FORM 6-K
 
SECURITIES AND EXCHANGE COMMISSION
 
Washington, D.C. 20549
 
 
 
Report of Foreign Private Issuer
 
Pursuant to Rule 13a - 16 or 15d - 16 of
 
the Securities Exchange Act of 1934
 
 
 
For the month of October
 
HSBC Holdings plc
 
42nd Floor, 8 Canada Square, London E14 5HQ, England
 
(Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F).
 
Form 20-F X Form 40-F  
 
(Indicate by check mark whether the registrant by furnishing the information contained in this Form is also thereby furnishing the information to the Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934).
 
Yes  No X
 
(If "Yes" is marked, indicate below the file number assigned to the registrant in connection with Rule 12g3-2(b): 82-   ).
 
 
 
HSBC HOLDINGS PLC
 
3Q17 EARNINGS RELEASE - HIGHLIGHTS
 
 
Strategic execution
 
 
Completed 71% of the buy-back announced in July 2017, at 26 October
 
 
 
Further $13bn of RWA reductions in 3Q17, bringing the total reduction since the start of 2015 to $309bn
 
 
 
Achieved annualised run-rate savings of $5.2bn since our investor update, and remain committed to delivering positive adjusted jaws for 2017
 
 
 
Continue to make good progress with actions to deploy capital and invest:
 
 
 
-
Delivered growth from our international network with a 7% increase in transaction banking product revenue and a 14% rise in revenue synergies between global businesses compared with 9M16
 
 
 
-
Pivot to Asia generating returns and driving over 70% of Group adjusted profit in 9M17; 17% lending growth vs. 3Q16
 
 
 
-
Lending growth in Guangdong of $1.1bn vs. 3Q16
 
 
 
-
Maintained momentum in Asian Insurance and Asset Management, with annualised new business premiums and AuM up 13% and 17%, respectively, compared with 9M16
 
Stuart Gulliver, Group Chief Executive, said:
"We maintained good momentum in the third quarter, with higher revenue in our three main global businesses. We also continued to make good progress with the strategic actions we set out in 2015. Our international network continued to deliver strong growth in the third quarter, and our pivot to Asia is driving higher returns and lending growth, particularly in Hong Kong."
 
Financial performance
 
 
Reported profit before tax for 9M17 of $14.9bn was $4.3bn or 41% higher than for 9M16, in part reflecting favourable movements in significant items, which included a loss on sale and trading results of the operations in Brazil that we sold on 1 July 2016; adjusted profit before tax of $17.4bn was $1.2bn or 8% higher than in 9M16, reflecting revenue growth, notably in RBWM and GB&M, and lower LICs, which were partly offset by an increase in operating expenses.
 
 
 
Reported revenue for 9M17 of $39.1bn was $0.2bn higher, as growth was partly offset by an adverse impact of foreign currency translation; adjusted revenue of $39.1bn increased by $1.1bn or 3%, reflecting higher revenue in RBWM and CMB due to higher average deposit balances and wider spreads in Asia, and higher revenue in GB&M across all of our businesses, which were partly offset by lower revenue in Corporate Centre and GPB.
 
 
 
Reported operating expenses for 9M17 of $25.0bn were $2.4bn or 9% lower due to a decrease in significant items; adjusted operating expenses of $22.4bn were $0.9bn or 4% higher, reflecting an increase in performance-related pay and investments in business growth programmes. The impact of our cost-saving initiatives broadly offset inflation and continuing investment in regulatory and compliance programmes.
 
 
 
Adjusted jaws for 9M17 was negative 1.3%.
 
 
 
Reported profit before tax for 3Q17 of $4.6bn was up $3.8bn compared with 3Q16, reflecting the net favourable effects of significant items; adjusted profit before tax of $5.4bn fell by $0.1bn. Compared with 2Q17, reported and adjusted profit before tax both fell by $0.7bn. Lower reported profit before tax reflected higher operating expenses, while the reduction in adjusted profit before tax reflected lower revenue in Corporate Centre and GB&M, as well as an increase in operating expenses.
 
 
 
Our capital base remained strong, with a common equity tier 1 ('CET1') ratio of 14.6% and a leverage ratio of 5.7%.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Financial highlights and key ratios
Nine months ended 30 Sep
Quarter ended 30 Sep
 
2017
 
2016
 
Change
2017
 
2016
 
Change
 
 
$m
 
$m
 
%
$m
 
$m
 
%
 
Reported PBT
14,863
 
10,557
 
41
4,620
 
843
 
448
 
Adjusted PBT
17,410
 
16,167
 
8
5,443
 
5,521
 
(1
)
Return on average ordinary shareholders' equity (annualised)
8.2%
 
4.4%
 
86.4
7.1%
 
(1.4)%
 
 
 
Adjusted jaws
(1.3)%
 
 
 
(4.9)%
 
 
 
 
We use adjusted performance to understand the underlying trends in the business. The main differences between reported and adjusted figures are foreign currency translation and significant items, as explained in 'Adjusted performance'.
 
 
 
 
 
 
 
 
 
Capital and balance sheet
At
 
30 Sep 2017
 
30 Jun 2017
 
31 Dec 2016
 
 
%
 
%
 
%
 
Common equity tier 1 ratio1
14.6
 
14.7
 
13.6
 
Leverage ratio
5.7
 
5.7
 
5.4
 
 
$m
 
$m
 
$m
 
Loans and advances to customers
945,168
 
919,838
 
861,504
 
Customer accounts
1,337,121
 
1,311,958
 
1,272,386
 
Risk-weighted assets1
888,628
 
876,118
 
857,181
 
 
 
 
1
Unless otherwise stated, risk-weighted assets and capital are calculated and presented on a transitional CRD IV basis as implemented in the UK by the Prudential Regulation Authority.
 
 
 
 
HSBC Holdings plc  Earnings Release 3Q17
1
 
Earnings Release - 3Q17
 
 
 
 
 
 
 
 
 
 
 
Table of contents
 
Page
 
 
 
Page
 
Highlights
1
 
 
Summary information - global businesses
21
 
Group Chief Executive's review
3
 
 
Summary information - geographical regions
24
 
Adjusted performance
4
 
 
Appendix - selected information
26
 
Financial performance commentary
6
 
 
- Reconciliation of reported and adjusted results - global businesses
26
 
Cautionary statement regarding forward-looking statements
14
 
 
- Reconciliation of reported and adjusted risk-weighted assets
31
 
Summary consolidated income statement
15
 
 
 
- Reconciliation of reported and adjusted results - geographical regions
32
 
Summary consolidated balance sheet
16
 
 
Capital
17
 
 
Gross loans and advances by industry sector and geographical region
37
 
Risk-weighted assets
17
 
 
Terms and abbreviations
38
 
Leverage
20
 
 
 
 
 
 
 
HSBC Holdings plc - Earnings Release
HSBC Holdings plc will be conducting a trading update conference call with analysts and investors today to coincide with the publication of its Earnings Release. The call will take place at 07.30am GMT. Details of how to participate in the call and the live audio webcast can be found at www.hsbc.com/investor-relations.
 
Note to editors
HSBC Holdings plc
HSBC Holdings plc, the parent company of HSBC, is headquartered in London. HSBC serves customers worldwide from approximately 3,900 offices in 67 countries and territories in our geographical regions: Europe, Asia, North America, Latin America, and Middle East and North Africa. With assets of $2,526bn at 30 September 2017, HSBC is one of the world's largest banking and financial services organisations.
 
 
 
 
2
HSBC Holdings plc  Earnings Release 3Q17
 
 
 
Review by Stuart Gulliver, Group Chief Executive
Business performance
Our businesses carried good momentum from the first half of the year into the third quarter. Reported profits were significantly higher than last year's third quarter, in part reflecting the non-recurrence of a number of significant items. Growth in loans and advances translated into higher adjusted revenue in all three main global businesses compared with 3Q16, and our strong year-to-date revenue performance enabled us to accelerate investment in business growth. This contributed to an increase in operating expenses, which kept adjusted profits broadly stable relative to the same period last year.
Retail Banking and Wealth Management had a good quarter, with strong revenue growth from current accounts, savings and deposits, and further growth in loans and deposits in Hong Kong, the UK and Mexico. Commercial Banking benefited from another strong revenue performance from Global Liquidity and Cash Management, particularly in Asia. Global Banking and Markets continued to grow revenue despite a challenging quarter for the industry, demonstrating again the benefit of its differentiated business model. It achieved this largely through growth in Global Liquidity and Cash Management, Equities and Securities Services, which exceeded the impact of subdued market activity on our banking and fixed income businesses.
Our third-quarter costs rose relative to the same period last year as we accelerated investment to grow the business. This aims to reinforce the positive impact of targeted investment in previous quarters, particularly in Retail Banking and Wealth Management. Performance-related compensation also grew in line with profit before tax for the year to date. We remain committed to achieving positive jaws for the full year.
We had completed 71% of our most recent $2bn equity buy-back as at 26 October, and we expect to finish by the end of 2017.
Strategy execution
With fewer than three months remaining to implement the strategic actions we started in 2015, we continue to make good progress.
We generated a further $13bn of RWA savings in the quarter, taking us further beyond our initial target. Our RWA reduction programmes have extracted a total of $309bn of RWAs from the business since the start of 2015.
We remain on track to achieve around $6bn of annualised cost savings by the end of the year, and removed a further $0.6bn of costs in the third quarter.
Our international network continued to deliver strong growth in the third quarter, with all of our transaction banking products benefiting from higher balances and interest rate rises.
Our pivot to Asia is driving higher returns and lending growth, particularly in Hong Kong and the Pearl River Delta. Our Insurance and Asset Management businesses in Asia generated higher annualised new business premiums and assets under management, up 13% and 17% respectively for the first nine months of the year.
HSBC was named Best Overall International Bank for the Belt and Road Initiative at the Asiamoney New Silk Road Finance Awards in September.
Last week, HSBC became the first foreign bank to be approved as a joint-lead underwriter for Panda bond issuance by offshore non-financial corporates in the mainland China interbank bond market. This enables us to extend our coverage of debt-market products, and reinforces our position as the leading non-Chinese bank in mainland China.
 
