HSBC Holdings plc FY2009

RNS Number : 8089H
HSBC Holdings PLC
01 March 2010
 



 

 

 

1 March 2010

 

HSBC HOLDINGS PLC

2009 FINAL RESULTS - HIGHLIGHTS

 

Underlying performance significantly ahead

 

·     Underlying pre-tax profit up US$4.7 billion or 56 per cent to US$13.3 billion, after excluding the goodwill impairment in North America in 2008.

·     On a reported basis, pre-tax profit down 24 per cent to US$7.1 billion.

·     Reported profit attributable to shareholders up 2 per cent to US$5.8 billion.

·     Positive jaws, with revenues up 8 per cent, costs down 4 per cent, and cost efficiency ratio 47.5 per cent on an underlying basis, after excluding the goodwill impairment in North America in 2008.

·     Dividends in respect of 2009 totalled US$5.9 billion, or US$0.34 per ordinary share, with a fourth interim dividend for 2009 declared of US$0.10 per ordinary share.

·     One of leading dividend payers in financial services. HSBC has declared dividends in respect of last three years totalling more than US$24 billion.

·     Earnings per share down 17 per cent to US$0.34 (2008: US$0.41).

 

Capital advantage and strong liquidity position maintained

 

·     Generated capital in every quarter. US$10.2 billion added to capital base through underlying profit generation.

·     Successful rights issue. US$17.8 billion added to shareholders' equity.

·     Enhanced capital position. Tier 1 ratio improved to 10.8 per cent, ahead of target range.

·     Distinctive liquidity position maintained. Held over US$1 trillion in deposits and ratio of customer advances-to-deposits was 77.3 per cent at 31 December 2009.

 

Diversified business model delivering profits through the cycle

 

·     Profitable in all regions excluding North America, but performance constrained by lower demand and deposit spread compression.

·     Loan impairment charges improved in US. In run-off consumer finance business, loan impairment charges fell by US$1.6 billion, offset by a rise in other regions.

·     Achieved very strong results in Global Banking and Markets.

·     Commercial Banking delivered profits in every region despite economic challenges.

·     Built on position as leading international bank in mainland China. Market value of strategic investments increased to US$25.4 billion and expanded our own network to 98 outlets.

·     Supported our customers through downturn. In the UK we made available £15 billion of new mortgage lending.

 

Well positioned for economic recovery

 

·     Two-speed economy. Expect emerging markets to grow three times faster than developed ones in 2010.

·     CEO's principal office relocated to Hong Kong, at heart of our most strategically important region.

·     Regulatory environment remains uncertain, but HSBC's strong capital and liquidity position and transparent structure position us strongly.

·     World's most valuable banking brand and Euromoney's'Best Global Bank'.

 

 

HSBC HOLDINGS REPORTS PRE-TAX PROFIT OF US$7,079 MILLION

 

HSBC made a profit before tax of US$7,079 million, a decrease of US$2,228 million, or 23.9 per cent, compared with 2008.

 

Net interest income of US$40,730 million was US$1,833 million, or 4.3 per cent, lower than 2008.

 

Net operating income before loan impairment charges and other credit risk provisions of US$66,181 million was US$15,501 million, or 19.0 per cent, lower than 2008.

 

Total operating expenses of US$34,395 million declined by US$4,140 million, or 10.7 per cent, compared with 2008 and excluding goodwill impairment. On an underlying basisW and excluding goodwill impairment, operating expenses were down 4 per cent compared with 2008.

 

HSBC's cost efficiency ratio was 52.0 per cent compared with 47.2 per cent* in 2008.

 

Loan impairment charges and other credit risk provisions were US$26,488 million in 2009, US$1,551 million higher than 2008.

 

The core tier 1 ratio and tier 1 ratio for the Group remained strong at 9.4 per cent and 10.8 per cent, respectively, at 31 December 2009.

 

The Group's total assets at 31 December 2009 were US$2,364 billion, a decrease of US$163 billion, or 6.5 per cent, since 31 December 2008.

 

 

 

*   Excluding goodwill impairment. The 2008 cost efficiency ratio including goodwill impairment was 60.1 per cent.

W   When 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 results

 

 

Year ended 31 December

 

 

2009

 

2008

 

 

US$m

 

%

 

US$m

 

%

 

 

 

 

 

 

 

 

 

 

Europe

4,009

 

56.7

 

10,869

 

116.7

 

Hong Kong

5,029

 

71.0

 

5,461

 

58.7

 

Rest of Asia-Pacific

4,200

 

59.3

 

4,722

 

50.7

 

Middle East

455

 

6.4

 

1,746

 

18.8

 

North America

(7,738

)

(109.3

)

(15,528

)

(166.8

)

Latin America

1,124

 

15.9

 

2,037

 

21.9

 

 

 

 

 

 

 

 

 

 

Profit before tax

7,079

 

100.0

 

9,307

 

100.0

 

 

 

 

 

 

 

 

 

 

Tax expense

(385

)

 

 

(2,809

)

 

 

 

 

 

 

 

 

 

 

 

Profit for the year

6,694

 

 

 

6,498

 

 

 

 

 

 

 

 

 

 

 

 

Profit attributable to shareholders of the parent

 

 

 

 

 

 

 

 

   company

5,834

 

 

 

5,728

 

 

 

Profit attributable to minority interests

860

 

 

 

770

 

 

 

 

Distribution of results by customer group and global business

 

 

 

 

 

 

 

Year ended 31 December

 

 

2009

 

2008

 

 

US$m

 

%

 

US$m

 

%

 

 

 

 

 

 

 

 

 

 

Personal Financial Services

(2,065

)

(29.2

)

(10,974

)

(117.9

)

Commercial Banking

4,275

 

60.4

 

7,194

 

77.3

 

Global Banking and Markets

10,481

 

148.1

 

3,483

 

37.4

 

Private Banking

1,108

 

15.6

 

1,447

 

15.6

 

Other

(6,720

)

(94.9

)

8,157

 

87.6

 

 

 

 

 

 

 

 

 

 

Profit before tax

7,079

 

100.0

 

9,307

 

100.0

 

 

 

Statement by Stephen Green, Group Chairman

 

2009: a year of transition

 

In a number of important respects, 2009 was a year of transition.

 

It began with further turbulence in global financial markets but, during the year, the markets pulled back from uncertainty and progressively stabilised as a consequence of the continued, extraordinary and timely actions by governments and central banks.

 

2009 also saw the deepest contraction in the real economy in any year since the second world war. However, it was apparent by year end that the worst was over - even if confidence remained fragile and recovery would be uneven.

 

The global macro-economic transition from West to East gathered pace during 2009. At HSBC we have long been convinced that the world's economic centre of gravity is shifting, and the financial crisis has only accelerated this trend.

 

Nevertheless, huge challenges and risks remain for all of us.

 

While emerging markets are leading global recovery and seem certain to drive the majority of the world's growth in the generation ahead, recovery in developed markets has been slow to start, and unemployment remains high.

 

Furthermore, the global rebalancing of demand has barely begun. The financial crisis brought into stark relief the extent of the imbalances, especially between over-consuming Western economies and high-saving emerging markets. Rebalancing requires structural change and international co-operation, and it will take time.

 

There are also important lessons to learn as we seek to reform the financial system. Few of these lessons are quick or simple, but the need for urgent change is clearer than ever.

 

Supporting customers and delivering results throughout the cycle

 

Throughout the crisis, HSBC has remained profitable, financially strong and independently owned by our shareholders.

 

It is testimony to the quality and strength of HSBC's management team that, in 2009, our underlying performance was significantly ahead of 2008. On an underlying basis, and excluding the impact of the goodwill impairment recorded in 2008, pre-tax profit was US$13.3 billion, 56 per cent higher. On a reported basis, profit before tax was US$7.1 billion, down 24 per cent, in part due to the reversal of fair value accounting gains on our own debt.

 

That HSBC has reported a pre-tax profit in all three years since the onset of the crisis should be a source of great confidence to our shareholders, our depositors and all of our customers. Our track record of delivering results through adversity, and at all stages of the economic cycle, remains intact.

 

We continued to enhance our financial strength during 2009. We strengthened our capital base by US$10.2 billion through underlying profit generation. This comfortably covers our dividends declared, which total US$5.9 billion in respect of 2009. The directors have announced a fourth interim dividend of 10 cents per ordinary share, payable on 5 May 2010, and we remain one of the leading payers of dividends in financial services, declaring dividends in respect of the last three years of over US$24 billion in total.

 

The successful completion of our rights issue in April added US$17.8 billion to shareholders' equity and helped to set the tenor for market recovery. Its success demonstrated the strong confidence which you, our shareholders, have in our future and we are profoundly thankful for your support.

 

We indicated at the time of the rights issue our expectation that, if successful, it would increase our tier 1 ratio by around 150 basis points. I am pleased to report that our tier 1 ratio increased by some 250 basis points to 10.8 per cent at 31 December 2009, largely as a result of the rights issue and internal capital generation. The core tier 1 ratio was 9.4 per cent at the same date, increasing by some 240 basis points.

 

Throughout the crisis, our strategy has remained clear: to build on our position as the leading international and emerging markets bank. We have also never forgotten that it is our responsibility to make a real contribution to economic and social development, and that our ability to do so is fundamental to our success in delivering sustainable value to our shareholders.

 

Meeting our commitments to the communities we serve around the world is not some optional extra or by-product of our business - it is part of our raison d' être. In Argentina, which was in the midst of the peso crisis ten years ago, we did not abandon our customers and have remained committed to the market ever since. In 2009, our operations there reported their best-ever underlying performance and resumed paying cash dividends to the Group in January 2010. In mainland China, we are proud of our position as the leading international bank, and we continued to build our strong rural presence during the year. In Indonesia, we nearly doubled our network to support the growing financial needs of personal and business banking customers, and we launched our SME fund in the United Arab Emirates in January 2010. These are just a few examples which illustrate our commitment to helping people prepare for the future, building prosperity and security for their families and communities.

 

Robust corporate governance and unrivalled management experience

 

In 2009 we announced that, as Group Chief Executive, Michael Geoghegan would take responsibility for developing strategy as part of his overall responsibilities for the performance of the Group's business. We relocated the principal office of the Group Chief Executive to Hong Kong and, on 1 February 2010, he succeeded Vincent Cheng as Chairman of The Hongkong and Shanghai Banking Corporation Limited. This underscores our commitment to our emerging markets businesses and reflects the historic shift now taking place in the global economy.

 

HSBC's corporate headquarters remain in the UK, where we continue to benefit from being at the heart of one of the world's pre-eminent financial centres. From this base, as Chairman, I spend an increasing amount of my time engaging with policymakers and regulators throughout the world on behalf of the Group, on the growing number of policy issues which are crucial for the banking industry in general and for HSBC in particular.

 

At HSBC, we have an extremely strong, diverse and engaged Board and the international experience and expertise of our management team is something which sets us apart. We are committed to delivering effective supervision and to compliance with the principles set out in the Walker Review in the UK. During 2009, we also took further steps to strengthen our top management team. Sandy Flockhart was appointed Chairman, Personal and Commercial Banking, with responsibility for Personal Financial Services, Commercial Banking and Insurance, HSBC's Latin American and African businesses, and most Group functions. Stuart Gulliver was appointed Chairman, Europe, Middle East and Global Businesses and assumed responsibility for Private Banking, adding to his responsibilities for Global Banking and Markets. Douglas Flint assumed additional responsibilities for Regulation and Compliance in an expanded role as Chief Financial Officer, Executive Director Risk and Regulation. Peter Wong was appointed Chief Executive of The Hongkong and Shanghai Banking Corporation Limited, succeeding Sandy Flockhart.

 

I would like to thank Vincent Cheng for his tremendous contribution over the past five years as Chairman of The Hongkong and Shanghai Banking Corporation Limited, and look forward to continuing to work with him as a main Board member and Chairman of HSBC Bank (China) Company Limited.

 

I would also like to say thank you on behalf of the Board to three of our directors, José Luis Durán, William Fung and Sir Mark Moody-Stuart, who will retire by rotation at the 2010 Annual General Meeting and will not seek re-election. It has been a privilege to work with each of them and all of us on the Board are extremely grateful for their counsel and support.

 

Learning the lessons from the crisis

 

In 2009, the G20 set out its clear belief that sustainable globalisation and rising prosperity will require an open world economy based on market principles, effective regulation, and strong global institutions. At HSBC, we agree that these principles are critical for the common good. It is vital that the industry should engage constructively in the debate about how this should work in practice and HSBC is participating fully in these discussions. In our view, the overall objective must be to deliver three effective market mechanisms.

 

Competitive product provision is fundamental to economic and social development. In the recent past, attempts to drive ever greater profits from the same source resulted in distorted products, lack of transparency and over-complexity. The industry needs to learn the lessons from this and deliver a market which provides financial services that are competitive, transparent and responsive to genuine customer needs.

 

The market for capital has also suffered from clear distortions in recent years. There has been too great an emphasis on short-term gains, often accompanied by shareholder pressure to increase leverage in order to boost returns, and a dangerous underpricing of risk. This resulted in unsustainable returns, which in some cases proved to be illusory. Banks must be appropriately capitalised, sufficiently liquid and not overstretched, and getting this right will be crucial in delivering the sustainable financial system we need for the future.

 

Partly because of these problems in other areas of the marketplace, the third area requiring urgent reform is the market for talent. There is understandable public anger in some countries as a result of the practices at certain banks and, in particular, because of the egregious reward of management failure. We have witnessed unacceptable distortions - from rewards linked to unsustainable or illusory day-one revenues which encouraged excessive risk-taking; to multi-year guaranteed bonuses with no performance criteria. Over the last three years I have spoken publicly about my concerns regarding remuneration and I will set out our principles at HSBC.

 

Rewarding sustainable performance

 

First, for any bank to be sustainable it must strike the right balance in serving the long-term interests of its stakeholders. It must deliver sustainable returns to shareholders on their investment; it must maintain the capital strength needed to support the customers and economies it serves; and it must reward its employees appropriately. My own experience is that colleagues want to know that their job makes a difference and contributes to social and economic development; reward is simply not the only motivating factor. Nonetheless it is important, and companies have a clear responsibility to treat their employees appropriately.

 

It therefore follows that remuneration must be firmly tied to sustainable performance and must not reward failure. It should be properly aligned with risk which remains on the balance sheet, and subject to deferral and to clawback in case performance later proves to be unsatisfactory.

 

Second, in order to maintain long-term competitive advantage, remuneration must be market-based. Underpaying ultimately results in a company losing some of its best people. HSBC is domiciled in the UK but we have around 300,000 employees in 88 countries and territories. We have to think internationally, and remuneration policy is no exception. Similarly, if pre-eminent financial centres like London are to remain home to firms like HSBC, those of us who care for its future must reflect the reality of the global marketplace in our thinking and approach.

 

Third, an independent Remuneration Committee should conduct rigorous international benchmarking on compensation and consult appropriately on its conclusions. These are the principles we have followed in determining HSBC's rewards this year.

 

Our executive Directors have a combined 178 years of service - a track record almost without parallel in the industry. I believe there is no better management team in banking and it is no coincidence that HSBC has remained profitable throughout the financial crisis and paid dividends when few other banks did. Indeed, for 2009, our total dividends to shareholders once again comfortably exceed total bonus awards. We have not needed taxpayers' money; on the contrary, HSBC has contributed nearly £5 billion in tax to the UK economy over the past five years.

 

At HSBC, we firmly believe that bonuses are a legitimate and proper element of reward providing, of course, awards fully satisfy the principles set out above. The G20 has set out clear guidance which HSBC wholly supports, and we comply with the Financial Services Authority's remuneration code of practice. Indeed, our decision to defer 100 per cent of executive Director bonuses in respect of 2009 over three years exceeds these guidelines.

 

Proper pay for proper performance includes ensuring market-based pay for employees over time. The Board expects fixed pay in banking to increase as a proportion of total compensation, especially for important risk and supervisory functions. This is a process we intend to see through at HSBC, and our management team is no exception.

 

The Board fully appreciates that, in these extraordinary times, remuneration is enormously sensitive - and particularly so when the absolute numbers involved are large by any standards, even if they are not in comparison with some other companies of HSBC's standing. Our practice is clear and transparent and this year's executive awards are set out in the Directors' Remuneration Report published today. We absolutely believe that the decisions we have taken on this year's remuneration awards are right - for all of our stakeholders.

 

Building a sustainable financial system for the future

 

As policymakers and industry participants take the necessary steps to improve the way our markets work, there are also some important over-arching challenges which we must address.

 

It is imperative to strike the right balance between strengthening the financial system and supporting economic growth. 'De-risking' the banking system, if taken too far, will throttle recovery and drive risk into other, unregulated parts of the capital markets. It is in the collective public interest to get this balance right. We must not rush to implement hastily conceived responses and policy must be co-ordinated internationally if we are to manage risk better in a truly global industry.

 

Policymakers also need to evolve new macroeconomic tools which will assist them to manage the supply of credit, as well as the cost of credit, in the economy. I believe a key element of this involves managing bank capital on a countercyclical basis which strikes the right balance between financial system stability and the prospects for economic growth. We cannot deliver a sustainable financial system without improving the wider framework for macroeconomic management too.

