•
|
Reported profit before tax down 48% to $3.2bn from higher expected credit losses and other credit impairment charges (‘ECL’) and lower revenue. The reduction primarily reflected the global impact of the Covid-19 outbreak and weakening oil prices.
|
•
|
Reported revenue down 5% as a result of adverse market impacts in life insurance manufacturing and adverse valuation adjustments in Global Banking and Markets ('GB&M'), offsetting a resilient revenue performance, notably in Asia, Global Markets, Retail Banking and Global Private Banking ('GPB').
|
•
|
Net interest margin ('NIM') of 1.54%, down 2 basis points ('bps') from 4Q19 and down 5bps from 1Q19. We expect material downward pressure on NIM in future quarters as we incur the full impact of 1Q20 market interest rate reductions.
|
•
|
Reported ECL increased by $2.4bn to $3.0bn due to the impact of Covid-19 and weakening oil prices on the forward economic outlook and a significant charge related to a corporate exposure in Singapore. Allowance for ECL increased from $9.2bn at 31 December 2019 to $11.1bn at 31 March 2020.
|
•
|
During the quarter, lending increased by $41bn and deposits grew by $47bn on a constant currency basis. Lending and deposit growth included the effects of corporate customers drawing on existing and new credit lines and re-depositing these to increase cash balances. Deposit balances also reflected continued growth in Retail Banking and Wealth Management ('RBWM').
|
•
|
Reported operating expenses down 5% and adjusted operating expenses down 3%, despite continued investment, due to lower performance-related pay and reduced discretionary costs.
|
•
|
Common equity tier 1 capital (‘CET1’) ratio of 14.6% (4Q19: 14.7%), including the impact of the cancellation of the final dividend in respect of 2019. Liquidity coverage ratio (‘LCR’) of 156% (4Q19: 150%) and a deposit surplus – the excess of deposit balances over lending balances – of over $400bn.
|
•
|
The outlook for world economies in 2020 has substantially worsened in the past two months. The impact and duration of the Covid-19 crisis will likely lead to higher ECL and put pressure on revenue due to lower customer activity levels and reduced global interest rates. We plan to reduce operating expenses to partly mitigate the reduction in revenue and we intend to continue to exercise cost discipline, while maintaining strategic investment. These factors are expected to lead to materially lower profitability in 2020, relative to 2019.
|
•
|
We have temporarily delayed parts of our transformation, including some elements of our cost and risk-weighted asset ('RWA') reduction programme, and expect restructuring costs for 2020 to be lower than indicated in our 2019 annual results.
|
•
|
We also expect mid-to-high single digit percentage growth in RWAs in 2020, including as a result of the effects of negative credit rating migration movements, impacting our CET1 ratio.
|
•
|
During 2020, we will continue to assess the impact of the Covid-19 crisis and review our financial performance and business plan accordingly. We will assess the appropriateness of our medium-term financial targets during that period, and will review our dividend policy at, or ahead of, our year-end results for 2020.
|
HSBC Holdings plc Earnings Release 1Q20
|
1
|
Key financial metrics
|
|
Quarter ended
|
|||||
|
31 Mar
|
|
31 Dec
|
|
31 Mar
|
|
|
2020
|
|
2019
|
|
2019
|
|
Reported results
|
|
|
|
|||
Reported revenue ($m)
|
13,686
|
|
13,371
|
|
14,428
|
|
Reported profit before tax ($m)
|
3,229
|
|
(3,897
|
)
|
6,213
|
|
Reported profit after tax ($m)
|
2,508
|
|
(5,024
|
)
|
4,910
|
|
Profit attributable to the ordinary shareholders of the parent company ($m)
|
1,785
|
|
(5,509
|
)
|
4,134
|
|
Basic earnings per share ($)
|
0.09
|
|
(0.27
|
)
|
0.21
|
|
Diluted earnings per share ($)
|
0.09
|
|
(0.27
|
)
|
0.21
|
|
Return on average ordinary shareholders' equity (annualised) (%)
|
4.4
|
|
(13.3
|
)
|
10.2
|
|
Return on average tangible equity (annualised) (%)
|
4.2
|
|
5.2
|
|
10.6
|
|
Net interest margin (%)
|
1.54
|
1.56
|
|
1.59
|
|
|
Adjusted results
|
|
|
|
|||
Adjusted revenue ($m)
|
13,327
|
13,586
|
|
14,149
|
|
|
Adjusted profit before tax ($m)
|
3,042
|
4,343
|
|
6,246
|
|
|
Adjusted cost efficiency ratio (%)
|
57.6
|
|
66.6
|
|
55.9
|
|
Expected credit losses and other credit impairment charges (‘ECL’) (annualised) as % of average gross loans and advances to customers (%)
|
1.18
|
|
0.28
|
|
0.24
|
|
|
|
At
|
|||||
|
|
31 Mar
|
|
31 Dec
|
|
31 Mar
|
|
|
Footnotes
|
2020
|
|
2019
|
|
2019
|
|
Balance sheet
|
|
|
|
|
|||
Total assets ($m)
|
|
2,917,810
|
|
2,715,152
|
|
2,658,996
|
|
Net loans and advances to customers ($m)
|
|
1,040,282
|
|
1,036,743
|
|
1,005,279
|
|
Customer accounts ($m)
|
|
1,440,529
|
|
1,439,115
|
|
1,356,511
|
|
Average interest-earning assets, year to date ($m)
|
|
1,991,702
|
|
1,922,822
|
|
1,902,912
|
|
Loans and advances to customers as % of customer accounts (%)
|
|
72.2
|
|
72.0
|
|
74.1
|
|
Total shareholders’ equity ($m)
|
|
189,771
|
|
183,955
|
|
188,362
|
|
Tangible ordinary shareholders’ equity ($m)
|
|
150,019
|
|
144,144
|
|
141,648
|
|
Net asset value per ordinary share at period end ($)
|
1
|
8.30
|
|
8.00
|
|
8.20
|
|
Tangible net asset value per ordinary share at period end ($)
|
|
7.44
|
|
7.13
|
|
7.05
|
|
Capital, leverage and liquidity
|
|
|
|
|
|||
Common equity tier 1 capital ratio (%)
|
2
|
14.6
|
|
14.7
|
|
14.3
|
|
Risk-weighted assets ($m)
|
2
|
857,078
|
|
843,395
|
|
879,485
|
|
Total capital ratio (%)
|
2
|
20.3
|
|
20.4
|
|
20.2
|
|
Leverage ratio (%)
|
2
|
5.3
|
|
5.3
|
|
5.4
|
|
High-quality liquid assets (liquidity value) ($bn)
|
|
617
|
|
601
|
|
535
|
|
Liquidity coverage ratio (%)
|
|
156
|
|
150
|
|
143
|
|
Share count
|
|
|
|
|
|||
Period end basic number of $0.50 ordinary shares outstanding (millions)
|
|
20,172
|
|
20,206
|
|
20,082
|
|
Period end basic number of $0.50 ordinary shares outstanding and dilutive potential ordinary shares (millions)
|
|
20,245
|
|
20,280
|
|
20,177
|
|
Average basic number of $0.50 ordinary shares outstanding (millions)
|
|
20,161
|
|
20,158
|
|
20,036
|
|
Dividend per ordinary share (in respect of the period) ($)
|
|
—
|
|
0.30
|
|
0.10
|
|
1
|
The definition of net asset value per ordinary share is total shareholders' equity, less non-cumulative preference shares and capital securities, divided by the number of ordinary shares in issue excluding shares the company has purchased and are held in treasury.
|
2
|
Unless otherwise stated, regulatory capital ratios and requirements are calculated in accordance with the transitional arrangements of the Capital Requirements Regulation in force in the EU at the time, including the regulatory transitional arrangements for IFRS 9 ‘Financial Instruments’ in article 473a. The capital ratios and requirements are reported in accordance with the revised Capital Requirements Regulation and Directive
(‘CRR II’), as implemented. Leverage ratios are calculated using the end point definition of capital. |
2
|
HSBC Holdings plc Earnings Release 1Q20
|
Contents
|
||||
|
Page
|
|
|
Page
|
Highlights
|
|
Credit risk
|
||
Key financial metrics
|
|
Capital adequacy
|
||
Covid-19
|
|
Leverage
|
||
Adjusted performance
|
|
Risk-weighted assets
|
||
Financial performance
|
|
Summary information – global businesses
|
||
Cautionary statement regarding forward-looking statements
|
|
Summary information – geographical regions
|
||
Summary consolidated income statement
|
|
Dividend on preference shares
|
||
Summary consolidated balance sheet
|
|
Terms and abbreviations
|
Covid-19
|
HSBC Holdings plc Earnings Release 1Q20
|
3
|
Adjusted performance
|
Foreign currency translation differences
Foreign currency translation differences for 1Q20 are computed by retranslating into US dollars for non-US dollar branches, subsidiaries, joint ventures and associates:
•
the income statements for 4Q19 and 1Q19 at the average rates of exchange for 1Q20; and
•
the closing prior period balance sheets at the prevailing rates of exchange on 31 March 2020.
No adjustment has been made to the exchange rates used to translate foreign currency-denominated assets and liabilities into the functional currencies of any HSBC branches, subsidiaries, joint ventures or associates. The constant currency data of HSBC’s Argentinian subsidiaries have not been adjusted further for the impacts of hyperinflation. When reference is made to foreign currency translation differences in tables or commentaries, comparative data reported in the functional currencies of HSBC’s operations have been translated at the appropriate exchange rates applied in the current period on the basis described above.
|
4
|
HSBC Holdings plc Earnings Release 1Q20
|
Reconciliation of reported and adjusted results
|
|||||||
|
|
Quarter ended
|
|||||
|
|
31 Mar
|
|
31 Dec
|
|
31 Mar
|
|
|
|
2020
|
|
2019
|
|
2019
|
|
|
Footnotes
|
$m
|
|
$m
|
|
$m
|
|
Revenue
|
|
|
|
|
|||
Reported
|
1
|
13,686
|
|
13,371
|
|
14,428
|
|
Currency translation
|
|
|
|
(66
|
)
|
(257
|
)
|
Significant items
|
|
(359
|
)
|
281
|
|
(22
|
)
|
– customer redress programmes
|
|
—
|
|
45
|
|
—
|
|
– disposals, acquisitions and investment in new businesses
|
|
7
|
|
55
|
|
—
|
|
– fair value movement on financial instruments
|
2
|
(357
|
)
|
176
|
|
(22
|
)
|
– restructuring and other related costs
|
|
(9
|
)
|
—
|
|
—
|
|
– currency translation of significant items
|
|
|
|
5
|
|
—
|
|
Adjusted
|
|
13,327
|
|
13,586
|
|
14,149
|
|
Change in expected credit losses and other credit impairment charges
|
|
|
|
|
|
|
|
Reported
|
|
(3,026
|
)
|
(733
|
)
|
(585
|
)
|
Currency translation
|
|
|
|
11
|
|
16
|
|
Adjusted
|
|
(3,026
|
)
|
(722
|
)
|
(569
|
)
|
Operating expenses
|
|
|
|
|
|||
Reported
|
|
(7,852
|
)
|
(17,053
|
)
|
(8,222
|
)
|
Currency translation
|
|
|
|
54
|
|
156
|
|
Significant items
|
|
172
|
|
7,956
|
|
155
|
|
– cost of structural reform
|
3
|
—
|
|
32
|
|
53
|
|
– customer redress programmes
|
|
1
|
|
183
|
|
56
|
|
– goodwill impairment
|
|
—
|
|
7,349
|
|
—
|
|
– restructuring and other related costs
|
|
170
|
|
400
|
|
50
|
|
– settlements and provisions in connection with legal and regulatory matters
|
|
1
|
|
5
|
|
—
|
|
– currency translation of significant items
|
|
|
|
(13
|
)
|
(4
|
)
|
Adjusted
|
|
(7,680
|
)
|
(9,043
|
)
|
(7,911
|
)
|
Share of profit in associates and joint ventures
|
|
|
|
|
|
|
|
Reported
|
|
421
|
|
518
|
|
592
|
|
Currency translation
|
|
|
|
4
|
|
(15
|
)
|
Adjusted
|
|
421
|
|
522
|
|
577
|
|
Profit/(loss) before tax
|
|
|
|
|
|
|
|
Reported
|
|
3,229
|
|
(3,897
|
)
|
6,213
|
|
Currency translation
|
|
|
|
3
|
|
(100
|
)
|
Significant items
|
|
(187
|
)
|
8,237
|
|
133
|
|
– revenue
|
|
(359
|
)
|
281
|
|
(22
|
)
|
– operating expenses
|
|
172
|
|
7,956
|
|
155
|
|
Adjusted
|
|
3,042
|
|
4,343
|
|
6,246
|
|
Loans and advances to customers (net)
|
|
|
|
|
|||
Reported
|
|
1,040,282
|
|
1,036,743
|
|
1,005,279
|
|
Currency translation
|
|
|
(37,012
|
)
|
(29,133
|
)
|
|
Adjusted
|
|
1,040,282
|
|
999,731
|
|
976,146
|
|
Customer accounts
|
|
|
|
|
|||
Reported
|
|
1,440,529
|
|
1,439,115
|
|
1,356,511
|
|
Currency translation
|
|
|
(45,453
|
)
|
(33,626
|
)
|
|
Adjusted
|
|
1,440,529
|
|
1,393,662
|
|
1,322,885
|
|
1
|
Net operating income before change in expected credit losses and other credit impairment charges, also referred to as revenue.
