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  July

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- ..............).

 

 


30 July 2010

 

GRUPO FINANCIERO HSBC, S.A. DE C.V.

FIRST HALF 2010 FINANCIAL RESULTS - HIGHLIGHTS

 

 

·    Net income for the first half of 2010 was MXN1,047 million, an increase of MXN398 million or 61.3 per cent compared with MXN649 million for the same period in 2009.

 

·    Net income before tax for the first half of 2010 was MXN634 million, an increase of MXN426 million or 204.8 per cent compared with MXN208 million for the same period in
  2009.

 

·    Total operating income for the first half of 2010 was MXN10,419 million, an increase of MXN972 million or 10.3 per cent compared with MXN9,447 million in the same period in
  2009.

 

·    Loan impairment charges for the first half of 2010 were MXN5,291 million, a decrease of MXN3,527 or 40.0 per cent compared with MXN8,818 million for the same period in
      2009.

 

·    Net loans and advances to customers were MXN144.0 billion at 30 June 2010, a decrease of MXN3.1 billion or 2.1 per cent compared with MXN147.1 billion at 30 June 2009.
  Total impaired loans as a percentage of gross loans and advances to customers improved to 4.2 per cent from 6.4 per cent compared with 30 June 2009 and the coverage ratio
  was 158.1 per cent compared with 126.5 per cent at 30 June 2009.

 

·    Deposits were MXN231.4 billion at 30 June 2010, an increase of MXN11.1 billion or 5.0 per cent compared with MXN220.3 billion at 30 June 2009.

 

·    Return on equity was 4.4 per cent for the first half of 2010, compared with 3.6 per cent for the same period in 2009.

 

·    At 30 June 2010, the bank's capital adequacy ratio was 16.6 per cent and the tier 1 capital ratio was 12.9 per cent, compared with 13.4 per cent and 9.7 per cent respectively at
  30 June 2009.

 

HSBC Mexico S.A. (the bank) is Grupo Financiero HSBC, S.A. de C.V.'s (Grupo Financiero HSBC) primary subsidiary company and is subject to supervision by the Mexican Banking and Securities Commission. The bank is required to file financial information on a quarterly basis (in this case for the quarter ended 30 June 2010) 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).



Overview

 

Mexico's GDP growth forecast for 2010 has been revised upwards to 4.4 per cent from 3.6 per cent, following better than expected first quarter GDP growth and improvements in other economic indicators such as the Manufacturing and Non-Manufacturing Purchasing Managers Indexes. These data confirm the improving outlook for the Mexican economy. The Mexican peso appreciated to 12.8 to the US dollar from 13.1 at the end of 2009.

 

Headline and core inflation pressures are expected to be benign for the remainder of 2010.  Monetary tightening is now expected to begin in early 2011 instead of late 2010. Interest rates are expected to rise in the first half of 2011 and are forecast to increase by 100 basis points to 5.5 per cent by the end of the year.

 

During the first half of 2010, Grupo Financiero HSBC maintained its strategy to become the best bank for its clients, shareholders and employees. The bank  consolidated measures introduced in previous years to improve the asset quality of its credit portfolios and lay the foundations for future business growth. Cautious risk management, strong collections and capital strength continue to be key pillars supporting this period's performance. With improving customer service continuing to be a principle objective, as of the end of June, branch opening hours have been standardized, providing convenient service schedules for all our customers. Early indications from customer satisfaction surveys show that this standardization has been well received.

 

In the first half of 2010, Grupo Financiero HSBC's net income was MXN1,047 million, an increase of MXN398 million or 61.3 per cent compared with the same period in 2009. Key factors contributing to the improvement are the reduction in loan impairment charges and higher net income from subsidiaries.  These two factors more than offset the effect of lower revenues when compared with the same period in 2009.

 

Net interest income was MXN10,407 million, a decrease of MXN280 million or 2.6 per cent compared with the same period in 2009. This reduction was mainly due to lower margins on customer deposits as a result of lower interest rates, and lower consumer portfolio volumes, particularly credit cards. This has been partially offset by net interest income generated through available for sale securities positions.

