Hsbc Holdings Plc · LSE:HSBA
Hsbc — HSBC SFH (France) — Debt Investor Presentation (September 2018)
46 slides from Hsbc's debt investor presentation, September 2018
Slide 1: HSBC SFH (France) Investor Presentation – September 2018
HSBC SFH (France) Investor Presentation – September 2018 1
Slide 2: Content
Content 1 HSBC SFH (France) key messages 2 2 HSBC Group 1H18 performance 4 3 HSBC France key facts 12 4 French home loan market 20 5 HSBC SFH (France) 25 6 Appendix 38 2
Slide 3: HSBC SFH (France) key messages
HSBC SFH (France) key messages 3
Slide 4: HSBC SFH (France) key messages
Issuer Cover pool • Specialised credit institution licensed as a • 100% prime home loans, all fixed-rate, HSBC France Société de Financement de l'Habitat 100% with first-lien mortgage (16%) or Prime Home Loans • Fully-owned by HSBC France guaranteed by Crédit Logement (84%)1 18 • Jointly regulated b
Slide 5: HSBC Group 1H18 performance
HSBC Group 1H18 performance 5
Slide 6: Key messages
HSBC Group Key messages 2Q18 key messages 1st half 2018 Reported PBT (1H17: $10.2bn) 1 Reported PBT of $6.0bn, 13% higher than 2Q17; $6.1bn adjusted PBT, in line with 2Q17 $10.7bn 5% Adjusted PBT (1H17: $12.4bn) Total adjusted revenue increased $0.2bn to $13.7bn vs. 2Q17; good business momentum with
Slide 7: 1H18 Profit before tax
HSBC Group - Financial overview 1H18 Profit before tax 1H18 ∆ 1H17 Adjusted revenue by global business, $m adverse favourable +8% Revenue $27,535m 578 2% 11,065 10,283 +1% LICs / ECL $(407)m 250 38% +12% 8,192 8,265 7,439 Operating (1 175) (8)% +6% $(16,370)m 6,622 >(100)% expenses 874 929 986 Share
Slide 8: Credit outlook remains stable
HSBC Group - Loan impairment charges and expected credit losses Credit outlook remains stable Loan impairment charges and expected credit losses, $m Analysis by stage as at 30 Jun 2018 Stage 3 as IAS 39 IFRS 9 $bn Stage 1 Stage 2 Stage 3 Total5 a % of Total 2Q17 1Q18 2Q18 30 Jun 2018 Loans and advan
Slide 9: Group CET1 requirements
HSBC Group - Capital Structure and Debt Issuance Group CET1 requirements Common Equity Tier 1 ratio, versus Maximum Distributable Amount (“MDA”) Buffer to $22bn MDA6 2.5% 11.7% 0.7% 14.2% CET1 ratio, down 40bps from 1 Jan 2018 (after the IFRS9 2.0% transitional day 1 impact) Combined buffer of 5.2
Slide 10: Total capital and estimated MREL requirements
HSBC Group - Capital Structure and Debt Issuance Total capital and estimated MREL requirements8 Regulatory capital and MREL-eligible HoldCo Senior versus regulatory requirements as a % of RWAs AT1 and Senior MREL increased in 1H18 due to 23.2% planned issuance 6.1% Tier 2 increased due to the ch
Slide 11: Customer lending
HSBC Group - Balance sheet Customer lending 2Q18 Loans and advances to customers11 2Q18 growth by global business and region excluding red-inked and CML balances Balances increased by $26bn from 1Q18, reflecting: Continued lending growth in Asia ($16bn) primarily in Hong Kong in term lending in li
Slide 12: Customer accounts
HSBC Group - Balance sheet Customer accounts 2Q18 Customer accounts11, $bn Customer accounts13, US$bn Balances increased $21bn in 2Q18: Growth in Europe of $9bn, all in the UK from higher GLCM deposits 6% CAGR (Demand Growth in Asia of $11bn mainly from Hong Kong ($6bn or 1%) largely from term d
Slide 13: HSBC France key facts
HSBC France key facts ep Hssc
Slide 14: HSBC Group Legal Structure – Principal entities as of 1 July 2018
HSBC France HSBC Group Legal Structure – Principal entities as of 1st July 2018 14
Slide 15: HSBC France – A key priority market for the Group
HSBC France HSBC France – A key priority market for the Group France France is the 5th largest global economy based on GDP14 and a key member of the eurozone. It also is the 5th largest trade nation15 and it has a wealthy population, ranking 3rd in wealth per adult among large countries16. HSBC in F
Slide 16: Capital structure
HSBC France Capital structure HSBC France has enhanced its capital structure in 2017 and 2018 to support its business planning and strategic initiatives. Capital and loss-absorbing instruments 24.0% HSBC France’s capital position as at 30 June 23.3% 2018: − CET1 ratio of 12.2% 19.5% 7.9% 7.9% − To
Slide 17: Liquidity and Funding
HSBC France Liquidity and Funding Advances Advances / DepositsRatio / Deposits Ratio(ADR) (ADR) Liquidity Coverage Ratio (LCR) Net Stable Funding Ratio (NSFR) LCR requirement 117% 121% 117% 169% 120% 116% 115% 112% 149% 127% 122% 100% 80% 70% 60% 2015 2016 2017 1H18 2015 2016 2017 1H18 2016 2017 1H1
