Annual Financial Report - 7 of 54

RNS Number : 0674I

HSBC Holdings PLC

20 March 2015

 



Consolidated balance sheet

Five-year summary consolidated balance sheet

		2014 US$m		2013 US$m		2012 US$m		2011 US$m		2010 US$m
ASSETS
Cash and balances at central banks		129,957		166,599		141,532		129,902		57,383
Trading assets26		304,193		303,192		408,811		330,451		385,052
Financial assets designated at fair value		29,037		38,430		33,582		30,856		37,011
Derivatives		345,008		282,265		357,450		346,379		260,757
Loans and advances to banks27		112,149		120,046		117,085		139,078		141,869
Loans and advances to customers27,28		974,660		992,089		962,972		899,010		897,847
Reverse repurchase agreements - non-trading26,27		161,713		179,690		70,112		83,328		126,921
Financial investments		415,467		425,925		421,101		400,044		400,755
Other assets		161,955		163,082		179,893		196,531		147,094
Total assets at 31 December		2,634,139		2,671,318		2,692,538		2,555,579		2,454,689
LIABILITIES AND EQUITY
Liabilities
Deposits by banks27		77,426		86,507		95,480		95,205		87,221
Customer accounts27		1,350,642		1,361,297		1,311,396		1,223,140		1,190,763
Repurchase agreements - non-trading26,27		107,432		164,220		40,567		48,402		60,325
Trading liabilities26		190,572		207,025		304,563		265,192		300,703
Financial liabilities designated at fair value		76,153		89,084		87,720		85,724		88,133
Derivatives		340,669		274,284		358,886		345,380		258,665
Debt securities in issue		95,947		104,080		119,461		131,013		145,401
Liabilities under insurance contracts		73,861		74,181		68,195		61,259		58,609
Other liabilities		121,459		120,181		123,141		134,171		109,954
Total liabilities at 31 December		2,434,161		2,480,859		2,509,409		2,389,486		2,299,774
Equity
Total shareholders' equity		190,447		181,871		175,242		158,725		147,667
Non-controlling interests		9,531		8,588		7,887		7,368		7,248
Total equity at 31 December		199,978		190,459		183,129		166,093		154,915
Total liabilities and equity at 31 December		2,634,139		2,671,318		2,692,538		2,555,579		2,454,689

Five-year selected financial information

		2014 US$m		2013 US$m		2012 US$m		2011 US$m		2010 US$m
Called up share capital		9,609		9,415		9,238		8,934		8,843
Capital resources29,30		190,730		194,009		180,806		170,334		167,555
Undated subordinated loan capital		2,773		2,777		2,778		2,779		2,781
Preferred securities and dated subordinated loan capital31		47,208		48,114		48,260		49,438		54,421
Risk-weighted assets29		1,219,765		1,092,653		1,123,943		1,209,514		1,103,113
Financial statistics
Loans and advances to customers as a percentage of customer accounts27		72.2		72.9		73.4		73.5		75.4
Average total shareholders' equity to average total assets		7.01		6.55		6.16		5.64		5.53
Net asset value per ordinary share at year-end32 (US$)		9.28		9.27		9.09		8.48		7.94
Number of US$0.50 ordinary shares in issue (millions)		19,218		18,830		18,476		17,868		17,686
Closing foreign exchange translation rates to US$:
US$1: £		0.642		0.605		0.619		0.646		0.644
US$1: €		0.823		0.726		0.758		0.773		0.748

For footnotes, see page 109.

A more detailed consolidated balance sheet is contained in the Financial Statements on page 337.

Movement in 2014

Total reported assets were US$2.6 trillion, 1% lower than at 31 December 2013. On a constant currency basis, total assets were US$85bn or 3% higher.

Our balance sheet remains strong with a ratio of customer advances to customer accounts of 72%. Although customer loans and customer accounts have fallen on a reported basis, both have increased on a constant currency basis, notably rising in Asia.

The following commentary is on a reported basis unless otherwise stated.

Assets

Cash and balances at central banks decreased by US$37bn, notably in Europe, in part reflecting net reductions in repurchase and reverse repurchase agreements.

Trading assets were broadly unchanged. Excluding adverse foreign exchange movements of US$18bn, trading assets grew, primarily from the holdings of debt securities in Asia to support GB&M's Rates business. In Europe, trading assets were broadly unchanged as increased holdings of equity securities were broadly offset by reductions in several other asset classes.

