No2 HSBL Final Results (2/2)
HSBC Holdings PLC
4 March 2002
PART 2
10. Overdue advances to customers
Rest of Americas/
Figures in HK$m Hong Kong Asia-Pacific Europe Total
At 31Dec01
Gross advances to customers which have
been overdue with respect to either
principal or interest for periods of ^
- six months or less but over three months 2,286 798 - 3,084
- one year or less but over six months 2,064 1,636 - 3,700
- over one year 7,352 6,040 - 13,392
11,702 8,474 - 20,176
Overdue advances to customers as a
percentage of gross advances to
Customers ^ ^
- six months or less but over three months 0.4 % 0.5 % - 0.5 %
- one year or less but over six months 0.4 % 1.0 % - 0.5 %
- over one year 1.4 % 3.5 % - 1.9 %
2.2 % 5.0 % - 2.9 %
Overdue advances to customers (as above) 11,702 8,474 - 20,176
Less: overdue advances on which interest
is still being accrued (766 ) (238 ) - (1,004 )
Add: advances overdue for periods of
three months or less, or which are not
yet overdue, and on which interest
has been placed in suspense:
- included in rescheduled advances 2,024 1,381 4 3,409
- other 2,856 3,662 - 6,518
Gross non-performing advances (Note 9) 15,816 13,279 4 29,099
Rest of Americas/
Figures in HK$m Hong Kong Asia-Pacific Europe Total
At 31Dec00
Gross advances to customers which have
been overdue with respect to either
principal or interest for periods of ^
- six months or less but over three months 1,732 1,076 - 2,808
- one year or less but over six months 2,332 1,448 1 3,781
- over one year 10,472 8,249 - 18,721
14,536 10,773 1 25,310
Overdue advances to customers as a
percentage of gross advances to
Customers ^
- six months or less but over three months 0.3 % 0.6 % - 0.4 %
- one year or less but over six months 0.5 % 0.9 % 0.4 % 0.5 %
- over one year 2.0 % 5.1 % - 2.8 %
2.8 % 6.6 % 0.4 % 3.7 %
Overdue advances to customers (as above) 14,536 10,773 1 25,310
Less: overdue advances on which interest
is still being accrued (590 ) (468 ) - (1,058 )
Add: advances overdue for periods of
three months or less, or which are not
yet overdue, and on which interest
has been placed in suspense:
- included in rescheduled advances 1,998 1,802 20 3,820
- other 3,713 3,485 - 7,198
Gross non-performing advances (Note 9) 19,657 15,592 21 35,270
^ Gross overdue advances to customers are stated after deduction of interest
in suspense.
^ ^ Expressed as a percentage of gross advances to customers after deduction
of interest in suspense.
11. Rescheduled advances to customers
Rest of Americas/
Figures in HK$m Hong Kong Asia-Pacific Europe Total
At 31Dec01
Rescheduled advances to customers ^ 3,088 1,588 4 4,680
Rescheduled advances to customers as a
percentage of gross advances to
customers ^ ^ 0.6 % 0.9 % 36.4 % 0.7 %
At 31Dec00
Rescheduled advances to customers ^ 4,691 2,643 20 7,354
Rescheduled advances to customers as a
percentage of gross advances to
customers ^ ^ 0.9 % 1.6 % 7.1 % 1.1 %
Rescheduled advances are those advances which have been restructured or
renegotiated because of a deterioration in the financial position of the
borrower, or because of the inability of the borrower to meet the original
repayment schedule.
Rescheduled advances to customers are stated net of any advances which have
subsequently become overdue for over three months and which are included in
overdue advances to customers (Note 10).
^ Rescheduled advances are stated after deduction of interest in suspense.
^ ^ Expressed as a percentage of gross advances to customers after deduction
of interest in suspense.
12. Analysis of advances to customers based on categories used by the HSBC Group
The following analysis of advances to customers is based on categories used by
the HSBC Group, including The Hongkong and Shanghai Banking Corporation Limited
and its subsidiary companies, to manage associated risks.
