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Interim Report - 16 of 28

15th Aug 2014 16:30

RNS Number : 2029P

HSBC Holdings PLC

15 August 2014

Credit risk

Credit risk in the first half of 2014 ......................	110	Loans and advances excluding held for sale: totalexposure, impairment allowances and charges ........	110

Credit exposure ......................................................	111
Maximum exposure to credit risk ...............................	111	Maximum exposure to credit risk .................................	112

Total personal lending ...........................................	113
Mortgage lending ........................................................	113
Other personal lending ...............................................	113	Total personal lending .................................................	113
Non-US mortgage lending ...........................................	114	Mortgage lending products ..........................................	115
Mortgage lending in the US ........................................	116	HSBC Finance US CML - residential mortgages .........	116
		HSBC Finance: foreclosed properties in the US ...........	117
		Trends in two months and over contractual delinquencyin the US ..................................................................	117

Wholesale lending .................................................	118	Total wholesale lending ...............................................	118
Corporate and commercial .........................................	120

Credit quality of financial instruments ..............	120	Distribution of financial instruments by credit quality ..	121
Past due but not impaired gross financial instruments .	124	Past due but not impaired loans and advances tocustomers and banks by geographical region ..........	124
		Ageing analysis of days past due but not impaired gross financial instruments ................................................	125
Renegotiated loans and forbearance ............................	126	Renegotiated loans and advances to customers ...........	126
		Renegotiated loans and advances to customers bygeographical region ................................................	127
HSBC Finance loan modifications and re-ageing..........	128	Gross loan portfolio of HSBC Finance real estatesecured balances ......................................................	129
		Movement in HSBC Finance renegotiated real estatebalances ..................................................................	129
		Number of renegotiated real estate secured accounts remaining in HSBC Finance's portfolio ...................	129

Impaired loans ........................................................	129	Impaired loans and advances to customers and banks by industry sector ..........................................................	130
Impairment of loans and advances ..............................	130	Impairment allowances on loans and advances tocustomers by geographical region ...........................	131
		Net loan impairment charge to the income statement by geographical region ................................................	132
		LICs by geographical region .......................................	132
		LICs by industry ...........................................................	132
Loan impairment in the first half of 2014 ..................	133	Movement in impairment allowances on loans andadvances to customers and banks ............................	134
		Charge for impairment losses as a percentage of average gross loans and advances to customers by geographical region ................................................	135
		Reconciliation of reported and constant currency changesby geographical region ............................................	135

Concentration of exposure ....................................	136
Financial investments .................................................	136
Trading assets .............................................................	136	Trading assets ..............................................................	136
Derivatives .................................................................	136
Loans and advances ....................................................	136	Gross loans and advances by industry sector ...............	137
		Gross loans and advances to customers by industry sector and by geographical region ...........................	138
		Loans and advances to banks by geographical region .	139
		Reverse repos - non-trading by geographical region ...	139
		Gross loans and advances to customers by country ......	140

Securitisation exposures and other structuredproducts ................................................................	143	Overall exposure of HSBC ...........................................	143
		Movement in the available-for-sale reserve ..................	143
		Carrying amount of HSBC's consolidated holdings of ABSs, and direct lending held at fair value through profit or loss	144
Representations and warranties related tomortgage sales and securitisation activities ..............	147

Credit risk is the risk of financial loss if a customer or counterparty fails to meet an obligation under a contract. It arises principally from direct lending, trade finance and leasing business, but also from certain other products such as guarantees and credit derivatives and from holding assets in the form of debt securities.

There have been no material changes to our policies and practices for the management of credit risk as described in the Annual Report and Accounts 2013. Following the change in balance sheet presentation explained on page 41, non-trading reverse repos are shown separately on the face of the balance sheet and are no longer included in 'Loans and advances to customers' and 'Loans and advances to banks'. Comparative data have been re-presented accordingly. As a result, any analysis that references loans and advances to customers or banks excludes non-trading reverse repos to customers or banks, respectively. The amount of the non-trading reverse repos to customers and banks is set out on page 121.

A summary of our current policies and practices regarding credit risk is provided in the Appendix to Risk on page 266 of the Annual Report and Accounts 2013.

Credit risk in the first half of 2014

Total exposure to credit risk increased in the first half of 2014 with gross loans and advances of US$1,189bn recorded at 30 June 2014, compared with US$1,127bn at 31 December 2013.

During the first half of 2014, there was an overall increase in loans and advances of US$61bn which was accompanied by an overall decrease in impairment allowances of US$1.2bn, principally reflecting run-off of the CML portfolios within North America.

The following commentary is on a constant currency basis.

Total personal lending of US$416bn at 30 June 2014, was broadly unchanged from 31 December 2013. Decreases in lending balances in North America due to the continued run-off of the CML portfolio were partly offset by increases in residential mortgage balances in Asia and Latin America.

Total wholesale lending increased to US$773bn at 30 June 2014 from US$725bn at the end of 2013, due to increases in Asia and Europe. In Asia, lending grew across a number of sectors reflecting continued buoyancy in credit market activity. In Europe, the increases were principally driven by a rise in Loans and advances excluding held for sale: total exposure, impairment allowances and charges

	30 Jun 2014	30 Jun 2013	31 Dec 2013
	US$bn	US$bn	US$bn
At end of period:
Gross loans and advances
-. personal lending (A) ................................	415.8	394.5	410.7
-. wholesale lending (B) ................................	772.9	687.2	716.6

Total (C)1 ......................	1,188.7	1,081.7	1,127.3

Impairment allowances
-. personal lending (a)	5.9	7.4	6.6
-. wholesale lending (b) ................................	8.1	8.2	8.6

Total (c)1 .......................	14.0	15.6	15.2

(a) as a percentage of (A)1 .......................................	1.42	1.88	1.61
(b) as a percentage of (B)1 .......................................	1.05	1.19	1.20
(c) as a percentage of (C)1 .......................................	1.18	1.44	1.35

Loans and advances net of impairment allowances1 ....................................	1,174.7	1,066.1	1,112.1

For half-year ended:
Impairment charges
-. personal lending ......	1.2	1.8	1.4
-. wholesale lending ....	0.8	1.4	1.4

Total ..............................	2.0	3.2	2.8

For footnote, see page 172.

corporate overdraft balances, mainly in GB&M, in accounts which are structured to allow customer corporate treasury functions to benefit from net interest arrangements but where net settlement is not intended to occur, together with a corresponding rise in current accounts.

Impairment allowances fell from US$15.4bn at the end of 2013 to US$14bn at 30 June 2014. In personal lending, impairment allowances decreased by US$0.8bn, principally due to the run-off of the CML portfolio within North America. In wholesale lending, impairment allowances decreased by US$0.6bn, mainly in Europe, due to amounts written off and a reduction in new impairment allowances reflecting an improved economic environment.

Loan impairment charges in the first half of 2014 decreased to US$2.0bn from US$3.1bn in the first half of 2013. In personal lending, loan impairment charges decreased by US$0.5bn, mainly in North America and Latin America.

