Interim Report - 13 of 24

RNS Number : 2023X
HSBC Holdings PLC
26 August 2015
 



Funds under management


Half-year to



            30 Jun 2015


            30 Jun 2014


           31 Dec 2014



$bn


$bn


$bn

Funds under management by business







Global Asset Management


440


465


445

Global Private Banking


280


286


275

Affiliates


6


6


5

Other


237


207


229










963


964


954



440





At beginning of period


954


921


964

Net new money


3


18


20

Value change


32


21


19

Exchange and other


(26)


4


(49)








At end of period


963


964


954

 


Reconciliation of reported results to adjusted performance

Reconciliation of reported results to adjusted performance - geographical regions


Half-year to 30 June 2015



Europe


Asia


MENA

 

North

America


Latin

America


Total


UK


Hong

Kong



$m


$m


$m


$m


$m


$m


$m


$m

Revenue15

















Reported


11,469


14,065


1,289


4,126


3,558


32,943


8,246


9,130

Significant items


(580)


(1,419)


(3)


(157)


(12)


(2,171)


(539)


(1,380)

- debit valuation adjustment ('DVA') on derivative contracts


(79)


(50)


(1)


(22)


(13)


(165)


(67)


(14)

- fair value movements on non-qualifying hedges22


23


-


-


21


1


45


44


5

- releases arising from the ongoing review of compliance with the Consumer Credit Act in the UK


(12)


-


-


-


-


(12)


(12)


-

- gain on the partial sale of shareholding in Industrial Bank


-


(1,372)


-


-


-


(1,372)


-


(1,372)

- gain on sale of several tranches of real estate secured accounts in the US


-


-


-


(17)


-


(17)



-



-

- own credit spread23


(512)


3


(2)


(139)


-


(650)


(504)


1




















2















Adjusted


10,889


12,646


1,286


3,969


3,546


30,772


7,707


7,750


















Loan impairment charges and other credit risk provisions ('LIC's)

















Reported


(288)


(246)


(31)


(153)


(721)


(1,439)


(72)


(58)


















Adjusted


(288)


(246)


(31)


(153)


(721)


(1,439)


(72)


(58)


















Operating expenses

















Reported


(8,978)


(5,457)


(624)


(3,287)


(2,405)


(19,187)


(6,753)


(2,855)

Significant items


1,132


8


1


398


6


1,545


967


6

- restructuring and other related costs


68


8


1


34


6


117


50


6

- regulatory provisions in GPB


147


-


-


-


-


147


-


-

- settlements and provisions in connection with legal matters


780


-


-


364


-


1,144


780


-

- UK customer redress programmes


137


-


-


-


-


137


137


-



































Adjusted


(7,846)


(5,449)


(623)


(2,889)


(2,399)


(17,642)


(5,786)


(2,849)


















Share of profit in associates and joint ventures

















Reported


2


1,038


267


4


-


1,311


4


16


















Adjusted


2


1,038


267


4


-


1,311


4


16


















Profit before tax

















Reported


2,205


9,400


901


690


432


13,628


1,425


6,233

Significant items


552


(1,411)


(2)


241


(6)


(626)


428


(1,374)

- revenue


(580)


(1,419)


(3)


(157)


(12)


(2,171)


(539)


(1,380)

- operating expenses


1,132


8


1


398


6


1,545


967


6



































Adjusted


2,757


7,989


899


931


426


13,002


1,853


4,859


 


Half-year to 30 June 2014



Europe


Asia


MENA

 

North

America


Latin

America


Total


UK


Hong

Kong

 



$m


$m


$m


$m


$m


$m


$m


$m

 

Revenue15

















 

Reported


10,873


12,107


1,294


4,067


4,265


31,167


7,658


7,220

 

Currency translation24


(1,196)


(254)


(23)


(107)


(781)


(2,326)


(646)


4

 

Significant items


749


(334)


(27)


248


(21)


615


643


(404)

 

- DVA on derivative contracts


79


53


3


14


6


155


57


15

 

- fair value movements on non-qualifying hedges22


144


4


-


174


-


322


94


10

 

- provisions arising from the ongoing review of compliance with the Consumer Credit Act in the UK


367


-


-


-


-


367


367


-

 

- own credit spread23


159


5


6


45


-


215


125


(1)

