Hsbc Holdings Plc · LSE:HSBA
Hsbc — Debt Investor Presentation (August 2019)
38 slides from Hsbc's debt investor presentation, Aug 5, 2019
Slide 1: HSBC Holdings plc 1H19 Results Fixed Income Investor Presentation
HSBC Holdings plc 1H19 Results Fixed Income Investor Presentation
Slide 2: Contents
Contents 1 Key credit messages 2 2 Group 1H19 performance 4 3 Capital structure and debt issuance 16 4 Appendix 25 1
Slide 3: Key credit messages
Key credit messages ep Hssc
Slide 4: Key credit messages
Key credit messages Diversified businesses, strong capital, funding and liquidity position As at 1H19 Conservative and consistent approach to risk 23bps ECL as a % of gross customer 1.3% Stage 3 loans as a % of advances (annualised) gross customer advances Other GB&M RBWM Europe Asia Diversified rev
Slide 5: Group 1H19 performance
Group 1H19 performance ep Hssc
Slide 6: Progress on our strategic priorities
Group 1H19 performance Progress on our strategic priorities Strategic priorities Targeted 2020 outcomes 1H19 performance highlights (vs. 1H18 unless noted) Asia adjusted revenue of $15.5bn (+9%); Wealth in Asia revenue of 1 Accelerate growth from Asia High single digit revenue growth p.a.; $3.1bn, u
Slide 7: Outlook
Group 1H19 performance Outlook Financial targets 1 Growing revenues in areas of strength RoTE13 >11% by 2020 Continue to redeploy capital into higher return businesses and invest 2 in technology to improve customer service and competitiveness Costs Positive adjusted jaws 3 Businesses have good m
Slide 8: Key financial metrics
Group 1H19 performance Key financial metrics Key financial metrics 1H19 1H18 ∆ 1H18 Return on average ordinary shareholders’ equity (annualised) 10.4% 8.7% 1.7ppt Return on average tangible equity (annualised) 11.2% 9.7% 1.5ppt Jaws (adjusted)14 4.5% (5.6)% nm Dividends per ordinary share in respect
Slide 9: 2Q19 adjusted revenue performance
Group 1H19 performance 2Q19 adjusted revenue performance Adjusted revenue analysis 2Q19 revenue 2Q19 vs. 2Q18, $m 1H19 vs. 1H18, $m $1,706m Wealth Management 176 316 $0.7bn or $1.3bn or RBWM $5,949m $4,002m Retail Banking 366 14% 741 12% $241m Other 181 194 $1,540m GLCM 148 364 $476m GTRF 13 37 CMB
Slide 10: 2Q19 Net interest income and NIM
Group 1H19 performance 2Q19 Net interest income and NIM Net interest income Adjusted NII up 6% 2Q19 vs. 2Q18; up 5% vs. 1Q19 driven by higher +6% +5% HIBOR, partly offset by a change in funding mix 7,587 7,695 7,359 7,422 7,772 Adjusted 7,075 2Q19 NIM of 1.62% up c.3bps vs. 1Q19: quarterly 4bp
Slide 11: 2Q19 credit performance
Group 1H19 performance 2Q19 credit performance 2Q19 ECL charge $555m, broadly stable vs. 1Q19: • 2Q19 ECL charge as a percentage of gross loans and advances of 22bps • RBWM 2Q19 ECL of $238m down $62m (21%) vs. 1Q19; stable vs. 2Q18 charge of $225m • CMB 2Q19 ECL of $248m stable vs. 1Q19 ($244m);
Slide 12: Asset quality
Group 1H19 performance Asset quality Gross loans and advances to Loans and advances to customers Stage 3 and impaired loans and LICs/ECL, $bn customers - $1,030bn of ‘Strong’ or ‘Good’ credit advances to customers, $bn quality, $bn Total gross customer loans and 23.8 advances to customers by credit
Slide 13: Customer loan book
Group 1H19 performance Customer loan book As at 30 June 2019 Retail mortgage average LTVs (portfolio, indexed) Wholesale loan book ($bn, gross loans and advances to customers) UK: 50 New lending: 68% % HK: 38 New lending: 49% % Non-bank financial institutions 11.3% 17.8% Manufacturing Other 12.2% Pe
Slide 14: Diversified revenue streams, pivoting to Asia
