Hsbc Holdings Plc · LSE:HSBA
Hsbc — FY2018 Earnings Presentation
48 slides from Hsbc's earnings presentation, Feb 19, 2019
Slide 1: Overseas Regulatory Announcement
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Slide 2: 2018 Annual Results Audio Webcast and Conference Call
19 February 2019 HSBC HOLDINGS PLC 2018 ANNUAL RESULTS AUDIO WEBCAST AND CONFERENCE CALL There will be an audio webcast presentation and conference call today for investors and analysts. The speakers will be: John Flint, Group Chief Executive; and Ewen Stevenson, Group Chief Financial Officer. A cop
Slide 3: HSBC Holdings plc FY18 Results
HSBC Holdings plc FY18 Results Presentation to Investors and Analysts
Slide 4: Contents
Contents Strategy update 1 FY18 financial performance 3 Appendix 12 Glossary 40 Footnotes 41 0
Slide 5: Key messages
Strategy update Key messages FY18 reported PBT up 16% to $19.9bn vs. FY17; adjusted PBT up 3% to $21.7bn; 1 RoTE up from 6.8% to 8.6% FY18 adjusted revenue up 4% to $53.9bn vs. FY17, driven by growth in all four global 2 businesses Weaker 4Q18, with adjusted revenue down 8% vs. 3Q18, principally dri
Slide 6: Progress on our strategic priorities
Strategic priorities Progress on our strategic priorities Strategic priorities Targeted 2020 outcomes FY18 performance highlights, YoY 1 Accelerate growth from Asia High single digit revenue Asia adjusted revenue of $28.7bn (+11%); Wealth in Asia Build on strength in Hong Kong growth per annum rev
Slide 7: Key financial metrics
FY18 financial performance Key financial metrics Reported profit before tax of $19.9bn, up $2.7bn or 16% vs. FY17 Adjusted profit before tax of $21.7bn, up $0.6bn or 3% vs. FY17 Group Return on average tangible equity of 8.6% vs. 6.8% FY17 Key financial metrics FY17 FY18 ∆ FY17 Return on avera
Slide 8: FY18 adjusted revenue performance
FY18 financial performance FY18 adjusted revenue performance Adjusted revenue analysis by global business Global business FY18 revenue FY18 vs. FY17, $m Insurance manufacturing market impacts (606) Wealth Management excl. market impacts 495 $1.7bn RBWM $21,935m or 8% Retail Banking 1,806 Other 20 GL
Slide 9: 4Q18 adjusted revenue performance
FY18 financial performance 4Q18 adjusted revenue performance Adjusted revenue analysis by global business Global business 4Q18 revenue 4Q18 vs. 4Q17, $m Insurance manufacturing market impacts (205) Wealth Management excl. market (51) $0.2bn impacts RBWM $5,110m or 4% Retail Banking 561 Other (85) GL
Slide 10: Repositioning towards target markets and customer segments
FY18 financial performance Repositioning towards target markets and customer segments Adjusted revenue Adjusted RWAs FY17 FY18 FY17 FY18 Group $51.7bn +4% $53.9bn $846bn +2% $865bn *RBWM 14% +7% 15% *RBWM 39% 41% RBWM +8% *CMB CMB 34% +11% 37% GB&M *CMB By global GPB business 26% +12% 27% *GB&M Corp
Slide 11: FY18 NIM of 1.66% up 3bps vs. FY17
FY18 financial performance FY18 NIM of 1.66% up 3bps vs. FY17 Net interest margin analysis +3bps Reported YTD NIM, % 1.63% 1.67% 1.66% 1.67% 1.66% FY18 NII of $30.5bn up $2.3bn or 8% vs. FY17 YTD average FY18 NIM of 1.66% up 3bps vs. FY17 +7% interest earning assets (AIEA), Interest rate rises acr
Slide 12: Quarterly costs broadly in line with previous guidance
FY18 financial performance Quarterly costs broadly in line with previous guidance 4Q18 vs. 4Q17, $bn excluding UK bank levy Near and medium term 0.2 investment in growth Productivity 0.1 0.0 Programmes and core 0.1 infrastructure Regulatory & 0.1 Mandatory (0.3) 0.2 8.0 7.6 4Q17 Cost savings Inflati
Slide 13: Credit performance
FY18 financial performance Credit performance $1,767m ECL in FY18; $1,713m LICs in FY17 ECL as a percentage of average gross loans and advances of 0.18% in FY18 4Q18 ECL of $853m was $358m higher than 3Q18; including a 4Q18 $165m charge in the UK relating to the current economic uncertainty
