Hsbc Holdings Plc · LSE:HSBA
Hsbc — Q1 2020 Earnings Presentation
39 slides from Hsbc's earnings presentation, Apr 28, 2020
Slide 1: HSBC Holdings plc 1Q20 Results
HSBC Holdings plc 1Q20 Results Presentation to Investors and Analysts
Slide 2: Covid-19
1Q20 results Appendix Covid-19 Response to Covid-19 Implications for our business update Operational response Our operations have stayed highly resilient: Our vision for the Bank is unchanged, HSBC will become a stronger, leaner, • c.80% of our branch network remains open for business globally and
Slide 3: 1Q20 highlights
1Q20 results Appendix 1Q20 highlights Key metrics Profits impacted by Covid-19 and fall in oil prices 1 Reported profit before tax of $3.2bn down 48%; adjusted profit before tax of RoTE7 4.2% $3.0bn down 51% vs. 1Q19 Revenue impacted by volatile items, resilient underlying performance Reported reven
Slide 4: Supporting our customers
1Q20 results Appendix Supporting our customers Business highlights RBWM GPB Continued organic growth in our customer base, with over 100k Revenue up 13% vs. 1Q19, mainly from growth in investment and lending additional active customers in 1Q20 revenue in Asia and in Europe, driven by high volati
Slide 5: 1Q20 results summary
1Q20 results Appendix 1Q20 results summary $m 1Q20 1Q19 ʣ NII 7,612 7,355 3% Good performance in January and February; the impact of Covid- 19 and weakening oil prices had a significant adverse impact on Other revenue 5,715 6,794 (16)% performance in March Revenue 13,327 14,149 (6)% NII increase
Slide 6: 1Q20 adjusted revenue performance
1Q20 results Appendix 1Q20 adjusted revenue performance 1Q20 revenue 1Q20 vs. 1Q19 Revenue by global business, $bn Retail Banking $3,831m 53 (6)% (2)% RBWM $4,869m (17)% Wealth Management $912m (983) o/w insurance market impacts: $(872)m 14.1 13.6 0.5 13.3 Other $126m (56) 0.5 0.6 0.5 GLCM $1,333m (
Slide 7: Net interest margin
1Q20 results Appendix Net interest margin Reported NIM progression, bps 156 (1) 154 Reported NII of $7.6bn, stable vs. 4Q19, (1) (1) 1 up $0.1bn (2%) vs. 1Q19; Adjusted NII of $7.6bn, down 1% vs. 4Q19 1Q20 NIM of 154bps down 2bps vs. 4Q19, driven by: 4Q19 Change in Reduction Argentina Significan
Slide 8: Adjusted costs
1Q20 results Appendix Adjusted costs Adjusted operating expenses trend, $m Adjusted costs of $7.7bn, down $0.2bn (3%) vs. 1Q19, due to reduced 9,043 discretionary spending and cost-saving initiatives, partially offset by increased 7,911 7,997 988 7,680 investment 7,584 986 1,178 1,228 1,228 1,122
Slide 9: Credit performance
1Q20 results Appendix Credit performance ECL charge trend ECL by global business, $m 0.27 1Q20 ECL of $3.0bn, up $2.3bn 1,374 vs. 4Q19 1.18 1,059 Of the $3.0bn ECL charge, around half is related to Stage 3, and half 0.24 0.22 0.34 0.28 to Stage 1 and Stage 2 exposures 543 393 Growth in wholesa
Slide 10: Balance sheet
1Q20 results Appendix Balance sheet Net loans and advances to customers Customer accounts $bn $bn Customer lending increased by $41bn* 9% (4%) vs. 4Q19, mainly due to increased term 7% 3% lending in CMB and GB&M, notably in March 4% as corporate and commercial customers drew 1,441 down on committe
Slide 11: Capital adequacy
1Q20 results Appendix Capital adequacy Capital progression Excluding FX movements, RWAs increased by $40bn, mainly from 1Q19 2Q19 3Q19 4Q19 1Q20 lending growth in GB&M and CMB Common equity tier 1 capital, $bn 125.8 126.9 123.8 124.0 125.2 Estimated* $4bn of RWA increase was due to credit rating
Slide 12: Summary
1Q20 results Appendix Summary 1 Challenging economic conditions in March, however the business showed resilience Elevated adjusted ECL charge of $3.0bn (increased by $2.5bn vs. 1Q19), mainly due to the effect of 2 Covid-19 and weakening oil prices on the forward economic outlook Good volume growth a
Slide 13: Appendix
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Slide 14: Key financial metrics
1Q20 results Appendix Key financial metrics Reported results, $m 1Q20 4Q19 1Q19 Balance sheet, $m 1Q20 4Q19 1Q19 NII 7,612 7,654 7,468 Total assets 2,917,810 2,715,152 2,658,996 Other Income 6,074 5,717 6,960 Net loans and advances to customers 1,040,282 1,036,743 1,005,279 Revenue 13,686 13,371 14,
