HSBC 2003 Annual Report Download - page 67

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Basis of preparation and Footnotes to ‘Analysis by customer group and by geographical region’
Basis of preparation
The results are presented in accordance with the
accounting policies used in the preparation of
HSBC’ s consolidated financial statements. HSBC’ s
operations are closely integrated and, accordingly,
the presentation of customer group data includes
internal allocations of certain items of income and
expense. These allocations include the costs of
certain support services and head office functions, to
the extent that these can be meaningfully attributed
to operational business lines. While such allocations
have been made on a systematic and consistent basis,
they necessarily involve a degree of subjectivity.
Where relevant, income and expense amounts
presented include the results of intra-segment
funding as well as inter-company and inter-business
line transactions. All such transactions are
undertaken on arm’s-length terms. Intra-segment
funding and placements of surplus funds are
generally undertaken at market interest rates.
Footnotes to ‘Analysis by customer group and by geographic region’
11,2,3 Goodwill amortisation excluded from profit/(loss) is disclosed in the tables on pages 58 to 63.
14Comprises Household’s consumer finance activities since the date of acquisition.
15The main items reported under ‘Other’ are the income and expenses of wholesale insurance operations, certain property activities,
unallocated investment activities including hsbc.com, centrally held investment companies and HSBC’s holding company and
financing operations. The results include net interest earned on free capital held centrally and operating costs incurred by the head
office operations in providing stewardship and central management services to HSBC. Net fees and commissions and other income of
the Group’s wholesale insurance operations amounted to US$382 million in 2003 (2002:US$324 million; 2001: US$297 million).
16Third party only.
17Excluding Hong Kong Government certificates of indebtedness.
18In 2003, North America implemented a revised funds transfer pricing system to transfer interest rate risk from the business units to
Corporate, Investment Banking and Markets. The figures for 2002 have been restated to reflect the impact of transfer pricing had it
been in place on a similar basis. The effect on the figures for 2001 is immaterial.
19The figures for ‘Total assets’ for 2002 and 2001, and for total assets for ‘Other’ for 2002 and 2001, have been restated to reflect the
adoption of UITF Abstracts 37 ‘Purchases and sales of own shares’ and 38 ‘Accounting for ESOP trusts’, details of which are set out
in Note 1 of the ‘Notes on the Financial Statements’ on pages 239 to 240.
10 Since the date of acquisition.
11 Deducted in arriving at the profit on ordinary activities before tax of North America.
12 Deducted in arriving at the profit on ordinary activities before tax of South America.