FORM 6-K
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Report of Foreign Private Issuer
Pursuant to Rule 13a - 16 or 15d - 16 of
the Securities Exchange Act of 1934
For the month of February, 2006
HSBC Holdings plc
42nd Floor, 8 Canada
Square, London E14 5HQ, England
(Indicate by check mark whether the registrant files or will file annual
reports under cover of Form 20-F or Form 40-F).
Form 20-F X Form 40-F ......
(Indicate by check mark whether the registrant by furnishing the information
contained in this Form is also thereby furnishing the information to the
Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of
1934).
Yes....... No X
(If "Yes" is marked, indicate below the file number assigned to the registrant
in connection with Rule 12g3-2(b): 82- ..............)
GRUPO FINANCIERO HSBC, S.A. DE C.V.
MEXICO & PANAMA
2005 FINANCIAL RESULTS - HIGHLIGHTS
-Net income of MXN4,981 million for the year ended 31 December 2005, an
increase of 47.8 per cent over the previous year.
-Return on average common equity of 22.0 per cent for 2005, compared with
15.7 per cent in 2004.
-Cost: income ratio of 64.9 per cent in 2005, improving from the previous
year's 65.9 per cent (adjusted for a non-recurrent VAT recovery received in
2004).
-Total assets of MXN275.1 billion at 31 December 2005, compared with
MXN227.8 billion at 31 December 2004.
Grupo Financiero HSBC, S.A. de C.V.'s primary subsidiary is HSBC Mexico S.A.
(the bank), which is subject to supervision by the Mexican Banking and
Securities Commission. The bank is required to file periodic financial
information for the year ending 31 December 2005 and this information is
publicly available. Given that this information is available in the public
domain, Grupo Financiero HSBC, S.A. de C.V. has elected to file this release.
Results are prepared in accordance with Mexican GAAP (generally accepted
accounting principles), with figures denominated in Mexican pesos (MXN).
Comparative figures are presented on a real basis, indexed to constant MXN as at
31 December 2005.
Grupo Financiero HSBC, S.A. de C.V. is an indirect, wholly-owned subsidiary of
HSBC Holdings plc (HSBC). HSBC's 2005 results are scheduled for release on
6 March 2006. Those results will be released under International Financial
Reporting Standards (IFRS) and will describe HSBC's North American results,
including Grupo Financiero HSBC, S.A. de C.V., as well as HSBC's fully
consolidated figures.
Commentary by Sandy Flockhart, CEO & Group General Manager
"Marking the three year anniversary of the Bital acquisition, I am very pleased
with the progress being made. The combination of the knowledge, network and
brand of the HSBC Group with the experience and capabilities of our Mexican
colleagues has been a powerful driver for executing change and generating
results in Mexico.
"HSBC continues to work towards being the number one financial services
institution in Mexico. Numerous initiatives are underway to improve customer
service and to strengthen the bank's product offerings to support the future
financial requirements of our customers."
Overview
Grupo Financiero HSBC reported strong 2005 results, with net income of MXN4,981
million, an increase of 47.8 per cent over the previous year. This was due to
robust revenue growth in HSBC Mexico, S.A. across all product categories. Net
interest income, fees and trading all reached record levels during the year.
This was coupled with strong performances in the insurance, Afore and Panama
bank subsidiaries.
Growth of 28.3 per cent in net interest income, from MXN11,845 million to
MXN15,193 million, was driven by higher deposit balances and widening spreads,
strong loan growth, and higher average interest rates than in 2004. The net
interest margin improved from prior year largely due to an increase in the
bank's margin from 6.3 per cent in 2004 to 6.8 per cent in 2005.
Fees and commissions increased by 10.8 per cent over the previous year due to
growth in credit cards, electronic banking, ATMs, membership programmes,
commercial lending, Afore pension fund management, trade services and
remittances. Trading results were excellent, up 49.3 per cent over 2004,
benefiting from successful strategic positioning, higher customer volumes and
the launch of new products on the back of enhanced treasury systems.
Administrative expenses grew 19.6 per cent (excluding the non-recurrent recovery
of VAT received in 2004) as HSBC continued to invest heavily in its Mexican
operations. Personnel costs increased due to additional headcount and variable
compensation to support revenue growth and to improve customer service.
Operating costs were driven by significant investment in systems and higher
marketing expenses.
Loan impairment charges increased 9.4 per cent for the year, in line with robust
lending growth and reflecting the high credit quality of new lending and
improved economic conditions. In the bank, the ratio of non-performing loans to
total loans decreased to 2.7 per cent, compared with 3.0 per cent in the
previous year, and the reserve coverage on non-performing loans was 168 per
cent. The bank's capital adequacy ratio remains solid at 14.3 per cent at 31
December 2005.
