hsba201102236k.htm
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
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- ..............).
 
 
 
 
 

 
 
 

 
 
23 February 2011
 
 
HSBC BANK CANADA
RESULTS FOR THE FOURTH QUARTER
AND YEAR ENDED 31 DECEMBER 2010 W 
 
 
·
Reported net income attributable to common shares was C$104 million for the quarter ended 31 December 2010, a decrease of 29.7 per cent over the same period in 2009.  
 
·
Reported net income attributable to common shares was C$429 million for the year ended 31 December 2010, a decrease of 4.2 per cent compared with C$448 million for the year ended 31 December 2009.WW
 
·
Return on average common equity was 11.4 per cent for the quarter ended 31 December 2010 and 12.1 per cent for the year ended 31 December 2010 compared with 17.3 per cent and 13.1 per cent, respectively, for the same periods in 2009.WW
 
·
The cost efficiency ratio was 56.9 per cent for the quarter ended 31 December 2010 and 57.4 per cent for the year ended 31 December 2010 compared with 47.6 per cent and 51.4 per cent, respectively, for the same periods in 2009.
 
·
Total assets were C$71.5 billion at 31 December 2010, an increase of C$0.2 billion, or 0.3 per cent, from C$71.3 billion at 31 December 2009.
 
·
Total funds under management were C$31.5 billion at 31 December 2010, an increase of C$3.3 billion, or 11.7 per cent, from C$28.2 billion at 31 December 2009.
 
·
Tier 1 capital ratio of 13.3 per cent and a total capital ratio of 16.0 per cent at 31 December 2010 compared to 12.1 per cent and 14.9 per cent respectively at 31 December 2009.WW
 
   
W 
Results are prepared in accordance with Canadian generally accepted accounting principles. On 1 January 2011, the Bank transitioned to International Financial Reporting Standards and future results will be prepared and disclosed on that basis.
   
WW 
Calculated using guidelines issued by the Office of the Superintendent of Financial Institutions in accordance with Basel II capital adequacy framework.


 


Overview
 
HSBC Bank Canada recorded net income attributable to common shares for the fourth quarter of 2010 of C$104 million, a decrease of C$44 million, or 29.7 per cent compared with the C$148 million reported in the same period in 2009. Net income attributable to common shares for the year ended 31 December 2010 was C$429 million, compared with the C$448 million reported in the same period in 2009, a decrease of C$19 million or 4.2 per cent. The results were impacted by fair value accounting on economic hedges and changes in the market values of certain non-trading financial assets and liabilities, which are recorded in the Global Banking and Markets business. Even though no economic gain or loss occurred, these adjustments resulted in a mark-to-market loss of C$196 million in 2010, compared to a gain of C$69 million in 2009. Income before income taxes excluding these items increased by 37.8 per cent for the year ended 31 December 2010, compared to the same period in 2009.
 
Commenting on the results, Lindsay Gordon, President and Chief Executive Officer of HSBC Bank Canada, said:
 
"Improving economic conditions, a reduction in credit losses and HSBC's strong business fundamentals delivered another solid set of operating results for 2010. We continued to focus on generating growth, building on our global capabilities to meet our customer needs, while maintaining strong capital and liquidity levels.
 
We expect the economy to show modest but continued improvement through 2011 and HSBC is very strongly placed to support our clients' growth ambitions as the Canadian employment picture improves and trade with emerging markets increases."
 
Business Performance in the Fourth Quarter of 2010
 
Personal Financial Services (PFS)
 
Key Initiatives
·
Launched HSBC BRIC Global Stock Market Guaranteed Investment Certificate product providing customers access to the upside potential of the dynamic Brazil, Russia, India and China markets.
·
Launched a New Money Promotion targeting existing HSBC clients and prospective clients by offering 1 per cent bonus interest on new money to invite them to upgrade to Premier or Advance, which offer individually tailored packages of exclusive financial services to our internationally-minded, mass-affluent and emerging affluent customers.
 
