HSBC Bank Canada results* for the fourth quarter and year ended 31 December 2007 - Highlights



    VANCOUVER, Feb. 26 /CNW/ -

    
    -   Net income attributable to common shares was C$530 million for the
        year ended 31 December 2007, an increase of 6.6 per cent over the
        year ended 31 December 2006.

    -   Net income attributable to common shares was C$111 million for the
        quarter ended 31 December 2007, a decrease of 13.3 per cent compared
        to the same period in 2006.

    -   Return on average common equity was 19.8 per cent for the year ended
        31 December 2007 and 15.6 per cent for the quarter ended 31 December
        2007 compared with 21.1 per cent and 20.6 per cent, respectively, for
        the same periods in 2006.

    -   The cost efficiency ratio was 51.7 per cent for the year ended
        31 December 2007 and 54.5 per cent for the quarter ended 31 December
        2007 compared with 51.3 per cent and 51.4 per cent, respectively, for
        the same periods in 2006.

    -   Total assets were C$62.9 billion at 31 December 2007, an increase of
        C$6.1 billion, or 10.7 per cent, from C$56.8 billion at 31 December
        2006.

    -   Total funds under management were C$26.2 billion at 31 December 2007,
        an increase of C$2.9 billion, or 12.4 per cent, from C$23.3 billion
        at 31 December 2006.

    (*) Results are prepared in accordance with Canadian generally accepted
        accounting principles.


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

    Overview

    HSBC Bank Canada ("the bank") recorded net income attributable to common
shares for the year ended 31 December 2007 of C$530 million compared with
C$497 million for 2006, an increase of C$33 million, or 6.6 per cent. Net
income attributable to common shares was C$111 million for the fourth quarter
ended 31 December 2007, a decrease of C$17 million, or 13.3 per cent, from
C$128 million for the fourth quarter of 2006.
    During the year, the bank took a charge in respect of its holdings of
Canadian non-bank sponsored Asset Backed Commercial Paper ("non-bank ABCP") of
C$47 million (C$30 million net of related income taxes). In 2007 the bank also
recorded a gain of C$21 million after related income taxes on disposal of its
shares in the Montreal Stock Exchange.
    Commenting on the results, Lindsay Gordon, President and Chief Executive
Officer, said: "The bank's underlying business remains strong and investments
in key businesses and markets are delivering growth in revenues. The liquidity
problems which emerged in the Canadian Asset Backed Commercial Paper market in
August posed a challenge to our industry and HSBC joined with other domestic
and international banks in engaging constructively to pursue an orderly market
solution to the situation. HSBC Bank Canada subsequently took some exposure
onto its own balance sheet and our charge represents impairments on such
positions; these positions include a very small element of exposure to the US
sub-prime mortgage market which is the bank's only exposure to that market.
    "The outlook for 2008 is mixed. The Canadian economy remains resilient
with strong growth in Western Canada. Both personal and commercial segments of
the bank's business remain very competitive with ongoing pressure on margins,
particularly in the personal segment. The bank will stay focused on building
its business for sustained growth. We see opportunities for growth across all
the bank's key business lines, and we will re-engineer key processes to
further improve the quality and consistency of customer service to achieve
this."

    Net interest income

    Net interest income was C$302 million for the quarter ended 31 December
2007 compared with C$291 million for the same quarter in 2006, an increase of
C$11 million, or 3.8 per cent. The increase was partially driven by growth in
assets in all businesses with average interest-earning assets increasing by
C$8.0 billion or 16.5 per cent compared with the same period in 2006. As a
result of widening credit spreads both in Canada and internationally that
began in the third quarter, the cost of funds, particularly wholesale deposits
has increased by almost 20 basis points. This resulted in a reduction in net
interest margin to 2.13 per cent for the quarter compared with 2.30 per cent
for the same period in 2006.
    Net interest income in the fourth quarter of 2007 was C$17 million lower
than the third quarter of 2007. While customer loans continued to grow during
the quarter, increased interest income from this source was eroded by a
reduction in net interest margin, from 2.33 per cent in the third quarter to
2.13 per cent, driven by the higher cost of wholesale deposits.
    For the year ended 31 December 2007, net interest income was
C$1,222 million compared with C$1,115 million for 2006, an increase of
C$107 million, or 9.6 per cent. Again, for the year as a whole, the increases
derived from the growth in assets were partially offset by the decrease in net
interest margin to 2.26 per cent compared with 2.33 per cent in 2006.

