HSBC 2009 Annual Report Download - page 292

HSBC HOLDINGS PLC
Report of the Directors: Risk (continued)
Capital management and allocation > Capital structure / Movement in tier 1 capital and RWAs // Subsidiaries’ RWAs // Footnotes
290
2009 2008
% %
Capital ratios
(Unaudited)
Core tier 1 ratio ..................................................................................................................................... 9.4 7.0
Tier 1 ratio ............................................................................................................................................ 10.8 8.3
Total capital ratio .................................................................................................................................. 13.7 11.4
Source and application of tier 1 capital
2009
US$m
2008
US$m
Movement in tier 1 capital
(Audited)
Opening tier 1 capital79 .......................................................................................................................... 95,336 101,685
Contribution to tier 1 capital from profit for the year ...................................................................... 10,247 11,682
Consolidated profits attributable to shareholders of the parent company ....................................... 5,834 5,728
Removal of own credit spread net of tax ......................................................................................... 4,413 (4,610)
Goodwill write-offs .......................................................................................................................... – 10,564
Net dividends ........................................................................................................................................ (3,969) (7,708)
Dividends .......................................................................................................................................... (5,639) (11,301)
Add back: shares issued in lieu of dividends ................................................................................... 1,670 3,593
Decrease/(increase) in goodwill and intangible assets deducted ......................................................... (1,819) 1,430
Ordinary shares issued .......................................................................................................................... 18,399 470
Rights issue (net of expenses)80 ....................................................................................................... 18,326 –
Other ................................................................................................................................................. 73 470
Innovative tier 1 securities issued ........................................................................................................ – 2,133
Foreign currency translation differences .............................................................................................. 4,837 (11,980)
Other79 ................................................................................................................................................... (874) (2,376)
Closing tier 1 capital ............................................................................................................................. 122,157 95,336
Movement in risk-weighted assets
(Unaudited)
At 1 January79 ........................................................................................................................................ 1,147,974 1,164,649
Movements ........................................................................................................................................... (14,806) (16,675)
At 31 December .................................................................................................................................... 1,133,168 1,147,974
For footnotes, see page 291.
Movement in tier 1 capital
(Audited)
HSBC complied with the FSA’s capital adequacy
requirements throughout 2009 and 2008. The rights
issue increased tier 1 capital by US$17.8 billion.
Profits attributable to shareholders of the parent
company of US$5.8 billion included losses of
US$4.4 billion from own credit spread, net of tax,
which do not impact regulatory capital. The
resulting contribution to tier 1 capital was therefore
US$10.2 billion less net dividends of US$4.0 billion
after taking account of shares issued in lieu of
dividends. The weakening US dollar caused foreign
currency translation differences to increase tier 1
capital by US$4.8 billion.
Movement in risk-weighted assets
(Unaudited)
Total risk-weighted assets decreased by
US$14.8 billion, or 1.3 per cent. Foreign currency
translation effects are estimated to have increased
RWAs by US$40 billion, mainly as a result of the
weakening of the US dollar, particularly against
sterling and the Brazilian real, resulting in an
estimated underlying decrease of US$55 billion in
RWAs. Of this underlying decrease, US$19 billion
was due to credit risk RWAs, reflecting decreases in
Europe and North America being offset by increases
in Asia. Market risk and counterparty credit risk
RWAs decreased by US$41 billion, primarily due
to reduced market volatility and active exposure
management. Operational risk RWAs increased by
US$4.8 billion because the three-year averaging of
gross revenues used in the calculation now includes
revenues for 2009 in place of 2006.