|
2
|
Includes fair value movements on non-qualifying hedges and debt valuation adjustments on derivatives.
|
3
|
Comprises costs associated with preparations for the UK’s exit from the European Union.
|
HSBC Holdings plc Earnings Release 1Q20
|
5
|
Financial performance
|
Distribution of results by global business
|
|
|||||
|
Quarter ended
|
|||||
|
31 Mar
|
|
31 Dec
|
|
31 Mar
|
|
|
2020
|
|
2019
|
|
2019
|
|
|
$m
|
|
$m
|
|
$m
|
|
Adjusted profit/(loss) before tax
|
|
|
|
|||
Retail Banking and Wealth Management
|
357
|
|
1,914
|
|
2,195
|
|
Commercial Banking
|
611
|
|
1,646
|
|
1,992
|
|
Global Banking and Markets
|
823
|
|
1,272
|
|
1,611
|
|
Global Private Banking
|
121
|
|
86
|
|
98
|
|
Corporate Centre
|
1,130
|
|
(575
|
)
|
350
|
|
Total
|
3,042
|
|
4,343
|
|
6,246
|
|
6
|
HSBC Holdings plc Earnings Release 1Q20
|
HSBC Holdings plc Earnings Release 1Q20
|
7
|
Movement in reported profit before tax compared with 4Q19
|
||||||||
|
Quarter ended
|
|||||||
|
31 Mar
|
|
31 Dec
|
|
Variance
|
|||
|
2020
|
|
2019
|
|
1Q20 vs. 4Q19
|
|||
|
$m
|
|
$m
|
|
$m
|
|
%
|
|
Revenue
|
13,686
|
|
13,371
|
|
315
|
|
2
|
|
ECL
|
(3,026
|
)
|
(733
|
)
|
(2,293
|
)
|
(313
|
)
|
Operating expenses
|
(7,852
|
)
|
(17,053
|
)
|
9,201
|
|
54
|
|
Share of profit from associates and JVs
|
421
|
|
518
|
|
(97
|
)
|
(19
|
)
|
Profit before tax
|
3,229
|
|
(3,897
|
)
|
7,126
|
|
183
|
|
Tax expense
|
(721
|
)
|
(1,127
|
)
|
406
|
|
36
|
|
Profit after tax
|
2,508
|
|
(5,024
|
)
|
7,532
|
|
150
|
|
8
|
HSBC Holdings plc Earnings Release 1Q20
|
Management view of adjusted revenue
|
|||||||||||
|
|
Quarter ended
|
|||||||||
|
|
31 Mar
|
|
31 Dec
|
|
31 Mar
|
|
Variance
|
|||
|
|
2020
|
|
2019
|
|
2019
|
|
1Q20 vs. 1Q19
|
|||
|
Footnotes
|
$m
|
|
$m
|
|
$m
|
|
$m
|
|
%
|
|
Retail Banking
|
|
3,831
|
|
3,969
|
|
3,778
|
|
53
|
|
1
|
|
– current accounts, savings and deposits
|
|
2,274
|
|
2,421
|
|
2,172
|
|
102
|
|
5
|
|
– personal lending
|
|
1,557
|
|
1,548
|
|
1,606
|
|
(49
|
)
|
(3
|
)
|
mortgages
|
|
423
|
|
386
|
|
423
|
|
—
|
|
0
|
|
credit cards
|
|
675
|
|
701
|
|
744
|
|
(69
|
)
|
(9
|
)
|
other personal lending
|
|
459
|
|
461
|
|
439
|
|
20
|
|
5
|
|
Wealth Management
|
|
912
|
|
1,652
|
|
1,895
|
|
(983
|
)
|
(52
|
)
|
– investment distribution
|
|
883
|
|
719
|
|
851
|
|
32
|
|
4
|
|
– life insurance manufacturing
|
|
(206
|
)
|
676
|
|
788
|
|
(994
|
)
|
>(100)
|
|
– asset management
|
|
235
|
|
257
|
|
256
|
|
(21
|
)
|
(8
|
)
|
Other
|
1
|
126
|
|
207
|
|
182
|
|
(56
|
)
|
(31
|
)
|
Net operating income
|
2
|
4,869
|
|
5,828
|
|
5,855
|
|
(986
|
)
|
(17
|
)
|
RoTE excluding significant items and UK bank levy (annualised) (%)
|
|
1.5
|
|
|
22.1
|
|
|
|
1
|
‘Other’ includes the distribution and manufacturing (where applicable) of retail and credit protection insurance, disposal gains and other
non-product-specific income. |
2
|
‘Net operating income’ means net operating income before changes in expected credit losses and other credit impairment charges (also referred to as ‘Revenue’).
|
Management view of adjusted revenue
|
|||||||||||
|
|
Quarter ended
|
|||||||||
|
|
31 Mar
|
|
31 Dec
|
|
31 Mar
|
|
Variance
|
|||
|
|
2020
|
|
2019
|
|
2019
|
|
1Q20 vs. 1Q19
|
|||
|
Footnotes
|
$m
|
|
$m
|
|
$m
|
|
$m
|
|
%
|
|
Global Trade and Receivables Finance
|
|
469
|
|
431
|
|
461
|
|
8
|
|
2
|
|
Credit and Lending
|
|
1,382
|
|
1,322
|
|
1,337
|
|
45
|
|
3
|
|
Global Liquidity and Cash Management
|
|
1,333
|
|
1,422
|
|
1,486
|
|
(153
|
)
|
(10
|
)
|
Markets products, Insurance and Investments, and Other
|
1
|
478
|
|
496
|
|
574
|
|
(96
|
)
|
(17
|
)
|
Net operating income
|
2
|
3,662
|
|
3,671
|
|
3,858
|
|
(196
|
)
|
(5
|
)
|
RoTE excluding significant items and UK bank levy (annualised) (%)
|
|
4.1
|
|
|
13.9
|
|
|
|
1
|
Includes revenue from Foreign Exchange, insurance manufacturing and distribution, interest rate management and Global Banking products.
|
2
|
‘Net operating income’ means net operating income before changes in expected credit losses and other credit impairment charges (also referred to as ‘Revenue’).
|
HSBC Holdings plc Earnings Release 1Q20
|
9
|
Management view of adjusted revenue
|
|||||||||||
|
|
Quarter ended
|
|||||||||
|
|
31 Mar
|
|
31 Dec
|
|
31 Mar
|
|
Variance
|
|||
|
|
2020
|
|
2019
|
|
2019
|
|
1Q20 vs. 1Q19
|
|||
|
Footnotes
|
$m
|
|
$m
|
|
$m
|
|
$m
|
|
%
|
|
Global Markets
|
|
2,133
|
|
1,241
|
|
1,712
|
|
421
|
|
25
|
|
– FICC
|
|
1,844
|
|
1,067
|
|
1,340
|
|
504
|
|
38
|
|
Foreign Exchange
|
|
1,129
|
|
665
|
|
684
|
|
445
|
|
65
|
|
Rates
|
|
675
|
|
274
|
|
481
|
|
194
|
|
40
|
|
Credit
|
|
40
|
|
128
|
|
175
|
|
(135
|
)
|
(77
|
)
|
– Equities
|
|
289
|
|
174
|
|
372
|
|
(83
|
)
|
(22
|
)
|
Securities Services
|
|
510
|
|
516
|
|
472
|
|
38
|
|
8
|
|
Global Banking
|
|
942
|
|
982
|
|
921
|
|
21
|
|
2
|
|
Global Liquidity and Cash Management
|
|
608
|
|
670
|
|
677
|
|
(69
|
)
|
(10
|
)
|
Global Trade and Receivables Finance
|
|
193
|
|
196
|
|
205
|
|
(12
|
)
|
(6
|
)
|
Principal Investments
|
|
(235
|
)
|
45
|
|
83
|
|
(318
|
)
|
>(100)
|
|
Credit and funding valuation adjustments
|
|
(346
|
)
|
189
|
|
46
|
|
(392
|
)
|
>(100)
|
|
Other
|
1
|
(142
|
)
|
(120
|
)
|
(119
|
)
|
(23
|
)
|
(19
|
)
|
Net operating income
|
2
|
3,663
|
|
3,719
|
|
3,997
|
|
(334
|
)
|
(8
|
)
|
RoTE excluding significant items and UK bank levy (annualised) (%)
|
|
6.9
|
|
|
11.3
|
|
|
|
1
|
‘Other’ in GB&M includes allocated funding costs. Additionally, within the management view of total operating income, notional tax credits are allocated to the businesses to reflect the economic benefit generated by certain activities that are not reflected within operating income, such as notional credits on income earned from tax-exempt investments where the economic benefit of the activity is reflected in tax expense. In order to reflect the total operating income on an IFRS basis, the offset to these tax credits is included within ‘Other’.
|
2
|
‘Net operating income’ means net operating income before changes in expected credit losses and other credit impairment charges (also referred to as ‘Revenue’).
|
Management view of adjusted revenue
|
|||||||||||
|
|
Quarter ended
|
|||||||||
|
|
31 Mar
|
|
31 Dec
|
|
31 Mar
|
|
Variance
|
|||
|
|
2020
|
|
2019
|
|
2019
|
|
1Q20 vs. 1Q19
|
|||
|
Footnotes
|
$m
|
|
$m
|
|
$m
|
|
$m
|
|
%
|
|
Investment revenue
|
|
255
|
|
188
|
|
185
|
|
70
|
|
38
|
|
Lending
|
|
113
|
|
111
|
|
97
|
|
16
|
|
16
|
|
Deposit
|
|
103
|
|
111
|
|
121
|
|
(18
|
)
|
(15
|
)
|
Other
|
|
40
|
|
44
|
|
48
|
|
(8
|
)
|
(17
|
)
|
Net operating income
|
1
|
511
|
|
454
|
|
451
|
|
60
|
|
13
|
|
RoTE excluding significant items and UK bank levy (annualised) (%)
|
|
15.8
|
|
|
10.9
|
|
|
|
1
|
‘Net operating income’ means net operating income before changes in expected credit losses and other credit impairment charges (also referred to as ‘Revenue’).
