HSBC Bank Canada 9 Mths Rslts

HSBC Holdings PLC
6 November 2001

                               HSBC BANK CANADA

                   THIRD QUARTER 2001 RESULTS - HIGHLIGHTS



* Income before taxes and non-controlling interest in income of subsidiaries
was C$296 million for the nine months ended 30 September 2001, an increase of
22.3 per cent over the same period in 2000.

* Income before taxes and non-controlling interest in income of subsidiaries
was C$103 million for the quarter ended 30 September 2001, an increase of 14.4
per cent over the comparative quarter in 2000.

* Net income was C$163 million for the nine months ended 30 September 2001, an
increase of 13.2 per cent over the comparative period in 2000.

* Net income was C$57 million for the quarter ended 30 September 2001, an
increase of 14.0 per cent over the comparative quarter in 2000.

* Return on average common equity was 15.5 per cent for the quarter and for
the nine months ended 30 September 2001.

* Total assets of C$32.6 billion at 30 September 2001 (C$29.1 billion at 30
September 2000).

* Total capital ratio of 10.9 per cent and tier 1 capital ratio of 8.3 per
cent at 30 September 2001 (11.0 per cent and 8.1 per cent respectively at 30
September 2000).



HSBC Bank Canada reports 22.3 per cent increase in income before taxes and
non-controlling interest in income of subsidiaries

HSBC Bank Canada recorded income before taxes and non-controlling interest in
income of subsidiaries of C$296 million for the nine months ended 30 September
2001, an increase of 22.3 per cent, compared to C$242 million for the similar
period in 2000. Net income for the nine months ended 30 September 2001 was
C$163 million, or C$19 million higher than the same period in 2000. Income
before taxes and non-controlling interest in income of subsidiaries was C$103
million for the three months ended 30 September 2001, an increase of C$13
million, or 14.4 per cent, over the third quarter of 2000. Net income was C$57
million for the three months ended 30 September 2001 compared to C$50 million
for the same period last year.

The underlying business of the bank performed strongly, as there was improved
profitability from the personal and commercial business lines, but return on
equity was adversely impacted by higher effective tax rates and the level of
retained capital. Return on equity was 15.5 per cent for the nine months ended
30 September 2001, compared to 16.5 per cent for the same period in 2000.
Return on equity was 15.5 per cent for the three months ended 30 September
2001 compared to 17.0 per cent for the same period in 2000.

The cost:income ratio, excluding amortisation of goodwill and intangible
assets, for the third quarter of 2001 improved to 56.7 per cent compared to
63.2 per cent for the comparable period in 2000. For the nine months ended 30
September 2001 the cost:income ratio, excluding amortisation of goodwill and
intangible assets, was 57.9 per cent compared to 66.6 per cent for the
comparable period in 2000.

Martin Glynn, president and chief executive officer, said: 'We are pleased
with results to date in the context of the challenging and uncertain economic
environment in which the bank operates. Our focus continues to be growing the
business across all operating segments.

'Overall net income and profitability continued to improve despite capital
market and trading revenues adversely impacted by the continued weakness in
equity markets. The improvement was due to higher net interest income, fuelled
by growth in average interest earning assets, lower funding costs and
continued control over operating expenses.

'Underlying credit quality remained strong across our entire loan portfolio,
but we felt it prudent to maintain provisions for credit losses at the same
level as that recorded in the second quarter of this year to cover a small
number of deteriorating commercial facilities.

'The tragic events of 11 September in the U.S. have had a negative impact in
Canada. However, we do not know the full effect on future economic conditions
at this time. We will strive to help our customers deal with these challenging
times by continuing to work closely with them to understand their needs and by
drawing on the global connections and financial strength of the HSBC Group.'

Financial Commentary

Net interest income

Net interest income for the third quarter of 2001 was C$196 million, an
increase of C$25 million, or 14.6 per cent, over the third quarter of 2000 and
C$10 million higher than the second quarter of 2001. For the nine months ended
30 September 2001 net interest income was C$557 million, an increase of 14.4
per cent over the comparative period in 2000. These increases were due to a
combination of continuing growth in the loan portfolio, primarily commercial
advances and residential mortgages and lower funding costs.