Slide 15: Reconciliation of reported and adjusted results
1Q20 results Appendix Reconciliation of reported and adjusted results $m 1Q20 4Q19 1Q19 Reported PBT 3,229 (3,897) 6,213 Revenue Currency translation - (66) (257) Customer redress programmes - 45 - Disposals, acquisitions and investment in new businesses 7 55 - Fair value movements on financial inst
Slide 16: Certain items and Argentina hyperinflation
1Q20 results Appendix Certain items and Argentina hyperinflation Certain items included in adjusted revenue highlighted in 1Q20 4Q19 3Q19 2Q19 1Q19 management commentary20, $m Insurance manufacturing market impacts in RBWM (689) 202 (207) (33) 183 Credit and funding valuation adjustments in GB&M (34
Slide 17: Certain volatile items analysis
1Q20 results Appendix Certain volatile items analysis RBWM: Insurance manufacturing market impacts GB&M: Credit and funding valuation adjustments Corporate Centre: Valuation differences on long- revenue, $m revenue, $m term debt and associated swaps, $m 183 202 189 259 46 (33) 93 (34) 76 (207) 50 (1
Slide 18: Global business management view of adjusted revenue
1Q20 results Appendix Global business management view of adjusted revenue Group, $m 4 4 4 4 4 Ή4 GB&M, $m 4 4 4 4 4 Ή4 Total Group revenue 14,149 13,935 13,332 13,586 13,327 (6)% Global Markets 1,712 1,406 1,363 1,241 2,133 25% Adjusted revenue as previously disclosed24 14,406 14,089 13,267 13,647 -
Slide 19: Retail Banking and Wealth Management
1Q20 results Appendix Retail Banking and Wealth Management 1Q20 financial highlights Balance sheet26 $bn 1Q20 vs. 1Q19 Revenue $4.9bn (17)% Revenue down $986m (17%) due to insurance manufacturing revenue (1Q19: $5.9bn) 7% decreasing by $994m, driven by $872m of adverse market impacts as 6% a resul
Slide 20: Commercial Banking
1Q20 results Appendix Commercial Banking 1Q20 financial highlights Balance sheet26, $bn 1Q20 vs. 1Q19 Revenue $3.7bn (5)% Revenue down $196m (5%): (1Q19: $3.9bn) Customer lending • GLCM down $153m (10%), reflecting lower rates partly offset by higher balances ECL $(1.4)bn >(100)% • C&L up $45m (3%
Slide 21: Global Banking and Markets
1Q20 results Appendix Global Banking and Markets 1Q20 financial highlights View of adjusted revenue 1Q20 vs. 1Q19 Revenue $3.7bn (8)% Revenue down $334m (8%), excl. XVAs up $58m (1%): $m 4 ΉQ19 (1Q19: $4.0bn) • Global Markets up $421 (25%) driven by volatility and wider credit Global Markets 2,133
Slide 22: Global Private Banking
1Q20 results Appendix Global Private Banking 1Q20 financial highlights Reported client assets26, $bn 1Q20 vs. 1Q19 Revenue $511m 13% Revenue up by $60m (13%), 1Q20 is the highest quarterly revenue (1Q19: $451m) (2)% (9)% since 1Q15 mainly from increased investment revenue (up $70m, 38%) >(100)% 34
Slide 23: Corporate Centre
1Q20 results Appendix Corporate Centre 1Q20 financial highlights Revenue performance20, $m Revenue $622m >100% 1Q19 2Q19 3Q19 4Q19 1Q20 (1Q19: $(12)m) Central Treasury 269 290 307 (19) 699 ECL $(1)m >(100)% (1Q19: $6m) Of which: Balance Sheet Management 608 585 622 450 829 Costs $84m >100% (1Q19: $(
Slide 24: HSBC UK RBWM: Customer activity trends
1Q20 results Appendix HSBC UK16 RBWM: Customer activity trends 2020 weekly credit card spend by Customer sentiment around Retail sales units28 category (change vs. 2019) Credit card overall spend29 Covid-19 has resulted in large 0 + 120 reductions in spending across Food stores & all categories ex
Slide 25: Net interest margin supporting information
1Q20 results Appendix Net interest margin supporting information Quarterly NIM by key legal entity Key rates (quarter averages) % of 1Q20 % of 1Q20 2Q19 3Q19 4Q19 1Q20 Group NII Group AIEA The Hongkong and Shanghai Banking 2.05% 2.05% 2.00% 1.96% 55% 43% 2.40% 2.40% Corporation (HBAP) 2.20% 2.16% HS
Slide 26: RoTE by global business excluding significant items and UK bank levy
