HSBC Holdings PLC · LSE:HSBA
HSBC — Debt Investor Presentation (February 2024)
51 slides from HSBC's debt investor presentation, Feb 21, 2024
Slide 1: HSBC Holdings plc FY23 Results Fixed Income Investor Presentation
HSBC Holdings plc FY23 Results Fixed Income Investor Presentation
Slide 2: Results & strategy
Results & strategy 1
Slide 3: Key messages
Results and strategy Balance sheet & issuance Appendix Key messages What we delivered in 2023 What we expect in 2024 Record reported PBT of $30.3bn Macro environment: Reported revenue of $66.1bn Interest rates to trend downwards, as efforts to combat Reported RoTE of 14.6%; 15.6% excluding s
Slide 4: A diversified and capital-generative business
Results and strategy Balance sheet & issuance Appendix A diversified and capital-generative business FY23 revenue Balance sheet strength Corporate Centre Global Banking and Markets (0)% Strong FY23 capital 14.8% 31.6% CET1 ratio1 MREL ratio1 24% Wealth and 41% Personal Banking $66.1bn Highly liquid;
Slide 5: FY23 results summary
Results and strategy Balance sheet & issuance Appendix FY23 results summary $m FY23 FY22 Δ NII 35,796 29,762 20% Non-NII 30,262 20,109 50% Revenue of $66.1bn, up $16.2bn (32%) vs. FY22. FY23 NII of Revenue 66,058 49,871 32% $35.8bn, up $6.0bn (20%), driven by higher interest rates ECL (3,447) (3,6
Slide 6: Good underlying performance in 4Q23; PBT included notable items and Argentina hyperinflation
Results and strategy Balance sheet & issuance Appendix Good underlying performance in 4Q23; PBT included $(6.3)bn relating to notable items and Argentina hyperinflation $bn 4Q22 4Q23 Δ Revenue growth, primarily Banking NII, was offset by $(2.7)bn notable items booked in 4Q23, primarily two items g
Slide 7: 4Q23 revenue growth primarily driven by Banking NII
Results and strategy Balance sheet & issuance Appendix 4Q23 revenue growth primarily driven by Banking NII 1.5 14.6 (2.4) Primarily Banking NII, in particular a $1.2bn* increase in the revenue offset (0.7) 13.0 into non-NII from the central costs of funding GBM trading activity 4Q22 Net growth Notab
Slide 8: Interest rate stabilisation and structural hedge
Results and strategy Balance sheet & issuance Appendix Interest rate stabilisation and structural hedge Year 1 Banking NII sensitivity to a (100)bps down-shock,* $bn 30-Jun-22 31-Dec-23 (1.6) Banking NII sensitivity to a (100)bps down-shock of $(3.4)bn, down NII c.50% vs. 30 June 2022 (6.0) (1.8)
Slide 9: Continued good Banking NII performance
Results and strategy Balance sheet & issuance Appendix Continued good Banking NII performance Banking NII, $bn * 4Q23 NII and Banking NII included $(0.8)bn from: $(0.5)bn Argentina hyperinflation1 +5% $(0.3)bn reclassification of cash flow hedge revenue between NII and non-NII, of which $(0.2
Slide 10: Non-NII: Wholesale Transaction Banking and Wealth
Results and strategy Balance sheet & issuance Appendix Non-NII: Wholesale Transaction Banking and Wealth Wholesale Transaction Banking non-NII: stable vs. 4Q22 Wealth non-NII: a strong 4Q23 performance in Asset Management and Private Banking was offset by corrections to historical $bn valuation esti
Slide 11: Gross customer lending
Results and strategy Balance sheet & issuance Appendix Gross customer lending Personal loan book, $bn Wholesale loan book, $bn At 31 December 2023 At 31 December 2023 Other Credit cards 5.3% 5.5% Non-bank financial institutions Manufacturing Other secured 89% 14.8% personal lending 8.6% secured 17.0
Slide 12: Asset quality
Results and strategy Balance sheet & issuance Appendix Asset quality Gross loans to customers by credit quality classification trend, $bn Stage 3 loans to customers Reported ECL charge / (release) 1,045 1,052 1,057 936 950 19.5 8.8 19.1 18.8 19.3 2%1% 4%2% 3%2% 3%2% 3%2% 22% 22% 21% 21% 24% 13.4 81b
Slide 13: Credit performance
Results and strategy Balance sheet & issuance Appendix Credit performance ECL charge trend, $bn (55)bps (41)bps 4Q23 ECL charge $(1.0)bn: (35)bps (40)bps (17)bps $(0.7)bn Stage 3 charge in Wholesale, of which $(0.2)bn related to mainland China CRE (1.5) (0.9) (1.1) (1.0) $(0.3)bn Personal char
Slide 14: 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 31 December 2023 Memo: Hong Hong Mainland Rest of $bn Total Kong at 3Q23 Kong China Group Total 7.5 6.3 5.0 0.9 12.1 Strong 1.2 0
Slide 15: Balance sheet & issuance
Balance sheet & issuance HSBC
Slide 16: Capital position
Results and strategy Balance sheet & issuance Appendix Capital position CET1 ratio, % (0.3) CET1 ratio of 14.8% up 0.6ppts vs. FY22, including: (0.1) 14.8 0.0 1.0ppt of capital generation, with profits offset by dividends and buybacks 1.0 This increase was partly offset by (0.3)ppts of regulat
