margin earned in the consumer finance business, net interest margins have increased
compared to those previously reported.
Total net interest income was C$375 million for the quarter ended 31 December 2008
compared with C$429 million for the same quarter in 2007, a decrease of C$54 million,
or 12.6 per cent. Average interest earning assets decreased to C$61.1 billion from
C$61.6 billion, which was further affected by the challenging interest rate environment
that adversely impacted the net interest margin, which decreased to 2.44 per cent in
the fourth quarter compared with 2.76 per cent in the same period in 2007.
Net interest income from banking
operations for the quarter ended 31 December 2008 decreased by C$35 million compared to
the same quarter in 2007, and the net interest margin decreased to 1.87 per cent from
2.13 per cent. Ongoing reductions in prime rates during 2008 resulted in reduced
interest income on our floating rate loans, which was not offset by an equal reduction
in interest expense as our deposits repriced downwards less quickly. As a result of the
sale of the automobile loan portfolio, net interest income decreased by C$11 million,
which also had an adverse impact on net interest margin. Also impacting net interest
margin was the reduction in the value of interest free funds and low interest deposits
in a falling interest rate environment as well as the lower rate earned on government
and other high quality securities, which have increased following a planned increase in
liquidity. In addition, wider credit spreads experienced across the banking industry
also adversely impacted the cost of wholesale funding.
Net interest income for the consumer finance business decreased by C$19 million
compared to the same quarter in 2007. Net interest margin increased slightly, from 9.70
per cent in 2007 to 9.82 per cent in 2008, but the impact was offset by lower average
receivable and investment balances including the impact of a C$7 million decrease in
net interest income following the sale of the auto finance portfolio.
Total net interest income in the fourth quarter of 2008 was C$46 million lower than
the third quarter of 2008. While customer loans continued to grow during the quarter,
this was partially offset by a decrease in interest income arising from a reduction in
net interest margin, from 2.63 per cent in the third quarter of 2008 to 2.44 per cent
in the fourth quarter 2008, driven by the factors referred to above.
Net interest income for banking operations decreased by C$39 million and net interest
margin decreased from 2.07 per cent in the third quarter of 2008 to 1.87 per cent in
the fourth quarter of 2008 largely due to reductions in prime lending rates. Net
interest income for consumer finance decreased by C$7 million in the fourth quarter of
2008 due to lower average receivable and investment balances.
For the year ended 31 December 2008, total net interest income was C$1,644 million
compared with C$1,718 million for 2007, a decrease of C$74 million, or 4.3 per cent.
For the year as a whole, the increases derived from the growth in assets were more than
offset by the decrease in net interest margin to 2.59 per cent compared with 2.91 per
cent in 2007. Net interest income from banking operations decreased by C$55 million in
2008 compared to the prior year of which C$15 million was related to the sale of the
automobile loan portfolio, and the interest rate margin decreased from 2.26 per cent in
2007 to 1.99 per cent, resulting from impacts on margins noted above.
Net interest income for the consumer finance business decreased by C$19 million
including a C$10 million impact from the sale of the auto finance portfolio and lower
other average receivable balances.
Non-interest revenue
Non-interest revenue was C$223
million for the fourth quarter of 2008 compared with C$198 million in the same quarter
of 2007, an increase of C$25 million, or 12.6 per cent. Trading revenue was C$63
million higher in the fourth quarter, primarily due to a C$73 million positive impact
of widening credit spreads on the value of certain debt obligations recorded at fair
value, a C$54 million increase in foreign exchange trading revenue arising from
increased customer activity and volatile foreign exchange markets as well as the
favourable impact of foreign currency funding in a lower interest rate environment.
These increases were partially offset by C$69 million of mark-to-market losses relating
to the effect of falling interest rates on interest rate derivatives used for economic
hedging and balance sheet management activities. Securitization income was C$9 million
higher as a result of increased transaction volumes as well as the beneficial impact of
falling interest rates. Deposit and payment service charges were C$3 million higher due
to increased customer banking activities.
The fourth quarter, following revisions to the terms of the Montreal Accord, as well
as further deteriorations in market conditions, saw a further impairment write-down of
C$58 million on non-bank ABCP of which C$9 million was recorded as a reduction of
trading revenues and C$49 million recorded as a loss on available-for-sale
(‘ AFS’
) securities. The increased
write-down of non-bank ABCP and an other than temporary impairment of C$8 million
recorded on holdings of preferred shares and other securities contributed to a C$21
million increase in losses on AFS securities compared to the fourth quarter of 2007.
