Annual Financial Report - 50 of 54 | RNS | Ticker

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Annual Financial Report - 50 of 54

RNS Announcement

RNS Number : 0602I

HSBC Holdings PLC

20 March 2015

HSBC

Maturity analysis of assets and liabilities

	At 31 December 2014
	Due not more than 1 month	Due over 1 month but not more than 3 months	Due over 3 months but not more than 6 months	Due over 6 months but not more than 9 months	Due over 9 months but not more than 1 year	Due over 1 year but not more than 2 years	Due over 2 years but not more than 5 years	Due over 5 years	Total
	US$m	US$m	US$m	US$m	US$m	US$m	US$m	US$m	US$m
Financial assets
Cash and balances at central banks	129,957	−	−	−	−	−	−	−	129,957
Items in the course of collection from other banks	4,927	−	−	−	−	−	−	−	4,927
Hong Kong Government certificates of indebtedness	27,674	−	−	−	−	−	−	−	27,674
Trading assets	303,463	−	−	−	−	−	730	−	304,193
- reverse repos	567	−	−	−	−	−	730	−	1,297
- other trading assets	302,896	−	−	−	−	−	−	−	302,896

Financial assets designated at fair value	244	399	417	346	208	1,825	4,634	20,964	29,037
Derivatives	341,558	56	463	220	32	1,003	1,033	643	345,008
- trading	341,416	−	−	−	−	−	−	−	341,416
- non-trading	142	56	463	220	32	1,003	1,033	643	3,592

Loans and advances to banks¹	73,758	17,649	5,682	1,934	1,850	7,371	1,981	1,924	112,149
Loans and advances to customers¹	203,130	76,236	55,018	35,347	37,674	91,300	187,728	288,227	974,660
- personal	42,170	9,673	8,911	7,486	8,672	27,305	54,439	230,298	388,954
- corporate and commercial	146,250	61,809	41,924	23,720	23,697	56,398	124,796	56,590	535,184
- financial	14,710	4,754	4,183	4,141	5,305	7,597	8,493	1,339	50,522

Reverse repurchase agreements - non-trading¹	116,002	30,490	9,076	2,230	582	868	2,465	−	161,713
Financial investments	28,237	50,445	41,503	14,577	17,011	48,392	96,891	118,411	415,467
Accrued income and other financial assets	17,870	7,572	2,415	605	327	748	1,282	9,803	40,622

Financial assets at 31 December 2014	1,246,820	182,847	114,574	55,259	57,684	151,507	296,744	439,972	2,545,407

Non-financial assets	−	−	−	−	−	−	−	88,732	88,732

Total assets at 31 December 2014	1,246,820	182,847	114,574	55,259	57,684	151,507	296,744	528,704	2,634,139

Maturity analysis of assets and liabilities (continued)

	At 31 December 2014
	Due not more than 1 month	Due over 1 month but not more than 3 months	Due over 3 months but not more than 6 months	Due over 6 months but not more than 9 months	Due over 9 months but not more than 1 year	Due over 1 year but not more than 2 years	Due over 2 years but not more than 5 years	Due over 5 years	Total
	US$m	US$m	US$m	US$m	US$m	US$m	US$m	US$m	US$m
Financial liabilities
Hong Kong currency notes in circulation	27,674	−	−	−	−	−	−	−	27,674
Deposits by banks¹	66,829	2,890	2,539	511	810	621	2,963	263	77,426

Customer accounts^1,2	1,216,574	57,127	32,925	15,023	13,586	9,278	5,819	310	1,350,642
- personal	572,459	28,580	16,728	10,609	9,625	7,220	3,967	125	649,313
- corporate and commercial	465,990	21,841	10,688	3,716	2,894	1,615	1,316	150	508,210
- financial	178,125	6,706	5,509	698	1,067	443	536	35	193,119

Repurchase agreements - non-trading¹	95,243	5,029	4,054	1,392	714	−	−	1,000	107,432
Items in the course of transmission to other banks	5,990	−	−	−	−	−	−	−	5,990
Trading liabilities	155,604	2,041	2,636	1,439	2,918	5,744	9,603	10,587	190,572
- repos	746	909	224	264	1,249	406	−	−	3,798
- debt securities in issue	1,686	1,132	2,412	1,175	1,669	5,338	9,603	10,587	33,602
- other trading liabilities	153,172	−	−	−	−	−	−	−	153,172

Financial liabilities designated at fair value	981	912	4,264	972	1,557	8,500	15,037	43,930	76,153
- debt securities in issue: covered bonds	−	−	−	205	−	−	2,705	2,942	5,852
- debt securities in issue: otherwise secured	−	−	−	−	−	−	−	−	−
- debt securities in issue: unsecured	942	868	4,242	742	1,409	8,500	9,576	14,233	40,512
- subordinated liabilities and preferred securities	−	36	−	−	18	−	2,623	20,640	23,317
- other	39	8	22	25	130	−	133	6,115	6,472

Derivatives	335,802	23	86	223	54	621	1,121	2,739	340,669
- trading	335,400	−	−	−	−	−	−	−	335,400
- non-trading	402	23	86	223	54	621	1,121	2,739	5,269

Debt securities in issue	14,741	15,424	13,027	7,854	6,050	14,209	19,481	5,161	95,947
- covered bonds	-	-	−	−	−	−	81	−	81
- otherwise secured	8,807	1,063	60	283	272	912	1,562	1,008	13,967
- unsecured	5,934	14,361	12,967	7,571	5,778	13,297	17,838	4,153	81,899

