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Earnings Release

5 May 2015 09:15

RNS Number : 1450M
HSBC Holdings PLC
05 May 2015
 



HSBC Holdings plc - Earnings Release

HSBC Holdings plc ('HSBC') will be conducting a trading update conference call with analysts and investors today to coincide with the publication of its Earnings Release. The trading update call will take place at 11.30am BST, and details of how to participate in the call and the live audio webcast can be found at www.hsbc.com/investor-relations.

 

 

Table of contents

Highlights

3

Group Chief Executive's comments

4

Adjusted performance

5

Financial performance commentary

6

Notes

8

Cautionary statement regarding forward-looking statements

9

Summary consolidated income statement

10

Summary consolidated balance sheet

11

Capital

12

Risk-weighted assets

13

 

Leverage ratio

16

Profit/(loss) before tax by global business andgeographical region

16

Summary information - global businesses

17

Summary information - geographical regions

21

Appendix - selected information

24

Reconciliation of the difference between reported and adjusted items

24

Loans and advances to customers by industry sectorand by geographical region

29

 

Terms and abbreviations

1Q14 / 1Q15

First quarter of 2014/2015

4Q14

Fourth quarter of 2014

AML

Anti-money laundering

CET1

Common equity tier 1

CMB

Commercial Banking

CML

Consumer and Mortgage Lending in the US

CRD IV

Capital Requirements Directive IV

CRS

Card and Retail Services

FTEs

Full-time equivalent staff

FFVA

Funding fair value adjustment methodology on derivative contracts

GB&M

Global Banking and Markets

GPB

Global Private Banking

IFRSs

International Financial Reporting Standards

Industrial Bank

Industrial Bank Co. Limited

IRB

Internal ratings based

Jaws

The difference between the rate of growth of revenue and the rate of growth of costs

Legacy Credit

A portfolio of assets comprising Solitaire Funding Limited, securities investment conduits, asset-backed securities trading and correlation portfolios and derivative transactions entered into with monoline insurers

LGD

Loss given default

LICs

Loan impairment charges and other credit risk provision

MENA

Middle East and North Africa

NCOA

Non-credit obligation assets

Own credit spread

Fair value movements on our long-term debt designated at fair value resulting from changes in credit spread

PBT

Profit before tax

ppts

Percentage points

PRA

Prudential Regulation Authority (UK)

Principal RBWM

RBWM excluding the effects of the US run-off portfolio and the disposal of the CRS business in the US

RBWM

Retail Banking and Wealth Management

Revenue

Net operating income before LICs

RoRWA

Pre-tax Return on Risk Weighted Assets is calculated using an average of RWAs on a CRD IV end point basis

RWAs

Risk-weighted assets

STD

Standardised approach

$m/$bn

United States dollar millions/billions

 

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 over 6,100 offices in 73 countries and territories in Europe, Asia, North and Latin America, and the Middle East and North Africa. With assets of $2,670bn at 31 March 2015, HSBC is one of the world's largest banking and financial services organisations.

 

Highlights

· Reported PBT up 4% in the first quarter of 2015 ('1Q15') at $7,059m compared with $6,785m in the same period in 2014 ('1Q14').

· Adjusted PBT up $349m or 5% in 1Q15 at $6,892m, compared with $6,543m in 1Q14, primarily reflecting higher revenue of $661m and lower loan impairment charges of $136m, partly offset by higher operating expenses of $483m.

· Reported PBT of $7,059m is up by $5,328m compared with $1,731m in 4Q14. Adjusted PBT of $6,892m is up by $3,988m or 137% compared with $2,904m in 4Q14, led by higher revenue in GB&M following a challenging fourth quarter in 2014.

· Earnings per share and dividends per ordinary share for 1Q15 were $0.26 and $0.10, respectively, compared with $0.27 and $0.10 for the equivalent period in 2014.

· Return on average ordinary shareholders' equity (annualised) was 0.2ppts lower at 11.5%, compared with 11.7% for the equivalent period in 2014.

· Adjusted revenue of $15,406m was higher by $661m or 4% from 1Q14 driven by revenue growth in GB&M, including an 8% rise in Markets, in CMB primarily in Hong Kong and the UK, and in Principal RBWM.

· Adjusted operating expenses of $8,526m were up by $483m or 6% from 1Q14 due to higher staff costs, partly reflecting an increase in staff numbers in customer-facing roles and in Regulatory Programmes and Compliance, and increased marketing expenditure to support growth.

· Loans and advances to customers, excluding foreign exchange movements, increased by $17,353m from 31 December 2014.

· Capital - The CRD IV end point CET1 capital ratio was 11.2%, up from 11.1% at 31 December 2014.

· Leverage ratio - The leverage ratio was 4.9%, up from 4.8% at 31 December 2014.

Three months ended 31 March

2015

2014

Change

$m

$m

%

Financial highlights and key ratios

Reported PBT

7,059

6,785

4

Adjusted PBT

6,892

6,543

5

Return on average ordinary shareholders' equity (annualised)

11.5%

11.7%

Return on average tangible equity (annualised)

13.1%

13.7%

Cost efficiency ratio (reported)

55.7%

55.7%

Adjusted jaws

(1.5)%

 

At

31 March 2015

31 December 2014

Change

%

%

ppts

Capital and balance sheet

Advances to deposits ratio

72.5

72.2

0.3

Common equity tier 1 ratio (end point)1

11.2

11.1

Common equity tier 1 ratio (transitional)1

11.2

10.9

1 From 1 January 2015 the CRD IV transitional CET1 and end point CET1 capital ratios became aligned for HSBC Holdings plc due to the recognition of unrealised gains on investment property and available-for-sale securities.

Group Chief Executive, Stuart Gulliver, commented:

Our business recovered well in the first quarter following a difficult 4Q14. Global Banking & Markets had its usual strong start to the year, with a notable increase in year-on-year revenue in our Markets businesses. Commercial Banking continued to perform well, particularly in the UK and Hong Kong, and Principal Retail Banking & Wealth Management generated increased revenue. Loan impairment charges were significantly lower compared to the same period in 2014, particularly in Europe and North America.

Adjusted operating expenses increased, as expected. We continue to work on initiatives to deliver cost-savings over the remainder of 2015 and beyond.

We generated $4.6bn of capital from profit in the period which enabled us to fund the first interim dividend, strengthen the CET1 capital ratio, and support asset growth.

As previously announced, we will hold an Investor Update on 9 June.

 

Adjusted performance

Adjusted performance is computed by adjusting reported results for the period-on-period effects of foreign currency translation differences and significant items which distort period-on-period comparisons.

Foreign currency translation differences are computed by retranslating into US dollars for non-US dollar branches, subsidiaries, joint ventures and associates:

· the income statements for prior periods at the average rates of exchange for Q1 2015; and

· the closing prior period balance sheets at the prevailing rates of exchange on 31 March 2015.

No adjustment has been made to the exchange rates used to translate foreign currency denominated assets and liabilities into the functional currencies of any HSBC branches, subsidiaries, joint ventures or associates. Whenreference is made to foreign currency translation differences in tables or commentaries, comparative data reported in the functional currencies of HSBC's operations have been translated at the appropriate exchange rates applied in the current period on the basis described above.

We use the term 'significant items' to collectively describe the group of individual adjustments which are excluded from reported results when arriving at adjusted performance. Significant items, which are detailed below, are those items which management and investors would ordinarily identify and consider separately when assessing performance in order to better understand the underlying trends in the business.

We believe adjusted performance provides useful information for investors by aligning internal and external reporting, identifying and quantifying items management believe to be significant and providing insight into how management assesses period-on-period performance.

 

Reconciliation of reported to adjusted PBT

Three months ended 31 March

2015

2014

$m

$m

Profit before tax

Reported

7,059

6,785

Adjusting Items

Currency translation

(336)

Significant items

Own credit spread

(298)

(148)

Debit valuation adjustment on derivative contracts

(98)

(30)

Fair value movements on non-qualifying hedges

285

142

Loss on sale of several tranches of real estate secured accounts in the US

-

30

Releases arising from the ongoing review of compliance with the Consumer Credit Act in the UK

(12)

-

Gain on the partial sale of shareholding in Industrial Bank

(363)

-

Restructuring and other related costs

43

40

Regulatory provisions in GPB

139

-

UK customer redress programmes

137

83

Gain on sale arising from HSBC Latin America Holdings UK Limited's disposal of HSBC Bank (Colombia) S.A.

-

(18)

Trading results of Group disposals

-

(5)

Adjusted profit before tax

6,892

6,543

 

Adjusted PBT by global businesses and regions

Three months ended 31 March

2015

2014

$m

$m

By global business

Retail Banking and Wealth Management

1,888

1,858

Commercial Banking

2,330

2,288

Global Banking and Markets

2,955

2,675

Global Private Banking

180

183

Other

(461)

(461)

6,892

6,543

By geographical region

Europe

1,789

1,548

Asia

3,942

3,710

Middle East and North Africa

458

493

North America

472

534

Latin America

231

258

6,892

6,543

The tables on pages 24 to 28 reconcile the difference between reported and adjusted items by disclosing the impact of significant items and currency translation adjustments in 1Q15, 1Q14 and 4Q14 for each of our geographical segments and global businesses.

 

Financial performance commentary

1Q15 compared with 1Q14

· Reported PBT of $7.1bn in 1Q15 was $274m or 4% higher than in 1Q14 with adverse movements in foreign currency between the periods broadly offsetting the positive net movement in significant items.

· On an adjusted basis, PBT was $349m or 5% higher than in 1Q14. This was primarily driven by higher revenue and lower LICs, partly offset by higher operating expenses.

· Reported revenue was $15.9bn in 1Q15, broadly unchanged from 1Q14. Revenue in 1Q15 included a $363m gain on the partial sale of our shareholding in Industrial Bank and higher favourable fair value movements on our own debt designated at fair value resulting from changes in credit spreads of $298m compared with $148m in 1Q14. This was partly offset by adverse fair value movements on non-qualifying hedges of $285m in 1Q15 compared with $142m in 1Q14.

