Interim Results - Part 1
HSBC HOLDINGS PLC
13 August 1999
PART 1
Contents
Financial highlights
Overview of results
Group Chairman's comment
Consolidated profit and loss account
Consolidated balance sheet
Statement of total consolidated recognised gains and losses
Reconciliation of movements in consolidated shareholders' funds
Notes on the accounts
Review report of the auditors
Additional information
Financial highlights
Results for the half-year to 30 June 1999
Half-year to Half-year to
30JUN98 31DEC98 30JUN99
US$m US$m US$m £m HK$m
For the period
3,686 2,885 Profit before tax 4,068 2,510 31,531
2,402 1,916 Profit attributable 2,694 1,662 20,881
996 1,499 Dividends 1,118 690 8,665
At period-end
27,540 27,402 Shareholders' funds 31,642 20,093 245,510
41,523 41,092 Capital resources 44,990 28,569 349,077
Customer accounts and
344,297 343,252 deposits by banks 351,559 223,240 2,727,746
484,367 483,128 Total assets 496,520 315,290 3,852,498
297,598 301,950 Risk-weighted assets 294,016 186,700 2,281,270
Per share^
US$ US$ US$ £ HK$
0.30 0.24 Basic and diluted earnings 0.33 0.20 2.56
0.29 0.24 Headline earnings 0.33 0.20 2.56
0.123 0.185 Dividend 0.133 0.084^^ 1.03^^
3.41 3.38 Net asset value 3.76 2.39 29.20
Number of ordinary shares
in issue^
8,076m 8,097m US$0.50 8,407m
% % Ratios (annualised) %
Return on average
17.5 13.6 shareholders' funds 18.6
Post-tax return on
1.11 0.86 average assets 1.22
Post-tax return on
average risk-weighted
1.81 1.40 assets 2.02
Capital ratios
14.0 13.6 - total capital 15.3
9.8 9.7 - tier 1 capital 11.4
52.2 57.5 Cost:income ratio 52.0
^ 1998 comparatives have been restated to reflect the share capital
reorganisation as discussed in note 3 in the Notes on the Accounts.
^^ The first interim dividend of US$0.133 per share is translated at
the closing rate on 30 June 1999. Where required, the dividend
will be converted into sterling or Hong Kong dollars at the
exchange rates on 27 September 1999.
Overview of results
HSBC Holdings plc made a profit before tax of US$4,068 million in the
first six months of 1999, up US$382 million, or 10 per cent, over the
same period in 1998. Profit attributable to shareholders was US$2,694
million, an increase of 12 per cent.
The Directors have declared a first interim dividend for 1999 of
US$0.133 per ordinary share (1998 first interim dividend of US$0.123
per ordinary share), an increase of 8 per cent. The dividend will be
payable on 7 October 1999 in cash, in US dollars, sterling or Hong
Kong dollars, or a combination of these currencies, at the exchange
rates on 27 September 1999, with a scrip dividend alternative.
The dividend payable to holders of American Depositary Shares ('ADSs'),
each of which represents five ordinary shares, will be paid in cash in
US dollars on 7 October 1999 or invested in additional ADSs for
participants in the dividend reinvestment plan operated by HSBC Bank
USA as depositary.
Net interest income of US$5,913 million was US$262 million, or 5 per
cent, higher than the same period in 1998. Other operating income rose
by US$179 million, or 4 per cent, to US$4,497 million.
The Group's cost:income ratio improved marginally to 52.0 per cent
from 52.2 per cent in the same period in 1998.
The charge for bad and doubtful debts was US$1,082 million, which was
US$64 million lower than in the same period in 1998 and US$409 million
lower than the second half of 1998. Provisioning requirements in
respect of exposure to customers in Indonesia and Thailand were
significantly lower. The credit environment in Malaysia remained weak
and, elsewhere, deterioration was evident in respect of certain credits
related to mainland China. In view of the continuing economic
uncertainty, the special general provision of US$290 million in
respect of Asian risk raised in 1997 remained intact.
