HSBC 2015 Annual Report Download - page 32

Profit before tax
– total RBWM ($bn)
2015 2014
5.0
5.6
6.8
7.6
Reported
Adjusted
Despite a challenging second half of
2015, Wealth Management revenue
grew by 8%
Total RBWM – Total RBWM adjusted profit
before tax fell by $0.7bn or 10%, with a
decrease in profit before tax in both Principal
RBWM and from the continued reduction
in our US run-off portfolio.
The graph below shows reported and adjusted
profit before tax. The difference between
them primarily reflects fines, penalties and
charges in relation to legal matters, which
totalled $1.6bn and $1.3bn in 2014 and 2015,
respectively. Significant items are detailed
on page 66.
Principal RBWM – In our Principal RBWM
business, profit before tax was down by
$0.5bn or 7%, reflecting higher costs
and LICs. Revenue grew.
– Revenue rose $0.4bn in Wealth
Management in Asia in the first half of
the year from investment distribution,
offsetting weaker investor sentiment in the
second half of 2015. Wealth Management
income in Europe also grew as insurance
manufacturing increased. Deposit and
savings income grew in Asia and the UK as
deposits increased by $32bn. This was partly
offset by lower overdraft fees in the UK.
– LICs increased by $0.3bn or 20%, mainly
in Brazil from increased impairment charges
following the economic slowdown, and the
UAE following a review of collateral in the
mortgage book.
– Costs rose by $0.5bn or 4%, driven by
inflation in Asia and Latin America. Our
marketing costs also increased as we
relaunched our Global Advance account
proposition with notable investment in the
UK, and we continued to invest in regulatory
programmes and compliance.
Asset Management and Insurance
We operate our own Asset
Management and Insurance businesses.
By owning these businesses directly,
we can tailor their products to the needs
of customers and maintain end-to-end
control over their quality. We are
investing for growth in these
businesses, leveraging our network
and strong client relationships.
Business synergies
RBWM makes a significant contribution
to the overall success of the Group.
In 2015, Insurance Manufacturing
(within Wealth Management) and
Asset Management generated revenue
of $1.7bn and $1.1bn, respectively,
from the provision of services to clients
across all of our global businesses.
In addition, the foreign exchange and
wealth management needs of our
RBWM clients create opportunities
for GB&M.
RBWM’s strong deposit franchise
supports a stable and diversified
core funding base for the Group,
and the branch network supports
the needs of other global business
clients while enhancing the visibility
of the HSBC brand.
Areas of focus
RBWM’s focus is on growing the
business through relationship-led personal
lending and wealth management, while
transforming our customer experience
and cost base through investment in
digital infrastructure.
Customers
RBWM serves close to 45 million
customers worldwide through four
main business areas: Retail Banking,
Wealth Management, Asset
Management and Insurance.
Since 2012, we have taken numerous
actions to improve the way we conduct
our business. We have removed the
formulaic link between product sales
and remuneration, paying all staff on
a discretionary basis, which includes
assessment of their behaviour and the
satisfaction of our customers. We have
simplified our product range, reviewed
the fairness of our product features
and pricing, and enhanced the way
we monitor the quality of our sales.
Products and services
RBWM provides services to individuals
under the HSBC Premier and Advance
propositions aimed at mass affluent and
emerging affluent customers who value
international connectivity and benefit
from our global reach and scale. For
customers who have simpler everyday
banking needs, RBWM offers a full range
of banking products and services
reflecting local requirements.
Retail Banking and Wealth Management (‘RBWM’)
Adjusted profit before tax – total RBWM
-10%
45m
customers served
$419bn
assets under
management
HSBC HOLDINGS PLC
30
Strategic Report | Global businesses