Q3 2016 Earnings Release

RNS Number : 4372O
HSBC Holdings PLC
07 November 2016
 
Earnings Release - 3Q16









7 November 2016

HSBC Holdings plc - Earnings Release
HSBC Holdings plc ('HSBC') will be conducting a trading update conference call with analysts and investors today to coincide with the publication of its Earnings Release. The call will take place at 07.15am GMT. Details of how to participate in the call and the live audio webcast can be found at www.hsbc.com/investor-relations.



HSBC HOLDINGS PLC
1

Earnings Release - 3Q16 (continued)

Table of contents
Highlights
 
4
Group Chief Executive's comments
 
5
Adjusted performance
 
6
Financial performance commentary
 
8
Cautionary statement regarding forward-looking statements
 
13
Summary consolidated income statement
 
14
Summary consolidated balance sheet
 
15
Capital
 
16
 

Risk-weighted assets
 
18
Leverage
 
20
Summary information - global businesses
 
21
Summary information - geographical regions
 
26
Appendix - selected information
 
31
Reconciliation of reported results to adjusted performance
 
31
Gross loans and advances by industry sector and by
 
 
geographical region
 
40



HSBC HOLDINGS PLC
2
Earnings Release - 3Q16 (continued)

Terms and abbreviations
2Q16
Second quarter of 2016
3Q15/3Q16
Third quarter of 2015/2016
9M15/9M16
Nine months to 30 September 2015/2016
BoCom
Bank of Communications Co., Limited, one of China's largest banks
CET1
Common equity tier 1
CMB
Commercial Banking, a global business
CML
Consumer and Mortgage Lending (US)
Costs to achieve
Transformation costs to deliver the cost reduction and productivity outcomes outlined in the Investor Update in June 2015
CRD IV
Capital Requirements Directive IV
CRR
Capital Requirements Regulation
DVA
Debit valuation adjustment
EBA
European Banking Authority
FTEs
Full-time equivalent staff
FX
Foreign exchange
GB&M
Global Banking and Markets, a global business
GPB
Global Private Banking, a global business
Group
HSBC Holdings together with its subsidiary undertakings
IFRSs
International Financial Reporting Standards
Industrial Bank
Industrial Bank Co. Limited, a national joint-stock bank in mainland China in which Hang Seng Bank Limited has a shareholding
IRB
Internal ratings-based
Jaws
The difference between the rate of growth of revenue and the rate of growth of costs. Positive jaws is where the revenue growth rate exceeds the cost growth rate. We calculate this on an adjusted basis
JV
Joint venture
Legacy credit
A portfolio of assets comprising Solitaire Funding Limited, securities investment conduits, asset-backed securities trading portfolios, credit correlation portfolios and derivative transactions entered into directly with monoline insurers
LICs
Loan impairment charges and other credit risk provisions
MENA
Middle East and North Africa
Other
Contains the results of HSBC's holding company and financing operations, central support and functional costs with associated recoveries, unallocated investment activities, centrally held investment companies, certain property transactions, movements in fair value of own debt and the UK bank levy
Own credit spread
Fair value movements on our long-term debt designated at fair value resulting from changes in credit spread
PBT
Profit before tax
PRA
Prudential Regulation Authority (UK)
Principal RBWM
RBWM excluding the effects of the US run-off portfolio
Revenue
Net operating income before LICs
RBWM
Retail Banking and Wealth Management, a global business
RoRWA
Pre-tax return on RWAs is calculated using an average of RWAs at quarter-ends
RWAs
Risk-weighted assets
$m/$bn
United States dollar millions/billions
VaR
Value at risk

Note to editors
HSBC Holdings plc
HSBC Holdings plc, the parent company of HSBC, is headquartered in London. HSBC serves customers worldwide from approximately 4,000 offices in 71 countries and territories in Europe, Asia, North and Latin America, and the Middle East and North Africa. With assets of $2,557bn at 30 September 2016, HSBC is one of the world's largest banking and financial services organisations.



HSBC HOLDINGS PLC
3
Earnings Release - 3Q16 (continued)



Highlights
Strategy execution
•
Further reduction in RWAs through the completion of Brazil disposal and other management actions.
•
Reduction in 3Q16 operating expenses on both a reported and adjusted basis to $8.7bn and $7.2bn respectively.
•
Positive adjusted jaws of 5.6% for 3Q16, and 1.5% for 9M16.
•
Increased market share in a number of key markets and international product areas, including trade finance in Hong Kong and Singapore.
•
Share buy-back programme is now 59% complete and expect to finish in late 2016 or early 2017.

Financial performance
•
Adjusted profit before tax ('PBT') in 3Q16 of $5.6bn, up 7%; reported PBT of $843m.
•
Adjusted revenue in 3Q16 of $12.8bn, up $0.3bn from increases in client-facing GB&M (+11%) and Principal RBWM (+9%); reported revenue in 3Q16 of $9.5bn, down $5.6bn reflecting the impact of significant items.
•
Adjusted PBT of $16.7bn in 9M16, down 6% or $1.0bn; reported PBT of $10.6bn.

Capital
•
Strong capital base with CRD IV end point CET1 ratio 13.9%, up from 12.1% at 30 June 2016, mainly due to a change in regulatory capital treatment of BoCom.

