HSBC 2012 Annual Report Download - page 284

HSBC HOLDINGS PLC
Report of the Directors: Operating and Financial Review (continued)
Capital > Capital overview / RWAs
282
Our objective in the management of Group
capital is to maintain appropriate levels of
capital to support our business strategy and
meet our regulatory requirements.
Capital highlights
• Core tier 1 capital ratio 12.3%, up
from 10.1% in 2011, as a result of capital
generation and management actions.
• CRD IV, which implements Basel III in
Europe, remains unfinalised and the
timetable for implementation is
uncertain.
Capital overview
Capital ratios
(Unaudited)
At 31 December
2012 2011
% %
Core tier 1 ratio .......................... 12.3 10.1
Tier 1 ratio ................................. 13.4 11.5
Total capital ratio ....................... 16.1 14.1
Our approach to managing Group capital has been to
ensure that we exceed current, and are well placed to
meet expected future, regulatory requirements.
Within the remit of Pillar 2, the FSA has defined a
common equity tier 1 (‘CET1’) capital resources
floor for the Group. This is expressed as a minimum
target CETI ratio calculated on a Basel III end point
basis, to be achieved by December 2013. In effect
this accelerates our full implementation date for
Basel III even though there remains uncertainty
around the precise requirements in Europe.
We currently manage our capital position to
meet an internal target CET1 ratio in the range
9.5%-10.5% for 31 December 2013 and will review
this on an ongoing basis.
The eligibility requirements in the UK for
non-equity capital securities, under Basel III rules,
remained under review so we did not issue any
such capital securities during 2012.
A summary of our policies and practices
regarding capital management, measurement
and allocation is provided in the Appendix to
Capital on page 294.
Risk-weighted assets
RWAs by risk type
(Unaudited)
At 31 December
2012 2011
US$m US$m
Credit risk ................................. 898,416 958,189
Standardised approach .............. 374,469 372,039
IRB foundation approach .......... 10,265 8,549
IRB advanced approach ............ 513,682 577,601
Counterparty credit risk ............ 48,319 53,792
Standardised approach1 ............. 2,645 3,163
IRB approach ............................ 45,674 50,629
Market risk ................................ 54,944 73,177
Operational risk ........................ 122,264 124,356
Total .......................................... 1,123,943 1,209,514
Of which:
Run-off portfolios ................. 145,689 181,657
Legacy credit in GB&M ....... 38,587 50,023
US CML and Other .............. 107,102 131,634
Card and Retail Services2 ..... 6,858 52,080
For footnotes, see page 292.
Market risk RWAs
(Unaudited)
At 31 December
2012 2011
US$m US$m
VAR .......................................... 7,616 11,345
Stressed VAR ............................ 11,048 19,117
Incremental risk charge ............ 11,062 5,249
Comprehensive risk measure .... 3,387 6,013
Other VAR and stressed VAR .... 11,355 12,957
Internal model based .................... 44,468 54,681
FSA standard rules .................... 10,476 18,496
54,944 73,177
RWAs by global businesses
(Unaudited)
At 31 December
2012 2011
US$bn US$bn
Retail Banking and Wealth
Management ......................... 276.6 351.2
Commercial Banking ................ 397.0 382.9
Global Banking and Markets .... 403.1 423.0
Global Private Banking ............ 21.7 22.5
Other ......................................... 25.5 29.9
Total .......................................... 1,123.9 1,209.5