14th Aug 2009 16:46
Footnotes to Financial Statements
1 The effect of the bonus element within the rights issue has been included within the calculation of basic and diluted earnings per share for the period, through an adjustment to the weighted average number of ordinary and dilutive potential ordinary shares outstanding. Comparative data has been restated on this basis.
2 Adjustment to bring changes between opening and closing balance sheet amounts to average rates. This is not done on a line-by-line basis, as details cannot be determined without unreasonable expense.
3 Share premium includes the deduction of US$1 million (30 June 2008: US$1 million; 31 December 2008; US$2 million) in respect of issue costs incurred during the period.
4 Retained earnings include 180,429,757 (US$2,429 million) of own shares held within HSBC's insurance business, retirement funds for the benefit of policyholders or beneficiaries within employee trusts for the settlement of shares expected to be delivered under employee share schemes or bonus plans, and the market-making activities in Global Markets (30 June 2008; 187,083,746 (US$3,235 million): 31 December 2008; 194,751,829 (US$3,094 million)).
5 Amounts transferred to the income statement in respect of cash flow hedges include US$284 million loss (30 June 2008; US$172 million income: 31 December 2008; US$152 million loss) taken to 'Net interest income' and US$567 million (30 June 2008; US$962 million: 31 December 2008; US$1,602 million) taken to 'Net trading income'.
6 Statutory share premium relief under Section 131 of the Companies Act 1985 was taken in respect of the acquisition of HSBC Bank plc in 1992, HSBC France in 2000 and HSBC Finance Corporation in 2003 and the shares issued were recorded at their nominal value only. In HSBC's consolidated accounts the fair value differences of US$8,290 million in respect of HSBC France and US$12,768 million in respect of HSBC Finance Corporation were recognised in the merger reserve. At 31 December 2008, an amount of US$3,601 million was transferred from this reserve to retained earnings as a result of impairment in HSBC Holdings' investment in HSBC Overseas Holdings (UK) Limited. During 2009, pursuant to Section 131 of the Companies Act 1985, statutory share premium relief was taken in respect of the rights issue and US$15,649 million was recognised in the merger reserve. The merger reserve includes the deduction of US$611 million in respect of costs relating to the rights issue and excludes the loss of US$344 million on a forward foreign exchange contract associated with hedging the proceeds of the rights issue. For further details see Note 19 on the Financial Statements.
Cumulative goodwill amounting to US$5,138 million has been charged against reserves in respect of acquisitions of subsidiaries prior to 1 January 1998, including US$3,469 million charged against the merger reserve arising on the acquisition of HSBC Bank plc. The balance of US$1,669 million was charged against retained earnings.
7 During April 2008, HSBC Holdings issued US$2,200 million of Perpetual Subordinated Capital Securities ('Capital Securities') of which there were US$66 million of issuance costs, which are classified as equity under IFRSs. The Capital Securities are exchangeable at HSBC Holdings' option into non-cumulative dollar preference shares on any coupon payment date. Interest on the Capital Securities is paid quarterly and may be deferred at the discretion of HSBC Holdings. The Capital Securities may only be redeemed at the option of HSBC Holdings.
|
Note |
Page |
|
|
1 |
Basis of preparation |
207 |
|
2 |
Accounting policies |
209 |
|
3 |
Dividends |
210 |
|
4 |
Earnings per share |
210 |
|
5 |
Post-employment benefits |
211 |
|
6 |
Tax expense |
213 |
|
7 |
Trading assets |
214 |
|
8 |
Financial assets designated at fair value |
215 |
|
9 |
Derivatives |
217 |
|
10 |
Financial investments |
219 |
|
11 |
Non-current assets held for sale |
221 |
|
12 |
Trading liabilities |
222 |
|
Note |
Page |
|
|
13 |
Financial liabilities designated at fair value |
222 |
|
14 |
Maturity analysis of assets and liabilities |
223 |
|
15 |
Notes on the statement of cash flows |
224 |
|
16 |
Contingent liabilities, contractual commitments and guarantees |
225 |
|
17 |
Segmental analysis |
225 |
|
18 |
Goodwill impairment |
226 |
|
19 |
Rights issue |
227 |
|
20 |
Litigation |
229 |
|
21 |
Events after the balance sheet date |
231 |
|
22 |
Interim Report 2009 and statutory accounts |
231 |
1 Basis of preparation
(a) Compliance with International Financial Reporting Standards
The interim consolidated financial statements of HSBC have been prepared in accordance with IAS 34 'Interim Financial Reporting' ('IAS 34') as issued by the International Accounting Standards Board ('IASB') and as endorsed by the EU. In order to present fairly the financial position, financial performance and cash flows of the Group, as required by IAS 1 'Presentation of Financial Statements', and give a true and fair view of the assets, liabilities, financial position and profit or loss of the Group, as required by section 393 of the Companies Act 2006, HSBC has departed from the requirements of IAS 32 'Financial Instruments: Presentation' ('IAS 32') in so far as this standard requires the offer of rights by HSBC to its shareholders in March 2009 to be classified as a derivative financial liability. Further details of this departure including its financial effect are provided in Note 19. The Directors have concluded that the interim consolidated financial statements prepared on this basis present fairly, and give a true and fair view of, the Group's financial position, financial performance and cash flows.
The consolidated financial statements of HSBC at 31 December 2008 were prepared in accordance with International Financial Reporting Standards ('IFRSs') as issued by the IASB and as endorsed by the EU. EUߛendorsed 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 2008, there were no unendorsed standards effective for the year ended 31 December 2008 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 2008 were prepared in accordance with IFRSs as issued by the IASB.
At 30 June 2009, there were no unendorsed standards effective for the period ended 30 June 2009 affecting these interim consolidated financial statements, and there was no difference between IFRSs endorsed by the EU and IFRSs issued by the IASB in terms of their application to HSBC.
IFRSs comprise accounting standards issued by the IASB and its predecessor body as well as interpretations issued by the International Financial Reporting Interpretations Committee ('IFRIC') and its predecessor body.
During the period ended 30 June 2009, HSBC adopted the following significant standards and revisions to standards:
On 1 January 2009, HSBC adopted IFRS 8 'Operating Segments' ('IFRS 8'), which replaced IAS 14 'Operating Segments'. IFRS 8 requires an entity to disclose information about its segments which enables users to evaluate the nature and financial effects of its business activities and the economic environments in which it operates. HSBC's operating segments are organised into six geographical regions, Europe, Hong Kong, Rest of Asia-Pacific, Middle East, North America and Latin America. Because of the nature of the Group, HSBC's chief operating decision-maker regularly reviews operating activity on a number of bases, including by geography, by customer group, and by retail businesses and global businesses. HSBC's IFRS 8 operating segments were determined to be geographical segments because the chief operating decision-maker uses information on geographical segments in order to make decisions about allocating resources and assessing performance.
IFRS 8 requires segment financial information to be reported using the same measures reported to the chief operating decision-maker for the purpose of making decisions about allocating resources to the operating segments and assessing their performance. Information provided to the chief operating decision-maker of HSBC to make decisions about allocating resources and assessing performance of operating segments is measured in accordance with IFRSs.
