Ετικέτα: HSBC Holdings

HSBC Holdings plc Annual Results 2024

Georges Elhedery, Group CEO, said:
“Our strong 2024 performance provides firm financial foundations upon which to build for the future, as we prioritise delivering sustainable strategic growth and the best outcomes for our customers. Since becoming CEO, I have focused on simplifying how we operate and injected energy and intent into the way we deliver our strategy. We are creating a simple, more agile, focused bank built on our core strengths. We continue to take deliberate and decisive steps. This includes creating four complementary, clearly differentiated businesses, aligning our structure to our strategy and reshaping our portfolio at pace and with purpose. I have put in place a smaller, core team of exceptionally talented leaders driven by a growth orientated mindset and a firm focus on dynamically managing our costs and capital. We are embedding this approach across the organisation to ensure we are continually focused on these two important principles. Each targeted action we are taking is designed to unlock HSBC’s full potential. We look to the future with confidence and clarity of purpose.” 
2024 financial performance (vs 2023)

Profit before tax rose by $2.0bn to $32.3bn, including a $1.0bn net favourable impact from notable items. In 2024, these included a gain of $4.8bn on the disposal of our banking business in Canada, the impacts of the disposal of our business in Argentina, comprising a $1.0bn loss on disposal, and the recycling of foreign currency reserve losses and other reserves of $5.2bn. In 2023, notable items included an impairment of $3.0bn on our associate, Bank of Communications Co., Limited (‘BoCom’), disposal losses of $1.0bn on Treasury repositioning and risk management and a $1.6bn gain recognised on the acquisition of Silicon Valley Bank UK Limited (‘SVB UK’). Profit after tax increased by $0.4bn to $25.0bn.

Constant currency profit before tax excluding notable items increased by $1.4bn to $34.1bn, primarily reflecting revenue growth in Wealth and Personal Banking (‘WPB’) and Global Banking and Markets (‘GBM’), partly offset by a rise in operating expenses, in line with our cost growth targets.

Revenue of $65.9bn was stable. There was growth in revenue from higher customer activity in Wealth in WPB, and in Equities and Securities Financing in GBM. In addition, 2023 included disposal losses of $1.0bn related to Treasury repositioning and risk management. This was offset by the net adverse impact of certain strategic transactions described above, as well as a $0.2bn loss on the early redemption of legacy securities.

Constant currency revenue excluding notable items rose by $2.9bn to $67.4bn.

Net interest income (‘NII’) decreased by $3.1bn, reflecting the impact of business disposals and higher funding costs associated with the redeployment of our commercial surplus to the trading book, where the related revenue is recognised in ‘net income from financial instruments held for trading or managed on a fair value basis‘, partly offset by higher NII in HSBC UK, reflecting the benefit of our structural hedge. Banking NII of $43.7bn fell by $0.4bn or 1% compared with 2023, as increased deployment of our commercial surplus to the trading book only partly mitigated the reductions in NII.

Net interest margin (‘NIM’) of 1.56% decreased by 10 basis points (‘bps’), mainly due to increased deployment of our commercial surplus to the trading book.

Expected credit losses and other credit impairment charges (‘ECL’) of $3.4bn were stable. ECL were $1.8bn in Commercial Banking (‘CMB’) and $0.2bn in GBM. This included stage 3 charges relating to the commercial real estate sector in mainland China ($0.4bn), the onshore Hong Kong real estate sector ($0.1bn), and a charge related to a single CMB customer in the UK. ECL in WPB were $1.3bn and primarily related to our legal entities in Mexico, Hong Kong and the UK. ECL were 36bps of average gross loans, including loans and advances classified as held for sale (2023: 32bps).

Operating expenses grew by $1.0bn or 3% to $33.0bn, mainly due to higher spend and investment in technology and the impacts of inflation, partly offset by reductions related to our business disposals in Canada and France, and from lower levies in the UK and the US.

Target basis operating expenses rose by 5%, in line with our cost growth target. This increase primarily reflected higher spend and investment in technology, and the impact of inflation. This is measured on a constant currency basis, excluding notable items, the impact of retranslating the prior year results of hyperinflationary economies at constant currency, and the direct costs from the sales of our French retail banking operations and our banking business in Canada.

Customer lending balances fell by $8bn on a reported basis but rose by $14bn on a constant currency basis. Growth included lending balance growth in CMB and higher mortgage balances in WPB.

Customer accounts rose by $43bn on a reported basis, and $75bn on a constant currency basis, with growth across all of our global businesses, primarily in Asia.

Common equity tier 1 (‘CET1’) capital ratio of 14.9% rose by 0.1 of a percentage point, mainly due to capital generation and a reduction in RWAs through strategic transactions, offset by dividends, share buy-backs and organic balance sheet growth.

