Hsbc Holdings Plc · LSE:HSBA
Hsbc — Q3 2017 Earnings Presentation
33 slides from Hsbc's earnings presentation, Oct 30, 2017
Slide 1: Overseas Regulatory Announcement
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Slide 2: 3Q17 Earnings Release: Audio Webcast and Conference Call
30 October 2017 HSBC HOLDINGS PLC 3Q17 EARNINGS RELEASE AUDIO WEBCAST AND CONFERENCE CALL There will be an audio webcast presentation and conference call today for investors and analysts. The speakers will be: Stuart Gulliver, Group Chief Executive; and Iain Mackay, Group Finance Director. A cop
Slide 3: HSBC Holdings plc 3Q 2017 Results
World’s Best Bank HSBC Holdings plc 3Q 2017 Results Presentation to Investors and Analysts
Slide 4: Our highlights
Our highlights ‒ Reported PBT of $4.6bn was $3.8bn higher than 3Q16 3rd Quarter 2017 ‒ Adjusted PBT of $5.4bn: ‒ Revenue of $13.0bn up $0.3bn or 3% up in all three of our largest global businesses: 3Q17 ‒ RBWM up $0.3bn or 6% primarily from increased deposit revenue and included favourable market im
Slide 5: 9M17 Key financial metrics
9M17 Key financial metrics Key financial metrics 9M16 9M17 Return on average ordinary shareholders’ equity1 4.4% 8.2% Return on average tangible equity1 5.3% 9.3% Jaws (adjusted)2, 4 1.5% (1.3)% Dividends per ordinary share in respect of the period $0.30 $0.30 Earnings per share $0.29 $0.50 Common e
Slide 6: Financial overview: Reconciliation of Reported to Adjusted PBT
Financial overview Reconciliation of Reported to Adjusted PBT Discrete quarter Nine month 3Q16 3Q17 ∆ 3Q16 9M16 9M17 ∆ 9M16 Reported profit before tax 843 4,620 3,777 10,557 14,863 4,306 Includes: Currency translation 71 - (71) 595 - (595) Significant items: FVOD5 Fair value gains / losses on own de
Slide 7: 9M17 Profit before tax
9M17 Profit before tax Higher adjusted PBT from increased revenue and reduced LICs partly offset by increased costs 9M17 vs. 9M16 Adjusted PBT by item Adjusted PBT by global 9M16 9M17 ∆ 9M16 ∆% business, $m 9M17 ∆ 9M16 adverse favourable RBWM 4,076 5,058 982 24% CMB 4,472 5,086 614 14% Revenue $39,0
Slide 8: 3Q17 Profit before tax
3Q17 Profit before tax Increased revenue and lower LICs offset by increased costs 3Q17 vs. 3Q16 Adjusted PBT by item Adjusted PBT by global 3Q16 3Q17 ∆ 3Q16 ∆% business, $m 3Q17 ∆ 3Q16 adverse favourable RBWM 1,533 1,703 170 11% CMB 1,527 1,643 116 8% Revenue $13,031m 320 3% GB&M 1,582 1,535 (47) (3
Slide 9: Revenue performance
Revenue performance Revenue up across our three largest businesses vs. 3Q16 Revenue performance, $m6 Global +4% businesses 12,885 12,806 12,845 12,073 12,305 11,941 428 11,823 438 437 451 442 414 467 4,025 4,008 3,878 GPB 3,735 3,789 3,703 3,641 GB&M CMB 3,183 3,284 3,266 3,347 3,240 3,219 3,118 RBW
Slide 10: Retail Banking and Wealth Management performance
Retail Banking and Wealth Management performance Revenue growth driven by liability revenue and wealth management Revenue performance, $m6 Balance Sheet, $bn7 9M17 highlights +6% Customer lending: +2% +6% +2% 4,475 4,668 4,891 4,706 5,148 5,094 5,183 330 337 Adjusted PBT 40 (9M16: $4.1bn) 141 80 318
Slide 11: Commercial Banking performance
Commercial Banking performance Continued revenue growth driven by GLCM Revenue performance, $m6 Balance Sheet, $bn7 9M17 highlights Customer lending: +5% +10% 2% +2% 309 316 288 Adjusted PBT 3,240 3,219 3,183 3,118 3,284 3,266 3,347 (9M16: $4.5bn) 355 $5.1bn 423 478 429 464 384 459 301 453 439 459 3
