7th Apr 2006 10:00
HSBC Holdings PLC07 April 2006 The following text is the English translation of a news release issued inGermany by HSBC Holdings plc's subsidiary. HSBC TRINKAUS & BURKHARDT KGaA 2005 RESULTS • Profit before tax up 59.1 per cent to €194.4 million; profit after tax up 50.4 per cent to €117.9 million.• Operating profit up 33.4 per cent to €137.4 million in 2005.• Return on equity before tax improved from 19.5 per cent to 30.6 per cent.• Assets under management for private bank clients increased approximately 75 per cent from €11.4 billion to €19.9 billion.• Highest profits in HSBC Trinkaus & Burkhardt's history. HSBC Trinkaus & Burkhardt's operating profit increased by 33.4 per cent to €137.4 million last year. This performance is encouraging given the double-digitgrowth in operating income already achieved in 2003 and 2004. In 2005, the bankimproved results significantly in all lines of business. It grew the totalnumber of clients as well as the range of products and services offered. The growth in product and service offerings included the rapid development ofthe fund management and administration businesses. Assets under management inthe private banking business grew from €11.4 billion in 2004 to €19.9 billion in2005. Funds under management and administration, an important performanceindicator in asset management and in funds administration, rose by more than 50per cent from €41.8 billion to €62.8 billion. Proprietary trading also performedwell, building on good results seen in 2004. Net fees and commissions, the most important contributor of the bank's profits,improved by 16.8 per cent from €226.4 million to €264.4 million. Net interestincome rose by 7.6 per cent from €69.3 million to €74.6 million. Trading profitsadvanced by 36.6 per cent from €54.4 million to €74.3 million. Risk provisionsin the lending business were reduced in 2005 while the bank continues to adhereto its traditionally conservative credit policies. Alongside a reduction inprovisions, significant reversals were realised as several commitments, forwhich loan loss provisions had been made, had performed more positively thanoriginally expected. The 14.9 per cent increase in the bank's administrative expenses to €286.4million is in line with strategic goals. Targeted investments are being made inclearly defined growth areas. These involve an increase in the number of staffand higher costs for information technology. Success in business performanceduring 2005 led to a strong increase in performance-related remuneration. As aresult of the significant increase in profits, the cost:income ratio was loweredto 60.8 per cent from 66.8 per cent in 2004. There was a structural change in administrative expenses in 2005 chiefly as aresult of two items. First, the launch of International Transaction ServicesGmbH (ITS) as a joint venture with T-Systems International GmbH. Higheradministrative expenses were incurred with the establishment of the company andduring the start-up phase. There was, however, some decline in reportedadministrative expenses once the net results of ITS were reported as income fromjoint ventures. Second, selected financial investments and pension liabilitieswere transferred to a Contractual Trust Arrangement (CTA). The expensesresulting from the obligations are set off against the income from the assetstransferred according to International Financial Reporting Standards. Both events and the sale of financial investments resulted in high extraordinaryincome in 2005. This led to an even stronger increase in net income for the yearthan in operating profit. Profit before tax increased 59.1 per cent from €122.2million to €194.4 million. Profit after tax increased 50.4 per cent from €78.4million to €117.9 million - the best result in Trinkaus & Burkhardt's history.Return on equity improved from 19.5 per cent to 30.6 per cent before tax andfrom 12.5 per cent to 18.5 per cent after tax. An increase in shareholderdividend to €2.50 from €2.25 for 2004, will be proposed at the bank's annualshareholders' meeting on 30 May 2006. In 2005, there was a strong increase in consolidated assets of 19.7 per cent to€16.0 billion. The increase in risk assets and in market risk positions asdefined by the German Banking Act (Kreditwesengesetz) led to a slight decline inthe total capital ratio from 12.5 per cent to 11.5 per cent and in the corecapital ratio from 8.2 per cent to 7.3 per cent. The bank's capital resourcesremain strong. As already announced at the end of 2005, HSBC has increased its stake in HSBCTrinkaus & Burkhardt. HSBC now holds 78.6 per cent from 73.5 per cent at the endof 2004. The stake held by Landesbank Baden-Wurttemberg remains unchanged at20.3 per cent. There was a strong increase in profit in the private banking division during2005. Pre-tax profits increased by 25.1 per cent from €30.7 million to €38.4million. This increase is particularly notable as last year's results includedan exceptional gain of €6.3 million from the sale of shares in HSBC GuyerzellerBank in 2004. The improvement in earnings of our private banking division wasthe