|
10
|
HSBC Holdings plc Earnings Release 1Q20
|
Management view of adjusted revenue
|
|||||||||||
|
|
Quarter ended
|
|||||||||
|
|
31 Mar
|
|
31 Dec
|
|
31 Mar
|
|
Variance
|
|||
|
|
2020
|
|
2019
|
|
2019
|
|
1Q20 vs. 1Q19
|
|||
|
Footnotes
|
$m
|
|
$m
|
|
$m
|
|
$m
|
|
%
|
|
Central Treasury
|
|
699
|
|
(19
|
)
|
269
|
|
430
|
|
>100
|
|
– Balance Sheet Management
|
1
|
829
|
|
450
|
|
608
|
|
221
|
|
36
|
|
– Holdings net interest expanses
|
|
(321
|
)
|
(318
|
)
|
(338
|
)
|
17
|
|
5
|
|
– valuation differences on long-term debt and associated swaps
|
|
259
|
|
(73
|
)
|
50
|
|
209
|
|
>100
|
|
– other central treasury
|
|
(68
|
)
|
(78
|
)
|
(51
|
)
|
(17
|
)
|
(33
|
)
|
Legacy portfolios
|
|
(91
|
)
|
13
|
|
(70
|
)
|
(21
|
)
|
(30
|
)
|
Other
|
|
14
|
|
(80
|
)
|
(211
|
)
|
225
|
|
>100
|
|
Net operating income
|
2
|
622
|
|
(86
|
)
|
(12
|
)
|
634
|
|
>100
|
|
RoTE excluding significant items and UK bank levy (annualised) (%)
|
|
0.9
|
|
|
(6.7
|
)
|
|
|
1
|
Balance Sheet Management revenue includes other internal allocations to reflect the economic benefit generated by certain activities, which is not reflected within operating income, such as notional credits on income earned from tax-exempt investments where the economic benefit of the activity is reflected in tax expense. In order to reflect the total operating income on an IFRS basis, the offset to these tax credits is included in 'other central treasury'.
|
2
|
‘Net operating income’ means net operating income before changes in expected credit losses and other credit impairment charges (also referred to as ‘Revenue’).
|
HSBC Holdings plc Earnings Release 1Q20
|
11
|
|
|
Quarter ended
|
Full year to
|
|
|||||
|
|
31 Mar
|
|
31 Dec
|
|
31 Mar
|
|
31 Dec
|
|
|
|
2020
|
|
2019
|
|
2019
|
|
2019
|
|
|
Footnotes
|
$m
|
|
$m
|
|
$m
|
|
$m
|
|
Net interest income
|
|
7,612
|
|
7,654
|
|
7,468
|
|
30,462
|
|
Average interest-earning assets
|
|
1,991,702
|
|
1,945,596
|
|
1,902,912
|
|
1,922,822
|
|
|
|
%
|
|
%
|
|
%
|
|
%
|
|
Gross interest yield
|
1
|
2.55
|
|
2.70
|
|
2.89
|
|
2.84
|
|
Less: cost of funds
|
1
|
(1.19
|
)
|
(1.34
|
)
|
(1.53
|
)
|
(1.48
|
)
|
Net interest spread
|
2
|
1.36
|
|
1.36
|
|
1.36
|
|
1.36
|
|
Net interest margin
|
3
|
1.54
|
|
1.56
|
|
1.59
|
|
1.58
|
|
1
|
Gross interest yield is the average annualised interest rate earned on average interest-earning assets (‘AIEA’). Cost of funds is the average annualised interest cost as a percentage of average interest-bearing liabilities.
|
2
|
Net interest spread is the difference between the average annualised interest rate earned on AIEA, net of amortised premiums and loan fees, and the average annualised interest rate payable on average interest-bearing funds.
|
3
|
Net interest margin is net interest income expressed as an annualised percentage of AIEA.
|
Return on Equity and Return on Tangible Equity
|
||||||
|
Quarter ended
|
|||||
|
31 Mar
|
|
31 Dec
|
|
31 Mar
|
|
|
2020
|
|
2019
|
|
2019
|
|
|
$m
|
|
$m
|
|
$m
|
|
Profit
|
|
|
|
|||
Profit attributable to the ordinary shareholders of the parent company
|
1,785
|
|
(5,509
|
)
|
4,134
|
|
Goodwill impairment
|
—
|
|
7,349
|
|
—
|
|
Increase in PVIF (net of tax)
|
(254
|
)
|
42
|
|
(446
|
)
|
Profit attributable to the ordinary shareholders, excluding goodwill impairment and PVIF
|
1,531
|
|
1,882
|
|
3,688
|
|
Significant items (net of tax) and bank levy
|
11
|
|
|
105
|
|
|
Profit attributable to the ordinary shareholders, excluding goodwill impairment, PVIF, significant items and UK bank levy
|
1,542
|
|
|
|
3,793
|
|
Equity
|
|
|
|
|||
Average ordinary shareholders’ equity
|
164,566
|
|
163,822
|
|
163,769
|
|
Effect of goodwill, PVIF and other intangibles (net of deferred tax)
|
(17,484
|
)
|
(20,724
|
)
|
(22,683
|
)
|
Average tangible equity
|
147,082
|
|
143,098
|
|
141,086
|
|
Fair value of own debt, DVA and other adjustments
|
(373
|
)
|
|
|
423
|
|
Average tangible equity excluding fair value of own debt, DVA and other adjustments
|
146,709
|
|
|
|
141,509
|
|
|
%
|
|
%
|
|
%
|
|
Ratio
|
|
|
|
|||
Return on equity
|
4.4
|
|
(13.30
|
)
|
10.2
|
|
Return on tangible equity (annualised)
|
4.2
|
|
5.2
|
|
10.6
|
|
Return on tangible equity excluding significant items and UK bank levy (annualised)
|
4.2
|
|
|
|
10.9
|
|
12
|
HSBC Holdings plc Earnings Release 1Q20
|
Return on Tangible Equity by global business
|
||||||||||||
|
Quarter ended 31 Mar 2020
|
|||||||||||
|
Retail Banking and Wealth Management
|
|
Commercial Banking
|
|
Global Banking and Markets
|
|
Global Private Banking
|
|
Corporate Centre
|
|
Total
|
|
|
$m
|
|
$m
|
|
$m
|
|
$m
|
|
$m
|
|
$m
|
|
Profit before tax
|
343
|
|
609
|
|
995
|
|
120
|
|
1,162
|
|
3,229
|
|
Tax expense
|
(38
|
)
|
(149
|
)
|
(167
|
)
|
(21
|
)
|
(346
|
)
|
(721
|
)
|
Profit after tax
|
305
|
|
460
|
|
828
|
|
99
|
|
816
|
|
2,508
|
|
Less attributable to: preference shareholders, other equity holders, non-controlling interests
|
(149
|
)
|
(168
|
)
|
(120
|
)
|
(3
|
)
|
(283
|
)
|
(723
|
)
|
Profit attributable to ordinary shareholders of the parent company
|
156
|
|
292
|
|
708
|
|
96
|
|
533
|
|
1,785
|
|
Increase in PVIF (net of tax)
|
(241
|
)
|
(16
|
)
|
—
|
|
4
|
|
(1
|
)
|
(254
|
)
|
Significant items (net of tax) and UK bank levy
|
11
|
|
2
|
|
(133
|
)
|
—
|
|
(63
|
)
|
(183
|
)
|
Balance Sheet Management allocation and other adjustments
|
166
|
|
180
|
|
240
|
|
16
|
|
(408
|
)
|
194
|
|
Profit attributable to ordinary shareholders, excluding PVIF, significant items and UK bank levy
|
92
|
|
458
|
|
815
|
|
116
|
|
61
|
|
1,542
|
|
Average tangible shareholders’ equity excluding fair value of own debt, DVA and other adjustments
|
24,905
|
|
44,623
|
|
47,727
|
|
2,958
|
|
26,496
|
|
146,709
|
|
RoTE excluding significant items and UK bank levy (annualised) (%)
|
1.5
|
|
4.1
|
|
6.9
|
|
15.8
|
|
0.9
|
|
4.2
|
|
|
||||||||||||
|
Quarter ended 31 Mar 2019
|
|||||||||||
Profit before tax
|
2,174
|
|
2,012
|
|
1,535
|
|
96
|
|
396
|
|
6,213
|
|
Tax expense
|
(410
|
)
|
(430
|
)
|
(307
|
)
|
(18
|
)
|
(138
|
)
|
(1,303
|
)
|
Profit after tax
|
1,764
|
|
1,582
|
|
1,228
|
|
78
|
|
258
|
|
4,910
|
|
Less attributable to: preference shareholders, other equity holders, non-controlling interests
|
(230
|
)
|
(241
|
)
|
(164
|
)
|
(5
|
)
|
(136
|
)
|
(776
|
)
|
Profit attributable to ordinary shareholders of the parent company
|
1,534
|
|
1,341
|
|
1,064
|
|
73
|
|
122
|
|
4,134
|
|
Increase in PVIF (net of tax)
|
(424
|
)
|
(22
|
)
|
—
|
|
—
|
|
—
|
|
(446
|
)
|
Significant items (net of tax) and UK bank levy
|
41
|
|
3
|
|
79
|
|
2
|
|
(20
|
)
|
105
|
|
Balance Sheet Management allocation and other adjustments
|
147
|
|
147
|
|
184
|
|
14
|
|
(492
|
)
|
—
|
|
Profit attributable to ordinary shareholders, excluding PVIF, significant items and bank levy
|
1,298
|
|
1,469
|
|
1,327
|
|
89
|
|
(390
|
)
|
3,793
|
|
Average tangible shareholders’ equity excluding fair value of own debt, DVA and other adjustments
|
23,800
|
|
42,916
|
|
47,743
|
|
3,330
|
|
23,720
|
|
141,509
|
|
RoTE excluding significant items and UK bank levy (annualised) (%)
|
22.1
|
|
13.9
|
|
11.3
|
|
10.9
|
|
(6.7)
|
|
10.9
|
|
•
|
Income statement comparisons, unless stated otherwise, are between the quarter ended 31 March 2020 and the quarter ended
31 March 2019. Balance sheet comparisons, unless otherwise stated, are between balances at 31 March 2020 and the corresponding balances at 31 December 2019. |
•
|
The financial information on which this Earnings Release is based, and the data set out in the appendix to this statement, are unaudited and have been prepared in accordance with our significant accounting policies as described on pages 240 to 251 of our Annual Report and Accounts 2019.
|
•
|
On 31 March 2020, HSBC announced that, in response to a request from the Bank of England through the UK's Prudential Regulation Authority (‘PRA’), the Board had cancelled the fourth interim dividend of $0.21 per ordinary share, which was scheduled to be paid on 14 April 2020. The Board also announced that until the end of 2020 HSBC will make no quarterly or interim dividend payments or accruals in respect of ordinary shares. As previously disclosed on 18 February 2020 in the Annual Report and Accounts 2019, we also plan to suspend share buy-backs in respect of ordinary shares in 2020 and 2021.
|
•
|
The Board will review our dividend policy at or ahead of the year-end results for 2020, when the economic impact of the pandemic is better understood. We will also take into account the views of our shareholders, the interests of our other stakeholders and other factors, including our financial performance and capital position.
