HSBC BANK PLC

Financial Statements

Consolidated income statement for the year ended 31 December 2010

2010
m

2009
m

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

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

11,110
(3,416)

12,643
(4,552)

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

7,694

8,091

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

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

5,311
(1,271)

5,560
(1,483)

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

4,040

4,077

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

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

1,210
907

970
1,656

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

2,117

2,626

Net income from financial instruments designated at fair value .............................

Gains less losses from financial investments ...........................................................
Dividend income ......................................................................................................
Net earned insurance premiums ............................................................................... 4
Other operating income ............................................................................................

276
537
18
2,635
782

543
(73)
29
2,716
1,093

18,099

19,102

(3,023)

(3,540)

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

15,076

15,562

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

(1,951)

(3,364)

Notes

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

Net insurance claims incurred and movement in liabilities to policyholders ..........

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

13,125

12,198

Employee compensation and benefits ...................................................................... 7

General and administrative expenses .......................................................................
Depreciation and impairment of property, plant and equipment ............................. 22
Amortisation and impairment of intangible assets .................................................. 21

(4,961)
(3,536)
(460)
(162)

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

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

(9,119)

(8,198)

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

4,006

4,000

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

14

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

4,011

4,014

Tax expense .............................................................................................................. 10

(996)

(856)

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

3,015

3,158

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

Profit attributable to non-controlling interests .........................................................

2,959
56

3,092
66

The accompanying notes on pages 89 to 195 and the audited sections of Report of the Directors: Risk on pages 25 to 64 and Report of the
Directors: Capital Management on pages 65 to 68 form an integral part of these financial statements.

79

HSBC BANK PLC

Financial Statements (continued)

Consolidated statement of comprehensive income for the year ended 31 December 2010
2010
m

2009
m

3,015

3,158

2,914
(419)
721
(254)

4,666
49
1,317
(248)

307
(530)
63

133
(91)
(19)

179
(63)
(114)

(2,396)
676
(848)

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

2,804

3,239

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

5,819

6,397

5,777
42
5,819

6,352
45
6,397

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

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 .......................................................................................

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

shareholders of the parent company .........................................................................
non controlling interests.........................................................................................

The accompanying notes on pages 89 to 195 and the audited sections of Report of the Directors: Risk on pages 25 to 64 and Report of the
Directors: Capital Management on pages 65 to 68 form an integral part of these financial statements.

80

HSBC BANK PLC

Financial Statements (continued)

Consolidated statement of financial position at 31 December 2010

2010
m

2009
m

24,495
1,932
159,552
15,467
129,158
57,027
285,218
102,086
6,118
216
3,568
76
11,143
2,108
330

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

798,494

751,928

48,287
344,123
1,411
132,360
27,935
129,204
48,119
4,860
153
17,116
3,950
425
54
733
7,407

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

766,137

723,500

Equity
Called up share capital ....................................................................................... 36
Share premium account ......................................................................................
Other equity instruments .................................................................................... 36
Other reserves .....................................................................................................
Retained earnings ...............................................................................................

797
20,025
1,750
(220)
9,473

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

Total equity attributable to shareholders of the parent company ......................

Non-controlling interests ....................................................................................

31,825
532

27,787
641

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
32
32
18
24

20
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 tax liability ............................................................................................
Liabilities under insurance contracts issued ......................................................
Accruals and deferred income ...........................................................................
Provisions ............................................................................................................
Deferred tax liability ..........................................................................................
Retirement benefit liabilities ..............................................................................
Subordinated liabilities ......................................................................................

32
32
25
26
17
32
27
28
29
10
7
30

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

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

32,357

28,428

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

798,494

751,928

The accompanying notes on pages 89 to 195 and the audited sections of Report of the Directors: Risk on pages 25 to 64 and Report of the
Directors: Capital Management on pages 65 to 68 form an integral part of these financial statements.

A A Flockhart, Chairman

28 February 2011

81

HSBC BANK PLC

Financial Statements (continued)

Consolidated cash flow statement for the year ended 31 December 2010
2010
m

2009
m

4,011

4,014

Adjustments for:
non-cash items included in profit before tax .............................................. 37
change in operating assets ............................................................................... 37
change in operating liabilities ......................................................................... 37
elimination of exchange differences1 ..............................................................
net gain from investing activities ....................................................................
share of profits in associates and joint ventures .............................................
distributions from associates ...........................................................................
contributions paid to defined benefit plans .....................................................
tax paid ............................................................................................................

