HSBC Ltd - Part 1 Results
HSBC Hldgs PLC
26 February 2001
HSBC Hldgs PLC
News Release 3 Part (1)of(2)
THE HONGKONG AND SHANGHAI BANKING CORPORATION LIMITED
2000 CONSOLIDATED RESULTS - HIGHLIGHTS
* Operating profit before provisions up 11.6 per cent to
HK$34,586 million (HK$30,999 million in 1999).
* Pre-tax profit up 40.3 per cent to HK$34,636 million
(HK$24,695 million in 1999).
* Attributable profit up 45.0 per cent to HK$25,965
million (HK$17,905 million in 1999).
* Return on average shareholders' funds of 33.3 per cent
(22.7 per cent for 1999).
* Assets up by 7.6 per cent to HK$1,762.0 billion
(HK$1,637.9 billion at the end of 1999).
* Total capital ratio of 13.2 per cent; tier 1 capital
ratio of 9.4 per cent.
* Cost:income ratio of 37.2 per cent (38.3 per cent for
1999).
Comment by David Eldon, Chairman
'Our results for 2000 were encouraging. Net interest income
increased despite subdued loan growth and intense competition
in Hong Kong, and the net interest margin held firm. There
was strong growth in other operating income, including fee
income from successful wealth management initiatives. We have
met the targets we set ourselves for the sale of MPF
services. In August we launched e-banking in Hong Kong and
have attracted to date more than 250,000 customers. In Asia
outside Hong Kong we are beginning to see positive results
from our investment in wealth management products and
services.
'The charge for bad and doubtful debts was substantially
lower than in 1999, reflecting the conservative level of
provisions taken at the onset of the Asian crisis, better
economic conditions in the region and improved asset quality.
There was a net release of general provisions including 50
per cent of the additional general provision made in 1997. In
view of the US economic slowdown and its implications for
Asia, the balance of the additional provision has been
transferred to the general provisions for bad and doubtful
debts.
'The year ahead is challenging. Loan demand remains subdued,
while July marks the end of interest rate regulation in Hong
Kong and a consequent move by the banking industry to the
principle of user pays. Despite these uncertainties our
strong balance sheet, prudent management and continuing
investment in wealth management initiatives mean we are well
placed to take advantage of market opportunities.'
Financial Overview
Financial highlights
Figures in HK$m 2000 1999
Net interest income 37,640 34,953
Other operating income 17,399 15,282
Operating expenses (20,453) (19,236)
Provisions for bad and doubtful
debts (1,355) (7,847)
Contingent liabilities and other
commitments (89) (143)
Other 1,494 1,686
Profit before tax 34,636 24,695
Attributable profit 25,965 17,905
Key ratios
Cost:income ratio 37.2% 38.3%
Net interest margin 2.55% 2.56%
Return on average shareholders'
funds (equity) 33.3% 22.7%
At 31Dec00 At 31Dec99
Advances to customers 652,503 636,251
Total assets 1,761,970 1,637,892
Current, savings and other deposit
accounts 1,395,702 1,263,359
Shareholders' funds 83,812 79,486
Staff numbers (full-time
equivalent) 37,855 36,347
Capital ratios
- Total capital 13.2% 14.0%
- Tier 1 capital 9.4% 9.6%
Attributable profit reported by The Hongkong and Shanghai
Banking Corporation Limited ('the bank') and its subsidiary
and associated companies ('the group') increased by HK$8,060
million, or 45.0 per cent, to HK$25,965 million in 2000.
Operating profit before provisions increased by HK$3,587
million, or 11.6 per cent, to HK$34,586 million.
Net interest income increased by HK$2,687 million, or 7.7 per
cent, to HK$37,640 million due to the positive impact of
increased average interest-earning assets.
