Annual Financial Report - 5 o

RNS Number : 3471J

HSBC Holdings PLC

30 March 2010

 



Consolidated balance sheet

Consolidated balance sheet as at 31 December 2009

	At 31 December
	2009 US$m		2008 US$m		2007 US$m
ASSETS
Cash and balances at central banks .............................................................	60,655		52,396		21,765
Trading assets ............................................................................................	421,381		427,329		445,968
Financial assets designated at fair value ......................................................	37,181		28,533		41,564
Derivatives ................................................................................................	250,886		494,876		187,854
Loans and advances to banks ......................................................................	179,781		153,766		237,366
Loans and advances to customers ...............................................................	896,231		932,868		981,548
Financial investments ................................................................................	369,158		300,235		283,000
Other assets ...............................................................................................	149,179		137,462		155,201
Total assets ................................................................................................	2,364,452		2,527,465		2,354,266
LIABILITIES AND EQUITY
Liabilities
Deposits by banks ......................................................................................	124,872		130,084		132,181
Customer accounts .....................................................................................	1,159,034		1,115,327		1,096,140
Trading liabilities .......................................................................................	268,130		247,652		314,580
Financial liabilities designated at fair value .................................................	80,092		74,587		89,939
Derivatives ................................................................................................	247,646		487,060		183,393
Debt securities in issue ................................................................................	146,896		179,693		246,579
Liabilities under insurance contracts ...........................................................	53,707		43,683		42,606
Other liabilities ..........................................................................................	148,414		149,150		113,432
Total liabilities ...........................................................................................	2,228,791		2,427,236		2,218,850
Equity
Total shareholders' equity ..........................................................................	128,299		93,591		128,160
Minority interests ......................................................................................	7,362		6,638		7,256
Total equity ...............................................................................................	135,661		100,229		135,416
Total equity and liabilities ..........................................................................	2,364,452		2,527,465		2,354,266

A more detailed consolidated balance sheet is contained in the Financial Statements on page 355.

Movement from 31 December 2008 to 31 December 2009

Total assets amounted to US$2.4 trillion, 6 per cent lower than at 31 December 2008. After excluding the effect of currency movements, underlying total assets declined by 11 per cent, driven by a reduction in the fair value of derivative assets as market conditions stabilised.

The Group's reported tier 1 ratio increased from 8.3 per cent to 10.8 per cent, mainly due to additional equity of US$17.8 billion raised through the rights issue in April 2009, the contribution from profits for the year and a reduction in the underlying level of risk-weighted assets. For more details of capital and risk weighted assets, see pages 285 to 291. The following commentary is on an underlying basis.

Assets

Cash and balances at central banks increased by 12 per cent, consistent with the global liquidity creation by central banks, particularly in Europe and North America.

Trading assets fell by 6 per cent, primarily due to a decrease in the level of reverse repos, particularly in Europe and North America, and a reduction in holdings of short‑dated government securities in Hong Kong. There was also a reduction in the collateral required by counterparties to support derivative liabilities as these balances declined. Equity shares held-for-trading grew as activity recovered against a low in the fourth quarter of 2008.

A reduction in the fair values of derivative assets drove an 11 per cent decline in underlying total assets.

Financial assets designated at fair value grew by 19 per cent due to an increase in UK government debt securities in Balance Sheet Management, and an increase in the fair value of equity securities held within the insurance business, particularly in Europe and Hong Kong, as market values recovered.

Derivative assets declined by 52 per cent with reductions across all classes of asset, notably foreign exchange, interest rate and credit derivatives. Lower volatility within the financial markets, steepening yield curves in major currencies and narrowing credit spreads led to a fall in the fair value of outstanding derivative contracts.

Loans and advances to banks increased by 12 per cent, mainly in Hong Kong and Rest of Asia-Pacific, where surplus funds were placed on a short‑term basis with financial institutions and central banks as part of Balance Sheet Management activities.

Loans and advances to customers fell by 9 per cent, driven by a reduction in balances in North America due to the run-off of the consumer finance businesses, the sale of selected portfolios, and a reduction in Treasury reverse repo balances and cash collateral as excess liquidity was placed in other investments. These factors were compounded by declines in balances in other regions, particularly in the first half of the year, due to customer deleveraging and lower credit origination in certain segments as risk appetite reduced and customer demand declined. In the UK, there was also a reduction in customer overdraft balances that are managed on a net basis but reported gross under IFRSs. Mortgage balances increased strongly in the UK and Hong Kong as HSBC targeted growth in these markets, although this was largely offset by the run-off of balances in the US, as noted above.

Financial investments rose by 17 per cent, mainly in Hong Kong driven by purchases of Hong Kong government and other highly-rated securities in the year. This increase was partly offset by a fall in financial investments in Europe, as a result of debt securities that matured and were not replaced.

Other assets grew by 7 per cent compared with 31 December 2008.

Liabilities

Deposits by banks decreased by 10 per cent, largely reflecting a decline in central bank and other interbank deposits in Hong Kong, Rest of Asia-Pacific and North America.

