Hsbc Holdings Plc · LSE:HSBA
Hsbc — Q3 2021 Earnings Presentation
34 slides from Hsbc's earnings presentation, Oct 25, 2021
Slide 1: HSBC Holdings plc 3Q21 Results
HSBC Holdings plc 3Q21 Results Presentation to Investors and Analysts
Slide 2: Our purpose, values and ambition support the execution of our strategy
3Q21 results Appendix Our purpose, values and ambition support the execution of our strategy Our purpose Opening up a world of opportunity Our ambition To be the preferred international financial partner for our clients Our values We value difference We succeed together We take responsibility
Slide 3: 3Q21 highlights
3Q21 results Appendix 3Q21 highlights Reported PBT of $5.4bn up 76% vs. 3Q20; adjusted PBT of $6.0bn up 36% vs. 3Q20, 1 primarily due to net ECL release of $0.7bn 2 Execution of strategy continues at pace NII stabilising; strong reported fee growth, up 11% vs. 3Q20; good growth in Asia revenue 3 des
Slide 4: 3Q21 results summary
3Q21 results Appendix 3Q21 results summary $m 3Q21 3Q20 Δ NII 6,610 6,646 (1)% Adjusted PBT of $6.0bn up $1.6bn (36%) vs. 3Q20, primarily due to a net ECL release of $0.7bn vs. $0.8bn Non interest income 5,591 5,728 (2)% charge in 3Q20 Revenue 12,201 12,374 (1)% Net interest income stable vs. 3Q
Slide 5: Business revenue growth drivers
3Q21 results Appendix Business revenue growth drivers WPB CMB & GBM Geographic performance 3Q21 Private Bank NNM of $3.9bn, with Encouraging trends in global trade visible; 3Q21 Pivot to Asia: strong revenue trends; $3.1bn in Asia; AMG NNM of $4.3bn, with $1.3bn trade balances of $79bn up $3bn
Slide 6: 3Q21 adjusted revenue performance
3Q21 results Appendix 3Q21 adjusted revenue performance 3Q21 revenue 3Q21 vs. 3Q20 Revenue by global business, $bn Wealth (excl. Market impacts) $2,206m 145 (1)% Market impacts $(40)m (167) 12.4 12.4 12.2 WPB $5,418m (3)% Personal Banking $3,067m (31) Other $185m (99) 3.7 3.5 3.6 GTRF $500m 64 Credi
Slide 7: NII stabilisation and fee growth across global businesses
3Q21 results Appendix NII stabilisation and fee growth across global businesses Adjusted revenue by global business, $m Adjusted revenue by income statement line, $m 140 12,395 12,395 92 (374) (237) 60 (109) 12,201 12,201 (52) 92 (426) Wealth Other Includes $(374)m of GTRF WPB Insurance market impac
Slide 8: Net interest income and margin
3Q21 results Appendix Net interest income and margin Reported NIM progression, bps 120 119 (2) 1 3Q21 reported NII up $26m vs. 2Q21; adjusted NII was up $92m vs. 2Q21, primarily 2Q21 Asset mix Liabilities and other 3Q21 due to day count 3Q21 NIM of 1.19%, down 1bp vs. 2Q21, Reported NIM trend du
Slide 9: Credit performance
3Q21 results Appendix Credit performance Adjusted ECL release/(charge) trend ECL, $m 659 3Q21 net ECL release of $0.7bn; 432 280 ECL release/(charge) continued low Stage 3 charges, Stage 1–2 (823) as a % of release of $1.0bn, reflecting continued (1,199) average stability in economic and credit co
Slide 10: Adjusted costs
3Q21 results Appendix Adjusted costs Operating expenses trend, $m 3Q21 costs of $7.6bn stable vs. 3Q20, with higher technology spend and 9,199 investment, offset by cost saves of $0.6bn; 3Q21 cost saves had associated 802 8,150 7,936 CTA of $0.4bn 7,612 7,585 1,444 1,564 1,335 1,454 1,461 3Q21 c
Slide 11: Capital adequacy
3Q21 results Appendix Capital adequacy CET1 ratio, % CET1 ratio of 15.9%, up 0.3ppt vs. 2Q21 (0.0) Includes 3Q21 regulatory dividend accrual14 0.3 (0.2) (0.2) 15.9 of $1.7bn (YTD $3.8bn) net of payment of 7¢ 15.6 0.4 interim dividend Excludes c.25bps impact of announced share buyback expected
