HSBC USA Inc. Announces 2000 Interim Results.
Business Editors
NEW YORK--(BUSINESS WIRE)--July 31, 2000--
HSBC USA Inc 2000 INTERIM Results - Highlights
-- Net income in the first half of 2000 increased by 39.3 per
cent to US$327 million from US$235 million in the first half
of 1999.
-- Cash earnings(a) in the first half increased by 75.4 per cent
to US$444 million from US$253 million for the same period last
year.
-- The cost:income ratio, excluding goodwill amortisation, was
53.5 per cent compared with 46.1 per cent in the first half of
1999.
-- Tier 1 capital to risk-weighted assets increased to 13.3 per
cent from 8.8 per cent at the end of the first half of 1999
and decreased from 13.4 per cent at year-end 1999.
-- Cash earnings, as a percentage of average common equity, was
9.5 per cent compared with 23.3 per cent during the first half
of 1999, reflecting a substantial increase in common equity as
a result of HSBC USA Inc.'s merger with Republic New York
Corporation.
-- Off-balance-sheet funds under management were US$45.9 billion.
(a) Cash earnings are primarily net income after preferred dividends
and after adding back goodwill amortisation.
HSBC USA Inc. recorded net income of US$327 million for the six
months ended 30 June 2000, up 39.3 per cent from US$235 million in the
first half of 1999. Cash earnings were US$227 million for the second
quarter, compared to US$124 million in the same period in 1999 and
US$444 million for the six months, up 75.4 per cent from US$253
million last year.
HSBC USA Inc. completed the acquisition of Republic New York
Corporation on 31 December 1999. The Republic acquisition was the
principal reason for the growth in earnings and increase in the
balance sheet compared with 30 June 1999.
Youssef Nasr, chief executive officer of HSBC USA Inc. said: "Our
strong first half results were in line with expectations. Core
earnings were ahead of both HSBC USA Inc.'s and Republic New York
Corporation's individual earnings for the same period last year. We
expect to complete most integration activities by the year-end. Total
restructuring costs, including capital costs and attributed goodwill,
are anticipated to be less than originally thought. The level of cost
savings is on track and the rate of realisation will accelerate later
this year and again in early 2001 when IT systems and offices are
consolidated."
Revenues from domestic wealth management were strong at US$100
million for the first half of 2000, up 18.0 per cent compared with the
combined results of the two organisations for the same period last
year. There was an increase in off-balance-sheet assets under
management of 7.5 per cent since 31 December 1999. Life insurance
revenues surpassed 1999 full-year levels. Total portfolio holdings for
International Private Banking (New York, Florida and California)
increased over 9.4 per cent compared with 31 December 1999. There was
some deterioration in the quality of more leveraged credits, but
reserves at 1.7 per cent of total loans and provision levels were
considered adequate.
Total loans at 30 June 2000 were US$38.1 billion, up 65.0 per cent
from US$23.1 billion at 30 June 1999 and compared with US$37.9 billion
at 31 December 1999. Total deposits were US$54.5 billion at 30 June
2000, up 102.6 per cent from US$26.9 billion at 30 June 1999 and
US$56.4 billion at 31 December 1999. Total assets were US$84.8 billion
compared with US$34.3 billion at 30 June 1999 and US$90.2 billion at
31 December 1999. Certain overseas operations of the former Republic
New York Corporation were transferred to other members of the HSBC
Group during the first half of 2000. More transfers are expected to
occur during the second half of the year.
Common equity increased to US$9.4 billion at 30 June 2000 compared
with US$2.2 billion at 30 June 1999 and US$9.5 billion at 31 December
1999. As a percentage of total assets, common equity increased to 11.1
per cent from 6.5 per cent at 30 June 1999 and 10.6 per cent at 31
December 1999. The ratio of Tier 1 capital to risk-weighted assets was
13.3 per cent compared with 8.8 per cent at 30 June 1999 and 13.4 per
cent at 31 December 1999, and the ratio of total capital to
risk-weighted assets was 14.9 per cent compared with 12.5 per cent at
30 June 1999 and 15.5 per cent at 31 December 1999. Capital ratios of
HSBC USA Inc., including the flagship bank, HSBC Bank USA, were high
compared to peers.
The return on average common equity for the first half of 2000 was
6.7 per cent versus 21.6 per cent in the first half of last year. The
return on average common equity was significantly affected by the
amortisation of goodwill through the income statement and the
substantial increase in common equity. The ratio of cash earnings to
common equity was 9.5 per cent compared with 23.3 per cent at 30 June
1999.
"HSBC is committed to delivering the highest quality of customer
service," Youssef Nasr said. "We owe much of our success to our
commitment to customer satisfaction. Recently, several research
organisations have rated our customer service extremely highly. We are
gratified that our attention to customer service has been recognised,
and we continue to try to improve further."
