HK&S Bkng Corp Results (1/2)

HSBC Holdings PLC 05 August 2002 THE HONGKONG AND SHANGHAI BANKING CORPORATION LIMITED 2002 INTERIM CONSOLIDATED RESULTS - HIGHLIGHTS * Operating profit before provisions up 0.4 per cent to HK$18,032 million (HK$17,959 million in the first half of 2001; up 2.3 per cent from HK$17,626 million in the second half of last year). * Pre-tax profit down 7.8 per cent to HK$17,240 million (HK$18,691 million in the first half of 2001; up 8.1 per cent from HK$15,944 million in the second half of last year). * Attributable profit down 10.3 per cent to HK$12,753 million (HK$14,214 million in the first half of 2001; up 6.1 per cent from HK$12,023 million in the second half of last year). * Return on average shareholders' funds of 30.4 per cent (34.0 per cent and 26.6 per cent in the first and second halves of 2001). * Assets up by 4.0 per cent to HK$1,812.4 billion (HK$1,742.7 billion at the end of 2001). * Total capital ratio of 13.1 per cent; tier 1 capital ratio of 9.7 per cent (13.0 per cent and 9.5 per cent at 31 December 2001). * Cost:income ratio of 37.1 per cent (37.2 per cent and 39.2 per cent for the first and second halves of 2001). Comment by David Eldon, Chairman We have reported an operating profit before provisions of HK$18.0 billion, in line with the first half of last year although 2 per cent above the second half. Costs were held at the same level as the first half of last year, and were 6 per cent down on the second half. Attributable profit of HK$12.8 billion was 10 per cent down on the first half of last year, due to lower levels of bad debt releases and recoveries and significantly lower investment gains. Attributable profit was up 6 per cent on the second half of 2001. This has been achieved against a backdrop of a deflationary economy in Hong Kong which has impacted domestic confidence. The results demonstrate the resilience of the Group's businesses in Hong Kong and the rest of the Asia-Pacific region, and reflect the progress made in implementing the HSBC Group's 'Managing for Value' strategy. Highlights of the first half of 2002 include: * Net interest margin improved to 2.59 per cent, despite the loss of HK$2.5 billion of net interest income through lower interest rates and lower mortgage pricing in Hong Kong. * Operating profit before provisions for Personal Financial Services was up 15 per cent at HK$8.8 billion. * Income from sale of wealth management products up 46 per cent at HK$2.4 billion. * Cards in issue now stand at nearly 5.3 million, up 9 per cent over the past 12 months. Despite a sharp rise in bad and doubtful debts due to personal bankruptcies in Hong Kong, credit cards remain profitable in Hong Kong and Asia-wide. * The Personal Financial Services businesses in Asia excluding Hong Kong increased operating profit by over 50 per cent through acquisition and organic growth. * The Corporate, Investment Banking and Markets division grew operating profit before provisions by 2 per cent. A 14 per cent growth in the contribution from Treasury was offset by narrower spreads in Corporate Banking and lower fees in Investment Banking. * Asset quality in Corporate and Commercial Banking remains good with net releases of bad and doubtful debt provisions. * Market share of loans for use in Hong Kong was up approximately 2 per cent, including residential mortgages and other personal lending. The outlook for Asia remains challenging amid continuing uncertainties. In Hong Kong, weak asset prices and high unemployment are likely to constrain domestic demand and investment. In these difficult circumstances, we will continue to implement our 'Managing for Value' strategy by holding down costs, growing our wealth management businesses and focusing on customer service across all lines of business. Results by Line of Business Corporate, Investment Personal Banking Financial Commercial and Private Figures in HK$m Services Banking Markets Banking Other Total Half-year ended 30Jun02 Operating profit before provisions 8,754 3,425 6,261 7 (415 ) 18,032 Provisions (1,683 ) 235 264 - 3 (1,181 ) Operating profit 7,071 3,660 6,525 7 (412 ) 16,851 Other 36 54 76 - 223 389 Profit on ordinary activities before tax 7,107 3,714 6,601 7 (189 ) 17,240 Half-year ended 30Jun01 Operating profit before provisions 7,615 3,765 6,124 161 294 17,959 Provisions (784 ) (774 ) 914 - 13 (631 ) Operating profit 6,831 2,991 7,038 161 307 17,328 Other 17 13 334 - 999 1,363 Profit on ordinary activities before tax 6,848 3,004 7,372 161 1,306 18,691 Half-year ended 31Dec01 Operating profit before provisions 7,506 3,289 