 

Finally, in the context of a wide-ranging discussion on the appropriate size and shape of banks, we must recognise that corporate structure and liquidity management are at least as important as size per se. This debate has sometimes been given the unhelpful shorthand 'too big to fail', but the reality is more complex than the headlines suggest. We believe that the financial system needs banks which are 'big enough to cope' by having a diversified business portfolio, helping to reduce risk and to generate consistent returns. There has likewise not been enough consideration given to the need for banks to be 'broad enough to serve' those global customers who have increasingly diverse financial needs. In short, it is undesirable and impractical to prescribe some ideal model for a bank. The crisis clearly demonstrated that systemic importance is not a function of size or business focus.

 

HSBC has always believed in having a transparent structure based on separately capitalised subsidiaries, takes a conservative approach to liquidity management, and has built a business with the scale to provide broad, diversified services to its global customers. While the detail and timing of regulatory change remain uncertain, we are confident that our focus on these fundamentals positions us strongly and competitively to respond to the challenges ahead.

 

Review by Michael Geoghegan, Group Chief Executive

 

Diversified business delivering for customers and shareholders

 

In last year's business review I said that 2009 would be another challenging year for both the economy and the financial sector. It was.

 

Lower trade volumes, shrinking investment and rising unemployment combined to hurt personal and commercial banking customers everywhere. No region and no industry was untouched. Although improved financial and capital market conditions led to stronger results in wholesale markets, the impact of global recession on the banking industry was broad and deep. Risk appetite remained subdued, deleveraging continued and demand for credit was constrained. Meanwhile, the effect of the low interest rate environment on income was hard for depositors and deposit-takers alike.

 

In this tough climate, it was our priority to work closely with our customers and to support them through the downturn. Thanks to our strong liquidity and capital position, we continued to make credit available to individuals and to companies. We worked with our wholesale and commercial customers to protect their businesses from foreign exchange and interest rate volatility, and to assist them in raising and refinancing their debt. We continued to meet the financial needs of businesses which depend on international trade, and to support smaller and medium size companies - the lifeblood of so many economies. We also further built our financial strength, ensuring we would continue to provide a safe home for customer deposits.

 

Despite the many challenges for our customers and our industry, HSBC's underlying performance improved significantly in 2009. Underlying pre-tax profitW was US$13.3 billion, some US$4.7 billion ahead of the previous year after excluding the goodwill impairment in North America Personal Financial Services in 2008. This improvement was largely driven by stronger results across our Global Banking and Markets businesses, where we saw exceptional revenues, considerably stronger Balance Sheet Management performance, and a significant decline in write-downs compared with 2008. It also reflected a significant fall in loan impairment charges in our US consumer finance portfolios, offset by higher loan impairment charges elsewhere.

 

On a reported basis, pre-tax profit was US$7.1 billion, down 24 per cent on the previous year. This reflected the reversal of fair value accounting gains on our own debt, the impact of the gain on the sale of the French regional banks in 2008 and foreign exchange movements, offset by the impact of the goodwill impairment.

 

These results were ahead of our expectations at the outset of the year, and they underscore the resilience of HSBC throughout the most difficult stages of the economic cycle. In particular, our improved underlying performance highlights the strength of our diversified business model. In 2009, the exceptionally strong results in Global Banking and Markets balanced the headwinds from severe deposit spread compression and lower demand elsewhere in the business. Commercial

 

W All commentary is on an underlying basis unless otherwise stated.

 

Banking remained profitable in all regions and in Personal Financial Services, loan impairment charges improved in the US consumer finance run-off business. Private Banking remained solidly profitable and insurance sales in Asia and Latin America were strongly ahead. Our diversification is also reflected in our global reach and ability to serve customers with international financial needs.

 

In 2009, while developed economies continued to bear the brunt of the downturn, we reinforced our focus on emerging markets, where we have unrivalled capability to support economic progress.

 

During 2009 HSBC stuck to its fundamentals and, thanks to this clear focus and our balanced business model, we ended the year as we began: one of the world's strongest and most profitable independent banks.

 

Performance overview

 

Public scrutiny of banks understandably intensified during 2009 and the industry's reputation remained under severe challenge. In such a year, we never took for granted the continued support of our customers, and we are grateful for it.

 

Deposits remained high at US$1,159 billion, despite lower activity and the impact of low interest rates on balances, especially in developed markets. This was in line with the previous year-end, when we benefited from a strong inflow of deposits during the market turmoil. Lending balances also held up well given muted demand in the tougher economic conditions. Commercial Banking customer numbers increased by 10 per cent to 3.2 million. In Personal Financial Services, HSBC continued to win HSBC Premier customers, with numbers increasing to 3.4 million. In February 2010 we launched HSBC Advance which adds to our Premier proposition. Focusing on the needs of upwardly mobile customers, we will launch the product in over 30 markets this year.

 

At HSBC we have always understood the importance of maintaining our signature financial strength, and I will describe how we put this into practice in 2009. We continued to generate capital in all four quarters of the year. The proceeds from the rights issue further reinforced this position and we will use that capital wisely on behalf of our shareholders. As a result, our tier 1 ratio increased by some 250 basis points, putting us ahead of our target range. This capital position, combined with HSBC's prudent advances-to-deposits ratio of 77.3 per cent, gives us a financial strength which I believe sets us apart in our industry.

 

In 2009 HSBC also proved its ability to pay dividends to shareholders in the toughest of times. Shareholder return on equity once again fell short of our target range, at 9.2 per cent excluding the effect of fair value movements on our own debt. However at this point in the economic cycle we believe it is an acceptable result. In light of current market conditions and proposed changes to capital requirements currently under consideration, HSBC believes return on average total shareholders' equity over the medium term is more likely to be around the low end of the target range. Once regulatory proposals are in definitive form, we intend to publish a revised target.

 

In this uncertain climate, we make no apology for having continued to position the balance sheet conservatively. Throughout the crisis, HSBC's banking philosophy has remained unchanged: we take deposits first, then we lend. The past three years have only reinforced our commitment to this approach. In this exceptionally low interest rate environment, it will be painful in the short term.

 

But I am confident that the liquidity this gives us will prove to be one of our strongest advantages during the next stage of the economic cycle, as new opportunities to grow revenues emerge and a more normal interest rate environment returns.

 

When I became Group Chief Executive in 2006, I believed that HSBC should be able to write greater revenues from a lower cost base. Despite the obvious challenges that 2009 presented for growth, we increased revenues by 8 per cent during the year, to US$72.4 billion and drove costs down by 4 per cent to US$34.4 billion, excluding the impact of the goodwill impairment in 2008.

 

On the same basis, our cost efficiency ratio, for which we have set a target range of 48 to 52 per cent, was on course at 47.5 per cent.

 

Our One HSBC programme is an important initiative in driving our progress on cost efficiency forward. We established this programme in 2007 to join up our products, processes and technologies, improving and simplifying the way we work. In 2009, as we moved to the next phase of the programme, we established regional centres of excellence which will allow us to transform and standardise our business models. By consistently managing products and services at equally high standards across all businesses and regions, our goal is to deliver enhanced and seamless service to our customers, at lower cost.

 

Credit quality: some early signs of improvement

 

Loan impairment charges and other credit risk provisions for the Group rose by 9 per cent to US$26.5 billion, and we believe this was acceptable given the severity of the global recession and the rise in unemployment in most developed markets. Loan impairments fell by 16 per cent in our US consumer finance run-off business compared with 2008. We also continued to benefit from actions taken in previous years to restrict growth in unsecured lending in certain markets, to tighten our underwriting criteria, and to reduce our exposure to higher-risk areas.

 

In our commercial businesses, we lowered our appetite for certain high-risk sectors, and we maintained only a selective appetite for leveraged and acquisition financing. In Global Banking and Markets, where loan impairment charges were significantly higher than in 2008, the increase was concentrated in a small number of individual accounts with losses driven by exposure to real estate, investment companies and the financial sector. In Commercial Banking, loan impairment charges were concentrated in manufacturing, general trading and real estate.

 

Within our personal portfolios, we continued to focus on our collection processes. We withdrew higher-risk products in those markets which have been most affected by recession. We also continued to reposition towards Premier business in key markets. Loan impairment charges stabilised in many of the worst affected markets in the second half, including Mexico, Brazil and the UK. In India, delinquencies began to moderate in the fourth quarter.

 

It is likely that improvement in employment levels will continue to lag GDP growth throughout 2010 and possibly into 2011. However, at this stage in the cycle of recovery, we are encouraged by the signals we are seeing. If economic and unemployment trends develop in line with our expectations, and in the absence of unforeseen events, loan impairment charges should decline in 2010.

 

Positioning the business for the future

 

In 2007 we articulated a Group strategy built upon three important long-term global forecasts. These were: emerging markets will grow faster than developed ones, global trade will grow faster than GDP, and populations are ageing. Earlier this year the Board reviewed the strategy, to ensure it continues to reflect and anticipate the changing world in which we operate. It was clear to us that each of these three fundamentals remains unchanged.

 

Over the next ten years, emerging markets will account for the majority of global growth. As a result, we will invest primarily in these faster-growing markets. We also believe that global trade will rebound faster than GDP. In Commercial Banking, developing our capabilities in trade, payments and international connectivity will therefore continue to be a key part of our strategy for both emerging and developed markets. Finally, ageing populations are now a feature of many of our markets, including a number of key emerging countries, leading to greater demand for wealth management products. As a result, our strategy in Personal Financial Services will be wealth-focused and we will continue to deepen our relationships by delivering the products and services our customers need over their lifetime.

 

As patterns of trade and wealth evolve, we will focus uncompromisingly on those markets, products and areas of business where HSBC has competitive strengths, based on our global reach, our scale and our expertise. As the world changes, it also makes sense to position ourselves at the heart of the world's economic activity. Last month HSBC moved the principal office of the Group Chief Executive to Hong Kong, the gateway to greater China, and at the centre of Asian trade and growth. This move reflects our deep roots in the region, and also the changing shape of our business. It is a strategic decision for the Group, but also a symbolic one which signals the strength of our commitment to grow HSBC in all of the world's faster-growing markets.

 

Global businesses

 

Global Banking and Markets: sustainable business model and exceptional profits

 

Global Banking and Markets delivered very strong pre-tax profits of US$10.5 billion, compared with US$3.0 billion in 2008. These results are clear evidence of the success of our distinctive emerging markets-led, financing-focused strategy. Write-downs declined by US$5.1 billion compared with the previous year, and we saw more favourable market conditions, in which greater levels of volatility supported higher trading margins and capital market activity increased significantly from extremely depressed conditions. At the same time, the low interest rate environment constrained revenues in Global Transaction Banking and, as a result of wider economic conditions, loan impairment charges more than doubled to US$1.7 billion.

 

Profitability was broadly distributed by geography and faster-growing markets accounted for over 50 per cent of the total. Revenues were also distributed across a wide range of customer-facing businesses. In 2009 we saw robust revenues in Rates and Credit. We continued to build our financing capabilities, where we made strong market share gains in debt capital markets. HSBC led or co-led debt issuance in 12 of the 16 euro zone states where governments issued debt during the year. We strengthened those relationships which offer the greatest opportunity to develop broad-based revenues, and we exited various transaction-based relationships.

 

Even as some industry players were forced to curtail their business, HSBC increased market share in our core businesses. HSBC ranked first in the Bloomberg Euromarket bond league table combining all issuance in the euro zone. For the first time, Euromoney named HSBC 'Best Global Debt House' and we won all three emerging markets categories in the FX Week Best Banks Awards.

 

In Balance Sheet Management, we seek to manage the Group's interest rate exposure and, when possible, enhance returns on the investment of our commercial surplus. Revenues were significantly higher at US$5.4 billion as a result of earlier successful positioning for lower interest rates. While we expect these revenues to reduce in 2010 as certain high yield positions mature, the current interest rate environment also offers opportunities to mitigate this.

 

We are confident that our diversified and customer-focused business model, combined with our scale and international presence, positions Global Banking and Markets to maintain revenues and to consolidate market share.

 

In our available-for-sale portfolios, greater liquidity led to rising prices and our asset-backed securities portfolios continued to perform in line with our expectations. On a reported basis, we recognised impairments of US$1.4 billion and expected losses of US$378 million in 2009, which is in line with guidance previously given. The carrying value of the portfolio reduced by 9 per cent to US$45.9 billion during the year as a result of repayment and amortisation and the available-for-sale reserve deficit further reduced by US$6.5 billion to US$12.2 billion as liquidity improved and prices rose.

 

Private Banking: focused on emerging market growth

 

Faced with a period of considerable uncertainty, private banking clients reduced their risk appetite for investments and demand for credit, leading to lower client revenues. Private Banking delivered pre-tax profits of US$1.1 billion, a decline of 21 per cent on 2008.

 

We have continued to build our presence and scale in all major emerging regions, in line with shifting patterns of wealth and opportunities for future growth. Driven by the tougher environment in developed markets, net new money fell overall. However, we were encouraged by net inflows of US$6.6 billion from emerging markets and intra-Group referrals.

 

Reported total client assets increased by 6 per cent to US$460 billion, despite the wider economic trends and our decision not to chase deposits in highly competitive conditions. We completed the merger of HSBC's two Swiss private banks, and we successfully launched a number of niche and alternative market products during the year.

 

Emerging markets

 

Building the business in Asia - the world's fastest-growing region

 

Our operations in the Asia-Pacific region achieved pre-tax profits of US$9.2 billion for the year, of which Hong Kong accounted for 55 per cent and the rest of Asia Pacific accounted for 45 per cent. While this was down 8 per cent overall, it was a strong performance in light of the more challenging economic and interest rate environment, and the region remained the largest contributor to Group profitability.

 

Many Asian economies were hit hard by falling trade and investment flows in the first part of the year, but economic activity and demand for credit and wealth management improved in the second half. The Chinese economy continued to grow rapidly, stimulus proved effective and employment levels remained healthy. As a result, exports and domestic demand both saw a rebound and trade flows strengthened within and beyond the region.

 

We continued to execute on our ambitions for growth, both through organic expansion and by building our strategic partnerships. We grew our deposit base by 8 per cent. Lending activity picked up in the second half of the year, and we supported small and medium size businesses by launching our SME fund in Malaysia and increasing our lending commitments in Hong Kong. In insurance, sales and profitability increased significantly across the region.

 

In Hong Kong we further built on our position as the number one bank. We grew deposits and we were the market leader in cards and in residential mortgage lending, where the strength of our book was underpinned by conservative average loan-to-value ratios of 38 per cent. We also consolidated our position as the largest bancassurer. Loan impairment charges were 35 per cent lower than in 2008, highlighting the quality and resilience of our portfolios.

 

In mainland China, where HSBC is the leading international bank, we further expanded our network and we soon expect to open our 100th HSBC-branded outlet. Developing our relationships with strategic partners also remains a principal pillar of our ambition for growth. In 2009, the value of our strategic investments, measured by market capitalisation, increased by US$11.3 billion to US$25.4 billion on a reported basis. We launched a new jointly held insurance entity and we announced our intention to establish a joint cards venture with Bank of Communications, to which we will transfer over 11 million cards already in force. We also supported the strategic development of the renminbi as an international trading currency. We were the first international bank to settle cross-border trade in the currency and we launched trade settlement services in seven ASEAN countries.

 

We continued to integrate and expand our operations in the rest of the region, in line with our positive outlook for the economy. In Vietnam, which is forecast to be one of the fastest-growing ASEAN economies, HSBC was the first foreign bank to incorporate locally, and earlier this year we increased our stake in the country's largest domestic insurer. We successfully completed our acquisition of Bank Ekonomi in Indonesia, nearly doubling our presence in the world's fifth most populous nation, where we now have over 200 outlets. In personal banking, we focused on opportunities in our Premier business, where we saw strong growth in Singapore and Malaysia. In line with this strategy, we exited consumer finance in India and Indonesia.

 

A difficult year for the Middle East economy

 

2009 was an extremely challenging year for the Middle East, where HSBC is the leading international bank. The region was significantly affected by falling capital inflows, a sharp decline in oil revenues, lower property prices and concerns over levels of debt in Dubai. Despite a recovery in oil prices in the second half of the year, credit conditions remained difficult.

 

As a result of these tough conditions, HSBC achieved pre-tax profits of US$0.5 billion, 74 per cent lower than 2008. Deposits and lending portfolios reduced overall. Loan impairment charges rose to unsatisfactory levels, and we took appropriate action to minimise this and to manage risk. Our exposure to the region, and within the region, remains acceptably spread.

 

HSBC has been doing business in the Middle East for over a century. We remain confident that the authorities in the region will provide the necessary conditions and support for continued growth, and we expect the economy to recover during this year and next. The Middle East will continue to be an important market at the heart of international trade and investment flows. Our commitment to the region is undiminished and in January 2010 we launched our SME fund in the United Arab Emirates to support our business banking customers.

 

Improved outlook in Latin America

 

HSBC's Latin American operations delivered pre-tax profits of US$1.1 billion, down 33 per cent on 2008, as a result of tougher economic conditions, the impact of the H1N1 virus in Mexico, and higher loan impairment charges across the region.

 

In 2009, we took a strategic decision to reposition our retail businesses. We continued to manage down successfully the higher risk personal lending and credit card portfolios where we had seen higher delinquency in 2008. We reduced the number of consumer finance and retail branches in Mexico and Brazil and focused on opportunities in Premier, which was particularly successful in Brazil. We also saw growth in insurance sales.

