Hsbc Holdings Plc · LSE:HSBA
Hsbc — Q1 2018 Earnings Presentation
31 slides from Hsbc's earnings presentation, May 4, 2018
Slide 1: HSBC Holdings plc 1Q18 Results Presentation to Investors and Analysts
HSBC Holdings plc 1Q18 Results Presentation to Investors and Analysts Date: 4 May 2018
Slide 2: 1Q18 Key messages
1Q18 Key messages 1Q18 key messages 1st quarter 2018 Reported PBT (1Q17: $5.0bn) 1 Reported PBT of $4.8bn, 4% lower than 1Q17; $6.0bn adjusted PBT, 3% lower than 1Q17 $4.8bn Adjusted PBT (1Q17: $6.2bn) Adjusted revenue of $13.9bn was 3% higher than 1Q17, driven by higher deposit balances and $6.0bn
Slide 3: 1Q18 Key financial metrics
Financial overview 1Q18 Key financial metrics Key financial metrics 1Q17 1Q18 Return on average ordinary shareholders’ equity1 8.0% 7.5% Return on average tangible equity1 9.1% 8.4% Jaws (adjusted)3 (0.6)% (5.7)% Dividends per ordinary share in respect of the period $0.10 $0.10 Earnings per share4 $
Slide 4: Reconciliation of Reported to Adjusted PBT
Financial overview Reconciliation of Reported to Adjusted PBT Discrete quarter 1Q17 4Q17 1Q18 Reported profit before tax 4,961 2,304 4,755 Includes: Currency translation (171) (11) - Significant items: Customer redress programmes - (105) - Revenue- Disposals, acquisitions and investments in new busi
Slide 5: 1Q18 Profit before tax
Financial overview 1Q18 Profit before tax 1Q18 ∆ 1Q17 Adjusted revenue by global business, $m adverse favourable 9% Revenue $13,850m 339 3% 5,669 5,213 0% LICs / ECL $(170)m 70 29% 10% 4,142 4,148 Operating 3,699 (624) (8)% 10% $(8,245)m 3,352 expenses >(100)% 437 482 367 Share of profits in associa
Slide 6: Revenue performance
Financial overview Revenue performance Revenue performance, $m6 +6% Global 13,998 businesses 13,144 13,074 13,085 12,554 482 437 446 445 430 4,148 4,142 4,131 3,984 3,463 GPB GB&M 3,699 3,352 3,335 3,412 3,532 CMB RBWM 5,213 5,162 5,244 5,129 5,669 1Q17 2Q17 3Q17 4Q17 1Q18 Corporate Centre 650 128 3
Slide 7: 1Q18 revenue growth driven by deposit revenues and wealth management
Retail Banking and Wealth Management 1Q18 revenue growth driven by deposit revenues and wealth management 1Q18 highlights Revenue performance, $m6 Balance Sheet, $bn7 +9% +11% 4% 8% 630 647 657 5,213 5,162 5,244 5,129 5,669 Adjusted PBT (1Q17: $1.8bn) 332 352 357 142 80 40 21 Wealth $1.9bn 5% Mgt. 1
Slide 8: Continued positive performance, driven by Global Liquidity and Cash Management
Commercial Banking Continued positive performance, driven by Global Liquidity and Cash Management 1Q18 highlights Revenue performance, $m6 Balance Sheet, $bn7 +10% +5% Customer lending: +8% +3% Adjusted revenue 3,352 3,335 3,412 3,532 3,699 Adjusted PBT (1Q17: $1.9bn) 330 321 Other 305 557 $2.1bn 12
Slide 9: Positive momentum in the majority of our business lines whilst investing in key areas
Global Banking and Markets Positive momentum in the majority of our business lines whilst investing in key areas for growth Management view of adjusted revenue 1Q18 highlights Revenue performance, $m6 $m 1Q18 ∆ 1Q17 Adjusted revenue 4,142 4,131 3,984 3,463 4,148 Global Markets 1,864 (10)% - FX 741 1
Slide 10: Revenue up 18% in areas targeted for growth; $5bn of positive inflows in 1Q18
Global Private Bank Revenue up 18% in areas targeted for growth; $5bn of positive inflows in 1Q18 1Q18 highlights Revenue performance, $m6 Client assets, $bn +10% 316 327 330 331 306 21 20 13 14 +12% 23 283 295 307 317 317 Adjusted revenue 437 446 445 430 482 Adjusted PBT (1Q17: $0.1bn) 1Q17 2Q17 3Q
