HSBC Trinkaus & Burkhardt AG 2006 Results

29 March 2007

The following text is the English version of a news release issued in Germany by HSBC Trinkaus & Burkhardt, a 78.6 per cent held subsidiary of HSBC Holdings plc.

• Operating profit up 34.0 per cent to €182.5 million in 2006 – the highest in the bank's history.
• Trading profits up 40.0 per cent to €104.0 million.
• Return on equity before tax 28.0 per cent, down from 30.4 per cent in 2005.
• Successfully completed change of legal structure from partnership to limited company.

In 2006, all four business segments continued to show encouraging signs of improvement.

Growth in net interest income of 20.2 per cent to €88.6 million was driven by strengthening positions in consumer loans and deposits. Overall, net interest income after risk provisions was up 12.4 per cent to €93.8 million.

Net fees and commission accounted for a 59.2 per cent share of the bank's operating profit. Thanks to the substantial broadening of the client base in the private and corporate banking business, these rose by 6.6 per cent in 2006 to €281.8 million. This solid performance also reflects the broader range of products and services on offer to the bank's clients as a result of increasing integration with the HSBC network.

Trading profit became the second highest contributor to earnings, increasing €29.7 million to €104.0 million, exceeding the record level prior-year figure by 40.0 per cent. The bank had particular success marketing retail products under the HSBC Trinkaus Investment Products brand.

The bank's administrative expenses rose by 3.8 per cent to €298.6 million, a figure which included an increase in personnel expenses of 1.6 per cent to €189.7 million. Administrative expenses and in particular personnel expenses, increased at a far slower rate due to the transfer of securities settlement services to the International Transaction Services GmbH (ITS) subsidiary and the establishment of a Contractual Trust Arrangement (CTA) in 2005. Depreciation declined 17.6 per cent to €10.3 million due to the sale of the license for the GEOS securities settlement system to ITS the previous year.

The cost:income ratio declined slightly to 61.8 per cent, well below the upper limit of 65 to 70 per cent target set by the bank.

There was a substantial decline in investment income and other income/expense as no notable non-recurring items were recorded in contrast to the previous year. Thanks to the strong increase in the operating performance however, the bank managed to compensate for these one-off effects with only a marginal decline in profit before tax of 2.1 per cent to €189.5 million. Correspondingly, profit after tax also declined only slightly by 2.4 per cent to €114.6 million. Return on equity before tax was 28.0 per cent after 30.4 per cent the year before. As in the previous year, a dividend of €2.50 per share will be proposed to the annual shareholders' meeting on 5 June 2007.

Consolidated total assets rose strongly in 2006 by 17.1 per cent to €18,676 million. At the balance sheet date the bank's total capital ratio and core capital ratio were 12.3 per cent and 7.0 per cent, respectively, as defined by the German Banking Act (KWG) and 12.5 per cent and 7.8 per cent according to the BIS definition. The bank's capital resources remain strong.

The HSBC Group continues to hold 78.6 per cent and Landesbank Baden-Württemberg 20.3 per cent of HSBC Trinkaus & Burkhardt AG's share capital.

Read the full media release here.(5 page PDF 28k )

Media enquiries to Harald Düren +49 (0)211 910 3761