Rest of Americas/
Figures in HK$m Hong Kong Asia-Pacific Europe Total
At 31Dec01
Residential mortgages 179,919 30,274 - 210,193
Hong Kong SAR Government's Home
Ownership Scheme and Private Sector
Participation Scheme and Tenants
Purchase Scheme mortgages 63,335 - - 63,335
Other personal 37,536 16,363 7 53,906
Total personal 280,790 46,637 7 327,434
Commercial, industrial and
international trade 75,314 59,517 - 134,831
Commercial real estate 66,051 16,830 4 82,885
Other property-related lending 36,725 6,993 - 43,718
Government 4,233 4,269 - 8,502
Other commercial 49,502 31,728 - 81,230
Total corporate and commercial 231,825 119,337 4 351,166
Non-bank financial institutions 12,051 4,954 - 17,005
Settlement accounts 1,547 550 - 2,097
Total financial 13,598 5,504 - 19,102
Gross advances to customers 526,213 171,478 11 697,702
Suspended interest (1,673 ) (952 ) - (2,625 )
Gross advances to customers
net of suspended interest 524,540 170,526 11 695,077
Provisions for bad and doubtful debts (10,946 ) (9,570 ) (4 ) (20,520 )
Net advances to customers 513,594 160,956 7 674,557
Rest of Americas/
Figures in HK$m Hong Kong Asia-Pacific Europe Total
At 31Dec00
Residential mortgages 180,192 23,770 - 203,962
Hong Kong SAR Government's Home
Ownership Scheme and Private Sector
Participation Scheme and Tenants
Purchase Scheme mortgages 57,345 - - 57,345
Other personal 36,932 12,406 4 49,342
Total personal 274,469 36,176 4 310,649
Commercial, industrial and
international trade 74,740 62,490 - 137,230
Commercial real estate 64,612 18,930 70 83,612
Other property-related lending 29,627 6,046 - 35,673
Government 1,014 2,548 207 3,769
Other commercial 58,177 32,547 - 90,724
Total corporate and commercial 228,170 122,561 277 351,008
Non-bank financial institutions 12,974 4,355 - 17,329
Settlement accounts 1,108 524 - 1,632
Total financial 14,082 4,879 - 18,961
Gross advances to customers 516,721 163,616 281 680,618
Suspended interest (2,710 ) (961 ) - (3,671 )
Gross advances to customers
net of suspended interest 514,011 162,655 281 676,947
Provisions for bad and doubtful debts (14,054 ) (10,360 ) (30 ) (24,444 )
Net advances to customers 499,957 152,295 251 652,503
13. Analysis of advances to customers by geographical area according to the
location of counterparties, after risk transfer
Rest of Americas/
Figures in HK$m Hong Kong Asia-Pacific Europe Others Total
At 31Dec01
Gross advances to customers, net of
suspended interest 488,222 157,329 46,752 2,774 695,077
Overdue advances to customers 11,059 7,649 1,467 1 20,176
Non-performing advances to customers 13,675 12,309 3,115 - 29,099
At 31Dec00
Gross advances to customers, net of
suspended interest 470,363 164,983 39,292 2,309 676,947
Overdue advances to customers 12,136 9,816 3,355 3 25,310
Non-performing advances to customers 17,280 14,503 3,487 - 35,270
14. Analysis of advances to customers by industry sector based on categories and
definitions used by the Hong Kong Monetary Authority ('HKMA')
The following analysis of advances to customers is based on the categories
contained in the 'Quarterly Analysis of Loans and Advances and Provisions'
return required to be submitted to the HKMA by branches of the bank and by
banking subsidiary companies in Hong Kong and is shown net of suspended
interest.