 
 
 
 
HSBC Holdings plc  Earnings Release 3Q17
3
 
Earnings Release - 3Q17
 
 
 
Adjusted performance
Adjusted performance is computed by adjusting reported results for the effects of foreign currency translation differences and significant items, which both distort period-on-period comparisons.
We consider adjusted performance to provide useful information for investors by aligning internal and external reporting, identifying and quantifying items management believes to be significant, and providing insight into how management assesses period-on-period performance.
Foreign currency translation differences
Foreign currency translation differences reflect the movements of the US dollar against most major currencies. We exclude them to derive constant currency data, allowing us to assess balance sheet and income statement performance on a like-for-like basis and better understand the underlying trends in the business.
 
 
Foreign currency translation differences
Foreign currency translation differences are computed by retranslating into US dollars for non-US dollar branches, subsidiaries, joint ventures and associates:
the income statement for 9M16 at the average rates of exchange for 9M17;
the income statement for quarterly periods at the average rates of exchange for 3Q17; and
the closing prior period balance sheets at the prevailing rates of exchange on 30 September 2017.
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. 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.
Significant items
'Significant items' refers collectively to the items that management and investors would ordinarily identify and consider separately to understand better the underlying trends in the business.
The tables on pages 26 to 36 detail the effects of significant items on each of our global business segments and geographical regions during 9M17, 3Q17 and the respective comparatives in 2016, as well as 2Q17.
Change to presentation from 1 January 2017
Own credit spread
'Own credit spread' includes the fair value movements on our long-term debt attributable to credit spread where the net result of such movements will be zero upon maturity of the debt. This does not include fair value changes due to own credit risk in respect of trading liabilities or derivative liabilities. From 1 January 2017, HSBC adopted, in its consolidated financial statement, the requirements of IFRS 9 'Financial Instruments' relating to the presentation of gains and losses on financial liabilities designated at fair value. As a result, changes in fair value attributable to changes in own credit risk are presented in other comprehensive income with the remainder of the effect presented in profit and loss.
 
Adjusted performance - foreign currency translation of significant items
The foreign currency translation differences related to significant items are presented as a separate component of significant items. This is considered a more meaningful presentation as it allows better comparison of period-on-period movements in performance.
Global business performance
The Group Chief Executive, supported by the rest of the Group Management Board ('GMB'), is considered to be the Chief Operating Decision Maker ('CODM') for the purposes of identifying the Group's reportable segments.
The Group Chief Executive and the rest of the GMB review operating activity on a number of bases, including by global business and geographical region.
In 2016, we changed our reportable segments from geographical regions to global businesses. This reflected a shift in emphasis of our internal reporting towards the global business basis.
Comparative data has been re-presented accordingly.
Reconciliations of the adjusted global business results to the Group reported results are presented on page 5. Supplementary reconciliations from reported to adjusted results by global business are presented on pages 26 to 31 for information purposes.
Management view of adjusted revenue
Our global business segment commentary includes tables which provide breakdowns of revenue by major product. These reflect the basis on which revenue performance of the businesses is assessed and managed. Adjusted return on average risk-weighted assets ('RoRWA') is used to measure the performance of RBWM, CMB, GB&M and GPB, and is also presented. For GPB, a further measure of business performance is client assets, which is presented on page 23.
 
 
 
 
 
4
HSBC Holdings plc  Earnings Release 3Q17
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Reconciliation of reported and adjusted results
 
Nine months ended 
Quarter ended
 
30 Sep
 
30 Sep
 
30 Sep
 
30 Jun
 
30 Sep
 
 
2017
 
2016
 
2017
 
2017
 
2016
 
 
$m
 
$m
 
$m
 
$m
 
$m
 
Revenue
 
 
 
 
 
Reported
39,144
 
38,982
 
12,978
 
13,173
 
9,512
 
Currency translation
 
(1,072
)
 
199
 
(78
)
Significant items
(60
)
36
 
53
 
39
 
3,277
 
- DVA on derivative contracts
340
 
(96
)
65
 
178
 
55
 
- fair value movements on non-qualifying hedges1
(50
)
385
 
(20
)
61
 
(12
)
- gain on disposal of our investment in Vietnam Technological and Commercial Joint
    Stock Bank
(126
)
-
 
(126
)
-
 
-
 
- gain on disposal of our membership interest in Visa - Europe
-
 
(584
)
-
 
-
 
-
 
- gain on disposal of our membership interest in Visa - US
(312
)
-
 
-
 
(166
)
-
 
-  own credit spread2
-
 
144
 
-
 
-
 
1,370
 
- portfolio disposals
163
 
51
 
131
 
42
 
119
 
- provisions/(releases) arising from the ongoing review of compliance with the
    UK Consumer Credit Act
3
 
(2
)
3
 
-
 
-
 
- other acquisitions, disposals and dilutions
(78
)
-
 
-
 
(78
)
-
 
- loss and trading results from disposed-of operations in Brazil
-
 
273
 
-
 
-
 
1,743
 
- currency translation on significant items
 
(135
)
 
2
 
2
 
Adjusted
39,084
 
37,946
 
13,031
 
13,411
 
12,711
 
Loan impairment charge and other credit risk provisions ('LICs')
 
 
 
 
 
Reported
(1,111
)
(2,932
)
(448
)
(427
)
(566
)
Currency translation
 
(59
)
 
1
 
(1
)
Significant items
-
 
867
 
-
 
-
 
-
 
- trading results from disposed-of operations in Brazil
-
 
748
 
-
 
-
 
-
 
- currency translation on significant items
 
119
 
 
-
 
-
 
Adjusted
(1,111
)
(2,124
)
(448
)
(426
)
(567
)
Operating expenses
 
 
 
 
 
Reported
(24,989
)
(27,349
)
(8,546
)
(8,115
)
(8,721
)
Currency translation
 
583
 
 
(138
)
7
 
Significant items
2,607
 
5,301
 
770
 
719
 
1,472
 
- costs associated with portfolio disposals
14
 
-
 
4
 
10
 
-
 
- costs associated with the UK's exit from the EU
12
 
-
 
8
 
4
 
-
 
- costs to achieve
2,347
 
2,032
 
677
 
837
 
1,014
 
- costs to establish UK ring-fenced bank
277
 
147
 
101
 
93
 
53
 
- impairment of GPB - Europe goodwill
-
 
800
 
-
 
-
 
-
 
- regulatory provisions/(releases) in GPB
-
 
(46
)
-
 
-
 
(50
)
- provisions/(releases) in connection with legal matters
(426
)
723
 
(104
)
(322
)
-
 
- UK customer redress programmes
383
 
489
 
84
 
89
 
456
 
- trading results from disposed-of operations in Brazil
-
 
1,059
 
-
 
-
 
-
 
- currency translation on significant items
 
97
 
 
8
 
(1
)
Adjusted
(22,382
)
(21,465
)
(7,776
)
(7,534
)
(7,242
)
Share of profit in associates and joint ventures
 
 
 
 
 
Reported
1,819
 
1,856
 
636
 
651
 
618
 
Currency translation
 
(47
)
 
17
 
1
 
Significant items
-
 
1
 
-
 
-
 
-
 
- trading results from disposed-of operations in Brazil
-
 
1
 
-
 
-
 
-
 
- currency translation on significant items
 
-
 
 
 
 
-
 
Adjusted
1,819
 
1,810
 
636
 
668
 
619
 
Profit before tax
 
 
 
 
 
Reported
14,863
 
10,557
 
4,620
 
5,282
 
843
 
Currency translation
 
 
(595
)
 
79
 
(71
)
Significant items
2,547
 
6,205
 
823
 
758
 
4,749
 
- revenue
(60
)
36
 
53
 
39
 
3,277
 
-  LICs
-
 
867
 
-
 
-
 
-
 
- operating expenses
2,607
 
5,301
 
770
 
719
 
1,472
 
-  share in profit of associates and joint ventures
-
 
1
 
-
 
-
 
-
 
Adjusted
17,410
 
16,167
 
5,443
 
6,119
 
5,521
 
 
 
 
1
Excludes items where there are substantial offsets in the income statement for the same period.
 
 
 
2
'Own credit spread' includes the fair value movements on our long-term debt attributable to credit spread where the net result of such movements will be zero upon maturity of the debt. This does not include fair value changes due to own credit risk in respect of trading liabilities or derivative liabilities. From 1 January 2017, HSBC adopted, in its consolidated financial statements, the requirements of IFRS 9 'Financial Instruments' relating to the presentation of gains and losses on financial liabilities designated at fair value. As a result, changes in fair value attributable to changes in own credit risk are presented in other comprehensive income with the remainder of the effect presented in profit and loss.
 