|
Cautionary statement regarding forward-looking statements
|
13
|
HSBC Holdings plc Earnings Release 1Q20
|
•
|
changes in general economic conditions in the markets in which we operate, such as continuing or deepening recessions and fluctuations in employment and creditworthy customers beyond those factored into consensus forecasts (including, without limitation, as a result of the Covid-19 outbreak); the Covid-19 outbreak, which could have adverse impacts on our income due to lower lending and transaction volumes, lower wealth and insurance manufacturing revenue, and lower interest rates globally, as well as, more generally, material adverse impacts on our financial condition, results of operations, prospects, liquidity, capital position and credit ratings; deviations from the market and economic assumptions that form the basis for our ECL measurements (including, without limitation, as a result of the Covid-19 outbreak); potential changes in future dividend policy; changes in foreign exchange rates and interest rates, including the accounting impact resulting from financial reporting in respect of hyperinflationary economies; volatility in equity markets; lack of liquidity in wholesale funding or capital markets, which may affect our ability to meet our obligations under financing facilities or to fund new loans, investments and businesses; other unfavourable political or diplomatic developments producing social instability or legal uncertainty, such as the unrest in Hong Kong, which in turn may affect demand for our products and services; climate change, which may cause both idiosyncratic and systemic risks resulting in potential financial impacts; illiquidity and downward price pressure in national real estate markets; adverse changes in central banks’ policies with respect to the provision of liquidity support to financial markets; heightened market concerns over sovereign creditworthiness in over-indebted countries; adverse changes in the funding status of public or private defined benefit pensions; consumer perception as to the continuing availability of credit; exposure to counterparty risk, including third parties using us as a conduit for illegal activities without our knowledge; the expected discontinuation of certain key Ibors and the development of alternative risk-free benchmark rates, which may require us to enhance our capital position and/or position additional capital in specific subsidiaries; and price competition in the market segments we serve;
|
•
|
changes in government policy and regulation, including the monetary, interest rate and other policies of central banks and other regulatory authorities in the principal markets in which we operate and the consequences thereof (including, without limitation, actions taken as a result of the Covid-19 outbreak); initiatives to change the size, scope of activities and interconnectedness of financial institutions in connection with the implementation of stricter regulation of financial institutions in key markets worldwide; revised capital and liquidity benchmarks, which could serve to deleverage bank balance sheets and lower returns available from the current business model and portfolio mix; imposition of levies or taxes designed to change business mix and risk appetite; the practices, pricing or responsibilities of financial institutions serving their consumer markets; expropriation, nationalisation, confiscation of assets and changes in legislation relating to foreign ownership; the UK’s exit from the EU, which may result in a prolonged period of uncertainty, unstable economic conditions and market volatility, including currency fluctuations; general changes in government policy that may significantly influence investor decisions; the costs, effects and outcomes of regulatory reviews, actions or litigation, including any additional compliance requirements; and the effects of competition in the markets where we operate including increased competition from non-bank financial services companies; and
|
•
|
factors specific to HSBC, including our success in adequately identifying the risks we face, such as the incidence of loan losses or delinquency, and managing those risks (through account management, hedging and other techniques); our ability to achieve our targets which may result in our failure to achieve any of the expected benefits of our strategic initiatives; model limitations or failure, which may require us to hold additional capital and incur losses; changes to the judgments, estimates and assumptions we base our financial statements on; changes in our ability to meet the requirements of regulatory stress tests; a reduction in the credit rating assigned to us or any of our subsidiaries, which could increase the cost or decrease the availability of our funding and affect our liquidity position and net interest margin; changes to the reliability and security of our data management, data privacy, information and technology infrastructure, including threats from cyber-attacks, which may impact our ability to service clients and may result in financial loss, business disruption and/or loss of customer services and data; changes in insurance customer behaviour and insurance claim rates; our dependence on loan payments and dividends from subsidiaries to meet our obligations; changes in accounting standards, which may have a material impact on the way we prepare our financial statements; changes in our ability to manage third-party, fraud and reputational risks inherent in our operations; employee misconduct, which may result in regulatory sanctions and/or reputational or financial harm; and changes in skill requirements, ways of working and talent shortages, which may affect our ability to recruit and retain senior management and skilled personnel. Effective risk management depends on, among other things, our ability through stress testing and other techniques to prepare for events that cannot be captured by the statistical models it uses; and our success in addressing operational, legal and regulatory, and litigation challenges; and other risks and uncertainties we identify in ‘Top and emerging risks’ on pages 76 to 81 of the Annual Report and Accounts 2019.
|
Investor Relations
|
Media Relations
|
UK – Richard O’Connor
|
UK – Heidi Ashley
|
Tel: +44 (0) 20 7991 6590
|
Tel: +44 (0) 20 7992 2045
|
|
|
Hong Kong – Mark Phin
|
Hong Kong – Patrick Humphris
|
Tel: +852 2822 4908
|
Tel: +852 2822 2052
|
14
|
HSBC Holdings plc Earnings Release 1Q20
|
Summary consolidated income statement
|
|
Quarter ended
|
|||||
|
31 Mar
|
|
31 Dec
|
|
31 Mar
|
|
|
2020
|
|
2019
|
|
2019
|
|
|
$m
|
|
$m
|
|
$m
|
|
Net interest income
|
7,612
|
|
7,654
|
|
7,468
|
|
Net fee income
|
3,123
|
|
2,938
|
|
3,026
|
|
Net income from financial instruments held for trading or managed on a fair value basis
|
3,364
|
|
2,354
|
|
2,881
|
|
Net income/(expense) from assets and liabilities of insurance businesses, including related derivatives, measured at fair value through profit or loss
|
(3,580
|
)
|
1,160
|
|
1,710
|
|
Changes in fair value of designated debt and related derivatives1
|
246
|
|
(59
|
)
|
11
|
|
Changes in fair value of other financial instruments mandatorily measured at fair value through profit or loss
|
(373
|
)
|
195
|
|
270
|
|
Gains less losses from financial investments
|
312
|
|
19
|
|
99
|
|
Net insurance premium income
|
2,910
|
|
1,589
|
|
3,296
|
|
Other operating income
|
404
|
|
22
|
|
858
|
|
Total operating income
|
14,018
|
|
15,872
|
|
19,619
|
|
Net insurance claims and benefits paid and movement in liabilities to policyholders
|
(332
|
)
|
(2,501
|
)
|
(5,191
|
)
|
Net operating income before change in expected credit losses and other credit impairment charges2
|
13,686
|
|
13,371
|
|
14,428
|
|
Change in expected credit losses and other credit impairment charges
|
(3,026
|
)
|
(733
|
)
|
(585
|
)
|
Net operating income
|
10,660
|
|
12,638
|
|
13,843
|
|
Total operating expenses excluding goodwill impairment
|
(7,852
|
)
|
(9,704
|
)
|
(8,222
|
)
|
Goodwill impairment
|
—
|
|
(7,349
|
)
|
—
|
|
Operating profit/(loss)
|
2,808
|
|
(4,415
|
)
|
5,621
|
|
Share of profit in associates and joint ventures
|
421
|
|
518
|
|
592
|
|
Profit/(loss) before tax
|
3,229
|
|
(3,897
|
)
|
6,213
|
|
Tax expense
|
(721
|
)
|
(1,127
|
)
|
(1,303
|
)
|
Profit/(loss) after tax
|
2,508
|
|
(5,024
|
)
|
4,910
|
|
Attributable to:
|
|
|
|
|
||
– ordinary shareholders of the parent company
|
1,785
|
|
(5,509
|
)
|
4,134
|
|
– preference shareholders of the parent company
|
22
|
|
23
|
|
22
|
|
– other equity holders
|
441
|
|
176
|
|
410
|
|
– non-controlling interests
|
260
|
|
286
|
|
344
|
|
Profit/(loss) after tax
|
2,508
|
|
(5,024
|
)
|
4,910
|
|
|
$
|
|
$
|
|
$
|
|
Basic earnings per share
|
0.09
|
|
(0.27
|
)
|
0.21
|
|
Diluted earnings per share
|
0.09
|
|
(0.27
|
)
|
0.21
|
|
Dividend per ordinary share (in respect of the period)3
|
—
|
|
—
|
|
0.10
|
|
|
%
|
|
%
|
|
%
|
|
Return on average ordinary shareholders’ equity (annualised)
|
4.4
|
|
(13.3
|
)
|
10.2
|
|
Return on average tangible equity (annualised)
|
4.2
|
|
5.2
|
|
10.6
|
|
Cost efficiency ratio
|
57.4
|
|
127.5
|
|
57.0
|
|
1
|
The debt instruments, issued for funding purposes, are designated under the fair value option to reduce an accounting mismatch.
|
2
|
Net operating income before change in expected credit losses and other credit impairment charges, also referred to as revenue.
|
3
|
Dividends recorded in the financial statements are dividends per ordinary share declared in a period and are not dividends in respect of, or for, that period.
|
HSBC Holdings plc Earnings Release 1Q20
|
15
|
Summary consolidated balance sheet
|
|
At
|
|||
|
31 Mar
|
|
31 Dec
|
|
|
2020
|
|
2019
|
|
|
$m
|
|
$m
|
|
Assets
|
|
|
||
Cash and balances at central banks
|
187,386
|
|
154,099
|
|
Trading assets
|
215,634
|
|
254,271
|
|
Financial assets designated and otherwise mandatorily measured at fair value through profit or loss
|
40,650
|
|
43,627
|
|
Derivatives
|
371,283
|
|
242,995
|
|
Loans and advances to banks
|
84,547
|
|
69,203
|
|
Loans and advances to customers1
|
1,040,282
|
|
1,036,743
|
|
Reverse repurchase agreements – non-trading
|
222,774
|
|
240,862
|
|
Financial investments
|
446,668
|
|
443,312
|
|
Other assets
|
308,586
|
|
230,040
|
|
Total assets
|
2,917,810
|
|
2,715,152
|
|
Liabilities and equity
|
|
|
|
|
Liabilities
|
|
|
|
|
Deposits by banks
|
75,504
|
|
59,022
|
|
Customer accounts
|
1,440,529
|
|
1,439,115
|
|
Repurchase agreements – non-trading
|
150,243
|
|
140,344
|
|
Trading liabilities
|
74,410
|
|
83,170
|
|
Financial liabilities designated at fair value
|
155,184
|
|
164,466
|
|
Derivatives
|
356,616
|
|
239,497
|
|
Debt securities in issue
|
99,410
|
|
104,555
|
|
Liabilities under insurance contracts
|
94,979
|
|
97,439
|
|
Other liabilities
|
272,664
|
|
194,876
|
|
Total liabilities
|
2,719,539
|
|
2,522,484
|
|
Equity
|
|
|
|
|
Total shareholders’ equity
|
189,771
|
|
183,955
|
|
Non-controlling interests
|
8,500
|
|
8,713
|
|
Total equity
|
198,271
|
|
192,668
|
|
Total liabilities and equity
|
2,917,810
|
|
2,715,152
|
|
1
|
Net of impairment allowances.
