Hang Seng pt 4/6

HSBC Holdings PLC 05 March 2007 Analysis of assets and liabilities by remaining maturity The maturity analysis is based on the remaining period at the balance sheet date to the contractual maturity date in accordance with the guideline issued by the Hong Kong Monetary Authority. Three months Three One Repayable or less months year Over No on but not to to five contractual Figures in HK$m demand on demand one year five years years Trading maturity Total Assets Cash and balances with banks and other financial institutions 9,390 _ _ _ _ _ _ 9,390 Placings with and advances to banks and other financial institutions 16,529 82,200 976 _ _ _ _ 99,705 Trading assets _ _ _ _ _ 12,467 _ 12,467 Financial assets designated at fair value _ 136 400 1,256 2,557 _ 3,931 8,280 Derivative financial instruments _ 166 146 153 48 1,374 _ 1,887 Advances to customers 17,087 34,868 39,736 87,768 99,894 _ _ 279,353 Financial investments _ 22,703 51,385 134,981 16,601 _ 2,040 227,710 Investments in associates _ _ _ _ _ _ 3,488 3,488 Investment properties _ _ _ _ _ _ 2,732 2,732 Premises, plant and equipment _ _ _ _ _ _ 6,516 6,516 Interest in leasehold land held for own use under operating _ _ _ _ _ _ 580 580 lease Intangible assets _ _ _ _ _ _ 2,070 2,070 Other assets 6,304 5,694 1,500 262 10 _ 1,116 14,886 At 31Dec06 49,310 145,767 94,143 224,420 119,110 13,841 22,473 669,064 At 31Dec05 43,944 97,970 74,642 220,161 110,087 13,861 20,155 580,820 Three months Three One Repayable or less months year Over No on but not to to five contractual Figures in HK$m demand on demand one year five years years Trading maturity Total Liabilities Current, savings and other deposit accounts 290,463 182,885 8,497 976 _ _ _ 482,821 Deposits from banks 2,797 14,032 1,121 _ _ _ _ 17,950 Trading liabilities _ _ _ _ _ 60,093 _ 60,093 Financial liabilities designated at fair value 81 _ _ 996 _ _ 485 1,562 Derivative financial instruments _ 7 101 98 11 1,314 _ 1,531 Certificates of deposit and other debt securities in issue _ 74 866 6,655 _ _ _ 7,595 Other liabilities 6,486 8,577 468 120 143 _ 329 16,123 Liabilities to customers under insurance contracts _ _ _ _ _ _ 22,975 22,975 Deferred tax and current tax liabilities _ 481 747 _ _ _ 1,488 2,716 Subordinated liabilities _ _ _ 7,000 _ _ _ 7,000 At 31Dec06 299,827 206,056 11,800 15,845 154 61,407 25,277 620,366 At 31Dec05 242,673 207,494 8,478 9,120 4,690 47,139 17,496 537,090 Cash and balances with banks and other financial institutions Figures in HK$m At 31Dec06 At 31Dec05 Cash in hand 4,920 4,772 Balances with central banks 357 303 Balances with banks and other financial institutions 4,113 4,126 9,390 9,201 Placings with and advances to banks and other financial institutions Figures in HK$m At 31Dec06 At 31Dec05 Placings with and advances to banks and other financial institutions maturing within one month 75,722 54,338 Placings with and advances to banks and other financial institutions maturing after one month 23,983 14,948 99,705 69,286 Trading assets Figures in HK$m At 31Dec06 At 31Dec05 Treasury bills 6,071 2,594 Certificates of deposit 212 538 Other debt securities 6,109 9,440 Debt securities 12,392 12,572 Equity shares 16 28 Total trading securities 12,408 12,600 Loans and advances to customers^ 59 _ Total trading assets 12,467 12,600 Debt securities: - listed in Hong Kong 2,839 767 - listed outside Hong Kong 269 _ 3,108 767 - unlisted 9,284 11,805 12,392 12,572 Equity shares: - listed in Hong Kong 16 17 - unlisted _ 11 16 28 Total trading securities 12,408 12,600 Debt securities: Issued by public bodies: - central governments and central banks 8,969 5,625 - other public sector entities 926 1,489 9,895 7,114 Issued by other bodies: - banks and other financial institutions 1,555 2,836 - corporate entities 942 2,622 2,497 5,458 12,392 12,572 Equity shares: Issued by corporate entities 16 28 Total trading securities 12,408 12,600 ^These represent amounts receivable from counterparties on trading transactions not yet settled. Financial assets designated at fair value Figures in HK$m At 31Dec06 At 31Dec05 Certificates of deposit 232 194 Other debt securities 4,587 4,075 Debt securities 4,819 4,269 Equity shares 3,461 1,758 8,280 6,027 Debt securities: - listed in Hong Kong 359 100 - listed outside Hong Kong 31 22 390 122 - unlisted 4,429 4,147 4,819 4,269 Equity shares: - listed in Hong Kong 1,202 732 - listed outside Hong Kong 1,300 979 2,502 1,711 - unlisted 959 47 3,461 1,758 8,280 6,027 Debt securities: Issued by public bodies: - central governments and central banks 870 865 - other public sector entities 285 295 1,155 1,160 Issued by other bodies: - banks and other financial institutions 3,535 2,937 - corporate entities 129 172 3,664 3,109 4,819 4,269 Equity shares: Issued by corporate entities 3,461 1,758 8,280 6,027 Financial assets are designated at fair value, usually together with the related liabilities or derivative financial instruments, primarily for the purpose of eliminating or significantly reducing the accounting mismatch. The figures also include those financial assets of life insurance funds designated at fair value for backing policyholders' liabilities. Advances to customers Figures in HK$m At 31Dec06 At 31Dec05 Gross advances to customers 280,277 261,714 Less: Loan impairment allowances: - individually assessed (406) (524) - collectively assessed (518) (510) 279,353 260,680 Included in advances to customers are: - trade bills 3,907 3,024 - loan impairment allowances (16) (14) 3,891 3,010 Loan impairment allowances against advances to customers Individually Collectively Figures in HK$m assessed assessed Total At 1 January 2006 524 510 1,034 Amounts written off (224) (177) (401) Recoveries of advances written off in previous years 25 40 65 New impairment allowances charged to income statement 238 185 423 Impairment allowances released to income statement (131) (40) (171) Unwind of discount of loan impairment allowances recognised as 'interest income' (26) - (26) At 31 December 2006 406 518 924 Total loan impairment allowances as a percentage of gross advances to customers are as follows: At 31Dec06 At 31Dec05 % % Loan impairment allowances: - individually assessed 0.15 0.20 - collectively assessed 0.18 0.19 Total loan impairment allowances 0.33 0.39 Total loan impairment allowances as a percentage of gross advances to customers was 0.33 per cent at 31 December 2006, compared with 0.39 per cent at the previous year-end. Individually assessed allowances as a percentage of gross advances fell by 0.05 percentage points to 0.15 per cent, reflecting recoveries from doubtful accounts and writing off of irrecoverable balances against impairment allowances. The percentage of collectively assessed allowances was slightly lowered to 0.18 per cent from 0.19 per cent at the previous year-end. Impaired advances and allowances Figures in HK$m At 31Dec06 At 31Dec05 Gross impaired advances 1,387 1,433 Individually assessed allowances (406) (524) Net impaired advances 981 909 Individually assessed allowances as a percentage of gross impaired advances 29.3% 36.6% Gross impaired advances as a percentage of gross advances to customers 0.5% 0.5% Impaired advances are those advances with objective evidence of impairment as assessed on an individual basis. Impairment allowances are made to write down the carrying value of the advances to the discounted value of future recoverable amounts, including the realisation of collateral. Gross impaired advances fell by 3.2 per cent to HK$1,387 million, reflecting the recovery and upgrading of certain commercial banking accounts. Gross impaired advances as a percentage of gross advances to customers stood at 0.5 per cent, the same level as last year. Overdue advances Advances to customers that are more than three months overdue and their expression as a percentage of gross advances to customers are as follows: At 31Dec06 At 31Dec05 HK$m % HK$m % Gross advances to customers which have been overdue with respect to either principal or interest for periods of: - six months or less but over three months 504 0.2 482 0.2 - one year or less but over six months 263 0.1 211 0.1 - over one year 173 _ 169 _ 940 0.3 862 0.3 Advances with a specific repayment date are classified as overdue when the principal or interest is overdue and remains unpaid at year-end. Advances repayable by regular instalments are treated as overdue when an instalment payment is overdue and remains unpaid at year-end. Advances repayable on demand are classified as overdue either when a demand for repayment has been served on the borrower but repayment has not been made in accordance with the demand notice, or when the advances have remained continuously outside the approved limit advised to the borrower for more than the overdue period in question. Overdue advances increased by 9.0 per cent to HK$940 million at 31 