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HSBC Canada reported a pretax loss of $28-million in the fourth quarter, down from a profit of $206-million in the fourth quarter of 2014.Fred Lum/The Globe and Mail

If HSBC Bank Canada's quarterly results provide a hint of what the financials from the Big Six are going to look like, look out.

The Canadian subsidiary of London-based HSBC Holdings PLC reported a sharp downturn in its fiscal fourth-quarter profit, driven by many of the issues weighing on the big banks as they near the start of their own reporting season.

On Sunday night, HSBC Canada reported a pretax loss of $28-million in the fourth quarter, down from a profit of $206-million in the fourth quarter of 2014.

Low interest rates sent net interest income tumbling $13-million, loan impairments tied to the struggling energy sector surged $127-million and operating expenses tied to investments in technology and financial regulation rose $33-million.

"Clearly our 2015 results reflect the macroeconomic challenges that mounted globally and in Canada particularly through the second half of the year," Sandra Stuart, chief executive officer of HSBC Bank Canada, said in a statement.

In other words, what's troubling HSBC Canada is what's also troubling the big banks, which start to report their fiscal first-quarter results on Tuesday morning when Bank of Montreal and National Bank of Canada get things rolling.

So far, though, the big banks aren't reflecting fresh concerns: The S&P/TSX commercial banks index actually gained 1 per cent in early trading on Monday. Although the rally evaporated by mid-afternoon, bank stocks were holding relatively steady.

Why the shrugs? For one thing, concern about low interest rates and rising loan impairments tied to the energy sector appear to be built in to the share prices of the big banks already.

Earlier this year, the commercial banks index fell into a bear market, defined as a decline of more than 20 per cent from its high. Even with the recent rebound, bank stocks are still down about 16 per cent.

Analysts, too, are less than ebullient, forecasting that first-quarter profits will be weighed down by the weak economy and rising loan losses. National Bank Financial's Peter Routledge, for example, has cut his 12-month price targets on bank stocks by an average of 5 per cent.

"We find it difficult to conclude that underlying macroeconomic growth prospects in Canada will drive material revenue and earnings growth for the Big Six Canadian banks in 2016," Mr. Routledge said in a recent note.

The other reason why the big banks might not be reacting: HSBC Canada doesn't perfectly overlap with the big banks in terms of reporting periods or operations, making comparisons difficult.

HSBC's fourth quarter ended on Dec. 31, while the big banks finished their fiscal first quarters a month later. As well, John Aiken, an analyst at Barclays Capital, noted that HSBC's fourth-quarter results may incorporate a more conservative approach as the final quarter of the year.

"The HSBC credit performance may have been part of a 'kitchen sink' fourth-quarter true-up, and may not be fully embraced by the Canadian banks," Mr. Aiken said in a note.

In terms of operations, HSBC Canada is focused on companies and individuals with international aspirations, and therefore doesn't have the gargantuan retail exposure of the big banks. Commercial banking represents about 50 per cent of HSBC Canada, versus just 10 per cent for retail banking and wealth management. For the big banks, these numbers are often reversed.

Still, if the start of the big banks' reporting season on Tuesday is raising the level of anxiety among many observers, HSBC Canada's results haven't exactly soothed any nerves.

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