Gains on disposal of investments of US$155 million were slightly
higher than in the same period in 1998.
The total capital ratio and tier 1 capital ratio for the Group
strengthened to 15.3 per cent and 11.4 per cent, respectively, at 30
June 1999. Excluding the impact of the US$3 billion equity issue
raised as part of the financing for the proposed Republic New York
Corporation and Safra Republic Holdings S.A. acquisitions, the total
capital ratio and tier 1 capital ratio stood at 14.3 per cent and 10.4
per cent, respectively.
The Group's total assets at 30 June 1999 were US$497 billion, an
increase of US$13 billion, or 3 per cent, since year-end 1998.
Geographic Distribution of Results
Half-year Half-year Half-year
to 30JUN99 to 30JUN98 to 31DEC98
Profit before tax
US$m % US$m % US$m %
Europe 1,719 42.3 1,671 45.3 1,213 42.0
Hong Kong 1,391 34.2 1,285 34.9 1,142 39.6
Rest of Asia-Pacific 180 4.4 73 2.0 (34) (1.2)
North America 530 13.0 515 14.0 472 16.4
Latin America 248 6.1 142 3.8 92 3.2
Group profit before tax 4,068 100.0 3,686 100.0 2,885 100.0
Tax on profit on ordinary
activities (1,103) (1,032) (757)
Profit on ordinary
activities after tax 2,965 2,654 2,128
Minority interests (271) (252) (212)
Profit attributable 2,694 2,402 1,916
Group Chairman's comment
Our results for the first half of 1999 reflect the continuing strength
of the Western economies and a degree of recovery in some emerging
markets. The results also indicate solid progress in implementing our
strategy of 'Managing for Value' which we described in our 1998 Annual
Report.
For the first time in our history, operating profits before provisions
approached US$5 billion for a six-month period. The charge for bad and
doubtful debts was lower than in either half of 1998, resulting in profit
attributable to shareholders of US$2,694 million, an increase of 12 per
cent over the first half of 1998 and of 41 per cent over the second half.
The Group's return on equity in the first half of 1999 improved to 18.6
per cent and the Board has declared a dividend of US$0.133 per share, an
increase of 8 per cent over the comparable dividend paid at this
stage in 1998.
Our businesses in Europe and North America enjoyed stable operating
conditions and the credit environment remained good. Our core business in
the UK continued to perform strongly. Together, these regions accounted
for 55 per cent of our pre-tax profit. In the Hong Kong Special
Administrative Region of China, and elsewhere in the Asia-Pacific region,
we benefited from lower interest rates and reduced market volatility which
encouraged progress in restructuring in the corporate sector. In Latin
America, and particularly in Brazil, exceptionally high and volatile
interest rates had a favourable effect on our highly liquid balance sheet.
Our credit experience in the first half of 1999 was better than in the
corresponding period of 1998, which was marked by the need to make
significant provisions against exposures to borrowers in Indonesia and
Thailand. As we said when we announced our 1998 results, our long-
standing policy of making provisions promptly and conservatively made a
recurrence of such a high level of provisions unlikely. This proved to be
the case and our operations in those countries returned to profit in the
first half of 1999.
In Malaysia, the deterioration in credit quality experienced in the
second half of 1998 continued; provisions for bad debts were at similarly
unsatisfactory levels. During the first half of 1999 we began to
restructure our operations in Malaysia which will result in a reduction
in headcount of about 1,000 by the end of the year. Together with a
greater focus on personal business, this will put us in a position to
benefit from the expected recovery in Malaysia's economy.
In Hong Kong, declining interest rates and some improvement in asset
prices suggest that the economic environment is beginning to stabilise.
However, Hong Kong's recovery, and therefore its credit environment, was
still affected by weak domestic consumption due to high real interest
rates and subdued exports. Personal lending, including mortgages, which
accounted for over half of our lending in Hong Kong, remained relatively
robust in terms of asset quality. Our exposures to certain mainland China-
related companies showed continued weakness and approximately 30 per cent
of our net bad debt charge in Hong Kong and the Rest of Asia-Pacific
reflected this deterioration.
