Hsbc Holdings Plc · LSE:HSBA

Hsbc — Q2 2024 Earnings Presentation

57 slides from Hsbc's earnings presentation, Jul 31, 2024

1. Slide 1: HSBC Holdings plc 2Q24 Results

   HSBC Holdings plc 2Q24 Results Presentation to Investors and Analysts

2. Slide 2: Summary of 1H24 performance and guidance

   Strategy 2Q24 results Appendix Summary of 1H24 performance and guidance $37.3bn reported revenue, up 1% vs. 1H23 Guidance 1 $33.7bn revenue excluding notable items, up 2% vs. 1H23 New: FY25 RoTE in the mid-teens, excluding notable items Existing guidance: FY24 RoTE in the mid-teens, excluding notabl

3. Slide 3: Strategic overview

   Strategic overview Noel Quinn Group Chief Executive

4. Slide 4: Our transformation journey since 2019

   Strategy 2Q24 results Appendix Our transformation journey since 2019  Exited non-strategic markets, including US mass market retail, France retail banking, Canada and Portfolio Argentina* repositioning  Optimised balance sheet with $128bn gross RWA saves during 2020-22 (ahead of our $110bn target)

5. Slide 5: Our strategy is delivering sustainable profitable growth

   Strategy 2Q24 results Appendix Our strategy is delivering sustainable profitable growth Driving growth by diversifying our revenue streams, including fee income:  Wealth: Strong revenue growth (+12% YoY1), with 2Q building on a good 1Q, and positive Asia NNIA (+43% YoY)  Wholesale Transaction Bank

6. Slide 6: Wealth: Key driver of revenue growth

   Strategy 2Q24 results Appendix Wealth: Key driver of revenue growth Wealth revenue $bn $3.5bn $1.3bn 1H24 1H24 $3.1bn $1.1bn +12% 1H23 1H23 4.3 3.9 7% Wealth fee and other income Private Banking revenue Asset (+14% from 1H23) (+16% from 1H23) Management 7% Life Insurance 16% Private $38bn $1.3bn Ban

7. Slide 7: Wholesale Transaction Banking: Maintaining leadership and driving growth through payments

   Strategy 2Q24 results Appendix Wholesale Transaction Banking: Maintaining leadership and driving growth through payments Wholesale Transaction Banking revenue $bn 4.8% +0% $1.1bn 2023 3.5% 13.2 13.2 2022 SSv (1)% Global Trade (1)% 1H24 GPS fee and other income Market share by GPS revenue Solutions*

8. Slide 8: Hong Kong and the UK: Continue driving strong profit generation in our home markets

   Strategy 2Q24 results Appendix Hong Kong and the UK: Continue driving strong profit generation in our home markets Hong Kong: Capturing inflows from customers seeking UK RFB: Driving growth domestically and internationally as the investment opportunities UK economy demonstrates resilience $6.1bn $54

9. Slide 9: International connectivity: Our competitive advantage is driving growth

   Strategy 2Q24 results Appendix International connectivity: Our competitive advantage is driving growth Our wholesale international business is positioned for when Growing our WPB international franchise as global mobility trade volumes and capital flows rebound expands +4% +6% $9.4bn $9.7bn $5.1bn $

10. Slide 10: 2Q24 Results

    2Q24 Results Georges Elhedery Group Chief Financial Officer

11. Slide 11: 2Q24 summary

    Strategy 2Q24 results Appendix 2Q24 summary $8.9bn PBT, up $0.4bn / 4% vs. 2Q23 1 Up 7% vs. 2Q23 excluding notable items and the impact of strategic transactions1 Banking NII run rate stable vs. 1Q24 2 Strong performance in Wealth Wholesale Transaction Banking stable ECL charge (15)bps of average gr

12. Slide 12: Financial performance

    Strategy 2Q24 results Appendix Financial performance Constant currency, $bn 2Q23 2Q24 Δ, $ Δ, %  $8.9bn PBT, up 4% vs 2Q23; up 7% excluding notable items and Revenue 16.3 16.5 0.3 2% the impact of strategic transactions ECL (0.9) (0.3) 0.5 61% PBT, $bn Costs (7.7) (8.1) (0.5) (6)% Associates 0.8 0.

