HSBC Holdings Plc - Q1 Earnings

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.

Financial highlights and key ratios

 

Quarter ended 31 Mar

 

2019

2018

Change

 

$m

$m

%

Reported profit before tax

6,213

4,755

30.7

 

Adjusted profit before tax

6,350

5,800

9.5

 

Reported profit after tax

4,910

3,738

31.4

 

 

$

$

%

Basic earnings per share

0.21

0.15

40.0

 

Diluted earnings per share

0.21

0.15

40.0

 

Net asset value per ordinary share

8.20

8.40

(2.4

)

Tangible net asset value per ordinary share

7.05

7.29

(3.3

)

Tangible net asset value per fully diluted ordinary share

7.02

7.25

(3.2

)

 

Millions

Millions

 

Basic number of ordinary shares outstanding

20,082

20,013

 

Basic number of ordinary shares outstanding and dilutive potential ordinary shares

20,177

20,118

 

 

%

%

 

Net interest margin

1.59

1.67

 

Return on average ordinary shareholders' equity (annualised)

10.2

7.5

 

Return on average tangible equity (annualised)
 

10.6

8.4

 

Adjusted jaws

6.0

 

 

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.

Capital and balance sheet

 

 

At

 

 

31 Mar

31 Dec

 

 

2019

2018

 

Footnotes

%

%

Common equity tier 1 ratio

1

14.3

 

14.0

Leverage ratio

1

5.4

5.5

 

 

$m

$m

Loans and advances to customers

 

1,005,279

981,696

Customer accounts

 

1,356,511

1,362,643

Loans and advances to customers as a percentage of customer accounts

 

 

74.1%

72.0%

Risk-weighted assets

 

 

 

1

879,485

865,318