HSBC 2002 Annual Report Download - page 118

HSBC HOLDINGS PLC
Financial Review (continued)
116
Such audits include consideration of the
completeness and adequacy of credit manuals and
lending guidelines, together with an in-depth analysis
of a representative sample of accounts in the
portfolio to assess the quality of the loan book and
other exposures. Individual accounts are reviewed to
ensure that the facility grade is appropriate, that
credit procedures have been properly followed and
that where an account is non-performing, provisions
raised are adequate. Internal Audit will discuss any
facility grading they consider should be revised at
the end of the audit and their subsequent
recommendations for revised grades must then be
assigned to the facility.
Loan portfolio
Loans and advances to customers are spread across
the various industrial sectors, as well as
geographically.
At constant exchange rates, loans and advances
to customers (excluding the finance sector and
settlement accounts) grew by US$31.5 billion, or
10.7 per cent during 2002 of which US$9.7 billion,
or 3.2 per cent, related to the acquisition of GFBital
in Mexico. Excluding the impact of GFBital,
personal lending grew by 14.9 per cent and loans and
advances to the commercial and corporate customer
base grew by 1.6 per cent.
Figures in US$m 2001
Exchange
variance
Under-
lying
change
GF
Bital 2002
Personal:
Residential mortgages 78,215 3,339 14,227 1,203 96,984
Hong Kong SAR
Government
Home Ownership
Scheme ................. 8,123 (1 ) (867 ) – 7,255
Other personal............ 39,125 2,101 6,142 1,194 48,562
Total personal............. 125,463 5,439 19,502 2,397 152,801
Corporate and
commercial:
Commercial,
industrial and
international trade . 70,158 5,219 1,953 1,685 79,015
Commercial real
estate .................... 26,315 1,471 1,394 87 29,267
Other property-related 14,594 519 (17 ) 251 15,347
Government ............... 5,339 (37 ) (476 ) 4,127 8,953
Other commercial....... 37,265 2,812 (292) 889 40,674
Total Corporate and
commercial........... 153,671 9,984 2,562 7,039 173,256
Financial:
Non-bank financial
institutions ............ 26,473 1,473 (733 ) 274 27,487
Settlement accounts.... 11,761 260 (3,636 ) – 8,385
Total financial............ 38,234 1,733 (4,369 )274 35,872
Total gross loans and
advances to
customers.............. 317,368 17,156 17,695 9,710 361,929
The commentary below excludes the impact of
foreign exchange transaction movements and the
acquisition of GFBital except where stated.
Residential mortgages increased by US$14.2
billion, or 18 per cent and including GFBital
comprised 26.8 per cent of total gross loans to
customers at 31 December 2002. Residential
mortgages in Europe increased by US$8.2 billion of
which US$8.0 billion arose in UK Banking as market
initiatives, including First Direct’s smart mortgage,
and competitive pricing resulted in improved
mortgage retention rates and increased share of the
remortgage market. Residential mortgage lending in
Hong Kong was slightly higher than 2001 against a
background of intense mortgage price competition as
HSBC increased its share of the remortgaging
market. This growth was more than offset by a
reduction in loans made under the Hong Kong SAR
Government Home Ownership Scheme (‘GHOS’ ).
At US$7.3 billion residential mortgage loans under
GHOS were US$0.9 billion lower than at 31
December 2001 and resulted from the suspension of
the sale of new homes under this scheme by the
Hong Hong SAR Government in the second half of
2001. In the rest of Asia-Pacific, residential
mortgages grew by US$2.1 billion with strong
growth in Singapore, Malaysia, South Korea, India
and Taiwan. In North America, residential mortgage
lending grew strongly by US$3.3 billion due to
strong mortgage origination as interest rates
remained low.
Including GFBital other personal lending
increased to approximately 13.4 per cent of total
gross loans to customers. Personal lending grew by
US$3.2 billion in Europe. Strong organic growth
was achieved in consumer lending in the UK with an
increase of 10 per cent in credit card advances at 31
December 2002.
Corporate commercial lending grew modestly,
less than 2 per cent, reflecting muted corporate loan
demand and cautious risk appetite.