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| Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
|---|---|---|---|---|---|
| Hsbc Holdings Plc | LSE:HSBA | London | Ordinary Share | GB0005405286 | ORD $0.50 (UK REG) |
| Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
|---|---|---|---|---|---|---|---|---|---|---|
| 7.50 | 1.08% | 705.00 | 705.80 | 705.90 | 712.30 | 703.60 | 705.40 | 24,830,433 | 16:35:07 |
| Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
|---|---|---|---|---|---|
| Offices-bank Holding Company | 65.91B | 23.53B | 1.2338 | 22.85 | 537.71B |
From May 2019 to May 2024
TIDMHSBA
RNS Number : 0441E
HSBC Holdings PLC
07 May 2013
HSBC Holdings plc - Interim Management Statement - 1Q 2013
HSBC Holdings plc ('HSBC') will be conducting a trading update conference call with analysts and investors today to coincide with the release of its Interim Management Statement. The trading update call will take place at 11.00am BST, and details of how to participate in the call and the live audio webcast can be found below and at Investor Relations on www.hsbc.com.
Conference call details
Date: Tuesday, 7 May 2013 Time: 6.00am EDT
11.00am BST
6.00pm HKT
Audio webcast: Please follow this link for the webcast: http://www.hsbc.com/1/2/investor-relations/financial-info
Speakers: Stuart Gulliver, Group Chief Executive
Iain Mackay, Group Finance Director
Conference details for investors and analysts: Passcode: HSBC
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Replay conference call details (available until 7 June 2013): Passcode: 49343981#
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Table of contents
Highlights 3 Profit before tax by global
...................................................... business and geographical
..........
region
Group Chief Executive's comments ....................................................
......................... 4 ............... 15
Underlying performance Summary information - global
.......................................... 5 businesses ................. 16
Financial performance commentary Summary information - geographical
......................... 6 regions ........... 22
Trading conditions and outlook Appendix - selected information
for 2013 ................. 9 ............................. 28
Notes 10 Loans and advances to customers
...................................................... by industry sector
.................
Cautionary statement regarding and by geographical region
forward-looking ............................. 28
statements
................................................... Exposures to countries in
......... 10 the eurozone ................. 29
Summary consolidated income 11 Redenomination risk 29
statement ................. ............................................
Summary consolidated balance 12 Notable revenue items and
sheet ........................ notable cost items by
Capital
..................................................... geographical region and global
................ 13 business.......... 30
Risk-weighted assets 13 US run-off portfolios 31
................................................. ............................................
Note to editors
HSBC Holdings plc
HSBC Holdings plc, the parent company of the HSBC Group, is headquartered in London. The Group serves customers worldwide from around 6,600 offices in over 80 countries and territories in Europe, Hong Kong, Rest of Asia-Pacific, North and Latin America, and the Middle East and North Africa. With assets of US$2,681bn at 31 March 2013, HSBC is one of the world's largest banking and financial services organisations.
Highlights
Reported Underlying(1)
-------------------------------------- ---------------------------------------
Quarter ended Quarter ended
31 Mar 31 Mar 31 Mar 31 Mar
2013 2012 Change 2013 2012 Change
US$m US$m % US$m US$m %
Income statement
Revenue(2)
....................................
........................... 18,416 16,201 14 17,555 16,798 5
Loan impairment charges
and other credit risk provisions (1,171) (2,366) 51 (1,170) (2,092) 44
Operating expenses
....................................
........... (9,347) (10,353) 10 (9,333) (9,565) 2
Profit before tax
....................................
............... 8,434 4,322 95 7,588 5,654 34
At At
31 Mar 31 Dec
2013 2012
Capital and balance sheet
Core tier 1 ratio .................................................... 12.7% 12.3%
Common equity tier 1(3)
.......................................... 9.7% 9.0%
Loans and advances to customers
.......................... 958,591 997,623
Customer accounts ................................................ 1,307,938 1,340,014
Risk-weighted assets .............................................. 1,097,792 1,123,943
Quarter ended
-----------------------------
31 Mar 31 Mar
2013 2012
Performance measures
Return on average shareholders'
equity .................. 14.9% 6.4%
Cost efficiency ratio .............................................. 50.8% 63.9%
Pre-tax return on average
risk-weighted assets ....... 3.1% 1.4%
1 The difference between reported and underlying results is explained and reconciled on page 5.
2 Revenue is defined as net operating income before loan impairment charges and other credit risk provisions.
3 Estimated Capital Requirements Directive ('CRD') IV common equity tier 1 ('CET1') end point capital pre management actions, based on our interpretation of the July 2011 draft CRD IV regulation, supplemented by Prudential Regulation Authority ('PRA') guidance. However, the rules are yet to be finalised and estimates are subject to change.
-- We continued to implement our strategy to grow, simplify and restructure the Group, announcing nine transactions to dispose of or close businesses since the start of 2013, making the total 52 since the start of 2011. Consistent with our commitment to adopt global standards, we continue to take steps to de-risk our business.
-- Reported profit before tax ('PBT') for the first quarter of 2013 ('1Q13') was US$8.4bn, up 95% compared with the first quarter of 2012 ('1Q12'). This included adverse movements of US$0.2bn on the fair value of our own debt (1Q12: US$2.6bn) and gains of US$1.1bn from disposals and the reclassification of an associate (1Q12: US$0.2m).
-- Underlying PBT for 1Q13 was US$7.6bn, up 34% compared with 1Q12. This primarily reflected higher revenue of US$0.8bn and lower loan impairment charges of US$0.9bn, with a notable improvement in our US Consumer and Mortgage Lending ('CML') portfolio.
-- Underlying revenue included a net gain of US$0.6bn on completion of the sale of our remaining shareholding in Ping An and a US$0.5bn favourable debit valuation adjustment on derivative contracts. Remaining revenue was broadly unchanged. We achieved revenue growth in key areas including residential mortgages and Commercial Banking in both our home markets of Hong Kong and the UK, and Financing and Equity Capital Markets.
-- Underlying operating expenses were down 2% compared with 1Q12, reflecting lower charges in respect of UK customer redress programmes and a reduction in restructuring costs. We achieved US$0.4bn of additional sustainable cost savings during the quarter.
-- Underlying cost efficiency ratio improved to 53.2% in 1Q13 from 56.9% in 1Q12. -- Core tier 1 capital ratio was 12.7% at 31 March 2013, up from 12.3% at 31 December 2012.
Group Chief Executive, Stuart Gulliver, commented:
"We have had a good start to the year, with growth in reported and underlying profit before tax. These results demonstrate our progress in implementing the strategy we set out in May 2011.
"While continuing uncertainty in the global economy has created a relatively muted environment for revenue growth, we have increased revenue in key areas including residential mortgages and Commercial Banking in both our home markets of Hong Kong and the UK, and in our Financing and Equity Capital Markets business.
"Loan impairment charges were lower in every region, notably in North America. Our continued focus on cost management contributed to an improvement in our underlying cost efficiency ratio.
"We have achieved further progress on the journey we started in 2011 to make HSBC easier to manage and control. The implementation of global standards will help ensure that we meet the commitments we made to the US and UK authorities as part of the settlement agreements reached at the end of last year.
"Our performance in April continued the trend we saw in the first quarter. Looking at the macroeconomic environment, there are still challenges ahead. However, we expect the mainland Chinese economy to accelerate after a slower than expected start to the year; the US to continue to outperform its peers, although the pace of growth is slow compared to past standards; the eurozone to contract; emerging markets to grow at around 5% and global growth to be around 2% for 2013.
"We have strengthened our capital position and remain one of the best-capitalised banks in the world, allowing us both to invest in organic growth and grow dividends. Our strategic direction remains unchanged. Later this month we will update investors on the next phase of its implementation."
Underlying performance
Internally we measure our performance on a like-for--like basis by eliminating the effects of foreign currency translation and changes in credit spread on the fair value of our long-term debt (where the net result of such movements will be zero upon maturity of the debt). We also eliminate the effects of acquisitions, disposals and changes of ownership levels of subsidiaries, associates and businesses. All of these distort period-on-period comparisons. For disposals, acquisitions and changes of ownership levels of subsidiaries, associates and businesses, we eliminate the gain or loss on disposal in the period incurred and remove the operating profit or loss of the acquired and disposed of businesses from all periods presented.
Reconciliation of reported and underlying revenue
Quarter ended
-------------------------------------------------------------------------------
31 Mar 31 Mar 31 Dec
2013 2012 Change 2012 Change
US$m US$m % US$m %
Reported revenue
....................................
............. 18,416 16,201 14 16,867 9
Currency translation adjustment(1)
......................... (302) (199)
Own credit spread
....................................
............. 243 2,644 (91) 1,312 (81)
Acquisitions, disposals
and dilutions ...................... (1,104) (1,745) (3,411)
-------------- -------------- ---------------
Underlying revenue
....................................
.......... 17,555 16,798 5 14,569 20
-------------- -------------- ---------------
Reconciliation of reported and underlying loan impairment charges and other credit risk provisions ('LIC's)
Quarter ended
-------------------------------------------------------------------------------
31 Mar 31 Mar 31 Dec
2013 2012 Change 2012 Change
US$m US$m % US$m %
Reported LICs
....................................
.................. (1,171) (2,366) 51 (1,792) 35
Currency translation adjustment(1)
......................... 61 (2)
Acquisitions, disposals
and dilutions ...................... 1 213 5
Underlying LICs
....................................
............... (1,170) (2,092) 44 (1,789) 35
-------------- -------------- ---------------
Reconciliation of reported and underlying operating expenses
Quarter ended
--------------------------------------------------------------------------------
31 Mar 31 Mar 31 Dec
2013 2012 Change 2012 Change
US$m US$m % US$m %
Reported operating expenses
................................ (9,347) (10,353) 10 (11,444) 18
Currency translation adjustment(1)
......................... 177 75
Acquisitions, disposals
and dilutions
...................... 14 611 46
Underlying operating expenses
............................. (9,333) (9,565) 2 (11,323) 18
-------------- --------------- ---------------
Underlying cost efficiency
ratio ........................... 53.2% 56.9% 77.7%
Reconciliation of reported and underlying profit before tax
Quarter ended
-------------------------------------------------------------------------------
31 Mar 31 Mar 31 Dec
2013 2012 Change 2012 Change
US$m US$m % US$m %
Reported profit before tax
................................... 8,434 4,322 95 4,431 90
Currency translation adjustment(1)
......................... (61) (125)
Own credit spread
....................................
............. 243 2,644 (91) 1,312 (81)
Acquisitions, disposals
and dilutions ...................... (1,089) (1,251) (3,667)
-------------- -------------- ---------------
Underlying profit before
tax ................................ 7,588 5,654 34 1,951 289
-------------- -------------- ---------------
1 'Currency translation adjustment' is the effect of translating the results of subsidiaries and associates for the previous period at the average rates of exchange applicable in the current period.
