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 October, 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.
THIRD QUARTER 2006 FINANCIAL RESULTS - HIGHLIGHTS
- Net income up 17.5 per cent to MXN4,327 million for the nine months ended
30 September 2006(MXN3,683 million for the nine months ended 30 September
2005).
- Cost efficiency ratio of 61.3 per cent for the nine months ended
30 September 2006(65.6 per cent for the nine months ended 30 September
2005).
- Return on equity of 20.3 per cent for the nine months ended
30 September 2006,(21.3 per cent for the nine months ended 30 September
2005).
- Net loans and advances to customers up MXN17.8 billion, or 14.0 per
cent, to MXN144.8 billion at 30 September 2006 (MXN127.0 billion at
30 September 2005).
- Total assets up MXN32.5 billion, or 12.9 per cent, to MXN284.3 billion
at 30 September 2006 (MXN251.8 billion at 30 September 2005).
HSBC Mexico S.A. (the bank) is Grupo Financiero HSBC, S.A. de C.V.'s (the Group)
primary subsidiary, and is subject to supervision by the Mexican Banking and
Securities Commission. The bank is required to file periodic financial
information for the year on a quarterly basis (in this case for the quarter
ending 30 September 2006) 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 an actual basis, indexed to constant MXN as
at 30 September 2006.
On 8 August 2006, HSBC Panama was sold by Grupo Financiero HSBC, S.A de C.V to
HSBC Asia Holdings BV; therefore, Group results include HSBC Panama up until
this date.
Grupo Financiero HSBC, S.A. de C.V. is a 99.74 per cent directly owned
subsidiary of HSBC Holdings plc (HSBC).
Comment by Sandy Flockhart, President and Group Managing Director of Latin
America and the Caribbean
"Grupo Financiero HSBC reported good results for the nine months ended
30 September 2006, with robust growth in revenues and net income driven by
strong performance in the bank and in the insurance and pension funds
management (Afore) subsidiaries. Total revenue was higher across all of our
customer segments despite a decreasing interest rate environment and a highly
competitive market. The growth in revenues for the first nine months of the
year of 17.2 per cent surpassed the 9.5 per cent growth in expenses, which is
in line with continued investment in our business.
"Since 2003 and through 30 September 2006, our consumer lending has increased
230 per cent through acquisition and organic growth and our business lending has
also increased by 182 per cent. During the same period, spreads have been
reduced by 777 and 399 basis points respectively due to competitive pressures.
This is a strong indication that there is greater competition in the Mexican
market, which has been beneficial to our customers and the economy as a whole.
"I am proud to announce that one of the main business magazines in Mexico,
Expansion, named HSBC The Mexican Bank of the Year in 2006. This reflects HSBC's
positive results, our solid position as a bank for Mexico's retail and business
customers, and reaffirms our commitment to be the leading financial services
institution in Mexico.
"Furthermore, HSBC Mexico was awarded fourth place overall in the second annual
ranking of the most ethical and sustainable banks of Latin America as published
by Latin Finance magazine. This represented an improvement for HSBC Mexico from
fourteenth place last year to fourth place this year. HSBC Mexico also had the
highest overall score of all Mexican banks mentioned. In terms of individual
categories, for Latin America, HSBC Mexico ranked first in ethics, third in
transparency and fourth in social responsibility.
"We look forward to a strong finish to the year as we continue to leverage our
business and product opportunities and enhance our service standards for all our
customers."
Overview
For the nine months ended at 30 September 2006, Grupo Financiero HSBC's net
income of MXN4,327 million was MXN644 million, 17.5 per cent, higher than the
same period in 2005. These results were largely due to strong performances in
the bank and insurance subsidiaries.
Despite the challenging interest rate environment, net interest income
(excluding the monetary position) was up MXN1,599 million to MXN13,191 million,
a 13.8 per cent increase compared to same period in 2005. This increase reflects
a solid performance in loans, concentrated in higher-yielding consumer lending,
small and medium-sized business products and robust growth in low-cost customer
deposits.
