HSBC Holdings PLC · LSE:HSBA
HSBC — H1 2012 Earnings Presentation
30 slides from HSBC's earnings presentation, Jul 31, 2012
Slide 1: Presentation to Investors and Analysts - Amendment
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Slide 2: HSBC Holdings plc Interim Results 2012
A Chinese ship in Brazil’s largest port, Santos. Photography: Matthew Mawson HSBC Holdings plc Interim Results 2012 Presentation to Investors and Analysts
Slide 3: Forward-looking statements
Forward-looking statements This presentation and subsequent discussion may contain certain forward-looking statements with respect to the financial condition, results of operations and business of the Group. These forward- looking statements represent the Group’s expectations or beliefs concerning
Slide 4: Interim results 2012 Highlights
Interim results 2012 Highlights Reported profit before tax USD12.7bn, up 11% on 1H11 Underlying1 profit before tax USD10.6bn, down 3% on 1H11 Profit before tax Reduced by provisions for UK customer redress USD1.3bn and US law enforcement and regulatory matters USD0.7bn A further 19 transacti
Slide 5: Financial highlights
Interim results 2012 Financial highlights Summary financial highlights1 % Better / (worse) 1H11 2H11 1H12 1H12 vs 1H11 1H12 vs 2H11 Reported PBT (USDbn) 11.5 10.4 12.7 11 23 Underlying PBT (USDbn) 11.0 5.8 10.6 (3) 83 EPS (USD) 0.51 0.41 0.45 (12) 10 Dividends2 (USD) 0.18 0.23 0.18 n/a n/a Financial
Slide 6: Regional and country profit contributions
Interim results 2012 Regional and country profit contributions Geographical regions Country highlights PBT1 (USDbn) 1H11 2H11 1H12 (PBT1 USDm, 1H12 v 1H11) Hong Kong 3,761 +22% India 515 +32% Hong Kong 3.1 2.8 3.8 China HSBC² 454 +59% Hong Kong and Singapore 335 +3% Rest of Asia- Malaysia 288 +17% R
Slide 7: Financial Performance
Financial Performance HSBC <>
Slide 8: Financial overview: Summary of reported results
Financial overview Summary of reported results % Better / (worse) (USDbn) 1H11 2H11 1H12 1H12 vs 1H11 1H12 vs 2H11 Revenue1 excluding FVOD2 35.8 32.5 39.1 9 20 LICs3 (5.3) (6.9) (4.8) 9 30 Net operating income, excluding FVOD 30.5 25.6 34.3 12 34 Operating expenses (20.5) (21.0) (21.2) (3) (1) Assoc
Slide 9: Financial overview: Underlying performance
Financial overview Underlying performance1 % Better / (worse) (USDbn) 1H11 2H11 1H12 1H12 vs 1H11 1H12 vs 2H11 Revenue2 33.4 30.9 34.8 4 13 LICs (4.8) (6.5) (4.8) (1) 26 Operating expenses (19.3) (20.4) (21.2) (10) (4) Profit before tax 11.0 5.8 10.6 (3) 83 Revenue growth (1H12 v 1H11) from: GBM (
Slide 10: Revenues
Revenues1 Geographical regions Underlying revenues increased by 4% (USDbn) 38 2.1 36.9 11% growth in revenues from Asia, 37 Latam and MENA, which account for 35.7 0.4 36 0.5 51% of total 0.7 34.8 35 0.6 (0.5) (0.1) 34 33.4 0.1 (0.3) Strong CMB revenues, particularly from 33 (2.3) lending growt
Slide 11: Operating expenses
Operating expenses1 Operating expenses Underlying operating expenses (USDbn) increased by USD1.9bn, largely due to 22 notable items of USD2.6bn 2.6 21.2 21 20.5 Notable items in 1H12 of USD2.6bn 20 include UK customer redress 19.3 0.2 0.1 USD1.3bn, restructuring USD0.6bn and 0.4 19 (1.2) US law
Slide 12: Operating expenses: Quarterly progression and FTE
Operating expenses1 Quarterly progression in operating expenses and FTE Operating expenses1 (USDbn) Operating expenses include significant notable items and 10.8 10.9 excluding these were stable for the last six quarters 9.6 9.9 9.2 9.1 1.5 1.9 0.5 0.1 0.7 0.2 FTE down 27k from peak in 1Q11, of
Slide 13: Credit quality: LICs stable
Credit quality LICs1 stable Group Geographic Regions LICs stable on underlying basis (USDbn) (USDbn) 6 1H11 1H12 0.7 1.1 1.1 1.0 Notable decrease in North America due to a reduction in the lending balances in the CML portfolio 5 4.8 4.8 0.1 0.3 0.1 0.1 Reduction in RBWM Europe reflecting 4 imp
Slide 14: Capital adequacy: Absorbing Basel 2.5
Capital adequacy Absorbing ‘Basel 2.5’ Strong capital generation and funding Movement in core tier 1 capital Core tier 1 ratio strengthened from gain on sale and reduction in (USDbn) RWAs from strategic disposals, mainly CRS 10 2 131 122 (3) Management actions on the trading book drove further r
Slide 15: Capital adequacy: Simulated effect of full Basel 3 rules
Capital adequacy Simulated effect of full Basel 3 rules on HSBC 30-Jun-12 Core Tier 1 capital ratio exclusive of future profit or business growth1 Core / Common equity tier 1 ratio1,2 (%) Run-off 11.3% 0.5% 10.3% 0.6% 1.1% (1.4%) (0.7%) 9.2% Basel 2.5 30-Jun-12 Basel 3 RWA impact Basel 3 capital imp
Slide 16: Business Performance
Business Performance HSBC <>
Slide 17: Report Card
Report Card Key execution elements Progress in 1H121 Capital Deployment 19 transactions announced in 1H12 with 36 since beginning of 2011 releasing up to USD55bn in RWAs Five Filters Run-off portfolios continued to decline Achieved USD0.8bn sustainable cost savings, annualised equivalent USD1.
