10th Aug 2012 16:15
The Interim Report 2012 of HSBC Holdings has been prepared in accordance with the requirements of English law, and liability in respect thereof is also governed by English law. In particular, the liability of the Directors for this report is solely to HSBC Holdings. Certain defined terms Unless the context requires otherwise, 'HSBC Holdings' means HSBC Holdings plc and 'HSBC', the 'Group', 'we', 'us' and 'our' refer to HSBC Holdings together with its subsidiaries. Within this document, the Hong Kong Special Administrative Region of the People's Republic of China is referred to as 'Hong Kong'. When used in the terms 'shareholders' equity' and 'total shareholders' equity', 'shareholders' means holders of HSBC Holdings ordinary shares and those preference shares classified as equity. The abbreviations 'US$m' and 'US$bn' represent millions and billions (thousands of millions) of US dollars, respectively. Interim financial statements and notes HSBC's Interim Consolidated Financial Statements and Notes thereon, as set out on pages 211 to 263, have been prepared in accordance with the Disclosure Rules and Transparency Rules of the Financial Services Authority and International Accounting Standard ('IAS') 34 'Interim Financial Reporting' as issued by the International Accounting Standards Board ('IASB') and as endorsed by the European Union ('EU'). The consolidated financial statements of HSBC at 31 December 2011 were prepared in accordance with International Financial Reporting Standards ('IFRSs') as issued by the IASB, and as endorsed by the EU. EU-endorsed IFRSs may differ from IFRSs as issued by the IASB if, at any point in time, new or amended IFRSs have not been endorsed by the EU. At 31 December 2011, there were no unendorsed standards effective for the year ended 31 December 2011 affecting the consolidated financial statements at that date, and there was no difference between IFRSs endorsed by the EU and IFRSs issued by the IASB in terms of their application to HSBC. Accordingly, HSBC's financial statements for the year ended 31 December 2011 were prepared in accordance with IFRSs as issued by the IASB. At 30 June 2012, there were no unendorsed standards effective for the period ended 30 June 2012 significantly affecting these interim consolidated financial statements, and there was no significant difference between IFRSs endorsed by the EU and IFRSs issued by the IASB in terms of their application to HSBC. HSBC uses the US dollar as its presentation currency because the US dollar and currencies linked to it form the major currency bloc in which HSBC transacts and funds its business. Unless otherwise stated, the information presented in this document has been measured in accordance with IFRSs. Except where stated otherwise, commentaries are on a constant currency basis as reconciled on page 14. When reference is made to 'underlying' or 'underlying basis' in commentaries, comparative information has been expressed at constant currency, eliminating the impact of fair value movements in respect of credit spread changes on HSBC's own debt and adjusted for the effects of acquisitions and disposals as reconciled on page 16. | Contents | ||
Overview | |||
Financial highlights ...................................................... | 2 | ||
Group Chairman's Statement ....................................... | 4 | ||
Group Chief Executive's Business Review .................... | 7 | ||
Principal activities ....................................................... | 10 | ||
Business and operating models ..................................... | 10 | ||
Strategic direction ........................................................ | 11 | ||
Risk ............................................................................. | 11 | ||
HSBC values ................................................................ | 12 | ||
Interim Management Report | |||
Financial summary1 ..................................................... | 13 | ||
Global businesses1 ......................................................... | 39 | ||
Geographical regions1 .................................................. | 57 | ||
Other information ....................................................... | 99 | ||
Risk1 ............................................................................ | 103 | ||
Capital ......................................................................... | 196 | ||
Board of Directors and Senior Management | 205 | ||
Financial Statements | |||
Financial statements .................................................... | 211 | ||
Notes on the financial statements1 .............................. | 219 | ||
Directors' Responsibility Statement .................... | 264 | ||
Independent Review Report by KPMGAudit plc to HSBC Holdings plc ....................... | 265 | ||
Additional Information | |||
Shareholder information1 ............................................. | 266 | ||
Cautionary statement regarding forward-looking statements ................................................................... | 277 | ||
Abbreviations .............................................................. | 278 | ||
Glossary ....................................................................... | 281 | ||
Index ........................................................................... | 288 | ||
1. Detailed contents are provided on the referenced pages. | |||
Who we are and what we do
HSBC is one of the world's largest banking and financial services organisations. With around 6,900 offices in both established and faster-growing markets, we aim to be where the growth is, connecting customers to opportunities, enabling businesses to thrive and economies to prosper, and ultimately helping people to fulfil their hopes and realise their ambitions.
We serve around 60 million customers through our four global businesses: Retail Banking and Wealth Management, Commercial Banking, Global Banking and Markets, and Global Private Banking. Our network covers 84 countries and territories in six geographical regions: Europe, Hong Kong, Rest of Asia-Pacific, Middle East and North Africa, North America and Latin America. Our aim is to be acknowledged as the world's leading international bank.
Listed on the London, Hong Kong, New York, Paris and Bermuda stock exchanges, shares in HSBC Holdings plc are held by about 221,000 shareholders in 134 countries and territories.
Highlights
·; Profit before tax up 11% to US$12.7bn on a reported basis.
·; Underlying pre-tax profit down 3% to US$10.6bn.
