HSBC 2005 Annual Report Download - page 329

327
40 Contingent liabilities and contractual commitments
Contingent liabilities and contractual commitments
HSBC HSBC Holdings
2005 2004 2005 2004
US$m US$m US$m US$m
Contract amounts
Contingent liabilities
Acceptances and endorsements ............................... –7,214 ––
Guarantees and irrevocable letters of credit
pledged as collateral security ............................... 57,475 55,828 36,877 40,708
Other contingent liabilities ...................................... 152 57 ––
57,627 63,099 36,877 40,708
Commitments
Documentary credits and short-term trade-related
transactions ......................................................... 8,090 7,788 ––
Forward asset purchases and forward forward
deposits placed .................................................... 2,179 2,689 ––
Undrawn note issuing and revolving
underwriting facilities ......................................... 468 601 ––
Undrawn formal standby facilities, credit lines
and other commitments to lend:
– 1 year and under .............................................. 527,506 464,541 2,517 2,625
– over 1 year ....................................................... 103,398 92,077 1,146 542
641,641 567,696 3,663 3,167
The above table discloses the nominal principal amounts of third party off-balance sheet transactions. Contingent
liabilities and commitments are mainly credit-related instruments which include letters of credit, guarantees and
commitments to extend credit. Contractual amounts represent the amounts at risk should contracts be fully drawn
upon and clients default. Since a significant portion of guarantees and commitments are expected to expire without
being drawn upon, the total of the contractual amounts is not representative of future liquidity requirements.
At 31 December 2005, HSBC had US$1,218 million (2004: US$1,212 million) of capital commitments contracted
but not provided for and US$333 million (2004: US$311 million) of capital commitments authorised but not
contracted for.
Guarantees
HSBC provides guarantees and similar undertakings on behalf of both third party customers and other entities within
the HSBC Group. These guarantees are generally provided in the normal course of HSBC’s banking business. The
principal types of guarantees provided, and the maximum potential amount of future payments which HSBC could be
required to make at 31 December 2005, were as follows:
At 31 December 2005 At 31 December 2004
Guarantees in
favour of
third parties
Guarantees
by HSBC
Holdings
in favour of
other HSBC
Group entities
Guarantees
in favour of
third parties
Guarantees
by HSBC
Holdings
in favour of
other HSBC
Group entities
US$m US$m US$m US$m
Guarantee type
Acceptances and endorsements1 .................................. ––7,214 –
Financial guarantees2 ................................................... 19,080 36,877 18,412 40,708
Standby letters of credit which are financial
guarantees3 .............................................................. 3,649 – 3,108 –
Other direct credit substitutes4 ..................................... 5,302 – 6,848 –
Performance bonds5 ..................................................... 6,355 – 4,910 –
Bid bonds5 ................................................................... 595 – 382 –
Standby letters of credit related to particular
transactions5 ............................................................ 6,640 – 5,322 –
Other transaction-related guarantees5 .......................... 15,709 – 16,824 –
Other items .................................................................. 297 – 79 –
57,627 36,877 63,099 40,708