Accruals and other financial liabilities	21,084	9,198	3,069	1,221	1,820	1,568	2,225	3,655	43,840
Subordinated liabilities	−	150	−	3	167	113	3,607	22,624	26,664

Total financial liabilities at 31 December 2014	1,940,522	92,794	62,600	28,638	27,676	40,654	59,856	90,269	2,343,009

Non-financial liabilities	-	-	-	-	-	-	-	91,152	91,152

Total liabilities at 31 December 2014	1,940,522	92,794	62,600	28,638	27,676	40,654	59,856	181,421	2,434,161

	At 31 December 2013
	Due not more than 1 month	Due over 1 month but not more than 3 months	Due over 3 months but not more than 3 months	Due over 6 months but not more than 9 months	Due over 9 months but not more than 1 year	Due over 1 year but not more than 2 years	Due over 2 years but not more than 5 years	Due over 5 years	Total
	US$m	US$m	US$m	US$m	US$m	US$m	US$m	US$m	US$m
Financial assets
Cash and balances at central banks	166,599	-	-	-	-	-	-	-	166,599
Items in the course of collection from other banks	6,021	-	-	-	-	-	-	-	6,021
Hong Kong Government certificates of indebtedness	25,220	-	-	-	-	-	-	-	25,220
Trading assets	296,396	3,098	1,536	2,062	100	−	−	−	303,192
- reverse repos	3,324	3,098	1,536	2,062	100	−	−	−	10,120
- other trading assets	293,072	-	-	-	-	-	-	-	293,072

Financial assets designated at fair value	1,929	254	494	426	328	2,145	2,819	30,035	38,430
Derivatives	277,747	48	88	389	552	716	1,486	1,239	282,265
- trading	277,709	-	-	-	-	-	-	-	277,709
- non-trading	38	48	88	389	552	716	1,486	1,239	4,556

Loans and advances to banks¹	76,551	22,107	5,397	1,429	1,290	6,129	2,779	4,364	120,046

Loans and advances to customers¹	230,736	73,463	56,053	29,273	32,194	87,942	182,525	299,903	992,089
- personal	43,805	8,929	8,561	6,603	7,578	26,915	58,611	243,124	404,126
- corporate and commercial	171,713	60,827	43,723	19,505	21,093	53,183	113,897	53,981	537,922
- financial	15,218	3,707	3,769	3,165	3,523	7,844	10,017	2,798	50,041

Reverse repurchase agreements - non-trading	134,242	35,329	5,287	1,239	2,072	1,136	385	-	179,690
Financial investments	34,331	48,053	35,877	22,353	18,816	50,711	105,340	110,444	425,925
Accrued income and other financial assets	18,719	7,684	2,467	1,369	700	1,133	1,027	4,536	37,635

Total financial assets at 31 December 2013	1,268,491	190,036	107,199	58,540	56,052	149,912	296,361	450,521	2,577,112

Non-financial assets	-	-	-	-	-	-	-	94,206	94,206

Total assets at 31 December 2013	1,268,491	190,036	107,199	58,540	56,052	149,912	296,361	544,727	2,671,318

Maturity analysis of assets and liabilities (continued)

	At 31 December 2013
	Due not more than 1 month	Due over 1 month but not more than 3 months	Due over 3 months but not more than 6 months	Due over 6 months but not more than 9 months	Due over 9 months but not more than 1 year	Due over 1 year but not more than 2 years	Due over 2 years but not more than 5 years	Due over 5 years	Total
	US$m	US$m	US$m	US$m	US$m	US$m	US$m	US$m	US$m
Financial liabilities
Hong Kong currency notes in circulation	25,220	-	-	-	-	-	-	-	25,220
Deposits by banks¹	76,298	3,931	1,796	858	318	737	1,922	647	86,507

Customer accounts^1,2	1,229,694	60,683	26,940	13,704	15,384	8,717	5,937	238	1,361,297
- personal	572,514	33,956	16,953	10,544	10,520	6,093	5,138	59	655,777
- corporate and commercial	494,612	18,084	3,414	1,717	1,786	1,643	674	140	522,070
- financial	162,568	8,643	6,573	1,443	3,078	981	125	39	183,450

Repurchase agreements - non-trading	136,137	13,058	6,583	3,711	4,231	-	-	500	164,220
Items in the course of transmission to other banks	6,910	-	-	-	-	-	-	-	6,910
Trading liabilities	161,231	11,405	4,886	2,844	3,653	6,323	7,979	8,704	207,025
- repos	2,565	9,763	2,715	1,012	1,279	87	−	-	17,421
- debt securities in issue	1,217	1,642	2,171	1,832	2,374	6,236	7,979	8,704	32,155
- other trading liabilities	157,449	-	-	-	-	-	-	-	157,449

Financial liabilities designated at fair value	4,907	157	92	2,266	68	9,348	21,544	50,702	89,084
- debt securities in issue: covered bonds	−	−	−	1,268	−	230	2,841	3,257	7,596
- debt securities in issue: otherwise secured	−	−	−	−	−	−	−	−	−
- debt securities in issue: unsecured	3,511	5	45	945	11	8,876	18,117	14,256	45,766
- subordinated liabilities and preferred securities	−	121	−	−	−	21	−	21,773	21,915
- other	1,396	31	47	53	57	221	586	11,416	13,807

Derivatives	269,816	33	95	84	61	563	1,978	1,654	274,284
- trading	269,739	-	-	-	-	-	-	-	269,739
- non-trading	77	33	95	84	61	563	1,978	1,654	4,545

