Hsbc Holdings Plc · LSE:HSBA
Hsbc — 2Q19 Earnings Presentation
36 slides from Hsbc's earnings presentation, Aug 5, 2019
Slide 1: HSBC Holdings plc 2Q19 Results Presentation to Investors and Analysts
HSBC Holdings plc 2Q19 Results Presentation to Investors and Analysts
Slide 2: Key messages
Key messages 1 2Q19 profit attributable to ordinary shareholders $4.4bn vs. $4.1bn 2Q18 2 2Q19 adjusted PBT of $6.2bn up 4% vs. 2Q18. 1H19 adjusted PBT of $12.5bn up 7% vs. 1H18 3 1H19 positive adjusted jaws of 4.5%, driven by growth in revenue 8.0% and costs up (3.5)% 1H19 annualised RoTE of 11.2%,
Slide 3: Progress on our strategic priorities
Progress on our strategic priorities Strategic priorities Targeted 2020 outcomes 1H19 performance highlights (vs. 1H18 unless noted) Asia adjusted revenue of $15.5bn (+9%); Wealth in Asia revenue of 1 Accelerate growth from Asia High single digit revenue growth p.a.; $3.1bn, up 7% (excl. market impa
Slide 4: Outlook
Outlook Financial targets 1 Growing revenues in areas of strength RoTE13 >11% by 2020 Continue to redeploy capital into higher return businesses and invest 2 in technology to improve customer service and competitiveness Costs Positive adjusted jaws 3 Businesses have good momentum, seeing good vo
Slide 5: Key financial metrics
Key financial metrics Key financial metrics 1H19 1H18 ∆ 1H18 Return on average ordinary shareholders’ equity (annualised) 10.4% 8.7% 1.7ppt Return on average tangible equity (annualised) 11.2% 9.7% 1.5ppt Jaws (adjusted)14 4.5% (5.6)% nm Dividends per ordinary share in respect of the period $0.20 $0
Slide 6: 2Q19 adjusted revenue performance
2Q19 financial performance 2Q19 adjusted revenue performance Adjusted revenue analysis 2Q19 revenue 2Q19 vs. 2Q18, $m 1H19 vs. 1H18, $m $1,706m Wealth Management 176 316 $0.7bn or $1.3bn or RBWM $5,949m $4,002m Retail Banking 366 14% 741 12% $241m Other 181 194 $1,540m GLCM 148 364 $476m GTRF 13 37
Slide 7: 2Q19 Net interest income and NIM
2Q19 financial performance 2Q19 Net interest income and NIM Net interest income Adjusted NII up 6% 2Q19 vs. 2Q18; up 5% vs. 1Q19 driven by higher +6% +5% HIBOR, partly offset by a change in funding mix 7,587 7,695 7,359 7,422 7,772 Adjusted 7,075 2Q19 NIM of 1.62% up c.3bps vs. 1Q19: quarterly
Slide 8: 2Q19 adjusted costs
2Q19 financial performance 2Q19 adjusted costs 2Q19 vs. 2Q18, $bn Adjusted costs $300m, +3.8% Adjusted costs up 3.8% to $8.1bn vs. 0.2 Near and medium term $7.8bn in 2Q18. Investment spend of investments in growth $1.2bn was $0.2bn or 18.3% higher than 0.1 2Q18 (0.2) 0.2 8.1 Investment spend gro
Slide 9: Investment in growth
2Q19 financial performance Investments Share of Investments by category investment $bn Continued investments in key strategic initiatives, including building digital capabilities, growing Wealth Management RBWM business in Asia, and driving growth in Hong Kong, UK, US, and RBWM Mexico, through len
Slide 10: 2Q19 credit performance
2Q19 financial performance 2Q19 credit performance 2Q19 ECL charge $555m, broadly stable vs. 1Q19: • 2Q19 ECL charge as a percentage of gross loans and advances of 22bps • RBWM 2Q19 ECL of $238m down $62m (21%) vs. 1Q19; stable vs. 2Q18 charge of $225m • CMB 2Q19 ECL of $248m stable vs. 1Q19 ($244
Slide 11: Capital adequacy: CET1 ratio of 14.3%
2Q19 financial performance Capital adequacy: CET1 ratio of 14.3% Capital progression CET1 ratio movement, % 2Q18 4Q18 1Q19 2Q19 0.5 Common equity tier 1 capital, $bn 122.8 121.0 125.8 126.9 (0.2) Risk-weighted assets, $bn 865.5 865.3 879.5 886.0 (0.1) CET1 ratio21, % 14.2 14.0 14.3 14.3 14.3 (0.1) 1
Slide 12: Outlook
