hsba201408046k4.htm
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 August
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- ..............).
 
 


 
 
4 August 2014
 
 
 
HSBC BANK CANADA
SECOND QUARTER 2014 RESULTS
 
 
 
·    Profit before income tax expense for the quarter ended 30 June 2014 was C$242m, an increase of 33.0% compared with the same period in 2013. Profit before income tax expense was C$475m for the half year ended 30 June 2014, an       increase of 5.3% compared with the same period in 2013. 
 
 
·    Profit attributable to the common shareholder was C$172m for the quarter ended 30 June 2014, an increase of 52.2% compared with the same period in 2013. Profit attributable to the common shareholder was C$332m for the half       year ended 30 June 2014, an increase of 16.9% compared with the same period in 2013.
 
 
·    Return on average common equity was 15.6% for the quarter ended 30 June 2014 and 15.3% for the half year ended 30 June 2014 compared with 10.6% and 13.4% respectively for the same periods in 2013.
 
 
·    The cost efficiency ratio was 51.1% for the quarter ended 30 June 2014 and 51.6% for the half year ended 30 June 2014 compared with 50.1% and 47.4% respectively for the same periods in 2013.
 
 
·    Total assets were C$83.1bn at 30 June 2014 compared with C$84.3bn at 31 December 2013.
 
 
·    Common equity tier 1 capital ratio was 11.0%, tier 1 ratio 12.4% and total capital ratio 14.0% at 30 June 2014 compared with 10.8%, 13.6% and 15.5% respectively at 30 June 2013.
 
The abbreviations "C$m" and "C$bn" represent millions and billions of Canadian dollars, respectively.
 
 
Financial Commentary
 
Overview
 
HSBC Bank Canada reported a profit before income tax expense of C$242m for the second quarter of 2014, an increase of C$60m, or 33%, compared with the second quarter of 2013 and an increase of C$9m or 4%, compared with the first quarter of 2014. Profit before income tax expense for the first half of 2014 was C$475m, an increase of C$24m, or 5%, compared with the first half of 2013.
 
The increase in profit before income tax expense compared with the same periods last year was primarily due to increased fees from credit and wealth products, lower loan impairment charges as a result of lower specific allowances for commercial customers and an increase in other income arising from a reduction in the fair value of investment property held for sale recorded in the second quarter of 2013. This was partially offset by lower net interest income from the continued planned run-off of the consumer finance portfolio, lower net trading income from foreign exchange and increased operating expenses as we invest in HSBC's global standards, risk and compliance activities. 
 
Commenting on the results, Paulo Maia, President and Chief Executive Officer of HSBC Bank Canada, said:
 
"The changes we have been making over the last several years have begun to show in our financial results.  There is good momentum in all our business lines with increased commercial lending, residential mortgages and customer activity in Global Banking and Markets, and significant growth in funds under management.  However, spread compression and the accelerated planned run-off of the consumer finance portfolio have both negatively impacted revenue. Consistent with the HSBC Group's global strategy, we continue to make strides to grow our business and make it more efficient while implementing global standards within Canada."
 
Analysis of Consolidated Financial Results for the Second Quarter of 2014
 
Net interest income for the second quarter of 2014 was C$307m, a decrease of C$33m, or 10%, compared with the second quarter of 2013 and unchanged from the first quarter of 2014. Net interest income for the first half of 2014 was C$614m, a decrease of C$62m, or 9%, compared with the first half of 2013. Net interest income decreased from the comparative periods in 2013, primarily due to declining loan balances from the continued planned run-off of the consumer finance portfolio. However, compared to the first quarter of 2014, net interest income was unchanged. This resulted from increased residential mortgage lending offset by declining balances from the planned run-off of the consumer finance portfolio noted above.
 