On 1 January 2009, HSBC adopted the revised IAS 1 'Presentation of Financial Statements' ('IAS 1'). The revised standard aims to improve users' ability to analyse and compare information given in financial statements. The adoption of the revised standard has no effect on the results reported in HSBC's consolidated financial statements. It does, however, result in certain presentational changes in HSBC's financial statements, including:
the presentation of all items of income and expenditure in two financial statements, the 'Consolidated income statement' and the 'Consolidated statement of comprehensive income'; and
the presentation of the 'Consolidated statement of changes in equity' as a financial statement, which replaces the 'Equity' note on the financial statements.
During the period ended 30 June 2009, HSBC adopted a number of amendments to standards and interpretations which had an insignificant effect on the consolidated financial statements. These are described on pages 342 to 344 of the Annual Report and Accounts 2008.
(b) Comparative information
These interim consolidated financial statements include comparative information as required by IAS 34, the UK Disclosure and Transparency Rules and the Hong Kong listing rules.
(c) Use of estimates and assumptions
The preparation of financial information requires the use of estimates and assumptions about future conditions. The use of available information and the application of judgement are inherent in the formation of estimates; actual results in the future may differ from those reported. Management believes that HSBC's critical accounting policies where judgement is necessarily applied are those which relate to impairment of loans and advances, goodwill impairment, the valuation of financial instruments, the impairment of available-for-sale financial assets and deferred tax assets. These critical accounting policies are described on pages 61 to 66 of the Annual Report and Accounts 2008.
(d) Consolidation
The interim consolidated financial statements of HSBC comprise the financial statements of HSBC Holdings and its subsidiaries. The method adopted by HSBC to consolidate its subsidiaries is described on page 341 of the Annual Report and Accounts 2008.
(e) Future accounting developments
Standards and Interpretations issued by the IASB and endorsed by the EU
A revised IFRS 3 'Business Combinations' and an amended IAS 27 'Consolidated and Separate Financial Statements', were issued on 10 January 2008. The revisions and amendments to the standards apply prospectively to business combinations for which the acquisition date is on or after the beginning of the first annual financial reporting period beginning on or after 1 July 2009. The main changes under the standards are that:
acquisition-related costs are recognised as expenses in the income statement in the period they are incurred;
equity interests held prior to control being obtained are remeasured to fair value at the time control is obtained, and any gain or loss is recognised in the income statement;
changes in a parent's ownership interest in a subsidiary that do not result in a change of control are treated as transactions between equity holders and reported in equity; and
an option is available, on a transaction-by-transaction basis, to measure any non-controlling (previously referred to as minority) interests in the entity acquired either at fair value, or at the non-controlling interests' proportionate share of the net identifiable assets of the entity acquired.
The effect that the changes will have on HSBC's consolidated financial statements will depend on the incidence and timing of business combinations occurring on or after 1 January 2010.
Standards and Interpretations issued by the IASB but not endorsed by the EU
At 30 June 2009, a number of amendments to standards and interpretations, effective for these consolidated financial statements, had been issued by the IASB but not endorsed by the EU, none of which would have had a significant effect on HSBC's consolidated financial statements. These amendments include:
an amendment to IFRIC 9 and IAS 39 - 'Embedded Derivatives' was issued on 12 March 2009 and is effective for annual periods ending on or after 30 June 2009. The amendment clarifies the accounting treatment of embedded derivatives for entities that make use of the amendment to IAS 39 'Financial Instruments: Recognition and Measurement' and to IFRS 7 'Financial Instruments: Disclosures' - 'Reclassification of Financial Assets' (the 'Reclassification Amendment') which was adopted by HSBC during 2008. Adoption of the amendment will not have a significant effect on the consolidated financial statements; and
an amendment to IAS 39 and to IFRS 7 - 'Reclassification of Financial Assets - Effective Date and Transition' was issued on 27 November 2008. The amendment clarifies the effective date of the Reclassification Amendment which was adopted by HSBC during 2008. Adoption of the amendment will have no effect on the consolidated financial statements.
At 30 June 2009, a number of amendments to standards and interpretations, not yet effective for these consolidated financial statements, had been issued by the IASB but not endorsed by the EU. HSBC does not expect adoption of any of these amendments to have a significant effect on the consolidated financial statements.
(f) Changes in composition of the Group
Acquisition of PT Bank Ekonomi Raharja Tbk ('Bank Ekonomi')
In May 2009, HSBC completed the acquisition of 88.89 per cent of Bank Ekonomi, in Indonesia, for cash consideration of US$608 million. Following acquisition of the initial stake, HSBC was required under Indonesian law to make a mandatory tender offer for a further holding of up to 10.11 per cent. HSBC completed the mandatory tender offer in July 2009.
2 Accounting policies
The accounting policies adopted by HSBC for these interim consolidated financial statements are consistent with those described on pages 344 to 359 of the Annual Report and Accounts 2008, except as discussed in Note 1, Basis of preparation. The methods of computation applied by HSBC for these interim consolidated financial statements are consistent with those applied for the Annual Report and Accounts 2008.
3 Dividends
Dividends to shareholders of the parent company were as follows:
|
Half-year to |
|||||||||||||||||
|
30 June 2009 |
30 June 2008 |
31 December 2008 |
|||||||||||||||
|
Per share US$ |
Total US$m |
Settled in scrip US$m |
Per share US$ |
Total US$m |
Settled in scrip US$m |
Per share US$ |
Total US$m |
Settled in scrip US$m |
|||||||||
|
Dividends declared on ordinary shares |
|||||||||||||||||
|
In respect of previous year: |
|||||||||||||||||
|
- fourth interim dividend |
0.10 |
1,210 |
624 |
0.39 |
4,620 |
2,233 |
- |
- |
- |
||||||||
|
In respect of current year: |
|||||||||||||||||
|
- first interim dividend |
0.08 |
1,384 |
190 |
0.18 |
2,158 |
256 |
- |
- |
- |
||||||||
|
- second interim dividend |
- |
- |
- |
- |
- |
- |
0.18 |
2,166 |
727 |
||||||||
|
- third interim dividend |
- |
- |
- |
- |
- |
- |
0.18 |
2,175 |
380 |
||||||||
|
0.18 |
2,594 |
814 |
0.57 |
6,778 |
2,489 |
0.36 |
4,341 |
1,107 |
|||||||||
|
Quarterly dividends on preference shares classified as equity |
|||||||||||||||||
|
March dividend |
15.50 |
22 |
15.50 |
22 |
- |
- |
|||||||||||
|
June dividend |
15.50 |
23 |
15.50 |
23 |
- |
- |
|||||||||||
|
September dividend |
- |
- |
- |
- |
15.50 |
22 |
|||||||||||
|
December dividend |
- |
- |
- |
- |
15.50 |
23 |
|||||||||||
|
31.00 |
45 |
31.00 |
45 |
31.00 |
45 |
||||||||||||
|
Quarterly coupons on capital securities classified as equity |
|||||||||||||||||
|
July coupon |
- |
- |
0.541 |
47 |
|||||||||||||
|
October coupon |
- |
- |
0.508 |
45 |
|||||||||||||
|
January coupon |
0.508 |
44 |
- |
- |
|||||||||||||
|
April coupon |
0.508 |
45 |
- |
- |
|||||||||||||
|
1.016 |
89 |
1.049 |
92 |
||||||||||||||
The Directors have declared a second interim dividend in respect of the financial year ending 31 December 2009 of US$0.08 per ordinary share, a distribution of approximately US$1,386 million. The second interim dividend will be payable on 7 October 2009 to holders of ordinary shares on the Register at the close of business on 21 August 2009. Further details are contained in item 7 of Additional Information on page 243. No liability is recorded in the financial statements in respect of the second interim dividend for 2009.
