27th Oct 2006 18:30
HSBC Holdings PLC27 October 2006 GRUPO FINANCIERO HSBC, S.A. DE C.V. THIRD QUARTER 2006 FINANCIAL RESULTS - HIGHLIGHTS • Net income up 17.5 per cent to MXN4,327 million for the nine months ended 30 September 2006(MXN3,683 million for the nine months ended 30 September 2005). • Cost efficiency ratio of 61.3 per cent for the nine months ended 30 September 2006(65.6 per cent for the nine months ended 30 September 2005). • Return on equity of 20.3 per cent for the nine months ended 30 September 2006,(21.3 per cent for the nine months ended 30 September 2005). • Net loans and advances to customers up MXN17.8 billion, or 14.0 per cent, to MXN144.8 billion at 30 September 2006 (MXN127.0 billion at 30 September 2005). • Total assets up MXN32.5 billion, or 12.9 per cent, to MXN284.3 billion at 30 September 2006 (MXN251.8 billion at 30 September 2005). HSBC Mexico S.A. (the bank) is Grupo Financiero HSBC, S.A. de C.V.'s (the Group)primary subsidiary, and is subject to supervision by the Mexican Banking andSecurities Commission. The bank is required to file periodic financialinformation for the year on a quarterly basis (in this case for the quarterending 30 September 2006) and this information is publicly available. Given thatthis information is available in the public domain, Grupo Financiero HSBC, S.A.de C.V. has elected to file this release. Results are prepared in accordance with Mexican GAAP (generally acceptedaccounting principles), with figures denominated in Mexican pesos (MXN).Comparative figures are presented on an actual basis, indexed to constant MXN asat 30 September 2006. On 8 August 2006, HSBC Panama was sold by Grupo Financiero HSBC, S.A de C.V toHSBC Asia Holdings BV; therefore, Group results include HSBC Panama up until this date. Grupo Financiero HSBC, S.A. de C.V. is a 99.74 per cent directly ownedsubsidiary of HSBC Holdings plc (HSBC). Comment by Sandy Flockhart, President and Group Managing Director of LatinAmerica and the Caribbean "Grupo Financiero HSBC reported good results for the nine months ended30 September 2006, with robust growth in revenues and net income driven by strong performance in the bank and in the insurance and pension funds management (Afore) subsidiaries. Total revenue was higher across all of our customer segments despite a decreasing interest rate environment and a highly competitive market. The growth in revenues for the first nine months of the year of 17.2 per cent surpassed the 9.5 per cent growth in expenses, which is in line with continued investment in our business. "Since 2003 and through 30 September 2006, our consumer lending has increased230 per cent through acquisition and organic growth and our business lending hasalso increased by 182 per cent. During the same period, spreads have beenreduced by 777 and 399 basis points respectively due to competitive pressures.This is a strong indication that there is greater competition in the Mexicanmarket, which has been beneficial to our customers and the economy as a whole. "I am proud to announce that one of the main business magazines in Mexico,Expansion, named HSBC The Mexican Bank of the Year in 2006. This reflects HSBC'spositive results, our solid position as a bank for Mexico's retail and businesscustomers, and reaffirms our commitment to be the leading financial servicesinstitution in Mexico. "Furthermore, HSBC Mexico was awarded fourth place overall in the second annualranking of the most ethical and sustainable banks of Latin America as publishedby Latin Finance magazine. This represented an improvement for HSBC Mexico fromfourteenth place last year to fourth place this year. HSBC Mexico also had thehighest overall score of all Mexican banks mentioned. In terms of individualcategories, for Latin America, HSBC Mexico ranked first in ethics, third intransparency and fourth in social responsibility. "We look forward to a strong finish to the year as we continue to leverage ourbusiness and product opportunities and