HSBC Holdings Plc 2010 Results

RNS Number : 9295B
HSBC Holdings PLC
26 February 2011
 



 

 

 

 

 

28 February 2011

 

HSBC HOLDINGS PLC

2010 FINAL RESULTS - HIGHLIGHTS1

 

Strong financial performance

·     Underlying pre-tax profit up by almost US$5bn or 36% to US$18.4bn.

·     Pre-tax profit more than doubled to US$19bn on a reported basis.

·     Profit attributable to shareholders rose to US$13.2bn (2009: US$5.8bn).

·     Loan impairment charges down US$12.4bn to US$14bn, lowest since 2006.

·     Earnings per share up 115% to US$0.73 (2009: US$0.34).

·     Dividends declared in respect of 2010 totalled US$6.3bn, or US$0.36 per ordinary share, with a fourth interim dividend for 2010 of US$0.12 per ordinary share.

 

Continued benefits from HSBC's universal banking model

·     Profitable in every customer group and region, including North America, for first time since 2006.

·     Improved Personal Financial Services performance to achieve pre-tax profit of US$3.5bn.

·     Commercial Banking up strongly, with pre-tax profit rising 48% to US$6bn.

·     Global Banking and Markets pre-tax profit of US$9.2bn, second only to 2009.

·     Faster growing markets accounted for 34% of customer lending, up from 26% in 2008, on a reported basis.

·     Rest of Asia-Pacific pre-tax profit of US$5.7bn, at a similar level to Hong Kong for first time.

·     Continued capital generation - core tier 1 ratio increased to 10.5% from 9.4% on a reported basis.

·     Strong liquidity maintained - ratio of advances-to-deposits at 78.1%.

 

Open for business and supporting customer needs

·     Customer lending up 8% to US$958bn; deposits up 7% to US$1.2tn.

·     No. 1 mortgage lender in Hong Kong; record share of UK mortgage market.

·     UK total Commercial Banking lending up 3% to £39.5bn; new loans up 17% to £9.9bn.

·     UK new loans to SMEs up 19% to £2.4bn; total SME lending down 1.6% as customers repaid.

·     Added over half a million Commercial Banking customers globally; helped 2,400 businesses a week start-up in UK.

·     Emerging market assets under management increased over 20% to US$145bn on a reported basis.

 

 

1

 

 

HSBC HOLDINGS REPORTS PRE-TAX PROFIT OF US$19,037 MILLION1

 

HSBC made a profit before tax of US$19,037m, an increase of US$11,958m, or 169%, compared with 2009.

 

Net interest income of US$39,441m was US$1,289m, or 3.2%, lower than 2009.

 

Net operating income before loan impairment charges and other credit risk provisions of US$68,247m was US$2,066m, or 3.1%, higher than 2009.

 

Total operating expenses of US$37,688m rose by US$3,293m, or 9.6%, compared with 2009. On an underlying basis operating expenses were up 8% compared with 2009.

 

HSBC's cost efficiency ratio was 55.2% compared with 52.0% in 2009.

 

Loan impairment charges and other credit risk provisions were US$14,039m in 2010, US$12,449m lower than 2009.

 

The core tier 1 ratio and tier 1 ratio for the Group remained strong at 10.5% and 12.1%, respectively, at 31 December 2010.

 

The Group's total assets at 31 December 2010 were US$2,455bn, an increase of US$91bn, or 3.8%, since 31 December 2009.

1When reference to 'underlying' or 'underlying basis' is made in tables or commentaries, comparative information has been expressed at constant currency, eliminating the impact of fair value movements in respect of credit spread changes on HSBC's own debt and adjusting for the effects of acquisitions and disposals. A reconciliation of reported and underlying profit before tax is presented in Additional Information.

 

Geographical distribution of results1

 

Year ended 31 December


2010


2009


US$m


%


US$m


%









Europe

4,302


22.6


4,009


56.7

Hong Kong

5,692


29.9


5,029


71.0

Rest of Asia-Pacific

5,902


31.0


4,200


59.3

Middle East

892


4.7


455


6.4

North America

454


2.4


(7,738)


(109.3)

Latin America

1,795


9.4


1,124


15.9

 

 


 


 


 

Profit before tax

19,037


100.0


7,079


100.0

 

 


 


 


 

Tax expense

(4,846)


 


(385)


 

 

 


 


 


 

Profit for the year

14,191


 


6,694


 

 

 


 


 


 

Profit attributable to shareholders of the parent company

13,159


 


5,834


 

Profit attributable to non-controlling interests

1,032


 


860


 

 

Distribution of results by customer group and global business1

 

Year ended 31 December


2010


2009


US$m


%


US$m

 

%









Personal Financial Services

3,518


18.5


(2,065)


(29.2)

Commercial Banking

6,090


32.0


4,275


60.4

Global Banking and Markets

9,536


50.1


10,481


148.1

Global Private Banking

1,054


5.5


1,108


15.6

Other

(1,161)


(6.1)


(6,720)


(94.9)

 

 


 


 


 

Profit before tax

19,037


100.0


7,079


100.0

 

 1  All figures on this page are stated on a reported basis.

 

Group Chairman's Statement

 

Statement by Douglas Flint, Group Chairman

 

When I took on the role of Chairman less than 90 days ago, I was acutely aware of the challenges facing our industry. I was conscious too of the need to demonstrate to all of our stakeholders that HSBC understands the responsibilities that accompany the systemic significance which continued success has built for HSBC in many of the markets in which we operate, not least those in Asia, given their historical significance to the Group. 145 years after we were founded, Hong Kong and the rest of Asia remain at the heart of HSBC's strength and identity and our commitment to the region is unwavering.

 

I fully acknowledge that our scale, the trust that our depositors place in us and our relevance to our personal and corporate clients - for their financing, banking, investment and risk management needs - all depend upon our maintaining our reputation and our integrity.

 

I also understand how important it is for you, our shareholders, that HSBC builds sustainable long-term value that is reflected through the share price and rebuilds, as quickly as competing regulatory demands allow, the dividend that was reduced during the financial crisis.

 

I firmly believe that HSBC has the people, the financial strength and the organisational structure best able to deliver all of the above and it is a privilege to have the opportunity to serve as Group Chairman as we enter a fresh chapter in our history.

 

Before I go any further, I want to pay tribute to both Stephen Green and Michael Geoghegan, who stepped down at the end of last year from their roles as Group Chairman and Group Chief Executive after, respectively, 28 and 37 years service to HSBC. It fell to them to be at the helm as HSBC navigated its way through the worst financial crisis since the 1930s. Mike led from the front in addressing the problems in our consumer finance subsidiary in the United States and in reshaping HSBC's organisational structure and operational practices in order to better and more efficiently serve an increasingly interconnected world. Stephen's personal reputation for integrity and probity stood out and distinguished HSBC during a period of intense disaffection with the banking industry. For their contribution over many years we owe them a deep debt of gratitude and wish them both well.

 

Our performance in 2010

 

The Group Chief Executive's business review sets out clearly how HSBC delivered a much improved balance of profits in 2010. It is reassuring to see our Personal Financial Services businesses returning to profitability in aggregate and Commercial Banking growing significantly, largely in emerging markets. These achievements augmented another year of strong performance in Global Banking and Markets.

 

Earnings per share improved strongly, rising by 115% to reach US$0.73 per share.

 

The Group's capital position also strengthened with the core tier 1 ratio, the ratio most favoured by regulators as it comprises equity capital after regulatory adjustments and deductions, increasing from 9.4% to 10.5%, largely due to profit retention throughout the year.

 

As a consequence of this strong capital generation, together with greater clarity on the direction of regulatory reform of capital requirements and an improving economic backdrop in the developed world - particularly in the United States - the Board has approved increases in both the final dividend payment in respect of 2010 and the planned quarterly dividends for 2011. The final dividend for 2010, payable on 5 May 2011 to shareholders on the register on 17 March 2011, will be 12 cents per ordinary share, up from 10 cents at the same point last year. For the remainder of 2011 we plan to pay quarterly dividends of nine cents for each of the first three quarters compared with eight cents in respect of the equivalent quarters of 2010.

 

A new leadership team

 

We enter 2011 with a new leadership team, but only in the sense of changed roles. Everyone has worked together over many years and there is immense experience to draw on both from within HSBC and from earlier careers at peer organisations. Stuart Gulliver is leading the management team as Group Chief Executive. His clear objective is to deliver sustainable long-term value for shareholders consistently in a manner that maintains the confidence of all other key stakeholders in our businesses including depositors, counterparties, long-term creditors, customers, employees, regulators and governments. His review on pages 8 to 11 gives an insight into his immediate priorities.

 

Everything we do is governed by the imperative of upholding HSBC's corporate reputation and character at the highest level and adding further strength to our brand; we deeply regret that a number of weaknesses in regulatory compliance were highlighted in 2010 and we are resolved to remedy these and reinforce the high standards we demand of ourselves.

 

For my part, I shall be focusing on engaging at the highest level in the regulatory reform debates that will, in large part, shape our future. I shall also lead the Board in the stewardship and review of performance of our financial and human resources.

 

In the interest of full transparency, we have today published on our website the respective roles and responsibilities of the Group Chairman, the Deputy Chairman and Senior Independent Director and the Group Chief Executive.

 

Board changes

 

I have already paid tribute to the contributions of Stephen Green and Michael Geoghegan. Vincent Cheng has indicated that he will step down at the next AGM and on behalf of the Board I want to thank him for his immense contribution in many roles over 33 years. Vincent will retain an association with the Group by taking on an advisory role to the Group Chief Executive on regional matters. Laura Cha will join the Board on 1 March; Laura has been Deputy Chair of The Hongkong and Shanghai Banking Corporation Limited for four years and brings a wealth of experience of China; fuller details of her background and experience are set out in the Directors' Report.

 

Regulatory update

 

There was much progress made during 2010 on the regulatory reform agenda. Although there is still a great deal to do, the shape of capital requirements was broadly clarified and an implementation timetable stretching out to 2019 was agreed to allow time for the industry to adjust progressively. A minimum common equity tier 1 ratio of 7%, including a capital conservation buffer, has been agreed. HSBC already meets this threshold requirement. The Group Chief Executive's Business Review addresses how these revised requirements will impact our targeted return on equity.

 

During 2011, the debate will be dominated by consideration of the calibration of minimum liquidity standards. Although it is clear that liquidity and funding weaknesses were key elements contributing to the crisis, HSBC agrees with the industry consensus that the revised requirements in these areas are overly conservative and could lead to unnecessary deleveraging at a time of fragile economic recovery in much of the developed world. It will be a near impossibility for the industry to expand business lending at the same time as increasing the amount of deposits deployed in government bonds while, for many banks but not HSBC, reducing dependency on central bank liquidity support arrangements. It is to be hoped that the observation period, which starts this year and precedes the formal introduction of the new requirements, will inform a recalibration of these minimum liquidity standards.

 

A second debate of importance to HSBC's shareholders in 2011 will concern the designation of 'Systemically Important Financial Institutions' ('SIFI's). Consideration is being given in the regulatory community to mandating higher capital requirements, together with more intense supervision, for institutions classified as SIFIs. We agree with heightened supervision but it is not clear that the reduced shareholder returns that would follow the imposition of incremental capital would be compensated for by improved stability. Classification as a SIFI with a requirement to hold incremental capital would, however, probably lead others to favour SIFIs as counterparties, and may therefore have the unintended consequence of further concentrating the industry.

 

HSBC's position is that systemic importance should not be determined by size alone. It is clear, however, that, on almost any basis, HSBC would be classified as systemically important. For this reason we are engaging fully in the debate around the consequences of designation as a SIFI. In particular, we draw attention to the benefits of our corporate organisation through separate subsidiaries in mitigation against the imposition of incremental capital for SIFIs based on size alone.

 

In October 2010, the UK government confirmed its intention to raise the sum of £2.5bn (US$3.9bn) through a levy on bank balance sheets, and recently announced it will accelerate the full impact of this levy to 2011. We take no issue with the right of the UK government to raise a levy on the banking industry, particularly when having had to risk taxpayers' money to rescue a number of important UK institutions. However, as the proposed levy is to be applied to the consolidated balance sheet, it applies beyond the legal boundary of the domestic institution to include overseas operations conducted through separately capitalised subsidiaries. This therefore constitutes an additional cost of basing a growing multinational banking group in the UK.

 

We intend to clarify in each set of results going forward the impact of the levy, split between UK and overseas operations, and Stuart Gulliver covers this in more detail in his review. We regard the levy, which is not tax deductible, as akin to a distribution of profits. For this reason, we intend to add to future shareholder dividends that would otherwise be paid, any amount saved in the event that the levy is restructured or relieved in due course.

 

The role of banks in society

 

The recent crisis has caused a proper introspection as to the role that banks play in society and at HSBC we welcome this. Banking is not simply about money. It is about helping individuals and organisations within society to meet personal and corporate objectives by facilitating access to financial capital and protecting value for those who make capital available. Payment mechanisms, the provision of long-term credit, trade finance, hedging and other risk management products, deposit, investment and retirement services are but a few of the activities through which banking groups contribute to today's financial system. Society cannot function without an effective financial system that delivers value to those it serves at an intermediation cost that is proportionate to the value created. Somehow, many participants and not just banks, lost sight of this basic principle in the run-up to the recent financial crisis and the consequences for all have, inevitably, been far reaching. There is no doubt that the scale of regulatory reform will bring many challenges, but it will also open new opportunities.

 

At HSBC, we shall not forget what happened to precipitate the scale of reform now underway. Although the financial turmoil arising from the events of 2007-2008 has largely moderated, in large part as a result of co-ordinated government action and support to the financial system, we enter 2011 with humility, ready to apply right across HSBC all of the lessons learned, notwithstanding that HSBC itself neither sought nor received support from any government.

 

Society has a right to ask if banks 'get it'. At HSBC, we do - and we are focused on embedding the necessary changes in our business model for long-term sustainable value creation. But we also do not forget that value creation depends upon HSBC recruiting, training and retaining the right talent in order to manage the risks we accept through intermediating customer flows; design solutions to address complex financial problems; build enduring relationships with core customers; build confidence in the Group's financial strength; and create the strategic options that offer the next generation fresh opportunities to continue building sustainable value.

 

In this globalised world, there is intense competition for the best people and, given our long history within and connections into the faster-growing developing markets, our best people are highly marketable. It would be irresponsible to allow our comparative advantages to wither by ignoring the market forces that exist around compensation, even though we understand how sensitive this subject is. Reform in this area can only be achieved if there is concerted international agreement on limiting the quantum of pay as well as harmonising pay structures but there appears to be no appetite to take the initiative on this. Our duty to shareholders is to build sustainable value in the economic and competitive environment in which we operate and our principal resource for achieving this is human talent. Under the governance of the Board, we will continue to operate and apply remuneration policies and practices that take full recognition of best practice and are aligned with the long-term interests of shareholders.

 

HSBC's people

 

Finally, I want to pay tribute to my 307,000 colleagues. So many of HSBC's people have exemplified commitment and endeavour again in 2010, helping our customers and clients to meet their financial objectives while taking on the additional burden of preparing for regulatory change. This has been done against a backdrop of continuing broad-based fiscal support to many economies, with public opinion consistently and highly critical of our industry. As I look forward, it is the combination of the capabilities of HSBC's people, their determination to do the right thing for our customers and their deep sense of responsibility to the communities they serve that makes me confident that HSBC will play a leading role in rebuilding the trust that our industry has lost and, by doing so, will build sustainable value for you, our shareholders.

 

Group Chief Executive's Business Review

 

Review by Stuart Gulliver, Group Chief Executive

 

Underlying financial performance continued to improve in 2010 and shareholders continued to benefit from HSBC's universal banking model. All regions and customer groups were profitable, as Personal Financial Services and North America returned to profit. Commercial Banking made an increased contribution to underlying earnings and Global Banking and Markets also remained strongly profitable, albeit behind 2009's record performance, reflecting a well-balanced and diversified business.

