1st Aug 2005 09:00
HSBC Holdings PLC01 August 2005 4. Gains less losses from financial investments Half-year ended Half-year ended Half-year ended 30Jun05 30Jun04 31Dec04Figures in HK$m restated restated Profit on disposal of available-for-sale securities 348 - - Profit on disposal of long-term investments - 380 931 Provision for impairment of available-for-sale securities (1) - - Reversal of/(provision for) impairment of long-term investments - 202 (16) 347 582 915 The profit on disposal of available-for-sale securities primarily comprisesgains on the sale of equity securities, partly offset by losses on the disposalof US dollar bonds. In the first half of 2004, there was a partial write-back of a provision againstan equity investment. 5. Dividend income Half-year ended Half-year ended Half-year ended 30Jun05 30Jun04 31Dec04Figures in HK$m restated restated Listed investments 52 68 32Unlisted investments 191 37 14Other participating interests 6 6 6 249 111 52 6. Net earned insurance premiums Half-year ended Half-year ended Half-year ended 30Jun05 30Jun04 31Dec04Figures in HK$m restated restated Gross insurance premium income 7,239 9,003 9,744Less: reinsurance premiums (264) (268) (257) 6,975 8,735 9,487 Premium income decreased compared with the first half of last year largely dueto a change in accounting treatment. In 2004, gross premium receipts on certaininvestment plans and the corresponding increase in the bank's liability topolicyholders are disclosed, respectively, under 'Net earned insurance premiums'and 'Net insurance claims incurred and movement in policyholder liabilities'. In2005, a net number is included under 'Net fee income'. 7. Other operating income Half-year ended Half-year ended Half-year ended 30Jun05 30Jun04 31Dec04Figures in HK$m restated restated Rental income 230 232 230Movement in present value of in force insurance business 490 389 444Profit on disposal of tangible fixed assets 19 141 51Profit on disposal of subsidiary and associated companies 58 309 33Surplus arising on property revaluation 1,038 829 209Other 885 505 742 2,720 2,405 1,709 Profit on disposal of subsidiary and associated companies for the first half of2005 comprises a gain made on the sale of HSBC Asset Management (Australia)Limited. Profit for the first half of 2004 included a gain on the exchange ofthe group's interest in World Finance International Limited, an associatedcompany, for an interest in Bergesen Worldwide. The surplus arising on property revaluation comprises gains on the revaluationof investment properties and the reversal of previous revaluation deficits thathad arisen when the value of certain premises fell below depreciated historicalcost. As permitted by Hong Kong Accounting Standard 40, prior year revaluationgains on investment properties have been credited to reserves and accordinglythe prior year profit and loss figures have not been restated. 'Other' includes profits on the sale of a residential property in Hong Kong heldon an operating lease. 8. Loan impairment charges and other credit risk provisions Half-year ended Half-year ended Half-year ended 30Jun05 30Jun04 31Dec04Figures in HK$m restated restated Net charge/(release) for impairment provisions Advances to customers - Specific individual provisions: New provisions 1,222 1,627 2,389 Releases (1,249) (1,379) (1,071) Recoveries (161) (336) (281) (188) (88) 1,037- Net charge/(release) for collective impairment provisions 706 (1,496) (227) - Country risk provision (8) - - 510 (1,584) 810 Placings with banks maturing after one month- Net release of specific individual provisions - - (1) 510 (1,584) 809Other credit risk provisions 6 22 (109) Total impairment charge/(credit) 516 (1,562) 700 There was a net charge for loan impairment and other credit risk provisions ofHK$516 million compared with a net release of HK$1,562 million in