Financial assets designated at fair value decreased by US$9bn, notably in Europe, largely from the transfer to 'Assets held for sale' of balances relating to the UK Pension business of HSBC Life (UK) Limited.

Derivative assets increased by 22%, notably in Europe relating to interest rate and foreign exchange derivative contracts reflecting market movements, including changes in yield curves and foreign exchange rates.

Loans and advances to customers marginally decreased by US$17bn or 2% including adverse foreign exchange movements of US$45bn. Excluding these movements, customer lending grew by US$28bn, or 3%, largely from growth in Asia of US$32bn and, to a lesser extent, in North America and Latin America. By contrast, balances decreased in Europe by US$15bn, as term lending growth in CMB and GB&M was more than offset by a fall in corporate overdraft balances relating to a small number of customers, as explained further below.

In Asia, term lending to CMB and GB&M customers grew, which included growth in commercial real estate and other property-related lending. Mortgage balances also increased, mainly in Hong Kong. In North America, the growth in balances was driven by increased term lending to corporate and commercial customers in CMB and GB&M, partly offset by a decline in RBWM from the continued reduction in the US run-off portfolio and the transfer to 'Assets held for sale' of US first lien mortgage balances. Balances also rose in Latin America, mainly in CMB in Brazil and GB&M in Mexico.

The fall in lending in Europe of US$15bn was driven by a reduction in corporate overdraft balances. In the UK, a small number of clients benefit from the use of net interest arrangements across their overdraft and deposit positions. During the year, as we aligned our approach in our Payments and Cash Management business to be more globally consistent, many of these clients increased the frequency with which they settled these balances, reducing their overdraft and deposit balances which fell by US$28bn. Other customer loans and advances increased by US$13bn, mainly in CMB and GB&M, driven by an increase in term lending to corporate and commercial customers, notably in the second half of the year.

Reverse repurchase agreements decreased by US$18bn, driven by a managed reduction in Europe as we reassessed the overall returns of these activities in light of new regulatory requirements. This decrease was partly offset by increases in Asia and North America.

Liabilities

Repurchase agreements decreased by US$57bn or 35%, driven by a decrease in Europe, notably in the UK and France, reflecting the managed reduction in reverse repurchase agreements in Europe as noted above.

Customer accounts decreased marginally by US$11bn, and included adverse foreign exchange movements of US$58bn. Excluding these movements, balances increased by US$47bn or 4%, with growth in all regions, notably Asia, of US$36bn. The increase in Asia reflected growth in our Payments and Cash Management business in CMB and GB&M, an increase in balances in Securities Services in GB&M and a rise in RBWM, in part reflecting successful deposit campaigns. In Europe, balances increased marginally despite a US$28bn fall in corporate current accounts, mainly in GB&M, in line with the fall in corporate overdraft balances, and a reduction in client deposits in GPB. These factors were more than offset by growth in CMB and, to a lesser extent, in GB&M as deposits from our Payments and Cash Management business increased together with a rise in RBWM balances reflecting customers' continued preference for holding balances in current and savings accounts.

Trading liabilities fell by US$16bn including adverse foreign exchange movements of US$12bn. Excluding these, balances fell reflecting changes in client demand.

Financial liabilities designated at fair value reduced by US$13bn, mainly in Europe reflecting the transfer to 'Liabilities held for sale' of balances relating to the UK Pension business of HSBC Life (UK) Limited.

The increase in derivative liabilities was in line with that of 'Derivative assets' as the underlying risk is broadly matched.

Equity

Total shareholders' equity rose by 5%, driven by profits generated in the year, which were partially offset by dividends paid. In addition, shareholders' equity increased as we issued new contingent convertible securities of US$5.7bn during 2014. For further details of these securities, see Note 35 on the Financial Statements. These movements were partly offset by a reduction of US$9bn in our foreign exchange reserve reflecting the notable appreciation in the US dollar against sterling and the euro, particularly in the second half of the year.

