HSBC 2009 Annual Report Download - page 209

207
recognised on the balance sheet, the maximum
exposure to credit risk equals their carrying amount;
for financial guarantees and similar contracts
granted, it is the maximum amount that HSBC
would have to pay if the guarantees were called
upon. For loan commitments and other credit-related
commitments that are irrevocable over the life of the
respective facilities, it is generally the full amount of
the committed facilities.
Maximum exposure to credit risk
(Audited)
At 31 December 2009 At 31 December 2008
Maximum
exposure
Offset
Exposure
to credit
risk (net)
Maximum
exposure
Offset
Exposure
to credit
risk (net)
US$m US$m US$m US$m US$m US$m
Cash and balances at central banks .................... 60,655 – 60,655 52,396 – 52,396
Items in the course of collection from other
banks ............................................................... 6,395 – 6,395 6,003 – 6,003
Hong Kong Government certificates of
indebtedness ................................................... 17,463 – 17,463 15,358 – 15,358
Trading assets ..................................................... 386,070 (8,496) 377,574 405,451 (13,227) 392,224
Treasury and other eligible bills ..................... 22,346 – 22,346 32,458 – 32,458
Debt securities ................................................ 201,598 – 201,598 199,619 – 199,619
Loans and advances to banks ......................... 78,126 – 78,126 73,055 – 73,055
Loans and advances to customers .................. 84,000 (8,496) 75,504 100,319 (13,227) 87,092
Financial assets designated at fair value ............ 22,198 – 22,198 17,540 – 17,540
Treasury and other eligible bills ..................... 223 – 223 235 – 235
Debt securities ................................................ 20,718 – 20,718 16,349 – 16,349
Loans and advances to banks ......................... 354 – 354 230 – 230
Loans and advances to customers .................. 903 – 903 726 – 726
Derivatives .......................................................... 250,886 (189,606) 61,280 494,876 (383,308) 111,568
Loans and advances held at amortised cost: ...... 1,076,012 (91,127) 984,885 1,086,634 (83,398) 1,003,236
– to banks ........................................................ 179,781 (116) 179,665 153,766 (126) 153,640
– to customers ................................................. 896,231 (91,011) 805,220 932,868 (83,272) 849,596
Financial investments ......................................... 360,034 – 360,034 292,984 – 292,984
Treasury and other similar bills ...................... 58,434 – 58,434 41,027 – 41,027
Debt securities ................................................ 301,600 – 301,600 251,957 – 251,957
Other assets ......................................................... 36,373 (4) 36,369 40,859 (5) 40,854
Endorsements and acceptances ...................... 9,311 (4) 9,307 10,482 (5) 10,477
Other ............................................................... 27,062 – 27,062 30,377 – 30,377
Financial guarantees and similar contracts ........ 53,251 – 53,251 52,318 – 52,318
Loan and other credit-related commitments1 ..... 558,050 – 558,050 604,022 – 604,022
2,827,387 (289,233) 2,538,154 3,068,441 (479,938) 2,588,503
For footnote, see page 291.
Collateral and other credit enhancements
(Audited)
Collateral held against financial instruments
presented in the above table is described in more
detail below.
Items in the course of collection from other banks
Settlement risk arises in any situation where a
payment in cash, securities or equities is made in the
expectation of a corresponding receipt of cash,
securities or equities. Daily settlement limits are
established for counterparties to cover the aggregate
of HSBC’s transactions with each one on any
single day. Settlement risk on many transactions,
particularly those involving securities and equities,
is substantially mitigated by settling through assured
payment systems or on a delivery-versus-payment
basis.
Treasury, other eligible bills and debt securities
Collateral held as security for financial assets other
than loans and advances is determined by the nature
of the instrument. Debt securities, treasury and other
eligible bills are generally unsecured, except for
ABSs and similar instruments, which are secured by
pools of financial assets.