Annual Financial Report - 52 of 56

RNS Number : 6402S

HSBC Holdings PLC

18 March 2016

 

HSBC

Maturity analysis of assets and liabilities

		Due not        more than            1 month		Due over            1 month               but not        more than          3 months		Due over          3 months               but not        more than          6 months		Due over          6 months               but not        more than          9 months		Due over          9 months               but not        more than                1 year		Due over                1 year               but not        more than              2 years		Due over              2 years               but not        more than              5 years		Due over              5 years		Total
		$m		$m		$m		$m		$m		$m		$m		$m		$m
Financial assets
Cash and balances at central banks		98,934		−		−		−		−		−		−		−		98,934
Items in the course of collection from other banks		5,768		−		−		−		−		−		−		−		5,768
Hong Kong Government certificates of indebtedness		28,410		−		−		−		−		−		−		−		28,410
Trading assets		224,691		34		−		−		−		112		−		−		224,837
- reverse repos		292		34		−		−		−		112		−		−		438
- other trading assets		224,399		−		−		−		−		−		−		−		224,399
Financial assets designated at fair value		429		194		222		83		390		896		2,603		19,035		23,852
Derivatives		285,797		215		223		198		33		499		841		670		288,476
- trading		285,678		−		−		−		−		−		−		−		285,678
- non-trading		119		215		223		198		33		499		841		670		2,798
Loans and advances to banks		57,296		14,530		4,063		1,964		2,499		5,134		3,274		1,641		90,401
Loans and advances to customers		176,862		69,638		54,730		33,095		34,774		81,560		201,253		272,542		924,454
- personal		39,191		8,328		8,510		7,457		9,350		22,438		57,283		218,646		371,203
- corporate and commercial		123,901		54,711		40,489		21,081		21,811		50,355		131,166		49,564		493,078
- financial		13,770		6,599		5,731		4,557		3,613		8,767		12,804		4,332		60,173
Reverse repurchase agreements - non-trading		110,478		21,978		7,220		2,786		580		2,985		228		−		146,255
Financial investments		35,104		59,098		36,897		19,102		17,293		48,634		94,549		118,278		428,955
Assets held for sale		15,816		2,628		2,544		1,218		2,611		4,675		6,365		4,422		40,279
Accrued income and other financial assets		12,732		6,682		1,995		483		395		463		445		2,115		25,310
Financial assets at 31 December 2015		1,052,317		174,997		107,894		58,929		58,575		144,958		309,558		418,703		2,325,931
Non-financial assets		−		−		−		−		−		−		−		83,725		83,725
Total assets at 31 December 2015		1,052,317		174,997		107,894		58,929		58,575		144,958		309,558		502,428		2,409,656

Maturity analysis of assets and liabilities (continued)

		Due not        more than            1 month		Due over            1 month               but not        more than          3 months		Due over          3 months               but not        more than          6 months		Due over          6 months               but not        more than          9 months		Due over          9 months               but not        more than                1 year		Due over                1 year               but not        more than              2 years		Due over              2 years               but not        more than              5 years		Due                   over              5 years		Total
		$m		$m		$m		$m		$m		$m		$m		$m		$m
Financial liabilities
Hong Kong currency notes in circulation		28,410		−		−		−		−		−		−		−		28,410
Deposits by banks		46,693		2,225		1,049		325		116		712		3,182		69		54,371
Customer accounts1		1,185,091		50,831		21,397		10,421		10,869		6,596		3,852		529		1,289,586
- personal		574,468		27,646		13,032		7,371		7,990		3,566		2,920		354		637,347
- corporate and commercial		459,813		18,802		7,314		2,479		2,495		2,926		828		156		494,813
- financial		150,810		4,383		1,051		571		384		104		104		19		157,426
Repurchase agreements - non-trading		73,478		3,788		1,816		164		154		−		500		500		80,400
Items in the course of transmission to other banks		5,638		−		−		−		−		−		−		−		5,638
Trading liabilities		111,691		1,471		1,529		882		2,184		4,344		10,105		9,408		141,614
- repos		77		365		−		−		−		−		−		−		442
- debt securities in issue		967		1,106		1,529		882		2,184		4,344		10,105		9,408		30,525
- other trading liabilities		110,647		−		−		−		−		−		−		−		110,647
Financial liabilities designated at fair value		2,036		1,822		2,943		342		1,900		4,930		14,316		38,119		66,408
- debt securities in issue: covered bonds		−		−		−		−		−		2,012		1,608		2,577		6,197
- debt securities in issue: otherwise secured		−		−		−		−		−		−		−		−		−
- debt securities in issue: unsecured		1,972		973		2,926		342		1,786		2,918		9,819		10,745		31,481
- subordinated liabilities and preferred securities		−		848		−		−		−		−		2,773		18,889		22,510
- other		64		1		17		−		114		−		116		5,908		6,220
Derivatives		276,765		34		251		213		52		524		1,063		2,169		281,071
- trading		276,558		−		−		−		−		−		−		−		276,558
- non-trading		207		34		251		213		52		524		1,063		2,169		4,513
Debt securities in issue		16,536		9,326		16,295		5,542		1,365		10,754		22,866		6,265		88,949
- covered bonds		−		−		1		−		1		83		17		33		135
- otherwise secured		8,436		173		195		206		173		2,082		4,354		1,118		16,737
- unsecured		8,100		9,153		16,099		5,336		1,191		8,589		18,495		5,114		72,077
Liabilities of disposal groups held for sale		20,350		1,416		1,548		1,344		1,246		5,050		1,484		115		32,553
Accruals and other financial liabilities		14,802		7,965		2,467		659		421		925		1,454		665		29,358
Subordinated liabilities		−		401		−		−		34		650		4,579		17,038		22,702
Total financial liabilities at 31 December 2015		1,781,490		79,279		49,295		19,892		18,341		34,485		63,401		74,877		2,121,060
Non-financial liabilities		−		−		−		−		−		−		−		91,078		91,078
Total liabilities at 31 December 2015		1,781,490		79,279		49,295		19,892		18,341		34,485		63,401		165,955		2,212,138