 

Credit experience continued to improve, as a result of a stronger global economy and our actions to reduce balance sheet risk. As a globally-connected bank with a growing presence across the world's faster-growing regions, HSBC also benefitted from higher trade volumes and strong momentum in emerging economies, especially in Asia. Asia contributed the largest proportion to underlying pre tax profits, while the contributions made by Latin America and the Middle East also increased. Together with our conservative management of the balance sheet, this improved performance allowed us to concentrate on serving our customers and to further strengthen our capital position.

 

Group performance headlines

 

·    Profit before tax1 improved year on year. On a reported basis, profits increased by nearly US$12bn from US$7.1bn to US$19bn. On an underlying basis, profits increased by 36%, or almost US$5bn, from US$13.5bn to US$18.4bn.

 

·    In a period of sustained low interest rates, revenues remained constrained, reflecting four principal factors: reducing loan balances in our US business; lower trading income in Global Banking and Markets resulting from lower client activity; adverse fair value movements on non-qualifying hedges; and a reduced contribution from Balance Sheet Management in line with earlier guidance.

 

·    Strong asset growth in Commercial Banking, particularly in Asia, higher trade-related revenues generally, and expansion of our wealth management business, again most notably in Asia, partially offset these revenue pressures.

 

·    Loan impairment charges reduced by almost half to US$14.0bn. All regions and customer groups improved. The US experienced the greatest improvement, largely in the cards and consumer finance portfolios. Loan impairment charges also declined significantly in Latin America and the Middle East.

 

·    In Global Banking and Markets, loan impairment charges fell significantly, notably in Europe as economic conditions improved. Credit risk provisions reduced by US$1bn to US$0.4bn in the available-for-sale asset-backed-securities portfolios due to a slowing in the rate of anticipated losses on underlying assets, in line with previous guidance. The associated available for sale reserve declined to US$6.4bn from US$12.2bn.

 

·    The cost efficiency ratio rose to 55.2%, which is above our target range and unacceptable to me. The causes were constrained revenues and, in part, investment in strategic growth initiatives across the business together with higher staff costs. It additionally reflected one-off payroll taxes of US$0.3bn paid in 2010 in respect of the previous year and a pension accounting credit of US$0.5bn in 2009 and US$0.1bn in 2010. However, it is also clear that we need to re-engineer the business to remove inefficiencies.

 

·    Return on average total shareholders' equity rose from 5.1% to 9.5%, reflecting increased profit generation during the year.

 

·    HSBC continued to grow its capital base and strengthen its capital ratios further. The core tier 1 ratio increased from 9.4% to 10.5%, as a result of capital generation and lower risk weighted assets.

 

·    Total loans and advances to customers increased by 7% to US$958bn while deposits increased by 6% to US$1.2 trillion.

 

Impact of the evolving regulatory environment on the business

 

Much of the detail around the potential impact of change for banks remains uncertain. However, analysis of what we know confirms that our ability to generate capital and manage our risk-weighted assets positions HSBC strongly - and competitively - within the industry as the pace of change intensifies.

 

HSBC fully supports the rationale of the Basel III proposals which require banks to hold more capital. This is absolutely core to ensuring that governments and taxpayers are better protected in future than they have been in the past.

 

Certain aspects of the Basel III rules remain uncertain as to interpretation and application by national regulators. Notably, this includes any capital requirements which may be imposed on the Group over the implementation period in respect of the countercyclical capital buffer and any additional regulatory requirements for SIFIs. However, we believe that ultimately the level for the common equity tier 1 ratio of the Group may lie in the range 9.5 to 10.5%. This exceeds the minimum requirement for common equity tier 1 capital plus the capital conservation buffer.

 

We have estimated the pro forma common equity tier 1 ratio of the Group based on our interpretation of the new Basel III rules as they will apply from 1 January 2019, based on the position of the Group at year-end 2010. The rules will be phased in from 2013 with a gradual impact and we have estimated that their full application, on a proforma basis, would result in a common equity tier 1 ratio which is lower than the Basel II core tier 1 ratio by some 250-300 basis points. The changes relate to increased capital deductions, new regulatory adjustments and increases in risk-weighted assets. However, as the changes will progressively take effect over six years leading up to 2019 and as HSBC has a strong track record of capital generation and actively manages its risk-weighted assets, we are confident in our ability to mitigate the effect of the new rules before they come into force.

 

Last year, HSBC committed to reviewing its target shareholder return on equity once the effects of new regulation became clearer. Now that we have better visibility on the impact of increased capital requirements, we believe that higher costs of the evolving regulatory framework will, all other things being equal, depress returns for shareholders of banks. We will therefore target a return on average shareholders' equity of 12-15% in the future.

 

As Group Chief Executive, it is right that, in managing the business and developing Group strategy, my principal office should be in Hong Kong - a global financial hub of growing importance at the centre of HSBC's strategically most important region. However, the company is headquartered in London and we hope to remain there. London's pre-eminence as an international financial services centre is widely recognised and well-deserved and reflects successful government policy over decades to build that position. It is therefore important to us that the UK's competitive position is protected and sustained. Appropriate supervision is an important part of the larger equation. Policymakers should continue to legislate and regulate, but they must not destroy London's competitive position in the process.

 

As the Group Chairman has outlined, new legislation is expected to be enacted in the UK, effective from the start of 2011, one curious consequence of which is an explicit incremental cost of being headquartered in the UK for any global bank. Had this been applied for 2010, this annual charge would have amounted to approximately US$0.6bn in HSBC's case. Moreover, the overseas balance sheet would account for the majority of the annual charge, with the UK balance sheet accounting for approximately one third of the total.

 

Outlook

 

We have been closely watching events unfold in parts of the Middle East and North Africa. Our primary concern is for the security of our 12,000 staff across the region and we continue to work to ensure their safety. We have also activated robust continuity plans so that we can also stay open for business and support the needs of our customers. As a strongly capitalised global bank, HSBC's financial performance has not been materially affected by events to date. HSBC has been present in the Middle East for more than 50 years and we remain absolutely committed to its future. We also believe that the region's economies have a number of structural strengths which leave us positive on the longer-term outlook.

 

In the short-term, risks to global growth remain, not least from an elevated oil price. We therefore expect cyclical volatility to continue - including in emerging markets - and progress is unlikely to be linear. In the longer-term, we believe that growth rates in many Western markets will continue to significantly underperform those of the emerging world. Emerging markets are no longer simply leading the recovery from a Western crisis: the growth gap has become a sustained secular trend.

 

The global economy's structural position also still requires fundamental readjustment. Many Western economies must still deal with a large overhang of household and government debt and weak growth and high unemployment will make this a slow and painful process. As faster-growing nations seek to limit the effect of Western monetary policy on their own economies, we cannot discount the risk of increased tension over exchange rate and trade issues.

 

HSBC's balance sheet remains strongly positioned to benefit from future interest rate rises. We are realistic that, in many developed countries at least, historically low rates may continue to constrain income growth in the near-term. Nevertheless, maintaining a conservative liquidity position is core to our proposition and to our funding strength. In our risk appetite statement approved by the Board we have set a maximum advances-to-deposits ratio for the Group of 90%. This underlines our continuing commitment to a high level of liquidity and reflects our philosophy that HSBC should not be reliant on wholesale markets for funding. Even with a ratio currently slightly below 80%, we have capacity for further lending growth.

 

In the short-term, we expect the benefits of asset growth achieved in 2010 to continue to flow into revenues. In the medium-term, we will continue to target growth in the most strategically attractive markets for HSBC and build our capabilities in connectivity, one of our distinctive strengths as a globally-connected bank.

 

At the same time, with demand in many developed markets constrained and interest spreads remaining compressed, we fully recognise the importance of ever more robust cost management discipline and the need to continue re-engineering the business to improve efficiency.

 

Furthermore, capital is becoming a scarcer resource and, as a new regulatory environment evolves, I am committed to making capital allocation a more disciplined and rigorous process at HSBC in order to drive the correct investment decisions for the future.

 

We will talk more to investors about each of these initiatives later in the spring. However, as a result of this focus, we are committed to delivering a cost efficiency ratio and a return on average shareholders' equity within our published target range.

 

We also recognise the importance of reliable dividend income for our shareholders and I believe it should be possible to benchmark a payout ratio of between 40-60% of attributable profits under normal market conditions.

 

In closing, I would like to acknowledge the huge contribution that my predecessor, Mike Geoghegan, made to HSBC in his five years as Group Chief Executive - not least during 2010 - and I wish him well for the future.

 

Finally, I am pleased to report that we have had a good start to the year, with continued momentum in lending, mainly in emerging markets and in respect of global trade.

 

1  All references to profits are profits before tax unless otherwise stated.

 

Financial Overview

 

Year ended 31 December

 

 

Year ended 31 December

2010

 

 

2010

 

2009

£m

 

HK$m

 

 

US$m

 

US$m

 

 

 

 

For the year

 

 

 

12,336

 

147,898

 

Profit before tax

19,037

 

7,079

8,527

 

102,232

 

Profit attributable to shareholders of the parent company

13,159

 

5,834

3,847

 

46,125

 

Dividends

5,937

 

5,370

 

 

 

 

 

 

 

 

 

 

 

 

At the year-end

 

 

 

95,098

 

1,147,816

 

Total shareholders' equity

147,667

 

128,299

107,905

 

1,302,405

 

Capital resources

167,555

 

155,729

861,871

 

10,402,675

 

Customer accounts and deposits by banks

1,338,309

 

1,283,906

1,580,820

 

19,080,298

 

Total assets

2,454,689

 

2,364,452

710,405

 

8,574,497

 

Risk-weighted assets

1,103,113

 

1,133,168

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

£

 

HK$

 

 

US$

 

US$

 

 

 

 

Per ordinary share

 

 

 

0.47

 

5.67

 

Basic earnings1

0.73

 

0.34

0.47

 

5.59

 

Diluted earnings1

0.72

 

0.34

0.22

 

2.64

 

Dividends2

0.34

 

0.34

5.11

 

61.71

 

Net asset value

7.94

 

7.17

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Share information

 

 

 

 

 

 

 

US$0.50 ordinary shares in issue

17,686m  


17,408m

 

 

 

 

Market capitalisation

US$180bn


US$199bn

 

 

 

 

Closing market price per share

£6.51


£7.09

 

 

 

 

 




 

 

 

 

 

Over

1 year

 

Over

3 years

 

Over

5 years

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total shareholder return to

 

 

 

 

 

 

 

 

 

   31 December 20103

95.3

 

103.4

 

103.4

 

 

 

 

Benchmarks:   FTSE 100

112.6

 

102.8

 

126.3

 

 

 

 

                         MSCI World

115.9

 

111.0

 

127.0

 

 

 

 

                         MSCI Banks

103.7

 

81.9

 

79.0

 

1 The effect of the bonus element of the rights issue has been included within the basic and diluted earnings per share.

2 Under IFRSs accounting rules, the dividend per share of US$0.34 shown in the accounts is the total of the dividends declared during 2010. This represents the fourth interim dividend for 2009 and the first, second and third interim dividends for 2010. As the fourth interim dividend for 2010 was declared in 2011 it will be reflected in the accounts for 2011.

3 Total shareholder return ('TSR') is as defined in the Annual Report and Accounts 2010.

 

 

 

Year ended 31 December

 

2010

 

2009

 

%

 

%

Performance ratios

 

 

 

Return on average invested capital1

8.7

 

4.1

Return on average shareholders' equity

9.5

 

5.1

Post-tax return on average total assets

0.6

 

0.3

Post-tax return on average risk-weighted assets

1.3

 

0.6

 

 

 

 

Efficiency and revenue mix ratios

 

 

 

Cost efficiency ratio

55.2

 

52.0

 

 

 

 

As a percentage of total operating income:

 

 

 

- net interest income

49.3

 

51.8

- net fee income

21.7

 

22.5

- net trading income

9.0

 

12.5

 

 

 

 

Capital ratios

 

 

 

- Core tier 1 ratio

10.5

 

9.4

- Tier 1 ratio

12.1

 

10.8

- Total capital ratio

15.2

 

13.7

 

1 Return on invested capital is based on the profit attributable to ordinary shareholders. Average invested capital is measured as average total shareholders' equity after adding back goodwill previously written-off directly to reserves, deducting average equity preference shares issued by HSBC Holdings and deducting/(adding) average reserves for unrealised gains/(losses) on effective cash flow hedges and available-for-sale securities. This measure reflects capital initially invested and subsequent profit.

 

 

Consolidated Income Statement

 

Year ended 31 December

 

 

Year ended 31 December

2010

 

 

2010

 

2009

£m

 

HK$m

 

 

US$m

 

US$m

 

 

 

 

 

 

 

 

37,808

 

453,282

 

Interest income

58,345

 

62,096

(12,250)

 

(146,865)

 

Interest expense

(18,904)

 

(21,366)

 

 

 

 

 

 

 

 

25,558

 

306,417

 

Net interest income

39,441

 

40,730

 

 

 

 

 

 

 

 

13,684

 

164,058

 

Fee income

21,117

 

21,403

(2,438)

 

(29,227)

 

Fee expense

(3,762)

 

(3,739)

 

 

 

 

 

 

 

 

11,246

 

134,831

 

Net fee income

17,355

 

17,664

 

 

 

 

 

 

 

 

3,033

 

36,359

 

Trading income excluding net interest income

4,680

 

6,236

1,639

 

19,655

 

Net interest income on trading activities

2,530

 

3,627

 

 

 

 

 

 

 

 

4,672

 

56,014

 

Net trading income

7,210

 

9,863

 

 

 

 

 

 

 

 

 

 

 

 

Changes in fair value of long-term debt issued


 


(167)

 

(2,005)

 

   and related derivatives

(258)

 

(6,247)

 

 

 

 

Net income from other financial instruments


 


958

 

11,483

 

   designated at fair value

1,478

 

2,716

 

 

 

 

Net income/(expense) from financial instruments

 

 

 

791

 

9,478

 

   designated at fair value

1,220

 

(3,531)

 

 

 

 

 

 

 

 

627

 

7,520

 

Gains less losses from financial investments

968

 

520

73

 

870

 

Dividend income

112

 

126

7,222

 

86,595

 

Net earned insurance premiums

11,146

 

10,471

1,660

 

19,904

 

Other operating income

2,562

 

2,788

 

 

 

 

 

 

 

 

51,849

 

621,629

 

Total operating income

80,014

 

78,631

 

 

 

 

 

 

 

 

 

 

 

 

Net insurance claims incurred and movement in

 

 

 

(7,625)

 

(91,418)

 

   liabilities to policyholders

(11,767)

 

(12,450)

 

 

 

 

 

 

 

 

 

 

 

 

Net operating income before loan impairment charges

 

 

 

44,224

 

530,211

 

   and other credit risk provisions

68,247

 

66,181

(9,097)

 

(109,069)

 

Loan impairment charges and other credit risk provisions

(14,039)

 

(26,488)

 

 

 

 

 

 

 

 

35,127

 

421,142

 

Net operating income

54,208

 

39,693

 

 

 

 

 

 

 

 

(12,854)

 

(154,106)

 

Employee compensation and benefits

(19,836)

 

(18,468)

(9,821)

 

(117,747)

 

General and administrative expenses

(15,156)

 

(13,392)

 

 

 

 

Depreciation and impairment of property, plant and


 


(1,110)

 

(13,308)

 

   equipment

(1,713)

 

(1,725)

(637)

 

(7,637)

 

Amortisation and impairment of intangible assets

(983)

 

(810)

 

 

 

 

 

 

 

 

(24,422)

 

(292,798)

 

Total operating expenses

(37,688)

 

(34,395)

 

 

 

 

 

 

 

 

10,705

 

128,344

 

Operating profit

16,520

 

5,298

 

 

 

 

 

 

 

 

1,631

 

19,554

 

Share of profit in associates and joint ventures

2,517

 

1,781

 

 

 

 

 

 

 

 

12,336

 

147,898

 

Profit before tax

19,037

 

7,079

 

 

 

 

 

 

 

 

(3,140)

 

(37,648)

 

Tax expense

(4,846)

 

(385)

 

 

 

 

 

 

 

 

9,196

 

110,250

 