6,477 10 344 17,626 Provisions (1,597 ) (32 ) (22 ) - (53 ) (1,704 ) Operating profit 5,909 3,257 6,455 10 291 15,922 Other 16 35 47 - (76 ) 22 Profit on ordinary activities before tax 5,925 3,292 6,502 10 215 15,944 In Personal Financial Services, net interest income was higher than both halves of 2001 reflecting sustained growth in lending and deposits. Income from wealth management initiatives continued to grow, particularly from sales of unit trusts and insurance products, and there was increased fee income from cards. Operating expenses were 0.8 per cent and 8.7 per cent lower than the first and second halves of 2001 respectively. The reduction against the second half of 2001 reflects lower retirement benefit and IT costs. Higher provisions in 2002 mainly relate to credit cards, particularly in Hong Kong, reflecting the higher level of personal bankruptcies, although mortgage provisions were lower. In Commercial Banking, reduced net interest income due to lower spreads was more than offset by a net release of provisions for bad and doubtful debts compared with a net charge in the first half of 2001 which mainly reflected provisioning in Indonesia. Corporate, Investment Banking and Markets benefited from a substantial increase in net interest income in the group's treasury operations partly offset by mark-to-market losses on debt securities, and lower spreads on corporate lending and deposits. The first half of 2001 benefited from the write-back of provisions against the Olympia and York exposure. Other includes the funding costs for staff housing loans and fixed assets. The first half of 2001 included the gain on disposal of Modern Terminals. Consolidated Profit and Loss Account Half-year ended Half-year ended Half-year ended Figures in HK$m 30Jun02 30Jun01 31Dec01 Interest income 29,427 47,773 35,813 Interest expense (9,711 ) (28,271 ) (16,041 ) Net interest income 19,716 19,502 19,772 Other operating income 8,968 9,114 9,237 Operating income 28,684 28,616 29,009 Operating expenses (10,652 ) (10,657 ) (11,383 ) Operating profit before provisions 18,032 17,959 17,626 Provisions for bad and doubtful debts (1,280 ) (595 ) (1,662 ) Provisions for contingent liabilities and commitments 99 (36 ) (42 ) Operating profit 16,851 17,328 15,922 Profit on tangible fixed assets and long-term investments 326 1,273 16 Deficit arising on property revaluation - - (36 ) Share of profits less losses of associated companies 63 90 42 Profit on ordinary activities before tax 17,240 18,691 15,944 Tax on profit on ordinary activities (2,510 ) (2,386 ) (2,093 ) Profit on ordinary activities after tax 14,730 16,305 13,851 Minority interests (1,977 ) (2,091 ) (1,828 ) Profit attributable to shareholders 12,753 14,214 12,023 Retained profits brought forward 19,980 44,818 46,239 Change of accounting policy in respect of defined benefit retirement schemes 576 - - As restated 20,556 44,818 46,239 Exchange and other adjustments 661 (310 ) 104 Transfer of depreciation to premises revaluation reserve 170 178 179 Realisation on disposal of premises and investment properties 45 20 42 Ordinary dividends paid in respect of the current year (3,000 ) (7,563 ) (9,700 ) Special interim dividend paid out of the bank's retained earnings - - (28,689 ) Ordinary dividends proposed (6,000 ) (5,000 ) - Preference dividends payable (658 ) (118 ) (218 ) (9,658 ) (12,681 ) (38,607 ) Retained profits carried forward 24,527 46,239 19,980 Extract from the Consolidated Balance Sheet Figures in HK$m At 30Jun02 At 30Jun01 At 31Dec 01 Assets Cash and short-term funds 322,704 395,000 344,637 Placings with banks maturing after one month 106,263 89,774 115,702 Certificates of deposit 44,134 39,026 34,468 Hong Kong SAR Government certificates of indebtedness 70,094 64,534 67,344 Securities held for dealing purposes 86,746 77,695 74,384 Long-term investments 306,493 231,905 266,946 Advances to customers 708,285 652,397 674,557 Amounts due from fellow subsidiary companies 24,095 22,791 22,095 Investments in associated companies 1,539 1,608 1,566 Tangible fixed assets 40,529 43,555 40,967 Other assets 101,565 95,359 100,075 1,812,447 1,713,644 1,742,741 Liabilities Hong Kong SAR currency notes in circulation 70,094 64,534 67,344 Current, savings and other deposit accounts 1,419,076 1,341,671 1,378,119 Deposits by banks 41,969 45,504 47,717 Amounts due to fellow subsidiary companies 10,958 10,895 11,417 Amounts due to ultimate holding company 587 367 480 Other liabilities 141,074 127,127 118,847 1,683,758 1,590,098 1,623,924 Capital resources Loan capital from ultimate holding company 