30th Jul 2007 09:15
HSBC Holdings PLC30 July 2007 THE HONGKONG AND SHANGHAI BANKING CORPORATION LIMITED 2007 INTERIM CONSOLIDATED RESULTS - HIGHLIGHTS - Net operating income before loan impairment charges and other credit risk provisions up 35.7 per cent to HK$60,177 million (HK$44,353 million in the first half of 2006).- Pre-tax profit up 52.9 per cent to HK$39,003 million (HK$25,516 million in the first half of 2006).- Pre-tax profit excluding dilution gains up 34.7 per cent to HK$34,371 million.- Attributable profit up 56.9 per cent to HK$28,987 million (HK$18,471 million in the first half of 2006).- Return on average shareholders' funds of 38.0 per cent (34.9 per cent in the first half of 2006).- Assets up 13.3 per cent to HK$3,569 billion (HK$3,151 billion at the end of 2006).- Cost efficiency ratio of 34.1 per cent (39.4 per cent for the first half of 2006). Within this document, the Hong Kong Special Administrative Region of thePeople's Republic of China has been referred to as 'Hong Kong'. Comment by Vincent Cheng, Chairman For the six months ended 30 June 2007, The Hongkong and Shanghai BankingCorporation Limited reported the best set of interim results, in terms of profitgrowth, for more than a decade. Profit before tax increased an impressive 52.9per cent to HK$39,003 million. The profit figure includes a HK$4,632 milliongain on the dilution of investments in associates in mainland China, comprisingBank of Communications and Industrial Bank. Excluding these one-off gains, thegroup's profit before tax in the period still rose strongly by 34.7 per cent. Our growth strategy is paying off. We continue to invest in our businesses,particularly Personal Financial Services. Operating conditions were the best formore than a decade, distinguished by record global stock market activity andbuoyant regional economies, most notably in mainland China. Credit quality inAsia remained good with loan impairment charges and other risk provisions, as aresult, largely unchanged at HK$2,635 million. In Hong Kong, our businesses put in an outstanding performance with profitbefore tax up a significant 26.4 per cent to HK$24,482 million, supported by anexceptionally strong economy and the bull market in equities. Hong Kong isbenefiting from the further integration of its economy into the wider PearlRiver Delta economic zone. The group's results in the territory were achievedthrough deposit growth, widening deposit spreads and strong wealth managementearnings in the face of fierce price competition for residential mortgages andrising cost pressures in rents and salaries. Amid these buoyant economic conditions, the group's operations in the rest ofthe Asia-Pacific region grew at a record pace with profit before tax up 136.3per cent, including the one-off dilution gain, to HK$14,521 million. Excludingthe one-off gain, profit before tax rose 60.9 per cent, reflecting strong growthin the underlying businesses. All of our major sites in the region reportedprofit growth, including mainland China, India, Indonesia, Korea, Singapore andTaiwan. In March, our mainland China operation was one of the first foreign banks tosuccessfully incorporate locally, creating HSBC Bank (China) Company Limited. Wehave the largest foreign bank presence in the country with a branch andsub-branch network of 40 outlets. In June, we announced the bank will take upnew headquarters in 'HSBC Building - Shanghai IFC' at the heart of the Lujiazuifinancial centre. Our partnerships in mainland China are performing strongly.Bank of Communications credit cards in issue reached 2.4 million in the period. In Vietnam, we received approval to raise our holding in Vietnam Technologicaland Commercial Joint-Stock Bank (Techcombank) from 10 per cent to 15 per cent -becoming one of the first foreign banks allowed to raise their holding in apartner bank. Personal Financial Services reported profit before tax of HK$15,163 million, up43.6 per cent on rising deposits, widening deposit spreads and increased feeincome from wealth management and stockbroking on the back of strong equitymarket conditions. The re-launch of HSBC Premier in the period also supportedbusiness growth, particularly in wealth management. Insurance income rose 39.1per cent with continued focus on retirement planning services. Our personalinternet banking service in Hong Kong goes from strength to strength with 1.3million customers registered online. By the end of June about 60 per cent ofcustomer bill payments and over 80 per cent of share trading transactions werebeing executed through this channel. HSBC Direct in Taiwan and Korea, which werelaunched