14th Aug 2009 16:36
Geographical regions
Summary
In the analysis of profit and loss by geographical region that follows, operating income and operating expenses include intraߛHSBC items of US$1,347 million (first half of 2008: US$1,169 million; second half of 2008: US$1,323 million).
Profit/(loss) before tax
|
Half-year to |
|||||||||||
|
30 June 2009 |
30 June 2008 |
31 December 2008 |
|||||||||
|
US$m |
% |
US$m |
% |
US$m |
% |
||||||
|
Europe |
2,976 |
59.3 |
5,177 |
50.5 |
5,692 |
605.5 |
|||||
|
Hong Kong |
2,501 |
49.8 |
3,073 |
30.0 |
2,388 |
254.1 |
|||||
|
Rest of Asia-Pacific17 |
2,022 |
40.3 |
2,634 |
25.7 |
2,088 |
222.1 |
|||||
|
Middle East17 |
643 |
12.8 |
990 |
9.7 |
756 |
80.4 |
|||||
|
North America |
(3,703) |
(73.8) |
(2,893) |
(28.2) |
(12,635) |
(1,344.1) |
|||||
|
Latin America |
580 |
11.6 |
1,266 |
12.3 |
771 |
82.0 |
|||||
|
|
|||||||||||
|
5,019 |
100.0 |
10,247 |
100.0 |
(940) |
(100.0) |
||||||
Total assets23
|
At 30 June 2009 |
At 30 June 2008 |
At 31 December 2008 |
|||||||||
|
US$m |
|
% |
US$m |
% |
US$m |
% |
|||||
|
Europe |
1,324,687 |
54.7 |
1,384,022 |
54.3 |
1,392,049 |
55.1 |
|||||
|
Hong Kong |
413,107 |
17.1 |
371,584 |
14.6 |
414,484 |
16.4 |
|||||
|
Rest of Asia-Pacific17 |
217,794 |
9.0 |
239,224 |
9.4 |
225,573 |
8.9 |
|||||
|
Middle East17 |
48,601 |
2.0 |
51,777 |
2.0 |
50,952 |
2.0 |
|||||
|
North America |
494,778 |
20.4 |
568,114 |
22.3 |
596,302 |
23.6 |
|||||
|
Latin America |
107,515 |
4.4 |
122,009 |
4.8 |
102,946 |
4.1 |
|||||
|
Intra-HSBC items |
(184,639) |
(7.6) |
(190,052) |
(7.5) |
(254,841) |
(10.1) |
|||||
|
2,421,843 |
100.0 |
2,546,678 |
100.0 |
2,527,465 |
100.0 |
||||||
For footnotes, see page 94.
Europe
Profit/(loss) before tax by country within customer groups and global businesses
|
Personal Financial Services US$m |
Commercial Banking US$m |
Global Banking and Markets US$m |
Private Banking US$m |
Other US$m |
Total US$m |
||||||
|
Half-year to 30 June 2009 |
|||||||||||
|
UK |
205 |
688 |
1,853 |
124 |
(1,214) |
1,656 |
|||||
|
France30 |
26 |
51 |
661 |
1 |
(219) |
520 |
|||||
|
Germany |
- |
17 |
129 |
8 |
(4) |
150 |
|||||
|
Malta |
13 |
29 |
5 |
- |
- |
47 |
|||||
|
Switzerland |
- |
- |
- |
233 |
- |
233 |
|||||
|
Turkey |
21 |
54 |
87 |
1 |
- |
163 |
|||||
|
Other |
(53) |
13 |
156 |
80 |
11 |
207 |
|||||
|
212 |
852 |
2,891 |
447 |
(1,426) |
2,976 |
||||||
|
Half-year to 30 June 2008 |
|||||||||||
|
UK |
1,164 |
1,656 |
329 |
162 |
168 |
3,479 |
|||||
|
France30 |
122 |
151 |
492 |
14 |
(70) |
709 |
|||||
|
Germany |
- |
21 |
122 |
20 |
(8) |
155 |
|||||
|
Malta |
26 |
33 |
12 |
- |
- |
71 |
|||||
|
Switzerland |
- |
- |
- |
335 |
- |
335 |
|||||
|
Turkey |
19 |
51 |
56 |
- |
- |
126 |
|||||
|
Other |
(7) |
28 |
179 |
48 |
54 |
302 |
|||||
|
1,324 |
1,940 |
1,190 |
579 |
144 |
5,177 |
||||||
|
Personal Financial Services US$m |
Commercial Banking US$m |
Global Banking and Markets US$m |
Private Banking US$m |
Other US$m |
Total US$m |
||||||
|
Half-year to 31 December 2008 |
|||||||||||
|
UK |
382 |
705 |
(798) |
88 |
2,829 |
3,206 |
|||||
|
France30
|
17 |
25 |
(219) |
(4) |
2,312 |
2,131 |
|||||
|
Germany |
- |
10 |
62 |
12 |
(14) |
70 |
|||||
|
Malta |
33 |
34 |
4 |
- |
- |
71 |
|||||
|
Switzerland |
- |
- |
- |
218 |
- |
218 |
|||||
|
Turkey |
(16) |
40 |
74 |
- |
- |
98 |
|||||
|
Other |
(82) |
(32) |
(118) |
105 |
25 |
(102) |
|||||
|
334 |
782 |
(995) |
419 |
5,152 |
5,692 |
For footnote, see page 94.
Loans and advances to customers (net) by country
|
At 30 June 2009 US$m |
At 30 June 2008 US$m |
At 31 December 2008 US$m |
|||
|
UK |
342,153 |
380,051 |
313,065 |
||
|
France30 |
77,096 |
78,376 |
70,896 |
||
|
Germany |
5,201 |
7,638 |
5,756 |
||
|
Malta |
4,480 |
4,684 |
4,343 |
||
|
Switzerland |
9,566 |
14,829 |
12,708 |
||
|
Turkey |
5,586 |
8,127 |
6,125 |
||
|
Other |
13,008 |
15,255 |
13,298 |
||
|
457,090 |
508,960 |
426,191 |
Customer accounts by country
|
At 30 June 2009 US$m |
At 30 June 2008 US$m |
At 31 December 2008 US$m |
|||
|
UK |
371,675 |
413,593 |
351,253 |
||
|
France30 |
85,899 |
60,281 |
74,826 |
||
|
Germany |
10,007 |
11,054 |
11,611 |
||
|
Malta |
5,646 |
6,292 |
5,604 |
||
|
Switzerland |
41,122 |
42,125 |
44,643 |
||
|
Turkey |
5,394 |
7,090 |
5,845 |
||
|
Other |
9,982 |
9,205 |
8,694 |
||
|
529,725 |
549,640 |
502,476 |
For footnote, see page 94.
Economic briefing
The UK economy contracted sharply during the first half of 2009, with much of this weakness concentrated in the early months of the year and the second quarter bringing some evidence of a stabilisation of economic conditions. Gross Domestic Product ('GDP') fell by 5.3 per cent below the comparable period in 2008, the sharpest contraction on record. Labour market conditions continued to deteriorate with the unemployment rate rising to a twelve-year high of 7.6 per cent in May 2009. Indicators of housing market activity improved only marginally from very subdued levels, although some monthly increases in house prices were recorded during the second quarter of 2009. After reducing interest rates to just 0.5 per cent in March 2009, the Bank of England launched the Asset Purchase Facility in an attempt to improve the circulation of credit across the economy and encourage confidence in future economic activity. Consumer Price Index ('CPI') inflation moderated throughout the first half of the year, falling from 3.0 per cent in January 2009 to 1.8 per cent in June, below the Bank of England's 2 per cent target.