Average interest-earning assets increased by HK$111.2
billion, or 8.1 per cent, to HK$1,476.8 billion, mainly due
to increased holdings of securities and driven by solid
growth in customer deposits, particularly in Hong Kong in
both the bank and Hang Seng Bank. Average advances to
customers during 2000 increased by 0.6 per cent against a
background of intense mortgage competition and subdued
corporate demand in Hong Kong. For the bank in Hong Kong,
average advances to customers fell by HK$11.9 billion, or 4.3
per cent, mainly in mortgages and term lending. In Hang Seng
Bank, average advances to customers increased by HK$13.3
billion, or 6.7 per cent, with increases in mortgages and
term lending. In the rest of the Asia-Pacific region, average
interest-earning assets increased by HK$24.2 billion, or 8.7
per cent, with strong growth in personal lending in Korea,
India and Taiwan, although lending in mainland China fell.
Average customer deposits for the group increased by HK$106.4
billion, or 8.8 per cent, compared with 1999, with increases
in current accounts, savings accounts and time deposits in
both the bank in Hong Kong and Hang Seng Bank. In the rest of
the region, personal deposits continued to grow particularly
in Korea, India and Taiwan.
The group's net interest margin was 2.55 per cent, one basis
point lower than 1999. Spread narrowed by six basis points to
2.08 per cent for the group in 2000. The favourable effects
of a reduction in suspended interest and improved Hong Kong
dollar time deposit spreads in a highly liquid environment
were outweighed by the adverse effects of a fall in the
average advances-to-deposits ratio and reduced mortgage
spreads in Hong Kong as a result of intense price
competition. Cash incentive payments on new mortgage loans of
HK$313 million have been written off as deductions from
interest income in 2000 compared with HK$239 million in 1999.
The reduction in suspended interest, net of releases and
recoveries, accounted for an improvement of five basis points
in spread for the group.
For the bank in Hong Kong, net interest margin for 2000
remained unchanged at 2.47 per cent. Spread narrowed by five
basis points largely due to the adverse effects of reduced
mortgage spreads, the fall in the average advances-to-
deposits ratio and the increased commercial surplus which was
placed in lower yielding debt securities and money market
loans. These were partly offset by the positive effect of a
reduction in suspended interest, net of releases and
recoveries, which accounted for an improvement of five basis
points in spread, and wider Hong Kong dollar time deposit
spreads.
In Hang Seng Bank, net interest margin reduced by 19 basis
points compared with 1999 to 2.68 per cent. Spread narrowed
by 17 basis points as pressure on mortgage yields and a fall
in the average advances-to-deposits ratio more than
outweighed the benefits of growth in lower cost savings
accounts, an improvement in spreads earned on time deposits,
and the widening of the gap between the Hong Kong best
lending rate ('BLR') and interbank rates.
Continued price competition in the residential mortgage
market throughout the year resulted in a reduction in the
average yield of the Hong Kong residential mortgage
portfolios, excluding Government Home Ownership Scheme
('GHOS') loans and staff loans. Mortgage yields in the bank
in Hong Kong were 27 basis points below BLR in 2000, compared
with 58 basis points above BLR in 1999 (before accounting for
the effect of cash incentive payments). Similarly the
mortgage yields in Hang Seng Bank were 26 basis points below
BLR in 2000, compared with 49 basis points above BLR in 1999.
In the rest of the Asia-Pacific region, spread widened by
five basis points to 1.66 per cent in 2000. Solid growth in
higher yielding personal lending contributed to increases in
net interest income in the bank in Taiwan and India, where
significant growth in residential mortgages was achieved
following intensive marketing campaigns. In Korea, the
positive impact on spread from the growth in higher yielding
personal lending was offset by mortgage incentive payments.
There were also increases in net interest income in the bank
in Thailand mainly due to higher earnings from treasury, and
in Singapore where spread widened on offshore banking
deposits and as a result of increased releases and recoveries
of suspended interest.
The contribution from net free funds for the group improved
by five basis points due to both increased net free funds and
higher average interest rates during 2000.
