HSBC 2015 Annual Report Download - page 26

Movement in adjusted revenue compared with 2014
355
(330)
372
1,147
77
Principal RBWM
RBWM US run-off portfolio
CMB
Client-facing
GB&M and BSM
Legacy credit
GPB
Other
Total
22,687
2015 ($m) Change ($m) (%)
1,155
14,887
17, 973
61
2,141
5,456
57,765
(139)
(250)
538
2
(22)
3
7
>200
(6)
(4)
1
Adjusted performance (continued)
Adjusted revenue
Adjusted revenue rose by 1% in part due
to growth in GB&M, CMB and Principal
RBWM reflecting the following:
– GB&M: Revenue of $18.0bn was
$1.2bn or 7% higher than in 2014.
This was driven by higher revenue
in all client-facing businesses except
Principal Investments. In Equities,
revenue increased by $0.5bn, reflecting
higher client flows and increased
market volatility. Revenue from
transaction banking products rose
$0.4bn as volatility drove higher client
flows in Foreign Exchange, as assets
under custody in Asia rose in Securities
Services, and as deposits rose in
Payments and Cash Management
(‘PCM’). Revenue was also higher in
Balance Sheet Management (‘BSM’),
rising $0.1bn.
– CMB: We grew revenue by $0.4bn
or 3%, in particular in Credit and
Lending (up by $0.4bn) and PCM (up
by $0.1bn). This growth was mainly
in Hong Kong and the UK, reflecting
average balance sheet growth. In
Hong Kong, lending balance growth
was primarily in 2014 and the first half
of 2015. Balances were broadly
unchanged for the remainder of 2015
reflecting subdued demand for credit.
In Global Trade and Receivables
Finance, performance was resilient
(revenue down $44m or 2%) despite a
significant decline in commodity prices
(approximately 40%) and stagnant
world trade.
– RBWM: Our revenue was broadly
unchanged from 2014. We continued
to reduce the size of the balances
in our US Consumer and Mortgage
Lending (‘CML’) run-off portfolio,
resulting in a fall in revenue of $0.3bn.
However, in our Principal RBWM
business, revenue was higher (up by
$0.4bn or 2%). This was driven by
increased Wealth Management
revenue in Asia (up by $0.2bn) in the
first half of 2015, from growth in
investment distribution, which more
than offset weaker investor sentiment
in the second half of 2015. There was
also growth in Europe (up by $0.3bn),
notably from insurance manufacturing.
We also increased our current account,
savings and deposit revenue by
$0.1bn, notably in Hong Kong and
the UK, from an increase in customer
deposit balances of $32bn. This was
partly offset by a decrease in Personal
Lending revenue of $0.3bn, primarily
from lower overdraft fees in the UK
after the introduction of a text
message alert service in late 2014.
– GPB: Our revenue fell by $0.1bn or 6%
reflecting lower brokerage and account
services fee income from a managed
reduction in client assets. However,
revenue increased in Asia, notably
in the first half of 2015, due to higher
client activity as a result of stock
market performance.
– Other: Revenue was $0.3bn or 4%
lower, reflecting adverse hedging
ineffectiveness movements compared
with favourable movements in
2014 (a net adverse movement
of $0.2bn), together with the non-
recurrence of a gain on the external
hedging of an intra-Group financing
transaction of $0.2bn. In addition,
dividend income was $0.1bn lower
following the partial sale of our
shareholding in Industrial Bank.
1%
growth in GB&M,
CMB and
Principal RBWM
Total includes Intersegment revenue of $(6,595)m.
HSBC HOLDINGS PLC
24
Strategic Report | Financial overview