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HSBC (-C) Monday said fourth-quarter profits were higher as operating expenses fell and it saw a drop in loan impairment charges, as well as a rise in trading income from rates and credit products. ?
For the period that ended December 31, the country?s seventh-largest bank reported profit of $140 million or 28 cents per share, up from $118 million or 24 cents per share a year earlier.
The increase in profit was mainly due to lower operating expenses, the company noted, on the sale of its full service retail brokerage business and wind-down of the consumer finance business. HSBC added that lower loan impairment charges and lower specific loan impairment charges as well as higher net trading income from rates and credit products lent to its higher profits.
"I am very pleased to report that in 2012 reached an important milestone, for the first time reporting profit before tax of over $1 billion,? said president and CEO Paulo Maia.
?Over the course of the last two years, HSBC has been refocusing our businesses to better serve our core clients. Growth in our strategic areas of focus, founded on deeper relationships with our customers, along with a reduction in costs are largely responsible for our results in 2012.?
?I look forward to continuing to grow HSBC's businesses and brand in Canada as the premier bank for internationally minded businesses and individuals."
Total assets under administration were $19.5 billion at the quarter?s end, down from $27.4 billion a year earlier, primarily due to sale of the full service retail brokerage business, the company said.
Excluding the full service retail brokerage business' funds under management, total assets under administration increased to $30.1 billion.
Net interest income ? meaning the difference between what a bank earned on loans and paid out on deposits ? was $348 million, a decrease of 11.5 per cent compared with the year-ago quarter.?
HSBC said the decrease was primarily due to lower average retail and consumer finance loan balances, following the strategic refocus of these businesses, and reduced net interest margin.
Net fee income was $154 million, a decrease of 1.9 per cent year-over-year.
Loan impairment charges and other credit risk provisions for the fourth quarter were $33 million, down 38.9 per cent from a year earlier, mainly due to improved credit quality, the bank said, adding that lower levels of specific loan impairment charges within the commercial loan portfolio also contributed to the decrease.
Return on average common equity was 13.1 per cent, up from 11.8 per cent a year earlier.
Tier 1 capital ratio and the total capital ratio were 13.8 per cent and 16.0 per cent, respectively, at the quarter?s end.
In HSBC?s commercial banking unit, profit before income tax was relatively flat year-over-year at $121 million, due to lower loan impairment charges and higher net fee income driven by growth in authorized credit facilities and transaction volume.
In its global banking and markets segment, the bank posted a profit of $69 million, up slightly over the year-earlier period due to improved trading performance in rates and credit products, it said.
In its retail banking and wealth management business, profit was $4 million, compared to a loss of $7 million in the year-ago quarter, when it was hit with a $14-million restructuring provision for the sale of its full service retail brokerage business.
Last March, HSBC announced the wind-down of its consumer finance business in Canada and, except for existing commitments, ceased origination of loans. Fourth quarter profit in the unit was $30 million, up 76.5 per cent year-over-year, as a result of lower operating expenses driven by reduced staff, infrastructure charges and other overhead expenses, it said.
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