The eurozone economies performed poorly during the first half of 2009. As in the UK, first
Profit before tax
|
Half-year to |
|||||
|
Europe |
30 June 2009 US$m |
30 June 2008 US$m |
31 December 2008 US$m |
||
|
Net interest income |
5,978 |
4,475 |
5,221 |
||
|
Net fee income |
2,843 |
4,223 |
3,269 |
||
|
Net trading income |
3,429 |
3,649 |
1,708 |
||
|
Changes in fair value of long-term debt issued and related derivatives |
(788) |
207 |
2,732 |
||
|
Net income/(expense) from other financial instruments designated at fair value |
212 |
(866) |
(960) |
||
|
Net income/(expense) from financial instruments designated at fair value |
(576) |
(659) |
1,772 |
||
|
Gains less losses from financial investments |
(60) |
608 |
(190) |
||
|
Dividend income |
13 |
20 |
110 |
||
|
Net earned insurance premiums |
2,134 |
2,286 |
3,013 |
||
|
Gains on disposal of French regional banks |
- |
- |
2,445 |
||
|
Other operating income |
976 |
1,427 |
669 |
||
|
Total operating income |
14,737 |
16,029 |
18,017 |
||
|
Net insurance claims incurred and movement in liabilities to policyholders |
(2,383) |
(1,388) |
(1,979) |
||
|
Net operating income before loan impairment charges and other credit risk provisions |
12,354 |
14,641 |
16,038 |
||
|
Loan impairment charges and other credit risk provisions |
(2,813) |
(1,272) |
(2,482) |
||
|
Net operating income |
9,541 |
13,369 |
13,556 |
||
|
Total operating expenses |
(6,587) |
(8,193) |
(7,879) |
||
|
Operating profit |
2,954 |
5,176 |
5,677 |
||
|
Share of profit in associates and joint ventures |
22 |
1 |
15 |
||
|
Profit before tax |
2,976 |
5,177 |
5,692 |
||
|
% |
% |
% |
|||
|
Share of HSBC's profit before tax |
59.3 |
50.5 |
605.5 |
||
|
Cost efficiency ratio |
53.3 |
56.0 |
49.1 |
||
|
Period-end staff numbers (full-time equivalent) |
79,132 |
84,457 |
82,093 |
||
|
Balance sheet data23 |
|
||||
|
US$m |
US$m |
US$m |
|||
|
Loans and advances to customers (net) |
457,090 |
508,960 |
426,191 |
||
|
Loans and advances to banks (net) |
72,491 |
94,795 |
61,949 |
||
|
Trading assets, financial instruments designated at fair value and financial investments28
|
449,928 |
481,015 |
433,885 |
||
|
Total assets |
1,324,687 |
1,384,022 |
1,392,049 |
||
|
Deposits by banks |
87,159 |
112,081 |
80,847 |
||
|
Customer accounts |
529,725 |
549,640 |
502,476 |
For footnotes, see page 94.
The commentary on Europe is on an underlying basis unless stated otherwise.
quarter GDP fell by 4.9 per cent on the first quarter of 2008 with the broad range of economic data pointing to some stabilisation of conditions during the second quarter. Investment expenditure proved exceptionally weak, while consumer spending continued to contract as the unemployment rate increased to 9.5 per cent in May 2009 from 8.2 per cent in December 2008. The annual rate of consumer price inflation fell substantially during the period, moving from 1.6 per cent in December 2008 to minus 0.1 per cent in June 2009, the first negative reading since the eurozone's inception, although much of this decline reflected the earlier rise and then fall of energy prices. The European Central Bank cut interest rates by 150 basis points during the first half of the year, leaving the refi rate at a record low level of 1 per cent in June 2009.
In Turkey, first quarter GDP fell by 13.8 per cent on the comparable period in 2008, and substantial declines in industrial activity continued to be recorded during the second quarter of the year. Inflationary pressures eased within this weak economic environment as the annual rate of change in consumer prices fell from 10.1 per cent in December 2008 to 5.7 per cent in June 2009. The unemployment rate averaged 15.6 per cent during the first four months of 2009 compared with 11.1 per cent during the equivalent period in 2008. Negotiations over an IMF assistance programme are ongoing.
Review of business performance
Reconciliation of reported and underlying profit before tax
|
Half-year to 30 June 2009 ('1H09') compared with half-year to 30 June 2008 ('1H08') |
|||||||||||||||||
|
Europe |
1H08 as reported US$m |
1H08 acquisitionsand disposals US$m |
Currency translation2 US$m |
1H08at 1H09exchange rates3 US$m |
1H09 acquisitionsand disposals1 US$m |
Under- lying changeUS$m |
|
1H09 as reported US$m |
Re- ported change4 % |
|
Under- lying change4 % |
||||||
|
Net interest income |
4,475 |
(65) |
(866) |
3,544 |
- |
2,434 |
5,978 |
34 |
69 |
||||||||
|
Net fee income |
4,223 |
(58) |
(806) |
3,359 |
- |
(516) |
2,843 |
(33) |
(15) |
||||||||
|
Changes in fair value5 |
207 |
- |
39 |
246 |
- |
(1,034) |
(788) |
(481) |
(420) |
||||||||
|
Other income6 |
5,736 |
(514) |
(1,127) |
4,095 |
280 |
(54) |
4,321 |
(25) |
(1) |
||||||||
|
Net operating income7 |
14,641 |
(637) |
(2,760) |
11,244 |
280 |
830 |
12,354 |
(16) |
7 |
||||||||
|
Loan impairment charges and other credit risk provisions |
(1,272) |
6 |
276 |
(990) |
- |
(1,823) |
(2,813) |
(121) |
(184) |
||||||||
|
Net operating income |
13,369 |
(631) |
(2,484) |
10,254 |
280 |
(993) |
9,541 |
(29) |
(10) |
||||||||
|
Operating expenses |
(8,193) |
68 |
1,486 |
(6,639) |
- |
52 |
(6,587) |
20 |
1 |
||||||||
|
Operating profit |
5,176 |
(563) |
(998) |
3,615 |
280 |
(941) |
2,954 |
(43) |
(26) |
||||||||
|
Income from associates |
1 |
- |
- |
1 |
- |
21 |
22 |
2,100 |
2,100 |
||||||||
|
Profit before tax |
5,177 |
(563) |
(998) |
3,616 |
280 |
(920) |
2,976 |
(43) |
(25) |
||||||||
For footnotes, see page 94.
HSBC's European operations reported a pre-tax profit of US$3.0 billion, compared with US$5.2 billion in 2008, a decrease of 43 per cent. Within these figures was a negative fair value movement of US$836 million on the Group's own debt held at fair value as financial markets stabilised and credit spreads tightened in the first half of 2009. This movement compared with a gain in the first half of 2008 of US$434 million. As in previous years, HSBC does not regard this movement as part of operating performance. Results also benefited from a gain on the sale of the residual stake in the UK card-acquiring business to Global Payments Inc. of US$280 million in the first half of 2009 following the US$425 million gain realised in the comparable period in 2008 on the sale of the original holding. Adjusting for these gains on sale, the disposal of the French regional banks in July 2008 and the reversal of movements in the fair value of own debt, underlying pre-tax profits grew by US$311 million or 10 per cent. This was driven by a strong performance within Global Banking and Markets, with record revenues in Balance Sheet Management and Rates coupled with a significant fall in credit-related write-downs, partly offset by higher loan impairment charges reflecting the deterioration in the economic environment and increased impairments to assets in the available-for-sale portfolio.
Net interest income increased by 69 per cent, driven by significant growth in Balance Sheet Management revenues, which benefited from favourable positioning in expectation of interest rate cuts by central banks. The fall in interest rates also reduced the cost of funding trading activities, further boosting net interest income.