The Board has approved a fourth interim dividend of $0.36 per share, resulting in a total of $0.87 per share in respect of 2024, inclusive of a special dividend of $0.21 per share. We also intend to initiate a share buy-back of up to $2bn, which we expect to complete by our first quarter 2025 results announcement. 
4Q24 financial performance (vs 4Q23)

Reported profit before tax up $1.3bn to $2.3bn. The increase reflected the non-recurrence of an impairment charge in 4Q23 of $3.0bn relating to the investment in our associate BoCom. This was partly offset by a reduction in revenue, which included the recycling of foreign currency losses and other reserves of $5.2bn recognised following the completion of sale of our business in Argentina in 4Q24, while 4Q23 included the impact of an impairment relating to the sale of our retail banking operations in France of $2.0bn as we reclassified these operations as held for sale. On a constant currency basis, profit before tax up $1.5bn to $2.3bn. Reported profit after tax up $0.4bn to $0.6bn.

Reported revenue down 11% to $11.6bn, due to the recycling of foreign currency losses and other reserves relating to the sale of our business in Argentina, as mentioned above. This was partly offset by the non-recurrence of a 4Q23 impairment relating to the sale of our retail banking operations in France, disposal losses relating to Treasury repositioning and risk management, and the impact of hyperinflationary accounting in Argentina. In addition, revenue increased in Wealth in WPB and in Markets and Securities Services (‘MSS’) in GBM. Constant currency revenue excluding notable items increased by $1.2bn to $16.5bn.

Reported ECL up $0.3bn to $1.4bn. ECL in 4Q24 comprised charges in CMB of $0.8bn, primarily related to stage 3 exposures which included charges relating to the commercial real estate sector in mainland China of $0.2bn and a charge relating to a single exposure in the UK. Charges in WPB of $0.4bn were concentrated in our legal entities in Mexico and Hong Kong.

Reported operating expenses stable at $8.6bn, as higher spend and investment in technology and inflation were broadly offset by lower levies in the UK and the US, a reduction in performance related pay and lower costs due to the impact of our disposals in Canada and France.
Outlook

We have announced measures to simplify the Group and we are focused on opportunities that build on our strong platform for growth.

We are now targeting a mid-teens return on average tangible equity (‘RoTE’) in each of the three years from 2025 to 2027 excluding notable items, while acknowledging the outlook for interest rates remains volatile and uncertain, particularly in the medium term.

We expect banking NII of around $42bn in 2025. Our current expectation reflects modelling of a number of market-dependent factors. If changes in these factors impact the output of our modelling, we would update our expectation for 2025 Banking NII in future quarterly results announcements.

We retain a Group-wide focus on cost discipline. We are targeting growth in target basis operating expenses of approximately 3% in 2025 compared with 2024.

Our target basis operating expenses for 2025 excludes the direct cost impact of the business disposals in Canada and Argentina, notable items and the impact of retranslating the prior year results of hyperinflationary economies at constant currency.

Our cost target includes the impact of simplification-related saves associated with our announced reorganisation, which aims to generate approximately $0.3bn of cost reductions in 2025, with a commitment to an annualised reduction of $1.5bn in our cost base expected by the end of 2026. To deliver these reductions, we plan to incur severance and other up-front costs of $1.8bn over 2025 and 2026, which will be classified as notable items. We are focused on opportunities where we have a clear competitive advantage and accretive returns, and we aim to redeploy around $1.5bn of additional costs from non-strategic activities into these areas, over the medium term.

We expect ECL charges as a percentage of average gross loans to continue to be within our medium-term planning range of 30bps to 40bps in 2025 (including lending held for sale balances).

Over the medium to long term, we continue to expect mid-single digit percentage growth for year-on-year customer lending balances.

We expect double-digit percentage average annual growth in fee and other income in Wealth over the medium-term.

We intend to continue to manage the CET1 capital ratio within our medium-term target range of 14% to 14.5%, with a dividend payout ratio target basis of 50% for 2025, excluding material notable items and related impacts.

Our targets and expectations reflect our current outlook for the global macroeconomic environment and market-dependent factors, such as market-implied interest rates (as of mid-January 2025) and rates of foreign exchange, as well as customer behaviour and activity levels.
We do not reconcile our forward guidance on RoTE excluding the impact of notable items, target basis operating expenses, dividend payout ratio target basis or banking NII to their equivalent reported measures.

HSBC Holdings plc 3Q 2024 Earnings Release

Georges Elhedery, Group Chief Executive, said:
“We delivered another good quarter, which shows that our strategy is working. There was strong revenue growth and good performances in Wealth and Wholesale Transaction Banking. Our strong organic capital generation enables us to announce a further $4.8bn of distributions in respect of the third quarter, which bring the total distributions announced so far in 2024 to $18.4bn.
I’m committed to building on this strong platform for growth. HSBC is a highly connected, global business and the plans we set out last week aim to increase our leadership and market share in areas where we have competitive advantage, deliver best-in-class products and service excellence to our customers, and create a simpler, more dynamic, more agile organisation with clearer lines of accountability and faster decision-making. We will begin to implement these plans immediately and will share further details as part of a business update alongside our full-year results in February.”
Financial performance in 3Q24

