HSBC Trinkaus & Burkhardt 3rd

RNS Number : 4014C

HSBC Holdings PLC

12 November 2009

 



The following text is the English version of a news release issued in Germany by HSBC Trinkaus & Burkhardt, a 78.6 per cent indirectly owned subsidiary of HSBC Holdings plc.

12 November 2009

HSBC TRINKAUS & BURKHARDT AG

THIRD QUARTER 2009 RESULTS

• Operating profit grew 9.1 per cent to €145.8 million in the first nine months of 2009, compared with €133.6 million for the same period in 2008

• Profit before tax increased by 12.6 per cent to €131.7 million in the first nine months of 2009, compared with €117.0 million for the same period in 2008

• Return on equity before tax was at 18.4 per cent in the first nine months of 2009 after 17.0 per cent for the same period in 2008

• Net interest income rose from €97.0 million to €108.8 million in the nine months to 30 September 2009, an increase of 12.2 per cent compared to the same period in 2008

• Net trading income was €93.1 million for the nine months to 30 September 2009, an increase of 34.1 per cent or €23.7 million compared to the same period in 2008

• Shareholders' equity grew by 9.2 per cent to €1,043.2 million at 30 September 2009 compared with €955.0 million at 31 December 2008

• Total assets were €21.4 billion at 30 September 2009, a decrease of 3.6 per cent compared with €22.2 billion at 30 September 2008

Overview

HSBC Trinkaus reported increases in both operating profit and profit before tax in the first nine months of 2009, despite the continuing difficult market conditions. Operating profit after net loan impairment and other credit risk provisions increased by 9.1 per cent from €133.6 million to €145.8 million compared with the same period in 2008. Profit before tax was 12.6 per cent higher than in the first nine months of 2008 increasing from €117.0 million to €131.7 million.

HSBC Trinkaus' strategy is to build lasting client relationships, pursue a conservative risk management policy and allow access to the advantages of the HSBC international network to a targeted client base of private, corporate and institutional clients, supported by risk-aware trading operations. The success of this strategy is clearly reflected in the results for the first nine months of 2009.

Financial commentary

Net interest income grew by 12.2 per cent from €97.0 million in the first nine months of 2008 to €108.8 million in the comparable period in 2009. This growth results from expanded bond holdings in the banking book.

Net loan impairment and other credit risk provisions amounted to €11.5 million at 30 September 2009 (30 September 2008: €1.7 million). This reflected new individually assessed loans of €7.5 million, in addition to a €4.0 million increase in portfolio impairments reflecting the deteriorating economic situation. 

Net fee income of €263.3 million for the first nine months of 2009 was slightly ahead of the €260.9 million reported for the same period in 2008. Although transaction volumes in the securities business remained low, this was offset by an increase in the new issues and structured product businesses of 18.2 per cent to €10.4 million (2008: €8.8 million).

There was a 34.1 per cent increase in net trading income in the first nine months of 2009 to €93.1 million compared to €69.4 million in the same period in 2008, due largely to Treasury activities. The money market business produced a strong performance as a result of the Bank's strong liquidity position. Equity and equity/index derivatives trading declined, primarily due to the weaker demand for investment certificates. However, the bank was able to expand its market share in retail products such as warrants.

Net other operating income made a positive contribution to earnings in the first nine months of 2009 of €11.9 million compared to €4.0 million in the comparable period in 2008. This was due largely to the income earned from the sale of a real estate fund and the gains from the disposal of a building in Luxembourg. Income from financial assets decreased due to valuation adjustments to equities, fund units and bonds recorded mainly during the first quarter of 2009.

The modest increase in administrative expenses of 5.3 per cent to €312.1 million in the first nine months of 2009 compared to €296.4 million in the same period in 2008 was due essentially to higher costs in respect of the pension insurance fund and an increased headcount. The cost:income ratio at 68.5 per cent remains within the target range of 65 per cent to 70 per cent.

