Hsbc Holdings Plc · LSE:HSBA
Hsbc — Q2 2021 Earnings Presentation
44 slides from Hsbc's earnings presentation, Aug 2, 2021
Slide 1: HSBC Holdings plc 2Q21 Results
HSBC Holdings plc 2Q21 Results Presentation to Investors and Analysts
Slide 2: Our purpose, values and ambition support the execution of our strategy
Strategy 2Q21 results Appendix Our purpose, values and ambition support the execution of our strategy Our purpose Opening up a world of opportunity Our ambition To be the preferred international financial partner for our clients Our values We value difference We succeed together We take respon
Slide 3: 2Q21 highlights
Strategy 2Q21 results Appendix 2Q21 highlights Reported PBT of $5.1bn up $4.0bn vs. 2Q20; adjusted PBT of $5.6bn up $3.0bn vs. 1 2Q20, primarily reflecting material ECL releases; 1H21 RoTE1 of 9.4%, up 5.6ppt vs. 1H20 Net ECL release of $0.3bn as forward economic outlook continues to improve in majo
Slide 4: Focus: Delivering growth in our areas of strength
Strategy 2Q21 results Appendix Focus: Delivering growth in our areas of strength Wealth and Personal Banking Commercial Banking Global Banking & Markets Strong traction in growing our Asia Wealth business Lending pipeline starting to translate into growth Repositioning our franchise to drive growth
Slide 5: Focus: Lending pipeline starting to translate into growth
Strategy 2Q21 results Appendix Focus: Lending pipeline starting to translate into growth WPB loans, $bn Wholesale 3% CMB loans up $6bn (2%) QoQ; now starting to see Strong quarter for mortgages, $6bn of growth drawdowns of term loans 476 491 globally; Hong Kong9 mortgage drawdowns up 56% YoY; re
Slide 6: Focus: Rebound in profits in the US and Europe
Strategy 2Q21 results Appendix Focus: Rebound in profits in the US and Europe even as we reshape our portfolio to support international clients US HSBC Bank plc (UK NRFB and Europe) PBT of $0.5bn in 1H21 (up from $0.1bn in 1H20) PBT of $1.4bn in 1H21 (up from loss of $0.6bn in 1H20) Reported RWAs Co
Slide 7: Digitise: Enhancing our technological capabilities and the client experience
Strategy 2Q21 results Appendix Digitise: Enhancing our technological capabilities and the client experience … while scaling digital capabilities globally to Our commitment to invest in technology… … is strengthening operational proficiency… improve customer experience Technology spend Usage of Cloud
Slide 8: Energise: Empowering our talent across the organisation
Strategy 2Q21 results Appendix Energise: Empowering our talent across the organisation Employee engagement index17 70 MSCI upgraded HSBC’s ESG rating from BBB to AA (“ESG Leader”) +1pt above Financial 67 Services Continue to adopt the hybrid model and agile ways of working with 77 buildings benc
Slide 9: Transition: Continuing to build on our global leadership position
Strategy 2Q21 results Appendix Transition: Continuing to build on our global leadership position Become a Net Zero Bank Support for customers Unlock new climate solutions Sustainable Finance and investments $bn 43 Shareholders who backed our 99.7% Climate Resolution at the 22 22 Annual General Meeti
Slide 10: 2Q21 results summary
Strategy 2Q21 results Appendix 2Q21 results summary $m 2Q21 2Q20 Δ NII 6,585 7,225 (9)% Non interest income Adjusted PBT of $5.6bn up $3.0bn vs. 2Q20; lower 5,939 6,659 (11)% revenue and higher costs were more than offset by Revenue 12,524 13,884 (10)% improved credit performance and higher associ
Slide 11: Improved earnings diversity as the global economy recovers