    Canadian non-bank sponsored Asset Backed Commercial Paper

    As at 31 December 2007, the bank held C$230 million of non-bank ABCP, net
of provisions, in available for sale ("AFS") securities and C$50 million, net
of write-downs, in trading securities. During the year, the bank took a charge
in respect of its holdings of Canadian non-bank sponsored Asset Backed
Commercial Paper ("non-bank ABCP") of C$47 million.

    Non-interest revenue

    Non-interest revenue was C$162 million for the fourth quarter of 2007
compared with C$168 million in the same quarter of 2006, a decrease of
C$6 million, or 3.6 per cent. Excluding the impact of a C$42 million reduction
relating to non-bank ABCP, non-interest revenues were C$204 million, or
21.4 per cent higher than the same period in 2006. Investment administration
fees were higher as the bank's funds under management in the wealth management
business continued to deliver good growth. Deposit and payment service charges
and credit fees increased as a result of increased customer activity. Capital
markets fees were lower due to curtailed activity resulting from market
uncertainty, particularly from new issue underwriting and advisory mandates.
Trading income was higher due to a C$11 million increase in foreign exchange
trading arising from the volatility of Canadian and United States currency
movements in the fourth quarter of 2007. There was also a positive impact of
C$7 million arising from changes in the carrying values of certain debt
obligations recorded at fair value, offset by a C$8 million mark-to-market
adjustment on non-bank ABCP held in the trading portfolio. The losses on AFS
securities in 2007, compared to realized investment gains in 2006, were due to
the C$34 million write-down of non-bank ABCP held in the AFS securities
portfolio, together with a lower increase in the fair value of investments in
private equity funds in the fourth quarter of 2007, compared to the fourth
quarter of 2006.
    In the fourth quarter of 2007, non-interest revenue was C$22 million
lower compared with the previous quarter, mainly as a result of the losses on
non-bank ABCP within AFS securities of C$34 million. Trading revenue in the
quarter was also lower due to the C$8 million mark-to-market adjustment on
non-bank ABCP held in the trading portfolio and a C$4 million lower positive
effect from changes in the fair value of certain debt obligations. However,
these were partially offset by increases in capital markets fees, deposit and
payment service charges and investment administration fees, as well as
increased revenues from foreign exchange. Foreign exchange trading revenues
increased considerably in the fourth quarter due to greater exchange rate
volatility.
    For the year ended 31 December 2007, non-interest revenue was
C$708 million, C$57 million, or 8.8 per cent, higher compared with
C$651 million for 2006. Excluding the impact of non-bank ABCP and gains on
sale of Montreal Stock Exchange shares, the year-on-year increase is 12.0 per
cent. Trading income was higher, arising from strong gains recorded from
foreign exchange trading together with a positive impact of C$23 million
arising from changes in the fair value of certain debt obligations. However,
this was partially offset by the C$8 million mark-to-market adjustment of
trading non-bank ABCP. Investment administration fees were strongly ahead
together with increases in deposit and payment service charges and credit
fees. Other income increased mainly due to higher activity in the bank's
investor immigration programme. Capital markets fees were lower arising from
lower activity as a result of uncertainties in the markets. Losses on AFS
securities in 2007 compared to gains on investment securities recorded in 2006
resulted from the write-down in non-bank ABCP and lower increases in the fair
value of private equity funds, offset by the gains on the sale of Montreal
Stock Exchange shares in 2007.