 

Loan impairment charges were MXN5,291 million, a decrease of MXN3,527 million or 40.0 per cent when compared with the same period in 2009.  Lower portfolio volumes, particularly in consumer lending, improved credit quality of originations and enhanced collections practices have played a significant role in bringing about this improvement. The decrease in loan impairment charges was achieved despite MXN448 million of additional reserve requirements resulting from local regulatory changes in the methodology for calculating provisions for consumer loans introduced in the third quarter of 2009.

 

Risk adjusted net interest income was MXN5,116 million, up by MXN3,247 million or 173.7 per cent when compared with MXN1,869 million for the same period in 2009.

 

Net fee income was MXN4,013 million, a decrease of MXN1,048 million or 20.7 per cent compared with the same period in 2009. This decrease was driven by lower credit card fees as a result of lower portfolio volumes, lower transactional volumes from payments and cash management and a reduction in account management fees.

 

Trading income was MXN815 million, a decrease of MXN1,339 million or 62.2 per cent compared with the same period in 2009. This decrease is due to an extraordinary first half in 2009 in foreign exchange and debt trading as a result of the extreme market volatility experienced during the financial crisis. In the first half of 2010, market conditions have lead to lower foreign exchange and less debt trading operations, this has been partially offset by an increase in securities sales.

 

Administrative and personnel expenses were MXN11,219 million, an increase of MXN607 million or 5.7 per cent compared with the same period in 2009. This increase is mainly due to higher personnel costs, as a result of an increase in headcount and expenditure related to infrastructure and technology and regional operations.

 

The performance of non-banking subsidiaries, particularly HSBC Seguros, contributed positively to the bank's results, reporting a net profit of MXN 608.8 million at 30 June 2010, an increase of 12.5 per cent compared with the same period in 2009. The higher results were driven by growth in net premium income, mainly as a result of the sale of individual life products (T-5), which reported a 12 per cent increase when compared to June 2009 and increased sales of a life endowment product launched in the second half of 2009. Additionally, claims have decreased 6 per cent when compared to June 2009, particularly in individual life products, where claims reported an 18 per cent decrease when compared to the same period in 2009. Tight expense control has also contributed to the results.

 

Net loans and advances to customers decreased MXN3.1 billion or 2.1 per cent to MXN144.0 billion at 30 June 2010 compared with 30 June 2009. This decrease is consistent with Grupo Financiero HSBC's strategy of prudent credit origination criteria, and reflects subdued demand for credit in the financial system as a whole. Growth in lending to financial institutions and government entities partially offset reductions in other credit portfolios.

 

Total impaired loans decreased by 37.8 per cent to MXN6.4 billion at 30 June 2010 when compared with 30 June 2009, mainly due to a 60.8 per cent reduction in non-performing consumer loans. Total impaired loans as a percentage of gross loans and advances to customers improved to 4.2 per cent from 6.4 per cent at 30 June 2009.

 

Total loan loss allowances at 30 June 2010 were MXN10.1 billion, a decrease of MXN2.9 billion or 22.2 per cent when compared with 30 June 2009. The total coverage ratio (allowance for loan losses divided by impaired loans) was 158.1 per cent at 30 June 2010, when compared with 126.5 per cent at 30 June 2009.

 

Total deposits were MXN231.4 billion at 30 June 2010, an increase of MXN11.1 billion or 5.0 per cent when compared with 30 June 2009. This increase is due to the Bank's focus on strengthening the deposit base through promoting competitive deposit product offerings. Demand deposits increased MXN9.1 billion or 7.7 percent to MXN126.4 billion and time deposits increased MXN2.1 billion or 2.1 percent to MXN100.7 billion.

 

At 30 June 2010, the bank's capital adequacy ratio was 16.6 per cent when compared with 13.4 per cent at 30 June 2009. The tier 1 capital ratio was 12.9 per cent when compared with 9.7 per cent at 30 June 2009.  This increase is a result of the MXN8,954 million capital injection received in the fourth quarter of 2009.

 

In July 2010, Banco de Mexico announced new regulations limiting the fees that can be charged for various banking services. This is likely to have a significant impact on future fee income.

