HSBC Holdings PLC · LSE:HSBA
HSBC — Non-Deal Roadshow (September 2012)
29 slides from HSBC's roadshow presentation, September 2012
Slide 1: Global Banking and Markets Citi Reverse Roadshow
Global Banking and Markets Citi Reverse Roadshow Samir Assaf Group Managing Director, Chief Executive, Global Banking and Markets Date: September 2012
Slide 2: 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
Slide 3: HSBC Group management matrix
HSBC Group management matrix Hong Kong & Rest Middle East & Europe North America Latin America of Asia Pacific North Africa RBWM Retail Banking & Wealth Management (RBWM) CMB Commercial Banking (CMB) GBM Global Banking & Markets (GBM) GPB Global Private Banking (GPB) Global Functions Communications
Slide 4: Four integrated Global Businesses
Four integrated Global Businesses • 1H2012 net operating • 1H2012 net operating income USD8,253m1 income USD10,335m1 • FY2011 net operating • FY2011 net operating income USD15,611m1 income USD17,057m1 • 2009 - 2011 cumulative • 2009 - 2011 cumulative PBT USD18,312m1 PBT USD26,526m1 • 2011 RWAs Comme
Slide 5: How we are structured
How we are structured Global Banking and Markets Coverage Groups Clients – over 4,000 mastergroups1 Client coverage teams – over 2,500 people1 FX Credit & Lending Payments & Cash Balance Sheet Credit Equity Capital Markets Management (PCM) Management (BSM) (ECM) Securities Services G
Slide 6: GBM strategy is underpinned by trends in growing international trade and capital flows
GBM strategy is underpinned by trends in growing international trade and capital flows Major trade flows1 Country Trade Growth2 2011 Imports and Exports, USDtn CAGR 2011-2021 % Intra-regional trade: Europe 29.5% China 3.6 6.7 11 Intra-regional trade: North America 3.5% USA 3.7 2.8 6 Germany 2.9 2 5
Slide 7: GBM strategy is aligned to the strategy of the Group
GBM strategy is aligned to the strategy of the Group Group Strategy GBM Strategy International network connecting emerging and International trade International mature markets, covering key growth areas network in markets and capital flows that matter Emerging 4 main hubs and 6 strategic hubs
Slide 8: Strong GBM financial performance diversified by product and geography, Average 2009-2011
Strong GBM financial performance diversified by product and geography Average 2009-2011 Managed View of Operating Income1 Profit Before Tax1 % average 2009-2011 % average 2009-2011 Total: USD19bn Total: USD9bn Credit (8%) Europe (28%) Rates (11%) FX (16%) Hong Kong (15%) Equities (4%) Securities Ser
Slide 9: Strong GBM financial performance diversified by product and geography, 1H 2012
Strong GBM financial performance diversified by product and geography 1H 2012 Managed View of Operating Income1 Profit Before Tax1 % 1H 2012 % 1H 2012 Total: USD10.3bn Total: USD5.0bn Credit (4%) Europe (21%) Rates (17%) FX (17%) Hong Kong (16%) Equities (4%) Securities Services (8%) RoAP (34%) Asse
Slide 10: Diversified and resilient client base
Diversified and resilient client base Financial Institutions Relationship Revenue Split by Product1 Asset and DCM Structured Finance Securities Services Rates Financial Institutions Corporates Equities Payments and Cash Management Asset Management FX Credit & Lending Gov ernment Financial Institutio
Slide 11: HSBC derives a larger quantity of its FX activity from non-FI clients than any other competitor
HSBC derives a larger quantity of its FX activity from non-FI clients than any other competitor Euromoney 2011 FX Survey1 Non-FI FX volume as a proportion of each bank’s total FX volume (with banks’ average rebased to 1) 2.19 Bank 1 1.88 Bank 2 1.72 Bank 3 1.03 Average 10 banks 1.00 Bank 4 0.79 Bank
Slide 12: Synergies with Global Businesses to generate increasing revenues
Synergies with Global Businesses to generate increasing revenues Potential upside in Size of opportunity Initiatives the medium term Aspiration: increase incremental revenues in the medium term – which, in 2011 alone, resulted in c.USD500m in incremental Over 50,000 revenues. Commercial corporate
Slide 13: GBM – Wholesale banking industry is changing and facing profitability challenges
GBM – Wholesale banking industry is changing and facing profitability challenges Industry changes in product profitability Post-regulation and ROE, % Pre-regulation Industry challenges post-mitigation FX 30 c.19 Client activity relatively subdued Cash Equities 25 c.18 with global investment bankin
Slide 14: GBM regulatory challenged products represent 14% of total operating income
GBM regulatory challenged products represent 14% of total operating income1 Challenged products GBM Total Operating Income2 ex. BSM and Other Minimum, Maximum and Average 2007 – 2011, USDm Average, USDm Share of 2011 Total Operating Income, % Foreign Exchange 3,005 24% Financing & ECM 2,983 24% Rate
Slide 15: RWAs and Legacy Credit