Profit before tax increased by $0.8bn to $8.5bn compared with 3Q23, primarily due to revenue growth in Wealth and Personal Banking (‘WPB‘), and in Foreign Exchange, Equities and Global Debt Markets in Global Banking and Markets (‘GBM‘). Profit before tax in 3Q24 included a $0.3bn loss on the early redemption of legacy securities. The 3Q23 period included $0.6bn of disposal losses relating to Treasury repositioning and risk management, which was partly offset by a $0.2bn gain on foreign exchange hedges relating to the disposal of our banking business in Canada. Profit after tax of $6.7bn was $0.5bn higher than in 3Q23.
Constant currency profit before tax excluding notable items increased by $0.8bn to $8.7bn compared with 3Q23, as revenue growth and lower expected credit losses and other impairment charges (‘ECL‘) were partly offset by a rise in operating expenses. This included a $0.2bn adverse impact from strategic transactions.
Revenue increased by $0.8bn or 5% to $17.0bn compared with 3Q23. The growth in revenue reflected higher customer activity in our Wealth products in WPB, supported by volatile market conditions, and in Foreign Exchange, Equities and Global Debt Markets in GBM. Revenue in 3Q24 included a $0.3bn loss on the early redemption of legacy securities and a loss of $0.1bn from Treasury repositioning and risk management actions. On a constant currency basis, revenue rose by 7% to $17.0bn compared with 3Q23.
Net interest income (‘NII‘) of $7.6bn fell by $1.6bn compared with 3Q23, reflecting reductions due to business disposals, higher interest expense on liabilities and a loss on the early redemption of legacy securities. It also included an increase in funding costs associated with redeployment of our commercial surplus into the trading book, where the related revenue is recognised in ‘net income from financial instruments held for trading or managed on a fair value basis‘. Banking net interest income (‘banking NII‘) fell by $1.0bn or 9% compared with 3Q23, as increased deployment of our commercial surplus to the trading book only partly mitigated the reductions in NII. NII fell by $0.6bn compared with 2Q24, while the funding costs associated with funding the trading book increased by $0.3bn, which resulted in a fall in banking NII of $0.3bn.
Net interest margin (‘NIM’) of 1.46% decreased by 24 basis points (‘bps‘) compared with 3Q23, mainly due to higher interest expense on liabilities because of higher interest rates. NIM decreased by 16bps compared with 2Q24, reflecting higher interest expense on liabilities and an impact from the early redemption of legacy securities.
ECL of $1.0bn were $0.1bn lower than in 3Q23, primarily reflecting lower charges in the mainland China commercial real estate sector in Commercial Banking (‘CMB‘) and GBM, in part offset by an increase in ECL charges in WPB. ECL in 3Q24 comprised charges in CMB and GBM of $0.5bn, including against exposures in the onshore Hong Kong commercial real estate ($0.1bn) and mainland China commercial real estate sectors ($0.1bn), while charges in WPB of $0.5bn primarily related to our legal entities in Mexico, Hong Kong and in HSBC UK.
Operating expenses of $8.1bn were $0.2bn or 2% higher than in 3Q23. The growth was primarily due to higher spend and investment in technology and the impacts of inflation, in part mitigated by continued cost discipline and the impact of our disposals in Canada and France. Target basis operating expenses were $0.4bn or 5% higher than in 3Q23, while they fell by 1% compared with 2Q24 driven by lower marketing costs and a lower performance-related pay accrual.
Customer lending balances increased by $30bn compared with 2Q24. On a constant currency basis, lending balances increased by $2bn, including growth in WPB and CMB, notably in HSBC UK, while term lending balances decreased in GBM, notably in our main legal entity in Asia.
Customer accounts increased by $67bn compared with 2Q24. On a constant currency basis, customer accounts increased by $20bn, mainly in our legal entity in Hong Kong due to an increase in term deposits prior to interest rate reductions and from short-term inflows into customer accounts amid equity market volatility. Deposits in GBM were broadly stable as an outflow of a large short-term deposit from a single client was partly offset by balance growth, notably in our legal entities in mainland China and the US.
Common equity tier 1 (‘CET1’) capital ratio of 15.2% increased by 0.2 percentage points compared with 2Q24, mainly driven by capital generation, partly offset by the share buy-back announced at our interim results and an increase in risk-weighted assets (‘RWAs‘).
The Board has approved a third interim dividend of $0.10 per share. On 25 October 2024, we completed the $3bn share buy-back announced at our interim results. We now intend to initiate a share buy-back of up to $3bn, which we expect to complete within the four-month period before our 2024 full-year results announcement.