In wholesale lending, loan impairment charges reduced by US$0.6bn, mainly driven by lower individually assessed impairment charges. However, during the first half of 2014, in North America, we revised certain estimates used in our corporate loan collective impairment calculation to better reflect inherent losses in a growing loan portfolio. This resulted in an increase to our allowance for credit losses of approximately US$93m for these loans. We are continuing to refine aspects of our loan allowance calculation and, as a result, there could be further adjustments to our credit loss estimates for corporate loans in future periods.

Credit exposure

Maximum exposure to credit risk

The following commentary is on a reported basis.

The table on page 112 provides information on balance sheet items, offsets and loan and other credit-related commitments. Commentary on the balance sheet movements is provided on page 39.

Maximum exposure to credit risk' table (page 112)

The table presents our maximum exposure to credit risk from balance sheet and off‑balance sheet financial instruments before taking account of any collateral held or other credit enhancements (unless such enhancements meet accounting offsetting requirements). For financial assets recognised on the balance sheet, the maximum exposure to credit risk equals their carrying amount; for financial guarantees and similar contracts granted, it is the maximum amount that we would have to pay if the guarantees were called upon. For loan commitments and other credit-related commitments that are irrevocable over the life of the respective facilities, it is generally the full amount of the committed facilities.

Loans and advances

The loans and advances offset in the table on page 112 relates to customer loans and deposits and balances where there is a legally enforceable right of offset in the event of counterparty default and where, as a result, there is a net exposure for credit risk purposes. However, as there is no intention to settle these balances on a net basis under normal circumstances, they do not qualify for net presentation for accounting purposes.

Derivatives

The derivatives offset amount in the table below relates to exposures where the counterparty has an offsetting derivative exposure with HSBC, a master netting arrangement is in place and the credit risk exposure is managed on a net basis, or the position is specifically collateralised, normally in the form of cash.

At 30 June 2014, the total amount of such offsets was US$251bn (31 December 2013: US$252bn), of which US$212bn (31 December 2013: US$209bn) were offsets under a master netting arrangement, US$32bn (31 December 2013: US$36bn) was collateral received in cash and US$7bn (31 December 2013: US$7bn) was other collateral. Whilst the derivative balances have reduced by US$12.4bn over the last six months, the offsets have remained broadly consistent. These amounts do not qualify for offset for accounting purposes as settlement is not intended to be made on a net basis.

Reverse repurchase agreements - non-trading

The reverse repurchase agreements - non-trading offset in the table on page 112 relates to amounts where there is a legally enforceable right of offset in the event of counterparty default and where, as a result, there is a net exposure for credit risk purposes. However, as there is no intention to settle these balances on a net basis under normal circumstances, they do not qualify for net presentation for accounting purposes. The effects of collateral held are not taken into account.

Loan and other credit-related commitments

Loan and other credit-related commitments largely consist of corporate and commercial off-balance sheet commitments, including term and trade-related lending balances and overdrafts, retail off-balance sheet commitments including overdrafts, residential mortgages and personal loans and credit card balances.

As at 30 June 2014, loan and other credit-related commitments increased by US$54bn over the last six months to US$642bn. This was primarily due to corporate loan facilities and undrawn credit card commitments in Asia, undrawn facilities in Europe and increased lending activity with our corporate customers in North America, reflecting our focus on growing in target commercial segments in the US.

Other credit risk mitigants

While not disclosed as an offset in the maximum exposure to credit risk table, other arrangements are in place which reduce our maximum exposure to credit risk. These include short positions in securities and financial assets held as part of linked insurance/ investment contracts where the risk is predominantly borne by the policyholder. In addition, we hold collateral in the form of financial instruments that are not recognised on the balance sheet.

Maximum exposure to credit risk

	At 30 June 2014			At 30 June 2013			At 31 December 2013
	Maximum exposure	Offset	Exposure to credit risk (net)	Maximum exposure	Offset	Exposure to credit risk (net)	Maximum exposure	Offset	Exposure to credit risk (net)
	US$m	US$m	US$m	US$m	US$m	US$m	US$m	US$m	US$m
Cash and balances atcentral banks .............	132,137	-	132,137	148,285	-	148,285	166,599	-	166,599
Items in the course of collection from other banks ........................	8,144	-	8,144	8,416	-	8,416	6,021	-	6,021
Hong Kong Government certificates of indebtedness ..............	26,640	-	26,640	24,275	-	24,275	25,220	-	25,220

Trading assets ..............	273,251	(3)	273,248	381,124	(8,557)	372,567	239,301	(1,777)	237,524
Treasury and othereligible bills .............	17,678	-	17,678	19,188	-	19,188	21,584	-	21,584
Debt securities ...........	155,522	-	155,522	147,568	-	147,568	141,644	-	141,644
Loans and advances:
- to banks ...............	41,048	-	41,048	96,748	-	96,748	27,885	-	27,885
- to customers ........	59,003	(3)	59,000	117,620	(8,557)	109,063	48,188	(1,777)	46,411

Financial assets designated at fair value ..................................	9,937	-	9,937	12,548	-	12,548	12,719	-	12,719
Treasury and othereligible bills .............	27	-	27	99	-	99	50	-	50
Debt securities ...........	9,870	-	9,870	12,392	-	12,392	12,589	-	12,589
Loans and advances:
- to banks ...............	39	-	39	25	-	25	76	-	76
- to customers ........	1	-	1	32	-	32	4	-	4

Derivatives ..................	269,839	(250,731)	19,108	299,213	(254,077)	45,136	282,265	(252,344)	29,921

Loans and advances tocustomers held atamortised cost1,2 .......	1,047,241	(110,782)	936,459	938,294	(79,649)	858,645	992,089	(96,726)	895,363
- personal ...............	409,846	(1,605)	408,241	387,125	(1,317)	385,808	404,126	(1,348)	402,778
- corporate and commercial ..........	584,265	(103,289)	480,976	505,535	(73,456)	432,079	537,922	(90,215)	447,707
- financial (non-bank financial institutions) .........	53,130	(5,888)	47,242	45,634	(4,876)	40,758	50,041	(5,163)	44,878

Loans and advances to banks held at amortised cost1 .........	127,387	(662)	126,725	127,810	(766)	127,044	120,046	(587)	119,459

Reverse repurchase agreements -non-trading1 ..............	198,301	(28,982)	169,319	88,400	(14,255)	74,145	179,690	(22,267)	157,423

Financial investments ..	414,984	-	414,984	394,846	-	394,846	416,785	-	416,785
Treasury and othersimilar bills .............	78,177	-	78,177	79,005	-	79,005	78,111	-	78,111
Debt securities ...........	336,807	-	336,807	315,841	-	315,841	338,674	-	338,674

Assets held for sale ......	3,081	-	3,081	18,690	(572)	18,118	3,306	(22)	3,284
- disposal groups .....	2,794	-	2,794	17,756	(572)	17,184	2,647	(22)	2,625
- non-current assets held for sale .........	287	-	287	934	-	934	659	-	659

Other assets	35,212	-	35,212	32,470	-	32,470	34,018	-	34,018
Endorsements and acceptances ............	12,511	-	12,511	11,329	-	11,329	11,624	-	11,624
Other ........................	22,701	-	22,701	21,141	-	21,141	22,394	-	22,394

Financial guarantees and similar contracts .......	45,817	-	45,817	43,783	-	43,783	46,300	-	46,300
Loan and other credit-related commitments3 ..................................	642,068	-	642,068	587,946	-	587,946	587,603	-	587,603
		-
	3,234,039	(391,160)	2,842,879	3,106,100	(357,876)	2,748,224	3,111,962	(373,723)	2,738,239

For footnotes, see page 172.