RWAs and Legacy Credit Industry changes in product profitability Actively managing down legacy exposure Legacy In 2011, disposal actions taken to mitigate USD7bn RWA increase; but RWAs increased USD24bn largely due to regulatory changes Clear economic framework for hold versus dispose decision
Slide 16: Transaction banking is a core and strategic product delivered to GBM clients
Transaction banking is a core and strategic product delivered to GBM clients Benefits from stable annuity-like revenues with further NII upside from interest rates increase Supports both Group and GBM’s liquidity position Strategic product with strong cross-selling potential for other products
Slide 17: Payments & Cash Management is a key funding engine
Payments & Cash Management is a key funding engine HSBC payments grow faster than global payments Global payment volumes1 (m) CAGR +8% 4,165 3,579 3,841 Continued strong growth in GBM’s contribution to PCM revenues – USD0.9bn 1H 20122. 2009 2010 2011 Comprehensive product set anchors HSBC paymen
Slide 18: The world's leading Trade Finance bank
The world’s leading Trade Finance bank1 World nominal GDP2 (USDtn) CAGR +10% 58 63 70 Trade financing provides access to 2009 2010 2011 the wider corporate relationship World merchandise trade2 (USDtn) Our network provides access to 77% CAGR +20% of world trade flows 30 35 24 HSBC is the world
Slide 19: Strength in core product capabilities – Market related flow products
Strength in core product capabilities – Market related flow products Market leadership in our product suite Strength in vanilla flow, G10 FX, Credit1, Rates2 Top tier primary bond position in Asia, Latin America and Europe and leading secondary trading capabilities Innovative Client solutions,
Slide 20: Strength in core product capabilities – Event products
Strength in core product capabilities – Event products Business highlights Rankings 2012 Our Asian ECM business has seen significant market Equity Capital Markets1 9 share improvements in Hong Kong, Singapore and India Leveraged and Acquisition Finance continues to use its Export Finance (Global
Slide 21: Equities will continue to target opportunities in chosen markets
Equities will continue to target opportunities in chosen markets The Global Equities targeted approach by country, core or relevant in selected markets, aligned with Research and Banking is the right one and will continue Equities wallet share increased in all relevant markets between 2008 and 2
Slide 22: BSM revenues stabilising after two exceptional years
BSM revenues stabilising after two exceptional years Balance Sheet Management Revenues (USDm) BSM has a clear governance 3,500 3,350 structure 3,000 BSM does not manage structural credit risks 2,500 2,269 2,206 1,988 2,040 Counterparty risk is mostly short 2,000 1,833 1,765 term exposure to ce
Slide 23: Clear competitive advantages in response to regulatory change
Clear competitive advantages in response to regulatory change Impact Concerns Strengths Leverage in ring-fenced bank Precise composition of ring- Ability to service customers Minimum loss absorbing fenced bank from subsidiary balance sheets Structural capital requirements Geographic reach
Slide 24: Disciplined approach to risk appetite for capital market activities
Disciplined approach to risk appetite for capital market activities Overall Strategy and Risk Appetite is set first by the HSBC Board and ultimately defines the shape of our capital markets activities Chief Risk Officer is actively involved in the Strategy setting and the Five Filters have criti
Slide 25: GBM Governance Structure Overview (simplified)
GBM Governance Structure Overview (simplified) Committees Legal Entity Committees Oversight GBM Audit & Risk Committee Senior (HSBC North America Holdings Inc, Hongkong (Group Level Oversight – Chaired by David Shaw, and Shanghai Banking Corp Ltd, HSBC Bank plc, Advisor to the Holdings Board) HSBC L
Slide 26: Why you should own HSBC
Why you should own HSBC The world is changing . . . HSBC’s distinctive position Long-term trends 1. Privileged access to growth Increasing imbalances in opportunities (cohesive portfolio) international trade and capital flows International network supporting our Rebalancing of the world econom
Slide 27: Appendix
Appendix Global Banking and Markets
Slide 28: GBM league table rankings show strengths in Asia, MENA, Latam
Appendix GBM league table rankings1 show strengths in Asia, MENA, Latam in Transaction Banking, Global Banking and vanilla Global Markets products Transaction Banking Global Banking Global Markets Project & Securities Export PCM Services Finance ECM M&A FX DCM Rates Credit Equities Hong Kong #3 #2 #
Slide 29: GBM Financials
Appendix GBM Financials Half-year to Half-year to Management view of net operating income1 30 Jun 2012 30 Jun 2011 (USDm) Credit 370 530 Rates 1,805 1,355 Foreign Exchange 1,733 1,517 Equities 396 612 Securities Services 818 854 Asset and Structured Finance 212 278 Global Markets 5,334 5,146 Financi