Hsbc Holdings Plc · LSE:HSBA
Hsbc — Q3 2018 Earnings Presentation
37 slides from Hsbc's earnings presentation, Oct 29, 2018
Slide 1: HSBC Holdings plc 3Q18 Results Presentation to Investors and Analysts
HSBC Holdings plc 3Q18 Results Presentation to Investors and Analysts Date: 29 October 2018
Slide 2: Our strategic priorities and financial targets
Our strategic priorities and financial targets Strategic priorities Financial targets Accelerate growth from our Asian franchise 1 Build on strength in Hong Kong Invest in PRD, ASEAN, and Wealth in Asia (incl. Insurance and Asset Management) RoTE1 >11% by 2020 Be the leading bank to support driv
Slide 3: Key messages
Key messages 3Q18 key messages 9M18 Reported PBT (9M17: $14.9bn) 1 Reported PBT of $5.9bn, 28% higher than 3Q17; $6.2bn adjusted PBT, 16% higher than 3Q17 $16.6bn 12% Adjusted PBT (9M17: $17.7bn) Total adjusted revenue increased $1.1bn to $13.8bn vs. 3Q17; good business momentum with $18.3bn 4% 2 re
Slide 4: Key financial metrics
Financial overview Key financial metrics Key financial metrics 9M17 9M18 Return on average ordinary shareholders’ equity2 8.2% 9.0% Return on average tangible equity2 9.3% 10.1% Jaws (adjusted)4 (1.3)% (1.6)% Dividends per ordinary share in respect of the period $0.30 $0.30 Earnings per share5 $0.50
Slide 5: Reconciliation of Reported to Adjusted PBT
Financial overview Reconciliation of Reported to Adjusted PBT 3Q18 vs. 3Q17 9M18 vs. 9M17 3Q17 3Q18 ∆ 3Q17 9M17 9M18 ∆ 9M17 Reported profit before tax 4,620 5,922 1,302 14,863 16,634 1,771 Currency translation (104) - 104 187 - (187) Significant items: Fair value movements on financial instruments 4
Slide 6: 9M18 Profit before tax
Financial overview 9M18 Profit before tax 9M18 ∆ 9M17 Adjusted revenue by global business, $m adverse favourable +10% Revenue $41,376m 1,698 4% 16,825 15,332 +4% LICs / ECL $(914)m 172 16% +13% 12,449 12,002 11,189 Operating (1,330) (6)% +4% $(24,108)m 9,893 expenses >(100)% 1,309 1,361 1,142 Share
Slide 7: 3Q18 Profit before tax
Financial overview 3Q18 Profit before tax 3Q18 ∆ 3Q17 Adjusted revenue by global business, $m adverse favourable +14% Revenue $13,841m 1,123 9% 5,760 5,049 +10% LICs / ECL $(507)m (78) (18)% +15% 4,184 3,750 3,810 Operating (155) (2)% 0% $(7,738)m 3,271 expenses >(100)% 434 432 Share of profits in 1
Slide 8: Revenue performance
Financial overview Revenue performance Revenue performance, $m7 +12% Global 14,126 businesses 13,450 13,376 432 12,612 12,533 12,564 467 443 425 12,052 434 434 416 4,184 3,965 4,002 GPB 3,956 3,939 3,810 3,312 GB&M 3,550 3,750 3,271 3,648 CMB 3,212 3,194 3,387 RBWM 5,019 4,966 5,049 4,937 5,468 5,28
Slide 9: Strong revenue growth driven by deposit margins
Retail Banking and Wealth Management Strong revenue growth driven by deposit margins 9M18 highlights Revenue performance, $m7 Balance Sheet, $bn8 +14% +3% +9% +8% 618 633 637 5,019 4,966 5,049 4,937 5,468 5,283 5,760 Adjusted PBT (9M17: $5.1bn) 329 349 356 134 88 40 Wealth $5.7bn 13% Mgt. 1,522 1,46
Slide 10: Broad based growth across all products
Commercial Banking Broad based growth across all products 9M18 highlights Revenue performance, $m7 Balance Sheet, $bn8 +15% Customer lending: +3% +8% +2% Adjusted revenue 3,212 3,194 3,271 3,387 3,550 3,648 3,750 Adjusted PBT (9M17: $5.2bn) 333 327 Markets products, 309 461 $6.0bn 16% Insurance and
Slide 11: Strong 9M18 PBT, up 7% reflecting our differentiated strategy
Global Banking and Markets Strong 9M18 PBT, up 7% reflecting our differentiated strategy Management view of adjusted revenue 9M18 highlights Revenue performance, $m7 $m 3Q18 ∆ 3Q17 Adjusted revenue 3,956 3,939 3,810 3,312 3,965 4,002 4,184 Global Markets 1,744 5% 38 FICC 1,460 10% 22 Credit and Adju
Slide 12: $11.5bn of positive inflows in 9M18; progress in building revenues in areas targeted for growth
Global Private Bank $11.5bn of positive inflows in 9M18; progress in building revenues in areas targeted for growth Client assets, $bn 9M18 highlights Revenue performance, $m7 0% 20 13 14 13 14 23 21 -2% 283 295 307 317 317 317 312 Adjusted revenue Adjusted PBT 425 434 434 416 467 443 432 (9M17: $0.
