Interim Report - 20 of 21

RNS Number : 3169X

HSBC Holdings PLC

14 August 2009

 



Terms used	Brief description
ABSs	Asset-backed securities
ADS	American depositary share
ALCO	Asset and Liability Management Committee
ARMs	Adjustable-rate mortgages
Asscher	Asscher Finance Ltd, a structured investment vehicle managed by HSBC
Bank Ekonomi	PT Bank Ekonomi Raharja Tbk
Bank of Communications	Bank of Communications Limited, mainland China's fifth largest bank, owned 19.01 per cent by HSBC
Barion	Barion Funding Limited, a term funding vehicle
Basel I	The 1988 Basel Capital Accord
Basel II	Final Accord of the Basel Committee on proposals for a new capital adequacy framework
CDO	Collateralised debt obligation
CP	Commercial paper
Cullinan	Cullinan Finance Ltd, a structured investment vehicle managed by HSBC
DPF	Discretionary participation feature of insurance and investment contracts
EU	European Union
Fannie Mae	Federal National Mortgage Association, US
Freddie Mac	Federal Home Loan Mortgage Corporation, US
FSA	Financial Services Authority (UK)
GAAP	Generally Accepted Accounting Principles
GDP	Gross domestic product
Ginnie Mae	Government National Mortgage Association, US
Global Markets	HSBC's treasury and capital markets services in Global Banking and Markets
GMO	Group Management Office
Group	HSBC Holdings together with its subsidiary undertakings
H1N1 flu virus	Influenza A (H1N1), commonly referred to as 'swine flu'
Hong Kong	Hong Kong Special Administrative Region of the People's Republic of China
HSBC	HSBC Holdings together with its subsidiary undertakings
HSBC Bank	HSBC Bank plc, formerly Midland Bank plc
HSBC Bank USA	HSBC Bank USA, N.A., HSBC's retail bank in the US
HSBC Finance	HSBC Finance Corporation, the US consumer finance company acquired in 2003 (formerly Household International, Inc.)
HSBC France	HSBC's French banking subsidiary (formerly CCF S.A.)
HSBC Holdings	HSBC Holdings plc
IAS	International Accounting Standard
IASB	International Accounting Standards Board
IFRIC	International Financial Reporting Interpretations Committee
IFRSs	International Financial Reporting Standards
Investsmart	IL&FS Investsmart Limited, an Indian incorporated, 93.86 per cent owned subsidiary of HSBC Holdings plc
Industrial Bank	Industrial Bank Co. Limited, a national joint-stock bank in mainland China of which Hang Seng Bank Limited owns 12.78 per cent
IRB	Internal ratings-based approach to implementing Basel II
Madoff Securities	Bernard L Madoff Investment Securities LLC
Mainland China	People's Republic of China excluding Hong Kong
Malachite	Malachite Funding Limited, a term funding vehicle
MasterCard	MasterCard Inc.
Mazarin	Mazarin Funding Limited, an asset-backed CP conduit

Terms used	Brief description
MBSs	US mortgage-backed securities
Monolines	Monoline insurance companies, so-called because they provide services in just one specific financial area
OTC	Over-the-counter
Ping An Insurance	Ping An Insurance (Group) Company of China, Limited
Premier	HSBC Premier, HSBC's global banking service for affluent customers
PVIF	Present value of in-force long-term insurance business
Refi rate	The European Central Bank main refinancing minimum bid rate
Repos	Sale and repurchase transactions
Reverse repos	Securities purchased under commitments to sell
RMM	Risk Management Meeting
S&P	Standard & Poor's
Seasoning	Emergence of loss patterns in a credit portfolio over time
SIC	Securities investment conduit
SIV	Structured investment vehicle
Solitaire	Solitaire Funding Limited, a special purpose entity managed by HSBC
SPE	Special purpose entity
Sub-prime	US description for customers who have limited credit histories, modest incomes, high debt-to-income ratios, high loan-to-value ratios (for real estate secured products) or have experienced credit problems caused by occasional delinquencies, prior charge-offs, bankruptcy or other credit-related actions
The Chinese Bank	The Chinese Bank Co., Ltd, in Taiwan, whose assets, liabilities and operations HSBC acquired in March 2008
UK	United Kingdom
US	United States of America
VAR	Value at risk
VNAV	Variable net asset value
Visa	Visa Inc.

