HSBC Holdings PLC · LSE:HSBA
HSBC — Debt Investor Presentation (February 2022)
45 slides from HSBC's debt investor presentation, Feb 22, 2022
Slide 1: HSBC Holdings plc FY21 Results Fixed Income Investor Presentation
HSBC Holdings plc FY21 Results Fixed Income Investor Presentation
Slide 2: FY21 Performance summary
Capital structure FY21 results Appendix and debt issuance FY21 Performance summary Returned to growth 1 4Q21 reported revenue up 2% vs. 4Q20; tailwinds expected from rates going forward Creating capacity through announced disposals in the US & France to facilitate wealth growth in Asia Profits u
Slide 3: Progress against our ambitions
Capital structure FY21 results Appendix and debt issuance Progress against our ambitions 2020 2021 Key ambitions Adjusted revenue growth, YoY (8.3)% (3.2)% Mid single digits medium to long-term2 Revenue Adjusted fee income + Insurance 28% 33% c.35% medium to long-term as a % of adjusted revenue Cost
Slide 4: FY21 results summary
Capital structure FY21 results Appendix and debt issuance FY21 results summary $m FY21 FY20 Δ NII 26,479 28,273 (6)% Reported PBT of $18.9bn up $10.1bn vs. FY20, Non interest income primarily from ECL releases and higher share of profit from 23,611 23,497 0% associates, partly offset by lower reve
Slide 5: Loan and fee growth
Capital structure FY21 results Appendix and debt issuance Loan and fee growth Customer lending by global business, $bn Net fee income by global business, $m +$27bn Includes the impact of $30bn of gross 5% RWA saves 3,101 489 +$11bn 462 2,949 338 349 $(14)bn 823 Group net fee income up 5% YoY, 827
Slide 6: FY21 adjusted revenue performance
Capital structure FY21 results Appendix and debt issuance FY21 adjusted revenue performance FY21 revenue FY21 vs. FY20 Revenue by global business, $bn o/w insurance market Wealth $9,123m impacts: $434m 1,119 WPB $22,110m (2)% Personal Banking $12,254m (1,076) 56.4 (3)% Other $733m (504) 51.8 50.1 15
Slide 7: Net interest income and margin
Capital structure FY21 results Appendix and debt issuance Net interest income and margin Reported NIM progression, bps 119 2 (2) 119 4Q21 reported NII of $6.8bn, up $0.2bn (3%) vs. 3Q21; mainly driven by 3Q21 Asset yields Asset mix 4Q21 higher yields on customer loans as well as growth in AIEAs Re
Slide 8: Net interest income sensitivity – main drivers and assumptions
Capital structure FY21 results Appendix and debt issuance Net interest income sensitivity – main drivers and assumptions NII sensitivity10 to instantaneous change in yield curves (12 months) At 31 December 2021 We have simplified the basis of preparation for our disclosure for FY21, Currency and h
Slide 9: Adjusted costs
Capital structure FY21 results Appendix and debt issuance Adjusted costs Operating expenses trend, $m 4Q21 costs (excl. levy) of $8.2bn modestly down vs. 4Q20, primarily 9,092 due to cost saves of $0.6bn and lower performance-related pay (PRP), 8,341 802 8,043 7,836 partially offset by increased t
Slide 10: Cost programme progress
Capital structure FY21 results Appendix and debt issuance Cost programme progress Adjusted costs, $bn FTE 33.6 (3.3) Stable costs over FY22 32.1 2019 Investment Inflation Cost Bank levy Other 2021 2022 programme 235.4k saves 219.7k Programme cost saves to date of $3.3bn and associated CTA spend of
Slide 11: Credit performance
Capital structure FY21 results Appendix and debt issuance Credit performance Adjusted ECL release/(charge) trend 4Q21 ECL charge of $450m, primarily ECL, $m from Stage 2 charges reflecting recent 644 424 272 ECL developments in China’s CRE market, with release/(charge) releases in the UK and Europ
Slide 12: Asset quality (reported)
Capital structure FY21 results Appendix and debt issuance Asset quality (reported) Gross loans and advances to Loans and advances to customers Stage 3 and impaired loans and ECL charge (release) customers of ‘Strong’ or ‘Good’ credit advances to customers By credit quality classification quality At
Slide 13: Customer loan book (reported)
Capital structure FY21 results Appendix and debt issuance Customer loan book (reported) At 31 Dec 2021 Personal loan book ($bn, gross loans and advances to customers) Wholesale loan book ($bn, gross loans and advances to customers) Motor vehicle finance Credit cards Other 4.8% Other secured 4.9% Non
Slide 14: Funding and liquidity
Capital structure FY21 results Appendix and debt issuance Funding and liquidity Reported loans to deposits ratio, % Principal operating entities LCR NSFR % 2021 2020 2021 2020 72.0 72.0 HSBC UK Bank plc (RFB) 241 198 178 164 63.2 HSBC Bank plc (NRFB) 150 136 107 124 61.1 Hongkong and Shanghai Bankin
Slide 15: Capital position
