HSBC Bank Canada recorded net income of $195 million for the nine months ended September 30, an increase of $32 million, or 19.6%, from $163 million for the nine months ended Sept. 30, 2001. Net income for the quarter was $78 million compared to $57 million for the third quarter of 2001, an increase of 36.8%.

The increase was primarily attributed to higher net interest income and a lower effective tax rate, partially offset by a larger credit loss provision. Martin Glynn, president and CEO, said, “Net interest income continues to be strong and benefited from continued growth in our residential mortgage portfolio and higher net interest margins during the quarter. We are encouraged that revenue from our non-market sensitive lines of business has continued to grow. However, weakness in the equity markets has continued to dampen our capital market revenues relative to the prior year comparative periods.”

Net interest income for the third quarter of 2002 was $222 million, an increase of $26 million, or 13.3%, from $196 million in the third quarter of 2001. Other income was $105 million in the third quarter of 2002 compared to $102 million in the third quarter of 2001. Other income for the third quarter benefited from higher fees generated in the merchant banking business. This was partially offset by the negative impact on capital market fees, resulting from the continuing uncertainty in global equity markets and the restructuring of the institutional equity business announced in the second quarter of this year. Non-interest expenses were $165 million in the quarter, compared to $171 million in the third quarter of 2001.

The provision for credit losses was $34 million in the third quarter of 2002 compared to $24 million in the third quarter of 2001. For the nine months, the provision for credit losses was $102 million compared to $62 million for the same period in 2001. The higher provision levels in 2002 reflect an exposure to the telecommunications sector. “Provisions for credit losses were higher in the third quarter of 2002 compared to the third quarter of last year but were lower than the second quarter of 2002. Overall, underlying credit quality remains strong and we remain adequately provisioned,” said Glynn.

Funds under management were $10 billion, compared to $10.5 billion at June 30 and $9.0 billion at September 2001. Including custody and administration balances, total assets under administration were $14.1 billion compared with $14.7 billion at June 30.