Other non-interest revenue decreased by C$18 million, primarily due to a reduction of
mortgage brokerage fees as a result of the disposal of HSBC Financials mortgage
brokerage businesses, and a decrease in credit insurance income. Capital market and
investment administration fees were down by C$12 million, as a result of lower trading
volumes arising from decreased market trading and underwriting activity and decreases
in the value of investments under management caused by lower equity markets.
In the fourth quarter of 2008, non-interest revenue was C$52 million higher compared
with the third quarter. Trading revenue increased by C$67 million,
primarily due to a C$60 million increase in foreign exchange trading revenue, and a
C$61 million favourable change in the carrying value of certain debt obligations
recorded at fair value and favourable impacts on foreign currency funding noted above.
These increases were partially offset by C$61 million of mark-to-market losses on
interest rate derivatives noted above. Securitization income was C$7 million higher as
a result of increased transaction volumes. Other non-interest revenue was C$18 million
higher as a result of a C$36 million loss before taxes recorded in the third quarter
related to the sale of the automobile loan portfolio, of which C$7 million related to
the portion of the portfolio previously held by HSBC Financial. This was partially
offset by a C$4 million reduction in fees from the Canadian Immigrant Investor Program
(‘
Canadian IIP’
). Capital markets fees were C$5
million higher due to increased capital market activity in the fourth quarter. Losses
on AFS securities were C$42 million higher than in the prior quarter, primarily due to
the impairment of non-bank ABCP and other AFS securities. Investment administration
fees were C$6 million lower due to a reduction in managed assets caused by lower equity
markets.
For the year ended
31 December 2008, non-interest revenue was C$837 million, C$56 million, or 7.2 per
cent, higher compared with C$781 million for 2007. Trading revenue increased by C$97
million, primarily due to an C$86 million increase in the fair value of certain debt
obligations recorded at fair value due to widening credit spreads, a C$62 million
increase in foreign exchange revenue resulting from initiatives undertaken to improve
business with customers and from the volatility in foreign exchange markets, the
benefit of lower foreign currency funding in lower interest rate environments, and a
C$14 million increase in trading gains on fixed income securities. These increases were
partially offset by C$61 million of mark-to-market losses on interest rate derivatives
used in balance sheet management activities. Securitization income increased by C$45
million as a result of increased activity and from the beneficial impact of falling
interest rates. Revenues from customer banking activities, including deposit and
payment service charges and credit fees, were C$20 million higher due to increased
customer activity, reflecting the underlying strength of the banking business. Losses
on AFS securities increased by C$55 million, primarily due to increased write-downs of
non-bank ABCP and an impairment recorded on AFS securities and 2007 included a gain of
C$25 million on the sale of Montreal Stock Exchange Shares. Other non-interest revenue
decreased in 2008 by C$26 million, mainly as a result of a C$36 million loss on
disposal of the automobile loan portfolio, partially offset by a $10 million increase
in fees from Canadian IIP. Capital market fees decreased by C$21 million due to lower
market activity in 2008, particularly new issue and underwriting mandates, resulting
from market uncertainties. Gains on other securities decreased by C$9 million due to a
lower contribution from private equity fund investments compared with the prior
year.
Non-interest expenses and operating efficiency
Non-interest expenses were C$295
million for the fourth quarter of 2008 compared with C$339 million in the same quarter
of 2007, a decrease of C$44 million, or 13.0 per cent. Salaries and employee benefit
expenses were C$31 million lower in the fourth quarter of 2008 as a result of lower
variable compensation as well as a reduction in pension and benefit expense resulting
from the release of a valuation allowance previously applicable to pension plan assets.
Other expenses were C$15 million lower, due to a restructuring charge recorded by HSBC
Financial following a reduction of their branch network in 2007. The cost efficiency
ratio for the fourth quarter of 2008 decreased to 49.3 per cent compared to 54.1 per
cent for 2007.
Non-interest expenses of C$295 million for the fourth quarter of 2008 were C$19
million, or 6.1 per cent lower, compared with the third quarter of 2008. Salaries and
employee benefits were C$30 million lower due to reductions in variable compensation
and pension and benefit expenses and lower staff levels in the consumer finance
segment. This decrease was partially offset by slight increases in expenses related to
premises and equipment and other costs.
For the year ended 31 December 2008, non-interest expenses were C$1,230 million
compared with C$1,271 million for 2007, a decrease of C$41 million, or 3.2 per cent.