the sameperiod last year. The charge for new specific individual provisions was lower ascredit card provisions were classified as specific individual in 2004, but ascollective in 2005. Excluding this effect, specific individual provisions rose,largely against lending to commercial banking customers in Hong Kong. Provisionsagainst mortgages, credit card advances and other personal lending fell, in linewith the improving economy in Hong Kong with lower bankruptcies, fallingunemployment and a rise in property prices. Releases and recoveries were lower,largely relating to corporates in Hong Kong, Singapore and Thailand, but thiswas partly offset by higher releases against personal lending in Hong Kong andagainst lending to commercial banking customers in mainland China. There was anet charge for collective provisions, comprising the reclassification of creditcard provisions and a small charge against corporate lending, reflecting thestable credit environment across the region. 9. Employee compensation and benefits Half-year ended Half-year ended Half-year ended 30Jun05 30Jun04 31Dec04Figures in HK$m restated restated Salaries and other costs 7,991 6,837 7,163Retirement benefit costs 434 416 349 8,425 7,253 7,512 Staff numbers by region^ At 30Jun05 At 30Jun04 At 31Dec04 Hong Kong 24,240 23,132 23,947 Rest of Asia-Pacific 22,942 19,430 21,009 Americas/Europe 16 16 16 Total 47,198 42,578 44,972 ^ Full-time equivalent Staff costs increased by HK$1,172 million, or 16.2 per cent, compared with thefirst half of 2004, attributable to the increase in headcount throughout theregion of 4,620. Staff numbers rose in all customer groups, notably in PersonalFinancial Services in India, Taiwan, the Philippines, Thailand and Sri Lanka,and Commercial Banking in Hong Kong and mainland China. The build-up of theinvestment banking division continued in Hong Kong, and the integration of Bankof Bermuda staff also added to headcount. 10. General and administrative expenses Half-year ended Half-year ended Half-year ended 30Jun05 30Jun04 31Dec04Figures in HK$m restated restated Premises and equipment - Rental expenses 627 597 600- Other premises and equipment 855 818 943 1,482 1,415 1,543 Other administrative expenses 3,716 3,077 4,125 Litigation and other provisions 204 130 1 5,402 4,622 5,669 The increase in general and administrative expenses of HK$780 million, or 16.9per cent, reflected additional costs incurred in the business expansionthroughout the region. Advertising and marketing expenditure increased inThailand, Taiwan, India, Indonesia and Singapore, in line with the growth in thePersonal Financial Services business in these countries. Other expenses rose,particularly in support of the expansion of the Corporate and InstitutionalBanking businesses in Singapore, India, Korea and Taiwan. 11. Share of profit in associates Share of profit in associates in the first half of 2005 included the group'sshare of post-tax profits from Bank of Communications and Industrial Bank forthe six months to 31 March 2005. 12. Taxation The charge for taxation in the consolidated profit and loss account comprises: Half-year ended Half-year ended Half-year ended 30Jun05 30Jun04 31Dec04Figures in HK$m restated restated Hong Kong profits tax 2,663 2,292 1,690Overseas taxation 1,300 1,423 1,074Deferred taxation 285 312 197 4,248 4,027 2,961 The effective rate of tax for the first half of 2005 was 17.6 per cent, comparedwith 17.0 per cent for the first half of 2004, principally as a result of theinterest expense on preference shares for which tax relief is not available. 