HSBC Bank Canada first quarter 2009 results*



    VANCOUVER, May 7 /CNW/ -

    
    -   Net income attributable to common shares was C$85 million for the
        quarter ended 31 March 2009, a decrease of 52.8 per cent over the
        same period in 2008.(xx)

    -   The cost efficiency ratio was 49.1 per cent for the quarter ended 31
        March 2009 compared with 46.7 per cent for the same period in 2008.

    -   Return on average common equity was 10.0 per cent for the quarter
        ended 31 March 2009 compared with 21.7 per cent for the same period
        in 2008.

    -   Total assets were C$70.1 billion at 31 March 2009 compared with
        C$71.7 billion at 31 March 2008.

    -   Total funds under management were C$21.5 billion at 31 March 2009
        compared with C$26.3 billion at 31 March 2008.

    -   Tier 1 capital ratio of 10.2 per cent and a total capital ratio of
        12.6 per cent at 31 March 2009 compared to 9.1 per cent and 11.3 per
        cent respectively at 31 March 2008.(xxx)

    (*)   Results are prepared in accordance with Canadian generally accepted
          accounting principles.
    (xx)  Restated to reflect accounting for the acquisition of HSBC
          Financial Corporation Limited ("HSBC Financial") on 30 November
          2008. Interim period results prior to 31 December 2008 have been
          restated to combine the previously reported results of the bank
          with those of HSBC Financial to reflect the continuity of interests
          method of accounting, as detailed in note 2 to the consolidated
          financial statements in the 2008 Annual Report. References in this
          news release to "banking operations" relate to those excluding HSBC
          Financial and "consumer finance" refers to the businesses of HSBC
          Financial.
    (xxx) Calculated using guidelines issued by the Office of the
          Superintendent of Financial Institutions in accordance with Basel
          II capital adequacy framework. 31 March 2008 ratios have not been
          restated to include HSBC Financial.


    HSBC Bank Canada                                    Financial Commentary
    -------------------------------------------------------------------------
    

    Overview

    HSBC Bank Canada recorded net income attributable to common shares for
the three months ended 31 March 2009 of C$85 million, a decrease of 52.8 per
cent compared to C$180 million reported in the same period in 2008, and a
decrease of C$30 million, or 26.1 per cent, from C$115 million for the fourth
quarter of 2008. This includes the results of the Consumer Finance business
which made a net loss attributable to common shares of C$16 million in the
first quarter of 2009 compared to net income attributable to common shares of
C$25 million recorded in the same period of 2008 and C$9 million in the fourth
quarter of 2008.
    Commenting on the results, Lindsay Gordon, President and Chief Executive
Officer of HSBC Bank Canada, said:

    "Canada, along with most developed economies, is in recession and this
inevitably affected our results in the first quarter. Credit provisions
increased and net interest margins declined due to falling interest rates and
a very competitive market for deposits. While the economic outlook for the
rest of 2009 remains challenging, we remain committed to supporting our core
customer relationships and focusing on costs in a less certain environment for
revenues. We have a strong and liquid balance sheet further enhanced by a
successful preferred share offering completed after the quarter end, and
remain committed to maintaining our traditional financial strength."

    Net interest income

    Net interest income for the three months ended 31 March 2009 was C$350
million compared with C$425 million for the same period last year, a decrease
of C$75 million, or 17.6 per cent. Although average interest earning assets
decreased only marginally to C$62.4 billion from C$62.9 billion, there was a
considerable decrease in net interest margin to 2.27 per cent compared with
2.72 per cent in 2008.
    Net interest income from banking operations, which consists of Personal
Financial Services, Commercial Banking and Global Banking and Markets,
decreased by C$49 million and net interest margin decreased to 1.73 per cent
in the quarter from 2.08 per cent in the same period last year. Multiple
reductions in prime interest rates during 2008 and 2009 resulted in reduced
interest income on our floating rate loans, which was not offset by an equal
reduction in interest expense as our deposit rates repriced downwards more
slowly. Also impacting net interest margin was the reduction in the value of
interest free funds and low interest deposits in a falling interest rate
environment as well as the lower rates earned on government and other
securities. Wider credit spreads experienced across the banking industry also
adversely impacted the relative cost of wholesale funding compared with the
same period in the prior year. The reduction in average interest earning
assets reflected the sale of the automobile loan portfolio in July 2008. Net
interest income for the Consumer Finance business decreased by C$26 million
compared to the same quarter in 2008 mainly as a result of a reduction in
average receivables including consumer finance automobile and other loans.
    Net interest income for the first quarter of 2009 was C$25 million, or
6.7 per cent lower compared with the fourth quarter of 2008 of which C$18
million arose from banking operations and C$7 million from Consumer Finance
business. Although average interest earning assets increased to C$62.4 billion
from C$61.1 billion in the previous quarter, this was offset by a 17 basis
points reduction in net interest margin to 2.27 per cent. This was primarily
as a result of factors noted above, particularly further reductions in the
prime rate recorded in the first quarter of 2009 and lower yields on
securities.

