Hsbc Holdings Plc · LSE:HSBA
Hsbc — Debt Investor Presentation (August 2020)
43 slides from Hsbc's debt investor presentation, August 2020
Slide 1: HSBC Holdings plc 1H20 Results Fixed Income Investor Presentation
HSBC Holdings plc 1H20 Results Fixed Income Investor Presentation
Slide 2: Highlights
Capital structure 1H20 results Appendix and debt issuance Highlights Resilient Asia and strong Global Markets performance; 1H20 profits challenged in Europe, the US and the 1 NRFB due to high ECL. Reported 2Q20 PBT of $1.1bn, down 82% vs. 2Q19; adjusted PBT of $2.6bn down 57% 2 2Q20 ECL of $3.8bn, p
Slide 3: Transformation programme: groundwork laid in 1H20
Capital structure 1H20 results Appendix and debt issuance Transformation programme: Groundwork laid in 1H20 to accelerate our plans as the global economic recovery strengthens Group-level transformation milestones Transformation programmes in Europe, US, GBM Adjusted costs: 1H20 down 5% vs 1H19; 2
Slide 4: 2Q20 results summary
Capital structure 1H20 results Appendix and debt issuance 2Q20 results summary $m 2Q20 2Q19 Δ Net interest income of $6.9bn, down $0.7bn (9%) vs. 2Q19 NII 6,871 7,541 (9)% impacted by 1Q20 rate cuts Non interest income 6,279 6,125 3% Non interest income of $6.3bn, up $0.2bn (3%), reflecting Reve
Slide 5: 1H20 adjusted revenue performance
Capital structure 1H20 results Appendix and debt issuance 1H20 adjusted revenue performance 1H20 revenue 1H20 vs. 1H19 Revenue by global business, $bn Retail Banking $6,896m (753) (1)% WPB $11,251m (13)% Wealth Management $3,606m (900) o/w insurance market impacts: $(482)m 27.8 26.6 26.5 Other $749m
Slide 6: Diversified revenue streams
Capital structure 1H20 results Appendix and debt issuance Diversified revenue streams 1H20 adjusted revenue by global business 1H20 adjusted revenue by region6 1H20 adjusted revenue by type Corporate Centre Latin America North 5% 0% Other America CMB 12% Europe 23% 26% 29% MENA 5% 43% WPB $26.5bn $2
Slide 7: Net interest income
Capital structure 1H20 results Appendix and debt issuance Net interest income Reported NIM progression, bps 154 (1) Reported NII of $6.9bn, down $0.7bn (20) 133 0 (9%) vs. 1Q20 and down $0.9bn (11%) vs. 2Q19 due to the impact of lower rates NIM of 1.33% down 21bps vs. 1Q20, 1Q20 Change in Reduct
Slide 8: Adjusted costs
Capital structure 1H20 results Appendix and debt issuance Adjusted costs Operating expenses trend, $m Costs decreased $0.6bn (7%) vs. 2Q19 due to management actions, reduced discretionary spending and performance related pay accrual, 8,867 despite continued investment; costs decreased by $0.3bn (3
Slide 9: Credit performance
Capital structure 1H20 results Appendix and debt issuance Credit performance ECL charge trend 0.27 1.33 ECL as a % of 2Q20 ECL charge of $3.8bn was average gross 1.48 $0.9bn (30%) higher vs. 1Q20, due to 1.14 loans and advances (annualised) higher charges in the UK RFB 0.21 0.32 0.27 ECL, $m UK
Slide 10: Balance sheet
Capital structure 1H20 results Appendix and debt issuance Balance sheet Net loans and advances to customers Customer accounts $bn $bn Net loans and advances to customers 13% decreased by $29bn (3%) vs. 1Q20 as wholesale 2% 6% clients repaid credit facilities drawn over 1Q20 (3)% 1,532 Customer a
Slide 11: Asset quality
Capital structure 1H20 results Appendix and debt issuance Asset quality Gross loans and advances to Loans and advances to customers Stage 3 and impaired loans and LICs/ECL customers of ‘Strong’ or ‘Good’ credit advances to customers By credit quality classification quality 6.9 IAS 39 IFRS 9 IAS 39 I
