30th Mar 2011 16:16
This document comprises the Annual Report and Accounts 2010 for HSBC Holdings plc and its subsidiaries. It contains the Report of the Directors and Financial Statements, together with the Independent Auditor's Report thereon, as required by the UK Companies Act 2006. The Annual Review 2010 of HSBC Holdings plc is published as a separate document. The Report of the Directors on pages 2 to 219 and the Directors' Remuneration Report on pages 220 to 233 have each been drawn up in accordance with the requirements of English law, and liability in respect thereof is also governed by English law. In particular, the liability of the Directors for these reports is solely to HSBC Holdings plc. Additional information, including commentary on 2009 compared with 2008, may be found in the Form 20‑F filed with the US Securities and Exchange Commission and available on www.hsbc.com and www.sec.gov. Certain defined terms Unless the context requires otherwise, 'HSBC Holdings' means HSBC Holdings plc and 'HSBC', the 'Group', 'we', 'us' and 'our' refers to HSBC Holdings together with its subsidiaries. Within this document the Hong Kong Special Administrative Region of the People's Republic of China is referred to as 'Hong Kong'. When used in the terms 'shareholders' equity' and 'total shareholders' equity', 'shareholders' means holders of HSBC Holdings ordinary shares and those preference shares classified as equity. The abbreviations 'US$m' and 'US$bn' represent millions and billions (thousands of millions) of US dollars, respectively. Financial statements The consolidated financial statements of HSBC and the separate financial statements of HSBC Holdings have been prepared in accordance with International Financial Reporting Standards ('IFRSs') as issued by the International Accounting Standards Board ('IASB') and as endorsed by the European Union ('EU'). EU‑endorsed IFRSs may differ from IFRSs as issued by the IASB if, at any point in time, new or amended IFRSs have not been endorsed by the EU. At 31 December 2010, there were no unendorsed standards effective for the year ended 31 December 2010 affecting these consolidated and separate financial statements, and there was no difference between IFRSs endorsed by the EU and IFRSs issued by the IASB in terms of their application to HSBC. Accordingly, HSBC's financial statements for the year ended 31 December 2010 are prepared in accordance with IFRSs as issued by the IASB. We use the US dollar as our presentation currency because the US dollar and currencies linked to it form the major currency bloc in which we transact and fund our business. Unless otherwise stated, the information presented in this document has been prepared in accordance with IFRSs. When reference to 'underlying' or 'underlying basis' is made in tables or commentaries, comparative information has been expressed at constant currency (see page 14), eliminating the impact of fair value movements in respect of credit spread changes on HSBC's own debt and adjusting for the effects of acquisitions and disposals. A reconciliation of reported and underlying profit before tax is presented on page 15. | Contents | ||
Report of the Directors | |||
Overview | |||
Financial highlights ...................................................... | 2 | ||
Group Chairman's Statement ....................................... | 4 | ||
Group Chief Executive's Business Review .................... | 7 | ||
Principal activities ....................................................... | 10 | ||
Strategic direction ........................................................ | 10 | ||
Top and emerging risks ................................................ | 11 | ||
Key performance indicators ......................................... | 11 | ||
Operating and Financial Review | |||
Financial summary1 ..................................................... | 14 | ||
Customer groups and global businesses1 ........................ | 37 | ||
Products and services ................................................... | 38 | ||
Geographical regions1 .................................................. | 50 | ||
Other information ....................................................... | 81 | ||
Risk1 ............................................................................ | 86 | ||
Capital ......................................................................... | 177 | ||
Governance1 | |||
Corporate Governance Report ..................................... | 183 | ||
Biographies of Directors and senior management ......... | 183 | ||
Board of Directors ....................................................... | 189 | ||
Board committees ........................................................ | 194 | ||
Employees ................................................................... | 206 | ||
Corporate sustainability ............................................... | 212 | ||
Share capital ................................................................ | 214 | ||
Dividends, shareholders and meetings ........................... | 217 | ||
Directors' Remuneration Report1 .............................. | 220 | ||
Financial Statements and Other Information | |||
Statement of Directors' Responsibilities ...................... | 234 | ||
Independent Auditor's Report ...................................... | 235 | ||
Financial Statements1 | |||
Financial statements .................................................... | 237 | ||
Notes on the financial statements ................................ | 250 | ||
Shareholder Information1 | |||
Shareholder information .............................................. | 371 | ||
Cautionary statement regarding forward-looking statements ................................................................... | 379 | ||
Glossary ....................................................................... | 380 | ||
Index ........................................................................... | 388 | ||
1. Detailed contents are provided on the referenced pages. | |||
Headquartered in London,HSBC is one of the world's largest banking and financial services organisations and one of the industry's most valuable brands. We provide a comprehensive range of financial services to around 95 million customers through two customer groups, Personal Financial Services (including consumer finance), and Commercial Banking, and two global businesses, Global Banking and Markets, and Global Private Banking.
Our international network covers 87 countries and territories in six geographical regions; Europe, Hong Kong, Rest of Asia-Pacific, the Middle East, North America and Latin America.