Slide 18: Asset structure and quality
HSBC France Asset structure and quality Gross loans and advances to customers, €bn Impaired loans as a % of gross loans and LICs as a % of total gross loans and advances to customers advances to customers Impairment ratio18 IAS 39 IFRS 9 IAS 39 IFRS 9 45.4 45.3 0.31% (Impaired) (Stage 3) (LICs) (ECL
Slide 19: 1H18 HSBC France results
HSBC France 1H18 HSBC France results20 HSBC Global businesses and Corporate Centre France Corporate €m RBWM CMB GB&M GPB HSBC France Centre Revenue 406 259 218 27 (10) 900 ECL (3) (12) (3) 1 2 (15) Operating expenses (409) (185) (211) (23) (26) (854) Profit before tax (6) 62 4 5 (34) 31 €bn Reported
Slide 20: External credit ratings
HSBC France External credit ratings Long term senior ratings as at 30 June 18 Fitch Moody’s S&P Rating Outlook Rating Outlook Rating Outlook HSBC Holdings plc AA- Stable A2 Stable A Stable HSBC Bank plc AA- Stable Aa3 Stable AA- Stable HSBC France AA- Stable Aa3 Stable AA- Stable HSBC SFH (France) A
Slide 21: French home loan market
French home loan market ep Hssc 21
Slide 22: French home loans market
French market French home loans market Typical loan characteristics French market – home loan security type23 Fixed rate for the entire length of the home loan Fully amortising, not “re-advanceable” 29% Mortgage24 34% 35% 35% 34% 32% 30% Underwriting criteria primarily based on the creditworth
Slide 23: French home loans market
French market French home loans market Market dynamics (2017) 23 Production and outstanding balance of home loans (EUR bn)26 In a context of sustained low borrowing rates, the housing has been Renegociations Production Outstanding very dynamic in 2017 in terms of volumes and prices. In a context 1
Slide 24: French home loans market
French market French home loans market Guarantees as a distinctive characteristic of the French home loan market Home loans which are secured by a guarantee provided either by a selected financial institution or a selected insurance company represent the majority of the French home loan market (59
Slide 25: French home loans market
French market French home loans market Crédit Logement is a major partner in the Crédit Logement is a fully regulated french home loan guarantee market financial institution with a strong balance sheet28 2.0% 2x 39% 55% Minimum capital ratio Coverage of the required by the French guaranteed portfoli
Slide 26: HSBC SFH (France)
HSBC SFH (France) ep Hssc
Slide 27: Legal features and structure - Protecting Investors
HSBC SFH Legal features and structure - Protecting Investors Dedicated issuing entity with a limited business purpose HSBC France – Specialised credit institution licensed as a Société de Financement de l'Habitat, Borrower with a purpose limited by the law to the sole refinancing of eligible asset
Slide 28: HSBC France SFH legal framework
HSBC SFH HSBC France SFH legal framework Key provisions of SFH law – Requirement to cover all liquidity needs for the next 180 day period on an ongoing basis – Minimum 5% legal over-collateralisation of the cover assets – Possibility for the issuers to use up to 10% of outstanding issued covered b
Slide 29: Programme features – Asset Cover Test
HSBC SFH Programme features – Asset Cover Test The Asset Cover Test (ACT)31 is designed to ensure that the collateral constituted by home loans, cash and other collateral is able to meet the future cash flows (interest and principal) on the covered bonds (performed monthly by the calculation agent)
Slide 30: Programme features – Amortisation Test
HSBC SFH Programme features – Amortisation Test The Amortisation Test31 32 is designed to ensure that the Issuer has the capacity to meet its commitments following the enforcement of the Borrower Event of Default. Compliance with the Amortisation Test requires compliance with the Amortisation Ratio
Slide 31: Programme features – Structural highlights
HSBC SFH Programme features – Structural highlights Pre-maturity Test Pre-Maturity test Designed to ensure that the Borrower can provide sufficient liquidity in case of a downgrade If, 180 days before the maturity of any series of hard bullet Covered Bonds, the Borrower’s rating is below A (long
Slide 32: Programme features – Key events
HSBC SFH Programme features – Key events Borrower Event of Default The occurrence of any of the following events will constitute a Borrower Event of Default – Default in the payment of principal or interest on any Borrower Facility not remedied within 3 business days after the due date – Breach of