		Due not        more than            1 month		Due over            1 month               but not        more than          3 months		Due over          3 months               but not        more than          6 months		Due over          6 months               but not        more than          9 months		Due over          9 months               but not        more than                1 year		Due over                1 year               but not        more than              2 years		Due over              2 years               but not        more than              5 years		Due over              5 years		Total
		$m		$m		$m		$m		$m		$m		$m		$m		$m
Financial assets
Cash and balances at central banks		129,957		−		−		−		−		−		−		−		129,957
Items in the course of collection from other banks		4,927		−		−		−		−		−		−		−		4,927
Hong Kong Government certificates of indebtedness		27,674		−		−		−		−		−		−		−		27,674
Trading assets		303,463		−		−		−		−		−		730		−		304,193
- reverse repos		567		−		−		−		−		−		730		−		1,297
- other trading assets		302,896		−		−		−		−		−		−		−		302,896
Financial assets designated at fair value		244		399		417		346		208		1,825		4,634		20,964		29,037
Derivatives		341,558		56		463		220		32		1,003		1,033		643		345,008
- trading		341,416		−		−		−		−		−		−		−		341,416
- non-trading		142		56		463		220		32		1,003		1,033		643		3,592
Loans and advances to banks		73,758		17,649		5,682		1,934		1,850		7,371		1,981		1,924		112,149
Loans and advances to customers		203,130		76,236		55,018		35,347		37,674		91,300		187,728		288,227		974,660
- personal		42,170		9,673		8,911		7,486		8,672		27,305		54,439		230,298		388,954
- corporate and commercial		146,250		61,809		41,924		23,720		23,697		56,398		124,796		56,590		535,184
- financial		14,710		4,754		4,183		4,141		5,305		7,597		8,493		1,339		50,522
Reverse repurchase agreements - non-trading		116,002		30,490		9,076		2,230		582		868		2,465		−		161,713
Financial investments		28,237		50,445		41,503		14,577		17,011		48,392		96,891		118,411		415,467
Assets held for sale		114		186		13		18		10		41		126		6,224		6,732
Accrued income and other financial assets		17,756		7,386		2,402		587		317		707		1,156		3,579		33,890
Financial assets at 31 December 2014		1,246,820		182,847		114,574		55,259		57,684		151,507		296,744		439,972		2,545,407
Non-financial assets		−		−		−		−		−		−		−		88,732		88,732
Total assets at 31 December 2014		1,246,820		182,847		114,574		55,259		57,684		151,507		296,744		528,704		2,634,139

Maturity analysis of assets and liabilities (continued)

		Due not        more than            1 month		Due over            1 month               but not        more than          3 months		Due over          3 months               but not        more than          6 months		Due over          6 months               but not        more than          9 months		Due over          9 months               but not        more than                1 year		Due over                1 year               but not        more than              2 years		Due over              2 years               but not        more than              5 years		Due                    over              5 years		Total
		$m		$m		$m		$m		$m		$m		$m		$m		$m
Financial liabilities
Hong Kong currency notes in circulation		27,674		−		−		−		−		−		−		−		27,674
Deposits by banks		66,829		2,890		2,539		511		810		621		2,963		263		77,426
Customer accounts1		1,216,574		57,127		32,925		15,023		13,586		9,278		5,819		310		1,350,642
- personal		572,459		28,580		16,728		10,609		9,625		7,220		3,967		125		649,313
- corporate and commercial		465,990		21,841		10,688		3,716		2,894		1,615		1,316		150		508,210
- financial		178,125		6,706		5,509		698		1,067		443		536		35		193,119
Repurchase agreements - non-trading		95,243		5,029		4,054		1,392		714		−		−		1,000		107,432
Items in the course of transmission to other banks		5,990		−		−		−		−		−		−		−		5,990
Trading liabilities		155,604		2,041		2,636		1,439		2,918		5,744		9,603		10,587		190,572
- repos		746		909		224		264		1,249		406		−		−		3,798
- debt securities in issue		1,686		1,132		2,412		1,175		1,669		5,338		9,603		10,587		33,602
- other trading liabilities		153,172		−		−		−		−		−		−		−		153,172
Financial liabilities designated at fair value		981		912		4,264		972		1,557		8,500		15,037		43,930		76,153
- debt securities in issue: covered bonds		−		−		−		205		−		−		2,705		2,942		5,852
- debt securities in issue: otherwise secured		−		−		−		−		−		−		−		−		−
- debt securities in issue: unsecured		942		868		4,242		742		1,409		8,500		9,576		14,233		40,512
- subordinated liabilities and preferred securities		−		36		−		−		18		−		2,623		20,640		23,317
- other		39		8		22		25		130		−		133		6,115		6,472
Derivatives		335,802		23		86		223		54		621		1,121		2,739		340,669
- trading		335,400		−		−		−		−		−		−		−		335,400
- non-trading		402		23		86		223		54		621		1,121		2,739		5,269
Debt securities in issue		14,741		15,424		13,027		7,854		6,050		14,209		19,481		5,161		95,947
- covered bonds		-		-		−		−		−		−		81		−		81
- otherwise secured		8,807		1,063		60		283		272		912		1,562		1,008		13,967
- unsecured		5,934		14,361		12,967		7,571		5,778		13,297		17,838		4,153		81,899
Liabilities of disposal groups held for sale		191		28		56		55		63		213		551		2,837		3,994
Accruals and other financial liabilities		20,893		9,170		3,013		1,166		1,757		1,355		1,674		818		39,846
Subordinated liabilities		−		150		−		3		167		113		3,607		22,624		26,664
Total financial liabilities at 31 December 2014		1,940,522		92,794		62,600		28,638		27,676		40,654		59,856		90,269		2,343,009
Non-financial liabilities		-		-		-		-		-		-		-		91,152		91,152
Total liabilities at 31 December 2014		1,940,522		92,794		62,600		28,638		27,676		40,654		59,856		181,421		2,434,161

