Hsbc Holdings Plc · LSE:HSBA
Hsbc — Investor Presentation (March 2016)
26 slides from Hsbc's investor presentation, March 2016
Slide 1: Retail Banking and Wealth Management Investor Update
March 2016 Retail Banking and Wealth Management Investor Update
Slide 2: Important notice and forward-looking statements
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 other finan
Slide 3: Group highlights
Group highlights 2015 Full Year ‒ Reported PBT up 1%: net favourable movement in significant items ‒ Adjusted PBT fell 7%: 2015 ‒ Higher revenue of $0.5bn (1%) from growth in client-facing GB&M (7%), CMB (3%) Reported PBT Financial and Principal RBWM (2%) (2014: $18.7bn) Performance ‒ Higher costs (
Slide 4: Group 2015 key metrics
Group 2015 key metrics 2015 Full Year Key financial metrics FY14 FY15 Target Return on average ordinary shareholders’ equity 7.3% 7.2% >10% Jaws (adjusted) - (3.7)% Positive Dividends per ordinary share in respect of the year $0.50 $0.51 Progressive Earnings per share $0.69 $0.65 n/a Common equity t
Slide 5: Key strategic priorities
Key strategic priorities Retail Banking and Wealth Management Key messages Principal RBWM financial outlook1 RoRWA excl. 6.3 – Consistently strong returns, accretive to Group RoE Associates Capital accretive 4.5 Sustainable – Client base positioned towards affluent customers high quality – High qual
Slide 6: RBWM is now a simpler business, delivering sustainable, diversified revenues
RBWM is now a simpler business, delivering sustainable, diversified revenues RBWM Investment Case Business transformation Principal RBWM Revenue and PBT1 Principal RBWM Revenue by (USDbn) region1 – Simplified our portfolio with 62 Revenue PBT MENA 4% disposals / closures of business North 8% lines o
Slide 7: Through Premier and Advance, we attract an affluent client base
Through Premier and Advance, we are able to attract an affluent client base, with higher revenue per customer RBWM Investment case Customers and markets Positioned towards affluent customers Premier Advance Personal Selected markets4 HSBC customer GPB base 8% % Premier Market5 21% Customer 35% China
Slide 8: Conduct risk is redefining how retail banks engage with customers
Conduct risk is redefining how retail banks engage with and serve their customers. We have proactively repositioned the business for this… RBWM Investment case UK customer redress and CCA provisions at their lowest since 2010 (USDm) Numerous actions to significantly reduce conduct risk starting in 2
Slide 9: We are maintaining our credit discipline – Example RBWM UK
… and we are maintaining our credit discipline – Example RBWM UK RBWM Investment case PRA stress tests: Projected cumulative three-year PRA stress tests: Projected cumulative three-year impairment charge rates on UK individuals mortgage impairment charge rates on UK individuals non- lending in the s
Slide 10: Repositioning impacted revenue growth, but revenue quality is improving
The repositioning impacted the rate of revenue growth in 2013 and 2014, but we are confident the quality of revenues is improving… RBWM Investment Case Principal RBWM revenue progress 2011 to 2015 (USDm) Design and policy (2012) Implementation (2013) Implementation (2014) – Business Risk Review – Gl
Slide 11: Repositioning is leading to improved customer experience – Example RBWM Mexico
... and there are signs that the repositioning is leading to improved customer experience – Example RBWM Mexico RBWM Investment Case Conduct Agenda Business performance 2014 2015 Revenues1 Sales volumes2 +7% +90% – In 2013-24, a new incentive framework was implemented across the Group, remunerating
Slide 12: Our growth priorities have not changed and we continue to optimise our portfolio
Our growth priorities have not changed and we continue to optimise our portfolio of markets and businesses Growth Priorities Strategic actions Targeted outcome 2014-17 2015 Progress 1 Relationship-led Personal Lending – Invest in marketing, customer relationship management, analytics – Principal RBW
Slide 13: We have the capacity to take more credit risk in RBWM
We have the capacity to take more credit risk in RBWM and the business is showing signs of volume growth Relationship-led Personal Lending Principal RBWM lending balances and sales volume growth Actions to date – Global analytics capability improving the identification of customer needs +3% – New tr
