27th Mar 2012 16:19
Consolidated balance sheet
Five-year summary consolidated balance sheet and selected financial information
At 31 December | |||||||||
2011US$m | 2010US$m | 2009US$m | 2008US$m | 2007US$m | |||||
ASSETS | |||||||||
Cash and balances at central banks .................................... | 129,902 | 57,383 | 60,655 | 52,396 | 21,765 | ||||
Trading assets ................................................................... | 330,451 | 385,052 | 421,381 | 427,329 | 445,968 | ||||
Financial assets designated at fair value ............................. | 30,856 | 37,011 | 37,181 | 28,533 | 41,564 | ||||
Derivatives ....................................................................... | 346,379 | 260,757 | 250,886 | 494,876 | 187,854 | ||||
Loans and advances to banks ............................................ | 180,987 | 208,271 | 179,781 | 153,766 | 237,366 | ||||
Loans and advances to customers37 ................................... | 940,429 | 958,366 | 896,231 | 932,868 | 981,548 | ||||
Financial investments ....................................................... | 400,044 | 400,755 | 369,158 | 300,235 | 283,000 | ||||
Assets held for sale ........................................................... | 39,558 | 1,991 | 3,118 | 2,075 | 2,804 | ||||
Other assets ...................................................................... | 156,973 | 145,103 | 146,061 | 135,387 | 152,397 | ||||
Total assets ...................................................................... | 2,555,579 | 2,454,689 | 2,364,452 | 2,527,465 | 2,354,266 | ||||
LIABILITIES AND EQUITY | |||||||||
Liabilities | |||||||||
Deposits by banks ............................................................. | 112,822 | 110,584 | 124,872 | 130,084 | 132,181 | ||||
Customer accounts ............................................................ | 1,253,925 | 1,227,725 | 1,159,034 | 1,115,327 | 1,096,140 | ||||
Trading liabilities .............................................................. | 265,192 | 300,703 | 268,130 | 247,652 | 314,580 | ||||
Financial liabilities designated at fair value ........................ | 85,724 | 88,133 | 80,092 | 74,587 | 89,939 | ||||
Derivatives ....................................................................... | 345,380 | 258,665 | 247,646 | 487,060 | 183,393 | ||||
Debt securities in issue ...................................................... | 131,013 | 145,401 | 146,896 | 179,693 | 246,579 | ||||
Liabilities under insurance contracts .................................. | 61,259 | 58,609 | 53,707 | 43,683 | 42,606 | ||||
Liabilities of disposal groups held for sale .......................... | 22,200 | 86 | 3 | - | - | ||||
Other liabilities ................................................................. | 111,971 | 109,868 | 148,411 | 149,150 | 113,432 | ||||
Total liabilities ................................................................. | 2,389,486 | 2,299,774 | 2,228,791 | 2,427,236 | 2,218,850 | ||||
Equity | |||||||||
Total shareholders' equity ................................................ | 158,725 | 147,667 | 128,299 | 93,591 | 128,160 | ||||
Non-controlling interests .................................................. | 7,368 | 7,248 | 7,362 | 6,638 | 7,256 | ||||
Total equity ...................................................................... | 166,093 | 154,915 | 135,661 | 100,229 | 135,416 | ||||
Total equity and liabilities ................................................. | 2,555,579 | 2,454,689 | 2,364,452 | 2,527,465 | 2,354,266 | ||||
Five-year selected financial information | |||||||||
Called up share capital ...................................................... | 8,934 | 8,843 | 8,705 | 6,053 | 5,915 | ||||
Capital resources38,39,40 ..................................................... | 170,334 | 167,555 | 155,729 | 131,460 | 152,640 | ||||
Undated subordinated loan capital ..................................... | 2,779 | 2,781 | 2,785 | 2,843 | 2,922 | ||||
Preferred securities and dated subordinated loan capital41 .. | 49,438 | 54,421 | 52,126 | 50,307 | 49,472 | ||||
Risk-weighted assets and capital ratios38,39 | |||||||||
Risk-weighted assets .......................................................... | 1,209,514 | 1,103,113 | 1,133,168 | 1,147,974 | 1,123,782 | ||||