Net fee income for the second quarter of 2014 was C$160m, an increase of C$6m, or 4%, compared with the second quarter of 2013 and an increase of C$5m, or 3%, compared with the first quarter of 2014. Net fee income for the first half of 2014 was C$315m, an increase of C$15m, or 5%, compared with the first half of 2013.The increase in net fee income from the same periods last year and the prior quarter was primarily due to higher fees from credit products such as standby lines of credit and banker's acceptances, as well as increased fees from wealth related products and from higher funds under management.
 
Net trading income for the second quarter of 2014 was C$33m, a decrease of C$12m, or 27%, compared with the second quarter of 2013, and a decrease of C$6m, or 15%, compared with the first quarter of 2014. Net trading income for the first half of 2014 was C$72m, a decrease of C$30m, or 29%, compared with the first half of 2013.The decrease in net trading income compared with the same periods last year was mainly due to lower spreads on foreign exchange products and the impact of debit valuation adjustments on derivative contracts due to the narrowing of our own credit spreads. The decrease in the second quarter of 2014 compared to the first quarter resulted primarily from the impact of the debit valuation adjustment on derivatives.
 
Net expense from financial instruments designated at fair value for the second quarter and first half of 2014 was C$1m and C$3m respectively, with no material change from comparative periods in 2013.
 
Gains less losses from financial investments for the second quarter of 2014 were C$27m, an increase of C$12m, or 80%, compared with the second quarter of 2013 and an increase of C$8m, or 42%, compared with the first quarter of 2014. Gains less losses from financial investments for the first half of 2014 was C$46m, a decrease of C$4m, or 8%, compared with the first half of 2013. The bank realizes gains and losses from financial investments from disposals of available-for-sale financial investments, mainly driven by balance sheet management activities. The variances from comparative periods are primarily as a result of the bank's continuous balance sheet management activities.
 
Other operating income for the second quarter of 2014 was C$13m, an increase of C$36m, or 156%, higher compared with the second quarter of 2013, and with no material change compared with the first quarter of 2014. Other operating income for the first half of 2014 was C$27m, an increase of C$37m, or 370%, compared with the first half of 2013. The increase in other operating income compared with the comparative periods in 2013 reflects the reduction in the fair value of an investment property held for sale that was recorded in the second quarter of 2013.
 
Loan impairment charges and other credit risk provisions for the second quarter of 2014 were C$27m, a decrease of C$57m, or 68%, compared with the second quarter of 2013 and with no material change from the first quarter of 2014. Loan impairment charges and other credit risk provisions for the first half of 2014 were C$53m, a decrease of C$87m, or 62%, compared with the first half of 2013. The decreases in loan impairment charges and other credit risk provisions compared with the same periods in the prior year is primarily as a result of lower specific allowances for commercial customers and the impact of reduced impairment charges resulting from the continued run-off of the consumer finance portfolio.
 
Total operating expenses for the second quarter of 2014 were C$276m, an increase of C$10m, or 4%, compared with the second quarter of 2013 and unchanged from the first quarter of 2014. Total operating expenses for the first half of 2014 was C$552m, an increase of C$23m, or 4%, compared with the first half of 2013. The increase in total operating expenses compared with the same periods in the prior year is primarily due to the continued investment in HSBC's global standards, risk and compliance activities. 
 
Share of profit in associates for the second quarter of 2014 was C$6m, C$5m higher than the second quarter of 2013, and C$3m higher than the first quarter of 2014. Share of profit in associates for the first half of 2014 was C$9m, C$4m higher than the first half of 2014. The increase in share of profits was due to the increase in value in the bank's investment in private equity funds.
 
Income tax expense. The effective tax rate in the second quarter of 2014 was 25.0%, compared with 28.9% in the second quarter of 2013 and 26.5% in the first quarter of 2014. Income tax expense for the second quarter and first half of 2014 includes the effect of an income tax refund, while the comparative periods in 2013 reflect the impact of a tax adjustment relating to prior periods.
 