Figures in HK$m At 31Dec01 At 31Dec00
Gross advances to customers for use in Hong Kong
Industrial, commercial and financial
Property development 43,770 34,671
Property investment 67,588 69,149
Financial concerns 10,485 12,264
Stockbrokers 445 186
Wholesale and retail trade 22,231 22,894
Manufacturing 9,182 8,331
Transport and transport equipment 29,950 28,371
Others 37,542 40,086
221,193 215,952
Individuals
Advances for the purchase of flats under the Hong Kong SAR
Government's Home Ownership Scheme and Private Sector
Participation and Tenants Purchase Scheme 63,335 57,345
Advances for the purchase of other residential properties 163,467 162,090
Credit card advances 17,051 14,919
Others 19,939 20,877
263,792 255,231
Gross advances to customers for use in Hong Kong 484,985 471,183
Trade finance 30,910 32,771
Gross advances to customers for use outside
Hong Kong made by branches of the bank
and subsidiary companies in Hong Kong 8,645 10,057
Gross advances to customers made by branches of
the bank and subsidiary companies in Hong Kong 524,540 514,011
Gross advances to customers made by branches of the
bank and subsidiary companies outside Hong Kong
- rest of Asia-Pacific 170,526 162,655
- Americas/Europe 11 281
Gross advances to customers net of suspended interest 695,077 676,947
An explanation of the significant differences between the categories of advances
and their definitions used by the HSBC Group and those used by the HKMA is given
on pages 13-15 of the Annual Report and Accounts for 2000.
15. Reserves
Figures in HK$m At 31Dec01 At 31Dec00
Share premium account 3,892 3,891
Revaluation reserves
- Premises revaluation reserve 10,011 12,694
- Investment properties revaluation reserve 2,138 2,284
- Long-term equity investment revaluation reserve 2,171 3,867
14,320 18,845
Retained profits 19,980 44,818
38,192 67,554
16. Contingent liabilities, commitments and derivatives
Credit Risk-
Contract equivalent weighted
Figures in HK$m amount amount amount
At 31Dec01
Contingent liabilities
- Acceptances and endorsements 11,148 2,254 2,161
- Guarantees 72,842 62,022 33,004
- Other 28 28 28
84,018 64,304 35,193
Commitments
- Documentary credits and short-term
trade-related transactions 34,348 8,208 6,715
- Forward asset purchases and forward forward
deposits placed 1,441 1,441 288
- Undrawn formal standby facilities, credit lines
and other commitments to lend:
- one year and over 49,587 24,793 21,054
- under one year 461,405 - -
546,781 34,442 28,057
Exchange rate contracts
- Spot and forward foreign exchange 1,899,434 37,157 8,812
- Other exchange rate contracts 310,080 19,853 5,670
2,209,514 57,010 14,482
Interest rate contracts
- Interest rate swaps 1,323,477 26,532 6,303
- Other interest rate contracts 544,706 886 256
1,868,183 27,418 6,559
Other derivative contracts 2,277 804 264
Impact of counterparty netting agreements on
derivatives' exposure - (27,915 ) (5,844 )
Credit Risk-
Contract equivalent weighted
Figures in HK$m amount amount amount
At 31Dec00
Contingent liabilities
- Acceptances and endorsements 12,092 2,548 2,391
- Guarantees 55,971 45,081 35,758
- Other 27 27 27
68,090 47,656 38,176
Commitments
- Documentary credits and short-term
trade-related transactions 37,641 9,345 7,084
- Forward asset purchases and forward forward
deposits placed 2,661 2,661 532
- Undrawn formal standby facilities, credit lines
and other commitments to lend:
- one year and over 45,018 22,509 20,993
- under one year 452,257 - -
537,577 34,515 28,609
Exchange rate contracts
- Spot and forward foreign exchange 1,603,602 34,595 8,095
- Other exchange rate contracts 218,065 13,666 3,960
1,821,667 48,261 12,055
Interest rate contracts
- Interest rate swaps 909,236 13,933 3,320
- Other interest rate contracts 610,220 524 133
1,519,456 14,457 3,453
Other derivative contracts 430 169 161
Impact of counterparty netting agreements on
derivatives' exposure - (16,643 ) (3,791 )
The tables above give the nominal contract amounts, credit equivalent amounts
and risk-weighted amounts of off-balance sheet transactions. The credit
equivalent amounts are calculated for the purposes of deriving the risk-weighted
amounts. These are assessed in accordance with the Third Schedule of the Banking
Ordinance on capital adequacy and depend on the status of the counterparty and
the maturity characteristics. The risk weights used range from 0 per cent to 100
per cent for contingent liabilities and commitments, from 0 per cent to 50 per
cent for exchange rate and interest rate contracts, and from 0 per cent to 100
per cent for other derivative contracts. The group has executed close-out
netting agreements with certain counterparties, which allow for positive and
negative mark-to-market values on different transactions to be offset and
settled by a single payment in the event of default by either party. These have
been taken into account in calculating total risk assets.
