HSBC 2011 Annual Report Download - page 99

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Overview Operating & Financial Review Corporate Governance Financial Statements Shareholder Information
49 Assets by geographical region and global businesses include intra-HSBC items. These items are eliminated, where appropriate, under
the heading ‘Intra-HSBC items’ or ‘inter-segment elimination’, as appropriate.
50 RWAs from associates have been reallocated in order to properly align with the classification of income. RWAs from Global Asset
Management have been reallocated to RBWM, principally from GB&M. Both items represent a reclassification from the basis used in
HSBC’s 2010 Pillar 3 disclosures. Comparative data have been adjusted accordingly.
51 The movement includes the impact of the rule changes under Basel 2.5.
52 Net operating income before loan impairment charges and other credit risk provisions.
53 Loan impairment charges and other credit risk provisions.
54 Share of profit in associates and joint ventures.
55 Pre-tax return on average risk-weighted assets. The 2009 RoRWA is based on the 2009 period end risk-weighted assets.
56 In the analysis of global businesses, net trading income comprises all gains and losses from changes in the fair value of financial assets
and financial liabilities classified as held for trading, together with related external and internal interest income and interest expense,
and dividends received; in the statutory presentation internal interest income and expense are eliminated.
57 In 2011, Global Markets included a favourable fair value movement of US$458m on the widening of credit spreads on structured
liabilities (2010: favourable fair value movement of US$23m; 2009: adverse fair value movement of US$444m).
58 Total income earned on payments and cash management products in the Group amounted to US$5.6bn (2010: US$4.4bn; 2009:
US$4.1bn), of which US$4.0bn was in CMB (2010: US$3.3bn; 2009: US$3.1bn) and US$1.5bn was in GB&M (2010: US$1.1bn; 2009:
US$1.1bn).
59 Total income earned on other transaction services in the Group amounted to US$3.2bn (2010: US$2.7bn; 2009: US$2.2bn), of which
US$2.6bn was in CMB relating to trade and receivables finance (2010: US$2.1bn; 2009: US$1.7bn) and US$634m was in GB&M of
which US$601m related to trade and receivables finance (2010: US$523m; 2009: US$382m) and US$33m related to banknotes and
other (2010: US$113m; 2009: US$125m).
60 In each Group entity, Balance Sheet Management is responsible for managing liquidity and funding under the supervision of the local
Asset and Liability Management Committee (‘ALCO’). Balance Sheet Management also manages the structural interest rate position of
the entity within a Global Markets limit structure.
61 ‘Other’ in GB&M includes net interest earned on free capital held in the global business not assigned to products.
62 The foreign exchange effect is not eliminated on an underlying basis as the reporting currency of the principal business within GPB is
US dollars.
63 ‘Client assets’ are translated at the rates of exchange applicable for their respective period-ends, with the effects of currency translation
reported separately. The main components of client assets are funds under management, which are not reported on the Group’s balance
sheet, and customer deposits, which are reported on the Group’s balance sheet.
64 Inter-segment elimination comprises (i) the costs of shared services and Group Service Centres included within ‘Other’ which are
recovered from global businesses, and (ii) the intra-segment funding costs of trading activities undertaken within GB&M. HSBC’s
Balance Sheet Management business, reported within GB&M, provides funding to the trading businesses. To report GB&M’s ‘Net
trading income’ on a fully funded basis, ‘Net interest income’ and ‘Net interest income/(expense) on trading activities’ are grossed up to
reflect internal funding transactions prior to their elimination in the inter-segment column.
65 Net insurance claims incurred and movement in liabilities to policyholders.
66 ‘Employee expenses’ comprise costs directly incurred by each global business. The reallocation and recharging of employee and other
expenses directly incurred in the ‘Other’ category are shown in ‘Other operating expenses’.
67 RWAs are non-additive across geographical regions due to market risk diversification effects within the Group.
68 Hong Kong Government certificates of indebtedness were reclassified from RBWM to ‘Other’ at 1 January 2010.
69 US includes the impairment of goodwill in respect of RBWM – North America.