HSBC 2012 Annual Report Download - page 72

HSBC HOLDINGS PLC
Report of the Directors: Operating and Financial Review (continued)
Global businesses > GB&M
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relationship managers and specialist sales teams
and the expansion of the Commodity and
Structured Trade Finance offering leading to
higher revenues in Europe and Rest of Asia-
Pacific. Revenues in Rest of Asia-Pacific also
increased as a result of growth in export lending
and improved spreads.
• Balance Sheet Management revenues rose by
US$324m due to higher gains on the disposal
of available-for-sale debt securities as part of
structural interest rate risk management of the
balance sheet, notably in Europe. Net interest
income declined in Europe, however, as yield
curves continued to flatten and liquidity from
maturities and sales of available-for-sale debt
securities was re-invested at lower prevailing
rates. In addition, we placed a greater portion
of our liquidity with central banks. Higher net
interest income was reported in Rest of Asia-
Pacific due to higher yields and portfolio growth
in mainland China, and in Latin America due to
lower funding costs in Brazil as interest rates
declined.
• Principal Investments revenue declined by
US$76m compared with 2011 owing to higher
impairments, mainly on three available-for-sale
equity securities, two of which were in our
direct investment business in run-off. This
was offset in part by higher realised gains on
disposals.
Strategic imperatives
Reinforce client coverage and client-led solutions
• Our multinational coverage teams continued to
expand our offerings of cross-product solutions
for our clients and delivered revenue growth,
particularly in faster-growing regions as we
successfully executed a number of notable cross-
border transactions. This included providing
financing and advisory services to clients through
our Project and Export Financing business, which
resulted in HSBC being awarded ‘Best Project
Finance House’ in Asia, the Middle East and
Latin America in the Euromoney Awards for
Excellence 2012.
• To further strengthen client coverage and product
expertise, we invested in selective recruitment in
key strategic markets. In Rest of Asia-Pacific, we
enhanced our advisory, debt capital markets and
credit and lending businesses through a number
of senior appointments in the Resources and
Energy and the Financial Institutions groups.
We also appointed a Co-Head of Global Banking
in Brazil to drive strategic dialogue with key
clients and develop our advisory business in
Latin America.
• We continued to develop our distinctive
geographical franchise to enhance client
coverage, particularly within debt capital
markets. A number of successfully executed
transactions, notably in emerging markets,
demonstrated the benefit of partnering between
regional and global product teams. These
partnerships facilitated the delivery of
innovative solutions and alternative funding
opportunities for our clients. As a result, HSBC
was awarded ‘Best Global Emerging Market
Debt House’ in the Euromoney Awards for
Excellence 2012. Additionally, we increased our
market share of, and maintained our leading
position in, emerging markets debt issuance.
Enhance core product strengths and selectively
develop new capabilities
• We continued to develop cross-product
capabilities in the growing renminbi market.
Earlier in the year, we issued the first
international renminbi bond outside Chinese
sovereign territory. Since then, a number of
significant transactions were supported by in-
depth collaboration between regional teams,
reinforcing HSBC’s position as the leading
house for international renminbi issuance. In
recognition of these achievements, HSBC was
awarded ‘RMB House of the Year’ in the 2012
Asia Risk Awards, along with ‘Best for overall
products/services’ and ‘Most likely RMB
products/services provider’ in the 2012
Asiamoney Offshore RMB Services survey.
• In Foreign Exchange, we remained focused on
enhancing product offerings in our e-FX
platforms for a broader client base, particularly
for CMB and RBWM customers. This included
the launch of our ‘Dynamic Currency
Conversion’ product within our transactional
Foreign Exchange business in the UK in time
for the Olympics, along with a real-time online
foreign currency margin trading product in
Hong Kong. Our strength in foreign exchange
capabilities, particularly in emerging markets,
was recognised by several awards during the
year including ‘Best Bank for Foreign
Exchange’ in Asia-Pacific and ‘Best Bank for
Emerging Asian currencies’ in the 2012 FX
Week Best Banks Awards. Our innovation and
achievements in the renminbi market
contributed to HSBC also being awarded
‘Foreign Exchange House of the Year’ in the
2012 Structured Products Asia Awards.