· On an adjusted basis, revenue of $15.4bn was $661m or 4% higher:

- in GB&M, total revenue was $0.4bn or 8% higher, driven by a rise in Balance Sheet Management, in part reflecting increased gains on disposal of available-for-sale debt securities. Revenue also rose in Foreign Exchange by $0.2bn, which benefited from increased volatility, as well as in Credit and Equities from increased client flows while Credit was also affected by favourable movements in credit spreads. We also recorded strong growth in Payments and Cash Management and Securities Services due to increased balances across both businesses. By contrast, there was a reduction in Rates reflecting difficult market conditions. In addition, there was lower revenue in Legacy Credit, as 1Q14 included higher revaluation gains, and in Principal Investments from reduced gains on disposal;

- in CMB, revenue rose by $0.2bn driven by Credit and Lending and Payments and Cash Management, primarily due to higher net interest income, mainly in Hong Kong and the UK. In Hong Kong, this reflected average balance sheet growth together with wider lending and deposit spreads and, in the UK, continued balance sheet growth. In addition, revenue also increased in the US, mainland China and Argentina, largely due to balance sheet growth;

- in RBWM, revenue was broadly unchanged. In our Principal RBWM business revenue increased by $0.2bn, mainly driven by higher revenues across all wealth management products, notably in Asia from Life Insurance Manufacturing, in part due to improved equity market performance, and Investment distribution. This was partly offset by lower personal lending revenues, mainly due to lower overdraft fees in the UK. In addition, revenue decreased in the US run-off portfolio, driven by lower average balances which in part reflected the impact of portfolio sales in 2014; and

- in GPB, revenue was broadly unchanged as lower revenue reflecting the managed reduction in client assets from our continued repositioning of the business was offset by higher revenue in Asia. We continued to grow the parts of the business that fit our desired model, attracting net new money of $3bn since the end of 2014, with over 40% from collaboration with other global businesses.

· Reported LICs of $0.6bn were $0.2bn lower than in 1Q14. On an adjusted basis, LICs were $0.1bn lower, primarily from reductions in North America and Europe:

- in North America LICs were lower, mainly in the CML portfolio reflecting reduced levels of new impaired loans and delinquency and a decrease in lending balances from the continued run-off and loan sales, partly offset by lower favourable market value adjustments of the underlying properties as improvements in housing market conditions were less pronounced in 1Q15 than in 1Q14; and

- in Europe, the decrease of $0.1bn was mainly in GB&M driven by lower individually assessed charges.

· Reported operating expenses in 1Q15 of $8.8bn were broadly unchanged from 1Q14. Operating expenses in 1Q15 included regulatory provisions in GPB of $139m and UK customer redress of $137m, up from $83m in 1Q14. The increase in significant items in 1Q15 was more than offset by favourable foreign currency movements between the periods.

· On an adjusted basis, operating expenses were $483m (6%) higher than in 1Q14. This was driven by higher staff costs, in part reflecting an increase in the number of customer-facing staff to support growth in RBWM, notably in Asia where we have invested in our branch network and contact centres, and in GB&M mainly relating to our Payments and Cash Management business. Higher staff costs also reflected wage inflation, notably in Asia and Latin America, and an increase in Regulatory Programmes and Compliance expenditure. In addition, marketing costs increased as we delivered a high number of marketing campaigns to support growth in our business. In RBWM these included the Big Start initiatives related to personal lending products, mainly in our priority markets, and the re-launch of Advance in the UK and in the US.

· Adjusted jaws was negative 1.5% as adjusted revenue growth was more than offset by an increase in adjusted operating expenses.

· The effective tax rate of 19.3% was lower than the UK corporation tax rate of 20.25%. This reflected the recurring benefits from tax exempt income from government bonds held in a number of Group entities and the recognition of our share of post-tax profits of associates and joint ventures within our pre-tax income. The effective tax rate in 1Q14 was marginally lower at 18.8%.

· On 5 May 2015, the Board announced a first interim dividend for 2015 of $0.10 per ordinary share.

 

1Q15 compared with 4Q14

· Reported PBT was $5.3bn higher than in 4Q14. This partly reflected lower significant items including fines, settlements, UK customer redress and associated provisions.

· On an adjusted basis, PBT was $4.0bn or 137% higher than in 4Q14, reflecting higher revenue and lower operating expenses and LICs.

· Reported revenue of $15.9bn in 1Q15 was $1.6bn (11%) higher than in 4Q14. This included a 1Q15 gain on the partial sale of our shareholding in Industrial Bank of $363m, partly offset by lower favourable fair value movements on our own debt designated at fair value resulting from changes in credit spreads of $298m compared with $432m in 4Q14. On an adjusted basis, revenue was $1.8bn or 13% higher, driven by GB&M. This was mainly in our Markets businesses as 4Q14 was affected by a particularly challenging backdrop, notably for Credit and Rates, including a charge of $263m relating to the adoption of FFVA.

· Reported LICs were $0.7bn lower than in 4Q14 and $0.6bn lower on an adjusted basis. Adjusted LICs fell in the majority of our regions, notably in Europe ($0.3bn) mainly reflecting collective impairment releases in CMB and GB&M compared with charges in 4Q14. In Asia, LICs fell by $0.2bn mainly in GB&M reflecting net releases compared with charges in 4Q14 on a small number of exposures. In Latin America, LICs fell by $0.2bn, mainly driven by lower specific and collective impairments in CMB in Brazil.

· Operating expenses for 1Q15 were $3.0bn lower than in 4Q14 on a reported basis. This primarily reflected a number of significant items including settlements and provisions in connection with foreign exchange investigations of $809m in 4Q14 and lower UK customer redress charges of $137m in 1Q15 compared with $340m booked in 4Q14. On an adjusted basis, operating expenses were $1.6bn lower, primarily due to the UK bank levy recorded in 4Q14.

· The number of FTEs at the end of the quarter was 260,074, an increase of 2,471 on 31 December 2014, reflecting continued investment in our Regulatory Programme and Compliance, primarily within Global Standards, and business growth initiatives including Wealth Management.

Balance sheet commentary

· Reported loans and advances to customers decreased by $18bn during 1Q15, driven by adverse foreign exchange movements of $35bn. Excluding these movements, loans and advances to customers increased by $17bn, primarily in Europe, Asia and North America. In Europe, lending grew in GB&M from higher corporate overdraft balances and from an increase in short-term client financing. In addition, lending rose in CMB, notably term lending in the UK and Germany. In Asia, growth was driven by RBWM in Hong Kong, where we recorded increased short-term lending to support our customers' investment aspirations and higher mortgage balances. In North America, term lending to CMB and GB&M customers continued to grow.

· Reported customer accounts decreased by $32bn, or 2% during 1Q15 driven by adverse foreign exchange movements of $45bn. Excluding these movements, customer accounts increased by $13bn, with growth in North America, Europe and Asia. In North America, balances grew in GB&M from a rise in certificates of deposit and in RBWM following promotional campaigns. In Europe, balances increased in the UK in both RBWM, reflecting continued risk-averse sentiment from our customers, and in CMB from targeted deposit acquisition. In Asia, balances rose in RBWM, primarily relating to savings accounts, and in GB&M, although to a lesser extent. These increases were partly offset by reductions in CMB, notably in Hong Kong and mainland China, reflecting increased investment opportunities in the region.

· Other significant balance sheet movements in the quarter included an increase in derivative assets and liabilities, notably in Europe, reflecting continued shifts in major yield curves. Trading assets and liabilities also rose due to an increase in settlement balances in the quarter, the former including increases in equity securities in Europe, reflecting valuation movements.

Capital and risk-weighted assets

At 1Q15, the CRD IV end point CET1 capital ratio increased to 11.2% from 11.1% at 31 December 2014.

At 1Q15, under the PRA's implementation of CRD IV, HSBC's transitional CET1 and end point CET1 capital ratios became aligned due to the recognition of unrealised gains on investment property and available-for-sale securities from 1 January 2015. Transitional provisions however continue to apply for additional tier 1 and tier 2 capital; comparatives are shown accordingly for these.

Capital generation contributed $4.1bn to CRD IV end point CET1 capital, being profits attributable to shareholders of the parent company after regulatory adjustment for own credit spread, debit valuation adjustment, deconsolidation of insurance entities and net of the first interim dividend after planned scrip. This also included the benefit of a higher fourth interim dividend scrip take-up.

Foreign exchange movements reduced risk-weighted assets ('RWAs') by $26.6bn. After adjusting for the effect of foreign exchange movements, RWAs increased by $19.4bn, of which $3.4bn was credit risk RWA. The following comments describe the RWA movements, excluding foreign exchange translation effects.

Standardised credit risk

Credit risk standardised approach RWAs decreased by $9.5bn due to the partial disposal of our investment in Industrial Bank, in 'Other' global business.

IRB approach

Under the IRB approach, RWAs increased by $12.9bn; within this, business growth in CMB and GB&M in North America, Europe and Asia due to higher term lending to corporate customers increased RWAs by $9.4bn.

GB&M continued to dispose of securitisation positions, lowering RWAs by $3.8bn. This was partially offset by the application of a scaling factor to the securitisation positions risk-weighted at 1250%, increasing RWAs by $2.1bn in methodology and policy updates.

In CMB, selected portfolios in Europe were migrated from the advanced IRB approach to the foundation IRB approach, as a result of a change in permission, increasing RWAs by $1.7bn in model updates.

In RBWM US retail run-off portfolio RWAs reduced by $2.5bn due to the continued wind-down of the portfolio and favourable shifts in portfolio quality, as lower quality loans continue to run-off. In Principal RBWM, a change in the methodology in the calculation of defaulted mortgage exposures, in Europe, resulted in an increase in RWAs of $2.0bn which was offset in the capital ratio by a reduction in the capital deduction for expected loss. Additionally, lending growth in Asia and Europe increased RWAs by $1.0bn while improved credit quality reduced RWAs by $1.0bn.

