Hsbc Holdings Plc · LSE:HSBA
Hsbc — Debt Investor Presentation (February 2025)
50 slides from Hsbc's debt investor presentation, Feb 25, 2025
Slide 1: HSBC Holdings plc FY24 Results Fixed Income Investor Presentation
HSBC Holdings plc FY24 Results Fixed Income Investor Presentation
Slide 2: Results & strategy
Results & strategy 1
Slide 3: FY24 performance
Results and strategy Balance sheet & issuance Appendix FY24 performance $26.9bn of distributions to shareholders1, on the back of our strong performance Record PBT $32.3bn, +6% YoY on a reported basis (o/w: WPB $12.2bn, CMB $11.9bn, GBM $7.1bn) Earnings $34.1bn excluding notable items, +4% YoY
Slide 4: Benefits from our organisational simplification
Results and strategy Balance sheet & issuance Appendix Benefits from our organisational simplification We are moving at pace to simplify the Group and unlock our growth potential Simplified the Group Elevated and empowered our two home markets 1 Combined our two wholesale businesses ~60% of re
Slide 5: We've aligned our business structure to our strategic priorities (1)
Results and strategy Balance sheet & issuance Appendix We’ve aligned our business structure to our strategic priorities (1) Leading, scale businesses in our home markets Hong Kong business UK business Retail Banking Retail Banking Activities Wealth distribution Wealth distribution Commerci
Slide 6: We've aligned our business structure to our strategic priorities (2)
Results and strategy Balance sheet & issuance Appendix We’ve aligned our business structure to our strategic priorities (2) Global scale in our international network businesses Corporate and Institutional Banking International Wealth and Premier (CIB) Banking (IWPB) Premier Banking in our priority
Slide 7: We generate recurring, predictable revenue streams
Results and strategy Balance sheet & issuance Appendix We generate recurring, predictable revenue streams >90% of revenue is from Banking NII, Wholesale Transaction Banking and Wealth FY24 revenue Other* Strong balance sheet positions in all Wealth 7% Banking NII our businesses 11% Wholesale Wholesa
Slide 8: We have a strong deposit base
Results and strategy Balance sheet & issuance Appendix We have a strong deposit base Our deposit strength drives Banking NII and gives us the funding capacity to support our customers Strong deposit franchise in each of our businesses High quality deposit base Loan to deposit ratio2 82% 85% Group 70
Slide 9: We maintain a high-quality loan portfolio
Results and strategy Balance sheet & issuance Appendix We maintain a high-quality loan portfolio Gross loans by credit quality 89% of loans to personal customers are secured with good levels $447bn $493bn 1% of collateral 6% 4% 4% 32% 60% of loans to wholesale customers have a rating equivalent to 9
Slide 10: Gross customer lending
Results and strategy Balance sheet & issuance Appendix Gross customer lending Personal loan book, $bn Wholesale loan book, $bn At 31 December 2024 At 31 December 2024 Other Credit cards 5.0% 5.6% Non-bank financial institutions Manufacturing Other secured 89% personal lending 8.6% 16.6% 16.8% secure
Slide 11: 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 1,057 936 950 940 22.6 (8.8) 2% 3%2% 4% 3% 2% 3%2% 2%2% 19.5 19.3 19.1 18.8 2.4 22% 21% 21% 20% 2
Slide 12: We aim to generate consistent mid-teens returns over the next three years
