Interim Report - 20 of 24

RNS Announcement

RNS Number : 2060X

HSBC Holdings PLC

26 August 2015

Consolidated income statement

for the half-year to 30 June 2015

		Half-year to
		30 June 2015	30 June 2014	31 December 2014
	Notes	$m	$m	$m

Interest income		24,019	25,435	25,520
Interest expense		(7,575)	(8,030)	(8,220)

Net interest income		16,444	17,405	17,300

Fee income		9,372	10,031	9,514
Fee expense		(1,647)	(1,854)	(1,734)

Net fee income		7,725	8,177	7,780

Trading income excluding net interest income		3,520	2,362	2,491
Net interest income on trading activities		1,053	913	994

Net trading income		4,573	3,275	3,485

Changes in fair value of long-term debt issued and related derivatives		1,324	438	70
Net income from other financial instruments designated at fair value		1,342	1,222	743

Net income from financial instruments designated at fair value		2,666	1,660	813
Gains less losses from financial investments		1,874	946	389
Dividend income		68	88	223
Net insurance premium income		5,607	6,137	5,784
Other operating income		836	538	593

Total operating income		39,793	38,226	36,367

Net insurance claims and benefits paid and movement in liabilities to policyholders		(6,850)	(7,059)	(6,286)

Net operating income before loan impairment charges and other credit risk provisions		32,943	31,167	30,081

Loan impairment charges and other credit risk provisions		(1,439)	(1,841)	(2,010)

Net operating income		31,504	29,326	28,071

Employee compensation and benefits		(10,041)	(9,978)	(10,388)
General and administrative expenses		(8,129)	(7,127)	(11,438)
Depreciation and impairment of property, plant and equipment		(604)	(712)	(670)
Amortisation and impairment of intangible assets		(413)	(449)	(487)

Total operating expenses		(19,187)	(18,266)	(22,983)

Operating profit		12,317	11,060	5,088

Share of profit in associates and joint ventures		1,311	1,280	1,252

Profit before tax		13,628	12,340	6,340

Tax expense	2	(2,907)	(2,022)	(1,953)

Profit for the period		10,721	10,318	4,387

Profit attributable to shareholders of the parent company		9,618	9,746	3,942
Profit attributable to non-controlling interests		1,103	572	445

		$	$	$

Basic earnings per ordinary share	4	0.48	0.50	0.19
Diluted earnings per ordinary share	4	0.48	0.50	0.19

The accompanying notes on pages 107 to 139 form an integral part of these financial statements¹.

For footnote, see page 106.

Consolidated statement of comprehensive income

for the half-year to 30 June 2015

	Half-year to
	30 June	30 June	31 December
	2015	2014	2014
	$m	$m	$m
		,
Profit for the period	10,721	10,318	4,387

Other comprehensive income/(expense)
Items that will be reclassified subsequently to profit or loss when specific conditions are met:
Available-for-sale investments	(2,445)	958	2,014
- fair value gains/(losses)	(355)	2,183	2,611
- fair value gains reclassified to the income statement	(2,317)	(643)	(1,029)
- amounts reclassified to the income statement in respect of impairment losses	2	15	359
- income taxes	225	(597)	73

Cash flow hedges	(150)	(17)	205
- fair value gains/(losses)	341	(44)	1,556
- fair value (gains)/losses reclassified to the income statement	(538)	50	(1,294)
- income taxes	47	(23)	(57)

Share of other comprehensive income/(expense) of associates and joint ventures	2	(16)	96
- share for the period	2	(18)	96
- reclassified to income statement on disposal	-	2	-

Exchange differences	(3,267)	670	(9,573)
- foreign exchange gains reclassified to the income statement on disposal of a foreign operation	-	(21)	-
- other exchange differences	(3,395)	691	(9,608)
- income tax attributable to exchange differences	128	-	35

Items that will not be reclassified subsequently to profit or loss:
Remeasurement of defined benefit asset/liability	(1,680)	316	1,669
- before income taxes	(2,085)	421	1,998
- income taxes	405	(105)	(329)

Other comprehensive income/(expense) for the period, net of tax	(7,540)	1,911	(5,589)

Total comprehensive income/(expense) for the period	3,181	12,229	(1,202)

Attributable to:
- shareholders of the parent company	2,856	11,706	(2,461)
- non-controlling interests	325	523	1,259

Total comprehensive income/(expense) for the period	3,181	12,229	(1,202)

The accompanying notes on pages 107 to 139 form an integral part of these financial statements¹.

