Interim Report - 1 of 28

RNS Number : 8774L

HSBC Holdings PLC

16 August 2013

 



The Interim Report 2013 of HSBC Holdings has been prepared in accordance with the requirements of English law, and liability in respect thereof is also governed by English law. In particular, the liability of the Directors for this report is solely to HSBC Holdings. Certain defined terms Unless the context requires otherwise, 'HSBC Holdings' means HSBC Holdings plc and 'HSBC', the 'Group', 'we', 'us' and 'our' refer to HSBC Holdings together with its subsidiaries. Within this document, the Hong Kong Special Administrative Region of the People's Republic of China is referred to as 'Hong Kong'. When used in the terms 'shareholders' equity' and 'total shareholders' equity', 'shareholders' means holders of HSBC Holdings ordinary shares and those preference shares classified as equity. The abbreviations 'US$m' and 'US$bn' represent millions and billions (thousands of millions) of US dollars, respectively. Interim financial statements and notes HSBC's Interim Consolidated Financial Statements and Notes thereon, as set out on pages 208 to 263, have been prepared in accordance with the Disclosure Rules and Transparency Rules of the Financial Conduct Authority and International Accounting Standard ('IAS') 34 'Interim Financial Reporting' as issued by the International Accounting Standards Board ('IASB') and as endorsed by the European Union ('EU'). The consolidated financial statements of HSBC at 31 December 2012 were prepared in accordance with International Financial Reporting Standards ('IFRSs') as issued by the IASB, and as endorsed by the EU. EU-endorsed IFRSs may differ from IFRSs as issued by the IASB if, at any point in time, new or amended IFRSs have not been endorsed by the EU. At 31 December 2012, there were no unendorsed standards effective for the year ended 31 December 2012 affecting the consolidated financial statements at that date, and there was no difference between IFRSs endorsed by the EU and IFRSs issued by the IASB in terms of their application to HSBC. Accordingly, HSBC's financial statements for the year ended 31 December 2012 were prepared in accordance with IFRSs as issued by the IASB. At 30 June 2013, there were no unendorsed standards effective for the period ended 30 June 2013 significantly affecting these interim consolidated financial statements, and there was no significant difference between IFRSs endorsed by the EU and IFRSs issued by the IASB in terms of their application to HSBC. HSBC uses the US dollar as its presentation currency because the US dollar and currencies linked to it form the major currency bloc in which HSBC transacts and funds its business. Unless otherwise stated, the information presented in this document has been measured in accordance with IFRSs. When reference to 'underlying' is made in tables or commentaries, the comparative information has been expressed at constant currency (see page 17), the impact of fair value movements in respect of credit spread changes on HSBC's own debt has been eliminated and the effects of acquisitions, disposals and dilutions have been adjusted as reconciled on page 19. Underlying return on risk-weighted assets ('RoRWA') is defined and reconciled on page 43.		Contents
		Overview
		Financial highlights ......................................................	2
		Group Chairman's Statement .......................................	4
		Group Chief Executive's Business Review ....................	7
		Principal activities .......................................................	10
		HSBC Values ................................................................	10
		Business and operating models .....................................	11
		Strategic direction ........................................................	13
		Risk .............................................................................	14
		Interim Management Report
		Financial summary1 .....................................................	17
		Global businesses1 .........................................................	44
		Geographical regions1 ..................................................	61
		Other information .......................................................	99
		Risk1 ............................................................................	102
		Capital .........................................................................	181
		Board of Directors and Senior Management	201
		Financial Statements
		Financial statements ....................................................	208
		Notes on the financial statements1 ..............................	216
		Directors' Responsibility Statement ....................	264
		Independent Review Report by KPMG Audit Plc to HSBC Holdings plc .......................	265
		Additional Information
		Shareholder information1 .............................................	266
		Cautionary statement regarding forward-looking statements ...................................................................	276
		Abbreviations ..............................................................	277
		Glossary .......................................................................	280
		Index ...........................................................................	288
		1. Detailed contents are provided on the referenced pages.

Who we are and what we do

HSBC is one of the world's largest banking and financial services organisations. With around 6,600 offices in both established and faster-growing markets, we aim to be where the growth is, connecting customers to opportunities, enabling businesses to thrive and economies to prosper, and ultimately helping people to fulfil their hopes and realise their ambitions.

We serve around 55 million customers through our four global businesses: Retail Banking and Wealth Management, Commercial Banking, Global Banking and Markets, and Global Private Banking. Our network covers 80 countries and territories in six geographical regions: Europe, Hong Kong, Rest of Asia-Pacific, Middle East and North Africa, North America and Latin America. Our aim is to be acknowledged as the world's leading international bank.

Listed on the London, Hong Kong, New York, Paris and Bermuda stock exchanges, shares in HSBC Holdings plc are held by about 216,000 shareholders in 130 countries and territories.

Highlights

·     Profit before tax was up 10% to US$14.1bn on a reported basis.

·    Underlying profit before tax was up 47% to US$13.1bn.

·    Return on average ordinary shareholders' equity was 12.0%, up from 10.5% in the first half of 2012.

·    We continued to make progress on delivering our strategy and grew revenues in key areas including in our Financing and Equity Capital Markets and Credit businesses, in residential mortgages in our home markets of Hong Kong and the UK, and from collaboration between our global businesses.