Financial highlights and key ratios
 
 
Nine months ended 30 Sep
 
Quarter ended 30 Sep
 
 
2016

 
2015

 
Change

 
2016

 
2015

 
Change

 
 
$m

 
$m

 
%

 
$m

 
$m

 
%

 
 
 
 
 
 
 
 
 
 
 
 
 
Reported PBT
 
10,557

 
19,725

 
(46
)
 
843

 
6,097

 
(86
)
Adjusted PBT
 
16,681

 
17,662

 
(6
)
 
5,591

 
5,240

 
7

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
%

 
%

 
 
 
%

 
%

 
 
Return on average ordinary shareholders' equity (annualised)
 
4.4

 
10.7

 
(59
)
 
(1.4
)
 
10.9

 
(113
)
Adjusted jaws
 
1.5

 
 
 
 
 
5.6

 
 
 
 
We use adjusted performance to understand the underlying trends in the business. The main differences between reported and adjusted are foreign currency translation and significant items, including the operating results for our Brazil business as well as the loss recognised on disposal.
Capital and balance sheet
 
 
At
 
 
30 Sep

 
30 Jun

 
31 Dec

 
 
2016

 
2016

 
2015

 
 
%

 
%

 
%

 
 
 
 
 
 
 
Common equity tier 1 ratio1
 
13.9

 
12.1

 
11.9

Leverage ratio
 
5.4

 
5.1

 
5.0

 
 
 
 
 
 
 
 
 
$m

 
$m

 
$m

Loans and advances to customers
 
880,851

 
887,556

 
924,454

Customer accounts
 
1,296,444

 
1,290,958

 
1,289,586

Risk-weighted assets
 
904,062

 
1,082,184

 
1,102,995

1
Since 1 January 2015 the CRD IV transitional CET1 and end point CET1 capital ratios have been aligned for HSBC Holdings plc.

The grant of the approval by the Prudential Regulation Authority to the change in regulatory capital of BoCom is inside information. This announcement is made by HSBC Holdings plc pursuant to the Inside Information Provisions (as defined under the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited (the 'Hong Kong Listing Rules')) under Part XIVA of the Securities and Futures Ordinance (Cap. 571) and Rule 13.09(2)(a) of the Hong Kong Listing Rules.

HSBC HOLDINGS PLC
4
Earnings Release - 3Q16 (continued)


Stuart Gulliver, Group Chief Executive, commented:
Business performance
Our third-quarter performance reflected the strength of our network and the deepening impact of our strategic actions. Reported profits were down, but adjusted profits were higher than last year's third quarter in all four global businesses and four out of five regions. Reported profits included the impact of the disposal of our operations in Brazil, changes in the fair value of our own debt, and the costs of implementing our cost-reduction programmes.
Our global universal banking model generated higher adjusted revenue than for the same period last year, and our cost-reduction programmes continued to reduce our operating expenses. This produced adjusted positive jaws of 5.6% for the third quarter and 1.5% for the first nine months of the year.
Global Banking and Markets had strong adjusted revenue growth in the quarter, with market share gains in Debt Capital Markets globally, and Rates and Credit in Europe. We also achieved one of our best ever rankings for global cross-border mergers and acquisitions. Principal Retail Banking and Wealth Management performed relatively well due to the impact of stock market movements on our insurance business in Asia, compared with a weak third quarter of 2015. Commercial Banking revenue remained stable, as higher balances in Global Liquidity and Cash Management helped mitigate the impact of lower revenue from trade finance.
Following a change in the regulatory treatment of our investment in BoCom, our common equity tier 1 capital ratio increased to 13.9%. This is another action forming part of our ongoing capital management of the Group that reinforces our ability to support the dividend, to invest in the business and, over the medium term, to contemplate share buy-backs, as appropriate. It also provides us with a significant capacity to manage the continuing uncertain regulatory environment.
We had completed 59% of our $2.5bn equity buy-back at 31 October. We expect to finish the programme by the end of 2016 or early in the first quarter of 2017, depending on market trading volumes in the fourth quarter.
Strategy execution
We generated a further $57bn of RWA savings in the third quarter, $40bn of which came from the sale of our Brazil business. We are now more than 80% of the way to achieving our RWA reduction target.
We have also now achieved $2.8bn of annualised cost savings and are on track to achieve our 2017 cost-saving target as well.
Transaction banking revenue for the first nine months is broadly level with the same period in 2015 following a good performance from Global Liquidity and Cash Management. Trade revenue remained under pressure, but we continued to make market share gains in some of the world's biggest trade centres, including Hong Kong and Singapore.
Our US business disposed of a further $0.9bn of legacy CML assets in the third quarter. The principal US business reduced adjusted costs by 5% compared with last year's third quarter and achieved adjusted positive jaws of 6.7% for the first nine months of 2016.
Our Mexico business remains on track to meet its profitability targets. Higher lending and deposit balances across retail and wholesale businesses, and market share gains in personal loans and mortgages helped to more than double its adjusted profit before tax compared with last year's third quarter. We also grew adjusted revenue in Mexico by more than 20% in both Global Trade and Receivables Finance, and Global Liquidity and Cash Management.



HSBC HOLDINGS PLC
5
Earnings Release - 3Q16 (continued)


Adjusted performance
Adjusted performance is computed by adjusting reported results for the period-on-period effects of foreign currency translation differences and significant items, which distort period-on-period comparisons.
We use 'significant items' collectively to describe the group of individual adjustments that are excluded from reported results when arriving at adjusted performance. These items, which are detailed below, are ones that management and investors would ordinarily identify and consider separately when assessing performance in order to understand underlying trends in the business.
These items include the operating results for our Brazil operations sold to Banco Bradesco S.A. on 1 July 2016, as well as the loss recognised on disposal.
We consider adjusted performance provides useful information for investors by aligning internal and external reporting, identifying and quantifying items management believe to be significant, and providing insight into how management assesses period-on-period performance.
 