For footnote, see page 106.

Consolidated balance sheet

at 30 June 2015

		At 30 June	At 30 June	At 31 December
		2015	2014	2014
	Notes	$m	$m	$m
Assets

Cash and balances at central banks		144,324	132,137	129,957
Items in the course of collection from other banks		10,190	8,144	4,927
Hong Kong Government certificates of indebtedness		28,104	26,640	27,674
Trading assets	6	283,138	347,106	304,193
Financial assets designated at fair value	9	25,168	31,823	29,037
Derivatives	10	296,942	269,839	345,008
Loans and advances to banks		109,405	127,387	112,149
Loans and advances to customers		953,985	1,047,241	974,660
Reverse repurchase agreements - non-trading		149,384	198,301	161,713
Financial investments	11	404,682	423,710	415,467
Assets held for sale	12	60,929	10,248	7,647
Prepayments, accrued income and other assets		55,489	75,520	67,529
Current tax assets		566	1,068	1,309
Interests in associates and joint ventures	14	18,705	17,497	18,181
Goodwill and intangible assets		24,913	29,740	27,577
Deferred tax assets		5,789	7,192	7,111

Total assets		2,571,713	2,753,593	2,634,139

Liabilities and equity

Liabilities
Hong Kong currency notes in circulation		28,104	26,640	27,674
Deposits by banks		71,140	92,764	77,426
Customer accounts		1,335,800	1,415,705	1,350,642
Repurchase agreements - non-trading		81,506	165,506	107,432
Items in the course of transmission to other banks		12,711	9,936	5,990
Trading liabilities	15	181,435	228,135	190,572
Financial liabilities designated at fair value		69,485	82,968	76,153
Derivatives	10	289,984	263,494	340,669
Debt securities in issue		102,656	96,397	95,947
Liabilities of disposal groups held for sale	12	53,226	12,361	6,934
Accruals, deferred income and other liabilities		42,224	50,882	46,462
Current tax liabilities		1,322	1,434	1,213
Liabilities under insurance contracts		69,494	75,223	73,861
Provisions	17	5,125	4,283	4,998
Deferred tax liabilities		1,338	1,091	1,524
Subordinated liabilities		24,781	28,052	26,664

Total liabilities		2,370,331	2,554,871	2,434,161

Equity
Called up share capital		9,758	9,535	9,609
Share premium account		12,290	11,582	11,918
Other equity instruments		13,991	5,851	11,532
Other reserves		15,180	28,355	20,244
Retained earnings		141,208	134,958	137,144

Total shareholders' equity		192,427	190,281	190,447
Non-controlling interests		8,955	8,441	9,531

Total equity		201,382	198,722	199,978

Total liabilities and equity		2,571,713	2,753,593	2,634,139

The accompanying notes on pages 107 to 139 form an integral part of these financial statements¹.

For footnote, see page 107.

Consolidated statement of cash flows

for the half-year to 30 June 2015

	Half-year to
	30 June 2015	30 June 2014	31 December 2014
	$m	$m	$m

Cash flows from operating activities
Profit before tax	13,628	12,340	6,340
-....
Adjustments for:
- net gain from investing activities	(1,926)	(979)	(949)
- share of profit in associates and joint ventures	(1,311)	(1,280)	(1,252)
- (gain)/loss on disposal of associates, joint ventures, subsidiaries and businesses	-	(18)	27
- other non-cash items included in profit before tax	4,522	4,284	6,978
- change in operating assets	12,077	(86,266)	112,143
- change in operating liabilities	(15,544)	59,108	(152,922)
- elimination of exchange differences	3,951	(5,486)	30,057
- dividends received from associates	770	127	630
- contributions paid to defined benefit plans	(226)	(315)	(366)
- tax paid	(1,351)	(1,358)	(2,215)

Net cash generated from/(used in) operating activities	14,590	(19,843)	(1,529)