Movement in Financial Position
 
Total assets at 30 June 2014were C$83.1bn, down C$1.1bn from 31 December 2013. Increases in commercial customer lending and residential mortgages resulted in a C$1.0bn growth in loans and advances to customers as well as C$0.8bn in customers' liability under acceptances. These increases were offset by declines of C$2.0bn in financial investments and C$0.7bn in loans and advances to banks resulting from disposals, maturities and other balance sheet management activities and C$0.2bn in trading positions in government and agency bonds.
 
Total liabilities at 30 June 2014 were C$78.2bn, down C$1.0bn from 31 December 2013. There were increases in acceptances of C$0.8bn driven by customer demand, and in non-trading repurchase agreements of C$0.8bn and deposits by banks of C$0.3bn both resulting from balance sheet management activities. However these were more than offset by decreases in customer accounts of C$1.6bn, primarily as a result of lower commercial account balances, and trading liabilities of C$0.9bn primarily due to lower balances from pending trade settlements and short position securities. In addition, debt securities were C$0.5bn lower at 30 June 2014 resulting from C$1.3bn in maturing issues and C$0.2bn lower in short-term funding compared with 31 December 2013, offset by a C$1.0bn wholesale five year issue in May 2014. 
 
Business Performance in the Second Quarter of 2014
 
Commercial Banking
 
Profit before income tax expense was C$156m for the second quarter of 2014, an increase of C$84m, or 117%, compared with the second quarter of 2013 and C$7m, or 5%, compared with the first quarter of 2014. Profit before income tax expense for the first half of 2014 was C$305m, an increase of C$109m, or 56%, compared with the first half of 2013.
 
The increase in profit before income tax expense compared with the same periods last year was primarily due to an increase in other income arising from a reduction in the fair value of investment property held for sale that was recorded in the second quarter of 2013, lower specific loan impairment charges and gains from financial investments. This was partially offset by higher operating expenses primarily from increased investments in HSBC's global standards, risk and compliance activities, increases in underlying business as well as the impact of the adoption of a revised methodology by HSBC Group for allocating functional support costs to the global lines of business. The increase in profit before income tax expense compared with the first quarter in 2014 resulted primarily from gains from financial investments.
 
Global Banking and Markets
 
Profit before income tax expense was C$64m for the second quarter of 2014, a decrease of C$3m, or 4%, compared with the second quarter of 2013 and a decrease of C$13m or 17% compared with the first quarter of 2014. Profit before income tax expense was C$141m for the first half of 2014, a decrease of C$29m, or 17% compared with the first half of 2013. Gains less losses from financial investments are realized as balance sheet management continues to re-balance the portfolio for risk management purposes in the low interest rate environment. The variances in profit before income tax expense compared with the same periods last year were primarily driven by lower gains on disposal from the re-balancing of the financial investments portfolio. Also contributing to the decrease in profit before income tax expense was lower spreads related to foreign exchange products.
 
Retail Banking and Wealth Management
 
Profit before income tax expense was C$24m for the second quarter of 2014, a decrease of C$19m, or 44%, compared with the second quarter of 2013 and an increase of C$9m, or 60%, compared with the first quarter of 2014. Profit before income tax expense was C$39m for the first half of 2014, a decrease of C$52m, or 57%, compared with the first half of 2013.
 
Profit before income tax expense relating to ongoing business (excluding the run-off consumer finance portfolio) was C$15m, a decrease of C$4m, or 21%, compared with the second quarter of 2013 and an increase of C$6m, or 67%, compared with the first quarter of 2014. Profit before income tax expense relating to ongoing business was C$24m for the first half of 2014, a decrease of C$13m, or 35% compared with the first half of 2013. Profit before income tax expense decreased from the same periods last year primarily due to lower net interest income driven by a decline in personal lending balances and a decline in net interest spread in a competitive low interest rate environment as well as higher costs from increased investments in global standards, risk and compliance activities, offset by a reduction of allocated support costs. Profit before income tax expense for the second quarter of 2014 increased over the first quarter of 2014 mainly due to increases in personal lending, particularly residential mortgages, as well as wealth fees earned. 
 
