Credit risk
Credit risk in the first half of 2014 ...................... |
110 |
|
Loans and advances excluding held for sale: total |
110 |
|
|
|
|
|
Credit exposure ...................................................... |
111 |
|
|
|
Maximum exposure to credit risk ............................... |
111 |
|
Maximum exposure to credit risk ................................. |
112 |
|
|
|
|
|
Total personal lending ........................................... |
113 |
|
|
|
Mortgage lending ........................................................ |
113 |
|
|
|
Other personal lending ............................................... |
113 |
|
Total personal lending ................................................. |
113 |
Non-US mortgage lending ........................................... |
114 |
|
Mortgage lending products .......................................... |
115 |
Mortgage lending in the US ........................................ |
116 |
|
HSBC Finance US CML - residential mortgages ......... |
116 |
|
|
|
HSBC Finance: foreclosed properties in the US ........... |
117 |
|
|
|
Trends in two months and over contractual delinquency |
117 |
|
|
|
|
|
Wholesale lending ................................................. |
118 |
|
Total wholesale lending ............................................... |
118 |
Corporate and commercial ......................................... |
120 |
|
|
|
|
|
|
|
|
Credit quality of financial instruments .............. |
120 |
|
Distribution of financial instruments by credit quality .. |
121 |
Past due but not impaired gross financial instruments . |
124 |
|
Past due but not impaired loans and advances to |
124 |
|
|
|
Ageing analysis of days past due but not impaired gross financial instruments ................................................ |
125 |
Renegotiated loans and forbearance ............................ |
126 |
|
Renegotiated loans and advances to customers ........... |
126 |
|
|
|
Renegotiated loans and advances to customers by |
127 |
HSBC Finance loan modifications and re-ageing.......... |
128 |
|
Gross loan portfolio of HSBC Finance real estate |
129 |
|
|
|
Movement in HSBC Finance renegotiated real estate |
129 |
|
|
|
Number of renegotiated real estate secured accounts remaining in HSBC Finance's portfolio ................... |
129 |
|
|
|
|
|
Impaired loans ........................................................ |
129 |
|
Impaired loans and advances to customers and banks by industry sector .......................................................... |
130 |
Impairment of loans and advances .............................. |
130 |
|
Impairment allowances on loans and advances to |
131 |
|
|
|
Net loan impairment charge to the income statement by geographical region ................................................ |
132 |
|
|
|
LICs by geographical region ....................................... |
132 |
|
|
|
LICs by industry ........................................................... |
132 |
Loan impairment in the first half of 2014 .................. |
133 |
|
Movement in impairment allowances on loans and |
134 |
|
|
|
Charge for impairment losses as a percentage of average gross loans and advances to customers by geographical region ................................................ |
135 |
|
|
|
Reconciliation of reported and constant currency changes |
135 |
|
|
|
|
|
Concentration of exposure .................................... |
136 |
|
|
|
Financial investments ................................................. |
136 |
|
|
|
Trading assets ............................................................. |
136 |
|
Trading assets .............................................................. |
136 |
Derivatives ................................................................. |
136 |
|
|
|
Loans and advances .................................................... |
136 |
|
Gross loans and advances by industry sector ............... |
137 |
|
|
|
Gross loans and advances to customers by industry sector and by geographical region ........................... |
138 |
|
|
|
Loans and advances to banks by geographical region . |
139 |
|
|
|
Reverse repos - non-trading by geographical region ... |
139 |
|
|
|
Gross loans and advances to customers by country ...... |
140 |
|
|
|
|
|
Securitisation exposures and other structured |
143 |
|
Overall exposure of HSBC ........................................... |
143 |
|
|
|
Movement in the available-for-sale reserve .................. |
143 |
|
|
|
Carrying amount of HSBC's consolidated holdings of ABSs, and direct lending held at fair value through profit or loss |
144 |
Representations and warranties related to |
147 |
|
|
|
|
|
|
|
|
Credit risk is the risk of financial loss if a customer or counterparty fails to meet an obligation under a contract. It arises principally from direct lending, trade finance and leasing business, but also from certain other products such as guarantees and credit derivatives and from holding assets in the form of debt securities.
There have been no material changes to our policies and practices for the management of credit risk as described in the Annual Report and Accounts 2013. Following the change in balance sheet presentation explained on page 41, non-trading reverse repos are shown separately on the face of the balance sheet and are no longer included in 'Loans and advances to customers' and 'Loans and advances to banks'. Comparative data have been re-presented accordingly. As a result, any analysis that references loans and advances to customers or banks excludes non-trading reverse repos to customers or banks, respectively. The amount of the non-trading reverse repos to customers and banks is set out on page 121.
|
A summary of our current policies and practices regarding credit risk is provided in the Appendix to Risk on page 266 of the Annual Report and Accounts 2013. |
Credit risk in the first half of 2014
Total exposure to credit risk increased in the first half of 2014 with gross loans and advances of US$1,189bn recorded at 30 June 2014, compared with US$1,127bn at 31 December 2013.
During the first half of 2014, there was an overall increase in loans and advances of US$61bn which was accompanied by an overall decrease in impairment allowances of US$1.2bn, principally reflecting run-off of the CML portfolios within North America.
The following commentary is on a constant currency basis.
Total personal lending of US$416bn at 30 June 2014, was broadly unchanged from 31 December 2013. Decreases in lending balances in North America due to the continued run-off of the CML portfolio were partly offset by increases in residential mortgage balances in Asia and Latin America.
Total wholesale lending increased to US$773bn at 30 June 2014 from US$725bn at the end of 2013, due to increases in Asia and Europe. In Asia, lending grew across a number of sectors reflecting continued buoyancy in credit market activity. In Europe, the increases were principally driven by a rise in
Loans and advances excluding held for sale: total exposure, impairment allowances and charges
|
30 Jun 2014 |
|
30 Jun 2013 |
|
31 Dec 2013 |
|
US$bn |
|
US$bn |
|
US$bn |
At end of period: |
|
|
|
|
|
Gross loans and advances |
|
|
|
|
|
-. personal lending (A) ................................ |
415.8 |
|
394.5 |
|
410.7 |
-. wholesale lending (B) ................................ |
772.9 |
|
687.2 |
|
716.6 |
|
|
|
|
|
|
Total (C)1 ...................... |
1,188.7 |
|
1,081.7 |
|
1,127.3 |
|
|
|
|
|
|
Impairment allowances |
|
|
|
|
|
-. personal lending (a) |
5.9 |
|
7.4 |
|
6.6 |
-. wholesale lending (b) ................................ |
8.1 |
|
8.2 |
|
8.6 |
|
|
|
|
|
|
Total (c)1 ....................... |
14.0 |
|
15.6 |
|
15.2 |
|
|
|
|
|
|
(a) as a percentage of (A)1 ....................................... |
1.42 |
|
1.88 |
|
1.61 |
(b) as a percentage of (B)1 ....................................... |
1.05 |
|
1.19 |
|
1.20 |
(c) as a percentage of (C)1 ....................................... |
1.18 |
|
1.44 |
|
1.35 |
|
|
|
|
|
|
Loans and advances net of impairment allowances1 .................................... |
1,174.7 |
|
1,066.1 |
|
1,112.1 |
|
|
|
|
|
|
For half-year ended: |
|
|
|
|
|
Impairment charges |
|
|
|
|
|
-. personal lending ...... |
1.2 |
|
1.8 |
|
1.4 |
-. wholesale lending .... |
0.8 |
|
1.4 |
|
1.4 |
|
|
|
|
|
|
Total .............................. |
2.0 |
|
3.2 |
|
2.8 |
For footnote, see page 172.
corporate overdraft balances, mainly in GB&M, in accounts which are structured to allow customer corporate treasury functions to benefit from net interest arrangements but where net settlement is not intended to occur, together with a corresponding rise in current accounts.
Impairment allowances fell from US$15.4bn at the end of 2013 to US$14bn at 30 June 2014. In personal lending, impairment allowances decreased by US$0.8bn, principally due to the run-off of the CML portfolio within North America. In wholesale lending, impairment allowances decreased by US$0.6bn, mainly in Europe, due to amounts written off and a reduction in new impairment allowances reflecting an improved economic environment.
Loan impairment charges in the first half of 2014 decreased to US$2.0bn from US$3.1bn in the first half of 2013. In personal lending, loan impairment charges decreased by US$0.5bn, mainly in North America and Latin America.
In wholesale lending, loan impairment charges reduced by US$0.6bn, mainly driven by lower individually assessed impairment charges. However, during the first half of 2014, in North America, we revised certain estimates used in our corporate loan collective impairment calculation to better reflect inherent losses in a growing loan portfolio. This resulted in an increase to our allowance for credit losses of approximately US$93m for these loans. We are continuing to refine aspects of our loan allowance calculation and, as a result, there could be further adjustments to our credit loss estimates for corporate loans in future periods.
Credit exposure
Maximum exposure to credit risk
The following commentary is on a reported basis.
The table on page 112 provides information on balance sheet items, offsets and loan and other credit-related commitments. Commentary on the balance sheet movements is provided on page 39.
Maximum exposure to credit risk' table (page 112)
The table presents our maximum exposure to credit risk from balance sheet and off‑balance sheet financial instruments before taking account of any collateral held or other credit enhancements (unless such enhancements meet accounting offsetting requirements). For financial assets recognised on the balance sheet, the maximum exposure to credit risk equals their carrying amount; for financial guarantees and similar contracts granted, it is the maximum amount that we would have to pay if the guarantees were called upon. For loan commitments and other credit-related commitments that are irrevocable over the life of the respective facilities, it is generally the full amount of the committed facilities.
Loans and advances
The loans and advances offset in the table on page 112 relates to customer loans and deposits and balances where there is a legally enforceable right of offset in the event of counterparty default and where, as a result, there is a net exposure for credit risk purposes. However, as there is no intention to settle these balances on a net basis under normal circumstances, they do not qualify for net presentation for accounting purposes.
Derivatives
The derivatives offset amount in the table below relates to exposures where the counterparty has an offsetting derivative exposure with HSBC, a master netting arrangement is in place and the credit risk exposure is managed on a net basis, or the position is specifically collateralised, normally in the form of cash.
At 30 June 2014, the total amount of such offsets was US$251bn (31 December 2013: US$252bn), of which US$212bn (31 December 2013: US$209bn) were offsets under a master netting arrangement, US$32bn (31 December 2013: US$36bn) was collateral received in cash and US$7bn (31 December 2013: US$7bn) was other collateral. Whilst the derivative balances have reduced by US$12.4bn over the last six months, the offsets have remained broadly consistent. These amounts do not qualify for offset for accounting purposes as settlement is not intended to be made on a net basis.
