• | Reported profit before tax in Asia up 4% to $4.7bn in 3Q19, with a resilient performance in Hong Kong. |
• | Growth in both loans and advances to customers and customer accounts, up 4% and 2% respectively on a reported basis compared with 3Q18, and up 7% and 5% on a constant currency basis. |
• | Commercial Banking (‘CMB’) and Retail Banking delivered revenue growth compared with 3Q18. Continued momentum in Global Private Banking (‘GPB’) with net new money of $19bn in 9M19. Performance in Retail Banking and Wealth Management (‘RBWM’) in HSBC UK in 3Q19 was adversely impacted by additional customer redress charges. |
• | Global Banking and Markets (‘GB&M’) performance continued to reflect low levels of client activity in Global Markets, although our transaction banking franchises delivered a resilient performance. In 3Q19, GB&M’s adjusted revenue in Asia increased by 9% compared with 3Q18 and represented over 50% of total GB&M adjusted revenue. |
• | Continued strong capital levels, with common equity tier 1 (‘CET1’) ratio of 14.3%, including the completion of a $1bn share buy-back. |
• | Profit attributable to ordinary shareholders in 3Q19 down 24% to $3.0bn, reflecting challenging market conditions. Return on tangible equity (annualised) (‘RoTE’) for 3Q19 of 6.4%. |
• | Reported profit before tax down 18% to $4.8bn, which included additional customer redress provisions of $606m and $120m of severance costs. Adjusted profit before tax down 12% to $5.3bn. |
• | Reported revenue down 3% to $13.4bn, due to lower client activity in Global Markets, compared with a strong 3Q18. In RBWM, continued growth in Retail Banking was broadly offset in insurance manufacturing due to higher adverse market impacts of $177m, while revenue increased in CMB and GPB. Adjusted revenue down 2% to $13.3bn. |
• | The reduction in revenue included an adverse movement in credit and funding valuation adjustments in GB&M of $196m, while the adverse impact of hyperinflation accounting in Argentina in 3Q19 was $132m, compared with $304m in 3Q18. |
• | Reported operating expenses up 2% due to significant items. Adjusted operating expenses up 0.8%, reflecting cost discipline while continuing to invest. |
• | Reported change in expected credit losses (‘ECL’) increased by $0.4bn, mainly on unsecured lending in RBWM and higher charges in CMB in the UK and Hong Kong. ECL in 3Q19 included a charge to reflect the economic outlook in Hong Kong. |
• | Reported profit before tax up 4% to $17.2bn, including an $828m dilution gain recognised in Saudi Arabia, customer redress provisions of $1.2bn, and $407m of severance costs. Adjusted profit before tax up $50m to $17.9bn. |
• | Reported revenue up 4%. Adjusted revenue up 4.8%, which reflected strong performances in RBWM and CMB, notably in the first half of 2019. Adjusted revenue in GB&M down 7% from lower market activity due to ongoing economic uncertainty. |
• | Reported operating expenses down 1%. Adjusted operating expenses up 2.6%, which is a slower growth rate than the 5.6% at FY18 (compared with FY17) while we have continued to invest. 9M19 positive adjusted jaws of 2.2%. |
• | Earnings per share of 57 cents. 9M19 RoTE (annualised) of 9.5%. |
• | The revenue environment is more challenging than in the first half of 2019, and the outlook for revenue growth is softer than we anticipated at the half-year. As a result, we no longer expect to reach our RoTE target of more than 11% in 2020. |
• | We will act to rebalance our capital away from low-return businesses and adjust the cost base in line with the actions we take. |
• | These actions, or any continuing deterioration in the revenue environment, could result in significant charges in 4Q19 and subsequent periods, including the possible impairment of goodwill and additional restructuring charges. |
• | Addressing low-return businesses and reducing risk-weighted assets (‘RWAs’) will allow redeployment of capital and resources into higher growth and return opportunities. |
• | We intend to sustain the dividend and maintain a CET1 ratio of above 14%. |
Registered office and Group Head office: 8 Canada Square , London, E14 5HQ, United Kingdom Web: www.hsbc.com Incorporated in England with limited liability. Registered number 617987 |
Key financial metrics |
Nine months ended | Quarter ended | |||||||||
30 Sep | 30 Sep | 30 Sep | 30 Jun | 30 Sep | ||||||
2019 | 2018 | 2019 | 2019 | 2018 | ||||||
Reported results | ||||||||||
Reported revenue ($m) | 42,727 | 41,085 | 13,355 | 14,944 | 13,798 | |||||
Reported profit before tax ($m) | 17,244 | 16,634 | 4,837 | 6,194 | 5,922 | |||||
Reported profit after tax ($m) | 13,732 | 12,932 | 3,795 | 5,027 | 4,516 | |||||
Profit attributable to the ordinary shareholders of the parent company ($m) | 11,478 | 11,071 | 2,971 | 4,373 | 3,899 | |||||
Basic earnings per share ($) | 0.57 | 0.56 | 0.15 | 0.22 | 0.19 | |||||
Diluted earnings per share ($) | 0.57 | 0.55 | 0.15 | 0.22 | 0.19 | |||||
Return on average ordinary shareholders' equity (annualised) (%) | 9.2 | 9.0 | 7.0 | 10.5 | 9.6 | |||||
Return on average tangible equity (annualised) (%) | 9.5 | 10.1 | 6.4 | 11.7 | 10.9 | |||||
Net interest margin (%) | 1.59 | 1.67 | ||||||||
Adjusted results | ||||||||||
Adjusted revenue ($m) | 41,762 | 39,868 | 13,267 | 13,881 | 13,486 | |||||
Adjusted profit before tax ($m) | 17,864 | 17,814 | 5,348 | 6,101 | 6,092 | |||||
Adjusted jaws (%) | 2.2 | (2.4 | ) | |||||||
Adjusted cost efficiency ratio (%) | 56.8 | 57.9 | 56.9 | 57.3 | 55.5 | |||||
Expected credit losses and other credit impairment charges (‘ECL’) as % of average gross loans and advances to customers (%) | 0.27 | 0.12 | 0.34 | 0.22 | 0.20 |
At | |||||||
30 Sep | 30 Jun | 31 Dec | |||||
Footnotes | 2019 | 2019 | 2018 | ||||
Balance sheet | |||||||
Total assets ($m) | 2,728,347 | 2,751,273 | 2,558,124 | ||||
Net loans and advances to customers ($m) | 1,017,833 | 1,021,632 | 981,696 | ||||
Customer accounts ($m) | 1,373,741 | 1,380,124 | 1,362,643 | ||||
Average interest-earning assets, year to date ($m) | 1,915,149 | 1,912,708 | 1,839,346 | ||||
Loans and advances to customers as % of customer accounts (%) | 74.1 | 74.0 | 72.0 | ||||
Total shareholders’ equity ($m) | 189,517 | 192,676 | 186,253 | ||||
Tangible ordinary shareholders’ equity ($m) | 141,831 | 145,441 | 140,056 | ||||
Net asset value per ordinary share at period end ($) | 1 | 8.21 | 8.35 | 8.13 | |||
Tangible net asset value per ordinary share at period end ($) | 7.02 | 7.19 | 7.01 | ||||
Capital, leverage and liquidity | |||||||
Common equity tier 1 capital ratio (%) | 2 | 14.3 | 14.3 | 14.0 | |||
Risk-weighted assets ($m) | 2 | 865,238 | 885,971 | 865,318 | |||
Total capital ratio (%) | 2 | 20.2 | 20.1 | 20.0 | |||
Leverage ratio (%) | 2 | 5.4 | 5.4 | 5.5 | |||
High-quality liquid assets (liquidity value) ($bn) | 513 | 533 | 567 | ||||
Liquidity coverage ratio (%) | 136 | 136 | 154 | ||||
Share count | |||||||
Period end basic number of $0.50 ordinary shares outstanding (millions) | 20,191 | 20,221 | 19,981 | ||||
Period end basic number of $0.50 ordinary shares outstanding and dilutive potential ordinary shares (millions) | 20,267 | 20,286 | 20,059 | ||||
Average basic number of $0.50 ordinary shares outstanding (millions) | 20,149 | 20,124 | 19,896 | ||||
Dividend per ordinary share (in respect of the period) ($) | 0.30 | 0.30 | 0.51 |
1 | The definition of net asset value per ordinary share is total shareholders’ equity less non-cumulative preference shares and capital securities, divided by the number of ordinary shares in issue excluding shares the company has purchased and are held in treasury. |
2 | Unless otherwise stated, regulatory capital ratios and requirements are calculated in accordance with the transitional arrangements of the Capital Requirements Regulation in force in the EU at the time, including the regulatory transitional arrangements for IFRS 9 ‘Financial Instruments’ in article 473a. The capital ratios and requirements at 30 September 2019 and 30 June 2019 apply the revisions to the Capital Requirements Regulation (‘CRR II’), whereas prior periods apply the Capital Requirements Regulation and Directive (‘CRD IV’). Leverage ratios are calculated using the end point definition of capital. |
2 | HSBC Holdings plc Earnings Release 3Q19 |
Contents | ||||||
Page | Page | |||||
Highlights | Minimum requirement for own funds and eligible liabilities | |||||
Key financial metrics | Summary information – global businesses | |||||
Adjusted performance | Summary information – geographical regions | |||||
Financial performance commentary | Appendix – selected information | |||||
Cautionary statement regarding forward-looking statements | – Reconciliation of reported to adjusted results – global businesses | |||||
Summary consolidated income statement | – Reconciliation of reported and adjusted risk-weighted assets | |||||
Summary consolidated balance sheet | – Reconciliation of reported to adjusted results – geographical regions and selected countries/territories | |||||
Credit risk | ||||||
Capital adequacy | Third interim dividend for 2019 | |||||
Leverage | Terms and abbreviations | |||||
Risk-weighted assets |
Adjusted performance |
Foreign currency translation differences Foreign currency translation differences for 9M19 and 3Q19 are computed by retranslating into US dollars for non-US dollar branches, subsidiaries, joint ventures and associates: • the income statements for 9M18 at the average rates of exchange for 9M19; • the income statements for quarterly periods at the average rates of exchange for 3Q19; and• the closing prior period balance sheets at the prevailing rates of exchange on 30 September 2019.No adjustment has been made to the exchange rates used to translate foreign currency-denominated assets and liabilities into the functional currencies of any HSBC branches, subsidiaries, joint ventures or associates. The constant currency data of HSBC’s Argentinian subsidiaries have not been adjusted further for the impacts of hyperinflation. When reference is made to foreign currency translation differences in tables or commentaries, comparative data reported in the functional currencies of HSBC’s operations have been translated at the appropriate exchange rates applied in the current period on the basis described above. |
HSBC Holdings plc Earnings Release 3Q19 | 3 |
Reconciliation of reported and adjusted results | |||||||||||
Nine months ended | Quarter ended | ||||||||||
30 Sep | 30 Sep | 30 Sep | 30 Jun | 30 Sep | |||||||
2019 | 2018 | 2019 | 2019 | 2018 | |||||||
Footnotes | $m | $m | $m | $m | $m | ||||||
Revenue | |||||||||||
Reported | 1 | 42,727 | 41,085 | 13,355 | 14,944 | 13,798 | |||||
Currency translation | (1,514 | ) | (208 | ) | (355 | ) | |||||
Significant items | (965 | ) | 297 | (88 | ) | (855 | ) | 43 | |||
– customer redress programmes | 118 | (46 | ) | 118 | — | — | |||||
– disposals, acquisitions and investment in new businesses | (823 | ) | 142 | 4 | (827 | ) | — | ||||
– fair value movement on financial instruments | 2 | (260 | ) | 195 | (210 | ) | (28 | ) | 43 | ||
– currency translation of significant items | 6 | — | — | ||||||||
Adjusted | 41,762 | 39,868 | 13,267 | 13,881 | 13,486 | ||||||
Change in expected credit losses and other credit impairment charges | |||||||||||
Reported | (2,023 | ) | (914 | ) | (883 | ) | (555 | ) | (507 | ) | |
Currency translation | 68 | 10 | 18 | ||||||||
Adjusted | (2,023 | ) | (846 | ) | (883 | ) | (545 | ) | (489 | ) | |
Operating expenses | |||||||||||
Reported | (25,296 | ) | (25,515 | ) | (8,147 | ) | (8,927 | ) | (7,966 | ) | |
Currency translation | 1,030 | 176 | 261 | ||||||||
Significant items | 1,585 | 1,382 | 599 | 800 | 218 | ||||||
– cost of structural reform | 3 | 126 | 300 | 35 | 38 | 89 | |||||
– customer redress programmes | 1,098 | 162 | 488 | 554 | 62 | ||||||
– disposals, acquisitions and investment in new businesses | — | 54 | — | 51 | |||||||
– restructuring and other related costs | 427 | 51 | 140 | 237 | 27 | ||||||
– settlements and provisions in connection with legal and regulatory matters | (66 | ) | 840 | (64 | ) | (2 | ) | (1 | ) | ||
– currency translation of significant items | (25 | ) | (27 | ) | (10 | ) | |||||
Adjusted | (23,711 | ) | (23,103 | ) | (7,548 | ) | (7,951 | ) | (7,487 | ) | |
Share of profit in associates and joint ventures | |||||||||||
Reported | 1,836 | 1,978 | 512 | 732 | 597 | ||||||
Currency translation | (83 | ) | (16 | ) | (15 | ) | |||||
Adjusted | 1,836 | 1,895 | 512 | 716 | 582 | ||||||
Profit before tax | |||||||||||
Reported | 17,244 | 16,634 | 4,837 | 6,194 | 5,922 | ||||||
Currency translation | (499 | ) | (38 | ) | (91 | ) | |||||
Significant items | 620 | 1,679 | 511 | (55 | ) | 261 | |||||
– revenue | (965 | ) | 297 | (88 | ) | (855 | ) | 43 | |||
– operating expenses | 1,585 | 1,382 | 599 | 800 | 218 | ||||||
Adjusted | 17,864 | 17,814 | 5,348 | 6,101 | 6,092 | ||||||
Loans and advances to customers (net) | |||||||||||
Reported | 1,017,833 | 981,460 | 1,017,833 | 1,021,632 | 981,460 | ||||||
Currency translation | (26,630 | ) | (19,742 | ) | (26,630 | ) | |||||
Adjusted | 1,017,833 | 954,830 | 1,017,833 | 1,001,890 | 954,830 | ||||||
Customer accounts | |||||||||||
Reported | 1,373,741 | 1,345,375 | 1,373,741 | 1,380,124 | 1,345,375 | ||||||
Currency translation | (33,300 | ) | (25,198 | ) | (33,300 | ) | |||||
Adjusted | 1,373,741 | 1,312,075 | 1,373,741 | 1,354,926 | 1,312,075 |
1 | Net operating income before change in expected credit losses and other credit impairment charges, also referred to as ‘revenue’. |
2 | Includes fair value movements on non-qualifying hedges and debit value adjustments (‘DVA’) on derivative contracts. |
3 | Comprises costs associated with preparations for the UK’s exit from the European Union, costs to establish the UK ring-fenced bank (including the UK ServCo group) and costs associated with establishing an intermediate holding company in Hong Kong. |
4 | HSBC Holdings plc Earnings Release 3Q19 |
Financial performance commentary |
Distribution of results by global business | ||||||||||
Nine months ended | Quarter ended | |||||||||
30 Sep | 30 Sep | 30 Sep | 30 Jun | 30 Sep | ||||||
2019 | 2018 | 2019 | 2019 | 2018 | ||||||
$m | $m | $m | $m | $m | ||||||
Adjusted profit before tax | ||||||||||
Retail Banking and Wealth Management | 6,137 | 5,661 | 1,696 | 2,195 | 2,072 | |||||
Commercial Banking | 5,657 | 5,811 | 1,632 | 1,979 | 1,837 | |||||
Global Banking and Markets | 4,065 | 5,196 | 1,241 | 1,183 | 1,765 | |||||
Global Private Banking | 319 | 280 | 123 | 98 | 93 | |||||
Corporate Centre | 1,686 | 866 | 656 | 646 | 325 | |||||
Total | 17,864 | 17,814 | 5,348 | 6,101 | 6,092 |
Distribution of results by geographical region | ||||||||||
Nine months ended | Quarter ended | |||||||||
30 Sep | 30 Sep | 30 Sep | 30 Jun | 30 Sep | ||||||
2019 | 2018 | 2019 | 2019 | 2018 | ||||||
$m | $m | $m | $m | $m | ||||||
Reported profit/(loss) before tax | ||||||||||
Europe | (944 | ) | 744 | (424 | ) | (506 | ) | 634 | ||
Asia | 14,431 | 13,839 | 4,651 | 4,774 | 4,459 | |||||
Middle East and North Africa | 2,041 | 1,158 | 305 | 1,271 | 322 | |||||
North America | 1,045 | 509 | 299 | 367 | 467 | |||||
Latin America | 671 | 384 | 6 | 288 | 40 | |||||
Total | 17,244 | 16,634 | 4,837 | 6,194 | 5,922 | |||||
Adjusted profit before tax | ||||||||||
Europe | 313 | 1,115 | 52 | 157 | 812 | |||||
Asia | 14,525 | 13,597 | 4,658 | 4,803 | 4,422 | |||||
Middle East and North Africa | 1,221 | 1,165 | 308 | 452 | 329 | |||||
North America | 1,109 | 1,558 | 321 | 403 | 469 | |||||
Latin America | 696 | 379 | 9 | 286 | 60 | |||||
Total | 17,864 | 17,814 | 5,348 | 6,101 | 6,092 |
Quarter ended | ||||||||
30 Sep | 30 Sep | Variance | ||||||
2019 | 2018 | 3Q19 vs. 3Q18 | ||||||
$m | $m | $m | % | |||||
Revenue | 13,355 | 13,798 | (443 | ) | (3 | ) | ||
ECL | (883 | ) | (507 | ) | (376 | ) | (74 | ) |
Operating expenses | (8,147 | ) | (7,966 | ) | (181 | ) | (2 | ) |
Share of profit from associates and JVs | 512 | 597 | (85 | ) | (14 | ) | ||
Profit before tax | 4,837 | 5,922 | (1,085 | ) | (18 | ) | ||
Tax expense | (1,042 | ) | (1,406 | ) | 364 | 26 | ||
Profit after tax | 3,795 | 4,516 | (721 | ) | (16 | ) |
HSBC Holdings plc Earnings Release 3Q19 | 5 |
Quarter ended | ||||||||
30 Sep | 30 Sep | Variance | ||||||
2019 | 2018 | 3Q19 vs. 3Q18 | ||||||
$m | $m | $m | % | |||||
Revenue | 13,267 | 13,486 | (219 | ) | (2 | ) | ||
ECL | (883 | ) | (489 | ) | (394 | ) | (81 | ) |
Operating expenses | (7,548 | ) | (7,487 | ) | (61 | ) | (1 | ) |
Share of profit from associates and JVs | 512 | 582 | (70 | ) | (12 | ) | ||
Profit before tax | 5,348 | 6,092 | (744 | ) | (12 | ) |
• | In GB&M, revenue decreased by $0.6bn or 15%, which included a net adverse movement on credit and funding valuation adjustments of $196m. Revenue was $0.4bn lower in Global Markets from reduced client activity, reflecting economic uncertainty, compared with a strong 3Q18. In Global Banking, revenue increased as we grew lending balances and benefited from wider credit spreads on portfolio hedges, partly offset by prior year gains on corporate restructuring and lower event-driven revenue. Investment in GLCM, Securities Services and Global Trade and Receivables Finance (‘GTRF’) supported continued momentum as we delivered single-digit growth in average balances. |
• | In RBWM, revenue was broadly unchanged. In Retail Banking, higher revenue (up $0.1bn) reflected balance growth in lending and deposits, primarily in the UK and Hong Kong, while revenue growth in investment distribution was driven by higher sales of mutual funds and FX products. These increases were broadly offset by adverse market impacts in insurance manufacturing in 3Q19 of $225m (3Q18: $48m adverse). |
• | In CMB, revenue increased by $0.1bn or 4%, primarily in C&L from balance sheet growth of 5%, with increases in all regions. In GLCM, revenue increased as we benefited from wider margins, notably in Hong Kong, and higher average balances in North America and the UK. |
6 | HSBC Holdings plc Earnings Release 3Q19 |
• | In GPB, revenue increased by $45m or 11%, mainly in Asia from growth in investment and lending revenue. |
• | In Corporate Centre, a net favourable movement in revenue of $194m mainly reflected a favourable effect of hyperinflation accounting in Argentina of $172m, and favourable movements of $91m relating to the economic hedging of interest rate and exchange rate risk on our long-term debt with long-term derivatives. Balance Sheet Management (‘BSM’) also recorded higher revenue, although this was partly offset by lower revenue in legacy credit due to higher losses on portfolio disposals. |
Nine months ended | ||||||||
30 Sep | 30 Sep | Variance | ||||||
2019 | 2018 | 9M19 vs. 9M18 | ||||||
$m | $m | $m | % | |||||
Revenue | 42,727 | 41,085 | 1,642 | 4 | ||||
ECL | (2,023 | ) | (914 | ) | (1,109 | ) | >(100) | |
Operating expenses | (25,296 | ) | (25,515 | ) | 219 | 1 | ||
Share of profit from associates and JVs | 1,836 | 1,978 | (142 | ) | (7 | ) | ||
Profit before tax | 17,244 | 16,634 | 610 | 4 | ||||
Tax expense | (3,512 | ) | (3,702 | ) | 190 | 5 | ||
Profit after tax | 13,732 | 12,932 | 800 | 6 |
HSBC Holdings plc Earnings Release 3Q19 | 7 |
• | customer redress programme costs of $1.1bn, of which $1.0bn related to PPI, compared with $0.2bn in 9M18; and |
• | restructuring and other related costs of $0.4bn, which included $407m of severance costs. |
• | the non-recurrence of settlements and provisions in connection with legal and regulatory matters of $0.8bn in 9M18; and |
• | structural reform costs of $0.1bn, compared with $0.3bn in 9M18. |
Nine months ended | ||||||||
30 Sep | 30 Sep | Variance | ||||||
2019 | 2018 | 9M19 vs. 9M18 | ||||||
$m | $m | $m | % | |||||
Revenue | 41,762 | 39,868 | 1,894 | 5 | ||||
ECL | (2,023 | ) | (846 | ) | (1,177 | ) | >(100) | |
Operating expenses | (23,711 | ) | (23,103 | ) | (608 | ) | (3 | ) |
Share of profit from associates and JVs | 1,836 | 1,895 | (59 | ) | (3 | ) | ||
Profit before tax | 17,864 | 17,814 | 50 | 0 |