1   'Customer accounts' includes $342,908m (2014: $342,927m) insured by guarantee schemes.

Maturity analysis of off-balance sheet commitments received

Due not        more than            1 month

Due over            1 month               but not        more than          3 months

Due over          3 months               but not        more than          6 months

Due over          6 months               but not        more than          9 months

Due over          9 months               but not        more than                1 year

Due over                1 year               but not        more than              2 years

Due over              2 years               but not        more than              5 years

Due over              5 years

Total

$m

$m

$m

$m

$m

$m

$m

$m

$m

At 31 December 2015

Loan and other credit-related commitments

3,472

−

2,149

−

−

111

−

−

5,732

At 31 December 2014

Loan and other credit-related commitments

3,313

−

4,312

607

−

−

−

−

8,232

Maturity analysis of off-balance sheet commitments given

		Due not        more than            1 month		Due over            1 month               but not        more than          3 months		Due over          3 months               but not        more than          6 months		Due over          6 months               but not        more than          9 months		Due over          9 months               but not        more than                1 year		Due over                1 year               but not        more than              2 years		Due over              2 years               but not        more than              5 years		Due over              5 years		Total
		$m		$m		$m		$m		$m		$m		$m		$m		$m
At 31 December 2015
Loan and other credit-related commitments		472,277		45,792		16,271		9,798		47,122		11,325		48,756		15,089		666,430
Of which:
- personal		161,843		11,547		6,333		963		19,607		1,207		425		1,018		202,943
- corporate and commercial		272,044		32,764		9,126		8,372		23,984		8,227		38,838		12,558		405,913
- financial		38,390		1,481		812		463		3,531		1,891		9,493		1,513		57,574
At 31 December 2014
Loan and other credit-related commitments		455,319		52,398		8,919		14,163		41,500		13,979		48,333		16,769		651,380
Of which:
- personal		179,088		15,784		452		305		14,036		1,432		1,003		955		213,055
- corporate and commercial		239,646		34,657		7,595		12,556		23,519		9,926		36,918		12,185		377,002
- financial		36,585		1,957		872		1,302		3,945		2,621		10,412		3,629		61,323

HSBC Holdings

Maturity analysis of assets, liabilities and off-balance sheet commitments

		Due not more than 1 month		Due over 1 month but not more than 3 months		Due over 3 months but not more than 6 months		Due over 6 months but not more than 9 months		Due over 9 months but not more than 1 year		Due over 1 year but not more than 2 years		Due over 2 years but not more than 5 years		Due over 5 years		Total
		$m		$m		$m		$m		$m		$m		$m		$m		$m
Financial assets
Cash at bank and in hand:
- balances with HSBC undertakings		242		-		-		-		-		-		-		-		242
Derivatives		1,990		-		-		-		-		-		109		368		2,467
- trading		1,990		-		-		-		-		-		-		-		1,990
- non-trading		-		-		-		-		-		-		109		368		477
Loans and advances to HSBC undertakings		7,805		2,629		4,618		-		-		-		-		29,298		44,350
Financial investments in HSBC undertakings		40		6		-		-		-		-		-		4,239		4,285
Accrued income and other financial assets		7		-		-		-		-		-		-		109		116
Total financial assets at 31 December 2015		10,084		2,635		4,618		-		-		-		109		34,014		51,460
								-		-		-
Non-financial assets		-		-		-		-		-		-		-		98,734		98,734
Total assets at 31 December 2015		10,084		2,635		4,618		-		-		-		109		132,748		150,194
Financial liabilities
Amounts owed to HSBC undertakings		1,629		-		-		-		-		415		-		108		2,152
Financial liabilities designated at fair value		-		960		-		-		-		-		2,285		16,608		19,853
- debt securities in issue		-		960		-		-		-		-		-		6,937		7,897
- subordinated liabilities and preferred securities		-		-		-		-		-		-		2,285		9,671		11,956
Derivatives		2,065		-		-		-		-		-		213		-		2,278
- trading		2,065		-		-		-		-		-		-		-		2,065
- non-trading		-		-		-		-		-		-		213		-		213
Debt securities in issue		-		-		-		-		-		-		-		960		960
Accruals and other financial liabilities		1,231		195		132		20		-		-		-		-		1,578
Subordinated liabilities		-		-		-		-		-		-		1,749		14,146		15,895
										-
Total financial liabilities at 31 December 2015		4,925		1,155		132		20		-		415		4,247		31,822		42,716
										-
Non-financial liabilities		-		-		-		-		-		-		-		64		64
										-
Total liabilities at 31 December 2015		4,925		1,155		132		20		-		415		4,247		31,886		42,780
Off-balance sheet commitments given
Undrawn formal standby facilities, credit lines and other commitments to lend		-		-		-		-		-		-		-		-		-