Debt securities in issue	20,739	8,280	15,734	7,442	8,106	18,552	19,850	5,377	104,080
- covered bonds	−	−	−	−	−	6	92	−	98
- otherwise secured	10,450	1,051	675	1,260	764	1,857	2,313	1,013	19,383
- unsecured	10,289	7,229	15,059	6,182	7,342	16,689	17,445	4,364	84,599

Accruals and other financial liabilities	25,267	10,475	3,278	1,280	1,599	1,831	1,592	936	46,258
Subordinated liabilities	21	28	1,171	144	6	1,435	3,406	22,765	28,976

Total financial liabilities at 31 December 2013	1,956,240	108,050	60,575	32,333	33,426	47,506	64,208	91,523	2,393,861

Non-financial liabilities	-	-	-	-	-	-	-	86,998	86,998

Total liabilities at 31 December 2013	1,956,240	108,050	60,575	32,333	33,426	47,506	64,208	178,521	2,480,859

1 See footnote 3 on page 344.

2 Includes US$342,927m (2013: US$355,980m) insured by guarantee schemes.

Maturity analysis of off-balance sheet commitments received

Due not

more than

1 month

Due over

1 month

but not

more than

3 months

Due over

3 months

but not

more than

6 months

Due over

6 months

but not

more than

9 months

Due over

9 months

but not

more than

1 year

Due over

1 year

but not

more than

2 years

Due over

2 years

but not

more than

5 years

Due over

5 years

Total

US$m

At 31 December 2014

Loan and other credit-related commitments

3,313

−

4,312

607

−

8,232

At 31 December 2013

Loan and other credit-related commitments

953

−

953

Maturity analysis of off-balance sheet commitments given

	Due not more than 1 month	Due over 1 month but not more than 3 months	Due over 3 months but not more than 6 months	Due over 6 months but not more than 9 months	Due over 9 months but not more than 1 year	Due over 1 year but not more than 2 years	Due over 2 years but not more than 5 years	Due over 5 years	Total
	US$m	US$m	US$m	US$m	US$m	US$m	US$m	US$m	US$m

At 31 December 2014
Loan and other credit-related commitments	455,319	52,398	8,919	14,163	41,500	13,979	48,333	16,769	651,380
Of which:
- personal	179,088	15,784	452	305	14,036	1,432	1,003	955	213,055
- corporate and commercial	239,646	34,657	7,595	12,556	23,519	9,926	36,918	12,185	377,002
- financial	36,585	1,957	872	1,302	3,945	2,621	10,412	3,629	61,323

At 31 December 2013
Loan and other credit-related commitments	404,598	45,255	18,770	16,927	20,242	13,320	46,652	21,839	587,603
Of which:
- personal	148,541	14,700	454	10,683	12,131	1,273	704	6,469	194,955
- corporate and commercial	225,333	29,191	17,794	5,662	4,879	9,009	41,851	12,096	345,815
- financial	30,724	1,364	522	582	3,232	3,038	4,097	3,274	46,833

HSBC Holdings

Maturity analysis of assets, liabilities and off-balance sheet commitments

	Due not more than 1 month	Due over 1 month but not more than 3 months	Due over 3 months but not more than 6 months	Due over 6 months but not more than 9 months	Due over 9 months but not more than 1 year	Due over 1 year but not more than 2 years	Due over 2 years but not more than 5 years	Due over 5 years	Total
	US$m	US$m	US$m	US$m	US$m	US$m	US$m	US$m	US$m
Financial assets
Cash at bank and in hand:
- balances with HSBC undertakings	249	-	-	-	-	-	-	-	249
Derivatives	2,287	-	-	-	-	-	127	357	2,771
- trading	2,287	-	-	-	-	-	-	-	2,287
- non-trading	-	-	-	-	-	-	127	357	484
Loans and advances to HSBC undertakings	7,007	858	7,676	-	14	-	-	28,355	43,910
Financial investments in HSBC undertakings	26	6	-	-	-	-	-	4,041	4,073
Accrued income and other financial assets	8	-	-	-	-	-	-	-	8

Total financial assets at 31 December 2014	9,577	864	7,676	-	14	-	127	32,753	51,011

Non-financial assets	-	-	-	-	-	-	-	96,853	96,853

Total assets at 31 December 2014	9,577	864	7,676	-	14	-	127	129,606	147,864

Financial liabilities
Amounts owed to HSBC undertakings	2,423	-	32	-	1	436	-	-	2,892
Financial liabilities designated at fair value	-	-	-	-	-	1,110	2,623	14,946	18,679
- debt securities in issue	-	-	-	-	-	1,110	-	7,075	8,185
- subordinated liabilities and preferred securities	-	-	-	-	-	-	2,623	7,871	10,494
Derivatives	1,066	-	-	-	-	-	103	-	1,169
- trading	1,066	-	-	-	-	-	-	-	1,066
- non-trading	-	-	-	-	-	-	103	-	103
Debt securities in issue	-	-	-	-	-	-	-	1,009	1,009
Accruals and other financial liabilities	924	208	137	21	-	-	-	-	1,290
Subordinated liabilities	-	-	-	-	-	-	1,951	15,304	17,255

Total financial liabilities at 31 December 2014	4,413	208	169	21	1	1,546	4,677	31,259	42,294

Non-financial liabilities	-	-	-	-	-	-	-	125	125

Total liabilities at 31 December 2014	4,413	208	169	21	1	1,546	4,677	31,384	42,419

Off-balance sheet commitments given
Undrawn formal standby facilities, credit lines and other commitments to lend	16	-	-	-	-	-	-	-	16