Customer account balances decreased by 2 per cent, despite growth in the Personal Financial Services and Commercial Banking segments. This was mainly due to an outflow of deposits in Europe as the economic situation improved and investor risk appetite increased. There was also a fall in deposits from customers whose accounts are managed net but reported gross under IFRSs, (see 'Loans and advances to customers'). These factors were partly offset by an increase in deposits in Hong Kong due to an excess of liquidity in the market.

Trading liabilities were 3 per cent higher, driven by increases in hedged net short positions on equity securities in line with a rise in market activity, and in government debt securities as a result of more active market making activities and an expectation of interest rate rises on certain trading desks. Offsetting this was a reduction in repo contracts, and a decrease in structured deposit accounts in Hong Kong as existing deals matured and customers expressed a preference for vanilla cash instruments in the uncertain economic environment.

Financial liabilities designated at fair value grew by 4 per cent due to new HSBC debt issuances in Europe during the year.

Derivative businesses are managed within market risk limits and, as a consequence, the reduction in the value of derivative liabilities broadly matched that of derivative assets.

Debt securities in issue fell by 22 per cent, primarily in North America as the funding requirements reduced in line with the run-off of the consumer finance business.

Liabilities under insurance contracts grew by 18 per cent due to gains recorded on unit-linked products as a result of an improvement in investment market values, and higher insurance sales in Hong Kong following the launch of several new products.

Other liabilities were 4 per cent lower than at 31 December 2008.

Equity

Total shareholders' equity increased by 31 per cent, mainly due to the US$17.8 billion of funds raised through the rights issue in April 2009. In addition, the negative balance on the available‑for‑sale reserve also declined from US$20.6 billion at 31 December 2008 to US$10.0 billion at 31 December 2009, largely reflecting increases in the market value of assets.

Reconciliation of reported and underlying assets and liabilities

	31 December 2009 compared with 31 December 2008
HSBC	31 Dec 08              as   reported         US$m		Currency translation31        US$m		31 Dec 08 at 31 Dec 09  exchange          rates        US$m		Underlying      change        US$m		31 Dec 09                                                         as    reported                                                         US$m		Reported   change            %		Under-       lying   change                                                            %
Cash and balances at central banks ...........	52,396		1,550		53,946		6,709		60,655		16		12
Trading assets ..............	427,329		21,612		448,941		(27,560)		421,381		(1)		(6)
Financial assets designated at fair value ........................	28,533		2,636		31,169		6,012		37,181		30		19
Derivative assets .........	494,876		32,379		527,255		(276,369)		250,886		(49)		(52)
Loans and advances to banks .......................	153,766		7,406		161,172		18,609		179,781		17		12
Loans and advances to customers ................	932,868		57,163		990,031		(93,800)		896,231		(4)		(9)
Financial investments ..	300,235		14,748		314,983		54,175		369,158		23		17
Other assets .................	137,462		1,807		139,269		9,910		149,179		9		7
Total assets .................	2,527,465		139,301		2,666,766		(302,314)		2,364,452		(6)		(11)
Deposits by banks ........	130,084		8,426		138,510		(13,638)		124,872		(4)		(10)
Customer accounts ......	1,115,327		64,478		1,179,805		(20,771)		1,159,034		4		(2)
Trading liabilities .........	247,652		12,714		260,366		7,764		268,130		8		3
Financial liabilities designated at fair value .................	74,587		2,709		77,296		2,796		80,092		7		4
Derivative liabilities ....	487,060		31,722		518,782		(271,136)		247,646		(49)		(52)
Debt securities in issue .	179,693		8,005		187,698		(40,802)		146,896		(18)		(22)
Liabilities under insurance contracts .................	43,683		1,763		45,446		8,261		53,707		23		18
Other liabilities ............	149,150		5,144		154,294		(5,880)		148,414		-		(4)
Total liabilities ............	2,427,236		134,961		2,562,197		(333,406)		2,228,791		(8)		(13)
Total shareholders' equity ......................	93,591		4,114		97,705		30,594		128,299		37		31
Minority interests .......	6,638		226		6,864		498		7,362		11		7
Total equity ................	100,229		4,340		104,569		31,092		135,661		35		30
Total equity and liabilities ..................	2,527,465		139,301		2,666,766		(302,314)		2,364,452		(6)		(11)

For footnote, see page 149.

In 2009, the effect of acquisitions was not material.

Reconciliation of reported and underlying loans and advances to customers and customer accounts by geographical region

