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HSBC Holdings PLC
07 November 2016
Earnings Release - 3Q16
7 November 2016
HSBC Holdings plc - Earnings Release
HSBC Holdings plc ('HSBC') will be conducting a trading update conference call with analysts and investors today to coincide with the publication of its Earnings Release. The call will take place at 07.15am GMT. Details of how to participate in the call and the live audio webcast can be found at www.hsbc.com/investor-relations.
HSBC HOLDINGS PLC
1
Earnings Release - 3Q16 (continued)
Table of contents
Highlights | 4 | |
Group Chief Executive's comments | 5 | |
Adjusted performance | 6 | |
Financial performance commentary | 8 | |
Cautionary statement regarding forward-looking statements | 13 | |
Summary consolidated income statement | 14 | |
Summary consolidated balance sheet | 15 | |
Capital | 16 | |
Risk-weighted assets | 18 | |
Leverage | 20 | |
Summary information - global businesses | 21 | |
Summary information - geographical regions | 26 | |
Appendix - selected information | 31 | |
Reconciliation of reported results to adjusted performance | 31 | |
Gross loans and advances by industry sector and by | ||
geographical region | 40 | |
HSBC HOLDINGS PLC
2
Earnings Release - 3Q16 (continued)
Terms and abbreviations
2Q16 | Second quarter of 2016 |
3Q15/3Q16 | Third quarter of 2015/2016 |
9M15/9M16 | Nine months to 30 September 2015/2016 |
BoCom | Bank of Communications Co., Limited, one of China's largest banks |
CET1 | Common equity tier 1 |
CMB | Commercial Banking, a global business |
CML | Consumer and Mortgage Lending (US) |
Costs to achieve | Transformation costs to deliver the cost reduction and productivity outcomes outlined in the Investor Update in June 2015 |
CRD IV | Capital Requirements Directive IV |
CRR | Capital Requirements Regulation |
DVA | Debit valuation adjustment |
EBA | European Banking Authority |
FTEs | Full-time equivalent staff |
FX | Foreign exchange |
GB&M | Global Banking and Markets, a global business |
GPB | Global Private Banking, a global business |
Group | HSBC Holdings together with its subsidiary undertakings |
IFRSs | International Financial Reporting Standards |
Industrial Bank | Industrial Bank Co. Limited, a national joint-stock bank in mainland China in which Hang Seng Bank Limited has a shareholding |
IRB | Internal ratings-based |
Jaws | The difference between the rate of growth of revenue and the rate of growth of costs. Positive jaws is where the revenue growth rate exceeds the cost growth rate. We calculate this on an adjusted basis |
JV | Joint venture |
Legacy credit | A portfolio of assets comprising Solitaire Funding Limited, securities investment conduits, asset-backed securities trading portfolios, credit correlation portfolios and derivative transactions entered into directly with monoline insurers |
LICs | Loan impairment charges and other credit risk provisions |
MENA | Middle East and North Africa |
Other | Contains the results of HSBC's holding company and financing operations, central support and functional costs with associated recoveries, unallocated investment activities, centrally held investment companies, certain property transactions, movements in fair value of own debt and the UK bank levy |
Own credit spread | Fair value movements on our long-term debt designated at fair value resulting from changes in credit spread |
PBT | Profit before tax |
PRA | Prudential Regulation Authority (UK) |
Principal RBWM | RBWM excluding the effects of the US run-off portfolio |
Revenue | Net operating income before LICs |
RBWM | Retail Banking and Wealth Management, a global business |
RoRWA | Pre-tax return on RWAs is calculated using an average of RWAs at quarter-ends |
RWAs | Risk-weighted assets |
$m/$bn | United States dollar millions/billions |
VaR | Value at risk |
Note to editors
HSBC Holdings plc
HSBC Holdings plc, the parent company of HSBC, is headquartered in London. HSBC serves customers worldwide from approximately 4,000 offices in 71 countries and territories in Europe, Asia, North and Latin America, and the Middle East and North Africa. With assets of $2,557bn at 30 September 2016, HSBC is one of the world's largest banking and financial services organisations.
HSBC HOLDINGS PLC
3
Earnings Release - 3Q16 (continued)
Highlights
Strategy execution
• | Further reduction in RWAs through the completion of Brazil disposal and other management actions. |
• | Reduction in 3Q16 operating expenses on both a reported and adjusted basis to $8.7bn and $7.2bn respectively. |
• | Positive adjusted jaws of 5.6% for 3Q16, and 1.5% for 9M16. |
• | Increased market share in a number of key markets and international product areas, including trade finance in Hong Kong and Singapore. |
• | Share buy-back programme is now 59% complete and expect to finish in late 2016 or early 2017. |
Financial performance
• | Adjusted profit before tax ('PBT') in 3Q16 of $5.6bn, up 7%; reported PBT of $843m. |
• | Adjusted revenue in 3Q16 of $12.8bn, up $0.3bn from increases in client-facing GB&M (+11%) and Principal RBWM (+9%); reported revenue in 3Q16 of $9.5bn, down $5.6bn reflecting the impact of significant items. |
• | Adjusted PBT of $16.7bn in 9M16, down 6% or $1.0bn; reported PBT of $10.6bn. |
Capital
• | Strong capital base with CRD IV end point CET1 ratio 13.9%, up from 12.1% at 30 June 2016, mainly due to a change in regulatory capital treatment of BoCom. |
Financial highlights and key ratios
Nine months ended 30 Sep | Quarter ended 30 Sep | |||||||||||||||||
2016 | 2015 | Change | 2016 | 2015 | Change | |||||||||||||
$m | $m | % | $m | $m | % | |||||||||||||
Reported PBT | 10,557 | 19,725 | (46 | ) | 843 | 6,097 | (86 | ) | ||||||||||
Adjusted PBT | 16,681 | 17,662 | (6 | ) | 5,591 | 5,240 | 7 | |||||||||||
% | % | % | % | |||||||||||||||
Return on average ordinary shareholders' equity (annualised) | 4.4 | 10.7 | (59 | ) | (1.4 | ) | 10.9 | (113 | ) | |||||||||
Adjusted jaws | 1.5 | 5.6 | ||||||||||||||||
We use adjusted performance to understand the underlying trends in the business. The main differences between reported and adjusted are foreign currency translation and significant items, including the operating results for our Brazil business as well as the loss recognised on disposal.
Capital and balance sheet
At | |||||||||
30 Sep | 30 Jun | 31 Dec | |||||||
2016 | 2016 | 2015 | |||||||
% | % | % | |||||||
Common equity tier 1 ratio1 | 13.9 | 12.1 | 11.9 | ||||||
Leverage ratio | 5.4 | 5.1 | 5.0 | ||||||
$m | $m | $m | |||||||
Loans and advances to customers | 880,851 | 887,556 | 924,454 | ||||||
Customer accounts | 1,296,444 | 1,290,958 | 1,289,586 | ||||||
Risk-weighted assets | 904,062 | 1,082,184 | 1,102,995 | ||||||
1 | Since 1 January 2015 the CRD IV transitional CET1 and end point CET1 capital ratios have been aligned for HSBC Holdings plc. |
The grant of the approval by the Prudential Regulation Authority to the change in regulatory capital of BoCom is inside information. This announcement is made by HSBC Holdings plc pursuant to the Inside Information Provisions (as defined under the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited (the 'Hong Kong Listing Rules')) under Part XIVA of the Securities and Futures Ordinance (Cap. 571) and Rule 13.09(2)(a) of the Hong Kong Listing Rules.
HSBC HOLDINGS PLC
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Earnings Release - 3Q16 (continued)
Stuart Gulliver, Group Chief Executive, commented:
Business performance
Our third-quarter performance reflected the strength of our network and the deepening impact of our strategic actions. Reported profits were down, but adjusted profits were higher than last year's third quarter in all four global businesses and four out of five regions. Reported profits included the impact of the disposal of our operations in Brazil, changes in the fair value of our own debt, and the costs of implementing our cost-reduction programmes.
Our global universal banking model generated higher adjusted revenue than for the same period last year, and our cost-reduction programmes continued to reduce our operating expenses. This produced adjusted positive jaws of 5.6% for the third quarter and 1.5% for the first nine months of the year.
Global Banking and Markets had strong adjusted revenue growth in the quarter, with market share gains in Debt Capital Markets globally, and Rates and Credit in Europe. We also achieved one of our best ever rankings for global cross-border mergers and acquisitions. Principal Retail Banking and Wealth Management performed relatively well due to the impact of stock market movements on our insurance business in Asia, compared with a weak third quarter of 2015. Commercial Banking revenue remained stable, as higher balances in Global Liquidity and Cash Management helped mitigate the impact of lower revenue from trade finance.
Following a change in the regulatory treatment of our investment in BoCom, our common equity tier 1 capital ratio increased to 13.9%. This is another action forming part of our ongoing capital management of the Group that reinforces our ability to support the dividend, to invest in the business and, over the medium term, to contemplate share buy-backs, as appropriate. It also provides us with a significant capacity to manage the continuing uncertain regulatory environment.
We had completed 59% of our $2.5bn equity buy-back at 31 October. We expect to finish the programme by the end of 2016 or early in the first quarter of 2017, depending on market trading volumes in the fourth quarter.
Strategy execution
We generated a further $57bn of RWA savings in the third quarter, $40bn of which came from the sale of our Brazil business. We are now more than 80% of the way to achieving our RWA reduction target.
We have also now achieved $2.8bn of annualised cost savings and are on track to achieve our 2017 cost-saving target as well.
Transaction banking revenue for the first nine months is broadly level with the same period in 2015 following a good performance from Global Liquidity and Cash Management. Trade revenue remained under pressure, but we continued to make market share gains in some of the world's biggest trade centres, including Hong Kong and Singapore.
Our US business disposed of a further $0.9bn of legacy CML assets in the third quarter. The principal US business reduced adjusted costs by 5% compared with last year's third quarter and achieved adjusted positive jaws of 6.7% for the first nine months of 2016.
Our Mexico business remains on track to meet its profitability targets. Higher lending and deposit balances across retail and wholesale businesses, and market share gains in personal loans and mortgages helped to more than double its adjusted profit before tax compared with last year's third quarter. We also grew adjusted revenue in Mexico by more than 20% in both Global Trade and Receivables Finance, and Global Liquidity and Cash Management.
HSBC HOLDINGS PLC
5
Earnings Release - 3Q16 (continued)
Adjusted performance
Adjusted performance is computed by adjusting reported results for the period-on-period effects of foreign currency translation differences and significant items, which distort period-on-period comparisons.
We use 'significant items' collectively to describe the group of individual adjustments that are excluded from reported results when arriving at adjusted performance. These items, which are detailed below, are ones that management and investors would ordinarily identify and consider separately when assessing performance in order to understand underlying trends in the business.
These items include the operating results for our Brazil operations sold to Banco Bradesco S.A. on 1 July 2016, as well as the loss recognised on disposal.
We consider adjusted performance provides useful information for investors by aligning internal and external reporting, identifying and quantifying items management believe to be significant, and providing insight into how management assesses period-on-period performance.
Foreign currency translation differences
Foreign currency translation differences reflect the movements of the US dollar against most major currencies. We exclude translation differences when deriving constant currency data because using this data allows us to assess balance sheet and income statement performance on a like-for-like basis to better understand the underlying trends in the business.
Foreign currency translation differences are computed by retranslating into US dollars for non-US dollar branches, subsidiaries, joint ventures and associates:
• | in the income statement for 9M15, at the average rates of exchange for 9M16; |
• | in the income statement for quarterly periods, at the average rates of exchange for 3Q16; and |
• | the closing prior period balance sheets at the prevailing rates of exchange on 30 September 2016. |
Significant items
The tables in the Appendix starting on page 30 detail the effect of significant items on each of our geographical segments and global businesses during 9M16 and 3Q16, and the respective comparatives in 2015.
HSBC HOLDINGS PLC
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Earnings Release - 3Q16 (continued)
Reconciliation of reported results to adjusted performance
Nine months ended 30 Sep | Quarter ended 30 Sep | |||||||||||
2016 | 2015 | 2016 | 2015 | |||||||||
$m | $m | $m | $m | |||||||||
Revenue | ||||||||||||
Reported | 38,982 | 48,028 | 9,512 | 15,085 | ||||||||
Currency translation | (2,233 | ) | (658 | ) | ||||||||
Significant items | 171 | (5,701 | ) | 3,275 | (1,899 | ) | ||||||
- DVA on derivative contracts | (96 | ) | (416 | ) | 55 | (251 | ) | |||||
- fair value movements on non-qualifying hedges | 385 | 353 | (12 | ) | 308 | |||||||
- loss on sale of several tranches of real estate secured accounts in the US | 51 | - | 119 | 17 | ||||||||
- gain on disposal of our membership interest in Visa Europe | (584 | ) | - | - | - | |||||||
- gain on the partial sale of shareholding in Industrial Bank | - | (1,372 | ) | - | - | |||||||
- own credit spread | 144 | (1,775 | ) | 1,370 | (1,125 | ) | ||||||
- provisions/(releases) arising from the ongoing review of compliance with the UK Consumer Credit Act | (2 | ) | (2 | ) | - | 10 | ||||||
- loss and trading results from disposed-of operations in Brazil1 | 273 | (2,489 | ) | 1,743 | (858 | ) | ||||||
Adjusted | 39,153 | 40,094 | 12,787 | 12,528 | ||||||||
LICs | ||||||||||||
Reported | (2,932 | ) | (2,077 | ) | (566 | ) | (638 | ) | ||||
Currency translation | 155 | (3 | ) | |||||||||
Significant items | 748 | 609 | - | 207 | ||||||||
- trading results from disposed-of operations in Brazil1 | 748 | 609 | - | 207 | ||||||||
Adjusted | (2,184 | ) | (1,313 | ) | (566 | ) | (434 | ) | ||||
Operating expenses | ||||||||||||
Reported | (27,349 | ) | (28,226 | ) | (8,721 | ) | (9,039 | ) | ||||
Currency translation | 1,476 | 437 | ||||||||||
Significant items | 5,204 | 3,716 | 1,473 | 1,088 | ||||||||
- costs to achieve2 | 2,032 | 165 | 1,014 | 165 | ||||||||
- costs to establish UK ring-fenced bank3 | 147 | 28 | 53 | 28 | ||||||||
- impairment of GPB - Europe goodwill | 800 | - | - | - | ||||||||
- regulatory provisions in GPB | (46 | ) | 154 | (50 | ) | 7 | ||||||
- restructuring and other related costs | - | 117 | - | - | ||||||||
- settlements and provisions in connection with legal matters | 723 | 1,279 | - | 135 | ||||||||
- UK customer redress programmes | 489 | 204 | 456 | 67 | ||||||||
- trading results from disposed-of operations in Brazil1 | 1,059 | 1,769 | - | 686 | ||||||||
Adjusted | (22,145 | ) | (23,034 | ) | (7,248 | ) | (7,514 | ) | ||||
Share of profit in associates and joint ventures | ||||||||||||
Reported | 1,856 | 2,000 | 618 | 689 | ||||||||
Currency translation | (86 | ) | (29 | ) | ||||||||
Significant items | 1 | 1 | - | - | ||||||||
- trading results from disposed-of operations in Brazil1 | 1 | 1 | - | - | ||||||||
Adjusted | 1,857 | 1,915 | 618 | 660 | ||||||||
Profit before tax | ||||||||||||
Reported | 10,557 | 19,725 | 843 | 6,097 | ||||||||
Currency translation | (688 | ) | (253 | ) | ||||||||
Significant items | 6,124 | (1,375 | ) | 4,748 | (604 | ) | ||||||
- revenue | 171 | (5,701 | ) | 3,275 | (1,899 | ) | ||||||
- LICs | 748 | 609 | - | 207 | ||||||||
- operating expenses | 5,204 | 3,716 | 1,473 | 1,088 | ||||||||
- share in profit of associates | 1 | 1 | - | - | ||||||||
Adjusted | 16,681 | 17,662 | 5,591 | 5,240 | ||||||||
1 | Includes loss on disposal, trading results, and foreign currency translation of operations in Brazil, which were sold on 1 July 2016. Trading results include inter-company transactions with other HSBC group entities. Trading results do not include 'DVA on derivative contracts', 'costs to achieve' and 'restructuring and other related costs' significant items. These significant items are included in the respective line items above. Further details are included in the Appendix on pages 30 to 37. |
2 | Transformation costs to deliver the cost reduction and productivity outcomes outlined in our Investor Update in June 2015. |
3 | Since 1 July 2015, costs to establish the UK ring-fenced bank have been classified as a significant item. |
HSBC HOLDINGS PLC
7
Earnings Release - 3Q16 (continued)
Financial performance commentary
Profit/(loss) before tax by global business and geographical region
Nine months ended | Quarter ended | ||||||||||||||
30 Sep 2016 | 30 Sep20151 | 30 Sep 2016 | 30 Jun20161 | 30 Sep20151 | |||||||||||
$m | $m | $m | $m | $m | |||||||||||
By global business | |||||||||||||||
Retail Banking and Wealth Management | 2,648 | 4,522 | 266 | 1,249 | 1,160 | ||||||||||
Commercial Banking | 5,839 | 6,749 | 1,535 | 2,254 | 2,226 | ||||||||||
Global Banking and Markets | 5,967 | 6,895 | 1,961 | 1,885 | 2,141 | ||||||||||
Global Private Banking | (406 | ) | 261 | 151 | (667 | ) | 81 | ||||||||
Other | (3,491 | ) | 1,298 | (3,070 | ) | (1,113 | ) | 489 | |||||||
10,557 | 19,725 | 843 | 3,608 | 6,097 | |||||||||||
By geographical region | |||||||||||||||
Europe | (32 | ) | 3,801 | (1,617 | ) | (113 | ) | 1,581 | |||||||
Asia | 10,815 | 12,948 | 3,660 | 3,625 | 3,548 | ||||||||||
Middle East and North Africa | 1,308 | 1,232 | 329 | 470 | 346 | ||||||||||
North America | 116 | 1,169 | 66 | (314 | ) | 479 | |||||||||
Latin America | (1,650 | ) | 575 | (1,595 | ) | (60 | ) | 143 | |||||||
10,557 | 19,725 | 843 | 3,608 | 6,097 | |||||||||||
1 | In 3Q16, HSBC Bank plc executed a management services agreement, transferring its governance responsibilities over HSBC Bank A.S. (Turkey) to HSBC Bank Middle East Limited to leverage the strong commercial ties between Turkey and MENA. Comparative data for Europe and MENA have been re-presented accordingly. |
Adjusted PBT by global business and region is presented to support the commentary on adjusted performance on the following pages.
