HSBC 2007 Annual Report Download - page 19

17
Personal Financial Services
Profit before tax
Year ended 31 December
2007 2006 2005
US$m US$m US$m
Net interest income ........... 29,069 26,076 23,351
Net fee income .................. 11,742 8,762 7,313
Trading income excluding
net interest income ......... 38 391 360
Net interest income on
trading activities ............. 140 220 214
Net trading income5 .......... 178 611 574
Net income from financial
instruments designated
at fair value .................... 1,333 739 574
Gains less losses from
financial investments ..... 351 78 19
Dividend income ............... 55 31 16
Net earned insurance
premiums ....................... 8,271 5,130 4,864
Other operating income .... 387 782 729
Total operating income .. 51,386 42,209 37,440
Net insurance claims6 ....... (8,147) (4,365) (3,716)
Net operating income4 ..... 43,239 37,844 33,724
Loan impairment charges
and other credit risk
provisions ....................... (16,172) (9,949) (7,537)
Net operating income ..... 27,067 27,895 26,187
Total operating expenses .. (21,757) (18,818) (16,427)
Operating profit .............. 5,310 9,077 9,760
Share of profit in associates
and joint ventures ........... 590 380 144
Profit before tax .............. 5,900 9,457 9,904
By geographical region
Europe ............................ 1,581 1,909 1,932
Hong Kong ..................... 4,212 2,880 2,628
Rest of Asia-Pacific ....... 760 477 377
North America ............... (1,546) 3,391 4,181
Latin America ................ 893 800 786
5,900 9,457 9,904
% % %
Share of HSBC’s profit
before tax ....................... 24.4 42.8 47.2
Cost efficiency ratio .......... 50.3 49.7 48.7
Balance sheet data7
US$m US$m US$m
Loans and advances to
customers (net) ............... 464,726 448,545 398,884
Total assets ........................ 588,473 546,568 484,314
Customer accounts ............ 450,071 388,468 321,240
For footnotes, see page 130.
Strategic direction
HSBC’s strategic direction in Personal Financial
Services is to use its global scale and local
knowledge to grow profitably in selected markets.
The strategy focuses on growth in:
– markets where HSBC has or can build or
acquire scale, particularly in Asia-Pacific, Latin
America, Turkey and the Middle East;
– markets where HSBC has scale, such as the UK
and Hong Kong;
– HSBC Premier customers, who appreciate the
benefits of a bank with strong international
connectivity; and
– consumer finance, cards, direct banking and
other product families where HSBC has global
scale and competitive advantages.
Business highlights in 2007
• Pre-tax profits in Personal Financial Services
declined by 38 per cent to US$5.9 billion in
2007, 41 per cent on an underlying basis. This
was due to a US$6.2 billion increase in loan
impairment charges, of which US$5.2 billion
arose in the US, substantially all from the
consumer finance business. Excluding US
consumer finance, profit before tax increased by
18 per cent, 12 per cent on an underlying basis,
driven by exceptionally strong net operating
income growth in Asia and, to a lesser extent,
Latin America.
• As Asian stock markets grew in value during
2007, HSBC delivered a wider array of products
and services to meet demand. The increase in
activity was considerable; retail securities
transaction volumes in Hong Kong increased by
more than 160 per cent and income from
investment products in Asia by 150 per cent.
• HSBC Premier (‘Premier’), a global banking
and wealth management service for affluent
customers, was relaunched in September 2007
with a high-profile advertising campaign.
Premier offers a comprehensive and consistent
service to customers in 35 markets supported by
over 280 international Premier centres.
Customer reaction to the relaunch was very
positive with a net 340,000 joining the Premier
service in 2007, of which more than 50 per cent
were new to HSBC. At the end of the year there
were more than 2.1 million Premier customers
across the Group and gross revenue generated
per customer during 2007 averaged in excess of
US$2,000 per year.