Hang Seng pt 4/6
HSBC Holdings PLC
05 March 2007
Analysis of assets and liabilities by remaining maturity
The maturity analysis is based on the remaining period at the balance sheet date
to the contractual maturity date in accordance with the guideline issued by the
Hong Kong Monetary Authority.
Three
months Three One
Repayable or less months year Over No
on but not to to five contractual
Figures in HK$m demand on demand one year five years years Trading maturity Total
Assets
Cash and balances
with banks and
other financial
institutions 9,390 _ _ _ _ _ _ 9,390
Placings with and
advances to
banks and other
financial
institutions 16,529 82,200 976 _ _ _ _ 99,705
Trading assets _ _ _ _ _ 12,467 _ 12,467
Financial assets
designated
at fair value _ 136 400 1,256 2,557 _ 3,931 8,280
Derivative
financial
instruments _ 166 146 153 48 1,374 _ 1,887
Advances to
customers 17,087 34,868 39,736 87,768 99,894 _ _ 279,353
Financial
investments _ 22,703 51,385 134,981 16,601 _ 2,040 227,710
Investments in
associates _ _ _ _ _ _ 3,488 3,488
Investment
properties _ _ _ _ _ _ 2,732 2,732
Premises, plant and
equipment _ _ _ _ _ _ 6,516 6,516
Interest in leasehold
land held for own
use under operating _ _ _ _ _ _ 580 580
lease
Intangible assets _ _ _ _ _ _ 2,070 2,070
Other assets 6,304 5,694 1,500 262 10 _ 1,116 14,886
At 31Dec06 49,310 145,767 94,143 224,420 119,110 13,841 22,473 669,064
At 31Dec05 43,944 97,970 74,642 220,161 110,087 13,861 20,155 580,820
Three
months Three One
Repayable or less months year Over No
on but not to to five contractual
Figures in HK$m demand on demand one year five years years Trading maturity Total
Liabilities
Current, savings
and other
deposit
accounts 290,463 182,885 8,497 976 _ _ _ 482,821
Deposits
from banks 2,797 14,032 1,121 _ _ _ _ 17,950
Trading
liabilities _ _ _ _ _ 60,093 _ 60,093
Financial
liabilities
designated at
fair value 81 _ _ 996 _ _ 485 1,562
Derivative
financial
instruments _ 7 101 98 11 1,314 _ 1,531
Certificates of
deposit and
other debt
securities
in issue _ 74 866 6,655 _ _ _ 7,595
Other
liabilities 6,486 8,577 468 120 143 _ 329 16,123
Liabilities
to customers
under insurance
contracts _ _ _ _ _ _ 22,975 22,975
Deferred tax
and current
tax liabilities _ 481 747 _ _ _ 1,488 2,716
Subordinated
liabilities _ _ _ 7,000 _ _ _ 7,000
At 31Dec06 299,827 206,056 11,800 15,845 154 61,407 25,277 620,366
At 31Dec05 242,673 207,494 8,478 9,120 4,690 47,139 17,496 537,090
Cash and balances with banks and other financial institutions
Figures in HK$m At 31Dec06 At 31Dec05
Cash in hand 4,920 4,772
Balances with central banks 357 303
Balances with banks and other
financial institutions 4,113 4,126
9,390 9,201
Placings with and advances to banks and other financial institutions
Figures in HK$m At 31Dec06 At 31Dec05
Placings with and advances to banks and
other financial institutions maturing
within one month 75,722 54,338
Placings with and advances to banks and
other financial institutions maturing
after one month 23,983 14,948
99,705 69,286
Trading assets
Figures in HK$m At 31Dec06 At 31Dec05
Treasury bills 6,071 2,594
Certificates of deposit 212 538
Other debt securities 6,109 9,440
Debt securities 12,392 12,572
Equity shares 16 28
Total trading securities 12,408 12,600
Loans and advances to customers^ 59 _
Total trading assets 12,467 12,600
Debt securities:
- listed in Hong Kong 2,839 767
- listed outside Hong Kong 269 _
3,108 767
- unlisted 9,284 11,805
12,392 12,572
Equity shares:
- listed in Hong Kong 16 17
- unlisted _ 11
16 28
Total trading securities 12,408 12,600
Debt securities:
Issued by public bodies:
- central governments and central
banks 8,969 5,625
- other public sector entities 926 1,489
9,895 7,114
Issued by other bodies:
- banks and other financial
institutions 1,555 2,836
- corporate entities 942 2,622
2,497 5,458
12,392 12,572
Equity shares:
Issued by corporate entities 16 28
Total trading securities 12,408 12,600
^These represent amounts receivable from counterparties on trading
transactions not yet settled.
