HSBC 2005 Annual Report Download - page 122

HSBC HOLDINGS PLC
Financial Review (continued)
120
branch expansions in the consumer finance business
delivered a 17 per cent increase in mortgage lending.
Residential mortgage balances in Hong Kong
were broadly flat, in what remained a highly
competitive market. There was a net repayment in
mortgages under the Hong Kong GHOS, under
which new advances remained suspended. In the rest
of Asia-Pacific, an increase of 22 per cent in
mortgage lending was driven by operations in the
Middle East, India, Taiwan, South Korea, mainland
China and Singapore, in each of which growth was
over 30 per cent.
Other personal lending increased by 17 per cent
to US$182 billion, and represented 24 per cent of
total gross loans to customers at 31 December 2005.
The acquisition of Metris in December 2005
increased personal loans by US$5 billion, or
3 percentage points of the growth in 2005. Including
and in part due to this, some 75 per cent of growth
was in North America. Organic growth within the
US in HSBC branded prime, Union Privilege and
non-prime portfolios, partly offset by the continued
decline in certain older acquired portfolios, also
contributed to the increase. The US vehicle finance
business reported strong organic growth, principally
in the near-prime portfolios. This came from newly
originated loans acquired through the dealer
network, growth in the consumer direct loan
programme and expanded distribution through
alliance channels. Growth in personal non-credit
card lending reflected HSBC’s increasing the
availability of this product in the second half of
2004, as a result of an improving US economy, as
well as the success of several large direct mail
campaigns launched in 2005.
In Europe, the charge-off of substantially
provided personal loans against provisions masked
the underlying growth in lending: Other personal
lending net of impairment reserves grew by 13 per
cent. In the UK, growth in credit card and other
unsecured lending was driven by pricing and
marketing initiatives, against the backdrop of
subdued consumer spending. In Turkey, credit card
lending rose markedly, also helped by marketing
campaigns.
In the Rest of Asia-Pacific, continuing
expansion of the credit card base and higher
utilisation of cards by existing customers, together
with successful marketing, contributed to a 25 per
cent increase in lending. In South America,
marketing and new product launches, combined with
improved consumer sentiment, contributed to
underlying growth of 26 per cent in Brazil.
Loans and advances to the corporate and
commercial sectors grew by 12 per cent during 2005,
predominantly in the Commercial Banking customer
group.
In Europe, corporate and commercial advances
increased by 10 per cent, reflecting customer
demand for credit, as well as new customer
acquisition, particularly in the property, distribution
and services sectors. In Hong Kong, an 11 per cent
increase was mainly in the property and
manufacturing sectors, in part reflecting the benefit
of economic expansion in mainland China. This was
also reflected in the Rest of Asia-Pacific, where
strong regional economies, and significant
government-backed infrastructure and property
projects, also contributed to the 16 per cent increase
overall. In North America, a 15 per cent increase
was driven by lending to finance real estate projects
and construction, as well as increases in most other
sectors and industries.
The following tables analyse loans by industry
sector and by the location of the principal operations
of the lending subsidiary or, in the case of the
operations of The Hongkong and Shanghai Banking
Corporation, HSBC Bank, HSBC Bank Middle East
and HSBC Bank USA, by the location of the lending
branch.