2,925 2,925 2,924 Other loan capital 15,035 14,246 14,828 Minority interests 17,503 17,940 17,936 Share capital 44,946 16,258 44,937 Reserves 42,280 67,177 38,192 Proposed dividends 6,000 5,000 - Shareholders' funds 93,226 88,435 83,129 128,689 123,546 118,817 1,812,447 1,713,644 1,742,741 Consolidated Statement of Changes in Equity Half-year ended Half-year ended Half-year ended Figures in HK$m 30Jun02 30Jun01 31Dec01 Shareholders' funds at beginning of period 83,129 90,812 88,435 Change of accounting policy in respect of defined benefit retirement schemes 576 - - As restated 83,705 90,812 88,435 Profit for the period attributable to shareholders 12,753 14,214 12,023 Unrealised surplus on revaluation of premises - - (2,035 ) Unrealised surplus on revaluation of investment properties - - (178 ) Long-term equity investments revaluation reserve - Loss on revaluation (204 ) (488 ) (156 ) - Realisation on disposal (172 ) (954 ) (71 ) New non-cumulative irredeemable preference shares issued - - 28,679 Dividends (3,658 ) (14,681 ) (43,607 ) Exchange and other movements 802 (468 ) 39 Shareholders' funds at end of period 93,226 88,435 83,129 Consolidated Cash Flow Statement Half-year ended Half-year ended Figures in HK$m 30Jun02 30Jun01 Operating activities Cash (used in)/generated from operations (3,863 ) 48,819 Income received on long-term investments 5,838 7,184 Dividends received from associated companies 91 27 Interest paid on loan capital (661 ) (653 ) Dividends paid to minority interests (2,027 ) (2,027 ) Ordinary dividends paid (3,000 ) (13,000 ) Preference dividends paid (235 ) (277 ) Taxation paid (792 ) (1,073 ) Net cash (outflow)/inflow from operating activities (4,649 ) 39,000 Investing activities Purchase of long-term investments (149,875 ) (178,038 ) Proceeds from sale or redemption of long-term investments 115,493 129,531 Purchase of tangible fixed assets (460 ) (631 ) Proceeds from sale of tangible fixed assets 83 91 Net cash outflow in respect of acquisition of and increased shareholding in subsidiary companies (176 ) (172 ) Net cash outflow in respect of sale of subsidiary companies - (23,599 ) Purchase of business (14 ) (7 ) Purchase of interest in associated company - (12 ) Proceeds from sale of interest in associated company 1 164 Net cash outflow from investing activities (34,948 ) (72,673 ) Decrease in cash and cash equivalents (39,597 ) (33,673 ) Additional Information 1. Net interest income Half-year ended Half-year ended Half-year ended Figures in HK$m 30Jun02 30Jun01 31Dec01 Net interest income 19,716 19,502 19,772 Average interest-earning assets 1,537,160 1,533,716 1,528,212 Net interest spread 2.46 % 2.20 % 2.36 % Net interest margin 2.59 % 2.56 % 2.57 % Net interest income increased by HK$214 million, or 1.1 per cent, compared with the first half of 2001, to HK$19,716 million primarily generated by a strong treasury performance and growth in personal lending. These were offset to a large degree by a HK$1,823 million lower contribution from net free funds, reflecting lower interest rates, and reduced spreads on home mortgage loans in Hong Kong which led to a HK$670 million reduction in net interest income. Net interest income from Personal Financial Services grew by 4.0 per cent over the same period last year. Net interest income from Corporate, Investment Banking and Markets increased by HK$817 million, or 15.2 per cent, mainly in the bank in Hong Kong, driven by pre-emptive positioning of the accrual books that continue to benefit from the low interest rate environment, partly offset by lower spreads on corporate lending and deposits. Lower spreads also led to reduced net interest income in Commercial Banking. Average interest-earning assets were broadly in line with the same period last year with increased average advances to customers and holdings of debt securities offset by reduced lending to banks. Average advances to customers for the group as a whole grew by HK$29.7 billion, or 4.5 per cent, compared with the same period last year. Average customer advances in the bank in Hong Kong grew by HK$19.6 billion, or 7.0 per cent, with increases in mortgage loans, mainly to first-time buyers, and credit card advances. Average term lending to corporate and commercial customers was also higher in the bank in Hong Kong despite subdued loan demand in these sectors. Average advances to customers in the rest of the Asia-Pacific region continued to grow, particularly in HSBC Bank Australia as a result of the acquisition of the former NRMA Building Society at the end of 2001, and in the bank in Taiwan, Japan, China