Hsbc Holdings Plc · LSE:HSBA
Hsbc — Debt Investor Presentation (August 2023)
48 slides from Hsbc's debt investor presentation, Aug 1, 2023
Slide 1: HSBC Holdings plc 1H23 Results
HSBC Holdings plc 1H23 Results Fixed Income Investor Presentation
Slide 2: Results & strategy
Results & strategy 1
Slide 3: A diversified and highly capital-generative business
Results and strategy Balance sheet & issuance Appendix A diversified and highly capital-generative business Diversified by global business Balance sheet strength Corporate Global Banking Commercial Wealth & Centre & Markets Banking Personal Banking 1H23 revenue (0)% 23% 33% 44% Strong 1H23 capital 1
Slide 4: 1H23 results summary
Results and strategy Balance sheet & issuance Appendix 1H23 results summary $m 1H23 1H22 Δ NII 18,264 12,846 42% Revenue of $36.9bn, up $13.2bn (56%) vs. 1H22. 1H23 NII of Non-NII 18,612 10,801 72% $18.3bn, up $5.4bn (42%), driven by higher interest rates Revenue 36,876 23,647 56% 1H23 revenue i
Slide 5: Net interest income and margin
Results and strategy Balance sheet & issuance Appendix Net interest income and margin NIM progression, bps Reported NII of $9.3bn, up $0.3bn (4%) vs. 1Q23 due to rising interest rates and higher interest 169 45 (42) 172 earning assets $11.6bn Banking NII5, up $1.3bn vs. 1Q23 $2.4bn interest ex
Slide 6: Non-NII
Results and strategy Balance sheet & issuance Appendix Non-NII Group non-NII, $bn vs. 2Q22 Constant currency non-NII: 5.3 11.4 7.4 +39% Notable items and FX: (0.5) 3.7 (0.2) Offset from central costs of 0.3 1.4 2.4* funding trading income: Constant currency non-NII up $2.1bn (39%) vs. 2Q22, primar
Slide 7: Gross customer lending
Results and strategy Balance sheet & issuance Appendix Gross customer lending Personal loan book, $bn Wholesale loan book, $bn At 30 June 2023 At 30 June 2023 Other Credit cards 5.0% 5.3% Non-bank financial institutions Manufacturing 90% Other secured secured 14.8% 16.6% 11.5% personal lending $ 453
Slide 8: 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 1,057 936 971 20.1 8.8 19.1 19.5 2%1% 4%2% 3%2% 3%2% 3%2% 18.8 22% 22% 21% 21% 24% 81bps 13
Slide 9: Credit performance
Results and strategy Balance sheet & issuance Appendix Credit performance ECL charge trend, $m 1,464 1,101 ECL 913 442 438 ECL charge as a % of average gross loans and 2Q22 3Q22 4Q22 1Q23 2Q23 advances8 Mainland China 0.17 0.42 0.56 0.17 0.35 CRE charge* 151 363 598 62 259 $0.9bn charge, including
Slide 10: 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 At 30 June 2023 Total mainland China CRE exposure $14.3bn, down Memo: $2.5bn vs. 4Q22, reflecting ongoing de-risking measures Main
Slide 11: Costs
Results and strategy Balance sheet & issuance Appendix Costs Operating expenses trend, $m +1% +3% Constant currency basis: 7,821 7,927 9,029 7,644 7,871 2Q23 constant currency costs of $7.9bn, up 1% 588 716 1,219 63 10 vs. 2Q22. Lower notable items and impairment write- backs were offset by higher
Slide 12: Summary
Results and strategy Balance sheet & issuance Appendix Summary 1 PBT up 92% vs. 2Q22, NII up $0.3bn vs. 1Q23 $0.9bn ECL charge, of which $0.3bn relates China CRE. FY23 guidance of c.40bps of average loans8 2 unchanged 3 On track to meet FY23 cost growth target of 3%10 4 Revised guidance: now expect
Slide 13: Group guidance summary
Results and strategy Balance sheet & issuance Appendix Group guidance summary Revised guidance Previous guidance Revised guidance FY23 NII ≥$34bn. NII guidance assumes the interest expense for FY23 NII >$35bn and the revenue offset into non-NII from the central NII centrally allocated funding costs
Slide 14: Balance sheet & issuance
Balance sheet & issuance HSBC
Slide 15: Funding and liquidity
Results and strategy Balance sheet & issuance Appendix Funding and liquidity Reported loans to deposits ratio, % Principal operating entities LCR16 % 1H23 FY22 72.0 HSBC UK Bank plc (RFB) 213 226 63.2 61.1 60.1 HSBC Bank plc (NRFB) 149 143 58.8 The Hongkong and Shanghai Banking Corporation – Hong Ko
Slide 16: Capital position
Results and strategy Balance sheet & issuance Appendix Capital position CET1 ratio18, % CET1 ratio of 14.7% up 0.5ppts vs. FY22, including: 0.1 0.7ppts of capital generation, a 0.3ppts increase from the reversal of the (0.2) 0.3 impairment relating to the planned sale of our retail banking opera