On 15 July 2009, HSBC paid a further coupon on the Capital Securities of US$0.508 per security, a distribution of US$45 million. No liability is recorded in the balance sheet at 30 June 2009 in respect of this coupon payment.
4 Earnings per share
Basic earnings per ordinary share was calculated by dividing the profit attributable to ordinary shareholders of the parent company by the weighted average number of ordinary shares outstanding, excluding own shares held. Diluted earnings per ordinary share was calculated by dividing the basic earnings, which require no adjustment for the effects of dilutive potential ordinary shares, by the weighted average number of ordinary shares outstanding, excluding own shares held, plus the weighted average number of ordinary shares that would be issued on conversion of dilutive potential ordinary shares.
In April 2009, HSBC Holdings completed a rights issue, details of which are provided in Note 19. The effect of the bonus element included within the rights issue has been included within the calculation of basic and diluted earnings per share. The effect of the rights issue was to increase the weighted average number of ordinary shares by 3,359 million (first half of 2008: 1,732 million; second half of 2008: 1,754 million) and dilutive potential ordinary shares by 12 million (first half of 2008: 10 million; second half of 2008: 20 million).
Profit attributable to ordinary shareholders of the parent company
|
Half-year to |
|||||
|
30 June |
30 June |
31 December |
|||
|
2009 |
2008 |
2008 |
|||
|
US$m |
US$m |
US$m |
|||
|
Profit/(loss) attributable to shareholders of the parent company |
3,347 |
7,722 |
(1,994) |
||
|
Dividend payable on preference shares classified as equity |
(45) |
(45) |
(45) |
||
|
Coupon payable on capital securities classified as equity |
(89) |
- |
(92) |
||
|
Profit/(loss) attributable to ordinary shareholders of the parent company |
3,213 |
7,677 |
(2,131) |
||
Basic and diluted earnings per share
|
Half-year to 30 June 2009 |
Half-year to 30 June 2008 |
Half-year to 31 December 2008 |
|||||||||||||||
|
Profit US$m |
Number of shares (millions) |
Amount per share US$ |
Profit US$m |
Number of shares (millions) |
Amount per share US$ |
Loss US$m |
Number of shares (millions) |
Amount per share US$ |
|||||||||
|
Basic |
3,213 |
15,353 |
0.21 |
7,677 |
13,469 |
0.57 |
(2,131) |
13,640 |
(0.16) |
||||||||
|
Effect of dilutive potential ordinary shares |
52 |
79 |
155 |
||||||||||||||
|
Diluted |
3,213 |
15,405 |
0.21 |
7,677 |
13,548 |
0.57 |
(2,131) |
13,795 |
(0.15) |
||||||||
5 Post-employment benefits
Included within 'Employee compensation and benefits' are components of net periodic benefit cost related to HSBC's defined benefit pension plans and other post-employment benefits, as follows:
|
Half-year to |
|||||
|
30 June 2009 |
30 June 2008 |
2005 |
31 December 2008 |
||
|
US$m |
US$m |
US$m |
|||
|
Current service cost |
335 |
404 |
359 |
||
|
Interest cost |
711 |
928 |
830 |
||
|
Expected return on plan assets |
(647) |
(1,012) |
(908) |
||
|
Past service cost |
3 |
3 |
4 |
||
|
Gains on curtailments |
(53) |
(16) |
(35) |
||
|
(Gains)/losses on settlements |
- |
(73) |
6 |
||
|
Other gains |
(499) |
- |
- |
||
|
Net defined benefit cost |
(150) |
234 |
256 |
||
HSBC revalues its defined benefit post-employment plans each year at 31 December, in consultation with the plans' local actuaries. The assumptions underlying the calculations are used to determine the expected income statement charge for the year going forward.
The triennial valuation applicable to the HSBC Bank (UK) Pension Scheme as at 31 December 2008 is currently underway and is due to be completed no later than 31 March 2010.
At 30 June each year, HSBC revalues all plan assets to current market prices. HSBC also reviews the assumptions used to calculate the defined benefit obligations (the liabilities of the plans) and updates the carrying amount of the obligations if there have been significant changes as a consequence of changes in assumptions.
In the first half of 2009, there was a decrease in the average yields of high quality (AA rated or equivalent) debt instruments in the UK, together with a rise in inflation expectations. As a result, the defined benefit obligation for the HSBC Bank (UK) Pension Scheme increased by US$2,340 million in respect of changes to discount and inflation rate assumptions. For other plans, the average discount rates used generally increased after 31 December 2008 resulting in a decrease in the defined benefit obligations of US$382 million. All differences from changes in the assumptions used were recognised directly in equity as actuarial gains or losses.
The US$53 million curtailment gain reported in the above table results primarily from the reduction in the number of employees covered by three defined benefit plans as a result of restructuring.
The US$499 million other gains relate to an accounting benefit following a restructuring of the basis of delivery of death in service and ill health early retirement benefits to certain UK employees.
The discount rates used to calculate HSBC's obligations under its defined benefit pension and post-employment healthcare plans were as follows:
|
At 30 June 2009 |
At 30 June 2008 |
2005 |
At 31 December 2008 |
||
|
% |
% |
% |
|||
|
UK |
6.20 |
6.60 |
6.50 |
||
|
Hong Kong |
2.65 |
3.45 |
1.19 |
||
|
US |
6.50 |
7.05 |
6.05 |
||
|
Jersey |
6.20 |
6.50 |
6.50 |
||
|
Mexico |
8.50 |
8.50 |
8.10 |
||
|
Brazil |
11.25 |
10.75 |
10.75 |
||
|
France |
5.75 |
6.25 |
5.75 |
||
|
Canada |
6.50 |
6.00 |
7.19 |
||
|
Switzerland |
3.00 |
3.30 |
2.60 |
||
|
Germany |
5.75 |
6.25 |
5.75 |
The inflation rate used to calculate the HSBC Bank (UK) Pension Scheme obligation at 30 June 2009 was 3.6 per cent (30 June 2008: 4.0 per cent; 31 December 2008: 2.9 per cent). Rates of pay and pension increases were adjusted in line with this inflation assumption. There were no changes to other assumptions.
Actuarial gains and losses
|
Half-year to |
|||||
|
30 June 2009 |
30 June 2008 |
2005 |
31 December 2008 |
||
|
US$m |
US$m |
US$m |
|||
|
Experience gains/(losses) on plan liabilities |
42 |
(231) |
96 |
||
|
Experience losses on plan assets |
(1,620) |
(1,361) |
(2,966) |
||
|
Gains/(losses) from changes in actuarial assumptions |
(2,000) |
682 |
2,125 |
||
|
Other movements |
- |
- |
46 |
||
|
Total net actuarial losses |
(3,578) |
(910) |
(699) |
||
Actuarial gains and losses comprise experience adjustments on plan assets and liabilities as well as adjustments arising from changes in actuarial assumptions. The experience gains and losses on plan assets arise as a result of the difference between the expected returns on the plan assets and the actual movement in the value of the plan assets during the period. The changes in actuarial assumptions arise as a result of changes in the plan assumptions, primarily discount rates and inflation rates, as previously described.
Total cumulative net actuarial losses recognised in equity at 30 June 2009 were US$4,639 million (30 June 2008: US$362 million cumulative losses; 31 December 2008: US$1,061 million cumulative losses).