Profit for the year

14,191

 

6,694

 

 

 

 

 

 

 

 

 

 

 

 

Profit attributable to shareholders of the parent

 

 

 

8,527

 

102,232

 

   company

13,159

 

5,834

 

 

 

 

 

 

 

 

669

 

8,018

 

Profit attributable to non-controlling interests

1,032

 

860

 

Consolidated Statement of Comprehensive Income

 

 

Year ended 31 December

 

2010

 

2009

 

US$m

 

US$m

 

 

 

 

Profit for the year

14,191

 

6,694

 

 

 

 

Other comprehensive income

 

 

 

Available-for-sale investments

5,835

 

10,817

- fair value gains

6,368

 

9,821

- fair value gains transferred to income statement on disposal

(1,174)

 

(648)

- amounts transferred to the income statement in respect of

 

 

 

      impairment losses

1,118

 

2,391

- income taxes

(477)

 

(747)

 

 

 

 

Cash flow hedges

(271)

 

772

- fair value gains/(losses)

(178)

 

481

- fair value (gains)/losses transferred to income statement

(164)

 

808

- income taxes

71

 

(517)

 

 

 

 

Actuarial losses on defined benefit plans

(61)

 

(2,608)

- before income taxes

(60)

 

(3,586)

- income taxes

(1)

 

978

 

 

 

 

Share of other comprehensive income of associates and joint ventures

107

 

149

Exchange differences

(567)

 

4,975

 

 

 

 

Other comprehensive income for the year, net of tax

5,043

 

14,105

 

 

 

 

Total comprehensive income for the year

19,234

 

20,799

 

 

 

 

Total comprehensive income for the year attributable to:

 

 

 

- shareholders of the parent company

18,087

 

19,529

- non-controlling interests

1,147

 

1,270

 

 

 

 

 

19,234

 

20,799

 

Consolidated Balance Sheet

 

Year ended 31 December

 

 

Year ended 31 December

2010

 

 

2010

 

2009

£m

 

HK$m

 

 

US$m

 

US$m

 

 

 

 

 

 

 

 

 

 

 

 

ASSETS

 

 

 

 

 

 

 

 

 

 

 

36,955

 

446,038

 

Cash and balances at central banks

57,383

 

60,655

3,910

 

47,198

 

Items in the course of collection from other banks

6,072

 

6,395

12,273

 

148,130

 

Hong Kong Government certificates of indebtedness

19,057

 

17,463

247,973

 

2,993,009

 

Trading assets

385,052

 

421,381

23,835

 

287,687

 

Financial assets designated at fair value

37,011

 

37,181

167,928

 

2,026,864

 

Derivatives

260,757

 

250,886

134,127

 

1,618,890

 

Loans and advances to banks

208,271

 

179,781

617,188

 

7,449,379

 

Loans and advances to customers

958,366

 

896,231

258,086

 

3,115,068

 

Financial investments

400,755

 

369,158

27,854

 

336,190

 

Other assets

43,251

 

44,534

706

 

8,519

 

Current tax assets

1,096

 

2,937

7,706

 

93,012

 

Prepayments and accrued income

11,966

 

12,423

11,075

 

133,680

 

Interests in associates and joint ventures

17,198

 

13,011

19,270

 

232,584

 

Goodwill and intangible assets

29,922

 

29,994

7,419

 

89,553

 

Property, plant and equipment

11,521

 

13,802

4,515

 

54,497

 

Deferred tax assets

7,011

 

8,620

 

 

 

 

 

 

 

 

1,580,820

 

19,080,298

 

Total assets

2,454,689

 

2,364,452

 

 

 

 

 

 

 

 

 

 

 

 

LIABILITIES AND EQUITY

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Liabilities

 

 

 

12,273

 

148,130

 

Hong Kong currency notes in circulation

19,057

 

17,463

71,216

 

859,569

 

Deposits by banks

110,584

 

124,872

790,655

 

9,543,106

 

Customer accounts

1,227,725

 

1,159,034

4,291

 

51,791

 

Items in the course of transmission to other banks

6,663

 

5,734

193,653

 

2,337,364

 

Trading liabilities

300,703

 

268,130

56,758

 

685,058

 

Financial liabilities designated at fair value

88,133

 

80,092

166,580

 

2,010,603

 

Derivatives

258,665

 

247,646

93,638

 

1,130,202

 

Debt securities in issue

145,401

 

146,896

18,064

 

218,033

 

Other liabilities

28,050

 

68,640

1,162

 

14,022

 

Current tax liabilities

1,804

 

2,140

37,744

 

455,568

 

Liabilities under insurance contracts

58,609

 

53,707

8,955

 

108,091

 

Accruals and deferred income

13,906

 

13,190

1,377

 

16,619

 

Provisions

2,138

 

1,965

704

 

8,496

 

Deferred tax liabilities

1,093

 

1,837

2,483

 

29,973

 

Retirement benefit liabilities

3,856

 

6,967

21,501

 

259,518

 

Subordinated liabilities

33,387

 

30,478

 

 

 

 

 

 

 

 

1,481,054

 

17,876,143

 

Total liabilities

2,299,774

 

2,228,791

 

 

 

 

 

 

 

 

 

 

 

 

Equity

 

 

 

5,695

 

68,737

 

Called up share capital

8,843

 

8,705

5,444

 

65,713

 

Share premium account

8,454

 

8,413

3,768

 

45,480

 

Other equity instruments

5,851

 

2,133

17,497

 

211,185

 

Other reserves

27,169

 

22,236

62,694

 

756,701

 

Retained earnings

97,350

 

86,812

 

 

 

 

 

 

 

 

95,098

 

1,147,816

 

Total shareholders' equity

147,667

 

128,299

4,668

 

56,339

 

Non-controlling interests

7,248

 

7,362

 

 

 

 

 

 

 

 

99,766

 

1,204,155

 

Total equity

154,915

 

135,661

 

 

 

 

 

 

 

 

1,580,820

 

19,080,298

 

Total equity and liabilities

2,454,689

 

2,364,452

 

Consolidated Statement of Cash Flows

 

 

Year ended 31 December

 

2010

 

2009

 

US$m

 

US$m

 

 

 

 

Cash flows from operating activities

 

 

 

Profit before tax

19,037

 

7,079


 

 

 

Adjustments for:

 

 

 

- non-cash items included in profit before tax

18,887

 

31,384

- change in operating assets

(13,267)

 

(20,803)

- change in operating liabilities

42,272

 

14,645

- elimination of exchange differences

(1,799)

 

(19,024)

- net gain from investing activities

(1,698)

 

(1,910)

- share of profits in associates and joint ventures

(2,517)

 

(1,781)

- dividends received from associates

441

 

414

- contributions paid to defined benefit plans

(3,321)

 

(974)

- tax paid

(2,293)

 

(2,132)


 

 

 

Net cash generated from operating activities

55,742

 

6,898


 

 

 

Cash flows from investing activities

 

 

 

Purchase of financial investments

(341,202)

 

(304,629)

Proceeds from the sale and maturity of financial investments

321,846

 

241,341

Purchase of property, plant and equipment

(2,533)

 

(2,000)

Proceeds from the sale of property, plant and equipment

4,373

 

4,701

Proceeds from the sale of loan portfolios

4,243

 

4,852

Net purchase of intangible assets

(1,179)

 

(956)

Net cash inflow/(outflow) from acquisition of subsidiaries

(86)

 

(677)

Net cash inflow from disposal of subsidiaries

466

 

45

Net cash outflow from acquisition of or increase in stake of associates

(1,589)

 

(62)

Net cash outflow from the consolidation of funds

(19,566)

 

-

Proceeds from disposal of associates and joint ventures

254

 

308


 

 

 

Net cash used in investing activities

(34,973)

 

(57,077)


 

 

 

Cash flows from financing activities

 

 

 

Issue of ordinary share capital

 

 

 

- rights issue

-

 

18,326

- other

180

 

72

Issue of other equity instruments

3,718

 

-

Net sales/(purchases) of own shares for market-making and investment purposes

163

 

(176)

Purchases of own shares to meet share awards and share option awards

11

 

(51)

On exercise of share options

2

 

12

Subordinated loan capital issued

4,481

 

2,959

Subordinated loan capital repaid

(2,475)

 

(4,637)

Net cash outflow from change in stake in subsidiaries

(229)

 

-

Dividends paid to shareholders of the parent company

(3,441)

 

(4,264)

Dividends paid to non-controlling interests

(595)

 

(702)

Dividends paid to holders of other equity instruments

(413)

 

(269)


 

 

 

Net cash generated from financing activities

1,402

 

11,270


 

 

 

Net increase/(decrease) in cash and cash equivalents

22,171

 

(38,909)


 

 

 

Cash and cash equivalents at 1 January

250,766

 

278,872

Exchange differences in respect of cash and cash equivalents

1,139

 

10,803

 

 

 

 

Cash and cash equivalents at 31 December

274,076

 

250,766

 

Consolidated Statement of Changes in Equity

 

 

Year ended 31 December

 

2010

 

2009

 

US$m

 

US$m

 

 

 

 

Called up share capital

 

 

 

At 1 January

8,705

 

6,053

Shares issued under employee share plans

12

 

4

Shares issued in lieu of dividends and amounts arising thereon

126

 

118

Shares issued in respect of rights issue

-

 

2,530


 

 

,

At 31 December

8,843

 

8,705


 

 

 

Share premium

 

 

 

At 1 January

8,413

 

8,463

Shares issued under employee share plans

168

 

69

Shares issued in lieu of dividends and amounts arising thereon

(127)

 

(119)


 

 

 

At 31 December

8,454

 

8,413


 

 

 

Other equity instruments

 

 

 

At 1 January

2,133

 

2,133

Capital securities issued

3,718

 

-


 

 

 

At 31 December

5,851

 

2,133


 

 

 

Retained earnings

 

 

 

At 1 January

86,812

 

80,689

Profit for the year

13,159

 

5,834

Other comprehensive income

 

 

 

   Actuarial losses on defined benefit plans

(58)

 

(2,685)

   Share of other comprehensive income of associates and joint ventures

107

 

149


 

 

 

Other comprehensive income (net of tax)

49

 

(2,536)


 

 

 


 

 

 

Total comprehensive income for the year

13,208

 

3,298

Shares issued in lieu of dividends and amounts arising thereon

2,524

 

1,670

Dividends to shareholders

(6,350)

 

(5,639)

Tax credit on dividends

122

 

50

Own shares adjustment

174

 

(227)

Exercise and lapse of share options and vesting of share awards

809

 

807

Income taxes on share-based payments

(14)

 

9

Other movements

(58)

 

210

Transfers

173

 

5,945

Changes in ownership interests in subsidiaries that did not result in loss of control

(50)

 

-


 

 

 

At 31 December

97,350

 

86,812


 

 

 

Other reserves

 

 

 

   Available-for-sale fair value reserve

 

 

 

   At 1 January

(9,965)

 

(20,550)

   Other comprehensive income

 

 

 

      Available-for-sale investments

5,671

 

10,603


 

 

 

   Other comprehensive income (net of tax)

5,671

 

10,603


 

 

 

   Total comprehensive income for the year

5,671

 

10,603

   Other movements

217

 

(18)


 

 

 

   At 31 December

(4,077)

 

(9,965)

 

 

Year ended 31 December

 

2010

 

2009

 

US$m

 

US$m

 

 

 

 

   Cash flow hedging reserve

 

 

 

   At 1 January

(26)

 

(806)

   Other comprehensive income

 

 

 

      Cash flow hedges

(266)

 

791


 

 

 

   Other comprehensive income (net of tax)

(266)

 

791


 

 

 

   Total comprehensive income for the year

(266)

 

791

   Other movements

7

 

(11)


 

 

 

   At 31 December

(285)

 

(26)


 

 

 

   Foreign exchange reserve

 

 

 

   At 1 January

2,994

 

(1,843)

   Other comprehensive income

 

 

 

      Exchange differences

(526)

 

4,837


 

 

 

   Other comprehensive income (net of tax)

(526)

 

4,837


 

 

 

   Total comprehensive income for the year

(526)

 

4,837


 

 

 

   At 31 December

2,468

 

2,994


 

 

 

   Share-based payment reserve

 

 

 

   At 1 January

1,925

 

1,995

   Exercise and lapse of share options and vesting of share awards

(809)

 

(769)

   Cost of share-based payment arrangements

812

 

683

   Transfers

(173)

 

-

   Other movements

- 

 

16


 

 

 

   At 31 December

1,755

 

1,925


 

 

 

   Merger reserve

 

 

 

   At 1 January

27,308

 

17,457

   Shares issued in respect of rights issue

-  

 

15,796

   Transfers

- 

 

(5,945)


 

 

 

   At 31 December

27,308

 

27,308

 

 

Year ended 31 December

 

2010

 

2009

 

US$m

 

US$m

 

 

 

 

Total shareholders' equity

 

 

 

At 1 January

128,299

 

93,591

Profit for the year

13,159

 

5,834

Other comprehensive income

 

 

 

   Available-for-sale investments

5,671

 

10,603

   Cash flow hedges

(266)

 

791

   Actuarial losses on defined benefit plans

(58)

 

(2,685)

   Share of other comprehensive income of associates and joint ventures

107

 

149

   Exchange differences

(526)

 

4,837


 

 

 

Other comprehensive income (net of tax)

4,928

 

13,695


 

 

 

Total comprehensive income for the year

18,087

 

19,529

Shares issued under employee share plans

180

 

73

Shares issued in lieu of dividends and amounts arising thereon

2,523

 

1,669

Capital securities issued

3,718

 

-

Shares issued in respect of rights issue

-  

 

18,326

Dividends to shareholders

(6,350)

 

(5,639)

Tax credit on dividends

122

 

50

Own shares adjustment

174

 

(227)

Exercise and lapse of share options and vesting of share awards

-  

 

38

Cost of share-based payment arrangements

812

 

683

Income taxes on share-based payments

(14)

 

9

Other movements

166

 

197

Changes in ownership interests in subsidiaries that did not result in loss of control

(50)

 

-


 

 

 

At 31 December

147,667

 

128,299


 

 

 

Non-controlling interests

 

 

 

At 1 January

7,362

 

6,638

Profit for the year

1,032

 

860

Other comprehensive income

 

 

 

   Available-for-sale investments

164

 

214

   Cash flow hedges

(5)

 

(19)

   Actuarial (losses)/gains on defined benefit plans

(3)

 

77

   Exchange differences

(41)

 

138


 

 

 

Other comprehensive income (net of tax)

115

 

410


 

 

 

Total comprehensive income for the year

1,147

 

1,270

Dividends to shareholders

(725)

 

(832)

Other movements

3

 

77

Acquisition and disposal of subsidiaries

(436)

 

(38)

Changes in ownership interests in subsidiaries that did not result in loss of control

(103)

 

247


 

 

 

At 31 December

7,248

 

7,362

 

 

Year ended 31 December

 

2010

 

2009

 

US$m

 

US$m

 

 

 

 

Total equity

 

 

 

At 1 January

135,661

 

100,229

Profit for the year

14,191

 

6,694

Other comprehensive income

 

 

 

   Available-for-sale investments

5,835

 

10,817

   Cash flow hedges

(271)

 

772

   Actuarial losses on defined benefit plans

(61)

 

(2,608)

   Share of other comprehensive income of associates and joint ventures

107

 

149

   Exchange differences

(567)

 

4,975


 

 

 

Other comprehensive income (net of tax)

5,043

 

14,105


 

 

 

Total comprehensive income for the year

19,234

 

20,799

Shares issued under employee share plans

180

 

73

Shares issued in lieu of dividends and amounts arising thereon

2,523

 

1,669

Capital securities issued

3,718

 

-

Shares issued in respect of rights issue

-  

 

18,326

Dividends to shareholders

(7,075)

 

(6,471)

Tax credit on dividends

122

 

50

Own shares adjustment

174

 

(227)

Exercise and lapse of share options and vesting of share awards

-  

 

38

Cost of share-based payment arrangements

812

 

683

Income taxes on share-based payments

(14)

 

9

Other movements

169

 

274

Acquisition and disposal of subsidiaries

(436)

 

(38)

Changes in ownership interests in subsidiaries that did not result in loss of control

(153)

 

247


 

 

 

At 31 December

154,915

 

135,661

 

Additional Information

 

1. Basis of preparation and accounting policies

 

The basis of preparation and summary of significant accounting policies applicable to the consolidated financial statements of HSBC and the separate financial statements of HSBC Holdings can be found in Notes 1 and 2 of the Annual Report and Accounts 2010.

