30th Jul 2007 09:15
HSBC Holdings PLC30 July 2007 Contents The financial information in this news release is based on the unauditedconsolidated financial statements of Hang Seng Bank Limited ('the bank') and itssubsidiaries and associates ('the group') for the six months ended 30 June 2007. ..Highlights of Results..Comment by Chief Executive..Results Summary..Customer Group Performance..Mainland Business..Contents..Consolidated Income Statement..Consolidated Balance Sheet..Consolidated Statement of Recognised Income and Expense..Consolidated Cash Flow Statement..Financial Review....Net interest income....Net fee income....Trading income....Other operating income....Analysis of income from wealth management business....Loan impairment charges and other credit risk provisions....Operating expenses....Profit on disposal of fixed assets and financial investments....Tax expenses....Earnings per share....Dividends per share....Segmental analysis....Cash and balances with banks and other financial institutions....Placings with and advances to banks and other financial institutions....Advances to customers....Loan impairment allowances against advances to customers....Impaired advances and allowances....Overdue advances....Segmental analysis of advances to customers by geographical area....Rescheduled advances....Gross advances to customers by industry sector....Financial investments....Investments in associates....Current, savings and other deposit accounts....Certificates of deposit and other debt securities in issue....Subordinated liabilities....Shareholders' funds....Capital resources management....Liquidity ratio....Reconciliation of cash flow statement....Contingent liabilities, commitments and derivatives....Accounting policies....Statement of compliance....Statutory accounts....Comparative figures....Acquisition....Property revaluation....Foreign currency positions....Ultimate holding company....Register of shareholders....Proposed timetable for 2007 quarterly dividends....Code on corporate governance practices....Board of directors....News release Consolidated Income Statement (unaudited) Half-year ended Half-year ended Half-year ended 30Jun07 30Jun06 31Dec06Figures in HK$m (restated) Interest income 16,318 13,654 15,608Interest expense (9,622) (8,113) (9,455)Net interest income 6,696 5,541 6,153Fee income 3,163 2,035 2,039Fee expense (301) (253) (324)Net fee income 2,862 1,782 1,715Trading income 584 659 671Net income from financial instruments designated at fair value 686 37 862Dividend income 26 31 16Net earned insurance premiums 4,821 3,954 3,892Other operating income 397 392 453Total operating income 16,072 12,396 13,762Net insurance claims incurred and movement in policyholders' liabilities (5,105) (3,671) (4,406)Net operating income before loan impairment charges and other credit risk provisions 10,967 8,725 9,356Loan impairment charges and other credit risk provisions (280) (34) (230)Net operating income 10,687 8,691 9,126Employee compensation and benefits (1,598) (1,277) (1,417)General and administrative expenses (1,136) (907) (1,307)Depreciation of premises, plant and equipment (169) (150) (173)Amortisation of intangible assets (11) (4) (6)Total operating expenses (2,914) (2,338) (2,903)Operating profit 7,773 6,353 6,223Profit on disposal of fixed assets and financial investments 274 574 269Gain on dilution of investment in associate 1,465 _ _Net surplus on property revaluation 266 318 3Share of profits from associates 440 268 387Profit before tax 10,218 7,513 6,882Tax expenses (1,150) (1,202) (847)Profit for the period 9,068 6,311 6,035 Profit attributable to shareholders 8,867 6,190 5,848Profit attributable to minority interests 201 121 187 9,068 6,311 6,035 Dividends 4,206 4,206 5,736Earnings per share (in HK$) 4.64 3.24 3.06 The HSBC Group reports interest income and interest expense arising fromfinancial assets and financial liabilities held for trading as 'Net tradingincome' and arising from financial instruments designated at fair value throughprofit and loss as 'Net income from financial instruments designated at fairvalue' (other than for debt securities in issue and subordinated liabilities,together with derivatives managed in conjunction with them). The table below presents the interest income and interest expense of Hang Seng,as included within the HSBC Group accounts: Half-year ended Half-year ended Half-year endedFigures in HK$m 30Jun07 30Jun06 31Dec06 Interest income 15,941 13,334 15,305Interest expense (8,354) (6,959) (8,041)Net interest income 7,587 6,375 7,264Net interest income and expense reported as 'Net trading income' (938) (879) (1,160)Net interest income and expense reported as 'Net income from financial instruments designated at fair value' 47 45 49 Consolidated Balance Sheet (unaudited) At 30Jun07 At 30Jun06 At 31Dec06Figures in HK$m AssetsCash and balances with banks and other financial institutions 12,921 13,763 9,390Placings with and advances to banks and other financial institutions 94,485 82,563 99,705Trading assets 9,848 14,543 12,467Financial assets designated at fair value 9,827 6,429 8,280Derivative financial instruments 2,348 2,161 1,887Advances to customers 310,972 266,505 279,353Financial investments 251,191 211,955 227,710Investments in associates 5,279 3,267 3,488Investment properties 2,457 3,161 2,732Premises, plant and equipment 6,342 6,553 6,516Interest in leasehold land held for own use under operating lease 572 587 580Intangible assets 2,347 1,857 2,070Other assets 32,733 14,945 14,886 741,322 628,289 669,064 LiabilitiesCurrent, savings and other deposit accounts 512,450 448,097 482,821Deposits from banks 57,834 22,131 17,950Trading liabilities 44,294 61,630 60,093Financial liabilities designated at fair value 1,473 1,494 1,562Derivative financial instruments 2,118 2,256 1,531Certificates of deposit and other debt securities in issue 7,282 8,312 7,595Other liabilities 22,123 10,821 16,123Liabilities to customers under insurance contracts 27,942 18,877 22,975Deferred tax and current tax liabilities 3,485 2,668 2,716Subordinated