HSBC Holdings PLC · LSE:HSBA
HSBC — Debt Investor Presentation (February 2020)
32 slides from HSBC's debt investor presentation, Feb 18, 2020
Slide 1: HSBC Holdings plc FY19 Results Fixed Income Investor Presentation
HSBC Holdings plc FY19 Results Fixed Income Investor Presentation
Slide 2: FY19 performance Summary
FY19 performance Summary 1 FY19 adjusted revenue up 6% to $55.4bn and adjusted PBT up 5% to $22.2bn FY19 adjusted jaws of 3.1%. FY19 adjusted cost growth of 2.8%, well below FY18 adjusted 2 cost growth of 5.6% Reported PBT of $13.3bn impacted by a 4Q19 goodwill impairment1 of $7.3bn, primarily 3 in
Slide 3: Key financial metrics
FY19 performance Key financial metrics Key financial metrics FY19 FY18 Ή)< Return on average tangible equity2 8.4% 8.6% (0.2)ppt Return on average ordinary shareholders’ equity 3.6% 7.7% (4.1)ppt Jaws (adjusted)3 3.1% (1.2)% 4.3ppt Dividends per ordinary share in respect of the period $0.51 $0.51 -
Slide 4: FY19 adjusted revenue performance
FY19 performance FY19 adjusted revenue performance FY19 revenue FY19 vs. FY18, $m $15,840m Retail Banking 974 $2.0bn RBWM $23,400m $6,746m Wealth Management 760 9% $814m Other 292 $5,978m GLCM 331 $1,833m GTRF 26 CMB $15,292m $0.8bn 6% $5,441m Credit and Lending 273 $2,040m Other 197 Global Markets,
Slide 5: Diversified revenue streams, pivoting to Asia
FY19 performance Diversified revenue streams, pivoting to Asia 2019 adjusted revenue by global 2019 adjusted revenue by region7 2019 adjusted revenue by type business GPB Corporate Centre Latin America North 3% 6% Other America 0% Europe 11% 23% CMB 29% 28% MENA RBWM 5% 42% $ 55.4bn $55.4bn $55.4bn
Slide 6: Net interest income and NIM
4Q19 performance Net interest income and NIM Reported quarterly 7,709 7,468 7,772 7,568 7,654 Adjusted NII of $7.7bn, stable vs. 3Q19 and up 1% vs. 4Q18; FY19 NII, $m adjusted NII of $30.6bn, up 3% or $1bn vs. FY18 4Q19 NIM 1.56% unchanged vs. 3Q19, driven by: +1% (0)% • 4bps favourable impact f
Slide 7: Credit performance
4Q19 performance Credit performance Adjusted ECL charge trend 4Q19 ECL as a % of gross loans and 0.17 0.27 advances to customers was 0.28% 0.34 0.33 4Q19 adjusted ECL of $733m, down 0.28 $144m (16%) vs. 3Q19, of which 0.19 0.23 0.21 $401m was in RBWM and $276m was 0.06 0.08 in CMB 4Q19 UK ECL
Slide 8: Asset quality
FY19 performance Asset quality Gross loans and advances to Loans and advances to Stage 3 and impaired loans and LICs/ECL, $bn customers - $1,045bn customers of ‘Strong’ or ‘Good’ advances to customers, $bn credit quality, $bn Total gross customer loans and 23.8 advances to customers by credit 783 IA
Slide 9: Customer loan book
FY19 performance Customer loan book As at 31 December 2019 Personal loan book ($bn, gross loans and advances Wholesale loan book ($bn, gross loans and advances to to customers) customers) Credit cards 6.2% Other personal Non-bank financial institutions 19.2% Manufacturing 11.6% 17.1% Motor vehicle 0
Slide 10: Funding and liquidity
FY19 performance Funding and liquidity High-quality liquid assets (liquidity value), $bn Principal operating entities LCR NSFR % 2019 2018 2019 2018 601 HSBC UK Bank plc (RFB) 165 143 150 144 567 HSBC Bank plc (NRFB) 142 147 106 113 513 The Hongkong and Shanghai Banking 432 163 161 128 132 Corporati
Slide 11: Capital position
FY19 performance Capital position FY19 vs. FY18 CET1 ratio movement, % (1.0) 14.7 1.5 (0.2) 0.5 (0.1) 0.0 14.0 31 Dec 2018 Profits (adjusted Dividends Buyback FX translation Change in RWAs Other 31 Dec 2019 for goodwill net of scrip differences impairment) CET1 ratio Leverage ratio Profit attributab
Slide 12: Total capital position versus requirements
Capital structure and debt issuance Total capital position versus requirements CET1 ratio as a % of RWAs, vs. MDA hurdle Regulatory capital vs. regulatory requirements as a % of RWAs 20.4% 18.9% Buffer to $29bn 2.8% MDA hurdle 3.4% 1.7% 16.2% 11.3% 2.9% 2.5% 0.6% 2.8% 2.0% Combined buffer 2.1% of 5.
