Hsbc Holdings Plc · LSE:HSBA
Hsbc — HSBC UK Bank — Investor Day (June 2019)
91 slides from Hsbc's investor day presentation, Jun 11, 2019
Slide 1: HSBC UK Seminar for Investors and Analysts
HSBC UK Seminar for Investors and Analysts Together we thrive 11 June 2019
Slide 2: Important notice and forward looking statements
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 purchase any se
Slide 3: Reported consolidated income statement and note on pro forma information
Reported consolidated income statement and note on pro forma information Reported income statement, £m 20171 2018 Pro-forma reported income statement, £m 2017 2018 Net interest income - 2,456 Net interest income 4,153 4,754 Other income - 901 Other income 1,843 1,734 Total revenue - 3,357 Total reve
Slide 4: Agenda
Agenda An introduction to HSBC UK 5 Commercial Banking (CMB) 25 Retail Banking and Wealth Management (RBWM) 41 Technology & Digital 59 Risk 66 Finance 75 4
Slide 5: Introduction
Introduction Ian Stuart, CEO HSBC UK 5
Slide 6: HSBC UK, a clear growth opportunity
An introduction to HSBC UK HSBC UK, a clear growth opportunity Key highlights 1 The UK is one of HSBC’s scale markets, and HSBC UK represents a material part of the Group 2 UK remains an attractive place to do business; HSBC UK has significant The UK represents a competitive advantages and opportuni
Slide 7: HSBC UK overview
An introduction to HSBC UK HSBC UK overview FY18 HSBC UK as a % of Group The UK is one of HSBC’s scale markets; through Midland Total adjusted revenue Bank, we have conducted business in the UK since 1836 HSBC UK HSBC UK is the Group’s UK ring-fenced bank, 16% headquartered in Birmingham HSBC
Slide 8: HSBC UK has returned to its Midland Bank roots
An introduction to HSBC UK HSBC UK has returned to its Midland Bank roots First UK bank The to issue Midland Bank 1st large UK Ring-fencing of Birmingham New London cheque joins HSBC bank to launch HSBC UK is and Midland Head Office guarantee Open Banking completed Bank opens cards solution 1836 185
Slide 9: An experienced management team is at the helm
An introduction to HSBC UK An experienced management team is at the helm Your presenters today Ian Stuart, Amanda Murphy, Stuart Haire, Emma Bunnell, James Calladine, Dave Watts, CEO HSBC UK Head of CMB Head of RBWM COO CRO CFO Appointed April Appointed April Appointed Appointed Appointed
Slide 10: Clear governance framework
An introduction to HSBC UK Clear governance framework Board of Directors 8 Non-Executive Directors (Chair: Dame Clara Furse) Dame Clara Leslie Van Mridul James Dame Denise David Rosemary Alan Keir Furse de Walle Hegde Coyle Holt Lister Leith 3 Executive Directors (HSBC UK CEO, CFO, CRO) Chairman’s N
Slide 11: The UK remains an attractive place to do business
An introduction to HSBC UK The UK remains an attractive place to do business UK structural advantages Sound economics, but with Brexit uncertainty Annual GDP growth5 (%) CPI inflation5 (%) Total private wealth of c. £13tn, with 14% of 1.8 2.7 2.5 households having assets 1.4 1.4 2.1 >£1m1 1.9 1.2
Slide 12: HSBC UK has clear competitive advantages
An introduction to HSBC UK HSBC UK has clear competitive advantages Full banking capability and exceptional international connectivity Strong balance sheet with a low cost of funding and conservative risk appetite Branch footprint optimisation ahead of peers Significant growth potential – hi
Slide 13: Key opportunities across our businesses
An introduction to HSBC UK Key opportunities across our businesses Leverage our exceptional global footprint to support commercial customers’ trade and overseas banking needs Commercial Improve penetration of mid market, through additional on-boarding capacity and Banking renewed focus on ‘fast
Slide 14: Clear plan to be a top UK financial institution
An introduction to HSBC UK Clear plan to be a top UK financial institution “Together we thrive” Our UK shared Top UK Financial ambition Institution “Simple, Safe and Sustainable” Customer Experience People Engagement Shareholder value growth Our 4 strategic priorities1 Top 3 for Customer Top 3 for B
Slide 15: Strong 2018 progress