 

Economic conditions improved during the year. The Brazilian economy returned to growth in the second quarter and, in Mexico, conditions began to improve in the second half as the impact of the H1N1 virus abated and as trade volumes with the US picked up. Loan impairment charges in the region fell in the latter part of the year. The Group continues to view Latin America as a region of considerable future opportunity and allocated US$1.3 billion of fresh capital to its operations in Mexico and Brazil at the end of 2009. This has enhanced our capital strength and will help us meet the growing needs of our customers as these economies expand.

 

Developed markets

 

US - improvement in consumer finance

 

The US economy returned to growth in the second half of 2009, although conditions remained difficult, especially in the personal financial services sector. Unemployment rates climbed to double digits and house prices continued to fall generally, although we saw some moderation in the latter half of the year, particularly in the middle and lower price sectors where targeted tax credits and low interest rates helped support housing market activity.

 

US Personal Financial Services made a loss before tax of US$5.3 billion, an improvement of 22 per cent on 2008, excluding the impact of the goodwill impairment. We completed the closure of all consumer lending branches, and associated restructuring costs of US$150 million were significantly lower than expectations. We continued to make encouraging progress in managing down the run-off business.

 

At year-end, HSBC Finance aligned its write-off period with the rest of the Group, leading to a significant decline in delinquency balances. Total balances in all parts of the run-off loan portfolio reduced during the year, falling by US$22 billion in total, to US$79 billion.

 

We also announced the sale of our US vehicle loan servicing operations and US$1 billion in vehicle loans, representing further progress in our run-off strategy. Since we began to run off parts of the portfolio in the first quarter of 2007, we have reduced balances by US$47 billion, or 37 per cent.

 

Excluding the effect of changing the write-off period, delinquency balances showed the usual seasonal rise in the second half, but the increase was significantly less pronounced than in previous years. The majority of our customers continued to meet their agreed payments, and we supported those in difficulty by modifying over 104,000 loans with an aggregate value of US$14.6 billion during the year. Loan impairments fell by 16 per cent in our US consumer finance run-off business as a result of these trends.

 

In HSBC Bank USA, we grew deposits in both Commercial Banking and in Personal Financial Services during the year. We sold US$4.5 billion of prime mortgages, and increased the number of Premier customers by 37 per cent. We also achieved encouraging results in cards. This business remained profitable despite the difficult economic environment, and the portfolio reduced overall.

 

However, we have resumed marketing spend to grow new card originations in some segments as a result of improving conditions.

 

Resilient performance in Europe

 

HSBC's European operations remained resilient in the face of severe economic challenges. Pre-tax profits increased by 83 per cent to US$6.6 billion, with Global Banking and Markets contributing 69 per cent of the total. On a reported basis, pre-tax profit was US$4.0 billion in 2009, compared with US$10.9 billion in the previous year.

 

In the UK, recession tightened its grip on the economy. While the downturn lasted longer than in many other developed markets, low interest rates and quantitative easing helped to moderate its impact for borrowers. However, the low interest rate environment also negatively affected our deposit spreads. HSBC continued to support its customers through this challenging period. We made available £15 billion of new mortgage lending for the year, for which average loan-to-value ratios were less than 55 per cent, and we grew our market share of net new mortgage lending to 11 per cent. Among our business banking customers, demand for credit remained muted and overdraft utilisation was 40 per cent, highlighting the ready availability of credit when demand picks up. We supported over 121,000 new business start-ups and lent £0.8 billion as part of our commitment to smaller and medium size businesses. We also increased trade lending by over 30 per cent.

 

Our French operations delivered a very strong performance overall, with pre-tax profits of US$827 million, driven by significantly higher Global Markets revenues and resilient performance in Personal Financial Services and Commercial Banking

 

HSBC also achieved very strong results in Turkey. Pre-tax profits of US$261 million were considerably higher than in 2008, despite a significant contraction in the economy in 2009 and record levels of unemployment. In our view, Turkey remains one of our key opportunities for future growth, and our expansion of the platform in recent years positions us strongly as the economy returns to health.

 

Outlook

 

2010 economic outlook: a two-speed economy

 

As the world emerges from recession, we anticipate a two-speed recovery. In 2010, we expect GDP in emerging markets to grow by over six per cent, while the developed world struggles to reach two per cent. A bank's performance reflects that of the underlying economies it serves, and this presents both challenges and opportunities for the sector.

 

It is likely to be another difficult year for developed markets. In both the US and Europe, recovery remains fragile and may well be more modest than we had become used to following previous recessions. Demand will continue to be dampened by the need to rebuild savings. Governments and central banks have some tough calls to make as they balance the need to reduce spending against the need to support recovery and jobs. Low interest rates will likely continue to support recovery but will also constrain deposit spreads for some time. The implications for banks of regulatory change remain uncertain, but these will probably impact developed markets more than those faster-growing regions where our focus lies.

 

Emerging markets are now increasingly in the driving seat. The latest HSBC Emerging Markets Index suggests that many of these economies will grow strongly in 2010. Over time, these markets will become increasingly connected to each other, and less reliant on the West. The centre of economic gravity will continue to move east and south, and so will the opportunities for growth in financial services.

 

As industry restructuring inevitably takes place, some banks may consolidate activity and refocus on domestic markets. As they do so, we expect some to sell portfolios of assets, which could present selective opportunities for HSBC. We will remain disciplined in reviewing the opportunities which emerge.

 

In this uncertain environment, the strength of the HSBC brand remains one of our most important assets. In 2009, we were named the world's most valuable banking brand by Interbrand and last month we were named number one banking brand by Brand Finance for the third year running. Thanks to our strong brand, our signature financial strength, our broad and well-balanced business model and our clear strategy, I believe HSBC is positioned strongly and competitively for the next stage of the business cycle - and for the continuing shift in the global economy.

 

Finally, I am pleased to report that performance in January 2010 was strong and ahead of our expectations.

 

Thank you to our people

 

2009 was a year which, once again, made exceptional demands on our people. For many, this meant doing more to support our customers during the downturn. For others it meant working even harder than usual to deliver on their commitments, at a time when external conditions made this doubly challenging. It is proof of their strength and commitment that our employee engagement score increased from 67 to 71 per cent in such a year. It is also encouraging that this is notably higher than the industry average.

 

My final remarks are therefore reserved for my colleagues. It is because of your professionalism that HSBC can hold its head high at a time when the reputation of the banking industry is at a very low point. It is also because of your unwavering focus on our customers that HSBC is a bank which people want to do business with. Thank you.

 

 

Financial Overview

 

Year ended 31 December

 

 

Year ended 31 December

 

2009

 

 

2009

 

2008

 

£m

 

HK$m

 

 

US$m

 

US$m

 

 

 

 

 

For the year

 

 

 

 

4,538

 

54,876

 

Profit before tax

7,079

 

9,307

 

 

 

 

 

Profit attributable to shareholders of the parent

 

 

 

 

3,740

 

45,224

 

   company

5,834

 

5,728

 

3,615

 

43,717

 

Dividends

5,639

 

11,301

 

 

 

 

 

 

 

 

 

 

 

 

 

 

At the year-end

 

 

 

 

79,031

 

994,829

 

Total shareholders' equity

128,299

 

93,591

 

95,929

 

1,207,523

 

Capital resources

155,729

 

131,460

 

790,886

 

9,955,407

 

Customer accounts and deposits by banks

1,283,906

 

1,245,411

 

1,456,499

 

18,333,957

 

Total assets

2,364,452

 

2,527,465

 

698,031

 

8,786,585

 

Risk-weighted assets

1,133,168

 

1,147,974

 

 

 

 

 

 

 

 

 

 

£

 

HK$

 

 

US$

 

US$

 

 

 

 

 

Per ordinary share

 

 

 

 

0.22

 

2.64

 

Basic earnings *

0.34

 

0.41

 

0.22

 

2.64

 

Diluted earnings *

0.34

 

0.41

 

0.22

 

2.64

 

Basic earnings excluding goodwill impairment *

0.34

 

1.19

 

0.22

 

2.64

 

Dividends **

0.34

 

0.93

 

4.41

 

55.57

 

Net asset value

7.17

 

7.44

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Share information

 

 

 

 

 

 

 

 

US$0.50 ordinary shares in issue

17,408m


12,105m

 

 

 

 

 

Market capitalisation

US$199.3bn


US$114bn

 

 

 

 

 

Closing market price per share

£7.09


£6.62

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Over 1
 year

 

Over 3 years

 

Over 5 years

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total shareholder return to

 

 

 

 

 

 

 

 

 

 

   31 December 2009 ***

128.3

 

103.6

 

120.6

 

 

 

 

 

Benchmarks: FTSE 100

127.3

 

98.0

 

135.4

 

 

 

 

 

                      MSCI World

116.7

 

103.6

 

134.9

 

 

 

 

 

                      MSCI Banks

125.2

 

70.6

 

92.3

 

 

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

**        Under IFRSs accounting rules, the dividend per share of US$0.34 shown in the accounts is the total of the dividends declared during 2009. This represents the fourth interim dividend for 2008 and the first, second and third interim dividends for 2009. As the fourth interim dividend for 2009 was declared in 2010 it will be reflected in the accounts for 2010.

***      Total shareholder return ('TSR') is as defined in the Annual Report and Accounts 2009.

 

 

 

 

Year ended 31 December

 

2009

 

2008

 

%

 

%

Performance ratios

 

 

 

Return on average invested capitalW

4.1

 

4.0

Return on average total shareholders' equity

5.1

 

4.7

Post-tax return on average total assets

0.27

 

0.26

Post-tax return on average risk-weighted assets

0.58

 

0.55

 

 

 

 

Efficiency and revenue mix ratios

 

 

 

Cost efficiency ratio

 

 

 

- reported

52.0

 

60.1

- excluding goodwill impairment

52.0

 

47.2

 

 

 

 

As a percentage of total operating income:

 

 

 

- net interest income

51.8

 

48.1

- net fee income

22.5

 

22.6

- net trading income

12.5

 

7.4

 

 

 

 

Capital ratios

 

 

 

- Core tier 1 ratio

9.4

 

7.0

- Tier 1 ratio

10.8

 

8.3

- Total capital ratio

13.7

 

11.4

 

W          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

 

2009

 

 

2009

 

2008

 

£m

 

HK$m

 

 

US$m

 

US$m

 

 

 

 

 

 

 

 

 

 

39,804

 

481,368

 

Interest income

62,096

 

91,301

 

(13,696

)

(165,629

)

Interest expense

(21,366

)

(48,738

)

 

 

 

 

 

 

 

 

 

26,108

 

315,739

 

Net interest income

40,730

 

42,563

 

 

 

 

 

 

 

 

 

 

13,719

 

165,916

 

Fee income

21,403

 

24,764

 

(2,396

)

(28,985

)

Fee expense

(3,739

)

(4,740

)

 

 

 

 

 

 

 

 

 

11,323

 

136,931

 

Net fee income

17,664

 

20,024

 

 

 

 

 

 

 

 

 

 

3,997

 

48,344

 

Trading income excluding net interest income

6,236

 

847

 

2,325

 

28,114

 

Net interest income on trading activities

3,627

 

5,713

 

 

 

 

 

 

 

 

 

 

6,322

 

76,458

 

Net trading income

9,863

 

6,560

 

 

 

 

 

 

 

 

 

 

(4,004

)

(48,426

)

Changes in fair value of long-term debt issued
   and related derivatives

(6,247

)

6,679

 

1,741

 

21,056

 

Net income/(expense) from other financial
   instruments designated at fair value

2,716


(2,827

)

 

 

 

 

Net income from financial instruments designated at

 

 

 

 

(2,263

)

(27,370

)

   fair value

(3,531

)

3,852

 

333

 

4,031

 

Gains less losses from financial investments

520

 

197

 

81

 

977

 

Dividend income

126

 

272

 

6,712

 

81,171

 

Net earned insurance premiums

10,471

 

10,850

 

-

 

-

 

Gains on disposal of French regional banks

-

 

2,445

 

1,787

 

21,613

 

Other operating income

2,788

 

1,808

 

 

 

 

 

 

 

 

 

 

50,403

 

609,550

 

Total operating income

78,631

 

88,571

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net insurance claims incurred and movement in

 

 

 

 

(7,980

)

(96,512

)

   liabilities to policyholders

(12,450

)

(6,889

)

 

 

 

 

 

 

 

 

 

 

 

 

 

Net operating income before loan impairment charges

 

 

 

 

42,423

 

513,038

 

   and other credit risk provisions

66,181

 

81,682

 

(16,979

)

(205,335

)

Loan impairment charges and other credit risk provisions

(26,488

)

(24,937

)

 

 

 

 

 

 

 

 

 

25,444

 

307,703

 

Net operating income

39,693

 

56,745

 

 

 

 

 

 

 

 

 

 

(11,839

)

(143,164

)

Employee compensation and benefits

(18,468

)

(20,792

)

(8,584

)

(103,818

)

General and administrative expenses

(13,392

)

(15,260

)


 


 

Depreciation and impairment of property, plant and


 


 

(1,106

)

(13,372

)

   equipment

(1,725

)

(1,750

)

-

 

-

 

Goodwill impairment

-

 

(10,564

)

(519

)

(6,279

)

Amortisation and impairment of intangible assets

(810

)

(733

)

 

 

 

 

 

 

 

 

 

(22,048

)

(266,633

)

Total operating expenses

(34,395

)

(49,099

)

 

 

 

 

 

 

 

 

 

3,396

 

41,070

 

Operating profit

5,298

 

7,646

 

 

 

 

 

 

 

 

 

 

1,142

 

13,806

 

Share of profit in associates and joint ventures

1,781

 

1,661

 

 

 

 

 

 

 

 

 

 

4,538

 

54,876

 

Profit before tax

7,079

 

9,307

 

 

 

 

 

 

 

 

 

 

(247

)

(2,985

)

Tax expense

(385

)

(2,809

)

 

 

 

 

 

 

 

 

 

4,291

 

51,891

 

Profit for the year

6,694

 

6,498

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Profit attributable to shareholders of the parent

 

 

 

 

3,740

 

45,224

 

   company

5,834

 

5,728

 

 

 

 

 

 

 

 

 

 

551

 

6,667

 

Profit attributable to minority interests

860

 

770

 

 

 

Consolidated Statement of Comprehensive Income

 

 

Year ended 31 December

 

 

2009

 

2008

 

 

US$m

 

US$m

 

 

 

 

 

 

Profit for the year

6,694

 

6,498

 

 

 

 

 

 

Other comprehensive income/(expense)

 

 

 

 

Available-for-sale investments:

10,817

 

(21,904

)

- fair value gains/(losses)

9,821

 

(23,722

)

- fair value gains transferred to income statement on disposal

(648

)

(1,316

)

- amounts transferred to the income statement in respect of

 

 

 

 

      impairment losses

2,391

 

1,779

 

- income taxes

(747

)

1,355

 

 

 

 

 

 

Cash flow hedges:

772

 

124

 

- fair value gains/(losses)

481

 

(1,720

)

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

808

 

1,754

 

- income taxes

(517

)

90

 

 

 

 


 

Actuarial gains/(losses) on defined benefit plans

(2,608

)

(1,175

)

- before income taxes

(3,586

)

(1,609

)

- income taxes

978

 

434

 

 

 

 


 

Share of other comprehensive income/(expense) of associates and joint ventures

149

 

(559

)

Exchange differences

4,975

 

(12,123

)

 

 

 

 

 

Other comprehensive income/(expense) for the year, net of tax

14,105

 

(35,637

)

 

 

 

 

 

Total comprehensive income/(expense) for the year

20,799

 

(29,139

)

 

 

 

 

 

Total comprehensive income/(expense) for the year attributable to:

 

 

 

 

- shareholders of the parent company

19,529

 

(29,143

)

- minority interests

1,270

 

4

 

 

 

 

 

 

 

20,799

 

(29,139

)

 

 

Consolidated Balance Sheet

 

 

At 31 December

 

 

At 31 December

 

2009

 

 

2009

 

2008

 

£m

 

HK$m

 

 

US$m

 

US$m

 

 

 

 

 

 

 

 

 

 

 

 

 

 

ASSETS

 

 

 

 

 

 

 

 

 

 

 

 

 

37,363

 

470,319

 

Cash and balances at central banks

60,655

 

52,396


3,939

 

49,587

 

Items in the course of collection from other banks

6,395

 

6,003

 

10,757

 

135,407

 

Hong Kong Government certificates of indebtedness

17,463

 

15,358

 

259,570

 

3,267,389

 

Trading assets

421,381

 

427,329

 

22,903

 

288,301

 

Financial assets designated at fair value

37,181

 

28,533

 

154,546

 

1,945,370

 

Derivatives

250,886

 

494,876

 

110,745

 

1,394,022

 

Loans and advances to banks

179,781

 

153,766

 

552,078

 

6,949,375

 

Loans and advances to customers

896,231

 

932,868

 

227,401

 

2,862,450

 

Financial investments

369,158

 

300,235

 

27,432

 

345,316

 

Other assets

44,534

 

37,822

 

1,809

 

22,773

 

Current tax assets

2,937

 

2,552

 

7,653

 

96,328

 

Prepayments and accrued income

12,423

 

15,797

 

8,015

 

100,887

 

Interests in associates and joint ventures

13,011

 

11,537

 

18,476

 

232,573

 

Goodwill and intangible assets

29,994

 

27,357

 

8,502

 

107,021

 

Property, plant and equipment

13,802

 

14,025

 

5,310

 

66,839

 

Deferred tax assets

8,620

 

7,011

 

 

 

 

 

 

 

 

 

 

1,456,499

 

18,333,957

 

Total assets

2,364,452

 

