HSBC Holdings PLC · LSE:HSBA
HSBC — Debt Investor Presentation (February 2023)
53 slides from HSBC's debt investor presentation, Feb 21, 2023
Slide 1: HSBC Holdings plc FY22 Results Fixed Income Investor Presentation
HSBC Holdings plc FY22 Results Fixed Income Investor Presentation
Slide 2: Results & strategy
Results & strategy 1
Slide 3: We have made good progress but there's so much more we can achieve
Results and strategy Balance sheet & issuance Appendix We have made good progress but there’s so much more we can achieve Transformation journey Delivery in 2022 Growth and returns First phase of our strategy execution Good set of results Value from international complete connectivity and cust
Slide 4: Portfolio repositioned: exited markets and reduced RWAs
Transformation journey Results and strategy Balance sheet & issuance Appendix Portfolio repositioned: Exited markets and reduced RWAs while reallocating capital towards higher growth and more profitable opportunities RWA saves in excess of target1 Capital reallocation to Asia $bn Asia as a % of Grou
Slide 5: Broad base of profit generation: multiple engines of growth
Transformation journey Results and strategy Balance sheet & issuance Appendix Broad base of profit generation: We have multiple engines of growth and profitability #1 Trade Finance Bank7; 26.9% Hong $6.8bn PBT; #1 market share in deposits5, insurance6 UK $5.0bn PBT; receivables finance market sh
Slide 6: Cost management: cost discipline and improved operational efficiency
Transformation journey Results and strategy Balance sheet & issuance Appendix Cost management: We have maintained cost discipline and improved operational efficiency Managed costs whilst increasing tech spend Achieved improved operational efficiency 2019-22 adjusted cost movements, % Adjusted cost e
Slide 7: Summary of our performance in 2022 (vs. 2021)
Delivery in 2022 Results and strategy Balance sheet & issuance Appendix Summary of our performance in 2022 (vs. 2021) Reported PBT of $17.5bn, down $1.4bn (7%); adjusted PBT of $24.0bn, up $3.4bn (17%) Adjusted revenue of $55.3bn, up $8.3bn (18%). NII of $32.6bn, up $7.7bn (31%). Non-NII of $22.7bn,
Slide 8: Focus on our strengths – CMB
Delivery in 2022 Results and strategy Balance sheet & issuance Appendix Focus on our strengths – CMB Revenue growth driven by Transaction With growth momentum in fee Strong growth delivered across Banking income all regions Revenue, $bn Fee income, $bn Geographical revenue breakdown, $bn +29% +8% +2
Slide 9: Focus on our strengths – WPB
Delivery in 2022 Results and strategy Balance sheet & issuance Appendix Focus on our strengths – WPB Double-digit revenue growth across Continued traction in NNIA following 21% Wealth and Personal banking growth in 2021 All regions delivered robust growth Revenue, $bn Net new invested assets, $bn Ge
Slide 10: Focus on our strengths – GBM
Delivery in 2022 Results and strategy Balance sheet & issuance Appendix Focus on our strengths – GBM Double-digit revenue growth across MSS Good momentum from cross-sell of GBM Robust growth in client business booked in and Banking products to WPB and CMB clients the East from clients managed in the
Slide 11: FY22 results summary
Results and strategy Balance sheet & issuance Appendix FY22 results summary $m FY22 FY21 Δ FY22 reported PBT of $17.5bn; adjusted PBT of $24.0bn NII 32,601 24,894 31 % NII of $32.6bn, up $7.7bn (31%) vs. FY21 reflecting interest Non-NII 22,744 22,126 3% rate rises Revenue 55,345 47,020 18 % No
Slide 12: Adjusted revenue performance
Results and strategy Balance sheet & issuance Appendix Adjusted revenue performance Revenue by global business, $m Net fee income by global business, $m +38% (11)% 15,352 (6)% (55) 2,920 516 2,766 2,604 Growth since 1,587 4Q21 11,090 2,214 7,159 1,282 1,264 1,143 WPB (11)% WPB 4,945 CMB CMB 4,689 GB
Slide 13: Net interest income and margin
Results and strategy Balance sheet & issuance Appendix Net interest income and margin Reported NIM progression, bps 4Q22 reported NII of $9.6bn, up $2.8bn (41%) 88 (71) 174 vs. 4Q21 (up $3.3bn / 53% adjusted) and $1.0bn 157 (12%) vs. 3Q22 (up $1.1bn / 13% adjusted), primarily due to interest rate
Slide 14: Gross customer lending
Results and strategy Balance sheet & issuance Appendix Gross customer lending (ex. held for sale) Personal loan book, $bn Wholesale loan book, $bn Other Credit cards Non-bank financial institutions 5.5% Manufacturing 5.2% 12.8% Other secured 16.8% personal lending 8.1% 89% secured Other 13.4% Wholes
Slide 15: Credit performance
Results and strategy Balance sheet & issuance Appendix Credit performance Adjusted ECL charge trend, $m 4Q21 and 1Q22 benefitted from releases 1,427 of Covid-19 related provisions ECL 1,071 598 o/w: mainland 482* 621 363 China CRE 424 196 ECL charge as a 628 151 % of average FY22 ECL charge of $3.