enhance our service standards for all ourcustomers." Overview For the nine months ended at 30 September 2006, Grupo Financiero HSBC's netincome of MXN4,327 million was MXN644 million, 17.5 per cent, higher than thesame period in 2005. These results were largely due to strong performances inthe bank and insurance subsidiaries. Despite the challenging interest rate environment, net interest income(excluding the monetary position) was up MXN1,599 million to MXN13,191 million,a 13.8 per cent increase compared to same period in 2005. This increase reflectsa solid performance in loans, concentrated in higher-yielding consumer lending,small and medium-sized business products and robust growth in low-cost customerdeposits. Fees and commissions performed well, increasing by 16.5 per cent versus the sameperiod in 2005, reaching MXN6,576 million for the nine months ended 30 September2006. These results were mainly driven by increased contributions from creditcards, membership programmes, mortgages, commercial lending, mutual funds, ATMfees as well as payments and cash management. Trading income was up 63.1 percent to MXN1,541 million, over the same period the previous year. These strongresults reflected the benefits of the Bank's successful strategic positioningand higher customer volumes. Administrative expenses grew 9.5 per cent compared to the same period in 2005,reaching MXN13,072 million for the nine months ended 30 September 2006. Theincrease reflects continued investment in growing the business, training anddeveloping our employees and the build-out of our branch and ATM infrastructure. Loan impairment charges increased to MXN2,419 million for the first nine monthsof 2006, in line with targeted increases in consumer lending, particularly incredit cards and mortgages. The ratio of impaired loans to total loans improvedto 2.6 per cent from 2.8 per cent for the first nine months of 2005. The reservecoverage on impaired loans continues to be strong at 153 per cent. The bank'scapital adequacy ratio remains solid at 13.9 per cent. By customer segment During the third quarter of 2006, Personal Financial Services (PFS) sawcontinued growth in credit cards, mortgage lending and transaction-based feeincome. Strong performance was driven by the launch of an innovative marketingcampaign, Tu Cuenta Episodio IV, featuring a five per cent credit card cashbackpromotion. The campaign provided additional momentum to the continued success of'Tu Cuenta', the first integrated financial services product of its kind offeredlocally, as it helped increase the credit card business and drive growth in lowcost deposits. Commercial Banking (CMB) enjoyed strong performance across all lines ofbusiness, largely as a result of successful restructuring and improvedsegmentation to better serve its client base. CMB benefited from volumeexpansion in the higher-yielding small- and medium-sized businesses (SME) andincreased fees and commissions driven by payments and cash managementtransactions and Estimulo, our combined loan and overdraft product. During thethird quarter, Estimulo Empresarial was launched for upper-end SMEs involving 11different services, including a potential credit of up to MXN10 million. Morethan 60 new clients have been approved for the product, generating some MXN230million in new loans. Corporate, Investment Banking and Markets (CIBM) continued to increaseprofitability while strengthening its market position in part from HSBC'sextensive international network for multinational companies. Payments and cashmanagement and the trust businesses generated strong results in the thirdquarter. The Global Markets business generated higher revenues in money markettrading and derivatives portfolio due to successful yield curve positioning andan increase in both interbank and customer-driven activity. About HSBC Grupo Financiero HSBC, S.A. de C.V. is Mexico's fourth largest banking andfinancial services institution with 1,400 branches, 5,350 ATMs, 6.5 