As disclosed in 'Related party transactions' in the Annual Report and Accounts 2008, HSBC Bank (UK) Pension Scheme entered into collateralised swap transactions with HSBC to manage the inflation and interest rate sensitivity of the Scheme's pension obligations. At 30 June 2009, the swaps had a positive fair value of US$609 million to the scheme (30 June 2008: US$979 million positive to the scheme; 31 December 2008: US$1,779 million positive to the scheme). All swaps were executed at prevailing market rates and within standard market bid-offer spreads.
6 Tax expense
|
Half-year to |
|||||
|
30 June |
30 June |
31 December |
|||
|
2009 |
2008 |
2008 |
|||
|
US$m |
US$m |
US$m |
|||
|
Current tax |
|||||
|
UK corporation tax charge |
60 |
991 |
680 |
||
|
Overseas tax |
1,472 |
1,306 |
397 |
||
|
1,532 |
2,297 |
1,077 |
|||
|
Deferred tax |
|||||
|
Origination and reversal of temporary differences |
(246) |
(356) |
(209) |
||
|
Tax expense |
1,286 |
1,941 |
868 |
||
|
Effective tax rate |
25.6% |
18.9% |
(92.3)% |
||
The UK corporation tax rate applying to HSBC was 28 per cent (2008: 30 per cent to 1 April 2008 and 28 per cent thereafter). Overseas tax included Hong Kong profits tax of US$416 million (first half of 2008: US$529 million; second half of 2008: US$317 million). Subsidiaries in Hong Kong provided for Hong Kong profits tax at the rate of 16.5 per cent (2008: 16.5 per cent) on the profits for the period assessable in Hong Kong. Other overseas subsidiaries and overseas branches provided for taxation at the appropriate rates in the countries in which they operate. The following table reconciles the overall tax expense which would apply if all profits had been taxed at the UK corporation tax rate:
|
Half-year to |
|||||||||||
|
30 June 2009 |
30 June 2008 |
31 December 2008 |
|||||||||
|
US$m |
% |
US$m |
% |
US$m |
% |
||||||
|
Analysis of overall tax expense1 |
|||||||||||
|
Taxation at UK corporation tax rate of 28 per cent (2008: 28.5 per cent)2
|
1,405 |
28.0 |
2,920 |
28.5 |
(268) |
28.5 |
|||||
|
Goodwill impairment |
- |
- |
150 |
1.5 |
2,860 |
(304.1) |
|||||
|
Effect of taxing overseas profits in principal locations at different rates |
(598) |
(11.9) |
(560) |
(5.5) |
(779) |
82.9 |
|||||
|
Tax-free gains |
(34) |
(0.7) |
(267) |
(2.6) |
(749) |
79.7 |
|||||
|
Adjustments in respect of prior period liabilities |
(5) |
(0.1) |
2 |
- |
(69) |
7.3 |
|||||
|
Low income housing tax credits3
|
(49) |
(1.0) |
(51) |
|
(0.5) |
(52) |
5.5 |
||||
|
Effect of profit in associates and joint ventures |
(243) |
(4.8) |
(263) |
(2.6) |
(210) |
22.3 |
|||||
|
Effect of previously unrecognised temporary differences4
|
(60) |
(1.2) |
(80) |
(0.8) |
(18) |
1.9 |
|||||
|
Deferred tax temporary differences not provided |
852 |
17.0 |
- |
- |
225 |
(23.9) |
|||||
|
Other items |
18 |
0.3 |
90 |
0.9 |
(72) |
7.7 |
|||||
|
Overall tax expense |
1,286 |
25.6 |
1,941 |
18.9 |
868 |
(92.3) |
|||||
1 Interim period income tax expense is accrued using the estimated average annual effective income tax rates, which have been substantively enacted by 30 June 2009, and which will be applicable to expected total annual earnings.
2 The change in the UK corporation tax rate from 30 per cent to 28 per cent with effect from 1 April 2008 gave rise to a blended tax rate for 2008 of 28.5 per cent.
3 Low income housing tax credits are designed to encourage the provision of rental housing for low income households in the US.
4 The effect of previously unrecognised temporary differences principally relates to the recognition of trading losses.
In March 2009, the UK Government announced its intention to propose to Parliament that gains or losses on transactions designed to hedge foreign exchange exposures connected to rights issues should be disregarded for tax purposes. The tax expense would have increased by US$96 million if this legislation had been substantively enacted by 30 June 2009. It is expected that this legislation will be enacted by the end of 2009 and the tax charge for the full year will reflect this.
For the period ended 30 June 2009, HSBC's share of associates' tax on profit was US$203 million (30 June 2008: US$298 million; 31 December 2008: US$217 million), which is included within share of profit in associates and joint ventures in the income statement.
Of the total net deferred tax assets of US$7.9 billion at 30 June 2009 (30 June 2008: US$6.5 billion; 31 December 2008: US$7.0 billion), US$4.9 billion (30 June 2008: US$4.5 billion; 31 December 2008: US$5.0 billion) arose in respect of HSBC's US operations where there has been a recent history of losses. Management's analysis of the recognition of these deferred tax assets significantly discounts the income expected from future US operations and relies to a greater extent on continued liquidity and capital support to the US operations from HSBC, including tax planning strategies implemented in relation to such support. During the second quarter of 2009, HSBC decided to limit the level and duration of excess capital it expects to invest in its US operations as part of these tax planning strategies and, as a result, US$0.9 billion of the potential increase in the deferred tax assets up to 30 June 2009 has not been recognised. However, management's analysis continues to support the assumption that it is probable that there will be sufficient taxable income to utilise the deferred tax assets that have been recognised in respect of the US operations as at 30 June 2009.
7 Trading assets
|
At 30 June 2009 |
At 30 June 2008 |
At 31 December 2008 |
|||
|
US$m |
US$m |
US$m |
|||
|
Trading assets: |
|||||
|
- not subject to repledge or resale by counterparties |
313,641 |
319,672 |
340,675 |
||
|
- which may be repledged or resold by counterparties |
100,717 |
153,865 |
86,654 |
||
|
414,358 |
473,537 |
427,329 |
|||
|
Treasury and other eligible bills |
22,990 |
7,417 |
32,458 |
||
|
Debt securities |
190,870 |
191,482 |
199,619 |
||
|
Equity securities |
25,484 |
42,608 |
21,878 |
||
|
239,344 |
241,507 |
253,955 |
|||
|
Loans and advances to banks |
73,636 |
95,359 |
73,055 |
||
|
Loans and advances to customers |
101,378 |
136,671 |
100,319 |
||
|
414,358 |
473,537 |
427,329 |
Trading securities valued at fair value
|
At 30 June 2009 |
At 30 June 2008 |
At 31 December 2008 |
|||
|
US$m |
US$m |
US$m |
|||
|
US Treasury and US Government agencies1
|
22,586 |
17,851 |
26,621 |
||
|
UK Government |
8,936 |
7,620 |
10,586 |
||
|
Hong Kong Government |
6,637 |
5,001 |
6,648 |
||
|
Other government |
95,672 |
92,452 |
98,983 |
||
|
Asset-backed securities2
|
4,769 |
19,122 |
6,566 |
||
|
Corporate debt and other securities |
75,260 |
56,853 |
82,673 |
||
|
Equity securities |
25,484 |
42,608 |
21,878 |
||
|
239,344 |
241,507 |
253,955 |
1 Includes securities that are supported by an explicit guarantee issued by the US Government.
2 Excludes asset-backed securities included under US Treasury and US Government agencies.
Included within the above figures are debt securities issued by banks and other financial institutions of US$41,590 million (30 June 2008: US$61,528 million; 31 December 2008: US$49,997 million), of which US$4,129 million (30 June 2008: US$1,586 million; 31 December 2008: US$3,449 million) are guaranteed by various governments.
