Annual Results 2019

Read a summary of our business update and Annual Results 2019, and download
our Annual Report and other key documents.

At a glance

We aim to deliver long-term value for our shareholders through our extensive international network, access to high-growth markets and balance sheet strength.

For year ended 31 December 2019

Fact: in 2019 our reported profit before tax was USD13.3bn, compared with USD19.9bn in 2018.
Fact: in 2019 our reported revenue was USD56.1bn, compared with USD53.8bn in 2018.
Fact: in 2019 our reported revenue was USD56.1bn, compared with USD53.8bn in 2018.

At 31 December 2019

Fact: at the end of 2019 we had USD843bn in risk-weighted assets, compared with USD865bn at the end of 2018.
Fact: at the end of 2019 our common equity tier 1 ratio was 14.7 per cent, compared with 14 per cent at the end of 2018.
Fact: at the end of 2019 we had USD2,715bn in total assets, compared with USD2,558bn at the end of 2018.

Key highlights

  • Adjusted profit rose 5% to US$22.2bn; reported profit was down 33% to US$13.3bn, due to a goodwill impairment of US$7.3bn
  • This reflects lower long-term economic growth rate assumptions and the fact we plan to reshape our Global Banking and Markets business
  • Positive adjusted jaws of 3.1 per cent, as we continue to take action on costs. Adjusted operating expense growth of 2.8% was well below the growth rate in 2018 (compared with 2017)
  • Adjusted revenue in Asia rose 7% to US$30.5bn and adjusted profit before tax in the region was up 6% to US$18.6bn
  • We have announced a business update setting out how we plan to deliver our strategy going forward

Group Chairman’s statement

“Even in this increasingly challenging competitive environment, there are many opportunities for a bank of HSBC’s scale and reach. We have made a good start in capturing these opportunities, but we need to go further and faster to capitalise fully on our heritage, network and financial strength.”

Mark E Tucker, HSBC Group Chairman
18 February 2020

Group Chief Executive’s review

“As we pursue our plan to deliver greater value for our customers and shareholders, we will continue to seek to grow the parts of the business where we are strongest. However, given the changed economic environment, we must also act decisively to reshape areas of persistent underperformance, particularly in Global Banking and Markets in Europe and the US. We also aim to simplify the Group to accelerate the pace of change and reduce the size of its cost base. This should create a leaner, simpler and more competitive Group that is better positioned to deliver higher returns for investors.”

Noel Quinn, HSBC Group Chief Executive
18 February 2020

Business update, February 2020

The macroeconomic environment and interest rate outlook have changed since we set our strategic priorities and financial targets in June 2018. While much of our business has held up well, particularly in Asia and the markets served by our international network, underperformance in other areas has had a negative impact on our returns.

In February 2020 we therefore set out a plan to upgrade the return profile of our risk-weighted assets, reduce our cost base and streamline our organisation. This is key to delivering our strategy. It will position the Group to increase returns for investors, create the capacity to invest in the future, and build a sustainable platform for growth.

We are planning action in three key areas. We aim to:

  • Restructure for growth by reshaping underperforming parts of the Group, including our non-ring fenced bank in Europe, and our business in the US
  • Reinvest capital released through restructuring in growth opportunities and areas of strength, including Asia, the Middle East, HSBC UK, transaction banking and international wealth
  • Create a simpler, more efficient and empowered organisation, allowing us to reduce our cost base and accelerate the pace of change

Our 2022 targets

Alongside our plan we are setting three overarching 2022 targets. We are aiming to achieve a:

  • Cumulative gross reduction in risk-weighted assets of more than US$100 billion by 2022
  • Reduction in our cost base to US$31 billion or less in 2022
  • Return on tangible equity in the range of 10 per cent to 12 per cent in 2022 with the benefit of our cost reductions and redeployed RWAs expected to flow into subsequent years

Video


HSBC Group Chief Executive Noel Quinn discusses the bank’s plans to increase returns, invest for growth, and simplify the business.

