Annual Financial Report - 4 of 56

RNS Number : 6115S

HSBC Holdings PLC

18 March 2016

 

Consolidated balance sheet

Five-year summary consolidated balance sheet

		2015 $m		2014 $m		2013 $m		2012 $m		2011 $m
ASSETS
Cash and balances at central banks		98,934		129,957		166,599		141,532		129,902
Trading assets		224,837		304,193		303,192		408,811		330,451
Financial assets designated at fair value		23,852		29,037		38,430		33,582		30,856
Derivatives		288,476		345,008		282,265		357,450		346,379
Loans and advances to banks		90,401		112,149		120,046		117,085		139,078
Loans and advances to customers17		924,454		974,660		992,089		962,972		899,010
Reverse repurchase agreements - non-trading		146,255		161,713		179,690		70,112		83,328
Financial investments		428,955		415,467		425,925		421,101		400,044
Assets held for sale		43,900		7,647		4,050		19,269		39,558
Other assets		139,592		154,308		159,032		160,624		156,973
Total assets at 31 December		2,409,656		2,634,139		2,671,318		2,692,538		2,555,579
LIABILITIES AND EQUITY
Liabilities
Deposits by banks		54,371		77,426		86,507		95,480		95,205
Customer accounts		1,289,586		1,350,642		1,361,297		1,311,396		1,223,140
Repurchase agreements - non-trading		80,400		107,432		164,220		40,567		48,402
Trading liabilities		141,614		190,572		207,025		304,563		265,192
Financial liabilities designated at fair value		66,408		76,153		89,084		87,720		85,724
Derivatives		281,071		340,669		274,284		358,886		345,380
Debt securities in issue		88,949		95,947		104,080		119,461		131,013
Liabilities under insurance contracts		69,938		73,861		74,181		68,195		61,259
Liabilities of disposal groups held for sale		36,840		6,934		2,804		5,018		22,200
Other liabilities		102,961		114,525		117,377		118,123		111,971
Total liabilities at 31 December		2,212,138		2,434,161		2,480,859		2,509,409		2,389,486
Equity
Total shareholders' equity		188,460		190,447		181,871		175,242		158,725
Non-controlling interests		9,058		9,531		8,588		7,887		7,368
Total equity at 31 December		197,518		199,978		190,459		183,129		166,093
Total liabilities and equity at 31 December		2,409,656		2,634,139		2,671,318		2,692,538		2,555,579

Five-year selected financial information

		2015 $m		2014 $m		2013 $m		2012 $m		2011 $m
Called up share capital		9,842		9,609		9,415		9,238		8,934
Capital resources18,19		189,833		190,730		194,009		180,806		170,334
Undated subordinated loan capital		2,368		2,773		2,777		2,778		2,779
Preferred securities and dated subordinated loan capital20		42,844		47,208		48,114		48,260		49,438
Risk-weighted assets18		1,102,995		1,219,765		1,092,653		1,123,943		1,209,514
Financial statistics
Loans and advances to customers as a percentage of customer accounts		71.7		72.2		72.9		73.4		73.5
Average total shareholders' equity to average total assets		7.31		7.01		6.55		6.16		5.64
Net asset value per ordinary share at year-end21 ($)		8.73		9.28		9.27		9.09		8.48
Number of $0.50 ordinary shares in issue (millions)		19,685		19,218		18,830		18,476		17,868
Closing foreign exchange translation rates to $:
$1: £		0.675		0.642		0.605		0.619		0.646
$1: €		0.919		0.823		0.726		0.758		0.773

For footnotes, see page 99.

A more detailed consolidated balance sheet is contained in the Financial Statements on page 339.

Combined view of customer lending and customer deposits

		2015 $m		2014 $m
Combined customer lending
Loans and advances to customers		924,454		974,660
Loans and advances to customers reported in 'Assets held for sale'		19,021		577
- Brazil22		17,001		−
- other		2,020		577
At 31 December		943,475		975,237
Combined customer deposits
Customer accounts		1,289,586		1,350,642
Customer accounts reported in 'Liabilities of disposal groups held for sale'		16,682		145
- Brazil22		15,094		−
- other		1,588		145
At 31 December		1,306,268		1,350,787

For footnote, see page 99.

Movement in 2015

Total reported assets of $2.4 trillion were 9% lower than at 31 December 2014 on a reported basis and 4% lower on a constant currency basis. One of the main drivers for this reduction was a fall in trading assets which reflects our ongoing focus on the efficient use of the balance sheet in the context of new prudential regulations. 

Our ratio of customer advances to customer accounts was 71.7%. Both customer loans and customer accounts fell on a reported basis with these movements including:

·   adverse currency translation movements of $52bn and $65bn, respectively;

·   the transfer to 'Assets held for sale' and 'Liabilities of disposal groups held for sale' of balances relating to the planned disposal of our operations in Brazil of $17bn and $15bn, respectively; and

·   a $13bn reduction in corporate overdraft and current account balances relating to a small number of clients in our PCM business in the UK who settled their overdraft and deposit balances on a net basis, with customers increasing the frequency with which they settled their positions.

Excluding these movements, customer lending grew by $32bn (or 4%) driven by Europe, and customer accounts grew by $32bn (or 3%), notably in Asia.

Assets

Cash and balances at central banks fell by $31bn, primarily in North America as we managed the balance of our liquid asset portfolio to maximise investment returns.