in September 2006 and February this year respectively, continued tomake good progress in acquiring customers and deposits. Our new consumer financeoperations in Australia, India and Indonesia are also doing well as we continueto invest in their development. Strong regional cash payments and trade flows, combined with rising deposits andwidening deposit spreads, contributed to Commercial Banking increasing profitbefore tax by 29.7 per cent to HK$8,701 million. We continue to exploitcross-border business growth, especially between mainland China, Hong Kong,Korea, Taiwan and Vietnam. Trade balances in all these countries and territoriesgrew during the period. The business was further strengthened by the acquisitionof Chailease Credit Services Co. Ltd, a Taiwanese factoring company, in May thisyear. Corporate, Investment Banking and Markets reported an excellent profit beforetax of HK$11,253 million, up 45.4 per cent, demonstrating the success of ouremerging markets-led and financing-focused strategy. Higher net interest incomein Global Markets and strong trading profits across Asia helped achieve thisoutstanding result. Our 'joining-up' strategy is going well. The group's leadership position in thedistribution of structured products in Hong Kong is an example of this. We areable to source products from our structured equity derivatives teams in HongKong and Paris and distribute these offerings to our personal and privatebanking clients in the territory. The recent HSBC China Dragon Fund launch wasthe result of the close cooperation of our asset management and investmentbanking teams and effective distribution through our branch network and internetbanking service. The HK$3.6 billion fund was the first authorisedactively-managed Chinese equity fund to be listed on the Stock Exchange of HongKong. HSBC in Asia continues to invest in its successful organic growth strategy. Weremain alert to opportunities to make acquisitions, where the price is right andthe fit with HSBC strategy, culture and operations is good. The group remainsalert to any change in the current benign credit environment. We are confidentwe have the right platform and risk management in place to manage any changes inthese conditions. We will continue to invest in our businesses in the region andwork to capture the opportunities we see, both now and over the medium to longterm. Results by Customer Group Corporate, Investment Personal Banking Intra- Financial Commercial and Private segmentFigures in HK$m Services Banking Markets Banking Other elimination Total Half-year ended 30Jun07 Net interest income/(expense) 17,040 7,985 6,519 24 (2,165) (152) 29,251 Net fee income 7,976 2,830 4,131 67 79 - 15,083 Net trading income/(expense) 719 494 5,838 15 (10) (102) 6,954 Net income/(loss) from financial instruments designated at fair value 2,563 (253) 45 - (322) 254 2,287 Gains less losses from financial investments 18 - 151 - 251 - 420 Gains arising from dilution of investments in associates - - - - 4,632 - 4,632 Dividend income 6 3 57 - 280 - 346 Net earned insurance premiums 11,458 534 66 - - - 12,058 Other operating income 846 121 320 7 3,233 (2,451) 2,076 Total operating income 40,626 11,714 17,127 113 5,978 (2,451) 73,107 Net insurance claims incurred and movement in policyholders' liabilities (12,584) (296) (50) - - - (12,930) Net operating income before loan impairment charges and other credit risk provisions 28,042 11,418 17,077 113 5,978 (2,451) 60,177 Loan impairment charges and other credit risk provisions (2,198) (375) (61) - (1) - (2,635) Net operating income 25,844 11,043 17,016 113 5,977 (2,451) 57,542 Operating expenses (10,900) (3,492) (6,283) (103) (2,213) 2,451 (20,540) Operating profit 14,944 7,551 10,733 10 3,764 - 37,002 Share of profit in associates and joint venture 219 1,150 520 - 112 - 2,001 Profit before tax 15,163 8,701 11,253 10 3,876 - 39,003 Share of profit before tax 38.9% 22.3% 28.9% - 9.9% - 100.0% Half-year ended 30Jun06 Net interest income/(expense) 14,403 6,458 4,017 39 (2,395) 1,068 23,590 Net fee income/(expense) 5,177 2,445 3,511 33 (252) - 10,914 Net trading income 459 386 4,587 6 215 (1,191) 4,462 Net income/(loss) from financial instruments designated at fair value 63 (319) 18 - 143 123 28 Gains less losses from financial investments 84 (1) 195 - 872 - 1,150 Gains arising from dilution of investments in associates - - - - - - - Dividend income 3 2 23 - 563 - 591 Net earned insurance premiums 10,413 437 62 - - - 10,912 Other operating income 836 71 148 7 3,481 (2,093) 2,450 Total operating income 31,438 9,479 12,561 85 2,627 (2,093) 54,097 Net insurance claims