·; Strong performance in faster-growing regions, higher revenue in Hong Kong, Rest of Asia-Pacific and Latin America.
·; Achieved additional sustainable cost savings of US$0.8bn.
·; Core tier 1 capital ratio increased during the period from 10.1% at the end of 2011 to 11.3%.
Cover image
A Chinese ship in Brazil's largest port, Santos, illustrates the growing trade links between the two countries.China is today Brazil's largest trading partner, with HSBC financing an increasing share of that trade.
Financial highlights
Earnings per share US$0.45 - down 12% 30 June 2011: US$0.51 31 December 2011: US$0.41 | Dividends per share1 US$0.23 30 June 2011: US$0.21 31 December 2011: US$0.18 | Net assets per share US$8.73 30 June 2011: US$8.59 31 December 2011: US$8.48 | ||
For the period
Profit before taxation US$12,737m - up 11% 30 June 2011: US$11,474m 31 December 2011: US$10,398m | Underlying profit before taxation US$10,608m - down 3% 30 June 2011: US$10,968m 31 December 2011: US$5,806m | Total operating income US$43,672m - up 3% 30 June 2011: US$42,311m 31 December 2011: US$41,150m | ||
Net operating income before loan impairment charges and other credit risk provisions US$36,897m - up 3% 30 June 2011: US$35,694m 31 December 2011: US$36,586m | Profit attributable to ordinary shareholders of the parent company US$8,152m - down 9% 30 June 2011: US$8,929m 31 December 2011: US$7,295m | |||
At the period-end
Loans and advances tocustomers US$975bn - up 4% 30 June 2011: US$1,038bn 31 December 2011: US$940bn | Customer accounts US$1,278bn - up 2% 30 June 2011: US$1,319bn 31 December 2011: US$1,254bn | Ratio of customer advances to customer accounts 76.3% 30 June 2011: 78.7% 31 December 2011: 75.0% | ||
Total equity US$174bn - up 5% 30 June 2011: US$168bn 31 December 2011: US$166bn | Average total shareholders' equityto average total assets 5.9% 30 June 2011: 5.7% 31 December 2011: 5.6% | Risk-weighted assets US$1,160bn - down 4% 30 June 2011: US$1,169bn 31 December 2011: US$1,210bn | ||
Capital ratios
Core tier 1 ratio 11.3% 30 June 2011: 10.8% 31 December 2011: 10.1% | Tier 1 ratio 12.7% 30 June 2011: 12.2% 31 December 2011: 11.5% | Total capital ratio 15.1% 30 June 2011: 14.9% 31 December 2011: 14.1% | ||
Percentage growth rates compare with figures at 30 June 2011 for income statement items and 31 December 2011 for balance sheet items.
Performance ratios (annualised)
Credit coverage ratios
Loan impairment charges tototal operating income 10.4% 30 June 2011: 11.8% 31 December 2011: 15.9% | Loan impairment charges toaverage gross customer advances 1.0% 30 June 2011: 1.0% 31 December 2011: 1.3% | Total impairment allowances to impaired loans at period-end 42.3% 30 June 2011: 42.5%2 31 December 2011: 42.3% | ||
Return ratios
Return on average ordinaryshareholders' equity3 10.5% 30 June 2011: 12.3% 31 December 2011: 9.5% | Return on averageinvested capital4 9.9% 30 June 2011: 11.4% 31 December 2011: 8.9% | Post-tax return onaverage total assets 0.7% 30 June 2011: 0.7% 31 December 2011: 0.6% | Pre-tax return on averagerisk-weighted assets 2.1% 30 June 2011: 2.0% 31 December 2011: 1.7% | |||
Efficiency and revenue mix ratios
Cost efficiency ratio5 57.5% 30 June 2011: 57.5% 31 December 2011: 57.5% | Net interest income tototal operating income 44.4% 30 June 2011: 47.8% 31 December 2011: 49.6% | Net fee income tototal operating income 19.0% 30 June 2011: 20.8% 31 December 2011: 20.3% | Net trading income tototal operating income 10.3% 30 June 2011: 11.4% 31 December 2011: 4.1% | |||
Share information at the period-end
Closing market price | ||||||||
US$0.50 ordinary shares in issue 18,164m 30 Jun 2011: 17,818m 31 Dec 2011: 17,868m | Marketcapitalisation US$160bn 30 Jun 2011: US$177bn 31 Dec 2011: US$136bn | London £5.61 30 Jun 2011: £6.18 31 Dec 2011: £4.91 | Hong Kong HK$68.55 30 Jun 2011: HK$77.05 31 Dec 2011: HK$59.00 | AmericanDepositary Share6 US$44.13 30 Jun 2011: US$49.62 31 Dec 2011: US$38.10 | ||||
Total shareholder return7 | ||||||||
Over 1 year | Over 3 years | Over 5 years | ||||||
To 30 June 2012 .............................................. | 96 | 127 | 90 | |||||
Benchmarks: |
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- FTSE 1008 ...................................................... |
| 97 |
| 146 |
| 102 | ||
- MSCI World9 .................................................. |
| 96 |
| 139 |
| 89 | ||
- MSCI Banks9 .................................................. |
| 87 |
| 111 |
| 51 | ||
For footnotes, see page 100.
Related Shares:
HSBC Holdings