Interim Report - 4 of 21

RNS Number : 9142Q

HSBC Holdings PLC

13 August 2010

 



Financial summary

Income statement

	Half-year to
	30 June                2010		30 June                2009		31 December                2009
	US$m		US$m		US$m
Interest income ..........................................................................................	28,686		32,479		29,617
Interest expense .........................................................................................	(8,929)		(11,941)		(9,425)
Net interest income ...................................................................................	19,757		20,538		20,192
Fee income ................................................................................................	10,405		10,191		11,212
Fee expense ...............................................................................................	(1,887)		(1,763)		(1,976)
Net fee income ..........................................................................................	8,518		8,428		9,236
Trading income excluding net interest income ...........................................	2,309		4,301		1,935
Net interest income on trading activities ....................................................	1,243		1,954		1,673
Net trading income ....................................................................................	3,552		6,255		3,608
Changes in fair value of long-term debt issued and related derivatives9 ........	1,125		(2,300)		(3,947)
Net income/(expense) from other financial instruments designated at fair value ...............................................................................................	(40)		777		1,939
Net income/(expense) from financial instruments designated at fair value ..	1,085		(1,523)		(2,008)
Gains less losses from financial investments ...............................................	557		323		197
Dividend income ........................................................................................	59		57		69
Net earned insurance premiums ..................................................................	5,666		5,012		5,459
Other operating income .............................................................................	1,478		1,158		1,630
Total operating income ..........................................................................	40,672		40,248		38,383
Net insurance claims incurred and movement in liabilities to policyholders	(5,121)		(5,507)		(6,943)
Net operating income before loan impairment charges and other credit risk provisions ....................................................................................	35,551		34,741		31,440
Loan impairment charges and other credit risk provisions ..........................	(7,523)		(13,931)		(12,557)
Net operating income .............................................................................	28,028		20,810		18,883
Employee compensation and benefits ........................................................	(9,806)		(9,207)		(9,261)
General and administrative expenses ..........................................................	(7,014)		(6,258)		(7,134)
Depreciation and impairment of property, plant and equipment ................	(834)		(814)		(911)
Amortisation and impairment of intangible assets ......................................	(457)		(379)		(431)
Total operating expenses .......................................................................	(18,111)		(16,658)		(17,737)
Operating profit .....................................................................................	9,917		4,152		1,146
Share of profit in associates and joint ventures ...........................................	1,187		867		914
Profit before tax ......................................................................................	11,104		5,019		2,060
Tax expense ..............................................................................................	(3,856)		(1,286)		901
Profit for the period ...............................................................................	7,248		3,733		2,961
Profit attributable to shareholders of the parent company .........................	6,763		3,347		2,487
Profit attributable to non-controlling interests ...........................................	485		386		474

 

For footnotes, see page 95.

Reported profit before tax of US$11.1 billion in the first half of 2010 was 121 per cent higher than in the first half of 2009, 30 per cent on an underlying basis, with significantly lower loan impairment charges more than offsetting lower revenues. The difference between reported and underlying results is explained on page 11. Except where otherwise stated, the commentaries in the Financial Summary are on an underlying basis.

Profit before tax on an underlying basis was 30 per cent higher than the first half of 2009.

The 11 per cent reduction in net operating income before loan impairment charges and other credit risk provisions ('revenue') was primarily attributable to three factors: (i) lower revenues in Balance Sheet Management as higher yielding positions matured, interest rates remained low and major yield curves flattened; (ii) lower revenues in HSBC Finance Corporation ('HSBC Finance') as the run-off portfolios continued to fall; and (iii) lower net trading income. Although deposit spread compression continued to constrain net interest income in a number of key markets, notably Hong Kong, there was strong growth in insurance and investment businesses in Asia along with higher fee income due to an increase in trade activity. In the UK, higher revenues were primarily driven by mortgage lending growth and stronger lending spreads.

Loan impairment charges were significantly lower than in both the first and second halves of 2009 (US$6.8 billion or 47 per cent and US$4.9 billion or 39 per cent, respectively), reflecting initiatives taken to exit higher risk portfolios, enhanced underwriting and collection activities and a general improvement in the economic environment which helped stabilise credit quality. This substantial decline was driven by a significant reduction in the HSBC Finance run-off portfolio, largely due to lower customer loan balances and an easing in delinquency rates. The non-recurrence of a small number of specific charges related to Global Banking and Markets' clients in the first half of 2009 and the run-off of certain consumer portfolios in Latin America also contributed to the improvement.

Reported profit after tax was US$3.5 billion or 94 per cent higher than in the first half of 2009. The tax charge included US$1.6 billion attributable to the taxable gain arising from an internal reorganisation designed to strengthen the US operations, capital position and support the recoverability of US deferred tax assets. No gain appears in the consolidated financial statements from this reorganisation, but the transaction generated a tax charge in the US that is expected to be covered by operating tax losses and foreign tax credits. The gain on the transaction was eliminated on consolidation but the tax charge remained, resulting in an increase in the Group's effective tax rate.

Group performance by income and expense item

Net interest income

	Half-year to
	30 June                2010		30 June                2009		31 December                2009
Net interest income10 (US$m) ............................................................	19,757		20,538		20,192
Average interest-earning assets (US$m) ..............................................	1,431,458		1,345,569		1,423,202
Gross interest yield11 (per cent) ..........................................................	4.04		4.87		4.13
Net interest spread12 (per cent) ..........................................................	2.68		3.05		2.77
Net interest margin13 (per cent) .........................................................	2.78		3.08		2.81

For footnotes, see page 95.

Reported net interest income fell by 4 per cent to US$19.8 billion; the decline was 7 per cent on an underlying basis.

The decrease in net interest income was driven by the effects of the continuing low interest rate environment on all parts of the balance sheet together with a repositioning of customer assets towards secured lending, which has a lower incidence of loss and a lower yield.

As expected, revenues in Balance Sheet Management slowed significantly as interest rates remained low and major yield curves flattened. In Balance Sheet Management, average interest-earning assets increased, reflecting a rise in the Group's commercial deposit surplus, particularly in Hong Kong, and driving an increase in overall interest-earning assets.

Low interest rates and a move towards lower yielding secured assets reduced net interest income by 4 per cent.

