HSBC 2004 Annual Report Download - page 358

HSBC HOLDINGS PLC
Notes on the Financial Statements (continued)
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contribute to changes in another (for example, increases in market interest rates may result in lower
prepayments) which might magnify or counteract the sensitivities. Furthermore, the estimated fair values as
disclosed should not be considered indicative of future earnings on these assets.
Static pool credit losses are calculated by summing actual and projected future credit losses and dividing them by
the original balance of each pool of asset. Due to the short term revolving nature of MasterCard and Visa, and
private label loan balances, the weighted-average percentage of static pool credit losses is not considered to be
materially different from the weighted-average charge-off assumptions used in determining the fair value of
interest-only strip receivables in the table above. At 31 December 2004, static pool credit losses for auto finance
loans securitised in 2003 were estimated to be 10.2 per cent and for auto finance loans securitised in 2002 were
estimated to be 14.7 per cent (2003: 11.5 per cent).
50 Approval of accounts
These accounts were approved by the Board of Directors on 28 February 2005.