		Due not more than 1 month		Due over 1 month but not more than 3 months		Due over 3 months but not more than 6 months		Due over 6 months but not more than 9 months		Due over 9 months but not more than 1 year		Due over 1 year but not more than 2 years		Due over 2 years but not more than 5 years		Due over 5 years		Total
		$m		$m		$m		$m		$m		$m		$m		$m		$m
Financial assets
Cash at bank and in hand:
- balances with HSBC undertakings		249		-		-		-		-		-		-		-		249
Derivatives		2,287		-		-		-		-		-		127		357		2,771
- trading		2,287		-		-		-		-		-		-		-		2,287
- non-trading		-		-		-		-		-		-		127		357		484
Loans and advances to HSBC undertakings		7,007		858		7,676		-		14		-		-		28,355		43,910
Financial investments in HSBC undertakings		26		6		-		-		-		-		-		4,041		4,073
Accrued income and other financial assets		8		-		-		-		-		-		-		-		8
Total financial assets at 31 December 2014		9,577		864		7,676		-		14		-		127		32,753		51,011
Non-financial assets		-		-		-		-		-		-		-		96,853		96,853
Total assets at 31 December 2014		9,577		864		7,676		-		14		-		127		129,606		147,864
Financial liabilities
Amounts owed to HSBC undertakings		2,423		-		32		-		1		436		-		-		2,892
Financial liabilities designated at fair value		-		-		-		-		-		1,110		2,623		14,946		18,679
- debt securities in issue		-		-		-		-		-		1,110		-		7,075		8,185
- subordinated liabilities and preferred securities		-		-		-		-		-		-		2,623		7,871		10,494
Derivatives		1,066		-		-		-		-		-		103		-		1,169
- trading		1,066		-		-		-		-		-		-		-		1,066
- non-trading		-		-		-		-		-		-		103		-		103
Debt securities in issue		-		-		-		-		-		-		-		1,009		1,009
Accruals and other financial liabilities		924		208		137		21		-		-		-		-		1,290
Subordinated liabilities		-		-		-		-		-		-		1,951		15,304		17,255
Total financial liabilities at 31 December 2014		4,413		208		169		21		1		1,546		4,677		31,259		42,294
Non-financial liabilities		-		-		-		-		-		-		-		125		125
Total liabilities at 31 December 2014		4,413		208		169		21		1		1,546		4,677		31,384		42,419
Off-balance sheet commitments given
Undrawn formal standby facilities, credit lines and other commitments to lend		16		-		-		-		-		-		-		-		16

32  Offsetting of financial assets and financial liabilities

Accounting policy

Financial assets and financial liabilities are offset and the net amount is reported in the balance sheet when there is a legally enforceable right to offset the recognised amounts and there is an intention to settle on a net basis, or realise the asset and settle the liability simultaneously ('the offset criteria').

The disclosure below has been enhanced this year with the inclusion of 'Amounts not subject to enforceable netting arrangements' resulting in a change in the basis of preparation from the prior period. Prior period data have been represented accordingly.

The 'Amounts not set off in the balance sheet' in the following table for derivatives and reverse repurchase/repurchase, stock borrowing/lending and similar agreements include transactions where:

·   the counterparty has an offsetting exposure with HSBC and a master netting or similar arrangement is in place with a right of set off only in the event of default, insolvency or bankruptcy, or the offset criteria are otherwise not satisfied; and

·   cash and non-cash collateral has been received/pledged in respect of the transactions described above.

For loans and advances to customers and customer accounts at amortised cost the amounts included in the table below typically relate to transactions entered into with corporate and commercial customers for working capital management purposes. The 'Amounts not set off in the balance sheet' relate to transactions where the customer has an offsetting exposure with HSBC and an agreement is in place with the right of offset but the offset criteria are otherwise not satisfied. For risk management purposes, the net amounts of such exposures are subject to limits which are monitored and the relevant customer agreements are subject to review and updated, as necessary, to ensure that the legal right of offset remains appropriate.

Footnotes to the table on page 435 are set out below:

1   At 31 December 2015, the amount of cash margin received that has been offset against the gross derivatives assets is $4,135m (2014: $606m). The amount of cash margin paid that has been offset against the gross derivatives liabilities is $4,224m (2014: $190m).

2   For the amount of reverse repos, stock borrowing and similar agreements recognised in the balance sheet, see the 'Funding sources and uses; table on page 160. In the analysis below, the $7,556m (2014: $9,266m) of trading assets presented in the balance sheet comprised $438m of reverse repos (2014: $1,297m) and $7,118m of stock borrowing (2014: $7,969m).

3   At 31 December 2015, the total amount of loans and advances to customers at amortised cost was $924,454m (2014: $974,660m) of which $45,904m (2014: $62,096m) was subject to offsetting. For the amount of loans and advances to customers at amortised cost recognised in the balance sheet, see the 'Funding sources and uses' table on page 160.

4   For the amount of repos, stock lending and similar agreements recognised in the balance sheet, see the 'Funding sources and uses' table on page 160. In the analysis below, the $9,301m (2014: $15,830m) of trading liabilities presented in the balance sheet comprised $442m of repos (2014: $3,798m) and $8,859m of stock lending (2014: $12,032m).

5   At 31 December 2015, the total amount of customer accounts at amortised cost was $1,289,586m (2014: $1,350,642m) of which $51,442m (2014: $69,082m) was subject to offsetting. For the amount of customer accounts at amortised cost recognised in the balance sheet, see the 'Funding sources and uses' table on page 160.