Total personal lending

The following commentary is on a constant currency basis.

Total personal lending of US$416bn at 30 June 2014 was broadly unchanged from 31 December 2013.

Mortgage lending

Total mortgage lending was US$310bn at 30 June 2014. Mortgage balances decreased by US$2.7bn in the US from the continued run-off and loan sales in our CML portfolio. This was partly offset by increased mortgage lending, particularly in Hong Kong, mainland China and Taiwan due to strong demand.

Other personal lending

Credit cards

Total credit card lending of US$29bn at 30 June 2014 was 5% lower than at the end of 2013. The decline was predominantly in Europe and Asia as a result of consumer de-leveraging following a seasonal high point in December 2013, and the sale of a credit card portfolio in Australia.

Other personal non credit card lending

Other personal non-credit card lending balances remained broadly in line with December 2013 at US$81bn at 30 June 2014. There were increases in term lending in Hong Kong to our private banking customers and in personal loans in Singapore in line with our growth strategy.

These increases were offset by reductions in the US second lien mortgages. In Latin America, personal and payroll loan balances contracted due to more restrictive lending criteria.

Total personal lending

	UK	Rest of Europe	Hong Kong	Rest of Asia	US4	Rest of North America	Other regions4	Total
	US$m	US$m	US$m	US$m	US$m	US$m	US$m	US$m
At 30 June 2014
First lien residential mortgages (A) .	135,701	8,524	54,988	40,501	39,939	18,738	7,044	305,435
Other personal lending (B) ..............	22,121	28,552	21,777	12,414	5,842	5,054	14,557	110,317
- motor vehicle finance ..............	-	9	-	407	-	28	1,947	2,391
- credit cards ...............................	11,276	2,743	6,233	3,448	681	403	4,420	29,204
- second lien residential mortgages ....................................................	-	-	-	80	4,685	194	3	4,962
- other ........................................	10,845	25,800	15,544	8,479	476	4,429	8,187	73,760


Total personal lending (C) ..............	157,822	37,076	76,765	52,915	45,781	23,792	21,601	415,752

Impairment allowances on personal lending
First lien residential mortgages (a) ....................................................	327	71	-	52	2,195	59	149	2,853
Other personal lending (b) ...........	376	549	81	137	374	60	1,476	3,053
- motor vehicle finance ..............	-	4	-	2	-	-	111	117
- credit cards ...............................	118	299	43	82	29	8	359	938
- second lien residential mortgages ....................................................	-	-	-	-	339	6	-	345
- other ........................................	258	246	38	53	6	46	1,006	1,653


Total (c) .........................................	703	620	81	189	2,569	119	1,625	5,906

(a) as a percentage of (A) ...............	0.2	0.8	-	0.1	5.5	0.3	2.1	0.9
(b) as a percentage of (B) ................	1.7	1.9	0.4	1.1	6.4	1.2	10.1	2.8
(c) as a percentage of (C) ................	0.4	1.7	0.1	0.4	5.6	0.5	7.5	1.4

	UK	Rest of Europe	Hong Kong	Rest of Asia	US4	Rest of North America	Other regions4	Total
	US$m	US$m	US$m	US$m	US$m	US$m	US$m	US$m
At 30 June 2013
First lien residential mortgages (D) .	120,740	6,694	53,475	36,605	47,186	19,091	5,857	289,648
Other personal lending (E) ..............	20,395	25,441	18,813	11,929	6,805	5,877	15,601	104,861
- motor vehicle finance ..............	-	16	-	490	-	22	2,560	3,088
- credit cards ...............................	10,421	3,042	5,738	3,927	742	567	4,168	28,605
- second lien residential mortgages ....................................................	-	-	-	103	5,483	295	-	5,881
- other ........................................	9,974	22,383	13,075	7,409	580	4,993	8,873	67,287


Total personal lending (F) ...............	141,135	32,135	72,288	48,534	53,991	24,968	21,458	394,509

Impairment allowances on personal lending
First lien residential mortgages (d) ....................................................	337	65	-	63	3,504	39	155	4,163
Other personal lending (e) ...........	488	474	76	128	554	75	1,426	3,221
- motor vehicle finance ..............	-	4	-	2	-	1	94	101
- credit cards ...............................	136	232	43	79	35	10	275	810
- second lien residential mortgages ....................................................	-	-	-	-	512	5	-	517
- other ........................................	352	238	33	47	7	59	1,057	1,793


Total (f) .........................................	825	539	76	191	4,058	114	1,581	7,384

(d) as a percentage of (D) ...............	0.3	1.0	-	0.2	7.4	0.2	2.6	1.4
(e) as a percentage of (E) ................	2.4	1.9	0.4	1.1	8.1	1.3	9.1	3.1
(f) as a percentage of (F) ................	0.6	1.7	0.1	0.4	7.5	0.5	7.4	1.9

At 31 December 2013
First lien residential mortgages (G) ..	132,174	8,300	53,762	38,285	42,317	18,638	6,399	299,875
Other personal lending (H) .............	22,913	28,720	19,794	12,688	6,257	5,478	15,003	110,853
- motor vehicle finance ..............	-	11	-	481	-	20	2,181	2,693
- credit cards ...............................	11,480	3,016	6,428	3,846	734	411	4,441	30,356
- second lien residential mortgages ....................................................	-	-	-	91	5,010	251	2	5,354
- other ........................................	11,433	25,693	13,366	8,270	513	4,796	8,379	72,450


Total personal lending (I) ...............	155,087	37,020	73,556	50,973	48,574	24,116	21,402	410,728

Impairment allowances on personal lending
First lien residential mortgages (g) ....................................................	368	71	-	57	2,834	52	156	3,538
Other personal lending (h) ..........	450	509	78	144	470	62	1,351	3,064
- motor vehicle finance ..............	-	3	-	2	-	-	88	93
- credit cards ...............................	132	271	40	87	39	8	278	855
- second lien residential mortgages ....................................................	-	-	-	-	421	5	-	426
- other ........................................	318	235	38	55	10	49	985	1,690


Total (i) ..........................................	818	580	78	201	3,304	114	1,507	6,602

(g) as a percentage of (G) ................	0.3	0.9	-	0.1	6.7	0.3	2.4	1.2
(h) as a percentage of (H) ...............	2.0	1.8	0.4	1.1	7.5	1.1	9.0	2.8
(i) as a percentage of (I) .................	0.5	1.6	0.1	0.4	6.8	0.5	7.0	1.6

For footnote, see page 172.