Slide 13: MREL/TLAC position versus requirements
Capital structure and debt issuance MREL/TLAC position versus requirements MREL-eligible capital and HoldCo senior versus estimated regulatory requirements12 as a % of Group RWAs HSBC Group’s 2020 MREL requirement13 is the greater of: 30.1% The greater of: − 16% of RWAs − 6% of leverage exposures1
Slide 14: Issuance strategy and plan
Capital structure and debt issuance Issuance strategy and plan Issuance plan17 Outstanding instruments by currency (notional) HoldCo senior HoldCo Senior Tier 2 AT1 OpCo EUR Broadly limited to No near-term Broadly limited to Expect certain 15% refinancing plans refinancing retired subsidiaries to GB
Slide 15: Indicative summary MREL/TLAC requirement
Capital structure and debt issuance Indicative summary MREL/TLAC requirement HSBC Group MREL requirements as at 1 Jan 2020 are driven by the sum of the parts (‘SoTP’) calculation. SoTP sums our subsidiaries’ local MREL/TLAC requirements to give the Group’s overall MREL requirement HSBC Group TLAC as
Slide 16: Indicative timeline of MREL/TLAC requirement
Capital structure and debt issuance Indicative timeline of MREL/TLAC requirement 2019 2020 2021 2022 The greater of: Indicatively, the greater of: HSBC 16% of RWAs 18% of RWAs Group 6% of leverage exposures16 6.75% of leverage exposures Sum-of-the-parts ♦ Sum-of-the-parts ♦ ♦ Key sum-of-
Slide 17: Approach to issuance – single point of issuance, multiple point of entry
Capital structure and debt issuance Approach to issuance – single point of issuance, multiple point of entry HSBC Holdings plc External Investors Since 2015, HSBC Holdings has been the Group’s issuing entity for external AT1, T2 and MREL/TLAC-eligible Senior Issuance over time to broadly match g
Slide 18: Appendix
Appendix
Slide 19: Improving Group returns by addressing underperforming franchises
Appendix Improving Group returns by addressing underperforming franchises RoTE (excluding significant items and UK bank levy) by major legal entity2, (2019 Tangible Equity as size) RoTE (%) 22 20 18 16 Asia Mexico 14 Canada UK RFB 21 MENA Group 2022 12 target 10-12% 10 8 6 4 US 2 0 -2 NRFB in Europe
Slide 20: Significant items
Appendix Significant items $m 4Q19 3Q19 4Q18 FY19 FY18 Reported PBT (3,897) 4,837 3,256 13,347 19,890 Revenue Currency translation - 110 (102) - (1,617) Customer redress programmes 45 118 (7) 163 (53) Disposals, acquisitions and investment in new businesses 55 4 (29) (768) 113 Fair value movements o
Slide 21: Certain revenue items and Argentina hyperinflation
Appendix Certain revenue items and Argentina hyperinflation Certain items included in adjusted revenue 4Q19 3Q19 2Q19 1Q19 4Q18 FY19 FY18 highlighted in management commentary22, $m Insurance manufacturing market impacts in RBWM 201 (210) (33) 182 (185) 129 (325) Credit and funding valuation adjustme
Slide 22: Balance sheet – customer lending
Appendix Balance sheet – customer lending 4Q19 Net loans and advances to customers, $bn 4Q19 adjusted lending growth by global business and region, $bn Adjusted customer lending decreased by $13bn (1%) vs. 3Q19 Customer lending in Asia decreased by $7bn (1%), of which $4bn in Growth since 3Q19 $bn
