2008 Interim Report Section 2

RNS Number : 6212A

HSBC Holdings PLC

04 August 2008

 



Terms used	Brief description
ABSs	Asset-backed securities
ADS	American depositary share
AIEA	Average interest-earning assets
ALCO	Asset and Liability Management Committee
ARMs	Adjustable-rate mortgages
Asscher	Asscher Finance Ltd, a structured investment vehicle managed by HSBC
ATM	Automated teller machine
Banca Nazionale	Banca Nazionale del Lavoro SpA
Bank of Bermuda	The Bank of Bermuda Limited
Bank of Communications	Bank of Communications Limited, mainland China's fifth largest bank, owned 19.01 per cent by HSBC
Barion	Barion Funding Limited, a term funding vehicle
Basel I	The 1988 Basel Capital Accord
Basel II	Final Accord of the Basel Committee on proposals for a new capital adequacy framework
CDO	Collateralised debt obligation
CP	Commercial paper
CRD	Capital Requirements Directive of the EU
Cullinan	Cullinan Finance Ltd, a structured investment vehicle managed by HSBC
Decision One	Decision One Mortgage Company, HSBC Finance's subsidiary which originates loans referred by mortgage brokers
DPF	Discretionary participation feature of insurance and investment contracts
EU	European Union
Fannie Mae	Federal National Mortgage Association
Freddie Mac	Federal Home Loan Mortgage Corporation
FSA	Financial Services Authority (UK)
GAAP	Generally Accepted Accounting Principles
GDP	Gross domestic product
Global Markets	HSBC's treasury and capital markets services in Global Banking and Markets
Group	HSBC Holdings together with its subsidiary undertakings
GSC	Group Service Centre
Hong Kong	Hong Kong Special Administrative Region of the People's Republic of China
HSBC	HSBC Holdings together with its subsidiary undertakings
HSBC Bank	HSBC Bank plc, formerly Midland Bank plc
HSBC Direct	HSBC's online banking and savings proposition
HSBC Finance	HSBC Finance Corporation, the US consumer finance company acquired in 2003 (formerly Household International, Inc.)
HSBC France	HSBC's French banking subsidiary (formerly CCF S.A.)
HSBC Holdings	HSBC Holdings plc
IAS	International Accounting Standard
IASB	International Accounting Standards Board
IFRIC	International Financial Reporting Interpretations Committee
IFRSs	International Financial Reporting Standards
Industrial Bank	Industrial Bank Co. Limited, a national joint-stock bank in mainland China of which Hang Seng Bank Limited owns 12.78 per cent
IPO	Initial public offering
Mainland China	People's Republic of China excluding Hong Kong
Malachite	Malachite Funding Limited, a term funding vehicle
MasterCard	MasterCard Inc.
Mazarin	Mazarin Funding Limited, an asset-backed CP conduit
MBSs	US mortgage-backed securities
Monolines	Monoline insurance companies

Terms used	Brief description
Ping An Insurance	Ping An Insurance (Group) Company of China, Limited
Premier	HSBC Premier, HSBC's global banking service for affluent customers
PVIF	Present value of in-force long-term insurance business
Repos	Sale and repurchase transactions
Reverse repos	Securities purchased under commitments to sell
Seasoning	The emergence of loss patterns in a credit portfolio over time
SICs	Securities investment conduits
SIV	Structured investment vehicles
Solitaire	Solitaire Funding Limited, a special purpose entity managed by HSBC
SPE	Special purpose entity
The Chinese Bank	The Chinese Bank Co., Ltd, in Taiwan, whose assets, liabilities and operations HSBC acquired in March 2008
TSR	Total shareholder return
UK	United Kingdom
US	United States of America
VAR	Value at risk
Visa	Visa Inc.

Index

Accounting policies 115, 213

Areas of special interest 161

Assets

by customer group 13, 25

by geographical region 28

deployment 108

financial assets designated at fair value 219

held in custody and under administration 110

maturity analysis 227

non-current assets held for sale 225

trading 109, 217

Auditor's review report 237

Balance sheet

consolidated 208

data 3, 14, 16, 19, 21, 23, 25, 30, 39, 42, 48, 54, 61, 65, 74, 78, 86

Basel II 198

Basis of preparation 13, 211

Business highlights 14, 16, 18, 21

Business performance review

Europe 31

Hong Kong 43

Rest of Asia-Pacific 55

North America 66

Latin America 79

Capital

management 197

measurement and allocation 197

structure 207

Cash flow

consolidated statement 210

notes 232

Cautionary statement regarding forward-looking statements 2

Commercial Banking

business highlights 16

performance in Europe 34

performance in Hong Kong 45

performance in Rest of Asia-Pacific 57

performance in North America 70

performance in Latin America 82

Constant currency 4

Contents 1

Contingent liabilities, contractual commitments and financial guarantee contracts 151, 233