Notable revenue items
Quarter ended
-------------------------------------------------------------------------------
31 Mar 31 Mar 31 Dec
2013 2012 Change 2012 Change
US$m US$m % US$m %
Sale of remaining Ping An
shareholding(1) .............. 553 - -
Ping An contingent forward
sale contract(2) ........... - - (553)
Notable cost items
Quarter ended
-------------------------------------------------------------------------------
31 Mar 31 Mar 31 Dec
2013 2012 Change 2012 Change
US$m US$m % US$m %
Restructuring and other
related costs .................... 75 260 71 216 65
UK customer redress programmes
........................ 164 468 65 640 74
Fines and penalties for
inadequate compliance with
anti-money laundering and
sanction laws .......... - - 421
1 The gain of US$553m represents the net impact of the disposal of available-for-sale investments in Ping An offset by adverse changes in fair value of the contingent forward sale contract to the point of delivery of the shares.
2 For a full description of the Ping An contingent forward sale contract, see page 472 of the Annual Report and Accounts 2012.
Financial performance commentary
-- Reported net operating income before loan impairment charges and other credit provisions ('revenue') was US$18.4bn in 1Q13, US$2.2bn higher than in 1Q12. This primarily reflected lower adverse movements of US$0.2bn on our own debt designated at fair value resulting from changes in credit spreads, compared with US$2.6bn in 1Q12. In addition, revenue included US$1.1bn of gains (net of losses) from disposals and reclassifications compared with US$0.2bn in 1Q12, including an accounting gain in 1Q13 arising from the reclassification of Industrial Bank Co., Limited ('Industrial Bank') as a financial investment following its issue of additional share capital to third parties. The resulting increase in revenue was partially offset by the absence of revenue in 1Q13 from businesses disposed of during 2012, notably Cards and Retail Services ('CRS') in the US, which was sold in May 2012.
-- Underlying revenue was US$17.6bn in 1Q13, US$0.8bn higher than in 1Q12. This included items totalling US$1.1bn, as follows:
- a net gain recognised on completion of the sale of our remaining shareholding in Ping An Insurance (Group) Company of China, Limited ('Ping An') of US$0.6bn;
- a favourable debit valuation adjustment of US$0.5bn in Global Banking and Markets ('GB&M') on derivative contracts reflecting a widening of spreads on HSBC credit default swaps and refinement of the calculation;
- foreign exchange gains on sterling debt issued by HSBC Holdings of US$0.4bn;
- a loss relating to the write-off of allocated goodwill recognised following the reclassification of a non-strategic business to 'Assets held for sale' in Global Private Banking ('GPB') of US$0.3bn; and
- a loss of US$0.1bn on the sale of an HFC Bank UK secured loan portfolio.
Remaining Group revenue was broadly unchanged:
- GB&M delivered a strong revenue performance in the quarter. However, this was lower than 1Q12 for two reasons: (i) 1Q12 benefited from the significant tightening of spreads on eurozone bonds following the European Central Bank's announcement of the Long-Term Refinancing Operation, although this reduction in revenue was partly offset by lower adverse fair value movements on structured liabilities; and (ii) Balance Sheet Management revenue decreased due to lower net interest income as proceeds from the sale and maturing of investments were reinvested at prevailing rates. In addition, there were lower gains on the disposal of available-for-sale debt securities in the UK. These factors were partly offset by increased revenue from Financing and Equity Capital Markets which was driven by higher lending spreads together with a rise in fees in our financing, advisory and underwriting businesses and the non-recurrence of losses on the sale of certain syndicated loans in 1Q12.
- In Retail Banking and Wealth Management ('RBWM'), revenue decreased due to a decline in the US run-off portfolio which reflected a loss of US$0.2bn arising from the early termination of US$1.0bn of qualifying accounting hedges as a result of potential funding changes. Revenue in RBWM excluding the US CRS business and the US run-off portfolio increased, mainly driven by higher net interest income from an increase in average secured lending balances in Hong Kong and the UK.
- In Commercial Banking ('CMB') revenue was in line with 1Q12. There was moderate growth in net fee income across most product groups, while net interest income was broadly unchanged as higher average lending and deposit balances, notably in the UK and Hong Kong, were largely offset by spread compression.
-- Loan impairment charges and other credit risk provisions ('LIC's) were lower in all regions than in 1Q12. The decrease was most significant in North America due to reduced lending balances and lower delinquency rates in our CML portfolio, as well as the sale of the CRS business in 2012. The Middle East and North Africa benefited from a net release of LICs raised in previous periods compared with significant impairment charges in 1Q12, reflecting the improvement in the financial position of certain customers. LICs also decreased in Europe, reflecting lower credit risk provisions due to net releases on available-for-sale asset-backed securities due to an improvement in underlying asset prices. This compared with charges in 1Q12. Also in Europe, notably in the UK, lower loan impairment charges in RBWM reflected a fall in delinquency rates.
-- Reported operating expenses in 1Q13 of US$9.3bn were 10% lower than in 1Q12. On an underlying basis, operating expenses fell by US$0.2bn, primarily due to lower charges relating to UK customer redress programmes of US$0.3bn and a US$0.2bn reduction in restructuring and related costs. Remaining operating expenses were US$0.3bn higher, mainly due to an operational risk provision in GPB, a customer remediation provision related to our former CRS business, the cost of transitional service agreements following the sale of the CRS business and an impairment of our interest in a joint venture, which in aggregate totalled US$0.4bn. Wage inflation also contributed to the increase in operating expenses. These factors were partly offset by sustainable cost savings and lower performance-related costs in GB&M.
-- We achieved an additional US$0.4bn of sustainable cost savings across all our regions, taking the annualised total to US$4.0bn as we continued with our organisational effectiveness programmes.
-- The reported cost efficiency ratio improved from 63.9% in 1Q12 to 50.8% in 1Q13 while, on an underlying basis, it improved from 56.9% to 53.2%.
-- The number of full-time equivalent staff at the end of the quarter was 260,400, broadly unchanged since 31 December 2012. This reflected a reduction from organisational effectiveness initiatives and business disposals which was largely offset by recruitment, notably in our Risk function (including Compliance) as we continued the implementation of global standards.
-- The effective tax rate for 1Q13 of 15.7% was lower than the UK corporation tax rate of 23.25%. This was driven by the benefits arising from the non-taxable gains on profits associated with the reclassification of Industrial Bank as a financial investment and the Ping An sale, and the geographical distribution of the Group's profit.
-- Profit attributable to ordinary shareholders for the first quarter was US$6.2bn, up by US$3.8bn on 1Q12, with the result that the annualised return on average ordinary shareholders' equity was 14.9% compared with 6.4% in 1Q12.
1Q13 compared with 4Q12
-- Reported revenue of US$18.4bn in 1Q13 was US$1.5bn higher than in 4Q12, despite significantly lower gains (net of losses) from disposals and reclassifications of US$1.1bn compared with US$3.3bn in 4Q12. 1Q13 included adverse movements on own debt designated at fair value resulting from changes in credit spreads of US$0.2bn compared with US$1.3bn in 4Q12.
-- On an underlying basis, revenue was US$3.0bn higher, driven by:
- a charge in 4Q12 of US$0.9bn from the change in estimation methodology in respect of credit valuation adjustments on derivative contracts;
- the net gain recognised on completion of our remaining shareholding in Ping An of US$0.6bn in 1Q13 which offset the adverse fair value movement on the forward contract included in our 4Q12 results; and
- foreign exchange gains in 1Q13 on sterling debt issued by HSBC Holdings.
-- Remaining revenue increased, driven by GB&M. This was notably in Rates in Europe following muted customer activity in the fourth quarter, in our Credit business as the momentum achieved in 2012 within debt capital markets continued, and in Balance Sheet Management due to higher gains on the disposal of available-for-sale debt securities in North America and Europe in 1Q13.
-- LICs were lower than in 4Q12, mainly in Europe due to a higher level of individually assessed impairments in CMB in 4Q12 on UK, Spanish and Greek exposures. In addition, there were lower loan impairment charges in North America, primarily due to the non-recurrence of an adjustment made in 4Q12 of US$0.2bn to increase the estimated average time period from current status to write-off for real estate loans.
-- Reported operating expenses for 1Q13 were 18% lower than in 4Q12. On an underlying basis, operating expenses were also lower, as 4Q12 included charges related to the UK bank levy and fines and penalties paid as part of the settlement of investigations into past inadequate compliance with anti-money laundering and sanctions laws. In addition, in 1Q13 there were lower charges relating to UK customer redress programmes and restructuring and related costs. The remaining operating expenses were US$0.4bn (5%) lower, primarily reflecting the non-recurrence of asset write-offs and lease provisions, and a decline in litigation penalties and related costs.
Balance sheet commentary
-- Reported loans and advances to customers declined by US$39.0bn during 1Q13. This resulted from foreign exchange differences of US$25.4bn, a US$1.2bn reduction in reverse repo balances and a decrease in customer lending of US$12.5bn. The latter was driven by the reclassification of customer lending balances relating to the planned disposals of non-strategic businesses in Latin America and Europe to 'Assets held for sale'. Apart from this, loans and advances to customers remained broadly unchanged from 31 December 2012. Term and trade-related lending to CMB customers in Hong Kong rose as cross-border trade between Hong Kong and mainland China increased. In addition, residential mortgage balances rose in a number of countries across Rest of Asia-Pacific, including mainland China which benefited from an active property market. Residential mortgage balances continued to grow in Hong Kong, albeit at a slower rate than in 2012, while competitive campaigns led to a rise in the UK. This was partly offset by the continued decline in residential mortgage balances in the US run-off portfolio. In addition, overdraft balances in the UK which did not meet the accounting netting criteria fell.
-- Reported customer accounts declined by US$32.1bn compared with 31 December 2012. This resulted from foreign exchange movements of US$29.8bn, and a fall in customer deposits of US$9.7bn in 1Q13. The latter was driven by declines in Latin America and Europe which reflected the reclassification to 'Liabilities of disposal groups held for sale' of customer account balances relating to the planned disposals of non-strategic operations. A US$7.4bn rise in repo balances partly offset these declines. The fall in customer account balances was broadly in line with 31 December 2012 levels, as a decline in current accounts in the UK relating to the reduction in overdraft balances which did not meet the accounting netting criteria and lower customer deposit balances in North America was largely offset by growth in all global businesses in the Middle East and North Africa and higher RBWM balances in Hong Kong, Rest of Asia-Pacific and the UK.
-- Other significant balance sheet movements in the quarter included an increase in trading assets and liabilities, reflecting a rise in customer activity and a resultant increase in settlement account balances. Loans to banks also rose, largely in Europe, as liquidity was deployed into reverse repos, and in Hong Kong and Rest of Asia-Pacific, where there was a rise in interbank placements.
Capital and risk-weighted assets
The core tier 1 capital ratio strengthened to 12.7% from 12.3% at 31 December 2012 as a result of the completion of management actions and profit generation offset by the effect of regulatory changes.
