Hsbc Holdings Plc · LSE:HSBA
Hsbc — Debt Investor Presentation (August 2022)
47 slides from Hsbc's debt investor presentation, Aug 1, 2022
Slide 1: HSBC Holdings plc 1H22 Results
HSBC Holdings plc 1H22 Results Fixed Income Investor Presentation 0
Slide 2: Strategy & Results
Strategy & Results HSBC
Slide 3: Summary
Results and strategy Balance sheet & issuance 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 star
Slide 4: In the first half, we made strong progress in executing on our strategy
Results and strategy Balance sheet & issuance 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% Adjusted fee income + Insurance 34% as a % of adjusted revenue Costs Adjusted costs4 $15.0bn $15.5
Slide 5: We have a strong starting position going into the current rates cycle
Results and strategy Balance sheet & issuance 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.
Slide 6: Focus on CMB: Strong transaction banking and fee performance globally
Results and strategy Balance sheet & issuance 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%
Slide 7: Focus on WPB: Strong momentum driving growth
Results and strategy Balance sheet & issuance 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 & Othe
Slide 8: Focus on GBM: Strong markets and transaction services performance
Results and strategy Balance sheet & issuance 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,
Slide 9: Costs: Multiple levers offsetting inflationary pressures
Results and strategy Balance sheet & issuance 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)% bus
Slide 10: 1H22 results summary
Results and strategy Balance sheet & issuance Appendix 1H22 results summary $m 1H22 1H21 Δ 1H22 reported PBT of $9.2bn; adjusted PBT of $10.7bn NII 14,465 12,542 15 % Non-NII 11,225 12,192 (8)% NII of $14.5bn, up $1.9bn (15%) vs. 1H21 reflecting interest Revenue 25,690 24,734 4% rate rises and b
Slide 11: Adjusted revenue performance
Results and strategy Balance sheet & issuance 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 adver
Slide 12: Net interest income and margin
Results and strategy Balance sheet & issuance 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 $0.5bn vs. 1Q22 2Q22 adjusted N
Slide 13: Customer loan book
Results and strategy Balance sheet & issuance Appendix Customer loan book (reported) Personal loan book ($bn, gross loans and advances to customers) Wholesale loan book ($bn, gross loans and advances to customers) Credit cards Other Motor vehicle finance 4.5% Non-bank financial institutions Other se
Slide 14: Credit performance
Results and strategy Balance sheet & issuance 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) gr
Slide 15: Asset quality
Results and strategy Balance sheet & issuance Appendix Asset quality Gross loans by credit quality classification trend, $bn Credit quality indicators by portfolio Wholesale Retail 1,045 1,052 1,056 1,039 2% 1% 4% 2% 3% 2% 3% 2% Watch / Worry exposure at default Credit cards 30+ days past due23 22%
Slide 16: Adjusted costs
Results and strategy Balance sheet & issuance 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 increases 7,179 1,472 in technology
Slide 17: Summary
Results and strategy Balance sheet & issuance 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 e
Slide 18: Balance sheet & issuance
Balance sheet & issuance HSBC
Slide 19: Funding and liquidity
Results and strategy Balance sheet & issuance Appendix Funding and liquidity Reported loans to deposits ratio, % Principal operating entities LCR NSFR33 % 1H22 FY21 1H22 FY21 72.0 HSBC UK Bank plc (RFB) 228 241 165 178 63.2 61.1 62.3 HSBC Bank plc (NRFB) 157 150 120 107 Hongkong and Shanghai Banking
Slide 20: Capital position
Results and strategy Balance sheet & issuance Appendix Capital position CET1 ratio, % CET1 ratio of 13.6% down 2.2ppts vs. FY21 primarily driven by reg change (0.8ppts) and FVOCI impacts (0.6ppts) 15.8 CET1 ratio for the remainder of FY22 will be impacted by: (0.8) Loss on disposal of France i
Slide 21: Capital position versus requirements
Results and strategy Balance sheet & issuance Appendix Capital position versus requirements CET1 ratio as a % of RWAs, vs. target and MDA hurdle Regulatory capital vs. regulatory requirements as a % of RWAs 18.6% 17.7% Buffer to 2.5% 1.6% 10.7% 15.4% MDA hurdle 0.2% 2.5% 2.5% $25bn 2.7% (2.9ppts) 2.