Copies of the Interim Report 2008 250

Corporate governance 249

Credit quality 169

Credit risk 187

maximum exposure 152

Customer accounts 29, 42, 53

Customer groups and global businesses 13, 25

Daily distribution of trading revenues 185

Dealings in HSBC Holdings shares 248

Defined terms - Inside front cover

Derivatives

by product contract type 220

hedging instruments 221

trading 220

Directors

biographies 203

interests 238

Dividends 2, 214, 248, 249

Earned insurance premiums (net) 100

Earnings per share 2, 214

Economic briefing

Europe 29

Hong Kong 43

Rest of Asia-Pacific 53

North America 65

Latin America 78

Economic profit 110

Equity 229

Europe

Balance sheet data 30, 39

business performance review 31

customer accounts 29

economic briefing 29

loans and advances (net) 29

profit before tax 28, 30, 39

Events after the balance sheet date 235

Fair values of financial instruments 129

Fee income (net) 94

Financial assets

designated at fair value 219

Financial highlights 2

Financial investments 222

Financial liabilities designated at fair value 226

Funds under management 109

Future accounting developments 212

Gains from dilution of interests  in associates 234

Gains less losses from financial  investments 99

Geographical regions 28

Global Banking and Markets

business highlights 18

performance in Europe 36

performance in Hong Kong 46

performance in Rest of Asia-Pacific 59

performance in North America 71

performance in Latin America 83

Goodwill impairment 234

Group Chairman's Statement 5

Group Chief Executive's Review 7

Group Managing Directors 205

Hong Kong

balance sheet data 42, 48

business performance review 43

economic briefing 43

profit before tax 42, 48

Impairment

allowances and charges 103, 173, 176,

available-for-sale securities 115

by geographical region 170

distribution 169

Income from financial instruments designated at fair value (net) 97

Income statement (consolidated) 90, 207

Insurance

balance sheet by type of contract 195

claims incurred and movement in liabilities to policyholders (net) 102

net-earned premiums 101

liabilities under contracts issued 192

risk management 191

Interest income (net) 92

sensitivity 188

Interim Report 2008 235, 250

Latin America

balance sheet data 78, 86

business performance review 79

customer accounts 77

economic briefing 78

loans and advances (net) 77

profit before tax 77, 78, 86

Legal risk 190

Leveraged finance transactions 127

Liabilities

financial liabilities designated  at fair value 226

maturity analysis 227

trading 226

Liquidity and funding 179

contingent liquidity risk 181

Litigation 234

Loans and advances

by country/region 29, 42, 52, 64

by credit quality 170

by industry sector 155,158

delinquency in the US 167

exposure 152

past due but not impaired 170, 178

personal lending 161, (US) 165

potential problem loans 178

renegotiated to banks/customers 172

to banks/customers by geographical region 158, 171

unimpaired loans contractually past due 90  days or more 177

within Rest of Asia-Pacific and  Latin America 160

Loan impairment charges and other credit risk provisions 2, 103

Market risk management 183

Market turmoil

accounting policies 115

business model 115

disclosure policy 112

exposures 112, 117

impact on market risk 184

special purpose entities 115

structured investment vehicles 114

residential mortgage-backed securities 114

Monoline insurers 126

Mortgage lending

products 164, HSBC Finance 165

in the UK 163, (US) 163

Non-trading portfolios 187

North America

balance sheet data 65, 74

business performance review 66

customer accounts 64

economic briefing 65

loans and advances (net) 64

profit before tax 64, 65, 74

Notifiable interests in share capital 248

Off-balance sheet arrangements 151

Operating expenses 105

Operating income (net) 233, (other) 105

Operational risk 190

'Other' customer group

performance in Europe 37

performance in Hong Kong 47

performance in Rest of Asia-Pacific 60

performance in North America 72

performance in Latin America 84

notes 23

Pension scheme 188

Personal Financial Services

business highlights 14

performance in Europe 31

performance in Hong Kong 43

performance in Rest of Asia-Pacific 55

performance in North America 67

performance in Latin America 80

Post-employment benefits 215

Potential problem loans 177

Principal activities 11

Private Banking

business highlights 21

performance in Europe 37

performance in Hong Kong 46

performance in Rest of Asia-Pacific 60

performance in North America 72

performance in Latin America 84

Profit before tax 90

by country 28, 42, 51, 64, 77

by customer group 13, 14, 16, 18, 21, 23, 25

by geographical region 28, 30, 39, 42, 48, 61, 65, 74, 78, 86, 233

consolidated 207

data 3

underlying/reported reconciliations 11, 15, 17, 20, 22, 24, 31, 38, 43, 47, 55, 60, 66, 73, 79, 85

Ratios

advances to deposits 179

capital 3, 201

Cost efficiency 107

credit coverage 3

earnings to combined fixed charges 111

efficiency and revenue mix 3

financial 3

net liquid assets to customer liabilities 180

performance 3

Related parties 110

Reputational risk 191

Responsibility statement 236

Rest of Asia-Pacific

balance sheet data 54, 61

business performance review 55

customer accounts 53

economic briefing 53

loans and advances (net) 52

profit before tax 51, 54, 61

Risk elements, analysis of 177

Risk elements in the loan portfolio 177

Risk management 152

credit 152, (credit spread) 186, 187

gap 187

insurance operations 191

liquidity and funding 179

market 183, (turmoil) 115

operational 190

pension 188

reputational 191

Risk-weighted assets by principal  subsidiary 202

al analysis 233

Sensitivity

projected net interest income 188

Share capital

notifiable interests 248

Share dealing service 250

4

Share of profit in associates and joint ventures 107

Share option plans 239

all-employee share plans 241

Bank of Bermuda plans 247

discretionary share incentive plans 244

HSBC Finance plans 245

HSBC France plans 245

Special purpose entities 115, 137

Staff numbers 105

Statement of recognised income and expense (consolidated) 209

Stock codes 250

Strategic direction 11

Structural foreign exchange exposures 190

Tax expense 216

Telephone and online share dealing service 250

Total shareholder return 4

Trading

assets and financial investments and derivatives 109

assets 217

liabilities 226

portfolios 186

Trading income (net) 96

Troubled debt restructurings 177

Value at risk 183

 

END

 

 

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