Counterparty credit and market risk

Counterparty credit risk RWAs increased by $3.9bn mainly driven by organic growth and MTM movements.

Market risk RWAs increased by $12.1bn principally driven by an increase in incremental risk charge as a result of a macroeconomic hedge position.

Net interest margin

Net interest margin has remained broadly unchanged since both 1Q14 and 4Q14. We recorded reductions in gross yields on customer lending, notably in Europe, reflecting both movements in interest rates in continental Europe as well as lower yields on mortgages in the UK. Gross yields on customer lending also fell in North America and Latin America, both reflecting the effects of changes in the composition of their lending portfolios, as secured, lower-yielding balances made up a greater proportion of their portfolios. These movements were offset by increased yields on reverse repurchase agreements. Our overall cost of funds was unchanged.

 

Notes

· As previously disclosed, various tax administration, regulatory and law enforcement authorities around the world are conducting investigations and reviews of HSBC Private Bank (Suisse) SA ('HSBC Swiss Private Bank') in connection with allegations of tax evasion or tax fraud, money laundering and unlawful cross border banking solicitation. In the UK, the Financial Conduct Authority issued a request for information to HSBC Bank plc and HSBC Holdings plc in relation to HSBC Swiss Private Bank. In April 2015, HSBC Holdings plc was informed that it has been placed under formal criminal investigation by the French magistrates in connection with the conduct of HSBC Swiss Private Bank in 2006 and 2007 for alleged tax offences, and a €1bn bail was imposed. HSBC Holdings plc has appealed the magistrates' decision.

· A decision of the UK Supreme Court held that, judged on its own facts, non-disclosure of the amount of commissions payable in connection with the sale of payment protection insurance ('PPI') to a customer created an unfair relationship under the provisions of the UK Consumer Credit Act. HSBC is assessing any possible impact of such decision on its historical sales of PPI.

· The financial information on which this Earnings Release 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 2014.

· 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.

 

Cautionary statement regarding forward-looking statements

The Earnings Release contains certain forward-looking statements with respect to HSBC's financial condition, results of operations, capital position 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 discretionary risk-weighted asset growth and 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.

For further information contact:

Investor Relations

 

Media Relations

UK

USA

Heidi Ashley

Tel: +44 (0) 20 7991 3643

Tel: +1 224 880 7979

Tel: +44 (0) 20 7992 2045

Hong Kong

 

Gareth Hewett

Tel: +852 2822 4908

 

Tel: +852 2822 4929

 

Summary consolidated income statement

Quarter ended

31 Mar

2015

31 Dec

2014

30 Sep

2014

30 Jun

2014

31 Mar

2014

$m

$m

$m

$m

$m

Net interest income

8,274

8,547

8,753

8,684

8,721

Net fee income

3,684

3,718

4,062

4,131

4,046

Net trading income

2,583

1,190

2,295

995

2,280

Changes in fair value of long-term debt issued and related derivatives

290

32

38

235

203

Net income from other financial instruments designated at fair value

1,306

525

218

917

305

Net income from financial instruments designated at fair value

1,596

557

256

1,152

508

Gains less losses from financial investments

647

420

(31)

762

184

Dividend income

17

22

201

64

24

Net earned insurance premiums

2,979

2,605

3,179

3,001

3,136

Other operating income

338

270

323

210

328

Total operating income

20,118

17,329

19,038

18,999

19,227

Net insurance claims and benefits paid and movement in liabilities to policyholders

(4,226)

(3,023)

(3,263)

(3,716)

(3,343)

Net operating income before loan impairment chargesand other credit risk provisions

15,892

14,306

15,775

15,283

15,884

Loan impairment charges and other credit risk provisions

(570)

(1,250)

(760)

(1,043)

(798)

Net operating income

15,322

13,056

15,015

14,240

15,086

Total operating expenses

(8,845)

(11,892)

(11,091)

(9,414)

(8,852)

Operating profit

6,477

1,164

3,924

4,826

6,234

Share of profit in associates and joint ventures

582

567

685

729

551

Profit before tax

7,059

1,731

4,609

5,555

6,785

Tax expense

(1,367)

(966)

(987)

(747)

(1,275)

Profit after tax

5,692

765

3,622

4,808

5,510

Profit attributable to shareholders of the parent company

5,259

511

3,431

4,535

5,211

Profit attributable to non-controlling interests

433

254

191

273

299

$

$

$

$

$

Basic earnings per ordinary share

0.26

0.02

0.17

0.23

0.27

Diluted earnings per ordinary share

0.26

0.02

0.17

0.23

0.27

Dividend per ordinary share (in respect of the period)

0.10

0.20

0.10

0.10

0.10

%

%

%

%

%

Return on average ordinary shareholders' equity (annualised)

11.5

0.8

7.2

9.8

11.7

Pre-tax return on average risk-weighted assets (annualised)1

2.4

0.6

1.5

1.8

2.3

Cost efficiency ratio

55.7

83.1

70.3

61.6

55.7

1 Return on average risk-weighted assets ('RWAs') is calculated using average RWAs on a CRD IV end point basis.

 

Summary consolidated balance sheet

At

31 March

2015

At

31 December

2014

At

30 June

2014

$m

$m

$m

ASSETS

Cash and balances at central banks

133,025

129,957

132,137

Trading assets

334,261

304,193

347,106

Financial assets designated at fair value

28,181

29,037

31,823

Derivatives

378,815

345,008

269,839

Loans and advances to banks

116,267

112,149

127,387

Loans and advances to customers

956,225

974,660

1,047,241

Reverse repurchase agreements - non-trading

172,262

161,713

198,301

Financial investments

390,234

415,467

423,710

Other assets

160,454

161,955

176,049

Total assets

2,669,724

2,634,139

2,753,593

LIABILITIES AND EQUITY

Liabilities

Deposits by banks

78,410

77,426

92,764

Customer accounts

1,318,522

1,350,642

1,415,705

Repurchase agreements - non-trading

117,474

107,432

165,506

Trading liabilities

208,636

190,572

228,135

Financial liabilities designated at fair value

72,471

76,153

82,968

Derivatives

376,577

340,669

263,494

Debt securities in issue

105,380

95,947

96,397

Liabilities under insurance contracts

72,427

73,861

75,223

Other liabilities

123,333

121,459

134,679

Total liabilities

2,473,230

2,434,161

2,554,871

Equity

Total shareholders' equity

187,137

190,447

190,281

Non-controlling interests

9,357

9,531

8,441

Total equity

196,494

199,978

198,722

Total liabilities and equity

2,669,724

2,634,139

2,753,593

Ratio of customer advances to customer accounts

72.5%

72.2%

74.0%

 

Capital

Capital and RWA movements by major driver - CRD IV end point basis

Common

equity

tier 1 capital

RWAs

$bn

$bn

CRD IV end point basis at 1 January 2015

136.0

1,219.8

Capital generation

4.1

-

Profit for the period (including regulatory adjustments)

4.6

-

Of which $0.4bn gain on the partial sale of shareholding in Industrial Bank

First interim dividend1, net of planned scrip

(1.7)

-

Higher 2014 fourth interim dividend scrip take-up

1.2

-

Further impact on the partial sale of shareholding in Industrial Bank

(1.4)

(9.4)

Asset growth

-

17.1

Traded risk

-

16.0

Management initiatives

-

(9.7)

Legacy reduction and run-off

-

(6.0)

RWA initiatives

-

(3.7)

Methodology change and model update

-

4.6

Foreign exchange translation differences2

(4.1)

(26.6)

Other movements

1.0

0.8

CRD IV end point basis at 31 March 2015

135.6

1,212.6

1 This includes dividends on ordinary shares, quarterly dividends on preference shares and coupons on capital securities, classified as equity.

2 The basis of presentation for foreign exchange translation differences has changed to reflect the total amount in CET1 capital. Previously this only included foreign exchange translation differences recognised in other comprehensive income.

Composition of regulatory capital

At

31 March

2015

At

31 December

2014

At

30 June

2014

$m

$m

$m

Common equity tier 1 capital on an end point basis

Shareholders' equity per balance sheet1

187,137

190,447

190,281

Non-controlling interests

4,253

4,640

3,792

Regulatory adjustments to the accounting basis

(25,916)

(27,386)

(17,900)

Deductions

(29,844)

(31,748)

(34,616)

Common equity tier 1 capital on an end point basis

135,630

135,953

141,557

Tier 1 and tier 2 capital on a transitional basis

Common equity tier 1 capital on an end point basis

135,630

135,953

141,557

Transitional adjustments

-

(2,753)

(1,487)

Unrealised gains arising from revaluation of property

-

(1,375)

(1,346)

Unrealised gains in available for sale reserves

-

(1,378)

(141)

Common equity tier 1 capital on a transitional basis

135,630

133,200

140,070

Other tier 1 capital before deductions

21,037

19,687

13,977

Deductions

(99)

(148)

(164)

Tier 1 capital on a transitional basis

156,568

152,739

153,883

Total qualifying tier 2 capital before deductions

34,396

38,213

39,197

Total deductions other than from tier 1 capital

(231)

(222)

(246)

Total regulatory capital on a transitional basis

190,733

190,730

192,834

Total risk-weighted assets

1,212,565

1,219,765

1,248,572

%

%

%

Capital ratios

CRD IV end point

Common equity tier 1 ratio

11.2

11.1

11.3

CRD IV transitional

Common equity tier 1 ratio

11.2

10.9

11.2

Tier 1 ratio

12.9

12.5

12.3

Total capital ratio

15.7

15.6

15.4

1 Includes externally verified profits for the period ended at the reporting date.

 

Risk-weighted assets

RWAs by risk type

At

At

At

31 Mar 2015

31 Dec 2014

30 Jun 2014

$bn

$bn

$bn

Credit risk

932.1

955.3

966.0

Counterparty credit risk

94.6

90.7

101.4

Market risk

68.1

56.0

63.1

Operational risk

117.8

117.8

118.1

1,212.6

1,219.8

1,248.6

 