Other operating income increased by HK$2,117 million or 13.9
per cent.
Within other operating income, net fees and commissions
increased by HK$1,710 million, or 18.2 per cent, compared
with 1999 reflecting the success of initiatives to expand fee
generating services and the improved economic environment in
Asia. Fees from credit facilities increased by HK$391
million, or 32.9 per cent, to HK$1,580 million in 2000 mainly
in the bank in Hong Kong and Hang Seng Bank. Fee income from
cards increased by HK$380 million, or 18.1 per cent, to
HK$2,483 million with strong growth in the bank in Taiwan and
Hong Kong and in Hang Seng Bank following successful
marketing initiatives. There was an increase of HK$289
million, or 14.8 per cent, to HK$2,241 million
in securities and stockbroking commission income on customer
transactions principally in the bank in Hong Kong, Hang Seng Bank
and in the investment bank as a result of the buoyant Hong Kong
stock market in the early part of 2000. There was a marked
increase in income from wealth management initiatives, mainly in
Hong Kong in both the bank and Hang Seng Bank. Total operating
income from the insurance businesses and commission on sales of
retail investment funds and on securities transactions executed for
personal customers amounted to some HK$2.5 billion, an
increase of 34.9 per cent compared to 1999.
Dealing profits increased by HK$121 million or 3.8 per cent.
Foreign exchange profits increased by HK$193 million, or 7.3
per cent, largely due to improved corporate business volumes
in the bank in Hong Kong. Profits on interest rate
derivatives decreased in the bank in Hong Kong, Thailand,
Japan and Korea as a result of lower volatility and volumes.
Profits on debt securities increased mainly due to the
reversal of a provision made in 1999 against a bond holding
in the investment bank.
Operating expenses increased by HK$1,217 million, or 6.3 per
cent, and included an increase of HK$510 million to HK$680
million in costs relating to the launch of the Mandatory
Provident Fund ('MPF') in Hong Kong.
Staff costs increased by HK$380 million, or 3.4 per cent, due
to higher profit-related remuneration in the investment bank,
increased costs in HSBC Insurance to support the launch of
MPF products, and additional headcount to support business
expansion in the bank. These increases were partly offset by
a lower headcount in Hang Seng Bank, and reductions in
retirement benefit costs in the bank in Hong Kong. The total
number of staff in the group increased to 37,855 at 31
December 2000 from 36,347 at 31 December 1999.
Premises and equipment expenses reduced by HK$188 million, or
4.1 per cent, compared with 1999 reflecting lower rental
expenses. Other operating expenses increased by HK$1,025
million with increases in advertising and marketing expenses,
and in the development costs of e-banking initiatives.
Provisions for bad and doubtful debts decreased sharply by
HK$6,492 million. New specific provisions for doubtful debts
for customers decreased by HK$4,685 million to HK$5,597
million whilst releases and recoveries increased by HK$1,285
million to HK$3,346 million.
The net charge for specific provisions for personal lending
reduced, with increased provisions for residential mortgages
more than offset by a lower provision for other forms of
personal lending. Average delinquency rates for residential
mortgages increased in 2000 but remained low in absolute
terms.
The net charge for specific provisions against corporate
customers in Hong Kong and elsewhere in the region reduced
significantly. The net charge for bad and doubtful debts in
respect of lending to mainland China-related companies in the
Hong Kong SAR, mainland China and the Macau SAR decreased
from HK$2,372 million in 1999 to HK$24 million in 2000. The
bank's operations in Indonesia and Thailand, the two
countries outside Hong Kong which suffered the largest bad
debt losses in 1998, both had net releases of provisions in
2000. There were net releases of bad debt provisions for
borrowers in Indonesia of HK$64 million and in Thailand of
HK$75 million in 2000. This compared with net charges of
HK$409 million and HK$161 million in 1999 respectively. There
was also a net release of specific provisions in Singapore.
