30th Jul 2007 09:15
HSBC Holdings PLC30 July 2007 Segmental analysis Segmental information is presented in respect of business and geographicalsegments. Business by customer group information, which is more relevant to thegroup in making operating and financial decisions, is chosen as the primaryreporting format. For the purpose of segmental analysis, the allocation of revenue reflects thebenefits of capital and other funding resources allocated to the customer groupsor geographical segments by way of internal capital allocation and fundstransfer pricing mechanisms. Cost allocation is based on the direct costsincurred by the respective customer groups and apportionment of managementoverheads. Rental charges at market rate for usage of premises are reflected asinter-segment income for the 'Other' customer group and inter-segment expensesfor the respective customer groups. (a) By customer group The group's business comprises five customer groups. Personal Financial Servicesprovides banking (including deposits, credit cards, mortgages and other retaillending) and wealth management services (including private banking, investmentand insurance) to personal customers. Commercial Banking manages middle marketand smaller corporate relationships and specialises in trade-related financialservices. Corporate Banking handles relationships with large corporate andinstitutional customers. Treasury engages in balance sheet management andproprietary trading. Treasury also manages the funding and liquidity positionsof the group and other market risk positions arising from banking activities.'Other' mainly represents management of shareholders' funds and investments inpremises, investment properties and equity shares. The table below sets out the profit before tax contributed by the customergroups for the periods stated. More customer group analysis and discussions areset out in the 'Customer Group Performance' section. Personal Financial Commercial CorporateFigures in HK$m Services Banking Banking Treasury Other Total Half-year ended 30Jun07 Profit before tax 5,278 1,285 192 571 2,892 10,218Share of profit before tax 51.7% 12.6% 1.8% 5.6% 28.3% 100.0% Half-year ended 30Jun06 Profit before tax 3,897 1,096 271 506 1,743 7,513Share of profit before tax 51.9% 14.6% 3.6% 6.7% 23.2% 100.0% Half-year ended 31Dec06 Profit before tax 3,833 1,166 286 545 1,052 6,882Share of profit before tax 55.7% 16.9% 4.2% 7.9% 15.3% 100.0% (b) By geographical region The geographical regions in this analysis are classified by the location of theprincipal operations of the subsidiary companies or, in the case of the bankitself, by the location of the branches responsible for reporting the results oradvancing the funds. MainlandFigures in HK$m Hong Kong Americas and other Total Half-year ended 30Jun07 Income and expenseTotal operating income 15,001 794 277 16,072Profit before tax 7,547 776 1,895 10,218Capital expenditure incurred 181 - 37 218 At 30Jun07 Total assets 639,154 67,972 34,196 741,322Total liabilities 668,243 3,886 16,245 688,374Contingent liabilities and commitments 176,613 - 13,218 189,831 Half-year ended 30Jun06 Income and expenseTotal operating income 11,666 573 157 12,396Profit before tax 6,668 558 287 7,513Capital expenditure incurred 130 - 12 142 At 30Jun06 Total assets 539,776 63,216 25,297 628,289Total liabilities 567,193 6,782 9,316 583,291Contingent liabilities and commitments 146,988 - 9,197 156,185 Half-year ended 31Dec06 Income and expenseTotal operating income 12,783 722 257 13,762Profit before tax 5,712 704 466 6,882Capital expenditure incurred 205 - 32 237 At 31Dec06 Total assets 573,067 65,997 30,000 669,064Total liabilities 603,636 4,180 12,550 620,366Contingent liabilities and commitments 165,541 - 8,701 174,242 Cash and balances with banks and other financial institutions At 30Jun07 At 30Jun06 At 31Dec06Figures in HK$m Cash in hand 4,626 5,229 4,920Balances with central banks 562 323 357Balances with banks and other financial institutions 7,733 8,211 4,113 12,921 13,763 9,390 Placings with and advances to banks and other financial institutions At 30Jun07 At 30Jun06 At 31Dec06Figures in HK$m Placings with and advances to banks and other financial institutions