Hsbc Holdings Plc · LSE:HSBA
Hsbc — Q2 2022 Earnings Presentation
56 slides from Hsbc's earnings presentation, Aug 1, 2022
Slide 1: HSBC Holdings plc 2Q22 Results
HSBC Holdings plc 2Q22 Results Presentation to Investors and Analysts
Slide 2: Introductory remarks
Introductory remarks Mark Tucker Group Chairman
Slide 3: Strategic progress
Strategic progress Noel Quinn Group Chief Executive
Slide 4: Opening up a world of opportunity
Strategy 2Q22 results Summary Appendix Our purpose and strategy: International at the heart of our purpose and ambition 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 togethe
Slide 5: Summary
Strategy 2Q22 results Summary Appendix Summary Strong 2Q22 results with reported revenue of $12.8bn, up $0.2bn (2%), and adjusted revenue of $13.1bn, up $1.4bn (12%) vs. 2Q21; reported PBT of $5.0bn, down $0.1bn (1%), adjusted PBT of $6.0bn, up $0.7bn (13%) vs. 2Q21 Our strategy has started to deliv
Slide 6: In the first half, we made strong progress in executing on our strategy
Strategy 2Q22 results Summary Appendix In the first half, we made strong progress in executing on our strategy 1H20 1H21 1H22 Adjusted revenue growth, YoY (4.8)% (6.5)% 3.9% Revenue 26% 29% Adjusted fee income + Insurance 34% as a % of adjusted revenue Costs Adjusted costs4 $15.0bn $15.5bn $15.4bn R
Slide 7: We have a strong starting position going into the current rates cycle
Strategy 2Q22 results Summary Appendix We have a strong starting position going into the current rates cycle Surplus deposits / TNAV10, % Unsecured as % of retail loan book Total operating expenses YoY growth, % 16.0% 16.0% 15.6% 500% 14.7% 14.4% 22.2% HSBC reported HSBC adjusted 11.1% 10.6% 10.5% P
Slide 8: Focus on CMB: Strong transaction banking and fee performance globally
Strategy 2Q22 results Summary Appendix Focus on CMB: Strong transaction banking and fee performance globally CMB revenue CMB fee income CMB geographical revenue breakdown $bn $bn $bn +14% +12% +14% YoY, % YoY, % 7.2 1.9 7.2 6.4 20% 1.7 6.4 5% Trade Hong Kong 42% GLCM 19% HSBC UK 18% Credit & Asia ex
Slide 9: Focus on WPB: Strong momentum driving growth
Strategy 2Q22 results Summary Appendix Focus on WPB: Strong momentum driving growth Net new invested assets13 WPB global revenue WPB geographical revenue breakdown $bn $bn $bn +9% (0.5)% (0.5)% YoY, % 11.0 10.9 11.0 39 10.9 36 Personal YoY, % banking Rest of World 9 17 87% 6.2 & Other14 6.8 Wealth H
Slide 10: Focus on GBM: Strong markets and transaction services performance
Strategy 2Q22 results Summary Appendix Focus on GBM: Strong markets and transaction services performance GBM revenue GBM collaboration revenue GBM business booked in East $bn $bn Client business18 booked in East from clients managed in Americas and Europe, $bn +4% +8% YoY, % 1.8 YoY, % 7.8 c.1.1 7.5
Slide 11: Digitise: Our investments are starting to accelerate digital adoption
Strategy 2Q22 results Summary Appendix Digitise: Our investments are starting to accelerate digital adoption Technology spend Technology agile workforce20 HSBC Trade e-penetration22 % of total adjusted operating expenses % % +5.9ppts +14ppts 81.8 87.7 27 20 1H21 1H22 19 13 HSBCnet23 wholesale mobile
Slide 12: Energise and Transition: diversity and sustainability progress