Profit before income tax expense relating to the run-off consumer finance portfolio for the second quarter of 2014 was C$9m, a decrease of C$15m, or 63%, compared with the second quarter of 2013 and an increase of C$3m, or 50%, compared with the first quarter of 2014. Profit before income tax expense for this business was C$15m for the first half of 2014, a decrease of C$39m, or 72%, compared with the first half of 2013.The decrease in profit before income tax expense relating to the run-off consumer finance portfolio compared to the same periods in 2013 was primarily due to lower interest income from declining loan balances, partially offset by lower collective provisions and lower operating expenses from the right sizing of operations. The increase in profit compared to the first quarter of 2014 was due to reduced loan impairment charges and operating costs.  
 
Other
 
Transactions which do not directly relate to our global lines of business are reported in 'Other'. The main items reported under 'Other' include income and expense from the impact of changes in credit spreads on our own subordinated debentures designated at fair value and income and expense related to information technology services provided to HSBC Group companies on an arm's length basis. Profit before income tax expense for the second quarter of 2014 was a loss of C$2m, compared with a break even for the second quarter of 2013, and a loss of C$8m recorded in the first quarter of 2014. For the half year ended 30 June 2014, there was a loss of C$10m compared to a loss of C$6m in the first half of 2013. The variances from comparative periods are primarily due to the impact of the items noted above.
 
Preferred Shares
 
The bank's $250m Class 1 Preferred Shares - Series E were redeemed for cash at par on 30 June 2014.
 
Dividends
 
During the second quarter of 2014, the bank declared and paid C$80m in dividends on HSBC Bank Canada common shares, a decrease of C$10m from the same quarter in 2013.
 
Regular quarterly dividends of 31.875 cents per share have been declared on HSBC Bank Canada Class 1 Preferred Shares - Series C and 31.25 cents per share on Class 1 Preferred Shares - Series D. Dividends will be paid on 30 September 2014, for shareholders of record on 15 September 2014. 
 
Use of non-IFRS financial measures
 
In measuring our performance, the financial measures that we use include those which have been derived from our reported results. However, these are not presented within the Financial Statements and are not defined under IFRS. These are considered non-IFRS financial measures and are unlikely to be comparable to similar measures presented by other companies. The following non-IFRS financial measures are used throughout this document and their purposes and definitions are discussed below:
 
Financial position at period end
These measures are indicators of the stability of the bank's balance sheet and the degree funds are deployed to fund assets.
 
Ratio of customer advances to customer accounts is calculated by dividing loans and advances to customers by customer accounts using period-end balances.
 
Average total shareholders' equity to average total assets is calculated by dividing average total shareholders' equity (determined using month-end balances during the period) with average total assets (determined using month-end balances during the period).
 
Credit coverage ratios
Credit coverage ratios are useful to management as a measure of the extent of incurred loan impairment charges relative to the bank's performance and size of its customer loan portfolio during the period.
 
Loan impairment charges to total operating income is calculated as loan impairment charges and other credit provisions, as a percentage of total operating income for the period.
 
Loan impairment charges to average gross customer advances is calculated as annualized loan impairment charges and other credit provisions for the period, as a percentage of average gross customer advances (determined using month-end balances during the period).
 
Total impairment allowances to impaired loans at period-end are useful to management to evaluate the coverage of impairment allowances relative to impaired loans using period-end balances.
 
Return ratios
Return ratios are useful for management to evaluate profitability on equity, assets and risk-weighted assets.
 
Return on average common equity is calculated as annualized profit attributable to the common shareholder for the period, divided by average common equity (determined using month-end balances during the period).
 
Post-tax return on average total assets is calculated as annualized profit attributable to the common shareholder for the period, divided by average assets (determined using average month-end balances during the period).
 
Pre-tax return on average risk-weighted assets is calculated as annualized profit attributable to the common shareholder for the period, divided by average risk-weighted assets (determined using quarter-end balances during the period).
 
Efficiency ratios
Efficiency ratios are measures of the bank's efficiency in managing its operating expense to generate revenue.
 