	Due not more than 1 month	Due over 1 month but not more than 3 months	Due over 3 months but not more than 6 months	Due over 6 months but not more than 9 months	Due over 9 months but not more than 1 year	Due over 1 year but not more than 2 years	Due over 2 years but not more than 5 years	Due over 5 years	Total
	US$m	US$m	US$m	US$m	US$m	US$m	US$m	US$m	US$m
Financial assets
Cash at bank and in hand:
- balances with HSBC undertakings	407	-	-	-	-	-	-	-	407
Derivatives	2,729	-	-	-	-	-	-	60	2,789
- trading	2,729	-	-	-	-	-	-	-	2,729
- non-trading	-	-	-	-	-	-	-	60	60
Loans and advances to HSBC undertakings	8,394	4,374	7,595	14	16	-	-	32,951	53,344
Financial investments in HSBC undertakings	23	-	8	-	-	-	330	849	1,210
Accrued income and other financial assets	10	-	-	-	-	-	-	-	10

Total financial assets at 31 December 2013	11,563	4,374	7,603	14	16	-	330	33,860	57,760

Non-financial assets	-	-	-	-	-	-	-	93,076	93,076

Total assets at 31 December 2013	11,563	4,374	7,603	14	16	-	330	126,936	150,836

Financial liabilities
Amounts owed to HSBC undertakings	3,770	12	2,234	-	1	-	463	5,205	11,685
Financial liabilities designated at fair value	-	-	-	-	-	-	1,283	19,744	21,027
- debt securities in issue	-	-	-	-	-	-	1,283	6,823	8,106
- subordinated liabilities and preferred securities	-	-	-	-	-	-	-	12,921	12,921
Derivatives	704	-	-	-	-	-	-	-	704
- trading	704	-	-	-	-	-	-	-	704
- non-trading	-	-	-	-	-	-	-	-	-
Debt securities in issue	-	-	1,721	-	-	-	-	1,070	2,791
Accruals and other financial liabilities	777	109	261	22	-	-	-	-	1,169
Subordinated liabilities	-	-	-	-	-	-	2,210	11,957	14,167

Total financial liabilities at 31 December 2013	5,251	121	4,216	22	1	-	3,956	37,976	51,543

Non-financial liabilities	-	-	-	-	-	-	-	206	206

Total liabilities at 31 December 2013	5,251	121	4,216	22	1	-	3,956	38,182	51,749

Off-balance sheet commitments given
Undrawn formal standby facilities, credit lines and other commitments to lend	1,245	-	-	-	-	-	-	-	1,245

32 Offsetting of financial assets and financial liabilities

Accounting policy

Financial assets and financial liabilities are offset and the net amount is reported in the balance sheet when there is a legally enforceable right to offset the recognised amounts and there is an intention to settle on a net basis, or realise the asset and settle the liability simultaneously ('the offset criteria').

Financial assets subject to offsetting, enforceable master netting arrangements and similar agreements

	Gross amounts of recognised financial assets	Gross amounts offset in the balance sheet	Amounts presented in the balance sheet	Amounts not set off in the balance sheet
	Gross amounts of recognised financial assets	Gross amounts offset in the balance sheet	Amounts presented in the balance sheet	Financial instruments¹	Cash collateral received	Net amount
	US$m	US$m	US$m	US$m	US$m	US$m

Derivatives² (Note 16)	595,473	(250,465)	345,008	(271,040)	(42,260)	31,708

Reverse repos, stock borrowing and similar agreements³	259,655	(88,676)	170,979	(166,958)	(249)	3,772
Classified as:
- trading assets	9,656	(390)	9,266	(9,256)	-	10
- non-trading assets	249,999	(88,286)	161,713	(157,702)	(249)	3,762

Loans and advances to customers at amortised cost⁴	101,220	(37,527)	63,693	(55,989)	(310)	7,394

At 31 December 2014	956,348	(376,668)	579,680	(493,987)	(42,819)	42,874

Derivatives² (Note 16)	569,595	(287,330)	282,265	(215,957)	(36,387)	29,921

Reverse repos, stock borrowing and similar agreements³	288,903	(88,775)	200,128	(197,287)	(57)	2,784
Classified as:
- trading assets	39,008	(18,570)	20,438	(20,438)	-	-
- non-trading assets	249,895	(70,205)	179,690	(176,849)	(57)	2,784

Loans and advances to customers at amortised cost⁴	192,437	(92,654)	99,783	(89,419)	-	10,364

At 31 December 2013	1,050,935	(468,759)	582,176	(502,663)	(36,444)	43,069

1 Including non-cash collateral.

2 Including amounts that are both subject to and not subject to enforceable master netting agreements and similar agreements.

3 For the amount of reverse repos, stock borrowing and similar agreements recognised in the balance sheet, see the 'Funding sources and uses' table on page 168. In the analysis above, the US$9,266m (31 December 2013: US$20,438m) of trading assets presented in the balance sheet comprised US$1,297m of reverse repos (31 December 2013: US$10,120m) and US$7,969m of stock borrowing (31 December 2013: US$10,318m).

4 At 31 December 2014, the total amount of loans and advances to customers at amortised cost was US$974,660m (31 December 2013: US$992,089m) of which US$63,693m (31 December 2013: US$99,783m) was subject to offsetting. For the amount of loans and advances to customers at amortised cost recognised in the balance sheet, see the 'Funding sources and uses' table on page 168.