Non-US mortgage lending

The commentary that follows is on a constant currency basis.

Total non-US mortgage lending was US$266bn at 30 June 2014, an increase of US$2.8bn compared with December 2013. Our most significant concentrations of mortgage lending remained in the UK and Hong Kong.

In the UK, on a constant currency basis, mortgage lending was US$136bn at 30 June 2014, a marginal decline of US$0.7bn compared with 31 December 2013 as result of prepayments, mainly on the interest only mortgage portfolio. However, on a reported basis there was an increase of US$3.5bn. The currency effect was US$4.2bn. Interest only products made up US$51bn of total UK mortgage lending including US$22bn of offset mortgages in First Direct.

The credit quality of our UK mortgage portfolio remained high and loan impairment charges and delinquency levels declined in the first half of 2014. Impairment allowances were 0.2% of total gross mortgages as the business continued to benefit from initiatives taken in previous years, the buoyant housing market, low interest rates and improved economic conditions. The majority of our mortgage lending in the UK continued to be to existing customers and for owner occupied properties. During the first half of 2014, the average LTV ratio for new business was 60% compared with 47% for the whole portfolio.

Mortgage lending in Asia was US$96bn, an increase of 3% on the end of 2013 reflecting continued growth, primarily in Hong Kong, mainland China and Taiwan. The quality of our Asian mortgage book remained high with negligible impairment allowances. The average LTV ratio on new mortgage lending in Hong Kong was 47% compared with an estimated 32% for the overall portfolio.

Mortgage lending in other regions remained broadly in line with that at the end of 2013.

Mortgage lending products

	UK	Rest of Europe	Hong Kong	Rest of Asia	US4	Restof North America	Other regions4	Total
	US$m	US$m	US$m	US$m	US$m	US$m	US$m	US$m
At 30 June 2014
First lien residential mortgages5 .......	135,701	8,524	54,988	40,501	39,939	18,738	7,044	305,435
Second lien residential mortgages ....	-	-	-	80	4,685	194	3	4,962

Total mortgage lending (A) ............	135,701	8,524	54,988	40,581	44,624	18,932	7,047	310,397

Second lien as percentage of (A) .....	-	-	-	0.2	10.5	1.0	-	1.6

Impairment allowances on mortgage lending ........................................	327	71	-	52	2,534	65	149	3,198
First lien residential mortgages ....	327	71	-	52	2,195	59	149	2,853
Second lien residential mortgages	-	-	-	-	339	6	-	345

Interest-only (including offset) mortgages ...................................	49,749	590	-	1,138	-	332	18	51,827
Affordability mortgages, including adjustable-rate mortgages ('ARM's) ....................................................	1	349	10	5,521	15,950	-	1	21,832
Other ..............................................	92	-	-	131	-	-	10	233

Total interest-only, affordability mortgages and other ....................	49,842	939	10	6,790	15,950	332	29	73,892

- as a percentage of (A) ..............	36.7	11.0	-	16.7	35.7	1.8	0.4	23.8

At 30 June 2013
First lien residential mortgages5 .......	120,740	6,694	53,475	36,605	47,186	19,091	5,857	289,648
Second lien residential mortgages ....	-	-	-	103	5,483	295	-	5,881

Total mortgage lending (B) .............	120,740	6,694	53,475	36,708	52,669	19,386	5,857	295,529

Second lien as percentage of (B) .....	-	-	-	0.3	10.4	1.5	-	2.0

Impairment allowances on mortgage lending ........................................	337	65	-	63	4,016	44	155	4,680
First lien residential mortgages ....	337	65	-	63	3,504	39	155	4,163
Second lien residential mortgages	-	-	-	-	512	5	-	517

Interest-only (including offset) mortgages ...................................	46,301	140	29	1,116	-	445	-	48,031
Affordability mortgages, includingARMs .........................................	2	453	17	5,534	18,007	-	1	24,014
Other ..............................................	89	-	-	156	-	-	19	264

Total interest-only, affordability mortgages and other ....................	46,392	593	46	6,806	18,007	445	20	72,309

- as a percentage of (B) ..............	38.4	8.9	0.1	18.5	34.2	2.3	0.3	24.5

Mortgage lending products (continued)

	UK	Rest of Europe	Hong Kong	Rest of Asia	US4	Restof North America	Other regions4	Total
	US$m	US$m	US$m	US$m	US$m	US$m	US$m	US$m
At 31 December 2013
First lien residential mortgages5 .......	132,174	8,300	53,762	38,285	42,317	18,638	6,399	299,875
Second lien residential mortgages ....	-	-	-	91	5,010	251	2	5,354

Total mortgage lending (C) .............	132,174	8,300	53,762	38,376	47,327	18,889	6,401	305,229

Second lien as percentage of (C) .....	-	-	-	0.2	10.6	1.3	-	1.8

Impairment allowances on mortgage lending ........................................	368	71	-	57	3,255	57	156	3,964
First lien residential mortgages ....	368	71	-	57	2,834	52	156	3,538
Second lien residential mortgages	-	-	-	-	421	5	-	426

Interest-only (including offset) mortgages ...................................	48,907	553	6	1,109	-	352	-	50,927
Affordability mortgages, including ARMs .........................................	2	506	12	5,581	16,274	-	-	22,375
Other ..............................................	95	-	-	141	-	-	18	254

Total interest-only, affordability mortgages and other ....................	49,004	1,059	18	6,831	16,274	352	18	73,556

- as a percentage of (C) ..............	37.1	12.8	-	17.8	34.4	1.9	0.3	24.1

For footnotes, see page 172.

Mortgage lending in the US

In the US, total mortgage lending balances were US$45bn at 30 June 2014, a decrease of 6% compared with the end of 2013. Overall, US mortgage lending represented 11% of our total personal lending and 14% of our total mortgage lending.

Mortgage lending balances at 30 June 2014 in HSBC Finance were US$27bn, a decrease of 10% compared with the end of 2013 due to the continued run-off and loan sales in the CML portfolio.

HSBC Finance US Consumer and Mortgage Lending6 - residential mortgages

	At 30 Jun 2014	At 30 Jun 2013	At 31 Dec 2013
	US$m	US$m	US$m
Residential mortgages
First lien .................	24,490	32,271	27,305
Second lien .............	2,784	3,328	3,014

Total (A) ................	27,274	35,599	30,319

Impairmentallowances ...........	2,338	3,789	3,028
- as a percentageof (A) .............	8.6	10.6	10.0

For footnote, see page 172.

For first lien residential mortgages in our CML portfolio, two months and over delinquent balances were US$3.1bn at 30 June 2014 compared with US$4.6bn at 31 December 2013. The decline mainly reflected the continued run-off and loan sales in the CML portfolio.

