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HSBC Bank Canada has posted a record quarterly profit amid speculation about potential takeovers

HSBC Bank Canada has posted a record quarterly profit amid speculation about potential takeovers

HSBC Bank Canada has posted a record quarterly profit amid speculation about potential takeovers

HSBC Bank Canada has posted a record quarterly profit amid speculation about potential takeovers

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HSBC Bank Canada reported strong pre-tax profit and revenue growth in the third quarter, weeks after its global parent confirmed it is considering a sale of its Canadian unit.

Pretax profit rose 27% from the same period last year to $298 million, while total operating income rose 19% to $665 million. Revenue grew in all of the company’s major business segments in the three months ended September 30.

“Thanks to the efforts of our dedicated team, we have achieved the highest pre-tax quarterly profit on record for the bank,” said Linda Seymour, president and CEO of HSBC Canada. Press release along with the results. “All of our business segments increased profits in the quarter, driven by the year-on-year central bank rate hike and growth in our businesses.”

The bank’s wealth and personal banking segment saw the biggest boost to its total operating income with a $270 million increase from the same period last year. Meanwhile, revenue from the bank’s commercial banking business grew 15 percent year over year to $308 million.

British financial services giant HSBC Holdings PLC surprised analysts earlier this month confirmed reports was considering the sale of its profitable Canadian unit. After Sky News reported the story, an HSBC spokesman said the review was at an early stage and no decision had been made. The bank confirmed in its earnings release that exploration was still ongoing and the company would provide updates as appropriate.

Industry watchers have speculated that Royal Bank of Canada is the most logical tradethough competition concerns and RBC’s already dominant market position may give CEO Dave McKay pause to make such a move.

Another concern that may make the Big Six banks think twice is the concern about the status quo the economy.

Nigel D’Souza, an analyst at Toronto-based Veritas Investment Research, acknowledged the strength of the results but said they wouldn’t be enough to move the needle on a selloff.

“The bigger problem is the risk of a recession” said D’Souza. “HSBC probably prefers to sell its Canadian unit at a healthy valuation ahead of a recession, and potential buyers may want to wait for the valuation to discount as macroeconomic risks emerge.”

“Unless someone blinks, a sale of HSBC Canada is probably not imminent,” D’Souza added. “That said, a deal is likely if HSBC’s Canadian assets are broken up and sold to multiple bidders.”

Strong results at the Canadian unit came despite disappointing overall earnings at parent HSBC Holdings PLC.

After-tax profits of the global financial giant It dropped to $3.1 billion From $5.5 billion in the third quarter of 2021.

In a post-results conference call, HSBC chief executive Noel Quinn also announced the departure of chief financial officer Ewen Stevenson, who will be replaced by Georges Elhedery early next year.

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