Hsbc Holdings Plc · LSE:HSBA
Hsbc — Q3 2019 Earnings Presentation
31 slides from Hsbc's earnings presentation, Oct 30, 2019
Slide 1: HSBC Holdings plc 3Q19 Results Presentation to Investors and Analysts
HSBC Holdings plc 3Q19 Results Presentation to Investors and Analysts
Slide 2: Highlights
Highlights 3Q19 reported PBT down 18% to $4.8bn versus 3Q18; adjusted PBT down 12% to $5.3bn 1 Reported PBT in Asia up 4% to $4.7bn in 3Q19, with a resilient performance in Hong Kong 2 Growth in adjusted loans and advances to customers and customer accounts, up 7% and 5% respectively, compared with
Slide 3: Business update
Business update Drivers of growth and returns: Leading global transaction bank, supported by strong international Protect and grow core wholesale bank business Inherent strengths Powerful and profitable retail banking and wealth management Update plans and businesses in our biggest markets a
Slide 4: Key financial metrics
Financial performance Key financial metrics Key financial metrics 9M19 9M18 ∆ 9M18 Return on average tangible equity (annualised)1 9.5% 10.1% (0.6)ppts Return on average ordinary shareholders’ equity (annualised) 9.2% 9.0% 0.2ppts Jaws (adjusted)2 2.2% (1.6)% nm Dividends per ordinary share in respe
Slide 5: Adjusted revenue performance
Financial performance Adjusted revenue performance Adjusted revenue analysis 3Q19 revenue 3Q19 vs. 3Q18, $m 9M19 vs. 9M18, $m Retail Banking 149 887 $3,981m $0.0bn $1.3bn RBWM $5,628m $1,476m Wealth Management (94) 223 0% 8% $171m Other (51) 144 $1,506m GLCM 60 424 $464m GTRF 9 42 CMB $3,791m $0.1bn
Slide 6: Net interest income and NIM
Financial performance Net interest income and NIM Net interest income Adjusted NII of $7.7bn stable versus 2Q19; up $0.2bn (3%) versus Reported 3Q18 quarterly 7,456 7,644 7,680 7,709 7,468 7,772 7,568 NII, $m Reported NII of $7.6bn down $0.2bn (3%) versus 2Q19, primarily due to provisions in rel
Slide 7: Adjusted costs
Financial performance Adjusted costs 3Q19 vs. 3Q18, $bn Adjusted costs Adjusted costs of $7.5bn in 3Q19 +61m, 0.8% broadly stable versus 3Q18 and down $0.4bn (5%) versus 2Q19 0.1 0.2 (0.2) Compared to the prior quarter, 3Q19 (0.3) 0.1 benefitted from a $0.2bn release of YTD variable pay, savings
Slide 8: Credit performance
Financial performance Credit performance Adjusted ECL of $883m, compared with $545m in 2Q19 primarily reflecting higher charges in RBWM and CMB: • RBWM adjusted ECL of $449m, up from $231m in 2Q19, primarily driven by: unsecured lending in the US, Mexico and the UK, and charges related to updated
Slide 9: Capital adequacy: CET1 ratio of 14.3%
Financial performance Capital adequacy: CET1 ratio of 14.3% Capital progression CET1 ratio movement, % 4Q18 1Q19 2Q19 3Q19 Common equity tier 1 capital, $bn 121.0 125.8 126.9 123.8 (0.2) 0.4 Risk-weighted assets, $bn 865.3 879.5 886.0 865.2 (0.1) 0.1 (0.1) 14.3 (0.1) 14.3 CET1 ratio, % 14.0 14.3 14.