maturing within one month 73,931 61,425 75,722Placings with and advances to banks and other financial institutions maturing after one month 20,554 21,138 23,983 94,485 82,563 99,705 Advances to customers At 30Jun07 At 30Jun06 At 31Dec06Figures in HK$m Gross advances to customers 311,952 267,393 280,277Less:Loan impairment allowances:- individually assessed (408) (377) (406)- collectively assessed (572) (511) (518) 310,972 266,505 279,353 Included in advances tocustomers are:- trade bills 3,491 3,577 3,907- loan impairment allowances (17) (15) (16) 3,474 3,562 3,891 Loan impairment allowances against advances to customers Individually CollectivelyFigures in HK$m assessed assessed Total At 1Jan07 406 518 924Amounts written off (136) (108) (244)Recoveries of advances written off in previous years 10 19 29New impairment allowances charged to income statement 187 162 349Impairment allowances released to income statement (50) (19) (69)Unwind of discount of loan impairment allowances recognised as 'interest income' (9) - (9)At 30Jun07 408 572 980 Total loan impairment allowances as a percentage of gross advances to customersare as follows: At 30Jun07 At 30Jun06 At 31Dec06 % % % Loan impairment allowances- individually assessed 0.13 0.14 0.15- collectively assessed 0.18 0.19 0.18Total loan impairment allowances 0.31 0.33 0.33 Impaired advances and allowances At 30Jun07 At 30Jun06 At 31Dec06Figures in HK$m Gross impaired advances 1,432 1,209 1,387Individually assessed allowances (408) (377) (406)Net impaired advances 1,024 832 981 Individually assessed allowances as a percentage of gross impaired advances 28.5% 31.2% 29.3% Gross impaired advances as a percentage of gross advances to customers 0.5% 0.4% 0.5% Impaired advances are those advances where objective evidence exists that fullrepayment of principal or interest is considered unlikely. Impairment allowancesare made to write down the carrying value of the advances to the discountedvalue of future recoverable amounts, including the realisation of collateral. Overdue advances Advances to customers that are more than three months overdue and theirexpression as a percentage of gross advances to customers are as follows: At 30Jun07 At 30Jun06 At 31Dec06 HK$m % HK$m % HK$m %Gross advances to customers which have been overdue with respect to either principal or interest for periods of:- six months or less but over three months 472 0.1 538 0.2 504 0.2- one year or less but over six months 178 0.1 337 0.1 263 0.1- over one year 173 0.1 149 0.1 173 - 823 0.3 1,024 0.4 940 0.3 Advances with a specific repayment date are classified as overdue when theprincipal or interest is overdue and remains unpaid at period-end. Advancesrepayable by regular instalments are treated as overdue when an instalmentpayment is overdue and remains unpaid at period-end. Advances repayable ondemand are classified as overdue either when a demand for repayment has beenserved on the borrower but repayment has not been made in accordance with thedemand notice, or when the advances have remained continuously outside theapproved limit advised to the borrower for more than the overdue period inquestion. Segmental analysis of advances to customers by geographical area Advances to customers by geographical area are classified according to thelocation of the counterparties after taking into account the transfer of risk.In general, risk transfer applies when an advance is guaranteed by a partylocated in an area which is different from that of the counterparty. At 30 June2007, over 90 per cent of the group's advances to customers was classified underHong Kong (unchanged from the positions at 30 June 2006 and 31 December 2006). Rescheduled advances Rescheduled advances and their expression as a percentage of gross advances tocustomers are as follows: At 30Jun07 At 30Jun06 At 31Dec06 HK$m % HK$m % HK$m %Rescheduled advances to customers 343 0.1 349 0.1 357 0.1 Rescheduled advances are those that have been rescheduled or renegotiated forreasons related to the borrower's financial difficulties. This will normallyinvolve the granting of concessionary terms and resetting the overdue account tonon-overdue status. A rescheduled advance will