Hsbc Holdings Plc · LSE:HSBA
Hsbc — Q1 2017 Earnings Presentation
29 slides from Hsbc's earnings presentation, May 4, 2017
Slide 1: Overseas Regulatory Announcement
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Slide 2: First Quarter 2017 Earnings Release
4 May 2017 HSBC HOLDINGS PLC FIRST QUARTER 2017 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 Direct
Slide 3: HSBC Holdings plc 1Q17 Results: strategic actions
Reduce Group RWAs by c. $290bn and re-deploy towards 1 higher performing businesses; return GB&M to Group target profitability 2 Optimise global network 3 Rebuild NAFTA profitability 4 Set up UK Ring-Fenced Bank Realise $4.5-5.0bn cost savings, deliver an exit rate in 2017 equal 5 to 2014 operating
Slide 4: Our highlights
Our highlights 1st Quarter 2017 ‒ Reported PBT of $5.0bn was $1.1bn lower than 1Q16 ‒ Adjusted PBT of $5.9bn up $0.6bn or 12%; up in all 3 of our largest global businesses: ‒ Revenue of $12.8bn up $0.3bn or 2%: ‒ RBWM up 15% primarily in insurance manufacturing in Asia reflecting market impacts in o
Slide 5: 1Q17 Key financial metrics
1Q17 Key financial metrics Key financial metrics 1Q16 4Q16 1Q17 Return on average ordinary shareholders’ equity1 9.0% (10.9)% 8.0% Return on average tangible equity1 10.3% (5.8)% 9.1% Jaws (adjusted)2, 4 (2.8)% 0.3% (0.6)% Dividends per ordinary share in respect of the period $0.10 $0.21 $0.10 Earni
Slide 6: Financial overview
Financial overview Reconciliation of Reported to Adjusted PBT Discrete quarter 1Q16 4Q16 1Q17 vs. 1Q16 vs. 4Q16 Reported profit before tax 6,106 (3,445) 4,961 (1,145) 8,406 Includes: Currency translation 270 24 - (270) (24) Significant items: FVOD5 Fair value gains / losses on own debt (credit sprea
Slide 7: 1Q17 Profit before tax performance
1Q17 Profit before tax performance Higher profit before tax from higher revenue and reduced LICs 1Q17 vs. 1Q16 PBT analysis Adjusted PBT by item Adjusted PBT by global 1Q16 1Q17 vs. 1Q16 % business, $m 1Q17 vs. 1Q16 adverse favourable RBWM 1,216 1,781 565 46% CMB 1,487 1,795 308 21% Revenue $12,843m
Slide 8: Revenue performance
Revenue performance Growth in all 3 of our largest global businesses Solid momentum over the last 2 years6… 1Q17 vs. 1Q16 adjusted revenue trend7 51,129 Global +9% 50,153 businesses 11,947 12,501 3,899 1,665 $m (unless 11,493 11,717 11,558 415 439 424 397 1,757 otherwise stated) 452 2,079 3,678 3,88
Slide 9: Retail Banking and Wealth Management performance
Retail Banking and Wealth Management performance Strong revenue growth supported by deposit revenues and wealth management RBWM highlights Quarterly revenue performance, $m7 Balance Sheet, $bn8 4,357 4,524 4,757 4,563 5,009 Customer lending: +0.6% Adjusted PBT 138 Insurance (1Q16: $1.2bn) 14 Wealth
Slide 10: Global Banking & Markets performance
Global Banking & Markets performance Strong revenue performance in the quarter, notably in Rates and Credit GB&M highlights Quarterly revenue performance, $m7 1Q17 vs. 1Q16 Management view of adjusted revenue Revenue increased by 14%, excluding 3,540 3,625 3,678 3,574 3,886 credit and funding valuat
Slide 11: Commercial Banking performance
Commercial Banking performance Continued revenue growth and lower LICs; operating expenses remain unchanged CMB highlights Quarterly revenue performance, $m7 Loan Impairment charges, $m7 +1% Asset quality +6% remains robust: Adjusted PBT (1Q16: $1.5bn) 3,144 3,129 3,191 − Net recoveries in 3,088 3,0
Slide 12: Global Private Bank performance
Global Private Bank performance Positive net new money in areas targeted for growth during 1Q17 GPB highlights Quarterly revenue performance, $m7 Client assets, $bn -10% Adjusted PBT +3% (1Q16: $0.1bn) +5% 452 436 429 415 $0.1bn 62 63 61 397 65 59 341 317 315 306 91 84 81 82 89 Adjusted revenue 298
Slide 13: Corporate Centre performance
Corporate Centre performance Lower revenue from an increase in interest expense on our debt, continued US run-off and valuation differences on long-term debt and associated swaps Highlights Quarterly revenue performance, $m7 Balance Sheet, $bn8 US run-off portfolio: vs. 1Q16 vs. 4Q16 1Q16 2Q16 3Q16
Slide 14: Net interest margin