Non-performing advances as a percentage of total advances
decreased from 6.5 per cent at 31 December 1999 to 5.2 per
cent at 31 December 2000 due to a combination of write-offs,
upgrades and recoveries, and an increase in total advances to
customers.
There was a net release of general provisions of HK$896
million in 2000. This included a release of 50 per cent of
the additional general provision made by the group in 1997.
In view of the slowdown in the US economy and its
implications for the Asian economies as a whole, the balance
of this additional provision has been transferred to augment
the general provision for bad and doubtful debts. Excluding
this release, there was a charge for general provisions of
HK$29 million reflecting an increase in advances to customers
since the end of December 1999.
The profit on tangible fixed assets and long-term investments
amounted to HK$1,275 million compared with HK$1,822 million
in 1999. This mainly related to the disposals of equity
investments by the investment bank and Hang Seng Bank, and
the sale to the Merrill Lynch HSBC joint venture of HSBC
InvestDirect (Australia), by HSBC Bank Australia.
The effective rate of tax decreased from 14.7 per cent in
1999 to 14.2 per cent in 2000, benefiting from the partial
release of the additional general provision which had not
been subject to tax relief when it was made in 1997, and tax
free gains on disposal of long-term investments. In addition,
the effective tax rate benefited from the utilisation of
certain unrecognised prior year tax losses.
Total assets increased by HK$124.1 billion, or 7.6 per cent,
since 31 December 1999.
Advances to customers increased by HK$16.3 billion, or 2.6
per cent, since 31 December 1999. Advances in Hong Kong for
the group as a whole grew by HK$16.7 billion, or
3.5 per cent, with increases in other property-related
lending and personal lending other than residential
mortgages. Residential mortgages fell by HK$3.4 billion, or
1.8 per cent, with an increase in Hang Seng Bank being more
than offset by a reduction in the bank in Hong Kong. Advances
to customers for the bank in Hong Kong fell by HK$1.7 billion
whilst Hang Seng Bank increased by HK$20.2 billion, or 10.3
per cent, with increases in residential mortgages, other
personal lending, including GHOS loans, and corporate
lending, mainly property-related.
In the rest of the Asia-Pacific region, advances remained at
the same level as at the end of 1999 at HK$152.3 billion,
despite an encouraging increase of HK$6.2 billion, or
20.8 per cent, in personal lending. There were significant
increases in residential mortgages and other personal lending
in Korea (up 715 per cent), India (up 95 per cent) and Taiwan
(up 30 per cent). These were offset by reductions in
corporate lending in Bahrain, New Zealand, Singapore, Japan
and in mainland China due to a combination of loan repayments
and subdued loan demand.
Current, savings and other deposit accounts increased by
HK$132.3 billion, or 10.5 per cent, to HK$1,395.7 billion at
31 December 2000. In Hong Kong, total deposits increased by
HK$114.8 billion or 10.8 per cent. For the bank in Hong Kong,
total customer deposits grew by HK$59.7 billion, or 9.4 per
cent, with increases in United States dollar time deposits
and savings accounts (both Hong Kong dollar and United States
dollar). Deposits in Hang Seng Bank increased by HK$53.9
billion, or 14.3 per cent, with growth in United States
dollar time deposits and Hong Kong dollar savings accounts
and time deposits. In the rest of the Asia-Pacific region,
total deposits grew by HK$19.2 billion, or 9.7 per cent, with
strong growth in the bank in Korea (up 107 per cent), Taiwan
(up 48 per cent) and India (up 15 per cent), due to the
expansion of personal banking.
The group's advances to deposits ratio decreased from 50.4
per cent at 31 December 1999 to 46.8 per cent at 31 December
2000 reflecting the fact that customer deposits increased at
a faster rate than advances to customers.