13. Dividends Half-year ended Half-year ended Half-year ended 30Jun05 30Jun04 31Dec04 HK$ HK$m HK$ HK$m HK$ HK$m per share per share per share Dividends on ordinary share capital- Paid 0.51 4,600 0.92 6,000 0.53 4,750- Proposed 0.67 6,000 0.73 4,750 0.53 4,800 1.18 10,600 1.65 10,750 1.06 9,550 14. Trading assets At 30Jun05 At 30Jun04 At 31Dec04Figures in HK$m restated restated Debt securities 117,682 95,971 89,355Equity shares 5,860 17,444 20,544Treasury bills 34,979 - -Other 926 - - 159,447 113,415 109,899 Treasury bills held for trading have been reclassified from 'Cash and short-termfunds' to 'Trading assets'. Certain equity shares and debt securities are nowclassified as 'Financial assets designated at fair value' (see Note 15). 15. Financial assets designated at fair value At30Jun05 At30Jun04 At31Dec04Figures in HK$m restated restated Debt securities 15,884 - -Equity shares 15,524 - -Other 4,239 - - 35,647 - - There was no such category in 2004. 16. Advances to customers At30Jun05 At30Jun04 At31Dec04Figures in HK$m restated restated Gross advances to customers 980,912 858,625 927,121 Specific individual provisions (4,114) (6,058) (5,482)Collective impairment provisions (3,158) (2,623) (2,447)Country risk provisions (3) - -Total provisions (7,275) (8,681) (7,929) 973,637 849,944 919,192 Provisions as a percentage of gross advances to customers:Specific individual provisions 0.42% 0.70% 0.59%Collective impairment provisions 0.32% 0.31% 0.26%Country risk provisions - - -Total provisions 0.74% 1.01% 0.85% 17. Impairment provisions against advances to customers Specific Collective Country individual impairment riskFigures in HK$m provisions provisions provisions Total At 1Jan05 (restated) 4,719 3,179 11 7,909Amounts written off (571) (901) - (1,472)Recoveries of advances written off in previous years 161 191 - 352Net charge/(release) to income (Note 8) (188) 706 (8) 510Exchange and other adjustments (7) (17) - (24) At 30Jun05 4,114 3,158 3 7,275 18. Impaired advances to customers and provisions The geographical information shown below, and in notes 19, 20, 21, and 23, hasbeen classified by location of the principal operations of the subsidiarycompany or, in the case of the bank, by location of the branch responsible foradvancing the funds. Rest of Americas/Figures in HK$m Hong Kong Asia-Pacific Europe Total Half-year ended 30Jun05 Impairment provision charge/ (release) 455 67 (12) 510 At 30Jun05 Advances to customers which are considered to be impaired are as follows: Gross impaired advances 5,436 3,438 - 8,874 Specific individual provisions (2,230) (1,884) - (4,114) 3,206 1,554 - 4,760 Specific individual provisions as a percentage of gross impaired advances 41.0% 54.8% - 46.4% Gross impaired advances as a percentage of gross advances to customers 0.9% 0.9% - 0.9% Rest of Americas/ TotalFigures in HK$m Hong Kong Asia-Pacific Europe restated Half-year ended 30Jun04 Impairment provision charge/ (release) ( 1,744) 160 - (1,584) At 30Jun04 Advances to customers which are considered to be impaired are as follows: Gross impaired advances 8,599 4,327 5 12,931 Specific individual provisions (3,016) (3,037) (5) (6,058) 5,583 1,290 - 6,873 Specific individual provisions as a percentage of gross impaired advances 35.1% 70.2% 100.0% 46.8% Gross impaired advances as a percentage of gross advances to customers 1.5% 1.5% 41.7% 1.5% Impaired advances to customers are those advances where objective evidenceexists that full repayment of principal or interest is considered unlikely. The specific provisions are made after taking into account the value ofcollateral in respect of such advances. Rest of Americas/ TotalFigures in HK$m Hong Kong Asia-Pacific Europe restated Half-year ended 31Dec04 Impairment provision charge/ (release) 64 752 (6) 810 At 31Dec04 Advances to customers which are considered to be impaired are as follows: Gross impaired advances 5,423 4,268 5 9,696 Specific individual provisions (2,485) (2,992) (5) (5,482) 2,938 1,276 - 4,214 Specific individual provisions as a percentage of gross impaired advances 45.8% 70.1% 100.0% 56.5% Gross impaired advances as a percentage of