An introduction to HSBC UK Strong 2018 progress Customer experience People engagement Achieved Top 3 position for Overall Improvement in engagement scores and positioning vs. CMB Satisfaction in 2018 Charterhouse peers in 2018 Banking Standards Board assessment Rankings1 Launched dedicated ‘Sp
Slide 16: Growing market share
An introduction to HSBC UK Growing market share RBWM mortgage market share1 CMB growth Stock share (%) Commercial loans market share2 (%) 0.5ppts +0.5ppts 9.4 9.9 6.1 6.6 2017 2018 2017 2018 New business share3 (%) CMB adjusted revenue (£bn) +1.1ppt +9% 8.2 2.7 7.1 2.5 2017 2018 2017 2018 Record m
Slide 17: Strong financial performance
An introduction to HSBC UK Strong financial performance Adjusted P&L performance, £m Key financial metrics – FY 2018 Total revenue +7% Positive adjusted jaws +3.8% 6,449 Good cost 6,009 control Adjusted cost efficiency ratio 54.4% NIM 2.21%1 Solid returns RoTE2 11.7% 2017 2018 Costs +3% 3,39
Slide 18: Financials compare well with peers
An introduction to HSBC UK Financials compare well with peers1 On a reported basis Revenue growth (FY18 vs FY17, %) Loans and advances to customers growth (FY18 vs FY17, %) 8.2% 7.9% 1.7% 2.1% 0.0% 0.5% -3.0% -2.5% -2.8% -6.1% HSBC UK Bank D Bank E Bank B Bank C HSBC UK Bank B Bank D Bank C Bank E C
Slide 19: Well-diversified business model
An introduction to HSBC UK Well-diversified business model FY2018 Adjusted revenue Adjusted profit before tax GPB Corporate Centre GPB Corporate Centre GB&M GB&M 2% 1% 2% 2% RBWM 2% 3% 34% £6.4bn 52% RBWM £2.5bn CMB 42% 60% CMB Customer accounts Loans and advances to customers GPB GPB Corporate Cent
Slide 20: Complemented by close collaboration
An introduction to HSBC UK Complemented by close collaboration FY18 Global Private Bank (GPB) in the UK Client case study – Huws Gray Small but growing part of HSBC UK, with significant profit growth potential HSBC CMB client since incorporation in 1990 Adjusted revenue of £154m Adjusted PBT
Slide 21: Improving customer service
An introduction to HSBC UK Improving customer service CMB progress Starting Point Target Improving 40% reduction Significant Improvement from colleague in average on- improvements 5th to 3rd place for Complex and engagement boarding time to HSBCnet Overall Satisfaction Improved following MME
Slide 22: Accelerating simplification
An introduction to HSBC UK Accelerating simplification Optimise governance and reporting Target Simplify procurement and recruitment Platform and architecture enhancements Lower cost Simplification efficiency ratio Reduction in products, and streamlining of features Adoption of automation
Slide 23: Building a sustainable business
An introduction to HSBC UK Building a sustainable business Our Commitments1 Encouraging progress in 2018 Source 100% of our electricity from renewable 71% of our electricity from renewable sources sources by 2030 Reduced waste by 57% and recycled 75% of office & Reduce waste by 75% and recyc
Slide 24: HSBC UK, a clear growth opportunity
An introduction to HSBC UK HSBC UK, a clear growth opportunity Key highlights 1 The UK is one of HSBC’s scale markets, and HSBC UK represents a material part of the Group 2 UK remains an attractive place to do business; HSBC UK has significant The UK represents a competitive advantages and opportuni
Slide 25: Commercial Banking (CMB)
Commercial Banking (CMB) Amanda Murphy, Head of CMB, HSBC UK 25
Slide 26: Summary
Summary Well-positioned to capture growth opportunities for UK customers UK CMB highlights 1 Build on our global footprint and customer base to capture trade, transaction banking and international connectivity opportunities Customer centric model 2 with a deep customer base Provide market leading
Slide 27: CMB in the UK
Overview of UK CMB CMB in the UK CMB snapshot CMB provides banking services to >900k customers across 4 customer groups We operate in >70 key sites across 5 regions of the UK We have a relationship focus, and cover all customer sizes from start-ups to multi-national corporates Our internatio
Slide 28: Overview of UK CMB