 

- loss on sale of several tranches of real
estate secured accounts in the US


-


-


-


15


-


15


-


-

 

- gain on sale of shareholding in Bank of Shanghai


-


(428)


-


-


-


(428)


-


(428)

 

- gain on sale arising from HSBC Latin America Holdings UK Limited's disposal of HSBC Bank (Colombia) S.A. ('HSBC Colombia')


-


-


-


-


(18)


(18)


-


-

 

- reclassification loss in respect of our holding in Vietnam Technological & Commercial Joint Stock Bank following the loss of significant influence


-


32


-


-


-


32


-


-

 

- trading results - HSBC Colombia


-


-


-


-


(9)


(9)


-


-

 

- trading results - HSBC Bank Middle East Limited's Pakistan operations


-


-


(8)


-


-


(8)


-


-

 

- trading results - HSBC Bank Middle East Limited's banking business in Jordan


-








 


















 


















 

Adjusted


10,426


11,519


1,244


4,208


3,463


29,456


7,655


6,820

 


















 

LICs

















 

Reported


(266)


(216)


50


(411)


(998)


(1,841)


30


(100)

 

Currency translation


50


8


1


6


202


267


(2)


-

 

Significant items


-


-


-


-


2


2


-


-

 

- trading results - HSBC Colombia


−







−


−

 


















 


















 

Adjusted


(216)


(208)


51


(405)


(794)


(1,572)


28


(100)

 


















 

Operating expenses

















 

Reported


(8,352)


(5,009)


(614)


(2,837)


(2,893)


(18,266)


(5,995)


(2,597)

 

Currency translation24


787


129


7


53


538


1,479


415


-

 


















 

Significant items


287


2


26


13


23


351


274


3

 

- restructuring and other related costs


53


2


-


13


14


82


40


3

 

- UK customer redress programmes


234


-


-


-


-


234


234


-

 

- trading results - HSBC Colombia


-


-


-


-


9


9


-


-

 

- trading results - HSBC Bank Middle East Limited's Pakistan operations


-


-


9


-


-


9


-


-

 

- trading results - HSBC Bank Middle East Limited's banking business in Jordan


-








 


















 


















 

Adjusted


(7,278)


(4,878)


(581)


(2,771)


(2,332)


(16,436)


(5,306)


(2,594)

 


















 

Share of profit in associates and joint ventures

















 

Reported


3


1,012


259


6


−


1,280


3


25

 

Currency translation


4


(9)


-


(1)


-


(6)


2


-

 


















 

Adjusted


7


1,003


259


5


-


1,274


5


25

 


















 

Profit before tax

















 

Reported


2,258


7,894


989


825


374


12,340


1,696


4,548

 

Currency translation


(355)


(126)


(15)


(49)


(41)


(586)


(231)


4

 

Significant items


1,036


(332)


(1)


261


4


968


917


(401)

 

- revenue


749


(334)


(27)


248


(21)


615


643


(404)

 

- LICs


-


-


-


-


2


2


-


-

 

- operating expenses


287


2


26


13


23


351


274


3

 


















 


















 

Adjusted


2,939


7,436


973


1,037


337


12,722


2,382


4,151

 


 

Reconciliation of reported results to adjusted performance - geographical regions (continued)


Half-year to 31 December 2014



Europe


Asia


MENA

 

North

America


Latin

America


Total


UK


Hong

Kong



$m


$m


$m


$m


$m


$m


$m


$m

Revenue15

















Reported


10,698


11,570


1,254


4,085


4,007


30,081


8,069


6,624

Currency translation24


(722)


(229)


(18)


(88)


(677)


(1,698)


(416)


(1)

Significant items


(41)


286


24


(132)


2


139


(290)


285

- DVA on derivative contracts


155


16


2


2


2


177


146


11

- fair value movements on non-qualifying hedges22


91


-


-


128


-


219


(102)


1

- provisions arising from the ongoing review of compliance with the Consumer Credit Act in the UK


265


-


-


-


-


265


265



- impairment of our investment in Industrial Bank


-


271


-


-


-


271


-


271

- own credit spread23


(552)


(1)


-


(79)


-


(632)


(599)


2

- gain on sale of several tranches of real
estate secured accounts in the US


-


-


-


(183)


-


(183)


