3rd Mar 2008 08:15
HSBC Holdings PLC03 March 2008 Other Half-year to Half-year to 30Jun07 31Dec07 2007 30Jun06 31Dec06 2006 US$m US$m US$m US$m US$m US$m Net interest income/(expense) (291) (251) (542) (292) (333) (625)Net fee income/(expense) (7) (221) (228) 25 147 172 Net trading income/(expense) (49) 175 126 (68) (78) (146)Net income/(expense) from financial instruments designated at fair value 91 2,802 2,893 133 (214) (81)Gains less losses from financial investments 101 (18) 83 107 40 147Gains arising from dilution of interests in associates 1,076 16 1,092 - - -Dividend income 27 5 32 61 2 63Net earned insurance premiums (9) (12) (21) 148 59 207Other operating income 1,667 1,856 3,523 1,544 1,710 3,254 Total operating income 2,606 4,352 6,958 1,658 1,333 2,991 Net insurance claims incurred and movement in liabilities to policyholders - - - (101) (80) (181)Net operating income before loan impairment charges and other credit risk provisions 2,606 4,352 6,958 1,557 1,253 2,810 Loan impairment charges and other credit risk provisions (2) (9) (11) (1) (12) (13) Net operating income 2,604 4,343 6,947 1,556 1,241 2,797 Net operating expenses (1,650) (1,912) (3,562) (1,573) (1,686) (3,259) Operating profit 954 2,431 3,385 (17) (445) (462) Share of profit in associates and joint ventures 116 34 150 20 54 74 Profit/(loss) before tax 1,070 2,465 3,535 3 (391) (388) 10. Geographical distribution of results Europe Half-year to Half-year to 30Jun07 31Dec07 2007 30Jun06 31Dec06 2006 US$m US$m US$m US$m US$m US$m Interest income 15,217 17,927 33,144 11,765 13,484 25,249Interest expense (11,297) (14,101) (25,398) (7,671) (9,289) (16,960) Net interest income 3,920 3,826 7,746 4,094 4,195 8,289 Fee income 5,382 5,591 10,973 4,874 4,709 9,583Fee expense (1,238) (1,304) (2,542) (1,361) (1,114) (2,475) Net fee income 4,144 4,287 8,431 3,513 3,595 7,108 Net trading income 3,338 3,605 6,943 2,187 2,342 4,529Net income from financial instruments designated at fair value 348 878 1,226 129 15 144Gains less losses from financial investments 790 536 1,326 266 358 624Dividend income 161 10 171 121 62 183Net earned insurance premiums 1,480 2,530 4,010 668 630 1,298Other operating income 262 931 1,193 633 795 1,428 Total operating income 14,443 16,603 31,046 11,611 11,992 23,603 Net insurance claims incurred and movement in liabilities to policyholders (1,146) (2,333) (3,479) (287) (244) (531)Net operating income before loan impairment charges and other credit risk provisions 13,297 14,270 27,567 11,324 11,748 23,072 Loan impairment charges and other credit risk provisions (1,363) (1,179) (2,542) (935) (1,220) (2,155) Net operating income 11,934 13,091 25,025 10,389 10,528 20,917 Net operating expenses (7,972) (8,553) (16,525) (6,723) (7,148) (13,871) Operating profit 3,962 4,538 8,500 3,666 3,380 7,046 Share of profit/(loss) in associates and joint ventures 88 7 95 (66) (6) (72) Profit before tax 4,050 4,545 8,595 3,600 3,374 6,974 Hong Kong Interest income 6,214 6,366 12,580 5,207 5,890 11,097Interest expense (3,646) (3,451) (7,097) (3,049) (3,363) (6,412) Net interest income 2,568 2,915 5,483 2,158 2,527 4,685 Fee income 1,659 2,201 3,860 1,197 1,251 2,448Fee expense (220) (278) (498) (197) (195) (392) Net fee income 1,439 1,923 3,362 1,000 1,056 2,056 Net trading income 469 773 1,242 306 311 617Net income from financial instruments designated at fair value 210 466 676 6 254 260Gains less losses from financial investments 32 62 94 122 40 162Dividend income 17 14 31 59 2 61Net earned insurance premiums 1,426 1,371 2,797 1,317 1,311 2,628Other operating income 413 432 845 443 391 834 Total operating income 6,574 7,956 14,530 5,411 5,892 11,303 Net insurance claims incurred and movement in liabilities to policyholders (1,512) (1,696) (3,208) (1,193) (1,506) (2,699)Net operating income before loan impairment charges and other credit risk provisions 5,062 6,260 11,322 4,218 4,386 8,604 Loan impairment charges and other credit risk provisions (80) (151) (231) (70) (102) (172) Net operating income 4,982 6,109 11,091 4,148 4,284 8,432 Net operating expenses (1,665) (2,115) (3,780) (1,504) (1,765) (3,269) Operating profit 3,317 3,994 7,311 2,644 2,519 5,163 Share of profit in associates and joint ventures 13 15 28 10 9 19 Profit before tax 3,330 4,009 7,339 2,654 2,528 5,182 Rest of Asia-Pacific (including Middle East) Interest income 4,662 5,496 10,158 3,548 4,145 7,693Interest expense (2,761) (3,254) (6,015) (2,069) (2,577) (4,646) Net interest income 1,901 2,242 4,143 1,479 1,568 3,047 Fee income 1,174 1,535 2,709 949 963 1,912Fee expense (164) (299) (463) (164) (126) (290) Net fee income 1,010 1,236 2,246 785 837 1,622 Net trading income 797 846 1,643 551 630 1,181Net income/(expense) from financial instruments designated at fair value 78 33 111 (5) 84 79Gains less losses from financial investments 26 12 38 27 14 41Gains arising from dilution of interests in associates 1,076 5 1,081 - - -Dividend income 4 4 8 - 5 5Net earned insurance premiums 109 117 226 89 85 174Other operating income 360 438 798 288 477 765 Total operating income 5,361 4,933 10,294 3,214 3,700 6,914 Net insurance claims incurred and movement in liabilities to policyholders (141) (112) (253) (63) (129) (192)Net operating income before loan impairment charges and other credit risk provisions 5,220 4,821 10,041 3,151 3,571 6,722 Loan impairment charges and other credit risk provisions (308) (308) (616) (271) (241) (512) Net operating income 4,912 4,513 9,425 2,880 3,330 6,210 Net operating expenses (2,075) (2,689) (4,764) (1,609) (1,939) (3,548) Operating profit 2,837 1,824 4,661 1,271 1,391 2,662 Share of profit in associates and joint ventures 507 841 1,348 386 479 865 Profit before tax 3,344 2,665 6,009 1,657 1,870 3,527 North America Interest income 14,958 15,225 30,183 13,514 14,445 27,959Interest expense (7,651) (7,685) (15,336) (6,518) (7,173) (13,691) Net interest income 7,307 7,540 14,847 6,996 7,272 14,268 Fee income 3,307 3,426 6,733 2,702 2,909 5,611Fee expense (403) (520) (923) (390) (455) (845) Net fee income 2,904 2,906 5,810 2,312 2,454 4,766 Net trading income/(expense) 622 (1,164) (542) 959 399 1,358Net income/(expense) from financial instruments designated at fair value 81 1,669 1,750 24 (87) (63)Gains less losses from financial investments 53 192 245 40 18 58Dividend income 64 41 105 39 46 85Net earned insurance premiums 231 218 449 238 254 492Other operating income 342 18 360 365 557 922 Total operating income 11,604 11,420 23,024 10,973 10,913 21,886 Net insurance claims incurred and movement in liabilities to policyholders (124) (117) (241) (117) (142) (259)Net operating income before loan impairment charges and other credit risk provisions 11,480 11,303 22,783 10,856 10,771 21,627 Loan impairment charges and other credit risk provisions (3,820) (8,336) (12,156) (2,172) (4,624) (6,796) Net operating income 7,660 2,967 10,627 8,684 6,147 14,831 Net operating expenses (5,235) (5,321) (10,556) (4,974) (5,219) (10,193) Operating profit/(loss) 2,425 (2,354) 71 3,710 928 4,638 Share of profit/(loss) in associates and joint ventures 10 10 20 31 (1) 30 Profit/(loss) before tax 2,435 (2,344) 91 3,741 927 4,668 Latin America Interest income 4,376 5,095 9,471 3,497 3,792 7,289Interest expense (1,842) (2,053) (3,895) (1,493) (1,599) (3,092) Net interest income 2,534 3,042 5,576 2,004 2,193 4,197 Fee income 1,234 1,413 2,647 933 1,042 1,975Fee expense (236) (258) (494) (163) (182) (345) Net fee income 998 1,155 2,153 770 860 1,630 Net trading income 285 263 548 258 279 537Net income from financial instruments designated at fair value 157 163 320 106 131 237Gains less losses from financial investments 98 155 253 38 46 84Gains arising from dilution of interests in associates - 11 11Dividend income 6 3 9 3 3 6Net earned insurance premiums 731 863 1,594 522 554 1,076Other operating income 153 75 228 41 50 91 Total operating income 4,962 5,730 10,692 3,742 4,116 7,858 Net insurance claims incurred and movement in liabilities to policyholders (676) (751) (1,427) (489) (534) (1,023)Net operating income before loan impairment charges and other credit risk provisions 4,286 4,979 9,265 3,253 3,582 6,835 Loan impairment charges and