Cost efficiency ratio is calculated as total operating expenses for the period as a percentage of total operating income for the period.
 
Adjusted cost efficiency ratio is calculated similar to the cost efficiency ratio; however, total operating income for the period excludes gains and losses from financial instruments designated at fair value, as the movement in value of the bank's own subordinated debt issues are primarily driven by changes in market rates and are not under the control of management.
 
Revenue mix ratio
This measure demonstrates the contribution of each of the primary revenue streams to total operating income.
 
Net interest income, net fee income and net trading income to total operating income is calculated as net interest income, net fee income and net trading income for the period divided by total operating income for the period.
About HSBC Bank Canada
 
HSBC Bank Canada, a subsidiary of HSBC Holdings plc, is the leading international bank in Canada. The HSBC Group serves customers worldwide from over 6,200 offices in 74 countries and territories in Europe, Asia, North and Latin America, and the Middle East and North Africa. With assets of US$2,754bn at 30 June 2014, HSBC is one of the world's largest banking and financial services organizations.
 
 
Media enquiries to:
Kimberly Flood
416-868-8001
 
Fabrice de Dongo
416-868-8282
 
Copies of HSBC Bank Canada's second quarter 2014 interim report will be sent to shareholders in August 2014.
 

Summary
 
 
Quarter ended
  
Half-year ended
 
30 June
2014
  
30 June
2013
  
31 March
2014
  
30 June 2014
  
30 June 2013
Financial performance for the period (C$m)
                  
Total operating income
539
  
531
  
532
  
1,071
  
1,115
Profit before income tax expense
242
  
182
  
233
  
475
  
451
Profit attributable to the common shareholder
172
  
113
  
160
  
332
  
284
Basic earnings per common share (C$)
0.35
  
0.23
  
0.32
  
0.67
  
0.57
                   
Financial position at period-end (C$m)
                  
Loan and advances to customers1
41,549
  
41,156
  
41,208
        
Customer accounts1
49,329
  
47,795
  
49,456
        
Ratio of customer advances to customer accounts2
84.2
  
86.1
  
83.3
        
Shareholders' equity
4,791
  
5,074
  
4,969
        
Average total shareholders' equity to average total assets2
5.8
  
6.0
  
5.8
        
                   
Capital measures
                  
Common equity tier 1 capital ratio (%)
11.0
  
10.8
  
10.8
        
Tier 1 ratio (%)
12.4
  
13.6
  
12.9
        
Total capital ratio (%)
14.0
  
15.5
  
14.5
        
Assets-to-capital multiple
16.0
  
14.5
  
15.3
        
Risk-weighted assets (C$m)
38,629
  
36,467
  
38,466
        
                   
Performance ratios (%)2
                  
Credit coverage ratios (%)
                  
Loan impairment charges to total operating income
5.0
  
15.8
  
4.9
  
4.9
  
12.6
Loan impairment charges to average gross customer advances3
0.3
  
0.7
  
0.3
  
0.4
  
0.7
Total impairment allowances to impaired loans at period-end3
67.7
  
58.4
  
62.0
  
67.7
  
59.5
                   
Return ratios (%)
                  
Return on average common shareholder's equity
15.6
  
10.6
  
15.0
  
15.3
  
13.4
Post-tax return on average total assets
0.81
  
0.53
  
0.76
  
0.79
  
0.67
Pre-tax return on average risk-weighted assets3
2.5
  
1.3
  
2.5
  
2.5
  
1.6
                   
Efficiency and revenue mix ratios (%)
                  
Cost efficiency ratio
51.1
  
50.1
  
51.9
  
51.6
  
47.4
Adjusted cost efficiency ratio
51.0
  
50.1
  
51.7
  
51.4
  
47.3
Net interest income to total operating income
57.0
  
64.0
  
57.7
  
57.3
  
60.6
Net fee income to total operating income
29.7
  
29.0
  
29.1
  
29.4
  
26.9
Net trading income to total operating income
6.2
  
8.5
  
7.3
  
6.8
  
9.1
 
 
 
1      From 1 January 2014, non-trading reverse repurchase and repurchase agreements are presented as separate lines in the balance sheet. Previously, non-trading reverse repurchase agreements were included within 'Loans         and advances to banks' and 'Loans and advances to customers' and non-trading repurchase agreements were included within 'Deposits by banks' and 'Customer accounts'.  Comparative data have been restated         accordingly. More information relating to the change in presentation will be made available in our second quarter 2014 interim report.
 
