FORM 6-K
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Report of Foreign Private Issuer
Pursuant to Rule 13a - 16 or 15d - 16 of
the Securities Exchange Act of 1934
For the month of July, 2007
HSBC Holdings plc
42nd Floor, 8 Canada
Square, London E14 5HQ, England
(Indicate by check mark whether the registrant files or will file annual
reports under cover of Form 20-F or Form 40-F).
Form 20-F X Form 40-F ......
(Indicate by check mark whether the registrant by furnishing the information
contained in this Form is also thereby furnishing the information to the
Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of
1934).
Yes....... No X
(If "Yes" is marked, indicate below the file number assigned to the registrant
in connection with Rule 12g3-2(b): 82- ..............)
HSBC HOLDINGS PLC
2007 INTERIM RESULTS - HIGHLIGHTS
- Total operating income up 23 per cent to US$42,092 million (US$34,334
million in the first half of 2006).
For the half-year:
- Net operating income up 14 per cent to US$32,147 million (US$28,295
million in the first half of 2006).
- Group pre-tax profit up 13 per cent to US$14,159 million (US$12,517
million in the first half of 2006).
- Profit attributable to shareholders of the parent company up 25 per
cent to US$10,895 million (US$8,729 million in the first half of 2006).
- Return on average invested capital of 18.4 per cent (17.2 per cent in
the first half of 2006).
- Basic earnings per ordinary share up 22 per cent to US$0.95 (US$0.78 in
the first half of 2006).
Dividend and capital position:
- Second interim dividend for 2007 of US$0.17 per ordinary share which,
together with the first interim dividend for 2007 of US$0.17 per ordinary
share already paid, represents an increase of 13 per cent over the first and
second interim dividends for 2006.
- Tier 1 capital ratio of 9.3 per cent and total capital ratio of 13.2
per cent.
HSBC HOLDINGS REPORTS PRE-TAX PROFIT OF US$14,159 MILLION
HSBC made a profit before tax of US$14,159 million, an increase of US$1,642
million, or 13 per cent, over the first half of 2006.
Net interest income of US$18,230 million was US$1,499 million, or 9 per cent,
higher than the first half of 2006.
Net operating income before loan impairment charges and other credit risk
provisions of US$38,493 million was US$6,308 million, or 20 per cent, higher
than the first half of 2006.
Operating expenses of US$18,611 million rose US$2,472 million, or 15 per cent,
compared with the first half of 2006. On an underlying basis and expressed in
terms of constant currency, operating expenses increased by 10 per cent.
HSBC's cost efficiency ratio was 48.3 per cent compared with 50.1 per cent in
the first half of 2006.
Loan impairment charges and other credit risk provisions were US$6,346 million
in the first half of 2007, US$2,456 million higher than the first half of 2006.
The tier 1 capital and total capital ratios for the Group remained strong at 9.3
per cent and 13.2 per cent, respectively, at 30 June 2007.
The Group's total assets at 30 June 2007 were US$2,150 billion, an increase of
US$290 billion, or 16 per cent, since 31 December 2006.
Geographical distribution of results
Profit before tax
Half-year to
30Jun07 30Jun06 31Dec06
US$m % US$m % US$m %
Europe 4,050 28.6 3,600 28.8 3,374 35.3
Hong Kong 3,330 23.5 2,654 21.2 2,528 26.4
Rest of Asia-Pacific 3,344 23.6 1,657 13.2 1,870 19.5
North America 2,435 17.2 3,741 29.9 927 9.7
Latin America 1,000 7.1 865 6.9 870 9.1
14,159 100.0 12,517 100.0 9,569 100.0
Tax expense (2,645) (3,272) (1,943)
Profit for the year 11,514 9,245 7,626
Profit attributable
to shareholders of
the parent
company 10,895 8,729 7,060
Profit attributable
to minority
interests 619 516 566
Distribution of results by customer group
Profit before tax
Half-year to
30Jun07 30Jun06 31Dec06
US$m % US$m % US$m %
Personal Financial
Services 4,729 33.4 5,908 47.2 3,549 37.1
Commercial Banking 3,422 24.2 2,862 22.9 3,135 32.8
Corporate, Investment
Banking and Markets 4,158 29.4 3,144 25.1 2,662 27.8
Private Banking 780 5.5 600 4.8 614 6.4
Other 1,070 7.5 3 - (391) (4.1)
Total 14,159 100.0 12,517 100.0 9,569 100.0
Statement by Stephen Green, Group Chairman
HSBC produced record results for the first half of 2007, delivering profit
before tax of US$14.2 billion, up 13 per cent, and earnings per share of
US$0.95, up 22 per cent.
The Directors have approved a second interim dividend of US$0.17 per share,
which will be payable on 4 October 2007 with a scrip alternative, in accordance
with our planned schedule of quarterly dividends.
The results were driven by excellent performances across Asia, and in Corporate,
Investment Banking and Markets ('CIBM'), and Commercial Banking, which offset
the impact of higher consumer finance impairment charges in the US and a
challenging environment for our personal business in Europe.
Our results benefited from two specific items. First, we recognised a gain of
US$1 billion in attributable profit, as a result of the dilution of our holdings
in our mainland China associates. Excluding this exceptional gain, profit before
tax rose by 5 per cent and attributable profit by 13 per cent. Second, our
effective tax rate was unusually low at 18.7 per cent in this period. The
following commentary excludes the impact of the dilution gain.
Revenues grew by US$5.2 billion, or 16 per cent, against cost growth of US$2.5
billion, or 15 per cent, contributing to an improved cost-efficiency ratio of
49.7 per cent.
Asia drove profit growth, with Hong Kong ahead by 25 per cent and the Rest of
Asia-Pacific by 37 per cent. Latin America and Europe delivered results ahead of
the prior year period by 16 per cent and 13 per cent respectively. As expected,
North America was lower by 35 per cent as a consequence of higher impairment
reserves. It is worth noting that our results for the first half of 2006
benefited from exceptionally low impairment charges in the US as a result of
changes in US bankruptcy law.
At a customer group level, Commercial Banking delivered pre-tax profits 20 per
cent ahead of last year, and both CIBM and Private Banking were at least 30 per
cent ahead. Our Personal Financial Services businesses in Asia also delivered
very strong results, with pre-tax profits 38 per cent ahead of the interim stage
last year. However, pre-tax profits in Personal Financial Services as a whole
declined 20 per cent overall compared with the first half of 2006, owing to
challenging conditions in the UK and to the weaknesses we have already
highlighted in our US correspondent mortgage business. The actions taken to
restructure and manage down our exposure in this business are progressing well.
The charge for impairments was lower than in the second half of last year and,
importantly, was in line with our expectations.
Within these results, the Group's Insurance operations made a significant
contribution and we see insurance as a growth opportunity for the future.
From a strategic perspective, these results illustrate the value we are creating
from our position as the world's largest and most profitable international
emerging markets bank, and from our unique global reach which allows us to act
as a bridge between developed and developing markets for our customers.
The strong growth we achieved in operating revenues reflects our focus on
seeking out growth markets and has allowed us to continue to invest in organic
expansion while maintaining a strong capital position and growing dividends to
shareholders.
Average invested capital rose by US$17 billion as we pursued expansion
opportunities around the world. Our tier one capital ratio remained strong at
9.3 per cent. We see this as a competitive advantage, particularly in the
current economic environment, and in light of the opportunities we see to deploy
this capital within our businesses.