Adjusted profit/(loss) before tax by global business and geographical region
Nine months ended 30 Sep | Quarter ended 30 Sep | |||||||||||
2016 | 20151 | 2016 | 20151 | |||||||||
$m | $m | $m | $m | |||||||||
By global business | ||||||||||||
Retail Banking and Wealth Management | 4,908 | 5,322 | 1,799 | 1,510 | ||||||||
Commercial Banking | 6,363 | 6,428 | 2,096 | 2,080 | ||||||||
Global Banking and Markets | 6,506 | 6,988 | 2,513 | 1,926 | ||||||||
Global Private Banking | 351 | 402 | 109 | 86 | ||||||||
Other | (1,447 | ) | (1,478 | ) | (926 | ) | (362 | ) | ||||
16,681 | 17,662 | 5,591 | 5,240 | |||||||||
By geographical region | ||||||||||||
Europe | 2,753 | 3,482 | 863 | 819 | ||||||||
Asia | 11,007 | 11,286 | 3,804 | 3,451 | ||||||||
Middle East and North Africa | 1,370 | 1,190 | 379 | 328 | ||||||||
North America | 1,067 | 1,461 | 383 | 556 | ||||||||
Latin America | 484 | 243 | 162 | 86 | ||||||||
16,681 | 17,662 | 5,591 | 5,240 | |||||||||
1 | In 3Q16, HSBC Bank plc executed a management services agreement, transferring its governance responsibilities over HSBC Bank A.S. (Turkey) to HSBC Bank Middle East Limited to leverage the strong commercial ties between Turkey and MENA. Comparative data for Europe and MENA have been re-presented accordingly. |
The tables on pages 30 to 37 reconcile reported to adjusted results for each of our geographical regions and global businesses.
3Q16 compared with 3Q15 - reported results
Movement in reported profit before tax compared with 3Q15
HSBC HOLDINGS PLC
8
Earnings Release - 3Q16 (continued)
3Q16 | 3Q15 | Var | ||||||||||
$m | $m | $m | % | |||||||||
Revenue | 9,512 | 15,085 | (5,573 | ) | (37 | ) | ||||||
LICs | (566 | ) | (638 | ) | 72 | 11 | ||||||
Operating expenses | (8,721 | ) | (9,039 | ) | 318 | 4 | ||||||
Share of profit from associates and JVs | 618 | 689 | (71 | ) | (10 | ) | ||||||
Profit before tax | 843 | 6,097 | (5,254 | ) | (86 | ) | ||||||
In 3Q16, reported PBT of $0.8bn was $5.3bn lower than in 3Q15. This was mainly due to a net unfavourable movement of $5.4bn in significant items and the adverse effect of foreign currency translation movements of $0.3bn, which are described in more detail on page 7. Movements in significant items included:
• | adverse fair value movements of $1.4bn arising from changes in credit spreads on our own debt designated at fair value, compared with favourable movements of $1.1bn in 3Q15; |
• | a $1.7bn loss recognised on the sale of our Brazil business to Banco Bradesco S.A., which completed on 1 July 2016 (in 3Q16, the operating results of our Brazil business were minimal); |
• | costs to achieve of $1.0bn in 3Q16 compared with $0.2bn in 3Q15; and |
• | UK customer redress of $0.5bn in 3Q16 compared with $0.1bn in 3Q15. |
These items had the effect of reducing reported PBT in RBWM, CMB and GB&M, although PBT in GPB rose. Excluding all significant items and the adverse effects of foreign currency translation differences between the periods, PBT rose by $0.4bn. The business drivers affecting our performance are covered in detail in the section below (see '3Q16 compared with 3Q15 - adjusted results' on this page).
Reported revenue of $9.5bn was $5.6bn lower than in 3Q15, notably driven by the adverse movements in the credit spread on our debt as mentioned above, and the unfavourable effects of foreign currency translation of $0.7bn between the periods. In addition, our reported revenue includes a loss recognised on the sale of our Brazil business of $1.7bn in 3Q16 compared with operating revenue of $0.9bn in Brazil in 3Q15. As a result of these items, reported revenue fell in all of our global businesses.
Reported LICs of $0.6bn were $0.1bn lower than in 3Q15, notably driven by the sale of our business in Brazil, where we recorded $0.2bn of LICs in 3Q15.
Reported operating expenses of $8.7bn were $0.3bn lower, as the adverse impact of significant items mentioned above (including the operating expenses for Brazil of nil in 3Q16 compared with $0.7bn in 3Q15) was broadly offset by the favourable effects of foreign currency translation between the periods of $0.4bn. Operating expenses fell in RBWM, CMB, GB&M and GPB, partly offset by a rise in Other.
3Q16 compared with 3Q15 - adjusted results
Movement in adjusted profit before tax compared with 3Q15
3Q16 | 3Q15 | Var | ||||||||||
$m | $m | $m | % | |||||||||
Revenue | 12,787 | 12,528 | 259 | 2 | ||||||||
LICs | (566 | ) | (434 | ) | (132 | ) | (30 | ) | ||||
Operating expenses | (7,248 | ) | (7,514 | ) | 266 | 4 | ||||||
Share of profit from associates and JVs | 618 | 660 | (42 | ) | (6 | ) | ||||||
Profit before tax | 5,591 | 5,240 | 351 | 7 | ||||||||
On an adjusted basis, PBT of $5.6bn was $0.4bn or 7% higher than 3Q15, reflecting an increase in revenue and lower costs, partly offset by an increase in LICs.
Adjusted revenue of $12.8bn increased by $0.3bn or 2%, mainly in GB&M (up $0.5bn or 13%) and in RBWM (up $0.3bn or 6%). Revenue in CMB was broadly unchanged. Key drivers are as follows:
• | In GB&M adjusted revenue increased by $0.5bn, driven by client-facing GB&M (up $0.4bn or 11%). This was primarily in our fixed income businesses - Rates (up $0.2bn) and Credit (up $0.2bn) - as we gained market share, notably in Europe, and improved client flows, which more than offset net adverse movements in Rates of $0.2bn on our own credit spreads in structured liabilities. Revenue also rose in Principal Investments ($0.1bn) reflecting higher gains on disposal. By contrast, revenue fell in Equities (down $0.1bn), resulting from unfavourable movements on our own credit spreads in structured liabilities in 3Q16 of $0.1bn, compared with favourable movements of $0.1bn in 3Q15. Excluding these movements, revenue in Equities was broadly unchanged. In legacy credit, revenue increased by $0.1bn following higher revaluation gains in 3Q16. |
• | In RBWM, adjusted revenue rose by $0.3bn. In Principal RBWM (up $0.4bn), this was driven by an increase in revenue in wealth management of $0.3bn arising from unfavourable market conditions in insurance manufacturing in Asia in 3Q15. Current account and savings revenue also increased, by $0.1bn, as we grew deposit balances in most regions and benefited from wider spreads, primarily in Hong Kong, Mexico and Argentina. By contrast, revenue from personal lending fell by $0.1bn, driven by lower credit card revenue, notwithstanding growth in lending volumes in Hong Kong, the UK and Mexico. In our US run-off business, revenue fell by $0.1bn as we continued to reduce the size of our US CML run-off portfolio. |
These increases were partly offset:
• | In Other, adjusted revenue decreased $0.7bn, partly reflecting higher interest expense relating to long-term debt issued by HSBC Holdings plc. The remainder of the decrease related to a number of intra-group adjustments, which were largely offset within the global businesses. |
Adjusted LICs of $0.6bn were $0.1bn or 30% higher. In RBWM, LICs increased by $0.1bn, principally in Mexico reflecting our strategic focus on growing unsecured lending balances.
HSBC HOLDINGS PLC
9
Earnings Release - 3Q16 (continued)
Additionally, in CMB LICs increased from a small number of charges against specific exposures, notably in Hong Kong, mainland China and Spain, as well as an increase in charges in the UK.
Adjusted operating expenses of $7.2bn were $0.3bn or 4% lower, despite inflationary pressures. This primarily reflected the effect of our transformational cost saving through organisational design, reduced FTEs and branch optimisation, as well as lower performance costs across the business.
9M16 compared with 9M15 - reported results
Movement in reported profit before tax compared with 9M15
9M16 | 9M15 | Var | ||||||||||
$m | $m | $m | % | |||||||||
Revenue | 38,982 | 48,028 | (9,046 | ) | (19 | ) | ||||||
LICs | (2,932 | ) | (2,077 | ) | (855 | ) | (41 | ) | ||||
Operating expenses | (27,349 | ) | (28,226 | ) | 877 | 3 | ||||||
Share of profit from associates and JVs | 1,856 | 2,000 | (144 | ) | (7 | ) | ||||||
Profit before tax | 10,557 | 19,725 | (9,168 | ) | (46 | ) | ||||||
Reported PBT of $10.6bn in 9M16 was $9.2bn or 46% lower than in 9M15. This was primarily due to net adverse movements relating to significant items and the unfavourable effects of foreign currency translation, which are described in more detail below and on page 7. Excluding significant items and currency translation, adjusted profit before tax fell by $1.0bn. The business drivers affecting performance are covered in detail in the section below (see '9M16 compared with 9M15 - adjusted results').
Movement in reported revenue compared with 9M15
9M16 | 9M15 | Var | ||||||||||
$m | $m | $m | % | |||||||||
RBWM | 15,306 | 17,912 | (2,606 | ) | (15 | ) | ||||||
CMB | 10,320 | 11,236 | (916 | ) | (8 | ) | ||||||
GB&M | 12,927 | 14,786 | (1,859 | ) | (13 | ) | ||||||
GPB | 1,435 | 1,685 | (250 | ) | (15 | ) | ||||||
Other1 | (1,006 | ) | 2,409 | (3,415 | ) | (142 | ) | |||||
Total | 38,982 | 48,028 | (9,046 | ) | (19 | ) | ||||||
1 | Other includes Inter-segment. |
Reported revenue of $39.0bn in 9M16 was $9.0bn or 19% lower than in 9M15, in part due to a net unfavourable movement in significant items of $5.9bn, which included:
• | adverse fair value movements of $0.1bn arising from changes in credit spreads on our own debt designated at fair value, compared with favourable movements of $1.8bn in 9M15; |
• | the $1.7bn loss recognised on the sale of our Brazil business to Banco Bradesco S.A., which we completed on 1 July 2016. In addition, the reported results include the revenue earned in our Brazil business of $1.5bn in 9M16 compared with $2.5bn in 9M15; and |
• | the non-recurrence of a $1.4bn gain on the sale of part of our shareholding in Industrial Bank in 9M15; partly offset by |
• | a $0.6bn gain on the disposal of our membership interest in Visa Europe in 2Q16. |
In addition, foreign currency translation between the periods had an adverse effect of $2.2bn. These factors contributed to a fall in reported revenue in all of our global businesses. Excluding significant items and the adverse effects of foreign currency translation differences between the periods, revenue fell by $0.9bn, which is described in detail below.
Reported LICs of $2.9bn were $0.9bn higher than in 9M15. The reported results include LICs incurred in our Brazil business of $0.7bn in 9M16 compared with $0.6bn in 9M15. In addition, LICs rose in our GB&M, CMB and RBWM businesses. This was partly offset by the favourable effect of foreign currency translation differences between the periods of $0.2bn.
Reported operating expenses of $27.3bn were $0.9bn or 3% lower than in 9M15. This includes favourable effects of currency translation of $1.5bn between the periods, although these were broadly offset by an increase in significant items of $1.5bn, including:
• | costs to achieve of $2.0bn in 9M16 compared with $0.2bn in 9M15; and |
• | an impairment of $0.8bn relating to goodwill in our GPB business in Europe; partly offset by |
• | a reduction of $0.6bn in settlements and provisions in connection with legal matters. |
In addition, the reported results include the operating expenses incurred in our Brazil business of $1.1bn in 9M16, compared with $1.8bn in 9M15.
Excluding significant items and the adverse effects of foreign currency translation differences between the periods, operating expenses fell by $0.9bn. Reductions in RBWM, CMB and GB&M, were partly offset by a rise in GPB and Other. The reductions partly reflected the effects of our cost-saving initiatives, which are described in more detail below.
Reported income from associates of $1.9bn decreased by $0.1bn.
On 3 October 2016, the Board announced a third interim dividend of $0.10 per ordinary share.
9M16 compared with 9M15 - adjusted results
Movement in adjusted profit before tax compared with 9M15
9M16 | 9M15 | Var | ||||||||||
$m | $m | $m | % | |||||||||
Revenue | 39,153 | 40,094 | (941 | ) | (2 | ) | ||||||
LICs | (2,184 | ) | (1,313 | ) | (871 | ) | (66 | ) | ||||
Operating expenses | (22,145 | ) | (23,034 | ) | 889 | 4 | ||||||
Share of profit from associates and JVs | 1,857 | 1,915 | (58 | ) | (3 | ) | ||||||
Profit before tax | 16,681 | 17,662 | (981 | ) | (6 | ) | ||||||
On an adjusted basis, PBT of $16.7bn was $1.0bn or 6% lower than in 9M15. This was primarily driven by lower revenue and higher LICs, partly offset by a decrease in operating expenses.
HSBC HOLDINGS PLC
10
Earnings Release - 3Q16 (continued)
Movement in adjusted revenue compared with 9M15
9M16 | 9M15 | Var | ||||||||||
$m | $m | $m | % | |||||||||
RBWM | 14,961 | 15,525 | (564 | ) | (4 | ) | ||||||
Principal RBWM | 14,393 | 14,668 | (275 | ) | (2 | ) | ||||||
US CML run-off portfolio | 568 | 857 | (289 | ) | (34 | ) | ||||||
CMB | 10,343 | 10,164 | 179 | 2 | ||||||||
GB&M | 13,062 | 13,394 | (332 | ) | (2 | ) | ||||||
Client facing GB&M and BSM | 13,036 | 13,303 | (267 | ) | (2 | ) | ||||||
Legacy credit | 26 | 91 | (65 | ) | (71 | ) | ||||||
GPB | 1,426 | 1,599 | (173 | ) | (11 | ) | ||||||
Other1 | (639 | ) | (588 | ) | (51 | ) | (9 | ) | ||||
Total | 39,153 | 40,094 | (941 | ) | (2 | ) | ||||||
1 | Other includes Inter-segment. |
Adjusted revenue of $39.2bn was $0.9bn or 2% lower. Notably:
• | In GB&M, adjusted revenue was $0.3bn or 2% lower than in 9M15. This was partly due to a decrease in our client-facing business (down $0.3bn or 3%), mainly in Equities, reflecting lower global trading volumes. FX revenue also fell, particularly in 1Q16, caused by market uncertainty leading to a fall in client activity, although this recovered in 2Q16 and 3Q16. By contrast, revenue increased in our fixed income businesses - Rates and Credit - as we gained market share, notably in 3Q16 in Europe, and from improved client flows. Rates and Equities were also affected by net adverse movements of $0.1bn and $0.2bn respectively in our own credit spreads on structured liabilities. In Global Liquidity and Cash Management, revenue increased as we won new client mandates, grew average balances and benefited from wider spreads. |
• | In RBWM, adjusted revenue decreased by $0.6bn or 4%. In our Principal RBWM business (down $0.3bn or 2%), decreases were primarily in Wealth Management, following a strong performance in the first half of 2015. In investment distribution, revenue fell (down $0.4bn), mainly in Asia due to lower retail-securities and mutual-funds turnover. In addition, there was lower revenue in life insurance manufacturing (down $0.2bn), primarily in Europe, due to adverse market updates as a result of interest rate movements. Personal lending revenue also decreased ($0.2bn down) because of lower credit card revenue in the UK, despite higher overall lending volumes in Hong Kong, the UK and Mexico. By contrast, current account and savings revenue increased (up $0.3bn), as we grew customer deposit balances in most regions, notably Hong Kong and the UK. We also benefited from wider spreads in Hong Kong, Mexico and Argentina. In our US run-off portfolio, revenue decreased by $0.3bn reflecting lower average lending balances and the impact of portfolio sales. |
• | In GPB, adjusted revenue fell by $0.2bn or 11%, driven by lower brokerage and trading activity in both Europe and Asia. This reflected adverse market sentiment and unfavourable market conditions, notably in the first half of the year. |
These factors were partly offset:
• | In CMB, adjusted revenue rose by $0.2bn or 2%. This increase included growth in Global Liquidity and Cash Management (up $0.1bn), notably because of increased balances and wider spreads in Hong Kong and increased balances in the UK. Revenue in Credit and Lending also increased (up $0.1bn), driven by continued loan growth in the UK. This was partly offset by lower revenue in Global Trade and Receivables Finance, mainly in Asia and MENA. This was driven by a reduction in world trade and resulting reduction in trade lending in the market. In Asia, we were also affected by Chinese corporates reverting to mainland China for financing due to lower interest rates. Notwithstanding these factors, we gained share in key markets such as Hong Kong and Singapore. |
Adjusted LICs of $2.2bn were $0.9bn higher, reflecting increases in our GB&M, CMB and RBWM businesses:
• | In GB&M (up $0.4bn), we incurred individually assessed charges, notably in the oil and gas, and metals and mining sectors, primarily in the US and Australia in 9M16. These compared with net releases in 9M15. |
• | In CMB (up $0.2bn), our individually assessed charges increased in a small number of countries, notably in Canada in the energy sector, and to a lesser extent in Spain in the construction sector, and in Hong Kong in several sectors. In addition, we increased our collectively assessed allowances in the UK, compared with a net release in 9M15. |
• | In RBWM (up $0.2bn), LICs rose, notably due to an increase of $0.1bn in Mexico, reflecting our strategic focus on growing unsecured lending. In the UK, LICs also grew due to net charges on mortgage balances, compared with a net release in 9M15. |
Adjusted operating expenses of $22.1bn were $0.9bn or 4% lower than in 9M15, despite inflationary pressures and increases in regulatory programmes and compliance costs. This primarily reflected transformational cost savings of $1.3bn achieved year on year, with run-rate savings of around $2.8bn since the commencement of our cost-saving programme.
Run-the-bank costs of $20.2bn were $0.3bn lower compared with 9M15 and change-the-bank costs of $2.1bn were $0.5bn lower compared with the same period. This reflected:
• | in RBWM, the effects of our transformational cost-saving initiatives, which included our branch optimisation programme; |
• | in GB&M, cost reductions driven by reduced performance-related pay, disciplined cost management, improved process efficiencies including material FTE reductions and technology delivery rationalisation; and |
• | in CMB, lower costs due to ongoing cost discipline and the impact of our transformation initiatives, which more than offset inflation. |
The savings above continue to be supported by benefits of transformational savings in our technology, operations and other functions.
Included within the above, our total expenditure on regulatory programmes and compliance, comprising both run-the-bank and change-the-bank elements, was $2.2bn, up $0.2bn or 10% from 9M15. This reflected the ongoing
HSBC HOLDINGS PLC
11
Earnings Release - 3Q16 (continued)
implementation of our Global Standards programme to enhance our financial crime risk controls and capabilities, and meet our external commitments.
