Hsbc Holdings Plc · LSE:HSBA
Hsbc — FY2021 Earnings Presentation
58 slides from Hsbc's earnings presentation, Feb 22, 2022
Slide 1: HSBC Holdings plc FY21 and 4Q21 Results
HSBC Holdings plc FY21 and 4Q21 Results Presentation to Investors and Analysts
Slide 2: Our purpose, values and ambition support the execution of our strategy
Strategy 4Q21 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 responsibili
Slide 3: FY21 performance summary
Strategy 4Q21 results Appendix FY21 performance summary Returned to growth 1 4Q21 reported revenue up 2% vs. 4Q20; tailwinds expected from rates going forward Creating capacity through announced disposals in the US & France to facilitate wealth growth in Asia Profits up, returns on an improved t
Slide 4: Progress against our ambitions
Strategy 4Q21 results Appendix Progress against our ambitions 2020 2021 Key ambitions Adjusted revenue growth, YoY (8.3)% (3.2)% Mid single digits medium to long-term2 Revenue Adjusted fee income + Insurance 28% 33% c.35% medium to long-term as a % of adjusted revenue Costs Adjusted costs $32.4bn $3
Slide 5: Focus: Wealth and Personal Banking
Strategy 4Q21 results Appendix Focus: Wealth and Personal Banking Net New Invested Assets7 WPB Asset Management9 Asia WPB Wealth Revenue10 $bn Funds under management, $bn $bn 21% YoY, % 5% 10% 64 53 602 630 5.2 5.8 (27)% 36 138% 15 2020 2021 2020 2021 2020 2021 Asia RoW WPB Reported Wealth Balances8
Slide 6: Focus: Wholesale Banking
Strategy 4Q21 results Appendix Focus: Wholesale Banking Growth in wholesale fees GBM collaboration revenue GBM RWAs $bn $bn $bn +0.3% 8% (10)% YoY, % YoY, % YoY, % 15.3 15.4 3.8 261 3.5 236 Other non-interest 1.4 2% income (8)% 1.3 55% 49% (18)% 7% 9% 2.5 12% 2.2 Fees 45% 51% 4% 9% 2020 2021 2020 20
Slide 7: Focus: Repositioning for higher growth
Strategy 4Q21 results Appendix Focus: Repositioning for higher growth Restructuring US and Europe Repositioning Asia for growth Recently announced acquisitions in Asia Reducing adjusted RWAs Reducing adjusted costs $bn $bn AXA Singapore20 (completed in Feb 2022) (12)% (5)% Acquisition results in t
Slide 8: Digitise: Enhancing our technological capabilities for our clients
Strategy 4Q21 results Appendix Digitise: Enhancing our technological capabilities for our clients Technology spend Technology agile workforce24 HSBC Trade e-penetration26 % of total adjusted operating expenses % % +15ppts 3x 84 69 +1ppt >21 15 19 18 5 2020 2021 HSBCnet wholesale mobile app payments
Slide 9: Energise: Empowering our talent across the organisation
Strategy 4Q21 results Appendix Energise: Empowering our talent across the organisation Employee engagement index29 Female leaders30 Average hours of training per FTE +5ppts +1.4ppts 16% 72% 72% 31.7% 27 30.3% 67% 23 2019 2020 2021 2020 2021 2020 2021 8
Slide 10: Transition: Continuing to build on our global leading position
Strategy 4Q21 results Appendix Transition: Continuing to build on our global leading position Supporting our customers in the transition to Net Zero and a sustainable future Becoming a Net Zero Bank Ambition to provide and facilitate $750bn to $1tn of sustainable finance and Ambition to be net zero
Slide 11: 4Q21 results summary
Strategy 4Q21 results Appendix 4Q21 results summary $m 4Q21 4Q20 Δ NII 6,788 6,585 3% 4Q21 reported PBT of $2.7bn, up $1.3bn (92%) vs. 4Q20; Non-NII 5,304 5,213 2% adjusted PBT of $4.0bn up $1.8bn (79%), primarily due to Revenue 12,092 11,798 2% a lower ECL charge and lower bank levy ECL (450) (1,
Slide 12: Loan and fee growth
Strategy 4Q21 results Appendix Loan and fee growth Customer lending by global business, $bn Net fee income by global business, $m +$27bn Includes the impact of $30bn of gross 5% RWA saves 3,101 489 +$11bn 462 2,949 338 349 $(14)bn 823 Group net fee income up 5% YoY, 827 mainly in CMB 221 207 WPB