millioncustomers and more than 23,000 employees. For more information, consult ourwebsite at www.hsbc.com.mx. Grupo Financiero HSBC, S.A. de C.V. is a 99.74 per cent directly ownedsubsidiary of HSBC Holdings plc. Headquartered in London, UK, the HSBC Groupserves over 125 million customers worldwide through 9,500 offices in 76countries and territories in Europe, the Asia-Pacific region, the Americas, theMiddle East and Africa. With assets of US$1,738 billion at 30 June 2006, HSBC isone of the world's largest banking and financial services organisations.Listings on the London, Hong Kong, New York, Paris and Bermuda stock exchanges,with shares in HSBC Holdings plc held by around 200,000 shareholders in some 100countries and territories. HSBC is marketed worldwide as 'the world's localbank'. Consolidated Balance Sheet GROUP BANKFigures in MXN millions 30Sep06 30Sep05 30Sep06 30Sep05 Assets Cash and deposits in banks 54,373 50,248 54,372 48,045 Investment in securities 49,787 51,108 49,219 49,218 Trading securities 11,889 4,945 11,322 4,252 Available for sale securities 33,973 42,080 33,973 40,884 Held to maturity securities 3,925 4,083 3,924 4,082 Securities and derivative operations 779 272 774 258 Repurchase agreements 137 95 133 81 Derivative transactions 642 177 641 177 Performing loans Commercial loans 51,437 45,786 51,437 40,448 Loans to financial intermediaries 5,227 5,308 5,227 5,215 Consumer loans 33,486 20,423 33,486 18,656 Mortgage 19,232 19,347 9,232 14,489 Loans to government entities 37,477 37,722 37,477 37,722 Loans to Fobaproa or IPAB - 968 - 968Total performing loans 146,859 129,554 146,859 117,498Impaired loans Commercial loans 1,347 1,793 1,347 1,746 Consumer loans 1,459 698 1,459 688 Mortgage 1,073 1,160 1,073 1,094 Immediate collection, remittances and other 23 32 23 32Total impaired loans 3,902 3,683 3,902 3,560Gross loans and advances to customers 150,761 133,237 150,761 121,058 Allowance for loan losses (5,984) (6,274) (5,984) (6,119)Net loans and advances to customers 144,777 126,963 144,777 114,939Other accounts receivable 22,622 9,931 22,487 8,965Foreclosed assets 55 456 55 412Property, furniture and equipment, net 5,648 5,226 5,641 4,998Long-term investments in equity securities 2,854 2,112 173 179Deferred taxes 176 1,307 140 1,180Goodwill 2,599 3,254 - -Other assets, deferred charges and intangibles 626 949 600 732 Total assets 284,296 251,826 278,238 228,926 BANK GROUPLiabilities 30Sep06 30Sep05 30Sep06 30Sep05 Deposits 201,300 198,189 202,907 185,945 Demand deposits 116,263 110,479 117,870 105,922 Time deposits 80,777 87,710 80,777 80,023 Bonds 4,260 - 4,260 - Bank deposits and other 10,036 7,199 10,036 7,112 liabilities Short-term 7,953 4,994 7,953 4,907 Long-term 2,083 2,205 2,083 2,205 Settlement accounts - - - - Securities and derivative transactions 7,081 3,045 7,077 3,030 Repurchase agreements 29 90 25 75 Loans with collateral 7,052 2,955 7,052 2,955 Other accounts payable 33,263 15,699 33,061 14,285 Income tax and employee profit sharing payable 1,309 402 1,277 325 Sundry creditors and others accounts payable 31,954 15,297 31,784 13,960 Subordinated debentures outstanding 2,203 2,676 2,203 2,284 Deferred credits 9 16 9 3 Total liabilities 253,892 226,824 255,293 212,659 Equity Paid in capital 20,300 20,300 12,798 10,549 Capital stock 7,764 7,764 3,857 3,576 Additional paid in capital 12,536 12,536 8,941 6,973 Other reserves 10,102 4,699 10,146 5,715 Capital reserves 828 648 8,980 4,686 Retained earnings 12,650 7,811 - - Deficit from the mark to market of available for sale securities - - 68 235 Result from translation of foreign operations - (4) - 12 Cumulative effect of restatement (3,771) (3,771) (3,438) (3,383) Gains on non-monetary asset valuation Valuation of fixed assets - - 1,273 1,273 Valuation of permanent investments (3,932) (3,668) (146) (146) Net income 4,327 3,683 3,409 3,038Minority interest in capital 2 3 1 3Total equity 30,404 25,002 22,945 16,267Total liabilities and equity 284,296 