% | % | % | % | % | |||||
Core tier 1 ratio ................................................................ | 10.1 | 10.5 | 9.4 | 7.0 | 8.1 | ||||
Total capital ratio ............................................................ | 14.1 | 15.2 | 13.7 | 11.4 | 13.6 | ||||
Financial statistics | |||||||||
Loans and advances to customers as a percentage ofcustomer accounts ......................................................... | 75.0 | 78.1 | 77.3 | 83.6 | 89.5 | ||||
Average total shareholders' equity to average total assets . | 5.64 | 5.53 | 4.72 | 4.87 | 5.69 | ||||
Net asset value per ordinary share at year-end42 (US$) ...... | 8.48 | 7.94 | 7.17 | 7.44 | 10.72 | ||||
Number of US$0.50 ordinary shares in issue (millions) ...... | 17,868 | 17,686 | 17,408 | 12,105 | 11,829 | ||||
Closing foreign exchange translation rates to US$: | |||||||||
US$1: £ ............................................................................ | 0.646 | 0.644 | 0.616 | 0.686 | 0.498 | ||||
US$1: € ............................................................................ | 0.773 | 0.748 | 0.694 | 0.717 | 0.679 | ||||
For footnotes, see page 95.
A more detailed consolidated balance sheet is contained in the Financial Statements on page 281.
Movement in 2011
Total reported assets were US$2.6 trillion, 4% higher than at 31 December 2010. Excluding the effect of currency movements, total assets increased by 6%.
Strong growth in deposits across most regions enabled us to support our customers' borrowing requirements, leading to significantly higher term lending and mortgage balances in Hong Kong, Rest of Asia-Pacific and the UK. Our strong liquidity position and risk preference also led to a rise in balances at central banks. In addition, the fair value of derivative contracts increased markedly, as the deteriorating economic outlook resulted in a decline in yield curves in major currencies during the latter part of the year. This growth was offset in part by a reduction in net trading assets as we took action to manage our balance sheet more effectively, which resulted in year-end balances being lower than the average for the year.
The following commentary is based on a comparison with the balance sheet at 31 December 2010 as shown on page 35.
Assets
Cash and balances at central banks rose by 129%. The increasingly prominent role played by western central banks in the functioning of the money markets as well as our own risk preference as the eurozone crisis deepened resulted in a larger portion of our excess liquidity being held with central banks in Europe and in North America. The redeployment of funds from maturities and sales of financial investments and strong growth in deposits also contributed to the rise.
Trading assets decreased by 13%. Economic uncertainty led to a decline in market activity. As a result, we reduced our holdings of government and highly-rated corporate debt securities and equity positions, notably in Europe, and did not replace maturities in our reverse repo book. This was partly offset by higher cash collateral posted with external counterparties as the fair value of derivative liabilities rose.
Financial assets designated at fair value declined by 14% as a result of improved netting of assets and the associated non-recourse liabilities. There was a corresponding reduction in 'Financial liabilities designated at fair value'.
Derivative assets increased by 35%, due to a significant rise in the fair value of interest rate contracts in Europe. This was driven by the downward movements of yield curves in major currencies following the global monetary response to continued economic weakness, including quantitative easing measures. The notional value of contracts outstanding also increased, reflecting a higher number of open interest rate and foreign exchange transactions than a year ago. The increase in the fair value of derivative assets was partly offset by higher netting, which rose in line with the increase in fair values.
Loans and advances to banks declined by 11%, as funds from maturing term loans and reverse repo balances, notably in Europe, were redeployed to 'Cash and balances at central banks'. This was offset in part by higher central bank lending in Rest of Asia-Pacific, reflecting strong deposit growth in the region.