Slide 12: Funding and liquidity
Capital structure 1H20 results Appendix and debt issuance Funding and liquidity High-quality liquid assets (liquidity value), $bn Principal operating entities LCR NSFR 654 % 1H20 2019 1H20 2019 601 HSBC UK Bank plc (RFB) 187 165 158 150 567 513 HSBC Bank plc (NRFB) 141 142 118 106 The Hongkong and S
Slide 13: Customer loan book
Capital structure 1H20 results Appendix and debt issuance Customer loan book As at 30 June 2020 Personal loan book ($bn, gross loans and advances to customers) Wholesale loan book ($bn, gross loans and advances to customers) Motor vehicle finance Credit cards 0.4% Non-bank financial institutions 5.1
Slide 14: Capital position
Capital structure 1H20 results Appendix and debt issuance Capital position 1H20 vs. FY19 CET1 ratio movement, % CET1 ratio of 15.0%, up 0.3ppts from FY19 0 Positive CET1 impact of $1.0bn (0.1ppts) from IFRS9 0.3 (0.6) 15.0 transitional arrangements; CET1 ratio of 14.9% on a 0.4 0.2 fully loaded
Slide 15: Capital position versus requirements
Capital structure 1H20 results Appendix and debt issuance Capital position versus requirements CET1 ratio as a % of RWAs, vs. MDA hurdle Regulatory capital vs. regulatory requirements as a % of RWAs 20.7% Buffer to $35bn 19.2% 2.9% MDA hurdle 4.1% 1.7% 10.9% 2.8% 2.5% 15.8% 0.2% 2.8% 2.0% Combined b
Slide 16: MREL/TLAC position versus requirements
Capital structure 1H20 results Appendix and debt issuance MREL/TLAC position versus requirements MREL-eligible capital and HoldCo senior versus estimated regulatory requirements17 as a % of Group RWAs HSBC Group’s 2020 MREL requirement18 is the greater 29.9% The greater of: of: – 16% of RWAs 25.1%
Slide 17: MREL/TLAC position
Capital structure 1H20 results Appendix and debt issuance MREL/TLAC position HSBC Group Total TLAC: $255bn Of which: non-regulatory capital: $78bn US European Asia Resolution Group Resolution Group Resolution Group Capital requirements of other Group Total TLAC: $30bn Total TLAC: $94bn Total TLAC: $
Slide 18: Indicative timeline of MREL/TLAC requirement
Capital structure 1H20 results Appendix and debt issuance Indicative timeline of MREL/TLAC requirement Binding requirement 2019 2020 2021 2022 The greater of: Indicatively, the greater of: 16% of RWAs 18% of RWAs HSBC Group 6% of leverage exposures21 6.75% of leverage exposures Sum-of-the-
Slide 19: Issuance plan
Capital structure 1H20 results Appendix and debt issuance Issuance plan 2020 Issuance plan23 Maturity profile (notional)24 As at 30 June 2020 HoldCo Senior Tier 2 AT1 OpCo 2021 Senior Broadly limited to No near-term Broadly limited to Expect certain HoldCo maturities refinancing plans refinancing su
Slide 20: Approach to issuance – single point of issuance, multiple point of entry
Capital structure 1H20 results Appendix and debt issuance Approach to issuance – single point of issuance, multiple point of entry HSBC Holdings plc External Investors Since 2015, HSBC Holdings has been the Group’s issuing entity for external AT1, T2 and MREL/TLAC-eligible Senior Issuance over t
Slide 21: Appendix
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Slide 22: Key financial metrics
Capital structure 1H20 results Appendix and debt issuance Key financial metrics Reported results, $m 2Q20 1Q20 2Q19 Balance sheet, $m 2Q20 1Q20 2Q19 NII 6,897 7,612 7,772 Total assets 2,922,798 2,917,810 2,751,273 Other Income 6,162 6,074 7,172 Net loans and advances to customers 1,018,681 1,040,282
