Interim Report - 13 of 25

RNS Number : 6277J

HSBC Holdings PLC

10 August 2012

 



Disposals, held for sale and run-off portfolios

In implementing our strategy, we have sold or agreed to sell a number of businesses across the Group. We expect these disposals to have a significant adverse effect on both the revenue and the profitability of the geographical regions in the

future, especially on North America due to the sale of the profitable US Card and Retail Services business. In addition, two significant portfolios are being run down. We expect the losses on these
portfolios to continue to adversely affect North America and the other geographical regions in the future.

The table below presents the historical results of these businesses. We do not expect the historical results to be indicative of future results because of disposal or run-off. Fixed allocated costs, included in total operating costs, will not necessarily be removed upon disposal and have been separately identified on page 38.

Summary income statements for disposals, held for sale and run-off portfolios^43,44

	Half-year to 30 June 2012
	Europe		Hong Kong		Rest of Asia-Pacific		MENA		North       America		Latin       America
	US$m		US$m		US$m		US$m		US$m		US$m
Net interest income ......................	2		8		34		6		2,666		203
Net fee income/(expense) .............	(9)		(30)		7		3		431		(3)
Net trading income/(expense) .......	(36)		(3)		4		37		(213)		14
Net income/(expense) from financial instruments designated at fair value ..............................	5		-		2		-		(513)		1
Gains less losses from financial investments .............................	(39)		-		-		-		12		6
Dividend income ..........................	-		-		-		-		2		-
Net earned insurance premiums ....	-		144		46		-		107		164
Other operating income ...............	-		-		6		-		(7)		6
Total operating income/(expense) ..................	(77)		119		99		46		2,485		391
Net insurance claims incurred and movement in liabilities to policyholders ........................	-		(71)		(30)		-		(71)		(81)
Net operating income/(expense)14	(77)		48		69		46		2,414		310
Loan impairment (charges)/recoveries and other credit risk provisions ................	(268)		-		2		-		(1,900)		(30)
Net operating income/(expense)	(345)		48		71		46		514		280
Total operating expenses .............	(24)		(27)		(68)		(11)		(1,186)		(213)
Operating profit/(loss) .............	(369)		21		3		35		(672)		67
Share of profit in associates and joint ventures ....................	-		-		1		-		-		1
Profit/(loss) before tax...............	(369)		21		4		35		(672)		68
By global business
Retail Banking and Wealth Management ............................	-		19		2		10		(159)		28
Commercial Banking ....................	-		-		4		-		9		23
Global Banking and Markets .........	(369)		2		(1)		25		(9)		26
Global Private Banking .................	-		-		(2)		-		-		-
Other ...........................................	-		-		1		-		(513)		(9)
Profit/(loss) before tax .................	(369)		21		4		35		(672)		68
Gain on sale ..................................	-		-		305		-		3,892		102

For footnotes, see page 100.

Other information

Funds under management and assets held in custody

	Half-year to
	30 June                2012		30 June                2011		31 December                2011
	US$bn		US$bn		US$bn
Funds under management
At beginning of period ...............................................................................   ...................................................................................................................	847		925		948
Net new money ..........................................................................................	10		16		(14)
Value change ..............................................................................................	9		3		(43)
Exchange and other ...................................................................................	(9)		4		(44)
At end of period .........................................................................................	857		948		847
Funds under management by business
HSBC Global Asset Management ................................................................   ...................................................................................................................	405		449		396
Global Private Banking ..............................................................................	263		297		259
Affiliates ....................................................................................................	3		3		3
Other .........................................................................................................	186		199		189
	857		948		847

Funds under management ('FuM') at 30 June 2012 amounted to US$857bn, an increase of 1% compared with 31 December 2011. Both Global Asset Management and GPB fund holdings increased in the first half of 2012, reflecting net new money inflows and favourable equity market movements, partly offset by adverse foreign exchange movements. This improvement in FuM only partly reversed the reduction experienced in the second half of 2011, as a result of the fall in equity markets and movements in foreign exchange in the latter part of 2011.

Global Asset Management funds, including emerging market funds, increased by 2% to US$405bn compared with 31 December 2011. Net inflows during the first half of 2012 of US$13bn were mainly from sales of long-term funds, notably fixed income and multi-asset products, in Rest of Asia‑Pacific, Hong Kong and Latin America. They also benefited from favourable equity market movements in Asia and Europe, partly offset by unfavourable foreign exchange movements during the first half of 2012.

GPB funds increased by 2% on 31 December 2011 to US$263bn, mainly as a result of favourable market performance and net inflows during the period originating from emerging markets. This was partly offset by negative foreign exchange movements, net outflows in Europe and the reduction of assets following the sale of the Private Banking business in Japan. Client assets, which include FuM and cash deposits and provide an indicator of overall GPB volumes, decreased by US$2.5bn to US$375bn due to the sale of the Japan business and net outflows in Europe.

Other FuM, decreased by 2% to US$186bn, primarily due to the disposal of the private client services business in North America.

Assets held in custody and under administration

Custody is the safekeeping and servicing of securities and other financial assets on behalf of clients. At 30 June 2012, we held assets as custodian of US$5.4 trillion, 4% higher than the US$5.2 trillion held at 31 December 2011. This was mainly driven by favourable market and foreign exchange movements.

Our assets under administration business, which includes the provision of various support function activities including the valuation of portfolios of securities and other financial assets on behalf of clients, complements the custody business. At 30 June 2012, the value of assets held under administration by the Group amounted to US$2.7 trillion, compared with US$2.6 trillion at 31 December 2011.

Review of transactions with related parties

The FSA's Disclosure Rules and Transparency Rules require the disclosure of related party transactions that have taken place in the first six months of the current financial year and any changes in the related party transactions described in the Annual Report and Accounts 2011, that have or could have materially affected the financial position or performance of HSBC. A fair review has been undertaken and any such related party transactions have been disclosed in the Notes on the Financial Statements.

 

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