251,826 278,238 228,926 GROUP 30Sep06 30Sep05 Memorandum Accounts Transactions on behalf of third parties 103,384 86,322 Customer current accounts 24 (3) Customer banks 5 - Settlement of customer securities and documents 19 (3)Customer securities 82,407 66,639 Customer securities in custody 82,401 65,202 Pledged customers securities and documents 6 1,437Transactions on behalf of customers 2,302 2,629 Customer repurchase transactions 2,302 2,629Other transactions on behalf of customers 18,651 17,057 Investment on behalf of customers, net 18,651 17,057Other memorandums accounts 322,310 458,981 Investment of the SAR funds 3,540 3,337 Integrated loan portfolio 156,436 124,461 Other memorandum accounts 162,334 331,183 Transactions for the Group's own accounts 688,264 405,024 Accounts for the Group's own registry 688,156 405,018 Guarantees granted 51 60 Irrevocable lines of credit granted 5,623 3,290 Goods in trust or mandate 78,211 68,391 Goods in custody or under administration 82,668 63,495Amounts committed in transactions with Fobaproa 155 481 Amounts contracted in derivative operations 517,396 259,897 Securities in custody 3,937 4,165 Other contingent obligations 115 5,239 Repurchase/resale agreements Securities receivable under repos 42,010 44,825 (less) Repurchase agreements 41,899 44,813 111 12 Reverse repurchase agreements 2,302 14,537(less) Securities deliverable under repos 2,305 14,543 (3) (6) BANK 30Sep06 30Sep05 Memorandum Accounts Guarantees granted 51 60Other contingent obligations 115 5,239Irrevocable lines of credit granted 5,623 3,290Goods in trust or mandate 78,211 68,391Goods in custody or under administration 82,668 63,495Third party investment banking operations, net 18,651 17,057Amounts committed in transactions with Fobaproa 155 481Amounts contracted in derivative operations 517,396 259,897Investments of retirement savings system funds 3,540 3,337Integrated loan portfolio 156,436 124,461Other control accounts 162,333 331,182 1,025,179 876,890 Securities receivable under repos 39,705 42,206(less) Repurchase agreements (39,597) (42,184) 108 22 Reverse repurchase agreements - 11,907(less) Securities deliverable under repos - (11,924) - (17) Consolidated Income Statement GROUP BANKFigures in MXN millions 30Sept06 30Sept05 30Sept06 30Sept05 Interest income 20,388 19,897 19,602 19,171Interest expense (-) (7,197) (8,305) (6,921) (8,021)Monetary position (margin), net (473) (150) (440) (112)Net interest income 12,718 11,442 12,241 11,038 Loan impairment charges (-) (2,419) (1,121) (2,389) (1,117)Risk adjusted net interest income 10,299 10,321 9,852 9,921 Fees and commissions receivable 7,365 6,323 6,609 5,626 Fees payable (789) (678) (761) (647) Trading income 1,541 945 1,536 937 Total operating income 18,416 16,911 17,236 15,837 Administrative and personnel expenses (-) (13,072) (11,935) (12,252) (11,057) Net operating income 5,344 4,976 4,984 4,780 Other income 1,540 1,078 1,435 1,054Other expenses (-) (833) (777) (829) (768)Net income before taxes 6,051 5,277 5,590 5,066 Income tax and employee profit (1,595) (1,186) (1,502) (1,102) sharing taxDeferred income tax (704) (860) (677) (860) Net income before subsidiaries 3,752 3,231 3,411 3,104 Undistributed income from subsidiaries 575 531 (2) 13Income from ongoing operations 4,327 3,762 3,409 3,117 Discontinued and extraordinary operations,and changes in accountable policies, net - (79) - (79) Net income 4,327 3,683 3,409 3,038 Statement of Changes in Shareholder's Equity GROUP Figures in millions of pesos Deficit in Result from restatement foreign of stock Capital Statutory Retained currency holders' Net Minority Total contributed reserves earnings transactions equity income interest equity Balances as of 31Dec05 20,300 648 7,812 (7) (7,485) 5,093 2 26,363 Movements inherent to the shareholders decision Capitalisation of retained earnings - - 5,093 - - (5,093) - - Other movements - 180 (255) - - - - (75)Total - 180 4,838 - - (5,093) - (75) Movements for the recognition