other credit risk provisions (775) (922) (1,697) (442) (496) (938) Net operating income 3,511 4,057 7,568 2,811 3,086 5,897 Net operating expenses (2,516) (2,886) (5,402) (1,946) (2,220) (4,166) Operating profit 995 1,171 2,166 865 866 1,731 Share of profit in associates and joint ventures 5 7 12 - 4 4 Profit before tax 1,000 1,178 2,178 865 870 1,735 11. Registers of shareholders The Overseas Branch Registers of shareholders in Hong Kong and Bermuda will beclosed for one day, on Tuesday 25 March 2008. Any person who has acquired sharesregistered on the Hong Kong Branch Register but who has not lodged the sharetransfer with the Hong Kong Branch Registrar should do so before 4.00pm onThursday 20 March 2008 and any person who has acquired shares registered on theBermuda Branch Register but who has not lodged the share transfer with theBermuda Branch Registrar should do so before 4.00pm on Monday 24 March 2008 inorder to receive the fourth interim dividend for 2007, which will be payable onWednesday 7 May 2008. Transfers may not be made to or from the Hong Kong orBermuda Overseas Branch Registers while those Branch Registers are closed. Any person who has acquired shares registered on the Principal Register in theUnited Kingdom but who has not lodged the share transfer with the PrincipalRegistrar should do so before 4.00pm on Tuesday 25 March 2008 in order toreceive the dividend. Transfers of American Depositary Shares should be lodged with the depositary by12 noon on Tuesday 25 March 2008 in order to receive the dividend. 12. Foreign currency amounts The sterling and Hong Kong dollar equivalent figures in the consolidated incomestatement and balance sheet are for information only. These are translated atthe average rate for the period for the income statement and the closing ratefor the balance sheet as follows: Year ended 31Dec07 31Dec06 Closing : HK$/US$ 7.798 7.776 £/US$ 0.498 0.509 Average : HK$/US$ 7.801 7.769 £/US$ 0.500 0.543 13. Litigation HSBC is party to legal actions in a number of jurisdictions including the UK,Hong Kong and the US, arising out of its normal business operations. HSBCconsiders that none of the actions is material, and none is expected to resultin a significant adverse effect on the financial position of HSBC, eitherindividually or in the aggregate. Management believes that adequate provisionshave been made in respect of such litigation. HSBC has not disclosed anycontingent liability associated with these legal actions because it is notpracticable to do so, except as set out below. On 27th July 2007, the UK Office of Fair Trading ('OFT') issued High Court legalproceedings against a number of UK financial institutions, including HSBC Bankplc, to determine the legal status and enforceability of certain of the chargesapplied to their personal customers in relation to unauthorised overdrafts (the'charges'). Certain preliminary issues in these proceedings were heard in atrial in the Commercial Division of the High Court on 17th January 2008. Thistrial concluded on 8th February 2008 and judgment, on the preliminary issuestested, is awaited. The proceedings remain at a very early stage and may, if appeals on thepreliminary issues (or, subsequently, on substantive issues) are pursued, take anumber of years to conclude. A wide range of outcomes is possible, depending,initially, upon whether the Court finds that some, all, or none of the chargesshould be tested for fairness and/or tested as common law penalties and, if itdoes find that some or all of the charges should be so tested, upon the Court'ssubsequent assessment of each charge across the period under review. Since July2001, there have been a variety of charges applied by HSBC Bank plc acrossdifferent charging periods under the then current contractual arrangements. HSBCBank plc considers the charges to be and to have been valid and enforceable, andintends strongly to defend its position. If, contrary to HSBC Bank plc's current assessment, the Court should ultimately(after appeals) reach a decision adverse to HSBC Bank plc that results inliability for it, a large number of different outcomes is possible, each ofwhich would have a different financial impact. Based on the facts currentlyavailable to it, and a number of assumptions, HSBC Bank plc estimates that thefinancial impact could be approximately US$600 million. To make an estimate ofthe potential financial impact at this stage with any precision is extremelydifficult, owing to (among other things) the complexity of the issues, thenumber of permutations of possible outcomes, and the early stage of theproceedings. In addition, the assumptions made by HSBC Bank plc may prove to beincorrect. 