13. Slide 13: Revenue

    Strategy 2Q24 results Appendix Revenue $16.5bn, up $0.3bn / 2% vs. 2Q23 Up $0.8bn / 5% excluding notable items and strategic transactions 2Q24 vs. Constant currency, $bn 2Q23 1Q24 2Q24 2Q23 Banking NII 11.1 11.1 10.9 (0.1) Primarily:  +$0.3bn other Fee and other income 5.2 9.5 5.6 0.4 Markets and I

14. Slide 14: Banking NII

    Strategy 2Q24 results Appendix Banking NII Stable run rate QoQ; upgrading FY24 guidance to ~$43bn1 Banking NII (reported FX), $bn Banking NII of $10.9bn, down $(0.4)bn vs. 1Q24, primarily: Canada  Canada sale: $(0.3)bn Argentina 11.6 11.5  Asia: $(0.1)bn due to lower HKD rates and 0.3 11.3 time de

15. Slide 15: Fee and other income: Wholesale Transaction Banking and Wealth

    Strategy 2Q24 results Appendix Fee and other income: Wholesale Transaction Banking and Wealth Wholesale Transaction Banking stable; strong quarter for Wealth Wholesale Transaction Banking stable vs. 2Q23 Wealth +13% vs. 2Q23 $bn $bn (0)% +13% vs. vs. 2.6 2.5 2.6 2.6 2Q23 1.8 1.7 2Q23 2.5 GTS* (1)% 1

16. Slide 16: Credit performance

    Strategy 2Q24 results Appendix Credit performance 2Q24 charge benefitted from recoveries and other items; excluding these, ECLs were broadly in line with our (30) to (40)bps planning range ECL charge trend, $bn (35)bps (41)bps (37)bps  $(0.3)bn 2Q24 ECL charge benefitted from (29)bps (15)bps $0.4bn

17. Slide 17: Costs

    Strategy 2Q24 results Appendix Costs On track to meet cost growth of ~(5)% vs. FY231 $bn* 1H23 1H24 Constant currency costs (15.2) (16.3) Less: notable items 0.1 0.1 Add: impact of retranslating results of hyperinflationary (0.3) —  Target basis costs up (7)% vs. 1H23, primarily economies at consta

18. Slide 18: Customer loans and deposits

    Strategy 2Q24 results Appendix Customer loans and deposits Second consecutive quarter of loan growth Customer loans, $bn +1% +$4bn Wholesale; +$1bn WPB 938 2 +$1bn WPB mortgages; +$1bn CMB 5 +$1bn WPB in the US Wholesale 930 (1) 2 1Q24 Hong Kong UK RFB Rest of Asia Other legal entities 2Q24 Customer

19. Slide 19: Capital and distributions

    Strategy 2Q24 results Appendix Capital and distributions Capital generation supporting further buyback CET1 ratio, %  $4.8bn further capital distributions: +0.8  Up to $3bn share buyback announced— expected 3Q24 CET1 ratio impact c.(0.4)ppts (0.4)  $0.10 DPS 15.2 +0.0 (0.4) 15.0  $6.4bn change i

20. Slide 20: Outlook

    Strategy 2Q24 results Appendix Outlook New RoTE guidance for FY25; upgrading FY24 Banking NII guidance 1 RoTE in the mid-teens for FY24 and FY25, excluding notable items 2 FY24 Banking NII of ~$43bn1 3 FY24 ECL charge to be within our medium term planning range of (30) to (40)bps2 4 Cost growth in F

21. Slide 21: Appendix

    Appendix

22. Slide 22: Group guidance summary

    Strategy 2Q24 results Appendix Group guidance summary Around $43bn in FY24, based on our current forecasts using market implied interest rates as of mid-July 2024. This Banking NII guidance remains dependent on the path of interest rates globally FY24 ECL charge to be within our medium term planning

23. Slide 23: Financial performance summary

    Strategy 2Q24 results Appendix Financial performance summary $m 2Q23 3Q23 4Q23 1Q24 2Q24 Δ 2Q23 NII 8,888 8,764 7,703 8,523 8,258 (7)% Non-NII 7,389 6,979 4,901 12,068 8,282 12 % Revenue 16,277 15,743 12,604 20,591 16,540 2% ECL (890) (1,046) (951) (711) (346) 61 % Costs (7,676) (7,755) (8,462) (8,0

24. Slide 24: Banking NII

    Strategy 2Q24 results Appendix Banking NII NII to Banking NII, $bn Reported FX, $bn1 2Q23 3Q23 4Q23 1Q24 2Q24 ∆ 1Q24 NII 9.3 9.2 8.3 8.7 8.2 (0.5) Less: insurance NII (0.1) (0.1) (0.1) (0.1) (0.1) (0.0) Central costs of funding trading income2 2.4 2.4 2.5 2.7 2.8 0.1 Banking NII 11.63 11.5 10.74 11.