Slide 14: Our investment in a differentiated Wealth offering is driving improved performance
Our investment in a differentiated Wealth offering is driving improved performance, with further opportunities for growth Wealth Management Strong customer satisfaction with improving sales momentum We have built a clearly differentiated Wealth offering Appointments Financial reviews – We operate a
Slide 15: Our Asset Management business delivers attractive returns
Our Asset Management business delivers attractive returns, and is positioned to benefit from managed asset growth in Asia Asset Management Managed asset pools are forecast to grow strongly (USD) This growth provides opportunities for us Global AUM1 Total Middle East – Distribution footprint aligned
Slide 16: Insurance is accretive to the Group, with majority of exposure to Asia
Insurance is accretive to the Group, with majority of exposure to Asia Insurance Profitable and accretive returns for Group (USD) Significant growth opportunity, particularly in Asia Gross premium annual Emerging Asia life – Asia’s share of the global middle class will almost double by 20204, drivin
Slide 17: Digital transformation will enable process simplification and accelerate channel migration
Digital transformation will enable process simplification and accelerate channel migration, improving productivity and customer experience Digital Changing customer behaviour The Group’s streamlining programme will sustainably reduce RBWM’s costs c.75% Investment brings 2017 exit costs to 2014 level
Slide 18: Digital transformation is well under way
Digital transformation is well under way Digital Active digital users Key achievements – Examples – Branch optimisation programme delivering cost savings as per plan3 – Mortgages live connect video roll out in the UK with completion of 1st c.250k customers remote mortgage drawdown in December 2015 3
Slide 19: Returns are driven by domestic scale and focus on affluent customers
Within our portfolio of businesses, returns are driven by a combination of domestic scale and focus on affluent customers… Portfolio Scale and returns for RBWM priority markets1 Strategic actions RBWM revenue2 x% of customers are Premier – Maintain and increase existing scale RoRWA3 Protect Premier
Slide 20: RBWM is focused on growth, and will invest to offset rising costs
RBWM is focused on growth, and will invest to offset rising costs while optimising our portfolio of businesses Conclusion 2014 – 2017 Principal RBWM RoRWA walk1 Achieving the 2017 RoRWA 6.3 – Our growth priorities have not changed. We will continue to focus our investment on relationship-led lending
Slide 21: Appendix – 2015 Performance
Appendix — 2015 Performance HSBC €&)>
Slide 22: 2015 Profit before tax performance
2015 Profit before tax performance Revenue growth more than offset by higher LICs and increased costs from the bank levy and regulatory programmes and compliance Full year PBT analysis Adjusted PBT by account line Adjusted PBT by global 2014 2015 vs. 2014 business (USDm) 2015 vs. 2014 RBWM 7,556 6,8
Slide 23: RBWM 2015 Financial Performance
RBWM 2015 Financial Performance Principal RBWM adjusted PBT lower driven by higher costs and LICs, partly offset by an increase in revenue Adjusted PBT1,2 (USDm) Adjusted revenue2 (USDm) 1.6% Personal lending 2014 2015 vs. 22,333 22,687 Current account, savings Total RBWM 7,556 6,829 (9.6)% and depo
Slide 24: Principal RBWM – Balance sheet
Principal RBWM – Balance sheet Growth in both customer lending and customer account balances since 4Q14 Loans and advances to customers Customer accounts (USDbn, Constant currency basis1) (USDbn, Constant currency basis1) USD9.5bn USD36.4bn increase increase 312.4 313.6 317.1 321.8 565.3 309.7 316.4
Slide 25: Insurance manufacturing subject to market volatility
Insurance manufacturing subject to market volatility Insurance manufacturing PAT sensitivity1 (USDm) 2015 2015 176 39 (158) (213) 2014 2014 290 180 (153) (549) +100 bps -100 bps +10% -10% increase in decrease2 in increase in decrease in yield curves yield curves equity prices equity prices 1. Insura
Slide 26: Total RBWM – Income Statement – Reported
Total RBWM – Income Statement – Reported Principal RBWM consists of: US run-off Principal Banking Insurance Asset Total RBWM6 portfolio RBWM operations Manufacturing Management (USDm) (USDm) (USDm) (USDm) (USDm) (USDm) 2015 Net interest income 15,926 1,033 14,893 13,127 1,757 9 Net fee income 6,218