2,527,465

 

 

 

At 31 December

 

 

At 31 December

 

2009

 

 

2009

 

2008

 

£m

 

HK$m

 

 

US$m

 

US$m

 

 

 

 

 

 

 

 

 

 

 

 

 

 

LIABILITIES AND EQUITY

 

 

 


 

 

 

 

 

 

 

 

 

 

 

 

 

Liabilities

 

 

 

 

10,757

 

135,408

 

Hong Kong currency notes in circulation

17,463

 

15,358

 

76,921

 

968,257

 

Deposits by banks

124,872

 

130,084

 

713,965

 

8,987,150

 

Customer accounts

1,159,034

 

1,115,327

 

3,532

 

44,461

 

Items in the course of transmission to other banks

5,734

 

7,232

 

165,168

 

2,079,080

 

Trading liabilities

268,130

 

247,652

 

49,337

 

621,033

 

Financial liabilities designated at fair value

80,092

 

74,587

 

152,550

 

1,920,247

 

Derivatives

247,646

 

487,060

 

90,488

 

1,139,032

 

Debt securities in issue

146,896

 

179,693

 

42,280

 

532,233

 

Other liabilities

68,640

 

72,384

 

1,318

 

16,594

 

Current tax liabilities

2,140

 

1,822

 

33,084

 

416,444

 

Liabilities under insurance contracts

53,707

 

43,683

 

8,125

 

102,275

 

Accruals and deferred income

13,190

 

15,448

 

1,210

 

15,237

 

Provisions

1,965

 

1,730

 

1,132

 

14,244

 

Deferred tax liabilities

1,837

 

1,855

 

4,292

 

54,022

 

Retirement benefit liabilities

6,967

 

3,888

 

18,774

 

236,326

 

Subordinated liabilities

30,478

 

29,433

 

 

 

 

 

 

 

 

 

 

1,372,933

 

17,282,043

 

Total liabilities

2,228,791

 

2,427,236

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Equity

 

 

 

 

5,362

 

67,499

 

Called up share capital

8,705

 

6,053

 

5,182

 

65,234

 

Share premium account

8,413

 

8,463

 

1,314

 

16,539

 

Other equity instruments

2,133

 

2,133

 

13,697

 

172,418

 

Other reserves

22,236

 

(3,747

)

53,476

 

673,139

 

Retained earnings

86,812

 

80,689

 

 

 

 

 

 

 

 

 

 

79,031

 

994,829

 

Total shareholders' equity

128,299

 

93,591

 

4,535

 

57,085

 

Minority interests

7,362

 

6,638

 

 

 

 

 

 

 

 

 

 

83,566

 

1,051,914

 

Total equity

135,661

 

100,229

 

 

 

 

 

 

 

 

 

 

1,456,499

 

18,333,957

 

Total equity and liabilities

2,364,452

 

2,527,465

 

 

Consolidated Statement of Cash Flows

 

 

Year ended 31 December

 

 

 

2009

 

2008

 

 

US$m

 

US$m

 

Cash flows from operating activities

 

 

 

 

Profit before tax

7,079

 

9,307

 


 

 

 

 

Adjustments for:

 

 

 

 

Non-cash items included in profit before tax

31,384

 

41,305

 

Change in operating assets

(20,803

)

18,123

 

Change in operating liabilities

14,645

 

(63,413

)

Elimination of exchange differences

(19,024

)

36,132

 

Net gain from investing activities

(1,910

)

(4,195

)

Share of profits in associates and joint ventures

(1,781

)

(1,661

)

Dividends received from associates

414

 

655

 

Contribution paid to defined benefit plans

(974

)

(719

)

Tax paid

(2,132

)

(5,114

)


 

 

 

 

Net cash from operating activities

6,898

 

30,420

 


 

 

 

 

Cash flows from investing activities

 

 

 

 

Purchase of financial investments

(304,629

)

(277,023

)

Proceeds from the sale and maturity of financial investments

241,341

 

223,138

 

Purchase of property, plant and equipment

(2,000

)

(2,985

)

Proceeds from the sale of property, plant and equipment

4,701

 

2,467

 

Proceeds from the sale of loan portfolios

4,852

 

9,941

 

Net purchase of intangible assets

(956

)

(1,169

)

Net cash inflow/(outflow) from acquisition of and increase in stake of subsidiaries

(677

)

1,313

 

Net cash inflow from disposal of subsidiaries

45

 

2,979

 

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

(62

)

(355

)

Net cash inflow from the consolidation of funds

-

 

16,500

 

Proceeds from disposal of associates and joint ventures

308

 

101

 


 

 

 

 

Net cash used in investing activities

(57,077

)

(25,093

)


 

 

 

 

Cash flows from financing activities

 

 

 

 

Issue of ordinary share capital - rights issue

18,326

 

-

 

Issue of ordinary share capital - other

72

 

467

 

Issue of other equity instruments

-

 

2,133

 

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

(176

)

(194

)

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

(51

)

(808

)

On exercise of share options

12

 

27

 

Subordinated loan capital issued

2,959

 

7,094

 

Subordinated loan capital repaid

(4,637

)

(350

)

Dividends paid to shareholders of the parent company

(4,264

)

(7,211

)

Dividends paid to minority interests

(702

)

(714

)

Dividends paid to holders of other equity instruments

(269

)

(92

)


 

 

 

 

Net cash generated from financing activities

11,270

 

352

 


 

 

 

 

Net increase in cash and cash equivalents

(38,909

)

5,679

 


 

 

 

 

Cash and cash equivalents at 1 January

278,872

 

297,009

 

Exchange differences in respect of cash and cash equivalents

10,803

 

(23,816

)

 

 

 

 

 

Cash and cash equivalents at 31 December

250,766

 

278,872

 

 

 

Consolidated Statement of Changes in Equity

 

 

Year ended 31 December

 

 

 

2009

 

2008

 

 

US$m

 

US$m

 

Called up share capital

 

 

 

 

At 1 January

6,053

 

5,915

 

Shares issued under employee share plans

4

 

20

 

Shares issued in lieu of dividends and amounts arising thereon

118

 

118

 

Shares issued in respects of rights issue

2,530

 

-

 


,

 

 

 

At 31 December

8,705

 

6,053

 


 

 

 

 

Share premium

 

 

 

 

At 1 January

8,463

 

8,134

 

Shares issued under employee share plans

69

 

450

 

Shares issued in lieu of dividends and amounts arising thereon

(119

)

(121

)


 

 

 

 

At 31 December

8,413

 

8,463

 


 

 

 

 

Other equity instruments

 

 

 

 

At 1 January

2,133

 

-

 

Capital securities issued

-

 

2,133

 


 

 

 

 

At 31 December

2,133

 

2,133

 


 

 

 

 

Retained earnings

 

 

 

 

At 1 January

80,689

 

81,097

 

Profit for the year

5,834

 

5,728

 

Other comprehensive income

 

 

 

 

   Actuarial losses on defined benefit plans

(2,685

)

(1,046

)

   Share of other comprehensive income of associates and joint ventures

149

 

(559

)


 

 

 

 

Other comprehensive income (net of tax)

(2,536

)

(1,605

)


 

 

 

 


 

 

 

 

Total comprehensive income for year

3,298

 

4,123

 

Shares issued in lieu of dividends and amounts arising thereon

1,670

 

3,596

 

Dividends to shareholders

(5,639

)

(11,301

)

Tax credit on dividends

50

 

-

 

Own shares adjustment

(227

)

(1,002

)

Exercise and lapse of share options and vesting of share awards

807

 

827

 

Income taxes on share-based payments

9

 

-

 

Other movements

210

 

(252

)

Transfers

5,945

 

3,601

 


 

 

 

 

At 31 December

86,812

 

80,689

 


 

 

 

 

Other reserves

 

 

 

 

   Available-for-sale fair value reserve

 

 

 

 

   At 1 January

(20,550

)

850

 

   Other comprehensive income

 

 

 

 

      Available-for-sale investments

10,603

 

(21,474

)


 

 

 

 

   Other comprehensive income (net of tax)

10,603

 

(21,474

)


 

 

 

 

   Total comprehensive income for year

10,603

 

(21,474

)

   Other movements

(18

)

74

 


 

 

 

 

   At 31 December

(9,965

)

(20,550

)

 

 

Year ended 31 December

 

 

 

2009

 

2008

 

 

US$m

 

US$m

 

   Cash flow hedging reserve

 

 

 

 

   At 1 January

(806

)

(917

)

   Other comprehensive income

 

 

 

 

      Cash flow hedges

791

 

106

 


 

 

 

 

   Other comprehensive income (net of tax)

791

 

106

 


 

 

 

 

   Total comprehensive income for year

791

 

106

 

   Other movements

(11

)

5

 


 

 

 

 

   At 31 December

(26

)

(806

)


 

 

 

 

   Foreign exchange reserve

 

 

 

 

   At 1 January

(1,843

)

10,055

 

   Other comprehensive income

 

 

 

 

      Exchange differences

4,837

 

(11,898

)


 

 

 

 

   Other comprehensive income (net of tax)

4,837

 

(11,898

)


 

 

 

 

   Total comprehensive income for year

4,837

 

(11,898

)


 

 

 

 

   At 31 December

2,994

 

(1,843

)


 

 

 

 

   Share-based payment reserve

 

 

 

 

   At 1 January

1,995

 

1,968

 

   Exercise and lapse of share options and vesting of share awards

(769

)

(848

)

   Cost of share-based payment arrangements

683

 

819

 

   Other movements

16

 

56

 


 

 

 

 

   At 31 December

1,925

 

1,995

 


 

 

 

 

   Merger reserve

 

 

 

 

   At 1 January

17,457

 

21,058

 

   Shares issued in respect of rights issue

15,796

 

-

 

   Transfers

(5,945

)

(3,601

)


 

 

 

 

   At 31 December

27,308

 

17,457

 


 

 

 

 

 

 

 

Year ended 31 December

 

 

 

2009

 

2008

 

 

US$m

 

US$m

 

Total shareholders' equity

 

 

 

 

At 1 January

93,591

 

128,160

 

Profit for the year

5,834

 

5,728

 

Other comprehensive income

 

 

 

 

   Available-for-sale investments

10,603

 

(21,474

)

   Cash flow hedges

791

 

106

 

   Actuarial losses on defined benefit plans

(2,685

)

(1,046

)

   Share of other comprehensive income of associates and joint ventures

149

 

(559

)

   Exchange differences

4,837

 

(11,898

)


 

 

 

 

Other comprehensive income (net of tax)

13,695

 

(34,871

)


 

 

 

 

Total comprehensive income for year

19,529

 

(29,143

)

Shares issued under employee share plans

73

 

470

 

Shares issued in lieu of dividends and amounts arising thereon

1,669

 

3,593

 

Capital securities issued

-

 

2,133

 

Shares in respect of rights issue

18,326

 

-

 

Dividends to shareholders

(5,639

)

(11,301

)

Tax credit on dividends

50

 

-

 

Own shares adjustment

(227

)

(1,002

)

Exercise and lapse of share options and vesting of share awards

38

 

(21

)

Cost of share-based payment arrangements

683

 

819

 

Income taxes on share-based payments

9

 

-

 

Other movements

197

 

(117

)


 

 

 

 

At 31 December

128,299

 

93,591

 


 

 

 

 

Minority interests

 

 

 

 

At 1 January

6,638

 

7,256

 

Profit for the year

860

 

770

 

Other comprehensive income

 

 

 

 

   Available-for-sale investments

214

 

(430

)

   Cash flow hedges

(19

)

18

 

   Actuarial gains on defined benefit plans

77

 

(129

)

   Exchange differences

138

 

(225

)


 

 

 

 

Other comprehensive income (net of tax)

410

 

(766

)


 

 

 

 

Total comprehensive income for year

1,270

 

4

 

Dividends to shareholders

(832

)

(813

)

Other movements

77

 

73

 

Net increase in minority interest arising on acquisitions,

 

 

 

 

   disposals and capital issuance

209

 

118

 


 

 

 

 

At 31 December

7,362

 

6,638

 

 

 

 

Year ended 31 December

 

 

 

2009

 

2008

 

 

US$m

 

US$m

 

Total equity

 

 

 

 

At 1 January

100,229

 

135,416

 

Profit for the year

6,694

 

6,498

 

Other comprehensive income

 

 

 

 

   Available-for-sale investments

10,817

 

(21,904

)

   Cash flow hedges

772

 

124

 

   Actuarial losses on defined benefit plans

(2,608

)

(1,175

)

   Share of other comprehensive income of associates and joint ventures

149

 

(559

)

   Exchange differences

4,975

 

(12,123

)


 

 

 

 

Other comprehensive income (net of tax)

14,105

 

(35,637

)


 

 

 

 

Total comprehensive income for year

20,799

 

(29,139

)

Shares issued under employee share plans

73

 

470

 

Shares issued in lieu of dividends and amounts arising thereon

1,669

 

3,593

 

Capital securities issued

-

 

2,133

 

Shares in respect of rights issue

18,326

 

-

 

Dividends to shareholders

(6,471

)

(12,114

)

Tax credit on dividends

50

 

-

 

Own shares adjustment

(227

)

(1,002

)

Exercise and lapse of share options and vesting of share awards

38

 

(21

)

Cost of share-based payment arrangements

683

 

819

 

Income taxes on share-based payments

9

 

-

 

Other movements

274

 

(44

)

Net increase in minority interest arising on acquisitions,

 

 

 

 

   disposals and capital issuance

209

 

118

 


 

 

 

 

At 31 December

135,661

 

100,229

 

 

 

Additional Information

 

 

1. Basis of preparation and accounting policies

 

The basis of preparation and 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 2009.

 

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 2009, there were no unendorsed standards effective for the year ended 31 December 2009 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 2009 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 International Financial Reporting Interpretations Committee ('IFRIC') and its predecessor body.

 

During 2009, HSBC adopted the following standards and amendments to standards:

 

·    'Classification of Rights Issues - Amendment to IAS 32';

·    IFRS 8 'Operating Segments';

·    IAS 1 'Presentation of Financial Statements' (Revised 2007); and

·    An amendment to IFRS 7 'Financial Instruments: Disclosures - Improving Disclosures about Financial Instruments.'

Further details of these standards and amendments to standards are provided in Note 1(a) of the Annual Report and Accounts 2009.

 

2. Dividends

 

On 1 March 2010, the Directors declared a fourth interim dividend for 2009 of US$0.10 per ordinary share. The dividend will be payable on 5 May 2010, to holders of record on 18 March 2010 on the Hong Kong Overseas Branch Register and 19 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 26 April 2010, and with a scrip dividend alternative. Particulars of these arrangements will be mailed to shareholders on or about 30 March 2010 and elections will be required to be made by 22 April 2010. As this dividend was declared after the balance sheet date, it has not been included in 'Other liabilities' at 31 December 2009.

 

The dividend on shares held through Euroclear France, the settlement and central depositary system for Euronext Paris, will be payable on 5 May 2010 to the holders of record on 19 March 2010. The dividend will be payable in cash, in euros at the exchange rate on 26 April 2010, or as a scrip dividend. Particulars of these arrangements will be announced through Euronext Paris on 15 March 2010 and 24 March 2010.

 

The dividend on American Depositary Shares ('ADSs'), each of which represents five ordinary shares, will be payable on 5 May 2010 to holders of record on 19 March 2010. The dividend of US$0.50 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 2010, and elections will be required to be made by 16 April 2010. 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 17 March 2010. The ADSs will be quoted ex-dividend in New York on 17 March 2010.

 

Dividends declared on HSBC Holdings shares during 2009 were as follows:

 


2009


2008


Per 




Settled  






Settled   


share


Total


                in scrip


                Per 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


1,210


624


0.39


4,620


2,233

In respect of current year:












 - first interim dividend

0.08


1,384


190


0.18


2,158


256

 - second interim dividend

0.08


1,385


696


0.18


2,166


727

 - third interim dividend

0.08


1,391


160


0.18


2,175


380













 

0.34


5,370


1,670


0.93


11,119


3,596

 












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 equityW












   January coupon

0.508


44




-


-



   April coupon

0.508


45




-


-



   July coupon

0.508


45




0.541


47



   October coupon

0.508


45




0.508


45



 












 

2.032


179




1.049


92



W During April 2008, HSBC Holdings issued US$2,200 million of Perpetual Subordinated Capital Securities which are classified as equity under IFRSs.

 

 

On 10 February 2010, the Directors declared a dividend of US$15.50 per non-cumulative US dollar preference share (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. The dividend is payable on 15 March 2010 to the holder of record on 1 March 2010.

 

On 15 January 2010, HSBC paid a coupon on the Capital Securities of US$0.508 per security, a distribution of US$45 million. No liability is recorded in the balance sheet at 31 December 2009 in respect of this coupon payment.

 

3. Earnings and dividends per ordinary share

 

 

Year ended 31 December

 

 

2009

 

 

 

US$

 

US$

 

 

 

 

 

 

Basic earnings per ordinary share

0.34

 

0.41

 

Diluted earnings per ordinary share

0.34

 

0.41

 

Basic earnings per ordinary share excluding goodwill impairment

0.34

 

1.19

 

Dividends per ordinary share

0.34

 

0.93

 

Net asset value at year-end

7.17

 

7.44

 

 

 

 

 

 

Dividend pay out ratioW

 

 

 

 

   - reported

100.0%

 

226.8%

 

   - excluding goodwill impairment

100.0%

 

78.2%

 

 

 

 

 

 

W   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 ordinary shares which may be issued pursuant to employee share plans (including share options outstanding not yet exercised), 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 ordinary conversion of dilutive potential ordinary shares.