Slide 16: Mainland China commercial real estate update
Results and strategy Balance sheet & issuance Appendix Mainland China commercial real estate update Mainland China CRE exposures by booking location and credit quality Total mainland China CRE exposure $16.8bn, down $3.0bn vs. At 31 December 2022 2Q22, primarily due to repayments in the Hong Kong
Slide 17: Asset quality
Results and strategy Balance sheet & issuance Appendix Asset quality Stage 3 and impaired loans Gross loans by credit quality classification trend, $bn to customers Reported ECL charge / (release) 1,045 1,052 1,057 936 19.5 8.8 19.1 18.8 2% 1% 4% 2% 3% 2% 3% 2% 22% 22% 21% 24% 13.4 81 13.0 25% 22% 2
Slide 18: Adjusted costs
Results and strategy Balance sheet & issuance Appendix Adjusted costs Operating expenses trend, $m 69% 63% 4Q22 costs of $7.8bn, up $0.1bn (2%) vs. 4Q21. $0.7bn of cost saves 57% 51% 51% were offset by $0.3bn higher technology spend and $0.3bn higher performance-related pay (PRP) due to accrual ti
Slide 19: Guidance summary
Results and strategy Balance sheet & issuance Appendix Guidance summary FY22 Guidance NII $32.6bn FY23 NII ≥$36bn33; intend to update target for IFRS 17 at or before 1Q23 Cautious outlook on loan growth in the short term; expect mid-single digit percentage annual loan Lending +1%36 growth in the med
Slide 20: Summary
Results and strategy Balance sheet & issuance Appendix Summary 4Q22 revenue up $4.3bn (38%), PBT up $3.3bn (92%) vs. 1 4Q21; FY22 revenue up $8.3bn and PBT up $3.4bn vs. FY21 12%+ RoTE from FY23 Substantial distribution capacity: $0.32 FY22 dividend per share FY22 ECL charge $3.6bn. Expect a charg
Slide 21: Balance sheet & issuance
Balance sheet & issuance HSBC
Slide 22: Funding and liquidity
Results and strategy Balance sheet & issuance Appendix Funding and liquidity Reported loans to deposits ratio, % Principal operating entities LCR42 NSFR42 % FY22 FY21 FY22 FY21 72.0 HSBC UK Bank plc (RFB) 226 222 164 176 63.2 61.1 HSBC Bank plc (NRFB) 143 142 115 115 58.9 The Hongkong and Shanghai B
Slide 23: Capital position
Results and strategy Balance sheet & issuance Appendix Capital position CET1 ratio, % 0.9 (0.8) 15.8 CET1 ratio of 14.2% down 1.6ppts vs. FY21, including 0.8ppts of regulatory (0.7) impacts, 0.7ppts of FVOCI movements and 0.3ppts impact from an impairment following the reclassification of our Fren
Slide 24: Capital position versus requirements
Results and strategy Balance sheet & issuance Appendix Capital position versus requirements CET1 ratio as a % of RWAs, vs. target and MDA hurdle Regulatory capital vs. regulatory requirements as a % of RWAs 19.3% 18.7% Buffer to MDA hurdle 16.6% 16.6% 10.9% 15.5% $28bn (3.3ppts) 0.4% 14.2% 14.2% 2.0
Slide 25: MREL / TLAC position
Results and strategy Balance sheet & issuance Appendix MREL / TLAC position MREL / TLAC position versus requirements46 as a % of Group RWAs 30.1% Current binding requirement Non-binding requirements 26.3% CET1 24.3% 3.8ppts / $32bn buffer to current requirement buffers47 4.9% 22.9% HSBC Group’s
Slide 26: Issuance plan
Results and strategy Balance sheet & issuance Appendix Issuance plan Modest net new issuance going forward FY23 issuance plan HoldCo senior gross and net issuance, $bn-equivalent 2023 expected to be in line with medium-term ‘steady HoldCo $17-20bn state’ senior 15-20 18 18 17-20 Tier 2 $4-5bn 13 8 4
Slide 27: Portfolio instruments
Results and strategy Balance sheet & issuance Appendix Portfolio instruments Maturity profile at FY2249 Outstanding instruments by currency (notional) at FY22 $bn-equivalent Tier 2 Additional Tier 1 21.8 EUR EUR 20.5 11% 13% 19.2 GBP 18.4 10% 16.0 18% GBP 3% SGD 15.9 $31.4bn $21.3bn 14.7 13.0 67% 2%
Slide 28: Legacy securities
Results and strategy Balance sheet & issuance Appendix Legacy securities Total legacy securities of $11bn50 Capital tier eligibility at issuance Issuer AT1 Tier 2 HSBC Holdings plc $0.9bn* $4.3bn $4.1bn of legacy securities exchanged or tendered in 2022, reducing the o/w fully ineligible $0.9bn* —
