HSBC Holdings PLC · LSE:HSBA
HSBC — HSBC Finance — Q3 2005 Earnings Presentation
34 slides from HSBC's earnings presentation, Nov 14, 2005
Slide 1: Form 8-K HSBC Finance Corporation
UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 8-K Pursuant to Section 13 or 15(d) of The Securities Exchange Act of 1934 Date of Report: November 14, 2005 Commission file number 1-8198 HSBC FINANCE CORPORATION (Exact name of registrant as specified in its charter) Dela
Slide 2: Item 7.01 Regulation FD Disclosure
Item 7.01. Regulation FD Disclosure Financial supplement pertaining to the financial results of HSBC Finance Corporation and HSBC USA Inc. for the quarter and nine months ended September 30, 2005. The information included in the financial supplement with respect to HSBC Finance Corporation and HSBC
Slide 3: Signature
Signature Pursuant to the requirement of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized. HSBC FINANCE CORPORATION (Registrant) By: /s/ Patrick D. Schwartz Patrick D. Schwartz Vice President-Deputy
Slide 4: HSBC Finance Corporation and HSBC USA Inc. Supplement to Forms 10-Q
November, 2005 HSBC Finance Corpor at ion and HSBC USA I nc. Supplement t o the For ms 10-Q for t he period ended S ep tember 30, 2 005
Slide 5: Forward Looking Statements
Forwar d Look ing Statement s T his document, and s ubs eq uent dis cuss ion, contain s certain forwar d -looking in form at ion with r espect to the financial condi tion, r es ults of operations and bus ines s of HSBC Holdings plc, HS BC F inance Cor porati on, HSBC USA I nc. and HSBC North Am er i
Slide 6: International Financial Reporting Standards (IFRSs)
Internati onal Financial Repor ting St an dar ds ("IFRS s") P rior to J an uar y 1, 2005 , HSBC Holdings plc ("HS BC") r ep orted r es ults on a U.K. GAAP basi s. T he Eur opean Union has determi ned that all E uropean lis ted compani es will be requir ed to prepare t hei r cons olidated f inancial
Slide 7: Management Basis - continued
Management Bas is - con tinued us without regard to owners hip. Fur thermo re, we also review operati ng res ults and make decisi ons about allocating r es our ces s uch as emplo yees on a management bas is . When repor ting on a m anagement bas is , net int er est i ncome, fee income and loan i mpa
Slide 8: HSBC Finance Corporation and HSBC USA Inc. Third Quarter 2005 Highlights - IFRS
Stron g underlyi ng bus iness perf ormance s upport ed by good credi t experience, cust omer loan gr owth and expens e trends Im pact s of Hurr icane Kat rina ( “KATRINA ”) resul ted in $206 m illion ( befor e tax) of incremental lo an i mpairm ent char ges and $11 mill ion (bef ore tax) o f for ego
Slide 9: Combined Profit for the Period - IFRS, Q3
HSBC F inance Co rpor at ion and HSBC USA I nc. Pro fit F or the P er iod - IFRS ( A Non-GAAP M eas ure) (M illio ns $) Q3 05 I FRS Pr ofit for the Period : HSBC Finance Corpor ation HS BC USA Inc. Sub - total Pr ofit f or t he Period r elated to tr ansf er red as sets (1 ) Combined P rof it for the
Slide 10: Combined Profit for the Period - IFRS, Nine Months
HSBC F inance Co rpor at ion and HSBC USA I nc. Pro fit f or the P eriod - IFRS ( A Non- GAAP M eas ure) (M illio ns $) 2005 I FRS Pr ofit for the Perio d: HSBC Finance Corpor ation HS BC USA Inc. Sub- total Pr ofit f or t he Period r elated to tr ansf er red as sets (1 ) Combined P rof it for the P
Slide 11: Third Quarter 2005 Hurricane Katrina Impacts - IFRS