incurred and movement in policyholders' liabilities (9,471) (225) (48) - - - (9,744) Net operating income before loan impairment charges and other credit risk provisions 21,967 9,254 12,513 85 2,627 (2,093) 44,353 Loan impairment charges and other credit risk provisions (2,480) (258) 155 - - - (2,583) Net operating income 19,487 8,996 12,668 85 2,627 (2,093) 41,770 Operating expenses (9,046) (3,011) (5,222) (81) (2,222) 2,093 (17,489) Operating profit 10,441 5,985 7,446 4 405 - 24,281 Share of profit in associates and joint venture 116 723 296 - 100 - 1,235 Profit before tax 10,557 6,708 7,742 4 505 - 25,516 Share of profit before tax 41.4% 26.3% 30.3% - 2.0% - 100.0% Personal Financial Services reported profit before tax of HK$15,163 million, anincrease of 43.6 per cent over the first half of 2006. This was driven by stronggrowth in operating income, partly offset by higher operating expenses as aresult of continued business expansion in the rest of the Asia-Pacific region. Net interest income increased by HK$2,637 million, or 18.3 per cent, comparedwith the first half of 2006. In Hong Kong, net interest income rose by HK$1,658million, or 15.5 per cent, as average customer account balances grew following aseries of deposit campaigns and rate offers to address customers' demand forshort-term products amid the buoyant stock market and during IPO subscriptionperiods. In addition, the relaunch of HSBC Premier attracted new funds, andspreads improved as a result of tactical deposit pricing and higher foreigncurrency interest rates. Activity in the local property market increased, butcustomer appetite for higher mortgage borrowing remained muted and intensecompetition continued to drive down mortgage pricing. In the rest of Asia-Pacific, net interest income rose by HK$979 million, or 26.7per cent, driven by strong deposit growth across the region. As a result of thegroup's focus on growing the mass-affluent HSBC Premier customer base, depositsincreased in a number of countries, particularly Singapore, mainland China,Australia and India, and deposit spreads improved on the back of higher interestrates. Several Mainland branches were granted approval to offer certain renminbideposit products to local residents in late 2006 and, since local incorporationin March 2007, are now able to offer a full range of renminbi services. Inaddition, HSBC Direct was launched in Taiwan in the third quarter of 2006 and inKorea in February 2007, and both countries have progressed well, generatingdeposits of more than HK$7 billion since launch. Interest earned on credit cardswas higher in the Philippines, India and Australia, reflecting growth in thenumber of cards in circulation and higher levels of receivables as therelationships mature. Income from consumer lending also rose, notably frompersonal instalment loans in India, Korea and Indonesia, and spreads widened asa result of higher pricing. Net interest income from mortgage lending fell dueto the sale of the broker-originated portfolio in Australia in the fourthquarter of 2006, although growth in Singapore was strong. Net fee income of HK$7,976 million was 54.1 per cent higher than the first halfof 2006, driven by strong business growth and favourable investment marketsentiment in Hong Kong. Fee income from stockbroking and custody services roseby 98.0 per cent, as transaction volumes were significantly higher, reflectingbuoyant stock market conditions and a large number of IPOs in Hong Kong in thefirst half of 2007. Sales of unit trusts and structured investment productsincreased significantly as investors were encouraged by informative and targetedcampaigns to boost investment awareness, and by the launch of new funds,particularly those comprising China stocks. Net fee income from credit cards was HK$230 million, or 15.8 per cent, higherthan the first half of 2006. The group maintained its leadership position inHong Kong with a successful mass acquisition campaign launched in April, and nowhas more than 4.8 million cards in circulation throughout the territory. In therest of Asia-Pacific, expansion of the cards business continued, particularly inIndia and the Philippines. The number of cards in issue rose by 25.3 per cent toa total of 6.2 million, and reward programmes helped drive a 30.4 per centincrease in cardholder spending. Insurance income rose by 39.1 per cent, with continued focus on retirementplanning services. The launch of new investment-linked insurance productscontributed to growth in life assurance premium income. Sales of generalinsurance products also grew, supported by more efficient usage of alternativedistribution