Hsbc Holdings Plc · LSE:HSBA
Hsbc — FY2014 Earnings Presentation
24 slides from Hsbc's earnings presentation, Feb 23, 2015
Slide 1: HSBC Holdings plc Overseas Regulatory Announcement
Hong Kong Exchanges and Clearing Limited and The Stock Exchange of Hong Kong Limited take no responsibility for the contents of this document, make no representation as to its accuracy or completeness and expressly disclaim any liability whatsoever for any loss howsoever arising from or in reliance
Slide 2: Annual Results 2014 Audio Webcast and Conference Call
23 February 2015 HSBC HOLDINGS PLC ANNUAL RESULTS 2014 AUDIO WEBCAST AND CONFERENCE CALL There will be an audio webcast presentation and conference call today for investors and analysts. The speakers will be: Douglas Flint, Group Chairman; Stuart Gulliver, Group Chief Executive; and Iain Mackay,
Slide 3: HSBC Holdings plc Annual Results 2014 Presentation to Investors and Analysts
HSBC Holdings plc Annual Results 2014 Presentation to Investors and Analysts PUBLIC
Slide 4: 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 5: Key messages for 2014
Key messages for 2014 Highlights Reported and Adjusted2 PBT (USDm) Reported PBT of USD18,680m included fines, settlements, UK customer redress, and associated provisions of USD3,709m Adjusted2 PBT 2014 adjusted revenue1 of USD62,002m and adjusted2 PBT of broadly unchanged USD22,829m broadly unch
Slide 6: Annual results 2014 Financial highlights
Annual results 2014 Financial highlights1 Summary financial highlights, USDbn Better/(worse) 2013 2014 2014 vs 2013 Reported PBT 22.6 18.7 (17)% Adjusted2 PBT 23.0 22.8 (1)% Key ratios, % 2013 2014 KPI Return on average ordinary shareholders’ equity 9.2% 7.3% 12-15% Return on average tangible equity
Slide 7: Reconciliation of Reported to Adjusted PBT
Financial overview Reconciliation of Reported to Adjusted1 PBT USDm Variance 2013 2014 2014 vs 2013 Reported profit before tax 22,565 18,680 (3,885) Includes, Gains / (losses): Currency translation 159 – (159) Significant items: Fair value gains / (losses) on own debt (credit spreads only)2 (1,246)
Slide 8: Profit before tax analysis: Summary of quarterly PBT
Profit before tax analysis Summary of quarterly PBT Reported and Adjusted1 PBT (USDm) Adjusted1 PBT Analysis 4Q14 vs 4Q13 (USDm) Adjusted1 8,434 PBT down Revenue2 (69) USD1,425m excl. FFVA3 1,497 6,785 (2)% 4,609 65 5,555 FFVA3 (263) 5,637 4,530 3,964 LICs (192) (18)% Regulatory 6,937 1,731 Programm
Slide 9: FY14 vs FY13 Profit before tax analysis
FY14 vs FY13 Profit before tax analysis Growth in three out of five regions Reported and Adjusted1 PBT 2014 vs 2013 Adjusted1 PBT Analysis 2014 vs 2013 Adjusted1 PBT by region (USDm) (USDm) (USDm) Adjusted1 PBT Europe (396) (9)% broadly unchanged Revenue2 148 -% Asia 326 2% 22,565 18,680 North Ameri
Slide 10: Revenue analysis
Revenue analysis Adjusted revenue1 broadly unchanged, growth in CMB Reported and Adjusted1 revenue 2014 vs 2013 Adjusted1 revenue by 2014 vs 2013 Adjusted1 revenue by (USDm) Global Business (USDm) Global Business (USDm) Adjusted revenue1 Personal broadly Principal lending unchanged (212) (1)% RBWM C
Slide 11: Balance sheet analysis
Balance sheet analysis Growth in customer lending during 2014 Loans and advances to customers1 (USDbn) 4Q14 vs 4Q13 Loans and advances USD56bn to customers1 excl. red-inked increase balances2 (USDbn) 988 1,003 Principal RBWM 7 2% 947 963 975 903 922 938 RBWM US (5) (17)% 93 100 55 77 83 88 run-off p
Slide 12: Operating expenses analysis
Operating expenses analysis Increased costs from Regulatory Programmes and Compliance and inflationary pressures Reported and adjusted1 operating 2014 vs 2013 Adjusted1 operating expenses expenses (USDm) By major category (USDbn) By Global Business (USDbn) Adjusted1 operating expenses up USD2,172m P
