Annual Report and Accounts - 35 of 35

Accounting 340

developments (future) 342

policies (critical) 61

policies (significant) 150

Accounts 

approval 447

basis of preparation 67, 340

Acquisitions and disposals 418

Actuaries 452

Annual General Meeting 314, 452

Areas of special interest 208

Asset-backed securities 145, 150

Assets 

by customer group 67, 389

by geographical region 88, 389

charged as security 430

held in custody and under administration 141

intangible 409

movement in 41

other 418

trading 396

Associates and joint ventures

dilution gains 31

interests in 360, 406

share of profit in 38

Audit committee (Group) 296

Auditors' remuneration 375

Auditors' Report 330

Balance sheet 

average 42

consolidated 40, 334

data 4, 68, 72, 75, 78, 79, 83, 90, 96, 99, 104, 116, 120, 126, 130, 135

HSBC Holdings 337

Basel II 274

Borrowings (short-term) 56

Brand perception 20

Business highlights 69, 73, 76, 80

Business model 149

Business performance review 

Europe 91, 93

Hong Kong 100, 102

Latin America 131, 133

North America 121, 123

Rest of Asia-Pacific 111, 114

Calendar (dividends) 448, 449

Capital

management and allocation 274

return on invested capital 2

structure 278

Capital and performance ratios 3

Cash flow

accounting policy 359

consolidated statement 336

HSBC Holdings 339

notes 439

payable under financial liabilities 240

projected scenario analysis 238

Cautionary statement regarding forward-looking statements 6

Certificates of deposit and other time deposits (maturity analysis) 61

Challenges and uncertainties 12

Client assets 80

Collateral and credit enhancements 199, 222

Commercial Banking

business highlights 73

financial performance 72

products and services 138

strategic direction 72

underlying/reported profit 74

Committees (board) 296, 315

Communication with shareholders 453

Conduits 174

Constant currency 23

Contents 1, 67, 87, 188, 281, 315, 332, 448

Contingent liabilities and contractual  commitments 440

Contractual obligations 57

Corporate governance

codes 294

report 281

Corporate sustainability 254, 312

committee 299

Cost efficiency ratio 2, 37

Credit coverage ratios 3

Credit exposure 197

Credit quality 195, 212, 217, 268

Credit risk 

challenges and uncertainties 15

management thereof 192

insurance 267

Critical accounting policies 61

Cross-border exposures 207

Customer accounts 89, 109, 119, 129

satisfaction 20

Customer groups and global businesses 67, 84

Daily distribution of revenues 243

Dealings in HSBC Holdings plc shares 314

Debt securities in issue 210, 420

accounting policy 359

rating agency designation 175

Deferred tax 66 

Defined terms inside front cover 

Deposits 

average balances and average rates 59

time 61

Derivatives 201, 398

accounting policy 351

Dilution gains 31

Directors

appointments and re-election 293

biographies 281

board of directors 290

emoluments 324, 374

interests 301

non-executive 323

other directorships 323

pensions 322, 324

remuneration (executive) 317

responsibilities (statement of) 329

service contracts 322

share plans 326

Disclosure policy 144

Dividends 2, 313, 384, 448, 449

Donations 312

Earnings per share 2, 19, 320, 384

Economic briefing

Europe 90, 93

Hong Kong 100, 101

Latin America 130, 132

North America 119, 123

Rest of Asia-Pacific 109, 113

Economic profit 39, 319

Efficiency and revenue mix ratios 3

Employees 303

compensation and benefits 311, 363

disabled 303

engagement 19

involvement 303

remuneration policy 303

Enforceability of judgements made in the US 448

Enquiries (from shareholders) 453

Equity 42, 436

Equity securities 246

Europe

balance sheet data 90, 96

business performance 91, 93

challenges and uncertainties 14

customer accounts by country 89

economic briefing 90, 93

lending 205, 207

loan impairment charges 223, 226, 229, 232

loans and advances to customers 89

profit/(loss) 89, 90, 96

regulation and supervision (UK) 189

underlying/reported profit 91, 94

Events after the balance sheet date 447

Exchange controls and other limitations affecting equity security holders 448

Exposures 150, 178, 183, 200

Fee income (net) 27

Fair value

accounting policy 345

Financial assets 

critical accounting policy 64

designated at fair value 397

not qualifying for de-recognition 405

