HSBC Holdings PLC · LSE:HSBA
HSBC — Debt Investor Presentation (February 2021)
43 slides from HSBC's debt investor presentation, Feb 23, 2021
Slide 1: HSBC Holdings plc FY20 Results Fixed Income Investor Presentation
HSBC Holdings plc FY20 Results Fixed Income Investor Presentation
Slide 2: FY20: A strong base to deliver future growth
Capital structure FY20 results Appendix and debt issuance FY20: A strong base to deliver future growth Continued support for customers and communities through Covid-19 restrictions 1 >$52bn of wholesale lending support through government schemes and moratoria, with >$26bn of additional relief grante
Slide 3: Delivering against our February 2020 Business Update
Capital structure FY20 results Appendix and debt issuance - - - Delivering against our February 2020 Business Update Progress against our financial targets Key highlights FY22 target FY20 progress4 (as announced at Feb20) $1.0bn Costs Adjusted costs ≤$31bn; $4.5bn of cost programme saves cost save
Slide 4: Accelerating the shift to our highest return and growth opportunities
Capital structure FY20 results Appendix and debt issuance Accelerating the shift to our highest return and growth opportunities, to deliver above cost of capital returns Fees + Revenue Capital allocation Insurance growth rate New group targets, dividend and capital policy Asia as % of WPB as % of %
Slide 5: FY20 results summary
Capital structure FY20 results Appendix and debt issuance FY20 results summary $m FY20 FY19 Δ NII 27,599 30,339 (9)% Non interest income 22,767 24,605 (7)% Revenue 50,366 54,944 (8)% Reported PBT of $8.8bn down $4.6bn (34%) vs. ECL (8,817) (2,627) >(100)% FY19, primarily from lower revenue and hig
Slide 6: FY20 adjusted revenue performance
Capital structure FY20 results Appendix and debt issuance FY20 adjusted revenue performance FY20 revenue FY20 vs. FY19 Revenue by global business, $bn Retail Banking $12,938m (2,717) (8)% WPB $22,013m (14)% Wealth Management $7,818m o/w insurance market impacts: $(38)m (815) 54.9 52.1 50.4 Other $1,
Slide 7: Net interest income
Capital structure FY20 results Appendix and debt issuance Net interest income Reported NIM progression, bps 120 122 1 (3) (1) 5 FY20 reported NII of $27.6bn was down $2.9bn (9%) vs. FY19 due to global reductions in interest rates, partly offset by increases in AIEAs 3Q20 Asset yields Asset volumes
Slide 8: Non-NII
Capital structure FY20 results Appendix and debt issuance Non-NII Group, $m WPB, $m CMB, $m GBM, $m Net fees Net fees Net fees Net fees (1)% (2)% (3)% (6)% 2,989 3,017 2,966 1,372 1,406 1,327 0% 1% 1% 1% 828 828 840 804 797 808 4Q19 3Q20 4Q20 4Q19 3Q20 4Q20 4Q19 3Q20 4Q20 4Q19 3Q20 4Q20 WM RB Other
Slide 9: Credit performance
Capital structure FY20 results Appendix and debt issuance Credit performance Adjusted ECL charge trend 0.25 0.81 FY20 ECL charge of $8.8bn, up $6.2bn ECL as a % of vs. FY19, due to deteriorations in forward 1.47 average gross 1.13 economic outlook from the global impact of loans and advances 0.44
Slide 10: Adjusted costs
Capital structure FY20 results Appendix and debt issuance Adjusted costs Operating expenses trend, $m FY20 costs of $31.5bn down $1.1bn (3%) vs. FY19 primarily from cost programme saves and reductions in performance-related pay (PRP), partially 9,176 9,106 offset by increases in technology spend a
Slide 11: Balance sheet
Capital structure FY20 results Appendix and debt issuance Balance sheet Customer lending, $bn Customer accounts, $bn 12% (2)% 2% (3)% 1,615 1,643 1,063 1,074 1 1,038 1,470 1 1 1 4Q20 customer lending decreased $25bn 1 1 337 355 (2%) vs. 4Q19 despite mortgage growth in WPB, 252 244 224 304 particul
Slide 12: Asset quality
Capital structure FY20 results Appendix and debt issuance Asset quality Gross loans and advances to Loans and advances to customers Stage 3 and impaired loans and Reported LICs/ECL customers of ‘Strong’ or ‘Good’ credit advances to customers By credit quality classification quality At 31 December 20
Slide 13: Funding and liquidity
Capital structure FY20 results Appendix and debt issuance Funding and liquidity High-quality liquid assets (liquidity value), $bn Principal operating entities LCR NSFR 678 % 2020 2019 2020 2019 601 HSBC UK Bank plc (RFB) 198 165 164 150 567 HSBC Bank plc (NRFB) 136 142 124 106 513 The Hongkong and S
Slide 14: Customer loan book
Capital structure FY20 results Appendix and debt issuance Customer loan book At 31 December 2020 Personal loan book ($bn, gross loans and advances to customers) Wholesale loan book ($bn, gross loans and advances to customers) Motor vehicle finance Credit cards 0.3% Non-bank financial institutions 5.