Cash flows from investing activities
Purchase of financial investments	(211,669)	(187,934)	(196,265)
Proceeds from the sale and maturity of financial investments	208,637	194,335	188,502
Purchase of property, plant and equipment	(620)	(523)	(954)
Proceeds from the sale of property, plant and equipment	56	55	33
Net cash inflow/(outflow) from disposal of customer and loan portfolios	321	950	(1,985)
Net purchase of intangible assets	(400)	(385)	(518)
Net cash inflow/(outflow) from disposal of subsidiaries, businesses, associates and joint ventures	7	(140)	(102)
Net cash outflow from acquisition of or increase in stake of associates	(1)	(30)	-
		-
Net cash generated from/(used in) investing activities	(3,669)	6,328	(11,289)

Cash flows from financing activities
Issue of ordinary share capital	9	14	253
Net sales/(purchases) of own shares for market-making and investment purposes	139	(25)	(71)
Issue of other equity instruments	2,459	-	5,681
Redemption of preference shares and other equity instruments	(462)	234	(468)
Subordinated loan capital issued	1,680	3,500	-
Subordinated loan capital repaid	(778)	(3,042)	(121)
Dividends paid to ordinary shareholders of the parent company	(1,834)	(1,755)	(4,856)
Dividends paid to non-controlling interests	(386)	(350)	(289)
Dividends paid to holders of other equity instruments	(428)	(287)	(286)
		-
Net cash generated from/(used in) financing activities	399	(1,711)	(157)

Net increase/(decrease) in cash and cash equivalents	11,320	(15,226)	(12,975)

Cash and cash equivalents at the beginning of the period	301,301	346,281	334,498
Exchange differences in respect of cash and cash equivalents	(3,829)	3,443	(20,222)

Cash and cash equivalents at the end of the period	308,792	334,498	301,301

Consolidated statement of changes in equity

for the half-year to 30 June 2015

					Other reserves
	Called up share capital	Share premium	Other equity instru- ments²	Retained earnings	Available- for-sale fair value reserve³	Cash flow hedging reserve³	Foreign exchange reserve³	Merger reserve	Total share- holders' equity	Non- controlling interests	Total equity
	$m	$m	$m	$m	$m	$m	$m	$m	$m	$m	$m

At 1 January 2015	9,609	11,918	11,532	137,144	2,143	58	(9,265)	27,308	190,447	9,531	199,978
Profit for the period	-	-	-	9,618	-	-	-	-	9,618	1,103	10,721

Other comprehensive income (net of tax)	-	-	-	(1,693)	(1,735)	(151)	(3,183)	-	(6,762)	(778)	(7,540)
- available-for-sale investments	-	-	-	-	(1,735)	-	-	-	(1,735)	(710)	(2,445)
- cash flow hedges	-	-	-	-	-	(151)	-	-	(151)	1	(150)
- remeasurement of defined benefit asset/liability	-	-	-	(1,695)	-	-	-	-	(1,695)	15	(1,680)
- share of other comprehensive income of associates and joint ventures	-	-	-	2	-	-	-	-	2	-	2
- exchange differences	-	-	-	-	-	-	(3,183)	-	(3,183)	(84)	(3,267)


Total comprehensive income for the period	-	-	-	7,925	(1,735)	(151)	(3,183)	-	2,856	325	3,181

Shares issued under employee remuneration and share plans	31	490	-	(512)	-	-	-	-	9	-	9
Shares issued in lieu of dividends and amounts arising thereon	118	(118)	-	2,242	-	-	-	-	2,242	-	2,242
Dividends to shareholders	-	-	-	(6,224)	-	-	-	-	(6,224)	(432)	(6,656)
Capital securities issued	-	-	2,459	-	-	-	-	-	2,459	-	2,459
Cost of share-based payment arrangements	-	-	-	444	-	-	-	-	444	-	444
Other movements	-	-	-	189	5	-	-	-	194	(469)	(275)

At 30 June 2015	9,758	12,290	13,991	141,208	413	(93)	(12,448)	27,308	192,427	8,955	201,382

At 1 January 2014	9,415	11,135	5,851	128,728	97	(121)	(542)	27,308	181,871	8,588	190,459
Profit for the period	-	-	-	9,746	-	-	-	-	9,746	572	10,318