-


-

- loss on sale arising from HSBC Bank Middle East Limited's disposal of its operations in Pakistan


-


-


27


-


-


27


-


-

- trading results - HSBC Bank Middle East Limited's Pakistan operations


-


-


(5)


-


-


(5)


-


-



































Adjusted


9,935


11,627


1,260


3,865


3,332


28,522


7,363


6,908


















LICs

















Reported


(498)


(431)


(44)


89


(1,126)


(2,010)


(244)


(220)

Currency translation


69


10


(2)


4


204


285


28


-

Significant items


-


-


(2)


-


-


(2)


-


-

- trading results - HSBC Bank Middle East Limited's Pakistan operations


-


-


(2)


-


-


(2)


 

−


 

−



































Adjusted


(429)


(421)


(48)


93


(922)


(1,727)


(216)


(220)


















Operating expenses

















Reported


(11,865)


(5,418)


(602)


(3,592)


(3,039)


(22,983)


(9,581)


(2,827)

Currency translation24


637


118


6


46


516


1,287


395


-

Significant items


2,314


56


7


565


102


3,044


2,279


53

- restructuring and other related costs


70


7


2


15


102


196


51


4

- regulatory provisions in GPB


16


49


-


-


-


65


-


49

- UK customer redress programmes


1,041


-


-


-


-


1,041


1,041


-

- charge in relation to the settlement agreement with the Federal Housing Finance Authority


-


-


-


550


-


550


-


-

- settlements and provisions in connection with legal matters


1,187


-


-


-


-


1,187


1,187


-

- trading results - HSBC Bank Middle East Limited's Pakistan operations


-


-


5


-


-


5


-


-



































Adjusted


(8,914)


(5,244)


(589)


(2,981)


(2,421)


(18,652)


(6,907)


(2,774)


















Share of profit in associates and joint ventures

















Reported


3


1,010


229


10


-


1,252


4


17

Currency translation


1


(8)


-


(1)


-


(8)


-


(1)


















Adjusted


4


1,002


229


9


-


1,244


4


16


















Profit before tax

















Reported


(1,662)


6,731


837


592


(158)


6,340


(1,752)


3,594

Currency translation


(15)


(109)


(14)


(39)


43


(134)


7


(2)

Significant items


2,273


342


29


433


104


3,181


1,989


338

- revenue


(41)


286


24


(132)


2


139


(290)


285

- LICs


-


-


(2)


-


-


(2)


-


-

- operating expenses


2,314


56


7


565


102


3,044


2,279


53



































Adjusted


596


6,964


852


986


(11)


9,387


244


3,930

For footnotes, see page 56.

 

Reconciliation of reported results to adjusted performance - global businesses


Half-year to 30 June 2015



RBWM


CMB


GB&M


GPB


Other


Total



$m


$m


$m


$m


$m


$m

Revenue15













Reported


12,442


7,534


10,261


1,177


4,687


32,943

Significant items


(23)


-


(143)


(24)


(1,981)


(2,171)

- DVA on derivative contracts


-


-


(165)


-


-


(165)

- fair value movements on non-qualifying hedges22


(18)


-


22


-


41


45

- provisions/(releases) arising from the ongoing review of compliance with the Consumer Credit Act in the UK


12


-


-


(24)


-


(12)

- gain on the partial sale of shareholding in Industrial Bank


-


-


-


-


(1,372)


(1,372)

- gain on sale of several tranches of real estate secured accounts in the US


(17)


-


-


-


-


(17)

- own credit spread23


-


-


-


-


(650)


(650)



























Adjusted


12,419


7,534


10,118


1,153


2,706


30,772














LICs













Reported


(934)


(511)


11


(5)


-


(1,439)














Adjusted


(934)


(511)


11


(5)


-


(1,439)














Operating expenses













Reported


(8,354)


(3,321)


(5,790)


(1,001)


(3,879)


(19,187)

Significant items


472


52


816


165


40


1,545

- restructuring and other related costs


32


5


22


18


40


117

- regulatory provisions in GPB


-


-


-


147


-


147

- settlements and provisions in connection with legal matters


350


-


794


-


-


1,144

- UK customer redress programmes


90


47


-


-


-


137



























Adjusted


(7,882)


(3,269)


(4,974)


(836)


(3,839)


(17,642)