Strategy 2Q22 results Summary Appendix Energise and Transition: On talent, we continue to build diversity; on Sustainability, strong progress to date Female leaders Total learning hours – Future Skills26 Sustainable finance and investments In senior leadership25 roles, % Across Sustainability, Digit
Slide 13: Costs: Multiple levers offsetting inflationary pressures
Strategy 2Q22 results Summary Appendix Costs: Multiple levers offsetting inflationary pressures 2019-22e adjusted cost movements Efficiency levers Group adjusted costs trend Global CRE $bn sq. ft, mn (30)% FY21 $32.1bn FY21 at 30.5 18.7 retranslated31 reported FX 13.0 Global (6)% businesses Cost sav
Slide 14: Guidance upgraded, driven by transformation and tailwinds from rates
Strategy 2Q22 results Summary Appendix Guidance upgraded, driven by transformation and tailwinds from rates FY21 Previous target / ambition Updated target / ambition Revenue NII $26.5bn N/A At least $31bn in FY22; at least $37bn in FY232,32 Returns Reported RoTE1 8.3% At least 10% by FY23 Ta
Slide 15: 2Q22 results update
2Q22 results update Ewen Stevenson Group Chief Financial Officer
Slide 16: 2Q22 results summary
Strategy 2Q22 results Summary Appendix 2Q22 results summary $m 2Q22 2Q21 Δ Strong set of 2Q22 results, reported PBT of $5.0bn, profit after tax of $5.8bn driven by tax credit of $0.8bn; adjusted PBT of $6.0bn NII 7,466 6,204 20 % Non-NII 5,675 5,568 2% NII of $7.5bn, up $1.3bn (20%) vs. 2Q21 ref
Slide 17: Adjusted revenue performance
Strategy 2Q22 results Summary Appendix Adjusted revenue performance Revenue by global business, $m Net fee income by global business, $m +12% (4)% 13,141 24 (4)% 487 3,060 3,047 Growth since 2,938 2Q21 580 11,772 870 774 738 (15)% 278 GBM Includes $(702)m of 946 844 940 11% CMB adverse insurance mar
Slide 18: Net interest income and margin
Strategy 2Q22 results Summary Appendix Net interest income and margin Reported NIM progression, bps (19) 135 2Q22 reported NII of $7.5bn was up $0.9bn 126 28 (13%) vs. 2Q21, primarily due to rate rises and balance sheet growth; 2Q22 reported NII up $0.5bn vs. 1Q22 2Q22 adjusted NII up $1.3bn (20
Slide 19: Forward-looking NII build
Strategy 2Q22 results Summary Appendix Forward-looking NII build FY22 NII build, $bn Market-implied path of interest rates at 30 June 202235, bps ≥31 327 333 c.1 c.(0) 294 294 282 259 c.6 158 170 26.5 139 125 (1.2) 73 FY21* FX Rate / margin Volume Other FY22 impacts growth (50) Jun-22 Dec-22 Jun-23
Slide 20: Credit performance
Strategy 2Q22 results Summary Appendix Credit performance Adjusted ECL charge / (release) trend ECL, $m 629 ECL charge / 2Q22 ECL net charge of $448m; including 466 448 (release) as a % a $142m charge reflecting further (255) of average developments in mainland China’s CRE (600) gross loans and ma
Slide 21: Adjusted costs
Strategy 2Q22 results Summary Appendix Adjusted costs Operating expenses trend, $m 8,004 2Q22 costs of $7.5bn, stable vs. 2Q21, cost savings and changes in 7,521 116 7,577 7,519 phasing of accrual for performance-related pay (‘PRP’) broadly offset 7,179 1,472 increases in technology spending, volu
Slide 22: Capital adequacy
Strategy 2Q22 results Summary Appendix Capital adequacy CET1 ratio, % CET1 ratio of 13.6%, down 0.5ppts vs. 1Q22 due to: 0.2 14.1 Higher RWAs: (0.2)ppts (0.2) Negative after-tax OCI movements: (0.2)ppts (0.1) 0.0 13.6 (0.2) Threshold deductions: (0.2)ppts (0.2) Partly offset by profits net
Slide 23: Summary