In an increasingly globalised world, the success we have reported today is
supported by the integrity that is part of our global brand, and which we
believe constitutes a distinct competitive advantage. In less than a decade, we
have made 'HSBC' the 23rd most valuable brand in the world, according to
Interbrand, and we are the fastest growing financial services brand. We will
continue to invest in developing our brand and the experience it promises for
the customers and communities we serve around the world. We will also extend our
brand to new markets and new business streams.
As I set out earlier this year, we are refocusing our business to make the most
of the opportunities presented by three major trends that are reshaping the
world economy. First, emerging markets are growing faster than mature economies.
Second, world trade is growing significantly faster than world GDP. Third,
longevity is increasing around the world.
As a result, we have positioned our business so that it is broadly balanced
between Asia, Latin America, the Middle East and other developing economies, and
slower-growing developed economies. As the world economy evolves, and trade and
investment flows from and into emerging markets expand, HSBC has an excellent
platform for growth. It is the linkages between our business operations across
83 countries and territories which deliver unique revenue opportunities and a
distinctive competitive position. Increasing longevity is also creating
opportunities to grow our insurance and retirement businesses. All these factors
contributed to the growth we delivered in the first half of 2007.
I want to thank all my colleagues for their contribution to these results. Our
progress is clear evidence of the value we are delivering through our strategy
of joining up the company for our customers, our shareholders and our people.
As the world's local bank, our responsibilities extend beyond how successfully
we run our business. Climate change is one of the most significant issues of our
time, which is why we announced in May the US$100 million HSBC Climate
Partnership, working with four world-class organisations to support initiatives
by individuals, businesses and governments around the world to address this
issue. I am also delighted that Sir Nicholas Stern - author of the Stern Report
on the economics of climate change - has agreed to become an adviser on economic
development and climate change to HSBC.
Outlook
The world economy remains remarkably buoyant. There is growing evidence of
economic decoupling, with US weakness not constraining economic activity
elsewhere. Even in the US, which faces considerable housing and
sub-prime-related difficulties, consumer spending has remained encouragingly
robust and the labour market has been firm. The financial markets continue to
enjoy record levels of activity, though muted in the past couple of months by
nervousness about credit markets, and more sophisticated product structuring and
risk management services are enabling the diversification and spread of risk on
an unprecedented scale. This buoyancy is supporting economic activity.
We estimate that global growth this year will be close to last year's 3.8 per
cent. We believe emerging markets will remain particularly strong, stimulating
global demand for capital goods, providing an economic boost to Germany, Japan
and other major exporters. The weakness in the housing market is likely to hold
back US growth for 2007, which may be as low as 2 per cent.
There are risks, however. Excess liquidity in global financial markets could
lead to further asset price dislocation. Perceptions of risk can change very
rapidly, affecting both credit spreads and liquidity, and history shows that
when market participants simultaneously seek to adjust risk exposures, market
instability can follow. Among the potential triggers are higher global interest
rates with a return to higher inflation, moves towards protectionism and greater
spillover effects from US housing market weakness. HSBC has always emphasised
balance sheet strength to maintain strong liquidity and a sound capital base to
take advantage of opportunities that arise in such circumstances. We remain
cautious in our risk appetite.
Our strategy is clear. We have well diversified earnings by both geography and
customer. Our distribution network provides compelling opportunities for serving
our customers around the world. We will continue to improve both customer
experience and operating efficiency through technology, especially in our direct
channels. The outlook for HSBC is buoyed by our expectation of continuing strong
growth in our developing markets businesses and their greater linkages
internationally. We are on a journey with great opportunities to build on our
strong current position, and I look forward to reporting our future progress.
Review by Michael Geoghegan, Group Chief Executive
Our first half results demonstrate sustainable growth and significant progress
in working through the challenges of sub prime lending, whilst also unlocking
real value from our world class distribution network through Joining Up The
Company.
The world's largest and most profitable international emerging markets bank
Our emerging markets operations continue to perform exceptionally well. We
prioritise investment in growing these businesses organically and we continue to
extract value from strategic investments - this month our integration of Grupo
Banistmo continued as we rebranded operations to HSBC in five Latin American
countries.
We have a strong presence in the world's most dynamic economies. In the BRIC
countries - forecast to account for 40 per cent of world growth by 2025 - we are
the largest international bank in mainland China, the second largest and growing
impressively in India, and the third largest in Brazil. In Russia, we received a
banking licence in May to start retail banking activities.
Joining up the company for our customers
The breadth of our international network means we can offer our customers
compelling global propositions that cannot be matched by purely domestic or
regional competitors. Increasingly, we are joining up our businesses for our
customers across borders and across businesses. Our CIBM business achieved
record results for the period by successfully executing its emerging markets-led
and financing-focused strategy. Our Commercial Banking business also grew
strongly as customers benefited from our international orientation and the
direct channels we are building for them.
Personal Financial Services profit before tax declined by 20 per cent, largely
as a consequence of our experience with sub-prime correspondent mortgages in the
US and weakness in the UK. Meanwhile in Asia, pre-tax profit grew 38 per cent.
We are increasingly connecting this business globally and in May rolled-out in
35 countries our market-leading Premier proposition - a signature account for
international HSBC Premier customers. First indications are encouraging and
there is an opportunity to gain significant global market share in this valuable
segment. We believe that, over time, we will add four million new mass-affluent
customers.
Private Banking achieved very strong results and continued to leverage closer
links with other customer groups, particularly Commercial Banking, generating
almost US$2 billion in total client assets from referrals. When our investment
business recently launched the first multi-manager Chinese equity fund in Hong
Kong, we were able to raise over US$1 billion from our retail and private
banking customer base in the region.
We also benefit from the ability to deliver global world-class propositions for
our customers through the effective use of our technology. By building core
systems for use across the Group, we can share the development and support costs
across our operations, close down old systems, and share best practice in sales
and service.
In our cards business, the introduction of our Whirl global credit card platform
across the world, which now services 86 million accounts across 16 countries,
has allowed us to improve services for our card customers and to cut our IT
costs per account by 16 per cent. We are adding 40,000 credit card customers to
the system each day.
We are also introducing a new personal and business internet platform across the
Group. This has been implemented in 25 countries so far. Internet sales have
risen 68 per cent compared to the first half of 2006. The new infrastructure is
allowing us to launch new services, including direct banking. Following earlier
successes in the US and Taiwan, HSBC Direct, our online direct banking and
savings proposition, was launched in South Korea and Canada during the first
half of 2007. In Asia, the service has attracted over 120,000 customers, with
total savings balances exceeding US$900 million. The US business has continued
to perform strongly; online savings balances have now reached US$12 billion with
over 225,000 new accounts added this year. One of the compelling features of the
HSBC Direct model is that it allows us to attract new customers who we do not
reach through our existing channels. We continue to develop the HSBC Direct
model, with a view to rolling it out in other markets.
In Latin America, we are introducing HSBC's systems into the newly-acquired
Grupo Banistmo companies, starting with Panama. We are also implementing HSBCnet
throughout Latin America to provide a full cash management system across the
region.
Number one international bank in Asia
We produced record results in Asia. Profit before tax grew impressively in all
our major markets, with our operations in Hong Kong up by 25 per cent, our
businesses in mainland China by 69 per cent, in India by 39 per cent, in
Indonesia by 115 per cent, in Malaysia by 13 per cent and in Singapore by 44 per
cent.