Salaries and employee benefits were C$43 million lower primarily due to lower staff
costs in consumer finance operations, lower variable compensation and a lower charge
for pension and benefits. Expenses related to premises and equipment increased by C$12
million due to new banking branches and higher information technology costs, but were
largely offset by decreases in other expenses including the impact of a restructuring
charge recorded by HSBC Financial in 2007. The cost efficiency ratio was 49.6 per cent
compared with 50.9 per cent for 2007.
Credit quality and provision for credit losses
The provision for credit losses was
C$136 million for the fourth quarter of 2008, compared with C$72 million in the fourth
quarter of 2007, and C$86 million for the third quarter of 2008. The provision for the
year ended 31 December 2008 was C$379 million compared to C$239 million for 2007. The
increased charge in the fourth quarter of 2008 and for the year ended 31 December 2008
compared to the same periods in 2007 was due to an increase in credit losses arising
from the deteriorating credit environment. The provision for credit losses from banking
operations arose entirely in the commercial banking segment with an increase of C$84
million arising from exposures across all business sectors compared to previous periods
which reflected a benign credit environment with historically low losses. Credit loss
provisions for consumer finance operations for 2008 increased by C$56 million to C$228
million compared with C$172 million in 2007.
Gross impaired credit exposures were C$932 million, C$512 million higher compared with
C$420 million at 31 December 2007. Total impaired exposures, net of specific allowances
for credit losses, were C$770 million at 31 December 2008 and C$336 million at 31
December 2007. However, the total of impaired exposures includes C$207 million (2007
– C$172 million) of consumer finance and other consumer loans, for which
impairment is assessed collectively and no specific impairment is recorded. The
increase in impaired credit exposures was driven by the deterioration of economic
conditions across all business sectors.
The general allowance for credit losses of C$259 million applicable to the banking
portfolio remained unchanged from 30 September 2008 and a reduction of $10 million
compared to $269 million at 31 December 2007 as a result of the sale of the automobile
loan portfolio. During the fourth quarter provision methodologies were amended for
retail and commercial portfolios to reflect increased granularity and risk sensitivity.
The general allowance applicable to consumer finance loans was C$194 million compared
to C$161 million at 31 December 2007. The total allowance for credit losses, as a
percentage of loans and acceptances outstanding, was 1.24 per cent at 31 December 2008
compared with 1.09 per cent at 30 September 2008 and 1.03 per cent at 31 December 2007.
The bank considers the total allowance for credit losses to be appropriate given the
credit quality of its portfolios and the current credit environment.
Income taxes
The effective tax rate in the fourth
quarter of 2008 was 23.8 per cent, which compares to 40.7 per cent in the same quarter
of 2007 and 33.3 per cent in the third quarter of 2008. The reduction in tax rate in
the fourth quarter of 2008 was primarily due to lower statutory tax rates, the release
of a pension plan allowance which is not taxable as well as the impact of lower tax on
future income, while the tax rate in the fourth quarter of 2007 included the impact of
a write-down of future taxes due to a change in tax rates.
The effective tax rate for the full year in 2008 was 29.9 per cent compared with 36.0
per cent in 2007. The lower tax rate in 2008 arises from a reduction in statutory tax
rates, together with the impact of the release of a pension plan allowance which is not
taxable as well as the impact of lower tax rates on future income.
Balance sheet
Total assets at 31 December 2008
were C$72.0 billion, an increase of C$3.9 billion from 31 December 2007 restated to
reflect the acquisition of HSBC Financial. Although there has been a slowdown in
business activity, commercial loans grew by C$1.8 billion, partially offset by a
reduction in acceptances of C$0.5 billion. Residential mortgages increased by C$0.9
billion during 2008 but, as a result of securitisation, there was a net decrease of
C$1.0 billion. We further strengthened our liquidity with increased holdings of
Treasury bills and other government guaranteed securities. The securities portfolio
increased by C$3.8 billion, and there were increases in balances under reverse
repurchase agreements of C$0.6 billion. The mark-to-market amount of derivatives,
principally interest rate swaps and forward foreign exchange contracts, increased
considerably as a result of significant changes in the underlying interest and foreign
exchange rates on which derivative valuations are based.
Total deposits increased C$3.1 billion to C$52.0 billion at 31 December 2008 from
C$48.9 billion at 31 December 2007. Growth in personal deposits resulted largely from
the new High Rate and Direct Savings accounts. Commercial deposits were higher due to
growth in term products, driven by improved product offerings in the Payments and Cash
Management business and growth in commercial banking relationships as we targeted an
increase in our portfolio of core customer deposits. These increases were partially
offset by a reduction in wholesale deposits of C$1.8 billion.