Strategy 2Q21 results Appendix Improved earnings diversity as the global economy recovers PBT by region, $bn PBT and reported RoTE20 by business 1H20 1H21 1H20 1H21 Europe (2.1) 2.7 PBT, $bn RoTE, % PBT, $bn RoTE, % o/w UK RFB (0.5) 2.3 WPB 1.7 6.0% 3.9 17.9% o/w HSBC Bank plc (0.6) 1.4 Asia 7.5 7.1
Slide 12: 2Q21 adjusted revenue performance
Strategy 2Q21 results Appendix 2Q21 adjusted revenue performance 2Q21 revenue 2Q21 vs. 2Q20 Revenue by global business, $bn o/w insurance market Wealth $2,439m 187 impacts: $(28)m (10)% WPB $5,707m (4)% Personal Banking $3,093m (161) 13.9 13.3 Other $175m (241) 12.5 GTRF $478m 4.7 35 4.3 3.6 Credit
Slide 13: Net interest income
Strategy 2Q21 results Appendix Net interest income Reported NIM progression, bps 121 120 (4) 3 1Q21 Asset yields Liability 2Q21 costs 2Q21 reported NII was $0.1bn (1%) higher vs. 1Q21, primarily due to day count Reported NIM trend 2Q21 NIM of 1.20% down 1bp vs. 1Q21; decreasing yield on assets d
Slide 14: Non-NII
Strategy 2Q21 results Appendix Non-NII WPB, $m Net fees Other income 4% (2)% WPB non-NII up by $77m (4%) vs. 2Q20, driven by increased investment distribution income, particularly mutual fund sales Fees increased across all 2,069 2,193 2,146 2Q21 fees down $218m (13%) vs. 1Q21; 1Q21 benefited
Slide 15: Credit performance
Strategy 2Q21 results Appendix Credit performance Adjusted ECL charge/(release) trend ECL, $m ECL 4,170 charge/(release) 2Q21 net ECL release of $0.3bn; Stage as a % of 3 charges of $0.1bn, Stage 1 – 2 releases 1,212 average of $0.5bn 825 gross loans and (439) (284) Unusually low Stage 3 charges,
Slide 16: Adjusted costs
Strategy 2Q21 results Appendix Adjusted costs Operating expenses trend, $m 9,288 Cost targets on track, while increasing higher investment and higher 802 8,238 8,019 performance-related pay (PRP) 7,722 7,692 1,459 1,580 1,469 2Q21 costs of $8.0bn, up $0.3bn (4%) vs. 2Q20; $0.5bn of cost saves mo
Slide 17: Capital adequacy
Strategy 2Q21 results Appendix Capital adequacy CET1 ratio, % CET1 ratio of 15.6% down 0.3ppt vs. 1Q21 (0.2) Adjusted RWAs of $862.3bn, up $13.5bn (2%) 15.9 0.3 (0.0) (0.1) vs. 1Q21, primarily due to loan growth, of which (0.3) 15.6 c.$10bn related to IPO loans in Hong Kong (equal to 18bps) So
Slide 18: Transformation programme – RWA saves
Strategy 2Q21 results Appendix Transformation programme – RWA saves Programme cumulative RWA savings2, $bn Strong progress to date – on track to meet FY22 target 84.5 $84.5bn of cumulative saves to 1H212, primarily in GBM 10.1 HSBC Bank plc (UK NRFB and Europe) saves of $46.0bn, with $37.9bn i
Slide 19: Strategic delivery
Strategy 2Q21 results Appendix Strategic delivery Progress against targets Shift to higher return areas and growth opportunities Target 1H21 progress25 Reported Wealth Balances3 RWAs by region $bn Adjusted costs of ≤$31bn in 2022 on Dec Costs 2020 average FX rates; $5-5.5bn of cost saves On track;
Slide 20: Summary
Strategy 2Q21 results Appendix Summary Increased profits, despite increased investment and lower revenue, due to a materially 1 better credit performance 2 Improved credit outlook Execution of strategy at pace – Announced disposal of US mass retail business and potential sale of French retail busine
Slide 21: Appendix
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Slide 22: Key financial metrics
Strategy 2Q21 results Appendix Key financial metrics Reported results, $m 2Q21 1Q21 2Q20 Balance sheet, $m 2Q21 1Q21 2Q20 NII 6,584 6,514 6,897 Total assets 2,976,005 2,958,629 2,922,798 Other Income 5,981 6,472 6,162 Net loans and advances to customers 1,059,511 1,040,207 1,018,681 Revenue 12,565 1
