Hsbc Holdings Plc · LSE:HSBA
Hsbc — Q4 2022 Earnings Presentation
67 slides from Hsbc's earnings presentation, Feb 21, 2023
Slide 1: HSBC Holdings plc 4Q22 Results
HSBC Holdings plc 4Q22 Results Presentation to Investors and Analysts
Slide 2: Strategic progress
Strategic progress Noel Quinn Group Chief Executive
Slide 3: Our purpose, values and ambition support the execution of our strategy
Strategy 4Q22 results Summary Appendix Our purpose, values and ambition support the execution of our strategy Our purpose Opening up a world of opportunity Our ambition To be the preferred international financial partner for our clients Our values We value difference We succeed together We take resp
Slide 4: We have made good progress but there's so much more we can achieve
Strategy 4Q22 results Appendix We have made good progress but there’s so much more we can achieve Transformation journey Delivery in 2022 Growth and returns First phase of our strategy execution Good set of results Value from international complete connectivity and customer Revenue growth ce
Slide 5: Our transformation journey: Six components
Transformation journey Strategy 4Q22 results Appendix Our transformation journey: Six components International Grown and protected our market leading position in international connectivity connectivity Portfolio Whilst repositioning unprofitable and non-strategic portfolios, particularly in US a
Slide 6: International connectivity: We continue to maintain our market-leading position
Transformation journey Strategy 4Q22 results Appendix International connectivity: We continue to maintain our market-leading position… Leading positions in Trade, Payments and FX 1st Top 3 3rd Processor of SWIFT Trade Finance FX globally payments2 (excl. Commodities)1 globally1 (>$600tn payments pro
Slide 7: International connectivity: drive growth in revenue and market share
Transformation journey Strategy 4Q22 results Appendix International connectivity: …and drive growth in revenue and market share Growth in revenue within payments franchise Growth in our trade business Strong momentum within FX Global Payments Solutions (GPS) revenue, $bn Global Trade and Receivables
Slide 8: Portfolio repositioned: Exited markets and reduced RWAs
Transformation journey Strategy 4Q22 results Appendix Portfolio repositioned: Exited markets and reduced RWAs while reallocating capital towards higher growth and more profitable opportunities RWA saves in excess of target8 Capital reallocation to Asia $bn Asia as a % of Group tangible equity9, % 24
Slide 9: Broad base of profit generation: multiple engines of growth
Transformation journey Strategy 4Q22 results Appendix Broad base of profit generation: We have multiple engines of growth and profitability #1 market share in deposits12, #1 Trade Finance Bank14; 26.9% Hong $6.8bn PBT; insurance13 UK $5.0bn PBT; receivables finance market share23 Kong (44)% vs.
Slide 10: Cost management: cost discipline and improved operational efficiency
Transformation journey Strategy 4Q22 results Appendix Cost management: We have maintained cost discipline and improved operational efficiency Managed costs whilst increasing tech spend Achieved improved operational efficiency 2019-22 adjusted cost movements, % Adjusted cost efficiency ratio % 2019 2
Slide 11: Building platform for growth: balance sheet growth and fee income
Transformation journey Strategy 4Q22 results Appendix Building platform for growth: Leveraging our balance sheet growth and driving fee income revenue streams… Balance sheet growth Building our wealth franchise Deposits Wealth revenue $bn Global, $bn CAGR +4% Total Wealth revenue 7.7 8.1 1,570 Insur