By customer segment
The personal financial services division reported a solid performance due to
higher deposit balances and widening spreads, strong loan growth and higher fee
income. Fixed rate mortgage volumes increased 151 per cent over the previous
year, driven mainly by the bank's low rate offer.
HSBC remains Mexico's market leader amongst banks in auto loans issued. A unique
new internet-based product, 'Venta Directa', was launched during the year,
enabling the direct sales of used cars between customers, using HSBC's financing
and the website as the intermediary. HSBC is also the first Mexican bank to
offer pre-approved personal loans through its ATMs, which helped grow balances
by 109 per cent compared with 2004. Targeted customer campaigns drove record
growth in credit cards, with balances 84 per cent higher and cards in
circulation increasing by 80 per cent to 1.1 million cards.
HSBC's market share in customer deposits continued to increase, reaching record
highs in 2005. This was accomplished while maintaining a cost of funds
significantly below that of the market. The bank saw good growth of Tu Cuenta,
an integrated package of financial services for a flat monthly fee. Since its
launch in February, it has generated 611,000 accounts, averaging some 2,300 new
customers per day. Mutual fund balances were up 58 per cent from the previous
year, benefiting from an expanded product offering and increased cross sales to
our extensive customer base. The HSBC D-2 fund is now the largest mutual fund
for individual investors in Mexico, with assets of over MXN20 billion at year
end.
The Afore pension funds business continued to perform strongly, with 394,000 new
customers which led to a 50 per cent growth in fees. In the insurance company,
growth in premiums was attributed to strong sales in packaged products in
personal financial services (including mortgages, credit cards and Tu Cuenta)
which have imbedded insurance components.
Fee income from international remittances rose 55 per cent due to the continued
success of La Efectiva, HSBC's electronic remittance card. Monthly transactions
now exceed one million, representing a market share among banks of approximately
20 per cent and a five-fold increase since acquisition. We continue to leverage
HSBC's extensive branch network in the US to create growth opportunities.
In commercial banking, deposit balances grew by 38 per cent as a result of the
expansion into the SME market. Loan balances rose by 21 per cent, principally in
the services and commerce sectors due to the increase in new clients. Trade
services increased its market share, generating revenue growth of 39 per cent
over the previous year. The recently launched Estimulo combined loan and
overdraft product for smaller companies has been very successful, with over
3,500 packages sold with an average cross-sale of 4.6 products.
The corporate, investment banking and markets division continued to strengthen
its market position with lending growth of MXN11,890 million, or 90 per cent,
over 2004, benefiting in part from HSBC's extensive international network for
multinational companies. HSBC was officially appointed market maker in debt
trading desk by the Central Bank and is now ranked third in the Mexican FX
market. The installment of new treasury systems in early 2005 allowed HSBC to
operate derivatives in Mexico, which has contributed strong earnings for the
year.
HSBC's newly-formed Group Investment Banking Financing (GIBF) won mandates to
arrange and underwrite the securitisation of mortgages and bridge loans. GIBF
also underwrote and placed the company's first local bond issue for Petroleos
Mexicanos and successfully sole lead arranged a 10-year MXN2 billion bond for
the Inter-American Development Bank.
The HSBC Group
Grupo Financiero HSBC, S.A. de C.V. is Mexico's fourth largest banking and
financial services institution with 1,400 branches, 5,000 ATMs and more than
22,000 employees. For more information, consult our website at www.hsbc.com.mx.
Grupo Financiero HSBC, S.A. de C.V. is a directly controlled subsidiary of, and
99.8 per cent owned by, HSBC Holdings plc. Headquartered in London, UK, the HSBC
Group serves over 110 million customers worldwide through 9,700 offices in 77
countries and territories in Europe, the Asia-Pacific region, the Americas, the
Middle East and Africa. With assets of US$1,467 billion at 30 June 2005, HSBC is
one of the world's largest banking and financial services organisations. HSBC is
marketed worldwide as 'the world's local bank'.