Foreign currency translation differences
Foreign currency translation differences reflect the movements of the US dollar against most major currencies. We exclude translation differences when deriving constant currency data because using this data allows us to assess balance sheet and income statement performance on a like-for-like basis to better understand the underlying trends in the business.
Foreign currency translation differences are computed by retranslating into US dollars for non-US dollar branches, subsidiaries, joint ventures and associates:
•
in the income statement for 9M15, at the average rates of exchange for 9M16;
•
in the income statement for quarterly periods, at the average rates of exchange for 3Q16; and
•
the closing prior period balance sheets at the prevailing rates of exchange on 30 September 2016.
Significant items
The tables in the Appendix starting on page 30 detail the effect of significant items on each of our geographical segments and global businesses during 9M16 and 3Q16, and the respective comparatives in 2015.



HSBC HOLDINGS PLC
6
Earnings Release - 3Q16 (continued)

Reconciliation of reported results to adjusted performance
 
 
Nine months ended 
 30 Sep
 
Quarter ended  
 30 Sep
 
 
2016

 
2015

 
2016

 
2015

 
 
$m

 
$m

 
$m

 
$m

Revenue
 
 
 
 
 
 
 
 
Reported
 
38,982

 
48,028

 
9,512

 
15,085

Currency translation
 
 
 
(2,233
)
 
 
 
(658
)
Significant items
 
171

 
(5,701
)
 
3,275

 
(1,899
)
- DVA on derivative contracts
 
(96
)
 
(416
)
 
55

 
(251
)
- fair value movements on non-qualifying hedges
 
385

 
353

 
(12
)
 
308

- loss on sale of several tranches of real estate secured accounts in the US
 
51

 
-

 
119

 
17

- gain on disposal of our membership interest in Visa Europe
 
(584
)
 
-

 
-

 
-

-  gain on the partial sale of shareholding in Industrial Bank
 
-

 
(1,372
)
 
-

 
-

- own credit spread
 
144

 
(1,775
)
 
1,370

 
(1,125
)
- provisions/(releases) arising from the ongoing review of compliance with the UK Consumer Credit Act
 
(2
)
 
(2
)
 
-

 
10

- loss and trading results from disposed-of operations in Brazil1
 
273

 
(2,489
)
 
1,743

 
(858
)
 
 
 
 
 
 
 
 
 
Adjusted
 
39,153

 
40,094

 
12,787

 
12,528

 
 
 
 
 
 
 
 
 
LICs
 
 
 
 
 
 
 
 
Reported
 
(2,932
)
 
(2,077
)
 
(566
)
 
(638
)
Currency translation
 
 
 
155

 
 
 
(3
)
Significant items
 
748

 
609

 
-

 
207

- trading results from disposed-of operations in Brazil1
 
748

 
609

 
-

 
207

 
 
 
 
 
 
 
 
 
Adjusted
 
(2,184
)
 
(1,313
)
 
(566
)
 
(434
)
 
 
 
 
 
 
 
 
 
Operating expenses
 
 
 
 
 
 
 
 
Reported
 
(27,349
)
 
(28,226
)
 
(8,721
)
 
(9,039
)
Currency translation
 
 
 
1,476

 
 
 
437

Significant items
 
5,204

 
3,716

 
1,473

 
1,088

- costs to achieve2
 
2,032

 
165

 
1,014

 
165

- costs to establish UK ring-fenced bank3
 
147

 
28

 
53

 
28

- impairment of GPB - Europe goodwill
 
800

 
-

 
-

 
-

- regulatory provisions in GPB
 
(46
)
 
154

 
(50
)
 
7

-  restructuring and other related costs
 
-

 
117

 
-

 
-

- settlements and provisions in connection with legal matters
 
723

 
1,279

 
-

 
135

- UK customer redress programmes
 
489

 
204

 
456

 
67

- trading results from disposed-of operations in Brazil1
 
1,059

 
1,769

 
-

 
686

 
 
 
 
 
 
 
 
 
Adjusted
 
(22,145
)
 
(23,034
)
 
(7,248
)
 
(7,514
)
 
 
 
 
 
 
 
 
 
Share of profit in associates and joint ventures
 
 
 
 
 
 
 
 
Reported
 
1,856

 
2,000

 
618

 
689

Currency translation
 
 
 
(86
)
 
 
 
(29
)
Significant items
 
1

 
1

 
-

 
-

- trading results from disposed-of operations in Brazil1
 
1

 
1

 
-

 
-

 
 
 
 
 
 
 
 
 
Adjusted
 
1,857

 
1,915

 
618

 
660

 
 
 
 
 
 
 
 
 
Profit before tax
 
 
 
 
 
 
 
 
Reported
 
10,557

 
19,725

 
843

 
6,097

Currency translation
 
 
 
(688
)
 
 
 
(253
)
Significant items
 
6,124

 
(1,375
)
 
4,748

 
(604
)
- revenue
 
171

 
(5,701
)
 
3,275

 
(1,899
)
- LICs
 
748

 
609

 
-

 
207

- operating expenses
 
5,204

 
3,716

 
1,473

 
1,088

- share in profit of associates
 
1

 
1

 
-

 
-

 
 
 
 
 
 
 
 
 
Adjusted
 
16,681

 
17,662

 
5,591

 
5,240

1
Includes loss on disposal, trading results, and foreign currency translation of operations in Brazil, which were sold on 1 July 2016. Trading results include inter-company transactions with other HSBC group entities. Trading results do not include 'DVA on derivative contracts', 'costs to achieve' and 'restructuring and other related costs' significant items. These significant items are included in the respective line items above. Further details are included in the Appendix on pages 30 to 37.
2
Transformation costs to deliver the cost reduction and productivity outcomes outlined in our Investor Update in June 2015.
3
Since 1 July 2015, costs to establish the UK ring-fenced bank have been classified as a significant item.