Slide 18: Profitability
Profitability Target RoE 12-15% supported by a RoRWA 2.1%-2.7%1,2 HSBC return on average ordinary shareholders’ equity (%) 12-15% ROE target supported by 2.1- 12-15 2.7% RoRWA 10.9 10.5 9.5 1H12 RoRWA at 2.1%, or 1.8% on underlying basis3 5.1 1H12 RoRWA, ex US CML and other, CRS and GBM legacy
Slide 19: Regional and country profit contribution
Regional and country profit contribution Geographical regions Country highlights PBT1 (USDbn) 1H11 2H11 1H12 (PBT1 USDm, 1H12 v 1H11) Hong Kong 3,761 +22% India 515 +32% Hong Kong 3.1 2.8 3.8 China HSBC² 454 +59% Hong Kong and Singapore 335 +3% Rest of Asia- Malaysia 288 +17% Rest of Asia- Pacific I
Slide 20: Global business contribution
Global business contribution % Better / (worse) PBT1, (USDbn) 1H11 2H11 1H12 1H12 vs 1H11 1H12 vs 2H11 Commercial Banking 4.1 3.7 4.2 3 13 Global Banking and Markets 4.7 2.2 5.0 7 128 Retail Banking Wealth Management 2.9 0.7 2.6 (11) 292 Global Private Banking 0.5 0.4 0.5 (16) 15 Other (1.2) (1.2) (
Slide 21: Commercial Banking
Commercial Banking1 Strengthen our position as the leading international trade and business bank CMB PBT Achievements and developments (USDbn) Focus on faster-growing markets while connecting with 4.1 4.2 developed markets 3.7 Revenues from faster growing regions up 12%, which account for 55% 1.3
Slide 22: Global Banking and Markets
Global Banking and Markets1 Emerging-markets led, financing focused with greater emphasis on connectivity GBM PBT Achievements and developments (USDbn) 4.7 5.0 Enhance core product strengths and selectively develop new capabilities 2.2 Revenues strong (+10%) Faster growing regions revenues up 15
Slide 23: Retail Banking and Wealth Management
Retail Banking and Wealth Management1 World class banking and wealth solutions RBWM PBT Achievements and developments (USDbn) 2.9 3.4 3.1 2.8 Re-shaping RBWM to drive superior returns 2.6 0.7 Further disposals of non-strategic businesses Exiting general insurance manufacturing business to focus
Slide 24: Interim results 2012 Highlights
Interim results 2012 Highlights Reported profit before tax USD12.7bn, up 11% on 1H11 Underlying1 profit before tax USD10.6bn, down 3% on 1H11 Profit before tax Reduced by provisions for UK customer redress USD1.3bn and US law enforcement and regulatory matters USD0.7bn A further 19 transacti
Slide 25: Appendix
Appendix HSBC <>
Slide 26: Reported quarterly results: Consolidated summary
Reported quarterly results Consolidated summary PBT, USDm 31 Mar 2011 30 Jun 2011 30 Sep 2011 31 Dec 2011 31 Mar 2012 30 Jun 2012 Income (excluding FVOD) 17,629 18,207 15,833 16,678 18,845 20,222 LICs (2,384) (2,882) (3,890) (2,971) (2,366) (2,433) Net operating income (excluding FVOD) 15,245 15,325
Slide 27: Reported quarterly results: Regional contributions
Reported quarterly results Regional contributions PBT, USDm 31 Mar 2011 30 Jun 2011 30 Sep 2011 31 Dec 2011 31 Mar 2012 30 Jun 2012 Hong Kong 1,562 1,519 1,288 1,454 1,897 1,864 Rest of Asia-Pacific 1,634 2,108 2,008 1,721 2,024 2,348 Asia 3,196 3,627 3,296 3,175 3,921 4,212 MENA 335 412 405 340 332
Slide 28: Global business contribution and GBM MVOI
Reported quarterly results Global business contribution and Global Banking & Markets MVOI1 Global business contribution PBT, USDm 31 Mar 2011 30 Jun 2011 30 Sep 2011 31 Dec 2011 31 Mar 2012 30 Jun 2012 Retail Banking and Wealth Management 960 2,166 224 920 2,182 4,228 Commercial Banking 1,935 2,254
Slide 29: Notable items
Notable items USDm 1H11 2H11 1H12 Revenue1 Non-qualifying hedges (NQH) (312) (1,072) (462) PVIF adoption of calculation refinement 237 - - Gain on sale of non-core investments in India - - 275 Loss recognised following the reclassification of business to HFS - - (137) Operating expenses1 Pension cur
Slide 30: Summary income statements for disposals, held for sale and run-off portfolios
Summary income statements for disposals, held for sale and run-off portfolios, 1H12 Disposals, held for sale and run-off portfolios Run-off portfolios USDm Cards and Other Held for Retail Services Disposals Sale US CML Legacy Credit + Other in GBM Revenue 1,683 187 506 577 (64) LICs (322) 1 (30) (1,