Financial liabilities subject to offsetting, enforceable master netting arrangements and similar agreements

	Gross amounts of recognised financial liabilities	Gross amounts offset in the balance sheet	Amounts presented in the balance sheet	Amounts not set off in the balance sheet
	Gross amounts of recognised financial liabilities	Gross amounts offset in the balance sheet	Amounts presented in the balance sheet	Financial instruments¹	Cash collateral pledged	Net amount
	US$m	US$m	US$m	US$m	US$m	US$m

Derivatives² (Note 16)	591,134	(250,465)	340,669	(272,815)	(40,291)	27,563
Repos, stock lending and similar agreements³	211,938	(88,676)	123,262	(121,722)	(105)	1,435
Classified as:
- trading liabilities	16,220	(390)	15,830	(15,828)	-	2
- non-trading liabilities	195,718	(88,286)	107,432	(105,894)	(105)	1,433

Customer accounts at amortised cost⁴	107,088	(37,527)	69,561	(55,989)	-	13,572

At 31 December 2014	910,160	(376,668)	533,492	(450,526)	(40,396)	42,570

Derivatives² (Note 16)	561,614	(287,330)	274,284	(216,596)	(29,093)	28,595
Repos, stock lending and similar agreements³	282,634	(88,775)	193,859	(193,354)	(81)	424
Classified as:
- trading liabilities	48,209	(18,570)	29,639	(29,625)	-	14
- non-trading liabilities	234,425	(70,205)	164,220	(163,729)	(81)	410

Customer accounts at amortised cost⁴	195,153	(92,654)	102,499	(89,394)	-	13,105

At 31 December 2013	1,039,401	(468,759)	570,642	(499,344)	(29,174)	42,124

1 Including non-cash collateral.

2 Including amounts that are both subject to and not subject to enforceable master netting agreements and similar agreements.

3 For the amount of repos, stock lending and similar agreements recognised in the balance sheet, see the 'Funding sources and uses' table on page 168. In the analysis above, the US$15,830m (31 December 2013: US$29,639m) of trading liabilities presented in the balance sheet comprised US$3,798m of repos (31 December 2013: US$17,421m) and US$12,032m of stock lending (31 December 2013: US$12,218m).

4 At 31 December 2014, the total amount of customer accounts at amortised cost was US$1,350,642m (31 December 2013: US$1,361,297m) of which US$69,561m (31 December 2013: US$102,499m) was subject to offsetting. For the amount of customer accounts at amortised cost recognised in the balance sheet, see the 'Funding sources and uses' table on page 168.

The 'Amounts not set off in the balance sheet' for derivatives and reverse repurchase/repurchase, stock borrowing/ lending and similar agreements include transactions where:

· the counterparty has an offsetting exposure with HSBC and a master netting or similar arrangement is in place with a right of set off only in the event of default, insolvency or bankruptcy, or the offset criteria are otherwise not satisfied; and

· cash and non-cash collateral received/pledged in respect of the transactions described above.

For loans and advances to customers and Customer accounts at amortised cost the amounts included in the table above typically relate to transactions entered into with corporate and commercial customers for working capital management purposes. The 'Amounts not set off in the balance sheet' relate to transactions where the customer has an offsetting exposure with HSBC and an agreement is in place with the right of offset but the offset criteria are otherwise not satisfied. For risk management purposes, the net amounts of such exposures are subject to limits which are monitored and the relevant customer agreements are subject to review and updated, as necessary, to ensure the legal right of offset remains appropriate.

33 Foreign exchange exposures

Structural foreign exchange exposures

HSBC's structural foreign exchange exposures are represented by the net asset value of its foreign exchange equity and subordinated debt investments in subsidiaries, branches, joint ventures and associates with non-US dollar functional currencies. Gains or losses on structural foreign exchange exposures are recognised in other comprehensive income. HSBC's management of its structural foreign exchange exposures is discussed on page 181.

Net structural foreign exchange exposures

	2014	2013
	US$m	US$m
Currency of structural exposure
Pound sterling¹	30,071	28,403
Chinese renminbi	24,578	20,932
Hong Kong dollars	24,028	18,974
Euros	20,378	22,014
Mexican pesos	5,249	5,932
Brazilian real	4,910	5,581
Canadian dollars	4,187	4,372
Indian rupees	3,466	3,222
Saudi riyals	2,910	2,531
Malaysian ringgit	2,219	2,194
UAE dirhams	2,199	3,069
Swiss francs	1,864	1,940
Taiwanese dollars	1,721	1,527
Australian dollars	1,516	1,515
Turkish lira	1,366	1,533
Korean won	1,360	1,373
Indonesian rupiah	1,352	1,244
Singapore dollars	1,185	849
Argentine pesos	1,059	1,067
Egyptian pounds	868	739
Others, each less than US$700m	5,918	6,157

At 31 December	142,404	135,168

1 During 2014, we entered into a forward foreign exchange contract amounting to US$1.6bn in order to manage our sterling structural foreign exchange exposure.

Shareholders' equity would decrease by US$2,522m (2013: US$2,521m) if euro and sterling foreign currency exchange rates weakened by 5% relative to the US dollar.

34 Non-controlling interests

	2014	2013
	US$m	US$m

Non-controlling interests attributable to holders of ordinary shares in subsidiaries	7,104	5,900
Preferred securities issued by subsidiaries	2,427	2,688
	9,531
At 31 December	9,531	8,588

Preferred securities issued by subsidiaries

Preferred securities are securities for which there is no obligation to pay a dividend and, if the dividend is not paid, it may not be cumulative. Such securities do not generally carry voting rights but rank higher than ordinary shares for dividend payments and in the event of a winding-up. These securities have no stated maturity date but may be called and redeemed by the issuer, subject to prior notification to the PRA and, where relevant, the consent of the local banking regulator. Dividends on floating rate preferred securities are generally related to interbank offer rates.