Overview of UK CMB UK CMB has delivered strong and sustainable growth in a challenging market FY18 Adjusted P&L, £m Adjusted revenue as a % of total Customer loans as a % of total HSBC UK HSBC UK FY17 FY18 FY ∆ FY ∆ % 1Q19 Net interest income 1,604 1,900 296 18% 493 36% 42% Other income 853 789 (64)
Slide 29: Financial performance is outpacing our peer group across key lines
Overview of UK CMB Financial performance is outpacing our peer group across key lines1 On a reported basis Revenue growth (FY18 vs FY17, %) Loans and advances to customers growth (FY18 vs FY17, %) 15% 7% 2% 4% -2% 0% -2% -3% -9% -9% HSBC UK CMB Bank E Bank D Bank B Bank C HSBC UK CMB Bank D Bank B B
Slide 30: UK CMB serves over 900k customers across 4 customer groups
Overview of UK CMB UK CMB serves over 900k customers across 4 customer groups, from >70 centres in the UK Customer groups Site map North, Scotland Global Banking and Northern . and Markets Ireland: 19 centres . Large Corporate (>£350m turnover) c. 1k clients Midlands: Mid Market Corporate 15 centres
Slide 31: Key sector specialisms and franchise offering
Overview of UK CMB Key sector specialisms and franchise offering UK CMB specialisms Segment wide specialist teams, fully embedded within the business, providing: Corporate Real • industry brand profile Franchising Estate • thought leadership and expertise • specialist sector content • strategic in
Slide 32: We support our customers with a full range of products
Overview of UK CMB We support our customers with a full range of products FY18 management view Securities of adjusted revenue, £m Services Global Liquidity and Cash Management (GLCM) 2,689 Mid-Market Corporates offered Global the same treasury solutions as Other1 190 Markets large multinationals GLC
Slide 33: We continue to drive strong collaboration with other global businesses
Overview of UK CMB We continue to drive strong collaboration with other global businesses CMB referrals through collaboration with GB&M and GPB Global Banking CMB clients generated c. £0.5bn from GB&M & Markets products in 20181 UK CMB #1 contributor of Private Bank referrals across the Group Gl
Slide 34: We play a key role in delivering international connectivity
Overview of UK CMB We play a key role in delivering international connectivity Opportunity to grow inbound and outbound client revenue1 further CMB global presence – 53 countries and territories Client revenue booked outside UK generated from UK clients During 2018, outbound client revenue2 booked
Slide 35: Video: International Subsidiary Banking proposition
Overview of UK CMB International Subsidiary Banking proposition Video 35
Slide 36: Market leading international transaction banking capabilities
Our propositions Market leading international transaction banking capabilities Global Trade and Receivables Finance (GTRF) Global Liquidity and Cash Management (GLCM) GTRF provides solutions for our customers to manage trade GLCM enables customers to maximise control over cash risk, process trad
Slide 37: Transaction banking capabilities facilitated by significant digital enhancements
Our propositions Transaction banking capabilities facilitated by significant digital enhancements Improved user interface for HSBCnet allowing customers to better manage, track and authorise global liquidity, cash management and trade transactions: Liquidity Management Portal (LMP) gives corpora
Slide 38: We continue to outpace the market and develop lending solutions
Our propositions We continue to outpace the market and develop lending solutions to assist our customers with their growth ambitions UK CMB is growing faster than market… Demonstrating our support for UK businesses Loans and advances to customers grew by 7% (£4bn) in 2018 – faster than market1 (up
Slide 39: Deliver a step-change in customer experience
Customer experience Deliver a step-change in customer experience 2018 outcomes Looking forward Improved customer satisfaction1 Building a simpler, faster, customer-focused business 2018 2017 Market-leading digital channels and customer journeys Frictionless integration with customer systems /
Slide 40: Summary