The number of employees expressed in FTEs at 30 September 2016 was 234,681, a decrease of 1,378 from 31 December 2015. This was primarily driven by reductions across global businesses, offset by investment in compliance and costs-to-achieve FTEs.
Adjusted income from associates of $1.9bn fell by $0.1bn.
The effective tax rate for 9M16 of 29.3% was higher than the 18.0% rate in 9M15, principally due to the non-deductible loss on disposal of our Brazil operations and the UK government's 8% surcharge on UK banking profits.
Balance sheet commentary compared with 30 June 2016
Total reported assets fell by $50.9bn, notably due to the completion of the sale of our Brazil business to Banco Bradesco S.A. (a $48.3bn reduction).
Reported loans and advances to customers decreased by $6.7bn during 3Q16, and included:
• | adverse currency translation movements of $9.5bn; partly offset by |
• | a $2.4bn increase in corporate overdraft balances in Europe that did not meet the criteria for netting, with a corresponding rise in customer accounts. |
Excluding these factors, customer lending was broadly unchanged. Lending rose mainly in Europe, primarily in the UK due to continued growth in CMB term lending and in RBWM in mortgages as we increased the use of broker channels. This was partly offset by our continued focus on reducing legacy portfolios, primarily transfers to 'Assets held for sale' of US first lien mortgage balances (a $0.9bn reduction). Balances also fell in CMB in North America from repayments and maturities, and in MENA in both
CMB and GB&M as we ran off certain portfolios and focused on return optimisation.
Reported customer account balances increased by $5.5bn during 3Q16, and included:
• | adverse currency translation movements of $12.5bn; partly offset by |
• | a $2.4bn increase in corporate current account balances, in line with the increase in corporate overdrafts. |
Excluding these movements, customer accounts increased by $15.6bn, mainly in Asia from RBWM and Global Liquidity and Cash Management.
Net interest margin
Net interest margin for 9M16 fell on a reported basis, compared with 9M15, in part driven by the adverse effects of currency translation and the sale of our Brazil business to Banco Bradesco S.A. Excluding currency movements and the sale of Brazil, our net interest margin fell, as gross yields on customer lending remained under pressure, principally in the UK on mortgages and term lending, as well as from the accelerated run-off and sales in the US CML portfolio. However, yields on customer lending were unchanged in Asia. By contrast, in Mexico and Argentina, we benefited from the effects of central bank rate rises across our asset portfolio.
However, we had a lower cost of funds, notably from a reduction in our cost of customer accounts in Asia, reflecting a shift in our portfolio in HK to lower-cost current accounts and the effects of lower central bank rates in China, Australia and India.
Notes
• | Income statement comparisons, unless stated otherwise, are between the quarter ended 30 September 2015 and the quarter ended 30 September 2016, or between the nine months ended 30 September 2015 and the corresponding nine months in 2016. Balance sheet comparisons, unless otherwise stated, are between balances at 30 September 2016 and the corresponding balances at 30 June 2016. |
• | 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 HSBC's significant accounting policies as described on pages 347 to 358 of the Annual Report and Accounts 2015. |
• | The Board has adopted a policy of paying quarterly interim dividends on the ordinary shares. Under this policy, it is intended to have a pattern of three equal interim dividends with a variable fourth interim dividend. Dividends are declared in US dollars and, at the election of the shareholder, paid in cash in one of, or in a combination of, US dollars, sterling and Hong Kong dollars or, subject to the Board's determination that a scrip dividend is to be offered in respect of that dividend, may be satisfied in whole or in part by the issue of new shares in lieu of a cash dividend. |
HSBC HOLDINGS PLC
12
Earnings Release - 3Q16 (continued)
Cautionary statement regarding forward-looking statements
This Earnings Release contains certain forward-looking statements with respect to HSBC's financial condition, results of operations, capital position and business.
Statements that are not historical facts, including statements about HSBC's beliefs and expectations, are forward-looking statements. Words such as 'expects', 'anticipates', 'intends', 'plans', 'believes', 'seeks', 'estimates', 'potential' and 'reasonably possible', variations of these words and similar expressions are intended to identify forward-looking statements. These statements are based on current plans, estimates and projections, and therefore undue reliance should not be placed on them. Forward-looking statements speak only as of the date they are made. HSBC makes no commitment to revise or update any forward-looking statements to reflect events or circumstances occurring or existing after the date of any forward-looking statements.
Written and/or oral forward-looking statements may also be made in the periodic reports to the US Securities and Exchange Commission, summary financial statements to shareholders, proxy statements, offering circulars and prospectuses, press releases and other written materials, and in oral statements made by HSBC's Directors, officers or employees to third parties, including financial analysts.
Forward-looking statements involve inherent risks and uncertainties. Readers are cautioned that a number of factors could cause actual results to differ, in some instances materially, from those anticipated or implied in any forward-looking statement.
These include, but are not limited to:
• | changes in general economic conditions in the markets in which we operate, such as continuing or deepening recessions and fluctuations in employment beyond those factored into consensus forecasts; changes in foreign exchange rates and interest rates; volatility in equity markets; lack of liquidity in wholesale funding markets; 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; and consumer perception as to the continuing availability of credit 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; 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 conduct of business of financial institutions in serving their retail customers, corporate clients and counterparties; the standards of market conduct; the costs, effects and outcomes of product regulatory reviews, actions or litigation, including any additional compliance requirements; expropriation, nationalisation, confiscation of assets and changes in legislation relating to foreign ownership; changes in bankruptcy legislation in the principal markets in which we operate and the consequences thereof; general changes in government policy that may significantly influence investor decisions; extraordinary government actions as a result of current market turmoil; other unfavourable political or diplomatic developments producing social instability or legal uncertainty which in turn may affect demand for our products and services; and the effects of competition in the markets where we operate including increased competition from non-bank financial services companies, including securities firms; 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). 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 we use; our success in addressing operational, legal and regulatory, and litigation challenges, notably compliance with the Deferred Prosecution Agreement with US authorities; and the other risks and uncertainties we identify in 'top and emerging risks' on pages 16 and 17 of the Interim Report 2016. |
For further information contact:
Investor Relations | Media Relations | |
UK - Richard O'Connor | UK - Heidi Ashley | |
Email: investorrelations@hsbc.com | Tel: +44 (0) 20 7992 2045 | |
Hong Kong - Hugh Pye | Hong Kong - Gareth Hewett | |
Tel: +852 2822 4908 | Tel: +852 2822 4929 | |
HSBC HOLDINGS PLC
13
Earnings Release - 3Q16 (continued)
Summary consolidated income statement
Nine months ended | Quarter ended | ||||||||||||||
30 Sep 2016 | 30 Sep 2015 | 30 Sep 2016 | 30 Jun 2016 | 30 Sep 2015 | |||||||||||
$m | $m | $m | $m | $m | |||||||||||
Net interest income | 22,945 | 24,472 | 7,185 | 7,847 | 8,028 | ||||||||||
Net fee income | 9,848 | 11,234 | 3,262 | 3,389 | 3,509 | ||||||||||
Net trading income | 7,555 | 7,315 | 2,231 | 2,488 | 2,742 | ||||||||||
Changes in fair value of long-term debt issued and related derivatives | (1,402 | ) | 1,947 | (1,672 | ) | (420 | ) | 623 | |||||||
Net income/(expense) from other financial instruments designated at fair value | 1,150 | (165 | ) | 859 | 286 | (1,507 | ) | ||||||||
Net income/(expense) from financial instruments designated at fair value | (252 | ) | 1,782 | (813 | ) | (134 | ) | (884 | ) | ||||||
Gains less losses from financial investments | 1,271 | 2,048 | 306 | 773 | 174 | ||||||||||
Dividend income | 78 | 96 | 14 | 36 | 28 | ||||||||||
Net insurance premium income | 7,891 | 8,100 | 2,535 | 2,441 | 2,493 | ||||||||||
Other operating income/(expense) | (847 | ) | 1,107 | (1,491 | ) | 472 | 271 | ||||||||
Total operating income | 48,489 | 56,154 | 13,229 | 17,312 | 16,361 | ||||||||||
Net insurance claims and benefits paid and movement in liabilities to policyholders | (9,507 | ) | (8,126 | ) | (3,717 | ) | (2,818 | ) | (1,276 | ) | |||||
Net operating income before loan impairment charges and othercredit risk provisions | 38,982 | 48,028 | 9,512 | 14,494 | 15,085 | ||||||||||
Loan impairment charges and other credit risk provisions | (2,932 | ) | (2,077 | ) | (566 | ) | (1,205 | ) | (638 | ) | |||||
Net operating income | 36,050 | 45,951 | 8,946 | 13,289 | 14,447 | ||||||||||
Total operating expenses | (27,349 | ) | (28,226 | ) | (8,721 | ) | (10,364 | ) | (9,039 | ) | |||||
Operating profit | 8,701 | 17,725 | 225 | 2,925 | 5,408 | ||||||||||
Share of profit in associates and joint ventures | 1,856 | 2,000 | 618 | 683 | 689 | ||||||||||
Profit before tax | 10,557 | 19,725 | 843 | 3,608 | 6,097 | ||||||||||
Tax expense | (3,094 | ) | (3,541 | ) | (803 | ) | (720 | ) | (634 | ) | |||||
Profit after tax | 7,463 | 16,184 | 40 | 2,888 | 5,463 | ||||||||||
Profit/(loss) attributable to shareholders of the parent company | 6,708 | 14,847 | (204 | ) | 2,611 | 5,229 | |||||||||
Profit attributable to non-controlling interests | 755 | 1,337 | 244 | 277 | 234 | ||||||||||
$ | $ | $ | $ | $ | |||||||||||
Basic earnings per ordinary share | 0.29 | 0.73 | (0.03) | 0.13 | 0.25 | ||||||||||
Diluted earnings per ordinary share | 0.29 | 0.72 | (0.03) | 0.12 | 0.25 | ||||||||||
Dividend per ordinary share (in respect of the period) | 0.30 | 0.30 | 0.10 | 0.10 | 0.10 | ||||||||||
% | % | % | % | % | |||||||||||
Return on average ordinary shareholders' equity (annualised) | 4.4 | 10.7 | (1.4 | ) | 5.7 | 10.9 | |||||||||
Pre-tax return on average risk-weighted assets (annualised) | 1.3 | 2.2 | 0.3 | 1.3 | 2.1 | ||||||||||
Cost efficiency ratio | 70.2 | 58.8 | 91.7 | 71.5 | 59.9 | ||||||||||
HSBC HOLDINGS PLC
14
Earnings Release - 3Q16 (continued)
Summary consolidated balance sheet
At | |||||||||
30 Sep 2016 | 30 Jun 2016 | 31 Dec 2015 | |||||||
$m | $m | $m | |||||||
Assets | |||||||||
Cash and balances at central banks | 120,270 | 128,272 | 98,934 | ||||||
Trading assets | 293,253 | 280,295 | 224,837 | ||||||
Financial assets designated at fair value | 25,285 | 23,901 | 23,852 | ||||||
Derivatives | 334,411 | 369,942 | 288,476 | ||||||
Loans and advances to banks | 95,579 | 92,199 | 90,401 | ||||||
Loans and advances to customers | 880,851 | 887,556 | 924,454 | ||||||
Reverse repurchase agreements - non-trading | 192,061 | 187,826 | 146,255 | ||||||
Financial investments | 455,681 | 441,399 | 428,955 | ||||||
Assets held for sale | 2,036 | 50,305 | 43,900 | ||||||
Other assets | 157,834 | 146,454 | 139,592 | ||||||
Total assets | 2,557,261 | 2,608,149 | 2,409,656 | ||||||
Liabilities and Equity | |||||||||
Liabilities | |||||||||
Deposits by banks | 71,525 | 69,900 | 54,371 | ||||||
Customer accounts | 1,296,444 | 1,290,958 | 1,289,586 | ||||||
Repurchase agreements - non-trading | 108,500 | 98,342 | 80,400 | ||||||
Trading liabilities | 208,507 | 188,698 | 141,614 | ||||||
Financial liabilities designated at fair value | 88,003 | 78,882 | 66,408 | ||||||
Derivatives | 329,098 | 368,414 | 281,071 | ||||||
Debt securities in issue | 71,650 | 87,673 | 88,949 | ||||||
Liabilities under insurance contracts | 76,131 | 73,416 | 69,938 | ||||||
Liabilities of disposal groups held for sale | 853 | 43,705 | 36,840 | ||||||
Other liabilities | 111,238 | 109,864 | 102,961 | ||||||
Total liabilities | 2,361,949 | 2,409,852 | 2,212,138 | ||||||
Equity | |||||||||
Total shareholders' equity | 188,108 | 191,257 | 188,460 | ||||||
Non-controlling interests | 7,204 | 7,040 | 9,058 | ||||||
Total equity | 195,312 | 198,297 | 197,518 | ||||||
Total liabilities and equity | 2,557,261 | 2,608,149 | 2,409,656 | ||||||
Ratio of customer advances to customer accounts | 67.9 | % | 68.8 | % | 71.7 | % | |||
HSBC HOLDINGS PLC
15
Earnings Release - 3Q16 (continued)
Capital
Transitional own funds disclosure
At | |||||||||||
30 Sep | 30 Jun | 31 Dec | |||||||||
Ref* | 2016 | 2016 | 2015 | ||||||||
$m | $m | $m | |||||||||
6 | Common equity tier 1 capital before regulatory adjustments | 163,320 | 166,118 | 164,183 | |||||||
28 | Total regulatory adjustments to common equity tier 1 | (37,483 | ) | (35,448 | ) | (33,320 | ) | ||||
29 | Common equity tier 1 capital1 | 125,837 | 130,670 | 130,863 | |||||||
36 | Additional tier 1 capital before regulatory adjustments | 21,786 | 21,784 | 22,621 | |||||||
43 | Total regulatory adjustments to additional tier 1 capital | (158 | ) | (142 | ) | (181 | ) | ||||
44 | Additional tier 1 capital | 21,628 | 21,642 | 22,440 | |||||||
45 | Tier 1 capital | 147,465 | 152,312 | 153,303 | |||||||
51 | Tier 2 capital before regulatory adjustments | 34,588 | 34,849 | 36,852 | |||||||
57 | Total regulatory adjustments to tier 2 capital | (433 | ) | (368 | ) | (322 | ) | ||||
58 | Tier 2 capital | 34,155 | 34,481 | 36,530 | |||||||
59 | Total capital | 181,620 | 186,793 | 189,833 | |||||||
60 | Total risk-weighted assets | 904,062 | 1,082,184 | 1,102,995 | |||||||
Capital ratios and buffers | % | % | % | ||||||||
61 | Common equity tier 1 ratio | 13.9 | 12.1 | 11.9 | |||||||
62 | Tier 1 ratio | 16.3 | 14.1 | 13.9 | |||||||
63 | Total capital ratio | 20.1 | 17.3 | 17.2 | |||||||
* | The references identify the lines prescribed in the EBA template. |
1 | Since 1 January 2015 the CRD IV transitional CET1 and end point CET1 capital ratios have been aligned for HSBC Holdings plc. Transitional provisions continue to apply for additional tier 1 and tier 2 capital. |
Capital
Our CET1 capital ratio increased to 13.9%.
Following a recent clarification of policy by the PRA, at 30 September 2016 the regulatory treatment of our investment in BoCom changed from proportional consolidation of RWAs to a deduction from capital (subject to regulatory thresholds). The change in treatment resulted in net reported RWAs related to the BoCom investment decreasing by $120.9bn, with a threshold deduction from capital of $5.6bn. The net impact on our reported CET1 ratio at 30 September 2016 was an increase of 104 basis points. The revised regulatory treatment is more consistent with our financial reporting treatment of BoCom, aligning with the equity method of accounting, and better reflects our relationship with BoCom, including the nature of our obligations and financial commitments.
CET1 capital decreased in the quarter by $4.8bn, due to:
• | $5.6bn from the change in treatment of BoCom; |
• | the share buy-back of $2.5bn; and |
• | unfavourable foreign currency translation differences of $1.3bn. |
These decreases were partly offset:
• | by $2.4bn from the sale of our activities in Brazil; and |
• | $1.3bn of capital generation through profits, from ongoing activities, net of dividends and scrip. |
Our 2016 Pillar 2A requirement as per the PRA's Individual Capital Guidance based on a point in time assessment is 2.9% of RWAs, of which 1.6% is met by CET1.
RWAs
RWAs decreased in the quarter by $178.1bn, of which $6.2bn was due to foreign currency translation differences. The decrease was primarily from the change of regulatory treatment of our investment in BoCom. RWA initiatives reduced RWAs by $57.2bn, partly offset by book size movements increasing RWAs by $5.2bn.
The following comments describe RWA movements in the quarter, excluding foreign currency translation differences.
RWA initiatives
The main drivers of these reductions were:
• | $39.5bn from the sale of our activities in Brazil; |
• | $2.4bn through the continued reduction in GB&M Legacy Credit and US run-off portfolios; and |
• | $15.3bn as a result of reduced exposures, refined calculations and process improvements. |
Book size
Book size movements increased RWAs by $5.2bn, principally from:
• | increased corporate lending in GB&M and CMB in Europe, increasing RWAs by $4.3bn, partly offset by a decline in trade related products and corporate lending in North America and MENA reducing RWAs by $2.8bn; |
• | increased central bank balances and deposits and government debt securities in Asia, MENA and North America by $3.4bn; and |
HSBC HOLDINGS PLC
16
Earnings Release - 3Q16 (continued)
• | financial market movements and client-driven activity, which increased market risk and counterparty credit risk by $1.1bn. |
Methodology and policy
The reduction in RWAs relating to methodology and policy changes was mainly driven by the change of regulatory treatment of our investment in BoCom.
