HSBC Holdings PLC · LSE:HSBA
HSBC — HSBC Finance — Q1 2005 Earnings Presentation
33 slides from HSBC's earnings presentation, May 16, 2005
Slide 1: Form 8-K HSBC Finance Corporation
UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 8-K Pursuant to Section 13 or 15(d) of The Securities Exchange Act of 1934 Date of Report: May 16, 2005 Commission Ñle number 1-8198 HSBC FINANCE CORPORATION (Exact name of registrant as speciÑed in its charter) Delaware 86
Slide 2: Item 7.01 Regulation FD Disclosure
Item 7.01. Regulation FD Disclosure Attached hereto as Exhibit 99 is a slide presentation made available to the public in a webcast presentation on May 16, 2005. The Appendix to the slides contains information that reconciles certain non-US GAAP information displayed in the webcast to US GAAP. The A
Slide 3: Signature
Signature Pursuant to the requirement of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized. HSBC FINANCE CORPORATION (Registrant) By: /s/ Patrick D. Schwartz Patrick D. Schwartz Vice President-Deputy
Slide 4: HSBC Finance Corporation and HSBC USA Inc. May 2005
May, 200 5 HSBC Fin ance Cor por ation an d HSBC USA Inc. Su pplem en t to the F or ms 1 0 -Q for the qu arte rly p erio d en ded Ma rch 31, 200 5
Slide 5: Forward Looking Statements
For war d Lo oking State men ts T his pr ese ntat io n, in cludin g th e acc omp anyin g slide s an d su bseq uen t discu ssion, cont ains c erta in fo rwar d -lo oking info rm ation with r espe ct to the fina ncial co nditio n, r esult s of o per atio ns an d b usine ss of H SBC Ho ldings plc, HSBC
Slide 6: Basis of Reporting
HSBC F inan ce Co rpo rat io n - Man age d Basis (a n on -GAAP fin ancia l me asur e) assum es t hat secur itized rece ivable s ha ve n ot be en sold a nd rem ain o n o ur b alan ce sh eet . HSBC Fina nce Corp ora tion - Man age me nt Basis (a n on - GAAP fin ancia l me asur e) rep rese nts M an age
Slide 7: Basis of Reporting Impact on Net Income
1. Deferr ed origin at ion expenses - - 2. Derivatives Sim ilar + or - 3. Securit izat ions + + 4. Intangibl es + + 5. Pur chase accounting adj ustm ents + + Bas is of Reporting Impact on Net I ncome Compared t o U.S. GAAP U.K. GAAP I FRS
Slide 8: HSBC Finance Corporation and HSBC USA Inc. Net Income
HSBC F inance Co rpor at ion and HSBC USA I nc. Net Income ( Mi llions $) 1 Q 05 4Q 04 1Q 04 Net Income: HS BC F inance Cor poratio n - U.S. GAAP HS BC US A Inc. - U.S. GAAP S ub -total Net Incom e related to tr ansf erred as sets (1 ) Combined Net I ncome L es s : HSBC Finance Corpor ation: Der iva
Slide 9: HSBC Finance Corporation
HSBC Finance Corporation HSBC «>
Slide 10: First Quarter Highlights - Management Basis
First Qua rte r High lights - Man age me nt Basis Net In com e gr owth - 47% ye ar- over -year , 21 % a djust ing fo r d eriva tives Str ong re ceivab les g rowth yea r -over - year of 1 8% Rea l Es tate Se cur ed g rowt h of 31% Aut o F in anc e gr owth of 1 4% Car ds gr owth of 6 % Unsec ure d gr
Slide 11: First Quarter Highlights - Management Basis, cont'd
First Qua rte r High lights - Man age me nt Basis, cont 'd NIM com pre ssion consist ent wit h th e cur re nt m arke t en viro nme nt Yield has stab ilize d Im pr oved cre dit r esults year -over -year dr iv en b y str ong er a nalyt ic s, imp rove d co llection s, m ix and a f avor able econ om y C