    Non-interest expenses and operating efficiency

    Non-interest expenses were C$253 million for the fourth quarter of 2007
compared with C$236 million in the same quarter of 2006, an increase of
C$17 million, or 7.2 per cent. Salaries and employee benefits expenses were
higher in the fourth quarter of 2007 due to an increase in the employee base.
This resulted from growth in new branches in Alberta and the Greater Toronto
Area, together with investments in the Direct Bank, Private Banking and Wealth
Management and the Payments and Cash Management businesses. Pension plan and
post-retirement costs were also higher than in the comparative period,
although this was partially offset by a reduction in stock-based compensation.
Premises and equipment expenses were largely unchanged, although depreciation
was lower compared to the fourth quarter of 2006 which was impacted by a
change in estimate of the useful life of improvements to leasehold properties.
Marketing expenses also increased as the bank continued to build the HSBC
brand in Canada. Operating losses were higher compared to the fourth quarter
of 2006, mainly due to increased debit card fraud. Technology costs also
increased as the bank invested further in new systems to support strategic
initiatives. Although the cost efficiency ratio for the fourth quarter of 2007
increased to 54.5 per cent compared to 51.4 per cent for 2006, excluding the
impact of the write-down of non-bank ABCP, the ratio was 50.0 per cent.
    Non-interest expenses for the fourth quarter of 2007 were slightly higher
compared with the third quarter of 2007. Salaries and benefits were affected
by increased variable compensation driven by higher capital markets revenues
compared to the prior quarter, although partially offset by lower stock-based
compensation. Other expenses increased due mainly to increased marketing
expenses.
    For the year ended 31 December 2007, non-interest expenses were
C$997 million compared with C$906 million for 2006, an increase of
C$91 million, or 10.0 per cent. Salaries and benefits expenses were higher due
to an increased employee base, increased variable compensation, and higher
pension and other post-retirement benefits costs. Other expenses were higher
due to continued investment in the business, higher costs arising from
increased customer transactions, and increased marketing costs supporting the
development of the HSBC brand. The cost efficiency ratio was 51.7 per cent
compared with 51.3 per cent for 2006. Excluding the impact of non-bank ABCP
and the sale of Montreal Stock Exchange shares, the cost efficiency ratio for
2007 improved marginally to 51.1 per cent.

    Credit quality and provision for credit losses

    The provision for credit losses was C$24 million for the fourth quarter
of 2007, compared with C$17 million in the fourth quarter of 2006, and
C$21 million for the third quarter of 2007. The provision for the year ended
31 December 2007 was C$67 million compared to C$34 million for 2006. Overall
credit quality remains sound, reflecting prudent lending standards and strong
economic conditions in Canada. The increased charge in the fourth quarter of
2007 and for the year ended 31 December 2007 compared to the same periods in
2006 was due to increases in provisions in certain resource sectors with
weaker industry conditions given the strength of the Canadian dollar. However,
2006 was an exceptionally benign credit environment, resulting in a low level
of provisions.
    The same factors impacted movement in impaired credit exposures. Gross
impaired credit exposures were C$272 million, C$66 million higher compared
with C$206 million at 30 September 2007, and C$95 million higher compared with
C$177 million at 31 December 2006. Total impaired exposures, net of specific
allowances for credit losses, were C$188 million at 31 December 2007 compared
with C$139 million at 30 September 2007 and C$119 million at 31 December 2006.
    The general allowance for credit losses of C$269 million remained
unchanged from 30 September 2007 and 31 December 2006. The total allowance for
credit losses, as a percentage of loans and acceptances outstanding, was
0.79 per cent at 31 December 2007 compared with 0.75 per cent at 30 September
2007 and 0.80 per cent at 31 December 2006. The bank considers the total
allowance for credit losses to be appropriate given the credit quality of its
portfolios and the current credit environment. The bank's loan portfolio has
no exposure to the US sub-prime market.

    Income taxes

    The effective tax rate in the fourth quarter of 2007 was 35.6 per cent,
which compares to 33.2 per cent in the same quarter of 2006 and 35.2 per cent
in the third quarter of 2007. The increase in tax rate in the fourth quarter
of 2007 was primarily due to a write-down of future income tax assets of
C$11 million resulting from the lower corporate income tax rates enacted by
the federal government in the quarter.
    The effective tax rate for the full year in 2007 was 34.8 per cent
compared with 35.6 per cent in 2006 primarily due to a higher level of gains
subject to a lower tax rate in 2007 compared to the previous year.