Strategy 2Q22 results Summary Appendix Summary 1 Strong business performance and strong NII growth as global interest rates rise Cost control continues to be strong; on track to reach high end of $5-5.5bn cost saves target 2 and deliver stable adjusted costs in FY22 3 Benign credit experience to dat
Slide 24: Summary
Summary Noel Quinn Group Chief Executive
Slide 25: HSBC's heritage is in bridging capital and trade flows between global hubs
Strategy 2Q22 results Summary Appendix HSBC’s 157 year heritage is in bridging capital and trade flows between global hubs Leading position in Trade… …with significant share of wallet for diversified set of clients into Asia Corporate client share of wallet in trade-related products: GLCM, GTRF, FX3
Slide 26: International connectivity is our core value proposition
Strategy 2Q22 results Summary 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 business18 is Even in WPB, International is the most Our employees identify mo
Slide 27: Structural change risks diluting the economics of our international business model
Strategy 2Q22 results Summary Appendix Structural change risks diluting the economics of our international business model: in addition to cost and capital factors, will drive material valuation loss Analysis considers a range of structuring options*; impacts vary between options but considered to dr
Slide 28: We remain focused on delivering our strategy with material upside
Strategy 2Q22 results Summary Appendix In summary, we remain focused in delivering our strategy with material upside in performance, returns and distribution potential expected Transforming our portfolio to focus on our strengths in areas where we have a competitive advantage – international connect
Slide 29: Appendix
Appendix
Slide 30: In Wholesale, we provide relationship lending to clients in the West
Strategy 2Q22 results Summary Appendix In Wholesale, we provide relationship lending to clients in the West as part of supporting their business with our differentiated products in the East GBM returns from cross-border relationships46 Case study: Top 20 Securities Services Size of bubble = Client b
Slide 31: 2Q22 global business highlights
Strategy 2Q22 results Summary Appendix 2Q22 global business highlights WPB CMB GBM 2Q22 revenue up 5% vs. 2Q21, benefitting from global interest rate rises and balance Revenue up 19% vs. 2Q21, including double- Revenue up 15% vs. 2Q21, primarily in sheet growth digit growth in GLCM and Trade M
Slide 32: 2Q22 geographic highlights
Strategy 2Q22 results Summary Appendix 2Q22 geographic highlights Asia Europe MENA Americas Europe revenue up 9% vs. 2Q22 Hong Kong NII up 10% 2Q21 North America loan growth of vs. 1Q22, and up 16% vs. 2Q21 Revenue up 7% vs. 2Q21, HSBC UK 2Q22 PBT up 17% 11% vs. 2Q21; CMB loans up 2Q22 A
Slide 33: Impacts of financial investments
Strategy 2Q22 results Summary Appendix Impacts of financial investments Hold-to-collect-and-sell (‘HTC&S’) portfolio evolution Portfolio size, $bn Portfolio stressed VaR, $bn In 2Q22, key rates (10 year US Treasuries, 10 year UK Gilts and 10 year German Bunds) increased by an average of 72bps, dri
Slide 34: Key financial metrics
Strategy 2Q22 results Summary Appendix Key financial metrics Reported results, $m 2Q22 1Q22 2Q21 Alternative performance measures, $m 2Q22 1Q22 2Q21 NII 7,454 6,997 6,584 Adjusted NII 7,466 6,773 6,204 Other Income 5,318 5,467 5,981 Adjusted other income 5,675 5,334 5,568 Revenue 12,772 12,464 12,56