Financial performance in 9M24

Profit before tax increased by $0.7bn to $30.0bn compared with 9M23, including a $0.2bn net favourable revenue impact of notable items relating to gains and losses recognised on certain strategic transactions. Profit after tax increased by $0.1bn to $24.4bn compared with 9M23.
In 9M24, we completed the disposal of our banking business in Canada, recognising a gain of $4.8bn. We also recognised a $1.2bn impairment following the classification of our business in Argentina as held for sale. Results in 9M23 included the impact of a $2.1bn reversal of an impairment relating to the sale of our retail banking operations in France, which was subsequently reinstated in 4Q23 prior to completion, and a $1.6bn gain recognised on the acquisition of Silicon Valley Bank UK Limited (‘SVB UK‘). In addition, the 9M24 period included a $0.3bn loss on the early redemption of legacy securities, while 9M23 included $0.6bn of disposal losses relating to Treasury repositioning and risk management.
Constant currency profit before tax excluding notable items increased by $0.7bn to $26.8bn compared with 9M23, as revenue growth and lower ECL charges were partly offset by a rise in operating expenses.
Revenue increased by $1.3bn or 2% to $54.3bn compared with 9M23, including the gains and losses on certain strategic transactions described above and a $0.3bn loss on the early redemption of legacy securities. The growth in revenue reflected the impact of higher customer activity in our Wealth products in WPB, and in Equities and Securities Financing in GBM.
NII of $24.5bn fell by $3.0bn compared with 9M23, reflecting reductions due to business disposals, higher interest expense in part due to deposit migration, and higher funding costs associated with the redeployment of our commercial surplus to the trading book, where the related revenue is recognised in ‘net income from financial instruments held for trading or managed on a fair value basis‘. Banking NII fell by $0.5bn or 2% compared with 9M23, as increased deployment of our commercial surplus to the trading book only partly mitigated the reductions in NII, including the adverse impact of foreign currency translation differences.
Constant currency revenue excluding notable items rose by $1.7bn to $50.9bn compared with 9M23, notably in Wealth in WPB, and in Equities and Securities Financing in GBM.
NIM of 1.57% decreased by 13bps compared with 9M23 due to higher interest expense on liabilities because of higher interest rates and increased deployment of our commercial surplus to the trading book.
ECL were $2.1bn, a reduction of $0.4bn compared with 9M23. The reduction included lower charges relating to exposures in the commercial real estate sector in mainland China, and lower charges in HSBC UK, partly offset by higher ECL charges in WPB, notably against unsecured lending in our legal entity in Mexico. Annualised ECL charges were 28bps of average gross loans, including loans and advances classified as held for sale.
Operating expenses increased by $1.0bn or 4% to $24.4bn compared with 9M23, mainly due to higher spend and investment in technology and the impacts of inflation, while the performance-related pay accrual was higher than in 9M23. These increases were partly offset by reductions related to our business disposals in Canada and France. Target basis operating expenses rose by $1.4bn or 6% compared with 9M23. Target basis operating expenses are measured on a constant currency basis, excluding notable items, the impact of retranslating the results of hyperinflationary economies at constant currency, and the direct costs from the sales of our French retail banking operations and our banking business in Canada.

Outlook

Our guidance remains unchanged from that set out at our Interim results on 31 July 2024.
We continue to target a mid-teens return on average tangible equity (‘RoTE‘) in 2024 and 2025, excluding the impact of notable items, while acknowledging the outlook for interest rates has changed, and been volatile, since our 1H24 results announcement in July.
Our banking NII guidance of around $43bn for 2024 remains unchanged and we continue to target cost growth of approximately 5% for 2024 compared with 2023, on a target basis. ECL charges as a percentage of average gross loans in 2024 are expected to be within our medium-term planning range of 30bps to 40bps (including customer lending balances transferred to held for sale).
Our guidance reflects our current outlook for the global macroeconomic environment, including customer and financial markets activity. This includes our modelling of a number of market-dependent factors, such as market-implied interest rates (as of mid-October 2024), as well as customer behaviour and activity levels.
We intend to manage our CET1 capital ratio within our medium-term target range of 14% to 14.5%, with a dividend payout ratio target basis of 50% for 2024, which excludes material notable items and related impacts.
We continue to make progress on reshaping the Group. We expect to complete the sale of our business in Argentina in 4Q24. On completion, cumulative foreign currency translation reserves and other reserves will recycle to the income statement. These impacts have already been recognised in capital. At 30 September 2024, foreign currency translation reserve and other reserve losses stood at $5.1bn.