In HSBC Bank USA, two months and over delinquent balances were broadly in line with the end of 2013, at US$1.1bn.

Second lien mortgages in the US

The majority of second lien residential mortgages are taken up by customers who hold a first lien mortgage issued by a third party. Second lien residential mortgage loans have a risk profile characterised by higher loan-to-value ratios, because in the majority of cases the loans were taken out to complete the refinancing of properties. Loss severity on default of second liens has typically approached 100% of the amount outstanding, as any equity in the property is consumed through the repayment of the first lien loan.

Impairment allowances for these loans are determined by applying a roll-rate migration analysis which captures the propensity of these loans to default based on past experience. Once we believe that a second lien residential mortgage loan is likely to progress to write-off, the loss severity assumed in establishing our impairment allowance is close to 100% in the CML portfolios, and more than 80% in HSBC Bank USA.

HSBC Finance: foreclosed properties in the US

	Half-year to
	30 June	30 June	31 December
	2014	2013	2013

Number of foreclosed properties at end of period .........................................	2,320	4,068	4,254
Number of properties added to foreclosed inventory in the half-year ............	2,243	4,902	4,850
Average (gain)/loss on sale of foreclosed properties7 .....................................	(1%)	2%	-
Average total loss on foreclosed properties8 .................................................	50%	51%	51%
Average time to sell foreclosed properties (days) ..........................................	161	155	154

For footnotes, see page 172.

We have resumed processing suspended foreclosure actions in all states and have referred the majority of the backlog of loans for foreclosure. We also began initiating new foreclosure activities in all states.The number of foreclosed properties at HSBC Finance at 30 June 2014 decreased compared with the end of December 2013 as we sold more properties than we added to inventory. The decrease in the number of properties added to the inventory during the second quarter of 2014 resulted from the sale of many of the receivables for which the underlying properties had previously been in the process of foreclosure.

The average total gain on foreclosed properties was 1%, reflecting improvements in home prices.

Valuation of foreclosed properties in the US

We obtain real estate by foreclosing on the collateral pledged as security for residential mortgages. Prior to foreclosure, carrying amounts of the loans in excess of fair value less costs to obtain and sell are written down to the discounted cash flows expected to be recovered, including from the sale of the property. Broker price opinions are obtained and updated every 180 days and real estate price trends are reviewed quarterly to reflect any improvement or additional deterioration. Our methodology is regularly validated by comparing the discounted cash flows expected to be recovered based on current market conditions (including estimated cash flows from the sale of the property) to the updated broker price opinion, adjusted for the estimated historical difference between interior and exterior appraisals. The fair values of foreclosed properties are initially determined based on broker price opinions. Within 90 days of foreclosure, a more detailed property valuation is performed reflecting information obtained from a physical interior inspection of the property and additional allowances or write-downs are recorded as appropriate. Updates to the valuation are performed no less than once every 45 days until the property is sold, with declines or increases recognised through changes to allowances.

Trends in two months and over contractual delinquency in the US

	At 30 June 2014	At 30 June 2013	At 31 December 2013
	US$m	US$m	US$m
In personal lending in the US
First lien residential mortgages .....................................................................	4,169	8,378	5,931
Consumer and Mortgage Lending ..............................................................	3,062	7,114	4,595
Other mortgage lending ............................................................................	1,107	1,264	1,336

Second lien residential mortgages ..................................................................	216	401	406
Consumer and Mortgage Lending ..............................................................	161	274	276
Other mortgage lending ............................................................................	55	127	130

Credit card ....................................................................................................	17	19	25
Personal non-credit card ...............................................................................	8	24	25

Total ............................................................................................................	4,410	8,822	6,387

	%	%	%
As a percentage of the equivalent loans and receivables balances
First lien residential mortgages .....................................................................	10.4	17.6	14.0
Second lien residential mortgages ..................................................................	4.6	7.3	8.1
Credit card ....................................................................................................	2.5	2.5	3.4
Personal non-credit card ...............................................................................	1.7	4.1	4.9

Total ............................................................................................................	9.6	16.2	13.1

Wholesale lending

Wholesale lending covers the range of credit

facilities granted to sovereign borrowers, banks,

non-bank financial institutions, corporate entities

and commercial borrowers. Our wholesale portfolios

are well diversified across geographical and industry

sectors, with certain exposures subject to specific

portfolio controls.

Total wholesale lending1

	Europe	Asia9	MENA	North America	Latin America	Total
	US$m	US$m	US$m	US$m	US$m	US$m
At 30 June 2014
Corporate and commercial (A) ....................	257,715	221,852	20,983	55,916	32,965	589,431
- manufacturing .......................................	65,374	35,210	2,445	12,941	14,196	130,166
- international trade and services .............	79,981	80,574	10,072	13,087	8,534	192,248
- commercial real estate ..........................	30,935	34,727	434	6,677	2,492	75,265
- other property-related ..........................	7,444	32,730	1,593	8,644	348	50,759
- government ..........................................	2,404	1,082	1,696	568	1,007	6,757
- other commercial10 ...............................	71,577	37,529	4,743	13,999	6,388	134,236

Financial (non-bank financial institutions) (B) .................................................................	29,603	12,091	2,838	7,579	1,397	53,508
Asset-backed securities reclassified................	2,382	-	-	138	-	2,520
Loans and advances to banks (C) .................	27,763	72,222	8,644	6,252	12,569	127,450

Total wholesale lending (D) .........................	317,463	306,165	32,465	69,885	46,931	772,909

Impairment allowances on wholesale lending
Corporate and commercial (a) .....................	3,355	951	1,161	817	1,402	7,686
- manufacturing .......................................	526	252	162	148	372	1,460
- international trade and services .............	961	458	490	187	257	2,353
- commercial real estate ..........................	1,062	19	147	178	454	1,860
- other property-related ..........................	257	99	239	89	7	691
- government ..........................................	3	-	4	1	-	8
- other commercial .................................	546	123	119	214	312	1,314

Financial (non-bank financial institutions) (b) .................................................................	250	15	30	81	2	378
Loans and advances to banks (c) ..................	45	-	18	-	-	63

Total (d) ......................................................	3,650	966	1,209	898	1,404	8,127

(a) as a percentage of (A) ............................	1.30	0.43	5.53	1.46	4.25	1.30
(b) as a percentage of (B) ............................	0.84	0.12	1.06	1.07	0.14	0.71
(c) as a percentage of (C) ............................	0.16	-	0.21	-	-	0.05
(d) as a percentage of (D) ............................	1.15	0.32	3.72	1.28	2.99	1.05

	Europe	Asia9	MENA	North America		Latin America	Total
	US$m	US$m	US$m	US$m		US$m	US$m
At 30 June 2013
Corporate and commercial (E) ....................	211,128	198,457	21,416	48,327		30,451	509,779
- manufacturing .......................................	46,202	30,244	3,409	9,609		12,128	101,592
- international trade and services .............	66,317	77,798	9,458	13,082		7,771	174,426
- commercial real estate ..........................	30,764	33,416	898	6,064		2,328	73,470
- other property-related ..........................	7,403	23,715	1,526	7,725		285	40,654
- government ..........................................	1,834	3,220	1,664	348		1,431	8,497
- other commercial10 ...............................	58,608	30,064	4,461	11,499		6,508	111,140