Slide 14: CET1 capital ratio of 14.0%
FY18 financial performance CET1 capital ratio of 14.0% CET1 ratio fell (0.3)ppt 4Q18; the decrease was due to: 4Q18 a net fall of (0.1)ppt from the fourth interim dividend (0.4)ppt, partly offset by profit generation 0.3ppt movement RWA growth (0.1)ppt adverse FX movements and other (0.1)ppt
Slide 15: Outlook
Outlook Financial targets RoTE16 >11% by 2020 1 Growing revenues in areas of strength Continue to redeploy capital into higher return businesses and invest Costs Positive adjusted jaws 2 in technology to improve customer service and competitiveness 3 Long term drivers of revenue growth remain st
Slide 16: Appendix
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Slide 17: Appendix Contents
Appendix Appendix Contents Supporting information - Strategy 14 Supporting information - Sustainable Finance 18 Supporting information - Income statement, global businesses, NIM and returns 19 Supporting information - Capital 33 Supporting information - Balance Sheet 35 Supporting information - Cred
Slide 18: Group returning to growth; strategic growth priorities in Asia, UK and international network
Appendix: Supporting information - Strategy Group returning to growth; strategic growth priorities in Asia, UK and through our international network delivering results Adjusted revenue growth Highlights Adjusted revenue FY17 FY18 $bn $bn unless otherwise stated Sustained leadership in key products
Slide 19: Revenue growth and market share gains in UK ring-fenced bank
Appendix: Supporting information - Strategy Revenue growth and market share gains in UK ring-fenced bank2 Key accomplishments and awards Financial performance Growth in customers & lending Market share Adjusted revenue, £bn Customers, millions Mortgages19, % +0.3 Completed the set-up of our ring-
Slide 20: US FY18 results supported by favourable ECL; progress from investments
Appendix: Supporting information - Strategy US FY18 results supported by favourable ECL; progress from investments Progress on US RoTE Global businesses building momentum FY17 FY18 RoTE4, % CMB loans, $bn Grew revenue by 7%; growth in all client segments +1.8ppt Double-digit growth in US 22.4 CM
Slide 21: Invested $4.1bn in growth and technology in FY18
Appendix: Supporting information - Strategy Invested $4.1bn in growth and technology in FY18; progress in customer numbers and customer satisfaction Investments by category Outcomes $bn 1.2 million more RBWM customers: RBWM customer growth, millions RBWM 0.9 Increase mainly in Asia due to Near a
Slide 22: HSBC's commitment to sustainable finance and approach to ESG
Appendix: Sustainable Finance HSBC’s commitment to sustainable finance and approach to ESG HSBC’s sustainable finance commitments HSBC’s ESG approach Support the global transition to the low-carbon economy, 1. Provide $100 billion of Environmental through our own sustainable operations and by supp
Slide 23: Currency translation and significant items included in the income statement
Appendix: Supporting information - Income statement, global businesses, NIM and returns Currency translation and significant items included in the income statement $m 4Q17 3Q18 4Q18 FY17 FY18 Reported PBT 2,304 5,922 3,256 17,167 19,890 Revenue Currency translation 450 147 - (133) - Customer redress
Slide 24: Global business management view of adjusted revenue
Appendix: Supporting information - Income statement, global businesses, NIM and returns Global business management view of adjusted revenue $m 1Q17 2Q17 3Q17 4Q17 1Q18 2Q18 3Q18 4Q18 GB&M, $m 1Q17 2Q17 3Q17 4Q17 1Q18 2Q18 3Q18 4Q18 Total Group revenue 12,800 12,953 12,580 11,982 13,116 13,188 13,694
Slide 25: Adjusted PBT by business and geography; adjusted revenue by business
Appendix: Supporting information - Income statement, global businesses, NIM and returns Adjusted PBT by business and geography; adjusted revenue by business Adjusted PBT by global business and geography Adjusted revenue performance, $m26 Adjusted PBT by global business, 4Q17 4Q18 ∆ 4Q17 ∆% FY17 FY18