HSBC Holdings plc – Senior Management Changes

HSBC Holdings plc (the ‘Company’, and together with its subsidiaries, the ‘Group’) has announced changes to its senior management team which will help position the Group for the next phase of development and growth. All changes will take effect from 1 October 2024 and, where required, are subject to regulatory approval.
Barry O’Byrne, Chief Executive Officer, Global Commercial Banking (CMB), is appointed CEO, Global Wealth & Personal Banking (WPB). Barry has a strong and proven track record in executing CMB’s transformation and growing the international franchise. Nuno Matos, the current CEO of WPB, has decided to step down to pursue other opportunities after nine years with the Group. He will support Barry in an advisory capacity throughout 2024 and will leave the Group in 2025 after a period of gardening leave. Nuno has led the group in Mexico, Europe and played a significant role in growing the WPB business globally as CEO. Barry will continue to be based in Hong Kong. We will provide an update on plans for his successor in due course.
Aileen Taylor, Group Company Secretary & Chief Governance Officer, is appointed Group Chief Human Resources and Governance Officer. Aileen is a strong and inclusive leader with a demonstrable track record over 20 years of advising boards and executives in delivering strategy, simplification and transformation. Throughout her career. Aileen has been instrumental in supporting talent acquisition, training and development and succession planning at board and executive level.
Aileen takes over from Elaine Arden, Group Chief Human Resources Officer, who after seven years in role, has decided to step down. Elaine has made a lasting positive impact on HSBC, including through her leadership of the work to help reset HSBC’s Purpose, Strategy and Values, enhance the Group’s talent identification and development capabilities, and to simplify and develop the Group’s performance culture.
John Hinshaw, Group Chief Operating Officer (GCOO), has decided to leave the Group to pursue other opportunities. Since joining the Bank in 2019, he has played an important part in the development of the Group’s technology and operations strategies, simplifying our approach, and improving the resilience of the Group. He has improved our third-party supplier relationships, refreshed the Group’s approach to innovation, and led the work to identify and secure the Group’s new global headquarters in London.
Georges Elhedery, HSBC Group Chief Executive Officer Designate, has reviewed the accountabilities of the current GCOO role and will split the responsibilities between two new Group Executive Committee level roles – an elevated and expanded role of Group Chief Information Officer, (GCIO), and a newly defined Group Chief Operating Officer (GCOO).
Stuart Riley is appointed to the expanded GCIO role, which will assume responsibility for Data and Innovation. He joined the Group in February 2024 and has made a strong and positive impact demonstrating the right capabilities, energy, and values to lead HSBC’s technology teams in the delivery of our technology ambitions. He brings extensive experience in managing global technology for large banking institutions, most recently as Global Co-CIO for Citi, where he co-led the Technology Division.
The remaining Group COO accountabilities will become the responsibility of the new GCOO. Suzy White, Global Banking & Markets Chief Operating Officer, has been appointed GCOO on an interim basis, whilst a formal recruitment process is carried out. In this interim capacity, Suzy will attend GEC but will not be a member. Suzy has been with HSBC for over 25 years in a variety of roles including COO for Global Markets and Securities Services and Chief Risk Officer for GBM and CMB in the US.
Georges Elhedery, HSBC Group Chief Executive Officer Designate, said:
“I am really looking forward to working with Barry, Aileen, Stuart and Suzy, as we pursue the next phase of our growth. It has been a pleasure working with Nuno, Elaine and John. I wish them every success in the future”.
Noel Quinn, Group Chief Executive Officer, said:
“I’d like to thank Nuno, Elaine and John for their extraordinary dedication and service to the Group over many years. I wish them well in their future endeavours.”

HSBC Holdings plc 1Q 2023 Earnings Release

Noel Quinn, Group Chief Executive, said:
“Our strong first quarter performance provides further evidence that our strategy is working. Our profits were spread across our major geographies, and all three global businesses performed well as we continued to meet our customers‘ needs through our internationally connected franchises. Our return on tangible equity was 19.3%, excluding the impact of strategic transactions. As a result, we have announced our first quarterly dividend since 2019 of $0.10 per share, as well as a share buy-back of up to $2bn. With the good momentum we have in our business, we expect to have substantial future distribution capacity for dividends and share buy-backs.
We remain focused on continuing to improve our performance and maintaining tight cost discipline, but we also saw an opportunity to invest in SVB UK to accelerate our growth plans. For 158 years, HSBC has banked the entrepreneurs who have created today’s industrial base. With the SVB UK acquisition, we have access to more of the entrepreneurs in the technology and life sciences sectors who will create the businesses of tomorrow. We believe they‘re a natural fit for HSBC, and that we‘re uniquely placed to take them global.“
Financial performance (1Q23 vs. 1Q22)

Profit before tax rose by $8.7bn to $12.9bn. This included a $2.1bn reversal of an impairment relating to the planned sale of our retail banking operations in France, as the completion of the transaction has become less certain, and a provisional gain of $1.5bn on the acquisition of Silicon Valley Bank UK Limited (‘SVB UK‘) in March. On a constant currency basis, profit before tax increased by $9.0bn to $12.9bn. Profit after tax increased by $7.6bn to $11.0bn.
Revenue increased by 64% to $20.2bn. The increase was driven by higher net interest income in all of our global businesses due to interest rate rises. It also included the gains related to the transactions in France and the UK. On a constant currency basis, revenue rose by 74% to $20.2bn.
Net interest margin (‘NIM’) of 1.69% increased by 50 basis points (‘bps‘) compared with 1Q22, and by 1bps compared with 4Q22.
Expected credit losses and other credit impairment charges (‘ECL‘) of $0.4bn were down by $0.2bn. The reduced 1Q23 charge reflected a favourable change in the probability weightings of economic scenarios and a low stage 3 charge of $0.4bn. The 1Q22 charge reflected economic uncertainty mainly due to the Russia-Ukraine war and inflationary pressures.
Operating expenses of $7.6bn were $0.6bn or 7% lower than in 1Q22. The reduction was primarily due to lower restructuring and other related costs following the completion of our cost-saving programme at the end of 2022, and ongoing cost discipline. Higher technology costs and the impacts of rising inflation continued to affect our operating expenses. On a constant currency basis, and excluding notable items and the impact of retranslating the 1Q22 results of hyperinflationary economies at constant currency, operating expenses rose by 2%.
Customer lending balances increased by $40bn in the quarter. On a constant currency basis, lending balances grew by $32bn, mainly as $25bn of balances associated with our retail banking operations in France were reclassified from held for sale during the period. In addition, the growth included $7bn of additional balances following our acquisition of SVB UK during the quarter. Excluding these factors, customer lending was stable.
Customer accounts increased by $34bn in the quarter. On a constant currency basis, customer accounts increased by $21bn, mainly as $23bn of balances associated with our retail banking operations in France were reclassified from held for sale during the period. In addition, our acquisition of SVB UK resulted in growth of $8bn. Excluding these factors, deposits fell by $10bn or 0.6%, reflecting outflows in HSBC UK as customers utilised surplus deposits, as well as in Commercial Banking (‘CMB‘) and Global Banking and Markets (‘GBM‘) in Hong Kong.
Common equity tier 1 (‘CET1’) capital ratio of 14.7% increased by 0.5 percentage points compared with 4Q22, which was driven by capital generation net of the dividend accrual and included an approximately 25bps impact from the reversal of an impairment on the planned sale of our retail banking operations in France. The acquisition of SVB UK had a minimal impact on the CET1 ratio.
The Board has approved a first interim dividend of $0.10 per share. We also intend to initiate a share buy-back of up to $2bn, which we expect to commence following our 2023 Annual General Meeting (‘AGM‘). The share buy-back is expected to have an approximately 25bps impact on the CET1 capital ratio.
From 1 January 2023, we adopted IFRS 17 ‘Insurance Contracts‘, which replaced IFRS 4 ‘Insurance Contracts‘. Comparative data have been restated. For further details of our adoption of IFRS 17, see page 3.