Average loans and advances to customers were broadly unchanged. However, yields were noticeably reduced as a result of a series of decisions to reposition lending in line with the Group's revised risk appetite. Higher yielding balances declined in North America as the run-off portfolios continued to repay and charge-off. Unsecured portfolios in Mexico, India and Europe decreased as a result of tighter underwriting criteria and the cessation of some business lines. In the US, credit card balances declined as customers repaid more and the number of active credit card accounts fell. This reduction in balances was mitigated by growth in lending in Asia and the UK in residential mortgages, which command a lower yield.

The low interest rate environment had a favourable effect on the cost of funding the Group's trading assets. Despite a lower cost of funds and asset repricing, the net interest spread contracted for the reasons described above. The net interest margin declined by a smaller amount as net free funds increased, in part due to the low interest rates which led customers to hold more funds in liquid non-interest bearing current accounts.

Net fee income

	Half-year to
	30 June 2010 US$m		30 June 2009 US$m		31 December 2009 US$m
Cards ..................................................................................................	1,900		2,209		2,416
Account services ................................................................................	1,821		1,771		1,821
Funds under management ....................................................................	1,181		945		1,227
Credit facilities ...................................................................................	827		729		750
Broking income ..................................................................................	766		749		868
Insurance ............................................................................................	578		688		733
Imports/exports .................................................................................	466		438		459
Global custody ....................................................................................	439		471		517
Remittances .......................................................................................	329		281		332
Unit trusts ..........................................................................................	267		137		226
Underwriting ......................................................................................	264		348		398
Corporate finance ..............................................................................	248		164		232
Trust income ......................................................................................	141		134		144
Taxpayer financial services ................................................................	91		91		(4)
Mortgage servicing .............................................................................	60		62		62
Maintenance income on operating leases ............................................	53		55		56
Other .................................................................................................	974		919		975
Fee income .........................................................................................	10,405		10,191		11,212
Less: fee expense ................................................................................	(1,887)		(1,763)		(1,976)
Net fee income ...................................................................................	8,518		8,428		9,236

Net fee income remained broadly in line with the first half of 2009 on both a reported and underlying basis.

Net fee income related to credit cards fell significantly, primarily in the US, due to a decline in late fees driven by lower volumes and delinquency levels, higher repayment levels, and reduced overlimit fees due to changes to charging practices following implementation of the CARD Act.

Underwriting fees decreased due to reduced activity in debt and equity capital markets, particularly in the US and the UK.

Insurance fee income in the US declined due to lower sales of credit protection products as a result of the run-off of the Consumer Lending portfolio and the reduced volume within the card business.

Offsetting the above, there were substantial increases in funds under management and unit trust income compared with the first half of 2009, particularly in Hong Kong and Rest of Asia-Pacific. Strong gains in most major markets during the latter part of 2009 led to an increase in the market value of assets, which resulted in higher management fees and an increase in customer transaction volumes as investor sentiment improved.

Credit facilities fees also increased, primarily as a result of an increase in the arrangement of loans and loan syndication in Hong Kong and the Rest of Asia-Pacific region.

Net trading income

	Half-year to
	30 June 2010 US$m		30 June 2009 US$m		31 December 2009 US$m
Trading activities ...............................................................................	3,419		3,294		1,946
Net interest income on trading activities ............................................	1,242		1,954		1,673
Loss on termination of hedges ............................................................	(3)		(37)		(17)
Other trading income - hedge ineffectiveness:
-  on cash flow hedges ....................................................................	(24)		70		74
-  on fair value hedges ....................................................................	17		(3)		(42)
Non-qualifying hedges ........................................................................	(1,099)		977		(26)
Net trading income14,15 .......................................................................	3,552		6,255		3,608

For footnotes, see page 95.

Reported net trading income at US$3.6 billion was 43 per cent lower than in the first half of 2009. On an underlying basis, it fell by 45 per cent compared with the first half of 2009 but was in line with the second half of the year.

The decline in net trading income was driven by a US$2.1 billion adverse effect from non-qualifying hedges, which are derivatives entered into as part of a documented interest rate management strategy for which hedge accounting has not or cannot be applied. These are principally cross-currency and interest rate swaps used to economically hedge fixed rate debt issued by HSBC Holdings, floating rate debt issued by HSBC Finance and certain operating leased assets. The loss recognised in respect of non-qualifying hedges was a result of fair value losses on these instruments, primarily driven by the decrease in long‑term US interest rates relative to sterling and euro interest rates. In HSBC Finance, the volume of non-qualifying hedge positions also increased as the duration of the mortgage book lengthened and swaps were used to more closely align the duration of the funding liabilities. This compared with fair value gains recognised in respect of these instruments in the same period in 2009. The size and direction of the changes in the fair value of non-qualifying hedges which are recognised in the income statement can be volatile from period to period, but do not alter the cash flows expected as part of the documented interest rate management strategy for both the instruments and the underlying economically hedged assets and liabilities.

Net interest income earned on trading activities decreased due to a fall in interest rates. The cost of internally funding these assets also declined as a result of the reduction in interest rates. However, reported net trading income excludes this interest expense.

Net income from trading activities declined compared with the unusually high levels reported in the first half of 2009, which benefited from exceptional volumes and margins and favourable market conditions. Revenues slowed in the second quarter of 2010 as European sovereign debt concerns and widening credit spreads suppressed client activity and reduced demand for foreign exchange, Credit and Rates products.

Rates income fell with the slowdown in client activity in Europe, while increased competition in the US adversely affected volumes and margins. The decrease was partly offset by fair value gains on structured liabilities as credit spreads widened, compared with losses in the same period in 2009.

Fall in trading income driven by US$2.1 billion adverse effect from non-qualifying hedges.

Credit trading recorded a net release of previous write-downs on legacy positions and monoline exposures of US$362 million, reflecting an improvement in asset prices; the first half of 2009 included a reported net charge of US$602 million. This benefit however, was more than offset by the non-recurrence of gains in other parts of the business that arose in the first half of 2009.

Performance in the foreign exchange business remained strong but suffered from a reduction in market volatility and customer-driven volumes compared with the unprecedented levels experienced in late 2008 and early 2009. Additionally, as a number of competitors sought to rebuild their businesses, the trading environment became more competitive, reducing spreads and adversely affecting revenues.

Trading income benefited from foreign exchange gains on trading assets held as economic hedges of foreign currency debt designated at fair value, with the offset reported in 'Net income from financial instruments designated at fair value'. Foreign exchange losses were reported on these instruments in the first half of 2009.