Slide 11: Lower revenue in 1Q18 from Balance Sheet Management and valuation differences
Corporate Centre Lower revenue in 1Q18 from Balance Sheet Management and valuation differences 1Q18 highlights Revenue performance, $m6 Legacy Credit adjusted RWAs: 1Q17 2Q17 3Q17 4Q17 1Q18 Central Treasury 364 449 329 269 (75) Adjusted PBT Of which: -6% (1Q17: $0.6bn) Balance Sheet Management 854 6
Slide 12: Net Interest margin rose by 4bps to 1.67%
Net interest margin Net Interest margin rose by 4bps to 1.67% Net interest income and margin 2017 1Q18 Average Average Reported $bn Yield Yield balance balance YTD NIM, % 1.64% 1.64% 1.63% 1.63% 1.67% Loans and advances 902 3.19% 961 3.30% to customers YTD Short-term funds and 626 1.51% 1.78% 618 av
Slide 13: Credit outlook remains stable
Loan impairment charges and expected credit losses Credit outlook remains stable Loan impairment charges and expected credit losses, $m Analysis by stage as at 31 Mar 2018 Stage 3 as IAS 39 IFRS 9 $bn Stage 1 Stage 2 Stage 3 Total9 a % of Total 240 682 170 31 Mar 2018 Loans and advances to customers
Slide 14: Investing to grow the business
Operating expenses Investing to grow the business 1Q18 vs. 1Q17, $bn excluding UK bank levy We intend to deliver positive jaws for FY2018, leveraging capacity where returns are highest 0.2 Focus on Digital and Technology programmes across all global businesses to enhance customer experience: • H
Slide 15: Strong capital base: Common Equity Tier 1 ratio of 14.5%
Capital adequacy Strong capital base: Common Equity Tier 1 ratio of 14.5% Regulatory capital and RWAs, $bn CET1 ratio movement, % 4Q17 1Q18 Common equity tier 1 capital 126.1 129.6 (0.3) 0.4 Total regulatory capital 182.4 185.2 14.6 (0.2) 14.5 0.1 0.1 (0.1) 14.5 Risk-weighted assets 871.3 894.4 1Q18
Slide 16: Return metrics
Return metrics Return metrics Group RoE walk, 1Q18 vs. 1Q17 RoE to RoTE walk, % 11.6 0.1 10.4 10.0 0.7 (0.1) 3.2 (0.3) 2.0 (2.9) 8.4 8.0 0.9 7.5 1Q17 Significant 1Q17 PBT Tax NCI Equity 1Q18 ex. Sig Significant 1Q18 Goodwill, 1Q18 RoTE Significant 1Q18 RoTE Reported items & UK ex. Sig excluding and
Slide 17: In summary
In summary 1Q18 LCR Leverage ratio Robust balance sheet, supporting retail and corporate customers (4Q17: 142%) UK leverage CRD IV 1 ratio across our network 158% 6.0% 5.6% Group leverage as defined by UK regulators (PRA) 2 Strong funding and liquidity, strong capital and conservative 1Q18 A/D ratio
Slide 18: Appendix
Appendix
Slide 19: Global business management view of adjusted revenue
Appendix Global business management view of adjusted revenue RBWM, $m 1Q17 2Q17 3Q17 4Q17 1Q18 GB&M, $m 1Q17 2Q17 3Q17 4Q17 1Q18 Retail Banking 3,380 3,439 3,495 3,531 3,653 Global Markets 2,066 1,874 1,728 1,323 1,864 Current accounts, savings and 1,510 1,589 1,628 1,740 1,857 Equities 361 342 341
Slide 20: Currency translation and significant items
Appendix Currency translation and significant items $m 1Q17 4Q17 1Q18 Revenue Currency translation (660) (236) - Customer redress programmes - (105) - Disposals, acquisitions and investment in new businesses 156 (79) (112) Fair value movement on financial instruments (6) 45 (28) Currency translation
Slide 21: RoTE by global business
Appendix RoTE by global business 1Q18 $m Corporate RBWM CMB GB&M GPB Group Centre Reported profit before tax 1,796 2,110 1,769 70 (990) 4,755 Reported profit before tax - Annualised 7,284 8,558 7,176 283 (4,016) 19,285 Significant items 445 5 (227) 174 4,784 5,181 Bank levy - - - - 166 166 BSM alloc
