HSBC 2002 Annual Report Download - page 96

HSBC HOLDINGS PLC
Financial Review (continued)
94
reflecting a decline in customer activity, lower
disposal gains and costs associated with
restructuring the business.
Net interest income was broadly in line.
Offsetting the effect of a full year’ s income from
CCF entities, the underlying change mainly reflects
a switch to lower yielding assets and a lower
benefit from free capital as interest rates fell and a
more conservative risk profile was taken.
Net fees and commissions rose by US$47
million or 8 per cent on the year. US$40 million of
this rise occurred in Europe again mainly due to the
impact of including a full year of results for CCF.
North America increased fee income by US$17
million on fees generated from increased assets
under management.
Operating expenses increased by US$160
million or 21 per cent and included a US$144
million rise in staff costs and US$33 million of
increased premises and equipment expenses. The
greatest increase in costs was in Europe, where
expenses rose by US$122 million, mainly due to
the inclusion of a full year’ s costs for CCF.
Excluding CCF, costs in Europe were up by US$34
million, in part relating to the cost of restructuring
the Group’s private banking operations during
2001 and the expansion of headcount as part of
business growth.
There was a net write-back of provisions for
bad and doubtful debts, amounting to US$24
million, against a net charge of US$6 million in
2000. The reduction reflected a write-back of
general provisions in Switzerland following a
review of the level of provisions held in the light of
historical loan loss experience.
The US$46 million of provisions for
contingent liabilities and commitments included
US$31m relating to CCF’s operation in Lebanon,
now closed, and smaller amounts relating to a
number of individual items of litigation.
Private Banking achieved US$5 million of gains on
the disposal of fixed asset investments, compared
with US$19 million in 2000.
Other
Cash basis profit before tax
Year ende
d
31 December
2002
31 December
2001
31 December
2000
US$m % US$
m
%US$
m
%
Europe .............................. 155
(
77.1
)
357 (23.4 ) 351 94.1
Hong Kong .......................
(
61
)
30.3 198 (13.0 ) 134 35.9
Rest of Asia-Pacific........... 12
(
6.0
)
30 (2.0 ) 40 10.7
North Americ
a
..................
(
207
)
103.0 (877 ) 57.6 (156 ) (41.8 )
South Americ
a
..................
(
100
)
49.8 (1,232 ) 80.8 4 1.1
(
201
)
100.0 (1,524 ) 100.0 373 100.0