Accounting policies 102, 209

Areas of special interest 145

Asset-backed securities 99, 102, 104, 177

Assets

by customer group 30

by geographical region 46

financial assets designated at fair value 215

held in custody and under administration 29

maturity analysis 223

movement in 27

non-current assets held for sale 221

trading 214

Associates and joint ventures 24

Auditor's review report 233

Balance sheet

consolidated 26, 201

data 3, 31, 33, 38, 39, 41, 43, 48, 52, 55, 59, 64, 68, 72, 75, 83, 87

movement 27

underlying/reported reconciliation 28

Basel II 188

Basis of preparation 207

Business (and financial) highlights 31, 33, 35, 39

Business performance review

Europe 49

Hong Kong 56

Latin America 88

Middle East 73

North America 80

Rest of Asia-Pacific 65

Capital

management 187

measurement and allocation 188

structure 190

Cash flow

consolidated statement 202

notes 224

projected scenario analysis 170

Cautionary statement regarding forward-looking statements 4

Client assets 39

Collateral 140

Commercial Banking

balance sheet data 33

financial and business highlights 33

profit before tax 33

Comparative information 208

Compliance with IFRSs 207

Composition of group (changes in) 209

Constant currency 12

Contents 1

Contingent liabilities, contractual commitments and financial guarantee contracts 137, 225

