HSBC 2015 Annual Report Download - page 27

Adjusted operating
expenses (excluding
bank levy)
Bank levy
Key
Adjusted operating expenses
$bn
8.2
(0.1)
8.6
1. 1
8.8 8.4 8.5
1. 5
4Q14 1Q15 2Q15 3Q15 4Q15
1H15:
$17.0bn
2H15:
$16.9bn
excluding bank levy
2015
$36.2bn
Adjusted LICs
$bn
2014
$3.2bn
2015
$3.7bn
1Q14 2Q14 3Q14 4Q14 1Q15 2Q15 3Q15 4Q15
614
793
530
1,011
480
800
617
1,645
0.2
0.25
0.14
0.30
0.13
0.26
0.19
0.48
LICs/average gross loans and advances
to customers (excluding Brazil)
Personal
Wholesale
Other credit risk provisions
Key
5%
Costs up year-on-
year; however,
costs excluding
the bank levy were
broadly unchanged
in the second half
of the year.
The quarterly and half-yearly operating expense figures
shown above are stated at the average exchange rate
for the quarter ended 31 December 2015.
Adjusted LICs
– Our LICs were $0.6bn or 17% higher
than in 2014, mainly in CMB ($0.5bn).
This included a fourth quarter increase
in specific LICs in a small number of
countries, largely reflecting local factors,
as well as LICs related to oil and gas.
– LICs increased in RBWM by $0.3bn,
mainly in Brazil as delinquency
rates increased; while in the UAE,
impairments on mortgages rose,
following a review of the quality
and value of collateral.
– In GB&M, there was a reduction
of $0.3bn in specific impairments
as 2014 included a small number
of significant charges, notably in
Brazil and Hong Kong.
Adjusted operating expenses
– Our adjusted operating expenses in
2015 were up $1.6bn or 5% on 2014.
– Run-the-bank costs rose by $0.8bn
or 2%. This was mainly due to wage
inflation in Latin America and Asia. We
also recruited additional staff across
the Group to support business growth.
– Change-the-bank costs rose by $0.5bn
or 16% on 2014. This reflected
investment in regulatory programmes
and compliance, including infrastructure
and systems.
– The bank levy of $1.4bn was $0.4bn or
34% higher than in 2014. Excluding the
bank levy, adjusted operating expenses
in the second half of 2015 were broadly
in line with the first half of the year. This
was despite investment and inflation,
and reflected the initial effect of our
cost-saving initiatives and a strong focus
on cost management. This included a
reduction in full-time equivalent staff in
the second half of the year of 4,585 and
lower travel costs.
For further details on the categorisation
of run-the-bank and change-the-bank
costs, see page 58.
Adjusted income from associates
– Our share of profit from associates
and joint-ventures was broadly unchanged
in 2015. The majority of this profit
was from our investments in Bank
of Communications Co. (‘BoCom’)
and The Saudi British Bank.
Adjusted performance (continued)
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HSBC HOLDINGS PLC
25
Financial overview