1st Dec 2005 08:15
HSBC Holdings PLC01 December 2005 HSBC HOLDINGS PLC - PRE-CLOSE TRADING UPDATE HSBC Holdings plc ("HSBC") will be conducting a trading update today withanalysts and investors ahead of its close period for the year ending 31 December2005. The meeting will take place by conference call from 10:00 am until 11:00 amlocal time in London. Details for participating in the call can be found at theend of this statement. The information that will be covered during the meeting relating to HSBC'soperating performance is as follows: HSBC's performance in the third quarter reflected continued progress. Allcustomer groups delivered higher pre-tax profits than achieved in the comparablequarter in 2004. The geographic distribution of profits remained essentially inline with prior periods. Notable within this performance, however, was broadbased expansion achieved throughout the Rest of Asia Pacific and, in particular,strong asset and profit growth in the Middle East driven by the regionalbenefits of the strong oil price. Credit growth continued to be concentrated in the personal sector, split evenlybetween residential mortgages and other personal credit. Underlying trends inour US consumer finance business remained favourable, delivering growth atbroadly stable risk adjusted margins; delinquency trends remained stable. Asalready announced, third quarter profits have been impacted by additional loanimpairment provisions necessitated by the consequences of Hurricane Katrina andnew bankruptcy legislation in the US. These incremental provisions amounted toUS$206 million and US$100 million respectively, the latter amount recognising aprojected rise in charge-offs after an exceptional spike in bankruptcy filingsin early October. Within the UK personal sector, actions taken to strengthen lending underwritingand collection activity are now contributing to improved credit experience; itis, however, too early to conclude whether or not delinquency levels havepeaked. Increased focus on deposit growth within the personal sector was reflected in anumber of new product initiatives and selective branch expansion in the UnitedStates; deposit spreads improved in the United States and Hong Kong as shortterm interest rates rose. Commercial Banking continued to deliver strong results with broad based creditexpansion. Initiatives to expand deposit growth within the Commercial customerbase were successful in all major geographic regions and contributed to improvedspreads, particularly in Hong Kong. Credit impairment charges remained subduedbut evidence of weakness within the UK retail sector and related serviceindustries continued. There were notable performances in asset management and in Global TransactionBanking, within which our expanded funds administration business continued togrow strongly and custody and payments and cash management revenues reflectedbusiness growth especially in emerging markets. Private Equity results were goodand reflected a strong flow of realisations. Global Markets delivered a strong trading quarter with continuing progress inthe areas of investment. This was evidenced by notable progress in league tablerankings and customer surveys, reflecting both increased market share andcustomer satisfaction. Offsetting this to an extent was the impact of flatteningUS dollar and HK dollar interest rate yield curves, which continued tonegatively impact balance sheet management and money market revenues. Private Banking continued to deliver strong profitability and build for thefuture, investing in additional offices in Europe, India and the United States.Good growth in funds under management was achieved with particular strength indiscretionary mandates in Asia. Cost performance in the third quarter was satisfactory and productivity improvedas net operating income before provisions outpaced underlying cost growth; insubstantial part this reflected progressive completion of the investment in Corporate, Investment Banking and Markets (CIBM) as the operating platform is built out. On business development and acquisitions, we completed the purchase of a further9.9 per cent of Ping An taking the aggregate holding to 19.9 per cent. The jointcredit card operation launched with Bank of Communications has issued more than300,000 dual-currency cards since its launch in July 2005 and continues to growstrongly. HSBC Finance Corporation has announced it is now ready to complete its US$1.6billion acquisition of Metris Companies Inc., the 11th largest issuer ofMasterCard and Visa cards in the US with receivables of approximately US$5.9billion; this is expected to complete in early December. CCF and four of its subsidiaries successfully re-branded as HSBC. Three hundredand thirty branches (half of which are located in the greater Paris region)opened their doors in early November as HSBC. The disposal of Framlington Group Limited to AXA Investment Managers SA wascompleted on 31 October 2005. The gain on sale of HSBC's indirect interest willbe reflected in the fourth quarter. The Group's tier 1 and total capital ratios remained broadly in line with thosedisclosed at the half year. The outlook for the rest of the year suggests continuation of the broad trendsnoted above although trading revenues are expected to be lower in the finalquarter. The possibility of unexpected economic events cannot be discounted inlight of continuing global imbalances. HSBC's credit appetite in many marketsremains selective in light of historically low risk pricing which could reversein the event of market disruption. Good organic expansion opportunities continue to be pursued throughout Asia andin Mexico, South America, Turkey and the Middle East. In Europe and the US weare focussing on margins, productivity and capital efficiency. Through remainingstrongly capitalised and liquid and with broad based business and geographicdiversification HSBC remains well placed to continue its profitable growth. HSBC's results for the year ending 31 December 2005 will be announced on Monday,6 March 2006. Conference call details The conference call will be hosted by Douglas Flint, Group Finance Director andwill be accessible by dialling: UK: +44 (0) 208 515 2361US: +1 303 262 2140Hong Kong: +852 3009 3050 A recording of the conference call will be available for seven days on HSBC'swebsite by following this link http://www.hsbc.com/precloseupdate from shortlyafter the event. For further information, please contact: Investor Relations Media RelationsPatrick McGuinness Richard Lindsay+44 (0) 20 7992 1938 +44 (0) 20 7992 1555 Forward-looking statements This presentation and subsequent discussion may contain certain forward-lookingstatements with respect to the financial condition, results of operations andbusiness of the Group. These forward-looking statements represent the Group'sexpectations or beliefs concerning future events and involve known and unknownrisks and uncertainties that could cause actual results, performance or eventsto differ materially from those expressed or implied in such statements.Additional detailed information concerning important factors that could causeactual results to differ materially is available in our Annual Report. Notes to editors: The HSBC GroupServing over 110 million customers worldwide, the HSBC Group has approximately9,700 offices in 77 countries and territories in Europe, the Asia-Pacificregion, the Americas, the Middle East and Africa. With assets of US$1,467billion at 30 June 2005, HSBC is one of the world's largest banking andfinancial services organisations. HSBC is marketed worldwide as 'the world'slocal bank'. This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
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