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

	Half-year to
	30 June 2010 US$m		30 June 2009 US$m		31 December 2009 US$m
Net income/(expense) arising from:
-. financial assets held to meet liabilities under insurance and investment contracts ...................................................................	(229)		956		2,837
-. liabilities to customers under investment contracts ......................	184		(197)		(1,132)
-. HSBC's long-term debt issued and related derivatives ..................	1,125		(2,300)		(3,947)
Change in own credit spread on long-term debt ........................	1,074		(2,457)		(4,076)
Other changes in fair value16 ...................................................	51		157		129
-. other instruments designated at fair value and related derivatives	5		18		234
Net income/(expense) from financial instruments designated at fair value ........................................................................................................	1,085		(1,523)		(2,008)
Financial assets designated at fair value at period end ..........................	32,243		33,361		37,181
Financial liabilities designated at fair value at period end .....................	80,436		77,314		80,092

For footnote, see page 95.

HSBC designates certain financial instruments at fair value to remove or reduce accounting mismatches in measurement or recognition, or where financial instruments are managed and their performance is evaluated together on a fair value basis. All income and expense from financial instruments designated at fair value are included in this line except for interest arising from HSBC's issued debt securities and related derivatives managed in conjunction with those debt securities, which is recognised in 'Interest expense'.

HSBC principally uses the fair value designation in the following instances (for which all numbers are 'reported'):

·     for certain fixed-rate long-term debt issues whose rate profile has been changed to floating through interest rate swaps as part of a documented interest rate management strategy. Approximately US$64 billion (31 December 2009: US$63 billion) of the Group's debt issues have been accounted for using the fair value option.

The movement in fair value of these debt issues includes the effect of own credit spread changes and any ineffectiveness in the economic relationship between the related swaps and own debt. As credit spreads widen or narrow, accounting profits or losses, respectively, are booked. The size and direction of the changes in own credit spread and ineffectiveness, which will be recognised in the income statement, can be volatile from period to period, but do not alter the cash flows envisaged as part of the documented interest rate management strategy. As a consequence, gains and losses arising from changes in own credit spread on long-term debt, and other fair value movements on the long-term debt and related derivatives, are not regarded internally as part of managed performance and are therefore not allocated to customer groups, but are reported in the 'Other' group. Own credit spread movements are excluded from underlying results. Similarly, such gains and losses are ignored in the calculation of regulatory capital;

·     for US$15 billion (31 December 2009: US$15 billion) of financial assets held to meet liabilities under insurance contracts, and certain liabilities under investment contracts with discretionary participation features ('DPF'); and

·     for US$7 billion (31 December 2009: US$8 billion) of financial assets held to meet liabilities under unit-linked and other investment contracts, as well as the associated liabilities.

Income from financial instruments designated at fair value of US$1.1 billion was reported compared with an expense of US$1.5 billion in the first half of 2009.

On an underlying basis, HSBC reported income of US$11 million in the first half of 2010 compared with income of US$917 million in the first half of 2009. The large difference between the reported and underlying results is due to the exclusion from the latter of the credit spread-related movements in the fair value of HSBC's own long-term debt. A gain of US$1.1 billion was reported in the first half of 2010, which resulted from a widening of credit spreads, compared with a loss of US$2.5 billion reported in the first half of 2009.

An expense of US$229 million was recorded due to a fair value movement on assets held to back insurance and investment contracts, compared with income of US$892 million in 2009. This reflected investment losses in the current period which were driven by weaker markets, and predominantly affected the value of assets held in unit-linked and participating funds in Hong Kong, the UK and France. Investment gains were also lower in Brazil than in the first half of 2009.

·     To the extent that the investment gains or losses related to assets held to back investment contracts, the income or expense associated with the corresponding movement in liabilities to customers was also recorded under 'Net income from financial instruments designated at fair value'. This amounted to income of US$198 million in the first half of 2010 compared with an expense of US$158 million in the same period in 2009.

·     To the extent that the investment gains or losses related to assets held to back insurance contracts or investment contracts with DPF, they were offset by a corresponding change in 'Net insurance claims incurred and movement in liabilities to policyholders' to reflect the extent to which unit-linked policyholders, in particular, participate in the investment performance experienced in the associated asset portfolios.

·    

Gains less losses from financial investments

	Half-year to
	30 June 2010 US$m		30 June 2009 US$m		31 December 2009 US$m
Net gains/(losses) from disposal of:
-. debt securities .............................................................................	382		329		134
-. equity securities ..........................................................................	223		268		139
-. other financial investments ........................................................	(8)		7		1
	597		604		274
Impairment of available-for-sale equity securities ...............................	(40)		(281)		(77)
Gains less losses from financial investments .......................................	557		323		197

Reported net gains from financial investments of US$557 million were US$234 million higher than in the first half of 2009. On an underlying basis, excluding a US$62 million accounting gain arising from the reclassification of Bao Viet as an associate following the purchase of additional shares, they increased by US$147 million. This was primarily from a reduction in the level of impairments on available-for-sale equity securities.

Net gains on the disposal of debt securities increased. These gains were primarily attributable to the sale of assets by Balance Sheet Management and by Global Markets, including available-for-sale government debt securities and mortgage-backed securities.

Net gains on the disposal of equity securities were lower than in the first half of 2009. Disposal gains in the private equity portfolios increased. However, this was more than offset by the non-recurrence of the gain on disposal of holdings of Visa Inc. shares in 2009.

Net earned insurance premiums

	Half-year to
	30 June 2010 US$m		30 June 2009 US$m		31 December 2009 US$m
Gross insurance premium income ........................................................	5,902		5,255		5,736
Reinsurance premiums ........................................................................	(236)		(243)		(277)
Net earned insurance premiums ..........................................................	5,666		5,012		5,459

Reported net earned insurance premiums amounted to US$5.7 billion, 13 per cent higher than in the first half of 2009. On an underlying basis, they increased by 11 per cent.

Growth in net earned insurance premiums was driven by continuing strong performance in the Hong Kong life insurance business, with higher sales of unit-linked, whole life and deferred annuity products reflecting successful sales campaigns and additional sales staff. The life insurance product designed for high net worth individuals introduced in Hong Kong in 2009 performed well.

Net earned insurance premiums also grew strongly in Latin America, driven by improved economic conditions and stronger sales, mainly in unit-linked pension products. Within other regions, successful marketing campaigns in France, Malaysia and Taiwan, and new product launches in the latter, resulted in higher sales.

