Hsbc Holdings Plc · LSE:HSBA
Hsbc — HSBC Finance — Q3 2007 Earnings Presentation
19 slides from Hsbc's earnings presentation, Nov 14, 2007
Slide 1: HSBC Finance Corporation Form 8-K
UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 ____________________________ FORM 8-K CURRENT REPORT Pursuant to Section 13 or 15(d) of The Securities Exchange Act of 1934 Date of Report: November 14, 2007 ____________________________ Commission file number 1-8198 HSBC Financ
Slide 2: Item 7.01. Regulation FD Disclosure
Item 7.01. Regulation FD Disclosure. This Form 8-K contains slides in Exhibit 99.1 pertaining to the financial results of HSBC Finance Corporation for the nine months ended September 30, 2007. The information included in the slides with respect to HSBC Finance Corporation is presented on an Internat
Slide 3: Signatures and Exhibit Index
SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized. HSBC FINANCE CORPORATION (Registrant) By: /s/ Patrick D. Schwartz Name: Patrick D. Schwartz Title: Vice P
Slide 4: Q3 2007 Results
Q3 2007 Results HSBC Finance Corporation IFRS Management Basis
Slide 5: Disclosure statement
Disclosure statement This presentation, including the accompanying slides and subsequent discussion, contains certain forward-looking information with respect to the financial condition, results of operations and business of HSBC Holdings plc and HSBC Finance Corporation. This information represents
Slide 6: Key developments
Key developments • Deteriorating mortgage industry trends, including continuing housing price decline, have contributed to a marked increase in delinquencies in the Retail Branch business – Q3 2007 experienced unprecedented turmoil in the mortgage industry evidenced by significantly reduced refinanc
Slide 7: Quarterly financial results
HSBC Finance Corporation – Quarterly financial results USD m % Better/(Worse) Q3 2006 Q2 2007 Q3 2007 versus Q3 2006 versus Q2 2007 Net operating income before loan $3,758 $3,914 $4,672 24.3% 19.4% impairment charges (1) Loan impairment and (1,564) (2,185) (3,478) (122.4%) (59.2%) other related char
Slide 8: YTD financial results
HSBC Finance Corporation – YTD financial results USD m % Better/(Worse) Q3 2006 Q3 2007 versus Q3 2006 Year-to-Date Year-to-Date Year-to-Date Net operating income before loan impairment charges (1) $11,728 $12,899 10.0% Loan impairment and other related charges (3,814) (7,551) (98.0%) Net operating
Slide 9: Financial results summary
HSBC Finance Corporation Financial results summary • Q3 2007 loss before tax of $1.6 billion was $1.8 billion below prior quarter due to goodwill impairment of $1.3 billion and higher loan impairment charges, partially offset by fair value option income on debt market valuation. Excluding the impact
Slide 10: Financial results summary
HSBC Finance Corporation Financial results summary • Operating expenses, excluding the impact of goodwill impairment, decreased $84 million (or 5.5%) compared to prior quarter primarily as a result of lower marketing expenses ($57 million), lower compensation expense ($18 million) resulting from the
Slide 11: Loan impairment charges
HSBC Finance Corporation Loan impairment charges $ bn 3.5 3.5 3.2 3.0 2.8 2.5 2.2 1.9 1.8 2.0 1.6 1.6 1.6 1.5 1.4 1.5 1.0 0.7 0.4 0.4 0.5 0.2 0.0 Q3 2006 Q4 2006 Q1 2007 Q2 2007 Q3 2007 To tal Excluding M o rtgage Services M o rtgage Services • Q3 2007 loan impairment charges excluding Mortgage Serv
Slide 12: 2+ delinquency ratio
HSBC Finance Corporation 2+ delinquency ratio 9% 8.17% 8% 7% 6.18% 6% 5.70% 4.91% 5.01% 5% 4.64% 4.73% 4.40% 4.31% 4.35% 4.16% 4.29% 4.05% 4.20% 4% 3.67% 3% 2% 1% 0% Q3 2006 Q4 2006 Q1 2007 Q2 2007 Q3 2007 Mortgage Services Excluding Mortgage Services Total • 2+ delinquencies excluding Mortgage Serv
Slide 13: Real estate secured 2+ delinquency
HSBC Finance Corporation Real estate secured 2+ delinquency 5.0 12 11.2 4.0 2+ delinquencies (USD billions) 10 3.2 7.9 7.5 8 2+ Delinquencies (%) 3.0 2.6 0.8 2.3 2.3 5.8 1.9 0.7 6 2.0 0.6 0.6 1.8 4.8 1.5 3.7 3.9 0.4 3.6 1.3 1.3 0.5 1.2 1.2 4 0.3 1.0 2.9 0.2 0.9 0.9 2.4 3.4 0.4 1.0 0.4 0.4 1.9 1.9 2.