Slide 33: Programme features – Key events
HSBC SFH Programme features – Key events Issuer Event of Default The occurrence of any of the following events will constitute an Issuer Event of Default – Breach of Amortisation Test – Default in the payment of principal or interest on any Covered Bond not remedied within 5 business days after th
Slide 34: Programme features – Key events
HSBC SFH Programme features – Key events No further issuance The Issuer undertakes not to issue any new Covered Bonds under the Programme – As from the date a Borrower Enforcement Notice has been served – As from the date an Issuer Enforcement Notice has been served – For so long as Non-Compliance
Slide 35: Programme features – Cash flow priorities
HSBC SFH Programme features – Cash flow priorities Pre-Enforcement Priority Controlled Post-Enforcement Accelerated Post-Enforcement Payment Order Priority Payment Order Priority Payment Order An Issuer Event of Default will result in an In the event of service by the Issuer to the Prior to any enfo
Slide 36: Cover Pool – high quality and diversified collateral
HSBC SFH Cover Pool – Cash flow priorities high quality and diversified collateral Main cover pool metrics1 Regional distribution1 33 Loan security1 11.5% Greater Paris 15.6% Crédit Logement Pool notional EUR 5.9bn North East Mortgage 22.2% North West 52.8% South East 100% prime home Collateral Sout
Slide 37: Funding Strategy
HSBC SFH Funding Strategy Rationale for covered bonds issuance HSBC SFH year end covered bonds balances34 EUR bn, as at 30 June 2018 EUR Fund asset growth and refinance maturing debt 4.5 CHF Manage HSBC France’s consolidated liability maturity profile 4.3 4.3 Diversify investor base 3.3 3.3
Slide 38: Legal entity governance – Strong internal supervision and risk management
HSBC SFH Legal entity governance – Strong internal supervision and risk management Specific governance dedicated to SFH Board and sub-committees of the board – set risk appetite Quarterly Every 6 Months Monthly Weekly – review evolution of the structure Audit Sub- against these limits Committee
Slide 39: Appendix
Appendix 39
Slide 40: Home loan eligibility criteria
Home loan eligibility criteria35 a. All lending criteria and conditions precedent as applied by the originator of the Home Loan pursuant to its customary lending procedures were satisfied b. The purpose of the Home Loan is either to buy, to renovate, to build or to refinance a residential real estat
Slide 41: Glossary
Glossary CET1 Common Equity Tier 1 OH Obligations de Financement de l’Habitat CMB Commercial Banking, a global business PBT Profit before tax CML Consumer Mortgage Lending portfolio PRD Pearl River Delta FMFC French Monetary and Financial Code RBWM Retail Banking and Wealth Management, a global busi
Slide 42: Footnotes
Footnotes 1. HSBC SFH Investor Report, Selection on 30 June 2018 2. HSBC SFH (France) believes that, at the time of its issuance and based on transparency data made publicly available by HSBC SFH (France), these covered bonds would satisfy the eligibility criteria for Article 129(7) of the Capital R
Slide 43: Footnotes
Footnotes 14. Source: IMF (June 2018) 15. Source: Global Insights (Import + Export 2016) 16. Source: Wealth per adult among Top 10 GDPs (Credit Suisse Global Wealth Databook 2017) 17. TLTRO: Targeted long-term refinancing operations 18. Impairment ratio is calculated as Impairment allowances / Total
Slide 44: Key Contacts and further information
Key Contacts and further information HSBC France HSBC SFH (France) Laurence Rogier Guillaume Makowski Chief Financial Officer Chief Executive Officer laurence.rogier@hsbc.fr guillaume.makowski@hsbc.fr +33 1 40 70 30 17 +33 1 58 13 03 76 HSBC Holdings plc Websites for Investor Relations and HTT Greg
Slide 45: Important notice and forward-looking statements
Important notice and forward-looking statements Important notice The information, statements and opinions set out in this presentation and subsequent discussion do not constitute a public offer for the purposes of any applicable law or an offer to sell or solicitation of any offer to purchase any se
Slide 46: Issued by HSBC Holdings plc
Issued by HSBC Holdings plc Group Investor Relations 8 Canada Square London E14 5HQ Cover image: Guangzhou is located at the heart of China’s Pearl River Delta, one of the United Kingdom country’s fastest growing economic regions. 46 www.hsbc.com Photography: Getty Images
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