 

The consolidated financial statements of HSBC and the separate financial statements of HSBC Holdings have been prepared in accordance with International Financial Reporting Standards ('IFRSs') as issued by the International Accounting Standards Board ('IASB') and as endorsed by the EU. EU-endorsed IFRSs may differ from IFRSs as issued by the IASB if, at any point in time, new or amended IFRSs have not been endorsed by the EU. At 31 December 2010, there were no unendorsed standards effective for the year ended 31 December 2010 affecting the consolidated and separate financial statements, and there was no difference between IFRSs endorsed by the EU and IFRSs issued by the IASB in terms of their application to HSBC. Accordingly, HSBC's financial statements for the year ended 31 December 2010 are prepared in accordance with IFRSs as issued by the IASB.

 

IFRSs comprise accounting standards issued by the IASB and its predecessor body as well as interpretations issued by the IFRS Interpretations Committee ('IFRIC') and its predecessor body.

 

During 2010 HSBC adopted the revised IFRS 3 'Business Combinations' ('IFRS 3') and amendments to IAS 27 'Consolidated and Separate Financial Statements' ('IAS 27'). In terms of their application to HSBC, the revised IFRS 3 and the amendments to IAS 27 apply prospectively to acquisitions and transactions taking place on or after 1 January 2010, and have had no significant effect on the consolidated financial statements of HSBC and the separate financial statements of HSBC Holdings.

 

Further details of these standards and amendments to standards are provided in Note 1(a) of the Annual Report and Accounts 2010.

 

 

2. Dividends

 

On 28 February 2011, the Directors declared a fourth interim dividend for 2010 of US$0.12 per ordinary share. The dividend will be payable on 5 May 2011, to holders of record on 17 March 2011 on the Hong Kong Overseas Branch Register and 18 March on the Principal Register in the United Kingdom or the Bermuda Overseas Branch Register. The dividend will be payable in cash, in US dollars, sterling or Hong Kong dollars, or a combination of these currencies, at the exchange rates quoted by HSBC Bank plc in London at or about 11 am on 27 April 2011, and with a scrip dividend alternative. Particulars of these arrangements will be mailed to shareholders on or about 30 March 2011 and elections will be required to be made by 20 April 2011. As this dividend was declared after the balance sheet date, it has not been included in 'Other liabilities' at 31 December 2010.

 

The dividend on shares held through Euroclear France, the settlement and central depositary system for Euronext Paris, will be payable on 5 May 2011 to the holders of record on 18 March 2011. The dividend will be payable in cash, in euros at the exchange rate on 27 April 2011, or as a scrip dividend. Particulars of these arrangements will be announced through Euronext Paris on 14 March 2011 and 23 March 2011.

 

The dividend on American Depositary Shares ('ADSs'), each of which represents five ordinary shares, will be payable on 5 May 2011 to holders of record on 18 March 2011. The dividend of US$60 per ADS will be payable in cash in US dollars or as a scrip dividend of new ADSs.

 

Particulars of these arrangements will be mailed to holders on or about 30 March 2011, and elections will be required to be made by 20 April 2011. Alternatively, the cash dividend may be invested in additional ADSs for participants in the dividend reinvestment plan operated by the depositary.

 

The Company's shares will be quoted ex-dividend in London, Hong Kong, Paris and Bermuda on 16 March 2011. The ADSs will be quoted ex-dividend in New York on 16 March 2011.

 

Dividends declared on HSBC Holdings shares during 2010 were as follows:

 

2010


2009


Per 




Settled 


Per




Settled


share


Total


in scrip


share


Total


in scrip


US$


US$m


US$m


US$


US$m


US$m













Dividends declared on ordinary shares












In respect of previous year:












- fourth interim dividend

0.10


1,733


838


0.10


1,210


624

In respect of current year:












- first interim dividend

0.08


1,394


746


0.08


1,384


190

- second interim dividend

0.08


1,402


735


0.08


1,385


696

- third interim dividend

0.08


1,408


205


0.08


1,391


160













 

0.34


5,937


2,524


0.34


5,370


1,670

 












Quarterly dividends on preference shares












   classified as equity












   March dividend

15.50


22




15.50


22



   June dividend

15.50


23




15.50


23



   September dividend

15.50


22




15.50


22



   December dividend

15.50


23




15.50


23



 












 

62.00


90




62.00


90



 












Quarterly coupons on capital securities












   classified as equity1












   January coupon

0.508


44




0.508


44



   April coupon

0.508


45




0.508


45



   July coupon

0.508


45




0.508


45



   September coupon

0.450


68




-


-



   October coupon

0.508


45




0.508


45



   December coupon

0.500


76




-


-



 












 

2.982


323




2.032


179



 

1 HSBC Holdings issued perpetual suboardinated capital securities of US$3,800m in June 2010 and US$2,200m in April 2008, which are classified as equity under IFRSs.

 

 

On 8 February 2011, the Directors declared quarterly dividends of US$15.50 per non-cumulative Series A Dollar Preference Share (equivalent to a dividend of US$0.3875 per Series A American Depository Share, each of which represents one-fortieth of a Series A dollar preference share) and £0.01 per Series A Sterling Preference Share for payment on 15 March 2011 to the holders of record on 1 March 2011.

 

On 18 January 2011, HSBC paid a coupon on the Capital Securities of US$0.508 per security, a distribution of US$44 million. No liability is recorded in the balance sheet at 31 December 2010 in respect of this coupon payment.

 

3. Earnings and dividends per ordinary share

 

Year ended 31 December

 

2010

 

2009

 

US$

 

US$

 

 

 

 

Basic earnings per ordinary share

0.73

 

0.34

Diluted earnings per ordinary share

0.72

 

0.34

Dividends per ordinary share

0.34

 

0.34

Net asset value at year-end

7.94

 

7.17

 

 

 

 

Dividend pay out ratio1

46.6%

 

100.0%

 

1 Dividends per ordinary share expressed as a percentage of basic earnings per ordinary share.

 

Basic earnings per ordinary share was calculated by dividing the profit attributable to ordinary shareholders of the parent company by the weighted average number of ordinary shares outstanding, excluding own shares held. Diluted earnings per ordinary share was calculated by dividing the basic earnings, which require no adjustment for the effects of dilutive potential ordinary shares, by the weighted average number of ordinary shares outstanding, excluding own shares held, plus the weighted average number of ordinary shares that would be issued on conversion of dilutive potential ordinary shares.

 

Profit attributable to the ordinary shareholders of the parent company

 

Year ended 31 December

 

2010

 

2009

 

US$m

 

US$m

 

 

 

 

Profit attributable to shareholders of the parent company

13,159

 

5,834

Dividend payable on preference shares classified as equity

(90)

 

(90)

Coupon payable on capital securities classified as equity

(323)

 

(179)

 

 

 

 

Profit attributable to the ordinary shareholders of the parent company

12,746

 

5,565

 

Basic and diluted earnings per share

2010


2009




Number of


Per




Number of


Per


Profit


shares


share


Profit


shares


share


US$m


(millions)


US$


US$m


(millions)


US$













Basic

12,746


17,404


0.73


5,565


16,277


0.34

Effect of dilutive potential ordinary shares



229






143















Diluted

12,746


17,633


0.72


5,565


16,420


0.34

 

4. Tax expense

 

 

Year ended 31 December

 

2010

 

2009

 

US$m

 

US$m

 

 

 

 

UK corporation tax charge

383

 

206

Overseas tax

3,328

 

1,847

 

 

 

 

Current tax

3,711

 

2,053

Deferred tax

1,135

 

(1,668)

 

 

 

 

Tax expense

4,846

 

385

 

 

 

 

Effective tax rate

25.5%

 

5.4%

 

HSBC Holdings and its subsidiaries in the United Kingdom provided for UK corporation tax at 28% (2009: 28%). Overseas tax included Hong Kong profits tax of US$962m (2009: US$783m) provided at the rate of 16.5% (2009: 16.5%) on the profits for the year assessable in Hong Kong. Other overseas subsidiaries and overseas branches provided for taxation at the appropriate rates in the countries in which they operate.

 

 

Analysis of tax expense

Year ended 31 December

 

2010

 

2009

 

US$m

 

US$m

 

 

 

 

Taxation at UK corporation tax rate of 28%

5,330

 

1,982

Non-deductible loss on foreign exchange swaps on rights issue proceeds

-

 

96

Effect of taxing overseas profits in principal locations at different rates

(744)

 

(1,345)

Gains not subject to tax

(275)

 

(238)

Adjustments in respect of prior period liabilities

-                           

 

(39)

Low income housing tax credits

(86)

 

(98)

Effect of profit in associates and joint ventures

(705)

 

(499)

Deferred tax temporary differences not provided /(previously not recognised)

(6)

 

360

Non taxable income

(374)

 

(365)

Permanent disallowables

276

 

223

Additional provision for tax on overseas dividends

-

 

341

Tax impact of intra-group transfer of subsidiary

1,216

 

-

Other items

214

 

(33)

 

 

 

 

Overall tax expense

4,846

 

385

 

5. Analysis of net fee income

 

 

 

 

30 June

 


 

30 June

31 December

 


2010

 

2010

 

2010

 

2009

 

2009

 

2009

US$m

 

US$m

 

US$m

 

US$m

 

US$m

 

US$m


 


 


 


 


 


Cards

1,900

 

1,901

 

3,801

 

2,209

 

2,416

 

4,625

Account services

1,821

 

1,811

 

3,632

 

1,771

 

1,821

 

3,592

Funds under management

1,181

 

1,330

 

2,511

 

945

 

1,227

 

2,172

Broking income

766

 

1,023

 

1,789

 

749

 

868

 

1,617

Credit facilities

827

 

808

 

1,635

 

729

 

750

 

1,479

Insurance

578

 

569

 

1,147

 

688

 

733

 

1,421

Imports/exports

466

 

525

 

991

 

438

 

459

 

897

Global custody

439

 

261

 

700

 

471

 

517

 

988

Remittances

329

 

351

 

680

 

281

 

332

 

613

Underwriting

264

 

359

 

623

 

348

 

398

 

746

Unit trusts

267

 

293

 

560

 

137

 

226

 

363

Corporate finance

248

 

192

 

440

 

164

 

232

 

396

Trust income

141

 

150

 

291

 

134

 

144

 

278

Mortgage servicing

60

 

58

 

118

 

62

 

62

 

124

Maintenance income on


 


 


 


 


 


   operating leases

53

 

46

 

99

 

55

 

56

 

111

Taxpayer financial services

91

 

(18)

 

73

 

91

 

 

87

Other

974

 

1,053

 

2,027

 

919

 

975

 

1,894


 


 


 


 


 


Total fee income

10,405

 

10,712

 

21,117

 

10,191

 

11,212

 

21,403

Less: fee expense

 

 

 

 

 


 


 


 


 


 


Total net fee income

8,518

 

8,837

 

17,355

 

8,428

 

9,236

 

17,664

 

 

6. Loan impairment charges

 

 

 

 

 


30 June

 


 

30 June

31 December

 


2010

 

2010

 

2010

 

2009

 

2009

 

2009

US$m

 

US$m

 

US$m

 

US$m

 

US$m

 

US$m


 


 


 


 


 


Individually assessed impairment


 


 


 


 


 


   allowances:


 


 


 


 


 


   - Net new allowances

1,129

 

1,641

 

2,770

 

2,284

 

2,308

 

4,592

   - Recoveries

(60

 

(85)

 

(145)

 

 

 

 


 


 


 


 


 


 

1,069

 

1,556

 

2,625

 

2,250

 

2,208

 

4,458

Collectively assessed impairment


 


 


 


 


 


   allowances:


 


 


 


 


 


   - Net new allowances

6,558

 

5,240

 

11,798

 

11,426

 

9,814

 

21,240

   - Recoveries

(393

 

(482)

 

(875)

 

 

 

 


 


 


 


 


 


 

6,165

 

4,758

 

10,923

 

11,083

 

9,401

 

20,484

Total charge for impairment losses

7,234

 

6,314

 

13,548

 

13,333

 

11,609

 

24,942

 


 


 


 


 


 


Banks

12

 

-

 

12

 

13

 

57

 

70

Customers

7,222

 

6,314

 

13,536

 

13,320

 

11,552

 

24,872

 

 

7. Notes on the statement of cash flows

 

Year ended 31 December

 

2010

 

2009

 

US$m

 

US$m

Non-cash items included in profit before tax

 

 

 

Depreciation, amortisation and impairment

2,801

 

2,538

Gains arising from dilution of interest in associates

(188)

 

-

Revaluations on investment property

(93)

 

24

Share-based payment expense

812

 

683

Loan impairment losses gross of recoveries and other credit risk provisions

15,059

 

27,378

Provisions

680

 

669

Impairment of financial investments

105

 

358

Charge for defined benefit plans

526

 

192

Accretion of discounts and amortisation of premiums

(815)

 

(458)

 

 

 

 

 

18,887

 

31,384

 

 

 

 

Change in operating assets

 

 

 

Change in prepayments and accrued income

457

 

3,198

Change in net trading securities and net derivatives

60,337

 

15,388

Change in loans and advances to banks

5,213

 

(30,354)

Change in loans and advances to customers

(79,283)

 

6,149

Change in financial assets designated at fair value

154

 

(8,911)

Change in other assets

(145)

 

(6,273)

 

 

 

 

 

(13,267)

 

(20,803)

 

 

 

 

Change in operating liabilities

 

 

 

Change in accruals and deferred income

716

 

(2,258)

Change in deposits by banks

(14,288)

 

(5,216)

Change in customer accounts

68,691

 

41,983

Change in debt securities in issue

(1,495)

 

(32,797)

Change in financial liabilities designated at fair value

5,659

 

7,430

Change in other liabilities

(17,011)

 

5,503

 

 

 

 

 

42,272

 

14,645

 

 

 

 

Cash and cash equivalents

 

 

 

Cash and balances at central banks

57,383

 

60,655

Items in the course of collection from other banks

6,072

 

6,395

Loans and advances to banks of one month or less

189,197

 

160,673

Treasury bills, other bills and certificates of deposit

 

 

 

   less than three months

28,087

 

28,777

Less: items in the course of transmission to other banks

(6,663)

 

(5,734)

 

 

 

 

 

274,076

 

250,766

 

 

 

 

Interest and dividends

 

 

 

Interest paid

(21,405)

 

(29,030)

Interest received

63,696

 

74,062

Dividends received

563

 

1,023

 

 

8. Segmental analysis

 

HSBC's operating segments are organised into six geographical regions, Europe, Hong Kong, Rest of Asia-Pacific, Middle East, North America and Latin America. Due to the nature of the Group, HSBC's chief operating decision-maker regularly reviews operating activity on a number of bases, including by geographical region, customer group and global business, and retail businesses by geographical region. The segmental analysis is presented on a geographical basis because, although information is reviewed on a number of bases, capital resources are allocated and performance is assessed primarily by geographical region. Also, the economic conditions of each geographical region are highly influential in determining the performance of the different businesses carried out in each region. As a result, provision of segmental information on a geographical basis provides the most meaningful basis from which to assess performance. HSBC's chief operating decision-maker is the Group Management Board which operates as a general management committee under the direct authority of the Board.

 

Geographical information is classified by the location of the principal operations of the subsidiary or, for The Hongkong and Shanghai Banking Corporation, HSBC Bank, HSBC Bank Middle East and HSBC Bank USA, by the location of the branch responsible for reporting the results or advancing the funds.