 

In April 2009, HSBC Holdings completed a rights issue. The effect of the bonus element included within the rights issue has been included within the calculation of basic and diluted earnings per share. The effect of the rights issue was to increase the weighted average number of ordinary shares for 2008 by 1,743 million and dilutive potential ordinary shares by 15 million.

 

Profit attributable to the ordinary shareholders of the parent company

 

Year ended 31 December

 

 

2009

 

2008

 

 

US$m

 

US$m

 

 

 

 

 

 

Profit attributable to shareholders of the parent company

5,834

 

5,728

 

Dividend payable on preference shares classified as equity

(90

)

(90

)

Coupon payable on capital securities classified as equity

(179

)

(92

)

 

 

 

 

 

Profit attributable to the ordinary shareholders of the parent company

5,565

 

5,546

 

 

Basic and diluted earnings per share


2009


2008


Profit US$m


Number of shares (millions

)

Per share US$


Profit US$m


Number of shares (millions

)

Per share US$













Basic

5,565


16,277


0.34


5,546


13,555


0.41

Effect of potential ordinary shares



143






118















Diluted

5,565


16,420


0.34


5,546


13,673


0.41

 

 

4. Tax expense

 

 

 

 

 

 

Year ended 31 December

 

 

 

2009

 

2008

 

 

US$m

 

US$m

 

 

 

 

 

 

UK corporation tax charge

206

 

1,671

 

Overseas tax

1,847

 

1,703

 

 

 

 

 

 

Current tax

2,053

 

3,374

 

Deferred tax

(1,668

)

(565

)

 

 

 

 

 

Tax expense

385

 

2,809

 

 

 

 

 

 

Effective tax rate

5.4%

 

30.2%

 

 

HSBC Holdings and its subsidiaries in the United Kingdom provided for UK corporation tax at 28 per cent (2008: 28.5 per cent). Overseas tax included Hong Kong profits tax of US$783 million (2008: US$846 million) provided at the rate of 16.5 per cent (2008: 16.5 per cent) 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

 

 

 

2009

 

2008

 

 

US$m

 

US$m

 

 

 

 

 

 

Taxation at UK corporation tax rate of 28 per cent (2008: 28.5 per cent)

1,982

 

2,652

 

Goodwill impairment

-

 

3,010

 

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

96

 

-

 

Effect of taxing overseas profits in principal locations at different rates

(1,345

)

(1,339

)

Gains not subject to tax

(238

)

(1,016

)

Adjustments in respect of prior period liabilities

(39

)

(67

)

Low income housing tax credits

(98

)

(103

)

Effect of profit in associates and joint ventures

(499

)

(473

)

Deferred tax temporary differences not provided          

360

 

157

 

Non taxable income            

(365

)

(519

)

Permanent disallowables   

223

 

217

 

Additional provision for tax on overseas dividends     

341

 

294

 

Other items

(33

)

(4

)

 

 

 


 

Overall tax expense

385

 

2,809

 

 

 

5. Analysis of net fee income

 

 

 

 


 

 

 

 

 

Half-year to

 

 

 

Half-year to

 

 

 

 


30 June

31 December

 


 

30 June

31 December

 


 


2009

 

2009

 

2009

 

2008

 

2008

 

2008

 


US$m

 

US$m

 

US$m

 

US$m

 

US$m

 

US$m

 



 


 


 


 


 


 

Cards

2,209

 

2,416

 

4,625

 

3,089

 

2,755

 

5,844

 

Account services

1,771

 

1,821

 

3,592

 

2,260

 

2,093

 

4,353

 

Funds under management

945

 

1,227

 

2,172

 

1,572

 

1,185

 

2,757

 

Broking income

749

 

868

 

1,617

 

954

 

784

 

1,738

 

Credit facilities

729

 

750

 

1,479

 

639

 

674

 

1,313

 

Insurance

688

 

733

 

1,421

 

942

 

829

 

1,771

 

Global custody

471

 

517

 

988

 

757

 

554

 

1,311

 

Imports/Exports

438

 

459

 

897

 

496

 

518

 

1,014

 

Underwriting

348

 

398

 

746

 

204

 

121

 

325

 

Remittances

281

 

332

 

613

 

307

 

303

 

610

 

Corporate finance

164

 

232

 

396

 

232

 

149

 

381

 

Unit trusts

137

 

226

 

363

 

337

 

165

 

502

 

Trust income

134

 

144

 

278

 

164

 

161

 

325

 

Mortgage servicing

62

 

62

 

124

 

56

 

64

 

120

 

Maintenance income on


 


 


 


 


 


 

   operating leases

55

 

56

 

111

 

70

 

60

 

130

 

Taxpayer financial services

91

 

(4

)

87

 

154

 

14

 

168

 

Other

919

 

975

 

1,894

 

1,148

 

954

 

2,102

 



 


 


 


 


 


 

Total fee income

10,191

 

11,212

 

21,403

 

13,381

 

11,383

 

24,764

 

Less: fee expense

(1,763

)

(1,976

)

(3,739

)

(2,390

)

(2,350

)

(4,740

)



 


 


 


 


 


 

Total net fee income

8,428

 

9,236

 

17,664

 

10,991

 

9,033

 

20,024

 

 

 

6. Loan impairment charges

 

 

 

 

 

 

Half-year to

 

 

 

Half-year to

 

 

 

 


30 June

31 December

 


 

30 June

31 December

 


 


2009

 

2009

 

2009

 

2008

 

2008

 

2008

 


US$m

 

US$m

 

US$m

 

US$m

 

US$m

 

US$m

 

Individually assessed impairment


 


 


 


 


 


 

   allowances:


 


 


 


 


 


 

   - Net new allowances

2,284

 

2,308

 

4,592

 

390

 

1,787

 

2,177

 

   - Recoveries

(34

)

(100

)

(134

)

(58

)

(55

)

(113

)

 


 


 


 


 


 


 

 

2,250

 

2,208

 

4,458

 

332

 

1,732

 

2,064

 

Collectively assessed impairment


 


 


 


 


 


 

   allowances:


 


 


 


 


 


 

   - Net new allowances

11,426

 

9,814

 

21,240

 

10,046

 

12,742

 

22,788

 

   - Recoveries

(343

)

(413

)

(756

)

(421

)

(300

)

(721

)

 


 


 


 


 


 


 

 

11,083

 

9,401

 

20,484

 

9,625

 

12,442

 

22,067

 

Total charge for


 


 


 


 


 


 

   impairment losses

13,333

 

11,609

 

24,942

 

9,957

 

14,174

 

24,131

 

 


 


 


 


 


 


 

Banks

13

 

57

 

70

 

-

 

54

 

54

 

Customers

13,320

 

11,552

 

24,872

 

9,957

 

14,120

 

24,077

 

 

 

 

7. Notes on the statement of cash flows

 


Year ended 31 December

 

 

2009

 

2008

 

 

US$m

 

US$m

 

Non-cash items included in profit before tax

 

 

 

 

Depreciation, amortisation and impairment

2,538

 

13,367

 

Revaluations on investment property

24

 

92

 

Share-based payment expense

683

 

819

 

Loan impairment losses gross of recoveries and other credit risk provisions

27,378

 

25,771

 

Provisions

669

 

591

 

Impairment of financial investments

358

 

1,042

 

Charge for defined benefit plans

192

 

490

 

Accretion of discounts and amortisation of premiums

(458

)

(867

)

 

 

 

 

 

 

31,384

 

41,305

 

 

 

 

 

 

Change in operating assets

 

 

 

 

Change in prepayments and accrued income

3,198

 

4,178

 

Change in net trading securities and net derivatives

15,388

 

(23,293

)

Change in loans and advances to banks

(30,354

)

22,596

 

Change in loans and advances to customers

6,149

 

7,279

 

Change in financial assets designated at fair value

(8,911

)

12,757

 

Change in other assets

(6,273

)

(5,394

)

 

 

 

 

 

 

(20,803

)

18,123

 

 

 

 

 

 

Change in operating liabilities

 

 

 

 

Change in accruals and deferred income

(2,258

)

(6,169

)

Change in deposits by banks

(5,216

)

(3,038

)

Change in customer accounts

41,983

 

32,372

 

Change in debt securities in issue

(32,797

)

(67,152

)

Change in financial liabilities designated at fair value

7,430

 

(15,352

)

Change in other liabilities

5,503

 

(4,074

)

 

 

 

 

 

 

14,645

 

(63,413

)

 

 

 

 

 

Cash and cash equivalents

 

 

 

 

Cash and balances at central banks

60,655

 

52,396

 

Items in the course of collection from other banks

6,395

 

6,003

 

Loans and advances to banks of one month or less

160,673

 

165,066

 

Treasury bills, other bills and certificates of deposit

 

 

 

 

   less than three months

28,777

 

62,639

 

Less: items in the course of transmission to other banks

(5,734

)

(7,232

)

 

 

 

 

 

Total cash and cash equivalents

250,766

 

278,872

 

 

 

 

 

 

Interest and dividends

 

 

 

 

Interest paid

(29,030

)

(60,342

)

Interest received

74,062

 

107,019

 

Dividends received

1,023

 

1,876

 

 

 

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.

 

The Middle East is presented as a separate operating segment with effect from 1 January 2009. Previously, it was included within the Rest of Asia-Pacific segment. The change was made to align the segmental analysis with the information reviewed by the chief operating decision-maker and comparative figures have been restated accordingly.

 

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, 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, wealth management and investment banking services.

 

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

 

·    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


 

 

 


 

 

 

 

 

Half-year to

 

 

 

Half-year to

 

 

 

 


30 June

31 December

 


 

30 June

31 December

 


 


2009

 

2009

 

2009

 

2008

 

2008

 

2008

 


US$m

 

US$m

 

US$m

 

US$m

 

US$m

 

US$m

 



 


 


 


 


 


 

Interest income

10,673

 

9,610

 

20,283

 

18,126

 

16,991

 

35,117

 

Interest expense

(4,695

)

(3,320

)

(8,015

)

(13,651

)

(11,770

)

(25,421

)

 


 


 


 


 


 


 

Net interest income

5,978

 

6,290

 

12,268

 

4,475

 

5,221

 

9,696

 

 


 


 


 


 


 


 

Fee income

3,998

 

4,578

 

8,576

 

5,666

 

4,559

 

10,225

 

Fee expense

(1,155

)

(1,154

)

(2,309

)

(1,443

)

(1,290

)

(2,733

)

 


 


 


 


 


 


 

Net fee income

2,843

 

3,424

 

6,267

 

4,223

 

3,269

 

7,492

 

 


 


 


 


 


 


 

Net trading income

3,429

 

2,030

 

5,459

 

3,649

 

1,708

 

5,357

 

Changes in fair value of long-term


 


 


 


 


 


 

   debt issued and related derivatives

(788

)

(1,958

)

(2,746

)

207

 

2,732

 

2,939

 

Net income/(expense) from


 


 


 


 


 


 

   other financial instruments


 


 


 


 


 


 

   designated at fair value

212

 

1,109

 

1,321

 

(866

)

(960

)

(1,826

)

 


 


 


 


 


 


 

Net income/(expense) from


 


 


 


 


 


 

   financial instruments


 


 


 


 


 


 

   designated at fair value

(576

)

(849

)

(1,425

)

(659

)

1,772

 

1,113

 

Gains less losses from financial


 


 


 


 


 


 

   investments

(60

)

110

 

50

 

608

 

(190

)

418

 

Dividend income

13

 

16

 

29

 

20

 

110

 

130

 

Net earned insurance premiums

2,134

 

2,089

 

4,223

 

2,286

 

3,013

 

5,299

 

Gains on disposal of French


 


 


 


 


 


 

   regional banks

-

 

-

 

-

 

-

 

2,445

 

2,445

 

Other operating income

976

 

1,286

 

2,262

 

1,427

 

669

 

2,096

 

 


 


 


 


 


 


 

Total operating income

14,737

 

14,396

 

29,133

 

16,029

 

18,017

 

34,046

 

 


 


 


 


 


 


 

Net insurance claims incurred and


 


 


 


 


 


 

   movement in liabilities to


 


 


 


 


 


 

   policyholders

(2,383

)

(3,206

)

(5,589

)

(1,388

)

(1,979

)

(3,367

)

Net operating income before loan


 


 


 


 


 


 

   impairment charges and other


 


 


 


 


 


 

   credit risk provisions

12,354

 

11,190

 

23,544

 

14,641

 

16,038

 

30,679

 

 


 


 


 


 


 


 

Loan impairment charges and


 


 


 


 


 


 

   other credit risk provisions

(2,813

)

(2,755

)

(5,568

)

(1,272

)

(2,482

)

(3,754

)

 


 


 


 


 


 


 

Net operating income

9,541

 

8,435

 

17,976

 

13,369

 

13,556

 

26,925

 

 


 


 


 


 


 


 

Net operating expenses

(6,587

)

(7,401

)

(13,988

)

(8,193

)

(7,879

)

(16,072

)

 


 


 


 


 


 


 

Operating profit

2,954

 

1,034

 

3,988

 

5,176

 

5,677

 

10,853

 

 


 


 


 


 


 


 

Share of profit/(loss) in associates


 


 


 


 


 


 

   and joint ventures

22

 

(1

)

21

 

1

 

15

 

16

 

 


 


 


 


 


 


 

Profit before tax

2,976

 

1,033

 

4,009

 

5,177

 

5,692

 

10,869

 

 


 


 


 


 


 


 

Tax expense

(527

)

(249

)

(776

)

(1,375

)

(824

)

(2,199

)

 


 


 


 


 


 


 

Profit after tax

2,449

 

784

 

3,233

 

3,802

 

4,868

 

8,670

 

 

Hong Kong


 

 

 


 

 

 

 

 

Half-year to

 

 

 

Half-year to

 

 

 

 


30 June

31 December

 


 

30 June

31 December

 


 


2009

 

2009

 

2009

 

2008

 

2008

 

2008

 


US$m

 

US$m

 

US$m

 

US$m

 

US$m

 

US$m

 



 


 


 


 


 


 

Interest income

2,923

 

2,404

 

5,327

 

4,984

 

4,546

 

9,530

 

Interest expense

(691

)

(441

)

(1,132

)

(2,149

)

(1,683

)

(3,832

)

 


 


 


 


 


 


 

Net interest income

2,232

 

1,963

 

4,195

 

2,835

 

2,863

 

5,698

 

 


 


 


 


 


 


 

Fee income

1,409

 

1,690

 

3,099

 

1,724

 

1,338

 

3,062

 

Fee expense

(209

)

(221

)

(430

)

(255

)

(227

)

(482

)

 


 


 


 


 


 


 

Net fee income

1,200

 

1,469

 

2,669

 

1,469

 

1,111

 

2,580

 

 


 


 


 


 


 


 

Net trading income

704

 

521

 

1,225

 

314

 

879

 

1,193

 

Changes in fair value of


 


 


 


 


 


 

   long-term debt issued


 


 


 


 


 


 

   and related derivatives

(3

)

-

 

(3

)

1

 

2

 

3

 

Net income/(expense) from


 


 


 


 


 


 

   other financial instruments


 


 


 


 


 


 

   designated at fair value

348

 

440

 

788

 

(362

)

(832

)

(1,194

)

 


 


 


 


 


 


 

Net income/(expense) from


 


 


 


 


 


 

   financial instruments


 


 


 


 


 


 

   designated at fair value

345

 

440

 

785

 

(361

)

(830

)

(1,191

)

Gains less losses from financial


 


 


 


 


 


 

   investments

2

 

7

 

9

 

(98

)

(211

)

(309

)

Dividend income

14

 

14

 

28

 

20

 

21

 

41

 

Net earned insurance premiums

1,838

 

1,836

 

3,674

 

1,650

 

1,597

 

3,247

 

Other operating income

505

 

769

 

1,274

 

448

 

369

 

817

 

 


 


 


 


 


 


 

Total operating income

6,840

 

7,019

 

13,859

 

6,277

 

5,799

 

12,076

 

 


 


 


 


 


 


 

Net insurance claims incurred and


 


 


 


 


 


 

   movement in liabilities to


 


 


 


 


 


 

   policyholders

(2,126

)

(2,266

)

(4,392

)

(1,169

)

(753

)

(1,922

)

Net operating income before


 


 


 


 


 


 

   loan impairment charges and


 


 


 


 


 


 

   other credit risk provisions

4,714

 

4,753

 

9,467

 

5,108

 

5,046

 

10,154

 

 


 


 


 


 


 


 

Loan impairment charges and


 


 


 


 


 


 

   other credit risk provisions

(273

)

(227

)

(500

)

(81

)

(684

)

(765

)

 


 


 


 


 


 


 

Net operating income

4,441

 

4,526

 

8,967

 

5,027

 

4,362

 

9,389

 

 


 


 


 


 


 


 

Net operating expenses

(1,935

)

(2,011

)

(3,946

)

(1,975

)

(1,968

)

(3,943

)

 


 


 


 


 


 


 

Operating profit

2,506

 

2,515

 

5,021

 

3,052

 

2,394

 

5,446

 

 


 


 


 


 


 


 

Share of profit/(loss) in associates


 


 


 


 


 


 

   and joint ventures

(5

)

13

 

8

 

21

 

(6

)

15

 

 


 


 


 


 


 


 