Financial assets designated at fair value
Figures in HK$m At 31Dec06 At 31Dec05
Certificates of deposit 232 194
Other debt securities 4,587 4,075
Debt securities 4,819 4,269
Equity shares 3,461 1,758
8,280 6,027
Debt securities:
- listed in Hong Kong 359 100
- listed outside Hong Kong 31 22
390 122
- unlisted 4,429 4,147
4,819 4,269
Equity shares:
- listed in Hong Kong 1,202 732
- listed outside Hong Kong 1,300 979
2,502 1,711
- unlisted 959 47
3,461 1,758
8,280 6,027
Debt securities:
Issued by public bodies:
- central governments and central
banks 870 865
- other public sector entities 285 295
1,155 1,160
Issued by other bodies:
- banks and other financial
institutions 3,535 2,937
- corporate entities 129 172
3,664 3,109
4,819 4,269
Equity shares:
Issued by corporate entities 3,461 1,758
8,280 6,027
Financial assets are designated at fair value, usually together with the related
liabilities or derivative financial instruments, primarily for the purpose of
eliminating or significantly reducing the accounting mismatch. The figures also
include those financial assets of life insurance funds designated at fair value
for backing policyholders' liabilities.
Advances to customers
Figures in HK$m At 31Dec06 At 31Dec05
Gross advances to customers 280,277 261,714
Less:
Loan impairment allowances:
- individually assessed (406) (524)
- collectively assessed (518) (510)
279,353 260,680
Included in advances to customers are:
- trade bills 3,907 3,024
- loan impairment allowances (16) (14)
3,891 3,010
Loan impairment allowances against advances to customers
Individually Collectively
Figures in HK$m assessed assessed Total
At 1 January 2006 524 510 1,034
Amounts written off (224) (177) (401)
Recoveries of advances
written off in previous years 25 40 65
New impairment allowances
charged to income statement 238 185 423
Impairment allowances
released to income statement (131) (40) (171)
Unwind of discount of loan
impairment allowances
recognised as 'interest income' (26) - (26)
At 31 December 2006 406 518 924
Total loan impairment allowances as a percentage of gross advances to customers
are as follows:
At 31Dec06 At 31Dec05
% %
Loan impairment allowances:
- individually assessed 0.15 0.20
- collectively assessed 0.18 0.19
Total loan impairment allowances 0.33 0.39
Total loan impairment allowances as a percentage of gross advances to customers
was 0.33 per cent at 31 December 2006, compared with 0.39 per cent at the
previous year-end. Individually assessed allowances as a percentage of gross
advances fell by 0.05 percentage points to 0.15 per cent, reflecting recoveries
from doubtful accounts and writing off of irrecoverable balances against
impairment allowances. The percentage of collectively assessed allowances was
slightly lowered to 0.18 per cent from 0.19 per cent at the previous year-end.
Impaired advances and allowances
Figures in HK$m At 31Dec06 At 31Dec05
Gross impaired advances 1,387 1,433
Individually assessed allowances (406) (524)
Net impaired advances 981 909
Individually assessed allowances
as a percentage of
gross impaired advances 29.3% 36.6%
Gross impaired advances
as a percentage of
gross advances to customers 0.5% 0.5%
Impaired advances are those advances with objective evidence of impairment as
assessed on an individual basis. Impairment allowances are made to write down
the carrying value of the advances to the discounted value of future recoverable
amounts, including the realisation of collateral.
Gross impaired advances fell by 3.2 per cent to HK$1,387 million, reflecting the
recovery and upgrading of certain commercial banking accounts. Gross impaired
advances as a percentage of gross advances to customers stood at 0.5 per cent,
the same level as last year.