HSBC HOLDINGS PLC
7
Earnings Release - 3Q16 (continued)

Financial performance commentary
Profit/(loss) before tax by global business and geographical region
 
 
Nine months ended
 
Quarter ended
 
 
30 Sep 
 2016


30 Sep
20151

 
30 Sep 
 2016

 
30 Jun
20161

 
30 Sep
20151

 
 
$m


$m

 
$m

 
$m

 
$m

By global business
 
 
 
 
 
 
 
 
 
 
Retail Banking and Wealth Management
 
2,648


4,522

 
266

 
1,249

 
1,160

Commercial Banking
 
5,839


6,749

 
1,535

 
2,254

 
2,226

Global Banking and Markets
 
5,967


6,895

 
1,961

 
1,885

 
2,141

Global Private Banking
 
(406
)

261

 
151

 
(667
)
 
81

Other
 
(3,491
)

1,298

 
(3,070
)
 
(1,113
)
 
489

 
 
 
 
 
 
 
 
 
 
 
 
 
10,557


19,725

 
843

 
3,608

 
6,097

 
 
 
 
 
 
 
 
 
 
 
By geographical region
 
 
 
 
 
 
 
 
 
 
Europe
 
(32
)

3,801

 
(1,617
)
 
(113
)
 
1,581

Asia
 
10,815


12,948

 
3,660

 
3,625

 
3,548

Middle East and North Africa
 
1,308


1,232

 
329

 
470

 
346

North America
 
116


1,169

 
66

 
(314
)
 
479

Latin America
 
(1,650
)

575

 
(1,595
)
 
(60
)
 
143

 
 
 
 
 
 
 
 
 
 
 
 
 
10,557


19,725

 
843

 
3,608

 
6,097

1
In 3Q16, HSBC Bank plc executed a management services agreement, transferring its governance responsibilities over HSBC Bank A.S. (Turkey) to HSBC Bank Middle East Limited to leverage the strong commercial ties between Turkey and MENA. Comparative data for Europe and MENA have been re-presented accordingly.

Adjusted PBT by global business and region is presented to support the commentary on adjusted performance on the following pages.
Adjusted profit/(loss) before tax by global business and geographical region
 
 
Nine months ended 
 30 Sep
 
Quarter ended  
 30 Sep
 
 
2016

 
20151
 
2016

 
20151

 
 
$m

 
$m

 
$m

 
$m

By global business
 
 
 
 
 
 
 
 
Retail Banking and Wealth Management
 
4,908

 
5,322

 
1,799

 
1,510

Commercial Banking
 
6,363

 
6,428

 
2,096

 
2,080

Global Banking and Markets
 
6,506

 
6,988

 
2,513

 
1,926

Global Private Banking
 
351

 
402

 
109

 
86

Other
 
(1,447
)
 
(1,478
)
 
(926
)
 
(362
)
 
 
 
 
 
 
 
 
 
 
 
16,681

 
17,662

 
5,591

 
5,240

 
 
 
 
 
 
 
 
 
By geographical region
 
 
 
 
 
 
 
 
Europe
 
2,753

 
3,482

 
863

 
819

Asia
 
11,007

 
11,286

 
3,804

 
3,451

Middle East and North Africa
 
1,370

 
1,190

 
379

 
328

North America
 
1,067

 
1,461

 
383

 
556

Latin America
 
484

 
243

 
162

 
86

 
 
 
 
 
 
 
 
 
 
 
16,681

 
17,662

 
5,591

 
5,240

1
In 3Q16, HSBC Bank plc executed a management services agreement, transferring its governance responsibilities over HSBC Bank A.S. (Turkey) to HSBC Bank Middle East Limited to leverage the strong commercial ties between Turkey and MENA. Comparative data for Europe and MENA have been re-presented accordingly.
The tables on pages 30 to 37 reconcile reported to adjusted results for each of our geographical regions and global businesses.

3Q16 compared with 3Q15 - reported results
Movement in reported profit before tax compared with 3Q15



HSBC HOLDINGS PLC
8
Earnings Release - 3Q16 (continued)


 
 
3Q16

 
3Q15

 
Var

 
 
 
 
$m

 
$m

 
$m

 
%

 
 
 
 
 
 
 
 
 
Revenue
 
9,512

 
15,085

 
(5,573
)
 
(37
)
LICs
 
(566
)
 
(638
)
 
72

 
11

Operating expenses
 
(8,721
)
 
(9,039
)
 
318

 
4

Share of profit from associates and JVs
 
618

 
689

 
(71
)
 
(10
)
 
 
 
 
 
 
 
 


Profit before tax
 
843

 
6,097

 
(5,254
)
 