Profit before tax

2,501

 

2,528

 

5,029

 

3,073

 

2,388

 

5,461

 

 


 


 


 


 


 


 

Tax expense

(495

)

(374

)

(869

)

(546

)

(353

)

(899

)

 


 


 


 


 


 


 

Profit after tax

2,006

 

2,154

 

4,160

 

2,527

 

2,035

 

4,562

 

 

Rest of Asia-Pacific

 

 

 


 

 

 

 

 

Half-year to

 

 

 

Half-year to

 

 

 

 


30 June

31 December

 


 

30 June

31 December

 


 


2009

 

2009

 

2009

 

2008

 

2008

 

2008

 


US$m

 

US$m

 

US$m

 

US$m

 

US$m

 

US$m

 



 


 


 


 


 


 

Interest income

3,025

 

2,852

 

5,877

 

4,612

 

4,454

 

9,066

 

Interest expense

(1,257

)

(1,081

)

(2,338

)

(2,693

)

(2,436

)

(5,129

)

 


 


 


 


 


 


 

Net interest income

1,768

 

1,771

 

3,539

 

1,919

 

2,018

 

3,937

 

 


 


 


 


 


 


 

Fee income

908

 

1,064

 

1,972

 

1,323

 

1,091

 

2,414

 

Fee expense

(189

)

(226

)

(415

)

(319

)

(228

)

(547

)

 


 


 


 


 


 


 

Net fee income

719

 

838

 

1,557

 

1,004

 

863

 

1,867

 

 


 


 


 


 


 


 

Net trading income

909

 

697

 

1,606

 

1,090

 

952

 

2,042

 

Changes in fair value of


 


 


 


 


 


 

   long-term debt issued and


 


 


 


 


 


 

   related derivatives

(2

)

1

 

(1

)

-

 

1

 

1

 

Net income/(expense) from


 


 


 


 


 


 

   other financial instruments


 


 


 


 


 


 

   designated at fair value

31

 

80

 

111

 

(88

)

(84

)

(172

)

 


 


 


 


 


 


 

Net income/(expense) from 


 


 


 


 


 


 

   financial instruments


 


 


 


 


 


 

   designated at fair value

29

 

81

 

110

 

(88

)

(83

)

(171

)

Gains less losses from financial


 


 


 


 


 


 

   investments

(21

)

2

 

(19

)

24

 

-

 

24

 

Gains arising from dilution of


 


 


 


 


 


 

   interests in associates


 


 


 


 


 


 

Dividend income

1

 

1

 

2

 

1

 

1

 

2

 

Net earned insurance premiums

152

 

213

 

365

 

114

 

83

 

197

 

Other operating income

608

 

630

 

1,238

 

475

 

580

 

1,055

 

 


 


 


 


 


 


 

Total operating income

4,165

 

4,233

 

8,398

 

4,539

 

4,414

 

8,953

 

 


 


 


 


 


 


 

Net insurance claims incurred and


 


 


 


 


 


 

   movement in liabilities to


 


 


 


 


 


 

   policyholders

(156

)

(239

)

(395

)

(4

)

32

 

28

 

Net operating income before loan


 


 


 


 


 


 

   impairment charges and other


 


 


 


 


 


 

   credit risk provisions

4,009

 

3,994

 

8,003

 

4,535

 

4,446

 

8,981

 

 


 


 


 


 


 


 

Loan impairment charges and


 


 


 


 


 


 

   other credit risk provisions

(531

)

(365

)

(896

)

(328

)

(524

)

(852

)

 


 


 


 


 


 


 

Net operating income

3,478

 

3,629

 

7,107

 

4,207

 

3,922

 

8,129

 

 


 


 


 


 


 


 

Net operating expenses

(2,151

)

(2,299

)

(4,450

)

(2,324

)

(2,380

)

(4,704

)

 


 


 


 


 


 


 

Operating profit

1,327

 

1,330

 

2,657

 

1,883

 

1,542

 

3,425

 

 


 


 


 


 


 


 

Share of profit in associates and


 


 


 


 


 


 

   joint ventures

695

 

848

 

1,543

 

751

 

546

 

1,297

 

 


 


 


 


 


 


 

Profit before tax

2,022

 

2,178

 

4,200

 

2,634

 

2,088

 

4,722

 

 


 


 


 


 


 


 

Tax expense

(338

)

(415

)

(753

)

(508

)

(420

)

(928

)

 


 


 


 


 


 


 

Profit after tax

1,684

 

1,763

 

3,447

 

2,126

 

1,668

 

3,794

 

 

Middle East

 

 

 


 

 

 

 

 

Half-year to

 

 

 

Half-year to

 

 

 

 


30 June

31 December

 


 

30 June

31 December

 


 


2009

 

2009

 

2009

 

2008

 

2008

 

2008

 


US$m

 

US$m

 

US$m

 

US$m

 

US$m

 

US$m

 



 


 


 


 


 


 

Interest income

1,217

 

1,043

 

2,260

 

1,135

 

1,316

 

2,451

 

Interest expense

(454

)

(321

)

(775

)

(421

)

(474

)

(895

)

 


 


 


 


 


 


 

Net interest income

763

 

722

 

1,485

 

714

 

842

 

1,556

 

 


 


 


 


 


 


 

Fee income

337

 

345

 

682

 

363

 

377

 

740

 

Fee expense

(29

)

(28

)

(57

)

(29

)

(20

)

(49

)

 


 


 


 


 


 


 

Net fee income

308

 

317

 

625

 

334

 

357

 

691

 

 


 


 


 


 


 


 

Net trading income

220

 

174

 

394

 

239

 

163

 

402

 

Gains less losses from financial


 


 


 


 


 


 

   investments

13

 

3

 

16

 

9

 

(1

)

8

 

Dividend income

2

 

1

 

3

 

1

 

1

 

2

 

Other operating income

63

 

8

 

71

 

9

 

-

 

9

 

 


 


 


 


 


 


 

Total operating income

1,369

 

1,225

 

2,594

 

1,306

 

1,362

 

2,668

 

 


 


 


 


 


 


 

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

 

1,306

 

1,362

 

2,668

 

 


 


 


 


 


 


 

Loan impairment charges and


 


 


 


 


 


 

   other credit risk provisions

(391

)

(943

)

(1,334

)

(41

)

(238

)

(279

)

 


 


 


 


 


 


 

Net operating income

978

 

282

 

1,260

 

1,265

 

1,124

 

2,389

 

 


 


 


 


 


 


 

Net operating expenses

(482

)

(519

)

(1,001

)

(460

)

(499

)

(959

)

 


 


 


 


 


 


 

Operating profit/(loss)

496

 

(237

)

259

 

805

 

625

 

1,430

 

 


 


 


 


 


 


 

Share of profit in associates and


 


 


 


 


 


 

   joint ventures

147

 

49

 

196

 

185

 

131

 

316

 

 


 


 


 


 


 


 

Profit/(loss) before tax

643

 

(188

)

455

 

990

 

756

 

1,746

 

 


 


 


 


 


 


 

Tax expense

(109

)

15

 

(94

)

(123

)

(122

)

(245

)

 


 


 


 


 


 


 

Profit/(loss) after tax

534

 

(173

)

361

 

867

 

634

 

1,501

 

 

North America

 

 

 


 

 

 

 

 

Half-year to

 

 

 

Half-year to

 

 

 

 


30 June

31 December

 


 

30 June

31 December

 


 


2009

 

2009

 

2009

 

2008

 

2008

 

2008

 


US$m

 

US$m

 

US$m

 

US$m

 

US$m

 

US$m

 



 


 


 


 


 


 

Interest income

10,485

 

9,041

 

19,526

 

13,797

 

12,100

 

25,897

 

Interest expense

(3,308

)

(2,548

)

(5,856

)

(5,924

)

(4,755

)

(10,679

)

 


 


 


 


 


 


 

Net interest income

7,177

 

6,493

 

13,670

 

7,873

 

7,345

 

15,218

 

 


 


 


 


 


 


 

Fee income

2,805

 

2,691

 

5,496

 

3,245

 

3,047

 

6,292

 

Fee expense

(270

)

(409

)

(679

)

(423

)

(642

)

(1,065

)

 


 


 


 


 


 


 

Net fee income

2,535

 

2,282

 

4,817

 

2,822

 

2,405

 

5,227

 

 


 


 


 


 


 


 

Net trading income/(expense)

394

 

(63

)

331

 

(1,816

)

(1,319

)

(3,135

)

Changes in fair value of


 


 


 


 


 


 

   long-term debt issued


 


 


 


 


 


 

   and related derivatives

(1,507

)

(1,990

)

(3,497

)

369

 

3,367

 

3,736

 

Net income/(expense) from


 


 


 


 


 


 

   other financial instruments


 


 


 


 


 


 

   designated at fair value

(2

)

3

 

1

 

(1

)

2

 

1

 

 


 


 


 


 


 


 

Net income/(expense)


 


 


 


 


 


 

   from financial instruments


 


 


 


 


 


 

   designated at fair value

(1,509

)

(1,987

)

(3,496

)

368

 

3,369

 

3,737

 

Gains less losses from financial


 


 


 


 


 


 

   investments

257

 

39

 

296

 

106

 

(226

)

(120

)

Dividend income

23

 

30

 

53

 

40

 

37

 

77

 

Net earned insurance premiums

164

 

145

 

309

 

203

 

187

 

390

 

Other operating income/(expense)

292

 

274

 

566

 

115

 

(92

)

23

 

 


 


 


 


 


 


 

Total operating income

9,333

 

7,213

 

16,546

 

9,711

 

11,706

 

21,417

 

 


 


 


 


 


 


 

Net insurance claims incurred and


 


 


 


 


 


 

   movement in liabilities to


 


 


 


 


 


 

   policyholders

(143

)

(98

)

(241

)

(112

)

(126

)

(238

)

Net operating income before loan


 


 


 


 


 


 

   impairment charges and other


 


 


 


 


 


 

   credit risk provisions

9,190

 

7,115

 

16,305

 

9,599

 

11,580

 

21,179

 

 


 


 


 


 


 


 

Loan impairment charges and


 


 


 


 


 


 

   other credit risk provisions

(8,538

)

(7,126

)

(15,664

)

(7,166

)

(9,629

)

(16,795

)

 


 


 


 


 


 


 

Net operating income/(expense)

652

 

(11

)

641

 

2,433

 

1,951

 

4,384

 

 


 


 


 


 


 


 

Net operating expenses


 


 


 


 


 


 

   excluding goodwill impairment

(4,362

)

(4,029

)

(8,391

)

(4,807

)

(4,552

)

(9,359

)

Goodwill impairment

-

 

-

 

-

 

(527

)

(10,037

)

(10,564

)

 


 


 


 


 


 


 

Operating loss

(3,710

)

(4,040

)

(7,750

)

(2,901

)

(12,638

)

(15,539

)

 


 


 


 


 


 


 

Share of profit in associates


 


 


 


 


 


 

   and joint ventures

7

 

5

 

12

 

8

 

3

 

11

 

 


 


 


 


 


 


 

Loss before tax

(3,703

)

(4,035

)

(7,738

)

(2,893

)

(12,635

)

(15,528

)

 


 


 


 


 


 


 

Tax  income

305

 

1,980

 

2,285

 

826

 

889

 

1,715

 

 


 


 


 


 


 


 

Loss after tax

(3,398

)

(2,055

)

(5,453

)

(2,067

)

(11,746

)

(13,813

)

 

Latin America

 

 

 


 

 

 

 

Half-year to

 

 

 

Half-year to

 

 

 


30 June

31 December

 


 

30 June

31 December

 


 


2009

 

2009

 

2009

 

2008

 

2008

 

2008

 


US$m

 

US$m

 

US$m

 

US$m

 

US$m

 

US$m

 



 


 


 


 


 


 

Interest income

4,890

 

5,201

 

10,091

 

5,785

 

5,847

 

11,632

 

Interest expense

(2,270

)

(2,248

)

(4,518

)

(2,423

)

(2,751

)

(5,174

)

 


 


 


 


 


 


 

Net interest income

2,620

 

2,953

 

5,573

 

3,362

 

3,096

 

6,458

 

 


 


 


 


 


 


 

Fee income

1,060

 

1,170

 

2,230

 

1,418

 

1,298

 

2,716

 

Fee expense

(237

)

(264

)

(501

)

(279

)

(270

)

(549

)

 


 


 


 


 


 


 

Net fee income

823

 

906

 

1,729

 

1,139

 

1,028

 

2,167

 

 


 


 


 


 


 


 

Net trading income

599

 

249

 

848

 

358

 

343

 

701

 

Changes in fair value of


 


 


 


 


 


 

   long-term debt issued


 


 


 


 


 


 

   and related derivatives

-

 

-

 

-

 

-

 

-

 

-

 

Net income from other 


 


 


 


 


 


 

   financial instruments


 


 


 


 


 


 

  designated at fair value

188

 

307

 

495

 

156

 

208

 

364

 

 


 


 


 


 


 


 

Net income from financial


 


 


 


 


 


 

   instruments designated at


 


 


 


 


 


 

   fair value

188

 

307

 

495

 

156

 

208

 

364

 

Gains less losses from financial


 


 


 


 


 


 

   investments

132

 

36

 

168

 

168

 

8

 

176

 

Dividend income

4

 

7

 

11

 

6

 

14

 

20

 

Net earned insurance premiums

724

 

1,176

 

1,900

 

900

 

817

 

1,717

 

Other operating income

61

 

72

 

133

 

130

 

170

 

300

 

 


 


 


 


 


 


 

Total operating income

5,151

 

5,706

 

10,857

 

6,219

 

5,684

 

11,903

 

 


 


 


 


 


 


 

Net insurance claims incurred and


 


 


 


 


 


 

   movement in liabilities to


 


 


 


 


 


 

   policyholders

(699

)

(1,134

)

(1,833

)

(764

)

(626

)

(1,390

)

Net operating income before loan


 


 


 


 


 


 

   impairment charges and other


 


 


 


 


 


 

   credit risk provisions

4,452

 

4,572

 

9,024

 

5,455

 

5,058

 

10,513

 

 


 


 


 


 


 


 

Loan impairment charges and


 


 


 


 


 


 

   other credit risk provisions

(1,385

)

(1,141

)

(2,526

)

(1,170

)

(1,322

)

(2,492

)

 


 


 


 


 


 


 

Net operating income

3,067

 

3,431

 

6,498

 

4,285

 

3,736

 

8,021

 

 


 


 


 


 


 


 

Net operating expenses

(2,488

)

(2,887

)

(5,375

)

(3,023

)

(2,967

)

(5,990

)

 


 


 


 


 


 


 

Operating profit

579

 

544

 

1,123

 

1,262

 

769

 

2,031

 

 


 


 


 


 


 


 

Share of profit in associates and


 


 


 


 


 


 

   joint ventures

1

 

-

 

1

 

4

 

2

 

6

 

 


 


 


 


 


 


 

Profit before tax

580

 

544

 

1,124

 

1,266

 

771

 

2,037

 

 


 


 


 


 


 


 

Tax expense

(122

)

(56

)

(178

)

(215

)

(38

)

(253

)

 


 


 


 


 


 


 

Profit after tax

458

 

488

 

946

 

1,051

 

733

 

1,784

 

 

 

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 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/(loss) for the year includes

















   the following significant

















   non-cash items:

















   Depreciation, amortisation

















      and impairment

1,039


342


215


37


515


390


-


2,538


   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



















Year ended 31 December 2008


































   External               

25,887


8,205


7,010


2,386


5,236


8,021


-


56,745


   Inter-segment

1,038


1,184


1,119


3


(852

)

-


(2,492

)

-



















Net operating income             

26,925


9,389


8,129


2,389


4,384


8,021


(2,492

)

56,745




































Profit/(loss) for the year includes

















   the following significant

















   non-cash items:

















   Depreciation, amortisation

















      and impairment

1,093


312


192


31


11,352


387


-


13,367


   Loan impairment losses gross

















      of recoveries and other credit

















      risk provisions

4,050


803


960


309


16,892


2,757


-


25,771


Impairment of financial investments

278


535


-


-


229


-


-


1,042


 

 

 

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 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 incurredW

983


290


159


102


658


540


-


2,732



















At 31 December 2008

















Loans and advances to

















   customers (net)

426,191


100,220


80,661


27,295


256,214


42,287


-


932,868


Interests in associates and

















   joint ventures

137


153


9,728


1,383


128


8


-


11,537


Total assets

1,392,049


414,484


225,573


50,952


596,302


102,946


(254,841

)

2,527,465


Customer accounts                

502,476


250,517


124,194


35,165


143,532


59,443


-


1,115,327


Total liabilities

1,361,960


400,637


210,478


45,416


571,657


91,929


(254,841

)

2,427,236



















Capital expenditure incurredW

2,078


440


426


85


726


617


-


4,372


 

 

*     The Middle East is disclosed as a separate geographical region with effect from 1 January 2009. Previously, it formed part of Rest of Asia-Pacific. Comparative data have been restated accordingly.