Slide 13: Loan impairment charges
Loan impairment charges1 Lower LICs during 2014, primarily in North America, Europe and Latin America partly offset by an increase in Asia Loan impairment charges – Geographical regions (USDm) 0.76% Loan impairment charges / average gross loans 2,500 0.64% and advances to customers1 (%) 0.45% 0.44%
Slide 14: Where the profit goes
Where the profit goes Pre-tax variable pay1 Pro-forma post-tax profits allocation USDbn Group GB&M 2013 2014 2013 2014 2013 2014 12% 15% Total variable pay pool2 3.9 3.7 1.3 1.1 32% Variable compensation as a % of pre-tax profit 15 16 13 15 53% (pre-variable pay) 35% 53% Proportion of incentive 18 1
Slide 15: Capital adequacy
Capital adequacy Movement in common equity tier 1 capital (USDbn) Common equity tier 1 ratio movement (%) CRD IV 1.0 Yr1 Trans End point At 31 December 2013 131.2 132.5 Accounting profit for the period 13.7 13.7 0.4 11.1 (0.6) Regulatory adjustments to accounting profit (1.0) (1.0) 0.1 10.9 10.9 10.
Slide 16: Future Regulatory Capital Developments
Future Regulatory Capital Developments Required common equity tier 1 ratio, % We exceed known, quantifiable, CET1 regulatory 11.1% CET1 ratio at Regulatory requirements on an end point basis (10.6%) 31 Dec 2014 (end-point) uncertainty Inherent uncertainty will be a continuing feature of the regu
Slide 17: Development of shareholders' equity and ROE
Development of shareholders’ equity and ROE Capital build-up due to increasing CET1 requirement Ordinary shareholders’ equity USDbn Group RoRWA, % Reported 174.6 177.5 168.0 Ordinary shareholders’ 151.5 equity1 41.5 45.5 42.1 Non-controlling 108.4 20.5 29.0 2.0 interests, deductions 1.5 and regulato
Slide 18: Revised Group financial targets
Revised Group financial targets Updated in light of significant changes in operating environment Rebase ROE target to new operating environment, % Revised Group financial targets 2011 ROE >10% 12-15 ROE target Increase to CET11 (1.4-2.5) Positive requirement Jaws (adjusted2) Increase in Regulatory (
Slide 19: Strategic priorities
Strategic priorities Capitalise on unrivalled global platform Target ‒ Leadership position in Trade Finance, Payments and Cash (medium term) Management, Foreign Exchange ‒ RMB internationalisation ‒ Revenue growth through international connectivity Grow Geographic priorities ROE > 10% business a
Slide 20: Appendix
Appendix HSBC €X>
Slide 21: Other significant items excluded from adjusted profit before tax
Appendix Other significant items1 excluded from adjusted profit before tax USDm For the year-ending 31 December 2013 2014 Includes the following significant items (reported basis): Revenue Restructuring and repositioning: Net gain on completion of Ping An disposal 553 - FX gains relating to the ster
Slide 22: Consolidated Income Statement
Appendix Consolidated Income Statement1 USDm For the year-ending 31 December 2013 2014 Net interest income 35,539 34,705 Net fee income 16,434 15,957 Net trading income 8,690 6,760 Net income from financial instruments designated at fair value 768 2,473 Gains less losses from financial investments 2
Slide 23: Consolidated Balance Sheet
Appendix Consolidated Balance Sheet1 USDm As at 31 December 2013 2014 Assets Cash and balances at central banks 166,599 129,957 Trading assets 303,192 304,193 Financial assets designated at fair value 38,430 29,037 Derivatives 282,265 345,008 Loans and advances to banks 120,046 112,149 Loans and adv
Slide 24: Cover images: HSBC – then and now
Cover images: HSBC – then and now It is 150 years since HSBC was founded in Hong Kong to finance trade between Asia and Europe. Much has changed since then, as our cover photos demonstrate. The left photo shows Hong Kong harbour, with the HSBC office (extreme left) a few years after it was establish