Financial (non-bank financial institutions) (F) .................................................................	26,895	8,549	1,822	7,470		1,365	46,101
Asset-backed securities reclassified................	3,319	-	-	147		-	3,466
Loans and advances to banks (G) .................	26,741	72,483	9,054	8,614		10,968	127,860

Total wholesale lending (H) .........................	268,083	279,489	32,292	64,558		42,784	687,206

Impairment allowances on wholesale lending
Corporate and commercial (e) .....................	3,708	840	1,264	827		1,071	7,710
- manufacturing .......................................	570	211	199	88		325	1,393
- international trade and services .............	1,116	381	523	207		346	2,573
- commercial real estate ..........................	1,036	28	158	156		231	1,609
- other property-related ..........................	213	98	241	139		13	704
- government ..........................................	2	-	31	2		-	35
- other commercial .................................	771	122	112	235		156	1,396

Financial (non-bank financial institutions) (f) .................................................................	270	35	118	43		1	467
Loans and advances to banks (g) ..................	33	-	17	-		-	50

Total (h) .....................................................	4,011	875	1,399	870		1,072	8,227

(e) as a percentage of (E) ............................	1.76	0.42	5.90	1.71		3.52	1.51
(f) as a percentage of (F) .............................	1.00	0.41	6.48	0.58		0.07	1.01
(g) as a percentage of (G) ............................	0.12	-	0.19	-	-	-	0.04
(h) as a percentage of (H) ............................	1.50	0.31	4.33	1.35		2.51	1.20

At 31 December 2013
Corporate and commercial (I) .....................	239,116	203,894	19,760	50,307		30,188	543,265
- manufacturing .......................................	55,920	30,758	3,180	11,778		12,214	113,850
- international trade and services .............	76,700	79,368	8,629	11,676		8,295	184,668
- commercial real estate ..........................	31,326	34,560	639	5,900		2,421	74,846
- other property-related ..........................	7,308	27,147	1,333	8,716		328	44,832
- government ..........................................	3,340	1,021	1,443	499		974	7,277
- other commercial10 ...............................	64,522	31,040	4,536	11,738		5,956	117,792

Financial (non-bank financial institutions) (J) .................................................................	27,872	9,688	2,532	9,055		1,376	50,523
Asset-backed securities reclassified ...............	2,578	-	-	138		-	2,716
Loans and advances to banks (K) .................	24,273	72,814	6,419	6,420		10,178	120,104

Total wholesale lending (L) .........................	293,839	286,396	28,711	65,920		41,742	716,608

Impairment allowances on wholesale lending
Corporate and commercial (i) ......................	3,821	918	1,212	769		1,339	8,059
- manufacturing .......................................	618	246	182	89		384	1,519
- international trade and services .............	1,216	428	502	188		349	2,683
- commercial real estate ..........................	1,116	22	153	202		396	1,889
- other property-related ..........................	269	102	236	93		8	708
- government ..........................................	3	-	10	1		-	14
- other commercial .................................	599	120	129	196		202	1,246

Financial (non-bank financial institutions) (j) .................................................................	344	17	60	50		11	482
Loans and advances to banks (k) .................	35	-	18	5		-	58

Total (l) ......................................................	4,200	935	1,290	824		1,350	8,599

(i) as a percentage of (I) ..............................	1.60	0.45	6.13	1.53		4.44	1.48
(j) as a percentage of (J) ..............................	1.23	0.18	2.37	0.55		0.80	0.95
(k) as a percentage of (K) ............................	0.14	-	0.28	0.08		-	0.05
(l) as a percentage of (L) .............................	1.43	0.33	4.49	1.25		3.23	1.20

For footnotes, see page 172.

The commentary that follows is on a constant currency basis.

Corporate and commercial

Corporate and commercial lending, excluding commercial real estate and other property-related lending, represented 44% of total gross loans and advances to customers compared with 42% at 31 December 2013. The increase of US$34bn was driven by lending within manufacturing, transport and other subsectors within Asia and increases in manufacturing and other commercial portfolios within Europe, where this was principally driven by a rise in corporate overdraft balances, mainly in GB&M, in accounts which are structured to allow customer corporate treasury functions to benefit from net interest arrangements but where net settlement is not intended to occur, together with a corresponding rise in current accounts.

The aggregate of our commercial real estate and other property-related lending was US$126bn at 30 June 2014, an increase of US$5.3bn relative to 31 December 2013, but still representing an overall 12% of total loans and advances to customers.

Commercial real estate

Our exposure to commercial real estate lending continued to be concentrated in Asia, the UK and North America. The improvements in commercial real estate markets noted in 2013 continued into 2014.

Refinance risk in commercial real estate

Refinance risk is described on page 272 of the Annual Report and Accounts 2013. This risk is subject to close scrutiny in key commercial real estate markets.

Liquidity continued to improve further in 2014, as a wider range of funding sources returned to the market. There are now many refinancing opportunities with evidence of pressure on pricing.

On a reported basis, at 31 June 2014, we had US$22bn (31 December 2013: US$22bn) of commercial real estate loans in the UK of which US$5.8bn (31 December 2013: US$6.8bn) were due to be refinanced within the next 12 months. Of these balances, cases subject to close monitoring in our Loan Management unit amounted to US$2.0bn (31 December 2013: US$2.4bn). US$1.6bn (31 December 2013: US$1.6bn) were disclosed as impaired with impairment allowances of US$0.7bn (31 December 2013: US$0.6bn). Where these loans are not considered impaired it is because there is sufficient evidence to indicate that the associated contractual cash flows will be recovered or that the loans will not need to be refinanced on terms we would consider below market norms.

Credit quality of financial instruments

We assess credit quality on all financial instruments which bear credit risk. The distribution of financial instruments by credit quality is tabulated below. The five classifications describing the credit quality of our lending, debt securities portfolios and derivatives are set out in the Appendix to Risk on page 267 of the Annual Report and Accounts 2013. Additional credit quality information in respect of our consolidated holdings of ABSs is provided on page 143.

