HSBC Holdings PLC · LSE:HSBA
HSBC — Debt Investor Presentation (February 2018)
35 slides from HSBC's debt investor presentation, February 2018
Slide 1: HSBC Holdings plc Annual Results 2017 Fixed Income Investor Presentation
HSBC Holdings plc Annual Results 2017 Fixed Income Investor Presentation
Slide 2: Contents
Contents 1 HSBC Key Credit Messages 2 2 HSBC Group 2017 Performance 4 3 HSBC’s Capital Structure and Debt Issuance 14 4 Appendix 21 1
Slide 3: HSBC Key Credit Messages
HSBC Key Credit Messages ep Hssc
Slide 4: HSBC Key Credit Messages
HSBC Key Credit Messages Diversified businesses, capital strength, robust funding and liquidity As at FY 2017 Conservative approach to risk management 19bps LICs as a % of average 1.6% Impaired loans as a % of gross customer advances gross customer advances Other GB&M RBWM Europe Trading Asia Divers
Slide 5: HSBC Group 2017 Performance
HSBC Group 2017 Performance 4
Slide 6: Our highlights
Our highlights ‒ Reported PBT of $2.3bn was $5.7bn higher than 4Q16 2017 Full Year ‒ Adjusted PBT of $3.6bn up $0.8bn vs. 4Q16: highlights ‒ Revenue of $12.4bn up $1.1bn or 10% ‒ RBWM up $366m or 8% primarily from increased deposit revenue; excluding favourable market impacts in insurance manufactur
Slide 7: 2017 Profit before tax
2017 Profit before tax Revenue growth in our three main global businesses 2017 ∆ 2016 Adjusted revenue by global business, $m adverse favourable +9% Revenue $51,524m 2,234 5% 20,287 Jaws3 18,542 LICs $(1,769)m 825 32% +3% 1.0% +5% 14,715 15,091 Operating $(31,140)m (1,056) (4)% 13,223 -3% expenses 1
Slide 8: 4Q17 Profit before tax
4Q17 Profit before tax Higher adjusted PBT from increased revenue, partly offset by increased LICs and higher costs 4Q17 vs. 4Q16 Adjusted PBT by item Adjusted PBT by global business, $m 4Q16 4Q17 ∆ 4Q16 ∆% 4Q17 ∆ 4Q16 adverse favourable RBWM 1,162 1,420 258 22% CMB 1,431 1,694 263 18% Revenue $12,4
Slide 9: Revenue performance
Revenue performance 4Q17 revenue up vs. 4Q16 in RBWM and CMB partly offset by subdued trading conditions in GB&M Revenue performance, $m5 +3% Global 12,887 12,817 12,846 businesses 11,807 12,058 12,307 11,940 426 438 436 12,340 450 439 420 466 412 4,037 4,023 3,890 3,390 3,742 3,799 3,713 3,646 GPB
Slide 10: Loan impairment charges
Loan impairment charges Loan impairment charges by global business Credit environment remains stable 4Q16 3Q17 4Q17 ∆ 4Q16 ∆ 3Q17 Group, $m 470 440 658 188 218 − 4Q17 LICs are $218m higher than 3Q17, largely driven by two individual corporate exposures in Europe. Excluding these, LICs were as a % of
Slide 11: Operating expenses
Operating expenses Delivered positive jaws for 2017 while continuing to invest in growth 4Q17 vs. 4Q16 excluding UK bank levy, $bn 0.1 − FY positive jaws of 1.0% for the Group; all four global businesses delivered FY positive 0.3 (0.6) 0.4 0.4 jaws 0.1 − $0.3bn investment for growth in 4Q17 mainly 7
Slide 12: Capital adequacy
Capital adequacy Strong capital base: Common Equity Tier 1 ratio of 14.5% Regulatory capital and RWAs, $bn: CET1 ratio movement, %: 3Q17 4Q17 0.2 Common equity tier 1 capital 129.8 126.1 14.6 (0.5) 0.1 (0.1) 14.5 Total regulatory capital 186.4 182.4 Risk-weighted assets 888.6 871.3 0.3 (0.1) 4Q17 CE
Slide 13: Balance sheet: Customer lending
