HSBC Bank Canada today reported slightly higher profit in the third quarter as increased interest income and fewer bad loans was offset by higher expenses as the bank grew its operations.

Canada’s largest foreign owned bank reported Tuesday it earned profits of $84 million for the three months ended September 30, up 3.7% from $81 million for the same period last year.

Interest income in the quarter rose to $389 million from $369, while total assets increased to $42.3 billion from $37 billion a year earlier.

Return on average common equity – fell to 16.4% for the quarter from 19.7% in 2003.

“Results for the quarter were satisfactory,” Lindsay Gordon, president and chief executive, said in a release.

“Credit losses remain stable given the favourable conditions in the overall market. As a result of the growth in our business, non-interest expenses have increased accordingly during the quarter,” Gordon added.

The bank said non-interest expenses rose to $207 million, including $6 million from its newly acquired Intesa Canada bank, for the quarter. That compared with $183 million for the same 2003 quarter.

Salaries and benefits in 2004 were higher than last year and included $4 million from Intesa, the bank said.

Meanwhile, the bank set aside $10 million for credit losses in the quarter, down from $14 million last year.

“Our integration of Intesa Bank Canada is on track and we expect to complete outstanding tasks, with minimal impact to our customers, during the fourth quarter of 2004,” said Gordon.