Included in the capital base of HSBC are non-cumulative preferred securities classified as additional tier 1 capital and cumulative preferred securities classified as tier 2 capital in accordance with CRD IV rules, by virtue of the application of grandfathering provisions.

Preferred securities issued by HSBC's subsidiaries

		First call date	2014 US$m	2013 US$m
HSBC USA Inc.
US$150m	Depositary shares each representing 25% interest in a share of adjustable-rate cumulative preferred stock, series D	Jul 1999	150	150
US$150m	Cumulative preferred stock	Oct 2007	150	150
US$518m	Floating rate non-cumulative preferred stock, series F	Apr 2010	518	518
US$374m	Floating rate non-cumulative preferred stock, series G	Jan 2011	374	374
US$374m	6.50% non-cumulative preferred stock, series H	Jul 2011	374	374

HSBC Finance Corporation.
US$575m	6.36% non-cumulative preferred stock, series B	Jun 2010	559	559

HSBC Bank Canada
CAD175m	Non-cumulative redeemable class 1 preferred shares, series C	Jun 2010	151	164
CAD175m	Non-cumulative class 1 preferred shares, series D	Dec 2010	151	164
CAD250m¹	Non-cumulative 5 year rate reset class 1 preferred shares, series E	Jun 2014	-	235

At 31 December			2,427	2,688

1 In June 2014, HSBC redeemed its non-cumulative 5 year reset class 1 preferred shares series E for US$234m.

35 Called up share capital and other equity instruments

Accounting policy

Financial instruments issued are classified as equity when there is no contractual obligation to transfer cash, other financial assets or issue a variable number of own equity instruments. Incremental costs directly attributable to the issue of equity instruments are shown in equity as a deduction from the proceeds, net of tax.

HSBC Holdings shares held by HSBC are recognised in equity as a deduction from retained earnings until they are cancelled. When such shares are subsequently sold, reissued or otherwise disposed of, any consideration received is included in equity, net of any directly attributable incremental transaction costs and related income tax effects.

Issued and fully paid

HSBC Holdings ordinary shares of US$0.50 each

	2014	2013
	US$m	US$m

HSBC Holdings ordinary shares¹ at 31 December	9,609	9,415

	Number	US$m

At 1 January 2014	18,830,007,039	9,415
Shares issued under HSBC employee share plans	119,391,238	60
Shares issued in lieu of dividends	268,475,983	134

At 31 December 2014	19,217,874,260	9,609

At 1 January 2013	18,476,008,664	9,238
Shares issued under HSBC employee share plans	120,033,493	60
Shares issued in lieu of dividends	233,964,882	117

At 31 December 2013	18,830,007,039	9,415

HSBC Holdings non-cumulative preference shares of US$0.01 each

	Number	US$m

At 1 January 2014 and 31 December 2014²	1,450,000	-
At 1 January 2013 and 31 December 2013	1,450,000	-

1 All HSBC Holdings ordinary shares in issue confer identical rights, including in respect of capital, dividends and voting.

2 Included in the capital base of HSBC as additional tier 1 capital in accordance with the CRD IV rules, by virtue of the application of grandfathering provisions.

Dividends on the HSBC Holdings non-cumulative dollar preference shares in issue ('dollar preference shares') are paid quarterly at the sole and absolute discretion of the Board of Directors. The Board of Directors will not declare a dividend on the dollar preference shares if payment of the dividend would cause HSBC Holdings not to meet the applicable capital adequacy requirements of the PRA or the profit of HSBC Holdings available for distribution as dividends is not sufficient to enable HSBC Holdings to pay in full both dividends on the dollar preference shares and dividends on any other shares that are scheduled to be paid on the same date and that have an equal right to dividends. HSBC Holdings may not declare or pay dividends on any class of its shares ranking lower in the right to dividends than the dollar preference shares nor redeem nor purchase in any manner any of its other shares ranking equal with or lower than the dollar preference shares unless it has paid in full, or set aside an amount to provide for payment in full, the dividends on the dollar preference shares for the then current dividend period. The dollar preference shares carry no rights to conversion into ordinary shares of HSBC Holdings. Holders of the dollar preference shares will only be entitled to attend and vote at general meetings of shareholders of HSBC Holdings if the dividend payable on the dollar preference shares has not been paid in full for four consecutive dividend payment dates. In such circumstances, holders of the dollar preference shares will be entitled to vote on all matters put to general meetings until such time as HSBC Holdings has paid a full dividend on the dollar preference shares. HSBC Holdings may redeem the dollar preference shares in whole at any time on or after 16 December 2010, subject to prior notification to the PRA.

HSBC Holdings non-cumulative preference share of £0.01

The one non-cumulative sterling preference share of £0.01 in issue ('sterling preference share') has been in issue since 29 December 2010 and is held by a subsidiary of HSBC Holdings. Dividends on the sterling preference share are paid quarterly at the sole and absolute discretion of the Board. The sterling preference share carries no rights of conversion into ordinary shares of HSBC Holdings and no rights to attend and vote at general meetings of shareholders of HSBC Holdings. HSBC Holdings may redeem it in whole at any time at the option of the Company.

Other equity instruments

Other equity instruments which have been included in the capital base of HSBC comprise of additional tier 1 capital securities and additional tier 1 - contingent convertible securities.

