Hsbc Holdings Plc · LSE:HSBA

Hsbc — Investor Presentation (November 2015)

38 slides from Hsbc's investor presentation, November 2015

  1. Slide 1: Global Banking and Markets Investor Update

    November 2015 Global Banking and Markets Investor Update Samir Assaf Group Managing Director, Chief Executive, Global Banking and Markets

  2. Slide 2: Important notice and forward-looking statements

    Appendix Important notice and forward-looking statements Important notice The information set out in this presentation and subsequent discussion does 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 securities or ot

  3. Slide 3: Global Banking & Markets – Returning to Group target profitability (1/2)

    Global Banking & Markets – Returning to Group target profitability (1/2)  Diversified by clients, geographies and businesses  Top 5 market positions driving c.70% of client facing revenue  International network of 62 countries capturing growth in trade and capital flows  Integral part of HSBC Gr

  4. Slide 4: Global Banking & Markets – Returning to Group target profitability (2/2)

    Global Banking & Markets – Returning to Group target profitability (2/2)  2.5% RoRWA by 2017 for Client Facing1 GB&M  Reduce RWAs by gross USD140bn2 and net USD130bn3, 31% reduction Returning to  Keep costs flat, aggressive management to offset USD1bn+ of growth from Group target inflation and in

  5. Slide 5: Agenda

    GB&M Investor Update Agenda 1 GB&M overview and track record 2 Strategy update: Returning to Group target profitability 3 Progress to date 4

  6. Slide 6: Diversified by clients, geographies and businesses

    GB&M overview and track record Diversified by clients, geographies and businesses Clients Geographies Businesses GB&M relationship revenue1 GB&M adjusted revenue3 GB&M adjusted revenue3 % % % 16% FX Asia 38% Markets Equities 7% Corporates c.50% Rates & 12% Credit Client Facing Capital 22% Financing

  7. Slide 7: Top 5 market positions driving c.70% of client facing revenue

    GB&M overview and track record Top 5 market positions driving c.70% of client facing revenue Client Facing GB&M: adjusted revenue by business by market rank1 USDbn Example Top 3 and Top 5 positions c.70% of adjusted revenue Global: Payments & Cash Management, Global Trade & Receivables Finance, Proj

  8. Slide 8: International network capturing growth in trade and capital flows

    GB&M overview and track record International network capturing growth in trade and capital flows HSBC Priority Markets Non-Priority Markets Global foreign direct 2011-14 Global GDP1 Global exports1 investment2 GB&M client revenues3 CAGR USDtrn USDtrn USDtrn +3% +4% +10% 71.9 20.3 26.3 66.6 18.3 21.9

  9. Slide 9: Integral part of HSBC Group, enabling c.USD8bn revenue synergies

    GB&M overview and track record Integral part of HSBC Group, enabling c.USD8bn revenue synergies Total revenue synergies related to GB&M1 Total revenue synergies related to GB&M1 2014, USDbn Revenue 2014, USDbn 8.2  Payments and Cash Management from CMB2 GB&M  GTRF products from CMB 2.8 clients  A

  10. Slide 10: Balance sheet with Client Facing assets of USD729bn, smaller than most major peers

    GB&M overview and track record Balance sheet with Client Facing assets of USD729bn, smaller than most major peers GB&M assets1 Peer estimated CIB assets3 USDbn Derivatives not set off USDbn Loans and advances 1,878 1,840 (217) Trading assets Other (3) (532) (46) 1,009 (313) 946 966 846 879 729 32 52

  11. Slide 11: RWA mitigation of c.USD100bn achieved 2011 to 2014

    GB&M overview and track record RWA mitigation of c.USD100bn achieved 2011 to 2014 Total GB&M RWAs1 USDbn c.100 516 31 423 70 44 371 Basel 3 LGD floors Total Regulation BSM and Client Facing Reduction 2014 Associates BSM Legacy 2014 Client GB&M 2011 driven Associates business Basel 3 Credit Facing Ba

  12. Slide 12: Sustained Client Facing revenue growth of c.6% CAGR 2011 to 2014

    GB&M overview and track record Sustained Client Facing revenue growth of c.6% CAGR 2011 to 2014 Total GB&M adjusted revenue by business1 USDbn 2011-14 CAGR (%) c.6% CAGR Client Facing Client Facing GB&M: 15.3 15.1 Markets USD14.2bn 13.5 ex Legacy Credit 5.4% average 12.7 Capital 4.4% Financing PCM,

