HSBC Holdings PLC · LSE:HSBA
HSBC — FY2011 Earnings Presentation
30 slides from HSBC's earnings presentation, Feb 27, 2012
Slide 1: Annual Results 2011 Presentation to Investors and Analysts
HSBC Holdings plc 27 February 2012 Annual Results Annual Results 2011 Presentation to Investors and Analysts
Slide 2: Forward-looking statements
Forward-looking statements This presentation and subsequent discussion may contain certain forward-looking statements with respect to the financial condition, results of operations and business of the Group. These forward- looking statements represent the Group’s expectations or beliefs concerning f
Slide 3: 2011: A year of progress on new strategy
2011: A year of progress on new strategy Reported profit before tax USD21.9bn, up 15% on 2010 Profit before tax1 Underlying profit before tax USD17.7bn1, down 6% on 2010 Gained traction Designed to simplify the structure and improve the management of the Group, thereby in first year of 3 year
Slide 4: 2011 financial highlights
2011 financial highlights % Better/(worse) Summary financial highlights 2010 2011 2011 vs 2010 Reported PBT (USDbn) 19.0 21.9 15 Underlying PBT (USDbn) 18.9 17.7 (6) EPS (USD) 0.73 0.92 26 Dividends1 (USD) 0.36 0.41 14 Financial targets % 2010 2011 Return on average ordinary shareholders’ equity 9.5
Slide 5: Regional profit contribution
Regional profit contribution Geographical regions Selected country highlights (PBT1 USDm) % Better/ Brazil 1,230 +13% PBT1, USDbn 2010 2011 (worse) Hong Kong 5.6 5.8 5 Canada 955 +4% Rest of Asia-Pacific 5.9 7.4 23 India 814 +22% MENA 0.9 1.5 57 China HSBC² 705 +236% Latam 1.8 2.2 21 UAE 562 +73% Eu
Slide 6: Financial performance
Annual Results Financial performance
Slide 7: Financial overview: Summary of reported results
Financial overview Summary of reported results % Better/(worse) USDbn 2010 2011 2011 vs 2010 Revenue1 excluding changes in FV of 68.3 68.3 0 own debt due to credit spread LICs2 (14.0) (12.1) 14 Net operating income 54.3 56.2 3 Operating expenses (37.7) (41.5) (10) Associates and joint ventures 2.5 3
Slide 8: Financial overview: Underlying performance, 2011 vs 2010
Financial overview Underlying performance, 2011 vs 2010 % Better/(worse) USDbn 2010 2011 2011 vs 2010 Revenue1 68.9 68.1 (1) LICs2 (14.2) (12.1) 15 Net operating income 54.6 55.9 2 Operating expenses (38.3) (41.5) (8) Associates and joint ventures 2.6 3.3 27 Underlying profit before tax 18.9 17.7 (6
Slide 9: Revenues
Revenues1 Geographical regions Increased revenues in faster growing (USDbn) regions by 10%, accounting for 49% of 1.1 0.1 1.3 Group revenues up from 44% in 2010 68.9 0.5 68.1 (0.3) (2.2) Increased CMB revenue with higher (1.1) (0.2) lending in Asia and Latam; focusing on servicing international
Slide 10: Operating expenses: Restructuring
Operating expenses1 Geographical regions Higher staff costs notably Asia and Latam (USDbn) 1.0 41.5 (wage inflation and higher average FTEs to 1.0 0.6 39.5 support business growth) 0.4 0.1 0.3 38.3 0.2 (0.1) (0.3) Increased cost of compliance and regulation reflected in higher costs in Europe
Slide 11: Operating expenses: Quarterly progression in operating expenses and FTE
Operating expenses1 Quarterly progression in operating expenses and FTE Operating expenses1 Regional FTE (USDbn) (000s) 295.1 288.3 9.3 10.0 10.1 9.7 9.6 11.2 8.8 9.3 1.5 33.9 (0.1) 0.2 0.7 0.1 0.2 31.0 0.3 0.1 8.9 9.0 9.2 9.8 9.4 9.6 9.4 9.7 75.7 74.9 1Q 2010 2Q 2010 3Q 2010 4Q 2010 1Q 2011 2Q 2011
Slide 12: Credit quality: LICs significantly lower
Credit quality LICs1 significantly lower Group Geographic regions (USDbn) (USDbn) 2010 2011 1.6 1.9 RBWM lower in North America 3.1 2.5 with reduced balances in US 14.2 0.4 Consumer Finance and improved 0.6 12.1 0.3 credit quality in CRS. Also in UK 0.6 improved delinquency rates 8.3 7.0 4Q 2011
Slide 13: Capital adequacy: Absorbing 'Basel 2.5'
Capital adequacy Absorbing ‘Basel 2.5’ Strong capital generation and funding Movement in core tier 1 capital (USDbn) Credit risk RWAs increased with growth in CMB 116.1 14.0 122.5 lending including a strong increase in mainland (5.3) (2.3) Chinese associates’ RWAs reflecting underlying growth 31-D
Slide 14: Capital adequacy: Basel 3 implementation to end 2013, pro forma
Capital adequacy Basel 3 implementation to end 2013, pro forma1 Common equity tier 1 ratio2 (%) Developing and implementing mitigating actions 0.4 10.2 10.1 0.7 Strategic disposals 0.1 Run-off US Consumer portfolio (1.1) Manage impact of CVA charge Beyond 2013: continued regulatory uncerta
Slide 15: Where the profit goes
Where the profit goes Allocation of 2011 attributable profit, Variable compensation, dividend and tax payment pro forma1 % change USDbn 2010 2011 higher/ (lower) Variable compensation pool, pre-tax Dividends Retained Group 4.3 4.2 (2) 35% earnings / o/w GB&M 1.6 1.2 (26) capital 50% UK 0.9 0.9 1 o/w
