Hang Seng Bank Interims Pt.2
HSBC Holdings PLC
6 August 2001
PART 2
Gross advances to customers by industry sector
The analysis of gross advances to customers (after deduction of interest in
suspense) by industry sector based on categories and definitions used by the
Hong Kong Monetary Authority is as follows:
Figures in HK$m At At At
30Jun01 30Jun00 31Dec00
Gross advances to
customers for
use in Hong Kong
Industrial,
commercial and
financial sectors
Property 19,199 18,910 19,079
development
Property investment 28,538 27,422 29,579
Financial concerns 1,693 4,025 2,979
Stockbrokers 133 153 97
Wholesale and 4,084 4,301 4,066
retail trade
Manufacturing 1,789 1,983 1,825
Transport and 8,205 8,640 8,471
transport equipment
Other 18,741 16,937 19,073
82,382 82,371 85,169
Individuals
Advances for the
purchase of flats
under the
Government Home
Ownership Scheme,
Private Sector
Participation
Scheme and
Tenants Purchase 39,333 34,852 35,971
Scheme
Advances for the
purchase of other
residential 76,678 76,379 78,005
properties
Credit card 4,986 4,086 4,745
advances
Other 5,945 5,312 4,875
126,942 120,629 123,596
Total gross
advances for use in
Hong
Kong 209,324 203,000 208,765
Trade finance 10,455 9,794 9,013
Gross advances for
use outside Hong
Kong 3,962 3,396 4,195
Gross advances to 223,741 216,190 221,973
customers
Lending to the industrial, commercial and financial sectors declined by
HK$2,787 million, or 3.3 per cent, during the first half of 2001, reflecting
weak demand in the corporate loan market. The fall was mainly in lending to
property investment companies and financial concerns which include the
financial vehicles of large corporate groups and public sector entities
engaged in financing activities.
Advances to individuals rose by HK$3,346 million, or 2.7 per cent. Residential
mortgages fell by 1.7 per cent, due to intense competition and lack of
activity in the secondary property market. Government Home Ownership Scheme
mortgages, however, continued to grow and rose by 9.3 per cent. Credit card
advances also showed satisfactory growth as a result of the expansion in the
card base. Other lending to individuals, mainly tax and personal loans,
increased by 21.9 per cent, in line with the bank's strategy to diversify its
loan portfolio.
Trade finance advances recorded an encouraging growth of 16.0 per cent despite
dampened export trade due to the slowdown of the US market. This was the
result of the bank's efforts to broaden its commercial banking and small and
medium sized enterprises customer base.
Long-term investments
Carrying Value
Figures in HK$m At 30Jun01 At 30Jun00 At 31Dec00
Held-to-maturity debt
securities
Issued by public bodies
- Central governments 3,806 2,091 3,459
and central banks
- Other public sector 6,053 4,293 7,381
entities
9,859 6,384 10,840
Issued by other bodies
- Banks and other 14,960 13,063 15,480
financial institutions
- Corporate entities 12,217 5,064 8,517
27,177 18,127 23,997
37,036 24,511 34,837
Equity investments
Issued by corporate 3,927 3,844 4,433
entities
40,963 28,355 39,270
Held-to-maturity debt
securities
- Listed in Hong Kong 371 441 419
- Listed outside Hong 7,560 1,596 4,881
Kong
7,931 2,037 5,300
- Unlisted 29,105 22,474 29,537
37,036 24,511 34,837
Equity investments
- Listed in Hong Kong 3,269 3,608 4,139
- Listed outside Hong 92 84 114
Kong
3,361 3,692 4,253
- Unlisted 566 152 180
3,927 3,844 4,433
40,963 28,355 39,270
Held-to-maturity debt securities are stated at cost, adjusted for the
amortisation of premiums and accretion of discounts over the period from the
date of purchase to the date of redemption. Equity investments are stated at
fair value, less provision for impairment.