Consolidated Profit and Loss Account
Figures in HK$m 2000 1999
Interest income 104,653 90,656
Interest expense (67,013) (55,703)
Net interest income 37,640 34,953
Other operating income 17,399 15,282
Operating income 55,039 50,235
Operating expenses (20,453) (19,236)
Operating profit before provisions 34,586 30,999
Provisions for bad and doubtful debts (1,355) (7,847)
Provisions for contingent liabilities
and commitments (89) (143)
Operating profit 33,142 23,009
Profit on tangible fixed assets and
long-term investments 1,275 1,822
Surplus/(deficit) on property
revaluation 54 (263)
Share of profits less losses of
associated companies 165 127
Profit on ordinary activities before
tax 34,636 24,695
Tax on profit on ordinary activities (4,917) (3,625)
Profit on ordinary activities after
tax 29,719 21,070
Minority interests (3,754) (3,165)
Profit attributable to shareholders 25,965 17,905
Retained profits brought forward 41,265 45,314
Exchange and other adjustments (764) (155)
Transfer of depreciation to premises
revaluation reserve 321 274
Realisation on disposal of premises
and investment properties 308 15
Dividends (including amounts
attributable to non-equity
shareholders) (22,277) (22,088)
Retained profits carried forward 44,818 41,265
Consolidated Balance Sheet
Figures in HK$m At 31Dec00 At 31Dec99
Assets
Cash and short-term funds 455,193 416,922
Placings with banks maturing after
one month 140,068 169,126
Certificates of deposit 34,359 32,308
Hong Kong SAR Government
certificates of indebtedness 63,904 76,994
Securities held for dealing
purposes 57,711 24,258
Long-term investments 193,314 130,226
Advances to customers 652,503 636,251
Amounts due from fellow subsidiary
companies 23,723 23,056
Investments in associated companies 1,641 1,480
Tangible fixed assets 44,251 42,666
Other assets 95,303 84,605
1,761,970 1,637,892
Liabilities
Hong Kong SAR currency notes in
circulation 63,904 76,994
Current, savings and other deposit
accounts 1,395,702 1,263,359
Deposits by banks 38,130 47,198
Dividends payable 7,277 8,217
Amounts due to fellow subsidiary
companies 7,291 6,813
Amounts due to ultimate holding
company 595 452
Other liabilities 131,703 121,834
1,644,602 1,524,867
Capital resources
Loan capital from ultimate holding
company 2,925 2,915
Other loan capital 14,374 14,567
Minority interests 16,257 16,057
Share capital 16,258 16,258
Reserves 67,554 63,228
Shareholders' funds 83,812 79,486
117,368 113,025
1,761,970 1,637,892
Consolidated statement of recognised gains and losses
Figures in HK$m 2000 1999
Profit for the year attributable to
shareholders 25,965 17,905
Unrealised surplus on revaluation
of premises 2,209 2,645
Unrealised surplus/(deficit) on
revaluation of
investment properties 108 (327)
Long-term equity investments
revaluation reserve
- Surplus on revaluation 241 3,726
- Realisation on disposal (963) (1,791)
Exchange and other movements (957) (83)
Recognised gains and losses for the
year 26,603 22,075
Reconciliation of movements in consolidated shareholders' funds
Figures in HK$m 2000 1999
Shareholders' funds at beginning of
year 79,486 79,499
Recognised gains and losses 26,603 22,075
Dividends (22,277) (22,088)
Shareholders' funds at end of year 83,812 79,486
Consolidated Cash Flow Statement
Figures in HK$m 2000 1999
Net cash inflow from operating
activities 117,284 98,059
Returns on investments and servicing
of finance
Income received on long-term
investments 10,516 9,955
Dividends received from associated
companies 82 62
Interest paid on loan capital (1,133) (1,003)
Dividends paid to minority interests (3,259) (5,588)
Ordinary dividends paid (23,000) (16,171)
Preference dividends paid (217) (251)
Net cash outflow from returns on
investments and servicing
of finance (17,011) (12,996)
Taxation paid (3,546) (1,834)
Investing activities