Summary Well-positioned to capture growth opportunities for UK customers UK CMB highlights 1 Build on our global footprint and customer base to capture trade, transaction banking and international connectivity opportunities Customer centric model 2 with a deep customer base Provide market leading
Slide 41: UK RBWM
UK RBWM Stuart Haire ia HSBC UK 41
Slide 42: Summary
Summary Well-positioned to service the UK retail market in the medium and long term RBWM UK highlights 1 Improving the end-to-end customer experience through increased process automation and digitally-led journeys Well positioned across four 2 reputable brands Increasing the scale and speed of dig
Slide 43: RBWM in the UK
Overview of UK RBWM RBWM in the UK RBWM snapshot 4 diversified brands sit under the HSBC UK RBWM umbrella4 c. 14 million active customer relationships, up 400,000 (3%) ~8.9m customers from FY17 Full banking relationships, innovative proposition improvements 51% of active customers are digitally
Slide 44: PBT increase in FY18 driven by disciplined strategic P&L management
Overview of UK RBWM PBT increase in FY18 driven by disciplined strategic P&L management and diverse portfolio FY18 Adjusted P&L, £m Adjusted revenue as a % of total Customer loans as a % of total HSBC UK HSBC UK FY17 FY18 FY ∆ FY ∆ % 1Q19 Net interest income 2,442 2,655 213 9% 687 Other income 656 7
Slide 45: Segmented and targeted approach to value pools in the UK market
Overview of UK RBWM Segmented and targeted approach to value pools in the UK market Personal Banking Relationships Relationship balance1 Average product holding per Jade by HSBC Premier is an exclusive (Multiples of personal banking) customer2 membership programme that caters for its members’ comp
Slide 46: UK RBWM has strong strategic alignment to HSBC UK's shared ambition
Overview of UK RBWM UK RBWM has strong strategic alignment to HSBC UK’s shared ambition with clear priorities UK strategy… UK RBWM priorities… 1 Optimising mortgage opportunity - high single-digit mortgage growth through controlled intermediary channel expansion whilst maintaining a conservative ris
Slide 47: Growth in valuable more stable deposit balances
Our propositions Growth in valuable more ‘stable’ deposit balances optimising our lending strategy and cross sell opportunity HSBC UK deposit growth versus the market, £bn HSBC UK deposit growth in value segments Customer deposits growth ahead of market growth FY15 – 1Q19 Active customer growth - Pr
Slide 48: Mortgage balance growth is outpacing peers
Our propositions Mortgage balance growth is outpacing peers, primarily through expanding into the broker channel RBWM residential mortgages1, £bn HSBC has historically been underweight in UK mortgages, and we see significant growth potential +23% Strong mortgage balance growth expanding broker cov
Slide 49: Maintaining a conservative risk appetite and improving customer service
Our propositions Maintaining a conservative risk appetite and improving customer service Conservative risk appetite Improving customer service LTV Focus Time To Offer2 Faster time to offer for more customers As at 1Q19 Less than 50% £45.9bn 17 Average time ~49% of the total book < 50% 50% - < 60%
Slide 50: Controlled balance growth in unsecured lending
Our propositions Controlled balance growth in unsecured lending through digital enhancements RBWM balance growth1, £bn #Sales and digital mix Portfolio facts Digital Non-digital HSBC UK has a 10.4% share of credit cards +6% and 14.5% of unsecured personal loans2 7.0 +39% Low levels of delinquenc
Slide 51: Providing appropriate Wealth solutions to more customers
Our propositions Providing appropriate Wealth solutions to more customers via their channel of choice Wealth growth and opportunity The UK Wealth primary customer needs Wealth balances1 growth Balance2 mix % Existing base penetration opportunity… MONEY RETIREMENT PROTECT 70% of balances from ~1m Pre
Slide 52: We will continue to empower our people to deliver great customer service
Customer service We will continue to empower our people to deliver great customer service that sets us apart from challenger institutions Customer Recommendation Index (CRI Scores)1 Strategic initiatives Driving customer satisfaction improvement across 9 million HSBC UK customers, Upskilled networ