 

Business Highlights

 

Personal Financial Services (PFS)

 

During the first half of 2010, PFS implemented a series of strategies aimed at growing deposits in the affluent segment and prudent reactivation of credit growth, while continuing with the rollout of the branch renovation programme.

 

Mutual funds sales volumes have increased following a targeted marketing campaign to promote the awareness and benefits of investing in HSBC's mutual funds, complemented by a focus by Premier Relationship Managers on sales.

 

Payroll accounts increased as a result of the implementation of a number of sales-focused activities across a number of commercial sectors, assisted by product enhancement - Escudo Total - and delivery through a dedicated implementation service team. These actions, coupled with a World Cup promotion campaign drove an increase in checking and savings accounts ("Flexible", "Ahorro" and "La Efectiva") during the first half of 2010. In addition, significant improvements to the account opening process were implemented at the beginning of the year. 

 

Market consumer lending activity remained subdued in the first half of 2010. The Bank prudently increased credit card sales and implemented a number of activities and promotions to targeted credit card customers including interest-free periods, balance transfer offers, preferential interest rates and cash advance offers. The Premier MasterCard World Elite card was launched at the beginning of the year to provide Premier customers with a best in class credit card proposition.

 

Special focus has also been given to increasing payroll loan sales, including a six- month interest free period promotion. The increased sales are being supported by strengthened credit origination processes and prudent credit risk policies to ensure high credit quality standards are maintained.

 

Commercial Banking

 

During the first half of 2010, Commercial Banking has focused on supporting customers with their business plans, resulting in 29 per cent growth in the credit portfolio and 19 per cent growth in deposits, compared with 30 June 2009.

 

Business Banking continues to be one of the business's top priorities and a specialized sales force has been established for this segment. Enhancements have been made to our credit product offerings, particularly for long-standing customers, that are aimed at increasing our credit portfolio while at the same time strengthening credit quality.

 

Commercial Banking continued its strategy of targeting states and municipalities through providing specialized training to our executives and strengthening our regional presence in this segment.

 

Global Banking and Markets

 

Global Markets achieved strong results for the first half of 2010, driven by Balance Sheet Management. This was mainly due to the successful risk management strategy of repositioning within the yield curve in anticipation of the delay to the timing of interest rate increases.

 

Trading results were lower compared to the same period in 2009 due to less favorable market conditions. During the first half of 2010, HSBC was ranked fourth in the Banco de Mexico Primary Dealers league table.

 

Debt Capital Markets has been actively involved in transactions that have re-opened the local debt markets. In the midst of a period of low investor sentiment, the bank proved that the market was still open for blue-chip issuers such as PEMEX, Liverpool, INFONAVIT and GMAC Mexicana.  This helped the bank achieve second position in the Mexican debt issuance league tables.

 

HSBC's local and worldwide Global Banking business expertise, market intelligence, and seamless execution, resulted in deals such as Pemex (deal of the year of Trade Finance Magazine and Global Trade Review). Global Banking also executed advisory deals for top tier local corporate customers, highlighting the strength of the newly developed HSBC Latin America Advisory platform.

 

About HSBC

 

Grupo Financiero HSBC, S.A. de C.V. is one of the leading financial groups in Mexico with 1,186 branches, 6,479 ATMs, approximately eight million customer accounts and more than 19,500 employees. For more information, consult our website at www.hsbc.com.mx.

 

Grupo Financiero HSBC, S.A. de C.V. is a 99.99 per cent directly owned subsidiary of HSBC Holdings plc, and a member of the HSBC Group. With around 8,000 offices in 88 countries and territories in Europe, the Asia-Pacific region, the Americas, the Middle East and Africa and assets of US$2,364 billion at 31 December 2009, HSBC is one of the world's largest banking and financial services organisations. HSBC is marketed worldwide as 'the world's local bank'.

 



For further information contact:

 

London

 

Patrick McGuinness

Alastair Brown

Group Media Relations

Investor Relations

Telephone: +44 (0)20 7991 0111

Telephone: +44 (0)20 7992 1938

   

Mexico City

 

Roy Caple

Yordana Aparicio

Public Affairs

Investor Relations

Telephone: +52 (55) 5721 6060

Telephone: +52 (55) 5721 5192


 



Grupo Financiero HSBC, S.A. de C.V.