• | In RBWM, revenue increased by $1.3bn or 8%, mainly in Retail Banking, reflecting growth in deposit and lending balances, primarily in Hong Kong and the UK. We also benefited from wider margins due to previous interest rate rises. In Wealth Management, revenue growth reflected higher insurance manufacturing revenue, which included favourable actuarial assumption changes of $0.1bn and lower adverse market impact of $67m, as 9M19 recorded an adverse movement of $72m compared with an adverse movement of $140m in 9M18. These increases were partly offset by lower investment distribution revenue. |
• | In CMB, revenue increased by $0.8bn or 8%, with growth in all major products and regions. Growth was primarily in GLCM, arising from wider deposit margins, notably in Hong Kong and the UK, and in Latin America from wider margins and growth in average deposit balances. Revenue increased in C&L due to balance sheet growth in most markets, partly offset by margin compression. |
• | In GB&M, revenue decreased by $0.8bn or 7%, mainly in Global Markets as economic uncertainty resulted in lower market activity, and in Global Banking as 9M18 benefited from gains on corporate lending restructuring. These decreases were partly offset by continued momentum in our transaction banking products as we increased client mandates and grew balances. |
• | In GPB, revenue increased by $0.1bn or 5%, mainly reflecting growth in investment revenue and lending revenue, primarily in Asia. These increases were partly offset by lower deposit revenue, notably in the US. |
• | In Corporate Centre, revenue increased by $0.6bn. This was mainly in Central Treasury from favourable fair value movements in 9M19 of $0.2bn relating to the economic hedging of interest rate and exchange rate risk on our long-term debt with long-term derivatives (9M18: $0.2bn adverse), and from a non-repeat of a 9M18 swap mark-to-market loss on a bond reclassification of $177m. In addition, the adverse impact of hyperinflation accounting in Argentina was lower than in 9M18. These movements were partly offset by lease expenses of $127m following the adoption of IFRS 16 ‘Leases’, which were recorded within operating expenses in 9M18. |
8 | HSBC Holdings plc Earnings Release 3Q19 |
• | In CMB, ECL increased by $0.6bn, primarily in the UK and Hong Kong. |
• | In GB&M, ECL of $0.1bn primarily related to a specific corporate exposure in Europe. This compared with net releases of $0.1bn in 9M18, mainly in the US against exposures in the oil and gas sector. |
• | In RBWM, ECL of $1.0bn increased by $0.2bn compared with 9M18, notably against unsecured lending, mainly in the UK, the US and Mexico. |
• | In Corporate Centre, there was an adverse movement of $0.1bn, reflecting lower net releases in 9M19 mainly related to our legacy portfolios. |
Management view of adjusted revenue | |||||||||||||||
Nine months ended | Quarter ended | ||||||||||||||
30 Sep | 30 Sep | Variance | 30 Sep | 30 Jun | 30 Sep | ||||||||||
2019 | 2018 | 9M19 vs. 9M18 | 2019 | 2019 | 2018 | ||||||||||
Footnotes | $m | $m | $m | % | $m | $m | $m | ||||||||
Retail Banking | 11,850 | 10,963 | 887 | 8 | 3,981 | 3,943 | 3,832 | ||||||||
– current accounts, savings and deposits | 7,067 | 6,048 | 1,019 | 17 | 2,422 | 2,423 | 2,285 | ||||||||
– personal lending | 4,783 | 4,915 | (132 | ) | (3 | ) | 1,559 | 1,520 | 1,547 | ||||||
mortgages | 1,218 | 1,455 | (237 | ) | (16 | ) | 379 | 396 | 408 | ||||||
credit cards | 2,187 | 2,087 | 100 | 5 | 711 | 677 | 691 | ||||||||
other personal lending | 1,378 | 1,373 | 5 | 0 | 469 | 447 | 448 | ||||||||
Wealth Management | 5,090 | 4,867 | 223 | 5 | 1,476 | 1,695 | 1,570 | ||||||||
– investment distribution | 2,549 | 2,656 | (107 | ) | (4 | ) | 839 | 849 | 792 | ||||||
– life insurance manufacturing | 1,778 | 1,421 | 357 | 25 | 395 | 586 | 522 | ||||||||
– asset management | 763 | 790 | (27 | ) | (3 | ) | 242 | 260 | 256 | ||||||
Other | 1 | 607 | 463 | 144 | 31 | 171 | 231 | 222 | |||||||
Net operating income | 2 | 17,547 | 16,293 | 1,254 | 8 | 5,628 | 5,869 | 5,624 | |||||||
RoTE excluding significant items and UK bank levy (annualised) (%) | 19.3 | 22.8 |
1 | ‘Other’ includes the distribution and manufacturing (where applicable) of retail and credit protection insurance, disposal gains and other non-product specific income. |
2 | ‘Net operating income’ means net operating income before changes in expected credit losses and other credit impairment charges (also referred to as ‘Revenue’). |
• | In Retail Banking, revenue of $11.9bn was up $0.9bn or 8%. The increase reflected deposit balance growth of $33bn or 5%, particularly in Hong Kong and the UK, and lending balance growth of $31bn or 9% compared with 9M18, notably in mortgages in Hong Kong and the UK. In addition, revenue benefited from the impact of previous interest rate increases. |
• | In Wealth Management, revenue of $5.1bn was up $0.2bn or 5%, reflecting higher life insurance manufacturing revenue (up $0.4bn or 25%), driven by growth in the value of new business written (up $0.1bn or 15%), favourable actuarial assumption changes of $0.1bn and lower adverse market impacts of $67m, as 9M19 recorded an adverse movement of $72m compared with an adverse movement of $140m in 9M18. This was partly offset by lower investment distribution revenue (down $0.1bn or 4%), driven by less favourable market conditions in Hong Kong, compared with 9M18, and a change in the product mix of clients’ investments to lower risk and lower margin products. |
HSBC Holdings plc Earnings Release 3Q19 | 9 |
Management view of adjusted revenue | ||||||||||||||
Nine months ended | Quarter ended | |||||||||||||
30 Sep | 30 Sep | Variance | 30 Sep | 30 Jun | 30 Sep | |||||||||
2019 | 2018 | 9M19 vs. 9M18 | 2019 | 2019 | 2018 | |||||||||
Footnotes | $m | $m | $m | % | $m | $m | $m | |||||||
Global Trade and Receivables Finance | 1,402 | 1,360 | 42 | 3 | 464 | 465 | 455 | |||||||
Credit and Lending | 4,113 | 3,843 | 270 | 7 | 1,367 | 1,363 | 1,293 | |||||||
Global Liquidity and Cash Management | 4,554 | 4,130 | 424 | 10 | 1,506 | 1,519 | 1,446 | |||||||
Markets products, Insurance and Investments, and Other | 1 | 1,538 | 1,459 | 79 | 5 | 454 | 492 | 459 | ||||||
Net operating income | 2 | 11,607 | 10,792 | 815 | 8 | 3,791 | 3,839 | 3,653 | ||||||
RoTE excluding significant items and UK bank levy (annualised) (%) | 13.0 | 14.5 |
1 | Includes revenue from Foreign Exchange, insurance manufacturing and distribution, interest rate management and Global Banking products. |
2 | ‘Net operating income’ means net operating income before changes in expected credit losses and other credit impairment charges (also referred to as ‘Revenue’). |
• | In GLCM, revenue was $0.4bn or 10% higher, with growth in all regions. The increase was mainly in Hong Kong and the UK, primarily reflecting wider margins, and in Latin America from wider margins and growth in average deposit balances. |
• | In C&L, revenue growth of $0.3bn or 7% reflected continued lending growth in all regions, partly offset by the effects of margin compression. |
• | In GTRF, revenue increased by $42m or 3%, with growth across all regions except Asia. The increase was mainly from higher volumes in the UK, fee growth in MENA and wider margins in Asia. |
• | Revenue growth in ‘Other’ products included a disposal gain of $24m in Latin America. |
10 | HSBC Holdings plc Earnings Release 3Q19 |
Management view of adjusted revenue | |||||||||||||||
Nine months ended | Quarter ended | ||||||||||||||
30 Sep | 30 Sep | Variance | 30 Sep | 30 Jun | 30 Sep | ||||||||||
2019 | 2018 | 9M19 vs. 9M18 | 2019 | 2019 | 2018 | ||||||||||
Footnotes | $m | $m | $m | % | $m | $m | $m | ||||||||
Global Markets | 4,514 | 5,182 | (668 | ) | (13 | ) | 1,352 | 1,405 | 1,745 | ||||||
– FICC | 3,696 | 4,216 | (520 | ) | (12 | ) | 1,145 | 1,173 | 1,465 | ||||||
Foreign Exchange | 2,021 | 2,319 | (298 | ) | (13 | ) | 713 | 602 | 812 | ||||||
Rates | 1,189 | 1,226 | (37 | ) | (3 | ) | 300 | 392 | 404 | ||||||
Credit | 486 | 671 | (185 | ) | (28 | ) | 132 | 179 | 249 | ||||||
– Equities | 818 | 966 | (148 | ) | (15 | ) | 207 | 232 | 280 | ||||||
Securities Services | 1,512 | 1,439 | 73 | 5 | 509 | 518 | 491 | ||||||||
Global Banking | 2,921 | 3,067 | (146 | ) | (5 | ) | 989 | 990 | 957 | ||||||
Global Liquidity and Cash Management | 2,080 | 1,905 | 175 | 9 | 692 | 693 | 671 | ||||||||
Global Trade and Receivables Finance | 610 | 589 | 21 | 4 | 202 | 198 | 211 | ||||||||
Principal Investments | 215 | 278 | (63 | ) | (23 | ) | 93 | 38 | 108 | ||||||
Credit and funding valuation adjustments | (147 | ) | (4 | ) | (143 | ) | >(100) | (160 | ) | (32 | ) | 36 | |||
Other | 1 | (529 | ) | (470 | ) | (59 | ) | (13 | ) | (207 | ) | (218 | ) | (149 | ) |
Net operating income | 2 | 11,176 | 11,986 | (810 | ) | (7 | ) | 3,470 | 3,592 | 4,070 | |||||
RoTE excluding significant items and UK bank levy (annualised) (%) | 9.6 | 12.5 |
1 | ‘Other’ in GB&M includes allocated funding costs 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 that 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’. |
2 | ‘Net operating income’ means net operating income before changes in expected credit losses and other credit impairment charges (also referred to as ‘Revenue’). |
• | Global Markets revenue decreased by $0.7bn or 13%, driven by low market volatility, reduced client activity due to ongoing economic uncertainty and continued spread compression. |
• | Global Banking revenue fell $0.1bn or 5%, reflecting a non-repeat of gains in 9M18 on corporate lending restructuring, lower event-driven activity and the impact of tightening credit spreads on portfolio hedges. These reductions were partly offset by higher lending revenue as we continued to grow balances, notably in Asia. |
• | Revenue grew in our transaction banking products. GLCM revenue rose by $0.2bn or 9%, primarily driven by higher average deposit balances and wider margins. Securities Services revenue increased by $0.1bn or 5% from continued growth in average assets under custody (up 5%) and average assets under administration (up 7%) from increased client mandates, as well as higher interest rates. GTRF revenue increased by $21m or 4% from growth in lending and higher fees from commodity and structured trade deals, particularly in MENA. |
Management view of adjusted revenue | |||||||||||||||
Nine months ended | Quarter ended | ||||||||||||||
30 Sep | 30 Sep | Variance | 30 Sep | 30 Jun | 30 Sep | ||||||||||
2019 | 2018 | 9M19 vs. 9M18 | 2019 | 2019 | 2018 | ||||||||||
Footnotes | $m | $m | $m | % | $m | $m | $m | ||||||||
Investment revenue | 589 | 544 | 45 | 8 | 207 | 197 | 164 | ||||||||
Lending | 313 | 290 | 23 | 8 | 109 | 107 | 94 | ||||||||
Deposit | 352 | 366 | (14 | ) | (4 | ) | 112 | 118 | 124 | ||||||
Other | 142 | 134 | 8 | 6 | 44 | 49 | 45 | ||||||||
Net operating income | 1 | 1,396 | 1,334 | 62 | 5 | 472 | 471 | 427 | |||||||
RoTE excluding significant items and UK bank levy (annualised) (%) | 12.1 | 10.9 |
1 | ‘Net operating income’ means net operating income before changes in expected credit losses and other credit impairment charges (also referred to as ‘Revenue’). |
HSBC Holdings plc Earnings Release 3Q19 | 11 |
• | Investment revenue increased by $45m or 8%, mainly in Asia from higher brokerage and trading revenue and from increased annuity fee income as a result of growth in discretionary client mandates. |
• | Lending revenue was $23m or 8% higher, with growth in Asia and most of our markets in Europe, with the exception of the UK, which was adversely affected by margin compression. |
• | Deposit revenue fell by $14m or 4%, as lower revenue in the US from compressed margins and repositioning actions was partly offset by growth in Asia from balance growth and wider margins. |
Management view of adjusted revenue | |||||||||||||||
Nine months ended | Quarter ended | ||||||||||||||
30 Sep | 30 Sep | Variance | 30 Sep | 30 Jun | 30 Sep | ||||||||||
2019 | 2018 | 9M19 vs. 9M18 | 2019 | 2019 | 2018 | ||||||||||
Footnotes | $m | $m | $m | % | $m | $m | $m | ||||||||
Central Treasury | 1 | 881 | 242 | 639 | >100 | 313 | 263 | 91 | |||||||
Legacy portfolios | (124 | ) | (78 | ) | (46 | ) | (59 | ) | (40 | ) | (13 | ) | 25 | ||
Other | (721 | ) | (701 | ) | (20 | ) | (3 | ) | (367 | ) | (140 | ) | (404 | ) | |
Net operating income | 2 | 36 | (537 | ) | 573 | >100 | (94 | ) | 110 | (288 | ) | ||||
RoTE excluding significant items and UK bank levy (annualised) (%) | (3.6) | (4.8 | ) |
1 | Central Treasury includes revenue relating to BSM in 9M19 of $1.8bn (9M18: $1.8bn; 3Q19: $626m; 2Q19: $586m; 3Q18: $528m), interest expense in 9M19 of $1.0bn (9M18: $978m; 3Q19: $321m; 2Q19: $348m; 3Q18: $358m) and favourable valuation differences on issued long-term debt and associated swaps in 9M19 of $219m (9M18: adverse $380m; 3Q19: favourable $76m; 2Q19: favourable $93m; 3Q18: adverse $15m). Revenue relating to BSM includes other internal allocations to reflect the economic benefit generated by certain activities, which is not reflected within operating income, such as notional credits on income earned from tax-exempt investments where the economic benefit of the activity is reflected in tax expense. In order to reflect the total operating income on an IFRS basis, the offset to these tax credits is included in other Central Treasury. |
2 | ‘Net operating income’ means net operating income before changes in expected credit losses and other credit impairment charges (also referred to as ‘Revenue’). |
• | favourable fair value movements relating to the economic hedging of interest rate and exchange rate risk on our long-term debt with long-term derivatives of $219m in 9M19, compared with adverse movements of $203m in 9M18; and |
• | the non-recurrence of a $177m loss in 9M18 arising from adverse swap mark-to-market movements following a bond reclassification under IFRS 9 ‘Financial Instruments’. |
12 | HSBC Holdings plc Earnings Release 3Q19 |
Nine months ended | Full year to | ||||||
30 Sep | 30 Sep | 31 Dec | |||||
2019 | 2018 | 2018 | |||||
Footnotes | $m | $m | $m | ||||
Net interest income | 22,808 | 22,780 | 30,489 | ||||
Average interest-earning assets | 1,915,149 | 1,827,337 | 1,839,346 | ||||
% | % | % | |||||
Gross interest yield | 1 | 2.89 | 2.64 | 2.70 | |||
Less: cost of funds | 1 | (1.53 | ) | (1.13 | ) | (1.21 | ) |
Net interest spread | 2 | 1.36 | 1.51 | 1.49 | |||
Net interest margin | 3 | 1.59 | 1.67 | 1.66 |
1 | Gross interest yield is the average annualised interest rate earned on average interest-earning assets (‘AIEA’). Cost of funds is the average annualised interest cost as a percentage on average interest-bearing liabilities. |
2 | Net interest spread is the difference between the average annualised interest rate earned on AIEA, net of amortised premiums and loan fees, and the average annualised interest rate payable on average interest-bearing funds. |
3 | Net interest margin is net interest income expressed as an annualised percentage of AIEA. |
Return on Equity and Return on Tangible Equity | ||||||||||
Nine months ended | Quarter ended | |||||||||
30 Sep | 30 Sep | 30 Sep | 30 Jun | 30 Sep | ||||||
2019 | 2018 | 2019 | 2019 | 2018 | ||||||
$m | $m | $m | $m | $m | ||||||
Profit | ||||||||||
Profit attributable to the ordinary shareholders of the parent company | 11,478 | 11,071 | 2,971 | 4,373 | 3,899 | |||||
Increase in PVIF (net of tax) | (1,290 | ) | (317 | ) | (652 | ) | (192 | ) | (75 | ) |
Profit attributable to the ordinary shareholders, excluding PVIF | 10,188 | 10,754 | 2,319 | 4,181 | 3,824 | |||||
Significant items (net of tax) and bank levy | 608 | 1,602 | ||||||||
Profit attributable to the ordinary shareholders, excluding PVIF, significant items and UK bank levy | 10,796 | 12,356 | ||||||||
Equity | ||||||||||
Average ordinary shareholders’ equity | 165,954 | 164,290 | 167,347 | 166,747 | 161,406 | |||||
Effect of goodwill, PVIF and other intangibles (net of deferred tax) | (23,191 | ) | (22,037 | ) | (23,688 | ) | (23,202 | ) | (22,036 | ) |
Average tangible equity | 142,763 | 142,253 | 143,659 | 143,545 | 139,370 | |||||
Fair value of own debt, DVA and other adjustments | 529 | 2,495 | ||||||||
Average tangible equity excluding fair value of own debt, DVA and other adjustments | 143,292 | 144,748 | ||||||||
% | % | % | % | % | ||||||
Ratio | ||||||||||
Return on equity | 9.2 | 9.0 | 7.0 | 10.5 | 9.6 | |||||
Return on tangible equity (annualised) | 9.5 | 10.1 | 6.4 | 11.7 | 10.9 | |||||
Return on tangible equity excluding significant items and UK bank levy (annualised) | 10.1 | 11.4 |
Return on tangible equity by global business | ||||||||||||
Nine months ended 30 Sep 2019 | ||||||||||||
Retail Banking and Wealth Management | Commercial Banking | Global Banking and Markets | Global Private Banking | Corporate Centre | Total | |||||||
$m | $m | $m | $m | $m | $m | |||||||
Profit before tax | 4,891 | 5,602 | 3,866 | 365 | 2,520 | 17,244 | ||||||
Tax expense | (801 | ) | (1,190 | ) | (766 | ) | (64 | ) | (691 | ) | (3,512 | ) |
Profit after tax | 4,090 | 4,412 | 3,100 | 301 | 1,829 | 13,732 | ||||||
Less attributable to: preference shareholders, other equity holders, non-controlling interests | (656 | ) | (652 | ) | (465 | ) | (14 | ) | (467 | ) | (2,254 | ) |
Profit attributable to ordinary shareholders of the parent company | 3,434 | 3,760 | 2,635 | 287 | 1,362 | 11,478 | ||||||
Increase in PVIF (net of tax) | (1,238 | ) | (51 | ) | — | 1 | (2 | ) | (1,290 | ) | ||
Significant items (net of tax) and UK bank levy | 911 | 40 | 148 | (37 | ) | (614 | ) | 448 | ||||
Balance Sheet Management allocation and other adjustments | 406 | 432 | 677 | 49 | (1,404 | ) | 160 | |||||
Profit attributable to ordinary shareholders, excluding PVIF, significant items and UK bank levy | 3,513 | 4,181 | 3,460 | 300 | (658 | ) | 10,796 | |||||
Average tangible shareholders’ equity excluding fair value of own debt, DVA and other adjustments | 24,310 | 43,134 | 48,206 | 3,305 | 24,337 | 143,292 | ||||||
RoTE excluding significant items and UK bank levy (annualised) (%) | 19.3 | 13.0 | 9.6 | 12.1 | (3.6) | 10.1 | ||||||
Nine months ended 30 Sep 2018 | ||||||||||||
Profit before tax | 5,544 | 6,034 | 5,535 | 182 | (661 | ) | 16,634 | |||||
Tax expense | (983 | ) | (1,272 | ) | (1,212 | ) | (28 | ) | (207 | ) | (3,702 | ) |
Profit after tax | 4,561 | 4,762 | 4,323 | 154 | (868 | ) | 12,932 | |||||
Less attributable to: preference shareholders, other equity holders, non-controlling interests | (630 | ) | (642 | ) | (429 | ) | (19 | ) | (141 | ) | (1,861 | ) |
Profit attributable to ordinary shareholders of the parent company | 3,931 | 4,120 | 3,894 | 135 | (1,009 | ) | 11,071 | |||||
Increase in PVIF (net of tax) | (300 | ) | (16 | ) | — | (1 | ) | — | (317 | ) | ||
Significant items (net of tax) and UK bank levy | 134 | (25 | ) | (110 | ) | 81 | 1,522 | 1,602 | ||||
Balance Sheet Management allocation and other adjustments | 399 | 418 | 641 | 61 | (1,519 | ) | — | |||||
Profit attributable to ordinary shareholders, excluding PVIF, significant items and bank levy | 4,164 | 4,497 | 4,425 | 276 | (1,006 | ) | 12,356 | |||||
Average tangible shareholders’ equity excluding fair value of own debt, DVA and other adjustments | 24,462 | 41,324 | 47,340 | 3,392 | 28,230 | 144,748 | ||||||
RoTE excluding significant items and UK bank levy (annualised) (%) | 22.8 | 14.5 | 12.5 | 10.9 | (4.8) | 11.4 |
HSBC Holdings plc Earnings Release 3Q19 | 13 |
• | Income statement comparisons, unless stated otherwise, are between the quarter ended 30 September 2019 and the quarter ended 30 September 2018. Balance sheet comparisons, unless otherwise stated, are between balances at 30 September 2019 and the corresponding balances at 30 June 2019. |
• | The financial information on which this Earnings Release is based, and the data set out in the appendix to this statement, are unaudited and have been prepared in accordance with HSBC’s significant accounting policies as described on pages 224 to 237 of our Annual Report and Accounts 2018. |
• | The Board has adopted a policy of paying quarterly interim dividends on 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. |