Mortgage balances increased, reflecting HSBC's continued efforts to support lending to core customers. During the first half of 2009, new mortgage sales in the UK amounted to 45 per cent of the £15 billion (US$25 billion) in new mortgage facilities made available to customers at the beginning of the year. Regionally, lending balances declined in line with reduced customer demand for credit and HSBC's diminished appetite for unsecured lending throughout the region. Lower funding costs, particularly in the personal sector, boosted income in cards, mortgages and personal loans. Given the volatility in the markets, and lack of liquidity, the pricing of commercial lending increased.
HSBC also benefited from an increase in customer accounts due to the strong flow of deposits gained during the market turmoil in the second half of 2008. However, both the Personal Financial Services and Commercial Banking businesses were adversely affected by interest rate cuts, which reduced liability spreads across the region. In Personal Financial Services, spreads were further constrained by competitive pressure to retain liability balances in the UK, and by further interest rate cap reductions on credit cards in Turkey.
Net fee income fell by 15 per cent. Card fees declined following the part disposal of the card-acquiring business to a joint venture in June 2008, and lower card utilisation which reduced transaction volumes. The relatively inactive markets resulted in lower mergers and acquisition fees, and the decline in global equity markets drove decreases in equity brokerage commissions in Private Banking and performance and management fees as the value of funds under management declined. As markets increasingly recognised the value of credit commitment and availability, HSBC generated higher underwriting fees as a result of increased debt originations in France and the UK.
Trading income increased by 19 per cent to US$3.4 billion, with a record performance in Rates and strong revenue generation in foreign exchange trading. Rates benefited from favourable positioning for falling interest rates and increased demand, while growth in foreign exchange earnings reflected market volatility. Trading income also benefited from credit spread contraction, which led to significantly lower credit write-downs on legacy positions and asset-backed securities portfolios than in the first half of 2008.
This increase in trading performance was partly offset by a loss on structured liabilities as credit spreads narrowed, compared with a gain last year, and a reduction in net interest income on trading activities due to the decline in interest rates (the compensating benefit is reported within 'Net interest income').
A net expense of US$576 million was incurred on financial instruments designated at fair value, primarily due to the fair value movements arising from the effect of narrowing credit spreads on certain fixed-rate long-term debt issued by HSBC, which partially reversed previous gains. This heading also encompasses movements in the fair value of assets held to meet liabilities under insurance and investment contracts in which, as equity markets recovered from declines sustained in the second half of 2008, gains were recorded. To the extent that investment gains are attributable to policyholders, the increase in the fair value of assets held to meet liabilities under unit-linked policies and insurance and investment contracts with discretionary participating features is offset by a corresponding increase in claims incurred and movement in liabilities to policyholders.
Gains less losses from financial investments were US$498 million lower than those arising in the first half of 2008 due to the non-recurrence of certain disposals in 2008, including the sale of MasterCard shares, realisations from private equity investments and the disposal of its remaining stake in the Hermitage Fund by Private Banking.
Excluding the reversal of movements in the fair value on own debt credit spreads, underlying pre-tax profit in Europe grew by US$311 million or 10 per cent, with a strong performance in Global Banking and Markets.
Net earned insurance premiums increased by 13 per cent. Premium income rose, mainly because of the non-recurrence of a significant re-insurance transaction in France in the first half of 2008 which passed insurance premiums to a third-party reinsurer. Excluding this transaction, premiums fell in the region. A reduction in premiums was driven by the withdrawal of the Guaranteed Income Bond from sale in the UK as the product was no longer commercially viable in the current economic environment. Sales in France were relatively unchanged despite a significant reduction in the distribution network following the disposal of the regional banks in July 2008.
Other operating income decreased by 9 per cent, with the non-recurrence of a favourable embedded value adjustment following HSBC's introduction of enhanced benefits to existing pension products in the first half of 2008 and reduced gains on the sale and leaseback of branches, partly offset by gains on the sale of properties in Private Banking.
Net insurance claims incurred and movement in liabilities to policyholders increased by US$1.2 billion as the allocation of investment returns to policyholders increased and net insurance premiums rose, in part due to the non-recurrence of the significant reinsurance transaction undertaken in France in 2008. In addition, an increase of US$105 million in claims reserving was required to reflect a higher incidence and severity of motor insurance claims with a standalone UK motor underwriter.
Loan impairment charges and other creditrisk provisions grew by US$1.8 billion to US$2.8 billion as the signs of stress observed at the end of 2008 continued into 2009 and economic conditions deteriorated across the region. Within Personal Financial Services and Commercial Banking, which in aggregate experienced a 63 per cent rise in loan impairments to US$1.6 billion, 85 per cent of the charge arose in the UK. Credit impairment charges in the personal sector in France remained low, reflecting the upmarket segmentation of the personal customer base.
Within the UK, the core residential mortgage portfolio continued to experience low impairment, in large part reflecting HSBC's continued focus on in-house origination and control. Stresses were more evident in the cards and other unsecured portfolios, and the secured portfolio of the consumer finance business, as unemployment rose and the ability to refinance existing debt reduced. In UK Commercial Banking, loan impairment charges rose from a low base of US$173 million to US$504 million, reflecting the general economic downturn with problems most evident in the property and retail distribution sectors. In Global Banking and Markets, impairment charges largely reflected HSBC's exposure to the financial and property sectors, as well as additional credit risk provisions from marking to market asset-backed debt securities held within the Group's available-for-sale portfolios on which cash flow impairment emerged in the period. Impairment booked on these exposures reflects mark-to-market losses which HSBC judges to be significantly in excess of the likely ultimate cash losses.
Outside the UK, higher loan impairment charges reflected deteriorating credit card and personal loan delinquency rates in Turkey, Greece and Central and Eastern Europe. Action taken to mitigate these trends included the strengthening of collection practices and systems, tightening unsecured lending origination criteria and the cessation of new monoline consumer finance lending. The decision was taken during the period to wind down the monoline consumer finance businesses in Hungary and Poland in line with Group strategic objectives.
Operating expenses were broadly in line with the first half of 2008. Staff costs were 5 per cent lower, notwithstanding a rise in Global Banking and Markets from performance-related pay, partly from an accounting gain of US$499 million following a change in the basis of delivering death-in-service, ill health and early retirement benefits for some UK employees.
Non-staff costs were 4 per cent higher as bank failures in the UK led to a US$52 million increase in the Financial Services Compensation Scheme levy. Higher rental charges following the sale and leaseback of properties in 2008 and increased network costs in support of business expansion in Turkey, Russia and Central and Eastern Europe were partly offset by lower advertising and marketing expenditure in response to difficult trading conditions and reduced customer demand.
Reconciliation of reported and underlying profit before tax
|
Half-year to 30 June 2009 ('1H09') compared with half-year to 31 December 2008 ('2H08') |
|||||||||||||||||
|
Europe |
2H08 as reported US$m |
2H08 acquisitions and disposals1 US$m |
Currency translation2 US$m |
2H08 at 1H09 exchange rates8 US$m |
1H09 acquisitions and disposals1 US$m |
Under- lying change US$m |
|
1H09 as reported US$m |
Re- ported change4 % |
|
Under - lying change4 % |
||||||
|
Net interest income |
5,221 |
- |
(580) |
4,641 |
- |
1,337 |
5,978 |
14 |
29 |
||||||||
|
Net fee income |
3,269 |
- |
(365) |
2,904 |
- |
(61) |
2,843 |
(13) |
(2) |
||||||||
|
Changes in fair value5 |
2,732 |
- |
(100) |
2,632 |
- |
(3,420) |
(788) |
(129) |
(130) |
||||||||
|
Other income6 |
4,816 |
(2,540) |
(404) |
1,872 |
280 |
2,169 |
4,321 |
(10) |
116 |
||||||||
|
Net operating income7
|
16,038 |
(2,540) |
(1,449) |
12,049 |
280 |
25 |
12,354 |
(23) |
- |
||||||||
|
Loan impairment charges and other credit risk provisions |
(2,482) |
- |
328 |
(2,154) |
- |
(659) |
(2,813) |
(13) |
(31) |
||||||||
|
Net operating income |
13,556 |
(2,540) |
(1,121) |
9,895 |
280 |
(634) |
9,541 |
(30) |
(6) |
||||||||
|
Operating expenses |
(7,879) |
- |
812 |
(7,067) |
- |
480 |
(6,587) |
16 |
7 |
||||||||
|
Operating profit |
5,677 |
(2,540) |
(309) |
2,828 |
280 |
(154) |
2,954 |
(48) |
(5) |
||||||||
|
Income from associates |
15 |
- |
(2) |
13 |
- |
9 |
22 |
47 |
69 |
||||||||
|
Profit before tax |
5,692 |
(2,540) |
(311) |
2,841 |
280 |
(145) |
2,976 |
(48) |
(5) |
||||||||
For footnotes, see page 94.