Net interest margin A fall of 6bps in NIM compared with FY16, excluding Brazil Net interest income and margin Main drivers: 0.02 0.03 (0.06) 1.73% (0.05) 1.85% 1.70 1.64 Reported 29,813 1.64% X% net interest margin, % Reported Customer Surplus L&A to Group debt 1Q17 Reported NIM excl. accounts liqui
Slide 15: Operating expenses
Operating expenses On track to achieve our cost targets Adjusted operating expenses ($bn) Saves UK bank levy Realised Savings Run Rate (savings recognised in the Income Statement during the time period) Saves 0.1 Life to Saves, $bn 2015 2016 1Q17 Life to date 0.2 (0.4) date 0.2 Global Businesses 0.1
Slide 16: Loan impairment charges
Loan impairment charges Lower impairment charges in 1Q17 Adjusted loan impairment charges and other credit risk provisions (LICs) analysis 1Q16 4Q16 1Q17 vs.1Q16 vs.4Q16 Environment remains benign Group, $m 800 456 236 564 220 LICs by − Better economic conditions as a % of gross loans 0.37 0.21 0.11
Slide 17: Exceeded our FX rebased RWA target
Exceeded our FX rebased RWA target10 $13bn reduction in 1Q17 including $7bn through US CML run-off Key movements in Group RWAs ($bn) 1Q17 achieved reduction Progress since Dec-14 Target (FX % rebased)10 achieved GB&M and 4Q16 4 857 Legacy GB&M and 122 133 92% Legacy12 US CML 7 (13) run-off RWA initi
Slide 18: Capital adequacy
Capital adequacy Strong capital base: common equity tier 1 ratio – 14.3% Regulatory capital and RWAs ($bn) CET1 ratio movement (%) 14.3 Reported basis 4Q16 1Q17 0.2 Common equity tier 1 capital 116.6 122.4 0.2 Total regulatory capital 172.4 173.3 (0.1) 0.1 Risk-weighted assets 857.2 857.9 0.3 13.6 1
Slide 19: HSBC's Capital Structure
HSBC’s Capital Structure Eligible Liabilities in issue and BOE Guidance as to HSBC’s Minimum Requirement for Eligible Liabilities (MREL) to be in issue by 2019 and 2022 HSBC’s Eligible Liabilities in issue as a % of MREL and debt issuance outlook Consolidated RWAs – 1.1.2019 end point basis ‒ The Ba
Slide 20: Return metrics
Return metrics 1Q17 Group ROE1, % 0.5 10.0 0.4 9.0 0.4 1.0 (2.0) (1.1) 7.9 (0.2) 8.0 1Q16 Sig Items & 1Q16 Revenue LICs Cost ex Tax prior year Equity 1Q17 Sig Items 1Q17 Reported Bank Levy ex. Sig items bank levy adjustments Reduction, ex. Sig items Reported & Bank levy FX & Other ROTE1 10.3% 9.1% 1
Slide 21: Looking ahead
Looking ahead Delivering our strategy Group financial targets ♦ Unrivalled footprint in Asia with strong returns and good business ROE >10% momentum ♦ Exceeded our RWA reduction target Positive jaws ♦ Deliver Global Standards, fulfil Deferred Prosecution Agreement Costs (adjusted) obligations, imple
Slide 22: Appendix
Appendix 20
Slide 23: Progress on our actions to capture value
On track to meet 2017 target Progress on our actions to capture value Strategic actions Targeted outcome by 2017 Progress Status Actions to re-size and simplify Reduce Group ‒ Group RWA reduction: $290bn RWAs by c.$290bn ‒ GB&M <1/3 of Group RWAs ‒ $280bn RWAs reduced through management actions (>
Slide 24: Equity drivers
Appendix Equity drivers 1Q17 vs. 4Q16 Equity drivers No. of shares Shareholders’ Tangible TNAV per (excl. treasury Equity, $bn Equity, $bn share, $ shares), million As at 31 December 2016 175.4 137.2 6.92 19,838 Profit to shareholders 3.5 3.5 0.17 - Dividends net of scrip (2.6) (2.6) (0.13) - Share
Slide 25: Balance sheet
Appendix Balance sheet 1Q17 vs. FY16: Loans and advances to customers, $bn Customer accounts, $bn Balances increased by $5bn vs. December 2016. Broadly stable vs. December 2016. Excluding CML and red-inked balances, lending increased by $15bn, however this included a $6bn 864 871 876 Compared with M
Slide 26: Currency translation and significant items
Appendix Currency translation and significant items $m 1Q16 4Q16 1Q17 Currency translation and significant items: Revenue Currency translation 466 74 - Trading results from disposed operations in Brazil 721 - - *Portfolio disposals - (112) 10 (Adverse) / Favourable debit valuation adjustment on deri
Slide 27: 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. 4Q16 quarterly Jaws as reported in 4Q16
Slide 28: 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 29: 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. 27 www.hsbc.com Photography: courtesy of Dragages-China Harbour-VSL JV