HSBC Canada looks to expand commercial unit

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After selling its retail brokerage a few months ago,HSBC Bank Canada is planning to expand its commercial lending and wealth management businesses in Canada as it retools operations.

HSBC Bank Canada chief executive officer Lindsay Gordon said the recent move by the bank's U.K.-based parent to sell off the Canadian retail brokerage does not mean less of a focus on its market here. Rather, he said the bank is shifting its attention to other areas.

"As an international bank in Canada, competing in a pretty competitive environment, we have to focus our time and our resources where we think we can add value and make a reasonable return," Mr. Gordon said.

HSBC sold its retail brokerage to National Bank Financial in late September for $206-million as its global parent HSBC Holdings PLC sells assets to raise capital.

"It interestingly has raised questions in people's minds about what's next and are you committed to Canada?" he said. in an interview. "My answer to that is absolutely we are totally committed to the Canadian market. But we can't be all things to all people."

HSBC Bank Canada is instead looking to grow its commercial lending and build a wealth management capacity internally to handle client investments. In particular, the bank It is looking to expand commercial banking in Ontario and Quebec, where more than 60 per cent of Canadian companies involved in international trade are located.

Mr. Gordon's comments came as HSBC's Canadian operations made $201-million in the third quarter, an increase of $55-million over the same quarter last year, when it made $146-million.

Net interest income fell 3 per cent to $391-million, compared with $404-million a year ago, a reflection of global economic uncertainty right now as companies borrow less," he said.

HSBC Canada reports earnings on a different schedule from Canada's Big Six banks, which unveil their fourth quarter in early December. Analyst John Aiken at Barclays Capital said HSBC's profits may suggest the upcoming quarter for banks will not be as negative as feared, given the uncertainty in the global financial sector. However, the fourth quarter is still expected to be challenging for the banks.

"HSBC's reported third quarter earnings points to a challenging fourth quarter for the Canadian banks, although potentially not as bad as some worst-case scenarios envisioned by investors," Mr. Aiken said in a note to clients.