channels such as the internet. The charge for loan impairment fell by HK$282 million to HK$2,198 million, asconditions improved in Taiwan and Indonesia. In Hong Kong, higher charges,mainly against credit card lending, were largely volume-driven. Although thecredit environment remained generally robust, the number of personalbankruptcies rose slightly which also contributed to the increased charges. Inthe rest of Asia-Pacific, impairment charges rose in line with volume growth incards and personal loans in India, Thailand and Australia. Delinquency ratesalso rose in Thailand as a result of higher minimum repayment rules for cards,coupled with a deterioration in credit conditions. In Taiwan, charges against credit card lending were lower on account of improveddelinquency rates whereas prior year impairment levels were severely affected bythe imposition of a mandatory government debt negotiation scheme which led tomarket-wide credit losses. However, conditions continue to be monitored closelyin light of proposed legislation in respect of personal bankruptcy arrangementsdue to be introduced in 2008. Conditions in Indonesia improved compared with theprior year which was impacted by higher minimum repayment rules and reductionsin the government subsidy of fuel prices. The reduction in the current yearcharge also benefited from greater collection efforts. Operating expenses were HK$1,854 million, or 20.5 per cent, higher than in thefirst half of 2006, principally driven by continued investment in organic growthacross the rest of the Asia-Pacific region. In Hong Kong, operating expensesrose by 13.2 per cent. Staff costs were higher primarily as a result of salesincentives and other performance-related pay, in addition to salary rises.Premises costs were higher, comprising branch refurbishments along with rises incommercial rentals. Marketing expenses rose as a result of campaigns to boostbusiness activities, particularly for wealth management products and creditcards. In the rest of Asia-Pacific, costs increased by HK$1,183 million, or 29.8per cent, notably in India, mainland China, Korea, Indonesia and thePhilippines. Headcount rose by 26.5 per cent as sales and support functions werestrengthened to support business growth, premises costs rose as new outlets wereopened in Indonesia, India, and mainland China, and higher marketing costs wereincurred to drive sales and promote the HSBC brand. Following the launch of theconsumer finance business in the region last year, India and Indonesia continuedto incur investment costs to strengthen their market presence. Korea sawincreased staff, infrastructure and marketing expenditure related to the launchof HSBC Direct. Income from associates of HK$219 million includes improved results from Bank ofCommunications and Industrial Bank. HSBC was the recipient of four major awards from The Asian Banker this year:Best Retail Bank in Hong Kong, Best Regional Retail Business in Asia, Excellencein Bancassurance and Excellence in Internet Banking (Channel), affirming thegroup's leading position in personal banking in the region. Commercial Banking reported profit before tax of HK$8,701 million, an increaseof 29.7 per cent over the first half of 2006, driven by strong balance sheetgrowth and improved deposit spreads. Net interest income increased by HK$1,527 million, or 23.6 per cent, comparedwith the first half of 2006, reflecting growth in advances and depositsresulting from product development and active marketing efforts, coupled withimprovements in deposit spreads. In Hong Kong, net interest income rose byHK$823 million, or 17.1 per cent. Although local interest rates remained stablefollowing rises in 2006, Hong Kong dollar deposits increased substantially,driven by strong economic growth and stock market gains. Foreign currencydeposits achieved significant growth on the back of rises in global interestrates. Spreads improved, particularly on foreign currency savings accounts,attributable to active management of savings rates offered to customers.Promotional activities and continued emphasis on the SME segment contributed tothe growth of 'BusinessVantage' accounts. Non-trade lending balances increasedas the economy continued to grow and demand for credit remained strong.Cross-border lending to manufacturers with operations in mainland Chinacontinued to be strong as intra-Asia trade accelerated. However, asset spreadswere generally tighter as a result of market competition, particularly forcorporate and mid-market business customers. In the rest of Asia-Pacific, net interest income grew by 43.1 per cent, with theopening of new