6   These exposures continue to be secured by financial collateral, but we may not have sought or been able to obtain a legal opinion evidencing enforceability of the right of offset.

Financial assets subject to offsetting, enforceable master netting arrangements and similar agreements

		Amounts subject to enforceable netting arrangements														Amounts not subject to enforceable netting arrangements6		Total
								Amounts not set off in the balance sheet
		Gross                  amounts		Amounts                        offset		Net amounts                         in the        balance sheet		Financial            instruments		Non-cash                 collateral		Cash                 collateral		Net                    amount
		$m		$m		$m		$m		$m		$m		$m		$m		$m
Financial assets
Derivatives (Note 16)1		385,682		(105,860)		279,822		(215,531)		(8,621)		(34,040)		21,630		8,654		288,476
Reverse repos, stock borrowing and similar agreements2		208,417		(77,925)		130,492		(544)		(129,476)		(270)		202		23,319		153,811
Classified as:
- trading assets		7,496		-		7,496		-		(7,495)		-		1		60		7,556
- non-trading assets		200,921		(77,925)		122,996		(544)		(121,981)		(270)		201		23,259		146,255
Loans and advances to customers at amortised cost3		77,547		(31,643)		45,904		(40,790)		-		-		5,114		1,487		47,391
At 31 December 2015		671,646		(215,428)		456,218		(256,865)		(138,097)		(34,310)		26,946		33,460		489,678
Derivatives (Note 16)1		584,359		(250,465)		333,894		(262,856)		(7,655)		(41,750)		21,633		11,114		345,008
Reverse repos, stock borrowing and similar agreements2		208,893		(88,676)		120,217		(5,117)		(114,394)		(249)		457		50,762		170,979
Classified as:
- trading assets		9,341		(390)		8,951		-		(8,951)		-		-		315		9,266
- non-trading assets		199,552		(88,286)		111,266		(5,117)		(105,443)		(249)		457		50,447		161,713
Loans and advances to customers at amortised cost3		99,623		(37,527)		62,096		(55,989)		-		-		6,107		1,597		63,693
At 31 December 2014		892,875		(376,668)		516,207		(323,962)		(122,049)		(41,999)		28,197		63,473		579,680
Financial liabilities
Derivatives (Note 16)1		377,930		(105,860)		272,070		(215,508)		(13,629)		(30,063)		12,870		9,001		281,071
Repos, stock lending and similar agreements4		136,040		(77,925)		58,115		(2,034)		(56,030)		(26)		25		31,586		89,701
Classified as:
- trading liabilities		9,300		-		9,300		-		(9,299)		-		1		1		9,301
- non-trading liabilities		126,740		(77,925)		48,815		(2,034)		(46,731)		(26)		24		31,585		80,400
Customer accounts at amortised cost5		83,085		(31,643)		51,442		(40,790)		-		(1)		10,651		729		52,171
At 31 December 2015		597,055		(215,428)		381,627		(258,332)		(69,659)		(30,090)		23,546		41,316		422,943
Derivatives (Note 16)1		580,644		(250,465)		330,179		(262,864)		(9,465)		(39,571)		18,279		10,490		340,669
Repos, stock lending and similar agreements4		165,514		(88,676)		76,838		(8,934)		(67,793)		(105)		6		46,424		123,262
Classified as:
- trading liabilities		16,206		(390)		15,816		-		(15,813)		-		3		14		15,830
- non-trading liabilities		149,308		(88,286)		61,022		(8,934)		(51,980)		(105)		3		46,410		107,432
Customer accounts at amortised cost5		106,609		(37,527)		69,082		(55,989)		-		-		13,093		479		69,561
At 31 December 2014		852,767		(376,668)		476,099		(327,787)		(77,258)		(39,676)		31,378		57,393		533,492

For footnotes, see page 434.

33  Foreign exchange exposures

Structural foreign exchange exposures

HSBC's structural foreign exchange exposures are represented by the net asset value of its foreign exchange equity and subordinated debt investments in subsidiaries, branches, joint ventures and associates with non-US dollar functional currencies. Gains or losses on structural foreign exchange exposures are recognised in other comprehensive income. HSBC's management of its structural foreign exchange exposures is discussed on page 171.

Net structural foreign exchange exposures

		2015		2014
		$m		$m
Currency of structural exposure
Pound sterling1		32,701		30,071
Hong Kong dollars		28,270		24,028
Chinese renminbi		24,117		24,578
Euros		19,966		20,378
Mexican pesos		4,228		5,249
Indian rupees		3,645		3,466
Canadian dollars		3,595		4,187
Saudi riyals		3,109		2,910
Brazilian real		2,865		4,910
Swiss francs		2,642		1,864
Malaysian ringgit		1,994		2,219
UAE dirhams		1,898		2,199
Taiwanese dollars		1,702		1,721
Singapore dollars		1,454		1,185
Australian dollars		1,396		1,516
Indonesian rupiah		1,303		1,352
Korean won		1,296		1,360
Turkish lira		1,006		1,366
Egyptian pounds		925		868
Argentine pesos		875		1,059
Others, each less than $700m		5,775		5,918
At 31 December		144,762		142,404

1   During 2015, we entered into new forward exchange contracts amounting to $2.6bn (2014: $1.6bn) in order to manage our sterling structural foreign exchange exposure.

Shareholders' equity would decrease by $2,633m (2014: $2,522m) if euro and sterling foreign currency exchange rates weakened by 5% relative to the US dollar.