 

Information provided to HSBC's chief operating decision-maker to make decisions about allocating resources to, and assessing the performance of, operating segments is measured in accordance with IFRSs. The financial information shown below includes the effects of intra-HSBC transactions between operating segments which are conducted on an arm's length basis and eliminated in a separate column. Shared costs are included in operating segments on the basis of the actual recharges made.

 

Products and services

 

HSBC provides a comprehensive range of banking and related financial services to its customers in its six geographical regions. The products and services offered to customers are organised by customer groups and global businesses.

 

·    Personal Financial Services offers a broad range of products and services to meet the personal banking, consumer finance and wealth management needs of individual customers. Personal banking products typically include current and savings accounts, mortgages and personal loans, credit cards, debit cards, insurance, wealth management and local and international payment services.

·    Commercial Banking product offerings include the provision of financing services, payments and cash management, international trade finance, treasury and capital markets, commercial cards, insurance, and online and direct banking offerings.

·    Global Banking and Markets provides tailored financial solutions to major government, corporate and institutional clients and private investors worldwide. The client-focused business lines deliver a full range of banking capabilities including financing, advisory and transaction services; a markets business that provides services in credit, rates, foreign exchange, money markets and securities services; global asset management services and principal investment activities.

·    Global Private Banking provides a range of services to meet the banking, investment and wealth advisory needs of high net worth individuals.

 

Financial information

 

In the following segmental analysis, the benefit of shareholders' funds impacts the analysis only to the extent that these funds are actually allocated to businesses in the segment by way of intra-HSBC capital and funding structures.

 

Europe

 

 

 

 



 

 

 

 



31 December

 


 

 



 

 

 

 

 


 

 

 

 

 


 

 

 

 

 

Interest income

 

 

 

 

 

Interest expense

 

 

 

(4,695)

 

(3,320)

 

(8,015)

 

 

 

 

 

 

Net interest income

 

 

 

 

 

 

 

 

 

 

 

Fee income

 

 

 

 

 

Fee expense

 

 

 

(1,155)

 

(1,154)

 

(2,309)

 

 

 

 

 

 

Net fee income

 

 

 

 

 

 

 

 

 

 

 

Net trading income

 

 

 

 

 

Changes in fair value of long-term

 

 

 

 

 

   debt issued and related derivatives

 

 

 

(788)

 

(1,958)

 

(2,746)

Net income/(expense) from

 

 

 

 

 

   other financial instruments

 

 

 

 

 

   designated at fair value

 

 

 

 

 

 

 

 

 

 

 

Net income/(expense) from

 

 

 

 

 

   financial instruments

 

 

 

 

 

   designated at fair value

 

 

 

(576)

 

(849)

 

(1,425)

Gains less losses from financial

 

 

 

 

 

   investments

 

 

 

(60)

 

 

Dividend income

 

 

 

 

 

Net earned insurance premiums

 

 

 

 

 

Other operating income

 

 

 

 

 

 

 

 

 

 

 

Total operating income

 

 

 

 

 

 

 

 

 

 

 

Net insurance claims incurred and

 

 

 

 

 

   movement in liabilities to

 

 

 

 

 

   policyholders

 

 

 

(2,383)

 

(3,206)

 

(5,589)

Net operating income before loan

 

 

 

 

 

   impairment charges and other

 

 

 

 

 

   credit risk provisions

 

 

 

 

 

 

 

 

 

 

 

Loan impairment charges and

 

 

 

 

 

   other credit risk provisions

 

 

 

(2,813)

 

(2,755)

 

(5,568)

 

 

 

 

 

 

Net operating income

 

 

 

 

 

 

 

 

 

 

 

Net operating expenses

 

 

 

(6,587)

 

(7,401)

 

(13,988)

 

 

 

 

 

 

Operating profit

 

 

 

 

 

 

 

 

 

 

 

Share of profit/(loss) in associates

 

 

 

 

 

   and joint ventures

 

 

 

 

 

 

 

 

 

 

 

Profit before tax

 

 

 

 

 

 

 

 

 

 

 

Tax expense

 

 

 

(527)

 

(249)

 

(776)

 

 

 

 

 

 

Profit for the year

 

 

 

 

 

 

Hong Kong

 

 

 

 


 

 

 

 


30 June

 

 

30 June

31 December

 


2010

 

2010

 

2010

 

2009

 

2009

 

2009

US$m

 

US$m

 

US$m

 

US$m

 

US$m

 

US$m

 

 

 

 

 

Interest income

2,414

 

2,688

 

5,102

 

2,923

 

2,404

 

5,327

Interest expense

(420)

 

(436)

 

(856)

 

 

 

 


 


 


 


 


 


Net interest income

1,994

 

2,252

 

4,246

 

2,232

 

1,963

 

4,195

 


 


 


 


 


 


Fee income

1,626

 

1,834

 

3,460

 

1,409

 

1,690

 

3,099

Fee expense

(231)

 

(267)

 

(498)

 

 

 

 


 


 


 


 


 


Net fee income

1,395

 

1,567

 

2,962

 

1,200

 

1,469

 

2,669

 


 


 


 


 


 


Net trading income

688

 

624

 

1,312

 

704

 

521

 

1,225

Changes in fair value of


 


 


 


 


 


   long-term debt issued


 


 


 


 


 


   and related derivatives

(2)

 

-                     

 

(2)

 

 

-

 

Net income/(expense) from


 


 


 


 


 


   other financial instruments


 


 


 


 


 


   designated at fair value

(28)

 

408

 

380

 

348

 

440

 

788

 


 


 


 


 


 


Net income/(expense) from


 


 


 


 


 


   financial instruments


 


 


 


 


 


   designated at fair value

(30)

 

408

 

378

 

345

 

440

 

785

Gains less losses from financial


 


 


 


 


 


   investments

111

 

(13)

 

98

 

2

 

7

 

9

Dividend income

13

 

17

 

30

 

14

 

14

 

28

Net earned insurance premiums

2,248

 

2,084

 

4,332

 

1,838

 

1,836

 

3,674

Other operating income

644

 

962

 

1,606

 

505

 

769

 

1,274

 


 


 


 


 


 


Total operating income

7,063

 

7,901

 

14,964

 

6,840

 

7,019

 

13,859

 


 


 


 


 


 


Net insurance claims incurred and


 


 


 


 


 


   movement in liabilities to


 


 


 


 


 


   policyholders

(2,167)

 

(2,595)

 

(4,762)

 

 

 

Net operating income before


 


 


 


 


 


   loan impairment charges and


 


 


 


 


 


   other credit risk provisions

4,896

 

5,306

 

10,202

 

4,714

 

4,753

 

9,467

 


 


 


 


 


 


Loan impairment charges and


 


 


 


 


 


   other credit risk provisions

(63)

 

(51)

 

(114)

 

 

 

 


 


 


 


 


 


Net operating income

4,833

 

5,255

 

10,088

 

4,441

 

4,526

 

8,967

 


 


 


 


 


 


Net operating expenses

(1,968)

 

(2,463)

 

(4,431)

 

 

 

 


 


 


 


 


 


Operating profit

2,865

 

2,792

 

5,657

 

2,506

 

2,515

 

5,021

 


 


 


 


 


 


Share of profit/(loss) in associates


 


 


 


 


 


   and joint ventures

12

 

23

 

35

 

(5)

 

13

 

8

 


 


 


 


 


 


Profit before tax

2,877

 

2,815

 

5,692

 

2,501

 

2,528

 

5,029

 


 


 


 


 


 


Tax expense

(476)

 

(511)

 

(987)

 

 

 

 


 


 


 


 


 


Profit for the year

2,401

 

2,304

 

4,705

 

2,006

 

2,154

 

4,160

 

Rest of Asia-Pacific

 

 

 

 



 

 

 

 



30 June

 

 

30 June

31 December

 



2010

 

2010

 

2010

 

2009

 

2009

 

2009


 

 

 

 

 


 

 

 

 

 

Interest income

 

 

 

 

 

Interest expense

 

 

 

(1,257)

 

(1,081

 

(2,338

 

 

 

 

 

 

Net interest income

 

 

 

 

 

 

 

 

 

 

 

Fee income

 

 

 

 

 

Fee expense

 

 

 

(189)

 

(226

 

(415

 

 

 

 


 


 


Net fee income

 

 

 

 

 

 

 

 

 

 

 

Net trading income

 

 

 

 

 

Changes in fair value of

 

 

 

 

 

   long-term debt issued and

 

 

 

 

 

   related derivatives

 

 

 

(2)

 

 

(1

Net income/(expense) from

 

 

 

 

 

   other financial instruments

 

 

 

 

 

   designated at fair value

 

 

 

 

 

 

 

 

 

 

 

Net income/(expense) from 

 

 

 

 

 

   financial instruments

 

 

 

 

 

   designated at fair value

 

 

 

 

 

Gains less losses from financial

 

 

 

 

 

   investments

 

 

 

(21)

 

 

(19

Dividend income

 

 

 

 

 

Net earned insurance premiums

 

 

 

 

 

Other operating income

 

 

 

 

 

 

 

 

 

 

 

Total operating income

 

 

 

 

 

 

 

 

 

 

 

Net insurance claims incurred and

 

 

 

 

 

   movement in liabilities to

 

 

 

 

 

   policyholders

 

 

 

(156)

 

(239

 

(395)

Net operating income before loan

 

 

 

 

 

   impairment charges and other

 

 

 

 

 

   credit risk provisions

 

 

 

 

 

 

 

 

 

 

 

Loan impairment charges and

 

 

 

 

 

   other credit risk provisions

 

 

 

(531)

 

(365

 

(896)

 

 

 

 

 

 

Net operating income

 

 

 

 

 

 

 

 

 

 

 

Net operating expenses

 

 

 

(2,151)

 

(2,299

 

(4,450)

 

 

 

 

 

 

Operating profit

 

 

 

 

 

 

 

 

 

 

 

Share of profit in associates and

 

 

 

 

 

   joint ventures

 

 

 

 

 

 

 

 

 

 

 

Profit before tax

 

 

 

 

 

 

 

 

 

 

 

Tax expense

 

 

 

(338)

 

(415)

 

(753)

 

 

 

 

 

 

Profit for the year

 

 

 

 

 

 

Middle East

 

 

 

 



 

 

 

 



30 June

 

 

30 June

31 December

 



2010

 

2010

 

2010

 

2009

 

2009

 

2009


 

 

 

 

 


 

 

 

 

 

Interest income

 

 

 

1,217

 

1,043

 

2,260

Interest expense

 

 

 

 

 

 

 

 

 


 


 


Net interest income

 

 

 

763

 

722

 

1,485

 

 

 

 

 

 

Fee income

 

 

 

337

 

345

 

682

Fee expense

 

 

 

 

 

 

 

 

 


 


 


Net fee income

 

 

 

308

 

317

 

625

 

 

 

 

 

 

Net trading income

 

 

 

220

 

174

 

394

Gains less losses from financial

 

 

 

 

 

   investments

 

 

 

13

 

3

 

16

Dividend income

 

 

 

2

 

1

 

3

Other operating income/(expense)

 

 

 

63

 

8

 

71

 

 

 

 


 


 


Total operating income

 

 

 

1,369

 

1,225

 

2,594

 

 

 

 

 

 

Net insurance claims incurred and

 

 

 

 

 

   movement in liabilities to

 

 

 

 

 

   policyholders

 

 

 

-

 

-

 

-

Net operating income before loan

 

 

 

 

 

   impairment charges and other

 

 

 

 

 

   credit risk provisions

 

 

 

1,369

 

1,225

 

2,594

 

 

 

 


 


 


Loan impairment charges and

 

 

 


 


 


   other credit risk provisions

 

 

 

 

 

 

 

 

 


 


 


Net operating income

 

 

 

978

 

282

 

1,260

 

 

 

 


 


 


Net operating expenses

 

 

 

 

 

 

 

 

 


 


 


Operating profit

 

 

 

496

 

 

259

 

 

 

 


 


 


Share of profit in associates and

 

 

 


 


 


   joint ventures

 

 

 

147

 

49

 

196

 

 

 

 

 

 

Profit/(loss) before tax

 

 

 

643

 

 

455

 

 

 

 


 


 


Tax income/(expense)

 

 

 

 

15

 

 

 

 

 


 


 


Profit/(loss) for the year

 

 

 

534

 

 

361

 

North America

 

 

 

 



 

 

 

 



 


 

 



 

 

 

 

 


 

 

 

 

 


 

 

 

 

 

Interest income

 

 

 

 

 

Interest expense

 

 

 

(3,308)

 

(2,548)

 

(5,856)

 

 

 

 

 

 

Net interest income

 

 

 

 

 

 

 

 

 

 

 

Fee income

 

 

 

 

 

Fee expense

 

 

 

(270)

 

(409)

 

(679)

 

 

 

 

 

 

Net fee income

 

 

 

 

 

 

 

 

 

 

 

Net trading income/(expense)

 

 

 

 

(63)

 

Changes in fair value of

 

 

 

 

 

   long-term debt issued

 

 

 

 

 

   and related derivatives

 

 

 

(1,507)

 

(1,990)

 

(3,497)

Net income/(expense) from

 

 

 

 

 

   other financial instruments

 

 

 

 

 

   designated at fair value

 

 

-

 

(2)

 

 

1

 

 

 

 

 

 

Net income/(expense)

 

 

 

 

 

   from financial instruments

 

 

 

 

 

   designated at fair value

 

 

 

(1,509)

 

(1,987)

 

(3,496)

Gains less losses from financial

 

 

 

 

 

   investments

 

 

 

 

 

Dividend income

 

 

 

 

 

Net earned insurance premiums

 

 

 

 

 

Other operating income/(expense)

 

 

 

 

 

 

 

 

 

 

 

Total operating income

 

 

 

 

 

 

 

 

 

 

 

Net insurance claims incurred and

 

 

 

 

 

   movement in liabilities to

 

 

 

 

 

   policyholders

 

 

 

(143)

 

(98)

 

(241)

Net operating income before loan

 

 

 

 

 

   impairment charges and other

 

 

 

 

 

   credit risk provisions

 

 

 

 

 

 

 

 

 

 

 

Loan impairment charges and

 

 

 

 

 

   other credit risk provisions

 

 

 

(8,538)

 

(7,126)

 

(15,664)

 

 

 

 

 

 

Net operating income/(expense)

 

 

 

 

 

 

 

 

 

 

 

Net operating expenses

 

 

 

(4,362)

 

(4,029)

 

(8,391)

 

 

 

 

 

 

Operating profit/(loss)

 

 

 

(3,710)

 

(4,040)

 

(7,750)

 

 

 

 

 

 

Share of profit in associates

 

 

 

 

 

   and joint ventures

 

 

 

 

 

 

 

 

 

 

 

Profit/(loss) before tax

 

 

 

(3,703)

 

(4,035)

 

(7,738)

 

 

 

 

 

 

Tax income/(expense)

 

 

 

 

 

 

 

 

 

 

 

Profit/(loss) for the year

 

 

 

(3,398)

 

(2,055)

 

(5,453)

 

Latin America

 

 

 

 

 

 

 

 

 

 

 

 

 


31 December

 


 

 


 


 

 

 

 

 

 


 

 

 

 

 

 


 

 

 

 

 

 

Interest income

 

 

 

 

 

 

Interest expense

 

 

 

(2,270)

 

(2,248)

 

(4,518)

 

 

 

 

 

 

 

 

Net interest income

 

 

 

 

 

 

 

 

 

 

 

 

 

Fee income

 

 

 

 

 

 

Fee expense

 

 

 

(237)

 

(264)

 

(501)

 

 

 

 

 

 

 

 

Net fee income

 

 

 

 

 

 

 

 

 

 

 

 

 

Net trading income

 

 

 

 

 

 

Changes in fair value of

 

 

 

 

 

 

   long-term debt issued

 

 

 

 

 

 

   and related derivatives

 

 

 

 

 

 

Net income from other 

 

 

 

 

 

 

   financial instruments

 

 

 

 

 

 

  designated at fair value

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income from financial

 

 

 

 

 

 

   Instruments designated at

 

 

 

 

 

 

   fair value

 

 

 

 

 

 

Gains less losses from financial

 

 

 

 

 

 

   investments

 

 