Slide 13: Adjusted revenue drivers
Strategy 4Q21 results Appendix Adjusted revenue drivers Revenue by global business, $m Revenue by income statement line, $m 12,092 30 (61) 12,092 34 152 Includes $(167)m Includes $(167)m of insurance of insurance 245 market impacts 203 market impacts 11,798 11,798 (15) 4Q20 WPB CMB GBM Corporate 4Q2
Slide 14: Net interest income and margin
Strategy 4Q21 results Appendix Net interest income and margin Reported NIM progression, bps 119 2 (2) 119 4Q21 reported NII of $6.8bn, up $0.2bn (3%) vs. 3Q21; mainly driven by 3Q21 Asset yields Asset mix 4Q21 higher yields on customer loans as well as growth in AIEAs Reported NIM trend 4Q21 NIM
Slide 15: Net interest income sensitivity – main drivers and assumptions
Strategy 4Q21 results Appendix Net interest income sensitivity – main drivers and assumptions NII sensitivity35 to instantaneous change in yield curves (12 months) At 31 December 2021 We have simplified the basis of preparation for our disclosure for FY21, Currency and have made a simplified 50% p
Slide 16: Credit performance
Strategy 4Q21 results Appendix Credit performance Adjusted ECL release/(charge) trend 4Q21 ECL charge of $450m, primarily ECL, $m from Stage 2 charges reflecting recent 424 644 developments in China’s CRE market, 272 ECL release/(charge) offset by releases in the UK and Europe (450) as a % of (1,1
Slide 17: Adjusted costs
Strategy 4Q21 results Appendix Adjusted costs Operating expenses trend, $m 4Q21 costs (excl. levy) of $8.2bn modestly down vs. 4Q20, primarily 9,092 due to cost saves of $0.6bn and lower performance-related pay (PRP), 8,341 802 8,043 7,836 partially offset by increased technology spend 7,486 116 1
Slide 18: Cost programme progress
Strategy 4Q21 results Appendix Cost programme progress Adjusted costs, $bn FTE 33.6 (3.3) Stable costs over FY22 32.1 2019 Investment Inflation Cost Bank levy Other 2021 2022 programme 235.4k saves 219.7k Programme cost saves to date of $3.3bn and associated CTA spend of $3.6bn; c.60% Targeting
Slide 19: Capital adequacy
Strategy 4Q21 results Appendix Capital adequacy CET1 ratio, % CET1 ratio of 15.8% down 0.1ppts vs. (0.0) 0.0 (0.0) 3Q21 as profits were offset by capital returns: 15.9 0.2 (0.2) 15.8 Includes second interim dividend for 2021, net of YTD dividend accruals Includes the impact of c.25bps from the
Slide 20: Path to CET1 target
Strategy 4Q21 results Appendix Path to CET1 target CET1 ratio evolution Aim to transition to c.14 — 14.5% CET1 1Q22 mainly impacted by: ratio planning range by FY22 Target CET1 ratio to be met primarily via 15.8% organic and inorganic growth, capital return, and regulatory impacts Expect CET1
Slide 21: Summary
Strategy 4Q21 results Appendix Summary A good set of results for 2021 and 4Q21; revenue growth returning (up 2.5% vs. 4Q20) and 1 improved earnings diversity by business and geography Good business momentum, including lending growth of $38bn in WPB and CMB in FY21, Trade loan 2 growth up 23% Signifi
Slide 22: Appendix
Appendix XP usec
Slide 23: Guidance summary
Strategy 4Q21 results Appendix Guidance summary FY21 Guidance Stable adjusted costs over FY22; 0-2% cost inflation over FY2323; bank levy expected to be Adjusted costs $32.1bn c.$300m p.a. Expect >$2bn of cost saves in FY22; expect total programme saves of at least $5.5bn by FY22; Costs Cost saves $
Slide 24: Business highlights
Strategy 4Q21 results Appendix Business highlights Global business highlights Transformation highlights Geographic highlights Reported wealth balances of $1.7tn up 2% Recently announced acquisitions Adjusted PBT by region, $bn QoQ HSBC Life China FY20 FY21 WPB Strong FY21 mortgage performance,