2,837
17,225
20,868
(3,613)
(925)
(5)
(1,985)
(1,087)

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

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

37,326

(11,759)

(68,653)
57,569
(511)
141
(184)
3

517

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

(247)
(16)

215

(15)

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

(11,118)

14,348

Cash flows from financing activities

Issue of share capital ..........................................................................................
Issue of preference share capital ........................................................................
Subordinated loan capital repaid ........................................................................
Subordinated loan capital issued.........................................................................
Dividends paid to shareholders ..........................................................................
Dividends paid to minority interests ..................................................................
Net cash outflow from acquisition of and increase in stake of subsidiaries.......

25

633
(1,874)
(22)
(194)

2,776

(101)

(1,067)
(7)

Net cash generated from financing activities

(1,432)

1,601

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 .........................

24,776
60,806
423

4,190
60,855
(4,239)

Cash and cash equivalents at 31 December ....................................................... 37

86,005

60,806

Notes
Cash flows from operating activities
Profit before tax ..................................................................................................

Cash flows from investing activities

Purchase of financial investments ......................................................................
Proceeds from the sale and maturity 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 .....................................................................................................

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.
The accompanying notes on pages 89 to 195 and the audited sections of Report of the Directors: Risk on pages 25 to 64 and Report of the
Directors: Capital Management on pages 65 to 68 form an integral part of these financial statements.

82

83

Retained
earnings
m

Availablefor-sale
fair value
reserve
m

Cash flow
hedging
reserve2
m

Foreign
exchange
reserve
m

Total
shareholders
equity
m

Noncontrolling
interests
m

Total
equity
m

1,750

8,135
2,959

(5,911)

350

2,641

27,787
2,959

641
56

28,428
3,015

118

118

2,962
2,962

(160)

(160)

(102)

(102)

2,818
2,962
(160)
118
(102)

14

(2)
(12)

2,804
2,962
(160)
116
(114)

3,077

2,962

(160)

(102)

5,777

42

5,804

Dividends to shareholders..........................................................................
Net impact of equity-settled share-based payments .................................
Other movements ......................................................................................
Change in ownership interest in subsidiaries1 ..........................................
Tax on items taken directly to equity ........................................................

(1,868)
163

(56)
22

(1,868)
163

(56)
22

(22)

(129)

(1,890)
163

(185)
22

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

797

20,025

1,750

9,473

(2,949)

190

(2,539)

31,825

532

32,357

Called up
share
capital
m

Share
premium
m

Other equity
instruments
m

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

797

20,025

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

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

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

1 Relates to the purchase of non-controlling interests in HSBC Europe B.V. See Note 41 for further details.
2 Movements in the cash flow hedging reserve include amounts transferred to the income statement of 530 million comprising a 514 million loss taken to Net interest income and a 16 million loss taken to
Net trading income.
The accompanying notes on pages 89 to 195 and the audited sections of Report of the Directors: Risk on pages 25 to 64 and Report of the Directors: Capital Management on pages 65 to 68 form an integral
part of these financial statements.

HSBC BANK PLC

2010
Other reserves

Financial Statements (continued)

Consolidated statement of changes in equity for the year ended 31 December 2010

Cash flow
hedging
reserve3
m

Foreign
exchange
reserve
m

Total
shareholders
equity
m

Noncontrolling
interests
m

Total equity
m

17,249

1,750

7,969
3,092

(11,627)

327

3,458

19,923
3,092

738
66

20,661
3,158

(1,716)

(1,721)
5

5,770
5,770

23

23

(817)

(817)

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

(21)
14

1
(36)

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

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

1,376

5,770

23

(817)

6,352

45

6,397

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

Dividends to shareholders .........................................................................
Net impact of equity-settled share-based payments ..................................
Other movements ......................................................................................
Change in ownership interest in subsidiaries2 ...........................................

2,776

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

(54)

2,776
(1,067)
(190)
(7)

(42)

(100)

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

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

797

20,025

1,750

8,135

(5,911)

350

2,641

27,787

641

28,428

Share
premium
m

Other equity
Instruments

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

797

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

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

Cash flow hedges ......................................................................................
Actuarial gains/(losses) on defined benefit plans .....................................
Exchange differences and other ................................................................

84
1 All new capital subscribed in the year was issued to HSBC Holdings plc. See note 36 for further details.
2 Relates to the purchase of non-controlling 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.
The accompanying notes on pages 89 to 195 and the audited sections of Report of the Directors: Risk on pages 25 to 64 and Report of the Directors: Capital Management on pages 65 to 68 form an integral
part of these financial statements.

