HSBC 2014 Annual Report Download - page 23

HSBC BANK PLC
Strategic Report: Business Review (continued)
21
Review of performance
Profit before tax (£m)
CMB reported a profit before tax of £1,592 million, £259
million or 19 per cent higher than 2013.
On an adjusted basis, CMB profit before tax was £1,700
million compared to £1,328 million in 2013, an increase
of £372 million or 28 per cent. The increase in profit was
primarily due to a reduction in loan impairment charges
from lower levels of individually assessed provisions in
the UK and Spain.
Business highlights
In the UK overall CMB lending increased by 7 per cent
compared with 2013, with new lending and re-financing
before attrition and amortisation increasing by 38 per
cent and approvals of over 85 per cent for small business
loan applications. Business Banking launched a campaign
to offer support and lending to SME customers, making
£5.8 billion of future lending available to help finance
growth across the UK. Lending in Global Trade and
Receivables Finance grew by 3 per cent, building on our
position in Trade Finance and reducing attrition from our
existing clients in Receivables Finance.
In France, our Payments and Cash Management business
implemented the Single Euro Payments Area platform
(‘SEPA’) for euro-denominated credit transfer and direct
debit payments across European locations. This allows
clients to make and receive payments in euros from their
HSBC accounts in the 34 countries that have
implemented SEPA, under a consistent set of standards,
rules and conditions. In addition, CMB allocated a further
£1.2 billion to the SME fund and approved over
£1.6 billion of lending in 2014.
In Germany, as part of our growth initiative, we opened
three branches in Dortmund, Cologne and Mannheim,
increased the number of relationship managers by 26
per cent and held a number of roadshows in countries
including France, mainland China and the UK to reinforce
Germany as a key international hub.
In Turkey we launched a £0.6 billion International Fund
in order to provide sustainable support and global
connectivity for international businesses, of which
£0.3 billion was drawn down.
Review of adjusted performance
Revenue (£m)
Revenue increased primarily in the UK and Germany
partially offset by lower revenues in Turkey.
In the UK revenue increased from wider spreads in term
lending and growth in deposit volumes in Payments and
Cash Management. In addition, there was an increase in
net fee income, partly reflecting higher volumes of new
business in the Large Corporate and Mid-Market
segments.
In Germany revenue grew by 11 per cent from increased
volumes in Credit and Lending, reflecting the growth
initiatives implemented earlier in the year. In Turkey
revenues were lower due to the impact of the regulatory
interest rate cap on overdrafts.
Loan impairment charges decreased primarily in the UK
and to a lesser extent in Spain due to lower individually
assessed provisions, reflecting the enhanced quality of
the portfolio and improved economic conditions. This
was partially offset by higher individually assessed
provisions in France.
Operating expenses (£m)
Operating expenses of £1,442 million were in line with
2013. An increase in expenses was driven by the timing
of the recognition of the FSCS levy in the UK and
increased investment in front-line staff in Germany and
wage inflation. This was offset by the benefits delivered
through re-engineering of business processes.
1,592
1,333
108 1,700
(5)
1,328
2014
2013
Adjusted Profit
Reported
Significant items
3,434 3,370
15 3,449 3,370
2014
2013
Adjusted RevenueReported
Significant items
1,535
1,437
(93)
1,442 51,442
2014
2013
Adjusted ExpensesReported
Significant items