Trading securities listed on a recognised exchange and unlisted
|
Treasury and other eligible bills |
Debt securities |
Equity securities |
Total |
||||
|
US$m |
US$m |
US$m |
US$m |
||||
|
Fair value at 30 June 2009 |
|||||||
|
Listed on a recognised exchange1
|
50 |
146,939 |
24,798 |
171,787 |
|||
|
Unlisted |
22,940 |
43,931 |
686 |
67,557 |
|||
|
22,990 |
190,870 |
25,484 |
239,344 |
||||
|
Fair value at 30 June 2008 |
|||||||
|
Listed on a recognised exchange1
|
120 |
111,143 |
41,433 |
152,696 |
|||
|
Unlisted |
7,297 |
80,339 |
1,175 |
88,811 |
|||
|
7,417 |
191,482 |
42,608 |
241,507 |
||||
|
Fair value at 31 December 2008 |
|||||||
|
Listed on a recognised exchange1
|
1 |
145,370 |
20,871 |
166,242 |
|||
|
Unlisted |
32,457 |
54,249 |
1,007 |
87,713 |
|||
|
32,458 |
199,619 |
21,878 |
253,955 |
1 Included within listed securities are US$3,552 million (30 June 2008: US$4,217 million; 31 December 2008: US$3,870 million) of investments listed in Hong Kong.
Loans and advances to banks held for trading
|
At 30 June 2009 |
At 30 June 2008 |
At 31 December 2008 |
|||
|
US$m |
US$m |
US$m |
|||
|
Reverse repos |
42,085 |
76,487 |
48,188 |
||
|
Settlement accounts |
18,040 |
11,547 |
4,337 |
||
|
Stock borrowing |
2,017 |
3,400 |
1,888 |
||
|
Other |
11,494 |
3,925 |
18,642 |
||
|
73,636 |
95,359 |
73,055 |
Loans and advances to customers held for trading
|
At 30 June 2009 |
At 30 June 2008 |
At 31 December 2008 |
|||
|
US$m |
US$m |
US$m |
|||
|
Reverse repos |
47,168 |
59,083 |
58,285 |
||
|
Settlement accounts |
20,933 |
36,137 |
10,116 |
||
|
Stock borrowing |
18,778 |
25,829 |
13,740 |
||
|
Other |
14,499 |
15,622 |
18,178 |
||
|
101,378 |
136,671 |
100,319 |
8 Financial assets designated at fair value
|
At 30 June 2009 |
At 30 June 2008 |
At 31 December 2008 |
|||
|
US$m |
US$m |
US$m |
|||
|
Treasury and other eligible bills |
495 |
240 |
235 |
||
|
Debt securities |
19,825 |
23,356 |
16,349 |
||
|
Equity securities |
12,060 |
16,768 |
10,993 |
||
|
Securities designated at fair value |
32,380 |
40,364 |
27,577 |
||
|
Loans and advances to banks |
204 |
421 |
230 |
||
|
Loans and advances to customers |
777 |
1 |
726 |
||
|
33,361 |
40,786 |
28,533 |
Securities designated at fair value
|
At 30 June 2009 |
At 30 June 2008 |
At 31 December 2008 |
|||
|
US$m |
US$m |
US$m |
|||
|
US Treasury and US Government agencies1
|
88 |
334 |
93 |
||
|
UK Government |
4,995 |
683 |
992 |
||
|
Hong Kong Government |
244 |
353 |
284 |
||
|
Other government |
3,153 |
4,507 |
3,624 |
||
|
Asset-backed securities2
|
6,598 |
7,478 |
6,492 |
||
|
Corporate debt and other securities |
5,242 |
10,241 |
5,099 |
||
|
Equity securities |
12,060 |
16,768 |
10,993 |
||
|
32,380 |
40,364 |
27,577 |
1 Includes securities that are supported by an explicit guarantee issued by the US Government.
2 Excludes asset-backed securities included under US Treasury and US Government agencies.
Included within the above figures are debt securities issued by banks and other financial institutions of US$13,391 million (30 June 2008: US$14,255 million; 31 December 2008: US$10,351 million), of which US$47 million (30 June 2008: nil; 31 December 2008: US$14 million) are guaranteed by various governments.
|
Treasury and other eligible bills |
Debt securities |
Equity securities |
Total |
||||
|
US$m |
US$m |
US$m |
US$m |
||||
|
Fair value at 30 June 2009 |
|||||||
|
Listed on a recognised exchange1
|
69 |
7,126 |
8,684 |
15,879 |
|||
|
Unlisted |
426 |
12,699 |
3,376 |
16,501 |
|||
|
495 |
19,825 |
12,060 |
32,380 |
||||
|
Fair value at 30 June 2008 |
|||||||
|
Listed on a recognised exchange1
|
85 |
4,877 |
12,492 |
17,454 |
|||
|
Unlisted |
155 |
18,479 |
4,276 |
22,910 |
|||
|
240 |
23,356 |
16,768 |
40,364 |
||||
|
Fair value at 31 December 2008 |
|||||||
|
Listed on a recognised exchange1
|
80 |
3,490 |
8,140 |
11,710 |
|||
|
Unlisted |
155 |
12,859 |
2,853 |
15,867 |
|||
|
235 |
16,349 |
10,993 |
27,577 |
1 Included within listed securities are US$608 million (30 June 2008: US$1,201 million; 31 December 2008: US$576 million) of investments listed in Hong Kong.
9 Derivatives
Fair values of derivatives by product contract type
|
Assets |
Liabilities |
||||||||||
|
Trading |
Hedging |
Total |
Trading |
Hedging |
Total |
||||||
|
US$m |
US$m |
US$m |
US$m |
US$m |
US$m |
||||||
|
At 30 June 2009 |
|||||||||||
|
Foreign exchange |
66,117 |
1,408 |
67,525 |
61,436 |
303 |
61,739 |
|||||
|
Interest rate |
172,811 |
4,051 |
176,862 |
167,607 |
3,539 |
171,146 |
|||||
|
Equities |
17,216 |
- |
17,216 |
18,815 |
- |
18,815 |
|||||
|
Credit derivatives |
47,828 |
- |
47,828 |
45,775 |
- |
45,775 |
|||||
|
Commodity and other |
1,365 |
- |
1,365 |
1,401 |
- |
1,401 |
|||||
|
Total fair values |
305,337 |
5,459 |
310,796 |
295,034 |
3,842 |
298,876 |
|||||
|
At 30 June 2008 |
|||||||||||
|
Foreign exchange |
67,045 |
4,161 |
71,206 |
62,982 |
288 |
63,270 |
|||||
|
Interest rate |
117,874 |
2,466 |
120,340 |
116,985 |
2,656 |
119,641 |
|||||
|
Equities |
19,999 |
- |
19,999 |
19,385 |
- |
19,385 |
|||||
|
Credit derivatives |
46,090 |
- |
46,090 |
45,687 |
- |
45,687 |
|||||
|
Commodity and other |
3,029 |
- |
3,029 |
3,374 |
- |
3,374 |
|||||
|
Total fair values |
254,037 |
6,627 |
260,664 |
248,413 |
2,944 |
251,357 |
|||||
|
At 31 December 2008 |
|||||||||||
|
Foreign exchange |
115,803 |
2,010 |
117,813 |
115,311 |
826 |
116,137 |
|||||
|
Interest rate |
259,672 |
4,481 |
264,153 |
252,131 |
4,435 |
256,566 |
|||||
|
Equities |
18,660 |
- |
18,660 |
21,913 |
- |
21,913 |
|||||
|
Credit derivatives |
91,271 |
- |
91,271 |
89,715 |
- |
89,715 |
|||||
|
Commodity and other |
2,979 |
- |
2,979 |
2,729 |
- |
2,729 |
|||||
|
Total fair values |
488,385 |
6,491 |
494,876 |
481,799 |
5,261 |
487,060 |
|||||
The 37 per cent decrease in the fair value of derivative assets during the first half of 2009 was driven by steepening yield curves of major currencies and narrowing of credit spreads. The decrease in the notional contract amounts of HSBC's derivatives in the same period was only 4 per cent. However, IFRSs only permit netting of assets and liabilities with the same counterparty in very limited circumstances, even when there are contractually agreed netting arrangements in place.