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 20.0% 19.6% Buffer to MDA hurdle 16.9% 16.9% 11.2% 15.8% $30.7bn 0.7% 14.8% 14.8% (3.6ppts) 2
Slide 18: MREL / TLAC position
Results and strategy Balance sheet & issuance Appendix MREL / TLAC position MREL / TLAC position versus requirements1 as a % of Group RWAs 31.6% Current binding requirement Non-binding requirements 26.7% CET1 25.5% 4.9ppts / $42bn buffer to current requirement buffers2 5.2% 23.2% HSBC Group’s MR
Slide 19: Funding and liquidity
Results and strategy Balance sheet & issuance Appendix Funding and liquidity Reported loans to deposits ratio, % Principal operating entities LCR1 % FY23 FY22 72.0 HSBC UK Bank plc (RFB) 201 226 63.2 61.1 HSBC Bank plc (NRFB) 148 143 58.8 58.2 The Hongkong and Shanghai Banking Corporation – Hong Kon
Slide 20: 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 3Q23 $(4.4)bn 960 Asia (HBAP) $455bn 941 939 (1)% o/w: Hong $(2.9)bn 177 174 $280bn GBM 190 Kong (1)% $1.0bn UK RFB (HBUK) $270bn 0% 314 309 HSBC B
Slide 21: 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 3Q23 $26.6bn Asia (HBAP) $801bn 1,598 1,599 1,612 3% o/w: Hong $13.8bn Kong $544bn GBM 332 319 331 3% $0.1bn UK RFB (HBUK) $340bn 0% HSBC Bank plc
Slide 22: Issuance plan
Results and strategy Balance sheet & issuance Appendix Issuance plan Modest net new issuance going forward FY24 issuance plan HoldCo senior gross and net issuance, $bn-equivalent Negative net issuance HoldCo Planned gross issuance: <$10bn Gross issuance Net issuance expected in 2024 senior Negative
Slide 23: Portfolio instruments
Results and strategy Balance sheet & issuance Appendix Portfolio instruments Maturity profile at FY231 Outstanding instruments by currency (notional) at FY23 $bn-equivalent Tier 2 Additional Tier 1 Other EUR EUR 23.6 6% 12% 7% GBP 21.7 20.7 11% SGD GBP 0% 16% 16.2 16.3 $35.0bn $19.5bn 17.6 SGD 14.8
Slide 24: Legacy securities
Results and strategy Balance sheet & issuance Appendix Legacy securities Total legacy capital securities of $9bn 14.7 Legacy securities have reduced by ~$6bn since end-2021, to $9bn at FY23 (4.0) When considering any potential actions to reduce the portfolio, we evaluate these opportunities agai
Slide 25: 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, both securities now redeemed We
Slide 26: Appendix
Appendix 25
Slide 27: 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)1 TLAC Total TLAC: $269.9bn Total TLAC: $23.1bn Total TLAC: $103.0bn Total TLAC: $110.7bn position Of which: non-regulator
Slide 28: 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 29: Financial performance summary
Results and strategy Balance sheet & issuance Appendix Financial performance summary $m 4Q22 1Q23 2Q23 3Q23 4Q23 Δ 4Q22 FY22 FY23 Δ FY22 NII 8,918 8,825 9,023 9,001 8,284 (7)% 29,762 35,796 20 % Non-NII 5,731 11,256 7,346 6,886 4,737 (17)% 20,109 30,262 50 % Revenue 14,649 20,081 16,369 15,887 13,02
Slide 30: Guidance summary
Results and strategy Balance sheet & issuance Appendix Guidance summary Banking NII At least $41bn in FY241 ECL FY24 ECL charge of around (40)bps2; through-the-cycle planning range of (30)-(40)bps3 Costs Growth in FY24 of approximately (5)% vs. FY23 on a target basis, reflecting our current business
Slide 31: Banking NII outlook
Results and strategy Balance sheet & issuance Appendix Banking NII outlook Rebase 4Q23 Banking NII of $10.7bn: Banking NII 1 year sensitivity* Add back $0.5bn to 4Q23 Banking NII for Argentina Currency hyperinflation1 and the reclassification of cash flow hedge $m revenue2 USD HKD GBP EUR Other To
Slide 32: 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 % 4Q23 % 4Q23 4Q22 1Q23 2Q23 3Q23 4Q23 At 19 February 2024 NII AIEA The Hongkong and 526 533 533 Shanghai Banking 1.94% 1.83% 1.83% 1.85% 1
Slide 33: FY23 cost target basis reconciliation
Results and strategy Balance sheet & issuance Appendix FY23 cost target basis reconciliation $m FY22 FY23 Reported (32,701) (32,070) Currency impact 399 — Constant currency (32,302) (32,070) Notable items 2,931 185 Impact of retranslating results of hyperinflationary (440) — economies at constant cu
Slide 34: ECL charge by legal entity (constant currency basis)
Results and strategy Balance sheet & issuance Appendix ECL charge by legal entity (constant currency basis) $m 4Q22 1Q23 2Q23 3Q23 4Q23 FY23 0 Asia (HBAP) (898) (64) (392) (749) (437) (1,641) o/w Hong Kong (766) (44) (451) (660) (375) (1,528) o/w mainland China CRE* (598) (62) (259) (503) (195) (1,0