Long-term investments rose by HK$1,693 million, or 4.3 per cent, compared with
the end of 2000. The portfolio of held-to-maturity debt securities increased
by HK$2,199 million, or 6.3 per cent, with an increase in securities issued by
governments and corporations partly offset by reduced holdings of issues of
other public sector entities and banks and other financial institutions.
Equity investments were HK$506 million, or 11.4 per cent lower, due to
disposals and a fall in fair value due to the decline in the stock market.
The following table shows the fair value of held-to-maturity debt securities:
Fair Value
Figures in HK$m At30Jun01 At30Jun01 At 31Dec00
Held-to-maturity debt
securities
Issued by public bodies
- Central governments and 3,825 2,080 3,471
central banks
- Other public sector 6,216 4,292 7,537
entities
10,041 6,372 11,008
Issued by other bodies
- Banks and other 14,974 13,060 15,510
financial institutions
- Corporate entities 12,338 5,045 8,595
27,312 18,105 24,105
37,353 24,477 35,113
Held-to-maturity debt
securities
- Listed in Hong Kong 373 445 425
- Listed outside Hong 7,570 1,593 4,940
Kong
7,943 2,038 5,365
- Unlisted 29,410 22,439 29,748
37,353 24,477 35,113
Other assets
Figures in HK$m At 30Jun01 At 30Jun00 At 31 Dec00
Unrealised gains on off-
balance sheet interest
rate,
exchange rate and
other derivative
contracts
which are marked to 862 978 1,800
market
Deferred taxation 13 __ 13
Items in the course of
collection from
other banks 4,722 3,304 4,472
Prepayments and accrued 2,991 2,868 3,849
income
Other accounts 2,870 848 1,193
11,458 7,998 11,327
Current, savings and other deposit accounts
Figures in HK$m At 30Jun01 At 30Jun00 At 31Dec00
Customer accounts
Repayable on demand 176,953 152,141 175,336
With agreed maturity
dates or periods
of notice, by remaining
maturity:
- Three months or less
but not
repayable on demand 210,806 219,509 224,985
- One year or less but 12,606 20,514 14,458
over three months
- Five years or less but 98 313 96
over one year
400,463 392,477 414,875
Certificates of deposit
in issue
Remaining maturity:
- Three months or less
but not
repayable on demand 4,272 5,172 5,358
- One year or less but
over
three months 1,797 7,849 2,771
- Five years or less but 8,587 5,678 6,276
over one year
- Over five years 365 365 325
15,021 19,064 14,730
415,484 411,541 429,605
Current, savings and other deposit accounts declined by HK$14.1 billion, or
3.3 per cent, to HK$415.5 billion, compared with HK$429.6 billion at 31
December 2000. The decline in Hong Kong dollar deposits was mainly in time
deposits and certificates of deposit issued, although savings deposits
continued to grow, reflecting customers' preference for liquidity in a low
interest rate environment. United States dollar and other foreign currency
deposits also decreased.
Shareholders' funds
Figures in HK$m At 30Jun01 At 30Jun00 At 31Dec00
Share capital 9,559 9,559 9,559
Retained profits 20,162 19,154 18,732
Premises and investment
properties
revaluation reserves 8,672 8,173 8,742
Long-term equity
investment
revaluation reserve 2,676 2,893 3,452
Capital redemption 99 99 99
reserve
Reserves 31,609 30,319 31,025
41,168 39,878 40,584
Proposed dividends 4,015 3,824 5,353
Shareholders' funds 45,183 43,702 45,937
Return on average 24.4 % 24.2 % 21.6 %
shareholders' funds
There was no purchase, sale or redemption of the bank's listed securities by
the bank or any of its subsidiaries during the period.