Fees and commissions performed well, increasing by 16.5 per cent versus the same
period in 2005, reaching MXN6,576 million for the nine months ended 30 September
2006. These results were mainly driven by increased contributions from credit
cards, membership programmes, mortgages, commercial lending, mutual funds, ATM
fees as well as payments and cash management. Trading income was up 63.1 per
cent to MXN1,541 million, over the same period the previous year. These strong
results reflected the benefits of the Bank's successful strategic positioning
and higher customer volumes.
Administrative expenses grew 9.5 per cent compared to the same period in 2005,
reaching MXN13,072 million for the nine months ended 30 September 2006. The
increase reflects continued investment in growing the business, training and
developing our employees and the build-out of our branch and ATM infrastructure.
Loan impairment charges increased to MXN2,419 million for the first nine months
of 2006, in line with targeted increases in consumer lending, particularly in
credit cards and mortgages. The ratio of impaired loans to total loans improved
to 2.6 per cent from 2.8 per cent for the first nine months of 2005. The reserve
coverage on impaired loans continues to be strong at 153 per cent. The bank's
capital adequacy ratio remains solid at 13.9 per cent.
By customer segment
During the third quarter of 2006, Personal Financial Services (PFS) saw
continued growth in credit cards, mortgage lending and transaction-based fee
income. Strong performance was driven by the launch of an innovative marketing
campaign, Tu Cuenta Episodio IV, featuring a five per cent credit card cashback
promotion. The campaign provided additional momentum to the continued success of
'Tu Cuenta', the first integrated financial services product of its kind offered
locally, as it helped increase the credit card business and drive growth in low
cost deposits.
Commercial Banking (CMB) enjoyed strong performance across all lines of
business, largely as a result of successful restructuring and improved
segmentation to better serve its client base. CMB benefited from volume
expansion in the higher-yielding small- and medium-sized businesses (SME) and
increased fees and commissions driven by payments and cash management
transactions and Estimulo, our combined loan and overdraft product. During the
third quarter, Estimulo Empresarial was launched for upper-end SMEs involving 11
different services, including a potential credit of up to MXN10 million. More
than 60 new clients have been approved for the product, generating some MXN230
million in new loans.
Corporate, Investment Banking and Markets (CIBM) continued to increase
profitability while strengthening its market position in part from HSBC's
extensive international network for multinational companies. Payments and cash
management and the trust businesses generated strong results in the third
quarter. The Global Markets business generated higher revenues in money market
trading and derivatives portfolio due to successful yield curve positioning and
an increase in both interbank and customer-driven activity.
About HSBC
Grupo Financiero HSBC, S.A. de C.V. is Mexico's fourth largest banking and
financial services institution with 1,400 branches, 5,350 ATMs, 6.5 million
customers and more than 23,000 employees. For more information, consult our
website at www.hsbc.com.mx.
Grupo Financiero HSBC, S.A. de C.V. is a 99.74 per cent directly owned
subsidiary of HSBC Holdings plc. Headquartered in London, UK, the HSBC Group
serves over 125 million customers worldwide through 9,500 offices in 76
countries and territories in Europe, the Asia-Pacific region, the Americas, the
Middle East and Africa. With assets of US$1,738 billion at 30 June 2006, HSBC is
one of the world's largest banking and financial services organisations.
Listings on the London, Hong Kong, New York, Paris and Bermuda stock exchanges,
with shares in HSBC Holdings plc held by around 200,000 shareholders in some 100
countries and territories. HSBC is marketed worldwide as 'the world's local
bank'.