Contingent liabilities and commitments are credit-related instruments which
include acceptances, letters of credit, guarantees and commitments to extend
credit. The contract amounts represent the amounts at risk should the contract
be fully drawn upon and the client default. Since a significant portion of
guarantees and commitments is expected to expire without being drawn upon, the
total of the contract amounts is not representative of future liquidity
requirements.
Derivatives arise from futures, forward, swap and option transactions undertaken
by the group in the foreign exchange, interest rate and equity markets. The
contract amounts of these instruments indicate the volume of transactions
outstanding at the balance sheet date; they do not represent amounts at risk.
Replacement cost of contracts
Figures in HK$m At 31Dec01 At 31Dec00
Exchange rate contracts 26,969 28,408
Interest rate contracts 24,027 11,822
Other derivative contracts 21 5
51,017 40,235
Less: netting adjustments (19,773 ) (12,165 )
31,244 28,070
The replacement cost of contracts represents the mark-to-market assets on all
contracts with a positive value, i.e. an asset to the group. This comprises the
mark-to-market assets on contracts with third parties and fellow subsidiary
companies included in the balance sheet in 'Other assets', and on accrual
accounted contracts which are not marked-to-market in the balance sheet.
Replacement cost is a close approximation of the credit risk for these contracts
as at the balance sheet date. The actual credit risk is measured internally as
the sum of positive mark-to-market values and an estimate for the future
fluctuation risk, using a future risk factor.
The netting adjustments represent amounts where the group has in place legally
enforceable rights of offset with individual counterparties where there is a
right to offset the gross amount of positive mark-to-market assets with any
negative mark-to-market liabilities with the same customer. These offsets are
recognised by the Hong Kong Monetary Authority in the calculation of risk assets
for the capital adequacy ratio.
17. Foreign exchange exposure
At 31 December 2001 the group's US dollar structural foreign currency position
exceeded 10 per cent of the group's net structural foreign currency exposure in
all currencies. The group's net short US dollar structural foreign currency
position increased during the year following the issue of HK$28,689 million of
US dollar non-cumulative irredeemable preference shares. These US dollar
denominated shares were issued to maintain the bank's capital ratios following
the payment of a special interim dividend out of HK dollar retained profits.