Consolidated Balance Sheet
Group Bank
Figures in MXN millions
31Dec05 31Dec04 31Dec05 31Dec04
Assets
Cash and
deposits in
banks 55,291 47,089 51,033 44,628
Financial
instruments 56,960 47,546 55,523 45,530
Trading
securities 6,945 3,065 6,589 2,729
Available for
sale securities 46,022 40,334 44,941 38,654
Held to
maturity
securities 3,993 4,147 3,993 4,147
Securities and
derivative
operations 568 112 573 103
Repurchase
agreements 186 69 191 60
Operations that represent
loans with collateral - - - -
Settlement accounts to be
recorded for purchase - - - -
Derivative
transactions 382 43 382 43
Performing loans
Commercial
loans 45,751 31,330 40,733 28,166
Loans to
financial
intermediaries 6,896 4,270 6,797 4,131
Consumer loans 25,660 16,480 23,954 15,142
Mortgage 20,099 16,640 15,318 12,355
Loans to
government
entities 36,163 6,478 36,164 6,478
Loans to
Fobaproa or
IPAB 1,096 43,019 1,096 43,019
Total
performing
loans 135,665 118,217 124,062 109,291
Non-performing loans
Commercial
loans 1,667 1,993 1,624 1,943
Loans to financial
intermediaries - - - -
Consumer loans 818 549 807 540
Mortgage 1,021 919 955 851
Loans to government
entities - - - -
Immediate
collection,
remittances
and other 28 42 27 42
Total
non-performing
loans 3,534 3,503 3,413 3,376
Total loan
portfolio 139,199 121,720 127,475 112,667
Allowance for
loan losses (5,897) (6,758) (5,729) (6,588)
Net loan
portfolio 133,302 114,962 121,746 106,079
Other accounts
receivable 15,218 4,499 14,677 4,054
Foreclosed
assets 394 562 354 510
Property,
furniture and
equipment, net 5,475 4,350 5,240 4,116
Long term
investments in
equity
securities 2,245 2,306 196 401
Deferred taxes 747 2,274 618 2,199
Goodwill 3,239 3,148 - -
Other assets,
deferred
charges and
intangibles 1,683 927 1,464 786
Total assets 275,122 227,776 251,424 208,406
Group Bank
Liabilities 31Dec05 31Dec04 31Dec05 31Dec04
Deposits 212,316 185,182 196,566 174,495
Demand
deposits 125,513 115,401 118,811 110,109
Time deposits 86,803 69,726 77,755 64,284
Bank bonds
outstanding - 56 - -
Bank deposits
and other
liabilities 6,963 9,244 6,896 9,244
On demand 21 - - 244
Short term 4,816 6,619 4,737 6,375
Long term 2,126 2,625 2,159 2,625
Settlement accounts to be
recorded for sale - - - -
Securities and
derivative
transactions 4,502 41 4,507 32
Repurchase
agreements 113 41 118 32
Loans with
collateral 4,389 - 4,389 -
Operations with derivative
instruments - - - -
Derivative transactions - - - -
Settlement accounts to be
recorded for purchase - - - -
Other accounts
payable 22,959 9,807 21,909 9,106
Income tax and
employee
profit sharing
payable 1,298 742 1,201 683
Sundry
creditors and
others
accounts
payable 21,661 9,065 20,708 8,423
Subordinated
debentures
outstanding 2,579 2,675 2,206 2,271
Deferred tax - - - -
Deferred
credits 20 86 15 14
Total
liabilities 249,339 207,036 232,099 195,060
Stockholders' equity
Paid in
capital 19,853 19,853 12,517 10,317
Capital stock 7,593 7,593 3,773 3,498
Additional
paid in
capital 12,260 12,260 8,744 6,819
Mandatorily convertible
subordinated debentures - - - -
Capital gains 5,928 884 6,808 3,027
Capital
reserves 634 465 4,583 1,955
Retained
earnings 7,640 4,437 - -
Surplus from
the mark to
market of
available for
sale
securites - - 269 16
Result from
translation of
foreign
operations (70) (1) 11 11
Cumulative
effect of
restatement (3,690) (3,690) (3,360) (3,238)
Gains on non monetary asset
valuation
Valuation of
fixed assets - - 1,245 1,245
Valuation of
permanent
investments (3,630) (3,698) (139) (152)
Adjustments to retirement
fund obligations - - - -
Net income 4,981 3,370 4,199 3,190
Minority
interest in
capital 2 3 - 2
Total
stockholder's
equity 25,783 20,740 19,325 13,346
Total
liabilities
and capital 275,122 227,776 251,424 208,406
Group
31 Dec 31 Dec
2005 2004
Memorandum accounts
Transactions on behalf of
third parties 86,016 78,248
Customer current accounts 1 (4)
Customer banks - 1
Settlement of customer
securities
and documents 1 (5)
Customer securities 66,738 50,009
Customer securities
in custody 65,592 49,433
Pledged customers
securities and
documents 1,146 575
Transactions on behalf of