14 | HSBC Holdings plc Earnings Release 3Q19 |
Cautionary statement regarding forward-looking statements |
• | 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; consumer perception as to the continuing availability of credit and price competition in the market segments we serve; and deviations from the market and economic assumptions that form the basis for our ECL measurements; |
• | 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 practices, pricing or responsibilities of financial institutions serving their consumer markets; 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; the costs, effects and outcomes of product regulatory reviews, actions or litigation, including any additional compliance requirements; and the effects of competition in the markets where we operate including increased competition from non-bank financial services companies, 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 it uses; our success in addressing operational, legal and regulatory, and litigation challenges; and the other risks and uncertainties we identify in ‘Top and emerging risks’ on pages 69 to 73 of the Annual Report and Accounts 2018 and on pages 16 and 17 of the Interim Report 2019. |
Investor Relations | Media Relations |
UK – Richard O’Connor | UK – Heidi Ashley |
Tel: +44 (0) 20 7991 6590 | Tel: +44 (0) 20 7992 2045 |
Hong Kong – Mark Phin | Hong Kong – Patrick Humphris |
Tel: +852 2822 4908 | Tel: +852 2822 2052 |
HSBC Holdings plc Earnings Release 3Q19 | 15 |
Summary consolidated income statement |
Nine months ended | Quarter ended | |||||||||
30 Sep | 30 Sep | 30 Sep | 30 Jun | 30 Sep | ||||||
2019 | 2018 | 2019 | 2019 | 2018 | ||||||
$m | $m | $m | $m | $m | ||||||
Net interest income | 22,808 | 22,780 | 7,568 | 7,772 | 7,680 | |||||
Net fee income | 9,085 | 9,793 | 2,961 | 3,098 | 3,026 | |||||
Net income from financial instruments held for trading or managed on a fair value basis | 7,877 | 7,485 | 2,546 | 2,450 | 2,602 | |||||
Net income/(expense) from assets and liabilities of insurance businesses, including related derivatives, measured at fair value through profit or loss | 2,318 | (44 | ) | 122 | 486 | 178 | ||||
Changes in fair value of designated debt and related derivatives1 | 149 | (129 | ) | 61 | 77 | (3 | ) | |||
Changes in fair value of other financial instruments mandatorily measured at fair value through profit or loss | 617 | 541 | 160 | 187 | 196 | |||||
Gains less losses from financial investments | 316 | 161 | 115 | 102 | 37 | |||||
Net insurance premium income | 9,047 | 8,488 | 2,724 | 3,027 | 2,712 | |||||
Other operating income | 2,935 | 569 | 863 | 1,214 | 169 | |||||
Total operating income | 55,152 | 49,644 | 17,120 | 18,413 | 16,597 | |||||
Net insurance claims and benefits paid and movement in liabilities to policyholders | (12,425 | ) | (8,559 | ) | (3,765 | ) | (3,469 | ) | (2,799 | ) |
Net operating income before change in expected credit losses and other credit impairment charges2 | 42,727 | 41,085 | 13,355 | 14,944 | 13,798 | |||||
Change in expected credit losses and other credit impairment charges | (2,023 | ) | (914 | ) | (883 | ) | (555 | ) | (507 | ) |
Net operating income | 40,704 | 40,171 | 12,472 | 14,389 | 13,291 | |||||
Total operating expenses | (25,296 | ) | (25,515 | ) | (8,147 | ) | (8,927 | ) | (7,966 | ) |
Operating profit | 15,408 | 14,656 | 4,325 | 5,462 | 5,325 | |||||
Share of profit in associates and joint ventures | 1,836 | 1,978 | 512 | 732 | 597 | |||||
Profit before tax | 17,244 | 16,634 | 4,837 | 6,194 | 5,922 | |||||
Tax expense | (3,512 | ) | (3,702 | ) | (1,042 | ) | (1,167 | ) | (1,406 | ) |
Profit after tax | 13,732 | 12,932 | 3,795 | 5,027 | 4,516 | |||||
Attributable to: | ||||||||||
– ordinary shareholders of the parent company | 11,478 | 11,071 | 2,971 | 4,373 | 3,899 | |||||
– preference shareholders of the parent company | 67 | 67 | 22 | 23 | 22 | |||||
– other equity holders | 1,148 | 795 | 484 | 254 | 264 | |||||
– non-controlling interests | 1,039 | 999 | 318 | 377 | 331 | |||||
Profit after tax | 13,732 | 12,932 | 3,795 | 5,027 | 4,516 | |||||
$ | $ | $ | $ | $ | ||||||
Basic earnings per share | 0.57 | 0.56 | 0.15 | 0.22 | 0.19 | |||||
Diluted earnings per share | 0.57 | 0.55 | 0.15 | 0.22 | 0.19 | |||||
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) | 9.2 | 9.0 | 7.0 | 10.5 | 9.6 | |||||
Return on average tangible equity (annualised) | 9.5 | 10.1 | 6.4 | 11.7 | 10.9 | |||||
Cost efficiency ratio | 59.2 | 62.1 | 61.0 | 59.7 | 57.7 |
1 | The debt instruments, issued for funding purposes, are designated under the fair value option to reduce an accounting mismatch. |
2 | Net operating income before change in expected credit losses and other credit impairment charges, also referred to as ‘revenue’. |
16 | HSBC Holdings plc Earnings Release 3Q19 |
Summary consolidated balance sheet |
At | ||||||
30 Sep | 30 Jun | 31 Dec | ||||
2019 | 2019 | 2018 | ||||
$m | $m | $m | ||||
Assets | ||||||
Cash and balances at central banks | 151,185 | 171,090 | 162,843 | |||
Trading assets | 243,905 | 271,424 | 238,130 | |||
Financial assets designated and otherwise mandatorily measured at fair value through profit or loss | 41,410 | 41,043 | 41,111 | |||
Derivatives | 283,945 | 233,621 | 207,825 | |||
Loans and advances to banks | 70,799 | 82,397 | 72,167 | |||
Loans and advances to customers | 1,017,833 | 1,021,632 | 981,696 | |||
Reverse repurchase agreements – non-trading | 214,837 | 233,079 | 242,804 | |||
Financial investments | 429,501 | 428,101 | 407,433 | |||
Other assets | 274,932 | 268,886 | 204,115 | |||
Total assets | 2,728,347 | 2,751,273 | 2,558,124 | |||
Liabilities and equity | ||||||
Liabilities | ||||||
Deposits by banks | 63,439 | 71,051 | 56,331 | |||
Customer accounts | 1,373,741 | 1,380,124 | 1,362,643 | |||
Repurchase agreements – non-trading | 135,581 | 184,497 | 165,884 | |||
Trading liabilities | 89,378 | 94,149 | 84,431 | |||
Financial liabilities designated at fair value | 164,698 | 165,104 | 148,505 | |||
Derivatives | 278,374 | 229,903 | 205,835 | |||
Debt securities in issue | 98,486 | 103,663 | 85,342 | |||
Liabilities under insurance contracts | 94,867 | 93,794 | 87,330 | |||
Other liabilities | 231,996 | 228,114 | 167,574 | |||
Total liabilities | 2,530,560 | 2,550,399 | 2,363,875 | |||
Equity | ||||||
Total shareholders’ equity | 189,517 | 192,676 | 186,253 | |||
Non-controlling interests | 8,270 | 8,198 | 7,996 | |||
Total equity | 197,787 | 200,874 | 194,249 | |||
Total liabilities and equity | 2,728,347 | 2,751,273 | 2,558,124 |
HSBC Holdings plc Earnings Release 3Q19 | 17 |
Credit risk |
Summary of financial instruments to which the impairment requirements in IFRS 9 are applied | |||||||||
At 30 Sep 2019 | At 31 Dec 2018 | ||||||||
Gross carrying/nominal amount | Allowance for ECL1 | Gross carrying/nominal amount | Allowance for ECL1 | ||||||
Footnotes | $m | $m | $m | $m | |||||
Loans and advances to customers at amortised cost | 1,026,414 | (8,581 | ) | 990,321 | (8,625 | ) | |||
– personal | 415,294 | (3,041 | ) | 394,337 | (2,947 | ) | |||
– corporate and commercial | 538,021 | (5,400 | ) | 534,577 | (5,552 | ) | |||
– non-bank financial institutions | 73,099 | (140 | ) | 61,407 | (126 | ) | |||
Loans and advances to banks at amortised cost | 70,827 | (28 | ) | 72,180 | (13 | ) | |||
Other financial assets measured at amortised cost | 623,938 | (108 | ) | 582,917 | (55 | ) | |||
– cash and balances at central banks | 151,187 | (2 | ) | 162,845 | (2 | ) | |||
– items in the course of collection from other banks | 7,288 | — | 5,787 | — | |||||
– Hong Kong Government certificates of indebtedness | 36,306 | — | 35,859 | — | |||||
– reverse repurchase agreements – non-trading | 214,837 | — | 242,804 | — | |||||
– financial investments | 83,856 | (41 | ) | 62,684 | (18 | ) | |||
– prepayments, accrued income and other assets | 2 | 130,464 | (65 | ) | 72,938 | (35 | ) | ||
Total gross carrying amount on-balance sheet | 1,721,179 | (8,717 | ) | 1,645,418 | (8,693 | ) | |||
Loans and other credit-related commitments | 626,618 | (325 | ) | 592,008 | (325 | ) | |||
– personal | 216,567 | (10 | ) | 207,351 | (13 | ) | |||
– corporate and commercial | 269,891 | (307 | ) | 271,022 | (305 | ) | |||
– financial | 140,160 | (8 | ) | 113,635 | (7 | ) | |||
Financial guarantees | 20,009 | (52 | ) | 23,518 | (93 | ) | |||
– personal | 837 | — | 927 | (1 | ) | ||||
– corporate and commercial | 14,783 | (49 | ) | 17,355 | (85 | ) | |||
– financial | 4,389 | (3 | ) | 5,236 | (7 | ) | |||
Total nominal amount off-balance sheet | 3 | 646,627 | (377 | ) | 615,526 | (418 | ) | ||
2,367,806 | (9,094 | ) | 2,260,944 | (9,111 | ) | ||||
Fair value | Memorandum allowance for ECL4 | Fair value | Memorandum allowance for ECL4 | ||||||
$m | $m | $m | $m | ||||||
Debt instruments measured at fair value through other comprehensive income (‘FVOCI’) | 343,960 | (95 | ) | 343,110 | (84 | ) |
1 | The total ECL is recognised in the loss allowance for the financial asset unless the total ECL exceeds the gross carrying amount of the financial asset, in which case the ECL is recognised as a provision. |
2 | Includes only those financial instruments that are subject to the impairment requirements of IFRS 9. ‘Prepayments, accrued income and other assets’ as presented within the summary consolidated balance sheet on page 17 includes both financial and non-financial assets. |
3 | Represents the maximum amount at risk should the contracts be fully drawn upon and clients default. |
4 | Debt instruments measured at FVOCI continue to be measured at fair value with the allowance for ECL as a memorandum item. Change in ECL is recognised in ‘Change in expected credit losses and other credit impairment charges’ in the income statement. |
18 | HSBC Holdings plc Earnings Release 3Q19 |
Summary of credit risk (excluding debt instruments measured at FVOCI) by stage distribution and ECL coverage by industry sector at 30 September 2019 | |||||||||||||||||||||||||
Gross carrying/nominal amount1 | Allowance for ECL | ECL coverage % | |||||||||||||||||||||||
Stage 1 | Stage 2 | Stage 3 | POCI2 | Total | Stage 1 | Stage 2 | Stage 3 | POCI2 | Total | Stage 1 | Stage 2 | Stage 3 | POCI2 | Total | |||||||||||
$m | $m | $m | $m | $m | $m | $m | $m | $m | $m | % | % | % | % | % | |||||||||||
Loans and advances to customers at amortised cost | 941,064 | 71,701 | 13,282 | 367 | 1,026,414 | (1,302 | ) | (2,175 | ) | (4,934 | ) | (170 | ) | (8,581 | ) | 0.1 | 3.0 | 37.1 | 46.3 | 0.8 | |||||
– personal | 395,532 | 15,007 | 4,755 | — | 415,294 | (580 | ) | (1,276 | ) | (1,185 | ) | — | (3,041 | ) | 0.1 | 8.5 | 24.9 | — | 0.7 | ||||||
– corporate and commercial | 476,420 | 53,032 | 8,202 | 367 | 538,021 | (677 | ) | (878 | ) | (3,675 | ) | (170 | ) | (5,400 | ) | 0.1 | 1.7 | 44.8 | 46.3 | 1.0 | |||||
– non-bank financial institutions | 69,112 | 3,662 | 325 | — | 73,099 | (45 | ) | (21 | ) | (74 | ) | — | (140 | ) | 0.1 | 0.6 | 22.8 | — | 0.2 | ||||||
Loans and advances to banks at amortised cost | 70,569 | 258 | — | — | 70,827 | (27 | ) | (1 | ) | — | — | (28 | ) | — | 0.4 | — | — | — | |||||||
Other financial assets measured at amortised cost | 621,710 | 2,079 | 145 | 4 | 623,938 | (36 | ) | (29 | ) | (43 | ) | — | (108 | ) | — | 1.4 | 29.7 | — | — | ||||||
Loan and other credit-related commitments | 603,254 | 22,632 | 726 | 6 | 626,618 | (132 | ) | (133 | ) | (60 | ) | — | (325 | ) | — | 0.6 | 8.3 | — | 0.1 | ||||||
– personal | 214,369 | 1,826 | 372 | — | 216,567 | (9 | ) | (1 | ) | — | — | (10 | ) | — | 0.1 | — | — | — | |||||||
– corporate and commercial | 249,830 | 19,706 | 349 | 6 | 269,891 | (117 | ) | (130 | ) | (60 | ) | — | (307 | ) | — | 0.7 | 17.2 | — | 0.1 | ||||||
– financial | 139,055 | 1,100 | 5 | — | 140,160 | (6 | ) | (2 | ) | — | — | (8 | ) | — | 0.2 | — | — | — | |||||||
Financial guarantees | 17,608 | 2,232 | 165 | 4 | 20,009 | (19 | ) | (26 | ) | (7 | ) | — | (52 | ) | 0.1 | 1.2 | 4.2 | — | 0.3 | ||||||
– personal | 833 | 3 | 1 | — | 837 | — | — | — | — | — | — | — | — | — | — | ||||||||||
– corporate and commercial | 12,605 | 2,012 | 162 | 4 | 14,783 | (17 | ) | (26 | ) | (6 | ) | — | (49 | ) | 0.1 | 1.3 | 3.7 | — | 0.3 | ||||||
– financial | 4,170 | 217 | 2 | — | 4,389 | (2 | ) | — | (1 | ) | — | (3 | ) | — | — | 50.0 | — | 0.1 | |||||||
At 30 Sep 2019 | 2,254,205 | 98,902 | 14,318 | 381 | 2,367,806 | (1,516 | ) | (2,364 | ) | (5,044 | ) | (170 | ) | (9,094 | ) | 0.1 | 2.4 | 35.2 | 44.6 | 0.4 |
Stage 2 days past due analysis at 30 September 2019 | |||||||||||||||
Gross carrying/nominal amount1 | Allowance for ECL | ECL coverage % | |||||||||||||
Of which: | Of which: | Of which: | Of which: | Of which: | Of which: | ||||||||||
Stage 2 | 1 to 29 DPD3 | 30 and > DPD3 | Stage 2 | 1 to 29 DPD3 | 30 and > DPD3 | Stage 2 | 1 to 29 DPD3 | 30 and > DPD3 | |||||||
$m | $m | $m | $m | $m | $m | % | % | % | |||||||
Loans and advances to customers at amortised cost | 71,701 | 2,248 | 1,513 | (2,175 | ) | (210 | ) | (226 | ) | 3.0 | 9.3 | 14.9 | |||
– personal | 15,007 | 1,750 | 1,191 | (1,276 | ) | (181 | ) | (206 | ) | 8.5 | 10.3 | 17.3 | |||
– corporate and commercial | 53,032 | 490 | 310 | (878 | ) | (29 | ) | (20 | ) | 1.7 | 5.9 | 6.5 | |||
– non-bank financial institutions | 3,662 | 8 | 12 | (21 | ) | — | — | 0.6 | — | — | |||||
Loans and advances to banks at amortised cost | 258 | — | — | (1 | ) | — | — | 0.4 | — | — | |||||
Other financial assets measured at amortised cost | 2,079 | 17 | 26 | (29 | ) | — | — | 1.4 | — | — |
1 | Represents the maximum amount at risk should the contracts be fully drawn upon and clients default. |
2 | Purchased or originated credit-impaired ('POCI'). |
3 | Days past due ('DPD'). Up-to-date accounts in Stage 2 are not shown in amounts presented above. |
HSBC Holdings plc Earnings Release 3Q19 | 19 |
Summary of credit risk (excluding debt instruments measured at FVOCI) by stage distribution and ECL coverage by industry sector at 31 December 2018 | |||||||||||||||||||||||||
Gross carrying/nominal amount1 | Allowance for ECL | ECL coverage % | |||||||||||||||||||||||
Stage 1 | Stage 2 | Stage 3 | POCI2 | Total | Stage 1 | Stage 2 | Stage 3 | POCI2 | Total | Stage 1 | Stage 2 | Stage 3 | POCI2 | Total | |||||||||||
$m | $m | $m | $m | $m | $m | $m | $m | $m | $m | % | % | % | % | % | |||||||||||
Loans and advances to customers at amortised cost | 915,188 | 61,786 | 13,023 | 324 | 990,321 | (1,276 | ) | (2,108 | ) | (5,047 | ) | (194 | ) | (8,625 | ) | 0.1 | 3.4 | 38.8 | 59.9 | 0.9 | |||||
– personal | 374,681 | 15,075 | 4,581 | — | 394,337 | (534 | ) | (1,265 | ) | (1,148 | ) | — | (2,947 | ) | 0.1 | 8.4 | 25.1 | — | 0.7 | ||||||
– corporate and commercial | 481,262 | 44,779 | 8,212 | 324 | 534,577 | (698 | ) | (812 | ) | (3,848 | ) | (194 | ) | (5,552 | ) | 0.1 | 1.8 | 46.9 | 59.9 | 1.0 | |||||
– non-bank financial institutions | 59,245 | 1,932 | 230 | — | 61,407 | (44 | ) | (31 | ) | (51 | ) | — | (126 | ) | 0.1 | 1.6 | 22.2 | — | 0.2 | ||||||
Loans and advances to banks at amortised cost | 71,873 | 307 | — | — | 72,180 | (11 | ) | (2 | ) | — | — | (13 | ) | — | 0.7 | — | — | — | |||||||
Other financial assets measured at amortised cost | 581,118 | 1,673 | 126 | — | 582,917 | (27 | ) | (6 | ) | (22 | ) | — | (55 | ) | — | 0.4 | 17.5 | — | — | ||||||
Loan and other credit-related commitments | 569,250 | 21,839 | 912 | 7 | 592,008 | (143 | ) | (139 | ) | (43 | ) | — | (325 | ) | — | 0.6 | 4.7 | — | 0.1 | ||||||
– personal | 205,183 | 1,760 | 408 | — | 207,351 | (12 | ) | (1 | ) | — | — | (13 | ) | — | 0.1 | — | — | — | |||||||
– corporate and commercial | 251,478 | 19,034 | 503 | 7 | 271,022 | (126 | ) | (136 | ) | (43 | ) | — | (305 | ) | 0.1 | 0.7 | 8.5 | — | 0.1 | ||||||
– financial | 112,589 | 1,045 | 1 | — | 113,635 | (5 | ) | (2 | ) | — | — | (7 | ) | — | 0.2 | — | — | — | |||||||
Financial guarantees | 20,884 | 2,334 | 297 | 3 | 23,518 | (19 | ) | (29 | ) | (45 | ) | — | (93 | ) | 0.1 | 1.2 | 15.2 | — | 0.4 | ||||||
– personal | 920 | 3 | 4 | — | 927 | (1 | ) | — | — | — | (1 | ) | 0.1 | — | — | — | 0.1 | ||||||||
– corporate and commercial | 15,011 | 2,053 | 288 | 3 | 17,355 | (16 | ) | (25 | ) | (44 | ) | — | (85 | ) | 0.1 | 1.2 | 15.3 | — | 0.5 | ||||||
– financial | 4,953 | 278 | 5 | — | 5,236 | (2 | ) | (4 | ) | (1 | ) | — | (7 | ) | — | 1.4 | 20.0 | — | 0.1 | ||||||
At 31 Dec 2018 | 2,158,313 | 87,939 | 14,358 | 334 | 2,260,944 | (1,476 | ) | (2,284 | ) | (5,157 | ) | (194 | ) | (9,111 | ) | 0.1 | 2.6 | 35.9 | 58.1 | 0.4 |
Stage 2 days past due analysis at 31 December 2018 | |||||||||||||||
Gross carrying/nominal amount1 | Allowance for ECL | ECL coverage % | |||||||||||||
Of which: | Of which: | Of which: | Of which: | Of which: | Of which: | ||||||||||
Stage 2 | 1 to 29 DPD3 | 30 and > DPD3 | Stage 2 | 1 to 29 DPD3 | 30 and > DPD3 | Stage 2 | 1 to 29 DPD3 | 30 and > DPD3 | |||||||
$m | $m | $m | $m | $m | $m | % | % | % | |||||||
Loans and advances to customers at amortised cost | 61,786 | 2,554 | 1,914 | (2,108 | ) | (204 | ) | (254 | ) | 3.4 | 8.0 | 13.3 | |||
– personal | 15,075 | 1,807 | 1,383 | (1,265 | ) | (165 | ) | (220 | ) | 8.4 | 9.1 | 15.9 | |||
– corporate and commercial | 44,779 | 737 | 485 | (812 | ) | (39 | ) | (34 | ) | 1.8 | 5.3 | 7.0 | |||
– non-bank financial institutions | 1,932 | 10 | 46 | (31 | ) | — | — | 1.6 | — | — | |||||
Loans and advances to banks at amortised cost | 307 | — | — | (2 | ) | — | — | 0.7 | — | — | |||||
Other financial assets measured at amortised cost | 1,673 | 10 | 26 | (6 | ) | — | — | 0.4 | — | — |
1 | Represents the maximum amount at risk should the contracts be fully drawn upon and clients default. |
2 | Purchased or originated credit-impaired ('POCI'). |
3 | Days past due ('DPD'). Up-to-date accounts in Stage 2 are not shown in amounts presented above. |
20 | HSBC Holdings plc Earnings Release 3Q19 |
Reconciliation of changes in gross carrying/nominal amount and allowances for loans and advances to banks and customers including loan commitments and financial guarantees | ||||||||||||||||||||
Non-credit impaired | Credit impaired | |||||||||||||||||||
Stage 1 | Stage 2 | Stage 3 | POCI | Total | ||||||||||||||||
Gross carrying/ nominal amount | Allowance for ECL | Gross carrying/ nominal amount | Allowance for ECL | Gross carrying/ nominal amount | Allowance for ECL | Gross carrying/ nominal amount | Allowance for ECL | Gross carrying/ nominal amount | Allowance for ECL | |||||||||||
$m | $m | $m | $m | $m | $m | $m | $m | $m | $m | |||||||||||
At 1 Jan 2019 | 1,511,839 | (1,449 | ) | 86,241 | (2,278 | ) | 14,232 | (5,135 | ) | 334 | (194 | ) | 1,612,646 | (9,056 | ) | |||||
Transfers of financial instruments | (30,224 | ) | (399 | ) | 26,379 | 845 | 3,845 | (446 | ) | — | — | — | — | |||||||
– transfers from stage 1 to stage 2 | (77,755 | ) | 353 | 77,755 | (353 | ) | — | — | — | — | — | — | ||||||||
– transfers from stage 2 to stage 1 | 48,061 | (768 | ) | (48,061 | ) | 768 | — | — | — | — | — | — | ||||||||
– transfers to stage 3 | (825 | ) | 50 | (3,906 | ) | 497 | 4,731 | (547 | ) | — | — | — | — | |||||||
– transfers from stage 3 | 295 | (34 | ) | 591 | (67 | ) | (886 | ) | 101 | — | — | — | — | |||||||
Net remeasurement of ECL arising from transfer of stage | — | 506 | — | (498 | ) | — | (91 | ) | — | — | — | (83 | ) | |||||||
New financial assets originated or purchased | 378,176 | (404 | ) | — | — | — | — | 99 | (21 | ) | 378,275 | (425 | ) | |||||||
Assets derecognised (including final repayments) | (260,857 | ) | 86 | (14,700 | ) | 346 | (2,017 | ) | 537 | (23 | ) | 10 | (277,597 | ) | 979 | |||||
Changes to risk parameters – further lending/repayments | (33,379 | ) | 218 | (65 | ) | 116 | 584 | (89 | ) | 16 | 16 | (32,844 | ) | 261 | ||||||
Changes in risk parameters – credit quality | — | (87 | ) | — | (923 | ) | — | (1,922 | ) | — | (38 | ) | — | (2,970 | ) | |||||
Changes to model used for ECL calculation | — | (2 | ) | — | 1 | — | 3 | — | — | — | 2 | |||||||||
Assets written off | — | — | — | — | (1,927 | ) | 1,927 | (54 | ) | 54 | (1,981 | ) | 1,981 | |||||||
Credit-related modifications that resulted in derecognition | — | — | — | — | (211 | ) | 111 | — | — | (211 | ) | 111 | ||||||||