RWAs by global businesses

At

At

At

31 Mar 2015

31 Dec 2014

30 Jun 2014

$bn

$bn

$bn

Retail Banking and Wealth Management

202.6

205.1

223.0

Commercial Banking

427.0

432.4

424.9

Global Banking and Markets

526.2

516.1

537.3

Global Private Banking

20.1

20.8

22.1

Other

36.7

45.4

41.3

1,212.6

1,219.8

1,248.6

 

RWAs by geographical regions

At

At

At

31 Mar 2015

31 Dec 2014

30 Jun 2014

$bn

$bn

$bn

Total1

1,212.6

1,219.8

1,248.6

Europe

386.1

375.4

393.6

Asia

490.7

499.8

481.1

Middle East and North Africa

63.6

63.0

62.7

North America

224.4

221.4

236.9

Latin America

81.1

88.8

96.8

1 RWAs are non-additive across geographical regions due to market risk diversification effects within the Group.

Credit risk exposure - RWAs by geographical region

Europe

Asia

MENA

North

America

Latin

America

Total

$bn

$bn

$bn

$bn

$bn

$bn

IRB advanced approach

194.6

216.0

10.7

142.5

10.1

573.9

IRB foundation approach

16.5

-

4.2

-

-

20.7

Standardised approach

44.6

174.0

39.2

30.7

49.0

337.5

RWAs at 31 March 2015

255.7

390.0

54.1

173.2

59.1

932.1

IRB advanced approach

203.3

213.1

11.6

142.0

11.6

581.6

IRB foundation approach

12.8

-

4.0

-

-

16.8

Standardised approach

47.1

186.0

39.0

29.6

55.2

356.9

RWAs at 31 December 2014

263.2

399.1

54.6

171.6

66.8

955.3

IRB advanced approach

211.2

209.9

11.2

155.3

12.0

599.6

IRB foundation approach

11.4

-

4.1

-

-

15.5

Standardised approach

46.9

174.3

39.0

30.7

60.0

350.9

RWAs at 30 June 2014

269.5

384.2

54.3

186.0

72.0

966.0

 

 

Credit risk exposure - RWAs by global businesses

Principal

RBWM

RBWM

(US run-off

portfolio)

 

Total

RBWM

CMB

GB&M

GPB

Other

Total

$bn

$bn

$bn

$bn

$bn

$bn

$bn

$bn

IRB advanced approach

56.3

45.1

101.4

206.3

245.3

9.2

11.7

573.9

IRB foundation approach

-

-

-

12.8

6.6

0.1

1.2

20.7

Standardised approach

60.3

4.2

64.5

174.7

67.8

6.9

23.6

337.5

RWAs at 31 March 2015

116.6

49.3

165.9

393.8

319.7

16.2

36.5

932.1

IRB advanced approach

55.9

47.3

103.2

209.4

248.1

10.0

10.9

581.6

IRB foundation approach

-

-

-

8.0

7.5

0.2

1.1

16.8

Standardised approach

60.4

4.8

65.2

181.8

70.1

6.6

33.2

356.9

RWAs at 31 December 2014

116.3

52.1

168.4

399.2

325.7

16.8

45.2

955.3

IRB advanced approach

60.3

60.6

120.9

206.2

249.5

11.1

11.9

599.6

IRB foundation approach

-

-

-

7.2

6.9

0.1

1.3

15.5

Standardised approach

59.0

5.5

64.5

178.5

73.6

6.5

27.8

350.9

RWAs at 30 June 2014

119.3

66.1

185.4

391.9

330.0

17.7

41.0

966.0

 

RWA movement by geographical region by key driver - credit risk - IRB only

Europe

Asia

MENA

North

America

Latin

America

Total

$bn

$bn

$bn

$bn

$bn

$bn

RWAs at 1 January 2015

216.1

213.1

15.6

142.0

11.6

598.4

Foreign exchange movement

(11.2)

(1.8)

(0.4)

(2.3)

(1.0)

(16.7)

Acquisitions and disposals

(3.8)

-

-

-

-

(3.8)

Book size

4.4

5.0

(0.3)

2.7

(0.1)

11.7

Book quality

(2.6)

(0.3)

(0.1)

0.8

(0.4)

(2.6)

Model updates

1.6

-

-

-

-

1.6

- new/updated models

1.6

-

-

-

-

1.6

Methodology and policy

6.6

-

0.1

(0.7)

-

6.0

- internal updates

4.0

-

-

(0.7)

-

3.3

- external updates - regulatory

2.6

-

0.1

-

-

2.7

Total RWA movement

(5.0)

2.9

(0.7)

0.5

(1.5)

(3.8)

RWAs at 31 March 2015

211.1

216.0

14.9

142.5

10.1

594.6

RWAs at 1 January 2014

166.9

182.9

15.0

161.5

8.5

534.8

Foreign exchange movement

2.3

0.6

-

(0.9)

(0.5)

1.5

Acquisitions and disposals

(0.2)

-

-

-

(0.1)

(0.3)

Book size

3.1

2.5

(0.2)

0.7

0.9

7.0

Book quality

(1.5)

2.3

0.5

(1.7)

0.3

(0.1)

Model updates

14.9

0.3

-

(4.9)

-

10.3

- new/updated models

14.9

0.3

-

(4.9)

-

10.3

Methodology and policy

45.4

19.8

1.9

4.1

2.0

73.2

- internal updates

(2.2)

(5.5)

-

(2.4)

-

(10.1)

- external updates - regulatory

2.2

6.7

0.2

0.7

0.1

9.9

- CRD IV impact

37.0

5.7

0.4

4.9

0.2

48.2

- NCOA moving from STD to IRB

8.4

12.9

1.3

0.9

1.7

25.2

Total RWA movement

64.0

25.5

2.2

(2.7)

2.6

91.6

RWAs at 31 March 2014

230.9

208.4

17.2

158.8

11.1

626.4

 

RWA movement by global businesses by key driver - credit risk - IRB only

Principal

RBWM

RBWM

(US run-off

portfolio)

Total

RBWM

CMB

GB&M

GPB

Other

Total

$bn

$bn

$bn

$bn

$bn

$bn

$bn

$bn

RWAs at 1 January 2015

55.9

47.3

103.2

217.4

255.6

10.2

12.0

598.4

Foreign exchange movement

(2.0)

-

(2.0)

(7.6)

(6.6)

(0.2)

(0.3)

(16.7)

Acquisitions and disposals

-

-

-

-

(3.8)

-

-

(3.8)

Book size

1.1

(1.2)

(0.1)

5.4

5.5

(0.3)

1.2

11.7

Book quality

(1.1)

(1.3)

(2.4)

2.3

(2.5)

-

-

(2.6)

Model updates

-

-

-

1.6

-

-

-

1.6

- new/updated models

-

-

-

1.6

-

-

-

1.6

Methodology and policy

2.4

0.3

2.7

-

3.7

(0.4)

-

6.0

- internal updates

2.4

0.3

2.7

-

1.0

(0.4)

-

3.3

- external updates - regulatory

-

-

-

-

2.7

-

-

2.7

Total RWA movement

0.4

(2.2)

(1.8)

1.7

(3.7)

(0.9)

0.9

(3.8)

RWAs at 31 March 2015

56.3

45.1

101.4

219.1

251.9

9.3

12.9

594.6

RWAs at 1 January 2014

58.4

72.6

131.0

189.5

198.5

10.6

5.2

534.8

Foreign exchange movement

(0.1)

-

(0.1)

0.4

1.2

-

-

1.5

Acquisitions and disposals

-

-

-

-

(0.3)

-

-

(0.3)

Book size

1.1

(1.3)

(0.2)

4.3

3.1

(0.2)

-

7.0

Book quality

(1.1)

(2.0)

(3.1)

2.1

0.7

(0.1)

0.3

(0.1)

Model updates

0.3

(4.9)

(4.6)

9.2

5.4

0.3

-

10.3

- new/updated models

0.3

(4.9)

(4.6)

9.2

5.4

0.3

-

10.3

Methodology and policy

2.4

-

2.4

(1.8)

55.0

1.1

16.5

73.2

- internal updates

(2.6)

-

(2.6)

(5.6)

(1.9)

-

-

(10.1)

- external updates - regulatory

-

-

-

2.7

6.5

0.5

0.2

9.9

- CRD IV impact

-

-

-

(0.7)

48.6

0.2

0.1

48.2

- NCOA moving from STD to IRB

5.0

-

5.0

1.8

1.8

0.4

16.2

25.2

Total RWA movement

2.6

(8.2)

(5.6)

14.2

65.1

1.1

16.8

91.6

RWAs at 31 March 2014

61.0

64.4

125.4

203.7

263.6

11.7

22.0

626.4

 

RWA movement by key driverCounterparty credit risk - advanced approach

2015

2014

$bn

$bn

RWAs at 1 January

65.5

42.2

Book size

2.8

3.4

Book quality

(0.2)

(0.4)

Model updates

-

2.2

Methodology and policy

0.2

7.5

- internal updates

0.2

(0.6)

- external updates - regulatory

-

8.1

CRD IV impact

-

17.0

Total RWA movement

2.8

29.7

RWAs at 31 March

68.3

71.9

RWA movement by key driverMarket risk - internal model based

2015

2014

$bn

$bn

RWAs at 1 January

44.6

52.2

Movement in risk levels

10.9

(0.5)

Model updates

-

-

Methodology and policy

-

0.5

- internal updates

-

0.5

- external updates - regulatory

-

-

Total RWA movement

10.9

-

RWAs at 31 March

55.5

52.2

 

 

 

Leverage ratio

The table below presents our estimated leverage ratio, based on the approach prescribed by the PRA. The numerator is calculated using the CRD IV end point tier 1 capital definition and the exposure measure is calculated based on the EU delegated act. The leverage ratio at 30 June 2014 was calculated using the CRD IV end point tier 1 capital definition for the numerator and the Basel III January 2014 text for the exposure measure, to which the EU delegated act is aligned.

