HSBC 2015 Annual Report Download - page 30

Profit before tax
($bn)
2015 2014
8.0
8.8
8.2
8.6
Reported
Adjusted
Continued revenue growth in Hong Kong
and the UK
– Adjusted profit before tax of $8.2bn
was $0.4bn or 5% lower than in 2014,
as revenue growth was more than offset
by a rise in LICs and higher costs.
– We grew revenue by $0.4bn or 3%, in
particular in Credit and Lending, and PCM.
This was mainly in Hong Kong and the
UK, reflecting average balance sheet
growth, although demand for credit in
Hong Kong was subdued in the second
half of 2015, with balances remaining
broadly unchanged.
– LICs were $0.5bn or 36% higher, reflecting
enhanced credit risk in the oil and gas
sector, notably in North America, Asia,
and Middle East and North Africa. In
addition, we raised LICs against a small
number of specific clients in Indonesia,
the UAE and the UK.
– Costs increased by $0.4bn or 6%, notably
in Asia and the US, due to wage inflation
and investment in growth initiatives,
regulatory programmes and compliance.
– Management initiatives set out in our
Investor Update in June 2015 contributed
a reduction in risk-weighted assets
(‘RWAs’) of $23.0bn or more than 75%
of our 2015–2017 target.
In 2015, the quality of our service was
recognised by several leading awards.
For the fourth consecutive year, we
were recognised as the Best Global
Cash Manager (for Non-Financial
Institutions) in the Euromoney Cash
Management survey. We were also
recognised as the Best Overall Global
Trade Finance Bank, among other
awards, in the Trade Finance Awards
for Excellence.
Business synergies
CMB is at the centre of business
synergies within the Group, enabling
nearly $6bn of business synergy
revenue in 2015. For example, it
provides trade finance, working capital
and liquidity management solutions to
GB&M clients. It also provides Capital
Finance expertise, and Insurance and
Asset Management capabilities from
across the Group to benefit customers.
Areas of focus
We are focused on creating value
from our network, which covers 90%
of global trade and capital flows. We
are therefore investing in digital and
technology aspects of our core
Payments and Cash Management
(‘PCM’), and Global Trade and
Receivables Finance propositions,
as well as in the Pearl River Delta,
ASEAN and NAFTA growth areas.
We achieved significant risk-weighted
asset efficiencies through management
initiatives in 2015 and continue to ensure
our capital is deployed effectively.
Customers
CMB serves more than two million
customers in 55 countries and
territories. Our customers range from
small enterprises focused primarily
on their domestic markets through
to corporates operating globally.
We have been simplifying our product
range and services to meet clients’
needs better. Since 2013, we have
reduced the number of products we
offer around the world from 975 to fewer
than 410. We have also completed
role-specific conduct training for more
than 20,000 employees to help ensure
that products are sold appropriately.
Products and services
We support our customers with tailored
financial products and services to allow
them to operate efficiently and to grow.
This includes providing them with
working capital, term loans, payment
services and international trade
facilitation, among other services.
We offer expertise in mergers and
acquisitions, and provide access to
financial markets.
Commercial Banking (‘CMB’)
Global businesses
We manage our products and services
globally through four global businesses.
Adjusted profit before tax
-5%
For further details on the financial
performance of our global businesses,
see pages 68 to 73.
Strategic Report
HSBC HOLDINGS PLC
28