Consolidated Balance Sheet
GROUP BANK
Figures in MXN millions 30Sep06 30Sep05 30Sep06 30Sep05
Assets
Cash and deposits in banks 54,373 50,248 54,372 48,045
Investment in securities 49,787 51,108 49,219 49,218
Trading securities 11,889 4,945 11,322 4,252
Available for sale securities 33,973 42,080 33,973 40,884
Held to maturity securities 3,925 4,083 3,924 4,082
Securities and derivative operations 779 272 774 258
Repurchase agreements 137 95 133 81
Derivative transactions 642 177 641 177
Performing loans
Commercial loans 51,437 45,786 51,437 40,448
Loans to financial intermediaries 5,227 5,308 5,227 5,215
Consumer loans 33,486 20,423 33,486 18,656
Mortgage 19,232 19,347 9,232 14,489
Loans to government entities 37,477 37,722 37,477 37,722
Loans to Fobaproa or IPAB - 968 - 968
Total performing loans 146,859 129,554 146,859 117,498
Impaired loans
Commercial loans 1,347 1,793 1,347 1,746
Consumer loans 1,459 698 1,459 688
Mortgage 1,073 1,160 1,073 1,094
Immediate collection, remittances
and other 23 32 23 32
Total impaired loans 3,902 3,683 3,902 3,560
Gross loans and advances to customers 150,761 133,237 150,761 121,058
Allowance for loan losses (5,984) (6,274) (5,984) (6,119)
Net loans and advances to customers 144,777 126,963 144,777 114,939
Other accounts receivable 22,622 9,931 22,487 8,965
Foreclosed assets 55 456 55 412
Property, furniture and equipment, net 5,648 5,226 5,641 4,998
Long-term investments in equity
securities 2,854 2,112 173 179
Deferred taxes 176 1,307 140 1,180
Goodwill 2,599 3,254 - -
Other assets, deferred charges
and intangibles 626 949 600 732
Total assets 284,296 251,826 278,238 228,926
BANK GROUP
Liabilities 30Sep06 30Sep05 30Sep06 30Sep05
Deposits 201,300 198,189 202,907 185,945
Demand deposits 116,263 110,479 117,870 105,922
Time deposits 80,777 87,710 80,777 80,023
Bonds 4,260 - 4,260 -
Bank deposits and other 10,036 7,199 10,036 7,112
liabilities
Short-term 7,953 4,994 7,953 4,907
Long-term 2,083 2,205 2,083 2,205
Settlement accounts - - - -
Securities and
derivative transactions 7,081 3,045 7,077 3,030
Repurchase agreements 29 90 25 75
Loans with collateral 7,052 2,955 7,052 2,955
Other accounts payable 33,263 15,699 33,061 14,285
Income tax and employee
profit sharing payable 1,309 402 1,277 325
Sundry creditors and
others accounts payable 31,954 15,297 31,784 13,960
Subordinated debentures
outstanding 2,203 2,676 2,203 2,284
Deferred credits 9 16 9 3
Total liabilities 253,892 226,824 255,293 212,659
Equity
Paid in capital 20,300 20,300 12,798 10,549
Capital stock 7,764 7,764 3,857 3,576
Additional paid in capital 12,536 12,536 8,941 6,973
Other reserves 10,102 4,699 10,146 5,715
Capital reserves 828 648 8,980 4,686
Retained earnings 12,650 7,811 - -
Deficit from the mark to
market of available for
sale securities - - 68 235
Result from translation
of foreign operations - (4) - 12
Cumulative effect of
restatement (3,771) (3,771) (3,438) (3,383)
Gains on non-monetary
asset valuation
Valuation of fixed assets - - 1,273 1,273
Valuation of permanent
investments (3,932) (3,668) (146) (146)
Net income 4,327 3,683 3,409 3,038
Minority interest in capital 2 3 1 3
Total equity 30,404 25,002 22,945 16,267
Total liabilities and equity 284,296 251,826 278,238 228,926
GROUP
30Sep06 30Sep05
Memorandum Accounts
Transactions on behalf of
third parties 103,384 86,322
Customer current accounts 24 (3)
Customer banks 5 -
Settlement of customer
securities and documents 19 (3)
Customer securities 82,407 66,639
Customer securities in custody 82,401 65,202
Pledged customers securities
and documents 6 1,437
Transactions on behalf of
customers 2,302 2,629
Customer repurchase
transactions 2,302 2,629
Other transactions on behalf
of customers 18,651 17,057
Investment on behalf of
