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 October, 2005
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- ..............)
HSBC BANK CANADA
THIRD QUARTER 2005 RESULTS - HIGHLIGHTS
-Net income attributable to common shares was C$325 million for the nine
months ended 30 September 2005, an increase of 25.5 per cent over the same
period in 2004.
-Net income attributable to common shares was C$113 million for the
quarter ended 30 September 2005, an increase of 37.8 per cent over the third
quarter of 2004.
-Return on average common equity was 20.4 per cent for the nine months
ended 30 September 2005 and 20.9 per cent for the quarter ended 30 September
2005 compared with 19.0 per cent and 16.4 per cent, respectively, for the
same periods in 2004.
-The cost:income ratio was 52.9 per cent for the nine months ended 30
September 2005 and 51.2 per cent for the quarter ended 30 September 2005
compared with 56.1 per cent and 58.1 per cent, respectively, for the same
periods in 2004.
-Total assets were C$49.4 billion at 30 September 2005 compared with
C$42.3 billion at 30 September 2004.
-Total funds under management were C$19.9 billion at 30 September 2005
compared with C$16.2 billion at 30 September 2004.
Financial Commentary
Overview
HSBC Bank Canada recorded net income attributable to common shares of C$325
million for the nine months ended 30 September 2005, an increase of C$66
million, or 25.5 per cent, from C$259 million for the same period in 2004. Net
income attributable to common shares for the quarter ended 30 September 2005 was
C$113 million, an increase of C$31 million, or 37.8 per cent, from C$82 million
for the quarter ended 30 September 2004.
Commenting on the results, Lindsay Gordon, President and Chief Executive
Officer, said: "Results for the quarter continue to be robust. The stable
interest rates in Canada and strong economy continue to provide stimulus for
growth. Net income in 2005 benefited from strong performance across all customer
groups, which helped increase both net interest income and non-interest revenue.
A stable credit environment in Canada and a strong economy has helped keep
provision for credit losses lower in 2005 compared with 2004. In Personal
Financial Services, growth in residential mortgages, consumer loans, and funds
under management all contributed to improved performance. In Commercial Banking,
growth in lending volumes contributed to strong revenue growth. Revenue in
Corporate, Investment Banking and Markets was impacted by the flatter yield
curve in 2005.
"We are excited about the launch of two new initiatives in the quarter which
will help us to deepen our existing client relationships and attract new
customers. Our LifeMapTM investment solution of bundled underlying mutual funds
will help simplify investing as well as align investors' changing needs
throughout all stages of their life. Our MasterCard product was upgraded to
include two new HSBC Rewards programs: HSBC Travel & Merchandise Rewards, or
HSBC Cash Back Rewards.
"With our positive results for this quarter and year-to-date, we have good
momentum leading into the final quarter of 2005. We will ensure that our focus
remains on executing core business strategies to achieve our growth objectives."
Net interest income
Net interest income for the nine months ended 30 September 2005 was C$741
million, up C$74 million or 11.1 per cent, compared with C$667 million for the
same period in 2004. For the quarter ended 30 September 2005, net interest
income was C$261 million, C$31 million or 13.5 per cent higher, compared with
C$230 million for the same quarter in 2004. Growth in net interest income during
2005 has been aided by growth in assets from each of our customer groups.
Despite tightening of interest rates in the US over the course of 2005, and the
one increase in Canada in September of this year, economic sentiment remains
positive. Average assets were C$46.5 billion for the nine months ended 30
September 2005 compared with C$39.6 billion for the same period in 2004 and
C$48.8 billion for the quarter ended 30 September 2005 compared with C$40.9
billion for the same quarter last year.
Net interest margins were negatively impacted by lower average interest rates in
2005 compared with 2004. The net interest margin, as a percentage of average
interest earning assets, was 2.38 per cent for the nine months ended 30
September 2005 compared with 2.53 per cent for the same period in 2004. For the
quarter ended 30 September 2005 the net interest margin was 2.36 per cent
compared with 2.51 per cent for the same period in 2004. Net interest margins
have been impacted in 2005 by continued competitive product pricing,
particularly in personal financial services. Additionally, a flatter yield curve
in 2005 has impacted net interest margins in our treasury and markets groups.
Non-interest revenue
Non-interest revenue was C$429 million for the nine months ended 30 September
2005, C$46 million or 12.0 per cent higher, compared with C$383 million for the
same period in 2004. For the quarter ended 30 September 2005, non-interest
revenue was C$145 million, up C$19 million or 15.1 per cent, compared with C$126
million for the same quarter in 2004.