 
 
 
 
HSBC Holdings plc  Earnings Release 3Q17
5
Earnings Release - 3Q17
 
 
 
Financial performance commentary
 
 
 
 
 
 
 
 
 
 
 
 
 
Distribution of results by global business
 
Nine months ended
Quarter ended
 
30 Sep
 
30 Sep
 
30 Sep
 
30 Jun
 
30 Sep
 
 
2017
 
2016
 
2017
 
2017
 
2016
 
 
$m
 
$m
 
$m
 
$m
 
$m
 
Adjusted profit before tax
 
 
 
 
 
Retail Banking and Wealth Management
5,058
 
4,076
 
1,703
 
1,578
 
1,533
 
Commercial Banking
5,086
 
4,472
 
1,643
 
1,675
 
1,527
 
Global Banking and Markets
4,938
 
4,134
 
1,535
 
1,729
 
1,582
 
Global Private Banking
198
 
254
 
55
 
73
 
72
 
Corporate Centre
2,130
 
3,231
 
507
 
1,064
 
807
 
Total
17,410
 
16,167
 
5,443
 
6,119
 
5,521
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Distribution of results by geographical region
 
Nine months ended
Quarter ended
 
30 Sep
 
30 Sep
 
30 Sep
 
30 Jun
 
30 Sep
 
 
2017
 
2016
 
2017
 
2017
 
2016
 
 
$m
 
$m
 
$m
 
$m
 
$m
 
Reported profit/(loss) before tax
 
 
 
 
 
Europe
522
 
(32
)
(50
)
778
 
(1,617
)
Asia
11,659
 
10,815
 
4,029
 
3,536
 
3,660
 
Middle East and North Africa
1,168
 
1,308
 
364
 
417
 
329
 
North America
1,080
 
116
 
127
 
381
 
66
 
Latin America
434
 
(1,650
)
150
 
170
 
(1,595
)
Total
14,863
 
10,557
 
4,620
 
5,282
 
843
 
Adjusted profit before tax
 
 
 
 
 
Europe
2,341
 
2,509
 
540
 
1,254
 
865
 
Asia
12,115
 
10,948
 
4,009
 
3,825
 
3,791
 
Middle East and North Africa
1,190
 
1,182
 
370
 
427
 
320
 
North America
1,287
 
1,071
 
361
 
427
 
388
 
Latin America
477
 
457
 
163
 
186
 
157
 
Total
17,410
 
16,167
 
5,443
 
6,119
 
5,521
 
 
Adjusted profit before tax by global business and region is presented to support the commentary on adjusted performance on the following pages.
The tables on pages 26 to 36 reconcile reported to adjusted results for each of our global business segments and geographical regions.
 
Group
3Q17 compared with 3Q16 - reported results
 
 
 
 
 
 
 
 
 
Movement in reported profit before tax compared with 3Q16
 
Quarter ended
 
30 Sep
 
30 Sep
 
Variance
 
2017
 
2016
 
3Q17 vs. 3Q16
 
$m
 
$m
 
$m
 
%
Revenue
12,978
 
9,512
 
3,466
 
36
LICs
(448
)
(566
)
118
 
21
Operating expenses
(8,546
)
(8,721
)
175
 
2
Share of profit from associates and JVs
636
 
618
 
18
 
3
Profit before tax
4,620
 
843
 
3,777
 
448
Reported profit before tax
Reported profit before tax of $4.6bn in 3Q17 was $3.8bn higher than in 3Q16. This reflected higher reported revenue (up $3.5bn), lower reported LICs (down $0.1bn) and a decrease in reported operating expenses (down $0.2bn).
Excluding the net favourable effects of significant items of $3.9bn and net adverse foreign currency translation of $0.1bn, profit before tax was $0.1bn or 1% lower.
 
Reported revenue
Reported revenue of $13.0bn in 3Q17 was $3.5bn or 36% higher. This largely reflected a net favourable movement in significant items of $3.2bn, notably:
 
 
the non-recurrence of a $1.7bn loss recognised in 3Q16 on our sale of operations in Brazil to Banco Bradesco S.A., which we completed on 1 July 2016; and
 
 
 
in 3Q16, $1.4bn of adverse fair value movements on our own debt designated at fair value, reflecting changes in our own credit spread, which are now reported in the statement of other comprehensive income, following our partial early adoption of IFRS 9 'Financial Instruments' on 1 January 2017.
 
Excluding significant items and an adverse effect of foreign currency translation of $0.1bn, revenue increased by $0.3bn or 3%.
Reported LICs
Reported LICs of $0.4bn were $0.1bn or 21% lower, reflecting reductions in RBWM and CMB.
Excluding significant items and foreign currency translation, LICs reduced by $0.1bn or 21%.
Reported operating expenses
Reported operating expenses of $8.5bn were $0.2bn or 2% lower and included a decrease in significant items of $0.7bn. Significant items included:
 
 
costs to achieve of $0.7bn, compared with $1.0bn in 3Q16; and
 
 
 
 
6
HSBC Holdings plc  Earnings Release 3Q17
 
 
 
a provision of $0.5bn in 3Q16 relating to UK customer redress programmes, compared with $0.1bn in 3Q17.
 
Excluding significant items and favourable currency translation differences, operating expenses increased by $0.5bn or 7%.
Reported income from associates
Reported income from associates of $0.6bn increased by $18m or 3%.
 
Group
3Q17 compared with 3Q16 - adjusted results
 
 
 
 
 
 
 
 
 
 
Movement in adjusted profit before tax compared with 3Q16
 
Quarter ended
 
30 Sep
 
30 Sep
 
Variance
 
2017
 
2016
 
3Q17 vs. 3Q16
 
$m
 
$m
 
$m
 
%
 
Revenue
13,031
 
12,711
 
320
 
3
 
LICs
(448
)
(567
)
119
 
21
 
Operating expenses
(7,776
)
(7,242
)
(534
)
(7
)
Share of profit from associates and JVs
636
 
619
 
17
 
3
 
Profit before tax
5,443
 
5,521
 
(78
)
(1
)
 
Adjusted profit before tax
On an adjusted basis, profit before tax of $5.4bn fell $0.1bn, as revenue growth and a reduction in LICs was offset by higher operating expenses.
Adjusted revenue
Adjusted revenue of $13.0bn was $0.3bn or 3% higher. The increase notably reflected higher deposit income across our three main global business:
 
 
In RBWM, revenue increased by $0.3bn. This was primarily in Retail Banking in current accounts, savings and deposits, particularly in Hong Kong, the US and Mexico, as we benefited from increased balances and wider spreads.
 
 
 
In CMB, revenue increased by $0.2bn, driven by Global Liquidity and Cash Management ('GLCM'), notably in Asia, as we benefited from wider deposit spreads and grew balances. In the UK, deposit balances grew, but this was more than offset by spread compression, following the base rate reduction in 2016. Revenue also increased to a lesser extent in Credit and Lending ('C&L'), as balance growth in the UK more than offset narrower spreads in Asia.
 
 
 
In GB&M, revenue increased by $0.1bn. There was continued momentum in revenue from transaction banking products, notably in GLCM, where we grew balances and benefited from wider spreads, particularly in Asia. In Global Markets, revenue increased in Equities, partly offset by lower revenue in Foreign Exchange and Credit, as a result of lower volatility and narrower spreads. In Global Banking, revenue fell primarily reflecting narrower spreads, notably in Asia.
 
These increases were partly offset:
 
 
In Corporate Centre, revenue decreased by $0.2bn, notably reflecting continuing disposals in the US run-off portfolio, reducing revenue by $0.2bn, and net unfavourable movements in credit and funding valuation adjustments in legacy credit (down $0.1bn).
 
Adjusted LICs
Adjusted LICs of $0.4bn were $0.1bn or 21% lower. This reflected a reduction in RBWM of $0.1bn, mainly in Turkey and the US as credit quality improved.
Adjusted operating expenses
Adjusted operating expenses of $7.8bn increased by $0.5bn or 7%, primarily reflecting investments in business growth programmes, notably in RBWM, and an increase in performance-related pay. The impact of our cost-saving initiatives broadly offset inflation and investment in our regulatory programmes and compliance.
Adjusted income from associates
Adjusted income from associates of $0.6bn increased by $17m or 3%.
Third interim dividend for 2017
On 3 October 2017, the Board announced a third interim dividend for 2017 of $0.10 per ordinary share.
 