gross advances to customers 0.9% 1.3% 35.7% 1.0% 19. Overdue advances to customers Rest of Americas/Figures in HK$m Hong Kong sia-Pacific Europe Total At 30Jun05 Gross advances to customers which have been overdue with respect to either principal or interest for periods of: - six months or less but over three months 814 886 - 1,700 - one year or less but over six months 307 379 - 686 - over one year 1,546 1,272 - 2,818 2,667 2,537 - 5,204 Overdue advances to customers as a percentage of gross advances to customers: - six months or less but over three months 0.1% 0.2% - 0.2% - one year or less but over six months 0.1% 0.1% - 0.1% - over one year 0.2% 0.4% - 0.2% 0.4% 0.7% - 0.5% Rest of Americas/ TotalFigures in HK$m Hong Kong Asia-Pacific Europe restated At 30Jun04 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 1,447 645 - 2,092 - one year or less but over six months 883 466 - 1,349 - over one year 1,685 1,818 - 3,503 4,015 2,929 - 6,944 Overdue advances to customers as a percentage of gross advances to customers: - six months or less but over three months 0.2% 0.2% - 0.2% - one year or less but over six months 0.2% 0.2% - 0.2% - over one year 0.3% 0.6% - 0.4% 0.7% 1.0% - 0.8% Rest of Americas/ TotalFigures in HK$m Hong Kong Asia-Pacific Europe restated At 31Dec04 Gross advances to customers which have been overdue with respect to either principal or interest for periods of: - six months or less but over three months 959 706 - 1,665 - one year or less but over six months 607 296 - 903 - over one year 1,631 1,430 - 3,061 3,197 2,432 - 5,629 Overdue advances to customers as a percentage of gross advances to customers: - six months or less but over three months 0.1% 0.2% - 0.2% - one year or less but over six months 0.1% 0.1% - 0.1% - over one year 0.3% 0.4% - 0.3% 0.5% 0.7% - 0.6% 20. Rescheduled advances to customers Rest of Americas/Figures in HK$m Hong Kong Asia-Pacific Europe Total At 30Jun05 Rescheduled advances to customers 2,327 552 - 2,879 Rescheduled advances to customers as a percentage of gross advances to customers 0.4% 0.1% - 0.3% At 30Jun04 (restated) Rescheduled advances to customers 6,404 385 5 6,794 Rescheduled advances to customers as a percentage of gross advances to customers 1.1% 0.1% 41.7% 0.8% At 31Dec04 (restated) Rescheduled advances to customers 4,009 465 5 4,479 Rescheduled advances to customers as a percentage of gross advances to customers 0.7% 0.1% 35.7% 0.5% Rescheduled advances are those advances which have been restructured orrenegotiated because of a deterioration in the financial position of theborrower, or because of the inability of the borrower to meet the originalrepayment schedule. Rescheduled advances to customers are stated net of any advances which havesubsequently become overdue for over three months and which are included inoverdue advances to customers (Note 19). 21. Analysis of advances to customers based on categories used by the HSBCGroup The following analysis of advances to customers is based on categories usedby the HSBC Group, including The Hongkong and Shanghai Banking Corporation Limited and its subsidiary companies, to manage associated risks. Rest of Americas/Figures in HK$m Hong Kong Asia-Pacific Europe Total At 30Jun05 Residential mortgages 184,740 108,582 3 293,325 Hong Kong SAR Government's Home Ownership Scheme, Private Sector Participation Scheme and Tenants Purchase Scheme mortgages 39,131 - - 39,131 Other personal 48,221 42,790 1 91,012Total personal 272,092 151,372 4 423,468 Commercial, industrial and international trade 126,034 112,301 - 238,335 Commercial real estate 80,473 29,560 - 110,033 Other property-related lending 47,560 15,426 - 62,986 Government 3,349 9,309 - 12,658 Other commercial 57,113 36,308 - 93,421Total corporate and commercial 314,529 202,904 - 517,433 Non-bank financial institutions 13,381 19,828 - 33,209 