HSBC Holdings PLC · LSE:HSBA
HSBC — Corporate Update (March 2017)
26 slides from HSBC's corporate update, Mar 8, 2017
Slide 1: HSBC Mexico
8 March 2017 HSBC Mexico Nuno A Matos CEO HSBC México
Slide 2: Important notice and forward-looking statements
HSBC Mexico Important notice and forward-looking statements 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 other financial
Slide 3: Value of the network
HSBC Value of the network Reduce Group RWAs by c. $290bn and re-deploy towards higher performing businesses; return GB&M 1 to Group target profitability 2 Optimise global network 3 Rebuild NAFTA profitability 4 Set up UK Ring-Fenced Bank 5 Realise $4.5-5.0bn cost savings, deliver an exit rate in 201
Slide 4: Our highlights
HSBC Group Our highlights Reported PBT of $7.1bn was $11.8bn lower than 2015 and impacted by significant items of $12.2bn, mainly: 2016 Full Year – non-cash items of $8.9bn including the write-off of GPB goodwill ($3.2bn), fair value own credit spread losses on own debt ($1.8bn) – cash items of $3
Slide 5: 1. Mexico's economic outlook
1. Mexico’s economic outlook
Slide 6: Macroeconomic highlights – Key fundamentals
Mexico’s economic outlook Macroeconomic highlights – Key fundamentals GDP growth Central Bank policy rate % y-o-y % 4.0 4.0 6.75 6.75 2.5 5.75 2.2 2.5 2.3 1.7 4.5 4.5 1.3 3.5 3.25 3.0 2011 2012 2013 2014 2015 2016 2017F 2018F 2011 2012 2013 2014 2015 2016 2017F 2018F Inflation % Foreign Exchange End
Slide 7: Macroeconomic highlights – Financial deepness and trade openness
Mexico’s economic outlook Macroeconomic highlights – Financial deepness and trade openness GDP per capita Domestic credit to private sector USDk3,4 As % of GDP2 10.0 10.1 10.6 10.8 32.7 9.4 30.6 31.0 8.3 8.0 8.1 25.7 27.5 2011 2012 2013 2014 2015 2016F 2017F 2018F 2011 2012 2013 2014 2015 Total Expo
Slide 8: Macroeconomic highlights - Public sector
Mexico’s economic outlook Macroeconomic highlights - Public sector Central Government Budget Deficit Gross public sector debt % GDP % GDP 45.3 50.5 50.2 45.5 3.5 38.0 40.7 2.6 3.1 3.0 33.6 35.3 2.4 2.3 2.5 2.1 2011 2012 2013 2014 2015 2016F 2017F 2018F 2011 2012 2013 2014 2015 2016F 2017F 2018F Oil
Slide 9: Mexico connected to Key regions
Mexico’s trade Mexico connected to Key regions Mexico in key trade corridors1 2015 value of trade (exports and imports), USDbn Trade with Europe Germany 18 Spain 8 Other 41 Europe 67 Trade with NAFTA US 496 Trade with Asia Canada 21 China 75 517 Japan 20 NAFTA South Korea 18 Other 39 Asia 152 Trade
Slide 10: NAFTA Opportunities
Mexico’s trade NAFTA Opportunities HSBC is the leading international bank and US-Mexico and US-Canada are amongst top trade corridors in the World and will be 1st and 2nd largest commodity corridors by 2020 HSBC Advantages HSBC has significant presence in all three countries International Trad
Slide 11: 2. HSBC in Mexico
2. HSBC in Mexico HSBC €&>
Slide 12: The Mexican operation has been considered strategically important for Group
HSBC in Mexico The Mexican operation has been considered strategically important for Group with significant potential to improve Ownership chart HSBC Mexico performance1 Revenues USDbn +18% % of Group HSBC Holdings plc 2.0 3.8% 1.7 3.2% 2015 2016 2015 2016 HSBC Latin America PBT Holdings (UK) Limite
Slide 13: Key executives bios
HSBC in Mexico Key executives bios Joined HSBC in March 2015. Appointed CEO of HSBC Mexico in December 2015. Nuno A. Matos Experience: Worked for Santander since 1994 in a variety of retail banking, investment banking and CEO functional leadership roles across Europe, the US and Latin America. Also
Slide 14: HSBC Mexico is a key player in the Mexican Financial System with room to grow