Other comprehensive income (net of tax)	-	-	-	300	956	(16)	720	-	1,960	(49)	1,911
- available-for-sale investments	-	-	-	-	956	-	-	-	956	2	958
- cash flow hedges	-	-	-	-	-	(16)	-	-	(16)	(1)	(17)
- remeasurement of defined benefit asset/liability	-	-	-	316	-	-	-	-	316	-	316
- share of other comprehensive income of associates and joint ventures	-	-	-	(16)	-	-	-	-	(16)	-	(16)
- exchange differences	-	-	-	-	-	-	720	-	720	(50)	670


Total comprehensive income for the period	-	-	-	10,046	956	(16)	720	-	11,706	523	12,229
					-	-	-	-
Shares issued under employee remuneration and share plans	28	539	-	(553)	-	-	-	-	14	-	14
Shares issued in lieu of dividends and amounts arising thereon	92	(92)	-	2,111	-	-	-	-	2,111	-	2,111
Dividends to shareholders	-	-	-	(5,774)	-	-	-	-	(5,774)	(432)	(6,206)
Cost of share-based payment arrangements	-	-	-	333	-	-	-	-	333	-	333
Other movements	-	-	-	67	(39)	(8)	-	-	20	(238)	(218)

At 30 June 2014	9,535	11,582	5,851	134,958	1,014	(145)	178	27,308	190,281	8,441	198,722

Consolidated statement of changes in equity for the half-year to 30 June 2015 (continued)

					Other reserves
	Called up share capital	Share premium	Other equity instru- ments	Retained earnings	Available- for-sale fair value reserve	Cash flow hedging reserve	Foreign exchange reserve	Merger reserve	Total share- holders' equity	Non- controlling interests	Total equity
	$m	$m	$m	$m	$m	$m	$m	$m	$m	$m	$m

At 1 July 2014	9,535	11,582	5,851	134,958	1,014	(145)	178	27,308	190,281	8,441	198,722
Profit for the period	-	-	-	3,942	-	-	-	-	3,942	445	4,387

Other comprehensive income (net of tax)	-	-	-	1,766	1,069	205	(9,443)	-	(6,403)	814	(5,589)
- available-for-sale investments	-	-	-	-	1,069	-	-	-	1,069	945	2,014
- cash flow hedges	-	-	-	-	-	205	-	-	205	-	205
- remeasurement of defined benefit asset/liability	-	-	-	1,670	-	-	-	-	1,670	(1)	1,669
- share of other comprehensive income of associates and joint ventures	-	-	-	96	-	-	-	-	96	-	96
- exchange differences	-	-	-	-	-	-	(9,443)	-	(9,443)	(130)	(9,573)


Total comprehensive income for the period	-	-	-	5,708	1,069	205	(9,443)	-	(2,461)	1,259	(1,202)

Shares issued under employee remuneration and share plans	32	378	-	(157)	-	-	-	-	253	-	253
Shares issued in lieu of dividends and amounts arising thereon	42	(42)	-	598	-	-	-	-	598	-	598
Dividends to shareholders	-	-	-	(4,119)	-	-	-	-	(4,119)	(280)	(4,399)
Capital securities issued	-	-	5,681	-	-	-	-	-	5,681	-	5,681
Cost of share-based payment arrangements	-	-	-	399	-	-	-	-	399	-	399
Other movements	-	-	-	(243)	60	(2)	-	-	(185)	111	(74)

At 31 December 2014	9,609	11,918	11,532	137,144	2,143	58	(9,265)	27,308	190,447	9,531	199,978

The accompanying notes on pages 107 to 139 form an integral part of these financial statements¹.

Footnotes to financial statements

1 The tables: 'Gross loans and advances to customers by industry sector and by geographical region' (see page 61), 'Movement in impairment allowances on loans and advances to customers and banks' (see page 66), and the Composition of regulatory capital within 'Capital' (see page 94) also form an integral part of these financial statements.

2 During March 2015, HSBC Holdings issued $2,450m of Perpetual Subordinated Contingent Convertible Capital Securities, after issuance costs of $8m and tax benefits of $17m, which are classified as equity under IFRSs.

3 At 30 June 2015, our operations in Brazil were classified as held for sale (see Note 12).The cumulative amount of other reserves attributable to these operations were as follows: available-for-sale fair value reserve debit of $65m, cash flow hedging reserve debit of $29m and foreign exchange reserve debit of $1,724m.

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RNS metadata

Title: Interim Report - 20 of 24
Time: 17:34:03
Date: 26 Aug 2015
Category: Results
ID: 2060X