Share of profit in associates and joint ventures













Reported


208


821


272


9


1


1,311














Adjusted


208


821


272


9


1


1,311














Profit before tax













Reported


3,362


4,523


4,754


180


809


13,628

Significant items


449


52


673


141


(1,941)


(626)

- revenue


(23)


-


(143)


(24)


(1,981)


(2,171)

- operating expenses


472


52


816


165


40


1,545



























Adjusted


3,811


4,575


5,427


321


(1,132)


13,002


 

Reconciliation of reported results to adjusted performance - global businesses (continued)


Half-year to 30 June 2014



RBWM


CMB


GB&M


GPB


Other


Total



$m


$m


$m


$m


$m


$m

Revenue15













Reported


12,616


7,823


9,791


1,230


2,657


31,167

Currency translation24


(1,020)


(599)


(698)


(75)


(48)


(2,326)

Significant items


576


(10)


93


-


(44)


615

- DVA on derivative contracts


-


-


155


-


-


155

- fair value movements on non-qualifying hedges22


234


-


(50)


-


138


322

- provisions arising from the ongoing review of compliance with the Consumer Credit Act in the UK


353


14


-


-


-


367

- own credit spread23


-


-


2


-


213


215

- loss on sale of several tranches of real estate secured accounts in the US


15


-


-


-


-


15

- gain on sale of shareholding in Bank of Shanghai


-


-


-


-


(428)


(428)

- (gain)/loss on sale arising from HSBC Latin America Holdings UK Limited's disposal of HSBC Bank (Colombia) S.A. ('HSBC Colombia')


(7)


(7)


(5)


-


1


(18)

- reclassification loss in respect of our holding in Vietnam Technological & Commercial Joint Stock Bank following the loss of significant influence


-


-


-


-


32


32

- trading results - HSBC Colombia


(6)


(1)


(2)


-


-


(9)

- trading results - HSBC Bank Middle East Limited's Pakistan operations


(2)


(4)


(2)


-


-


(8)

- trading results - HSBC Bank Middle East Limited's banking business in Jordan


(11)


(12)


(5)


-


-


(28)



























Adjusted


12,172


7,214


9,186


1,155


2,565


29,456














LICs













Reported


(1,299)


(488)


(49)


(6)


1


(1,841)

Currency translation


181


66


18


2


-


267

Significant items


3


(1)


-


-


-


2

- trading results - HSBC Colombia


2


-


-


-


-


2

- trading results - HSBC Bank Middle East Limited's banking business in Jordan


1


(1)


-


-


-


-



























Adjusted


(1,115)


(423)


(31)


(4)


1


(1,572)














Operating expenses













Reported


(8,530)


(3,327)


(4,958)


(868)


(3,533)


(18,266)

Currency translation24


812


291


360


39


91


1,479

Significant items


235


38


33


2


43


351

- restructuring and other related costs


22


6


9


2


43


82

- UK customer redress programmes


194


20


20


-


-


234

- trading results - HSBC Colombia


6


1


2


-


-


9

- trading results - HSBC Bank Middle East Limited's Pakistan operations


4


4


1


-


-


9

- trading results - HSBC Bank Middle East Limited's banking business in Jordan


9


 7


1


-


-


17



























Adjusted


(7,483)


(2,998)


(4,565)


(827)


(3,399)


(16,436)














Share of profit in associates and joint ventures













Reported


215


806


249


8


2


1,280

Currency translation


(1)


(8)


(1)


1


3


(6)














Adjusted


214


798


248


9


5


1,274














Profit before tax













Reported


3,002


4,814


5,033


364


(873)


12,340

Currency translation


(28)


(250)


(321)


(33)


46


(586)

Significant items


814


27


126


2


(1)


968

- revenue


576


(10)


93


-


(44)


615

- LICs


3


(1)


-


-


-


2

- operating expenses


235


38


33


2


43


351



























Adjusted


3,788


4,591


4,838


333


(828)


12,722

 

 

 


Half-year to 31 December 2014



RBWM


CMB


GB&M


GPB


Other


Total



$m


$m


$m


$m


$m


$m

Revenue15













Reported


12,533


7,925


7,987


1,147


3,708


30,081

Currency translation24


(821)


(470)


(449)


9


(70)


(1,698)