HSBC F inance Co rpor at ion and HSBC USA I nc. Thi rd Quart er 2005 Hur ricane Katri na Impacts - IFRS ( A Non -GAAP M eas ure) (M illio ns $) Loan I mpair ment Charges Con sumer Car ds HSBC F inance Corpor at ion HSBC USA I nc. Tot al Kat rina I mpact $125 55 180 26 $206 F oregone Operati ng Incom
Slide 12: HSBC Finance Corporation
HSBC Finance Corporation HSBC «>
Slide 13: HSBC Finance Corporation - Third Quarter 2005 Highlights
HSBC F inance Co rpor at ion - Thir d Quarter 2005 Highl ights IFRS Management Bas is ( A Non -GAAP M eas ure) Str ong underl ying bus ines s per form an ce E xpect higher bankruptcy char ge- offs in th e r egion of $200 mil lion ( bef ore tax) in the f ourth qu ar ter due to U.S. bankr uptcy legis
Slide 14: HSBC Finance Corporation IFRS Management Basis, Q3
HSBC F inance Co rpor at ion IF RS Management Bas is (A Non - GAAP M eas ure) (M illio ns $) Q3 05 I FRS $2,973 614 3,587 1,4 30 205 1,295 657 233 424 1 38 $ 562 36.1% 3.4% Q3 04 I AS Li te $2,839 692 3 ,531 1,392 - 1,290 849 306 543 - $ 543 36.5% 4.0% Net Interes t I nco me Other Oper at ing Incom
Slide 15: HSBC Finance Corporation IFRS Management Basis, Nine Months
HSBC F inance Co rpor at ion IF RS Management Bas is (A Non - GAAP M eas ure) (M illio ns $) Net Int er est I ncome Other Oper ating I ncome Tot al Operating I ncome Loan I mpair ment Charges Loan I mpairment Char ges, Katr ina related Oper at ing E xpenses Pr ofit Befor e Tax T ax Exp ens e Pr ofit
Slide 16: Key Ratios - Management Basis
HSBC F inance Co rpor at ion Key Ratios - Management Bas is ( A Non- GAAP M eas ure) Q3 04 Q4 04 Q 1 05 Q2 05 Q3 05 NIM 0.0775 0.0 757 0.0713 0.0 71 0.069 RAR 0.064 0.0 652 0.0671 0.0 651 0.066 ROM A 0.0084 0. 0074 0.0132 0 .0114 0.008 Ris k Adjus ted M argin 4.07 4.6 4.35 4.34 0.01 Deri ved fro m U
Slide 17: Credit Quality - Management Basis
HSBC F inance Co rpor at ion Credit Quali ty - Management Bas is ( A Non -GAAP M eas ure) Q3 04 Q4 04 Q 1 05 Q2 05 Q3 05 Char ge- Offs 0.0423 0.0384 0.0356 0.0325 0.032 RAR 0.064 0.0652 0.0671 0.0651 0.066 2+ Delinqu ency 0 .0444 0.0395 0 .0368 0.0359 0.036 Ris k Adjus ted M ar gin 4.07 4 .6 4.35 4.
Slide 18: Customer Loans - IFRS Management Basis
HSBC F inance Co rpor at ion IF RS Management Bas is (A Non - GAAP M eas ure) Custom er L oan s ( Mil lions $) ( 1) M ast er Car d is a regis tered tr ademark of Mas terCard I nternatio nal , Incor porated and Vis a is a regis tered tr ad em ar k of V ISA US A, Inc.
Slide 19: Third Quarter 2005 - Business Unit Highlights
HSBC F inance Co rpor at ion Th ird Quar ter 2005 - Bus ines s Un it Highli ghts Good growt h in Real Es tate Secured p roducts , up 17% year- over-year Includes both near - prime and s ubpr ime segm en ts Conti nued focus on juni or liens and cros s sell ing M ore granul ar pri ci ng based on segme
Slide 20: Third Quarter 2005 - Business Unit Highlights (Cards)
HSBC F inance Co rpor at ion Th ird Quar ter 2005 - Bus ines s Un it Highli ghts Excellent qu ar ter wit h str ong pr ofits , s olid or ganic loan gr owth and good op er ating incom e g rowth E xpanded net int er est m argin by growing n on-prime book an d repri ci ng effo rts Str ong growt h in fee
Slide 21: Third Quarter 2005 - Business Unit Highlights (International)
HSBC F inance Co rpor at ion Th ird Quar ter 2005 - Bus ines s Un it Highli ghts Stro ng organic gr owth, pr incipally in the near-prime por tfol io Ben ef it of mix s hift is evi dent in res ults E xpanded dis tribut ion thr ough dir ect chann el Optimized collectio ns and active por tfo lio manage
Slide 22: HSBC USA Inc.