W          Expenditure incurred on property, plant and equipment and other intangible assets. Excludes assets acquired as

 

Net operating income by customer group and global business

 


Personal




Global






Intra-





Financial


Commercial


Banking


Private




HSBC





Services


Banking


& Markets


Banking


Other*


items


Total



US$m


US$m


US$m


US$m


US$m


US$m


US$m

















Year ended 31 December 2009















   External               

13,804


9,285


21,383


2,275


(7,054

)


39,693


   Inter-segment      

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

















Year ended 31 December 2008















   External               

15,023


13,080


17,739


2,231


8,672


-


56,745


   Inter-segment      

5,246


64


(5,692

)

1,332


3,618


(4,568

)

-

















Net operating income             

20,269


13,144


12,047


3,563


12,290


(4,568

)

56,745


 

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

 

 

Information by country

 


2009


2008



External net


Non-


External net


Non-



operating


current


operating


current



income*


assetsW


income*


assetsW



US$m


US$m


US$m


US$m











UK

9,958


19,704


15,789


12,491


Hong Kong

8,352


3,374


8,205


3,527


USA

(1,042

)

5,499


2,862


4,660


France

3,322


11,782


6,457


11,862


Brazil

3,368


1,868


3,886


1,421


Other countries

15,735


25,557


19,546


23,020












39,693


67,784


56,745


56,981


 

*     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.

 

W     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

 


2009 compared with 2008

 








2008 at 2009









2008 as


2008


Currency


exchange


2009


Underlying


2009 as



reported


adjustments


translation


rates


adjustments


change


reported


HSBC

US$m


US$m


US$m


US$m


US$m


US$m


US$m

















Net interest income

42,563


(65

)

(2,062

)

40,436


53


241


40,730


Net fee income

20,024


(58

)

(1,315

)

18,651


6


(993

)

17,664


Changes in fair value*

6,570


(6,570

)

-


-


(6,533

)

-


(6,533

)

Gains on disposal of















   French regional banks

2,445


(2,445

)

-


-


-


-


-


Other income

10,080


(680

)

(1,597

)

7,803


298


6,219


14,320


 

 















Net operating income

81,682


(9,818

)

(4,974

)

66,890


(6,176

)

5,467


66,181

















Loan impairment charges















   and other credit risk















   provisions

(24,937

)

6


709


(24,222

)

-


(2,266

)

(26,488

)
















Net operating income

56,745


(9,812

)

(4,265

)

42,668


(6,176

)

3,201


39,693

















Operating expenses















   (excluding goodwill















   impairment)

(38,535

)

68


2,655


(35,812

)

(31

)

1,448


(34,395

)
















Goodwill impairment

(10,564

)

-


-


(10,564

)

-


10,564


-

















Operating profit

7,646


(9,744

)

(1,610

)

(3,708

)

(6,207

)

15,213


5,298

















Income from associates

1,661


-


25


1,686


-


95


1,781

















Profit before tax

9,307


(9,744

)

(1,585

)

(2,022

)

(6,207

)

15,308


7,079


 

*   Changes in own credit spread on long-term debt.

 

10. Distribution of results by customer group and global business

 

Personal Financial Services


 

 

 


 

 

 

 

 

Half-year to

 

 

 

Half-year to

 

 

 

 


30 June

31 December

 


 

30 June

31 December

 


 


2009

 

2009

 

2009

 

2008

 

2008

 

2008

 


US$m

 

US$m

 

US$m

 

US$m

 

US$m

 

US$m

 

 


 


 


 


 


 


 

Net interest income

12,650

 

12,457

 

25,107

 

15,217

 

14,202

 

29,419

 

Net fee income

4,045

 

4,193

 

8,238

 

5,626

 

4,481

 

10,107

 

 


 


 


 


 


 


 

Net trading income

489

 

213

 

702

 

184

 

70

 

254

 

Net income/(expense) from


 


 


 


 


 


 

   financial instruments designated


 


 


 


 


 


 

   at fair value

744

 

1,595

 

2,339

 

(1,135

)

(1,777

)

(2,912

)

Gains less losses from financial


 


 


 


 


 


 

   investments

195

 

29

 

224

 

585

 

78

 

663

 

Dividend income

17

 

16

 

33

 

15

 

75

 

90

 

Net earned insurance premiums

4,585

 

4,949

 

9,534

 

4,746

 

5,337

 

10,083

 

Other operating income/(expense)

302

 

507

 

809

 

390

 

(131

)

259

 

 


 


 


 


 


 


 

Total operating income

23,027

 

23,959

 

46,986

 

25,628

 

22,335

 

47,963

 

 


 


 


 


 


 


 

Net insurance claims incurred and


 


 


 


 


 


 

   movement in liabilities to


 


 


 


 


 


 

   policyholders

(5,144

)

(6,427

)

(11,571

)

(3,206

)

(3,268

)

(6,474

)

Net operating income before loan


 


 


 


 


 


 

   impairment charges and other


 


 


 


 


 


 

   credit risk provisions

17,883

 

17,532

 

35,415

 

22,422

 

19,067

 

41,489

 

 


 


 


 


 


 


 

Loan impairment charges and


 


 


 


 


 


 

   other credit risk provisions

(10,673

)

(9,229

)

(19,902

)

(9,384

)

(11,836

)

(21,220

)

 


 


 


 


 


 


 

Net operating income

7,210

 

8,303

 

15,513

 

13,038

 

7,231

 

20,269

 

 


 


 


 


 


 


 

Employee expenses

(3,499

)

(3,824

)

(7,323

)

(4,759

)

(4,484

)

(9,243

)

Goodwill impairment

-

 

-

 

 

(527

)

(10,037

)

(10,564

)

Other operating expenses

(5,275

)

(5,694

)

(10,969

)

(5,813

)

(6,084

)

(11,897

)

 


 


 


 


 


 


 

Total operating expenses

(8,774

)

(9,518

)

(18,292

)

(11,099

)

(20,605

)

(31,704

)

 


 


 


 


 


 


 

Operating profit/(loss)

(1,564

)

(1,215

)

(2,779

)

1,939

 

(13,374

)

(11,435

)

 


 


 


 


 


 


 

Share of profit in associates and


 


 


 


 


 


 

   joint ventures

315

 

399

 

714

 

374

 

87

 

461

 

 


 


 


 


 


 


 

Profit/(loss) before tax

(1,249

)

(816

)

(2,065

)

2,313

 

(13,287

)

(10,974

)

 

Commercial Banking


 

 

 


 

 

 

 

 

Half-year to

 

 

 

Half-year to

 

 

 

 


30 June

31 December

 


 

30 June

31 December

 


 


2009

 

2009

 

2009

 

2008

 

2008

 

2008

 


US$m

 

US$m

 

US$m

 

US$m

 

US$m

 

US$m

 



 


 


 


 


 


 

Net interest income

3,809

 

4,074

 

7,883

 

4,747

 

4,747

 

9,494

 

Net fee income

1,749

 

1,953

 

3,702

 

2,165

 

1,932

 

4,097

 

 


 


 


 


 


 


 

Net trading income

194

 

160

 

354

 

221

 

165

 

386

 

Net income/(expense) from 


 


 


 


 


 


 

   financial instruments


 


 


 


 


 


 

   designated at fair value

(17

)

117

 

100

 

(59

)

(165

)

(224

)

Gains less losses from financial


 


 


 


 


 


 

   investments

25

 

(2)

 

23

 

191

 

2

 

193

 

Dividend income

3

 

5

 

8

 

3

 

85

 

88

 

Net earned insurance premiums

390

 

496

 

886

 

360

 

319

 

679

 

Other operating income

519

 

220

 

739

 

718

 

221

 

939

 

 


 


 


 


 


 


 

Total operating income

6,672

 

7,023

 

13,695

 

8,346

 

7,306

 

15,652

 

 


 


 


 


 


 


 

Net insurance claims incurred and


 


 


 


 


 


 

   movement in liabilities to


 


 


 


 


 


 

   policyholders

(328

)

(514

)

(842

)

(190

)

(145

)

(335

)

Net operating income before loan


 


 


 


 


 


 

   impairment charges and other


 


 


 


 


 


 

   credit risk provisions

6,344

 

6,509

 

12,853

 

8,156

 

7,161

 

15,317

 

 


 


 


 


 


 


 

Loan impairment charges and


 


 


 


 


 


 

   other credit risk provisions

(1,509

)

(1,773

)

(3,282

)

(563

)

(1,610

)

(2,173

)

 


 


 


 


 


 


 

Net operating income

4,835

 

4,736

 

9,571

 

7,593

 

5,551

 

13,144

 

 


 


 


 


 


 


 

Employee expenses

(1,151

)

(1,455

)

(2,606

)

(1,566

)

(1,490

)

(3,056

)

Other operating expenses

(1,589

)

(1,768

)

(3,357

)

(1,714

)

(1,811

)

(3,525

)

 


 


 


 


 


 


 

Total operating expenses

(2,740

)

(3,223

)

(5,963

)

(3,280

)

(3,301

)

(6,581

)

 


 


 


 


 


 


 

Operating profit

2,095

 

1,513

 

3,608

 

4,313

 

2,250

 

6,563

 

 


 


 


 


 


 


 

Share of profit in associates and


 


 


 


 


 


 

   joint ventures

337

 

330

 

667

 

298

 

333

 

631

 

 


 


 


 


 


 


 

Profit before tax

2,432

 

1,843

 

4,275

 

4,611

 

2,583

 

7,194

 

 

 

Global Banking and Markets

 

 

 


 

 

 

 

 

Half-year to

 

 

 

Half-year to

 

 

 

 


30 June

31 December

 


 

30 June

31 December

 


 


2009

 

2009

 

2009

 

2008

 

2008

 

2008

 


US$m

 

US$m

 

US$m

 

US$m

 

US$m

 

US$m

 



 


 


 


 


 


 

Net interest income

4,667

 

3,943

 

8,610

 

3,737

 

4,804

 

8,541

 

Net fee income

1,968

 

2,395

 

4,363

 

2,354

 

1,937

 

4,291

 

 


 


 


 


 


 


 

Net trading income/(expense)

4,478

 

2,397

 

6,875

 

633

 

(152

)

481

 

Net income/(expense) from 


 


 


 


 


 


 

   financial instruments designated


 


 


 


 


 


 

   at fair value

329

 

144

 

473

 

(211

)

(227

)

(438

)

Gains less losses from financial


 


 


 


 


 


 

   investments

158

 

107

 

265

 

244

 

(571

)

(327

)

Dividend income

23

 

45

 

68

 

49

 

27

 

76

 

Net earned insurance premiums

40

 

14

 

54

 

62

 

43

 

105

 

Other operating income

603

 

543

 

1,146

 

551

 

317

 

868

 

 


 


 


 


 


 


 

Total operating income

12,266

 

9,588

 

21,854

 

7,419

 

6,178

 

13,597

 

 


 


 


 


 


 


 

Net insurance claims incurred and


 


 


 


 


 


 

   movement in liabilities to


 


 


 


 


 


 

   policyholders

(35

)

1

 

(34

)

(40

)

(39

)

(79

)

Net operating income before loan


 


 


 


 


 


 

   impairment charges and other


 


 


 


 


 


 

   credit risk provisions

12,231

 

9,589

 

21,820

 

7,379

 

6,139

 

13,518

 

 


 


 


 


 


 


 

Loan impairment charges and


 


 


 


 


 


 

   other credit risk recoveries

(1,732

)

(1,436

)

(3,168

)

(115

)

(1,356

)

(1,471

)

 


 


 


 


 


 


 

Net operating income

10,499

 

8,153

 

18,652

 

7,264

 

4,783

 

12,047

 

 


 


 


 


 


 


 

Employee expenses

(2,633

)

(2,070

)

(4,703

)

(2,791

)

(2,137

)

(4,928

)

Other operating expenses

(1,772

)

(2,062

)

(3,834

)

(2,036

)

(2,128

)

(4,164

)

 


 


 


 


 


 


 

Total operating expenses

(4,405

)

(4,132

)

(8,537

)

(4,827

)

(4,265

)

(9,092

)

 


 


 


 


 


 


 

Operating profit

6,094

 

4,021

 

10,115

 

2,437

 

518

 

2,955

 

 


 


 


 


 


 


 

Share of profit in associates and


 


 


 


 


 


 

   joint ventures

204

 

162

 

366

 

253

 

275

 

528

 

 


 


 


 


 


 


 

Profit before tax

6,298

 

4,183

 

10,481

 

2,690

 

793

 

3,483

 

 

 

Private Banking

 

 

 


 

 

 

 

 

Half-year to

 

 

 

Half-year to

 

 

 

 


30 June

31 December

 


 

30 June

31 December

 


 


2009

 

2009

 

2009

 

2008

 

2008

 

2008

 


US$m

 

US$m

 

US$m

 

US$m

 

US$m

 

US$m

 



 


 


 


 


 


 

Net interest income

784

 

690

 

1,474

 

783

 

829

 

1,612

 

Net fee income

602

 

634

 

1,236

 

814

 

662

 

1,476

 

 


 


 


 


 


 


 

Net trading income

163

 

181

 

344

 

218

 

204

 

422

 

Net income/(expense) from


 


 


 


 


 


 

   financial instruments designated


 


 


 


 


 


 

   at fair value

-

 

 

 

1

 

(1

)

-

 

Gains less losses from financial


 


 


 


 


 


 

   investments

(2

)

7

 

5

 

80

 

(16

)

64

 

Dividend income

2

 

3

 

5

 

4

 

4

 

8

 

Other operating income

40

 

8

 

48

 

16

 

33

 

49

 

 


 


 


 


 


 


 

Net operating income before


 


 


 


 


 


 

   loan impairment charges and


 


 


 


 


 


 

   other credit risk provisions

1,589

 

1,523

 

3,112

 

1,916

 

1,715

 

3,631

 

 


 


 


 


 


 


 

Loan impairment (charges)/


 


 


 


 


 


 

   recoveries and other credit


 


 


 


 


 


 

   risk provisions

(14

)

(114

)

(128

)

4

 

(72

)

(68

)

 


 


 


 


 


 


 

Net operating income

1,575

 

1,409

 

2,984

 

1,920

 

1,643

 

3,563

 

 


 


 


 


 


 


 

Employee expenses

(621

)

(613

)

(1,234

)

(722

)

(645

)

(1,367

)

Other operating expenses

(328

)

(322

)

(650

)

(376

)

(373

)

(749

)

 


 


 


 


 


 


 

Total operating expenses

(949

)

(935

)

(1,884

)

(1,098

)

(1,018

)

(2,116

)

 


 


 


 


 


 


 

Operating profit

626

 

474

 

1,100

 

822

 

625

 

1,447

 

 


 


 


 


 


 


 

Share of profit in associates and


 


 


 


 


 


 

   joint ventures

6

 

2

 

8

 

-

 

-

 

-

 

 


 


 


 


 


 


 

Profit before tax

632

 

476

 

1,108

 

822

 

625

 

1,447

 

 

Other

 

 

 


 

 

 

 

 

Half-year to

 

 

 

Half-year to

 

 

 

 


30 June

31 December

 


 

30 June

31 December

 


 


2009

 

2009

 

2009

 

2008

 

2008

 

2008

 


US$m

 

US$m

 

US$m

 

US$m

 

US$m

 

US$m

 

 


 


 


 


 


 


 

Net interest expense

(551

)

(484

)

(1,035

)

(375

)

(581

)

(956

)

Net fee income/(expense)

64

 

61

 

125

 

32

 

21

 

53

 

 


 


 


 


 


 


 

Net trading income/(expense)

110

 

169

 

279

 

(353

)

(177

)

(530

)

Changes in fair value of long-term


 


 


 


 


 


 

   debt issued and related


 


 


 


 


 


 

   derivatives

(2,300

)

(3,947

)

(6,247

)

577

 

6,102

 

6,679

 

Net income from


 


 


 


 


 


 

   other financial instruments


 


 


 


 


 


 

   designated at fair value

(279

)

83

 

(196

)

243

 

504

 

747

 

 


 


 


 


 


 


 

Net income/(expense) from


 


 


 


 


 


 

   financial instruments


 


 


 


 


 


 

   designated at fair value

(2,579

)

(3,864

)

(6,443

)

820

 

6,606

 

7,426

 

Gains less losses from financial


 


 


 


 


 


 

   investments

(53

)

56

 

3

 

(283

)

(113

)

(396

)

Dividend income

12

 

 

12

 

17

 

(7

)

10

 

Net earned insurance premiums

(3

)

 

(3

)

(15

)

(2

)

(17

)

Gains on disposal of French


 


 


 


 


 


 

   regional banks

-

 

-

 

-

 

-

 

2,445

 

2,445

 

Other operating income

2,172

 

2,870

 

5,042

 

1,943

 

2,318

 

4,261

 

 


 


 


 


 


 


 

Total operating


 


 


 


 


 


 

   income/(expense)

(828

)

(1,192

)

(2,020

)

1,786

 

10,510

 

12,296

 

 


 


 


 


 


 


 

Net insurance claims incurred


 


 


 


 


 


 

   and movement in liabilities


 


 


 


 


 


 

   to policyholders

-

 

(3

)

(3

)

(1

)

-

 

(1

)

Net operating income/(expense)


 


 


 


 


 


 

   before loan impairment


 


 


 


 


 


 

   charges and other credit


 


 


 


 


 


 

   risk provisions

(828

)

(1,195

)

(2,023

)

1,785

 

10,510

 

12,295

 

 


 


 


 


 


 


 

Loan impairment charges and


 


 


 


 


 


 

   other credit risk provisions

(3

)

(5

)

(8

)

-

 

(5

)

(5

)

 


 


 


 


 


 


 

Net operating income/(expense)

(831

)

(1,200

)

(2,031

)

1,785

 

10,505

 

12,290

 

 


 


 


 


 


 


 

Employee expenses

(1,303

)

(1,299

)

(2,602

)

(1,087

)

(1,111

)

(2,198

)

Other operating expenses

(965

)

(1,148

)

(2,113

)

(932

)

(1,044

)

(1,976

)

 


 


 


 


 


 


 

Total operating expenses

(2,268

)

(2,447

)

(4,715

)

(2,019

)

(2,155

)

(4,174

)

 


 


 


 


 


 


 

Operating profit/(loss)

(3,099

)

(3,647

)

(6,746

)

(234

)

8,350

 

8,116

 

 


 


 


 


 


 


 

Share of profit/(loss) in associates


 


 


 


 


 


 

   and joint ventures

5

 

21

 

26

 

45

 

(4

)

41

 

 


 


 


 


 


 


 

Profit/(loss) before tax

(3,094

)

(3,626

)

(6,720

)

(189

)

8,346

 

8,157

 

 

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

 

 

 

 

2009

 

2008

 

 

 

 

 

 

 

 

 

Closing :

HK$/US$

7.754

 

7.750

 

 

 

£/US$

0.616

 

0.686

 

 

 

 

 

 

 

 

 

Average :

HK$/US$

7.752

 

7.787

 

 

 

£/US$

0.641

 

0.545

 

 

 

 

12. Rights issue

 

On 2 March 2009, HSBC Holdings announced its proposal to raise £12.5 billion (US$17.8 billion), net of expenses, by way of a fully underwritten rights issue. Under the proposal, HSBC offered its shareholders the opportunity to acquire 5 new ordinary shares for every 12 ordinary shares at a price of 254 pence per new ordinary share. For shareholders on the Hong Kong and Bermuda Overseas Branch Registers this offer was expressed in Hong Kong dollars and US Dollars respectively, fixed at published exchange rates on 27 February 2009. The proposal was subject to authorisation by the shareholders which was obtained at a general meeting held on 19 March 2009. The offer period commenced on 20 March 2009 and closed for acceptance on 3 April 2009. Dealing in the new shares began on 6 April 2009.

