HSBC 2005 Annual Report Download - page 178

HSBC HOLDINGS PLC
Financial Review (continued)
176
Capital structure (Unaudited information)
2005
US$m
2004
US$m
Composition of regulatory capital
Tier 1 capital
Shareholders’ funds ..................................................................................................................... 92,432 86,623
Minority interests and preference shares ..................................................................................... 6,741 4,253
Innovative tier 1 securities .......................................................................................................... 9,383 10,077
Less :
Goodwill capitalised and intangible assets .............................................................................. (32,821) (31,190)
Other regulatory adjustments1 ................................................................................................. (1,332) (2,504)
Total qualifying tier 1 capital ...................................................................................................... 74,403 67,259
Tier 2 capital
Reserves arising from revaluation of property and unrealised gains on
available-for-sale equities ....................................................................................................... 1,593 2,660
Collective impairment allowances ...............................................................................................8,749 –
General provisions ...................................................................................................................... –2,624
Perpetual subordinated debt ........................................................................................................ 3,640 3,670
Term subordinated debt ............................................................................................................... 24,519 21,373
Minority and other interests in tier 2 capital ................................................................................ 425 519
Total qualifying tier 2 capital ...................................................................................................... 38,926 30,846
Unconsolidated investments ........................................................................................................ (6,437) (6,361)
Investments in other banks .......................................................................................................... (1,147) (799)
Other deductions ......................................................................................................................... (296) (165)
Total regulatory capital ............................................................................................................... 105,449 90,780
Risk-weighted assets
Banking book .................................................................................................................................. 762,037 705,302
Trading book ................................................................................................................................... 65,127 53,908
Total ................................................................................................................................................ 827,164 759,210
Risk-weighted assets were included in the totals above in respect of:
– contingent liabilities ................................................................................................................. 43,333 41,264
– commitments ............................................................................................................................ 51,288 47,541
Capital ratios %%
Total capital ..................................................................................................................................... 12.8 12.0
Tier 1 capital ................................................................................................................................... 9.0 8.9
1Other regulatory adjustments mainly arise from the implementation of IFRSs in conjunction with the FSA’s policy statement PS05/5.
The above figures were computed in accordance
with the EU Banking Consolidation Directive and
the FSA policy statement PS05/5. The comparative
figures at 31 December 2004 have not been restated
to reflect the implementation of IFRSs and PS05/5.
HSBC complied with the FSA’s capital adequacy
requirements throughout 2005 and 2004.
Tier 1 capital increased by US$7.1 billion.
Retained profits contributed US$7.3 billion, shares
issued in lieu of dividends, together with preference
shares issued, contributed US$3.2 billion and other
movements, including net other IFRS transitional
adjustments, added US$0.8 billion. These increases
were partly offset by reductions due to exchange
differences of US$4.2 billion.
The increase of US$8 billion in tier 2 capital
mainly reflects collective impairment allowances
becoming eligible for inclusion in capital in place of
general provisions.
Total risk-weighted assets increased by
US$68 billion, or 9 per cent. The increase mainly
reflects growth in the loan book and trading
positions. At constant currency, risk-weighted asset
growth was 13 per cent.