HSBC Holdings plc Annual Results 2016

  • Completed a $2.5bn share buy-back following the sale of the Brazil business
  • Further reduced our risk-weighted assets (‘RWAs’) during 2016 by $143bn as a result of extensive management actions, including the sale of operations in Brazil
  • Generated annualised run rate savings of $3.7bn, following investment in costs to achieve (‘CTA’) of $4.0bn to date
  • Expect to deliver increased annualised cost savings of c. $6.0bn while continuing to invest in regulatory programmes and compliance, with c. $6.0bn of CTA investment required
  • Increased market share in a number of key markets and international product areas, including trade finance in Hong Kong and Singapore

Stuart Gulliver, Group Chief Executive, said:

“2016 was a good year in which we delivered a solid performance from all our global businesses, made better-than-anticipated progress in reducing our cost base, and delivered a total return to shareholders of 36%. We are investing over $2bn in digital transformation initiatives to improve our offer to customers, and are instigating a further $1bn buy-back programme reflecting the strength and flexibility of our balance sheet.”

Financial performance

  • Adjusted profit before tax of $19.3bn was broadly unchanged following solid performances from our global businesses; lower reported profit before tax of $7.1bn reflects significant items. These included a $3.2bn impairment of goodwill in GPB in Europe, costs to achieve of $3.1bn, adverse fair value movements of $1.8bn arising from changes in credit spreads on our own debt designated at fair value, and the impact of our sale of operations in Brazil
  • Adjusted revenue of $50.2bn was broadly unchanged; reported revenue of $48.0bn was 20% lower primarily driven by unfavourable movements in significant items and currency translation
  • Adjusted operating expenses fell by $1.2bn or 4%, reflecting investment in cost-saving initiatives; reported operating expenses were broadly unchanged;
  • Positive adjusted jaws of 1.2%1
  • Strong capital base with common equity tier 1 (‘CET1’) ratio 13.6% and a leverage ratio of 5.4%
  • Maintained the dividend at $0.51 per ordinary share; total dividends in respect of the year of $10.1bn; confident of maintaining at this level
  • The Board has determined to return to shareholders up to a further $1.0bn by way of a share buy-back which is expected to complete in the first half of 2017. This takes announced buy-backs since the second half of 2016 to $3.5bn following the successful sale of our Brazil business

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