    Balance sheet

    Total assets at 31 December 2007 were C$62.9 billion, an increase of
C$6.1 billion from 31 December 2006. The loan portfolio continues to be a
major driver of balance sheet growth. Commercial loans and bankers'
acceptances grew C$4.1 billion from 31 December 2006 on the continued strong
economy, particularly in Western Canada. Residential mortgages increased C$1.4
billion during 2007, but as a result of securitisation, there was a net
decrease of C$1.1 billion. Balance sheet management activity in the Treasury
and Markets business has increased the securities portfolio by C$2.2 billion,
and there were increases in balances under reverse repurchase agreements of
C$1.4 billion, as a result of the tightening of liquidity in the markets.
    Total deposits increased C$4.7 billion to C$48.9 billion at 31 December
2007 from C$44.2 billion at 31 December 2006. Growth in personal deposits
resulted largely from the new High Rate and Direct Savings accounts.
Commercial deposits were higher due to growth in term products, driven by
improved product offerings in the Payments and Cash Management business and
growth in commercial banking relationships.

    Total assets under administration

    Funds under management were C$26.2 billion at 31 December 2007 compared
with C$27.1 billion at 30 September 2007 and C$23.3 billion at 31 December
2006. Including custody and administration balances, total assets under
administration were C$37.1 billion compared with C$36.4 billion at
30 September 2007 and C$31.9 billion at 31 December 2006.
    Growth in funds under management in 2007 benefited from strong
acquisitions of new clients, strong investment sales and the success of
Private Client products assisted by growth in equity markets, although a
slight reduction in those markets was experienced in the final quarter of
2007.

    Capital management

    The tier 1 capital ratio was 8.8 per cent and the total capital ratio was
11.3 per cent at 31 December 2007. These compare with 8.5 per cent and
10.9 per cent, respectively, at 30 September 2007 and 9.0 per cent and
11.1 per cent, respectively, at 31 December 2006.
    In addition to net income, regulatory capital increased from an issue of
C$100 million of common shares during the fourth quarter of 2007 and an issue
of C$400 million in subordinated debentures in the second quarter of 2007.
These issues were partially offset by dividends declared on preferred and
common shares and the redemption of C$100 million and C$25 million in
subordinated debentures in the second and third quarters of 2007 respectively.

    Accounting policies adopted in 2007

    Effective 1 January 2007, the bank adopted new Canadian Institute of
Chartered Accountants (CICA) Handbook Standards relating to the recognition,
measurement and disclosure of financial instruments including hedges and
comprehensive income. Although these standards were adopted prospectively,
without restatement of prior year comparatives, the impact on initial adoption
as well as the effects of certain transitional adjustments have been recorded
as adjustments to opening retained earnings and opening accumulated other
comprehensive income.
    Although there was no material impact on the results for the fourth
quarter arising from the adoption of these new standards, more detailed
information on the impact of adopting these standards was included in HSBC
Bank Canada's first quarter 2007 report to shareholders and will be included
in the bank's annual report and consolidated financial statements for 2007.

    Dividends

    During the fourth quarter of 2007, C$65 million in dividends were
declared and paid on the bank's 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 dividends will be payable on
30 March 2008, to shareholders of record on 14 March 2008.

    About HSBC Bank Canada

    HSBC Bank Canada, a subsidiary of HSBC Holdings plc, has more than 170
offices. With around 10,000 offices in 83 countries and territories and assets
of US$2,150 billion at 30 June 2007, 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 Annual Report for 2007 will be sent to
shareholders in March 2008.

    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                Year ended
    Figures in         -------------------------------- ---------------------
     C$ millions              31         30         31         31         31
    (except per         December  September   December   December   December
     share amounts)         2007       2007       2006       2007       2006
                       ---------- ---------- ---------- ---------- ----------

    Earnings
    Net income
     attributable to
     common shares           111        145        128        530        497
    Basic earnings
     per share              0.22       0.30       0.26       1.08       1.02

    Performance ratios (%)
    Return on average
     common equity          15.6       21.3       20.6       19.8       21.1
    Return on average
     assets                 0.66       0.91       0.87       0.84       0.91
    Net interest margin(*)  2.13       2.33       2.30       2.26       2.33
    Cost efficiency
     ratio(xx)              54.5       48.9       51.4       51.7       51.3
    Non-interest
     revenue: total
     revenue ratio          34.9       36.6       36.6       36.7       36.9