Total assets under administration
Capital management
During the fourth quarter, the bank
issued preferred shares with a fair value of C$346 million as consideration for the
acquisition of HSBC Financial. For further information refer to Appendix I.
On 1 January 2008, the bank adopted the revised Basel Capital Framework commonly known
as ‘
Basel II’
to comply with new regulations
issued by the Office of the Superintendent of Financial Institutions Canada
(‘ OSFI’
). In February 2008, OSFI provided
the bank with conditional approval, subject to certain conditions, to use the Advanced
Internal Ratings Based approach for calculating regulatory capital requirements under
the new Framework. In September 2008, OSFI advised the bank that it had satisfied the
conditions that allowed the bank to reduce the transitional floor for Regulatory
Capital, as required under OSFIs capital adequacy guidelines, from 100 per cent to 90
per cent, commencing with the third quarter 2008 regulatory reporting period. However
in accordance with OSFI requirements for new subsidiaries, the bank used the
standardized approach for calculating regulatory capital requirements applicable to
consumer finance assets. The banks Tier 1 and overall capital ratios calculated in
accordance with the new framework were 10.1 per cent and 12.5 per cent respectively,
compared with 10.6 per cent for Tier 1 and 13.2 per cent overall at 30 September 2008,
which was not restated to reflect the acquisition of HSBC Financial.
Capital adequacy ratios
calculated in accordance with the previous
‘
Basel I’
framework were 8.8 per cent for Tier
1 and 11.3 per cent overall at 31 December 2007, which were not restated to reflect the
acquisition of HSBC Financial. Further details of the banks capital management process,
including details of the calculation of capital adequacy under the new
‘
Basel II’
framework will be included in the
banks annual report to shareholders.
Accounting policies adopted in 2008
Effective 1 January 2008, the bank
adopted new Canadian Institute of Chartered Accountants (CICA) Handbook Standards
requiring additional disclosures particularly relating to the management of risk
associated with Capital and Financial Instruments. There was no impact on reported
results in 2008 arising from the adoption of these new presentation and disclosure
standards, which will be reflected in HSBC Bank Canadas Annual Report to Shareholders.
Certain prior period amounts have been reclassified to conform to the current years
presentation.
Dividends
During the fourth quarter of 2008,
C$65 million in dividends were declared and paid on the banks common shares and
dividends of C$2.2 million were declared on Class 2 Preferred Shares – Series B,
which were paid on 15 January 2009. In addition, C$50 million in dividends were
declared and paid on Common Shares of HSBC Financial.
Quarterly dividends of 31.875 cents per share have been declared on HSBC Bank Canada
Class 1 Preferred Shares – Series C and 31.25 cents per share on Class 1
Preferred Shares – Series D. The dividends will be payable on 31 March 2009, to
shareholders of record on 13 March 2009.
About HSBC Bank Canada
HSBC Bank Canada, a subsidiary of
HSBC Holdings plc, has more than 180 offices. With around 9,500 offices in 85 countries
and territories and assets of US$2,547 billion at 30 June 2008, the HSBC Group is one
of the worlds largest banking and financial services organisations.
Media enquiries to Ernest Yee on 604-641-2973 or Sharon Wilks on 416-868-3878
Copies of HSBC Bank
Canada’ s Annual Report
for 2008 will be sent to shareholders in March 2009.
Caution regarding forward-looking financial
statements
This document may contain forward-looking statements, including statements regarding the business and anticipated financial performance of HSBC Bank Canada. These statements are subject to a number of risks and uncertainties that may cause actual results to differ materially from those contemplated by the forward-looking statements. Some of the factors that could cause such differences include legislative or regulatory developments, technological change, global capital market activity, changes in government monetary and economic policies, changes in prevailing interest rates, inflation level and general economic conditions in geographic areas where HSBC Bank Canada operates. Canada is an extremely competitive banking environment and pressures on interest rates and the banks net interest margin may arise from actions taken by individual banks acting alone. Varying economic conditions may also affect equity and foreign exchange markets, which could also have an impact on the banks revenues. The factors disclosed above may not be complete and there could be other uncertainties and potential risk factors not considered here which may impact the banks results and financial condition.