Shareholders' funds (excluding proposed dividends) grew by HK$584 million to
HK$41,168 million at 30 June 2001, mainly reflecting an increase of HK$1,430
million in retained profits and a decrease of HK$776 million in the long-term
equity investment revaluation reserve, due to realisation on disposals and the
fall in fair value of long-term equities. Following the adoption of the
revised HKSSAP 9, dividends proposed after the balance sheet date are recorded
as a separate component of shareholders' funds. Shareholders' funds and return
on average shareholders' funds at 30 June 2000 and 31 December 2000 have been
restated to reflect the change in accounting policy.
The return on average shareholders' funds was 24.4 per cent, compared with
24.2 per cent for the first half of 2000.
Capital resources management
Analysis of capital base and risk-weighted assets
Figures in HK$m At 30Jun01 At 30Jun00 At 31Dec00
Capital base
Tier 1 capital
- Share capital 9,559 9,559 9,559
- Retained profits 19,821 18,819 18,455
- Capital redemption 99 99 99
reserve
- Total 29,479 28,477 28,113
Tier 2 capital
- Premises and investment
properties
revaluation reserves 5,860 5,748 5,860
- Long-term equity
investment
revaluation reserve 1,605 1,737 2,043
- General provisions 1,437 1,463 1,437
- Total 8,902 8,948 9,340
Unconsolidated
investments and
other deductions (1,365) (1,240) (1,346)
Total capital base after 37,016 36,185 36,107
deductions
Risk-weighted assets
On-balance sheet 219,577 210,144 220,037
Off-balance sheet 14,743 11,612 13,982
Total risk-weighted 234,320 221,756 234,019
assets
Total risk-weighted
assets adjusted for
market risk 234,834 222,041 235,453
Capital adequacy ratios
After adjusting for
market risk
- Tier 1^ 12.6 % 12.8 % 11.9 %
- Total ^ 15.8 % 16.3 % 15.3 %
Before adjusting for
market risk
- Tier 1 12.6 % 12.8 % 12.0 %
- Total 15.8 % 16.3 % 15.4 %
^ The capital ratios take into account market risks in accordance with the
relevant Hong Kong Monetary Authority guideline.
The total capital ratio increased by 0.5 percentage points to 15.8 per cent at
30 June 2001 from 15.3 per cent at 31 December 2000. The tier 1 capital ratio
rose to 12.6 per cent from 11.9 per cent at 31 December 2000. This was due to
a growth of 2.5 per cent in the capital base while risk-weighted assets, after
adjusting for market risk, declined by 0.3 per cent.
Liquidity ratio
The average liquidity ratio for the period, calculated in accordance with the
Fourth Schedule of the Banking Ordinance, is as follows:
Half-year ended Half-year ended Half-year ended
30Jun01 30Jun00 31Dec00
The bank and
its major
banking 46.0 % 41.4 % 45.1 %
subsidiaries
Reconciliation of cash flow statement
(a) Reconciliation of operating profit to net cash flow from operating
activities
Half-year Half-year
ended ended
Figures in HK$m 30Jun01 30Jun00
Operating profit 5,946 5,881
Provisions for bad and doubtful debts 21 83
Depreciation 189 191
Amortisation of long-term investments (249) (188)
Advances written off net of (484) (269)
recoveries
Income receivable on long-term (1,196) (752)
investments
Net cash inflow from trading 4,227 4,946
activities
Change in cash and short-term funds 5,129 (2,635)
Change in placings with banks
repayable after three
months 7,207 (4,942)
Change in certificates of deposit (1,765) 9,709
Change in securities held for dealing 1,662 (387)
purposes
Change in advances to customers (1,768) (13,946)
Change in amounts due from immediate
holding
company and fellow subsidiary (580) (180)
companies
Change in other assets (185) 1,165
Change in customer accounts (14,412) 28,439
Change in certificates of deposit in 291 7,391
issue
Change in deposits from banks 248 (326)
