HSBC 2004 Annual Report Download - page 349

347
Available-for-sale
The following table provides an analysis of available-for-sale securities under US GAAP. The principal impact
of the adjustment described below is to increase the carrying value of investment securities under US GAAP by
US$1,653 million in 2004 (2003: US$2,053 million):
Book
value
Market
Valuation
Gross
SFAS 115
adjustment
Tax and
minority
interests
Net
SFAS 115
adjustment
US$m US$m US$m US$m US$m
At 31 December 2004
Investment securities (excluding
investments with no readily
determinable market value) ....... 172,541 174,188 1,647 (517) 1,130
Other participating interests ........... 881 1,255 374 (107) 267
Brady bonds ................................... 177 176 (1) – (1)
Other debt securities and equity
shares acquired in exchange for
advances .................................... 8 15 7 (2) 5
Securities available-for-sale at
31 December 2004 .................... 173,607 175,634 2,027 (626) 1,401
Securities available-for-sale at
31 December 2003 ..................... 144,807 146,934 2,127 (645) 1,482
Movement in the year ended
31 December 2004 .................... (100) 19 (81)
The book value above includes securities denominated in foreign currencies which have been translated at
closing rates. Foreign exchange movements between historic rates and closing rates are reflected in OCI.
Unrealised losses on investment securities
The following investment securities, that have unrealised losses at 31 December 2004, are not considered ‘Other-
than-temporary’ impaired under US GAAP:
Period investment has been in an unrealised loss position
Less than one year
Greater than or equal to
one year Total
Fair value
Unrealised
losses Fair value
Unrealised
losses Fair value
Unrealised
losses
US$m US$m US$m US$m US$m US$m
US Treasury and
Government agencies 8,704 (70) 2,510 (88) 11,214 (158)
UK Government ......... 4,040 (2) 2 – 4,042 (2)
Other government ....... 4,185 (221) 1,779 (6) 5,964 (227)
Asset-backed securities 934 (3) 178 (3) 1,112 (6)
Corporate debt and
other securities ......... 21,253 (84) 5,373 (41) 26,626 (125)
Debt securities ............. 39,116 (380) 9,842 (138) 48,958 (518)
Equity shares ............... 157 (12) – – 157 (12)
Total 39,273 (392) 9,842 (138) 49,115 (530)
Under US GAAP, 2,653 debt security investments and 61 investments in equity shares had unrealised losses at
31 December 2004.
Under US GAAP, HSBC recognises an ‘other-than-temporary’ impairment in the income statement for any
investment security whose market value has been significantly below its carrying value for a period exceeding
six months. The only exception to this policy is in respect of debt securities where their decline in market value
is due solely to an increase in underlying rates of interest and where HSBC has the ability to hold these securities
until maturity. None of the securities disclosed in the table above are considered ‘Other-than-temporarily’
impaired at 31 December 2004.