HSBC Bank USA introduced internet banking in the second quarter to
provide customers with easier access to their money. Over 20,000
accounts were opened, and account openings continue to grow rapidly.
During the second quarter, HSBC Bank USA announced its intention
to acquire the full-service stand-alone bank business of The Chase
Manhattan Bank in Panama. The acquisition includes 11 full-service
bank branches and is anticipated to close during the third quarter of
2000. On completion, HSBC's existing presence in Panama of four
branches operated by London-based HSBC Bank plc will transfer to HSBC
Bank USA. With a total of 15 branches, HSBC Bank USA will be the
largest commercial lender in Panama and the Colon Free Zone.
New York-based HSBC USA Inc. is the 11th largest US bank holding
company by total assets and is the holding company for HSBC Bank USA;
Republic Bank California, N.A. and the HSBC Group's interest in the
Wells Fargo HSBC Trade Bank. HSBC has more than 450 branches in New
York, seven branches in Florida, two in Pennsylvania and three in
California. For more information about HSBC Bank USA, visit
www.banking.us.hsbc.com.
HSBC USA Inc. is an indirectly-held, wholly-owned subsidiary of
HSBC Holdings plc (NYSE:HBC), which is headquartered in London. With
over 5,000 offices in 80 countries and territories, the HSBC Group is
one of the world's largest banking and financial services
organisations.
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*T
HSBC USA Inc.
Quarterly summary
Quarter ended Half year ended
Figures in US$ millions 30 June 30 June 30 June 30 June
2000 1999 2000 1999
--------------------------------------
Net income 168 113 327 235
Cash earnings(a) 227 124 444 253
Performance ratios (%)
Cash earnings
as a percentage of
average common equity 9.8 % 22.5 % 9.5 % 23.3 %
Cost:income ratio
(excluding goodwill
amortisation) 53.0 % 46.7 % 53.5 % 46.1 %
Staff numbers
(full time equivalents) 14,161 9,165
Average balances (US$ m)
Loans 37,577 23,358 37,855 23,375
Earning assets 75,739 31,979 74,643 31,710
Total assets 86,111 34,140 85,111 33,944
Deposits 54,445 26,688 54,064 26,329
Common equity 9,348 2,214 9,405 2,189
Net yields on total assets
(tax equivalent basis) (%) 2.6 % 3.6 % 2.6 % 3.7 %
Capital (at end of period)
Common equity (US$ m) 9,411 2,242
As a percentage of
total assets (%) 11.1 % 6.5 %
Capital ratios (%)
Leverage ratio 8.8 6.9
Tier 1 capital to
risk-weighted assets 13.3 8.8
Total capital to
risk-weighted assets 14.9 12.5
(a) Cash earnings is essentially net income after preferred dividends
plus goodwill amortisation.
HSBC USA Inc.
Consolidated statement of income
Quarter ended Quarter ended
Figures in US$ thousands 30 June 2000 30 June 1999
--------------------------------
Interest income
Loans 728,791 456,902
Securities 433,288 53,858
Trading assets 23,795 10,597
Other short-term investments 168,275 52,777
-------------- --------------
Total interest income 1,354,149 574,134
Interest expense
Deposits 569,285 208,930
Short-term borrowings 124,350 31,114
Long-term debt 112,136 27,158
-------------- --------------
Total interest expense 805,771 267,202
-------------- --------------
Net interest income 548,378 306,932
Provision for credit losses 28,007 22,500
-------------- --------------
Net interest income,
after provision for credit losses 520,371 284,432
-------------- --------------
Other operating income
Trust income 22,400 13,450
Service charges 43,173 30,516
Mortgage banking revenue 8,577 8,775
Other fees and commissions 74,247 41,076
Trading revenues 29,516 2,884
Security gains 4,024 4,855
Earning from equity investments:
- Share of earnings 39,403 1,132
- Less: amortisation of share
of affiliates goodwill (20,100 ) -
-------------- --------------
19,303 1,132
Other income 10,611 6,206
-------------- --------------
Total other operating income 211,851 108,894
-------------- --------------
Total income from operations 732,222 393,326
Other operating expenses
Salaries and employee benefits 251,450 104,909
Occupancy expense, net 44,567 21,512
Other expenses 136,551 67,655
-------------- --------------
Operating expenses before
goodwill amortisation 432,568 194,076
Goodwill amortisation 43,731 9,771
-------------- --------------
Total operating expenses 476,299 203,847
-------------- --------------
Income before taxes 255,923 189,479
Income tax expense 87,800 76,000
-------------- --------------
Net income 168,123 113,479
============== ==============
Preferred dividends 6,984 -
-------------- --------------
Net income available to
common shareholders 161,139 113,479
============== ==============
Half year ended Half year ended
Figures in US$ thousands 30 June 2000 30 June 1999