 

 

 

13. Litigation

 

Unauthorised overdraft charges in the UK

 

On 27 July 2007, the UK Office of Fair Trading ('OFT') issued High Court legal proceedings against a number of UK financial institutions, including HSBC Bank, to determine the legal status and enforceability of certain of the charges applied to their personal customers in relation to unauthorised overdrafts (the 'charges'). Pending the resolution of the proceedings, the Financial Services Authority ('FSA') granted firms (including HSBC Bank) a waiver enabling them to place relevant complaints about the charges on hold and the County Courts stayed all individual customer claims.

 

In a judgement given on 25 November 2009, the Supreme Court unanimously allowed the financial institutions' appeal against the Court of Appeal ruling given on 26 February 2009 and held that, provided the relevant charges were in plain and intelligible language, the amount of those charges could not be assessed for fairness under the regulations by either the OFT or the Courts. This is because the charges are part of the price the customer pays for the package of banking services he receives in exchange, and hence an assessment of their amount is outside the scope of the regulations.

 

While the Supreme Court left open the possibility that the terms could be challenged on some other basis, HSBC Bank does not believe that any other realistic basis for challenge exists.

 

On 22 December 2009, the OFT announced that, following detailed consideration of the Supreme Court judgement, and discussions with consumer groups, campaigners, banks, the Government, the FSA and the Financial Ombudsman Service, it would not be continuing the investigation it began in March 2007 into the fairness of unauthorised overdraft charges as, were the investigation to continue, it would have a very limited scope and low prospects of success. The OFT also decided not to investigate the charges using certain other enforcement tools. Its initial assessment was that there were not good grounds for concluding that a collective challenge alleging breach of such other provisions generally would have good prospects of success. The OFT also confirmed that it would address its ongoing concerns about the operation of the market for personal current accounts, by discussing the issues with banks, consumer groups and other organisations, with the aim of reporting on progress by the end of March 2010.

 

The Supreme Court judgement means that the legal proceedings between the OFT and the banks relating to unauthorised overdraft charges are concluded. Accordingly, the FSA confirmed on 25 November 2009 the waiver enabling firms to place relevant charges complaints on hold had therefore lapsed. Normal complaint handling rules therefore applied.

 

Bernard L. Madoff Investment Securities LLC

 

On 11 December 2008, Bernard L. Madoff ('Madoff') was arrested and charged in the United States District Court for the Southern District of New York with one count of securities fraud. That same day, the US Securities and Exchange Commission ('SEC') filed securities fraud charges against Madoff and his firm Bernard L. Madoff Investment Securities LLC ('Madoff Securities'), a broker dealer and investment adviser registered with the SEC. The criminal complaint and SEC complaint each alleged that Madoff had informed senior Madoff Securities employees, in substance, that his investment advisory business was a fraud. On 15 December 2008, on the application of the Securities Investor Protection Corporation, the United States District Court for the Southern District of New York appointed a trustee for the liquidation of the business of Madoff Securities, and removed the liquidation proceeding to the United States Bankruptcy Court for the Southern District of New York. The Madoff Securities trustee has begun processing claims filed by investors allegedly damaged by the Madoff fraud. On 9 February 2009, on Madoff's consent, the United States District Court for the Southern District of New York entered a partial judgement in the SEC action, permanently enjoining Madoff from violating certain antifraud provisions of the US securities laws, ordering Madoff to pay disgorgement, prejudgement interest and a civil penalty in amounts to be determined at a later time, and continuing certain other relief previously imposed, including a freeze on Madoff's assets. On 12 March 2009, Madoff pleaded guilty to 11 felony charges, including securities fraud, investment adviser fraud, mail fraud, wire fraud, three counts of money laundering, false statements, perjury, false filings with the SEC and theft from an employee benefit plan. On 29 June 2009, Madoff was sentenced to 150 years in prison. The relevant US authorities are continuing their investigations into the fraud, and have brought charges against others, including several Madoff Securities employees as well as its external auditor. Some details of the fraud have come to light as a result of these and other investigations and proceedings; however, significant uncertainty remains as to the facts of the fraud and the total amount of assets that will ultimately be available for distribution by the Madoff Securities trustee.

 

Various non-US HSBC companies provide 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 aggregate net asset value of these funds (which would include principal amounts invested and unrealised gains) was US$8.4 billion. Proceedings concerning Madoff and Madoff Securities have been issued by different plaintiffs (including funds, fund investors, and the Madoff Securities trustee) in various jurisdictions against numerous defendants and HSBC expects further proceedings may be brought. Various HSBC companies have been named as defendants in suits in the US, Ireland, Luxembourg, and other jurisdictions. All of the cases where HSBC companies are named as a defendant are at an early stage. HSBC considers that it has good defences to these claims and will continue to defend them vigorously. HSBC is unable reliably to estimate the liability, if any, that might arise as a result of such claims.

 

Various HSBC companies have also received requests for information from various regulatory and law enforcement authorities, and from the Madoff Securities trustee, in connection with the fraud by Madoff. HSBC companies are co-operating with these requests for information.

 

Other litigation

 

These actions apart, HSBC is party to legal actions in a number of jurisdictions including the UK, Hong Kong and the US arising out of its normal business operations. HSBC considers that none of the actions is material, and none is expected to result in a significant adverse effect on the financial position of HSBC, either individually or in the aggregate. Management believes that adequate provisions have been made in respect of the litigation arising out of its normal business operations. HSBC has not disclosed any contingent liability associated with these legal actions because it is not practical to do so.

 

14. Goodwill impairment

 

It is HSBC's policy to test goodwill for impairment annually, and to perform an impairment test more frequently for cash generating units ('CGUs') when there are indications that conditions have changed for those CGUs since the last goodwill impairment test that would result in a different outcome.

 

During 2009 there was no impairment of goodwill. In 2008 HSBC recognised an impairment charge of US$10,564 million in respect of Personal Financial Services - North America. This was a result of the very significant deterioration in the economic and credit conditions in North America and the resulting further restructuring in the Personal Financial Services - North America CGU in the latter part of 2008.

 

15. Events after the balance sheet date

 

A fourth interim dividend for 2009 of US$0.10 per ordinary share (US$1,741 million) (2008: US$0.10 per ordinary share, US$1,210 million) was declared by the Directors after 31 December 2009.

On 14 January 2010, the US Government announced its intention to propose a Financial Crisis Responsibility Fee for a period of at least ten years to be applied to financial institutions with more than US$50 billion of consolidated assets. It is not possible to assess the financial impact of this proposal until final legislation has been enacted.

On 31 January 2010, HSBC Bank Canada which was part of the sub-group headed by HSBC North America Holdings Inc. was transferred to HSBC Overseas Holdings (UK) Limited ('HOHU') as part of an internal reorganisation. The transfer was effected by HSBC Holdings subscribing for one new share in HOHU for a cash consideration of US$6,093 million.

 

The statutory accounts were approved by the Board of Directors on 1 March 2010 and authorised for issue.

 

16. Capital resources

 

 

2009

 

2008

 

 

US$m

 

US$m

 

Composition of regulatory capital

 

 

 

 

Tier 1 capital




 

   Shareholders' equity per balance sheet

128,299

 

93,591


   Preference share premium

(1,405

)

(1,405

)

   Other equity instruments

(2,133

)

(2,133

)

   Deconsolidation of special purpose entities

10,491

 

16,248


 

 

 

 

 

Shareholders' equity

135,252

 

106,301


 

 

 

 

 

   Minority interests per balance sheet

7,362

 

6,638


   Preference share minority interests

(2,395

)

(2,110

)

   Minority interest transferred to tier 2 capital

(678

)

(626

)

   Minority interest in deconsolidated subsidiaries

(357

)

(286

)

 

 

 

 

 

Minority interests

3,932

 

3,616


 


 



   Unrealised losses on available-for-sale debt securities

906

 

5,191


   Own credit spread

(1,050

)

(5,744

)

   Defined benefit pension fund adjustment

2,508

 

1,822


      Reserves arising from revaluation of property and unrealised gains on


 



         available-for-sale equities

(2,226

)

(1,726

)

   Cash flow hedging reserve

26

 

806


 

 

 

 

 

Regulatory adjustments to the accounting basis

164

 

349


 


 



   Goodwill capitalised and intangible assets  

(28,680

)

(26,861

)

   50% of securitisation positions

(1,579

)

(989

)

   50% of tax credit adjustment for expected losses

546

 

516


   50% of excess of expected losses over impairment allowances

(3,375

)

(2,660

)

 

 

 

 

 

Deductions

(33,088

)

(29,994

)

 


 



Core tier 1 capital

106,260

 

80,272


 

 

 

 

 

   Preference share premium

1,405

 

1,405


   Preference share minority interests

2,395

 

2,110


   Innovative tier 1 securities

11,998

 

11,411


 

 

 

 

 

Other tier 1 capital before deductions

15,798

 

14,926


 


 



   Unconsolidated investments

(447

)

(378

)

   50% of tax credit adjustment for expected losses

546

 

516


 

 

 

 

 

Deductions

99

 

138


 


 



Tier 1 capital

122,157

 

95,336


 

 

 

2009

 

2008

 

 

US$m

 

US$m

 

Tier 2 capital


 



   Reserves arising from revaluation of property and unrealised gains on


 



      available-for-sale equities

2,226

 

1,726


   Collective impairment allowances

4,120

 

3,168


   Perpetual subordinated debt

2,987

 

2,996


   Term subordinated debt

40,442

 

41,204


   Minority interest in tier 2 capital

300

 

300


 


 



Total qualifying tier 2 capital before deductions

50,075

 

49,394


 


 



   Unconsolidated investments

(11,547

)

(9,613

)

   50% of securitisation positions

(1,579

)

(989

)

   50% of excess of expected losses over impairment allowances

(3,375

)

(2,660

)

   Other deductions

(2

)

(8

)

 


 



Total deductions other than from tier 1 capital

(16,503

)

(13,270

)

 


 



Total regulatory capital    

155,729

 

131,460


 


 



Risk-weighted assets


 



Credit risk

903,518

 

882,597


Counterparty credit risk

51,892

 

73,999


Market risk

51,860

 

70,264


Operational risk

125,898

 

121,114


 


 



Total

1,133,168

 

1,147,974


 

 

 

2009

 

2008

 

 

%

 

%

 

Capital ratios


 


 

Core tier 1 ratio

9.4

 

7.0

 

Tier 1 ratio

10.8

 

8.3

 

Total capital ratio

13.7

 

11.4

 

 

 

17. 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.

 

18. 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 2009 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.

 

19. 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 bought, sold or redeemed any securities of HSBC Holdings during the year ended 31 December 2009.

 

20. 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 18 March 2010 in order to receive the fourth interim dividend for 2009, which will be payable on Wednesday 5 May 2010.

 

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 19 March 2010 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 Register should do so before 4.00pm on Friday 19 March 2010 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 19 March 2010. 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 17 March 2010; 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 18 March 2010.

 

Transfers of American Depositary Shares should be lodged with the depositary by 12 noon on Friday 19 March 2010 in order to receive the dividend.

 

21. Proposed interim dividends for 2010

 

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 2010 will be US$0.08 per ordinary share. The proposed timetables for the dividends in respect of 2010 are:

 

 

Interim dividends on the ordinary shares for 2010

 

 

First

 

Second

 

Third

 

Fourth

 

 

 

 

 

 

 

 

 

 

Announcement

4 May 2010

 

2 August 2010

 

1 November 2010

 

28 February 2011

 

ADSs quoted ex-dividend in

 

 

 

 

 

 

 

 

   New York

19 May 2010

 

18 August 2010

 

17 November 2010

 

16 March 2011

 

Shares quoted ex-dividend in

 

 

 

 

 

 

 

 

   London, Hong Kong, Paris

 

 

 

 

 

 

 

 

   and Bermuda

19 May 2010

 

18 August 2010

 

17 November 2010

 

16 March 2011

 

Record date in Hong Kong

20 May 2010

 

19 August 2010

 

18 November 2010

 

17 March 2011

 

Record date in London, New

 

 

 

 

 

 

 

 

   York, Paris and Bermuda*

21 May 2010

 

20 August 2010

 

19 November 2010

 

18 March 2011

 

Payment date

7 July 2010

 

6 October 2010

 

12 January 2011

 

5 May 2011

 

 

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

 

22. Corporate governance

 

HSBC is committed to high standards of corporate governance. HSBC Holdings plc has complied throughout 2009 with the applicable code provisions of the Combined Code on Corporate Governance issued by the Financial Reporting Council and 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 2009.

 

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

 

S K Green, M F Geoghegan, S A Catz, V H C Cheng, M K T Cheung, J D Coombe, J L Durán, R A Fairhead, D J Flint, A A Flockhart, W K L Fung*, S T Gulliver, J W J Hughes-Hallett, W S H Laidlaw, J R Lomax, Sir Mark Moody-Stuart, G Morgan, N R N Murthy, S M Robertson, J L Thornton and Sir Brian Williamson.

 

 

* Non-executive Director

† Independent non-executive Director

 

The Group Audit Committee has reviewed the annual results for 2009.

 

23. Annual Review and Annual Report and Accounts

 

The Annual Review 2009 and/or Annual Report and Accounts 2009 will be mailed to shareholders on or about Tuesday 30 March 2010. Copies may be obtained from Group Communications, HSBC Holdings plc, 8 Canada Square, London E14 5HQ, United Kingdom; Group Public Affairs, The Hongkong and Shanghai Banking Corporation Limited, 1 Queen's Road Central, Hong Kong; Internal Communications, HSBC - North America, 26525 N Riverwoods Boulevard, Mattawa, Illinois, 60045, USA; HSBC France, Direction de la Communication, 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 2010 from Computershare Hong Kong Investor Services Limited, Hopewell Centre, Rooms 1806-07, 18th Floor, 183 Queen's Road East, Hong Kong.

 

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

 

The Annual Report and Accounts will be filed with the United States Securities and Exchange Commission.

 

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

 

Custodians or nominees that wish to distribute copies of the Annual Review and/or Annual Report and Accounts to their clients may request copies for collection by writing to Group Communications at the address given above.

 

24. Annual General Meeting

 

The 2010 Annual General Meeting of the Company will be held at the Barbican Hall, Barbican Centre, London EC2 on Friday 28 May 2010 at 11 am.

 

Notice of the meeting will be mailed to shareholders on or about Tuesday 30 March 2010.

 

25. Interim Management Statements and Interim Results for 2010

 

Interim Management Statements are expected to be issued on 10 May 2010 and 5 November 2010, respectively. The interim results for the six months to 30 June 2010 will be announced on Monday 2 August 2010.

 

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

David Hall

Group General Manager

Head of Group Communications (Asia)

  and Director of Group Communications

Telephone: +852 2822 1133

Telephone: +44 (0)20 7991 0633

 

 

 

Patrick McGuinness

Gareth Hewett

Head of Group Press Office

Deputy Head of Group Communications (Asia)

Telephone: +44(0)20 7991 0111

Telephone: +852 2822 4929

 

 

Alastair Brown

 

Manager Investor Relations

 

Telephone: +44 (0)20 7992 1938

 



Chicago

Paris

Lisa Sodeika

Chantal Nedjib

Executive Vice President,

Head of Corporate Communications

Corporate Affairs

Telephone: +33 1 40 70 7729

Telephone: +1 224 544 3299




Diane Bergan

Gilberte Lombard

Senior Vice President,

Investor Relations Director

Public Affairs

Telephone: +33 1 40 70 2257

Telephone: +1 224 544 3310

 

 


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