 

 

 

 

Dividend income

 

7

 

12

 

 

7

 

11

 

Net earned insurance premiums

 

 

 

 

 

 

Other operating income

 

 

 

 

 

 

 

 

 

 

 

 

 

Total operating income

 

 

 

 

 

 

 

 

 

 

 

 

 

Net insurance claims incurred and

 

 

 

 

 

 

   movement in liabilities to

 

 

 

 

 

 

   policyholders

 

 

 

(699)

 

(1,134)

 

(1,833)

 

Net operating income before loan

 

 

 

 

 

 

   Impairment charges and other

 

 

 

 

 

 

   credit risk provisions

 

 

 

 

 

 

 

 

 

 

 

 

 

Loan impairment charges and

 

 

 

 

 

 

   other credit risk provisions

 

 

 

(1,385)

 

(1,141)

 

(2,526)

 

 

 

 

 

 

 

 

Net operating income

 

 

 

 

 

 

 

 

 

 

 

 

 

Net operating expenses

 

 

 

(2,488)

 

(2,887)

 

(5,375)

 

 

 

 

 

 

 

 

Operating profit

 

 

 

 

 

 

 

 

 

 

 

 

 

Share of profit in associates and

 

 

 

 

 

 

   joint ventures

 

 

 

 

-

 

 

 

 

 

 

 

 

 

Profit before tax

 

 

 

 

 

 

 

 

 

 

 

 

 

Tax expense

 

 

 

(122)

 

(56)

 

(178)

 

 

 

 

 

 

 

 

Profit for the year

 

 

 

 

 

 

 

Other information about the profit/(loss) for the year

 





Rest of







 

Intra-






Hong


Asia-


Middle


North


Latin

 

HSBC




Europe


Kong


Pacific


East


America


America

 

items


Total


US$m


US$m


US$m


US$m


US$m


US$m


US$m


US$m

Year ended 31 December 2010
































   External

18,881


9,170


7,728


1,774


8,504


8,151


-


54,208

   Inter-segment

849


918


1,065


9


248


36


(3,125)


-









Net operating income

19,730


10,088


8,793


1,783


8,752


8,187


(3,125)


54,208









Profit for the year includes the
















   following significant non-cash items:
















   Depreciation, amortisation
















      and impairment

1,071


404


243


49


471


458


-


2,696

   Loan impairment losses gross
















      of recoveries and other credit
















      risk provisions

3,303


169


615


684


8,476


1,812


-


15,059

Impairment of financial investments

35


41


4


5


21


1


-


107

















Year ended 31 December 2009
































   External

16,734


8,352


6,056


1,283


767


6,501


-


39,693

   Inter-segment

1,242


615


1,051


(23)


(126)


(3)


(2,756)


-









Net operating income

17,976


8,967


7,107


1,260


641


6,498


(2,756)


39,693









Profit for the year includes the
















   following significant non-cash items:
















   Depreciation, amortisation
















      and impairment

1,039


342


215


37


512


390


-


2,535

   Loan impairment losses gross
















      of recoveries and other credit
















      risk provisions

5,833


534


1,028


1,361


15,757


2,865


-


27,378

Impairment of financial investments

137


129


50


4


38


-


-


358

 

Balance sheet information

 





Rest of







 

Intra-






Hong


Asia-


Middle


North


Latin

 

HSBC




Europe


Kong


Pacific


East


America


America

 

items


Total


US$m


US$m


US$m


US$m


US$m


US$m


US$m


US$m

At 31 December 2010
















Loans and advances to
















   customers (net)

435,799


140,691


108,731


24,626


190,532


57,987


-


958,366

Interests in associates and
















   joint ventures

186


207


15,035


1,661


104


5


-


17,198

Total assets

1,249,527


429,565


278,062


52,757


492,487


139,938


(187,647)


2,454,689

Customer accounts

491,563


297,484


158,155


33,511


158,486


88,526


-


1,227,725

Total liabilities

1,189,996


422,101


246,989


45,379


459,301


123,655


(187,647)


2,299,774

















Capital expenditure incurred1

865


836


168


46


774


788


-


3,477

















At 31 December 2009
















Loans and advances to
















   customers (net)

439,481


99,381


80,043


22,844


206,853


47,629


-


896,231

Interests in associates and
















   joint ventures

147


157


11,083


1,573


42


9


-


13,011

Total assets

1,268,600


399,243


222,139


48,107


475,014


115,967


(164,618)


2,364,452

Customer accounts

495,019


275,441


133,999


32,529


149,157


72,889


-


1,159,034

Total liabilities

1,213,907


384,912


203,243


42,325


447,530


101,492


(164,618)


2,228,791

















Capital expenditure incurred1

983


290


159


102


658


540


-


2,732

 

1   Expenditure incurred on property, plant and equipment and other intangible assets. Excludes assets acquired as part of business combinations and goodwill.

 

Net operating income by customer group and global business

 

Personal




Global


Global




Intra-




Financial


Commercial


Banking


Private




HSBC




Services


Banking


& Markets


Banking


Other1


items


Total


US$m


US$m


US$m


US$m


US$m


US$m


US$m















Year ended 31 December 2010














   External

19,529


11,419


22,090


2,194


(1,024)


            -  


54,208

   Internal

1,788


610


(3,133)


911


5,687


(5,863)


            -  















Net operating income

21,317


12,029


18,957


3,105


4,663


(5,863)


54,208















Year ended 31 December 2009














   External

13,804


9,285


21,383


2,275


(7,054)


-


39,693

   Internal

1,709


286


(2,731)


709


5,023


(4,996)


-















Net operating income

15,513


9,571


18,652


2,984


(2,031)


(4,996)


39,693

 

1   The main items reported in the 'Other' category are certain property activities, unallocated investment activities, centrally held investment companies, movements in fair value of own debt and HSBC's holding company and financing operations. The 'Other' category also includes gains and losses on the disposal of certain significant subsidiaries or business units.

 

Information by country

 

2010


2009


External net


Non-


External net


Non-


operating


current


operating


current


income1


assets2


income1


assets2


US$m


US$m


US$m


US$m









UK

11,467


19,661


9,958


19,704

Hong Kong

9,170


4,630


8,352


3,374

USA

6,098


6,669


(1,042)


5,499

France

3,185


10,914


3,322


11,782

Brazil

4,506


2,025


3,368


1,868

Other countries

19,782


29,747


15,735


25,557










54,208


73,646


39,693


67,784

 

1   External net operating income is attributed to countries on the basis of the location of the branch responsible for reporting the results or advancing the funds.

2   Non-current assets consist of property, plant and equipment, goodwill, other intangible assets, interests in associates and joint ventures and certain other assets expected to be recovered more than twelve months after the reporting period.

 

9 .  Reconciliation of reported and underlying profit before tax

 

2010 compared with 2009








2009 at 2010 








2009 as


2009


Currency


exchange


2010 as


2010


2010


reported


adjustments


translation


rates


reported


adjustments


underlying

HSBC

US$m


US$m


US$m


US$m


US$m


US$m


US$m















Net interest income

40,730


(1)


642


41,371


39,441


(31)


39,410

Net fee income

17,664


(210)


182


17,636


17,355


(3)


17,352

Changes in fair value1

(6,533)


6,533


-


-


(63)


63


-

Other income

14,320


(283)


228


14,265


11,514


(719)


10,795

 

 














Net operating income

66,181


6,039


1,052


73,272


68,247


(690)


67,557















Loan impairment charges














   and other credit risk














   provisions

(26,488)


-


(330)


(26,818)


(14,039)


-


(14,039)















Net operating income

39,693


6,039


722


46,454


54,208


(690)


53,518















Operating expenses

(34,395)


200


(568)


(34,763)


(37,688)


19


(37,669)















Operating profit

5,298


6,239


154


11,691


16,520


(671)


15,849















Income from associates

1,781


(1)


11


1,791


2,517


-


2,517















Profit before tax

7,079


6,238


165


13,482


19,037


(671)


18,366

 

1   Changes due to movements in own credit spread on long-term debt issued.

 

10. Distribution of results by customer group and global business

 

Personal Financial Services

 

 

 

 

 

 

 

 

 

 

 

30 June

 

 

30 June

31 December

 

2010

 

2010

 

2010

 

2009

 

2009

 

2009

US$m

 

US$m

 

US$m

 

US$m

 

US$m

 

US$m

 


 


 


 


 


 


Net interest income

12,198

 

11,963

 

24,161

 

12,650

 

12,457

 

25,107

Net fee income

3,560

 

3,776

 

7,336

 

4,045

 

4,193

 

8,238

 


 


 


 


 


 


Net trading income/(expense)

(377)

 

298

 

(79)

 

489

 

213

 

702

Net income/(expense) from


 


 


 


 


 


   financial instruments designated


 


 


 


 


 


   at fair value

(127)

 

1,337

 

1,210

 

744

 

1,595

 

2,339

Gains less losses from financial


 


 


 


 


 


   investments

3

 

39

 

42

 

195

 

29

 

224

Dividend income

14

 

13

 

27

 

17

 

16

 

33

Net earned insurance premiums

4,953

 

4,784

 

9,737

 

4,585

 

4,949

 

9,534

Other operating income

387

 

263

 

650

 

302

 

507

 

809

 


 


 


 


 


 


Total operating income

20,611

 

22,473

 

43,084

 

23,027

 

23,959

 

46,986

 


 


 


 


 


 


Net insurance claims incurred and


 


 


 


 


 


   movement in liabilities to


 


 


 


 


 


   policyholders

(4,572)

 

(5,936)

 

(10,508)

 

(5,144)

 

(6,427)

 

(11,571)

Net operating income before loan


 


 


 


 


 


   impairment charges and other


 


 


 


 


 


   credit risk provisions

16,039

 

16,537

 

32,576

 

17,883

 

17,532

 

35,415

 


 


 


 


 


 


Loan impairment charges and


 


 


 


 


 


   other credit risk provisions

(6,317)

 

(4,942)

 

(11,259)

 

(10,673)

 

(9,229)

 

(19,902)

 


 


 


 


 


 


Net operating income

9,722

 

11,595

 

21,317

 

7,210

 

8,303

 

15,513

 


 


 


 


 


 


Direct employee expenses

(2,584)

 

(2,804)

 

(5,388)

 

(2,876)


(3,193)


(6,069)

Other operating expenses

(6,425)

 

(6,992)

 

(13,417)

 

(5,898)

 

(6,325)

 

(12,223)

 


 


 


 


 


 


Total operating expenses

(9,009)

 

(9,796)

 

(18,805)

 

(8,774)

 

(9,518)

 

(18,292)

 


 


 


 


 


 


Operating profit/(loss)

713

 

1,799

 

2,512

 

(1,564)

 

(1,215)

 

(2,779)

 


 


 


 


 


 


Share of profit in associates and


 


 


 


 


 


   joint ventures

458

 

548

 

1,006

 

315

 

399

 

714

 


 


 


 


 


 


Profit/(loss) before tax

1,171

 

2,347

 

3,518

 

(1,249)

 

(816)

 

(2,065)

 

Commercial Banking

 

 

 

 

 

 

 

 

 

 

 

30 June

 

 

30 June

31 December

 

2010

 

2010

 

2010

 

2009

 

2009

 

2009

US$m

 

US$m

 

US$m

 

US$m

 

US$m

 

US$m


 


 


 


 


 


Net interest income

4,024

 

4,463

 

8,487

 

3,809

 

4,074

 

7,883

Net fee income

1,935

 

2,029

 

3,964

 

1,749

 

1,953

 

3,702

 


 


 


 


 


 


Net trading income

233

 

222

 

455

 

194

 

160

 

354

Net income/(expense) from


 


 


 


 


 


   financial instruments


 


 


 


 


 


   designated at fair value

26

 

 

 

 

 

Gains less losses from financial


 

 

 

 

 

   investments

3

 

 

 

25

 

 

23

Dividend income

5

 

 

 

3

 

5

 

8

Net earned insurance premiums

696

 

 

 

390

 

496

 

886

Other operating income

 

 

 

519

 

220

 

739

 

 

 

 


 


 


Total operating income

 

 

 

6,672

 

7,023

 

13,695

 

 

 

 


 

 

Net insurance claims incurred and

 

 

 


 

 

   movement in liabilities to

 

 

 

 

 

   policyholders

 

 

 

 

 

Net operating income before loan

 

 

 

 

 

   impairment charges and other

 

 

 

 

 

   credit risk provisions

 

 

 

6,344

 

6,509

 

12,853

 

 

 

 

 

 

Loan impairment charges and

 

 

 

 

 

   other credit risk provisions

 

 

 

 

 

 

 

 

 

 

 

Net operating income

 

 

 

4,835

 

4,736

 

9,571

 

 

 

 

 

 

Direct employee expenses

 

 

 

 

 

Other operating expenses

 

 

 

 

(2,027)

 

 

 

 

 

 

 

Total operating expenses

 

 

 

 

 

 

 

 

 

 

 

Operating profit

 

 

 

2,095

 

1,513

 

3,608

 

 

 

 


 


 


Share of profit in associates and

 

 

 


 


 


   joint ventures

 

 

 

337

 

330

 

667

 

 

 

 


 


 


Profit before tax

 

 

 

2,432

 

1,843

 

4,275

 

Global Banking and Markets

 

 

 

 

 

 

 

 

 

 

 

30 June

 


 

30 June

31 December

 


2010

 

2010

 

2010

 

2009

 

2009

 

2009

US$m

 

US$m

 

US$m

 

US$m

 

US$m

 

US$m


 


 


 


 


 


Net interest income

3,720

 

3,628

 

7,348

 

4,667

 

3,943

 

8,610

Net fee income

2,379

 

2,346

 

4,725

 

1,968

 

2,395

 

4,363

 


 


 


 


 


 


Net trading income

3,755

 

2,076

 

5,831

 

4,478

 

2,397

 

6,875

Net income from financial


 


 


 


 


 


   instruments designated


 


 


 


 


 


   at fair value

8

 

28

 

36

 

329

 

144

 

473

Gains less losses from financial


 


 


 


 


 


   investments

505

 

292

 

797

 

158

 

107

 

265

Dividend income

22

 

26

 

48

 

23

 

45

 

68

Net earned insurance premiums

22

 

19

 

41

 

40

 

14

 

54

Other operating income

438

 

709

 

1,147

 

603

 

543

 

1,146

 


 


 


 


 


 


Total operating income

10,849

 

9,124

 

19,973

 

12,266

 

9,588

 

21,854

 


 


 


 


 


 


Net insurance claims incurred and


 


 


 


 


 


   movement in liabilities to


 


 


 


 


 


   policyholders

(15)

 

(11)

 

(26)

 

 

1

 

Net operating income before loan


 


 


 


 


 


   impairment charges and other


 


 


 


 


 


   credit risk provisions

10,834

 

9,113

 

19,947

 

12,231

 

9,589

 

21,820

 


 


 


 


 


 


Loan impairment charges and


 


 


 


 


 


   other credit risk provisions

(500)

 

(490)

 

(990)

 

 

 

 


 


 


 


 


 


Net operating income

10,334

 

8,623

 

18,957

 

10,499

 

8,153

 

18,652

 


 


 


 


 


 


Direct employee expenses

(2,520)

 

(2,215)

 

(4,735)

 

 

 

Other operating expenses

(2,427)

 

(2,800)

 

(5,227)

 

 

 

 


 


 


 


 


 


Total operating expenses

(4,947)

 

(5,015)

 

(9,962)

 

 

 

 


 


 


 


 


 


Operating profit

5,387

 

3,608

 

8,995

 

6,094

 

4,021

 

10,115

 


 


 


 


 


 


Share of profit in associates and


 


 


 


 


 


   joint ventures

246

 

295

 

541

 

204

 

162

 

366

 


 


 


 


 


 


Profit before tax

5,633

 

3,903

 

9,536

 

6,298

 

4,183

 

10,481

 

 

Global Private Banking

 

 

 

 

 

 

 

 

 

 

 

30 June

 

 

30 June

31 December

 

2010

 

2010

 

2010

 

2009

 

2009

 

2009

US$m

 