 
 
2      Refer to the 'Use of non-IFRS financial measures' section of this document for a discussion of non-IFRS financial measures.
 
 
 
3      The measure has been aligned with that in use by the HSBC Group and comparative information has been restated. Refer to the 'Use of non-IFRS financial measures' section of this document for a description of the method in         use to calculate the measure.
 
 
 
Consolidated Income Statement (Unaudited)
 
Figures in C$m
Quarter ended
  
Half-year ended
(except per share amounts)
30 June
2014
  
30 June
2013
  
31 March
2014
  
30 June
2014
  
30 June
2013
                   
Interest income
484
  
534
  
483
  
967
  
1,051
Interest expense
(177)
  
(194)
  
(176)
  
(353)
  
(375)
Net interest income
307
  
340
  
307
  
614
  
676
                   
Fee income
183
  
181
  
172
  
355
  
347
Fee expense
(23)
  
(27)
  
(17)
  
(40)
  
(47)
Net fee income
160
  
154
  
155
  
315
  
300
                   
Trading income excluding net interest income
32
  
33
  
36
  
68
  
80
Net interest income on trading activities
1
  
12
  
3
  
4
  
22
Net trading income
33
  
45
  
39
  
72
  
102
                   
Net expense from financial instruments designated at fair value
(1)
  
-
  
(2)
  
(3)
  
(3)
Gains less losses from financial investments
27
  
15
  
19
  
46
  
50
Other operating income / (loss)
13
  
(23)
  
14
  
27
  
(10)
Total operating income
539
  
531
  
532
  
1,071
  
1,115
Loan impairment charges and other credit risk provisions
(27)
  
(84)
  
(26)
  
(53)
  
(140)
Net operating income
512
  
447
  
506
  
1,018
  
975
                   
Employee compensation and benefits
(152)
  
(158)
  
(159)
  
(311)
  
(314)
General and administrative expenses
(111)
  
(96)
  
(104)
  
(215)
  
(191)
Depreciation of property, plant and equipment
(9)
  
(8)
  
(8)
  
(17)
  
(17)
Amortization and impairment of intangible assets
(4)
  
(4)
  
(5)
  
(9)
  
(7)
Total operating expenses
(276)
  
(266)
  
(276)
  
(552)
  
(529)
Operating profit
236
  
181
  
230
  
466
  
446
Share of profit in associates
6
  
1
  
3
  
9
  
5
Profit before income tax expense
242
  
182
  
233
  
475
  
451
Income tax expense
(60)
  
(52)
  
(61)
  
(121)
  
(132)
Profit for the period
182
  
130
  
172
  
354
  
319
                   
Profit attributable to the common shareholder
172
  
113
  
160
  
332
  
284
Profit attributable to preferred shareholders
8
  
15
  
9
  
17
  
30
                   
Profit attributable to shareholders
180
  
128
  
169
  
349
  
314
Profit attributable to non-controlling interests
2
  
2
  
3
  
5
  
5
                   
Average number of common shares outstanding (000's)
498,668
  
498,668
  
498,668
  
498,668
  
498,668
Basic earnings per common share
0.35
  
0.23
  
0.32
  
0.67
  
0.57
 
 
Consolidated Balance Sheet (Unaudited)
 
