HSBC Bank Canada second quarter 2007 results - highlights

30 July 2007

• Net income attributable to common shares was C$135 million for the quarter ended 30 June 2007, an increase of 17.4 per cent over the quarter ended 30 June 2006.
• Net income attributable to common shares was C$274 million for the half-year ended 30 June 2007, an increase of 18.6 per cent over the same period in 2006.
• Return on average common equity was 20.7 per cent for the quarter ended 30 June 2007 and 21.4 per cent for the half-year ended 30 June 2007 compared with 19.9 per cent and 20.3 per cent respectively for the same periods in 2006.
• The cost efficiency ratio was 51.2 per cent for the quarter ended 30 June 2007 and 51.7 per cent for the half-year ended 30 June 2007 compared with 52.6 per cent and 52.8 per cent respectively for the same periods in 2006.
• Total assets were C$61.2 billion at 30 June 2007 compared with C$53.1 billion at 30 June 2006.
• Total funds under management were C$25.8 billion at 30 June 2007 compared with C$21.7 billion at 30 June 2006.

Results are prepared in accordance with Canadian generally accepted accounting principles.

Overview

HSBC Bank Canada recorded net income attributable to common shares of C$135 million for the quarter ended 30 June 2007, an increase of C$20 million, or 17.4 per cent, from C$115 million for the second quarter of 2006.  Net income attributable to common shares for the first half of 2007 was C$274 million compared with C$231 million for the same period in 2006, an increase of C$43 million, or 18.6 per cent.

Net income attributable to common shares in the first and second quarters of 2007 benefited from gains of C$14 million and C$7 million respectively, after related income taxes, on the sale of the bank's shares in the Montreal Exchange. Excluding these gains, net income attributable to common shares for the second quarter of 2007 increased by 11.3 per cent compared to the equivalent quarter in 2006 and net income attributable to common shares for the first half of 2007 increased by 9.5 per cent from the same period last year.
 
Commenting on the results, Lindsay Gordon, President and Chief Executive Officer, said: "HSBC Bank Canada has achieved satisfactory results for the quarter with good year-on-year revenue and net income growth. All of our business lines reported growth in net income in the first half of 2007 compared with the same period last year. Our Commercial Banking business continues to achieve strong results spurred by robust asset growth arising from the continuing strength of the Canadian economy, while maintaining a high level of credit quality. Our Personal Financial Services business has been adversely affected by slower residential mortgage growth and by competitive pressures on interest margins. Our Corporate, Investment Banking and Markets business has benefited from growth in fee income from a number of advisory and underwriting mandates.

"Our focus for the remainder of 2007 will be on leveraging initiatives to enhance sales and improve efficiencies in our operations, while continuing to further develop our direct banking capabilities. The launch in 2006 of our in-branch High Rate savings account was a success and we have followed this up with the recent launch of our internet only Direct Savings account with an introductory rate of 5.0 per cent. The Commercial Banking business will continue to expand distribution and product offerings in the Payments and Cash Management business, leveraging the capabilities of HSBC Group platforms, including systems and software."