HSBC BANK PLC

Financial Statements

Consolidated income statement for the year ended 31 December 2009

2009
m

2008
m

Interest income ...............................................................................................

Interest expense ..............................................................................................

12,643
(4,552)

18,998
(13,301)

Net interest income .........................................................................................

8,091

5,697

Fee income ......................................................................................................

Fee expense .....................................................................................................

5,560
(1,483)

5,453
(1,496)

Net fee income ................................................................................................

4,077

3,957

Trading income excluding net interest income ..............................................

Net interest income on trading activities ........................................................

970
1,656

1,165
1,802

Net trading income .........................................................................................

2,626

2,967

Net income/(expense) from financial instruments designated at fair value ..

Gains less losses from financial investments .................................................
Dividend income .............................................................................................
Net earned insurance premiums .....................................................................
Other operating income ..................................................................................

543
(73)
29
2,716
1,093

(1,097)
82
85
2,891
1,593

19,102

16,175

(3,540)

(1,835)

Net operating income before loan impairment charges and other credit
risk provisions ...........................................................................................

15,562

14,340

Loan impairment charges and other credit risk provisions ............................

(3,364)

(1,861)

Notes

Total operating income ................................................................................

Net insurance claims incurred and movement in liabilities to policyholders

Net operating income ...................................................................................

12,198

12,479

Employee compensation and benefits ............................................................

General and administrative expenses .............................................................
Depreciation and impairment of property, plant and equipment ...................
Amortisation and impairment of intangible assets .........................................

(4,452)
(3,114)
(482)
(150)

(4,498)
(3,049)
(466)
(109)

Total operating expenses ..............................................................................

(8,198)

(8,122)

Operating profit ............................................................................................

4,000

4,357

Share of profit in associates and joint ventures ..............................................

14

Profit before tax ............................................................................................

4,014

4,366

(856)

(843)

Profit for the year .........................................................................................

3,158

3,523

Profit attributable to shareholders of the parent company .............................

Profit attributable to minority interests ..........................................................

3,092
66

3,441
82

Tax expense ....................................................................................................

30

22
21

10

HSBC BANK PLC

Financial Statements (continued)

Consolidated statement of comprehensive income for the year ended 31 December 2009

Profit for the year..........................................................................................................

2009
m

2008
m

3,158

3,523

4,666
49
1,317
(248)

(11,551)
(330)
429
558

Other comprehensive income

Available-for-sale investments:
fair value gains/ (losses) .......................................................................................
fair value losses/ (gains) transferred to income statement on disposal ................
amounts transferred to the income statement in respect of impairment losses ....
income taxes ..........................................................................................................
Cash flow hedges
fair value gains .....................................................................................................
fair value gains transferred to income statement ..................................................
income taxes ..........................................................................................................
Actuarial losses on defined benefit plans
before income taxes...............................................................................................
income taxes ..........................................................................................................
Exchange differences and other ...................................................................................

133
(91)
(19)

545
(8)
(151)

(2,396)
676
(848)

(129)
26
3,226

Other comprehensive income/ (expense) for the year, net of tax ................................

3,239

(7,385)

Total comprehensive income/ (expense) for the year ..................................................

6,397

(3,862)

6,352
45
6,397

(4,062)
200
(3,862)

Total comprehensive income/ (expense) for the year attributable to:

shareholders of the parent company .....................................................................
minority interests...................................................................................................

31

HSBC BANK PLC

Financial Statements (continued)

Consolidated statement of financial position at 31 December 2009

Notes
ASSETS
Cash and balances at central banks ................................................................
Items in the course of collection from other banks ........................................
Trading assets .................................................................................................
Financial assets designated at fair value ........................................................
Derivatives ......................................................................................................
Loans and advances to banks .........................................................................
Loans and advances to customers ..................................................................
Financial investments .....................................................................................
Other assets .....................................................................................................
Current tax assets ............................................................................................
Prepayments and accrued income ..................................................................
Interests in associates and joint ventures .......................................................
Goodwill and intangible assets .......................................................................
Property, plant and equipment ........................................................................
Deferred tax assets ..........................................................................................

15
16
17
31
31
18
24

20
21
22
10

Total assets .....................................................................................................