Group
9M17 compared with 9M16 - reported results
 
 
 
 
 
 
 
 
 
 
Movement in reported profit before tax compared with 9M16
 
Nine months ended
 
30 Sep
 
30 Sep
 
Variance
 
2017
 
2016
 
9M17 vs. 9M16
 
$m
 
$m
 
$m
 
%
 
Revenue
39,144
 
38,982
 
162
 
-
 
LICs
(1,111
)
(2,932
)
1,821
 
62
 
Operating expenses
(24,989
)
(27,349
)
2,360
 
9
 
Share of profit from associates and JVs
1,819
 
1,856
 
(37
)
(2
)
Profit before tax
14,863
 
10,557
 
4,306
 
41
 
 
Reported profit before tax
Reported profit before tax of $14.9bn in 9M17 was $4.3bn or 41% higher than in 9M16, including net favourable movement in significant items of $3.7bn, partly offset by the adverse impact of foreign currency translation of $0.6bn. Excluding these, profit before tax increased by $1.2bn to $17.4bn.
Reported revenue
Reported revenue of $39.1bn was $0.2bn higher, and included a net favourable movement in significant items of $0.1bn. Significant items included a loss of $1.7bn recognised in 9M16 on the sale of our Brazil business to Banco Bradesco S.A., which completed on 1 July 2016. This loss was substantially offset by the reported revenue earned by the Brazil business in 9M16 of $1.5bn.
Excluding significant items and foreign currency translation, revenue increased by $1.1bn or 3%.
Reported LICs
Reported LICs of $1.1bn were $1.8bn or 62% lower, notably due to reductions in CMB, RBWM and GB&M, as well as the effect of our sale of operations in Brazil ($0.7bn).
Excluding significant items and a favourable effect of foreign currency translation, LICs were $1.0bn or 48% lower.
Reported operating expenses
Reported operating expenses of $25.0bn were $2.4bn or 9% lower. This reflected a decrease in significant items of $2.7bn, which reflected:
 
 
in 9M16, a $0.8bn write-off of goodwill in our GPB business in Europe;
 
 
 
a net release of $0.4bn in 9M17 related to settlements and provisions in connection with legal matters compared with charges of $0.7bn in 9M16; and
 
 
 
operating expenses of $1.1bn incurred by our Brazil business prior to its sale.
 
 
 
 
HSBC Holdings plc  Earnings Release 3Q17
7
 
 
Earnings Release - 3Q17
 
These were partly offset by:
 
 
costs to achieve of $2.3bn, compared with $2.0bn in 9M16.
 
Excluding significant items and the favourable effect of foreign currency translation of $0.6bn, operating expenses increased by $0.9bn or 4%, mainly reflecting higher performance-related pay and increased investment in growth programmes, primarily in RBWM where investments were partly funded by the proceeds from our sale of Visa shares. The increase also included a $0.1bn credit in 9M16 related to the 2015 UK bank levy.
Reported income from associates
Reported income from associates of $1.8bn was $37m or 2% lower.
Tax expense
The effective tax rate for 9M17 of 22.3% was lower than the 29.3% in 9M16, principally as 9M16 included the non-deductible loss on our sale of operations in Brazil, a non-deductible goodwill impairment and a higher level of charges in respect of prior periods.
 
Group
9M17 compared with 9M16 - adjusted results
 
 
 
 
 
 
 
 
 
 
Movement in adjusted profit before tax compared with 9M16
 
Nine months ended
 
30 Sep
 
30 Sep
 
Variance
 
2017
 
2016
 
9M17 vs. 9M16
 
$m
 
$m
 
$m
 
%
 
Revenue
39,084
 
37,946
 
1,138
 
3
 
LICs
(1,111
)
(2,124
)
1,013
 
48
 
Operating expenses
(22,382
)
(21,465
)
(917
)
(4
)
Share of profit from associates and JVs
1,819
 
1,810
 
9
 
-
 
Profit before tax
17,410
 
16,167
 
1,243
 
8
 
Adjusted profit before tax
On an adjusted basis, profit before tax of $17.4bn was $1.2bn higher than in 9M16, reflecting higher revenue and lower LICs, partly offset by an increase in operating expenses. Adjusted jaws was negative 1.3%, although we achieved positive adjusted jaws in our three main global businesses.
Adjusted revenue
Adjusted revenue of $39.1bn was $1.1bn or 3% higher, reflecting increased revenue in RBWM, GB&M and CMB, partly offset by decreases in Corporate Centre and GPB.
 
 
In RBWM, revenue increased by $1.4bn or 10%, with growth in Wealth Management and Retail Banking. The increase in Wealth Management was mainly in insurance manufacturing (up $0.5bn) as favourable market impacts compared with adverse market impacts in 9M16, notably in Asia. In addition, investment distribution income increased. Retail Banking revenue also increased, notably from current accounts, savings and deposits, reflecting balance growth and wider spreads in Hong Kong, Mexico and the US. This was partly offset by lower personal lending revenue compared with 9M16.
 
 
 
In GB&M revenue increased by $0.7bn or 6%. In Global Markets revenue was higher, notably in Equities reflecting Prime Financing growing its market share. Revenue also increased in GLCM, Securities Services ('HSS') and Global Banking. These increases were partly offset by lower revenue in Foreign Exchange and a net adverse movement on credit and funding valuations adjustments ($136m).
 
 
 
In CMB, revenue increased by $0.3bn or 3%, driven by growth in GLCM. This reflected wider spreads and increased deposit balances in Asia. In the UK, narrower spreads more than offset balance growth.
 
These increases were partly offset:
 
 
In Corporate Centre, revenue decreased by $1.1bn, with reductions in the US run-off portfolio (down $0.5bn), as a result of continuing disposals, and Central Treasury (down $0.6bn). In Central Treasury, a fall in revenue reflected lower favourable fair value movements ($0.2bn in 9M17, compared with $0.5bn in 9M16) relating to the hedging of our long-term debt, higher interest expense on our debt and a fall in Balance Sheet Management ('BSM') revenue.
 
 
 
In GPB, revenue was $0.1bn or 4% lower, primarily due to the impact of client repositioning actions. However, in the markets that we have targeted for growth, revenue increased, notably in Hong Kong due to higher investment revenue reflecting increased client activity, and growth in deposit revenue as spreads widened.
 
Adjusted LICs
Adjusted LICs of $1.1bn were $1.0bn or 48% lower, reflecting reductions in:
 
 
CMB ($0.5bn lower), notably due to lower LICs in North America and the UK, primarily as 9M16 included charges against exposures in the oil and gas sector, and in Spain as 9M16 included charges related to an exposure in the construction sector. In addition, 9M17 included a release of allowances related to the construction sector in the UK. These reductions were partly offset by higher LICs in Hong Kong across various sectors.
 
 
 
GB&M ($0.4bn lower) due to a reduction in individually assessed charges, particularly as 9M16 included LICs on exposures in the oil and gas, and mining sectors in the US.
 
Adjusted operating expenses
Adjusted operating expenses of $22.4bn were $0.9bn or 4% higher than in 9M16. This reflected an increase in performance-related pay ($0.4bn), as well as increased investments in business growth programmes ($0.2bn), primarily in RBWM where investments were partly funded by the proceeds from our sale of Visa shares. The increase also included a credit of $0.1bn related to the 2015 UK bank levy recorded in 9M16. The impact of our cost-saving initiatives broadly offset inflation and continued investment in our regulatory programmes and compliance.
Our total investment in regulatory programmes and compliance was $2.1bn, up $0.2bn or 9%. This reflected the continued implementation of our Global Standards programme to enhance financial crime risk controls and capabilities, and to meet external commitments.
The number of employees expressed in full time equivalent staff ('FTEs') at 30 September 2017 was 232,346, a decrease of 2,829 from 31 December 2016. This reflected reductions resulting from our transformation programmes, partly offset by investment in Global Standards and our business growth programmes.
Adjusted income from associates
Adjusted income from associates of $1.8bn was broadly unchanged.
 
 
 
 
 
8
HSBC Holdings plc  Earnings Release 3Q17
 
Retail Banking and Wealth Management
9M17 compared with 9M16 - adjusted results
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Management view of adjusted revenue
 
Nine months ended
Quarter ended
 
30 Sep
 
30 Sep
 
Variance
30 Sep
 
30 Jun
 
30 Sep
 
 
2017
 
2016
 
9M17 vs. 9M16
2017
 
2017
 
2016
 
 
$m
 
$m
 
$m
 
%
 
$m
 
$m
 
$m
 
Net operating income1
 
 
 
 
 
 
 
Retail Banking
9,984
 
9,443
 
541
 
6
 
3,434
 
3,404
 
3,191
 
- current accounts, savings and deposits
4,624
 
3,865
 
759
 
20
 
1,612
 
1,582
 
1,300
 
- personal lending
5,360
 
5,578
 
(218
)
(4
)
1,822
 
1,822
 
1,891
 
mortgages
1,750
 
1,914
 
(164
)
(9
)
599
 
578
 
646
 
credit cards
2,220
 
2,288
 
(68
)
(3
)
742
 
771
 
771
 
other personal lending2
1,390
 
1,376
 
14
 
1
 
481
 
473
 
474
 
Wealth Management
4,803
 
3,979
 
824
 
21
 
1,583
 
1,590
 
1,542
 
- investment distribution3
2,491
 
2,218
 
273
 
12
 
894
 
810
 
808
 
- life insurance manufacturing
1,538
 
1,025
 
513
 
50
 
425
 
509
 
466
 
- asset management
774
 
736
 
38
 
5
 
264
 
271
 
268
 
Other4
439
 
427
 
12
 
3
 
166
 
100
 
158
 
Total
15,226
 
13,849
 
1,377
 
10
 
5,183
 
5,094
 
4,891
 
Adjusted RoRWA (%)5
5.8
 
4.8
 
 
 
 
 
5.7
 
5.5
 
5.3
 
 
For footnotes see page 13
Adjusted profit before tax of $5.1bn was $1.0bn or 24% higher, reflecting strong revenue growth from deposits and Wealth Management. We achieved positive adjusted jaws of 4.7% as revenue growth (up 9.9%) exceeded growth in operating expenses (up 5.2%), which included investments in technology and business growth programmes.
Adjusted revenue of $15.2bn was $1.4bn or 10% higher, reflecting growth in both Retail Banking, and Wealth Management.
The revenue increase in Retail Banking resulted from:
 
 
growth in current accounts, savings and deposits (up $0.8bn) due to wider spreads and higher balances in Hong Kong, Mexico and the US.
This was partly offset by:
 
 
lower personal lending revenue (down $0.2bn) reflecting mortgage spread compression, notably in Hong Kong, the UK and mainland China, which was partly offset by balance growth.
The revenue increase in Wealth Management resulted from:
 
 
growth in insurance manufacturing revenue (up $0.5bn) including favourable market impacts of $257m due to
 
interest rate and equity market movements, notably in Asia and France, compared with adverse market impacts in 9M16 of $320m, and higher insurance sales in Asia; and
 
 
higher investment distribution revenue (up $0.3bn), primarily driven by higher sales of mutual funds in Hong Kong, reflecting increased investor confidence.
 
