Hsbc Holdings Plc · LSE:HSBA
Hsbc — Q3 2016 Earnings Presentation
28 slides from Hsbc's earnings presentation, Nov 7, 2016
Slide 1: Overseas Regulatory Announcement
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Slide 2: Third Quarter 2016 Earnings Release
7 November 2016 HSBC HOLDINGS PLC THIRD QUARTER 2016 EARNINGS RELEASE AUDIO WEBCAST AND CONFERENCE CALL There will be an audio webcast presentation and conference call today for investors and analysts. The speakers will be: Stuart Gulliver, Group Chief Executive; and Iain Mackay, Group Finance D
Slide 3: Value of the network
Value of the network Connecting customers to opportunities Reduce Group RWAs by c. $290bn and re-deploy towards 1 higher performing businesses; return GB&M to Group target profitability 2 Optimise global network 3 Rebuild NAFTA profitability 4 Set up UK Ring-Fenced Bank Realise $4.5-5.0bn cost savin
Slide 4: Our highlights
Our highlights 3rd Quarter 2016 ‒ Reported PBT of $0.8bn includes the impact of the disposal of our operations in Brazil, changes in fair value of our own debt and costs-to-achieve 3Q16 ‒ Adjusted PBT of $5.6bn up $0.4bn or 7%; Financial ‒ Revenue of $12.8bn up $0.3bn or 2%: Client-facing GB&M up 11
Slide 5: 9M16 Key metrics
9M16 Key metrics 2015 Full Year Key financial metrics 9M15 9M16 Return on average ordinary shareholders’ equity3 10.7% 4.4% Return on average tangible equity3 12.1% 5.3% Jaws (adjusted) - 1.5% Dividends per ordinary share in respect of the period $0.30 $0.30 Earnings per share $0.73 $0.29 Common equ
Slide 6: Financial overview: Reconciliation of Reported to Adjusted PBT
Financial overview Reconciliation of Reported to Adjusted PBT 2015 Full Year Discrete quarter 9M16 $m 3Q15 3Q16 vs. 3Q15 9M15 9M16 vs. 9M15 Reported profit before tax 6,097 843 (5,254) 19,725 10,557 (9,168) Includes Currency translation 253 - (253) 688 - (688) Significant items: Loss on disposal of
Slide 7: 3Q16 Profit before tax performance
3Q16 Profit before tax performance Higher PBT from increased revenue and reduced costs 3Q16 vs 3Q15 PBT analysis5, $m Adjusted PBT by account line Adjusted PBT by global 3Q15 3Q16 vs. 3Q15 % business, $m 3Q16 vs. 3Q15 Principal RBWM 1,356 1,747 391 29% adverse favourable US CML run-off 154 52 (102)
Slide 8: 3Q16 revenue performance
3Q16 revenue performance 2% increase vs. 3Q15 driven by client-facing GB&M and Principal RBWM; 9M16 revenue down 2% on 9M15 Revenue analysis6, $m 1Q15 2Q15 3Q15 1Q16 2Q16 3Q16 vs. 3Q15 Wealth Management Principal RBWM excl. Wealth Management 9% increase vs. 3Q15 4,766 5,121 4,956 4,560 4,517 4,676 W
Slide 9: 3Q16 Loan impairment charges
3Q16 Loan impairment charges LICs decreased by $0.2bn compared with 2Q16 LICs analysis6 by type $m 3Q15 2Q16 3Q16 vs. 3Q15 vs. 2Q16 Quarterly movements by region Group 434 773 566 (132) 207 LICs / average gross loans and 3Q16 vs. 2Q16 3Q16 vs. 3Q15 0.19% 0.35% 0.25% (0.06)ppt 0.10ppt advances to cus
Slide 10: 3Q16 operating expenses
3Q16 operating expenses Annualised savings of $2.8bn; fully on track to achieve our target of $4.5bn to $5.0bn Operating expenses6 trend UK bank levy7 9M15: 9M16: $23.1bn $22.3bn (excluding bank levy) (excluding bank levy) 4% reduction 7.3 7.8 7.5 7.3 7.3 7.2 7.2 (0.1) 1Q15 2Q15 3Q15 1Q16 2Q16 3Q16
Slide 11: 3Q16 operating expenses
3Q16 operating expenses Annualised savings of $2.8bn; fully on track to achieve our target of $4.5bn to $5.0bn Operating expenses analysis (excluding UK bank levy) Examples of savings achieved (4)% 1 ‒ Enhance digital capabilities and self-service (e.g Apple, Digital (0.4) Android and Google pay in
Slide 12: 9M16 Profit before tax performance
9M16 Profit before tax performance Positive Jaws despite a challenging revenue environment 9M16 vs 9M15 PBT analysis, $m Adjusted PBT by account line Adjusted PBT by global 9M15 9M16 vs. 9M15 % business, $m 9M16 vs. 9M15 Principal RBWM 4,954 4,761 (193) (4)% adverse favourable US CML run-off 368 147
Slide 13: Capital adequacy
Capital adequacy Strong capital base: common equity tier 1 ratio1 – 13.9% Regulatory capital and RWAs $bn 3Q16 CET1 ratio movement % 31 Dec 30 Jun 30 Sep 2015 2016 2016 13.9 Common equity tier 1 capital 130.9 130.7 125.8 0.2 − $121bn reduction in RWAs Total regulatory capital on a transitional − $5.