Financial assets and liabilities 

accounting policy 346, 353

by measurement basis 392

reclassification 145

Financial guarantee contracts 

accounting policy 357

Financial highlights 2

Financial instruments 

accounting policy 349

credit quality 217

fair value 162

net income from 29, 360

not at fair value 170

critical accounting policy (valuation) 63

Financial investments 403

accounting policy 350

gains less losses from 30

Financial liabilities designated at fair value 419

Financial risks (insurance) 262

Financial statements 23, 332

Five-year comparison 4

Foreign exchange 

accounting policy 357

exposures 248, 429

rates 4

Funds under management 140

Geographical regions 87

Global Banking and Markets

asset-backed securities 147

balance sheet data 78

business highlights 76

financial performance 75

products and services 139

strategic direction 75

underlying/reported profit 77

Goodwill 

accounting policy 353

and intangible assets 409

critical accounting policy 63

Governance codes 294

HSBC Holdings/New York Stock Exchange corporate governance differences 294

Group Chairman's Statement 8

Group Management Board 296

Health and safety 313

History and development of HSBC 457

Hong Kong

balance sheet data 99, 104

business performance 100, 102

challenges and uncertainties 14

economic briefing 100, 101

lending 205, 207

loan impairment charges 223, 226, 229, 232

profit/(loss) 99, 104

regulation and supervision 189

underlying/reported profit 100, 102

HSBC Holdings plc

balance sheet 337

cash flow 339

credit risk 232

dividends 449

employee emoluments 374

financial assets and liabilities 395

liquidity and funding management 240

market risk 249

maturity analysis of assets and liabilities 429

related party transactions 447

share plans 379

statement of changes in total equity 338

structural foreign exchange exposures 249

subordinated liabilities 427

Impairment 

accounting policy 346

allowances and charges 34, 223

assessment 195

critical accounting policy 62

losses as percentage of loans and advances 224

movement by industry and geographical  region 224, 225

Income statement (consolidated) 24, 333

Information on HSBC (availability thereof) 454

Insurance

accounting policy 358

claims incurred (net) and movements in liabilities to policyholders 33, 362

liabilities under contracts issued 421

net earned premiums 31, 361

PVIF business 272

risk management 255

Interest income (net) 26

accounting policy 344

analysis of changes in 50

average balance sheet 42

forgone on impaired loans 233

sensitivity 58, 246

Interim management statements 452

Internal control 299

IFRS and Hong Kong Financial Reporting Standards comparison 340

Investment contracts

accounting policy 358

Investor relations 454

IT performance 20

Key performance indicators

financial 17

non-financial 19

Latin America

balance sheet data 130, 135

business performance 131, 133

challenges and uncertainties 15

customer accounts by country 129

economic briefing 130, 132

lending 205, 207

loan impairment charges 223, 226, 229, 232

loans and advances to customers 129, 206

profit/(loss) 129, 130

underlying/reported profit 131/133

Lease commitments 442

accounting policy 355

Legal

proceedings/risk 16, 142, 252

litigation 443

Leveraged finance transactions 160 

Liabilities 

by geographical region 389

movement in 47

other 421

subordinated 424

trading 419

Life insurance business 255

Liquidity and funding 

challenges and uncertainties 15

management thereof 235

impact of market turmoil 239

insurance 271

Loans and advances

accounting policy 346

collateral 200

concentration of exposure 200

credit quality of 195

delinquency in the US 215

impairment 220

maturity and interest sensitivity 58

past due 219 

renegotiated 216

to banks by geographical region 210

to customers by industry sector and geographical region 204, 205, 206

Market risk

impact of market turmoil 242

insurance 263

management thereof 241

Market turmoil 144, 239, 242

Maturity analysis of assets and liabilities 428

Maximum exposure to credit risk 197

Memorandum and Articles of Association 451

Minority interests 431

Money market funds 179

Monoline insurers 158

Mortgage lending 210, 211, 213

Nomination committee 298