Additional tier 1 capital securities

Additional tier 1 capital securities are perpetual subordinated securities on which coupon payments may be deferred at the discretion of HSBC Holdings. While any coupon payments are unpaid or deferred, HSBC Holdings will not declare, pay dividends or make distributions or similar periodic payments in respect of, or repurchase, redeem or otherwise acquire any securities of lower or equal rank. Such securities do not generally carry voting rights but rank higher than ordinary shares for coupon payments and in the event of a winding-up. These securities have been included in the capital base of HSBC in accordance with CRD IV rules by virtue of the application of grandfathering provisions.

At HSBC Holdings' discretion, and subject to certain conditions being satisfied, the capital securities may be exchanged on any coupon payment date for non-cumulative preference shares to be issued by HSBC Holdings and ranking pari passu with the dollar and sterling preference shares in issue. The preference shares would be issued at a nominal value of US$0.01 per share and a premium of US$24.99 per share, with both such amounts being subscribed and fully paid. These securities may be called and redeemed by HSBC subject to prior notification to the PRA.

HSBC's additional tier 1 capital securities in issue which are accounted for in equity

		First call date	2014 US$m	2013 US$m

US$2,200m	8.125% perpetual subordinated capital securities	Apr 2013	2,133	2,133
US$3,800m	8.00% perpetual subordinated capital securities, Series 2	Dec 2015	3,718	3,718

At 31 December			5,851	5,851

Additional tier 1 capital - contingent convertible securities

During 2014, HSBC issued new contingent convertible securities that are included in HSBC's capital base as fully CRD IV compliant additional tier 1 capital securities on an end point basis. The net proceeds of the issuances will be used for general corporate purposes and to further strengthen the capital base pursuant to requirements under CRD IV. These securities bear a fixed rate of interest until their initial call dates. After the initial call dates, in the event they are not redeemed, the securities will bear interest at rates which are fixed periodically in advance for five year periods based on prevailing market rates. Interest on the contingent convertible securities will be due and payable only at the sole discretion of HSBC, and HSBC has sole and absolute discretion at all times and for any reason to cancel (in whole or in part) any interest payment that would otherwise be payable on any interest payment date. There are limitations on the payment of distributions if such payments are prohibited under UK banking regulations, or other requirements, if HSBC Holdings has insufficient reserves available for distribution or if HSBC fails to satisfy the solvency condition as defined in the securities' terms.

The contingent convertible securities are undated and are repayable, at the option of HSBC, in whole at the initial call date, or on any fifth anniversary after the initial call date. In addition, the securities are repayable at the option of HSBC in whole for certain regulatory or tax reasons. Any repayments require the prior consent of the PRA. These securities rank pari passu with HSBC's dollar and sterling preference shares and are therefore ahead of ordinary shares. The contingent convertible securities will be converted into ordinary shares of HSBC, at a pre-determined price, should HSBC's consolidated, end-point CET1 ratio fall below 7.0%. Therefore, per the terms of the securities, on bail-in the securities will convert into ordinary shares at a conversion price of £2.70 subject to certain anti-dilution and foreign exchange adjustments and will rank pari passu with the fully paid ordinary shares in issue.

HSBC's additional tier 1 capital - contingent convertible securities in issue which are accounted for in equity

		First call date	2014 US$m	2013 US$m

US$2,250m	6.375% perpetual subordinated contingent convertible securities	Sep 2024	2,244	-
US$1,500m	5.625% perpetual subordinated contingent convertible securities	Jan 2020	1,494	-
€1,500m	5.25% perpetual subordinated contingent convertible securities	Sep 2022	1,943	-

At 31 December			5,681	-

Shares under option

For details of the options outstanding to subscribe for HSBC Holdings ordinary shares under the HSBC Holdings Group Share Option Plan, the HSBC Share Plan and HSBC Holdings savings-related share option plans, see Note 6.

Aggregate options outstanding under these plans

	Number of HSBC Holdings ordinary shares	Period of exercise	Exercise price

31 December 2014	63,918,042	2014 to 2020	£3.3116 - 7.9911
	6,468,782	2014 to 2018	HK$37.8797 - 63.9864
	571,502	2014 to 2018	€3.6361 - 6.0657
	1,867,328	2014 to 2018	US$4.8876 - 8.2094

31 December 2013	119,085,250	2013 to 2019	£3.3116 - 7.9911
	24,215,341	2013 to 2018	HK$37.8797 -92.5881
	1,574,652	2013 to 2018	€3.6361 - 7.5571
	3,997,069	2013 to 2018	US$4.8876 - 11.8824

31 December 2012	159,703,771	2013 to 2018	£3.3116 - 7.9911
	31,637,840	2013 to 2018	HK$37.8797 - 94.5057
	2,180,263	2013 to 2018	€3.6361 - 9.5912
	6,488,894	2013 to 2018	US$4.8876 - 12.0958

Maximum obligation to deliver HSBC Holdings ordinary shares

At 31 December 2014, the maximum obligation to deliver HSBC Holdings ordinary shares under all of the above option arrangements, together with GPSP awards and restricted share awards granted under the HSBC Share Plan and/or the HSBC Share Plan 2011, was 193,154,512 (2013: 265,534,885). The total number of shares at 31 December 2014 held by employee benefit trusts that may be used to satisfy such obligations to deliver HSBC Holdings ordinary shares was 7,943,191 (2013: 12,068,136).