Foreign exchange | (27,078 | ) | 38 | (1,688 | ) | 52 | (336 | ) | 108 | (8 | ) | 5 | (29,110 | ) | 203 | |||||
Others | (842 | ) | 12 | 656 | 4 | 3 | (3 | ) | 13 | (2 | ) | (170 | ) | 11 | ||||||
At 30 Sep 2019 | 1,537,635 | (1,481 | ) | 96,823 | (2,335 | ) | 14,173 | (5,000 | ) | 377 | (170 | ) | 1,649,008 | (8,986 | ) | |||||
ECL income statement change for the period | 317 | (958 | ) | (1,562 | ) | (33 | ) | (2,236 | ) | |||||||||||
Recoveries | 290 | |||||||||||||||||||
Others | (37 | ) | ||||||||||||||||||
Total ECL income statement change for the period | (1,983 | ) |
At 30 Sep 2019 | Nine months ended 30 Sep 2019 | |||||
Gross carrying/nominal amount | Allowance for ECL | ECL charge | ||||
$m | $m | $m | ||||
As above | 1,649,008 | (8,986 | ) | (1,983 | ) | |
Other financial assets measured at amortised cost | 623,938 | (108 | ) | (27 | ) | |
Non-trading reverse purchase agreement commitments | 94,860 | — | — | |||
Summary of financial instruments to which the impairment requirements in IFRS 9 are applied/Summary consolidated income statement | 2,367,806 | (9,094 | ) | (2,010 | ) | |
Debt instruments measured at FVOCI | 343,960 | (95 | ) | (13 | ) | |
Total allowance for ECL/total income statement ECL change for the period | n/a | (9,189 | ) | (2,023 | ) |
• | $815m relating to volume movements, which included the ECL allowance associated with new originations, assets derecognised and further lending/repayments; |
• | $1,981m of assets written off; and |
• | foreign exchange and all other movements of $327m. |
• | $2,970m relating to underlying credit quality changes, including the credit quality impact of financial instruments transferring between stages; and |
• | $83m relating to the net remeasurement impact of stage transfers. |
HSBC Holdings plc Earnings Release 3Q19 | 21 |
Reconciliation of changes in gross carrying/nominal amount and allowances for loans and advances to banks and customers including loan commitments and financial guarantees1 | ||||||||||||||||||||
Non-credit impaired | Credit impaired | |||||||||||||||||||
Stage 1 | Stage 2 | Stage 3 | POCI | Total | ||||||||||||||||
Gross carrying/ nominal amount | Allowance for ECL | Gross carrying/ nominal amount | Allowance for ECL | Gross carrying/ nominal amount | Allowance for ECL | Gross carrying/ nominal amount | Allowance for ECL | Gross carrying/ nominal amount | Allowance for ECL | |||||||||||
$m | $m | $m | $m | $m | $m | $m | $m | $m | $m | |||||||||||
At 1 Jan 2018 | 1,446,857 | (1,469 | ) | 102,032 | (2,406 | ) | 15,083 | (5,722 | ) | 1,042 | (242 | ) | 1,565,014 | (9,839 | ) | |||||
Transfers of financial instruments | (8,747 | ) | (685 | ) | 3,582 | 1,185 | 5,165 | (500 | ) | — | — | — | — | |||||||
– transfers from stage 1 to stage 2 | (84,181 | ) | 319 | 84,181 | (319 | ) | — | — | — | — | — | — | ||||||||
– transfers from stage 2 to stage 1 | 77,325 | (999 | ) | (77,325 | ) | 999 | — | — | — | — | — | — | ||||||||
– transfers to stage 3 | (2,250 | ) | 35 | (4,439 | ) | 607 | 6,689 | (642 | ) | — | — | — | — | |||||||
– transfers from stage 3 | 359 | (40 | ) | 1,165 | (102 | ) | (1,524 | ) | 142 | — | — | — | — | |||||||
Net remeasurement of ECL arising from transfer of stage | — | 620 | — | (605 | ) | — | (103 | ) | — | — | — | (88 | ) | |||||||
Net new lending and further lending/repayments | 126,868 | (512 | ) | (16,162 | ) | 564 | (2,902 | ) | 733 | (587 | ) | 42 | 107,217 | 827 | ||||||
Changes in risk parameters – credit quality | — | 423 | — | (1,087 | ) | — | (2,238 | ) | — | (51 | ) | — | (2,953 | ) | ||||||
Changes to models used for ECL calculation | — | — | — | — | — | — | — | — | — | — | ||||||||||
Assets written off | — | — | — | — | (2,568 | ) | 2,552 | (1 | ) | 1 | (2,569 | ) | 2,553 | |||||||
Foreign exchange | (52,983 | ) | 76 | (2,863 | ) | 99 | (636 | ) | 232 | (26 | ) | 6 | (56,508 | ) | 413 | |||||
Other | (156 | ) | 98 | (348 | ) | (28 | ) | 90 | (89 | ) | (94 | ) | 50 | (508 | ) | 31 | ||||
At 31 Dec 2018 | 1,511,839 | (1,449 | ) | 86,241 | (2,278 | ) | 14,232 | (5,135 | ) | 334 | (194 | ) | 1,612,646 | (9,056 | ) | |||||
ECL income statement change for the period | 531 | (1,128 | ) | (1,608 | ) | (9 | ) | (2,214 | ) | |||||||||||
Recoveries | 408 | |||||||||||||||||||
Others | (87 | ) | ||||||||||||||||||
Total ECL income statement change for the period | (1,893 | ) |
At 31 Dec 2018 | 12 months ended 31 Dec 2018 | |||||
Gross carrying/nominal amount | Allowance for ECL | ECL charge | ||||
$m | $m | $m | ||||
As above | 1,612,646 | (9,056 | ) | (1,893 | ) | |
Other financial assets measured at amortised cost | 582,917 | (55 | ) | 21 | ||
Non-trading reverse purchase agreement commitments | 65,381 | — | — | |||
Summary of financial instruments to which the impairment requirements in IFRS 9 are applied/Summary consolidated income statement | 2,260,944 | (9,111 | ) | (1,872 | ) | |
Debt instruments measured at FVOCI | 343,110 | (84 | ) | 105 | ||
Total allowance for ECL/total income statement ECL charge for the period | n/a | (9,195 | ) | (1,767 | ) |
1 | The 31 December 2018 comparative ‘Reconciliation of changes in gross carrying/nominal amount and allowances for loans and advances to banks and customers‘ disclosure presents ‘New financial assets originated or purchased’, ‘Assets derecognised (including final repayments)’ and ‘Changes to risk parameters – further lending/repayments’ under ‘Net new lending and further lending/repayments’. To provide greater granularity, these amounts have been separately presented in the 30 September 2019 disclosure. The 31 December 2018 total ECL income statement change of $1,893m is attributable to $1,030m for the nine months ended 30 September 2018 and $863m for the three months ended 31 December 2018. |
22 | HSBC Holdings plc Earnings Release 3Q19 |
Total personal lending for loans and advances to customers by stage distribution | ||||||||||||||||
Gross carrying amount | Allowance for ECL | |||||||||||||||
Stage 1 | Stage 2 | Stage 3 | Total | Stage 1 | Stage 2 | Stage 3 | Total | |||||||||
$m | $m | $m | $m | $m | $m | $m | $m | |||||||||
By portfolio | ||||||||||||||||
First lien residential mortgages | 297,169 | 6,457 | 2,996 | 306,622 | (43 | ) | (67 | ) | (412 | ) | (522 | ) | ||||
– of which: interest only (including offset) | 29,699 | 1,603 | 342 | 31,644 | (6 | ) | (16 | ) | (83 | ) | (105 | ) | ||||
– affordability (including US adjustable rate mortgages) | 14,357 | 763 | 521 | 15,641 | (4 | ) | (3 | ) | (8 | ) | (15 | ) | ||||
Other personal lending | 98,363 | 8,550 | 1,759 | 108,672 | (537 | ) | (1,209 | ) | (773 | ) | (2,519 | ) | ||||
– other | 75,312 | 4,678 | 1,189 | 81,179 | (231 | ) | (472 | ) | (481 | ) | (1,184 | ) | ||||
– credit cards | 20,764 | 3,728 | 507 | 24,999 | (299 | ) | (724 | ) | (275 | ) | (1,298 | ) | ||||
– second lien residential mortgages | 772 | 89 | 55 | 916 | (1 | ) | (6 | ) | (11 | ) | (18 | ) | ||||
– motor vehicle finance | 1,515 | 55 | 8 | 1,578 | (6 | ) | (7 | ) | (6 | ) | (19 | ) | ||||
At 30 Sep 2019 | 395,532 | 15,007 | 4,755 | 415,294 | (580 | ) | (1,276 | ) | (1,185 | ) | (3,041 | ) | ||||
By geography | ||||||||||||||||
Europe | 171,537 | 6,537 | 2,112 | 180,186 | (108 | ) | (510 | ) | (483 | ) | (1,101 | ) | ||||
– of which: UK | 140,072 | 5,223 | 1,418 | 146,713 | (100 | ) | (481 | ) | (275 | ) | (856 | ) | ||||
Asia | 171,814 | 5,263 | 752 | 177,829 | (214 | ) | (325 | ) | (177 | ) | (716 | ) | ||||
– of which: Hong Kong | 117,267 | 2,589 | 243 | 120,099 | (85 | ) | (205 | ) | (43 | ) | (333 | ) | ||||
MENA | 5,536 | 261 | 383 | 6,180 | (58 | ) | (63 | ) | (252 | ) | (373 | ) | ||||
North America | 40,054 | 1,954 | 1,236 | 43,244 | (54 | ) | (104 | ) | (138 | ) | (296 | ) | ||||
Latin America | 6,591 | 992 | 272 | 7,855 | (146 | ) | (274 | ) | (135 | ) | (555 | ) | ||||
At 30 Sep 2019 | 395,532 | 15,007 | 4,755 | 415,294 | (580 | ) | (1,276 | ) | (1,185 | ) | (3,041 | ) |
By portfolio | ||||||||||||||||
First lien residential mortgages | 284,103 | 6,286 | 2,944 | 293,333 | (41 | ) | (62 | ) | (432 | ) | (535 | ) | ||||
– of which: interest only (including offset) | 31,874 | 1,324 | 338 | 33,536 | (3 | ) | (13 | ) | (92 | ) | (108 | ) | ||||
– affordability (including US adjustable rate mortgages) | 16,110 | 1,065 | 507 | 17,682 | (3 | ) | (4 | ) | (5 | ) | (12 | ) | ||||
Other personal lending | 90,578 | 8,789 | 1,637 | 101,004 | (493 | ) | (1,203 | ) | (716 | ) | (2,412 | ) | ||||
– other | 67,196 | 4,400 | 1,121 | 72,717 | (214 | ) | (435 | ) | (465 | ) | (1,114 | ) | ||||
– credit cards | 20,932 | 4,259 | 453 | 25,644 | (272 | ) | (756 | ) | (233 | ) | (1,261 | ) | ||||
– second lien residential mortgages | 1,022 | 100 | 57 | 1,179 | (2 | ) | (9 | ) | (13 | ) | (24 | ) | ||||
– motor vehicle finance | 1,428 | 30 | 6 | 1,464 | (5 | ) | (3 | ) | (5 | ) | (13 | ) | ||||
At 31 Dec 2018 | 374,681 | 15,075 | 4,581 | 394,337 | (534 | ) | (1,265 | ) | (1,148 | ) | (2,947 | ) | ||||
By geography | ||||||||||||||||
Europe | 169,782 | 5,731 | 2,051 | 177,564 | (105 | ) | (453 | ) | (450 | ) | (1,008 | ) | ||||
– of which: UK | 139,237 | 4,308 | 1,315 | 144,860 | (93 | ) | (421 | ) | (219 | ) | (733 | ) | ||||
Asia | 155,661 | 5,413 | 693 | 161,767 | (207 | ) | (353 | ) | (180 | ) | (740 | ) | ||||
– of which: Hong Kong | 104,909 | 2,715 | 169 | 107,793 | (71 | ) | (220 | ) | (39 | ) | (330 | ) | ||||
MENA | 5,565 | 350 | 411 | 6,326 | (61 | ) | (70 | ) | (263 | ) | (394 | ) | ||||
North America | 38,283 | 2,552 | 1,186 | 42,021 | (29 | ) | (90 | ) | (142 | ) | (261 | ) | ||||
Latin America | 5,390 | 1,029 | 240 | 6,659 | (132 | ) | (299 | ) | (113 | ) | (544 | ) | ||||
At 31 Dec 2018 | 374,681 | 15,075 | 4,581 | 394,337 | (534 | ) | (1,265 | ) | (1,148 | ) | (2,947 | ) |
HSBC Holdings plc Earnings Release 3Q19 | 23 |
Total wholesale lending for loans and advances to banks and customers at amortised cost | ||||||||||||||||||||
Gross carrying amount | Allowance for ECL | |||||||||||||||||||
Stage 1 | Stage 2 | Stage 3 | POCI | Total | Stage 1 | Stage 2 | Stage 3 | POCI | Total | |||||||||||
$m | $m | $m | $m | $m | $m | $m | $m | $m | $m | |||||||||||
Corporate and commercial | 476,420 | 53,032 | 8,202 | 367 | 538,021 | (677 | ) | (878 | ) | (3,675 | ) | (170 | ) | (5,400 | ) | |||||
– agriculture, forestry and fishing | 5,835 | 744 | 269 | 2 | 6,850 | (16 | ) | (32 | ) | (135 | ) | (1 | ) | (184 | ) | |||||
– mining and quarrying | 10,982 | 2,848 | 273 | 12 | 14,115 | (25 | ) | (65 | ) | (115 | ) | (7 | ) | (212 | ) | |||||
– manufacture | 92,424 | 12,161 | 1,632 | 163 | 106,380 | (139 | ) | (210 | ) | (803 | ) | (90 | ) | (1,242 | ) | |||||
– electricity, gas, steam and air-conditioning supply | 12,351 | 1,547 | 151 | — | 14,049 | (14 | ) | (38 | ) | (22 | ) | — | (74 | ) | ||||||
– water supply, sewerage, waste management and remediation | 2,823 | 451 | 27 | — | 3,301 | (6 | ) | (3 | ) | (18 | ) | — | (27 | ) | ||||||
– construction | 11,094 | 3,313 | 845 | 65 | 15,317 | (18 | ) | (48 | ) | (472 | ) | (64 | ) | (602 | ) | |||||
– wholesale and retail trade, repair of motor vehicles and motorcycles | 84,317 | 11,570 | 1,784 | 16 | 97,687 | (108 | ) | (116 | ) | (990 | ) | (7 | ) | (1,221 | ) | |||||
– transportation and storage | 22,054 | 2,161 | 482 | 32 | 24,729 | (46 | ) | (36 | ) | (112 | ) | — | (194 | ) | ||||||
– accommodation and food | 20,126 | 3,608 | 253 | 1 | 23,988 | (47 | ) | (42 | ) | (72 | ) | (1 | ) | (162 | ) | |||||
– publishing, audiovisual and broadcasting | 21,915 | 1,400 | 123 | — | 23,438 | (40 | ) | (23 | ) | (26 | ) | — | (89 | ) | ||||||
– real estate | 118,481 | 6,428 | 1,255 | 1 | 126,165 | (107 | ) | (102 | ) | (438 | ) | — | (647 | ) | ||||||
– professional, scientific and technical activities | 21,521 | 1,965 | 350 | — | 23,836 | (30 | ) | (35 | ) | (129 | ) | — | (194 | ) | ||||||
– administrative and support services | 21,430 | 2,865 | 413 | 75 | 24,783 | (23 | ) | (44 | ) | (174 | ) | — | (241 | ) | ||||||
– public administration and defence, compulsory social security | 1,363 | 245 | — | — | 1,608 | (1 | ) | (10 | ) | — | — | (11 | ) | |||||||
– education | 1,464 | 185 | 39 | — | 1,688 | (8 | ) | (6 | ) | (8 | ) | — | (22 | ) | ||||||
– health and care | 3,869 | 576 | 104 | — | 4,549 | (10 | ) | (20 | ) | (33 | ) | — | (63 | ) | ||||||
– arts, entertainment and recreation | 2,362 | 238 | 25 | — | 2,625 | (7 | ) | (9 | ) | (9 | ) | — | (25 | ) | ||||||
– other services | 12,789 | 474 | 171 | — | 13,434 | (27 | ) | (25 | ) | (114 | ) | — | (166 | ) | ||||||
– activities of households | 638 | 65 | — | — | 703 | — | — | — | — | — | ||||||||||
– extra-territorial organisations and bodies activities | 1 | — | — | — | 1 | — | — | — | — | — | ||||||||||
– government | 7,887 | 175 | 6 | — | 8,068 | (5 | ) | (1 | ) | (5 | ) | — | (11 | ) | ||||||
– asset-backed securities | 694 | 13 | — | — | 707 | — | (13 | ) | — | — | (13 | ) | ||||||||
Non-bank financial institutions | 69,112 | 3,662 | 325 | — | 73,099 | (45 | ) | (21 | ) | (74 | ) | — | (140 | ) | ||||||
Loans and advances to banks | 70,569 | 258 | — | — | 70,827 | (27 | ) | (1 | ) | — | — | (28 | ) | |||||||
At 30 Sep 2019 | 616,101 | 56,952 | 8,527 | 367 | 681,947 | (749 | ) | (900 | ) | (3,749 | ) | (170 | ) | (5,568 | ) | |||||
By geography | ||||||||||||||||||||
Europe | 189,113 | 20,006 | 4,451 | 143 | 213,713 | (351 | ) | (496 | ) | (1,461 | ) | (79 | ) | (2,387 | ) | |||||
– of which: UK | 131,801 | 16,329 | 3,151 | 41 | 151,322 | (285 | ) | (433 | ) | (911 | ) | (29 | ) | (1,658 | ) | |||||
Asia | 320,343 | 25,287 | 1,437 | 160 | 347,227 | (226 | ) | (209 | ) | (1,018 | ) | (40 | ) | (1,493 | ) | |||||
– of which: Hong Kong | 194,794 | 16,694 | 670 | 57 | 212,215 | (127 | ) | (123 | ) | (492 | ) | (33 | ) | (775 | ) | |||||
MENA | 26,094 | 2,565 | 1,885 | 53 | 30,597 | (53 | ) | (70 | ) | (987 | ) | (47 | ) | (1,157 | ) | |||||
North America | 63,118 | 8,018 | 457 | — | 71,593 | (41 | ) | (89 | ) | (114 | ) | — | (244 | ) | ||||||
Latin America | 17,433 | 1,076 | 297 | 11 | 18,817 | (78 | ) | (36 | ) | (169 | ) | (4 | ) | (287 | ) | |||||
At 30 Sep 2019 | 616,101 | 56,952 | 8,527 | 367 | 681,947 | (749 | ) | (900 | ) | (3,749 | ) | (170 | ) | (5,568 | ) |
24 | HSBC Holdings plc Earnings Release 3Q19 |
Total wholesale lending for loans and advances to banks and customers at amortised cost (continued) | ||||||||||||||||||||
Gross carrying amount | Allowance for ECL | |||||||||||||||||||
Stage 1 | Stage 2 | Stage 3 | POCI | Total | Stage 1 | Stage 2 | Stage 3 | POCI | Total | |||||||||||
$m | $m | $m | $m | $m | $m | $m | $m | $m | $m | |||||||||||
Corporate and commercial | 481,262 | 44,779 | 8,212 | 324 | 534,577 | (698 | ) | (812 | ) | (3,848 | ) | (194 | ) | (5,552 | ) | |||||
– agriculture, forestry and fishing | 5,361 | 1,102 | 236 | 2 | 6,701 | (15 | ) | (34 | ) | (117 | ) | (1 | ) | (167 | ) | |||||
– mining and quarrying | 12,094 | 1,717 | 359 | 2 | 14,172 | (29 | ) | (51 | ) | (94 | ) | (2 | ) | (176 | ) | |||||
– manufacture | 92,606 | 11,404 | 1,569 | 125 | 105,704 | (132 | ) | (156 | ) | (791 | ) | (83 | ) | (1,162 | ) | |||||
– electricity, gas, steam and air-conditioning supply | 14,522 | 1,422 | 40 | 60 | 16,044 | (18 | ) | (60 | ) | (15 | ) | (54 | ) | (147 | ) | |||||
– water supply, sewerage, waste management and remediation | 3,335 | 164 | 24 | — | 3,523 | (5 | ) | (2 | ) | (17 | ) | — | (24 | ) | ||||||
– construction | 12,919 | 1,116 | 1,168 | 51 | 15,254 | (27 | ) | (41 | ) | (524 | ) | (44 | ) | (636 | ) | |||||
– wholesale and retail trade, repair of motor vehicles and motorcycles | 83,751 | 12,225 | 1,652 | 37 | 97,665 | (115 | ) | (128 | ) | (968 | ) | (7 | ) | (1,218 | ) | |||||
– transportation and storage | 23,327 | 1,825 | 351 | 38 | 25,541 | (37 | ) | (46 | ) | (82 | ) | (1 | ) | (166 | ) | |||||
– accommodation and food | 19,385 | 1,889 | 270 | 3 | 21,547 | (43 | ) | (41 | ) | (83 | ) | (1 | ) | (168 | ) | |||||
– publishing, audiovisual and broadcasting | 19,758 | 1,224 | 189 | 1 | 21,172 | (42 | ) | (16 | ) | (84 | ) | — | (142 | ) | ||||||
– real estate | 116,132 | 5,985 | 1,115 | 1 | 123,233 | (97 | ) | (80 | ) | (594 | ) | — | (771 | ) | ||||||
– professional, scientific and technical activities | 21,282 | 941 | 350 | — | 22,573 | (29 | ) | (29 | ) | (113 | ) | — | (171 | ) | ||||||
– administrative and support services | 22,820 | 1,843 | 437 | 3 | 25,103 | (41 | ) | (48 | ) | (166 | ) | (1 | ) | (256 | ) | |||||
– public administration and defence, compulsory social security | 1,425 | 30 | 8 | — | 1,463 | (1 | ) | (3 | ) | (5 | ) | — | (9 | ) | ||||||
– education | 1,713 | 102 | 14 | — | 1,829 | (11 | ) | (7 | ) | (6 | ) | — | (24 | ) | ||||||
– health and care | 3,710 | 457 | 141 | — | 4,308 | (10 | ) | (16 | ) | (33 | ) | — | (59 | ) | ||||||
– arts, entertainment and recreation | 4,326 | 676 | 39 | — | 5,041 | (9 | ) | (9 | ) | (15 | ) | — | (33 | ) | ||||||
– other services | 13,259 | 411 | 242 | 1 | 13,913 | (31 | ) | (31 | ) | (140 | ) | — | (202 | ) | ||||||
– activities of households | 770 | 59 | 1 | — | 830 | — | — | — | — | — | ||||||||||
– extra-territorial organisations and bodies activities | 49 | 3 | 7 | — | 59 | — | — | (1 | ) | — | (1 | ) | ||||||||
– government | 7,905 | 168 | — | — | 8,073 | (6 | ) | (1 | ) | — | — | (7 | ) | |||||||
– asset-backed securities | 813 | 16 | — | — | 829 | — | (13 | ) | — | — | (13 | ) | ||||||||
Non-bank financial institutions | 59,245 | 1,932 | 230 | — | 61,407 | (44 | ) | (31 | ) | (51 | ) | — | (126 | ) | ||||||
Loans and advances to banks | 71,873 | 307 | — | — | 72,180 | (11 | ) | (2 | ) | — | — | (13 | ) | |||||||
At 31 Dec 2018 | 612,380 | 47,018 | 8,442 | 324 | 668,164 | (753 | ) | (845 | ) | (3,899 | ) | (194 | ) | (5,691 | ) | |||||
By geography | ||||||||||||||||||||
Europe | 190,387 | 19,073 | 4,233 | 150 | 213,843 | (366 | ) | (529 | ) | (1,598 | ) | (102 | ) | (2,595 | ) | |||||
– of which: UK | 133,004 | 15,370 | 2,928 | 8 | 151,310 | (313 | ) | (471 | ) | (998 | ) | — | (1,782 | ) | ||||||
Asia | 314,591 | 17,729 | 1,736 | 92 | 334,148 | (179 | ) | (121 | ) | (1,040 | ) | (36 | ) | (1,376 | ) | |||||
– of which: Hong Kong | 194,186 | 8,425 | 729 | 69 | 203,409 | (99 | ) | (54 | ) | (413 | ) | (35 | ) | (601 | ) | |||||
MENA | 25,684 | 2,974 | 1,769 | 53 | 30,480 | (73 | ) | (77 | ) | (974 | ) | (46 | ) | (1,170 | ) | |||||
North America | 62,631 | 6,928 | 314 | — | 69,873 | (37 | ) | (107 | ) | (101 | ) | — | (245 | ) | ||||||
Latin America | 19,087 | 314 | 390 | 29 | 19,820 | (98 | ) | (11 | ) | (186 | ) | (10 | ) | (305 | ) | |||||
At 31 Dec 2018 | 612,380 | 47,018 | 8,442 | 324 | 668,164 | (753 | ) | (845 | ) | (3,899 | ) | (194 | ) | (5,691 | ) |
HSBC Holdings plc Earnings Release 3Q19 | 25 |
Capital adequacy |
Key metrics (KM1/IFRS9–FL) | ||||||||||||
At | ||||||||||||
30 Sep | 30 Jun | 31 Mar | 31 Dec | 30 Sep | ||||||||
Ref* | Footnotes | 2019 | 2019 | 2019 | 2018 | 2018 | ||||||
Available capital ($bn) | 1 | |||||||||||
1 | Common equity tier 1 (‘CET1’) capital | 123.8 | 126.9 | 125.8 | 121.0 | 123.1 | ||||||
2 | CET1 capital as if IFRS 9 transitional arrangements had not been applied | 122.9 | 126.0 | 124.9 | 120.0 | 122.1 | ||||||
3 | Tier 1 capital | 149.7 | 152.8 | 151.8 | 147.1 | 149.3 | ||||||
4 | Tier 1 capital as if IFRS 9 transitional arrangements had not been applied | 148.8 | 151.9 | 150.9 | 146.1 | 148.3 | ||||||
5 | Total capital | 175.1 | 178.3 | 177.8 | 173.2 | 178.1 | ||||||
6 | Total capital as if IFRS 9 transitional arrangements had not been applied | 174.2 | 177.4 | 176.9 | 172.2 | 177.1 | ||||||
Risk-weighted assets (‘RWAs’) ($bn) | ||||||||||||
7 | Total RWAs | 865.2 | 886.0 | 879.5 | 865.3 | 862.7 | ||||||
8 | Total RWAs as if IFRS 9 transitional arrangements had not been applied | 864.7 | 885.5 | 878.9 | 864.7 | 862.1 | ||||||
Capital ratios (%) | 1 | |||||||||||
9 | CET1 | 14.3 | 14.3 | 14.3 | 14.0 | 14.3 | ||||||
10 | CET1 as if IFRS 9 transitional arrangements had not been applied | 14.2 | 14.2 | 14.2 | 13.9 | 14.2 | ||||||
11 | Tier 1 | 17.3 | 17.2 | 17.3 | 17.0 | 17.3 | ||||||
12 | Tier 1 as if IFRS 9 transitional arrangements had not been applied | 17.2 | 17.2 | 17.2 | 16.9 | 17.2 | ||||||