HSBC USA Inc. HSBC «> 19
Slide 23: HSBC USA Inc. - Third Quarter 2005 Highlights
HSBC US A Inc. - Thir d Quarter 2005 Highl ights IFRS (A Non- GAAP M eas ure) Good core lo an and deposit growth over 2004 Comm ercial loan gr owth of 20% T otal depos it gr owth of 17% Over al l credit qu al ity remain s s tron g Adjus ting f or Katr ina and non- recurri ng items in Q3 04, prof it
Slide 24: HSBC USA Inc. IFRS, Q3
HSBC US A Inc. I FRS ( A Non -GAAP M eas ure) (M illio ns $) Net Int er est I ncome Other Oper ating I ncome Tot al Operating I ncome Loan I mpair ment Charges Loan I mpairment Char ges, Katr ina related Oper at ing E xpenses Pr ofit Befor e Tax T ax Exp ens e Pr ofit for t he Period Kat rina imp ac
Slide 25: HSBC USA Inc. IFRS, Nine Months
HSBC US A Inc. I FRS ( A Non -GAAP M eas ure) (M illio ns $) Net Int er est I ncome Other Oper ating I ncome Tot al Operating I ncome Loan I mpair ment Charges Loan I mpairment Char ges, Katr ina related Oper at ing E xpenses Pr ofit Befor e Tax T ax Exp ens e Pr ofit for t he Period Kat rina imp ac
Slide 26: HSBC USA Inc. Third Quarter 2005 - Business Unit Highlights
HSBC US A Inc. T hird Quarter 20 05 - Bus ines s Un it Highli ghts Pers onal Fin ancial Services (PF S) Good core loan and depos it g rowth On -line savi ngs pr oduct being l au nch ed Mor tgage res ults impr oved on s trong r etail or igination vo lumes and increased valu e o f s er vicing r ights
Slide 27: HSBC USA Inc. Business Unit Highlights - Corporate, Investment Banking and Markets
Interes t rate and yi el d curve pr es s ures sig nificantly reduced M oney Mar ket and Bal an ce S heet Management i nco me. Other oper ating income, par ticularly in areas wher e inves tment has been made, such as global m ar kets trading, i mproved. Bus ines s i nvestm ent str ategy remains on co
Slide 28: Appendix
HSBC €&> APPENDIX
Slide 29: Reconciliation to GAAP: HSBC Finance Income Statement, Three Months
Reconciliation to GAAP Financial Measures HSBC Finance Corporation Income Statement IFRS Management Basis Three Months Ended 9/30/05 Three Months Ended 9/30/04 IFRS IAS Lite Management IFRS Management IAS Lite Owned Basis Management Owned Basis Management (dollars are in millions) Basis Adjustments
Slide 30: Reconciliation to GAAP: HSBC Finance Income Statement, Nine Months
Reconciliation to GAAP Financial Measures HSBC Finance Corporation Income Statement IFRS Management Basis Nine Months Ended 9/30/05 Nine Months Ended 9/30/04 IFRS IAS Lite Management IFRS Management IAS Lite Owned Basis Management Owned Basis Management (dollars are in millions) Basis Adjustments Ba
Slide 31: Reconciliation to GAAP: Management Basis Ratios
Reconciliation to GAAP Financial Measures HSBC Finance Corporation Management Basis Three months ended September 30, 2005 September 30, 2004 (dollars are in millions) Return on Average Assets: Profit for the period: Owned basis $ 281 $ 325 Management basis adjustments 31 26 Management basis $ 312 $
Slide 32: Reconciliation to GAAP: Net Charge-off and Delinquency Ratios
Reconciliation to GAAP Financial Measures HSBC Finance Corporation Management Basis Three months ended September 30, 2005 September 30, 2004 (dollars are in millions) Consumer Net Charge-off Ratio: Consumer net charge-offs: Owned basis $ 902 $ 969 Management basis adjustments 308 396 Management basi
Slide 33: Reconciliation to GAAP: Customer Loans
Reconciliation to GAAP Financial Measures HSBC Finance Corporation Customer Loans IFRS Management Basis As at September 30, 2005 As at June 30, 2005 As at September 30, 2004 IFRS IFRS IFRS Management IFRS Management IFRS Management IFRS Owned Basis Management Owned Basis Management Owned Basis Manag
Slide 34: Reconciliation to GAAP: HSBC USA Inc. Income Statement
Reconciliation to GAAP Financial Measures HSBC USA Inc. Income Statement IFRS Three Months Ended 9/30/05 Three Months Ended 9/30/04 Owned IFRS Owned IAS Lite (dollars are in millions) Basis Adjustments IFRS Basis Adjustments IAS Lite Net interest income $ 761 $ 5 $ 766 $ 698 $ (5) $ 693 Other operat