Slide 22: Balance sheet – Customer lending
Appendix Balance sheet – Customer lending 1Q18 Loans and advances to customers20 Gross balances analysis vs 1 Jan 2018, $bn The impact of transitioning to IFRS 9 ‘Financial instruments’ on 1 Jan 2018 was a (Reported basis, not currency adjusted; further analysis on UK mortgages on slide 26) reductio
Slide 23: Balance sheet – Customer accounts
Appendix Balance sheet – Customer accounts 1Q18 Customer accounts20, $bn Customer accounts23, US$bn Balances were stable on a constant currency basis: Growth in balances in Europe in GB&M in the UK, partly offset by CMB and GPB 6% CAGR (Demand In Asia, customer accounts fell, primarily in GB&M a
Slide 24: Net interest income sensitivity
Appendix Net interest income sensitivity Net interest income sensitivity For further commentary and information, refer to pages 108 and 109 of the Annual Report and Accounts 2017 NII sensitivity 25 basis point shift in yield curves at the beginning of each NII sensitivity following a 25bps and 100bp
Slide 25: Net interest margin supporting information
Appendix Net interest margin supporting information Gross customer lending analysis - $970bn Of our customer lending: HIBOR / LIBOR 1 month rate26 As at 31 Dec 2017 As at 31 Dec 2017 UK RBWM mortgages, $116bn Due less 9% − Fixed 60% than 1 year Due over 1 year 12% − Variable 40% but not more than 5
Slide 26: Equity drivers
Appendix Equity drivers 1Q18 vs. 4Q17 Equity drivers No. of shares (excl. Shareholders’ Tangible TNAV per treasury Equity, $bn Equity, $bn share, $ shares), million As at 31 December 2017 190.3 144.9 7.26 19,960 Profit to shareholders 3.4 3.4 0.17 - Dividends net of scrip*,27 (4.1) (4.1) (0.20) - FX
Slide 27: UK credit quality
Appendix UK credit quality Total UK28 gross customer advances - RBWM residential mortgages29, £bn RBWM unsecured lending30, £bn £221bn 80.7 81.8 83.8 85.6 86.7 Of which 79.7 £86.7bn relates Wholesale to RBWM 6.5 6.5 6.7 6.5 5.3 5.4 5.8 4.8 £90bn £116bn £221bn Dec-16 Mar-17 Jun-17 Sep-17 Dec-17 Mar-1
Slide 28: Glossary
Appendix Glossary AUM Assets under management IFRS International Financial Reporting Standard AMG Asset Management Group The difference between the rate of growth of revenue and the rate of growth of costs. Positive jaws is where the revenue growth rate Basis points. One basis point is equal to one-
Slide 29: Footnotes
Appendix Footnotes 1. Annualised 2. Unless otherwise stated, risk-weighted assets and capital are calculated using (i) the CRD IV transitional arrangement as implemented in the UK by the Prudential Regulation Authority; and (ii) EU's regulatory transitional arrangements for IFRS 9 in article 473a of
Slide 30: Important notice and forward-looking statements
Appendix Important notice and forward-looking statements Important notice The information, statements and opinions set out in this presentation and subsequent discussion do not constitute a public offer for the purposes of any applicable law or an offer to sell or solicitation of any offer to purcha
Slide 31: Cover image: Guangzhou is located at the heart of China’s Pearl River Delta, one
Issued by HSBC Holdings plc Group Investor Relations 8 Canada Square London E14 5HQ Cover image: Guangzhou is located at the heart of China’s Pearl River Delta, one of the United Kingdom country’s fastest growing economic regions. 30 www.hsbc.com Photography: Getty Images