Slide 12: Building platform for growth: investing in technology to scale digital propositions
Transformation journey Strategy 4Q22 results Appendix Building platform for growth: …while investing in technology to scale-up our digital propositions and launch new propositions Growth in technology spend29 Scaling up our digital propositions Launched new propositions $bn, P&L basis +19% Mobile X;
Slide 13: Summary of our performance in 2022 (vs. 2021)
Delivery in 2022 Strategy 4Q22 results Appendix Summary of our performance in 2022 (vs. 2021) Reported PBT of $17.5bn, down $1.4bn (7%); adjusted PBT of $24.0bn, up $3.4bn (17%) Adjusted revenue of $55.3bn, up $8.3bn (18%). NII of $32.6bn, up $7.7bn (31%). Non-NII of $22.7bn, up $0.6bn (3%) Adjusted
Slide 14: Focus on our strengths – CMB
Delivery in 2022 Strategy 4Q22 results Appendix Focus on our strengths – CMB Revenue growth driven by Transaction With growth momentum in fee Strong growth delivered across Banking income all regions Revenue, $bn Fee income, $bn Geographical revenue breakdown, $bn +29% +8% +29% 16.2 3.7 16.2 14% 3.4
Slide 15: Focus on our strengths – WPB
Delivery in 2022 Strategy 4Q22 results Appendix Focus on our strengths – WPB Double-digit revenue growth across Continued traction in NNIA following 21% All regions delivered robust Wealth and Personal banking growth in 2021 growth Revenue, $bn Net new invested assets, $bn Geographical revenue break
Slide 16: Focus on our strengths – GBM
Delivery in 2022 Strategy 4Q22 results Appendix Focus on our strengths – GBM Double-digit revenue growth across MSS Good momentum from cross-sell of GBM Growth in client business booked in the East and Banking products to WPB and CMB clients from clients managed in the West39 Revenue, $bn Collaborat
Slide 17: Digitise - Speed, Scale, Resilience
Delivery in 2022 Strategy 4Q22 results Appendix Digitise - Speed, Scale, Resilience Improvement in product release frequency, and more to come Mobile active WPB customers approaching half of our client base Product release frequency per year40, # Mobile active WPB customers42, % +6.1ppts +42% 42.7%
Slide 18: Energise - Inspiring a dynamic culture
Delivery in 2022 Strategy 4Q22 results Appendix Energise - Inspiring a dynamic culture Key highlights Employee engagement index48 Female leaders50 % In senior leadership roles, % Simplification – through delayering and de-duplication of management structures; focus on improving employee +1.0ppts +
Slide 19: Transitioning to net zero
Delivery in 2022 Strategy 4Q22 results Appendix Transitioning to net zero - Continuing to build a leading position through active client engagement Supporting our customers in the transition to net zero Becoming a net zero bank Ambition to provide and facilitate $750bn to $1tn of sustainable finance
Slide 20: Driving value creation and delivering sustainable growth
Growth and returns Strategy 4Q22 results Appendix We are focused on driving value creation and delivering sustainable growth Next phase of strategy execution will focus on our …while continuing to deliver on improved performance and strengths… higher returns Higher growth and returns 12%+ RoTE guida
Slide 21: 4Q22 results update
4Q22 results update Georges Elhedery Group Chief Financial Officer
Slide 22: 4Q22 results summary
Strategy 4Q22 results Appendix 4Q22 results summary $m 4Q22 4Q21 Δ Reported PBT of $5.2bn (up 95%); adjusted PBT of $6.8bn, up NII 9,573 6,255 53% $3.3bn (92%) vs. 4Q21, reflecting strong NII growth (up $3.3bn, 53%) Non-NII 5,779 4,835 20% and higher non-NII in Corporate Centre related to revenue