Consolidated Balance Sheet

 

 

 

 

GROUP

 

BANK

Figures in MXN millions

 

30 June

 

30 June

 

30 June

 

30 June

 

2010

 

2009

 

2010

 

2009

Assets

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash and deposits in banks

 

46,590

 

65,346

 

46,590

 

65,346

 

 

 

 

 

 

 

 

 

Margin accounts

 

3

 

3,997

 

3

 

3,997

 

 

 

 

 

 

 

 

 

Investment in securities

 

161,953

 

126,999

 

160,384

 

126,442

  Trading securities

 

57,463

 

73,990

 

56,639

 

73,903

  Available-for-sale securities

 

96,223

 

43,989

 

95,478

 

43,519

  Held to maturity securities

 

8,267

 

9,020

 

8,267

 

9,020

 

 

 

 

 

 

 

 

 

  Repurchase agreements

 

-

 

798

 

-

 

798

 

 

 

 

 

 

 

 

 

  Derivative transactions

 

27,829

 

31,368

 

27,829

 

31,368

 

 

 

 

 

 

 

 

 

Performing loans

 

 

 

 

 

 

 

 

  Commercial loans

 

64,781

 

70,184

 

64,781

 

70,184

  Loans to financial intermediaries

 

11,979

 

7,832

 

11,979

 

7,832

  Consumer loans

 

27,306

 

36,564

 

27,306

 

36,564

  Mortgage loans

 

19,477

 

19,287

 

19,477

 

19,287

  Loans to government entities

 

24,207

 

16,003

 

24,207

 

16,003

Total performing loans

 

147,750

 

149,870

 

147,750

 

149,870

Impaired loans

 

 

 

 

 

 

 

 

  Commercial loans

 

1,857

 

2,425

 

1,857

 

2,425

  Loans to government entities

 

-

 

-

 

-

 

-

  Consumer loans

 

2,325

 

5,930

 

2,325

 

5,930

  Mortgage loans

 

2,226

 

1,947

 

2,226

 

1,947

Total impaired loans

 

6,408

 

10,302

 

6,408

 

10,302

Gross loans and advances to customers

 

154,158

 

160,172

 

154,158

 

160,172

Allowance for loan losses

 

(10,134)

 

(13,033)

 

(10,134)

 

(13,033)

Net loans and advances to customers

 

144,024

 

147,139

 

144,024

 

147,139

Benefits to be received from trading operations

 

-

 

257

 

-

 

257

Other accounts receivable

 

28,565

 

15,396

 

28,616

 

15,241

Foreclosed assets

 

165

 

134

 

165

 

134

Property, furniture and equipment, net

 

7,736

 

6,583

 

7,736

 

6,573

Long-term investments in equity securities

 

4,287

 

3,673

 

118

 

132

Deferred taxes

 

4,481

 

3,494

 

4,558

 

3,536

Goodwill

 

2,749

 

2,749

 

-

 

-

Other assets, deferred charges and intangibles

 

3,982

 

2,435

 

3,900

 

2,368

Total assets

 

432,364

 

410,368

 

423,923

 

403,331



 


Grupo Financiero HSBC, S.A. de C.V.

Consolidated Balance Sheet

(continued)


 

 

 

GROUP

 

BANK

Figures in MXN millions

 

30 June

 

30 June

 

30 June

 

30 June

 

2010

 

2009

 

2010

 

2009

Liabilities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Deposits

 

231,396

 

220,278

 

231,570

 

220,987

  Demand deposits

 

126,426

 

117,366

 

126,600

 

118,075

  Time deposits

 

100,735

 

98,664

 

100,735

 

98,664

  Issued credit securities

 

4,235

 

4,248

 

4,235

 

4,248

 

 

 

 

 

 

 

 

 

Bank deposits and other liabilities

 

16,767

 

22,602

 

16,767

 

22,602

  On demand

 

5,194

 

1,967

 

5,194

 

1,967

  Short-term

 

