HSBC : 1Q 2024 Presentation to Investors and Analysts

HSBC Holdings plc 1Q24 Results

Presentation to Investors and Analysts

1Q24 Results

Georges Elhedery

Group Chief Financial Officer

1Q24 results

Appendix

Summary

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2

3

4

$12.7bn PBT, down $(0.3)bn vs. 1Q23

$9.0bn PBT excluding notable items, down $(0.4)bn vs. 1Q23

26.1% reported RoTE1

16.4% RoTE excluding notable items1

$2bn buyback completed ($9bn completed since YE22)

1.2bn of shares repurchased since 1 January 2023 (6% of YE22 share count)

$8.8bn of further distributions announced:

• $0.10 ordinary DPS
• $0.21 special DPS
• Up to $3bn share buyback

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Reconfirming FY24 guidance, including a mid-teens RoTE excluding notable items and approximately (5)% cost growth vs. FY23 on a target basis2

Unless otherwise stated, this presentation is presented on a constant currency basis. denotes a measure shown on a reported FX basis. In this presentation, % changes relating to ECLs and costs in ( )	2
represent adverse movements. Figures throughout this presentation may be subject to rounding adjustments and may not sum precisely to totals given in charts, tables or commentary

Financial performance

Constant currency, $bn	1Q23	1Q24	Δ, $	Δ, %
Revenue	20.2	20.8	0.5	3 %
ECL	(0.4)	(0.7)	(0.3)	(68)%
Costs	(7.6)	(8.2)	(0.6)	(8)%
Associates	0.7	0.8	0.1	10 %
PBT	12.9	12.7	(0.3)	(2)%
0
Customer loans	963	933	(30)	(3)%
Customer deposits	1,603	1,570	(33)	(2)%
CET1 ratio, %	14.7	15.2	.	0.5ppts
0
Memo items:	.	.	.	.
Target basis costs1	(7.4)	(7.9)	(0.5)	(7)%
Total notable items	3.6	3.7	0.1	2 %
0
Reported FX basis :	.	.	.	.
PAOS	10.3	10.2	(0.1)	(1)%
EPS, $	0.52	0.54	$0.02	4 %
EPS excl. material notable items	0.36	0.34	$(0.02)	(6)%
and related impacts, $
DPS, $2	0.10	0.31	$0.21	>100%
RoTE, %3	27.4	26.1	. (1.3)ppts
RoTE excl. notable items, %3	18.4	16.4	. (2.0)ppts

1Q24 results	Appendix

• $12.7bn PBT included $3.7bn notable items, principally:
• • $4.8bn gain on sale of Canada4
  • $(1.1)bn impairment on classifying Argentina to held-for-sale
• $9.0bn PBT excluding notable items, down $(0.4)bn vs. 1Q23 as higher revenue was offset by higher costs and ECLs

PBT excluding notable items, $bn

12.9					12.7
			(4)%
9.3	0.5	(0.3)	(0.6)	0.1	9.0
1Q23	Revenue	ECL	Costs	Associates	1Q24

Constant currency (includes notable items)

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1Q24 results

Appendix

Revenue

$20.8bn, up $0.5bn vs. 1Q23, primarily Banking NII $17.0bn excluding notable items, up $0.5bn vs. 1Q23

Constant currency, $bn	1Q23	1Q24	Δ 1Q23
Revenue
20.2	20.8	0.5
Banking NII
10.1	11.3	1.2
Fee and other income	10.1	9.5	(0.7)
o/w: Wholesale Transaction Banking	2.9	2.6	(0.3)
o/w: Wealth			0.2
1.6	1.8
o/w: Other (includes notable items)	5.7	5.1	(0.6)
Memo: revenue notable items	3.7	3.7	0.1

Primarily:

• $(0.3)bn Argentina, excluding the $(1.1)bn impairment
• $(0.2)bn Markets Treasury (favourable mark to market

movements on swaps in 1Q23)

• Partly offset by +$0.1bn notable

items

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Banking NII

Stable run-rate QoQ; reconfirming at least $41bn FY24 guidance1

Banking NII (reported FX), $bn

		Canada	11.6	11.5			11.3
		0.3
		Argentina	0.3			Canada
		0.4			0.3
			0.4
			10.7
				0.5	Argentina
						0.3
10.3
		0.0
0.3
0.2	10.9	10.8	10.4	10.5
9.7
		1Q232	2Q232	3Q23	4Q23*	1Q24

• Canada: no further contribution in 2024 given sale completed on 28 March
• Argentina: sale expected to complete within the next 12 months. Argentina Banking NII will be volatile in future quarters due to hyperinflation accounting
• FY24 Banking NII guidance of at least $41bn unchanged1; assumes $1bn contribution from Argentina (FY23: $1.0bn)

1Q24 results	Appendix

1Q24 vs. 4Q23

$11.3bn Banking NII, up $0.6bn, driven by:

• $0.5bn Argentina
• $0.2bn non-recurrence of cash flow hedge reclassification*
• $(0.1)bn impact of the disposal of our retail banking operations in France
• UK RFB broadly stable
• Down modestly in Hong Kong:
• • Lower average HKD rates (1m HIBOR down c.(60)bps)
  • Stable time deposits as a % of customer accounts

* 4Q23 included impacts of $(0.5)bn from Argentina hyperinflation and $(0.3)bn from the reclassification of cash flow hedge revenue between NII and non-NII (of which $(0.2)bn related to 9M23)

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1Q24 results

Appendix

Fee and other income: Wholesale Transaction Banking and Wealth

Strong growth in Wealth, particularly in Asia

Wholesale Transaction Banking: down (9)%, primarily in FX

Wealth up 14%: growth across all products

$bn

		(9)%
2.9	2.7			2.6
	2.5	2.6

	vs.
	1Q23
GTRF	3%
GPS	6%

Securities

Services (3)%

FX1(18)%

$bn

+14%

1.8

1.6 1.6 1.5

1.3

vs.