    Non-interest revenue

    For the three months ended 31 March 2009, non-interest revenue was C$243
million, C$4 million, or 1.7 per cent, higher compared with C$239 million for
the same period last year.
    Revenues from customer banking activities, including deposit and payment
service charges, trade finance and credit fees, were comparable to the prior
year reflecting the underlying strength and robustness of our core banking
business. Securitization income increased, partially due to increased activity
and falling interest rates also generated a benefit. Volatility in market
interest rates and credit spreads continued to affect the valuation of trading
assets and liabilities, which have significantly impacted reported results.
Trading revenue was higher mainly as a result of the impact of mark to market
gains from interest rate derivatives used as economic hedges. These gains were
offset by the impact of narrowing credit spreads on the value of certain debt
obligations recorded at fair value. This generated a charge to income in the
first quarter of 2009 of C$9 million compared to a credit of C$18 million in
the first quarter of 2008. Capital market fees were higher due to increased
underwriting activity in 2009, particularly from Canadian Bank preferred share
and public sector debt issues. Investment administration fees were lower
reflecting the reduced market values of customer portfolios. As a result of
further economic weakness in the first quarter of 2009, the bank recorded, as
a reduction of other income, a provision of C$20 million in respect of a loss
contingency arising from a transaction occurring in a previous year.
    Non-interest revenue in the first quarter of 2009 was C$20 million or 9.0
per cent higher compared with C$223 million in the last quarter of 2008. A C$1
million provision for other than temporary impairment of available-for-sale
securities has been recorded during the quarter compared to an impairment of
C$49 million on Canadian non-bank sponsored Asset Backed Commercial Paper
("non-bank ABCP") and provisions for other than temporary impairment of
available-for-sale securities of C$8 million that were recorded in the fourth
quarter of 2008. Securitization income in the first quarter of 2009 was C$13
million higher than the fourth quarter of 2008 due to increased activity as
well as the continuing benefit from falling interest rates. Trading revenue
was C$28 million lower than the fourth quarter of 2008. Higher mark to market
gains in the first quarter of 2009 from interest rate derivatives used for
economic hedges and balance sheet management were offset by very strong
foreign exchange revenue arising from volatile foreign exchange markets and
the favourable impact of foreign currency funding in a lower interest rate
environment in the fourth quarter of 2008. Trading revenue was also adversely
impacted in the first quarter of 2009 by C$9 million arising from the impact
of narrowing credit spreads on the value of certain debt obligations recorded
at fair value compared to a credit of C$73 million recorded in the fourth
quarter of 2008. Other non-interest revenue in the first quarter of 2009 was
negatively impacted by the effect of the loss contingency referred to above.
    There was no material income statement impact arising from the
restructuring of the bank's non-bank ABCP as a result of the implementation of
the Montreal Accord in the first quarter of 2009. For further details on the
restructuring plan, refer to the first quarter 2009 report to shareholders.

    Non-interest expenses

    For the three months ended 31 March 2009, non-interest expenses were
C$291 million compared with C$310 million for the same period last year, a
decrease of C$19 million, or 6.1 per cent. Salaries and benefits were lower,
reflecting a lower number of staff, particularly in the Consumer Finance
business as a result of changes in its branch network. Premises costs
increased modestly, in part as a result of increased amortization costs. Other
non-interest expenses were lower due to reductions in a number of expense
categories, particularly IT expenses and marketing. The cost efficiency ratio
for the first quarter of 2009 increased to 49.1 per cent from 46.7 per cent in
the same period in 2008, as a result of the decrease in total revenue.
    Non-interest expenses for the first quarter were C$291 million compared
to C$295 million for the fourth quarter of 2008. Salaries and benefits were
higher due to reduced variable compensation recorded in the fourth quarter of
2008 as well as lower pension and benefits expenses arising from the release
of the pension plan valuation allowance. Premises and equipment expenses were
in line with the fourth quarter of 2008. Other expenses were C$27 million
lower as a result of lower marketing expenditures and an increased focus on
containment initiatives on other discretionary expenditures. The cost
efficiency ratio improved slightly from 49.3 per cent in the fourth quarter of
2008 to 49.1 per cent in the current period.