Overdue advances
Advances to customers that are more than three months overdue and their
expression as a percentage of gross advances to customers are as follows:
At 31Dec06 At 31Dec05
HK$m % HK$m %
Gross advances to customers
which have been overdue
with respect to either principal
or interest for periods of:
- six months or less but over three
months 504 0.2 482 0.2
- one year or less but over six
months 263 0.1 211 0.1
- over one year 173 _ 169 _
940 0.3 862 0.3
Advances with a specific repayment date are classified as overdue when the
principal or interest is overdue and remains unpaid at year-end. Advances
repayable by regular instalments are treated as overdue when an instalment
payment is overdue and remains unpaid at year-end. Advances repayable on demand
are classified as overdue either when a demand for repayment has been served on
the borrower but repayment has not been made in accordance with the demand
notice, or when the advances have remained continuously outside the approved
limit advised to the borrower for more than the overdue period in question.
Overdue advances increased by 9.0 per cent to HK$940 million at 31 December
2006, representing 0.3 per cent (same level as the previous year-end) of gross
advances to customers, mainly attributable to commercial banking accounts.
Rescheduled advances
Rescheduled advances and their expression as a percentage of gross advances to
customers are as follows:
At 31Dec06 At 31Dec05
HK$m % HK$m %
Rescheduled advances to customers 357 0.1 361 0.1
Rescheduled advances are those that have been rescheduled or renegotiated for
reasons related to the borrower's financial difficulties. This will normally
involve the granting of concessionary terms and resetting the overdue account to
non-overdue status. A rescheduled advance will continue to be disclosed as such
unless the debt has been performing in accordance with the rescheduled terms for
a period of six to twelve months. Rescheduled advances that have been overdue
for more than three months under the rescheduled terms are reported as overdue
advances to customers (page 38).
Rescheduled advances decreased by HK$4 million, or 1.1 per cent, to HK$357
million at 31 December 2006, representing 0.1 per cent (same level as the
previous year-end) of gross advances to customers.
Segmental analysis of advances to customers by geographical area
Advances to customers by geographical area are classified according to the
location of the counterparties after taking into account the transfer of risk.
In general, risk transfer applies when an advance is guaranteed by a party
located in an area which is different from that of the counterparty. At 31
December 2006, over 90 per cent of the group's advances to customers, including
related impaired advances and overdue advances, were classified under Hong Kong
(a position unchanged from that at 31 December 2005).
Gross advances to customers by industry sector
The analysis of gross advances to customers by industry sector based on
categories and definitions used by the Hong Kong Monetary Authority ('HKMA') is
as follows:
At 31Dec06 At 31Dec05
Figures in HK$m (restated)
Gross advances to customers for
use in Hong Kong
Industrial, commercial and
financial sectors
Property development 18,051 16,446
Property investment 48,096 45,964
Financial concerns 2,103 968
Stockbrokers 234 221
Wholesale and retail trade 6,360 5,562
Manufacturing 7,670 6,477
Transport and transport equipment 11,145 11,919
Other 22,787 22,912
116,446 110,469
Individuals
Advances for the purchase of flats under
the Government Home Ownership
Scheme, Private Sector Participation
Scheme and Tenants Purchase Scheme 20,078 22,879
Advances for the purchase of other
residential properties 83,616 81,318
Credit card advances 9,448 7,735
Other 8,813 7,563
121,955 119,495
Total gross advances for use in Hong Kong 238,401 229,964
Trade finance 19,684 15,874
Gross advances for use outside Hong Kong 22,192 15,876
Gross advances to customers 280,277 261,714
Gross advances to customers rose by 7.1 per cent compared with the previous
year-end.
Lending to the property development sector rose 9.8 per cent, reflecting the
increase in financing of development projects by CIB and CMB. The 4.6 per cent
rise in property investment was largely residential mortgages to property
holding vehicles controlled by individuals. Lending to investment companies
grouped under the financial concerns sector rose significantly, driven by the
active investment market. The encouraging growth of the CMB loan portfolio was
reflected in rises of 14.3 per cent and 18.4 per cent in lending to the
wholesale and retail trade and manufacturing sector respectively. Lending to the
transport and transport equipment sector recorded a fall of 6.5 per cent,
attributable to the disposal of a part of the taxi portfolio to balance the
overall loan portfolio structure. Excluding such effect, lending to this sector
rose 5.5 per cent.
Trade finance recorded strong growth of 24.0 per cent and gained substantial
market share in 2006, reflecting CMB's achievement in strengthening customer
relationships and enhancing trade finance service efficiency.
Lending to individuals recorded a rise of 2.1 per cent. Excluding the fall in
Government Home Ownership Scheme mortgages, lending to individuals grew by 5.4
per cent. Residential mortgages to individuals rose by 2.8 per cent and the bank
gained market share amid intense market competition. Including mortgages held in
the name of investment holding vehicles, which were grouped under the property
investment sector as mentioned above, the growth rate reached 5.2 per cent.