HSBC HOLDINGS PLC
17
Earnings Release - 3Q16 (continued)
Risk-weighted assets
RWA movement by geographical region by key driver
Credit risk, counterparty credit risk and operational risk | |||||||||||||||||||||
Europe2 | Asia | MENA2 | NorthAmerica | LatinAmerica | Market risk | Total RWAs | |||||||||||||||
$bn | $bn | $bn | $bn | $bn | $bn | $bn | |||||||||||||||
RWAs at 1 Jul 2016 | 290.6 | 437.6 | 67.4 | 167.4 | 77.4 | 41.8 | 1,082.2 | ||||||||||||||
RWA movements | |||||||||||||||||||||
RWA initiatives | (1.9 | ) | (5.0 | ) | (1.0 | ) | (7.5 | ) | (39.6 | ) | (2.2 | ) | (57.2 | ) | |||||||
Foreign exchange movement | (4.2 | ) | (0.3 | ) | (0.2 | ) | (0.2 | ) | (1.3 | ) | - | (6.2 | ) | ||||||||
Acquisitions and disposals | - | - | - | - | - | - | - | ||||||||||||||
Book size1 | 4.8 | 1.5 | (1.1 | ) | (3.8 | ) | 0.5 | 3.3 | 5.2 | ||||||||||||
Book quality | (1.0 | ) | - | 0.4 | 0.3 | 0.3 | - | - | |||||||||||||
Model updates | - | - | - | - | - | - | - | ||||||||||||||
- portfolios moving onto IRB approach | - | - | - | - | - | - | - | ||||||||||||||
- new/updated models | - | - | - | - | - | - | - | ||||||||||||||
Methodology and policy | 0.5 | (119.7 | ) | (0.1 | ) | (0.1 | ) | (0.5 | ) | - | (119.9 | ) | |||||||||
- internal updates | 1.6 | 0.5 | (0.1 | ) | (0.1 | ) | (0.2 | ) | - | 1.7 | |||||||||||
- external updates - regulatory | (1.1 | ) | (120.2 | ) | - | - | (0.3 | ) | - | (121.6 | ) | ||||||||||
Total RWA movement | (1.8 | ) | (123.5 | ) | (2.0 | ) | (11.3 | ) | (40.6 | ) | 1.1 | (178.1 | ) | ||||||||
RWAs at 30 Sep 2016 | 288.8 | 314.1 | 65.4 | 156.1 | 36.8 | 42.9 | 904.1 | ||||||||||||||
1 | Book size now includes market risk movements previously categorised as movements in risk levels. |
2 | In 3Q16, HSBC Bank plc executed a management services agreement, transferring its governance responsibilities over HSBC Bank A.S. (Turkey) to HSBC Bank Middle East Limited to leverage the strong commercial ties between Turkey and MENA. Comparative data for Europe and MENA have been re-presented accordingly. |
RWA movement by global businesses by key driver
Credit risk, counterparty credit risk and operational risk | |||||||||||||||||||||||||||
PrincipalRBWM | RBWM (US run-offportfolio) | TotalRBWM | CMB | GB&M | GPB | Other | Market risk | Total RWAs | |||||||||||||||||||
$bn | $bn | $bn | $bn | $bn | $bn | $bn | $bn | $bn | |||||||||||||||||||
RWAs at 1 Jul 2016 | 148.9 | 27.2 | 176.1 | 414.8 | 395.6 | 18.5 | 35.4 | 41.8 | 1,082.2 | ||||||||||||||||||
RWA movements | |||||||||||||||||||||||||||
RWA initiatives | (8.2 | ) | (3.6 | ) | (11.8 | ) | (21.4 | ) | (21.5 | ) | - | (0.3 | ) | (2.2 | ) | (57.2 | ) | ||||||||||
Foreign exchange movement | (1.1 | ) | - | (1.1 | ) | (3.1 | ) | (1.8 | ) | (0.1 | ) | (0.1 | ) | - | (6.2 | ) | |||||||||||
Acquisitions and disposals | - | - | - | - | - | - | - | - | - | ||||||||||||||||||
Book size1 | 1.1 | - | 1.1 | 2.3 | (1.7 | ) | (0.3 | ) | 0.5 | 3.3 | 5.2 | ||||||||||||||||
Book quality | (0.5 | ) | - | (0.5 | ) | 0.7 | (0.2 | ) | (0.1 | ) | 0.1 | - | - | ||||||||||||||
Model updates | - | - | - | - | - | - | - | - | - | ||||||||||||||||||
- portfolios moving onto IRB approach | - | - | - | - | - | - | - | - | - | ||||||||||||||||||
- new/updated models | - | - | - | - | - | - | - | - | - | ||||||||||||||||||
Methodology and policy | (17.9 | ) | - | (17.9 | ) | (87.9 | ) | (29.3 | ) | - | 15.2 | - | (119.9 | ) | |||||||||||||
- internal updates | 1.5 | - | 1.5 | 2.3 | (0.4 | ) | - | (1.7 | ) | - | 1.7 | ||||||||||||||||
- external updates - regulatory | (19.4 | ) | - | (19.4 | ) | (90.2 | ) | (28.9 | ) | - | 16.9 | - | (121.6 | ) | |||||||||||||
Total RWA movement | (26.6 | ) | (3.6 | ) | (30.2 | ) | (109.4 | ) | (54.5 | ) | (0.5 | ) | 15.4 | 1.1 | (178.1 | ) | |||||||||||
RWAs at 30 Sep 2016 | 122.3 | 23.6 | 145.9 | 305.4 | 341.1 | 18.0 | 50.8 | 42.9 | 904.1 | ||||||||||||||||||
1 | Book size now includes market risk movements previously categorised as movements in risk levels. |
HSBC HOLDINGS PLC
18
Earnings Release - 3Q16 (continued)
RWAs by risk type
RWAs at | Capital required1 at | |||||
30 Sep 2016 | 30 Sep 2016 | |||||
$bn | $bn | |||||
Credit risk | 686.8 | 55.0 | ||||
Standardised approach | 175.0 | 14.0 | ||||
IRB foundation approach | 27.1 | 2.2 | ||||
IRB advanced approach | 484.7 | 38.8 | ||||
Counterparty credit risk | 70.0 | 5.5 | ||||
Standardised approach | 18.3 | 1.4 | ||||
- CCR standardised approach | 2.3 | 0.2 | ||||
- Credit valuation adjustment | 14.3 | 1.1 | ||||
- Central counterparty | 1.7 | 0.1 | ||||
Advanced approach | 51.7 | 4.1 | ||||
- CCR IRB approach | 46.6 | 3.7 | ||||
- Credit valuation adjustment | 5.1 | 0.4 | ||||
Market risk | 42.9 | 3.5 | ||||
Internal model based | 37.8 | 3.0 | ||||
- VaR | 7.5 | 0.6 | ||||
- Stressed VaR | 10.0 | 0.8 | ||||
- Incremental risk charge | 11.8 | 0.9 | ||||
- Other VaR and stressed VaR | 8.5 | 0.7 | ||||
Standardised approach | 5.1 | 0.5 | ||||
- Interest rate positions risk | 1.9 | 0.2 | ||||
- Foreign exchange position risk | 0.4 | - | ||||
- Equity position risk | 0.7 | 0.1 | ||||
- Commodity position risk | - | - | ||||
- Securitisation | 2.1 | 0.2 | ||||
- Options | - | - | ||||
Operational risk | 104.4 | 8.4 | ||||
At 30 Sep 2016 | 904.1 | 72.4 | ||||
1 | 'Capital required' represents the Pillar 1 capital charge at 8% of RWAs. |
HSBC HOLDINGS PLC
19
Earnings Release - 3Q16 (continued)
RWAs by geographical region
Europe2 | Asia | MENA2 | NorthAmerica | LatinAmerica | Total | |||||||||||||
$bn | $bn | $bn | $bn | $bn | $bn | |||||||||||||
IRB approach | 176.8 | 197.7 | 21.7 | 110.4 | 5.2 | 511.8 | ||||||||||||
- IRB advanced approach | 159.4 | 197.7 | 12.0 | 110.4 | 5.2 | 484.7 | ||||||||||||
- IRB foundation approach | 17.4 | - | 9.7 | - | - | 27.1 | ||||||||||||
Standardised approach | 40.7 | 64.5 | 34.5 | 17.9 | 17.4 | 175.0 | ||||||||||||
Credit risk | 217.5 | 262.2 | 56.2 | 128.3 | 22.6 | 686.8 | ||||||||||||
Counterparty credit risk | 38.1 | 15.3 | 1.5 | 13.8 | 1.3 | 70.0 | ||||||||||||
Market risk1 | 29.8 | 24.4 | 3.2 | 8.0 | 0.8 | 42.9 | ||||||||||||
Operational risk | 33.2 | 36.6 | 7.7 | 14.0 | 12.9 | 104.4 | ||||||||||||
At 30 Sep 2016 | 318.6 | 338.5 | 68.6 | 164.1 | 37.6 | 904.1 | ||||||||||||
1 | RWAs are non-additive across geographical regions due to market risk diversification effects within the Group. |
2 | In 3Q16, HSBC Bank plc executed a management services agreement, transferring its governance responsibilities over HSBC Bank A.S. (Turkey) to HSBC Bank Middle East Limited to leverage the strong commercial ties between Turkey and MENA. Comparative data for Europe and MENA have been re-presented accordingly. |
RWAs by global business
Principal RBWM | RBWM (US run-off portfolio) | Total RBWM | CMB | GB&M | GPB | Other | Total | |||||||||||||||||
$bn | $bn | $bn | $bn | $bn | $bn | $bn | $bn | |||||||||||||||||
IRB approach | 54.8 | 17.4 | 72.2 | 219.5 | 201.8 | 7.3 | 11.0 | 511.8 | ||||||||||||||||
- IRB advanced approach | 54.8 | 17.4 | 72.2 | 200.4 | 194.7 | 7.3 | 10.1 | 484.7 | ||||||||||||||||
- IRB foundation approach | - | - | - | 19.1 | 7.1 | - | 0.9 | 27.1 | ||||||||||||||||
Standardised approach | 33.5 | 3.8 | 37.3 | 58.1 | 31.4 | 7.0 | 41.2 | 175.0 | ||||||||||||||||
Credit risk | 88.3 | 21.2 | 109.5 | 277.6 | 233.2 | 14.3 | 52.2 | 686.8 | ||||||||||||||||
Counterparty credit risk | - | - | - | - | 69.5 | 0.2 | 0.3 | 70.0 | ||||||||||||||||
Market risk | - | - | - | - | 42.6 | - | 0.3 | 42.9 | ||||||||||||||||
Operational risk | 34.0 | 2.4 | 36.4 | 27.8 | 38.4 | 3.5 | (1.7 | ) | 104.4 | |||||||||||||||
At 30 Sep 2016 | 122.3 | 23.6 | 145.9 | 305.4 | 383.7 | 18.0 | 51.1 | 904.1 | ||||||||||||||||
Leverage
Leverage ratio
At | ||||||||||
30 Sep | 30 Jun | 31 Dec | ||||||||
2016 | 2016 | 2015 | ||||||||
Ref* | $bn | $bn | $bn | |||||||
21 | Total leverage ratio exposure | 2,529 | 2,788 | 2,794 | ||||||
20 | Tier 1 capital (end point) | 137 | 142 | 140 | ||||||
22 | Leverage ratio | 5.4 | % | 5.1 | % | 5.0 | % | |||
EU-23 | Choice on transitional arrangements for the definition of the capital measure | Fully phased in | Fully phased in | Fully phased in | ||||||
Total leverage ratio exposure - quarterly average | 2,672 | 2,819 | 2,869 | |||||||
Leverage ratio - quarterly average | 5.3 | % | 5.1 | % | 5.0 | % | ||||
* | The references identify the lines prescribed in the EBA template. |
Our leverage ratio calculated on the CRR basis was 5.4% at 30 September 2016, up from 5.1% at 30 June 2016. This was mainly due to a reduction in the exposure measure resulting from the change in regulatory treatment of our investment in BoCom.
The Group's UK leverage ratio on a modified basis, excluding qualifying central bank balances, was 5.6%. This modification to the leverage ratio exposure measure was made following recommendations by the Bank of England's Financial Policy Committee.
The Financial Policy Committee has stated that it intends to re-calibrate the leverage ratio in 2017 to take account of this modification. Any uplift in HSBC's UK leverage ratio should be considered in this context.
At 30 September 2016, our UK minimum leverage ratio requirement of 3% was supplemented by an additional leverage ratio buffer of 0.2% that translates to a value of $6bn, and a countercyclical leverage ratio buffer which results in no capital impact. We comfortably exceeded these leverage requirements.
HSBC HOLDINGS PLC
20
Earnings Release - 3Q16 (continued)
Summary information - global businesses
Retail Banking and Wealth Management
Nine months ended | Quarter ended | ||||||||||||||
30 Sep 2016 | 30 Sep 2015 | 30 Sep 2016 | 30 Jun 2016 | 30 Sep 2015 | |||||||||||
$m | $m | $m | $m | $m | |||||||||||
Net operating income before loan impairment chargesand other credit risk provisions | 15,306 | 17,912 | 4,189 | 5,957 | 5,470 | ||||||||||
Loan impairment charges and other credit risk provisions | (1,483 | ) | (1,396 | ) | (363 | ) | (539 | ) | (462 | ) | |||||
Net operating income | 13,823 | 16,516 | 3,826 | 5,418 | 5,008 | ||||||||||
Total operating expenses | (11,463 | ) | (12,308 | ) | (3,655 | ) | (4,276 | ) | (3,954 | ) | |||||
Operating profit | 2,360 | 4,208 | 171 | 1,142 | 1,054 | ||||||||||
Share of profit in associates and joint ventures | 288 | 314 | 95 | 107 | 106 | ||||||||||
Profit before tax | 2,648 | 4,522 | 266 | 1,249 | 1,160 | ||||||||||
Profit before tax related to: | |||||||||||||||
- Principal RBWM | 3,338 | 4,698 | 380 | 1,708 | 1,181 | ||||||||||
- US run-off portfolio | (690 | ) | (176 | ) | (114 | ) | (459 | ) | (21 | ) | |||||
% | % | % | % | % | |||||||||||
Cost efficiency ratio | 74.9 | 68.7 | 87.3 | 71.8 | 72.3 | ||||||||||
Reported pre-tax RoRWA (annualised) | 2.0 | 3.0 | 0.7 | 2.8 | 2.3 | ||||||||||
$m | $m | $m | $m | $m | |||||||||||
Adjusted profit before tax - Principal RBWM1 | 4,761 | 4,954 | 1,747 | 1,502 | 1,356 | ||||||||||
1 | Excludes the US run-off portfolio. Adjusted profit before tax of the US run-off portfolio was $147m for 9M16 (9M15: $368m) and $52m for 3Q16 (2Q16: $71m; 3Q15: $154m). |
Principal RBWM: management view of adjusted revenue
Nine months ended | Quarter ended | ||||||||||||||
30 Sep 2016 | 30 Sep 2015 | 30 Sep 2016 | 30 Jun 2016 | 30 Sep 2015 | |||||||||||
$m | $m | $m | $m | $m | |||||||||||
Current accounts, savings and deposits | 4,035 | 3,737 | 1,307 | 1,346 | 1,231 | ||||||||||
Wealth products | 3,937 | 4,505 | 1,500 | 1,288 | 1,191 | ||||||||||
Investment distribution1 | 2,251 | 2,622 | 804 | 730 | 784 | ||||||||||
Life insurance manufacturing | 968 | 1,136 | 442 | 331 | 168 | ||||||||||
Asset Management | 718 | 747 | 254 | 227 | 239 | ||||||||||
Personal lending | 5,814 | 5,986 | 1,883 | 1,878 | 1,956 | ||||||||||
Mortgages | 1,980 | 2,033 | 636 | 641 | 670 | ||||||||||
Credit cards | 2,379 | 2,536 | 773 | 761 | 821 | ||||||||||
Other personal lending2 | 1,455 | 1,417 | 474 | 476 | 465 | ||||||||||
Other3 | 607 | 440 | 266 | 164 | 182 | ||||||||||
Revenue | 14,393 | 14,668 | 4,956 | 4,676 | 4,560 | ||||||||||
1 | 'Investment distribution' includes Investments, comprising mutual funds (HSBC manufactured and third-party), structured products and securities trading, and Wealth insurance distribution, comprising HSBC manufactured and third-party life, pension and investment insurance products. |
2 | 'Other personal lending' includes personal non-residential closed-end loans and personal overdrafts. |
3 | 'Other' mainly includes the distribution and manufacturing (where applicable) of retail and credit protection insurance. |
HSBC HOLDINGS PLC
21
Earnings Release - 3Q16 (continued)
Commercial Banking
Nine months ended | Quarter ended | ||||||||||||||
30 Sep 2016 | 30 Sep 2015 | 30 Sep 2016 | 30 Jun 2016 | 30 Sep 2015 | |||||||||||
$m | $m | $m | $m | $m | |||||||||||
Net operating income before loan impairment chargesand other credit risk provisions | 10,320 | 11,236 | 2,811 | 3,886 | 3,702 | ||||||||||
Loan impairment charges and other credit risk provisions | (1,077 | ) | (757 | ) | (244 | ) | (443 | ) | (246 | ) | |||||
Net operating income | 9,243 | 10,479 | 2,567 | 3,443 | 3,456 | ||||||||||
Total operating expenses | (4,558 | ) | (4,997 | ) | (1,415 | ) | (1,619 | ) | (1,676 | ) | |||||
Operating profit | 4,685 | 5,482 | 1,152 | 1,824 | 1,780 | ||||||||||
Share of profit in associates and joint ventures | 1,154 | 1,267 | 383 | 430 | 446 | ||||||||||
Profit before tax | 5,839 | 6,749 | 1,535 | 2,254 | 2,226 | ||||||||||
% | % | % | % | % | |||||||||||
Cost efficiency ratio | 44.2 | 44.5 | 50.3 | 41.7 | 45.3 | ||||||||||
Reported pre-tax RoRWA (annualised) | 2.0 | 2.1 | 1.7 | 2.2 | 2.0 | ||||||||||
Management view of adjusted revenue
Nine months ended | Quarter ended | ||||||||||||||
30 Sep 2016 | 30 Sep 2015 | 30 Sep 2016 | 30 Jun 2016 | 30 Sep 2015 | |||||||||||
$m | $m | $m | $m | $m | |||||||||||
Global Trade and Receivables Finance | 1,477 | 1,634 | 479 | 484 | 548 | ||||||||||
Credit and Lending | 4,044 | 3,991 | 1,326 | 1,319 | 1,355 | ||||||||||
Global Liquidity and Cash Management | 3,368 | 3,233 | 1,101 | 1,103 | 1,080 | ||||||||||
Markets products, Insurance and Investments and other | 1,454 | 1,306 | 446 | 495 | 358 | ||||||||||
Revenue | 10,343 | 10,164 | 3,352 | 3,401 | 3,341 | ||||||||||
HSBC HOLDINGS PLC
22
Earnings Release - 3Q16 (continued)
Global Banking and Markets
Nine months ended | Quarter ended | ||||||||||||||
30 Sep 2016 | 30 Sep 2015 | 30 Sep 2016 | 30 Jun 2016 | 30 Sep 2015 | |||||||||||
$m | $m | $m | $m | $m | |||||||||||
Net operating income before loan impairment chargesand other credit risk provisions | 12,927 | 14,786 | 4,014 | 4,447 | 4,525 | ||||||||||
Loan impairment (charges)/recoveries and other credit risk provisions | (385 | ) | 90 | 40 | (232 | ) | 79 | ||||||||
Net operating income | 12,542 | 14,876 | 4,054 | 4,215 | 4,604 | ||||||||||
Total operating expenses | (6,976 | ) | (8,385 | ) | (2,227 | ) | (2,471 | ) | (2,595 | ) | |||||
Operating profit | 5,566 | 6,491 | 1,827 | 1,744 | 2,009 | ||||||||||
Share of profit in associates and joint ventures | 401 | 404 | 134 | 141 | 132 | ||||||||||
Profit before tax | 5,967 | 6,895 | 1,961 | 1,885 | 2,141 | ||||||||||
% | % | % | % | % | |||||||||||
Cost efficiency ratio | 54.0 | 56.7 | 55.5 | 55.6 | 57.3 | ||||||||||
Reported pre-tax RoRWA (annualised) | 1.9 | 1.9 | 1.9 | 1.7 | 1.8 | ||||||||||
Management view of adjusted revenue
Nine months ended | Quarter ended | ||||||||||||||
30 Sep 2016 | 30 Sep 2015 | 30 Sep 2016 | 30 Jun 2016 | 30 Sep 2015 | |||||||||||
$m | $m | $m | $m | $m | |||||||||||
Markets | 5,190 | 5,457 | 1,736 | 1,760 | 1,391 | ||||||||||
Legacy Credit | 26 | 91 | 125 | (55 | ) | (5 | ) | ||||||||