Change in amounts due to immediate
holding
company and fellow subsidiary (901) (959)
companies
Change in other liabilities (3,100) 197
Elimination of exchange differences
and
other non-cash items 2,877 1,449
Net cash (outflow)/inflow from
operating
activities (1,070) 29,921
(b) Analysis of the changes in cash and cash equivalents during the period
Half-year ended Half-year ended
Figures in HK$m 30Jun01 30Jun00
Balance at beginning of period 157,511 150,579
Net cash (outflow)/inflow before
the effect of
foreign exchange movements (7,285) 23,406
Effect of foreign exchange (2,793) (766)
movements
Balance at end of period 147,433 173,219
(c) Analysis of the balances of cash and cash equivalents
Figures in HK$m At 30Jun01 At 30Jun00
Cash in hand and balances with banks and
other financial institutions 3,978 3,311
Money at call and placings with banks
maturing within one month 105,155 108,756
Treasury bills 1,767 3,975
Placings with banks repayable between one
to
three months 35,226 43,453
Certificates of deposit 1,307 13,724
147,433 173,219
Contingent liabilities, commitments and derivatives
Credit Risk-
Contract equivalent weighted
Figures in HK$m Amount amount amount
At 30 June 2001
Contingent liabilities:
Guarantees 9,124 9,033 3,906
Commitments:
Documentary credits and short-term
trade-related transactions 6,176 1,240 1,234
Undrawn formal standby facilities,
credit lines
and other commitments to lend:
- Under one year 62,777 __ __
- One year and over 18,296 9,148 8,899
87,249 10,388 10,133
Exchange rate contracts:
Spot and forward foreign exchange 143,256 2,103 481
Other exchange rate contracts 5,556 85 17
148,812 2,188 498
Interest rate contracts:
Interest rate swaps 47,556 820 206
Other interest rate contracts 7,755 __ __
55,311 820 206
Credit Risk-
Contract equivalent weighted
Figures in HK$m Amount amount amount
At 30 June 2000
Contingent liabilities:
Guarantees 2,807 2,738 1,716
Commitments:
Documentary credits and short-term
trade-related transactions 6,055 1,213 1,210
Undrawn formal standby facilities,
credit lines
and other commitments to lend:
- Under one year 57,574 __ __
- One year and over 17,175 8,588 8,200
80,804 9,801 9,410
Exchange rate contracts:
Spot and forward foreign exchange 154,224 1,896 416
Other exchange rate contracts 2,405 99 32
156,629 1,995 448
Interest rate contracts:
Interest rate swaps 24,632 150 37
Other interest rate contracts 21,887 __ __
46,519 150 37
Credit Risk-
Contract equivalent weighted
Figures in HK$m Amount amount amount
At 31 December 2000
Contingent liabilities:
Guarantees 3,829 3,763 2,963
Commitments:
Documentary credits and short-term
trade-related transactions 5,801 1,168 1,160
Undrawn formal standby facilities,
credit lines
and other commitments to lend:
- Under one year 59,665 __ __
- One year and over 18,438 9,219 8,975
83,904 10,387 10,135
Exchange rate contracts:
Spot and forward foreign exchange 169,896 2,886 647
Other exchange rate contracts 6,504 174 37
176,400 3,060 684
Interest rate contracts:
Interest rate swaps 46,951 842 201
Other interest rate contracts 6,229 __ __
53,180 842 201
The tables above give the nominal contract, credit equivalent and
risk-weighted amounts of off-balance sheet transactions. The credit equivalent
amounts are calculated for the purposes of deriving the risk-weighted amounts.
These are assessed in accordance with the Third Schedule of the Banking
Ordinance on capital adequacy and depend on the status of the counterparty and
the maturity characteristics. The risk weights used range from 0 per cent to
100 per cent for contingent liabilities and commitments, and from 0 per cent
to 50 per cent for exchange rate, interest rate and other derivative
contracts.