The net interest margin, as a percentage of average interest earning assets,
for the third quarter of 2001 was 2.76 per cent, 9 basis points higher than
the same period in 2000 and for the nine months ended 30 September 2001 was
2.70 per cent, 3 basis points higher than the comparable period in 2000. The
improvement in net interest margin resulted from a fall in funding costs as
the cost of funds fell in advance of anticipated decreases in the Canadian
prime and U.S. base lending rates. During the period to 30 September 2001, the
Canadian prime rate has decreased 225 basis points and the U.S. base lending
rate has dropped 350 basis points.

Other income

Other income was C$102 million in the third quarter of 2001 compared to C$106
million in the third quarter of 2000 and C$104 million in the second quarter
of 2001. For the nine months ended 30 September 2001, other income was C$308
million compared to C$349 million in 2000. The continuing weakness in the
global equity markets, which began in the first quarter of this year, has
resulted in lower other income. Capital market fees for the third quarter and
nine months ended 30 September 2001 were C$19 million and C$69 million,
respectively. This compared with C$31 million and C$126 million for the
similar periods in 2000, which included C$7 million and C$26 million,
respectively, of capital market fees from HSBC InvestDirect (Canada) Inc. ('
InvestDirect'). InvestDirect was transferred to the Merrill Lynch HSBC joint
venture ('Merrill Lynch HSBC') in the fourth quarter of 2000.

Excluding capital market fees and trading revenue, other income from the other
lines of business, primarily personal financial services and commercial
financial services, increased 12.3 per cent for the nine months ended 30
September 2001 compared to the similar period in 2000.

Non-interest expenses

Non-interest expenses were C$171 million in the quarter ended 30 September
2001 compared to C$177 million in the third quarter of 2000 and C$172 million
in the second quarter of 2001. For the nine months ended 30 September 2001,
non-interest expenses were C$507 million compared to C$562 million for the
same period of 2000. Salaries and employee benefits and other expenses were
lower due primarily to lower performance-based compensation and volume-driven
transaction expenses resulting from the lower capital market fees in 2001. The
nine months ended 30 September 2000 included C$11 million of non-interest
expenses from InvestDirect.

Provision for income taxes

The provision for income taxes was C$42 million for the third quarter of 2001
compared to C$36 million for the same quarter in 2000 and C$38 million in the
second quarter of 2001. On a year-to-date basis, the provision for income
taxes was C$121 million in 2001 compared to C$94 million in 2000. The higher
effective tax rate in 2001 was partly due to additional charges totalling C$5
million to reflect the reduced value of future income tax assets following the
fall in provincial corporate income tax rates.

Credit quality and provision for credit losses

The provision for credit losses was C$24 million in the third quarter of 2001
compared to C$10 million in the third quarter of 2000 and C$25 million for the
second quarter of 2001. For the nine months ended 30 September 2001, the
provision for credit losses was C$62 million compared to C$32 million for the
same period in 2000. The higher level of provisions in the second and third
quarters of this year resulted from the deterioration in a small number of
commercial facilities. Overall the credit quality remained strong. The
allowance for credit losses was in excess of impaired loans by C$52 million at
30 September 2001.

Balance sheet

Total assets at 30 September 2001 were C$32.6 billion, up C$3.2 billion from
31 December 2000. Loans increased by C$2.6 billion due primarily to the
continued growth of the commercial loan portfolio and residential mortgages
during 2001.

Total deposits increased C$3.0 billion from 31 December 2000 to 30 September
2001. Personal deposits grew C$1.0 billion to C$13.1 billion at 30 September
2001 compared to C$12.1 billion at 31 December 2000. Commercial deposits
increased by C$1.1 billion to C$11.8 billion over the same period.

Funds under management

Funds under management were C$9.5 billion at 30 September 2001 compared to
C$10.0 billion at 30 June 2001 and C$12.2 billion at 30 September 2000. The
decrease since 30 September 2000 related primarily to the reduction of C$1.7
billion in the fourth quarter of 2000 on the transfer of InvestDirect to
Merrill Lynch HSBC. The gross increase in funds under management over the nine
months ended 30 September 2001 was more than offset by a decline in market
values due to the weak global equity markets over the period.