liabilities 9,373 7,005 7,000 688,374 583,291 620,366 Capital resourcesMinority interests 1,917 1,280 1,717Share capital 9,559 9,559 9,559Retained profits 32,706 28,627 29,044Other reserves 6,663 3,429 4,745Proposed dividends 2,103 2,103 3,633Shareholders' funds 51,031 43,718 46,981 52,948 44,998 48,698 741,322 628,289 669,064 Consolidated Statement of Recognised Income and Expense (unaudited) Half-year ended Half-year ended Half-year ended 30Jun07 30Jun06 31Dec06Figures in HK$m Unrealised surplus on revaluation of premises, net of tax 218 469 50Tax on realisation of revaluation surplus on disposal of premises 10 97 9Available-for-sale investments reserve, net of tax:- fair value changes taken to equity 271 (80) 1,312- fair value changes transferred to income statement: -- on impairment _ _ 12 -- on hedged items 73 255 (234) -- on disposal (247) (121) (204)Cash flow hedges reserve, net of tax: - fair value changes taken to equity (127) (116) (63)- fair value changes transferred to income statement 141 67 375Actuarial gains on defined benefit plans, net of tax 369 2 216Exchange differences on translation of financial statements of overseas branches, subsidiaries and associates 180 60 124Net income recognised directly in equity 888 633 1,597Profit for the period 9,068 6,311 6,035Total recognised income and expense for the period 9,956 6,944 7,632 Attributable to shareholders 9,755 6,823 7,445Attributable to minority interests 201 121 187 9,956 6,944 7,632 Consolidated Cash Flow Statement (unaudited) Half-year ended Half-year ended 30Jun07 30Jun06 Figures in HK$m Net cash inflow from operating activities 12,376 38,080 Cash flows from investing activities Dividends received from associates 195 20Purchase of available-for-sale investments (47,529) (60,007)Purchase of held-to-maturity debt securities (420) (216)Proceeds from sale or redemption of available-for-sale investments 33,895 34,844Proceeds from redemption of held-to-maturity debt securities 33 28Purchase of fixed assets and intangible assets (218) (143)Proceeds from sale of fixed assets and asset held for sale 212 2,599Interest received from available-for-sale investments 4,691 2,408Dividends received from available-for-sale investments 10 31Net cash outflow from investing activities (9,131) (20,436) Cash flows from financing activities Dividends paid (5,736) (5,736)Interest paid for subordinated liabilities (212) (108)Proceeds from subordinated liabilities 2,342 3,495Net cash outflow from financing activities (3,606) (2,349) (Decrease)/increase in cash and cash equivalents (361) 15,295 Cash and cash equivalents at 1 January 90,275 65,513Effect of foreign exchange rate changes 1,197 54Cash and cash equivalents at 30 June 91,111 80,862 Financial Review Net interest income Half-year ended Half-year ended Half-year ended 30Jun07 30Jun06 31Dec06Figures in HK$m (restated) Net interest income/(expense) arising from:- financial assets and liabilities that are not at fair value through profit and loss 7,609 6,399 7,290- trading assets and liabilities (938) (879) (1,160)- financial instruments designated at fair value 25 21 23 6,696 5,541 6,153 Average interest-earning assets 639,539 555,773 601,031 Net interest spread 1.72% 1.67% 1.66%Net interest margin 2.11% 2.01% 2.03% Net interest income rose by HK$1,155 million, or 20.8 per cent, to HK$6,696million with a 15.1 per cent increase in average interest-earning assets. Deposit products contributed HK$514 million to the increase in net interestincome. This was attributable to the increase of 10.0 per cent in averagecustomer deposits, mainly in lower cost savings balances and wider depositspreads. Average customer advances rose by 9.7 per cent, driven by encouraging growth inhigher yielding card advances, personal loans, trade finance and mainland loans.The pricing of residential mortgages and corporate lending, however, was stillunder pressure due to intense market competition. Overall, the total loanportfolio contributed HK$153 million to the growth in net interest income. Net interest income of Treasury's balance sheet management portfolios improvedby HK$191 million as the holding of lower yield securities gradually matured.The debt securities portfolio of life insurance funds grew by 45.0 per cent,adding HK$138 million to net interest income. Benefiting from the rise in both interest rates and funds balance, net freefunds (including non-interest-bearing account balances and net shareholders'funds) contributed HK$159 million to the increase in net interest income. Net interest margin rose by 10 basis points to 2.11 per cent. Net interestspread increased by five basis points to 1.72 per cent, contributed by widerdeposit spreads and the gradual improvement of Treasury's balance sheetmanagement portfolio yields. The contribution from net free funds also rose byfive basis points to 0.39 per cent. Compared with the second half of 2006, net interest income rose by HK$543million, or 8.8 per cent, with a growth of 6.4 per cent in averageinterest-earning assets. Net interest margin improved by eight basis points,attributable mainly to wider deposit spreads and contribution from net freefunds. The HSBC Group reports interest income and interest expense arising fromfinancial assets and financial liabilities held for trading as 'Net tradingincome' and arising from financial instruments designated at fair value throughprofit and loss as 'Net income from financial instruments designated at fairvalue' (other than for debt securities in issue and subordinated liabilities,together with derivatives managed in conjunction with them). The table below presents the net interest income of Hang Seng, as includedwithin the HSBC Group accounts: Half-year ended Half-year ended Half-year ended 30Jun07 30Jun06 31Dec06Figures in HK$m Net interest income 7,587 6,375 7,264Average interest-earning assets 620,830 541,337 586,347 Net interest spread 1.87% 1.82% 1.84%Net interest margin 2.46% 2.37% 2.46% This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
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