    Credit information
    Gross impaired
     credit exposures        272        206        177
    Allowance for
     credit losses           353        336        327
      - As a percentage
        of gross impaired
        credit exposures     130%       163%       185%
      - As a percentage
        of gross loans
        and acceptances     0.79%      0.75%      0.80%

    Average balances
    Assets                66,158     62,934     58,883     63,273     54,118
    Loans                 39,032     38,405     34,943     37,635     33,659
    Deposits              49,755     47,588     44,491     47,483     41,904
    Common equity          2,827      2,693      2,464      2,674      2,360

    Capital ratios
     (per cent)
    Tier 1                   8.8        8.5        9.0
    Total capital           11.3       10.9       11.1

    Total assets under
     administration
    Funds under
     management           26,213     27,129     23,340
    Custodial accounts    10,914      9,279      8,574
                       ---------- ---------- ----------
    Total assets under
     administration       37,127     36,408     31,914
                       ---------- ---------- ----------
                       ---------- ---------- ----------

    (*)  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.



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

                                 Quarter ended                Year ended
    Figures in         -------------------------------- ---------------------
     C$ millions              31         30         31         31         31
    (except per         December  September   December   December   December
     share amounts)         2007       2007       2006       2007       2006
                       ---------- ---------- ---------- ---------- ----------

    Interest and
     dividend income
    Loans                    678        663        593      2,554      2,144
    Securities                74         70         49        273        186
    Deposits with
     regulated financial
     institutions             55         61         62        237        234
                       ---------- ---------- ---------- ---------- ----------
                             807        794        704      3,064      2,564
                       ---------- ---------- ---------- ---------- ----------

    Interest expense
    Deposits                 495        464        406      1,803      1,422
    Debentures                10         11          7         39         27
                       ---------- ---------- ---------- ---------- ----------
                             505        475        413      1,842      1,449
                       ---------- ---------- ---------- ---------- ----------

    Net interest income      302        319        291      1,222      1,115
                       ---------- ---------- ---------- ---------- ----------

    Non-interest revenue
    Deposit and payment
     service charges          27         25         23        100         90
    Credit fees               29         30         26        114        106
    Capital market fees       27         21         30        109        115
    Investment
     administration fees      35         33         28        131        103
    Foreign exchange          12         10          9         40         32
    Trade finance              5          6          6         23         24
    Trading revenue           32         40         17        102         69
    (Losses) gains on
     available for sale
     (2006 - investment)
     securities              (34)        (5)         2        (13)         3
    Gains on other
     securities                2          -          5         11         27
    Securitisation income     13         10         13         42         42
    Other                     14         14          9         49         40
                       ---------- ---------- ---------- ---------- ----------
                             162        184        168        708        651
                       ---------- ---------- ---------- ---------- ----------

    Total revenue            464        503        459      1,930      1,766
                       ---------- ---------- ---------- ---------- ----------

    Non-interest
     expenses
    Salaries and
     employee benefits       134        132        124        548        503
    Premises and
     equipment                28         31         34        122        116
    Other                     91         83         78        327        287
                       ---------- ---------- ---------- ---------- ----------
                             253        246        236        997        906
                       ---------- ---------- ---------- ---------- ----------

    Net operating income
     before provision
     for credit losses       211        257        223        933        860
    Provision for
     credit losses            24         21         17         67         34
                       ---------- ---------- ---------- ---------- ----------

    Income before taxes
     and non-controlling
     interest in income
     of trust                187        236        206        866        826
    Provision for
     income taxes             64         81         66        292        285
    Non-controlling
     interest in income
     of trust                  7          6          7         26         26
                       ---------- ---------- ---------- ---------- ----------
    Net income               116        149        133        548        515
                       ---------- ---------- ---------- ---------- ----------
                       ---------- ---------- ---------- ---------- ----------
    Preferred share
     dividends                 5          4          5         18         18
                       ---------- ---------- ---------- ---------- ----------
    Net income
     attributable to
     common shares           111        145        128        530        497
                       ---------- ---------- ---------- ---------- ----------
                       ---------- ---------- ---------- ---------- ----------

    Average common
     shares outstanding
     (000)               493,668    488,668    488,668    489,918    488,668
    Basic earnings
     per share (C$)         0.22       0.30       0.26       1.08       1.02