  13. Slide 13: Tight management of direct costs

    GB&M overview and track record Tight management of direct costs Total GB&M adjusted operating expenses1 GB&M headcount USDbn End 2014 FTE, ‘000 10.1 9.6 BSM 3.8 16.3 9.3 9.4 GB&M 2011-14 Support CAGR (%) 5.9 Indirect HSS +7% Costs2 Direct (1)% 6.6 PCM Costs2 Banking3 Growth drivers  Indirect – inve

  14. Slide 14: Actions taken to improve profitability and simplify the business

    GB&M overview and track record Actions taken to improve profitability and simplify the business Actions taken  Focused GB&M client base c.20% reduction – c.275 client mastergroup exits (c.5% of total) completed Client – c.700 client mastergroup exits (c.15% of total) currently in execution Actions

  15. Slide 15: Agenda

    GB&M Investor Update Agenda 1 GB&M overview and track record 2 Strategy update: Returning to Group target profitability 3 Progress to date 14

  16. Slide 16: Achieve 2.5% RoRWA for Client Facing GB&M by 2017

    Strategy update: Returning to Group target profitability Achieve 2.5% RoRWA for Client Facing GB&M by 2017 GB&M RoRWA1 % Client Facing GB&M: 2.5% 3 2.5 Group 2.3% RoRWA = 10% ROE 2 1 Client Facing 1.6 Mid single GB&M: 1.4% digit CAGR 1.2 Flat costs 2014 BSM 2014 Client Net RWA Cost growth Cost savin

  17. Slide 17: RWAs – Reduce RWAs by gross USD140bn and net USD130bn, 31% reduction

    Strategy update: Returning to Group target profitability 1 RWAs – Reduce RWAs by gross USD140bn1 and net USD130bn, 31% reduction Legacy GB&M RWAs Associates USDbn Net reduction of 516 USD130bn or 31% 31 Gross reduction of 70 USD140bn1 415 44 285 485 Including c.20% 371 natural run-off 280 A B C D 20

  18. Slide 18: RWAs – Concrete actions defined to deliver plan

    Strategy update: Returning to Group target profitability 1 RWAs – Concrete actions defined to deliver plan Key actions to manage down RWAs 2015-17 gross RWA reduction plan USDbn A Legacy  Actively sell down 40 Credit 100 B  Manage down long-dated Rates book USD140bn Markets gross ex Legacy  Adopt

  19. Slide 19: Costs – Keep costs flat by aggressive management to fully offset USD1bn+ of inflation and investment growth

    Strategy update: Returning to Group target profitability 2 Costs – Keep costs flat by aggressive management to fully offset USD1bn+ inflation and investment growth Total GB&M adjusted operating expenses USDbn 10.1 10.2 (0.7) 1.1 (0.3) 9.1 9.1 Adjusted FX Brazil & 2014 Cost growth: Pre saves Business

  20. Slide 20: Costs – Actions defined front-to-back to achieve cost target

    Strategy update: Returning to Group target profitability 2 Costs – Actions defined front-to-back to achieve cost target Cost initiatives Estimated savings 2017 exit run-rate  Savings from client mastergroup exits USDbn  Savings from exiting dormant and low revenue clients  Savings related to exit

  21. Slide 21: Growth – Revenue growth opportunities in areas of competitive advantage

    Strategy update: Returning to Group target profitability 3 Growth – Revenue growth opportunities in areas of competitive advantage Strategic priorities  Realise the value of the universal banking model and the network i.e. more products across more countries to existing GB&M clients GB&M Clients 

  22. Slide 22: Growth – Realise the value of the network and the universal banking model

    Strategy update: Returning to Group target profitability 3 Growth – Realise the value of the network and the universal banking model with the GB&M client base Client revenue multiplier by Client revenue multiplier by number of products sold1 number of countries served in1 # of products sold2 # of co

  23. Slide 23: Growth – Capture and accelerate growth in Capital Financing fee income

    Strategy update: Returning to Group target profitability 3 Growth – Capture and accelerate growth in Capital Financing fee income Global IB Fees – Industry vs. HSBC growth1 Example event deals Industry Top 10 HSBC +5.8% +6.7% +8.4% Hutchison Whampoa Limited GBP10.3bn acquisition of O2 UK from Telefo

  24. Slide 24: Growth – Transaction banking products: Investing in FX, PCM, HSS and Trade Finance

    Strategy update: Returning to Group target profitability 3 Growth – Transaction banking products: Investing in FX, PCM, HSS and Trade Finance Ranking Strategic priorities Adjusted GB&M revenue 2014, USDbn  Enhance electronic trading platform and capabilities #1 Global Market  Expand pre and post-t