December 2006, representing 0.3 per cent (same level as the previous year-end) of gross advances to customers, mainly attributable to commercial banking accounts. Rescheduled advances Rescheduled advances and their expression as a percentage of gross advances to customers are as follows: At 31Dec06 At 31Dec05 HK$m % HK$m % Rescheduled advances to customers 357 0.1 361 0.1 Rescheduled advances are those that have been rescheduled or renegotiated for reasons related to the borrower's financial difficulties. This will normally involve the granting of concessionary terms and resetting the overdue account to non-overdue status. A rescheduled advance will continue to be disclosed as such unless the debt has been performing in accordance with the rescheduled terms for a period of six to twelve months. Rescheduled advances that have been overdue for more than three months under the rescheduled terms are reported as overdue advances to customers (page 38). Rescheduled advances decreased by HK$4 million, or 1.1 per cent, to HK$357 million at 31 December 2006, representing 0.1 per cent (same level as the previous year-end) of gross advances to customers. Segmental analysis of advances to customers by geographical area Advances to customers by geographical area are classified according to the location of the counterparties after taking into account the transfer of risk. In general, risk transfer applies when an advance is guaranteed by a party located in an area which is different from that of the counterparty. At 31 December 2006, over 90 per cent of the group's advances to customers, including related impaired advances and overdue advances, were classified under Hong Kong (a position unchanged from that at 31 December 2005). Gross advances to customers by industry sector The analysis of gross advances to customers by industry sector based on categories and definitions used by the Hong Kong Monetary Authority ('HKMA') is as follows: At 31Dec06 At 31Dec05 Figures in HK$m (restated) Gross advances to customers for use in Hong Kong Industrial, commercial and financial sectors Property development 18,051 16,446 Property investment 48,096 45,964 Financial concerns 2,103 968 Stockbrokers 234 221 Wholesale and retail trade 6,360 5,562 Manufacturing 7,670 6,477 Transport and transport equipment 11,145 11,919 Other 22,787 22,912 116,446 110,469 Individuals Advances for the purchase of flats under the Government Home Ownership Scheme, Private Sector Participation Scheme and Tenants Purchase Scheme 20,078 22,879 Advances for the purchase of other residential properties 83,616 81,318 Credit card advances 9,448 7,735 Other 8,813 7,563 121,955 119,495 Total gross advances for use in Hong Kong 238,401 229,964 Trade finance 19,684 15,874 Gross advances for use outside Hong Kong 22,192 15,876 Gross advances to customers 280,277 261,714 Gross advances to customers rose by 7.1 per cent compared with the previous year-end. Lending to the property development sector rose 9.8 per cent, reflecting the increase in financing of development projects by CIB and CMB. The 4.6 per cent rise in property investment was largely residential mortgages to property holding vehicles controlled by individuals. Lending to investment companies grouped under the financial concerns sector rose significantly, driven by the active investment market. The encouraging growth of the CMB loan portfolio was reflected in rises of 14.3 per cent and 18.4 per cent in lending to the wholesale and retail trade and manufacturing sector respectively. Lending to the transport and transport equipment sector recorded a fall of 6.5 per cent, attributable to the disposal of a part of the taxi portfolio to balance the overall loan portfolio structure. Excluding such effect, lending to this sector rose 5.5 per cent. Trade finance recorded strong growth of 24.0 per cent and gained substantial market share in 2006, reflecting CMB's achievement in strengthening customer relationships and enhancing trade finance service efficiency. Lending to individuals recorded a rise of 2.1 per cent. Excluding the fall in Government Home Ownership Scheme mortgages, lending to individuals grew by 5.4 per cent. Residential mortgages to individuals rose by 2.8 per cent and the bank gained market share amid intense market competition. Including mortgages held in the name of investment holding vehicles, which were grouped under the property investment sector as mentioned