HSBC 2015 Annual Report Download - page 406

Notes on the Financial Statements (continued)
19 – Interests in associates and joint ventures
HSBC HOLDINGS PLC
404
The following table illustrates the effect on VIU of reasonably possible changes to key assumptions. This reflects the sensitivity
of VIU to each key assumption on its own and it is possible that more than one favourable and/or unfavourable change will
occur at the same time.
Favourable change Current model Unfavourable change
$bn $bn $bn $bn $bn
At 31 December 2015
Carrying amount: $15.3bn
Long-term growth rate +100bps 5% -210bps
VIU 20.3 17.0 12.3
Increase/(decrease) in VIU 3.2 (4.7)
Long-term asset growth rate -50bps 4% +100bps
VIU 18.2 17.0 14.3
Increase/(decrease) in VIU 1.2 (2.8)
Discount rate -150bps 13% +110bps
VIU 21.2 17.0 14.9
Increase/(decrease) in VIU 4.2 (2.1)
Loan impairment charge as a percentage of customer advances 70bps throughout
2015-18: 0.71% - 0.78%
2019 onwards: 0.70%
2015-18: 0.85%
2019 onwards: 0.75%
VIU 17.2 17.0 16.4
Increase/(decrease) in VIU 0.1 (0.7)
Risk-weighted assets as a percentage of total assets -350bps 67% throughout +10bps
VIU 18.2 17.0 17.0
Increase/(decrease) in VIU 1.2 (0.0)
Cost income ratio -250bps 41% throughout +120bps
VIU 18.5 17.0 16.35
Increase/(decrease) in VIU 1.5 (0.7)
At 31 December 2014
Carrying amount: $14.6bn
Long-term growth rate +50bp +100bp 5% -50bp -100bp
VIU 17.0 18.6 15.7 14.5 13.4
Increase/(decrease) in VIU 1.3 2.9 (1.2) (2.3)
Discount rate -50bp -100bp 13% +50bp +100bp
VIU 16.8 18.1 15.7 14.7 13.9
Increase/(decrease) in VIU 1.1 2.4 (1.0) (1.8)
Loan impairment charge as a percentage of customer advances 0.65% throughout
2014-18: 0.73%
–
1%
2019 onwards: 0.65%
1% from 2014-18
2019 onwards: 0.65%
VIU 16.2 15.7 14.9
Increase/(decrease) in VIU 0.5 (0.8)
Risk-weighted assets as a percentage of total assets -100bp -200bp
2014-18: 70%
–
72%
2019 onwards: 70.0% +100bp +200bp
VIU 16.0 16.3 15.7 15.4 15.1
Increase/(decrease) in VIU 0.3 0.6 (0.3) (0.6)
Cost income ratio -50bp -100bp 2014-18: 40.0%
–
42.4%
2019 onwards: 42.4%
+50bp +100bp
VIU 16.0 16.3 15.7 15.4 15.1
Increase/(decrease) in VIU 0.3 0.6 (0.3) (0.6)
Based on the forecasts disclosed by external analysts, management estimates that the reasonably possible range of VIU is
$12.4bn to $22.7bn.
Selected financial information of BoCom
The statutory accounting reference date of BoCom is 31 December. For the year ended 31 December 2015, HSBC included
the associate’s results on the basis of financial statements made up for the 12 months ended 30 September 2015, taking into
account changes in the subsequent period from 1 October 2015 to 31 December 2015 that would have materially affected the
results.