Results and strategy Balance sheet & issuance Appendix We aim to generate consistent mid-teens returns over the next three years External environment Actions Benign rate outlook*, Drive operating leverage as an ongoing process though policy uncertainty remains 1 Cost efficiency and optimisation 20
Slide 13: FY24 results summary
Results and strategy Balance sheet & issuance Appendix FY24 results summary Constant currency, $bn FY23 FY24 Δ NII 34.2 32.7 (4)% Revenue of $65.9bn, stable vs. FY23, including higher Non-NII 30.8 33.1 8% customer activity in Wealth, and in Equities and Securities Revenue 64.9 65.9 1% Financing in
Slide 14: Revenue
Results and strategy Balance sheet & issuance Appendix Revenue +$1.2bn YoY excluding notable items, driven by Banking NII and Wealth Constant currency, $bn 4Q23 4Q24 Δ Banking NII 10.0 11.0 0.9 Fee and other income 2.5 0.6 (1.9) — Wholesale Transaction Banking 2.5 2.5 0.0 — Wealth 1.3 1.6 0.4 — Othe
Slide 15: Banking NII (1)
Results and strategy Balance sheet & issuance Appendix Banking NII (1) Run-rate broadly stable QoQ Reported FX, $bn 11.3 11.0 10.7 0.5 10.9 10.6 0.4 0.3 0.2 0.0 0.0 0.3 0.3 Run-rate broadly stable QoQ: Deposit growth and structural hedge unwind‡ partly offset by lower interest rates 10.4 10.5 10.5 1
Slide 16: Banking NII (2)
Results and strategy Balance sheet & issuance Appendix Banking NII (2) Investment in the structural hedge has reduced our interest rate sensitivity and will support Banking NII Investment in the structural hedge Reduction in rate sensitivity Support to Banking NII Structural hedge notional balance Y
Slide 17: Fee and other income: Wholesale Transaction Banking
Results and strategy Balance sheet & issuance Appendix Fee and other income: Wholesale Transaction Banking Stable YoY Fee and other income, $bn +0% 2.6 2.6 Stable fee and other income vs. 4Q23 (up 3% excluding the 2.5 2.6 2.5 vs. 4Q23 impact of strategic transactions, principally the sale of Canada)
Slide 18: Fee and other income: Wealth
Results and strategy Balance sheet & issuance Appendix Fee and other income: Wealth Fourth consecutive quarter of double-digit % YoY growth Fee and other income, $bn Growth in all products vs. 4Q23 Life insurance: good business performance in the quarter (new business +27% CSM $0.4bn, +15% YoY)
Slide 19: Wealth outlook
Results and strategy Balance sheet & issuance Appendix Wealth outlook Expect to grow fee and other income at a double-digit % CAGR over the medium term New-to-bank customers in Hong Kong Invested assets, $tn CSM balance, $bn For new customers, total balances and Double digit CAGR since 2022, strengt
Slide 20: Credit performance
Results and strategy Balance sheet & issuance Appendix Credit performance (36)bps ECL charge in 2024* ECL charge trend, $bn (57)bps (36)bps (41)bps (28)bps (14)bps $(1.4)bn 4Q24 ECL charge, including: (1.4) $(1.0)bn Wholesale, including $(0.3)bn from two clients — one in the UK, one in the mainl
Slide 21: Costs: driving efficiencies and creating incremental investment capacity
Results and strategy Balance sheet & issuance Appendix Costs: driving efficiencies and creating incremental investment capacity Committed to deliver ~$1.5bn of simplification savings Aiming to re-allocate an additional ~$(1.5)bn of costs from from our re-organisation by YE26* non-strategic activitie
Slide 22: Cost guidance
Results and strategy Balance sheet & issuance Appendix Cost guidance 2025 guidance: ~(3)% growth on a target basis* FY25 costs ~(3)% ~1% Up to (4)% $(32.1)bn ~$0.3bn P&L saves Baseline* Inflation and Simplification savings FY25 on a target basis* Notable items‡ FY25 reported costs investment† from o