Balance sheet Customer lending 4Q17 Loans and advances to customers8, $bn Growth since 4Q16 Growth since 3Q17 Balances increased by $13bn vs. 3Q17. Excluding CML and red-inked balances, lending increased by $12bn or 1%: RBWM $346.1bn 22 7% 7 2% - Growth in term lending in Asia - $1.5bn or 2% growth
Slide 14: Balance sheet: Customer accounts
Balance sheet Customer accounts 4Q17 Customer accounts8, $bn Customer accounts10, US$bn Excluding red-inked balances, customer accounts increased by $20bn vs. 3Q17 and $36bn vs. 4Q16 notably in the UK and Hong Kong 6% CAGR (Demand deposits) 1,025 1,000 663 1,364 1,329 1,335 1,344 1,314 1,317 1,288 1
Slide 15: HSBC's Capital Structure and Debt Issuance
HSBC’s Capital Structure and Debt Issuance 14
Slide 16: Group CET1 requirements
Group CET1 requirements Strong capital position versus requirements Common Equity Tier 1 ratio, versus Maximum Distributable Amount (“MDA”) Buffer to $46bn $25bn MDA11 5.3% 2.9% 11.6% 0.6% − 14.5% CET1 ratio, up 90bps 2.0% from 31 Dec 2016 9.2% CET1 0.2% buffers of 1.3% 5.1% − $9.7bn of profit attri
Slide 17: Total capital and estimated MREL requirements
Total capital and estimated MREL requirements HSBC well positioned to meet requirements Capital structure versus regulatory requirements as a % of RWAs 23.3% 23.1% − HSBC meets its estimated 2019 MREL requirements 13,14 5.0% − HSBC group MREL requirement for 2022 is the 6.5% greater of: − 18% of RWA
Slide 18: Issuance strategy and plan
Issuance strategy and plan Issuance plans broadly consistent with prior year Issuance Strategy − HSBC Holdings is the Group’s principal issuing entity for AT1, T2 and Senior MREL − MREL debt will be downstreamed, where appropriate, in a form compliant with local regulations − Issuance over time to b
Slide 19: Redemption profile
Redemption profile Planned maturities to minimise refinance risk Contractual maturity profile, $bn As at 31 Dec 2017 18.9 15.1 14.4 7.5 13.6 4.6 11.9 1.2 8.2 10.0 12.4 8.0 7.9 8.6 6.1 2.1 1.4 0.9 2.0 2.1 2.0 2.5 1.5 1.2 2018 2019 2020 2021 2022 2023 Other term senior (HSBC Group)16 Senior MREL (HSBC
Slide 20: Establishing the UK Ring-Fenced Bank
Establishing the UK Ring-Fenced Bank HSBC Bank plc to remain issuer of its debt issuance programmes and outstanding securities Illustrative future structure Holding company Operating entities HSBC Holdings plc New entities already in existence HSBC UK Holdings Limited Our ring-fenced bank Our non ri
Slide 21: Establishing the UK Ring-Fenced Bank
Establishing the UK Ring-Fenced Bank HSBC UK Bank plc – illustrative disclosures as at 31 December 201717 Balance Sheet, £bn RWA composition19, % RBWM 3% 233 233 1% CMB Other liabilities 25% Other assets 12 9 GPB Corporate Centre Liquid assets 18 59 £82bn 71% Customer accounts 204 Milestones complet
Slide 22: Appendix
Appendix
Slide 23: Achieved eight out of ten strategic actions
Appendix Achieved eight out of ten of the actions we set out at our 2015 Investor Update Strategic actions Targeted outcome by 2017 Outcomes Status Actions to re-size and simplify Reduce Group RWAs by c.$290bn ‒ Group RWA reduction: $290bn ‒ RWA: $338bn gross reduction through management actions (>1
Slide 24: Credit quality remains robust
Appendix Credit quality remains robust reflecting the Group’s conservative approach to risk management Gross loans and advances to Loans and advances to customers Impaired loans and advances to Loan impairment charges and other customers - $970bn of ‘Strong’ or ‘Good’ credit customers, $bn credit ri