Slide 17: 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 19.8% 19.3% Buffer to MDA hurdle 17.0% 17.0% $32.3bn 10.9% 15.6% 0.5% 14.7% 14.7% (3.8ppts) 2
Slide 18: MREL / TLAC position
Results and strategy Balance sheet & issuance Appendix MREL / TLAC position MREL / TLAC position versus requirements21 as a % of Group RWAs 31.2% Current binding requirement Non-binding requirements 26.4% CET1 24.6% 4.8ppts / $41.4bn buffer to current requirement buffers22 23.0% 5.0% HSBC Group’
Slide 19: 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 Negative net issuance HoldCo c.$17-20bn (likely lower end of range) 15-20 expected in 2H23 18 c.17-20 senior $13bn issued
Slide 20: Portfolio instruments
Results and strategy Balance sheet & issuance Appendix Portfolio instruments Maturity profile at 1H2324 Outstanding instruments by currency (notional) at 1H23 $bn-equivalent Tier 2 Additional Tier 1 Other EUR EUR 23.4 0% 12% 12% 20.6 GBP 18.6 10% GBP 18% 16.1 16.3 3% SGD $33.5bn $21.1bn 17.5 14.8 66
Slide 21: Legacy securities
Results and strategy Balance sheet & issuance Appendix Legacy securities Total legacy securities of $9bn25 Capital tier eligibility at issuance Issuer AT1 Tier 2 HSBC Holdings plc $0.9bn* $4.3bn Legacy securities have reduced by ~$6bn since end-2021, to $9bn at 1H23 o/w fully ineligible $0.9n* —
Slide 22: IBOR – regulatory capital & MREL securities
Results and strategy Balance sheet & issuance Appendix IBOR – regulatory capital & MREL securities Milestones so far Consent solicitation passed on English law GBP securities, September 2021 September 2021 consent solicitation failed on English law SGD securities, one AT1 security remains which
Slide 23: Appendix
Appendix 22
Slide 24: 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)26 TLAC Total TLAC: $268.3bn Total TLAC: $24.0bn Total TLAC: $103.3bn Total TLAC: $110.3bn position Of which: non-regulato
Slide 25: 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 26: Key financial metrics
Results and strategy Balance sheet & issuance Appendix Key financial metrics Reported results, $m 2Q23 1Q23 2Q22 Alternative performance measures, $m 2Q23 1Q23 2Q22 NII 9,305 8,959 6,910 Constant currency NII 9,305 8,999 6,758 Other Income 7,400 11,212 5,330 Constant currency other income 7,400 11,3
Slide 27: Notable items (reported basis)
Results and strategy Balance sheet & issuance Appendix Notable items (reported basis) $m 2Q23 1Q23 4Q22 3Q22 2Q22 Revenue (241) 3,577 (320) (2,691) (471) o/w: Disposals, acquisitions and related costs (241) 3,562 (71) (2,378) (288) o/w: Fair value movements on financial instruments — 15 35 (282) (17
Slide 28: Interest rate sensitivity
Results and strategy Balance sheet & issuance Appendix Interest rate sensitivity 1 year NII sensitivity The reduction in NII sensitivity to a (100)bps parallel shift in interest rates, from At 30 June 2023, assumes a static balance sheet (no assumed migration from current account to time $(4.0)bn
Slide 29: Net interest margin
Results and strategy Balance sheet & issuance Appendix Net interest margin Quarterly NIM by key legal entity Key rates (quarter averages), bps Source: Bloomberg * At 31 July 2023 512 % of 2Q23 % of 2Q23 499 507 500 2Q22 3Q22 4Q22 1Q23 2Q23 Group Group NII 452 445 AIEA 368 392 385 400 The Hongkong an
Slide 30: Cost target basis reconciliation
Results and strategy Balance sheet & issuance Appendix Cost target basis reconciliation $m 2Q23 1Q23 4Q22 3Q22 2Q22 1H23 1H22 FY22 Reported 7,871 7,586 8,781 7,793 7,949 15,457 16,127 32,701 Currency impact — 58 248 134 (128) — (595) (195) Constant currency 7,871 7,644 9,029 7,927 7,821 15,457 15,53
Slide 31: Wealth and Personal Banking
Results and strategy Balance sheet & issuance Appendix Wealth and Personal Banking 2Q23 financial highlights Balance sheet, $bn 2Q23 vs. 2Q22 Revenue $7.2bn 41% 848 850 845 Revenue up $2.1bn (41%). Personal Banking up $1.8bn (51%) (2Q22: $5.1bn) 1 primarily due to higher NII. Wealth up $0.3bn (19%
Slide 32: Commercial Banking
Results and strategy Balance sheet & issuance Appendix Commercial Banking 2Q23 financial highlights Balance sheet, $bn 2Q23 vs. 2Q22 49% Revenue up $1.8bn (49%)32 with growth across all our main Revenue $5.5bn Customer lending (2Q22: $3.7bn) legal entities, notably in Asia and the UK RFB. GPS was
Slide 33: Global Banking and Markets