branches delivering deposit and loan growth, coupled with thewidening of spreads, notably in India and mainland China. Efforts were made toincrease liability balances by conducting various deposit garnering campaigns inTaiwan, mainland China and Australia. Trade balances grew in Korea, mainlandChina, Vietnam and India, and the business was strengthened by the acquisitionof Chailease Credit Services Co., Ltd., a Taiwanese factoring company, in May2007. The group continued to develop its cross-border capabilities and itscross-border referral system linked up business opportunities across differentgeographical boundaries. Country desks were established by Korea and Taiwan inmainland China, and a new commercial banking unit was set up in South Africa. Net fee income rose by HK$385 million, or 15.7 per cent, and was largelyattributable to higher cash management, remittance and trade fees, particularlyin Hong Kong and India, driven by increased trade flows and enhancements tocustomer service. Fees from sales of unit trusts and structured investmentproducts rose as the robust Hong Kong stock market boosted investment appetiteand demand for investment products. Earnings from customer foreign exchangetrades also increased, reflecting an increase in cross-border payments. Insurance revenues, particularly from life insurance, continued to grow as thesales force was realigned to capture cross-selling opportunities within theexisting client base, supported by marketing campaigns and new product launches.Income increased by 15.2 per cent as a result. The net charge for loan impairment was HK$117 million higher than in the firsthalf of 2006 primarily due to fewer releases, coupled with new specific chargesagainst a number of customers in Thailand, Sri Lanka and Bangladesh. However,credit quality generally remained stable in Hong Kong and elsewhere in theregion, and there were releases in Mauritius. Operating expenses increased by 16.0 per cent over the first half of 2006,largely attributable to higher staff costs as the number of staff increased inHong Kong, India and mainland China to support SME initiatives, insurancebusiness expansion and product development. Performance-related costs also rosesignificantly, in line with the improved results. The group continued to placestrong emphasis in leveraging its direct channel capabilities, and the number ofinternet-based transactions increased, contributing to efficiencies thatmitigated the increased cost of processing higher volumes. In the rest of theAsia-Pacific region, higher costs reflected the increased sales force to supportinitiatives and business expansion, notably in India and mainland China. HigherIT and infrastructure costs and marketing expenditure were incurred in thesecountries as a result of branch expansion. Income from associates of HK$1,150 million includes improved results from Bankof Communications and Industrial Bank. HSBC's position as a leading commercial bank has earned it the recognition ofvarious awards including The Best Trade Finance Bank by FinanceAsia for tenconsecutive years, Best Bank for Cash Management in Asia for five consecutiveyears by Global Finance, and was the recipient of the SME's Best Partner Awardin 2007 by the Hong Kong Chamber of Small and Medium Business Ltd. Corporate, Investment Banking and Markets reported profit before tax ofHK$11,253 million, 45.4 per cent higher than the first half of 2006 largely onaccount of higher net interest income in Global Markets and strong tradingprofits. Net interest income increased by HK$2,502 million, or 62.3 per cent, comparedwith the first half of 2006. In Global Markets, balance sheet managementrevenues rose significantly, reflecting the replacement of maturing low-yieldassets at higher yields, as well as a slightly steeper yield curve. Net interestincome in Global Transaction Banking increased by 32.2 per cent, notably inmainland China, India, Hong Kong and Taiwan, as deposit spreads improved as aresult of interest rate rises across the region, coupled with business growth inthe payments and cash management and securities services businesses. Netinterest income from corporate lending fell by 10.3 per cent, primarily due tocontinued margin compression in Hong Kong which was affected by surplusliquidity in the corporate sector, although there was strong growth in income inIndia and mainland China. Net fee income increased by HK$620 million, or 17.7 per cent. In Hong Kong,higher revenues in the securities and fund services business reflected increasedclient volumes, driven by continuing investor confidence in the local stockmarkets and high