HSBC Holdings PLC · LSE:HSBA

HSBC — Investor Day (May 2012)

45 slides from HSBC's investor day presentation, May 17, 2012

  1. Slide 1: HSBC Holdings plc Investor Day

    Abc 17 May 2012 HSBC HOLDINGS PLC INVESTOR DAY The presentation to be given today by Stuart Gulliver, Group Chief Executive, is attached and will be available to view at www.hsbc.com. ends/all Registered Office and Group Head Office: This news release is issued by 8 Canada Square, London E14 5HQ, Un

  2. Slide 2: Group Strategy Investor Day

    May 2012 Group Strategy Investor Day Stuart Gulliver Group Chief Executive

  3. Slide 3: 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 fu

  4. Slide 4: Agenda

    Agenda Recap and progress on execution Vision of HSBC Priorities going forward 2

  5. Slide 5: Strategy aligned with two long-term trends

    Introduction and recap Group Strategy Strategy aligned with two long-term trends International trade and capital flows Economic development and wealth creation  Build on  Most relevant international trade markets for wealth and commercial creation banking heritage  Retail banking only  Internati

  6. Slide 6: Progress against May 2011 Report Card

    Introduction and recap Progress against May 2011 Report Card Key execution elements May 2011 Report Card Metrics Progress to date  Disposals and closures of non-  28 transactions to dispose of or close strategic / underperforming businesses Capital Deployment businesses  c.USD55bn expected reduct

  7. Slide 7: Five Filters – Unprecedented number of disposals over last 12 months

    Progress on Execution 1 Five Filters – We have announced an unprecedented number of disposals over the last 12 months Announced Completed Disposals Disposals 16 12 Number of 8 8 disposals 6 6 6 announced 4 4 3 3 2 2 4.0 3.3 Conside- 2.4 ration, 1.9 USDbn1 1.5 0.8 0.5 0.3 0.0 0.1 0.0 0.0 0.1 2000 200

  8. Slide 8: Five Filters – Reduce fragmentation through closures and disposals

    Progress on Execution 1 Five Filters – Reduce fragmentation in our portfolio through closures and disposals in non-strategic markets 28 transactions to dispose of or close businesses announced and currently being executed  US Upstate New York Branches US repositioning  US Cards and Retail Services

  9. Slide 9: Five Filters – Overall Insurance review

    Progress on Execution 1 Five Filters – Overall Insurance review addresses General Insurance and other fragmented businesses Sub-scale / General Insurance exit Countries Fragmentation Countries  Argentina General  El Salvador Life Insurance Latin Insurance Life  Honduras Life Insurance America  M

  10. Slide 10: Five Filters – Reduced fragmentation in Europe and Asia

    Progress on Execution 1 Five Filters – Reduced fragmentation in Europe and Asia Europe actions Asia actions  Georgia full exit  Japan RBWM and GPB exits  Slovakia full exit  Thailand RBWM Footprint exit simplification  Poland RBWM exit Priority Markets Priority Markets  Russia RBWM  UK  Hong

  11. Slide 11: Five Filters – Reduced fragmentation in Latin America

    Progress on Execution 1 Five Filters – Reduced fragmentation in Latin America Costa Rica Full exit El Salvador Full exit Honduras Full exit Chile Exit RBWM; become network Footprint market to support CMB, GB&M simplification Priority Markets Colombia Onshore exit; move to rep office model  Argentin

  12. Slide 12: Four Programmes – Sustainable savings booked until 1Q 2012

    Progress on Execution 2 Four Programmes – Sustainable savings booked until 1Q 2012 to deliver USD2bn by 2012YE USDbn Annualised benefits Sustainable savings from actions taken in 1.3 2011 Sustainable savings from actions taken in 0.7 1Q 2012 Total sustainable savings 2.0 10

  13. Slide 13: Growth – Markets with strong fundamentals driving wealth creation

    Progress on Execution 3 Growth – HSBC has exposure to markets with strong fundamentals driving wealth creation Top economies by 2050 Income per capita in 2050 GDP, USDtn GDP Growth 06-11, CAGR Multiple over 2010 income China 25.3 11% 6.9x US 22.3 1% 1.5x India 8.2 8% 6.4x Japan 6.4 0% 1.6x Germany 3

  14. Slide 14: Growth – Progress across faster growing markets

    Progress on Execution 3 Growth – Progress has been made across faster growing markets Gross loans and advances to customers growth1, Reported regional PBT growth, countries with more than USD10bn RWA, % % 2010-11 2010-11 4Q 11-1Q 12 Singapore 19 Mainland 19 China Hong Kong Malaysia 17 and Rest 15%2

  15. Slide 15: Growth – Initiatives to position HSBC as a leading wealth provider

    Progress on Execution 3 Growth – Initiatives on-track to position HSBC as a leading wealth provider Definition Wealth Revenues USDbn per year Revenues  USD4bn target defined on a product basis, all  Strong existing incremental 3.7 client and revenue revenues from: base  Asset management  Integra