25. Slide 25: Reported net interest margin

    Strategy 2Q24 results Appendix Reported net interest margin Quarterly NIM by key legal entity (reported FX basis) Group NIM, bps (reported FX basis) 2Q23 3Q23 4Q23 1Q24 2Q24 % 2Q24 % 2Q24 163 NII AIEA (1) 162 Asia 1.83% 1.85% 1.73% 1.66% 1.63% 44% 44% HSBC Bank plc 0.60% 0.53% 0.50% 0.35% 0.35% 5% 2

26. Slide 26: Banking NII sensitivity and structural hedge

    Strategy 2Q24 results Appendix Banking NII sensitivity and structural hedge Year 1 Banking NII sensitivity to a (100)bps down-shock,* $bn Banking NII sensitivity 30-Jun-22 31-Dec-23 30-Jun-24  Banking NII sensitivity to a (100)bps downshock $(2.7)bn, a reduction of c.$4.3bn since June 2022. We esti

27. Slide 27: Wholesale Transaction Banking and Wealth – additional information

    Strategy 2Q24 results Appendix Wholesale Transaction Banking and Wealth – additional information Total revenue, $m Wholesale Transaction Banking – selected metrics Constant currency basis 2Q23 1Q24 2Q24 vs. 2Q23 2Q23 3Q23 4Q23 1Q24 2Q24 Wholesale Transaction Banking 6,522 6,600 6,484 (38) (1)% GTS l

28. Slide 28: Wholesale multi-jurisdictional revenue (1/2)

    Strategy 2Q24 results Appendix Wholesale multi-jurisdictional revenue (1/2) 61% of wholesale client revenue is from multi-jurisdictional clients... …a majority of which is earned from activity outside the clients’ home market 1H24 Wholesale client revenue1, $bn Domestic-only clients in Clients whose

29. Slide 29: Wholesale multi-jurisdictional revenue (2/2)

    Strategy 2Q24 results Appendix Wholesale multi-jurisdictional revenue (2/2) 1H24 Wholesale client revenue  $9.7bn (61%) of wholesale client revenue is from clients we bank in multiple jurisdictions, of which $6.1bn is cross-border, i.e. earned outside the clients’ $bn 1H24 home market*  GBM: 90% o

30. Slide 30: WPB international revenue (1/2)

    Strategy 2Q24 results Appendix WPB international revenue (1/2) 40% of WPB customer revenue is from …delivering $5.4bn international customer revenues in 1H24 international customers… 1H24 WPB customer revenue, $bn Of which: Of which: Hong Kong UK RFB International customers1 $2.9bn $0.8bn Of which,

31. Slide 31: WPB international revenue (2/2)

    Strategy 2Q24 results Appendix WPB international revenue (2/2) 1H24 WPB customer revenue by type of customer  $5.4bn (40%) of WPB customer revenue is from international customers $bn  $2.7bn (20%) is from multi-jurisdictional customers, i.e. customers who bank with us in more than one market  $2.

32. Slide 32: ECL charge by legal entity

    Strategy 2Q24 results Appendix ECL charge by legal entity Constant currency, $m 2Q23 3Q23 4Q23 1Q24 2Q24 Asia (HBAP) (390) (746) (436) (271) (184) o/w Hong Kong (451) (660) (375) (234) (152) o/w mainland China CRE (259) (503) (195) (54) (72) UK RFB (HBUK) (259) (58) (47) (52) (10) HSBC Bank plc (HBE

33. Slide 33: Global CRE exposures

    Strategy 2Q24 results Appendix Global CRE exposures Commercial real estate gross loans and advances, $m1 Hong Kong, excluding exposure to mainland China borrowers 1H24 Reported FX basis FY23 1H24 Δ stage 3 Exposure of $35.6bn, down $(1.2)bn vs. FY23 %  c.60% secured; c.40% unsecured Asia (HBAP) 58,

34. Slide 34: Mainland China commercial real estate

    Strategy 2Q24 results Appendix Mainland China commercial real estate Mainland China CRE exposures by booking location and credit quality At 30 June 2024 Memo: Hong Hong Mainland Rest of Reported FX, $bn Total Kong at 4Q23 Kong China Group Total 6.3 4.8 4.3 0.3 9.4 Strong 0.8 0.3 1.7 0.1 2.1 Total ex