Outlook Financial targets 1 Growing revenues in areas of strength RoTE13 >11% by 2020 Continue to redeploy capital into higher return businesses and invest 2 in technology to improve customer service and competitiveness Costs Positive adjusted jaws 3 Businesses have good momentum, seeing good vo
Slide 13: Appendix
Appendix
Slide 14: Sustainable Finance Performance
Appendix Sustainable Finance Performance Progress against our targets Our awards Euromoney Awards for Extel Survey Environmental Finance Target Excellence 2019 2019 Awards 2019 80% Facilitation $100bn 16% Financing World's Best Bank for No.1 in a range of categories Lead manager of the year, o
Slide 15: Significant items
Appendix Significant items $m 2Q19 1Q19 2Q18 1H19 1H18 Reported PBT 6,194 6,213 5,957 12,407 10,712 Revenue Currency translation - (104) (508) - (1,160) Customer redress programmes - - (46) - (46) Disposals, acquisitions and investment in new businesses (827) - 30 (827) 142 Fair value movements on f
Slide 16: Certain revenue items and Argentina hyperinflation
Appendix Certain revenue items and Argentina hyperinflation Certain items included in adjusted revenue highlighted 2Q19 1Q19 2Q18 1H19 1H18 in management commentary23, $m Insurance manufacturing market impacts in RBWM (33) 184 (52) 152 (92) Credit and funding valuation adjustments in GB&M (34) 47 21
Slide 17: Volatile items analysis
Appendix Volatile items analysis RBWM: Insurance manufacturing GB&M: Markets excl. Foreign GB&M: Credit and funding valuation Corporate Centre: Valuation market impacts revenue, $m Exchange revenue, $m adjustments revenue, $m differences on long-term debt and associated swaps revenue, $m 184 1,106 4
Slide 18: Net interest margin and net interest income sensitivity
Appendix Net interest margin and net interest income sensitivity Net interest margin analysis Variance FY18 1H18 1Q19 1H19 1H19 vs. FY18 Average Average Average Average Average $bn Yield/Cost Yield/Cost Yield/Cost Yield/Cost Yield/Cost balance balance balance balance balance Loans and advances to cu
Slide 19: Global business management view of adjusted revenue
Appendix Global business management view of adjusted revenue Δ% Δ% Group, $m 1Q18 2Q18 3Q18 4Q18 1Q19 2Q19 GB&M, $m 1Q18 2Q18 3Q18 4Q18 1Q19 2Q19 2Q18 2Q18 Total Group revenue 13,117 13,182 13,698 12,549 14,302 14,089 7 Global Markets 1,819 1,604 1,779 1,100 1,727 1,423 (11) Total adjusted revenue a
Slide 20: Retail Banking and Wealth Management
Appendix Retail Banking and Wealth Management Revenue performance, $m28 Balance sheet, $bn29 1H19 highlights +14% +5% 0% +9% 629 652 661 5,415 5,226 5,688 5,105 5,926 5,949 Adjusted PBT 376 (1H18: $3.6bn) 345 367 184 Wealth 1,801 $4.4bn 24% Mgt. 1,582 1,629 1,308 1,717 1,739 (39) (52) (48) (185) (33
Slide 21: Commercial Banking
Appendix Commercial Banking 1H19 highlights Revenue performance, $m28 Balance sheet, $bn29 +8% +0% Customer lending: +7% Adjusted revenue 3,512 3,606 3,704 3,689 3,892 3,894 +3% Adjusted PBT (1H18: $4.0bn) Markets products, 338 347 Insurance and 325 574 493 $4.0bn 1% Investments, and Other 529 463 4
Slide 22: Global Banking and Markets
Appendix Global Banking and Markets Revenue performance, $m28 Management view of adjusted 1H19 highlights (8)% revenue Adjusted revenue 3,929 3,961 4,136 3,062 4,038 3,638 $m 2Q19 ∆2Q18 21 37 47 Global Markets 1,423 (11)% Credit and Funding (34) FICC 1,189 (11)% Adjusted PBT Valuation (60) (177) (1H
Slide 23: Global Private Banking
Appendix Global Private Banking Revenue performance, $m28 Reported client assets, $bn 1H19 highlights +8% 331 330 326 335 341 309 +5% Adjusted revenue 463 439 428 423 449 473 Adjusted PBT Other (1H18: $187m) 41 49 1Q18 2Q18 3Q18 4Q18 1Q19 2Q19 45 44 44 49 Deposit 119 120 119 122 125 125 $196m 5% Len
Slide 24: Corporate Centre