Slide 13: Lower revenue in 3Q18 from adverse impact of hyperinflation in Argentina and valuation difference
Corporate Centre Lower revenue in 3Q18 from adverse impact of hyperinflation in Argentina and valuation difference 9M18 highlights Revenue performance, $m7 Legacy Credit adjusted RWAs: 1Q17 2Q17 3Q17 4Q17 1Q18 2Q18 3Q18 Adjusted PBT (9M17: $2.2bn) Central Treasury 456 525 481 286 (2) 249 111 $0.9bn
Slide 14: YTD net interest margin rose by 1bp to 1.67%
Net interest margin YTD net interest margin rose by 1bp to 1.67%; includes a 1bp adverse impact from hyperinflation in Argentina NII sensitivity as at 30 June 2018, $m: Sensitivity of NII to a Reported YTD 1.63% 1.63% 1.67% 1.66% 1.67% 25bps / 100bps instantaneous change in yield curves (12 months),
Slide 15: Credit outlook remains stable
Loan impairment charges and expected credit losses Credit outlook remains stable Loan impairment charges and expected credit losses, $m Analysis by stage as at 30 Sep 2018 Stage 3 as IAS 39 IFRS 9 Reported basis $bn Stage 1 Stage 2 Stage 3 Total12 a % of Total 3Q17 2Q18 3Q18 30 Sep 2018 Loans and ad
Slide 16: Operating expenses in line with expectations
Operating expenses Operating expenses in line with expectations On track to deliver positive jaws for FY18, based on current 3Q18 vs. 3Q17, $bn excluding UK bank levy operating trends. We remain committed to the discipline of delivering positive jaws. 0.2 (0.3) Near and medium term 3Q Operating Expe
Slide 17: Strong capital base: CET1 ratio of 14.3%
Capital adequacy Strong capital base: CET1 ratio of 14.3% Regulatory capital and RWAs, $bn CET1 ratio movement, % 3Q17 4Q17 2Q18 3Q18 Common equity tier 1 capital 129.8 126.1 122.8 123.1 (0.2) Total regulatory capital 186.4 182.4 176.6 178.1 0.4 Risk-weighted assets 888.6 871.3 865.5 862.7 (0.1) 0.0
Slide 18: Return metrics
Return metrics Return metrics Group RoTE walk, 9M18 vs. 9M17, % 0.2 (0.3) 0.6 (1.3) 10.1 1.6 9.3 9M17 Reported RoTE 9M17 significant items Change in PBT excl. Change in Tax excl. Change in NCI & 9M18 significant items 9M18 Reported RoTE and UK Bank levy significant items and significant items AT1/ P
Slide 19: In summary
In summary Financial targets RoTE1 >11% by 2020 Good business momentum; Group revenues up 9% vs. 3Q17, with 1 strong performances from RBWM, CMB and GB&M Strong cost discipline and control; on track for positive adjusted jaws Costs Positive adjusted jaws 2 on an annual basis while continuing to
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Slide 21: Appendix
Appendix
Slide 22: Global business management view of adjusted revenue
Appendix Global business management view of adjusted revenue $m 1Q17 2Q17 3Q17 4Q17 1Q18 2Q18 3Q18 GB&M, $m 1Q17 2Q17 3Q17 4Q17 1Q18 2Q18 3Q18 Total Group revenue 12,934 13,097 12,718 12,119 13,252 13,328 13,841 Global Markets 1,978 1,793 1,657 1,265 1,785 1,567 1,744 Total adjusted revenue as FICC
Slide 23: Currency translation and significant items included in the Income Statement
Appendix Currency translation and significant items included in the Income Statement $m 3Q17 2Q18 3Q18 9M17 9M18 Reported PBT 4,620 5,957 5,922 14,863 16,634 Revenue Currency translation (314) (360) - 586 - Customer redress programmes 3 (46) - 3 (46) Disposals, acquisitions and investment in new bus
Slide 24: RoTE by global business
Appendix RoTE by global business 9M18 $m Corporate RBWM CMB GB&M GPB Group Centre Reported profit before tax 5,544 6,034 5,535 182 (661) 16,634 Tax (983) (1,272) (1,212) (28) (207) (3,702) Reported profit after tax 4,561 4,762 4,323 154 (868) 12,932 less attributable to: preference shareholders, oth
Slide 25: Balance sheet – Customer lending
Appendix Balance sheet – Customer lending 3Q18 Loans and advances to customers20 3Q18 growth by global business and region excluding red-inked balances Excluding red-inked balances, customer lending increased by $15bn or 2% from 2Q18, reflecting: Lending growth in Europe ($11bn) primarily in the U
Slide 26: Balance sheet – Customer accounts
