HSBC Bank Bermuda 2015 Year End Results

March 4, 2016

HSBC Bank Bermuda Limited’s total operating income before loan impairment charges reduced by US $22m or 7% which reflected the sale of much of the bank’s Cayman operations in 2014, as well as the economic environment. Net operating income increased as the business benefited from the impact of lower loan impairment charges.

Total loan impairment charges decreased from US$64m in 2014 to US$36m in 2015. Non-performing loans continue to represent 17% of the total loan portfolio. The 9% reduction in operating expenses largely reflects the sale of much of the Cayman operations in 2014.

HSBC Bermuda continued to exercise strong cost discipline while investing in technology and financial crime monitoring. The headcount in Bermuda remained stable during the year.

As announced in October 2015, HSBC Bermuda made the decision to sell its Private Banking operations, and focus on supporting the customers of the core businesses in Bermuda where it has strategic advantages, namely Retail Banking Wealth Management [‘RBWM’] [including HSBC Asset Management and Premier banking], Commercial Banking [‘CMB’] and Global Banking and Markets [‘GB&M’]. These three businesses represent over 90% of total revenues.

The net profit from the continuing operations [RBWM, CMB and GB&M] was US$92m for the year [an increase of US$23m or 33% from prior year] with a cost efficiency ratio of 59%. The balance sheet remains conservatively positioned and strong capital and liquidity positions are being maintained, which exceed the regulatory requirements under Basel III.

The core businesses all delivered positive contributions to the bank’s profitability in 2015. RBWM, particularly towards the end of the year, saw higher levels of demand for mortgages. CMB benefited from a more benign credit environment. The GB&M franchise continues to leverage the HSBC Group’s international network and work closely with colleagues in the US and elsewhere in the HSBC Group.

Mark Watkinson, Chief Executive Officer, HSBC Bermuda, said: “Banks continue to operate in a challenging economic environment, both globally and in Bermuda. The overall results were solid against a difficult global background. However, we continue to be a liquid and well capitalized business, ready to support the Bermuda economy and our customers.

“Contribution to communities is an important part of the HSBC Group’s approach to sustainability. HSBC Bermuda is aligned with HSBC’s global community investment and sponsorship strategies and is committed to supporting programmes and events in the local community.

“In 2006, HSBC Bermuda launched its Staff Volunteer Community Action Day Programme, providing all permanent, full-time HSBC Bermuda staff with time off from work to volunteer on various projects.

“In 2015, 147 HSBC staff contributed 500 volunteer hours in support of educational, environmental and community initiatives. To date, these efforts have accumulated a total of 9,000 hours of community service since programme inception.

“On behalf of the Board and the executive team, I would like to thank our customers for their continued support and confidence in the Bank and our staff for their commitment and hard work during 2015.”

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