Trading assets decreased by $79bn, of which $16bn was driven by adverse currency translation, as we continued our reduction in trading inventory in the context of the prudential regulation. This resulted in reductions in holdings of debt securities by the Rates business, notably in Europe and North America. In addition, lower settlement balances also reflected our actions to improve efficiency of balance sheet usage.

Derivative assets decreased by $57bn or 16%, driven by valuation movements in interest rate contracts, reflecting shifts in major yield curves, notably in France and the UK.

Loans and advances to customers decreased by $50bn on a reported basis, driven by Latin America and Europe. This included the following items:

·   adverse currency translation movements of $52bn;

·   reclassification of $17bn to 'Assets held for sale' relating to our operations in Brazil; and

·   a $13bn reduction in corporate overdraft balances in Europe, with a corresponding fall in corporate customer accounts.

Excluding these factors, customer lending balances grew by $32bn, largely from growth in Europe of $20bn, North America of $5bn and Asia of $4bn.

In Europe, the growth was from increased term lending to CMB customers, notably in the UK and Germany and higher balances in GB&M. In North America, the growth in balances was driven by increased term lending to corporate and commercial customers in CMB and GB&M, partly offset by a decline in RBWM from the continued reduction in the US run-off portfolio and the transfer to 'Assets held for sale' of US first lien mortgage balances. In Asia, balances rose largely from residential mortgage lending in Hong Kong and mainland China. CMB lending balances also rose, although GB&M lending fell. Both of these businesses were affected by weakening demand for trade lending, while GB&M's reduction also reflected our active management of overall client returns.

Liabilities

Repurchase agreements decreased by $27bn or 25%, driven by falls in Europe, notably in the UK, and in North America. We continued to closely manage these balances, as we reassessed the overall returns on these activities in light of the evolving regulatory landscape and overall client returns.

Customer accounts decreased by $61bn and included the following items:

·   adverse currency translation movements of $65bn;

·   reclassification of over $15bn to 'Liabilities of disposal groups held for sale' relating to our operations in Brazil; and

·   a $13bn reduction in corporate current account balances, in line with the fall in corporate overdraft positions.

Excluding these factors, customer accounts grew by $32bn, notably in Asia in the first half of the year, reflecting growth in RBWM from increased savings balances by new and existing Premier customers, together with a rise in our PCM business in CMB.

Balances in Europe were broadly unchanged. Growth in our PCM business in CMB and a rise in RBWM balances reflecting customers' continued preference for holding balances in current and savings accounts were broadly offset by a fall in GB&M.

Trading liabilities fell by $49bn, mainly in North America and Europe reflecting the reduction in trading assets and our focus on optimising the funding of trading assets.

The decrease in derivative liabilities was in line with that of derivative assets as the underlying risk was broadly matched.

Equity

Total shareholders' equity fell by $2.0bn or 1%. The effects of profits generated in the year and the issue of new contingent convertible securities were more than offset by the combined effect of dividends paid and an increase in accumulated foreign exchange losses, which reflected the marked appreciation in the US dollar against a number of currencies, notably sterling and the euro. We recorded fair value gains in our available-for-sale reserve relating to our equity interest in Visa Europe of $432m. These were more than offset by fair value gains transferred to the income statement and fair value losses on debt securities during the year. The gains on Visa Europe were assessed against the expected consideration to be received from the proposed sale to Visa Inc. This transaction is expected to complete in 2016, at which point we will transfer the fair value gains to the income statement.

Risk-weighted assets

Risk-weighted assets ('RWA's) totalled $1,103bn at 31 December 2015, a decrease of $117bn during 2015. After foreign currency translation differences, RWAs reduced by $65bn in 2015, driven by targeted RWA initiatives of $124bn, partly offset by business growth of $35bn, and from growth in our associates of $14bn. The RWA initiatives included:

·   the accelerated sell-down of our consumer mortgage portfolio in the US and the GB&M legacy book, together contributing $30bn to the reduction; and

·   exposure reductions, process improvements and refined calculations, which reduced RWAs by $93bn, 61% of which were in GB&M.

The business growth of $35bn was from higher term lending to corporate customers in CMB and from higher general lending to corporates in GB&M. There was an increase of $14bn in our associates, BoCom and The Saudi British Bank.

Customer accounts by country

		2015 $m		2014 $m
Europe		497,876		545,959
- UK		404,084		439,313
- France23		35,635		40,750
- Germany		13,873		15,757
- Switzerland		10,448		11,058
- other		33,836		39,081
Asia		598,620		577,491
- Hong Kong		421,538		389,094
- Australia		17,703		19,312
- India		11,795		11,678
- Indonesia		5,366		5,788
- Mainland China		46,177		46,588
- Malaysia		14,114		16,292
- Singapore		41,307		43,731
- Taiwan		11,812		14,901
- other		28,808		30,107
Middle East and North Africa (excluding Saudi Arabia)		36,468		39,720
-  Egypt		6,602		7,663
-  United Arab Emirates		18,281		19,771
-  other		11,585		12,286
North America		135,152		138,884
- US		86,322		84,894
- Canada		39,727		43,871
- other		9,103		10,119
Latin America		21,470		48,588
- Mexico		15,798		18,360
- other		5,672		30,228
included in other: Brazil22		-		23,204
At 31 December		1,289,586		1,350,642

For footnotes, see page 99.

 

END

 

 

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