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HSBC BANK PLC
Strategic Report: Business Review (continued)
18
Performance and Business Review
Profit on ordinary activities before tax
2014
2013
£m
£m
Retail Banking and Wealth Management
213
1,177
Commercial Banking
1,592
1,333
Global Banking and Markets
(19)
1,023
Global Private Banking
115
140
Other/Intersegment
52
(379)
1,953
3,294
HSBC Bank plc and its subsidiaries reported a profit
before tax of £1,953 million, £1,341 million or 41 per
cent lower than 2013.
CMB reported significantly higher profits in 2014 while
reported profits reduced across RBWM, GB&M and GPB.
Use of non-GAAP financial measures
Our reported results are prepared in accordance with
IFRSs as detailed in the Financial Statements on page
105. In measuring our business performance, the
primary financial measure that we use is ‘adjusted
performance’, which has been derived from our reported
results in order to eliminate factors which distort year-
on-year comparisons. This is considered to be a non-
GAAP financial measure.
Adjusted performance
Adjusted performance is computed by adjusting
reported results for the year-on-year effects of
significant items which distort year-on-year comparisons.
In 2014, we modified our business performance
reporting to better align it with the way we view our
performance internally and with feedback received from
investors. We use the term ‘significant items’ to
collectively describe the group of individual adjustments
which are excluded from reported results when arriving
at adjusted performance. Significant items, which are
detailed below, are those items which management and
investors would ordinarily identify and consider
separately when assessing performance in order to
better understand the underlying trends in the business.
We believe adjusted performance provides useful
information for investors by aligning internal and
external reporting, identifying and quantifying items
management believe to be significant and providing
insight into how management assesses year-on-year
performance.
The following business commentary is on an adjusted
basis, all tables are on a reported basis and the graphs
provide a reconciliation between reported and adjusted
basis, unless stated otherwise.
Significant revenue items by business segment
RBWM
CMB
GB&M
GPB
Other
Total
£m
£m
£m
£m
£m
£m
2014
Change in credit spread on long-term debt
–
–
–
–
17
17
Debit valuation adjustment on derivative contracts
–
–
(143)
–
–
(143)
Fair value movement on non-qualifying hedges
(155)
1
3
–
–
(151)
Provisions
arising from the on-going review of
compliance with the Consumer Credit Act in the UK
(337)
(16)
–
(26)
–
(379)
Year ended 31 December
(492)
(15)
(140)
(26)
17
(656)
2013
Change in credit spread on long-term debt
–
–
–
–
(167)
(167)
Debit valuation adjustment on derivative contracts
–
–
45
–
–
45
Fair value movement on non-qualifying hedges
33
–
(41)
–
–
(8)
Year ended 31 December
33
–
4
–
(167)
(130)