customer 2,411 2,619
Customer
repurchase
transactions 2,411 2,619
Customer option repurchase
transaction - -
Other transactions on
behalf of customers 16,866 25,624
Investment on behalf of
customers, net 16,866 25,624
Other memorandums
accounts 481,483 440,454
Investment of the
SAR funds 3,292 2,958
Integrated loan
portfolio 131,294 115,148
Other memorandum
accounts 346,897 322,348
Transactions for
the group's
own accounts 339,597 226,047
Memorandum accounts 339,524 226,020
Guarantees granted 57 224
Irrevocable lines of
credit granted 3,761 2,257
Goods in trust or mandate 67,769 63,606
Goods in custody or under
administration 56,937 50,566
Amounts committed in
transactions
with Fobaproa 123 983
Amounts contracted
in derivative
operations 205,915 94,647
Securities in custody 3,986 4,082
Other contingent
obligations 976 9,654
Repurchase/resale
agreements
Securities receivable
under repos 44,434 39,776
Less: Repurchase
agreements (44,450) (39,749)
(16) 28
Reverse repurchase
agreements 15,944 8,836
Less: Securities
deliverable
under repos (15,855) (8,836)
89 -
Bank
31Dec05 31Dec04
Memorandum accounts
Guarantees granted 56 222
Other contingent
obligations 976 9,654
Irrevocable lines of
credit granted 3,761 2,257
Goods in trust or mandate 67,769 63,605
Goods in custody or under
administration 56,937 50,567
Third party investment
banking
operations, net 16,866 25,624
Amounts committed in
transactions
with Fobaproa 123 983
Amounts contracted in
derivative operations 205,915 94,648
Investments of retirement
savings system
funds 3,292 2,958
Integrated loan portfolio 131,294 115,148
Other control accounts 346,896 322,347
833,885 688,013
Securities receivable
under repos 42,005 37,140
Less: Repurchase
agreements (42,018) (37,110)
(13) 30
Reverse repurchase
agreements 13,511 6,197
Less: Securities deliverable
under repos (13,511) (6,197)
- -
Consolidated Income Statement
Figures in MXN Group Bank
millions
31Dec05 31Dec04 31Dec05 31Dec04
Interest
income 26,350 19,393 25,327 19,044
Interest
expenses (-) 10,837 7,197 10,467 7,111
Monetary
position
(margin), net (320) (351) (241) (273)
Net interest
income 15,193 11,845 14,619 11,660
Provisions for
bad & doubtful
debt (1,499) (1,370) (1,489) (1,363)
Risk adjustment
netinterest
income 13,694 10,475 13,130 10,297
Fees and
commissions 8,435 7,616 7,564 7,181
Fees paid (917) (637) (879) (774)
Trading income 1,363 913 1,356 907
Total
operating
income 22,575 18,367 21,171 17,611
Administrative
and personnel
expenses 15,830 12,987 14,698 12,232
Net operating
income 6,745 5,380 6,473 5,379
Other income 1,495 1,363 1,504 1,327
Other expenses 1,021 (1,076) (993) (1,062)
Net income
before taxes 7,219 5,666 6,984 5,644
Income tax and
employee
profit
sharing tax (1,491) (1,247) (1,383) (1,196)
Deferred
income tax (1,346) (1,270) (1,341) (1,265)
Net income
before
subsidiaries 4,382 3,149 4,260 3,183
Undistributed
income from
subsidiaries 675 228 16 14
Income from
ongoing
operations 5,057 3,377 4,276 3,197
Discontinued
operations,
extraordinary
items and
changes in
accounting
standards, net (78) (7) (77) (7)
Minority interests - - - -
Net income 4,981 3,370 4,199 3,190
Statement of Changes in Shareholder's Equity
GROUP
Figures in millions of pesos
Capital Statutory Retained Result from Surplus Net Minority Total
contributed reserves earnings foreign (deficit) in income interest stock-
currency restatement holders'
transactions of equity
stock-holders'
equity
Balances as of
31Dec04 19,853 466 4,437 (1) (7,389) 3,371 3 20,740
Movements
inherent to
the shareholders
decision
Subscription
of shares - - 3,371 - - (3,371) - -
Capitalisation
of retained
earnings - 168 (168) - - - - -
Total - 168 3,202 - - (3,371) - -
Movements for
the recognition
of the
comprehensive
income
Net result - - - - - 4,981 - 4,981
Result from
translation
of foreign - - - (6) - - - (6)
operations
Cumulative
effect of
restatement - - - - 2 - (1) 1
- Gains on
non-monetary
asset
valuation - - - - 67 - - 67
Total - - - (6) 69 4,981 (1) 5,043
Balances as of
31Dec05 19,853 634 7,640 (7) (7,320) 4,981 2 25,783
BANK
Figures in millions
of pesos
Unreal-
ised
gain
(loss)