customers, net 18,651 17,057
Other memorandums accounts 322,310 458,981
Investment of the SAR funds 3,540 3,337
Integrated loan portfolio 156,436 124,461
Other memorandum accounts 162,334 331,183
Transactions for the Group's
own accounts 688,264 405,024
Accounts for the Group's
own registry 688,156 405,018
Guarantees granted 51 60
Irrevocable lines of credit
granted 5,623 3,290
Goods in trust or mandate 78,211 68,391
Goods in custody or under
administration 82,668 63,495
Amounts committed in transactions
with Fobaproa 155 481
Amounts contracted in
derivative operations 517,396 259,897
Securities in custody 3,937 4,165
Other contingent obligations 115 5,239
Repurchase/resale agreements
Securities receivable under
repos 42,010 44,825
(less) Repurchase agreements 41,899 44,813
111 12
Reverse repurchase agreements 2,302 14,537
(less) Securities deliverable
under repos 2,305 14,543
(3) (6)
BANK
30Sep06 30Sep05
Memorandum Accounts
Guarantees granted 51 60
Other contingent obligations 115 5,239
Irrevocable lines of credit granted 5,623 3,290
Goods in trust or mandate 78,211 68,391
Goods in custody or under administration 82,668 63,495
Third party investment banking
operations, net 18,651 17,057
Amounts committed in transactions
with Fobaproa 155 481
Amounts contracted in derivative
operations 517,396 259,897
Investments of retirement savings
system funds 3,540 3,337
Integrated loan portfolio 156,436 124,461
Other control accounts 162,333 331,182
1,025,179 876,890
Securities receivable under repos 39,705 42,206
(less) Repurchase agreements (39,597) (42,184)
108 22
Reverse repurchase agreements - 11,907
(less) Securities deliverable
under repos - (11,924)
- (17)
Consolidated Income Statement
GROUP BANK
Figures in MXN
millions 30Sept06 30Sept05 30Sept06 30Sept05
Interest income 20,388 19,897 19,602 19,171
Interest expense (-) (7,197) (8,305) (6,921) (8,021)
Monetary position
(margin), net (473) (150) (440) (112)
Net interest income 12,718 11,442 12,241 11,038
Loan impairment
charges (-) (2,419) (1,121) (2,389) (1,117)
Risk adjusted net
interest income 10,299 10,321 9,852 9,921
Fees and commissions
receivable 7,365 6,323 6,609 5,626
Fees payable (789) (678) (761) (647)
Trading income 1,541 945 1,536 937
Total operating income 18,416 16,911 17,236 15,837
Administrative and
personnel expenses (-) (13,072) (11,935) (12,252) (11,057)
Net operating income 5,344 4,976 4,984 4,780
Other income 1,540 1,078 1,435 1,054
Other expenses (-) (833) (777) (829) (768)
Net income before taxes 6,051 5,277 5,590 5,066
Income tax and
employee profit (1,595) (1,186) (1,502) (1,102)
sharing tax
Deferred income tax (704) (860) (677) (860)
Net income before
subsidiaries 3,752 3,231 3,411 3,104
Undistributed income
from subsidiaries 575 531 (2) 13
Income from ongoing
operations 4,327 3,762 3,409 3,117
Discontinued and
extraordinary
operations,and changes
in accountable
policies, net - (79) - (79)
Net income 4,327 3,683 3,409 3,038
Statement of Changes in Shareholder's Equity
GROUP
Figures in millions of pesos
Deficit in
Result from restatement
foreign of stock
Capital Statutory Retained currency holders' Net Minority Total
contributed reserves earnings transactions equity income interest equity
Balances as of
31Dec05 20,300 648 7,812 (7) (7,485) 5,093 2 26,363
Movements inherent to
the shareholders
decision
Capitalisation of
retained earnings - - 5,093 - - (5,093) - -
Other movements - 180 (255) - - - - (75)
Total - 180 4,838 - - (5,093) - (75)
Movements for the
recognition of the
comprehensive income
Net income - - - - - 4,327 - 4,327
Result from foreign
currency transactions - - - 7 - - - 7
Cumulative effect of
restatement - - - - 1 - - 1
Gains on non-monetary
asset valuation - - - - (219) - - (219)
Total - - - 7 (218) 4,327 - 4,116