  16. Slide 16: Growth – Integration between CMB and GB&M

    Progress on Execution 3 Growth – Integration between CMB and GB&M has resulted in c.USD500m in incremental revenues in 2011 Actions to date  Clients screened and prioritised for collaborative c.USD500m additional revenues delivered in 2011 coverage Incremental integration revenues by product Client

  17. Slide 17: 1Q 2012 results also demonstrated progress

    Progress on Execution 1Q 2012 results also demonstrated progress USDm Difference 1Q 2011 1Q 2012 USDm Percent PBT 4,906 4,322 (584) (12%) Reported CER 60.9% 63.9% PBT 5,413 6,775 1,362 25% Underlying1 CER 58.7% 55.5% (1) We measure our performance internally on a like-for-like basis by eliminating t

  18. Slide 18: Agenda

    Agenda Recap and progress on execution Vision of HSBC Priorities going forward 16

  19. Slide 19: HSBC Vision

    Vision HSBC Vision We enable businesses to thrive and economies to Reason why we Purpose prosper, helping people fulfil their hopes and dreams exist and realise their ambitions Act with courageous integrity  Dependable and do the right thing How we behave and Values  Open to different ideas and cu

  20. Slide 20: Four integrated Global Businesses

    Vision Four integrated Global Businesses Senior manager Fast growth company first gains invests for retirement access to Debt or Equity markets Exporter requires a International corporate pays its employees Commercial USD futures contract Banking Agricultural producer buys HR manager establishes pro

  21. Slide 21: Cohesive portfolio of markets

    Vision Cohesive portfolio of markets Hong Kong and Middle East and rest of Asia Pacific Europe North Africa North America Latin America ‘Home  United  Hong Kong1 markets’ Kingdom  Australia  France  Egypt  Canada  Argentina  Mainland China  Germany  Saudi Arabia  USA  Brazil  India  Sw

  22. Slide 22: Committed to delivering on our financial targets

    Vision Committed to delivering on our financial targets Capital Profitability Efficiency Common equity tier 1 ROE target of CER target of ratio of 12 - 15% 48 - 52% 9.5 - 10.5% 20

  23. Slide 23: Growth HSBC delivered pre-tax RoRWA of 2.2% in 2011

    Vision ‘Growth HSBC’1 delivered a pre-tax RoRWA2 of 2.2% in 2011 PBT 20112, Run-off Disposals ‘Growth HSBC’1 USDbn 0.4 2.1 20.7 4.5 0.1 17.9 7.5 7.7 5.5 2011 PBT US run off GB&M US cards Non- ‘Growth GB&M3 Growth, “Home ex FVOD legacy and retail strategic HSBC’1 network markets”5 services markets an

  24. Slide 24: Agenda

    Agenda Recap and progress on execution Vision of HSBC Priorities going forward  Run off II Simplify  Portfolio fragmentation (Five Filters)  Organisation, processes and procedures  Reposition elements of GPB business model II Restructure  Reposition US business  GB&M structurally challenged pr

  25. Slide 25: US Legacy Consumer Assets – Running off the CML book

    Simplifying HSBC I US Legacy Consumer Assets – Running off the CML book We continue to run off US Legacy … and are actively analysing opportunities to consumer assets … reduce risk and improve returns Run-off Portfolio Receivables, USDbn  Identifying segments of the real Vehicle Finance1 estate por

  26. Slide 26: GB&M – GM Legacy hold vs. sell decisions

    Simplifying HSBC I GB&M – GM Legacy hold vs. sell decisions taken based on a clear economic framework Decision framework Hold Expected loss on sale + NPV of future cash flows Transaction costs Sell  NPV considers terminal value, net of funding and operational costs as well as Cost of Capital  Capi

  27. Slide 27: Fragmentation – Using the five filters to drive further actions

    Simplifying HSBC I Fragmentation – We continue to use the five filters to drive further strategic actions What is the strategic Are the current relevance? returns attractive? Resulting actions 1.Connectivity 3.Profitability 2.Economic 4.Efficiency development 5.Liquidity Yes Invest Transactions anno

  28. Slide 28: Simplifying the organisation and our approach to talent and values

    Simplifying HSBC I Simplifying the organisation and our approach to talent and values How we will achieve it . . .  Continue to establish 8x8 8 by 8  Maximum of 8 layers between Group CEO and frontline structure  Increased spans of control (8 reports per manager) Group FTE  Target business and o

  29. Slide 29: Four Programmes – Pipeline of actions to deliver cost target

    Simplifying HSBC I Four Programmes – A strong pipeline of actions to deliver against the cost target USDbn Sustainable Total Savings Confirmed (Booked & Target Four Programmes (Booked)1 Pipeline Pipeline) by 2013 Implement consistent 0.2 0.6 0.8 0.9 business models Key actions in pipeline Re-enginee

  30. Slide 30: Agenda

    Agenda Recap and progress on execution Vision of HSBC Priorities going forward  Run off II Simplify  Portfolio fragmentation (Five Filters)  Organisation, processes and procedures  Reposition elements of GPB business model II Restructure  Reposition US business  GB&M structurally challenged pr