Slide 23: Reconciliation of reported and adjusted results
Capital structure 1H20 results Appendix and debt issuance Reconciliation of reported and adjusted results $m 2Q20 1Q20 2Q19 Reported PBT 1,089 3,229 6,194 Revenue Currency translation — (277) (424) Customer redress programmes (26) — — Disposals, acquisitions and investment in new businesses 1 7 (827
Slide 24: Certain items and Argentina hyperinflation
Capital structure 1H20 results Appendix and debt issuance Certain items and Argentina hyperinflation Certain items included in adjusted revenue highlighted in 2Q20 1Q20 4Q19 3Q19 2Q19 management commentary26, $m Insurance manufacturing market impacts in WPB 356 (689) 207 (205) (33) Credit and fundin
Slide 25: Net interest margin supporting information
Capital structure 1H20 results Appendix and debt issuance Net interest margin supporting information Quarterly NIM by key legal entity Key rates (quarter averages) % of 2Q20 % of 2Q20 3Q19 4Q19 1Q20 2Q20 Group NII Group AIEA The Hongkong and Shanghai Banking 2.05% 2.00% 1.96% 1.69% 54% 42% 2.40% Cor
Slide 26: ECL analysis
Capital structure 1H20 results Appendix and debt issuance ECL analysis ECL charge by global business, $m ECL charge by geography, $m 2,151 1,450 1Q20 2Q20 1Q20 2Q20 1,346 984 1,065 1,094 818 552 565 657 620 505 536 573 379 247 14 (2) Asia UK RFB8 NRFB8 NAM Other WPB CMB GBM Corporate Centre Analysis
Slide 27: GBM and CMB IRB RWA inflation and mitigating actions
Capital structure 1H20 results Appendix and debt issuance GBM and CMB IRB RWA inflation and mitigating actions Wholesale counterparty IRB RWAs and exposures GBM and CMB wholesale performing IRB book: All CRR Bands FY19 2Q20 ∆ RWA, $bn 341 353 12 • Includes: corporates, sovereigns and financial ins
Slide 28: Customer relief and lending support programmes
Capital structure 1H20 results Appendix and debt issuance Customer relief and lending (including government) support programmes Other Hong We have granted personal customers more than 700,000 UK US major Total Kong payment holidays on loans, credit cards and mortgages, and As at 30 June 2020 marke
Slide 29: Balance sheet – customer lending
Capital structure 1H20 results Appendix and debt issuance Balance sheet – customer lending Adjusted customer lending (on a constant currency basis), $bn 2Q20 adjusted customer lending growth by global business and region, $bn 1,022 1,018 1,037 1,040 1,019 Growth since 1Q20 Growth since 1Q20 UK mortg
Slide 30: Balance sheet – customer accounts
Capital structure 1H20 results Appendix and debt issuance Balance sheet – customer accounts Adjusted customer accounts (on a constant currency basis), $bn 2Q20 adjusted customer account growth by global business and region, $bn 1,380 1,374 1,439 1,441 1,532 Growth since 1Q20 Growth since 1Q20 1,532
Slide 31: Oil and gas exposures
Capital structure 1H20 results Appendix and debt issuance Oil and gas exposures34 Drawn risk exposure35 by region, $bn Credit quality 2Q20 1Q20 As at 30 June 2020 As at 31 March 2020 Asia 8.2 8.7 Europe 5.8 6.3 9% 3% 3% 7% Middle East and North Africa 3.9 3.8 North America 5.2 5.5 30% $24.6bn 28% $2
Slide 32: Sectors particularly affected by Covid-19
Capital structure 1H20 results Appendix and debt issuance Sectors particularly affected by Covid-19 Aviation36 Restaurants and leisure Retail As at 30 June 2020 As at 30 June 2020 As at 30 June 2020 1% CRR 1-3 2% 1% 9% 3% 4% CRR 4-6 CRR 7-8 39% 39% Defaulted 36% $10.4bn $2.7bn $26.7bn 59% 57% 50% $2
