Hsbc Holdings Plc · LSE:HSBA
Hsbc — Investor Day (March 2023)
24 slides from Hsbc's investor day presentation, Mar 9, 2023
Slide 1: HSBC Life IFRS 17 teach-in for Investors and Analysts
HSBC Life IFRS 17 teach-in for Investors and Analysts 9 March 2023
Slide 2: Insurance strategy
Insurance strategy Greg Hingston CEO, Global Insurance and Partnerships
Slide 3: HSBC Life overview
HSBC Life overview Overview FY22 selected financial information (IFRS 4) HSBC manufactures life and health insurance products in 10 markets1 $17.7bn Manufacturing Embedded Value $1.3bn Key manufacturing markets are Hong Kong, mainland China, Singapore, India1, the Manufacturing VNB UK and Mexico $60
Slide 4: HSBC Life – an integrated business model
HSBC Life – an integrated business model Key customer needs Serving customers across retail and private bank, SMEs and corporates Borrow More effective integration across customer journeys, propositions, loyalty Transact Investments and rewards mechanisms, data analytics and customer engagement Cust
Slide 5: Focused on growing value
Focused on growing value Growth ambition focus Driving value creation for shareholders4 Market growth – Hong Kong (#1 life insurer3), mainland China, Embedded value increased from $15.4bn to $17.7bn (2020-2022) India, Singapore, the UK and Mexico VNB CAGR of 31% (2020-2022); $3.2bn cumulative
Slide 6: IFRS 17 update
IFRS 17 update Alistair Chamberlain CFO, Global Wealth and Insurance
Slide 7: Executive summary
Executive summary 1 IFRS 17 does not change the economics of the insurance business and decreases the volatility of Group RoTE No expected impact on: 2 Regulatory capital of the Group and Insurance Lifetime expected profit of insurance contracts Insurance business solvency Cash and dividend
Slide 8: IFRS 4 vs. IFRS 17 accounting changes
IFRS 17 vs. IFRS 4 accounting changes Accounting changes No impact on recognised profit over time7 HSBC adopted IFRS 17 from 1 January 2023 Equity at transition impacted by: Elimination of PVIF intangible and related deferred tax liability Establishing a Contractual Service Margin (‘CSM’) liab
Slide 9: Key IFRS 17 concepts
Key IFRS 17 concepts The building block approach IFRS 17 insurance contract measurement variations8 % value of Income statement impact Product types Estimated future cashflows discounted using contracts risk-free rate + illiquidity premium Share of investment experience Unit-linked / assumption ch
Slide 10: Expected impacts on Group and Insurance manufacturing total equity and tangible equity on transition
Expected impacts5 on Group and Insurance manufacturing total equity and tangible equity on transition IFRS 4 to IFRS 17 equity walk at 1 Jan 2022 Changes to Group equity on transition Total equity Tangible equity PVIF eliminated from the balance sheet $bn Insurance Group Insurance Group c.$60bn
Slide 11: Key business performance measures for insurance manufacturing
Key business performance measures for insurance manufacturing Under IFRS 17, VNB will no longer form part of the insurance Business performance, decision making and reporting will include manufacturing operations’ IFRS results VNB and NB CSM as key long-term value creation metrics 1H22 NB CSM to
Slide 12: 1H22 expected impacts on insurance manufacturing profit before tax
1H22 expected impacts5 on insurance manufacturing profit before tax 1H22 IFRS 4 to IFRS 17 adjusted PBT walk*, $bn IFRS 17 insurance manufacturing PBT movement drivers Insurance manufacturing PBT 1H22 Revenue will be mainly driven by the unwind of the CSM of the in-force IFRS 4 PBT 0.6 business, a
Slide 13: Insurance capital and cash
Insurance capital and cash No material impact expected on HSBC Group’s CET1 ratio and Insurance dividend and capital injection Insurance’s regulatory capital on transition trend, $m 627 376 Bank regulatory capital treatment does not change under IFRS 17: 401 For capital purposes HSBC Insurance ent
Slide 14: 1H22 expected IFRS 17 impacts on HSBC Group
1H22 expected IFRS 17 impacts5 on HSBC Group 1H22 Group adjusted income statement* at reported FX rates, $bn Key changes Net IFRS 17 impact NII down $1.1bn, due to reclassification of assets IFRS 4 IFRS 17 backing policyholder liabilities Net interest income 14.5 (1.1) 13.4 Under IFRS 4, this po
Slide 15: Summary
Summary 1 No change to the economics of the insurance business 2 Insurance is an integral part of our Wealth offering and in the context of the Group’s Asia growth ambitions 3 1Q23 Group results will be presented on an IFRS 17 basis, including IFRS 17 comparatives for 4Q22 and 1Q22 4 We plan to issu
Slide 16: Impact on Group financial targets and guidance
Impact on Group financial targets and guidance Estimated impact5 of IFRS 17 on key Group targets FY22 guidance and guidance FY23 NII ≥$36bn; intend to update target for 2023 Group and insurance NII estimated to reduce Revenue Net interest income IFRS 17 at or before 1Q23 by c.$2.3bn Approximat
Slide 17: Appendix
Appendix
Slide 18: IFRS 4 vs. IFRS 17 – Key differences
IFRS 4 vs. IFRS 17 – Key differences IFRS 4 IFRS 17 Profit emergence / CSM will be reported as liability on Day 1 and recognised in VNB is reported as revenue on Day 1 recognition revenue as services are provided (i.e. no Day 1 profit) CSM is calculated based on market consistent assumptions a
Slide 19: CSM breakdown at transition
CSM breakdown at transition IFRS 17 transition approaches CSM on transition Full Retrospective Approach (FRA) The $10.0bn opening CSM represents the estimated future profit of the in-force business at transition and is unwound through the P&L Default IFRS 17 requirement unless impracticable over
Slide 20: Expected changes to insurance manufacturing operations balance sheet
Expected changes5 to insurance manufacturing operations balance sheet Insurance manufacturing operations transition balance sheet, $bn 31 Dec 2021 1 Jan 2022 Expected changes to balance sheet on transition IFRS 4 IFRS 17 Financial assets 127.7 131.9 On transition, PVIF intangible asset and related
Slide 21: Impact on WPB disclosure presentation
Impact on WPB disclosure presentation 1H22 management view of adjusted revenue*,5, $bn IFRS 4 IFRS 17 WPB disclosures will be enhanced to include total Life Insurance, versus Wealth 4.1 3.5 the current insurance manufacturing-only view Investment distribution 1.6 1.3 WPB business segment disclos
Slide 22: Glossary
Glossary ANP Annualised new business premiums NB CSM New business contractual service margin CAGR Compound annual growth rate NII Net interest income CET1 Common equity tier 1 PAOS Profit attributable to ordinary shareholders of the parent company CMB Commercial Banking, a global business PBT Profit
Slide 23: Footnotes
Footnotes 1. Includes our presence in India through our 26% shareholding in Canara HSBC Life Insurance Company Limited 2. Dividends paid by insurance entities to their immediate parent companies 3. Hong Kong Insurance Authority Statistics. Market shares and ranking based on ANP, HSBC Life Hong Kong
Slide 24: Disclaimer
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 an offer to sell or sol