and India reflecting growth in both personal and corporate lending. Average loans to banks were lower in both the bank in Hong Kong and Hang Seng Bank reflecting the switching of funds to higher yielding debt securities. The group's net interest margin of 2.59 per cent for the first half of 2002 was higher than both halves of last year. Spread widened by 26 basis points compared with the first half of 2001 and by 10 basis points compared with the second half. For the bank in Hong Kong, net interest margin improved by three basis points compared with the first half of 2001 to 2.52 per cent. Spread widened by 23 basis points. The strong treasury performance in 2002 accounted for an improvement of 22 basis points in spread. Higher releases of suspended interest during the first half of 2002 accounted for an improvement of 11 basis points in spread. Additionally, the increased proportion of higher yielding personal lending balances, together with the migration of funds from time deposits to lower cost savings accounts, improved spread by eight basis points. These positive factors were partly offset by a further decline in spreads on home mortgage loans and lower spreads on foreign currency savings deposits, which reduced spread by nine and seven basis points respectively. The contribution from net free funds reduced by 20 basis points to nine basis points compared with the first half of 2001. In Hang Seng Bank, net interest margin reduced by nine basis points to 2.49 per cent compared with the first half of last year. Spread improved by 17 basis points mainly attributable to higher spreads on debt securities and time deposits which improved spread by 21 and eight basis points respectively, together with growth in lower cost savings accounts which accounted for a six basis point improvement. These were partly offset by a 16 basis point reduction due to lower spreads on mortgages, including loans made under the Government Home Ownership Scheme. The fall in average interest rates resulted in a reduction of 26 basis points to 11 basis points in the contribution from net free funds. Continued price competition in the residential loan market resulted in a further reduction in the average yield on the residential mortgage portfolio, excluding Government Home Ownership Scheme loans and staff loans, in the bank in Hong Kong to 141 basis points below the Hong Kong best lending rate ('BLR') for the first half of 2002, before accounting for the effect of cash incentive payments. This compared with 56 basis points and 111 basis points below BLR for the first and second halves of 2001 respectively. Similarly, the average yield on the residential mortgage portfolio in Hang Seng Bank was 138 basis points below BLR for the first half of 2002 compared with 65 basis points and 103 basis points below BLR for the first and the second halves of 2001 respectively. In the rest of the Asia-Pacific region, net interest margin widened by five basis points compared with the first half of 2001 to 2.27 per cent. Spreads widened in several countries, including Singapore and Japan mainly due to a strong treasury performance. Growth in net interest income generated by an increased proportion of higher yielding personal lending in Taiwan and HSBC Bank Australia also led to wider spreads. The contribution to the group margin from net free funds fell by 23 basis points compared with the same period last year to 13 basis points due to lower average interest rates during the first half of 2002. 2. Other operating income Half-year Half-year Half-year ended ended ended Figures in HK$m 30Jun02 30Jun01 31Dec01 Dividend income - Listed investments 78 96 98 - Unlisted investments 12 16 15 90 112 113 Fees and commissions - Account services 601 582 632 - Credit facilities 715 764 770 - Import/export 1,037 1,060 1,133 - Remittances 438 422 434 - Securities/stockbroking 752 804 726 - Cards 1,536 1,320 1,403 - Other 2,174 1,689 1,895 Fees and commissions receivable 7,253 6,641 6,993 Fees and commissions payable (1,223 ) (1,117 ) (1,053 ) 6,030 5,524 5,940 Dealing profits 1,166 1,937 1,512 Rental income from investment properties 121 130 131 Other 1,561 1,411 1,541 8,968 9,114 9,237 Analysis of income from dealing in financial instruments Half-year ended Half-year ended Half-year ended 30Jun02 30Jun01 31Dec01 Dividend Dividend Dividend and net and net and net Dealing interest Dealing interest Dealing interest Figures in HK$m profits income Total profits income Total profits income Total Foreign exchange 1,439 35 1,474 1,435 72 1,507 1,440 (35 ) 1,405 Interest rate