Slide 23: Reconciliation of reported and adjusted PBT
Strategy 2Q21 results Appendix Reconciliation of reported and adjusted PBT $m 2Q21 1Q21 2Q20 Reported PBT 5,060 5,779 1,089 Revenue Currency translation — 50 724 Customer redress programmes — (18) (26) Disposals, acquisitions and investment in new businesses — — 1 Fair value movements on financial i
Slide 24: Certain items included in adjusted revenue
Strategy 2Q21 results Appendix Certain items included in adjusted revenue Certain items included in adjusted revenue 2Q21 1Q21 4Q20 3Q20 2Q20 1H21 1H20 highlighted in management commentary, $m Insurance manufacturing market impacts in WPB 336 78 299 126 364 413 (351) Credit and funding valuation adj
Slide 25: Global business management view of adjusted revenue
Strategy 2Q21 results Appendix Global business management view of adjusted revenue Group, $m 2Q20 3Q20 4Q20 1Q21 2Q21 ∆2Q20 GBM, $m 2Q20 3Q20 4Q20 1Q21 2Q21 ∆2Q20 Total Group revenue 13,884 12,499 12,069 13,324 12,524 (10)% Markets and Securities Services 2,681 2,085 1,946 2,497 1,941 (28)% Adjusted
Slide 26: Wealth and Personal Banking
Strategy 2Q21 results Appendix Wealth and Personal Banking 2Q21 financial highlights Balance sheet, $bn 2Q21 vs. 2Q20 (4)% 4% Revenue down $215m (4%) driven by lower interest rates, lower Revenue $5.7bn (2Q20: $5.9bn) 8% Markets Treasury revenue, despite higher Asia Wealth revenue 810 844 841 EC
Slide 27: Commercial Banking
Strategy 2Q21 results Appendix Commercial Banking 2Q21 financial highlights Balance sheet, $bn 2Q21 vs. 2Q20 Revenue $3.3bn (4)% Revenue down $148m (4%), reflecting the impact of lower interest (2Q20: $3.5bn) Customer lending rate environment in GLCM and other products, partially offset by (3)% >1
Slide 28: Global Banking and Markets
Strategy 2Q21 results Appendix Global Banking and Markets 2Q21 financial highlights View of adjusted revenue 2Q21 vs. 2Q20 Revenue $3.6bn (23)% $m 2Q21 ∆2Q20 Revenue down $1.1bn (23%): (2Q20: $4.7bn) MSS 1,941 (28)% • MSS down $740m (28%) due to lower market volatility and client >100% Securities
Slide 29: Corporate Centre
Strategy 2Q21 results Appendix Corporate Centre 2Q21 financial highlights Revenue performance, $m Revenue $(89)m 52% 2Q20 3Q20 4Q20 1Q21 2Q21 (2Q20: $(186)m) Central Treasury (64) (32) (12) (28) (27) ECL $7m >100% Of which: (2Q20: $(16)m) Valuation differences on long-term debt and (64) (32) (12) (2
Slide 30: Insurance
Strategy 2Q21 results Appendix Insurance* Key financial metrics Reported Embedded value, $bn Insurance HK quarterly ANP, $m Adjusted income statement, $m 1H21 1H20 2H20 16% 948 Revenue 1,555 676 1,306 16.4 751 722 Of which: NII 1,232 1,187 1,239 14.1 589 599 629 Of which: market impacts 413 (337) 42
Slide 31: Net interest margin supporting information
Strategy 2Q21 results Appendix Net interest margin supporting information NII sensitivity to instantaneous change in yield curves (12 months) Quarterly NIM by key legal entity At 30 June 2021 % of 2Q21 % of 2Q21 2Q20 3Q20 4Q20 1Q21 2Q21 Group NII Group AIEA Currency Change in Jul The Hongkong and 20
Slide 32: ECL analysis
Strategy 2Q21 results Appendix ECL analysis Stage 1 & 2 allowances for ECL, $bn ECL charge / (release) by global business, $m 2Q21 1Q21 $3.9bn 1 $(1.5)bn 7.9 (18) (19) (7) 7.3 7.5 (34) 6.9 6.3 3.3 (190) 3.0 3.1 (224) 5.1 2.9 (232) 2.6 WPB CMB GBM Corporate Centre 4.0 2.4 Analysis by stage 2.0 Stage