Reverse repurchase agreements - non-trading
The reverse repurchase agreements - non-trading offset in the table on page 112 relates to amounts where there is a legally enforceable right of offset in the event of counterparty default and where, as a result, there is a net exposure for credit risk purposes. However, as there is no intention to settle these balances on a net basis under normal circumstances, they do not qualify for net presentation for accounting purposes. The effects of collateral held are not taken into account.
Loan and other credit-related commitments
Loan and other credit-related commitments largely consist of corporate and commercial off-balance sheet commitments, including term and trade-related lending balances and overdrafts, retail off-balance sheet commitments including overdrafts, residential mortgages and personal loans and credit card balances.
As at 30 June 2014, loan and other credit-related commitments increased by US$54bn over the last six months to US$642bn. This was primarily due to corporate loan facilities and undrawn credit card commitments in Asia, undrawn facilities in Europe and increased lending activity with our corporate customers in North America, reflecting our focus on growing in target commercial segments in the US.
Other credit risk mitigants
While not disclosed as an offset in the maximum exposure to credit risk table, other arrangements are in place which reduce our maximum exposure to credit risk. These include short positions in securities and financial assets held as part of linked insurance/ investment contracts where the risk is predominantly borne by the policyholder. In addition, we hold collateral in the form of financial instruments that are not recognised on the balance sheet.
Maximum exposure to credit risk
|
At 30 June 2014 |
|
At 30 June 2013 |
|
At 31 December 2013 |
||||||||||||
|
Maximum exposure |
|
Offset |
|
Exposure to credit risk (net) |
|
Maximum exposure |
|
Offset |
|
Exposure to credit risk (net) |
|
Maximum exposure |
|
Offset |
|
Exposure to credit risk (net) |
|
US$m |
|
US$m |
|
US$m |
|
US$m |
|
US$m |
|
US$m |
|
US$m |
|
US$m |
|
US$m |
Cash and balances at |
132,137 |
|
- |
|
132,137 |
|
148,285 |
|
- |
|
148,285 |
|
166,599 |
|
- |
|
166,599 |
Items in the course of collection from other banks ........................ |
8,144 |
|
- |
|
8,144 |
|
8,416 |
|
- |
|
8,416 |
|
6,021 |
|
- |
|
6,021 |
Hong Kong Government certificates of indebtedness .............. |
26,640 |
|
- |
|
26,640 |
|
24,275 |
|
- |
|
24,275 |
|
25,220 |
|
- |
|
25,220 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Trading assets .............. |
273,251 |
|
(3) |
|
273,248 |
|
381,124 |
|
(8,557) |
|
372,567 |
|
239,301 |
|
(1,777) |
|
237,524 |
Treasury and other |
17,678 |
|
- |
|
17,678 |
|
19,188 |
|
- |
|
19,188 |
|
21,584 |
|
- |
|
21,584 |
Debt securities ........... |
155,522 |
|
- |
|
155,522 |
|
147,568 |
|
- |
|
147,568 |
|
141,644 |
|
- |
|
141,644 |
Loans and advances: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
- to banks ............... |
41,048 |
|
- |
|
41,048 |
|
96,748 |
|
- |
|
96,748 |
|
27,885 |
|
- |
|
27,885 |
- to customers ........ |
59,003 |
|
(3) |
|
59,000 |
|
117,620 |
|
(8,557) |
|
109,063 |
|
48,188 |
|
(1,777) |
|
46,411 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Financial assets designated at fair value .................................. |
9,937 |
|
- |
|
9,937 |
|
12,548 |
|
- |
|
12,548 |
|
12,719 |
|
- |
|
12,719 |
Treasury and other |
27 |
|
- |
|
27 |
|
99 |
|
- |
|
99 |
|
50 |
|
- |
|
50 |
Debt securities ........... |
9,870 |
|
- |
|
9,870 |
|
12,392 |
|
- |
|
12,392 |
|
12,589 |
|
- |
|
12,589 |
Loans and advances: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
- to banks ............... |
39 |
|
- |
|
39 |
|
25 |
|
- |
|
25 |
|
76 |
|
- |
|
76 |
- to customers ........ |
1 |
|
- |
|
1 |
|
32 |
|
- |
|
32 |
|
4 |
|
- |
|
4 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Derivatives .................. |
269,839 |
|
(250,731) |
|
19,108 |
|
299,213 |
|
(254,077) |
|
45,136 |
|
282,265 |
|
(252,344) |
|
29,921 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loans and advances to |
1,047,241 |
|
(110,782) |
|
936,459 |
|
938,294 |
|
(79,649) |
|
858,645 |
|
992,089 |
|
(96,726) |
|
895,363 |
- personal ............... |
409,846 |
|
(1,605) |
|
408,241 |
|
387,125 |
|
(1,317) |
|
385,808 |
|
404,126 |
|
(1,348) |
|
402,778 |
- corporate and |
584,265 |
|
(103,289) |
|
480,976 |
|
505,535 |
|
(73,456) |
|
432,079 |
|
537,922 |
|
(90,215) |
|
447,707 |
- financial (non-bank |
53,130 |
|
(5,888) |
|
47,242 |
|
45,634 |
|
(4,876) |
|
40,758 |
|
50,041 |
|
(5,163) |
|
44,878 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loans and advances to banks held at amortised cost1 ......... |
127,387 |
|
(662) |
|
126,725 |
|
127,810 |
|
(766) |
|
127,044 |
|
120,046 |
|
(587) |
|
119,459 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reverse repurchase agreements - |
198,301 |
|
(28,982) |
|
169,319 |
|
88,400 |
|
(14,255) |
|
74,145 |
|
179,690 |
|
(22,267) |
|
157,423 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Financial investments .. |
414,984 |
|
- |
|
414,984 |
|
394,846 |
|
- |
|
394,846 |
|
416,785 |
|
- |
|
416,785 |
Treasury and other |
78,177 |
|
- |
|
78,177 |
|
79,005 |
|
- |
|
79,005 |
|
78,111 |
|
- |
|
78,111 |
Debt securities ........... |
336,807 |
|
- |
|
336,807 |
|
315,841 |
|
- |
|
315,841 |
|
338,674 |
|
- |
|
338,674 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Assets held for sale ...... |
3,081 |
|
- |
|
3,081 |
|
18,690 |
|
(572) |
|
18,118 |
|
3,306 |
|
(22) |
|
3,284 |
- disposal groups ..... |
2,794 |
|
- |
|
2,794 |
|
17,756 |
|
(572) |
|
17,184 |
|
2,647 |
|
(22) |
|
2,625 |
- non-current assets |
287 |
|
- |
|
287 |
|
934 |
|
- |
|
934 |
|
659 |
|
- |
|
659 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other assets |
35,212 |
|
- |
|
35,212 |
|
32,470 |
|
- |
|
32,470 |
|
34,018 |
|
- |
|
34,018 |
Endorsements and acceptances ............ |
12,511 |
|
- |
|
12,511 |
|
11,329 |
|
- |
|
11,329 |
|
11,624 |
|
- |
|
11,624 |
Other ........................ |
22,701 |
|
- |
|
22,701 |
|
21,141 |
|
- |
|
21,141 |
|
22,394 |
|
- |
|
22,394 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Financial guarantees and similar contracts ....... |
45,817 |
|
- |
|
45,817 |
|
43,783 |
|
- |
|
43,783 |
|
46,300 |
|
- |
|
46,300 |
Loan and other credit- |
642,068 |
|
- |
|
642,068 |
|
587,946 |
|
- |
|
587,946 |
|
587,603 |
|
- |
|
587,603 |
|
|
|
- |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3,234,039 |
|
(391,160) |
|
2,842,879 |
|
3,106,100 |
|
(357,876) |
|
2,748,224 |
|
3,111,962 |
|
(373,723) |
|
2,738,239 |
For footnotes, see page 172.
Total personal lending
The following commentary is on a constant currency basis.
Total personal lending of US$416bn at 30 June 2014 was broadly unchanged from 31 December 2013.
Mortgage lending
Total mortgage lending was US$310bn at 30 June 2014. Mortgage balances decreased by US$2.7bn in the US from the continued run-off and loan sales in our CML portfolio. This was partly offset by increased mortgage lending, particularly in Hong Kong, mainland China and Taiwan due to strong demand.
Other personal lending
Credit cards
Total credit card lending of US$29bn at 30 June 2014 was 5% lower than at the end of 2013. The decline was predominantly in Europe and Asia as a result of consumer de-leveraging following a seasonal high point in December 2013, and the sale of a credit card portfolio in Australia.
Other personal non credit card lending
Other personal non-credit card lending balances remained broadly in line with December 2013 at US$81bn at 30 June 2014. There were increases in term lending in Hong Kong to our private banking customers and in personal loans in Singapore in line with our growth strategy.
These increases were offset by reductions in the US second lien mortgages. In Latin America, personal and payroll loan balances contracted due to more restrictive lending criteria.