14. Dealings in HSBC Holdings plc shares Except for dealings as intermediaries by HSBC Bank plc, HSBC Financial Products(France) and The Hongkong and Shanghai Banking Corporation Limited, which aremembers of a European Economic Area exchange, neither HSBC Holdings nor anysubsidiaries has bought, sold or redeemed any securities of HSBC Holdings duringthe year ended 31 December 2007. 15. Statutory accounts The information in this news release does not constitute statutory accountswithin the meaning of Section 240 of the Companies Act 1985 (the Act). Thestatutory accounts for the year ended 31 December 2007 will be delivered to theRegistrar of Companies in England and Wales in accordance with Section 242 ofthe Act. The auditor has reported on those accounts. Its report was unqualifiedand did not contain a statement under Section 237(2) or (3) of the Act. 16. Forward-looking statements This news release contains certain forward-looking statements with respect tothe financial condition, results of operations and business of HSBC. Theseforward-looking statements represent HSBC's expectations or beliefs concerningfuture events and involve known and unknown risks and uncertainty that couldcause actual results, performance or events to differ materially from thoseexpressed or implied in such statements. Certain statements, such as those thatinclude the words 'potential', 'estimated', and similar expressions orvariations on such expressions may be considered 'forward-looking statements'. 17. Corporate governance HSBC is committed to high standards of corporate governance. HSBC Holdings plchas complied throughout 2007 with the applicable code provisions of the CombinedCode on Corporate Governance issued by the Financial Reporting Council and theCode on Corporate Governance Practices in Appendix 14 to the Rules Governing theListing of Securities on The Stock Exchange of Hong Kong Limited. The Board of HSBC Holdings plc has adopted a code of conduct for transactions inHSBC Group securities by Directors that complies with The Model Code in theListing Rules of the Financial Services Authority and with The Model Code forSecurities Transactions by Directors of Listed Issuers ('Hong Kong Model Code')set out in the Rules Governing the Listing of Securities on The Stock Exchangeof Hong Kong Limited save that The Stock Exchange of Hong Kong has grantedcertain waivers from strict compliance with the Hong Kong Model Code, primarilyto take into account accepted practices in the UK, particularly in respect ofemployee share plans. Following a specific enquiry, each Director has confirmedhe or she has complied with the code of conduct for transactions in HSBC Groupsecurities throughout 2007. The Directors of HSBC Holdings plc as at the date of this announcement are:S K Green, Baroness Dunn*, Sir Brian Moffat*, M F Geoghegan, Lord Butler*, V H CCheng, J D Coombe+, J L Duran+, R A Fairhead+, D J Flint, W K L Fung*, J W JHughes-Hallett+, W S H Laidlaw+, Sir Mark Moody-Stuart+, G Morgan+, S W Newton+,S M Robertson+ and Sir Brian Williamson+. * Non-executive Director+ Independent non-executive Director The Group Audit Committee has reviewed the annual results for 2007. 