derivatives 186 52 238 250 16 266 463 35 498 Debt securities (459 ) 655 196 257 348 605 (335 ) 534 199 Equities and other trading - (3 ) (3 ) (5 ) 3 (2 ) (56 ) - (56 ) 1,166 739 1,905 1,937 439 2,376 1,512 534 2,046 Other operating income, excluding dealing profits, increased by HK$625 million, or 8.7 per cent, compared with the first half of 2001. Wealth management continued to be the principal driver of growth. Net fee income in Personal Financial Services grew by 26.3 per cent and now accounts for 44.6 per cent of total net fees, against 38.5 per cent in the first half of 2001. Income from wealth management initiatives, including total operating income from the insurance business, and commission on sales of unit trust products and on securities transactions executed for personal customers, amounted to some HK$2.4 billion, up 46 per cent on the first half of 2001 and 21 per cent on the second half of last year. There was strong growth in revenues earned from sales of unit trusts in both the bank in Hong Kong and in Hang Seng Bank. These included the successful marketing of several capital guaranteed products launched by the group in 2002 which resulted in the sale of over US$1.9 billion of funds compared with US$1.2 billion in the first half of 2001 and US$1.3 billion in the second half. Total income from sales of unit trusts amounted to HK$966 million in 2002 compared with HK$425 million in the first half and HK$620 million in the second half of 2001. Income from the insurance business grew by HK$204 million, or 27.0 per cent, compared with the first half of last year, with continued strong growth in individual life insurance premiums and revenues from the Mandatory Provident Fund business. Fee income from cards grew by HK$216 million, or 16.4 per cent, over the first half of 2001 reflecting increases in the bank in Taiwan and Hong Kong, partly offset by a reduction in Hang Seng Bank. The group now has 5,295,000 cards in issue following an increase of over 450,000 during the past 12 months. Fee income from Corporate, Investment Banking and Markets decreased by HK$207 million, or 10.7 per cent, and HK$275 million, or 13.8 per cent, compared with the first and second halves of 2001 respectively mainly due to lower income from structured finance and corporate finance in the bank in Hong Kong. Dealing profits were HK$771 million lower than the first half of 2001 and HK$346 million lower than the second half of 2001. This was mainly due to mark-to-market losses on debt securities caused by a widening in credit spreads, although, in the prevailing low interest rate environment, these securities generated high levels of net interest income. The second half of 2001 benefited from higher levels of interest rate volatility. 3. Operating expenses Half-year ended Half-year ended Half-year ended Figures in HK$m 30Jun02 30Jun01 31Dec01 Staff costs - Salaries and other costs 5,605 5,654 5,684 - Retirement benefit costs 448 587 772 6,053 6,241 6,456 Premises and equipment - Depreciation 1,018 998 1,030 - Rental expenses 556 523 557 - Other premises and equipment expenses 674 705 801 2,248 2,226 2,388 Other 2,351 2,190 2,539 10,652 10,657 11,383 Staff numbers by region^ At 30Jun02 At 30Jun01 At 31Dec01 Hong Kong 23,349 24,279 23,861 Rest of Asia-Pacific 17,005 15,534 16,234 Americas/Europe 13 14 13 Total 40,367 39,827 40,108 ^ Full-time equivalent Operating expenses were in line with the first half of 2001 and were HK$731 million, or 6.4 per cent, lower than the second half of last year. Staff costs decreased compared with both halves of last year, despite headcount increases to support business expansion, with a reduction in the bank in Hong Kong mainly due to lower bonus provisions in investment banking and a reduction in the contribution rate to the local staff defined benefit retirement scheme. Compared with the second half of 2001, staff costs in Hang Seng Bank decreased due to the non-recurrence of a top-up provision to maintain the fully funded position of its local staff retirement benefit scheme. Progress continues to be made with the transfer of a wide range of back office functions from operations in Hong Kong to the Group Service Centre in Guangzhou. This now handles processing work such as cross-border and real time gross settlement payments, new account and credit card account opening and customer data maintenance. A further centre was opened in Shanghai during the first half of 2002 to undertake work for the HSBC Group. The total number of staff in the group increased to 40,367 at 30 June 2002 compared with 39,827 at June 2001 