HSBC Holdings PLC · LSE:HSBA

HSBC — Investor Day (May 2012)

20 slides from HSBC's investor day presentation, May 17, 2012

  1. Slide 1: HSBC Holdings plc Investor Day announcement

    Abc 17 May 2012 HSBC HOLDINGS PLC INVESTOR DAY The presentation given today by Iain Mackay, Group Finance Director, is attached and will be available to view at www.hsbc.com. ends/all Registered Office and Group Head Office: This news release is issued by 8 Canada Square, London E14 5HQ, United King

  2. Slide 2: Capital and Financial targets

    May 2012 Capital and Financial targets Investor Day Iain Mackay Group Finance Director

  3. Slide 3: Forward-looking statements

    Forward-looking statements This presentation and subsequent discussion may contain certain forward-looking statements with respect to the financial condition, results of operations and business of the Group. These forward-looking statements represent the Group’s expectations or beliefs concerning fu

  4. Slide 4: Committed to delivering on our financial targets

    Committed to delivering on our financial targets  On track to exceed Basel 3 capital and liquidity requirements  Maintain dividend growth policy and 50% earnings retention 1 Capital  Target upper end of 9.5-10.5% Core Tier 1 capital range in advance of increased capital requirements  Target lowe

  5. Slide 5: Financial strength

    Financial strength Key Metrics 20111 Q1 20121 Core Tier 1 Ratio (%) 10.1 10.4 Capital & Dividends (USD per 1 0.41 0.09 Liquidity ordinary share)2 ADR (%) 75.0 74.8 PBT (USDbn) 21.9 4.3 2 Returns RoE (%) 10.9 6.4 RoRWA (%) 1.9 1.4 CER (%) 57.5 63.9 3 Efficiency CER (%) (underlying) 61.0 55.5 Sustaina

  6. Slide 6: Capital generation through the cycle

    1 Capital generation through the cycle Capital Generation1 2011 Core Tier 1 Capital USDbn 126.9 122.5 116.1 1.8 106.3 8.7 9.4 6.3 2009 2010 2011 Q1 2012 Profit2 10.2 13.2 14.0 4.5 Gross Dividends3 5.6 6.4 7.5 2.7 Scrip 1.7 2.5 2.2 n/a Core Tier 1 9.4 10.5 10.1 10.4 Ratio (1) Capital generation is ca

  7. Slide 7: Simulated effect of full Basel 3 rules on Core Tier 1

    1 Simulated effect of full Basel 3 rules on HSBC 1Q 2012 Core Tier 1 capital ratio exclusive of future profit or business growth Core/Common Equity Tier 1 Ratio1,2 Capital/RWA requirements Management actions and run-off Early implementation:  CVA mitigation  Change in treatment for deferred tax as

  8. Slide 8: Beyond 2013: continued regulatory uncertainty

    1 Beyond 2013: continued regulatory uncertainty Transition to Basel 3 Common Equity Tier 1 requirements1 Required Core/Common Equity Tier 1 ratio, % Countercyclical capital buffer (0-2.5%) 12.0 G-SIB surcharge (1-2.5%) Conservation capital buffer 10.2 2.5 Core Tier 1 minimum 1.9  ICB, G-SIB, counte

  9. Slide 9: Dividends/Earnings usage

    1 Dividends/Earnings usage 2011 pro forma post-tax profits allocation1 Dividends2 35%  50% profit retention Retained  Robust subsidiary dividend flow earnings/ 50% capital  Maintain 40-60% dividend payout ratio  Considered levels of variable pay 15% Variable pay3 (1) Attributable profits excludi

  10. Slide 10: Lower end of 12-15% RoE expected in the medium term

    2 Lower end of 12-15% RoE expected in the medium term HSBC return on average ordinary shareholders’ equity Percent 12 – 15 10.9 9.5 5.1  Target returns impacted by evolving regulatory requirements  Returns dependent on degree of market stability 2009 2010 2011 Target  Strategic disposals suppress