13 | Total capital | 20.2 | 20.1 | 20.2 | 20.0 | 20.7 | ||||||
14 | Total capital as if IFRS 9 transitional arrangements had not been applied | 20.1 | 20.0 | 20.1 | 19.9 | 20.6 | ||||||
Additional CET1 buffer requirements as a percentage of RWAs (%) | ||||||||||||
Capital conservation buffer requirement | 2.50 | 2.50 | 2.50 | 1.88 | 1.88 | |||||||
Countercyclical buffer requirement | 0.69 | 0.68 | 0.67 | 0.56 | 0.45 | |||||||
Bank G-SIB and/or D-SIB additional requirements | 2.00 | 2.00 | 2.00 | 1.50 | 1.50 | |||||||
Total bank CET1 specific buffer requirements | 5.19 | 5.18 | 5.17 | 3.94 | 3.83 | |||||||
Total capital requirement (%) | 2 | |||||||||||
Total capital requirement | 11.0 | 11.0 | 11.0 | 10.9 | 11.5 | |||||||
CET1 available after meeting the bank’s minimum capital requirements | 8.1 | 8.1 | 8.1 | 7.9 | 7.8 | |||||||
Leverage ratio | 3 | |||||||||||
15 | Total leverage ratio exposure measure ($bn) | 2,708.2 | 2,786.5 | 2,735.2 | 2,614.9 | 2,676.4 | ||||||
16 | Leverage ratio (%) | 5.4 | 5.4 | 5.4 | 5.5 | 5.4 | ||||||
17 | Leverage ratio as if IFRS 9 transitional arrangements had not been applied (%) | 5.4 | 5.3 | 5.4 | 5.5 | 5.4 | ||||||
Liquidity coverage ratio (‘LCR’) | 4 | |||||||||||
Total high-quality liquid assets ($bn) | 513.2 | 532.8 | 535.4 | 567.2 | 533.2 | |||||||
Total net cash outflow ($bn) | 378.0 | 391.0 | 374.8 | 368.7 | 334.1 | |||||||
LCR ratio (%) | 135.8 | 136.3 | 142.9 | 153.8 | 159.6 |
* | The references in this table and other tables within this section identify the lines prescribed in the relevant European Banking Authority (‘EBA’) template where applicable and where there is a value. |
1 | Capital figures and ratios at 30 September 2019 and 30 June 2019 are calculated in accordance with the revisions to the Capital Requirements Regulation (‘CRR II’) on a transitional basis. Prior period capital figures and ratios are reported under the Capital Requirements Regulation and Directive (‘CRD IV’) on a transitional basis. |
2 | Total capital requirement is defined as the sum of Pillar 1 and Pillar 2A capital requirements set by the UK’s Prudential Regulation Authority (‘PRA’). The minimum requirements represent the total capital requirement to be met by CET1. |
3 | Leverage ratios at 30 September 2019 and 30 June 2019 are calculated using the CRR II end point basis for additional tier 1 capital. Prior period leverage ratios are calculated using the CRD IV end point basis for capital. |
4 | The EU’s regulatory transitional arrangements for IFRS 9 in article 473a of the Capital Requirements Regulation do not apply to liquidity coverage measures. LCR is calculated as at the end of each period rather than using average values. For further details, refer to page 68 of the Interim Report 2019. |
• | the increase in loan loss allowances on day one of IFRS 9 adoption; and |
• | any subsequent increase in expected credit losses (‘ECL’) in the non-credit-impaired book thereafter. |
26 | HSBC Holdings plc Earnings Release 3Q19 |
Own funds disclosure | |||||
At | |||||
30 Sep | 30 Jun | ||||
2019 | 2019 | ||||
Ref | $m | $m | |||
6 | Common equity tier 1 capital before regulatory adjustments | 159,771 | 161,348 | ||
28 | Total regulatory adjustments to common equity tier 1 | (35,980 | ) | (34,399 | ) |
29 | Common equity tier 1 capital | 123,791 | 126,949 | ||
36 | Additional tier 1 capital before regulatory adjustments | 25,946 | 25,938 | ||
43 | Total regulatory adjustments to additional tier 1 capital | (60 | ) | (60 | ) |
44 | Additional tier 1 capital | 25,886 | 25,878 | ||
45 | Tier 1 capital | 149,677 | 152,827 | ||
51 | Tier 2 capital before regulatory adjustments | 26,725 | 26,625 | ||
57 | Total regulatory adjustments to tier 2 capital | (1,279 | ) | (1,193 | ) |
58 | Tier 2 capital | 25,446 | 25,432 | ||
59 | Total capital | 175,123 | 178,259 |
• | foreign currency translation differences of $2.6bn; |
• | a provision of $1.0bn for share buy-backs; and |
• | other movements totalling $1.1bn, including a $0.5bn increase in the deduction for significant investments. |
Leverage |
Leverage ratio | ||||||
At | ||||||
30 Sep | 30 Jun | |||||
2019 | 2019 | |||||
Ref | Footnotes | $bn | $bn | |||
20 | Tier 1 capital | 146.2 | 149.3 | |||
21 | Total leverage ratio exposure | 2,708.2 | 2,786.5 | |||
% | % | |||||
22 | Leverage ratio | 5.4 | 5.4 | |||
EU-23 | Choice of transitional arrangements for the definition of the capital measure | Fully phased-in | Fully phased-in | |||
UK leverage ratio exposure – quarterly average | 1 | 2,570.7 | 2,550.1 | |||
% | % | |||||
UK leverage ratio – quarterly average | 1 | 5.7 | 5.8 | |||
UK leverage ratio – quarter end | 1 | 5.8 | 5.8 |
1 | UK leverage ratio denotes the Group’s leverage ratio calculated under the PRA’s UK leverage framework and excludes qualifying central bank balances from the calculation of exposure. |
HSBC Holdings plc Earnings Release 3Q19 | 27 |
Risk-weighted assets |
Overview of RWAs (OV1) | ||||||||
30 Sep | 30 Jun | 30 Sep | ||||||
2019 | 2019 | 2019 | ||||||
RWAs | RWAs | Capital requirement1 | ||||||
Ref | Footnotes | $bn | $bn | $bn | ||||
1 | Credit risk (excluding counterparty credit risk) | 636.6 | 657.3 | 50.9 | ||||
2 | – standardised approach | 129.3 | 134.8 | 10.3 | ||||
3 | – foundation internal ratings based (‘IRB’) approach | 31.0 | 31.1 | 2.5 | ||||
4 | – advanced IRB approach | 476.3 | 491.4 | 38.1 | ||||
6 | Counterparty credit risk | 49.6 | 50.5 | 3.9 | ||||
7 | – mark-to-market | 23.4 | 26.8 | 1.9 | ||||
10 | – internal model method (‘IMM’) | 20.4 | 17.4 | 1.6 | ||||
11 | – risk exposure amount for contributions to the default fund of a central counterparty | 0.5 | 0.5 | — | ||||
12 | – credit valuation adjustment | 5.3 | 5.8 | 0.4 | ||||
13 | Settlement risk | 0.2 | 0.1 | — | ||||
14 | Securitisation exposures in the non-trading book | 6.9 | 7.4 | 0.6 | ||||
15 | – IRB method | 2.2 | 2.5 | 0.2 | ||||
17 | – IRB internal assessment approach | 1.0 | 1.2 | 0.1 | ||||
18 | – standardised approach | 1.3 | 2.0 | 0.1 | ||||
14a | – exposures subject to the new securitisation framework | 2 | 2.4 | 1.7 | 0.2 | |||
19 | Market risk | 36.9 | 34.8 | 2.9 | ||||
20 | – standardised approach | 8.1 | 4.3 | 0.6 | ||||
21 | – internal models approach (‘IMA’) | 28.8 | 30.5 | 2.3 | ||||
23 | Operational risk | 91.1 | 91.1 | 7.3 | ||||
25 | – standardised approach | 91.1 | 91.1 | 7.3 | ||||
27 | Amounts below the thresholds for deduction (subject to 250% risk weight) | 43.9 | 44.8 | 3.5 | ||||
29 | Total | 865.2 | 886.0 | 69.1 |
1 | ‘Capital requirement’ in this and subsequent tables represents the minimum capital charge set at 8% of RWAs by article 92 of the Capital Requirements Regulation. |
2 | On 1 January 2019, a new securitisation framework came into force in the EU for new transactions. Existing positions are subject to ‘grandfathering’ provisions and will transfer to the new framework on 1 January 2020. Our exposures subject to the approaches under the new framework at 30 September 2019 include $551m under the external ratings-based approach, $1,065m under the internal assessment approach, and $745m under the standardised approach. |
RWAs by global business | ||||||||||||
RBWM | CMB | GB&M | GPB | Corporate Centre | Total | |||||||
$bn | $bn | $bn | $bn | $bn | $bn | |||||||
Credit risk | 100.1 | 292.9 | 166.8 | 13.2 | 114.4 | 687.4 | ||||||
Counterparty credit risk | — | — | 48.3 | 0.2 | 1.3 | 49.8 | ||||||
Market risk | — | — | 30.8 | — | 6.1 | 36.9 | ||||||
Operational risk | 27.8 | 24.4 | 30.9 | 2.8 | 5.2 | 91.1 | ||||||
At 30 Sep 2019 | 127.9 | 317.3 | 276.8 | 16.2 | 127.0 | 865.2 |
RWAs by geographical region | |||||||||||||
Europe | Asia | MENA | North America | Latin America | Total | ||||||||
Footnotes | $bn | $bn | $bn | $bn | $bn | $bn | |||||||
Credit risk | 210.3 | 293.2 | 47.8 | 105.0 | 31.1 | 687.4 | |||||||
Counterparty credit risk | 28.2 | 10.4 | 1.4 | 8.2 | 1.6 | 49.8 | |||||||
Market risk | 1 | 29.1 | 21.6 | 1.6 | 6.2 | 2.1 | 36.9 | ||||||
Operational risk | 27.4 | 39.5 | 6.7 | 11.7 | 5.8 | 91.1 | |||||||
At 30 Sep 2019 | 295.0 | 364.7 | 57.5 | 131.1 | 40.6 | 865.2 |
1 | RWAs are non-additive across geographical regions due to market risk diversification effects within the Group. |
28 | HSBC Holdings plc Earnings Release 3Q19 |
RWA movement by global business by key driver | ||||||||||||||
Credit risk, counterparty credit risk and operational risk | ||||||||||||||
RBWM | CMB | GB&M | GPB | Corporate Centre | Market risk | Total RWAs | ||||||||
$bn | $bn | $bn | $bn | $bn | $bn | $bn | ||||||||
RWAs at 1 Jul 2019 | 129.0 | 327.6 | 252.2 | 16.5 | 125.9 | 34.8 | 886.0 | |||||||
Asset size | 2.3 | 2.4 | (0.2 | ) | (0.2 | ) | (3.7 | ) | 2.4 | 3.0 | ||||
Asset quality | 0.2 | 1.5 | 2.7 | (0.1 | ) | 0.4 | 0.2 | 4.9 | ||||||
Model updates | (0.5 | ) | (0.2 | ) | (0.8 | ) | — | — | — | (1.5 | ) | |||
Methodology and policy | (1.2 | ) | (7.7 | ) | (4.6 | ) | 0.1 | (0.5 | ) | (0.5 | ) | (14.4 | ) | |
Foreign exchange movements | (1.9 | ) | (6.3 | ) | (3.3 | ) | (0.1 | ) | (1.2 | ) | — | (12.8 | ) | |
Total RWA movement | (1.1 | ) | (10.3 | ) | (6.2 | ) | (0.3 | ) | (5.0 | ) | 2.1 | (20.8 | ) | |
RWAs at 30 Sep 2019 | 127.9 | 317.3 | 246.0 | 16.2 | 120.9 | 36.9 | 865.2 |
RWA movement by geographical region by key driver | ||||||||||||||
Credit risk, counterparty credit risk and operational risk | ||||||||||||||
Europe | Asia | MENA | North America | Latin America | Market risk | Total RWAs | ||||||||
$bn | $bn | $bn | $bn | $bn | $bn | $bn | ||||||||
RWAs at 1 Jul 2019 | 280.8 | 351.0 | 55.9 | 124.9 | 38.6 | 34.8 | 886.0 | |||||||
Asset size | 0.6 | 0.6 | 0.1 | (0.5 | ) | (0.2 | ) | 2.4 | 3.0 | |||||
Asset quality | 0.7 | 0.5 | (0.1 | ) | 1.3 | 2.3 | 0.2 | 4.9 | ||||||
Model updates | (1.0 | ) | (0.5 | ) | — | — | — | — | (1.5 | ) | ||||
Methodology and policy | (8.1 | ) | (5.1 | ) | (0.2 | ) | (0.5 | ) | — | (0.5 | ) | (14.4 | ) | |
Foreign exchange movements | (7.1 | ) | (3.4 | ) | 0.2 | (0.3 | ) | (2.2 | ) | — | (12.8 | ) | ||
Total RWA movement | (14.9 | ) | (7.9 | ) | — | — | (0.1 | ) | 2.1 | (20.8 | ) | |||
RWAs at 30 Sep 2019 | 265.9 | 343.1 | 55.9 | 124.9 | 38.5 | 36.9 | 865.2 |
RWA flow statements of credit risk exposures under IRB approach1 (CR8) | |||||
RWAs | Capital requirement | ||||
Ref | $bn | $bn | |||
1 | RWAs at 1 Jul 2019 | 522.5 | 41.8 | ||
2 | Asset size | 0.8 | 0.1 | ||
3 | Asset quality | 4.4 | 0.4 | ||
4 | Model updates | (0.5 | ) | — | |
5 | Methodology and policy | (9.9 | ) | (0.9 | ) |
7 | Foreign exchange movements | (10.0 | ) | (0.8 | ) |
9 | RWAs at 30 Sep 2019 | 507.3 | 40.6 |
1 | Securitisation positions are not included in this table. |
HSBC Holdings plc Earnings Release 3Q19 | 29 |
RWA flow statements of counterparty credit risk exposures under the IMM (CCR7) | |||||
RWAs | Capital requirement | ||||
Ref | $bn | $bn | |||
1 | RWAs at 1 Jul 2019 | 21.5 | 1.7 | ||
2 | Asset size | 0.7 | 0.1 | ||
4 | Model updates | 2.8 | 0.2 | ||
9 | RWAs at 30 Sep 2019 | 25.0 | 2.0 |
RWA flow statements of market risk exposures under the IMA (MR2–B) | |||||||||||||
VaR | Stressed VaR | IRC | Other | Total RWAs | Capital requirement | ||||||||
Ref | $bn | $bn | $bn | $bn | $bn | $bn | |||||||
1 | RWAs at 1 Jul 2019 | 6.5 | 9.4 | 11.1 | 3.5 | 30.5 | 2.4 | ||||||
2 | Movement in risk levels | (0.4 | ) | (0.6 | ) | (0.5 | ) | 0.3 | (1.2 | ) | (0.1 | ) | |
4 | Methodology and policy | (0.1 | ) | (0.2 | ) | — | (0.2 | ) | (0.5 | ) | — | ||
8 | RWAs at 30 Sep 2019 | 6.0 | 8.6 | 10.6 | 3.6 | 28.8 | 2.3 |
Minimum requirement for own funds and eligible liabilities |
30 | HSBC Holdings plc Earnings Release 3Q19 |
Key metrics of the resolution groups (KM2) | ||||||||
Resolution groups | ||||||||
European1 | Asian2 | US3 | ||||||
At 30 Sep 2019 | At 30 Jun 2019 | At 30 Sep 2019 | At 30 Jun 2019 | At 30 Sep 2019 | At 30 Jun 2019 | |||
1 | Total loss absorbing capacity ('TLAC') available ($m) | 95,474 | 97,256 | 97,244 | 97,040 | 30,184 | 31,739 | |
1a | Fully loaded ECL accounting model TLAC available ($m) | 95,282 | 97,055 | 97,244 | 97,040 | N/A | N/A | |
2 | Total RWAs at the level of the resolution group ($m) | 316,766 | 321,149 | 370,590 | 371,100 | 139,016 | 140,762 | |
3 | TLAC as a percentage of RWA (row1/row2) (%) | 30.1 | 30.3 | 26.2 | 26.1 | 21.7 | 22.5 | |
3a | Fully loaded ECL accounting model TLAC as a percentage of fully loaded ECL accounting model RWA (%) | 30.1 | 30.2 | 26.2 | 26.1 | N/A | N/A | |
4 | Leverage exposure measure at the level of the resolution group ($m) | 1,132,679 | 1,176,134 | 1,024,554 | 1,041,168 | 372,556 | 362,621 | |
5 | TLAC as a percentage of leverage exposure measure (row1/row4) (%) | 8.4 | 8.3 | 9.5 | 9.3 | 8.1 | 8.8 | |
5a | Fully loaded ECL accounting model TLAC as a percentage of fully loaded ECL accounting model leverage exposure measure (%) | 8.4 | 8.3 | 9.5 | 9.3 | N/A | N/A | |
6a | Does the subordination exemption in the antepenultimate paragraph of section 11 of the FSB TLAC term sheet apply? | No | No | No | No | No | No | |
6b | Does the subordination exemption in the penultimate paragraph of section 11 of the FSB TLAC term sheet apply? | No | No | No | No | No | No | |
6c | If the capped subordination exemption applies, the amount of funding issued that ranks pari passu with excluded liabilities and that is recognised as external TLAC, divided by funding issued that ranks pari passu with excluded liabilities and that would be recognised as external TLAC if no cap was applied (%) | N/A | N/A | N/A | N/A | N/A | N/A |
1 | The European resolution group reports in accordance with the applicable provisions of the Capital Requirements Regulation as amended by CRR II. Unless otherwise stated, all figures are calculated using the EU's regulatory transitional arrangements for IFRS 9 in article 473a of the Capital Requirements Regulation. |
2 | Reporting for the Asian resolution group follows the Hong Kong Monetary Authority regulatory rules. IFRS 9 has been implemented but no regulatory transitional arrangements apply. |
3 | Reporting for the US resolution group is prepared in accordance with local regulatory rules. The US accounting standard for current expected credit losses corresponding to IFRS 9 is not yet effective. Leverage exposure and ratio are calculated under the US supplementary leverage ratio rules. |
HSBC Holdings plc Earnings Release 3Q19 | 31 |
Summary information – global businesses |
HSBC adjusted profit before tax | |||||||||||||
Nine months ended 30 Sep 2019 | |||||||||||||
Retail Banking and Wealth Management | Commercial Banking | Global Banking and Markets | Global Private Banking | Corporate Centre | Total | ||||||||
Footnotes | $m | $m | $m | $m | $m | $m | |||||||
Net operating income before change in expected credit losses and other credit impairment charges | 1 | 17,547 | 11,607 | 11,176 | 1,396 | 36 | 41,762 | ||||||
of which: net interest income/(expense) | 12,339 | 8,461 | 4,224 | 662 | (2,760 | ) | 22,926 | ||||||
Change in expected credit losses and other credit impairment (charges)/recoveries | (989 | ) | (907 | ) | (121 | ) | (25 | ) | 19 | (2,023 | ) | ||
Net operating income | 16,558 | 10,700 | 11,055 | 1,371 | 55 | 39,739 | |||||||
Total operating expenses | (10,472 | ) | (5,043 | ) | (6,990 | ) | (1,052 | ) | (154 | ) | (23,711 | ) | |
Operating profit/(loss) | 6,086 | 5,657 | 4,065 | 319 | (99 | ) | 16,028 | ||||||
Share of profit in associates and joint ventures | 51 | — | — | — | 1,785 | 1,836 | |||||||
Adjusted profit before tax | 6,137 | 5,657 | 4,065 | 319 | 1,686 | 17,864 | |||||||
% | % | % | % | % | % | ||||||||
Share of HSBC’s adjusted profit before tax | 34.3 | 31.7 | 22.8 | 1.8 | 9.4 | 100.0 | |||||||
Adjusted cost efficiency ratio | 59.7 | 43.4 | 62.5 | 75.4 | 427.8 | 56.8 |
Nine months ended 30 Sep 2018 | |||||||||||||
Net operating income/(expense) before change in expected credit losses and other credit impairment charges | 1 | 16,293 | 10,792 | 11,986 | 1,334 | (537 | ) | 39,868 | |||||
of which: net interest income/(expense) | 11,397 | 7,623 | 3,700 | 654 | (1,407 | ) | 21,967 | ||||||
Change in expected credit losses and other credit impairment (charges)/recoveries | (797 | ) | (274 | ) | 96 | 16 | 113 | (846 | ) | ||||
Net operating income | 15,496 | 10,518 | 12,082 | 1,350 | (424 | ) | 39,022 | ||||||
Total operating expenses | (9,856 | ) | (4,707 | ) | (6,886 | ) | (1,070 | ) | (584 | ) | (23,103 | ) | |
Operating profit | 5,640 | 5,811 | 5,196 | 280 | (1,008 | ) | 15,919 | ||||||
Share of profit in associates and joint ventures | 21 | — | — | — | 1,874 | 1,895 | |||||||
Adjusted profit before tax | 5,661 | 5,811 | 5,196 | 280 | 866 | 17,814 | |||||||
% | % | % | % | % | % | ||||||||
Share of HSBC’s adjusted profit before tax | 31.8 | 32.6 | 29.2 | 1.6 | 4.9 | 100.0 | |||||||
Adjusted cost efficiency ratio | 60.5 | 43.6 | 57.5 | 80.2 | (108.8 | ) | 57.9 |
32 | HSBC Holdings plc Earnings Release 3Q19 |
HSBC adjusted profit before tax (continued) | |||||||||||||
Quarter ended 30 Sep 2019 | |||||||||||||
Retail Banking and Wealth Management | Commercial Banking | Global Banking and Markets | Global Private Banking | Corporate Centre | Total | ||||||||
Footnotes | $m | $m | $m | $m | $m | $m | |||||||
Net operating income/(expense) before change in expected credit losses and other credit impairment charges | 1 | 5,628 | 3,791 | 3,470 | 472 | (94 | ) | 13,267 | |||||
of which: net interest income/(expense) | 4,184 | 2,808 | 1,363 | 221 | (890 | ) | 7,686 | ||||||
Change in expected credit losses and other credit impairment (charges)/recoveries | (449 | ) | (413 | ) | (26 | ) | (6 | ) | 11 | (883 | ) | ||
Net operating income/(expense) | 5,179 | 3,378 | 3,444 | 466 | (83 | ) | 12,384 | ||||||
Total operating expenses | (3,491 | ) | (1,746 | ) | (2,203 | ) | (343 | ) | 235 | (7,548 | ) | ||
Operating profit | 1,688 | 1,632 | 1,241 | 123 | 152 | 4,836 | |||||||
Share of profit in associates and joint ventures | 8 | — | — | — | 504 | 512 | |||||||
Adjusted profit before tax | 1,696 | 1,632 | 1,241 | 123 | 656 | 5,348 | |||||||
% | % | % | % | % | % | ||||||||
Share of HSBC’s adjusted profit before tax | 31.7 | 30.5 | 23.2 | 2.3 | 12.3 | 100.0 | |||||||
Adjusted cost efficiency ratio | 62.0 | 46.1 | 63.5 | 72.7 | 250.0 | 56.9 |
Quarter ended 30 Jun 2019 | |||||||||||||
Net operating income before change in expected credit losses and other credit impairment charges | 1 | 5,869 | 3,839 | 3,592 | 471 | 110 | 13,881 | ||||||
of which: net interest income/(expense) | 4,133 | 2,814 | 1,424 | 224 | (925 | ) | 7,670 | ||||||
Change in expected credit losses and other credit impairment (charges)/recoveries | (231 | ) | (244 | ) | (56 | ) | (16 | ) | 2 | (545 | ) | ||
Net operating income | 5,638 | 3,595 | 3,536 | 455 | 112 | 13,336 | |||||||
Total operating expenses | (3,475 | ) | (1,616 | ) | (2,353 | ) | (357 | ) | (150 | ) | (7,951 | ) | |
Operating profit/(loss) | 2,163 | 1,979 | 1,183 | 98 | (38 | ) | 5,385 | ||||||
Share of profit in associates and joint ventures | 32 | — | — | — | 684 | 716 | |||||||
Adjusted profit before tax | 2,195 | 1,979 | 1,183 | 98 | 646 | 6,101 | |||||||
% | % | % | % | % | % | ||||||||
Share of HSBC’s adjusted profit before tax | 36.0 | 32.4 | 19.4 | 1.6 | 10.6 | 100.0 | |||||||
Adjusted cost efficiency ratio | 59.2 | 42.1 | 65.5 | 75.8 | 136.4 | 57.3 |
Quarter ended 30 Sep 2018 | |||||||||||||
Net operating income/(expense) before change in expected credit losses and other credit impairment charges | 1 | 5,624 | 3,653 | 4,070 | 427 | (288 | ) | 13,486 | |||||
of which: net interest income/(expense) | 4,008 | 2,637 | 1,315 | 218 | (686 | ) | 7,492 | ||||||
Change in expected credit losses and other credit impairment (charges)/recoveries | (283 | ) | (237 | ) | (8 | ) | 11 | 28 | (489 | ) | |||
Net operating income/(expense) | 5,341 | 3,416 | 4,062 | 438 | (260 | ) | 12,997 | ||||||
Total operating expenses | (3,273 | ) | (1,579 | ) | (2,297 | ) | (345 | ) | 7 | (7,487 | ) | ||
Operating profit/(loss) | 2,068 | 1,837 | 1,765 | 93 | (253 | ) | 5,510 | ||||||
Share of profit in associates and joint ventures | 4 | — | — | — | 578 | 582 | |||||||
Adjusted profit before tax | 2,072 | 1,837 | 1,765 | 93 | 325 | 6,092 | |||||||