Partly offsetting this growth was the effect of closing the loss-making motor underwriting business in the UK during the second half of 2009. In the US, the run-off of payment protection insurance following the decision to cease new real estate lending in HSBC Finance, led to a decrease in net earned premiums.

As a consequence of the increase in premiums from new business noted above, there was an increase in liabilities to policyholders reported in 'Net insurance claims incurred and movement in liabilities to policyholders' which reflected new liabilities established on the inception of policies. The relationship between insurance premiums and movement in liabilities to policyholders becomes more direct as the level of policyholder participation in asset performance increases; this is particularly the case for unit-linked contracts and, to a lesser extent, those with DPF.

Strong growth in insurance premiums reported in Hong Kong and Latin America.

Other operating income

	Half-year to
	30 June 2010 US$m		30 June 2009 US$m		31 December 2009 US$m
Rent received .....................................................................................	297		273		274
Gains/(losses) recognised on assets held for sale ..................................	(100)		(120)		5
Valuation gains/(losses) on investment properties ...............................	(8)		(43)		19
Gain on disposal of property, plant and equipment, intangible assets and non-financial investments ........................................................	274		305		728
Gains arising from dilution of interests in associates ...........................	188		-		-
Change in present value of in-force long-term insurance business .......	325		290		315
Other .................................................................................................	502		453		289
Other operating income .....................................................................	1,478		1,158		1,630

Reported other operating income of US$1.5 billion was 28 per cent higher than in the first half of 2009. Income in the first half of 2010 included a gain of US$188 million following the dilution of HSBC's holding in Ping An Insurance, gains of US$107 million from the sale of HSBC Insurance Brokers and US$66 million from the disposal of the Group's interest in the Wells Fargo HSBC Trade Bank, and a write-down of US$47 million resulting from an agreement to sell HSBC's shareholding in British Arab Commercial Bank plc.

Reported results in the first half of 2009 included gains of US$280 million from the sale of the card merchant-acquiring business. On an underlying basis, excluding the items referred to above, other operating income increased by 34 per cent, mainly from gains on the disposal of property in France and the US.

Net losses recognised on assets held for sale declined, reflecting lower losses on foreclosed properties held for sale in HSBC Finance due to the stabilisation in property prices. In addition, a US$77 million loss was recognised on the sale of the US vehicle finance servicing operations and an associated US$1.0 billion loan portfolio to Santander Consumer USA Inc.

The improvement in the property markets in Hong Kong and the UK led to gains and lower valuation losses, respectively, on investment properties, resulting in reduced net investment valuation losses for HSBC. In addition, property gains of US$194 million and US$56 million, respectively, were recognised on the sale and leaseback of HSBC's Paris and New York headquarters.

Favourable movements in the present value of in-force ('PVIF') long-term insurance business were mainly due to an increase in sales of life insurance products in Hong Kong. These were partly offset by the non-recurrence of gains recognised in the first half of 2009 following the refinement of the income recognition methodology in HSBC Finance.

Gains recognised in the first half of 2009 on the sale of US prime residential mortgage portfolios did not recur.

Net insurance claims incurred and movement in liabilities to policyholders

	Half-year to
	30 June 2010 US$m		30 June 2009 US$m		31 December 2009 US$m
Insurance claims incurred and movement in liabilities to policyholders:
- gross ...........................................................................................	5,281		5,505		7,055
- reinsurers' share ..........................................................................	(160)		2		(112)
- net17 ...........................................................................................	5,121		5,507		6,943

For footnote, see page 95.

Reported net insurance claims incurred and movement in liabilities to policyholders decreased by 7 per cent to US$5.1 billion. On an underlying basis, they fell by 8 per cent.

This largely reflected a decline in the value of assets backing policyholder funds compared with an increase in the first half of 2009, which was partly offset by new business growth, mainly in Hong Kong, Brazil and France, as described in 'Net earned insurance premiums'.

A fall in asset values, particularly in the UK, France and Hong Kong, driven by weaker investment markets, led to a decrease in liabilities to policyholders on unit-linked insurance contracts and, to a certain extent, participating policies whose policyholders share in the investment performance of the assets supporting the policies. In comparison, the first half of 2009 included an increase in policyholder liabilities reflecting higher asset values. The gains or losses experienced on the financial assets designated at fair value held to support insurance contract liabilities and investment contracts with DPF are reported in 'Net income from financial instruments designated at fair value'.

An increase in the reserves in the UK motor insurance book was recorded in the first half of 2009 to reflect the rising incidence and severity of claims at that time. This business has since been placed into run-off. There was no further deterioration in claims in the first half of 2010 and, accordingly, no equivalent strengthening in reserves was required.

Net insurance claims incurred and movement in liabilities to policyholders declined in the US, reflecting the run-off of payment protection insurance following the decision to cease new real estate lending in HSBC Finance and the non-recurrence of reserve strengthening in the US reinsurance business.

Loan impairment charges and other credit risk provisions

	Half-year to
	30 June 2010 US$m		30 June 2009 US$m		31 December 2009 US$m
Loan impairment charges
New allowances net of allowance releases ........................................	7,687		13,710		12,122
Recoveries of amounts previously written off .................................	(453)		(377)		(513)
	7,234		13,333		11,609
Individually assessed allowances ..........................................................	1,069		2,250		2,208
Collectively assessed allowances .........................................................	6,165		11,083		9,401
Impairment of available-for-sale debt securities ..................................	282		591		883
Other credit risk provisions ................................................................	7		7		65
Loan impairment charges and other credit risk provisions ..................	7,523		13,931		12,557
	%		%		%
- as a percentage of net operating income excluding the effect of fair value movements in respect of credit spread on own debt and before loan impairment charges and other credit risk provisions ............	21.8		37.5		35.4
Impairment charges on loans and advances to customers as a percentage of gross average loans and advances to customers (annualised) ........	1.7		3.1		2.6
	US$m		US$m		US$m
Customer impaired loans ....................................................................	27,887		31,826		30,606
Customer loan impairment allowances ................................................	22,033		27,701		25,542

Reported loan impairment charges and other credit risk provisions of US$7.5 billion were US$6.4 billion or 46 per cent lower than in the first half of 2009. On an underlying basis, they were US$6.8 billion or 47 per cent less than in the first half of 2009.

At 30 June 2010, the aggregate balance of outstanding customer loan impairment allowances stood at US$22 billion and represented 2.6 per cent of gross customer advances (net of reverse repos and settlement accounts), compared with 3.1 per cent at 30 June 2009.