Outlook

We remain confident of achieving our return on average tangible equity (‘RoTE‘) target of at least 12% for 2023 onwards, which is not dependent on the impact of material acquisitions and disposals. Our 1Q23 annualised RoTE of 27.4% included the annualised impact of our provisional gain on the acquisition of SVB UK and the reversal of an impairment on the planned sale of our retail banking operations in France. After excluding these transactions, annualised RoTE was 19.3%. The annualised RoTE in the first quarter is likely to be higher than in other quarters due to revenue seasonality, and as we do not expect certain favourable tax impacts to recur in subsequent quarters.
Based on the current market consensus for global central bank rates, our net interest income expectations are unchanged from our full-year guidance. After including an approximately $2bn reduction due to the implementation of IFRS 17 ‘Insurance Contracts’, we expect to achieve net interest income of at least $34bn in 2023. While the interest rate outlook remains positive, we expect continued pressure from increased migration to term deposits as interest rates rise.
We continue to use a range of 30bps to 40bps of average loans for planning our ECL charges over the medium to long term. While the ECL charge in 1Q23 was relatively benign, given current macroeconomic uncertainty we maintain the guidance provided at our full-year 2022 results of around 40bps of average gross loans in 2023 (including lending balances transferred to held for sale). We continue to monitor risks related to our exposures in mainland China’s commercial real estate sector.
We remain highly focused on maintaining cost discipline. Our acquisition of SVB UK, and the related investments internationally, are expected to add approximately 1% to the Group‘s operating expenses. This is in addition to our 2023 target of keeping cost growth to approximately 3%, excluding the impact of foreign currency translation differences, notable items and the impact of retranslating the 2022 results of hyperinflationary economies at constant currency. We expect the up to $300m severance costs announced at our 2022 full-year results to be concentrated in the second quarter of 2023, with the benefits expected to be realised towards the end of 2023 and into 2024.
Our current intention is to manage the CET1 ratio within our medium-term target range of 14% to 14.5%, with a dividend payout ratio of 50% for 2023 and 2024, excluding material notable items. Given the strength of our capital position, we have announced a first interim dividend of $0.10 per share and intend to initiate a share buy-back of up to $2bn, which we expect to commence following our 2023 AGM, subject to approval of the relevant resolutions. Our intention is for this to be completed in around three months, although with an expected contractual term of five months. Further buy-backs for 2023 and beyond will be subject to appropriate capital levels. Our capital distributions are independent of both the reversal of the impairment of our retail banking operations in France and our provisional gain on the acquisition of SVB UK.

Η HSBC Holdings εξαγοράζει την Axa Singapore έναντι 575 εκατ. δολαρίων

Στην εξαγορά της Axa Singapore έναντι 575 εκατ. δολαρίων συμφώνησε η HSBC Holdings, σε μια προσπάθεια να κατασκευάσει ένα παγκόσμιο κόμβο πλούτου στη Σιγκαπούρη και να τροφοδοτήσει την επέκτασή της στην ΝΑ Ασία εν μέσω αυξανόμενων εντάσεων στην Κίνα.
Η εξαγορά θα δώσει στην HSBC την όγδοη μεγαλύτερη εταιρεία ασφαλειών ζωής στη Σιγκαπούρη, καθώς και έναν κορυφαίο όμιλο ασφαλειών υγείας, με assets 474 εκατ. δολαρίων, σύμφωνα με την ανακοίνωση.
«Πρόκειται για μια σημαντική εξαγορά που αποδεικνύει τις φιλοδοξίες μας, να αυξήσουμε τις δραστηριότητες πλούτου σε όλη την Ασία. Οι εν λόγω δραστηριότητες είναι από τις μεγαλύτερες ευκαιρίες ανάπτυξης και υψηλότερων αποδόσεων, και ενισχύουν τη θέση μας ως μια επικεντρωμένη στην Ασία με παγκόσμια εμβέλεια», αναφέρει ο διευθύνων σύμβουλος Noel Quinn.
Η βρετανική τράπεζα βρίσκεται στο επίκεντρο της στροφής προς την Ασία, επενδύοντας δισ. στην περιοχή, καθώς αποχωρεί από μη κερδοφόρες δραστηριότητες παντού.
Η επέκταση στη Σιγκαπούρη έρχεται μετά από χρόνια εντάσεων για την τράπεζα στο Χονγκ Κονγκ, στη μεγαλύτερη αγορά της, και στην ηπειρωτική Κίνα.