    Credit quality and provision for credit losses

    For the three months ended 31 March 2009, the provision for credit losses
was C$161 million compared with C$75 million for the same period in 2008 and
C$136 million recorded in the fourth quarter of 2008. Included in these
amounts were provisions of C$77 million for the three months ended 31 March
2009 related to the Consumer Finance business compared with C$50 million and
C$57 million for the same period in 2008 and for the fourth quarter of 2008
respectively. These increases have been driven by continuing economic weakness
and deterioration in credit conditions for certain borrowers as well as
deterioration in the Consumer Finance business sector.
    Gross impaired credit exposures were C$1,157 million compared with C$932
million at 31 December 2008, and C$467 million at 31 March 2008. Total
impaired exposures, net of specific allowances for credit losses, were C$923
million at 31 March 2009 compared with C$770 million at 31 December 2008 and
C$366 million at 31 March 2008.
    The general allowance for credit losses of C$475 million at 31 March 2009
is C$22 million higher than C$453 million at 31 December 2008 and C$37 million
higher than C$438 million at 31 March 2008 mainly due to higher provisions in
the Consumer Finance business due to worsening economic conditions. The total
allowance for credit losses, as a percentage of loans and acceptances
outstanding, was 1.46 per cent at 31 March 2009 compared with 1.24 per cent at
31 December 2008 and 1.06 per cent at 31 March 2008. The bank considers the
total allowance for credit losses to be appropriate given the credit quality
of its portfolios and the current credit environment.

    Income taxes

    The effective tax rate in the first quarter of 2009 was 28.9 per cent,
which compared to 32.6 per cent in the same quarter of 2008 and 23.8 per cent
in the fourth quarter of 2008, which benefited from the non-taxable release of
a pension plan allowance.

    Balance sheet

    Total assets at 31 March 2009 were C$70.1 billion, a decrease of C$1.9
billion from 31 December 2008, and C$1.6 billion from 31 March 2008. Global
and credit market conditions have caused a tightening of available credit, as
well as an extremely competitive environment for both personal and commercial
deposits. Commercial loans decreased by C$0.6 billion from the end of 2008.
Residential mortgage originations decreased by C$0.2 billion and, when
combined with a C$0.2 billion increase in securitizations in the first quarter
of 2009, resulted in an overall decrease of C$0.4 billion. Consumer loans and
personal lines of credit in the Personal Financial Services business were up
slightly to C$5.4 billion while receivables of the Consumer Finance business
decreased by C$0.2 billion. Liquidity remained strong at 31 March 2009, with
more than C$17.0 billion of securities and reverse repurchase agreements
compared to C$17.5 billion at 31 December 2008 and C$14.8 billion at 31 March
2008.
    Total deposits decreased by C$2.2 billion to C$49.8 billion at 31 March
2009 from C$52.0 billion at 31 December 2008 and were C$0.2 billion lower
compared with C$50.0 billion at 31 March 2008. Personal deposits grew by C$1.0
billion over 31 December 2008 mainly driven by growth in the number of High
Rate and Direct Savings accounts, while higher cost wholesale deposits
decreased by C$2.5 billion as a result of lower client borrowings and
securitizations of C$1.3 billion.

    Total assets under administration

    Funds under management were C$21.5 billion at 31 March 2009 largely
unchanged from C$21.3 billion at 31 December 2008. However, declines in equity
markets during 2008 caused a decrease from C$26.3 billion at 31 March 2008.
Including custody and administration balances, total assets under
administration were C$30.8 billion compared with C$30.5 billion at 31 December
2008 and C$37.3 billion at 31 March 2008.