Total personal lending
|
UK |
|
Rest of Europe |
|
Hong Kong |
|
Rest of Asia |
|
US4 |
|
Rest of North America |
|
Other regions4 |
|
Total |
|
US$m |
|
US$m |
|
US$m |
|
US$m |
|
US$m |
|
US$m |
|
US$m |
|
US$m |
At 30 June 2014 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
First lien residential mortgages (A) . |
135,701 |
|
8,524 |
|
54,988 |
|
40,501 |
|
39,939 |
|
18,738 |
|
7,044 |
|
305,435 |
Other personal lending (B) .............. |
22,121 |
|
28,552 |
|
21,777 |
|
12,414 |
|
5,842 |
|
5,054 |
|
14,557 |
|
110,317 |
- motor vehicle finance .............. |
- |
|
9 |
|
- |
|
407 |
|
- |
|
28 |
|
1,947 |
|
2,391 |
- credit cards ............................... |
11,276 |
|
2,743 |
|
6,233 |
|
3,448 |
|
681 |
|
403 |
|
4,420 |
|
29,204 |
- second lien residential mortgages .................................................... |
- |
|
- |
|
- |
|
80 |
|
4,685 |
|
194 |
|
3 |
|
4,962 |
- other ........................................ |
10,845 |
|
25,800 |
|
15,544 |
|
8,479 |
|
476 |
|
4,429 |
|
8,187 |
|
73,760 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total personal lending (C) .............. |
157,822 |
|
37,076 |
|
76,765 |
|
52,915 |
|
45,781 |
|
23,792 |
|
21,601 |
|
415,752 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Impairment allowances on personal lending |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
First lien residential mortgages (a) .................................................... |
327 |
|
71 |
|
- |
|
52 |
|
2,195 |
|
59 |
|
149 |
|
2,853 |
Other personal lending (b) ........... |
376 |
|
549 |
|
81 |
|
137 |
|
374 |
|
60 |
|
1,476 |
|
3,053 |
- motor vehicle finance .............. |
- |
|
4 |
|
- |
|
2 |
|
- |
|
- |
|
111 |
|
117 |
- credit cards ............................... |
118 |
|
299 |
|
43 |
|
82 |
|
29 |
|
8 |
|
359 |
|
938 |
- second lien residential mortgages .................................................... |
- |
|
- |
|
- |
|
- |
|
339 |
|
6 |
|
- |
|
345 |
- other ........................................ |
258 |
|
246 |
|
38 |
|
53 |
|
6 |
|
46 |
|
1,006 |
|
1,653 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total (c) ......................................... |
703 |
|
620 |
|
81 |
|
189 |
|
2,569 |
|
119 |
|
1,625 |
|
5,906 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(a) as a percentage of (A) ............... |
0.2 |
|
0.8 |
|
- |
|
0.1 |
|
5.5 |
|
0.3 |
|
2.1 |
|
0.9 |
(b) as a percentage of (B) ................ |
1.7 |
|
1.9 |
|
0.4 |
|
1.1 |
|
6.4 |
|
1.2 |
|
10.1 |
|
2.8 |
(c) as a percentage of (C) ................ |
0.4 |
|
1.7 |
|
0.1 |
|
0.4 |
|
5.6 |
|
0.5 |
|
7.5 |
|
1.4 |
|
UK |
|
Rest of Europe |
|
Hong Kong |
|
Rest of Asia |
|
US4 |
|
Rest of North America |
|
Other regions4 |
|
Total |
|
US$m |
|
US$m |
|
US$m |
|
US$m |
|
US$m |
|
US$m |
|
US$m |
|
US$m |
At 30 June 2013 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
First lien residential mortgages (D) . |
120,740 |
|
6,694 |
|
53,475 |
|
36,605 |
|
47,186 |
|
19,091 |
|
5,857 |
|
289,648 |
Other personal lending (E) .............. |
20,395 |
|
25,441 |
|
18,813 |
|
11,929 |
|
6,805 |
|
5,877 |
|
15,601 |
|
104,861 |
- motor vehicle finance .............. |
- |
|
16 |
|
- |
|
490 |
|
- |
|
22 |
|
2,560 |
|
3,088 |
- credit cards ............................... |
10,421 |
|
3,042 |
|
5,738 |
|
3,927 |
|
742 |
|
567 |
|
4,168 |
|
28,605 |
- second lien residential mortgages .................................................... |
- |
|
- |
|
- |
|
103 |
|
5,483 |
|
295 |
|
- |
|
5,881 |
- other ........................................ |
9,974 |
|
22,383 |
|
13,075 |
|
7,409 |
|
580 |
|
4,993 |
|
8,873 |
|
67,287 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total personal lending (F) ............... |
141,135 |
|
32,135 |
|
72,288 |
|
48,534 |
|
53,991 |
|
24,968 |
|
21,458 |
|
394,509 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Impairment allowances on personal lending |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
First lien residential mortgages (d) .................................................... |
337 |
|
65 |
|
- |
|
63 |
|
3,504 |
|
39 |
|
155 |
|
4,163 |
Other personal lending (e) ........... |
488 |
|
474 |
|
76 |
|
128 |
|
554 |
|
75 |
|
1,426 |
|
3,221 |
- motor vehicle finance .............. |
- |
|
4 |
|
- |
|
2 |
|
- |
|
1 |
|
94 |
|
101 |
- credit cards ............................... |
136 |
|
232 |
|
43 |
|
79 |
|
35 |
|
10 |
|
275 |
|
810 |
- second lien residential mortgages .................................................... |
- |
|
- |
|
- |
|
- |
|
512 |
|
5 |
|
- |
|
517 |
- other ........................................ |
352 |
|
238 |
|
33 |
|
47 |
|
7 |
|
59 |
|
1,057 |
|
1,793 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total (f) ......................................... |
825 |
|
539 |
|
76 |
|
191 |
|
4,058 |
|
114 |
|
1,581 |
|
7,384 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(d) as a percentage of (D) ............... |
0.3 |
|
1.0 |
|
- |
|
0.2 |
|
7.4 |
|
0.2 |
|
2.6 |
|
1.4 |
(e) as a percentage of (E) ................ |
2.4 |
|
1.9 |
|
0.4 |
|
1.1 |
|
8.1 |
|
1.3 |
|
9.1 |
|
3.1 |
(f) as a percentage of (F) ................ |
0.6 |
|
1.7 |
|
0.1 |
|
0.4 |
|
7.5 |
|
0.5 |
|
7.4 |
|
1.9 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
At 31 December 2013 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
First lien residential mortgages (G) .. |
132,174 |
|
8,300 |
|
53,762 |
|
38,285 |
|
42,317 |
|
18,638 |
|
6,399 |
|
299,875 |
Other personal lending (H) ............. |
22,913 |
|
28,720 |
|
19,794 |
|
12,688 |
|
6,257 |
|
5,478 |
|
15,003 |
|
110,853 |
- motor vehicle finance .............. |
- |
|
11 |
|
- |
|
481 |
|
- |
|
20 |
|
2,181 |
|
2,693 |
- credit cards ............................... |
11,480 |
|
3,016 |
|
6,428 |
|
3,846 |
|
734 |
|
411 |
|
4,441 |
|
30,356 |
- second lien residential mortgages .................................................... |
- |
|
- |
|
- |
|
91 |
|
5,010 |
|
251 |
|
2 |
|
5,354 |
- other ........................................ |
11,433 |
|
25,693 |
|
13,366 |
|
8,270 |
|
513 |
|
4,796 |
|
8,379 |
|
72,450 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total personal lending (I) ............... |
155,087 |
|
37,020 |
|
73,556 |
|
50,973 |
|
48,574 |
|
24,116 |
|
21,402 |
|
410,728 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Impairment allowances on personal lending |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
First lien residential mortgages (g) .................................................... |
368 |
|
71 |
|
- |
|
57 |
|
2,834 |
|
52 |
|
156 |
|
3,538 |
Other personal lending (h) .......... |
450 |
|
509 |
|
78 |
|
144 |
|
470 |
|
62 |
|
1,351 |
|
3,064 |
- motor vehicle finance .............. |
- |
|
3 |
|
- |
|
2 |
|
- |
|
- |
|
88 |
|
93 |
- credit cards ............................... |
132 |
|
271 |
|
40 |
|
87 |
|
39 |
|
8 |
|
278 |
|
855 |
- second lien residential mortgages .................................................... |
- |
|
- |
|
- |
|
- |
|
421 |
|
5 |
|
- |
|
426 |
- other ........................................ |
318 |
|
235 |
|
38 |
|
55 |
|
10 |
|
49 |
|
985 |
|
1,690 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total (i) .......................................... |
818 |
|
580 |
|
78 |
|
201 |
|
3,304 |
|
114 |
|
1,507 |
|
6,602 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(g) as a percentage of (G) ................ |
0.3 |
|
0.9 |
|
- |
|
0.1 |
|
6.7 |
|
0.3 |
|
2.4 |
|
1.2 |
(h) as a percentage of (H) ............... |
2.0 |
|
1.8 |
|
0.4 |
|
1.1 |
|
7.5 |
|
1.1 |
|
9.0 |
|
2.8 |
(i) as a percentage of (I) ................. |
0.5 |
|
1.6 |
|
0.1 |
|
0.4 |
|
6.8 |
|
0.5 |
|
7.0 |
|
1.6 |
For footnote, see page 172.
Non-US mortgage lending
The commentary that follows is on a constant currency basis.
Total non-US mortgage lending was US$266bn at 30 June 2014, an increase of US$2.8bn compared with December 2013. Our most significant concentrations of mortgage lending remained in the UK and Hong Kong.
In the UK, on a constant currency basis, mortgage lending was US$136bn at 30 June 2014, a marginal decline of US$0.7bn compared with 31 December 2013 as result of prepayments, mainly on the interest only mortgage portfolio. However, on a reported basis there was an increase of US$3.5bn. The currency effect was US$4.2bn. Interest only products made up US$51bn of total UK mortgage lending including US$22bn of offset mortgages in First Direct.
The credit quality of our UK mortgage portfolio remained high and loan impairment charges and delinquency levels declined in the first half of 2014. Impairment allowances were 0.2% of total gross mortgages as the business continued to benefit from initiatives taken in previous years, the buoyant housing market, low interest rates and improved economic conditions. The majority of our mortgage lending in the UK continued to be to existing customers and for owner occupied properties. During the first half of 2014, the average LTV ratio for new business was 60% compared with 47% for the whole portfolio.
Mortgage lending in Asia was US$96bn, an increase of 3% on the end of 2013 reflecting continued growth, primarily in Hong Kong, mainland China and Taiwan. The quality of our Asian mortgage book remained high with negligible impairment allowances. The average LTV ratio on new mortgage lending in Hong Kong was 47% compared with an estimated 32% for the overall portfolio.
Mortgage lending in other regions remained broadly in line with that at the end of 2013.