Analysis by customer group and global business
Profit/(loss) before tax
|
Half-year to 30 June 2009 |
|||||||||||||
|
Europe |
Personal Financial Services US$m |
Commercial Banking US$m |
Global Banking and Markets US$m |
Private Banking US$m |
Other US$m |
|
Inter- segment elimination29 US$m |
Total US$m |
|||||
|
Net interest income/ (expense) |
2,507 |
1,295 |
2,376 |
506 |
(265) |
(441) |
5,978 |
||||||
|
Net fee income |
875 |
789 |
706 |
438 |
35 |
- |
2,843 |
||||||
|
Trading income excluding net interest income |
78 |
4 |
1,678 |
72 |
167 |
- |
1,999 |
||||||
|
Net interest income on trading activities |
(1) |
7 |
966 |
9 |
8 |
441 |
1,430 |
||||||
|
Net trading income24 |
77 |
11 |
2,644 |
81 |
175 |
441 |
3,429 |
||||||
|
Changes in fair value of long-term debt issued and related derivatives |
- |
- |
- |
- |
(788) |
- |
(788) |
||||||
|
Net income/(expense) from other financial instruments designated at fair value |
170 |
5 |
358 |
- |
(321) |
- |
212 |
||||||
|
Net income/(expense) from financial instruments designated at fair value |
170 |
5 |
358 |
- |
(1,109) |
- |
(576) |
||||||
|
Gains less losses from financial investments |
5 |
2 |
(47) |
(2) |
(18) |
- |
(60) |
||||||
|
Dividend income |
- |
1 |
11 |
1 |
- |
- |
13 |
||||||
|
Net earned insurance premiums |
2,002 |
135 |
- |
- |
(3) |
- |
2,134 |
||||||
|
Other operating income |
89 |
323 |
303 |
26 |
162 |
73 |
976 |
||||||
|
Total operating income/ (expense) |
5,725 |
2,561 |
6,351 |
1,050 |
(1,023) |
73 |
14,737 |
||||||
|
Net insurance claims25 |
(2,249) |
(134) |
- |
- |
- |
- |
(2,383) |
||||||
|
Net operating income/ (expense)7 |
3,476 |
2,427 |
6,351 |
1,050 |
(1,023) |
73 |
12,354 |
||||||
|
Loan impairment charges and other credit risk provisions |
(982) |
(606) |
(1,212) |
(10) |
(3) |
- |
(2,813) |
||||||
|
Net operating income/ (expense) |
2,494 |
1,821 |
5,139 |
1,040 |
(1,026) |
73 |
9,541 |
||||||
|
Total operating expenses |
(2,283) |
(987) |
(2,251) |
(593) |
(400) |
(73) |
(6,587) |
||||||
|
Operating profit/(loss) |
211 |
834 |
2,888 |
447 |
(1,426) |
- |
2,954 |
||||||
|
Share of profit in associates and joint ventures |
1 |
18 |
3 |
- |
- |
- |
22 |
||||||
|
Profit/(loss) before tax |
212 |
852 |
2,891 |
447 |
(1,426) |
- |
2,976 |
||||||
|
% |
% |
% |
% |
% |
% |
||||||||
|
Share of HSBC's profit before tax |
4.2 |
17.0 |
57.6 |
8.9 |
(28.4) |
59.3 |
|||||||
|
Cost efficiency ratio |
65.7 |
40.7 |
35.4 |
56.5 |
(39.1) |
53.3 |
|||||||
|
Balance sheet data23 |
|||||||||||||
|
US$m |
US$m |
US$m |
US$m |
US$m |
US$m |
||||||||
|
Loans and advances to customers (net) |
143,886 |
89,788 |
198,290 |
23,774 |
1,352 |
457,090 |
|||||||
|
Total assets |
205,023 |
112,749 |
1,060,344 |
74,469 |
86,649 |
(214,547) |
1,324,687 |
||||||
|
Customer accounts |
166,295 |
95,132 |
208,792 |
59,503 |
3 |
529,725 |
|||||||
For footnotes, see page 94.
|
Half-year to 30 June 2008 |
|||||||||||||
|
Europe |
Personal Financial Services US$m |
Commercial Banking US$m |
Global Banking and Markets US$m |
Private Banking US$m |
Other US$m |
|
Inter- segment elimination29 US$m |
Total US$m |
|||||
|
Net interest income/ (expense) |
3,373 |
1,739 |
1,351 |
515 |
(156) |
(2,347) |
4,475 |
||||||
|
Net fee income |
1,479 |
1,134 |
999 |
559 |
52 |
- |
4,223 |
||||||
|
Trading income excluding net interest income |
34 |
18 |
1,362 |
106 |
33 |
- |
1,553 |
||||||
|
Net interest income/ (expense) on trading activities |
(1) |
20 |
(285) |
7 |
8 |
2,347 |
2,096 |
||||||
|
Net trading income24 |
33 |
38 |
1,077 |
113 |
41 |
2,347 |
3,649 |
||||||
|
Changes in fair value of long-term debt issued and related derivatives |
- |
- |
- |
- |
207 |
- |
207 |
||||||
|
Net income/(expense) from other financial instruments designated at fair value |
(761) |
(75) |
(218) |
- |
188 |
- |
(866) |
||||||
|
Net income/(expense) from financial instruments designated at fair value |
(761) |
(75) |
(218) |
- |
395 |
- |
(659) |
||||||
|
Gains less losses from financial investments |
182 |
140 |
190 |
78 |
18 |
- |
608 |
||||||
|
Dividend income |
1 |
2 |
11 |
4 |
2 |
- |
20 |
||||||
|
Net earned insurance premiums |
2,084 |
213 |
- |
- |
(11) |
- |
2,286 |
||||||
|
Other operating income |
252 |
581 |
362 |
4 |
251 |
(23) |
1,427 |
||||||
|
Total operating income |
6,643 |
3,772 |
3,772 |
1,273 |
592 |
(23) |
16,029 |
||||||
|
Net insurance claims24 |
(1,290) |
(98) |
- |
- |
- |
- |
(1,388) |
||||||
|
Net operating income7 |
5,353 |
3,674 |
3,772 |
1,273 |
592 |
(23) |
14,641 |
||||||
|
Loan impairment (charges)/ recoveries and other credit risk provisions |
(963) |
(285) |
(29) |
5 |
- |
- |
(1,272) |
||||||
|
Net operating income |
4,390 |
3,389 |
3,743 |
1,278 |
592 |
(23) |
13,369 |
||||||
|
Total operating expenses |
(3,065) |
(1,449) |
(2,554) |
(699) |
(449) |
23 |
(8,193) |
||||||
|
Operating profit |
1,325 |
1,940 |
1,189 |
579 |
143 |
- |
5,176 |
||||||
|
Share of profit/(loss) in associates and joint ventures |
(1) |
- |
1 |
- |
1 |
- |
1 |
||||||
|
Profit before tax |
1,324 |
1,940 |
1,190 |
579 |
144 |
- |
5,177 |
||||||
|
% |
% |
% |
% |
% |
% |
||||||||
|
Share of HSBC's profit before tax |
12.9 |
18.9 |
11.6 |
5.7 |
1.4 |
50.5 |
|||||||
|
Cost efficiency ratio |
57.3 |
39.4 |
67.7 |
54.9 |
75.8 |
56.0 |
|||||||
|
Balance sheet data23 |
|||||||||||||
|
US$m |
US$m |
US$m |
US$m |
US$m |
US$m |
||||||||
|
Loans and advances to customers (net) |
153,460 |
111,791 |
210,727 |
31,933 |
1,049 |
508,960 |
|||||||
|
Total assets |
219,433 |
138,494 |
1,100,421 |
94,321 |
65,122 |
(233,769) |
1,384,022 |
||||||
|
Customer accounts |
183,608 |
105,135 |
196,432 |
64,242 |
223 |
549,640 |
|||||||
For footnotes, see page 94.
