HSBC Trinkhaus Q1 2008 Result

RNS Number : 8489U

HSBC Holdings PLC

20 May 2008

 



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.

20 May 2008

HSBC TRINKAUS & BURKHARDT AG

FIRST QUARTER 2008 RESULTS

• First quarter 2008 operating profit of €52.2 million 

• Net profit after tax for the period of €34.6 million

• 38% increase in net interest income to €28.3 million

Overview

Despite the continuing turbulence in global capital markets, the bank reported an operating profit of €52.2 million (Q1 2007: €61.5 million) and net profit after tax of €34.6 million (Q1 2007: €41.5 million) for the first quarter of 2008. These figures represent declines of 15.1 per cent and 16.6 per cent respectively, compared to the same quarter of last year, which was one of the best in the bank's history. 

Financial commentary

Net interest income grew strongly, up 38.0 per cent to €28.3 million (Q1 2007: €20.5 million). This growth was due predominantly to a higher level of customer deposits which was utilised to fund an increase in loans and advances to customers.

Net loan impairment and other credit risk provisions of €1.2 million (Q1 2007: €-0.4 million) can be attributed mainly to an increase in collective impairment provisions. HSBC Trinkaus continues to apply a conservative default risk assessment policy.

Net fee income in the first quarter of 2008, at €90.0 million, compared to €89.2 million for the first quarter of 2007. This includes a €10.7 million contribution from International Transaction Services GmbH (ITS), which is in the consolidated figures for the first time.

Net trading income of €33.5 million represented a decline of 10.7 per cent compared to the figure of €37.5 million reported for Q1 2007. This is mainly due to a fall in the trading of interest rate products and foreign currency. Income from equities and equity/index derivatives trading was 4.0 per cent up on the Q1 2007 result at €28.5 million.

Administrative expenses in the first quarter of 2008 increased by 12.1% compared to the same quarter in 2007, from €88.6 million to €99.3 million, mainly as a result of the inclusion of ITS. At 65.5 per cent, the cost:income ratio was 14.5% higher than in the same period in 2007 (Q1 2007: 57.2%) but still at the lower end of the acceptable range for our business model of 65 per cent to 70 per cent.

Results by business segment

The business segments experienced varying performance in the first quarter of 2008. The wider effects of the subprime crisis on the financial markets had little impact on Corporate Banking, which improved on its previous year result. However, the other two client sectors, Private and Institutional Banking, and Global Markets were unable to overcome fully the difficult market conditions and therefore did not repeat the record results of the first quarter of 2007. 

In Corporate Banking, net interest income rose as a result of a considerable increase in sight deposits and lending volumes, along with an increase in deposit margins. There was also a substantial increase in net fee income. 

Transaction revenues in the securities business declined in the Private Banking business, due to the caution shown by many investors in the adverse market environment. However, this decline was compensated by higher revenues in other areas such as Asset Management. 

In Institutional Banking, there was a slight increase in revenues as a result of increased business in securities, alternative investments and custody. Although not matching its performance in the same period in 2007, despite the unfavourable market conditions, Global Markets made a strong contribution to revenue in the first quarter of 2008 of €26.1 million.

Outlook

HSBC Trinkaus performed well during the difficult first quarter of 2008. The bank's clear and consistent strategy of continuity in personnel and relationship management geared exclusively to the client proved to be an important factor. The bank's financial strength gives it every reason to be optimistic about the future and it intends to sustain its 2007 level of performance during 2008. This aim will be supported by the bank's beneficial relationship with the wider HSBC Group, which will be used further to expand market shares within the clearly-defined target groups - private clients, corporate clients and institutional clients. 

Media enquires to Steffen Pörner, [phone] or at [e-mail]

Notes to Editor:

1. HSBC Trinkaus
HSBC Trinkaus is one of the leading private banks in Germany and part of the globally-operating HSBC Group. With over 2,150 employees HSBC Trinkaus can be found at six locations in Germany in addition to the head office in Düsseldorf, and has access to the HSBC Group's global network. With total assets of €21.0 billion* and €85.0 billion in funds under management and administration*, the bank has a Fitch rating of 'AA'. The Bank's central target groups are wealthy private clients, corporate clients and institutional clients. *(Figures as at 31 March 2008)

All HSBC Trinkaus press releases can be found in the "About us", "Press" section of the website at www.hsbctrinkaus.de.

2. HSBC Holdings plc

HSBC Holdings plc serves over 128 million customers worldwide through around 10,000 offices in 83 countries and territories in Europe, the Asia-Pacific region, the Americas, the Middle East and Africa. With assets of some US$2,354 billion at 31 December 2007, HSBC is one of the world's largest banking and financial services organisations. HSBC is marketed worldwide as 'the world's local bank'.

 

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