	31 December 2009 compared with 31 December 2008
	31 Dec 08              as reported         US$m		Currency translation31        US$m		31 Dec 08 at 31 Dec 09  exchange        rates     US$m		Underlying      change        US$m		31 Dec 09                                                         as    reported                                                         US$m		Reported   change            %		Under-       lying   change                                                            %
Loans and advances to customers (net)
Europe ............................	426,191		37,773		463,964		(24,483)		439,481		3		(5)
Hong Kong .....................	100,220		(54)		100,166		(785)		99,381		(1)		(1)
Rest of Asia-Pacific ........	80,661		5,320		85,981		(5,938)		80,043		(1)		(7)
Middle East .....................	27,295		(69)		27,226		(4,382)		22,844		(16)		(16)
North America ...............	256,214		7,379		263,593		(56,740)		206,853		(19)		(22)
Latin America ................	42,287		6,814		49,101		(1,472)		47,629		13		(3)
	932,868		57,163		990,031		(93,800)		896,231		(4)		(9)
Customer accounts
Europe ............................	502,476		42,883		545,359		(50,340)		495,019		(1)		(9)
Hong Kong .....................	250,517		(119)		250,398		25,043		275,441		10		10
Rest of Asia-Pacific ........	124,194		5,736		129,930		4,069		133,999		8		3
Middle East .....................	35,165		(76)		35,089		(2,560)		32,529		(7)		(7)
North America ...............	143,532		5,577		149,109		48		149,157		4		-
Latin America ................	59,443		10,477		69,920		2,969		72,889		23		4
	1,115,327		64,478		1,179,805		(20,771)		1,159,034		4		(2)

Reconciliation of reported and underlying loans and advances to customers and customer accounts by customer groups and global businesses

	31 December 2009 compared with 31 December 2008
	31 Dec 08             as reported         US$m		Currency translation31        US$m		31 Dec 08 at 31 Dec 09  exchange     rates    US$m		Underlying      change        US$m		31 Dec 09                                                         as    reported                                                         US$m		Reported   change            %		Under-       lying   change                                                            %
Loans and advances to customers (net)
Personal Financial Services ......................................	401,402		21,119		422,521		(23,061)		399,460		-		(5)
Commercial Banking ........	203,949		14,614		218,563		(18,889)		199,674		(2)		(9)
Global Banking and Markets ........................	287,306		19,989		307,295		(50,339)		256,956		(11)		(16)
Private Banking ................	37,590		1,416		39,006		(1,975)		37,031		(1)		(5)
Other ................................	2,621		25		2,646		464		3,110		19		18
	932,868		57,163		990,031		(93,800)		896,231		(4)		(9)
Customer accounts
Personal Financial Services ......................................	440,338		24,029		464,367		34,742		499,109		13		7
Commercial Banking ........	235,879		13,901		249,780		17,608		267,388		13		7
Global Banking and Markets ........................	320,386		24,243		344,629		(59,902)		284,727		(11)		(17)
Private Banking ................	116,683		2,291		118,974		(12,441)		106,533		(9)		(10)
Other ................................	2,041		14		2,055		(778)		1,277		(37)		(38)
	1,115,327		64,478		1,179,805		(20,771)		1,159,034		4		(2)

For footnote, see page 149.

In 2009, the effect of acquisitions was not material.

Average balance sheet and net interest income

Average balances and related interest are shown for the domestic operations of HSBC's principal commercial banks by geographical region. 'Other operations' comprise the operations of the principal Commercial Banking and consumer finance entities outside their domestic markets and all other banking operations, including investment banking balances and transactions.

Average balances are based on daily averages for the principal areas of HSBC's banking activities with monthly or less frequent averages used elsewhere.

Balances and transactions with fellow subsidiaries are reported gross in the principal Commercial Banking and consumer finance entities within 'Other interest-earning assets' and 'Other interest-bearing liabilities' as appropriate and the elimination entries are included within 'Other operations' in those two categories.

Net interest margin numbers are calculated by dividing net interest income as reported in the income statement by the average interest-earning assets from which interest income is reported within the 'Net interest income' line of the income statement. Interest income and interest expense arising from trading assets and liabilities and the funding thereof is included within 'Net trading income' in the income statement.

Assets
		2009						2008						2007
		Average balance		Interest income		Yield		Average     balance		Interest income		Yield		Average     balance		Interest income		Yield
		US$m		US$m		%		US$m		US$m		%		US$m		US$m		%
Summary
Total interest-earning assets (itemised below) ...............................................		1,384,705		62,096		4.48		1,466,622		91,301		6.23		1,296,701		92,359		7.12
Trading assets32 .....................................		357,504		7,614		2.13		428,539		16,742		3.91		374,973		17,562		4.68
Financial assets designated at fair value33		62,143		1,032		1.66		37,303		1,108		2.97		14,899		813		5.46
Impairment provisions ..........................		(26,308)						(20,360)						(15,309)
Non-interest-earning assets ...................		667,942						596,885						440,686
Total assets and interest income ...........		2,445,986		70,742		2.89		2,508,989		109,151		4.35		2,111,950		110,734		5.24
Short-term funds and loans and advances to banks
Europe	HSBC Bank ..................	38,455		1,379		3.59		46,703		2,187		4.68		49,910		2,592		5.19
	HSBC Private Banking Holdings (Suisse) ......	4,451		43		0.97		8,040		333		4.14		5,295		229		4.32
	HSBC France ...............	37,239		440		1.18		35,801		1,495		4.18		31,591		1,294		4.10
Hong Kong	Hang Seng Bank ...........	16,626		202		1.21		17,402		587		3.37		13,054		609		4.67
	The Hongkong and Shanghai Banking Corporation .............	27,903		182		0.65		47,244		1,344		2.84		50,210		2,352		4.68
Rest of Asia-Pacific27	The Hongkong and Shanghai Banking Corporation .............	23,107		326		1.41		27,907		881		3.16		19,286		810		4.20
	HSBC Bank Malaysia ...	3,776		81		2.15		4,659		165		3.54		2,861		103		3.60
Middle East27	HSBC Bank Middle East	4,312		52		1.21		6,028		188		3.12		6,328		324		5.12
North America	HSBC Bank USA ..........	2,338		94		4.02		9,595		328		3.42		9,393		477		5.08
	HSBC Bank Canada ......	2,934		10		0.34		3,354		107		3.19		3,810		174		4.57
Latin America	HSBC Mexico ..............	3,722		149		4.00		3,682		247		6.71		3,555		239		6.72
	Brazilian operations34 ..	10,490		1,003		9.56		7,959		951		11.95		5,790		645		11.14
	HSBC Bank Panama ....	1,187		10		0.84		1,133		30		2.65		897		33		3.68
	HSBC Bank Argentina .	256		29		11.33		612		43		7.03		304		16		5.26
Other operations ...................................		15,782		199		1.26		19,992		760		3.80		19,087		898		4.70
		192,578		4,199		2.18		240,111		9,646		4.02		221,371		10,795		4.88