Slide 33: Consumer credit
Capital structure 1H20 results Appendix and debt issuance Consumer credit Gross personal lending (excl. first lien mortgages), $m As at 30 June 2020 Of which: Of which: Unsecured Total UK Hong Kong Retail credit cards, primarily in Hong Kong and the Crédit Logement 17,585 — — UK Motor vehicle fina
Slide 34: Mainland China drawn risk exposure
Capital structure 1H20 results Appendix and debt issuance Mainland China37 drawn risk exposure China drawn risk exposure (including Sovereigns, Banks and Customers) of $177bn comprising: Wholesale $167bn (of which China drawn risk exposure, $bn 54% is onshore); Retail: $10bn Gross loans and adva
Slide 35: Hong Kong drawn risk exposure
Capital structure 1H20 results Appendix and debt issuance Hong Kong drawn risk exposure Total gross loans and advances to customers and banks of $331bn as at 30 June 2020 by booking location (wholesale: $210bn; personal: Total gross loans and advances, $bn $121bn) During 1H20, ECL and Stage 2 ba
Slide 36: UK RFB disclosures
Capital structure 1H20 results Appendix and debt issuance UK RFB disclosures Total RFB lending, £bn Personal As at 30 June 2020 WPB gross residential mortgages, £bn WPB unsecured lending, £bn 94.9 96.0 97.9 99.5 101.6 102.4 104.2 Wholesale 89.5 92.5 70.2 8.4 7.4 8.2 8.8 £188bn 104.2 Personal 7.3 5.7
Slide 37: Credit ratings for main issuing entities
Capital structure 1H20 results Appendix and debt issuance Credit ratings for main issuing entities Long term senior ratings as at 02 August 2020 S&P Moody’s Fitch Rating Outlook Rating Outlook Rating Outlook HSBC Holdings plc A- STABLE A2 NEG A+ NEG The Hongkong and Shanghai Banking Corporation Ltd
Slide 38: Outstanding instruments
Capital structure 1H20 results Appendix and debt issuance Outstanding instruments Outstanding instruments by currency (notional) HoldCo senior Tier 2 Additional Tier 1 USD EUR EUR EUR 12% 15% 19% GBP 9% 9% GBP $80.1bn $25.3bn $22.3bn 24% GBP 4% JPY 3% Other 6% 64% 66% SGD 69% USD USD 37
Slide 39: Simplified structure chart
Capital structure 1H20 results Appendix and debt issuance Simplified structure chart Holding company Associate Intermediate holding company Resolution entity HSBC Operating company Holdings plc 99.9% HSBC HSBC Private HSBC HSBC HSBC HSBC Asia Bank Mexico, North America Bank 94.5% HSBC UK Banking Hol
Slide 40: Glossary
Capital structure 1H20 results Appendix and debt issuance Glossary AIEA Average interest earning assets A portfolio of assets including securities investment conduits, asset-backed securities, trading Legacy credit portfolios, credit correlation portfolios and derivative transactions entered into di
Slide 41: Footnotes
Capital structure 1H20 results Appendix and debt issuance Footnotes 1. Unless otherwise stated, risk-weighted assets and capital amounts at 30 June 2020 are calculated in accordance with the revised Capital Requirements Regulation and Directive, as implemented (‘CRR II’), and specifically using its
Slide 42: Disclaimer
Capital structure 1H20 results Appendix and debt issuance Disclaimer Important notice The information, statemen ts and opinions set out in this presen tation and accomp anying discussion (“this Pres entation”) are for informational and reference purposes only and do not constitute a public offer for
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