Slide 16: Business performance
Annual Results Business performance
Slide 17: Significant progress in year 1 of strategy
Significant progress in year 1 of strategy Key execution elements Progress in 2011 19 disposals announced to date Capital deployment Accounting for around USD50bn of RWA Reshaping US business Achieved USD0.9bn sustainable cost saves, USD1.3bn annualised equivalent Cost efficiency Pipeline
Slide 18: Significant progress on strategy: Target RoE 12-15%
Significant progress on strategy Target RoE 12-15%1 HSBC return on average ordinary shareholders’ equity (%) 12-15 10.9 9.5 Operational focus on RoRWA 5.1 12-15% RoE target supported by 1.8-2.6% pretax RoRWA2 2009 2010 2011 Target 2011 RoRWA 1.9% or 1.5% on underlying basis HSBC return on aver
Slide 19: Regional profit contribution
Regional profit contribution Geographical regions Selected country highlights (PBT1 USDm) % Better/ PBT1, USDbn 2010 2011 Brazil 1,230 +13% (worse) Hong Kong 5.6 5.8 5 Canada 955 +4% Rest of Asia-Pacific 5.9 7.4 23 India 814 +22% MENA 0.9 1.5 57 China HSBC² 705 +236% Latam 1.8 2.2 21 UAE 562 +73% Eu
Slide 20: Global business contribution
Global business contribution % Better/(worse) PBT1, USDbn 2010 2011 2011 vs 2010 Commercial Banking 6.1 7.9 30 Global Banking & Markets 9.2 7.1 (23) Retail Banking Wealth Management 4.0 4.2 6 Global Private Banking 1.1 0.9 (11) Other (1.3) (2.4) (81) Total 18.9 17.7 (6) Note: 1 Underlying basis 20
Slide 21: Commercial Banking
Commercial Banking1 Strengthen our position as the leading international trade and business bank CMB key financials Achievements and developments (PBT, USDbn) Focus on faster-growing markets while connecting with developed markets 7.9 Record year PBT 6.1 5 years cumulative PBT: USD32.7bn 2.7 S
Slide 22: Global Banking & Markets
Global Banking & Markets1 Emerging-markets led, financing focused with greater emphasis on connectivity GB&M key financials Achievements and developments (PBT, USDbn) 9.2 7.0 Enhance core product strengths and selectively develop new capabilities 2010 2011 Grew revenue in 6 major business lines GB
Slide 23: Retail Banking and Wealth Management
Retail Banking and Wealth Management1 World class banking and wealth solutions RBWM key financials Achievements and developments (PBT, USDbn) 6.1 6.6 4.0 4.2 Transforming RBWM Global business model developed (2.1) (2.4) RBWM headcount reduced by 5k in 2H 2011 from progress Group HSBC Finance Res
Slide 24: 2011: A year of progress on new strategy
2011: A year of progress on new strategy Reported profit before tax USD21.9bn, up 15% on 2010 Profit before tax1 Underlying profit before tax USD17.7bn1, down 6% on 2010 Gained traction Designed to simplify the structure and improve the management of the Group, thereby in first year of 3 year
Slide 25: Appendix
Annual Results Appendix
Slide 26: Reported quarterly results: Consolidated summary
Reported quarterly results Consolidated summary 31 Mar 30 Jun 30 Sep 31 Dec 31 Mar 30 Jun 30 Sep 31 Dec PBT, USDm 2010 2010 2010 2010 2011 2011 2011 2011 Income, ex changes in FV of own debt 18,283 16,194 16,308 17,525 17,629 18,207 15,833 16,678 due to credit spread LICs (3,787) (3,736) (3,146) (3,
Slide 27: Reported quarterly results: Regional contribution
Reported quarterly results Regional contribution Year end Year end 31 Mar 30 Jun 30 Sep 31 Dec 31 Mar 30 Jun 30 Sep 31 Dec PBT, USDm 31 Dec 31 Dec 2010 2010 2010 2010 2011 2011 2011 2011 2010 2011 Hong Kong 1,509 1,368 1,407 1,408 1,562 1,519 1,288 1,454 5,692 5,823 Rest of Asia-Pacific 1,302 1,683
Slide 28: Reported quarterly results: Global business contribution
Reported quarterly results Global business contribution Year end Year end 31 Mar 30 Jun 30 Sep 31 Dec 31 Mar 30 Jun 30 Sep 31 Dec PBT, USDm 31 Dec 31 Dec 2010 2010 2010 2010 2011 2011 2011 2011 2010 2011 Retail Banking and Wealth 907 445 802 1,685 960 2,166 224 920 3,839 4,270 Management Commercial
Slide 29: Notable items within underlying basis
Notable items within underlying basis 20101 20111 USDm 1H 2H FY 1H 2H FY Revenue Gain on sale/sale and lease back of properties 249 - 249 - - - Non-qualifying hedges (NQH) (1,105) 31 (1,074) (314) (1,078) (1,392) PVIF adoption of calculation refinement - - - 243 - 243 Operating expenses Pension curt
Slide 30: Underlying performance, 2H 2011 vs 1H 2011
Underlying performance1, 2H 2011 vs 1H 2011 % Better/(worse) USDbn 1H 2011 2H 2011 2H 2011 vs 1H 2011 Revenue1 35.1 32.4 (8) LICs2 (5.2) (6.9) (32) Net operating income 29.9 25.5 (15) Operating expenses (20.2) (21.0) (4) Associates and joint ventures 1.6 1.8 11 Underlying profit before tax 11.3 6.3