Non-interest income

accounting policy 344

Non-life insurance business 256

Non-trading portfolios 245

North America

balance sheet data 120, 126

business performance 121, 123

challenges and uncertainties 14

customer accounts by country 119

economic briefing 119, 123

lending 205, 207

loan delinquency in the US 215

loan impairment charges 223, 226, 229, 232

mortgage lending 210

profit/(loss) 119, 120, 126

regulation and supervision (US) 190

underlying/reported profit 121, 124

Off-balance sheet arrangements 187

Operating expenses 36

Operating income 32, 363

Operational risk 252

challenges and uncertainties 16

Organisational structure chart 459

Other (notes) 82

Pensions

accounting policy 356

for directors 324

risk 246, 253

Personal Financial Services

business highlights 69

financial performance 69

products and services 138

strategic direction 68

subsequent developments 70

underlying/reported profit 71

Personal lending 208

Principal activities 12

Private Banking 

business highlights 80

financial performance 79

products and services 140

strategic direction 79

underlying/reported profit 81

Products and services 138

Profit before tax

by country 89, 107, 119, 129

by customer group 67, 68, 72, 75, 79, 82, 84, 390

by geographical region 88, 90, 96, 99, 104, 110, 116, 386

consolidated 333

data 4

underlying/reported reconciliations 21, 22, 71, 74, 77, 81, 83, 91, 94, 100, 102, 111, 114, 121, 124, 131, 133

Property, plant and equipment 141, 413

accounting policy 354

valuation of land and buildings 141

Provisions 424

accounting policy 357

PVIF 272

Ratios 

advances to deposits 236

capital and performance 3

credit coverage 3

cost efficiency 3

earnings to combined fixed charges 57

financial 4

net liquid assets to customer liabilities 237

Regulation and supervision 17, 188

Related party transactions 444

Remuneration committee 298, 315

Renegotiated loans 216

Repricing gap 250

Reputational risk 254

Residual value risk management 252

Rest of Asia-Pacific

balance sheet data 110, 116

business performance 111, 114

challenges and uncertainties 14

customer accounts by country 109

economic briefing 109, 113

lending 205, 207

loan impairment charges 223, 226, 229, 232

loans and advances to customers 108, 206

profit/(loss) 107, 110, 116

underlying/reported profit 111, 114

Risk elements in loan portfolio 233

Risk management 150, 191

capital management and allocation 274

contingent liquidity 238

credit 192

credit spread 244, 245

insurance operations 262

legal 252

liquidity and funding management 235

market 241

operational 252

pension 253

rating scales 218

reputational 254

residual value 252

security and fraud 253

sustainability 254

Risk-weighted assets  by principal subsidiary 280

Sale and repurchase agreements

accounting policy 351

Securities held for trading (concentration of exposure) 200

Securitisations 182

Segment analysis 385

accounting policy 345

biographies 286

376

accounting policy 356

Share capital 431

accounting policy 359

and reserves 53

notifiable interests in 314

Share information 3

Share plans

Bank of Bermuda plans 310, 434

discretionary plans 307

for directors 326

for employees 304

HSBC Finance plans 309, 381, 434

HSBC France plans 308, 380, 433

long-term incentives 318

performance shares and restricted share awards 326

Shareholder (communications with) 313, 453

profile 451

Social and community investment 312

Special purpose entities 149, 173, 183, 187

Staff numbers 36, 303

Statement of changes in total equity 338

Statement of recognised income and expense 335

Stock symbols 450

Strategic direction 12, 68, 72, 75, 79

Structural foreign exchange exposure 248

Structured investment vehicles (SIVs) 174

Subsidiaries 87, 416

accounting policy 353

Supplier payment policy 313

Sustainability 312

risk 254

Taxation

accounting policy 355

challenges and uncertainties 17

deferred tax - critical accounting policy 66

expense 381

UK residents 455

US residents 456

Tier 1 capital 279

Total shareholder return 3, 19, 319, 322

Trading assets 396

accounting policy 349

Trading income (net) 28

Trading liabilities 419

accounting policy 349

Trading market (nature of) 449

Trading portfolios 244

Troubled debt restructurings 233

Value at risk 241, 251