Slide 23: Customer loans and deposits
Results and strategy Balance sheet & issuance Appendix Customer loans and deposits Lending stable, deposits +3% QoQ Lending, $bn Deposits, $bn +3% (0)% 1,655 931 (1) 931 3 24 (3) 1 14 4 1,603 10 3Q24 Hong Kong UK RFB Rest of Other legal 4Q24 3Q24 Hong Kong UK RFB Rest of Other legal 4Q24 Asia entiti
Slide 24: Outlook
Results and strategy Balance sheet & issuance Appendix Outlook Target Mid-teens RoTE in each of 2025 to 2027, excluding notable items FY25 guidance Banking NII Around $42bn (market-dependent) ECL charge (30) to (40)bps1 Costs Growth of ~(3)%, on a target basis2 Dividends 50% of PAOS excluding materi
Slide 25: Balance sheet & issuance
Balance sheet & issuance 24
Slide 26: Capital position
Results and strategy Balance sheet & issuance Appendix Capital position CET1 ratio, % (1.6) FY24 CET1 ratio does not include an anticipated c.(0.2)ppts impact from the 3.4 up to $2bn buyback announced with the (1.4) 0.9 (0.9) 4Q24 results 14.8 (0.3) 14.9 Expect $(1)bn CET1 impact from a reclassi
Slide 27: FY24 capital position versus requirements
Results and strategy Balance sheet & issuance Appendix FY24 capital position versus requirements CET1 ratio as a % of RWAs, vs. target and MDA hurdle End-point regulatory capital vs. regulatory requirements As a % of RWAs 20.1% Buffer to MDA hurdle 17.2% $31.7bn 11.1% 15.8% 0.7% 14.9% (3.8ppts) 2.0%
Slide 28: MREL / TLAC position
Results and strategy Balance sheet & issuance Appendix MREL / TLAC position MREL / TLAC position versus requirements1 as a % of Group RWAs 32.1% Current binding requirement Non-binding requirements 27.3% CET1 25.9% 4.8ppts / $41bn buffer to current requirement buffers2 5.2% 23.2% HSBC Group’s MR
Slide 29: Funding and liquidity
Results and strategy Balance sheet & issuance Appendix Funding and liquidity Reported loans to deposits ratio, % Principal operating entities Average LCR1 % FY23 FY24 63.2 HSBC UK Bank plc (RFB) 201 190 61.1 58.8 58.2 56.2 HSBC Bank plc (NRFB) 148 148 The Hongkong and Shanghai Banking Corporation –
Slide 30: Balance sheet
Results and strategy Balance sheet & issuance Appendix Balance sheet Customer lending Customer deposits By business, $bn 4Q23 3Q24 4Q24 Δ 3Q24 By business, $bn 4Q23 3Q24 4Q24 Δ 3Q24 WPB 445 445 447 2 1% WPB 793 806 823 17 2% CMB 301 309 307 (3) (1)% CMB 465 470 490 21 4% GBM 171 170 170 (0) (0)% GBM
Slide 31: 2025 issuance plan
Results and strategy Balance sheet & issuance Appendix 2025 issuance plan Planned 2025 gross issuance 2025 calls and maturities 2024 gross issuance HoldCo $16.1bn $16-18bn $14.1bn senior $6bn of tenders conducted $4.3bn Tier 2 $2-3bn $2.8bn $1bn of tenders conducted $3.6bn $2.5bn AT1 $3-4bn Legacy T
Slide 32: Portfolio instruments
Results and strategy Balance sheet & issuance Appendix Portfolio instruments Maturity profile at FY241 Outstanding instruments by currency (notional) at FY24 $bn-equivalent Tier 2 Additional Tier 1 Other EUR 26.4 EUR 2% 6% GBP 14% 11% SGD 6% 19.4 16% GBP 17.4 $35.8bn $19.8bn 15.6 20.6 15.4 61% 7% US
Slide 33: Appendix
Appendix 32
Slide 34: 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: $269.4bn Total TLAC: $23.8bn Total MREL / TLAC: $107.1bn Total TLAC: $111.3bn position O
Slide 35: 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 36: Banking NII
Results and strategy Balance sheet & issuance Appendix Banking NII Reported FX, $m 4Q23 1Q24 2Q24 3Q24 4Q24 ∆ 3Q24 FY23 FY24 Banking NII 10,7171 11,266 10,938 10,584 10,950 366 44,095 43,738 Of which: Asia 5,566 5,435 5,317 5,475 5,464 (11) 22,024 21,691 Of which: UK RFB 2,455 2,531 2,532 2,643 2,66