9,938

 

19,111

 

9,938

 

19,111

  Long-term

 

1,635

 

1,524

 

1,635

 

1,524

 

 

 

 

 

 

 

 

 

     Repurchase agreements

 

27,954

 

57,115

 

27,954

 

57,115

     Settlement accounts

 

13,155

 

3,550

 

13,155

 

3,550

Collateral sold

 

14,264

 

6,934

 

14,264

 

6,934

Derivative transactions

 

31,376

 

29,572

 

31,376

 

29,572

 

 

 

 

 

 

 

 

 

Other payable accounts

 

37,674

 

24,289

 

37,408

 

23,988

  Income tax and employee profit sharing payable

 

1,197

 

1,341

 

1,083

 

1,241

  Sundry creditors and other accounts Payable

 

36,477

 

22,948

 

36,325

 

22,747

 

 

 

 

 

 

 

 

 

Subordinated debentures outstanding

 

10,160

 

8,932

 

10,159

 

8,932

 

 

 

 

 

 

 

 

 

Deferred credits

 

812

 

468

 

812

 

468

 

 

 

 

 

 

 

 

 

Total liabilities

 

383,558

 

373,740

 

383,465

 

374,148

 

 

 

 

 

 

 

 

 

Equity

 

 

 

 

 

 

 

 

Paid in capital

 

32,678

 

23,724

 

25,605

 

15,883

  Capital stock

 

9,434

 

8,452

 

5,087

 

4,272

  Additional paid in capital

 

23,244

 

15,272

 

20,518

 

11,611

 

 

 

 

 

 

 

 

 

Other reserves

 

16,125

 

12,900

 

14,850

 

13,297

  Capital reserves

 

1,726

 

1,648

 

14,449

 

14,313

  Retained earnings

 

13,058

 

11,582

 

-

 

 

  Result from the mark-to-market of available-for-sale securities

 

607

 

(979)

 

477

 

(1,032)

     Result from cash flow hedging transactions

 

(313)

 

-

 

(312)

 

--

  Net income

 

1,047

 

649

 

236

 

16

Non-controlling interest

 

3

 

4

 

3

 

3

Total equity

 

48,806

 

36,628

 

40,458

 

29,183

Total liabilities and equity

 

432,364

 

410,368

 

423,923

 

403,331



 


Grupo Financiero HSBC, S.A. de C.V.

Consolidated Balance Sheet

(continued)

 

 

 

 

GROUP

 

BANK

Figures in MXN millions

 

30 June

 

30 June

 

30 June

 

30 June

 

2010

 

2009

 

2010

 

2009

Memorandum Accounts

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Guarantees granted

 

26

 

35

 

26

 

35

Contingent assets and liabilities

 

124

 

125

 

124

 

125

Irrevocable lines of credit granted

 

16,185

 

10,539

 

16,185

 

10,539

Goods in trust or mandate

 

277,105

 

238,917

 

277,105

 

238,917

Goods in custody or under administration

 

250,496

 

213,580

 

245,386

 

209,452

Collateral received by the institution

 

21,827

 

19,992

 

21,827

 

14,934

Collateral received and sold or delivered as guarantee

 

23,643

 

9,677

 

19,322

 

14,735

Third party investment banking operations, net

 

44,303

 

56,804

 

44,303

 

56,804

Amounts contracted in derivative operations

 

-

 

-

 

-

 

-

Integrated loan portfolio

 

-

 

-

 

-

 

-

Other control accounts

 

1,830,944

 

1,625,612

 

1,790,024

 

1,582,132

 

 

2,464,653

 

2,175,281

 

2,414,302

 

2,127,673


 



Grupo Financiero HSBC, S.A. de C.V.

