EX-12 2 exhibit129301510-q.htm EXHIBIT 12 Exhibit


EXHIBIT 12
HSBC USA INC.
COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES AND
EARNINGS TO COMBINED FIXED CHARGES AND PREFERRED STOCK DIVIDENDS
 
 
Nine Months Ended September 30,
  
2015
 
2014
 
(dollars are in millions)
Ratios excluding interest on deposits:
 
 
 
Income from continuing operations
$
455

 
$
284

Income tax expense (benefit)
285

 
(86
)
Fixed charges:
 
 
 
Interest on:
 
 
 
Short-term borrowings
35

 
27

Long-term debt
524

 
487

Others(2)
10

 
(91
)
One third of rents, net of income from subleases
22

 
22

Total fixed charges, excluding interest on deposits
591

 
445

Earnings from continuing operations before taxes and fixed charges
$
1,331

 
$
643

Ratio of earnings to fixed charges
2.25

 
1.44

Preferred stock dividends(1)
$
81

 
$
90

Fixed charges, including preferred stock dividends
$
672

 
$
535

Ratio of earnings to fixed charges, including preferred stock dividends
1.98

 
1.20

 
 
 
 
Ratios including interest on deposits:
 
 
 
Total fixed charges, excluding interest on deposits
$
591

 
$
445

Add: Interest on deposits
177

 
108

Total fixed charges, including interest on deposits
$
768

 
$
553

Earnings from continuing operations before taxes and fixed charges
$
1,331

 
$
643

Add: Interest on deposits
177

 
108

Earnings from continuing operations before taxes and fixed charges, including interest on deposits
$
1,508

 
$
751

Ratio of earnings to fixed charges, including interest on deposits
1.96

 
1.36

Fixed charges, including preferred stock dividends
$
672

 
$
535

Add: Interest on deposits
177

 
108

Fixed charges, including interest on deposits and the preferred stock dividend factor
$
849

 
$
643

Ratio of earnings to fixed charges, including interest on deposits and preferred stock dividends
1.78

 
1.17

 
(1) 
Preferred stock dividends are 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.