Hsbc Holdings Plc · LSE:HSBA
Hsbc — Debt Investor Presentation (July 2024)
43 slides from Hsbc's debt investor presentation, Jul 31, 2024
Slide 1: HSBC Holdings plc 1H24 Results
HSBC Holdings plc 1H24 Results Fixed Income Investor Presentation
Slide 2: Results & strategy
Results & strategy 1
Slide 3: Summary of 1H24 performance and guidance
Results and strategy Balance sheet & issuance Appendix Summary of 1H24 performance and guidance $37.3bn reported revenue, up 1% vs. 1H23 Guidance 1 $33.7bn revenue excluding notable items, up 2% vs. 1H23 New: FY25 RoTE in the mid-teens, excluding notable items Existing guidance: FY24 RoTE in the mid
Slide 4: A diversified and capital-generative business
Results and strategy Balance sheet & issuance Appendix A diversified and capital-generative business 1H24 revenue Balance sheet strength Corporate Centre 9% Strong 1H24 capital 15.0% 31.8% CET1 ratio1 MREL ratio1 Wealth and Global Banking 39% Personal Banking and Markets 23% $37.3bn Highly liquid; w
Slide 5: 1H24 results summary
Results and strategy Balance sheet & issuance Appendix 1H24 results summary $m 1H24 1H23 Δ NII 16,911 17,727 (5)% Non-NII 20,381 18,775 9% Revenue of $37.3bn, up $0.8bn (2%) vs. 1H23, reflecting the impact of higher customer activity in WPB, and in Equities and Revenue 37,292 36,502 2% Securities
Slide 6: Revenue
Results and strategy Balance sheet & issuance Appendix Revenue $16.5bn, up $0.3bn / 2% vs. 2Q23 Up $0.8bn / 5% excluding notable items and strategic transactions 2Q24 vs. Constant currency, $bn 2Q23 1Q24 2Q24 2Q23 Banking NII 11.1 11.1 10.9 (0.1) Primarily: +$0.3bn other Fee and other income 5.2 9
Slide 7: Banking NII
Results and strategy Balance sheet & issuance Appendix Banking NII Stable run rate QoQ; upgrading FY24 guidance to ~$43bn1 Banking NII (reported FX), $bn Banking NII of $10.9bn, down $(0.4)bn vs. 1Q24, primarily: Canada Canada sale: $(0.3)bn Argentina 11.6 11.5 Asia: $(0.1)bn due to lower HKD ra
Slide 8: Fee and other income: Wholesale Transaction Banking and Wealth
Results and strategy Balance sheet & issuance Appendix Fee and other income: Wholesale Transaction Banking and Wealth Wholesale Transaction Banking stable; strong quarter for Wealth Wholesale Transaction Banking stable vs. 2Q23 Wealth +13% vs. 2Q23 $bn $bn (0)% +13% vs. vs. 2.6 2.5 2.6 2.6 2Q23 1.8
Slide 9: Gross customer lending
Results and strategy Balance sheet & issuance Appendix Gross customer lending Personal loan book, $bn Wholesale loan book, $bn At 30 June 2024 At 30 June 2024 Other Credit cards 5.2% 5.3% Non-bank financial institutions Manufacturing Other secured 90% 15.8% 8.8% 17.2% personal lending secured1 $ 446
Slide 10: Asset quality
Results and strategy Balance sheet & issuance Appendix Asset quality Gross loans to customers by credit quality classification trend, $bn Stage 3 loans to customers Reported ECL (charge) / release 1,052 1,057 936 950 949 22.7 (8.8) 2% 3%2% 4% 3% 2% 3%2% 2%2% 19.5 19.3 19.1 18.8 2.4 24% 22% 21% 21% 2
Slide 11: Credit performance
Results and strategy Balance sheet & issuance Appendix Credit performance 2Q24 charge benefitted from recoveries and other items; excluding these, ECLs were broadly in line with our (30) to (40)bps planning range ECL charge trend, $bn (35)bps (41)bps (37)bps $(0.3)bn 2Q24 ECL charge benefitted fro
Slide 12: Costs
Results and strategy Balance sheet & issuance Appendix Costs On track to meet cost growth of ~(5)% vs. FY231 $bn* 1H23 1H24 Constant currency costs (15.2) (16.3) Less: notable items 0.1 0.1 Add: impact of retranslating results of hyperinflationary (0.3) — economies at constant currency Target basi
Slide 13: Customer loans and deposits
Results and strategy Balance sheet & issuance Appendix Customer loans and deposits Second consecutive quarter of loan growth Customer loans, $bn +1% +$4bn Wholesale; +$1bn WPB 938 2 +$1bn WPB mortgages; +$1bn CMB 5 +$1bn WPB in the US Wholesale 930 (1) 2 1Q24 Hong Kong UK RFB Rest of Asia Other lega
Slide 14: Outlook
Results and strategy Balance sheet & issuance Appendix Outlook New RoTE guidance for FY25; upgrading FY24 Banking NII guidance 1 RoTE in the mid-teens for FY24 and FY25, excluding notable items 2 FY24 Banking NII of ~$43bn1 3 FY24 ECL charge to be within our medium term planning range of (30) to (40