Slide 25: ESG update
Strategy 4Q21 results Appendix ESG update Environmental Social Governance We plan to publish our own climate transition plan in FY23 bringing together how we intend to embed net zero targets Our percentage of female into our strategy, processes, policies and governance leaders was 31.7%, up 1.4p
Slide 26: Sustainable finance / ESG update
Strategy 4Q21 results Appendix Sustainable finance / ESG update Sustainable finance Net zero emissions pathways for Oil & Gas and Power & Utilities sectors We have provided and facilitated a cumulative Oil and gas – absolute emissions Power and utilities – emissions intensity $126.7bn of sustainab
Slide 27: Capital allocation progress
Strategy 4Q21 results Appendix Capital allocation progress Tangible Equity allocation to Asia and WPB Tangible Equity, % of Group By legal entity5 By global business6 24% 25% 27% c.35% 41% 42% 42% c.50% 36% 36% 37% 19% 17% 17% 13% 12% 11% 14% 15% 16% 41% 39% 36% 13% 14% 14% 2018 2020 2021 Medium to
Slide 28: The value of our international network
Strategy 4Q21 results Appendix The value of our international network FY21 Wholesale client value45 HSBC franchise is highly connected c.77% of CMB and Global Banking client revenue is linked to HSBC’s international network, up 2ppt vs. FY20 and focused on international clients International clients
Slide 29: GBM: Building from our plans announced in February 2020
Strategy 4Q21 results Appendix GBM: Building from our plans announced in February 2020 Delivering our restructuring plan Focusing on growth FY19 vs. FY21 Grow Transaction Banking revenues in key corridors Reposition our GBM RWAs down capital base (14)% from $273bn to $236bn48 Become top 5 Global Fin
Slide 30: GBM: Differentiating from our competitors
Strategy 4Q21 results Appendix GBM: Differentiating from our competitors Leading Transaction bank Deep roots in Asia Globally connected with strength in Asia Broad and diverse client base The leading international bank c.50% of revenues booked in the Diversified revenues and well Collaboration reven
Slide 31: Key financial metrics
Strategy 4Q21 results Appendix Key financial metrics Reported results, $m 4Q21 3Q21 4Q20 Balance sheet, $m 4Q21 3Q21 4Q20 NII 6,781 6,610 6,619 Total assets 2,957,939 2,968,791 2,984,164 Other Income 5,208 5,402 5,138 Net loans and advances to customers 1,045,814 1,039,677 1,037,987 Revenue 11,989 1
Slide 32: Reconciliation of reported and adjusted PBT
Strategy 4Q21 results Appendix Reconciliation of reported and adjusted PBT $m 4Q21 3Q21 4Q20 FY21 FY20 Reported PBT 2,664 5,403 1,385 18,906 8,777 Revenue Currency translation — (150) (27) — 1,393 Customer redress programmes 7 — (1) (11) 21 Disposals, acquisitions and investment in new businesses —
Slide 33: Certain items included in adjusted revenue
Strategy 4Q21 results Appendix Certain items included in adjusted revenue Certain items included in adjusted revenue highlighted 4Q21 3Q21 2Q21 1Q21 4Q20 FY21 FY20 in management commentary, $m Insurance manufacturing market impacts in WPB 130 (41) 333 70 297 504 70 of which: Asia WPB insurance manuf
Slide 34: 4Q21 adjusted revenue performance
Strategy 4Q21 results Appendix 4Q21 adjusted revenue performance 4Q21 revenue 4Q21 vs. 4Q20 Revenue by global business, $bn Wealth $2,042m (13) o/w insurance market impacts: $(167)m 2% WPB $5,292m (0)% Personal Banking $3,094m 46 11.8 12.0 12.1 Other $156m (48) GTRF $512m 90 3.5 3.6 3.5 Credit and L
Slide 35: Net interest margin supporting information