Internal capital generation contributed US$3.0bn to core tier 1 capital, being profits attributable to shareholders of the parent company after a regulatory adjustment for own credit spread and net of dividends. This was largely offset by foreign currency translation differences resulting from the strengthening of the US dollar.
Risk-weighted assets ('RWA's) reduced by US$26.2bn, of which US$9.8bn was due to foreign exchange movements. Credit risk RWAs decreased by US$38.1bn from the reclassification of Industrial Bank as a financial investment and its consequent exclusion from the regulatory consolidation of RWAs. This was partially offset by an increase in credit risk RWAs of US$19.0bn due to the introduction of a new PRA regulatory floor in the calculation of credit risk RWAs on sovereign exposures under the advanced internal ratings-based ('IRB') approach.
The estimated CRD IV CET1 ratio strengthened to 9.7% from 9.0% at 31 December 2012 due to the sale of our remaining shareholding in Ping An and to the factors described above. After taking into account planned management actions mitigating the effect of immaterial holdings, the CET1 ratio is estimated to be 10.1%.
Net interest margin
Net interest margin was lower than in 1Q12 as a result of significantly lower yields on customer lending, including balances within 'Assets held for sale'. This was driven by the effect of disposals during 2012, notably the higher yielding CRS portfolio in the US, coupled with a downward trend in interest rates in a number of countries. Yields on our surplus liquidity also fell, notably in Latin American and Europe, as proceeds from maturing investments and disposals were reinvested at lower prevailing rates. The fall in yield was partly offset by a reduction in the cost of funds on customer accounts in the low rate environment and on debt issued by the Group, notably in the US where lower funding requirements following the business disposals led to debt at higher effective rates maturing and not being replaced. The decline in net interest margin compared with 4Q12 similarly reflected the change in the composition of our balance sheet as a result of disposals, together with lower yields on our surplus liquidity. This was partly offset by a reduction in our cost of funds, notably on debt issued by the Group, together with lower rates paid on customer account balances.
Trading conditions and outlook for 2013
Although broad macroeconomic challenges persist, we expect the mainland Chinese economy to accelerate after a slower than expected start to the year. We forecast that the US will continue to outperform its peers, though the pace of growth will be slow compared with past experience. We expect that the eurozone will contract, that emerging markets will grow at around 5%, and that global growth will be around 2% in 2013.
Our performance in April continued the trend we saw in the first quarter.
Notes
-- Income statement comparisons, unless stated otherwise, are between the quarter ended 31 March 2013 and the quarter ended 31 March 2012. Balance sheet comparisons, unless otherwise stated, are between balances at 31 March 2013 and the corresponding balances at 31 December 2012.
-- The financial information on which this Interim Management Statement is based, and the data set out in the appendix to this statement, are unaudited and have been prepared in accordance with HSBC's significant accounting policies as described in the Annual Report and Accounts 2012, with the exception of the adoption of the following new or revised standards: IFRS 10 'Consolidated Financial Statements', IFRS 11 'Joint Arrangements', IFRS 13 'Fair Value Measurement' and IAS 19 'Employee Benefits'. These new standards are effective from 1 January 2013 and their adoption had an insignificant effect on the consolidated financial statements of HSBC. A glossary of terms is also provided in the Annual Report and Accounts 2012.
-- The Board has adopted a policy of paying quarterly interim dividends on the ordinary shares. Under this policy, it is intended to have a pattern of three equal interim dividends with a variable fourth interim dividend. Dividends are declared in US dollars and, at the election of the shareholder, paid in cash in one of, or in a combination of, US dollars, sterling and Hong Kong dollars or, subject to the Board's determination that a scrip dividend is to be offered in respect of that dividend, may be satisfied in whole or in part by the issue of new shares in lieu of a cash dividend.
Interim Report 2013 announcement date 5 August ............................................................................................... 2013 Shares quoted ex-dividend in London, Hong Kong, 21 August Paris and Bermuda ................................................... 2013 ADSs quoted ex-dividend in New York 21 August ................................................................................................... 2013 Dividend record date in Hong Kong 22 August ....................................................................................................... 2013 Dividend record date in London, New York, Paris 23 August and Bermuda ............................................................. 2013 Dividend payment date 9 October ........................................................................................................... 2013 ...............
Cautionary statement regarding forward-looking statements
The Interim Management Statement contains certain forward-looking statements with respect to HSBC's financial condition, results of operations and business.
Statements that are not historical facts, including statements about HSBC's beliefs and expectations, are forward-looking statements. Words such as 'expects', 'anticipates', 'intends', 'plans', 'believes', 'seeks', 'estimates', 'potential' and 'reasonably possible', variations of these words and similar expressions are intended to identify forward-looking statements. These statements are based on current plans, estimates and projections, and therefore undue reliance should not be placed on them. Forward-looking statements speak only as of the date they are made. HSBC makes no commitment to revise or update any forward-looking statements to reflect events or circumstances occurring or existing after the date of any forward-looking statements.
Written and/or oral forward-looking statements may also be made in the periodic reports to the US Securities and Exchange Commission, summary financial statements to shareholders, proxy statements, offering circulars and prospectuses, press releases and other written materials, and in oral statements made by HSBC's Directors, officers or employees to third parties, including financial analysts.
Forward-looking statements involve inherent risks and uncertainties. Readers are cautioned that a number of factors could cause actual results to differ, in some instances materially, from those anticipated or implied in any forward-looking statement. These include, but are not limited to:
-- changes in general economic conditions in the markets in which we operate, such as continuing or deepening recessions and fluctuations in employment beyond those factored into consensus forecasts; changes in foreign exchange rates and interest rates; volatility in equity markets; lack of liquidity in wholesale funding markets; illiquidity and downward price pressure in national real estate markets; adverse changes in central banks' policies with respect to the provision of liquidity support to financial markets; heightened market concerns over sovereign creditworthiness in over-indebted countries; adverse changes in the funding status of public or private defined benefit pensions; and consumer perception as to the continuing availability of credit and price competition in the market segments we serve;
-- changes in government policy and regulation, including the monetary, interest rate and other policies of central banks and other regulatory authorities; initiatives to change the size, scope of activities and interconnectedness of financial institutions in connection with the implementation of stricter regulation of financial institutions in key markets worldwide; revised capital and liquidity benchmarks which could serve to deleverage bank balance sheets and lower returns available from the current business model and portfolio mix; imposition of levies or taxes designed to change business mix and risk appetite; the practices, pricing or responsibilities of financial institutions serving their consumer markets; expropriation, nationalisation, confiscation of assets and changes in legislation relating to foreign ownership; changes in bankruptcy legislation in the principal markets in which we operate and the consequences thereof; general changes in government policy that may significantly influence investor decisions; extraordinary government actions as a result of current market turmoil; other unfavourable political or diplomatic developments producing social instability or legal uncertainty which in turn may affect demand for our products and services; the costs, effects and outcomes of product regulatory reviews, actions or litigation, including any additional compliance requirements; and the effects of competition in the markets where we operate including increased competition from non-bank financial services companies, including securities firms; and
-- factors specific to HSBC, including our success in adequately identifying the risks we face, such as the incidence of loan losses or delinquency, and managing those risks (through account management, hedging and other techniques). Effective risk management depends on, among other things, our ability through stress testing and other techniques to prepare for events that cannot be captured by the statistical models it uses; and our success in addressing operational, legal and regulatory, and litigation challenges, notably compliance with the Deferred Prosecution Agreements with US authorities.
Summary consolidated income statement
Quarter ended
-----------------------------------------------------------------------------------
31 Mar 31 Dec 30 Sep 30 Jun 31 Mar
2013 2012 2012 2012 2012
US$m US$m US$m US$m US$m
Net interest income
................................
........................... 8,968 9,182 9,114 9,289 10,087
Net fee income
................................
................................
.. 4,245 4,066 4,057 3,997 4,310
Net trading income
................................
............................ 3,843 780 1,792 1,637 2,882
Changes in fair value of
long-term
debt issued and related
derivatives
................................
................................
...... (1,457) (1,132) (1,385) 581 (2,391)
Net income/(expense) from other
financial instruments designated
at fair value
................................
................... 553 655 819 (422) 1,049
--------------- --------------- --------------- --------------- ---------------
Net income/(expense) from
financial
instruments designated
at fair value
................................
................................
.... (904) (477) (566) 159 (1,342)
Gains less losses from financial
investments
....................... 1,610- 166 564 459
Dividend income
................................
................................ 34 87 31 75 28
Net earned insurance premiums
................................
.......... 3,172 3,023 3,325 3,176 3,520
Gains on disposal of US branch
network, US cards business
and Ping An
................................
................................
... - 3,012 203 3,809 -
Other operating income
................................
..................... 1,001 757 321 526 496
--------------- --------------- --------------- --------------- ---------------
Total operating income
................................
.................. 21,969 20,430 18,443 23,232 20,440
Net insurance claims incurred
and movement in liabilities
to policyholders
................................
................................
.. (3,553) (3,563) (3,877) (2,536) (4,239)
--------------- --------------- --------------- --------------- ---------------
Net operating income before
loan impairment charges
and other credit risk provisions
................................ 18,416 16,867 14,566 20,696 16,201
Loan impairment charges and
other credit risk provisions
.. (1,171) (1,792) (1,720) (2,433) (2,366)
--------------- --------------- --------------- --------------- ---------------
Net operating income
................................
..................... 17,245 15,075 12,846 18,263 13,835
Total operating expenses
................................
................... (9,347) (11,444) (10,279) (10,851) (10,353)
--------------- --------------- --------------- --------------- ---------------
Operating profit
................................
............................. 7,898 3,631 2,567 7,412 3,482
Share of profit in associates
and joint ventures
................... 536 800 914 1,003 840
--------------- --------------- --------------- --------------- ---------------
Profit before tax
................................
.............................. 8,434 4,431 3,481 8,415 4,322
Tax expense
................................
................................
...... (1,324) (1,028) (658) (2,244) (1,385)
--------------- --------------- --------------- --------------- ---------------
Profit after tax
................................
................................ 7,110 3,403 2,823 6,171 2,937
--------------- --------------- --------------- --------------- ---------------
Profit attributable to
shareholders
of the parent company . 6,353 3,091 2,498 5,857 2,581
Profit attributable to
non-controlling
interests ................... 757 312 325 314 356
US$ US$ US$ US$ US$
Basic earnings per ordinary
share
................................
....... 0.34 0.16 0.13 0.32 0.13
Diluted earnings per ordinary
share
................................
.... 0.33 0.16 0.13 0.31 0.13
Dividend per ordinary share
(in respect of the period)
........ 0.10 0.18 0.09 0.09 0.09
%% %% %
Return on average ordinary
shareholders'
equity (annualised)
................................
................................
....................... 14.9 7.1 5.8 14.6 6.4
Pre-tax return on average
risk-weighted
assets (annualised) 3.1 1.5 1.2 2.9 1.4
Cost efficiency ratio
................................