Mortgage lending products
|
UK |
|
Rest of |
|
Hong Kong |
|
Rest of Asia |
|
US4 |
|
Rest America |
|
Other regions4 |
|
Total |
|
US$m |
|
US$m |
|
US$m |
|
US$m |
|
US$m |
|
US$m |
|
US$m |
|
US$m |
At 30 June 2014 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
First lien residential mortgages5 ....... |
135,701 |
|
8,524 |
|
54,988 |
|
40,501 |
|
39,939 |
|
18,738 |
|
7,044 |
|
305,435 |
Second lien residential mortgages .... |
- |
|
- |
|
- |
|
80 |
|
4,685 |
|
194 |
|
3 |
|
4,962 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total mortgage lending (A) ............ |
135,701 |
|
8,524 |
|
54,988 |
|
40,581 |
|
44,624 |
|
18,932 |
|
7,047 |
|
310,397 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Second lien as percentage of (A) ..... |
- |
|
- |
|
- |
|
0.2 |
|
10.5 |
|
1.0 |
|
- |
|
1.6 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Impairment allowances on mortgage lending ........................................ |
327 |
|
71 |
|
- |
|
52 |
|
2,534 |
|
65 |
|
149 |
|
3,198 |
First lien residential mortgages .... |
327 |
|
71 |
|
- |
|
52 |
|
2,195 |
|
59 |
|
149 |
|
2,853 |
Second lien residential mortgages |
- |
|
- |
|
- |
|
- |
|
339 |
|
6 |
|
- |
|
345 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest-only (including offset) mortgages ................................... |
49,749 |
|
590 |
|
- |
|
1,138 |
|
- |
|
332 |
|
18 |
|
51,827 |
Affordability mortgages, including adjustable-rate mortgages ('ARM's) .................................................... |
1 |
|
349 |
|
10 |
|
5,521 |
|
15,950 |
|
- |
|
1 |
|
21,832 |
Other .............................................. |
92 |
|
- |
|
- |
|
131 |
|
- |
|
- |
|
10 |
|
233 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total interest-only, affordability mortgages and other .................... |
49,842 |
|
939 |
|
10 |
|
6,790 |
|
15,950 |
|
332 |
|
29 |
|
73,892 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
- as a percentage of (A) .............. |
36.7 |
|
11.0 |
|
- |
|
16.7 |
|
35.7 |
|
1.8 |
|
0.4 |
|
23.8 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
At 30 June 2013 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
First lien residential mortgages5 ....... |
120,740 |
|
6,694 |
|
53,475 |
|
36,605 |
|
47,186 |
|
19,091 |
|
5,857 |
|
289,648 |
Second lien residential mortgages .... |
- |
|
- |
|
- |
|
103 |
|
5,483 |
|
295 |
|
- |
|
5,881 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total mortgage lending (B) ............. |
120,740 |
|
6,694 |
|
53,475 |
|
36,708 |
|
52,669 |
|
19,386 |
|
5,857 |
|
295,529 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Second lien as percentage of (B) ..... |
- |
|
- |
|
- |
|
0.3 |
|
10.4 |
|
1.5 |
|
- |
|
2.0 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Impairment allowances on mortgage lending ........................................ |
337 |
|
65 |
|
- |
|
63 |
|
4,016 |
|
44 |
|
155 |
|
4,680 |
First lien residential mortgages .... |
337 |
|
65 |
|
- |
|
63 |
|
3,504 |
|
39 |
|
155 |
|
4,163 |
Second lien residential mortgages |
- |
|
- |
|
- |
|
- |
|
512 |
|
5 |
|
- |
|
517 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest-only (including offset) mortgages ................................... |
46,301 |
|
140 |
|
29 |
|
1,116 |
|
- |
|
445 |
|
- |
|
48,031 |
Affordability mortgages, including |
2 |
|
453 |
|
17 |
|
5,534 |
|
18,007 |
|
- |
|
1 |
|
24,014 |
Other .............................................. |
89 |
|
- |
|
- |
|
156 |
|
- |
|
- |
|
19 |
|
264 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total interest-only, affordability mortgages and other .................... |
46,392 |
|
593 |
|
46 |
|
6,806 |
|
18,007 |
|
445 |
|
20 |
|
72,309 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
- as a percentage of (B) .............. |
38.4 |
|
8.9 |
|
0.1 |
|
18.5 |
|
34.2 |
|
2.3 |
|
0.3 |
|
24.5 |
Mortgage lending products (continued)
|
UK |
|
Rest of |
|
Hong Kong |
|
Rest of Asia |
|
US4 |
|
Rest America |
|
Other regions4 |
|
Total |
|
US$m |
|
US$m |
|
US$m |
|
US$m |
|
US$m |
|
US$m |
|
US$m |
|
US$m |
At 31 December 2013 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
First lien residential mortgages5 ....... |
132,174 |
|
8,300 |
|
53,762 |
|
38,285 |
|
42,317 |
|
18,638 |
|
6,399 |
|
299,875 |
Second lien residential mortgages .... |
- |
|
- |
|
- |
|
91 |
|
5,010 |
|
251 |
|
2 |
|
5,354 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total mortgage lending (C) ............. |
132,174 |
|
8,300 |
|
53,762 |
|
38,376 |
|
47,327 |
|
18,889 |
|
6,401 |
|
305,229 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Second lien as percentage of (C) ..... |
- |
|
- |
|
- |
|
0.2 |
|
10.6 |
|
1.3 |
|
- |
|
1.8 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Impairment allowances on mortgage lending ........................................ |
368 |
|
71 |
|
- |
|
57 |
|
3,255 |
|
57 |
|
156 |
|
3,964 |
First lien residential mortgages .... |
368 |
|
71 |
|
- |
|
57 |
|
2,834 |
|
52 |
|
156 |
|
3,538 |
Second lien residential mortgages |
- |
|
- |
|
- |
|
- |
|
421 |
|
5 |
|
- |
|
426 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest-only (including offset) mortgages ................................... |
48,907 |
|
553 |
|
6 |
|
1,109 |
|
- |
|
352 |
|
- |
|
50,927 |
Affordability mortgages, including ARMs ......................................... |
2 |
|
506 |
|
12 |
|
5,581 |
|
16,274 |
|
- |
|
- |
|
22,375 |
Other .............................................. |
95 |
|
- |
|
- |
|
141 |
|
- |
|
- |
|
18 |
|
254 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total interest-only, affordability mortgages and other .................... |
49,004 |
|
1,059 |
|
18 |
|
6,831 |
|
16,274 |
|
352 |
|
18 |
|
73,556 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
- as a percentage of (C) .............. |
37.1 |
|
12.8 |
|
- |
|
17.8 |
|
34.4 |
|
1.9 |
|
0.3 |
|
24.1 |
For footnotes, see page 172.
Mortgage lending in the US
In the US, total mortgage lending balances were US$45bn at 30 June 2014, a decrease of 6% compared with the end of 2013. Overall, US mortgage lending represented 11% of our total personal lending and 14% of our total mortgage lending.
Mortgage lending balances at 30 June 2014 in HSBC Finance were US$27bn, a decrease of 10% compared with the end of 2013 due to the continued run-off and loan sales in the CML portfolio.
HSBC Finance US Consumer and Mortgage Lending6 - residential mortgages
|
At 30 Jun 2014 |
|
At 30 Jun 2013 |
|
At 31 Dec 2013 |
|
US$m |
|
US$m |
|
US$m |
Residential mortgages |
|
|
|
|
|
First lien ................. |
24,490 |
|
32,271 |
|
27,305 |
Second lien ............. |
2,784 |
|
3,328 |
|
3,014 |
|
|
|
|
|
|
Total (A) ................ |
27,274 |
|
35,599 |
|
30,319 |
|
|
|
|
|
|
Impairment |
2,338 |
|
3,789 |
|
3,028 |
- as a percentage |
8.6 |
|
10.6 |
|
10.0 |
For footnote, see page 172.
For first lien residential mortgages in our CML portfolio, two months and over delinquent balances were US$3.1bn at 30 June 2014 compared with US$4.6bn at 31 December 2013. The decline mainly reflected the continued run-off and loan sales in the CML portfolio.
In HSBC Bank USA, two months and over delinquent balances were broadly in line with the end of 2013, at US$1.1bn.
Second lien mortgages in the US
The majority of second lien residential mortgages are taken up by customers who hold a first lien mortgage issued by a third party. Second lien residential mortgage loans have a risk profile characterised by higher loan-to-value ratios, because in the majority of cases the loans were taken out to complete the refinancing of properties. Loss severity on default of second liens has typically approached 100% of the amount outstanding, as any equity in the property is consumed through the repayment of the first lien loan.
Impairment allowances for these loans are determined by applying a roll-rate migration analysis which captures the propensity of these loans to default based on past experience. Once we believe that a second lien residential mortgage loan is likely to progress to write-off, the loss severity assumed in establishing our impairment allowance is close to 100% in the CML portfolios, and more than 80% in HSBC Bank USA.
HSBC Finance: foreclosed properties in the US
|
Half-year to |
||||
|
30 June |
|
30 June |
|
31 December |
|
2014 |
|
2013 |
|
2013 |
|
|
|
|
|
|
Number of foreclosed properties at end of period ......................................... |
2,320 |
|
4,068 |
|
4,254 |
Number of properties added to foreclosed inventory in the half-year ............ |
2,243 |
|
4,902 |
|
4,850 |
Average (gain)/loss on sale of foreclosed properties7 ..................................... |
(1%) |
|
2% |
|
- |
Average total loss on foreclosed properties8 ................................................. |
50% |
|
51% |
|
51% |
Average time to sell foreclosed properties (days) .......................................... |
161 |
|
155 |
|
154 |
We have resumed processing suspended foreclosure actions in all states and have referred the majority of the backlog of loans for foreclosure. We also began initiating new foreclosure activities in all states.The number of foreclosed properties at HSBC Finance at 30 June 2014 decreased compared with the end of December 2013 as we sold more properties than we added to inventory. The decrease in the number of properties added to the inventory during the second quarter of 2014 resulted from the sale of many of the receivables for which the underlying properties had previously been in the process of foreclosure.
The average total gain on foreclosed properties was 1%, reflecting improvements in home prices.
Valuation of foreclosed properties in the US
We obtain real estate by foreclosing on the collateral pledged as security for residential mortgages. Prior to foreclosure, carrying amounts of the loans in excess of fair value less costs to obtain and sell are written down to the discounted cash flows expected to be recovered, including from the sale of the property. Broker price opinions are obtained and updated every 180 days and real estate price trends are reviewed quarterly to reflect any improvement or additional deterioration. Our methodology is regularly validated by comparing the discounted cash flows expected to be recovered based on current market conditions (including estimated cash flows from the sale of the property) to the updated broker price opinion, adjusted for the estimated historical difference between interior and exterior appraisals. The fair values of foreclosed properties are initially determined based on broker price opinions. Within 90 days of foreclosure, a more detailed property valuation is performed reflecting information obtained from a physical interior inspection of the property and additional allowances or write-downs are recorded as appropriate. Updates to the valuation are performed no less than once every 45 days until the property is sold, with declines or increases recognised through changes to allowances.