Adjusted LICs of $0.8bn were $0.1bn or 10% lower as a result of decreases in Turkey of $63m and the US of $39m, reflecting improved credit quality. This was partly offset in Mexico where higher LICs ($43m) reflected targeted growth in unsecured lending and associated higher delinquency rates. In the UK, LICs also rose by $34m as we increased allowances against our mortgages and cards exposures. LICs in the UK remain at historically low levels (c.12bps of the overall portfolio).
Adjusted operating expenses of $9.4bn were $0.5bn or 5% higher, mainly from investment in growth initiatives, notably in retail business banking, in our international proposition through the introduction of new products and services, and in mainland China. Operating expense growth also reflected higher staff costs and inflation, however, these factors were substantially offset by transformational and other cost savings.
 
 
Commercial Banking
9M17 compared with 9M16 - adjusted results
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Management view of adjusted revenue
 
Nine months ended
Quarter ended
 
30 Sep
 
30 Sep
 
Variance
30 Sep
 
30 Jun
 
30 Sep
 
 
2017
 
2016
 
9M17 vs. 9M16
2017
 
2017
 
2016
 
 
$m
 
$m
 
$m
 
%
 
$m
 
$m
 
$m
 
Net operating income1
 
 
 
 
 
 
 
 
 
 
 
 
Global Trade and Receivables Finance
1,363
 
1,385
 
(22
)
(2
)
464
 
456
 
459
 
Credit and Lending
3,738
 
3,750
 
(12
)
-
 
1,297
 
1,259
 
1,279
 
Global Liquidity and Cash Management
3,500
 
3,138
 
362
 
12
 
1,231
 
1,179
 
1,061
 
Markets products, Insurance and Investments, and Other6
1,153
 
1,225
 
(72
)
(6
)
355
 
372
 
384
 
Total
9,754
 
9,498
 
256
 
3
 
3,347
 
3,266
 
3,183
 
Adjusted RoRWA (%)5
2.4
 
2.2
 
 
 
2.2
 
2.3
 
2.2
 
For footnotes see page 13
 
 
 
 
HSBC Holdings plc  Earnings Release 3Q17
9
 
Earnings Release - 3Q17
 
Adjusted profit before tax of $5.1bn was $0.6bn or 14% higher, reflecting lower LICs and higher revenue. We achieved positive adjusted jaws of 0.3%, as 2.7% revenue growth exceeded a 2.4% increase in operating expenses.
Adjusted revenue was $0.3bn or 3% higher, as strong growth in GLCM was partly offset by a small reduction in Global Trade and Receivables Finance ('GTRF') and as C&L remained broadly unchanged.
 
 
In GLCM, revenue increased by $362m or 12%, notably in Asia, reflecting wider spreads and balance growth, partly achieved through customer deposit retention initiatives. In the UK, average balances increased by 14%, but this was more than offset by narrower spreads following the base rate reduction in 2016.
 
 
 
In GTRF, revenue was $22m or 2% lower. While revenue has stabilised in 2017 following a period of decline, mainly from lending growth in Asia and Europe, this was more than offset by a reduction in Middle East and North Africa ('MENA') reflecting the effect of managed customer exits in the UAE.
 
 
 
In C&L revenue was broadly unchanged. In Asia revenue was lower, as balance growth was more than offset by spread compression, although in the UK revenue increased as lending growth more than offset narrower spreads.
 
Adjusted LICs of $0.3bn were $0.5bn lower, notably due to lower LICs in North America and the UK, primarily as 9M16 included charges against exposures in the oil and gas sector, and in Spain as 9M16 included charges related to an exposure in the construction sector. In addition, 9M17 included a release of allowances related to the construction sector in the UK. These reductions were partly offset by higher LICs in Hong Kong, notably as 9M17 included a small number of individually assessed LICs across various sectors.
Adjusted operating expenses were $0.1bn or 2% higher as we continued to invest in Global Standards. Salary inflation was offset by our cost-saving initiatives.
 
Global Banking and Markets
9M17 compared with 9M16 - adjusted results
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Management view of adjusted revenue
 
Nine months ended
Quarter ended
 
30 Sep
 
30 Sep
 
Variance
30 Sep
 
30 Jun
 
30 Sep
 
 
2017
 
2016
 
9M17 vs. 9M16
2017
 
2017
 
2016
 
 
$m
 
$m
 
$m
 
%
 
$m
 
$m
 
$m
 
Net operating income1
 
 
 
 
 
 
 
 
 
 
Global Markets
5,401
 
5,069
 
332
 
7
 
1,679
 
1,815
 
1,689
 
- FICC
4,410
 
4,312
 
98
 
2
 
1,348
 
1,484
 
1,425
 
Foreign Exchange
1,955
 
2,006
 
(51
)
(3
)
605
 
733
 
655
 
Rates
1,698
 
1,599
 
99
 
6
 
551
 
509
 
544
 
Credit
757
 
707
 
50
 
7
 
192
 
242
 
226
 
- Equities
991
 
757
 
234
 
31
 
331
 
331
 
264
 
Global Banking
2,893
 
2,778
 
115
 
4
 
943
 
1,077
 
995
 
Global Liquidity and Cash Management
1,609
 
1,387
 
222
 
16
 
567
 
530
 
475
 
Securities Services
1,281
 
1,155
 
126
 
11
 
442
 
441
 
408
 
Global Trade and Receivables Finance
532
 
515
 
17
 
3
 
174
 
180
 
175
 
Principal Investments
255
 
172
 
83
 
48
 
178
 
50
 
174
 
Credit and funding valuation adjustments7
(161
)
(25
)
(136
)
>100
 
(66
)
(92
)
(77
)
Other8
(109
)
(49
)
(60
)
>100
 
(39
)
7
 
(50
)
Total
11,701
 
11,002
 
699
 
6
 
3,878
 
4,008
 
3,789
 
Adjusted RoRWA (%)5
2.2
 
1.7
 
 
 
 
 
2.0
 
2.3
 
2.0
 
 
For footnotes see page 13
 
Adjusted profit before tax of $4.9bn was $0.8bn or 19% higher, reflecting a strong revenue performance and a reduction in LICs of $0.4bn. We achieved positive adjusted jaws of 2.3%, as our revenue growth (up 6.4%) exceeded an increase in our operating expenses (up 4.1%).
 
Adjusted revenue increased by $0.7bn or 6% including a net adverse movement of $136m on credit and funding valuation adjustments. Excluding these movements, adjusted revenue increased by $0.8bn or 8%, with growth in all of our businesses:
 
 
Revenue increased from our transaction banking products, notably GLCM (up $0.2bn) and HSS (up $0.1bn). In GLCM, balances grew as we won client mandates and deposit spreads widened, notably in Asia and the US.
 
 
 
Global Markets revenue increased by $0.3bn, notably in Equities (up $0.2bn), as we continued to capture market share with Prime Financing products. In Fixed Income, Currencies and Commodities ('FICC'), revenue increased by $0.1bn as we captured increased client flows and grew market share in Europe in Rates and Credit.
 
 
 
Global Banking revenue increased by $0.1bn or 4%, reflecting growth in lending balances and continued momentum in investment banking products, which offset the effects of tightening spreads on lending in Asia. The increase in revenue also included recoveries on restructured facilities in 9M17, compared with write-downs in 9M16.
 
Adjusted LICs of $0.1bn decreased by $0.4bn. This reflected a reduction in individually assessed charges, particularly as the prior year included LICs on exposures in the oil and gas, and mining sectors in the US.
 
Adjusted operating expenses increased by $0.3bn or 4%, reflecting higher performance-related pay, and pension and severance costs, as well as strategic investments in GLCM, HSS and Foreign Exchange. Our continued cost management, efficiency improvements and FTE reductions were broadly offset by the effects of inflation.
 