The marked reduction in loan impairment charges compared with the first half of 2009 occurred in all customer groups. It was largely driven by the planned run-down of lending balances in higher-risk portfolios, a general upturn in credit quality as economic conditions improved, and the introduction of stronger underwriting and collection processes. The bulk of the improvement was in the US, where better economic conditions underpinned a slowdown in the pace of job losses and greater stability in house prices, particularly in the low to mid-price segments served by HSBC Finance. In addition, several large loan impairment charges generated in 2009 from individually significant Global Banking and Markets accounts were not replicated.

Underlying loan impairment charges and other credit risk provisions were 47 per cent lower than in the first half of 2009.

In the US, loan impairment charges declined by 47 per cent to US$4.4 billion, driven by lower balances and an improvement in economic conditions.

In Consumer Lending and Mortgage Services, loan impairment charges fell by 29 per cent and 25 per cent, respectively, reflecting the continued run-off of balances, lower delinquency and improved economic conditions.

In the Card and Retail Services portfolio, loan impairment charges fell by US$1.4 billion or 51 per cent, driven by reduced balances, improved economic and credit conditions, lower delinquency levels and higher repayment activity, all of which generated an improved outlook for future loss estimates. In the Personal Financial Services business of HSBC Bank USA, lower loan impairment charges reflected the stabilisation of both delinquencies and loss severity and lower balances, which combined to have a favourable effect on future loss estimates. Loan impairment charges in the US Commercial Banking business also decreased as improved economic conditions and managed reductions in exposures led to fewer customer downgrades and lower impairment of assets.

In Global Banking and Markets, loan impairment charges and other credit risk provisions declined by 72 per cent to US$500 million. Loan impairment charges decreased, reflecting improved credit conditions and the non-recurrence of the significant loan impairments taken in relation to a small number of clients in the first half of 2009. The decline was partly offset by higher specific loan impairment charges in the Middle East, driven by a deterioration in credit quality which continued into the first half of 2010. This, combined with further restructuring, led to additional loan impairment charges in the region. A reduction in other credit risk provisions in Global Banking and Markets reflected a rise in asset-backed securities' prices and a decline in default rates.

In the UK Personal Financial Services business, loan impairment charges of US$625 million were 28 per cent less than in the first half of 2009. The decline was due to lower delinquencies across all products as interest rates continued at historical lows, improved collection activity, a change in mix to secured lending and a rise in house prices which lessened the collective impairment charge against the residential mortgage portfolio. In UK Commercial Banking, loan impairment charges declined by 32 per cent, reflecting the better economic backdrop and the continued benefit of low interest rates.

In Latin America, loan impairment charges and other credit risk provisions of US$820 million fell by 48 per cent with improvements seen in many countries in the region. In Personal Financial Services, loan impairment charges decreased by 49 per cent to US$661 million, mainly in Mexico as balances in the cards portfolio declined and actions taken in previous periods to improve credit quality and increase collections continued. In the Commercial Banking portfolios, loan impairment charges were US$160 million, 47 per cent less than the first half of 2009, with lower charges in Brazil in the mid-market and Business Banking segments.

The situation in India improved notably on the first half of 2009, with loan impairment charges of US$53 million, 83 per cent below the comparable period. In Personal Financial Services, lower loan impairment charges reflected the Group's success in reducing the troubled elements within the credit card and unsecured portfolios, and tighter credit criteria. The specific impairment charges on technology-related exposures reported in the first half of 2009 in India did not recur, helping Commercial Banking to reduce loan impairment charges by 97 per cent to US$3 million.

In Hong Kong, the improvement in economic conditions resulted in a decline in unemployment and fewer bankruptcies and individual corporate failures, reducing the loan impairment charge by 77 per cent to US$63 million.

In the Middle East, loan impairment charges and other credit risk provisions increased by 12 per cent in the first half of 2010 to US$438 million, mainly in Global Banking and Markets (see above). The increase was offset by a 43 per cent decline in loan impairment charges in Commercial Banking as incremental loan impairment allowances were required on only a small number of customer accounts. In Personal Financial Services, loan impairment charges also fell, notably in the United Arab Emirates ('UAE'), as steps taken to enhance the quality of the personal lending portfolio and improve collections took effect. 

In Private Banking, loan impairment charges were negligible compared with a small charge in 2009 as releases in North America fully offset a low level of loan impairment charges in other regions.

Operating expenses

	Half-year to
	30 June 2010		30 June 2009		31 December 2009
	US$m		US$m		US$m
By expense category
Employee compensation and benefits .................................................	9,806		9,207		9,261
Premises and equipment (excluding depreciation and impairment) ......	2,089		2,048		2,051
General and administrative expenses ...................................................	4,925		4,210		5,083
Administrative expenses .....................................................................	16,820		15,465		16,395
Depreciation and impairment of property, plant and equipment .........	834		814		911
Amortisation and impairment of intangible assets ..............................	457		379		431
Operating expenses ............................................................................	18,111		16,658		17,737

	At 30 June 2010		At 30 June 2009		At 31 December 2009
Staff numbers (full-time equivalent)
Europe ...............................................................................................	73,431		79,132		76,703
Hong Kong .........................................................................................	28,397		28,259		27,614
Rest of Asia-Pacific ............................................................................	88,605		87,567		87,141
Middle East ........................................................................................	8,264		8,819		8,281
North America ...................................................................................	33,988		37,021		35,458
Latin America ....................................................................................	54,886		54,812		54,288
Staff numbers .....................................................................................	287,571		295,610		289,485

Operating expenses increased by 9 per cent to US$18.1 billion on a reported basis and by 5 per cent on an underlying basis. There were a number of one-off items, including payroll taxes levied on 2009 bonuses in the UK and France, amounting in aggregate to US$367 million, and the curtailment of certain benefits delivered through pension schemes, which generated accounting credits of US$148 million and US$480 million (US$499 million as reported) in the first halves of 2010 and 2009, respectively. After allowing for these items, expenses were broadly unchanged as the Group continued to leverage its global scale and technology platforms to make sustainable reductions in its cost base, while positioning itself for future growth.

Underlying cost efficiency ratio slightly above target range at 53.1 per cent following investment in expanding the business and transforming operations.