    Capital management and regulatory capital ratios

    Capital adequacy ratios calculated in accordance with the Basel II
framework were 10.2 per cent for tier 1 and 12.6 per cent total capital
adequacy ratios at 31 March 2009 up marginally from 31 December 2008, and
compared to 9.1 per cent and 11.3 per cent respectively at 31 March 2008,
which were not restated to reflect the acquisition of HSBC Financial.
    Subsequent to the quarter end, on 8 April 2009, the bank's issue of
10,000,000 Class 1 Preferred Shares Series E of C$25 each for cash was
completed at a coupon of 6.60 per cent and raised approximately C$246 million,
net of issue of costs. Pro-forma tier 1 and total capital adequacy ratios at
31 March 2009 would be 10.8 per cent and 13.2 per cent, respectively.

    Dividends

    During the first quarter of 2009, the bank declared and paid C$70 million
in dividends on HSBC Bank Canada common shares.
    Regular quarterly dividends of 31.875 cents per share have been declared
on HSBC Bank Canada Class 1 Preferred Shares - Series C and 31.25 cents per
share on Class 1 Preferred Shares - Series D. The first dividend of C$0.3762
per share has been declared on Class 1 Preferred Shares - Series E. Dividends
will be payable on 30 June 2009, for shareholders of record on 15 June 2009.

    Accounting policies adopted in 2009

    Certain new accounting standards have become effective for 2009. This has
resulted in a reclassification for the current and previous periods of the net
carrying value of certain computer software costs from computer equipment
included in land, buildings and equipment to intangible assets included in
other assets although this has not resulted in any changes to the bank's total
assets. In addition, corresponding amortization has been reclassified for the
current and previous periods from premises and equipment expenses to other
non-interest expense although there is no change in reported net income.
Reference should be made to note 2 to the consolidated financial statements
included in the first quarter 2009 report to shareholders.
    Certain prior period amounts have been reclassified to conform to the
current year's presentation. In addition, comparatives for certain interim
periods in 2008 have been restated to reflect the acquisition of HSBC
Financial Corporation Limited accounted for using the continuity of interests
method. Reference should be made to the Bank's 2008 Consolidated Financial
Statements included in the 2008 Annual Report and Accounts for more detailed
information on the acquisition.

    About HSBC Bank Canada

    HSBC Bank Canada, a subsidiary of HSBC Holdings plc, has more than 290
offices. With around 9,500 offices in 86 countries and territories and assets
of US$2,527 billion at 31 December 2008, the HSBC Group is one of the world's
largest banking and financial services organisations. Visit the bank's website
at hsbc.ca for more information about HSBC Bank Canada and its products and
services.

    Copies of HSBC Bank Canada's first quarter 2009 report will be sent to
shareholders in May 2009.

    Caution regarding forward-looking financial statements

    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,
technological change, global capital market activity, changes in government
monetary and economic policies, changes in prevailing interest rates,
inflation level and general economic conditions in geographic areas where HSBC
Bank Canada operates. Canada is an extremely competitive banking environment
and pressures on interest rates and the bank's net interest margin may arise
from actions taken by individual banks acting alone. Varying economic
conditions may also affect equity and foreign exchange markets, which could
also have an impact on the bank's revenues. In addition, there may be a number
of factors relating to the valuation of non-bank ABCP. The factors disclosed
above may not be complete and there could be other uncertainties and potential
risk factors not considered here which may impact the bank's results and
financial condition.


    
    HSBC Bank Canada                                                 Summary
    -------------------------------------------------------------------------

                                                       Quarter ended
                                              -------------------------------
                                                    31         31         31
    Figures in C$ millions                       March   December      March
    (except per share amounts)                    2009       2008     2008(1)
                                              ---------  ---------  ---------
    Earnings
    Net income attributable to common shares  $     85   $    115   $    180
    Basic earnings per share (C$)                 0.17       0.22       0.34

    Performance ratios (%)
    Return on average common equity               10.0       12.8       21.7
    Return on average assets                      0.48       0.61       0.99
    Net interest margin(*)                        2.27       2.44       2.72
    Cost efficiency ratio(xx)                     49.1       49.3       46.7
    Non-interest revenue: total revenue ratio     41.0       37.3       36.0

    Credit information
    Gross impaired credit exposures           $  1,157   $    932   $    467
    Allowance for credit losses
    - Balance at end of period                     709        615        539
    - As a percentage of gross impaired credit
      exposures                                    61%        66%       115%
    - As a percentage of gross loans and
      acceptances                                1.46%      1.24%      1.06%