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

                                              At 31 December  At 31 December
    Figures in C$ millions                              2007            2006
                                              --------------- ---------------
    Assets
    Cash and non-interest bearing deposits
     with the Bank of Canada and other banks             510             368
    Deposits with regulated financial
     institutions                                      3,063           4,346
                                              --------------- ---------------
                                                       3,573           4,714
                                              --------------- ---------------

    Available for sale securities                      5,639               -
    Investment securities                                  -           3,554
    Trading securities                                 1,227           1,162
    Other securities                                      60              50
                                              --------------- ---------------
                                                       6,926           4,766
                                              --------------- ---------------

    Securities purchased under
     reverse repurchase agreements                     6,122           4,760
                                              --------------- ---------------

    Loans
    - Businesses and government                       21,322          17,819
    - Residential mortgage                            12,920          14,016
    - Consumer                                         4,826           3,728
    - Allowance for credit losses                       (353)           (327)
                                              --------------- ---------------
                                                      38,715          35,236
                                              --------------- ---------------

    Customers' liability under acceptances             5,727           5,130
    Derivatives                                          623             308
    Land, buildings and equipment                        149             121
    Other assets                                       1,096           1,735
                                              --------------- ---------------
                                                       7,595           7,294
                                              --------------- ---------------
    Total assets                                      62,931          56,770
                                              --------------- ---------------
                                              --------------- ---------------

    Liabilities and shareholders' equity
    Deposits
    - Regulated financial institutions                 1,535           1,469
    - Individuals                                     18,291          17,039
    - Businesses and governments                      29,051          25,665
                                              --------------- ---------------
                                                      48,877          44,173
                                              --------------- ---------------

    Acceptances                                        5,727           5,130
    Securities sold under repurchase agreements          320             162
    Derivatives                                          649             316
    Securities sold short                                623             715
    Other liabilities                                  2,256           2,413
    Non-controlling interest in trust
     and subsidiary                                      430             430
                                              --------------- ---------------
                                                      10,005           9,166
                                              --------------- ---------------

    Subordinated debentures                              801             563
                                              --------------- ---------------

    Shareholders' equity
    - Preferred shares                                   350             350
    - Common shares                                    1,225           1,125
    - Contributed surplus                                206             202
    - Retained earnings                                1,462           1,191
    - Accumulated other comprehensive income               5               -
                                              --------------- ---------------
                                                       3,248           2,868
                                              --------------- ---------------
    Total liabilities and shareholders'
     equity                                           62,931          56,770
                                              --------------- ---------------
                                              --------------- ---------------



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

                                 Quarter ended                Year ended
                       -------------------------------- ---------------------
                              31         30         31         31         31
    Figures in          December  September   December   December   December
     C$ millions            2007       2007       2006       2007       2006
                       ---------- ---------- ---------- ---------- ----------

    Cash flows provided
     by (used in):
    - operating
       activities            (30)       205        361      1,013        673
    - financing
       activities          1,006      1,867      1,165      4,959      5,247
    - investing
       activities           (847)    (2,136)    (1,541)    (5,835)    (5,964)
                       ---------- ---------- ---------- ---------- ----------

    (Decrease) increase
     in cash and cash
     equivalents             129        (64)       (15)       137        (44)
    Cash and cash
     equivalents,
     beginning of period     355        419        362        347        391
                       ---------- ---------- ---------- ---------- ----------
    Cash and cash
    equivalents, end
     of period               484        355        347        484        347
                       ---------- ---------- ---------- ---------- ----------
                       ---------- ---------- ---------- ---------- ----------

    Represented by:
    - Cash and non-interest
       bearing deposits
       with the Bank of
       Canada and other
       banks                 510        384        368
    - less non-operating
       deposits with
       regulated financial
       institutions(*)       (26)       (29)       (21)
                       ---------- ---------- ----------
    - Cash and cash
       equivalents,
       end of period         484        355        347
                       ---------- ---------- ----------
                       ---------- ---------- ----------

    (*) Non-operating deposits comprise cash restricted for recourse on
        securitisation transactions.
    





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For further information: Media enquiries to: Ernest Yee, (604) 641-2973;
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