Slide 15: Balance sheet & issuance
Balance sheet & issuance HSBC
Slide 16: Capital position
Results and strategy Balance sheet & issuance Appendix Capital position CET1 ratio, % (0.9) 1.7 1H24 CET1 ratio does not include an (0.5) (0.6) 0.8 anticipated c.(0.4)ppts impact from the (0.1) 15.0 (0.2) announced 2Q24 up to $3bn buyback 14.8 Dividend payout ratio target basis of 50% for 20243;
Slide 17: Capital position versus requirements
Results and strategy Balance sheet & issuance Appendix Capital position versus requirements CET1 ratio as a % of RWAs, vs. target and MDA hurdle Regulatory capital vs. regulatory requirements as a % of RWAs 20.6% 20.1% Buffer to MDA hurdle 17.3% 17.3% $31.7bn 11.2% 15.8% (3.8ppts) 0.7% 15.0% 15.0% 2
Slide 18: MREL / TLAC position
Results and strategy Balance sheet & issuance Appendix MREL / TLAC position MREL / TLAC position versus requirements1 as a % of Group RWAs 31.8% Current binding requirement Non-binding requirements 27.2% CET1 25.6% 4.6ppts / $38bn buffer to current requirement buffers2 5.2% 23.2% HSBC Group’s MR
Slide 19: Funding and liquidity
Results and strategy Balance sheet & issuance Appendix Funding and liquidity Reported loans to deposits ratio, % Principal operating entities Average LCR1 % 1H24 FY23 63.2 HSBC UK Bank plc (RFB) 193 201 61.1 58.8 58.2 58.9 HSBC Bank plc (NRFB) 146 148 The Hongkong and Shanghai Banking Corporation –
Slide 20: Balance sheet – customer lending
Results and strategy Balance sheet & issuance Appendix Balance sheet – customer lending Balances by global business, $bn Balances by entity Growth since 1Q24 $4bn 951 938 Asia (HBAP) $454bn 930 1% o/w: Hong $(1)bn GBM 175 173 174 $275bn Kong (0)% $2bn UK RFB (HBUK) $270bn 1% CMB 315 307 310 HSBC Ban
Slide 21: Balance sheet – customer accounts
Results and strategy Balance sheet & issuance Appendix Balance sheet – customer accounts Balances by global business, $bn Balances by entity Growth since 1Q24 $23bn Asia (HBAP) $799bn 1,580 1,594 3% 1,566 o/w: Hong $16bn Kong $544bn GBM 310 322 331 3% $1bn UK RFB (HBUK) $335bn 0% HSBC Bank plc $6bn
Slide 22: Issuance plan
Results and strategy Balance sheet & issuance Appendix Issuance plan Modest net new issuance going forward FY24 issuance plan HoldCo senior gross and net issuance, $bn-equivalent Negative net issuance Gross issuance expected in 2024 (including Planned gross: ~$10bn, YTD: $7.5bn HoldCo Net issuance $
Slide 23: Portfolio instruments
Results and strategy Balance sheet & issuance Appendix Portfolio instruments Maturity profile at 1H241 Outstanding instruments by currency (notional) at 1H24 $bn-equivalent Tier 2 Additional Tier 1 Other EUR 25.1 EUR 3% 7% GBP 14% 10% 20.5 SGD 5% 17.6 16% GBP 16.2 $35.4bn $20.5bn 19.2 60% 7% 14.7 US
Slide 24: Legacy securities
Results and strategy Balance sheet & issuance Appendix Legacy securities Total legacy capital securities of $9bn 14.7 Legacy securities have reduced by ~$6bn since end-2021, to $9bn at 1H24 (4.0) When considering any potential actions to reduce the portfolio, we evaluate these opportunities agai
Slide 25: IBOR – regulatory capital & MREL securities
Results and strategy Balance sheet & issuance Appendix IBOR – regulatory capital & MREL securities Milestones so far Consent solicitation passed on English law GBP securities, September 2021 September 2021 consent solicitation failed on English law SGD securities, both securities now redeemed We
Slide 26: Appendix
Appendix 25
Slide 27: MREL / TLAC position
Results and strategy Balance sheet & issuance Appendix MREL / TLAC position HSBC Group US resolution group Europe resolution group Asian resolution group (Including HSBC Holdings)1 MREL / TLAC Total MREL / TLAC: $265.7bn Total TLAC: $23.3bn Total MREL / TLAC: $105.7bn Total TLAC: $110.9bn position O
Slide 28: Approach to issuance
Results and strategy Balance sheet & issuance Appendix Approach to issuance HSBC Holdings plc External Since 2015, HSBC Holdings has been the Group’s issuing entity for external AT1, Tier 2 and MREL / Investors TLAC-eligible senior Issuance executed with consideration to our maturity profile Ext
Slide 29: Banking NII
Results and strategy Balance sheet & issuance Appendix Banking NII NII to Banking NII, $bn Reported FX, $bn1 2Q23 3Q23 4Q23 1Q24 2Q24 ∆ 1Q24 NII 9.3 9.2 8.3 8.7 8.2 (0.5) Less: insurance NII (0.1) (0.1) (0.1) (0.1) (0.1) (0.0) Central costs of funding trading income2 2.4 2.4 2.5 2.7 2.8 0.1 Banking