Credit | 728 | 547 | 225 | 332 | 71 | ||||||||||
Rates | 1,595 | 1,280 | 541 | 535 | 359 | ||||||||||
Foreign Exchange | 2,085 | 2,143 | 658 | 690 | 633 | ||||||||||
Equities | 756 | 1,396 | 187 | 258 | 333 | ||||||||||
Capital Financing | 2,658 | 2,688 | 933 | 854 | 924 | ||||||||||
Global Liquidity and Cash Management | 1,357 | 1,246 | 457 | 440 | 409 | ||||||||||
Securities Services | 1,191 | 1,233 | 412 | 393 | 406 | ||||||||||
Global Trade and Receivables Finance | 489 | 487 | 163 | 161 | 164 | ||||||||||
Balance Sheet Management | 2,217 | 2,176 | 726 | 756 | 693 | ||||||||||
Principal Investments | 168 | 172 | 173 | (4 | ) | 46 | |||||||||
Other1 | (208 | ) | (65 | ) | (95 | ) | (79 | ) | (53 | ) | |||||
Revenue | 13,062 | 13,394 | 4,505 | 4,281 | 3,980 | ||||||||||
1 | 'Other' in GB&M includes net interest earned on free capital held in the global business not assigned to products and gains resulting from business disposals. 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 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 within 'Other'. |
HSBC HOLDINGS PLC
23
Earnings Release - 3Q16 (continued)
Global Private Banking
Nine months ended | Quarter ended | ||||||||||||||
30 Sep 2016 | 30 Sep 2015 | 30 Sep 2016 | 30 Jun 2016 | 30 Sep 2015 | |||||||||||
$m | $m | $m | $m | $m | |||||||||||
Net operating income before loan impairment charges and other credit risk provisions | 1,435 | 1,685 | 462 | 486 | 508 | ||||||||||
Loan impairment (charges)/recoveries and other credit risk provisions | 10 | (9 | ) | (1 | ) | 11 | (4 | ) | |||||||
Net operating income | 1,445 | 1,676 | 461 | 497 | 504 | ||||||||||
Total operating expenses | (1,858 | ) | (1,427 | ) | (313 | ) | (1,166 | ) | (426 | ) | |||||
Operating profit | (413 | ) | 249 | 148 | (669 | ) | 78 | ||||||||
Share of profit in associates and joint ventures | 7 | 12 | 3 | 2 | 3 | ||||||||||
Profit/(loss) before tax | (406 | ) | 261 | 151 | (667 | ) | 81 | ||||||||
% | % | % | % | % | |||||||||||
Cost efficiency ratio | 129.5 | 84.7 | 67.7 | 239.9 | 83.9 | ||||||||||
Reported pre-tax RoRWA (annualised) | (2.9 | ) | 1.7 | 3.3 | (14.2 | ) | 1.5 | ||||||||
Client assets1 by geography
Quarter ended | |||||||||||||||
30 Sep 2016 | 30 Jun 2016 | 31 Mar 2016 | 31 Dec 2015 | 30 Sep 2015 | |||||||||||
$bn | $bn | $bn | $bn | $bn | |||||||||||
Europe | 158 | 159 | 163 | 168 | 170 | ||||||||||
Asia | 112 | 108 | 108 | 112 | 106 | ||||||||||
North America | 42 | 41 | 62 | 61 | 62 | ||||||||||
Latin America | 3 | 9 | 8 | 8 | 8 | ||||||||||
Total | 315 | 317 | 341 | 349 | 346 | ||||||||||
1 | 'Client assets' are translated at the rates of exchange applicable for their respective period-ends, with the effects of currency translation reported separately. The main components of client assets are funds under management, which are not reported on the Group's balance sheet and customer deposits, which are reported on the Group's balance sheet. |
Client assets1
Quarter ended | |||||||||||||||
30 Sep 2016 | 30 Jun 2016 | 31 Mar 2016 | 31 Dec 2015 | 30 Sep 2015 | |||||||||||
$bn | $bn | $bn | $bn | $bn | |||||||||||
Opening balance | 317 | 341 | 349 | 346 | 370 | ||||||||||
Net new money | (4 | ) | (1 | ) | (5 | ) | (1 | ) | 3 | ||||||
Of which: areas targeted for growth | - | 1 | 4 | 2 | 6 | ||||||||||
Value change | 6 | - | (6 | ) | 6 | (14 | ) | ||||||||
Exchange and other | (4 | ) | (23 | ) | 3 | (2 | ) | (13 | ) | ||||||
Closing balance | 315 | 317 | 341 | 349 | 346 | ||||||||||
1 | 'Client assets' are translated at the rates of exchange applicable for their respective period-ends, with the effects of currency translation reported separately. The main components of client assets are funds under management, which are not reported on the Group's balance sheet and customer deposits, which are reported on the Group's balance sheet. |
HSBC HOLDINGS PLC
24
Earnings Release - 3Q16 (continued)
Other1
Nine months ended | Quarter ended | ||||||||||||||
30 Sep 2016 | 30 Sep 2015 | 30 Sep 2016 | 30 Jun 2016 | 30 Sep 2015 | |||||||||||
$m | $m | $m | $m | $m | |||||||||||
Net operating income before loan impairment charges and other credit risk provisions | 3,524 | 7,227 | (504 | ) | 1,370 | 2,540 | |||||||||
- of which: effect of changes in own credit spread on the fair value of long-term debt issued | (144 | ) | 1,775 | (1,370 | ) | 75 | 1,125 | ||||||||
Loan impairment recoveries/(charges) and other credit risk provisions | 3 | (5 | ) | 2 | (2 | ) | (5 | ) | |||||||
Net operating income | 3,527 | 7,222 | (502 | ) | 1,368 | 2,535 | |||||||||
Total operating expenses | (7,024 | ) | (5,927 | ) | (2,571 | ) | (2,484 | ) | (2,048 | ) | |||||
Operating profit/(loss) | (3,497 | ) | 1,295 | (3,073 | ) | (1,116 | ) | 487 | |||||||
Share of profit in associates and joint ventures | 6 | 3 | 3 | 3 | 2 | ||||||||||
Profit/(loss) before tax | (3,491 | ) | 1,298 | (3,070 | ) | (1,113 | ) | 489 | |||||||
1 | The main items reported under 'Other' are the results of HSBC's holding company and financing operations, which include net interest earned on free capital held centrally, operating costs incurred by the head office operations in providing stewardship and central management services to HSBC, along with the costs incurred by the Group Service Centres and Shared Service Organisations and associated recoveries. The results also include unallocated investment activities, centrally held investment companies and certain property transactions. In addition, 'Other' also includes part of the movement in the fair value of long-term debt designated at fair value (the remainder of the Group's movement on own debt is included in GB&M). |
HSBC HOLDINGS PLC
25
Earnings Release - 3Q16 (continued)
Summary information - geographical regions
Europe
Nine months ended | Quarter ended | ||||||||||||||
30 Sep 2016 | 30 Sep20151 | 30 Sep 2016 | 30 Jun20161 | 30 Sep20151 | |||||||||||
$m | $m | $m | $m | $m | |||||||||||
Net operating income before loan impairment charges and other credit risk provisions | 13,881 | 17,014 | 3,023 | 5,222 | 5,874 | ||||||||||
Loan impairment charges and other credit risk provisions | (386 | ) | (213 | ) | (44 | ) | (192 | ) | (22 | ) | |||||
Net operating income | 13,495 | 16,801 | 2,979 | 5,030 | 5,852 | ||||||||||
Total operating expenses | (13,524 | ) | (13,006 | ) | (4,594 | ) | (5,141 | ) | (4,275 | ) | |||||
Operating profit/(loss) | (29 | ) | 3,795 | (1,615 | ) | (111 | ) | 1,577 | |||||||
Share of profit in associates and joint ventures | (3 | ) | 6 | (2 | ) | (2 | ) | 4 | |||||||
Profit/(loss) before tax | (32 | ) | 3,801 | (1,617 | ) | (113 | ) | 1,581 | |||||||
% | % | % | % | % | |||||||||||
Cost efficiency ratio | 97.4 | 76.4 | 152.0 | 98.4 | 72.8 | ||||||||||
Reported pre-tax RoRWA (annualised)1 | - | 1.4 | (2.0 | ) | (0.1 | ) | 1.8 | ||||||||
Profit/(loss) before tax by global business
Nine months ended | Quarter ended | ||||||||||||||
30 Sep 2016 | 30 Sep20151 | 30 Sep 2016 | 30 Jun20161 | 30 Sep20151 | |||||||||||
$m | $m | $m | $m | $m | |||||||||||
Retail Banking and Wealth Management | 719 | 1,298 | (189 | ) | 656 | 363 | |||||||||
Commercial Banking | 1,878 | 1,929 | 553 | 760 | 653 | ||||||||||
Global Banking and Markets | 1,291 | 1,090 | 755 | 212 | 234 | ||||||||||
Global Private Banking | (725 | ) | (15 | ) | 20 | (764 | ) | 9 | |||||||
Other | (3,195 | ) | (501 | ) | (2,756 | ) | (977 | ) | 322 | ||||||
Profit/(loss) before tax | (32 | ) | 3,801 | (1,617 | ) | (113 | ) | 1,581 | |||||||
1 | In 3Q16, HSBC Bank plc executed a management services agreement, transferring its governance responsibilities over HSBC Bank A.S. (Turkey) to HSBC Bank Middle East Limited to leverage the strong commercial ties between Turkey and MENA. Comparative data for Europe and MENA have been re-presented accordingly. |
Reported and adjusted UK profit/(loss) before tax
Nine months ended | Quarter ended | ||||||||||||||
30 Sep 2016 | 30 Sep 2015 | 30 Sep 2016 | 30 Jun 2016 | 30 Sep 2015 | |||||||||||
$m | $m | $m | $m | $m | |||||||||||
Reported profit/(loss) before tax | 223 | 2,781 | (1,754 | ) | 390 | 1,356 | |||||||||
Adjusted profit before tax | 2,018 | 2,368 | 559 | 643 | 614 | ||||||||||
HSBC HOLDINGS PLC
26
Earnings Release - 3Q16 (continued)
Asia
Nine months ended | Quarter ended | ||||||||||||||
30 Sep 2016 | 30 Sep 2015 | 30 Sep 2016 | 30 Jun 2016 | 30 Sep 2015 | |||||||||||
$m | $m | $m | $m | $m | |||||||||||
Net operating income before loan impairment charges and other credit risk provisions | 17,751 | 19,843 | 5,999 | 5,919 | 5,778 | ||||||||||
Loan impairment charges and other credit risk provisions | (552 | ) | (365 | ) | (208 | ) | (154 | ) | (119 | ) | |||||
Net operating income | 17,199 | 19,478 | 5,791 | 5,765 | 5,659 | ||||||||||
Total operating expenses | (7,887 | ) | (8,126 | ) | (2,642 | ) | (2,702 | ) | (2,669 | ) | |||||
Operating profit | 9,312 | 11,352 | 3,149 | 3,063 | 2,990 | ||||||||||
Share of profit in associates and joint ventures | 1,503 | 1,596 | 511 | 562 | 558 | ||||||||||
Profit before tax | 10,815 | 12,948 | 3,660 | 3,625 | 3,548 | ||||||||||
% | % | % | % | % | |||||||||||
Cost efficiency ratio | 44.4 | 41.0 | 44.0 | 45.6 | 46.2 | ||||||||||
Reported pre-tax RoRWA (annualised) | 3.4 | 3.5 | 3.6 | 3.2 | 2.9 | ||||||||||
Profit/(loss) before tax by global business
Nine months ended | Quarter ended | ||||||||||||||
30 Sep 2016 | 30 Sep 2015 | 30 Sep 2016 | 30 Jun 2016 | 30 Sep 2015 | |||||||||||
$m | $m | $m | $m | $m | |||||||||||
Retail Banking and Wealth Management | 3,382 | 3,432 | 1,301 | 1,060 | 901 | ||||||||||
Commercial Banking | 3,509 | 3,623 | 1,153 | 1,213 | 1,219 | ||||||||||
Global Banking and Markets | 3,648 | 3,962 | 1,136 | 1,271 | 1,279 | ||||||||||
Global Private Banking | 237 | 209 | 114 | 57 | 53 | ||||||||||
Other | 39 | 1,722 | (44 | ) | 24 | 96 | |||||||||
Profit before tax | 10,815 | 12,948 | 3,660 | 3,625 | 3,548 | ||||||||||
Reported and adjusted Hong Kong profit before tax
Nine months ended | Quarter ended | ||||||||||||||
30 Sep 2016 | 30 Sep 2015 | 30 Sep 2016 | 30 Jun 2016 | 30 Sep 2015 | |||||||||||
$m | $m | $m | $m | $m | |||||||||||
Reported profit before tax | 6,366 | 8,050 | 2,196 | 2,081 | 1,817 | ||||||||||
Adjusted profit before tax | 6,440 | 6,651 | 2,230 | 2,138 | 1,802 | ||||||||||
HSBC HOLDINGS PLC
27
Earnings Release - 3Q16 (continued)
Middle East and North Africa
Nine months ended | Quarter ended | ||||||||||||||
30 Sep 2016 | 30 Sep20151 | 30 Sep 2016 | 30 Jun20161 | 30 Sep20151 | |||||||||||
$m | $m | $m | $m | $m | |||||||||||
Net operating income before loan impairment charges and other credit risk provisions | 2,337 | 2,405 | 725 | 775 | 779 | ||||||||||
Loan impairment charges and other credit risk provisions | (184 | ) | (272 | ) | (88 | ) | (49 | ) | (144 | ) | |||||
Net operating income | 2,153 | 2,133 | 637 | 726 | 635 | ||||||||||
Total operating expenses | (1,206 | ) | (1,297 | ) | (419 | ) | (381 | ) | (418 | ) | |||||
Operating profit | 947 | 836 | 218 | 345 | 217 | ||||||||||
Share of profit in associates and joint ventures | 361 | 396 | 111 | 125 | 129 | ||||||||||
Profit before tax | 1,308 | 1,232 | 329 | 470 | 346 | ||||||||||
% | % | % | % | % | |||||||||||
Cost efficiency ratio | 51.6 | 53.9 | 57.8 | 49.2 | 53.7 | ||||||||||
Reported pre-tax RoRWA (annualised)1 | 2.5 | 2.2 | 1.9 | 2.7 | 1.9 | ||||||||||
Profit/(loss) before tax by global business
Nine months ended | Quarter ended | ||||||||||||||
30 Sep 2016 | 30 Sep20151 | 30 Sep 2016 | 30 Jun20161 | 30 Sep20151 | |||||||||||
$m | $m | $m | $m | $m | |||||||||||
Retail Banking and Wealth Management | 109 | 92 | 3 | 50 | (8 | ) | |||||||||
Commercial Banking | 442 | 404 | 119 | 162 | 120 | ||||||||||
Global Banking and Markets | 824 | 751 | 260 | 263 | 232 | ||||||||||
Global Private Banking | 7 | 14 | 1 | 3 | 5 | ||||||||||
Other | (74 | ) | (29 | ) | (54 | ) | (8 | ) | (3 | ) | |||||
Profit before tax | 1,308 | 1,232 | 329 | 470 | 346 | ||||||||||
1 | In 3Q16, HSBC Bank plc executed a management services agreement, transferring its governance responsibilities over HSBC Bank A.S. (Turkey) to HSBC Bank Middle East Limited to leverage the strong commercial ties between Turkey and MENA. Comparative data for Europe and MENA have been re-presented accordingly. |
HSBC HOLDINGS PLC
28
Earnings Release - 3Q16 (continued)
North America
Nine months ended | Quarter ended | ||||||||||||||
30 Sep 2016 | 30 Sep 2015 | 30 Sep 2016 | 30 Jun 2016 | 30 Sep 2015 | |||||||||||
$m | $m | $m | $m | $m | |||||||||||
Net operating income before loan impairment charges and other credit risk provisions | 5,532 | 6,065 | 1,580 | 1,958 | 1,939 | ||||||||||
Loan impairment charges and other credit risk provisions | (705 | ) | (217 | ) | (88 | ) | (289 | ) | (64 | ) | |||||
Net operating income | 4,827 | 5,848 | 1,492 | 1,669 | 1,875 | ||||||||||
Total operating expenses | (4,707 | ) | (4,682 | ) | (1,424 | ) | (1,981 | ) | (1,395 | ) | |||||
Operating profit/(loss) | 120 | 1,166 | 68 | (312 | ) | 480 | |||||||||
Share of profit/(loss) in associates and joint ventures | (4 | ) | 3 | (2 | ) | (2 | ) | (1 | ) | ||||||
Profit/(loss) before tax | 116 | 1,169 | 66 | (314 | ) | 479 | |||||||||
% | % | % | % | % | |||||||||||
Cost efficiency ratio | 85.1 | 77.2 | 90.1 | 101.2 | 71.9 | ||||||||||
Reported pre-tax RoRWA (annualised) | 0.1 | 0.7 | 0.2 | (0.7 | ) | 0.9 | |||||||||
Profit/(loss) before tax by global business
Nine months ended | Quarter ended | ||||||||||||||
30 Sep 2016 | 30 Sep 2015 | 30 Sep 2016 | 30 Jun 2016 | 30 Sep 2015 | |||||||||||
$m | $m | $m | $m | $m | |||||||||||
Retail Banking and Wealth Management | (644 | ) | (168 | ) | (129 | ) | (428 | ) | 4 | ||||||
Principal RBWM | 46 | 8 | (15 | ) | 31 | 25 | |||||||||
Run-off portfolio | (690 | ) | (176 | ) | (114 | ) | (459 | ) | (21 | ) | |||||
Commercial Banking | 515 | 595 | 205 | 151 | 172 | ||||||||||
Global Banking and Markets | 330 | 564 | 171 | 34 | 208 | ||||||||||
Global Private Banking | 73 | 50 | 20 | 34 | 13 | ||||||||||
Other | (158 | ) | 128 | (201 | ) | (105 | ) | 82 | |||||||
Profit/(loss) before tax | 116 | 1,169 | 66 | (314 | ) | 479 | |||||||||
HSBC HOLDINGS PLC
29
Earnings Release - 3Q16 (continued)
Latin America
Nine months ended | Quarter ended | ||||||||||||||
30 Sep 2016 | 30 Sep 2015 | 30 Sep 2016 | 30 Jun 2016 | 30 Sep 2015 | |||||||||||
$m | $m | $m | $m | $m | |||||||||||
Net operating income before loan impairment charges and other credit risk provisions | 1,960 | 5,167 | (965 | ) | 1,506 | 1,609 | |||||||||
Loan impairment charges and other credit risk provisions | (1,105 | ) | (1,010 | ) | (138 | ) | (521 | ) | (289 | ) | |||||
Net operating income | 855 | 4,157 | (1,103 | ) | 985 | 1,320 | |||||||||
Total operating expenses | (2,504 | ) | (3,581 | ) | (492 | ) | (1,045 | ) | (1,176 | ) | |||||
Operating profit/(loss) | (1,649 | ) | 576 | (1,595 | ) | (60 | ) | 144 | |||||||
Share of loss in associates and joint ventures | (1 | ) | (1 | ) | - | - | (1 | ) | |||||||
Profit/(loss) before tax | (1,650 | ) | 575 | (1,595 | ) | (60 | ) | 143 | |||||||
% | % | % | % | % | |||||||||||
Cost efficiency ratio | 127.8 | 69.3 | (51.0 | ) | 69.4 | 73.1 | |||||||||
Reported pre-tax RoRWA (annualised) | (3.3 | ) | 0.9 | (10.9 | ) | (0.3 | ) | 0.7 | |||||||
Profit/(loss) before tax by global business
Nine months ended | Quarter ended | ||||||||||||||
30 Sep 2016 | 30 Sep 2015 | 30 Sep 2016 | 30 Jun 2016 | 30 Sep 2015 | |||||||||||
$m | $m | $m | $m | $m | |||||||||||
Retail Banking and Wealth Management | (918 | ) | (132 | ) | (720 | ) | (89 | ) | (100 | ) | |||||
Commercial Banking | (505 | ) | 198 | (495 | ) | (32 | ) | 62 | |||||||
Global Banking and Markets | (126 | ) | 528 | (361 | ) | 105 | 188 | ||||||||
