HSBCBankARAcover06 19/2/07 10:22 am Page 1 2006 Annual Report and Accounts HSBC Bank plc HSBC BANK PLC Annual Report and Accounts 2006 Contents Page Page Financial Highlights .............................................. 1 Consolidated statement of recognised income and expense for the year ended Board of Directors and Senior Management ...... 2 31 December 2006 .............................................. 29 Report of the Directors ......................................... 4 Consolidated cash flow statement for the year ended 31 December 2006 ............................ 30 Statement of Directors’ Responsibilities in Relation to the Directors’ Report and the HSBC Bank plc balance sheet at Financial Statements ........................................... 25 31 December 2006 .............................................. 31 Independent Auditors’ Report to the Member HSBC Bank plc statement of recognised income of HSBC Bank plc ............................................... 26 and expense for the year ended 31 December 2006 .............................................. 32 Financial Statements HSBC Bank plc cash flow statement for the year Consolidated income statement for the year ended 31 December 2006 .................................... 33 ended 31 December 2006 ................................27 Notes on the Financial Statements ............................ 34 Consolidated balance sheet at 31 December 2006 ......................................... 28 Presentation of Information This document comprises the Annual Report and Accounts 2006 for HSBC Bank plc (‘the bank’) and its subsidiary undertakings (together ‘the group’). It contains the Directors’ Report and Accounts, together with the Auditors’ report, as required by the UK Companies Act 1985. References to ‘HSBC’ or ‘the Group’ within this document mean HSBC Holdings Plc together with its subsidiaries. Cautionary statement regarding forward-looking statements This Annual Report contains certain forward-looking statements with respect to the financial condition, results of operations and business of the bank. Statements that are not historical facts, including statements about the bank’s beliefs and expectations, are forward- looking statements. Words such as ‘expects’, ‘anticipates’, ‘intends’, ‘plans’, ‘believes’, ‘seeks’, ‘estimates’, ‘potential’ and ‘reasonably possible’, variations of these words and similar expressions are intended to identify forward looking statements. These statements are based on current plans, estimates and projections, and therefore undue reliance should not be placed on them. Forward-looking statements speak only as of the date they are made, and it should not be assumed that they have been revised or updated in the light of new information or future events. Forward-looking statements involve inherent risks and uncertainties. Readers are cautioned that a number of factors could cause actual results to differ, in some instances materially, from those anticipated or implied in any forward-looking statement. HSBC BANK PLC Financial Highlights 2006 20054 2004 2003 2002 £m £m £m £m £m For the year 1,2 Profit on ordinary activities before tax3 ....................................... 3,796 3,731 2,953 2,810 2,773 Profit attributable to shareholders of the parent company3 .......... 2,722 2,842 2,057 2,046 1,867 At year-end Shareholders’ funds of the parent company ................................. 20,399 19,091 16,828 17,064 16,455 Capital resources ........................................................................... 21,360 19,677 16,424 14,603 12,768 Customer accounts and deposits by banks ................................... 265,863 239,673 193,664 175,390 155,234 Total assets ................................................................................... 440,760 386,422 292,481 246,104 218,378 Ratios (%) Return on average shareholders’ funds (equity) of the parent company ................................................................................... 13.6 16.4 12.7 8.5 8.5 Capital ratios ................................................................................. — total capital .............................................................................. 11.2 10.8 10.5 10.7 10.3 — tier 1 capital ............................................................................. 7.5 6.9 7.4 7.4 7.1 Cost:income ratio .......................................................................... 58.5 57.5 59.5 62.9 58.7 Cost:income ratio including net insurance claims ....................... 