(86
)
In 3Q16, reported PBT of $0.8bn was $5.3bn lower than in 3Q15. This was mainly due to a net unfavourable movement of $5.4bn in significant items and the adverse effect of foreign currency translation movements of $0.3bn, which are described in more detail on page 7. Movements in significant items included:
•
adverse fair value movements of $1.4bn arising from changes in credit spreads on our own debt designated at fair value, compared with favourable movements of $1.1bn in 3Q15;
•
a $1.7bn loss recognised on the sale of our Brazil business to Banco Bradesco S.A., which completed on 1 July 2016 (in 3Q16, the operating results of our Brazil business were minimal);
•
costs to achieve of $1.0bn in 3Q16 compared with $0.2bn in 3Q15; and
•
UK customer redress of $0.5bn in 3Q16 compared with $0.1bn in 3Q15.
These items had the effect of reducing reported PBT in RBWM, CMB and GB&M, although PBT in GPB rose. Excluding all significant items and the adverse effects of foreign currency translation differences between the periods, PBT rose by $0.4bn. The business drivers affecting our performance are covered in detail in the section below (see '3Q16 compared with 3Q15 - adjusted results' on this page).
Reported revenue of $9.5bn was $5.6bn lower than in 3Q15, notably driven by the adverse movements in the credit spread on our debt as mentioned above, and the unfavourable effects of foreign currency translation of $0.7bn between the periods. In addition, our reported revenue includes a loss recognised on the sale of our Brazil business of $1.7bn in 3Q16 compared with operating revenue of $0.9bn in Brazil in 3Q15. As a result of these items, reported revenue fell in all of our global businesses.
Reported LICs of $0.6bn were $0.1bn lower than in 3Q15, notably driven by the sale of our business in Brazil, where we recorded $0.2bn of LICs in 3Q15.
Reported operating expenses of $8.7bn were $0.3bn lower, as the adverse impact of significant items mentioned above (including the operating expenses for Brazil of nil in 3Q16 compared with $0.7bn in 3Q15) was broadly offset by the favourable effects of foreign currency translation between the periods of $0.4bn. Operating expenses fell in RBWM, CMB, GB&M and GPB, partly offset by a rise in Other.
 
3Q16 compared with 3Q15 - adjusted results
Movement in adjusted profit before tax compared with 3Q15
 
 
3Q16

 
3Q15

 
Var

 
 
 
 
$m

 
$m

 
$m

 
%

 
 
 
 
 
 
 
 
 
Revenue
 
12,787

 
12,528

 
259

 
2

LICs
 
(566
)
 
(434
)
 
(132
)
 
(30
)
Operating expenses
 
(7,248
)
 
(7,514
)
 
266

 
4

Share of profit from associates and JVs
 
618

 
660

 
(42
)
 
(6
)
 
 
 
 
 
 


 
 
Profit before tax
 
5,591

 
5,240

 
351

 
7

On an adjusted basis, PBT of $5.6bn was $0.4bn or 7% higher than 3Q15, reflecting an increase in revenue and lower costs, partly offset by an increase in LICs.
Adjusted revenue of $12.8bn increased by $0.3bn or 2%, mainly in GB&M (up $0.5bn or 13%) and in RBWM (up $0.3bn or 6%). Revenue in CMB was broadly unchanged. Key drivers are as follows:
•
In GB&M adjusted revenue increased by $0.5bn, driven by client-facing GB&M (up $0.4bn or 11%). This was primarily in our fixed income businesses - Rates (up $0.2bn) and Credit (up $0.2bn) - as we gained market share, notably in Europe, and improved client flows, which more than offset net adverse movements in Rates of $0.2bn on our own credit spreads in structured liabilities. Revenue also rose in Principal Investments ($0.1bn) reflecting higher gains on disposal. By contrast, revenue fell in Equities (down $0.1bn), resulting from unfavourable movements on our own credit spreads in structured liabilities in 3Q16 of $0.1bn, compared with favourable movements of $0.1bn in 3Q15. Excluding these movements, revenue in Equities was broadly unchanged. In legacy credit, revenue increased by $0.1bn following higher revaluation gains in 3Q16.
•
In RBWM, adjusted revenue rose by $0.3bn. In Principal RBWM (up $0.4bn), this was driven by an increase in revenue in wealth management of $0.3bn arising from unfavourable market conditions in insurance manufacturing in Asia in 3Q15. Current account and savings revenue also increased, by $0.1bn, as we grew deposit balances in most regions and benefited from wider spreads, primarily in Hong Kong, Mexico and Argentina. By contrast, revenue from personal lending fell by $0.1bn, driven by lower credit card revenue, notwithstanding growth in lending volumes in Hong Kong, the UK and Mexico. In our US run-off business, revenue fell by $0.1bn as we continued to reduce the size of our US CML run-off portfolio.
These increases were partly offset:
•
In Other, adjusted revenue decreased $0.7bn, partly reflecting higher interest expense relating to long-term debt issued by HSBC Holdings plc. The remainder of the decrease related to a number of intra-group adjustments, which were largely offset within the global businesses.
Adjusted LICs of $0.6bn were $0.1bn or 30% higher. In RBWM, LICs increased by $0.1bn, principally in Mexico reflecting our strategic focus on growing unsecured lending balances.



HSBC HOLDINGS PLC
9
Earnings Release - 3Q16 (continued)


Additionally, in CMB LICs increased from a small number of charges against specific exposures, notably in Hong Kong, mainland China and Spain, as well as an increase in charges in the UK.
Adjusted operating expenses of $7.2bn were $0.3bn or 4% lower, despite inflationary pressures. This primarily reflected the effect of our transformational cost saving through organisational design, reduced FTEs and branch optimisation, as well as lower performance costs across the business.
9M16 compared with 9M15 - reported results
Movement in reported profit before tax compared with 9M15
 
 
9M16

 
9M15

 
Var

 
 
 
 
$m

 
$m

 
$m

 
%

 
 
 
 
 
 
 
 
 
Revenue
 
38,982

 
48,028

 
(9,046
)
 
(19
)
LICs
 
(2,932
)
 
(2,077
)
 
(855
)
 
(41
)
Operating expenses
 
(27,349
)
 
(28,226
)
 
877

 
3

Share of profit from associates and JVs
 
1,856

 
2,000

 
(144
)
 
(7
)
 
 
 
 
 
 
 
 


Profit before tax
 
10,557

 
19,725

 
(9,168
)
 