With the improved economic environment and positive consumer sentiment, personal
loans and card advances rose 46.4 per cent and 22.1 per cent respectively. PFS
further expanded its consumer finance business by stepping up marketing
initiatives and improving process efficiency.
Loans for use outside Hong Kong increased by HK$6,316 million, or 39.8 per cent,
over the previous year-end. This was due largely to the 50.9 per cent expansion
of lending by mainland branches, which had reached HK$15,851 million at 31
December 2006. Strong growth was recorded in corporate lending, driven by
renminbi loans which can be priced at a higher margin. Trade finance rose
significantly, reflecting good collaboration between the Hong Kong and mainland
trade services teams. Mainland branches continued to grow residential mortgage
business, leveraging the bank's strong capabilities and experience in Hong Kong.
Financial investments
Figures in HK$m At 31Dec06 At 31Dec05
Available-for-sale at fair value:
- debt securities 209,463 177,813
- equity shares 2,110 1,360
Held-to-maturity debt securities at
amortised cost 16,137 10,731
227,710 189,904
Fair value of held-to-maturity debt
securities 16,551 10,778
Treasury bills 1,088 4,816
Certificates of deposit 25,020 27,048
Other debt securities 199,492 156,680
Debt securities 225,600 188,544
Equity shares 2,110 1,360
227,710 189,904
Debt securities:
- listed in Hong Kong 3,759 3,008
- listed outside Hong Kong 1,914 1,947
5,673 4,955
- unlisted 219,927 183,589
225,600 188,544
Equity shares:
- listed in Hong Kong 1,702 1,049
- listed outside Hong Kong 150 186
1,852 1,235
- unlisted 258 125
2,110 1,360
227,710 189,904
Fair value of listed financial
investments 7,538 6,209
Debt securities:
Issued by public bodies:
- central governments and central banks 8,321 15,981
- other public sector entities 7,044 8,667
15,365 24,648
Issued by other bodies:
- banks and other financial institutions 192,751 149,557
- corporate entities 17,484 14,339
210,235 163,896
225,600 188,544
Equity shares:
Issued by corporate entities 2,110 1,360
227,710 189,904
Available-for-sale investments include treasury bills, certificates of deposit,
other debt securities and equity shares intended to be held for an indefinite
period of time, but which may be sold in response to needs for liquidity or
changes in the market environment. Available-for-sale investments are carried at
fair value with the gains and losses from change in fair value recognised
through equity reserves.
Held-to-maturity debt securities are stated at amortised cost. Where debt
securities have been purchased at a premium or discount, the carrying value of
the security is adjusted to reflect the effective interest rate of the debt
security taking into account such premium or discount.
Amounts due from/to immediate holding company and fellow subsidiary companies
At balance sheet dates, the amounts due from/to immediate holding company and
fellow subsidiary companies included in the assets and liabilities balances of
the consolidated balance sheet are as follows:
Figures in HK$m At 31Dec06 At 31Dec05
Amounts due from:
Cash and balances with banks and
other financial institutions 1,665 718
Placings with and advances to banks
and other financial institutions 4,573 3,495
Trading assets _ 50
Financial assets designated at fair
value 2,842 2,299
Derivative financial instruments 194 145
Financial investments 1,023 1,135
Other assets 79 29
10,376 7,871
Amounts due to:
Customer accounts 199 167
Deposits from banks 5,724 5,136
Derivative financial instruments 333 488
Subordinated liabilities 2,022 2,016
Other liabilities 473 361
8,751 8,168
Investments in associates
Figures in HK$m At 31Dec06 At 31Dec05
Share of net assets 3,158 2,611
Goodwill 330 318
3,488 2,929
Intangible assets
Figures in HK$m At 31Dec06 At 31Dec05
Present value of in-force long-term
insurance business 1,927 1,565
Internally developed software 129 56
Acquired software 14 15
2,070 1,636
Other assets
Figures in HK$m At 31Dec06 At 31Dec05
Items in the course of collection
from other banks 6,036 8,068
Prepayments and accrued income 3,520 3,016
Deferred tax assets 1 9
Assets held for sale 256 216
Acceptances and endorsements 2,855 2,371
Other accounts 2,218 1,545
14,886 15,225
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