.......................... 50.8 67.8 70.6 52.4 63.9
Summary consolidated balance sheet
At At At
31 March 31 December 30 June
2013 2012 2012
US$m US$m US$m
ASSETS
Cash and balances at central
banks
.............................
.............................
...... 135,240 141,532 147,911
Trading assets
.............................
.............................
.............................
........ 438,834 408,811 391,371
Financial assets designated at
fair
value
.............................
............................ 34,858 33,582 32,310
Derivatives
.............................
.............................
.............................
............ 334,741 357,450 355,934
Loans and advances to banks
.............................
.............................
.............. 177,652 152,546 182,191
Loans and advances to
customers
.............................
.............................
....... 958,591 997,623 974,985
Financial investments
.............................
.............................
......................... 414,623 421,101 393,736
Assets held for sale
.............................
.............................
............................. 23,332 19,269 12,383
Other assets
.............................
.............................
.............................
........... 163,485 160,624 161,513
--------------------------- ----------------------------- --------------------------
Total assets
.............................
.............................
.............................
........... 2,681,356 2,692,538 2,652,334
--------------------------- ----------------------------- --------------------------
LIABILITIES AND EQUITY
Liabilities
Deposits by banks
.............................
.............................
.............................
.. 105,474 107,429 123,553
Customer accounts
.............................
.............................
............................. 1,307,938 1,340,014 1,278,489
Trading liabilities
.............................
.............................
.............................
... 331,780 304,563 308,564
Financial liabilities
designated at
fair value
.............................
....................... 86,830 87,720 87,593
Derivatives
.............................
.............................
.............................
............ 335,619 358,886 355,952
Debt securities in issue
.............................
.............................
........................ 117,264 119,461 125,543
Liabilities under insurance
contracts
.............................
.............................
... 69,279 68,195 62,861
Liabilities of disposal groups
held
for sale
.............................
........................ 18,209 5,018 12,599
Other liabilities
.............................
.............................
.............................
...... 125,215 118,123 123,414
--------------------------- ----------------------------- --------------------------
Total liabilities
.............................
.............................
.............................
...... 2,497,608 2,509,409 2,478,568
--------------------------- ----------------------------- --------------------------
Equity
Total shareholders' equity
.............................
.............................
.................. 175,339 175,242 165,845
Non-controlling interests
.............................
.............................
................... 8,409 7,887 7,921
--------------------------- ----------------------------- --------------------------
Total equity
.............................
.............................
.............................
.......... 183,748 183,129 173,766
--------------------------- ----------------------------- --------------------------
Total equity and liabilities
.............................
.............................
.................. 2,681,356 2,692,538 2,652,334
--------------------------- ----------------------------- --------------------------
Ratio of customer advances to
customer
accounts
.............................
........... 73.3% 74.4% 76.3%
Capital
Capital structure
At At At
31 Mar 2013 31 Dec 2012 30 Jun 2012
US$m US$m US$m
Composition of regulatory
capital
Tier 1 capital
Shareholders' equity
...............................
...............................
....................... 166,984 167,360 160,606
Non-controlling interests
...............................
...............................
............... 4,850 4,348 4,451
Regulatory adjustments to the
accounting
basis
...............................
.............. (2,506) (2,437) (3,308)
Deductions
...............................
...............................
...............................
...... (30,003) (30,482) (31,080)
-------------------------- --------------------------- ---------------------------
Core tier 1 capital
...............................
...............................
....................... 139,325 138,789 130,669
Other tier 1 capital before
deductions
...............................
............................ 17,034 17,301 17,110
Deductions
...............................
...............................
...............................
...... (7,062) (5,042) (845)
-------------------------- --------------------------- ---------------------------
Tier 1 capital
...............................
...............................
...............................
. 149,297 151,048 146,934
-------------------------- --------------------------- ---------------------------
Total regulatory capital
...............................
...............................
.............. 183,262 180,806 175,724
Total risk-weighted assets
...............................
...............................
......... 1,097,792 1,123,943 1,159,896
% % %
Capital ratios
Core tier 1 ratio
...............................
...............................
............................. 12.7 12.3 11.3
Tier 1 ratio
...............................
...............................
...............................
..... 13.6 13.4 12.7
Total capital ratio
...............................
...............................
.......................... 16.7 16.1 15.1
Risk-weighted assets
RWAs by risk type
At At At
31 Mar 2013 31 Dec 2012 30 Jun 2012
US$m US$m US$m
Credit risk
...................................................
................................................. 875,303 898,416 931,724
Counterparty credit risk
...................................................
............................ 47,231 48,319 49,535
Market risk
...................................................
............................................... 52,994 54,944 54,281
Operational risk
...................................................
........................................ 122,264 122,264 124,356
-------------------- -------------------- --------------------
Total
...................................................
...................................................
...... 1,097,792 1,123,943 1,159,896
-------------------- -------------------- --------------------
RWAs by global businesses
At At At
31 Mar 2013 31 Dec 2012 30 Jun 2012
US$bn US$bn US$bn
Retail Banking and Wealth Management
...................................................
... 264.2 276.6 298.7
Commercial Banking
...................................................
................................. 373.8 397.0 397.8
Global Banking and Markets
...................................................
...................... 412.3 403.1 412.9
Global Private Banking
...................................................
.............................. 22.0 21.7 21.8
Other
...................................................
...................................................
..... 25.5 25.5 28.7
-------------------- -------------------- --------------------
Total
...................................................
...................................................
...... 1,097.8 1,123.9 1,159.9
-------------------- -------------------- --------------------
RWAs by geographical regions(1)
At At At
31 Mar 2013 31 Dec 2012 30 Jun 2012
US$bn US$bn US$bn
Total
...................................................
...................................................
...... 1,097.8 1,123.9 1,159.9
-------------------- -------------------- --------------------
Europe
...................................................
...................................................
... 300.8 314.7 329.5
Hong Kong
...................................................
................................................ 118.7 111.9 108.0
Rest of Asia-Pacific
...................................................
................................... 273.7 302.2 303.2
Middle East and North Africa
...................................................
.................... 65.7 62.2 63.0
North America
...................................................
.......................................... 254.0 253.0 279.2
Latin America
...................................................
........................................... 100.8 97.9 99.8
1 RWAs are non-additive across geographical regions due to market risk diversification effects within the Group.
RWA movement by key driver - credit risk - IRB only
Rest
Hong of Asia- North Latin
Europe Kong Pacific MENA America America Total
US$bn US$bn US$bn US$bn US$bn US$bn US$bn
RWAs at 1
January
2013 ....... 150.7 70.2 92.1 12.6 187.1 11.2 523.9
Foreign
exchange
movement
. (6.5) (0.1) (0.3) (0.3) (0.6) 0.1 (7.7)
Acquisitions
and disposals
....... (1.4) - - - - - (1.4)
Book size
..............
..............
... 3.9 2.8 1.9 0.9 (4.4) (0.3) 4.8
Book quality
..............
............ (0.4) 0.8 (0.1) 1.9 (2.8) 0.1 (0.5)
Model updates
..............
.......... - - - - (0.2) - (0.2)
---------------- ---------------- ---------------- ---------------- ---------------- ---------------- ----------------
Portfolios
moving
onto
IRB approach
............
..... - - - - - - -
New/updated
models
........... - - - - (0.2) - (0.2)
---------------- ---------------- ---------------- ---------------- ---------------- ---------------- ----------------
Methodology and
policy
........ 4.7 3.9 2.5 - 11.0 - 22.1
---------------- ---------------- ---------------- ---------------- ---------------- ---------------- ----------------
Internal
updates
...........
....... 2.3 - - - 0.8 - 3.1
External
updates -
regulatory
...........
...........
...........
...... 2.4 3.9 2.5 - 10.2 - 19.0
---------------- ---------------- ---------------- ---------------- ---------------- ---------------- ----------------
Total RWA
movement
.......... 0.3 7.4 4.0 2.5 3.0 (0.1) 17.1
---------------- ---------------- ---------------- ---------------- ---------------- ---------------- ----------------
RWAs at 31
March-
2013 ....... 151.0 77.6 96.1 15.1 190.1 11.1 541.0
---------------- ---------------- ---------------- ---------------- ---------------- ---------------- ----------------
RWA movement by key driver - counterparty credit risk - IRB only
US$bn
RWAs at 1 January 2013
...................... 45.7
---------------------
Book size .............................................. (0.4)
Book quality ......................................... (0.5)
Model updates ....................................... -
Methodology and policy
....................... (0.4)
---------------------
Internal updates ................................. (0.4)
External updates -
regulatory ............ -
---------------------
Total RWA movement
......................... (1.3)
---------------------
RWAs at 31 March 2013
...................... 44.4
---------------------
RWA movement by key driver - market risk
- internal model based
US$bn
RWAs at 1 January 2013
...................... 44.5
---------------------
Foreign exchange movement
and other . -
Movement in risk levels
........................ (6.3)
Model updates ....................................... -
Methodology and policy
....................... 2.3
---------------------
Internal updates ................................. -
External updates -
regulatory ............ 2.3
---------------------
Total RWA movement
......................... (4.0)
---------------------
RWAs at 31 March 2013
...................... 40.5
---------------------
Estimated effect of CRD IV end point rules applied to the 31 March 2013 position
At 31 March 2013
-----------------------------
RWAs CET1
US$m US$m
Reported total under the current regime
.............................................................................. 1,097,792 139,325
Regulatory adjustments applied to reported totals
(under the current regime) in respect of
amounts subject to CRD IV treatment:
Additional valuation adjustment (referred to
as PVA) ...................................................... (1,850)
Individually immaterial holdings in CET1 capital
of banks, financial institutions and
insurance in aggregate above 10% of HSBC CET1
....................................................... (4,258)
Deductions under threshold approach
.............................................................................. (4,669)
Other regulatory adjustments
...................................................................................
....... 161,950 (5,917)
--------- ------------------
Estimated total under CRD IV
......................................................................................
....... 1,259,742 122,631
------------------
Estimated CET1 ratio
......................................................................................
................ 9.7%
US$m
Planned short-term management actions to mitigate
immaterial holdings including
threshold effects
......................................................................................
....................... 1,877 5,009
--------- ------------------
Estimated total after planned management actions
............................................................. 1,261,619 127,640
--------- ------------------
Estimated CET1 ratio after planned management
actions ......................................... 10.1%
The table above presents a reconciliation of our reported core tier 1 capital and RWAs position at 31 March 2013 to the pro-forma CRD IV fully loaded estimated CET1 capital and estimated RWAs. The table has been prepared on a consistent basis to our 2012 year end disclosures in order to illustrate our transition to Basel III under CRD IV and provide some insight into the possible effects of these rules on our capital position. These estimates are based on our interpretation of the draft July 2011 CRD IV rules, supplemented by guidance provided by the PRA, as applicable. However, the rules are yet to be finalised and these estimates are subject to change.
