HSBC 2004 Annual Report Download - page 179

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Capital structure
The table below sets out the analysis of regulatory capital.
2004
US$m
2003
US$m
Composition of capital
Tier 1
Shareholders’ funds ........................................................................................................................ 86,623 74,473
Minority interests ............................................................................................................................ 4,253 3,711
Innovative tier 1 securities .............................................................................................................. 10,077 8,094
Less :
Property revaluation reserves ...................................................................................................... (2,660) (1,615)
Goodwill capitalised and intangible assets .................................................................................. (31,190) (29,920)
Own shares held .......................................................................................................................... 156 120
Total qualifying tier 1 capital .......................................................................................................... 67,259 54,863
Tier 2
Property revaluation reserves .......................................................................................................... 2,660 1,615
General provisions .......................................................................................................................... 2,624 2,868
Perpetual subordinated debt ............................................................................................................ 3,670 3,608
Term subordinated debt .................................................................................................................. 21,373 15,795
Minority and other interests in tier 2 capital .................................................................................... 519 523
Total qualifying tier 2 capital .......................................................................................................... 30,846 24,409
Unconsolidated investments ............................................................................................................ (6,361) (4,101)
Investments in other banks .............................................................................................................. (799) (911)
Other deductions ............................................................................................................................. (165) (218)
Total capital .................................................................................................................................... 90,780 74,042
Risk-weighted assets
Banking book .................................................................................................................................. 705,302 577,430
Trading book ................................................................................................................................... 53,908 41,232
Total ................................................................................................................................................ 759,210 618,662
%%
Capital ratios:
Total capital .................................................................................................................................... 12.0 12.0
Tier 1 capital ................................................................................................................................... 8.9 8.9
The above figures were computed in accordance
with the EU Banking Consolidation Directive.
Tier 1 capital increased by US$12.4 billion.
Retained profits (excluding goodwill amortisation)
contributed US$6.4 billion. Shares issued in lieu of
dividends and innovative tier 1 securities issued
contributed US$2.6 billion and US$2.0 billion,
respectively. Exchange movements on reserves and
other movements also added US$1.4 billion to tier 1
capital.
The increase of US$6.4 billion in tier 2 capital
mainly reflects the proceeds of capital issues, net of
redemption and regulatory amortisation.
Total risk-weighted assets increased by
US$141 billion. This increase was driven by
significant growth in loans and advances to
customers in North America, the UK and Hong
Kong. In constant currency, risk-weighted asset
growth was 17 per cent.
Risk-weighted assets by principal subsidiary
In order to give an indication of how HSBC’ s capital
is deployed, the table below analyses the disposition
of risk-weighted assets by principal subsidiary. The
risk-weighted assets are calculated using FSA rules
and exclude intra-HSBC items.