Trends in two months and over contractual delinquency in the US
|
At 30 June 2014 |
|
At 30 June 2013 |
|
At 31 December 2013 |
|
US$m |
|
US$m |
|
US$m |
In personal lending in the US |
|
|
|
|
|
First lien residential mortgages ..................................................................... |
4,169 |
|
8,378 |
|
5,931 |
Consumer and Mortgage Lending .............................................................. |
3,062 |
|
7,114 |
|
4,595 |
Other mortgage lending ............................................................................ |
1,107 |
|
1,264 |
|
1,336 |
|
|
|
|
|
|
Second lien residential mortgages .................................................................. |
216 |
|
401 |
|
406 |
Consumer and Mortgage Lending .............................................................. |
161 |
|
274 |
|
276 |
Other mortgage lending ............................................................................ |
55 |
|
127 |
|
130 |
|
|
|
|
|
|
Credit card .................................................................................................... |
17 |
|
19 |
|
25 |
Personal non-credit card ............................................................................... |
8 |
|
24 |
|
25 |
|
|
|
|
|
|
Total ............................................................................................................ |
4,410 |
|
8,822 |
|
6,387 |
|
|
|
|
|
|
|
% |
|
% |
|
% |
As a percentage of the equivalent loans and receivables balances |
|
|
|
|
|
First lien residential mortgages ..................................................................... |
10.4 |
|
17.6 |
|
14.0 |
Second lien residential mortgages .................................................................. |
4.6 |
|
7.3 |
|
8.1 |
Credit card .................................................................................................... |
2.5 |
|
2.5 |
|
3.4 |
Personal non-credit card ............................................................................... |
1.7 |
|
4.1 |
|
4.9 |
|
|
|
|
|
|
Total ............................................................................................................ |
9.6 |
|
16.2 |
|
13.1 |
Wholesale lending
Wholesale lending covers the range of credit
facilities granted to sovereign borrowers, banks,
non-bank financial institutions, corporate entities
and commercial borrowers. Our wholesale portfolios
are well diversified across geographical and industry
sectors, with certain exposures subject to specific
portfolio controls.
Total wholesale lending1
|
Europe |
|
Asia9 |
|
MENA |
|
North America |
|
Latin America |
|
Total |
|
US$m |
|
US$m |
|
US$m |
|
US$m |
|
US$m |
|
US$m |
At 30 June 2014 |
|
|
|
|
|
|
|
|
|
|
|
Corporate and commercial (A) .................... |
257,715 |
|
221,852 |
|
20,983 |
|
55,916 |
|
32,965 |
|
589,431 |
- manufacturing ....................................... |
65,374 |
|
35,210 |
|
2,445 |
|
12,941 |
|
14,196 |
|
130,166 |
- international trade and services ............. |
79,981 |
|
80,574 |
|
10,072 |
|
13,087 |
|
8,534 |
|
192,248 |
- commercial real estate .......................... |
30,935 |
|
34,727 |
|
434 |
|
6,677 |
|
2,492 |
|
75,265 |
- other property-related .......................... |
7,444 |
|
32,730 |
|
1,593 |
|
8,644 |
|
348 |
|
50,759 |
- government .......................................... |
2,404 |
|
1,082 |
|
1,696 |
|
568 |
|
1,007 |
|
6,757 |
- other commercial10 ............................... |
71,577 |
|
37,529 |
|
4,743 |
|
13,999 |
|
6,388 |
|
134,236 |
|
|
|
|
|
|
|
|
|
|
|
|
Financial (non-bank financial institutions) (B) ................................................................. |
29,603 |
|
12,091 |
|
2,838 |
|
7,579 |
|
1,397 |
|
53,508 |
Asset-backed securities reclassified................ |
2,382 |
|
- |
|
- |
|
138 |
|
- |
|
2,520 |
Loans and advances to banks (C) ................. |
27,763 |
|
72,222 |
|
8,644 |
|
6,252 |
|
12,569 |
|
127,450 |
|
|
|
|
|
|
|
|
|
|
|
|
Total wholesale lending (D) ......................... |
317,463 |
|
306,165 |
|
32,465 |
|
69,885 |
|
46,931 |
|
772,909 |
|
|
|
|
|
|
|
|
|
|
|
|
Impairment allowances on wholesale lending |
|
|
|
|
|
|
|
|
|
|
|
Corporate and commercial (a) ..................... |
3,355 |
|
951 |
|
1,161 |
|
817 |
|
1,402 |
|
7,686 |
- manufacturing ....................................... |
526 |
|
252 |
|
162 |
|
148 |
|
372 |
|
1,460 |
- international trade and services ............. |
961 |
|
458 |
|
490 |
|
187 |
|
257 |
|
2,353 |
- commercial real estate .......................... |
1,062 |
|
19 |
|
147 |
|
178 |
|
454 |
|
1,860 |
- other property-related .......................... |
257 |
|
99 |
|
239 |
|
89 |
|
7 |
|
691 |
- government .......................................... |
3 |
|
- |
|
4 |
|
1 |
|
- |
|
8 |
- other commercial ................................. |
546 |
|
123 |
|
119 |
|
214 |
|
312 |
|
1,314 |
|
|
|
|
|
|
|
|
|
|
|
|
Financial (non-bank financial institutions) (b) ................................................................. |
250 |
|
15 |
|
30 |
|
81 |
|
2 |
|
378 |
Loans and advances to banks (c) .................. |
45 |
|
- |
|
18 |
|
- |
|
- |
|
63 |
|
|
|
|
|
|
|
|
|
|
|
|
Total (d) ...................................................... |
3,650 |
|
966 |
|
1,209 |
|
898 |
|
1,404 |
|
8,127 |
|
|
|
|
|
|
|
|
|
|
|
|
(a) as a percentage of (A) ............................ |
1.30 |
|
0.43 |
|
5.53 |
|
1.46 |
|
4.25 |
|
1.30 |
(b) as a percentage of (B) ............................ |
0.84 |
|
0.12 |
|
1.06 |
|
1.07 |
|
0.14 |
|
0.71 |
(c) as a percentage of (C) ............................ |
0.16 |
|
- |
|
0.21 |
|
- |
|
- |
|
0.05 |
(d) as a percentage of (D) ............................ |
1.15 |
|
0.32 |
|
3.72 |
|
1.28 |
|
2.99 |
|
1.05 |
|
Europe |
|
Asia9 |
|
MENA |
|
North America |
|
Latin America |
|
Total |
|
US$m |
|
US$m |
|
US$m |
|
US$m |
|
US$m |
|
US$m |
At 30 June 2013 |
|
|
|
|
|
|
|
|
|
|
|
Corporate and commercial (E) .................... |
211,128 |
|
198,457 |
|
21,416 |
|
48,327 |
|
30,451 |
|
509,779 |
- manufacturing ....................................... |
46,202 |
|
30,244 |
|
3,409 |
|
9,609 |
|
12,128 |
|
101,592 |
- international trade and services ............. |
66,317 |
|
77,798 |
|
9,458 |
|
13,082 |
|
7,771 |
|
174,426 |
- commercial real estate .......................... |
30,764 |
|
33,416 |
|
898 |
|
6,064 |
|
2,328 |
|
73,470 |
- other property-related .......................... |
7,403 |
|
23,715 |
|
1,526 |
|
7,725 |
|
285 |
|
40,654 |
- government .......................................... |
1,834 |
|
3,220 |
|
1,664 |
|
348 |
|
1,431 |
|
8,497 |
- other commercial10 ............................... |
58,608 |
|
30,064 |
|
4,461 |
|
11,499 |
|
6,508 |
|
111,140 |
|
|
|
|
|
|
|
|
|
|
|
|
Financial (non-bank financial institutions) (F) ................................................................. |
26,895 |
|
8,549 |
|
1,822 |
|
7,470 |
|
1,365 |
|
46,101 |
Asset-backed securities reclassified................ |
3,319 |
|
- |
|
- |
|
147 |
|
- |
|
3,466 |
Loans and advances to banks (G) ................. |
26,741 |
|
72,483 |
|
9,054 |
|
8,614 |
|
10,968 |
|
127,860 |
|
|
|
|
|
|
|
|
|
|
|
|
Total wholesale lending (H) ......................... |
268,083 |
|
279,489 |
|
32,292 |
|
64,558 |
|
42,784 |
|
687,206 |
|
|
|
|
|
|
|
|
|
|
|
|
Impairment allowances on wholesale lending |
|
|
|
|
|
|
|
|
|
|
|
Corporate and commercial (e) ..................... |
3,708 |
|
840 |
|
1,264 |
|
827 |
|
1,071 |
|
7,710 |
- manufacturing ....................................... |
570 |
|
211 |
|
199 |
|
88 |
|
325 |
|
1,393 |
- international trade and services ............. |
1,116 |
|
381 |
|
523 |
|
207 |
|
346 |
|
2,573 |
- commercial real estate .......................... |
1,036 |
|
28 |
|
158 |
|
156 |
|
231 |
|
1,609 |
- other property-related .......................... |
213 |
|
98 |
|
241 |
|
139 |
|
13 |
|
704 |
- government .......................................... |
2 |
|
- |
|
31 |
|
2 |
|
- |
|
35 |
- other commercial ................................. |
771 |
|
122 |
|
112 |
|
235 |
|
156 |
|
1,396 |
|
|
|
|
|
|
|
|
|
|
|
|
Financial (non-bank financial institutions) (f) ................................................................. |
270 |
|
35 |
|
118 |
|
43 |
|
1 |
|
467 |
Loans and advances to banks (g) .................. |
33 |
|
- |
|
17 |
|
- |
|
- |
|
50 |
|
|
|
|
|
|
|
|
|
|
|
|
Total (h) ..................................................... |
4,011 |
|
875 |
|
1,399 |
|
870 |
|
1,072 |
|
8,227 |
|
|
|
|
|
|
|
|
|
|
|
|
(e) as a percentage of (E) ............................ |
1.76 |
|
0.42 |
|
5.90 |
|
1.71 |
|
3.52 |
|
1.51 |
(f) as a percentage of (F) ............................. |
1.00 |
|
0.41 |
|
6.48 |
|
0.58 |
|
0.07 |
|
1.01 |
(g) as a percentage of (G) ............................ |
0.12 |
|
- |
|
0.19 |
|
- |
- |
- |
|
0.04 |
(h) as a percentage of (H) ............................ |
1.50 |
|
0.31 |
|
4.33 |
|
1.35 |
|
2.51 |
|
1.20 |
|
|
|
|
|
|
|
|
|
|
|
|
At 31 December 2013 |
|
|
|
|
|
|
|
|
|
|
|
Corporate and commercial (I) ..................... |
239,116 |
|
203,894 |
|
19,760 |
|
50,307 |
|
30,188 |
|
543,265 |
- manufacturing ....................................... |
55,920 |
|
30,758 |
|
3,180 |
|
11,778 |
|
12,214 |
|
113,850 |
- international trade and services ............. |
