HSBC Holdings PLC · LSE:HSBA
HSBC — Investor Presentation (October 2016)
27 slides from HSBC's investor presentation, October 2016
Slide 1: Retail Banking and Wealth Management Investor Update
October 2016 Retail Banking and Wealth Management Investor Update
Slide 2: Important notice and forward-looking statements
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 other finan
Slide 3: Group highlights
Group highlights 1st Half 2016 ‒ Reported PBT of $9.7bn down $3.9bn ‒ Adjusted PBT of $10.8bn down $1.8bn; a reasonable performance in the face of considerable uncertainty: 1H16 ‒ Revenue down $1.3bn or 4% versus a strong 1H15: Client-facing GB&M and BSM down Reported PBT (1H15: $13.6bn) Financial 7
Slide 4: Group 1H16 Key metrics
Group 1H16 Key metrics 2015 Full Year Key financial metrics 1H15 1H16 Return on average ordinary shareholders’ equity1 10.6% 7.4% Return on average tangible equity1 12.0% 9.3% Jaws (adjusted) - (0.5)% Dividends per ordinary share in respect of the period $0.20 $0.20 Earnings per share $0.48 $0.32 Co
Slide 5: RBWM: key messages and financial performance
RBWM: key messages and financial performance Key messages Principal RBWM financial performance1 6.3 RoRWA excl. Associates Capital accretive – Consistently strong returns, accretive to Group RoE 3.9 Sustainable – Client base positioned towards affluent customers high quality – High quality asset boo
Slide 6: RBWM 1H16 Financial Performance
RBWM 1H16 Financial Performance Principal RBWM adjusted PBT lower driven by lower wealth management revenue and LICs, partly offset by higher retail banking revenue Adjusted PBT1,2 (USDm) Adjusted revenue2 (USDm) -6% 1H15 1H16 vs. 11,116 10,423 Total RBWM 3,753 2,841 (24.3)% 1,008 986 Brazil Of whic
Slide 7: Lower revenue in 1H16 driven by market impact in wealth management
Lower revenue in 1H16 driven by market impact in our wealth management business, however partly offset by growth in retail banking Revenue analysis1, $m 1Q14 2Q14 1Q15 2Q15 1Q16 2Q16 Wealth Management Other 5,774 5,476 5,428 5,273 5,352 5,153 Lower Wealth Management revenue (28)% vs. 2Q15: Wealth 1,
Slide 8: Principal RBWM – Balance sheet
Principal RBWM – Balance sheet Growth in both customer lending and customer account balances since 1Q15 Loans and advances to customers Customer accounts (USDbn, Constant currency basis1) (USDbn, Constant currency basis1) USD8bn USD8bn USD46bn increase increase increase 315 589 581 313 570 307 309 3
Slide 9: RBWM strategic overview 1H16 – Diversified franchise
RBWM strategic overview 1H16 – Diversified franchise Active customers3 Customer deposits4 Retail Banking (USD) Wealth Management Asset Management Insurance Net operating income5 Loans and advances4 – C. 44 million customers1 (USD) (USD) – Consistent global proposition model – Significant domestic sc
Slide 10: Through Premier and Advance, we attract an affluent client base
Through Premier and Advance, we are able to attract an affluent client base, with higher revenue per customer Customers and markets Positioned towards affluent customers Premier Advance Personal Selected markets4 HSBC customer base 8% % Premier Market5 GPB 24% Customer 35% China 2% c. 71% base compa
Slide 11: Since 2011, we have simplified the business
Since 2011, we have simplified the business for high quality and diversified revenues Business transformation Principal RBWM Revenue by region, 1H161 $10.4bn - 66 disposals / closures of business lines or MENA 4% markets2 North America 8% A simplified - Common organisation design and target Other La
Slide 12: Conduct risk is redefining how retail banks serve customers
Conduct risk is redefining how retail banks engage with and serve their customers. We have proactively repositioned the business for this… UK customer redress and CCA provisions at their lowest since 2010 (USDm) Numerous actions to significantly reduce conduct risk starting in 2012 Principal RBWM LI
Slide 13: Maintaining our credit discipline – Example RBWM UK
… and we are maintaining our credit discipline – Example RBWM UK PRA stress tests: Projected cumulative three-year PRA stress tests: Projected cumulative three-year impairment charge rates on UK individuals mortgage impairment charge rates on UK individuals non- lending in the stress1,2 (%) mortgage
Slide 14: Improved customer experience – Example RBWM Mexico
…and there are signs that the repositioning is leading to improved customer experience – Example RBWM Mexico Conduct Agenda Business performance 1H15 1H16 Revenues1 Sales volumes2 +12% +42% – In 2013-14, a new incentive framework was implemented across the Group, remunerating staff for meeting custo
