HSBC 2003 Annual Report Download - page 94

HSBC HOLDINGS PLC
Financial Review (continued)
92
was 59 per cent higher than in 2001, driven by
significant growth in credit cards and other personal
lending, partly offset by increased costs due to
business expansion and global processing costs.
Net interest income grew by 21 per cent,
generated by strong growth in credit card advances
and personal lending across the region, in particular
in Taiwan, Singapore and India. In Malaysia, growth
resulted from acquisition of the ABN AMRO
mortgage portfolio in the first half of 2002, together
with a significant increase in credit card advances. In
Australia, the inclusion of a full year’s income from
the acquisition of NRMA in November 2001
contributed to the increase in net interest income.
HSBC’s credit card business recorded a 25 per
cent increase in balances in 2002. In the difficult
economic environment, HSBC’s focus switched from
the acquisition of customers to their retention.
Investment was made in staff, training and systems
to support expected growth in the credit card
business in 2003.
Other operating income rose by 30 per cent over
2001. Net fees grew by 25 per cent to US$211
million, largely due to the significant increase in
credit card income, principally in Malaysia, the
Middle East and Indonesia, and growth in account
service fees. In Australia, fee income for 2002 more
than doubled, following HSBC’s acquisition of
NRMA Building Society in 2001 and the acquisition
of HSBC Stockbroking Australia. The financial
planning services team in the Middle East, which
provides savings, retirement education and
protection planning services throughout the region,
reported a 19 per cent growth in fee and commission
income.
HSBC’s strong presence in mainland China was
supported by a wide range of business capabilities.
With further liberalisation of China’s financial
market, banking regulations were relaxed to permit
foreign banks to provide foreign currency services to
mainland Chinese companies and citizens, and
HSBC became the first foreign bank to offer them, at
10 locations across the country. In December 2002,
HSBC launched online personal banking services to
local citizens and international customers in
mainland China.
Operating costs, before goodwill amortisation,
increased by 20 per cent compared with 2001. This
growth primarily reflected a higher staff complement
in the Group Service Centres in India and mainland
China and business expansion in the Middle East,
Australia and Taiwan. During the year, The
Hongkong and Shanghai Banking Corporation
opened eight new branches in the region.
The year saw continued expansion of internet
banking services across the region, with substantial
increases in both online customer activity and the
range of services offered. The number of personal
internet banking customers rose to over 249,000,
covering 8 per cent of the personal banking customer
base in 12 countries.
Provisions for bad and doubtful debts increased
by 13 per cent to US$104 million, following
increased credit card lending in India, Indonesia and
Taiwan, partly offset by lower provisioning
requirements in Indonesia and the Middle East, led
by improved credit control procedures.
Commercial Banking reported pre-tax profits,
before goodwill amortisation, of US$423 million, an
increase of 58 per cent, compared with 2001.
Net interest income declined by 11 per cent
compared with 2001, as a result of subdued
commercial loan demand and lower lending margins,
particularly in Mauritius, Singapore and Indonesia.
Net fees and commissions were slightly higher than
in 2001, reflecting the acquisition of the trade
finance portfolio from State Street Bank Australia in
July.
Operating expenses, excluding goodwill
amortisation, were in line with 2001. HSBC
continued to expand its utilisation of Group Service
Centres, with new centres opening in Shanghai and
Bangalore in addition to existing facilities in
Hyderabad and Guangzhou. By the end of the year,
12,400 calls from UK business telephone banking
customers were being answered each week in the
Bangalore call centre.
There was a net release of provisions for bad and
doubtful debts in 2002, mainly in Indonesia,
Singapore, Taiwan and Thailand. These releases were
partly offset by additional provisions in India and
Mauritius. In 2001, significant specific provisions
were raised in Indonesia in view of the deteriorating
political and economic environment.
Corporate, Investment Banking and Markets
reported pre-tax profit, before amortisation of
goodwill, of US$706 million, broadly in line with
2001.