and 40,108 at 31 December 2001, with increases in the processing centres in Guangzhou and in Shanghai, in HSBC Bank Australia reflecting the acquisition of the former NRMA Building Society in the second half of 2001, and in the bank in India, China, the Philippines and Indonesia due to branch openings and business expansion. Headcount in Hong Kong reduced by 512 since the year end. There was also a reduction in Singapore due to outsourcing and the implementation of a voluntary separation scheme. In the Asia-Pacific region outside Hong Kong, five new branches have been opened during the first half of 2002. Operating expenses, other than staff costs, were up 4.1 per cent in the first half of last year, but decreased by 6.7 per cent compared with the second half of last year with reductions in advertising and marketing costs, and IT expenditure after the higher spend in previous periods on the development of e-banking initiatives. 4. Provisions for bad and doubtful debts Half-year ended Half-year ended Half-year ended Figures in HK$m 30Jun02 30Jun01 31Dec01 Net charge/(release) for bad and doubtful debts Advances to customers - Specific provisions New provisions 2,764 3,058 3,341 Releases (1,320 ) (1,531 ) (1,533 ) Recoveries (173 ) (821 ) (174 ) 1,271 706 1,634 - General provisions 9 (113 ) 28 1,280 593 1,662 Placings with banks maturing after one month - Net specific provisions - 2 - Net charge to profit and loss account 1,280 595 1,662 The charge for new specific provisions for customers was lower than both halves of 2001 with a reduced charge for commercial and corporate customers particularly in the bank in Indonesia. This was partly offset by increased new specific provisions for personal lending. Provisions for cards were HK$1,074 million, increases of HK$676 million compared with the first half of 2001 and HK$253 million compared with the second half of 2001. The provisions mainly related to the card portfolio in Hong Kong, reflecting the increasing level of personal bankruptcies. Provisions against the Hong Kong mortgage portfolio were lower than the first and second halves of 2001, with a steadily declining level of delinquencies. Elsewhere in the region, provisions for personal lending increased, particularly in the bank in Taiwan, Indonesia, India and in HSBC Bank Australia, reflecting growth in the portfolios and some increase in delinquency rates. Releases and recoveries were lower compared with the first half of 2001 principally due to the non-recurrence of the release of long-standing provisions against Olympia and York. There was a net recovery of specific provisions against commercial and corporate lending in the first half of 2002 compared with a small net charge in the second half of 2001. 5. Profit on tangible fixed assets and long-term investments Half-year ended Half-year ended Half-year ended Figures in HK$m 30Jun02 30Jun01 31Dec01 Loss on disposal of tangible fixed assets (11 ) (6 ) (12 ) Profit on disposal of long-term investments 382 1,374 67 Provision for impairment of long-term investments (45 ) (95 ) (39 ) 326 1,273 16 The net profit on disposal of long-term investments was HK$992 million lower than the first half of 2001 which included gains on disposal of investments in Modern Terminals and Central Registration. 6. Taxation The charge for taxation in the consolidated profit and loss account comprises: Half-year ended Half-year ended Half-year ended Figures in HK$m 30Jun02 30Jun01 31Dec01 Hong Kong profits tax 1,941 1,703 1,770 Overseas taxation 629 726 329 Deferred taxation (69 ) (48 ) (11 ) 2,501 2,381 2,088 Share of associated companies' taxation 9 5 5 2,510 2,386 2,093 The effective rate of tax was 14.6 per cent compared to 12.8 per cent in the first half of 2001 and 13.1 per cent in the second half of 2001. The rate for the first half of 2001 benefited from higher tax-free gains on disposals of investments. 7. Dividends Half-year ended Half-year ended Half-year ended 30Jun02 30Jun01 31Dec01 HK$ HK$m HK$ HK$m HK$ HK$m per share per share per share Equity Ordinary dividends - paid 0.46 3,000 1.17 7,563 5.90 38,389 - proposed 0.92 6,000 0.77 5,000 - - 1.38 9,000 1.94 12,563 5.90 38,389 Non-equity Preference dividends payable - cumulative redeemable preference shares 114 57 236 118 236 118 - non-cumulative irredeemable preference shares 0.16 601 - - 0.03 100 9,658 12,681 38,607 8. Advances to customers Figures in HK$m At 30Jun02 At 30Jun01 At 31Dec01 Gross advances to customers 728,618 678,902 697,702 Suspended interest (2,034 ) (3,524 ) (2,625 ) 726,584 675,378 695,077 Specific provisions (13,337 ) (18,109 ) (15,581 ) General provisions (4,962 ) (4,872 ) (4,939 ) Total provisions (18,299 ) (22,981 ) (20,520 ) Net advances to customers 708,285 652,397 674,557 Provisions as a percentage of gross advances to customers^ Specific provisions 1.84 % 2.68 % 2.24 % General provisions 0.68 % 0.72 % 0.71 % Total provisions 2.52 % 3.40 % 2.95 % ^Gross advances to customers are stated after deduction of interest in suspense. 