 
 
 
10
HSBC Holdings plc  Earnings Release 3Q17
 
 
Global Private Banking
9M17 compared with 9M16 - adjusted results
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Management view of adjusted revenue
 
Nine months ended
Quarter ended
 
30 Sep
 
30 Sep
 
Variance
30 Sep
 
30 Jun
 
30 Sep
 
 
2017
 
2016
 
9M17 vs. 9M16
2017
 
2017
 
2016
 
 
$m
 
$m
 
$m
 
%
 
$m
 
$m
 
$m
 
Net operating income1
 
 
 
 
 
 
 
 
 
 
Investment revenue
528
 
571
 
(43
)
(8
)
174
 
180
 
191
 
Lending
284
 
316
 
(32
)
(10
)
98
 
97
 
105
 
Deposit
294
 
258
 
36
 
14
 
103
 
103
 
82
 
Other
177
 
190
 
(13
)
(7
)
62
 
58
 
64
 
Total
1,283
 
1,335
 
(52
)
(4
)
437
 
438
 
442
 
Adjusted RoRWA (%)5
1.7
 
2.0
 
 
 
1.3
 
1.8
 
1.7
 
 
For footnotes see page 13
 
Adjusted profit before tax of $0.2bn was $56m or 22% lower as revenue decreased, partly offset by a reduction in costs.
 
Adjusted revenue of $1.3bn was $52m or 4% lower, reflecting the impact of client repositioning actions. These actions are largely complete. However, revenue from markets targeted for growth increased by 9%, particularly in Hong Kong as higher investment revenue reflected increased client activity, and deposit revenue benefited from wider spreads.
 
Adjusted LICs of $17m compared with net releases of $10m in 9M16. The figure in 9M17 primarily reflects a charge related to a single client in the UK.
 
Adjusted operating expenses of $1.1bn were $23m or 2% lower, mainly as a result of the managed reduction in FTEs and the impact of our cost-saving initiatives.
 
Net new money of $4bn reflected positive inflows of $13bn in key markets targeted for growth, particularly in Hong Kong. This was partly offset by outflows resulting from the repositioning of the business.
 
 
Corporate Centre
9M17 compared with 9M16 - adjusted results
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Management view of adjusted revenue
 
Nine months ended
Quarter ended
 
30 Sep
 
30 Sep
 
Variance
30 Sep
 
30 Jun
 
30 Sep
 
 
2017
 
2016
 
9M17 vs. 9M16
2017
 
2017
 
2016
 
 
$m
 
$m
 
$m
 
%
 
$m
 
$m
 
$m
 
Net operating income1
 
 
 
 
 
 
 
 
 
 
Central Treasury9
1,076
 
1,719
 
(643
)
(37
)
311
 
431
 
366
 
Legacy portfolios
88
 
606
 
(518
)
(85
)
(46
)
106
 
275
 
- US run-off portfolio
47
 
570
 
(523
)
(92
)
(28
)
47
 
150
 
- legacy credit
41
 
36
 
5
 
14
 
(18
)
59
 
125
 
Other10
(44
)
(63
)
19
 
(30
)
(79
)
68
 
(235
)
Total
1,120
 
2,262
 
(1,142
)
(50
)
186
 
605
 
406
 
 
For footnotes see page 13
 
Adjusted profit before tax of $2.1bn was $1.1bn or 34% lower, due to a reduction in revenue and higher operating expenses. This was partly offset by a reduction in LICs.
 
Adjusted revenue fell by $1.1bn or 50%, reflecting a decrease in Central Treasury ($0.6bn) and continuing disposals in the US run-off portfolio ($0.5bn). In Central Treasury revenue decreased as a result of:
 
 
lower favourable fair value movements relating to the economic hedging of interest and exchange rate risk on our long-term debt with long-term derivatives of $0.2bn compared with $0.5bn in 9M16;
 
 
 
higher interest on our debt (up $0.3bn), mainly reflecting the higher costs of debt issued to meet regulatory requirements; and
 
 
 
a reduction in revenue in BSM reflecting lower reinvestment yields.
 
Net loan impairment releases of $92m compared with adjusted LICs of $34m in 9M16. This reflected lower LICs in the US run-off portfolio together with higher net releases of impairment allowances in our legacy credit portfolio as collateral values improved.
 
Adjusted operating expenses were $0.1bn or 14% higher, in part due to a credit booked in 1Q16 relating to the 2015 UK bank levy $0.1bn. The remainder of the increase related to investment in regulatory programmes and compliance, partly offset by lower costs associated with our US run-off portfolio.
 
Adjusted income from associates rose by $26m or 1%.
 
 
 
 
HSBC Holdings plc  Earnings Release 3Q17
11
 
Earnings Release - 3Q17
 
Balance sheet commentary compared with 30 June 2017
 
Total assets grew by $33.8bn or 1.4% on a reported basis. On a constant currency basis, total assets were broadly unchanged.
 
Loans and advances to customers
 
Reported loans and advances to customers grew by $25.3bn or 3%, driven by growth in Asia. This included the following:
 
 
favourable currency translation differences of $13.3bn; and
 
 
 
a $3.8bn increase in corporate overdraft balances in the UK relating to a small number of customers that settled their overdraft and deposit balances on a net basis.
 
Excluding these factors, loans and advances to customers grew by $8.2bn or 1%. We continued to grow lending in Asia (up $8.6bn) across all our global businesses, notably in Hong Kong, where CMB term lending increased, and we grew mortgage balances in RBWM. This reflected our continuing strategic focus on growth in the region.
 
Lending in Europe increased by $1.2bn, notably in the UK, as higher balances in RBWM were driven by UK mortgage growth of $2.8bn. CMB term lending in the UK increased, but this was offset by reductions in GB&M, which reflected a reduction in short-term assets, including overdrafts.
 
These lending increases were partly offset by a $1.4bn reduction in GB&M balances in North America, reflecting our active management of overall client returns.
 
Customer accounts
 
Customer accounts increased by $25.2bn or 2% on a reported basis. This included:
 
 
a favourable currency translation effect of $16.4bn; and
 
 
 
a $3.8bn increase in corporate current account balances, in line with the increase in corporate overdrafts.
 
Excluding these factors, customer accounts increased by $4.9bn. This reflected increases in Asia in CMB, RBWM and GB&M ($10.1bn combined), notably in Hong Kong, Singapore and Australia.
 
By contrast, Europe balances decreased by $6.8bn, primarily in GB&M and CMB, reflecting outflows of short-term deposits placed by a small number of customers in the UK and France.
 
 
Net interest margin
 
 
 
 
 
 
 
 
Net interest margin
 
Nine months ended
Year ended
 
30 Sep
 
30 Sep
 
31 Dec
 
 
2017
 
2016
 
2016
 
 
$m
 
$m
 
$m
 
Net interest income
20,904
 
22,945
 
29,813
 
Average interest earning assets
1,711,493
 
1,723,736
 
1,723,702
 
 
%
 
%
 
%
 
Gross yield
2.36
 
2.55
 
2.46
 
Less: cost of funds
(0.87
)
(0.93
)
(0.87
)
Net interest spread
1.49
 
1.62
 
1.59
 
Net interest margin
1.63
 
1.78
 
1.73
 
 
In 2016, we earned net interest income of $0.9bn from the operations in Brazil that we sold in that year (9M16: $0.9bn) from average interest-earning assets of $25.8bn (9M16: $25.2bn). Excluding these operations in Brazil, our net interest margin for 2016 was 1.70% (9M16: 1.73%) with a gross yield of 2.34% (9M16: 2.37%) and a cost of funds of 0.76% (9M16: 0.77%).
 
9M17 vs FY16
 
Net interest margin ('NIM') of 1.63% fell by 10bps, compared with NIM of 1.73% for 2016. Excluding the effects of the sale of our operations in Brazil (completed on 1 July 2016) and foreign currency translation, NIM fell by 5bps.
 
The fall in NIM reflected:
 
 
The continuing run-off of our higher-yielding US CML portfolio;
 
 
 
Pressure on asset yields, notably in Europe, reflecting negative interest rates in continental Europe, market competition and decreased yields on mortgages in the UK, due to a change in portfolio mix towards lower-yielding fixed-rate products, partly offset by the benefits of lending volume growth in Asia and central bank rate rises in Mexico; and
 
 
 
Higher Group debt costs, affected by the longer maturities and the structural subordination of our new issuance. The cost of debt was also affected by the US dollar rate rises.
 
These decreases were partly offset by:
 
 
The benefits of US dollar rate rises, notably from increased yields on our surplus liquidity; and
 
 
 
A lower cost of customer accounts in Europe, reflecting base rate reductions in the UK and negative interest rates in continental Europe, and in Asia reflecting a change in mix towards lower-cost accounts.
 
9M17 NIM remained broadly unchanged from 1H17.
 
 
 
 
12
HSBC Holdings plc  Earnings Release 3Q17
 
Notes
 
 
Income statement comparisons, unless stated otherwise, are between the quarter ended 30 September 2017 and the quarter ended 30 September 2016. Balance sheet comparisons, unless otherwise stated, are between balances at 30 September 2017 and the corresponding balances at 30 June 2017.
 
 
 
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 194 to 203 of our Annual Report and Accounts 2016.
 
 
 
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.
 
