HSBC 2009 Annual Report Download - page 387

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value. Such investments are normally those with less than three months’ maturity from the date of acquisition,
and include cash and balances at central banks, treasury bills and other eligible bills, loans and advances to
banks, items in the course of collection from or in transmission to other banks, and certificates of deposit.
(ac) Rights issues
Rights issues to acquire a fixed number of the entity’s own equity instruments for a fixed amount of any currency
are equity instruments if the entity offers the rights issues pro rata to all of its existing owners of the same class
of its own non-derivative equity instruments. On initial recognition, these rights are recognised in shareholders’
equity and are not subsequently re-measured during the offer period. Following the exercise of the rights and the
allotment of new shares, the cash proceeds of the rights issue are recognised in shareholders’ equity. Incremental
costs directly attributable to the rights issue are shown as a deduction from the proceeds, net of tax.
3 Net income/(expense) from financial instruments designated at fair value
Net income/(expense) from financial instruments designated at fair value includes:
• all gains and losses from changes in the fair value of financial assets and liabilities designated at fair value,
including liabilities under investment contracts;
• all gains and losses from changes in the fair value of derivatives that are managed in conjunction with financial
assets and liabilities designated at fair value; and
• interest income, interest expense and dividend income in respect of:
– financial assets and liabilities designated at fair value; and
– derivatives managed in conjunction with the above,
except for interest arising from HSBC’s issued debt securities and derivatives managed in conjunction with those
debt securities, which is recognised in ‘Interest expense’.
2009 2008 2007
US$m US$m US$m
Net income/(expense) arising on:
– financial assets held to meet liabilities under insurance and investment
contracts .......................................................................................................... 3,793 (5,064) 2,056
– other financial assets designated at fair value ..................................................... 2 1,738 581
– derivatives managed in conjunction with financial assets designated
at fair value ...................................................................................................... (249) 77 (18)
3,546 (3,249) 2,619
– liabilities to customers under investment contracts ............................................ (1,329) 1,751 (940)
– HSBC’s long-term debt issued and related derivatives ...................................... (6,247) 6,679 2,812
– changes in own credit spread on long-term debt ............................................ (6,533) 6,570 3,055
– derivatives managed in conjunction with HSBC’s issued debt securities ...... (1,726) 4,413 2,476
– other changes in fair value .............................................................................. 2,012 (4,304) (2,719)
– other financial liabilities designated at fair value ............................................... 492 (1,368) (395)
– derivatives managed in conjunction with other financial liabilities
designated at fair value ................................................................................... 7 39 (13)
(7,077) 7,101 1,464
Net income/(expense) from financial instruments designated at fair value ............ (3,531) 3,852 4,083
HSBC Holdings
2009 2008 2007
US$m US$m US$m
Net income/(expense) arising on:
– HSBC’s long-term debt issued and related derivatives
– changes in own credit spread on long-term debt ............................................ (2,612) 2,262 876
– derivatives managed in conjunction with HSBC’s issued debt securities ...... (352) 688 1,094
– other changes in fair value .............................................................................. 201 37 (1,054)
Net income/(expense) from financial instruments designated at fair value ............ (2,763) 2,987 916