    Average balances
    Assets                                    $ 72,346   $ 75,161   $ 73,073
    Loans                                       42,790     44,643     43,796
    Deposits                                    51,805     53,522     50,973
    Common equity                                3,461      3,565      3,353

    Capital ratios (%)(xxx)
    Tier 1                                        10.2       10.1        9.1
    Total capital                                 12.6       12.5       11.3

    Total assets under administration
    Funds under management                    $ 21,503   $ 21,287   $ 26,283
    Custody accounts                             9,260      9,221     11,006
                                              ---------  ---------  ---------
    Total assets under administration         $ 30,763   $ 30,508   $ 37,289
                                              ---------  ---------  ---------

    (*)   Net interest margin is net interest income divided by average
          interest earning assets for the period.
    (xx)  The cost efficiency ratio is defined as non-interest expenses
          divided by total revenue.
    (xxx) Calculated using guidelines issued by the Office of the
          Superintendent of Financial Institution Canada in accordance with
          Basel II capital adequacy framework. 31 March 2008 ratios have not
          been restated to include HSBC Financial.
    (1) Restated to reflect the acquisition of HSBC Financial.



    HSBC Bank Canada             Consolidated Statement of Income (Unaudited)
    -------------------------------------------------------------------------

                                                       Quarter ended
                                              -------------------------------
                                                    31         31         31
    Figures in C$ millions                       March   December      March
    (except per share amounts)                    2009       2008     2008(1)
                                              ---------  ---------  ---------
    Interest income:
      Loans                                   $    551   $    670   $    819
      Securities                                    68         68         76
      Deposits with regulated financial
       institutions                                  4         21         36
                                              ---------  ---------  ---------
                                                   623        759        931
                                              ---------  ---------  ---------

    Interest expense:
      Deposits                                     225        332        441
      Interest bearing liabilities of
       subsidiaries, other than deposits            38         42         55
      Debentures                                    10         10         10
                                              ---------  ---------  ---------
                                                   273        384        506
                                              ---------  ---------  ---------

    Net interest income                            350        375        425
                                              ---------  ---------  ---------

    Non-interest revenue
      Deposit and payment service charges           27         30         27
      Credit fees                                   34         30         32
      Capital market fees                           26         22         22
      Investment administration fees                26         28         33
      Foreign exchange                              10         13         11
      Trade finance                                  7          7          5
      Trading revenue                               76        104         54
      Losses on available-for-sale securities       (1)       (55)         -
      Gains on other securities                      1          -          1
      Securitization income                         35         22         27
      Other                                          2         22         27
                                              ---------  ---------  ---------
                                                   243        223        239
                                              ---------  ---------  ---------
    Total revenue                                  593        598        664
                                              ---------  ---------  ---------
    Non-interest expenses:
      Salaries and employee benefits               160        137        171
      Premises and equipment                        41         41         38
      Other                                         90        117        101
                                              ---------  ---------  ---------
                                                   291        295        310
                                              ---------  ---------  ---------
    Net operating income before provision for
     credit losses                                 302        303        354
    Provision for credit losses                    161        136         75
                                              ---------  ---------  ---------
    Income before taxes and
      non-controlling interest in income of trust  141        167        279
    Provision for income taxes                      39         38         89
    Non-controlling interest in income of trust      6          7          6
                                              ---------  ---------  ---------
    Net income                                $     96   $    122   $    184
                                              ---------  ---------  ---------
                                              ---------  ---------  ---------
    Preferred share dividends                       11          7          4
                                              ---------  ---------  ---------
    Net income attributable to common shares  $     85   $    115   $    180
                                              ---------  ---------  ---------
                                              ---------  ---------  ---------
    Average number of common shares
     outstanding (000's)                       498,668    517,122    526,349
    Basic earnings per common share           $   0.17   $   0.22   $   0.34

    (1) Restated to reflect the acquisition of HSBC Financial Corporation
        Limited.