Hong Kong produced very strong results. As a result of its leading position in
wealth management, our business there was well-positioned to benefit from the
buoyant stock market activity during the period and the steady flow of mainland
China companies listing on the Hong Kong Stock Exchange. We also continued to
leverage our position as the leading financial institution in Hong Kong in trade
finance and in insurance. Increased foreign investment through Hong Kong into
mainland China boosted Hong Kong's services and property sectors, and provided
further opportunities for HSBC to generate revenue growth.
Strong domestic interest in stock market investments within mainland China also
encouraged listings on the Shanghai Stock Exchange during this period, and our
three associates, Bank of Communications, Ping An Insurance and Industrial Bank,
all successfully raised new capital. The resulting dilution of our interests was
considerably less than our share of the new monies raised, and our results
reflect aggregate gains at the attributable profit level of some US$1 billion,
or US$0.09 per share, which should be regarded as exceptional.
We reinforced HSBC's position as the leading international bank in mainland
China. Our domestic operations in mainland China, following local incorporation,
grew strongly, with deposit and asset growth of over 50 per cent and 26 per cent
respectively, compared with the same period last year. Pre-tax profits grew by
69 per cent to US$473 million. We added seven outlets to what is already the
largest international branch network and recruited over 800 new staff to support
business growth.
In India, strong performance in CIBM drove the 39 per cent rise in profit before
tax. We significantly expanded our customer base and continued to invest heavily
in growing our business organically, particularly in consumer finance, while
maintaining a largely unchanged cost efficiency ratio at 55 per cent.
In Indonesia, where we are also investing in developing our consumer finance
business and opened 20 new outlets in the period, profit before tax grew 115 per
cent to US$58 million. In Vietnam, a market with great long-term potential, we
agreed to increase our stake in Techcombank and we are also growing our own
business rapidly there. We grew profit before tax by 117 per cent to US$21
million in the first half, and increased headcount by a third.
Across Asia as a whole, our Commercial Banking business performed very well,
thanks in part to our success in growing the customer base. Commercial Banking
customers in Asia have increased by 6 per cent in the past year, with
particularly strong growth in mainland China and South Korea.
Our success in Asia is being driven in large part by our success in joining up
the Group to leverage skills transfer and international reach. In particular, in
our investment business, our Asian operations are capturing the leading share of
securities services revenues from custody and administration for international
funds groups. Reciprocally, we are producing developing market products, both
for our own asset management group and for third parties to distribute in the
developed world. Similar linkages exist in capital markets activities,
remittance services, cross-referral of commercial customers transacting overseas
and in consumer finance expansion throughout Asia.
Integration and development in Latin America on track
Profit before tax for Latin America grew by 16 per cent. From a handful of
offices a decade ago to some 4,000 in the region today, our operations now
account for 8 per cent of Group profit. We are one of the largest international
banks in the region, and we continue to develop our businesses in our major
markets in Mexico, Brazil, Argentina and now across Central America.
This was the first complete half-year contribution from Grupo Banistmo, the
leading bank in Central America, following its acquisition in 2006. Pre-tax
contribution of US$49 million was in line with our expectations and integration
is proceeding well.
Improved credit performance in Brazil, coupled with strong asset growth
contributed to pre-tax profit growth of 43 per cent. Growth in secured lending
and invoice financing has set the scene for sustained revenue growth, and
insurance sales in the existing customer base were also stronger.
Revenue growth in Mexico remained strong at just over 23 per cent as we improved
market share. We have built a highly successful business in the last five years,
which has already returned profits in excess of our total investment. In the
first half of 2007, customer acquisition grew at a higher rate than forecast,
and related costs affected profits through a rise in provisions which largely
offset the expansion in revenues. HSBC in Mexico continued to build market share
with credit cards, Tu Cuenta packaged accounts and Premier accounts all growing
by over 45 per cent compared with the previous year.
In Argentina, the successful integration of Banca Nazionale del Lavoro, a
well-timed acquisition in May 2006, contributed to a 14 per cent rise in pre-tax
profits to US$95 million. Once again, CIBM, working with local management,
helped HSBC in Argentina maintain leading positions in foreign exchange and
trade services for multinational companies operating there.
Benefiting from organic growth in the Middle East
Our Middle East businesses, excluding Saudi Arabia, grew strongly, with profit
before tax up by 31 per cent. Our operations in the United Arab Emirates and in
Egypt performed well as the region expanded its infrastructure development and
its outward investment, supported by sustained high oil prices.
Commercial Banking enjoyed higher revenues as a result of the region's high
growth and increased trade flows. High liquidity in the region and demand from
institutional customers led to strong sales of structured derivatives and other
products in CIBM.
The rollout of additional branches and customer service units, the expansion of
the direct sales force and sales of Premier products drove increased personal
customer numbers and higher revenues.
The contribution from Saudi Arabia was, however, lower as the stock market
declines which occurred in the second half of last year dampened market activity
in the first half of 2007.
Europe: investing in emerging markets and strong returns from UK Commercial
Banking
Within emerging Europe, profits in Turkey grew by 34 per cent, even as we opened
25 new branches and installed 101 ATMs to develop our retail platform. Further
expansion is planned for the second half of the year. We obtained a licence to
begin retail business in Russia, where we aim to open over 35 branches in the
next three years.
We intend to expand our operations in Poland, the Czech Republic and Slovakia
for personal customers, and we are looking at other markets in Central and
Eastern Europe. We will also be opening more branches in Armenia, expanding in
Kazakhstan, and we have applied for a licence to begin operations in Georgia.
In continental Europe, our French operations were strongly ahead of the
comparable prior period, with profits growing by US$219 million, driven by CIBM
revenue growth.
UK Commercial Banking continued to perform well. Profit before tax rose 18 per
cent, our customer base expanded, and we are now the bank most recommended by
our start-up customers. Investment in technology is improving customer service
and productivity; the successful positioning of Business Direct has attracted
over 40,000 customers since its launch in September 2006, of which 60 per cent
are new to the Group.
Our Personal Financial Services business in Europe was, however, 34 per cent
down on the comparable period in 2006. This was largely due to two factors.
First, a deliberate reduction in credit exposure to sectors whose pricing, in
our view, inadequately reflects risk. Second, the impact in the UK of
unauthorised overdraft fee refunds, which increased our costs by US$236 million.
This is an industry-wide issue and the size of the refunds that we have made
demonstrate our commitment to treating our customers in a fair and transparent
manner. Indeed, we very much welcome the agreement with the OFT to take the case
to court to achieve legal clarity and a resolution for our customers and our
business. In Group terms, our Personal Financial Services business in the UK
typically represents less than 7 per cent of our worldwide profits.
Nevertheless, this remains a highly challenging operating environment. We
continue to focus on customer acquisition and retention, and we see growth
opportunities in wealth management and insurance to counterbalance the
challenges posed by competition and regulation for current account pricing.
We grew strongly in packaged fee-based accounts, in Premier accounts, and in
retail savings products, which helped to offset the reduction in lending margin.
Average savings balances increased by 14 per cent in the first half to US$83
billion. In First Direct we have the UK's most recommended bank - for every one
of the 15 years the measure has existed - and we will learn from its expertise
as we build direct channels around the world.
Good progress in managing down the Mortgage Services portfolio in North America
Within North America, our Canadian and Bermudian businesses grew pre-tax profits
by 22 per cent and, although our US businesses were 43 per cent below the
pre-tax performance achieved in the first half of 2006, they recovered strongly
against the second half of last year, delivering pre-tax profits of US$1.8
billion - an improvement of US$1.5 billion.
