HSBC 2015 Annual Report Download - page 56

Report of the Directors: Financial summary (continued)
Group performance by income and expense item
HSBC HOLDINGS PLC
54
Net trading income
2015
$m
2014
$m
2013
$m
Trading activities 7,285 5,419 6,921
Ping An contingent forward sale contract
–
–
(682)
Net interest income on trading activities 1,775 1,907 2,047
Gain/(loss) on termination of hedges (11) 1 (194)
Other trading income
–
hedge ineffectiveness:
–
on cash flow hedges 15 34 22
–
on fair value hedges (11) 19 65
Fair value movement on non-qualifying hedges14 (330) (620) 511
Year ended 31 December 8,723 6,760 8,690
For footnote, see page 99.
Reported net trading income of $8.7bn was $2.0bn higher
than in 2014, predominantly in Europe. The movement in
net trading income in part reflected the favourable
significant items and currency translation summarised in
the table below.
Significant items and currency translation
2015
$m
2014
$m
Significant items
Included within trading activities: 230 (332)
–
favourable/(adverse) debit valuation adjustment on derivative contracts 230 (332)
Included in other net trading income: (327) (539)
–
fair value movement on non-qualifying hedges (327) (541)
–
acquisitions, disposals and dilutions
–
2
(97) (871)
Currency translation 520
Year ended 31 December (97) (351)
On an adjusted basis, net trading income from trading
activities increased by $1.7bn compared with 2014, driven
by our client-facing GB&M businesses, notably Equities,
Foreign Exchange and Credit. This was primarily in the
UK following an increase in volatility and client activity.
Net trading income from trading activities also rose due
to a number of other valuation movements. In 2014,
we revised our estimation methodology for valuing
uncollateralised derivative portfolios by introducing the
funding fair value adjustment (‘FFVA’) which resulted in a
charge of $263m. In addition, the Equities and Rates
businesses benefited from favourable movements on own
credit spreads compared with minimal movements in 2014.
These movements contributed to an increase in net trading
income from trading activities in Rates, although client
activity remained subdued.
Net income from financial instruments designated at fair value
2015
$m
2014
$m
2013
$m
Net income/(expense) arising from:
–
financial assets held to meet liabilities under insurance and investment contracts 531 2,300 3,170
–
liabilities to customers under investment contracts 34 (435) (1,237)
–
HSBC’s long-term debt issued and related derivatives 863 508 (1,228)
–
change in own credit spread on long-term debt (significant item) 1,002 417 (1,246)
–
other changes in fair value (139) 91 18
–
other instruments designated at fair value and related derivatives 104 100 63
Year ended 31 December 1,532 2,473 768
Assets and liabilities from which net income from financial instruments designated at fair value arose
2015
$m
2014
$m
2013
$m
Financial assets designated at fair value at 31 December 23,852 29,037 38,430
Financial liabilities designated at fair value at 31 December 66,408 76,153 89,084
Including:
Financial assets held to meet liabilities under:
–
insurance and investment contracts with DPF 11,119 10,650 10,717
–
unit-linked insurance and other insurance and investment contracts 11,153 16,333 25,423
Long-term debt issues designated at fair value 60,188 69,681 75,278