(46
)
Reported PBT of $10.6bn in 9M16 was $9.2bn or 46% lower than in 9M15. This was primarily due to net adverse movements relating to significant items and the unfavourable effects of foreign currency translation, which are described in more detail below and on page 7. Excluding significant items and currency translation, adjusted profit before tax fell by $1.0bn. The business drivers affecting performance are covered in detail in the section below (see '9M16 compared with 9M15 - adjusted results').
Movement in reported revenue compared with 9M15
 
 
9M16

 
9M15

 
Var

 
 
 
 
$m

 
$m

 
$m

 
%

 
 
 
 
 
 
 
 
 
RBWM
 
15,306

 
17,912

 
(2,606
)
 
(15
)
CMB
 
10,320

 
11,236

 
(916
)
 
(8
)
GB&M
 
12,927

 
14,786

 
(1,859
)
 
(13
)
GPB
 
1,435

 
1,685

 
(250
)
 
(15
)
Other1
 
(1,006
)
 
2,409

 
(3,415
)
 
(142
)
 
 
 
 
 
 


 


Total
 
38,982

 
48,028

 
(9,046
)
 
(19
)
1
Other includes Inter-segment.
Reported revenue of $39.0bn in 9M16 was $9.0bn or 19% lower than in 9M15, in part due to a net unfavourable movement in significant items of $5.9bn, which included:
•
adverse fair value movements of $0.1bn arising from changes in credit spreads on our own debt designated at fair value, compared with favourable movements of $1.8bn in 9M15;
•
the $1.7bn loss recognised on the sale of our Brazil business to Banco Bradesco S.A., which we completed on 1 July 2016. In addition, the reported results include the revenue earned in our Brazil business of $1.5bn in 9M16 compared with $2.5bn in 9M15; and
•
the non-recurrence of a $1.4bn gain on the sale of part of our shareholding in Industrial Bank in 9M15; partly offset by
•
a $0.6bn gain on the disposal of our membership interest in Visa Europe in 2Q16.
 
In addition, foreign currency translation between the periods had an adverse effect of $2.2bn. These factors contributed to a fall in reported revenue in all of our global businesses. Excluding significant items and the adverse effects of foreign currency translation differences between the periods, revenue fell by $0.9bn, which is described in detail below.
Reported LICs of $2.9bn were $0.9bn higher than in 9M15. The reported results include LICs incurred in our Brazil business of $0.7bn in 9M16 compared with $0.6bn in 9M15. In addition, LICs rose in our GB&M, CMB and RBWM businesses. This was partly offset by the favourable effect of foreign currency translation differences between the periods of $0.2bn.
Reported operating expenses of $27.3bn were $0.9bn or 3% lower than in 9M15. This includes favourable effects of currency translation of $1.5bn between the periods, although these were broadly offset by an increase in significant items of $1.5bn, including:
•
costs to achieve of $2.0bn in 9M16 compared with $0.2bn in 9M15; and
•
an impairment of $0.8bn relating to goodwill in our GPB business in Europe; partly offset by
•
a reduction of $0.6bn in settlements and provisions in connection with legal matters.
In addition, the reported results include the operating expenses incurred in our Brazil business of $1.1bn in 9M16, compared with $1.8bn in 9M15.
Excluding significant items and the adverse effects of foreign currency translation differences between the periods, operating expenses fell by $0.9bn. Reductions in RBWM, CMB and GB&M, were partly offset by a rise in GPB and Other. The reductions partly reflected the effects of our cost-saving initiatives, which are described in more detail below.
Reported income from associates of $1.9bn decreased by $0.1bn.
On 3 October 2016, the Board announced a third interim dividend of $0.10 per ordinary share.
9M16 compared with 9M15 - adjusted results
Movement in adjusted profit before tax compared with 9M15
 
 
9M16

 
9M15

 
Var

 
 
 
 
$m

 
$m

 
$m

 
%

 
 
 
 
 
 
 
 
 
Revenue
 
39,153

 
40,094

 
(941
)
 
(2
)
LICs
 
(2,184
)
 
(1,313
)
 
(871
)
 
(66
)
Operating expenses
 
(22,145
)
 
(23,034
)
 
889

 
4

Share of profit from associates and JVs
 
1,857

 
1,915

 
(58
)
 
(3
)
 
 
 
 
 
 
 
 


Profit before tax
 
16,681

 
17,662

 
(981
)
 
(6
)
On an adjusted basis, PBT of $16.7bn was $1.0bn or 6% lower than in 9M15. This was primarily driven by lower revenue and higher LICs, partly offset by a decrease in operating expenses.




HSBC HOLDINGS PLC
10
Earnings Release - 3Q16 (continued)


Movement in adjusted revenue compared with 9M15
 
 
9M16

 
9M15

 
Var

 
 
 
 
$m

 
$m

 
$m

 
%

 
 
 
 
 
 
 
 
 
RBWM
 
14,961

 
15,525

 
(564
)
 
(4
)
Principal RBWM
 
14,393

 
14,668

 
(275
)
 
(2
)
US CML run-off portfolio
 
568

 
857

 
(289
)
 
(34
)
CMB
 
10,343

 
10,164

 
179

 
2

GB&M
 
13,062

 
13,394

 
(332
)
 
(2
)
Client facing GB&M and BSM
 
13,036

 
13,303

 
(267
)
 
(2
)
Legacy credit
 
26

 
91

 
(65
)
 
(71
)
GPB
 
1,426

 
1,599

 
(173
)
 
(11
)
Other1
 
(639
)
 
(588
)
 
(51
)
 
(9
)
 
 
 
 
 
 
 
 
 
Total
 
39,153

 
40,094

 
(941
)
 