US$m

 

US$m

 

US$m

 

US$m

 

US$m

 

 

 

 

 

Net interest income

646

 

699

 

1,345

 

784

 

690

 

1,474

Net fee income

643

 

656

 

1,299

 

602

 

634

 

1,236

 


 


 


 


 


 


Net trading income

219

 

193

 

412

 

163

 

181

 

344

Gains less losses from financial


 


 


 


 


 


   Investments

11

 

(17)

 

(6)

 

 

7

 

5

Dividend income

3

 

2

 

5

 

2

 

3

 

5

Other operating income

21

 

17

 

38

 

40

 

8

 

48

 


 


 


 


 


 


Net operating income before


 


 


 


 


 


   loan impairment charges and


 


 


 


 


 


   other credit risk provisions

1,543

 

1,550

 

3,093

 

1,589

 

1,523

 

3,112

 


 


 


 


 


 


Loan impairment (charges)/


 


 


 


 


 


   recoveries and other credit


 


 


 


 


 


   risk provisions

-

 

12

 

12

 

 

 

 


 


 


 


 


 


Net operating income

1,543

 

1,562

 

3,105

 

1,575

 

1,409

 

2,984

 


 


 


 


 


 


Direct employee expenses

(609)

 

(628)

 

(1,237)

 

 

 

Other operating expenses

(358)

 

(440)

 

(798)

 

 

 

 


 


 


 


 


 


Total operating expenses

(967)

 

(1,068)

 

(2,035)

 

 

 

 


 


 


 


 


 


Operating profit

576

 

494

 

1,070

 

626

 

474

 

1,100

 


 


 


 


 


 


Share of profit/(loss) in associates


 


 


 


 


 


   and joint ventures

(20)

 

4

 

(16)

 

6

 

2

 

8

 


 


 


 


 


 


Profit before tax

556

 

498

 

1,054

 

632

 

476

 

1,108

 

Other

 

 

 

 

 

 

 

 

 

 

 

30 June

 

 

30 June

31 December

 

2010

 

2010

 

2010

 

2009

 

2009

 

2009

US$m

 

US$m

 

US$m

 

US$m

 

US$m

 

US$m

 

 

 

 

 

 

Net interest expense

(537)

 

(461)

 

(998)

 

 

 

Net fee income

1

 

30

 

31

 

64

 

61

 

125

 


 


 


 

 

 

Net trading income/(expense)

(572)

 

261

 

(311)

 

110

 

169

 

279

Changes in fair value of long-term


 


 


 

 

 

   debt issued and related


 


 


 

 

 

   derivatives

1,125

 

(1,383)

 

(258)

 

 

 

Net income/(expense) from


 


 


 

 

 

   other financial instruments


 


 


 

 

 

   designated at fair value

53

 

(11)

 

42

 

 

83

 

 


 


 


 

 

 

Net income/(expense) from


 


 


 

 

 

   financial instruments


 


 


 

 

 

   designated at fair value

1,178

 

(1,394)

 

(216)

 

 

 

Gains less losses from financial


 


 


 

 

 

   investments

35

 

101

 

136

 

 

56

 

3

Dividend income

15

 

5

 

20

 

12

 

- 

 

12

Net earned insurance premiums

(5)

 

(6)

 

(11)

 

 

- 

 

Other operating income

3,114

 

2,891

 

6,005

 

2,172

 

2,870

 

5,042

 


 


 


 

 

 

Total operating


 


 


 

 

 

   income/(expense)

3,229

 

1,427

 

4,656

 

 

 

 


 


 


 

 

 

Net insurance claims incurred


 


 


 

 

 

   and movement in liabilities


 


 


 

 

 

   to policyholders

3

 

1

 

4

 

-

 

 

Net operating income/(expense)


 


 


 

 

 

   before loan impairment


 


 


 

 

 

   charges and other credit


 


 


 

 

 

   risk provisions

3,232

 

1,428

 

4,660

 

 

 

 


 


 


 

 

 

Loan impairment (charges)/


 


 


 

 

 

   recoveries and other credit


 


 


 

 

 

   risk provisions

(1)

 

4

 

3

 

 

 

 


 


 


 

 

 

Net operating income/(expense)

3,231

 

1,432

 

4,663

 

 

 

 


 


 


 

 

 

Direct employee expenses

(3,030)

 

(3,293)

 

(6,323)

 

 

 

Other operating


 


 


 

 

 

   (expenses)/income

271

 

134

 

405

 

90

 

 

 75 

 


 


 


 

 

 

Total operating expenses

(2,759)

 

(3,159)

 

(5,918)

 

 

 

 


 


 


 

 

 

Operating profit/(loss)

472

 

(1,727)

 

(1,255)

 

 

 

 


 


 


 

 

 

Share of profit in associates


 


 


 

 

 

   and joint ventures

68

 

26

 

94

 

5

 

21

 

26

 


 


 


 

 

 

Profit/(loss) before tax

540

 

(1,701)

 

(1,161)

 

 

 

 

11. Foreign currency amounts

 

The sterling and Hong Kong dollar equivalent figures in the consolidated income statement and balance sheet are for information only. These are translated at the average rate for the period for the income statement and the closing rate for the balance sheet as follows:

 

 

 

Year ended 31 December

 

 

2010

 

2009

 

 

 

 

 

Closing :

HK$/US$

7.773

 

7.754

 

£/US$

0.644

 

0.616

 

 

 

 

 

Average :

HK$/US$

7.769

 

7.752

 

£/US$

0.648

 

0.641

 

 

12. Legal proceedings, investigations and regulatory matters

 

HSBC is party to legal proceedings, investigations and regulatory matters in a number of jurisdictions including the UK, Hong Kong and the US arising out of its normal business operations. Apart from the matters described below, HSBC considers that none of these matters is material, either individually or in the aggregate. HSBC recognises a provision for a liability in relation to these matters when it is probable that an outflow of economic benefits will be required to settle an obligation which has arisen as a result of past events, and for which a reliable estimate can be made of the amount of the obligation. While the outcome of these matters is inherently uncertain, management believes that, based on the information available to it, appropriate provisions have been made in respect of legal proceedings, investigations and regulatory matters as at 31 December 2010.

 

Securities litigation

 

As a result of an August 2002 restatement of previously reported consolidated financial statements and other corporate events, including the 2002 settlement with 46 State Attorneys General relating to real estate lending practices, Household International (now HSBC Finance) and certain former officers were named as defendants in a class action law suit, Jaffe v Household International Inc, et al No 2. C 5893 (N.D.Ill, filed 19 August 2002). The complaint asserted claims under the US Securities Exchange Act of 1934, on behalf of all persons who acquired and disposed of Household International common stock between 30 July 1999 and 11 October 2002. The claims alleged that the defendants knowingly or recklessly made false and misleading statements of material fact relating to Household's Consumer Lending operations, including collections, sales and lending practices, some of which ultimately led to the 2002 State settlement agreement, and facts relating to accounting practices evidenced by the restatement. Following a jury trial concluded in April 2009, which was decided partly in favour of the plaintiffs, the Court issued a ruling on 22 November 2010, within the second phase of the case to determine actual damages, that claim forms should be mailed to class members, and also set out a method for calculating damages for class members who filed claims. At subsequent hearings the Court has allowed HSBC Finance to take limited discovery on the issue of whether investors relied on the 'misleading statements' at the time they made their investments and also reserved on the issue of whether HSBC Finance would ultimately be entitled to a jury trial on the issue of reliance.

 

Despite the jury verdict and the 22 November 2010 ruling, HSBC continues to believe that it has meritorious defences, and intends to seek an appeal of the Court's rulings. Lead Plaintiffs, in Court filings, have estimated that damages could range 'somewhere between US$2.4bn to US$3.2bn to class members', before pre-judgement interest. The timing and outcome of the resolution of this matter is uncertain. Given the complexity and uncertainties associated with the actual determination of damages, including but not limited to the number of class members that may file valid claims, the number of claims that can be substantiated by class members providing adequate documentation, the reduction of trading losses by any trading gains made over the relevant period, the determination of reliance by class members on the financial statements, and whether any given class member was the beneficial owner of the shares, HSBC is unable at this time to estimate reliably the amount of any damages, or range of possible damages, that could arise, but they could be significant.

 

Bernard L. Madoff Investment Securities LLC

 

In December 2008, Bernard L. Madoff ('Madoff') was arrested for running a Ponzi scheme and a trustee was appointed for the liquidation of his firm, Bernard L. Madoff Investment Securities LLC ('Madoff Securities'), an SEC-registered broker-dealer and investment adviser. Since his appointment, the trustee has been recovering assets and processing claims of Madoff Securities customers. Madoff subsequently pleaded guilty to various charges and is serving a 150-year prison sentence. He has acknowledged, in essence, that while purporting to invest his customers' money in securities and, upon request, return their profits and principal, he in fact never invested in securities and used other customers' money to fulfil requests for the return of profits and principal. The relevant US authorities are continuing their investigations into his fraud, and have brought charges against others.

 

Various non-US HSBC companies provided custodial, administration and similar services to a number of funds incorporated outside the US whose assets were invested with Madoff Securities.

 

Based on information provided by Madoff Securities, as at 30 November 2008, the purported aggregate value of these funds was US$8.4bn, an amount that includes fictitious profits reported by Madoff. Based on information available to HSBC to date, we estimate that the funds' actual transfers to Madoff Securities minus their actual withdrawals from Madoff Securities during the time that HSBC serviced the funds totalled approximately US$4.3bn.

 

Plaintiffs (including funds, fund investors, and the Madoff Securities trustee) have commenced Madoff-related proceedings against numerous defendants in a multitude of jurisdictions. Various HSBC companies have been named as defendants in suits in the US, Ireland, Luxembourg, and other jurisdictions. The suits (which include US class actions) allege that the HSBC defendants knew or should have known of Madoff's fraud and breached various duties to the funds and fund investors. In December 2010, the Madoff Securities trustee commenced suits against various HSBC companies in the US bankruptcy court and in the English High Court. The US action (which also names certain funds, investment managers, and other entities and individuals) seeks US$9bn in damages and additional recoveries from HSBC and the various co-defendants. It seeks damages against HSBC for allegedly aiding and abetting Madoff's fraud and breach of fiduciary duty. It also seeks, pursuant to US bankruptcy law, recovery of unspecified amounts received by HSBC from funds invested with Madoff, including amounts that HSBC received when it redeemed units HSBC held in the various funds. HSBC acquired those fund units in connection with financing transactions HSBC had entered into with various clients. The trustee's US bankruptcy law claims also seek recovery of fees earned by HSBC for providing custodial, administration and similar services to the funds. The trustee's English action seeks recovery of unspecified transfers of money from Madoff Securities to or through HSBC, on the ground that the HSBC defendants actually or constructively knew of Madoff's fraud.

 

Between October 2009 and July 2010, Fairfield Sentry Limited and Fairfield Sigma Limited ('Fairfield'), funds whose assets were directly or indirectly invested with Madoff Securities, commenced multiple suits in the British Virgin Islands and the US against numerous fund shareholders, including various HSBC companies that acted as nominees for clients of HSBC's private banking business and other clients who invested in the Fairfield funds. The Fairfield actions seek restitution of amounts paid to the defendants in connection with share redemptions, on the ground that such payments were made by mistake, based on inflated values resulting from Madoff's fraud.

 

There are many factors which may affect the range of possible outcomes, and the resulting financial impact, of the various Madoff-related proceedings, including but not limited to the circumstances of the fraud, the multiple jurisdictions in which the proceedings have been brought and the number of different plaintiffs and defendants in such proceedings. The cases where HSBC companies are named as a defendant are at an early stage. For these reasons, among others, it is not practicable at this time for HSBC to estimate reliably the aggregate liabilities, or ranges of liabilities, that might arise as a result of all such claims but they could be significant. In any event, HSBC considers that it has good defences to these claims and will continue to defend them vigorously.

 

Payment Protection Insurance

 

Following an extensive period of consultation, on 10 August 2010 the Financial Services Authority ('FSA') published Policy Statement 10/12 ('PS 10/12') on the assessment and redress of Payment Protection Insurance ('PPI') complaints. This included (i) new handbook guidance setting out how complaints are to be handled, and 'redressed fairly' where appropriate; (ii) an explanation of when and why firms should analyse their past complaints to identify if there are serious flaws in sales practices that may have affected complainants and non-complainants; and (iii) an Open Letter setting out common sales failings to help firms identify bad practices.

 

After extensive consideration, the British Bankers Association ('BBA'), as the representative body of UK banks, sent a formal pre-action protocol letter to the FSA and the Financial Ombudsman Service ('FOS') setting out its concerns and what it considered to be the flaws identified in PS 10/12 and Guidance issued by FOS on the handling of PPI complaints. The letter indicated that, absent a satisfactory reply, it was the BBA's intention to apply to the High Court for a Judicial Review of both PS 10/12 and the FOS Guidance. The FSA and FOS responded on 28 September 2010 denying that they had acted unlawfully in introducing the Policy Statement or relying on the Guidance.

 

On 8 October 2010, an application for Judicial Review was issued by the BBA seeking an order to quash PS 10/12 and the FOS Guidance. The FSA subsequently issued a statement on 24 November 2010 seeking to clarify aspects of PS 10/12 and the Open Letter. The FSA and FOS filed defences to the Judicial Review application on 10 December 2010. The Judicial Review application was heard by the Court on 25 - 28 January 2011, and Judgement is currently awaited.

 

HSBC believes that the BBA has a strongly arguable case against both the FSA and the FOS. If the Court ultimately concludes, however, after any appeals of the Judgement that may follow from any of the parties, that PS 10/12 and the FOS Guidance stand, in whole or in part, then these would need to be taken into consideration when determining complaints alleging the mis-sale of PPI.

 

If, contrary to HSBC's current assessment, a decision is reached in the case that results in a potential liability for HSBC, a large number of different outcomes is possible, each of which would have a different financial impact. There are many factors affecting the range of possible outcomes, and the resulting financial impact, including the extent to which one or both of PS 10/12 and the FOS Guidance are upheld, and the underlying rationale for each decision; the ways in which PS 10/12 and or the FOS Guidance are found to impose additional requirements over and above the common law and the FSA Conduct of Business rules in force at the time relating to the sale of general insurance products, and in the handling of firms' PPI complaints; the effect of any decision on the nature and volume of customer complaints; and the extent to which, if at all, HSBC might be required to take action, and the nature of any such action, in relation to non-complainants. The extent of any redress that may be required as a result of a decision to uphold PS 10/12 and the FOS Guidance, in whole or in part, would also depend on the facts and circumstances of each individual customer's case. For these reasons, among others, HSBC does not at this time consider it practicable to provide a reliable estimate or range of estimates of the potential financial impact of an adverse decision.

 

Pending resolution of the dispute, HSBC continues to review all complaints received which allege that PPI has been mis-sold and, where possible, seeks to resolve them. Where HSBC considers it is not in a position to reach a final decision on a complaint until the conclusion of the application for Judicial Review of PS 10/12 and the FOS Guidance and any subsequent appeals, it informs the complainant that this is the case.

 

In December 2007, the Group decided to cease selling PPI products in the UK and a phased withdrawal was completed across the HSBC, first direct and M&S Money brands during 2008. HFC Bank Ltd ('HFC') ceased selling single premium PPI in 2008 and sales of regular premium PPI will reduce as HFC exits its remaining retail relationships. During the consultation process in 2009, the FSA reported that it had obtained agreement from firms representing 40% of the market for face to face single premium PPI sales to review all such sales since July 2007. No HSBC subsidiary or associate was included in that group of firms.

 

Regulatory and law enforcement agencies investigations

 

HSBC Bank USA entered into a consent cease and desist order with the Office of the Comptroller of the Currency and the indirect parent of that company, HSBC North America, entered into a consent cease and desist order with the Federal Reserve Board in the first week of October 2010. These actions require improvements for an effective compliance risk management programme across the Group's US businesses, including US Bank Secrecy Act ('BSA') and Anti Money Laundering ('AML') compliance. Steps continue to be taken to address the requirements of these Orders and to ensure that compliance and effective policies and procedures are maintained.