Credit fees were higher in 2005 due to increased activity in commercial banking,
particularly in shorter term facilities such as bankers' acceptances, financial
guarantees and letters of credit. Capital market fees improved slightly in the
third quarter of 2005 as customers increased their retail trading activity on
the back of improved equity markets in Canada, driven by higher natural resource
prices. Investment administration fees increased in 2005 due to higher funds
under management, driven partly by increases in our Private Client products.
Foreign exchange revenues in 2005 have benefited from the significant volatility
of the exchange rate between the Canadian and US dollars. Other non-interest
revenue is higher in 2005 from stronger fee income from our Canadian Immigrant
Investor Program ("CIIP") and due to upward fair value adjustments to our
investment company assets, resulting from new accounting requirements in 2005.
Non-interest expenses
Non-interest expenses were C$619 million for the nine months ended 30 September
2005, C$30 million or 5.1 per cent higher, compared with C$589 million for the
same period in 2004. For the quarter ended 30 September 2005 non-interest
expenses were C$208 million compared with C$207 million for the same quarter in
2004.
Salaries and benefits for the nine months ended 30 September 2005 were higher
than the same period in 2004 due to an increased employee base resulting from
the acquisition of Intesa Bank Canada in 2004, investments in our branch
network, and higher variable-based compensation. In the third quarter of 2005,
employee benefits were lower as a result of adjustments to our pension plan
expenses. Other non-interest expenses were higher for the nine months to 30
September 2005 compared with 2004 due to higher transactions costs associated
with increased volumes in our brokerage subsidiary and administration fees
associated with the CIIP. In addition, increased activity in banking operations
resulted in higher administrative and technical services fees. Non-interest
expenses in 2005 included a net credit arising from successful resolution of
certain commodity tax issues from previous years.
Credit quality and provision for credit losses
Provision for credit losses was C$21 million for the nine months ended 30
September 2005 compared with C$44 million in the same period of 2004. For the
quarter ended 30 September 2005 the provision for credit losses was C$7 million
compared with C$10 million in the same period last year. Credit quality remains
stable, as has been the case for most of 2005, and reflects the strong economic
conditions in Canada and the United States. This has resulted in lower default
rates, primarily in loans to businesses, and related allowances for credit
losses.
Gross impaired loans decreased C$58 million to C$132 million at 30 September
2005 compared with C$190 million at 30 September 2004. Gross impaired loans to
businesses were C$104 million at 30 September 2005 compared with C$153 million
at 30 September 2004. Gross impaired consumer loans were C$28 million at 30
September 2005 compared with C$37 million at the same time last year. Total
impaired loans, net of specific allowances, were C$78 million at 30 September
2005 compared with C$108 million at 30 September 2004. The general allowance for
credit losses was C$283 million compared with C$273 million at 30 September
2004. The total allowance for credit losses, as a percentage of loans
outstanding, was 1.04 per cent per cent at 30 September 2005 compared with 1.25
per cent at 30 September 2004.
Balance sheet
Total assets at 30 September 2005 were C$49.4 billion, an increase of C$6.1
billion, or 14.1 per cent, from C$43.3 billion at 31 December 2004 and an
increase of C$7.1 billion, or 16.8 per cent, from C$42.3 billion at 30 September
2004. Loan growth during 2005 was strong across all customer groups and was
supported by strong economic conditions and stable interest rates in Canada.
Commercial loans increased by $1.7 billion in 2005 to C$15.1 billion at 30
September 2005. Residential mortgages and consumer loans grew by C$2.2 billion
to C$17.4 billion in total at 30 September 2005.
Total deposits at 30 September 2005 were C$38.6 billion, an increase of C$4.8
billion from C$33.8 billion at 31 December 2004 and an increase of C$5.6 billion
from C$33.0 billion at 30 September 2004. Commercial deposits and deposits from
banks increased during 2005 by C$4.3 billion to C$23.3 billion in total as at 30
September 2005. This increase was used to fund the increase in loans over the
period. During 2005, personal deposits increased C$0.4 billion to C$15.3 billion
as at 30 September 2005. At constant exchange rates, this increase would have
been C$0.6 billion.
Total assets under administration
Funds under management were C$19.9 billion at 30 September 2005 compared with
C$16.2 billion at the same time last year and C$18.8 billion at 30 June 2005.
Including custody and administration balances, total assets under administration
were C$26.5 billion compared with C$24.7 billion at 30 June 2005 and C$21.4
billion at 30 September 2004.