Slide 33: Total shareholders’ equity to CET1 capital
Strategy 2Q21 results Appendix Total shareholders’ equity to CET1 capital Total equity to CET1 capital, at 30 June 2021, $m Total equity to CET1 capital walk, $m 2Q21 4Q20 Total equity (per balance sheet) 206,764 204,995 Total equity 206,764 - Non-controlling interests (8,546) (8,552) Total sharehol
Slide 34: 2Q21 vs. 1Q21 equity drivers
Strategy 2Q21 results Appendix 2Q21 vs. 1Q21 equity drivers Shareholders’ Tangible Equity31, TNAV per share, Basic number of ordinary Equity, $bn $bn $ shares, million As at 31 March 2021 199.2 157.4 7.78 20,226 Profit attributable to: 3.6 3.6 0.18 — Ordinary shareholders 3.4 3.6 0.18 — Other equity
Slide 35: Balance sheet – customer lending
Strategy 2Q21 results Appendix Balance sheet – customer lending Balances by global business, $bn Balances by region, $bn Growth since 1Q21 Europe $403bn $(4)bn Adjusted customer lending of (1)% (1)% o/w: mortgages $1,060bn up $16bn (2%) vs. 1Q21 2% $(1)bn 1,074 o/w: UK $314bn (0)% 3 WPB lending in
Slide 36: Balance sheet – customer accounts
Strategy 2Q21 results Appendix Balance sheet – customer accounts Balances by global business, $bn Balances by region, $bn Growth since 1Q21 4% $18bn Europe $664bn 3% 1% Adjusted customer accounts of 1,654 1,669 $19bn $1,669bn increased by $15bn (1%) 1,609 o/w: UK $534bn 4% 1 1 vs. 1Q21; 1 337 341 $3
Slide 37: Asset quality
Strategy 2Q21 results Appendix Asset quality Gross loans and advances to Loans and advances to customers Stage 3 and impaired loans and Reported ECL customers of ‘Strong’ or ‘Good’ credit advances to customers By credit quality classification quality At 30 June 2021 783 760 19.1 19.1 730 740 8.8 Goo
Slide 38: UK RFB disclosures
Strategy 2Q21 results Appendix UK RFB disclosures Business performance WPB CMB 1H21 financial highlights Personal gross mortgage balances, £bn Mortgages: Wholesale gross customer loans, £bn 90+ day delinquency trend33, % (2)% 114.3 Revenue £3.0bn (1H20: £3.1bn) 110.7 70.2 70.2 67.1 (3)% 104.2 0.3 0.
Slide 39: Hong Kong
Strategy 2Q21 results Appendix Hong Kong Wealth and Personal Banking (WPB) Wholesale Growing customer base; 98k NTB customers over 1H21 Business banking growth; net new to bank CMB customers grew by 2% YTD (at May-21); active mobile customers grew by 12% YTD (at May-21) Good lending momentum a
Slide 40: Announced retail banking business disposals
Strategy 2Q21 results Appendix Announced retail banking business disposals US France 1Q21 US WPB balance sheet FY20 HSBC Continental Europe WPB balance sheet of which: disposed of which: disposed $bn operations $bn39 operations Customer lending 23.8 c.3.0 Customer lending 28.7 25.5 Customer deposits
Slide 41: Glossary
Strategy 2Q21 results Appendix Glossary AIEA Average interest earning assets LATAM Latin America BAU Business as usual LCR Liquidity coverage ratio BoCom Bank of Communications Co. Limited, an associate of HSBC A portfolio of assets including securities investment conduits, asset-backed securities,
Slide 42: Footnotes
Strategy 2Q21 results Appendix Footnotes 1. YTD, annualised. RoTE methodology annualises Profits Attributable to Shareholders, including ECL, in order to AT1 Coupons on an accruals basis, vs. Reported RoTE where it is treated on a cash basis provide a returns metric. Expected Credit Losses “ECL” is
Slide 43: Disclaimer
Strategy 2Q21 results Appendix 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
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