Slide 23: Adjusted revenue performance
Strategy 4Q22 results Appendix Adjusted revenue performance Revenue by global business, $m Net fee income by global business, $m +38% (11)% 15,352 (6)% (55) 2,920 516 2,766 2,604 Growth since 1,587 4Q21 11,090 2,214 7,159 1,282 1,264 1,143 WPB (11)% WPB 4,945 CMB CMB 4,689 GBM 853 GBM 903 863 1% 3,1
Slide 24: Net interest income and margin
Strategy 4Q22 results Appendix Net interest income and margin Reported NIM progression, bps 4Q22 reported NII of $9.6bn, up $2.8bn (41%) 88 (71) 174 vs. 4Q21 (up $3.3bn / 53% adjusted) and $1.0bn 157 (12%) vs. 3Q22 (up $1.1bn / 13% adjusted), primarily due to interest rate rises 4Q22 reported NI
Slide 25: Credit performance
Strategy 4Q22 results Appendix Credit performance Adjusted ECL charge trend, $m 4Q21 and 1Q22 benefitted from releases 1,427 of Covid-19 related provisions ECL 1,071 598 o/w: mainland 482* 621 363 China CRE 424 196 ECL charge as a 628 151 % of average FY22 ECL charge of $3.6bn was 35bps of gross l
Slide 26: Mainland China commercial real estate update
Strategy 4Q22 results Appendix Mainland China commercial real estate update Mainland China CRE exposures by booking location and credit quality At 31 December 2022 Total mainland China CRE exposure $16.8bn, down $3.0bn vs. 2Q22, primarily due to repayments in the Hong Kong booked Memo: portfolio M
Slide 27: Adjusted costs
Strategy 4Q22 results Appendix Adjusted costs Operating expenses trend, $m 69% 63% 4Q22 costs of $7.8bn, up $0.1bn (2%) vs. 4Q21. $0.7bn of cost saves 57% 51% 51% were offset by $0.3bn higher technology spend and $0.3bn higher performance-related pay (PRP) due to accrual timing differences 7,658 7
Slide 28: Capital adequacy
Strategy 4Q22 results Appendix Capital adequacy CET1 ratio, % 0.0 0.1 14.2 0.2 0.6 (0.1) 13.4 CET1 ratio of 14.2%, up 0.8ppts vs. 3Q22 CET1 capital increased by $8.5bn, mainly due to profits and favourable FX moves, partly offset by the dividend 3Q22 Profits58 Dividend Change FX Other 4Q22 accru
Slide 29: Guidance summary
Strategy 4Q22 results Appendix Guidance summary FY22 Guidance NII $32.6bn FY23 NII ≥$36bn54; intend to update target for IFRS 17 at or before 1Q23 Cautious outlook on loan growth in the short term; expect mid-single digit percentage annual loan Lending +1%55 growth in the medium to long term Costs $
Slide 30: Summary
Strategy 4Q22 results Appendix Summary 4Q22 revenue up $4.3bn (38%), PBT up $3.3bn (92%) vs. 1 4Q21; FY22 revenue up $8.3bn and PBT up $3.4bn vs. FY21 12%+ RoTE from FY23 Substantial distribution capacity: FY22 ECL charge $3.6bn. Expect a charge of around $0.32 FY22 dividend per share 2 40bps of l
Slide 31: Appendix
Appendix
Slide 32: International connectivity is our core value proposition
Strategy 4Q22 results Appendix International connectivity is our core value proposition for clients and employees; it’s the foundation of our strategy and a driver behind improving returns ~45% of wholesale client business is cross-border3 In WPB, International is the most attractive client segment
Slide 33: Changes to presentation of financial results from 1Q23
Strategy 4Q22 results Appendix Changes to presentation of financial results from 1Q23 Current New Reported performance (IFRS) Reported performance (IFRS) Key changes We are making several changes to the presentation of the Group’s financial results with effect from 1 January 2023: Adjust for FX, sig
Slide 34: ESG update