76,700 |
|
79,368 |
|
8,629 |
|
11,676 |
|
8,295 |
|
184,668 |
- commercial real estate .......................... |
31,326 |
|
34,560 |
|
639 |
|
5,900 |
|
2,421 |
|
74,846 |
- other property-related .......................... |
7,308 |
|
27,147 |
|
1,333 |
|
8,716 |
|
328 |
|
44,832 |
- government .......................................... |
3,340 |
|
1,021 |
|
1,443 |
|
499 |
|
974 |
|
7,277 |
- other commercial10 ............................... |
64,522 |
|
31,040 |
|
4,536 |
|
11,738 |
|
5,956 |
|
117,792 |
|
|
|
|
|
|
|
|
|
|
|
|
Financial (non-bank financial institutions) (J) ................................................................. |
27,872 |
|
9,688 |
|
2,532 |
|
9,055 |
|
1,376 |
|
50,523 |
Asset-backed securities reclassified ............... |
2,578 |
|
- |
|
- |
|
138 |
|
- |
|
2,716 |
Loans and advances to banks (K) ................. |
24,273 |
|
72,814 |
|
6,419 |
|
6,420 |
|
10,178 |
|
120,104 |
|
|
|
|
|
|
|
|
|
|
|
|
Total wholesale lending (L) ......................... |
293,839 |
|
286,396 |
|
28,711 |
|
65,920 |
|
41,742 |
|
716,608 |
|
|
|
|
|
|
|
|
|
|
|
|
Impairment allowances on wholesale lending |
|
|
|
|
|
|
|
|
|
|
|
Corporate and commercial (i) ...................... |
3,821 |
|
918 |
|
1,212 |
|
769 |
|
1,339 |
|
8,059 |
- manufacturing ....................................... |
618 |
|
246 |
|
182 |
|
89 |
|
384 |
|
1,519 |
- international trade and services ............. |
1,216 |
|
428 |
|
502 |
|
188 |
|
349 |
|
2,683 |
- commercial real estate .......................... |
1,116 |
|
22 |
|
153 |
|
202 |
|
396 |
|
1,889 |
- other property-related .......................... |
269 |
|
102 |
|
236 |
|
93 |
|
8 |
|
708 |
- government .......................................... |
3 |
|
- |
|
10 |
|
1 |
|
- |
|
14 |
- other commercial ................................. |
599 |
|
120 |
|
129 |
|
196 |
|
202 |
|
1,246 |
|
|
|
|
|
|
|
|
|
|
|
|
Financial (non-bank financial institutions) (j) ................................................................. |
344 |
|
17 |
|
60 |
|
50 |
|
11 |
|
482 |
Loans and advances to banks (k) ................. |
35 |
|
- |
|
18 |
|
5 |
|
- |
|
58 |
|
|
|
|
|
|
|
|
|
|
|
|
Total (l) ...................................................... |
4,200 |
|
935 |
|
1,290 |
|
824 |
|
1,350 |
|
8,599 |
|
|
|
|
|
|
|
|
|
|
|
|
(i) as a percentage of (I) .............................. |
1.60 |
|
0.45 |
|
6.13 |
|
1.53 |
|
4.44 |
|
1.48 |
(j) as a percentage of (J) .............................. |
1.23 |
|
0.18 |
|
2.37 |
|
0.55 |
|
0.80 |
|
0.95 |
(k) as a percentage of (K) ............................ |
0.14 |
|
- |
|
0.28 |
|
0.08 |
|
- |
|
0.05 |
(l) as a percentage of (L) ............................. |
1.43 |
|
0.33 |
|
4.49 |
|
1.25 |
|
3.23 |
|
1.20 |
For footnotes, see page 172.
The commentary that follows is on a constant currency basis.
Corporate and commercial
Corporate and commercial lending, excluding commercial real estate and other property-related lending, represented 44% of total gross loans and advances to customers compared with 42% at 31 December 2013. The increase of US$34bn was driven by lending within manufacturing, transport and other subsectors within Asia and increases in manufacturing and other commercial portfolios within Europe, where this was principally driven by a rise in corporate overdraft balances, mainly in GB&M, in accounts which are structured to allow customer corporate treasury functions to benefit from net interest arrangements but where net settlement is not intended to occur, together with a corresponding rise in current accounts.
The aggregate of our commercial real estate and other property-related lending was US$126bn at 30 June 2014, an increase of US$5.3bn relative to 31 December 2013, but still representing an overall 12% of total loans and advances to customers.
Commercial real estate
Our exposure to commercial real estate lending continued to be concentrated in Asia, the UK and North America. The improvements in commercial real estate markets noted in 2013 continued into 2014.
Refinance risk in commercial real estate
Refinance risk is described on page 272 of the Annual Report and Accounts 2013. This risk is subject to close scrutiny in key commercial real estate markets.
Liquidity continued to improve further in 2014, as a wider range of funding sources returned to the market. There are now many refinancing opportunities with evidence of pressure on pricing.
On a reported basis, at 31 June 2014, we had US$22bn (31 December 2013: US$22bn) of commercial real estate loans in the UK of which US$5.8bn (31 December 2013: US$6.8bn) were due to be refinanced within the next 12 months. Of these balances, cases subject to close monitoring in our Loan Management unit amounted to US$2.0bn (31 December 2013: US$2.4bn). US$1.6bn (31 December 2013: US$1.6bn) were disclosed as impaired with impairment allowances of US$0.7bn (31 December 2013: US$0.6bn). Where these loans are not considered impaired it is because there is sufficient evidence to indicate that the associated contractual cash flows will be recovered or that the loans will not need to be refinanced on terms we would consider below market norms.
Credit quality of financial instruments
We assess credit quality on all financial instruments which bear credit risk. The distribution of financial instruments by credit quality is tabulated below. The five classifications describing the credit quality of our lending, debt securities portfolios and derivatives are set out in the Appendix to Risk on page 267 of the Annual Report and Accounts 2013. Additional credit quality information in respect of our consolidated holdings of ABSs is provided on page 143.
Distribution of financial instruments by credit quality
|
Neither past due nor impaired |
|
Past due |
|
|
|
Impair- |
|
|
||||||
|
|
|
|
|
Satis- |
|
Sub- |
|
but not |
|
|
|
ment |
|
|
|
Strong |
|
Good |
|
factory |
|
standard |
|
impaired11 |
|
Impaired |
allowances12 |
Total |
||
|
US$m |
|
US$m |
|
US$m |
|
US$m |
|
US$m |
|
US$m |
|
US$m |
|
US$m |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
At 30 June 2014 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and balances at central |
129,684 |
|
1,781 |
|
256 |
|
416 |
|
|
|
|
|
|
|
132,137 |
Items in the course of collection from other banks .......................................... |
7,466 |
|
299 |
|
286 |
|
93 |
|
|
|
|
|
|
|
8,144 |
Hong Kong Government |
26,640 |
|
- |
|
- |
|
- |
|
|
|
|
|
|
|
26,640 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Trading assets13 ..................... |
190,567 |
|
39,199 |
|
41,659 |
|
1,826 |
|
|
|
|
|
|
|
273,251 |
- treasury and other eligible bills .............................. |
13,400 |
|
3,356 |
|
893 |
|
29 |
|
|
|
|
|
|
|
17,678 |
- debt securities ................. |
119,117 |
|
18,709 |
|
16,389 |
|
1,307 |
|
|
|
|
|
|
|
155,522 |
- loans and advances: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
to banks ....................... |
23,478 |
|
5,456 |
|
11,686 |
|
428 |
|
|
|
|
|
|
|
41,048 |
to customers ................ |
34,572 |
|
11,678 |
|
12,691 |
|
62 |
|
|
|
|
|
|
|
59,003 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Financial assets designated at |
4,341 |
|
4,362 |
|
852 |
|
382 |
|
|
|
|
|
|
|
9,937 |
- treasury and other eligible bills .............................. |
24 |
|
- |
|
- |
|
3 |
|
|
|
|
|
|
|
27 |
- debt securities ................. |
4,298 |
|
4,361 |
|
832 |
|
379 |
|
|
|
|
|
|
|
9,870 |
- loans and advances: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
to banks ....................... |
19 |
|
- |
|
20 |
|
- |
|
|
|
|
|
|
|
39 |
to customers ................ |
- |
|
1 |
|
- |
|
- |
|
|
|
|
|
|
|
1 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Derivatives13 ......................... |
213,280 |
|
43,103 |
|
12,460 |
|
996 |
|
|
|
|
|
|
|
269,839 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loans and advances to |
501,162 |
|
274,776 |
|
212,714 |
|
24,712 |
|
13,967 |
|
33,880 |
|
(13,970) |
|
1,047,241 |
- personal ........................ |
332,045 |
|
38,673 |
|
16,847 |
|
1,366 |
|
9,283 |
|
17,538 |
|
(5,906) |
|
409,846 |
- corporate and |
140,941 |
|
222,982 |
|
185,541 |
|
22,450 |
|
4,327 |
|
15,710 |
|
(7,686) |
|
584,265 |
- financial (non-bank |
28,176 |
|
13,121 |
|
10,326 |
|
896 |
|
357 |
|
632 |
|
(378) |
|
53,130 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loans and advances to banks |
96,849 |
|
21,948 |
|
6,986 |
|
1,599 |
|
12 |
|
56 |
|
(63) |
|
127,387 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reverse repurchase agreements |
137,023 |
|
32,897 |
|
25,780 |
|
2,601 |
|
- |
|
- |
|
- |
|
198,301 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Financial investments ........... |
358,131 |
|
29,280 |
|
18,734 |
|
6,503 |
|
- |
|
2,336 |
|
|
|
414,984 |
- treasury and other similar bills .............................. |
66,661 |
|
7,038 |
|
2,445 |
|
2,033 |
|
- |
|
- |
|
|
|
78,177 |
- debt securities ................. |
291,470 |
|
22,242 |
|
16,289 |
|
4,470 |
|
- |
|
2,336 |
|
|
|
336,807 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Assets held for sale ............... |
1,265 |
|
802 |
|
597 |
|
90 |
|
6 |
|
397 |
|
(76) |
|
3,081 |
- disposal groups ............... |
1,232 |
|
802 |
|
596 |
|
90 |
|
3 |
|
118 |
|
(47) |
|