A key objective of our strategy is to increase fee-based services to our
customers and, in the first six months of the year, we made good progress
in a number of areas. In the UK, for example, our life, pensions and
investment business grew revenues by 18 per cent. In Hong Kong, our life
and investment business achieved an increase of more than 40 per cent in
revenues compared with the first half of 1998 while, in Brazil, funds
under management grew by some 60 per cent from the beginning of the year.
Our trading and capital markets businesses continued to perform well
with dealing profits improving to US$814 million, representing 8 per cent
of our operating revenues. Investment banking had a strong first half
with pre-tax profits growing to US$316 million. The quality of earnings
improved again and our strategy of continuing investment in this business
and strengthening its links with HSBC's commercial banks is proving
successful.
There have been a number of significant developments in the first half
of 1999. In May, we announced our intention to acquire Republic New York
Corporation and Safra Republic Holdings S.A. for a maximum consideration
of approximately US$10.3 billion. These acquisitions are still subject to
certain shareholder and regulatory approvals but we expect them to be
completed in the fourth quarter of 1999. They will increase our US
banking business significantly and virtually double the size of our
international private banking business. As such, they are entirely
consistent with our strategic plan.
We have continued to hold discussions with the Government of South Korea
on the possible acquisition of Seoul Bank. These discussions have proved
complex and, as yet, their final outcome is unknown. In April, we announced
our agreement with the Government of Malta to acquire a controlling
interest in Mid-Med Bank. That transaction was completed in June.
The reorganisation of the Group's share capital as part of the
preparations for a listing on the New York Stock Exchange was completed
successfully on 2 July. Our American Depositary Shares began trading in
New York on 16 July and, with our listings in London and Hong Kong, our
shares can now be traded for almost 18 hours a day.
During the period, we also augmented the Group's share capital, raising
US$3 billion on 10 May in a placement of new shares as part of the
financing of the proposed acquisition of Republic New York Corporation
and Safra Republic Holdings S.A. This transaction, the largest ever
single day equity offering, was placed within nine hours, predominantly
in London and Hong Kong.
The Group's capital position was strengthened significantly with the
tier 1 ratio increasing to 11.4 per cent at 30 June. Excluding the impact
of the US$3 billion equity raised, the tier 1 ratio improved to 10.4 per
cent at 30 June 1999 from 9.7 per cent at 31 December 1998, reflecting a
more liquid balance sheet and further reductions in capital requirements
for our trading books.
The outlook for the rest of 1999 still remains dependent on the
continuing strength of the US economy and the revival of demand in our
major markets in Asia. Since the economic downturn began in Asia in the
second half of 1997, we have maintained that it should be seen in the
context of three decades of remarkable economic progress and that, after
a period of adjustment, the region should resume its economic growth.
In much of the region, loan demand remains subdued and there is a
continued build-up of liquidity. Nevertheless, there is also clear
evidence of corporate restructuring and of a determination by governments
to address the issues which led to the recession. It is important that
this process continues and that Asian countries create a sound framework
for the next phase of their growth.
Although the first half of 1999 saw some important developments for our
Group in the USA and Europe, HSBC is determined to build on its major
presence in Asia. With our liquidity and capital strength, we are well
placed to benefit from increasing business volumes wherever we operate
and to take advantage of further opportunities which support our strategy
of profitable growth.