Slide 12: HSBC Finance Corporation Management Basis Income Statement
Net Interes t I nco me Other Revenues T otal Revenues Provi sion for Loan L oss es Oper ating E xpens es Pr e -tax Income T axes Net I ncome - Management Bas is Der ivative I ncome (2) - net of tax Adj usted Net Income HSBC Fin ance Corp oration M anagement Basi s ( A Non- GAAP M eas ure) (M illio n
Slide 13: Key Ratios - Management Basis
Key Ratio s - Management Bas is 1Q 04 2Q 04 3Q 04 4Q 04 1Q 05 NI M 0 .0818 0.0816 0 .0775 0.0757 0.0713 RAR 0.0679 0.06 56 0.0634 0.06 43 0.0667 ROM A 0.0121 0 .0104 0.0081 0 .0073 0.0129 Ris k Adju sted M argi n 4.07 4.6 4.35 4.34 4.03 ( 1) E xcludes impact of i nitial F FIE C implementatio n. (2)
Slide 14: Credit Quality - Management Basis
Cred it Qua lity - Man age me nt Basis 1Q 0 4 2Q 04 3Q 0 4 4Q 04 1Q 0 5 Ch arg e -Offs 0 .047 5 0 .044 2 0. 042 3 0. 038 4 0. 0356 RAR 0.0 679 0.0 656 0.0 634 0.0 643 0.06 67 2+ Delinqu ency 0.0 491 0.04 54 0.04 44 0 .04 15 0 .03 68 Risk Ad juste d M arg in 4.0 7 4 .6 4 .35 4.34 4.0 3 (1 ) Exclu des
Slide 15: Net Interest Income - Management Basis
Net Interes t I nco me - Management Bas is I nteres t Incom e I nteres t E xpense Net I nteres t Income F FIE C adjus tments Adjus ted Net Inter est I ncome 1Q 05 $3, 902 1,299 $2,6 03 0 $2,603 4 Q 04 $3,692 1,0 85 $2,607 57 $2,664 1Q 04 $3 ,466 855 $2,6 11 0 $2,611 ( M illions $) Net Interes t I nc
Slide 16: Operating Expenses - Management Basis
Oper atin g Expe nses - Man age me nt Basis B/ (W) Efficie ncy Ra tio O per ating Expen ses/Re ceivab les Sale s & Ma rket in g/Re ceivab les 1 Q 05 40. 5% 4.0 % 0 .6% 4Q 04 41.4 % 3.8% 0 .7% 1Q 04 40.5 % 4.3% 0 .6% 4Q 04 8 3 b ps (1 6) bps 9 bp s 1Q 04 ( 1) bps 29 b ps ( 7) bps
Slide 17: Receivable Mix - Management Basis
Receiva ble M ix - Man age me nt Basis Mast erCa rd/ Visa Privat e La bel Aut o F inan ce Rea l Estate Secur ed - Corr espo nde nt Re al Estat e Secu red -Br anch Perso nal Home owne r L oan s Perso nal No n -cred it Car d 20 05 0.15 0.1 3 0. 07 0 .25 0.26 0.0 3 0 .11 Mast erCa rd/ Visa Private La b
Slide 18: Retail Channel and Correspondent/Wholesale Channel
Retail Channel Cont inued record productio n of s ub -prime mo rtgages . Volume up 10% vs . 1Q 04. Near P rime pr oduction h as been s ucces s ful Volu me up, but of f a s mall bas e vs. 1Q 04 Leverages fix ed cos t br anch infr astr ucture Whil e d ilutive to NIM on a sh ort ter m basi s, it is acc
Slide 19: Retail Branch Channel and Wholesale Channel Key Actions
Retail Br anch Chan nel ( HFC/ Be nef ic ia l) Expa nd junior lien pro duct ion In cre ase u nse cure d line s sele ctively I ncre ase usag e of risk -base d pr icing Mor e g ran ular pricin g fo r r eal e state secu red pr odu ct Con tinue dep loym ent of p rop rieta ry a nalyt ic s for pr ic in g
Slide 20: Cards and Auto Key Actions
Card s Cont inue focu s on non - prim e ca rd se ctor s F ocus on in crem en tal fe e op por tun it ies, in cluding fee - focuse d p rod ucts Co ntin ue f ocus o n r isk-base d pr icing and line m ana gem en t Key Action s to Af fect NIM, RAR, Receiva ble M ix Auto Incr eas e dir ect -to -consu mer
Slide 21: HSBC USA Inc.
