HSBC Holdings PLC · LSE:HSBA

HSBC — Investor Presentation (April 2017)

35 slides from HSBC's investor presentation, April 2017

  1. Slide 1: Global Trade & Receivables Finance Webinar

    Global Trade & Receivables Finance Webinar APRIL 2017 Noel Quinn – Group Managing Director and Chief Executive Officer, Global Commercial Banking Natalie Blyth – Global Head of Trade and Receivables Finance, Global Commercial Banking 1

  2. Slide 2: Agenda

    Agenda 1 Introduction 2 Our Leading Competitive Differentiators 3 Performance Trends 4 Looking Ahead 2

  3. Slide 3: HSBC overview

    HSBC overview Our global footprint Diversified global businesses and regions Home Priority Network Rep office Revenue PBT RWAs $50.2bn $19.3bn $857bn Revenue by region2 Europe Asia MENA NAM LAM $17.3bn $23.3bn Revenue by global business CMB GB&M RBWM GPB 70 90 > 45 4 Inter- connected global % % busi

  4. Slide 4: HSBC's network is key to being the leading international bank

    HSBC’s network is key to being the leading international bank Geographic Product breadth Customer depth spread 100% 9% Non HSBC markets Global c.4k Global Liquidity & Banking Network markets Cash 31% Security Management Large Services c.7k Corporates t/o $500m-5bn HSBC Global Trade & Insurance & cov

  5. Slide 5: Trade is a key part of HSBC's leading transaction banking franchise

    Trade is a key part of HSBC’s leading transaction banking franchise Transaction Banking accounts for 29% Group adjusted revenues, of which 18% is GTRF FY16 adjusted revenue, % Transaction Banking revenue Other revenue $14.7bn HSS1 11% GLCM2 43% $35.6bn $14.7bn (71%) (29%) $35.6bn (71%) FX 28% $2.6bn

  6. Slide 6: Global trade is >USD20trn and underlying volumes are still growing

    Global trade is >USD20trn and underlying volumes are still growing Evolution of global goods and services exports Goods & services export value1 Index - 2012 = 100 Goods & services exports volumes2 Since 2009, trade volumes 120 have continued to increase 110 100 90 80 World trade values and volumes

  7. Slide 7: Trade is a core part of HSBC and critical to world economy

    Trade is a core part of HSBC and critical to world economy Trade in HSBC Trade in Society HSBC in Trade  Founded in 1865 to finance  Key to human progress  #1 Trade Bank in the world2 international trade  Catalyst for global economic  Best Bank for Corporates3  Serving our Multinationals growt

  8. Slide 8: What is trade finance?

    What is trade finance? Seller Trusted Intermediary: seller wants payment before shipping  Absorbs risks  Bridges cash flow gaps Buyer  Facilitates trade flows & settlements buyer wants goods before paying TRADITIONAL TRADE OPEN ACCOUNT Documentary Receivables Supply Chain Guarantees Trade Loans T

  9. Slide 9: Documentary credit (DC)

    Documentary credit (DC) Assures seller of payment by a trusted intermediary, provided they deliver the right goods; used when there is low familiarity with the buyer or in an uncertain economic environment = Interest and Fee income earned across life cycle 2 3 5 3 2 1 1 1 Buyer Seller 4 1 Buyer requ

  10. Slide 10: Receivables finance (RF) – factoring & invoice discounting

    Receivables finance (RF) – factoring & invoice discounting Used when seller/buyer relationship matures: seller raises cash against trade debtors; improves balance sheet and accelerates growth OA = Interest and Fee income earned across life cycle T 2 1 Buyer 5 3 Seller Factoring 4 5 Invoice discounti

  11. Slide 11: Agenda

    Agenda 1 Introduction 2 Our Leading Competitive Differentiators 3 Performance Trends 4 Looking Ahead 11

  12. Slide 12: Overview of GTRF by numbers

    Overview of GTRF by numbers Revenue4 Av. funded assets5 Total assets $500,000,000,000 Trade facilitated annually1 FY16 as at 4Q16 as at 4Q16 $2.6bn $71bn c.$165bn 6,000 Experts Guarantees Supply Chain 25% 2% Receivables Finance 1,500 Frontline staff in 56 markets 18% FY16 revenue4 25% Documentary Tr

  13. Slide 13: Trade is pivotal to the value of HSBC's network

    Trade is pivotal to the value of HSBC’s network Value of HSBC being at both ends  Local knowledge with a greater understanding of risk Unrivalled global presence  Better pricing  Accelerated time to cash1  HSBC is at both ends of a DC transaction c.70% of the time2 Covers full global supply chai

  14. Slide 14: Trade is pivotal to the value of HSBC's network: client examples

    Trade is pivotal to the value of HSBC’s network: client examples Structured a receivables finance Structured a facility in MENA A multi-geography Bank Guarantee solution for L&T (HQ in India) receivables finance facility in US with HK Netherlands Microsoft (Seller) Seller Buyer Beneficiary HSBC Bala

  15. Slide 15: Agenda

    Agenda 1 Introduction 2 Our Leading Competitive Differentiators 3 Performance Trends 4 Looking Ahead 15

  16. Slide 16: After 30+ years of almost uninterrupted growth, global trade under short-term pressure

    After 30+ years of almost uninterrupted growth, global trade under short-term pressure Evolution of global goods and services exports Index - 2012 = 100 Good & Services Export Value1 Goods & Services Exports Volumes2 110 100  Decline in trade value largely driven 90 by commodity prices 80 140  Tra