Sir John Bond
Group Chairman
2 August 1999
Consolidated Profit and Loss Account
Half-year to Half-year to 30 June 1999
30JUN98 31DEC98
US$m US$m Note US$m £m HK$m
16,425 17,195 Interest receivable 14,460 8,921 112,080
(10,774) (11,299) Interest payable (8,547) (5,273) (66,248)
5,651 5,896 Net interest income 4 5,913 3,648 45,832
4,318 4,190 Other operating income 5 4,497 2,775 34,856
9,969 10,086 Operating income 10,410 6,423 80,688
(5,205) (5,799) Operating expenses 6 (5,415) (3,341) (41,972)
Operating profit before
4,764 4,287 provisions 4,995 3,082 38,716
Provisions for bad and
(1,146) (1,491) doubtful debts 7 (1,082) (668) (8,386)
Provisions for
contingent
liabilities and
(184) 40 commitments (52) (32) (403)
Amounts written off fixed
(5) (80) asset investments (10) (6) (78)
3,429 2,756 Operating profit 3,851 2,376 29,849
Share of operating
profit in associated
76 60 undertakings 60 37 465
Gains/(losses) on
disposal of:
147 75 - investments 8 155 96 1,201
34 (6) - tangible fixed assets 2 1 16
Profit on ordinary
3,686 2,885 activities before tax 4,068 2,510 31,531
Tax on profit on
(1,032) (757) ordinary activities 9 (1,103) (681) (8,549)
Profit on ordinary
2,654 2,128 activities after tax 2,965 1,829 22,982
Minority interests:
(217) (176) - equity (234) (144) (1,814)
(35) (36) - non-equity (37) (23) (287)
Profit attributable to
2,402 1,916 shareholders 2,694 1,662 20,881
(996) (1,499) Dividends (1,118) (690) (8,665)
Retained profit for the
1,406 417 period 1,576 972 12,216
Consolidated Balance Sheet
At At At
30JUN98 31DEC98 30JUN99
US$m US$m Note US$m £m HK$m
ASSETS
Cash and balances at
2,329 3,048 central banks 2,591 1,645 20,104
Items in the course of
collection from
8,407 5,911 other banks 6,776 4,303 52,575
Treasury bills and other
15,773 21,980 eligible bills 23,683 15,039 183,756
Hong Kong SAR Government
certificates of
7,524 7,408 indebtedness 7,277 4,621 56,462
Loans and advances to
98,736 85,315 banks 96,136 61,046 745,919
Loans and advances to
241,100 235,295 customers 236,125 149,939 1,832,094
59,181 69,185 Debt securities 75,066 47,667 582,437
4,353 4,221 Equity shares 4,420 2,807 34,295
Interests in associated
921 889 undertakings 875 556 6,789
Other participating
292 309 interests 297 189 2,304
73 146 Intangible fixed assets 299 190 2,320
11,695 12,108 Tangible fixed assets 11,640 7,391 90,315
29,612 32,352 Other assets 26,564 16,867 206,110
Prepayments and accrued
4,371 4,961 income 4,771 3,030 37,018
484,367 483,128 Total assets 496,520 315,290 3,852,498
LIABILITIES
Hong Kong SAR currency
7,524 7,408 notes in circulation 7,277 4,621 56,462
41,288 34,342 Deposits by banks 35,920 22,809 278,703
303,009 308,910 Customer accounts 315,639 200,431 2,449,043
Items in the course of
transmission to
6,286 4,206 other banks 5,090 3,232 39,493
30,268 29,190 Debt securities in issue 29,084 18,469 225,663
46,469 48,662 Other liabilities 48,920 31,063 379,572
Accruals and deferred
4,282 4,805 income 4,696 2,982 36,436
Provisions for
liabilities and charges:
1,018 1,268 - deferred taxation 1,264 803 9,807
2,667 2,906 - other provisions 2,691 1,708 20,879
Subordinated liabilities:
3,250 3,247 - undated loan capital 3,223 2,046 25,007
7,318 7,597 - dated loan capital 7,718 4,901 59,884
Minority interests:
2,598 2,315 - equity 2,484 1,578 19,273
850 870 - non-equity 872 554 6,766
3,439 3,443 Called up share capital 10 3,514 2,231 27,265
24,101 23,959 Reserves 11 28,128 17,862 218,245
27,540 27,402 Shareholders' funds 31,642 20,093 245,510
484,367 483,128 Total liabilities 496,520 315,290 3,852,498
Statement of Total Consolidated Recognised Gains and Losses
Half- Half- Half-
year to year to year to
30JUN98 31DEC98 30JUN99
US$m US$m Figures in US$m US$m
Profit for the period attributable to
2,402 1,916 shareholders 2,694
- (38) Impairment of land and buildings -
Unrealised deficit on revaluation of
investment properties:
(122) (68) - subsidiaries -
(32) (24) - associates -