Settlement accounts 3,358 3,444 - 6,802Total financial 16,739 23,272 - 40,011 Gross advances to customers 603,360 377,548 4 980,912 Impairment provisions (3,871) (3,404) - (7,275) Net advances to customers 599,489 374,144 4 973,637 Rest of Americas/ TotalFigures in HK$m Hong Kong Asia-Pacific Europe restated At30Jun04 Residential mortgages 182,972 84,527 - 267,499 Hong Kong SAR Government's Home Ownership Scheme, Private Sector Participation Scheme and Tenants Purchase Scheme mortgage 45,057 - - 45,057 Other personal 42,843 31,855 7 74,705Total personal 270,872 116,382 7 387,261 Commercial, industrial and international trade 106,210 91,069 - 197,279 Commercial real estate 69,943 24,471 5 94,419 Other property-related lending 42,202 10,059 - 52,261 Government 6,515 4,612 - 11,127 Other commercial 57,433 33,755 - 91,188Total corporate and commercial 282,303 163,966 5 446,274 Non-bank financial institutions 12,070 7,005 - 19,075 Settlement accounts 3,959 2,056 - 6,015Total financial 16,029 9,061 - 25,090 Gross advances to customers 569,204 289,409 12 858,625 Impairment provisions (4,664) (4,012) (5) (8,681) Net advances to customers 564,540 285,397 7 849,944 Rest of Americas/ TotalFigures in HK$m Hong Kong Asia-Pacific Europe restated At 31Dec04 Residential mortgages 184,631 98,516 2 283,149 Hong Kong SAR Government's Home Ownership Scheme, Private Sector Participation Scheme and Tenants Purchase Scheme mortgages 41,845 - - 41,845 Other personal 50,741 37,873 7 88,621Total personal 277,217 136,389 9 413,615 Commercial, industrial and international trade 109,655 105,133 - 214,788 Commercial real estate 80,726 27,956 5 108,687 Other property-related lending 46,319 14,070 - 60,389 Government 4,781 5,150 - 9,931 Other commercial 56,607 35,006 - 91,613Total corporate and commercial 298,088 187,315 5 485,408 Non-bank financial institutions 15,008 9,148 - 24,156 Settlement accounts 3,470 472 - 3,942Total financial 18,478 9,620 - 28,098 Gross advances to customers 593,783 333,324 14 927,121 Impairment provisions (4,032) (3,892) (5) (7,929) Net advances to customers 589,751 329,432 9 919,192 Advances to customers increased by HK$54 billion, or 5.9 per cent, since the endof 2004. Advances in Hong Kong increased by HK$10 billion, or 1.7 per cent. Excluding theimpact of lending under the Government Home Ownership Scheme, which remainedsuspended during 2005, mortgage lending remained flat, in line with the overallmarket. Commercial lending rose by 5.5 per cent, with particularly strong growthin the manufacturing and retailing sectors and in trade finance, which benefitedfrom focused relationship strategies in the middle-market sector, and theexpansion of business banking centres to better serve the customer base. In the rest of Asia-Pacific, advances grew strongly by HK$45 billion, or 13.6per cent, since the end of 2004. Mortgage loans increased by 10.2 per cent,principally in Korea, Taiwan, India, Singapore and Australia. The cards businesscontinued to expand and receivables rose by 15.2 per cent, largely in Taiwan andIndonesia. Lending to corporate and commercial customers rose by 8.3 per cent,notably in mainland China, India, Korea and Indonesia. 22. Analysis of advances to customers by geographical area according to thelocation of counterparties, after risk transfer Rest of Americas/Figures in HK$m Hong Kong Asia-Pacific Europe Others Total At 30Jun05 Gross advances to customers 550,724 357,221 63,356 9,611 980,912Overdue advances to customers 2,865 2,269 69 1 5,204 At 30Jun04 (restated) Gross advances to customers 522,134 275,728 56,611 4,152 858,625Overdue advances to customers 3,979 2,829 135 1 6,944 At 31Dec04 (restated) Gross advances to customers 543,997 319,512 59,461 4,151 927,121Overdue advances to customers 3,212 2,343 74 - 5,629 This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
HSBC Holdings