		2009						2008						2007
		Average balance		Interest income		Yield		Average    balance		Interest income		Yield		Average    balance		Interest income		Yield
		US$m		US$m		%		US$m		US$m		%		US$m		US$m		%
Loans and advances to customers
Europe	HSBC Bank ..................	276,602		10,898		3.94		288,214		18,587		6.45		237,231		18,078		7.62
	HSBC Private Banking Holdings (Suisse) ......	9,993		176		1.76		12,355		494		4.00		9,805		507		5.17
	HSBC France ...............	71,048		1,932		2.72		73,455		3,604		4.91		68,027		3,219		4.73
	HSBC Finance ..............	3,094		319		10.31		4,808		505		10.50		5,492		611		11.13
Hong Kong	Hang Seng Bank ...........	42,619		1,194		2.80		42,304		1,589		3.76		37,827		2,120		5.60
	The Hongkong and Shanghai Banking Corporation .............	55,287		1,757		3.18		54,628		2,291		4.19		48,134		2,901		6.03
Rest of Asia-Pacific27	The Hongkong and Shanghai Banking Corporation .............	66,262		3,668		5.54		77,741		5,163		6.64		59,286		4,321		7.29
	HSBC Bank Malaysia ...	8,113		455		5.61		8,407		553		6.58		7,467		507		6.79
Middle East27	HSBC Bank Middle East .................................	22,612		1,593		7.04		23,697		1,549		6.54		15,125		1,200		7.93
North America	HSBC Bank USA ..........	98,422		5,541		5.63		93,088		5,758		6.19		90,091		6,585		7.31
	HSBC Finance ..............	101,132		9,941		9.83		140,957		15,835		11.23		153,658		18,086		11.77
	HSBC Bank Canada ......	43,072		1,499		3.48		48,331		2,455		5.08		43,570		2,598		5.96
Latin America	HSBC Mexico ..............	12,185		1,708		14.02		17,252		2,565		14.87		16,469		2,187		13.28
	Brazilian operations34 ..	18,704		4,494		24.03		19,642		4,879		24.84		13,569		3,895		28.71
	HSBC Bank Panama ....	9,302		864		9.29		8,620		810		9.40		8,113		778		9.59
	HSBC Bank Argentina .	1,940		357		18.40		2,136		378		17.70		1,667		241		14.46
Other operations ...................................		29,670		1,905		6.42		28,027		1,707		6.09	7.72	21,318		1,790		8.40
		870,057		48,301		5.55		943,662		68,722		7.28		836,849		69,624		8.32
Financial investments
Europe	HSBC Bank ..................	79,763		2,321		2.91		83,725		3,840		4.59		45,885		2,431		5.30
	HSBC Private Banking Holdings (Suisse) .................................	15,602		363		2.33		12,018		553		4.60		10,372		511		4.93
	HSBC France ...............	5,327		141		2.65		14,862		795		5.35		10,357		511		4.93
Hong Kong	Hang Seng Bank ...........	24,594		630		2.56		24,031		1,063		4.42		30,791		1,550		5.03
	The Hongkong and Shanghai Banking Corporation .............	52,965		644		1.22		15,361		563		3.67		20,717		1,017		4.91
Rest of Asia-Pacific27	The Hongkong and Shanghai Banking Corporation .............	34,056		1,039		3.05		31,992		1,507		4.71		23,739		1,065		4.49
	HSBC Bank Malaysia ...	1,218		37		3.04		937		36		3.84		1,515		56		3.70
Middle East27	HSBC Bank Middle East .................................	6,996		118		1.69		5,671		144		2.54		3,654		174		4.76
North America	HSBC Bank USA ..........	27,253		969		3.56		25,089		1,232		4.91		23,373		1,189		5.09
	HSBC Finance ..............	2,426		120		4.95		2,908		143		4.92		4,072		229		5.62
	HSBC Bank Canada ......	10,282		205		1.99		7,037		197		2.80		6,068		258		4.25
Latin America	HSBC Mexico ..............	3,916		227		5.80		3,470		244		7.03		3,327		319		9.59
	Brazilian operations34 ..	6,930		820		11.83		6,758		853		12.62		5,596		672		12.01
	HSBC Bank Panama ....	604		39		6.46		618		47		7.61		709		58		8.18
	HSBC Bank Argentina .	181		35		19.34		287		47		16.38		563		68		12.08
Other operations ...................................		50,767		1,717		3.38		29,632		1,354		4.57	4.96	27,252		1,407		5.16
		322,880		9,425		2.92		264,396		12,618		4.77		217,990		11,515		5.28