This recovery in profitability reflected the success of the steps we have taken
to manage loss exposure within the correspondent channel mortgage business.
There was no significant change to the levels of loan impairment reserves
established at the end of last year. Credit impairment charges in Mortgage
Services in the half year were US$760 million and we wrote off loans of US$715
million against allowances already raised. As a result our impairment allowances
remained largely unchanged at US$2.1 billion. We have stopped underwriting
sub-prime mortgages within the Mortgage Services correspondent business,
centralised collection activities at one centre for the most at-risk customers,
made management changes in key accountabilities, and put in place a proactive
calling programme to reach out to customers facing interest rate resets in the
coming months. In contrast to many lenders, we are able to manage these
relationships directly because we own the loan and the servicing. This means
that we can have a more positive dialogue with customers and can actively manage
our portfolio in this challenging environment.
Since we started the contact programme at the end of 2006, we have contacted
19,000 customers, and have modified the loans for over 5,000 of them, benefiting
both our customers and our business.
With the benefit of a resilient US economy, we have managed down the Mortgage
Services exposure to US$41.4 billion, a reduction of some US$8 billion from the
beginning of the year, a trend we hope to continue in the second half. We have
also managed down the value of resets in the Mortgage Services portfolio due in
the second half by almost a quarter to US$5.3 billion.
Elsewhere in US consumer finance, the remaining US businesses continued to meet
expectations, led by branch-based consumer lending. There is growing evidence
that the reduction of capacity in the sub-prime mortgage industry, coupled with
curtailment of most of the structured 'affordability' products offered, are
leading to more disciplined underwriting and pricing across the industry. This
is reducing acquisition costs and improving customer retention. As a result, our
US consumer finance revenues were 2 per cent and 5 per cent higher compared with
the first and second halves of 2006, respectively.
In our US retail bank, we continued to expand outside of residential mortgage
lending. We are growing our branch network in California, Connecticut, New
Jersey, Florida and the Metro DC Area, and continuing to roll out HSBC Direct,
our highly successful online business.
Record results in CIBM reflecting focus on emerging markets and financing
Our strategy of positioning our CIBM business as emerging markets-led and
financing-focused is paying off, with profits growing by 32 per cent to a new
high of US$4 billion. Asian (including Middle Eastern) and Latin American
operations contributed 49 per cent of CIBM's pre-tax profits in the first half
of 2007.
In Asia, success in financing and providing structuring and hedging solutions
for the growing investment flows into and from the region, together with growth
in traditional foreign exchange and securities activities, delivered an
additional US$479 million of pre-tax profits, a rise of 36 per cent. Europe also
achieved strong growth as CIBM's product hubs in London and Paris delivered a
full spectrum of products both within Europe and to the global HSBC network.
Especially encouraging was the growing number of notable mandates in sizeable
cross-border financing transactions which leveraged HSBC's presence in both
countries. These included: Saudi Basic Industries Corp.'s US$11.6 billion
acquisition of GE Plastics; Singapore Telecommunications Ltd.'s US$758 million
acquisition of 30 per cent of Warid Telecom (Pvt) Ltd. of Pakistan; National
Titanium Dioxide Co. of Saudi Arabia's US$1.2 billion acquisition of Lyondell
Chemical Co.'s inorganic chemicals business in the US; and Dubai Drydocks' S$650
million acquisition of Pan-United Marine Ltd. of Singapore.
HSBC also acted as lead arranger of financing facilities for Macquarie of GBP1.8
billion for the acquisition of O2 Airwave and GBP3.4 billion for the acquisition
of National Grid Wireless.
We were pleased to be recognised in industry awards: HSBC was named global 'Best
Risk Management House' in the Euromoney magazine 2007 Awards for Excellence. We
also won global 'Best Cash Management House' in the Euromoney awards. In debt
capital markets HSBC ranked first in the Asian local currency Bloomberg bond
league table, first in the sterling bond league table and sixth in the
international bond league table.
Developing our income stream in Insurance
Less than 15 per cent of HSBC customers currently take an insurance product from
us. Our insurance operations across our customer groups are making an important
contribution to the Group and we believe that insurance has the potential over
time to represent a fifth of Group pre-tax profits.
We have started our work towards this by strengthening the management team and
launching the 'HSBC Insurance' brand, repositioning for growth and aiming to be
a top-10 player. We are committed to the life pensions and investments business
and to working with preferred strategic partners in general insurance, and to
raising the Group's retention levels.
We announced three insurance deals in three months. In France, where we are
building our life, pensions, investments and retirement services business, we
acquired the remaining 50 per cent of Erisa, the life, property and casualty
insurer, from our former joint venture partner, Swiss Life, for a consideration
of EUR229 million.
In the UK, HSBC Bank plans to partner with Aviva to create a joint venture under
the 'HSBC Insurance' brand.
In India, we plan to create a joint venture life insurance company - Canara HSBC
Life Insurance - with Canara Bank and the Oriental Bank of Commerce. The new
company will have access to the customers of both banks - 40 million people in
total - and provides a platform for growth in India's growing life insurance
market.
Global wealth creation supporting strong growth in private banking
Given the strong economic background and buoyant property and stock markets in
many parts of the world, increasing wealth accumulation drove strong growth in
client assets and sales of structured investment products within our private
banking operations. Client assets grew by 11 per cent to reach US$370 billion.
Fee revenues within the private bank were up by 15 per cent to a record US$811
million. In part, this reflected improved cooperation between our commercial
bank and the private bank in terms of customer referral, and the use of our
in-house structuring capabilities in CIBM to build the products demanded by the
private bank's customers.
Global credit environment
Apart from US sub-prime mortgages, the credit environment generally remained
favourable globally in the first half of the year, with continuing low levels of
impairment emerging across our corporate and commercial lending books.
Encouragingly, the more recent underwriting of unsecured personal lending in the
UK has performed better, although credit impairment has remained at the elevated
levels experienced in the past two years.
High levels of liquidity and demand for higher yielding debt, combined with
investor appetite for higher leverage, have historically supported the
restructuring of corporate balance sheets. We remain alert, however, to the
probability of a change in sentiment, in particular as risk premia are rising
and interest rates move on an upward trend across much of the world.
A clear way forward
The management team has a clear strategy to execute and we have produced strong
results for the half-year. We will build on these results during the rest of the
year. We are focused on growing revenues by joining up the company for the
benefit of our customers. We are intent on slowing cost growth by using
technology to re-engineer our processes in a meaningful way. We believe there is
great potential to unlock further value from HSBC and we aim to do precisely
that.
