HSBC Bank Canada recorded net income of $41 million for its latest quarter. That’s down from $51 million for the second quarter of 2001, a decrease of 19.6%.

The decrease is largely the result of a one-off restructuring cost of $28 million due the withdrawal from institutional equity sales, trading and research activities, said Martin Glynn, president and CEO, in a news release. “The decision to withdraw from institutional equities sales, trading and research activities was a difficult one, but we believe that it was necessary. We must ensure that we continue to operate in businesses that are profitable or strategically relevant to our North American and international operations.”

“The expansion of our wealth management business is a core component of HSBC’s overall growth strategy for Canada. As we continue to implement this strategy, I am confident that we will be successful in maintaining our reputation for outstanding customer service.”

Net interest income for the second quarter of 2002 was $213 million, an increase of $27 million over the second quarter of 2001. The increase in net interest income in the first half of 2002 was driven primarily by growth residential mortgages as the low interest rate environment had a positive impact on the housing market across Canada. The net interest margin widened to 2.86% for the half, compared with 2.67% for the similar period in 2001.

Non-interest expenses were $205 million in the quarter, compared to $172 million in the second quarter of 2001. Salaries and employee benefits were lower due primarily to lower performance-based compensation. Other non-interest expenses, excluding restructuring costs, were higher primarily due to a one-off operating loss.

The provision for credit losses was $43 million in the quarter, compared to $25 million in the second quarter of 2001. The higher provision level in the second quarter of this year related to an exposure in the telecommunications sector. The allowance for credit losses was in excess of impaired loans by $12 million.

Funds under management were $11 billion, compared to $11.1 billion at March 31 and $10 billion at the end of June 2001. Net new funds invested by customers during the second quarter of 2002 offset the fall in the equity markets over the same period. Including custody and administration balances, total assets under administration were $15.4 billion, an increase of $2 billion over 31 March 2002. This increase was attributed to HSBC Securities (Canada) Inc. assuming carrying broker activities for Merrill Lynch HSBC Canada Inc. in the second quarter of 2002.