Slide 35: Reconciliation of reported PBT and adjusted profit after tax
Strategy 2Q22 results Summary Appendix Reconciliation of reported PBT and adjusted profit after tax $m 2Q22 1Q22 2Q21 1H22 1H21 Reported PBT 5,010 4,166 5,060 9,176 10,839 Currency translation — (448) (760) — (1,069) Customer redress programmes 12 2 — 14 (18) Disposal, acquisitions and investment in
Slide 36: Certain items included in adjusted revenue
Strategy 2Q22 results Summary Appendix Certain items included in adjusted revenue Certain items included in adjusted revenue 2Q22 1Q22 4Q21 3Q21 2Q21 1H22 1H21 highlighted in management commentary, $m Insurance manufacturing market impacts in WPB (378) (276) 127 (42) 324 (654) 392 of which: Asia WPB
Slide 37: 2Q22 adjusted revenue performance
Strategy 2Q22 results Summary Appendix 2Q22 adjusted revenue performance 2Q22 revenue 2Q22 vs. 2Q21 Revenue by global business, $bn o/w insurance market Wealth $2,183m (209) impacts: $(702)m +12% WPB $5,691m 5% Personal Banking $3,476m 569 13.1 12.1 Other $32m (82) 11.8 GTRF $536m 85 3.8 3.3 3.9 Cre
Slide 38: Net interest margin supporting information
Strategy 2Q22 results Summary Appendix Net interest margin supporting information Group NII sensitivity to instantaneous change in yield curves Quarterly NIM by key legal entity At 30 June 2022, using a simplified pass-through assumption of 50% % of 2Q22 % of 2Q22 2Q21 3Q21 4Q21 1Q22 2Q22 Group NII
Slide 39: Wealth and Personal Banking
Strategy 2Q22 results Summary Appendix Wealth and Personal Banking 2Q22 financial highlights Balance sheet, $bn 2Q22 vs. 2Q21 Revenue $5.7bn 5% +5% Revenue up $278m (5%). Personal banking up $569m (20%) (2Q21: $5.4bn) from interest rate rises and balance sheet growth. Wealth down >(100)% +4% $209m
Slide 40: Commercial Banking
Strategy 2Q22 results Summary Appendix Commercial Banking 2Q22 financial highlights Balance sheet, $bn 2Q22 vs. 2Q21 Revenue $3.7bn 19% Revenue up $580m (19%) across all core CMB products, GLCM (2Q21: $3.1bn) Customer lending (up 63%), GTRF (up 19%) and C&L (up 5%) reflecting higher +6% volumes at
Slide 41: Global Banking and Markets
Strategy 2Q22 results Summary Appendix Global Banking and Markets 2Q22 financial highlights View of adjusted revenue 2Q22 vs. 2Q21 Revenue $3.8bn 15% $m 2Q22 ∆2Q21 Revenue of $3.8bn up $0.5bn (15%) vs. 2Q21 (2Q21: $3.3bn) MSS 2,329 27% MSS revenue of $2.3bn up $502m (27%) vs. prior year: (62)% S
Slide 42: Corporate Centre
Strategy 2Q22 results Summary Appendix Corporate Centre 2Q22 financial highlights Revenue performance, $m Revenue $(63)m 28% (2Q21: $(87)m) 2Q21 3Q21 4Q21 1Q22 2Q22 >(100)% Central Treasury (27) (35) (10) 5 (32) ECL $0m (2Q21: $5m) Legacy Credit 6 (34) (13) (20) 25 Costs $11m >100% (2Q21: $(34)m) Ot
Slide 43: Insurance
Strategy 2Q22 results Summary Appendix Insurance Key financial metrics* Reported Embedded Value, $bn Strategic highlights +6% Adjusted income statement, $m 1H22 1H21 2H21 #1 ranked with a market share of 23.0% in Hong Revenue 1,060 1,509 1,190 16.4 17.3 Kong for 1Q2258, up 3.0ppts vs. 1Q21 Of whic
Slide 44: Wealth and Personal Banking: Global invested assets
Strategy 2Q22 results Summary 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 (10)% (13)% (5)% 1,134 1,119 512 616 630 1,019 472 448 585 31 317 32 27 334 310 165 147 137 430
Slide 45: 2Q22 vs. 1Q22 equity drivers