36 Notes on the statement of cash flows

Other non-cash items included in profit before tax

	HSBC			HSBC Holdings
	2014	2013	2012	2014	2013
	US$m	US$m	US$m	US$m	US$m

Depreciation, amortisation and impairment	2,251	2,330	2,531	39	35
(Gains)/losses arising from dilution of interests in associates	32	(1,051)	-	-	-
Revaluations on investment property	(120)	(113)	(72)	-	-
Share-based payment expense	732	630	988	74	49
Loan impairment losses gross of recoveries and other credit risk provisions	5,125	7,356	9,358	-	-
Provisions	3,074	2,578	5,732	-	-
Impairment/(release of impairment) of financial investments	54	(36)	519	-	-
Charge/(credit) for defined benefit plans	535	121	476	-	-
Accretion of discounts and amortisation of premiums	(421)	180	246	(62)	(10)

Year ended 31 December	11,262	11,995	19,778	51	74

Change in operating assets

	HSBC			HSBC Holdings
	2014	2013	2012	2014	2013
	US$m	US$m	US$m	US$m	US$m

Change in loans to HSBC undertakings	-	-	-	1,364	(11,669)
Change in net trading securities and net derivatives	(18,498)	(24,870)	(36,829)	483	923
Change in loans and advances to banks	5,147	(4,739)	1,174	-	-
Change in loans and advances to customers	12,666	(46,551)	(79,388)	-	-
Change in reverse repurchase agreements - non-trading	18,900	(70,403)	6,678	-	-
Change in financial assets designated at fair value	3,269	(4,922)	(2,698)	-	-
Change in other assets	4,393	2,586	(5,458)	7	(49)

Year ended 31 December	25,877	(148,899)	(116,521)	1,854	(10,795)

Change in operating liabilities

	HSBC			HSBC Holdings
	2014	2013	2012	2014	2013
	US$m	US$m	US$m	US$m	US$m

Change in deposits by banks	(9,081)	(7,781)	274	-	-
Change in customer accounts	(8,362)	57,365	92,238	-	-
Change in repurchase agreements - non-trading	(56,788)	123,653	(7,834)	-	-
Change in debt securities in issue	(8,133)	(15,381)	(11,552)	(149)	98
Change in financial liabilities designated at fair value	(10,734)	994	2,549	(694)	(550)
Change in other liabilities	(716)	5,907	13,395	(9,071)	(609)

Year ended 31 December	(93,814)	164,757	89,070	(9,914)	(1,061)

Cash and cash equivalents

Accounting policy

Cash and cash equivalents include highly liquid investments that are readily convertible to known amounts of cash and which are subject to an insignificant risk of change in value. Such investments are normally those with less than three months' maturity from the date of acquisition.

Cash and cash equivalents

	HSBC			HSBC Holdings
	2014	2013	2012	2014	2013
	US$m	US$m	US$m	US$m	US$m

Cash at bank with HSBC undertakings	-	-	-	249	407
Cash and balances at central banks	129,957	166,599	141,532	-	-
Items in the course of collection from other banks	4,927	6,021	7,303	-	-
Loans and advances to banks of one month or less	89,285	96,584	119,400	-	-
Reverse repurchase agreements with banks of one month or less	68,930	68,007	28,832	-	-
Treasury bills, other bills and certificates of deposit less than three months	14,192	15,980	25,379	-	-
Less: items in the course of transmission to other banks	(5,990)	(6,910)	(7,138)	-	-

At 31 December	301,301	346,281	315,308	249	407

1 Measured at amortised cost from 2013.

Interest and dividends

	HSBC			HSBC Holdings
	2014	2013	2012	2014	2013
	US$m	US$m	US$m	US$m	US$m

Interest paid	(15,633)	(17,262)	(18,412)	(2,463)	(2,705)
Interest received	51,522	50,823	61,112	1,945	1,986
Dividends received	1,199	1,133	766	9,077	20,925

The amount of cash and cash equivalents not available for use by HSBC at 31 December 2014 was US$43,738m (2013: US$38,019m), of which US$29,883m (2013: US$21,811m) related to mandatory deposits at central banks.

Disposal of subsidiaries and businesses

During 2014, we completed the disposals of HSBC Bank Middle East Limited's banking business in Jordan and operations in Pakistan. This resulted in a net US$303m outflow of cash and cash equivalents which is included under 'Cash flow from investing activities' in the Consolidated statement of cash flows on page 338.

In October 2013, we completed the disposal of HSBC Bank (Panama) S.A., receiving total cash consideration of US$2,210m which is included under 'Cash flow from investing activities' in the Consolidated statement of cash flows on page 338.

The effect of disposals of subsidiaries and businesses in 2012 is tabulated below.

	2012
	US cards business	US branch network	Other disposals	Total
	US$m	US$m	US$m	US$m
Total assets excluding cash and cash equivalents	28,007	2,166	7,302	37,475
Total liabilities	161	13,206	8,463	21,830

Aggregate net assets at date of disposal, excluding cash and cash equivalents	27,846	(11,040)	(1,161)	15,645
Non-controlling interests disposed	-	-	(81)	(81)
Gain on disposal including costs to sell	3,148	864	355	4,367
Add back: costs to sell	72	15	56	143

Selling price	31,066	(10,161)	(831)	20,074

Satisfied by:
Cash and cash equivalents received/(paid) as consideration	31,066	(10,091)	(542)	20,433
Cash and cash equivalents sold	-	(70)	(321)	(391)

Cash consideration received/(paid) up to 31 December 2012	31,066	(10,161)	(863)	20,042
Cash still to be received at 31 December 2012	-	-	32	32

Total cash consideration	31,066	(10,161)	(831)	20,074

This information is provided by RNS

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END

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RNS metadata

Title: Annual Financial Report - 50 of 54
Time: 17:04:02
Date: 20 Mar 2015
Category: Results
ID: 0602I