HSBC Holdings PLC · LSE:HSBA
HSBC — Investor Day (March 2015)
48 slides from HSBC's investor day presentation, March 2015
Slide 1: Global Banking and Markets Investor Update
March 2015 Global Banking and Markets Investor Update Samir Assaf Group Managing Director, Chief Executive, Global Banking and Markets
Slide 2: 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 3: Introduction
Introduction § HSBC Global Banking and Markets’ business model and strategy are well established: – We aim to be a “Top 5” bank to our priority clients and in our chosen products and geographies – We focus on the following growth priorities ▪ Connecting clients to international growth priorities ▪ C
Slide 4: Contents
Contents 1 Performance overview 2 Distinctive business model 3 Positioned for growth 4 Summary A Appendix 4
Slide 5: HSBC Holdings plc financial overview: Key messages for 2014
HSBC Holdings plc financial overview Key messages for 2014 Highlights Reported and Adjusted2 PBT (USDm) § Reported PBT of USD18,680m included fines, settlements, UK customer redress, and associated provisions of USD3,709m Adjusted2 PBT § 2014 adjusted revenue1 of USD62,002m and adjusted2 PBT of broa
Slide 6: Annual results 2014 - Financial highlights
HSBC Holdings plc financial overview Annual results 2014 - Financial highlights1 Summary financial highlights, USDbn Better/(worse) 2013 2014 2014 vs 2013 Reported PBT 22.6 18.7 (17)% Adjusted2 PBT 23.0 22.8 (1)% Key ratios, % 2013 2014 KPI Return on average ordinary shareholders’ equity 9.2% 7.3% 1
Slide 7: GB&M financial performance
Performance overview GB&M financial performance1 Annual revenue2 Quarterly revenue2 US$bn Includes US$bn Includes § US$ ~200m Includes US$ ~200m Includes revaluation gains § US$ (263)m revaluation US$ (263)m in equities FFVA charge5 4.3 gains in 3.3 FFVA § US$ 146m § US$ (2)m equities4 charge5 Legac
Slide 8: Client-facing businesses
Performance overview Growth in majority of client-facing businesses between FY11 and FY14 Revenue1 US$bn Client-facing businesses +3% 2011-14 CAGR 19.2 18.3 17.8 Other2 17.1 Balance Sheet Management Global Trade & Receivables Finance Client-facing businesses Securities Services Payments and Cash Man
Slide 9: Market share in key products and regions
Performance overview Market share in key products and regions Capital Financing Markets Ranking Market Share % Ranking Market Share % Rankings and Rankings and Market Share 2012 2013 2014 2012 2013 2014 Market Share 2012 2013 2014 2012 2013 2014 5.7 6.2 FX – 6.7 6.9 7.1 All International 5.3 5 4 4 O
Slide 10: Comprehensive client service spanning multiple products and geographies
Performance overview Comprehensive client service spanning multiple products and geographies Client HSBC’s role in recent transactions HSBC’s competitive advantages for the transactions § Extensive cooperation with the UK Government in Joint Lead Manager, Duration Manager, Fiscal Paying capital mark
Slide 11: Moderate dependency on Credit, Rates and FX revenues
Performance overview Moderate dependency on Credit, Rates and FX revenues Credit, Rates and Foreign Exchange revenue1 US$m 5,635 Includes 5,307 US$ (263)m 5,048 FFVA4 charge § Credit, Rates and FX contribution to 4,640 GB&M revenues has been stable and below 30% over 2011-14 § Credit, Rates and FX r
Slide 12: Balance Sheet Management (BSM) revenue
Performance overview Balance Sheet Management (BSM) revenue Balance Sheet Management revenue1 US$m 5,390 § Within each operating entity, BSM is responsible for managing liquidity, funding and structural interest rate risk § BSM reinvests excess liquidity into 4,102 highly rated liquid assets: 3,738
Slide 13: Continuing to actively pursue operating efficiency
Performance overview Continuing to actively pursue operating efficiency GB&M CER1 % 70% FY13 FY14 60% Reported op. 50% US$ 10.0bn US$ 12.0bn expenses 40% 2.4 2.6 Adjusted2 op. expenses US$ 9.6bn US$ 10.1bn 30% 20% 10% 0% FY13 FY14 Currency translation and Adjusted2 CER Reported significant items 1.