HSBC BANK PLC

Retained
earnings
m

Availablefor-sale
fair value
reserve
m

Called up
share
capital
m

Financial Statements (continued)

2009
Other reserves

HSBC BANK PLC

Financial Statements (continued)

HSBC Bank plc statement of financial position at 31 December 2010

2010
m

2009
m

22,357
1,030
126,493
4,505
108,905
27,860
208,548
41,338
3,354
216
1,557
63
15,459
686
1,343
617

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

564,331

525,970

38,873
230,795
577
98,412
18,334
108,786
29,417
2,221
11
1,955
229
2
575
7,562

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

537,749

501,039

797
20,025
1,750
42
3,968

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

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

26,582

24,931

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

564,331

525,970

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
32
32
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 ..................................................................................

32
32
25
26
17
32
27

29
10
7
30

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

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

36
36

The accompanying notes on pages 89 to 195 and the audited sections of Report of the Directors: Risk on pages 25 to 64 and Report of the
Directors: Capital Management on pages 65 to 68 form an integral part of these financial statements.

A A Flockhart, Chairman

28 February 2011

85

HSBC BANK PLC

Financial Statements (continued)

HSBC Bank plc cash flow statement for the year ended 31 December 2010
2010
m

2009
m

3,396

2,967

2,215
(5,523)
28,734
(1,189)
(329)
(1,933)
(674)

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

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

24,697

(6,900)

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 ...................................................
Net cash outflow from acquisition of and increase in stake of associates
Proceeds from disposal of associates .............................................................

(27,066)
14,849
(316)
5
(163)

(31,309)
50,482
(312)
791
(133)
(16)
188

Net cash generated from/(used in) investing activities

(12,689)

19,691

Cash flows from financing activities

Issue of ordinary share capital .......................................................................
Net cash outflow from acquisition of and increase in stake of subsidiaries ..
Subordinated loan capital issued.....................................................................
Dividends paid ................................................................................................

(442)
633
(1,868)

2,776

(1,067)

Net cash generated from financing activities

(1,677)

1,709

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

10,331

14,500

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

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

40,702
326

27,791
(1,589)

51,359

40,702

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 to defined benefit plans ............................................
tax paid ....................................................................................................

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

37
37
37

37

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.
The accompanying notes on pages 89 to 195 and the audited sections of Report of the Directors: Risk on pages 25 to 64 and Report of the
Directors: Capital Management on pages 65 to 68 form an integral part of these financial statements.

86

Other reserves

Called up
share capital
m

Share
premium
m

Other equity
instruments
m

Retained
earnings
m

Availablefor-sale fair
value reserve
m

Cash flow
hedging
reserve1
m

Foreign
exchange
reserve
m

Total equity
m

797

20,025

1,750

2,715
2,858

(664)

332

(24)

24,931
2,858

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

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

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

140

140

596
596

(202)

(202)

538
596
(202)
140
4

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

2,998

596

(202)

3,396

Dividends to shareholders..........................................................................
Net impact of equity-settled share-based payments .................................
Tax on items taken directly to equity ........................................................

(1,868)
101
22

(1,868)
101
22

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

797

20,025

1,750

3,968

(68)

130

(20)

26,582

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

87

1 Movements in the cash flow hedging reserve include an amount transferred to the income statement of 558 million loss taken to Net interest income.
The accompanying notes on pages 89 to 195 and the audited sections of Report of the Directors: Risk on pages 25 to 64 and Report of the Directors: Capital Management on pages 65 to 68 form an integral
part of these financial statements.

HSBC BANK PLC

2010

Financial Statements (continued)

HSBC Bank plc statement of changes in equity for the year ended 31 December 2010

88

Called up
share capital
m

Share
premium
m

Other equity
Instruments
m

Retained
earnings
m

Available- forsale fair value

reserve
m

Cash flow
hedging
reserve2
m

Foreign
exchange
reserve
m

Total equity
m

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

797

17,249

1,750

3,081
2,531

(977)

407

(52)

22,255
2,531

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

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

(1,764)

(1,769)
5

313
313

(75)

(75)

28

28

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

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

767

313

(75)

28

1,033

Share capital issued, net of costs 1 .............................................................

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

2,776

(1,067)
(66)

2,776
(1,067)
(66)

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

797

20,025

1,750

2,715

(664)

332

(24)

24,931

1 All new capital subscribed in the year was issued to HSBC Holdings plc. See note 36 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.
The accompanying notes on pages 89 to 195 and the audited sections of Report of the Directors: Risk on pages 25 to 64 and Report of the Directors: Capital Management on pages 65 to 68 form an integral
part of these financial statements.

HSBC BANK PLC

Other reserves

Financial Statements (continued)

2009