1Q20 results Appendix RoTE by global business excluding significant items and UK bank levy 1Q20 $m Corporate RBWM CMB GB&M GPB Group Centre Reported profit before tax 343 609 995 120 1,162 3,229 Tax expense (38) (149) (167) (21) (346) (721) Reported profit after tax 305 460 828 99 816 2,508 less att
Slide 27: 1Q20 vs. 4Q19 equity drivers
1Q20 results Appendix 1Q20 vs. 4Q19 equity drivers Shareholders’ Tangible Equity, TNAV9 per Basic number of ordinary Equity, $bn $bn share, $ shares, million As at 31 December 2019 184.0 144.1 7.13 20,206 Profit attributable to: 2.2 1.8 0.09 - Ordinary shareholders32 1.8 1.8 0.09 - Other equity hold
Slide 28: Balance sheet – customer lending
1Q20 results Appendix Balance sheet – customer lending Adjusted customer lending increased by $41bn (4%) vs. 4Q19 GB&M growth of $24bn (10%) mainly in UK, Hong Kong and the US 1Q20 adjusted customer lending growth by global business and region, $bn CMB growth of $16bn (5%) mainly in UK, US and a
Slide 29: Balance sheet – customer accounts
1Q20 results Appendix Balance sheet – customer accounts Adjusted customer accounts increased by $47bn (3%) vs. 4Q19 RBWM balances grew by $13bn (2%), notably in the UK, Hong Kong 1Q20 adjusted customer account growth by global business and region, $bn and North America CMB increases in Europe an
Slide 30: Oil and gas exposures
1Q20 results Appendix Oil and gas exposures36 Drawn risk exposure37 by region, $bn Credit quality 1Q20 FY19 As at 31 December 2019 As at 31 March 2020 Asia 8.7 8.9 Europe 6.2 4% 6.3 3% 3% 7% Middle East and North Africa 3.8 3.7 North America 5.5 5.0 28% $25.6bn 53% $25.7bn 40% Latin America 1.4 1.8
Slide 31: Sectors particularly affected by Covid-19
1Q20 results Appendix Sectors particularly affected by Covid-19 Aviation38 Restaurants and leisure* Retail As at 31 March 2020 As at 31 March 2020 As at 31 March 2020 1% 2% 1% 1% 1% 3% 21% 32% 40% $9.4bn $2.6bn $27.8bn 57% 64% 77% CRR 1-3 CRR 4-6 CRR 7-8 Defaulted Drawn risk exposure37 by region, $b
Slide 32: CRE exposures
1Q20 results Appendix CRE exposures Commercial Real Estate loans including loan commitments, $bn Credit quality As at 31 December 2019 As at 31 December 2019 $48.6bn $34.7bn $5.4bn $6.4bn 0% CRR 1-7 1% CRR 8 29.7 CRR 9-10 $168bn 99% 13.2 11.2 11.3 10.1 7.7 Analysis by stage 4.8 Stage 3 2.2 Reported
Slide 33: Residential mortgage exposures
1Q20 results Appendix Residential mortgage exposures Residential mortgages, $bn Credit quality As at 31 December 2019 Stable credit profile in residential mortgage exposures reinforced by $174.0bn $56.6bn $45.5bn $34.3bn $18.8bn $7.2bn $1.8bn low average LTVs 72.2 We have worked with governments
Slide 34: RWAs by Global Business and geography
1Q20 results Appendix RWAs by Global Business and geography Reported RWAs as at 31 March 2020, $bn Corporate RBWM CMB GB&M GPB Total40 Centre Europe 37.4 112.1 108.0 7.5 15.6 280.6 Asia 65.4 130.2 106.5 3.5 67.9 373.5 Middle East and North Africa 4.9 14.2 13.3 - 26.7 59.1 North America 15.8 51.4 49.
Slide 35: Glossary
1Q20 results Appendix Glossary AIEA Average interest earning assets A portfolio of assets including securities investment conduits, asset-backed securities, trading Legacy credit portfolios, credit correlation portfolios and derivative transactions entered into directly with AUM Assets under managem
Slide 36: Footnotes
1Q20 results Appendix Footnotes 1. As at 14 April 2020 2. As at 23 April 2020 3. Coronavirus Business Interruption Loan Scheme 4. Market share of lending by value as at 21 April 2020. Source: UK Finance Coronavirus Business Interruption Loans Scheme (CBILS) Data Table 23 April 5. 8.6% of SME loans a
Slide 37: Footnotes
1Q20 results Appendix Footnotes 25. RoTE by Global Business excludes significant items and the UK bank levy. RoTE methodology annualises Profits Attributable to Shareholders, including ECL, in order to provide a returns metric. RoTE by Global Business for Q1 2020 considers AT1 Coupons on an accruals
Slide 38: Disclaimer
1Q20 results 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 applicable law or a
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