|
16
|
HSBC Holdings plc Earnings Release 1Q20
|
Credit risk
|
HSBC Holdings plc Earnings Release 1Q20
|
17
|
Summary of credit risk (excluding debt instruments measured at FVOCI) by stage distribution and ECL coverage by industry sector at
31 December 2019
|
|||||||||||||||||||||||||
|
Gross carrying/nominal amount1
|
|
Allowance for ECL
|
|
ECL coverage %
|
|
|||||||||||||||||||
|
Stage 1
|
|
Stage 2
|
|
Stage 3
|
|
POCI2
|
|
Total
|
|
Stage 1
|
|
Stage 2
|
|
Stage 3
|
|
POCI2
|
|
Total
|
|
Stage 1
|
Stage 2
|
Stage 3
|
POCI2
|
Total
|
|
$m
|
|
$m
|
|
$m
|
|
$m
|
|
$m
|
|
$m
|
|
$m
|
|
$m
|
|
$m
|
|
$m
|
|
%
|
%
|
%
|
%
|
%
|
Loans and advances to customers
|
951,583
|
|
80,182
|
|
13,378
|
|
332
|
|
1,045,475
|
|
(1,297
|
)
|
(2,284
|
)
|
(5,052
|
)
|
(99
|
)
|
(8,732
|
)
|
0.1
|
2.8
|
37.8
|
29.8
|
0.8
|
Personal
|
413,669
|
|
15,751
|
|
4,851
|
|
—
|
|
434,271
|
|
(583
|
)
|
(1,336
|
)
|
(1,215
|
)
|
—
|
|
(3,134
|
)
|
0.1
|
8.5
|
25.0
|
—
|
0.7
|
– Europe
|
186,561
|
|
6,854
|
|
2,335
|
|
—
|
|
195,750
|
|
(112
|
)
|
(538
|
)
|
(578
|
)
|
—
|
|
(1,228
|
)
|
0.1
|
7.8
|
24.8
|
—
|
0.6
|
of which: UK
|
153,313
|
|
5,455
|
|
1,612
|
|
—
|
|
160,380
|
|
(104
|
)
|
(513
|
)
|
(370
|
)
|
—
|
|
(987
|
)
|
0.1
|
9.4
|
23.0
|
—
|
0.6
|
of which:
UK first lien
mortgages
|
134,914
|
|
1,890
|
|
1,181
|
|
—
|
|
137,985
|
|
(16
|
)
|
(19
|
)
|
(124
|
)
|
—
|
|
(159
|
)
|
—
|
1.0
|
10.5
|
—
|
0.1
|
of which: UK
other personal
lending
|
18,399
|
|
3,565
|
|
431
|
|
—
|
|
22,395
|
|
(88
|
)
|
(494
|
)
|
(246
|
)
|
—
|
|
(828
|
)
|
0.5
|
13.9
|
57.1
|
—
|
3.7
|
– Asia
|
173,523
|
|
5,855
|
|
717
|
|
—
|
|
180,095
|
|
(223
|
)
|
(339
|
)
|
(170
|
)
|
—
|
|
(732
|
)
|
0.1
|
5.8
|
23.7
|
—
|
0.4
|
of which: Hong
Kong
|
117,013
|
|
2,751
|
|
189
|
|
—
|
|
119,953
|
|
(90
|
)
|
(220
|
)
|
(44
|
)
|
—
|
|
(354
|
)
|
0.1
|
8.0
|
23.3
|
—
|
0.3
|
of which:
Hong Kong
first lien
mortgages
|
85,732
|
|
1,116
|
|
43
|
|
—
|
|
86,891
|
|
(1
|
)
|
—
|
|
—
|
|
—
|
|
(1
|
)
|
—
|
—
|
—
|
—
|
—
|
of which: Hong
Kong other
personal
lending
|
31,281
|
|
1,635
|
|
146
|
|
—
|
|
33,062
|
|
(89
|
)
|
(220
|
)
|
(44
|
)
|
—
|
|
(353
|
)
|
0.3
|
13.5
|
30.1
|
—
|
1.1
|
– MENA
|
5,671
|
|
247
|
|
299
|
|
—
|
|
6,217
|
|
(50
|
)
|
(58
|
)
|
(189
|
)
|
—
|
|
(297
|
)
|
0.9
|
23.5
|
63.2
|
—
|
4.8
|
– North America
|
41,148
|
|
1,930
|
|
1,238
|
|
—
|
|
44,316
|
|
(56
|
)
|
(119
|
)
|
(141
|
)
|
—
|
|
(316
|
)
|
0.1
|
6.2
|
11.4
|
—
|
0.7
|
– Latin America
|
6,766
|
|
865
|
|
262
|
|
—
|
|
7,893
|
|
(142
|
)
|
(282
|
)
|
(137
|
)
|
—
|
|
(561
|
)
|
2.1
|
32.6
|
52.3
|
—
|
7.1
|
Corporate and
commercial
|
472,253
|
|
59,599
|
|
8,315
|
|
332
|
|
540,499
|
|
(672
|
)
|
(920
|
)
|
(3,747
|
)
|
(99
|
)
|
(5,438
|
)
|
0.1
|
1.5
|
45.1
|
29.8
|
1.0
|
– Europe
|
151,378
|
|
19,191
|
|
4,517
|
|
129
|
|
175,215
|
|
(288
|
)
|
(447
|
)
|
(1,524
|
)
|
(45
|
)
|
(2,304
|
)
|
0.2
|
2.3
|
33.7
|
34.9
|
1.3
|
of which: UK
|
108,052
|
|
15,346
|
|
3,283
|
|
79
|
|
126,760
|
|
(234
|
)
|
(379
|
)
|
(984
|
)
|
(32
|
)
|
(1,629
|
)
|
0.2
|
2.5
|
30.0
|
40.5
|
1.3
|
– Asia
|
237,553
|
|
28,607
|
|
1,401
|
|
148
|
|
267,709
|
|
(208
|
)
|
(237
|
)
|
(966
|
)
|
(38
|
)
|
(1,449
|
)
|
0.1
|
0.8
|
69.0
|
25.7
|
0.5
|
of which: Hong
Kong
|
147,162
|
|
20,515
|
|
655
|
|
48
|
|
168,380
|
|
(111
|
)
|
(156
|
)
|
(455
|
)
|
(28
|
)
|
(750
|
)
|
0.1
|
0.8
|
69.5
|
58.3
|
0.4
|
– MENA
|
18,476
|
|
3,302
|
|
1,651
|
|
18
|
|
23,447
|
|
(55
|
)
|
(86
|
)
|
(934
|
)
|
(12
|
)
|
(1,087
|
)
|
0.3
|
2.6
|
56.6
|
66.7
|
4.6
|
– North America
|
51,953
|
|
7,274
|
|
453
|
|
—
|
|
59,680
|
|
(43
|
)
|
(94
|
)
|
(137
|
)
|
—
|
|
(274
|
)
|
0.1
|
1.3
|
30.2
|
—
|
0.5
|
– Latin America
|
12,893
|
|
1,225
|
|
293
|
|
37
|
|
14,448
|
|
(78
|
)
|
(56
|
)
|
(186
|
)
|
(4
|
)
|
(324
|
)
|
0.6
|
4.6
|
63.5
|
10.8
|
2.2
|
Non-bank
financial
institutions
|
65,661
|
|
4,832
|
|
212
|
|
—
|
|
70,705
|
|
(42
|
)
|
(28
|
)
|
(90
|
)
|
—
|
|
(160
|
)
|
0.1
|
0.6
|
42.5
|
—
|
0.2
|
– Europe
|
25,345
|
|
1,000
|
|
153
|
|
—
|
|
26,498
|
|
(19
|
)
|
(9
|
)
|
(53
|
)
|
—
|
|
(81
|
)
|
0.1
|
0.9
|
34.6
|
—
|
0.3
|
of which: UK
|
17,613
|
|
874
|
|
58
|
|
—
|
|
18,545
|
|
(14
|
)
|
(7
|
)
|
(5
|
)
|
—
|
|
(26
|
)
|
0.1
|
0.8
|
8.6
|
—
|
0.1
|
– Asia
|
28,530
|
|
3,607
|
|
19
|
|
—
|
|
32,156
|
|
(17
|
)
|
(16
|
)
|
(19
|
)
|
—
|
|
(52
|
)
|
0.1
|
0.4
|
100.0
|
—
|
0.2
|
of which: Hong
Kong
|
16,589
|
|
3,168
|
|
19
|
|
—
|
|
19,776
|
|
(6
|
)
|
(15
|
)
|
(19
|
)
|
—
|
|
(40
|
)
|
—
|
0.5
|
100.0
|
—
|
0.2
|
– MENA
|
254
|
|
—
|
|
34
|
|
—
|
|
288
|
|
—
|
|
—
|
|
(13
|
)
|
—
|
|
(13
|
)
|
—
|
—
|
38.2
|
—
|
4.5
|
– North America
|
9,852
|
|
220
|
|
6
|
|
—
|
|
10,078
|
|
(3
|
)
|
(3
|
)
|
(5
|
)
|
—
|
|
(11
|
)
|
—
|
1.4
|
83.3
|
—
|
0.1
|
– Latin America
|
1,680
|
|
5
|
|
—
|
|
—
|
|
1,685
|
|
(3
|
)
|
—
|
|
—
|
|
—
|
|
(3
|
)
|
0.2
|
—
|
—
|
—
|
0.2
|
Loans and advances to banks
|
67,769
|
|
1,450
|
|
—
|
|
—
|
|
69,219
|
|
(14
|
)
|
(2
|
)
|
—
|
|
—
|
|
(16
|
)
|
—
|
0.1
|
—
|
—
|
—
|
Other financial assets at amortised cost
|
613,200
|
|
1,827
|
|
151
|
|
1
|
|
615,179
|
|
(38
|
)
|
(38
|
)
|
(42
|
)
|
—
|
|
(118
|
)
|
—
|
2.1
|
27.8
|
—
|
—
|
Loan and other credit-related commitments
|
577,631
|
|
21,618
|
|
771
|
|
9
|
|
600,029
|
|
(137
|
)
|
(133
|
)
|
(59
|
)
|
—
|
|
(329
|
)
|
—
|
0.6
|
7.7
|
—
|
0.1
|
– personal
|
221,490
|
|
1,630
|
|
194
|
|
—
|
|
223,314
|
|
(13
|
)
|
(2
|
)
|
—
|
|
—
|
|
(15
|
)
|
—
|
0.1
|
—
|
—
|
—
|
– corporate and commercial
|
259,138
|
|
18,804
|
|
573
|
|
9
|
|
278,524
|
|
(118
|
)
|
(130
|
)
|
(59
|
)
|
—
|
|
(307
|
)
|
—
|
0.7
|
10.3
|
—
|
0.1
|
– financial
|
97,003
|
|
1,184
|
|
4
|
|
—
|
|
98,191
|
|
(6
|
)
|
(1
|
)
|
—
|
|
—
|
|
(7
|
)
|
—
|
0.1
|
—
|
—
|
—
|
Financial guarantees
|
17,684
|
|
2,340
|
|
186
|
|
4
|
|
20,214
|
|
(16
|
)
|
(22
|
)
|
(10
|
)
|
—
|
|
(48
|
)
|
0.1
|
0.9
|
5.4
|
—
|
0.2
|
– personal
|
802
|
|
1
|
|
1
|
|
—
|
|
804
|
|
(1
|
)
|
—
|
|
—
|
|
—
|
|
(1
|
)
|
0.1
|
—
|
—
|
—
|
0.1
|
– corporate and commercial
|
12,540
|
|
2,076
|
|
184
|
|
4
|
|
14,804
|
|
(14
|
)
|
(21
|
)
|
(9
|
)
|
—
|
|
(44
|
)
|
0.1
|
1.0
|
4.9
|
—
|
0.3
|
– financial
|
4,342
|
|
263
|
|
1
|
|
—
|
|
4,606
|
|
(1
|
)
|
(1
|
)
|
(1
|
)
|
—
|
|
(3
|
)
|
—
|
0.4
|
100.0
|
—
|
0.1
|
At 31 Dec 2019
|
2,227,867
|
|
107,417
|
|
14,486
|
|
346
|
|
2,350,116
|
|
(1,502
|
)
|
(2,479
|
)
|
(5,163
|
)
|
(99
|
)
|
(9,243
|
)
|
0.1
|
2.3
|
35.6
|
28.6
|
0.4
|
1
|
Represents the maximum amount at risk should the contracts be fully drawn upon and clients default.
|
2
|
Purchased or originated credit-impaired ('POCI').
|
18
|
HSBC Holdings plc Earnings Release 1Q20
|
1
|
Includes Insurance and other central Group portfolios.
|
2
|
The consensus probability-weighted ECL includes adjustments related to the 4Q19 UK alternative Downside scenario of $311m and Asia-Pacific alternative Downside scenario of $180m. The 1Q20 incremental Covid-19 scenario impact is shown net of the removal of these adjustments.
|
•
|
Mild: This scenario models brief recessions in most of our major markets followed by an extended period of low growth. Temporary restrictions in activity lead to a rise in unemployment, a short-lived contraction in equity markets and a slowdown in house price growth. Hong Kong GDP growth is expected to have reached a low point in 1Q20, with positive GDP growth expected by 3Q20, while UK and US GDP growth are expected to reach a low point in 2Q20, with positive GDP growth expected by 1Q21.
|
•
|
Moderate: This scenario models a deeper and longer recession across our major markets. There is a strong rise in unemployment across some of our major markets and significant contractions in equity markets and house prices in 2020. Hong Kong GDP growth is expected to have reached a low point in 1Q20, with positive GDP growth expected by 4Q20, while UK and US GDP growth are expected to reach a low point in 2Q20 and 3Q20, respectively, with positive GDP growth expected by 1Q21.
|
•
|
Severe: The severe scenario models a deep and more prolonged recession, with a slow recovery across our major markets. Restrictions in activity and a more prolonged recession lead to a sharp rise in unemployment across our major markets. House prices and equity markets undergo very significant contractions in 2020. Hong Kong GDP growth is expected to have reached a low point in 2Q20, with positive GDP growth expected by 2Q21, while UK and US GDP growth is expected to reach a low point in 2Q20 and 3Q20, respectively, with positive GDP growth expected by 2Q21.
|
1
|
Based on 4Q19 estimates.
