Hsbc Holdings Plc · LSE:HSBA
Hsbc — HSBC Finance — Q2 2005 Earnings Presentation
23 slides from Hsbc's earnings presentation, Aug 1, 2005
Slide 1: HSBC Finance Corporation Form 8-K
UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 Form 8-K Pursuant to Section 13 or 15(d) of The Securities Exchange Act of 1934 Date of Report: August 1, 2005 Commission Ñle number 1-8198 HSBC FINANCE CORPORATION (Exact name of registrant as speciÑed in its charter) Delaware
Slide 2: Item 7.01 Regulation FD Disclosure
Item 7.01. Regulation FD Disclosure Financial supplement pertaining to the Ñnancial results of HSBC Finance Corporation for the quarter and six months ended June 30, 2005. The information included in the Ñnancial supplement is presented on a management basis and an International Financial Reporting
Slide 3: Signature
Signature Pursuant to the requirement 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 Patrick D. Schwartz Vice President-Deputy
Slide 4: Supplement to the Form 10-Q for period ended June 30, 2005
August , 2005 HSBC Fin an ce Cor poration S upplement t o the For m 10 -Q for t he period ended J une 30, 200 5
Slide 5: International Financial Reporting Standards (IFRS)
Internati onal Financial Repor ting St an dar ds ("IFRS ") Pri or to J anuary 1, 2005, HSBC Holdin gs pl c ( "HSBC") report ed resul ts o n a U.K. GAAP bas is . The E uropean Unio n has deter mined that all Eur opean list ed co mpanies wi ll be requi red to pr epar e their cons olid at ed financial
Slide 6: Management Basis - continued
Management Bas is - con tinued als o review oper at ing res ults and make decis ions ab out allocating r esour ces s uch as emp loyees on a m anagement basis . When repor ting on a manag em en t basis , net in terest margin, fee income and the pr ovis ion for credit l oss es i s adjus ted to i nclud
Slide 7: June 30, 2005 Highlights - IFRS Management Basis
June 30, 2 005 Highli ghts - IFRS M anagement Basi s Net I ncome growt h - 7% H1 05 over H1 04 S trong recei vables gr owth J une 05 over June 04 o f 17% Real E s tate Secured gr owth of 2 6% Auto Finance growt h of 16% Cards growth of 10% Pers onal non - cr edit card gr owth of 9% E xpens es H1 05
Slide 8: June 30, 2005 Highlights - Management Basis
June 30, 2 005 Highli ghts - Management Bas is NI M co mpres sio n consis tent wi th the curr ent market envi ronment Yield has s tabili zed agains t f irs t half of las t year NI M s table Q2 05 com pared to Q1 05 RAR ( Ri sk Adj usted Revenue) i s es senti al ly flat due to the off sett ing aff ec
Slide 9: HSBC Finance Corporation IFRS Management Basis
Net Interes t I nco me Other Revenues T otal Revenues Provi sion for Loan L oss es Oper ating E xpens es Pr e -tax Income T axes Net I ncome - Management Bas is E ff iciency Rat io HSBC Finance Corpo ration I FRS M anagement Basis (A N on-GAAP M eas ure) (M illio ns $) IF RS H1 05 (1 ) E xcl uding i
Slide 10: Key Ratios - Management Basis
Key Ratio s - Management Bas is Q2 04 Q3 04 Q4 04 Q1 05 Q2 05 NI M 0 .0816 0.0775 0 .0757 0.0713 0.071 RAR 0.066 0.064 0 .0652 0.0671 0.0651 ROM A 0.0106 0.008 4 0.0074 0.01 32 0.0114 Ris k Adjus ted M argin 4. 07 4.6 4.35 4.3 4 4.03 (1 ) E xcl udes im pact of ini tial FF IE C im plementation. ( 2)
Slide 11: Credit Quality - Management Basis
Cr edit Quality - Management Bas is Q2 04 Q3 04 Q4 04 Q1 05 Q2 05 Charge -Offs 0.0442 0.0423 0.0384 0.0356 0.0325 RAR 0.06 6 0.064 0.0652 0.0671 0.065 1 2+ Delinq uen cy 0.0454 0.0444 0.0395 0.0368 0.0359 Ris k Adjus ted M argin 4.0 7 4.6 4.35 4.34 4.03 (1) Q4 04 excludes impact of initial F FI EC i
Slide 12: Net Interest Income - Management Basis
Net Interes t I nco me - Management Bas is I nteres t Incom e I nteres t E xpense Net I nteres t Income Q2 0 5 $4,004 1,34 4 $2,660 Q1 05 $3,902 1,299 $2,603 Q2 04 $ 3,486 856 $2,6 30 (M illio ns $) Net Int er est I ncome Yield Cos t of Funds NIM Q2 05 10 .7% 3.6 7 .1% Q1 05 10.7% 3.6 7.1% Q2 04 10.