from Deficit
valuation Result in
of avail- from restate-
ble-for- foreign ment Total
Capital sale currency of stock Net Mino- stock-
contri- Stautory Retained secur- trans- holders' income rity holders
buted reserves earnings ities actions equity (loss) interest equity
Balances
as at
31Dec04 10,025 1,899 - 16 11 (2,085) 3,099 2 12,968
Movements
inherent to
the
shareholders
decision
Subscription
of shares 2,200 - - - - - - - 2,200
Transfer of
result of
prior years - - 3,099 - - - (3,099) - -
Constitution
of reserves - 3,099 (3,099) - - - - - -
Payment of
dividends - (549) - - - - - - (550)
Total 2,200 2,550 - - - - (3,099) - 1,651
Movements for
the
recognition
of the
comprehensive
income
- Result from
translation
of
foreign
operations - - - - - - 4,199 - 4,199
- Cumulative
effect of
restatement - - - 252 - - - - 252
- Adjustments
to retirement
fund 292 134 - 1 - (183) - - 243
obligations
- Others - - - - - 13 - - 13
Total 292 134 - 253 - (170) 4,199 (1) 4,707
Balances as
at 31Dec05 12,517 4,583 - 269 11 (2,255) 4,199 1 19,325
Consolidated Statement of Changes in Financial Position
GROUP
Figures in MXN millions
31Dec05 1Dec04
Operating activities
Net income 4,981 3,370
Items included in operations
not requiring (providing)funds:
Losses from mark to market
valuations (1,352) (69)
Allowances for loan losses 1,499 1,377
Depreciation and amortisation 849 807
Deferred taxes 1,346 1,279
Undistributed income from
subsidiaries, net (675) (3,559)
Increase of the minority
interest - 7
6,648 3,213
Changes in items related
to operations:
Increase in deposits: 27,134 25,959
(Decrease) increase of loan
portfolio (19,838) 297
Decrease of securities and derivative
transactions, net (8,062) (22,438)
Increase (decrease) of financial
instruments 4,004 (217)
Other accounts receivable 2,432 (1,506)
Funds provided by operating
activities 12,318 5,308
Financing activities:
Subordinated debentures
outstanding (96) 283
Decrease in bank and other loans (2,281) -
Funds used or provided in
financing activities (2,377) 283
Investing activities:
(Decrease) increase of property,
furniture and
equipment, net (1,273) 1,351
(Decrease) increase in
deferred charges or
credits, net (472) 760
Other investment activities 6 -
Funds used in investing activities (1,739) 2,112
Increase in cash and equivalents 8,202 7,703
Cash and equivalents at beginning
of period 47,089 39,386
Cash and equivalents at end of period 55,291 47,089
BANK
Figures in MXN millions
31Dec05 31Dec04
Operating activities
Net income 4,199 3,190
Items included in operations
not requiring (providing)funds:
Depreciation and amortisation 821 634
Allowance for loan losses 1,489 1,363
Provisions for foreclosed assets - 13
Losses from mark to market
valuations (270) (67)
Deferred taxes 1,341 1,265
Undistributed income from
subsidiaries, net (16) (8)
Value loss estimation for
foreclosed assets 52 -
Increase of the minority interest - -
7,618 6,390
Changes in operating accounts:
Increase in retail
deposit and money desk 22,173 5,167
(Decrease) Increase of loan portfolio (17,156) 9,015
Decrease of financial instruments (5,466) (21,015)
Increase (decrease) of other receivable
and payable accounts, net 1,499 (303)
Funds provided by operations 8,668 9,254
Financing activities:
Subordinated debentures
outstanding (64) (120)
Decrease of interbank and
other loans (2,348) -
Dividends paid (561) (2,431)
Increase in capital 2,200 -
Result from foreign currency
transactions - -
Convertible subordinated debentures - -
Fiscal results of agencies - -
Funds used or provided by
financing activities (773) (2,551)
Investing activities:
Decrease of property, furniture
and equipment and
long term investments (1,834) (1,479)
Increase in deferred credits 240 20
Increase in loans to employee 104 -
Funds used in investing activities (1,490) (1,459)
Increase in cash and equivalents 6,404 5,244
Cash and equivalents at
beginning of period 44,629 39,385
Cash and equivalents at end of period 51,033 44,629
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
HSBC Holdings plc
By:
Name: P A Stafford
Title: Assistant Group Secretary
Date: 28 February 2006