2009
m

2008
m

14,274
2,082
165,008
16,435
118,516
46,994
274,659
86,695
8,013
172
3,357
79
11,199
4,090
355

9,470
1,917
172,026
13,895
243,084
50,719
298,304
103,511
8,802
215
5,625
73
11,780
4,697
113

751,928

924,231

57,729
332,896
1,477
118,881
18,164
118,689
39,340
5,867
197
16,505
3,752
368
158
2,678
6,799

61,431
369,880
1,802
124,450
15,184
241,031
52,308
6,897
197
16,132
5,464
428
443
664
7,259

723,500

903,570

797
20,025
1,750
(2,920)
8,135

797
17,249
1,750
(7,842)
7,969

27,787
641

19,923
738

LIABILITIES AND EQUITY

Liabilities
Deposits by banks ...........................................................................................
Customer accounts ..........................................................................................
Items in the course of transmission to other banks ........................................
Trading liabilities ............................................................................................
Financial liabilities designated at fair value ...................................................
Derivatives ......................................................................................................
Debt securities in issue ...................................................................................
Other liabilities ...............................................................................................
Current tax liability .........................................................................................
Liabilities under insurance contracts issued ...................................................
Accruals and deferred income ........................................................................
Provisions ........................................................................................................
Deferred tax liability .......................................................................................
Retirement benefit liabilities ..........................................................................
Subordinated liabilities ...................................................................................

31
31
25
26
17
31
27
28
29
10
7
30

Total liabilities ................................................................................................

Equity
Called up share capital ....................................................................................
Share premium account ..................................................................................
Other equity instruments ................................................................................
Other reserves .................................................................................................
Retained earnings ...........................................................................................
Total equity attributable to shareholders of the parent company ...................
Minority interests ............................................................................................

35
35

Total equity .....................................................................................................

28,428

20,661

Total equity and liabilities ..............................................................................

751,928

924,231

S K Green, Chairman

1 March 2010

32

HSBC BANK PLC

Financial Statements (continued)

Consolidated cash flow statement for the year ended 31 December 2009
2009
m

2008
m

4,014

4,366

4,224
25,222
(53,082)
9,707
(657)
(14)
8
(258)
(923)

2,733
(72,242)
118,194
(24,765)
(1,284)
(9)
2
(273)
(795)

(11,759)

25,927

(73,475)
87,764
(613)
897
(162)

(247)
(16)

215

(102,333)
71,626
(782)
281
(182)
18
(28)
(1)
1,554
62

(15)

(197)

Net cash generated from/(used in) investing activities

14,348

(29,982)

Cash flows from financing activities

Issue of share capital ......................................................................................
Issue of capital securities ................................................................................
Subordinated loan capital issued ....................................................................
Subordinated loan capital repaid ....................................................................
Dividends paid to shareholders ......................................................................
Dividends paid to minority interests ..............................................................

2,776

(101)
(1,067)
(7)

1,750
750
1,014
(51)
(2,974)
(25)

1,601

464

4,190
60,855
(4,239)

(3,591)
51,235
13,211

60,806

60,855

Notes
Cash flows from operating activities
Profit before tax ..............................................................................................
Adjustments for:
non-cash items included in profit before tax ..........................................
change in operating assets .......................................................................
change in operating liabilities .................................................................
elimination of exchange differences1 ......................................................
net gain from investing activities ............................................................
share of profits in associates and joint ventures .....................................
distributions from associates ...................................................................
contributions paid for defined benefit plans ...........................................
tax paid ....................................................................................................

36
36
36

Net cash (used in)/generated from operating activities ..................................

Cash flows from investing activities
Purchase of financial investments ..................................................................
Proceeds from the sale of financial investments ............................................
Purchase of property, plant and equipment ....................................................
Proceeds from the sale of property, plant and equipment ..............................
Purchase of intangible assets ..........................................................................
Proceeds from the sale of intangible assets ....................................................
Net cash outflow from acquisition of and increase in stake of subsidiaries ..
Net cash outflow from acquisition of and increase in stake of associates
Proceeds from disposal of subsidiaries ..........................................................
Proceeds from disposal of associates .............................................................
Purchases of HSBC Holdings plc shares to satisfy share based payment
transactions .................................................................................................