Assets (continued)
		2009						2008						2007
		Average balance		Interest income		Yield		Average     balance		Interest income		Yield		Average     balance		Interest income		Yield
		US$m		US$m		%		US$m		US$m		%		US$m		US$m		%
Other interest-earning assets
Europe	HSBC Bank ..................	17,406		188		1.08		25,885		630		2.43		11,170		652		5.84
	HSBC Private Banking Holdings (Suisse) ......	21,450		360		1.68		21,189		875		4.13		16,360		882		5.39
	HSBC France ...............	11,867		172		1.45		23,414		630		2.69		12,158		419		3.45
Hong Kong	Hang Seng Bank ...........	2,618		32		1.22		1,629		48		2.95		832		42		5.05
	The Hongkong and Shanghai Banking Corporation .............	26,657		214		0.80		33,571		949		2.83		27,057		1,237		4.57
Rest of Asia-Pacific27	The Hongkong and Shanghai Banking Corporation .............	19,917		106		0.53		24,492		352		1.44		11,137		588		5.28
	HSBC Bank Malaysia ...	407		6		1.47		212		7		3.30		231		12		5.19
Middle East27	HSBC Bank Middle East	541		46		8.50		843		63		7.47		758		52		6.86
North America	HSBC Bank USA ..........	3,327		71		2.13		3,091		188		6.08		3,731		231		6.19
	HSBC Finance ..............	2,995		6		0.20		2,638		63		2.39		1,724		89		5.16
	HSBC Bank Canada ......	773		9		1.16		1,025		25		2.44		960		31		3.23
Latin America	HSBC Mexico ..............	138		-		-		193		2		1.04		-		-		-
	Brazilian operations34 ..	1,074		46		4.28		1,438		147		10.22		840		75		8.93
	HSBC Bank Panama ....	1,372		9		0.66		1,807		23		1.27		1,351		40		2.96
	HSBC Bank Argentina .	51		-		-		58		1		1.72		39		1		2.56
Other operations ...................................		(111,403)		(1,094)				(123,032)		(3,688)				(67,857)		(3,926)
		(810)		171		(21.11)		18,453		315		1.71		20,491		425		2.07
Total interest-earning assets
Europe	HSBC Bank ..................	412,226		14,786		3.59		444,527		25,244		5.68		344,196		23,753		6.90
	HSBC Private Banking Holdings (Suisse) .................................	51,496		942		1.83		53,602		2,255		4.21		41,832		2,129		5.09
	HSBC France ...............	125,481		2,685		2.14		147,532		6,524		4.42		122,133		5,443		4.46
	HSBC Finance ..............	3,094		319		10.31		4,808		505		10.50		5,492		611		11.13
Hong Kong	Hang Seng Bank ...........	86,457		2,058		2.38		85,366		3,287		3.85		82,504		4,321		5.24
	The Hongkong and Shanghai Banking Corporation .............	162,812		2,797		1.72		150,804		5,147		3.41		146,118		7,507		5.14
Rest of Asia-Pacific27	The Hongkong and Shanghai Banking Corporation .............	143,342		5,139		3.59		162,132		7,903		4.87		113,448		6,784		5.98
	HSBC Bank Malaysia ...	13,514		579		4.28		14,215		761		5.35		12,074		678		5.62
Middle East27	HSBC Bank Middle East	34,461		1,809		5.25		36,239		1,944		5.36		25,865		1,750		6.77
North America	HSBC Bank USA ..........	131,340		6,675		5.08		130,863		7,506		5.74		126,588		8,482		6.70
	HSBC Finance ..............	106,553		10,067		9.45		146,503		16,041		10.95		159,454		18,404		11.54
	HSBC Bank Canada ......	57,061		1,723		3.02		59,747		2,784		4.66		54,408		3,061		5.63
Latin America	HSBC Mexico ..............	19,961		2,084		10.44		24,597		3,058		12.43		23,351		2,745		11.76
	Brazilian operations34 ..	37,198		6,363		17.11		35,797		6,830		19.08		25,795		5,287		20.50
	HSBC Bank Panama ....	12,465		922		7.40		12,178		910		7.47		11,070		909		8.21
	HSBC Bank Argentina .	2,428		421		17.34		3,093		469		15.16		2,573		326		12.67
Other operations ...................................		(15,184)		2,727				(45,381)		133			7.05	(200)		169
		1,384,705		62,096		4.48		1,466,622		91,301		6.23		1,296,701		92,359		7.12

For footnotes, see page 149.