Slide 53: We've made significant progress in digital
Digitising our journeys We’ve made significant progress in digital ~90% >7m 55 of all transactions Payments a month are now performed through the app, Digital NPS1 at an digitally totalling all-time high >£2.5bn +85% ~57% 131,000 YoY growth in Digital sales Hours saved via mobile app logins2 penetra
Slide 54: We have adopted digital technologies to help enrich our customers' experience
Digitising our journeys We have adopted digital technologies to help enrich our customers’ experience Mobile X Connected Money A faster and simpler mobile app that We were the first bank to launch an app in the UK that was significantly improves customer experience inspired by Open Banking 2.3
Slide 55: We want to realise a Mobile-Centred Smart Bank experience
Digitising our journeys We want to realise a Mobile-Centred Smart Bank experience Accounts, Products & Services Profile & Preferences Our future state Full suite of originations and Allowing customers full control servicing journeys of personal details, messaging, Real time onboarding and data
Slide 56: first direct - pioneering amazing service
Our brands first direct - pioneering amazing service FY18 first direct snapshot ~1.4 million active customer relationships, of which c.72% are digitally active Part of the HSBC UK legal entity Launched as a 24/7 telephone banking business with no physical high street presence, first direct has
Slide 57: M&S Bank - new fashioned banking
Our brands M&S Bank - new fashioned banking FY18 M&S Bank snapshot ~2.9 million customers M&S Bank is run as a joint venture arrangement between Marks & Spencer and HSBC Offer a range of financial services, from current accounts to insurance, savings products to credit cards and we recently la
Slide 58: Summary
Summary Well-positioned to service the UK retail market in the medium and long term RBWM UK highlights 1 Improving the end-to-end customer experience through increased process automation and digitally-led journeys Well positioned across four 2 reputable brands Increasing the scale and speed of dig
Slide 59: Technology & Digital
Technology & Digital Emma Bunnell, COO HSBC UK 59
Slide 60: The engine room – delivering simpler, better, faster outcomes
Technology & Digital The engine room – delivering simpler, better, faster for outcomes for customers What are we doing? Who are we? 1 Investing – increasing our investment in technology to meet the changing needs of our customers The ‘engine room’ of 2 the bank - HSBC Protecting – defending for to
Slide 61: Investing in technology to support our growth ambitions
Technology & Digital Investing in technology to support our growth ambitions Technology and digital enables us to: HSBC Group investment plan (2018-2020) $ 15-17bn1 Create scalable revenue streams HSBC Group 2018 investment expense: $ 4.1bn Improve customer service HSBC UK investment £ Lower cost to
Slide 62: Protecting HSBC UK - a safe bank with a solid foundation
Technology & Digital Protecting HSBC UK - a safe bank with a solid foundation Protecting our customers Delivering real benefits – case study Zero tolerance for unsupported hardware and software Fraud prevention Before: manually intensive, ‘dial all Early market adopter for the deployment of To
Slide 63: Innovating with external partners to complement internal capabilities
Technology & Digital Innovating with external partners to complement internal capabilities Select engagement with Fintech partners Collaboration examples Improve customer journeys and bring digital into aspects of our customers’ banking life where they value it most Incremental adoption of Cloud b
Slide 64: Changing the way we work - some key examples
Technology & Digital Changing the way we work - some key examples Digital transformation is not just about technology … we are also changing our Ways of Working to embrace faster delivery Employee engagement Improved efficiency >10k management Overall CMB employee hours saved by engagement up 10