Contingent liabilities and commitments are credit-related instruments which
include acceptances, letters of credit, guarantees and commitments to extend
credit. The risk involved is essentially the same as the credit risk involved
in extending loan facilities to customers. These transactions are, therefore,
subject to the same credit origination, portfolio maintenance and collateral
requirements as for customers applying for loans. As the facilities may expire
without being drawn upon, the total of the contract amounts is not
representative of future liquidity requirements.
Off-balance sheet financial instruments arise from futures, forward, swap and
option transactions undertaken in the foreign exchange, interest rate and
equity markets.
The contract amounts of these instruments indicate the volume of transactions
outstanding at the balance sheet date and do not represent amounts at risk.
The credit equivalent amount of these instruments is measured as the sum of
positive mark-to-market values and the potential future credit exposure in
accordance with the Third Schedule of the Banking Ordinance.
At 30Jun01 At 30Jun00 At 31Dec00
Figures in HK$m
Replacement cost
Exchange rate contracts 936 868 1,491
Interest rate contracts 670 76 722
1,606 944 2,213
The replacement cost of contracts represents the mark-to-market assets on all
contracts (including non-trading contracts) with a positive value and which
have not been subject to any bilateral netting arrangement.
Segmental analysis
Segmental information is presented in respect of business and geographical
segments. Business segment information, which is more relevant to Hang Seng in
making operating and financial decisions, is chosen as the primary reporting
format.
For the purpose of segmental analysis, the allocation of revenue reflects the
benefits of capital and other funding resources allocated to the business or
geographical segments by way of internal capital allocation and funds transfer
mechanisms. Cost allocation is based on the direct cost incurred by the
respective segments and apportionment of management overheads.
(a) By business segment
Hang Seng comprises five major business segments. Personal Financial Services
provides banking services (including deposits, credit cards, mortgages and
other retail lending) and wealth management products (including insurance and
investment) to personal (including private banking) customers. Corporate and
Institutional Banking handles the relationships with large corporate and
institutional customers. Commercial Banking manages middle market and smaller
corporate relationships and provides trade-related financial services.
Treasury engages in interbank and capital market activities and proprietary
trading and manages the funding and liquidity positions of the bank and other
market risk positions arising from banking activities. Other mainly represents
shareholders' funds and investments in premises, investment properties and
long-term equities.
Personal Corporate &
Financial Institutional Commercial
Figures in Services Banking Banking Treasury Other Total
HK$m
Half-year
ended 30
June 2001
Income and
expenses
Total
operating
income 4,289 528 1,058 888 1,070 7,833
Operating
expenses^ (1,347) (53) (421) (63) 18 (1,866)
Operating
profit
before 2,942 475 637 825 1,088 5,967
provisions
Provisions
for bad
and (184) 104 45 __ 14 (21)
doubtful
debts
Operating
profit 2,758 579 682 825 1,102 5,946
Profit on
tangible
fixed
assets and
long-term
investments 3 __ 3 43 163 212
Share of
profits of
associated
companies __ __ __ __ 25 25
Profit on
ordinary
activities 2,761 579 685 868 1,290 6,183
before tax
^Including (65) (1) (17) (1) (105) (189)
depreciation
At 30 June
2001
Total assets 138,166 65,055 23,035 233,546 22,815 482,617
Total 310,111 19,024 79,867 12,148 16,284 437,434
liabilities
Personal Corporate &
Financial Institutional Commercial
Figures in Services Banking Banking Treasury Other Total
HK$m
Half-year
ended
30 June
2000
Income and
expenses
Total
operating
income 4,448 533 917 680 1,125 7,703
Operating
expenses^ (1,237) (49) (420) (61) 28 (1,739)
Operating
profit
before 3,211 484 497 619 1,153 5,964
provisions
Provisions
for bad
and (185) (26) 65 __ 63 (83)
doubtful
debts
Operating 3,026 458 562 619 1,216 5,881
profit
Profit on
tangible
fixed
assets and
long-term
investments 65 __ 78 1 52 196
Share of
profits of
associated
companies 3 __ __ __ 24 27
Profit on
ordinary
activities 3,094 458 640 620 1,292 6,104
before tax
^Including (65) (1) (19) (1) (105) (191)
depreciation
At 30 June
2000
Total assets 131,628 64,292 20,062 239,999 21,011 476,992
Total 293,910 21,425 81,572 15,886 20,497 433,290
liabilities
Personal Financial Services reported a fall of 10.8 per cent in profit before
tax compared with the same period last year. This was mainly due to the
decline in mortgage yields which outweighed the income growth in other wealth
management businesses. Corporate and Institutional Banking achieved a growth
of 26.4 per cent in profit before tax, mainly benefiting from a substantial
recovery of bad and doubtful debts. Commercial Banking showed an increase of
7.0 per cent in profit before tax, with steady growth in trade finance and
commercial lending and an enlarged customer base. Treasury recorded a growth
of 40.0 per cent in profit before tax, reflecting successful positioning of
portfolios to benefit from the downward trend in interest rates. Other showed
a marginal decrease of 0.2 per cent in profit before tax, with a lower
contribution from shareholders' funds offset by the increase in profit on
disposal of long-term equities.
