HSBC 2007 Annual Report Download - page 16

HSBC HOLDINGS PLC
Report of the Directors: Business Review (continued)
KPIs / Reconciliation of reported and underlying profit before tax
14
0
500
1,000
1,500
2,000
2,500
Branch/Call
Centre-Agent
Credit card Internet Self-Service
Terminal
Other
e-Channels
Others
(payment,
clearing, etc)
90%
91%
92%
93%
94%
95%
96%
97%
98%
99%
100%
Europe Hong Kong Rest of
A sia- Pac if ic
North America Latin America
Customer transactions
in millions
▓ 2005 ▓ 2006 ▓ 2007
The call centre, internet and self-service transaction numbers
for 2006 have been restated to align them with the definition of
customer transactions adopted in 2007.
Percentage of IT services meeting or exceeding
targets
HSBC’s IT function establishes with its end-users
agreed service levels for systems performance, such
as systems running 99.9 per cent of the time and
credit card authorisations within two seconds,
and monitors the achievement of each of these
commitments. The following chart reflects the
percentage of IT services meeting and/or exceeding
the agreed service targets. Overall results in Europe,
Hong Kong and Latin America were each affected
by a single month’s service issue, which skewed a
trend of flat or improving service performance.
Percentage of IT services meeting or exceeding
targets
▓ 2006 ▓ 2007
Reconciliation of reported and
underlying profit before tax
HSBC measures its performance internally on a like-
for-like basis, eliminating the effects of Group
currency translation gains and losses, acquisitions
and disposals and gains from the dilution of the
Group’s interests in associates, which distort the
year-on-year comparison. HSBC refers to this as its
underlying performance.
The tables below show the underlying
performance of HSBC for the year ended
31 December 2007 compared with the year ended
31 December 2006. Comparative information
comparing the years ended 31 December 2006 and
2005 is also set out below. Equivalent tables are
provided for each of HSBC’s customer groups and
geographical segments in their respective sections
below.
The main differences between HSBC’s reported
and underlying financial performances were:
• Foreign currency translation differences, mainly
due to the weakening of the US dollar, most
significantly in Europe due to the size of
HSBC’s operations in the UK. The Group’s
profit before tax for 2007 compared with 2006
increased by 10 per cent, of which the effect of
the change in foreign currency translation rates
accounted for 4 percentage points. The
equivalents for 2006 compared with 2005 were
5 per cent and 1 per cent, respectively.
• There were a number of acquisitions and
disposals that affected both comparisons. The
most significant were the acquisitions of Metris
Companies Inc. (‘Metris’) in North America in
December 2005; in Latin America, the
Argentine operations of Banca Nazionale del
Lavoro SpA (‘Banca Nazionale’) in May 2006
and Grupo Banistmo (now ‘HSBC Bank
Panama’) in November 2006; and HSBC’s
partner’s share in life insurer, Erisa S.A., and
property and casualty insurer, Erisa I.A.R.D.
(together now renamed ‘HSBC Assurances’) in
France in March 2007; and the deemed
disposals of the stakes in Ping An Insurance
(Group) Company of China, Limited (‘Ping An
Insurance’), Bank of Communications Limited
(‘Bank of Communications’) and Industrial
Bank Co. Limited (‘Industrial Bank’), as a
consequence of their making share offerings on
the domestic ‘A’ share market in mainland
China.