HSBC Holdings plc Annual Results 2017

  • Delivered growth from our international network with a 6% increase in transaction banking product revenue and a 13% rise in revenue synergies between global businesses compared with 2016.
  • Achieved annualised run-rate savings of $6.1bn since our Investor Update in 2015, while continuing to invest in growth, and regulatory programmes and compliance; exit run-rate in line with 2014 adjusted cost base.
  • Exceeded our RWA reduction target; extracting a total of $338bn of RWAs from the business since the start of 2015.
  • Pivot to Asia generating returns and driving over 75% of Group reported and adjusted profit in 2017.
  • Delivered a return on equity of 5.9% in 2017, up from 0.8% in 2016. We will continue to invest for growth and manage our capital efficiently to achieve our medium term ROE target of >10%.

Stuart Gulliver, Group Chief Executive, said:

“These good results demonstrate the strength and potential of HSBC. All our global businesses grew adjusted profits and we concluded the transformation programme that we started in 2015. HSBC is simpler, stronger, and more secure than it was in 2011. It has been my great privilege to lead HSBC for the last seven years, and in handing over to John I am confident the organisation is in great hands.”

John Flint, Group Chief Executive Designate, said:

“These results and the achievements of the last couple of years give us a great platform to build on. I am working with the management team and the Board to evolve our strategy and execute it at pace, and I will update shareholders on this work by our half year results. The fundamentals of HSBC will remain the same as they always have - strong funding and liquidity, strong capital, and a conservative approach to credit.”

Financial performance

  • Reported profit before tax of $17.2bn was up $10.1bn or 141% on 2016, in part reflecting favourable movements in significant items, which included a loss on sale and trading results of the operations in Brazil that we sold on 1 July 2016; adjusted profit before tax of $21.0bn was $2.1bn or 11% higher, as revenue growth and lower LICs more than offset higher operating expenses.
  • Reported revenue of $51.4bn was $3.5bn or 7% higher, in part due to adverse fair value movements on our own debt in 2016, which are now reported in other comprehensive income. This was partly offset by the adverse impact of foreign currency translation; adjusted revenue of $51.5bn rose by $2.2bn or 5%, primarily driven by higher revenue in our three main global businesses.
  • Reported LICs of $1.8bn were $1.6bn or 48% lower, in part reflecting the impact of the sale of our operations in Brazil in 2016 of $0.7bn; adjusted LICs of $1.8bn fell by $0.8bn, spread across our Commercial Banking and Retail Banking and Wealth Management businesses.
  • Reported operating expenses of $34.9bn fell by $4.9bn or 12% due to lower significant items, which included a $3.2bn write-off of goodwill in our Global Private Banking business in Europe in 2016; adjusted operating expenses of $31.1bn were $1.1bn or 4% higher, lifted by investments in business growth programmes and higher performance-related pay.
  • Positive adjusted jaws of 1%.
  • Strong capital base with a common equity tier 1 (‘CET1’) ratio 14.5% and a leverage ratio of 5.6%.
  • Maintained the dividend at $0.51 per ordinary share; total dividends in respect of 2017 of $10.2bn; confident of maintaining at this level.
  • Share buybacks as and when appropriate, subject to the execution of targeted capital actions and regulatory approval.
  • Additional Tier 1 Capital issuance of between $5bn to $7bn planned during the first half of 2018.

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