Net cash generated from financing activities

Net increase/(decrease) in cash and cash equivalents ...............................
Cash and cash equivalents at 1 January .........................................................
Effect of exchange rate changes on cash and cash equivalents .....................
Cash and cash equivalents at 31 December ...................................................

36

1 Adjustment to bring changes between opening and closing balance sheet amounts to average rates. This is not done on a line-by-line
basis, as details cannot be determined without unreasonable expense.

33

34

797

Share capital issued, net of costs1 ..............................................................

Dividends to shareholders .........................................................................
Net impact of equity-settled share-based payments .................................
Purchase of minority interest2....................................................................
Other movements ......................................................................................

At 31 December .......................................................................................

20,025

2,776

17,249

Share
premium
m

1,750

1,750

Other equity
instruments
m

8,135

(1,067)
(190)
54
(7)

1,376

(1,716)

(1,721)
5

7,969
3,092

Retained
earnings
m

(5,911)

(54)

5,770

5,770
5,770

(11,627)

Availablefor-sale
fair value
reserve
m

350

23

23

23

327

Cash flow
hedging
reserve3
m

2009
Other reserves

2,641

(817)

(817)

(817)

3,458

Foreign
exchange
reserve
m

27,787

2,776
(1,067)
(190)

(7)

6,352

3,260
5,770
23
(1,721)
(812)

19,923
3,092

Total
shareholders
equity
m

641

(42)

(100)

45

(21)
14

1
(36)

738
66

Minority
interests
m

28,428

2,776
(1,109)
(190)
(100)
(7)

6,397

3,239
5,784
23
(1,720)
(848)

20,661
3,158

Total
equity
m

1 All new capital subscribed in the year was issued to HSBC Holdings plc. See note 35 for further details.
2 Relates to the purchase of minority interest in HSBC Private Bank (Suisse) SA. See Note 41 for further details.
3 Movements in the cash flow hedging reserve include amounts transferred to the income statement of 91 million comprising a 120 million loss taken to Net interest income and a 29 million gain taken
to Net trading income.

Other comprehensive income (net of tax) ................................................

Available-for-sale investments .................................................................
Cash flow hedges ......................................................................................
Actuarial losses on defined benefit plans .................................................
Exchange differences and other ................................................................

Total comprehensive income for the year .................................................

797

At 1 January ..............................................................................................
Profit for the year ......................................................................................

Called up
share
capital
m

Consolidated statement of changes in equity for the year ended 31 December 2009

HSBC BANK PLC

Financial Statements (continued)

35
797

At 31 December ........................................................................................
17,249

1,750

15,499

Share
premium
m

1,750

750

1,000

Other
equity
Instruments
m

7,969

(2,999)
49

(13)

3,345

(96)

(101)
5

7,587
3,441

Retained
earnings
m

(11,627)

27
(3)

(10,894)

(10,894)
(10,894)

(757)

Availablefor-sale
fair value
reserve
m

327

386

386

386

(60)

Cash flow
hedging
reserve2
m

3,458

3,101

3,101

3,101

357

Foreign
exchange
reserve
m

19,923

1,750
750
(2,999)
49
28
(3)
(13)

(4,062)

(7,503)
(10,894)
386
(101)
3,106

24,423
3,441

Total
shareholders
equity
m

738

(38)

200

118

(2)
120

576
82

Minority
interests
m

20,661

1,750
750
(3,037)
49
28
(3)
(13)

(3,862)

(7,385)
(10,894)
386
(103)
3,226

24,999
3,523

Total
equity
m

1 All new capital subscribed in the year was issued to HSBC Holdings plc. See note 35 for further details.
2 Movements in the cash flow hedging reserve include amounts transferred to the income statement of 8 million comprising a 13 million gain taken to Net interest income and a 21 million loss taken to
Net trading income.

Share capital issued, net of costs1 .............................................................

Capital securities issued ............................................................................
Dividends ..................................................................................................
Net impact of equity-settled share-based payments ..................................
Purchase of minority interest
Transfers from associates
Other movements ......................................................................................

Available-for-sale investments .................................................................

Cash flow hedges ......................................................................................
Actuarial losses on defined benefit plans .................................................
Exchange differences and other ................................................................

