1Q19 EARNINGS RELEASE – HIGHLIGHTS
John Flint, Group Chief Executive, said:
“These are an encouraging set of results, particularly in the context of heightened economic uncertainty globally. We remain focused on executing the strategy we outlined last June, while also being alert to risks in the global economy.”
Financial performance (vs. 1Q18)
• Reported profit after tax up 31% to $4.9bn.
• Reported revenue up 5%. Adjusted revenue up 9%, supported by positive market impacts and disposal gains.
• Reported operating expenses down 12%. Adjusted operating expenses up 3.2% in 1Q19, which has slowed from 5.6% at FY18 (compared with FY17). Returned to positive adjusted jaws of 6.0%, supported by favourable markets-related movements and disposal gains in Latin America.
• Earnings per share of 21 cents, up 40%. Return on tangible equity (annualised) up 220bps to 10.6%.
• Common equity tier 1 ('CET1') ratio up 30bps from 31 December 2018 to 14.3%, including a 7bps adverse impact of IFRS 16. We are committed to the discipline of scrip neutralisation and will announce our decision on 2019 share buybacks at the half-year.
Strategic progress
• Continued growth momentum in RBWM and CMB. Adjusted revenue up 10% in RBWM and 11% in CMB, compared with 1Q18. Strong adjusted revenue performances in Retail Banking (up 11%) and Global Liquidity and Cash Management (up 17%).
• Strong growth in Asia, despite a softer rate and growth environment. Reported revenue up 7% compared with 1Q18; reported lending growth of $11bn or 2% compared with 4Q18.
• Investments of $1.0bn in 1Q19, up 15% compared with 1Q18, on near- and medium-term initiatives to grow the business and enhance our digital capabilities.
• Revenue growth from our international network, with transaction banking revenue up 9% compared with 1Q18.
• US turnaround progressing, but this remains our most challenging strategic priority. In 1Q19, we increased retail customer numbers and continued to capitalise on our international network, despite the softening rate environment.
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Financial highlights and key ratios |
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Quarter ended 31 Mar |
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2019 |
2018 |
Change |
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|
|
$m |
$m |
% |
|
|
Reported profit before tax |
6,213 |
4,755 |
30.7 |
|
|
Adjusted profit before tax |
6,350 |
5,800 |
9.5 |
|
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Reported profit after tax |
4,910 |
3,738 |
31.4 |
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|
|
$ |
$ |
% |
|
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Basic earnings per share |
0.21 |
0.15 |
40.0 |
|
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Diluted earnings per share |
0.21 |
0.15 |
40.0 |
|
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Net asset value per ordinary share |
8.20 |
8.40 |
(2.4 |
) |
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Tangible net asset value per ordinary share |
7.05 |
7.29 |
(3.3 |
) |
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Tangible net asset value per fully diluted ordinary share |
7.02 |
7.25 |
(3.2 |
) |
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Millions |
Millions |
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Basic number of ordinary shares outstanding |
20,082 |
20,013 |
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Basic number of ordinary shares outstanding and dilutive potential ordinary shares |
20,177 |
20,118 |
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|
|
|
% |
% |
|
|
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Net interest margin |
1.59 |
1.67 |
|
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Return on average ordinary shareholders' equity (annualised) |
10.2 |
7.5 |
|
|
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Return on average tangible equity (annualised) |
10.6 |
8.4 |
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Adjusted jaws |
6.0 |
|
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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, which include litigation and regulatory items.
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Capital and balance sheet |
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At |
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31 Mar |
31 Dec |
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2019 |
2018 |
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Footnotes |
% |
% |
|
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Common equity tier 1 ratio |
1 |
14.3 |
|
14.0 |
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Leverage ratio |
1 |
5.4 |
5.5 |
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|
|
|
$m |
$m |
|
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Loans and advances to customers |
|
1,005,279 |
981,696 |
|
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Customer accounts |
|
1,356,511 |
1,362,643 |
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Loans and advances to customers as a percentage of customer accounts
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|
74.1% |
72.0% |
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Risk-weighted assets
|
1 |
879,485 |
865,318 |
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