Slide 22: MREL / TLAC position
Results and strategy Balance sheet & issuance Appendix MREL / TLAC position MREL / TLAC position versus requirements as a % of Group RWAs 28.7% Current binding requirement Non-binding requirements 26.0% 24.4% CET1 4.7% 22.7% 2.7pps / $23bn buffer to current requirement buffers24 4.7% HSBC Group’
Slide 23: Issuance plan – MREL build complete
Results and strategy Balance sheet & issuance Appendix Issuance plan – MREL build complete Limited net new issuance going forward 2H22 issuance plan HoldCo Senior gross and net issuance, $bn-equivalent Modest additional issuance expected versus original plan driven by market moves impacting bond lia
Slide 24: 2022 YTD issuance
Results and strategy Balance sheet & issuance Appendix 2022 YTD issuance Additional 2022 issuance of ~$7bn expected in Senior Holdco versus original plan Significant rises in rates and USD strength 2022 issuance and redemptions have reduced the value of our Tier 2 and MREL Revised 2022 Maturitie
Slide 25: Portfolio instruments
Results and strategy Balance sheet & issuance Appendix Portfolio instruments Maturity profile at 1H2225 Outstanding instruments by currency (notional) at 1H22 $bn-equivalent Tier 2 Additional Tier 1 EUR 18.8 18.4 EUR 17.3 9% 17% 16.0 15.5 GBP 21% 9% GBP 12.6 $28.6bn $22.8bn 2% SGD 13.0 14.7 3% 11.7
Slide 26: Legacy securities
Results and strategy Balance sheet & issuance Appendix Legacy securities Total legacy securities of $15bn26 Capital tier eligibility at issuance Issuer AT1 Tier 2 We are conscious of the Bank of England’s view on legacy instruments and HSBC Holdings plc $0.9bn* $6.7bn we are committed to reducing
Slide 27: Liability Management Exercise for Subordinated Notes
Results and strategy Balance sheet & issuance Appendix Liability Management Exercise for Subordinated Notes Exchange Offers for Subordinated Notes: Background $6.7bn of notes targeted across five series, which were issued before the implementation of the BRRD The terms of the Original Notes are
Slide 28: IBOR – regulatory capital & MREL securities
Results and strategy Balance sheet & issuance Appendix IBOR – regulatory capital & MREL securities Consent solicitation completed Consent exercise passed in September 2021 to alter reference rate for post-call coupons on a number of bonds issued by a number of group entities GBP English Used est
Slide 29: Appendix
Appendix 28
Slide 30: MREL/TLAC position
Results and strategy Balance sheet & issuance Appendix MREL/TLAC position HSBC Group US Resolution Group Europe Resolution Group Asia Resolution Group (Including HSBC Holdings)32 TLAC Total TLAC: $245bn Total TLAC: $26bn Total TLAC: $88bn Total TLAC: $103bn position Of which: non-regulatory Of which
Slide 31: Approach to issuance
Results and strategy Balance sheet & issuance Appendix Approach to issuance HSBC Holdings plc External Investors Since 2015, HSBC Holdings has been the Group’s issuing entity for external AT1, Tier 2 and MREL/TLAC-eligible Senior Issuance executed with consideration to our maturity profile Exter
Slide 32: Key financial metrics
Results and strategy Balance sheet & issuance 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,
Slide 33: Reconciliation of reported PBT and adjusted profit after tax
Results and strategy Balance sheet & issuance 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 a
Slide 34: Certain items included in adjusted revenue
Results and strategy Balance sheet & issuance 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
Slide 35: Net interest margin supporting information
Results and strategy Balance sheet & issuance 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
Slide 36: Wealth and Personal Banking
Results and strategy Balance sheet & issuance 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 >
Slide 37: Commercial Banking
Results and strategy Balance sheet & issuance 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 highe
Slide 38: Global Banking and Markets
Results and strategy Balance sheet & issuance 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. pri
Slide 39: Mainland China drawn risk exposure
Results and strategy Balance sheet & issuance 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
Slide 40: Hong Kong
Results and strategy Balance sheet & issuance 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
Slide 41: UK ring-fenced bank
Results and strategy Balance sheet & issuance Appendix UK ring-fenced bank Business performance WPB CMB 1H22 financial highlights Personal gross mortgage balances, £bn Mortgages: 122.5 90+ day delinquency trend49, % 20% 114.3 118.1 Wholesale gross customer loans, £bn Revenue £3.6bn 0.23 (1H21: £3.0b
Slide 42: Credit ratings for main issuing entities
Results and strategy Balance sheet & issuance Appendix Credit ratings for main issuing entities Long term senior ratings as at 1 August 2022 S&P Moody’s Fitch Rating Outlook Rating Outlook Rating Outlook HSBC Holdings plc A- STABLE A3 STABLE A+ NEG The Hongkong and Shanghai Banking Corporation Ltd A
Slide 43: Simplified structure chart
Results and strategy Balance sheet & issuance Appendix Simplified structure chart Holding company Associate Intermediate holding company Resolution entity HSBC Operating company Holdings plc 99.9% HSBC HSBC Private HSBC HSBC HSBC HSBC Asia 94.6% Bank HSBC UK Bank Banking Mexico, North America Bank H
Slide 44: Glossary
Results and strategy Balance sheet & issuance 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 portfolio
Slide 45: Footnotes
Results and strategy Balance sheet & issuance Appendix Footnotes 1. Reported RoTE is computed by adjusting annualised reported results for PVIF and for impairment of goodwill and other intangible assets (net of 29. Includes Global Functions, centrally managed costs and other DBS tax), divided by ave
Slide 46: Disclaimer
Results and strategy Balance sheet & issuance 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 pu
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