HSBC 2015 Annual Report Download - page 31

Profit before tax
($bn)
2015 2014
7.9
5.9
8.7
7.7
Reported
Adjusted
Adjusted profit growth of 14% compared
with 2014
– Adjusted profit before tax was higher by
$1.1bn due to higher revenue and lower
LICs, partly offset by increased costs.
– Our revenue increased by $1.2bn or 7%,
with higher revenue in all businesses except
Principal Investments. In client-facing GB&M,
revenue rose due to increased client flows
and volatility in Equities (up by $0.5bn) and in
transaction banking products (up by $0.4bn).
Revenue was also higher in Balance Sheet
Management (up $0.1bn).
– LICs were $0.3bn lower. This reflected
minimal impairments in 2015 compared with
a net charge in 2014 in client-facing GB&M.
However, in 2015 we had lower net releases
of credit risk provisions, primarily on
available-for-sale asset-backed securities
in legacy credit.
– Our operating expenses increased by
$0.4bn or 5%, mainly from higher
performance-related costs and higher staff
costs reflecting wage inflation. In addition,
we continued to invest in our PCM and
Foreign Exchange businesses, as well as
in regulatory programmes and compliance.
– Management initiatives identified in our
Investor Update in June 2015 contributed
to an overall reduction in RWAs of $72bn
this year. This is 54% of our target of $134bn
(stated at December 2015 exchange rates).
– The graph below shows reported and
adjusted profit before tax. The difference
between these figures primarily reflects
fines, penalties and charges in relation
to legal matters, which totalled $1.9bn
and $0.9bn in 2014 and 2015, respectively.
Significant items are detailed on page 66.
accolades, including Most Innovative
Investment Bank and Best Bank for
Securities Services in The Banker
awards. We were ranked number one
Bank for Corporates (Global Market
Share) in the Euromoney FX Survey,
and for the third consecutive year we
were voted Best Bond House in Asia
by FinanceAsia.
In addition, we provide award-winning
research to investors with an emphasis
on emerging markets.
Business synergies
In 2015, GB&M enabled business
synergies of $8.4bn, supporting growth
in a number of areas. For example, we
provide Markets products to CMB and
RBWM customers, Capital Financing
products to CMB customers, and also
use CMB and Asset Management
products to serve GB&M clients.
Areas of focus
Deepening relationships with clients
in both event and transaction banking
products remains a priority. We will
focus on regions where we see the
greatest growth opportunities such
as NAFTA, ASEAN and the Pearl River
Delta. We also plan to grow our
business from the internationalisation
of China’s renminbi currency and by
investing in digital capabilities.
We made significant progress towards
reducing RWAs in 2015. This will
remain a focus as we continue to exit
legacy credit, manage our Markets
and Capital Financing businesses and
employ a disciplined approach to
new client business.
Our continued focus on cost discipline
will result in further simplification
of the business from streamlining
of our business lines, operations
and technology.
Customers
GB&M supports major government,
corporate and institutional clients
worldwide in achieving their long-term
strategic goals through tailored and
innovative solutions. Our deep sector
expertise extends across transaction
banking, financing, advisory, capital
markets and risk management. We
serve nearly 4,000 clients in more than
50 countries and territories, helping
them to realise opportunities in the
markets that matter to them.
We continue to strengthen the services
we provide and our relationships with
clients. We regularly assess these
relationships, using benchmarking
and internal programmes. As a result,
in 2015 we improved the on-boarding
experience for clients and enabled
relationship bankers to spend more
time understanding clients’ needs.
Customer feedback allows us
to identify opportunities to further
improve our business and the wider
client experience.
Products and services
Our product specialists continue to
deliver a comprehensive range of
transaction banking, financing, advisory,
capital markets and risk management
services. In 2015, our product strengths
were recognised by numerous
Global Banking and Markets (‘GB&M’)
Adjusted profit before tax
+14%
Most
Innovative
Investment
Bank
The Banker
Best
Overall Global
Trade Finance
Bank
Trade Fina nc e
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HSBC HOLDINGS PLC
29
Global businesses