A description of HSBC's determination of the fair values of financial instruments, including derivatives, is provided on pages 114 to 124.
Trading derivatives
The notional contract amounts of these instruments indicate the nominal value of transactions outstanding at the reporting date; they do not represent amounts at risk.
Notional contract amounts of derivatives held for trading purposes by product type
|
At 30 June 2009 |
At 30 June 2008 |
At 31 December 2008 |
|||
|
US$m |
US$m |
US$m |
|||
|
Foreign exchange |
2,849,035 |
3,704,399 |
3,045,017 |
||
|
Interest rate |
12,148,712 |
13,143,237 |
12,435,965 |
||
|
Equities |
226,043 |
343,343 |
221,053 |
||
|
Credit derivatives |
1,377,155 |
2,075,700 |
1,583,337 |
||
|
Commodity and other |
46,577 |
96,985 |
63,103 |
||
|
16,647,522 |
19,363,664 |
17,348,475 |
Credit derivatives
The notional contract amount of credit derivatives of US$1,377 billion (30 June 2008: US$2,076 billion; 31 December 2008: US$1,583 billion) consisted of protection bought of US$680 billion (30 June 2008: US$1,020 billion; 31 December 2008: US$778 billion) and protection sold of US$697 billion (30 June 2008: US$1,056 billion; 31 December 2008: US$806 billion).
The difference between the notional amounts bought and sold is attributable to HSBC selling protection on large, diversified, predominantly investment-grade portfolios (including the most senior tranches) and then offsetting risk on these positions by buying protection on the more subordinated tranches of the same portfolios. In addition, HSBC uses securities to mitigate risks on certain derivative positions and credit derivative contracts to reduce counterparty exposures. Consequently, while there is a mismatch in notional amounts of credit derivatives bought and sold, this should not be interpreted as representing the open risk position. The credit derivative business operates within the market risk management framework described on page 173.
Derivatives valued using models with unobservable inputs
The difference between the fair value at initial recognition (the transaction price) and the value that would have been derived had valuation techniques used for subsequent measurement been applied at initial recognition, less subsequent releases, is as follows.
|
Half-year to |
|||||
|
30 June 2009 |
30 June 2008 |
31 December 2008 |
|||
|
US$m |
US$m |
US$m |
|||
|
Unamortised balance at beginning of period |
204 |
306 |
278 |
||
|
Deferral on new transactions |
71 |
239 |
87 |
||
|
Recognised in the income statement during the period: |
|||||
|
- amortisation |
(44) |
(117) |
(51) |
||
|
- subsequent to unobservable inputs becoming observable |
(4) |
(85) |
(33) |
||
|
- maturity or termination, or offsetting derivative |
(19) |
(68) |
(31) |
||
|
Exchange differences |
10 |
5 |
(43) |
||
|
Risk hedged |
- |
(2) |
(3) |
||
|
Unamortised balance at end of period1
|
218 |
278 |
204 |
||
1 This amount is yet to be recognised in the consolidated income statement.
Hedging instruments
The notional contract amounts of these instruments indicate the nominal value of transactions outstanding at the balance sheet date; they do not represent amounts at risk.
Notional contract amounts of derivatives held for hedging purposes by product type
|
At 30 June 2009 |
At 30 June 2008 |
At 31 December 2008 |
|||||||||
|
Cash flow hedge |
Fair value hedge |
Cash flow hedge |
Fair value hedge |
Cash flow hedge |
Fair value hedge |
||||||
|
US$m |
US$m |
US$m |
US$m |
US$m |
US$m |
||||||
|
Foreign exchange |
12,943 |
2,453 |
16,518 |
3,190 |
14,931 |
2,602 |
|||||
|
Interest rate |
212,673 |
44,346 |
288,721 |
29,736 |
229,785 |
27,305 |
|||||
|
Equities |
- |
- |
- |
41 |
- |
- |
|||||
|
225,616 |
46,799 |
305,239 |
32,967 |
244,716 |
29,907 |
||||||
Fair value hedges
Fair value of derivatives designated as fair value hedges
|
At 30 June 2009 |
At 30 June 2008 |
At 31 December 2008 |
|||||||||
|
Assets |
Liabilities |
Assets |
Liabilities |
Assets |
Liabilities |
||||||
|
US$m |
US$m |
US$m |
US$m |
US$m |
US$m |
||||||
|
Foreign exchange |
263 |
- |
274 |
53 |
265 |
10 |
|||||
|
Interest rate |
300 |
926 |
338 |
346 |
574 |
1,257 |
|||||
|
563 |
926 |
612 |
399 |
839 |
1,267 |
||||||
Gains or losses arising from fair value hedges
|
Half-year to |
|||||
|
30 June 2009 |
30 June 2008 |
31 December 2008 |
|||
|
US$m |
US$m |
US$m |
|||
|
Gains/(losses): |
|||||
|
- on hedging instruments |
72 |
113 |
(409) |
||
|
- on the hedged items attributable to the hedged risk |
(75) |
(133) |
434 |
||
|
(3) |
(20) |
25 |
|||
The gains and losses on ineffective portions of fair value hedges are recognised immediately in 'Net trading income'.
Cash flow hedges
Fair value of derivatives designated as cash flow hedges
|
At 30 June 2009 |
At 30 June 2008 |
At 31 December 2008 |
|||||||||
|
Assets |
Liabilities |
Assets |
Liabilities |
Assets |
Liabilities |
||||||
|
US$m |
US$m |
US$m |
US$m |
US$m |
US$m |
||||||
|
Foreign exchange |
1,145 |
303 |
3,887 |
235 |
1,745 |
816 |
|||||
|
Interest rate |
3,751 |
2,613 |
2,128 |
2,310 |
3,907 |
3,178 |
|||||
|
4,896 |
2,916 |
6,015 |
2,545 |
5,652 |
3,994 |
||||||
The gains and losses on ineffective portions of such derivatives are recognised immediately in 'Net trading income'. During the period to 30 June 2009, a gain of US$33 million was recognised due to hedge ineffectiveness (first half of 2008: loss of US$15 million; second half of 2008: loss of US$25 million).