Slide 15: Our growth priorities have not changed
Our growth priorities have not changed and we continue to optimise our portfolio of markets and businesses Strategic actions Targeted outcome 2014-17 1H16 Progress 1 Relationship-led Personal Lending – Invest in marketing, customer relationship management, analytics – Principal RBWM lending balance1
Slide 16: Capacity to take more credit risk in RBWM
We have the capacity to take more credit risk in RBWM and the business is showing signs of volume growth Principal RBWM lending balances and sales volume growth Actions to date +3% – Global analytics capability improving the identification of customer needs – New triggers enabling targeted offers to
Slide 17: Investment in a differentiated Wealth offering
Our investment in a differentiated Wealth offering is driving good performance in the face of market headwinds Strong customer satisfaction and Net New Money We have built a clearly differentiated Wealth offering – We operate a consistent global financial planning model Financial Financial based on
Slide 18: Asset management positioned to benefit from retirement savings growth
Our asset management business is positioned to benefit from the growth in retirement savings and collaboration with the Global Businesses Managed asset pools are forecast to grow strongly (USD) This growth provides opportunities for us Global AUM1 Total Middle East – Ageing populations and the risk
Slide 19: Insurance remains accretive to the Group, with exposure to Asia
Despite market conditions negatively impacting 1H16 revenue through lower favourable movements in PVIF, Insurance remains accretive to the Group, with majority of exposure to Asia Profitable and accretive returns for Group (USD) Significant growth opportunity, particularly in Asia Gross premium annu
Slide 20: Digital transformation will enable process simplification
Digital transformation will enable process simplification and accelerate channel migration, improving productivity and customer experience Changing customer behaviour The Group’s streamlining programme will sustainably reduce RBWM’s costs c.75% Investment brings 2017 exit costs to 2014 levels Withou
Slide 21: Digital transformation is well under way
Digital transformation is well under way Selected achievements Mobile customers1,2 Automation of manual payments Increasing customer connectivity RBWM mobile customers Volume manually processed High value -67% ‒ Over 5 million logins using Touch ID across the Low value -69% US, UK and France with c.
Slide 22: Returns driven by domestic scale and affluent customers
Within our portfolio of businesses, returns are driven by a combination of domestic scale and focus on affluent customers… Scale and returns for RBWM priority markets1 Strategic actions RBWM revenue2 x% of customers are Premier – Maintain and increase existing scale RoRWA3 Protect Premier Premier Pr
Slide 23: Conclusion - RBWM focused on sustainable growth and digital transformation
Conclusion - RBWM is focused on sustainable growth and delivering digital transformation Achieving our strategic priorities – Our growth priorities have not changed. We will continue to focus our investment on relationship-led lending, wealth management and digital Growth priorities – We will shift
Slide 24: Appendix – 1H16 Performance
Appendix — 1H16 Performance HSBC €>
Slide 25: Group 1H16 vs. 1H15 profit before tax performance
Group 1H16 vs. 1H15 profit before tax performance Lower adjusted PBT from a fall in revenue and increased LICs; continued progress with our cost base 1H16 vs. 1H15 adjusted PBT analysis, $m Adjusted PBT by global 1H15 1H16 vs. 1H15 % business, $m RBWM 3,753 2,839 (914) (24)% CMB 4,371 4,128 (243) (6
Slide 26: Insurance manufacturing subject to market volatility
Insurance manufacturing subject to market volatility Insurance manufacturing PAT sensitivity1 (USDm) 2015 2015 176 39 (158) (213) 2014 2014 290 180 (153) (549) +100 bps -100 bps +10% -10% increase in decrease2 in increase in decrease in yield curves yield curves equity prices equity prices 1. Insura
Slide 27: Total RBWM – Income Statement – Reported
Total RBWM – Income Statement – Reported 1 2 3 1H16 4 5 1 2 3 1H15 4 5 All figures are sourced from the Interim Report 1. Other income in this context comprises where applicable net trading income, net income/(expense) from other financial instruments designated at fair value, gains less losses from