Loans and advances to customers were broadly in line with 2010. Following the announcement of agreements for the sale of 195 non-strategic US branches and our Cards and Retail Services business, we reclassified the related loans and advances to 'Assets held for sale', which, for the purpose of this commentary, is reported within 'Other assets' (see page 86). We also reclassified loans and advances relating to the planned disposals of non-strategic banking operations in Central America, the RBWM business in Thailand and our private banking business in Japan to 'Assets held for sale'.
Excluding the above reclassifications, loans and advances to customers increased by US$30bn compared with 2010, although the pace of growth slowed in the second half of 2011. This reflected targeted loan growth in our CMB and GB&M businesses in Hong Kong and Rest of Asia-Pacific as the economic environment improved and trade flows increased, together with growth as a result of lending campaigns in CMB in the UK and Latin America. Residential mortgage balances also rose significantly in the UK, Hong Kong and Rest of Asia-Pacific due to a strong sales focus and competitive pricing, reflecting the successful implementation of our strategy to reposition RBWM towards higher quality secured lending. This growth was offset in part by a reduction in reverse repo balances in Europe and North America, as a result of lower market activity.
Financial investments were broadly in line with 2010, as Balance Sheet Management continued to hold large portfolios of highly liquid assets. In North America, financial investments rose due to the purchases of government and government agency debt securities. This was partly offset by a reduction in Europe, where a portion of the proceeds from sales and maturities of financial investments were placed at central banks.
Other assets, which, for the purpose of this commentary, includes assets held for sale, increased by 34%, reflecting the reclassification of assets of disposal groups, most notably the loans and advances to customers associated with the non-strategic US branches and our Cards and Retail Services business.
Liabilities
Deposits by banks rose by 4% due to higher placements by other financial institutions with HSBC, primarily in Rest of Asia-Pacific and North America. This was partly offset by a reduction in repo balances as a result of lower market activity.
Customer accounts increased by 4% in highly competitive markets. This was driven by customer acquisition, coupled with targeted deposit gathering campaigns to support growth in lending, most notably in Hong Kong, Rest of Asia-Pacific and in Europe. This was partly offset by the reclassification of deposits of businesses, principally the US branches, to liabilities held-for-sale. Repo balances in Europe also declined, reflecting lower market activity levels, particularly during the latter part of the year.
Trading liabilities fell by 11%. Net short bond and equity positions decreased in line with the reduction in holdings of debt and equity securities, which fell as a result of lower market activity. Repo balances also declined, reflecting lower funding requirements as trading assets fell. These declines were offset in part by a rise in cash collateral posted by external counterparties in line with the increase in the fair value of derivative contracts, notably in Europe.
Financial liabilities designated at fair value were broadly in line with 2010. Debt issuances by HSBC entities in Europe were partly offset by maturities not being replaced in North America as funding requirements reduced in line with the decline in the consumer finance portfolios in run-off. Improved netting of non-recourse liabilities and associated assets led to a further reduction in 'Financial liabilities designated at fair value', with a corresponding decrease in 'Financial assets designated at fair value'.
Derivative businesses are managed within market risk limits and, as a consequence, the increase in the value of Derivative liabilities broadly matched that of 'Derivative assets'.
Debt securities in issue declined by 9%, reflecting the non-replacement of maturing securities in both North America and Europe as a result of lower funding requirements relating to the continued reduction in consumer lending balances and the decline in trading assets, respectively. This was offset in part by new issuances in Latin America and Rest of Asia-Pacific to support balance sheet growth.
Liabilities under insurance contracts grew by 7%, driven by reserves established for new business premiums written, notably in Hong Kong, Brazil, France, the UK and Singapore. This was partly offset by the effect of a fall in equity markets, which resulted in a decline in the fair value of assets held to support unit-linked and investment and insurance contracts with DPF and also in the related liabilities to policyholders, together with reductions due to the non-renewal and transfer to third parties of certain contracts in our Irish businesses and the sale of the motor insurance business in the UK during 2011.
Other liabilities, which, for the purpose of this commentary, includes liabilities of disposal groups, increased by 24% as a result of the reclassification of liabilities of businesses held for sale.