Financial Overview
Half-year to Half-year to
30Jun07 30Jun07 30Jun06 31Dec06
GBPm HK$m US$m US$m US$m
For the period
7,188 110,611 Profit before tax 14,159 12,517 9,569
Profit attributable to
shareholders of the parent
5,531 85,112 company 10,895 8,729 7,060
3,143 48,372 Dividends 6,192 5,270 3,499
At the period-end
59,738 936,374 Total shareholders' equity 119,780 101,381 108,352
68,347 1,071,319 Capital resources 137,042 116,636 127,074
489,168 7,667,605 Customer accounts 980,832 833,742 896,834
1,072,485 16,810,965 Total assets 2,150,441 1,738,138 1,860,758
519,445 8,142,187 Risk-weighted assets 1,041,540 872,893 938,678
GBP HK$ US$ US$ US$
Per ordinary share
0.48 7.42 Basic earnings 0.95 0.78 0.62
0.48 7.34 Diluted earnings 0.94 0.77 0.62
0.27 4.13 Dividends^ 0.53 0.46 0.30
5.04 79.05 Net asset value 10.10 8.71 9.24
Share information
US$0.50 ordinary shares
in issue 11,713m 11,481m 11,572m
Market capitalisation US$215bn US$202bn US$212bn
Closing market price per share GBP9.15 GBP9.52 GBP9.31
Over 1 Over 3 Over 5
year years years
Total shareholder return to
30Jun07^^ 101.2 129.1 156.6
Benchmarks: FTSE 100 117.1 163.8 168.5
MSCI World 124.2 161.4 197.2
^ The second interim dividend for 2007 of US$0.17 per ordinary share is
translated at the closing rate on 30 June 2007 (see note 7 on page
25). Where required, this dividend will be converted into sterling or
Hong Kong dollars at the exchange rates on 24 September 2007 (see note
7 on page 25).
^^ Total shareholder return ('TSR') is as defined on page 282 of the
Annual Report and Accounts 2006.
Half-year to
30Jun07 30Jun06 31Dec06
% % %
Performance ratios
Return on average invested capital^ 18.4 17.2 12.8
Return on average total shareholders' equity 19.1 18.1 13.4
Post-tax return on average total assets 1.19 1.12 0.88
Post-tax return on average risk-weighted assets 2.30 2.21 1.65
Efficiency and revenue mix ratios
Cost efficiency ratio 48.3 50.1 52.5
As a percentage of total operating income:
- Net interest income 43.3 48.7 49.7
- Net fee income 24.9 24.4 24.6
- Net trading income 13.1 12.4 11.1
Capital ratios
- Tier 1 capital 9.3 9.4 9.4
- Total capital 13.2 13.4 13.5
^ Average invested capital is measured as average total shareholders' equity
after adding back goodwill previously written-off directly to reserves,
deducting average equity preference shares issued by HSBC Holdings and deducting
average reserves for unrealised gains/(losses) on effective cash flow hedges and
available-for-sale securities. This measure reflects capital initially invested
and subsequent profit.
Consolidated Income Statement
Half-year to Half-year to
30Jun07 30Jun07 30Jun06 31Dec06
GBPm HK$m US$m US$m US$m
22,116 340,348 Interest income 43,567 35,785 40,094
(12,862) (197,934) Interest expense (25,337) (19,054) (22,339)
9,254 142,414 Net interest income 18,230 16,731 17,755
6,339 97,557 Fee income 12,488 10,441 10,639
(1,012) (15,569) Fee expense (1,993) (2,061) (1,837)
5,327 81,988 Net fee income 10,495 8,380 8,802
Trading income excluding
1,701 26,178 net interest income 3,351 3,112 2,507
Net interest income on
1,097 16,874 trading activities 2,160 1,149 1,454
2,798 43,052 Net trading income 5,511 4,261 3,961
Net income from financial
instruments designated at
444 6,828 fair value 874 260 397
Gains less losses from
507 7,804 financial investments 999 493 476
Gains arising from dilution
546 8,406 of interests in associates 1,076 - -
128 1,969 Dividend income 252 222 118
Net earned insurance
2,019 31,069 premiums 3,977 2,834 2,834
344 5,297 Other operating income 678 1,153 1,393
21,367 328,827 Total operating income 42,092 34,334 35,736
Net insurance claims
incurred and movement in
(1,826) (28,117) policyholders' liabilities (3,599) (2,149) (2,555)
Net operating income before
loan impairment charges
and other credit
19,541 300,710 risk provisions 38,493 32,185 33,181
Loan impairment charges and
other credit risk
(3,222) (49,576) provisions (6,346) (3,890) (6,683)
16,319 251,134 Net operating income 32,147 28,295 26,498
Employee compensation and
(5,295) (81,480) benefits (10,430) (8,992) (9,508)
General and administrative
(3,565) (54,856) expenses (7,022) (6,065) (6,758)
Depreciation of property,
(415) (6,382) plant and equipment (817) (748) (766)
Amortisation of intangible
(173) (2,672) assets (342) (334) (382)
(9,448) (145,390) Total operating expenses (18,611) (16,139) (17,414)
6,871 105,744 Operating profit 13,536 12,156 9,084
Share of profit in
associates and joint
317 4,867 ventures 623 361 485
7,188 110,611 Profit before tax 14,159 12,517 9,569
(1,343) (20,663) Tax expense (2,645) (3,272) (1,943)
5,845 89,948 Profit for the period 11,514 9,245 7,626
Profit attributable to
shareholders of the
5,531 85,112 parent company 10,895 8,729 7,060
Profit attributable to
314 4,836 minority interests 619 516 566
Consolidated Balance Sheet
At 30Jun07 At 30Jun07 At 30Jun06 At 31Dec06
GBPm HK$m US$m US$m US$m
ASSETS
Cash and balances at
8,304 130,168 central banks 16,651 24,343 12,732
Items in the course of
collection from other
11,547 180,990 banks 23,152 12,425 14,144
Hong Kong Government
certificates of
6,457 101,214 indebtedness 12,947 12,588 13,165
211,782 3,319,641 Trading assets 424,645 299,295 328,147
Financial assets
designated at fair
17,380 272,430 value 34,849 16,855 20,573
74,401 1,166,215 Derivatives 149,181 104,665 103,702
Loans and advances to
107,049 1,677,977 banks 214,645 162,482 185,205
Loans and advances to
462,870 7,255,383 customers 928,101 814,209 868,133
116,204 1,821,473 Financial investments 233,001 192,334 204,806
Interests in associates
4,281 67,097 and joint ventures 8,583 7,795 8,396
Goodwill and intangible
19,174 300,542 assets 38,445 34,544 37,335
Property, plant and
7,472 117,121 equipment 14,982 15,277 16,424
17,040 267,088 Other assets 34,166 27,542 33,444
Prepayments and accrued
8,525 133,624 income 17,093 13,784 14,552
1,072,486 16,810,963 Total assets 2,150,441 1,738,138 1,860,758
At 30Jun07 At 30Jun07 At 30Jun06 At 31Dec06
GBPm HK$m US$m US$m US$m
LIABILITIES AND EQUITY
Liabilities
Hong Kong currency notes in
6,457 101,213 circulation 12,947 12,588 13,165
64,223 1,006,676 Deposits by banks 128,773 83,139 99,694
489,168 7,667,605 Customer accounts 980,832 833,742 896,834
Items in the course of
transmission to other
10,144 158,999 banks 20,339 9,532 12,625
156,198 2,448,371 Trading liabilities 313,193 228,116 226,608
Financial liabilities designated
37,886 593,860 at fair value 75,966 64,354 70,211
71,958 1,127,933 Derivatives 144,284 103,660 101,478
114,328 1,792,064 Debt securities in issue 229,239 209,309 230,325
1,488 23,327 Retirement benefit liabilities 2,984 3,722 5,555
17,206 269,702 Other liabilities 34,500 31,669 29,824
Liabilities under insurance
18,418 288,691 contracts issued 36,929 15,663 17,670
8,407 131,779 Accruals and deferred income 16,857 12,584 16,310
1,797 28,166 Provisions 3,603 2,286 2,859
11,722 183,741 Subordinated liabilities 23,504 20,404 22,672
1,009,400 15,822,127 Total liabilities 2,023,950 1,630,768 1,745,830
Equity
2,921 45,787 Called up share premium 5,857 5,741 5,786
3,907 61,242 Share premium account 7,834 7,236 7,789
15,879 248,892 Other reserves 31,838 26,394 29,380
37,031 580,453 Retained earnings 74,251 62,010 65,397
59,738 936,374 Total shareholders' equity 119,780 101,381 108,352
