EX-12 2 exhibit126301510-q.htm EXHIBIT 12 Exhibit 12 6.30.15 10-Q


EXHIBIT 12
HSBC USA INC.
COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES AND
EARNINGS TO COMBINED FIXED CHARGES AND PREFERRED STOCK DIVIDENDS
 
 
Six Months Ended June 30,
  
2015
 
2014
 
(dollars are in millions)
Ratios excluding interest on deposits:
 
 
 
Income from continuing operations
$
251

 
$
283

Income tax expense (benefit)
174

 
(57
)
Less: Undistributed equity earnings
—

 
—

Fixed charges:
 
 
 
Interest on:
 
 
 
Short-term borrowings
22

 
16

Long-term debt
340

 
322

Others(2)
8

 
(94
)
One third of rents, net of income from subleases
14

 
14

Total fixed charges, excluding interest on deposits
384

 
258

Earnings from continuing operations before taxes and fixed charges, net of undistributed equity earnings
809

 
484

Ratio of earnings to fixed charges
2.11

 
1.88

Total preferred stock dividend factor(1)
$
57

 
$
59

Fixed charges, including the preferred stock dividend factor
$
441

 
$
317

Ratio of earnings from continuing operations to combined fixed charges and preferred stock dividends
1.83

 
1.53

Ratios including interest on deposits:
 
 
 
Total fixed charges, excluding interest on deposits
$
384

 
$
258

Add: Interest on deposits
100

 
71

Total fixed charges, including interest on deposits
$
484

 
$
329

Earnings from continuing operations before taxes and fixed charges, net of undistributed equity earnings
$
809

 
$
484

Add: Interest on deposits
100

 
71

Total
$
909

 
$
555

Ratio of earnings to fixed charges
1.88

 
1.69

Fixed charges, including the preferred stock dividend factor
$
441

 
$
317

Add: Interest on deposits
100

 
71

Fixed charges, including the preferred stock dividend factor and interest on deposits
$
541

 
$
388

Ratio of earnings from continuing operations to combined fixed charges and preferred stock dividends
1.68

 
1.43

 
(1) 
Preferred stock dividends grossed up to their pretax equivalents.
(2) 
During the second quarter of 2014, we concluded certain state and local tax audits resulting in the settlement of significant uncertain tax positions covering a number of years. As a result, we released tax reserves previously maintained in relation to the periods and issues under review. In addition, we released our accrued interest associated with the tax reserves released which resulted in a $120 million benefit to interest expense in 2014.