IPO activity. In addition, there were strong performances fromKorea, Australia, India and Singapore, and capabilities in the region werestrengthened by the acquisition of Westpac's sub-custody business in Australiaand New Zealand last year. Investment banking benefited from strong capitalmarkets, and underwriting revenues from IPO activities in Hong Kong grewsignificantly. Fee income from the asset management business grew modestly, ashigher revenues from funds under management were partly offset by lower fundperformance fees. Structured finance reported lower fees, reflecting lowertransaction volumes over the same period last year. Net trading income rose by 27.3 per cent to HK$5,838 million. Foreign exchangeand interest rate derivatives profits were higher as rate volatility providedgood trading opportunities and higher sales volumes, particularly in India andThailand, reflecting a growing requirement from customers for risk managementproducts. The equities and equity derivatives business in Hong Kong, which hasbeen built up significantly over the past two years, capitalised on the strongregional stock market performances and returned excellent results. Inparticular, there was significant growth in structured equity derivatives,attributable to cross-sales to personal and private banking customers. There was a net charge for loan impairment of HK$61 million compared with a netrelease of HK$155 million in the first half of 2006. Although the corporatecredit environment throughout the region generally remained benign, there werelower releases, and a new specific allowance was made against a mainland Chinaexposure. Operating expenses increased by 20.3 per cent compared with the first half of2006, reflecting headcount increases to support business expansion in all areasand higher performance-related remuneration. IT costs also rose to supportbusiness growth. Income from associates of HK$520 million includes improved results from Bank ofCommunications and Industrial Bank. Other includes income and expenses relating to certain funding, investment,property and other activities that are not allocated to other customer groups. Gains of HK$4,632 million were made on the dilution of the group's interests inBank of Communications and Industrial Bank. Both of these associates raised newcapital in the first half of 2007, but the group did not subscribe for anyadditional shares issued under these offers and, as a result, its percentageshareholdings decreased. However, the assets of Bank of Communications andIndustrial Bank increased substantially as a result of the new issues, andconsequently the group's share of the associates' underlying net assetsincreased by HK$4,632 million. This one-off increase was regarded as a gainarising from deemed disposals of part of the group's interests in associates,and has been recognised in the income statement. These gains were slightly offset by lower gains from financial investments asthe first half of 2006 included profit on the disposal of part of the group'sstake in UTI Bank. In addition, there were lower profits made on property salesin the first half of 2007 compared with the first half of 2006. Consolidated Income Statement Half-year ended Half-year endedFigures in HK$m 30Jun07 30Jun06 Interest income 67,550 53,745Interest expense (38,299) (30,155)Net interest income 29,251 23,590Fee income 17,396 13,185Fee expense (2,313) (2,271)Net fee income 15,083 10,914Net trading income 6,954 4,462Net income from financial instruments designated at fair value 2,287 28Gains less losses from financial investments 420 1,150Gains arising from dilution of investments in associates 4,632 -Dividend income 346 591Net earned insurance premiums 12,058 10,912Other operating income 2,076 2,450Total operating income 73,107 54,097Net insurance claims incurred and movement in policyholders' liabilities (12,930) (9,744)Net operating income before loan impairment charges and other credit risk provisions 60,177 44,353Loan impairment charges and other credit risk provisions (2,635) (2,583)Net operating income 57,542 41,770Employee compensation and benefits (12,111) (10,109)General and administrative expenses (7,157) (6,317)Depreciation of property, plant and equipment (1,005) (934)Amortisation of intangible assets (267) (129)Total operating expenses (20,540) (17,489)Operating profit 37,002 24,281Share of profit in associates and joint venture 2,001 1,235Profit before tax 39,003 25,516Tax expense (6,404) (4,569)Profit for the period 32,599 20,947 Profit attributable to shareholders 28,987 18,471Profit attributable to minority interests 3,612 2,476 Consolidated