Finding Economic Clues in HSBC's Results

| About: HSBC Holdings (HSBC)
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By Tara Perkins

HSBC Bank Canada (HBC) posted its third-quarter results on Wednesday and, as always, a number of analysts and bank investors will be wading through them for clues about how the big banks will fare when they report their results in a few weeks.

In total, HSBC Bank Canada recorded profit of $101 million for the three months ended Sept. 30, down 15.8% from a year ago. (The big banks are on a different fiscal year, and their latest quarter, the fourth, ran until the end of October).

Its core banking operations – personal financial services, commercial banking, and global banking and markets – had a net interest margin of 1.89%, down from 2.07% a year ago. Falling interest rates have resulted in lower interest income on its floating rate loans, and the decrease in the amount of interest it had to pay for customer deposits was not enough to offset that.

On the bright side, capital market fees were $18 million higher thanks to an increase in underwriting and higher commissions on client trading. And the bank’s provision for bad loans came in at $97 million, up from $86 million a year ago but significantly lower than the $126 million provision it booked in the second quarter of this year.