Hsbc Bank Analysis Essays

Hsbc Bank Analysis Essays Hsbc Bank Analysis Essay Hsbc Bank Analysis Essay HSBC (The Hong Kong Shanghai Banking Corporation): INTRODUCTION: HSBC is the world’s second-largest banking and financial services group. The origins of the bank lie in Hong Kong and Shanghai, where its branches were first open in 1865. Number of location is around 7,500 offices in 87 countries and territories; Only in united states it has more than 460 bank branches, 210. 000 shareholders, 300,000 staff, and approximately 128 million customers worldwide. Throughout the world among the multinational banking giants HSBC is one of the leading largest banking groups. A A Flock hart, Chairman since 1 January 2011 and a Director since July 2010. An executive Director of HSBC Holdings plc and Chairman, Europe, Middle East, Africa, Latin America and Commercial Banking, Joined HSBC in 1974. BACKGROUND: HSBC Private Bank is the marketing name for the private banking business, HSBC group has a significant presence in each of the world’s financial markets, with the America, Asia Pacific and Europe each representing one third of the business, with around 8,000 offices 87 countries and territories, 210,000 shareholders, 300,000 staff and 128 million customers worldwide, HSBC arguably has the most valuable place in multinational banking giants. As HSBC announces so many facilities to their customer, Retail Banking and Wealth Management were previously referred to as Personal Financial Services. This rename was announced during HSBCs 2011 Investor Day. Commercial bank also provides financial services to small, medium-sized and middle-market enterprises; the bank said it would be hiring at least 2,000 extra people in mainland China and Singapore over the next five years, as it seeks to tap the fast growing Asia Pacific market. HSBC was founded in Hong Kong and Shanghai in 1865 and the bank regards Asia as its most important region†. FINANCIAL SERVICES: * Customer’s Personal financial services. * Current and savings accounts. * Mortgage. * Car financing. * Insurance. * Credit cards. * Loans. * Pensions. * Investments. SPONSORSHIP: HSBC sponsors the Great Canadian Geography Challenge, which has had around 2 million participants in the past 12 years. Since 2001, HSBC has sponsored the Celebration of Light, an annual musical fireworks competition in Vancouver, British Columbia, Canada. In 2007 HSBC announced it would be a sponsor of the National Hockey Leagues Vancouver Canucks and Calgary Flames. HSBC has also sponsored a professional gaming team that was disbanded late 2007. HSBC sponsored the 2009 British and Irish Lions tour to South Africa. GLOBAL SERVICE CENTER: HSBC develops global technology centre in Pacific Asia for HSBC group, the main theme is to lower cost economies in order to reduce the cost of providing services in developed and well economical countries. UK Retail Banking: The UK Personal Financial Services business continues, To build its position as a leading provider of financial Services to mass affluent customers in the UK through, The Premier and Advance propositions. The UK Commercial Banking strategy is to be: the ‘Leading International Business’ bank, using HSBC’s extensive geographical network together With product expertise in payments, trade, Receivables finance and foreign exchange to actively support customers who are trading and investing across borders; and the best bank for small and medium-sized Enterprises (‘SMEs’) in target markets, building global scale and creating efficiencies by sharing systems and best practice, including customer experience, training and product offerings, and selectively applying a direct banking model. DEPTH OF ANALYSIS: Consolidated income statement for the year ended 31 December 2010 20102009 ?m ? m Interest income . 11,110 12,643 Interest expense (3,416) (4,552) Net interest income ,694 8,091 Fee income 5,310 5,560 Fee expense (1,271) (1,483) Net fee income . 4,040 4,077 Trading income excluding net interest income . ,210 970 Net interest income on trading activities.. 901 1,656 Net trading income.. 2,117 2,626 Net income from financial instruments designated at fair value.. 276 543 Gains less loss from financial investments.. 537 (73) Dividend income 8 29 Net earned insurance premiums .. 42,635 2,716 Other operating income 782 1,093 Total operating income 18,090 19,102 Net insurance claims incurred and movement in liabilities to policyholders (3,023) (3,540) Net operating income before loan impairment charges and other credit risk Provisions 15,076 15,562 Loan impairment charges and other credit risk provisions (1,951) (3,364) Net operating income . 13,125 12,198 Employee compensation and benefits. (4,961) (4,452) General and administrative expenses 3,536) (3,114) Depreciation and impairment of property, plant and equipment.. (460) (482) Amortization and impairment of intangible assets. (162) (150) Total operating expenses.. (9,119) (8,198) Operating profit . ,006 4,000 Share of profit in associates and joint ventures . 5 14 Profit before tax . 4,011 4,014 Tax expense (996) (856) Profit for the year ,015 3,158 Profit attributable to shareholders of the parent company 2, 654 3,092 Profit attributable to non-controlling interests 56 66 2010 compared with 2009: Overview: Global Banking and Markets reported a pre-tax profit of ? 1,876 million in the period compared with ? 2,511 million in 2009, a decrease of 25 per cent. The 2010 results, however, remained strong by historical standards and were second only to the exceptional performance of 2009. On an underlying basis, adjusting for the Global Banking and Markets’ element of the disposal of the Insurance Brokers’ business in April 2010 and the disposal of Eversholt Rail Group in December 2010, profit before tax was ? 1,699 million, 32 per cent lower than 2009. Revenues slowed in 2010, due to less favorable market conditions caused by the impact of the European sovereign debt crisis and the anticipated lower revenues in Balance Sheet Management. Operating expenses included a ? 207 million charge from the one-off UK and French bonus and payroll taxes applied on certain 2009 bonus payments. DATA GATHERING: Financial Statements: HSBC Bank plc cash flow statement for the year ended 31 December 2010 2010 2009 ? m ? m Cash flows from operating activities Profit before tax . 3,396 2,967 Adjustments for: – Non-cash items included in profit before tax . 7 2,215 3,126 – Change in operating assets 37 (5,523) 14,404 – Change in operating liabilities.. 37 28,734 – Elimination of exchange differences1 1,189) 377 (2, 6564) – Net gain from investing activities (329) (535) – Contributions paid to defined benefit plans.. (1,933) (236) – Tax paid. (674) (461) Net cash (used in)/generated from operating activities.. 24,697 (6,900) Cash flows from investing activities Purchase of financial investments. 27,066) (31,309) Proceeds from the sale of financial investments .. 14,849 50,482 Purchase of property, plant and equipment. (316) (312) Proceeds from the sale of property, plant and equipment.. 5 791 Purchase of goodwill and intangible assets (163) (133) Net cash outflow from acquisition of and increase in stake of associates – (16) Proceeds from disposal of associates . 188 Net cash generated from/(used in) investing activities (12,689) 19,691 Cash flows from financing activities Issue of ordinary share capital.. – 2,776 Net cash outflow from acquisition of and increase in stake of subsidiaries.. (442) – Subordinated loan capital issued 633 – Dividends paid.. (1,868) (1,067) Net cash generated from financing activities (1,677) 1,709