10th Nov 2005 10:00
HSBC Holdings PLC10 November 2005 The following text is the English translation of a news release issued in Germany by HSBC Holdings plc's subsidiary. HSBC TRINKAUS & BURKHARDT ANNOUNCE STRONG INCREASE IN THIRD QUARTER RESULTS • Operating profit up 21.0 per cent to EUR87.4 million in the first nine months of 2005.• Profit after tax up 31.2 per cent during the same period.• 2005 results have shown continuous improvement over the first three quarters. Return on equity before tax increased to 25.4 per cent. The EUR15.2 million increase in operating profit for the first nine months of2005 was reflected in all areas of the business. The third quarter delivered thestrongest operating profit of the year and was up on the corresponding periodlast year. Risk provisions remained low as a result of the bank's continuedstringent credit risk assessment criteria. A 31.2 per cent increase in profitafter tax, up EUR18.9 million to EUR79.5 million, is particularly notablebecause last year's results included a one-off gain due to the sale of anindirect shareholding in HSBC Guyerzeller Bank. Return on equity increased to25.4 per cent on an annualised basis in the first three quarters 2005, comparedto 18.9 per cent in the previous year. Interest income improved by 13.9 per cent to EUR57.5 million despite lowinterest margins. This was mainly due to high customer deposits which werere-invested in the inter-bank market. Fees and commissions increased 18.5 per cent (EUR30.5 million) to EUR195.4million. This was mainly as a result of an upturn in the financial markets.Origination and structured solutions also delivered much improved results. Trading profits exceeded last year's results by 3.0 per cent to EUR47.7 million.The increase was mainly a result of stronger numbers from equities, equityderivatives and foreign exchange. Fixed income sales slightly decreased. HSBC Trinkaus & Burkhardt continues to invest in its businesses, and the numberof employees has increased steadily. In addition, higher bonus accruals resultedin increased staff costs. Due to higher IT expenses, increases have also beenseen in other administration costs. The cost increase was mainly as a result ofbusiness initiatives which have led to a corresponding increase in revenues.Another reason for the increase was the expenses incurred by the launch of a newsubsidiary: International Transaction Services GmbH. Overall, administrativeexpenses increased by 13.3 per cent (EUR25.0 million) to EUR212.9 million.Despite this, the cost:income ratio decreased to 63.7 per cent from 67.0 percent the previous year. In addition to the operating results highlighted above, other income alsoimproved in the third quarter. This was attributable to the deconsolidation of aspecial fund. Furthermore, a 49 per cent shareholding in InternationalTransaction Services GmbH was sold to T-Systems. On 1 August 2005 HSBC Trinkaus& Burkhardt's securities services department was outsourced to InternationalTransaction Services GmbH which also offers these transaction services to otherbanks. In the first three quarters of 2005 the Institutional Customers divisioncontributed EUR35.9 million to the results of the bank, an increase ofEUR3.9million on the previous year. This was due to growing sales in the assetmanagement and fixed income sales business areas. Services to high net worth individuals reported the biggest increase inoperating results of all the customer business groups, from EUR15.8 million toEUR25.1 million. This was mainly due to an expansion of the securities businessand success in winning new customers. Despite ongoing pressure on credit marginsthe commercial and corporate banking division was able to increase revenues toEUR31.0 million, which exceeded last year's result of EUR30.1 million.Proprietary trading registered a strong increase in results, achieving EUR33.3million. This was significantly up on the EUR19.6 million achieved in thecorresponding period last year. The managing partners conclude that further growth in commission and tradingdepends strongly on the development of the capital markets and growth in demandfor the bank's products. With regards to commission income, increasingcollaboration with HSBC is becoming more and more important - particularly withregards to the placement of structured products. Outside of trading, furtherrevenues should be generated by the introduction of sophisticated structuredsolutions as well as consulting, including corporate retirement planning. Inaddition, with the setting up of a Contractual Trust Arrangement (CTA) for thebank's own pension liabilities, the bank has created an innovative solution thatcan be marketed to other companies. The broad spectrum of asset managementservices is also a significant growth opportunity. As a result of ongoing adherence to strict risk assessment criteria, themanaging partners are confident there will be no significant defaults in thecredit portfolio in the year ahead. Cost increases will remain strictlycontrolled and care will be taken to invest in potential new sources of revenue.The partners are confident of achieving the goal of two digit growth inoperating income, as defined at the beginning of the year. This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
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