|
HSBC Bank Canada |
Summary |
|
Quarter ended |
Year ended |
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|
|
31 December |
30 September |
31 December |
31 December |
31 December |
|||||||||||||||||||||
|
(except per share amounts) |
2008 |
2008 |
2007 |
2008 |
2007 |
|||||||||||||||||||||
|
Earnings |
||||||||||||||||||||||||||
|
Net income
attributable to |
|
|
|
|
|
|||||||||||||||||||||
|
Basic earnings per share (C$) |
0.22 |
0.23 |
0.23 |
1.09 |
1. 16 |
|||||||||||||||||||||
|
Performance ratios (%)W |
||||||||||||||||||||||||||
|
Return on average common |
|
|
|
|
|
|||||||||||||||||||||
|
Return on average assets |
0.61 |
0.65 |
0.66 |
0.77 |
0.8 8 |
|||||||||||||||||||||
|
Net interest marginW |
2.44 |
2.63 |
2.76 |
2.59 |
2. 91 |
|||||||||||||||||||||
|
Cost efficiency ratioWW |
49.3 |
53.0 |
54.1 |
49.6 |
5 0.9 |
|||||||||||||||||||||
|
Non-interest
revenue:total |
37.3 |
28.9 |
31.6 |
33.7 |
3 1.3 |
|||||||||||||||||||||
|
Credit information |
||||||||||||||||||||||||||
|
Gross impaired credit |
932 |
467 |
420 |
|||||||||||||||||||||||
|
Allowance for credit losses |
615 |
549 |
514 |
|||||||||||||||||||||||
|
– As a percentage of
gross |
66 |
% |
118 |
% |
122 |
% |
||||||||||||||||||||
|
– As a percentage of gross |
1.24 |
% |
1.09 |
% |
1.03 |
% |
||||||||||||||||||||
|
Average balances W |
||||||||||||||||||||||||||
|
Assets |
75,161 |
73,930 |
71,730 |
73,952 |
6 8,194 |
|||||||||||||||||||||
|
Loans |
44,643 |
44,178 |
44,035 |
44,331 |
42 ,351 |
|||||||||||||||||||||
|
Deposits |
53,522 |
52,096 |
49,756 |
52,109 |
47,48 4 |
|||||||||||||||||||||
|
Common equity |
3,565 |
3,512 |
3,228 |
3,462 |
3,051 |
|||||||||||||||||||||
|
Capital ratios (%)WWW |
||||||||||||||||||||||||||
|
Tier 1 |
10.1 |
10.6 |
8.8 |
|||||||||||||||||||||||
|
Total capital |
12.5 |
13.2 |
11.3 |
|||||||||||||||||||||||
|
Total assets under administration |
||||||||||||||||||||||||||
|
Funds under management |
21,287 |
24,629 |
26,213 |
|||||||||||||||||||||||
|
Custodial accounts |
9,221 |
8,667 |
10,914 |
|||||||||||||||||||||||
|
Total assets under |
30,508 |
33,296 |
37,127 |
|||||||||||||||||||||||
|
W
Net interest margin is net interest income divided by average interest
earning assets for the |
||||||||||||||||||||||||||
|
WW The cost efficiency ratio is defined as non-interest expenses divided by total revenue. |
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|
WWW
The capital ratios for the quarters ended 31 December 2008 and 30
September 2008 have |
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|
HSBC Bank Canada |
Consolidated Statement of Income (Unaudited) |
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Quarter ended |
Year ended |
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|
Figures in C$ millions |
31 December |
30 September |
31 December |
31 December |
31 December |
|||||||||||
|
(except per share amounts) |
2008 |
2008 |
2007 |
2008 |
2007 |
|||||||||||
|
Interest and dividend |
||||||||||||||||
|
Loans |
670 |
751 |
854 |
3,016 |
3,234 |
|||||||||||
|
Securities |
68 |
75 |
73 |
288 |
285 |
|||||||||||
|
Deposits with regulated |
||||||||||||||||
|
financial institutions |
21 |
16 |
60 |
94 |
242 |
|||||||||||
|
759 |
842 |
987 |
3,398 |
3,761 |
||||||||||||
|
Interest expense |
||||||||||||||||
|
Deposits |
332 |
366 |
492 |
1,520 |
1,791 |
|||||||||||
|
Interest bearing liabilities of |
42 |
46 |
56 |
195 |
213 |
|||||||||||
|
Debentures |
10 |
9 |
10 |
39 |
39 |
|||||||||||
|
384 |
421 |
558 |
1,754 |
2,043 |
||||||||||||
|
Net interest income |
375 |
421 |
429 |
