HSBC 2013 Annual Report Download - page 18

Strategic direction
Retail Banking and Wealth Management provides retail
banking and wealth management services for personal
customers in markets where we have, or can build, the
scale to do so cost effectively.
We focus on three strategic initiatives:
– building a consistent, high standard, customer
needs-driven wealth management service for retail
customers drawing on our financial advisory and
asset management businesses;
– leveraging global expertise to improve customer service
and productivity, to provide a high standard of banking
solutions and service to our customers efficiently; and
– simplifying and re-shaping the Retail Banking
and Wealth Management portfolio of products and
services, to focus our capital and resources where we
have, or can build, the scale to do so cost effectively.
To support these initiatives, we have targeted
growth through deepening customer relationships and
enhancing distribution capabilities.
Implementing Global Standards, enhancing risk
management control models and simplifying processes
also remain top priorities for Retail Banking and
Wealth Management.
Review of financial performance
2013
$m
2012
$m
Net interest income ........................................................................................................ 505 629
Net fee income ............................................................................................................... 203 207
Net trading income ......................................................................................................... 19 12
Gains less losses from financial investments ................................................................. 41
Other operating income .................................................................................................. 13 16
Gain on sale of the full service retail brokerage business ............................................... –80
Net operating income before loan impairment charges and other credit risk provisions ... 744 945
Loan impairment charges and other credit risk provisions ............................................ (64) (132)
Net operating income ....................................................................................................... 680 813
Total operating expenses (excluding restructuring charges) .......................................... (549) (589)
Restructuring charges ..................................................................................................... –(36)
Profit before income tax expense ................................................................................... 131 188
Profit before income tax expense
2013
$m
2012
$m
Ongoing Retail Banking and Wealth Management business ......................................... 52 43
Gain on the sale of the full service retail brokerage business ......................................... –80
Run-off consumer finance portfolio1 .............................................................................. 79 65
Profit before income tax expense ................................................................................... 131 188
1 Refer to the beginning of this section for an explanation of the merger of Consumer Finance with Retail Banking and Wealth Management.
Overview
Profit before income tax expense was $131m for 2013, a
decrease of $57m, or 30%, compared with 2012. Profit
before income tax expense relating to ongoing business
(excluding the run-off consumer finance portfolio and gain
on the sale of the full service retail brokerage business) was
$52m for 2013, an increase of $9m, or 21%, compared with
2012. Profit before income tax expense relating to ongoing
business increased primarily due to lower total operating
expenses as a result of cost control and continued delivery of
our organizational effectiveness programs as well as higher
net trading income from mark to market gains on structured
products and an increase in foreign exchange activity. The
increase was partially offset by lower net interest income
from a decline in loan balances and narrowing net interest
spread in a competitive low interest rate environment.
HSBC BANK CANADA
Management’s Discussion and Analysis (continued)
16