Slide 10: Summary
Summary 3Q19 results demonstrate the resilience of our international transaction banking network and the strength of our Asian 1 franchise The revenue environment is more challenging than in the first half of 2019, and the outlook for revenue growth is softer than we 2 anticipated at 1H19 We no long
Slide 11: Appendix
Appendix
Slide 12: Significant items
Appendix Significant items $m 3Q19 2Q19 3Q18 9M19 9M18 Reported PBT 4,837 6,194 5,922 17,244 16,634 Revenue Currency translation - (208) (355) - (1,514) Customer redress programmes 118 - - 118 (46) Disposals, acquisitions and investment in new businesses 4 (827) - (823) 142 Fair value movements on f
Slide 13: Certain revenue items and Argentina hyperinflation
Appendix Certain revenue items and Argentina hyperinflation Certain items included in adjusted revenue highlighted 3Q19 2Q19 3Q18 9M19 9M18 in management commentary8, $m Insurance manufacturing market impacts in RBWM (225) (33) (48) (72) (140) Credit and funding valuation adjustments in GB&M (160) (
Slide 14: Volatile items analysis
Appendix Volatile items analysis RBWM: Insurance manufacturing GB&M: Markets excl. Foreign GB&M: Credit and funding valuation Corporate Centre: Valuation market impacts revenue, $m Exchange revenue, $m adjustments revenue, $m differences on long-term debt and 183 associated swaps revenue, $m 1,088 4
Slide 15: Global business management view of adjusted revenue
Appendix Global business management view of adjusted revenue Δ% Δ% Group, $m 1Q18 2Q18 3Q18 4Q18 1Q19 2Q19 3Q19 GB&M, $m 1Q18 2Q18 3Q18 4Q18 1Q19 2Q19 3Q19 3Q18 3Q18 Total Group revenue 12,935 12,994 13,486 12,359 14,087 13,881 13,267 (2) Global Markets 1,791 1,578 1,745 1,084 1,703 1,405 1,352 (23)
Slide 16: Retail Banking and Wealth Management
Appendix Retail Banking and Wealth Management 9M19 highlights Revenue performance8, $m Balance sheet13, $bn 0% +5% (4)% +9% 5,353 5,162 5,624 5,038 5,842 5,869 5,628 623 650 656 Adjusted PBT (9M18: $5.7bn) 183 345 368 376 Wealth Mgt. $6.1bn 8% 1,792 1,571 1,618 1,298 1,705 1,728 1,701 (39) (52) (48)
Slide 17: Commercial Banking
Appendix Commercial Banking 9M19 highlights Revenue performance8, $m Balance sheet13, $bn +4% Customer lending: (1)% +5% 3,466 3,558 3,653 3,638 3,839 3,839 3,791 0% Adjusted PBT (9M18: $5.8bn) Adjusted revenue 341 341 Markets products, 492 324 $5.7bn 3% Insurance and Investments, and 526 462 459 38
Slide 18: Global Banking and Markets
Appendix Global Banking and Markets 9M19 highlights Revenue performance8, $m Management view of adjusted (15)% revenue $m 3Q19 ∆3Q18 Adjusted revenue 3,875 3,905 4,070 3,023 3,980 3,592 3,470 Global Markets 1,352 (23)% 21 36 46 FICC 1,145 (22)% Credit and Adjusted PBT Funding (58) (173) (32) (160) -
Slide 19: Global Private Banking
Appendix Global Private Banking 9M19 highlights Revenue performance8, $m Reported client assets +29bn +11% 331 330 326 335 341 338 309 +0% Adjusted PBT 463 438 427 421 448 471 472 Adjusted revenue (9M18: $280m) Other 1Q18 2Q18 3Q18 4Q18 1Q19 2Q19 3Q19 43 49 44 $319m 14% Deposit 47 45 43 49 118 112 1
Slide 20: Corporate Centre
Appendix Corporate Centre 9M19 highlights Revenue performance8, $m Legacy credit adjusted RWAs, $bn 5.5 1Q18 2Q18 3Q18 4Q18 1Q19 2Q19 3Q19 Central Treasury (41) 187 91 268 284 263 313 Adjusted PBT Of which: -3.8% (9M18: $0.9bn) Balance Sheet Management 566 672 528 627 610 586 626 2.6 2.5 $1.7bn 95%