Employee compensation and benefits increased by 3 per cent due to the net effect of the curtailment gains and the payroll tax referred to above. Excluding these items, staff costs fell by 4 per cent as staff numbers declined. During the second quarter of 2010, HSBC began to recruit selectively to position itself for an upturn in the global economy. Performance-related costs were US$246 million lower in Global Banking and Markets, as performance declined from the exceptional levels reported in the first half of 2009. Costs in the US also declined with the non-recurrence of restructuring costs associated with the closure of the Consumer Lending branch network in the first half of 2009.

Premises and equipment costs were broadly in line with the first half of 2009. Lower rental costs following the closure of the Consumer Lending branch offices and the non-recurrence of the related restructuring costs were offset by higher rental costs in the UK following the sale and leaseback of 8 Canada Square, London in 2009, and expansion and refurbishment costs in Europe, Rest of Asia-Pacific and Latin America. IT costs also rose, mainly in Europe.

General and administrative expenses rose, reflecting in part an increased expenditure on services contracted out in Europe and in the US. Marketing and advertising costs were increased, primarily in the US and Brazil, to position HSBC for growth as the economic recovery boosted confidence and activity in these markets.

The One HSBC programme continued to invest in infrastructure and process redesign in order to contribute to progress through the better use of direct channels, increased automation of manual processes, enhanced utilisation of Global Service Centres and elimination of redundant systems over time.

Cost efficiency ratios

	Half-year to
	30 June 2010 %		30 June 2009 %		31 December 2009 %
HSBC ...............................................................................................	50.9		47.9		56.4
Personal Financial Services ..........................................................	56.2		49.1		54.3
Europe ...............................................................................................	66.9		65.7		71.3
Hong Kong .........................................................................................	34.1		34.6		35.1
Rest of Asia-Pacific ............................................................................	82.8		79.9		82.4
Middle East ........................................................................................	56.3		48.7		59.0
North America ...................................................................................	45.3		36.9		39.4
Latin America ....................................................................................	70.5		62.9		70.4
Commercial Banking .....................................................................	48.5		43.2		49.5
Europe ...............................................................................................	51.2		40.7		54.3
Hong Kong .........................................................................................	30.7		33.4		34.0
Rest of Asia-Pacific ............................................................................	49.4		45.4		48.4
Middle East ........................................................................................	39.9		32.1		35.7
North America ...................................................................................	43.1		49.3		46.3
Latin America ....................................................................................	65.7		54.4		59.5

Share of profit in associates and joint ventures

	Half-year to
	30 June 2010 US$m		30 June 2009 US$m		31 December 2009 US$m
Associates
Bank of Communications Co., Limited ...........................................	467		358		396
Ping An Insurance (Group) Company of China, Limited .................	377		235		316
Industrial Bank Co., Limited ...........................................................	146		92		124
The Saudi British Bank ...................................................................	101		136		36
Other ..............................................................................................	84		19		23
Share of profit in associates ................................................................	1,175		840		895
Share of profit in joint ventures .........................................................	12		27		19
Share of profit in associates and joint ventures ...................................	1,187		867		914

The share of profit in associates and joint ventures was US$1.2 billion, an increase of 37 per cent compared with the first half of 2009 on both reported and underlying bases.

This increase was driven by higher contributions from the mainland China associates.

HSBC's share of profits in associates and joint ventures increased by 37 per cent, principally in mainland China.

HSBC's share of profits from the Bank of Communications Co., Limited ('Bank of Communications') was higher than in the first half of 2009. Net interest income rose with higher average balances and fee income improved, benefiting from growth in the cards business, wealth management and settlement and agent services.

Profits from Ping An Insurance increased by 60 per cent, driven by strong sales growth as the company capitalised on the improved economic conditions.

Profits from Industrial Bank Co., Limited ('Industrial Bank') increased, driven by a decline in loan impairment charges which reflected an improvement in the credit environment.

HSBC's share of profits from The Saudi British Bank decreased due to higher loan impairment charges and a decline in revenue following a contraction in lending as a result of the challenging operating conditions faced by customers in the region.

Economic profit/(loss)

HSBC's internal performance measures include economic profit/(loss), a calculation which compares the return on financial capital invested in HSBC by its shareholders with the cost of that capital. HSBC prices its cost of capital internally and the difference between that cost and the post-tax profit attributable to ordinary shareholders represents the amount of economic profit/(loss) generated. Economic profit/ (loss) generated is used by management as one input in deciding where to allocate capital and other resources. 

In order to concentrate on external factors rather than measurement bases, HSBC emphasises the trend in economic profit/(loss) ahead of absolute amounts within business units. The Group's long term cost of capital is reviewed annually and for 2010 it was revised to 11 per cent from the 10 per cent used in 2009. The Group uses the Capital Asset Pricing Model to determine its cost of capital. The main drivers of the increase were the rise in the Group's beta along with the risk free rate. The following commentary is on a reported basis.

The economic loss decreased by US$2.1 billion to US$1.1 billion. The increase in profit attributable to shareholders was offset by the effect of higher average invested capital and the change in the cost of capital used.

The increase in profit attributable to shareholders was predominantly driven by lower loan impairment charges, which more than offset lower income and increased expenses. Personal Financial Services in the US was the primary driver of lower loan impairment charges due to an improvement in the economic environment and the run-off of the Consumer Lending portfolio. Income was lower in Global Banking and Markets following the exceptional first half in 2009 and also in Personal Financial Services, reflecting the effect of the run-off portfolio in the US.

The increase in average invested capital compared with the first half of 2009 primarily reflected the rights issue in April 2009, which did not impact average shareholders' equity for the full period.

Economic loss

	Half-year to
	30 June 2010				30 June 2009				31 December 2009
	US$m		%18		US$m		%18		US$m		%18
Average total shareholders' equity ...........................	131,198				105,734				124,970
Adjusted by:
Goodwill previously amortised or written off ........	8,123				8,123				8,123
Property revaluation reserves ...............................	(786)				(804)				(794)
Reserves representing unrealised losses on effective cash flow hedges ...............................................	25				582				191
Reserves representing unrealised losses on available-for-sale securities ..............................................	7,590				19,456				12,975
Preference shares and other equity instruments ....	(3,661)				(3,538)				(3,538)
Average invested capital19 ........................................	142,489				129,553				141,927
Return on invested capital20 .....................................	6,629		9.4		3,213		5.0		2,352		3.3
Benchmark cost of capital .......................................	(7,772)		(11.0)		(6,424)		(10.0)		(7,155)		(10.0)
Economic loss and spread .........................................	(1,143)		(1.6)		(3,211)		(5.0)		(4,803)		(6.7)

For footnotes, see page 95.

