HSBC 2009 Annual Report Download - page 430

HSBC HOLDINGS PLC
Notes on the Financial Statements (continued)
Notes 18 and 19
428
Forecast principal balances on which interest cash flows are expected to arise
3 months
or less
More than 3
months but less
than 1 year
5 years or less
but more than
1 year
More than
5 years
US$m US$m US$m US$m
At 31 December 2009
Assets ........................................................................................ 120,915 111,456 53,184 476
Liabilities .................................................................................. (71,143) (78,841) (39,377) (6,559)
Net cash inflows/(outflows) exposure ...................................... 49,772 32,615 13,807 (6,083)
At 31 December 2008
Assets ........................................................................................ 99,426 71,491 52,988 2,081
Liabilities .................................................................................. (83,019) (77,656) (62,633) (7,817)
Net cash inflows/(outflows) exposure ...................................... 16,407 (6,165) (9,645) (5,736)
This table reflects the interest rate repricing profile of the underlying hedged items.
The gains and losses on ineffective portions of such derivatives are recognised immediately in ‘Net trading income’.
During the year to 31 December 2009 a gain of US$90 million (2008 loss of US$40 million; 2007: loss of
US$77 million) was recognised due to hedge ineffectiveness.
Hedges of net investments in foreign operations
HSBC’s consolidated balance sheet is affected by exchange differences between the US dollar and all the non-US
dollar functional currencies of subsidiaries. HSBC hedges structural foreign exchange exposures only in limited
circumstances. Hedging is undertaken using forward foreign exchange contracts which are accounted for as hedges of
a net investment in a foreign operation, or by financing with borrowings in the same currencies as the functional
currencies involved.
At 31 December 2009, the fair values of outstanding financial instruments designated as hedges of net investments
in foreign operations were liabilities of US$28 million (2008: US$52 million) and notional contract values of
US$566 million (2008: US$161 million).
The ineffectiveness recognised in ‘Net trading income’ in the year ended 31 December 2009 that arose from hedges
in foreign operations was nil (2008 and 2007: nil).
19 Financial investments
2009 2008
US$m US$m
Financial investments:
– not subject to repledge or resale by counterparties ......................................................................... 356,864 287,479
– which may be repledged or resold by counterparties ..................................................................... 12,294 12,756
369,158 300,235
2009 2008
Carrying
amount
Fair
value
Carrying
amount
Fair
value
US$m US$m US$m US$m
Treasury and other eligible bills ............................................... 58,434 58,434 41,027 41,027
– available for sale .............................................................. 58,333 58,333 41,027 41,027
– held to maturity ................................................................ 101 101 – –
Debt securities .......................................................................... 301,600 302,171 251,957 253,001
– available for sale .............................................................. 284,074 284,074 237,944 237,944
– held to maturity ................................................................ 17,526 18,097 14,013 15,057
Equity securities ....................................................................... 9,124 9,124 7,251 7,251
– available for sale .............................................................. 9,124 9,124 7,251 7,251
Total financial investments ....................................................... 369,158 369,729 300,235 301,279