Slide 14: GB&M Legacy portfolio managed to protect shareholder value
Performance overview GB&M Legacy portfolio managed to protect shareholder value ABS portfolio carrying value1 US$bn § Portfolio reduced by US$24bn since 20103 § Hold versus dispose decisions based on a clear economic 47 -51% framework (considering cost of capital and funding) § Strong capital base a
Slide 15: Focused on improving capital efficiency
Performance overview Focused on improving capital efficiency GB&M risk-weighted assets1,2 GB&M assets1 US$bn FY14, US$bn GB&M total assets: US$ 1,840bn GB&M Legacy credit portfolio 1% Derivatives netting3 17% 554 537 527 516 1Q14 2Q14 3Q14 4Q14 Balance Sheet Management Remaining FY14 Adjusted4 RoRWA
Slide 16: Contents
Contents 1 Performance overview 2 Distinctive business model 3 Positioned for growth 4 Summary A Appendix 16
Slide 17: GB&M competitive advantages
Distinctive business model GB&M competitive advantages § Balanced mix of Corporates vs Financial Institutions and Deep and diversified client base Governments1 § Suite of products across markets, financing, transaction Diversified by business and geography banking and advisory § Distinctive geograph
Slide 18: Deep and diversified client base
Distinctive business model Deep and diversified client base: Financial Institutions’ revenues are well diversified Financial Institutions relationship revenue – diversified by product1 Other Credit/DCM Securities Services Asset and Structured Finance Financial Rates Corporates Institutions Payments
Slide 19: Diversified by business and geography
Distinctive business model Diversified by business and geography Management view of adjusted1 revenue2, 3 Adjusted1 profit before tax3 % average 2013-14 % average 2013-14 By product: US$ 18.3bn By region: US$ 8.7bn Principal Credit Investments 4% Latin America 3% Rates Balance Sheet North America 7%
Slide 20: International network
Distinctive business model International network: Leveraging our distinctive geographic network to connect clients across borders Total revenue flows1 § Over half of total client revenues are booked outside the client’s home country § Over half of all cross-border revenues flow between developed and
Slide 21: Collaboration: providing solutions to clients across all Global Businesses
Distinctive business model Collaboration: providing solutions to clients across all Global Businesses Strengthening collaboration across Global Businesses Enabling client success § Lead Financial Advisor to Yildiz’s US$ 3.3bn acquisition of United § Incremental collaboration revenues of US$ 1.3bn Bi
Slide 22: Regulatory readiness: well equipped for regulatory change
Distinctive business model Regulatory readiness: well equipped for regulatory change Impact Concerns Strengths § Prohibited activities § Ring-fencing definitions § Client driven business § Leverage § Geographic reach § Ability to service clients from Structural § Loss absorbing capital § Operational
Slide 23: Contents
Contents 1 Performance overview 2 Distinctive business model 3 Positioned for growth 4 Summary A Appendix 23
Slide 24: Investment priorities focus on areas with growth potential
Positioned for growth Investment priorities focus on areas with growth potential § Enhance Global Business collaboration and capabilities of electronic distribution platform Foreign Exchange & Renminbi § Strengthen our position as the leading international bank in RMB and capture offshore RMB, FX an
Slide 25: Renminbi
Positioned for growth Renminbi Renminbi (RMB) internationalisation HSBC is at the forefront Global RMB trade settlement1 § First foreign bank to underwrite RMB government bonds RMB (trn) % § Ranked #1 in offshore CNY bond market with 20% market share3 7 25 § Dominant market share (c.40%) among RMB (
Slide 26: Global Trade & Receivables Finance and Payments & Cash Management
Positioned for growth Global Trade & Receivables Finance and Payments & Cash Management Global Trade and Receivables Finance Payments and Cash Management Trade grows faster than GDP1 Cross-border payments volumes (billions of transactions)2 1,400 x% 2012-22 CAGR 8% 1,200 21 1,000 10% 800 600 10 11 4
Slide 27: Securities Services and Capital Financing
Positioned for growth Securities Services and Capital Financing Securities Services Capital Financing AUM projection by region for 20201 (US$trn) Global variation in composition of debt financing2 CAGR: +10% +12% % GDP 160 16.2 1.5 140 34 12 120 2012 100 108 7.7 80 11 2 0.6 2020 60 127 110 40 54 62
Slide 28: Contents
Contents 1 Performance overview 2 Distinctive business model 3 Positioned for growth 4 Summary A Appendix 28
Slide 29: Summary
Summary Key messages 2016 objectives § Delivering resilient financial results, showing growth in the majority of client-facing businesses over 2011-14 § Continuing to actively pursue operating and capital efficiency § Contributing to Group targets § Managing GB&M Legacy portfolio to protect sharehol
Slide 30: Contents
Contents 1 Performance overview 2 Distinctive business model 3 Positioned for growth 4 Summary A Appendix 30
Slide 31: Reconciliation of Reported to Adjusted PBT
HSBC Holdings plc financial overview Reconciliation of Reported to Adjusted1 PBT USDm Variance 2013 2014 2014 vs 2013 Reported profit before tax 22,565 18,680 (3,885) Includes, Gains / (losses): Currency translation 159 – (159) Significant items: Fair value gains / (losses) on own debt (credit sprea
