HSBC 2012 Annual Report Download - page 116

HSBC HOLDINGS PLC
Report of the Directors: Operating and Financial Review (continued)
Geographical regions > Latin America
114
addition, liabilities to policyholders were established
for new business, reflecting the increase in premiums
in Brazil, though this was partly offset by the
disposal of the general insurance business in
Argentina in 2012.
Loan impairment charges and other credit risk
provisions increased by 29%. This was mainly in
Brazil, driven by increased delinquency rates in
RBWM and CMB, particularly in Business Banking,
reflecting lower economic growth in 2012. We took
a number of steps to reposition our portfolios in
RBWM and CMB including reducing third-party
originations and lowering credit limits where
appropriate. We also improved our collections
capabilities. Loan impairment charges improved
during the second half of the year in Brazil.
Operating expenses decreased by US$83m
compared with 2011. Restructuring costs declined
by US$137m as 2011 included costs associated with
the consolidation of the branch network and
the reorganisation of regional and country support
functions. These restructuring initiatives and our
continued efforts to exercise strict cost control and
progress with our organisational effectiveness
programmes resulted in approximately US$285m of
additional sustainable cost savings and a net 7%
reduction in average FTEs of around 4,000 in 2012.
These savings were partly offset by inflationary
pressures, union-agreed wage increases in Brazil and
Argentina and a payment of fines and penalties of
US$29m in connection with non-compliance with
anti-money laundering systems and controls
including requirements to report unusual
transactions, in Mexico.