HSBC 2002 Annual Report Download - page 74

HSBC HOLDINGS PLC
Financial Review (continued)
72
average outstanding credit card advances were 18 per
cent higher. Funds sold to customers rose by 51 per
cent to US$272 million compared with 2000. A
wider range of trade, cash management and
institutional products also contributed to the increase
in other operating income.
The expansion of the personal banking sales
teams and the related strengthening of the credit
function across the region drove staff costs higher
and was the principal contributor to operating
expenses being US$19 million, or 11 per cent, higher
than in 2000. Investment in new products (including
the card loyalty programme), costs associated with
centralisation of regional back office processes in
Dubai and investment in internet service capabilities
also contributed to increased operating expenses. The
bank’s new internet service was soft launched in the
United Arab Emirates in November 2001and a full
regional launch to customers is planned for the
second half of 2002.
The individually significant bad debt provisions
which burdened HSBC Bank Middle East in 2000
were not repeated and as a result the charge for bad
and doubtful debt provisions was 30 per cent lower.
This also reflected an increased level of recoveries
following investment in strengthening the credit
systems and collection processes.
Elsewhere, HSBC operations in Korea and
Thailand each contributed in excess of US$50
million to pre-tax profits and HSBC’s operations in
Taiwan, the Philippines and Mauritius each
contributed in excess of US$25 million to pre-tax
profits. Following investment to take HSBC’s stake
in HSBC Bank Egypt from 40 per cent to 94.5 per
cent HSBC’s return on a pre-tax basis grew to US$19
million. HSBC’s associates, The Saudi British Bank
and British Arab Commercial Bank, contributed
US$96 million to cash basis pre-tax profits.
In Lebanon, losses of US$31 million were
suffered on an operation which has subsequently
been closed. In addition, increased levels of credit
provisions raised against a small number of
customers reduced the contribution from operations
in Australia and resulted in losses being reported in
Indonesia.
North America
Cash basis profit before tax
Year ended 31 December
Figures in US$m 2002 2001 2000
HSBC Bank USA (excl
Princeton) ....................... 1,406 1,273 871
HSBC Markets USA............ (100 )(6) 35
Other USA operations.......... 413 5
USA operations ................... 1,310 1,280 911
Canadian operations ............ 267 230 236
Mexico ................................ 35 14 9
Panama ................................ (15)11 2
1,597 1,535 1,158
Princeton Note settlement ... –(575) –
Group internet
development – hsbc.com.(83 ) (161) –
Intermediate holding
companies....................... (130 ) (151 ) (154)
1,384 648 1,004
Year ended 31 December
Figures in US$m 2002 2001 2000
Net interest income............... 2,732 2,450 2,185
Dividend income .................. 24 29 68
Net fees and commissions..... 984 913 862
Dealing profits...................... 161 346 229
Other income ........................ 333 207 179
Other operating income ........ 1,502 1,495 1,338
Total operating income 4,234 3,945 3,523
Staff costs............................. (1,537 ) (1,440) (1,406)
Premises and equipment ....... (356) (323 ) (312 )
Other .................................... (651) (653 ) (561)
Depreciation ......................... (131) (124) (117 )
(2,675) (2,540 ) (2,396)
Goodwill amortisation .......... (146 ) (145 ) (144)
Operating expenses............... (2,821 ) (2,685) (2,540)
Operating profit before
provisions........................ 1,413 1,260 983
Provisions for bad and
doubtful debts .................. (300 ) (300) (157)
Provisions for contingent
liabilities and
commitments ...................
- other ................................... 3(7 ) 1
- Princeton Note settlement .. – (575 ) –
Amounts written off fixed
asset investments ............. (9) (5 ) –
Operating profit.................. 1,107 373 827
Share of operating losses in
joint venture..................... (2 ) (7) –
Share of operating
profit/(losses) in
associates ......................... 85(2)
Gains on disposal of
investments and tangible
fixed assets ...................... 125 132 35
Profit on ordinary
activities before tax ........ 1,238 503 860