(2
)
1
Other includes Inter-segment.
Adjusted revenue of $39.2bn was $0.9bn or 2% lower. Notably:
•
In GB&M, adjusted revenue was $0.3bn or 2% lower than in 9M15. This was partly due to a decrease in our client-facing business (down $0.3bn or 3%), mainly in Equities, reflecting lower global trading volumes. FX revenue also fell, particularly in 1Q16, caused by market uncertainty leading to a fall in client activity, although this recovered in 2Q16 and 3Q16. By contrast, revenue increased in our fixed income businesses - Rates and Credit - as we gained market share, notably in 3Q16 in Europe, and from improved client flows. Rates and Equities were also affected by net adverse movements of $0.1bn and $0.2bn respectively in our own credit spreads on structured liabilities. In Global Liquidity and Cash Management, revenue increased as we won new client mandates, grew average balances and benefited from wider spreads.
•
In RBWM, adjusted revenue decreased by $0.6bn or 4%. In our Principal RBWM business (down $0.3bn or 2%), decreases were primarily in Wealth Management, following a strong performance in the first half of 2015. In investment distribution, revenue fell (down $0.4bn), mainly in Asia due to lower retail-securities and mutual-funds turnover. In addition, there was lower revenue in life insurance manufacturing (down $0.2bn), primarily in Europe, due to adverse market updates as a result of interest rate movements. Personal lending revenue also decreased ($0.2bn down) because of lower credit card revenue in the UK, despite higher overall lending volumes in Hong Kong, the UK and Mexico. By contrast, current account and savings revenue increased (up $0.3bn), as we grew customer deposit balances in most regions, notably Hong Kong and the UK. We also benefited from wider spreads in Hong Kong, Mexico and Argentina. In our US run-off portfolio, revenue decreased by $0.3bn reflecting lower average lending balances and the impact of portfolio sales.
•
In GPB, adjusted revenue fell by $0.2bn or 11%, driven by lower brokerage and trading activity in both Europe and Asia. This reflected adverse market sentiment and unfavourable market conditions, notably in the first half of the year.
These factors were partly offset:
 
•
In CMB, adjusted revenue rose by $0.2bn or 2%. This increase included growth in Global Liquidity and Cash Management (up $0.1bn), notably because of increased balances and wider spreads in Hong Kong and increased balances in the UK. Revenue in Credit and Lending also increased (up $0.1bn), driven by continued loan growth in the UK. This was partly offset by lower revenue in Global Trade and Receivables Finance, mainly in Asia and MENA. This was driven by a reduction in world trade and resulting reduction in trade lending in the market. In Asia, we were also affected by Chinese corporates reverting to mainland China for financing due to lower interest rates. Notwithstanding these factors, we gained share in key markets such as Hong Kong and Singapore.
Adjusted LICs of $2.2bn were $0.9bn higher, reflecting increases in our GB&M, CMB and RBWM businesses:
•
In GB&M (up $0.4bn), we incurred individually assessed charges, notably in the oil and gas, and metals and mining sectors, primarily in the US and Australia in 9M16. These compared with net releases in 9M15.
•
In CMB (up $0.2bn), our individually assessed charges increased in a small number of countries, notably in Canada in the energy sector, and to a lesser extent in Spain in the construction sector, and in Hong Kong in several sectors. In addition, we increased our collectively assessed allowances in the UK, compared with a net release in 9M15.
•
In RBWM (up $0.2bn), LICs rose, notably due to an increase of $0.1bn in Mexico, reflecting our strategic focus on growing unsecured lending. In the UK, LICs also grew due to net charges on mortgage balances, compared with a net release in 9M15.
Adjusted operating expenses of $22.1bn were $0.9bn or 4% lower than in 9M15, despite inflationary pressures and increases in regulatory programmes and compliance costs. This primarily reflected transformational cost savings of $1.3bn achieved year on year, with run-rate savings of around $2.8bn since the commencement of our cost-saving programme.
Run-the-bank costs of $20.2bn were $0.3bn lower compared with 9M15 and change-the-bank costs of $2.1bn were $0.5bn lower compared with the same period. This reflected:
•
in RBWM, the effects of our transformational cost-saving initiatives, which included our branch optimisation programme;
•
in GB&M, cost reductions driven by reduced performance-related pay, disciplined cost management, improved process efficiencies including material FTE reductions and technology delivery rationalisation; and
•
in CMB, lower costs due to ongoing cost discipline and the impact of our transformation initiatives, which more than offset inflation.
The savings above continue to be supported by benefits of transformational savings in our technology, operations and other functions.
Included within the above, our total expenditure on regulatory programmes and compliance, comprising both run-the-bank and change-the-bank elements, was $2.2bn, up $0.2bn or 10% from 9M15. This reflected the ongoing



HSBC HOLDINGS PLC
11
Earnings Release - 3Q16 (continued)


implementation of our Global Standards programme to enhance our financial crime risk controls and capabilities, and meet our external commitments.
The number of employees expressed in FTEs at 30 September 2016 was 234,681, a decrease of 1,378 from 31 December 2015. This was primarily driven by reductions across global businesses, offset by investment in compliance and costs-to-achieve FTEs.
Adjusted income from associates of $1.9bn fell by $0.1bn.
The effective tax rate for 9M16 of 29.3% was higher than the 18.0% rate in 9M15, principally due to the non-deductible loss on disposal of our Brazil operations and the UK government's 8% surcharge on UK banking profits.
Balance sheet commentary compared with 30 June 2016
Total reported assets fell by $50.9bn, notably due to the completion of the sale of our Brazil business to Banco Bradesco S.A. (a $48.3bn reduction).
Reported loans and advances to customers decreased by $6.7bn during 3Q16, and included:
•
adverse currency translation movements of $9.5bn; partly offset by
•
a $2.4bn increase in corporate overdraft balances in Europe that did not meet the criteria for netting, with a corresponding rise in customer accounts.
Excluding these factors, customer lending was broadly unchanged. Lending rose mainly in Europe, primarily in the UK due to continued growth in CMB term lending and in RBWM in mortgages as we increased the use of broker channels. This was partly offset by our continued focus on reducing legacy portfolios, primarily transfers to 'Assets held for sale' of US first lien mortgage balances (a $0.9bn reduction). Balances also fell in CMB in North America from repayments and maturities, and in MENA in both
 