1,644 |
1,718 |
|||||||||||
|
Non-interest revenue |
||||||||||||||||
|
Deposit and payment service |
30 |
27 |
27 |
112 |
100 |
|||||||||||
|
Credit fees |
30 |
32 |
29 |
124 |
116 |
|||||||||||
|
Capital market fees |
22 |
17 |
27 |
88 |
109 |
|||||||||||
|
Investment administration fees |
28 |
34 |
35 |
130 |
131 |
|||||||||||
|
Foreign exchange |
13 |
12 |
13 |
49 |
44 |
|||||||||||
|
Trade finance |
7 |
6 |
5 |
24 |
23 |
|||||||||||
|
Trading revenue |
104 |
37 |
41 |
209 |
112 |
|||||||||||
|
Losses on available-for-sale |
(55) |
|
(13) |
|
(34) |
|
(68) |
|
(13) |
|
||||||
|
Gains on other securities |
– |
– |
2 |
2 |
11 |
|||||||||||
|
Securitization income |
22 |
15 |
13 |
87 |
42 |
|||||||||||
|
Other |
22 |
4 |
40 |
80 |
106 |
|||||||||||
|
223 |
171 |
198 |
837 |
781 |
||||||||||||
|
Total revenue |
598 |
592 |
627 |
2,481 |
2,499 |
|||||||||||
|
Non-interest expenses |
||||||||||||||||
|
Salaries and employee benefits |
137 |
167 |
168 |
644 |
687 |
|||||||||||
|
Premises and equipment |
44 |
39 |
42 |
165 |
153 |
|||||||||||
|
Other |
114 |
108 |
129 |
421 |
431 |
|||||||||||
|
295 |
314 |
339 |
1,230 |
1,271 |
||||||||||||
|
Net operating income before provision |
||||||||||||||||
|
for credit losses |
303 |
278 |
288 |
1,251 |
1,228 |
|||||||||||
|
Provision for credit losses |
136 |
86 |
72 |
379 |
239 |
|||||||||||
|
Income before taxes and non- |
||||||||||||||||
|
controlling interest in income of trust |
167 |
192 |
216 |
872 |
989 |
|||||||||||
|
Provision for income taxes |
38 |
62 |
85 |
253 |
347 |
|||||||||||
|
Non-controlling interest in income of trust |
7 |
6 |
7 |
26 |
26 |
|||||||||||
|
Net income |
122 |
124 |
124 |
593 |
616 |
|||||||||||
|
Preferred share dividends |
7 |
4 |
5 |
20 |
18 |
|||||||||||
|
Net income attributable to common |
||||||||||||||||
|
shares |
115 |
120 |
119 |
573 |
598 |
|||||||||||
|
Average common shares outstanding (000) |
517,122 |
526,349 |
521,349 |
524,042 |
517,599 |
|||||||||||
|
Basic earnings per share (C$) |
0.22 |
0.23 |
0.23 |
1.09 |
1.16 |
|||||||||||
|
HSBC Bank Canada |
Condensed Consolidated Balance Sheet (Unaudited) |
|
Figures in C$ millions |
At 31 December |
At 31 December |
||||||||
|
Assets |
||||||||||
|
Cash and non-interest bearing deposits with banks |
434 |
554 |
||||||||
|
Interest bearing deposits with regulated financial institutions |
1,421 |
3,120 |
||||||||
|
1,855 |
3,674 |
|||||||||
|
Available-for-sale securities |
9,683 |
5,704 |
||||||||
|
Trading securities |
1,079 |
1,227 |
||||||||
|
Other securities |
56 |
60 |
||||||||
|
10,818 |
6,991 |
|||||||||
|
Securities purchased under |
||||||||||
|
reverse repurchase agreements |
6,682 |
6,122 |
||||||||
|
Loans |
||||||||||
|
– Businesses and government |
23,067 |
21,322 |
||||||||
|
– Residential mortgage |
11,869 |
12,920 |
||||||||
|
– Consumer finance loans |
4,029 |
5,041 |
||||||||
|
– Other consumer loans |
5,296 |
4,826 |
||||||||
|
– Allowance for credit losses |
(615) |
|
(514) |
|
||||||
|
43,646 |
43,595 |
|||||||||
|
Customers liability under acceptances |
5,209 |
5,727 |
||||||||
|
Derivatives |
2,448 |
623 |
||||||||
|
Land, buildings and equipment |
180 |
172 |
||||||||
|
Other assets |
1,211 |
1,226 |
||||||||
|
9,048 |
7,748 |
|||||||||
|
Total assets |
72,049 |
68,130 |
||||||||
|
Liabilities and shareholders equity |
||||||||||
|
Deposits |
||||||||||
|
– Regulated financial institutions |
1,264 |
1,535 |
||||||||
|
– Individuals |
21,064 |
18,292 |
||||||||
|
– Businesses and governments |
29,634 |
29,051 |
||||||||
|
51,962 |
48,878 |
|||||||||
|