Balance sheet

	At 30 June 2010 US$m		At 30 June 2009 US$m		At 31 December 2009 US$m
ASSETS
Cash and balances at central banks ........................................................	71,576		56,368		60,655
Trading assets .......................................................................................	403,800		414,358		421,381
Financial assets designated at fair value .................................................	32,243		33,361		37,181
Derivatives ...........................................................................................	288,279		310,796		250,886
Loans and advances to banks .................................................................	196,296		182,266		179,781
Loans and advances to customers ..........................................................	893,337		924,683		896,231
Financial investments ...........................................................................	385,471		353,444		369,158
Other assets ..........................................................................................	147,452		146,567		149,179
Total assets ...........................................................................................	2,418,454		2,421,843		2,364,452
LIABILITIES AND EQUITY
Liabilities
Deposits by banks .................................................................................	127,316		129,151		124,872
Customer accounts ................................................................................	1,147,321		1,163,343		1,159,034
Trading liabilities ..................................................................................	274,836		264,562		268,130
Financial liabilities designated at fair value ............................................	80,436		77,314		80,092
Derivatives ...........................................................................................	287,014		298,876		247,646
Debt securities in issue ...........................................................................	153,600		156,199		146,896
Liabilities under insurance contracts ......................................................	52,516		48,184		53,707
Other liabilities .....................................................................................	152,092		158,916		148,414
Total liabilities ......................................................................................	2,275,131		2,296,545		2,228,791
Equity
Total shareholders' equity .....................................................................	135,943		118,355		128,299
Non-controlling interests ......................................................................	7,380		6,943		7,362
Total equity ..........................................................................................	143,323		125,298		135,661
Total equity and liabilities .....................................................................	2,418,454		2,421,843		2,364,452

A more detailed consolidated balance sheet is contained in the Financial Statements on page 206.

Movement from 31 December 2009 to 30 June 2010

Total assets amounted to US$2.4 trillion, 2 per cent higher than at 31 December 2009. After excluding currency movements, underlying assets increased by 7 per cent. The following commentary is on an underlying basis.

HSBC continued to attract both customer and bank deposits in the first half of 2010 and maintained a strong and liquid balance sheet. In addition, the Group was able to further strengthen its capital base with an issue of US$3.8 billion of innovative tier 1 securities. The consumer finance portfolios continued to run off, and unsecured portfolios in Mexico, India and Europe reduced as a result of tighter underwriting criteria. This decrease in balances was mitigated by growth in lending in Asia and in residential mortgages in the UK. There was also a rise in derivative assets and liabilities driven by higher mark-to-market movements following a downward shift in interest rate yield curves.

The Group's reported tier 1 ratio increased from 10.8 per cent to 11.5 per cent, mainly due to internal capital generation, the issuance of innovative tier 1 securities and a reduction in the level of risk-weighted assets. For further details of capital and risk weighted assets, see pages 189 to 195.

Assets

Cash and balances at central banks increased by 22 per cent as a result of higher period-end cash balances, which are inherently volatile, predominantly in Europe. This was partly offset by lower balances in North America, as funds were placed in reverse repo and available-for-sale investments.

Trading assets grew by 2 per cent, driven by an increase in settlement account balances, which vary considerably in proportion to the volume of outstanding trades, along with higher holdings of government and government-agency debt securities as market volatility and customer demand increased. Money market placements also increased due to higher collateral posted to counterparties, in line with an increase in derivative liabilities. This was partly offset by a decrease in reverse repo balances due to lower yields, and decreased holdings of equity shares due to a reduction in trading activity.

Financial assets designated at fair value decreased by 6 per cent due to asset disposals in Europe during the first half of 2010.

Derivative assets grew by 26 per cent. This was driven by growth in the fair value of interest rate contracts due to downward shifts in major currency yield curves as the prospective rate of global economic growth reduced during the second quarter. An increased number of open transactions also drove a rise in the notional value of outstanding contracts. A higher volume of transactions executed through clearing houses enabled a greater level of netting between derivative assets and liabilities.

Loans and advances to customers grew by 4 per cent, driven by targeted growth in Hong Kong and Rest of Asia-Pacific, mainly in the Commercial Banking and Global Banking segments reflecting growth in trade finance in particular. In Europe, growth was driven by a continued increase in mortgage balances in the UK, along with higher balances in the securities services and Private Banking businesses. North America reported a reduction in the consumer finance portfolio as the business continued to run-off, coupled with a decline in credit card balances due to management actions to reduce risk and an increased focus by consumers on reducing credit card debt. However, these factors were partly offset by an increase in reverse repo balances with customers.

Loans and advances to banks increased by 14 per cent. This was driven by an increase in reverse repos collateralised with government securities in Europe. There was also a rise in central bank deposit balances in Latin America and Rest of Asia-Pacific.

Financial investments increased by 7 per cent due to additional purchases of available-for-sale treasury bills and other government and government-agency debt securities, particularly in Europe and North America. These included a notable increase in UK gilts.

Other assets were approximately in line with 31 December 2009.

Liabilities

Deposits by banks increased by 11 per cent, driven by an increase in funds placed with HSBC by central banks and other financial institutions in Asia.

Customer account balances were 3 per cent higher, driven by an increase in repo balances with customers in Europe. Savings balances increased in most regions, and growth in Premier deposits contributed to an increase in current account balances, as customers responded well to HSBC's marketing and brand strength.

Trading liabilities rose by 10 per cent, driven by an increase in settlement account balances, which tend to vary in proportion to the volume of outstanding trades. Furthermore, money market deposits rose due to an increase in collateral posted by counterparties, which reflected the higher value of derivative assets. In Europe, there was an increase in short bond positions; these are held to hedge long swap trades which rose due to an increase in client demand. This was partly offset, however, by a reduction in repo balances used to meet internal funding requirements. In contrast, repo balances increased in North America due to increased trading volumes of treasury and government agency securities, and corporate bonds, driven by market volatility in the bond market.

Financial liabilities designated at fair value grew by 5 per cent due to new bond issues in Europe.

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

Debt securities in issue rose by 8 per cent, partly due to new issuances in Europe. This was partly offset by lower funding requirements in North America due to the continued run-off of the consumer finance business. 