Slide 13: IFRS Management Basis Receivables
HSBC F inance Co rpor at ion - IFRS M anagement Basi s Receivables ( M illions $) (1) M as terCard is a regis tered t rademark of M as terCard Intern at ional, Incor porated and Vi sa is a regis tered tr ademark of VISA USA, Inc.
Slide 14: Retail Branch Channel and Correspondent/Wholesale Mortgage
Retail Br anch Channel Cont inued recor d producti on of s ub -prime mo rtgages new volume yields lower than port folio yields due to mix s hif t to lower LT V Near pri me mort gag e p roduction co ntinues to grow 7% of managed loan acco unt leverages fixed cos t br an ch infr as tr ucture led to s
Slide 15: Retail Branch Channel (HFC/Beneficial) Key Actions
Retail Br anch Channel (HFC/Beneficial) Expand junior lien produ ct ion pro duction incr eas ed 27% over Q1 05 I ncrease uns ecured lo ans thr ough mor e fr equ ent mailings and incr eas ed lines selectiv el y Increas e usage of ris k -bas ed pr icing enhanced regional m ar ket pri ci ng segm en tat
Slide 16: Cards and Auto Key Actions
Car ds Conti nue focus on non -prime card s ectors Focus on in cr emental fee oppor tunit ies, inclu ding fee -focus ed products Continue f ocus on ris k -bas ed pr icing and line management "HS BC" branded pr ime por tfoli o delivered s tro ng growt h Key Actions to Aff ect NIM , RAR, Receivable M
Slide 17: Appendix
HSBC €&> APPENDIX
Slide 18: Reconciliations to GAAP Financial Measures: Return on Average Assets
Reconciliations to GAAP Financial Measures Three Months Ended June 30, 2005 March 31, 2005 June 30, 2004 (Dollars are in millions) Return on Average Assets: Net income: Owned basis ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ $ 472 $ 626 $ 433 Management basis adjustmentsÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 38 80 24 Man
Slide 19: Reconciliations: Managed Basis Risk Adjusted Revenue
Reconciliations to GAAP Financial Measures Three Months Ended June 30, 2005 March 31, 2005 June 30, 2004 (Dollars are in millions) Managed Basis Risk Adjusted Revenue: Net interest income ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ $ 2,284 $ 2,220 $ 2,582 Other revenues, excluding securitization revenue and d
Slide 20: Reconciliations: Consumer Net Charge-off Ratio
Reconciliations to GAAP Financial Measures Three Months Ended June 30, 2005 March 31, 2005 June 30, 2004 (Dollars are in millions) Consumer Net Charge-oÅ Ratio: Consumer net charge-oÅs: Owned basis ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ $ 844 $ 856 $ 966 Management basis adjustmentsÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Slide 21: Reconciliation: Net Interest Income
Reconciliation to GAAP Financial Measures Net Interest Income Three Months Ended 6/30/05 Three Months Ended 3/31/05 Three Months Ended 6/30/04 Management Management Management Owned Basis Management Owned Basis Management Owned Basis Management ($ millions) Basis Adjustments Basis Basis Adjustments
Slide 22: Reconciliation: Receivables
Reconciliation to GAAP Financial Measures Receivables As at June 30, 2005 As at December 31, 2004 As at June 30, 2004 IFRS IFRS IFRS Management IFRS Management IFRS Management IFRS Owned Basis Management Owned Basis Management Owned Basis Management Basis Adjustments Basis Basis Adjustments Basis Ba
Slide 23: Reconciliation: Income Statement
Reconciliation to GAAP Financial Measures Income Statement IFRS Management Basis Six Months Ended 6/30/05 Six Months Ended 12/31/04 Six Months Ended 6/30/04 IFRS IFRS IFRS Management IFRS Management IFRS Management IFRS Owned Basis Management Owned Basis Management Owned Basis Management Basis Adjus