9. Provisions for bad and doubtful debts against advances to customers Suspended Figures in HK$m Specific General Total interest At 1Jan02 15,581 4,939 20,520 4,050 Amounts written off (3,778 ) - (3,778 ) (1,050 ) Recoveries of advances written off in previous years 173 - 173 - Net charge to profit and loss account (Note 4) 1,271 9 1,280 - Interest suspended during the period - - - 732 Suspended interest recovered - - - (557 ) Exchange and other adjustments 90 14 104 (26 ) At 30Jun02 13,337 4,962 18,299 3,149 Suspended interest above comprises both suspended interest netted against ' Advances to customers' and suspended interest netted against accrued interest receivable in 'Other assets'. 10. Non-performing advances to customers and provisions The geographical information shown below, and in notes 11, 12, 13 and 15, has been classified by location of the principal operations of the subsidiary company or, in the case of the bank, by location of the branch responsible for advancing the funds. Rest of Americas/ Figures in HK$m Hong Kong Asia-Pacific Europe Total Half-year ended 30Jun02 Bad and doubtful debt charge 947 333 - 1,280 At 30Jun02 Advances to customers on which interest is being placed in suspense or on which interest accrual has ceased are as follows: Gross advances on which interest - has been placed in suspense 12,898 10,615 - 23,513 - accrual has ceased 1,619 1,177 4 2,800 Gross non-performing advances^ 14,517 11,792 4 26,313 Specific provisions (5,650 ) (7,683 ) (4 ) (13,337 ) 8,867 4,109 - 12,976 Specific provisions as a percentage of gross non-performing advances 38.9 % 65.2 % 100.0 % 50.7 % Gross non-performing advances as a percentage of gross advances to Customers^^ 2.7 % 6.5 % 30.8 % 3.6 % Rest of Americas/ Figures in HK$m Hong Kong Asia-Pacific Europe Total Half-year ended 30Jun01 Bad and doubtful debt charge/(release) 686 (62 ) (31 ) 593 At 30Jun01 Advances to customers on which interest is being placed in suspense or on which interest accrual has ceased are as follows: Gross advances on which interest - has been placed in suspense 16,900 12,593 - 29,493 - accrual has ceased 1,325 1,640 6 2,971 Gross non-performing advances^ 18,225 14,233 6 32,464 Specific provisions (8,919 ) (9,184 ) (6 ) (18,109 ) 9,306 5,049 - 14,355 Specific provisions as a percentage of gross non-performing advances 48.9 % 64.5 % 100.0 % 55.8 % Gross non-performing advances as a percentage of gross advances to customers^^ 3.5 % 9.2 % 42.9 % 4.8 % Rest of Americas/ Figures in HK$m Hong Kong Asia-Pacific Europe Total Half-year ended 31Dec01 Bad and doubtful debt charge/(release) 845 834 (17 ) 1,662 At 31Dec01 Advances to customers on which interest is being placed in suspense or on which interest accrual has ceased are as follows: Gross advances on which interest - has been placed in suspense 14,002 11,952 - 25,954 - accrual has ceased 1,814 1,327 4 3,145 Gross non-performing advances^ 15,816 13,279 4 29,099 Specific provisions (6,678 ) (8,899 ) (4 ) (15,581 ) 9,138 4,380 - 13,518 Specific provisions as a percentage of gross non-performing advances 42.2 % 67.0 % 100 % 53.5 % Gross non-performing advances as a percentage of gross advances to customers^^ 3.0 % 7.8 % 36.4 % 4.2 % Non-performing advances to customers are those advances where full repayment of principal or interest is considered unlikely. Non-performing advances may include advances that are not yet more than three months overdue but are considered doubtful. Advances are classified as non-performing as soon as it becomes apparent that full recovery of the advance is unlikely. Except in certain limited circumstances, all advances on which principal or interest is more than three months overdue are classified as non-performing. The specific provisions are made after taking into account the value of collateral in respect of such advances. ^ Gross non-performing advances to customers are stated after deduction of interest in suspense. ^^ Expressed as a percentage of gross advances to customers after deduction of interest in suspense. 