Slide 15: Capital position
Capital structure FY20 results Appendix and debt issuance Capital position FY20 vs. FY19 CET1 ratio movement, % CET1 ratio of 15.9%, up 1.2ppts from FY19 Reported RWAs of $857.5bn, up $14.1bn (2%) vs. 15.9 FY19, from credit migration of $29.7bn and FX movements 0.5 0.2 of $13.1bn, partially offs
Slide 16: Capital position versus requirements
Capital structure FY20 results Appendix and debt issuance Capital position versus requirements CET1 ratio as a % of RWAs, vs. MDA hurdle Regulatory capital vs. regulatory requirements as a % of RWAs 21.5% 20.2% Buffer to $43bn 2.8% 1.7% MDA hurdle 5.0% 2.8% 2.6% 15.7% 10.9% 0.2% 2.7% 2.0% Combined 2
Slide 17: MREL/TLAC position versus requirements
Capital structure FY20 results Appendix and debt issuance MREL/TLAC position versus requirements MREL/TLAC position versus estimated end-point regulatory requirements19 as a % of Group RWAs 30.9% The greater of: HSBC Group’s 2022 MREL requirement20 is the greater 27.5% 27.5% of: 9.2% 4.7% 4.7% – 1
Slide 18: MREL/TLAC position
Capital structure FY20 results Appendix and debt issuance MREL/TLAC position Europe Resolution Group HSBC Group US Resolution Group Asia Resolution Group (Including HSBC Holdings)24 TLAC Total TLAC: $265bn Total TLAC: $30bn Total TLAC: $98bn Total TLAC: $102bn position Of which: non-regulatory Of wh
Slide 19: FY20 issuance and redemptions
Capital structure FY20 results Appendix and debt issuance FY20 issuance and redemptions FY20 issuance and redemptions Issuance plan Issued Redeemed HoldCo Broadly limited to $5.1bn called / matured Completed a number of liability management exercises $15.5bn Senior refinancing $11.8bn tendered in
Slide 20: Issuance plan
Capital structure FY20 results Appendix and debt issuance Issuance plan Issuance plan28 Limited net new issuance going forward 2021 2022 onwards HoldCo Senior gross and net issuance, $bn-equivalent Gross Issuance HoldCo Expect to issue c.$15bn Broadly limited to Senior on a gross basis refinancing c
Slide 21: Approach to issuance
Capital structure FY20 results Appendix and debt issuance Approach to issuance HSBC Holdings plc External Investors Since 2015, HSBC Holdings has been the Group’s issuing entity for external AT1, T2 and MREL/TLAC-eligible Senior Issuance over time to broadly match group currency exposures Extern
Slide 22: 2021 Fixed Income Agenda
Capital structure FY20 results Appendix and debt issuance 2021 Fixed Income Agenda IBOR transition Guiding principle is to work with bondholders to transition where we can 1 Any transition offerings will aim to facilitate value neutral transition in line with market precedent and best practice P
Slide 23: Appendix
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Slide 24: Update on guidance versus Feb-20 update
Appendix Update on guidance versus Feb-20 update Feb-20 guidance New guidance As at FY20 ≤$31bn in FY22 on Dec 2020 average FX rates* Adjusted costs ≤$31bn in FY22 $31.5bn ≤$30bn using average FY20 FX rates $6bn FY19-22 $7bn FY19-22 CTA $1.8bn (phasing: 40%/>50%/<10% in 2020-22) (phasing: 25%/50%/25
Slide 25: Key financial metrics
Appendix Key financial metrics Reported results, $m 4Q20 3Q20 4Q19 Balance sheet, $m 4Q20 3Q20 4Q19 NII 6,619 6,450 7,654 Total assets 2,984,164 2,955,935 2,715,152 Other Income 5,138 5,477 5,717 Net loans and advances to customers 1,037,987 1,041,340 1,036,743 Revenue 11,757 11,927 13,371 Adjusted
Slide 26: Reconciliation of reported and adjusted results
Appendix Reconciliation of reported and adjusted results $m 4Q20 3Q20 4Q19 FY20 FY19 Reported PBT 1,385 3,074 (3,897) 8,777 13,347 Revenue Currency translation — 178 134 — (471) Customer redress programmes (1) 48 45 21 163 Disposals, acquisitions and investment in new businesses 2 — 55 10 (768) Fair
Slide 27: Certain items and Argentina hyperinflation
Appendix Certain items and Argentina hyperinflation Certain items included in adjusted revenue 4Q20 3Q20 2Q20 1Q20 4Q19 FY20 FY19 highlighted in management commentary29 $m Insurance manufacturing market impacts in WPB 298 126 362 (710) 200 90 128 Credit and funding valuation adjustments in GBM 70 33
Slide 28: Net interest margin supporting information
Appendix Net interest margin supporting information NII sensitivity to instantaneous change in yield curves (12 months) Quarterly NIM by key legal entity % of 4Q20 % of 4Q20 Currency 4Q19 1Q20 2Q20 3Q20 4Q20 Group NII Group AIEA Change in Jan 2021 to Dec 2021 USD HKD GBP EUR Other Total The Hongkong
Slide 29: ECL analysis
