Retail Banking and Wealth Management
Retail Banking and Wealth Management
Retail Banking and Wealth Management
Forward-looking statements
This presentation and subsequent discussion may contain certain forward-looking statements with
respect to the financial condition, results of operations and business of the Group. These forwardlooking statements represent the Groups expectations or beliefs concerning future events and involve
known and unknown risks and uncertainty that could cause actual results, performance or events to
differ materially from those expressed or implied in such statements. Additional detailed information
concerning important factors that could cause actual results to differ materially is available in our
Annual Report and Accounts. Past performance cannot be relied on as a guide to future performance.
This presentation contains non-GAAP financial information. Reconciliation of non-GAAP financial
information to the most directly comparable measures under GAAP are provided in the constant
currency and underlying reconciliations supplement available at www.hsbc.com.
Agenda
RBWM Overview
Section 1
RBWM Results
Section 2
Strategic Execution
Section 3
Summary
Section 4
RBWM Overview
Strategies:
RBWM Transformation
Wealth Management
Portfolio Management
RBWM Results
PBT1, (USDbn)
% Better / (worse)
2011
2012
4.3
9.6
124
6.7
7.1
2.1
3.8
83
(4.5)
(1.3)
72
Commercial Banking
7.9
8.5
7.0
8.5
21
0.9
1.0
Other
1.7
(7.0)
(521)
Total
21.9
20.6
(6)
5.3
5.5
2012 vs 2011
Of Which
US run-off portfolio
5.0
2011
2012
CER
72.2%
54.2%
184
114
(3.3%)
(1.1%)
4
2
Metrics
1.8
2.4
2.6
RoRWA3
1.3
1.3
0
(2)
(1.5)
(4)
(6)
(4.5)
Revenue 4
LICs 5
Operating expenses6
2011
2012
Significant reduction in LICs driven by decline in average lending balances and reduced delinquency rates
Improved revenue driven by lower adverse movement in the fair value of non-qualifying hedges
Note:
1 All data on an underlying basis, except where otherwise stated
2 On a reported basis
3 Calculated using underlying pre-tax profit and reported average RWAs at constant currency, adjusted for disposals
4 Revenue is net operating income before loan impairment charges and other credit risk provisions
5 Loan impairment charges and other credit risk provisions
6 2012 Operating expenses includes USD150m of residual costs incurred by the CRS business during the period
1.1
4.5
5.3
0.3
0.1
( 0.1)
0.7
5.5
(2.0)
(1.5)
2012 Total
RBWM
Metrics
2011
2012
CER
69.1%
69.6%
167
163
3.4%
3.4%
CRS and US
run-off
portfolio
2012 RBWM
ex CRS and
US run-off
2012 Notable
items
Cost
reduction
Associates
LICs
Revenue
(developed)
Revenue
(faster
growing)
2011 Notable
items
2011 RBWM
ex CRS and
US run-off
0.9
CRS and US
run-off
portfolio
+23%
2011 Total
RBWM
4.0
Revenue1,2
Continue to build revenues in faster growing markets
RBWM excluding CRS and US run-off portfolios
USDbn
+7%
20
15
14.0
15.0
10.3
10
10.3
2012
Revenue growth in faster growing markets with these markets representing 59% of RBWM underlying revenue in 2012 (58% in 2011)
Despite UK market remaining challenging our share of new UK mortgage lending in 2012 was 12%, up from the 10% share of new
lending in 2011
Increased revenue per customer
Note:
1 All data on an underlying basis, except where otherwise stated
2 Total RBWM underlying Revenue USD27.7bn in 2012. vs USD26.1bn in 2011; CRS and US
run-off portfolio underlying Revenues USD2.4bn in 2012 vs USD1.8bn in 2011
3 Excluding US run-off portfolio and CRS
10
Operating expenses1,2
Progression in operating expenses and FTE
RBWM excluding CRS and US run-off portfolio Operating Expenses3
USDbn
+1%
15
12
8.4
8.3
9
6
3
0
-4%
1.0
2.0
7.5
7.2
2012
Notables
120
275
250
100
80
225
1Q
11
2Q
11
3Q
11
4Q
11
FTE
1Q
12
2Q
12
3Q
12
4Q
12
200
Rev / FTE
Note:
1 All data on an underlying basis, except where otherwise stated
2 Total RBWM underlying Expenses USD18.9bn in 2012. vs USD18.1bn in 2011; CRS and US run-off portfolio underlying Expenses USD1.3bn in 2012 vs USD1.3bn in 2011
3 Operating expenses excluding notables. Significant notables in 2012 are USD1.8bn customer redress and USD0.3bn restructuring costs (2011: USD0.9bn customer redress, USD0.4bn restructuring and USD(0.3bn) pension credit)
4 Excluding US run-off portfolio and CRS
5 All notable items including restructuring costs have been allocated to Europe and North America
11
2.6
2.5
2011
2012
LICs/Customer advances
2%
1%
0%
2011
Note:
1 All data on an underlying basis, except where otherwise stated
2 Total RBWM underlying LICs USD5.2bn in 2012. vs USD7.5bn in 2011; CRS and US
run-off portfolio underlying LICs USD2.6bn in 2012 vs USD5.0bn in 2011
2012
12
400
357
351
300
184
114
200
277
193
100
81
80
76
83
87
87
2010
2011
2012
13
Strategic Execution
Portfolio management
Reduce fragmentation through closures and disposals
North America
Europe
Line of Business
Market Exits
Line of Business
Georgia, Poland,
Russia, Slovakia
Middle East
Latin America
Market Exits
Line of Business
Market Exits
Line of Business
Kuwait, Pakistan
Dar Es Salam
Insurance (Iraq)
Chile, Colombia,
Costa Rica,
El Salvador,
Honduras, Panama,
Paraguay, Peru,
Uruguay
GI (Argentina, Mexico),
Life (El Salvador ,
Honduras), Afore
Pensions (Mexico)
Asia
Market Exits
Line of Business
Thailand, Japan
Acquisitions
Lloyds (onshore Retail Banking UAE); Merger
with OIB (Oman)
Announced Acquisitions
15
Portfolio management
Cohesive portfolio of markets
Hong Kong and
rest of Asia-Pacific Europe
Home
markets
Priority
Growth
markets
Hong Kong1
Australia
Mainland China
India
Indonesia
Malaysia
Singapore
Taiwan
Vietnam
North
America
United
Kingdom2
France
Germany3
Switzerland3
Turkey
Egypt
Saudi Arabia
UAE
Canada
USA
Small markets
Network
CMB funding
Note:
1 Includes Hang Seng Bank
2 Includes first direct, M&S Money
3 Group priority growth markets but not RBWM
Latin
America
16
Argentina
Brazil
Mexico
RBWM Strategy
Build scale
and/or
capture
wealth
opportunity
Differentiate
to target
segments
Wealth management
Increasing momentum towards our incremental wealth goal
Wealth revenues1
Underlying trends
USDbn
0.6
0.3
5.8
2010
2011
6.4
2012
2013E
2014E
2015E
17
Summary
Summary
Committed to delivering incremental revenues from Wealth ManagementProduct set largely in place,
strengthening the distribution capabilities and improving relationship management
Implementing a consistent global business model to improve organisational effectiveness and cost
efficiency and enhance capital deployment
19