A detailed basis of preparation is outlined on page 261 of the Annual Report and Accounts 2014 and page 198 of the Interim Report 2014.

 

Estimated leverage ratio

EU delegated act basis

Basel III2014 basis

 

At

31 March

2015

At

31 December

2014

At

30 June

2014

$bn

$bn

$bn

Total assets per regulatory balance sheet

2,765

2,726

2,833

Adjustment to reverse netting of loans and deposits allowable under IFRSs

35

38

98

Reversal of accounting values

(570)

(525)

(498)

- derivatives

(379)

(345)

(270)

- repurchase agreement and securities finance

(191)

(180)

(228)

Replaced with regulatory values

370

354

436

- derivatives

168

166

199

- repurchase agreement and securities finance

202

188

237

Addition of off-balance sheet commitments and guarantees

387

396

445

Exclusion of items already deducted from the capital measure

(33)

(36)

(37)

Exposure measure after regulatory adjustments

2,954

2,953

3,277

Tier 1 capital under CRD IV (end point)

144

142

142

Estimated leverage ratio (end point)

4.9%

4.8%

4.3%

 

 

 

Profit/(loss) before tax by global business and geographical region

Quarter ended

31 Mar

2015

31 Dec

2014

30 Sep

2014

30 Jun

2014

31 Mar

2014

$m

$m

$m

$m

$m

By global business

Retail Banking and Wealth Management

1,623

1,299

1,307

1,333

1,712

Commercial Banking

2,281

1,682

2,291

2,351

2,420

Global Banking and Markets

3,041

(85)

941

2,162

2,871

Global Private Banking

65

72

190

163

201

Other

49

(1,237)

(120)

(454)

(419)

7,059

1,731

4,609

5,555

6,785

By geographical region

Europe

1,564

(2,155)

493

498

1,760

Asia

4,330

3,256

3,475

4,130

3,764

Middle East and North Africa

457

350

487

487

502

North America

477

534

58

376

449

Latin America

231

(254)

96

64

310

7,059

1,731

4,609

5,555

6,785

 

 

Summary information - global businesses

Retail Banking and Wealth Management

Quarter ended

31 Mar

2015

31 Dec

2014

30 Sep

2014

30 Jun

2014

31 Mar

2014

$m

$m

$m

$m

$m

Net operating income before loan impairment chargesand other credit risk provisions

5,805

5,894

6,377

6,079

6,244

Loan impairment charges and other credit risk provisions

(435)

(347)

(247)

(621)

(604)

Net operating income

5,370

5,547

6,130

5,458

5,640

Total operating expenses

(3,834)

(4,324)

(4,929)

(4,253)

(4,016)

Operating profit

1,536

1,223

1,201

1,205

1,624

Share of profit in associates and joint ventures

87

76

106

128

88

Profit before tax

1,623

1,299

1,307

1,333

1,712

Profit before tax relates to:

Principal RBWM

1,593

1,157

939

1,224

1,762

US run-off portfolio

30

142

368

109

(50)

%

%

%

%

%

Cost efficiency ratio

66.0

73.4

77.3

70.0

64.3

Reported pre-tax RoRWA (annualised)1

3.2

2.5

2.4

2.4

3.0

$m

$m

$m

$m

$m

Adjusted profit before tax - Principal RBWM

1,762

1,508

1,812

1,765

1,784

1 Return on average risk-weighted assets ('RWAs') is calculated using average RWAs on a CRD IV end point basis.

Principal RBWM: management view of adjusted revenue1

Quarter ended

31 Mar

2015

31 Dec

2014

30 Sep

2014

30 Jun

2014

31 Mar

2014

$m

$m

$m

$m

$m

Current accounts, savings and deposits

1,361

1,393

1,373

1,364

1,325

Wealth products

1,630

1,303

1,569

1,527

1,476

Investment distribution2

883

779

886

801

831

Life insurance manufacturing

475

258

417

456

408

Asset Management

272

266

266

270

237

Personal lending

2,522

2,584

2,609

2,578

2,597

Mortgages

717

745

736

725

764

Credit cards

991

1,029

1,014

1,012

979

Other personal lending3

814

810

859

841

854

Other4

160

206

163

227

89

Revenue

5,673

5,486

5,714

5,696

5,487

1 'Management view of adjusted revenue' figures for each quarter are stated at the average exchange rate for the quarter ended 31 March 2015. The effect of currency translation on total adjusted revenue for each quarter is as follows: 4Q14: $(226)m; 3Q14: $(461)m; 2Q14: $(481)m; 1Q14: $(432)m.

2 'Investment distribution' includes Investments, which comprises mutual funds (HSBC manufactured and third party), structured products and securities trading, and wealth insurance distribution, consisting of HSBC manufactured and third-party life, pension and investment insurance products.

3 'Other personal lending' includes personal non-residential closed-end loans and personal overdrafts.

4 'Other' mainly includes the distribution and manufacturing (where applicable) of retail and credit protection insurance.

 

Commercial Banking

Quarter ended

31 Mar

2015

31 Dec

2014

30 Sep

2014

30 Jun

2014

31 Mar

2014

$m

$m

$m

$m

$m

Net operating income before loan impairment chargesand other credit risk provisions

3,891

3,985

4,202

4,106

4,010

Loan impairment charges and other credit risk provisions

(241)

(705)

(408)

(365)

(197)

Net operating income

3,650

3,280

3,794

3,741

3,813

Total operating expenses

(1,732)

(1,958)

(1,943)

(1,849)

(1,739)

Operating profit

1,918

1,322

1,851

1,892

2,074

Share of profit in associates and joint ventures

363

360

440

459

346

Profit before tax

2,281

1,682

2,291

2,351

2,420

%

%

%

%

%

Cost efficiency ratio

44.5

49.1

46.2

45.0

43.4

Reported pre-tax RoRWA (annualised)1

2.2

1.5

2.1

2.2

2.4

1 Return on average risk-weighted assets ('RWAs') is calculated using average RWAs on a CRD IV end point basis.

Management view of adjusted revenue1, 2

Quarter ended

31 Mar

2015

31 Dec

2014

30 Sep

2014

30 Jun

2014

31 Mar

2014

$m

$m

$m

$m

$m

Global Trade and Receivables Finance

623

626

662

638

596

Credit and Lending

1,516

1,520

1,501

1,473

1,379

Payments and Cash Management, current accounts and savings deposits

1,170

1,187

1,196

1,165

1,109

Markets products, Insurance and Investments and Other

582

510

525

492

617

Revenue

3,891

3,843

3,884

3,768

3,701

1 'Management view of adjusted revenue' figures for each quarter are stated at the average exchange rate for the quarter ended 31 March 2015. The effect of currency translation on total adjusted revenue for each quarter is as follows: 4Q14: $(162)m; 3Q14: $(317)m; 2Q14: $(345)m; 1Q14: $(293)m.

2 The table above has been re-presented to reclassify Foreign Exchange revenue. In 1Q15, 'Markets products, Insurance and Investments and Other' included Foreign Exchange revenue of $46m previously included within 'Global Trade and Receivables Finance' (4Q14: $52m, 3Q14: $48m, 2Q14: $45m, 1Q14: $44m) and $127m previously included within 'Payments and Cash Management' (4Q14: $128m, 3Q14: $125m, 2Q14: $130m, 1Q14: $108m).

 

 

 

Global Banking and Markets

Quarter ended

31 Mar

2015

31 Dec

2014

30 Sep

2014

30 Jun

2014

31 Mar

2014

$m

$m

$m

$m

$m

Net operating income before loan impairment chargesand other credit risk provisions

5,242

3,308

4,679

4,631

5,160

Loan impairment (charges)/recoveries and other credit risk provisions

108

(180)

(136)

(46)

(3)

Net operating income

5,350

3,128

4,543

4,585

5,157

Total operating expenses

(2,437)

(3,341)

(3,729)

(2,561)

(2,397)

Operating profit/(loss)

2,913

(213)

814

2,024

2,760

Share of profit in associates and joint ventures

128

128

127

138

111

Profit/(loss) before tax

3,041

(85)

941

2,162

2,871

%

%

%

%

%

Cost efficiency ratio

46.5

101.0

79.7

55.3

46.5

Reported pre-tax RoRWA (annualised)1

2.4

(0.1)

0.7

1.6

2.4

1 Return on average risk-weighted assets ('RWAs') is calculated using average RWAs on a CRD IV end point basis.

 

Management view of adjusted revenue1

Quarter ended

31 Mar

2015

31 Dec

2014

30 Sep

2014

30 Jun

2014

31 Mar

2014

$m

$m

$m

$m

$m

Markets

2,230

532

1,733

1,492

2,068

Credit

338

(205)

166

229

325

Rates

472

(71)

470

450

579

Foreign Exchange

942

614

799

588

757

Equities

478

194

298

225

407

Capital Financing

908

967

923

993

929

Payments and Cash Management

458

415

437

432

420

Securities Services

432

411

404

404

389

Global Trade and Receivables Finance

183

172

185

187

173

Balance Sheet Management

927

751

761

657

714

Principal Investments

20

65

114

224

91

Other

(6)

(54)

(9)

20

3

Revenue

5,152

3,259

4,548

4,409

4,787

1 'Management view of adjusted revenue' figures for each quarter are stated at the average exchange rate for the quarter ended 31 March 2015. The effect of currency translation on total adjusted revenue for each quarter is as follows: 4Q14: $(102)m; 3Q14: $(314)m; 2Q14: $(354)m; 1Q14: $(333)m.