Hedges of net investments in foreign operations
At 30 June 2009, the fair values of outstanding financial instruments designated as hedges of net investments in foreign operations were liabilities of US$25 million (30 June 2008: liabilities of US$238 million; 31 December 2008: liabilities of US$52 million), and contract notional values of US$517 million (30 June 2008: US$238 million; 31 December 2008: US$161 million).
The ineffectiveness recognised in 'Net trading income' for the period ended 30 June 2009 was nil (first and second halves of 2008: nil).
10 Financial investments
|
At 30 June 2009 |
At 30 June 2008 |
At 31 December 2008 |
|||
|
US$m |
US$m |
US$m |
|||
|
Financial investments: |
|||||
|
- not subject to repledge or resale by counterparties |
346,877 |
270,098 |
287,479 |
||
|
- which may be repledged or resold by counterparties |
6,567 |
4,652 |
12,756 |
||
|
353,444 |
274,750 |
300,235 |
|
At 30 June 2009 |
At 30 June 2008 |
At 31 December 2008 |
|||||||||
|
Carrying amount |
Fair value |
Carrying amount |
Fair value |
Carrying amount |
Fair value |
||||||
|
US$m |
US$m |
US$m |
US$m |
US$m |
US$m |
||||||
|
Treasury and other eligible bills: |
|||||||||||
|
- available for sale |
54,262 |
54,262 |
27,928 |
27,928 |
41,027 |
41,027 |
|||||
|
Debt securities: |
290,382 |
290,663 |
237,341 |
237,477 |
251,957 |
253,001 |
|||||
|
- available for sale |
274,092 |
274,092 |
226,318 |
226,318 |
237,944 |
237,944 |
|||||
|
- held to maturity |
16,290 |
16,571 |
11,023 |
11,159 |
14,013 |
15,057 |
|||||
|
Equity securities: |
|||||||||||
|
- available for sale |
8,800 |
8,800 |
9,481 |
9,481 |
7,251 |
7,251 |
|||||
|
Total financial investments |
353,444 |
353,725 |
274,750 |
274,886 |
300,235 |
301,279 |
|||||
Financial investments at amortised cost and fair value
|
Amortised cost |
Fair value |
||
|
US$m |
US$m |
||
|
At 30 June 2009 |
|||
|
US Treasury |
20,936 |
20,963 |
|
|
US Government agencies1
|
14,105 |
14,266 |
|
|
US Government sponsored entities1
|
3,511 |
3,605 |
|
|
UK Government |
9,028 |
9,138 |
|
|
Hong Kong Government |
19,692 |
19,703 |
|
|
Other government |
76,048 |
76,720 |
|
|
Asset-backed securities2
|
52,242 |
33,131 |
|
|
Corporate debt and other securities |
168,644 |
167,399 |
|
|
Equities |
6,874 |
8,800 |
|
|
371,080 |
353,725 |
||
|
At 30 June 2008 |
|||
|
US Treasury |
7,197 |
7,195 |
|
|
US Government agencies1
|
6,646 |
6,630 |
|
|
US Government sponsored entities1
|
17,340 |
17,072 |
|
|
UK Government |
142 |
140 |
|
|
Hong Kong Government |
3,260 |
3,262 |
|
|
Other government |
60,806 |
60,485 |
|
|
Asset-backed securities2
|
61,321 |
52,695 |
|
|
Corporate debt and other securities |
119,355 |
117,926 |
|
|
Equities |
7,048 |
9,481 |
|
|
283,115 |
274,886 |
||
|
At 31 December 2008 |
|||
|
US Treasury |
11,528 |
11,755 |
|
|
US Government agencies1
|
8,131 |
8,307 |
|
|
US Government sponsored entities1
|
15,109 |
15,240 |
|
|
UK Government |
16,077 |
16,217 |
|
|
Hong Kong Government |
966 |
989 |
|
|
Other government |
60,755 |
61,528 |
|
|
Asset-backed securities2
|
55,685 |
36,052 |
|
|
Corporate debt and other securities |
145,269 |
143,940 |
|
|
Equities |
5,901 |
7,251 |
|
|
319,421 |
301,279 |
1 Includes securities that are supported by an explicit guarantee issued by the US Government.
2 Excludes asset-backed securities included under US Government agencies and sponsored entities.
Included within the above figures are debt securities issued by banks and other financial institutions of US$170,277 million (30 June 2008: US$135,576 million; 31 December 2008: US$140,878 million), of which US$70,398 million (30 June 2008: US$2,456 million; 31 December 2008: US$39,213 million) are guaranteed by various governments.
The fair value of the debt securities issued by banks and other financial instruments at 30 June 2009 was US$170,483 million (30 June 2008: US$135,477 million; 31 December 2008: US$141,526 million).
Financial investments listed on a recognised exchange and unlisted
|
Treasury and other eligible bills available for sale |
Debt securities available for sale |
Debt securities held to maturity |
Equity securities |
Total |
|||||
|
US$m |
US$m |
US$m |
US$m |
US$m |
|||||
|
Carrying amount at 30 June 2009 |
|||||||||
|
Listed on a recognised exchange |
7,834 |
134,312 |
2,143 |
712 |
145,001 |
||||
|
Unlisted |
46,428 |
139,780 |
14,147 |
8,088 |
208,443 |
||||
|
54,262 |
274,092 |
16,290 |
8,800 |
353,444 |
|||||
|
Carrying amount at 30 June 2008 |
|||||||||
|
Listed on a recognised exchange |
1,299 |
96,030 |
2,094 |
2,264 |
101,687 |
||||
|
Unlisted |
26,629 |
130,288 |
8,929 |
7,217 |
173,063 |
||||
|
27,928 |
226,318 |
11,023 |
9,481 |
274,750 |
|||||
|
Carrying amount at 31 December 2008 |
|||||||||
|
Listed on a recognised exchange |
3,539 |
108,972 |
2,332 |
471 |
115,314 |
||||
|
Unlisted |
37,488 |
128,972 |
11,681 |
6,780 |
184,921 |
||||
|
41,027 |
237,944 |
14,013 |
7,251 |
300,235 |
The fair value of listed held-to-maturity debt securities at 30 June 2009 was US$5,067 million (30 June 2008: US$4,696 million; 31 December 2008: US$4,926 million). Included within listed investments were US$1,481 million (30 June 2008: US$1,640 million; 31 December 2008: US$1,475 million) of investments listed in Hong Kong.