1Q23

Asset8%

Management

Life3%

Insurance

Private34%

Banking

Investment

Distribution 14%

1Q23

2Q23

3Q23

4Q23

1Q24

1Q23 2Q23 3Q23 4Q23 1Q24

• FX down as 1Q23 benefited from higher market volatility
• GPS up due to increased client flows, including new mandates

• Private Banking up due to strong brokerage and trading in Asia
• Investment Distribution up due to strong sales of mutual funds, structured products and bonds across Asia
• $27bn NNIA during the quarter ($19bn Asia); $1.2tn invested assets (up 4% vs. 4Q23 on a reported basis)
• $0.8bn insurance new business CSM, up $0.4bn vs. 1Q23, primarily in HK; global CSM balance of $11.9bn, up $1.1bn in the quarter

See slide 18 for further details

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Credit performance

Stable; mainland China CRE charge immaterial

ECL charge trend, $bn

(17)bps	(35)bps	(41)bps	(38)bps	(30)bps
(0.4)		(0.9)	(1.1)	(1.0)	(0.7)
1Q23		2Q23	3Q23	4Q23	1Q24
(0.1)		(0.3)	(0.5)	(0.2)	(0.1)
	ECL charge as a % of gross loans and advances1	Mainland China CRE charge *

1Q24 ECL charge, $bn

	Stage 1-2	Stage 3	Total
Wholesale	(0.1)	(0.2)	(0.3)
Personal	(0.0)	(0.3)	(0.3)
Total	(0.1)	(0.5)	(0.7)‡

1Q24 results	Appendix

• $(0.7)bn 1Q24 ECL charge:
• • $(0.3)bn Wholesale; immaterial mainland China CRE charge
  • $(0.3)bn Personal, stable QoQ
• $21.3bn stage 3 balances (2.3% of customer loans), up $2.0bn / 0.3ppts vs. 4Q23 on a reported basis
• (30)bps ECL charge at 1Q24; reiterate ECL guidance of c.(40)bps for FY241

* Mainland China CRE charge 1Q24: $(54)m	7
‡ Total charge includes other instruments which are not classified as Wholesale or Personal

1Q24 results

Appendix

Costs

Reconfirming cost growth guidance of approximately (5)% vs. FY231

$bn	1Q23	1Q24
Constant currency costs	(7.6)	(8.2)
Less: notable items	0.1	0.1
Add: impact of retranslating results of	(0.1)	-
hyperinflationary economies at constant currency
Less: Canada direct costs	0.2	0.2
Less: France direct costs	0.1	-
Target basis costs	(7.4)	(7.9)

1Q24 vs. 1Q23 (target basis), $bn

(7)%

(0.2)

(0.1)

(0.2)

(0.1)

(7.9)

(7.4)

1Q23

Phasing of

Acquisition

Levies*

Technology,

1Q24

performance-

of SVB UK

inflation and

related pay

other

• Target basis costs up (7)%, of which:
• • (2)ppts from a change in the phasing of accrual for performance-related pay (PRP) relative to 2023
  • (1)ppt from the costs of HSBC Innovation Banking (SVB UK acquired in March 2023)
  • (1)ppt from incremental levies*
• While 1Q24 PRP accrual was higher than in 1Q23, our target basis cost guidance assumes PRP for FY24 to be broadly in line with FY23
• Reconfirming cost growth guidance of approximately (5)% vs. FY23 on a target basis1 (FY23 baseline: $(31.2)bn)

* Bank of England levy and the incremental FDIC special assessment	8
Totals may not cast due to rounding

Customer loans and deposits

Broadly stable vs. 4Q23

Customer loans, $bn

														+1%
																								933
928																	9
		(1)
								(4)
																	1
		4Q23	Argentina	Hong Kong			UK RFB	Other legal	1Q24
					moved to												entities
					held-for-sale
Customer deposits, $bn
														(2)%
1,594
		(3)			(16)
																				1,570
															(3)
																	(2)

4Q23	Argentina	Hong Kong	UK RFB	Other legal	1Q24
	moved to			entities

held-for-sale

1Q24 results	Appendix

• Loans up $5bn / 1%. Reductions in Hong Kong were offset by growth in other markets:
• • $(4)bn Hong Kong, primarily Wholesale, due to lower market-wide demand
  • +$1bn mortgage growth in the UK RFB
  • +$9bn other entities, including: $3bn Wholesale growth in HSBC Bank plc, $3bn growth in the rest of Asia, $1bn HSBC Middle East and $1bn Mexico
• Deposits down $(24)bn / (2)%, primarily in Wholesale, reflecting seasonality, our focus on margins and customer deleveraging:
• • $(16)bn Hong Kong: $(8)bn WPB, including migration from time deposits to Wealth products; $(8)bn Wholesale
  • $(3)bn UK RFB in CMB, reflecting seasonality
  • $(2)bn other entities: $(6)bn Wholesale reduction in the rest of Asia was partially offset by WPB growth in the region and Wholesale growth in HSBC Bank plc

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