34  Non-controlling interests

		2015		2014
		$m		$m
Non-controlling interests attributable to holders of ordinary shares in subsidiaries		6,981		7,104
Preferred securities issued by subsidiaries		2,077		2,427
At 31 December		9,058		9,531

 

Preferred securities issued by subsidiaries

Preferred securities are securities for which there is no obligation to pay a dividend and, if the dividend is not paid, it may not be cumulative. Such securities do not generally carry voting rights but rank higher than ordinary shares for dividend payments and in the event of a winding-up. These securities have no stated maturity date but may be called and redeemed by the issuer, subject to prior notification to the PRA and, where relevant, the consent of the local banking regulator. Dividends on floating rate preferred securities are generally related to interbank offer rates.

Included in the capital base of HSBC are non-cumulative preferred securities classified as additional tier 1 capital and cumulative preferred securities classified as tier 2 capital in accordance with CRD IV rules, by virtue of the application of grandfathering provisions.

Preferred securities issued by HSBC's subsidiaries

		First call date		2015 $m		2014 $m
HSBC USA Inc.
$150m1	Depositary shares each representing 25% interest in a share of adjustable-rate cumulative preferred stock, series D	Jul 1999		-		150
$150m2	Cumulative preferred stock	Oct 2007		-		150
$518m	Floating rate non-cumulative preferred stock, series F	Apr 2010		518		518
$374m	Floating rate non-cumulative preferred stock, series G	Jan 2011		374		374
$374m	6.50% non-cumulative preferred stock, series H	Jul 2011		374		374
HSBC Finance Corporation
$575m	6.36% non-cumulative preferred stock, series B	Jun 2010		559		559
HSBC Bank Canada
CAD175m	Non-cumulative redeemable class 1 preferred shares, series C	Jun 2010		126		151
CAD175m	Non-cumulative class 1 preferred shares, series D	Dec 2010		126		151
At 31 December				2,077		2,427

1   In May 2015, HSBC redeemed its depositary shares representing 25% interest in a share of adjustable-rate cumulative preferred stock, series D for $152m.

2   In May 2015, HSBC redeemed its cumulative preferred stock for $152m.

35  Called up share capital and other equity instruments

Accounting policy

Financial instruments issued are classified as equity when there is no contractual obligation to transfer cash or other financial assets or issue a variable number of own equity instruments. Incremental costs directly attributable to the issue of equity instruments are shown in equity as a deduction from the proceeds, net of tax. HSBC Holdings equity instruments held by HSBC are recognised in equity as a deduction from retained earnings until they are cancelled. When such instruments are subsequently sold, reissued or otherwise disposed of, any consideration received is included in equity, net of any directly attributable incremental transaction costs and related income tax effects.

 

Issued and fully paid

HSBC Holdings ordinary shares of $0.50 each

		2015		2014
		$m		$m
HSBC Holdings ordinary shares1 at 31 December		9,842		9,609
		Number		$m
At 1 January 2015		19,217,874,260		9,609
Shares issued under HSBC employee share plans		91,265,909		45
Shares issued in lieu of dividends		375,956,765		188
At 31 December 2015		19,685,096,934		9,842
At 1 January 2014		18,830,007,039		9,415
Shares issued under HSBC employee share plans		119,391,238		60
Shares issued in lieu of dividends		268,475,983		134
At 31 December 2014		19,217,874,260		9,609

HSBC Holdings non-cumulative preference shares of $0.01 each

		Number		$m
At 1 January 2015 and 31 December 20152		1,450,000		-
At 1 January 2014 and 31 December 2014		1,450,000		-

1   All HSBC Holdings ordinary shares in issue confer identical rights, including in respect of capital, dividends and voting.

2   Included in the capital base of HSBC as additional tier 1 capital in accordance with the CRD IV rules, by virtue of the application of grandfathering provisions.

Dividends on the HSBC Holdings non-cumulative dollar preference shares in issue ('dollar preference shares') are paid quarterly at the sole and absolute discretion of the Board of Directors. The Board of Directors will not declare a dividend on the dollar preference shares if payment of the dividend would cause HSBC Holdings not to meet the applicable capital adequacy requirements of the PRA or the profit of HSBC Holdings available for distribution as dividends is not sufficient to enable HSBC Holdings to pay in full both dividends on the dollar preference shares and dividends on any other shares that are scheduled to be paid on the same date and that have an equal right to dividends. HSBC Holdings may not declare or pay dividends on any class of its shares ranking lower in the right to dividends than the dollar preference shares nor redeem nor purchase in any manner any of its other shares ranking equal with or lower than the dollar preference shares unless it has paid in full, or set aside an amount to provide for payment in full, the dividends on the dollar preference shares for the then current dividend period. The dollar preference shares carry no rights to conversion into ordinary shares of HSBC Holdings. Holders of the dollar preference shares will only be entitled to attend and vote at general meetings of shareholders of HSBC Holdings if the dividend payable on the dollar preference shares has not been paid in full for four consecutive dividend payment dates. In such circumstances, holders of the dollar preference shares will be entitled to vote on all matters put to general meetings until such time as HSBC Holdings has paid a full dividend on the dollar preference shares. HSBC Holdings may redeem the dollar preference shares in whole at any time on or after 16 December 2010, subject to prior notification to the PRA.

