HSBC Holdings plc 1Q 2016 Earnings Release
1Q16 compared with 1Q15
- Reported PBT of $6,106m in 1Q16, down by $953m or 14%, a resilient performance despite challenging market conditions.
- Adjusted PBT of $5,434m in 1Q16, down by $1,162m or 18%.
- Adjusted revenue of $13,914m, down by $543m or 4% in challenging market conditions. This was mainly in GB&M (FX, Equities and Credit) and RBWM (life insurance manufacturing), partly offset by continued momentum in CMB.
- Adjusted LICs of $1,161m, up by $692m from higher specific charges across a number of countries.
- Adjusted operating expenses down $76m or 1% at $7,874m. Excluding the UK bank levy, operating expenses were broadly unchanged reflecting tight cost control and the continued impact of cost saving plans.
1Q16 compared with 4Q15
- Reported PBT up by $6,964m and adjusted PBT up by $3,577m. Operating expenses excluding the bank levy down by $236m and significantly lower LICs, down by $450m.
Dividends and capital
- Earnings per share in respect of 1Q16 were $0.20 compared with $0.26 for the equivalent period in 2015.
- Dividends per ordinary share in respect of 1Q16 were $0.10 compared with $0.10 for the equivalent period in 2015.
- CET1 ratio remained strong at 11.9%.
- Leverage ratio remained strong at 5.0%.
- Issued TLAC securities of $10.5bn, the largest fund-raising by a bank since 2008.
Group Chief Executive Stuart Gulliver commented:
Our first quarter performance was resilient in tough market conditions that affected the entire banking sector. Profits were down against a very strong first quarter of 2015, but we increased market share in many of the product areas that are critical to our strategy.
Market uncertainty led to extreme levels of volatility in January and February, which affected our ability to generate revenue in our Markets and Wealth Management businesses. However, our diversified, universal-banking business model helped to cushion the impact through growth in other parts of the bank. Commercial Banking continued its momentum in spite of the slow-down in global trade, and we increased market share across our strategic trade corridors. We also grew revenue elsewhere in Retail Banking and Wealth Management, particularly from current and savings accounts in Hong Kong and the UK, and personal lending in Asia and Mexico.
A combination of tight cost management and the increasing impact of our cost-saving programmes reduced operating expenses relative to the fourth quarter of 2015.
Credit quality remains robust. As anticipated at our Annual Results in February, there were additional loan impairment charges in the quarter related to the oil and gas, and metals and mining sectors.
Our targeted initiatives removed another $15bn of risk-weighted assets in the first quarter. Risk-weighted assets increased overall due to an increase in corporate lending. Higher market volatility and some corporate credit downgrades also increased risk-weighted assets. We remain on track to hit our risk-weighted asset reduction target.
All of our cost-reduction programmes are now under way and we have a good grip on operating expenses. We are confident of hitting our cost target by the end of 2017.
The technical body of the Brazilian Competition Agency has now recommended to its Board that the sale of our Brazil business be approved. We await a final decision from the Competition Agency. This is the final regulatory approval required prior to the completion of the transaction.
Our Asia businesses continue to gain momentum. We made important market share gains in debt capital markets, China M&A and syndicated lending in the first quarter, and had strong business wins on the back of our investment in Asia. We also extended our leadership in services related to renminbi internationalisation.
We maintain sharp focus on implementing the strategic actions from our Investor Update last June.
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