HSBC 2001 Annual Report Download - page 41

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the value to HSBC of our most loyal customers and
has resulted in narrower spread on a number of
products, particularly mortgages and savings
products. The benefit of this strategy is seen in the
mix and volume of HSBC’s core current account and
savings products, particularly in the United
Kingdom, Hong Kong and the United States.
Year ended 31 December 2000 compared with
year ended 31 December 1999
Net interest income was US$1,733 million, or 14 per
cent, higher in 2000 than 1999 primarily due to the
acquisitions of RNYC, SRH and CCF. There was
growth across all geographical regions. In Hong
Kong, net interest income was US$262 million, or 7
per cent, higher which mainly reflected the
placement of increased customer deposits and an
improved mix of lower costing liabilities. The
increase was achieved despite muted loan demand
and intense competition in the residential mortgage
market which reduced interest earned on mortgages
by some US$170 million. In the United Kingdom,
there was underlying growth of US$173 million, or 6
per cent, generated by balance sheet growth, again
with strong growth in savings balances. At constant
exchange rates, net interest income would have been
US$2,060 million, or 18 per cent, higher than 1999.
Average interest-earning assets increased by
US$97 billion, or 23 per cent, largely as a result of
acquisitions. Excluding acquisitions, there was
organic growth in Hong Kong driven principally by
the placement of customer deposits, together with
personal lending growth in the United Kingdom,
Brazil, Korea, India and Taiwan.
At 2.66 per cent, HSBC’s net interest margin
was 20 basis points lower than for 1999. The major
impact on HSBC’s net interest margin was mix,
driven by the very liquid balance sheets in the recent
acquisitions, and the related funding costs of these
acquisitions. The impact of mix was compounded by
a reduction of spread on savings products in the
United Kingdom and on residential mortgages in the
United Kingdom and Hong Kong. The effect of the
downward pressures was partly offset by increased
recoveries of previously suspended interest, together
with an increased contribution from net free funds.
Other operating income
Year ended 31
December 2001
Year ended 31
December 2000
Year ended 31
December 1999
US$m % US$
m
%US$
m
%
By geographical segment
Europe................... 6,056 53.1 5,922 53.5 4,936 53.5
Hong Kong............ 1,852 16.2 1,790 16.2 1,552 16.9
Rest of Asia-
Pacific .............. 1,137 10.0 1,085 9.8 983 10.7
North America ...... 1,456 12.7 1,317 11.9 949 10.3
Latin America ....... 919 8.0 953 8.6 790 8.6
11,420 100.0 11,067 100.0 9,210 100.0
Intra-HSBC
eliminatio
n
....... (257
)
(217) (198)
Other operating
income.............. 11,163 10,850 9,012
Year ended 31 December
Figures in US$m 2001 2000 1999
By income category:
Dividend income................... 186 197 157
Fees and commissions (net) .. 7,470 7,311 6,017
Dealing profits
–
foreign exchange................ 1,120 965 797
–
interest rate derivatives....... 159 57 67
–
debt securities..................... 311 281 197
– equities and other trading 95 323 238
1,685 1,626 1,299
– operating leased assets
rental income.................... 465 481 511
– general insurance
underwriting (net)............. 373 360 353
– increase in value of
long-term insurance
business............................ 251 195 181
–
othe
r
................................... 733 680 494
1,822 1,716 1,539
Total other operating income 11,163 10,850 9,012
Analysis of fees and commissions receivable
and payable
Year ended 31 December
Figures in US$m 2001 2000 1999
Account services .................. 1,620 1,536 1,319
Credit facilities..................... 628 613 522
Remittances.......................... 246 225 214
Cards ................................... 1,116 1,070 935
Imports/exports .................... 524 540 480
Underwriting........................ 135 203 180
Insurance.............................. 668 570 525
Mortgage servicing rights..... 78 69 45
Trust income ........................ 114 185 145
Broking income.................... 928 1,208 948
Global custody ..................... 308 291 235
Maintenance income on
operating leases ............... 165 176 208
Other ................................... 2,226 1,891 1,393
Total fees and commissions
receivable ....................... 8,756 8,577 7,149
Less: fees payable ................ (1,286 ) (1,266 ) (1,132 )
Net fees and
commissions..................... 7,470 7,311 6,017