Acceptances |
5,209 |
5,727 |
||||||||
|
Interest bearing liabilities of subsidiaries, other than deposits |
4,164 |
5,182 |
||||||||
|
Derivatives |
2,023 |
660 |
||||||||
|
Securities sold under repurchase agreements |
715 |
320 |
||||||||
|
Securities sold short |
631 |
623 |
||||||||
|
Other liabilities |
1,974 |
1,897 |
||||||||
|
Non-controlling interest in trust and subsidiary |
430 |
430 |
||||||||
|
15,146 |
14,839 |
|||||||||
|
Subordinated debentures |
788 |
801 |
||||||||
|
Shareholders equity |
||||||||||
|
– Preferred shares |
696 |
350 |
||||||||
|
– Common shares |
1,225 |
1,293 |
||||||||
|
– Contributed surplus |
– |
232 |
||||||||
|
– Retained earnings |
1,950 |
1,736 |
||||||||
|
– Accumulated other comprehensive income |
282 |
1 |
||||||||
|
4,153 |
3,612 |
|||||||||
|
Total liabilities and shareholders equity |
72,049 |
68,130 |
||||||||
|
HSBC Bank Canada |
Condensed Consolidated Statement of Cash Flows (Unaudited) |
|
Quarter ended |
Year ended |
|||||||||||||||||||
|
31
|
30
|
31
|
31
|
31
|
||||||||||||||||
|
Figures in C$ millions |
2008 |
2008 |
2007 |
2008 |
2007 |
|||||||||||||||
|
Cash flows provided by (used in): |
||||||||||||||||||||
|
– operating activities |
62 |
417 |
14 |
1,212 |
1,259 |
|||||||||||||||
|
– financing activities |
342 |
(718) |
1,001 |
2,073 |
5,440 |
|||||||||||||||
|
– investing activities |
(503) |
298 |
(844) |
(3,393) |
(6,553) |
|||||||||||||||
|
(Decrease) increase in |
(99) |
(3) |
171 |
(108) |
146 |
|||||||||||||||
|
Cash and cash |
519 |
522 |
357 |
528 |
382 |
|||||||||||||||
|
Cash and cash |
420 |
519 |
528 |
420 |
528 |
|||||||||||||||
|
Represented by: |
||||||||||||||||||||
|
– Cash and
non-interest |
434 |
535 |
554 |
|||||||||||||||||
|
– less
non-operating |
(14) |
(16) |
(26) |
|||||||||||||||||
|
– Cash and cash |
420 |
519 |
528 |
|||||||||||||||||
|
W Non-operating deposits comprise cash restricted for recourse on securitization transactions. |
||||||||||||||||||||
Appendix I
Acquisition of HSBC Financial Corporation Limited
Effective November 30, 2008, the
Bank acquired HSBC Financial, the consideration for which was an issue to another HSBC
Group company of 86,450,000 Class 2, Series B Preferred Shares, with a fair value of
C$346 million, which approximated the net book value of HSBC Financial at November 30,
2008. The transaction has been accounted for as a transfer of a business under common
control using the continuity of interests method and results and financial position for
current and prior periods have been restated to include the income, assets, liabilities
and shareholders equity of HSBC Financial at their recorded net book values. As no new
equity was contributed, the issue of Class 2 preferred shares was recorded as a
recapitalization of shareholders equity as follows:
|
Figures in C$ millions |
||||
|
Cancellation of common shares of HSBC Financial Corporation |
68 |
|||
|
Charge to contributed surplus |
239 |
|||
|
Charge to retained earnings |
39 |
|||
|
Total |
346 |
|||
The impact of this restatement on
net income for 2008 and 2007 including earnings previously reported in 2008 was as
follows:
|
Quarter ended |
Year ended |
||||||||||||||
|
31 December |
30 September |
31 December |
31 D ecember |
31 December |
|||||||||||
|
Figures in C$ millions |
2008 |
2008 |
200 7 |
2008 |
2007 |
||||||||||
|
HSBC Bank Canada |
107 |
121 |
111 |
524 |
530 |
||||||||||
|
HSBC Financial |
8 |
(1) |
|
8 |
49 |
68 |
|||||||||
|
Total |
115 |
120 |
119 |
573 |
598 |
||||||||||