|
HSBC Holdings plc Earnings Release 1Q20
|
19
|
Capital adequacy
|
Capital adequacy metrics
|
||||
|
At
|
|||
|
31 Mar
|
|
31 Dec
|
|
|
2020
|
|
2019
|
|
Risk-weighted assets ('RWAs') ($bn)
|
|
|
||
Credit risk (excluding counterparty credit risk)
|
685.6
|
|
676.6
|
|
Counterparty credit risk
|
47.5
|
|
44.1
|
|
Market risk
|
34.8
|
|
29.9
|
|
Operational risk
|
89.2
|
|
92.8
|
|
Total risk-weighted assets
|
857.1
|
|
843.4
|
|
Capital on a transitional basis ($bn)
|
|
|
||
Common equity tier 1 (‘CET1’) capital
|
125.2
|
|
124.0
|
|
Tier 1 capital
|
149.2
|
|
148.4
|
|
Total capital
|
174.0
|
|
172.2
|
|
Capital ratios on a transitional basis (%)
|
|
|
||
CET1
|
14.6
|
|
14.7
|
|
Tier 1
|
17.4
|
|
17.6
|
|
Total capital
|
20.3
|
|
20.4
|
|
Capital on an end point basis ($bn)
|
|
|
||
Common equity tier 1 (‘CET1’) capital
|
125.2
|
|
124.0
|
|
Tier 1 capital
|
146.1
|
|
144.8
|
|
Total capital
|
161.1
|
|
159.3
|
|
Capital ratios on an end point basis (%)
|
|
|
||
CET1
|
14.6
|
|
14.7
|
|
Tier 1
|
17.0
|
|
17.2
|
|
Total capital
|
18.8
|
|
18.9
|
|
Liquidity coverage ratio (‘LCR’)
|
|
|
||
Total high-quality liquid assets ($bn)
|
617.2
|
|
601.4
|
|
Total net cash outflow ($bn)
|
395.0
|
|
400.5
|
|
LCR ratio (%)
|
156.3
|
|
150.2
|
|
•
|
the increase in loan loss allowances on day one of IFRS 9 adoption; and
|
•
|
any subsequent increase in expected credit losses (‘ECL’) in the non-credit-impaired book thereafter.
|
•
|
the cancellation of the 4Q19 unpaid dividend of $3.4bn at the PRA’s request;
|
•
|
capital generation of $1.9bn through profits;
|
•
|
a $0.9bn increase in FVOCI reserves; and
|
•
|
a fall in the deduction for excess expected loss of $0.7bn.
|
•
|
foreign currency translation differences of $4.7bn; and
|
•
|
a $0.5bn increase in the deduction for prudent valuation adjustment.
|
20
|
HSBC Holdings plc Earnings Release 1Q20
|
Leverage
|
1
|
UK leverage ratio denotes the Group’s leverage ratio calculated under the PRA’s UK leverage framework and excludes qualifying central bank balances from the calculation of exposure.
|
Risk-weighted assets
|
RWAs by global business
|
||||||||||||
|
RBWM
|
|
CMB
|
|
GB&M
|
|
GPB
|
|
Corporate
Centre |
|
Total
|
|
|
$bn
|
|
$bn
|
|
$bn
|
|
$bn
|
|
$bn
|
|
$bn
|
|
Credit risk
|
102.2
|
|
291.8
|
|
165.3
|
|
11.2
|
|
115.1
|
|
685.6
|
|
Counterparty credit risk
|
—
|
|
—
|
|
45.9
|
|
0.2
|
|
1.4
|
|
47.5
|
|
Market risk
|
—
|
|
—
|
|
28.3
|
|
—
|
|
6.5
|
|
34.8
|
|
Operational risk
|
29.1
|
|
25.0
|
|
29.6
|
|
2.7
|
|
2.8
|
|
89.2
|
|
At 31 Mar 2020
|
131.3
|
|
316.8
|
|
269.1
|
|
14.1
|
|
125.8
|
|
857.1
|
|
|
|
|
|
|
|
|
||||||
Credit risk
|
103.8
|
|
290.8
|
|
161.1
|
|
11.0
|
|
109.9
|
|
676.6
|
|
Counterparty credit risk
|
—
|
|
—
|
|
42.7
|
|
0.2
|
|
1.2
|
|
44.1
|
|
Market risk
|
—
|
|
—
|
|
23.6
|
|
—
|
|
6.3
|
|
29.9
|
|
Operational risk
|
30.2
|
|
25.9
|
|
30.8
|
|
2.8
|
|
3.1
|
|
92.8
|
|
At 31 Dec 2019
|
134.0
|
|
316.7
|
|
258.2
|
|
14.0
|
|
120.5
|
|
843.4
|
|
HSBC Holdings plc Earnings Release 1Q20
|
21
|
22
|
HSBC Holdings plc Earnings Release 1Q20
|
Summary information – global businesses
|
1
|
Net operating income before change in expected credit losses and other credit impairment charges, also referred to as revenue.
|
2
|
Fair value movements on financial instruments include non-qualifying hedges and debt valuation adjustments on derivatives.
|
HSBC Holdings plc Earnings Release 1Q20
|
23
|
Reconciliation of reported results to adjusted results – global businesses (continued)
|
|||||||||||||
|
|
Quarter ended 31 Dec 2019
|
|||||||||||
|
|
Retail Banking
and Wealth Management |
|
Commercial
Banking |
|
Global Banking
and Markets
|
|
Global Private
Banking |
|
Corporate Centre
|
|
Total
|
|
|
Footnotes
|
$m
|
|
$m
|
|
$m
|
|
$m
|
|
$m
|
|
$m
|
|
Revenue
|
1
|
|
|
|
|
|
|
||||||
Reported
|
|
5,758
|
|
3,687
|
|
3,697
|
|
452
|
|
(223
|
)
|
13,371
|
|
Currency translation
|
|
(24
|
)
|
(13
|
)
|
(21
|
)
|
2
|
|
(10
|
)
|
(66
|
)
|
Significant items
|
|
94
|
|
(3
|
)
|
43
|
|
—
|
|
147
|
|
281
|
|
– customer redress programmes
|
|
47
|
|
(2
|
)
|
—
|
|
—
|
|
—
|
|
45
|
|
– disposals, acquisitions and investment in new businesses
|
|
48
|
|
—
|
|
—
|
|
—
|
|
7
|
|
55
|
|
– fair value movements on financial instruments
|
2
|
—
|
|
—
|
|
43
|
|
—
|
|
133
|
|
176
|
|
– currency translation on significant items
|
|
(1
|
)
|
(1
|
)
|
—
|
|
—
|
|
7
|
|
5
|
|
Adjusted
|
|
5,828
|
|
3,671
|
|
3,719
|
|
454
|
|
(86
|
)
|
13,586
|
|
ECL
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reported
|
|
(401
|
)
|
(277
|
)
|
(32
|
)
|
3
|
|
(26
|
)
|
(733
|
)
|
Currency translation
|
|
8
|
|
2
|
|
(1
|
)
|
—
|
|
2
|
|
11
|
|
Adjusted
|
|
(393
|
)
|
(275
|
)
|
(33
|
)
|
3
|
|
(24
|
)
|
(722
|
)
|
Operating expenses
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reported
|
|
(3,824
|
)
|
(4,740
|
)
|
(6,484
|
)
|
(811
|
)
|
(1,194
|
)
|
(17,053
|
)
|
Currency translation
|
|
25
|
|
12
|
|
14
|
|
2
|
|
1
|
|
54
|
|
Significant items
|
|
273
|
|
2,978
|
|
4,056
|
|
438
|
|
211
|
|
7,956
|
|
– costs of structural reform
|
3
|
—
|
|
—
|
|
5
|
|
—
|
|
27
|
|
32
|
|
– customer redress programmes
|
|
181
|
|
2
|
|
—
|
|
—
|
|
—
|
|
183
|
|
– goodwill impairment
|
|
—
|
|
2,956
|
|
3,962
|
|
431
|
|
—
|
|
7,349
|
|
– restructuring and other related costs
|
|
98
|
|
24
|
|
88
|
|
12
|
|
178
|
|
400
|
|
– settlements and provisions in connection with legal and regulatory matters
|
|
—
|
|
—
|
|
2
|
|
(4
|
)
|
7
|
|
5
|
|
– currency translation on significant items
|
|
(6
|
)
|
(4
|
)
|
(1
|
)
|
(1
|
)
|
(1
|
)
|
(13
|
)
|
Adjusted
|
|
(3,526
|
)
|
(1,750
|
)
|
(2,414
|
)
|
(371
|
)
|
(982
|
)
|
(9,043
|
)
|
Share of profit in associates and joint ventures
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reported
|
|
4
|
|
—
|
|
—
|
|
—
|
|
514
|
|
518
|
|
Currency translation
|
|
1
|
|
—
|
|
—
|
|
—
|
|
3
|
|
4
|
|
Adjusted
|
|
5
|
|
—
|
|
—
|
|
—
|
|
517
|
|
522
|
|
Profit/(loss) before tax
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reported
|
|
1,537
|
|
(1,330
|
)
|
(2,819
|
)
|
(356
|
)
|
(929
|
)
|
(3,897
|
)
|
Currency translation
|
|
10
|
|
1
|
|
(8
|
)
|
4
|
|
(4
|
)
|
3
|
|
Significant items
|
|
367
|
|
2,975
|
|
4,099
|
|
438
|
|
358
|
|
8,237
|
|
– revenue
|
|
94
|
|
(3
|
)
|
43
|
|
—
|
|
147
|
|
281
|
|
– operating expenses
|
|
273
|
|
2,978
|
|
4,056
|
|
438
|
|
211
|
|
7,956
|
|
Adjusted
|
|
1,914
|
|
1,646
|
|
1,272
|
|
86
|
|
(575
|
)
|
4,343
|
|
Loans and advances to customers (net)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reported
|
|
395,393
|
|
346,060
|
|
246,266
|
|
47,593
|
|
1,431
|
|
1,036,743
|
|
Currency translation
|
|
(16,403
|
)
|
(11,995
|
)
|
(7,764
|
)
|
(782
|
)
|
(68
|
)
|
(37,012
|
)
|
Adjusted
|
|
378,990
|
|
334,065
|
|
238,502
|
|
46,811
|
|
1,363
|
|
999,731
|
|
Customer accounts
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reported
|
|
689,283
|
|
386,522
|
|
292,284
|
|
62,943
|
|
8,083
|
|
1,439,115
|
|
Currency translation
|
|
(19,667
|
)
|
(12,403
|
)
|
(11,205
|
)
|
(1,404
|
)
|
(774
|
)
|
(45,453
|
)
|
Adjusted
|
|
669,616
|
|
374,119
|
|
281,079
|
|
61,539
|
|
7,309
|
|
1,393,662
|
|
1
|
Net operating income before change in expected credit losses and other credit impairment charges, also referred to as revenue.
|
2
|
Fair value movements on financial instruments include non-qualifying hedges and debt valuation adjustments on derivatives.
|
3
|
Comprises costs associated with preparations for the UK’s exit from the European Union.