Appendix ECL analysis ECL charge by geography, $m Analysis by stage Stage 3 499 Reported basis, $bn Stage 1 Stage 2 Stage 3 Total31 as a % 3Q20 4Q20 of Total 4Q20 237 256 271 219 216 Gross loans and advances to customers 869.9 163.2 19.1 1,052.5 1.8% 164 89 103 Allowance for ECL 2.0 5.0 7.4 14.5 55
Slide 30: Balance sheet – customer lending
Appendix Balance sheet – customer lending Adjusted customer lending (on a constant currency basis), $bn 4Q20 adjusted customer lending growth by global business and region, $bn 1,037 1,040 1,019 1,041 1,038 Growth since 3Q20 Growth since 3Q20 Hong Kong UK mortgages mortgages 1,063 1,106 1,075 1,074
Slide 31: Balance sheet – customer accounts
Appendix Balance sheet – customer accounts Adjusted customer accounts (on a constant currency basis), $bn 4Q20 adjusted customer accounts growth by global business and region, $bn 1,439 1,441 1,532 1,569 1,643 Growth since 3Q20 Growth since 3Q20 1,611 1,615 1,643 1,470 1,521 Europe $630bn 4 1% WPB $
Slide 32: Balance sheet – deposits by type
Appendix Balance sheet – deposits by type Group customer accounts by type, $bn Group loans and deposits by currency Average balances At 31 December 2020 At 31 December 2020 1,170 Loans and advances to customers Customer accounts 989 1,025 1,054 1,026 969 USD Others Others 17% 17% USD 228 229 279 290
Slide 33: Sectors particularly affected by Covid-19
Appendix Sectors particularly affected by Covid-19 Oil and Gas34 Aviation36 Restaurants and leisure Retail CRR 1-3 CRR 4-6 CRR 7-8 Defaulted 4% 8% 2% 3% 8% 3% 3% 4% 30% 27% $23.0bn $10.5bn 47% $3.3bn $25.4bn 48% 62% 46% 46% 59% Drawn risk exposure35 by region, Drawn risk exposure35 by region, Drawn
Slide 34: Hong Kong drawn risk exposure
Capital structure FY20 results Appendix and debt issuance Hong Kong drawn risk exposure Total gross loans and advances, $bn Total gross loans and advances to customers and banks of $321bn as at 31 December 2020 (4Q20: $327bn) by booking location Corporate (wholesale: $198bn; personal: $123bn) 10%
Slide 35: Mainland China drawn risk exposure
Capital structure FY20 results Appendix and debt issuance Mainland China drawn risk exposure China drawn risk exposure37, $bn Total China drawn risk exposure (including Sovereigns, Banks and Customers) of $178bn comprising: Wholesale $167bn (of which 58% is onshore); Retail: $11bn Gross loans an
Slide 36: UK RFB disclosures
Capital structure FY20 results Appendix and debt issuance UK RFB disclosures Total RFB lending to customers, £bn Personal At 31 December 2020 Residential mortgage balances, £bn Unsecured lending balances, £bn 101.5 102.4 104.2 108.1 110.7 Wholesale 94.7 96.0 97.7 99.4 67.4 8.2 8.8 7.7 7.3 7.4 5.9 £1
Slide 37: Credit ratings for main issuing entities
Capital structure FY20 results Appendix and debt issuance Credit ratings for main issuing entities Long term senior ratings as at 23 February 2021 S&P Moody’s Fitch Rating Outlook Rating Outlook Rating Outlook HSBC Holdings plc A- STABLE A2 NEG A+ NEG The Hongkong and Shanghai Banking Corporation Lt
Slide 38: Outstanding instruments
Capital structure FY20 results Appendix and debt issuance Outstanding instruments Outstanding instruments by currency (notional) HoldCo senior Tier 2 Additional Tier 1 USD EUR EUR EUR 11% 16% 19% GBP 10% 24% GBP 9% GBP $80.6bn $28.3bn $24.5bn 4% JPY 3% 6% 67% Other 65% 66% SGD USD USD 37
Slide 39: Simplified structure chart
Capital structure FY20 results Appendix and debt issuance Simplified structure chart Holding company Associate Intermediate holding company Resolution entity HSBC Operating company Holdings plc 99.9% HSBC HSBC Private HSBC HSBC HSBC HSBC Asia 94.5% Bank HSBC UK Banking Mexico, North America Bank Hol
Slide 40: Glossary
Capital structure FY20 results Appendix and debt issuance Glossary AIEA Average interest earning assets LTV Loan to value BAU Business as usual MDA Maximum distributable amount Bps Basis points. One basis point is equal to one-hundredth of a percentage point MENA Middle East and North Africa CCyB Co
Slide 41: Footnotes
Capital structure FY20 results Appendix and debt issuance Footnotes 1. A number of our clients were in need of financial relief as a result of the economic slowdown brought on by the Covid-19 pandemic, which we sought to address in a responsible way. This included extending our own relief measures s
Slide 42: Disclaimer
Capital structure FY20 results Appendix and debt issuance 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
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