Slide 35: Mainland China risk exposure
Results and strategy Balance sheet & issuance Appendix Mainland China risk exposure Mainland China risk exposure, $bn Mainland China drawn risk exposure is defined as lending booked in mainland China and wholesale lending booked offshore where the ultimate parent and beneficial owner is in mainlan
Slide 36: Global CRE exposures
Results and strategy Balance sheet & issuance Appendix Global CRE exposures Commercial real estate gross loans and advances, $m1 LTV analysis (fully collateralised exposure)2 FY23 2% FY22 FY23 Δ 5% 8% stage 3 % 9% Asia 66,350 58,121 (12)% 6 22% o/w Hong Kong* 50,021 42,462 (15)% 8 UK RFB 14,874 14,0
Slide 37: BoCom
Results and strategy Balance sheet & issuance Appendix BoCom We maintain a 19.03% interest in BoCom. Since our initial investment from 2004, BoCom has grown its business significantly to the extent that it has recently been designated as a global systemically important bank (‘GSIB’) For accounti
Slide 38: Notable items (reported FX basis)
Results and strategy Balance sheet & issuance Appendix Notable items (reported FX basis) Notable items, $m 4Q22 1Q23 2Q23 3Q23 4Q23 FY22 FY23 Revenue (320) 3,577 (241) (268) (2,733) (3,602) 335 o/w: Disposals, acquisitions and related costs* (71) 3,562 (241) 310 (2,333) (2,737) 1,298 o/w: Fair value
Slide 39: Argentina hyperinflation impacts
Results and strategy Balance sheet & issuance Appendix Argentina hyperinflation impacts $m 4Q22 4Q23 FY22 FY23 Argentina was a hyperinflationary economy for NII (19) (495) (3) (526) accounting purposes in FY23. As a consequence, IAS 29 ‘Financial Reporting in Hyperinflationary Non-NII* (100) (329)
Slide 40: Canada and France disposals
Results and strategy Balance sheet & issuance Appendix Canada and France disposals Banking business in Canada Our banking business in Canada remains in held-for-sale. We expect the transaction to complete in 1Q24 for a base cash consideration of CAD13.5bn HSBC Bank Canada and France retail selecte
Slide 41: Hong Kong
Results and strategy Balance sheet & issuance Appendix Hong Kong FY23 performance Hong Kong loans and advances to Stage 3 loans as a % of total L&As to customers customers and banks and banks $bn FY22 FY23 Δ NII 8,005 9,960 24% 9% 4 Non-NII 7,012 9,987 42% 3.2% 3.4% 3.3% Revenue 15,017 19,947 33% 10
Slide 42: UK ring-fenced bank
Results and strategy Balance sheet & issuance Appendix UK ring-fenced bank FY23 performance Personal gross lending balances Deposits by type, £bn £m FY22 FY23 Δ £bn FY21 FY22 FY23 9 NII 6,203 7,787 26% Mortgages 118.1 125.5 129.3 6 62 40 WPB current CMB savings Non-NII1 1,749 3,020 73% Credit cards
Slide 43: Transition
Results and strategy Balance sheet & issuance Appendix Transition Supporting our customers in the transition to net zero Becoming a net zero bank Ambition to provide and facilitate $750bn to $1tn of sustainable finance and Ambition to be net zero in our operations and supply chain by 2030, investmen
Slide 44: ESG supplementary detail
Results and strategy Balance sheet & issuance Appendix ESG supplementary detail Environmental Social Governance 3/6 WPB markets and 5/6 CMB Released our first Net Zero Our percentage of female leaders markets sustained top 3 rank Transition Plan to provide further was 34.1%, up 0.8ppts vs. FY22 and/
Slide 45: 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 2024 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 46: 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 47: Glossary
Results and strategy Balance sheet & issuance Appendix Glossary AIEA Average interest earning assets IBOR Interbank Offered Rate AT1 Additional Tier 1 IFRS International Financial Reporting Standard BoCom Bank of Communications Co. Limited, an associate of HSBC LCR Liquidity coverage ratio Bps Basis
Slide 48: Footnotes
Results and strategy Balance sheet & issuance Appendix Footnotes Slide 2: Key messages Slide 12: Credit performance 1. Unless otherwise stated, regulatory capital ratios and requirements are based on the transitional 1. Including held-for-sale balances arrangements of the Capital Requirements Regula
Slide 49: Footnotes
Results and strategy Balance sheet & issuance Appendix Footnotes Slide 26: MREL / TLAC position Slide 31: Net interest margin 1. Investments by the European resolution group in the regulatory capital or TLAC of other group 1. Based on a 31 December 2023 HK deposit balance of $544bn and the c.3.5ppts
Slide 50: 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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