Capital

The bank's tier 1 capital ratio was 8.3 per cent and the total capital ratio
was 10.9 per cent at 30 September 2001. This compares with 8.1 per cent and
11.0 per cent, respectively, at 30 September 2000 and 8.4 per cent and 11.1
per cent at 30 June 2001.

Dividends

At its meeting on 2 November 2001, the Board of Directors declared a regular
dividend of 39.0625 cents per share (totalling C$2 million) on the Class 1
Preferred Shares - Series A. The dividend will be payable in cash on 31
December 2001 for shareholders of record on 14 December 2001.

Shareholder information

HSBC Bank Canada, a subsidiary of HSBC Holdings plc, has more than 160
offices. With over 6,500 offices in 78 countries and territories and assets of
US$692 billion at 30 June 2001, the HSBC Group is one of the world's largest
banking and financial services organisations.

Copies of HSBC Bank Canada's third quarter 2001 report will be sent to
shareholders during November 2001.

This document may contain forward-looking statements, including statements
regarding the business and anticipated financial performance of HSBC Bank
Canada. These statements are subject to a number of risks and uncertainties
that may cause actual results to differ materially from those contemplated by
the forward-looking statements. Some of the factors that could cause such
differences include legislative or regulatory developments, competition,
technological change, global capital market activity, changes in government
monetary and economic policies, changes in prevailing interest rates,
inflation levels and general economic conditions in geographic areas where
HSBC Bank Canada operates.


Highlights
                                   Quarter ended            Nine months ended

Figures in C$ millions     30Sept01   30Jun01   30Sept00   30Sept01    30Sept00
(except per share amounts)

Earnings
Net interest income             196       186        171        557         487

Income before taxes and non-
controlling interest in         103        93         90        296         242
subsidiaries

Net income                       57        51         50        163         144

Basic earnings per share       0.12      0.11       0.15       0.34        0.44

Financial ratios (%)
Return on average common       15.5      14.6       17.0       15.5        16.5
equity

Return on average assets       0.68      0.63       0.65       0.67        0.60

Net interest margin            2.76      2.70       2.67       2.70        2.67

Cost:income ratio(^)           56.7      58.6       63.2       57.9        66.6

Provision for credit
losses:average                 0.40      0.44       0.18       0.36        0.20
loans and acceptances

Other income:total income      34.2      35.9       38.3       35.6        41.7
ratio

(^)Excluding amortisation of goodwill and intangible
assets

Figures in C$ millions                                At         At          At 
                                                30Sept01    31Dec00    30Sept00
Financial position
Total assets                                      32,628     29,438      29,147
Total loans                                       22,371     19,753      19,577
Total deposits                                    26,465     23,511      23,043
Shareholders' equity                               1,563      1,406       1,331

Total assets under
administration
Funds under management                             9,547     10,198      12,278
Custodial assets under                             2,172      2,500       2,585
administration

Capital ratios (%)
Total capital                                       10.9       11.5        11.0
Tier 1                                               8.3        8.6         8.1


Consolidated Statement of Income (Unaudited)

                                  Quarter ended            Nine months ended

Figures in C$ millions    30Sept01   30Jun01   30Sept00   30Sept01   30Sept00
(except per share
amounts)

Interest and dividend income

Loans                          368       373        382      1,119      1,047

Securities                      36        41         49        123        127

Deposits with regulated
 financial institutions         27        32         33        101        106

Total interest income          431       446        464      1,343      1,280

Interest expense

Deposits                      (227 )    (252 )     (285 )     (762 )     (771 )

Debentures                      (8 )      (8 )       (8 )      (24 )      (22 )

Total interest expense        (235 )    (260 )     (293 )     (786 )     (793 )

Net interest income            196       186        171        557        487

Provision for credit           (24 )     (25 )      (10 )      (62 )      (32 )
losses

Net interest income after
 provision for credit          172       161        161        495        455
 losses

