HSBC 2009 Annual Report Download - page 73

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following the part disposal of the card merchant
acquiring business to a joint venture in 2008.
• Loan impairment charges and other credit risk
provisions increased by 56 per cent to
US$3.3 billion, representing less than 2 per cent
of average reported assets. Loan impairment
charges in 2009 remained at broadly the same
rate as experienced in the second half of 2008,
with the charge concentrated in manufacturing,
general trading and real estate. The increase in
loan impairment charges was mainly in the
Middle East, the UK, Brazil, and India, partly
offset by an improving credit environment in
Hong Kong.
• Operating expenses remained broadly
unchanged, including the benefit in the UK of
an accounting gain on staff benefits; however,
the cost efficiency ratio deteriorated slightly
driven by the effect of deposit spread
compression on revenues.
• Income from associates and joint ventures rose
by 5 per cent.
Business highlights in 2009
HSBC’s ‘leading international business’ strategy
continued to deliver customer-led and product-driven
growth across all segments.
• Product revenues from foreign exchange were
unchanged at US$0.5 billion, and revenues from
trade and supply chain also remained flat at
US$1.4 billion despite the overall decline
in global trade levels. While volumes of trade
activity were depressed in line with world trade
volumes, signs of recovery were apparent
towards the end of the year.
• Foreign exchange services were enhanced with
the launch of GetRate on Business Internet
Banking in Malaysia, India and the UK.
• The number of cross-border intra-Group
referrals increased by 48 per cent, notably in
Asia which accounted for over half of all
successful referrals. The aggregate transaction
value of successful referrals was US$9.0 billion.
• HSBC further strengthened its international
offerings for customers, with particular focus on
business flows to and from mainland China. In
conjunction with Bank of Communications,
HSBC launched a renminbi trade settlement
service in seven ASEAN countries and a same-
day credit pledge service on outward remittances
into mainland China from Hong Kong.
• Services for mainland China companies looking
to expand overseas were also a focus of
attention, with innovative solutions including a
video conference account opening service for
SMEs. Investment flows into mainland China
were targeted by increasing the number of
foreign national relationship managers in
HSBC’s international business teams there.
HSBC’s ‘best bank for business’ strategy also
progressed strongly with its transaction banking and
liabilities-led approach, particularly relevant in a
period of low credit demand:
• Business banking customer numbers increased
by 12 per cent to 3 million with over 61 per cent
of new customers in emerging markets.
• Deposit balances in business banking were
US$146 billion, providing a significant surplus
of funds for deployment. Total revenue from
Business Banking of US$5.8 billion, despite the
effects of deposit spread compression,
represented 45 per cent of total revenue,
highlighting the importance of this segment to
the Commercial Banking business.
• Customer loans and advances in business
banking were US$53 billion, and HSBC
continued to support businesses in the global
downturn. The US$5 billion International SME
Fund was launched in December 2008 in five
key markets. The fund was fully allocated by the
end of 2009 and 80 per cent of it was utilised.
• In 2009, the global roll-out of internationally
consistent offerings continued. Business Direct,
the direct channel proposition, was launched in
a further three countries and is now live in ten,
while the roll-out of a credit scoring platform
and deployment of globally consistent training
programmes illustrated HSBC’s ability to
leverage best practice and drive efficiencies
across its worldwide network.
In the corporate segment (see page 145 for
details), HSBC’s ability to provide or arrange debt
finance combined with its international reach for
payments and trade activity across developed and
emerging markets was evident in the number of new
multi-country banking relationships won in 2009,
despite the more cautious sentiment within the
global economy.
• The number of customers using HSBCnet
continued to grow strongly, and full regional
connectivity was rolled out in Latin America.
The receivables finance capability was extended
to deliver supplier funding programmes for
large buyers, and new pan-European deals were
written.