Distribution of financial instruments by credit quality

	Neither past due nor impaired				Past due			Impair-
			Satis-	Sub-	but not			ment
	Strong	Good	factory	standard	impaired11	Impaired	allowances12		Total
	US$m	US$m	US$m	US$m	US$m	US$m		US$m	US$m

At 30 June 2014
Cash and balances at centralbanks ................................	129,684	1,781	256	416					132,137
Items in the course of collection from other banks ..........................................	7,466	299	286	93					8,144
Hong Kong Governmentcertificates of indebtedness	26,640	-	-	-					26,640

Trading assets13 .....................	190,567	39,199	41,659	1,826					273,251
- treasury and other eligible bills ..............................	13,400	3,356	893	29					17,678
- debt securities .................	119,117	18,709	16,389	1,307					155,522
- loans and advances:
to banks .......................	23,478	5,456	11,686	428					41,048
to customers ................	34,572	11,678	12,691	62					59,003

Financial assets designated atfair value13 ........................	4,341	4,362	852	382					9,937
- treasury and other eligible bills ..............................	24	-	-	3					27
- debt securities .................	4,298	4,361	832	379					9,870
- loans and advances:
to banks .......................	19	-	20	-					39
to customers ................	-	1	-	-					1

Derivatives13 .........................	213,280	43,103	12,460	996					269,839

Loans and advances tocustomers held atamortised cost1,14 ...............	501,162	274,776	212,714	24,712	13,967	33,880		(13,970)	1,047,241
- personal ........................	332,045	38,673	16,847	1,366	9,283	17,538		(5,906)	409,846
- corporate and commercial ...................	140,941	222,982	185,541	22,450	4,327	15,710		(7,686)	584,265
- financial (non-bank financial institutions) ....	28,176	13,121	10,326	896	357	632		(378)	53,130

Loans and advances to banksheld at amortised cost1 .......	96,849	21,948	6,986	1,599	12	56		(63)	127,387

Reverse repurchase agreements- non-trading1 ....................	137,023	32,897	25,780	2,601	-	-		-	198,301

Financial investments ...........	358,131	29,280	18,734	6,503	-	2,336			414,984
- treasury and other similar bills ..............................	66,661	7,038	2,445	2,033	-	-			78,177
- debt securities .................	291,470	22,242	16,289	4,470	-	2,336			336,807

Assets held for sale ...............	1,265	802	597	90	6	397		(76)	3,081
- disposal groups ...............	1,232	802	596	90	3	118		(47)	2,794
- non-current assets held for sale ..............................	33	-	1	-	3	279		(29)	287

Other assets ..........................	10,893	8,060	14,815	823	178	443			35,212
- endorsements and acceptances ..................	1,661	5,179	5,176	463	24	8			12,511
- accrued income and other	9,232	2,881	9,639	360	154	435			22,701


	1,677,301	456,507	335,139	40,041	14,163	37,112		(14,109)	2,546,154

Distribution of financial instruments by credit quality (continued)

	Neither past due nor impaired				Past due			Impair-
			Satis-	Sub-	but not			ment
	Strong	Good	factory	standard	impaired11	Impaired	allowances12		Total
	US$m	US$m	US$m	US$m	US$m	US$m		US$m	US$m

At 30 June 2013
Cash and balances at centralbanks ................................	145,666	2,084	156	379					148,285
Items in the course of collection from other banks ..........................................	7,992	117	215	92					8,416
Hong Kong Governmentcertificates of indebtedness	24,275	-	-	-					24,275

Trading assets13 .....................	238,433	60,246	77,818	4,627					381,124
- treasury and other eligible bills ..............................	14,827	3,569	758	34					19,188
- debt securities .................	115,007	15,430	16,333	798					147,568
- loans and advances:
to banks .......................	59,115	22,581	13,076	1,976					96,748
to customers ................	49,484	18,666	47,651	1,819					117,620

Financial assets designated atfair value13 ........................	6,016	5,417	1,024	91					12,548
- treasury and other eligible bills ..............................	99	-	-	-					99
- debt securities .................	5,916	5,385	1,010	81					12,392
- loans and advances:
to banks .......................	1	-	14	10					25
to customers ................	-	32	-	-					32

Derivatives13 .........................	228,458	44,137	24,808	1,810					299,213

Loans and advances tocustomers held atamortised cost1,14 ...............	464,224	216,359	198,418	20,687	16,047	38,120		(15,561)	938,294
- personal ........................	311,216	36,434	13,103	1,702	9,968	22,086		(7,384)	387,125
- corporate and commercial ...................	134,939	167,595	171,797	17,956	5,794	15,164		(7,710)	505,535
- financial (non-bank financial institutions) ....	18,069	12,330	13,518	1,029	285	870		(467)	45,634

Loans and advances to banksheld at amortised cost1 .......	95,549	20,795	9,355	2,050	26	85		(50)	127,810

Reverse repurchase agreements -non-trading1 .......................	78,258	4,421	5,721	-	-	-		-	88,400

Financial investments ...........	340,631	26,981	18,751	5,110	-	3,373			394,846
- treasury and other similar bills ..............................	72,441	3,424	2,056	1,078	-	6			79,005
- debt securities .................	268,190	23,557	16,695	4,032	-	3,367			315,841

Assets held for sale ...............	4,906	5,955	6,129	492	641	744		(177)	18,690
- disposal groups ...............	4,788	5,679	6,065	478	609	239		(102)	17,756
- non-current assets held for sale .............................	118	276	64	14	32	505		(75)	934

Other assets ..........................	11,146	6,530	12,627	1,532	193	442			32,470
- endorsements and acceptances ..................	1,880	4,506	4,367	543	31	2			11,329
- accrued income and other	9,266	2,024	8,260	989	162	440			21,141


	1,645,554	393,042	355,022	36,870	16,907	42,764		(15,788)	2,474,371

	Neither past due nor impaired				Past due			Impair-
			Satis-	Sub-	but not			ment
	Strong	Good	factory	standard	impaired11	Impaired	allowances12		Total
	US$m	US$m	US$m	US$m	US$m	US$m		US$m	US$m

At 31 December 2013
Cash and balances at central banks ...............................	162,017	2,877	265	1,440					166,599
Items in the course of collection from other banks .........................................	5,590	66	286	79					6,021
Hong Kong Government certificates of indebtedness	25,220	-	-	-					25,220

Trading assets13 ...................	163,444	39,475	34,868	1,514					239,301
- treasury and other eligible bills .............................	17,235	3,585	758	6					21,584
-debt securities ................	107,831	16,498	16,167	1,148					141,644
- loans and advances:
to banks ......................	15,804	5,546	6,342	193					27,885
to customers ...............	22,574	13,846	11,601	167					48,188

Financial assets designated atfair value13 .......................	6,608	5,183	671	257					12,719
- treasury and other eligible bills .............................	50	-	-	-					50
- debt securities ...............	6,490	5,179	664	256					12,589
- loans and advances:
to banks ......................	68	-	7	1					76
to customers ...............	-	4	-	-					4

Derivatives13 .......................	220,711	47,004	13,425	1,125					282,265

Loans and advances tocustomers held atamortised cost1,14 ...............	488,504	243,077	199,821	23,942	15,460	36,428		(15,143)	992,089
- personal ........................	326,269	39,024	14,882	1,580	10,175	18,798		(6,602)	404,126
- corporate and commercial ...................	132,943	194,966	174,905	21,281	5,009	16,877		(8,059)	537,922
- financial (non-bank financial institutions) ....	29,292	9,087	10,034	1,081	276	753		(482)	50,041

Loans and advances to banksheld at amortised cost1 .......	91,498	21,131	6,266	1,123	11	75		(58)	120,046

Reverse repurchase agreements -non-trading1 .......................	111,543	37,878	28,265	2,004	-	-		-	179,690

Financial investments ..........	362,799	27,833	17,556	6,089	-	2,508			416,785
- treasury and other similar bills .............................	69,364	5,595	1,856	1,296	-	-			78,111
- debt securities ...............	293,435	22,238	15,700	4,793	-	2,508			338,674

Assets held for sale ..............	1,129	642	1,050	351	89	156		(111)	3,306
- disposal groups ..............	1,093	642	496	351	86	90		(111)	2,647
- non-current assets held for sale .............................	36	-	554	-	3	66		-	659

Other assets .........................	11,372	7,386	13,798	808	218	436			34,018
- endorsements and acceptances ................	1,976	4,824	4,562	225	19	18			11,624
- accrued income and other .........................................	9,396	2,562	9,236	583	199	418			22,394


	1,650,435	432,552	316,271	38,732	15,778	39,603		(15,312)	2,478,059

For footnotes, see page 172.