3,348 52,462 Minority interests 6,711 5,989 6,576
63,086 988,836 Total equity 126,491 107,370 114,928
1,072,486 16,810,963 Total liabilities and equity 2,150,441 1,738,138 1,860,758
Consolidated Statement of Recognised Income and Expense
Half-year to
30Jun07 30Jun06 31Dec06
US$m US$m US$m
Available-for-sale investments:
- fair value gains/(losses) taken to equity 1,162 (476) 2,058
- fair value gains transferred to income statement on
disposal or impairment (783) (319) (325)
Cash flow hedges:
- fair value gains taken to equity 395 147 1,407
- fair value changes transferred to income statement (568) (177) (2,021)
Share of changes in equity of associates and joint ventures 186 (44) 64
Exchange differences 2,293 3,203 1,472
Actuarial gains/(losses) on defined benefit plans 2,028 1,477 (1,555)
4,713 3,811 1,100
Tax on items taken directly to equity (455) (196) 152
Total income and expenses taken directly to equity
during the period 4,258 3,615 1,252
Profit for the period 11,514 9,245 7,626
Total recognised income and expense for the period 15,772 12,860 8,878
Total recognised income and expense for the period
attributable to:
- shareholders of the parent company 14,950 12,292 8,235
- minority interests 822 568 643
15,772 12,860 8,878
Consolidated Cash Flow Statement
Half-year to
30Jun07 30Jun06 31Dec06
US$m US$m US$m
Cash flows from operating activities
Profit before tax 14,159 12,517 9,569
Adjustments for:
- non-cash items included in profit before tax 8,434 5,681 9,275
- change in operating assets (65,685) (106,213) (67,056)
- change in operating liabilities 123,248 136,184 101,194
- elimination of exchange differences (5,871) (8,203) (3,911)
- net gain from investing activities (2,225) (752) (1,262)
- share of profits in associates and joint ventures (623) (361) (485)
- dividends received from associates 146 32 65
- contribution paid to defined benefit pension
schemes (970) (236) (311)
- tax paid (2,217) (1,983) (2,963)
Net cash from operating activities 68,396 36,666 44,115
Cash flows from investing activities
Purchase of financial investments (248,734) (181,454) (104,862)
Proceeds from the sale of financial investments 237,481 177,762 96,012
Purchase of property, plant and equipment (965) (803) (1,597)
Proceeds from the sale of property, plant and
equipment 1,368 915 1,589
Purchase of intangible assets (451) (352) (500)
Net cash outflow from acquisition of and increase
in stake of subsidiaries (323) (5) (1,180)
Net cash inflow from disposal of subsidiaries - 23 39
Net cash outflow from acquisition of and increase
in stake of associates (9) (208) (377)
Proceeds from disposal of associates - 319 555
Net cash used in investing activities (11,633) (3,803) (10,321)
Cash flows from financing activities
Issue of ordinary share capital 116 414 596
Issuance of preference shares - 374 -
Net purchases and sales of own shares for
market-making purposes 220 (141) 187
Purchases of own shares to meet share awards
and share option awards (807) (526) (49)
Own shares released on vesting of share awards
and exercise of options 58 137 36
Subordinated loan capital issued 563 3,716 2,232
Subordinated loan capital repaid (87) (273) (630)
Dividends paid to the shareholders of the parent
company (3,591) (3,202) (2,725)
Dividends paid to minority interests (460) (533) (177)
Net cash used in financing activities (3,988) (34) (530)
Net increase in cash and cash equivalents 52,775 32,829 33,264
Cash and cash equivalents at the beginning of the
period 215,486 141,307 178,626
Exchange differences in respect of cash and cash
equivalents 4,023 4,490 3,596
Cash and cash equivalents at the end of the
period 272,284 178,626 215,486
Additional Information
1. Accounting policies
The accounting policies adopted by HSBC for these interim consolidated financial
statements are consistent with those described on page 304 of the Annual Report
and Accounts 2006.
2. Dividends
The Directors have declared a second interim dividend for 2007 of US$0.17 per
ordinary share, a distribution of approximately US$1,991 million. The second
interim dividend will be payable on 4 October 2007 to holders of ordinary shares
on the Register at the close of business on 17 August 2007. The dividend will be
payable in cash, in US dollars, sterling or Hong Kong dollars, or a combination
of these currencies, at the forward exchange rates quoted by HSBC Bank plc in
London at or about 11:00am on 24 September 2007, and with a scrip dividend
alternative. Particulars of these arrangements will be mailed to shareholders on
or about 29 August 2007, and elections must be received by 19 September 2007. As
this dividend was declared after the balance sheet date, it has not been
included in 'Other liabilities' at 30 June 2007.
The dividend will be payable on shares held through Euroclear France, the
settlement and central depositary system for Euronext Paris, on 4 October 2007
to the holders of record on 17 August 2007. The dividend will be payable in
cash, in euros at the forward exchange rate quoted by HSBC France on 24
September 2007, or as a scrip dividend. Particulars of these arrangements will
be announced through Euronext Paris on 15 August 2007 and 22 August 2007.
The dividend on American Depositary Shares ('ADSs'), each of which represents
five ordinary shares, will be payable on 4 October 2007 to holders of record on
17 August 2007. The dividend of US$0.85 per ADS will be payable in cash in US
dollars or as a scrip dividend of new ADSs. Particulars of these arrangements
will be mailed to holders on or about 24 August 2007. Elections must be received
by the depositary on or before 14 September 2007. Alternatively, the cash
dividend may be invested in additional ADSs for participants in the dividend
reinvestment plan operated by the depositary.
HSBC Holdings plc ordinary shares will be quoted ex-dividend in London, Hong
Kong and Bermuda on 15 August 2007 and in Paris on 20 August 2007. The ADSs will
be quoted ex-dividend in New York on 15 August 2007.
Dividends to shareholders of the parent company were as follows:
Half-year to Half-year to Half-year to
30Jun07 30Jun06 31Dec06
Settled Settled Settled
Per in Per in Per in
share Total scrip share Total scrip share Total scrip
US$ US$m US$m US$ US$m US$m US$ US$m US$m
Dividends declared
on ordinary shares
Fourth interim divi-
dend in respect
of previous year 0.360 4,161 2,116 0.310 3,513 1,542 - - -
First interim divi-
dend in respect
of current year 0.170 1,986 712 0.150 1,712 248 - - -
Second interim
dividend in res-
pect of current
year - - - - - - 0.150 1,724 515
Third interim divi-
dend in respect
of current year - - - - - - 0.150 1,730 233
0.530 6,147 2,828 0.460 5,225 1,790 0.300 3,454 738
Quarterly dividends
on ordinary
share capital
March dividend 15.50 22 15.50 22 - -
June dividend 15.50 23 15.50 23 - -
September dividend - - - - 15.50 22
December dividend - - - - 15.50 23
31.00 45 31.00 45 31.00 45
3. Earnings and dividends per ordinary share
Half-year to
30Jun07 30Jun06 31Dec06
US$ US$ US$
Basic earnings per ordinary share 0.95 0.78 0.62
Diluted earnings per ordinary share 0.94 0.77 0.62
Dividends per ordinary share 0.53 0.46 0.30
Dividend payout ratio^ 56% 59% 48%
^ Dividends per ordinary share expressed as a percentage of basic
earnings per share.