HSBC Holdings plc Interim Results 2021

Noel Quinn, Group Chief Executive, said:
“These are good results that reflect the return of growth in our main markets and marked progress in the execution of our strategy. We were profitable in every region in the first half of the year, supported by the release of expected credit loss provisions. Our lending pipeline began to translate into business growth in the second quarter and we further strengthened that pipeline during the half. This performance enables us to pay an interim dividend for the first six months of 2021.
I’m pleased with the momentum generated around our growth and transformation plans, with good delivery against all four pillars of our strategy. In particular, we have taken firm steps to define the future of our US and continental Europe businesses, and further enhanced our global Wealth capabilities.
We are focused on executing the growth and transformation plans we announced in February.”
Financial performance (1H21 vs 1H20)

Reported profit after tax increased by $5.3bn to $8.4bn and reported profit before tax increased by $6.5bn to $10.8bn. A fall in revenue reflected 2020 interest rate reductions and lower Markets and Securities Services (‘MSS’) revenue relative to a strong 1H20. This was more than offset by releases in our expected credit losses and other credit impairment charges (‘ECL’). Reported profit in 1H20 included an impairment of software intangibles of $1.2bn, mainly in Europe.
All regions profitable in 1H21, notably HSBC UK Bank plc reported profit before tax of over $2.1bn in the period. Despite interest rate headwinds, there was continued strength in Asia and a material recovery in profitability in all other regions, reflecting a net release in ECL as the economic outlook improved.
Reported revenue down 4% to $25.6bn, primarily reflecting 2020 interest rate reductions and lower MSS revenue in Global Banking and Markets (‘GBM’). These reductions were partly offset by net favourable movements in market impacts in life insurance manufacturing and valuation adjustments in GBM.
In 1H21, lending increased by $21.5bn on a reported basis, reflecting growth in Wealth and Personal Banking (‘WPB’) and Commercial Banking (‘CMB’). Deposits grew by $26.3bn on a reported basis, with increases in all global businesses.
Net interest margin (‘NIM’) of 1.21% in 1H21, down 22 basis points (‘bps’) from 1H20. NIM in 2Q21 of 1.20% remained stable compared with 1Q21.
Reported ECL were a net release of $0.7bn, compared with a $6.9bn charge in 1H20. The net release in 1H21 primarily reflected an improvement in the economic outlook since 2020. The reduction also reflected low levels of stage 3 charges in 1H21, as well as the non-recurrence of a large charge in 1H20 related to a corporate exposure in Singapore.
Reported and adjusted operating expenses increased 3%, primarily due to a higher performance-related pay accrual as profitability improved, as well as continued investment, partly offset by the impact of our cost-saving initiatives.
Return on average tangible equity (‘RoTE‘) (annualised) of 9.4%, up 5.6 percentage points compared with 1H20.
Common equity tier 1 (‘CET1’) ratio of 15.6%, down 0.3 percentage points from 31 December 2020, reflecting an increase in RWAs from lending growth and a decrease in CET1 capital including the impact of foreseeable dividends.
The Board has announced an interim dividend for 1H21 of $0.07 per ordinary share, to be paid in cash with no scrip alternative.

Financial performance (2Q21 vs 2Q20)

Reported profit after tax up $3.2bn to $3.9bn and reported profit before tax up $4.0bn to $5.1bn. Reported revenue was down 4%, mainly due to lower revenue in MSS, as well as the impact of lower interest rates. This was more than offset by net releases in reported ECL and lower reported operating expenses.

Outlook for 2021

The execution of our strategy continues at pace, including the announcement of transactions in relation to our retail operations in France and mass market retail operations in the US.
Despite continued revenue headwinds, notably in fixed income markets relative to strong comparative periods, as well as low interest rates and Covid-19 impacts, there are emerging signs of unsecured personal lending and commercial lending growth. We expect mid-single-digit lending growth for the full year, which is expected to translate into low-single-digit RWA growth as we progress with our RWA reduction actions.
Given current consensus economics and default experience, ECL charges for 2021 are expected to be materially lower than our medium-term range of 30bps to 40bps of average loans and possibly a net release for the year. Uncertainty remains as countries emerge from the pandemic at different speeds, government support measures unwind and new virus strains test the efficacy of vaccination programmes. To reflect this uncertainty, at 30 June 2021 around $2.4bn remained of the stage 1 and stage 2 ECL allowance uplift we made during 2020.
Our cost reduction programme remains on track. We expect adjusted operating expenses for 2021 to be broadly in line with 2020, excluding the benefit from a reduced bank levy. This remains subject to final decisions on performance-related pay, which will primarily reflect the performance of the Group.
The Group maintains a strong capital position and is well placed to fund growth and step up capital returns. Reflecting the current improved economic outlook and operating environment in many of our markets, we now expect to move to within our target dividend payout ratio range of 40% to 55% of reported earnings per ordinary share in 2021.