|
24
|
HSBC Holdings plc Earnings Release 1Q20
|
Reconciliation of reported results to adjusted results – global businesses (continued)
|
|||||||||||||
|
|
Quarter ended 31 Mar 2019
|
|||||||||||
|
|
Retail Banking
and Wealth Management |
|
Commercial
Banking |
|
Global Banking
and Markets |
|
Global Private
Banking |
|
Corporate
Centre |
|
Total
|
|
|
Footnotes
|
$m
|
|
$m
|
|
$m
|
|
$m
|
|
$m
|
|
$m
|
|
Revenue
|
1
|
|
|
|
|
|
|
|
|
|
|
|
|
Reported
|
|
5,971
|
|
3,921
|
|
4,015
|
|
450
|
|
71
|
|
14,428
|
|
Currency translation
|
|
(116
|
)
|
(63
|
)
|
(70
|
)
|
1
|
|
(9
|
)
|
(257
|
)
|
Significant items
|
|
—
|
|
—
|
|
52
|
|
—
|
|
(74
|
)
|
(22
|
)
|
– fair value movement on financial instruments
|
2
|
—
|
|
—
|
|
53
|
|
—
|
|
(75
|
)
|
(22
|
)
|
– currency translation on significant items
|
|
—
|
|
—
|
|
(1
|
)
|
—
|
|
1
|
|
—
|
|
Adjusted
|
|
5,855
|
|
3,858
|
|
3,997
|
|
451
|
|
(12
|
)
|
14,149
|
|
ECL
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reported
|
|
(302
|
)
|
(247
|
)
|
(40
|
)
|
(2
|
)
|
6
|
|
(585
|
)
|
Currency translation
|
|
8
|
|
7
|
|
1
|
|
—
|
|
—
|
|
16
|
|
Adjusted
|
|
(294
|
)
|
(240
|
)
|
(39
|
)
|
(2
|
)
|
6
|
|
(569
|
)
|
Operating expenses
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reported
|
|
(3,508
|
)
|
(1,662
|
)
|
(2,440
|
)
|
(352
|
)
|
(260
|
)
|
(8,222
|
)
|
Currency translation
|
|
74
|
|
32
|
|
43
|
|
(1
|
)
|
8
|
|
156
|
|
Significant items
|
|
56
|
|
4
|
|
50
|
|
2
|
|
43
|
|
155
|
|
– costs of structural reform
|
3
|
—
|
|
2
|
|
13
|
|
—
|
|
38
|
|
53
|
|
– customer redress programmes
|
|
56
|
|
—
|
|
—
|
|
—
|
|
—
|
|
56
|
|
– restructuring and other related costs
|
|
1
|
|
2
|
|
38
|
|
2
|
|
7
|
|
50
|
|
– currency translation on significant items
|
|
(1
|
)
|
—
|
|
(1
|
)
|
—
|
|
(2
|
)
|
(4
|
)
|
Adjusted
|
|
(3,378
|
)
|
(1,626
|
)
|
(2,347
|
)
|
(351
|
)
|
(209
|
)
|
(7,911
|
)
|
Share of profit in associates and joint ventures
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reported
|
|
13
|
|
—
|
|
—
|
|
—
|
|
579
|
|
592
|
|
Currency translation
|
|
(1
|
)
|
—
|
|
—
|
|
—
|
|
(14
|
)
|
(15
|
)
|
Adjusted
|
|
12
|
|
—
|
|
—
|
|
—
|
|
565
|
|
577
|
|
Profit before tax
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reported
|
|
2,174
|
|
2,012
|
|
1,535
|
|
96
|
|
396
|
|
6,213
|
|
Currency translation
|
|
(35
|
)
|
(24
|
)
|
(26
|
)
|
—
|
|
(15
|
)
|
(100
|
)
|
Significant items
|
|
56
|
|
4
|
|
102
|
|
2
|
|
(31
|
)
|
133
|
|
– revenue
|
|
—
|
|
—
|
|
52
|
|
—
|
|
(74
|
)
|
(22
|
)
|
– operating expenses
|
|
56
|
|
4
|
|
50
|
|
2
|
|
43
|
|
155
|
|
Adjusted
|
|
2,195
|
|
1,992
|
|
1,611
|
|
98
|
|
350
|
|
6,246
|
|
Loans and advances to customers (net)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reported
|
|
369,178
|
|
339,729
|
|
252,180
|
|
42,497
|
|
1,695
|
|
1,005,279
|
|
Currency translation
|
|
(12,158
|
)
|
(9,682
|
)
|
(7,013
|
)
|
(221
|
)
|
(59
|
)
|
(29,133
|
)
|
Adjusted
|
|
357,020
|
|
330,047
|
|
245,167
|
|
42,276
|
|
1,636
|
|
976,146
|
|
Customer accounts
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reported
|
|
653,969
|
|
349,352
|
|
281,462
|
|
64,489
|
|
7,239
|
|
1,356,511
|
|
Currency translation
|
|
(13,483
|
)
|
(8,909
|
)
|
(9,767
|
)
|
(807
|
)
|
(660
|
)
|
(33,626
|
)
|
Adjusted
|
|
640,486
|
|
340,443
|
|
271,695
|
|
63,682
|
|
6,579
|
|
1,322,885
|
|
1
|
Net operating income before change in expected credit losses and other credit impairment charges, also referred to as revenue.
|
2
|
Fair value movements on financial instruments include non-qualifying hedges and debt valuation adjustments on derivatives.
|
3
|
Comprises costs associated with preparations for the UK’s exit from the European Union.
|
HSBC Holdings plc Earnings Release 1Q20
|
25
|
Summary information – geographical regions
|
Reconciliation of reported results to adjusted results – geographical regions
|
|
||||||||||||
|
|
Quarter ended 31 Mar 2020
|
|||||||||||
|
|
Europe
|
|
Asia
|
|
MENA
|
|
North
America |
|
Latin
America |
|
Total
|
|
|
Footnotes
|
$m
|
|
$m
|
|
$m
|
|
$m
|
|
$m
|
|
$m
|
|
Revenue
|
1
|
|
|
|
|
|
|
|
|
|
|
|
|
Reported
|
2
|
4,420
|
|
7,559
|
|
690
|
|
1,704
|
|
863
|
|
13,686
|
|
Significant items
|
|
(229
|
)
|
(98
|
)
|
(1
|
)
|
(15
|
)
|
(16
|
)
|
(359
|
)
|
– disposals, acquisitions and investment in new businesses
|
|
—
|
|
—
|
|
—
|
|
7
|
|
—
|
|
7
|
|
– fair value movement on financial instruments
|
3
|
(229
|
)
|
(98
|
)
|
(1
|
)
|
(13
|
)
|
(16
|
)
|
(357
|
)
|
– restructuring and other related costs
|
|
—
|
|
—
|
|
—
|
|
(9
|
)
|
—
|
|
(9
|
)
|
Adjusted
|
2
|
4,191
|
|
7,461
|
|
689
|
|
1,689
|
|
847
|
|
13,327
|
|
ECL
|
|
|
|
|
|
|
|
||||||
Reported
|
|
(868
|
)
|
(1,000
|
)
|
(333
|
)
|
(508
|
)
|
(317
|
)
|
(3,026
|
)
|
Adjusted
|
|
(868
|
)
|
(1,000
|
)
|
(333
|
)
|
(508
|
)
|
(317
|
)
|
(3,026
|
)
|
Operating expenses
|
|
|
|
|
|
|
|
||||||
Reported
|
2
|
(3,962
|
)
|
(3,284
|
)
|
(369
|
)
|
(1,307
|
)
|
(480
|
)
|
(7,852
|
)
|
Significant items
|
|
55
|
|
1
|
|
—
|
|
116
|
|
—
|
|
172
|
|
– customer redress programmes
|
|
1
|
|
—
|
|
—
|
|
—
|
|
—
|
|
1
|
|
– restructuring and other related costs
|
|
53
|
|
1
|
|
—
|
|
116
|
|
—
|
|
170
|
|
– settlements and provisions in connection with legal and regulatory matters
|
|
1
|
|
—
|
|
—
|
|
—
|
|
—
|
|
1
|
|
Adjusted
|
2
|
(3,907
|
)
|
(3,283
|
)
|
(369
|
)
|
(1,191
|
)
|
(480
|
)
|
(7,680
|
)
|
Share of profit in associates and joint ventures
|
|
|
|
|
|
|
|
||||||
Reported
|
|
(101
|
)
|
465
|
|
56
|
|
—
|
|
1
|
|
421
|
|
Adjusted
|
|
(101
|
)
|
465
|
|
56
|
|
—
|
|
1
|
|
421
|
|
Profit/(loss) before tax
|
|
|
|
|
|
|
|
||||||
Reported
|
|
(511
|
)
|
3,740
|
|
44
|
|
(111
|
)
|
67
|
|
3,229
|
|
Significant items
|
|
(174
|
)
|
(97
|
)
|
(1
|
)
|
101
|
|
(16
|
)
|
(187
|
)
|
– revenue
|
|
(229
|
)
|
(98
|
)
|
(1
|
)
|
(15
|
)
|
(16
|
)
|
(359
|
)
|
– operating expenses
|
|
55
|
|
1
|
|
—
|
|
116
|
|
—
|
|
172
|
|
Adjusted
|
|
(685
|
)
|
3,643
|
|
43
|
|
(10
|
)
|
51
|
|
3,042
|
|
Loans and advances to customers (net)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reported
|
|
386,221
|
|
481,512
|
|
29,651
|
|
122,858
|
|
20,040
|
|
1,040,282
|
|
Adjusted
|
|
386,221
|
|
481,512
|
|
29,651
|
|
122,858
|
|
20,040
|
|
1,040,282
|
|
Customer accounts
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reported
|
|
531,992
|
|
690,917
|
|
40,553
|
|
153,893
|
|
23,174
|
|
1,440,529
|
|
Adjusted
|
|
531,992
|
|
690,917
|
|
40,553
|
|
153,893
|
|
23,174
|
|
1,440,529
|
|
1
|
Net operating income before change in expected credit losses and other credit impairment charges, also referred to as revenue.
|
2
|
Amounts are non-additive across geographical regions due to intercompany transactions within the Group.
|
3
|
Fair value movements on financial instruments include non-qualifying hedges and debt valuation adjustments on derivatives.
|
26
|
HSBC Holdings plc Earnings Release 1Q20
|
Reconciliation of reported to adjusted results – geographical regions (continued)
|
|||||||||||||
|
|
Quarter ended 31 Dec 2019
|
|||||||||||
|
|
Europe
|
|
Asia
|
|
MENA
|
|
North
America |
|
Latin
America |
|
Total
|
|
|
Footnotes
|
$m
|
|
$m
|
|
$m
|
|
$m
|
|
$m
|
|
$m
|
|
Revenue
|
1
|
|
|
|
|
|
|
||||||
Reported
|
2
|
4,575
|
|
7,245
|
|
764
|
|
1,603
|
|
937
|
|
13,371
|
|
Currency translation
|
2
|
(34
|
)
|
11
|
|
(1
|
)
|
(8
|
)
|
(38
|
)
|
(66
|
)
|
Significant items
|
|
208
|
|
14
|
|
—
|
|
56
|
|
3
|
|
281
|
|
– customer redress programmes
|
|
45
|
|
—
|
|
—
|
|
—
|
|
—
|
|
45
|
|
– disposals, acquisitions and investment in new businesses
|
|
—
|
|
—
|
|
—
|
|
55
|
|
—
|
|
55
|
|
– fair value movement on financial instruments
|
3
|
158
|
|
15
|
|
—
|
|
1
|
|
2
|
|
176
|
|
– currency translation on significant items
|
|
5
|
|
(1
|
)
|
—
|
|
—
|
|
1
|
|
5
|
|
Adjusted
|
2
|
4,749
|
|
7,270
|
|
763
|
|
1,651
|
|
902
|
|
13,586
|
|
ECL
|
|
|
|
|
|
|
|
||||||
Reported
|
|
(128
|
)
|
(182
|
)
|
(52
|
)
|
(97
|
)
|
(274
|
)
|
(733
|
)
|
Currency translation
|
|
(1
|
)
|
—
|
|
1
|
|
—
|
|
11
|
|
11
|
|
Adjusted
|
|
(129
|
)
|
(182
|
)
|
(51
|
)
|
(97
|
)
|
(263
|
)
|
(722
|
)
|
Operating expenses
|
|
|
|
|
|
|
|
||||||
Reported
|
2, 5
|
(8,126
|
)
|
(3,502
|
)
|
(497
|
)
|
(1,784
|
)
|
(935
|
)
|
(17,053
|
)
|
Currency translation
|
2
|
32
|
|
(2
|
)
|
2
|
|
4
|
|
22
|
|
54
|
|
Significant items
|
5
|
2,988
|
|
53
|
|
104
|
|
491
|
|
358
|
|
7,956
|
|
– costs of structural reform
|
4
|
31
|
|
1
|
|
—
|
|
—
|
|
—
|
|
32
|
|
– customer redress programmes
|
|
183
|
|
—
|
|
—
|
|
—
|
|
—
|
|
183
|
|
– goodwill impairment
|
5
|
2,522
|
|
—
|
|
97
|
|
431
|
|
337
|
|
7,349
|
|
– restructuring and other related costs
|
|
260
|
|
51
|
|
7
|
|
61
|
|
21
|
|
400
|
|
– settlements and provisions in connection with legal and regulatory matters
|
|
5
|
|
—
|
|
—
|
|
—
|
|
—
|
|
5
|
|
– currency translation on significant items
|
|
(13
|
)
|
1
|
|
—
|
|
(1
|
)
|
—
|
|
(13
|
)
|
Adjusted
|
2, 5
|
(5,106
|
)
|
(3,451
|
)
|
(391
|
)
|
(1,289
|
)
|
(555
|
)
|
(9,043
|
)
|
Share of profit in associates and joint ventures
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reported
|
|
(30
|
)
|
476
|
|
71
|
|
—
|
|
1
|
|
518
|
|
Currency translation
|
|
—
|
|
4
|
|
—
|
|
—
|
|
—
|
|
4
|
|
Adjusted
|
|
(30
|
)
|
480
|
|
71
|
|
—
|
|
1
|
|
522
|
|
Profit/(loss) before tax
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reported
|
5
|
(3,709
|
)
|
4,037
|
|
286
|
|
(278
|
)
|
(271
|
)
|
(3,897
|
)
|
Currency translation
|
|
(3
|
)
|
13
|
|
2
|
|
(4
|
)
|
(5
|
)
|
3
|
|
Significant items
|
5
|
3,196
|
|
67
|
|
104
|
|
547
|
|
361
|
|
8,237
|
|
– revenue
|
|
208
|
|
14
|
|
—
|
|
56
|
|
3
|
|
281
|
|
– operating expenses
|
5
|
2,988
|
|
53
|
|
104
|
|
491
|
|
358
|
|
7,956
|
|
Adjusted
|
|
(516
|
)
|
4,117
|
|
392
|
|
265
|
|
85
|
|
4,343
|
|
Loans and advances to customers (net)
|
|
|
|
|
|
|
|
||||||
Reported
|
|
393,850
|
|
477,727
|
|
28,556
|
|
113,474
|
|
23,136
|
|
1,036,743
|
|
Currency translation
|
|
(20,041
|
)
|
(8,143
|
)
|
(258
|
)
|
(4,199
|
)
|
(4,371
|
)
|
(37,012
|
)
|
Adjusted
|
|
373,809
|
|
469,584
|
|
28,298
|
|
109,275
|
|
18,765
|
|
999,731
|
|
Customer accounts
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reported
|
|
528,718
|
|
697,358
|
|
38,126
|
|
146,676
|
|
28,237
|
|
1,439,115
|
|
Currency translation
|
|
(27,950
|
)
|
(7,806
|
)
|
(335
|
)
|
(4,262
|
)
|
(5,100
|
)
|
(45,453
|
)
|
Adjusted
|
|
500,768
|
|
689,552
|
|
37,791
|
|
142,414
|
|
23,137
|
|
1,393,662
|
|
1
|
Net operating income before change in expected credit losses and other credit impairment charges, also referred to as revenue.