 
 
Footnotes to financial performance
Commentary
1
Net operating income before loan impairment charges and other credit risk provisions, also referred to as revenue.
2
'Other personal lending' includes personal non-residential closed-end loans and personal overdrafts.
3
'Investment distribution' includes Investments, which comprises mutual funds (HSBC manufactured and third party), structured products and securities trading, and Wealth Insurance distribution, consisting of HSBC manufactured and third-party life, pension and investment insurance products.
4
'Other' mainly includes the distribution and manufacturing (where applicable) of retail and credit protection insurance.
5
Adjusted return on average risk-weighted assets ('RoRWA') is used to measure the performance of RBWM, CMB, GB&M and GPB. Adjusted RoRWA is calculated using annualised profit before tax and reported average risk-weighted assets at constant currency adjusted for the effects of significant items.
6
'Markets products, Insurance and Investments and Other' includes revenue from Foreign Exchange, insurance manufacturing and distribution, interest rate management and Global Banking products.
7
In 3Q17, credit and funding valuation adjustments included an adverse fair value movement of $126m on the widening of credit spreads on structured liabilities (3Q16: adverse fair value movement of $160m; 2Q17: adverse fair value movement of $216m).
8
'Other' in GB&M includes net interest earned on free capital held in the global business not assigned to products, 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'.
9
Central Treasury includes revenue relating to BSM of $584m (2Q17: $643m; 3Q16: $744m), interest expense of $331m (2Q17: $296m; 3Q16: $293m) and favourable valuation differences on issued long-term debt and associated swaps of $80m (2Q17: favourable movements of $125m; 3Q16: favourable movements of $108m). Revenue relating to BSM includes other internal allocations, including notional tax credits to reflect the economic benefit generated by certain activities that is not reflected within operating income, for example 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.
10
'Other' in Corporate Centre includes internal allocations relating to legacy credit.
 
 
 
 
HSBC Holdings plc  Earnings Release 3Q17
13
 
Earnings Release - 3Q17
 
Cautionary statement regarding forward-looking statements
This Earnings Release contains certain forward-looking statements with respect to HSBC's financial condition, results of operations, capital position and business.
Statements that are not historical facts, including statements about HSBC's beliefs and expectations, are forward-looking statements. Words such as 'expects', 'anticipates', 'intends', 'plans', 'believes', 'seeks', 'estimates', 'potential' and 'reasonably possible', variations of these words and similar expressions are intended to identify forward-looking statements. These statements are based on current plans, estimates and projections, and therefore undue reliance should not be placed on them. Forward-looking statements speak only as of the date they are made. HSBC makes no commitment to revise or update any forward-looking statements to reflect events or circumstances occurring or existing after the date of any forward-looking statements.
Written and/or oral forward-looking statements may also be made in the periodic reports to the US Securities and Exchange Commission, summary financial statements to shareholders, proxy statements, offering circulars and prospectuses, press releases and other written materials, and in oral statements made by HSBC's Directors, officers or employees to third parties, including financial analysts.
Forward-looking statements involve inherent risks and uncertainties. Readers are cautioned that a number of factors could cause actual results to differ, in some instances materially, from those anticipated or implied in any forward-looking statement.
These include, but are not limited to:
 
 
changes in general economic conditions in the markets in which we operate, such as continuing or deepening recessions and fluctuations in employment beyond those factored into consensus forecasts; changes in foreign exchange rates and interest rates; volatility in equity markets; lack of liquidity in wholesale funding markets; illiquidity and downward price pressure in national real estate markets; adverse changes in central banks' policies with respect to the provision of liquidity support to financial markets; heightened market concerns over sovereign creditworthiness in over-indebted countries; adverse changes in the funding status of public or private defined benefit pensions; and consumer perception as to the
 
continuing availability of credit and price competition in the market segments we serve;
 
 
changes in government policy and regulation, including the monetary, interest rate and other policies of central banks and other regulatory authorities; initiatives to change the size, scope of activities and interconnectedness of financial institutions in connection with the implementation of stricter regulation of financial institutions in key markets worldwide; revised capital and liquidity benchmarks which could serve to deleverage bank balance sheets and lower returns available from the current business model and portfolio mix; imposition of levies or taxes designed to change business mix and risk appetite; the conduct of business of financial institutions in serving their retail customers, corporate clients and counterparties; the standards of market conduct; the costs, effects and outcomes of product regulatory reviews, actions or litigation, including any additional compliance requirements; expropriation, nationalisation, confiscation of assets and changes in legislation relating to foreign ownership; changes in bankruptcy legislation in the principal markets in which we operate and the consequences thereof; general changes in government policy that may significantly influence investor decisions; extraordinary government actions as a result of current market turmoil; other unfavourable political or diplomatic developments producing social instability or legal uncertainty which in turn may affect demand for our products and services; and the effects of competition in the markets where we operate including increased competition from non-bank financial services companies, including securities firms; and
 
 
 
factors specific to HSBC, including our success in adequately identifying the risks we face, such as the incidence of loan losses or delinquency, and managing those risks (through account management, hedging and other techniques). Effective risk management depends on, among other things, our ability through stress testing and other techniques to prepare for events that cannot be captured by the statistical models we use; our success in addressing operational, legal and regulatory, and litigation challenges, notably compliance with the Deferred Prosecution Agreement with US authorities; and other risks and uncertainties we identify in the 'top and emerging risks' on pages 64 to 67 of the Annual Report and Accounts 2016.
 
For further information contact:
 
 
 
Investor Relations
Media Relations
UK - Richard O'Connor
UK - Heidi Ashley
Tel: +44 (0) 20 7991 6590
Tel: +44 (0) 20 7992 2045
 
 
Email: investorrelations@hsbc.com
 
 
 
Hong Kong - Hugh Pye
Hong Kong - Gareth Hewett
Tel: +852 2822 4908
Tel: +852 2822 4929
 
 
 
US - Rob Sherman
 
Tel: +1 (1) 212 525 6901
 
 
 
 
 
 
14
HSBC Holdings plc  Earnings Release 3Q17
 
 
Summary consolidated income statement
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Nine months ended
Quarter ended
 
 
30 Sep
 
30 Sep
 
30 Sep
 
30 Jun
 
30 Sep
 
 
 
2017
 
2016
 
2017
 
2017
 
2016
 
 
 
$m
 
$m
 
$m
 
$m
 
$m
 
 
Net interest income
20,904
 
22,945
 
7,127
 
6,990
 
7,185
 
 
Net fee income
9,746
 
9,848
 
3,255
 
3,267
 
3,262
 
 
Net trading income
5,758
 
7,555
 
1,830
 
1,682
 
2,231
 
 
Net income/(expense) from financial instruments designated at fair value
3,048
 
(252
)
1,041
 
1,078
 
(813
)
 
- changes in fair value of long-term debt issued and related derivatives
752
 
(1,402
)
272
 
540
 
(1,672
)
 
- net income from other financial instruments designated at fair value
2,296
 
1,150
 
769
 
538
 
859
 
 
Gains less losses from financial investments
1,079
 
1,271
 
388
 
353
 
306
 
 
Dividend income
89
 
78
 
40
 
36
 
14
 
 
Net insurance premium income
7,462
 
7,891
 
2,651
 
2,018
 
2,535
 
 
Other operating income/(expense)
416
 
(847
)
(110
)
324
 
(1,491
)
 
Total operating income
48,502
 
48,489
 
16,222
 
15,748
 
13,229
 
 
Net insurance claims and benefits paid and movement in liabilities to policyholders
(9,358
)
(9,507
)
(3,244
)
(2,575
)
(3,717
)
 
Net operating income before loan impairment charges and other credit risk provisions
39,144
 
38,982
 
12,978
 
13,173
 
9,512
 
 
Loan impairment charges and other credit risk provisions
(1,111
)
(2,932
)
(448
)
(427
)
(566
)
 
Net operating income
38,033
 
36,050
 
12,530
 
12,746
 
8,946
 
 
Total operating expenses
(24,989
)
(27,349
)
(8,546
)
(8,115
)
(8,721
)
 
Operating profit
13,044
 
8,701
 
3,984
 
4,631
 
225
 
 
Share of profit in associates and joint ventures
1,819
 
1,856
 
636
 
651
 
618
 
 
Profit before tax
14,863
 
10,557
 
4,620
 
5,282
 
843
 
 
Tax expense
(3,310
)
(3,094
)
(1,115
)
(994
)
(803
)
 
Profit after tax
11,553
 
7,463
 
3,505
 
4,288
 
40
 
 
Attributable to:
 
 
 
 
 
 
 
- ordinary shareholders of the parent company
9,957
 
5,739
 
2,958
 
3,869
 
(617
)
 
- preference shareholders of the parent company
67
 
67
 
22
 
23
 
22
 
 
- other equity holders
722
 
902
 
256
 
153
 
391
 
 
- non-controlling interests
807
 
755
 
269
 
243
 
244
 
 
Profit after tax
11,553
 
7,463
 
3,505
 
4,288
 
40
 
 
 
$
 
$
 
$
 
$
 
$
 
 
Basic earnings per share
0.50
 
0.29
 
0.15
 
0.19
 
(0.03
)
 
Diluted earnings per share
0.50
 
0.29
 
0.15
 
0.19
 
(0.03
)
 
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)
8.2
 
4.4
 
7.1
 
9.5
 
(1.4
)
 
Return on average risk-weighted assets1
2.3
 
1.3
 
2.1
 
2.4
 
0.3
 
 
Cost efficiency ratio
63.8
 
70.2
 
65.8
 
61.6
 
91.7
 
 
 
 
 
1
Return on average risk-weighted assets is calculated using annualised profit before tax and reported average risk-weighted assets.
 