% | % | % | % | % | % | ||||||||
Share of HSBC’s adjusted profit before tax | 34.0 | 30.2 | 29.0 | 1.5 | 5.3 | 100.0 | |||||||
Adjusted cost efficiency ratio | 58.2 | 43.2 | 56.4 | 80.8 | 2.4 | 55.5 |
1 | Net operating income before change in expected credit losses and other credit impairment charges, also referred to as ‘revenue’. |
HSBC Holdings plc Earnings Release 3Q19 | 33 |
Global Private Banking – reported client assets1 | ||||||
Quarter ended | ||||||
30 Sep | 30 Jun | 30 Sep | ||||
2019 | 2019 | 2018 | ||||
$bn | $bn | $bn | ||||
Opening balance | 341 | 335 | 330 | |||
Net new money | 5 | 4 | 2 | |||
Value change | (2 | ) | 1 | (3 | ) | |
Disposals | — | — | — | |||
Exchange and other | (6 | ) | 1 | (3 | ) | |
Closing balance | 338 | 341 | 326 |
Global Private Banking – reported client assets by geography1 | |||||||
Quarter ended | |||||||
30 Sep | 30 Jun | 30 Sep | |||||
2019 | 2019 | 2018 | |||||
Footnotes | $bn | $bn | $bn | ||||
Europe | 155 | 160 | 158 | ||||
Asia | 143 | 143 | 129 | ||||
North America | 40 | 38 | 39 | ||||
Latin America | — | — | — | ||||
Middle East | 2 | — | — | — | |||
Closing balance | 338 | 341 | 326 |
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. |
2 | ‘Middle East’ is an offshore business, therefore client assets are booked across to various regions, primarily in Europe. |
34 | HSBC Holdings plc Earnings Release 3Q19 |
Summary information – geographical regions |
HSBC reported profit/(loss) before tax | ||||||||||||||
Nine months ended 30 Sep 2019 | ||||||||||||||
Europe | Asia | MENA | North America | Latin America | Intra-HSBC items | Total | ||||||||
$m | $m | $m | $m | $m | $m | $m | ||||||||
Net interest income | 4,251 | 12,394 | 1,349 | 2,461 | 1,546 | 807 | 22,808 | |||||||
Net fee income | 2,744 | 4,105 | 491 | 1,347 | 398 | — | 9,085 | |||||||
Net income from financial instruments held for trading or managed on a fair value basis | 2,995 | 3,660 | 252 | 652 | 597 | (279 | ) | 7,877 | ||||||
Net income from assets and liabilities of insurance businesses, including related derivatives, measured at fair value through profit or loss | 1,262 | 1,082 | — | — | (26 | ) | — | 2,318 | ||||||
Changes in fair value of other financial instruments mandatorily measured at fair value through profit or loss | 1,051 | 15 | — | 24 | 55 | (528 | ) | 617 | ||||||
Other income/(expense)1 | 1,178 | 1,918 | 854 | 500 | 9 | (4,437 | ) | 22 | ||||||
Net operating income before change in expected credit losses and other credit impairment charges2 | 13,481 | 23,174 | 2,946 | 4,984 | 2,579 | (4,437 | ) | 42,727 | ||||||
Change in expected credit losses and other credit impairment charges | (810 | ) | (542 | ) | (65 | ) | (140 | ) | (466 | ) | — | (2,023 | ) | |
Net operating income | 12,671 | 22,632 | 2,881 | 4,844 | 2,113 | (4,437 | ) | 40,704 | ||||||
Total operating expenses | (13,633 | ) | (9,795 | ) | (1,052 | ) | (3,799 | ) | (1,454 | ) | 4,437 | (25,296 | ) | |
Operating profit/(loss) | (962 | ) | 12,837 | 1,829 | 1,045 | 659 | — | 15,408 | ||||||
Share of profit in associates and joint ventures | 18 | 1,594 | 212 | — | 12 | — | 1,836 | |||||||
Profit/(loss) before tax | (944 | ) | 14,431 | 2,041 | 1,045 | 671 | — | 17,244 | ||||||
% | % | % | % | % | % | |||||||||
Share of HSBC’s profit before tax | (5.5 | ) | 83.7 | 11.8 | 6.1 | 3.9 | 100.0 | |||||||
Cost efficiency ratio | 101.1 | 42.3 | 35.7 | 76.2 | 56.4 | 59.2 | ||||||||
Nine months ended 30 Sep 2018 | ||||||||||||||
Net interest income | 5,212 | 11,976 | 1,332 | 2,632 | 1,450 | 178 | 22,780 | |||||||
Net fee income | 3,086 | 4,477 | 463 | 1,397 | 370 | — | 9,793 | |||||||
Net income from financial instruments held for trading or managed on a fair value basis | 3,048 | 3,070 | 197 | 651 | 523 | (4 | ) | 7,485 | ||||||
Net income from assets and liabilities of insurance businesses, including related derivatives, measured at fair value through profit or loss | (36 | ) | (14 | ) | — | — | 6 | — | (44 | ) | ||||
Changes in fair value of other financial instruments mandatorily measured at fair value through profit or loss | 696 | (26 | ) | 2 | 30 | 17 | (178 | ) | 541 | |||||
Other income/(expense)1 | 1,702 | 2,418 | 25 | 442 | (247 | ) | (3,810 | ) | 530 | |||||
Net operating income before change in expected credit losses and other credit impairment charges2 | 13,708 | 21,901 | 2,019 | 5,152 | 2,119 | (3,814 | ) | 41,085 | ||||||
Change in expected credit losses and other credit impairment (charges)/recoveries | (187 | ) | (405 | ) | (203 | ) | 264 | (383 | ) | — | (914 | ) | ||
Net operating income | 13,521 | 21,496 | 1,816 | 5,416 | 1,736 | (3,814 | ) | 40,171 | ||||||
Total operating expenses | (12,798 | ) | (9,263 | ) | (1,009 | ) | (4,907 | ) | (1,352 | ) | 3,814 | (25,515 | ) | |
Operating profit | 723 | 12,233 | 807 | 509 | 384 | — | 14,656 | |||||||
Share of profit in associates and joint ventures | 21 | 1,606 | 351 | — | — | — | 1,978 | |||||||
Profit before tax | 744 | 13,839 | 1,158 | 509 | 384 | — | 16,634 | |||||||
% | % | % | % | % | % | |||||||||
Share of HSBC’s profit before tax | 4.5 | 83.2 | 6.9 | 3.1 | 2.3 | 100.0 | ||||||||
Cost efficiency ratio | 93.4 | 42.3 | 50.0 | 95.2 | 63.8 | 62.1 |
HSBC Holdings plc Earnings Release 3Q19 | 35 |
HSBC reported profit/(loss) before tax (continued) | ||||||||||||||
Quarter ended 30 Sep 2019 | ||||||||||||||
Europe | Asia | MENA | North America | Latin America | Intra-HSBC items | Total | ||||||||
$m | $m | $m | $m | $m | $m | $m | ||||||||
Net interest income | 942 | 4,212 | 452 | 776 | 470 | 716 | 7,568 | |||||||
Net fee income | 875 | 1,340 | 165 | 444 | 137 | — | 2,961 | |||||||
Net income from financial instruments held for trading or managed on a fair value basis | 1,158 | 1,308 | 77 | 240 | 194 | (431 | ) | 2,546 | ||||||
Net income from assets and liabilities of insurance businesses, including related derivatives, measured at fair value through profit or loss | 206 | (35 | ) | — | — | (49 | ) | — | 122 | |||||
Changes in fair value of other financial instruments mandatorily measured at fair value through profit or loss | 455 | 1 | (1 | ) | 9 | (20 | ) | (284 | ) | 160 | ||||
Other income/(expense)1 | 593 | 889 | 10 | 150 | (53 | ) | (1,591 | ) | (2 | ) | ||||
Net operating income before change in expected credit losses and other credit impairment charges2 | 4,229 | 7,715 | 703 | 1,619 | 679 | (1,590 | ) | 13,355 | ||||||
Change in expected credit losses and other credit impairment charges | (274 | ) | (282 | ) | (16 | ) | (80 | ) | (231 | ) | — | (883 | ) | |
Net operating income | 3,955 | 7,433 | 687 | 1,539 | 448 | (1,590 | ) | 12,472 | ||||||
Total operating expenses | (4,389 | ) | (3,305 | ) | (358 | ) | (1,240 | ) | (445 | ) | 1,590 | (8,147 | ) | |
Operating profit/(loss) | (434 | ) | 4,128 | 329 | 299 | 3 | — | 4,325 | ||||||
Share of profit in associates and joint ventures | 10 | 523 | (24 | ) | — | 3 | — | 512 | ||||||
Profit/(loss) before tax | (424 | ) | 4,651 | 305 | 299 | 6 | — | 4,837 | ||||||
% | % | % | % | % | % | |||||||||
Share of HSBC’s profit before tax | (8.8 | ) | 96.2 | 6.3 | 6.2 | 0.1 | 100.0 | |||||||
Cost efficiency ratio | 103.8 | 42.8 | 50.9 | 76.6 | 65.5 | 61.0 | ||||||||
Quarter ended 30 June 2019 | ||||||||||||||
Net interest income | 1,785 | 4,186 | 460 | 832 | 568 | (59 | ) | 7,772 | ||||||
Net fee income | 958 | 1,356 | 167 | 479 | 138 | — | 3,098 | |||||||
Net income from financial instruments held for trading or managed on a fair value basis | 630 | 1,143 | 71 | 194 | 188 | 224 | 2,450 | |||||||
Net income from assets and liabilities of insurance businesses, including related derivatives, measured at fair value through profit or loss | 309 | 169 | — | — | 8 | — | 486 | |||||||
Changes in fair value of other financial instruments mandatorily measured at fair value through profit or loss | 305 | 6 | 2 | 13 | 28 | (167 | ) | 187 | ||||||
Other income/(expense)1 | 660 | 780 | 841 | 171 | (1 | ) | (1,500 | ) | 951 | |||||
Net operating income before change in expected credit losses and other credit impairment charges2 | 4,647 | 7,640 | 1,541 | 1,689 | 929 | (1,502 | ) | 14,944 | ||||||
Change in expected credit losses and other credit impairment charges | (233 | ) | (102 | ) | (43 | ) | (57 | ) | (120 | ) | — | (555 | ) | |
Net operating income | 4,414 | 7,538 | 1,498 | 1,632 | 809 | (1,502 | ) | 14,389 | ||||||
Total operating expenses | (4,926 | ) | (3,359 | ) | (349 | ) | (1,265 | ) | (530 | ) | 1,502 | (8,927 | ) | |
Operating profit/(loss) | (512 | ) | 4,179 | 1,149 | 367 | 279 | — | 5,462 | ||||||
Share of profit in associates and joint ventures | 6 | 595 | 122 | — | 9 | — | 732 | |||||||
Profit/(loss) before tax | (506 | ) | 4,774 | 1,271 | 367 | 288 | — | 6,194 | ||||||
% | % | % | % | % | % | |||||||||
Share of HSBC’s profit before tax | (8.2 | ) | 77.2 | 20.5 | 5.9 | 4.6 | 100.0 | |||||||
Cost efficiency ratio | 106.0 | 44.0 | 22.6 | 74.9 | 57.1 | 59.7 |
36 | HSBC Holdings plc Earnings Release 3Q19 |
HSBC reported profit/(loss) before tax (continued) | ||||||||||||||
Quarter ended 30 Sep 2018 | ||||||||||||||
Europe | Asia | MENA | North America | Latin America | Intra-HSBC items | Total | ||||||||
$m | $m | $m | $m | $m | $m | $m | ||||||||
Net interest income | 1,685 | 4,155 | 468 | 885 | 411 | 76 | 7,680 | |||||||
Net fee income | 976 | 1,338 | 143 | 467 | 102 | — | 3,026 | |||||||
Net income from financial instruments held for trading or managed on a fair value basis | 1,122 | 1,089 | 50 | 195 | 139 | 7 | 2,602 | |||||||
Net income from assets and liabilities of insurance businesses, including related derivatives, measured at fair value through profit or loss | 105 | 65 | — | — | 8 | — | 178 | |||||||
Changes in fair value of other financial instruments mandatorily measured at fair value through profit or loss | 272 | (10 | ) | 3 | 11 | 7 | (87 | ) | 196 | |||||
Other income/(expense)1 | 677 | 752 | (1 | ) | 182 | (144 | ) | (1,350 | ) | 116 | ||||
Net operating income before change in expected credit losses and other credit impairment charges2 | 4,837 | 7,389 | 663 | 1,740 | 523 | (1,354 | ) | 13,798 | ||||||
Change in expected credit losses and other credit impairment (charges)/recoveries | — | (289 | ) | (100 | ) | 30 | (148 | ) | — | (507 | ) | |||
Net operating income | 4,837 | 7,100 | 563 | 1,770 | 375 | (1,354 | ) | 13,291 | ||||||
Total operating expenses | (4,206 | ) | (3,153 | ) | (323 | ) | (1,303 | ) | (335 | ) | 1,354 | (7,966 | ) | |
Operating profit | 631 | 3,947 | 240 | 467 | 40 | — | 5,325 | |||||||
Share of profit in associates and joint ventures | 3 | 512 | 82 | — | — | — | 597 | |||||||
Profit before tax | 634 | 4,459 | 322 | 467 | 40 | — | 5,922 | |||||||
% | % | % | % | % | % | |||||||||
Share of HSBC’s profit before tax | 10.7 | 75.3 | 5.4 | 7.9 | 0.7 | 100.0 | ||||||||
Cost efficiency ratio | 87.0 | 42.7 | 48.7 | 74.9 | 64.1 | 57.7 |
1 | Other income in this context comprises where applicable changes in fair value of long-term debt and related derivatives, gains less losses from financial investments, dividend income, net insurance premium income and other operating income less net insurance claims and benefits paid and movement in liabilities to policyholders. |
2 | Net operating income before change in expected credit losses and other credit impairment charges, also referred to as ‘revenue’. |
HSBC Holdings plc Earnings Release 3Q19 | 37 |
Appendix – selected information |
Reconciliation of reported results to adjusted results – global businesses | |||||||||||||
Nine months ended 30 Sep 2019 | |||||||||||||
Retail Banking and Wealth Management | Commercial Banking | Global Banking and Markets | Global Private Banking | Corporate Centre | Total | ||||||||
Footnotes | $m | $m | $m | $m | $m | $m | |||||||
Revenue | 1 | ||||||||||||
Reported | 17,434 | 11,598 | 11,143 | 1,396 | 1,156 | 42,727 | |||||||
Significant items | 113 | 9 | 33 | — | (1,120 | ) | (965 | ) | |||||
– customer redress programmes | 109 | 9 | — | — | — | 118 | |||||||
– disposals, acquisitions and investment in new businesses | 4 | — | — | — | (827 | ) | (823 | ) | |||||
– fair value movement on financial instruments | 2 | — | — | 33 | — | (293 | ) | (260 | ) | ||||
Adjusted | 17,547 | 11,607 | 11,176 | 1,396 | 36 | 41,762 | |||||||
ECL | |||||||||||||
Reported | (989 | ) | (907 | ) | (121 | ) | (25 | ) | 19 | (2,023 | ) | ||
Adjusted | (989 | ) | (907 | ) | (121 | ) | (25 | ) | 19 | (2,023 | ) | ||
Operating expenses | |||||||||||||
Reported | (11,605 | ) | (5,089 | ) | (7,156 | ) | (1,006 | ) | (440 | ) | (25,296 | ) | |
Significant items | 1,133 | 46 | 166 | (46 | ) | 286 | 1,585 | ||||||
– costs of structural reform | 3 | — | 4 | 37 | — | 85 | 126 | ||||||
– customer redress programmes | 1,083 | 15 | — | — | — | 1,098 | |||||||
– restructuring and other related costs | 50 | 27 | 129 | 20 | 201 | 427 | |||||||
– settlements and provisions in connection with legal and regulatory matters | — | — | — | (66 | ) | — | (66 | ) | |||||
Adjusted | (10,472 | ) | (5,043 | ) | (6,990 | ) | (1,052 | ) | (154 | ) | (23,711 | ) | |
Share of profit in associates and joint ventures | |||||||||||||
Reported | 51 | — | — | — | 1,785 | 1,836 | |||||||
Adjusted | 51 | — | — | — | 1,785 | 1,836 | |||||||
Profit before tax | |||||||||||||
Reported | 4,891 | 5,602 | 3,866 | 365 | 2,520 | 17,244 | |||||||
Significant items | 1,246 | 55 | 199 | (46 | ) | (834 | ) | 620 | |||||
– revenue | 113 | 9 | 33 | — | (1,120 | ) | (965 | ) | |||||
– operating expenses | 1,133 | 46 | 166 | (46 | ) | 286 | 1,585 | ||||||
Adjusted | 6,137 | 5,657 | 4,065 | 319 | 1,686 | 17,864 | |||||||
Loans and advances to customers (net) | |||||||||||||
Reported | 376,312 | 341,339 | 252,462 | 46,132 | 1,588 | 1,017,833 | |||||||
Adjusted | 376,312 | 341,339 | 252,462 | 46,132 | 1,588 | 1,017,833 | |||||||
Customer accounts | |||||||||||||
Reported | 655,592 | 353,037 | 295,900 | 61,464 | 7,748 | 1,373,741 | |||||||
Adjusted | 655,592 | 353,037 | 295,900 | 61,464 | 7,748 | 1,373,741 |
38 | HSBC Holdings plc Earnings Release 3Q19 |
Reconciliation of reported results to adjusted results – global businesses (continued) | |||||||||||||
Nine months ended 30 Sep 2018 | |||||||||||||
Retail Banking and Wealth Management | Commercial Banking | Global Banking and Markets | Global Private Banking | Corporate Centre | Total | ||||||||
Footnotes | $m | $m | $m | $m | $m | $m | |||||||
Revenue | 1 | ||||||||||||
Reported | 16,818 | 11,235 | 12,522 | 1,361 | (851 | ) | 41,085 | ||||||
Currency translation | (532 | ) | (399 | ) | (466 | ) | (27 | ) | (90 | ) | (1,514 | ) | |
Significant items | 7 | (44 | ) | (70 | ) | — | 404 | 297 | |||||
– customer redress programmes | — | (46 | ) | — | — | — | (46 | ) | |||||
– disposal, acquisitions and investment in new businesses | 7 | — | — | — | 135 | 142 | |||||||
– fair value movement on financial instruments | 2 | — | — | (73 | ) | — | 268 | 195 | |||||
– currency translation on significant items | — | 2 | 3 | — | 1 | 6 | |||||||
Adjusted | 16,293 | 10,792 | 11,986 | 1,334 | (537 | ) | 39,868 | ||||||
ECL | |||||||||||||
Reported | (838 | ) | (295 | ) | 90 | 16 | 113 | (914 | ) | ||||
Currency translation | 41 | 21 | 6 | — | — | 68 | |||||||
Adjusted | (797 | ) | (274 | ) | 96 | 16 | 113 | (846 | ) | ||||
Operating expenses | |||||||||||||
Reported | (10,457 | ) | (4,906 | ) | (7,077 | ) | (1,195 | ) | (1,880 | ) | (25,515 | ) | |
Currency translation | 435 | 188 | 272 | 27 | 108 | 1,030 | |||||||
Significant items | 166 | 11 | (81 | ) | 98 | 1,188 | 1,382 | ||||||
– costs of structural reform | 3 | 3 | 5 | 27 | — | 265 | 300 | ||||||
– customer redress programmes | 156 | 6 | — | — | — | 162 | |||||||
– disposals, acquisitions and investment in new businesses | — | — | — | 54 | — | 54 | |||||||
– restructuring and other related costs | — | — | — | 7 | 44 | 51 | |||||||
– settlements and provisions in connection with legal and regulatory matters | 16 | — | (110 | ) | 42 | 892 | 840 | ||||||
– currency translation on significant items | (9 | ) | — | 2 | (5 | ) | (13 | ) | (25 | ) | |||
Adjusted | (9,856 | ) | (4,707 | ) | (6,886 | ) | (1,070 | ) | (584 | ) | (23,103 | ) | |
Share of profit in associates and joint ventures | |||||||||||||
Reported | 21 | — | — | — | 1,957 | 1,978 | |||||||
Currency translation | — | — | — | — | (83 | ) | (83 | ) | |||||
Adjusted | 21 | — | — | — | 1,874 | 1,895 | |||||||
Profit/(loss) before tax | |||||||||||||
Reported | 5,544 | 6,034 | 5,535 | 182 | (661 | ) | 16,634 | ||||||
Currency translation | (56 | ) | (190 | ) | (188 | ) | — | (65 | ) | (499 | ) | ||
Significant items | 173 | (33 | ) | (151 | ) | 98 | 1,592 | 1,679 | |||||
– revenue | 7 | (44 | ) | (70 | ) | — | 404 | 297 | |||||
– operating expenses | 166 | 11 | (81 | ) | 98 | 1,188 | 1,382 | ||||||
Adjusted | 5,661 | 5,811 | 5,196 | 280 | 866 | 17,814 | |||||||
Loans and advances to customers (net) | |||||||||||||
Reported | 356,453 | 332,649 | 250,674 | 39,210 | 2,474 | 981,460 | |||||||
Currency translation | (11,327 | ) | (8,369 | ) | (6,005 | ) | (807 | ) | (122 | ) | (26,630 | ) | |
Adjusted | 345,126 | 324,280 | 244,669 | 38,403 | 2,352 | 954,830 | |||||||
Customer accounts | |||||||||||||
Reported | 636,603 | 352,477 | 285,525 | 63,717 | 7,053 | 1,345,375 | |||||||
Currency translation | (13,959 | ) | (8,826 | ) | (8,583 | ) | (1,652 | ) | (280 | ) | (33,300 | ) | |
Adjusted | 622,644 | 343,651 | 276,942 | 62,065 | 6,773 | 1,312,075 |
HSBC Holdings plc Earnings Release 3Q19 | 39 |
Reconciliation of reported results to adjusted results – global businesses (continued) | |||||||||||||
Quarter ended 30 Sep 2019 | |||||||||||||
Retail Banking and Wealth Management | Commercial Banking | Global Banking and Markets | Global Private Banking | Corporate Centre | Total | ||||||||
Footnotes | $m | $m | $m | $m | $m | $m | |||||||
Revenue | 1 | ||||||||||||
Reported | 5,515 | 3,782 | 3,507 | 472 | 79 | 13,355 | |||||||
Significant items | 113 | 9 | (37 | ) | — | (173 | ) | (88 | ) | ||||
– customer redress programmes | 109 | 9 | — | — | — | 118 | |||||||
– disposals, acquisitions and investment in new businesses | 4 | — | — | — | — | 4 | |||||||
– fair value movement on financial instruments | 2 | — | — | (37 | ) | — | (173 | ) | (210 | ) | |||
Adjusted | 5,628 | 3,791 | 3,470 | 472 | (94 | ) | 13,267 | ||||||
ECL | |||||||||||||
Reported | (449 | ) | (413 | ) | (26 | ) | (6 | ) | 11 | (883 | ) | ||
Adjusted | (449 | ) | (413 | ) | (26 | ) | (6 | ) | 11 | (883 | ) | ||
Operating expenses | |||||||||||||
Reported | (3,966 | ) | (1,765 | ) | (2,249 | ) | (284 | ) | 117 | (8,147 | ) | ||
Significant items | 475 | 19 | 46 | (59 | ) | 118 | 599 | ||||||
– costs of structural reform | 3 | — | — | 8 | — | 27 | 35 | ||||||
– customer redress programmes | 468 | 16 | 4 | — | — | 488 | |||||||
– restructuring and other related costs | 7 | 3 | 34 | 6 | 90 | 140 | |||||||
– settlements and provisions in connection with legal and regulatory matters | — | — | — | (65 | ) | 1 | (64 | ) | |||||
Adjusted | (3,491 | ) | (1,746 | ) | (2,203 | ) | (343 | ) | 235 | (7,548 | ) | ||
Share of profit in associates and joint ventures | |||||||||||||
Reported | 8 | — | — | — | 504 | 512 | |||||||
Adjusted | 8 | — | — | — | 504 | 512 | |||||||
Profit before tax | |||||||||||||
Reported | 1,108 | 1,604 | 1,232 | 182 | 711 | 4,837 | |||||||
Significant items | 588 | 28 | 9 | (59 | ) | (55 | ) | 511 | |||||
– revenue | 113 | 9 | (37 | ) | — | (173 | ) | (88 | ) | ||||
– operating expenses | 475 | 19 | 46 | (59 | ) | 118 | 599 | ||||||
Adjusted | 1,696 | 1,632 | 1,241 | 123 | 656 | 5,348 | |||||||
Loans and advances to customers (net) | |||||||||||||
Reported | 376,312 | 341,339 | 252,462 | 46,132 | 1,588 | 1,017,833 | |||||||
Adjusted | 376,312 | 341,339 | 252,462 | 46,132 | 1,588 | 1,017,833 | |||||||
Customer accounts | |||||||||||||
Reported | 655,592 | 353,037 | 295,900 | 61,464 | 7,748 | 1,373,741 | |||||||
Adjusted | 655,592 | 353,037 | 295,900 | 61,464 | 7,748 | 1,373,741 |
40 | HSBC Holdings plc Earnings Release 3Q19 |
Reconciliation of reported results to adjusted results – global businesses (continued) | |||||||||||||
Quarter ended 30 June 2019 | |||||||||||||