With listings on the London, Hong Kong, New York, Paris and Bermuda stock exchanges, shares in HSBC Holdings plc are held by over 221,000 shareholders in 127 countries and territories.
Highlights
·; Pre-tax profit more than doubled to US$19bn on a reported basis.
·; Underlying pre-tax profit up by almost US$5bn or 36% to US$18.4bn.
·; Profitable in every customer group and region, including North America, for thefirst time since 2006.
·; Dividends declared in respect of 2010 totalled US$6.3bn, or US$0.36 per ordinary share,with a fourth interim dividend for 2010 of US$0.12 per ordinary share.
·; Continued capital generation - core tier 1 ratio increased to 10.5% from 9.4%.
·; Customer lending up 8% to US$958bn; deposits up 7% to US$1.2 trillion on anunderlying basis.
Cover theme
An evening view of the Central Elevated Walkway in Hong Kong's business district. Used by tens of thousands of commuters every day, this walkway forms a vital artery through the heart of Asia's pre-eminent financial centre, which hosts over 190 banks and deposit-taking companies from all over the world.
Financial highlights
For the year
Profit before taxation US$19,037m - up 169% 2009: US$7,079m 2008: US$9,307m | Underlying profit before taxation US$18,366m - up 36% 2009: US$13,482m
| Total operating income US$80,014m - up 2% 2009: US$78,631m 2008: US$88,571m | ||
Net operating income before loan impairment charges and other credit risk provisions US$68,247m - up 3% 2009: US$66,181m 2008: US$81,682m | Profit attributable to shareholders of the parent company US$13,159m - up 126% 2009: US$5,834m 2008: US$5,728m | |||
Earnings per share and dividends per share
Earnings per share US$0.73 - up 115% 2009: US$0.34 2008: US$0.41 | Dividends per share1 US$0.34 2009: US$0.34 2008: US$0.93 | |||
At the year-end
Loans and advances tocustomers US$958bn - up 7% 2009: US$896bn 2008: US$933bn | Customer accounts US$1,228bn - up 6% 2009: US$1,159bn 2008: US$1,115bn | Ratio of customer advances to customer accounts 78.1% 2009: 77.3% 2008: 83.6% | ||
Total equity US$155bn - up 14% 2009: US$136bn 2008: US$100bn | Average total shareholders' equityto average total assets 5.5% 2009: 4.7% 2008: 4.9% | Risk-weighted assets US$1,103bn - down 3% 2009: US$1,133bn 2008: US$1,148bn | ||
Capital ratios
Core tier 1 ratio 10.5% 2009: 9.4% 2008: 7.0% | Tier 1 ratio 12.1% 2009: 10.8% 2008: 8.3% | Total capital ratio 15.2% 2009: 13.7% 2008: 11.4% | ||
Performance ratios
Credit coverage ratios
Loan impairment charges tototal operating income 16.9% 2009: 31.7% 2008: 27.2% | Loan impairment charges toaverage gross customer advances 1.5% 2009: 2.8% 2008: 2.5% | Total impairment allowances to impaired loans at year-end 71.6% 2009: 83.2% 2008: 94.3% | ||
Return ratios
Return on averageinvested capital2 8.7% 2009: 4.1% 2008: 4.0% | Return on average total shareholders' equity3 9.5% 2009: 5.1% 2008: 4.7% | Post-tax return onaverage total assets 0.6% 2009: 0.3% 2008: 0.3% | Post-tax return on average risk-weighted assets 1.3% 2009: 0.6% 2008: 0.6% | |||
Efficiency and revenue mix ratios
Cost efficiency ratio4 55.2% 2009: 52.0% 2008: 60.1% | Net interest income tototal operating income 49.3% 2009: 51.8% 2008: 48.1% | Net fee income tototal operating income 21.7% 2009: 22.5% 2008: 22.6% | Net trading income tototal operating income 9.0% 2009: 12.5% 2008: 7.4% | |||
Share information at the year-end
Closing market price | ||||||||
US$0.50 ordinary shares in issue 17,686m 2009: 17,408m 2008: 12,105m | Marketcapitalisation US$180bn 2009: US$199bn 2008: US$114bn | London £6.51 2009: £7.092008: £5.77 | Hong Kong HK$79.70 2009: HK$89.402008: HK$67.81 | AmericanDepositary Share5 US$51.04 2009: US$57.092008: US$44.15 | ||||
Total shareholder return6 | ||||||||
Over 1 year | Over 3 years | Over 5 years | ||||||
To 31 December 2010 ..................................... | 95.3 | 103.4 | 103.4 | |||||
Benchmarks: | ||||||||
- FTSE 1007 ...................................................... | 112.6 | 102.8 | 126.3 | |||||
- MSCI World7 .................................................. | 115.9 | 111.0 | 127.0 | |||||
- MSCI Banks7 .................................................. | 103.7 | 81.9 | 79.0 | |||||
For footnotes, see page 83.
Related Shares:
HSBC Holdings