Capital structure FY21 results Appendix and debt issuance Capital position FY21 vs. FY20 CET1 ratio movement, % CET1 ratio of 15.8% down 0.1ppts vs. FY20 as profits were offset by capital returns: Includes FY21 dividend of $0.25 per share 1.3 (0.8) Includes the impact of c.25bps from the share
Slide 16: Path to CET1 target
Capital structure FY21 results Appendix and debt issuance Path to CET1 target CET1 ratio evolution Aim to transition to c.14 — 14.5% CET1 1Q22 mainly impacted by: ratio planning range by FY22 Target CET1 ratio to be met primarily via 15.8% organic and inorganic growth, capital return, and regula
Slide 17: Capital position versus requirements
Capital structure FY21 results Appendix and debt issuance Capital position versus requirements CET1 ratio as a % of RWAs, vs. target and MDA hurdle Regulatory capital vs. regulatory requirements as a % of RWAs 21.2% Buffer to $43bn 20.0% 2.6% 1.5% MDA hurdle 5.1% 10.7% 2.8% 2.7% 15.4% 0.2% 2.0% 2.7%
Slide 18: MREL/TLAC position versus requirements
Capital structure FY21 results Appendix and debt issuance MREL/TLAC position versus requirements MREL/TLAC position versus estimated 1 Jan 22 MREL/TLAC requirements as a % of Group RWAs (using reported figures as at 31 Dec 21) HSBC Group’s 2022 MREL requirement27 is the greater of: 32.3% – 18% of
Slide 19: Issuance plan – MREL build complete
Capital structure FY21 results Appendix and debt issuance Issuance plan – MREL build complete Limited net new issuance going forward 2022 issuance plan29 HoldCo Senior gross and net issuance, $bn-equivalent HoldCo ~$10bn on a gross basis, c.$0bn net Senior 18 ~$4bn gross, expecting to return to Tier
Slide 20: 2021 issuance
Capital structure FY21 results Appendix and debt issuance 2021 issuance Met issuance target plus some opportunistic pre- financing of 2022 Issued $6bn to pre-finance $5.8bn of 1Q22 2021 issuance and redemptions HoldCo senior calls and maturities 2021 issuance plan Issued Redeemed Net nil AT1 i
Slide 21: Portfolio instruments
Capital structure FY21 results Appendix and debt issuance Portfolio instruments Maturity profile at FY2130 Outstanding instruments by currency (notional) at FY21 $bn-equivalent Tier 2 Additional Tier 1 17.9 USD EUR EUR 16.9 16.7 11% 18% 15.0 15.1 10% GBP $26.9bn $24.1bn 25% GBP 10.4 13.4 64% 5% 12.9
Slide 22: Legacy securities
Capital structure FY21 results Appendix and debt issuance Legacy securities Instruments ineligible as capital or Group MREL (notional) $2.3bn of securities lost capital and Group MREL eligibility post 2021 due to CRR1 grandfathering: Ineligible from 1-Jan-22 Ineligible from 29-Jun-25 – $1.8bn of s
Slide 23: IBOR – regulatory capital & MREL securities
Capital structure FY21 results Appendix and debt issuance IBOR – regulatory capital & MREL securities Consent solicitation, September 2021 Consent exercise passed to alter reference rate for post-call coupons on a number of bonds issued by a number of group entities Used established market conve
Slide 24: Appendix
Appendix XP usec
Slide 25: MREL/TLAC position
Capital structure FY21 results Appendix and debt issuance MREL/TLAC position Europe Resolution Group HSBC Group US Resolution Group Asia Resolution Group (Including HSBC Holdings)33 TLAC Total TLAC: $271bn Total TLAC: $26bn Total TLAC: $108bn Total TLAC: $102bn position Of which: non-regulatory Of w
Slide 26: Approach to issuance
Capital structure FY21 results Appendix and debt issuance Approach to issuance HSBC Holdings plc External Investors Since 2015, HSBC Holdings has been the Group’s issuing entity for external AT1, T2 and MREL/TLAC-eligible Senior Issuance over time to broadly match group currency exposures Extern
Slide 27: ESG update
Capital structure FY21 results Appendix and debt issuance ESG update Environmental Social Governance We plan to publish our own climate transition plan in FY23 bringing together how we intend to embed net zero targets Our percentage of female into our strategy, processes, policies and governance
Slide 28: Sustainable finance / ESG update
Capital structure FY21 results Appendix and debt issuance Sustainable finance / ESG update Sustainable finance Net zero emissions pathways for Oil & Gas and Power & Utilities sectors We have provided and facilitated a cumulative Oil and gas – absolute emissions Power and utilities – emissions inte
Slide 29: Key financial metrics
Capital structure FY21 results Appendix and debt issuance Key financial metrics Reported results, $m 4Q21 3Q21 4Q20 Balance sheet, $m 4Q21 3Q21 4Q20 NII 6,781 6,610 6,619 Total assets 2,957,939 2,968,791 2,984,164 Other Income 5,208 5,402 5,138 Net loans and advances to customers 1,045,814 1,039,677
Slide 30: Reconciliation of reported and adjusted PBT