  11. Slide 11: Focus on building returns in growth businesses

    2 Focus on building returns in growth businesses 2011 Impact of Legacy Businesses on RoRWA Percentage points 2.2 0.1 (0.1) 0.6 1.6  Legacy businesses will be managed down robustly  Redeployment of capital within ‘growth HSBC’ to optimise returns  Capture additional growth through Global Business

  12. Slide 12: 2011 RoRWA by Geography and Global Business

    2 2011 RoRWA by Geography and Global Business (‘growth HSBC’) RWAs2, USDbn 2011 RoRWA1 by Geography 2011 RoRWA1 by Global Business Percent Percent Hong Kong 5.3 106 RBWM 3.7 178 Rest of 3.1 279 GPB 3.9 22 Asia Pacific MENA 2.6 59 CMB 2.2 383 Latin America 2.3 102 GB&M 2.1 373 North America 1.1 144 O

  13. Slide 13: 2011 and 1Q 2012 impacted by a number of notable items

    3 2011 and 1Q 2012 impacted by a number of notable items Operating Expenses – 4Q 2011 to 1Q 2012 USDbn 11.2 Net reduction Q on Q Net increase Q on Q (0.6) of USD0.1bn of USD0.2bn (0.3) 10.4 (0.3) 0.3 0.5 (0.4) 0.3 (0.3) 4Q 11 4Q 11 4Q 11 US 4Q 11 1Q 12 4Q 11 1Q 12 1Q 12 Other 1Q 12 Expenses UK bank

  14. Slide 14: Quarterly progression in operating expenses and FTE

    3 Quarterly progression in operating expenses and FTE Operating Expenses excl. FTE, 000’s Notable Items, USDbn2 notable items, USDbn Operating Expenses1 and FTE USDbn; FTE 299 296 294 288 285 11.2 10.1 9.8 10.4 9.6 1.5 0.7 (0.0) 0.8 0.2 9.5 9.8 9.4 9.7 9.6 Q1 2011 Q2 2011 Q3 2011 Q4 2011 Q1 2012 (1)

  15. Slide 15: Robust revenue base: over 90% of income from reliable revenue streams

    3 Robust revenue base: over 90% of income from reliable revenue streams Total Net Operating Income1, 2011 USDbn CAGR % % Share Net Operating Income1 Minimum and Maximum 2009 – 2011 2009-2011 2009-2011 (average) RBWM NII and NFI 32.3 (3) 48 CMB NII and NFI 14.2 11 19 Global Markets 9 8 6.4 (ex Rates

  16. Slide 16: Continuous progress: 48-52% CER

    3 Continuous progress: 48-52% CER…..a KPI Operating Income drivers, USDbn 2011 Net 2011 variability BSM Disposals and Economic Revenue Operating run-off factors growth Income  CRS, US  Wealth management  FVOD  Expected lower  Policy rates/NII  NQHs annual return of branches  GDP  CMB/GBM con

  17. Slide 17: Cost growth focused on growth markets with positive jaws

    3 Cost growth focused on growth markets with positive jaws Impact of notable cost items1 Underlying Expense and Revenue Growth (2010 to 2011) Underlying revenue growth Percent 13 12 10 8 8 7 6 5 2 3 5  Sustained growth with Developing / positive jaws in faster Growth markets growing markets Latin R

  18. Slide 18: Key messages

    Key messages  On track to exceed Basel 3 capital and liquidity requirements  Maintain dividend growth policy and 50% earnings retention 1 Capital  Target upper end of 9.5-10.5% Core Tier 1 capital range in advance of increased capital requirements  Target lower end of 12-15% RoE range in medium

  19. Slide 19: Definitions (1/2)

    Definitions (1/2) Please refer to the 2011 Annual Report and Accounts for the definition of terms used in this presentation. Set out below, are the definitions of terms not defined in the 2011 Annual Report and Accounts. RoRWA The metric, return on risk weighted assets (‘RoRWA’), is defined as profi

  20. Slide 20: Definitions (2/2)

    Definitions (2/2) Run-off Run-off includes Legacy Credit in GB&M and North America consumer lending and mortgage run-off portfolios. CRS Card and Retail Services. Growth HSBC The term ‘Growth HSBC’ is used in an analysis of HSBC’s results, showing the effect of disposals and run-off portfolios separ

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