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Fourth quarter 2013 financial performance
Summary consolidated income statement
Quarter ended
31 December
2013
$m
31 December
2012
$m
30 September
2013
$m
Net interest income ............................................................................... 316 348 319
Net fee income ...................................................................................... 151 154 152
Net trading income ................................................................................ 34 45 42
Net expense from financial instruments designated at fair value ......... (2) (3) –
Gains less losses from financial investments ........................................ 64 2
Other operating income/(expense) ........................................................ 19 (26) 7
Gain on sale of full service retail brokerage business ........................... –4 –
Net operating income before loan impairment charges and other
credit risk provisions ........................................................................ 524 526 522
Loan impairment charges and other credit risk provisions ................... (39) (33) (9)
Net operating income ............................................................................. 485 493 513
Total operating expenses ........................................................................ (270) (277) (271)
Operating profit ...................................................................................... 215 216 242
Share of profit in associates .................................................................. 17 2 9
Profit before income tax expense ............................................................ 232 218 251
Income tax expense ............................................................................... (50) (64) (65)
Profit for the quarter ............................................................................... 182 154 186
Overview
HSBC Bank Canada reported a profit before income
tax expense of $232m for the fourth quarter of 2013,
an increase of $14m, or 6%, compared with the fourth
quarter of 2012, and a decrease of $19m, or 8%,
compared with the third quarter of 2013.
Profit before income tax expense in the fourth quarter
of 2012 included a $42m write down in the value of
investment property. Excluding the impact of the write
down, profit before income tax expense decreased by
$28m, or 11%, compared with the same quarter last
year primarily due to lower net interest income from
the declining run-off consumer finance portfolio. The
decrease in profit before income tax expense compared
with the prior quarter is primarily due to higher levels of
specific provisions within Commercial Banking.
Performance by income and expense item
Net interest income
Net interest income for the fourth quarter of 2013 was
$316m, a decrease of $32m, or 9%, compared with the
fourth quarter of 2012 and broadly unchanged compared
with the third quarter of 2013. Net interest income
decreased compared with the same quarter last year
primarily due to declining loan balances of the run-off
consumer finance portfolio and the sale of the consumer
private label credit card portfolio during the prior quarter
as well as a reduction in net interest spread.
HSBC BANK CANADA
Management’s Discussion and Analysis (continued)
18