This summary is based on the fourth quarter fiscal 2006 earnings call conducted by HSBC Holdings Plc (HBC) on March 5, 2007.
Key Investors Issues
- Quarterly dividend rose 16.1% to 36 cents, over the year ago period.
- Delinquency for Mortgage Services first lien was at 4.52%, versus the year ago period.
Fiscal 2007 Outlook
The bank expects to see a weaker U.S. credit environment in 2007, along with a higher rate of bankruptcies, in part due to the impact of changes in bankruptcy laws in 2005. Going forward, the level of future impairment allowances will be sensitive to economic conditions and, in particular, to the state of the housing market, the level of interest rates and the availability of financing options for sub-prime borrowers.
- Market trends suggest that emerging markets are growing faster than mature economies. Emerging markets represented about 35% of world GNP (Gross National Product) 10 years ago, today they are just over 40% on the current trends, which the company believes will continue to be 50% or more within 10 years.
- The second trend is that globalization continues its momentum. World trade is growing faster than world economic growth. This is a powerful context for evolving group strategy for a bank with a strong position in commercial banking.
- The percentage of people over the age of 60 is increasing and is expected to continue to do so over the next generation.
Fourth Quarter Fiscal 2006 Financial Highlights
Dividend for the fourth quarter was $4,171 million or 36 cents per share, up 16.1% over the year ago period.
- Delinquency for Branch Real Estate Secured was at 2.39%, versus 2.49% in the year ago period.
- Delinquency for Mortgage Services first lien was at 4.52%, versus 3.20% in the year ago period.
- Delinquency for Mortgage Services second lien was at 5.71%, versus 1.91% in the year ago period.
- Delinquency rate for total mortgage services was 4.76%, versus 2.97% in the year ago period.
- Consumer lending first lien delinquency rate was 2.08%, versus 2.31% in the year ago period.
- Consumer lending second lien delinquency rate was 3.08%, versus 2.07% in the year ago period.
- Total consumer lending delinquency rate was 2.22%, versus 2.28% in the year ago period.
Fiscal 2006 Financial Highlights
Profit attributable to shareholders of the parent company was $15.789 billion, up 5% versus $15.081 billion a year ago.
- Earnings per share were $1.39, versus $1.35 a year ago.
- Profit before tax for the year was $22.086 billion, up 5% versus $20.966 billion a year ago.
- Profit for the year was $16.871 billion, versus $15.873 billion a year ago.
- Profit attributable to minority interests was $1.082 billion, versus $792 million a year ago.
Net interest income was $34.486 billion, up 10% versus $31.334 billion a year ago.
- Interest income was $75.879 billion, versus $60.094 billion a year ago.
- Interest expense was $41.393 billion, versus $28.76 billion a year ago.
Net fee income was $17.182 billion, versus $14.456 billion a year ago.
- Fee income was $21.08 billion, versus $17.486 billion a year ago.
- Fee expense was $3.898 billion, versus $3.03 billion a year ago.
Net trading income was $8.222 billion, versus $5.864 billion a year ago.
- Trading income excluding net interest income was $5.619 billion, versus $3.656 billion a year ago.
- Net interest income on trading activities was $2.603 billion, versus $2.208 billion a year ago.
Total operating income was $70.07 billion, up 14% versus $61.704 billion a year ago.