above, the growth rate reached 5.2 per cent. With the improved economic environment and positive consumer sentiment, personal loans and card advances rose 46.4 per cent and 22.1 per cent respectively. PFS further expanded its consumer finance business by stepping up marketing initiatives and improving process efficiency. Loans for use outside Hong Kong increased by HK$6,316 million, or 39.8 per cent, over the previous year-end. This was due largely to the 50.9 per cent expansion of lending by mainland branches, which had reached HK$15,851 million at 31 December 2006. Strong growth was recorded in corporate lending, driven by renminbi loans which can be priced at a higher margin. Trade finance rose significantly, reflecting good collaboration between the Hong Kong and mainland trade services teams. Mainland branches continued to grow residential mortgage business, leveraging the bank's strong capabilities and experience in Hong Kong. Financial investments Figures in HK$m At 31Dec06 At 31Dec05 Available-for-sale at fair value: - debt securities 209,463 177,813 - equity shares 2,110 1,360 Held-to-maturity debt securities at amortised cost 16,137 10,731 227,710 189,904 Fair value of held-to-maturity debt securities 16,551 10,778 Treasury bills 1,088 4,816 Certificates of deposit 25,020 27,048 Other debt securities 199,492 156,680 Debt securities 225,600 188,544 Equity shares 2,110 1,360 227,710 189,904 Debt securities: - listed in Hong Kong 3,759 3,008 - listed outside Hong Kong 1,914 1,947 5,673 4,955 - unlisted 219,927 183,589 225,600 188,544 Equity shares: - listed in Hong Kong 1,702 1,049 - listed outside Hong Kong 150 186 1,852 1,235 - unlisted 258 125 2,110 1,360 227,710 189,904 Fair value of listed financial investments 7,538 6,209 Debt securities: Issued by public bodies: - central governments and central banks 8,321 15,981 - other public sector entities 7,044 8,667 15,365 24,648 Issued by other bodies: - banks and other financial institutions 192,751 149,557 - corporate entities 17,484 14,339 210,235 163,896 225,600 188,544 Equity shares: Issued by corporate entities 2,110 1,360 227,710 189,904 Available-for-sale investments include treasury bills, certificates of deposit, other debt securities and equity shares intended to be held for an indefinite period of time, but which may be sold in response to needs for liquidity or changes in the market environment. Available-for-sale investments are carried at fair value with the gains and losses from change in fair value recognised through equity reserves. Held-to-maturity debt securities are stated at amortised cost. Where debt securities have been purchased at a premium or discount, the carrying value of the security is adjusted to reflect the effective interest rate of the debt security taking into account such premium or discount. Amounts due from/to immediate holding company and fellow subsidiary companies At balance sheet dates, the amounts due from/to immediate holding company and fellow subsidiary companies included in the assets and liabilities balances of the consolidated balance sheet are as follows: Figures in HK$m At 31Dec06 At 31Dec05 Amounts due from: Cash and balances with banks and other financial institutions 1,665 718 Placings with and advances to banks and other financial institutions 4,573 3,495 Trading assets _ 50 Financial assets designated at fair value 2,842 2,299 Derivative financial instruments 194 145 Financial investments 1,023 1,135 Other assets 79 29 10,376 7,871 Amounts due to: Customer accounts 199 167 Deposits from banks 5,724 5,136 Derivative financial instruments 333 488 Subordinated liabilities 2,022 2,016 Other liabilities 473 361 8,751 8,168 Investments in associates Figures in HK$m At 31Dec06 At 31Dec05 Share of net assets 3,158 2,611 Goodwill 330 318 3,488 2,929 Intangible assets Figures in HK$m At 31Dec06 At 31Dec05 Present value of in-force long-term insurance business 1,927 1,565 Internally developed software 129 56 Acquired software 14 15 2,070 1,636 Other assets Figures in HK$m At 31Dec06 At 31Dec05 Items in the course of collection from other banks 6,036 8,068 Prepayments and accrued income 3,520 3,016 Deferred tax assets 1 9 Assets held for sale 256 216 Acceptances and endorsements 2,855 2,371 Other accounts 2,218 1,545 14,886 15,225 This information is provided by RNS The company news service from the London Stock Exchange

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