2,794 |
- non-current assets held for sale .............................. |
33 |
|
- |
|
1 |
|
- |
|
3 |
|
279 |
|
(29) |
|
287 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other assets .......................... |
10,893 |
|
8,060 |
|
14,815 |
|
823 |
|
178 |
|
443 |
|
|
|
35,212 |
- endorsements and acceptances .................. |
1,661 |
|
5,179 |
|
5,176 |
|
463 |
|
24 |
|
8 |
|
|
|
12,511 |
- accrued income and other |
9,232 |
|
2,881 |
|
9,639 |
|
360 |
|
154 |
|
435 |
|
|
|
22,701 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,677,301 |
|
456,507 |
|
335,139 |
|
40,041 |
|
14,163 |
|
37,112 |
|
(14,109) |
|
2,546,154 |
Distribution of financial instruments by credit quality (continued)
|
Neither past due nor impaired |
|
Past due |
|
|
|
Impair- |
|
|
||||||
|
|
|
|
|
Satis- |
|
Sub- |
|
but not |
|
|
|
ment |
|
|
|
Strong |
|
Good |
|
factory |
|
standard |
|
impaired11 |
|
Impaired |
allowances12 |
Total |
||
|
US$m |
|
US$m |
|
US$m |
|
US$m |
|
US$m |
|
US$m |
|
US$m |
|
US$m |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
At 30 June 2013 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and balances at central |
145,666 |
|
2,084 |
|
156 |
|
379 |
|
|
|
|
|
|
|
148,285 |
Items in the course of collection from other banks .......................................... |
7,992 |
|
117 |
|
215 |
|
92 |
|
|
|
|
|
|
|
8,416 |
Hong Kong Government |
24,275 |
|
- |
|
- |
|
- |
|
|
|
|
|
|
|
24,275 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Trading assets13 ..................... |
238,433 |
|
60,246 |
|
77,818 |
|
4,627 |
|
|
|
|
|
|
|
381,124 |
- treasury and other eligible bills .............................. |
14,827 |
|
3,569 |
|
758 |
|
34 |
|
|
|
|
|
|
|
19,188 |
- debt securities ................. |
115,007 |
|
15,430 |
|
16,333 |
|
798 |
|
|
|
|
|
|
|
147,568 |
- loans and advances: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
to banks ....................... |
59,115 |
|
22,581 |
|
13,076 |
|
1,976 |
|
|
|
|
|
|
|
96,748 |
to customers ................ |
49,484 |
|
18,666 |
|
47,651 |
|
1,819 |
|
|
|
|
|
|
|
117,620 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Financial assets designated at |
6,016 |
|
5,417 |
|
1,024 |
|
91 |
|
|
|
|
|
|
|
12,548 |
- treasury and other eligible bills .............................. |
99 |
|
- |
|
- |
|
- |
|
|
|
|
|
|
|
99 |
- debt securities ................. |
5,916 |
|
5,385 |
|
1,010 |
|
81 |
|
|
|
|
|
|
|
12,392 |
- loans and advances: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
to banks ....................... |
1 |
|
- |
|
14 |
|
10 |
|
|
|
|
|
|
|
25 |
to customers ................ |
- |
|
32 |
|
- |
|
- |
|
|
|
|
|
|
|
32 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Derivatives13 ......................... |
228,458 |
|
44,137 |
|
24,808 |
|
1,810 |
|
|
|
|
|
|
|
299,213 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loans and advances to |
464,224 |
|
216,359 |
|
198,418 |
|
20,687 |
|
16,047 |
|
38,120 |
|
(15,561) |
|
938,294 |
- personal ........................ |
311,216 |
|
36,434 |
|
13,103 |
|
1,702 |
|
9,968 |
|
22,086 |
|
(7,384) |
|
387,125 |
- corporate and |
134,939 |
|
167,595 |
|
171,797 |
|
17,956 |
|
5,794 |
|
15,164 |
|
(7,710) |
|
505,535 |
- financial (non-bank |
18,069 |
|
12,330 |
|
13,518 |
|
1,029 |
|
285 |
|
870 |
|
(467) |
|
45,634 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loans and advances to banks |
95,549 |
|
20,795 |
|
9,355 |
|
2,050 |
|
26 |
|
85 |
|
(50) |
|
127,810 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reverse repurchase agreements - |
78,258 |
|
4,421 |
|
5,721 |
|
- |
|
- |
|
- |
|
- |
|
88,400 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Financial investments ........... |
340,631 |
|
26,981 |
|
18,751 |
|
5,110 |
|
- |
|
3,373 |
|
|
|
394,846 |
- treasury and other similar bills .............................. |
72,441 |
|
3,424 |
|
2,056 |
|
1,078 |
|
- |
|
6 |
|
|
|
79,005 |
- debt securities ................. |
268,190 |
|
23,557 |
|
16,695 |
|
4,032 |
|
- |
|
3,367 |
|
|
|
315,841 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Assets held for sale ............... |
4,906 |
|
5,955 |
|
6,129 |
|
492 |
|
641 |
|
744 |
|
(177) |
|
18,690 |
- disposal groups ............... |
4,788 |
|
5,679 |
|
6,065 |
|
478 |
|
609 |
|
239 |
|
(102) |
|
17,756 |
- non-current assets held for sale ............................. |
118 |
|
276 |
|
64 |
|
14 |
|
32 |
|
505 |
|
(75) |
|
934 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other assets .......................... |
11,146 |
|
6,530 |
|
12,627 |
|
1,532 |
|
193 |
|
442 |
|
|
|
32,470 |
- endorsements and acceptances .................. |
1,880 |
|
4,506 |
|
4,367 |
|
543 |
|
31 |
|
2 |
|
|
|
11,329 |
- accrued income and other |
9,266 |
|
2,024 |
|
8,260 |
|
989 |
|
162 |
|
440 |
|
|
|
21,141 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,645,554 |
|
393,042 |
|
355,022 |
|
36,870 |
|
16,907 |
|
42,764 |
|
(15,788) |
|
2,474,371 |
|
Neither past due nor impaired |
|
Past due |
|
|
|
Impair- |
|
|
||||||
|
|
|
|
|
Satis- |
|
Sub- |
|
but not |
|
|
|
ment |
|
|
|
Strong |
|
Good |
|
factory |
|
standard |
|
impaired11 |
|
Impaired |
allowances12 |
Total |
||
|
US$m |
|
US$m |
|
US$m |
|
US$m |
|
US$m |
|
US$m |
|
US$m |
|
US$m |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
At 31 December 2013 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and balances at central banks ............................... |
162,017 |
|
2,877 |
|
265 |
|
1,440 |
|
|
|
|
|
|
|
166,599 |
Items in the course of collection from other banks ......................................... |
5,590 |
|
66 |
|
286 |
|
79 |
|
|
|
|
|
|
|
6,021 |
Hong Kong Government certificates of indebtedness |
25,220 |
|
- |
|
- |
|
- |
|
|
|
|
|
|
|
25,220 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Trading assets13 ................... |
163,444 |
|
39,475 |
|
34,868 |
|
1,514 |
|
|
|
|
|
|
|
239,301 |
- treasury and other eligible bills ............................. |
17,235 |
|
3,585 |
|
758 |
|
6 |
|
|
|
|
|
|
|
21,584 |
-debt securities ................ |
107,831 |
|
16,498 |
|
16,167 |
|
1,148 |
|
|
|
|
|
|
|
141,644 |
- loans and advances: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
to banks ...................... |
15,804 |
|
5,546 |
|
6,342 |
|
193 |
|
|
|
|
|
|
|
27,885 |
to customers ............... |
22,574 |
|
13,846 |
|
11,601 |
|
167 |
|
|
|
|
|
|
|
48,188 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Financial assets designated at |
6,608 |
|
5,183 |
|
671 |
|
257 |
|
|
|
|
|
|
|
12,719 |
- treasury and other eligible bills ............................. |
50 |
|
- |
|
- |
|
- |
|
|
|
|
|
|
|
50 |
- debt securities ............... |
6,490 |
|
5,179 |
|
664 |
|
256 |
|
|
|
|
|
|
|
12,589 |
- loans and advances: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
to banks ...................... |
68 |
|
- |
|
7 |
|
1 |
|
|
|
|
|
|
|
76 |
to customers ............... |
- |
|
4 |
|
- |
|
- |
|
|
|
|
|
|
|
4 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Derivatives13 ....................... |
220,711 |
|
47,004 |
|
13,425 |
|
1,125 |
|
|
|
|
|
|
|
282,265 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loans and advances to |
488,504 |
|
243,077 |
|
199,821 |
|
23,942 |
|
15,460 |
|
36,428 |
|
(15,143) |
|
992,089 |
- personal ........................ |
326,269 |
|
39,024 |
|
14,882 |
|
1,580 |
|
10,175 |
|
18,798 |
|
(6,602) |
|
404,126 |
- corporate and |
132,943 |
|
194,966 |
|
174,905 |
|
21,281 |
|
5,009 |
|
16,877 |
|
(8,059) |
|
537,922 |
- financial (non-bank |
29,292 |
|
9,087 |
|
10,034 |
|
1,081 |
|
276 |
|
753 |
|
(482) |
|
50,041 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loans and advances to banks |
91,498 |
|
21,131 |
|
6,266 |
|
1,123 |
|
11 |
|
75 |
|
(58) |
|
120,046 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reverse repurchase agreements - |
111,543 |
|
37,878 |
|
28,265 |
|
2,004 |
|
- |
|
- |
|
- |
|
179,690 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Financial investments .......... |
362,799 |
|
27,833 |
|
17,556 |
|
6,089 |
|
- |
|
2,508 |
|
|
|
416,785 |
- treasury and other similar bills ............................. |
69,364 |
|
5,595 |
|
1,856 |
|
1,296 |
|
- |
|
- |
|
|
|
78,111 |
- debt securities ............... |
293,435 |
|
22,238 |
|
15,700 |
|
4,793 |
|
- |
|
2,508 |
|
|
|
338,674 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Assets held for sale .............. |
1,129 |
|
642 |
|
1,050 |
|
351 |
|
89 |
|
156 |
|
(111) |
|
3,306 |
- disposal groups .............. |
1,093 |
|
642 |
|
496 |
|
351 |
|
86 |
|
90 |
|
(111) |
|
2,647 |
- non-current assets held for sale ............................. |
36 |
|
- |
|
554 |
|
- |
|
3 |
|
66 |
|
- |
|
659 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other assets ......................... |
11,372 |
|
7,386 |
|
13,798 |
|
808 |
|
218 |
|
436 |
|
|
|
34,018 |
- endorsements and acceptances ................ |
1,976 |
|
4,824 |
|
4,562 |
|
225 |
|
19 |
|
18 |
|
|
|
11,624 |
- accrued income and other ......................................... |
9,396 |
|
2,562 |
|
9,236 |
|
583 |
|
199 |
|
418 |
|
|
|
22,394 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,650,435 |
|
432,552 |
|
316,271 |
|
38,732 |
|
15,778 |
|
39,603 |
|
(15,312) |
|
2,478,059 |
For footnotes, see page 172.