Funds under management grew in the third quarter of 2005 due to increased
activity in our securities brokerage firm, as Canadian equity markets improved
supported by higher natural resource prices, and increases in funds in our
Private Client products. Custodial assets under administration grew C$0.7
billion in the third quarter due largely to higher institutional business
volumes in our trust company.
Capital ratios
The tier 1 capital ratio was 8.7 per cent and the total capital ratio was 10.9
per cent at 30 September 2005. This compares with 8.7 per cent and 11.2 per
cent, respectively, at 30 September 2004.
On 30 September 2005, all of the issued and outstanding Class 1 Preferred Shares
- Series A, totalling C$125 million, were redeemed for C$25.00 per share.
Dividends
During the third quarter of 2005, we declared and paid a C$75 million dividend
on our common shares. For the fourth quarter of 2005, a C$75 million dividend on
our common shares was declared. A regular dividend of 31.875 cents per share has
been declared on the Class 1 Preferred Shares - Series C. The preferred share
dividends will be payable in cash on 31 December 2005, for shareholders of
record on 15 December 2005.
About HSBC Bank Canada
HSBC Bank Canada, a subsidiary of HSBC Holdings plc, has more than 170 offices.
With over 9,700 offices in 77 countries and territories and assets of US$1,467
billion at 30 June 2005, the HSBC Group is one of the world's largest banking
and financial services organisations. For more information about HSBC Bank
Canada and its products and services, visit our website at hsbc.ca.
HSBC Bank Canada's third quarter 2005 report will be sent to shareholders during
November 2005.
Basis of presentation
These consolidated financial statements have been prepared in accordance with
Canadian generally accepted accounting principles.
Forward-looking financial information
This document contains forward-looking statements, including statements
regarding the business and anticipated financial performance of HSBC Bank
Canada. These statements are subject to a number of risks and uncertainties that
may cause actual results to differ materially from those contemplated by the
forward-looking statements. Some of the factors that could cause such
differences include legislative or regulatory developments, technological
change, global capital market activity, changes in government monetary and
economic policies, changes in prevailing interest rates, inflation levels and
general economic conditions in geographic areas where HSBC Bank Canada operates.
Canada is an extremely competitive banking environment and pressures on interest
rates and our net margin may arise from actions taken by individual banks acting
alone. Varying economic conditions may also affect equity and foreign exchange
markets, which could also have an impact on our revenues. The factors disclosed
above may not be complete and there could be other uncertainties and potential
risk factors not considered here which may impact our results and financial
condition.
Summary
Figures in Quarter ended Nine months ended
C$ millions
(except
per share
amounts) 30Sep05 30Jun05 30Sep04 30Sep05 30Sep04
Earnings
Net income
attributable
to common
shares 113 104 82 325 259
Basic earnings
per share 0.23 0.21 0.17 0.67 0.54
Performance
ratios (%)
Return on
average
common equity 20.9 19.7 16.4 20.4 19.0
Return on
average
assets 0.92 0.90 0.80 0.93 0.87
Net interest
margin 2.36 2.34 2.51 2.38 2.53
Cost:income
ratio 51.2 54.6 58.1 52.9 56.1
Non-interest
revenue:total
revenue ratio 35.7 36.6 35.4 36.7 36.5
Credit
information
Impaired loans 132 125 190
Allowance for
credit losses
- Balance at
end of
period 337 338 355
- As a
percentage
of impaired
loans 255% 270% 187%
- As a
percentage
of loans
outstanding 1.04% 1.09% 1.25%
Average
balances
Assets 48,754 46,523 40,925 46,502 39,552
Loans 31,535 29,901 27,727 30,102 26,481
Deposits 38,572 37,028 31,825 36,779 30,544
Common
equity 2,157 2,411 1,991 2,132 1,825
Capital ratios (%)
Tier 1 8.7 9.0 8.7
Total capital 10.9 11.2 11.2
Total assets under
administration
Funds under
management 19,872 18,820 16,220
Custody
accounts 6,585 5,875 5,190
Total assets
under
administration 26,457 24,695 21,410
Consolidated Statement of Income (Unaudited)
