HSBC Holdings PLC · LSE:HSBA
HSBC — Debt Investor Presentation (February 2017)
26 slides from HSBC's debt investor presentation, Feb 21, 2017
Slide 1: HSBC Holdings plc Annual Results 2016 Fixed Income Update
Reduce Group RWAs by c. $290bn and re-deploy towards 1 higher performing businesses; return GB&M to Group target profitability 2 Optimise global network 3 Rebuild NAFTA profitability 4 Set up UK Ring-Fenced Bank Realise $4.5-5.0bn cost savings, deliver an exit rate in 2017 equal 5 to 2014 operating
Slide 2: Contents
Contents 1 HSBC Group 2016 Performance 3 2 HSBC’s Debt Issuance Approach 12 3 HSBC’s Capital Structure 15 4 In Summary 18 5 Appendix 20 2
Slide 3: HSBC Group 2016 Performance
HSBC Group 2016 Performance HSBC >
Slide 4: Our highlights
Our highlights 2016 Full Year ‒ Reported PBT of $7.1bn was $11.8bn lower than 2015 and impacted by significant items of $12.2bn, mainly: ‒ non-cash items of $8.9bn including the write-off of GPB goodwill ($3.2bn), fair value own credit spread losses on own debt ($1.8bn) ‒ cash items of $3.3bn includ
Slide 5: 2016 Key financial metrics
2016 Key financial metrics Key financial metrics 2015 2016 Return on average ordinary shareholders’ equity 7.2% 0.8% Return on average tangible equity 8.1% 2.6% Jaws (adjusted)1, 2 (3.7)% 1.2% Dividends per ordinary share in respect of the period $0.51 $0.51 Earnings per share $0.65 $0.07 Common equ
Slide 6: 2016 Profit before tax performance
2016 Profit before tax performance 1% lower profit before tax with reduced costs more than offset by a fall in revenue 2016 vs. 2015 PBT analysis Adjusted PBT by item Adjusted PBT by global 2015 2016 vs. 2015 % business, $m 2016 vs. 2015 adverse favourable RBWM 5,690 5,333 (357) (6)% CMB 5,423 6,052
Slide 7: 4Q16 Profit before tax performance
4Q16 Profit before tax performance Higher profit before tax from reduced costs and lower LICs 4Q16 vs. 4Q15 PBT analysis Adjusted PBT by item Adjusted PBT by global 4Q15 4Q16 vs. 4Q15 % business, $m 4Q16 vs. 4Q15 adverse favourable RBWM 1,323 1,140 (183) (14)% Includes valuation differences on long-
Slide 8: Loan impairment charges
Loan impairment charges Lower impairment charges in 4Q16 Loan impairment charges and other credit risk provisions (LICs) analysis Q416 benign environment 4Q15 3Q16 4Q16 vs.4Q15 vs. 3Q16 2015 2016 − Better economic conditions Group, $m 1,293 551 468 825 83 2,604 2,652 − LICs as a % of gross loans are
Slide 9: Capital adequacy – YTD
Capital adequacy – YTD Strong capital base: common equity tier 1 ratio – 13.6% Regulatory capital and RWAs, $bn CET1 ratio movement, % 31 Dec 31 Dec 13.6 2015 2016 0.2 Common equity tier 1 capital 130.9 116.6 − $121bn reduction in RWAs − $5.6bn threshold deduction from Total regulatory capital 189.8
Slide 10: Conservative Balance Sheet
Conservative Balance Sheet1 Mainly deposit funded with an Assets to Deposits ratio of 67.7% Assets, $bn Liabilities and Equity, $bn 2,375 2,375 Derivatives 291 Derivatives 280 Other6 230 Other2 333 Trading Liabilities7 121 Repos 89 Trading Assets 235 Debt securities8 200 Reverse Repos3,4 126 Assets
Slide 11: Key Credit Metrics
Key Credit Metrics 2016 demonstrated the fundamental strength of our business HSBC came through 2016 securely as our diversified business model and geographic profile again demonstrated resilience in difficult market conditions Our 2016 profit1 of $8.4bn along with a strong CET1 capital ratio
Slide 12: HSBC’s Debt Issuance Approach
HSBC’s Debt Issuance Approach
Slide 13: HSBC’s Approach to MREL
HSBC’s Approach to MREL1 In 2017 HSBC Holdings plc will be the sole issuer of external MREL debt for the Group MREL debt will be downstreamed in a form compliant with local regulations Issuing Entity Once regulatory rules have been finalised MREL debt could be issued directly from regional / l