Global Private Banking | 2 | 3 | (4 | ) | 3 | 1 | |||||||||
Other | (103 | ) | (22 | ) | (15 | ) | (47 | ) | (8 | ) | |||||
Profit/(loss) before tax | (1,650 | ) | 575 | (1,595 | ) | (60 | ) | 143 | |||||||
HSBC HOLDINGS PLC
30
Earnings Release - 3Q16 (continued)
Appendix - selected information
Reconciliation of reported results to adjusted performance - geographical regions
Nine months ended 30 Sep 2016 | ||||||||||||||||||||||||
Europe | Asia | MENA | NorthAmerica | LatinAmerica | Total | UK | HongKong | |||||||||||||||||
$m | $m | $m | $m | $m | $m | $m | $m | |||||||||||||||||
Revenue | ||||||||||||||||||||||||
Reported1 | 13,881 | 17,751 | 2,337 | 5,532 | 1,960 | 38,982 | 10,369 | 10,700 | ||||||||||||||||
Significant items | (165 | ) | (23 | ) | (13 | ) | 64 | 308 | 171 | (100 | ) | (11 | ) | |||||||||||
- DVA on derivative contracts | (106 | ) | (29 | ) | - | 2 | 37 | (96 | ) | (108 | ) | (29 | ) | |||||||||||
- fair value movements on non-qualifying hedges | 260 | 18 | - | 109 | (2 | ) | 385 | 221 | 25 | |||||||||||||||
- loss on sale of several tranches of real estate secured accounts in the US | - | - | - | 51 | - | 51 | - | - | ||||||||||||||||
- gain on disposal of our membership interest in Visa Europe | (573 | ) | - | (11 | ) | - | - | (584 | ) | (441 | ) | - | ||||||||||||
- own credit spread | 256 | (12 | ) | (2 | ) | (98 | ) | - | 144 | 230 | (7 | ) | ||||||||||||
- releases arising from the ongoing review of compliance with the UK Consumer Credit Act | (2 | ) | - | - | - | - | (2 | ) | (2 | ) | - | |||||||||||||
- loss and trading results from disposed-of operations in Brazil2 | - | - | - | - | 273 | 273 | - | - | ||||||||||||||||
Adjusted1 | 13,716 | 17,728 | 2,324 | 5,596 | 2,268 | 39,153 | 10,269 | 10,689 | ||||||||||||||||
LICs | ||||||||||||||||||||||||
Reported | (386 | ) | (552 | ) | (184 | ) | (705 | ) | (1,105 | ) | (2,932 | ) | (240 | ) | (231 | ) | ||||||||
Significant items | - | - | - | - | 748 | 748 | - | - | ||||||||||||||||
- trading results from disposed-of operations in Brazil2 | - | - | - | - | 748 | 748 | - | - | ||||||||||||||||
Adjusted | (386 | ) | (552 | ) | (184 | ) | (705 | ) | (357 | ) | (2,184 | ) | (240 | ) | (231 | ) | ||||||||
Operating expenses | ||||||||||||||||||||||||
Reported1 | (13,524 | ) | (7,887 | ) | (1,206 | ) | (4,707 | ) | (2,504 | ) | (27,349 | ) | (9,902 | ) | (4,122 | ) | ||||||||
Significant items | 2,950 | 215 | 75 | 887 | 1,077 | 5,204 | 1,895 | 85 | ||||||||||||||||
- costs to achieve | 1,377 | 262 | 75 | 300 | 18 | 2,032 | 1,187 | 132 | ||||||||||||||||
- costs to establish UK ring-fenced bank | 147 | - | - | - | - | 147 | 147 | - | ||||||||||||||||
- impairment of GPB - Europe goodwill | 800 | - | - | - | - | 800 | - | - | ||||||||||||||||
- regulatory provisions in GPB | 1 | (47 | ) | - | - | - | (46 | ) | - | (47 | ) | |||||||||||||
- settlements and provisions in connection with legal matters | 136 | - | - | 587 | - | 723 | 72 | - | ||||||||||||||||
- UK customer redress programmes | 489 | - | - | - | - | 489 | 489 | - | ||||||||||||||||
- trading results from disposed-of operations in Brazil2 | - | - | - | - | 1,059 | 1,059 | - | - | ||||||||||||||||
Adjusted1 | (10,574 | ) | (7,672 | ) | (1,131 | ) | (3,820 | ) | (1,427 | ) | (22,145 | ) | (8,007 | ) | (4,037 | ) | ||||||||
Share of profit/(loss) in associates and joint ventures | ||||||||||||||||||||||||
Reported | (3 | ) | 1,503 | 361 | (4 | ) | (1 | ) | 1,856 | (4 | ) | 19 | ||||||||||||
Significant items | - | - | - | - | 1 | 1 | - | - | ||||||||||||||||
- trading results from disposed-of operations in Brazil2 | - | - | - | - | 1 | 1 | - | - | ||||||||||||||||
Adjusted | (3 | ) | 1,503 | 361 | (4 | ) | - | 1,857 | (4 | ) | 19 | |||||||||||||
Profit before tax | ||||||||||||||||||||||||
Reported | (32 | ) | 10,815 | 1,308 | 116 | (1,650 | ) | 10,557 | 223 | 6,366 | ||||||||||||||
Significant items | 2,785 | 192 | 62 | 951 | 2,134 | 6,124 | 1,795 | 74 | ||||||||||||||||
- revenue | (165 | ) | (23 | ) | (13 | ) | 64 | 308 | 171 | (100 | ) | (11 | ) | |||||||||||
- LICs | - | - | - | - | 748 | 748 | - | - | ||||||||||||||||
- operating expenses | 2,950 | 215 | 75 | 887 | 1,077 | 5,204 | 1,895 | 85 | ||||||||||||||||
- share in profit of associates | - | - | - | - | 1 | 1 | - | - | ||||||||||||||||
Adjusted | 2,753 | 11,007 | 1,370 | 1,067 | 484 | 16,681 | 2,018 | 6,440 | ||||||||||||||||
1 | Amounts are non-additive across geographical regions due to inter-company transactions within the Group. |
2 | Includes loss on disposal and trading results of operations in Brazil, which were sold on 1 July 2016. The amount of the loss on disposal included in revenue is $1,743m. Trading results do not include 'DVA on derivative contracts', 'costs to achieve' and 'restructuring and other related costs' significant items. These significant items are included in the respective line items above, with a total adjustment of $36m. |
HSBC HOLDINGS PLC
31
Earnings Release - 3Q16 (continued)
Reconciliation of reported results to adjusted performance - geographical regions (continued)
Nine months ended 30 Sep 2015 | ||||||||||||||||||||||||
Europe3 | Asia | MENA3 | NorthAmerica | LatinAmerica | Total | UK | HongKong | |||||||||||||||||
$m | $m | $m | $m | $m | $m | $m | $m | |||||||||||||||||
Revenue | ||||||||||||||||||||||||
Reported1 | 17,014 | 19,843 | 2,405 | 6,065 | 5,167 | 48,028 | 12,962 | 12,408 | ||||||||||||||||
Currency translation1 | (1,007 | ) | (267 | ) | (96 | ) | (59 | ) | (842 | ) | (2,233 | ) | (975 | ) | (18 | ) | ||||||||
Significant items | (1,505 | ) | (1,486 | ) | (11 | ) | (119 | ) | (2,580 | ) | (5,701 | ) | (1,429 | ) | (1,397 | ) | ||||||||
- DVA on derivative contracts | (167 | ) | (119 | ) | (1 | ) | (37 | ) | (92 | ) | (416 | ) | (135 | ) | (27 | ) | ||||||||
- fair value movements on non-qualifying hedges | 196 | 2 | - | 154 | 1 | 353 | 196 | 3 | ||||||||||||||||
- gain on the partial sale of shareholding in Industrial Bank | - | (1,372 | ) | - | - | - | (1,372 | ) | - | (1,372 | ) | |||||||||||||
- own credit spread | (1,532 | ) | 3 | (10 | ) | (236 | ) | - | (1,775 | ) | (1,488 | ) | (1 | ) | ||||||||||
- releases arising from the ongoing review of compliance with the UK Consumer Credit Act | (2 | ) | - | - | - | - | (2 | ) | (2 | ) | - | |||||||||||||
- trading results from disposed-of operations in Brazil2 | - | - | - | - | (2,489 | ) | (2,489 | ) | - | - | ||||||||||||||
Adjusted1 | 14,502 | 18,090 | 2,298 | 5,887 | 1,745 | 40,094 | 10,558 | 10,993 | ||||||||||||||||
LICs | ||||||||||||||||||||||||
Reported | (213 | ) | (365 | ) | (272 | ) | (217 | ) | (1,010 | ) | (2,077 | ) | (52 | ) | (119 | ) | ||||||||
Currency translation | (1 | ) | 7 | 13 | 3 | 133 | 155 | 3 | 1 | |||||||||||||||
Significant items | - | - | - | - | 609 | 609 | - | - | ||||||||||||||||
- trading results from disposed-of operations in Brazil2 | - | - | - | - | 609 | 609 | - | - | ||||||||||||||||
Adjusted | (214 | ) | (358 | ) | (259 | ) | (214 | ) | (268 | ) | (1,313 | ) | (49 | ) | (118 | ) | ||||||||
Operating expenses | ||||||||||||||||||||||||
Reported1 | (13,006 | ) | (8,126 | ) | (1,297 | ) | (4,682 | ) | (3,581 | ) | (28,226 | ) | (10,135 | ) | (4,261 | ) | ||||||||
Currency translation1 | 736 | 155 | 50 | 31 | 542 | 1,476 | 709 | 5 | ||||||||||||||||
Significant items | 1,458 | 15 | 2 | 436 | 1,805 | 3,716 | 1,279 | 10 | ||||||||||||||||
- costs to achieve | 89 | 7 | 1 | 38 | 30 | 165 | 82 | 4 | ||||||||||||||||
- costs to establish UK ring-fenced bank | 28 | - | - | - | - | 28 | 28 | - | ||||||||||||||||
- regulatory provisions in GPB | 154 | - | - | - | - | 154 | - | - | ||||||||||||||||
- restructuring and other related costs | 68 | 8 | 1 | 34 | 6 | 117 | 50 | 6 | ||||||||||||||||
- settlements and provisions in connection with legal matters | 915 | - | - | 364 | - | 1,279 | 915 | - | ||||||||||||||||
- UK customer redress programmes | 204 | - | - | - | - | 204 | 204 | - | ||||||||||||||||
- trading results from disposed-of operations in Brazil2 | - | - | - | - | 1,769 | 1,769 | - | - | ||||||||||||||||
Adjusted1 | (10,812 | ) | (7,956 | ) | (1,245 | ) | (4,215 | ) | (1,234 | ) | (23,034 | ) | (8,147 | ) | (4,246 | ) | ||||||||
Share of profit/(loss) in associates and joint ventures | ||||||||||||||||||||||||
Reported | 6 | 1,596 | 396 | 3 | (1 | ) | 2,000 | 6 | 22 | |||||||||||||||
Currency translation | - | (86 | ) | - | - | - | (86 | ) | - | - | ||||||||||||||
Significant items | - | - | - | - | 1 | 1 | - | - | ||||||||||||||||
- trading results from disposed-of operations in Brazil2 | - | - | - | - | 1 | 1 | - | - | ||||||||||||||||
Adjusted | 6 | 1,510 | 396 | 3 | - | 1,915 | 6 | 22 | ||||||||||||||||
Profit before tax | ||||||||||||||||||||||||
Reported | 3,801 | 12,948 | 1,232 | 1,169 | 575 | 19,725 | 2,781 | 8,050 | ||||||||||||||||
Currency translation | (272 | ) | (191 | ) | (33 | ) | (25 | ) | (167 | ) | (688 | ) | (263 | ) | (12 | ) | ||||||||
Significant items | (47 | ) | (1,471 | ) | (9 | ) | 317 | (165 | ) | (1,375 | ) | (150 | ) | (1,387 | ) | |||||||||
- revenue | (1,505 | ) | (1,486 | ) | (11 | ) | (119 | ) | (2,580 | ) | (5,701 | ) | (1,429 | ) | (1,397 | ) | ||||||||
- LICs | - | - | - | - | 609 | 609 | - | - | ||||||||||||||||
- operating expenses | 1,458 | 15 | 2 | 436 | 1,805 | 3,716 | 1,279 | 10 | ||||||||||||||||
- share in profit of associates | - | - | - | - | 1 | 1 | - | - | ||||||||||||||||
Adjusted | 3,482 | 11,286 | 1,190 | 1,461 | 243 | 17,662 | 2,368 | 6,651 | ||||||||||||||||
1 | Amounts are non-additive across geographical regions due to inter-company transactions within the Group. |
2 | Includes foreign currency translation of operations in Brazil, which were sold on 1 July 2016. These are $(321)m in revenue, $78m in LICs and $208m in operating expenses. Trading results do not include 'DVA on derivative contracts', 'costs to achieve' and 'restructuring and other related costs' significant items. These significant items are included in the respective line items above, with a total adjustment of $(54)m. |
3 | In 3Q16, HSBC Bank plc executed a management services agreement, transferring its governance responsibilities over HSBC Bank A.S. (Turkey) to HSBC Bank Middle East Limited to leverage the strong commercial ties between Turkey and MENA. Comparative data for Europe and MENA have been re-presented accordingly. |
HSBC HOLDINGS PLC
32
Earnings Release - 3Q16 (continued)
Reconciliation of reported results to adjusted performance - geographical regions (continued)
Quarter ended 30 Sep 2016 | ||||||||||||||||||||||||
Europe | Asia | MENA | NorthAmerica | LatinAmerica | Total | UK | HongKong | |||||||||||||||||
$m | $m | $m | $m | $m | $m | $m | $m | |||||||||||||||||
Revenue | ||||||||||||||||||||||||
Reported1 | 3,023 | 5,999 | 725 | 1,580 | (965 | ) | 9,512 | 1,919 | 3,639 | |||||||||||||||
Significant items | 1,346 | 43 | 3 | 138 | 1,745 | 3,275 | 1,291 | 11 | ||||||||||||||||
- DVA on derivative contracts | 4 | 34 | - | 15 | 2 | 55 | (8 | ) | (4 | ) | ||||||||||||||
- fair value movements on non-qualifying hedges | (17 | ) | 5 | - | - | - | (12 | ) | (18 | ) | 9 | |||||||||||||
- loss on sale of several tranches of real estate secured accounts in the US | - | - | - | 119 | - | 119 | - | - | ||||||||||||||||
- own credit spread | 1,359 | 4 | 3 | 4 | - | 1,370 | 1,317 | 6 | ||||||||||||||||
- loss on disposal of operations in Brazil | - | - | - | - | 1,743 | 1,743 | - | - | ||||||||||||||||
Adjusted1 | 4,369 | 6,042 | 728 | 1,718 | 780 | 12,787 | 3,210 | 3,650 | ||||||||||||||||
LICs | ||||||||||||||||||||||||
Reported | (44 | ) | (208 | ) | (88 | ) | (88 | ) | (138 | ) | (566 | ) | 21 | (88 | ) | |||||||||
Adjusted | (44 | ) | (208 | ) | (88 | ) | (88 | ) | (138 | ) | (566 | ) | 21 | (88 | ) | |||||||||
Operating expenses | ||||||||||||||||||||||||
Reported1 | (4,594 | ) | (2,642 | ) | (419 | ) | (1,424 | ) | (492 | ) | (8,721 | ) | (3,692 | ) | (1,362 | ) | ||||||||
Significant items | 1,134 | 101 | 47 | 179 | 12 | 1,473 | 1,022 | 23 | ||||||||||||||||
- costs to achieve | 628 | 148 | 47 | 179 | 12 | 1,014 | 513 | 70 | ||||||||||||||||
- costs to establish UK ring-fenced bank | 53 | - | - | - | - | 53 | 53 | - | ||||||||||||||||
- regulatory provisions in GPB | (3 | ) | (47 | ) | - | - | - | (50 | ) | - | (47 | ) | ||||||||||||
- UK customer redress programmes | 456 | - | - | - | - | 456 | 456 | - | ||||||||||||||||
Adjusted1 | (3,460 | ) | (2,541 | ) | (372 | ) | (1,245 | ) | (480 | ) | (7,248 | ) | (2,670 | ) | (1,339 | ) | ||||||||
Share of profit/(loss) in associates and joint ventures | ||||||||||||||||||||||||
Reported | (2 | ) | 511 | 111 | (2 | ) | - | 618 | (2 | ) | 7 | |||||||||||||
Adjusted | (2 | ) | 511 | 111 | (2 | ) | - | 618 | (2 | ) | 7 | |||||||||||||
Profit/(loss) before tax | ||||||||||||||||||||||||
Reported | (1,617 | ) | 3,660 | 329 | 66 | (1,595 | ) | 843 | (1,754 | ) | 2,196 | |||||||||||||
Significant items | 2,480 | 144 | 50 | 317 | 1,757 | 4,748 | 2,313 | 34 | ||||||||||||||||
- revenue | 1,346 | 43 | 3 | 138 | 1,745 | 3,275 | 1,291 | 11 | ||||||||||||||||
- operating expenses | 1,134 | 101 | 47 | 179 | 12 | 1,473 | 1,022 | 23 | ||||||||||||||||
Adjusted | 863 | 3,804 | 379 | 383 | 162 | 5,591 | 559 | 2,230 | ||||||||||||||||
1 | Amounts are non-additive across geographical regions due to inter-company transactions within the Group. |
HSBC HOLDINGS PLC
33
Earnings Release - 3Q16 (continued)
Reconciliation of reported results to adjusted performance - geographical regions (continued)
Quarter ended 30 Sep 2015 | ||||||||||||||||||||||||
Europe3 | Asia | MENA3 | NorthAmerica | LatinAmerica | Total | UK | HongKong | |||||||||||||||||
$m | $m | $m | $m | $m | $m | $m | $m | |||||||||||||||||
Revenue | ||||||||||||||||||||||||
Reported1 | 5,874 | 5,778 | 779 | 1,939 | 1,609 | 15,085 | 4,716 | 3,278 | ||||||||||||||||
Currency translation1 | (547 | ) | (15 | ) | (22 | ) | 1 | (83 | ) | (658 | ) | (547 | ) | (3 | ) | |||||||||
Significant items | (925 | ) | (67 | ) | (8 | ) | 38 | (937 | ) | (1,899 | ) | (890 | ) | (17 | ) | |||||||||
- DVA on derivative contracts | (88 | ) | (69 | ) | - | (15 | ) | (79 | ) | (251 | ) | (68 | ) | (13 | ) | |||||||||
- fair value movements on non-qualifying hedges | 173 | 2 | - | 133 | - | 308 | 152 | (2 | ) | |||||||||||||||
- loss on sale of several tranches of real estate secured accounts in the US | - | - | - | 17 | - | 17 | - | - | ||||||||||||||||
- own credit spread | (1,020 | ) | - | (8 | ) | (97 | ) | - | (1,125 | ) | (984 | ) | (2 | ) | ||||||||||
- provisions arising from the ongoing review of compliance with the UK Consumer Credit Act | 10 | - | - | - | - | 10 | 10 | - | ||||||||||||||||
- trading results from disposed-of operations in Brazil2 | - | - | - | - | (858 | ) | (858 | ) | - | - | ||||||||||||||
Adjusted1 | 4,402 | 5,696 | 749 | 1,978 | 589 | 12,528 | 3,279 | 3,258 | ||||||||||||||||
LICs | ||||||||||||||||||||||||
Reported | (22 | ) | (119 | ) | (144 | ) | (64 | ) | (289 | ) | (638 | ) | 20 | (62 | ) | |||||||||
Currency translation | (1 | ) | - | 2 | - | (4 | ) | (3 | ) | (2 | ) | - | ||||||||||||
Significant items | - | - | - | - | 207 | 207 | - | - | ||||||||||||||||
- trading results from disposed-of operations in Brazil2 | - | - | - | - | 207 | 207 | - | - | ||||||||||||||||
Adjusted | (23 | ) | (119 | ) | (142 | ) | (64 | ) | (86 | ) | (434 | ) | 18 | (62 | ) | |||||||||
Operating expenses | ||||||||||||||||||||||||
Reported1 | (4,275 | ) | (2,669 | ) | (418 | ) | (1,395 | ) | (1,176 | ) | (9,039 | ) | (3,382 | ) | (1,405 | ) | ||||||||
Currency translation1 | 385 | 8 | 9 | - | 43 | 437 | 383 | 1 | ||||||||||||||||
