HSBC 2005 Annual Report Download - page 54

HSBC HOLDINGS PLC
Financial Review (continued)
52
Private Banking
Profit before tax Business highlights
Year ended 31 December
2005 2004
US$m US$m
Net interest income ............................. 848 718
Net fee income ................................... 1,080 962
Net trading income1 ............................ 317 257
Net expenses from financial
instruments designated at fair value (1) –
Gains less losses from financial
investments .................................... 45 39
Dividend income ................................ 95
Other operating income ...................... 68 24
Total operating income .................... 2,366 2,005
Net insurance claims2 ......................... ––
Net operating income before loan
impairment charges and other
credit risk provisions .................... 2,366 2,005
Net recovery of loan impairment
charges and other credit risk
provisions ....................................... 12 11
Net operating income ....................... 2,378 2,016
Total operating expenses .................... (1,466) (1,319)
Operating profit ................................ 912 697
Share of profit in associates and
joint ventures .................................. ––
Profit before tax ................................ 912 697
By geographical region
Europe ................................................ 539 438
Hong Kong ......................................... 190 131
Rest of Asia-Pacific ............................ 78 60
North America .................................... 104 68
South America .................................... 1–
Profit before tax .................................. 912 697
%%
Share of HSBC’s profit before tax ...... 4.4 3.7
Cost efficiency ratio ........................... 62.0 65.8
US$m US$m
Selected balance sheet data3
Loans and advances to customers
(net) ................................................ 27,749 24,463
Total assets4 ........................................ 59,827 56,751
Customer accounts ............................. 67,205 57,780
For footnotes, see page 55.
• Pre-tax profit grew by 31 per cent compared with
2004, supported by strong growth in client assets and
lending. On an underlying basis, growth was also
31 per cent. Operational efficiency was increased by
greater utilisation of Group Service Centres and the
cost efficiency ratio was reduced by 4 percentage
points to 62 per cent.
• HSBC won a number of awards in the Euromoney
third annual private banking survey. In the global
private banking awards, notable wins included ‘1st
Private Bank for Trust Services’ for the second year
running, ‘1st Private Bank for Islamic Services’ and
‘1st Private Bank for Inheritance and Succession
Planning’. Overall, HSBC improved one place to
‘3rd best Private Bank’.
• Client assets increased by 13 per cent to
US$282 billion, benefiting from net new money of
US$35.7 billion in 2005. On an underlying basis,
growth was 20 per cent. Discretionary and advisory
asset growth benefited from the establishment of
dedicated investment advisory resources in all major
regions, and also from growth in the Strategic
Investment Solutions product, in which invested
assets increased by US$1.9 billion to US$2.9 billion
during the year.
• HSBC also continued to develop alternative
investment products. Total client investment in hedge
funds reached US$29.5 billion, and HSBC Private
Bank was named the third largest global provider of
hedge funds by capital invested by Institutional
Investor magazine.
• Dedicated teams working with Commercial Banking,
Personal Financial Services and Corporate,
Investment Banking and Markets produced a
significant increase in intra-Group referrals in 2005.
A closer alignment with the latter was also reflected
in the manufacture of tailored structured products for
private banking clients. Bank of Bermuda’s private
banking operations were fully integrated during the
year.
• The lending book grew strongly, as clients sought to
leverage their investments in the low interest rate
environments in North America, Europe and Asia. In
the UK and US, lending book growth was also
buoyed by strong growth in higher value mortgages.