Basic earnings per ordinary share was calculated by dividing the earnings of
US$10,850 million by the weighted average number of ordinary shares outstanding,
excluding own shares held, of 11,463 million shares (first half of 2006:
earnings of US$8,684 million and 11,148 million shares; second half of 2006:
earnings of US$7,015 million and 11,272 million shares).
Half-year to
30Jun07 30Jun06 31Dec06
US$m US$m US$m
Profit attributable to shareholders
of the parent company 10,895 8,729 7,060
Dividend payable on preference shares
classified as equity (45) (45) (45)
Profits attributable to ordinary
shareholders of the parent company 10,850 8,684 7,015
Diluted earnings per ordinary share was calculated by dividing the basic
earnings by the weighted average number of ordinary shares outstanding,
excluding own shares held, plus the weighted average number of ordinary shares
that would be issued on ordinary conversion of all the dilutive potential
ordinary shares of 11,518 million shares (first half of 2006: 11,304 million
shares; second half of 2006: 11,336 million shares).
4. Taxation
Half-year to
30Jun07 30Jun06 31Dec06
US$m US$m US$m
UK corporation tax charge 476 536 114
Overseas taxation 1,937 2,254 2,298
Current taxation 2,413 2,790 2,412
Deferred taxation 232 482 (469)
Total charge for taxation 2,645 3,272 1,943
Effective tax rate 18.7% 26.1% 20.3%
HSBC Holdings and its subsidiaries in the United Kingdom provided for UK
corporation tax at 30 per cent (2006: 30 per cent). Overseas tax included Hong
Kong profits tax of US$495 million (first half of 2006: US$387 million; second
half of 2006: US$364 million) provided at the rate of 17.5 per cent (2006: 17.5
per cent) on the profits for the period assessable in Hong Kong. Other overseas
subsidiaries and overseas branches provided for taxation at the appropriate
rates in the countries in which they operate.
Analysis of overall tax expense
Half-year to
30Jun07 30Jun06 31Dec06
US$m US$m US$m
Taxation at UK corporate tax rate
of 30 per cent (2006: 30 per cent) 4,248 3,756 2,870
Impact of overseas profits in principal
locations taxed at different rates (459) (187) (381)
Tax-free gains (157) (97) (102)
Adjustments in respect of prior period
liabilities (152) 36 (142)
Low income housing credits (52) (55) (53)
Other items (137) (36) (19)
Effect of profits in associate and joint ventures (185) (100) (153)
Effect of previously unrecognised temporary
differences (211) (45) (77)
Impact of gains arising from dilution of
interests in associates (250) - -
Overall tax charge 2,645 3,272 1,943
5. Capital resources
At At At
30Jun07 30Jun06 31Dec06
% % %
Capital ratios
Total capital ratio 13.2 13.4 13.5
Tier 1 capital ratio 9.3 9.4 9.4
US$m US$m US$m
Composition of regulatory capital
Tier 1 capital:
Shareholders' equity 119,780 101,381 108,352
Minority interests and preference shares 5,668 6,734 7,413
Innovative tier 1 securities 9,874 9,601 9,932
Less
Goodwill capitalised and intangible assets (37,547) (33,992) (36,489)
Other regulatory adjustments (431) (1,586) (1,366)
Total qualifying tier 1 capital 97,344 82,138 87,842
Tier 2:
Reserves arising from revaluation of property
and unrealised gains in available for sale
Equities 3,653 2,040 2,982
Collective impairment allowances 11,735 9,087 11,077
Perpetual subordinated debt 3,387 3,665 3,396
Term subordinated debt 30,901 27,446 30,677
Minority and other interests in tier 2
capital 425 425 425
Total qualifying tier 2 capital
before deductions 50,101 42,663 48,557
Unconsolidated investments^ (9,883) (6,441) (7,512)
Investments in capital of other banks - (1,419) (1,419)
Other deductions (520) (305) (394)
Total regulatory capital 137,042 116,636 127,074
Total risk-weighted assets 1,041,540 872,893 938,678
^ Mainly comprises investments in insurance entities.
The above figures were computed in accordance with the FSA's requirements.
6. Registers of shareholders
The Overseas Branch Register of shareholders in Hong Kong will be closed for one
day, on Friday 17 August 2007. Any person who has acquired shares registered on
the Hong Kong Branch Register but who has not lodged the share transfer with the
Hong Kong Branch Registrar should do so before 4.00pm on Thursday 16 August 2007
in order to receive the second interim dividend for 2007, which will be payable
on Thursday 4 October 2007. Transfers may not be made to or from the Hong Kong
Overseas Branch Register while that Branch Register is closed.
Any person who has acquired shares registered on the Principal Register in the
United Kingdom but who has not lodged the share transfer with the Principal
Registrar should do so before 4.00pm on Friday 17 August 2007 in order to
receive the dividend.
Any person who has acquired shares registered on the Overseas Branch Register of
shareholders in Bermuda but who has not lodged the share transfer with the
Bermuda Branch Registrar should do so before 4.00pm on Friday 17 August 2007 in
order to receive the dividend.
Transfers of American Depositary Shares should be lodged with the depositary by
12 noon on Friday 17 August 2007 in order to receive the dividend.
7. Foreign currency amounts
The sterling and Hong Kong dollar equivalent figures in the consolidated income
statement and balance sheet are for information only. These are translated at
the average rate for the period for the income statement and the closing rate
for the balance sheet as follows:
Period ended
30Jun07 30Jun06 31Dec06
Closing: HK$/US$ 7.817 7.767 7.776
GBP/US$ 0.499 0.542 0.509
Average: HK$/US$ 7.812 7.758 7.769
GBP/US$ 0.508 0.559 0.543
8. Litigation
On 27 July 2007, the UK Office of Fair Trading issued High Court legal
proceedings against a number of UK financial institutions, including HSBC Bank
plc, to determine the legal status and enforceability of certain of the charges
applied to their personal customers in relation to unauthorised overdrafts (the
'Charges'). The proceedings were commenced with the agreement of all parties
concerned. Proceedings are at a very early stage, and may (if appeals are
pursued) take a number of years to conclude. A range of outcomes is possible,
depending upon the Court's assessment of each Charge across the period under
review.
HSBC Bank plc considers the Charges to be and to have been valid and
enforceable, and intends strongly to defend its position. It is impossible at
this stage to predict accurately the outcome of the litigation or whether the
proceedings will have any financial impact, and if so the size of that impact
but on the basis of facts currently available and the advice received the
financial impact on HSBC is not considered to be material.
HSBC is party to legal actions in a number of jurisdictions including the UK,
Hong Kong and the US, arising out of its normal business operations. HSBC
considers that none of the actions is regarded as material, and none is expected
to result in a significant adverse effect on the financial position of HSBC,
either individually or in the aggregate. Management believes that adequate
provisions have been made in respect of such litigation. HSBC has not disclosed
any contingent liability associated with these legal actions in aggregate
because it is not practicable to do so.