58.9 58.8 64.2 – – Profit on ordinary activities Cost:income ratio (%) Capital resources (£m) before tax (£m) 65 4,000 25,000 64 3,796 3,500 3,731 63 62.9 20,000 21,360 3,000 62 19,677 2,953 2,810 2,773 61 2,500 60 15,000 16,424 14,603 2,000 59 59.5 58.7 58 58.5 12,768 10,000 1, 5 0 0 57 57.5 1, 0 0 0 56 55 5,000 500 54 0 53 0 2006 2005 2004 2003 2002 2006 2005 2004 2003 2002 2006 2005 2004 2003 2002 1 From 2004 the financial highlights are prepared in accordance with IFRSs as endorsed by the EU. 2 2004 financial highlights excludes IAS 32, IAS 39 and IFRS 4. The 2002 and 2003 financial highlights are under UK GAAP as previously reported. 3 The profit on ordinary activities before tax and the profit attributable to shareholders for the years 2002 and 2003 exclude goodwill amortisation. 4 Restated 2005 income statement and balance sheet figures. The financial highlights are influenced by changes in the group structure over the five years. The most significant acquisitions are as follows: in 2002, HSBC Trinkaus & Burkhardt AG, HSBC Republic Bank (UK) Limited and activities of HSBC Investment Bank plc; in 2004, Marks and Spencer Retail Financial Services Holdings Limited. 1 HSBC BANK PLC Board of Directors and Senior Management Directors C-H Filippi S K Green, Chairman Age 54. A Director since 2000. Chairman and Chief Executive Officer of HSBC France. A Group Age 58. Chairman since 2005 and a Director since Managing Director since 2004. A member of the 1995. Deputy Chairman from 2003 to December Supervisory Board of HSBC Trinkaus & Burkhardt 2004. Group Chairman of HSBC Holdings plc since AG. Joined HSBC France in 1987 having previously May 2006. Group Chief Executive of HSBC held senior appointments in the French civil service. Holdings plc from 2003 to 26 May 2006. Joined A Group General Manager from 2001 to 2004. HSBC in 1982. Chairman of HSBC North America Global Head of Corporate and Institutional Banking Holdings Inc. and HSBC Private Banking Holdings from 2001 to 2004. (Suisse) S.A. Deputy Chairman of HSBC Trinkaus & Burkhardt AG. A Director of HSBC France and J D Fishburn* The Hongkong and Shanghai Banking Corporation Age 60. A Director since 2003. Chairman of HFC Limited. Executive Director, Corporate, Investment Bank Limited and an independent non-executive Banking and Markets from 1998 to 2003. Group Director of HSBC Finance Corporation. Treasurer of HSBC Holdings plc from 1992 to 1998. Chairman of the British Bankers Association. S T Gulliver M F Geoghegan, CBE, Deputy Chairman Age 47. A Director since September 2006. Head of HSBC’s Corporate, Investment Banking and Age 53. Deputy Chairman since 6 March 2006 and a Markets and Group Investment Businesses. A Group Director since 2004. Chief Executive from 2004 to Managing Director since 2004. Joined HSBC in March 2006. Group Chief Executive of HSBC 1980. A Director of HSBC USA Inc. and The Holdings plc since 26 May 2006. Joined HSBC in Hongkong and Shanghai Banking Corporation 1973. Chairman of HSBC Bank USA, N.A., HSBC Limited. A Group General Manager from 2000 to USA Inc. and HSBC Bank Canada. A Director of 2004. Head of Treasury and Capital Markets in Asia- The Hongkong and Shanghai Banking Corporation Pacific from 1996 to 2002, Head of Global Markets Limited, HSBC France, HSBC North America from 2002 to 2003 and Co-Head of Corporate, Holdings Inc., and HSBC National Bank USA. Investment Banking and Markets from 2003 to May President of HSBC Bank Brasil S.A.-Banco Múltiplo 2006. from 1997 to 2003 and responsible for all of HSBC’s business throughout South America from 2000 to C M S Jones* 2003. A non-executive Director and Chairman of Age 63. A Director since 2001. Formerly Chairman Young Enterprise. and Managing Director, James Beattie PLC. D D J John, Chief Executive R E S Martin* Age 56. Chief Executive since 6 March 2006 and a Age 46. A Director since 2005. General Counsel and Director since 2003. A Group Managing Director Company Secretary of Reuters Group PLC. since 6 March 2006. Joined HSBC Bank plc in 1971. Deputy Chief Executive from 2005 to 6 March 2006 A R D Monro-Davies* and Chief Operating Officer from 2003 to May Age 66. A Director since 2004. Formerly Chief 2005. A Group General Manager from 2000 to 6 Executive Officer, Fitch Ratings. March 2006. Deputy Chairman and Chief Executive Officer, HSBC Bank Malaysia Berhad from 1999 to P M Shawyer* 2002. Chief Executive Officer, The Hongkong and Age 56. A Director since 2004. Formerly a Shanghai Banking Corporation Limited in India Managing Partner of Deloitte. from 1997 to 1999. General Manager for Wales from 1993 to 1997. J Singh, OBE* Age 55. A Director since 2001. Chairman and Chief D C Budd, Chief Operating Officer Executive Officer of Edwardian Group Limited. Age 53. Chief Operating Officer and a Director since Member of the Board of Warwick Business School. 2005. A Group General Manager since 2005. Joined HSBC in 1972. A Director of HFC Bank Limited, J F Trueman* HSBC Bank Malta p.l.c. and Marks and Spencer Age 64.