HSBC Holdings non-cumulative preference share of £0.01

The one non-cumulative sterling preference share of £0.01 in issue ('sterling preference share') has been in issue since 29 December 2010 and is held by a subsidiary of HSBC Holdings. Dividends on the sterling preference share are paid quarterly at the sole and absolute discretion of the Board. The sterling preference share carries no rights of conversion into ordinary shares of HSBC Holdings and no rights to attend and vote at general meetings of shareholders of HSBC Holdings. HSBC Holdings may redeem it in whole at any time at the option of the Company.

Other equity instruments

HSBC has included three types of additional tier 1 capital securities in its tier 1 capital. The two types of additional tier 1 securities presented in this Note are accounted for as equity because HSBC does not have an obligation to transfer cash or a variable number of its own ordinary shares to holders under any circumstances outside its control. See Note 30 for additional tier 1 securities accounted for as liabilities.

Other equity instruments which have been included in the regulatory capital base of HSBC comprise additional tier 1 capital securities and additional tier 1 contingent convertible securities.

Additional tier 1 capital securities

Additional tier 1 capital securities are perpetual subordinated securities on which coupon payments may be deferred at the discretion of HSBC Holdings. While any coupon payments are unpaid or deferred, HSBC Holdings will not declare, pay dividends or make distributions or similar periodic payments in respect of, or repurchase, redeem or otherwise acquire any securities of lower or equal rank. Such securities do not generally carry voting rights but rank higher than ordinary shares for coupon payments and in the event of a winding-up. These securities do not meet the identifying criteria in full for recognition as tier 1 capital under CRD IV but are eligible as regulatory capital subject to grandfathering limits and progressive phase-out.

At HSBC Holdings' discretion, and subject to certain conditions being satisfied, the capital securities may be exchanged on any coupon payment date for non-cumulative preference shares to be issued by HSBC Holdings and ranking pari passu with the dollar and sterling preference shares in issue. The preference shares would be issued at a nominal value of $0.01 per share and a premium of $24.99 per share, with both such amounts being subscribed and fully paid. These securities may be called and redeemed by HSBC subject to prior notification to the PRA.

HSBC's additional tier 1 capital securities in issue which are accounted for in equity

		First call date		2015 $m		2014 $m
$2,200m	8.125% perpetual subordinated capital securities	Apr 2013		2,133		2,133
$3,800m	8.00% perpetual subordinated capital securities, Series 2	Dec 2015		3,718		3,718
At 31 December				5,851		5,851

 

Additional tier 1 capital - contingent convertible securities

During 2015, HSBC continued to issue contingent convertible securities that are included in HSBC's capital base as fully CRD IV compliant additional tier 1 capital securities on an end point basis. The net proceeds of the issuances will be used for general corporate purposes and to further strengthen the capital base pursuant to requirements under CRD IV. These securities bear a fixed rate of interest until their initial call dates. After the initial call dates, in the event they are not redeemed, the securities will bear interest at rates which are fixed periodically in advance for five-year periods based on prevailing market rates. Interest on the contingent convertible securities will be due and payable only at the sole discretion of HSBC, and HSBC has sole and absolute discretion at all times and for any reason to cancel (in whole or in part) any interest payment that would otherwise be payable on any interest payment date. There are limitations on the payment of distributions if such payments are prohibited under UK banking regulations, or other requirements, if HSBC Holdings has insufficient reserves available for distribution or if HSBC fails to satisfy the solvency condition as defined in the securities' terms.

The contingent convertible securities are undated and are repayable, at the option of HSBC, in whole at the initial call date, or on any fifth anniversary after the initial call date. In addition, the securities are repayable at the option of HSBC in whole for certain regulatory or tax reasons. Any repayments require the prior consent of the PRA. These securities rank pari passu with HSBC's dollar and sterling preference shares and are therefore ahead of ordinary shares. The contingent convertible securities will be converted into fully paid ordinary shares of HSBC at a pre-determined price should HSBC's consolidated end point CET1 ratio fall below 7.0%. Therefore, in accordance with the terms of the securities, if the end point CET1 ratio breaches the 7.0% trigger the securities will convert into ordinary shares at fixed contractual conversion prices in the issuance currencies of the relevant securities equivalent to £2.70 at the prevailing rate of exchange on the issuance date subject to certain anti-dilution adjustments.

HSBC's additional tier 1 capital - contingent convertible securities in issue which are accounted for in equity

		First call date		2015 $m		2014 $m
$2,250m	6.375% perpetual subordinated contingent convertible securities	Sep 2024		2,244		2,244
$1,500m	5.625% perpetual subordinated contingent convertible securities	Jan 2020		1,494		1,494
€1,500m	5.25% perpetual subordinated contingent convertible securities	Sep 2022		1,943		1,943
$2,450m	6.375% perpetual subordinated contingent convertible securities	Mar 2025		2,459		-
€1,000m	6.000% perpetual subordinated contingent convertible securities	Sep 2023		1,121		-
At 31 December				9,261		5,681

 

Shares under option

For details of the options outstanding to subscribe for HSBC Holdings ordinary shares under the HSBC Holdings savings-related share option plans, see Note 6.