Significant items | 326 | 7 | 1 | 38 | 716 | 1,088 | 312 | 4 | ||||||||||||||||
- costs to achieve | 89 | 7 | 1 | 38 | 30 | 165 | 82 | 4 | ||||||||||||||||
- costs to establish UK ring-fenced bank | 28 | - | - | - | - | 28 | 28 | - | ||||||||||||||||
- regulatory provisions in GPB | 7 | - | - | - | - | 7 | - | - | ||||||||||||||||
- settlements and provisions in connection with legal matters | 135 | - | - | - | - | 135 | 135 | - | ||||||||||||||||
- UK customer redress programmes | 67 | - | - | - | - | 67 | 67 | - | ||||||||||||||||
- trading results from disposed-of operations in Brazil2 | - | - | - | - | 686 | 686 | - | - | ||||||||||||||||
Adjusted1 | (3,564 | ) | (2,654 | ) | (408 | ) | (1,357 | ) | (417 | ) | (7,514 | ) | (2,687 | ) | (1,400 | ) | ||||||||
Share of profit/(loss) in associates and joint ventures | ||||||||||||||||||||||||
Reported | 4 | 558 | 129 | (1 | ) | (1 | ) | 689 | 2 | 6 | ||||||||||||||
Currency translation | - | (30 | ) | - | - | 1 | (29 | ) | 2 | - | ||||||||||||||
Adjusted | 4 | 528 | 129 | (1 | ) | - | 660 | 4 | 6 | |||||||||||||||
Profit before tax | ||||||||||||||||||||||||
Reported | 1,581 | 3,548 | 346 | 479 | 143 | 6,097 | 1,356 | 1,817 | ||||||||||||||||
Currency translation | (163 | ) | (37 | ) | (11 | ) | 1 | (43 | ) | (253 | ) | (164 | ) | (2 | ) | |||||||||
Significant items | (599 | ) | (60 | ) | (7 | ) | 76 | (14 | ) | (604 | ) | (578 | ) | (13 | ) | |||||||||
- revenue | (925 | ) | (67 | ) | (8 | ) | 38 | (937 | ) | (1,899 | ) | (890 | ) | (17 | ) | |||||||||
- LICs | - | - | - | - | 207 | 207 | - | - | ||||||||||||||||
- operating expenses | 326 | 7 | 1 | 38 | 716 | 1,088 | 312 | 4 | ||||||||||||||||
Adjusted | 819 | 3,451 | 328 | 556 | 86 | 5,240 | 614 | 1,802 | ||||||||||||||||
1 | Amounts are non-additive across geographical regions due to inter-company transactions within the Group. |
2 | Includes foreign currency translation of operations in Brazil, which were sold on 1 July 2016. These are $78m in revenue, $(17)m in LICs and $(58)m in operating expenses. Trading results do not include 'DVA on derivative contracts', 'costs to achieve' and 'restructuring and other related costs' significant items. These significant items are included in the respective line items above, with a total adjustment of $(46)m. |
3 | In 3Q16, HSBC Bank plc executed a management services agreement, transferring its governance responsibilities over HSBC Bank A.S. (Turkey) to HSBC Bank Middle East Limited to leverage the strong commercial ties between Turkey and MENA. Comparative data for Europe and MENA have been re-presented accordingly. |
HSBC HOLDINGS PLC
34
Earnings Release - 3Q16 (continued)
HSBC HOLDINGS PLC
35
Earnings Release - 3Q16 (continued)
Reconciliation of reported results to adjusted performance - global businesses
Nine months ended 30 Sep 2016 | ||||||||||||||||||
RBWM | CMB | GB&M | GPB | Other | Total | |||||||||||||
$m | $m | $m | $m | $m | $m | |||||||||||||
Revenue | ||||||||||||||||||
Reported1 | 15,306 | 10,320 | 12,927 | 1,435 | 3,524 | 38,982 | ||||||||||||
Significant items1 | (345 | ) | 23 | 135 | (9 | ) | 350 | 171 | ||||||||||
- DVA on derivative contracts | - | - | (96 | ) | - | - | (96 | ) | ||||||||||
- fair value movements on non-qualifying hedges | 176 | - | 32 | - | 177 | 385 | ||||||||||||
- loss on sale of several tranches of real estate secured accounts in the US | 51 | - | - | - | - | 51 | ||||||||||||
- gain on disposal of our membership interest in Visa Europe | (354 | ) | (230 | ) | - | - | - | (584 | ) | |||||||||
- own credit spread | - | - | - | - | 144 | 144 | ||||||||||||
- provisions/(releases) arising from the ongoing review of compliance with the UK Consumer Credit Act | - | - | - | (2 | ) | - | (2 | ) | ||||||||||
- loss and trading results from disposed-of operations in Brazil1,2 | (218 | ) | 253 | 199 | (7 | ) | 29 | 273 | ||||||||||
Adjusted1 | 14,961 | 10,343 | 13,062 | 1,426 | 3,874 | 39,153 | ||||||||||||
LICs | ||||||||||||||||||
Reported | (1,483 | ) | (1,077 | ) | (385 | ) | 10 | 3 | (2,932 | ) | ||||||||
Significant items | 461 | 273 | 14 | - | - | 748 | ||||||||||||
- trading results from disposed-of operations in Brazil2 | 461 | 273 | 14 | - | - | 748 | ||||||||||||
Adjusted | (1,022 | ) | (804 | ) | (371 | ) | 10 | 3 | (2,184 | ) | ||||||||
Operating expenses | ||||||||||||||||||
Reported1 | (11,463 | ) | (4,558 | ) | (6,976 | ) | (1,858 | ) | (7,024 | ) | (27,349 | ) | ||||||
Significant items1 | 2,144 | 227 | 390 | 766 | 1,694 | 5,204 | ||||||||||||
- costs to achieve | 313 | 48 | 142 | 6 | 1,523 | 2,032 | ||||||||||||
- costs to establish UK ring-fenced bank | 1 | 1 | - | - | 145 | 147 | ||||||||||||
- impairment of GPB - Europe goodwill | - | - | - | 800 | - | 800 | ||||||||||||
- regulatory provisions in GPB | - | - | - | (48 | ) | 2 | (46 | ) | ||||||||||
- settlements and provisions in connection with legal matters | 587 | - | 136 | - | - | 723 | ||||||||||||
- UK customer redress programmes | 438 | 23 | 28 | - | - | 489 | ||||||||||||
- trading results from disposed-of operations in Brazil1,2 | 805 | 155 | 84 | 8 | 24 | 1,059 | ||||||||||||
Adjusted1 | (9,319 | ) | (4,331 | ) | (6,586 | ) | (1,092 | ) | (5,330 | ) | (22,145 | ) | ||||||
Share of profit in associates and joint ventures | ||||||||||||||||||
Reported | 288 | 1,154 | 401 | 7 | 6 | 1,856 | ||||||||||||
Significant items | - | 1 | - | - | - | 1 | ||||||||||||
- trading results from disposed-of operations in Brazil2 | - | 1 | - | - | - | 1 | ||||||||||||
Adjusted | 288 | 1,155 | 401 | 7 | 6 | 1,857 | ||||||||||||
Profit before tax | ||||||||||||||||||
Reported | 2,648 | 5,839 | 5,967 | (406 | ) | (3,491 | ) | 10,557 | ||||||||||
Significant items | 2,260 | 524 | 539 | 757 | 2,044 | 6,124 | ||||||||||||
- revenue1 | (345 | ) | 23 | 135 | (9 | ) | 350 | 171 | ||||||||||
- LICs | 461 | 273 | 14 | - | - | 748 | ||||||||||||
- operating expenses1 | 2,144 | 227 | 390 | 766 | 1,694 | 5,204 | ||||||||||||
- share in profit of associates | - | 1 | - | - | - | 1 | ||||||||||||
Adjusted | 4,908 | 6,363 | 6,506 | 351 | (1,447 | ) | 16,681 | |||||||||||
1 | Amounts are non-additive across global businesses due to inter-company transactions within the Group. |
2 | Includes loss on disposal and trading results of operations in Brazil, which were sold on 1 July 2016. The amount of the loss on disposal is $1,743m. Trading results do not include 'DVA on derivative contracts', 'costs to achieve' and 'restructuring and other related costs' significant items. These significant items are included in the respective line items above, with a total adjustment of nil in RBWM, nil in CMB, $36m in GB&M, nil in GPB and nil in Other. |
HSBC HOLDINGS PLC
36
Earnings Release - 3Q16 (continued)
Reconciliation of reported results to adjusted performance - global businesses (continued)
Nine months ended 30 Sep 2015 | ||||||||||||||||||
RBWM | CMB | GB&M | GPB | Other | Total | |||||||||||||
$m | $m | $m | $m | $m | $m | |||||||||||||
Revenue | ||||||||||||||||||
Reported1 | 17,912 | 11,236 | 14,786 | 1,685 | 7,227 | 48,028 | ||||||||||||
Currency translation1 | (987 | ) | (577 | ) | (628 | ) | (41 | ) | (100 | ) | (2,233 | ) | ||||||
Significant items1 | (1,400 | ) | (495 | ) | (764 | ) | (45 | ) | (3,024 | ) | (5,701 | ) | ||||||
- DVA on derivative contracts | - | - | (416 | ) | - | - | (416 | ) | ||||||||||
- fair value movements on non-qualifying hedges | 130 | - | 18 | (1 | ) | 206 | 353 | |||||||||||
- gain on the partial sale of shareholding in Industrial Bank | - | - | - | - | (1,372 | ) | (1,372 | ) | ||||||||||
- own credit spread | - | - | - | - | (1,775 | ) | (1,775 | ) | ||||||||||
- provisions/(releases) arising from the ongoing review of compliance with the UK Consumer Credit Act | 22 | - | - | (24 | ) | - | (2 | ) | ||||||||||
- trading results from disposed-of operations in Brazil1,2 | (1,552 | ) | (495 | ) | (366 | ) | (20 | ) | (83 | ) | (2,489 | ) | ||||||
Adjusted1 | 15,525 | 10,164 | 13,394 | 1,599 | 4,103 | 40,094 | ||||||||||||
LICs | ||||||||||||||||||
Reported | (1,396 | ) | (757 | ) | 90 | (9 | ) | (5 | ) | (2,077 | ) | |||||||
Currency translation | 114 | 45 | (6 | ) | 1 | 1 | 155 | |||||||||||
Significant items | 482 | 156 | (29 | ) | - | - | 609 | |||||||||||
- trading results from disposed-of operations in Brazil2 | 482 | 156 | (29 | ) | - | - | 609 | |||||||||||
Adjusted | (800 | ) | (556 | ) | 55 | (8 | ) | (4 | ) | (1,313 | ) | |||||||
Operating expenses | ||||||||||||||||||
Reported1 | (12,308 | ) | (4,997 | ) | (8,385 | ) | (1,427 | ) | (5,927 | ) | (28,226 | ) | ||||||
Currency translation1 | 739 | 252 | 412 | 33 | 140 | 1,476 | ||||||||||||
Significant items1 | 1,864 | 360 | 1,121 | 190 | 208 | 3,716 | ||||||||||||
- costs to achieve | 56 | 13 | 20 | 1 | 75 | 165 | ||||||||||||
- costs to establish UK ring-fenced bank | - | - | - | - | 28 | 28 | ||||||||||||
- regulatory provisions in GPB | - | - | - | 154 | - | 154 | ||||||||||||
- restructuring and other related costs | 32 | 5 | 22 | 18 | 40 | 117 | ||||||||||||
- settlements and provisions in connection with legal matters | 350 | - | 929 | - | - | 1,279 | ||||||||||||
- UK customer redress programmes | 163 | 41 | - | - | - | 204 | ||||||||||||
- trading results from disposed-of operations in Brazil1,2 | 1,263 | 301 | 150 | 17 | 65 | 1,769 | ||||||||||||
Adjusted1 | (9,705 | ) | (4,385 | ) | (6,852 | ) | (1,204 | ) | (5,579 | ) | (23,034 | ) | ||||||
Share of profit in associates and joint ventures | ||||||||||||||||||
Reported | 314 | 1,267 | 404 | 12 | 3 | 2,000 | ||||||||||||
Currency translation | (12 | ) | (63 | ) | (13 | ) | 3 | (1 | ) | (86 | ) | |||||||
Significant items | - | 1 | - | - | - | 1 | ||||||||||||
- trading results from disposed-of operations in Brazil2 | - | 1 | - | - | - | 1 | ||||||||||||
Adjusted | 302 | 1,205 | 391 | 15 | 2 | 1,915 | ||||||||||||
Profit before tax | ||||||||||||||||||
Reported | 4,522 | 6,749 | 6,895 | 261 | 1,298 | 19,725 | ||||||||||||
Currency translation | (146 | ) | (343 | ) | (235 | ) | (4 | ) | 40 | (688 | ) | |||||||
Significant items | 946 | 22 | 328 | 145 | (2,816 | ) | (1,375 | ) | ||||||||||
- revenue1 | (1,400 | ) | (495 | ) | (764 | ) | (45 | ) | (3,024 | ) | (5,701 | ) | ||||||
- LICs | 482 | 156 | (29 | ) | - | - | 609 | |||||||||||
- operating expenses1 | 1,864 | 360 | 1,121 | 190 | 208 | 3,716 | ||||||||||||
- share in profit of associates | - | 1 | - | - | - | 1 | ||||||||||||
Adjusted | 5,322 | 6,428 | 6,988 | 402 | (1,478 | ) | 17,662 | |||||||||||
1 | Amounts are non-additive across global businesses due to inter-company transactions within the Group. |
2 | Includes foreign currency translation of operations in Brazil, which were sold on 1 July 2016. Foreign currency translation amounts included in revenue are $(204)m in RBWM, $(65)m in CMB, $(47)m in GB&M, $(2)m in GPB and $(8)m in Other. Foreign currency amounts included in LICs are $52m in RBWM, $24m in CMB, $2m in GB&M, nil in GPB and nil in Other. Foreign currency amounts included in operating expenses are $154m in RBWM, $32m in CMB, $19m in GB&M, $2m in GPB and $5m in Other. Trading results do not include 'DVA on derivative contracts', 'costs to achieve' and 'restructuring and other related costs' significant items. These significant items are included in the respective line items above, with a total adjustment of $28m in RBWM, $3m in CMB, $(86)m in GB&M, nil in GPB and $1m in Other. |
HSBC HOLDINGS PLC
37
Earnings Release - 3Q16 (continued)
Reconciliation of reported results to adjusted performance - global businesses (continued)
Quarter ended 30 Sep 2016 | ||||||||||||||||||
RBWM | CMB | GB&M | GPB | Other | Total | |||||||||||||
$m | $m | $m | $m | $m | $m | |||||||||||||
Revenue | ||||||||||||||||||
Reported1 | 4,189 | 2,811 | 4,014 | 462 | (504 | ) | 9,512 | |||||||||||
Significant items | 923 | 541 | 491 | 5 | 1,315 | 3,275 | ||||||||||||
- DVA on derivative contracts | - | - | 55 | - | - | 55 | ||||||||||||
- fair value movements on non-qualifying hedges | 34 | - | 12 | - | (58 | ) | (12 | ) | ||||||||||
- loss on sale of several tranches of real estate secured accounts in the US | 119 | - | - | - | - | 119 | ||||||||||||
- own credit spread | - | - | - | - | 1,370 | 1,370 | ||||||||||||
- loss on disposal of operations in Brazil | 770 | 541 | 424 | 5 | 3 | 1,743 | ||||||||||||
Adjusted1 | 5,112 | 3,352 | 4,505 | 467 | 811 | 12,787 | ||||||||||||
LICs | ||||||||||||||||||
Reported | (363 | ) | (244 | ) | 40 | (1 | ) | 2 | (566 | ) | ||||||||
Adjusted | (363 | ) | (244 | ) | 40 | (1 | ) | 2 | (566 | ) | ||||||||
Operating expenses | ||||||||||||||||||
Reported1 | (3,655 | ) | (1,415 | ) | (2,227 | ) | (313 | ) | (2,571 | ) | (8,721 | ) | ||||||
Significant items | 610 | 20 | 61 | (47 | ) | 829 | 1,473 | |||||||||||
- costs to achieve | 171 | 11 | 51 | 1 | 780 | 1,014 | ||||||||||||
- costs to establish UK ring-fenced bank | 1 | 1 | - | - | 51 | 53 | ||||||||||||
- regulatory provisions in GPB | - | - | - | (48 | ) | (2 | ) | (50 | ) | |||||||||
- UK customer redress programmes | 438 | 8 | 10 | - | - | 456 | ||||||||||||
Adjusted1 | (3,045 | ) | (1,395 | ) | (2,166 | ) | (360 | ) | (1,742 | ) | (7,248 | ) | ||||||
Share of profit in associates and joint ventures | ||||||||||||||||||
Reported | 95 | 383 | 134 | 3 | 3 | 618 | ||||||||||||
Adjusted | 95 | 383 | 134 | 3 | 3 | 618 | ||||||||||||
Profit before tax | ||||||||||||||||||
Reported | 266 | 1,535 | 1,961 | 151 | (3,070 | ) | 843 | |||||||||||
Significant items | 1,533 | 561 | 552 | (42 | ) | 2,144 | 4,748 | |||||||||||
- revenue | 923 | 541 | 491 | 5 | 1,315 | 3,275 | ||||||||||||
- operating expenses | 610 | 20 | 61 | (47 | ) | 829 | 1,473 | |||||||||||
Adjusted | 1,799 | 2,096 | 2,513 | 109 | (926 | ) | 5,591 | |||||||||||
1 | Amounts are non-additive across global businesses due to inter-company transactions within the Group. |
Quarter ended 30 Jun 2016 | ||||||||||||||||||
RBWM | CMB | GB&M | GPB | Other | Total | |||||||||||||
$m | $m | $m | $m | $m | $m | |||||||||||||
Revenue | ||||||||||||||||||
Reported1 | 5,957 | 3,886 | 4,447 | 486 | 1,370 | 14,494 | ||||||||||||
Currency translation | (107 | ) | (97 | ) | (82 | ) | (4 | ) | (14 | ) | (289 | ) | ||||||
Significant items1 | (994 | ) | (388 | ) | (86 | ) | (8 | ) | 100 | (1,367 | ) | |||||||
- DVA on derivative contracts | - | - | 7 | - | - | 7 | ||||||||||||
- fair value movements on non-qualifying hedges | (6 | ) | - | 12 | - | 158 | 164 | |||||||||||
- gain on sale of several tranches of real estate secured accounts in the US | (68 | ) | - | - | - | - | (68 | ) | ||||||||||
- gain on disposal of our membership interest in Visa Europe | (354 | ) | (230 | ) | - | - | - | (584 | ) | |||||||||
- own credit spread | - | - | - | - | (75 | ) | (75 | ) | ||||||||||
- releases arising from the ongoing review of compliance with the UK Consumer Credit Act | - | - | - | (2 | ) | - | (2 | ) | ||||||||||
- trading results from disposed-of operations in Brazil1,2 | (566 | ) | (158 | ) | (105 | ) | (6 | ) | 17 | (809 | ) | |||||||
Adjusted1 | 4,856 | 3,401 | 4,279 | 474 | 1,456 | 12,838 | ||||||||||||
1 | Amounts are non-additive across global businesses due to inter-company transactions within the Group. |
2 | Includes foreign currency translation of operations in Brazil, which were sold on 1 July 2016. Foreign currency translation amounts included in revenue are $42m in RBWM, $12m in CMB, $9m in GB&M, nil in GPB and $(1)m in Other. Trading results do not include the 'DVA on derivative contracts', significant item. This significant item is included in the respective line item above, with a total adjustment of nil in RBWM, nil in CMB, |
$(9)m in GB&M, nil in GPB and nil in Other.