Analysis by customer group and global business (continued)
Profit/(loss) before tax
|
Half-year to 31 December 2008 |
|||||||||||||
|
Europe |
Personal Financial Services US$m |
Commercial Banking US$m |
Global Banking and Markets US$m |
Private Banking US$m |
Other US$m |
|
Inter- segment elimination29 US$m |
Total US$m |
|||||
|
Net interest income/ (expense) |
3,091 |
1,696 |
2,137 |
531 |
(303) |
(1,931) |
5,221 |
||||||
|
Net fee income |
1,133 |
891 |
764 |
461 |
20 |
- |
3,269 |
||||||
|
Trading income/(expense) excluding net interest income |
13 |
53 |
151 |
92 |
(171) |
- |
138 |
||||||
|
Net interest income/ (expense) on trading activities |
1 |
(8) |
(370) |
7 |
9 |
1,931 |
1,570 |
||||||
|
Net trading income/ (expense)24 |
14 |
45 |
(219) |
99 |
(162) |
1,931 |
1,708 |
||||||
|
Changes in fair value of long-term debt issued and related derivatives |
- |
- |
- |
- |
2,732 |
- |
2,732 |
||||||
|
Net income/(expense) from other financial instruments designated at fair value |
(873) |
(139) |
(393) |
- |
445 |
- |
(960) |
||||||
|
Net income/(expense) from financial instruments designated at fair value |
(873) |
(139) |
(393) |
- |
3,177 |
- |
1,772 |
||||||
|
Gains less losses from financial investments |
99 |
(8) |
(220) |
(16) |
(45) |
- |
(190) |
||||||
|
Dividend income |
34 |
72 |
14 |
1 |
(11) |
- |
110 |
||||||
|
Net earned insurance premiums |
2,843 |
178 |
- |
- |
(8) |
- |
3,013 |
||||||
|
Gains on disposal of French regional banks |
- |
- |
- |
- |
2,445 |
2,445 |
|||||||
|
Other operating income/ (expense) |
(22) |
39 |
36 |
12 |
581 |
23 |
669 |
||||||
|
Total operating income |
6,319 |
2,774 |
2,119 |
1,088 |
5,694 |
23 |
18,017 |
||||||
|
Net insurance claims25 |
(1,934) |
(45) |
- |
- |
- |
- |
(1,979) |
||||||
|
Net operating income7 |
4,385 |
2,729 |
2,119 |
1,088 |
5,694 |
23 |
16,038 |
||||||
|
Loan impairment charges and other credit risk provisions |
(1,008) |
(582) |
(846) |
(43) |
(3) |
- |
(2,482) |
||||||
|
Net operating income |
3,377 |
2,147 |
1,273 |
1,045 |
5,691 |
23 |
13,556 |
||||||
|
Total operating expenses |
(3,042) |
(1,381) |
(2,269) |
(626) |
(538) |
(23) |
(7,879) |
||||||
|
Operating profit/(loss) |
335 |
766 |
(996) |
419 |
5,153 |
- |
5,677 |
||||||
|
Share of profit/(loss) in associates and joint ventures |
(1) |
16 |
1 |
- |
(1) |
- |
15 |
||||||
|
Profit/(loss) before tax |
334 |
782 |
(995) |
419 |
5,152 |
- |
5,692 |
||||||
|
% |
% |
% |
% |
% |
% |
||||||||
|
Share of HSBC's loss before tax |
35.5 |
83.2 |
(105.9) |
44.6 |
548.1 |
|
605.5 |
||||||
|
Cost efficiency ratio |
69.4 |
50.6 |
107.1 |
57.5 |
9.4 |
49.1 |
|||||||
|
Balance sheet data23 |
|||||||||||||
|
US$m |
US$m |
US$m |
US$m |
US$m |
US$m |
||||||||
|
Loans and advances to customers (net) |
126,909 |
87,245 |
185,818 |
25,722 |
497 |
426,191 |
|||||||
|
Total assets |
171,962 |
107,495 |
1,180,759 |
84,485 |
64,423 |
(217,075) |
1,392,049 |
||||||
|
Customer accounts |
145,411 |
91,188 |
199,687 |
66,007 |
183 |
502,476 |
|||||||
For footnotes, see page 94.
Hong Kong
Profit/(loss) before tax by customer group and global business
|
Half-year to |
|||||
|
30 June 2009 US$m |
30 June 2008 US$m |
31 December 2008 US$m |
|||
|
Personal Financial Services |
1,337 |
2,036 |
1,392 |
||
|
Commercial Banking |
424 |
869 |
446 |
||
|
Global Banking and Markets |
907 |
770 |
666 |
||
|
Private Banking |
106 |
123 |
114 |
||
|
Other |
(273) |
(725) |
(230) |
||
|
Profit before tax |
2,501 |
3,073 |
2,388 |
||
Profit before tax
|
Half-year to |
|||||
|
30 June 2009 US$m |
30 June 2008 US$m |
31 December 2008 US$m |
|||
|
Net interest income |
2,232 |
2,835 |
2,863 |
||
|
Net fee income |
1,200 |
1,469 |
1,111 |
||
|
Net trading income |
704 |
314 |
879 |
||
|
Changes in fair value of long-term debt and related derivatives |
(3) |
1 |
2 |
||
|
Net income/(expense) from other financial instruments designated at fair value |
348 |
(362) |
(832) |
||
|
Net income/(expense) from financial instruments designated at fair value |
345 |
(361) |
(830) |
||
|
Gains less losses from financial investments |
2 |
(98) |
(211) |
||
|
Dividend income |
14 |
20 |
21 |
||
|
Net earned insurance premiums |
1,838 |
1,650 |
1,597 |
||
|
Other operating income |
505 |
448 |
369 |
||
|
Total operating income |
6,840 |
6,277 |
5,799 |
||
|
Net insurance claims incurred and movement in liabilities to policyholders |
(2,126) |
(1,169) |
(753) |
||
|
Net operating income before loan impairment charges and other credit risk provisions |
4,714 |
5,108 |
5,046 |
||
|
Loan impairment charges and other credit risk provisions |
(273) |
(81) |
(684) |
||
|
Net operating income |
4,441 |
5,027 |
4,362 |
||
|
Total operating expenses |
(1,935) |
(1,975) |
(1,968) |
||
|
Operating profit |
2,506 |
3,052 |
2,394 |
||
|
Share of profit/(loss) in associates and joint ventures |
(5) |
21 |
(6) |
||
|
Profit before tax |
2,501 |
3,073 |
2,388 |
||
|
% |
% |
% |
|||
|
Share of HSBC's profit before tax |
49.8 |
30.0 |
254.1 |
||
|
Cost efficiency ratio |
41.0 |
38.7 |
39.0 |
||
|
Period-end staff numbers (full-time equivalent) |
28,259 |
29,467 |
29,330 |
||
|
Balance sheet data23 |
|||||
|
US$m |
US$m |
US$m |
|||
|
Loans and advances to customers (net) |
97,486 |
99,741 |
100,220 |
||
|
Loans and advances to banks (net) |
41,197 |
73,461 |
29,646 |
||
|
Trading assets, financial instruments designated at fair value, and financial investments |
135,916 |
78,735 |
122,602 |
||
|
Total assets |
413,107 |
371,584 |
414,484 |
||
|
Deposits by banks |
10,299 |
5,063 |
11,769 |
||
|
Customer accounts |
267,532 |
231,709 |
250,517 |
||
For footnote, see page 94.
