2/3: HK&S Bk Corp 1H04 PT 2
HSBC Holdings PLC
02 August 2004
Additional Information (continued)
5. Profit on tangible fixed assets and long-term investments
Half-year ended Half-year ended Half-year ended
Figures in HK$m 30Jun04 30Jun03 31Dec03
Profit/(loss) on disposal
of tangible fixed
assets 141 (11) (73)
Profit on disposal of
long-term investments
and associated companies 741 695 165
Reversal of impairment of
long-term investments 210 33 204
1,092 717 296
The profit on disposal of tangible fixed assets in 2004 reflected a gain made on
the sale of a residential property in Hong Kong.
The profit on disposal of long-term investments and associated companies in the
first half of 2004 included a gain on the disposal of an investment in World
Finance International Limited, an associated company.
The reversal of impairment of long-term investments in 2004 benefited from a
partial write-back of provisions against an equity investment.
6. Taxation
The charge for taxation in the consolidated profit and loss account comprises:
Half-year ended Half-year ended Half-year ended
Figures in HK$m 30Jun04 30Jun03 31Dec03
Hong Kong profits tax 2,292 1,906 1,697
Overseas taxation 1,423 1,091 711
Deferred taxation 295 (138) 108
4,010 2,859 2,516
Share of associated
companies' taxation 5 8 4
4,015 2,867 2,520
The effective rate of tax for the first half of 2004 was 16.5 per cent compared
with 16.7 per cent for the first half of 2003.
7. Dividends
Half-year ended Half-year ended Half-year ended
30Jun04 30Jun03 31Dec03
HK$ HK$m HK$ HK$m HK$ HK$m
per share per share per share
Equity
Ordinary dividends
- Paid 0.92 6,000 0.48 3,150 0.35 2,300
- Proposed 0.73 4,750 0.49 3,200 1.30 8,450
1.65 10,750 0.97 6,350 1.65 10,750
Non-equity
Preference dividends
payable
- Cumulative
redeemable
preference shares 96 48 100 50 98 49
- Non-cumulative
irredeemable
preference shares 0.12 644 0.13 524 0.11 551
11,442 6,924 11,350
8. Advances to customers
Figures in HK$m At 30Jun04 At 30Jun03 At 31Dec03
Gross advances to customers 860,063 781,469 829,415
Suspended interest (999) (1,268) (1,141)
859,064 780,201 828,274
Specific provisions (6,314) (11,002) (9,132)
General provisions (2,623) (4,388) (4,138)
Total provisions (8,937) (15,390) (13,270)
Net advances to customers 850,127 764,811 815,004
Provisions as a percentage of
gross advances to customers^
Specific provisions 0.73% 1.41% 1.10%
General provisions 0.31% 0.56% 0.50%
Total provisions 1.04% 1.97% 1.60%
^Gross advances to customers are stated after deduction of interest in suspense.
9. Provisions for bad and doubtful debts against advances to customers
Suspended
Figures in HK$m Specific General Total interest
At 1Jan04 9,132 4,138 13,270 2,007
Amounts written off (3,036) - (3,036) (820)
Recoveries of advances written
off in previous years 337 - 337 -
Net release to profit and loss
account (Note 4) (97) (1,495) (1,592) -
Interest suspended during the
period - - - 423
Suspended interest recovered - - - (279)
Exchange and other adjustments (22) (20) (42) (12)
At 30Jun04 6,314 2,623 8,937 1,319
Suspended interest above comprises both suspended interest netted against
'Advances to customers' and suspended interest netted against accrued interest
receivable in 'Other assets'.
10. Non-performing advances to customers and provisions
The geographical information shown below, and in notes 11, 12, 13 and 15, has
been classified by location of the principal operations of the subsidiary
company or, in the case of the bank, by location of the branch responsible for
advancing the funds.