Unrealised deficit on revaluation of land
and buildings (excluding investment
(1,188) (599) properties) -
(92) 61 Exchange and other movements (764)
Total recognised gains and losses for the
968 1,248 period 1,930
Reconciliation of Movements in Consolidated Shareholders' Funds
Half- Half- Half-
year to year to year to
30JUN98 31DEC98 30JUN99
US$m US$m Figures in US$m US$m
Profit for the period attributable to
2,402 1,916 shareholders 2,694
(996) (1,499) Dividends (1,118)
1,406 417 1,576
Other recognised gains and losses
(1,434) (668) relating to the period (764)
New share capital subscribed, net
- - of costs 2,968
11 6 Shares issued under options 10
Amounts arising on shares issued in
477 107 lieu of dividends 450
Net addition to/(reduction in)
460 (138) shareholders' funds 4,240
Shareholders' funds at beginning of
27,080 27,540 period 27,402
27,540 27,402 Shareholders' funds at end of period 31,642
Notes on the Accounts
1. Accounting policies
The accounting policies adopted are consistent with those described
in the 1998 Annual Report and Accounts.
2. Dividend
The Directors have declared a first interim dividend for 1999 of
US$0.133 per ordinary share, an increase of 8 per cent. The
dividend will be payable on 7 October 1999 to shareholders on the
Register at the close of business on 20 August 1999. The dividend
will be payable in cash, in US dollars, sterling or Hong Kong
dollars, or a combination of these currencies, at the exchange
rates on 27 September 1999, with a scrip dividend alternative.
Particulars of these arrangements will be mailed to shareholders
on or about 27 August 1999, and elections will be required to be
made by 20 September 1999.
The dividend payable to holders of ADSs, each of which represents
five ordinary shares, will be paid in cash in US dollars on 7
October 1999 or invested in additional ADSs for participants in
the dividend reinvestment plan operated by HSBC Bank USA as
depositary.
The Company's shares will be quoted ex-dividend in London and in
Hong Kong on 16 August 1999. The ADSs will be quoted ex-dividend
in New York on 18 August 1999.
3. Earnings and dividend per share
Half-year Half-year Half-year
Figures in US$ to 30JUN99 to 30JUN98 to 31DEC98
Basic and diluted earnings
per share 0.33 0.30 0.24
Headline earnings per share 0.33 0.29 0.24
Dividend per share 0.133 0.123 0.185
Under the terms of the share capital reorganisation approved by the
High Court on 30 June 1999, each shareholder of HSBC Holdings plc
received three new ordinary shares of US$0.50 for each existing
ordinary share of HK$10 or ordinary share of 75p held on 2 July 1999.
Figures for earnings per share, dividend per share and net asset value
per share reflect the 3-for-1 share capital reorganisation that took
place on 2 July 1999.
Basic earnings per share was calculated by dividing the earnings of
US$2,694 million by the weighted average number of ordinary shares
outstanding of 8,167 million (first half of 1998: earnings of US$2,402
million and 8,045 million shares; second half of 1998: earnings of
US$1,916 million and 8,077 million shares).
Diluted earnings per share was calculated by dividing the basic
earnings, which require no adjustment for the effects of dilutive
ordinary potential shares, by the weighted average number of shares
outstanding plus the weighted average number of ordinary shares that
would be issued on conversion of all the dilutive potential ordinary
shares of 8,237 million (first half of 1998: 8,114 million shares;
second half of 1998: 8,140 million shares).
The headline earnings per share, calculated in accordance with the
definition in the Institute of Investment Management and Research
('IIMR') Statement of Investment Practice No. 1, 'The Definition of IIMR
Headline Earnings', increased by 12 per cent. The headline earnings
per share excluded the gains on the sale of fixed assets (other than
investment securities) and included the add back of amortised
goodwill.