 

 

 

Global Private Banking

Quarter ended

31 Mar

2015

31 Dec

2014

30 Sep

2014

30 Jun

2014

31 Mar

2014

$m

$m

$m

$m

$m

Net operating income before loan impairment chargesand other credit risk provisions

613

557

590

597

633

Loan impairment (charges)/recoveries and other credit risk provisions

(2)

(17)

31

(11)

5

Net operating income

611

540

621

586

638

Total operating expenses

(551)

(474)

(436)

(427)

(441)

Operating profit

60

66

185

159

197

Share of profit in associates and joint ventures

5

6

5

4

4

Profit before tax

65

72

190

163

201

%

%

%

%

%

Cost efficiency ratio

89.9

85.1

73.9

71.5

69.7

Reported pre-tax RoRWA (annualised)1

1.3

1.4

3.5

2.9

3.6

1 Return on average risk-weighted assets ('RWAs') is calculated using average RWAs on a CRD IV end point basis.

Client assets1 by geography

Quarter ended

31 Mar

2015

31 Dec

2014

30 Sep

2014

30 Jun

2014

31 Mar

2014

$bn

$bn

$bn

$bn

$bn

Europe

178

179

190

196

195

Asia

113

112

112

112

109

North America

65

63

65

63

65

Latin America

10

11

13

13

12

Total

366

365

380

384

381

1 'Client assets' are translated at the rates of exchange applicable for their respective period-ends. The main components of client assets are funds under management ($278bn as at 31 March 2015), which are not reported on the Group's balance sheet, and customer deposits ($88bn as at 31 March 2015), of which $83bn is reported on the Group's balance sheet and $5bn are off-balance sheet deposits.

 

Client assets1

Quarter ended

31 Mar

2015

31 Dec

2014

30 Sep

2014

30 Jun

2014

31 Mar

2014

$bn

$bn

$bn

$bn

$bn

Opening balance

365

380

384

381

382

Net new money

(1)

-

-

(1)

(2)

Of which: areas targeted for growth

3

6

5

3

2

Value change

8

3

(1)

3

3

Exchange and other

(6)

(18)

(3)

1

(2)

Closing balance

366

365

380

384

381

1 'Client assets' are translated at the rates of exchange applicable for their respective period-ends, with the effects of currency translation reported separately. The main components of client assets are funds under management ($278bn as at 31 March 2015), which are not reported on the Group's balance sheet, and customer deposits ($88bn as at 31 March 2015), of which $83bn is reported on the Group's balance sheet and $5bn are off-balance sheet deposits.

 

 

 

Other1

Quarter ended

31 Mar

2015

31 Dec

2014

30 Sep

2014

30 Jun

2014

31 Mar

2014

$m

$m

$m

$m

$m

Net operating income before loan impairment charges and other credit risk provisions

1,831

2,195

1,513

1,440

1,217

- of which effect of changes in own credit spread on the

fair value of long-term debt issued

298

432

200

(429)

148

Loan impairment (charges)/recoveries and other credit risk provisions

(1)

-

-

1

Net operating income

1,831

2,194

1,513

1,440

1,218

Total operating expenses

(1,781)

(3,428)

(1,640)

(1,894)

(1,639)

Operating profit/(loss)

50

(1,234)

(127)

(454)

(421)

Share of profit/(loss) in associates and joint ventures

(1)

(3)

7

-

2

Profit/(loss) before tax

49

(1,237)

(120)

(454)

(419)

1 The main items reported under 'Other' are the results of HSBC's holding company and financing operations, which 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, along with the costs incurred by the Group Service Centres and Shared Service Organisations and associated recoveries. The results also include fines and penalties as part of the settlement of investigations into past inadequate compliance with anti-money laundering and sanctions laws, the UK bank levy and unallocated investment activities, centrally held investment companies, gains arising from the dilutions of interests in associates and joint ventures and certain property transactions. In addition, 'Other' also includes part of the movement in the fair value of long-term debt designated at fair value (the remainder of the Group's movement on own debt is included in GB&M).

 

Summary information - geographical regions

Europe

Quarter ended

31 Mar

2015

31 Dec

2014

30 Sep

2014

30 Jun

2014

31 Mar

2014

$m

$m

$m

$m

$m

Net operating income before loan impairment chargesand other credit risk provisions

5,619

4,797

5,901

5,021

5,852

Loan impairment charges and other credit risk provisions

(12)

(360)

(138)

(150)

(116)

Net operating income

5,607

4,437

5,763

4,871

5,736

Total operating expenses

(4,045)

(6,593)

(5,272)

(4,374)

(3,978)

Operating profit/(loss)

1,562

(2,156)

491

497

1,758

Share of profit in associates and joint ventures

2

1

2

1

2

Profit/(loss) before tax

1,564

(2,155)

493

498

1,760

%

%

%

%

%

Cost efficiency ratio

72.0

137.4

89.3

87.1

68.0

Reported pre-tax RoRWA (annualised)1

1.7

(2.3)

0.5

0.5

2.0

1 Return on average risk-weighted assets ('RWAs') is calculated using average RWAs on a CRD IV end point basis.

Profit/(loss) before tax by global business

Quarter ended

31 Mar

2015

31 Dec

2014

30 Sep

2014

30 Jun

2014

31 Mar

2014

$m

$m

$m

$m

$m

Retail Banking and Wealth Management

261

79

(245)

(35)

515

Commercial Banking

653

403

594

805

746

Global Banking and Markets

1,136

(1,485)

109

601

824

Global Private Banking

(43)

53

86

78

98

Other

(443)

(1,205)

(51)

(951)

(423)

Profit/(loss) before tax

1,564

(2,155)

493

498

1,760

 

Reported and adjusted UK profit/(loss) before tax

Quarter ended

31 Mar

2015

31 Dec

2014

30 Sep

2014

30 Jun

2014

31 Mar

2014

$m

$m

$m

$m

$m

Reported profit/(loss) before tax

1,465

(1,986)

234

338

1,358

Adjusted profit/(loss) before tax

1,476

(1,075)

1,322

1,207

1,153

 

 

 

Asia

Quarter ended

31 Mar

2015

31 Dec

2014

30 Sep

2014

30 Jun

2014

31 Mar

2014

$m

$m

$m

$m

$m

Net operating income before loan impairment chargesand other credit risk provisions

6,572

5,793

5,777

6,234

5,873

Loan impairment charges and other credit risk provisions

(95)

(260)

(171)

(112)

(104)

Net operating income

6,477

5,533

5,606

6,122

5,769

Total operating expenses

(2,595)

(2,737)

(2,681)

(2,581)

(2,428)

Operating profit

3,882

2,796

2,925

3,541

3,341

Share of profit in associates and joint ventures

448

460

550

589

423

Profit before tax

4,330

3,256

3,475

4,130

3,764

%

%

%

%

%

Cost efficiency ratio

39.5

47.2

46.4

41.4

41.3

Reported pre-tax RoRWA (annualised)1

3.5

2.6

2.8

3.5

3.4

1 Return on average risk-weighted assets ('RWAs') is calculated using average RWAs on a CRD IV end point basis.

 

Profit/(loss) before tax by global business

Quarter ended

31 Mar

2015

31 Dec

2014

30 Sep

2014

30 Jun

2014

31 Mar

2014

$m

$m

$m

$m

$m

Retail Banking and Wealth Management

1,239

1,010

1,123

1,183

1,156

Commercial Banking

1,180

1,145

1,225

1,218

1,154

Global Banking and Markets

1,320

1,038

1,123

1,120

1,295

Global Private Banking

85

2

76

63

70

Other

506

61

(72)

546

89

Profit before tax

4,330

3,256

3,475

4,130

3,764

 

Reported and adjusted Hong Kong profit before tax

Quarter ended

31 Mar

2015

31 Dec

2014

30 Sep

2014

30 Jun

2014

31 Mar

2014

$m

$m

$m

$m

$m

Reported profit before tax

2,771

1,728

1,866

2,441

2,107

Adjusted profit before tax

2,407

1,785

2,143

2,038

2,112

 

 

 

Middle East and North Africa

Quarter ended

31 Mar

2015

31 Dec

2014

30 Sep

2014

30 Jun

2014

31 Mar

2014

$m

$m

$m

$m

$m

Net operating income before loan impairment chargesand other credit risk provisions

639

570

684

642

652

Loan impairment (charges)/recoveries and other credit risk provisions

(9)

(24)

(20)

28

22

Net operating income

630

546

664

670

674

Total operating expenses

(303)

(298)

(304)

(319)

(295)

Operating profit

327

248

360

351

379

Share of profit in associates and joint ventures

130

102

127

136

123

Profit before tax

457

350

487

487

502

%

%

%

%

%

Cost efficiency ratio

47.4

52.3

44.4

49.7

45.2

Reported pre-tax RoRWA (annualised)1

2.9

2.2

3.1

3.1

3.2

1 Return on average risk-weighted assets ('RWAs') is calculated using average RWAs on a CRD IV end point basis.

Profit/(loss) before tax by global business

Quarter ended

31 Mar

2015

31 Dec

2014

30 Sep

2014

30 Jun

2014

31 Mar

2014

$m

$m

$m

$m

$m

Retail Banking and Wealth Management

91

50

91

100

82

Commercial Banking

147

98

150

175

181

Global Banking and Markets

227

203

246

233

244

Global Private Banking

5

6

4

5

4

Other

(13)

(7)

(4)

(26)

(9)

Profit before tax

457

350

487

487

502

 

 

North America

Quarter ended

31 Mar

2015

31 Dec

2014

30 Sep

2014

30 Jun

2014

31 Mar

2014

$m

$m

$m

$m

$m

Net operating income before loan impairment chargesand other credit risk provisions

1,988

2,007

2,078

2,006

2,061

Loan impairment (charges)/recoveries and other credit risk provisions

(79)

34

55

(238)

(173)

Net operating income

1,909

2,041

2,133

1,768

1,888

Total operating expenses

(1,435)

(1,511)

(2,081)

(1,395)

(1,442)