Reconciliation of consolidated reported and constant currency assets and liabilities

		31 December 2014 compared with 31 December 2013
		31 Dec 13                            as              reported		Currency         translation        adjustment33		31 Dec 13        at 31 Dec 14             exchange                      rates		31 Dec 14                            as              reported		Reported                  change		Constant              currency                  change
		US$m		US$m		US$m		US$m		%		%
Cash and balances at central banks		166,599		(9,384)		157,215		129,957		(22)		(17)
Trading assets		303,192		(18,176)		285,016		304,193		−		7
Financial assets designated at fair value		38,430		(2,467)		35,963		29,037		(24)		(19)
Derivative assets		282,265		(16,582)		265,683		345,008		22		30
Loans and advances to banks27		120,046		(4,923)		115,123		112,149		(7)		(3)
Loans and advances to customers27		992,089		(45,494)		946,595		974,660		(2)		3
Reverse repurchase agreements - non-trading26,27		179,690		(9,961)		169,729		161,713		(10)		(5)
Financial investments		425,925		(15,285)		410,640		415,467		(2)		1
Other assets		163,082		(385)		162,697		161,955		(1)		−
Total assets		2,671,318		(122,657)		2,548,661		2,634,139		(1)		3
Deposits by banks27		86,507		(3,317)		83,190		77,426		(10)		(7)
Customer accounts27		1,361,297		(57,673)		1,303,624		1,350,642		(1)		4
Repurchase agreements - non-trading26, 27		164,220		(7,730)		156,490		107,432		(35)		(31)
Trading liabilities		207,025		(12,208)		194,817		190,572		(8)		(2)
Financial liabilities designated at fair value		89,084		(3,930)		85,154		76,153		(15)		(11)
Derivative liabilities		274,284		(16,214)		258,070		340,669		24		32
Debt securities in issue		104,080		(5,089)		98,991		95,947		(8)		(3)
Liabilities under insurance contracts		74,181		(4,447)		69,734		73,861		−		6
Other liabilities		120,181		(4,221)		115,960		121,459		1		5
Total liabilities		2,480,859		(114,829)		2,366,030		2,434,161		(2)		3
Total shareholders' equity		181,871		(7,720)		174,151		190,447		5		9
Non-controlling interests		8,588		(108)		8,480		9,531		11		12
Total equity		190,459		(7,828)		182,631		199,978		5		9
Total liabilities and equity		2,671,318		(122,657)		2,548,661		2,634,139		(1)		3

For footnotes, see page 109.

Combined view of lending and deposits^26,27

		2014		2013		Change
		US$m		US$m		%
Customers - amortised cost
Loans and advances to customers		974,660		992,089		(2)
Loans and advances to customers reported in 'Assets held for sale'34		577		1,703		(66)
Reverse repurchase agreements - non-trading		66,310		88,215		(25)
Combined customer lending		1,041,547		1,082,007		(4)
Customer accounts		1,350,642		1,361,297		(1)
Customer accounts reported in 'Liabilities of disposal groups held for sale'		145		2,187		(93)
Repurchase agreements - non-trading		79,556		121,515		(35)
Combined customer deposits		1,430,343		1,484,999		(4)
Banks - amortised cost
Loans and advances to banks		112,149		120,046		(7)
Reverse repurchase agreements - non-trading		95,403		91,475		4
Combined bank lending		207,552		211,521		(2)
Deposits by banks		77,426		86,507		(10)
Repurchase agreements - non-trading		27,876		42,705		(35)
Combined bank deposits		105,302		129,212		(19)
Customers and banks - fair value
Trading assets - reverse repos		1,297		10,120		(87)
-  loans and advances to customers		908		7,180		(87)
-  loans and advances to banks		389		2,940		(87)
Trading liabilities - repos		3,798		17,421		(78)
-  customer accounts		898		9,611		(91)
-  deposits by banks		2,900		7,810		(63)

For footnotes, see page 109.

Financial investments

		2014						2013
		Equity securities		Debt securities		Total		Equity securities		Debt securities		Total
		US$bn		US$bn		US$bn		US$bn		US$bn		US$bn
		-
Balance Sheet Management		-		306.8		306.8		-		314.4		314.4
Insurance entities		-		48.5		48.5		-		46.4		46.4
Structured entities		0.1		14.9		15.0		0.1		22.6		22.7
Principal Investments		2.0		-		2.0		2.7		-		2.7
Other		8.6		34.6		43.2		6.3		33.4		39.7
-
At 31 December		10.7		404.8		415.5		9.1		416.8		425.9

 

END

 

 

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