4. Net interest income
Half year to Half year to Half Year to
Figures in US$m 30JUN99 30JUN98 31DEC98
Net interest income 5,913 5,651 5,896
Average interest-
earning assets 413,778 398,209 413,563
Net interest spread (per cent) 2.35 2.15 2.33
Net interest margin (per cent) 2.88 2.86 2.83
5. Other operating income
Half-year to Half-year to Half-year to
Figures in US$m 30JUN99 30JUN98 31DEC98
Dividend income 73 82 66
Fees and commissions
(net) 2,887 2,866 2,870
Dealing profits 814 657 492
Other 723 713 762
Total other operating
income 4,497 4,318 4,190
6. Operating expenses
Half-year Half-year Half-year
to 30JUN99 to 30JUN98 to 31DEC98
Figures in US$m
Staff costs 3,266 3,100 3,221
Premises and equipment (excluding depreciation):
- vacant space
provisions
arising from the move
to Canary Wharf - - 180
- other 606 619 655
Other administrative
expenses 1,072 1,069 1,246
Administrative
expenses 4,944 4,788 5,302
Depreciation and
amortisation 471 417 497
Operating expenses 5,415 5,205 5,799
Cost:income ratio (per cent) 52.0 52.2 57.5
7. Bad and doubtful debts
Half- Half- Half-
year to year to year to
Figures in US$m 30JUN99 30JUN98 31DEC98
Profit and loss account charge
Loans and advances to customers:
- specific charge:
new provisions 1,493 1,376 1,897
releases and recoveries (389) (289) (366)
- net general (release)/charge (20) 60 (50)
Customers' bad and doubtful debt
charge 1,084 1,147 1,481
Loans and advances to banks:
- net specific (release)/charge (2) (1) 10
Total bad and doubtful debt charge 1,082 1,146 1,491
Total outstanding provisions
Loans and advances to customers:
- specific provisions 5,200 3,774 4,608
- general provisions 1,986 2,077 2,019
7,186 5,851 6,627
Loans and advances to banks:
- specific provisions 26 45 31
Total provisions 7,212 5,896 6,658
Interest in suspense 933 715 768
8. Gains on disposal of investments
Half-year Half-year Half-year
to 30JUN99 to 30JUN98 to 31DEC98
Figures in US$m
Gains on disposal of:
- investment securities 142 138 72
- part of a business 10 - -
- associates 3 - 3
- subsidiaries - 9 -
155 147 75
HSBC Private Equity reported a US$47 million profit from venture capital
investment disposals (first half of 1998: US$71 million; second half of 1998:
US$24 million). Hang Seng Bank recorded profits on the sale of listed equity
investments of US$12 million (first half of 1998: US$8 million; second
half of 1998: nil).
9. Tax on profit on ordinary activities
Half-year Half-year Half-year
to 30JUN99 to 30JUN98 to 31DEC98
Figures in US$m
UK corporation tax charge 431 488 244
Overseas taxation 634 576 542
Deferred taxation 34 (40) (31)
1,099 1,024 755
Associated undertakings 4 8 2
Total charge for taxation 1,103 1,032 757
Effective tax rate 27.1% 28.0% 26.2%
The Company and its subsidiary undertakings in the UK provided for
UK corporation tax at 30.25 per cent, the rate for the calendar
year 1999 (1998: 31.0 per cent). Overseas tax included Hong Kong
profits tax of US$175 million (first half of 1998: US$170 million;
second half of 1998: US$123 million) provided at the rate of 16.0 per
cent (1998: 16.0 per cent) on the profits assessable in Hong Kong.
Other overseas taxation was provided for in the countries of
operation at the appropriate rates of taxation.
At 30 June 1999, there were potential future tax benefits of
approximately US$425 million (31 December 1998: US$380 million) in
respect of trading losses, allowable expenditure charged to the
profit and loss account but not yet allowed for tax, and capital
losses which have not been recognised because recoverability of
the potential benefits is not considered certain.
