HSBC 2008 Annual Report Download - page 25

23
Financial summary
Page
Consolidated financial statements ................. 23
Income statement .......................................... 24
Group performance by income and
expense item .............................................. 26
Net interest income .................................... 26
Net fee income ........................................... 27
Net trading income .................................... 28
Net income from financial instruments
designated at fair value .......................... 29
Gains less losses from financial
investments ............................................. 30
Gains arising from dilution of interests in
associates ............................................... 31
Net earned insurance premiums ................ 31
Other operating income ............................. 32
Net insurance claims incurred and
movement in liabilities to policyholders . 33
Loan impairment charges and other
credit risk provisions .............................. 34
Operating expenses .................................... 36
Share of profit in associates and joint
ventures .................................................. 38
Economic profit ......................................... 39
Balance sheet ................................................. 40
Movement from 31 December 2007 to
31 December 2008 ................................. 40
Average balance sheet and net interest
income .................................................... 42
Analysis of changes in net interest
income .................................................... 50
Share capital and reserves ......................... 53
Short-term borrowings ............................... 56
Contractual obligations ............................. 57
Ratios of earnings to combined fixed
charges ................................................... 57
Loan maturity and interest sensitivity
analysis .................................................. 58
Deposits ..................................................... 59
Certificates of deposit and other time
deposits .................................................. 61
Consolidated financial statements
The consolidated financial statements of HSBC and
the separate financial statements of HSBC Holdings
have been prepared in accordance with International
Financial Reporting Standards (‘IFRSs’) as issued by
the International Accounting Standards Board
(‘IASB’) and as endorsed by the European Union
(‘EU’). EU-endorsed IFRSs may differ from IFRSs
as issued by the IASB if, at any point in time, new or
amended IFRSs have not been endorsed by the EU.
At 31 December 2008, there were no unendorsed
standards effective for the year ended 31 December
2008 affecting these consolidated and separate
financial statements, and there was no difference
between IFRSs endorsed by the EU and IFRSs
issued by the IASB in terms of their application to
HSBC. Accordingly, HSBC’s financial statements
for the year ended 31 December 2008 are prepared
in accordance with IFRSs as issued by the IASB.
HSBC uses the US dollar as its presentation
currency because the US dollar and currencies linked
to it form the major currency bloc in which HSBC
transacts its business. Unless otherwise stated, the
accounting information presented in this document
has been prepared in accordance with IFRSs.
Constant currency
Constant currency comparatives for 2007 and 2006
used in the 2008 and 2007 commentaries,
respectively, are computed by retranslating into US
dollars, for non-US dollar branches, subsidiaries,
joint ventures and associates:
• the income statements for 2007 and 2006 at the
average rates of exchange for 2008 and 2007,
respectively; and
• the balance sheets at 31 December 2007 and
2006 at the prevailing rates of exchange on
31 December 2008 and 2007, respectively.
No adjustment has been made to the exchange
rates used to translate foreign currency denominated
assets and liabilities into the functional currencies of
any HSBC branches, subsidiaries, joint ventures or
associates. When reference is made to ‘constant
currency’ in tables or commentaries, comparative
data reported in the functional currencies of HSBC’s
operations have been translated at the appropriate
exchange rates applied in the current period on the
basis described above.