HSBC Holdings plc PT3

HSBC Holdings PLC
31 July 2006



Consolidated Income Statement

30Jun05     31Dec05             Half-year to                          30Jun06
   US$m        US$m                                          US$m          £m        HK$m

 29,202      30,892   Interest income                      35,785      20,004     277,620
(13,886)    (14,874)  Interest expense                    (19,054)    (10,651)   (147,821)

 15,316      16,018   Net interest income                  16,731       9,353     129,799

  8,558       8,928   Fee income                           10,441       5,837      81,001
 (1,514)     (1,516)  Fee expense                          (2,061)     (1,152)    (15,989)

  7,044       7,412   Net fee income                        8,380       4,685      65,012

                      Trading income excluding net          
  1,804       1,852     interest income                     3,112       1,740      24,143
                      Net interest income on trading        
  1,087       1,121     activities                          1,149         642       8,914

  2,891       2,973   Net trading income                    4,261       2,382      33,057

                      Net income from financial               
                        instruments designated at fair
    547         487     value                                 260         145       2,017
                      Gains less losses from financial        
    354         338     investments                           493         276       3,825
     95          60   Dividend income                         222         124       1,722
  2,396       3,040   Net earned insurance premiums         2,834       1,584      21,986
  1,146       1,587   Other operating income                1,153         645       8,945

 29,789      31,915   Total operating income               34,334      19,194     266,363

                      Net insurance claims incurred and    
                        movement in policyholders'
 (1,760)     (2,307)    liabilities                        (2,149)     (1,201)    (16,672)
                      Net operating income before loan     
                        impairment charges and other credit
 28,029      29,608     risk provisions                    32,185      17,993     249,691
                      Loan impairment charges and other    
 (3,277)     (4,524)    credit risk provisions             (3,890)     (2,175)    (30,179)

 24,752      25,084   Net operating income                 28,295      15,818     219,512

 (7,869)     (8,276)  Employee compensation and benefits   (8,992)     (5,027)    (69,760)
 (5,444)     (5,739)  General and administrative expenses  (6,065)     (3,390)    (47,052)
                      Depreciation of property, plant and    
   (831)       (801)    equipment                            (748)       (418)     (5,803)
                      Amortisation and impairment of         
   (276)       (278)    intangible assets                    (334)       (187)     (2,591)

(14,420)    (15,094)  Total operating expenses            (16,139)     (9,022)   (125,206)

 10,332       9,990   Operating profit                     12,156       6,796      94,306

                      Share of profit in associates and       
    308         336     joint ventures                        361         202       2,801

 10,640      10,326   Profit before tax                    12,517       6,998      97,107

 (2,658)     (2,435)  Tax expense                          (3,272)     (1,829)    (25,384)

  7,982       7,891   Profit for the period                 9,245       5,169      71,723

                      Profit attributable to shareholders   
  7,596       7,485     of the parent company               8,729       4,880      67,720

                      Profit attributable to minority         
    386         406     interests                             516         289       4,003

Consolidated Balance Sheet

At30Jun05   At31Dec05                                                 At 30Jun06
     US$m        US$m                                         US$m          £m           HK$m

                        ASSETS

                        Cash and balances at central        
    8,905      13,712     banks                             24,343      13,194        189,072
                        Items in the course of              
   11,717      11,300     collection from other banks       12,425       6,734         96,505
                        Hong Kong Government                
   12,196      12,554     certificates of indebtedness      12,588       6,823         97,774
  165,159     190,257   Trading assets                     226,650     122,844      1,760,391
                        Trading assets which may be         
                          repledged or resold by
   50,142      42,652     counterparties                    72,645      39,374        564,234
                        Financial assets designated at      
   14,033      15,046     fair value                        16,855       9,135        130,913
   63,594      73,928   Derivatives                        104,665      56,728        812,933
  155,141     125,965   Loans and advances to banks        162,482      88,065      1,261,998
  706,724     740,002   Loans and advances to customers    814,209     441,301      6,323,961
  179,574     176,301   Financial investments              187,438     101,591      1,455,831
                        Financial investments which may      
                          be repledged or resold by
    9,113       6,041     counterparties                     4,896       2,654         38,027
                        Interests in associates and          
    5,067       7,249     joint ventures                     7,795       4,225         60,544
   32,500      33,200   Goodwill and intangible assets      34,544      18,723        268,303
   15,032      15,206   Property, plant and equipment       15,277       8,280        118,656
   26,765      26,596   Other assets                        27,542      14,929        213,916
   11,148      11,961   Prepayments and accrued income      13,784       7,471        107,060

1,466,810   1,501,970   Total assets                     1,738,138     942,071     13,500,118

At 30Jun05  At 31Dec05                                                     At 30Jun06
      US$m        US$m                                            US$m          £m           HK$m