Our businesses in 2019

Retail Banking and Wealth Management
Retail Banking and Wealth Management in 2019 Our Retail Banking and Wealth Management business delivered USD8.0bn adjusted profit before tax in 2019, compared with USD7.0bn in 2018. We help 39 million customers across the world to manage their finances, buy their homes, and save and invest for the future. In 2019: Adjusted revenue of US$23.4bn was 9% higher than in 2018, with strong performances in Hong Kong, Latin America, the UK and mainland China We increased customers by 1.5 million Our mortgage book grew by 9% in Hong Kong and 7% in the UK Return on tangible equity of 20.5%
Commercial Banking

Commercial Banking in 2019 Our Commercial Banking business delivered USD7.3bn adjusted profit before tax in 2019, compared with USD7.5bn in 2018. We support approximately 1.4 million business customers in 53 countries and territories, ranging from small enterprises focused primarily on their domestic markets to large companies operating globally. In 2019: Adjusted revenue of US$15.3bn, with broad-based growth across all main products and regions We continued to invest in ways to make banking with us easier, including improved customer journeys, new digital platforms and mobile apps Loans and advances to customers grew by US$9.0bn
Global Banking and Markets
Global Banking and Markets in 2019 Our Global Banking and Markets business delivered adjusted profit before tax of USD5.3bn in 2019, compared with USD5.9bn in 2018. We support major government, corporate and institutional clients worldwide. Our product specialists deliver a comprehensive range of transaction banking, financing, advisory, capital markets and risk management services. In 2019: Our performance reflected ongoing economic uncertainty and spread compression, which negatively affected our business in Europe There was a strong performance in Asia: 48% of adjusted revenue was generated in the region Global Liquidity and Cash Management grew revenue by 7%; Securities Services revenue rose by 6% We reduced risk-weighted assets by US$23bn at year end compared with 31 December 2018
Global Private Banking

Global Private Banking in 2019 Our Global Private Banking business delivered USD0.4bn in adjusted profit before tax in 2019, compared with USD$0.3bn in 2018. We serve high net worth and ultra high net worth individuals and families, including those with international banking needs. In 2019: Net new money inflows were US$23bn, the highest since 2008. More than 60% came from collaboration with our other global businesses Adjusted revenue increased by 5%, primarily reflecting growth in Asia Lending revenue was 11% higher, with growth in most of our markets

Financial targets

In our Annual Report and Accounts 2019, we reported on our performance against the financial targets that we set in June 2018. A summary can be seen below.

Our Business Update in February 2020 set new targets. We will report progress towards these new targets alongside future updates on our financial performance.

Return on tangible equity (%)

In 2019, we achieved a return on tangible equity (RoTE) of 8.4%, compared with 8.6% in 2018.

When we set our strategy in June 2018, our target was to achieve a reported RoTE of more than 11% by the end of 2020, which is broadly equivalent to a reported return on equity (RoE) of 10%. The revenue environment is now more challenging than when we set this strategy, and as a result we no longer expect to reach this target by the end of 2020.

Following our February 2020 business update, we are targeting a return on tangible equity in the range of 10 per cent to 12 per cent in 2022, with the benefit of our cost reductions and redeployed RWAs expected to flow into subsequent years.

Adjusted jaws

Adjusted jaws measures the difference between the rates of change in adjusted revenue and adjusted operating expenses.

In 2019, adjusted revenue increased by 5.9%, while adjusted operating expenses increased by 2.8%. Adjusted jaws was therefore positive 3.1%.

Following our February 2020 business update, we are targeting a reduction in our cost base to US$31 billion or less in 2022.

ESG Update

HSBC published its Environmental, Social and Governance (ESG) Update 2019 alongside its Annual Report and Accounts on 18 February 2020.

The ESG Update outlines action the bank is taking to meet its wider responsibilities towards customers, communities and other stakeholders around the world. It covers areas including corporate governance, environmental impact, customer satisfaction, conduct, and employee advocacy.

It also gives new information on issues such as the Group’s progress in helping customers make the low-carbon transition, and summarises performance against key non-financial targets and metrics.

Group Chief Executive Noel Quinn said: “We have been open and honest about our successes – of which there are many – but equally transparent about where we need to improve.”

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