HSBC 2008 Annual Report Download - page 203

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US$23 billion). A more detailed analysis of
securities held by the insurance businesses is set
out on page 262.
Derivatives
(Unaudited)
Derivative assets at 31 December 2008 were
US$495 billion, a rise of 163 per cent from
31 December 2007, primarily foreign exchange,
interest rate and credit derivatives. The main drivers
of growth were mark-to-market movements across
the entire portfolio arising from volatility and
movements in interest rates and credit spreads.
Loans and advances
(Unaudited)
Loans and advances were well diversified across
industry sectors and jurisdictions.
At constant exchange rates, gross loans and
advances to customers (excluding the financial
sector settlement accounts and reclassified ABSs) at
31 December 2008 rose by US$54 billion or 7 per
cent from 31 December 2007.
Personal lending represented 46 per cent of total
loans and advances to customers including the
financial sector settlement accounts and reclassified
ABSs. Residential mortgages of US$243 billion
represented 25 per cent of total advances to
customers, the Group’s largest concentration in a
single exposure type.
Corporate, commercial and financial lending,
including settlement accounts, amounted to 53 per
cent of total loans and advances to customers
at 31 December 2008. The largest industry
concentrations were in non-bank financial
institutions and commercial real estate lending at
10 per cent and 7 per cent, respectively, of total
gross lending to customers.
Exposure to non-bank financial institutions
principally comprised secured lending on trading
accounts, primarily through repo facilities. During
2008, HSBC reduced unsecured exposure to hedge
fund trading accounts. HSBC had no material
exposure to hedge funds affected by the
administration of Lehman Brothers International
(Europe).
HSBC managed its exposure to insurance
institutions closely within existing limits and
experienced no material loss during 2008.
Commercial, industrial and international trade
lending rose strongly during 2008, increasing its
proportion of total lending by 2 percentage points to
22 per cent of total gross loans and advances to
customers on a reported basis. Within this category,
the largest concentration of lending was to the
service sector, which amounted to 6 per cent of total
gross lending to customers.
Loans and advances to banks were widely
distributed across major institutions.
Lending to banks was managed downwards
during 2008. HSBC reduced limits to this sector in
response to a deterioration in credit quality which
was most visible in the collapse of a number of US
and Icelandic banks to which the Group had
advanced funds. The expansion of sovereign
guarantees for some bank issuance increased appetite
for these counterparties.
2008 compared with 2007
(Unaudited)
The commentary below analyses, on a constant
currency basis, the changes in lending noted in
the table below, compared with the position at
31 December 2007. On this basis, loans and
advances to personal, corporate and commercial
customers increased by 7 per cent, and total gross
loans and advances rose by 1 per cent.
Total lending to personal customers was
concentrated in North America (US$196 billion),
the UK (US$108 billion) and Hong Kong
(US$46 billion). Collectively, these regions
accounted for 79 per cent of total personal lending, a
decline of 1 percentage point from the level reported
at 31 December 2007. Total lending to personal
customers declined by 3 per cent to US$440 billion
at 31 December 2008.