Figures in C$m
At 30 June
2014
  
At 30 June
2013
  
At 31 December
2013
           
ASSETS
          
           
Cash and balances at central bank
66
  
66
  
165
Items in the course of collection from other banks
87
  
110
  
107
Trading assets
6,525
  
7,522
  
6,728
Derivatives
2,139
  
2,096
  
2,112
Loans and advances to banks1
438
  
456
  
1,149
Loans and advances to customers1
41,549
  
41,156
  
40,524
Reverse repurchase agreements - non-trading1
6,178
  
6,989
  
6,161
Financial investments
19,774
  
19,841
  
21,814
Other assets
418
  
892
  
332
Prepayments and accrued income
189
  
218
  
206
Customers' liability under acceptances
5,586
  
4,785
  
4,757
Property, plant and equipment
132
  
137
  
137
Goodwill and intangibles assets
65
  
70
  
68
Total assets
83,146
  
84,338
  
84,260
           
LIABILITIES AND EQUITY
          
           
Liabilities
          
Deposits by banks1
912
  
728
  
635
Customer accounts1
49,329
  
47,795
  
50,926
Repurchase agreements - non-trading1
2,246
  
2,562
  
1,487
Items in the course of transmission to other banks
219
  
149
  
53
Trading liabilities
3,492
  
4,241
  
4,396
Financial liabilities designated at fair value
429
  
428
  
428
Derivatives
1,880
  
1,737
  
1,746
Debt securities in issue
10,829
  
13,240
  
11,348
Other liabilities
2,202
  
2,258
  
2,338
Acceptances
5,586
  
4,785
  
4,757
Accruals and deferred income
499
  
487
  
551
Retirement benefit liabilities
293
  
295
  
271
Subordinated liabilities
239
  
329
  
239
Total liabilities
78,155
  
79,034
  
79,175
           
Equity
          
Common shares
1,225
  
1,225
  
1,225
Preferred shares
350
  
946
  
600
Other reserves
138
  
101
  
134
Retained earnings
3,078
  
2,802
  
2,926
Total shareholders' equity
4,791
  
5,074
  
4,885
Non-controlling interests
200
  
230
  
200
Total equity
4,991
  
5,304
  
5,085
Total equity and liabilities
83,146
  
84,338
  
84,260
 
 
1      From 1 January 2014, non-trading reverse repurchase and repurchase agreements are presented as separate lines in the balance sheet. Previously, non-trading reverse repurchase agreements were included within 'Loans        and advances to banks' and 'Loans and advances to customers' and non-trading repurchase agreements were included within 'Deposits by banks' and 'Customer accounts'.  Comparative data have been restated       accordingly. More information relating to the change in presentation will be made available in our second quarter 2014 interim report.
 
 
Condensed Consolidated Statement of Cash Flows (Unaudited)
 
 
 
Figures in C$m
Quarter ended
  
Half-year ended
 
30 June
2014
  
30 June
2013
  
31 March
2014
  
30 June
2014
  
30 June
2013
                   
Cash flows generated from/(used in):
                  
- operating activities
(15)
  
1,786
  
(1,841)
  
(1,856)
  
2,673
- investing activities
(212)
  
33
  
2,245
  
2,033
  
459
- financing activities
(340)
  
(107)
  
(92)
  
(432)
  
(215)
Net increase/(decrease) in cash and cash equivalents
(567)
  
1,712
  
312
  
(255)
  
2,917
Cash and cash equivalents, beginning of period
2,208
  
2,958
  
1,896
  
1,896
  
1,753
Cash and cash equivalents, end of period
1,641
  
4,670
  
2,208
  
1,641
  
4,670
                   
Represented by:
                  
- Cash and balances at central bank
66
  
66
  
71
  
66
  
66
- Items in the course of transmission to other banks, net
(132)
  
(39)
  
(20)
  
(132)
  
(39)
- Loans and advances to banks of one month or less
438
  
456
  
1,188
  
438
  
456
- Reverse repurchase agreements with banks of one month or less
992
  
3,200
  
810
  
992
  
3,200
- Treasury bills and certificates of deposits of three months or less
277
  
987
  
159
  
277
  
987
Cash and cash equivalents, end of period
1,641
  
4,670
  
2,208
  
1,641
  
4,670
                     
 
 