  31. Slide 31: GPB – Elements of business model to be re-positioned

    Restructure II GPB – Elements of business model to be re-positioned Industry challenges Business model going forward  Capturing new inflows from Operational  Adhere to the highest standards in the industry faster growing markets and risk and  Continue to focus International on transparency domest

  32. Slide 32: We are reshaping the US business to focus on core activities

    Restructure II We are reshaping the US business to focus on core activities Reposition the US towards international Major US transactions announced to date businesses  Consideration: USD2.4bn  Commercial Banking focused on 5 hubs concentrating over 50% of US corporate  Transferred FTEs: c.5k impo

  33. Slide 33: GB&M – Industry is changing and facing profitability challenges

    Restructure II GB&M – Industry is changing and facing profitability challenges Industry changes in product profitability Industry-wide structurally challenged businesses ROE, % Pre-regulation Post regulation FX 30 c.19 Industry challenges Cash Equities 25 c.18  Client activity relatively Structured

  34. Slide 34: GB&M – HSBC is well positioned for the new business paradigm

    Restructure II GB&M – HSBC is well positioned for the new business paradigm What matters going forward… …HSBC GB&M execution progress 2011  Access to deep and  1Q 2012 vs 1Q 2011 PBT diversified client base Faster growth in Hong Kong (20%), Deep client Rest of Asia Pacific (17%), growing franchise

  35. Slide 35: GB&M – Challenged products represent 14% of total operating income

    Restructure II GB&M – Challenged products represent 14% of total operating income1 Challenged products GB&M Total Operating Income2 ex. BSM and Other Minimum, Maximum and Average 2007 – 2011, USDm Average, USDm Share of 2011 Total Operating Income, % Global markets Credit -501 2 Equities 694 7 Asset

  36. Slide 36: GB&M is taking the necessary actions

    Restructure II GB&M is taking the necessary actions Industry changes in product profitability  Actively managing down legacy exposure  In 2011, disposal actions taken to mitigate USD7bn RWA GM Legacy increase; but RWAs increased USD24bn largely due to regulatory changes  Clear economic framework

  37. Slide 37: Agenda

    Agenda Recap and progress on execution Vision of HSBC Priorities going forward  Run off II Simplify  Portfolio fragmentation (Five Filters)  Organisation, processes and procedures  Reposition elements of GPB business model II Restructure  Reposition US business  GB&M structurally challenged pr

  38. Slide 38: Integration should deliver another USD1bn revenue upside

    Organic Growth III Integration should deliver another USD1bn revenue upside in the short to medium term Collaboration areas Description Total upside Revenues, USDbn  Original collaboration target from May 2011 Previous target  c.USD500m achieved in 2011 1 CMB and GB&M Additional  Enhanced coverag

  39. Slide 39: Growth in RWAs focused on growth priority markets

    Organic Growth III Apart from regulatory increases, growth in RWAs focused on growth priority markets RWA1 growth 2011 vs 2010 USDbn Net Regulatory +50 RWA increase 106 Total Run-off -4 21 Growth +63 We will 29 continue to 3 deploy RWAs (7) (0) in key markets 17 to drive growth 43 Home, GB&M GB&M US

  40. Slide 40: HSBC has been shifting towards faster growing regions

    Organic Growth III HSBC has been shifting towards faster growing regions Fast Growers Developed Faster growing regions1 as share of Group 2007, % 2011, % 2007 – 2011 Difference, 2007 – 2011 Difference percentage points PBT 64% 78% 14 USD 1.6bn Revenues2 39% 49% 10 USD 4.8bn Gross loans and advances

  41. Slide 41: Key opportunities in Commercial Banking

    Organic Growth Key opportunities in Commercial Banking World Trade continues to grow faster than GDP . . . Distinctiveness  The world's leading trade bank with 9% global market World merchandise trade2, USDtn share1  International network covering 77% of world trade2 CAGR+20% and 81% of multinatio

  42. Slide 42: Key opportunities in Growth Priority Markets

    Organic Growth Key opportunities in Growth Priority Markets Asia Pacific Latin America  Leading foreign bank for RMB in 2011  Continue strong growth in CMB, Mainland  Debt and equity financing opportunities particularly with international customers Brazil China  International desks driving China

  43. Slide 43: Priorities going forward

    Priorities going forward Key actions  Aggressively run-off legacy assets  Fragmentation – Continue to dispose non-strategic businesses I Simplify through Five Filters  Four Programmes – Make HSBC easier to manage and control  Reposition elements of GPB business model  Reposition the US for grow

  44. Slide 44: Report Card

    Report Card Actions (examples) By the end of 2013 . . .  Release capital from run-off (CML,  Additional transactions announced and GB&M) and non-strategic executed Capital Deployment businesses  RWAs increase in ‘Growth HSBC’ and Five Filters  Mitigate regulatory RWA increase material reduction

  45. Slide 45: Our purpose

    Our purpose Throughout our history we have been where the growth is, connecting customers to opportunities. We enable businesses to thrive and economies to prosper, helping people fulfil their hopes and dreams and realise their ambitions. This is our role and purpose. 43

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