HSBC 2008 Annual Report Download - page 117

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global custody, credit facilities and insurance.
Increased trade services income in the region
reflected higher intra-regional trade flows, which
were driven by the favourable economic conditions.
Strong trading income growth was delivered, led
by foreign exchange trading, where higher volumes
were driven by increased volatility which, in turn,
increased customer demand for risk management
products.
Net earned insurance premiums rose by 24 per
cent to US$226 million. This growth was mainly
generated in Malaysia by the HSBC Amanah Takaful
business which was launched in late 2006, offering
shariah-compliant insurance products.
Other operating income decreased by 2 per cent,
partly because gains on disposals of certain
businesses in Australia were recorded in 2006.
Similarly, profits from the disposal of assets held for
sale decreased due to the non-recurrence of profits on
sale of properties in Japan and India.
Net insurance claims incurred and movement in
liabilities to policyholders rose by 25 per cent to
US$253 million, in line with the increase in
premiums, mainly in Malaysia.
Loan impairment charges rose by 17 per cent to
US$616 million as corporate loan impairment
charges increased in several countries. In addition,
loan impairment charges in India rose due to balance
sheet growth and higher loss rates on credit cards.
Partly offsetting these factors, loan impairment
charges were significantly lower in Taiwan due to the
non-recurrence of impairment charges in 2006 which
resulted from regulatory intervention in the card
market and the imposition of a government debt
negotiation scheme. In Indonesia, performance
improved on 2006 when loan impairment charges
were affected by the introduction of minimum
repayment terms.
Operating expenses increased by 28 per cent in
line with the rise in net operating income before loan
impairment charges. Business expansion continued
throughout the region. Staff costs in India, mainland
China and the Middle East rose on increases in
volume-driven headcount and performance-related
bonuses, the latter due to higher revenue generation.
Business expansion initiatives were taken in
mainland China, where an additional 27 new
branches or sub-branches were opened. In India, the
branch network and the consumer finance and credit
card businesses were all expanded. Marketing,
technology and infrastructure costs were incurred in
support of business expansion.
Share of profit in associates and joint ventures
in the region rose by 51 per cent, mainly due to
increased contributions from HSBC’s strategic
investments in mainland China, Bank of
Communications, Ping An Insurance and Industrial
Bank. HSBC’s share of profit from Ping An
Insurance rose by 101 per cent to US$518 million as
a result of robust growth, notably from life insurance
products, and the realisation of synergistic gains
across Ping An Insurance’s other business offerings.
Profit from the Bank of Communications rose by
64 per cent to US$445 million as a result of
improved performance across the associate’s various
product offerings. Increased income from credit and
treasury products and significant growth in fee
income contributed to the rise in profits. HSBC’s
share of profits from the Saudi British Bank
decreased by 22 per cent to US$216 million. This
was largely due to the effects of a significant
correction to the local stock market in the second
half of 2006.