Consolidated Income Statement

 


 

 

 

GROUP

 

BANK

Figures in MXN millions

 

30 June

 

30 June

 

30 June

 

30 June

 

2010

 

2009

 

2010

 

2009

 

 

 

 

 

 

 

 

 

Interest income

 

14,391

 

16,943

 

14,367

 

16,846

Interest expense

 

(3,984)

 

(6,256)

 

(3,977)

 

(6,144)

Net interest income

 

10,407

 

10,687

 

10,390

 

10,702

 

 

 

 

 

 

 

 

 

Loan impairment charges

 

(5,291)

 

(8,818)

 

(5,291)

 

(8,818)

Risk-adjusted net interest income

 

5,116

 

1,869

 

5,099

 

1,884

 

 

 

 

 

 

 

 

 

Fees and commissions receivable

 

4,703

 

5,524

 

4,251

 

5,143

 

 

 

 

 

 

 

 

 

Fees payable

 

(690)

 

(463)

 

(670)

 

(511)

 

 

 

 

 

 

 

 

 

Trading income

 

815

 

2,154

 

811

 

2,149

 

 

 

 

 

 

 

 

 

Other operating income

 

475

 

363

 

475

 

363

 

 

 

 

 

 

 

 

 

Total operating income

 

10,419

 

9,447

 

9,966

 

9,028

 

 

 

 

 

 

 

 

 

Administrative and personnel   expenses

 

(11,219)

 

(10,612)

 

(11,150)

 

(10,313)

 

 

 

 

 

 

 

 

 

Net operating income

 

(800)

 

(1,165)

 

(1,184)

 

(1,285)

 

 

 

 

 

 

 

 

 

Other income

 

2,044

 

1,949

 

2,129

 

1,881

Other expenses

 

(610)

 

(576)

 

(557)

 

(574)

Net other income

 

1,434

 

1,373

 

1,572

 

1,307

Net income before taxes

 

634

 

208

 

388

 

22

 

 

 

 

 

 

 

 

 

Income tax and employee profit   sharing tax

 

(805)

 

(1,868)

 

(711)

 

(1,783)

Deferred income tax

 

567

 

1,736

 

549

 

1,754

Net income before subsidiaries

 

396

 

76

 

226

 

(7)

 

 

 

 

 

 

 

 

 

Undistributed income from   subsidiaries

 

643

 

573

 

2

 

24

Income from ongoing operations

 

1,039

 

649

 

228

 

17

 

 

 

 

 

 

 

 

 

Non-controlling interest

 

8

 

-

 

8

 

(1)

 

 

 

 

 

 

 

 

 

Net income

 

1,047

 

649

 

236

 

16

 


Grupo Financiero HSBC, S.A. de C.V.

Consolidated Statement of
Changes in Shareholders' Equity

 

 

GROUP

 

 

 

Capital  contributed

Capital  reserves

Retained  earnings

Result from valuation of available-for-sale securities

Result from cash flow hedging transactions

Net  income

Minority interest

Total  equity

Figures in MXN million

 

 

 

 

 

 

 

 

Balances at 1 January 2010

32,678

1,648

11,582

(76)

(400)

1,554

3

46,989

 

 

 

 

 

 

 

 

 

Movements inherent to the shareholders' decision

 

 

 

 

 

 

 

 

   Transfer of result of prior years

-

78

1,476

(1,554)

-

Total

 -

78

1,476

 -

 -

-1,554

 -

 -


 

 

 

 

 

 

 

 

 

Movements for the recognition of the comprehensive income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

   Net income

 -

 -

 -

 - 

 - 

 1,047

 -

 1,047

   Result from valuation of available-for-sale securities

 -

 -

 -

 683

 - 

 - 

 - 

 683

   Result from cash flow hedging transactions

 -

 -

 -

 -

 87

 -

 -

 87

Total

 -

 -

 -

 683

 87

 1,047

 -

 1,817

Total Balances at 30 June 2010

 32,678

1,726

 13,058

 607

 (313)

 1,047

 3

 48,806

 

 

 

 

 

 

 

 

 

 



 


Grupo Financiero HSBC, S.A. de C.V.

