HSBC 2004 Annual Report Download - page 53

51
Commercial Banking
Profit excluding goodwill amortisation Business highlights
Year ended 31 December
2004 2003 2002
US$m US$m US$m
Net interest income ............ 4,884 4,196 3,835
Dividend income .................. 636
Net fees and commissions .... 2,742 2,256 1,934
Dealing profits ..................... 142 118 107
Other income9 ...................... 656 587 459
Other operating income9 ...... 3,546 2,964 2,506
Operating income9 ............. 8,430 7,160 6,341
Operating expenses excluding
goodwill amortisation1,9 ... (4,107) (3,768) (3,149)
Operating profit before
provisions1....................... 4,323 3,392 3,192
Provisions for bad and
doubtful debts .................. (227) (274) (269)
Provisions for contingent
liabilities and commitments 10 14 19
Amounts (written off)/written
back on fixed asset
investments ...................... (1) –3
Operating profit1 ................ 4,105 3,132 2,945
Share of operating profit in
joint ventures ................... ––3
Share of operating profit in
associates2......................... 57 20 15
Gains on disposal of
investments and tangible
fixed assets ...................... 7651
Profit on ordinary activities
before tax3 ....................... 4,169 3,158 3,014
By geographical region:
Europe .................................. 1,749 1,303 1,344
Hong Kong ........................... 914 711 733
Rest of Asia-Pacific ............. 496 450 423
North America ..................... 845 595 435
South America ..................... 165 99 79
Profit on ordinary activities
before tax3........................ 4,169 3,158 3,014
%%%
Share of HSBC’ s pre-tax
profits3 ............................. 21.5 21.9 28.7
Cost:income ratio1 ................ 48.7 52.6 49.7
US$m US$m US$m
Selected balance sheet data7
Loans and advances to
customers (net) ................ 129,939 103,495 90,562
Total assets8,9 ........................ 160,299 128,086 113,520
Customer accounts ............... 137,847 111,515 92,884
Goodwill amortisation:
1excluded from (1) above ... 271 263 168
2excluded from (2) above ... 3––
3excluded from (3) above ... 274 263 168
General
• Pre-tax profit before goodwill amortisation was 32
per cent higher than last year. At constant exchange
rates and excluding acquisitions, profits increased by
24 per cent because of good revenue growth and
improving credit quality.
• Customer numbers rose by 6 per cent to 2.3 million,
while loans and advances to customers increased by
26 per cent and customer accounts by 24 per cent.
• Sales activity expanded across the segment. Global
relationship management was launched in 2004 for
well-established relationship with customers with
international business dealings. Inward referral
champions were appointed in 35 countries to
maximise cross border-referral business.
• Segmentation of the customer base continued in
2004, with the successful approach adopted in UK
corporate banking being repeated in other countries
for top tier customers. An increase in the number of
commercial centres and a change in the focus of
their activities, and new packaged products,
benefited Smaller and Medium Enterprises (‘SME’ ).
• Internet Banking customer numbers increased by 43
per cent. The internet represents a rapidly growing
revenue source, generating over US$50 million from
transactions, fees and e-sales in 2004. Global e-
development resources were rationalised in 2004 to
extract cost synergies from utilising common IT
platforms.
• HSBCnet, the Group’ s new ‘e’ banking platform for
corporate and mid-market customers, was introduced
and now has customers in 30 countries in Asia
Pacific, Europe, North America and the Middle East.
Services include a range of transaction banking and
treasury products.
• Major initiatives commenced in the second half of
2004, aimed at significantly increasing the sale of
business insurance and commercial wealth
management products to relevant customers in a
number of selected countries.
• In November, HSBC retained the title of ‘Best
Clearing Bank for Small Businesses’ awarded by the
Forum of Private Business in the UK. It is the fourth
consecutive time that HSBC has won the title, which
is awarded every two years.
For other footnotes, see page 59.