Figures in HK$m Net structural positions
At 31Dec01
United States dollar (39,680 )
At 31Dec00
Australian dollar 1,094
Indian rupee 1,603
Korean won 1,548
Philippine peso 729
Singapore dollar 4,406
Thai baht 828
Taiwan dollar 420
United States dollar (14,717 )
The group's US dollar non-structural foreign currency position exceeded 10 per
cent of the group's net foreign currency non-structural positions in all
currencies and was made up as follows:
Figures in HK$m USD non-structural position
At 31Dec01 At 31Dec00
Spot assets 809,254 780,010
Spot liabilities (701,270 ) (691,311 )
Forward purchases 1,115,011 975,594
Forward sales (1,151,384 ) (989,410 )
Net options position 306 (543 )
71,917 74,340
18. Reconciliation of operating profit to net cash inflow from operating
activities
Figures in HK$m 2001 2000
Operating profit 33,250 33,142
Interest on loan capital 995 1,182
Depreciation and amortisation 2,032 1,942
Provisions for bad and doubtful debts 2,257 1,355
Advances written off net of recoveries (6,025 ) (5,547 )
Other provisions for liabilities and charges 286 302
Provisions utilised (105 ) (277 )
Income on long-term investments (14,091 ) (11,545 )
Net cash inflow from trading activities 18,599 20,554
Change in treasury bills with original term to
maturity of more than three months 25,814 (7,235 )
Change in placings with banks maturing after one month 24,366 29,058
Change in certificates of deposit with original term
to maturity of more than three months (974 ) (10,922 )
Change in securities held for dealing purposes (16,673 ) (33,453 )
Change in advances to customers (18,013 ) (11,657 )
Change in amounts due from fellow subsidiary companies 1,628 (667 )
Change in other assets 26,308 9,069
Change in current, savings and other deposit accounts (17,583 ) 132,343
Change in deposits by banks 9,587 (9,068 )
Change in amounts due to fellow subsidiary companies 4,126 478
Change in amounts due to ultimate holding company (115 ) 143
Change in other liabilities (4,146 ) 31
Exchange adjustments (730 ) (1,390 )
Net cash inflow from operating activities 52,194 117,284
19. Analysis of cash and cash equivalents
a. Changes in cash and cash equivalents during the period
Figures in HK$m 2001 2000
Balance at beginning of period 399,815 377,649
Net cash (outflow)/inflow before the effect of
foreign exchange movements (78,939 ) 26,847
Effect of foreign exchange movements (6,670 ) (4,681 )
Balance at end of period 314,206 399,815
b. Analysis of balances of cash and cash equivalents as classified in the
consolidated balance sheet
Figures in HK$m 2001 2000
Cash in hand and current balances with banks 24,008 17,494
Placings with banks 236,379 341,485
Treasury bills 53,112 39,264
Certificates of deposit 707 1,572
314,206 399,815
c. Analysis of net (outflow)/inflow of cash and cash equivalents in respect of
acquisition of and increased shareholding in subsidiary companies
Figures in HK$m 2001 2000
Cash consideration (941 ) (172 )
Cash and cash equivalents acquired 783 181
(158 ) 9
d. Analysis of net (outflow)/inflow of cash and cash equivalents in respect of
sale of subsidiary companies
Figures in HK$m 2001 2000
Sales proceeds 105 236
Cash and cash equivalents transferred (23,646 ) (23 )
(23,541 ) 213
20. Segmental analysis
The allocation of earnings reflects the benefits of shareholders' funds to the
extent that these are actually allocated to businesses in the segment by way of
intra-group capital and funding structures. Common costs are included in
segments on the basis of the actual recharges made. Geographical information has
been classified by the location of the principal operations of the subsidiary
company or, in the case of the bank, by the location of the branch responsible
for reporting the results or advancing the funds. Due to the nature of the group
structure, the analysis of profits shown below includes intra-group items
between geographical regions.