Aggregate options outstanding under these plans

		Number of                          HSBC Holdings                      ordinary shares		Period of exercise		Exercise price
31 December 2015		72,840,810		2015 to 2021		£4.0472 - 5.4738
		1,114,830		2015 to 2018		HK$55.4701 - 63.9864
		153,610		2015 to 2018		€5.3532 - 6.0657
		665,445		2015 to 2018		$7.1456 - 8.2094
31 December 2014		63,918,042		2014 to 2020		£3.3116 - 7.9911
		6,468,782		2014 to 2018		HK$37.8797 - 63.9864
		571,502		2014 to 2018		€3.6361 - 6.0657
		1,867,328		2014 to 2018		$4.8876 - 8.2094
31 December 2013		119,085,250		2013 to 2019		£3.3116 - 7.9911
		24,215,341		2013 to 2018		HK$37.8797 - 92.5881
		1,574,652		2013 to 2018		€3.6361 - 7.5571
		3,997,069		2013 to 2018		$4.8876 - 11.8824

 

Maximum obligation to deliver HSBC Holdings ordinary shares

At 31 December 2015, the maximum obligation to deliver HSBC Holdings ordinary shares under all of the above option arrangements and the HSBC International Employee Share Purchase Plan, together with GPSP awards and restricted share awards granted under the HSBC Share Plan and/or the HSBC Share Plan 2011, was 193,178,906 (2014: 193,154,512). The total number of shares at 31 December 2015 held by employee benefit trusts that may be used to satisfy such obligations to deliver HSBC Holdings ordinary shares was 4,753,747 (2014: 7,943,191).

36  Notes on the statement of cash flows

Other non-cash items included in profit before tax

		HSBC						HSBC Holdings
		2015		2014		2013		2015		2014
		$m		$m		$m		$m		$m
Depreciation, amortisation and impairment		2,181		2,251		2,330		30		39
(Gains)/losses arising from dilution of interests in associates		-		32		(1,051)		-		-
Revaluations on investment property		(61)		(120)		(113)		-		-
Share-based payment expense		757		732		630		86		74
Loan impairment losses gross of recoveries and other credit risk provisions		4,546		5,125		7,356		-		-
Provisions		3,210		3,074		2,578		-		-
Impairment/(release of impairment) of financial investments		94		54		(36)		-		-
Charge for defined benefit plans		262		535		121		-		-
Accretion of discounts and amortisation of premiums		(224)		(421)		180		(2)		(61)
Year ended 31 December		10,765		11,262		11,995		114		52

Change in operating assets

		HSBC						HSBC Holdings
		2015		2014		2013		2015		2014
		$m		$m		$m		$m		$m
Change in loans to HSBC undertakings		-		-		-		(729)		1,364
Change in net trading securities and net derivatives		24,384		(18,498)		(24,870)		1,413		483
Change in loans and advances to banks		1,218		5,147		(4,739)		-		-
Change in loans and advances to customers		31,753		12,666		(46,551)		-		-
Change in reverse repurchase agreements - non-trading		(3,011)		18,900		(70,403)		-		-
Change in financial assets designated at fair value		2,394		3,269		(4,922)		-		-
Change in other assets		9,090		4,393		2,586		(141)		7
Year ended 31 December		65,828		25,877		(148,899)		543		1,854

Change in operating liabilities

		HSBC						HSBC Holdings
		2015		2014		2013		2015		2014
		$m		$m		$m		$m		$m
Change in deposits by banks		(21,534)		(9,081)		(7,781)		-		-
Change in customer accounts		(44,373)		(8,362)		57,365		-		-
Change in repurchase agreements - non-trading		(26,481)		(56,788)		123,653		-		-
Change in debt securities in issue		960		(8,133)		(15,381)		(49)		(149)
Change in financial liabilities designated at fair value		(10,785)		(10,734)		994		(1,228)		(694)
Change in other liabilities		(4,549)		(716)		5,907		(1,065)		(9,071)
Year ended 31 December		(106,762)		(93,814)		164,757		(2,342)		(9,914)

Interest and dividends

		HSBC						HSBC Holdings
		2015		2014		2013		2015		2014
		$m		$m		$m		$m		$m
Interest paid		(14,559)		(15,633)		(17,262)		(2,309)		(2,463)
Interest received		47,623		51,522		50,823		2,026		1,945
Dividends received		914		1,199		1,133		8,469		9,077

 

Cash and cash equivalents

Accounting policy

Cash and cash equivalents include highly liquid investments that are readily convertible to known amounts of cash and which are subject to an insignificant risk of change in value. Such investments are normally those with less than three months' maturity from the date of acquisition.

Cash and cash equivalents

		HSBC						HSBC Holdings
		2015		2014		2013		2015		2014
		$m		$m		$m		$m		$m
Cash at bank with HSBC undertakings		-		-		-		242		249
Cash and balances at central banks		98,934		129,957		166,599		-		-
Items in the course of collection from other banks		5,768		4,927		6,021		-		-
Loans and advances to banks of one month or less		70,985		89,285		96,584		-		-
Reverse repurchase agreements with banks of one month or less		53,971		68,930		68,007		-		-
Treasury bills, other bills and certificates of deposit less than three months		19,843		14,192		15,980		-		-
Less: items in the course of transmission to other banks		(5,638)		(5,990)		(6,910)		-		-
At 31 December		243,863		301,301		346,281		242		249

The amount of cash and cash equivalents not available for use by HSBC at 31 December 2015 was $33,744m (2014: $43,738m), of which $21,773m (2014: $29,883m) related to mandatory deposits at central banks.

Disposal of subsidiaries and businesses

During 2014, we completed the disposals of HSBC Bank Middle East Limited's banking business in Jordan and operations in Pakistan. This resulted in a net $303m outflow of cash and cash equivalents which is included under 'Cash flow from investing activities' in the consolidated statement of cash flows on page 340.

In October 2013, we completed the disposal of HSBC Bank (Panama) S.A., receiving total cash consideration of $2,210m which is included under 'Cash flow from investing activities' in the consolidated statement of cash flows on page 340.

 

END

 

 

ACSUWVVRNWAOAAR