|
2
|
Amounts are non-additive across geographical regions due to intercompany transactions within the Group.
|
3
|
Fair value movements on financial instruments include non-qualifying hedges and debt valuation adjustments on derivatives.
|
4
|
Comprises costs associated with preparations for the UK’s exit from the European Union.
|
5
|
Amounts are non-additive across geographical regions due to goodwill impairment recognised on the Global Banking and Markets cash-generating unit, which is monitored on a global basis.
|
HSBC Holdings plc Earnings Release 1Q20
|
27
|
Reconciliation of reported to adjusted results – geographical regions (continued)
|
|
||||||||||||
|
|
Quarter ended 31 Mar 2019
|
|||||||||||
|
|
Europe
|
|
Asia
|
|
MENA
|
|
North
America |
|
Latin
America |
|
Total
|
|
|
Footnotes
|
$m
|
|
$m
|
|
$m
|
|
$m
|
|
$m
|
|
$m
|
|
Revenue
|
1
|
|
|
|
|
|
|
||||||
Reported
|
2
|
4,605
|
|
7,819
|
|
702
|
|
1,676
|
|
971
|
|
14,428
|
|
Currency translation
|
2
|
(95
|
)
|
(27
|
)
|
6
|
|
(5
|
)
|
(147
|
)
|
(257
|
)
|
Significant items
|
|
(59
|
)
|
27
|
|
—
|
|
4
|
|
6
|
|
(22
|
)
|
– fair value movement on financial instruments
|
3
|
(60
|
)
|
27
|
|
—
|
|
4
|
|
7
|
|
(22
|
)
|
– currency translation on significant items
|
|
1
|
|
—
|
|
—
|
|
—
|
|
(1
|
)
|
—
|
|
Adjusted
|
2
|
4,451
|
|
7,819
|
|
708
|
|
1,675
|
|
830
|
|
14,149
|
|
ECL
|
|
|
|
|
|
|
|
||||||
Reported
|
|
(303
|
)
|
(158
|
)
|
(6
|
)
|
(3
|
)
|
(115
|
)
|
(585
|
)
|
Currency translation
|
|
6
|
|
1
|
|
(1
|
)
|
—
|
|
10
|
|
16
|
|
Adjusted
|
|
(297
|
)
|
(157
|
)
|
(7
|
)
|
(3
|
)
|
(105
|
)
|
(569
|
)
|
Operating expenses
|
|
|
|
|
|
|
|
||||||
Reported
|
2
|
(4,318
|
)
|
(3,131
|
)
|
(345
|
)
|
(1,294
|
)
|
(479
|
)
|
(8,222
|
)
|
Currency translation
|
2
|
75
|
|
24
|
|
1
|
|
3
|
|
64
|
|
156
|
|
Significant items
|
|
139
|
|
7
|
|
1
|
|
5
|
|
3
|
|
155
|
|
– costs of structural reform
|
4
|
52
|
|
1
|
|
—
|
|
—
|
|
—
|
|
53
|
|
– customer redress programmes
|
|
56
|
|
—
|
|
—
|
|
—
|
|
—
|
|
56
|
|
– restructuring and other related costs
|
|
35
|
|
6
|
|
1
|
|
5
|
|
3
|
|
50
|
|
– currency translation on significant items
|
|
(4
|
)
|
—
|
|
—
|
|
—
|
|
—
|
|
(4
|
)
|
Adjusted
|
2
|
(4,104
|
)
|
(3,100
|
)
|
(343
|
)
|
(1,286
|
)
|
(412
|
)
|
(7,911
|
)
|
Share of profit in associates and joint ventures
|
|
|
|
|
|
|
|
||||||
Reported
|
|
2
|
|
476
|
|
114
|
|
—
|
|
—
|
|
592
|
|
Currency translation
|
|
2
|
|
(16
|
)
|
(1
|
)
|
—
|
|
—
|
|
(15
|
)
|
Adjusted
|
|
4
|
|
460
|
|
113
|
|
—
|
|
—
|
|
577
|
|
Profit/(loss) before tax
|
|
|
|
|
|
|
|
||||||
Reported
|
|
(14
|
)
|
5,006
|
|
465
|
|
379
|
|
377
|
|
6,213
|
|
Currency translation
|
|
(12
|
)
|
(18
|
)
|
5
|
|
(2
|
)
|
(73
|
)
|
(100
|
)
|
Significant items
|
|
80
|
|
34
|
|
1
|
|
9
|
|
9
|
|
133
|
|
– revenue
|
|
(59
|
)
|
27
|
|
—
|
|
4
|
|
6
|
|
(22
|
)
|
– operating expenses
|
|
139
|
|
7
|
|
1
|
|
5
|
|
3
|
|
155
|
|
Adjusted
|
|
54
|
|
5,022
|
|
471
|
|
386
|
|
313
|
|
6,246
|
|
Loans and advances to customers (net)
|
|
|
|
|
|
|
|
||||||
Reported
|
|
384,129
|
|
461,508
|
|
27,823
|
|
109,923
|
|
21,896
|
|
1,005,279
|
|
Currency translation
|
|
(15,279
|
)
|
(6,748
|
)
|
(212
|
)
|
(2,571
|
)
|
(4,323
|
)
|
(29,133
|
)
|
Adjusted
|
|
368,850
|
|
454,760
|
|
27,611
|
|
107,352
|
|
17,573
|
|
976,146
|
|
Customer accounts
|
|
|
|
|
|
|
|
||||||
Reported
|
|
507,459
|
|
656,566
|
|
35,941
|
|
129,934
|
|
26,611
|
|
1,356,511
|
|
Currency translation
|
|
(20,840
|
)
|
(4,431
|
)
|
(124
|
)
|
(2,720
|
)
|
(5,511
|
)
|
(33,626
|
)
|
Adjusted
|
|
486,619
|
|
652,135
|
|
35,817
|
|
127,214
|
|
21,100
|
|
1,322,885
|
|
1
|
Net operating income before change in expected credit losses and other credit impairment charges, also referred to as revenue.
|
2
|
Amounts are non-additive across geographical regions due to intercompany transactions within the Group.
|
3
|
Fair value movements on financial instruments include non-qualifying hedges and debt valuation adjustments on derivatives.
|
4
|
Comprises costs associated with preparations for the UK’s exit from the European Union.
|
28
|
HSBC Holdings plc Earnings Release 1Q20
|
Dividend on preference shares
|
*
|
Non-executive Group Chairman
|
†
|
Independent non-executive Director
|
HSBC Holdings plc Earnings Release 1Q20
|
29
|
Terms and abbreviations
|
1Q20
|
First quarter of 2020
|
1Q19
|
First quarter of 2019
|
4Q19
|
Fourth quarter of 2019
|
AIEA
|
Average interest-earning assets
|
Bps
|
Basis points. One basis point is equal to one-hundredth of a percentage point
|
BSM
|
Balance Sheet Management
|
C&L
|
Credit and Lending
|
CET1
|
Common equity tier 1
|
CMB
|
Commercial Banking, a global business
|
CODM
|
Chief Operating Decision Maker
|
Corporate Centre
|
Corporate Centre comprises Central Treasury, including Balance Sheet Management, our legacy businesses, interests in our associates and joint ventures, central stewardship costs and the UK bank levy
|
CRR II
|
Revised Capital Requirements Regulation and Directive, as implemented
|
ECL
|
Expected credit losses. In the income statement, ECL is recorded as a change in expected credit losses and other credit impairment charges. In the balance sheet, ECL is recorded as an allowance for financial instruments to which only the impairment requirements in IFRS 9 are applied
|
FTE
|
Full-time equivalent staff
|
FVOCI
|
Fair value through other comprehensive income
|
GB&M
|
Global Banking and Markets, a global business
|
GEC
|
Group Executive Committee
|
GLCM
|
Global Liquidity and Cash Management
|
GPB
|
Global Private Banking, a global business
|
Group
|
HSBC Holdings together with its subsidiary undertakings
|
GTRF
|
Global Trade and Receivables Finance
|
Hong Kong
|
Hong Kong Special Administrative Region of the People’s Republic of China
|
HSBC
|
HSBC Holdings together with its subsidiary undertakings
|
HSBC Bank
|
HSBC Bank plc, also known as the non-ring-fenced bank
|
HSBC Holdings
|
HSBC Holdings plc, the parent company of HSBC
|
HSBC UK
|
HSBC UK Bank plc, also known as the ring-fenced bank
|
IAS
|
International Accounting Standards
|
IFRSs
|
International Financial Reporting Standards
|
IRB
|
Internal ratings based
|
JV
|
Joint venture
|
LCR
|
Liquidity coverage ratio
|
Mainland China
|
People’s Republic of China excluding Hong Kong
|
MENA
|
Middle East and North Africa
|
Net operating income
|
Net operating income before change in expected credit losses and other credit impairment charges, also referred to as revenue
|
NIM
|
Net interest margin
|
POCI
|
Purchased or originated credit-impaired financial assets
|
PRA
|
Prudential Regulation Authority (UK)
|
RBWM
|
Retail Banking and Wealth Management, a global business
|
Revenue
|
Net operating income before ECL
|
RoE
|
Return on equity
|
RoTE
|
Return on average tangible equity
|
RWAs
|
Risk-weighted assets
|
ServCo group
|
Separately incorporated group of service companies set up in response to UK ring-fencing proposals
|
$m/$bn/$tn
|
United States dollar millions/billions/trillions. We report in US dollars
|
30
|
HSBC Holdings plc Earnings Release 1Q20
|
By:
|
/s/ Ewen Stevenson
|
Name:
|
Ewen Stevenson
|
Title:
|
Group Chief Financial Officer
|