In April 2013, the European Parliament ('EP'), the Council and Commission agreed in principle the final CRD IV package. However, an EP Plenary vote is scheduled for June to adopt the final text. The implementation date of CRD IV is likely to be 1 January 2014, although this is dependent upon the completion of the various translations and its publication in the EU Official Journal before 1 July 2013. There are also still numerous areas where technical standards are yet to be drafted by the European Banking Authority.
We are currently analysing the impact of the proposals incorporated in the text.
A detailed basis of preparation can be found in the Annual Report and Accounts 2012 (see Appendix to Capital on page 298).
Profit before tax by global business and geographical region
Quarter ended
-------------------------------------------------------------------
31 Mar 31 Dec 30 Sep 30 Jun 31 Mar
2013 2012 2012 2012 2012
US$m US$m US$m US$m US$m
By global business
Retail Banking and Wealth Management
............................ 1,567 1,654 1,511 4,228 2,182
Commercial Banking
................................................
.......... 2,187 1,858 2,248 2,225 2,204
Global Banking and Markets
............................................... 3,588 1,226 2,247 1,968 3,079
Global Private Banking
................................................
...... (125) 230 252 241 286
Other
................................................
................................. 1,217 (537) (2,777) (247) (3,429)
---------- ----------- ------------- ------------- ------------
8,434 4,431 3,481 8,415 4,322
---------- ----------- ------------- ------------- ------------
By geographical region
Europe
................................................
............................... 1,795 (2,530) (217) 330 (997)
Hong Kong
................................................
........................ 2,158 2,031 1,790 1,864 1,897
Rest of Asia-Pacific
................................................
........... 3,356 4,171 1,905 2,348 2,024
Middle East and North Africa
............................................. 524 302 276 440 332
North America
................................................
................... 140 (129) (926) 2,892 462
Latin America
................................................
.................... 461 586 653 541 604
8,434 4,431 3,481 8,415 4,322
---------- ----------- ------------- ------------- ------------
Summary information - global businesses
Retail Banking and Wealth Management
Quarter ended
-----------------------------------------------------------------------------------
31 Mar 31 Dec 30 Sep 30 Jun 31 Mar
2013 2012 2012 2012 2012
US$m US$m US$m US$m US$m
Net operating income before
loan impairment charges
and other credit risk provisions
................................ 6,713 7,422 7,124 10,499 8,816
Loan impairment charges and
other credit risk provisions
.. (890) (1,089) (1,153) (1,503) (1,770)
--------------- --------------- --------------- --------------- ---------------
Net operating income
................................
..................... 5,823 6,333 5,971 8,996 7,046
Total operating expenses
................................
................... (4,339) (4,847) (4,704) (5,093) (5,125)
--------------- --------------- --------------- --------------- ---------------
Operating profit
................................
............................. 1,484 1,486 1,267 3,903 1,921
Share of profit in associates
and joint ventures
................... 83 168 244 325 261
--------------- --------------- --------------- --------------- ---------------
Profit before tax
................................
.............................. 1,567 1,654 1,511 4,228 2,182
--------------- --------------- --------------- --------------- ---------------
Profit before tax relates to:
--------------- --------------- --------------- --------------- ---------------
RBWM excluding US Card and
Retail
Services business
and US run-off portfolio
.............................
................ 1,887 1,818 1,810 1,731 1,724
US Card and Retail Services
..............................
.............. -- (150) 3,247 669
US run-off portfolio(1)
..............................
........................ (320) (164) (149) (750) (211)
Reconciliation of reported and
underlying profit before tax
Reported profit before tax
................................
................. 1,567 1,654 1,511 4,228 2,182
Currency translation adjustment
................................
......... (6) 4 (4) 7
Acquisitions, disposals and
dilutions
................................
.... - (243) (299) (3,985) (1,083)
Underlying profit before tax
................................
.............. 1,567 1,405 1,216 239 1,106
--------------- --------------- --------------- --------------- ---------------
%% %% %
Cost efficiency ratio
................................
.......................... 64.6 65.3 66.0 48.5 58.1
Pre-tax return on average
risk-weighted
assets (annualised) 2.4 2.3 2.0 5.3 2.5
1 31 March 2013 includes the loss on sale and results of the US Insurance business.
Commercial Banking
Quarter ended
-----------------------------------------------------------------------------------
31 Mar 31 Dec 30 Sep 30 Jun 31 Mar
2013 2012 2012 2012 2012
US$m US$m US$m US$m US$m
Net operating income before
loan impairment charges
and other credit risk provisions
................................ 3,933 4,151 4,147 4,210 4,043
Loan impairment charges and
other credit risk provisions
.. (358) (621) (554) (512) (412)
--------------- --------------- --------------- --------------- ---------------
Net operating income
................................
..................... 3,575 3,530 3,593 3,698 3,631
Total operating expenses
................................
................... (1,726) (2,077) (1,785) (1,938) (1,798)
--------------- --------------- --------------- --------------- ---------------
Operating profit
................................
............................. 1,849 1,453 1,808 1,760 1,833
Share of profit in associates
and joint ventures
................... 338 405 440 465 371
--------------- --------------- --------------- --------------- ---------------
Profit before tax
................................
.............................. 2,187 1,858 2,248 2,225 2,204
--------------- --------------- --------------- --------------- ---------------
Reconciliation of reported and
underlying profit before tax
Reported profit before tax
................................
................. 2,187 1,858 2,248 2,225 2,204
Currency translation adjustment
................................
......... 1 1 (8) (24)
Acquisitions, disposals and
dilutions
................................
.... - (252) (196) (341) (77)
Underlying profit before tax
................................
.............. 2,187 1,607 2,053 1,876 2,103
--------------- --------------- --------------- --------------- ---------------
%% %% %
Cost efficiency ratio
................................
.......................... 43.9 50.0 43.0 46.0 44.5
Pre-tax return on average
risk-weighted
assets (annualised) 2.3 1.8 2.2 2.2 2.3
Management view of revenue
Quarter ended
-------------------------------------------------------------------
31 Mar 31 Dec 30 Sep 30 Jun 31 Mar
2013 2012 2012 2012 2012
US$m US$m US$m US$m US$m
Global Trade and Receivables
Finance(1) ............................... 713 725 762 753 726
Credit and lending
................................................
.............. 1,488 1,603 1,585 1,532 1,528
Payments and Cash Management(1)
, current accounts and
savings deposits
................................................
.............. 1,275 1,372 1,347 1,338 1,314
Insurance and investments
................................................
. 183 111 242 173 202
Other
................................................
................................. 274 340 211 414 273
Revenue
................................................
............................. 3,933 4,151 4,147 4,210 4,043
---------- ----------- ------------- ------------- ------------
1'Global Trade and Receivables Finance' and 'Payments and Cash Management' include revenue attributable to foreign exchange products.
Global Banking and Markets
Quarter ended
-----------------------------------------------------------------------------------
31 Mar 31 Dec 30 Sep 30 Jun 31 Mar
2013 2012 2012 2012 2012
US$m US$m US$m US$m US$m
Net operating income before
loan impairment charges
and other credit risk provisions
................................ 5,816 3,619 4,319 4,536 5,799
Loan impairment charges and
other credit risk
(provisions)/recoveries
................................
................... 45 (82) 10 (420) (178)
--------------- --------------- --------------- --------------- ---------------
Net operating income
................................
..................... 5,861 3,537 4,329 4,116 5,621
Total operating expenses
................................
................... (2,388) (2,530) (2,304) (2,356) (2,717)
--------------- --------------- --------------- --------------- ---------------
Operating profit
................................
............................. 3,473 1,007 2,025 1,760 2,904
Share of profit in associates
and joint ventures
................... 115 219 222 208 175
--------------- --------------- --------------- --------------- ---------------
Profit before tax
................................
.............................. 3,588 1,226 2,247 1,968 3,079
--------------- --------------- --------------- --------------- ---------------
Reconciliation of reported and
underlying profit before tax
Reported profit before tax
................................
................. 3,588 1,226 2,247 1,968 3,079
Currency translation adjustment
................................
......... 21 202 (48)
Acquisitions, disposals and
dilutions
................................
.... - (160) (109) (131) (93)
Underlying profit before tax
................................
.............. 3,588 1,087 2,158 1,839 2,938
--------------- --------------- --------------- --------------- ---------------
%% %% %
Cost efficiency ratio
................................
.......................... 41.1 69.9 53.3 51.9 46.9
Pre-tax return on average
risk-weighted
assets (annualised) 3.6 1.2 2.2 1.9 2.9
Management view of revenue(1)
Quarter ended
-------------------------------------------------------------------
31 Mar 31 Dec 30 Sep 30 Jun 31 Mar
2013 2012 2012 2012 2012
US$m US$m US$m US$m US$m
Global Markets
................................................
................... 2,848 1,187 2,192 2,181 3,133
---------- ----------- ------------- ------------- ------------
Credit
.............................................
................................ 409 124 285 65 305
Rates
.............................................
................................. 814 (397) 363 611 1,194
Foreign Exchange
.............................................
.............. 871 746 736 776 957
Equities
.............................................
............................. 266 143 140 211 185
Securities Services
.............................................
.............. 405 454 371 413 385
Asset and Structured Finance
.......................................... 83 117 297 105 107
---------- ----------- ------------- ------------- ------------
Global Banking
................................................
................... 1,436 1,227 1,354 1,337 1,246
---------- ----------- ------------- ------------- ------------
Financing and Equity Capital
Markets ............................ 831 619 756 723 633
Payments and Cash Management
................................... 423 432 406 425 417
Other transaction services
.............................................
. 182 176 192 189 196
---------- ----------- ------------- ------------- ------------
Balance Sheet Management
................................................ 976 697 835 926 1,280
Principal Investments
................................................
........ 14 (75) 53 71 76
Debit valuation adjustment
................................................
. 472 518 - - -
Other
................................................
................................. 70 65 (115) 21 64
---------- ----------- ------------- ------------- ------------
Revenue
................................................
............................. 5,816 3,619 4,319 4,536 5,799
---------- ----------- ------------- ------------- ------------
1 In 1Q13 funding costs that had previously been reported within 'Other' were allocated to their respective business lines. For comparative purposes, 2012 quarterly data have been restated to reflect this change.
Revenue by geographical region
Quarter ended
-------------------------------------------------------------------
31 Mar 31 Dec 30 Sep 30 Jun 31 Mar
2013 2012 2012 2012 2012
US$m US$m US$m US$m US$m
Europe
................................................
............................... 2,525 953 1,463 1,603 2,410
Hong Kong
................................................
........................ 898 656 674 643 788
Rest of Asia-Pacific
................................................
........... 1,045 901 928 1,031 1,134
Middle East and North Africa
............................................. 212 177 209 229 178
North America
................................................
................... 774 619 641 608 799
Latin America
................................................
.................... 402 382 433 441 518
Intra-HSBC items
................................................
............... (40) (69) (29) (19) (28)
---------- ----------- ------------- ------------- ------------
Revenue
................................................
