HSBC 2012 Annual Report Download - page 65

63
Overview Operating & Financial Review Corporate Governance Financial Statements Shareholder Information
non-recurrence of the implementation benefit
from refining the PVIF asset calculation in
2011.
• Revenue in Rest of Asia-Pacific increased by
3% due to the gain on sale of our operations in
Thailand, partly offset by the loss of operating
revenues associated with this disposal and the
discontinuation of our HSBC Premier (‘Premier’)
service in Japan. Net interest income remained
broadly in line with 2011. Mortgage and deposit
balances grew, primarily in Singapore, mainland
China, Australia and Malaysia, although the
effect was offset by narrower asset and deposit
spreads.
• In Latin America, revenue grew by 6%, driven
by higher insurance revenues from strong sales
of unit-linked pension and term life products
and the favourable effect of the recognition of a
PVIF asset (US$144m) in Brazil. In addition,
we reported a gain on sale of the general
insurance business in Argentina. Net interest
income increased due to growth in personal
loans and deposit balances. Growth was partly
offset by the loss on sale of certain businesses as
well as the non-recurrence of gains on the sale
and leaseback of branches and the sale of HSBC
Afore, both in Mexico during 2011.
• In Europe, revenue remained broadly in line
with 2011. Revenue decreased in the UK,
largely driven by deposit spread compression.
This was partly offset by higher mortgage
spreads and average balances in the UK and
business expansion in Turkey, which led to
higher net interest income following growth in
personal lending and mortgage balances.
• Loan impairment charges in RBWM excluding
US CRS and the US run-off portfolio were
broadly in line with 2011. Reductions in Europe,
driven by lower delinquencies across both the
secured and unsecured lending portfolios,
particularly in the UK, were offset by higher
impairments in Brazil, where delinquency rates
increased as economic growth slowed in 2012.
• Operating expenses in RBWM excluding US
CRS and the US run-off portfolio increased
only modestly, despite significantly higher
customer redress provisions and the non-
recurrence of a pension credit in the UK.
Excluding these items, expenses decreased
through both our organisational effectiveness
programmes and the transactions undertaken
as part of our portfolio management activities,
detailed below. These led to a reduction of more
than 13,500 FTEs, with all regions contributing
to sustainable cost savings of more than
US$350m.
• Share of profit from associates and joint
ventures decreased by 22%, mainly from Ping
An due to market valuation losses on equity
securities held by their insurance business,
reflecting volatile domestic equity markets.
Following the disposal of our associate, Ping
An, our remaining shareholding has been
classified as a financial investment.
Strategic imperatives
Developing a high standard of wealth
management for retail customers
• In 2012, we accelerated the transformation of
the Wealth Management business in HSBC,
investing significantly in infrastructure to
improve customer experience and revenue
generation, although further progress is required
to achieve our strategic goals.
• Wealth Management revenues increased by over
US$550m in 2012 to US$6.4bn, primarily due
to growth from insurance, mutual funds and
foreign exchange. Wealth insurance revenues
improved, driven by higher investment returns,
notably in Hong Kong and France and strong
sales of life insurance products in Hong Kong
and Brazil. Mutual funds sales grew, with
revenues increasing by 17% to US$935m.
Revenues from foreign exchange transactions
benefited from infrastructure investments,
including the successful deployment of our web-
enabled foreign currency ‘Get Rate’ system
across key markets in Europe and Asia towards
the end of 2011.
• Foreign exchange services are a core component
of our wealth strategy, and we continue to invest
in order to further enhance our customer
offering. By 31 December 2012, over 220,000
of our customers were using our Global View
and Global Transfer products, making cross-
border transfers amounting to more than
US$13bn in the year. We enhanced our
international wire services by improving limits
and pricing. We also completed the online
launch of dual-currency deposits in Asian
markets, and improved market access for
foreign exchange trading.