continue to be disclosed as suchunless the debt has been performing in accordance with the rescheduled terms fora period of six to 12 months. Rescheduled advances that have been overduefor more than three months under the rescheduled terms are reported as overdueadvances to customers. Gross advances to customers by industry sector The analysis of gross advances to customers by industry sector based oncategories and definitions used by the HKMA is as follows: At 30Jun07 At 30Jun06 At 31Dec06 Figures in HK$m Gross advances to customers for use in Hong Kong Industrial, commercial and financial sectorsProperty development 17,855 15,728 18,051Property investment 51,461 47,617 48,096Financial concerns 1,917 2,108 2,103Stockbrokers 7,976 288 234Wholesale and retail trade 6,084 5,972 6,360Manufacturing 8,098 6,894 7,670Transport and transport equipment 9,431 11,578 11,145Recreational activities 211 209 210Information technology 911 666 478Other 39,822 19,740 22,099 143,766 110,800 116,446IndividualsAdvances for the purchase of flats under the Government Home Ownership Scheme, Private Sector Participation Scheme and Tenants Purchase Scheme 19,126 21,377 20,078Advances for the purchase of other residential properties 82,983 82,778 83,616Credit card advances 9,804 7,585 9,448Other 8,970 8,058 8,813 120,883 119,798 121,955Total gross advances for use in Hong Kong 264,649 230,598 238,401Trade finance 21,988 18,968 19,684Gross advances for use outside Hong Kong 25,315 17,827 22,192Gross advances to customers 311,952 267,393 280,277 Gross advances at 30 June 2007 reached HK$312.0 billion, representing growth of11.3 per cent over 31 December 2006 and 16.7 per cent year-on-year. The amountincluded IPO-related financing of HK$26.9 billion recorded under 'Stockbrokers'and 'Others' of lending to the industrial, commercial and financial sectors.During the first half of 2007, the bank acted as receiving bank for eight IPOsand provided over HK$209.3 billion in IPO-related financing to brokers andcorporate and private investors. Excluding IPO-related financing, gross advances grew by 1.7 per cent and 6.6 percent over 31 December 2006 and 30 June 2006 respectively. New financing for large CIB customers was active, reflected in good growth inlending to the property investment, stockbrokers and information technology sectors. However, large repayments of existing loans in the wholesale and retail trade and the 'Other' sectors curtailed the growth of the overall CIB loan portfolio. Growth in CMB advances was mainly recorded in the manufacturing, wholesale andretail trade sectors and in the 11.7 per cent increase in trade finance, thesebeing the target segments of CMB. Residential mortgages fell marginally by 0.8 per cent amid severe marketcompetition. The bank did not compete on pricing but defended its marketposition by providing preferential offers via its e-channel. Mortgages under theGovernment Home Ownership Scheme ('GHOS') fell at a slower pace of 4.7 per centin the first half of 2007 (compared with a fall of 6.5 per cent during thesecond half of 2006) as there were new loans drawdown following the HousingAuthority's re-launch of the sale of GHOS flats earlier this year. Sustained strong consumer spending saw card advances rise 3.8 per cent comparedwith the end of 2006 and 29.3 per cent year-on-year. Personal lending grew by18.6 per cent compared with 31 December 2006 and 48.8 per cent year-on-year,riding on the bank's successful promotion campaigns. Loans for use outside Hong Kong increased by 14.1 per cent for the first sixmonths of 2007 to reach HK$25.3 billion. Year-on-year, a growth of 42.0 per centwas recorded. This was attributable largely to the expansion of the mainlandloan portfolio - which grew by 21.3 per cent compared with the end of last yearand 50.4 per cent year-on-year - to reach HK$19.2 billion at 30 June 2007.Strong growth was recorded in corporate lending, driven by renminbi loans. Tradefinance rose significantly by 42.2 per cent, leveraging on the bank'sexperience, service quality and strong customer base in the Pearl River Deltaregion. This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
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