HSBC in Mexico HSBC Mexico is a key player in the Mexican Financial System with room to grow HSBC Mexico position Key businesses Competitive top-5 universal bank with scale1 Contribution to HSBC Mexico5 Leading trade and cash management bank2 RBWM CMB GB&M Important retail player with high cus
Slide 15: Our Strategy – The Right Strategy…
HSBC in Mexico Our Strategy – The Right Strategy… + Clients + Revenue + Profitability + Financial Crime Risk Management RBWM CMB GB&M + Clients + Client base diversification + Profitable clients + Retail Business Banking + Fee Income (GLCM & GTRF) + Fee Income (GLCM & GTRF) + Lending to our market s
Slide 16: HSBC Mexico operates with scale in a connected economy
HSBC in Mexico HSBC Mexico operates with scale in a connected economy, which is in contrast to the Brazil operation pre-sale Exports as Trade1, 2015 % of GDP, 2015 Brazil, Assets2 Mexico, Assets3 USDbn USDbn USDbn China 2,282 21% Banco do #1 499 #1 BBVA 98 Brasil US 1,504 8% Germany 1,331 40% #2 Ita
Slide 17: 3. Financial performance
3. Financial performance HSBC €&>
Slide 18: Financial performance 2015-2016
HSBC Mexico Financial performance 2015-2016 Revenues1 Loan impairment charges MXNm MXNm +17.1% -7.0% 37,065 8,840 31,651 8,220 2015 2016 2015 2016 Expenses Profit before taxes MXNm MXNm +6.8% >1,000% 4,901 24,008 22,472 391 2015 2016 2015 2016 Source: HSBC Mexico 4Q16 press release. 1. Revenues refe
Slide 19: Financial performance 2015-2016 – excluding non-recurrent items
HSBC Mexico Financial performance 2015-20162 – excluding non-recurrent items Revenues1 Loan impairment charges MXNm MXNm +14.1% +8.2% 36,110 31,651 7,460 8,073 2015 2016 2015 2016 Expenses Profit before taxes MXNm MXNm +7.0% +128.9% 4,054 24,047 22,472 1,771 2015 2016 2015 2016 Source: HSBC Mexico 4
Slide 20: Credit portfolio increasing steadily, whilst deposits being managed
HSBC Mexico Credit portfolio increasing steadily, whilst deposits being managed with a view to reach an effective A/D ratio Loans and advances, net MXNbn +14.5% 253.3 257.8 265.7 232.1 242.0 Dec 15 Mar 16 Jun 16 Sep 16 Dec 16 Demand and Time Deposits1 MXNbn +8.7% 285.4 297.9 274.0 258.2 275.2 Dec 15
Slide 21: Credit gross loan growth as of December 2016
HSBC vs. Market Credit gross loan growth as of December 2016 Total Loans Total Loans (excl. Government) MXNbn MXNbn +13% +12% +14% +14% 4,339 3,754 245 278 3,843 215 3,293 248 Dec 15 Dec 16 Dec 15 Dec 16 Dec 15 Dec 16 Dec 15 Dec 16 Total System HSBC Mexico Total System HSBC Mexico Retail Loans Whole
Slide 22: Margin increase and lower credit costs
HSBC vs. Market Margin increase and lower credit costs Lending rates (NIM) Lending rates (NIM adjusted by LICs) % % 7.5 7.5 6.2 5.8 5.4 5.5 4.0 2.6 Dec 15 Dec 16 Dec 15 Dec 16 Dec 15 Dec 16 Dec 15 Dec 16 Total System HSBC Mexico Total System HSBC Mexico Credit Costs (LICs/Loans) Loan Reserves / Tota
Slide 23: NPL Ratio converging with the Market
HSBC vs. Market NPL Ratio converging with the Market Total NPL ratio NPL ratio – Commercial % % 5.2 6.4 2.6 3.0 2.1 3.0 1.9 1.3 Dec 15 Dec 16 Dec 15 Dec 16 Dec 15 Dec 16 Dec 15 Dec 16 Total System HSBC Mexico Total System HSBC Mexico NPL ratio – Retail NPL ratio – Mortgage % % 4.3 4.2 3.4 3.8 2.8 3.
Slide 24: Loan quality adjusting gradually to Market
HSBC vs. Market Loan quality adjusting gradually to Market Coverage Index (Reserves / NPL)1 % 157.0 150.8 140.1 121.1 Dec 15 Dec 16 Dec 15 Dec 16 Total System HSBC Mexico Source: CNBV, figures under local GAAP 1. The increase in the HSBC Coverage Index, is related to lower NPL during 2016 24
Slide 25: 4. Final remarks
4. Final remarks HSBC €&>
Slide 26: Final remarks
HSBC Mexico Final remarks Turnaround financial performance Increase new to bank customer base in RBWM through CMB/GB payroll collaboration Increase market share of wallet of existing customers across all businesses, and become a player commensurate with our retail scale Grow CMB/GB focusing