(b) By geographical segment
The geographical segments in this analysis are classified by the location of
the principal operations of the subsidiary companies or, in the case of the
bank itself, by the location of the branches responsible for reporting the
results or advancing the funds.
Figures in HK$m Hong Kong Americas Other Total
Half-year ended
30 June 2001
Income and expenses
Total operating income 7,274 524 35 7,833
Profit on ordinary
activities
before tax 5,572 509 102 6,183
Total assets at 30 June 385,709 90,495 6,413 482,617
2001
Half-year ended
30 June 2000
Income and expenses
Total operating income 7,337 351 15 7,703
Profit on ordinary 5,765 338 1 6,104
activities before tax
Total assets at 30 June 417,652 53,563 5,777 476,992
2000
Additional information
1. Accounting policies
This news release has been prepared on a basis consistent with the accounting
policies adopted in the 2000 financial statements except for the recognition
and the presentation of proposed dividends which have been amended in
accordance with Hong Kong Statement of Standard Accounting Practice 9 (HKSSAP
9) on 'Events after the balance sheet date'.
Dividends proposed or declared after the balance sheet date were previously
recognised as a liability at the balance sheet date. Following the
implementation of HKSSAP 9, dividends proposed after the balance sheet date
are not recognised as a liability at the balance sheet date but are disclosed
as a separate component of shareholders' funds.
The effect of the above change in accounting policy was to increase
shareholders' funds by HK$4,015 million at 30 June 2001, HK$3,824 million at
30 June 2000 and HK$5,353 million at 31 December 2000 and to decrease
liabilities by the same amount. The return on average shareholders' funds for
the half-year periods ended 30 June 2000 and 31 December 2000 have been
restated to reflect the change.
2. Comparative figures
Certain comparative figures have been reclassified to conform with the current
period's presentation.
3. Market risk
Market risk is the risk that the movements in interest rates, foreign exchange
rates or equity and commodity prices will result in profits or losses to Hang
Seng. Market risk arises on financial instruments which are valued at current
market prices (mark-to-market basis) and those valued at cost plus any accrued
interest (accruals basis). Hang Seng's market risk arises from
customer-related business and from position taking.
Market risk is managed within risk limits approved by the Board of Directors.
Risk limits are set by product and risk type with market liquidity being a
principal factor in determining the level of limits set. Limits are set using
a combination of risk measurement techniques, including position limits,
sensitivity limits, as well as value at risk (VAR) limits at a portfolio
level.
Hang Seng adopts the risk management policies and risk measurement techniques
developed by the HSBC Group. The daily risk monitoring process measures actual
risk exposures against approved limits and triggers specific action to ensure
the overall market risk is managed within an acceptable level.