Slide 21: RoTE by global business excluding significant items and UK bank levy
Appendix RoTE by global business excluding significant items and UK bank levy 9M19 $m Corporate RBWM CMB GB&M GPB Group Centre Reported profit before tax 4,891 5,602 3,866 365 2,520 17,244 Tax expense (801) (1,190) (766) (64) (691) (3,512) Reported profit after tax 4,090 4,412 3,100 301 1,829 13,732
Slide 22: Return metrics
Appendix Return metrics Group RoTE (annualised) walk, 9M19 vs. 9M18, % 11.4 1.3 (1.3) 10.1 0.1 10.1 0.1 (0.2) (0.6) 9.5 9M18 Reported Significant items 9M18 excl. Change in PBT Change in tax NCI & AT1/ Change in Equity 9M19 excl. Significant 9M19 Reported RoTE and UK bank levy signficant items Prefe
Slide 23: Equity drivers
Appendix Equity drivers 3Q19 vs. 2Q19 Equity drivers Basic number Shareholders’ Tangible TNAV per of ordinary Equity, $bn Equity16, $bn share, $ shares, million As at 30 June 2019 192.7 145.4 7.19 20,221 Profit attributable to: 3.5 2.5 0.12 - Ordinary shareholders 3.0 2.5 0.12 - Other equity holders
Slide 24: Balance sheet – customer lending
Appendix Balance sheet – customer lending 3Q19 Net loans and advances to customers 3Q19 adjusted lending growth by global business and region $bn Adjusted customer lending increased by $16bn (2%) vs. 2Q19: Growth since 2Q19 $bn Growth since 2Q19 $bn Customer lending growth was primarily in Asia (u
Slide 25: Balance sheet – customer accounts
Appendix Balance sheet – customer accounts 3Q19 Customer accounts Reported average customer accounts, $bn Adjusted customer accounts increased by $19bn (1%) vs. 2Q19: Customer accounts increased in Europe by $9bn, driven by an increase in CMB and 6% CAGR (Demand RBWM balances, notably in HSBC UK (
Slide 26: UK customer loans and advances
Appendix UK customer loans and advances Total UK gross customer loans and advances RFB RBWM residential mortgages, £bn RFB RBWM unsecured lending, £bn As at 30 September 2019 92.6 93.7 95.3 97.0 85.1 86.8 89.8 Of which £97.0bn relates to RBWM in the RFB 6.7 7.0 6.8 6.2 6.9 Wholesale 5.4 £102bn Mar-1
Slide 27: US geographical region
Appendix US geographical region Reported by global business, $m Corporate RBWM CMB GB&M GPB US total 9M19 Centre Income statement Net interest income 639 595 227 102 28 1,591 Net fee income 172 170 547 50 (12) 927 Other income 48 10 671 5 282 1,016 Revenue 859 775 1,445 157 298 3,534 ECL (85) (33) 1
Slide 28: HSBC Bank plc (NRFB)
Appendix HSBC Bank plc (NRFB) Reported by global business, $m Corporate HSBC RBWM CMB GB&M GPB 9M19 Centre Bank plc Income statement Net interest income 628 711 697 77 (726) 1,387 Net fee income 278 345 568 95 (12) 1,274 Other income 58 71 2,194 - 654 2,977 Revenue 964 1,127 3,459 172 (84) 5,638 ECL
Slide 29: Footnotes
Appendix Footnotes 1. Due to falling interest rates in the year to date, the regulator-prescribed ‘Valuation Interest Rate’ parameters used to discount the insurance liabilities in Hong Kong and Singapore were reduced. This led to an increase in the liabilities under insurance contracts of USD 1.3bn
Slide 30: Glossary
Appendix Glossary AIEA Average interest earning assets The difference between the rate of growth of revenue and the rate of Jaws growth of costs. Positive jaws is where the revenue growth rate ASEAN Association of Southeast Asian Nations exceeds the cost growth rate. Calculated on an adjusted basis
Slide 31: 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