Strategy 4Q21 results Appendix Net interest margin supporting information Market-implied path of overnight interest rates36, bps Quarterly NIM by key legal entity % of 4Q21 % of 4Q21 4Q20 1Q21 2Q21 3Q21 4Q21 Group NII Group AIEA GBP USD 205 The Hongkong and 195 Shanghai Banking 1.42% 1.40% 1.37% 1.3
Slide 36: Balance sheet analysis
Strategy 4Q21 results Appendix Balance sheet analysis Group customer accounts by type, $bn Group loans and deposits by currency Average balances at 31 December 2021 1,056 At 31 December 2021 898 823 840 795 Loans and advances to customers Customer accounts USD Others 279 290 323 Others 229 230 272 2
Slide 37: Net fee income by global business
Strategy 4Q21 results Appendix Net fee income by global business $m 2021 2020 ∆ $m 2021 2020 ∆ Personal Banking 1,341 1,203 11% MSS 939 859 9% Wealth Management 4,449 4,099 9% o/w HSS 1,332 1,185 12% WPB Other WPB 104 217 (52)% o/w Other MSS (393) (326) (21)% Total WPB 5,894 5,519 7% Banking 2,696 2
Slide 38: Wealth and Personal Banking
Strategy 4Q21 results Appendix Wealth and Personal Banking 4Q21 financial highlights Balance sheet, $bn 4Q21 vs. 4Q20 (0)% 4% Revenue down $15m (<1%) driven by adverse insurance market Revenue $5.3bn (4Q20: $5.3bn) 6% impacts of $167m, lower interest rates and lower Markets >100% 824 844 859 Treas
Slide 39: Commercial Banking
Strategy 4Q21 results Appendix Commercial Banking 4Q21 financial highlights Balance sheet, $bn 4Q21 vs. 4Q20 Revenue $3.4bn 8% Revenue up $245m (8%), driven by higher fees across all 4Q20: $3.1bn Customer lending products, growth in trade and deposit balances notably in Asia 3% 75% partially offse
Slide 40: Global Banking and Markets
Strategy 4Q21 results Appendix Global Banking and Markets 4Q21 financial highlights View of adjusted revenue 4Q21 vs. 4Q20 Revenue $3.5bn 1% $m 4Q21 ∆4Q20 Revenue higher by $34m (1%): (4Q20: $3.5bn) MSS 1,871 (2)% • Global FX and Securities Financing grew revenue from a >(100)% Securities Services
Slide 41: Corporate Centre
Strategy 4Q21 results Appendix Corporate Centre 4Q21 financial highlights Revenue performance, $m Revenue $(109)m 22% (4Q20: $(139)m) 4Q20 1Q21 2Q21 3Q21 4Q21 >(100)% Central Treasury (12) (28) (27) (35) (9) ECL $(4)m (4Q20: $1m) Legacy Credit 3 9 6 (35) (14) Costs $136m >100% (4Q20: $(885)m) Other
Slide 42: Wealth and Personal Banking: Global invested assets
Strategy 4Q21 results Appendix Wealth and Personal Banking: Global invested assets Reported invested assets managed by AM, Global reported invested assets, $bn Asia reported invested assets, $bn $bn 7% 3% 5% 1,050 1,097 1,119 630 459 481 472 602 610 407 437 434 281 298 293 326 345 351 176 181 180 31
Slide 43: Insurance
Strategy 4Q21 results Appendix Insurance Key financial metrics* Reported Embedded value, $bn 11% Insurance HK quarterly ANP, $m Adjusted income statement, $m FY21 FY20 FY19 CAGR Revenue 2,761 1,973 2,741 17.0 15.4 948 13.9 Offshore Onshore Of which: NII 2,492 2,414 2,318 7.5 751 722 4.9 6.0 Of which
Slide 44: Total shareholders’ equity to CET1 capital
Strategy 4Q21 results Appendix Total shareholders’ equity to CET1 capital Total equity to CET1 capital, at 31 December 2021, $m Total equity to CET1 capital walk, $m 4Q21 2Q21 Total equity 206,777 Total equity (per balance sheet) 206,777 206,764 Non-controlling interests (8,527) (8,546) Non-controll
Slide 45: 4Q21 vs. 3Q21 equity drivers
Strategy 4Q21 results Appendix 4Q21 vs. 3Q21 equity drivers Shareholders’ Tangible Equity, TNAV per share, Basic number of ordinary Equity, $bn $bn $ shares, million As at 30 September 2021 198.1 157.7 7.81 20,201 Profit attributable to: 1.9 2.7 0.13 — Ordinary shareholders58 1.8 2.7 0.13 — Other eq
Slide 46: FY21 vs. FY20 equity drivers