Results and strategy Balance sheet & issuance Appendix Global Banking and Markets 2Q23 financial highlights Management view of revenue 2Q23 vs. 2Q22 8% $m 2Q23 ∆2Q22 Revenue of $4.1bn, up $0.3bn (8%)32 Revenue $4.1bn (2Q22: $3.8bn) MSS 2,205 (8)% MSS revenue of $2.2bn, down $0.2bn (8%): Securiti
Slide 34: Corporate Centre
Results and strategy Balance sheet & issuance Appendix Corporate Centre 2Q23 financial highlights Revenue performance, $m Revenue $(114)m (77)% (2Q22: $(499)m) 2Q22 3Q22 4Q22 1Q23 2Q23 0% Central Treasury (189) (352) (12) 101 (20) ECL $0m (2Q22: $(0)m) Legacy Portfolios 25 (7) (175) (2) (9) Costs $6
Slide 35: Balance sheet
Results and strategy Balance sheet & issuance Appendix Balance sheet 2Q23 funding mix Strong liquidity base Debt instruments measured at amortised cost, $bn +8% $1.6tn 132% 276.7 Deposits (1Q23: $1.6tn) Group liquidity coverage ratio (1Q23: 132%) 255.7 Other 60% 6% Loan to deposit ratio (1Q23: 60%)
Slide 36: Balance sheet – customer lending
Results and strategy Balance sheet & issuance Appendix Balance sheet – customer lending Balances by global business, $bn Balances by entity Growth since 1Q23 Total 1,038 1,026 1,020 $(0)bn Asia (HBAP) $465bn (0)% Customer lending of $960bn, down $9bn 57 60 (1%) vs. 1Q23, including the impact of $4
Slide 37: Balance sheet – customer accounts
Results and strategy Balance sheet & issuance Appendix Balance sheet – customer accounts Balances by global business, $bn Balances by entity Growth since 1Q23 Total 1,673 1,677 1,662 $2bn Asia (HBAP) $775bn 0% HFS 63 66 o/w: Hong $(5)bn 2 $530bn Kong (1)% Customer accounts of $1,596bn, down 1,671
Slide 38: 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 $318bn (2Q22: $332bn) by booking location (wholesale: $181bn; personal: $137bn) 8% 10% 2Q23 average LTV on new retail mortgage
Slide 39: Mainland China risk exposure
Results and strategy Balance sheet & issuance Appendix Mainland China risk exposure Mainland China risk exposure, $bn Mainland China risk exposure is defined as lending booked in mainland China plus wholesale lending booked offshore where the ultimate parent and beneficial owner is in mainland Chi
Slide 40: Global CRE exposures
Results and strategy Balance sheet & issuance Appendix Global CRE exposures Commercial real estate exposure, $m38 HBAP o/w HK HBUK HBEU HNAH HBMX HBME Other Total Gross loans and 59,560 44,068 14,805 5,045 4,643 976 1,604 928 87,561 Actively reducing exposure in the USA; exposure of advances $4.6b
Slide 41: Hong Kong
Results and strategy Balance sheet & issuance Appendix Hong Kong 1H23 financial performance Revenue up 64% vs. 1H22. Non-NII #1 in card spend; up $2.1bn, including $1.9bn offset #1 retail NPS amongst $m 1H23 1H22 Δ market share 48.4%, up into non-NII from the central costs of major banks40 NII 4,9
Slide 42: UK ring-fenced bank
Results and strategy Balance sheet & issuance Appendix UK ring-fenced bank 1H23 financial performance WPB CMB 67% Personal gross mortgage balances, £bn 90+ day mortgages delinquency trend45, Revenue £6.0bn Wholesale gross customer loans, £bn (1H22: £3.6bn) 125.5 126.4 % 24% 122.5 o/w: WPB £2.4bn 0.2
Slide 43: 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 1 August 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 Lt
Slide 44: Simplified structure chart
Results and strategy Balance sheet & issuance Appendix Simplified structure chart Holding company Associate Intermediate holding company Resolution entity HSBC Operating company Holdings plc Ringfenced Bank HSBC Asia 94.6% HSBC Bank HSBC Holdings Ltd Egypt SAE HSBC UK North America HSBC Bank plc Hol
Slide 45: Glossary
Results and strategy Balance sheet & issuance Appendix Glossary AIEA Average interest earning assets A portfolio of assets including securities investment conduits, asset-backed securities, trading Legacy credit portfolios, credit correlation portfolios and derivative transactions entered into direc
Slide 46: Footnotes
Results and strategy Balance sheet & issuance Appendix Footnotes 1. Unless otherwise stated, regulatory capital ratios and requirements are based on the transitional arrangements of the Capital 2020 Requirements Regulation in force at the time. These include the regulatory transitional arrangements
Slide 47: 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
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