HSBC 2004 Annual Report Download - page 35

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Operating expenses
Year ended 31 December
2004 2003 2002
US$m % US$m % US$m %
By geographical region
Europe .................................................... 11,570 43.8 9,529 44.3 7,878 51.6
Hong Kong ............................................. 2,524 9.5 2,212 10.3 2,139 14.0
Rest of Asia-Pacific ............................... 2,080 7.8 1,741 8.1 1,528 10.0
North America ....................................... 8,887 33.5 6,947 32.3 2,675 17.5
South America ....................................... 1,444 5.4 1,075 5.0 1,060 6.9
26,505 100.0 21,504 100.0 15,280 100.0
Intra-HSBC elimination ......................... (630) (422) (326)
25,875 21,082 14,954
Goodwill amortisation
Europe .................................................... 947 52.2 758 52.3 651 76.2
Hong Kong ............................................. 90.5 30.2 ––
Rest of Asia-Pacific ............................... 68 3.7 35 2.4 33 3.9
North America ....................................... 761 42.0 643 44.3 146 17.1
South America ....................................... 29 1.6 11 0.8 24 2.8
1,814 100.0 1,450 100.0 854 100.0
Total operating expenses ........................ 27,689 22,532 15,808
Year ended 31 December
2004 2003 2002
US$m US$m US$m
By expense category
Staff costs ...................................................................................................... 14,492 12,111 8,609
Premises and equipment (excluding depreciation) ......................................... 2,726 2,331 1,824
Other administrative expenses ....................................................................... 6,965 5,243 3,331
Administrative expenses ................................................................................ 24,183 19,685 13,764
Depreciation and amortisation
– tangible fixed assets .................................................................................... 1,664 1,382 1,189
– intangible assets .......................................................................................... 28 15 1
– goodwill ...................................................................................................... 1,814 1,450 854
Total operating expenses ................................................................................ 27,689 22,532 15,808
%%%
Cost:income ratio (excluding goodwill amortisation) .................................... 51.1 51.3 56.2
Year ended 31 December
2004 2003 2002
Staff numbers (full-time equivalent)
Europe ........................................................................................................... 74,861 73,943 72,260
Hong Kong .................................................................................................... 25,552 23,636 23,786
Rest of Asia-Pacific ...................................................................................... 41,031 31,827 28,630
North America .............................................................................................. 69,781 65,021 34,207
South America .............................................................................................. 32,108 28,292 25,522
Total staff numbers ....................................................................................... 243,333 222,719 184,405
Year ended 31 December 2004 compared
with year ended 31 December 2003
Operating expenses increased by US$5,157 million,
or 23 per cent, with an additional quarter’ s costs in
HSBC Finance accounting for US$1,302 million and
acquisitions US$745 million of the increase.
Excluding these acquisitions and expressed in terms
of constant currency, operating expenses, excluding
goodwill amortisation, were 8 per cent higher than in
2003. Staff costs, which, on the same basis, rose by
7 per cent, accounted for less than half of the
increase, and largely reflected restructuring and
expansion costs in Corporate Investment Banking
and Markets, higher performance-related bonuses,
and growth in staff numbers in support of rising
business volumes. Higher advertising and marketing
costs to stimulate product sales, and expenditure on
IT infrastructure, largely accounted for the
US$1,020 million, or 11 per cent, increase in non-
staff costs. HSBC’ s cost:income ratio excluding
goodwill amortisation fell to 51.1 per cent in 2004
from 51.3 per cent in 2003, reflecting the inclusion