Retail Banking and Wealth Management | Commercial Banking | Global Banking and Markets | Global Private Banking | Corporate Centre | Total | ||||||||
Footnotes | $m | $m | $m | $m | $m | $m | |||||||
Revenue | 1 | ||||||||||||
Reported | 5,948 | 3,895 | 3,621 | 474 | 1,006 | 14,944 | |||||||
Currency translation | (79 | ) | (56 | ) | (46 | ) | (3 | ) | (24 | ) | (208 | ) | |
Significant items | — | — | 17 | — | (872 | ) | (855 | ) | |||||
– disposals, acquisitions and investment in new businesses | — | — | — | — | (827 | ) | (827 | ) | |||||
– fair value movement on financial instruments | 2 | — | — | 17 | — | (45 | ) | (28 | ) | ||||
– currency translation on significant items | — | — | — | — | — | — | |||||||
Adjusted | 5,869 | 3,839 | 3,592 | 471 | 110 | 13,881 | |||||||
ECL | |||||||||||||
Reported | (238 | ) | (247 | ) | (55 | ) | (17 | ) | 2 | (555 | ) | ||
Currency translation | 7 | 3 | (1 | ) | 1 | — | 10 | ||||||
Adjusted | (231 | ) | (244 | ) | (56 | ) | (16 | ) | 2 | (545 | ) | ||
Operating expenses | |||||||||||||
Reported | (4,131 | ) | (1,662 | ) | (2,467 | ) | (370 | ) | (297 | ) | (8,927 | ) | |
Currency translation | 80 | 24 | 45 | 2 | 25 | 176 | |||||||
Significant items | 576 | 22 | 69 | 11 | 122 | 800 | |||||||
– costs of structural reform | 3 | — | 2 | 16 | — | 20 | 38 | ||||||
– customer redress programmes | 559 | (1 | ) | (4 | ) | — | — | 554 | |||||
– restructuring and other related costs | 42 | 22 | 57 | 12 | 104 | 237 | |||||||
– settlements and provisions in connection with legal and regulatory matters | — | — | — | (1 | ) | (1 | ) | (2 | ) | ||||
– currency translation on significant items | (25 | ) | (1 | ) | — | — | (1 | ) | (27 | ) | |||
Adjusted | (3,475 | ) | (1,616 | ) | (2,353 | ) | (357 | ) | (150 | ) | (7,951 | ) | |
Share of profit in associates and joint ventures | |||||||||||||
Reported | 30 | — | — | — | 702 | 732 | |||||||
Currency translation | 2 | — | — | — | (18 | ) | (16 | ) | |||||
Adjusted | 32 | — | — | — | 684 | 716 | |||||||
Profit before tax | |||||||||||||
Reported | 1,609 | 1,986 | 1,099 | 87 | 1,413 | 6,194 | |||||||
Currency translation | 10 | (29 | ) | (2 | ) | — | (17 | ) | (38 | ) | |||
Significant items | 576 | 22 | 86 | 11 | (750 | ) | (55 | ) | |||||
– revenue | — | — | 17 | — | (872 | ) | (855 | ) | |||||
– operating expenses | 576 | 22 | 69 | 11 | 122 | 800 | |||||||
Adjusted | 2,195 | 1,979 | 1,183 | 98 | 646 | 6,101 | |||||||
Loans and advances to customers (net) | |||||||||||||
Reported | 376,126 | 347,387 | 250,790 | 45,806 | 1,523 | 1,021,632 | |||||||
Currency translation | (7,831 | ) | (6,510 | ) | (4,630 | ) | (725 | ) | (46 | ) | (19,742 | ) | |
Adjusted | 368,295 | 340,877 | 246,160 | 45,081 | 1,477 | 1,001,890 | |||||||
Customer accounts | |||||||||||||
Reported | 660,588 | 358,735 | 289,950 | 62,235 | 8,616 | 1,380,124 | |||||||
Currency translation | (10,447 | ) | (6,676 | ) | (6,529 | ) | (1,225 | ) | (321 | ) | (25,198 | ) | |
Adjusted | 650,141 | 352,059 | 283,421 | 61,010 | 8,295 | 1,354,926 |
HSBC Holdings plc Earnings Release 3Q19 | 41 |
Reconciliation of reported results to adjusted results – global businesses (continued) | |||||||||||||
Quarter ended 30 Sep 2018 | |||||||||||||
Retail Banking and Wealth Management | Commercial Banking | Global Banking and Markets | Global Private Banking | Corporate Centre | Total | ||||||||
Footnotes | $m | $m | $m | $m | $m | $m | |||||||
Revenue | 1 | ||||||||||||
Reported | 5,760 | 3,750 | 4,192 | 432 | (336 | ) | 13,798 | ||||||
Currency translation | (136 | ) | (97 | ) | (114 | ) | (5 | ) | (3 | ) | (355 | ) | |
Significant items | — | — | (8 | ) | — | 51 | 43 | ||||||
– fair value movement on financial instruments | 2 | — | — | (8 | ) | — | 51 | 43 | |||||
– currency translation on significant items | — | — | — | — | — | — | |||||||
Adjusted | 5,624 | 3,653 | 4,070 | 427 | (288 | ) | 13,486 | ||||||
ECL | |||||||||||||
Reported | (295 | ) | (240 | ) | (7 | ) | 12 | 23 | (507 | ) | |||
Currency translation | 12 | 3 | (1 | ) | (1 | ) | 5 | 18 | |||||
Adjusted | (283 | ) | (237 | ) | (8 | ) | 11 | 28 | (489 | ) | |||
Operating expenses | |||||||||||||
Reported | (3,437 | ) | (1,625 | ) | (2,375 | ) | (408 | ) | (121 | ) | (7,966 | ) | |
Currency translation | 103 | 43 | 71 | 7 | 37 | 261 | |||||||
Significant items | 61 | 3 | 7 | 56 | 91 | 218 | |||||||
– costs of structural reform | 3 | 2 | 3 | 11 | — | 73 | 89 | ||||||
– customer redress programmes | 62 | — | — | — | — | 62 | |||||||
– disposals, acquisitions and investment in new businesses | — | — | — | 51 | — | 51 | |||||||
– restructuring and other related costs | — | — | — | 7 | 20 | 27 | |||||||
– settlements and provisions in connection with legal and regulatory matters | — | — | (2 | ) | 1 | — | (1 | ) | |||||
– currency translation on significant items | (3 | ) | — | (2 | ) | (3 | ) | (2 | ) | (10 | ) | ||
Adjusted | (3,273 | ) | (1,579 | ) | (2,297 | ) | (345 | ) | 7 | (7,487 | ) | ||
Share of profit in associates and joint ventures | |||||||||||||
Reported | 4 | — | — | — | 593 | 597 | |||||||
Currency translation | — | — | — | — | (15 | ) | (15 | ) | |||||
Adjusted | 4 | — | — | — | 578 | 582 | |||||||
Profit before tax | |||||||||||||
Reported | 2,032 | 1,885 | 1,810 | 36 | 159 | 5,922 | |||||||
Currency translation | (21 | ) | (51 | ) | (44 | ) | 1 | 24 | (91 | ) | |||
Significant items | 61 | 3 | (1 | ) | 56 | 142 | 261 | ||||||
– revenue | — | — | (8 | ) | — | 51 | 43 | ||||||
– operating expenses | 61 | 3 | 7 | 56 | 91 | 218 | |||||||
Adjusted | 2,072 | 1,837 | 1,765 | 93 | 325 | 6,092 | |||||||
Loans and advances to customers (net) | |||||||||||||
Reported | 356,453 | 332,649 | 250,674 | 39,210 | 2,474 | 981,460 | |||||||
Currency translation | (11,327 | ) | (8,369 | ) | (6,005 | ) | (807 | ) | (122 | ) | (26,630 | ) | |
Adjusted | 345,126 | 324,280 | 244,669 | 38,403 | 2,352 | 954,830 | |||||||
Customer accounts | |||||||||||||
Reported | 636,603 | 352,477 | 285,525 | 63,717 | 7,053 | 1,345,375 | |||||||
Currency translation | (13,959 | ) | (8,826 | ) | (8,583 | ) | (1,652 | ) | (280 | ) | (33,300 | ) | |
Adjusted | 622,644 | 343,651 | 276,942 | 62,065 | 6,773 | 1,312,075 |
1 | Net operating income before change in expected credit losses and other credit impairment charges, also referred to as ‘revenue’. |
2 | Includes fair value movements on non-qualifying hedges and DVA on derivative contracts. |
3 | Comprises costs associated with preparations for the UK’s exit from the European Union, costs to establish the UK ring-fenced bank (including the UK ServCo group) and costs associated with establishing an intermediate holding company in Hong Kong. |
42 | HSBC Holdings plc Earnings Release 3Q19 |
Reconciliation of reported and adjusted risk-weighted assets | ||||||||||||
At 30 Sep 2019 | ||||||||||||
Retail Banking and Wealth Management | Commercial Banking | Global Banking and Markets | Global Private Banking | Corporate Centre | Total | |||||||
$bn | $bn | $bn | $bn | $bn | $bn | |||||||
Risk-weighted assets | ||||||||||||
Reported | 127.9 | 317.3 | 276.8 | 16.2 | 127.0 | 865.2 | ||||||
Disposals | — | — | — | — | (0.8 | ) | (0.8 | ) | ||||
– operations in Brazil | — | — | — | — | (0.8 | ) | (0.8 | ) | ||||
Adjusted | 127.9 | 317.3 | 276.8 | 16.2 | 126.2 | 864.4 | ||||||
At 30 Jun 2019 | ||||||||||||
Risk-weighted assets | ||||||||||||
Reported | 129.0 | 327.6 | 284.5 | 16.5 | 128.4 | 886.0 | ||||||
Currency translation | (1.9 | ) | (6.3 | ) | (3.3 | ) | (0.1 | ) | (1.2 | ) | (12.8 | ) |
Disposals | — | — | — | — | (0.8 | ) | (0.8 | ) | ||||
– operations in Brazil | — | — | — | — | (0.8 | ) | (0.8 | ) | ||||
Adjusted | 127.1 | 321.3 | 281.2 | 16.4 | 126.4 | 872.4 | ||||||
At 30 Sep 2018 | ||||||||||||
Risk-weighted assets | ||||||||||||
Reported | 125.0 | 317.1 | 277.5 | 16.3 | 126.8 | 862.7 | ||||||
Currency translation | (2.4 | ) | (7.9 | ) | (3.8 | ) | (0.3 | ) | (0.8 | ) | (15.2 | ) |
Disposals | — | — | — | — | (2.7 | ) | (2.7 | ) | ||||
– operations in Brazil | — | — | — | — | (2.7 | ) | (2.7 | ) | ||||
Adjusted | 122.6 | 309.2 | 273.7 | 16.0 | 123.3 | 844.8 |
Reconciliation of reported results to adjusted results – geographical regions and selected countries/territories | |||||||||||||
Nine months ended 30 Sep 2019 | |||||||||||||
Europe | Asia | MENA | North America | Latin America | Total | ||||||||
Footnotes | $m | $m | $m | $m | $m | $m | |||||||
Revenue | 1 | ||||||||||||
Reported | 2 | 13,481 | 23,174 | 2,946 | 4,984 | 2,579 | 42,727 | ||||||
Significant items | (177 | ) | 20 | (828 | ) | 12 | 8 | (965 | ) | ||||
– customer redress programmes | 118 | — | — | — | — | 118 | |||||||
– disposals, acquisitions and investment in new businesses | — | — | (828 | ) | 4 | 1 | (823 | ) | |||||
– fair value movement on financial instruments | 3 | (295 | ) | 20 | — | 8 | 7 | (260 | ) | ||||
Adjusted | 2 | 13,304 | 23,194 | 2,118 | 4,996 | 2,587 | 41,762 | ||||||
ECL | |||||||||||||
Reported | (810 | ) | (542 | ) | (65 | ) | (140 | ) | (466 | ) | (2,023 | ) | |
Adjusted | (810 | ) | (542 | ) | (65 | ) | (140 | ) | (466 | ) | (2,023 | ) | |
Operating expenses | |||||||||||||
Reported | 2 | (13,633 | ) | (9,795 | ) | (1,052 | ) | (3,799 | ) | (1,454 | ) | (25,296 | ) |
Significant items | 1,434 | 74 | 8 | 52 | 17 | 1,585 | |||||||
– costs of structural reform | 4 | 123 | 3 | — | — | — | 126 | ||||||
– customer redress programmes | 1,098 | — | — | — | — | 1,098 | |||||||
– restructuring and other related costs | 278 | 72 | 8 | 52 | 17 | 427 | |||||||
– settlements and provisions in connection with legal and regulatory matters | (65 | ) | (1 | ) | — | — | — | (66 | ) | ||||
Adjusted | 2 | (12,199 | ) | (9,721 | ) | (1,044 | ) | (3,747 | ) | (1,437 | ) | (23,711 | ) |
Share of profit in associates and joint ventures | |||||||||||||
Reported | 18 | 1,594 | 212 | — | 12 | 1,836 | |||||||
Adjusted | 18 | 1,594 | 212 | — | 12 | 1,836 | |||||||
Profit/(loss) before tax | |||||||||||||
Reported | (944 | ) | 14,431 | 2,041 | 1,045 | 671 | 17,244 | ||||||
Significant items | 1,257 | 94 | (820 | ) | 64 | 25 | 620 | ||||||
– revenue | (177 | ) | 20 | (828 | ) | 12 | 8 | (965 | ) | ||||
– operating expenses | 1,434 | 74 | 8 | 52 | 17 | 1,585 | |||||||
Adjusted | 313 | 14,525 | 1,221 | 1,109 | 696 | 17,864 | |||||||
Loans and advances to customers (net) | |||||||||||||
Reported | 377,153 | 478,015 | 28,091 | 111,963 | 22,611 | 1,017,833 | |||||||
Adjusted | 377,153 | 478,015 | 28,091 | 111,963 | 22,611 | 1,017,833 | |||||||
Customer accounts | |||||||||||||
Reported | 496,874 | 672,557 | 36,768 | 142,781 | 24,761 | 1,373,741 | |||||||
Adjusted | 496,874 | 672,557 | 36,768 | 142,781 | 24,761 | 1,373,741 |
HSBC Holdings plc Earnings Release 3Q19 | 43 |
Reconciliation of reported results to adjusted results – geographical regions and selected countries/territories (continued) | |||||||||||
Nine months ended 30 Sep 2019 | |||||||||||
UK | Hong Kong | Mainland China | US | Mexico | |||||||
Footnotes | $m | $m | $m | $m | $m | ||||||
Revenue | 1 | ||||||||||
Reported | 9,857 | 14,831 | 2,386 | 3,534 | 1,919 | ||||||
Significant items | (177 | ) | 16 | — | 10 | 6 | |||||
– customer redress programmes | 117 | — | — | — | — | ||||||
– disposals, acquisitions and investment in new businesses | — | — | — | 4 | — | ||||||
– fair value movement on financial instruments | 3 | (294 | ) | 16 | — | 6 | 6 | ||||
Adjusted | 9,680 | 14,847 | 2,386 | 3,544 | 1,925 | ||||||
ECL | |||||||||||
Reported | (647 | ) | (341 | ) | (101 | ) | (102 | ) | (346 | ) | |
Adjusted | (647 | ) | (341 | ) | (101 | ) | (102 | ) | (346 | ) | |
Operating expenses | |||||||||||
Reported | (11,321 | ) | (5,083 | ) | (1,565 | ) | (2,954 | ) | (1,029 | ) | |
Significant items | 1,403 | 40 | 2 | 39 | 8 | ||||||
– costs of structural reform | 4 | 86 | 3 | — | — | — | |||||
– customer redress programmes | 1,098 | — | — | — | — | ||||||
– restructuring and other related costs | 219 | 38 | 2 | 39 | 8 | ||||||
– settlements and provisions in connection with legal and regulatory matters | — | (1 | ) | — | — | — | |||||
Adjusted | (9,918 | ) | (5,043 | ) | (1,563 | ) | (2,915 | ) | (1,021 | ) | |
Share of profit in associates and joint ventures | |||||||||||
Reported | 19 | 29 | 1,547 | — | 12 | ||||||
Adjusted | 19 | 29 | 1,547 | — | 12 | ||||||
Profit/(loss) before tax | |||||||||||
Reported | (2,092 | ) | 9,436 | 2,267 | 478 | 556 | |||||
Significant items | 1,226 | 56 | 2 | 49 | 14 | ||||||
– revenue | (177 | ) | 16 | — | 10 | 6 | |||||
– operating expenses | 1,403 | 40 | 2 | 39 | 8 | ||||||
Adjusted | (866 | ) | 9,492 | 2,269 | 527 | 570 | |||||
Loans and advances to customers (net) | |||||||||||
Reported | 289,491 | 307,828 | 41,024 | 65,985 | 19,853 | ||||||
Adjusted | 289,491 | 307,828 | 41,024 | 65,985 | 19,853 | ||||||
Customer accounts | |||||||||||
Reported | 395,536 | 487,347 | 43,111 | 89,742 | 19,938 | ||||||
Adjusted | 395,536 | 487,347 | 43,111 | 89,742 | 19,938 |
44 | HSBC Holdings plc Earnings Release 3Q19 |
Reconciliation of reported results to adjusted results – geographical regions and selected countries/territories (continued) | |||||||||||||
Nine months ended 30 Sep 2018 | |||||||||||||
Europe | Asia | MENA | North America | Latin America | Total | ||||||||
Footnotes | $m | $m | $m | $m | $m | $m | |||||||
Revenue | 1 | ||||||||||||
Reported | 2 | 13,708 | 21,901 | 2,019 | 5,152 | 2,119 | 41,085 | ||||||
Currency translation | 2 | (889 | ) | (314 | ) | (29 | ) | (40 | ) | (302 | ) | (1,514 | ) |
Significant items | 204 | (36 | ) | (1 | ) | 96 | 34 | 297 | |||||
– customer redress programmes | (46 | ) | — | — | — | — | (46 | ) | |||||
– disposals, acquisitions and investment in new businesses | — | — | — | 103 | 39 | 142 | |||||||
– fair value movement on financial instruments | 3 | 246 | (37 | ) | (1 | ) | (7 | ) | (6 | ) | 195 | ||
– currency translation on significant items | 4 | 1 | — | — | 1 | 6 | |||||||
Adjusted | 2 | 13,023 | 21,551 | 1,989 | 5,208 | 1,851 | 39,868 | ||||||
ECL | |||||||||||||
Reported | (187 | ) | (405 | ) | (203 | ) | 264 | (383 | ) | (914 | ) | ||
Currency translation | 13 | 6 | 11 | (1 | ) | 39 | 68 | ||||||
Adjusted | (174 | ) | (399 | ) | (192 | ) | 263 | (344 | ) | (846 | ) | ||
Operating expenses | |||||||||||||
Reported | 2 | (12,798 | ) | (9,263 | ) | (1,009 | ) | (4,907 | ) | (1,352 | ) | (25,515 | ) |
Currency translation | 2 | 641 | 176 | 26 | 23 | 224 | 1,030 | ||||||
Significant items | 403 | 8 | — | 971 | — | 1,382 | |||||||
– costs of structural reform | 4 | 295 | 5 | — | — | — | 300 | ||||||
– customer redress programmes | 162 | — | — | — | — | 162 | |||||||
– disposals, acquisitions and investment in new businesses | 54 | — | — | — | — | 54 | |||||||
– restructuring and other related costs | 40 | 3 | — | 8 | — | 51 | |||||||
– settlements and provisions in connection with legal and regulatory matters | (123 | ) | — | — | 963 | — | 840 | ||||||
– currency translation on significant items | (25 | ) | — | — | — | — | (25 | ) | |||||
Adjusted | 2 | (11,754 | ) | (9,079 | ) | (983 | ) | (3,913 | ) | (1,128 | ) | (23,103 | ) |
Share of profit in associates and joint ventures | |||||||||||||
Reported | 21 | 1,606 | 351 | — | — | 1,978 | |||||||
Currency translation | (1 | ) | (82 | ) | — | — | — | (83 | ) | ||||
Adjusted | 20 | 1,524 | 351 | — | — | 1,895 | |||||||
Profit before tax | |||||||||||||
Reported | 744 | 13,839 | 1,158 | 509 | 384 | 16,634 | |||||||
Currency translation | (236 | ) | (214 | ) | 8 | (18 | ) | (39 | ) | (499 | ) | ||
Significant items | 607 | (28 | ) | (1 | ) | 1,067 | 34 | 1,679 | |||||
– revenue | 204 | (36 | ) | (1 | ) | 96 | 34 | 297 | |||||
– operating expenses | 403 | 8 | — | 971 | — | 1,382 | |||||||
Adjusted | 1,115 | 13,597 | 1,165 | 1,558 | 379 | 17,814 | |||||||
Loans and advances to customers (net) | |||||||||||||
Reported | 380,496 | 444,168 | 28,968 | 106,522 | 21,306 | 981,460 | |||||||
Currency translation | (20,174 | ) | (4,317 | ) | 350 | (883 | ) | (1,606 | ) | (26,630 | ) | ||
Adjusted | 360,322 | 439,851 | 29,318 | 105,639 | 19,700 | 954,830 | |||||||
Customer accounts | |||||||||||||
Reported | 502,369 | 651,772 | 35,997 | 131,078 | 24,159 | 1,345,375 | |||||||
Currency translation | (26,622 | ) | (4,344 | ) | 676 | (946 | ) | (2,064 | ) | (33,300 | ) | ||
Adjusted | 475,747 | 647,428 | 36,673 | 130,132 | 22,095 | 1,312,075 |
HSBC Holdings plc Earnings Release 3Q19 | 45 |
Reconciliation of reported results to adjusted results – geographical regions and selected countries/territories (continued) | |||||||||||
Nine months ended 30 Sep 2018 | |||||||||||
UK | Hong Kong | Mainland China5 | US5 | Mexico5 | |||||||
Footnotes | $m | $m | $m | $m | $m | ||||||
Revenue | 1 | ||||||||||
Reported | 10,726 | 13,870 | 2,228 | 3,652 | 1,698 | ||||||
Currency translation | (710 | ) | 3 | (112 | ) | — | (18 | ) | |||
Significant items | 206 | 11 | (1 | ) | 97 | (4 | ) | ||||
– customer redress programmes | (46 | ) | — | — | — | — | |||||
– disposals, acquisitions and investment in new businesses | — | — | — | 103 | — | ||||||
– fair value movement on financial instruments | 3 | 248 | 11 | (1 | ) | (6 | ) | (4 | ) | ||
– currency translation on significant items | 4 | — | — | — | — | ||||||
Adjusted | 10,222 | 13,884 | 2,115 | 3,749 | 1,676 | ||||||
ECL | |||||||||||
Reported | (112 | ) | (112 | ) | (87 | ) | 222 | (330 | ) | ||
Currency translation | 9 | — | 4 | — | 4 | ||||||
Adjusted | (103 | ) | (112 | ) | (83 | ) | 222 | (326 | ) | ||
Operating expenses | |||||||||||
Reported | (10,130 | ) | (4,831 | ) | (1,427 | ) | (4,018 | ) | (959 | ) | |
Currency translation | 492 | (2 | ) | 72 | — | 10 | |||||
Significant items | 263 | 8 | — | 916 | — | ||||||
– costs of structural reform | 4 | 253 | 5 | — | — | — | |||||
– customer redress programmes | 162 | — | — | — | — | ||||||
– restructuring and other related costs | 32 | 3 | — | 7 | — | ||||||
– settlements and provisions in connection with legal and regulatory matters | (166 | ) | — | — | 908 | — | |||||
– currency translation on significant items | (18 | ) | — | — | 1 | — | |||||
Adjusted | (9,375 | ) | (4,825 | ) | (1,355 | ) | (3,102 | ) | (949 | ) | |
Share of profit in associates and joint ventures | |||||||||||
Reported | 21 | 26 | 1,578 | — | — | ||||||
Currency translation | (1 | ) | — | (82 | ) | — | — | ||||
Adjusted | 20 | 26 | 1,496 | — | — | ||||||
Profit/(loss) before tax | |||||||||||
Reported | 505 | 8,953 | 2,292 | (144 | ) | 409 | |||||
Currency translation | (210 | ) | 1 | (118 | ) | — | (4 | ) | |||
Significant items | 469 | 19 | (1 | ) | 1,013 | (4 | ) | ||||
– revenue | 206 | 11 | (1 | ) | 97 | (4 | ) | ||||
– operating expenses | 263 | 8 | — | 916 | — | ||||||
Adjusted | 764 | 8,973 | 2,173 | 869 | 401 | ||||||
Loans and advances to customers (net) | |||||||||||
Reported | 295,398 | 284,956 | 39,779 | 62,617 | 18,147 | ||||||
Currency translation | (15,608 | ) | (571 | ) | (1,490 | ) | — | (898 | ) | ||
Adjusted | 279,790 | 284,385 | 38,289 | 62,617 | 17,249 | ||||||
Customer accounts | |||||||||||
Reported | 398,920 | 478,214 | 41,489 | 79,699 | 19,044 | ||||||
Currency translation | (21,078 | ) | (958 | ) | (1,554 | ) | — | (943 | ) | ||
Adjusted | 377,842 | 477,256 | 39,935 | 79,699 | 18,101 |
46 | HSBC Holdings plc Earnings Release 3Q19 |
Reconciliation of reported results to adjusted results – geographical regions and selected countries/territories (continued) | |||||||||||||
Quarter ended 30 Sep 2019 | |||||||||||||
Europe | Asia | MENA | North America | Latin America | Total | ||||||||
Footnotes | $m | $m | $m | $m | $m | $m | |||||||
Revenue | 1 | ||||||||||||
Reported | 2 | 4,229 | 7,715 | 703 | 1,619 | 679 | 13,355 | ||||||
Significant items | (70 | ) | (20 | ) | — | 4 | (2 | ) | (88 | ) | |||
– customer redress programmes | 118 | — | — | — | — | 118 | |||||||
– disposals, acquisitions and investment in new businesses | — | — | — | 4 | — | 4 | |||||||
– fair value movement on financial instruments | 3 | (188 | ) | (20 | ) | — | — | (2 | ) | (210 | ) | ||
Adjusted | 2 | 4,159 | 7,695 | 703 | 1,623 | 677 | 13,267 | ||||||
ECL | |||||||||||||
Reported | (274 | ) | (282 | ) | (16 | ) | (80 | ) | (231 | ) | (883 | ) | |