Slide 32: GB&M financials
GB&M financials1,3 Reported Adjusted (US$m) 4Q13 4Q14 FY 13 FY 14 FY 13 FY 14 Credit 154 (207)4 796 5674 801 5674 Rates 40 (80)4 1,653 1,5634 1,678 1,5634 Foreign Exchange 693 632 3,186 2,918 3,140 2,916 Equities 403 201 1,300 1,216 1,314 1,216 Markets 1,290 546 6,935 6,264 6,933 6,262 Capital Finan
Slide 33: Significant items included in underlying profit before tax
GB&M financials1 Significant items included in underlying profit before tax US$m 4Q13 4Q14 FY13 FY14 Underlying profit before tax Includes the following significant items (reported basis): Revenue Volatility: Debit valuation adjustment on derivative contracts (195) (53) 106 (332) Fair value movement
Slide 34: Diverse range of products aligned with client needs
GB&M core to HSBC strategy Diverse range of products aligned with client needs Clients Products/business Global Banking and Markets Coverage Groups Clients – more than 4,000 mastergroups1 § Asset-Backed Finance § Credit § Payments and Cash § Balance Sheet Management Management § Asset & Structured F
Slide 35: Performance diversified by business line and geography
Diversification Performance diversified by business line and geography Management view of adjusted2 revenue1, 3, 4 Adjusted2 profit before tax1 % FY14 % FY14 By product: US$ 18.1bn By region: US$ 8.1bn Principal Latin America Investments Credit North 6% Balance 3% 3% Rates America Sheet 9% 5% Europe
Slide 36: Market leaders across product and region
Product strength Market leaders across product and region Global Markets Transaction Banking Capital Financing Trade and Project and Securities Receivable Export FX1 Rates2 Credit3 Equities4 PCM5 Services6 Finance7 Finance8 DCM9 ECM10 Hong Kong #1 #1 #1 #1 #1 #1 #2 RoAP ex Japan #4 #1 #1 #6 MENA #4
Slide 37: Cover images: HSBC – then and now
Cover images: HSBC – then and now It is 150 years since HSBC was founded in Hong Kong to finance trade between Asia and Europe. Much has changed since then, as our cover photos demonstrate. The left photo shows Hong Kong harbour, with the HSBC office (extreme left) a few years after it was establish
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Slide 39: Global Banking and Markets Addendum
March 2015 Global Banking and Markets Addendum to February 2015 Investor Update Samir Assaf Group Managing Director, Chief Executive, Global Banking and Markets
Slide 40: 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 41: GB&M financial performance – Quarterly financials
Performance overview GB&M financial performance – Quarterly financials Quarterly revenue1,2 Comments US$bn § Lower adjusted revenue vs. 4Q13, mainly driven by 4.3 3.3 Markets – including Includes c. US$ 200m Includes – US$ (263)m FFVA charge § US$ (263)m revaluation FFVA – No revaluation gains in eq
Slide 42: GB&M financial performance – Annual financials
Performance overview GB&M financial performance – Annual financials Annual revenue1,2 Comments US$bn § Lower adjusted revenue, driven partly by Includes § US$ (263)m – US$ (263)m FFVA charge 19.2 Includes c. US$ 17.8 FFVA 200m charge4 – US$ (224)m decline in FX revenue 0.7 revaluation § US$ (124)m –
Slide 43: Growth in majority of client-facing businesses between FY11 and FY14
Performance overview Growth in majority of client-facing businesses between FY11 and FY14 Revenue by business1 US$bn GB&M revenue 17.1 18.3 19.2 17.8 0.1 Includes 0.9 US$ 316m 2011-14 0.5 Panama 0.5 CAGR (%) disposal gain 0.1 0.3 Includes Includes § US$ (263)m BSM (4)% 6.9 c.US$ 200m 6.3 FFVA3 6.1 r
Slide 44: GB&M assets include the Group Balance Sheet Management portfolio
Distinctive business model GB&M assets include the Group Balance Sheet Management portfolio GB&M assets1 FY14, US$bn 1,840 532 1,308 Includes § Intra-HSBC items3 § Gross derivative amounts not offset in the balance sheet4 Reported GB&M BSM assets2 GB&M assets excluding BSM total assets 1. HSBC Annua
Slide 45: GB&M RWAs are mostly concentrated in the banking book
Distinctive business model GB&M RWAs are mostly concentrated in the banking book GB&M RWAs1,2 US$bn FY13 FY14 Market risk 516 Legacy portfolio RWAs (US$ 44bn Operational 422 risk RWAs) Counterparty credit risk Includes § Associates § Balance Sheet Credit risk Management Total RWAs Basel 2.5 Total RW
Slide 46: Actions to increase profitability: Key actions
Actions to increase profitability Key actions § Intensive management of client profitability Targets (medium term) § Run down Legacy portfolio Address challenged § Greater focus on credit risk businesses § Improve counterparty credit risk and market risk data § Contributing to Group flows targets (m
Slide 47: Focused on improving capital efficiency
Performance overview Focused on improving capital efficiency GB&M risk-weighted assets1,2 US$bn 554 537 527 516 1Q14 2Q14 3Q14 4Q14 1. HSBC Annual Reports, Interim Reports and Interim Management Statements 2. End of period risk-weighted assets 47
Slide 48: Cover images: HSBC – then and now
Cover images: HSBC – then and now It is 150 years since HSBC was founded in Hong Kong to finance trade between Asia and Europe. Much has changed since then, as our cover photos demonstrate. The left photo shows Hong Kong harbour, with the HSBC office (extreme left) a few years after it was establish