Slide 37: 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 to a (100)bps downshock $(2.9)bn, a reduction of ~$(4)bn since June 2022. We estimate that ~50% of 1H22 FY22 1H2
Slide 38: Reported net interest margin
Results and strategy Balance sheet & issuance Appendix Reported net interest margin Quarterly NIM by key legal entity (reported FX) Group NIM, bps (reported FX) 154 % 4Q24 % 4Q24 2 4Q23 1Q24 2Q24 3Q24 4Q24 (3) 3 NII AIEA 6 146 Asia 1.73% 1.66% 1.63% 1.58% 1.63% 48% 45% HSBC Bank plc 0.50% 0.35% 0.35
Slide 39: Notable items
Results and strategy Balance sheet & issuance Appendix Notable items Reported FX, $m 4Q23 1Q24 2Q24 3Q24 4Q24 Revenue (2,733) 3,732 (161) (211) (4,940) — o/w: Banking NII — — — (283) 46 — o/w: Fee and other income (2,733) 3,732 (161) 72 (4,986) Costs (65) (50) (32) (45) (106) Associates (3,000) — —
Slide 40: Global CRE exposure
Results and strategy Balance sheet & issuance Appendix Global CRE exposure Commercial real estate gross loans and advances, $m1 Hong Kong, excluding exposure to mainland China borrowers Stage 3 Reported FX 4Q23 2Q24 4Q24 Δ 2Q24 % Exposure of $33.2bn, down $(2.4)bn vs. 1H24 on a reported FX basis Asi
Slide 41: 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 31 December 2024 Memo: Hong Hong Mainland Rest of Reported FX, $bn Total Kong at 2Q24 Kong China Group Total 4.8 3.2 3.7 0.3 7.3 Strong
Slide 42: Mainland China exposure
Results and strategy Balance sheet & issuance Appendix Mainland China exposure Mainland China risk exposure, $bn Mainland China drawn risk exposure is defined as lending booked in mainland China and wholesale lending booked offshore where the ultimate parent and beneficial owner is in mainland Chi
Slide 43: Cost target basis reconciliations
Results and strategy Balance sheet & issuance Appendix Cost target basis reconciliations 2024 target basis $m FY23 FY24 1Q24 2Q24 3Q24 4Q24 Costs* (31,493) (33,043) (8,151) (8,145) (8,143) (8,604) Less: Notable items 185 233 50 32 45 106 Add: Impact of retranslating prior period results in (742) — —
Slide 44: 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 18 February 2025 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
Slide 45: 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 HSBC Asia Holdings Ltd 99.9% HSBC HSBC The Hongkong & HSBC UK HSBC Shanghai 94.5% HSBC Bank Mexico, North Ame
Slide 46: Glossary
Results and strategy Balance sheet & issuance Appendix Glossary AIEA Average interest earning assets GTS Global Trade Solutions APAC Asia Pacific HBAP The Hongkong and Shanghai Banking Corporation Limited, our principal operating entity in Asia AT1 Additional Tier 1 HIBOR Hong Kong Interbank Offered
Slide 47: Footnotes
Results and strategy Balance sheet & issuance Appendix Footnotes Slide 2: FY24 performance 3. Source: Coalition Greenwich Competitor Analytics – 3Q24YTD. Based on HSBC’s internal business structure and 1. $26.9bn includes: $11.9bn ordinary dividends, including an estimated amount for the fourth inte
Slide 48: Footnotes
Results and strategy Balance sheet & issuance Appendix Footnotes Slide 11: We aim to generate consistent mid-teens returns over the next three years 2. Group CET1 buffers are shown in addition to the MREL requirements. The buffers shown in addition to the RWA, 1. Excluding the impact of notable item
Slide 49: 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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