The loss before income taxes was C$13 million for the fourth quarter of 2010, compared with income before income taxes of C$32 million for the same period in 2009, and income of C$32 million for the year, compared with C$56 million in 2009. Total revenue decreased in the quarter and the year as a result of lower interest income due to tight spreads on personal deposits and lower securitization income. Higher staff incentive and commission expenses arising from increased revenues in the securities business also contributed to the loss in the fourth quarter and the decrease in income for the year.
 
Commercial Banking (CMB)
 
Key Initiatives
·
Continued to leverage our Global Banking and Markets capabilities and international connectivity through our Global Links system which tracks and measures cross-border CMB referrals within HSBC worldwide, resulting in increased referrals and revenues from foreign exchange, equity and debt capital markets, and derivative instruments.
·
Continued to execute our Business Direct strategy, with new clients added and the successful migration of existing customers to our online platform.
·
Driven by Payments and Cash Management initiatives, CMB's deposits have grown C$1.7 billion, or 10.8 per cent, year on year.
 
Income before income taxes for the fourth quarter of 2010 was C$94 million, compared with C$97 million in the same quarter in 2009, and C$521 million for the year, compared with C$410 million in 2009. Net interest income increased in the quarter and for the year, driven by higher net interest margins and growth in commercial deposits from the Mid-Market and Business Banking segments, partially offset by lower lending volumes, primarily in the Commercial Real Estate and Mid-Market segments, commensurate with reduced commercial borrowings by corporations broadly across the marketplace. Non-interest revenue also increased compared to the prior year, primarily from growth in credit fees and trade finance revenues. The increase in revenues was partially offset by higher non-interest expenses, primarily related to staff remuneration as a result of increased corporate performance, marketing to promote our leading international business proposition and branch network charges. The provision for credit losses for the year decreased by C$40 million compared with 2009, reflecting reduced levels of impaired loans in the trade, manufacturing and service sectors as a result of improved credit and economic conditions.
 
Global Banking and Markets (GBM)
 
Key Initiatives
·
Continued to focus on cross-border capital market and banking activities by leveraging our global capabilities.
·
Successful implementation of a new Treasury risk management system.
 
Income before income taxes for the GBM business for the fourth quarter of 2010 was C$89 million, compared with C$101 million in the same period in 2009, and was C$120 million for the year, compared with C$301 million for 2009. Excluding the impact of mark-to-market accounting losses, discussed below under Non-Interest Revenue, income before taxes was C$84 million in the fourth quarter, or C$9 million lower than the same period in 2009 and C$316 million for the year, or C$84 million higher than in 2009. The quarter over quarter decline was mainly due to a $22 million decrease in capital market fees, reflecting higher client trading volumes and higher structuring and advisory fees in the fourth quarter of 2009. The increase in 2010 compared to 2009 was due mainly to an increase in net interest income from reductions in funding and liquidity costs, and the positive impact from the increase in the Bank of Canada interest rates and the stable interest rate environment.
 
Consumer Finance (CF)
 
Key Initiative
·
Continued to manage risk and improved credit quality.
 
Income before income taxes for the CF business for the fourth quarter of 2010 was C$10 million compared with income of C$7 million in the same period in 2009, and was C$53 million for the year,  compared with a loss before income taxes of C$29 million for 2009. The primary reason for the improved results in 2010 is a decrease in the provision for credit losses, which resulted from reduced delinquencies arising from the improvement in economic conditions combined with investments in credit collection processes and credit tightening decisions, partially offset by lower revenues due to a declining receivable base emanating from the aforementioned credit tightening decisions.
 


Analysis of Consolidated Financial Results for the Fourth Quarter of 2010
 
Net interest income
 
Net interest income for the fourth quarter of 2010 was C$388 million, compared with C$393 million for the same quarter in 2009, a decrease of C$5 million, or 1.3 per cent. The decrease was due to lower consumer finance loan volumes resulting from credit tightening decisions and a shift in asset mix from higher earning commercial loans to lower yielding government securities as a result of a lower demand for credit. This was partially offset by a reduction in funding and liquidity costs and the positive impact of higher interest rates.
 