VAR is a technique which estimates the potential losses that could occur on
risk positions taken due to movements in market rates and prices over a
specified time horizon and to a given level of confidence. The model used by
Hang Seng calculates VAR on a variance/co-variance basis, using historical
movements in market rates and prices, a 99 per cent confidence level and a
10-day holding period, and generally takes account of correlations between
different markets and rates. The movement in market prices is calculated by
reference to market data for the last two years. Aggregation of VAR from
different risk types is based upon the assumption of independence between risk
types.
Hang Seng has obtained approval from the Hong Kong Monetary Authority (HKMA)
for the use of its VAR model to calculate market risk for capital adequacy
reporting. The HKMA is also satisfied with Hang Seng's market risk management
process.
The VAR for all interest rate risk and foreign exchange risk positions at 30
June 2001 was HK$152 million, compared with HK$213 million at 31 December
2000. The average VAR for the first half of 2001 was HK$202 million (HK$170
million for the first half of 2000). On an individual portfolio basis, the
values at risk at 30 June 2001 relating to the trading portfolio and accrual
portfolio were HK$6 million (HK$7 million at 31 December 2000) and HK$151
million (HK$212 million at 31 December 2000) respectively.
The average daily revenue earned from market risk-related treasury activities
for the first half of 2001, including accrual book net interest income and
funding related to dealing positions, was HK$6 million (HK$6 million for the
first half of 2000). No loss was recorded out of 121 trading days for the
first half of 2001. The highest daily revenue was HK$22 million.
Hang Seng's foreign exchange exposures mainly comprise foreign exchange
dealing by Treasury and currency exposures originated by its banking business.
The latter are transferred to Treasury where they are centrally managed within
foreign exchange position limits approved by the Board of Directors.
The VAR relating to foreign exchange positions was HK$5 million at 30 June
2001 (HK$6 million at 31 December 2000) and the average amount for the first
half of 2001 was HK$4 million (HK$12 million for the first half of 2000). The
average one-day foreign exchange profit for the first half of 2001 was HK$1
million (HK$2 million for the first half of 2000).
Interest rate risk arises in both the treasury dealing portfolio and accrual
book, which are managed by Treasury under limits approved by the Board of
Directors. The VAR relating to interest rate exposures was HK$152 million at
30 June 2001 (HK$213 million at 31 December 2000) and the average amount for
the first half of 2001 was HK$202 million (HK$169 million for the first half
of 2000). The average daily revenue earned from treasury-related interest rate
activities for the first half of 2001 was HK$5 million (HK$4 million for the
first half of 2000).
4. Foreign currency position
Foreign currency exposures arising from dealing, non-dealing and structural
positions, where an individual currency constitutes 10 per cent or more of the
total net position in all foreign currencies, are shown separately as follows:
Other Total
foreign foreign
Figures in HK$m US$ currencies currencies
At 30 June 2001
Spot assets 235,047 54,638 289,685
Spot liabilities (207,328) (52,183) (259,511)
Forward purchases 64,170 17,136 81,306
Forward sales (83,184) (19,531) (102,715)
Net options positions __ __ __
Net long non-structural 8,705 60 8,765
position
Net structural position 508 51 559
At 30 June 2000
Spot assets 206,609 52,890 259,499
Spot liabilities (164,762) (52,441) (217,203)
Forward purchases 59,470 29,407 88,877
Forward sales (95,033) (29,784) (124,817)
Net options positions __ __ __
Net long non-structural 6,284 72 6,356
position
Net structural position 413 132 545
At 31 December 2000
Spot assets 209,969 88,563 298,532
Spot liabilities (187,255) (74,755) (262,010)
Forward purchases 79,272 21,146 100,418
Forward sales (95,630) (34,920) (130,550)
Net options positions 2 (2) __
Net long non-structural 6,358 32 6,390
position
Net structural position 508 127 635
5. Material related-party transactions
(a) Immediate holding company and fellow subsidiary companies
During the first half of 2001, Hang Seng entered into transactions with its
immediate holding company and fellow subsidiary companies in the ordinary
course of its interbank activities including the acceptance and placement of
interbank deposits, correspondent banking transactions and off-balance sheet
transactions. The activities were priced at the relevant market rates at the
time of the transactions. Hang Seng used the IT services of, and shared an
automated teller machine network with, its immediate holding company on a cost
recovery basis. Hang Seng also maintained a staff retirement benefit scheme
for which a fellow subsidiary company acts as insurer and administrator.