The commentary on Hong Kong is on an underlying basis unless stated otherwise.
Economic briefing
Hong Kong's economy suffered a sharp contraction during the early months of 2009 as first quarter GDP fell by 7.8 per cent from the comparable period in 2008. Economic weakness proved widespread with significant declines in manufacturing activity, investment expenditure and external demand being registered. Labour market conditions continued to deteriorate, the unemployment rate rising from 4.1 per cent in December 2008 to 5.4 per cent in June 2009. Consumer price inflation continued to decline as the annual rate of change fell from 2.1 per cent in December 2008 to a reading of minus 0.9 per cent in June 2009, although this movement largely reflected trends in food and energy prices. Hong Kong maintained its base interest rate at 0.5 per cent during the first half of 2009. Asset prices proved volatile, with the Hang Seng Index first falling sharply before recovering strongly to register a 28 per cent gain during the period.
Review of business performance
Reconciliation of reported and underlying profit before tax
|
Half-year to 30 June 2009 ('1H09') compared with half-year to 30 June 2008 ('1H08') |
|||||||||||||||||
|
Hong Kong |
1H08 as reported US$m |
1H08 acquisitionsand disposals1 US$m |
Currency translation2 US$m |
1H08at 1H09exchange rates3 US$m |
1H09 acquisitionsand disposals1 US$m |
Under- lying change US$m |
|
1H09 as reported US$m |
Re- ported change4 % |
|
Under- lying change4 % |
||||||
|
Net interest income |
2,835 |
- |
13 |
2,848 |
- |
(616) |
2,232 |
(21) |
(22) |
||||||||
|
Net fee income |
1,469 |
- |
7 |
1,476 |
- |
(276) |
1,200 |
(18) |
(19) |
||||||||
|
Changes in fair value5
|
1 |
- |
- |
1 |
- |
(4) |
(3) |
(400) |
(400) |
||||||||
|
Other income6 |
803 |
- |
5 |
808 |
- |
477 |
1,285 |
60 |
59 |
||||||||
|
Net operating income7
|
5,108 |
- |
25 |
5,133 |
- |
(419) |
4,714 |
(8) |
(8) |
||||||||
|
Loan impairment charges and other credit risk provisions |
(81) |
- |
- |
(81) |
- |
(192) |
(273) |
(237) |
(237) |
||||||||
|
Net operating income |
5,027 |
- |
25 |
5,052 |
- |
(611) |
4,441 |
(12) |
(12) |
||||||||
|
Operating expenses |
(1,975) |
- |
(10) |
(1,985) |
- |
50 |
(1,935) |
2 |
3 |
||||||||
|
Operating profit |
3,052 |
- |
15 |
3,067 |
- |
(561) |
2,506 |
(18) |
(18) |
||||||||
|
Income from associates |
21 |
- |
- |
21 |
- |
(26) |
(5) |
(124) |
(124) |
||||||||
|
Profit before tax |
3,073 |
- |
15 |
3,088 |
- |
(587) |
2,501 |
(19) |
(19) |
||||||||
For footnotes, see page 94.
HSBC reported pre-tax profits in Hong Kong of US$2.5 billion, a 19 per cent decline compared with US$3.1 billion in the first half of 2008. HSBC remained one of the market leaders in deposits, mortgages and credit cards. The decrease in profits was largely due to lower revenue as a result of deposit spread compression and weakened investor sentiment, which led to declines in net interest income and net fee income, respectively. The loss of revenue was compounded by a rise, albeit from a low base, in loan impairment charges driven largely by the effects of falling trade activity on the Commercial Banking portfolio and rising delinquency in the personal lending portfolio. Operating costs were reduced to mitigate falling revenue. Global Banking and Markets delivered a strong performance in Rates and financing-related fees. In addition, deposit inflows were significant in the period, adding to the commercial surplus of deposits and contributing to the higher revenues generated from treasury activities within Balance Sheet Management.
Net interest income declined by 22 per cent, driven by significant deposit spread compression evident in Personal Financial Services and Commercial Banking. This was expected in the low interest rate environment and, during this period, HSBC continued to increase deposit balances and reprice customer loans to enhance lending margins and position itself for when the current economic downturn reverses.
Notwithstanding the decline in both GDP and trade activity, personal lending volumes rose, driven by targeted growth in mortgage lending. HSBC led the mortgage market with a combined 32 per cent market share on new loan drawdowns. Commercial lending declined, reflecting the reduction in trade activity, notwithstanding actions taken by HSBC to support local businesses in the difficult economic environment and provide access to funds. This included the SME Fund launched in 2008 to ensure small and medium-sized enterprises continued to have access to credit through the financial and economic crisis, which was trebled to HK$12 billion (and increased a further HK$4 billion in July). These facilities were 86 per cent utilised at 30 June 2009. HSBC's commitment to its SME customer base also included a two-month interest refund scheme introduced in June 2009 for customers who had suffered significant sales contraction, recognising that volumes of trade finance had declined significantly from the first half of 2008 due to reduced international and intra-regional trade.
Asset spreads improved due to active repricing on renewals to reflect current market pricing levels, while funding costs reduced due to the low interest rate environment.
Underlying pre-tax profits in Hong Kong fell by 19 per cent as deposit spreads narrowed and investment activity weakened.
Growth in savings and deposit balances continued, with increases across all customer groups, and by the end of May 2009 HSBC had further improved its market share compared with December 2008. Strong growth in the Commercial Banking segment was driven by a 12 per cent rise in customer numbers through a series of deposit acquisition campaigns launched in the first half of 2009. Liability spreads, however, remained under severe pressure in the first half of 2009 in the low interest rate environment.
In Global Banking and Markets, Balance Sheet Management and Credit and Lending reported increases in net interest income.
Net fee income was 19 per cent lower, as equity market-related revenues declined as customers reduced their risk tolerance, preferring deposit products to equities or structured products. This weaker market sentiment led to a decrease in income from retail brokerage, unit trusts, wealth management and other investment products. However, towards the end of the period there was an improvement in investor sentiment and, accordingly, equity-related products as the local equity market rebounded.
The contraction of trade flows in the region adversely affected commercial customers, and the effect on fees was in line with the decline in import and export volumes.
Net trading income more than doubled compared with the first half of 2008, in part from the non-recurrence of write-downs on legacy exposures within Global Banking and Markets. Additionally, income from Credit trading increased due to higher volumes of bond trading in institutional markets and increased margins on market-making activities.
Income of US$345 million was generated from financial instruments designated at fair value, compared with a net loss of US$361 million in the first half of 2008. This mostly related to the insurance business as asset values increased due to a modest recovery in equity market levels during the period. To the extent that these gains were attributed to policyholders, there was an equivalent increase in net insurance claims incurred and movement in liabilities to policyholders.
Net earned insurance premiums grew by 11 per cent to US$1.8 billion as sales, particularly those associated with traditional life products, increased. HSBC continued to maintain its leadership position with a combined 35 per cent share of the market for new individual life business in the first quarter.