Net interest income was C$1,557 million for the year ended 31 December 2010 compared with C$1,479 million in the same period last year, an increase of C$78 million, or 5.3 per cent. Net interest margin increased by 9 basis points to 2.49 per cent, while average interest earning assets increased by C$0.8 billion. This increase primarily resulted from a reduction in funding and liquidity costs and the positive impact of higher interest rates and a more stable interest rate environment compared to 2009. This was partially offset by a shift in asset mix from commercial loans to government securities and lower consumer finance loan volumes.
 
Non-interest revenue 
 
Non-interest revenue was C$283 million in the fourth quarter of 2010, compared with C$309 million for the same quarter in 2009, a decrease of C$26 million, or 8.4 per cent. One of the main factors affecting the comparability of the periods is the impact of mark-to-market accounting adjustments under Canadian generally accepted accounting principles, which requires that changes in the fair values of derivatives used as hedges for certain of the bank's non-trading assets and liabilities that do not qualify for hedge accounting are recorded in income although no economic gain or loss has arisen. This includes derivatives related to certain mortgage securitization programs where the bank does not expect to realize any gains or losses as the intent is to hold such derivatives to maturity. Excluding the impact of these mark-to-market accounting adjustments, non-interest revenue decreased by C$23 million in the fourth quarter of 2010, or 7.6 per cent, compared with the same quarter in 2009. The other main factors contributing to the lower non-interest revenue were lower capital market fees in the GBM business as mentioned above and a C$28 million decrease in securitization income due to lower securitization volumes. These reductions were partially offset by higher investment administration fees in PFS, reflecting the increased market values of customer portfolios compared to the prior year, driven by strong sales of investment products and improving equity markets. Revenues were also higher from loan insurance and the Global Investor Immigration Services program ("GIIS").
 
Non-interest revenue was C$936 million for the year ended 31 December 2010, compared with C$1,097 million in the same period last year, a decrease of C$161 million, or 14.7 per cent. Excluding the impact of the mark-to-market adjustments noted above, non-interest revenue increased by C$104 million, or 10.1 per cent in 2010 compared with 2009. The increase was primarily due to higher investment administration fees, insurance revenue and GIIS fees, offset by lower securitization income, as noted above. In addition, credit fees were higher due to pricing initiatives in the CMB business and trading revenues were also higher, due to a C$21 million recovery of previously recorded losses on the disposal of substantially all of the bank's non-bank Canadian asset backed commercial paper in 2010, and higher gains on securities sold during 2010 compared to 2009. In 2009, non-interest revenue was adversely impacted by a C$20 million provision related to a loss contingency from a prior year.
 
Non-interest expenses
 
Non-interest expenses of C$382 million in the fourth quarter of 2010 were C$48 million or 14.4 per cent higher than the same period in 2009. Salaries and employee benefits were C$26 million higher, or 14.9 per cent, compared to the previous year, primarily due to increases in commissions and performance-based incentives, as a result of better underlying performance, and an increase in the post-retirement benefits expense. Other non-interest expenses were C$23 million higher mainly due to increased marketing expenditures and higher brokerage expenses resulting from increased activity in the GIIS program.
 
For the year ended 31 December 2010, non-interest expenses were C$1,432 million in 2010, compared with C$1,323 million in the same period last year, an increase of C$109 million or 8.2 per cent, primarily due to the same factors noted above for the fourth quarter. The cost efficiency ratio was 57.4 per cent for 2010 compared to 51.4 per cent in 2009. Excluding the impact of the mark-to-market accounting gains and losses noted above, the cost efficiency ratio was 53.3 per cent compared to 52.8 per cent in the prior year.
 