Slide 12: Global Banking & Markets performance
Global Banking & Markets performance Positive performance in 3rd quarter despite subdued trading conditions Revenue performance, $m6 9M17 highlights +2% Management view of adjusted revenue $m 3Q17 ∆ 3Q16 3,641 3,735 3,789 3,703 4,025 4,008 3,878 Adjusted PBT (9M16: $4.1bn) 3,834 3,866 4,026 4,100 3,
Slide 13: Global Private Bank performance
Global Private Bank performance Business now positioned for growth; $13.1bn of positive inflows in 2017 Revenue performance, $m6 Client assets, $bn 9M17 highlights -1% 315 306 316 327 298 44 23 21 22 35 0% Adjusted PBT 271 283 295 305 (9M16: $0.3bn) 263 467 451 442 414 428 438 437 $0.2bn 64 68 64 60
Slide 14: Corporate Centre performance
Corporate Centre performance Lower revenue from the run-off of the CML and other legacy portfolios Revenue performance, $m6 Balance Sheet, $bn7 9M17 highlights US run-off portfolio (CML): 1Q16 2Q16 3Q16 4Q16 1Q17 2Q17 3Q17 Assets held for sale Central Treasury 745 634 366 (266) 397 431 311 0.3 Adjus
Slide 15: Net interest margin
Net interest margin Net interest margin of 1.63%; well positioned to benefit as rates move higher Net interest income and margin Main drivers, bps: Net interest 170 4 (5) 1 margin YTD, % 1.70% (2) (excl. Brazil) 1.64% 1.64% 1.63% Wider deposit spreads (5) 29,813 28,862 163 20,904 20,904 13,777 13,77
Slide 16: Operating expenses
Operating expenses Committed to delivering positive jaws for FY 2017 while investing in growth 3Q17 vs. 3Q16, $bn 0.2 $0.2bn ― Our three largest global businesses investment delivered positive jaws during 9M17 0.1 for growth 0.5 ($0.3bn 0.3 YTD) 0.3 ― Continue to invest in growth (0.6) $0.3bn YTD an
Slide 17: Loan impairment charges
Loan impairment charges Our credit standards remain robust; stable outlook Adjusted loan impairment charges and other credit risk provisions (LICs) analysis 3Q16 2Q17 3Q17 ∆ 3Q16 ∆ 2Q17 Credit environment remains stable Group, $m 567 426 448 119 (22) LICs by as a % of gross loans and advances to 0.2
Slide 18: Capital adequacy
Capital adequacy Strong capital base: common equity tier 1 ratio of 14.6% Regulatory capital and RWAs ($bn) CET1 ratio movement (%) Reported basis 2Q17 3Q17 Common equity tier 1 capital 128.9 129.8 (0.2) 0.3 Total regulatory capital 183.9 186.4 14.7 (0.2) Risk-weighted assets 876.1 888.6 14.6 (0.1)
Slide 19: Return metrics
Return metrics 9M17 Group ROE1, % 0.6 0.3 9.7 8.8 0.7 (0.5) (0.2) (1.5) 8.2 4.4 4.4 9M16 Reported Significant 9M16 Revenue LICs Cost ex Avg ordinary Tax and other 9M17 ex. Significant 9M17 Reported items & ex. Sig items bank levy shareholders’ Sig items & items & bank levy & bank levy equity bank le
Slide 20: Looking ahead
Looking ahead Delivering our strategy Group financial targets ♦ Unrivalled global network ROE >10% ♦ Investing for growth Positive jaws ♦ Deliver Global Standards Costs (adjusted) ♦ Achieve c.$6bn cost savings ♦ Deliver positive jaws in 2017 ‒ Sustain dividend through long-term earnings capacity ♦ S
Slide 21: Appendix
Appendix 18
Slide 22: Significant progress in execution of Strategic Actions
Significant progress in the execution of the “Strategic Actions to capture value from our international network” announced in June 2015 On track to meet target Strategic actions Targeted outcome by 2017 Progress Status Actions to re-size and simplify Reduce Group ‒ Group RWA reduction: $290bn RWAs
