HSBC 2005 Annual Report Download - page 53

51
Management view of total operating income
Year ended 31 December
2005
US$m
2004
US$m
Global Markets
Money market and balance sheet ........ 1,238 2,376
Foreign exchange ............................... 1,200 1,125
Credit and rates ................................... 931 655
Structured derivatives ......................... 387 386
Equities ............................................... 324 256
4,080 4,798
Corporate and Investment Banking
Global Investment Banking ................ 1,022 877
Corporate and Institutional Banking
and Global Transaction Banking .... 3,433 2,937
Private Equity ..................................... 648 207
5,103 4,021
Other1 ................................................ 2,328 1,743
Total operating income ....................... 11,511 10,562
Selected balance sheet data3
Loans and advances to:
– customers (net) ............................ 169,435 145,353
– banks (net) ................................... 106,123 128,032
Total assets4 ........................................ 755,056 584,779
Customer accounts ............................. 202,361 177,449
Trading assets, financial instruments
designated at fair value, and
financial investments ...................... 373,787 252,459
Deposits by banks ............................... 65,853 80,443
1‘Other’ includes the Corporate, Investment Banking and Markets
business of HSBC Trinkaus & Burkhardt, Group Investment
Businesses, and net interest earned on free capital held in
Corporate, Investment Banking and Markets not assigned to
products.
For other footnotes, see page 55.
Structured derivatives activity rose strongly as a
significant upgrade and expansion of the quantitative
skill base and investment in systems allowed HSBC
to complete higher volumes of derivatives
transactions in 2005. In accordance with IFRSs, the
inception profits on certain types of these
transactions are deferred as described in Note 17 on
the Financial Statements.
The strong momentum in client revenue was
confirmed by industry surveys. In the Euromoney
foreign exchange survey, HSBC ranked second in
FX options in 2005, up from fourth in 2004 and
eighth in 2003. In addition, HSBC was ranked fourth
in foreign exchange trading market share, retained
the premier ranking in Hong Kong and was voted,
for the first time, ‘Best Foreign Exchange Bank’ in
London.
• In Corporate and Institutional Banking, which
includes relationship management and lending
activities, market conditions and competitive
pressures resulted in spread contraction in all
regions. This was mitigated by a continued focus on
fee-generating business, cost management and a
favourable credit environment. HSBC introduced a
number of balance sheet management initiatives
including the implementation of a detailed review of
HSBC’s portfolio and a balance sheet securitisation
programme to enhance return on capital employed.
• In Global Investment Banking, an increase in market
share reflected HSBC’s success in developing
customer relationships. In debt capital markets,
HSBC was ranked fifth in the international bond
league table, up from seventh in 2004. In project and
export finance, Dealogic ranked HSBC first in the
Global Financial Adviser, Project Finance category.
In the advisory business, there was continued
momentum in both developed and emerging markets.
Notable transactions included advising Dubai
International Capital on its US$1.5 billion
acquisition of Tussauds Group and acting as adviser
to Autoroutes Paris-Rhin-Rhône on its privatisation.
Significant equity-related transactions, in which
HSBC acted as joint global coordinator, were the
US$2.8 billion Link Real Estate Investment Trust
(‘REIT’) IPO, the largest ever real estate offering
and REIT IPO in the world, and the US$2.2 billion
IPO by the Bank of Communications.
• In Global Transaction Banking, a move to offering a
wider range of integrated solutions to clients played
a large part in winning Unilever’s first Asian pan-
regional cash management mandate, covering 17
countries and territories.
• At the end of December 2005, Group Investment
Businesses managed US$272 billion of assets, a
33 per cent increase on 2004, driven mainly by
US$33 billion of net flows from clients. Assets in
money market products exceeded US$60 billion.
HSBC manages two of the world's largest active
equity funds investing in India and China with
US$4.7 billion and US$1.9 billion assets,
respectively. HSBC’s presence in mainland China
was strengthened with an asset management joint
venture with Shanxi Trust and Investment
Corporation Limited.