Significant items


301


19


237


41


(459)


139

- DVA on derivative contracts


-


-


177


-


-


177

- fair value movements on non-qualifying hedges22


259


(1)


58


1


(98)


219

- provisions arising from the ongoing review of compliance with the Consumer Credit Act in the UK


215


10


-


40


-


265

- impairment of our investment in Industrial Bank


-


-


-


-


271


271

- own credit spread23


-


-


-


-


(632)


(632)

- gain on sale of several tranches of real estate secured accounts in the US


(183)


-


-


-


-


(183)

- loss on sale arising from HSBC Bank Middle East Limited's disposal of its operations in Pakistan


11


13


3


-


-


27

- trading results - HSBC Bank Middle East Limited's Pakistan operations


(1)


(3)


(1)


-


-


(5)



























Adjusted


12,013


7,474


7,775


1,197


3,179


28,522














LICs













Reported


(637)


(1,070)


(316)


14


(1)


(2,010)

Currency translation


100


120


67


(2)


-


285

Significant items


(1)


(1)


-


-


-


(2)

- trading results - HSBC Bank Middle East Limited's Pakistan operations


(1)


(1)


-


-


-


(2)



























Adjusted


(538)


(951)


(249)


12


(1)


(1,727)














Operating expenses













Reported


(9,500)


(3,654)


(7,070)


(910)


(5,068)


(22,983)

Currency translation24


739


243


352


11


45


1,287

Significant items


883


151


1,864


69


77


3,044

- restructuring and other related costs


66


31


18


4


77


196

- regulatory provisions in GPB


-


-


-


65


-


65

- UK customer redress programmes


798


118


125


-


-


1,041

- charge in relation to the settlement agreement with the Federal Housing Finance Authority


17


-


533


-


-


550

- settlements and provisions in connection with legal matters


-


-


1,187


-


-


1,187

- trading results - HSBC Bank Middle East Limited's Pakistan operations


2


2


1


-


-


5



























Adjusted


(7,878)


(3,260)


(4,854)


(830)


(4,946)


(18,652)














Share of profit in associates and joint ventures













Reported


183


799


255


11


4


1,252

Currency translation


(1)


(4)


(3)


-


-


(8)














Adjusted


182


795


252


11


4


1,244














Profit before tax













Reported


2,579


4,000


856


262


(1,357)


6,340

Currency translation


17


(111)


(33)


18


(25)


(134)

Significant items


1,183


169


2,101


110


(382)


3,181

- revenue


301


19


237


41


(459)


139

- LICs


(1)


(1)


-


-


-


(2)

- operating expenses


883


151


1,864


69


77


3,044



























Adjusted


3,779


4,058


2,924


390


(1,764)


9,387

For footnotes, see page 56.




 

Footnotes to pages 2 to 55

  1   The risk profile measures HSBC against a peer group average from a sample set of five global banks and five regional banks measured by: (a) the ratio of gross loans and advances to customers versus deposits; (b) the ratio of LICs to loans and advances to customers; and (c) the leverage ratio.

  2   2014 pro forma basis ex associates; excluding business growth.

  3   The sum of balances presented does not agree to consolidated amounts because inter-company eliminations are not presented here.

  4   Adjusted jaws is the difference between the percentage rate of growth of revenue and the percentage rate of growth of operating expenses, both on an adjusted basis.

  5   Client-facing GB&M refers to GB&M excluding associates, legacy credit and Balance Sheet Management. The GB&M client-facing and BSM businesses measure excludes the effects of the legacy credit portfolio and income from associates. We believe that looking at the client-facing and BSM businesses allows GB&M management to more clearly discuss the cause of material changes from period-to-period in the ongoing businesses and to assess the factors and trends in the business which are expected to have a material effect in future years.

  6   Net interest income includes the cost of internally funding trading assets, while the related revenues are reported in net trading income. In our global business results, the total cost of funding trading assets is included within GB&M's net trading income as an interest expense. In the statutory presentation, internal interest income and expense are eliminated.

  7   Gross interest yield is the average annualised interest rate earned on average interest-earning assets ('AIEA').

  8   Net interest spread is the difference between the average annualised interest rate earned on AIEA, net of amortised premiums and loan fees, and the average annualised interest rate payable on average interest-bearing funds. Net interest margin is net interest income expressed as an annualised percentage of AIEA.