Rest of Americas/
Figures in HK$m Hong Kong Asia-Pacific Europe Total
Half-year ended 30Jun04
Bad and doubtful debt
charge/(release) (1,752) 160 - (1,592)
At 30Jun04
Advances to customers on which interest is being placed in suspense or on which
interest accrual has ceased are as follows:
Gross advances on which interest
- has been placed in suspense 7,448 3,452 - 10,900
- accrual has ceased 1,908 1,141 5 3,054
Gross non-performing advances^ 9,356 4,593 5 13,954
Specific provisions (3,146) (3,163) (5) (6,314)
6,210 1,430 - 7,640
Specific provisions as a percentage
of gross non-performing advances 33.6% 68.9% 100.0% 45.2%
Gross non-performing advances as a
percentage of gross advances to
customers^^ 1.6% 1.6% 41.7% 1.6%
Non-performing advances fell by HK$5,304 million, or 27.5%, since the end of
2003 to HK$13,954 million at 30 June 2004. In Hong Kong, non-performing advances
decreased by HK$3,620 million due to write-offs and repayments in the bank and
in Hang Seng Bank. In the rest of the Asia-Pacific region, non-performing
advances fell by HK$1,684 million, mainly in Singapore, Indonesia and Thailand
due to a combination of upgrades, write-offs and recoveries.
Rest of Americas/
Figures in HK$m Hong Kong Asia-Pacific Europe Total
Half-year ended 30Jun03
Bad and doubtful debt
charge/(release) 2,355 90 (32) 2,413
At 30Jun03
Advances to customers on which interest is being placed in suspense or on which
interest accrual has ceased are as follows:
Gross advances on which interest
- has been placed in suspense 12,256 6,326 - 18,582
- accrual has ceased 1,709 1,794 4 3,507
Gross non-performing advances^ 13,965 8,120 4 22,089
Specific provisions (5,667) (5,331) (4) (11,002)
8,298 2,789 - 11,087
Specific provisions as a percentage
of gross non-performing advances 40.6% 65.7% 100.0% 49.8%
Gross non-performing advances as a
percentage of gross advances to
customers^^ 2.5% 3.6% 33.3% 2.8%
Non-performing advances to customers are those advances where full repayment of
principal or interest is considered unlikely. Non-performing advances may
include advances that are not yet more than three months overdue but are
considered doubtful. Advances are classified as non-performing as soon as it
becomes apparent that full recovery of the advance is unlikely. Except in
certain limited circumstances, all advances on which principal or interest is
more than three months overdue are classified as non-performing.
The specific provisions are made after taking into account the value of
collateral in respect of such advances.
Rest of Americas/
Figures in HK$m Hong Kong Asia-Pacific Europe Total
Half-year ended 31Dec03
Bad and doubtful debt
charge/(release) 743 231 (1) 973
At 31Dec03
Advances to customers on which interest is being placed in suspense or on which
interest accrual has ceased are as follows:
Gross advances on which interest
- has been placed in suspense 11,675 5,306 - 16,981
- accrual has ceased 1,301 971 5 2,277
Gross non-performing advances^ 12,976 6,277 5 19,258
Specific provisions (4,885) (4,242) (5) (9,132)
8,091 2,035 - 10,126
Specific provisions as a percentage
of gross non-performing advances 37.6% 67.6% 100.0% 47.4%
Gross non-performing advances as a
percentage of gross advances to
customers^^ 2.3% 2.4% 41.7% 2.3%
^Gross non-performing advances to customers are stated after deduction of
interest in suspense.
^^Expressed as a percentage of gross advances to customers after deduction of
interest in suspense.