The effects of the acquisition on the consolidated income statements and consolidated balance sheets of the bank as at or for the years ended 31 December 2008 and 2007 are as follows:
Consolidated Income Statement
|
2008 |
|||||||||
|
Figures in C$ millions |
Pro -forma excluding HSBC Financial (1) |
|
|
||||||
|
Net interest income |
|
1,168 |
$ |
476 |
|
1,644 |
|||
|
Non-interest revenue |
778 |
59 |
837 |
||||||
|
Total revenue |
1,946 |
535 |
2,481 |
||||||
|
Non-interest expense |
1,008 |
222 |
1,230 |
||||||
|
Net operating income before
provision for |
938 |
313 |
1,251 |
||||||
|
Provision for credit losses |
151 |
228 |
379 |
||||||
|
Income before provision for
income taxes and non- |
787 |
85 |
872 |
||||||
|
Provision for income taxes |
219 |
34 |
253 |
||||||
|
Non-controlling interest in income of trust |
26 |
– |
26 |
||||||
|
Net income |
542 |
51 |
593 |
||||||
|
Preferred shares |
18 |
2 |
20 |
||||||
|
Net income attributable to common shares |
524 |
49 |
573 |
||||||
Consolidated Balance
Sheet
|
2008 |
|||||||||
|
Figures in C$ millions |
Pro-forma excluding HSBC Financial(1) |
Impact of |
Total |
||||||
|
Assets |
|||||||||
|
Cash resources |
|
1,815 |
|
40 |
|
1,855 |
|||
|
Securities |
10,772 |
46 |
10,818 |
||||||
|
Securities purchased under reverse repurchase agreements |
6,682 |
– |
6,682 |
||||||
|
Loans |
39,812 |
3,834 |
43,646 |
||||||
|
Other assets |
8,909 |
139 |
9,048 |
||||||
|
67,990 |
4,059 |
72,049 |
|||||||
|
Liabilities and Shareholders Equity |
|||||||||
|
Deposits |
51,961 |
1 |
51,962 |
||||||
|
Other liabilities |
11,435 |
3,711 |
15,146 |
||||||
|
Subordinated debt |
788 |
– |
788 |
||||||
|
Shareholders equity |
3,806 |
347 |
4,153 |
||||||
|
67,990 |
4,059 |
72,049 |
|||||||
|
(1) Represents the following customer groups: Personal Financial Services, Commercial Banking, and Global Banking and Markets; excluding Consumer Finance. |
|||||||||
Consolidated Income Statement
|
2007 |
|||||||||
|
Figures in C$ millions |
HSBC Bank Canada as previously reported |
HSBC Financial |
|
||||||
|
Net interest income |
|
1,222 |
|
496 |
|
1,718 |
|||
|
Non-interest revenue |
708 |
73 |
781 |
||||||
|
Total revenue |
1,930 |
569 |
2,499 |
||||||
|
Non-interest expense |
997 |
274 |
1,271 |
||||||
|
Net operating income before
provision for |
933 |
295 |
1,228 |
||||||
|
Provision for credit losses |
67 |
172 |
239 |
||||||
|
Income before provision for
income taxes and non- |
866 |
123 |
989 |
||||||
|
Provision for income taxes |
292 |
55 |
347 |
||||||
|
Non-controlling interest in income of trust |
26 |
– |
26 |
||||||
|
Net income |
548 |
68 |
616 |
||||||
|
Preferred shares |
18 |
– |
18 |
||||||
|
Net income attributable to common shares |
530 |
68 |
598 |
||||||
Consolidated Balance Sheet
|
2007 |
|||||||||
|
Figures in C$ millions |
HSBC Bank Canada as previously reported |
|
|
||||||
|
Assets |
|||||||||
|
Cash resources |
|
3,573 |
|
101 |
|
3,674 |
|||
|
Securities |
6,926 |
65 |
6,991 |
||||||
|
Securities purchased under reverse repurchase agreements |
6,122 |
– |
6,122 |
||||||
|
Loans |
38,715 |
4,880 |
43,595 |
||||||
|
Other assets |
7,595 |
153 |
7,748 |
||||||
|
62,931 |
5,199 |
68,130 |
|||||||
|
Liabilities and Shareholders Equity |
|||||||||
|
Deposits |
48,877 |
1 |
48,878 |
||||||
|
Other liabilities |
10,005 |
4,834 |
14,839 |
||||||
|
Subordinated debt |
801 |
– |
801 |
||||||
|
Shareholders equity |
3,248 |
364 |
3,612 |
||||||
|
62,931 |
5,199 |
68,130 |
|||||||
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
HSBC Holdings plc
By:
Name: P A Stafford
Title: Assistant Group Secretary
Date: February 20, 2009