Strategy 4Q22 results Appendix ESG update Environmental Social Governance Our net zero transition will be challenging but is an opportunity to make an impact. Our percentage of female leaders 4/6 WPB markets and 5/6 was 33.3%, up 1.6ppts vs. FY2150 CMB markets sustained top We plan to publish our tr
Slide 35: Sustainable finance update
Strategy 4Q22 results Appendix Sustainable finance update Sustainable finance Global GSSS bond issuance22, $bn We have provided and facilitated a cumulative 941 $211bn of sustainable finance and investment 751 against our 2030 ambition of $750bn - $1tn 519 34 Financing by type 2015 2020 2021 2022
Slide 36: Key financial metrics
Strategy 4Q22 results Appendix Key financial metrics Reported results, $m 4Q22 3Q22 4Q21 Alternative performance measures, $m 4Q22 3Q22 4Q21 NII 9,578 8,581 6,781 Adjusted NII 9,573 8,455 6,255 Other Income 5,297 3,035 5,208 Adjusted other income 5,779 5,698 4,835 Revenue 14,875 11,616 11,989 Adjust
Slide 37: Reconciliation of reported PBT and adjusted profit after tax
Strategy 4Q22 results Appendix Reconciliation of reported PBT and adjusted profit after tax $m 4Q22 3Q22 4Q21 FY22 FY21 Reported PBT (B) 5,205 3,147 2,664 17,528 18,906 Currency translation — (174) (1,004) — (3,074) Customer redress programmes (5) (17) 7 (8) (11) Disposal, acquisitions and investmen
Slide 38: Certain items included in adjusted revenue
Strategy 4Q22 results Appendix Certain items included in adjusted revenue Certain items included in adjusted revenue 4Q22 3Q22 2Q22 1Q22 4Q21 FY22 FY21 highlighted in management commentary, $m Insurance manufacturing market impacts in WPB 107 (421) (382) (279) 126 (964) 479 of which: Asia WPB insura
Slide 39: 4Q22 adjusted revenue performance
Strategy 4Q22 results Appendix 4Q22 adjusted revenue performance 4Q22 revenue 4Q22 vs. 4Q21 Revenue by global business, $bn o/w: insurance market Wealth $2,078m 144 impacts: $(19)m +38% WPB $7,159m 45% Personal Banking $4,991m 2,097 15.4 Other $90m (27) 14.2 3.7 GTRF $488m 17 11.1 3.8 Credit and Len
Slide 40: Net interest margin supporting information
Strategy 4Q22 results Appendix Net interest margin supporting information 1 year NII sensitivity Quarterly NIM by key legal entity At 31 December 2022, assumes a static balance sheet (no assumed migration from current account to % of 4Q22 % of 4Q22 4Q21 1Q22 2Q22 3Q22 4Q22 time deposits), no managem
Slide 41: Further NII analysis
Strategy 4Q22 results Appendix Further NII analysis Reported NII trend, $bn IFRS 17 32.6 NII in our insurance manufacturing business* ($2.6bn in FY22) will reduce under IFRS 17 which came into force on 1st January 2023 as a result of related asset 26.5 reclassifications. Associated income will now
Slide 42: Net fee income by global business
Strategy 4Q22 results Appendix Net fee income by global business $m FY22 FY21 ∆ $m FY22 FY21 ∆ Personal Banking 1,259 1,277 (1)% MSS 468 931 (50)% Wealth Management 3,648 4,281 (15)% o/w: Securities Services 1,201 1,257 (4)% WPB Other WPB 123 91 35% o/w: Other MSS (733) (326) >(100)% Total WPB 5,030
Slide 43: Wealth and Personal Banking
Strategy 4Q22 results Appendix Wealth and Personal Banking 4Q22 financial highlights Balance sheet, $bn 4Q22 vs. 4Q21 Revenue $7.2bn 45% 828 830 836 Revenue up $2.2bn (45%). Personal Banking up $2.1bn (72%) (4Q21: $4.9bn) 9 24 57 primarily due to interest rate rises and balance sheet growth in the
Slide 44: Commercial Banking
Strategy 4Q22 results Appendix Commercial Banking 4Q22 financial highlights Balance sheet, $bn 4Q22 vs. 4Q21 Revenue $4.7bn 51% Revenue up $1.6bn (51%) with double digit growth in all regions (4Q21: $3.1bn) Customer lending notably in Asia and the UK. GPS revenue up 199% driven by 347 higher rates