The effective tax rate was below the standard rate of UK
corporation tax of 30.25 per cent, mainly because of lower rates
of tax in major subsidiaries overseas. The effective tax rate was
adversely affected by unrelieved losses in Malaysia in both the
second half of 1998 and the first half of 1999, and likewise, but
to a greater extent in the first half of 1998, as a result of
unrelieved losses in other Asian countries. The effective tax rate
in the second half of 1998 benefited from an exceptional prior
year tax credit in the US amounting to US$10 million in respect of
Brazilian tax credits.
10. Called up share capital
Half-year Half-year Half-year
to 30JUN99 to 30JUN98 to 31DEC98
Figures in US$m
At beginning of period 3,443 3,406 3,439
New shares issued 111 - -
Shares issued in lieu of dividends 18 20 7
Shares issued under option schemes 1 1 2
Exchange adjustments (59) 12 (5)
At end of period 3,514 3,439 3,443
Under the terms of the share capital reorganisation approved by the High
Court on 30 June 1999, each shareholder of HSBC Holdings plc received three
new ordinary shares of US$0.50 for each existing ordinary share of HK$10 or
ordinary share of 75p held on 2 July 1999.
11. Reserves
Half-year Half-year Half-year
to 30JUN99 to 30JUN98 to 31DEC98
Figures in US$m
At beginning of period 23,959 23,674 24,101
Retained profit for the half-year 1,576 1,406 417
Arising on new shares issued, net of costs 2,857 - -
Arising on shares issued in lieu of dividends 450 477 107
Deficit on revaluation of investment properties:
- subsidiaries - (122) (68)
- associates - (32) (24)
Deficit on revaluation of Group premises - (1,188) (599)
Share options 9 10 4
Impairment of land and buildings - - (38)
Capitalisation of share premium account on scrip
dividend issue and associated costs (18) (20) (7)
Exchange and other movements (705) (104) 66
28,128 24,101 23,959
The reserves of the Group include property revaluation reserves amounting to
US$2,087 million (31 December 1998: US$2,120 million).
12. Capital resources
At 30JUN99 At 30JUN98 At 31DEC98
Capital ratios % % %
Total capital ratio 15.3 14.0 13.6
- excluding the US$3.0 billion share
placing 14.3
Tier 1 capital ratio 11.4 9.8 9.7
- excluding the US$3.0 billion share
placing 10.4
Composition of capital US$m US$m US$m
Tier 1 capital 33,594 29,043 29,352
Total qualifying tier 2 capital 13,798 14,345 13,637
Deductions (2,402) (1,865) (1,897)
Total capital 44,990 41,523 41,092
Total risk-weighted assets 294,016 297,598 301,950
The above figures were computed in accordance with the European Union
Consolidated Supervision Directive.
13. Financial instruments, contingent liabilities and commitments
At At At
Figures in US$m 30JUN99 30JUN98 31DEC98
Contract amounts
Contingent liabilities
- acceptances and endorsements 3,663 4,077 4,032
- guarantees and assets pledged
on collateral security 23,574 24,543 23,686
- other 7 113 64
27,244 28,733 27,782
Commitments
- documentary credits and short-
term trade-related transactions 6,072 6,560 5,927
- forward asset purchases and forward
forward deposits placed 481 1,839 893
- undrawn note issuing and
revolving underwriting
facilities 360 147 405
- undrawn formal standby
facilities, credit lines and
other commitments to lend:
- over 1 year 27,586 29,810 27,028
- 1 year and under 106,364 106,680 112,399
140,863 145,036 146,652
Exchange rate contracts 636,820 810,124 765,665
Interest rate contracts 913,272 940,923 1,060,563
Equities contracts 30,147 26,891 29,799
The table above gives the nominal principal amounts of off-balance-
sheet transactions.
For contingent liabilities and commitments, the contract amount
represents the amount at risk should the contract be fully drawn
upon and the client default. The total of the contract amounts is
not representative of future liquidity requirements.
For exchange rate, interest rate and equities contracts, the
notional or contractual amounts of these instruments indicate the
nominal value of transactions outstanding at the balance sheet
date; they do not represent amounts at risk.
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IR AUAKKKOKWAAR
Wednesday, 15th May 2024
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