Credit quality and provision for credit losses
 
The provision for credit losses was C$109 million in the fourth quarter of 2010 compared to C$131 million in the fourth quarter of 2009. For the year ended 31 December 2010, the provision for credit losses decreased by C$180 million, or 35.0 per cent, to C$335 million in 2010. Although conditions remain uncertain, the improvement in 2010 compared to 2009 was due to a decrease in specific provisions for credit losses on the bank's commercial loan portfolio and lower delinquencies in the Consumer Finance business, both reflecting improved economic conditions. Gross impaired credit exposures were C$829 million, compared with C$1,022 million at 31 December 2009. Total impaired exposures net of specific allowances for credit losses were C$602 million at 31 December 2010, compared with C$836 million at 31 December 2009. Total impaired exposures includes C$152 million (31 December 2009 - C$214 million) of Consumer Finance and other consumer loans, for which impairment is assessed collectively. The general allowance applicable to Consumer Finance loans was C$146 million compared to C$201 million at 31 December 2009. The total general allowance was C$398 million compared to C$452 million at 31 December 2009. The total allowance for credit losses, as a percentage of loans and acceptances outstanding, was 1.5 per cent at 31 December 2010, unchanged from 31 December 2009.
 
Income taxes
 
The effective tax rate in the fourth quarter of 2010 was 31.2 per cent, compared with 28.7 per cent in the same quarter of 2009 and 30.0 per cent for the year, compared with 29.1 per cent in 2009. The tax rates in the comparative periods in 2009 were lower due to the recognition of a tax refund with respect to income earned in the British Columbia international finance centre.
 
Balance sheet
 
Total assets at 31 December 2010 were C$71.5 billion, an increase of C$0.2 billion from 31 December 2009. Liquidity was strong, with C$27.9 billion of cash resources, securities and reverse repurchase agreements at 31 December 2010, compared to C$25.1 billion at 31 December 2009. This increase was partially offset by a decrease of C$2.2 billion in business and government loans and customers liabilities under acceptances from the end of 2009, as a result of lower borrowing demands from clients who are de-leveraging their exposures following the effect of the world-wide recession and a reduction in our commercial real estate exposures. There was also a decrease in Consumer Finance receivables of C$0.6 billion as a result of lower loan originations arising from credit tightening decisions.
 
Total deposits increased to C$52.1 billion at 31 December 2010 from C$50.2 billion at 31 December 2009. The main drivers for the increase were business deposits together with smaller increases in wholesale deposits, which are included in business and government deposits.
 
Dividends
 
During the fourth quarter of 2010, the bank declared and paid C$70 million in dividends on HSBC Bank Canada common shares, unchanged from the same period in 2009. 
 
Regular quarterly dividends of 31.875 cents per share have been declared on HSBC Bank Canada Class 1 Preferred Shares - Series C, 31.25 cents per share on Class 1 Preferred Shares - Series D, 41.25 cents per share on Class 1 Preferred Shares - Series E and 7.75 cents per share on Class 2 Preferred Shares - Series B. Dividends will be payable on 31 March 2011, for shareholders of record on 15 March 2011.
 
About HSBC Bank Canada
 
HSBC Bank Canada, a subsidiary of HSBC Holdings plc, has more than 260 offices, including over 140 bank branches, and is the leading international bank in Canada. With around 8,000 offices in 86 countries and territories and assets of US$2,418 billion at 30 June 2010, the HSBC Group is one of the world's largest banking and financial services organizations.
 
Media enquiries to:
Ernest Yee
604-641-2973
 
Sharon Wilks
416-868-3878
 
Copies of HSBC Bank Canada's 2010 Annual Report will be sent to shareholders in March 2011.
 
