HSBC 2006 Annual Report Download - page 248

HSBC HOLDINGS PLC
Report of the Directors: The Management of Risk (continued)
Capital management and allocation > Capital measurement
246
Capital structure
(Unaudited)
2006
US$m
2005
US$m
Composition of regulatory capital
Tier 1 capital
Shareholders’ funds ......................................................................................................................... 108,352 92,432
Minority interests and preference shares ........................................................................................ 7,413 6,741
Innovative tier 1 securities .............................................................................................................. 9,932 9,383
Less :
Goodwill capitalised and intangible assets ................................................................................. (36,489) (32,821)
Other regulatory adjustments ...................................................................................................... (1,366) (1,332)
Total qualifying tier 1 capital .......................................................................................................... 87,842 74,403
Tier 2 capital
Reserves arising from revaluation of property and unrealised gains on
available-for-sale equities ........................................................................................................... 2,982 1,593
Collective impairment allowances .................................................................................................. 11,077 8,749
Perpetual subordinated liabilities .................................................................................................... 3,396 3,640
Term subordinated liabilities .......................................................................................................... 30,677 24,519
Minority interests in tier 2 capital ................................................................................................... 425 425
Total qualifying tier 2 capital .......................................................................................................... 48,557 38,926
Unconsolidated investments ........................................................................................................... (7,512) (6,437)
Investments in other banks .............................................................................................................. (1,419) (1,147)
Other deductions ............................................................................................................................. (394) (296)
Total regulatory capital ................................................................................................................... 127,074 105,449
Risk-weighted assets
Banking book ....................................................................................................................................... 857,198 762,037
Trading book ........................................................................................................................................ 81,480 65,127
Total ..................................................................................................................................................... 938,678 827,164
Risk-weighted assets were included in the totals above in respect of:
– contingent liabilities ..................................................................................................................... 44,704 43,333
– commitments ................................................................................................................................ 58,569 51,288
Capital ratios % %
Total capital ......................................................................................................................................... 13.5 12.8
Tier 1 capital ........................................................................................................................................ 9.4 9.0
The above figures were computed in accordance
with the EU Banking Consolidation Directive.
Tier 1 capital increased by US$13.4 billion.
Retained profits contributed US$7.0 billion, shares
issued, including shares issued in lieu of dividends,
contributed US$3.5 billion and exchange differences
added US$4.6 billion. These increases were partly
offset by an increase in goodwill and intangible
assets, which are deducted from capital, of
US$3.7 billion, and is mainly due to the acquisition
of Grupo Banistmo as well as the weakening of the
US dollar against the pound sterling and the euro.
Total risk-weighted assets increased by
US$112 billion, or 13.5 per cent. The increase
mainly reflects growth in the loan book and trading
positions. At constant currency, risk-weighted asset
growth was 8.9 per cent.