Operating profit

474

530

52

373

446

Share of profit in associates and joint ventures

3

4

6

3

3

Profit before tax

477

534

58

376

449

%

%

%

%

%

Cost efficiency ratio

72.2

75.3

100.1

69.5

70.0

Reported pre-tax RoRWA (annualised)1

0.9

0.9

0.1

0.6

0.8

1 Return on average risk-weighted assets ('RWAs') is calculated using average RWAs on a CRD IV end point basis.

Profit/(loss) before tax by global business

Quarter ended

31 Mar

2015

31 Dec

2014

30 Sep

2014

30 Jun

2014

31 Mar

2014

$m

$m

$m

$m

$m

Retail Banking and Wealth Management

33

177

325

144

(14)

Principal RBWM

3

35

(43)

35

36

Run-off portfolio

30

142

368

109

(50)

Commercial Banking

226

271

256

153

233

Global Banking and Markets

192

117

(543)

52

262

Global Private Banking

18

9

25

23

28

Other

8

(40)

(5)

4

(60)

Profit before tax

477

534

58

376

449

 

Latin America

Quarter ended

31 Mar

2015

31 Dec

2014

30 Sep

2014

30 Jun

2014

31 Mar

2014

$m

$m

$m

$m

$m

Net operating income before loan impairment chargesand other credit risk provisions

1,827

1,899

2,108

2,135

2,130

Loan impairment charges and other credit risk provisions

(375)

(640)

(486)

(571)

(427)

Net operating income

1,452

1,259

1,622

1,564

1,703

Total operating expenses

(1,220)

(1,513)

(1,526)

(1,500)

(1,393)

Operating profit/(loss)

232

(254)

96

64

310

Share of loss in associates and joint ventures

(1)

-

-

-

-

Profit/(loss) before tax

231

(254)

96

64

310

%

%

%

%

%

Cost efficiency ratio

66.8

79.7

72.4

70.3

65.4

Reported pre-tax RoRWA (annualised)1

1.1

(1.1)

0.4

0.3

1.4

1 Return on average risk-weighted assets ('RWAs') is calculated using average RWAs on a CRD IV end point basis.

Profit/(loss) before tax by global business

Quarter ended

31 Mar

2015

31 Dec

2014

30 Sep

2014

30 Jun

2014

31 Mar

2014

$m

$m

$m

$m

$m

Retail Banking and Wealth Management

(1)

(17)

13

(59)

(27)

Commercial Banking

75

(235)

66

-

106

Global Banking and Markets

166

42

6

156

246

Global Private Banking

2

(1)

(6)

1

Other

(9)

(46)

12

(27)

(16)

Profit/(loss) before tax

231

(254)

96

64

310

 

Appendix - selected information

Reconciliation of the difference between reported and adjusted items

Significant items

Quarter ended 31 March 2015

Europe

Asia

MENA

 

North

America

Latin

America

Total

 

UK

Hong

 Kong

$m

$m

$m

$m

$m

$m

$m

$m

Revenue

Debit valuation adjustment on derivative contracts

54

27

12

5

98

46

7

Fair value movements on non-qualifying hedges

(190)

1

(96)

(285)

(120)

(3)

Releases arising from the ongoing review of compliance with the Consumer Credit Act in the UK

12

12

12

Gain on the partial sale of shareholding in Industrial Bank

363

363

363

Own credit spread

208

(1)

91

298

221

(1)

Difference between reported and adjusted revenue

84

391

(1)

7

5

486

159

366

Operating expenses

Restructuring and other related costs

(33)

(3)

(2)

(5)

(43)

(33)

(2)

Regulatory provisions in GPB

(139)

(139)

UK customer redress programmes

(137)

(137)

(137)

Difference between reported and adjusted operating expenses

(309)

(3)

(2)

(5)

(319)

(170)

(2)

Profit before tax

Significant revenue items

84

391

(1)

7

5

486

159

366

Significant operating expense items

(309)

(3)

(2)

(5)

(319)

(170)

(2)

Difference between reported and adjusted PBT

(225)

388

(1)

5

167

(11)

364

 

Significant items

Quarter ended 31 March 2015

RBWM

CMB

GB&M

GPB

Other

Total

$m

$m

$m

$m

$m

$m

Revenue

Debit valuation adjustment on derivative contracts

98

98

Fair value movements on non-qualifying hedges

(158)

(8)

(119)

(285)

Releases/(provisions) arising from the ongoing review of compliancewith the Consumer Credit Act in the UK

(12)

24

12

Gain on the partial sale of shareholding in Industrial Bank

363

363

Own credit spread

298

298

Difference between reported and adjusted revenue

(170)

90

24

542

486

Operating expenses

Restructuring and other related costs

(5)

(2)

(4)

(32)

(43)

Regulatory provisions in GPB

(139)

(139)

UK customer redress programmes

(90)

(47)

(137)

Difference between reported and adjusted operating expenses

(95)

(49)

(4)

(139)

(32)

(319)

Profit before tax

Significant revenue items

(170)

90

24

542

486

Significant operating expense items

(95)

(49)

(4)

(139)

(32)

(319)

Difference between reported and adjusted PBT

(265)

(49)

86

(115)

510

167

 

 

Currency translation and significant items

Quarter ended 31 December 2014

Europe

Asia

MENA

North

America

Latin

America

Total

 

UK

Hong

 Kong

$m

$m

$m

$m

$m

$m

$m

$m

Revenue

Currency translation1

233

68

5

36

169

498

144

Significant items

Own credit spread

381

(1)

1

51

-

432

393

(1)

Debit valuation adjustment on derivative contracts

(42)

(10)

-

-

(2)

(54)

(38)

(4)

Fair value movements on non-qualifying hedges

(83)

-

-

(117)

-

(200)

(10)

(1)

Gain on sale of several tranches of real estate secured accounts in the US

-

-

-

92

-

92

-

-

Provisions arising from the ongoing review of compliance with the Consumer Credit Act in the UK

(52)

-

-

-

-

(52)

(52)

-

Loss on sale arising from HSBC Bank Middle East Limited's disposal of its operations in Pakistan

-

-

(27)

-

-

(27)

-

-

204

(11)

(26)

26

(2)

191

293

(6)

Difference between reported and adjusted revenue

437

57

(21)

62

167

689

437

(6)

Operating expenses

Currency translation1

(246)

(33)

(3)

(21)

(135)

(426)

(155)

(1)

Significant items

Settlements and provisions in connection with foreign exchange investigations

(809)

-

-

-

-

(809)

(809)

-

Restructuring and other related costs

(34)

(4)

(2)

3

(91)

(128)

(31)

(2)

Regulatory provisions in GPB

(16)

(49)

-

-

-

(65)

-

(49)

UK customer redress programmes

(340)

-

-

-

-

(340)

(340)

-

(1,199)

(53)

(2)

3

(91)

(1,342)

(1,180)

(51)

Difference between reported and adjusted operating expenses

(1,445)

(86)

(5)

(18)

(226)

(1,768)

(1,335)

(52)

Profit before tax

Currency translation

(43)

36

5

13

(33)

(22)

(22)

(1)

Significant items

Significant revenue items

204

(11)

(26)

26

(2)

191

293

(6)

Significant operating expense items

(1,199)

(53)

(2)

3

(91)

(1,342)

(1,180)

(51)

(995)

(64)

(28)

29

(93)

(1,151)

(887)

(57)

Difference between reported and adjusted PBT

(1,038)

(28)

(23)

42

(126)

(1,173)

(909)

(58)

1 Currency translations are non-additive across geographical regions and global businesses due to inter-company transactions within the Group.

 

 

Currency translation and significant items

Quarter ended 31 December 2014

RBWM

CMB

GB&M

GPB

Other

Total

$m

$m

$m

$m

$m

$m

Revenue

Currency translation1

226

162

102

9

31

498

Significant items

Own credit spread

-

-

-

-

432

432

Debit valuation adjustment on derivative contracts

-

-

(54)

-

-

(54)

Fair value movements on non-qualifying hedges

(191)

-

3

(1)

(11)

(200)

Gain on sale of several tranches of real estate secured accounts in the US

92

-

-

-

-

92

Provisions arising from the ongoing review of compliance with the Consumer Credit Act in the UK

(24)

(8)

-

(20)

-

(52)

Loss on sale arising from HSBC Bank Middle East Limited's disposal of its operations in Pakistan

(11)

(13)

(3)

-

-

(27)

(134)

(21)

(54)

(21)

421

191

Difference between reported and adjusted revenue

92

141

48

(12)

452

689

Operating expenses

Currency translation1

(196)

(92)

(137)

(8)

(25)

(426)

Significant items

Settlements and provisions in connection with foreign exchange investigations

-

-

(809)

-

-

(809)

Restructuring and other related costs

(60)

(27)

(6)

2

(37)

(128)

Regulatory provisions in GPB

-

-

-

(65)

-

(65)

UK customer redress programmes

(182)

(79)

(79)

-

-

(340)

(242)

(106)

(894)

(63)

(37)

(1,342)

Difference between reported and adjusted operating expenses

(438)

(198)

(1,031)

(71)

(62)

(1,768)

Profit before tax

Currency translation

5

13

(44)

-

4

(22)

Significant items

Significant revenue items

(134)

(21)

(54)

(21)

421

191

Significant operating expense items

(242)

(106)

(894)

(63)

(37)

(1,342)

(376)

(127)

(948)

(84)

384

(1,151)

Difference between reported and adjusted PBT

(371)

(114)

(992)

(84)

388

(1,173)

1 Currency translations are non-additive across geographical regions and global businesses due to inter-company transactions within the Group.

 

 

Currency translation and significant items

Quarter ended 31 March 2014

Europe

Asia

MENA

North

America

Latin

America

Total

 

UK

Hong

 Kong

$m

$m

$m

$m

$m

$m

$m

$m

Revenue

Currency translation3

616

102

9

53

318

1,086

348

(1)

Significant items

Own credit spread

149

-

(5)

4

-

148

152

-

Debit valuation adjustment on derivative contracts

22

5

(1)

2

2

30

20

2

Fair value movements on non-qualifying hedges

(63)

(1)

-

(78)

-

(142)

(16)

(5)

Loss on sale of several tranches of real estate secured accounts in the US

-

-

-

(30)

-

(30)

-

-

Gain on sale arising from HSBC Latin America Holdings UK Limited's disposal of HSBC Bank (Colombia) S.A.