............................. 5,816 3,619 4,319 4,536 5,799
---------- ----------- ------------- ------------- ------------
Global Private Banking
Quarter ended
----------------------------------------------------------------------------------------------------
31 Mar 31 Dec 30 Sep 30 Jun 31 Mar
2013 2012 2012 2012 2012
US$m US$m US$m US$m US$m
Net operating income
before
loan impairment charges
and other credit risk
provisions
................. 444 786 745 815 826
Loan impairment charges
and
other credit risk
(provisions)/recoveries
.......................
............. (7)1 (24) 2 (6)
---------------- -------------- --------------- -------------- ---------------
Net operating income
.......................
............... 437 787 721 817 820
Total operating expenses
.......................
............. (566) (559) (471) (578) (535)
---------------- --------------- --------------- --------------- ---------------
Operating profit/(loss)
.......................
............. (129) 228 250 239 285
Share of profit in
associates
and joint ventures .... 42 2 2 1
---------------- -------------- --------------- -------------- ---------------
Profit/(loss) before tax
.......................
.............. (125) 230 252 241 286
---------------- --------------- --------------- --------------- ---------------
Reconciliation of
reported and
underlying profit/(loss)
before tax
Reported profit/(loss)
before
tax
.......................
.. (125) 230 252 241 286
Currency translation
adjustment
.......................
... (1) - (10) -
Acquisitions, disposals
and
dilution
...................... -1 - (58) 2
Underlying profit/(loss)
before
tax
...................... (125) 230 252 173 288
---------------- --------------- --------------- --------------- ---------------
%% % % %
Cost efficiency ratio
.......................
..................... 127.5 71.1 63.2 70.9 64.8
Pre-tax return on
average risk-weighted
assets (annualised)
.......................
.......................
....... (2.3) 4.2 4.6 4.6 4.3 5.1
Other(1)
Quarter ended
---------------------------------------------------------
31 31 30 30 31
Mar Dec Sep Jun Mar
2013 2012 2012 2012 2012
US$m US$m US$m US$m US$m
Net operating income/(expense)
before loan impairment charges
and other credit risk provisions
...........................................................
.......... 2,821 2,355 (361) 2,124 (1,786)
-------- --------- ----------- ----------- ----------
* of which effect of changes in own credit spread on
the fair value of long-term debt issued
.............................. (243) (1,312) (1,733) 474 (2,644)
-------- --------- ----------- ----------- ----------
Loan impairment charges and
other credit risk (provisions)/recoveries
................................................... 39 (1) 1 - -
-------- --------- ----------- ----------- ----------
Net operating income/(expense)
................................... 2,860 2,354 (360) 2,124 (1,786)
Total operating expenses
................................................... (1,639) (2,897) (2,423) (2,374) (1,675)
-------- --------- ----------- ----------- ----------
Operating profit/(loss)
................................................... 1,221 (543) (2,783) (250) (3,461)
Share of profit/(loss) in associates
and joint ventures ......... (4) 6 6 3 32
-------- --------- ----------- ----------- ----------
Profit/(loss) before tax
................................................... 1,217 (537) (2,777) (247) (3,429)
-------- --------- ----------- ----------- ----------
Reconciliation of reported and
underlying profit/(loss)
before tax
Reported profit/(loss) before
tax ........................................ 1,217 (537) (2,777) (247) (3,429)
Currency translation adjustment
......................................... (140) - 2 4
Own credit spread
...........................................................
.... 243 1,312 1,733 (474) 2,644
Acquisitions, disposals and
dilutions .................................... (1,089) (3,013) 38 (132) -
Underlying profit/(loss) before
tax ..................................... 371 (2,378) (1,006) (851) (781)
-------- --------- ----------- ----------- ----------
1 The main items reported under 'Other' are certain property activities, unallocated investment activities, centrally held investment companies, gains arising from the dilution of interests in associates, and joint ventures, part of the movement in the fair value of our long-term debt designated at fair value (the remainder of the Group's movement on own debt is included in GB&M), and HSBC's holding company and financing operations. The results also include net interest earned on free capital held centrally, operating costs incurred by the head office operations in providing stewardship and central management services to HSBC, and costs incurred by the Group Service Centres and Shared Service Organisations and associated recoveries. In addition, fines and penalties as part of the settlement of investigations into past inadequate compliance with anti-money laundering and sanctions laws together with the UK bank levy are recorded in 'Other'.
Summary information - geographical regions
Europe
Quarter ended
--------------------------------------------------------------------------------------
31 Mar 31 Dec 30 Sep 30 Jun 31 Mar
2013 2012 2012 2012 2012
US$m US$m US$m US$m US$m
Net operating income before
loan impairment charges
and other credit risk
provisions
.............................
... 5,968 3,833 4,108 5,782 3,885
Loan impairment charges and
other credit risk provisions
.. (190) (512) (372) (690) (347)
--------------- ---------------- ---------------- --------------- ----------------
Net operating income
.............................
........................ 5,778 3,321 3,736 5,092 3,538
Total operating expenses
.............................
...................... (3,984) (5,849) (3,957) (4,755) (4,534)
--------------- ---------------- ---------------- --------------- ----------------
Operating profit/(loss)
.............................
...................... 1,794 (2,528) (221) 337 (996)
Share of profit/(loss) in
associates
and joint ventures ......... 1 (2) 4 (7) (1)
--------------- ---------------- ---------------- --------------- ----------------
Profit/(loss) before tax
.............................
...................... 1,795 (2,530) (217) 330 (997)
--------------- ---------------- ---------------- --------------- ----------------
Reconciliation of reported and
underlying profit/(loss)
before tax
Reported profit/(loss) before
tax
.............................
........... 1,795 (2,530) (217) 330 (997)
Currency translation
adjustment
.............................
............ (100) 9 15 (4)
Own credit spread
.............................
.............................
..... 154 1,079 1,426 (345) 1,950
Acquisitions, disposals and
dilutions
.............................
....... - (6) 9- -
Underlying profit/(loss)
before
tax
.............................
........ 1,949 (1,557) 1,227- 949
--------------- ---------------- ---------------- -------------- ----------------
%% %% %
Cost efficiency ratio
.............................
............................. 66.8 152.6 96.3 82.2 116.7
Pre-tax return on average
risk-weighted
assets (annualised) 2.4 (3.2) (0.3) 0.4 (1.2)
Profit/(loss) before tax by global business
Quarter ended
-------------------------------------------------------------------
31 Mar 31 Dec 30 Sep 30 Jun 31 Mar
2013 2012 2012 2012 2012
US$m US$m US$m US$m US$m
Retail Banking and Wealth Management
............................ 400 293 308 (146) 54
Commercial Banking
................................................
.......... 545 17 417 292 482
Global Banking and Markets
............................................... 1,336 (470) 413 92 951
Global Private Banking
................................................
...... (242) 119 144 71 165
Other
................................................
................................. (244) (2,489) (1,499) 21 (2,649)
---------- ----------- ------------- ------------- ------------
Profit/(loss) before tax
................................................
....... 1,795 (2,530) (217) 330 (997)
---------- ----------- ------------- ------------- ------------
Hong Kong
Quarter ended
-----------------------------------------------------------------------------------
31 Mar 31 Dec 30 Sep 30 Jun 31 Mar
2013 2012 2012 2012 2012
US$m US$m US$m US$m US$m
Net operating income before
loan impairment charges
and other credit risk provisions
................................ 3,351 3,264 3,025 3,047 3,086
Loan impairment charges and
other credit risk provisions
.. (17) (18) (24) (13) (19)
--------------- --------------- --------------- --------------- ---------------
Net operating income
................................
..................... 3,334 3,246 3,001 3,034 3,067
Total operating expenses
................................
................... (1,181) (1,236) (1,216) (1,191) (1,205)
--------------- --------------- --------------- --------------- ---------------
Operating profit
................................
............................. 2,153 2,010 1,785 1,843 1,862
Share of profit in associates
and joint ventures
................... 5 21 5 21 35
--------------- --------------- --------------- --------------- ---------------
Profit before tax
................................
.............................. 2,158 2,031 1,790 1,864 1,897
--------------- --------------- --------------- --------------- ---------------
Reconciliation of reported and
underlying profit before tax
Reported profit before tax
................................
................. 2,158 2,031 1,790 1,864 1,897
Currency translation adjustment
................................
......... (4) 11 1
Acquisitions, disposals and
dilutions
................................
.... - (341) (50) (18) (11)
Underlying profit before tax
................................
.............. 2,158 1,686 1,741 1,847 1,887
--------------- --------------- --------------- --------------- ---------------
%% %% %
Cost efficiency ratio
................................
.......................... 35.2 37.9 40.2 39.1 39.0
Pre-tax return on average
risk-weighted
assets (annualised) 7.6 7.3 6.6 7.0 7.3
Profit/(loss) before tax by global business
Quarter ended
-------------------------------------------------------------------
31 Mar 31 Dec 30 Sep 30 Jun 31 Mar
2013 2012 2012 2012 2012
US$m US$m US$m US$m US$m
Retail Banking and Wealth Management
............................ 979 1,051 890 809 944
Commercial Banking
................................................
.......... 526 666 521 501 500
Global Banking and Markets
............................................... 583 383 349 352 434
Global Private Banking
................................................
...... 70 69 58 58 64
Other
................................................
................................. - (138) (28) 144 (45)
---------- ----------- ------------- ------------- ------------
Profit before tax
................................................
................ 2,158 2,031 1,790 1,864 1,897
---------- ----------- ------------- ------------- ------------
Rest of Asia-Pacific
Quarter ended
-----------------------------------------------------------------------------------
31 Mar 31 Dec 30 Sep 30 Jun 31 Mar
2013 2012 2012 2012 2012
US$m US$m US$m US$m US$m
Net operating income before
loan impairment charges
and other credit risk provisions
................................ 4,397 5,015 2,622 2,963 2,984
Loan impairment charges and
other credit risk provisions
.. (63) (100) (38) (122) (176)
--------------- --------------- --------------- --------------- ---------------
Net operating income
................................
..................... 4,334 4,915 2,584 2,841 2,808
Total operating expenses
................................
................... (1,392) (1,434) (1,507) (1,380) (1,485)
--------------- --------------- --------------- --------------- ---------------
Operating profit
................................
............................. 2,942 3,481 1,077 1,461 1,323
Share of profit in associates
and joint ventures
................... 414 690 828 887 701
--------------- --------------- --------------- --------------- ---------------
Profit before tax
................................
.............................. 3,356 4,171 1,905 2,348 2,024
--------------- --------------- --------------- --------------- ---------------
Reconciliation of reported and
underlying profit before tax
Reported profit before tax
................................
................. 3,356 4,171 1,905 2,348 2,024
Currency translation adjustment
................................
......... (19) 18 (6) (9)
Own credit spread
................................
............................... 2- 11 1
Acquisitions, disposals and
dilutions
................................
.... (1,209) (3,319) (380) (616) (412)
Underlying profit before tax
................................
.............. 2,149 833 1,544 1,727 1,604
--------------- --------------- --------------- --------------- ---------------
%% %% %
Cost efficiency ratio
................................