Figures in Quarter ended Nine months ended
C$ millions
(except per
share
amounts) 30Sep05 30Jun05 30Sep04 30Sep05 30Sep04
Interest and
dividend
income
Loans 417 396 352 1,187 1,030
Securities 31 25 20 80 60
Deposits with
regulated
financial
institutions 45 39 17 114 43
493 460 389 1,381 1,133
Interest expense
Deposits 226 211 150 621 440
Debentures 6 6 9 19 26
232 217 159 640 466
Net interest
income 261 243 230 741 667
Provision for
credit losses 7 6 10 21 44
Net interest
income after
provision for
credit losses 254 237 220 720 623
Non-interest
revenue
Deposit and
payment service
charges 20 22 20 62 61
Credit fees 23 24 21 69 60
Capital market
fees 25 24 21 81 78
Investment
administration
fees 24 17 16 58 45
Foreign exchange 19 19 16 55 50
Trade finance 7 7 8 21 22
Trading revenue 5 2 4 12 10
Securitization
income 5 5 6 18 21
Other 17 20 14 53 36
145 140 126 429 383
Net interest and
non-interest
revenue 399 377 346 1,149 1,006
Non-interest
expenses
Salaries and
employee
benefits 112 110 113 331 316
Premises and
equipment 26 27 26 80 79
Other 70 72 68 208 194
208 209 207 619 589
Income before
the undernoted 191 168 139 530 417
Effect of
accounting
change - - - - 14
Income before
provision for
income taxes
and
non-controlling
interest in
income of trust 191 168 139 530 431
Provision for
income taxes 67 55 51 179 159
Non-controlling
interest in
income of trust 7 5 4 16 12
Income from
continuing
operations 117 108 84 335 260
Income from
discontinued
operations^ - - - - 5
Net income 117 108 84 335 265
Preferred share
dividends 4 4 2 10 6
Net income
attributable to
common shares 113 104 82 325 259
Average common
shares
outstanding
(000) 488,668 488,668 488,668 488,668 478,513
Basic earnings
per share (C$) 0.23 0.21 0.17 0.67 0.54
^ Reflects the sale of HSBC Canadian Direct Insurance Incorporated effective 30
April 2004.
Condensed Consolidated Balance Sheet (Unaudited)
Figures in C$ millions At 30Sep05 At 31Dec04 At 30Sep04
Assets
Cash and deposits with
Bank of Canada 340 328 297
Deposits with regulated
financial institutions 5,191 4,094 4,123
5,531 4,422 4,420
Investment securities 2,912 1,967 2,023
Trading securities 1,459 1,055 966
4,371 3,022 2,989
Assets purchased under
reverse repurchase
agreements 1,821 2,264 2,002
Loans
- Businesses and government 15,122 13,450 13,230
- Residential mortgage 13,407 11,966 11,835
- Consumer 3,999 3,252 3,320
- Allowance for credit losses (337) (349) (355)
32,191 28,319 28,030
Customers' liability
under acceptances 3,903 3,754 3,560
Land, buildings and
equipment 95 101 95
Other assets 1,490 1,381 1,209
5,488 5,236 4,864
Total assets 49,402 43,263 42,305
Liabilities and shareholders'
equity
Deposits
- Regulated financial
institutions 1,960 635 594
- Individuals 15,267 14,818 14,822
- Businesses and
governments 21,353 18,395 17,595
38,580 33,848 33,011
Acceptances 3,903 3,754 3,560
Assets sold under repurchase
agreements 286 23 119
Other liabilities 3,400 2,785 2,725
Non-controlling interest
in trust and subsidiary 430 230 230
8,019 6,792 6,634
Subordinated debentures 423 426 501
Shareholders' equity
- Preferred shares 175 125 125
- Common shares 1,125 1,125 1,125
- Contributed surplus 184 177 175
- Retained earnings 896 770 734
2,380 2,197 2,159
Total liabilities and
shareholders' equity 49,402 43,263 42,305
Condensed Consolidated Statement of Cash Flows (Unaudited)
Quarter ended Nine months ended
Figures in
C$millions 30Sep05 30Jun05 30Sep04 30Sep05 30Sep04
Cash flows (used in)/
provided by:
- Operating
activities 412 (293) (28) 524 356
- Financing
activities 1,174 2,154 841 4,990 2,823
- Investing
activities (1,483) (1,623) (641) (4,697) (2,772)
Increase in cash and
Cash equivalents 103 238 172 817 407
Cash and cash
equivalents,
beginning of
period 4,721 4,483 3,684 4,007 3,449
Cash and cash
equivalents,
end of period 4,824 4,721 3,856 4,824 3,856
Represented by:
- Cash resources
per balance sheet 5,531 5,344 4,420
- less non-operating
deposits^ (707) (623) (564)
- Cash and cash
equivalents,
end of period 4,824 4,721 3,856
^ Non operating deposits are comprised primarily of cash which reprices after 90
days and cash restricted for recourse on securitization transactions.
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: 25 October 2005