Appendix Balance sheet – Customer accounts 3Q18 Customer accounts20, $bn Customer accounts22, US$bn Balances broadly unchanged in 3Q18: Small decreases in North America and Asia broadly offset by increases in MENA and 6% CAGR Latin America. (Demand deposits) 1,025 Balances increased $17bn or 1% si
Slide 27: Net interest margin analysis and net interest income sensitivity
Appendix Net interest margin analysis and net interest income sensitivity Net interest margin analysis Variance FY17 1H18 9M18 Group NIM 9M18 vs. 2017 Average Average Average Average $bn Yield Yield Yield Yield Impact balance balance balance balance Loans and advances to customers 902 3.19% 966 3.35
Slide 28: Net interest margin supporting information
Appendix Net interest margin supporting information Gross customer lending analysis - $990bn Of our customer lending: HIBOR / LIBOR 1 month rate25 As at 30 Sep 2018 As at 31 Dec 2017 UK RBWM 9% mortgages, $119bn Due less − Fixed 67% than 1 year Due over 1 year 12% − Variable 33% but not more than 5
Slide 29: Equity drivers
Appendix Equity drivers 3Q18 vs. 2Q18 Equity drivers No. of shares (excl. Shareholders’ Tangible TNAV per treasury Equity, $bn Equity, $bn share, $ shares), million As at 30 June 2018 183.6 139.7 7.00 19,963 Profit to shareholders 4.2 3.9 0.19 - Dividends net of scrip26 (2.1) (2.1) (0.12) 42 FX (1.7
Slide 30: UK customer advances
Appendix UK customer advances Total UK27 gross customer advances - RBWM residential mortgages28, £bn RBWM unsecured lending30, £bn £229bn 85.6 86.7 88.6 91.6 As at 30 Sep 2018 79.7 80.7 81.8 83.8 Of which £91.6bn Wholesale relates to RBWM 6.5 6.5 6.7 6.7 6.2 Mortgages Dec-16 Mar-17 Jun-17 Sep-17 Dec
Slide 31: Turkey / Argentina supporting information
Appendix Turkey / Argentina supporting information Turkey Argentina $3.9bn of gross loans and advances; 90% of lending is either Stage 1 or 2 $3.4bn of gross loans and advances c.$5bn drawn exposure booked outside of $0.3bn of allowances for ECL <0.5% of Group gross loans and advances Tu
Slide 32: Leading Indicators for World Trade
Appendix Leading Indicators for World Trade Trade Values are expected to continue their growth in the short term… …but trade volumes are expected to soften in the medium term DC issuances value indexed (2Q 15 = 1) 31 34 35 World export value indexed (2Q 15 = 1) 32 WTOI Export Volume Index 1.24 1.14
Slide 33: Glossary
Appendix Glossary AIEA Average interest earning assets IFRS International Financial Reporting Standard AT1 Additional Tier 1 The difference between the rate of growth of revenue and the rate of growth of costs. Positive jaws is where the revenue growth rate AUA Assets under administration Jaws excee
Slide 34: Footnotes
Appendix Footnotes 1. A targeted reported RoTE of 11% is broadly equivalent to a reported return on equity of 10%; assumes a Group CET1 ratio greater than 14% 2. Annualised 3. Unless otherwise stated, risk-weighted assets and capital are calculated using (i) the CRD IV transitional arrangement as im
Slide 35: Footnotes
Appendix Footnotes 31. Documentary credit Traffic / MT700 values by SWIFT 32. World exports value (merchandise) by WTO 33. Short term is ~ 1month from the point data is available 34. WTOI by WTO 35. Export volume index (Q1 2005 = 100) by WTO 36. Medium to long term is ~ 3 months to 2 quarters from t
Slide 36: Disclaimer
Appendix Disclaimer Important notice The information, statements and opinions set out in this presentation and subsequent discussion do not constitute a public offer for the purposes of any applicable law or an offer to sell or solicitation of any offer to purchase any securities or other financial
Slide 37: Issued by HSBC Holdings plc Group Investor Relations
Issued by HSBC Holdings plc Group Investor Relations 8 Canada Square London E14 5HQ Cover image: Guangzhou is located at the heart of China’s Pearl River Delta, one of the United Kingdom country’s fastest growing economic regions. 36 www.hsbc.com Photography: Getty Images