                         LIABILITIES AND EQUITY

                         Liabilities
                         Hong Kong currency notes in            
    12,196      12,554     circulation                          12,588       6,823         97,774
   101,747      69,727   Deposits by banks                      83,139      45,061        645,741
   710,464     739,419   Customer accounts                     833,742     451,888      6,475,674
                         Items in the course of transmission     
     9,533       7,022     to other banks                        9,532       5,166         74,035
   162,459     174,365   Trading liabilities                   228,116     123,639      1,771,777
                         Financial liabilities designated at    
    58,420      61,829     fair value                           64,354      34,880        499,838
    62,101      74,036   Derivatives                           103,660      56,184        805,127
   184,483     188,072   Debt securities in issue              209,309     113,445      1,625,703
     5,727       4,869   Retirement benefit liabilities          3,722       2,017         28,909
    26,169      26,515   Other liabilities                      31,669      17,165        245,969
                         Liabilities under insurance            
    12,428      14,144     contracts issued                     15,663       8,489        121,655
    10,421      12,689   Accruals and deferred income           12,584       6,821         97,740
     3,329       1,966   Provisions                              2,286       1,239         17,755
    15,652      16,537   Subordinated liabilities               20,404      11,059        158,478

 1,375,129   1,403,744   Total liabilities                   1,630,768     883,876     12,666,175

                         Equity
     5,610       5,667   Called up share capital                 5,741       3,112         44,590
     4,952       6,896   Share premium account                   7,236       3,922         56,202
    25,000      23,646   Other reserves                         26,394      14,306        205,002
    51,151      56,223   Retained earnings                      62,010      33,609        481,632

    86,713      92,432   Total shareholders' equity            101,381      54,949        787,426
     4,968       5,794   Minority interests                      5,989       3,246         46,517

    91,681      98,226   Total equity                          107,370      58,195        833,943

 1,466,810   1,501,970   Total equity and liabilities        1,738,138     942,071     13,500,118

Consolidated Statement of Recognised Income and Expense

  30Jun05     31Dec05                      Half-year to                        30Jun06
     US$m        US$m                                                             US$m

                        Available-for-sale investments:
       70        (470)  - Fair value changes taken to equity                      (476)
                        - Fair value changes transferred to income statement      
     (103)       (137)      on disposal or impairment                             (319)
                        Cash flow hedges:
     (293)        201   - Fair value changes taken to equity                       147
        -        (106)  - Fair value changes transferred to income statement      (177)        
                        Share of changes in equity of associates and joint         
       68          93     ventures                                                 (44)
   (3,665)       (592)  Exchange differences                                     3,203
                        Actuarial gains/(losses) on post-employment             
      358      (1,170)    benefits                                               1,477
   (3,565)     (2,181)                                                           3,811
     (125)        562   Net deferred tax on items taken directly to equity        (196)
                        Total income and expense taken to equity during the     
   (3,690)     (1,619)    period                                                 3,615
    7,982       7,891   Profit for the period                                    9,245
    4,292       6,272   Total recognised income and expense for the period      12,860

                        - Attributable to shareholders of the parent          
    4,056       5,856       company                                             12,292
      236         416   - Attributable to minority interests                       568
    4,292       6,272                                                           12,860


Consolidated Cash Flow Statement

                                                    Half-year   Half-year   Half-year 
                                                           to          to          to
                                                      30Jun06     30Jun05     31Dec05
                                                         US$m        US$m        US$m

Cash flows from operating activities
Profit before tax                                      12,517      10,640      10,326
Adjustments for:
Non-cash items included in profit before tax              762       1,022         336
Change in operating assets                           (101,775)    (61,792)    (20,918)
Change in operating liabilities                       135,226      57,777      13,156
Elimination of exchange differences                    (7,000)      7,089      (4,774)
Net gain from investing activities                       (752)       (354)       (338)
Share of profits in associates and joint ventures        (361)       (308)       (336)
Dividends received from associates                         32          57          57
Tax paid                                               (1,983)     (1,811)     (2,808)
Net cash from/(used in) operating activities           36,666      12,320      (5,299)

Cash flows from investing activities
Purchase of financial investments                    (181,454)    (91,507)   (286,596)
Proceeds from the sale of financial investments       177,762      82,562     286,134
Purchase of property, plant and equipment                (803)     (1,227)     (1,660)
Proceeds from the sale of property, plant
  and equipment                                           915         340         280
Purchase of intangible assets                            (352)        (90)       (759)
Net cash outflow from acquisition of and increase
  in stake of subsidiaries                                 (5)          -      (1,662)
Net cash inflow from disposal of subsidiaries              23         566         139
Net cash outflow from acquisition of and increase
  in stake of associates                                 (208)       (682)     (1,887)
Proceeds from disposal of associates                      319         161         261
Net cash used in investing activities                  (3,803)     (9,877)     (5,750)

Cash flows from financing activities
Issue of ordinary share capital                           414          94         596
Issue of preference shares                                374           -       1,298
Net purchases and sales of own shares for
  market-making purposes                                  (78)         27         (82)
Purchases of own shares to meet share awards
  and share option awards                                (589)       (288)       (478)
Own shares released on vesting of share awards
  and exercise of options                                 137          65         212
Subordinated loan capital issued                        3,716       1,928         165
Subordinated loan capital repaid                         (273)       (896)       (225)
Dividends paid to the shareholders of the parent
  company                                              (3,202)     (4,197)     (1,738)
Dividends paid to minority interests                     (533)       (419)        (89)

Net cash used in financing activities                     (34)     (3,686)       (341)
Net increase/(decrease) in cash and cash equivalents   32,829      (1,243)    (11,390)
Cash and cash equivalents at the beginning of the
  period                                              141,307     160,956     152,925
Exchange differences in respect of cash and cash
  equivalents                                           4,490      (6,788)       (228)
Cash and cash equivalents at the end of the period    178,626     152,925     141,307









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