Interim Results 2019

Our Interim Report 2019 and other key documents are available to download.

At a glance

Our international network, access to high-growth markets and balance sheet strength deliver long-term value for customers and shareholders.

Our operating model consists of four global businesses and a Corporate Centre, supported by HSBC Operations, Services and Technology, and global functions.

For the half-year ended 30 June 2019

Fact: Reported profit before tax is 12.4 billion US dollars. Reported profit before tax in the first half of 2018 is 10.7 billion US dollars.
Fact: Adjusted profit before tax is 12.5 billion US dollars. Adjusted profit before tax in the first half of 2018 is 11.7 billion US dollars.
Fact: Reported revenue is 29.4 billion US dollars. Reported revenue in the first half of 2018 is 27.3billion US dollars.

At 30 June 2019

Fact: Reported risk-weighted assets in 2019 is 886 billion US dollars. Reported risk-weighted assets as of 31 December 2018 is 865 billion US dollars.
Fact: Common equity tier 1 ratio in 2019 is 14.3 per cent. Common equity tier 1 ratio as of 31 December 2018 is 14.0 per cent.
Fact: Total assets in 2019 is 2,751 billion US dollars. Total assets as of 31 December 2018 is 2,558 billion US dollars

Key highlights

  • Continued growth in Asia
  • Investments of $2.2bn, up 17% compared with 1H18, on near- and medium-term initiatives to grow the business and enhance digital capabilities
  • Adjusted revenue up 8.0% on 1H18, with strong performances in Retail Banking and Wealth Management and Commercial Banking. Adjusted revenue was down 3% in Global Banking and Markets
  • Adjusted costs up 3.5%; positive adjusted jaws of 4.5%
  • Earnings per share of 42 cents. Return on average tangible equity (annualised) rose to 11.2%
  • We intend to initiate a share buy-back of up to US$1bn, which is expected to commence shortly

Our businesses

Retail Banking and Wealth Management
Retail Banking and Wealth Management performance in 1H19: Retail Banking and Wealth Management had adjusted profit before tax of US$4.4bn in the first half of 2019, up from US$3.6bn in the first half of 2018. We help more than 38 million customers across the world to manage their finances, buy their homes, and save and invest for the future. In the first half of 2019 we grew the number of active customers by more than 700,000 through targeted growth in key markets and continued improvements to customer service and onboarding journeys. We increased our lending in the UK and Hong Kong by $10bn, and customer deposits by $11bn, compared with the end of 2018. This further strengthened our competitive positions in these markets We continued to invest in improving digital banking, introducing more than 90 new features to improve our customers’ online and mobile banking experience.
Commercial Banking

Commercial Banking performance in 1H19: Commercial Banking had adjusted profit before tax of US$4.0bn in the first half of 2019, compared with US$4.0bn in the first half of 2018. We support approximately 1.5 million business customers in 53 countries and territories, ranging from small enterprises focused primarily on their domestic markets to large companies operating globally. In the first half of 2019 we continued to improve customer journeys and develop digital solutions to make banking with us easier. We reduced the average onboarding time for our relationship-managed customers to eight days, compared with 23 days in January 2018. We enhanced our HSBC UK Business Banking app. In Hong Kong we migrated more than 360,000 customers onto a new digital business banking platform and launched the PayMe for Business app. We announced with Walmart the roll-out of a sustainable supply chain finance programme that pegs a supplier’s financing rate to its sustainability performance.
Global Banking and Markets
Global Banking and Markets performance in 1H19: Global Banking and Markets had adjusted profit before tax of US$2.8bn in the first half of 2018, down from US$3.4bn in the first half of 2018. We serve approximately 4,400 clients in more than 50 countries and territories. We support major government, corporate and institutional clients worldwide. In the first half of 2019 we continued to drive our sustainable finance agenda, acting as joint bookrunner for Latin America’s first sovereign green bond; sole green structuring adviser on the first green convertible bond in the real estate sector; and joint bookrunner for the world’s first green bond in the telecommunications sector. We continued to invest in digital to enhance and personalise our client experience, building digital capabilities and tools to improve efficiency and provide value to our clients.
Global Private Banking

Global Private Banking performance in 1H19: Global Private Banking had adjusted profit before tax of US$0.2bn in the first half of 2019, compared with $0.2bn in the first half of 2018. We serve high net worth and ultra high net worth individuals and families, including those with international banking needs. In the first half of 2019 we recorded net new money inflows of US$14bn, the highest half-year net inflow since 2008. We generated more than 60% of 1H19 net new money inflows from collaboration with our other global businesses. We were named 'Best Asia Private Bank' at the WealthBriefingAsia Awards 2019.

Financial targets

Return on tangible equity (%)

Our target is to achieve a reported return on tangible equity (‘RoTE’) of more than 11% by the end of 2020, which is broadly equivalent to a reported return on equity of 10%. We intend to do this while maintaining a common equity tier 1 ratio of greater than 14%.

In the first half of 2019, we achieved a RoTE of 11.2% compared with 9.7% in 1H18. This included the favourable impact of the Saudi British Bank dilution gain of around 1.2 percentage points.

The outlook for the rest of 2019 has changed. Interest rates in the US dollar bloc are now expected to fall rather than rise, and geopolitical issues could impact a significant number of our major markets. In the near term, the nature and impact of the UK’s departure from the European Union remain highly uncertain. We are managing operating expenses and investment spending in line with the increased risks to revenue.

We expect some recovery from first-half market conditions in Global Banking and Markets in the second half of 2019 and into next year, and continue to target a RoTE above 11% in 2020.

Adjusted jaws (%)

Our target is to maintain on an annual basis, while noting the sensitivity of the metric to unexpected movements in revenue or operating expenses growth.

In 1H19, adjusted revenue increased by 8.0% and adjusted operating expenses increased by 3.5%. Adjusted jaws was therefore positive 4.5%.

Adjusted jaws in 1H19 were supported by favourable market impacts in life insurance manufacturing, the non-recurrence of a 1H18 swap mark-to-market loss on a bond reclassification and 1H19 disposal gains in Latin America.

Dividends

We plan to sustain the annual dividend in respect of the year at its current level for the foreseeable future. Growing our dividend will depend on the overall profitability of the Group, delivering further release of less efficiently deployed capital and meeting regulatory capital requirements in a timely manner.

Total dividends declared in respect of the half-year (US$bn)

Video


Group Chief Financial Officer Ewen Stevenson says that HSBC delivered a good set of results and continued strategic progress in the first six months of 2019.