HSBC USA Inc. 18 HSBC «>
Slide 22: HSBC USA Inc. U.S. GAAP
HSBC US A Inc. U.S . GAAP ( Mil lions $) 1Q 0 5 4Q 04 1Q 04 B/( W) 4Q 04 1 Q 04 Net Int er est I ncome Other Revenues Tot al Revenues Pr ovis ion for Loan L os ses Operating Expens es P re -tax Income T axes Net I ncome $775 478 1 ,253 107 654 492 176 $316 $700 325 1,02 5 (24) 613 436 167 $269 $654
Slide 23: Personal Financial Services and Commercial Banking Highlights
Pe rson al F inan cial Ser vices Pre -tax inc ome incr ease d 85 % over 1Q 04 Nu mb er o f pe rso nal d epo sit acco unt s ope ned incr ease d 4 0% year - over -year 3 d e -novo locat io ns a dde d Im pro vem ent in re siden tial m ort gag e re sults Intr odu ced n ew d epo sit pr odu cts th rou gh
Slide 24: Private Banking and CIBM First Quarter Highlights
Pre -tax income increas ed 9% over 1Q 04 Dives ted s eg ment of p er son al trus t bus ines s to focus on larger trus t relati onsh ips Ad ded relations hip m an ager s i n purs uit of growt h str ategy Fir st Quarter Hi ghlights Corpor ate Inves tment Banking & Mar kets (CIBM ) Pr e- tax income dec
Slide 25: HSBC «>
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Slide 26: Appendix
Appendix 23 HSBC €&>
Slide 27: HSBC Finance Corporation Management Basis Receivables
HSBC F inance Co rpor at ion - Management Bas is Receivables (Billion s $) (1) Mas terCard i s a r egi ster ed trademark of M aster Car d Inter national, I ncorpor at ed and Visa is a regi ster ed trademark o f VIS A USA, I nc.
Slide 28: Reconciliations to GAAP Financial Measures: Return on Average Assets
Reconciliations to GAAP Financial Measures Three Months Ended March 31, 2005 Dec. 31, 2004 March 31, 2004 (Dollars are in millions) Return on Average Assets: Net income: Owned basis ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ $ 626 $ 712 $ 470 Management basis adjustments ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 80 (394) 10
Slide 29: Reconciliations to GAAP Financial Measures: Net Interest Margin
Reconciliations to GAAP Financial Measures Three Months Ended March 31, 2005 Dec. 31, 2004 March 31, 2004 (Dollars are in millions) Net Interest Margin: Net Interest Income: Owned basis ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ $ 1,888 $ 2,083 $ 1,820 Management basis adjustments ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 7
Slide 30: Reconciliations to GAAP Financial Measures: Risk Adjusted Revenue
Reconciliations to GAAP Financial Measures Three Months Ended March 31, 2005 Dec. 31, 2004 March 31, 2004 (Dollars are in millions) Managed Basis Risk Adjusted Revenue: Net interest incomeÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ $ 2,220 $ 2,551 $ 2,574 Other revenues, excluding securitization revenueÏÏÏÏÏÏ
Slide 31: Reconciliations to GAAP Financial Measures: Consumer Net Charge-off Ratio
Reconciliations to GAAP Financial Measures Three Months Ended March 31, 2005 Dec. 31, 2004 March 31, 2004 (Dollars are in millions) Consumer Net Charge-oÅ Ratio: Consumer net charge-oÅs: Owned basis ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ $ 856 $ 1,127 $ 970 Management basis adjustments ÏÏÏÏÏÏÏÏÏÏÏÏÏÏ
Slide 32: Reconciliations to GAAP Financial Measures: Efficiency Ratio
Reconciliations to GAAP Financial Measures Three Months Ended March 31, 2005 Dec. 31, 2004 March 31, 2004 (Dollars are in millions) EÇciency Ratio: Total costs and expenses less policyholders' beneÑts: Owned basis ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ $ 1,420 $ 1,349 $ 1,297 Management basis adjustm
Slide 33: Reconciliation to GAAP Financial Measures: Income Statement
Reconciliation to GAAP Financial Measures Income Statement Three Months Ended 3/31/05 Three Months Ended 12/31/04 Three Months Ended 3/31/04 Management Management Management Owned Basis Management Owned Basis Management Owned Basis Management Basis Adjustments Basis Basis Adjustments Basis Basis Adj