Slide 12: Summary
3Q21 results Appendix Summary More positive revenue outlook; growth in mortgages, trade and deposit balances 1 — Stabilisation of NII — Strong fee growth Continued strong cost control; seeing some inflation and performance related pay 2 pressures. Expect c.$32bn costs for FY21 and FY2212, excluding
Slide 13: Appendix
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Slide 14: Mainland China drawn risk exposure, at 30 June 2021
3Q21 results Appendix Mainland China drawn risk exposure, at 30 June 2021 Mainland China drawn risk exposure17 Mainland China drawn risk exposure (including Sovereigns, Banks and Customers) of $194bn comprising: Wholesale $183bn (of which 53% is onshore); Retail: $11bn. These amounts exclude Marke
Slide 15: Mainland China incorporated Property company exposure
3Q21 results Appendix Mainland China incorporated Property company exposure Exposures to mainland China ultimate parent companies by booking location, $bn Mainland China Real Estate exposures19 At 30 June 2021 0.1 0.4 Mainland China Real Estate exposures of $14.7bn do not include Hong Kong incorpo
Slide 16: Key financial metrics
3Q21 results Appendix Key financial metrics Reported results, $m 3Q21 2Q21 3Q20 Balance sheet, $m 3Q21 2Q21 3Q20 NII 6,610 6,584 6,450 Total assets 2,968,791 2,976,005 2,955,935 Other Income 5,402 5,981 5,477 Net loans and advances to customers 1,039,677 1,059,511 1,041,340 Revenue 12,012 12,565 11,
Slide 17: Reconciliation of reported and adjusted PBT
3Q21 results Appendix Reconciliation of reported and adjusted PBT $m 3Q21 2Q21 3Q20 Reported PBT 5,403 5,060 3,074 Revenue Currency translation — (130) 303 Customer redress programmes — — 48 Fair value movements on financial instruments 64 (45) (11) Restructuring and other related costs* 125 4 101 C
Slide 18: Certain items included in adjusted revenue
3Q21 results Appendix Certain items included in adjusted revenue Certain items included in adjusted revenue highlighted 3Q21 2Q21 1Q21 4Q20 3Q20 in management commentary, $m Insurance manufacturing market impacts in WPB (40) 334 75 298 127 of which: Asia WPB insurance manufacturing market impacts (5
Slide 19: Wealth and Personal Banking
3Q21 results Appendix Wealth and Personal Banking 3Q21 financial highlights Balance sheet, $bn 3Q21 vs. 3Q20 Revenue $5.4bn (3)% 5% Revenue down $152m (3%) driven by adverse insurance market (3Q20: $5.6bn) 3% impacts of $167m, lower Markets Treasury revenue and lower >100% 804 831 845 interest rat
Slide 20: Commercial Banking
3Q21 results Appendix Commercial Banking 3Q21 financial highlights Balance sheet, $bn 3Q21 vs. 3Q20 Revenue $3.4bn 4% Revenue up $127m (4%), the first YoY increase since the start of the (3Q20: $3.2bn) Customer lending pandemic, driven by higher fees across all products, growth in trade (1)% and d
Slide 21: Global Banking and Markets
3Q21 results Appendix Global Banking and Markets 3Q21 financial highlights View of adjusted revenue 3Q21 vs. 3Q20 Revenue $3.6bn (3)% $m 3Q21 ∆3Q20 Revenue down $0.1bn (3%): (3Q20: $3.7bn) MSS 1,985 (4)% • Continued momentum in Equities, driven by wealth specifically in >100% Securities Services 5
Slide 22: Corporate Centre
3Q21 results Appendix Corporate Centre 3Q21 financial highlights Revenue performance, $m Revenue $(195)m (28)% (3Q20: $(152)m) 3Q20 4Q20 1Q21 2Q21 3Q21 (77)% Central Treasury (32) (12) (28) (27) (35) ECL $3m (3Q20: $13m) Legacy Credit 28 3 9 6 (35) Costs $191m (3)% (3Q20: $196m) Other (148) (138) (2
Slide 23: Net interest margin supporting information
