Hsbc Holdings Plc · LSE:HSBA
Hsbc — Investor Presentation (March 2015)
44 slides from Hsbc's investor presentation, March 2015
Slide 1: HSBC Holdings plc and HSBC Bank Canada Presentation to Canadian Investors
March 2015 HSBC Holdings plc and HSBC Bank Canada Presentation to Canadian Investors
Slide 2: 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 3: The HSBC Group
The HSBC Group
Slide 4: An unrivalled global position and platform for growth
The HSBC Group Strategy An unrivalled global position and platform for growth A leading international bank with a presence in 73 countries and territories HSBC Balanced global business model with universal banks in key global geographies today Strong capital position and resilient results in 2
Slide 5: Four Global Businesses Supported by Global Functions
The HSBC Group Four Global Businesses Supported by Global Functions Commun- ications Strategy Company and Secretaries Planning Risk (including Commercial Corporate Compliance) Banking Sustainability Retail Global Banking Private and Wealth Finance Banking Manage- ment HSBC Global Technology Marketin
Slide 6: Home and Priority growth markets
The HSBC Group 21 Home and Priority growth markets With further network and small markets Middle East and North Latin Europe Asia North Africa America America United Kingdom Hong Kong1 Home markets France Australia Egypt Canada Argentina Germany Mainland China Saudi Arabia USA Brazil Switzerland Ind
Slide 7: Simplified structure chart
The HSBC Group Simplified structure chart Principal entities in Home and Priority growth markets1 HSBC Holdings plc UK HSBC HSBC HSBC Private Holding company HSBC HSBC Latin America Overseas HSBC Bank HSBC Banking HSBC Bank 94% Latin Holdings Holdings Holdings Holdings Canada Bank plc Egypt S.A.E. I
Slide 8: Canada is a top 5 market for HSBC
The HSBC Group Canada is a top 5 market for HSBC Profit contributions by largest 5 markets Reported PBT FY 2014 USDm Hong Kong 8,142 Mainland China 2,951 Canada 829 India 700 UAE 662 8
Slide 9: Strong profit generation FY14
The HSBC Group Strong profit generation FY14 Consolidated statement of income1,2 USDbn Revenue3 61.2 Loan impairment (3.9) charges Operating (41.2) expenses Associates4 2.5 Profit 18.7 before tax 0 10 20 30 40 50 60 Notes: 1. Source: HSBC Holdings plc Annual Report and Accounts 2014 2. On a reported
Slide 10: Conservative Balance Sheet
The HSBC Group Conservative Balance Sheet1 31 December 2014 Assets Other4 Assets managed by Balance Sheet Insurance Management2 Liabilities Other6 Equity and equity Debt securities5 Derivatives Derivatives Repos Total USD2.6trn Trading liabilities6 Reverse Repos3,4 Customer accounts Loans to Trading
Slide 11: Growing equity base driven by retained earnings
The HSBC Group Growing equity base driven by retained earnings With strong and increasing capital ratios Common equity tier 1 ratio movement (%)1 USDbn 1.0 0.8 11.1 (0.6) 10.9 (0.6) (0.4) 31 December 2013 Profit for the period Dividends Corporate lending Regulatory change: Management initiatives 31
Slide 12: Future Regulatory Capital Developments
The HSBC Group 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 feat
Slide 13: HSBC Bank Canada
HSBC Bank Canada
Slide 14: Executing the Canadian Strategy
HSBC Bank Canada Executing the Canadian Strategy Grow our Revenue and Profitability Strategic Implement Global Standards objectives Streamline the business Focus on New-to-Bank clients to increase market share by investing in high value trade corridors and Execute successfully on Trade Corri
Slide 15: Strong profit generation FY14
HSBC Bank Canada Strong profit generation FY14 Consolidated statement of income1 CADm Revenue2 2,110 Loan impairment (107) charges Operating (1,102) expenses Associates3 11 Profit 912 before tax 0 500 1,000 1,500 2,000 Notes: 1. On a reported basis 2. Net Operating Income before loan impairment char
Slide 16: Profit before tax (Reported) 2014 vs 2013
HSBC Bank Canada Profit before tax (Reported) 2014 vs 2013 CADm 81 934 (32) 912 (20) (51) 2013 Revenue¹ Loan Impairment Operating Associates 2014 Charges² Expenses Notes: 1. Revenue is net operating income before loan impairment charges 2. Loan impairment charges and other credit risk provisions 16
Slide 17: Strong equity base driven by retained earnings
HSBC Bank Canada Strong equity base driven by retained earnings Common equity tier 1 ratio movement (%) 1.7 11.0 (1.2) 10.6 (0.9)1 31 December 2013 Profit for the period Dividends Risk Weighted Assets 31 December 2014 End point Growth End point Note: 1. 0.9% reduction due to business growth partiall
Slide 18: Growth in Advances despite repositioning loan book
HSBC Bank Canada Growth in Advances despite repositioning (de-risking) loan book Growth in RBWM deposit base allowed decline in GBM Broker Deposits Advances to deposits ratio CADm Advances: +695m Deposits: -83m +212m +439m +44m -341m -1,246m +1,504m 2.0% 0.1% 0.5% 81.1% 0.8% 79.6% 0.4% (2.3%) 31-Dec
Slide 19: Consistent and growing public issuance
HSBC Bank Canada Consistent and growing public issuance HSBC Bank Canada has issued CAD8bn since 2010 Issuer HSBC Bank Canada Senior Debt Fixed FRN Maturity 1-3 years 3.5 years 5 years 7 years Issue year 2010 2012 2013 2014 0 1 2 3 4 5 6 7 8 CADbn Source: HSBC Note: Excludes minor amount of retail f
Slide 20: Investment case
HSBC Bank Canada Investment case Privileged access to growth opportunities Distinctive Four global businesses sharing strong commercial linkages position Lean and values driven organisation fit for the new environment Strong balance sheet generating resilient stream of earnings To be the w
Slide 21: Contacts and further information
HSBC Bank Canada Contacts and further information HSBC Bank Canada HSBC Securities (Canada) Inc. Jacques Fleurant Bob Buttke Chief Financial Officer Head of Debt Syndication jacques_fleurant@hsbc.ca bob_buttke@hsbc.ca +1 604 641 1915 +1 416 868 7722 Marty Halpin Treasurer marty_halpin@hsbc.ca +1 416
Slide 22: Temporary cover
The view from HSBC Building, 8 Century Avenue, Pudong, Shanghai The view from HSBC Main Building, 1 Queen’s Road Central, Hong Kong SAR The view from HSBC Group Head Office, 8 Canada Square, London Temporary cover Cover images: internationalisation of the renminbi The images show the views from HSBC
Slide 23: Appendix
Appendix
Slide 24: HSBC Holdings plc Annual Results 2014 Presentation to Investors and Analysts
HSBC Holdings plc Annual Results 2014 Presentation to Investors and Analysts
Slide 25: 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 26: 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 27: 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 28: 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 29: 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 30: 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 31: Balance sheet analysis Growth in customer lending during 2014
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 32: 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 33: 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 34: 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 35: 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 36: 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 37: 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 38: 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 39: Strategic priorities
Strategic priorities Capitalise on unrivalled global platform Targets ‒ 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
Slide 40: Appendix II
Appendix II
Slide 41: 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 42: 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 43: 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 44: 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