.......................... 31.7 28.6 57.5 46.6 49.8
Pre-tax return on average
risk-weighted
assets (annualised) 4.7 5.4 2.5 3.2 2.8
Profit before tax by global business
Quarter ended
-------------------------------------------------------------------
31 Mar 31 Dec 30 Sep 30 Jun 31 Mar
2013 2012 2012 2012 2012
US$m US$m US$m US$m US$m
Retail Banking and Wealth Management
............................ 260 234 362 456 465
Commercial Banking
................................................
.......... 588 652 700 673 577
Global Banking and Markets
............................................... 793 781 810 865 869
Global Private Banking
................................................
...... 22 20 25 88 26
Other
................................................
................................. 1,693 2,484 8 266 87
---------- ----------- ------------- ------------- ------------
Profit before tax
................................................
................ 3,356 4,171 1,905 2,348 2,024
---------- ----------- ------------- ------------- ------------
Middle East and North Africa
Quarter ended
-----------------------------------------------------------------------------------
31 Mar 31 Dec 30 Sep 30 Jun 31 Mar
2013 2012 2012 2012 2012
US$m US$m US$m US$m US$m
Net operating income before
loan impairment charges
and other credit risk provisions
................................ 632 617 576 635 602
Loan impairment charges and
other credit risk provisions
.. 62 (69) (82) (24) (111)
--------------- --------------- --------------- --------------- ---------------
Net operating income
................................
..................... 694 548 494 611 491
Total operating expenses
................................
................... (281) (336) (293) (276) (261)
--------------- --------------- --------------- --------------- ---------------
Operating profit
................................
............................. 413 212 201 335 230
Share of profit in associates
and joint ventures
................... 111 90 75 105 102
--------------- --------------- --------------- --------------- ---------------
Profit before tax
................................
.............................. 524 302 276 440 332
--------------- --------------- --------------- --------------- ---------------
Reconciliation of reported and
underlying profit before tax
Reported profit before tax
................................
................. 524 302 276 440 332
Currency translation adjustment
................................
......... (7) (5) (8) (7)
Own credit spread
................................
............................... 37 14 -
Acquisitions, disposals and
dilutions
................................
.... - (25) 70 (21) (6)
Underlying profit before tax
................................
.............. 527 277 342 415 319
--------------- --------------- --------------- --------------- ---------------
%% %% %
Cost efficiency ratio
................................
.......................... 44.5 54.5 50.9 43.5 43.4
Pre-tax return on average
risk-weighted
assets (annualised) 3.3 1.9 1.8 2.9 2.3
Profit/(loss) before tax by global business
Quarter ended
-------------------------------------------------------------------
31 Mar 31 Dec 30 Sep 30 Jun 31 Mar
2013 2012 2012 2012 2012
US$m US$m US$m US$m US$m
Retail Banking and Wealth Management
............................ 90 65 47 61 79
Commercial Banking
................................................
.......... 192 149 97 171 170
Global Banking and Markets
............................................... 256 127 168 215 71
Global Private Banking
................................................
...... 5 3 3 1 3
Other
................................................
................................. (19) (42) (39) (8) 9
---------- ----------- ------------- ------------- ------------
Profit before tax
................................................
................ 524 302 276 440 332
---------- ----------- ------------- ------------- ------------
North America
Quarter ended
-------------------------------------------------------------------------------------
31 Mar 31 Dec 30 Sep 30 Jun 31 Mar
2013 2012 2012 2012 2012
US$m US$m US$m US$m US$m
Net operating income before
loan impairment charges
and other credit risk
provisions
..............................
.. 2,296 2,340 2,375 6,417 3,561
Loan impairment charges and
other credit risk provisions
.. (447) (601) (695) (1,051) (1,110)
--------------- ---------------- ---------------- --------------- ---------------
Net operating income
..............................
....................... 1,849 1,739 1,680 5,366 2,451
Total operating expenses
..............................
..................... (1,714) (1,870) (2,608) (2,471) (1,991)
--------------- ---------------- ---------------- --------------- ---------------
Operating profit/(loss)
..............................
..................... 135 (131) (928) 2,895 460
Share of profit/(loss) in
associates
and joint ventures ......... 52 2 (3) 2
--------------- --------------- ---------------- --------------- ---------------
Profit/(loss) before tax
..............................
..................... 140 (129) (926) 2,892 462
--------------- ---------------- ---------------- --------------- ---------------
Reconciliation of reported and
underlying profit/(loss)
before tax
Reported profit/(loss) before
tax
..............................
.......... 140 (129) (926) 2,892 462
Currency translation adjustment
..............................
........... (4) (3)- (2)
Own credit spread
..............................
..............................
... 84 226 305 (134) 693
Acquisitions, disposals and
dilutions
..............................
...... 1208 (191) (3,894) (784)
Underlying profit/(loss) before
tax
..............................
....... 344 101 (815) (1,136) 369
--------------- ---------------- ---------------- --------------- ---------------
%% %% %
Cost efficiency ratio
..............................
............................ 74.7 79.9 109.8 38.5 55.9
Pre-tax return on average
risk-weighted
assets (annualised) 0.2 (0.2) (1.3) 3.8 0.6
Profit/(loss) before tax by global business
Quarter ended
-------------------------------------------------------------------
31 Mar 31 Dec 30 Sep 30 Jun 31 Mar
2013 2012 2012 2012 2012
US$m US$m US$m US$m US$m
Retail Banking and Wealth Management
............................ (280) (218) (261) 2,942 532
---------- ----------- ------------- ------------- ------------
RBWM excluding CRS and run-off
portfolio ................... 40 (54) 38 445 74
Card and Retail Services
..............................................
.... - - (150) 3,247 669
Run-off portfolio(1)
..............................................
............ (320) (164) (149) (750) (211)
Commercial Banking
................................................
.......... 186 216 301 399 283
Global Banking and Markets
............................................... 381 199 209 151 398
Global Private Banking
................................................
...... 16 14 17 18 23
Other
................................................
................................. (163) (340) (1,192) (618) (774)
---------- ----------- ------------- ------------- ------------
Profit/(loss) before tax
................................................
....... 140 (129) (926) 2,892 462
---------- ----------- ------------- ------------- ------------
1 31 March 2013 includes the loss on sale and results of the US Insurance business.
Latin America
Quarter ended
-----------------------------------------------------------------------------------
31 Mar 31 Dec 30 Sep 30 Jun 31 Mar
2013 2012 2012 2012 2012
US$m US$m US$m US$m US$m
Net operating income before
loan impairment charges
and other credit risk provisions
................................ 2,505 2,691 2,695 2,679 2,886
Loan impairment charges and
other credit risk provisions
.. (516) (492) (509) (533) (603)
--------------- --------------- --------------- --------------- ---------------
Net operating income
................................
..................... 1,989 2,199 2,186 2,146 2,283
Total operating expenses
................................
................... (1,528) (1,612) (1,533) (1,605) (1,680)
--------------- --------------- --------------- --------------- ---------------
Operating profit
................................
............................. 461 587 653 541 603
Share of profit/(loss) in
associates
and joint ventures ......... - (1) -- 1
--------------- --------------- --------------- -------------- ---------------
Profit before tax
................................
.............................. 461 586 653 541 604
--------------- --------------- --------------- --------------- ---------------
Reconciliation of reported and
underlying profit before tax
Reported profit before tax
................................
................. 461 586 653 541 604
Currency translation adjustment
................................
......... 9 5 (20) (40)
Acquisitions, disposals and
dilutions
................................
.... - 16 (24) (98) (38)
Underlying profit before tax
................................
.............. 461 611 634 423 526
--------------- --------------- --------------- --------------- ---------------
%% %% %
Cost efficiency ratio
................................
.......................... 61.0 59.9 56.9 59.9 58.2
Pre-tax return on average
risk-weighted
assets (annualised) 1.9 2.4 2.6 2.1 2.3
Profit/(loss) before tax by global business
Quarter ended
-------------------------------------------------------------------
31 Mar 31 Dec 30 Sep 30 Jun 31 Mar
2013 2012 2012 2012 2012
US$m US$m US$m US$m US$m
Retail Banking and Wealth Management
............................ 118 229 165 106 108
Commercial Banking
................................................
.......... 150 158 212 189 192
Global Banking and Markets
............................................... 239 206 298 293 356
Global Private Banking
................................................
...... 4 5 5 5 5
Other
................................................
................................. (50) (12) (27) (52) (57)
---------- ----------- ------------- ------------- ------------
Profit before tax
................................................
................ 461 586 653 541 604
---------- ----------- ------------- ------------- ------------
Appendix - selected information
Loans and advances to customers by industry sector and by geographical region
Gross
loans
by
industry
Gross sector
Middle loans as a
Rest East and % of
of and advances total
Hong Asia- North North Latin to gross
Europe Kong Pacific Africa America America customers loans
US$m US$m US$m US$m US$m US$m US$m %
At 31 March 2013
Personal
...................
...................
... 171,292 71,066 49,660 6,223 82,006 16,166 396,413 40.7
------- --------- --------- -------- ----------- ------------ ------------- -------------
First lien
residential
mortgages .... 127,863 53,019 37,446 2,187 68,403 3,734 292,652 30.0
Other personal
................
............ 43,429 18,047 12,214 4,036 13,603 12,432 103,761 10.7
------- --------- --------- -------- ----------- ------------ ------------- -------------
Corporate and
commercial
.............. 206,272 100,742 84,872 21,520 47,490 32,695 493,591 50.7
------- --------- --------- -------- ----------- ------------ ------------- -------------
Manufacturing
................
............. 45,090 10,288 19,091 3,286 9,800 12,882 100,437 10.3
International
trade
and services ... 67,973 35,536 31,667 8,732 13,013 8,538 165,459 17.0
Commercial real
estate
................ 31,668 23,545 9,376 869 6,227 2,444 74,129 7.6
Other
property-related
................ 7,542 15,962 6,973 1,849 7,517 316 40,159 4.1
Government
................
................ 1,511 2,817 608 1,663 327 1,796 8,722 0.9
Other commercial
................
....... 52,488 12,594 17,157 5,121 10,606 6,719 104,685 10.8
------- --------- --------- -------- ----------- ------------ ------------- -------------
Financial
...................
...................
... 47,928 7,195 4,585 1,654 17,083 1,771 80,216 8.2
------- --------- --------- -------- ----------- ------------ ------------- -------------
Non-bank
financial
institutions ... 46,972 6,398 3,812 1,513 17,083 1,633 77,411 7.9
Settlement
accounts
................
.... 956 797 773 141 - 138 2,805 0.3
------- --------- --------- -------- ----------- ------------ ------------- -------------
Asset-backed
securities
reclassified .. 3,412 - - - 181 - 3,593 0.4
------- --------- --------- -------- ----------- ------------ ------------- -------------
Total gross loans
and advances to
customers(1)
...................