3Q21 results Appendix Net interest margin supporting information NII sensitivity to instantaneous change in yield curves (12 months) Quarterly NIM by key legal entity At 30 June 2021 % of 3Q21 % of 3Q21 3Q20 4Q20 1Q21 2Q21 3Q21 Group NII Group AIEA Currency Change in Jul The Hongkong and 2021 to Jun
Slide 24: 3Q21 vs. 2Q21 equity drivers
3Q21 results Appendix 3Q21 vs. 2Q21 equity drivers Shareholders’ Tangible Equity23, TNAV per share, Basic number of ordinary Equity, $bn $bn $ shares, million As at 30 June 2021 198.2 158.0 7.81 20,223 Profit attributable to: 4.0 3.8 0.19 — Ordinary shareholders 3.5 3.8 0.19 — Other equity holders 0
Slide 25: Balance sheet – customer lending
3Q21 results Appendix Balance sheet – customer lending Balances by global business, $bn Balances by region, $bn Growth since 2Q21 $5bn (2)% Europe $398bn 1% o/w: mortgages Adjusted customer lending of (1)% $1,040bn down $6bn (1%) vs. $5bn 1,059 o/w: UK $311bn 2 1,045 1,040 2% 2Q21; primarily due to
Slide 26: Balance sheet – customer accounts
3Q21 results Appendix Balance sheet – customer accounts Balances by global business, $bn Balances by region, $bn Growth since 2Q21 6% $19bn Europe $667bn 3% 2% 1,647 1,688 o/w: UK $533bn $12bn 1,592 2% 1 1 1 Adjusted customer accounts of 336 354 Asia $771bn $15bn $1,688bn, up $41bn (2%) vs. 2Q21 2%
Slide 27: IFRS 17 - Summary
3Q21 results Appendix IFRS 1724 - Summary IFRS 17 ‘Insurance Contracts’ Insurance manufacturing IFRS 17 is effective from 1 January 2023 and will result in a number Reported income statement, $m FY18 FY19 FY20 1H21 of changes compared to our current accounting policies Revenue 2,040 2,711 1,977 1,
Slide 28: Insurance manufacturing reporting today
3Q21 results Appendix Insurance manufacturing reporting today Current accounting treatment Insurance as part of HSBC Group 1H21 Group adjusted PBT, $bn 1H21 Insurance PBT, $bn Today HSBC reports Insurance Manufacturing results under IFRS 4: 11% 1.3 Insurance liabilities reflect current local mar
Slide 29: Insurance manufacturing reporting under IFRS 17
3Q21 results Appendix Insurance manufacturing reporting under IFRS 17 HSBC will adopt IFRS 17 from 1 January 2023, with 2022 comparatives restated Recognised profit over time Equity at transition will be impacted by the following: Elimination of PVIF intangible and the related deferred tax lia
Slide 30: IFRS 4 vs. IFRS 17 – Key differences
3Q21 results Appendix IFRS 4 vs. IFRS 17 – Key differences IFRS 4 IFRS 17 Profit emergence / Value of new business (VNB) is reported as revenue on Day 1 Contractual service margin (CSM) will be reported as liability on Day 1 recognition and recognised in revenue as services are provided (i.e. no
Slide 31: Glossary
3Q21 results Appendix Glossary AIEA Average interest earning assets A portfolio of assets including securities investment conduits, asset-backed securities, trading portfolios, Legacy credit credit correlation portfolios and derivative transactions entered into directly with monoline insurers BGF Bu
Slide 32: Footnotes
3Q21 results Appendix Footnotes 1. Unless otherwise stated, regulatory capital ratios and requirements are based on the transitional arrangements of the Capital Requirements Regulation in force at the time. These include the regulatory transitional arrangements for IFRS 9 ‘Financial Instruments’. Fo
Slide 33: Disclaimer
3Q21 results Appendix Disclaimer Important notice The information, statements and opinions set out in this presentation and accompanying discussion (“this Presentation”) are for informational and reference purposes only and do not constitute a public offer for the purposes of any applicable law or a
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