HSBC USA 3Q affected by Republic acquisition

CNY Business Journal (1996+), Dec 08, 2000

NEW YORK - HSBC USA Inc. recorded net income of $177 million for the quarter ended Sept. 30, up 53.7 percent from $115 million in the third quarter of 1999. Cash earnings were $236 million for the third quarter, compared to $123 million in the same period in 1999.

HSBC USA completed the acquisition of Republic New York Corp. on Dec. 31, 1999. This acquisition, according to the company, was the principal reason for the growth in earnings and increase in balance sheet compared to Sept. 30, 1999.

Youssef Nasr, chief executive officer of HSBC USA, said in a recent press release, "We are pleased with the results we have reported ... Cash earnings once again exhibited strong growth as the integration of Republic and HSBC USA continues to move forward, both ahead of schedule and with lower levels of restructuring costs than previously expected."

More than 43,000 accounts have been opened since the bank introduced Internet banking in April - more than 23,000 in the third quarter alone.

Revenues from domestic wealth management were strong at $51 million for the third quarter of 2000, up 19.6 percent compared to the combined results of the two organizations (HSBC USA and Republic Bank) for the same period last year. There was an increase in offbalance-sheet assets under management of 10.8 percent since Dec. 31, 1999. Life-insurance revenues for the nine months ended Sept. 30 more than doubled compared to the same period in 1999. Total customer holdings for International Private Banking (New York, Florida, and California) increased by more than 13.9 percent compared to Dec. 31, 1999. There was some deterioration in the quality of more leveraged credits, but reserves at 1.4 percent of total loans and provision levels were adequate.

Total loans at Sept. 30 were $39.2 billion, up 66.7 percent from $23.5 billion at Sept. 30, 1999 and compared to $37.9 billion at Dec. 31, 1999. Total deposits were $55.2 billion at Sept. 30, up 106.3 percent from $26.7 billion at Sept. 30, 1999, and $56.4 billion at Dec. 31, 1999. Total assets were $87.1 billion, compared to $34.4 billion at Sept. 30, 1999 and $90.2 billion at Dec. 31, 1999. Certain overseas operations of the former Republic New York Corporation have been transferred to other members of the HSBC Group. More transfers are expected to occur later this year.

Common equity was $9.5 billion at Sept. 30, compared to $2.4 billion at Sept. 30, 1999 and $9.5 billion at Dec. 31, 1999. As a percentage of total assets, common equity increased to 10.9 percent from 6.8 percent at Sept. 30, 1999 and 10.6 percent at Dec. 31, 1999. The ratio of tier 1 capital to risk-weighted assets was 12.8 percent compared to 9.7 percent at Sept. 30, 1999 and 13.4 percent at Dec. 31, 1999. The ratio of total capital to risk-weighted assets was 14.2 percent compared to 13.6 percent at Sept. 30, 1999 and 15.5 percent at Dec. 31, 1999. capital ratios of HSBC USA Inc., including the flagship bank, HSBC Bank USA, were high compared to peers, said the company.

The return on average common equity for the third quarter of 2000 was 7.3 percent compared to 19.9 percent in the third quarter of last year. This was significantly affected, according to the company's report, by the amortization of goodwill through the income statement and the substantial increase in common equity. The ratio of cash earnings to common equity was 10.0 percent compared to 21.3 percent at Sept. 30,1999.

During the third quarter, HSBC USA Inc. formed the charitable foundation, HSBC in the Community (USA) Inc. The foundation will provide funding for a broad range of both educational and environmental activities in the United States.

New York-based HSBC USA Inc. is the 13th largest US bank holding company by total assets and is the holding company for HSBC Bank USA; Republic Bank California N.A., and the HSBC Group's interest in the Wells Fargo HSBC Trade Bank. HSBC has more than 430 branches in New York, seven branches in Florida, two in Pennsylvania and three in California.

HSBC celebrates its 150th anniversary of banking in the United States this year. HSBC USA is an indirectly held, wholly owned subsidiary of HSBC Holdings plc, with headquarters-in London. With some 6,000 offices in 81 countries and territories and assets of $580 billion at June 30, the HSBC Group is one of the world's largest banking and financial-services organization.