Gains less losses from financial investments were US$2 million compared with a loss of US$98 million in the first half of 2008, mainly due to the non-recurrence of impairments against long-term equity investments in that period following declines in market valuations as regional equity markets fell. It is worth noting that the value of investments against which impairments of US$296 million were taken in the first half of 2008 as a result of significant market price declines, recovered by US$214 million in the first half of 2009, most notably in Vietnam. Under IFRSs, while impairments on non-trading equities are taken through the income statement, reversals are credited to reserves. In the first half of 2009, Global Banking and Markets recorded a net loss of US$76 million, mostly in respect of the write-down of certain unlisted investments. This was more than offset by gains of US$104 million on the sale of Visa shares, compared with gains of US$203 million from Visa and MasterCard shares in the first half of 2008.
Loan impairment charges increased from the first half of 2008's low level of US$81 million to US$273 million as the economic slowdown and trade downturn adversely affected credit conditions.
In Commercial Banking, loan impairment charges increased from a low base, reflecting a broad weakening in credit quality, particularly amongst exporters who were exposed to the slowdown in global trade. By the end of May, the values of Hong Kong's exports and imports had each declined by a fifth compared with the first five months of 2008.
The rising unemployment rate and an increase in bankruptcy petitions contributed to increased loan impairment charges against unsecured lending within Personal Financial Services. Credit policies were tightened to reduce risk where necessary. Property prices increased in the first half of 2009 and mortgage lending remained well secured with loan-to-value ratios on origination subject to tight regulatory restrictions.
Operating expenses were reduced by 3 per cent to US$1.9 billion in response to the adverse effect of market conditions on revenues. Management restricted non-staff costs, driving a 7 per cent decline. In particular, marketing costs were reduced as new campaigns were targeted carefully. IT costs rose due to higher utilisation of data services as processes were automated to improve productivity. A number of activities are performed at a central data centre in Hong Kong on behalf of other Group entities. Related recoveries are recorded in Other operating income. Staff costs were in line due to tight control of staff numbers.
Reconciliation of reported and underlying profit before tax
|
Half-year to 30 June 2009 ('1H09') compared with half-year to 31 December 2008 ('2H08') |
|||||||||||||||||
|
Hong Kong |
2H08 as reported US$m |
2H08 acquisitionsand disposals1 US$m |
Currency translation2 US$m |
2H08at 1H09 exchange rates8 US$m |
1H09 acquisitionsand disposals1 US$m |
Under- lying change US$m |
|
1H09 as reported US$m |
Re- ported change4 % |
|
Under- lying change4 % |
||||||
|
Net interest income |
2,863 |
- |
8 |
2,871 |
- |
(639) |
2,232 |
(22) |
(22) |
||||||||
|
Net fee income |
1,111 |
- |
3 |
1,114 |
- |
86 |
1,200 |
8 |
8 |
||||||||
|
Changes in fair value5 |
2 |
- |
- |
2 |
- |
(5) |
(3) |
(250) |
(250) |
||||||||
|
Other income6 |
1,070 |
- |
3 |
1,073 |
- |
212 |
1,285 |
20 |
20 |
||||||||
|
Net operating income7
|
5,046 |
- |
14 |
5,060 |
- |
(346) |
4,714 |
(7) |
(7) |
||||||||
|
Loan impairment charges and other credit risk provisions |
(684) |
- |
- |
(684) |
- |
411 |
(273) |
60 |
60 |
||||||||
|
Net operating income |
4,362 |
- |
14 |
4,376 |
- |
65 |
4,441 |
2 |
1 |
||||||||
|
Operating expenses |
(1,968) |
- |
(5) |
(1,973) |
- |
38 |
(1,935) |
2 |
2 |
||||||||
|
Operating profit |
2,394 |
- |
9 |
2,403 |
- |
103 |
2,506 |
5 |
4 |
||||||||
|
Income from associates |
(6) |
- |
- |
(6) |
- |
1 |
(5) |
17 |
17 |
||||||||
|
Profit before tax |
2,388 |
- |
9 |
2,397 |
- |
104 |
2,501 |
5 |
4 |
||||||||
For footnotes, see page 94.
Analysis by customer group and global business
Profit/(loss) before tax
|
Half-year to 30 June 2009 |
|||||||||||||
|
Hong Kong |
Personal Financial Services US$m |
Commercial Banking US$m |
Global Banking and Markets US$m |
Private Banking US$m |
Other US$m |
Inter- segment elimination29 US$m |
Total US$m |
||||||
|
Net interest income/(expense) .. |
1,294 |
480 |
713 |
122 |
(313) |
(64) |
2,232 |
||||||
|
Net fee income |
643 |
244 |
230 |
57 |
26 |
- |
1,200 |
||||||
|
Trading income/(expense) excluding net interest income |
69 |
41 |
555 |
42 |
(70) |
- |
637 |
||||||
|
Net interest income/(expense)on trading activities |
2 |
- |
(7) |
- |
8 |
64 |
67 |
||||||
|
Net trading income/(expense)24 |
71 |
41 |
548 |
42 |
(62) |
64 |
704 |
||||||
|
Changes in fair value of long-term debt issued and related derivatives |
- |
- |
- |
- |
(3) |
- |
(3) |
||||||
|
Net income/(expense) from other financial instruments designated at fair value |
319 |
(22) |
28 |
- |
23 |
- |
348 |
||||||
|
Net income/(expense) from financial instruments designated at fair value |
319 |
(22) |
28 |
- |
20 |
- |
345 |
||||||
|
Gains less losses from financial investments |
81 |
17 |
(76) |
- |
(20) |
- |
2 |
||||||
|
Dividend income |
4 |
- |
1 |
- |
9 |
- |
14 |
||||||
|
Net earned insurance premiums |
1,622 |
211 |
5 |
- |
- |
- |
1,838 |
||||||
|
Other operating income |
146 |
39 |
18 |
5 |
440 |
(143) |
505 |
||||||
|
Total operating income |
4,180 |
1,010 |
1,467 |
226 |
100 |
(143) |
6,840 |
||||||
|
Net insurance claims25 |
(1,953) |
(168) |
(5) |
- |
- |
- |
(2,126) |
||||||
|
Net operating income7 |
2,227 |
842 |
1,462 |
226 |
100 |
(143) |
4,714 |
||||||
|
Loan impairment charges and other credit risk provisions |
(122) |
(137) |
(14) |
- |
- |
- |
(273) |
||||||
|
Net operating income |
2,105 |
705 |
1,448 |
226 |
100 |
(143) |
4,441 |
||||||
|
Total operating expenses |
(770) |
(281) |
(541) |
(120) |
(366) |
143 |
(1,935) |
||||||
|
Operating profit/(loss) |
1,335 |
424 |
907 |
106 |
(266) |
- |
2,506 |
||||||
|
Share of profit/(loss) in associates and joint ventures |
2 |
- |
- |
- |
(7) |
- |
(5) |
||||||
|
Profit/(loss) before tax |
1,337 |
424 |
907 |
106 |
(273) |
- |
2,501 |
||||||
|
% |
% |
% |
% |
% |
% |
||||||||
|
Share of HSBC's profit before tax |
26.6 |
8.4 |
18.1 |
2.1 |
(5.4) |
49.8 |
|||||||
|
Cost efficiency ratio |
34.6 |
33.4 |
37.0 |
53.1 |
366.0 |
41.0 |
|||||||
|
Balance sheet data23 |
|||||||||||||
|
US$m |
US$m |
US$m |
US$m |
US$m |
US$m |
||||||||
|
Loans and advances to customers (net) |
42,665 |
26,682 |
23,182 |
3,054 |
1,903 |
97,486 |
|||||||
|
Total assets |
79,113 |
33,209 |
221,196 |
23,000 |
67,820 |
(11,231) |
413,107 |
||||||
|
Customer accounts |
157,437 |
54,730 |
34,875 |
19,919 |
571 |
267,532 |
|||||||
For footnotes, see page 94.
