HSBC Holdings plc 2008 Final Results

HSBC Holdings plc 2008 Final Results

Profitable business model

Pre-tax profit for 2008, excluding goodwill impairment, of US$19.9 billion, down 18 per cent. On a reported basis, pre-tax profit was US$9.3 billion, down 62 per cent.
Diversified business model delivers profits in every region except North America and every customer group except Personal Financial Services.
Earnings per ordinary share excluding goodwill impairment down 18 per cent to US$1.36 (2007: US$1.65). On a reported basis, earnings per share was US$0.47, down 72 per cent (2007: US$1.65).
Maintaining our traditional financial strength

Capital generation remains strong. Tier 1 ratio of 8.3 per cent and total capital ratio of 11.4 per cent at 31 December 2008.
Fully underwritten Rights Issue announced to enhance our capital strength.
Subject to shareholder approval on 19 March 2009, Rights Issue will add 150 basis points to our capital ratios, strengthening the core equity tier 1 ratio to 8.5 per cent and the tier 1 ratio to 9.8 per cent, both on a pro forma basis as at 31 December 2008.
Enhances our ability to respond to unforeseen events as well as provide opportunities to grow through targeted acquisitions.
Total dividends in respect of 2008 of US$0.64 including fourth interim dividend of US$0.10, down 29 per cent, around 15 per cent in sterling terms. Total value of dividends for 2008 of US$7.7 billion.
Customer advances to deposits ratio of 84 per cent at 31 December 2008.
Managing our business in a challenging environment

Supporting our customers: grew our lending to personal, commercial and corporate customers by 9 per cent on an underlying basis.
Writing no further consumer finance business in the US through the HFC and Beneficial brands and closing the majority of the network.
Growing in emerging markets:
- Mainland China profit before tax of US$1.6 billion, up 25 per cent excluding 2007 dilution gains;
- India profit before tax of US$666 million, up 26 per cent;
- Middle East profit before tax of US$1.7 billion, up 34 per cent.
Emerging markets acquisitions in banking in Taiwan and Indonesia and in retail brokerage in India.
Difficult outlook for 2009.
Strong performance in January 2009 ahead of expectations, particularly in Global Banking and Markets.

HSBC made a profit before tax of US$9,307 million, a decrease of US$14,905 million, or 62 per cent, compared with 2007.

Net interest income of US$42,563 million was US$4,768 million, or 13 per cent, higher than 2007.

Net operating income before loan impairment charges and other credit risk provisions of US$81,682 million was US$2,689 million, or 3 per cent, higher than 2007.

Total operating expenses (excluding goodwill impairment) of US$38,535 million declined by US$507 million, or 1 per cent, compared with 2007. On an underlying basis, and expressed in terms of constant currency, operating expenses were broadly unchanged.

HSBC’s cost efficiency ratio* was 47.2 per cent compared with 49.4 per cent in 2007.

Loan impairment charges and other credit risk provisions were US$24,937 million in 2008, US$7,695 million higher than 2007.

The tier 1 ratio and total capital ratio for the Group remained strong at 8.3 per cent and 11.4 per cent, respectively, at 31 December 2008.

The Group’s total assets at 31 December 2008 were US$2,527 billion, an increase of US$173 billion, or 7 per cent, since 31 December 2007.

* Excluding goodwill impairment. The cost efficiency ratio including goodwill impairment was 60.1 per cent.

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