 

Various HSBC Group companies are the subject of ongoing investigations, including Grand Jury subpoenas and other requests for information, by US Government agencies, including the US Attorney's Office, the US Department of Justice and the New York County District Attorney's Office. These investigations pertain to, among other matters, HSBC Bank USA's bank note and foreign correspondent banking businesses and its compliance with BSA and AML controls, as well as various HSBC companies' compliance with Office of Foreign Asset Control ('OFAC') requirements, and adherence by certain customers to US tax reporting requirements.

 

The consent cease and desist orders do not preclude additional enforcement actions against HSBC Bank USA or HSBC North America by bank regulatory or law enforcement agencies, including actions to recover civil money penalties, fines and other financial penalties relating to activities which were the subject of the cease and desist orders. In addition, it is likely that there could be some form of formal enforcement action in respect of some or all of the ongoing investigations. Actual or threatened enforcement actions against other financial institutions for breaches of BSA, AML and OFAC requirements have resulted in settlements involving fines and penalties, some of which have been significant depending on the individual circumstances of each action. The ongoing investigations are at an early stage. Based on the facts currently known, it is not practicable at this time for HSBC to determine the terms on which the ongoing investigations will be resolved or the timing of such resolution or for HSBC to estimate reliably the amounts, or range of possible amounts, of any fines and/or penalties. As matters progress, it is possible that any fines and/or penalties could be significant.

13. Goodwill impairment

14. Events after the balance sheet date

A fourth interim dividend for 2010 of US$0.12 per ordinary share (a distribution of approximately US$2,125m) (2009: US$0.10 per ordinary share, US$1,741m) was declared by the Directors after 31 December 2010.

 

These accounts were approved by the Board of Directors on 28 February 2011 and authorised for issue.

 

 

15. Capital resources

 

 

2010

 

2009

 

US$m

 

US$m

Composition of regulatory capital

 

 

 

Tier 1 capital

 



   Shareholders' equity per balance sheet

147,667

 

128,299

   Preference share premium

(1,405)

 

(1,405)

   Other equity instruments

(5,851)

 

(2,133)

   Deconsolidation of special purpose entities

2,335

 

10,491

 

 

 

 

Shareholders' equity

142,746

 

135,252

 

 

 

 

   Non-controlling interests per balance sheet

7,248

 

7,362

   Preference share non-controlling interests

(2,426)

 

(2,395)

   Non-controlling interest transferred to tier 2 capital

(501)

 

(678)

   Non-controlling interest in deconsolidated subsidiaries

(404)

 

(357)

 

 

 

 

Non-controlling interests

3,917

 

3,932

 

 

 


   Unrealised losses on available-for-sale debt securities

3,843

 

906

   Own credit spread

(889)

 

(1,050)

   Defined benefit pension fund adjustment

1,676

 

2,508

      Reserves arising from revaluation of property and unrealised gains on

 

 


         available-for-sale equities

(3,121)

 

(2,226)

   Cash flow hedging reserve

285

 

26

 

 

 

 

Regulatory adjustments to the accounting basis

1,794

 

164

 

 

 


   Goodwill capitalised and intangible assets

(28,001)

 

(28,680)

   50% of securitisation positions

(1,467)

 

(1,579)

   50% of tax credit adjustment for expected losses

241

 

546

   50% of excess of expected losses over impairment allowances

(3,114)

 

(3,375)

 

 

 

 

Deductions

(32,341)

 

(33,088)

 

 

 


Core tier 1 capital

116,116

 

106,260

 

 

 

 

   Preference share premium

1,405

 

1,405

   Preference share non-controlling interest

2,426

 

2,395

   Hybrid capital securities

14,095

 

11,998

 

 

 

 

Other tier 1 capital before deductions

17,926

 

15,798

 

 

 


   Unconsolidated investments

(1,104)

 

(447)

   50% of tax credit adjustment for expected losses

241

 

546

 

 

 

 

Deductions

(863)

 

99

 

 

 


Tier 1 capital

133,179

 

122,157

 

2010

 

2009

 

US$m

 

US$m

Tier 2 capital


 


   Reserves arising from revaluation of property and unrealised gains on


 


      available-for-sale equities

3,121

 

2,226

   Collective impairment allowances

3,109

 

4,120

   Perpetual subordinated debt

2,781

 

2,987

   Term subordinated debt

43,402

 

40,442

   Non-controlling interest in tier 2 capital

300

 

300

 


 


Total qualifying tier 2 capital before deductions

52,713

 

50,075

 


 


   Unconsolidated investments

(13,744)

 

(11,547)

   50% of securitisation positions

(1,467)

 

(1,579)

   50% of excess of expected losses over impairment allowances

(3,114)

 

(3,375)

   Other deductions

(12)

 

(2)

 


 


Total deductions other than from tier 1 capital

(18,337)

 

(16,503)

 


 


Total regulatory capital

167,555

 

155,729

 


 


Risk-weighted assets


 


Credit risk

890,696

 

903,518

Counterparty credit risk

50,175

 

51,892

Market risk

38,679

 

51,860

Operational risk

123,563

 

125,898

 


 


Total

1,103,113

 

1,133,168

 

 

 

2010

 

2009

 

%

 

%

Capital ratios


 


Core tier 1 ratio

10.5

 

9.4

Tier 1 ratio

12.1

 

10.8

Total capital ratio

15.2

 

13.7

16. Forward-looking statements

 

This news release contains certain forward-looking statements with respect to the financial condition, results of operations and business of HSBC. These forward-looking statements represent HSBC's expectations or beliefs concerning future events and involve known and unknown risks and uncertainty that could cause actual results, performance or events to differ materially from those expressed or implied in such statements. Certain statements, such as those that include the words 'potential', 'estimated', and similar expressions or variations on such expressions may be considered 'forward-looking statements'.

 

Past performance cannot be relied on as a guide to future performance.

 

 

17. Statutory accounts

 

The information in this news release does not constitute statutory accounts within the meaning of Section 434 of the Companies Act 2006 (the Act). The statutory accounts for the year ended 31 December 2010 will be delivered to the Registrar of Companies in England and Wales in accordance with Section 441 of the Act. The auditor has reported on those accounts. Its report was unqualified and did not contain a statement under Section 498(2) or (3) of the Act.

 

 

18. Dealings in HSBC Holdings plc shares

Except for dealings as intermediaries by HSBC Bank plc, HSBC Financial Products (France) and The Hongkong and Shanghai Banking Corporation Limited, which are members of a European Economic Area exchange, neither HSBC Holdings nor any of its subsidiaries has purchased, sold or redeemed any listed securities of HSBC Holdings during the year ended 31 December 2010.

 

 

19. Registers of shareholders

 

Any person who has acquired ordinary shares registered on the Hong Kong Overseas Branch Register but who has not lodged the share transfer with the Hong Kong Overseas Branch Registrar should do so before 4.00pm on Thursday 17 March 2011 in order to receive the fourth interim dividend for 2010, which will be payable on Thursday 5 May 2011.

 

Any person who has acquired ordinary shares registered on the Principal Register in the United Kingdom but who has not lodged the share transfer with the Principal Registrar should do so before 4.00pm on Friday 18 March 2011 in order to receive the dividend.

 

Any person who has acquired ordinary shares registered on the Bermuda Overseas Branch Register but who has not lodged the share transfer with the Bermuda Branch Registrar should do so before 4.00pm on Friday 18 March 2011 in order to receive the dividend.

 

Removals of ordinary shares may not be made to or from the Hong Kong Overseas Branch Register on Friday 18 March 2011. Accordingly any person who wishes to remove shares to the Hong Kong Overseas Branch Register must lodge the removal request with the Principal Registrar in the United Kingdom or the Bermuda Branch Register by 4pm on Wednesday 16 March 2011; any person who wishes to remove shares from the Hong Kong Overseas Branch Register must lodge the removal request with the Hong Kong Branch Register by 4pm on Thursday 17 March 2011.

 

Transfers of American Depositary Shares should be lodged with the depositary by 12 noon on Friday, 18 March 2011 in order to receive the dividend.

 

20. Interim dividends for 2011

 

The Board has adopted a policy of paying quarterly interim dividends on the ordinary shares. Under this policy it is intended to have a pattern of three equal interim dividends with a variable fourth interim dividend. It is envisaged that the first interim dividend in respect of 2011 will be US$0.09 per ordinary share. The proposed timetables for the dividends in respect of 2011 are:

 

 

Interim dividends on the ordinary shares for 2011

 

First

 

Second

 

Third

 

Fourth

 

 

 

 

 

 

 

 

Announcement

3 May 2011

 

1 August 2011

 

7 November 2011

 

27 February 2012

Shares quoted ex-dividend in

 

 

 

 

 

 

 

   London, Hong Kong, Paris

 

 

 

 

 

 

 

   and Bermuda

18 May 2011

 

17 August 2011

 

23 November 2011

 

14 March 2012

ADSs quoted ex-dividend in

 

 

 

 

 

 

 

   New York

18 May 2011

 

17 August 2011

 

23 November 2011

 

14 March 2012

Record date in Hong Kong

19 May 2011

 

18 August 2011

 

24 November 2011

 

15 March 2012

Record date in London, New

 

 

 

 

 

 

 

   York, Paris and Bermuda1

20 May 2011

 

19 August 2011

 

25 November 2011

 

16 March 2012

Payment date

6 July 2011

 

6 October 2011

 

18 January 2012

 

2 May 2012

 

1   Removals to and from the Overseas Branch Register of shareholders in Hong Kong will not be permitted on these dates.

 

 

21. Corporate governance

 

HSBC is committed to high standards of corporate governance. HSBC Holdings plc has complied throughout 2010 with the applicable code provisions of the Combined Code on Corporate Governance issued by the Financial Reporting Council, save for code provision A.2.2 as D J Flint, who had previously served as Chief Financial Officer, Executive Director, Risk and Regulation, did not meet the independence criteria of the Combined Code on Corporate Governance when he was appointed Group Chairman on 3 December 2010. HSBC Holdings plc has complied throughout 2010 with all applicable code provisions of the Code on Corporate Governance Practices in Appendix 14 to the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited.

 

The Board of HSBC Holdings plc has adopted a code of conduct for transactions in HSBC Group securities by Directors. The code of conduct complies with The Model Code in the Listing Rules of the Financial Services Authority and with The Model Code for Securities Transactions by Directors of Listed Issuers ('Hong Kong Model Code') set out in the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited save that The Stock Exchange of Hong Kong Limited has granted certain waivers from strict compliance with the Hong Kong Model Code. The waivers granted by The Stock Exchange of Hong Kong Limited primarily take into account accepted practices in the UK, particularly in respect of employee share plans. Following a specific enquiry, each Director has confirmed he or she has complied with the code of conduct for transactions in HSBC Group securities throughout 2010.

 

The Directors of HSBC Holdings plc as at the date of this announcement are:

 

D J Flint, S T Gulliver, S A Catz†, V H C Cheng, M K T Cheung†, J D Coombe†, R A Fairhead†, A A Flockhart, J W J Hughes-Hallett†, W S H Laidlaw†, J R Lomax†, I J Mackay, G Morgan†, N R N Murthy†, Sir Simon Robertson†, J L Thornton† and Sir Brian Williamson†.

 

† Independent non-executive Director

 

The Group Audit Committee has reviewed the annual results for 2010.

 

 

22. Annual Review and Annual Report and Accounts

 

The Annual Review 2010 and/or Annual Report and Accounts 2010 will be mailed to shareholders on or about Wednesday 30 March 2011. Copies may be obtained from Group Communications, HSBC Holdings plc, 8 Canada Square, London E14 5HQ, United Kingdom; Group Communications (Asia), The Hongkong and Shanghai Banking Corporation Limited, 1 Queen's Road Central, Hong Kong; Internal Communications, HSBC - North America, 26525 N Riverwoods Boulevard, Mettawa, Illinois 60045, USA; Direction de la Communication, HSBC France, 103 avenue des Champs Elysées, 75419 Paris Cedex 08, France; or from the HSBC Group website www.hsbc.com.

 

A Chinese translation of the Annual Review and Annual Report and Accounts is available upon request after 30 March 2011 from Computershare Hong Kong Investor Services Limited, Rooms 1712-1716, 17th Floor, Hopewell Centre, 183 Queen's Road East, Hong Kong.

 

A French translation of the Annual Review may be obtained on request from early May onwards from Direction de la Communication, HSBC France, 103 avenue des Champs Elysées, 75419 Paris Cedex 08, France.

 

The Annual Review and Annual Report and Accounts will be available on the Stock Exchange of Hong Kong's website www.hkex.com.hk.

 

The Form 20-F will be filed with the US Securities and Exchange Commission.

 

Custodians or nominees that wish to distribute copies of the Annual Review and/or Annual Report and Accounts to their clients may request copies by writing to: Computershare Investor Services PLC, The Pavilions, Bridgwater Road, Bristol BS99 6ZZ, UK.

 

 

23. HSBC Holdings plc - Capital and Risk Management Pillar 3 Disclosures

 

HSBC also publishes its Capital and Risk Management Pillar 3 Disclosures at 31 December 2010 ('Pillar 3 Disclosures 2010') today and these are available on the HSBC Group website - www.hsbc.com.

 

A Chinese translation of the Pillar 3 Disclosures 2010 will be available on the HSBC Group website after 30 March 2011.

 

 

24. Annual General Meeting

 

The 2011 Annual General Meeting of the Company will be held at the Barbican Hall, Barbican Centre, London EC2 on Friday 27 May 2011 at 11.00 am.

 

Notice of the meeting will be mailed to shareholders on or about Wednesday 30 March 2011.

 

 

25. Interim Management Statements and Interim Results for 2011

 

Interim Management Statements are expected to be issued on 12 May 2011 and 9 November 2011, respectively. The interim results for the six months to 30 June 2011 will be announced on Monday 1 August 2011.

 

 

26. News Release

 

Copies of this news release may be obtained from Group Communications, HSBC Holdings plc, 8 Canada Square, London E14 5HQ, United Kingdom; Group Communications (Asia), The Hongkong and Shanghai Banking Corporation Limited, 1 Queen's Road Central, Hong Kong; Internal Communications, HSBC - North America, 26525 N Riverwoods Boulevard, Mettawa, Illinois 60045, USA; Direction de la Communication, HSBC France, 103 avenue des Champs Elysées, 75419 Paris Cedex 08, France. The news release will also be available on the HSBC Group website - www.hsbc.com.

 

 

27. For further information contact:

 

London                                                                  Hong Kong

Richard Beck                                                          Cindy Tang

Group General Manager                                          Head of Group Communications (Asia)

Communications Director                                        Telephone: +852 2822 1268

Telephone: +44 (0)20 7991 0633                          

 

Robert Bailhache                                                     Patrick McGuinness

Head of Group Press Office                                     Head of Group Financial PR

Telephone: +44 (0)20 7992 5712                            Telephone: +852 3663 6883

 

Alastair Brown                                                        Gareth Hewett

Manager Investor Relations                                      Head of Group Communications (Hong Kong)

Telephone: +44 (0)20 7992 1938                            Telephone: +852 2822 4929

 

                                                                               Hugh Pye

                                                                               Head of Investor Relations (Asia)

                                                                               Telephone: +852 2822 4908

 

Chicago                                                                 Paris

Lisa Sodeika                                                           Jonathan Mullen

Executive Vice President,                                        Head of Communications Continental Europe

Corporate Affairs                                                    Telephone: +33 1 40 70 30 96

Telephone: +1 224 544 3299

                                                                               Investor relations enquiries to:

Diane Bergan                                                          Alexandre Macaire

Senior Vice President,                                             Head of Analysis & Capital Management

Public Affairs                                                           Telephone: +33 1 58 13 92 09

Telephone: +1 224 544 3310

 

 


This information is provided by RNS
The company news service from the London Stock Exchange
 
END
 
 
FR FMGZZLVFGMZM

Companies

HSBC Holdings (HSBA)
UK 100
FTSE quotes by TradingView

Latest directors dealings

All directors dealings today