Analysis by customer group and global business (continued)
Profit/(loss) before tax
|
Half-year to 30 June 2008 |
|||||||||||||
|
Hong Kong |
Personal Financial Services US$m |
Commercial Banking US$m |
Global Banking and Markets US$m |
Private Banking US$m |
Other US$m |
Inter- segment elimination29 US$m |
Total US$m |
||||||
|
Net interest income/(expense) .. |
1,693 |
770 |
801 |
96 |
(514) |
(11) |
2,835 |
||||||
|
Net fee income |
856 |
278 |
238 |
95 |
2 |
- |
1,469 |
||||||
|
Trading income/(expense) excluding net interest income |
90 |
37 |
40 |
57 |
(121) |
- |
103 |
||||||
|
Net interest income on trading activities |
6 |
1 |
177 |
- |
16 |
11 |
211 |
||||||
|
Net trading income/ (expense)24 |
96 |
38 |
217 |
57 |
(105) |
11 |
314 |
||||||
|
Changes in fair value of long-term debt issued and related derivatives |
- |
- |
- |
- |
1 |
- |
1 |
||||||
|
Net income/(expense) from other financial instruments designated at fair value |
(455) |
15 |
8 |
- |
70 |
- |
(362) |
||||||
|
Net income/(expense) from financial instruments designated at fair value |
(455) |
15 |
8 |
- |
71 |
- |
(361) |
||||||
|
Gains less losses from financial investments |
159 |
34 |
12 |
- |
(303) |
- |
(98) |
||||||
|
Dividend income |
2 |
1 |
3 |
- |
14 |
- |
20 |
||||||
|
Net earned insurance premiums |
1,559 |
84 |
6 |
- |
1 |
- |
1,650 |
||||||
|
Other operating income |
110 |
17 |
47 |
2 |
448 |
(176) |
448 |
||||||
|
Total operating income/ (expense) |
4,020 |
1,237 |
1,332 |
250 |
(386) |
(176) |
6,277 |
||||||
|
Net insurance claims25 |
(1,104) |
(61) |
(4) |
- |
- |
- |
(1,169) |
||||||
|
Net operating income/ (expense)7 |
2,916 |
1,176 |
1,328 |
250 |
(386) |
(176) |
5,108 |
||||||
|
Loan impairment (charges)/ recoveries and other credit risk provisions |
(34) |
(28) |
(20) |
- |
1 |
- |
(81) |
||||||
|
Net operating income/ (expense) |
2,882 |
1,148 |
1,308 |
250 |
(385) |
(176) |
5,027 |
||||||
|
Total operating expenses |
(848) |
(279) |
(538) |
(127) |
(359) |
176 |
(1,975) |
||||||
|
Operating profit/(loss) |
2,034 |
869 |
770 |
123 |
(744) |
- |
3,052 |
||||||
|
Share of profit in associates and joint ventures |
2 |
- |
- |
- |
19 |
- |
21 |
||||||
|
Profit/(loss) before tax |
2,036 |
869 |
770 |
123 |
(725) |
- |
3,073 |
||||||
|
% |
% |
% |
% |
% |
% |
||||||||
|
Share of HSBC's profit before tax |
19.9 |
8.5 |
7.5 |
1.2 |
(7.1) |
30.0 |
|||||||
|
Cost efficiency ratio |
29.1 |
23.7 |
40.5 |
50.8 |
(93.0) |
38.7 |
|||||||
|
Balance sheet data23 |
|||||||||||||
|
US$m |
US$m |
US$m |
US$m |
US$m |
US$m |
||||||||
|
Loans and advances to customers (net) |
40,608 |
32,112 |
20,257 |
4,912 |
1,852 |
99,741 |
|||||||
|
Total assets |
69,810 |
38,553 |
201,094 |
31,635 |
59,923 |
(29,431) |
371,584 |
||||||
|
Customer accounts |
133,454 |
49,700 |
31,577 |
16,602 |
376 |
231,709 |
|||||||
For footnotes, see page 94.
|
Half-year to 31 December 2008 |
|||||||||||||
|
Hong Kong |
Personal Financial Services US$m |
Commercial Banking US$m |
Global Banking and Markets US$m |
Private Banking US$m |
Other US$m |
Inter- segment elimination29
US$m |
Total US$m |
||||||
|
Net interest income/(expense) .. |
1,688 |
728 |
723 |
118 |
(155) |
(239) |
2,863 |
||||||
|
Net fee income |
585 |
270 |
176 |
68 |
12 |
- |
1,111 |
||||||
|
Trading income excluding net interest income |
53 |
42 |
443 |
63 |
151 |
- |
752 |
||||||
|
Net interest income/(expense) on trading activities |
5 |
- |
67 |
- |
(184) |
239 |
127 |
||||||
|
Net trading income/ (expense)24 |
58 |
42 |
510 |
63 |
(33) |
239 |
879 |
||||||
|
Changes in fair value of long-term debt issued and related derivatives |
- |
- |
- |
- |
2 |
- |
2 |
||||||
|
Net income/(expense) from other financial instruments designated at fair value |
(836) |
(25) |
31 |
- |
(2) |
- |
(832) |
||||||
|
Net income/(expense) from financial instruments designated at fair value |
(836) |
(25) |
31 |
- |
- |
- |
(830) |
||||||
|
Gains less losses from financial investments |
(3) |
(2) |
(121) |
- |
(85) |
- |
(211) |
||||||
|
Dividend income |
1 |
1 |
14 |
- |
5 |
- |
21 |
||||||
|
Net earned insurance premiums |
1,488 |
97 |
11 |
- |
1 |
- |
1,597 |
||||||
|
Other operating income |
22 |
21 |
54 |
6 |
458 |
(192) |
369 |
||||||
|
Total operating income |
3,003 |
1,132 |
1,398 |
255 |
203 |
(192) |
5,799 |
||||||
|
Net insurance claims25 |
(669) |
(75) |
(7) |
- |
(2) |
- |
(753) |
||||||
|
Net operating income7 |
2,334 |
1,057 |
1,391 |
255 |
201 |
(192) |
5,046 |
||||||
|
Loan impairment charges and other credit risk provisions |
(100) |
(307) |
(264) |
(13) |
- |
- |
(684) |
||||||
|
Net operating income |
2,234 |
750 |
1,127 |
242 |
201 |
(192) |
4,362 |
||||||
|
Total operating expenses |
(843) |
(305) |
(462) |
(128) |
(422) |
192 |
(1,968) |
||||||
|
Operating profit/(loss) |
1,391 |
445 |
665 |
114 |
(221) |
- |
2,394 |
||||||
|
Share of profit/(loss) in associates and joint ventures |
1 |
1 |
1 |
- |
(9) |
- |
(6) |
||||||
|
Profit/(loss) before tax |
1,392 |
446 |
666 |
114 |
(230) |
- |
2,388 |
||||||
|
% |
% |
% |
% |
% |
% |
||||||||
|
Share of HSBC's loss before tax |
148.1 |
47.4 |
70.9 |
12.1 |
(24.4) |
254.1 |
|||||||
|
Cost efficiency ratio |
36.1 |
28.9 |
33.2 |
50.2 |
210.0 |
39.0 |
|||||||
|
Balance sheet data23 |
|||||||||||||
|
US$m |
US$m |
US$m |
US$m |
US$m |
US$m |
||||||||
|
Loans and advances to customers (net) |
41,447 |
30,331 |
23,042 |
3,605 |
1,795 |
100,220 |
|||||||
|
Total assets |
75,419 |
36,428 |
233,187 |
28,800 |
66,192 |
(25,542) |
414,484 |
||||||
|
Customer accounts |
145,002 |
54,869 |
30,866 |
19,416 |
364 |
250,517 |
|||||||
For footnotes, see page 94.
Related Shares:
HSBC Holdings