Capital structure FY21 results Appendix and debt issuance Reconciliation of reported and adjusted PBT $m 4Q21 3Q21 4Q20 FY21 FY20 Reported PBT 2,664 5,403 1,385 18,906 8,777 Revenue Currency translation — (150) (27) — 1,393 Customer redress programmes 7 — (1) (11) 21 Disposals, acquisitions and inve
Slide 31: Certain items included in adjusted revenue
Capital structure FY21 results Appendix and debt issuance Certain items included in adjusted revenue Certain items included in adjusted revenue highlighted 4Q21 3Q21 2Q21 1Q21 4Q20 FY21 FY20 in management commentary, $m Insurance manufacturing market impacts in WPB 130 (41) 333 70 297 504 70 of whic
Slide 32: Net interest margin supporting information
Capital structure FY21 results Appendix and debt issuance Net interest margin supporting information Market-implied path of overnight interest rates11, bps Quarterly NIM by key legal entity % of 4Q21 % of 4Q21 4Q20 1Q21 2Q21 3Q21 4Q21 Group NII Group AIEA GBP USD 205 The Hongkong and 195 Shanghai Ba
Slide 33: Balance sheet analysis
Capital structure FY21 results Appendix and debt issuance Balance sheet analysis Group customer accounts by type, $bn Group loans and deposits by currency Average balances at 31 December 2021 1,056 At 31 December 2021 898 823 840 795 Loans and advances to customers Customer accounts USD Others 279 2
Slide 34: Balance sheet – customer lending
Capital structure FY21 results Appendix and debt issuance Balance sheet – customer lending Balances by global business, $bn Balances by region, $bn Growth since 3Q21 $(1)bn 2% Europe $397bn (0)% 1% o/w: mortgages Adjusted customer lending of Growth since 4Q20 $(6)bn $1,046bn, up $6bn (1%) vs. 3Q21 1
Slide 35: Balance sheet – customer accounts
Capital structure FY21 results Appendix and debt issuance Balance sheet – customer accounts Balances by global business, $bn Balances by region, $bn Growth since 3Q21 6% $1bn Adjusted customer accounts of Europe $668bn 1% 0% $1,711bn increased by $24bn (1%) vs. 3Q21 1,687 1,711 o/w: UK $536bn $1bn 1
Slide 36: Mainland China drawn risk exposure
Capital structure FY21 results Appendix and debt issuance Mainland China drawn risk exposure Mainland China drawn risk exposure41 Mainland China drawn risk exposure is defined as lending booked in mainland China and wholesale lending booked offshore $bn where the ultimate parent and beneficial own
Slide 37: Mainland China commercial real estate update
Capital structure FY21 results Appendix and debt issuance Mainland China commercial real estate update Mainland China commercial real estate exposures42 Market conditions update Mainland China commercial real estate exposures by location of parent company, $bn Uncertainty exists for real estate de
Slide 38: Group real estate ECL analysis
Capital structure FY21 results Appendix and debt issuance Group real estate ECL analysis Total real estate allowances for ECL by stage Group real estate allowances for ECL $m 4Q21 3Q21 ∆ Group Stage 2 allowances for real estate increased $451m in 4Q21, primarily due to exposures to mainland 1 132
Slide 39: UK RFB disclosures
Capital structure FY21 results Appendix and debt issuance UK RFB disclosures Business performance WPB CMB FY21 financial highlights Personal gross mortgage balances, £bn Mortgages: Wholesale gross customer loans, £bn 118.1 90+ day delinquency trend44, % 3% 101.5 110.7 Revenue £6.2bn (FY20: £6.0bn) 0
Slide 40: Credit ratings for main issuing entities
Capital structure FY21 results Appendix and debt issuance Credit ratings for main issuing entities Long term senior ratings as at 21 February 2022 S&P Moody’s Fitch Rating Outlook Rating Outlook Rating Outlook HSBC Holdings plc A- STABLE A3 STABLE A+ NEG The Hongkong and Shanghai Banking Corporation
Slide 41: Simplified structure chart
Capital structure FY21 results Appendix and debt issuance Simplified structure chart Holding company Associate Intermediate holding company Resolution entity HSBC Operating company Holdings plc 99.9% HSBC HSBC Private HSBC HSBC HSBC HSBC Asia 94.5% Bank HSBC UK Bank Banking Mexico, North America Ban
Slide 42: Glossary
Capital structure FY21 results Appendix and debt issuance Glossary AIEA Average interest earning assets LCR Liquidity coverage ratio Bps Basis points. One basis point is equal to one-hundredth of a percentage point LDR Loan-to-deposit ratio CCyB Countercyclical Buffer LTV Loan to value CET1 Common E
Slide 43: Footnotes
Capital structure FY21 results Appendix and debt issuance Footnotes 1. If policy rates were to follow the current implied market consensus exposures, which could impact these requirements 2. Medium-term is defined as 3-4 years from 1 January 2020; long-term is defined as 5-6 years 27. Minimum requir
Slide 44: Disclaimer
Capital structure FY21 results Appendix and debt issuance 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
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