 
Caution concerning forward-looking statements
 
This document may contain forward-looking information, including statements regarding the business and anticipated actions of HSBC Bank Canada. These statements can be identified by the fact that they do not pertain strictly to historical or current facts. Forward-looking statements often include words such as "anticipates," "estimates," "expects," "projects," "intends," "plans," "believes," and words and terms of similar substance in connection with discussions of future operating or financial performance. 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 the bank's net interest margin may arise from actions taken by individual banks or other financial institutions acting alone. Varying economic conditions may also affect equity and foreign exchange markets, which could also have an impact on the bank's revenues. The factors disclosed above are not exhaustive and there could be other uncertainties and potential risk factors not considered here which may impact the bank's results and financial condition. Any forward-looking statements speak only as of the date of this document. The bank undertakes no obligation to, and expressly disclaims any obligation to, update or alter our forward-looking statements, whether as a result of new information, subsequent events or otherwise, except as required by law.
 
 

 
 

 
 
Summary
 
Quarter ended
  
Year ended
Figures in C$ millions
31 December
  
30 September
  
31 December
  
31 December
  
31 December
(except per share amounts)
2010
  
2010
  
2009
  
2010
  
2009
                   
Earnings
                  
Net income attributable to common 
  shares
 
$
 
104
  
 
$
 
89
  
 
$
 
148
  
 
429
  
 
448
Basic earnings per share (C$)
0.21
  
0.18
  
0.30
  
0.86
  
0.90
                   
Performance ratios (per cent)
                  
Return on average common equity
11.4
  
9.9
  
17.3
  
12.1
  
13.1
Return on average assets
0.57
  
0.49
  
0.81
  
0.59
  
0.62
Net interest marginW
2.42
  
2.50
  
2.52
  
2.49
  
2.40
Cost efficiency ratioWW
56.9
  
59.2
  
47.6
  
57.4
  
51.4
Non-interest revenue:total revenue
     ratio  
 
42.2
  
 
35.3
  
 
44.0
  
 
37.5
  
 
42.6
                   
Credit information
                  
Gross impaired credit exposures
$
829
  
$
917
  
$
1,022
        
Allowance for credit losses
                  
  - Balance at end of period
625
  
621
  
638
        
  - As a percentage of gross                
          impaired credit exposures
 
75.4
 
%
 
67.7
 
%
 
62.4
 
%
      
- As a percentage of gross loans    
           and acceptances
 
1.5
 
%
 
1.5
 
%
 
1.5
 
%
      
                   
Average balances
                  
Assets
72,411
  
72,288
  
72,749
  
72,211
  
71,695
Loans
34,551
  
35,512
  
37,220
  
35,752
  
39,644
Deposits
54,491
  
53,344
  
53,309
  
53,524
  
52,019
Common equity
3,626
  
3,610
  
3,418
  
3,534
  
3,417
                   
Capital ratios (per cent)WWW
                  
Tier 1
13.3
  
13.1
  
12.1
        
Total capital
16.0
  
15.8
  
14.9
        
                   
Total assets under administration
                
Funds under management
31,501
  
29,707
  
28,174
        
Custodial accounts
8,978
  
9,389
  
10,721
        
Total assets under administration
$
40,479
  
$
39,096
  
$
38,895
        
                   
 
                                           

 
W      Net interest margin is net interest income divided by average interest earning assets for the period.
  
WW     The cost efficiency ratio is defined as non-interest expenses divided by total revenue.
  
WWW    Calculated using guidelines issued by the Office of the Superintendent of Financial Institution Canada in accordance with Basel II
    capital adequacy framework.
  
