HSBC 2002 Annual Report Download - page 95

93
Share of HSBC’ s pre-
tax profits (cash
basis) (per cent) 4.0 5.2 5.6
Cost: income ratio
(
excludin
g
g
oodwill
amotisation)(per
cent).................. 69.5 65.9 57.2
Selected balance sheet data (third party items
only)
At
Figures in US$m 31 December
2002
31 December
2001*
31 December
2000*
Loans and advances to
customers (net) ........ 14,115 12,137 11,930
Customer deposits ........ 49,012 51,199 48,003
*Restatement consistent with page 81.
Year ended 31 December 2002 compared with
year ended 31 December 2001
The Private Banking division of HSBC includes all
of the activities of HSBC Private Banking
Holdings (Suisse) S.A., which contains HSBC
Republic Bank (Suisse) S.A. and Guyerzeller Bank
AG, the private banking operations of HSBC Bank
USA, CCF and HSBC Trinkaus & Burkhardt.
HSBC continued with the integration of
various businesses into Group Private Banking.
This is now complete in Asia. Additionally, the
process of alignment of domestic and international
operations was completed in the UK during 2002
and is ongoing in America. Comparative figures for
2001 and 2000 have been restated to reflect the
changes made in organisation structure.
Private Banking contributed US$420 million
to HSBC’s pre-tax profits (cash basis) and
represented 4.0 per cent of such profits. These
profits were 8 per cent lower than in 2001.
Despite the decline in the world stock markets
the Private Banking division grew client funds
under management, including trust assets, from
US$129.7 billion to US$144.0 billion or 11 per
cent.
Excellent teamwork with HSBC’ s personal
banking operations led to a significant increase in
client referrals during 2002.
Net interest income declined by US$21 million
to US$556 million as lower interest rates reduced
the benefit of free funds. In addition, asset
portfolios were moved to lower yielding but higher
grade securities at the beginning of the year in
expectation of difficult credit markets.
Other operating income, including fees and
commissions, increased by US$47 million, or 6 per
cent, reflecting an increase in fees from greater
client assets under management and fee income
from the newly formed WTAS which provides
private tax services to wealthy clients.
Trust business was expanded in the United
States, Asia and the Channel Islands. Working with
Group Insurance, the Private Bank launched new
tax efficient insurance wrapper products. In fund
management the range of funds expanded
especially in the alternative or hedge fund sector.
There was strong growth in investment fees, which
benefited from the success of the Hermitage Fund,
which provided clients access to investment
opportunities in Russia.
Operating expenses increased by US$68
million. In constant currency, operating expenses
increased by US$28 million mainly due to the
launch of WTAS.
The provision for bad and doubtful debts was
US$5 million in 2002 compared with a credit of
US$24 million in 2001. The prior year credit
reflected the reduction in the allowance based upon
a study of actual loss history on the loan book.
Amounts written off fixed asset investments of
US$22 million related to the write-down of one
specific debt instrument of a company in the
telecommunications sector.
The share of profit in associated undertakings
was a loss of US$11 million in 2002. This reflected
a drop in the value of a partially owned private
equity company.
Gain on disposal of investments and tangible
assets were US$46 million compared with US$5
million in 2001. The increase related to debt
instruments sold during the year and the liquidation
of a Russian Recovery fund established in 2000 to
manage previously written down Russian debt
instruments.
Year ended 31 December 2001 compared with
year ended 31 December 2000
Private Banking contributed US$456 million to
pre-tax profits in 2001 which represented 5.2 per
cent of such profits. These profits were US$122
million or 21 per cent lower than in 2000,