Slide 45: Global Banking and Markets
Strategy 4Q22 results Appendix Global Banking and Markets 4Q22 financial highlights View of adjusted revenue 4Q22 vs. 4Q21 16% $m 4Q22 ∆4Q21 Revenue of $3.7bn up $0.5bn (16%) Revenue $3.7bn (4Q21: $3.2bn) MSS 2,017 18% MSS revenue of $2.0bn up $0.3bn (18%): (19)% Securities Services 574 32% • Co
Slide 46: Corporate Centre
Strategy 4Q22 results Appendix Corporate Centre 4Q22 financial highlights Revenue performance, $m Revenue $(191)m (40)% (4Q21: $(136)m) 4Q21 1Q22 2Q22 3Q22 4Q22 >(100)% Central Treasury (10) 5 (32) (48) (1) ECL $(8)m (4Q21: $(3)m) Legacy Credit (12) (18) 23 (6) (15) Costs $47m (70)% (4Q21: $156m) Ot
Slide 47: Insurance
Strategy 4Q22 results Appendix Insurance Key financial metrics* Reported Embedded Value, $bn Strategic highlights +4% Adjusted income statement, $m FY22 FY21 FY20 Revenue 2,006 2,683 1,934 17.0 17.7 Of which: NII 2,595 2,430 2,352 #1 ranked with a market share of 25%13 in Hong 7.5 7.8 Kong for 9M2
Slide 48: Wealth and Personal Banking: Global invested assets
Strategy 4Q22 results Appendix Wealth and Personal Banking: Global invested assets Global reported invested assets Asia reported invested assets Reported invested assets managed by AM $bn $bn $bn +2% (6)% (9)% 1,119 472 484 630 595 968 1,016 437 567 32 58 334 43 306 340 147 141 127 450 391 399 351 2
Slide 49: Balance sheet – customer lending
Strategy 4Q22 results Appendix Balance sheet – customer lending Balances by global business, $bn Balances by region Growth since 3Q22 1,005 $(6)bn 1,031 Europe $344bn 994 81 (2)% 2 26 Adjusted customer lending of $925bn, down o/w: UK $286bn $(3)bn $80bn (8%) vs. 3Q22, primarily due to the (1)% recla
Slide 50: Balance sheet – customer accounts
Strategy 4Q22 results Appendix Balance sheet – customer accounts Balances by global business, $bn Balances by region Growth since 3Q22 1,656 Adjusted customer accounts of $1,570bn, 1,631 1,655 $(18)bn 85 Europe $601bn 9 26 (3)% down $58bn (4%) vs. 3Q22 primarily due to the reclassification of $61bn
Slide 51: Balance sheet analysis
Strategy 4Q22 results Appendix Balance sheet analysis Group customer accounts by type, $bn* Group loans, deposits and RWAs by currency Average balances 1,056 1,024 $1,570bn $925bn $840bn 15% 16% 898 4% 25% 823 840 7% 5% 795 6% 6% 20% 7% 24% 18% 27% 29% 17% 290 323 315 279 272 255 263 27% 20% 27% 20
Slide 52: 4Q22 vs. 3Q22 equity drivers
Strategy 4Q22 results Appendix 4Q22 vs. 3Q22 equity drivers Shareholders’ Tangible equity, TNAV per share, Basic number of ordinary equity, $bn $bn $ shares, millions At 30 September 2022 177.7 140.7 7.13 19,738 Profit attributable to: 4.7 5.1 0.26 — Ordinary shareholders72 4.6 5.1 0.26 — Other equi
Slide 53: FY22 vs. FY21 equity drivers
Strategy 4Q22 results Appendix FY22 vs. FY21 equity drivers Shareholders’ Tangible equity, TNAV per share, Basic number of ordinary equity, $bn $bn $ shares, millions At 31 December 2021 198.3 158.2 7.88 20,073 Profit attributable to: 16.0 16.1 0.80 — Ordinary shareholders72 14.8 16.1 0.80 — Other e
Slide 54: Total shareholders' equity to CET1 capital
Strategy 4Q22 results Appendix Total shareholders’ equity to CET1 capital Total equity to CET1 capital, at 31 December 2022, $m Total equity to CET1 capital walk, $m 4Q22 3Q22 2Q22 4Q21 Total equity 196,028 Total equity (per balance sheet) 196,028 185,993 196,690 206,777 Non-controlling interests (8
Slide 55: Hong Kong business performance
Strategy 4Q22 results Appendix Hong Kong business performance FY22 financial performance Rising interest rates and market share gains #1 retail NPS amongst major bank74 $m FY22 FY21 Δ drove PBT of $6.8bn, up $0.6bn (10%) vs. FY21 NII 9,928 7,216 38% Strong 4Q22 performance: revenue $5.1bn, Non-N