Slide 26: Retail Banking and Wealth Management
Appendix: Supporting information - Income statement, global businesses, NIM and returns Retail Banking and Wealth Management FY18 highlights Revenue performance, $m26 Balance sheet, $bn27 +4% +3% FY18 revenue up -10% 8% and PBT up 9% +9% 620 632 641 4,970 4,915 5,000 4,890 5,417 5,232 5,694 5,110 Ad
Slide 27: Commercial Banking
Appendix: Supporting information - Income statement, global businesses, NIM and returns Commercial Banking FY18 highlights Revenue performance, $m26 Balance sheet, $bn27 +10% FY18 revenue and Customer lending: -0% PBT up 12% +9% +1% Adjusted revenue 3,183 3,158 3,238 3,355 3,517 3,613 3,709 3,696 Ad
Slide 28: Global Banking and Markets
Appendix: Supporting information - Income statement, global businesses, NIM and returns Global Banking and Markets Management view of adjusted revenue FY18 highlights Revenue performance, $m26 $m 4Q18 ∆ 4Q17 FY18 revenue up Adjusted revenue Global Markets 1,101 (16)% 3,918 3,898 3,774 3,278 3,928 3,
Slide 29: Global Private Bank
Appendix: Supporting information - Income statement, global businesses, NIM and returns Global Private Bank Client assets, $bn FY18 highlights Revenue performance, $m26 21 20 13 14 13 14 12 23 FY18 revenue up 4%, PBT up 16% +2% 283 295 307 317 317 317 312 297 Adjusted revenue -1% Adjusted PBT (FY17:
Slide 30: Corporate Centre
Appendix: Supporting information - Income statement, global businesses, NIM and returns Corporate Centre FY18 highlights Revenue performance, $m26 Legacy Credit adjusted RWAs, $bn: 1Q17 2Q17 3Q17 4Q17 1Q18 2Q18 3Q18 4Q18 12.4 Central Treasury 420 505 477 282 (23) 231 107 303 Adjusted PBT Of which: (
Slide 31: Net interest margin supporting information
Appendix: Supporting information - Income statement, global businesses, NIM and returns Net interest margin supporting information Gross customer lending - $990bn HIBOR / 1 month US$ LIBOR rate31 As at 31 Dec 2018 Wholesale vs. Personal Net Customer lending by currency 251 UK RBWM 10% mortgages, $12
Slide 32: Net interest margin and net interest income sensitivity
Appendix: Supporting information - Income statement, global businesses, NIM and returns Net interest margin and net interest income sensitivity Net interest margin analysis Variance FY17 9M18 FY18 Group NIM FY18 vs. FY17 Average Average Average Average $bn Yield/Cost Yield/Cost Yield/Cost Yield Impa
Slide 33: Argentina FY18 hyperinflation impact
Appendix: Supporting information - Income statement, global businesses, NIM and returns Argentina FY18 hyperinflation impact Impact (Latin America Corporate Centre), $m 3Q18 4Q18 FY18 Net interest income (109) 55 (54) Other income (195) 18 (177) Revenue (304) 73 (231) ECL 20 (12) 8 Costs 139 (76) 63
Slide 34: Return metrics
Appendix: Supporting information - Income statement, global businesses, NIM and returns Return metrics Group RoTE walk, FY18 vs. FY17, % 0.1 10.2 0.7 (0.1) 9.3 0.2 (1.6) 8.6 2.5 6.8 FY17 Reported Significant items FY17 excl. Change in PBT Change in tax NCI & AT1/ Change in Equity FY18 excl. Signific
Slide 35: RoTE by global business excluding significant items and UK bank levy
Appendix: Supporting information - Income statement, global businesses, NIM and returns RoTE by global business excluding significant items and UK bank levy FY18 $m Corporate RBWM CMB GB&M GPB Group Centre Reported profit before tax 6,882 7,719 6,312 248 (1,271) 19,890 Tax (1,238) (1,680) (1,350) (5
Slide 36: Shareholders' equity, tangible equity and TNAV per share
Appendix: Supporting information - Income statement, global businesses, NIM and returns Shareholders’ equity, tangible equity and TNAV per share 4Q18 vs. 3Q18 Equity drivers FY18 vs. FY17 Equity drivers No. of No. of shares shares Shareholders’ Tangible Shareholders’ Tangible TNAV per (excl. TNAV pe