35. Slide 35: FY24 cost target basis reconciliation

    Strategy 2Q24 results Appendix FY24 cost target basis reconciliation $m FY23 1H23 1H24 1Q24 2Q24 Costs* (31,450) (15,244) (16,296) (8,151) (8,145) Less: Notable items 185 71 82 50 32 Add: Impact of retranslating prior period results in (714) (302) — — — hyperinflationary economies at constant curren

36. Slide 36: Notable items

    Strategy 2Q24 results Appendix Notable items Reported FX basis, $m 2Q23 3Q23 4Q23 1Q24 2Q24 Revenue (241) (268) (2,733) 3,732 (161) o/w: Disposals, acquisitions and related costs (241) 310 (2,333) 3,732 (161) o/w: Fair value movements on financial instruments — — (1) — — o/w: Restructuring and other

37. Slide 37: Argentina

    Strategy 2Q24 results Appendix Argentina Reported FX basis, $m 2Q23 3Q23 4Q23 1Q24 2Q24 NII 384 355 13 488 434  Announced agreement to sell the business on 9 April 2024 Non-NII (76) (108) (42) (291) (125)  In 1H24, recognised a pre-tax $(1.2)bn impairment loss following Revenue 308 247 (29) 197 30

38. Slide 38: EPS excluding material notable items and related impacts

    Strategy 2Q24 results Appendix EPS excluding material notable items and related impacts Reported FX basis, $m 2Q23 3Q23 4Q23 1Q24 2Q24 1H23 1H24 PAOS 6,639 5,619 (153) 10,183 6,403 16,966 16,586 Impact of acquisition of SVB UK 4 (86) 44 — (2) (1,507) (2) Impact of the sale of our retail banking oper

39. Slide 39: Balance sheet – customer lending

    Strategy 2Q24 results Appendix Balance sheet – customer lending Balances by global business, $bn Balances by entity Growth since 1Q24 $4bn 951 938 Asia (HBAP) $454bn 930 1% o/w: Hong $(1)bn GBM 175 173 174 $275bn Kong (0)% $2bn UK RFB (HBUK) $270bn 1% CMB 315 307 310 HSBC Bank plc $0bn $108bn (HBEU)

40. Slide 40: Balance sheet – customer accounts

    Strategy 2Q24 results Appendix Balance sheet – customer accounts Balances by global business, $bn Balances by entity Growth since 1Q24 $23bn Asia (HBAP) $799bn 1,580 1,594 3% 1,566 o/w: Hong $16bn Kong $544bn GBM 310 322 331 3% $1bn UK RFB (HBUK) $335bn 0% HSBC Bank plc $6bn CMB 466 454 467 $296bn (

41. Slide 41: 2Q24 vs. 1Q24 equity drivers

    Strategy 2Q24 results Appendix 2Q24 vs. 1Q24 equity drivers Shareholders’ Tangible equity, TNAV per share, Basic number of ordinary Reported FX basis equity, $bn $bn $ shares, millions At 31 March 2024 191.2 162.0 8.67 18,687 Profit attributable to: 6.5 6.9 0.37 — Ordinary shareholders1 6.4 6.9 0.37

42. Slide 42: Total shareholders’ equity to CET1 capital

    Strategy 2Q24 results Appendix Total shareholders’ equity to CET1 capital 2Q24 total equity to CET1 capital (reported FX), $m Total equity to CET1 capital walk (reported FX), $m 4Q23 1Q24 2Q24 Total equity 190,414 Total equity (per balance sheet) 192,610 198,377 190,414 Non-controlling interests (7,

43. Slide 43: Wealth and Personal Banking

    Strategy 2Q24 results Appendix Wealth and Personal Banking Revenue 2Q24 vs. 2Q23 Total revenue +$0.1bn, including $(0.3)bn impacts from strategic vs. 2Q23 transactions (sale of Canada and France retail). Excluding these, revenue $m 2Q23 1Q24 2Q24 o/w: strategic up $0.4bn / 6% $ % transactions Wealth

44. Slide 44: Wealth and Personal Banking: Global invested assets

    Strategy 2Q24 results Appendix Wealth and Personal Banking: Global invested assets Reported FX basis Global reported invested assets Asia reported invested assets Reported invested assets managed by AM $bn $bn $bn +16% +21% 1,191 1,271 607 683 703 1,097 549 628 503 104 469 72 91 384 445 166 185 485

