HSBC will no longer report interest income from its global trade finance unit, while continuing to disclose fee and commission revenue.
The London-headquartered lender bills itself as the world’s largest trade bank and says it facilitated US$850bn in trade flows last year, making its earnings a bellwether for global trade activity.
It previously included total revenue from its Global Trade Solutions business, which generated US$1.99bn in revenue last year, in quarterly and annual earnings reports.
But in its first quarterly report this year, the bank disclosed only “fee and other” revenue, amounting to US$375mn.
In the same period last year, the bank reported US$673mn in combined trade-related revenue, including fee and commission income of US$379mn, suggesting interest makes up just under half of its trade turnover.
An HSBC spokesperson confirmed the change in reporting practice, adding: “We continually review our disclosures to ensure what we provide is useful to our stakeholders.”
Fees and commissions are typically earned on instruments such as letters of credit and guarantees, while interest income stems from trade loans and working capital finance.
Despite the reduced detail, HSBC will still make public more information about its trade business than most of its peers in Europe, which typically do not disclose trade earnings at all.
Globally, banks do not report trade finance earnings in a uniform way. Some lenders disclose total trade income, while others only publish fee and commission income, or loan or documentary credit volumes.
Standard Chartered, which, like HSBC, earns a significant share of its revenues in Asia, reports both interest and non-interest income for its trade business.
HSBC is undergoing a structural transformation under the leadership of Georges Elhedery, who last year merged the commercial banking and global banking arms, across which trade finance was previously split.
Earlier this year, HSBC unveiled a refreshed 10-strong leadership lineup, including the hiring of Kai Fehr, previously global head of trade at Standard Chartered, as global head of industry groups and partnerships.