Slide 37: Total shareholders' equity to CET1 capital
Appendix: Supporting information - Capital Total shareholders’ equity to CET1 capital Total equity to CET1 capital, as at 31.12.18, $m Total equity to CET1 capital walk, $m 4Q17 4Q18 Total equity (per balance sheet) 197,871 194,249 Total equity 194,249 - Non-controlling interests (7,621) (7,996) Tot
Slide 38: FY18 movements in CET1 and RWAs
Appendix: Supporting information - Capital FY18 movements in CET1 and RWAs FY18 vs. FY17 CET1 ratio movement, % FY18 vs. FY17 CET1 capital movement, $bn At 31.12.17 126.1 (1.2) 1.5 IFRS9 transitional Day 1 impact 1.2 14.6 (0.2) At 1.1.18 127.3 14.5 0.1 (0.3) (0.2) Capital generation 3.1 (0.2) 14.0 P
Slide 39: Balance sheet – customer lending
Appendix: Supporting information - Balance sheet Balance sheet – customer lending 4Q18 Net loans and advances to customers37 Customer lending* increased by $12bn or 1.3% vs. 3Q18, reflecting: 4Q18 lending growth by global business and region (excluding red-inked balances) Lending growth in Hong Ko
Slide 40: Balance sheet – customer accounts
Appendix: Supporting information - Balance sheet Balance sheet – customer accounts 4Q18 Customer accounts37, $bn Average Customer accounts30, US$bn Customer accounts* increased by $31bn or 2.4% vs. 3Q18: Growth in Asia of $13bn notably RBWM ($6bn) and GB&M ($5bn) primarily in savings 6% CAGR refle
Slide 41: Balance sheet – asset quality
Appendix: Supporting information - Credit risk Balance sheet – asset quality Gross loans and advances to Loans and advances to customers Stage 3 and impaired loans and Change in LICs/ECL, $bn Customers - $990bn of ‘Strong’ or ‘Good’ credit advances to customers, $bn quality, $bn Total gross customer
Slide 42: UK customer advances
Appendix: Supporting information - Credit risk UK customer advances Total UK39 gross customer advances - RBWM residential mortgages40, £bn RBWM unsecured lending43, £bn £226bn 86.7 88.6 91.6 94.2 As at 31 Dec 2018 79.7 80.7 81.8 83.8 85.6 Of which £94.2bn Wholesale relates to RBWM 6.5 6.5 6.7 6.9 6.
Slide 43: Mainland China drawn risk exposure
Appendix: Supporting information - Credit risk Mainland China drawn risk exposure44 Total Mainland China drawn risk Total mainland China drawn risk exposure of $161bn exposure of $161bn Wholesale: $151bn (of which 51% is onshore); Retail: $10bn Wholesale - $151bn Gross loans and advances to cu
Slide 44: Glossary
Appendix Glossary AIEA Average interest earning assets The difference between the rate of growth of revenue and the rate of Jaws growth of costs. Positive jaws is where the revenue growth rate ASEAN Association of Southeast Asian Nations exceeds the cost growth rate. We calculate this on an adjusted
Slide 45: Footnotes
Appendix Footnotes 1. Commitment by 2025 2. HSBC completed the set up of its ring-fenced bank, HSBC UK Bank plc, on 1 July 2018; pro forma results are extracted from the HSBC UK Bank plc Annual Report and Accounts, used for 2017 and 1H18 to enable an understanding of year-on-year performance 3. Mark
Slide 46: Footnotes
Appendix Footnotes 25. 3Q18 as reported at 3Q18 Results; 2Q18 as reported at 2Q18 Results; 1Q18 as reported at 1Q18 Results; 4Q17 as reported at 4Q17 Results; 3Q17 as reported at 3Q17 Results; 2Q17 as reported at 2Q17 Results; 1Q17 as reported at 1Q17 Results 26. Where a quarterly trend is presented
Slide 47: Disclaimer
Appendix Disclaimer Important notice The information, statements and opinions set out in this presentation and accompanying discussion (“this Presentation”) are for informational and reference purposes only and do not constitute a public offer for the purposes of any applicable law or an offer to se
Slide 48: Issued by HSBC Holdings plc Group Investor Relations
Issued by HSBC Holdings plc Group Investor Relations 8 Canada Square London E14 5HQ United Kingdom 44 www.hsbc.com