 

 
 

 
 
Consolidated Statement of Income (Unaudited)

 

 
 
Quarter ended
  
Year ended
  
Figures in C$ millions
31 December
  
30 September
  
31 December
  
31 December
  
31 December
  
(except per share amounts)
2010
  
2010
  
2009
  
2010
  
2009
  
                     
Interest income:
                    
     Loans
$
476
  
$
470
  
$
468
  
$
1,830
  
$
1,986
  
     Securities
87
  
76
  
71
  
301
  
275
  
     Deposits with regulated financial institutions
5
  
4
  
4
  
16
  
14
  
   
568
    
550
    
543
    
2,147
    
2,275
  
                     
Interest expense:
                    
     Deposits
155
  
130
  
115
  
480
  
637
  
     Interest bearing liabilities of subsidiaries, other
                    
          than deposits
17
  
16
  
25
  
77
  
120
  
     Subordinated debentures
8
  
8
  
10
  
33
  
39
  
   
180
    
154
    
150
    
590
    
796
  
                     
Net interest income
  
388
    
396
    
393
    
1,557
    
1,479
  
                     
Non-interest revenue:
                    
     Deposit and payment service fees
28
  
28
  
27
  
111
  
110
  
     Credit fees
51
  
49
  
49
  
194
  
165
  
     Capital market fees
36
  
24
  
58
  
119
  
153
  
     Investment administration fees
38
  
36
  
33
  
143
  
117
  
     Foreign exchange
12
  
12
  
10
  
48
  
41
  
     Trade finance
7
  
6
  
5
  
24
  
24
  
     Trading revenue
19
  
19
  
21
  
104
  
95
  
     Gains (losses) on available-for-sale and other securities
2
  
3
  
(1)
  
14
  
8
  
     Securitization income
11
  
22
  
39
  
83
  
102
  
     Other non-interest revenue
74
  
81
  
60
  
292
  
213
  
     Other mark-to-market accounting gains (losses), net
5
  
(64)
  
8
  
(196)
  
69
  
   
283
    
216
    
309
    
936
    
1,097
  
Total revenue
  
671
    
612
    
702
    
2,493
    
2,576
  
                     
Non-interest expenses:
                    
     Salaries and employee benefits
201
  
187
  
175
  
753
  
732
  
     Premises and equipment, including amortization
44
  
42
  
45
  
175
  
173
  
     Other
137
  
133
  
114
  
504
  
418
  
   
382
    
362
    
334
    
1,432
    
1,323
  
                     
Net operating income before provision for credit
                            
     losses
  
289
    
250
    
368
    
1,061
  
1,253
  
                     
Provision for credit losses
  
109
    
97
    
131
    
335
    
515
  
                     
Income before taxes and non-controlling
                    
     interest in income of trust
180
  
153
  
237
  
726
  
738
  
Provision for income taxes
54
  
42
  
66
  
210
  
207
  
Non-controlling interest in income of trust
7
  
6
  
7
  
26
  
26
  
Net income
$
119
  
$
105
  
$
164
  
$
490
  
$
505
  
Preferred share dividends
  
15
    
16
    
16
    
61
  
57
  
Net income attributable to common shares
$
104
  
$
89
  
$
148
  
$
429
  
$
448
  
                     
Average number of common shares outstanding (000)
498,668
  
498,668
  
498,668
  
498,668
  
498,668
  
Basic earnings per common share (C$)
0.21
  
0.18
  
0.30
  
0.86
  
0.90
  
 
  
Consolidated Balance Sheet (Unaudited)
 
 
At 31 December  
 
At 31 December
  
Figures in C$ millions
2010   
 
2009
  
         
Assets
        
Cash resources:
        
     Cash and non-interest bearing deposits with the Bank of Canada
        
           and other banks
$
513   
 
$
652   
 
     Deposits with regulated financial institutions
2,173   
 
1,245   
 
 
2,686   
 
1,897   
 
         
Securities:
        
     Available-for-sale
15,804   
 
12,682   
 
     Held-for-trading
2,254   
 
1,986   
 
     Other
40   
 
41   
 
 
18,098   
 
14,709   
 
         
Securities purchased under reverse repurchase agreements
7,155   
 
8,496   
 
         
Loans:
        
     Business and government
16,847   
 
18,442   
 
     Residential mortgages
11,243   
 
11,359   
 
     Consumer finance loans
2,599   
 
3,199   
 
     Other consumer loans
5,905   
 
5,742   
 
     Allowance for credit losses
(625)   
 