·    We achieved additional sustainable cost savings of US$0.8bn, taking annualised savings to US$4.1bn since 2011, exceeding our target for the end of 2013.

·    We continued to reshape the business, announcing 11 disposals and closures of non-strategic businesses since the start of the year.

·    Core tier 1 capital ratio increased during the period from 12.3% at the end of 2012 to 12.7%.

Cover image

Financing trade has always been at the heart of HSBC's business, especially in our home market of Hong Kong. Today, Hong Kong International Airport is the world's busiest air cargo hub, with its freight volume accounting for over one-third of the total value of Hong Kong's external trade.

Financial highlights

Earnings per share US$0.54 - up 20% 30 June 2012: US$0.45 31 December 2012: US$0.29		Dividends per ordinary share1 US$0.28 30 June 2012: US$0.23 31 December 2012: US$0.18		Net assets per share US$8.96 30 June 2012: US$8.73 31 December 2012: US$9.09

For the half‑year to 30 June 2013

Profit before taxation US$14,071m - up 10% 30 June 2012: US$12,737m 31 December 2012: US$7,912m		Underlying profit before taxation US$13,078m - up 47% 30 June 2012: US$8,896m 31 December 2012: US$6,546m		Total operating income US$40,523m - down 7% 30 June 2012: US$43,672m 31 December 2012: US$38,873m
Net operating income before loan impairment charges and other credit risk provisions US$34,372m - down 7% 30 June 2012: US$36,897m 31 December 2012: US$31,433m		Profit attributable to the ordinary shareholders of the parent company US$9,998m - up 23% 30 June 2012: US$8,152m 31 December 2012: US$5,302m

At 30 June 2013

Loans and advances to customers US$969bn - down 3% 30 June 2012: US$975bn 31 December 2012: US$998bn		Customer accounts US$1,316bn - down 2% 30 June 2012: US$1,278bn 31 December 2012: US$1,340bn		Ratio of customer advances to customer accounts 73.7% 30 June 2012: 76.3% 31 December 2012: 74.4%
Total equity US$182bn - unchanged 30 June 2012: US$174bn 31 December 2012: US$183bn		Average total shareholders' equity to average total assets 6.4% 30 June 2012: 5.9% 31 December 2012: 6.4%		Risk-weighted assets US$1,105bn - down 2% 30 June 2012: US$1,160bn 31 December 2012: US$1,124bn

Capital ratios

Core tier 1 ratio 12.7% 30 June 2012: 11.3% 31 December 2012: 12.3%

Total capital ratio 16.6% 30 June 2012: 15.1% 31 December 2012: 16.1%

Common equity tier 1 ratio2 10.1% 30 June 2012: n/a 31 December 2012: 9.5%

Percentage growth rates compare with figures for the half year ended 30 June 2012 for income statement items and 31 December 2012 for balance sheet items.

Performance ratios (annualised)

Credit coverage ratios

Loan impairment charges to total operating income 7.9% 30 June 2012: 10.4% 31 December 2012: 9.4%		Loan impairment charges to average gross customer advances 0.7% 30 June 2012: 1.0% 31 December 2012: 0.8%		Total impairment allowances to impaired loans at period-end 40.9% 30 June 2012: 42.3% 31 December 2012: 41.7%

Return ratios

Return on average ordinary shareholders' equity3 12.0% 30 June 2012: 10.5% 31 December 2012: 6.5%		Return on average invested capital4 11.6% 30 June 2012: 9.9% 31 December 2012: 6.2%		Post-tax return on average total assets 0.8% 30 June 2012: 0.7% 31 December 2012: 0.5%		Pre-tax return on average risk-weighted assets 2.6% 30 June 2012: 2.1% 31 December 2012: 1.4%

Efficiency and revenue mix ratios

Cost efficiency ratio5 53.5% 30 June 2012: 57.5% 31 December 2012: 69.1%		Net interest income to total operating income 44.0% 30 June 2012: 44.4% 31 December 2012: 47.1%		Net fee income to total operating income 20.7% 30 June 2012: 19.0% 31 December 2012: 20.9%		Net trading income to total operating income 15.7% 30 June 2012: 10.3% 31 December 2012: 6.6%

Share information at 30 June 2013

				Closing market price
US$0.50 ordinary shares in issue 18,627m 30 Jun 2012: 18,164m 31 Dec 2012: 18,476m		Market capitalisation US$196bn 30 Jun 2012: US$160bn 31 Dec 2012: US$194bn		London £6.82 30 Jun 2012: £5.61 31 Dec 2012: £6.47		Hong Kong HK$81.25 30 Jun 2012: HK$68.55 31 Dec 2012: HK$81.3		American Depositary Share6 US$51.90 30 Jun 2012: US$44.13 31 Dec 2012: US$53.07
				Total shareholder return7
				Over 1 year		Over 3 years		Over 5 years
To 30 June 2013 ..............................................				127.7		127.9		128.3
Benchmarks:
- FTSE 1008 ......................................................				115.8		140.8		133.4
- MSCI World9 ..................................................				123.4		147.6		154.3
- MSCI Banks9 ..................................................				128.0		127.3		118.3

For footnotes, see page 100.

 

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