At a glance

Our operating model consists of four global businesses and five geographical regions supported by 11 global functions.

Adjusted profit before tax
(3Q15: US$5.2bn)

US$5.6bn

Adjusted revenue
(3Q15: US$12.5bn)

US$12.8bn

Reported profit before tax
(3Q15: US$6.1bn)

US$0.8bn

Common equity tier 1 ratio
(2Q16: 12.1%)

13.9%

Key highlights

  • Good quarter in challenging operating conditions
  • Adjusted revenue up 2% on 3Q15
  • 4% fall in costs, reflecting the effect of transformational cost saving programmes
  • Strengthened capital position following a change in the regulatory treatment of our investment in BoCom
  • Adjusted loan impairment charges and other credit risk provisions (LICs) up US$0.1bn on 3Q15, down US$0.2bn on 2Q16

Group Chief Executive

Stuart Gulliver, HSBC Group Chief Executive

Financial targets

Delivering on our Group financial targets

Return on average ordinary shareholders’ equity
(%)

9M 2016 4.4%
9M 2015 10.7%

Return on average tangible equity (excluding significant items and the bank levy)

9M 2016 8.8%
9M 2015 10.9%


Our medium-term target is to achieve a return on equity (RoE) of more than 10%. This target is modelled on a common equity tier 1 (CET1) ratio in the range of 12% to 13%.

Over the first nine months of 2016, the return on average ordinary shareholders’ equity was 4.4%. This was down compared to the prior year, primarily reflecting an adverse movement in significant items, including the loss on disposal of our operation in Brazil, fair value losses on our own debt and the cost of investments to deliver the strategic actions set out at the Investor Update.

Excluding significant items and the bank levy, return on average tangible equity was 8.8%.

Adjusted jaws (%)

Adjusted jaws in per cent; 3Q16 positive 5.6 per cent; 9M16 positive 1.5 per cent



Our target is to grow revenue faster than operating expenses on an adjusted basis. This is referred to as positive jaws.

In the third quarter of 2016, jaws were positive, with revenue up 2% and costs down 4% compared with 3Q15 on an adjusted basis.

Over the first nine months of 2016, we had positive jaws of 1.5%.

Dividends declared
(US$ per ordinary share)

3Q16 US$0.10
3Q15 US$0.10


Our aim is to sustain the dividend through the long-term earnings capacity of our four global businesses.

We will contemplate share buy-backs as and when appropriate, subject to the execution of targeted capital actions and regulatory approval.

As of 31 October, we had completed 59% of the US$2.5bn equity buy-back announced in August 2016. We expect to finish the programme by the end of 2016 or early in the first quarter of 2017, depending on market trading volumes in the fourth quarter.

Video

Iain Mackay, Group Finance Director, talks about progress on costs and the bank’s strong capital position.

Iain Mackay, Group Finance Director, HSBC