Maturities of investment securities at carrying amount
|
At 30 June 2009 |
At 30 June 2008 |
At 31 December 2008 |
|||
|
US$m |
US$m |
US$m |
|||
|
Remaining contractual maturities of total debt securities: |
|||||
|
- 1 year or less |
70,497 |
92,110 |
72,551 |
||
|
- 5 years or less but over 1 year |
140,343 |
64,692 |
93,824 |
||
|
- 10 years or less but over 5 years |
28,412 |
20,316 |
28,141 |
||
|
- over 10 years |
51,130 |
60,223 |
57,441 |
||
|
290,382 |
237,341 |
251,957 |
|||
|
Remaining contractual maturities of debt securities available for sale: |
|||||
|
- 1 year or less |
69,762 |
91,682 |
71,967 |
||
|
- 5 years or less but over 1 year |
134,976 |
62,157 |
89,931 |
||
|
- 10 years or less but over 5 years |
22,345 |
15,993 |
22,402 |
||
|
- over 10 years |
47,009 |
56,486 |
53,644 |
||
|
274,092 |
226,318 |
237,944 |
|||
|
Remaining contractual maturities of debt securities held to maturity: |
|||||
|
- 1 year or less |
735 |
428 |
584 |
||
|
- 5 years or less but over 1 year |
5,367 |
2,535 |
3,893 |
||
|
- 10 years or less but over 5 years |
6,067 |
4,323 |
5,739 |
||
|
- over 10 years |
4,121 |
3,737 |
3,797 |
||
|
16,290 |
11,023 |
14,013 |
11 Non-current assets held for sale
|
At 30 June 2009 |
At 30 June 2008 |
At 31 December 2008 |
|||
|
US$m |
US$m |
US$m |
|||
|
Interest in associates |
- |
2 |
2 |
||
|
Property, plant and equipment |
1,099 |
2,599 |
2,007 |
||
|
Investment properties |
1 |
118 |
2 |
||
|
Financial assets |
846 |
11,454 |
62 |
||
|
Other |
9 |
990 |
2 |
||
|
Total assets classified as held for sale |
1,955 |
15,163 |
2,075 |
Property, plant and equipment
Property, plant and equipment classified as held for sale results from the repossession of property that had been pledged as collateral by customers. These assets are expected to be disposed of within 12 months of acquisition. Neither a gain nor a loss was recognised on reclassifying these assets as held for sale. The majority arose within the geographical segment, North America.
During the third quarter of 2008, 8 Canada Square was reclassified out of non-current assets held for sale as described on page 414 of the Annual Report and Accounts 2008.
Financial assets
At 30 June 2009, financial assets classified as held for sale of US$805 million consisted of vehicle finance loans. Neither a gain nor a loss was recognised on reclassifying these assets as held for sale. These assets are presented in the geographical segment, North America.
12 Trading liabilities
|
At 30 June 2009 |
At 30 June 2008 |
At 31 December 2008 |
|||
|
US$m |
US$m |
US$m |
|||
|
Deposits by banks |
44,036 |
45,091 |
36,537 |
||
|
Customer accounts |
116,227 |
147,000 |
113,053 |
||
|
Other debt securities in issue |
30,746 |
44,363 |
31,288 |
||
|
Other liabilities - net short positions |
73,553 |
104,157 |
66,774 |
||
|
264,562 |
340,611 |
247,652 |
At 30 June 2009, the cumulative amount of change in fair value attributable to changes in credit risk was a gain of US$415 million (30 June 2008: gain of US$300 million; 31 December 2008: gain of US$563 million).
13 Financial liabilities designated at fair value
|
At 30 June 2009 |
At 30 June 2008 |
At 31 December 2008 |
|||
|
US$m |
US$m |
US$m |
|||
|
Deposits by banks and customer accounts |
6,535 |
7,306 |
6,618 |
||
|
Liabilities to customers under investment contracts |
9,485 |
15,407 |
9,283 |
||
|
Debt securities in issue |
34,576 |
39,704 |
34,969 |
||
|
Subordinated liabilities |
23,416 |
22,706 |
20,316 |
||
|
Preference shares |
3,302 |
4,635 |
3,401 |
||
|
77,314 |
89,758 |
74,587 |
The carrying amount at 30 June 2009 of financial liabilities designated at fair value was US$2,777 million less than the contractual amount at maturity (30 June 2008: US$2,397 million less; 31 December 2008: US$1,851 million less). At 30 June 2009, the cumulative amount of the change in fair value attributable to changes in credit risk was a gain of US$5,451 million (30 June 2008: gain of US$2,443 million; 31 December 2008: gain of US$7,978 million).
14 Maturity analysis of assets and liabilities
The following is an analysis, by remaining contractual maturities at the reporting date, of asset and liability line items that represent amounts expected to be recovered or settled within one year, and after one year.
Trading assets and liabilities are excluded because they are not held for collection or settlement over the period of contractual maturity.
|
Due within one year |
Due after more than one year |
Total |
|||
|
US$m |
US$m |
US$m |
|||
|
At 30 June 2009 |
|||||
|
Assets |
|||||
|
Financial assets designated at fair value |
3,953 |
29,408 |
33,361 |
||
|
Loans and advances to banks |
172,881 |
9,385 |
182,266 |
||
|
Loans and advances to customers |
399,211 |
525,472 |
924,683 |
||
|
Financial investments |
123,481 |
229,963 |
353,444 |
||
|
Other financial assets |
23,041 |
6,537 |
29,578 |
||
|
722,567 |
800,765 |
1,523,332 |
|||
|
Liabilities |
|||||
|
Deposits by banks |
116,379 |
12,772 |
129,151 |
||
|
Customer accounts |
1,123,792 |
39,551 |
1,163,343 |
||
|
Financial liabilities designated at fair value |
5,540 |
71,774 |
77,314 |
||
|
Debt securities in issue |
87,564 |
68,635 |
156,199 |
||
|
Other financial liabilities |
69,204 |
3,463 |
72,667 |
||
|
Subordinated liabilities |
392 |
29,742 |
30,134 |
||
|
1,402,871 |
225,937 |
1,628,808 |
|
At 30 June 2008 |
|||||
|
Assets |
|||||
|
Financial assets designated at fair value |
8,590 |
32,196 |
40,786 |
||
|
Loans and advances to banks |
245,718 |
11,263 |
256,981 |
||
|
Loans and advances to customers |
495,856 |
553,344 |
1,049,200 |
||
|
Financial investments |
99,446 |
175,304 |
274,750 |
||
|
Other financial assets |
28,723 |
6,436 |
35,159 |
||
|
878,333 |
778,543 |
1,656,876 |
|||
|
Liabilities |
|||||
|
Deposits by banks |
145,597 |
8,555 |
154,152 |
||
|
Customer accounts |
1,128,991 |
32,932 |
1,161,923 |
||
|
Financial liabilities designated at fair value |
6,350 |
83,408 |
89,758 |
||
|
Debt securities in issue |
134,198 |
96,069 |
230,267 |
||
|
Other financial liabilities |
35,301 |
5,039 |
40,340 |
||
|
Subordinated liabilities |
1,333 |
30,184 |
31,517 |
||
|
1,451,770 |
256,187 |
1,707,957 |
|
At 31 December 2008 |
|||||
|
Assets |
|||||
|
Financial assets designated at fair value |
4,735 |
23,798 |
28,533 |
||
|
Loans and advances to banks |
146,268 |
7,498 |
153,766 |
||
|
Loans and advances to customers |
407,582 |
525,286 |
932,868 |
||
|
Financial investments |
111,027 |
189,208 |
300,235 |
||
|
Other financial assets |
27,642 |
6,308 |
33,950 |
||
|
697,254 |
752,098 |
1,449,352 |
|||
|
Liabilities |
|||||
|
Deposits by banks |
123,835 |
6,249 |
130,084 |
||
|
Customer accounts |
1,083,426 |
31,901 |
1,115,327 |
||
|
Financial liabilities designated at fair value |
7,368 |
67,219 |
74,587 |
||
|
Debt securities in issue |
107,094 |
72,599 |
179,693 |
||
|
Other financial liabilities |
70,898 |
4,860 |
75,758 |
||
|
Subordinated liabilities |
745 |
28,688 |
29,433 |
||
|
1,393,366 |
211,516 |
1,604,882 |
Related Shares:
HSBC Holdings