Slide 14: Impairment allowance – Real estate portfolios
HSBC Finance Corporation Impairment allowance – Real estate portfolios Mortgage Services US Retail Branch Real Estate Secured $m $m 2,500 $ 670 $ 2,360 1,200 $ 368 $ 392 $ 659 $ 1,028 $ 2,043 ( $ 27) 2,000 1,000 ( $ 367) ( $ 406) 800 1,500 ( $ 313) 600 $ 201 $ 276 1,000 400 $ 295 500 ($ 140) ($ 148)
Slide 15: Customer loans and advances
HSBC Finance Corporation Customer loans and advances $ bn 200.0 182.6 174.3 177.6 180.0 178.2 178.3 163.8 168.5 21.6 21.4 21.5 21.4 21.4 21.3 160.0 20.9 20.8 12.8 12.9 12.7 13.0 13.2 12.4 12.1 11.9 20.6 19.5 19.0 19.3 19.8 20.3 18.4 120.0 19.7 26.3 28.3 28.0 25.7 29.6 30.2 24.7 25.8 80.0 44.4 46.2 4
Slide 16: Mortgage Services loans by vintage and type
Mortgage Services Loans by vintage and type December 2006 September 2007 Second Lien ARM $3.0 bn 49% 39% 5% 7% 8% 5% 36% 51% $2.0 bn Second Lien Fixed $7.2 bn 33% 57% 5% 5% 5% 4% 55% 35% 1% $5.4 bn First Lien ARM 30% 46% 16% 8% 7% 11% 48% 34% $24.1 bn $15.8 bn First Lien Fixed 27% 23% 32% 18% 16% 27
Slide 17: Mortgage Services loans – Vintages
HSBC Finance Corporation Mortgage Services loans – Vintages Vintages ($ bn) December 2006 March 2007 June 2007 September 2007 2007 0.6 1.4 1.5 2006 15.2 15.0 13.5 12.9 2005 19.9 18.0 15.6 14.2 2004 9.3 8.3 6.7 6.3 Pre 2004 5.2 4.8 4.3 4.0 49.6 46.7 41.5 38.9 • Continued progress in reduction of 2005
Slide 18: Adjustable rate mortgages – ARM resets
HSBC Finance Corporation Adjustable rate mortgages – ARM resets $ bn Q4 2006 Q2 2007 Q3 2007 12.0 10.7 9.9 10.0 8.0 5.8 6.0 5.1 5.3 4.1 3.8 4.0 4.0 3.0 3.0 2.8 2.9 2.0 1.3 1.1 0.8 1.1 0.5 0.2 0.0 2007 2008 H2 2007 2008 Q4 2007 2008 Total HBIO Mortgage Services Retail Branch RE • Proactively contacti
Slide 19: Ongoing areas of focus
HSBC Finance Corporation Ongoing areas of focus In unpredictable, turbulent markets, focused on what we can control: • Continued liquidation of Mortgage Services portfolio • Continued tightening of underwriting standards and intensified risk management • Reducing Retail Branch network to align with