Slide 14: Reduce RWAs by $290bn
Reduce RWAs by $290bn9 $121bn reduction through Bocom; $57bn reduction through the disposal of Brazil and RWA initiatives Key movements in Group RWA ($bn) 3Q16 achieved reduction Progress since Dec-14 Jun-16 1,082 Target (FX % rebased)9 achieved GB&M 7 RWA excl. BSM (17) initiatives GB&M excl. 102 1
Slide 15: Return metrics
Return metrics Drivers of returns 9M16 ROE vs. 9M15 (1.0) (0.6) (0.5) 0.5 (0.8) (3.9) 10.7 9.7 8.3 4.4 9M15 Sig Items & 9M15 Revenue LICs Costs ex Tax Rate 9M16 Sig Items & 9M16 Reported Bank Levy ex. Sig items, Bank Levy ex. Sig items, Bank Levy Reported ex Bank levy ex Bank levy CET1 ratio, % 11.8
Slide 16: Progress on strategic actions to capture value from our international network
Progress on strategic actions to capture value from our international network On track to meet 2017 target To deliver post 2017 Strategic actions Progress Targeted outcome by 2017 Status Actions to re-size and simplify ‒ $57bn further reduction in 3Q16, notably from the disposal of Brazil ($40bn)
Slide 17: Conclusion
Conclusion Strong franchise in challenging operating environment Group financial targets Strength of franchise and universal banking model ‒ Continued to capture value from international network: ROE >10% ‒ Gained market share in key Asian markets and businesses ‒ Sustainable business model with lon
Slide 18: Appendix
Appendix 16
Slide 19: Oil and gas
Appendix Oil and gas Oil and gas, $bn ‒ $30bn represents c. 2% of wholesale drawn risk exposures Overall $1bn lower $30bn ‒ Large integrated producers remain resilient drawn risk than June-16 exposure ‒ 4% of the portfolio is CRR 7-8, the majority of which is in service companies and pure producers
Slide 20: Metals and mining
Appendix Metals and mining Metals and mining, $bn Overall $1bn lower ‒ $17bn represents c.1% of wholesale drawn risk exposure $17bn drawn risk than June-16 ‒ In line with expectations precious metals, copper, nickel and zinc prices exposure improved during 2016 ‒ The outlook for steel, aluminium and
Slide 21: UK loans and advances to customers
Appendix UK loans and advances to customers, as of September 2016 UK loans and advances to customers UK Personal of $124bn (vs. $127bn at June 16) UK Mortgage lending of $106bn (vs. $107bn at June 16 on a reported basis) ‒ Total UK lending of $281bn which Scotland Northern Ireland East Anglia repres
Slide 22: Mainland China exposure
Appendix Mainland China exposure, as of September 2016 Mainland China drawn risk exposure12 Wholesale lending by type: ‒ Total China exposure of $146bn of which Our top 5 exposures to banks 55% is onshore amounted to $23bn CRRs 1-3 4-6 7-8 9+ Banks Sovereigns 34.1 - - - $34.1bn 23% NBFI ‒ Wholesale:
Slide 23: Balance sheet
Appendix Balance sheet Loans and advances to customers, $bn (constant currency) Customer accounts, $bn (constant currency) Key messages vs. June 16 Key messages vs. June 16 ‒ 2% mortgage growth in the UK ‒ Growth in customer accounts driven by Asia ‒ Growth in CMB term lending, mainly in the UK ‒ Co
Slide 24: Currency translation and significant items
Appendix Currency translation and significant items $m 3Q15 3Q16 9M15 9M16 Currency translation 253 - 688 - Significant items: Revenue Loss on disposal of operations in Brazil - (1,743) - (1,743) Trading results from disposed operations in Brazil 858 - 2,489 1,470 (Loss) / Gain on sale of several tr
Slide 25: Reported Consolidated Income statement
Appendix Reported Consolidated Income statement $m 3Q15 3Q16 9M15 9M16 Net interest income 8,028 7,185 24,472 22,945 Net fee income 3,509 3,262 11,234 9,848 Net trading income 2,742 2,231 7,315 7,555 Other income 806 (3,166) 5,007 (1,366) Net operating income before loan impairment charges and other
Slide 26: Footnotes
Appendix Footnotes 1. Since 1 January 2015 the CRD IV transitional CET1 and end point CET1 capital ratios have been aligned for HSBC Holdings plc 2. As at 2nd November 2016 3. On an annualised basis 4. Refer to slide 22 for a complete list of significant items 5. Significant items for 3Q15 and 3Q16
Slide 27: Important notice and forward-looking statements
Appendix Important notice and forward-looking statements Important notice The information set out in this presentation and subsequent discussion does not constitute a public offer for the purposes of any applicable law or an offer to sell or solicitation of any offer to purchase any securities or ot
Slide 28: Issued by HSBC Holdings plc Group Investor Relations
Issued by HSBC Holdings plc Group Investor Relations 8 Canada Square London E14 5HQ United Kingdom Cover image: Tsing Ma Bridge carries road and rail traffic to Hong Kong International Airport and accommodates large Telephone: 44 020 7991 3643 container ships. At HSBC, we help customers across the w