HSBC 2002 Annual Report Download - page 45

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rate trading, with debt securities earnings US$236
million less as credit spreads on corporate bonds
widened sharply as market confidence was
undermined by low earnings growth and news of
corporate scandals in the United States. Dealing
profits were also impacted by weaknesses in the
equity markets.
Fees in debt capital markets grew strongly by 30
per cent, or US$40 million, as HSBC improved its
position in European markets.
Year ended 31 December 2001 compared with
year ended 31 December 2000
Other operating income in 2001 was US$313
million, or 3 per cent, higher than in 2000 at
US$11,163 million and included other operating
income of US$1,822 million. At constant exchange
rates and excluding CCF, other operating income was
2 per cent higher than 2000 reflecting good growth in
wealth management income which offset the falls in
broking and other securities-related fee and
commission income arising from the less favourable
conditions in the equity markets.
Net fees and commissions at US$7,470 million
represented 29 per cent of total operating income
against 30 per cent in 2000 and were US$159
million, or 2 per cent, higher than 2000. At constant
exchange rates and excluding CCF, net fees and
commissions were 1 per cent higher than in 2000.
As part of HSBC’s competitive positioning and
consistent with the pricing changes on loan and
deposit products referred to above, its customers also
benefited from a number of fee reductions during
2001, particularly in HSBC Bank plc’s UK Banking
business.
In the United Kingdom, eliminating mortgage
loan to valuation fees reduced revenues by US$7
million, dispensing with ATM withdrawal fees
benefited customers by US$49 million, and overdraft
fees fell by US$41 million as unauthorised overdrafts
fell, as we have made it easier for customers to
obtain authorised borrowings. Offsetting these
reductions, UK Banking achieved good growth in
wealth management with income rising by 9 per
cent, reflecting increased income from life, pension
and investment business, general insurance income
and private clients.
In Hong Kong and the rest of Asia-Pacific, there
was encouraging growth in wealth management
income, particularly in fee income from the sale of
unit trusts, reflecting the successful sale of capital-
guaranteed products. Credit card fees grew by
US$39 million, or 11 per cent, following the growth
in the number of credit cards issued.
In the United States, the harmonisation of
product lines between HSBC and the former
Republic Bank of New York and the increase in
volume of annuities sold contributed to the 15 per
cent increase in fee income. In addition insurance
revenues also increased by 44 per cent compared to
2000.
In South America, fee income benefited from the
initiatives taken to increase wealth management
revenue. Fee income in Brazil, at constant exchange
rates, was US$79 million, or 28 per cent, higher with
good growth in revenue from asset management
activities and success in cross-sales to existing
customers through the retails branch.
Revenues from investment banking, broking
income, corporate finance activities and other
securities-related activities were substantially lower
than those earned in the buoyant equity markets
during the first half of 2000.
Dealing profits held up well, despite less
favourable conditions in the equity markets, as
performance in debt securities and interest rate
trading improved. Foreign exchange trading was
bolstered by CCF.