HSBC Cites Customer Business Behind Higher Forex Revenues

HSBC Holdings reports a slight year-on-year improvement in its annual foreign exchange dealing profits, to £362 million, up 5.5 per cent from the £343 million reported for 1994. HSBC Midland treasurer Guy Heald says the increase was due mainly to "improved customer volumes."

The first half proved harder than the second, dragging down profits overall, says Heald. In the second half, HSBC pulled in £208 million from FX, a 35 per cent rise over the first half's £154 million. Most U.K. banks reported stronger second-half performance (see table below).

HSBC Holdings includes income from its principal group businesses: the Hongkong Bank Group; Hang Seng Bank; Midland Bank; HSBC Americas; the British Bank of the Middle East; Hongkong Bank Malaysia; Hongkong Bank of Canada and HSBC Investment Banking.

Total dealing profits for HSBC Holdings of £533 million are more than double 1994's £261 million. In a geographical breakdown of dealing profits (which includes FX, interest-rate derivatives, debt securities, equities and other trading) £186 million was generated in the U.K.; £68 million from Continental Europe; £108 million in Hong Kong; £121 million from the rest of Asia-Pacific and £50 million in the Americas.

Earnings for HSBC Midland (formerly Midland Global Markets), which comprises the HSBC Group's treasury operations in London, New York and Tokyo, are reported under the Midland Bank group.

Midlands foreign exchange profits grew by 12 per cent, to £123 million for the year, up from the £110 million reported in 1994. Total dealing profits surged to £137 million in 1995, an increase of £129 million, from the £8 million earned in 1994.

Hang Seng Bank reports forex income of HK$509 million, a nearly 18 per cent increase from the prior year's HK$432 million. Foreign exchange provided the bulk of the bank's overall dealing profits, which netted HK$520 million for the year versus the HK$527 million last year.

Looking ahead, Heald says the bank will focus on continued growth in the G-7 and European currencies, as well as increased turnover in emerging markets currencies. Furthermore, he says HSBC anticipates the New York dealing room will step up its market presence.

"HSBC is probably among the top five for banks in London and Japan, but New York is not quite there yet," says Heald, "And that's an ambition for us."

HSBC has added significant numbers to its front-office staff in its major centres in recent years (FXW, March 6, 1995 and August 28). Most recently, the London room added four strategic traders from Deutsche Morgan Grenfell, to its ranks: Ronnie Aked is the chief strategic position taker; Mark Austin and Keith Haydon are managers of the strategic positioning unit; and Colin Horsfield is a strategic position taker.