Equity and liabilities
	2009						2008						2007
	Average balance		Interest expense		Cost		Average     balance		Interest expense		Cost		Average     balance		Interest expense		Cost
	US$m		US$m		%		US$m		US$m		%		US$m		US$m		%
Summary
Total interest-bearing liabilities (itemised below) .........................................................	1,353,283		21,366		1.58		1,451,842		48,738		3.36		1,279,460		54,564		4.26
Trading liabilities .................................	205,670		3,987		1.94		277,940		11,029		3.97		250,572		12,186		4.86
Financial liabilities designated at fair value (excluding own debt issued) ...............	15,688		293		1.87		21,266		345		1.62		20,827		224		1.07
Non-interest bearing current accounts ..	123,271						98,193						83,958
Total equity and other non-interest bearing liabilities ..........................................	748,074						659,747						477,133
Total equity and liabilities ....................	2,445,986		25,646		1.05		2,508,988		60,112		2.40		2,111,950		66,974		3.17

Deposits by banks35
Europe	HSBC Bank ..................		35,207		553		1.57		48,167		1,875		3.89		44,787		2,148		4.80
	HSBC Private Banking Holdings (Suisse) ......		1,063		1		0.09		4,493		105		2.34		690		22		3.19
	HSBC France ...............		43,682		536		1.23		37,851		1,672		4.42		30,816		1,358		4.41
Hong Kong	Hang Seng Bank ...........		1,051		5		0.48		1,696		55		3.24		2,993		123		4.11
	The Hongkong and Shanghai Banking Corporation .............		6,892		9		0.13		3,665		70		1.91		3,634		150		4.13
Rest of Asia-Pacific27	The Hongkong and Shanghai Banking Corporation .............		10,710		165		1.54		16,232		450		2.77		10,247		445		4.34
	HSBC Bank Malaysia ...		110		2		1.82		338		10		2.96		375		12		3.20
Middle East27	HSBC Bank Middle East .................................		773		9		1.16		1,680		29		1.73		672		32		4.76
North America	HSBC Bank USA ..........		8,381		9		0.11		11,015		220		2.00		6,933		414		5.97
	HSBC Bank Canada ......		1,405		8		0.57		1,391		41		2.95		1,681		93		5.53
Latin America	HSBC Mexico ..............		1,462		49		3.35		822		32		3.89		983		63		6.41
	Brazilian operations34 ..		3,292		241		7.32		2,790		190		6.81		1,549		106		6.84
	HSBC Bank Panama ....		908		26		2.86		1,016		43		4.23		1,137		66		5.80
	HSBC Bank Argentina .		12		1		8.33		27		1		3.70		117		9		7.69
Other operations ...................................			2,899		45		1.55		4,564		166		3.64	5.33	4,495		291		6.47
			117,847		1,659		1.41		135,747		4,959		3.65		111,109		5,332		4.80
Financial liabilities designated at fair value - own debt issued36
Europe	HSBC Holdings ............		17,887		369		2.06		18,675		721		3.86		15,142		822		5.43
	HSBC Bank ..................		7,932		196		2.47		8,805		529		6.01		9,907		525		5.30
	HSBC France ...............		5,108		128		2.51		1,515		79		5.21		143		11		7.69
Hong Kong	Hang Seng Bank ...........		130		2		1.54		127		6		4.72		126		6		4.76
North America	HSBC Bank USA ..........		1,615		30		1.86		1,504		67		4.45		1,620		125		7.72
	HSBC Finance ..............		26,628		871		3.27		32,126		1,563		4.87		31,889		2,079		6.52
Other operations ...................................			921		(38)		(4.13)		1,083		168		15.51	6.94	-		-		-
			60,221		1,558		2.59		63,835		3,133		4.91		58,827		3,568		6.07