9. Dealings in HSBC Holdings plc shares
Except for dealings as intermediaries by HSBC Bank plc, HSBC Financial Products
(France) and The Hongkong and Shanghai Banking Corporation Limited, which are
members of a European Economic Area exchange, neither the Company nor any
subsidiaries has bought, sold or redeemed any securities of the Company during
the six months ended 30 June 2007.
10. Statutory accounts
The information in this news release does not constitute statutory accounts
within the meaning of Section 240 of the Companies Act 1985 (the Act). The
Interim Report 2007 was approved by the Board of Directors on 30 July 2007. The
statutory accounts for the year ended 31 December 2006 have been delivered to
the Registrar of Companies in England and Wales in accordance with Section 242
of the Act. The auditor has reported on those accounts. Its report was
unqualified and did not contain a statement under Section 237(2) or (3) of the
Act.
This news release does not constitute the unaudited interim consolidated
financial statements which are contained in the Interim Report 2007. The
unaudited interim consolidated financial statements have been reviewed by the
Company's auditor, KPMG Audit Plc, in accordance with the guidance contained in
Bulletin 1999/4: Review of interim financial information issued by the Auditing
Practices Board. On the basis of its review, KPMG Audit Plc was not aware of any
material modifications that should be made to the unaudited interim consolidated
financial statements as presented for the six months ended 30 June 2007 in the
Interim Report to the shareholders. The full report of its review is included in
the Interim Report 2007 to the shareholders.
11. Forward-looking statements
This news release contains certain forward-looking statements with respect to
the financial condition, results of operations and business of HSBC. These
forward-looking statements represent HSBC's expectations or beliefs concerning
future events and involve known and unknown risks and uncertainty that could
cause actual results, performance or events to differ materially from those
expressed or implied in such statements. Certain statements, such as those that
include the words 'potential', 'estimated', and similar expressions or
variations on such expressions may be considered 'forward-looking statements'.
12. Corporate governance
HSBC is committed to high standards of corporate governance. HSBC Holdings plc
has complied with the applicable code provisions of the Combined Code on
Corporate Governance issued by the Financial Reporting Council throughout the
six months to 30 June 2007.
HSBC Holdings plc has complied throughout the six months to 30 June 2007 with
the applicable code provisions of the Code on Corporate Governance Practices in
Appendix 14 to the Rules Governing the Listing of Securities on The Stock
Exchange of Hong Kong Limited.
The Board of HSBC Holdings plc has adopted a code of conduct for transactions in
HSBC Group securities by Directors that complies with The Model Code in the
Listing Rules of the Financial Services Authority and with The Model Code for
Securities Transactions by Directors of Listed Issuers ('Hong Kong Model Code')
set out in the Rules Governing the Listing of Securities on The Stock Exchange
of Hong Kong Limited save that The Stock Exchange of Hong Kong has granted
certain waivers from strict compliance with the Hong Kong Model Code, primarily
to take into account accepted practices in the UK, particularly in respect of
employee share plans. Following a specific enquiry, each Director has confirmed
he or she has complied with the code of conduct for transactions in HSBC Group
securities throughout the period.
The Directors of HSBC Holdings plc are:
S K Green, Baroness Dunn*, Sir Brian Moffat*, M F Geoghegan, Lord Butler*, J D
Coombe+, R A Fairhead+, D J Flint, W K L Fung*, J W J Hughes-Hallett+, Sir Mark
Moody-Stuart+, G Morgan+, S W Newton+, S M Robertson+ and Sir Brian Williamson+.
* Non-executive Director
+ Independent non-executive Director
The Group Audit Committee has reviewed the interim results for the six months to
30 June 2007.
13. Interim Report
The Interim Report 2007 will be published on or about Friday 10 August 2007.
Copies may be obtained from Group Communications, HSBC Holdings plc, 8 Canada
Square, London E14 5HQ, United Kingdom; Group Public Affairs, The Hongkong and
Shanghai Banking Corporation Limited, 1 Queen's Road Central, Hong Kong;
Employee Communications, HSBC - North America, 2700 Sanders Road, Prospect
Heights, Illinois 60070, USA; or from the HSBC Group website - www.hsbc.com.
A Chinese translation of the Interim Report 2007 may be obtained on request from
Computershare Hong Kong Investor Services Limited, Hopewell Centre, Rooms
1806-1807, 18th Floor, 183 Queen's Road East, Wan Chai, Hong Kong.
The Interim Report 2007 will be available on the Stock Exchange of Hong Kong's
website - www.hkex.com.hk.
Custodians or nominees that wish to distribute copies of the Interim Report 2007
to their clients may request copies for collection by writing to Group
Communications at the address given above.
14. Final results for 2007
The results for the year to 31 December 2007 will be announced on Monday 3 March
2008.
15. Proposed interim dividends for 2007
The Board has adopted a policy of paying quarterly interim dividends on the
ordinary shares. Under this policy it is intended to have a pattern of three
equal interim dividends with a variable fourth interim dividend. The proposed
timetables for the third and fourth interim dividends payable on the ordinary
shares in respect of 2007 are:
Third interim dividend for 2007
Announcement 13 November 2007
American Depositary Shares quoted 20 November 2007
ex-dividend in New York
Shares quoted ex-dividend in London, 21 November 2007
Hong Kong and Bermuda
Record date and closure of Hong Kong 23 November 2007
Overseas Branch Register of shareholders
for one day
Shares quoted ex-dividend in Paris 26 November 2007
Payment date 16 January 2008
Fourth interim dividend for 2007
Announcement 3 March 2008
American Depositary Shares quoted 19 March 2008
ex-dividend in New York
Shares quoted ex-dividend in London, 19 March 2008
Hong Kong and Bermuda
Record date and closure of Hong Kong 25 March 2008
Overseas Branch Register of shareholders
for one day
Shares quoted ex-dividend in Paris 26 March 2008
Payment date 7 May 2008
16. News release
Copies of this news release may be obtained from Group Communications, HSBC
Holdings plc, 8 Canada Square, London E14 5HQ, United Kingdom; The Hongkong and
Shanghai Banking Corporation Limited, 1 Queen's Road Central, Hong Kong; HSBC
Bank USA, 452 Fifth Avenue, New York, NY 10018, USA; HSBC France, Direction de
la Communication, 103 avenue des Champs Elysees, 75419 Paris Cedex 08, France.
The news release will also be available on the HSBC Group website -
www.hsbc.com.
17. For further information contact:
London Hong Kong
Richard Beck David Hall
Director of Group Communications Head of Group Public Affairs (Asia)
Telephone: +44 20 7991 0633 Telephone: +852 2822 1133
Danielle Neben Gareth Hewett
Senior Manager Investor Relations Senior External Relations Manager
Telephone: +44 20 7992 1938 Telephone: +852 2822 4929
Chicago Paris
Lisa Sodeika Chantal Nedjib
Executive Vice President, Managing Director, Corporate Communications
Corporate Affairs Telephone: +33 1 40 70 7729
Telephone: +1 847 564 6394
Linda Recupero Gilberte Lombard
Executive Vice President, Investor Relations Director
Group Public Affairs Telephone: +33 1 40 70 2257
Telephone: +1 212 525 3800
An interview with Michael Geoghegan, Group Chief Executive, and Douglas Flint,
Group Finance Director, is now available in video/audio and text on www.hsbc.com
and www.cantos.com
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
HSBC Holdings plc
By:
Name: P A Stafford
Title: Assistant Group Secretary
Date: 30 July 2007