Balances as of
30Sep06 20,300 828 2,650 - (7,703) 4,327 2 30,404
BANK
Figures in millions of pesos
Unrealised
loss from Result Deficit in
valuation of from restatement
available-for foreign of stock-
Capital Statutory Retained sale currency holders' Net Minority Total
contributed reserves earnings securities transactions equity income interest equity
Balances as of
31Dec05 12,516 4,583 - 269 11 (2,255) 4,199 1 19,324
Movements inherent
to the shareholders
decision
Transfer of result
of prior years - - 4,199 - - - (4,199) - -
Other movements - 4,199 (4,199) - - - - - -
Total - 4,199 - - - - (4,199) - -
Movements for the
recognition of the
comprehensive income
Net income - - - - - - 3,409 - 3,409
Unrealised loss from
valuation of
available for
sale securties - - - (207) - - - - (207)
Cumulative effect
of restatement 282 198 - 6 - (51) - - 435
Others - - - - (11) (5) - - (16)
Total 282 198 - (201) (11) (56) 3,409 - 3,621
Balances as of
30Sep06 12,798 8,980 - 68 - (2,311) 3,409 1 22,945
Consolidated Statement of Changes in Financial Position
GROUP
Figures in MXN millions 30Sep06 30Sep05
Operating activities
Net income 4,327 3,683
Items included in operations
not requiring (providing) funds:
Profit from mark-to-market valuations (1,541) (885)
Allowances for loan losses 2,419 1,121
Depreciation and amortisation 641 630
Deferred taxes 704 860
Undistributed income
from subsidiaries, net (575) (531)
Total operating items not requiring funds 1,648 1,195
Changes in items related to operations:
Decrease in deposits: (15,795) 8,839
Increase in loan portfolio (10,894) (10,534)
Decrease/(increase) in securities
and derivative transactions, net 9,996 (1,608)
Decrease in financial instruments 2,280 2,844
Other accounts receivable 2,726 340
Funds provided by operating activities (11,687) (119)
Financing activities:
Subordinated debentures outstanding (434) (59)
Increase/(decrease) in bank and other loans 2,916 (2,252)
Funds used or provided in financing activities 2,482 (2,311)
Investing activities:
Increase in property, furniture and equipment, net (239) (556)
Increase in deferred charges or credits, net 1,314 201
Other investment activities (8) 3
Funds used in investing activities 1,067 (352)
(Decrease)/increase in cash and equivalents (2,163) 2,096
Cash and equivalents at beginning of period 56,536 48,152
Cash and equivalents at end of period 54,373 50,248
BANK
Figures in MXN millions 30Sep06 30Sep05
Operating activities
Net income 3,409 3,038
Items included in operations not
requiring (providing) funds:
Profit from mark to market valuations (338) (76)
Allowance for loan losses 2,389 1,117
Depreciation and amortisation 618 606
Deferred taxes 677 860
Undistributed income from subsidiaries, net 2 (8)
Value loss estimation for foreclosed assets 229 -
3,577 2,499
Changes in operating accounts:
Decrease in retail deposit and money desk 1,917 7,626
Increase/(decrease) in bank deposits and
other liabilities 2,985 (2,340)
Increase in loan portfolio (22,679) (7,480)
Decrease in financial instruments 9,965 545
Decrease in other receivable and payable
accounts, net 4,070 296
Funds provided by operations (3,742) (1,353)
Financing activities:
Subordinated debentures outstanding (65) (611)
Funds used or provided by financing activities (65) (611)
Investing activities:
Increase in property, furniture and equipment
and long-term investments (880) (1,220)
(Increase)/decrease in deferred credits (185) 60
(Increase) in loans to employees 78 -
Funds used in investing activities (987) (1,160)
Increase/(decrease) in cash and equivalents 2,192 2,413
Cash and equivalents at beginning of period 52,180 45,632
Cash and equivalents at end of period 54,372 48,045
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: 27 October, 2006