HSBC 2015 Annual Report Download - page 35

Profit before tax
($bn)
2015 2014
0.6
1.4
1.6
2.0
Reported
Adjusted
Profit before tax
($bn)
2015 2014
1.5
1.8
1.5
1.8
Reported
Adjusted
Profit before tax ($bn)
2015 2014
0.3
0.2
0.5
0.4
Reported
Adjusted
Latin America
Revenue growth driven
by RBWM and CMB
We are focusing on growing our
business in Mexico, where we are
among the top five banks by assets
and provide connectivity for businesses
around the world, including ones in
the US. In 2015, we announced the
sale of our operations in Brazil. We aim
to continue to provide access to the
region for large multinational companies.
Revenue growth and lower LICs
– Adjusted profit before tax rose by $0.1bn
due to higher revenue and lower LICs,
offset by higher costs.
– Our revenue was $0.2bn higher (up by
3%). We increased revenue in CMB by
$97m, as lending and deposit balances
grew in Argentina, and in RBWM we
grew lending across all core products
in Mexico and grew deposit balances
in Argentina. In RBWM in Brazil, revenue
fell (down by $21m) reflecting the
economic slowdown and our decision
to sell the business there.
– LICs fell by $0.1bn due to lower specific
LICs as the prior year included a significant
GB&M charge, while LICs also fell in
CMB. This was partly offset by higher
LICs in RBWM in Brazil reflecting a rise
in delinquency rates.
– Costs increased in all of our businesses
(up by $0.2bn or 4%) at below the
average rate of inflation in the region.
This was despite continued investment
in Global Standards.
North America
Growing revenue from cross-
border banking in the NAFTA area
The US is a key partner in global trade
and the US dollar remains the primary
currency for global trade and payments.
We support our North American
customers within the NAFTA area and
around the world, helping them grow
their businesses.
GB&M revenue rose 9% and run-off of the
US CML portfolio continued
– Adjusted profit before tax fell $0.4bn or
22% as the decrease in profit before tax
from the continued reduction in our US
CML portfolio more than offset growth
in our principal business.
– Total revenue was $0.3bn lower. We grew
revenue in GB&M by 9%, notably from
increased income in Markets and Balance
Sheet Management. However, this was
more than offset by a decrease in revenue
in the US CML run-off portfolio, reflecting
lower lending balances from the continued
run-off and loan sales.
– LICs increased by $0.2bn in CMB from
the oil and gas sector, and in RBWM
from lower favourable market value
adjustments in the US CML run-off
portfolio as improvements in housing
market conditions were less pronounced.
– We kept costs broadly unchanged, as
higher staff costs in CMB and GB&M
were offset in RBWM, notably in the
US CML run-off portfolio.
– The graph below shows reported and
adjusted profit before tax. The difference
between them in part reflects the effect
of fines, penalties and charges in relation
to legal matters, which totalled $0.6bn
and $0.7bn in 2014 and 2015, respectively.
Middle East and North Africa
Revenue growth across all
businesses despite geopolitical
uncertainties and falling oil prices
HSBC is the longest serving international
bank with one of the largest networks
in the region, offering a universal
banking model and playing a vital role
in facilitating international trade. Our
priority markets in the region are
Saudi Arabia, Egypt and the United
Arab Emirates (‘UAE’).
Despite revenue growth, profit before tax
fell due to higher LICs and costs
– Adjusted profit before tax fell by $0.3bn,
or 15%, mainly due to an increase in LICs
of $0.3bn reflecting net charges in 2015
compared with net releases in 2014. LICs
in 2015 included higher charges in CMB
on individually assessed UAE-related
exposures, and in RBWM on mortgages
in the UAE, reflecting the impact of
a review of portfolio collateral.
– We increased our revenue by $0.1bn,
or 2%, across all businesses, mainly in
GB&M in Egypt from growth in lending
and investments, and in RBWM in the
UAE from higher fee income on cards
and wealth products.
– Our costs were $0.1bn or 5% higher,
mainly in the UAE and Egypt due to higher
staff costs, in part reflecting continued
investment in Global Standards and
wage inflation.
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HSBC HOLDINGS PLC
33
Regions