Strategy 4Q21 results Appendix FY21 vs. FY20 equity drivers Shareholders’ Tangible Equity, TNAV per share, Basic number of ordinary Equity, $bn $bn $ shares, million As at 31 December 2020 196.4 156.4 7.75 20,184 Profit attributable to: 13.9 14.3 0.71 — Ordinary shareholders58 12.6 14.3 0.71 — Other
Slide 47: Balance sheet – customer lending
Strategy 4Q21 results Appendix Balance sheet – customer lending Balances by global business, $bn Balances by region, $bn Growth since 3Q21 $(1)bn 2% Europe $397bn (0)% 1% o/w: mortgages Adjusted customer lending of Growth since 4Q20 $(6)bn $1,046bn, up $6bn (1%) vs. 3Q21 1,040 1,046 o/w: UK $306bn (
Slide 48: Personal and Wholesale lending analysis
Strategy 4Q21 results Appendix Personal and Wholesale lending analysis Reported net personal lending balances, $bn Net CMB and GBM lending balances, $bn 475.2 558.9 556.3 456.1 23.4 2% 22.9 21.7 2% Other Credit cards 21.3 Other secured 490.8 472.4 (4)% 37.8 0% personal lending Guaranteed loans 37.9
Slide 49: Balance sheet – customer accounts
Strategy 4Q21 results Appendix Balance sheet – customer accounts Balances by global business, $bn Balances by region, $bn Growth since 3Q21 6% $1bn Adjusted customer accounts of Europe $668bn 1% 0% $1,711bn increased by $24bn (1%) vs. 3Q21 1,687 1,711 o/w: UK $536bn $1bn 1,620 0% 1 1 1 WPB custome
Slide 50: Mainland China drawn risk exposure
Strategy 4Q21 results Appendix Mainland China drawn risk exposure Mainland China drawn risk exposure59 Mainland China drawn risk exposure is defined as lending booked in mainland China and wholesale lending booked offshore $bn where the ultimate parent and beneficial owner is in mainland China 179
Slide 51: Mainland China commercial real estate update
Strategy 4Q21 results Appendix Mainland China commercial real estate update Mainland China commercial real estate exposures60 Market conditions update Mainland China commercial real estate exposures by location of parent company, $bn Uncertainty exists for real estate developers following recent m
Slide 52: Group real estate ECL analysis
Strategy 4Q21 results Appendix Group real estate ECL analysis Total real estate allowances for ECL by stage Group real estate allowances for ECL $m 4Q21 3Q21 ∆ Group Stage 2 allowances for real estate increased $451m in 4Q21, primarily due to exposures to mainland 1 132 163 (31) China ultimate par
Slide 53: UK RFB disclosures
Strategy 4Q21 results Appendix UK RFB disclosures Business performance WPB CMB FY21 financial highlights Personal gross mortgage balances, £bn Mortgages: Wholesale gross customer loans, £bn 118.1 90+ day delinquency trend62, % 3% 101.5 110.7 Revenue £6.2bn (FY20: £6.0bn) 0.23 0.25 70.2 3% 0.19 67.1
Slide 54: Glossary
Strategy 4Q21 results Appendix Glossary AIEA Average interest earning assets IFRS International Financial Reporting Standard AM Asset Management LCR Liquidity coverage ratio AT1 Additional Tier 1 A portfolio of assets including securities investment conduits, asset-backed securities, trading portfol
Slide 55: Footnotes
Strategy 4Q21 results Appendix Footnotes 1. If policy rates were to follow the current implied market consensus agile blueprint 2. Medium-term is defined as 3-4 years from 1 January 2020; long-term is defined as 5-6 years 25. % of the Group’s technology services that are on the private or public clo
Slide 56: Footnotes
Strategy 4Q21 results Appendix Footnotes 42. For further details on our financed emissions scope, methodology and terminology see pages 47 – 50 of the HSBC 57. Source: Hong Kong Insurance Authority Quarterly Release of Provisional Statistics for Long Term Business up to Holdings Annual Report and Ac
Slide 57: Disclaimer
Strategy 4Q21 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
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