Balance Sheet Figures in HK$m At 30Jun07 At 31Dec06 ASSETSCash and short-term funds 744,586 518,022Items in the course of collection from other banks 117,403 46,519Placings with banks maturing after one month but less than one year 77,598 99,332Placings with banks maturing after one year 3,124 4,705Certificates of deposit 69,485 73,200Hong Kong SAR Government certificates of indebtedness 101,214 102,374Trading assets 301,371 338,792Financial assets designated at fair value 56,686 50,514Derivatives 128,096 99,167Advances to customers 1,154,991 1,043,782Financial investments 527,245 484,841Amounts due from group companies 142,804 161,118Investments in associates and joint venture 32,840 25,534Goodwill and intangible assets 11,594 10,428Property, plant and equipment 29,904 29,159Deferred tax assets 1,130 1,245Retirement benefit assets 3,307 2,191Other assets 65,453 59,917Total assets 3,568,831 3,150,840 LIABILITIESHong Kong SAR currency notes in circulation 101,214 102,374Items in the course of transmission to other banks 114,015 57,226Deposits by banks 183,967 108,125Customer accounts 2,163,224 1,989,467Trading liabilities 276,991 272,545Financial liabilities designated at fair value 37,811 36,554Derivatives 122,724 98,659Debt securities in issue 73,993 69,195Retirement benefit liabilities 340 465Amounts due to group companies 47,131 31,356Other liabilities and provisions 61,043 56,478Liabilities under insurance contracts issued 73,792 61,350Current tax liabilities 7,137 4,500Deferred tax liabilities 4,899 4,284Subordinated liabilities 18,920 16,353Preference shares 78,823 76,464Total liabilities 3,366,024 2,985,395 EQUITYShare capital 22,494 22,494Other reserves 56,662 35,514Retained profits 95,645 80,942Proposed dividend 5,500 6,500Total shareholders' equity 180,301 145,450Minority interests 22,506 19,995 202,807 165,445Total equity and liabilities 3,568,831 3,150,840 Consolidated Statement of Recognised Income and Expense Half-year ended Half-year endedFigures in HK$m 30Jun07 30Jun06 Available-for-sale investments:- fair value changes taken to equity 13,483 5,481- fair value changes transferred to the income statement on disposal or impairment (469) (1,119)- fair value changes transferred to the income statement on hedged items due to hedged risks 402 670 Cash flow hedges:- fair value changes taken to equity (547) 12- fair value changes transferred to the income statement 260 884 Property revaluation:- fair value changes taken to equity 1,285 1,468 Share of changes in equity of associates and joint venture 21 164Exchange differences 3,118 914Actuarial gains/(losses) on post-employment benefits 959 (279) 18,512 8,195Net deferred tax on items taken directly to equity (241) (47)Total income and expense taken to equity during the period 18,271 8,148Profit for the period 32,599 20,947Total recognised income and expense for the period 50,870 29,095 Total recognised income and expense for the period attributable to:- shareholders 46,179 26,381- minority interests 4,691 2,714 50,870 29,095 Consolidated Cash Flow Statement Half-year ended Half-year endedFigures in HK$m 30Jun07 30Jun06 Operating activitiesCash generated from operations 230,682 118,945Interest received on financial investments 10,268 9,095Dividends received on financial investments 234 206Dividends received from associates 221 33Taxation paid (3,151) (2,019)Net cash inflow from operating activities 238,254 126,260 Investing activitiesPurchase of financial investments (226,576) (201,753)Proceeds from sale or redemption of financial investments 214,046 174,201Purchase of property, plant and equipment (1,076) (568)Purchase of other intangible assets (587) (532)Proceeds from sale of property, plant and equipment 187 707Net cash outflow in respect of the acquisition of a subsidiary company (134) -Net cash inflow in respect of the purchase of interests in business portfolios 1,999 -Net cash outflow in respect of the purchase of interest in an associate (74) -Proceeds from the sale of interest in an associate 230 -Net cash outflow from investing activities (11,985) (27,945) Net cash inflow before financing 226,269 98,315 FinancingIssue of preference shares 1,953 -Change in minority interests (17) 322Issue of subordinated liabilities 2,345 4,485Ordinary dividends paid (11,500) (8,257)Dividends paid to minority interests (2,968) (3,043)Interest paid on preference shares (2,405) (1,856)Interest paid on subordinated liabilities (577) (383)Net cash outflow from financing (13,169) (8,732) Increase in cash and cash equivalents 213,100 89,583 This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
HSBC Holdings