Other comprehensive income (net of tax) ................................................

Total comprehensive income for the year .................................................

797

At 1 January ..............................................................................................
Profit for the year ......................................................................................

Called up
share
capital
m

2008
Other reserves

HSBC BANK PLC

Financial Statements (continued)

HSBC BANK PLC

Financial Statements (continued)

HSBC Bank plc statement of financial position at 31 December 2009

2009
m

2008
m

13,130
1,071
123,957
6,592
100,800
20,729
208,669
27,389
4,230
160
1,263
63
15,226
632
1,280
779

6,779
692
130,205
4,592
197,128
18,295
217,309
46,608
3,637
291
2,705
53
15,236
598
1,515
138

525,970

645,781

39,346
223,652
595
96,821
10,675
101,161
14,636
2,636
8
1,852
176
2
2,524
6,955

54,986
240,397
772
98,389
9,429
197,247
8,670
3,163
4
2,585
158
2
414
7,310

501,039

623,526

797
20,025
1,750
(356)
2,715

797
17,249
1,750
(622)
3,081

Total equity .....................................................................................................

24,931

22,255

Total equity and liabilities ..............................................................................

525,970

645,781

Notes
ASSETS
Cash and balances at central banks ................................................................
Items in the course of collection from other banks ........................................
Trading assets .................................................................................................
Financial assets designated at fair value ........................................................
Derivatives ......................................................................................................
Loans and advances to banks .........................................................................
Loans and advances to customers ..................................................................
Financial investments .....................................................................................
Other assets .....................................................................................................
Current tax assets ............................................................................................
Prepayments and accrued income ..................................................................
Interests in associates and joint ventures .......................................................
Investments in subsidiary undertakings .........................................................
Goodwill and intangible assets .......................................................................
Property, plant and equipment ........................................................................
Deferred tax assets ..........................................................................................

15
16
17
31
31
18
24

20
23
21
22
10

Total assets .....................................................................................................

LIABILITIES AND EQUITY
Liabilities
Deposits by banks ...........................................................................................
Customer accounts ..........................................................................................
Items in the course of transmission to other banks ........................................
Trading liabilities ............................................................................................
Financial liabilities designated at fair value ...................................................
Derivatives ......................................................................................................
Debt securities in issue ...................................................................................
Other liabilities ...............................................................................................
Current taxation ..............................................................................................
Accruals and deferred income ........................................................................
Provisions ........................................................................................................
Deferred tax liability .......................................................................................
Retirement benefit liabilities ..........................................................................
Subordinated liabilities ...................................................................................

31
31
25
26
17
31
27

29
10
7
30

Total liabilities ................................................................................................

Equity
Called up share capital ....................................................................................
Share premium account ..................................................................................
Other equity instruments ................................................................................
Other reserves .................................................................................................
Retained earnings ...........................................................................................

S K Green, Chairman

35
35

1 March 2010

36

HSBC BANK PLC

Financial Statements (continued)

HSBC Bank plc cash flow statement for the year ended 31 December 2009
2009
m

2008
m

2,967

3,235

3,126
14,404
(26,542)
377
(535)
(236)
(461)

1,448
(39,012)
70,364
(7,301)
(733)
(252)
(365)

(6,900)

27,384

(31,309)
50,482
(312)
791
(133)

(16)

188

(77,011)
48,606
(393)
67
(132)
16
(28)
(7)
1,116
224

(99)

Net cash generated from/(used in) investing activities

19,691

(27,641)

Cash flows from financing activities

Issue of ordinary share capital ........................................................................
Issue of capital securities ................................................................................
Subordinated loan capital issued ....................................................................
Subordinated loan capital repaid ....................................................................
Dividends paid ................................................................................................

2,776

(1,067)

1,750
750
1,612

(2,974)

1,709

1,138

Net increase in cash and cash equivalents ..................................................

14,500

881

Cash and cash equivalents at 1 January .........................................................

Effect of exchange rate changes on cash and cash equivalents .....................

27,791
(1,589)

22,592
4,318

40,702

27,791

Notes
Cash flows from operating activities
Profit before tax ..............................................................................................
Adjustments for:
non-cash items included in profit before tax ..........................................
change in operating assets .......................................................................
change in operating liabilities .................................................................
elimination of exchange differences1 ......................................................
net gain from investing activities ............................................................
contributions paid for defined benefit plans ...........................................
tax paid ....................................................................................................