Slide 23: Exceeded our FX rebased RWA target
Appendix Exceeded our FX rebased RWA target15 Key movements in Group RWAs ($bn) 3Q17 achieved reduction Progress since Dec-14 Target (FX % rebased)15 achieved GB&M and 2Q17 9 876 Legacy GB&M and Legacy16 140 135 Target achieved US CML 1 (13) run-off RWA US CML 49 initiatives run-off 40 Target achi
Slide 24: Global business management view of adjusted revenue
Appendix Global business management view of adjusted revenue RBWM, $m 1Q16 2Q16 3Q16 4Q16 1Q17 2Q17 3Q17 ∆ 3Q16 ∆ 2Q17 GB&M, $m 1Q16 2Q16 3Q16 4Q16 1Q17 2Q17 3Q17 ∆ 3Q16 ∆ 2Q17 Retail Banking 3,243 3,234 3,191 3,236 3,345 3,404 3,434 8% 1% Global Markets 1,686 1,924 1,689 1,582 2,005 1,815 1,679 (1)
Slide 25: Currency translation and significant items
Appendix Currency translation and significant items $m 3Q16 3Q17 9M16 9M17 Revenue Currency translation 78 - 1,072 - Trading results from disposed operations in Brazil (1,743) - (273) - *Portfolio disposals (119) (131) (51) (163) (Adverse) / Favourable debit valuation adjustment on derivative contra
Slide 26: Balance sheet
Appendix Balance sheet 3Q17 Loans and advances to customers19, $bn Customer accounts19, $bn 933 945 Balances increased by $12bn vs. 2Q17. Total on a 906 Excluding red-inked balances, customer accounts increased 895 888 892 901 Excluding CML and red-inked balances, constant by $5bn vs. 2Q17, notably
Slide 27: Net interest margin supporting information
Appendix Net interest margin supporting information Gross customer lending analysis - $1,042bn Of our customer lending: HIBOR / USD 1 month rate23 As at 30 Sep 2017 As at 31 Dec 2016 1.40 UK RBWM 7% mortgages, $110bn Due less 1.20 − Fixed 57% than 1 year Due over 1 year 12% − Variable 43% but not mo
Slide 28: Equity drivers
Appendix Equity drivers 3Q17 vs. 2Q17 Equity drivers No. of shares (excl. Shareholders’ Tangible TNAV per treasury Equity, $bn Equity, $bn share, $ shares), million As at 30 June 2017 188.4 145.3 7.26 20,015 Profit to shareholders 3.2 3.2 0.16 - Dividends net of scrip24 (2.1) (2.1) (0.15) 115 AT1 is
Slide 29: UK credit quality
Appendix UK credit quality Total UK25 gross customer advances - RBWM residential mortgages26, RBWM unsecured lending27, £bn Commercial real estate, £bn £224bn £bn 78.9 79.7 80.7 81.8 83.8 Of which £84bn relates to Commercial Wholesale RBWM Other UK Wholesale real estate £109bn £14bn lending, excl. b
Slide 30: Footnotes
Appendix Footnotes 1. Annualised 2. Includes the impact of UK bank levy 3. 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 Authority 4. 9M16 jaws as reported in our 3Q17 Result
Slide 31: Footnotes
Appendix Footnotes 21. Uses FY2016 split of fixed and variable for commercial lending including lending to banks with greater than 1 year maturity as published in ‘Form 20-F’ as a proxy 22. Based on the average balance sheet at 3Q17. Of the 79% that relates to Demand, 64% is interest bearing with th
Slide 32: 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
Slide 33: Issued by HSBC Holdings plc Group Investor Relations
Issued by HSBC Holdings plc Group Investor Relations 8 Canada Square London E14 5HQ Cover image: The Hong Kong-Zhuhai-Macau Bridge: one of the most ambitious United Kingdom infrastructure projects in the Pearl River. 30 www.hsbc.com Photography: courtesy of Dragages-China Harbour-VSL JV