Finance for HSBC Bank - Case Study Example

Name : XXXXXXX Tutor : XXXXXXX Title : XXXXXXX Institution : XXXXXXX Date:@2009 Finance for HSBC Bank Introduction HSBC Bank was integrated in 1865 as Shanghai Banking Company. HSBC's Hong Kong main offices are at Queen's Street in the middle region on the Island. It is among the huge banks by possessions on the globe. It provides customer and commerce banking services, credit cards, property management and private banking. In 2002, HSBC extended in the US and spend US$15.5 billion to obtain Family Finance Company. In 2004, HSBC declared to spend US$1.75 billion for a 19.9% stake in Shanghai’s Communications bank. During that moment the bank was China's fifth-largest bank (Collis1965). The investment by HSBC was bigger than any preceding overseas investment in a Chinese bank. This gave HSBC a lead in the contest to seize pieces of China's banking market. In the previous year prior to this transaction, HSBC joined with Hong Kong's Shanghai Commercial Bank to buy11 percent stake in the Bank of Shanghai. HSBC paid US$ 62.6 million for the 8 percent stake and US$733 million for the10 percent stake in Ping An Insurance. In the UK, HSBC obtained Marks & Spencer Retail Economic Services Holdings at £763 million in 2004. Purchases in 2005 comprised of Metris Inc at US$1.6billion. In 2006 HSBC, purchased ninety branches in Argentina of Banca Nazionale del Lavoro at US$155 million. When HM Treasury needed all UK banks to augment their capital in 2007, HSBC Bank transferred £750 million to London in a few hours. In 2009, it declared that it had obtained US$5.73 billion of profit in 2008. It also declared to utilize HK$138 billion to purchase other banks that were making efforts to carry on. However, doubt over the rights' issue's insinuation for company shareholders caused instability in the Hong Kong stock market. In March 2009, HSBC's share fee dropped to 24.14 percent with 12 million shares sold in the last moment of sales. In 2007, HSBC purchased Chinese Bank and by that time, it was the lucrative bank on the globe with a net income of US$19.13 billion. In 2008, HSBC purchased IL&FS Investment, which is an Indian retail broking firm. HSBC was recognized as the world's most precious banking brand by The Banker magazine. HSBC is better known in banking spheres for its conservative and risk-averse mechanism in its commerce dealings. In 2008, HSBC was number four among the leading banks on the globe by virtue of its assets which amounted to US$2,348.98 billion. It is number two on earth with regard to the quantity of sales which sums up to US$146.50 billion and the biggest in terms of marketplace by US$180.81 billion (Irvine 1997). From 2005, HSBC continues to be the leading banking faction on earth. In 2008, finance and insurance revenue was £49,759 million, working profits £5,072 million and net profits £3,541 million. The combination of the bank’s knowledge and overseas width is upheld by a significant economic capacity based on the balance sheet strength. This is accredited to the corporation’s vend deposit foundations. The profit prior to tax was HK$79,896 million in 2008. In stipulations of money strength, the Tier capital proportion was 8.8% while the whole capital proportion was 11.9%. HSBC’s US$0.50 normal shares are sold on Shanghai market. Sales were US$145,408 million, net profits US$20,455 million while profits growth was 25% in 2007 (Engardio & Paula 1995). Financial Statement. All sums in millions of US dollars apart from the sums per share. 2008 2007 2006 2005 Profits Obtained in Process R&D 0 - 0 - Interest Restructuring and M&A Other Special Charges 0 - 0 - Total Profits Present for Interest Expense Interest Cost Profits Before Tax Income Levies 971 - 1323 - Minority Interest Preferred Securities of Subsidiary Trust Net Profits from Ongoing Operations Net Profits from Stopped Operations. Net Profits from All Operations Unusual Profits/Losses 0 - 0 - Profits from Cumulative Outcome of Accounting Profits from Levy Loss Carried forward Other Gains/Losses Total Net Profits 3861 - 5448 - Normalized Profits 3861 - 5448 - Net Profits Accessible for Common Preferred Dividends 0 - 0 - Excise Levies Per Share Information Fundamental EPS from Ongoing Operations. 1.63 - 2.38 - Fundamental EPS from Stopped Operations. Fundamental EPS from All Operations 1.63 - 2.38 - Fundamental EPS from Unusual Inc. 0 - 0 - Fundamental EPS from Cumulative Outcome of Accounting 0 - 0 - Fundamental EPS from Other Gains/Losses 0 - 0 - Fundamental EPS Total 1.63 - 2.38 - Fundamental Normalized Net Profits/Share 1.63 - 2.37 - Diluted EPS from Ongoing Operations. 