Liabilities under insurance contracts grew by 6 per cent, driven by higher sales of life insurance products in Hong Kong.

Other liabilities increased by 5 per cent compared with 31 December 2009.

Equity

Total shareholders' equity increased by 11 per cent, driven by profits generated during the period and the issue of US$3.8 billion of Perpetual Subordinated Capital Securities, an innovative form of tier 1 securities, during June 2010. The available-for-sale reserve deficit also decreased from US$10.0 billion at 31 December 2009 to US$5.5 billion at 30 June 2010, which largely reflected an increase in asset prices as market conditions improved.

Reconciliation of reported and underlying changes in assets and liabilities

	30 June 2010 compared with 31 December 2009
HSBC	31 Dec 09 as reported US$m		Currency translation US$m		31 Dec 09 at 30 Jun 10 exchange rates US$m		Underlying change US$m		30 Jun 10 as reported US$m		Reported change %		Under- lying change %
Cash and balances at central banks ................................................	60,655		(1,856)		58,799		12,777		71,576		18		22
Trading assets .............................	421,381		(27,158)		394,223		9,577		403,800		(4)		2
Financial assets designated at fair value .......................................	37,181		(2,830)		34,351		(2,108)		32,243		(13)		(6)
Derivative assets .........................	250,886		(21,532)		229,354		58,925		288,279		15		26
Loans and advances to banks .......	179,781		(7,620)		172,161		24,135		196,296		9		14
Loans and advances to customers	896,231		(40,403)		855,828		37,509		893,337		-		4
Financial investments .................	369,158		(9,341)		359,817		25,654		385,471		4		7
Other assets ................................	149,179		(3,777)		145,402		2,050		147,452		(1)		1
Total assets .................................	2,364,452		(114,517)		2,249,935		168,519		2,418,454		2		7
Deposits by banks .......................	124,872		(10,458)		114,414		12,902		127,316		2		11
Customer accounts ......................	1,159,034		(43,055)		1,115,979		31,342		1,147,321		(1)		3
Trading liabilities ........................	268,130		(17,713)		250,417		24,419		274,836		3		10
Financial liabilities designated at fair value .................................	80,092		(3,136)		76,956		3,480		80,436		-		5
Derivative liabilities ....................	247,646		(21,496)		226,150		60,864		287,014		16		27
Debt securities in issue .................	146,896		(5,281)		141,615		11,985		153,600		5		8
Liabilities under insurance contracts .................................	53,707		(3,971)		49,736		2,780		52,516		(2)		6
Other liabilities ...........................	148,414		(3,290)		145,124		6,968		152,092		2		5
Total liabilities ............................	2,228,791		(108,400)		2,120,391		154,740		2,275,131		2		7
Total shareholders' equity ...........	128,299		(5,993)		122,306		13,637		135,943		6		11
Non-controlling interests ............	7,362		(124)		7,238		142		7,380		-		2
Total equity ................................	135,661		(6,117)		129,544		13,779		143,323		6		11
Total equity and liabilities ...........	2,364,452		(114,517)		2,249,935		168,519		2,418,454		2		7

In 2010, the effect of acquisitions and disposals was not significant.

Other information

Funds under management

	Half-year to
	30 June                2010		30 June                2009		31 December                2009
	US$bn		US$bn		US$bn
Funds under management
At beginning of period ........................................................................	857		735		763
Net new money ..................................................................................	25		1		35
Value change ......................................................................................	(16)		21		55
Exchange and other ............................................................................	(38)		6		4
At end of period .................................................................................	828		763		857
Funds under management by business
HSBC Global Asset Management .........................................................	407		387		423
Private Banking .................................................................................	245		223		251
Affiliates ............................................................................................	3		3		3
Other ..................................................................................................	173		150		180
	828		763		857

Funds under management at 30 June 2010 amounted to US$828 billion, a decrease of 3 per cent compared with 31 December 2009. Both Global Asset Management and Private Banking fund holdings decreased.

Global Asset Management funds decreased by 4 per cent compared with 31 December 2009 to US$407 billion, despite strong net inflows of US$12 billion. This decline was primarily due to the foreign exchange translation of non-US dollar denominated funds under management and falls in global equity markets. Emerging markets funds increased during the first half of 2010, driven by net inflows. HSBC remains one of the world's largest emerging market asset managers with funds under management of US$93 billion at 30 June 2010.

Private Banking funds under management decreased by 2 per cent to US$245 billion compared with 31 December 2009, as net inflows of US$9 billion were offset by adverse foreign exchange and equity market movements.

Client assets, which provide an indicator of overall Private Banking volumes and include funds under management, were US$354 billion, down by US$13 billion compared with 31 December 2009.

Other funds under management, the majority of which are held by a corporate trust business in Asia, decreased by 4 per cent to US$173 billion.

Assets held in custody and under administration

Custody is the safekeeping and servicing of securities and other financial assets on behalf of clients. At 30 June 2010, assets held by HSBC as custodian amounted to US$4.9 trillion, 6 per cent lower than the US$5.2 trillion held at 31 December 2009. This was mainly due to adverse movements on foreign exchange.

HSBC's assets under administration business, which includes the provision of various support function activities including the valuation of portfolios of securities and other financial assets on behalf of clients, complements the custody business. At 30 June 2010, the value of assets held under administration by the Group amounted to US$2.5 trillion.

Review of transactions with related parties

The Financial Services Authority's ('FSA') Disclosure Rules and Transparency Rules require the disclosure of related party transactions that have taken place in the first six months of the current financial year and any changes in the related party transactions described in the Annual Report and Accounts 2009, that have or could have materially affected the financial position or performance of HSBC. A fair review has been undertaken and any such related party transactions have been disclosed in the Notes on the Financial Statements.

Ratios of earnings to combined fixed charges (and preference share dividends)

	Half-year to 30 June		Year ended 31 December
	2010		2009		2008		2007		2006		2005
Ratios of earnings to combined fixed charges and preference share dividends:21
- excluding interest on deposits .........................	7.28		2.64		2.97		6.96		7.22		9.16
- including interest on deposits ..........................	1.89		1.20		1.13		1.34		1.40		1.59
Ratios of earnings to combined fixed charges:21
- excluding interest on deposits .........................	8.25		2.99		3.17		7.52		7.93		9.60
- including interest on deposits ..........................	1.92		1.22		1.14		1.34		1.41		1.59

For footnote, see page 95.

 

 

 

END

 

 

IR UAOARRVAWAAR