Slide 56: Hong Kong loans and advances
Strategy 4Q22 results Appendix Hong Kong loans and advances Hong Kong loans and advances Total gross loans and advances to customers and banks of $322bn (4Q21: $329bn) by booking location (wholesale: $189bn; personal: $133bn) 10% 7% FY22 ECL charge of $1,680m (CMB: $1,276m, WPB: $139m, GBM $267m
Slide 57: Mainland China business performance
Strategy 4Q22 results Appendix Mainland China business performance FY22 financial performance Regional highlights $m FY22 FY21 Δ NII 1,794 1,604 12% 1m registered users on the Pinnacle Non-NII 2,379 1,932 23% FY22 revenue up 18% vs. FY21; PBT River app. c.1,300 wealth planners Revenue 4,173 3,536 18
Slide 58: Mainland China risk exposure
Strategy 4Q22 results Appendix Mainland China risk exposure Mainland China risk exposure, $bn Wholesale lending analysis, $bn Corporate lending by sector, $bn 178.8 178.4 176.0 176 1.9 2.1 2.2 34.7 33.9 40.1 Transportation Automotive Wholesale 36.6 36.1 34.0 Consumer Goods & Retail Mortgages 4.4 3.9
Slide 59: UK ring-fenced bank
Strategy 4Q22 results Appendix UK ring-fenced bank FY22 financial performance WPB CMB 27% Personal gross mortgage balances, £bn Mortgages: Revenue £7.9bn (FY21: £6.2bn) 90+ day delinquency trend82, % Wholesale gross customer loans, £bn 118.1 125.5 28% 110.7 o/w: WPB £4.3bn (FY21: £3.4bn) 0.25 0.23 +
Slide 60: Held-for-sale businesses
Strategy 4Q22 results Appendix Held-for-sale businesses FY22 Canada and France retail performance In 2022, we reclassified our Canada, France retail, Greece and Russia businesses as held-for-sale. During the year we recognised a $2.4bn impairment loss on France and a $0.4bn loss associated with Gr
Slide 61: Impacts of financial investments
Strategy 4Q22 results Appendix Impacts of financial investments Hold-to-collect-and-sell (‘HTC&S’) portfolio, $bn (27)% As part of our interest rate hedging strategy, we hold a debt portfolio of financial 347 investments measured at fair value through other comprehensive income (FVOCI), which are
Slide 62: PBT by region and dividends by subsidiary
Strategy 4Q22 results Appendix PBT by region and dividends by subsidiary Profit / (loss) before tax by region, $bn Dividends paid by subsidiary in period, $m FY22 FY19 FY22 FY19 Europe 4.8 (0.3) HSBC UK Bank plc 2,192 424 o/w UK RFB 5.0 2.8 HSBC Bank plc* — 3,689 o/w HSBC Bank plc 2.1 0.7 The Hongko
Slide 63: Glossary
Strategy 4Q22 results Appendix Glossary AIEA Average interest earning assets IFRS International Financial Reporting Standard AM Asset Management A portfolio of assets including securities investment conduits, asset-backed securities, trading Legacy credit portfolios, credit correlation portfolios an
Slide 64: Footnotes
Strategy 4Q22 results Appendix Footnotes 1. Source: Coalition Greenwich Competitor Analytics. Based on HSBC’s internal business structure and internal revenue 23. Trade association UK. Data as of 30 September 2022 numbers. Global Trade Finance rank at 1H22 and based on the following peer group: BAC,
Slide 65: Footnotes
Strategy 4Q22 results Appendix Footnotes 50. Senior leadership is classified as those at Band 3 and above in our global career band structure. Employees with an 73. A revised approach to insurance-related adjustments has been effective from 30 September 2022. This has had no impact on ‘Undeclared’ o
Slide 66: Disclaimer
Strategy 4Q22 results 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
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