HSBC 2015 Annual Report Download - page 64

Report of the Directors: Financial summary (continued)
Consolidated balance sheet
HSBC HOLDINGS PLC
62
Combined view of customer lending and customer deposits
2015
$m
2014
$m
Combined customer lending
Loans and advances to customers 924,454 974,660
Loans and advances to customers
reported in ‘Assets held for sale’ 19,021 577
–
Brazil22 17,001 −
–
other 2,020 577
At 31 December 943,475 975,237
Combined customer deposits
Customer accounts 1,289,586 1,350,642
Customer accounts reported
in ‘Liabilities of disposal groups
held for sale’ 16,682 145
–
Brazil22 15,094 −
–
other 1,588 145
At 31 December 1,306,268 1,350,787
For footnote, see page 99.
Movement in 2015
Total reported assets of $2.4 trillion were 9% lower than at
31 December 2014 on a reported basis and 4% lower on a
constant currency basis. One of the main drivers for this
reduction was a fall in trading assets which reflects our
ongoing focus on the efficient use of the balance sheet
in the context of new prudential regulations.
Our ratio of customer advances to customer accounts was
71.7%. Both customer loans and customer accounts fell
on a reported basis with these movements including:
• adverse currency translation movements of $52bn and
$65bn, respectively;
• the transfer to ‘Assets held for sale’ and ‘Liabilities of
disposal groups held for sale’ of balances relating to the
planned disposal of our operations in Brazil of $17bn
and $15bn, respectively; and
• a $13bn reduction in corporate overdraft and current
account balances relating to a small number of clients in
our PCM business in the UK who settled their overdraft
and deposit balances on a net basis, with customers
increasing the frequency with which they settled their
positions.
Excluding these movements, customer lending grew by
$32bn (or 4%) driven by Europe, and customer accounts
grew by $32bn (or 3%), notably in Asia.
Assets
Cash and balances at central banks fell by $31bn, primarily
in North America as we managed the balance of our liquid
asset portfolio to maximise investment returns.
Trading assets decreased by $79bn, of which $16bn was
driven by adverse currency translation, as we continued
our reduction in trading inventory in the context of the
prudential regulation. This resulted in reductions in
holdings of debt securities by the Rates business, notably in
Europe and North America. In addition, lower settlement
balances also reflected our actions to improve efficiency of
balance sheet usage.
Derivative assets decreased by $57bn or 16%, driven by
valuation movements in interest rate contracts, reflecting
shifts in major yield curves, notably in France and the UK.
Loans and advances to customers decreased by $50bn on a
reported basis, driven by Latin America and Europe. This
included the following items:
• adverse currency translation movements of $52bn;
• reclassification of $17bn to ‘Assets held for sale’ relating
to our operations in Brazil; and
• a $13bn reduction in corporate overdraft balances in
Europe, with a corresponding fall in corporate customer
accounts.
Excluding these factors, customer lending balances grew
by $32bn, largely from growth in Europe of $20bn, North
America of $5bn and Asia of $4bn.
In Europe, the growth was from increased term lending to
CMB customers, notably in the UK and Germany and higher
balances in GB&M. In North America, the growth in
balances was driven by increased term lending to
corporate and commercial customers in CMB and GB&M,
partly offset by a decline in RBWM from the continued
reduction in the US run-off portfolio and the transfer to
‘Assets held for sale’ of US first lien mortgage balances. In
Asia, balances rose largely from residential mortgage
lending in Hong Kong and mainland China. CMB lending
balances also rose, although GB&M lending fell. Both of
these businesses were affected by weakening demand for
trade lending, while GB&M’s reduction also reflected our
active management of overall client returns.
Liabilities
Repurchase agreements decreased by $27bn or 25%,
driven by falls in Europe, notably in the UK, and in North
America. We continued to closely manage these balances,
as we reassessed the overall returns on these activities in
light of the evolving regulatory landscape and overall client
returns.
Customer accounts decreased by $61bn and included the
following items:
• adverse currency translation movements of $65bn;
• reclassification of over $15bn to ‘Liabilities of disposal
groups held for sale’ relating to our operations in Brazil;
and
• a $13bn reduction in corporate current account
balances, in line with the fall in corporate overdraft
positions.
Excluding these factors, customer accounts grew by $32bn,
notably in Asia in the first half of the year, reflecting
growth in RBWM from increased savings balances by new
and existing Premier customers, together with a rise in our
PCM business in CMB.
Balances in Europe were broadly unchanged. Growth in
our PCM business in CMB and a rise in RBWM balances
reflecting customers’ continued preference for holding
balances in current and savings accounts were broadly
offset by a fall in GB&M.