HSBC HOLDINGS PLC
38
Earnings Release - 3Q16 (continued)
Reconciliation of reported results to adjusted performance - global businesses (continued)
Quarter ended 30 Sep 2015 | ||||||||||||||||||
RBWM | CMB | GB&M | GPB | Other | Total | |||||||||||||
$m | $m | $m | $m | $m | $m | |||||||||||||
Revenue | ||||||||||||||||||
Reported1 | 5,470 | 3,702 | 4,525 | 508 | 2,540 | 15,085 | ||||||||||||
Currency translation1 | (261 | ) | (183 | ) | (179 | ) | (10 | ) | (48 | ) | (658 | ) | ||||||
Significant items1 | (368 | ) | (178 | ) | (366 | ) | (9 | ) | (986 | ) | (1,899 | ) | ||||||
- DVA on derivative contracts | - | - | (251 | ) | - | - | (251 | ) | ||||||||||
- fair value movements on non-qualifying hedges | 148 | - | (4 | ) | (1 | ) | 165 | 308 | ||||||||||
- loss on sale of several tranches of real estate secured accounts in the US | 17 | - | - | - | - | 17 | ||||||||||||
- own credit spread | - | - | - | - | (1,125 | ) | (1,125 | ) | ||||||||||
- provisions arising from the ongoing review of compliance with the UK Consumer Credit Act | 10 | - | - | - | - | 10 | ||||||||||||
- trading results from disposed-of operations in Brazil1,2 | (543 | ) | (178 | ) | (111 | ) | (8 | ) | (26 | ) | (858 | ) | ||||||
Adjusted1 | 4,841 | 3,341 | 3,980 | 489 | 1,506 | 12,528 | ||||||||||||
LICs | ||||||||||||||||||
Reported | (462 | ) | (246 | ) | 79 | (4 | ) | (5 | ) | (638 | ) | |||||||
Currency translation | (4 | ) | 3 | (5 | ) | 1 | 2 | (3 | ) | |||||||||
Significant items | 198 | 37 | (28 | ) | - | - | 207 | |||||||||||
- trading results from disposed-of operations in Brazil2 | 198 | 37 | (28 | ) | - | - | 207 | |||||||||||
Adjusted | (268 | ) | (206 | ) | 46 | (3 | ) | (3 | ) | (434 | ) | |||||||
Operating expenses | ||||||||||||||||||
Reported1 | (3,954 | ) | (1,676 | ) | (2,595 | ) | (426 | ) | (2,048 | ) | (9,039 | ) | ||||||
Currency translation1 | 182 | 64 | 163 | 7 | 44 | 437 | ||||||||||||
Significant items1 | 609 | 133 | 205 | 15 | 134 | 1,088 | ||||||||||||
- costs to achieve | 56 | 13 | 20 | 1 | 75 | 165 | ||||||||||||
- costs to establish UK ring-fenced bank | - | - | - | - | 28 | 28 | ||||||||||||
- regulatory provisions in GPB | - | - | - | 7 | - | 7 | ||||||||||||
- settlements and provisions in connection with legal matters | - | - | 135 | - | - | 135 | ||||||||||||
- UK customer redress programmes | 73 | (6 | ) | - | - | - | 67 | |||||||||||
- trading results from disposed-of operations in Brazil1,2 | 480 | 126 | 50 | 7 | 31 | 686 | ||||||||||||
Adjusted1 | (3,163 | ) | (1,479 | ) | (2,227 | ) | (404 | ) | (1,870 | ) | (7,514 | ) | ||||||
Share of profit in associates and joint ventures | ||||||||||||||||||
Reported | 106 | 446 | 132 | 3 | 2 | 689 | ||||||||||||
Currency translation | (6 | ) | (22 | ) | (5 | ) | 1 | 3 | (29 | ) | ||||||||
Adjusted | 100 | 424 | 127 | 4 | 5 | 660 | ||||||||||||
Profit before tax | ||||||||||||||||||
Reported | 1,160 | 2,226 | 2,141 | 81 | 489 | 6,097 | ||||||||||||
Currency translation | (89 | ) | (138 | ) | (26 | ) | (1 | ) | 1 | (253 | ) | |||||||
Significant items | 439 | (8 | ) | (189 | ) | 6 | (852 | ) | (604 | ) | ||||||||
- revenue1 | (368 | ) | (178 | ) | (366 | ) | (9 | ) | (986 | ) | (1,899 | ) | ||||||
- LICs | 198 | 37 | (28 | ) | - | - | 207 | |||||||||||
- operating expenses1 | 609 | 133 | 205 | 15 | 134 | 1,088 | ||||||||||||
Adjusted | 1,510 | 2,080 | 1,926 | 86 | (362 | ) | 5,240 | |||||||||||
1 | Amounts are non-additive across global businesses due to inter-company transactions within the Group. |
2 | Includes foreign currency translation of operations in Brazil, which were sold on 1 July 2016. Foreign currency translation amounts included in revenue are $45m in RBWM, $15m in CMB, $16m in GB&M, $1m in GPB and $2m in Other. Foreign currency amounts included in LICs are $(17)m in RBWM, $(3)m in CMB, $2m in GB&M, nil in GPB and nil in Other. Foreign currency amounts included in operating expenses are $(40)m in RBWM, $(11)m in CMB, $(4)m in GB&M, $(1)m in GPB and $(3)m in Other. Trading results do not include 'DVA on derivative contracts', 'costs to achieve' and 'restructuring and other related costs' significant items. These significant items are included in the respective line items above, with a total adjustment of $26m in RBWM, $3m in CMB, $(75)m in GB&M, nil in GPB and nil in Other. |
HSBC HOLDINGS PLC
39
Earnings Release - 3Q16 (continued)
Gross loans and advances by industry sector and by geographical region
Europe1 | Asia | MENA1 | North America | Latin America | Total | As a %of total gross loans | ||||||||||||||
$m | $m | $m | $m | $m | $m | |||||||||||||||
At 30 Sep 2016 | ||||||||||||||||||||
Personal | 154,245 | 134,956 | 8,869 | 51,759 | 5,972 | 355,801 | 36.1 | |||||||||||||
First lien residential mortgages | 113,163 | 97,631 | 2,786 | 44,364 | 1,964 | 259,908 | 26.4 | |||||||||||||
Other personal | 41,082 | 37,325 | 6,083 | 7,395 | 4,008 | 95,893 | 9.7 | |||||||||||||
Wholesale | ||||||||||||||||||||
Corporate and commercial | 175,410 | 201,900 | 23,566 | 61,273 | 11,153 | 473,302 | 48.0 | |||||||||||||
- manufacturing | 32,803 | 32,858 | 3,713 | 16,000 | 2,634 | 88,008 | 8.9 | |||||||||||||
- international trade and services | 61,597 | 67,116 | 9,591 | 10,921 | 2,665 | 151,890 | 15.4 | |||||||||||||
- commercial real estate | 22,886 | 32,349 | 729 | 7,927 | 1,510 | 65,401 | 6.6 | |||||||||||||
- other property-related | 7,848 | 34,662 | 1,745 | 9,453 | 423 | 54,131 | 5.5 | |||||||||||||
- government | 3,016 | 2,205 | 1,567 | 385 | 575 | 7,748 | 0.8 | |||||||||||||
- other commercial | 47,260 | 32,710 | 6,221 | 16,587 | 3,346 | 106,124 | 10.8 | |||||||||||||
Financial | 47,966 | 79,319 | 12,164 | 12,775 | 3,986 | 156,210 | 15.9 | |||||||||||||
- non-bank financial institutions | 32,348 | 16,938 | 2,648 | 8,033 | 664 | 60,631 | 6.2 | |||||||||||||
- banks | 15,618 | 62,381 | 9,516 | 4,742 | 3,322 | 95,579 | 9.7 | |||||||||||||
Total wholesale | 223,376 | 281,219 | 35,730 | 74,048 | 15,139 | 629,512 | 63.9 | |||||||||||||
Total gross loans and advances at 30 Sep 2016 | 377,621 | 416,175 | 44,599 | 125,807 | 21,111 | 985,313 | 100.0 | |||||||||||||
Percentage of total gross loans and advances | 38.3 | % | 42.3 | % | 4.5 | % | 12.8 | % | 2.1 | % | 100.0 | % | ||||||||
At 30 Jun 2016 | ||||||||||||||||||||
Personal | 156,716 | 134,416 | 9,168 | 53,433 | 5,981 | 359,714 | 36.4 | |||||||||||||
First lien residential mortgages | 115,222 | 96,304 | 2,787 | 45,687 | 1,976 | 261,976 | 26.5 | |||||||||||||
Other personal | 41,494 | 38,112 | 6,381 | 7,746 | 4,005 | 97,738 | 9.9 | |||||||||||||
Wholesale | ||||||||||||||||||||
Corporate and commercial | 175,567 | 203,162 | 25,510 | 63,347 | 11,373 | 478,959 | 48.4 | |||||||||||||
- manufacturing | 34,100 | 32,902 | 4,090 | 16,919 | 2,659 | 90,670 | 9.2 | |||||||||||||
- international trade and services | 58,004 | 68,347 | 10,681 | 11,549 | 2,637 | 151,218 | 15.3 | |||||||||||||
- commercial real estate | 23,133 | 31,505 | 741 | 8,077 | 1,266 | 64,722 | 6.5 | |||||||||||||
- other property-related | 7,471 | 34,987 | 1,820 | 9,448 | 441 | 54,167 | 5.5 | |||||||||||||
- government | 2,953 | 2,105 | 1,730 | 350 | 623 | 7,761 | 0.8 | |||||||||||||
- other commercial | 49,906 | 33,316 | 6,448 | 17,004 | 3,747 | 110,421 | 11.1 | |||||||||||||
Financial | 45,235 | 75,969 | 11,424 | 13,658 | 3,749 | 150,035 | 15.2 | |||||||||||||
- non-bank financial institutions | 30,234 | 16,466 | 2,760 | 7,615 | 761 | 57,836 | 5.9 | |||||||||||||
- banks | 15,001 | 59,503 | 8,664 | 6,043 | 2,988 | 92,199 | 9.3 | |||||||||||||
Total wholesale | 220,802 | 279,131 | 36,934 | 77,005 | 15,122 | 628,994 | 63.6 | |||||||||||||
Total gross loans and advances at 30 Jun 2016 | 377,518 | 413,547 | 46,102 | 130,438 | 21,103 | 988,708 | 100.0 | |||||||||||||
Percentage of total gross loans and advances | 38.2 | % | 41.8 | % | 4.7 | % | 13.2 | % | 2.1 | % | 100.0 | % | ||||||||
At 31 Dec 2015 | ||||||||||||||||||||
Personal | 167,666 | 132,707 | 9,565 | 58,186 | 5,958 | 374,082 | 36.5 | |||||||||||||
First lien residential mortgages | 125,098 | 94,606 | 2,704 | 50,117 | 1,986 | 274,511 | 26.8 | |||||||||||||
Other personal | 42,568 | 38,101 | 6,861 | 8,069 | 3,972 | 99,571 | 9.7 | |||||||||||||
Wholesale | ||||||||||||||||||||
Corporate and commercial | 187,508 | 211,224 | 26,525 | 62,882 | 11,374 | 499,513 | 48.8 | |||||||||||||
- manufacturing | 36,623 | 34,272 | 4,884 | 17,507 | 2,572 | 95,858 | 9.4 | |||||||||||||
- international trade and services | 61,598 | 72,199 | 10,621 | 11,505 | 3,096 | 159,019 | 15.5 | |||||||||||||
- commercial real estate | 26,148 | 32,371 | 798 | 7,032 | 1,577 | 67,926 | 6.7 | |||||||||||||
- other property-related | 7,129 | 35,206 | 2,102 | 8,982 | 45 | 53,464 | 5.2 | |||||||||||||
- government | 3,653 | 1,132 | 1,695 | 203 | 772 | 7,455 | 0.7 | |||||||||||||
- other commercial | 52,357 | 36,044 | 6,425 | 17,653 | 3,312 | 115,791 | 11.3 | |||||||||||||
Financial | 50,446 | 68,321 | 11,762 | 16,308 | 3,996 | 150,833 | 14.7 | |||||||||||||
- non-bank financial institutions | 33,345 | 13,969 | 2,597 | 9,822 | 681 | 60,414 | 5.9 | |||||||||||||
- banks | 17,101 | 54,352 | 9,165 | 6,486 | 3,315 | 90,419 | 8.8 | |||||||||||||
Total wholesale | 237,954 | 279,545 | 38,287 | 79,190 | 15,370 | 650,346 | 63.5 | |||||||||||||
Total gross loans and advances at 31 Dec 2015 | 405,620 | 412,252 | 47,852 | 137,376 | 21,328 | 1,024,428 | 100.0 | |||||||||||||
Percentage of total gross loans and advances | 39.6 | % | 40.3 | % | 4.6 | % | 13.4 | % | 2.1 | % | 100.0 | % | ||||||||
1 | In 3Q16, HSBC Bank plc executed a management services agreement, transferring its governance responsibilities over HSBC Bank A.S. (Turkey) to HSBC Bank Middle East Limited to leverage the strong commercial ties between Turkey and MENA. Comparative data for Europe and MENA have been re-presented accordingly. |
HSBC HOLDINGS PLC
40
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