Strategy 2Q22 results Summary Appendix 2Q22 vs. 1Q22 equity drivers Shareholders’ Basic number of ordinary Tangible Equity, $bn TNAV per share, $ Equity, $bn shares, millions As at 31 March 2022 196.3 155.8 7.80 19,968 Profit attributable to: 5.6 5.4 0.27 — Ordinary shareholders60 5.5 5.4 0.27 — Oth
Slide 46: Total shareholders' equity to CET1 capital
Strategy 2Q22 results Summary Appendix Total shareholders’ equity to CET1 capital Total equity to CET1 capital, at 30 June 2022, $m Total equity to CET1 capital walk, $m 2Q22 1Q22 4Q21 Total equity 196,690 Total equity (per balance sheet) 196,690 204,658 206,777 Non-controlling interests (8,308) (8,
Slide 47: Balance sheet – customer lending
Strategy 2Q22 results Summary Appendix Balance sheet – customer lending Balances by global business, $bn Balances by region, $bn Growth since 1Q22 3% 1% $1bn Adjusted customer lending of Europe $369bn 1,028 0% o/w: mortgages $1,028bn, up $14bn (1%) vs. 1Q22 995 1,015 0 1 $(0)bn 1 o/w: UK $285bn 3
Slide 48: Balance sheet – customer accounts
Strategy 2Q22 results Summary Appendix Balance sheet – customer accounts Balances by global business, $bn Balances by region, $bn Growth since 1Q22 5% 0% $10bn Europe $629bn 2% 1,647 1,651 1,566 1 1 $9bn Adjusted customer accounts of 1 o/w: UK $505bn $1,651bn, up $4bn (0%) vs. 1Q22 2% 333 335 317 $(
Slide 49: Mainland China drawn risk exposure
Strategy 2Q22 results Summary Appendix Mainland China drawn risk exposure Mainland China drawn risk exposure $bn Mainland China drawn risk exposure is defined as lending booked in mainland China and wholesale lending booked offshore where the ultimate parent and beneficial owner is in mainland Chi
Slide 50: Hong Kong
Strategy 2Q22 results Summary Appendix Hong Kong Financial performance Regional highlights $m 2Q22 2Q21 Δ Resilient financial performance in spite of challenges; advanced digitalisation maintained NII 2,067 1,775 16% business momentum through Covid-related disruption Non-NII 1,653 1,874 (12)% NI
Slide 51: UK ring-fenced bank
Strategy 2Q22 results Summary Appendix UK ring-fenced bank Business performance WPB CMB 1H22 financial highlights Personal gross mortgage balances, £bn Mortgages: 122.5 90+ day delinquency trend67, % 20% 114.3 118.1 Wholesale gross customer loans, £bn Revenue £3.6bn 0.23 (1H21: £3.0bn) 0.25 o/w: WPB
Slide 52: Glossary
Strategy 2Q22 results Summary Appendix Glossary AIEA Average interest earning assets IPO Initial Public Offering AM Asset Management A portfolio of assets including securities investment conduits, asset-backed securities, trading Legacy credit portfolios, credit correlation portfolios and derivative
Slide 53: Footnotes
Strategy 2Q22 results Summary Appendix Footnotes 1. Reported RoTE is computed by adjusting annualised reported results for PVIF and for impairment of goodwill 17. Between GBM and CMB: Includes GBM products to CMB customers and other intangible assets (net of tax), divided by average reported equity
Slide 54: Footnotes
Strategy 2Q22 results Summary Appendix Footnotes 37. Regulatory profits, net of regulatory dividend accrual for the purposes of capital calculations. Over 2Q22 we 54. From 1 June 2022, Turkey was deemed a hyperinflationary economy for accounting purposes accrued 15.4¢, equal to 55% of reported EPS o
Slide 55: Disclaimer
Strategy 2Q22 results Summary 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 ap
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