Slide 65: Enjoy our showcases – a few examples of the innovations we are delivering
Technology & Digital Enjoy our showcases – a few examples of the innovations we are delivering Presenter The enablers to delivering growth in our Mortgages Tracie Pearce, Commercial UK mortgage business Director, RBWM UK RBWM Presenter Mobile Centred Transforming the current and future state George
Slide 66: Risk
Risk James Calladine, CRO HSBC UK 66
Slide 67: A robust risk management framework
Risk A robust risk management framework Culture and Values Non-executive risk governance Risk Governance Executive risk governance Responsibilities Three Lines of Defence model Risk appetite Processes Enterprise-wide risk-management tools – risk appetite profile, top and emerging risks report, risk
Slide 68: Strong oversight and management of financial and non-financial risks
Risk Strong oversight and management of financial and non-financial risks, with executive and non-executive governance Board of Directors Chairman’s Nominations Executive Committee and Remuneration Audit Committee Risk Committee (Exco) Committee Risk Management Meeting Financial Crime Risk Asset and
Slide 69: Resilient profitability during the Global Financial Crisis
Risk Resilient profitability during the Global Financial Crisis (HSBC Bank plc) Performance through Global Financial Crisis – HSBC Bank plc 2006 – 20171 Reported Profit Before Tax (£bn) LICs as a % of gross loans and advances to customers (%) Reported Profit Before Tax (£bn) ECL as a % of gross loan
Slide 70: HSBC UK has a well-diversified loan portfolio
Risk HSBC UK has a well-diversified loan portfolio, and closely monitors exposure to higher risk sectors Retail mortgage average LTVs (1Q19) Wholesale gross loans and advances to customers As at 31 Dec 2018 Portfolio New Business Non-bank financial institutions 51% 66% Other 2.6 Real estate 6.0 11.7
Slide 71: HSBC UK has a high quality loan portfolio
Risk HSBC UK has a high quality loan portfolio Gross loans and advances to customers as at 31 Dec 2018 Analysis by stage as at 31 Dec 2018 Stage 3 Good Reported basis, £bn Stage 1 Stage 2 Stage 3 Total1 as a % of Total 15.0% Gross loans and 163.1 10.6 2.6 176.3 1.5% advances to customers Allowance f
Slide 72: PRA stress test results 2018: projected cumulative five-year impairment charge rates
Risk PRA stress test results 2018: Projected cumulative five-year impairment charge rates Note: HSBC results represent total UK lending (RFB and NRFB) UK individuals – mortgage lending1,2,3 (%) UK individuals – non-mortgage lending1,2,3 (%) 4% 40% 30% 2% 20% 3.4% 35.9% 27.4% 27.0% 10% 22.5% 22.4% 20
Slide 73: Strong focus on key risks, particularly ongoing Brexit uncertainty
Risk Strong focus on key risks, particularly ongoing Brexit uncertainty People Risk Increased focus on resource planning and employee retention Heightened Execution Risk Strengthening governance processes for significant projects Conduct and Customer Detriment Risk Enhanced management of conduct in
Slide 74: Summary
Risk Summary Key highlights 1 HSBC UK’s Strong governance and oversight over risk ambitions of growth are supported by its robust risk 2 management Conservative and a well-diversified loan portfolio framework and prudent approach to lending 3 Proactive management of top and emerging risks, particula
Slide 75: Finance
Finance Dave Watts, CFO HSBC UK 75
Slide 76: HSBC UK is a profitable bank, generating capital
Financial performance HSBC UK is a profitable bank, generating capital Adjusted P&L, £m FY18 FY17 FY18 FY ∆ % 3Q18 4Q18 1Q19 NII of £4.7bn up 11% primarily due to balance sheet Net interest income 4,232 4,715 11% 1,223 1,228 1,220 growth and base rate rises Strong revenue growth of 7%, supportin
Slide 77: Good revenue and PBT growth in RBWM and CMB
Financial performance Good revenue and PBT growth in RBWM and CMB Net interest margin Adjusted revenue, £m Adjusted PBT, £m +7% +6% Quarterly 2.21% 2.21% NIM, % 6,449 2,540 4Q18 1Q19 6,009 154 107 2,388 96 140 47 15 145 99 166 25 9 NIM has been broadly stable, though asset 143 +9% +8% pricing rema
Slide 78: Cost management is a core focus for HSBC UK