Slide 30: Reported net interest margin
Results and strategy Balance sheet & issuance Appendix Reported net interest margin Quarterly NIM by key legal entity (reported FX basis) Group NIM, bps (reported FX basis) 2Q23 3Q23 4Q23 1Q24 2Q24 % 2Q24 % 2Q24 163 NII AIEA (1) 162 Asia 1.83% 1.85% 1.73% 1.66% 1.63% 44% 44% HSBC Bank plc 0.60% 0.53
Slide 31: Banking NII sensitivity and structural hedge
Results and strategy Balance sheet & issuance Appendix Banking NII sensitivity and structural hedge Year 1 Banking NII sensitivity to a (100)bps down-shock,* $bn Banking NII sensitivity 30-Jun-22 31-Dec-23 30-Jun-24 Banking NII sensitivity to a (100)bps downshock $(2.7)bn, a reduction of c.$4.3bn
Slide 32: Global CRE exposures
Results and strategy Balance sheet & issuance Appendix Global CRE exposures Commercial real estate gross loans and advances, $m1 Hong Kong, excluding exposure to mainland China borrowers 1H24 Reported FX basis FY23 1H24 Δ stage 3 Exposure of $35.6bn, down $(1.2)bn vs. FY23 % c.60% secured; c.40% u
Slide 33: Mainland China commercial real estate
Results and strategy Balance sheet & issuance Appendix Mainland China commercial real estate Mainland China CRE exposures by booking location and credit quality At 30 June 2024 Memo: Hong Hong Mainland Rest of Reported FX, $bn Total Kong at 4Q23 Kong China Group Total 6.3 4.8 4.3 0.3 9.4 Strong 0.8
Slide 34: Notable items
Results and strategy Balance sheet & issuance Appendix Notable items Reported FX basis, $m 2Q23 3Q23 4Q23 1Q24 2Q24 Revenue (241) (268) (2,733) 3,732 (161) o/w: Disposals, acquisitions and related costs (241) 310 (2,333) 3,732 (161) o/w: Fair value movements on financial instruments — — (1) — — o/w:
Slide 35: Hong Kong
Results and strategy Balance sheet & issuance Appendix Hong Kong 1H24 performance Gross loans and advances to WPB active customers, millions2 customers Customer acquisition accelerated following the border reopening $m 1H23 1H24 Δ in early 2023 NII 4,967 4,178 (16)% 11% Non-NII 5,312 6,344 19% +6% R
Slide 36: UK ring-fenced bank
Results and strategy Balance sheet & issuance Appendix UK ring-fenced bank 1H24 performance Personal gross lending balances Deposits by type, £bn £m 1H23 1H24 Δ £bn 1H23 FY23 1H24 9 NII 3,871 4,003 3% Mortgages 126.4 129.3 131.2 7 59 43 WPB current CMB savings Non-NII 2,133 923 (57)% Credit cards 5.
Slide 37: Credit ratings for main issuing entities
Results and strategy Balance sheet & issuance Appendix Credit ratings for main issuing entities Long term senior ratings as at 30 July 2024 S&P Moody’s Fitch Rating Outlook Rating Outlook Rating Outlook HSBC Holdings plc A- STABLE A3 STABLE A+ STABLE The Hongkong and Shanghai Banking Corporation Ltd
Slide 38: Simplified structure chart
Results and strategy Balance sheet & issuance Appendix Simplified structure chart Holding company Associate Intermediate holding company Resolution entity HSBC Operating company Holdings plc 99.9% Ringfenced Bank HSBC Asia HSBC Holdings Ltd Mexico, HSBC UK HSBC S.A. Bank plc Bank plc The Hongkong &
Slide 39: Glossary
Results and strategy Balance sheet & issuance Appendix Glossary AIEA Average interest earning assets LCR Liquidity coverage ratio AT1 Additional Tier 1 LIBOR London Interbank Offered Rate Bps Basis points. One basis point is equal to one-hundredth of a percentage point LTV Loan to value ratio CASA C
Slide 40: Footnotes
Results and strategy Balance sheet & issuance Appendix Footnotes Slide 2: Summary of 1H24 performance and guidance Slide 7: Fee and other income: Wholesale Transaction Banking and Wealth 1. Cost growth is on a target basis which excludes the direct cost impact of our disposals in France and Canada 1
Slide 41: Footnotes
Results and strategy Balance sheet & issuance Appendix Footnotes Slide 16: Capital position versus requirements Slide 28: Banking NII 1. See footnote 4 on slide 15 1. On a constant currency basis: 2Q23 $11.1bn, 3Q23 $11.1bn, 4Q23 $10.1bn, 1Q24 $11.1bn 2. Excludes Pillar 2B requirements 2. Funding is
Slide 42: Disclaimer
Results and strategy Balance sheet & issuance 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 pu
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