Slide 29: IBOR – regulatory capital & MREL securities
Results and strategy Balance sheet & issuance Appendix IBOR – regulatory capital & MREL securities Consent solicitation completed Consent exercise passed in September 2021 to alter reference rate for post-call coupons on a number of bonds issued by a number of group entities GBP English Used est
Slide 30: Appendix
Appendix 29
Slide 31: MREL/TLAC position
Results and strategy Balance sheet & issuance Appendix MREL/TLAC position HSBC Group US resolution group Europe resolution group Asia resolution group (Including HSBC Holdings)51 TLAC Total TLAC: $253.1bn Total TLAC: $23.8bn Total TLAC: $94.8bn Total TLAC: $108.0bn position Of which: non-regulatory
Slide 32: Approach to issuance
Results and strategy Balance sheet & issuance Appendix Approach to issuance HSBC Holdings plc External Since 2015, HSBC Holdings has been the Group’s issuing entity for external AT1, Tier 2 and MREL / Investors TLAC-eligible senior Issuance executed with consideration to our maturity profile Ext
Slide 33: Key financial metrics
Results and strategy Balance sheet & issuance Appendix Key financial metrics Reported results, $m 4Q22 3Q22 4Q21 Alternative performance measures, $m 4Q22 3Q22 4Q21 NII 9,578 8,581 6,781 Adjusted NII 9,573 8,455 6,255 Other Income 5,297 3,035 5,208 Adjusted other income 5,779 5,698 4,835 Revenue 14,
Slide 34: Reconciliation of reported PBT and adjusted profit after tax
Results and strategy Balance sheet & issuance Appendix Reconciliation of reported PBT and adjusted profit after tax $m 4Q22 3Q22 4Q21 FY22 FY21 Reported PBT (B) 5,205 3,147 2,664 17,528 18,906 Currency translation — (174) (1,004) — (3,074) Customer redress programmes (5) (17) 7 (8) (11) Disposal, ac
Slide 35: Certain items included in adjusted revenue
Results and strategy Balance sheet & issuance Appendix Certain items included in adjusted revenue Certain items included in adjusted revenue 4Q22 3Q22 2Q22 1Q22 4Q21 FY22 FY21 highlighted in management commentary, $m Insurance manufacturing market impacts in WPB 107 (421) (382) (279) 126 (964) 479 o
Slide 36: Net interest margin supporting information
Results and strategy Balance sheet & issuance Appendix Net interest margin supporting information 1 year NII sensitivity Quarterly NIM by key legal entity At 31 December 2022, assumes a static balance sheet (no assumed migration from current account to % of 4Q22 % of 4Q22 4Q21 1Q22 2Q22 3Q22 4Q22 ti
Slide 37: Further NII analysis
Results and strategy Balance sheet & issuance Appendix Further NII analysis Reported NII trend, $bn IFRS 17 32.6 NII in our insurance manufacturing business* ($2.6bn in FY22) will reduce under IFRS 17 which came into force on 1st January 2023 as a result of 26.5 related asset reclassifications. As
Slide 38: Wealth and Personal Banking
Results and strategy Balance sheet & issuance Appendix Wealth and Personal Banking 4Q22 financial highlights Balance sheet, $bn 4Q22 vs. 4Q21 Revenue $7.2bn 45% 828 830 836 Revenue up $2.2bn (45%). Personal Banking up $2.1bn (72%) (4Q21: $4.9bn) 9 24 57 primarily due to interest rate rises and bal
Slide 39: Commercial Banking
Results and strategy Balance sheet & issuance Appendix Commercial Banking 4Q22 financial highlights Balance sheet, $bn 4Q22 vs. 4Q21 Revenue $4.7bn 51% Revenue up $1.6bn (51%) with double digit growth in all regions (4Q21: $3.1bn) Customer lending notably in Asia and the UK. GPS revenue up 199% dr
Slide 40: Global Banking and Markets
Results and strategy Balance sheet & issuance Appendix Global Banking and Markets 4Q22 financial highlights View of adjusted revenue 4Q22 vs. 4Q21 16% $m 4Q22 ∆4Q21 Revenue of $3.7bn up $0.5bn (16%) Revenue $3.7bn (4Q21: $3.2bn) MSS 2,017 18% MSS revenue of $2.0bn up $0.3bn (18%): (19)% Securiti
