HSBC 2009 Annual Report Download - page 252

HSBC HOLDINGS PLC
Report of the Directors: Risk (continued)
Liquidity and funding > HSBC Holdings // Market risk > Sensitivity analysis
250
Cash flows payable by HSBC Holdings under financial liabilities by remaining contractual maturities
(Audited)
On
demand
Due
within 3
months
Due
between
3 and 12
months
Due
between
1 and 5
years
Due
after 5
years
US$m US$m US$m US$m US$m
At 31 December 2009
Amounts owed to HSBC undertakings ................... – 292 25 3,477 –
Financial liabilities designated at fair value ............ – 229 687 6,205 26,152
Derivatives ............................................................... 362 – – – –
Debt securities in issue ............................................. – 37 112 2,346 1,698
Subordinated liabilities ............................................ – 243 728 3,881 32,232
Other financial liabilities ......................................... – 1,239 – – –
362 2,040 1,552 15,909 60,082
Loan commitments .................................................. 3,240 – – – –
Financial guarantees and similar contracts .............. 35,073 – – – –
38,675 2,040 1,552 15,909 60,082
At 31 December 2008
Amounts owed to HSBC undertakings ................... – 133 539 3,590 –
Financial liabilities designated at fair value ............ – 587 1,762 5,977 25,571
Derivatives ............................................................... 1,324 – – – –
Subordinated liabilities ............................................ – 235 706 3,764 32,214
Other financial liabilities ......................................... – 1,805 – – –
1,324 2,760 3,007 13,331 57,785
Loan commitments .................................................. 3,241 – – – –
Financial guarantees and similar contracts .............. 47,341 – – – –
51,906 2,760 3,007 13,331 57,785
The balances in the above table will not agree
directly with the balances in the balance sheet of
HSBC Holdings as the table incorporates, on an
undiscounted basis, all cash flows relating to
principal and future coupon payments (except
for trading derivatives).
In addition, loan and other credit-related
commitments and financial guarantees and similar
contracts are generally not recognised on the balance
sheet. Trading derivatives are included in the ‘On
demand’ time bucket, and not by contractual
maturity, because trading derivatives are typically
held for short periods of time. The undiscounted
cash flows potentially payable under financial
guarantees and similar contracts are classified on the
basis of the earliest date they can be called.
Market risk
(Audited)
The objective of HSBC’s market risk management is
to manage and control market risk exposures in order
to optimise return on risk while maintaining a market
profile consistent with the Group’s status as one of
the world’s largest banking and financial services
organisations.
Market risk is the risk that movements in
market factors, including foreign exchange rates and
commodity prices, interest rates, credit spreads and
equity prices, will reduce HSBC’s income or the
value of its portfolios.
HSBC separates exposures to market risk into
trading and non-trading portfolios. Trading portfolios
include those positions arising from market-making,
position-taking and other marked-to-market
positions so designated.
Non-trading portfolios include positions that
arise from the interest rate management of HSBC’s
retail and commercial banking assets and liabilities,
financial investments designated as available for sale
and held to maturity, and exposures arising from
HSBC’s insurance operations.
Market risk arising in HSBC’s insurance
businesses is discussed in ‘Risk management of
insurance operations’ on pages 265 to 285.
The management of market risk is principally
undertaken in Global Markets using risk limits
approved by the GMB. Limits are set for portfolios,
products and risk types, with market liquidity being
a principal factor in determining the level of limits
set. Group Risk, an independent unit within Group
Management Office, develops the Group’s market