HSBC Bank Canada reports that its net income increased 21.9% to $206 million for the year ended December 31 compared to $169 million in 2000.

Return on equity was 14.9% for the year, compared to 15.3% for the same period in 2000 due primarily to a higher level of retained capital. Martin Glynn, president and CEO of HSBC Bank Canada said, “We are pleased with the results for 2001, as the underlying business of the bank performed strongly. There was improved profitability from all of our business lines despite the challenging economic environment. We are also proud of the increasing recognition in independent market surveys of the high quality of our customer service.”

Net interest income for the fourth quarter of 2001 was $197 million, an increase of $18 million over the fourth quarter of 2000 and in line with the third quarter of 2001. “Higher net interest income was achieved from a combination of growth in the loan and customer deposit portfolios and higher spreads due to improved pricing and lower funding costs,” said Glynn.

Other income was $111 million in the fourth quarter of 2001 compared to $113 million in the fourth quarter of 2000. Capital market fees for the fourth quarter and year were $29 million and $98 million, respectively. This compared with $36 million and $162 million for the similar periods in 2000. “Equity markets performed poorly, resulting in lower capital market and trading revenues. However, this was more than offset by cost containment measures and reduced performance-related expenses as a result of the poor markets,” Glynn noted.

The provision for credit losses was $30 million in the fourth quarter of 2001 compared to $7 million in the same quarter of 2000 and $24 million for the third quarter of 2001. For the year, the provision for credit losses was $92 million compared to $39 million for 2000. The allowance for credit losses was in excess of impaired loans by $33 million at December 31.”Although the credit quality of our loan portfolio remains sound, we felt it prudent to increase provisions compared to the third quarter of 2001 to cover a small number of deteriorating commercial facilities and to maintain general allowances at an appropriate level,” Glynn said.

Looking ahead, he noted, “In 2002 we will build upon the achievements of 2001, in an environment of continuing risk and uncertainty. We will aim to do this by providing the highest levels of customer service in Canada and using HSBC’s international presence and expertise.”