The aggregate amount of income and expenses arising from these transactions
during the period, and the balances of amounts due to and from relevant
related parties and the total contract sum of off-balance sheet transactions
at the end of the period are as follows:
Income and
expenses for
the period
Half-year ended Half-year ended Half-year ended
Figures in 30Jun01 30Jun00 31Dec00
HK$m
Interest 265 334 368
income
Interest 33 41 40
expense
Operating 231 233 304
expenses
Balances at the period-end
Figures in HK$m At 30Jun01 At 30Jun00 At 31Dec00
Total amount due from 7,641 10,129 10,383
Total amount due to 1,098 1,822 1,999
Total contract sum of
off-balance sheet 26,766 24,131 41,510
transactions
(b) Associated companies
Hang Seng maintains an interest-free shareholders' loan to an associated
company. The balance at 30 June 2001 was HK$208 million (HK$208 million at 30
June 2000 and 31 December 2000). Hang Seng acts as agent for the marketing of
life insurance products (including mandatory provident fund products) for an
associated company. Total agency commissions received during the first half of
2001 amounted to HK$144 million (HK$66 million and HK$105 million for the
first half and second half of 2000 respectively).
(c) Ultimate holding company
During the first half of 2001, no transaction was conducted with the bank's
ultimate holding company (unchanged from 2000).
(d) Key management personnel
During the first half of 2001, no material transaction was conducted with key
management personnel of Hang Seng and its holding companies and parties
related to them (unchanged from 2000).
6. Statutory accounts
The information in this news release is unaudited and does not constitute
statutory accounts.
The statutory accounts for the year ended 31 December 2000 have been delivered
to the Registrar of Companies and the Hong Kong Monetary Authority. The
auditors expressed an unqualified opinion on those statutory accounts in their
report dated 26 February 2001. The Annual Report and Accounts for the year
ended 31 December 2000, which includes the statutory accounts, can be obtained
on request from the Company Secretary Department, Level 10, 83 Des Voeux Road
Central, Hong Kong; or from Hang Seng Bank's website www.hangseng.com.
7. Ultimate holding company
Hang Seng Bank is an indirectly-held, 62.14 per cent-owned subsidiary of HSBC
Holdings plc.
8. Statement of compliance
This news release has been prepared in accordance with Hong Kong Statement of
Standard Accounting Practice 25 'Interim Financial Reporting'. It also
complies with the 'Recommendations on Interim Financial Disclosure by
Authorised Institutions Incorporated in Hong Kong' issued by the Hong Kong
Monetary Authority in June 2001.
9. Register of shareholders
The Register of Shareholders of Hang Seng Bank will be closed on Monday, 27
August 2001 and Tuesday, 28 August 2001, during which no transfer of shares
can be registered. In order to qualify for the first interim dividend, all
transfers, accompanied by the relevant share certificates, must be lodged with
the bank's Registrars, Central Registration Hong Kong Limited, Shops
1712-1716, 17th Floor, Hopewell Centre, 183 Queen's Road East, Wanchai, Hong
Kong, for registration not later than 4:00 pm on Friday, 24 August 2001. The
first interim dividend will be payable on Tuesday, 4 September 2001 to
shareholders on the Register of Shareholders of the bank on Tuesday, 28 August
2001.
10. News release
Copies of the interim results announcement may be obtained from the Company
Secretary Department, Level 10, 83 Des Voeux Road Central, Hong Kong; or from
Hang Seng's website http://www.hangseng.com.