Equity
Total shareholders' equity increased by 9%, driven by profits generated during the year. In addition, the negative balance on the available-for-sale reserve declined from US$4.1bn at 31 December 2010 to US$3.4bn at 31 December 2011, reflecting an improvement in the market value of assets.
Reconciliation of reported and underlying assets and liabilities
31 December 2011 compared with 31 December 2010 | |||||||||||||
31 Dec 10 as reported |
| Currency translation43 |
| 31 Dec 10 at 31 Dec 11 exchange rates |
| Under- lying change |
| 31 Dec 11 as reported |
| Reported change |
| Under- lying change | |
HSBC | US$m | US$m | US$m | US$m | US$m |
| % |
| % | ||||
Cash and balances atcentral banks ........... | 57,383 | (590) | 56,793 | 73,109 | 129,902 | 126 | 129 | ||||||
Trading assets ............. | 385,052 | (3,834) | 381,218 | (50,767) | 330,451 | (14) | (13) | ||||||
Financial assets designatedat fair value ............. | 37,011 | (937) | 36,074 | (5,218) | 30,856 | (17) | (14) | ||||||
Derivative assets ......... | 260,757 | (3,765) | 256,992 | 89,387 | 346,379 | 33 | 35 | ||||||
Loans and advances to banks ...................... | 208,271 | (5,661) | 202,610 | (21,623) | 180,987 | (13) | (11) | ||||||
Loans and advances tocustomers ................ | 958,366 | (12,556) | 945,810 | (5,381) | 940,429 | (2) | (1) | ||||||
Financial investments . | 400,755 | (5,219) | 395,536 | 4,508 | 400,044 | - | 1 | ||||||
Other assets ................ | 147,094 | (439) | 146,655 | 49,876 | 196,531 | 34 | 34 | ||||||
Total assets ................ | 2,454,689 | (33,001) | 2,421,688 | 133,891 | 2,555,579 | 4 | 6 | ||||||
Deposits by banks ....... | 110,584 | (1,837) | 108,747 | 4,075 | 112,822 | 2 | 4 | ||||||
Customer accounts ...... | 1,227,725 | (17,065) | 1,210,660 | 43,265 | 1,253,925 | 2 | 4 | ||||||
Trading liabilities ........ | 300,703 | (2,785) | 297,918 | (32,726) | 265,192 | (12) | (11) | ||||||
Financial liabilities designatedat fair value ............. | 88,133 | (449) | 87,684 | (1,960) | 85,724 | (3) | (2) | ||||||
Derivative liabilities .... | 258,665 | (3,710) | 254,955 | 90,425 | 345,380 | 34 | 35 | ||||||
Debt securities in issue | 145,401 | (1,456) | 143,945 | (12,932) | 131,013 | (10) | (9) | ||||||
Liabilities under insurancecontracts ................. | 58,609 | (1,501) | 57,108 | 4,151 | 61,259 | 5 | 7 | ||||||
Other liabilities ........... | 109,954 | (1,906) | 108,048 | 26,123 | 134,171 | 22 | 24 | ||||||
Total liabilities ........... | 2,299,774 | (30,709) | 2,269,065 | 120,421 | 2,389,486 | 4 | 5 | ||||||
Total shareholders' equity ...................... | 147,667 | (2,263) | 145,404 | 13,321 | 158,725 | 7 | 9 | ||||||
Non-controlling interests .................. | 7,248 | (29) | 7,219 | 149 | 7,368 | 2 | 2 | ||||||
Total equity ................ | 154,915 | (2,292) | 152,623 | 13,470 | 166,093 | 7 | 9 | ||||||
- | |||||||||||||
Total equity and liabilities ................. | 2,454,689 | (33,001) | 2,421,688 | 133,891 | 2,555,579 | 4 | 6 | ||||||
For footnote, see page 95.
In 2011, the effect of acquisitions was not material.
Related Shares:
HSBC Holdings