(638)   
 
 
35,969   
 
38,104   
 
Other:
        
     Customers' liability under acceptances
4,372   
 
4,966   
 
     Derivatives
1,364   
 
1,100   
 
     Land, buildings and equipment
123   
 
142   
 
     Other assets
1,729   
 
1,923   
 
 
7,588   
 
8,131   
 
 
$
71,496   
 
$
71,337   
 
         
Liabilities and Shareholders' equity
        
Deposits:
        
     Regulated financial institutions
$
1,071   
 
$
754   
 
     Individuals
21,586   
 
21,578   
 
     Businesses and governments
29,398   
 
27,875   
 
 
52,055   
 
50,207   
 
Other:
        
     Acceptances
4,372   
 
4,966   
 
     Interest bearing liabilities of subsidiaries, other than deposits
2,363   
 
3,324   
 
     Derivatives
1,329   
 
897   
 
     Securities sold under repurchase agreements
1,560   
 
2,517   
 
     Securities sold short
1,262   
 
1,148   
 
     Other liabilities
3,079   
 
2,650   
 
     Non-controlling interest in trust and subsidiary
230   
 
430   
 
 
14,195   
 
15,932   
 
         
Subordinated debentures
739   
 
834   
  
Shareholders' equity:
        
     Capital stock
        
          Preferred shares
946   
 
946   
 
          Common shares
1,225   
 
1,225   
 
     Contributed surplus
12   
  
7
  
     Retained earnings
2,262   
 
2,113   
 
     Accumulated other comprehensive income
62   
 
73   
  
 
4,507   
 
4,364   
 
Total liabilities and shareholders' equity
$
71,496   
 
$
71,337   
 
                     
 
 
 Condensed Consolidated Statement of Cash Flows (Unaudited)
 
 
Quarter ended
  
Year ended
  
 
31 December
  
30 September
  
31 December
  
31 December
  
31 December
  
Figures in C$ millions
2010
  
2010
  
2009
  
2010
  
2009
  
                     
Cash flows provided by (used in):
                    
- operating activities
$
1,361
  
$
(567)
  
$
433
  
$
1,481
  
$
979
  
- financing activities
(808)
  
759
  
235
  
(711)
  
(882)
  
- investing activities
  
(877)
    
71
    
(1,206)
    
(896)
    
122
  
                     
(Decrease) increase in cash and cash equivalents
(324)
  
263
  
(538)
  
(126)
  
219
  
Cash and cash equivalents, beginning of period
837
  
574
  
1,177
  
639
  
420
  
Cash and cash equivalents, end of period
$
513
  
$
837
  
$
639
  
$
513
  
$
639
  
                     
Represented by:
                    
 -  Cash resources per balance sheet
$
513
  
$
852
  
$
652
          
     - less non-operating depositsW
  
-
    
(15)
    
(13)
          
-   Cash and cash equivalents, end of period
$
513
  
$
837
  
$
639
          
                     
W Non-operating deposits are comprised primarily of cash restricted for recourse on securitization transactions.
  
 

Customer Group Segmentation (Unaudited) 
 
The bank reports and manages its operations according to the customer group definitions of the HSBC Group.
 
Quarter ended
  
Year ended
  
 
31 December
  
30 September
  
31 December
  
31 December
  
31 December
  
 
2010
  
2010
  
2009
  
2010
  
2009
  
                     
Personal Financial Services
                    
Net interest income
$
71
  
$
77
  
$
95
  
$
296
  
$
357
  
Non-interest revenue
92
  
110
  
115
  
420
  
364
  
Total revenue
163
  
187
  
210
  
716
  
721
  
Non-interest expenses
170
  
167
  
164
  
657
  
623
  
Net operating (loss) income
(7) 
 
20
  
46
  
59
  
98
  
Provision for credit losses
6
  
6
  
14
  
27
  
42
  
(Loss) income before taxes
(13) 
 