11. Overdue advances to customers
Rest of Americas/
Figures in HK$m Hong Kong Asia-Pacific Europe Total
At 30Jun04
Gross advances to customers
which have been overdue with
respect to either principal or
interest for periods of^
- six months or less but
over three months 1,563 662 - 2,225
- one year or less but
over six months 1,124 471 - 1,595
- over one year 2,065 2,087 - 4,152
4,752 3,220 - 7,972
Overdue advances to customers
as a percentage of gross
advances to customers^^
- six months or less but
over three months 0.3% 0.2% - 0.2%
- one year or less but
over six months 0.2% 0.2% - 0.2%
- over one year 0.3% 0.7% - 0.5%
0.8% 1.1% - 0.9%
Overdue advances to customers
(as above) 4,752 3,220 - 7,972
Less: overdue advances on which
interest is still being accrued (861) (221) - (1,082)
Add: advances overdue for periods
of three months or less, or
which are not yet overdue,
and on which interest has been
placed in suspense:
- included in rescheduled advance 3,366 306 5 3,677
- other 2,099 1,288 - 3,387
Gross non-performing advances
(Note 10) 9,356 4,593 5 13,954
Rest of Americas/
Figures in HK$m Hong Kong Asia-Pacific Europe Total
At 30Jun03
Gross advances to customers
which have been overdue with
respect to either principal or
interest for periods of^
- six months or less but
over three months 2,224 1,080 - 3,304
- one year or less but
over six months 1,822 927 - 2,749
- over one year 4,786 3,420 - 8,206
8,832 5,427 - 14,259
Overdue advances to customers
as a percentage of gross
advances to customers^^
- six months or less but
over three months 0.4% 0.5% - 0.4%
- one year or less but
over six months 0.3% 0.4% - 0.4%
- over one year 0.9% 1.5% - 1.0%
1.6% 2.4% - 1.8%
Overdue advances to customers
(as above) 8,832 5,427 - 14,259
Less: overdue advances on which
interest is still being accrued (1,520) (352) - (1,872)
Add: advances overdue for periods
of three months or less, or
which are not yet overdue, and
on which interest has been placed
in suspense:
- included in rescheduled advances 4,718 837 4 5,559
- other 1,935 2,208 - 4,143
Gross non-performing advances
(Note 10) 13,965 8,120 4 22,089
Rest of Americas/
Figures in HK$m Hong Kong Asia-Pacific Europe Total
At 31Dec03
Gross advances to customers
which have been overdue with
respect to either principal or
interest for periods of^
- six months or less but
over three months 2,334 866 - 3,200
- one year or less but
over six months 1,428 867 - 2,295
- over one year 3,133 2,376 - 5,509
6,895 4,109 - 11,004
Overdue advances to customers as a
percentage of gross advances to
customers^^
- six months or less but
over three months 0.4% 0.3% - 0.4%
- one year or less but
over six months 0.2% 0.3% - 0.3%
- over one year 0.6% 0.9% - 0.6%
1.2% 1.5% - 1.3%
Overdue advances to customers
(as above) 6,895 4,109 - 11,004
Less: overdue advances on which
interest is still being accrued (1,593) (247) - (1,840)
Add: advances overdue for
periods of three months or
less, or which are not yet
overdue, and on which interest has
been placed in suspense:
- included in rescheduled advances 4,043 692 5 4,740
- other 3,631 1,723 - 5,354
Gross non-performing advances
(Note 10) 12,976 6,277 5 19,258
^Gross overdue advances to customers are stated after deduction of interest in
suspense.
^^Expressed as a percentage of gross advances to customers after deduction of
interest in suspense.
12. Rescheduled advances to customers
Rest of Americas/
Figures in HK$m Hong Kong Asia-Pacific Europe Total
At 30Jun04
Rescheduled advances to
customers^ 6,404 385 5 6,794
Rescheduled advances to customers
as a percentage of gross advances
to customers^^ 1.1% 0.1% 41.7% 0.8%
At 30Jun03
Rescheduled advances to
customers^ 9,202 1,160 4 10,366
Rescheduled advances to
customers as a percentage of
gross advances to customers^^ 1.7% 0.5% 33.3% 1.3%
At 31Dec03
Rescheduled advances to
customers^ 7,520 829 5 8,354
Rescheduled advances to
customers as a
percentage of gross
advances to customers^^ 1.3% 0.3% 41.7% 1.0%
Rescheduled advances are those advances which have been restructured or
renegotiated because of a deterioration in the financial position of the
borrower, or because of the inability of the borrower to meet the original
repayment schedule.
Rescheduled advances to customers are stated net of any advances which have
subsequently become overdue for over three months and which are included in
overdue advances to customers (Note 11).
^Rescheduled advances are stated after deduction of interest in suspense.
^^Expressed as a percentage of gross advances to customers after deduction of
interest in suspense.