11. Overdue advances to customers Rest of Americas/ Figures in HK$m Hong Kong Asia-Pacific Europe Total At 30Jun02 Gross advances to customers which have been overdue with respect to either principal or interest for periods of^ - six months or less but over three months 1,720 1,128 - 2,848 - one year or less but over six months 2,213 656 - 2,869 - over one year 5,428 5,429 - 10,857 9,361 7,213 - 16,574 Overdue advances to customers as a percentage of gross advances to customers^^ - six months or less but over three months 0.3% 0.6% - 0.4% - one year or less but over six months 0.4% 0.4% - 0.4% - over one year 1.0% 3.0% - 1.5% 1.7% 4.0% - 2.3% Overdue advances to customers (as above) 9,361 7,213 - 16,574 Less: overdue advances on which interest is still being accrued (895) (175) - (1,070) Add: advances overdue for periods of three months or less, or which are not yet overdue, and on which interest has been placed in suspense - included in rescheduled advances 2,260 1,475 4 3,739 - other 3,791 3,279 - 7,070 Gross non-performing advances (Note 10) 14,517 11,792 4 26,313 Rest of Americas/ Figures in HK$m Hong Kong Asia-Pacific Europe Total At 30Jun01 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 1,926 827 - 2,753 - one year or less but over six months 3,006 1,012 - 4,018 - over one year 9,352 6,864 - 16,216 14,284 8,703 - 22,987 Overdue advances to customers as a percentage of gross advances to customers^^ - six months or less but over three months 0.3% 0.5% - 0.4% - one year or less but over six months 0.6% 0.7% - 0.6% - over one year 1.8% 4.4% - 2.4% 2.7% 5.6% - 3.4% Overdue advances to customers (as above) 14,284 8,703 - 22,987 Less: overdue advances on which interest is still being accrued (860) (200) - (1,060) Add: advances overdue for periods of three months or less, or which are not yet overdue, and on which interest has been placed in suspense - included in rescheduled advances 1,711 1,760 6 3,477 - other 3,090 3,970 - 7,060 Gross non-performing advances (Note 10) 18,225 14,233 6 32,464 Rest of Americas/ Figures in HK$m Hong Kong Asia-Pacific Europe Total At 31Dec01 Gross advances to customers which have been overdue with respect to either principal or interest for periods of^ - six months or less but over three months 2,286 798 - 3,084 - one year or less but over six months 2,064 1,636 - 3,700 - over one year 7,352 6,040 - 13,392 11,702 8,474 - 20,176 Overdue advances to customers as a percentage of gross advances to customers^^ - six months or less but over three months 0.4% 0.5% - 0.5% - one year or less but over six months 0.4% 1.0% - 0.5% - over one year 1.4% 3.5% - 1.9% 2.2% 5.0% - 2.9% Overdue advances to customers (as above) 11,702 8,474 - 20,176 Less: overdue advances on which interest is still being accrued (766) (238) - (1,004) Add: advances overdue for periods of three months or less, or which are not yet overdue, and on which interest has been placed in suspense - included in rescheduled advances 2,024 1,381 4 3,409 - other 2,856 3,662 - 6,518 Gross non-performing advances (Note 10) 15,816 13,279 4 29,099 ^ Gross overdue advances to customers are stated after deduction of interest in suspense. ^^ Expressed as a percentage of gross advances to customers after deduction of interest in suspense. 12. Rescheduled advances to customers Rest of Americas/ Figures in HK$m Hong Kong Asia-Pacific Europe Total At 30Jun02 Rescheduled advances to customers^ 4,286 1,580 4 5,870 Rescheduled advances to customers as a percentage of gross advances to customers^^ 0.8 % 0.9 % 30.8 % 0.8 % At 30Jun01 Rescheduled advances to customers^ 4,632 2,028 6 6,666 Rescheduled advances to customers as a percentage of gross advances to customers^^ 0.9 % 1.3 % 42.9 % 1.0 % At 31Dec01 Rescheduled advances to customers^ 3,088 1,588 4 4,680 Rescheduled advances to customers as a percentage of gross advances to customers^^ 0.6 % 0.9 % 36.4 % 0.7 % Rescheduled advances are those advances which have been restructured or renegotiated because of a deterioration in the financial position of the borrower, or because of the inability of the borrower to meet the original repayment schedule. Rescheduled advances to customers are stated net of any advances which have subsequently become overdue for over three months and which are included in overdue advances to customers (Note 11). ^ Rescheduled advances are stated after deduction of interest in suspense. ^^ Expressed as a percentage of gross advances to customers after deduction of interest in suspense. This information is provided by RNS The company news service from the London Stock Exchange

Companies

HSBC Holdings (HSBA)
UK 100
FTSE quotes by TradingView

Latest directors dealings

All directors dealings today