14
  
32
  
32
  
56
  
(Recovery of) provision for income taxes
(3) 
 
3
  
12
  
9
  
16
  
Non-controlling interest in income of trust
1
  
1
  
1
  
5
  
5
  
Net (loss) income
(11) 
 
10
  
19
  
18
  
35
  
Preferred share dividends
2
  
1
  
3
  
7
  
7
  
Net (loss) income attributable to common shares
$
(13) 
 
$
9
  
$
16
  
$
11
  
$
28
  
Average assets
$
16,464
  
$
17,769
  
$
18,474
  
$
17,787
  
$
18,290
  
                     
Commercial Banking
                    
Net interest income
$
187
  
$
190
  
$
172
  
$
749
  
$
692
  
Non-interest revenue
95
  
102
  
92
  
385
  
318
  
Total revenue
282
  
292
  
264
  
1,134
  
1,010
  
Non-interest expenses
118
  
108
  
96
  
430
  
377
  
Net operating income
164
  
184
  
168
  
704
  
633
  
Provision for credit losses
70
  
57
  
71
  
183
  
223
  
Income before taxes
94
  
127
  
97
  
521
  
410
  
Provision for income taxes
25
  
34
  
15
  
146
  
101
  
Non-controlling interest in income of trust
4
  
4
  
4
  
16
  
16
  
Net income
65
  
89
  
78
  
359
  
293
  
Preferred share dividends
5
  
6
  
5
  
21
  
18
  
Net income attributable to common shares
$
60
  
$
83
  
$
73
  
$
338
  
$
275
  
Average assets
$
20,330
  
$
21,977
  
$
22,855
  
$
22,088
  
$
24,249
  
                     
Global Banking and Markets
                    
Net interest income
59
  
52
  
37
  
203
  
53
  
Non-interest revenue (loss)
72
  
(5) 
 
94
  
73
  
396
  
Total revenue
131
  
47
  
131
  
276
  
449
  
Non-interest expenses
46
  
40
  
31
  
163
  
136
  
Net operating income
85
  
7
  
100
  
113
  
313
  
(Recovery of) provision for credit losses
(4) 
 
-
  
(1) 
 
(7) 
 
12
  
Income before taxes
89
  
7
  
101
  
120
  
301
  
Provision for income taxes
34
  
1
  
36
  
41
  
100
  
Non-controlling interest in income of trust
2
  
1
  
2
  
5
  
5
  
Net income
53
  
5
  
63
  
74
  
196
  
Preferred share dividends
1
  
2
  
1
  
6
  
5
  
Net income attributable to common shares
$
52
  
$
3
  
$
62
  
$
68
  
$
191
  
Average assets
$
33,056
  
$
29,874
  
$
28,204
  
$
29,537
  
$
25,626
  
                     
Consumer Finance
                    
Net interest income
71
  
77
  
89
  
309
  
377
  
Non-interest revenue (loss)
24
  
9
  
8
  
58
  
19
  
Total revenue
95
  
86
  
97
  
367
  
396
  
Non-interest expenses
48
  
47
  
43
  
182
  
187
  
Net operating income
47
  
39
  
54
  
185
  
209
  
Provision for credit losses
37
  
34
  
47
  
132
  
238
  
Income (loss) before taxes
10
  
5
  
7
  
53
  
(29)
  
Provision for (recovery of) income taxes
(2) 
 
4
  
3
  
14
  
(10)
  
Net income (loss)
12
  
1
  
4
  
39
  
(19)
  
Preferred share dividends
7
  
7
  
7 
 
27
  
27
  
Net income (loss) attributable to common shares
$
5
  
$
(6) 
 
$
(3)
  
$
12
  
$
(46)
  
Average assets
$
2,561
  
$
2,668
  
$
3,216
  
$
2,799
  
$
3,530
  
 



 
 
 

 
 
 
 
 
 

 
 
 
 
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: 23 February, 2011