The commentary that follows is on a reported basis.

The balance of credit risk-bearing financial instruments at 30 June 2014 was US$2,546bn, of which US$1,677bn or 66% were classified as 'strong' (31 December 2013: 67%). The proportion of financial instruments classified as 'good' and 'satisfactory' remained broadly unchanged at 18% and 13%, respectively. The proportion of 'sub-standard' financial instruments remained low at 2% at 30 June 2014.

Loans and advances held at amortised cost were US$1,175bn, a US$63bn increase over the US$1,112bn at 31 December 2013. At 30 June 2014, 76% of these balances were classified as either 'strong' or 'good', broadly in line with the end of 2013.

The majority of the Group's exposure to financial investments was in the form of available-for-sale debt securities issued by government and government agencies classified as 'strong'. At 30 June 2014 this amounted to 86% of the total, broadly similar to 31 December 2013.

Trading assets increased by US$34bn to US$273bn at 30 June 2014, broadly reflecting the same credit quality distribution as at 31 December 2013.

Derivative assets fell by US$12bn with credit quality distribution remaining broadly consistent with 31 December 2013.

Cash and balances at central banks reduced by US$34bn to US$132bn at 30 June 2014, principally in Europe, driven by the redeployment of surplus funds.

Past due but not impaired gross financial instruments

The definition of past due but not impaired loans is set out on page 172 of the Annual Report and Accounts 2013.

Past due but not impaired loans and advances to customers and banks by geographical region

	Europe	Asia9	MENA	North America	Latin America	Total
	US$m	US$m	US$m	US$m	US$m	US$m
At 30 June 2014
Banks ..........................................................	-	12	-	-	-	12

Customers ...................................................	2,717	4,244	872	4,303	1,831	13,967
- personal ...............................................	1,395	2,860	198	3,679	1,151	9,283
- corporate and commercial ...................	1,316	1,192	640	516	663	4,327
- financial (non-bank financialinstitutions) .........................................	6	192	34	108	17	357


	2,717	4,256	872	4,303	1,831	13,979

At 30 June 2013
Banks ..........................................................	16	10	-	-	-	26

Customers ...................................................	2,043	4,135	1,001	6,930	1,938	16,047
- personal ...............................................	1,210	2,648	227	4,585	1,298	9,968
- corporate and commercial ...................	822	1,275	723	2,340	634	5,794
- financial (non-bank financialinstitutions) .........................................	11	212	51	5	6	285


	2,059	4,145	1,001	6,930	1,938	16,073

At 31 December 2013
Banks ..........................................................	-	11	-	-	-	11

Customers ...................................................	2,399	4,211	757	6,453	1,640	15,460
- personal ...............................................	1,287	2,764	174	4,817	1,133	10,175
- corporate and commercial ...................	1,092	1,197	580	1,635	505	5,009
- financial (non-bank financialinstitutions) .........................................	20	250	3	1	2	276


	2,399	4,222	757	6,453	1,640	15,471

For footnote, see page 172.

Ageing analysis of days past due but not impaired gross financial instruments

	Up to 29 days	30-59 days	60-89 days	90-179 days	180 days and over	Total
	US$m	US$m	US$m	US$m	US$m	US$m
At 30 June 2014
Loans and advances to customers held at amortised cost ...........................................................................	10,980	1,910	915	121	41	13,967
- personal ..............................................................	6,848	1,655	759	14	7	9,283
- corporate and commercial ...................................	3,814	238	137	107	31	4,327
- financial (non-bank financial institutions) ...........	318	17	19	-	3	357

Loans and advances to banks held at amortised cost ...	12	-	-	-	-	12

Loans and advances ...................................................	10,992	1,910	915	121	41	13,979

Assets held for sale ....................................................	3	1	-	1	1	6
- disposal groups ....................................................	3	-	-	-	-	3
- non-current assets held for sale ...........................	-	1	-	1	1	3

Other assets ...............................................................	111	32	15	13	7	178
- endorsements and acceptances ............................	15	8	-	1	-	24
- other ...................................................................	96	24	15	12	7	154


	11,106	1,943	930	135	49	14,163

At 30 June 2013
Loans and advances to customers held at amortised cost ...........................................................................	12,147	2,711	1,098	78	13	16,047
- personal ..............................................................	6,944	2,052	953	19	-	9,968
- corporate and commercial ...................................	4,923	655	144	59	13	5,794
- financial (non-bank financial institutions) ...........	280	4	1	-	-	285

Loans and advances to banks held at amortised cost ...	26	−	−	−	−	26

Loans and advances ...................................................	12,173	2,711	1,098	78	13	16,073

Assets held for sale ....................................................	384	139	79	20	19	641
- disposal groups ....................................................	361	133	76	20	19	609
- non-current assets held for sale ...........................	23	6	3	−	−	32

Other assets ...............................................................	111	42	19	12	9	193
- endorsements and acceptances ............................	20	5	2	3	1	31
- other ...................................................................	91	37	17	9	8	162


	12,668	2,892	1,196	110	41	16,907

At 31 December 2013
Loans and advances to customers held at amortised cost ...........................................................................	11,689	2,587	1,057	76	51	15,460
- personal ..............................................................	7,170	2,124	865	16	-	10,175
- corporate and commercial ...................................	4,290	418	190	60	51	5,009
- financial (non-bank financial institutions) ...........	229	45	2	-	-	276

Loans and advances to banks held at amortised cost ...	11	-	-	-	-	11

Loans and advances ...................................................	11,700	2,587	1,057	76	51	15,471

Assets held for sale ....................................................	61	12	8	6	2	89
- disposal groups ....................................................	61	11	8	5	1	86
- non-current assets held for sale ...........................	-	1	-	1	1	3

Other assets ...............................................................	142	43	18	6	9	218
- endorsements and acceptances ............................	13	3	-	1	2	19
- other ...................................................................	129	40	18	5	7	199


	11,903	2,642	1,083	88	62	15,778

This information is provided by RNS

The company news service from the London Stock Exchange

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