Consolidated Statement of
Changes in Shareholders' Equity

 

 

BANK
 
 

 

Capital  contributed

Capital  reserves

Retained  earnings

Result from valuation of available-for-sale securities

Result from cash flow hedging transactions

Net  income

Minority interest

Total  equity

Figures in MXN million

 

 

 

 

 

 

 

 

Balances at 1 January 2010

25,605

14,313

-

(160)

(400)

136

3

39,497

 

 

 

 

 

 

 

 

 

Movements inherent to the shareholders' decision

 

 

 

 

 

 

 

 

   Transfer of result of prior years

-

136

-

(136)

-

Total

                   -

136

               -

                       -

                    -

(136)

              -

                    -

 

 

 

 

 

 

 

 

 

Movements for the recognition of the comprehensive income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

   Net income

                   -

             -

               -

 - 

 - 

      236

              -

               236

   Result from valuation of available-for-sale securities

                   -

             -

               -

                  637

 - 

 - 

 - 

              637

   Result from cash flow hedging transactions

                   -

             -

               -

 - 

                 88

 - 

 - 

                 88

Total

                   -

             -

               -

                 637

                 88

236

              -

               961

Total Balances at 30 June 2010

25,605

14,449

               -

                 477

             (312)

236

             3

         40,458


 



Grupo Financiero HSBC, S.A. de C.V.

Consolidated Statement of Cash Flows

 

 

GROUP
 
 

Figures in MXN millions

30 Jun
2010

 

 

Net income

1,047

Adjustments for items not involving cash flow:

5,493

Gain or loss on appraisal of activities associated with investment & financing

(104)

Allowances for loan losses

5,303

Depreciation and amortisation

681

Income Tax and deferred taxes

238

Undistributed income from subsidiaries

(625)

 

 

Changes in items related to operating activities:

 

Investment securities

(25,704)

Repurchase agreements

1,593

Derivative (assets)

(4,111)

Loan portfolio

190

Foreclosed assets

(3)

Operating assets

(20,857)

Deposits

(7,143)

Bank deposits and other liabilities

(8,089)

Creditors repo transactions

3,452

Collateral sold or delivered as guarantee

7,959

Derivative (liabilities)

4,244

Subordinated debentures outstanding

(61)

Other operating liabilities

22,435

Funds provided by operating activities

(26,095)

 

 

Investing activities:

 

Acquisition of property, furniture and equipment

(892)

Intangible assets acquisitions

(1,285)

Funds used in investing activities

(2,177)

 

 

Financing activities:

 

Increase/decrease in cash and equivalents

(21,732)

Cash and equivalents at beginning of period

68,322

Cash and equivalents at end of period

46,590



 


Grupo Financiero HSBC, S.A. de C.V.

Consolidated Statement of Cash Flows

 

 

BANK
 
 

Figures in MXN millions

31 Jun
 2010

 

 

Net income

236

Adjustments for items not involving cash flow:

6,059

Gain or loss on appraisal of activities associated with investment & financing

(102)

Allowances for loan losses

5,303

Depreciation and amortisation

681

Income Tax and deferred taxes

162

Undistributed income from subsidiaries

15

 

 

Changes in items related to operating activities:

 

Investment securities

(25,763)

Repurchase agreements

1,593

Derivative (assets)

(3,818)

Loan portfolio

190

Foreclosed assets

(3)

Operating assets

(20,996)

Deposits

(7,156)

Bank deposits and other liabilities

(8,089)

Creditors repo transactions

3,410

Collateral sold or delivered as guarantee

7,959

Derivative (liabilities)

4,244

Subordinated debentures outstanding

(62)

Other operating liabilities

22,648

Funds provided by operating activities

(25,843)

 

 

Investing activities:

 

Acquisition of property, furniture and equipment

(892)

Intangible assets acquisitions

(1,292)

Funds used in investing activities

(2,184)

 

 

Financing activities:

 

Increase/decrease in cash and equivalents

(21,732)

Cash and equivalents at beginning of period

68,322

Cash and equivalents at end of period

46,590


 



Grupo Financiero HSBC, S.A. de C.V.

Differences between Mexican GAAP and International Financial Reporting Standards (IFRS)

 


 

Grupo Financiero HSBC

 

HSBC Holdings plc, the parent of Grupo Financiero, reports its results under International Financial Reporting Standards (IFRS). Set out below is a reconciliation of the results of Grupo Financiero from Mexican GAAP to IFRS for the six months to 30 June 2010 and an explanation of the key reconciling items.

