HSBC Fixed Income: 1H22 (PDF 3MB)

									Fixed Income
HSBC Holdings plc
1H22 Fixed income factbook				30 June 2022
2H22 issuance strategy and plan1
	HoldCo Senior		Tier 2		AT1		OpCo
	~$8bn on a gross		~$2bn gross / net		Unlikely to refinance		Expect certain
	basis, ~$6bn net				any 2022		subsidiaries to issue
						redemptions		senior and secured
								debt in local markets
								to meet funding and
								liquidity requirements

Issuance strategy

• Since 2015, HSBC Holdings has been the Group's issuing entity for external AT1, T2 and MREL/TLAC-eligible Senior

 Issuance over time to broadly	 Issuance executed with
match group currency	consideration to our maturity
exposures	profile

Maturity profile (notional) at 1H222

$bn-equivalent*
		17.3		18.8	18.4
		16.0
							15.5
		13.0		12.6	14.7		Senior (HSBC Holdings)
		11.7		11.0
			Tier 2 (HSBC Group)
6.2								AT1 (HSBC Holdings)
2.6					3.8
	0.4		2.0	1.5	1.4
2.1
3.9
	2.5	3.0
1.6		2.3	2.2
	2H22	2023	2024	2025	2026	2027

* Totals may not cast due to rounding

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HSBC at a glance

63	$3tn
countries and
territories	in assets
c.40m	3
customers	global
businesses

Our 3 global businesses

Wealth and Personal Banking

 We help over 38m of our customers look after their day-to-day finances and

WPB		manage, protect and grow their wealth
 We provide insurance, investment management, advisory and wealth
		solutions to those with more sophisticated requirements
	Commercial Banking
CMB	 Our global reach and expertise help domestic and international businesses
	around the world unlock their potential
	 We help businesses grow by supporting their financial needs and facilitating
		cross-border trade and payment services
GBM	Global Banking and Markets
 We provide a comprehensive range of financial services and products to
		corporates, governments and institutions

Diversified across businesses and geographies

1H22 Business performance, $bn			1H22 Geographic performance, $bn
Revenue3	RWAs			Revenue4		RWAs5
		10%	22%			6%	16%	13%	12%
30%				11%		4%
				5%			7%		17%
25.7 42%					25.7 15%
28%	852		852
							3%				0%
28%			40%			44%			47%
WPB	GBM					UK RFB6	Asia		LATAM
				NRFB6	MENA
CMB	Corporate Centre
	Europe - Other	NAM

Denotes an alternative performance measure	2

Progress on our 2021 commitments

We have made good progress across our four strategic pillars since the announcement of our transformation programme

Focus on our strengths: delivering growth in areas where we are strongest and have opportunities to grow, including to Asia and our higher-returning WPB business

Digitise at scale: to adapt our operating model for the future

Energise for growth: empowering and energising our employees is crucial for building a more effective workforce

Support the transition to a net zero global economy

The impact of our growth and transformation programmes over the last two years has given us the confidence to update our returns guidance. We are now targeting a RoTE of 12%+ from FY237, and aim to revert to paying quarterly dividends in 20238 with a dividend payout ratio of around 50%.

Updated guidance*

Revenue

Costs

Capital

Dividends

NII growth

• NII of at least $31bn in FY22; at least $37bn in FY237,9

Tight cost discipline

• Stable adjusted costs in 2022
• Aiming for c.2% adjusted growth in FY23 with tight cost discipline thereafter9
• Manage CET1 ratio in a 14-14.5% range over medium-term; aim to manage range down further longer term10
• Dividend payout ratio expected to be c.50% for FY23 and FY24
• Reinstate quarterly dividends from 2023 onwards8

RoTE

Targeting 12%+ from FY23 onwards

Progress on capital allocation

Asia as a % of Group tangible equity11	WPB as a % of Group tangible equity12
		1H21		27%
1H21	42%
1H22	44%	1H22		29%
Medium		c.50%	Medium			c.35%
to long-term10		to long-term10

* Full guidance can be found in the HSBC Holdings plc Interim Report 2022

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Digitise at scale

Technology spend13

Cloud adoption14

% of total adjusted operating expenses

%

1H21

19%

25%

+1ppt

1H21

1H22

20%

+6ppts

1H22

2025

>21%

31%

ambition

We continue to invest in our technology and operational capabilities to drive operating productivity and to offer a better client experience across businesses and geographies. At the end of 1H22, 46% of our retail customers active on our mobile services had logged onto a HSBC mobile app at least once in the last 30 days, compared with 41% at the end of 1H21. Our wholesale clients executed c.6.3 million payments on HSBCnet's mobile banking app, a 61% increase compared with 1H21.

ESG update

	 Aim to be net zero in our operations
	and supply chain by 2030 and net
	zero in our financed emissions by
	2050
	 We plan to publish our own climate
	transition plan in FY23 bringing
	together how we intend to embed net
	zero targets into our strategy,
Environmental	processes, policies and governance
	 We have provided and facilitated
	$171bn of sustainable finance and
	investment towards our ambition of
	$750bn to $1tn by 203015

Cumulative sustainable finance & investments15, $bn

1H21 87

1H22 171

2030	1,000
ambition

• We have an ambition to increase our gender and ethnicity representation in senior leadership by 2025:
• • 35% of senior leaders to be female
  • Double the number of Black colleagues in senior leadership

Socialpositions16

• Opened >5,000 bank accounts for Ukrainian refugees in the UK to support them with accessing required financial services

Percentage of female senior leaders17

1H21 31.1

+1.4ppts

1H22 32.5

202535.0 ambition

4

Balance sheet strength

At 30 June 2022

Loan/deposit		High quality	Liquidity		CET1 ratio19		Leverage
ratio		liquid	coverage				ratio19
		assets18	ratio
62.3%		$657bn	134%	13.6%	5.5%

Unsecured as % of retail loan book		Gross customer lending by type, $bn
16.0% 15.6%	14.7% 14.4%
	11.1% 10.6%	10.5%	575

2016

2017

2018

2019

2020

2021

1H22

1,039

361

82 21

	Mortgages	Other personal
Business Banking Loans & Advances and	Credit cards	Wholesale
Deposits, $bn

UK RFB6	Hong Kong
32.5%	17.1%
			90.6
	54.7
17.8		15.5
L&A	Deposits	L&A	Deposits
	Loan/Deposit ratio

• UK mortgages: $153bn
• • Average LTV: 49%; new lending: 67%
• HK mortgages: $99bn
• • Average LTV: 50%; new lending: 59%

Lending quality at 30 June 2022

• 73% of loans are rated 'Strong' or 'Good'
• 1.8% of gross loans and advances in Stage 3

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