    HSBC Bank Canada         Condensed Consolidated Balance Sheet (Unaudited)
    -------------------------------------------------------------------------


                                                 At 31      At 31      At 31
                                                 March   December      March
    Figures in C$ millions                        2009       2008     2008(1)
                                              ---------  ---------  ---------
    Assets
    Cash resources:
      Cash and non-interest bearing
       deposits with the Bank of Canada and
       other banks                            $    446   $    434   $    535
      Deposits with regulated financial
       institutions                              1,403      1,421      3,173
                                              ---------  ---------  ---------
                                                 1,849      1,855      3,708
                                              ---------  ---------  ---------

    Securities:
      Available-for-sale                        11,078      9,683      6,411
      Held-for-trading                           1,816      1,079      1,630
      Other                                         57         56         42
                                              ---------  ---------  ---------
                                                12,951     10,818      8,083
                                              ---------  ---------  ---------
    Securities purchased under reverse
     repurchase agreements                       4,070      6,682      6,700
                                              ---------  ---------  ---------

    Loans:
      Business and government                   22,454     23,067     21,940
      Residential mortgages                     11,526     11,869     12,292
      Consumer finance loans                     3,832      4,029      4,872
      Other consumer loans                       5,424      5,296      5,361
      Allowance for credit losses                 (709)      (615)      (539)
                                              ---------  ---------  ---------
                                                42,527     43,646     43,926
                                              ---------  ---------  ---------
    Other:
      Customers' liability under acceptances     5,394      5,209      6,265
      Derivatives                                1,901      2,448        905
      Land, buildings and equipment                123        126        141
      Other assets                               1,314      1,265      1,935
                                              ---------  ---------  ---------
                                                 8,732      9,048      9,246
                                              ---------  ---------  ---------
                                              $ 70,129   $ 72,049   $ 71,663
                                              ---------  ---------  ---------
                                              ---------  ---------  ---------
    Liabilities and Shareholders' equity
    Deposits:
      Regulated financial institutions        $    999   $  1,264   $  1,646
      Individuals                               22,147     21,064     19,455
      Businesses and governments                26,659     29,634     28,891
                                              ---------  ---------  ---------
                                                49,805     51,962     49,992
                                              ---------  ---------  ---------
    Other:
      Acceptances                                5,394      5,209      6,265
      Interest bearing liabilities of
       subsidiaries, other than deposits         4,284      4,164      5,193
      Derivatives                                1,487      2,023        692
      Securities sold under repurchase
       agreements                                  493        715        712
      Securities sold short                        591        631        906
      Other liabilities                          2,661      1,974      2,917
      Non-controlling interest in trust and
       subsidiary                                  430        430        430
                                              ---------  ---------  ---------
                                                15,340     15,146     17,115
                                              ---------  ---------  ---------
    Subordinated debentures                        795        788        805
                                              ---------  ---------  ---------
    Shareholders' equity:
      Capital stock
        Preferred shares                           696        696        350
        Common shares                            1,225      1,225      1,293
      Contributed surplus                            1          -        234
      Retained earnings                          1,965      1,950      1,851
      Accumulated other comprehensive income       302        282         23
                                              ---------  ---------  ---------
                                                 4,189      4,153      3,751
                                              ---------  ---------  ---------
    Total liabilities and shareholders'
     equity                                   $ 70,129   $ 72,049   $ 71,663
                                              ---------  ---------  ---------
                                              ---------  ---------  ---------

    (1) Restated to reflect the acquisition of HSBC Financial Corporation
        Limited.


                                                      Condensed Consolidated
    HSBC Bank Canada                      Statement of Cash Flows (Unaudited)
    -------------------------------------------------------------------------

                                                       Quarter ended
                                              -------------------------------
                                                    31         31         31
    Figures in C$ millions                       March   December      March
                                                  2009       2008     2008(1)
                                              ---------  ---------  ---------

    Cash flows provided by (used in):
    - operating activities                         133         62        269
    - financing activities                      (2,340)       342      1,447
    - investing activities                       2,220       (503)    (1,735)
                                              ---------  ---------  ---------

    Increase (decrease) in cash and cash
     equivalents                                    13        (99)       (19)
    Cash and cash equivalents, beginning of
     period                                        420        519        528
                                              ---------  ---------  ---------
    Cash and cash equivalents, end of period       433        420        509
                                              ---------  ---------  ---------
                                              ---------  ---------  ---------


    Represented by:
    - Cash resources per balance sheet             446        434        535
      - less non-operating deposits(*)             (13)       (14)       (26)
                                              ---------  ---------  ---------
    - Cash and cash equivalents, end of period     433        420        509
                                              ---------  ---------  ---------
                                              ---------  ---------  ---------

    (*) Non-operating deposits are comprised primarily of cash restricted for
        recourse on securitization transactions.
    (1) Restated to reflect the acquisition of HSBC Financial Corporation
        Limited.
    





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