Adjusted | (274 | ) | (282 | ) | (16 | ) | (80 | ) | (231 | ) | (883 | ) | |
Operating expenses | |||||||||||||
Reported | 2 | (4,389 | ) | (3,305 | ) | (358 | ) | (1,240 | ) | (445 | ) | (8,147 | ) |
Significant items | 546 | 27 | 3 | 18 | 5 | 599 | |||||||
– costs of structural reform | 4 | 33 | 2 | — | — | — | 35 | ||||||
– customer redress programmes | 488 | — | — | — | — | 488 | |||||||
– restructuring and other related costs | 89 | 25 | 3 | 18 | 5 | 140 | |||||||
– settlements and provisions in connection with legal and regulatory matters | (64 | ) | — | — | — | — | (64 | ) | |||||
Adjusted | 2 | (3,843 | ) | (3,278 | ) | (355 | ) | (1,222 | ) | (440 | ) | (7,548 | ) |
Share of profit in associates and joint ventures | |||||||||||||
Reported | 10 | 523 | (24 | ) | — | 3 | 512 | ||||||
Adjusted | 10 | 523 | (24 | ) | — | 3 | 512 | ||||||
Profit/(loss) before tax | |||||||||||||
Reported | (424 | ) | 4,651 | 305 | 299 | 6 | 4,837 | ||||||
Significant items | 476 | 7 | 3 | 22 | 3 | 511 | |||||||
– revenue | (70 | ) | (20 | ) | — | 4 | (2 | ) | (88 | ) | |||
– operating expenses | 546 | 27 | 3 | 18 | 5 | 599 | |||||||
Adjusted | 52 | 4,658 | 308 | 321 | 9 | 5,348 | |||||||
Loans and advances to customers (net) | |||||||||||||
Reported | 377,153 | 478,015 | 28,091 | 111,963 | 22,611 | 1,017,833 | |||||||
Adjusted | 377,153 | 478,015 | 28,091 | 111,963 | 22,611 | 1,017,833 | |||||||
Customer accounts | |||||||||||||
Reported | 496,874 | 672,557 | 36,768 | 142,781 | 24,761 | 1,373,741 | |||||||
Adjusted | 496,874 | 672,557 | 36,768 | 142,781 | 24,761 | 1,373,741 |
HSBC Holdings plc Earnings Release 3Q19 | 47 |
Reconciliation of reported results to adjusted results – geographical regions and selected countries/territories (continued) | |||||||||||
Quarter ended 30 Sep 2019 | |||||||||||
UK | Hong Kong | Mainland China | US | Mexico | |||||||
Footnotes | $m | $m | $m | $m | $m | ||||||
Revenue | 1 | ||||||||||
Reported | 3,099 | 4,896 | 788 | 1,136 | 648 | ||||||
Significant items | (67 | ) | (13 | ) | (1 | ) | 3 | (1 | ) | ||
– customer redress programmes | 117 | — | — | — | — | ||||||
– disposals, acquisitions and investment in new businesses | — | — | — | 4 | — | ||||||
– fair value movement on financial instruments | 3 | (184 | ) | (13 | ) | (1 | ) | (1 | ) | (1 | ) |
Adjusted | 3,032 | 4,883 | 787 | 1,139 | 647 | ||||||
ECL | |||||||||||
Reported | (218 | ) | (207 | ) | (34 | ) | (66 | ) | (148 | ) | |
Adjusted | (218 | ) | (207 | ) | (34 | ) | (66 | ) | (148 | ) | |
Operating expenses | |||||||||||
Reported | (3,731 | ) | (1,678 | ) | (527 | ) | (965 | ) | (343 | ) | |
Significant items | 593 | 19 | — | 13 | 3 | ||||||
– costs of structural reform | 4 | 27 | 2 | — | — | — | |||||
– customer redress programmes | 488 | — | — | — | — | ||||||
– restructuring and other related costs | 77 | 17 | — | 13 | 3 | ||||||
– settlements and provisions in connection with legal and regulatory matters | 1 | — | — | — | — | ||||||
Adjusted | (3,138 | ) | (1,659 | ) | (527 | ) | (952 | ) | (340 | ) | |
Share of profit in associates and joint ventures | |||||||||||
Reported | 11 | 6 | 516 | — | 3 | ||||||
Adjusted | 11 | 6 | 516 | — | 3 | ||||||
Profit/(loss) before tax | |||||||||||
Reported | (839 | ) | 3,017 | 743 | 105 | 160 | |||||
Significant items | 526 | 6 | (1 | ) | 16 | 2 | |||||
– revenue | (67 | ) | (13 | ) | (1 | ) | 3 | (1 | ) | ||
– operating expenses | 593 | 19 | — | 13 | 3 | ||||||
Adjusted | (313 | ) | 3,023 | 742 | 121 | 162 | |||||
Loans and advances to customers (net) | |||||||||||
Reported | 289,491 | 307,828 | 41,024 | 65,985 | 19,853 | ||||||
Adjusted | 289,491 | 307,828 | 41,024 | 65,985 | 19,853 | ||||||
Customer accounts | |||||||||||
Reported | 395,536 | 487,347 | 43,111 | 89,742 | 19,938 | ||||||
Adjusted | 395,536 | 487,347 | 43,111 | 89,742 | 19,938 |
48 | HSBC Holdings plc Earnings Release 3Q19 |
Reconciliation of reported to adjusted results – geographical regions and selected countries/territories (continued) | |||||||||||||
Quarter ended 30 Jun 2019 | |||||||||||||
Europe | Asia | MENA | North America | Latin America | Total | ||||||||
Footnotes | $m | $m | $m | $m | $m | $m | |||||||
Revenue | 1 | ||||||||||||
Reported | 2 | 4,647 | 7,640 | 1,541 | 1,689 | 929 | 14,944 | ||||||
Currency translation | 2 | (159 | ) | (28 | ) | 7 | 5 | (43 | ) | (208 | ) | ||
Significant items | (48 | ) | 13 | (828 | ) | 4 | 4 | (855 | ) | ||||
– disposals, acquisitions and investment in new businesses | — | — | (828 | ) | — | 1 | (827 | ) | |||||
– fair value movement on financial instruments | 3 | (47 | ) | 13 | — | 4 | 2 | (28 | ) | ||||
– currency translation on significant items | (1 | ) | — | — | — | 1 | — | ||||||
Adjusted | 2 | 4,440 | 7,625 | 720 | 1,698 | 890 | 13,881 | ||||||
ECL | |||||||||||||
Reported | (233 | ) | (102 | ) | (43 | ) | (57 | ) | (120 | ) | (555 | ) | |
Currency translation | 4 | 1 | — | — | 5 | 10 | |||||||
Adjusted | (229 | ) | (101 | ) | (43 | ) | (57 | ) | (115 | ) | (545 | ) | |
Operating expenses | |||||||||||||
Reported | 2 | (4,926 | ) | (3,359 | ) | (349 | ) | (1,265 | ) | (530 | ) | (8,927 | ) |
Currency translation | 2 | 148 | 19 | (2 | ) | (3 | ) | 24 | 176 | ||||
Significant items | 719 | 39 | 4 | 30 | 8 | 800 | |||||||
– costs of structural reform | 4 | 38 | — | — | — | — | 38 | ||||||
– customer redress programmes | 554 | — | — | — | — | 554 | |||||||
– restructuring and other related costs | 154 | 41 | 4 | 29 | 9 | 237 | |||||||
– settlements and provisions in connection with legal and regulatory matters | (1 | ) | (1 | ) | — | — | — | (2 | ) | ||||
– currency translation on significant items | (26 | ) | (1 | ) | — | 1 | (1 | ) | (27 | ) | |||
Adjusted | 2 | (4,059 | ) | (3,301 | ) | (347 | ) | (1,238 | ) | (498 | ) | (7,951 | ) |
Share of profit in associates and joint ventures | |||||||||||||
Reported | 6 | 595 | 122 | — | 9 | 732 | |||||||
Currency translation | (1 | ) | (15 | ) | — | — | — | (16 | ) | ||||
Adjusted | 5 | 580 | 122 | — | 9 | 716 | |||||||
Profit/(loss) before tax | |||||||||||||
Reported | (506 | ) | 4,774 | 1,271 | 367 | 288 | 6,194 | ||||||
Currency translation | (8 | ) | (23 | ) | 5 | 2 | (14 | ) | (38 | ) | |||
Significant items | 671 | 52 | (824 | ) | 34 | 12 | (55 | ) | |||||
– revenue | (48 | ) | 13 | (828 | ) | 4 | 4 | (855 | ) | ||||
– operating expenses | 719 | 39 | 4 | 30 | 8 | 800 | |||||||
Adjusted | 157 | 4,803 | 452 | 403 | 286 | 6,101 | |||||||
Loans and advances to customers (net) | |||||||||||||
Reported | 383,363 | 473,627 | 28,509 | 112,693 | 23,440 | 1,021,632 | |||||||
Currency translation | (12,791 | ) | (5,366 | ) | 114 | (487 | ) | (1,212 | ) | (19,742 | ) | ||
Adjusted | 370,572 | 468,261 | 28,623 | 112,206 | 22,228 | 1,001,890 | |||||||
Customer accounts | |||||||||||||
Reported | 504,386 | 677,289 | 36,593 | 135,400 | 26,456 | 1,380,124 | |||||||
Currency translation | (16,686 | ) | (6,368 | ) | 194 | (520 | ) | (1,818 | ) | (25,198 | ) | ||
Adjusted | 487,700 | 670,921 | 36,787 | 134,880 | 24,638 | 1,354,926 |
HSBC Holdings plc Earnings Release 3Q19 | 49 |
Reconciliation of reported to adjusted results – geographical regions and selected countries/territories (continued) | |||||||||||
Quarter ended 30 Jun 2019 | |||||||||||
UK | Hong Kong | Mainland China | US | Mexico | |||||||
Footnotes | $m | $m | $m | $m | $m | ||||||
Revenue | 1 | ||||||||||
Reported | 3,257 | 4,915 | 792 | 1,206 | 614 | ||||||
Currency translation | (151 | ) | 6 | (21 | ) | (1 | ) | (10 | ) | ||
Significant items | (47 | ) | 8 | — | 3 | 2 | |||||
– fair value movement on financial instruments | 3 | (46 | ) | 7 | — | 4 | 2 | ||||
– currency translation on significant items | (1 | ) | 1 | — | (1 | ) | — | ||||
Adjusted | 3,059 | 4,929 | 771 | 1,208 | 606 | ||||||
ECL | |||||||||||
Reported | (139 | ) | (34 | ) | (27 | ) | (26 | ) | (100 | ) | |
Currency translation | 5 | — | (1 | ) | 1 | 2 | |||||
Adjusted | (134 | ) | (34 | ) | (28 | ) | (25 | ) | (98 | ) | |
Operating expenses | |||||||||||
Reported | (4,139 | ) | (1,733 | ) | (539 | ) | (978 | ) | (352 | ) | |
Currency translation | 143 | (2 | ) | 14 | — | 6 | |||||
Significant items | 671 | 13 | 2 | 23 | 3 | ||||||
– costs of structural reform | 4 | 26 | — | — | — | — | |||||
– customer redress programmes | 554 | — | — | — | — | ||||||
– restructuring and other related costs | 118 | 15 | 2 | 23 | 3 | ||||||
– settlements and provisions in connection with legal and regulatory matters | (1 | ) | (1 | ) | — | — | — | ||||
– currency translation on significant items | (26 | ) | (1 | ) | — | — | — | ||||
Adjusted | (3,325 | ) | (1,722 | ) | (523 | ) | (955 | ) | (343 | ) | |
Share of profit in associates and joint ventures | |||||||||||
Reported | 5 | 17 | 570 | — | 9 | ||||||
Currency translation | (1 | ) | 1 | (15 | ) | — | — | ||||
Adjusted | 4 | 18 | 555 | — | 9 | ||||||
Profit/(loss) before tax | |||||||||||
Reported | (1,016 | ) | 3,165 | 796 | 202 | 171 | |||||
Currency translation | (4 | ) | 5 | (23 | ) | — | (2 | ) | |||
Significant items | 624 | 21 | 2 | 26 | 5 | ||||||
– revenue | (47 | ) | 8 | — | 3 | 2 | |||||
– operating expenses | 671 | 13 | 2 | 23 | 3 | ||||||
Adjusted | (396 | ) | 3,191 | 775 | 228 | 174 | |||||
Loans and advances to customers (net) | |||||||||||
Reported | 291,955 | 304,431 | 42,657 | 67,039 | 20,135 | ||||||
Currency translation | (9,113 | ) | (1,168 | ) | (1,634 | ) | 2 | (552 | ) | ||
Adjusted | 282,842 | 303,263 | 41,023 | 67,041 | 19,583 | ||||||
Customer accounts | |||||||||||
Reported | 398,857 | 487,948 | 45,409 | 82,260 | 20,437 | ||||||
Currency translation | (12,447 | ) | (1,867 | ) | (1,739 | ) | — | (553 | ) | ||
Adjusted | 386,410 | 486,081 | 43,670 | 82,260 | 19,884 |
50 | HSBC Holdings plc Earnings Release 3Q19 |
Reconciliation of reported to adjusted results – geographical regions and selected countries/territories (continued) | |||||||||||||
Quarter ended 30 Sep 2018 | |||||||||||||
Europe | Asia | MENA | North America | Latin America | Total | ||||||||
Footnotes | $m | $m | $m | $m | $m | $m | |||||||
Revenue | 1 | ||||||||||||
Reported | 2 | 4,837 | 7,389 | 663 | 1,740 | 523 | 13,798 | ||||||
Currency translation | 2 | (270 | ) | (34 | ) | 8 | (5 | ) | (68 | ) | (355 | ) | |
Significant items | 58 | (16 | ) | 1 | — | — | 43 | ||||||
– fair value movement on financial instruments | 3 | 59 | (17 | ) | 1 | — | — | 43 | |||||
– currency translation on significant items | (1 | ) | 1 | — | — | — | — | ||||||
Adjusted | 2 | 4,625 | 7,339 | 672 | 1,735 | 455 | 13,486 | ||||||
ECL | |||||||||||||
Reported | — | (289 | ) | (100 | ) | 30 | (148 | ) | (507 | ) | |||
Currency translation | — | — | — | — | 18 | 18 | |||||||
Adjusted | — | (289 | ) | (100 | ) | 30 | (130 | ) | (489 | ) | |||
Operating expenses | |||||||||||||
Reported | 2 | (4,206 | ) | (3,153 | ) | (323 | ) | (1,303 | ) | (335 | ) | (7,966 | ) |
Currency translation | 2 | 184 | 21 | (2 | ) | 2 | 70 | 261 | |||||
Significant items | 206 | 7 | — | 5 | — | 218 | |||||||
– costs of structural reform | 4 | 86 | 3 | — | — | — | 89 | ||||||
– customer redress programmes | 62 | — | — | — | — | 62 | |||||||
– disposals, acquisitions and investment in new businesses | 51 | — | — | — | — | 51 | |||||||
– restructuring and other related costs | 19 | 3 | — | 5 | — | 27 | |||||||
– settlements and provisions in connection with legal and regulatory matters | (3 | ) | 2 | — | — | — | (1 | ) | |||||
– currency translation on significant items | (9 | ) | (1 | ) | — | — | — | (10 | ) | ||||
Adjusted | 2 | (3,816 | ) | (3,125 | ) | (325 | ) | (1,296 | ) | (265 | ) | (7,487 | ) |
Share of profit in associates and joint ventures | |||||||||||||
Reported | 3 | 512 | 82 | — | — | 597 | |||||||
Currency translation | — | (15 | ) | — | — | — | (15 | ) | |||||
Adjusted | 3 | 497 | 82 | — | — | 582 | |||||||
Profit before tax | |||||||||||||
Reported | 634 | 4,459 | 322 | 467 | 40 | 5,922 | |||||||
Currency translation | (86 | ) | (28 | ) | 6 | (3 | ) | 20 | (91 | ) | |||
Significant items | 264 | (9 | ) | 1 | 5 | — | 261 | ||||||
– revenue | 58 | (16 | ) | 1 | — | — | 43 | ||||||
– operating expenses | 206 | 7 | — | 5 | — | 218 | |||||||
Adjusted | 812 | 4,422 | 329 | 469 | 60 | 6,092 | |||||||
Loans and advances to customers (net) | |||||||||||||
Reported | 380,496 | 444,168 | 28,968 | 106,522 | 21,306 | 981,460 | |||||||
Currency translation | (20,174 | ) | (4,317 | ) | 350 | (883 | ) | (1,606 | ) | (26,630 | ) | ||
Adjusted | 360,322 | 439,851 | 29,318 | 105,639 | 19,700 | 954,830 | |||||||
Customer accounts | |||||||||||||
Reported | 502,369 | 651,772 | 35,997 | 131,078 | 24,159 | 1,345,375 | |||||||
Currency translation | (26,622 | ) | (4,344 | ) | 676 | (946 | ) | (2,064 | ) | (33,300 | ) | ||
Adjusted | 475,747 | 647,428 | 36,673 | 130,132 | 22,095 | 1,312,075 |
HSBC Holdings plc Earnings Release 3Q19 | 51 |
Reconciliation of reported results to adjusted results – geographical regions and selected countries/territories (continued) | |||||||||||
Quarter ended 30 Sep 2018 | |||||||||||
UK | Hong Kong | Mainland China5 | US5 | Mexico5 | |||||||
Footnotes | $m | $m | $m | $m | $m | ||||||
Revenue | 1 | ||||||||||
Reported | 3,913 | 4,715 | 769 | 1,230 | 590 | ||||||
Currency translation | (234 | ) | 10 | (22 | ) | — | (14 | ) | |||
Significant items | 59 | 3 | — | — | — | ||||||
– fair value movement on financial instruments | 3 | 59 | 4 | — | — | — | |||||
– currency translation on significant items | — | (1 | ) | — | — | — | |||||
Adjusted | 3,738 | 4,728 | 747 | 1,230 | 576 | ||||||
ECL | |||||||||||
Reported | 44 | (92 | ) | (52 | ) | 25 | (135 | ) | |||
Currency translation | (2 | ) | — | 1 | — | 3 | |||||
Adjusted | 42 | (92 | ) | (51 | ) | 25 | (132 | ) | |||
Operating expenses | |||||||||||
Reported | (3,362 | ) | (1,652 | ) | (480 | ) | (1,029 | ) | (314 | ) | |
Currency translation | 152 | (3 | ) | 14 | — | 8 | |||||
Significant items | 138 | 7 | — | 4 | — | ||||||
– costs of structural reform | 4 | 75 | 3 | — | — | — | |||||
– customer redress programmes | 62 | — | — | — | — | ||||||
– restructuring and other related costs | 11 | 3 | — | 4 | — | ||||||
– settlements and provisions in connection with legal and regulatory matters | (2 | ) | 1 | — | — | — | |||||
– currency translation on significant items | (8 | ) | — | — | — | — | |||||
Adjusted | (3,072 | ) | (1,648 | ) | (466 | ) | (1,025 | ) | (306 | ) | |
Share of profit in associates and joint ventures | |||||||||||
Reported | 3 | 6 | 505 | — | — | ||||||
Currency translation | — | (1 | ) | (15 | ) | — | — | ||||
Adjusted | 3 | 5 | 490 | — | — | ||||||
Profit before tax | |||||||||||
Reported | 598 | 2,977 | 742 | 226 | 141 | ||||||
Currency translation | (84 | ) | 6 | (22 | ) | — | (3 | ) | |||
Significant items | 197 | 10 | — | 4 | — | ||||||
– revenue | 59 | 3 | — | — | — | ||||||
– operating expenses | 138 | 7 | — | 4 | — | ||||||
Adjusted | 711 | 2,993 | 720 | 230 | 138 | ||||||
Loans and advances to customers (net) | |||||||||||
Reported | 295,398 | 284,956 | 39,779 | 62,617 | 18,147 | ||||||
Currency translation | (15,608 | ) | (571 | ) | (1,490 | ) | — | (898 | ) | ||
Adjusted | 279,790 | 284,385 | 38,289 | 62,617 | 17,249 | ||||||
Customer accounts | |||||||||||
Reported | 398,920 | 478,214 | 41,489 | 79,699 | 19,044 | ||||||
Currency translation | (21,078 | ) | (958 | ) | (1,554 | ) | — | (943 | ) | ||
Adjusted | 377,842 | 477,256 | 39,935 | 79,699 | 18,101 |
1 | Net operating income before change in expected credit losses and other credit impairment charges, also referred to as ‘revenue’. |
2 | Amounts are non-additive across geographical regions due to intra-Group transactions. |
3 | Includes fair value movements on non-qualifying hedges and DVA on derivative contracts. |
4 | Comprises costs associated with preparations for the UK’s exit from the European Union, costs to establish the UK ring-fenced bank (including the UK ServCo group) and costs associated with establishing an intermediate holding company in Hong Kong. |
5 | 9M18 and 3Q18 comparative data has been re-presented from the previously disclosed to align the basis of presentation to the correct reporting period. |
52 | HSBC Holdings plc Earnings Release 3Q19 |
Third interim dividend for 2019 |
* | Non-executive Group Chairman |
† | Independent non-executive Director |
HSBC Holdings plc Earnings Release 3Q19 | 53 |
Terms and abbreviations |
3Q19 | Third quarter of 2019 |
2Q19 | Second quarter of 2019 |
3Q18 | Third quarter of 2018 |
9M19 | Nine months to 30 September 2019 |
9M18 | Nine months to 30 September 2018 |
ADS | American Depositary Share |
AIEA | Average interest-earning assets |
BoCom | Bank of Communications Co., Limited, one of China’s largest banks |
Bps | Basis points. One basis point is equal to one-hundredth of a percentage point |
BSM | Balance Sheet Management |
C&L | Credit and Lending |
CET1 | Common equity tier 1 |
CMB | Commercial Banking, a global business |
CODM | Chief Operating Decision Maker |
Corporate Centre | Corporate Centre comprises Central Treasury, including Balance Sheet Management, our legacy businesses, interests in our associates and joint ventures, central stewardship costs and the UK bank levy |
CRD IV | Capital Requirements Regulation and Directive |
CRR | Customer risk rating |
CRR II | Revisions to the Capital Requirements Regulation |
DPD | Days past due |
D-SIB | Domestic systemically important bank |
DVA | Debit value adjustments |
EBA | European Banking Authority |
ECL | Expected credit losses. In the income statement, ECL is recorded as a change in expected credit losses and other credit impairment charges. In the balance sheet, ECL is recorded as an allowance for financial instruments to which only the impairment requirements in IFRS 9 are applied |
FVOCI | Fair value through other comprehensive income |
GB&M | Global Banking and Markets, a global business |
GLCM | Global Liquidity and Cash Management |
GMB | Group Management Board |
GPB | Global Private Banking, a global business |
Group | HSBC Holdings together with its subsidiary undertakings |
G-SIB | Global systemically important bank |
GTRF | Global Trade and Receivables Finance |
Hong Kong | Hong Kong Special Administrative Region of the People’s Republic of China |
HSBC | HSBC Holdings together with its subsidiary undertakings |
HSBC Bank | HSBC Bank plc |
HSBC Holdings | HSBC Holdings plc, the parent company of HSBC |
HSBC UK | HSBC UK Bank plc |
IAS | International Accounting Standards |
IFRSs | International Financial Reporting Standards |
IMA | Internal models approach |
IMM | Internal model method |
IRB | Internal ratings based |
IRC | Incremental risk charge |
Jaws | Adjusted jaws measures the difference between the rates of change in adjusted revenue and adjusted operating expenses |
JV | Joint venture |
LCR | Liquidity coverage ratio |
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 |
Mainland China | People’s Republic of China excluding Hong Kong |
MENA | Middle East and North Africa |
MREL | EU minimum requirements for own funds and eligible liabilities |
Net operating income | Net operating income before change in expected credit losses and other credit impairment charges/Loan impairment charges and other credit provisions, also referred to as revenue |
NIM | Net interest margin |
PBT | Profit before tax |
PD | Probability of default |
POCI | Purchased or originated credit-impaired |
PPI | Payment protection insurance |
PRA | Prudential Regulation Authority (UK) |
RBWM | Retail Banking and Wealth Management, a global business |
Revenue | Net operating income before ECL |
RoE | Return on average ordinary shareholders’ equity |
RoTE | Return on average tangible equity |
RWAs | Risk-weighted assets |
SABB | The Saudi British Bank |
ServCo group | Separately incorporated group of service companies set up in response to UK ring-fencing proposals |
TLAC | Total loss-absorbing capacity |
$m/$bn/$tn | United States dollar millions/billions/trillions. We report in US dollars |
VaR | Value at risk |
54 | HSBC Holdings plc Earnings Release 3Q19 |
HSBC Holdings plc | |
By: | /s/ Ewen Stevenson |
Name: Ewen Stevenson | |
Title: Group Chief Financial Officer |