............... 428,904 179,003 139,117 29,397 146,760 50,632 973,813 100.0
------- --------- --------- -------- ----------- ------------ ------------- -------------
At 31 December 2012
Personal
...................
...................
... 186,274 70,341 49,305 6,232 84,354 18,587 415,093 41.0
------- --------- --------- -------- ----------- ------------ ------------- -------------
First lien
residential
mortgages .... 135,172 52,296 36,906 2,144 70,133 5,211 301,862 29.8
Other personal
................
............ 51,102 18,045 12,399 4,088 14,221 13,376 113,231 11.2
------- --------- --------- -------- ----------- ------------ ------------- -------------
Corporate and
commercial
.............. 223,061 99,199 85,305 22,452 47,886 35,590 513,493 50.6
------- --------- --------- -------- ----------- ------------ ------------- -------------
Manufacturing
................
............. 56,690 10,354 19,213 3,373 9,731 12,788 112,149 11.1
International
trade
and services ... 70,954 33,832 32,317 9,115 13,419 9,752 169,389 16.6
Commercial real
estate
................ 33,279 23,384 9,286 865 6,572 3,374 76,760 7.6
Other
property-related
................ 7,402 16,399 6,641 2,103 7,607 380 40,532 4.0
Government
................
................ 2,393 2,838 1,136 1,662 774 1,982 10,785 1.1
Other commercial
................
....... 52,343 12,392 16,712 5,334 9,783 7,314 103,878 10.2
------- --------- --------- -------- ----------- ------------ ------------- -------------
Financial
...................
...................
... 55,732 4,546 4,255 1,196 13,935 1,594 81,258 8.0
------- --------- --------- -------- ----------- ------------ ------------- -------------
Non-bank
financial
institutions ... 55,262 4,070 3,843 1,194 13,935 1,513 79,817 7.9
Settlement
accounts
................
.... 470 476 412 2 - 81 1,441 0.1
------- --------- --------- -------- ----------- ------------ ------------- -------------
....................
....................
................
Asset-backed
securities
reclassified .. 3,694 - - - 197 - 3,891 0.4
------- --------- --------- -------- ----------- ------------ ------------- -------------
Total gross loans
and advances to
customers(1)
...................
............... 468,761 174,086 138,865 29,880 146,372 55,771 1,013,735 100.0
------- --------- --------- -------- ----------- ------------ ------------- -------------
At 30 June 2012
Personal
...................
...................
... 173,650 65,669 45,409 6,015 91,611 18,448 400,802 40.4
------- --------- --------- -------- ----------- ------------ ------------- -------------
First lien
residential
mortgages .... 125,729 48,951 33,636 1,937 71,582 4,945 286,780 28.9
Other personal
................
............ 47,921 16,718 11,773 4,078 20,029 13,503 114,022 11.5
------- --------- --------- -------- ----------- ------------ ------------- -------------
Corporate and
commercial
.............. 214,423 96,164 81,029 22,216 43,540 34,829 492,201 49.6
------- --------- --------- -------- ----------- ------------ ------------- -------------
Manufacturing
................
............. 55,245 10,235 17,550 3,888 8,594 12,538 108,050 10.9
International
trade
and services ... 64,843 31,631 30,777 8,574 11,471 9,399 156,695 15.8
Commercial real
estate
................ 32,563 21,510 9,544 940 6,706 3,451 74,714 7.5
Other
property-related
................ 7,506 17,079 6,849 2,060 6,120 344 39,958 4.0
Government
................
................ 2,073 2,906 390 1,514 774 1,853 9,510 1.0
Other commercial
................
....... 52,193 12,803 15,919 5,240 9,875 7,244 103,274 10.4
------- --------- --------- -------- ----------- ------------ ------------- -------------
Financial
...................
...................
... 58,322 3,907 3,897 1,438 25,237 1,754 94,555 9.5
------- --------- --------- -------- ----------- ------------ ------------- -------------
Non-bank
financial
institutions ... 57,460 3,413 3,492 1,433 25,186 1,547 92,531 9.3
Settlement
accounts
................
.... 862 494 405 5 51 207 2,024 0.2
------- --------- --------- -------- ----------- ------------ ------------- -------------
Asset-backed
securities
reclassified .. 4,243 - - - 401 - 4,644 0.5
------- --------- --------- -------- ----------- ------------ ------------- -------------
Total gross loans
and advances to
customers(1)
...................
............... 450,638 165,740 130,335 29,669 160,789 55,031 992,202 100.0
------- --------- --------- -------- ----------- ------------ ------------- -------------
1 Additionally, gross loans and advances to customers of US$16,938m (31 December 2012: US$6,842m; 30 June 2012: US$5,602m) are reported within assets held for sale.
Exposures to countries in the eurozone
During 1Q13, in spite of continued improvements through austerity and structural reforms, the peripheral eurozone countries of Greece, Ireland, Italy, Portugal, Spain and Cyprus continued to exhibit a high ratio of sovereign debt to gross domestic product and excessive fiscal deficits.
In our Annual Report and Accounts 2012, we disclosed information on our exposures to the peripheral eurozone countries. At 31 March 2013, there were no significant changes in our exposures to peripheral eurozone countries compared with 31 December 2012.
Redenomination risk
In our Annual Report and Accounts 2012, we disclosed information on our in-country funding exposures for the peripheral eurozone countries. At 31 March 2013, there were no significant changes in our in-country funding exposures for peripheral eurozone countries compared with 31 December 2012.
Notable revenue items and notable cost items by geographical region and global business
Notable revenue items by geographical region
Rest
of
Hong Asia- North Latin
Europe Kong Pacific MENA America America Total
US$m US$m US$m US$m US$m US$m US$m
Quarter ended 31 March
2013
Sale of remaining Ping
An shareholding(1) .. - - 553 - - - 553
Quarter ended 31 December
2012
Ping An contingent forward
sale contract(2)
............................
............................
......... - - (553) - - - (553)
Notable revenue items by global business
Retail Global
Banking Banking Global
and Wealth Commercial and Private
Management Banking Markets Banking Other Total
US$m US$m US$m US$m US$m US$m
Quarter ended
31 March
2013
Sale of Ping
An
investment(1)
.... - - - - 553 553
Quarter ended
31 December
2012
Ping An
contingent
forward
sale
contract(2)
.............
.............
........ - - - - (553) (553)
1 The gain of US$553m represents the net impact of the disposal of available-for-sale investments in Ping An offset by adverse changes in fair value of the contingent forward sale contract to the point of delivery of the shares.
2 For a full description of the Ping An contingent forward sale contract, see page 472 of the Annual Report and Accounts 2012.
Notable cost items by geographical region
Rest
of
Hong Asia- North Latin
Europe Kong Pacific MENA America America Total
US$m US$m US$m US$m US$m US$m US$m
Quarter ended 31 March
2013
Restructuring and other
related costs ........ 5 3 5 - 35 27 75
UK customer redress
programmes ............ 164 - - - - - 164
Quarter ended 31 December
2012
Restructuring and other
related costs ........ 65 1 24 13 46 67 216
UK customer redress
programmes ............ 640 - - - - - 640
Fines and penalties
for inadequate
compliance with anti-money
laundering
and sanction laws
............................
..... 375 - - - 46 - 421
Quarter ended 31 March
2012
Restructuring and other
related costs ........ 27 10 102 4 68 49 260
UK customer redress
programmes ............ 468 - - - - - 468
Notable cost items by global business
Retail Global
Banking Commercial Banking Global
and Wealth and Private
Management Banking Markets Banking (Other) Total
US$m US$m US$m US$m US$m US$m
Quarter ended
31 March
2013
Restructuring
and other
related costs
........... 15 1 8 1 50 75
UK customer
redress
programmes
.............
... 164 - - - - 164
Quarter ended
31 December
2012
Restructuring
and other
related costs
........... 67 9 29 6 105 216
UK customer
redress
programmes
.............
... 286 144 212 (2) - 640
Fines and
penalties for
inadequate
compliance
with
anti-money
laundering
and sanction
laws
.............
.............
........... - - - - 421 421
Quarter ended
31 March
2012
Restructuring
and other
related costs
........... 106 8 14 21 111 260
UK customer
redress
programmes
.............
... 468 - - - - 468
US run-off portfolios
Quarter ended
---------------------------------------------------------------------
31 Mar 31 Dec 30 Sep 30 Jun 31 Mar
2013(1) 2012 2012 2012 2012
US$m US$m US$m US$m US$m
Net operating income before
loan impairment charges
and other credit risk provisions(2)
............................... 399 809 587 151 849
* of which:
------------ ----------- ------------- ------------- ------------
non-qualifying hedges
.........................................
........ 83 38 (48) (425) 208
------------ ----------- ------------- ------------- ------------
Loan impairment charges and
other credit risk provisions
.. (317) (494) (498) (724) (853)
------------ ----------- ------------- ------------- ------------
Net operating income/(expense)
................................... 82 315 89 (573) (4)
Total operating expenses
..............................................
..... (402) (481) (238) (177) (207)
------------ ----------- ------------- ------------- ------------
Operating loss
..............................................
.................. (320) (166) (149) (750) (211)
Share of profit in associates
and joint ventures ................... - 2 - - -
------------ ----------- ------------- ------------- ------------
Loss before tax(2)
..............................................
................. (320) (164) (149) (750) (211)
------------ ----------- ------------- ------------- ------------
1 31 March 2013 includes the loss on sale and results of the US Insurance business.
2 'Net operating income before loan impairment charges and other credit risk provisions' and 'Loss before tax' exclude movements in fair value of own debt, and include the effect of non-qualifying hedges.
Quarter ended
-----------------------------------------------------------------------------------
31 Mar 31 Dec 30 Sep 30 Jun 31 Mar
2013 2012 2012 2012 2012
US$m US$m US$m US$m US$m
Loan portfolio information
Loans and advances to customers
(gross)
............................ 37,164 38,741 39,980 45,812 47,508
Loans and advances to customers
- held for sale ................ 3,974 3,958 4,290- -
Impairment allowances
................................
...................... 4,137 4,481 4,652 5,631 5,737
Impairment allowances - assets
held for sale
...................... 642 669 706- -
2+ delinquency
................................
................................
... 7,670 8,284 8,419 8,346 8,423
Write-offs (net)
................................
................................
. 544 563 646 717 974
Ratios(1) : %% %% %
Impairment allowances
..............................
..................... 11.1 11.6 11.6 12.3 12.1
Loan impairment charges
..............................
................. 3.0 4.6 4.4 6.2 7.0
2+ delinquency
..............................
..............................
... 18.6 19.4 19.0 18.3 17.7
Write-offs
..............................
..............................
.......... 5.2 5.2 5.7 6.2 8.0
1 The 'write-offs' and 'loan impairment charges' ratios are a percentage of average total loans and advances (quarter annualised), while the 'impairment allowances' and '2+ delinquency' ratios are a percentage of period end loans and advances to customers (gross). '2+ delinquency' ratios include loans and advances classified as held for sale.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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