HSBC 2007 Annual Report Download - page 161

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Transaction Banking necessitated by business
volumes.
In North America, costs rose by 13 per cent in
2006. In the US, the increase accompanied the
expansion of both the core banking network (by
25 branches) and the geographical presence of
Commercial Banking, and arose from incremental
costs incurred in support of revenue growth in the
consumer finance business. Marketing expenditure
also rose, in line with increased levels of activity in
the cards businesses in the US, continued promotion
of the online savings product and airport branding
initiatives. Cost growth in Canada followed higher
revenues. The first full year effect of the expansion
of various Global Banking and Markets businesses
that commenced last year, together with higher
performance-linked pay contributed further to the
expense growth.
In Latin America, operating expenses rose by
12 per cent. Staff costs grew as additional staff were
recruited to support business expansion and pay rises
were agreed with the unions. Marketing expenditure
was higher as a consequence of advertising
campaigns run by Personal Financial Services and
Commercial Banking. The continued expansion of
the branch network and ATM infrastructure in
Mexico, in conjunction with construction of the new
headquarters, also contributed to the overall cost
growth in the region. Costs rose in Global Banking
and Markets in line with higher transactional
volumes, increased headcount and union-agreed
pay rises.
Cost efficiency ratios
Year ended 31 December
2007
%
2006
%
2005
%
HSBC .............................................................................................................. 49.4 51.3 51.2
Personal Financial Services .......................................................................... 50.3 49.7 48.7
Europe ............................................................................................................. 64.8 59.2 58.2
Hong Kong ...................................................................................................... 27.2 32.2 33.3
Rest of Asia-Pacific ......................................................................................... 73.9 71.1 72.3
North America ................................................................................................. 42.3 42.3 40.8
Latin America .................................................................................................. 61.3 65.6 64.4
Commercial Banking .................................................................................... 44.8 43.7 45.5
Europe ............................................................................................................. 49.3 46.7 49.9
Hong Kong ...................................................................................................... 24.9 26.1 27.2
Rest of Asia-Pacific ......................................................................................... 42.9 42.5 43.8
North America ................................................................................................. 45.1 44.9 43.1
Latin America .................................................................................................. 54.3 55.9 58.2
Share of profit in associates and joint ventures
Year ended 31 December
2007 2006 2005
US$m % US$m % US$m %
By geographical region
Europe ...................................................... 95 6.3 (72) (8.4) 120 18.6
Hong Kong .............................................. 28 1.9 19 2.2 23 3.6
Rest of Asia-Pacific ................................. 1,348 89.7 865 102.2 453 70.3
North America ......................................... 20 1.3 30 3.5 48 7.5
Latin America .......................................... 12 0.8 4 0.5 – –
Share of profit in associates and joint
ventures ............................................... 1,503 100.0 846 100.0
644 100.0