Total assets fell by 3.6 per cent to €21.4 billion at 30 September 2009 compared with 31 December 2008. Customer deposits remain the bank's main source of funding, representing over 50 per cent of total assets, reflecting clients' attraction to a conservative business policy, solid earnings base and strong credit rating. 

Shareholders' equity was €1,043.2 million at 30 September 2009, an increase of 9.2 per cent compared with 31 December 2008 (€955.0 million). This was due mainly to the allocation to retained earnings from last year's profit and an increase in the valuation reserve for financial instruments from €47.5 million to €106.2 million.

The bank's financial position remains characterised by strong liquidity. The capital ratio remains strong at 13.6 per cent at 30 September 2009 compared with 13.4 per cent at 31 December 2008. The tier 1 ratio was 9.3 per cent at 30 September 2009 compared with 8.8 per cent at the end of 2008.

Results by business segment

Segmental analysis for the first three quarters of 2009 shows the resilience of a balanced business mix even during financial market crisis. The Corporate Banking, Institutional Clients and Global Markets segments again improved on the good performances in the same period in 2008, offsetting a decline in private banking. The valuation adjustments resulting from financial assets, which are held in the bank's Central Division, are attributable mainly to the difficult market conditions in the first quarter of 2009.

The Institutional Clients segment saw an increase in net fee income and a significant increase in net trading income from fixed income products compared to the first nine months of 2008, which more than compensated for declining revenues in the asset management and equities business. Net fee income in the Corporate Clients' business increased compared to the same period last year due to the origination and placement of fixed-interest bonds as well as foreign exchange transactions. Net interest income remained on a high level as decreasing sight deposits' margins were offset by higher loan margins. Global Markets benefited from the growth in earnings in the Treasury and foreign exchange businesses, which more than offset the reduction in revenues in trading of equity derivatives. In the Private Banking business a moderate decline in revenues compared to the sector and the market conditions was set against an almost unchanged cost base and higher risk costs.

Outlook

Although some economic forecasts have brightened thanks to government intervention in recent months, it is still unclear whether the economy is on a growth path. The global recession and major reductions in orders, even at companies which are essentially healthy, have led to real adjustments to the wider economy. HSBC Trinkaus has not been immune from this, although to a comparatively small extent given its conservative lending policy. 

We remain optimistic thanks to the bank's well balanced and sustained earnings base. The Management Board expects the trends shown in the first nine months of 2009 to continue, provided no significant impairment provisions are required to be recognised in the fourth quarter.

HSBC Trinkaus continues to pursue its strategy of expanding market share in its clearly defined target groups, based on relationship banking principles and further integration in the HSBC network. This will allow HSBC Trinkaus to offer its clients the 'best of both worlds', namely the continuity, professionalism and individuality of the core bank coupled with the international service capacity of a global financial services provider. The Management Board believes that HSBC Trinkaus is well equipped and well positioned for the challenges of the final quarter.

Media enquiries to Steffen Poerner on [phone] or at [e-mail]

Notes to editors:

1. HSBC Trinkaus & Burkhardt AG
HSBC Trinkaus is one of Germany's leading private banks and part of the globally operating HSBC Group. With 2,265 employees HSBC Trinkaus can be found in six locations in Germany in addition to the head office in Duesseldorf and has access to the global network of the HSBC Group. With total assets of €21.4 billion* and €94.4 billion in funds under management and administration*, the Bank is the best rated private commercial bank in Germany with a "AA" Fitch Rating last confirmed in January 2009. The Bank's central target groups are wealthy private clients, corporate clients and institutional clients. HSBC Trinkaus press releases can be found at www.hsbctrinkaus.de

*(figures as at 30 September 2009)

2. HSBC Holdings plc
HSBC Holdings plc, the parent company of the HSBC Group, is headquartered in London. The Group serves customers worldwide from around 8,500 offices in 86 countries and territories in Europe, the Asia-Pacific region, the Americas, the Middle East and Africa. With assets of US$2,422 billion at 30 June 2009, HSBC is one of the world's largest banking and financial services organisations. HSBC is marketed worldwide as 'the world's local bank'.

 

END

 

 

QRTCKBKBCBDKPDD