------------------------------------
Interest income
Loans 1,449,812 922,732
Securities 854,255 112,701
Trading assets 52,393 22,496
Other short-term investments 275,563 93,318
------------- --------------
Total interest income 2,632,023 1,151,247
Interest expense
Deposits 1,094,725 409,863
Short-term borrowings 223,324 69,751
Long-term debt 216,319 53,447
------------- --------------
Total interest expense 1,534,368 533,061
------------- --------------
Net interest income 1,097,655 618,186
Provision for credit losses 56,000 45,000
------------- --------------
Net interest income,
after provision for credit losses 1,041,655 573,186
------------- --------------
Other operating income
Trust income 42,544 26,109
Service charges 86,681 59,709
Mortgage banking revenue 15,164 19,990
Other fees and commissions 153,690 81,038
Trading revenues 81,743 5,476
Security gains 745 7,306
Earning from equity investments:
- Share of earnings 72,725 1,792
- Less: amortisation of share
of affiliates goodwill (40,200) -
------------- --------------
32,525 1,792
Other income 21,407 29,075
------------- --------------
Total other operating income 434,499 230,495
Total income from operations 1,476,154 803,681
Other operating expenses
Salaries and employee benefits 502,342 209,409
Occupancy expense, net 86,667 44,264
Other expenses 274,709 137,334
------------- --------------
Operating expenses before
goodwill amortisation 863,718 391,007
Goodwill amortisation 87,461 19,353
------------- --------------
Total operating expenses 951,179 410,360
------------- --------------
Income before taxes 524,975 393,321
Income tax expense 197,800 158,400
------------- --------------
Net income 327,175 234,921
============= ==============
Preferred dividends 13,869 -
------------- --------------
Net income available to
common shareholders 313,306 234,921
============= ==============
HSBC USA Inc.
Consolidated balance sheet
At 30 June At 31 December At 30 June
Figures in US$ thousands 2000 1999 1999
--------------------------------------
Assets
Cash and due from banks 2,073,075 1,977,756 1,127,147
Interest bearing
deposits with banks 5,348,441 4,234,668 1,462,632
Federal funds
sold and
securities purchased
under resale agreements 2,438,516 2,318,361 3,065,532
Trading assets 4,357,221 4,526,988 834,032
Securities available
for sale 18,944,053 25,973,805 3,473,981
Securities held
to maturity 4,633,200 4,811,695 -
Loans 38,146,289 37,909,143 23,124,309
Less: allowance
for credit losses 636,166 659,603 371,601
------------ ------------- --------------
Loans, net 37,510,123 37,249,540 22,752,708
Premises and
equipment 765,887 745,910 200,416
Accrued interest
receivable 823,545 778,363 207,262
Equity investments (a) 2,567,107 2,540,927 27,052
Goodwill and other
acquisition intangibles 3,217,577 3,307,147 332,834
Other assets 2,146,592 1,774,459 800,029
------------ ------------- --------------
Total assets 84,825,337 90,239,619 34,283,625
============ ============= ==============
Liabilities
Deposits in
domestic offices
- Non-interest bearing 6,749,383 6,003,813 3,358,185
- Interest bearing 29,054,325 29,393,957 18,766,118
Deposits in
foreign offices
- Non-interest bearing 247,248 187,099 -
- Interest bearing 18,457,641 20,865,022 4,776,525
------------ ------------- --------------
Total deposits 54,508,597 56,449,891 26,900,828
Trading account
liabilities 2,403,592 2,440,729 47,182
Short-term borrowings 9,332,661 5,271,597 2,385,188
Interest, taxes
and other liabilities 2,772,884 3,059,993 861,456
Payable to shareholders
of acquired company - 7,091,209 -
Subordinated
long-term debt 3,424,539 3,427,649 822,472
Guaranteed mandatorily
redeemable securities 710,998 710,259 400,000
Other long-term debt 1,761,072 1,747,131 624,176
------------ ------------- --------------
Total liabilities 74,914,343 80,198,458 32,041,302
Shareholders' equity
Preferred stock 500,000 500,000 -
Common shareholders'
equity 9,410,994 9,541,161 2,242,323
------------ ------------- --------------
Total shareholders'
equity 9,910,994 10,041,161 2,242,323
------------ ------------- --------------
Total liabilities
and shareholders' equity 84,825,337 90,239,619 34,283,625
============ ============= ==============
(a) Principally 49 per cent ownership interest in HSBC Republic
Holdings (Luxembourg) formerly called Safra Republic Holdings,
including goodwill of US$1.6 billion.
--30--mw/ny*
CONTACT: Linda Stryker 212/525-3800
Kathleen Rizzo Young 716/841-5003
KEYWORD: NEW YORK
INDUSTRY KEYWORD: BANKING EARNINGS
COPYRIGHT 2000 Business Wire
No portion of this article can be reproduced without the express written permission from the copyright holder.
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