Profit and loss account:
Rest of Americas/
Figures in HK$m Hong Kong Asia-Pacific Europe Total
Year ended 31Dec01
Interest income 68,564 18,653 601 87,818
Interest expense (36,616 ) (11,412 ) (516 ) (48,544 )
Net interest income 31,948 7,241 85 39,274
Dividend income 200 16 9 225
Fees and commissions receivable 9,939 3,753 14 13,706
Fees and commissions payable (1,448 ) (786 ) (8 ) (2,242 )
Dealing profits 1,422 2,029 (2 ) 3,449
Rental income from investment
properties 259 2 - 261
Other 3,164 322 1 3,487
Operating income 45,484 12,577 99 58,160
Operating expenses (15,924 ) (6,610 ) (41 ) (22,575 )
Operating profit before provisions 29,560 5,967 58 35,585
Provisions for bad and doubtful debts (1,531 ) (774 ) 48 (2,257 )
Provisions for contingent liabilities
and commitments 49 (127 ) - (78 )
Operating profit 28,078 5,066 106 33,250
Profit on tangible fixed assets
and long-term investments 1,270 4 15 1,289
Surplus/(deficit) on property
revaluation 4 (40 ) - (36 )
Share of profits less losses of
associated companies 132 - - 132
Profit on ordinary activities before tax 29,484 5,030 121 34,635
Tax on profit on ordinary activities (3,512 ) (953 ) (14 ) (4,479 )
Profit on ordinary activities after tax 25,972 4,077 107 30,156
Minority interests (3,923 ) 4 - (3,919 )
Profit attributable to shareholders 22,049 4,081 107 26,237
Rest of Americas/
Figures in HK$m Hong Kong Asia-Pacific Europe Total
Year ended 31Dec00
Interest income 89,142 19,901 1,017 110,060
Interest expense (58,173 ) (13,313 ) (934 ) (72,420 )
Net interest income 30,969 6,588 83 37,640
Dividend income 261 10 8 279
Fees and commissions receivable 9,351 3,722 27 13,100
Fees and commissions payable (1,281 ) (728 ) (2 ) (2,011 )
Dealing profits 1,715 1,574 (2 ) 3,287
Rental income from investment
properties 260 6 - 266
Other 2,572 250 12 2,834
Operating income 43,847 11,422 126 55,395
Operating expenses (14,716 ) (6,036 ) (57 ) (20,809 )
Operating profit before provisions 29,131 5,386 69 34,586
Provisions for bad and doubtful debts (1,933 ) 460 118 (1,355 )
Provisions for contingent liabilities
and commitments (76 ) (29 ) 16 (89 )
Operating profit 27,122 5,817 203 33,142
Profit on tangible fixed assets and
long-term investments 985 160 130 1,275
Surplus/(deficit) on property
revaluation 96 (42 ) - 54
Share of profits less losses of
associated companies 163 2 - 165
Profit on ordinary activities before tax 28,366 5,937 333 34,636
Tax on profit on ordinary activities (3,646 ) (1,203 ) (68 ) (4,917 )
Profit on ordinary activities after tax 24,720 4,734 265 29,719
Minority interests (3,838 ) 84 - (3,754 )
Profit attributable to shareholders 20,882 4,818 265 25,965
Interest income and interest expense include intra-group interest of HK$4,232
million (2000: HK$5,407 million). Fees and commissions receivable and fees and
commissions payable include intra-group fees of HK$72 million (2000: HK$23
million). Other operating income and operating expenses include intra-group
items of HK$535 million (2000: HK$356 million).
21. Capital adequacy
The table below sets out an analysis of regulatory capital and capital adequacy
ratios for the group.
Figures in HK$m At 31Dec01 At 31Dec00
Composition of capital
Tier 1:
Shareholders' funds 83,129 90,812
Less: proposed dividends - (7,000 )
property revaluation reserves (12,14 9) (14,978 )
long-term equity investments revaluation reserve (2,171 ) (3,867 )
term preference shares (3,896 ) (3,895 )
goodwill (652 ) (288 )
Minority interests ^ 15,495 15,753
Total qualifying tier 1 capital 79,756 76,537
Tier 2:
Property revaluation reserves (@70%) ^ ^ 7,977 7,977
Long-term equity investments revaluation
reserve (@70%) 1,520 2,707
General provisions 4,939 5,022
Perpetual subordinated debt 12,282 12,284
Term subordinated debt 3,082 3,479
Term preference shares 3,896 3,895
Total qualifying tier 2 capital 33,696 35,364
Investments in associated companies (1,566 ) (1,641 )
Investments in unconsolidated subsidiary companies (2,200 ) (2,016 )
Investments in other banks (515 ) -
Total capital 109,171 108,244
Risk-weighted assets 836,946 817,967
^ After deduction of minority interests in unconsolidated subsidiary
companies.
^ ^ Capped at 31 December 1998 amount.