Purchase of long-term investments (305,490) (196,309)
Proceeds from sale or redemption of
long-term investments 236,865 160,621
Purchase of tangible fixed assets (1,824) (1,694)
Proceeds from sale of tangible fixed
assets 428 116
Net cash inflow/(outflow) in respect
of acquisition of and increased
shareholding in subsidiary
companies 9 (406)
Net cash inflow in respect of sale of
subsidiary companies 213 -
Purchase of business from a fellow
subsidiary (70) -
Proceeds from sale of interest in
associated company 23 3
Purchase of interest in associated
company (34) (78)
Net cash outflow from investing
activities (69,880) (37,747)
Net cash inflow before financing 26,847 45,482
Financing
Issue of loan capital - 357
Increase in cash and cash equivalents 26,847 45,839
Additional Information
1. Net interest income
Figures in HK$m 2000 1999
Net interest income 37,640 34,953
Average interest-earning assets 1,476,842 1,365,627
Net interest spread 2.08% 2.14%
Net interest margin 2.55% 2.56%
2. Other operating income
Figures in HK$m 2000 1999
Dividend income
- Listed investments 191 175
- Unlisted investments 88 131
279 306
Fees and commissions (net)
- Fees and commissions receivable 13,077 11,141
- Fees and commissions payable (1,988) (1,762)
11,089 9,379
Dealing profits
- Foreign exchange 2,833 2,640
- Interest rate derivatives 208 413
- Debt securities 260 70
- Equities and other trading (14) 43
3,287 3,166
Rental income from investment
properties 266 260
Other 2,478 2,171
17,399 15,282
3. Operating expenses
Figures in HK$m 2000 1999
Staff costs
- Salaries and other costs 10,702 10,124
- Retirement benefit costs 948 1,146
11,650 11,270
Premises and equipment
- Depreciation 1,943 1,883
- Rental expenses 1,099 1,380
- Other premises and equipment
expenses 1,338 1,305
4,380 4,568
Other 4,423 3,398
20,453 19,236
4. Provisions for bad and doubtful
debts
Figures in HK$m 2000 1999
Net charge/(release) for bad and
doubtful debts
Advances to customers
- Specific provisions
New provisions 5,597 10,282
Releases (3,001) (1,754)
Recoveries (345) (307)
2,251 8,221
- General provisions
Additional general provisions
- the bank (800) -
- Hang Seng Bank Limited (125) -
Other 29 (364)
(896) (364)
1,355 7,857
Placings with banks maturing after
one month
- Net specific release - (10)
Net charge to profit and loss
account 1,355 7,847
5. Taxation
The bank and its subsidiary companies in Hong Kong have
provided for Hong Kong profits tax at the rate of 16.0 per
cent (1999: 16.0 per cent) on the profits for the year
assessable in Hong Kong. Overseas branches and subsidiary
companies have similarly provided for tax in the countries in
which they operate at the appropriate rates of tax ruling in
2000. Deferred taxation is provided for in accordance with
the group's accounting policy.
The charge for taxation in the consolidated profit and loss
account comprises:
Figures in HK$m 2000 1999
Hong Kong profits tax 3,676 2,825
Overseas taxation 1,067 909
Deferred taxation 160 (120)
4,903 3,614
Share of associated companies'
taxation 14 11
4,917 3,625
6. Dividends
2000 1999
HK$ HK$m HK$ HK$m
per per
share share
Equity
Ordinary dividends
- paid 2.31 15,000 2.13 13,871
- proposed 1.07 7,000 1.23 8,000
3.38 22,000 3.36 21,871
Non-equity
Preference dividends payable 554 277 434 217
22,277 22,088
7. Advances to customers
Figures in HK$m At 31Dec00 At 31Dec99
Gross advances to customers 680,618 669,835
Suspended interest (3,671) (4,451)
676,947 665,384
Specific provisions (19,422) (23,177)
General provisions (5,022) (5,956)
Total provisions (24,444) (29,133)
Net advances to customers 652,503 636,251
Provisions as a percentage of gross advances
to customers^
Specific provisions 2.87% 3.48%
General provisions 0.74% 0.90%
Total provisions 3.61% 4.38%
^Gross advances to customers are stated after deduction of interest in
suspense.