  9   In the first half of 2015, a portfolio of customers was transferred from CMB to RBWM in Latin America in order to better align the combined banking needs of the customers with our established global businesses. Comparative data have been re-presented accordingly.

 10  During the first half of 2015 our operations in Brazil were classified as held for sale. As a result, balance sheet accounts have been classified to 'assets held for sale' and 'liabilities of disposal groups held for sale'. There is no separate income statement classification.

 11  Adjusted RoRWA is calculated using adjusted pre-tax return and reported average RWAs at constant currency and adjusted for the effects of business disposals. RoRWAs are calculated using annualised PBT and average RWAs on a CRD IV basis for all periods from 1 January 2014 and on a Basel 2.5 basis at 31 December 2013.

 12  'Currency translation adjustment' is the effect of translating the assets and liabilities of subsidiaries and associates for the previous period-end at the rates of exchange applicable at the current period-end.

 13  The main items reported under 'Other' are the results of HSBC's holding company and financing operations, which includes net interest earned on free capital held centrally, operating costs incurred by the head office operations in providing stewardship and central management services to HSBC, along with the costs incurred by the Group Service Centres and Shared Service Organisations and associated recoveries. The results also include fines and penalties as part of the settlement of investigations into past inadequate compliance with anti-money laundering and sanctions laws, the UK bank levy together with unallocated investment activities, centrally held investment companies, gains arising from the dilution of interests in associates and joint ventures and certain property transactions. In addition, 'Other' also includes part of the movement in the fair value of long-term debt designated at fair value (the remainder of the Group's movement on own debt is included in GB&M).

14   Assets by geographical region and global businesses include intra-HSBC items. These items are eliminated, where appropriate, under the headings 'Intra-HSBC items' or 'Inter-segment elimination', as appropriate.

15   Net operating income before loan impairment charges and other credit risk provisions, also referred to as revenue.

16   The Principal RBWM business measure excludes the effects of the US run-off portfolio. We believe that looking at the Principal RBWM business allows management to more clearly discuss the cause of material changes from period-to-period in the ongoing business and to assess the factors and trends in the business which are expected to have a material effect in future years.

17   'Other' in GB&M includes net interest earned on free capital held in the global business not assigned to products and gains resulting from business disposals. Within the management view of total operating income, notional tax credits are allocated to the businesses to reflect the economic benefit generated by certain activities which is not reflected within operating income, for example notional credits on income earned from tax-exempt investments where the economic benefit of the activity is reflected in tax expense. In order to reflect the total operating income on an IFRSs basis, the offset to these tax credits are included within 'Other'.

18   'Client assets' are translated at the rates of exchange applicable for their respective period-ends, with the effects of currency translation reported separately. The main components of client assets are funds under management, which are not reported on the Group's balance sheet, and customer deposits, which are reported on the Group's balance sheet.

19   Inter-segment elimination comprises (i) the costs of shared services and Group Service Centres included within 'Other' which are recovered from global businesses, and (ii) the intra-segment funding costs of trading activities undertaken within GB&M. The Balance Sheet Management business, reported within GB&M, provides funding to the trading businesses. To report GB&M's net trading income on a fully funded basis, 'Net interest income/(expense)' and 'Net interest income/(expense) on trading activities' are grossed up to reflect internal funding transactions prior to their elimination in the inter-segment column.

20   'Employee expenses' comprises costs directly incurred by each global business. The reallocation and recharging of employee and other expenses directly incurred in the 'Other' category is shown in 'Other operating expenses'.

21   RWAs are non-additive across geographical regions due to market risk diversification effects within the Group.

22   Excludes items where there are substantial offsets in the income statement for the same period.

23   'Own credit spread' includes the fair value movements on our long-term debt attributable to credit spread where the net result of such movements will be zero upon maturity of the debt. This does not include fair value changes due to own credit risk in respect of trading liabilities or derivative liabilities.

24   Currency translations are non-additive across geographical regions and global businesses due to inter-company transactions within the Group.


This information is provided by RNS
The company news service from the London Stock Exchange
 
END
 
 
ISEPKADKPBKDDFB

Companies

HSBC Holdings (HSBA)
UK 100
FTSE quotes by TradingView

Latest directors dealings

All directors dealings today