  25. Slide 25: Growth – Renminbi: Capturing growth opportunity

    Strategy update: Returning to Group target profitability 3 Growth – Renminbi: Capturing growth opportunity Context Product GB&M revenue5 Global revenue pool 2014 2014-17 CAGR  Interest rate liberalisation by 2016  RMB fully convertible by 2017 FX1 c.12%  Capital account opening by 2017 External e

  26. Slide 26: Growth – CMB, RBWM, GPB clients: Realising the value of the universal banking model

    Strategy update: Returning to Group target profitability 3 Growth – CMB, RBWM, GPB clients: Realising the value of the universal banking model Total revenue synergies related to GB&M GB&M revenue synergy examples USDbn c.10.0  CMB UK client  HSBC acted as Joint Sponsor, Joint Global 1.7-2.0 Coordi

  27. Slide 27: Digital – Leveraging digital to create competitive advantage

    Strategy update: Returning to Group target profitability Digital – Leveraging digital to create competitive advantage for ourselves and our clients HSBC Solutions Aspirations  Access & Convenience  Deeper client Investment1 relationships c. USD0.3bn  Superior analytics  Seamless, end-to-end syst

  28. Slide 28: Agenda

    GB&M Investor Update Agenda 1 GB&M overview and track record 2 Strategy update: Returning to Group target profitability 3 Progress to date 27

  29. Slide 29: GB&M Investor day targets

    Strategy Update: Progress to date GB&M Investor day targets RWAs Operating expenses Revenues RoRWA USDbn USDbn USDbn % GB&M ex- Associates and GB&M ex- ex-Legacy: 485 Associates and ex- 2.7% Legacy: 1.7% 44 415 2.6% 2.5% 360 9.1 44 9.11 8.5 8.5 5 285 18.1 5 15.1 1.6% 1.4% Objectives 371 280 2014 201

  30. Slide 30: Progress to date: RWAs

    Strategy update: Progress to date Progress to date: RWAs Investor day target Update on progress2,3 USDbn GB&M ex Associates RWAs: GB&M ex Associates, USDbn RWAs: Client Facing & Legacy, USDbn Legacy Credit 4714 Client Facing GB&M 492 4044 485 456 4044 44 41 424 415 425 485 30 390 29 44 41 358 44 30

  31. Slide 31: Progress to date: Operating expenses

    Strategy update: Progress to date Progress to date: Operating expenses Investor day target Update on progress1,2,3,4 USDbn GB&M ex Associates Operating Expenses, USDbn Client Facing GB&M 7.1 7.4 9.22 9.22 2.5 2.3 2.4 2.5 2.4 9.11 9.1 8.5 8.5 YTD14 YTD15 3Q14 4Q14 1Q15 2Q15 3Q15 CER: 51.8% 51.5%  Po

  32. Slide 32: Progress to date: Revenues

    Strategy update: Progress to date Progress to date: Revenues Investor day target Update on progress1 USDbn GB&M ex Associates Revenues, USDbn  GB&M Clients3: clients in 3+ products up c.5% 9M15 vs Client Facing GB&M 9M14; Clients in 3+ countries up c.2% 9M15 vs 9M14  Event: significant deals inclu

  33. Slide 33: Appendix

    GB&M Investor Update Appendix A Appendix 32

  34. Slide 34: Balance Sheet Management – Managing non-operating deposits

    Appendix Balance Sheet Management – Managing non-operating deposits Manage size of deposits BSM adjusted revenue USDbn  Target to reduce non-operating deposits by USD100bn by offering clients alternate cash 3.7 management solutions 3.2  PCM developing automated platform to sweep funds 3.0 3.0 to a

  35. Slide 35: GB&M financials

    Appendix GB&M financials1 Reported Adjusted USDm Sep YTD 15 Sep YTD 14 Sep YTD 15 Total Total Total Legacy Assoc. Legacy Assoc. Legacy Assoc. GB&M GB&M GB&M Credit 658 90 723 172 658 90 Rates 1,374 1,496 1,374 Foreign Exchange 2,349 2,130 2,349 Equities 1,472 928 1,472 Markets 5,853 90 5,277 172 5,8

  36. Slide 36: Reported to Adjusted reconciliation

    Appendix Reported to Adjusted reconciliation1 USDm 9M14 9M15 3Q14 3Q15 Revenue Reported 14,470 14,786 4,679 4,525 Currency Translation (1,076) - (379) - Significant Items 274 (398) 183 (255) - debit valuation adjustment (‘DVA’) on derivative contracts 278 (416) 123 (251) - fair value movements on no

  37. Slide 37: Definitions

    Appendix Definitions The following terminology is used in the GB&M presentation: More detailed list of definitions available in the Glossary.  Direct costs include staff employment and other costs directly managed by the business including market data, travel, and consultancy  Indirect costs inclu

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