HSBC 2004 Annual Report Download - page 86

HSBC HOLDINGS PLC
Financial Review (continued)
84
Profit before tax
Year ended 31 December
2004 2003 2002
Rest of Asia-Pacific (including the Middle East) US$m US$m US$m
Net interest income ...................................................................................... 2,055 1,740 1,607
Dividend income ............................................................................................ 343
Net fees and commissions .............................................................................. 1,057 805 724
Dealing profits ............................................................................................... 494 421 364
Other income ................................................................................................. 195 120 83
Other operating income .................................................................................. 1,749 1,350 1,174
Total operating income ................................................................................ 3,804 3,090 2,781
Staff costs ...................................................................................................... (1,104) (952) (826)
Premises and equipment ................................................................................. (183) (164) (156)
Other .............................................................................................................. (689) (527) (454)
Depreciation and intangible asset amortisation .............................................. (104) (98) (92)
(2,080) (1,741) (1,528)
Goodwill amortisation ................................................................................... (68) (35) (33)
Operating expenses ........................................................................................ (2,148) (1,776) (1,561)
Operating profit before provisions ............................................................. 1,656 1,314 1,220
Provisions for bad and doubtful debts ............................................................ (100) (85) (89)
Provisions for contingent liabilities and commitments ................................... –(1) 18
Amounts written off fixed asset investments ................................................. –(2) (2)
Operating profit ........................................................................................... 1,556 1,226 1,147
Share of operating profit in associates ............................................................ 232 149 113
Gains on disposal of investments and tangible fixed assets ............................ 17 16 –
Profit on ordinary activities before tax ...................................................... 1,805 1,391 1,260
%%%
Share of HSBC’ s pre-tax profits (excluding goodwill amortisation) .............. 9.7 9.9 12.3
Share of HSBC’ s pre-tax profits .................................................................... 10.3 10.9 13.1
Cost:income ratio (excluding goodwill amortisation) .................................... 54.7 56.3 54.9
Period-end staff numbers (full-time equivalent) ............................................. 41,031 31,827 28,630
US$m US$m US$m
Selected balance sheet data1
Loans and advances to customers (net) .......................................................... 60,599 47,952 37,078
Loans and advances to banks (net) ................................................................. 14,780 12,944 10,708
Debt securities, treasury bills and other eligible bills ..................................... 30,312 25,980 21,622
Total assets .................................................................................................... 120,504 98,081 76,635
Deposits by banks .......................................................................................... 8,046 6,967 5,362
Customer accounts ......................................................................................... 78,613 65,441 54,172
1Third party only.
Year ended 31 December 2004 compared
with year ended 31 December 2003
Driven primarily by external demand, growth in
Asia-Pacific was strong in the first half of 2004 and
the positive export performance, in turn, provided
the necessary income growth to support consumption
demand. However, the surging growth seen in most
Asian economies appeared to peak in the middle of
2004 and slow, primarily for two reasons. The first
was the erosion of purchasing power from the high
level of oil prices, and the second was the start of a
policy-induced slowdown in mainland China’ s
investment demand, designed to slow China’ s
domestic economy. HSBC estimates that, excluding
Japan, Asian economies grew by 7.1 per cent
throughout 2004, with growth of 8.3 per cent in the
first half down to 6 per cent in the second half of the
year. The slowdown is expected to persist in 2005.
The mainland China economy dominated
economic activity in Asia in 2004, with concerns
over whether the authorities would be able to slow
growth in a manageable fashion from the
unsustainably high levels of 2003 and first half of
2004, and continued speculation regarding a possible