  17. Slide 17: HSBC has shown resilient performance in challenging environment

    HSBC has shown resilient performance in challenging environment GTRF adjusted revenues declined in line with global trade value Revenue decline bottomed out in 4Q16 USDm -7% -1%  Increased market share in 2016; 2,768 623 616 2,581  HK1 from 10.8% to 13%, record high  Singapore2 from 8.6% to 12.7%

  18. Slide 18: Agenda

    Agenda 1 Introduction 2 Our Leading Competitive Differentiators 3 Performance Trends 4 Looking Ahead 18

  19. Slide 19: Five reasons to be optimistic in an uncertain environment

    Five reasons to be optimistic in an uncertain environment Strong medium term prospects 1 Asia has potential to drive trade growth 2 HSBC well positioned within Asia and the trade market overall 3 We are strengthening capabilities in growth segments 4 Well positioned to capture additional opportuniti

  20. Slide 20: HSBC is a leading player in the digitisation of trade

    HSBC is a leading player in the digitisation of trade GTRF digital priorities Project examples Tactical Improving digital customer experience Self-Serve, real-time mobile solution for clients to track status of their trade transactions and documents Automating trade finance operations Connecting wit

  21. Slide 21: Five reasons to be optimistic in an uncertain environment

    Five reasons to be optimistic in an uncertain environment Strong medium term prospects 1 Asia has potential to drive trade growth 2 HSBC well positioned within Asia and the trade market overall 3 We are strengthening capabilities in growth segments 4 Well positioned to capture additional opportuniti

  22. Slide 22: Appendix

    Appendix HSBC €&>

  23. Slide 23: Important notice and forward-looking statements

    Appendix 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 ot

  24. Slide 24: Executive Biographies

    Executive Biographies  Noel Quinn was appointed Chief Executive, Global Commercial Banking, in December 2015.  He became a Group Managing Director in September 2016.  Based in London, Mr Quinn is responsible for HSBC’s relationships with about 2 million business customers with turnover up to $5bn

  25. Slide 25: Executive Biographies

    Executive Biographies  Natalie Blyth was appointed Global Head of Trade and Receivables Finance, Global Commercial Banking, in July 2016.  Based in HSBC Group’s London offices, Ms. Blyth is responsible for a business which provides financing and risk mitigation solutions to meet clients’ internati

  26. Slide 26: The value of trade to our customers

    The value of trade to our customers Key Product Clients needs….. …and benefit to client  Buyer (defer payment) & Supplier (early payment) conflicting  Supplier is assured of payment and can receive upfront Documentary needs discounted proceeds  Bank’s undertaking to pay the supplier if they have

  27. Slide 27: How trade products relate to our balance sheet and P&L

    How trade products relate to our balance sheet and P&L Balance Sheet Capital Profit & Loss Funded Contingent RWA NII NFI Asset Liability Letter of Credit      Receivable Finance      Guarantees      Trade Loans      Supply Chain      27

  28. Slide 28: Supply chain finance

    Supply chain finance Banks intermediating in open account trade, providing working capital financing solutions across the entire supply chain benefiting both buyers and sellers = Interest and Fee income earned across life cycle 1 2 3 Buyer Seller 4 1 HSBC agrees legal documents with Buyer and Seller

  29. Slide 29: 9% decline in trade finance market in 2015

    9% decline in trade finance market in 2015 Trade Finance Global Market Size1 Revenue Pool, USDbn -9% 52 51 51 52 47  Open Account revenues 43 stable as clients move from Traditional Trade Finance 28 27 26 25 22 25  BCG projects 4% p.a. growth2 Traditional Trade in Trade Finance market over next de

  30. Slide 30: HSBC has gained market share and remains #1 Trade Bank

    HSBC has gained market share and remains #1 Trade Bank GTRF have shown resilient performance in challenging environment Market share1 2012 – 2015, % 11 10.2 9.9 GTRF vs. Lending Market Share 10 Traditional Trade 9.0 9.2 Market share, % 9 5% 8 7 India3 1% 6.0 6.1 6 5.6 5.5 Total Trade Lending Trade F

  31. Slide 31: Asia leading trade growth going forward, positioning HSBC well

    Asia leading trade growth going forward, positioning HSBC well Selected Regional Bilateral Trade Corridors, 2015 Area of bubble = Value of bilateral merchandise trade (global total = USD17trn) Merchandise Trade1, USDtrn 1.4 NAFTA-Asia Intra-Europe 1.7 Europe-Asia 0.9 4.4 Intra-NAFTA 1.1 NAFTA-Europe

  32. Slide 32: Further integration in ASEAN, RCEP, as well as the Belt and Road initiative

    Further integration in ASEAN, RCEP, as well as the Belt and Road initiative are expected to deliver additional trade growth in Asia China Belt and Road Initiative Land route Maritime route  Countries covered under plan1 65  Number of planned projects1 >900  Trade along BRI by 20252 USD2.5trn Regi

  33. Slide 33: 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

  34. Slide 34: Reconciliation of reported to adjusted PBT

    Reconciliation of reported to adjusted PBT Discrete quarter 2016 4Q15 4Q16 vs. 4Q15 2015 2016 vs. 2015 Reported profit before tax (858) (3,445) (2,587) 18,867 7,112 (11,755) Includes: Currency translation 139 - (139) 840 - (840) Significant items: FVOD Fair value gains / losses on own debt (credit s

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