8. Provisions for bad and doubtful debts against advances to
customers
Suspended
Figures in HK$m Specific General Total interest
At 1 January 2000 23,177 5,956 29,133 5,983
Amounts written off (5,892) - (5,892) (2,266)
Recoveries of advances
written off in
previous years 345 - 345 -
Net charge/(release) to
profit and loss
account (Note 4) 2,251 (896) 1,355 -
Interest suspended during
the period - - - 3,829
Suspended interest
recovered - - - (1,547)
Exchange and other
adjustments (459) (38) (497) (638)
At 31 December 2000 19,422 5,022 24,444 5,361
Suspended interest above comprises both suspended interest netted
against 'Advances to customers' and suspended interest netted
against accrued interest receivable in 'Other assets'.
9. Non-performing advances to customers and provisions
The geographical information shown below, and in notes 10, 11, 12 and
13, has been classified by location of the principal operations
of the subsidiary company or, in the case of the bank, by location
of the branch responsible for advancing the funds.
Rest of Americas
Figures in HK$m Hong Asia- /Europe Total
Kong Pacific
Year ended 31 December 2000
Bad and doubtful debt
charge/(release) 1,933 (460) (118) 1,355
At 31 December 2000
Advances to customers on which interest is being placed in suspense
or on which interest accrual has ceased are as follows:
Gross advances on which
interest
- has been placed in
suspense 17,610 12,522 - 30,132
- accrual has ceased 2,047 3,070 21 5,138
Gross non-performing
advances^ 19,657 15,592 21 35,270
Specific provisions (9,680) (9,712) (30) (19,422)
9,977 5,880 (9) 15,848
Specific provisions as a
percentage of
gross non-performing
advances 49.2% 62.3% 100% 55.1%
Gross non-performing
advances as a
percentage of gross
advances to customers^^ 3.8% 9.6% 7.5% 5.2%
Rest of
Figures in HK$m Hong Asia- Americas
Kong Pacific /Europe Total
Year ended 31 December 1999
Bad and doubtful debt
charge/(release) 4,537 3,495 (175) 7,857
At 31 December 1999
Advances to customers on which interest is being placed in suspense
or on which interest accrual has ceased are as follows:
Gross advances on which
interest
- has been placed in
suspense 22,528 15,594 199 38,321
- accrual has ceased 1,825 3,058 126 5,009
Gross non-performing
advances^ 24,353 18,652 325 43,330
Specific provisions (11,100) (11,917) (160) (23,177)
13,253 6,735 165 20,153
Specific provisions as a
percentage of
gross non-performing
advances 45.6% 63.9% 49.2% 53.5%
Gross non-performing
advances as a
percentage of gross
advances to
customers^^ 4.9 % 11.2 % 35.3 % 6.5 %
Non-performing advances to customers are those advances where
full repayment of principal or interest is considered
unlikely. Non-performing advances may include advances that
are not yet more than three months overdue but are considered
doubtful. Advances are classified as non-performing as soon
as it becomes apparent that full recovery of the advance is
unlikely. Except in certain limited circumstances, all
advances on which principal or interest is more than three
months overdue are classified as non-performing.
The specific provisions are made after taking into account the
value of collateral in respect of such advances.
^Gross non-performing advances to customers are stated after
deduction of interest in suspense.
^^Expressed as a percentage of gross advances to customers after
deduction of interest in suspense.
10. Overdue advances to customers
Rest Americas
Hong of Asia- /Europe Total
Figures in HK$m Kong Pacific
At 31 December 2000
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 0 7,198
Gross non-performing advances
(Note 9) 19,657 15,592 21 35,270
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