result of significant business expansion in the securities business thatincluded strong increases in volumes. In the corporate banking division, net fees and commissions rose as a result ofa significant expansion of the client base and the bank's strengthening positionas 'core' bank for a large number of corporate clients. The earningscontribution in this division rose by 7.7 per cent to €46.3 million. The bank's institutional client segment operated very successfully, withparticular success in the structured products business and in asset management.The sale of products from the HSBC Group contributed to the further increase inthis division's results. There was strong growth in the earnings contribution,of 13.4 per cent to €50.7 million. In order to highlight the growing cooperationwith HSBC in the field of worldwide asset management services, the subsidiaryHSBC Trinkaus Capital Management GmbH has been renamed HSBC InvestmentsDeutschland GmbH in 2006. The pace of growth of INKA Internationale Kapitalanlagegesellschaft mbHaccelerated again last year, after being very successful in 2003 and 2004. Theassets managed by the subsidiary in 269 (previous year 227) special and publicfunds increased from €24.5 billion to €38.8 billion. As a custodian bank, HSBCTrinkaus & Burkhardt offers the safekeeping of securities in many countries.Assets under custody reached a high of €103.6 billion in 2005. Proprietary trading benefited from the favourable market environment and wasable to record the highest increase in earnings in a year-on-year comparison.Alongside the particularly successful equities derivatives trading activities,fixed income and foreign exchange trading also reported significant increases inrevenues. Overall, the earnings contribution from the proprietary tradingsegment more than doubled to €51.2 million from €25.1 million the previous year. HSBC Trinkaus & Burkhardt acted as lead manager in the debt capital market incooperation with HSBC in 74 issues with an aggregate volume of more than €26.6billion. The bank's own issuance of warrants, certificates and bonds withdifferent structures led to more than a 20 per cent increase in the bank's ownissues from 9,354 to 11,305. The bank's subsidiary ITS is one of the leading securities processing serviceproviders. In terms of transaction volume it is already the second-largestprovider in the German market. The ITS platform today is used by HSBC Trinkaus &Burkhardt, S Broker, DAB bank and fimatex by boursorama. FondsServiceBank is tobe added to the ITS client list in 2006. By the end of 2007, HypoVereinsbankwill also outsource substantial parts of its securities processing in theprivate clients business to ITS. Together with the majority shareholder HSBC, the managing partners of HSBCTrinkaus & Burkhardt have decided to propose to the annual shareholders' meetingon 30 May 2006 the conversion of the legal form of the bank from a partnershiplimited by shares (KGaA) to a German Stock Corporation (AG). The new legalstructure will strengthen HSBC's commitment to HSBC Trinkaus & Burkhardt as astrategic partner to grow the largest European bank's presence in the Germanmarket. HSBC Trinkaus & Burkhardt's business model with its focus on corporateand institutional clients, wealthy private banking clients and proprietarytrading remains unchanged. This will be emphasised by the appointment of themanaging partners as members of the future board whose objective is to furtherexpand operations in Germany. The partners believe that by changing the legalform of the bank, the links between HSBC and HSBC Trinkaus & Burkhardt will bereinforced and new forward-looking opportunities will be created for clients aswell as employees. The managing partners of HSBC Trinkaus & Burkhardt are optimistic about thebank's performance in 2006 and will pursue the goal of further increasing thebank's operating profit during the year. This goal is subject to a strong upwardtrend in stock market turnover and risk provisioning costs in line with thelevels seen in previous years. Consolidated figures according to International Financial Reporting Standards 1. Balance sheet (• m) 2005 2004 %change Loans and advances to customers 2,554.0 2,636.7 (3.1) Financial assets held for trading 6,470.6 6,215.6 4.1 Customer accounts 7,139.6 5,927.1 20.5 Financial liabilities held for trading 5,883.9 4,956.4 18.7 Equity capital 844.5 787.5 7.2 Total assets 15,951.4 13,323.1 19.7 2. Profit and loss account (• m) Net interest income 74.6 69.3 7.6 Risk provisions (9.7) 1.6 - Net fees and commissions 264.4 226.4 16.8 Trading profit 74.3 54.4 36.6 Trading administrative expenses 286.4 249.3 14.9 Operating profit 137.4 103.0 33.4 Profit before tax 194.4 122.2 59.1 Profit after tax 117.9 78.4 50.4 3. Other key figures Pre-tax return on equity (%) 30.6 19.5 - Cost:income ratio of ordinary activities (%) 60.8 66.8 - Funds under management and administration (• bn) 62.8 41.8 50.2 Capital ratio according to Kreditwesengesetz (KWG)(%) 11.5 12.5 - This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
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