45. Slide 45: Insurance manufacturing

    Strategy 2Q24 results Appendix Insurance manufacturing $m 1H23 1H24 vs. 1H23 ANP, $m NB CSM, $m Revenue 776 822 46 6% o/w NII 155 177 22 14% +48% +77% o/w CSM unwind 522 629 107 20% 2,792 1,324 1,888 747 o/w Onerous contracts 11 7 (4) (36)% o/w Net investment returns (23) (55) (32) >(100)% 1H23 1H24

46. Slide 46: Commercial Banking

    Strategy 2Q24 results Appendix Commercial Banking Revenue 2Q24 vs. 2Q23 vs. 2Q23 $m 2Q23 1Q24 2Q24 Revenue stable despite the impact of strategic transactions o/w: strategic (Canada sale). Excluding this, revenue was up $0.2bn / 4%, driven $ % transactions by currency volatility in Argentina and a s

47. Slide 47: Global Banking and Markets

    Strategy 2Q24 results Appendix Global Banking and Markets vs. 2Q23 Commentary 2Q24 vs. 2Q23 $m 2Q23 1Q24 2Q24 o/w: strategic $ % MSS revenue $2.4bn, up $0.3bn / 12%: transactions  Underlying growth in Securities Services was offset by a deposit Securities Services 585 555 572 (13) (2)% — outflow re

48. Slide 48: Corporate Centre

    Strategy 2Q24 results Appendix Corporate Centre vs. 2Q23 2Q24 vs. 2Q23 commentary o/w strategic Revenue down $(0.2)bn, primarily in ‘Other’ reflecting: $m 2Q23 1Q24 2Q24 $ % transactions  A loss related to the recycling of reserves following the Central Treasury (21) 9 (35) (14) (67)% — completion

49. Slide 49: Hong Kong

    Strategy 2Q24 results Appendix Hong Kong 1H24 performance Gross loans and advances to WPB active customers, millions2 customers Customer acquisition accelerated following the border reopening $m 1H23 1H24 Δ in early 2023 NII 4,967 4,178 (16)% 11% Non-NII 5,312 6,344 19% +6% Revenue 10,279 10,522 2%

50. Slide 50: UK ring-fenced bank

    Strategy 2Q24 results Appendix UK ring-fenced bank 1H24 performance Personal gross lending balances Deposits by type, £bn £m 1H23 1H24 Δ £bn 1H23 FY23 1H24 9 NII 3,871 4,003 3% Mortgages 126.4 129.3 131.2 7 59 43 WPB current CMB savings Non-NII 2,133 923 (57)% Credit cards 5.8 6.3 6.3 WPB savings CM

51. Slide 51: Reconciliations: Impact of notable items and strategic transactions

    Strategy 2Q24 results Appendix Reconciliations: Impact of notable items and strategic transactions $m 2Q23 2Q24 Revenue and PBT reconciliations include the Reported revenue 16,705 16,540 impact of: Currency translation (428) —  Strategic transactions (Canada, France, Constant currency revenue 16,27

52. Slide 52: Glossary

    Strategy 2Q24 results Appendix Glossary AIEA Average interest earning assets LTV Loan to value ANP Annualised new business premium Execution arm of HSBC's Treasury function, responsible for cash and liquidity Markets Treasury Banking net interest income is an alternative performance measure, and is

53. Slide 53: Footnotes

    Strategy 2Q24 results Appendix Footnotes Strategy numbers, and the following peer group: BofA, BARC, BNPP, CA-CIB, CITI, DBS, JPM, SCB. Analysis includes all Institutional Clients and Corporates with annual sales turnover of more than US$5-10m Slide 1: Summary of 1H24 performance and guidance 2. Eur

54. Slide 54: Footnotes

    Strategy 2Q24 results Appendix Footnotes Slide 14: Fee and other income: Wholesale Transaction Banking and Wealth Slide 24: Net interest margin 1. Includes (i) GFX in GBM management view of income; (ii) GFX from cross sale of FX products to CMB clients, included within 1. Based on HK deposit balance

55. Slide 55: Footnotes

    Strategy 2Q24 results Appendix Footnotes Slide 34: FY24 cost target basis reconciliation 1. Refer to slide 19, footnote 3 Slide 36: Argentina 1. RWAs (excluding Operational Risk RWAs) as at 30JUN24 Slide 40: 2Q24 vs. 1Q24 equity drivers 1. Differences between shareholders’ equity and tangible equity

56. Slide 56: Disclaimer

    Strategy 2Q24 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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HSBC Holdings — Q2 2024 Earnings Presentation on 6ix