13. Analysis of advances to customers based on categories used by the HSBC Group
The following analysis of advances to customers is based on categories used by
the HSBC Group, including The Hongkong and Shanghai Banking Corporation Limited
and its subsidiary companies, to manage associated risks.
Rest of Americas/
Figures in HK$m Hong Kong Asia-Pacific Europe Total
At 30Jun04
Residential mortgages 183,504 84,104 - 267,608
Hong Kong SAR Government's Home
Ownership Scheme and Private
Sector Participation Scheme
and Tenants Purchase Scheme
mortgages 45,248 - - 45,248
Other personal 42,892 31,936 7 74,835
Total personal 271,644 116,040 7 387,691
Commercial, industrial
and international trade 106,497 91,400 - 197,897
Commercial real estate 70,020 24,515 5 94,540
Other property-related lending 42,230 10,061 - 52,291
Government 6,515 4,612 - 11,127
Other commercial 57,529 33,972 - 91,501
Total corporate and commercial 282,791 164,560 5 447,356
Non-bank financial institutions 11,995 7,006 - 19,001
Settlement accounts 3,960 2,055 - 6,015
Total financial 15,955 9,061 - 25,016
Gross advances to customers 570,390 289,661 12 860,063
Suspended interest (508) (491) - (999)
Gross advances to customers
net of suspended interest 569,882 289,170 12 859,064
Provisions for bad and doubtful
debts (4,794) (4,138) (5) (8,937)
Net advances to customers 565,088 285,032 7 850,127
Rest of Americas/
Figures in HK$m Hong Kong Asia-Pacific Europe Total
At 30Jun03
Residential mortgages 183,028 64,640 - 247,668
Hong Kong SAR Government's
Home Ownership Scheme and
Private Sector Participation
Scheme and Tenants Purchase
Scheme mortgages 52,908 - - 52,908
Other personal 39,315 25,359 8 64,682
Total personal 275,251 89,999 8 365,258
Commercial, industrial and
international trade 84,768 64,185 - 148,953
Commercial real estate 63,404 20,109 4 83,517
Other property-related lending 39,809 8,034 - 47,843
Government 3,616 4,512 - 8,128
Other commercial 55,642 31,742 - 87,384
Total corporate and commercial 247,239 128,582 4 375,825
Non-bank financial institutions 26,564 7,518 - 34,082
Settlement accounts 3,529 2,775 - 6,304
Total financial 30,093 10,293 - 40,386
Gross advances to customers 552,583 228,874 12 781,469
Suspended interest (733) (535) - (1,268)
Gross advances to customers
net of suspended interest 551,850 228,339 12 780,201
Provisions for bad and doubtful
debts (9,335) (6,051) (4) (15,390)
Net advances to customers 542,515 222,288 8 764,811
Rest of Americas/
Figures in HK$m Hong Kong Asia-Pacific Europe Total
At 31Dec03
Residential mortgages 183,031 79,104 - 262,135
Hong Kong SAR Government's
Home Ownership Scheme and
Private Sector Participation
Scheme and Tenants Purchase
Scheme mortgages 48,830 - - 48,830
Other personal 40,679 29,490 7 70,176
Total personal 272,540 108,594 7 381,141
Commercial, industrial and
international trade 85,132 79,927 - 165,059
Commercial real estate 66,362 21,899 5 88,266
Other property-related lending 39,401 11,849 - 51,250
Government 7,193 4,976 - 12,169
Other commercial 52,426 29,149 - 81,575
Total corporate and commercial 250,514 147,800 5 398,319
Non-bank financial institutions 38,206 7,818 - 46,024
Settlement accounts 3,564 367 - 3,931
Total financial 41,770 8,185 - 49,955
Gross advances to customers 564,824 264,579 12 829,415
Suspended interest (603) (538) - (1,141)
Gross advances to customers
net of suspended interest 564,221 264,041 12 828,274
Provisions for bad and doubtful
debts (8,144) (5,121) (5) (13,270)
Net advances to customers 556,077 258,920 7 815,004
Net advances to customers increased by HK$35.1 billion, or 4.3 per cent, since
December 2003.