Slide 23: Balance sheet – customer accounts
Appendix Balance sheet – customer accounts 4Q19 Customer accounts, $bn Reported average customer accounts, $bn Adjusted customer accounts increased by $24bn (2%) vs. 3Q19 Customer accounts in Asia grew by $17bn, of which $10bn in CMB (mainly 1,026 in Hong Kong and mainland China), and $10bn in RBW
Slide 24: UK customer loans and advances
Appendix UK customer loans and advances Total UK gross customer loans and advances RFB RBWM gross residential mortgages, £bn RFB RBWM unsecured lending*, £bn As at 31 December 2019 92.7 93.8 95.4 97.0 99.1 86.9 89.9 Of which £99.1bn relates to RBWM in the RFB Wholesale £110bn £104bn Mortgages 6.7 7.
Slide 25: Mainland China drawn risk exposure
Appendix Mainland China drawn risk exposure China drawn risk exposure includes wholesale lending where the ultimate parent and beneficial owner is based in mainland China25 Total China drawn risk exposure of $170bn Total China drawn risk exposure (including Sovereigns, Banks and Customers) of $170
Slide 26: Hong Kong drawn risk exposure
Appendix Hong Kong drawn risk exposure Hong Kong drawn risk exposure represents lending booked in Hong Kong Total gross loans and advances Total gross loans and advances to customers and banks of $327bn as at 31 December 2019 by booking location to customers and banks (wholesale: $207bn; personal:
Slide 27: RWAs by global business and geography
Appendix RWAs by global business and geography RWAs as at 31 December 2019, $bn Corporate RBWM CMB GB&M GPB Total Centre Europe 37.6 116.0 106.1 7.7 13.6 281.0 Asia 65.7 129.3 102.0 3.2 66.2 366.4 Middle East and North Africa 5.0 13.5 12.9 - 26.1 57.5 North America 16.2 47.7 42.8 3.1 12.2 122.0 Lati
Slide 28: Current credit ratings for main issuing entities
Appendix Current credit ratings for main issuing entities Long term senior ratings as at 17 February 2020 Fitch Moody’s S&P Rating Outlook Rating Outlook Rating Outlook HSBC Holdings plc A+ STABLE A2 NEG A NEG The Hongkong and Shanghai Banking Corporation Ltd AA- STABLE Aa3 NEG AA- STABLE HSBC Bank
Slide 29: Simplified structure chart
Appendix Simplified structure chart Holding company Associate HSBC Intermediate holding company Holdings plc Resolution entity Operating company 99.9% HSBC HSBC HSBC Private HSBC HSBC HSBC Asia North 94.5% Bank HSBC UK Banking Mexico, Bank Holdings Ltd America Egypt Holdings Ltd Holdings S.A. Canada
Slide 30: Glossary
Appendix Glossary ASEAN Association of Southeast Asian Nations HoldCo Holding Company AT1 Additional Tier 1 HQLA High Quality Liquid Assets Basis points. One basis point is equal to one-hundredth of a percentage LTD Long term debt Bps point LTV Loan-to-value ratio CET1 Common Equity Tier 1 IAS Inter
Slide 31: Footnotes
Appendix Footnotes 1. The goodwill impairment of $7.3bn arose from an update to long-term growth assumptions reflecting the more challenging revenue outlook impacting a number of our businesses, and specifically to GB&M arising from the reshaping of the business 2. Due to falling interest rates in t
Slide 32: Disclaimer
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 an offer to se
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