The commentary that follows is on a reported basis.
The balance of credit risk-bearing financial instruments at 30 June 2014 was US$2,546bn, of which US$1,677bn or 66% were classified as 'strong' (31 December 2013: 67%). The proportion of financial instruments classified as 'good' and 'satisfactory' remained broadly unchanged at 18% and 13%, respectively. The proportion of 'sub-standard' financial instruments remained low at 2% at 30 June 2014.
Loans and advances held at amortised cost were US$1,175bn, a US$63bn increase over the US$1,112bn at 31 December 2013. At 30 June 2014, 76% of these balances were classified as either 'strong' or 'good', broadly in line with the end of 2013.
The majority of the Group's exposure to financial investments was in the form of available-for-sale debt securities issued by government and government agencies classified as 'strong'. At 30 June 2014 this amounted to 86% of the total, broadly similar to 31 December 2013.
Trading assets increased by US$34bn to US$273bn at 30 June 2014, broadly reflecting the same credit quality distribution as at 31 December 2013.
Derivative assets fell by US$12bn with credit quality distribution remaining broadly consistent with 31 December 2013.
Cash and balances at central banks reduced by US$34bn to US$132bn at 30 June 2014, principally in Europe, driven by the redeployment of surplus funds.
Past due but not impaired gross financial instruments
The definition of past due but not impaired loans is set out on page 172 of the Annual Report and Accounts 2013.
Past due but not impaired loans and advances to customers and banks by geographical region
|
Europe |
|
Asia |
|
MENA |
|
North America |
|
Latin America |
|
Total |
|
US$m |
|
US$m |
|
US$m |
|
US$m |
|
US$m |
|
US$m |
At 30 June 2014 |
|
|
|
|
|
|
|
|
|
|
|
Banks .......................................................... |
- |
|
12 |
|
- |
|
- |
|
- |
|
12 |
|
|
|
|
|
|
|
|
|
|
|
|
Customers ................................................... |
2,717 |
|
4,244 |
|
872 |
|
4,303 |
|
1,831 |
|
13,967 |
- personal ............................................... |
1,395 |
|
2,860 |
|
198 |
|
3,679 |
|
1,151 |
|
9,283 |
- corporate and commercial ................... |
1,316 |
|
1,192 |
|
640 |
|
516 |
|
663 |
|
4,327 |
- financial (non-bank financial |
6 |
|
192 |
|
34 |
|
108 |
|
17 |
|
357 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,717 |
|
4,256 |
|
872 |
|
4,303 |
|
1,831 |
|
13,979 |
|
|
|
|
|
|
|
|
|
|
|
|
At 30 June 2013 |
|
|
|
|
|
|
|
|
|
|
|
Banks .......................................................... |
16 |
|
10 |
|
- |
|
- |
|
- |
|
26 |
|
|
|
|
|
|
|
|
|
|
|
|
Customers ................................................... |
2,043 |
|
4,135 |
|
1,001 |
|
6,930 |
|
1,938 |
|
16,047 |
- personal ............................................... |
1,210 |
|
2,648 |
|
227 |
|
4,585 |
|
1,298 |
|
9,968 |
- corporate and commercial ................... |
822 |
|
1,275 |
|
723 |
|
2,340 |
|
634 |
|
5,794 |
- financial (non-bank financial |
11 |
|
212 |
|
51 |
|
5 |
|
6 |
|
285 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,059 |
|
4,145 |
|
1,001 |
|
6,930 |
|
1,938 |
|
16,073 |
|
|
|
|
|
|
|
|
|
|
|
|
At 31 December 2013 |
|
|
|
|
|
|
|
|
|
|
|
Banks .......................................................... |
- |
|
11 |
|
- |
|
- |
|
- |
|
11 |
|
|
|
|
|
|
|
|
|
|
|
|
Customers ................................................... |
2,399 |
|
4,211 |
|
757 |
|
6,453 |
|
1,640 |
|
15,460 |
- personal ............................................... |
1,287 |
|
2,764 |
|
174 |
|
4,817 |
|
1,133 |
|
10,175 |
- corporate and commercial ................... |
1,092 |
|
1,197 |
|
580 |
|
1,635 |
|
505 |
|
5,009 |
- financial (non-bank financial |
20 |
|
250 |
|
3 |
|
1 |
|
2 |
|
276 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,399 |
|
4,222 |
|
757 |
|
6,453 |
|
1,640 |
|
15,471 |
For footnote, see page 172.
Ageing analysis of days past due but not impaired gross financial instruments
|
Up to 29 days |
|
30-59 |
|
60-89 |
|
90-179 |
|
180 days and over |
|
Total |
|
US$m |
|
US$m |
|
US$m |
|
US$m |
|
US$m |
|
US$m |
At 30 June 2014 |
|
|
|
|
|
|
|
|
|
|
|
Loans and advances to customers held at amortised cost ........................................................................... |
10,980 |
|
1,910 |
|
915 |
|
121 |
|
41 |
|
13,967 |
- personal .............................................................. |
6,848 |
|
1,655 |
|
759 |
|
14 |
|
7 |
|
9,283 |
- corporate and commercial ................................... |
3,814 |
|
238 |
|
137 |
|
107 |
|
31 |
|
4,327 |
- financial (non-bank financial institutions) ........... |
318 |
|
17 |
|
19 |
|
- |
|
3 |
|
357 |
|
|
|
|
|
|
|
|
|
|
|
|
Loans and advances to banks held at amortised cost ... |
12 |
|
- |
|
- |
|
- |
|
- |
|
12 |
|
|
|
|
|
|
|
|
|
|
|
|
Loans and advances ................................................... |
10,992 |
|
1,910 |
|
915 |
|
121 |
|
41 |
|
13,979 |
|
|
|
|
|
|
|
|
|
|
|
|
Assets held for sale .................................................... |
3 |
|
1 |
|
- |
|
1 |
|
1 |
|
6 |
- disposal groups .................................................... |
3 |
|
- |
|
- |
|
- |
|
- |
|
3 |
- non-current assets held for sale ........................... |
- |
|
1 |
|
- |
|
1 |
|
1 |
|
3 |
|
|
|
|
|
|
|
|
|
|
|
|
Other assets ............................................................... |
111 |
|
32 |
|
15 |
|
13 |
|
7 |
|
178 |
- endorsements and acceptances ............................ |
15 |
|
8 |
|
- |
|
1 |
|
- |
|
24 |
- other ................................................................... |
96 |
|
24 |
|
15 |
|
12 |
|
7 |
|
154 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
11,106 |
|
1,943 |
|
930 |
|
135 |
|
49 |
|
14,163 |
|
|
|
|
|
|
|
|
|
|
|
|
At 30 June 2013 |
|
|
|
|
|
|
|
|
|
|
|
Loans and advances to customers held at amortised cost ........................................................................... |
12,147 |
|
2,711 |
|
1,098 |
|
78 |
|
13 |
|
16,047 |
- personal .............................................................. |
6,944 |
|
2,052 |
|
953 |
|
19 |
|
- |
|
9,968 |
- corporate and commercial ................................... |
4,923 |
|
655 |
|
144 |
|
59 |
|
13 |
|
5,794 |
- financial (non-bank financial institutions) ........... |
280 |
|
4 |
|
1 |
|
- |
|
- |
|
285 |
|
|
|
|
|
|
|
|
|
|
|
|
Loans and advances to banks held at amortised cost ... |
26 |
|
− |
|
− |
|
− |
|
− |
|
26 |
|
|
|
|
|
|
|
|
|
|
|
|
Loans and advances ................................................... |
12,173 |
|
2,711 |
|
1,098 |
|
78 |
|
13 |
|
16,073 |
|
|
|
|
|
|
|
|
|
|
|
|
Assets held for sale .................................................... |
384 |
|
139 |
|
79 |
|
20 |
|
19 |
|
641 |
- disposal groups .................................................... |
361 |
|
133 |
|
76 |
|
20 |
|
19 |
|
609 |
- non-current assets held for sale ........................... |
23 |
|
6 |
|
3 |
|
− |
|
− |
|
32 |
|
|
|
|
|
|
|
|
|
|
|
|
Other assets ............................................................... |
111 |
|
42 |
|
19 |
|
12 |
|
9 |
|
193 |
- endorsements and acceptances ............................ |
20 |
|
5 |
|
2 |
|
3 |
|
1 |
|
31 |
- other ................................................................... |
91 |
|
37 |
|
17 |
|
9 |
|
8 |
|
162 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
12,668 |
|
2,892 |
|
1,196 |
|
110 |
|
41 |
|
16,907 |
|
|
|
|
|
|
|
|
|
|
|
|
At 31 December 2013 |
|
|
|
|
|
|
|
|
|
|
|
Loans and advances to customers held at amortised cost ........................................................................... |
11,689 |
|
2,587 |
|
1,057 |
|
76 |
|
51 |
|
15,460 |
- personal .............................................................. |
7,170 |
|
2,124 |
|
865 |
|
16 |
|
- |
|
10,175 |
- corporate and commercial ................................... |
4,290 |
|
418 |
|
190 |
|
60 |
|
51 |
|
5,009 |
- financial (non-bank financial institutions) ........... |
229 |
|
45 |
|
2 |
|
- |
|
- |
|
276 |
|
|
|
|
|
|
|
|
|
|
|
|
Loans and advances to banks held at amortised cost ... |
11 |
|
- |
|
- |
|
- |
|
- |
|
11 |
|
|
|
|
|
|
|
|
|
|
|
|
Loans and advances ................................................... |
11,700 |
|
2,587 |
|
1,057 |
|
76 |
|
51 |
|
15,471 |
|
|
|
|
|
|
|
|
|
|
|
|
Assets held for sale .................................................... |
61 |
|
12 |
|
8 |
|
6 |
|
2 |
|
89 |
- disposal groups .................................................... |
61 |
|
11 |
|
8 |
|
5 |
|
1 |
|
86 |
- non-current assets held for sale ........................... |
- |
|
1 |
|
- |
|
1 |
|
1 |
|
3 |
|
|
|
|
|
|
|
|
|
|
|
|
Other assets ............................................................... |
142 |
|
43 |
|
18 |
|
6 |
|
9 |
|
218 |
- endorsements and acceptances ............................ |
13 |
|
3 |
|
- |
|
1 |
|
2 |
|
19 |
- other ................................................................... |
129 |
|
40 |
|
18 |
|
5 |
|
7 |
|
199 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
11,903 |
|
2,642 |
|
1,083 |
|
88 |
|
62 |
|
15,778 |