Appendix Corporate Centre ** * 1H19 highlights Revenue performance, $m28 Legacy credit adjusted RWAs29, $bn 1Q18 2Q18 3Q18 4Q18 1Q19 2Q19 5.5 (33)% Central Treasury (26) 208 111 293 311 289 3.9 Of which: 2.6 Adjusted PBT* Balance Sheet Management 568 677 531 633 617 593 (1H18: $0.5 bn) Holdings Inte
Slide 25: RoTE by global business excluding significant items and UK bank levy
Appendix RoTE by global business excluding significant items and UK bank levy 1H19 $m Corporate RBWM CMB GB&M GPB Group Centre Reported profit before tax 3,783 3,998 2,634 183 1,809 12,407 Tax expense (675) (851) (523) (30) (391) (2,470) Reported profit after tax 3,108 3,147 2,111 153 1,418 9,937 le
Slide 26: Equity drivers
Appendix Equity drivers 2Q19 vs. 1Q19 Equity drivers Basic number Shareholders’ Tangible TNAV per of ordinary Equity, $bn Equity, $bn share, $ shares, million As at 31 March 2019 188.4 141.6 7.05 20,082 Profit attributable to: 4.6 4.4 0.22 - Ordinary Shareholders33 4.4 4.4 0.22 - Other equity holder
Slide 27: Return metrics
Appendix Return metrics Group RoTE (annualised) walk, 1H19 vs. 1H18, % 11.5 (0.1) (0.3) 11.2 0.2 11.0 0.2 (0.3) 1.8 9.7 1H18 Reported Significant items 1H18 excl. Change in PBT Change in tax NCI & AT1/ Change in Equity 1H19 excl. Significant 1H19 Reported RoTE and UK bank levy signficant items Prefe
Slide 28: Total shareholders' equity to CET1 capital
Appendix Total shareholders’ equity to CET1 capital Total equity to CET1 capital, as at 30 June 2019, $m Total equity to CET1 capital walk, $m 4Q18 2Q19 Total equity (per balance sheet) 194,249 200,874 Total equity 200,874 - Non-controlling interests (7,996) (8,198) Total shareholders’ equity 186,25
Slide 29: Balance sheet – customer lending
Appendix Balance sheet – customer lending 2Q19 Net loans and advances to customers 2Q19 adjusted lending growth by global business and region $bn Adjusted customer lending increased by $20.9bn (+2%) vs. 1Q19, reflecting Growth since 1Q19 $bn Growth since 1Q19 $bn lending growth in: UK mortgages Othe
Slide 30: Balance sheet – customer accounts
Appendix Balance sheet – customer accounts 2Q19 Customer accounts FY18: Reported average customer accounts37, $bn Adjusted customer accounts increased by $29.2bn (2%) vs. 1Q19: 6% CAGR Asia up $19.5bn, mainly in GB&M ($9.1bn) and CMB ($7.3bn), including (Demand seasonality in Hong Kong and mainlan
Slide 31: Asset quality
Appendix Asset quality Gross loans and advances to Loans and advances to customers Stage 3 and impaired loans and LICs/ECL, $bn customers - $1,030bn of ‘Strong’ or ‘Good’ credit advances to customers, $bn quality, $bn Total gross customer loans and 23.8 advances to customers by credit quality 763 IA
Slide 32: UK customer loans and advances
Appendix UK customer loans and advances Total UK gross customer loans and advances RBWM residential mortgages38, £bn RBWM unsecured lending38, £bn As at 30 June 2019 89.8 92.6 93.7 95.3 85.1 86.8 Of which £95.3bn relates to RBWM in the RFB 6.7 6.9 7.0 6.7 Wholesale 5.4 6.1 £101bn Mar-18 Jun-18 Sep-1
Slide 33: Mainland China drawn risk exposure
Appendix Mainland China drawn risk exposure40 Total China drawn risk exposure of Total China drawn risk exposure of $173bn $173bn Wholesale: $163bn (of which 52% is onshore); Retail: $10bn As at 30 June 2019 Wholesale - $163bn Gross loans and advances to customers of c$43bn in mainland China (
Slide 34: 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. Calculated on an adjusted basis
Slide 35: Footnotes
Appendix Footnotes 1. Scale markets include HK, UK, Mexico, PRD, Singapore, Malaysia, UAE, Saudi Arabia 2. Market share gains are vs. 2017 year end; market shares for HK, UK, Mexico, PRD, Singapore and Malaysia are as of May 2019; Saudi Arabia is as of April 2019; UAE is as of March 2019 3. Cumulati
Slide 36: 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