HSBC Holdings plc 1Q 2020 Earnings Release

Financial performance (vs. 1Q19)
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.
2020 outlook
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. 
Noel Quinn, Group Chief Executive, said:
“The economic impact of the Covid-19 pandemic on our customers has been the main driver of the change in our financial performance since the turn of the year. The resultant increase in expected credit losses in the first quarter contributed to a material fall in reported profit before tax compared with the same period last year.
HSBC has always been there for our customers in times of crisis, and we are working hard to support them during this unprecedented period of disruption. We do so from a position of strength, with robust levels of capital, funding and liquidity. The market-specific support measures that we are offering our personal and business customers have had strong take-up, and we remain responsive to their changing needs. We are also working closely with governments around the world to channel fiscal support to the real economy quickly and efficiently.
I take the well-being of our people extremely seriously. We have therefore paused the vast majority of redundancies related to the transformation we announced in February to reduce the uncertainty they are facing at this difficult time. We continue to press forward with the other areas of our transformation with the aim of delivering a stronger and leaner business that is better equipped to help our customers prosper in the recovery still to come.”

HSBC Holdings plc Annual Results 2019

Noel Quinn, Group Chief Executive, said:“The Group’s 2019 performance was resilient, however parts of our business are not delivering acceptable returns. We are therefore outlining a revised plan to increase returns for investors, create the capacity for future investment, and build a platform for sustainable growth. We have already begun to implement this plan, which my management team and I are committed to executing at pace.”
2019 financial performance (vs 2018)
Reported profit attributable to ordinary shareholders down 53% to $6.0bn, materially impacted by a goodwill impairment of $7.3bn. Reported profit before tax down 33% to $13.3bn. Reported revenue up 4% and reported operating expenses up 22% due to a goodwill impairment of $7.3bn.
Goodwill impairment of $7.3bn, primarily $4.0bn related to Global Banking and Markets (‘GB&M’) and $2.5bn in Commercial Banking (‘CMB’) in Europe. This reflected lower long-term economic growth rate assumptions, and additionally for GB&M, the planned reshaping of the business.
Adjusted revenue up 5.9% to $55.4bn and adjusted profit before tax up 5% to $22.2bn, reflecting good revenue growth in Retail Banking and Wealth Management (‘RBWM’), Global Private Banking (‘GPB’) and CMB, together with improved cost control.
Adjusted revenue in Asia up 7% to $30.5bn and adjusted profit before tax up 6% to $18.6bn. Within this, there was a resilient performance by Hong Kong, with adjusted profit before tax up 5% to $12.1bn.
Adjusted expected credit losses and other credit impairment charges (‘ECL’) up $1.1bn to $2.8bn from higher charges in CMB and RBWM.
Positive adjusted jaws of 3.1%, reflecting improving cost discipline. Adjusted operating expense growth of 2.8%, well below the growth rate in 2018 (compared with 2017).
Return on average tangible equity (‘RoTE’) down 20 basis points (‘bps’) to 8.4%, supported by a resilient Hong Kong performance.
Earnings per share of $0.30, including a $0.36 per share impact of the goodwill impairment. Dividends per share in respect of 2019 of $0.51.
We continue to monitor the recent coronavirus outbreak, which is causing economic disruption in Hong Kong and mainland China and may impact performance in 2020.
4Q19 financial performance (vs 4Q18)
Reported loss before tax of $3.9bn, impacted by a goodwill impairment of $7.3bn and a $1.0bn UK bank levy charge. Reported revenue up 5% and reported operating expenses up 86% due to a goodwill impairment of $7.3bn.
Adjusted revenue up 9% to $13.6bn and adjusted profit before tax up 29% to $4.3bn. Adjusted profit before tax in Hong Kong up 3% to $2.6bn.
Adjusted costs of $9.1bn, up 3% or $0.3bn, reflecting ongoing cost discipline. Common equity tier 1 (‘CET1’) ratio improved by 40bps from 3Q19 to 14.7%, driven by risk-weighted asset (‘RWA’) reductions of $22bn in 4Q19.
Update on the Group Chief Executive process
The process for appointing a permanent Group Chief Executive is ongoing and we expect to make an appointment within the 6 to 12 months initially outlined.
2020 business update
Alongside the publication of our full-year results, we today update you on our plans to improve the Group’s returns by 2022 to allow us to meet our growth ambition and sustain our current dividend policy. We intend to reduce capital and costs in our underperforming businesses to enable continued investment in businesses with stronger returns and growth prospects, including in RBWM and in all our businesses in Asia. We also plan to simplify our complex organisational structure, including a reduction in Group and central costs, while improving the capital efficiency of the Group.
The Group will target:
– a gross RWA reduction of over $100bn by the end of 2022, with these RWAs to be reinvested, resulting in broadly flat RWAs between 2019 and 2022;- a reduced adjusted cost base of $31bn or below in 2022, underpinned by a new cost reduction plan of $4.5bn; and- a reported RoTE in the range of 10% to 12% in 2022, with the full benefit of our cost reductions and redeployed RWAs flowing into subsequent years.
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