Copies of the Interim Report 2009 245

Corporate governance 244

Credit quality 155

Credit risk 138

credit exposure 138, 140

Customer accounts 47, 63, 71, 78, 86

Customer groups and global businesses 30

Daily distribution of trading revenues 175

Dealings in HSBC Holdings shares 243

Defined terms - Inside front cover

Derivatives

by product contract type 217

hedging instruments 218

trading and credit 217

Directors

biographies 193

interests 234

Dividends 2, 210, 243, 244

Earnings per share 3, 210

Economic briefing

Europe 47

Hong Kong 56

Latin America 87

Middle East 72

North America 78

Rest of Asia-Pacific 63

Economic profit 25

Equity 28, 203

Equity securities available for sale 178

Estimates and assumptions 208

Europe

balance sheet data 48, 52

business performance review 49

customer accounts 47

economic briefing 47

impairment allowances 159

loans and advances (net) 47, 142

profit/(loss) before tax 46, 48, 52

Events after the balance sheet date 231

Fair values

of financial instruments at fair value 18, 114

of financial instruments not at fair value 122

valuation bases 116

Fee income (net) 16

Final results 244

Financial assets

designated at fair value 215

reclassification 97

Financial highlights 2

Financial investments 219

Financial liabilities designated at fair value 222

Foreclosed properties in US 155

Funds under management 29

Future accounting developments 208

Gains less losses from financial investments 19

Geographical regions 46

Global Banking and Markets

ABSs classified as AFS 99

balance sheet data 38

financial and business highlights 35

profit before tax 35

Goodwill impairment 226

Group Chairman's Statement 5

Group Chief Executive's Review 7

Group Managing Directors 197

Hong Kong

balance sheet data 55, 59

business performance review 56

economic briefing 56

impairment allowances 159

loans and advances 55, 142

profit before tax 55, 59

HSBC Finance 171

Impairment

allowances and charges 159

available-for-sale assets 121

by geographical region 159, 162

by industry 161

charges and other credit risk provisions 21

impaired loans 159, 164, 166

Income from financial instruments designated at fair value (net) 18

Income statement (consolidated) 14, 199

Insurance

balance sheet by type of contract 185

claims incurred and movement in liabilities to policyholders (net) 20

net earned premiums 19

liabilities under contracts issued 183

risk management 182

Interest income (net) 15

sensitivity 179

Interest rate repricing gap 178

Interim Management Statement 244

Interim Report 2009 231

Latin America

balance sheet data 87, 91

business performance review 88

customer accounts 86

economic briefing 87

impairment allowances 159

loans and advances 86, 142, 144

profit before tax 86, 87, 91

Legal risk 182

Leveraged finance transactions 112, 137

Liabilities

financial liabilities designated at fair value 222

maturity analysis 223

movement in 27

trading 222

Liquidity and funding 169

contingent liquidity risk 171

Litigation 229

Loans and advances

by country/region 47, 63, 71, 78, 86

by credit quality 155

by industry sector 142

delinquency in the US 153

exposure 138, 140

impaired 159

mortgage lending 148

past due but not impaired 157

personal lending 146, 151

potential problem loans 166

renegotiated to banks/customers 154

to banks/customers 142, 215

unimpaired loans contractually past due  90 days or more 166

wholesale lending 145

within Rest of Asia-Pacific, Middle East and  Latin America 144

Loan impairment charges and other credit risk provisions 21

Market risk 173, 189

Market turmoil

accounting policies 102

asset-backed securities 99, 102, 104

business model 101

disclosure policy 96

exposures 96, 102, 133

financial effect 98

impact on liquidity risk 172

impact of market risk 174

special purpose entities 124, 137

structured investment vehicles 124

Middle East

balance sheet data 72, 75

business performance review 73

customer accounts 71

economic briefing 72

impairment allowances 159

loans and advances 71, 142, 144

profit/(loss) before tax 71, 72, 75

Money market funds 130

Monoline insurers 111

Mortgage lending

products 149, HSBC Finance 151

in the UK, (US) 148

Non-trading portfolios 177

North America

balance sheet data 79, 83

business performance review 80

customer accounts 78

economic briefing 78

impairment allowances 159

loans and advances 78, 142

profit/(loss) before tax 78, 79, 83

Notifiable interests in share capital 242

Off-balance sheet arrangements 137

Operating expenses 23

Operating income (other) 20

Operational risk 181, 190

'Other' customer group

balance sheet data 41

notes 41

profit/(loss) before tax 41

Pension scheme 179

balance sheet data 33

financial and business highlights 31

profit/(loss) before tax 33

Pillar 2, Pillar 3 190

Post-employment benefits 211

Potential problem loans 166

Principal activities 11

Private Banking

balance sheet data 39

financial and business highlights 39

profit before tax 39

Profit before tax

attributable 211

by country 46, 62, 71, 78, 86

by customer group 30, 31, 33, 35, 39, 41, 43, 46, 55, 62, 78, 86

by geographical region 46, 48, 52, 55, 59, 64, 68, 72, 75, 79, 83, 87, 91, 226

consolidated 199

data 3

underlying/reported reconciliations 12, 13, 32, 34, 37, 40, 42, 49, 51, 56, 58, 65, 67, 73, 74, 80, 82, 88, 90

Ratios

advances to deposits 169

capital 3

cost efficiency 3, 24

credit coverage 3

earnings to combined fixed charges 26

efficiency and revenue mix 3

financial 3

net liquid assets to customer liabilities 170

performance 3

Related parties 29

Reputational risk 182

Responsibility statement 232

Rest of Asia-Pacific

balance sheet data 64, 68

business performance review 65

customer accounts 63

economic briefing 63

impairment allowances 159

loans and advances 63, 142, 144

profit before tax 62, 64, 68

Rights issue 2, 11, 227

Risk elements, analysis of 167

Risk elements in the loan portfolio 166

Risk management 138

contingent liquidity 171

credit 138, 189

credit spread 176, 177

foreign exchange 179

gap 177

insurance operations 182

liquidity and funding 169, 172

market 173, 189

operational 181, 190

pension 179

reputational 182

Sensitivity

projected net interest income 179

Share capital

notifiable interests 242

Shareholder enquiries 245

Share option plans

directors' interests 234

discretionary share incentive plans 239

employee share option plans 237

subsidiary company plans 240

Bank of Bermuda plans 241

HSBC Finance plans 241

HSBC France plans 240

Special purpose entities 124, 133, 137

Staff numbers 23

Statement of comprehensive income (consolidated) 200

Stock codes 245

Strategic direction 11

Stress testing 174

Structural foreign exchange exposures 181

Structured investment vehicles and conduits 124

Tax expense 213

Telephone and online share-dealing service 245

Total shareholder return 4

Trading

assets 214

derivatives 217

income (net) 17

liabilities 222

portfolios 175

Troubled debt restructurings 166

Underlying performance 12

Value at risk 173, 174

Wholesale lending 145

 

END

 

 

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