Financial performance Cost management is a core focus for HSBC UK, facilitating investment in growth initiatives Adjusted costs, £m CER of 54.4% in FY18, down from 56.5% in 2017; adjusted positive -2.1ppts jaws of 3.8% in FY18 Cost efficiency 54.4% We intend to continue to manage costs by: 56.5%
Slide 79: Balance sheet strength
Balance sheet Balance sheet strength As at 31 Dec 2018 Consolidated balance sheet, £bn HSBC UK has a simple, low risk, evolving balance sheet 239 239 We have a diversified balance sheet, across retail and 17 7 Other liabilities 5 wholesale Other assets Subordinated liabilities Our primary sour
Slide 80: HSBC UK benefits from low cost of funding
Balance sheet HSBC UK benefits from low cost of funding As at 31 Dec 2018 Customer deposits, £bn Our primary sources of funding is customer deposits; we did not By global business By deposit type participate in the Term Funding Scheme 2% We benefit from a high credit rating and the low credit sp
Slide 81: HSBC UK is well capitalised and aims to become a significant dividend payer
Balance sheet HSBC UK is well capitalised and aims to become a significant dividend payer As at 31 Dec 2018 The balance sheet is supported by a prudent capital position, and strong capital generation CET1 ratio 12.7% HSBC UK aims to become a significant dividend payer and to pay out a high perce
Slide 82: Risk-weighted assets
Balance sheet Risk-weighted assets FY18 Portfolio risk-weight densities1, % Regulatory changes Mortgages Mortgage RWAs of c. £5bn at FY18, a risk-weight density of 4.6% Mortgages: 4.6% Corporates: 75.5% A number of regulation changes from the PRA, EBA and BCBS are expected to result in material
Slide 83: Outlook – prudent growth
Outlook – prudent growth FY17 FY18 FY ∆ % Medium term outlook2 Adjusted P&L, £m Net interest income 4,232 4,715 11% Other income 1,777 1,734 (2%) Continue to grow revenue as we invest in Total revenue 6,009 6,449 7% the business LICs / ECL (229) (399) (74%) Costs (3,392) (3,510) (3%) ECL expecte
Slide 84: Summary
Summary Key highlights 1 HSBC UK is a profitable bank, generating capital 2 The UK represents a Cost management is a core focus for HSBC UK, balanced against investment in growth initiatives clear growth opportunity for HSBC, 3 with a robust plan to HSBC UK has a simple, low risk, evolving balance s
Slide 85: Summary and close
Summary and close Ian Stuart, CEO HSBC UK 85
Slide 86: HSBC UK, a clear growth opportunity
An introduction to HSBC UK HSBC UK, a clear growth opportunity Key highlights 1 The UK is one of HSBC’s scale markets, and HSBC UK represents a material part of the Group 2 UK remains an attractive place to do business; HSBC UK has significant The UK represents a competitive advantages and opportuni
Slide 87: Appendix
Appendix ia HSBC UK 87
Slide 88: Detailed financial information
Appendix Detailed financial information Pro- Pro - Pro- Pro- Reported P&L, £m forma forma 3Q18 4Q18 1Q19 Includes significant items, £m forma forma 3Q18 4Q18 1Q19 FY17 FY18 FY17 FY18 NII 4,153 4,754 1,223 1,233 1,220 Revenue (13) 39 - 5 - RBWM 2,440 2,655 692 699 687 RBWM (2) - - - - CMB 1,527 1,939
Slide 89: Reconciliation between reported and adjusted income statement items
Appendix Reconciliation between reported and adjusted income statement items £m 3Q18 4Q18 1Q19 FY17 FY18 Reported PBT 710 354 494 1,132 2,207 Revenue Customer redress programmes - 5 - (79) 39 Disposals, acquisitions and investment in new businesses - - - 66 - - 5 - (13) 39 Operating expenses Costs o
Slide 90: RoTE reconciliation
Appendix RoTE reconciliation $m unless otherwise stated 2H18 1Q19 Reported profit before tax (£m) 1,064 494 Reported profit before tax ($m) 1,381 643 Tax (458) (184) Reported profit after tax 923 459 less attributable to: preference shareholders, other equity holders, non- 0 (43) controlling interes
Slide 91: Glossary
Appendix Glossary Basis points. One basis point is equal to one-hundredth of a percentage IFRS International Financial Reporting Standard Bps point Client revenue booked in Country A where the primary relationship is BSM Balance Sheet Management Inbound revenue managed outside of Country A Cost effi