HSBC 2015 Annual Report Download - page 34

Profit before tax
($bn)
2015 2014
0.6
0.6
2.4
3.5
Reported
Adjusted
Profit before tax
($bn)
2015 2014
15.8
14.6
14.5
14.3
Reported
Adjusted
Regions
Europe
Strong revenue growth in GB&M
We serve European clients with a
broad range of services and facilitate
international trade and investment.
London is the strategic hub for our
GB&M business. We are creating a
ring-fenced bank based in Birmingham
to serve UK retail and business clients.
Europe generated $2.4bn of adjusted
profit before tax
– Adjusted profit before tax fell $1.1bn
or 32%, as revenue growth of $0.1bn
or 1% was more than offset by an increase
in costs (up by $1.2bn or 8%), of which
$0.4bn related to an increase in the bank
levy. Excluding the bank levy, costs rose by
$0.9bn or 6% as regulatory programmes,
compliance and staff costs increased.
– We increased revenue in GB&M by
$0.7bn or 11%, mainly in client-facing
businesses, such as Equities and Foreign
Exchange, and in Balance Sheet
Management. In CMB, revenue grew
marginally by $0.1bn or 1%, in part due to
balance sheet growth in term lending and
PCM, although fees from overdrafts fell.
Revenue in RBWM was broadly unchanged.
However, revenue fell in GPB by $0.2bn
or 12%, reflecting the ongoing repositioning
of the business. ‘Other’, which includes
revenue relating to central financing
activities, reported a fall in revenue
of $0.4bn.
– The graph below shows reported and
adjusted profit before tax. The difference
between them primarily reflects fines,
penalties, redress and charges in relation
to legal matters, which totalled $3.1bn
and $1.7bn in 2014 and 2015, respectively.
Asia
Revenue growth across all
global businesses
Our history as a bank is founded on
financing trade with Asia, and the
continent remains central to our strategy.
In 2015, our businesses in Asia accounted
for 70% of adjusted profit before tax.
We aim to grow our business in China’s
Pearl River Delta and the ASEAN region,
as well as strengthen our leadership
position in the internationalisation of
China’s renminbi currency.
GB&M and Wealth Management
revenue growth despite a challenging
second half
– Adjusted profit before tax was $0.2bn or
1% higher as we grew revenue in all of our
businesses by $0.9bn, partly offset by an
increase in costs of $0.7bn.
– Our revenue increased by $0.9bn or 4%.
In GB&M, this was notably in Foreign
Exchange, Equities, Capital Financing and
Securities Services. Revenue in RBWM also
rose, mainly in Hong Kong from investment
distribution income notably in the first half
of 2015, which more than offset weaker
market sentiment in the second half of the
year, and a rise in interest income from
average lending and deposit balance growth.
We also increased revenue in CMB (up by
$0.2bn or 4%) mainly from average balance
sheet growth, although balances remained
broadly unchanged in the second half of the
year, reflecting subdued demand for credit.
– Our costs grew across all businesses,
notably from higher staff costs due to wage
inflation. We increased staff numbers in
RBWM to support business growth, and in
Risk and Compliance.
– The graph below shows reported and
adjusted profit before tax. The difference
between them was primarily due to the gain
of $1.4bn on the partial disposal of our
shareholding in Industrial Bank in 2015.
We coordinate activities
across global businesses
and supporting functions
through a regional
structure.
For further details on our financial
performance by region, see pages
79 to 95.
HSBC HOLDINGS PLC
32
Strategic Report