 
 
 
 
HSBC Holdings plc  Earnings Release 3Q17
15
 
 
 
Earnings Release - 3Q17
 
 
Summary consolidated balance sheet
 
 
 
 
 
 
 
 
 
 
 
 
At
 
 
30 Sep
 
30 Jun
 
31 Dec
 
 
 
2017
 
2017
 
2016
 
 
 
$m
 
$m
 
$m
 
 
Assets
 
 
 
 
Cash and balances at central banks
162,555
 
163,353
 
128,009
 
 
Trading assets
334,283
 
320,037
 
235,125
 
 
Financial assets designated at fair value
28,952
 
27,937
 
24,756
 
 
Derivatives
221,936
 
229,719
 
290,872
 
 
Loans and advances to banks
89,710
 
86,633
 
88,126
 
 
Loans and advances to customers
945,168
 
919,838
 
861,504
 
 
Reverse repurchase agreements - non-trading
184,920
 
196,834
 
160,974
 
 
Financial investments
383,898
 
385,378
 
436,797
 
 
Assets held for sale
669
 
2,301
 
4,389
 
 
Other assets
174,123
 
160,413
 
144,434
 
 
Total assets
2,526,214
 
2,492,443
 
2,374,986
 
 
Liabilities and equity
 
 
 
 
Liabilities
 
 
 
 
Deposits by banks
69,653
 
64,230
 
59,939
 
 
Customer accounts
1,337,121
 
1,311,958
 
1,272,386
 
 
Repurchase agreements - non-trading
122,196
 
145,306
 
88,958
 
 
Trading liabilities
227,961
 
202,401
 
153,691
 
 
Financial liabilities designated at fair value
95,205
 
93,163
 
86,832
 
 
Derivatives
213,269
 
223,413
 
279,819
 
 
Debt securities in issue
59,740
 
63,289
 
65,915
 
 
Liabilities of disposal groups held for sale
1,093
 
620
 
2,790
 
 
Liabilities under insurance contracts
83,770
 
81,147
 
75,273
 
 
Other liabilities
117,462
 
111,130
 
106,805
 
 
Total liabilities
2,327,470
 
2,296,657
 
2,192,408
 
 
Equity
 
 
 
 
Total shareholders' equity
191,013
 
188,396
 
175,386
 
 
Non-controlling interests
7,731
 
7,390
 
7,192
 
 
Total equity
198,744
 
195,786
 
182,578
 
 
Total liabilities and equity
2,526,214
 
2,492,443
 
2,374,986
 
 
 
%
 
%
 
%
 
 
Loans and advances to customers as a percentage of customer accounts
70.7
 
70.1
 
67.7
 
 
 
 
 
 
16
HSBC Holdings plc  Earnings Release 3Q17
 
 
Capital
 
 
 
 
 
 
 
Transitional own funds disclosure
 
 
At
 
 
30 Sep
 
30 Jun
 
 
 
2017
 
2017
 
Ref*
 
$m
 
$m
 
6
Common equity tier 1 capital before regulatory adjustments
160,966
 
160,026
 
28
Total regulatory adjustments to common equity tier 1
(31,186
)
(31,117
)
29
Common equity tier 1 capital
129,780
 
128,909
 
36
Additional tier 1 capital before regulatory adjustments
25,189
 
23,695
 
43
Total regulatory adjustments to additional tier 1 capital
(111
)
(110
)
44
Additional tier 1 capital
25,078
 
23,585
 
45
Tier 1 capital
154,858
 
152,494
 
51
Tier 2 capital before regulatory adjustments
32,003
 
31,885
 
57
Total regulatory adjustments to tier 2 capital
(498
)
(487
)
58
Tier 2 capital
31,505
 
31,398
 
59
Total capital (TC = T1 + T2)
186,363
 
183,892
 
60
Total risk-weighted assets
888,628
 
876,118
 
 
Capital ratios
%
 
%
 
61
Common equity tier 1 ratio
14.6
 
14.7
 
62
Tier 1 ratio
17.4
 
17.4
 
63
Total capital ratio
21.0
 
21.0
 
 
 
 
*
The references identify the lines prescribed in the European Banking Authority ('EBA') template that are applicable and where there is a value.
 
Capital
 
Our CET1 capital ratio decreased to14.6%, mainly as a result of a $12.5bn rise in RWAs.
 
CET1 capital increased in the quarter by $0.9bn, due to:
 
 
 
$0.9bn of capital generation through profits, net of dividends and scrip; and
 
 
 
favourable foreign currency translation differences of $1.8bn.
 
These increases were partly offset by the share buy-back of $2.0bn.
 
Our 2017 Pillar 2A requirement, as per the PRA's Individual Capital Guidance based on a point in time assessment, is 3.5% of RWAs, of which 2.0% is met by CET1.
 
 
 
Risk-weighted assets
 
RWAs
 
RWAs increased by $12.5bn during the third quarter of the year, including an increase of $7.6bn due to foreign currency translation differences. The remaining increase of $4.9bn was mainly due to an increase in asset size of $16.1bn and changes to methodology and policy of $2.2bn, less reductions of $13.0bn due to RWA initiatives.
 
Asset size
 
Asset size movements principally derive from:
 
 
corporate lending growth in CMB and GB&M businesses which increased RWAs by $10.5bn, mainly in Asia and Europe;
 
 
 
retail lending growth in RBWM, primarily in Asia, which increased RWAs by $1.5bn; and
 
 
 
new transactions and changes in parameters which increased counterparty credit risk and market risk RWAs by $3.3bn, mainly in Europe.
 
Methodology and policy
 
Methodology and policy movements arise mainly from changes of $1.1bn to the treatment of non-performing retail exposures and an increase in the risk weight floors applied by the Hong Kong Monetary Authority to local mortgages of $0.6bn.
RWA initiatives
 
Reduced exposures, refined calculations and process improvements reduced RWAs by $11.8bn, and continued reduction in legacy credit and US run-off portfolios reduced them by a further $1.2bn.
 
 
 
 
HSBC Holdings plc  Earnings Release 3Q17
17
 
Earnings Release - 3Q17
 
 
 
 
 
 
 
 
 
 
Overview of RWAs
 
 
30 Sep
 
30 Jun
 
30 Sep
 
 
 
2017
 
2017
 
2017
 
 
 
RWA
 
RWA
 
Capital
requirement1
 
 
 
$bn
 
$bn
 
$bn
 
1
Credit risk (excluding Counterparty credit risk)
615.9
 
601.9
 
49.3
 
2
Standardised approach
129.8
 
130.2
 
10.4
 
3
Foundation IRB (FIRB) approach2
27.7
 
26.9
 
2.2
 
4
Advanced IRB (AIRB) approach2
458.4
 
444.8
 
36.7
 
6
Counterparty credit risk
59.8
 
61.5
 
4.8
 
7
Mark to market
37.2
 
36.7
 
3.0
 
10
Internal model method (IMM)
10.0
 
10.0
 
0.8
 
11
Risk exposure amount for contributions to the default fund of a CCP
0.7
 
0.7
 
0.1
 
12
CVA
11.9
 
14.1
 
0.9
 
13
Settlement risk
0.7
 
0.3
 
0.1
 
14
Securitisation exposures in the banking book (after the cap)
22.8
 
22.7
 
1.8
 
15
IRB approach
20.0
 
19.7
 
1.6
 
16
IRB supervisory formula approach (SFA)
0.2
 
0.2
 
-
 
17
Internal assessment approach (IAA)
1.5
 
1.6
 
0.1
 
18
Standardised approach
1.1
 
1.2
 
0.1
 
19
Market risk
42.6
 
43.6
 
3.4
 
20
Standardised approach
4.4
 
3.8
 
0.3
 
21
Internal models approach (IMA)
38.2
 
39.8
 
3.1
 
23
Operational risk
98.0
 
98.0
 
7.8
 
25
Standardised approach
98.0
 
98.0
 
7.8
 
27
Amounts below the thresholds for deduction (subject to 250% risk weight)
48.8
 
48.1
 
3.9
 
29
Total
888.6
 
876.1
 
71.1
 
 
 
 
1
'Capital requirement' here, and in all tables where the term is used, represents the Pillar 1 capital charge at 8% of the RWAs.
 
 
 
2
Internal ratings based.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
RWAs by global business
 
RBWM
 
CMB
 
GB&M
 
GPB
 
Corporate
Centre
 
Total
 
 
$bn
 
$bn
 
$bn
 
$bn
 
$bn
 
$bn
 
Credit risk
93.8
 
274.2
 
175.7
 
13.4
 
130.4
 
687.5
 
Counterparty credit risk
-
 
-
 
57.8
 
0.2
 
2.5
 
60.5
 
Market risk
-
 
-
 
40.6
 
-
 
2.0
 
42.6
 
Operational risk
27.4
 
24.2
 
30.9
 
2.8
 
12.7
 
98.0
 
At 30 Sep 2017
121.2
 
298.4
 
305.0
 
16.4
 
147.6
 
888.6
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
RWAs by geographical region
 
Europe
 
Asia
 
MENA
 
NorthAmerica
 
LatinAmerica
 
Total
 
 
$bn
 
$bn
 
$bn
 
$bn
 
$bn
 
$bn
 
Credit risk
231.8
 
278.0
 
47.6
 
104.0
 
26.1
 
687.5
 
Counterparty credit risk
30.7
 
15.1
 
1.1
 
12.3
 
1.3
 
60.5
 
Market risk1
28.9
 
22.9
 
2.7
 
7.3
 
0.9
 
42.6
 
Operational risk
30.9