HSBC 2004 Annual Report Download - page 166

HSBC HOLDINGS PLC
Financial Review (continued)
164
Interest foregone on non-performing lendings
Interest income that would have been recognised
under the original terms of the non-accrual,
suspended interest and restructured loans amounted
to approximately US$300 million in 2004 compared
with US$380 million in 2003 and US$406 million in
2002. Interest income of approximately
US$184 million from such loans was recorded in
2004, compared with US$230 million in 2003 and
US$258 million in 2002.
Country distribution of outstandings and
cross-border exposures
HSBC controls the risks associated with cross-border
lending, essentially the risk of foreign currency
required for payments not being available to local
residents, through a central process of internal
country limits which are determined by taking into
account both economic and political risks. Exposure
to individual countries and cross-border exposure in
aggregate is kept under continuous review.
The following tables analyse the aggregate of
in-country foreign currency and cross-border
outstandings by type of borrower to countries which
individually represent in excess of 1 per cent of
HSBC’s total assets. Classification is based upon the
country of residence of the borrower but recognises
the transfer of country risk in respect of third party
guarantees, eligible collateral held or residence of
the head office where the borrower is a branch. In
accordance with the Bank of England Country
Exposure Report (Form CE) guidelines, outstandings
comprise loans and advances (excluding settlement
accounts), amounts receivable under finance leases,
acceptances, commercial bills, certificates of deposit
and debt and equity securities (net of short
positions), and exclude accrued interest and intra-
HSBC exposures. Comparative figures for 2003 and
2002 were calculated under the requirements of the
Bank of England’s Form C1, which was replaced by
Form CE from 31 December 2004 reporting. The
requirements of Form CE differ from those of Form
C1 in a number of ways, none of which materially
affects the exposures reported below. For 2003,
outstandings to counterparties in the UK were
collected on a comparable basis to that required for
Form C1 for the first time. For 2002, the UK
outstandings, which are not recorded on Form C1
because the UK is HSBC’s country of domicile, have
not been collected or disclosed.
Banks
Government
and official
institutions Other Total
US$bn US$bn US$bn US$bn
At 31 December 2004
United Kingdom ........................................................... 19.7 3.8 24.5 48.0
United States ................................................................. 9.213.314.036.5
Germany ....................................................................... 17.8 10.4 4.0 32.2
France ........................................................................... 11.1 3.7 4.6 19.4
Italy ............................................................................... 5.7 9.7 2.1 17.5
The Netherlands ............................................................ 9.1 2.2 4.2 15.5
Hong Kong .................................................................... 1.6 1.1 10.3 13.0
At 31 December 2003
United Kingdom ............................................................ 14.2 3.1 20.4 37.7
Germany ........................................................................ 16.0 8.0 3.7 27.7
United States.................................................................. 5.5 8.4 12.3 26.2
France ............................................................................ 9.5 2.3 5.5 17.3
The Netherlands............................................................. 9.0 0.6 4.6 14.2
Hong Kong..................................................................... 1.1 0.7 10.0 11.8
Canada........................................................................... 6.0 3.2 1.8 11.0
Italy................................................................................ 4.4 5.2 0.8 10.4
At 31 December 2002
United States ................................................................. 5.6 9.6 9.7 24.9
Germany ....................................................................... 16.9 2.4 2.7 22.0
France ........................................................................... 5.8 1.7 5.0 12.5
The Netherlands ............................................................ 7.5 0.4 4.0 11.9
Hong Kong .................................................................... 0.9 0.7 9.1 10.7
Canada .......................................................................... 4.8 2.9 2.4 10.1
Japan ............................................................................. 4.0 4.1 1.0 9.1
Italy ............................................................................... 4.7 2.2 1.1 8.0
Australia ....................................................................... 5.8 0.5 1.6 7.9