18. Annual Review and Annual Report and Accounts The Annual Review 2007 and/or Annual Report and Accounts 2007 will be mailed toshareholders on or about Thursday 3 April 2008. Copies may be obtained fromGroup Communications, HSBC Holdings plc, 8 Canada Square, London E14 5HQ, UnitedKingdom; Group Communications (Asia), The Hongkong and Shanghai Banking CorporationLimited, 1 Queen's Road Central, Hong Kong; Internal Communications, HSBC -North America, 26525 N Riverwoods Boulevard, Mattawa, Illinois, 60045,USA; Direction de la Communication, HSBC France, 103 avenue des Champs Elysees, 75419Paris Cedex 08, France; or from the HSBC Group website - www.hsbc.com. Chinese translations of the Annual Review and Annual Report and Accounts may beobtained on request from Computershare Hong Kong Investor Services Limited,Hopewell Centre, Rooms 1806-07, 18th Floor, 183 Queen's Road East, Hong Kong. A French translation of the Annual Review may be obtained on request from HSBCFrance, Direction de la Communication, 103 avenue des Champs Elysees, 75419Paris Cedex 08, France. The Annual Report and Accounts will be filed with the United States Securitiesand Exchange Commission. The Annual Review and Annual Report and Accounts will be available on the StockExchange of Hong Kong's website - www.hkex.com.hk. Custodians or nominees that wish to distribute copies of the Annual Review and/or Annual Report and Accounts to their clients may request copies for collectionby writing to Group Communications at the address given above. Custodians andnominees will need to request copies of the Annual Review 2007 and/or AnnualReport and Accounts 2007 no later than 10 March 2008. 19. Annual General Meeting The Annual General Meeting of the Company will be held at the Barbican Hall,Barbican Centre, London EC2 on Friday 30 May 2008 at 11 am. Notice of the meeting will be mailed to shareholders on or about Thursday 3April 2008. 20. Interim results for 2008 The interim results for the six months to 30 June 2008 will be announced onMonday 4 August 2008. 21. Proposed interim dividends for 2008 The Board has adopted a policy of paying quarterly dividends. Under this policyit is intended to have a pattern of three equal interim dividends with avariable fourth interim dividend. It is envisaged that the first interimdividend in respect of 2008 will be US$0.18 per ordinary share. The proposedtimetables for the dividends in respect of 2008 are: Interim dividends on the ordinary shares for 2008 First Second Third Fourth Announcement 6 May 2008 4 August 2008 3 November 2008 2 March 2009 ADSs quoted ex-dividend in New York 21 May 2008 20 August 2008 19 November 2008 18 March 2009 Shares quoted ex-dividend in London, Hong Kong and Bermuda 21 May 2008 20 August 2008 19 November 2008 18 March 2009 Record date and closure of Hong Kong Overseas Branch register of shareholders for one day 23 May 2008 22 August 2008 21 November 2008 20 March 2009 Shares quoted ex-dividend in Paris 26 May 2008 25 August 2008 24 November 2008 23 March 2009 Payment date 9 July 2008 8 October 2008 14 January 2009 6 May 2009 22. News release Copies of this news release may be obtained from Group Comunications, HSBCHoldings plc, 8 Canada Square, London E14 5HQ, United Kingdom; Group Communications (Asia) The Hongkong and Shanghai Banking Corporation Limited, 1 Queen's Road Central, Hong Kong; Group Public Affairs, HSBC Bank USA, N.A., 452 Fifth Avenue, New York, NY 10018, USA; Direction de la Communication, HSBC France, 103 avenue des Champs Elysees, 75419 Paris Cedex 08, France. The news release will also be available on the HSBC Group website - www.hsbc.com. 23. For further information contact: London Hong KongRichard Beck David HallGroup Communications Director Head of Group Communications (Asia)Telephone: +44 (0)20 7991 0633 Telephone: +852 2822 1133 Danielle Neben Gareth HewettManager Investor Relations Senior Manager, External Relations Telephone: +44 (0)20 7992 1938 Telephone: +852 2822 4929 Chicago ParisLisa Sodeika Chantal NedjibExecutive Vice President, Managing Director, Corporate CommunicationsCorporate Affairs Telephone: +33 1 40 70 7729Telephone: +1 847 564 6394 Linda Recupero Gilberte LombardExecutive Vice President, Investor Relations DirectorGroup Public Affairs Telephone: +33 1 40 70 2257Telephone: +1 212 525 3800 This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
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