-

-

-

-

18

18

-

-

Trading results - HSBC Bank (Colombia) S.A.

-

-

-

-

8

8

-

-

Trading results - HSBC Bank Middle East Limited's Pakistan operations1

-

-

4

-

-

4

-

-

Trading results - HSBC Bank Middle East Limited's banking business in Jordan2

-

-

17

-

-

17

-

-

108

4

15

(102)

28

53

156

(3)

Difference between reported and adjusted revenue

724

106

24

(49)

346

1,139

504

(4)

Operating expenses

Currency translation3

(387)

(50)

(3)

(27)

(208)

(663)

(208)

Significant items

Restructuring and other related costs

(22)

(2)

-

(7)

(9)

(40)

-

-

UK customer redress programmes

(83)

-

-

-

-

(83)

(83)

-

Trading results - HSBC Bank (Colombia) S.A.

-

-

-

-

(9)

(9)

-

-

Trading results - HSBC Bank Middle East Limited's Pakistan operations1

-

-

(4)

-

-

(4)

-

-

Trading results - HSBC Bank Middle East Limited's banking business in Jordan2

-

-

(10)

-

-

(10)

(17)

(1)

(105)

(2)

(14)

(7)

(18)

(146)

(100)

(1)

Difference between reported and adjustedoperating expenses

(492)

(52)

(17)

(34)

(226)

(809)

(308)

(1)

Profit before tax

Currency translation

209

52

7

24

43

336

149

(1)

Significant items

Significant revenue items

108

4

15

(102)

28

53

156

(3)

Significant operating expense items

(105)

(2)

(14)

(7)

(18)

(146)

(100)

(1)

Trading results - HSBC Bank (Colombia) S.A.

-

-

-

-

(2)

(2)

-

-

Trading results - HSBC Bank Middle East Limited's banking business in Jordan2

-

-

1

-

-

1

-

-

3

2

2

(109)

8

(94)

56

(4)

Difference between reported and adjusted PBT

212

54

9

(85)

51

242

205

(5)

1 HSBC Bank Middle East Limited disposed of its operations in Pakistan during October 2014 and incurred a loss on disposal of $27m.

2 HSBC Bank Middle East Limited disposed of its banking business in Jordan during June 2014. There were no gains or losses relating to this disposal.

3 Currency translations are non-additive across geographical regions and global businesses due to inter-company transactions within the Group.

 

 

Currency translation and significant items

Quarter ended 31 March 2014

RBWM

CMB

GB&M

GPB

Other

Total

$m

$m

$m

$m

$m

$m

Revenue

Currency translation3

432

293

333

40

16

1,086

Significant items

Own credit spread

-

-

-

-

148

148

Debit valuation adjustment on derivative contracts

-

-

30

-

-

30

Fair value movements on non-qualifying hedges

(80)

-

-

-

(62)

(142)

Loss on sale of several tranches of real estate secured accounts in the US

(30)

-

-

-

-

(30)

Gain on sale arising from HSBC Latin America Holdings UK Limited's disposal of HSBC Bank (Colombia) S.A.

6

7

5

-

-

18

Trading results - HSBC Bank (Colombia) S.A.

5

1

2

-

-

8

Trading results - HSBC Bank Middle East Limited's Pakistan operations1

1

2

1

-

-

4

Trading results - HSBC Bank Middle East Limited's banking business in Jordan2

6

6

3

-

2

17

(92)

16

41

-

88

53

Difference between reported and adjusted revenue

340

309

374

40

104

1,139

Operating expenses

Currency translation3

(318)

(148)

(169)

(21)

(35)

(663)

Significant items

Restructuring and other related costs

(8)

(1)

(4)

-

(27)

(40)

UK customer redress programmes

(83)

-

-

-

-

(83)

Trading results - HSBC Bank (Colombia) S.A.

(6)

(1)

(2)

-

-

(9)

Trading results - HSBC Bank Middle East Limited's Pakistan operations1

(2)

(1)

(1)

-

-

(4)

Trading results - HSBC Bank Middle East Limited's banking business in Jordan2

(4)

(3)

(1)

-

(2)

(10)

(103)

(6)

(8)

-

(29)

(146)

Difference between reported and adjusted operating expenses

(421)

(154)

(177)

(21)

(64)

(809)

Profit before tax

Currency translation

51

120

163

18

(17)

336

Significant items

Significant revenue items

(92)

16

41

-

88

53

Significant operating expense items

(103)

(6)

(8)

-

(29)

(146)

Trading results - HSBC Bank (Colombia) S.A.

(2)

-

-

-

-

(2)

Trading results - HSBC Bank Middle East Limited's banking business in Jordan2

-

1

-

-

-

1

(197)

11

33

-

59

(94)

Difference between reported and adjusted PBT

(146)

131

196

18

42

242

1 HSBC Bank Middle East Limited disposed of its operations in Pakistan during October 2014 and incurred a loss on disposal of $27m.

2 HSBC Bank Middle East Limited disposed of its banking business in Jordan during June 2014. There were no gains or losses relating to this disposal.

3 Currency translations are non-additive across geographical regions and global businesses due to inter-company transactions within the Group.

 

Loans and advances to customers by industry sector and by geographical region

Europe

Asia

MENA

North

America

Latin

America

Gross

loans and

advances to

customers

Gross

loans by

industry

sector as a

% of total

gross loans

$m

$m

$m

$m

$m

$m

%

At 31 March 2015

Personal

167,398

133,509

6,569

62,727

12,162

382,365

39.5

First lien residential mortgages

123,428

93,544

2,643

53,620

3,778

277,013

28.6

Other personal

43,970

39,965

3,926

9,107

8,384

105,352

10.9

Corporate and commercial

199,660

217,760

21,012

61,473

27,104

527,009

54.5

Manufacturing

38,102

35,839

2,580

17,024

10,808

104,353

10.8

International trade and services

73,309

72,259

9,613

13,810

6,841

175,832

18.2

Commercial real estate

25,705

35,679

591

7,089

2,163

71,227

7.4

Other property-related

8,058

35,421

1,614

8,898

238

54,229

5.6

Government

1,999

1,172

1,902

176

888

6,137

0.6

Other commercial

52,487

37,390

4,712

14,476

6,166

115,231

11.9

Financial

28,199

16,073

3,157

7,932

1,130

56,491

5.8

Non-bank financial institutions

26,329

15,056

3,155

7,932

950

53,422

5.5

Settlement accounts

1,870

1,017

2

-

180

3,069

0.3

Asset-backed securities reclassified

1,519

-

-

130

-

1,649

0.2

Total gross loans and advances to customers

396,776

367,342

30,738

132,262

40,396

967,514

100.0

At 31 December 2014

Personal

178,531

129,515

6,571

65,400

13,537

393,554

39.9

First lien residential mortgages

131,000

93,147

2,647

55,577

4,153

286,524

29.0

Other personal

47,531

36,368

3,924

9,823

9,384

107,030

10.9

Corporate and commercial

210,585

220,799

20,588

57,862

30,722

540,556

54.8

Manufacturing

39,456

37,767

2,413

15,299

12,051

106,986

10.9

International trade and services

76,629

72,814

9,675

13,484

8,189

180,791

18.3

Commercial real estate

28,187

35,678

579

6,558

2,291

73,293

7.4

Other property-related

7,126

34,379

1,667

8,934

281

52,387

5.3

Government

2,264

1,195

1,552

164

968

6,143

0.6

Other commercial

56,923

38,966

4,702

13,423

6,942

120,956

12.3

Financial

23,103

13,997

3,291

9,034

1,393

50,818

5.1

Non-bank financial institutions

21,867

13,410

3,289

9,034

1,199

48,799

4.9

Settlement accounts

1,236

587

2

-

194

2,019

0.2

Asset-backed securities reclassified

1,938

-

-

131

-

2,069

0.2

Total gross loans and advances to customers

414,157

364,311

30,450

132,427

45,652

986,997

100.0

At 30 June 2014

Personal

194,898

129,680

6,553

69,573

15,048

415,752

39.2

First lien residential mortgages

144,225

95,489

2,543

58,677

4,501

305,435

28.8

Other personal

50,673

34,191

4,010

10,896

10,547

110,317

10.4

Corporate and commercial

257,715

221,852

20,983

55,916

32,965

589,431

55.5

Manufacturing

65,374

35,210

2,445

12,941

14,196

130,166

12.3

International trade and services

79,981

80,574

10,072

13,087

8,534

192,248

18.1

Commercial real estate

30,935

34,727

434

6,677

2,492

75,265

7.1

Other property-related

7,444

32,730

1,593

8,644

348

50,759

4.8

Government

2,404

1,082

1,696

568

1,007

6,757

0.6

Other commercial

71,577

37,529

4,743

13,999

6,388

134,236

12.6

Financial

29,603

12,091

2,838

7,579

1,397

53,508

5.0

Non-bank financial institutions

26,990

11,686

2,837

7,579

1,230

50,322

4.7

Settlement accounts

2,613

405

1

-

167

3,186

0.3

Asset-backed securities reclassified

2,382

-

-

138

-

2,520

0.3

Total gross loans and advances to customers

484,598

363,623

30,374

133,206

49,410

1,061,211

100.0

 

Please click on the following link to view the HSBC Holdings plc Data Pack for Q1 2015:

http://www.rns-pdf.londonstockexchange.com/rns/1450M_-2015-5-4.pdf 

 

 

This information is provided by RNS
The company news service from the London Stock Exchange
 
END
 
 
MSCSSUFMLFISEFI
Date   Source Headline
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