CEO: 2010 ‘A Good Year For HSBC Bermuda’

HSBC Bermuda reported its net pre-tax profit surged by 15 percent to $254 million in 2010, aided by the sale of an insurance subsidiary.

Underlying profit — which does not take into the account the sale of subsidiary HSBC Insurance (Bermuda) Limited to another HSBC affiliated entity  –also increased three percent to $182 million. Customer accounts grew, as did the bank’s loan book, while total assets increased 10 percent over the year to $11.85 billion.

Philip Butterfield, Chief Executive Officer, HSBC Bermuda, said: “2010 has been a good year for HSBC Bermuda. The Bank was recognised by Euromoney as ‘Best Bank in Bermuda 2010’. This was followed by winning The Banker magazine’s ‘Bank of the Year’ award in Bermuda for four consecutive years in 2007, 2008, 2009 and 2010.

“In this uncertain environment, these awards and the strength of the HSBC brand reaffirm our values and commitment to achieving service excellence. HSBC Bermuda continues to benefit from integration with other parts of the HSBC Group, which allows the Bank to offer a world class value proposition to customers. We have been able to build on Bermuda’s international connectivity and offer our customers integrated solutions to their financial services needs.”

Highlights on “underlying” performance:

• Underlying consolidated profit before tax of US$182 million for the year ended 31 December 2010, an increase of 3 per cent compared with the prior year.
• Underlying consolidated net profit of US$175 million for the year ended 31 December 2010, an increase of 11 per cent compared with the prior year.
• Underlying consolidated net operating income of US$486 million for the year ended 31 December 2010, an increase of 3 per cent compared with the prior year.
• Total underlying cost efficiency ratio of 62 per cent for the year ended 31 December 2010 remains stable compared with the prior year.

Highlights on the “as reported” performance:

• Consolidated profit before tax of US$254 million for the year ended 31 December 2010, an increase of 15 per cent compared with the prior year. This includes a nonrecurring gain of US$31 million from the transfer of HSBC Insurance (Bermuda) Limited as well as profit before tax of US$41 million attributable in 2010.
• Consolidated net operating income of US$530 million for the year ended 31 December 2010, an increase of 2 per cent compared with the prior year.
• Total cost efficiency ratio of 57 per cent for the year ended 31 December 2010 remains stable compared with the prior year.
• Total assets of US$11,847 million at 31 December 2010, an increase of 10 per cent compared with the prior year end.
  1 HSBC Bermuda measures performance on an ‘as reported’ basis and “underlying basis”. When references are made to
  “underlying” or “underlying basis”, adjustment has been made to the “as reported” information for the effects of acquisitions and disposals. During the year ended 31 December 2010, a wholly owned subsidiary, HSBC Insurance (Bermuda) Limited, was sold to an HSBC affiliated entity.
• Total loans and advances to customers increased by US$182 million or 6 per cent compared with the prior year end.
• Total customer accounts increased by US$1,486 million or 18 per cent compared with the prior year end.
• Total allowances as a percentage of total loans and advances to customers remains low at 0.6 per cent at 31 December 2010, compared to 0.4 per cent for the prior year.
• Tier 1 capital ratio stable at 31 per cent at 31 December 2010, compared to 30 per cent at prior year end.

Michael Schrum, Chief Financial Officer, HSBC Bermuda, noted: “2010 has been a very tough year for the economy and financial services in Bermuda. Our underlying performance remains stable amid a slow global economic recovery. At a time of low interest rates and prolonged credit turmoil the Bank has achieved solid and sustained success across all businesses. Our core Bermuda and Cayman banking operations contributed US$139 million, Global Private Banking trust business earning US$28 million, and the remainder generated by overseas operations.

“The Bank has maintained a strong and growing balance sheet with a focus on building a high-quality, liquid investment portfolio, well-secured mortgages and diversified loan portfolio. Loan impairment charges remain at relatively modest levels and the balance sheet remains well positioned for future growth. We were pleased to note that Standard & Poor’s re-affirmed the ‘AA-’ rating of HSBC Bermuda and revised the outlook from ‘negative’ to ‘stable’ in October 2010.”

Philip Butterfield, Chief Executive Officer, HSBC Bermuda, said: “2010 has been a good year for HSBC Bermuda. The Bank was recognised by ‘Euromoney’ as ‘Best Bank in Bermuda 2010’. This was followed by winning ‘The Banker’ magazine’s ‘Bank of the Year’ award in Bermuda for four consecutive years in 2007, 2008, 2009 and 2010.

“In this uncertain environment, these awards and the strength of the HSBC brand reaffirm our values and commitment to achieving service excellence. HSBC Bermuda continues to benefit from integration with other parts of the HSBC Group, which allows the Bank to offer a world class value proposition to customers.

“We have been able to build on Bermuda’s international connectivity and offer our customers integrated solutions to their financial services needs.

“I would like to thank our customers for their continued support and confidence in the Bank and our staff for their commitment and support to our customers during this difficult period in the economic cycle. This focus will ensure that HSBC Bermuda continues to be a bank which people want to do business with in 2011.”

HSBC Bermuda is the brand name of HSBC Bank Bermuda Limited. Founded in 1889, HSBC Bermuda is the leading provider of retail and corporate banking, and investment, trust, custody and fund administration services to international and local clients. Since 2004 it has been a wholly owned indirect subsidiary of HSBC Holdings plc.

Headquartered in London, HSBC is one of the world’s largest banking and financial services organisations and one of the industry’s most valuable brands. We provide a comprehensive range of financial services to around 95 million customers through two customer groups, Personal Financial Services (including consumer finance), and Commercial Banking, and two global businesses, Global Banking and Markets, and Global Private Banking.

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