1.63 - 2.35 - Diluted EPS from stopped Operations. 0 - 0 - Diluted EPS from All Operations 1.63 - 2.35 - Diluted EPS from Unusual Inc. 0 - 0 - Diluted EPS from Cumulative Outcome of Accounting 0 - 0 - Diluted EPS from Other Gains/Losses 0 - 0 - Diluted EPS Total 1.63 - 2.35 - Diluted Normalized Net Profits/Share 1.63 - 2.35 - Dividends Remunerated per Share 1.95 0 1.8 0 Extra Information Basic Weighted Shares Outstanding Diluted Weighted Shares Outstanding 2347 -999 2229 -999 Balance Sheet. All sums are in millions of US dollars a part from sums per share. Q2 Q4 Q2 Q4 2008 2007 2006 2005 Possessions Cash and Equivalents Restricted Cash 0 0 0 0 Marketable Securities Accounts Receivable Loans Receivable Other Receivable Receivables Raw Resources Work In Progress Purchased Components Finished Goods Other Inventories Inventories of Allowances Inventories Prepaid Expenses Current Deferred Income levies Other Current Possessions Total Current Possessions Gross Fixed Possessions Accumulated Depreciation & Depletion Net Fixed Possessions Intangibles Cost in Excess Non-Current Deferred Income Taxes Other Non-Current Possessions Total Non Current Possessions Total Possessions 2546678 2354266 2150441 1860758 Accounts Payable Notes Payable Short Term Debt 14378 13893 12947 13165 Accumulated Costs Accumulated Liabilities Deferred Revenues Current Deferred Income Taxes Other Current Liabilities Total Current Liabilities Long Term Debt 261784 271398 252743 252997 Capital Lease Obligations 0 0 0 0 Deferred Income Taxes Other Non-Current Liabilities Minority Interest Preferred Securities of Subsidiary Trust Preferred Equity outside Stock Equity Total Non-Current Liabilities Total Liabilities 2419893 2226106 2030661 1752406 Stockholder's Equity Preferred Stock Equity 0 0 0 0 Common Stock Equity 126785 128160 119780 108352 Common Par 6003 5915 5857 5786 Additional Paid In Capital 8097 8134 7834 7789 Cumulative Translation Adjustment 0 0 0 0 Maintained Earnings 82990 81097 74251 65397 Treasury Stock 0 0 0 0 Other Equity Adjustments 29695 22959 31838 25073 Total Equity 126785 128160 119780 108352 Total Capitalization Total Liabilities & Stock Equity Extra Information Cash Flow Working Money Free Cash Flow Invested Money Share Information Shares Outstanding Preferred Shares 0 0 0 0 Total Ordinary Shares 12005 11829.052317 11463 11572.207735 Total Common Shares Outstanding 2401 2365.810463 2292.6 2314.441547 Treasury Shares 0 0 0 0 Cash Flow All sums in millions of US dollars apart from sums per share. Q2 Q4 Q2 Q4 2008 2007 2006 2005 Working Activities Net Profits/Loss Depreciation Amortization Amortization of Intangibles Deferred Profit Taxes 0 0 0 0 Operating Gains/Losses Extraordinary Gains/Losses Increase/Decrease in Receivables Increase/Decrease in Inventories Increase/Decrease in Prepaid Expenses Increase/Decrease in Current Possessions Increase/Decrease in Payables Increase/Decrease in Liabilities. Increase/Decrease in Working Money Other Non-Cash Items -13478 -17695 -10856 -10709 Net Cash from Continuing Operations Net Cash from Discontinued Operations Net Cash from Operating Activities -24909 91038 68396 80781 Investing Activities Transaction of Possessions, Plant, Equipment Transaction of Long Term Investments Transaction of Short Term Investments Payment of Property, Plant, Equipment Acquisitions 1918 -436 -332 -834 Payment of Long Term Investments Payment of Short Term Investments Other Investing Changes Net Cash from Discount Investing Activities Net Cash from Investing Activities 5329 -20278 -11633 -14124 Financing Activities Issuance of Debt Issuance of Capital Stock Repayment of Debt 0 -689 -87 -903 Repurchase of Capital Stock Payment of Cash Dividends Other Financing Charges, Net Cash from Discount Financing Activities Net Cash from Financing Activities 2584 -1637 -3988 -564 Effect of Exchange Rate Changes Net Change in Cash & Cash Equivalents -9471 81523 56798 74179 (Engardio & Paula 1995) The information above was updated on 11th April 2009. References Collis, M1965, Wayfoong: The Hong Kong and Shanghai Banking Company, Faber, London. Irvine, S 1997, "The Culture That Powers Hong Kong Bank," Euromoney Article, Vol. 48 no. 8, pp. 186-44. Engardio, P & Paula D 1995, "Hong Kong & Shanghai Bank" Business Week, Vol. 56 no. 4, Viewed 16 April 2009, Read More