Group 1H19 performance Diversified revenue streams, pivoting to Asia Diversified revenue streams by global business, region and type Strategic priority 1 is to accelerate growth from our Asia franchise and be the leading bank to support drivers of global investment 1H19 adjusted revenue by globa
Slide 15: Funding and liquidity
Group 1H19 performance Funding and liquidity Group consolidated LCR, % Principal operating entities LCR NSFR 154% % 1H19 2018 1H19 2018 142% HSBC UK Bank plc (RFB) 155 143 147 144 136% 136% HSBC Bank plc (NRFB) 140 147 110 113 The Hongkong and Shanghai Banking 151 161 128 132 Corporation Ltd – HK br
Slide 16: Capital position
Group 1H19 performance Capital position 1H19 vs. FY18 CET1 ratio movement, % 14.3% CET1 ratio, up 0.3ppts from 31 (0.4) December 2018, mainly as a result of: 0.9 (0.3) 14.3 − Capital generation through profits 0.0 0.1 14.0 (0.9ppts) Partly offset by: − Dividends net of scrip (-0.4ppts) − RWA growt
Slide 17: Capital structure and debt issuance
Capital structure and debt issuance 16
Slide 18: CET1 position versus requirements
Capital structure and debt issuance CET1 position versus requirements Common Equity Tier 1 ratio, versus Maximum Distributable Amount (“MDA”) Buffer to $26bn MDA25 2.9% 11.4% 0.7% 2.0% 14.3% CET1 ratio as at 30 June 2019 Combined buffer of 5.2% Throughout the period to 2020, our plan assumes our
Slide 19: Total capital position versus requirements
Capital structure and debt issuance Total capital position versus requirements Regulatory capital versus regulatory requirements as a % of RWAs Regulatory capital instrument eligibility No impact on the eligibility of AT1 securities under CRR II 20.1% $9bn notional of Tier 2 securities previousl
Slide 20: Progress toward meeting MREL requirements
Capital structure and debt issuance Progress toward meeting MREL requirements $77bn stock of MREL-eligible HoldCo Senior built (notional) Outstanding MREL-eligible senior by currency $bn-equivalent 77.3 69.1 EUR 15% 49.6 GBP 9% 38.1 $ 77.3bn 4% JPY 3% Other 69% USD 7.0 Pre-2016 2016 2017 2018 1H19 M
Slide 21: MREL/TLAC position versus requirements
Capital structure and debt issuance MREL/TLAC position versus requirements29 MREL-eligible capital and HoldCo senior versus estimated regulatory requirements as a % of Group RWAs 29.3% HSBC exceeds its 2019 MREL requirements 27.3% HSBC Group’s 2019 MREL requirement32 is the 9.0% 24.1% greater of
Slide 22: Indicative summary MREL/TLAC requirement
Capital structure and debt issuance Indicative summary MREL/TLAC requirement35 HSBC Group MREL requirements as at 1 Jul 2019 are driven by the sum of the parts (‘SoTP’)31 calculation. SoTP sums our local subsidiaries’ MREL/TLAC requirements to give the Group’s overall MREL requirement HSBC Group TLA
Slide 23: Indicative timeline of MREL/TLAC requirement
Capital structure and debt issuance Indicative timeline of MREL/TLAC requirement 2019 2020 2021 2022 The greater of: Indicatively, the greater of: HSBC 16% of RWAs 18% of RWAs Group 6% of leverage exposures 6.75% of leverage exposures Sum-of-the-parts ♦ Sum-of-the-parts ♦ ♦ Key sum-of-th
Slide 24: Approach to issuance – single point of issuance, multiple point of entry
Capital structure and debt issuance Approach to issuance – single point of issuance, multiple point of entry 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 g
Slide 25: Issuance strategy and plan
Capital structure and debt issuance Issuance strategy and plan Forward-looking issuance plan42 Maturity profile28 $bn-equivalent 26.0 HoldCo senior: expect to issue low / mid-teens As at 30 Jun 2019 0.8 USDbn per year 23.4 1.1 21.7 − Increasing maturity profile will reduce net 1.1 19.5 10.3 issuan
Slide 26: Appendix
Appendix
