At a glance
Our operating model consists of four global businesses and five geographical regions supported by 11 global functions.
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
“Our third-quarter performance reflected the strength of our network and the deepening impact of our strategic actions. Reported profits were down, but adjusted profits were higher than last year’s third quarter in all four global businesses and four out of five regions.”
Stuart Gulliver, HSBC Group Chief Executive
7 November 2016
Implementing our strategy
We generated a further US$57bn of risk-weighted assets (RWA) savings in the third quarter. We are now more than 80 per cent of the way to achieving our RWA reduction target.
We have now achieved US$2.8bn of annualised cost-savings and are on track to achieve our 2017 cost-saving target as well.
Financial targets
Delivering on our Group financial targets
Our medium-term target is to achieve a return on equity (RoE) of more than 10%. This target is modelled on a common equity tier 1 (CET1) ratio in the range of 12% to 13%.
Over the first nine months of 2016, the return on average ordinary shareholders’ equity was 4.4%. This was down compared to the prior year, primarily reflecting an adverse movement in significant items, including the loss on disposal of our operation in Brazil, fair value losses on our own debt and the cost of investments to deliver the strategic actions set out at the Investor Update.
Excluding significant items and the bank levy, return on average tangible equity was 8.8%.
Adjusted jaws (%)
Our target is to grow revenue faster than operating expenses on an adjusted basis. This is referred to as positive jaws.
In the third quarter of 2016, jaws were positive, with revenue up 2% and costs down 4% compared with 3Q15 on an adjusted basis.
Over the first nine months of 2016, we had positive jaws of 1.5%.
Dividends declared (US$ per ordinary share)
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.
