HSBC 2015 Annual Report Download - page 231

HSBC HOLDINGS PLC
229
Strategic Report Financial Review Corporate Governance Financial Statements Shareholder Information
The following comments describe the key RWA movements
excluding foreign currency translation differences.
RWA initiatives
The main drivers were:
• $38bn from reduced exposures, the partial disposal of
our investment in Industrial Bank, a decrease in trading
positions subject to the Incremental Risk Charge, client
facility reductions and trade compressions;
• $30bn from refining our calculations, including the
further application of the small and medium-sized
enterprise (‘SME’) supporting factor, a more refined
application of credit conversion factors (‘CCFs’),
increased usage of internal ratings-based (‘IRB’) models
and the move of certain exposures from residual to cash
flow weighted maturity;
• $25bn from process improvements such as better
linking of collateral and guarantees to facilities,
enhanced risk parameters and the use of more granular
data resulting in lower CCFs for off-balance sheet items;
and
• $30bn through the continued reduction in the GB&M
legacy credit and US run-off portfolios.
Business growth
Business growth increased RWAs by $49bn, principally in:
• CMB, from higher term lending to corporate customers,
principally in Europe, North America and Asia, $23bn;
• our associates, Bank of Communications and The Saudi
British Bank, $14bn; and
• GB&M, from higher general lending to corporates which
increased RWAs by $10bn, mainly in Europe.
Risk-weighted assets
RWAs by risk type
2015 2014
$bn $bn
Credit risk 875.9 955.3
–
standardised approach 332.7 356.9
–
IRB foundation approach 27.4 16.8
–
IRB advanced approach 515.8 581.6
Counterparty credit risk 69.2 90.7
–
standardised approach 19.1 25.2
–
advanced approach 50.1 65.5
Market risk 42.5 56.0
–
internal model based 34.9 44.6
–
standardised approach 7.6 11.4
Operational risk 115.4 117.8
At 31 December 2015 1,103.0 1,219.8
Of which:
Run-off portfolios 69.3 99.2
–
legacy credit in GB&M 29.8 44.1
–
US CML and Other 39.5 55.1
RWAs by global businesses
2015 2014
$bn $bn
Retail Banking and Wealth Management4
189.5 207.2
Commercial Banking4 421.0 430.3
Global Banking and Markets 440.6 516.1
Global Private Banking 19.3 20.8
Other 32.6 45.4
At 31 December 2015 1,103.0 1,219.8
RWAs by geographical regions5
2015 2014
$bn $bn
Europe 337.4 375.4
Asia 459.7 499.8
Middle East and North Africa 60.4 63.0
North America 191.6 221.4
Latin America 73.4 88.8
At 31 December 2015 1,103.0 1,219.8
For footnotes, see page 243
Credit risk RWAs
Credit risk exposure – RWAs by geographical region
Europe Asia MENA
North
America
Latin
America Total
$bn $bn $bn $bn $bn $bn
IRB approach 192.6 195.9 19.4 122.5 12.8 543.2
–
IRB advanced approach 175.1 195.9 9.5 122.5 12.8 515.8
–
IRB foundation approach 17.5
–
9.9
–
–
27.4
Standardised approach 46.8 177.7 32.0 33.9 42.3 332.7
RWAs at 31 December 2015 239.4 373.6 51.4 156.4 55.1 875.9
IRB approach 216.1 213.1 15.6 142.0 11.6 598.4
–
IRB advanced approach 203.3 213.1 11.6 142.0 11.6 581.6
–
IRB foundation approach 12.8
–
4.0
–
–
16.8
Standardised approach 47.1 186.0 39.0 29.6 55.2 356.9
RWAs at 31 December 2014 263.2 399.1 54.6 171.6 66.8 955.3