Slide 27: Significant items
Appendix Significant items $m 2Q19 1Q19 2Q18 1H19 1H18 Reported PBT 6,194 6,213 5,957 12,407 10,712 Revenue Currency translation - (104) (508) - (1,160) Customer redress programmes - - (46) - (46) Disposals, acquisitions and investment in new businesses (827) - 30 (827) 142 Fair value movements on f
Slide 28: Balance sheet – customer accounts
Appendix Balance sheet – customer accounts 2Q19 Customer accounts FY18: Reported average customer accounts44, $bn Adjusted customer accounts increased by $29.2bn (2%) vs. 1Q19: 6% CAGR Asia up $19.5bn, mainly in GB&M ($9.1bn) and CMB ($7.3bn), including (Demand seasonality in Hong Kong and mainlan
Slide 29: Balance sheet – customer lending
Appendix Balance sheet – customer lending 2Q19 Net loans and advances to customers 2Q19 adjusted lending growth by global business and region $bn Adjusted customer lending increased by $20.9bn (+2%) vs. 1Q19, reflecting Growth since 1Q19 $bn Growth since 1Q19 $bn lending growth in: UK mortgages Othe
Slide 30: UK customer loans and advances
Appendix UK customer loans and advances Total UK gross customer loans and advances RBWM residential mortgages45, £bn RBWM unsecured lending45, £bn As at 30 June 2019 89.8 92.6 93.7 95.3 85.1 86.8 Of which £95.3bn relates to RBWM in the RFB 6.7 6.9 7.0 6.7 Wholesale 5.4 6.1 £101bn Mar-18 Jun-18 Sep-1
Slide 31: Mainland China drawn risk exposure
Appendix Mainland China drawn risk exposure47 Total China drawn risk exposure of Total China drawn risk exposure of $173bn $173bn Wholesale: $163bn (of which 52% is onshore); Retail: $10bn As at 30 June 2019 Wholesale - $163bn Gross loans and advances to customers of c$43bn in mainland China (
Slide 32: Current credit ratings for main issuing entities
Appendix Current credit ratings for main issuing entities Long term senior ratings as at 5 August 2019 Fitch Moody’s S&P Rating Outlook Rating Outlook Rating Outlook Ratings Watch HSBC Holdings plc AA- A2 Stable A Stable Negative Ratings Watch The Hongkong and Shanghai Banking Corporation Ltd AA- Aa
Slide 33: Simplified structure chart
Appendix Simplified structure chart Holding company Associate HSBC Intermediate holding company Holdings plc Resolution entity UK Operating company 99.9% HSBC HSBC HSBC Private HSBC HSBC HSBC Asia North 94.5% Bank HSBC UK Banking Mexico, Bank Holdings Ltd America Egypt Holdings Ltd Holdings S.A. Can
Slide 34: Glossary
Appendix Glossary ASEAN Association of Southeast Asian Nations HoldCo Holding Company AT1 Additional Tier 1 HQLA High Quality Liquid Assets Basis points. One basis point is equal to one-hundredth of a percentage LTD Long term debt Bps point LTV Loan-to-value ratio CET1 Common Equity Tier 1 IAS Inter
Slide 35: Footnotes
Appendix Footnotes 1. Scale markets include HK, UK, Mexico, PRD, Singapore, Malaysia, UAE, Saudi Arabia 2. Market share gains are vs. 2017 year end; market shares for HK, UK, Mexico, PRD, Singapore and Malaysia are as of May 2019; Saudi Arabia is as of April 2019; UAE is as of March 2019 3. Cumulati
Slide 36: Footnotes
Appendix Footnotes 32. The Bank of England has written to HSBC confirming the preferred resolution strategy for HSBC Group remains a multiple-point-of-entry (‘MPE’) resolution strategy and setting out the 2019 and indicative 2020, 2021 and 2022 external MREL applicable to HSBC Group. The Group’s ext
Slide 37: Disclaimer
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 law or an offer to se
Slide 38: Issued by HSBC Holdings plc
Issued by HSBC Holdings plc Group Investor Relations 8 Canada Square London E14 5HQ United Kingdom www.hsbc.com 37
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