Slide 25: UK credit quality
Appendix UK credit quality Total UK21 gross customer advances - RBWM residential mortgages22, £bn RBWM unsecured lending23, £bn Commercial real estate, £bn £220bn 78.9 79.7 80.7 81.8 83.8 85.6 Of which £85.6bn relates Commercial Wholesale to RBWM Other UK Wholesale real estate £103bn £14bn lending,
Slide 26: Mainland China drawn risk exposure
Appendix Mainland China drawn risk exposure24 Total China drawn risk exposure of ‒ Total China drawn risk exposure of $160bn of which 58% of wholesale is onshore. $160bn ‒ Wholesale: $150bn; Retail: $10bn Wholesale - $150bn ‒ Gross loans and advances to customers of c$41bn in Mainland China (by coun
Slide 27: Legal proceedings and regulatory matters
Appendix Legal proceedings and regulatory matters This slide should be read in conjunction with Note 26 and Note 34 of the HSBC Holdings plc Annual Report and Accounts 2017. Provisions relating to legal proceedings and regulatory matters, $m Commentary on selected items25 Anti-money In December 20
Slide 28: HSBC's SDG Bond & Framework
Appendix HSBC’s SDG Bond & Framework Background In September 2015, the UN General Assembly formally established the 17 Sustainable Development Goals (SDGs) to be addressed by 2030. They give a framework to end poverty and reverse human impacts for a more sustainable planet by 2050. The SDGs call for
Slide 29: Current credit ratings for key entities
Appendix Current credit ratings for key entities Long term senior ratings as at 19 Feb 2018 Fitch Moody’s S&P Rating Outlook Rating Outlook Rating Outlook HSBC Holdings plc AA- Stable A2 Negative A Stable The Hongkong and Shanghai Banking Corporation Ltd AA- Stable Aa3 Stable AA- Stable HSBC Bank pl
Slide 30: Simplified structure chart - principal entities
Appendix Simplified structure chart - principal entities Holding company HSBC Intermediate holding company Holdings Operating company plc Associate UK 99% HSBC HSBC The Hongkong HSBC HSBC HSBC Private HSBC HSBC & Shanghai 95% HSBC North Bank (China) Bank Bank Banking Mexico Bank Banking Bank America
Slide 31: Glossary
Appendix Glossary AUM Assets under management LICs Loan Impairment charges and other credit risk provisions AMG Asset Management Group MENA Middle East and North Africa BSM Balance Sheet Management MREL Minimum requirement for own funds and eligible liabilities CET1 Common Equity Tier 1 NAV Net Asse
Slide 32: Footnotes
Appendix Footnotes 1. The 2018 issuance plan is guidance only; it is a point in time assessment and is subject to change 2. Unless otherwise stated, risk-weighted assets and capital are calculated and presented on a transitional CRD IV basis as implemented in the UK by the Prudential Regulation Auth
Slide 33: Footnotes
Appendix Footnotes 17. The purpose of this disclosure is to provide an estimate of the likely financial position of the RFB following legal separation, based on assets and liabilities held in HSBC Bank plc as at 31 December 2017. The estimated assets and liabilities of HSBC UK have been prepared for
Slide 34: Important notice and forward-looking statements
Appendix 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 purcha
Slide 35: Issued by HSBC Holdings plc Group Investor Relations
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. 34 www.hsbc.com Photography: Getty Images
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