   

       
   

30 Jun 

 
 

     Figures in MXN millions

2010 

 
       
 

Grupo Financiero - Net Income Under Mexican GAAP

1,047 

 
       
 

Differences arising from:

   
       
 

   Valuation of pensions and post retirement healthcare benefits W

40

 
 

   Acquisition costs relating to long-term investment contracts W

(20)

 
 

   Deferral of fees received and paid on the origination of loans

27

 
 

   Recognition and provisioning for loan impairments W

884

 
 

   Purchase accounting adjustments W

(12)

 
 

   Recognition of the present value in-force of long-term insurance contracts W

(9)

 
 

   Tax criteria

338

 
 

   Other W

(100)

 
 

HSBC México net income under IFRS

2,195

 
 

US dollar equivalent (millions)

173

 
 

Add back tax expense

637

 
 

HSBC México profit before tax under IFRS

2,832

 
 

US dollar equivalent (millions)

224

 
 

Exchange rate used for conversion

12.67

 

 

W Net of tax at 30 per cent.

 

Summary of key differences between Grupo Financiero's results as reported under Mexican GAAP and IFRS

 

Valuation of pensions and post retirement healthcare benefits

Mexican GAAP

Obligations are recognised in the Income Statement of each year based on actuarial computations of the present value of those obligations using the projected unit credit method and real interest rates.

Unrecognised past service costs are amortised on an estimated service life of the employees.

 

IFRS

Obligations are recognised in the Income Statement of each year based on actuarial computations of the present value of those obligations using the projected unit credit method.

Actuarial gains and losses are recognised in stockholders equity as they arise.

Unrecognised past service cost are recognised in the Income Statement as they arise.

 

Acquisition costs of long-term investment contracts

Mexican GAAP

All costs related to the acquisition of long-term investment contracts are expensed as they are incurred.

 

IFRS

Incremental costs relating to the acquisition of long-term investment contracts are deferred and amortised over the expected life of the contract.


Fees paid and received on origination of loans

Mexican GAAP

All fees received on loan origination are deferred and amortised over the life of the loan on a straight line basis. This policy was introduced from 1 January 2007, previous to this all fees were recognised up-front.

 

IFRS

Fees and expenses received or paid on origination of a loan that are directly attributable to the origination of that loan are accounted for under the effective interest rate method over the expected life of the loan. This policy has been in effect since 1 January 2005.

 

Loan impairment charges

Mexican GAAP

Loan impairment charges are calculated following the rules issued by the Mexican Ministry of Finance and the National Banking and Securities Commission. Such rules establish authorised methodologies for determining the amount of provision for each type of loan.

 

IFRS

Impairment losses on collectively assessed loans are calculated as follows:
 

·    When appropriate empirical information is available, the Bank utilises roll rate methodology. This methodology employs statistical analysis of historical data and experience of delinquency and default to estimate the amount of loans that will eventually be written off as a result of events occurring before the balance sheet date which the Bank is not able to identify on an individual loan basis, and that can be reliably estimated.

·    In other cases, loans are grouped together according to their credit risk characteristics for the purpose of calculating an estimated collective loss.


Impairment losses on individually assessed loans are calculated by discounting the expected future cash flows of a loan at its original effective interest rate, and comparing the resultant present value with the loan's current carrying value.

 

Purchase accounting adjustments

Purchase accounting adjustments arose from the valuation of assets and liabilities on acquiring Grupo Financiero Bital in November 2002 under IFRS. Under Mexican GAAP, a different valuation methodology is applied.

 

Recognition of present value of in-force long-term life insurance contracts

Mexican GAAP

The present value of future earnings is not recognised. Premiums are accounted for on a received basis and reserves are calculated in accordance with guidance set out by the Insurance Regulator (Comisión Nacional de Seguros y Fianzas).

 

IFRS

A value is placed on insurance contracts that are classified as long-term insurance business and are in-force at the balance sheet date. The present value of in-force long-term insurance business is determined by discounting future earnings expected to emerge from business currently in force using appropriate assumptions in assessing factors such as recent experience and general economic conditions.

 
 
 
 
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: 30 July, 2010