Slide 41: Corporate Centre
Results and strategy Balance sheet & issuance Appendix Corporate Centre 4Q22 financial highlights Revenue performance, $m Revenue $(191)m (40)% (4Q21: $(136)m) 4Q21 1Q22 2Q22 3Q22 4Q22 >(100)% Central Treasury (10) 5 (32) (48) (1) ECL $(8)m (4Q21: $(3)m) Legacy Credit (12) (18) 23 (6) (15) Costs $47
Slide 42: Hong Kong business performance
Results and strategy Balance sheet & issuance Appendix Hong Kong business performance FY22 financial performance Rising interest rates and market share gains #1 retail NPS amongst major banks58 $m FY22 FY21 Δ drove PBT of $6.8bn, up $0.6bn (10%) vs. FY21 NII 9,928 7,216 38% Strong 4Q22 performan
Slide 43: Hong Kong loans and advances
Results and strategy Balance sheet & issuance Appendix Hong Kong loans and advances Hong Kong loans and advances Total gross loans and advances to customers and banks of $322bn (4Q21: $329bn) by booking location (wholesale: $189bn; personal: $133bn) 10% 7% FY22 ECL charge of $1,680m (CMB: $1,276
Slide 44: Mainland China business performance
Results and strategy Balance sheet & issuance Appendix Mainland China business performance FY22 financial performance Regional highlights $m FY22 FY21 Δ NII 1,794 1,604 12% 1m registered users on the Pinnacle Non-NII 2,379 1,932 23% FY22 revenue up 18% vs. FY21; PBT River app. c.1,300 wealth planner
Slide 45: Mainland China risk exposure
Results and strategy Balance sheet & issuance Appendix Mainland China risk exposure Mainland China risk exposure, $bn Wholesale lending analysis, $bn Corporate lending by sector, $bn 178.8 178.4 176.0 176 1.9 2.1 2.2 34.7 33.9 40.1 Transportation Automotive Wholesale 36.6 36.1 34.0 Consumer Goods &
Slide 46: UK ring-fenced bank
Results and strategy Balance sheet & issuance Appendix UK ring-fenced bank FY22 financial performance WPB CMB 27% Personal gross mortgage balances, £bn Mortgages: Revenue £7.9bn (FY21: £6.2bn) 90+ day delinquency trend64, % Wholesale gross customer loans, £bn 118.1 125.5 28% 110.7 o/w: WPB £4.3bn (F
Slide 47: Credit ratings for main issuing entities
Results and strategy Balance sheet & issuance Appendix Credit ratings for main issuing entities Long term senior ratings as at 21 February 2023 S&P Moody’s Fitch Rating Outlook Rating Outlook Rating Outlook HSBC Holdings plc A- STABLE A3 STABLE A+ STABLE The Hongkong and Shanghai Banking Corporation
Slide 48: Simplified structure chart
Results and strategy Balance sheet & issuance Appendix Simplified structure chart 65 Holding company Associate Intermediate holding company Resolution entity HSBC Operating company Holdings plc 99.9% Ringfenced Bank HSBC HSBC HSBC HSBC Asia 94.6% HSBC Bank Mexico, North America Bank Holdings Ltd Egy
Slide 49: Glossary
Results and strategy Balance sheet & issuance Appendix Glossary AIEA Average interest earning assets IPO Initial Public Offering ANP Annualised new business premiums LCR Liquidity coverage ratio AT1 Additional Tier 1 A portfolio of assets including securities investment conduits, asset-backed securi
Slide 50: Footnotes
Results and strategy Balance sheet & issuance Appendix Footnotes 1. Cumulative RWA saves under our transformation programs includes $9.6bn of accelerated saves made over 4Q19 2. Based on tangible equity (‘TE’) of the Group’s major legal entities excluding associates, holding companies and consolidat
Slide 51: Footnotes
Results and strategy Balance sheet & issuance Appendix Footnotes 35. Calculated as total collateral and guarantees expressed as a percentage of gross loans as per Table 24: Performing and non-performing exposures and related provisions (CR1) on page 33 of the Group Pillar 3 disclosures as 31 Decembe
Slide 52: Disclaimer
Results and strategy Balance sheet & issuance 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 pu
Slide 53: Slide 53
HSBC Holdings — Debt Investor Presentation (February 2023) on 6ix