Equity and liabilities (continued)
		2009							2008						2007
		Average balance			Interest expense		Cost		Average    Balance		Interest expense		Cost		Average    balance		Interest expense		Cost
		US$m			US$m		%		US$m		US$m		%		US$m		US$m		%
Customer accounts37
Europe	HSBC Bank ..................	274,949			2,407		0.88		305,702		10,092		3.30		270,965		10,576		3.90
	HSBC Private Banking Holdings (Suisse) .................................	27,250			256		0.94		37,778		1,349		3.57		30,955		1,485		4.80
	HSBC France ...............	61,465			645		1.05		39,428		1,583		4.01		31,845		1,226		3.85
Hong Kong	Hang Seng Bank ...........	71,140			200		0.28		66,142		914		1.38		61,227		1,900		3.10
	The Hongkong and Shanghai Banking Corporation .............	150,520			211		0.14		139,169		1,365		0.98		125,478		3,499		2.79
Rest of Asia-Pacific27	The Hongkong and Shanghai Banking Corporation .............	92,305			1,494		1.62		96,476		2,869		2.97		76,052		2,645		3.48
	HSBC Bank Malaysia ...	9,658			191		1.98		10,266		295		2.87		8,823		260		2.95
Middle East27	HSBC Bank Middle East .................................	18,726			432		2.31		19,922		422		2.12		15,685		578		3.69
North America	HSBC Bank USA ..........	85,007			975		1.15		86,701		2,069		2.39		78,138		3,051		3.90
	HSBC Bank Canada ......	35,051			385		1.10		34,090		967		2.84		30,060		1,090		3.63
Latin America	HSBC Mexico ..............	11,636			391		3.36		14,612		561		3.84		14,230		548		3.85
	Brazilian operations34 ..	28,605			2,946		10.30		26,288		3,110		11.83		19,581		2,163		11.05
	HSBC Bank Panama ....	8,592			353		4.11		7,761		296		3.81		7,604		314		4.13
	HSBC Bank Argentina .	2,151			99		4.60		2,266		145		6.40		1,892		85		4.49
Other operations ...................................		63,863			361		0.57		64,253		1,952		3.04	2.84	55,351		2,297		4.15
		940,918			11,346		1.21		950,854		27,989		2.94		827,886		31,717		3.83
Debt securities in issue
Europe	HSBC Bank ..................		72,955		1,305		1.79		86,216		4,001		4.64		64,168		3,753		5.85
	HSBC France ...............		25,065		330		1.32		30,815		1,447		4.70		28,757		1,207		4.20
	HSBC Finance ..............		-		-		-		215		8		3.72		240		18		7.50
Hong Kong	Hang Seng Bank ...........		1,220		21		1.72		1,685		57		3.38		1,734		80		4.61
Rest of Asia-Pacific27	The Hongkong and Shanghai Banking Corporation .............		5,409		218		4.03		8,995		640		7.12		8,979		559		6.23
	HSBC Bank Malaysia ...		403		16		3.97		475		20		4.21		318		13		4.09
Middle East27	HSBC Bank Middle East .................................		2,988		62		2.07		2,650		90		3.40		2,086		119		5.70
North America	HSBC Bank USA ..........		20,968		590		2.81		21,922		852		3.89		25,724		1,232		4.79
	HSBC Finance ..............		63,563		2,510		3.95		98,096		3,765		3.84		115,520		5,311		4.60
	HSBC Bank Canada ......		12,825		322		2.51		16,957		604		3.56		14,771		640		4.33
Latin America	HSBC Mexico ..............		1,460		67		4.59		2,693		243		9.02		1,147		110		9.59
	Brazilian operations34 ..		1,568		86		5.48		1,859		156		8.39		1,417		115		8.12
	HSBC Bank Panama ....		487		34		6.98		556		33		5.94		607		45		7.41
	HSBC Bank Argentina .		1		-		-		2		-		-		12		-		-
Other operations ...................................			16,745		340		2.03		13,691		66		0.48		6,446		(13)		(0.20)
			225,657		5,901		2.62		286,827		11,982		4.18		271,926		13,189		4.85

		2009						2008						2007
		Average balance		Interest expense		Cost		Average     balance		Interest expense		Cost		Average     balance		Interest expense		Cost
		US$m		US$m		%		US$m		US$m		%		US$m		US$m		%
Other interest-bearing liabilities
Europe	HSBC Bank ..................	50,247		655		1.30		38,906		1,134		2.91		22,035		1,302		5.91
	HSBC Private Banking Holdings (Suisse) .................................	3,892		18		0.46		4,203		135		3.21		3,427		163		4.76
	HSBC France ...............	24,699		187		0.76		33,920		1,361		4.01		27,830		979		3.52
	HSBC Finance ..............	2,363		59		2.50		3,712		191		5.15		4,557		227		4.98
Hong Kong	Hang Seng Bank ...........	789		5		0.63		1,258		41		3.26		2,278		114		5.00
	The Hongkong and Shanghai Banking Corporation .............	12,815		105		0.82		10,557		288		2.73		9,866		535		5.42
Rest of Asia-Pacific27	The Hongkong and Shanghai Banking Corporation .............	19,447		177		0.91		23,685		466		1.97		12,631		580		4.59
	HSBC Bank Malaysia ...	266		2		0.75		338		7		2.07		232		6		2.59
Middle East27	HSBC Bank Middle East .................................	1,748		68		3.89		1,918		89		4.64		1,168		81		6.93
North America	HSBC Bank USA ..........	9,754		368		3.77		10,490		468		4.46		13,602		587		4.32
	HSBC Finance ..............	4,051		102		2.52		4,670		141		3.02		1,941		113		5.82
	HSBC Bank Canada ......	1,149		6		0.52		1,306		19		1.45		1,151		27		2.35
	HSBC Markets Inc .......	1,716		36		2.10		10,349		78		0.75		8,889		255		2.87
Latin America	HSBC Mexico ..............	301		11		3.65		187		20		10.70		207		16		7.73
	Brazilian operations34 ..	1,496		130		8.69		2,340		207		8.85		1,103		182		16.50
	HSBC Bank Panama ....	192		2		1.04		917		3		0.33		574		9		1.57
	HSBC Bank Argentina .	36		1		2.78		92		6		6.52		95		4		4.21
Other operations ...................................		(126,321)		(1,030)				(134,269)		(3,979)				(101,874)		(4,422)
		8,640		902		10.44		14,579		675		4.63		9,712		758		7.80
Total interest-bearing liabilities
Europe	HSBC Bank ..................	441,290		5,116		1.16		487,796		17,631		3.61		411,862		18,304		4.44
	HSBC Private Banking Holdings (Suisse) .................................	32,205		275		0.85		46,474		1,589		3.42		35,072		1,670		4.76
	HSBC France ...............	160,019		1,826		1.14		143,529		6,142		4.28		119,391		4,781		4.00
	HSBC Finance ..............	2,363		59		2.50		3,927		199		5.07		4,797		245		5.11
Hong Kong	Hang Seng Bank ...........	74,330		233		0.31		70,908		1,073		1.51		68,358		2,223		3.25
	The Hongkong and Shanghai Banking Corporation .............	170,227		325		0.19		153,391		1,723		1.12		138,978		4,184		3.01
Rest of Asia-Pacific27	The Hongkong and Shanghai Banking Corporation .............	127,871		2,054		1.61		145,388		4,425		3.04		107,909		4,229		3.92
	HSBC Bank Malaysia ...	10,437		211		2.02		11,417		332		2.91		9,748		291		2.99
Middle East27	HSBC Bank Middle East .................................	24,235		571		2.36		26,170		630		2.41		19,611		810		4.13
North America	HSBC Bank USA ..........	125,725		1,972		1.57		131,632		3,676		2.79		126,017		5,409		4.29
	HSBC Finance ..............	94,242		3,483		3.70		134,892		5,469		4.05		149,350		7,503		5.02
	HSBC Bank Canada ......	50,430		721		1.43		53,744		1,631		3.03		47,663		1,850		3.88
	HSBC Markets Inc .......	1,716		36		2.10		10,349		78		0.75		8,889		255		2.87
Latin America	HSBC Mexico ..............	14,859		518		3.49		18,314		856		4.67		16,567		737		4.45
	Brazilian operations34 ..	34,961		3,403		9.73		33,277		3,663		11.01		23,650		2,566		10.85
	HSBC Bank Panama ....	10,179		415		4.08		10,250		375		3.66		9,922		434		4.37
	HSBC Bank Argentina .	2,200		101		4.59		2,387		152		6.37		2,116		98		4.63
Other operations ...................................		(24,006)		47				(32,003)		(906)				(20,440)		(1,025)
		1,353,283		21,366		1.58		1,451,842		48,738		3.36		1,279,460		54,564		4.26