 
 
Global Business Segmentation (Unaudited)
 
 
Quarter ended
  
Half-year ended
Figures in C$m
30 June
2014
  
30 June
2013
  
31 March
2014
  
30 June
2014
  
30 June
2013
                   
Commercial Banking
                  
Net interest income
165
  
172
  
168
  
333
  
333
Net fee income
81
  
80
  
79
  
160
  
157
Net trading income
7
  
7
  
6
  
13
  
15
Gains less losses from financial investments
16
  
-
  
-
  
16
  
-
Other operating income / (loss)
3
  
(35)
  
6
  
9
  
(32)
Total operating income
272
  
224
  
259
  
531
  
473
Loan impairment charges and other credit risk provisions
(18)
  
(61)
  
(12)
  
(30)
  
(100)
Net operating income
254
  
163
  
247
  
501
  
373
Total operating expenses
(104)
  
(92)
  
(101)
  
(205)
  
(182)
Operating profit
150
  
71
  
146
  
296
  
191
Share of profit in associates
6
  
1
  
3
  
9
  
5
Profit before income tax expense
156
  
72
  
149
  
305
  
196
 
 
Global Banking and Markets
                  
Net interest income
46
  
40
  
44
  
90
  
82
Net fee income
22
  
20
  
24
  
46
  
38
Net trading income
15
  
25
  
21
  
36
  
62
Gains less losses from financial investments
11
  
13
  
19
  
30
  
46
Other operating income
1
  
-
  
-
  
1
  
-
Total operating income
95
  
98
  
108
  
203
  
228
Loan impairment charges reversals and other credit risk provisions
(2)
  
(2)
  
(1)
  
(3)
  
-
Net operating income
93
  
96
  
107
  
200
  
228
Total operating expenses
(29)
  
(29)
  
(30)
  
(59)
  
(58)
Profit before income tax expense
64
  
67
  
77
  
141
  
170
 
 
Retail Banking and Wealth Management
                  
Net interest income
104
  
134
  
102
  
206
  
275
Net fee income
57
  
54
  
52
  
109
  
105
Net trading income
3
  
7
  
5
  
8
  
11
Gain less losses from financial investments
-
  
2
  
-
  
-
  
4
Other operating income
2
  
4
  
2
  
4
  
7
Total operating income
166
  
201
  
161
  
327
  
402
Loan impairment charges and other credit risk provisions
(7)
  
(21)
  
(13)
  
(20)
  
(40)
                   
Net operating income
159
  
180
  
148
  
307
  
362
Total operating expenses
(135)
  
(137)
  
(133)
  
(268)
  
(271)
                   
Profit before income tax expense
24
  
43
  
15
  
39
  
91
                   
Ongoing Retail Banking and Wealth Management business
15
  
19
  
9
  
24
  
37
Run-off consumer finance portfolio
9
  
24
  
6
  
15
  
54
 
 
 
Quarter ended
  
Half-year ended
Figures in C$m
30 June
2014
  
30 June
2013
  
31 March
2014
  
30 June
2014
  
30 June
2013
                   
Other
                  
Net interest expense
(8)
  
(6)
  
(7)
  
(15)
  
(14)
Net trading income
8
  
6
  
7
  
15
  
14
Net expense from financial instruments designated at fair value
(1)
  
-
  
(2)
  
(3)
  
(3)
Other operating income
7
  
8
  
6
  
13
  
15
 
Total operating income
6
  
8
  
4
  
10
  
12
Total operating expenses
(8)
  
(8)
  
(12)
  
(20)
  
(18)
Loss before income tax expense
(2)
  
-
  
(8)
  
(10)
  
(6)
 
  
 
 
 
 
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: Ben J S Mathews
 
                                                                                                 Title: Group Company Secretary
                     
                                                                                Date: 04 August 2014