HSBC 2008 Annual Report Download - page 234

HSBC HOLDINGS PLC
Report of the Directors: Risk (continued)
Credit risk > Impairment allowances > Charge // HSBC Holdings / Risk elements
232
Charge for impairment losses as a percentage of average gross loans and advances to customers
(Unaudited)
2008 2007 2006 2005 2004
% % % % %
New allowances net of allowance releases1 ................................ 2.54 2.09 1.49 1.25 1.41
Recoveries1 .................................................................................. (0.09) (0.12) (0.10) (0.09) (0.35)
Total charge for impairment losses1 ............................................ 2.45 1.97 1.39 1.16 1.06
Amount written off net of recoveries .......................................... 1.75 1.36 1.15 1.26 1.26
1 In 2004, ‘New allowances’ were ‘New provisions’; ‘Recoveries’ were ‘Releases and recoveries’; and ‘Total charge for impairment
losses’ was ‘Total provisions charged’.
Charge for impairment losses as a percentage of average gross loans and advances to customers by
geographical region
(Unaudited)
Europe
Hong
Kong
Rest of
Asia-
Pacific
North
America
Latin
America Total
% % % % % %
2008
New allowances net of allowance releases ........ 0.86 0.63 1.06 5.73 5.32 2.54
Recoveries .......................................................... (0.07) (0.04) (0.12) (0.03) (0.51) (0.09)
Total charge for impairment losses .................... 0.79 0.59 0.94 5.70 4.81 2.45
Amount written off net of recoveries ................. 0.52 0.19 0.61 4.16 3.73 1.75
2007
New allowances net of allowance releases ........ 0.86 0.29 0.83 4.20 4.55 2.09
Recoveries .......................................................... (0.15) (0.05) (0.14) (0.02) (0.55) (0.12)
Total charge for impairment losses .................... 0.71 0.24 0.69 4.18 4.00 1.97
Amount written off net of recoveries ................. 0.67 0.23 0.67 2.55 2.95 1.36
HSBC Holdings
(Audited)
Credit risk arises in HSBC Holdings primarily from
transactions with Group subsidiaries and from
guarantees issued in support of obligations assumed
by certain Group operations in the normal conduct of
their business.
These risks are reviewed and managed within
regulatory and internal limits for exposures by the
HSBC Global Risk function, which provides high-
level, centralised oversight and management of
HSBC’s credit risks world-wide.
No collateral or other credit enhancements were
held by HSBC Holdings in respect of its transactions
with subsidiary undertakings.
HSBC Holdings’ maximum exposure to credit
risk at 31 December 2008 is shown below. HSBC
Holdings’ financial assets principally represent
claims on Group subsidiaries in Europe and North
America.
HSBC Holdings – maximum exposure to credit risk
Maximum exposure
2008 2007
US$m US$m
Derivatives ......................................................................................................................................... 3,682 2,660
Loans and advances to HSBC undertakings ..................................................................................... 11,804 17,242
Financial investments ........................................................................................................................ 2,629 3,022
Financial guarantees .......................................................................................................................... 47,341 38,457
Loan commitments and other credit-related commitments .............................................................. 3,241 3,638
68,697 65,019