The group's capital adequacy ratios calculated in accordance with the Hong Kong
Monetary Authority Guideline on 'Maintenance of Adequate Capital Against Market
Risks' are as follows:
At 31Dec01 At 31Dec00
Total capital 13.0 % 13.2 %
Tier 1 capital 9.5 % 9.4 %
The group's capital adequacy ratios calculated in accordance with the provisions
of the Third Schedule of the Banking Ordinance which does not take into account
market risk are as follows:
Total capital 12.8 % 13.2 %
Tier 1 capital 9.3 % 9.3 %
22. Liquidity ratio
The Banking Ordinance requires banks operating in Hong Kong to maintain a
minimum liquidity ratio, calculated in accordance with the provisions of the
Fourth Schedule of the Banking Ordinance, of 25 per cent. This requirement
applies separately to the Hong Kong branches of the bank and to those subsidiary
companies which are Authorised Institutions under the Banking Ordinance in Hong
Kong.
2001 2000
The average liquidity ratio for the year
was as follows:
Hong Kong branches of the bank 54.1 % 47.0 %
23. Property revaluation
The group's premises and investment properties were revalued by independent
professionally qualified valuers as at 30 September 2001 and updated for any
material changes at 31 December 2001. The basis of the valuation for premises
was open market value for existing use or, in the case of one specialised
building, depreciated replacement cost. The basis of the valuation for
investment properties was open market value. Previously the bank's head office
building in Hong Kong was valued using the depreciated replacement cost basis.
Following the advice of professionally qualified valuers the basis of valuation
of this building has been changed to open market value for existing use.
Premises and investment properties in the Hong Kong SAR, the Macau SAR and
mainland China, which represent 90.8 per cent by value of the group's properties
subject to valuation, were valued by Chesterton Petty Limited. The valuations
were carried out by independent qualified valuers who are members of the Hong
Kong Institute of Surveyors. Different independent valuers were used in the
other eleven countries in which the group owns premises and investment
properties.
The property revaluation has resulted in a decrease in the group's revaluation
reserves of HK$2,213 million as at 31 December 2001 and a debit to the profit
and loss account of HK$36 million in respect of properties where the valuation
had fallen below depreciated historical cost. Most of the decrease in the
group's revaluation reserve was as a result of the change in the basis of
valuing the bank's head office building in Hong Kong.
24. Accounting policies
The accounting policies adopted are consistent with those described in the
Annual Report and Accounts for 2000 except for the recognition and the
presentation of proposed dividends which have been amended in accordance with
Hong Kong Statement of Standard Accounting Practice 9 ('HK SSAP9') on Events
after the balance sheet date.
Dividends proposed or declared after the balance sheet date were previously
recognised as a liability at the balance sheet date. Following the
implementation of HK SSAP9, dividends proposed after the balance sheet date are
not recognised as a liability at the balance sheet date but disclosed as a
separate component of shareholders' funds.
The effect of the above change in accounting policy was to increase
shareholders' funds by HK$7,000 million at 31 December 2000 and to decrease
liabilities by the same amount. In respect of dividends payable by subsidiaries,
the effect was to increase minority interests by HK$2,027 million at 31 December
2001 and HK$2,027 million at 31 December 2000 while reducing liabilities by the
same amount.
25. Comparative figures
Certain comparative figures have been reclassified to conform with the current
year's presentation.
26. Statutory accounts
The information in this news release is not audited and does not constitute
statutory accounts.
Certain financial information in this news release is extracted from the
statutory accounts for the year ended 31 December 2001 which were approved by
the Board of Directors on 4 March 2002 and will be delivered to the Registrar of
Companies and the Hong Kong Monetary Authority. The Auditors expressed an
unqualified opinion on those statutory accounts in their report dated 4 March
2002. The Annual Report and Accounts for the year ended 31 December 2001, which
include the statutory accounts, can be obtained on request from Group Public
Affairs, The Hongkong and Shanghai Banking Corporation Limited, 1 Queen's Road
Central, Hong Kong, and may be viewed on our web site: www.hsbc.com, on or after
25 March 2002.
27. Ultimate holding company
The Hongkong and Shanghai Banking Corporation Limited is an indirectly-held,
wholly-owned subsidiary of HSBC Holdings plc.
This information is provided by RNS
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