Other income

Deposit and payment             17        17         14         50         42
service charges

Credit fees                     14        13         10         39         28

Capital market fees             19        26         31         69        126

Mutual fund and                 14        13         12         40         37
administration fees

Foreign exchange                13        12         12         37         35

Trade finance                    7         5          6         18         17

Trading revenue                  3         4          6         11         20

Securitization income            3         4          3         10          8

Other                           12        10         12         34         36

Total other income             102       104        106        308

Net interest and other         274       265        267        803        804
income

Non-interest expenses

Salaries and employee          (90 )     (87 )      (92 )     (261 )     (293 )
benefits

Premises and equipment         (25 )     (30 )      (26 )      (84 )      (83 )

Other                          (56 )     (55 )      (59 )     (162 )     (186 )

Total non-interest            (171 )    (172 )     (177 )     (507 )     (562 )
expenses

Income before taxes and
non-controlling interest
in income of subsidiaries      103        93         90        296        242

Provision for income           (42 )     (38 )      (36 )     (121 )      (94 )
taxes

Non-controlling interest
in income of subsidiaries       (4 )      (4 )       (4 )      (12 )       (4 )

Net income                      57        51         50        163        144

Preferred share dividends       (2 )      (2 )       (2 )       (6 )      (13 )

Net income attributable
to common shares                55        49         48        157        131

Average common shares
outstanding
 (000's)                   456,168   456,168    322,559    456,168    294,402

Basic earnings per share      0.12      0.11       0.15       0.34       0.44



Condensed Consolidated Balance Sheet (Unaudited)

Figures in C$ millions                            At          At           At
                                            30Sept01     31Dec00     30Sept00

Assets
Cash and deposits with Bank of Canada            335         375          376
Deposits with regulated financial              2,772       1,997        1,683
institutions                                   3,107       2,372        2,059

Investment securities                          2,383       2,840        3,113
Trading securities                               954         955          373
                                               3,337       3,795        3,486

Assets purchased under
 reverse repurchase agreements                   364         436          543

Loans
 Businesses and government                    12,554      11,330       11,431
 Residential mortgage                          7,977       6,809        6,427
 Consumer                                      2,158       1,899        2,003
 Allowance for credit losses                    (318 )      (285 )       (284 )
                                              22,371      19,753       19,577


Customers' liability under acceptances         2,113       2,134        2,201
Land, buildings and equipment                    116         118          121
Other assets                                   1,220         830        1,160
                                               3,449       3,082        3,482
Total assets                                  32,628      29,438       29,147


Liabilities and shareholders' equity
Deposits
 Regulated financial institutions              1,520         707          625
 Individuals                                  13,110      12,116       11,862
 Businesses and governments                   11,835      10,688       10,556
                                              26,465      23,511       23,043

Subordinated debentures                          446         422          422

Acceptances                                    2,113       2,134        2,201
Assets sold under repurchase agreements            -          15           99
Other liabilities                              1,811       1,720        1,821
Non-controlling interest in subsidiaries         230         230          230
                                               4,154       4,099        4,351
Shareholders' equity
 Preferred shares                                125         125          125
 Common shares                                   935         935          175
 Contributed surplus                             165         165          165
 Retained earnings                               338         181          866
                                               1,563       1,406        1,331

Total liabilities and shareholders'           32,628      29,438       29,147
equity


Condensed Consolidated Statement of Cash Flows (Unaudited)

                                  Quarter ended            Nine months ended

Figures in C$ millions    30Sept01   30Jun01   30Sept00   30Sept01   30Sept00
Cash flows provided by
(used in):

Operating activities          (365 )      82        (37 )      (42 )       82

Financing activities         1,787      (258 )      862      2,933 )    1,894

Investing activities          (955 )    (286 )     (319 )   (2,384 )   (2,077 )

Increase (decrease) in
cash and
cash equivalents               467      (462 )      506        507       (101 )

Cash and cash
equivalents,
beginning of period          2,378     2,840      1,485      2,338      2,092

Cash and cash
equivalents,
 end of period               2,845     2,378      1,991      2,845      1,991