36
36
36

Net cash (used in)/generated from operating activities ..................................

Cash flows from investing activities
Purchase of financial investments ..................................................................
Proceeds from the sale of financial investments ............................................
Purchase of property, plant and equipment ....................................................
Proceeds from the sale of property, plant and equipment ..............................
Purchase of goodwill and intangible assets ....................................................
Proceeds from the sale of intangible assets ....................................................
Net cash outflow from acquisition of and increase in stake of subsidiaries ..
Net cash outflow from acquisition of and increase in stake of associates
Net cash inflow due to repayment of capital in subsidiary ............................
Proceeds from disposal of subsidiaries ..........................................................
Proceeds from disposal of associates .............................................................
Purchases of HSBC Holdings plc shares to satisfy share based payment
transactions .................................................................................................

Net cash generated from financing activities

Cash and cash equivalents at 31 December ...................................................

36

1 Adjustment to bring changes between opening and closing balance sheet amounts to average rates. This is not done on a line-by-line
basis, as details cannot be determined without unreasonable expense.

37

38
797

At 31 December .......................................................................................
20,025

2,776

17,249

Share
premium
m

1,750

1,750

Other equity
instruments
m

2,715

(1,067)
(66)

767

(1,764)

(1,769)
5

3,081
2,531

Retained
earnings
m

2009

(664)

313

313
313

(977)

Availablefor-sale fair
value reserve
m

1 All new capital subscribed in the year was issued to HSBC Holdings plc. See note 35 for further details.
2 Movements in the cash flow hedging reserve include an amount transferred to the income statement of a 148 million loss taken to Net interest income.

Share capital issued, net of costs1 ..............................................................

Dividends to shareholders .........................................................................
Net impact of equity-settled share-based payments .................................

Available-for-sale investments .................................................................

Cash flow hedges ......................................................................................
Actuarial losses on defined benefit plans .................................................
Exchange differences and other.................................................................

Other comprehensive income (net of tax) ................................................

Total comprehensive income for the year ................................................

797

At 1 January ..............................................................................................
Profit for the year ......................................................................................

Called up
share capital
m

HSBC Bank plc statement of changes in equity for the year ended 31 December 2009

332

(75)

(75)

(75)

407

Cash flow
hedging
reserve2
m

Other reserves

(24)

28

28

28

(52)

Foreign
exchange
reserve
m

24,931

2,776
(1,067)
(66)

1033

(1,498)
313
(75)
(1,769)
33

22,255
2,531

Total equity
m

HSBC BANK PLC

Financial Statements (continued)

39

797

Other comprehensive income (net of tax) ................................................

Available-for-sale investments .................................................................
Cash flow hedges.......................................................................................
Actuarial losses on defined benefit plans .................................................
Exchange differences and other.................................................................

Total comprehensive income for the year .................................................

Share capital issued, net of costs ..............................................................

Capital securities issued1 ..........................................................................
Dividends to shareholders ........................................................................
Net impact of equity-settled share-based payments..................................
Other movements ......................................................................................

At 31 December ........................................................................................
17,249

1,750

15,499

Share
premium
m

1,750

750

1,000

Other equity
Instruments
m

3,081

(2,974)
28
16

2,710

29

24
5

3,301
2,681

Retained
earnings
m

(977)

(1,156)

(1,156)
(1,156)

179

Available- forsale fair value

reserve
m

1 All new capital subscribed in the year was issued to HSBC Holdings plc. See note 35 for further details.
2 Movements in the cash flow hedging reserve include an amount transferred to the income statement of a 16 million loss taken to Net interest income.

797

At 1 January ..............................................................................................
Profit for the year ......................................................................................

Called up
share capital
m

2008

407

394

394

394

13

Cash flow
hedging
reserve2
m

Other reserves

(52)

(40)

(40)

(40)

(12)

Foreign
exchange
reserve
m

22,255

1,750
750
(2,974)
28
16

1,908

(773)
(1,156)
394
24
(35)

20,777
2,681

Total equity
m

HSBC BANK PLC

Financial Statements (continued)