Slide 14: HSBC Issuance and maturities of existing long-term debt
HSBC Issuance and maturities of existing long-term debt HSBC Group debt maturity profile1,2, $bn 2016-21: $76bn senior funding maturity profile Recent Supply HSBC is a predominantly Bail-in-able maturities 3 deposit funded organisation Senior maturities and reduced its external 2 Non Common Equity
Slide 15: HSBC’s Capital Structure
HSBC’s Capital Structure HSBC >
Slide 16: Group Capital Requirements to 2020
Group Capital Requirements1 to 2020 HSBC’s Capital Structure – Maximum Distributable Amount (MDA) Requirements Common equity tier 1 ratio of 13.6% as at 31 December 2016 14% 13.6% 13% $23bn $23bn $33bn 12% $41bn Buffer to MDA2 10.9% 10.9% 11% $53bn 0.3% 10% 9.8% 0.3% 8.9% 2.5% 2.5% 9% 0.3% 1.9% Comb
Slide 17: Progressing to end state Group capital structure
Progressing to end state Group capital structure HSBC’s Capital Structure – Total Capital Requirements Evolution of Group capital structure in % of RWA1 MREL issuance Based on Bank of England’s finalised rules from CET1 AT1 T2 MREL debt > 1 Year November 2016, HSBC's indicative MREL requirement as
Slide 18: In Summary
In Summary HSBC >
Slide 19: Summary
Summary Investment case Our unparalleled network covers countries accounting for more than 90% of global GDP, Distinctive trade and capital flows advantages Four interconnected, global businesses share balance sheets and liquidity in addition to strong commercial links To facilitate internatio
Slide 20: Appendix
Appendix HSBC >
Slide 21: Simplified structure chart
Simplified structure chart Principal entities1 Holding company HSBC Intermediate holding company Holdings Operating company plc Associate UK 99% HSBC HSBC The Hongkong HSBC HSBC HSBC Private HSBC HSBC & Shanghai HSBC North Bank (China) Bank 94% Bank Banking Mexico Bank Banking Bank America Company C
Slide 22: Establishing the UK Ring-Fenced Bank
Establishing the UK Ring-Fenced Bank Changes to the legal structure in Europe and to the business of HSBC Bank plc as at 31 December 2016 HSBC’s ring-fenced bank, HSBC UK Bank plc, will be a new entity and will not be a subsidiary of HSBC Bank plc We intend to transfer into HSBC UK Bank plc the
Slide 23: HSBC’s Creditor Loss Hierarchy
HSBC’s Creditor Loss Hierarchy 2 Impact of Banking Subsidiary Resolution on HSBC Holdings Consolidated CET1 ratio would be eroded by any losses in Banking Subsidiaries HSBC External NCEC1 and ‒ But CET1 ratio has substantial buffers versus regulatory minima Holdings MREL2 Debt Raised Any write d
Slide 24: Legal proceedings and regulatory matters
Legal proceedings and regulatory matters As at 31 December 2016 This slide should be read in conjunction with Note 27 and Note 35 of the HSBC Holdings plc Annual Report and Accounts 2016. Provisions relating to legal proceedings and regulatory matters, $m Commentary on selected items1 In June 20
Slide 25: Important notice and forward-looking statements
Important notice and forward-looking statements Important notice The information set out in this presentation and subsequent discussion does not constitute a public offer for the purposes of any applicable law or an offer to sell or solicitation of any offer to purchase any securities or other finan
Slide 26: Issued by HSBC Holdings plc Group Investor Relations
Issued by HSBC Holdings plc Group Investor Relations 8 Canada Square London E14 5HQ United Kingdom Cover image: The Hong Kong-Zhuhai-Macau Bridge: one of the most ambitious infrastructure projects in the Pearl River Delta. www.hsbc.com Photography: courtesy of Dragages-China Harbour-VSL JV 26
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