Net advances in Hong Kong grew by HK$9.0 billion, or 1.6 per cent, since the end
of 2003 against a backdrop of improved economic conditions and intense
competition. In the bank in Hong Kong, advances to customers fell by HK$9.2
billion. There was a decrease in stock borrowing balances while corporate and
commercial gross lending in Hong Kong grew by 12.9 per cent since the end of
December 2003 against a backdrop of improved economic conditions. This was
particularly the case across both the bank in Hong Kong and in Hang Seng Bank in
respect of trade finance, property related lending and instalment finance. There
was a reduction in residential mortgage lending due to the continued decline in
lending under the GHOS, which remained suspended during the first half of 2004.
In the rest of the Asia-Pacific region, net advances to customers increased by
HK$26.1 billion, or 10.1 per cent. Personal lending has increased across the
region with strong growth in residential mortgages in Singapore, Korea and
India. Credit card receivables were higher in Taiwan. Gross lending to
commercial and corporate customers rose by 11.3 per cent, with significant
increases in China, Korea, Singapore and India.
14. Analysis of advances to customers by geographical area according to the
location of counterparties, after risk transfer
Rest of Americas/
Figures in HK$m Hong Kong Asia-Pacific Europe Others Total
At 30Jun04
Gross advances to
customers, net of
suspended interest 522,573 275,728 56,611 4,152 859,064
Overdue advances to
customers 4,716 3,120 135 1 7,972
Non-performing advances to
customers 8,450 4,586 917 1 13,954
At 30Jun03
Gross advances to
customers, net of
suspended interest 497,820 223,933 54,821 3,627 780,201
Overdue advances to
customers 8,735 5,032 486 6 14,259
Non-performing advances to
customers 12,530 7,802 1,751 6 22,089
At 31Dec03
Gross advances to
customers, net of
suspended interest 499,432 260,108 64,116 4,618 828,274
Overdue advances to
customers 6,679 3,958 366 1 11,004
Non-performing advances to
customers 11,527 6,267 1,462 2 19,258
15. Analysis of advances to customers by industry sector based on categories and
definitions used by the Hong Kong Monetary Authority ('HKMA')
The following analysis of advances to customers is based on the categories
contained in the 'Quarterly Analysis of Loans and Advances and Provisions'
return required to be submitted to the HKMA by branches of the bank and by
banking subsidiary companies in Hong Kong and is shown net of suspended
interest.
Figures in HK$m At 30Jun04 At 30Jun03 At 31Dec03
Gross advances to customers for
use in Hong Kong
Industrial, commercial and financial
Property development 32,820 38,230 37,873
Property investment 85,555 73,721 74,938
Financial concerns 14,282 11,157 16,218
Stockbrokers 1,201 573 612
Wholesale and retail trade 29,641 27,119 26,689
Manufacturing 13,146 9,132 10,498
Transport and transport equipment 33,610 29,630 31,482
Others 41,247 44,355 39,641
251,502 233,917 237,951
Individuals
Advances for the purchase of flats under
the Hong Kong SAR Government's Home
Ownership Scheme and Private Sector
Participation and Tenants Purchase
Scheme 45,248 52,908 48,830
Advances for the purchase of other
residential properties 168,988 168,182 168,841
Credit card advances 20,189 18,605 20,747
Others 19,780 19,159 17,689
254,205 258,854 256,107
Gross advances to customers for use
in Hong Kong 505,707 492,771 494,058
Trade finance 48,738 37,120 38,086
Gross advances to customers for use
outside Hong Kong made by branches of
the bank and subsidiary companies in Hong
Kong 15,437 21,959 32,077
Gross advances to customers made by
branches of the bank and subsidiary
companies in Hong Kong 569,882 551,850 564,221
Gross advances to customers made by
branches of the bank and subsidiary
companies outside Hong Kong
- Rest of Asia-Pacific 289,170 228,339 264,041
- Americas/Europe 12 12 12
Gross advances to customers net of
suspended interest 859,064 780,201 828,274
An explanation of the significant differences between the categories of advances
and their definitions used by the HSBC Group and those used by the HKMA is given
on pages 17-18 of the Annual Report and Accounts for 2003.
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