For footnotes, see page 149.

Net interest margin39
		2009		2008		2007
		%		%		%
Europe	HSBC Bank ...............................................................	2.35		1.71		1.58
	HSBC Private Banking Holdings (Suisse) ...................	1.30		1.24		1.10
	HSBC France .............................................................	0.68		0.26		0.54
	HSBC Finance ...........................................................	8.40		6.36		6.66
Hong Kong	Hang Seng Bank ........................................................	2.11		2.59		2.54
	The Hongkong and Shanghai Banking Corporation ...	1.52		2.27		2.27
Rest of Asia-Pacific27	The Hongkong and Shanghai Banking Corporation ...	2.15		2.15		2.25
	HSBC Bank Malaysia ................................................	2.72		3.02		3.21
Middle East27	HSBC Bank Middle East ............................................	3.59		3.63		3.63
North America	HSBC Bank USA .......................................................	3.58		2.93		2.43
	HSBC Finance ...........................................................	6.18		7.22		6.84
	HSBC Bank Canada ...................................................	1.76		1.93		2.23
Latin America	HSBC Mexico ...........................................................	7.85		8.95		8.60
	Brazilian operations34 ...............................................	7.96		8.85		10.55
	HSBC Bank Panama ..................................................	4.07		4.39		4.29
	HSBC Bank Argentina ...............................................	13.18		10.25		8.86
		2.94		2.90		2.91

Distribution of average total assets
		2009		2008		2007
		%		%		%
Europe	HSBC Bank ...............................................................	36.7		36.7		34.6
	HSBC Private Banking Holdings (Suisse) ...................	2.3		2.3		2.2
	HSBC France .............................................................	15.0		13.8		12.0
	HSBC Finance ...........................................................	-		0.2		0.3
Hong Kong	Hang Seng Bank ........................................................	4.2		3.9		4.4
	The Hongkong and Shanghai Banking Corporation ...	10.5		9.5		10.1
Rest of Asia-Pacific27	The Hongkong and Shanghai Banking Corporation ...	8.5		8.8		6.9
	HSBC Bank Malaysia ................................................	0.6		0.6		0.7
Middle East27	HSBC Bank Middle East ............................................	1.6		1.8		1.4
North America	HSBC Bank USA .......................................................	11.0		11.2		10.1
	HSBC Finance ...........................................................	4.5		6.2		8.3
	HSBC Bank Canada ...................................................	2.7		2.9		3.3
Latin America	HSBC Mexico ...........................................................	1.4		1.5		2.5
	Brazilian operations34 ...............................................	2.1		2.1		1.6
	HSBC Bank Panama ..................................................	0.6		0.6		0.7
	HSBC Bank Argentina ...............................................	0.2		0.2		0.2
Other operations (including consolidation adjustments) ..............................		(1.9)		(2.3)		0.7
		100.0		100.0		100.0

For footnotes, see page 149.

 

END

 

 

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