of the comprehensive income Net income - - - - - 4,327 - 4,327 Result from foreign currency transactions - - - 7 - - - 7 Cumulative effect of restatement - - - - 1 - - 1 Gains on non-monetary asset valuation - - - - (219) - - (219)Total - - - 7 (218) 4,327 - 4,116 Balances as of 30Sep06 20,300 828 2,650 - (7,703) 4,327 2 30,404 BANK Figures in millions of pesos Unrealised loss from Result Deficit in valuation of from restatement available-for foreign of stock- Capital Statutory Retained sale currency holders' Net Minority Total contributed reserves earnings securities transactions equity income interest equityBalances as of 31Dec05 12,516 4,583 - 269 11 (2,255) 4,199 1 19,324 Movements inherent to the shareholders decision Transfer of result of prior years - - 4,199 - - - (4,199) - - Other movements - 4,199 (4,199) - - - - - -Total - 4,199 - - - - (4,199) - - Movements for the recognition of the comprehensive income Net income - - - - - - 3,409 - 3,409 Unrealised loss from valuation of available for sale securties - - - (207) - - - - (207) Cumulative effect of restatement 282 198 - 6 - (51) - - 435 Others - - - - (11) (5) - - (16)Total 282 198 - (201) (11) (56) 3,409 - 3,621 Balances as of 30Sep06 12,798 8,980 - 68 - (2,311) 3,409 1 22,945 Consolidated Statement of Changes in Financial Position GROUP Figures in MXN millions 30Sep06 30Sep05 Operating activities Net income 4,327 3,683Items included in operations not requiring (providing) funds:Profit from mark-to-market valuations (1,541) (885)Allowances for loan losses 2,419 1,121Depreciation and amortisation 641 630 Deferred taxes 704 860Undistributed income from subsidiaries, net (575) (531) Total operating items not requiring funds 1,648 1,195Changes in items related to operations:Decrease in deposits: (15,795) 8,839Increase in loan portfolio (10,894) (10,534)Decrease/(increase) in securities and derivative transactions, net 9,996 (1,608)Decrease in financial instruments 2,280 2,844Other accounts receivable 2,726 340 Funds provided by operating activities (11,687) (119) Financing activities:Subordinated debentures outstanding (434) (59)Increase/(decrease) in bank and other loans 2,916 (2,252) Funds used or provided in financing activities 2,482 (2,311) Investing activities:Increase in property, furniture and equipment, net (239) (556)Increase in deferred charges or credits, net 1,314 201Other investment activities (8) 3 Funds used in investing activities 1,067 (352)(Decrease)/increase in cash and equivalents (2,163) 2,096Cash and equivalents at beginning of period 56,536 48,152Cash and equivalents at end of period 54,373 50,248 BANK Figures in MXN millions 30Sep06 30Sep05 Operating activities Net income 3,409 3,038Items included in operations not requiring (providing) funds: Profit from mark to market valuations (338) (76) Allowance for loan losses 2,389 1,117 Depreciation and amortisation 618 606 Deferred taxes 677 860 Undistributed income from subsidiaries, net 2 (8) Value loss estimation for foreclosed assets 229 - 3,577 2,499Changes in operating accounts: Decrease in retail deposit and money desk 1,917 7,626 Increase/(decrease) in bank deposits and other liabilities 2,985 (2,340) Increase in loan portfolio (22,679) (7,480) Decrease in financial instruments 9,965 545 Decrease in other receivable and payable accounts, net 4,070 296 Funds provided by operations (3,742) (1,353) Financing activities: Subordinated debentures outstanding (65) (611) Funds used or provided by financing activities (65) (611) Investing activities: Increase in property, furniture and equipment and long-term investments (880) (1,220) (Increase)/decrease in deferred credits (185) 60 (Increase) in loans to employees 78 - Funds used in investing activities (987) (1,160)Increase/(decrease) in cash and equivalents 2,192 2,413Cash and equivalents at beginning of period 52,180 45,632Cash and equivalents at end of period 54,372 48,045 This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
HSBC Holdings