CMB and GB&M as we ran off certain portfolios and focused on return optimisation.
Reported customer account balances increased by $5.5bn during 3Q16, and included:
•
adverse currency translation movements of $12.5bn; partly offset by
•
a $2.4bn increase in corporate current account balances, in line with the increase in corporate overdrafts.
Excluding these movements, customer accounts increased by $15.6bn, mainly in Asia from RBWM and Global Liquidity and Cash Management.
Net interest margin
Net interest margin for 9M16 fell on a reported basis, compared with 9M15, in part driven by the adverse effects of currency translation and the sale of our Brazil business to Banco Bradesco S.A. Excluding currency movements and the sale of Brazil, our net interest margin fell, as gross yields on customer lending remained under pressure, principally in the UK on mortgages and term lending, as well as from the accelerated run-off and sales in the US CML portfolio. However, yields on customer lending were unchanged in Asia. By contrast, in Mexico and Argentina, we benefited from the effects of central bank rate rises across our asset portfolio.
However, we had a lower cost of funds, notably from a reduction in our cost of customer accounts in Asia, reflecting a shift in our portfolio in HK to lower-cost current accounts and the effects of lower central bank rates in China, Australia and India.




Notes
•
Income statement comparisons, unless stated otherwise, are between the quarter ended 30 September 2015 and the quarter ended 30 September 2016, or between the nine months ended 30 September 2015 and the corresponding nine months in 2016. Balance sheet comparisons, unless otherwise stated, are between balances at 30 September 2016 and the corresponding balances at 30 June 2016.
•
The financial information on which this Earnings Release is based, and the data set out in the appendix to this statement, are unaudited and have been prepared in accordance with HSBC's significant accounting policies as described on pages 347 to 358 of the Annual Report and Accounts 2015.
•
The Board has adopted a policy of paying quarterly interim dividends on the ordinary shares. Under this policy, it is intended to have a pattern of three equal interim dividends with a variable fourth interim dividend. Dividends are declared in US dollars and, at the election of the shareholder, paid in cash in one of, or in a combination of, US dollars, sterling and Hong Kong dollars or, subject to the Board's determination that a scrip dividend is to be offered in respect of that dividend, may be satisfied in whole or in part by the issue of new shares in lieu of a cash dividend.


HSBC HOLDINGS PLC
12
Earnings Release - 3Q16 (continued)

Cautionary statement regarding forward-looking statements
This Earnings Release contains certain forward-looking statements with respect to HSBC's financial condition, results of operations, capital position and business.
Statements that are not historical facts, including statements about HSBC's beliefs and expectations, are forward-looking statements. Words such as 'expects', 'anticipates', 'intends', 'plans', 'believes', 'seeks', 'estimates', 'potential' and 'reasonably possible', variations of these words and similar expressions are intended to identify forward-looking statements. These statements are based on current plans, estimates and projections, and therefore undue reliance should not be placed on them. Forward-looking statements speak only as of the date they are made. HSBC makes no commitment to revise or update any forward-looking statements to reflect events or circumstances occurring or existing after the date of any forward-looking statements.
Written and/or oral forward-looking statements may also be made in the periodic reports to the US Securities and Exchange Commission, summary financial statements to shareholders, proxy statements, offering circulars and prospectuses, press releases and other written materials, and in oral statements made by HSBC's Directors, officers or employees to third parties, including financial analysts.
Forward-looking statements involve inherent risks and uncertainties. Readers are cautioned that a number of factors could cause actual results to differ, in some instances materially, from those anticipated or implied in any forward-looking statement.
These include, but are not limited to:
•
changes in general economic conditions in the markets in which we operate, such as continuing or deepening recessions and fluctuations in employment beyond those factored into consensus forecasts; changes in foreign exchange rates and interest rates; volatility in equity markets; lack of liquidity in wholesale funding markets; illiquidity and downward price pressure in national real estate markets; adverse changes in central banks' policies with respect to the provision of liquidity support to financial markets; heightened market concerns over sovereign creditworthiness in over-indebted countries; adverse changes in the funding status of public or private defined benefit pensions; and consumer perception as to the continuing availability of credit and price competition in the market segments we serve;
•
changes in government policy and regulation, including the monetary, interest rate and other policies of central banks and other regulatory authorities; initiatives to change the size, scope of activities and interconnectedness of financial institutions in connection with the implementation of stricter regulation of financial institutions in key markets worldwide; revised capital and liquidity benchmarks which could serve to deleverage bank balance sheets and lower returns available from the current business model and portfolio mix; imposition of levies or taxes designed to change business mix and risk appetite; the conduct of business of financial institutions in serving their retail customers, corporate clients and counterparties; the standards of market conduct; the costs, effects and outcomes of product regulatory reviews, actions or litigation, including any additional compliance requirements; expropriation, nationalisation, confiscation of assets and changes in legislation relating to foreign ownership; changes in bankruptcy legislation in the principal markets in which we operate and the consequences thereof; general changes in government policy that may significantly influence investor decisions; extraordinary government actions as a result of current market turmoil; other unfavourable political or diplomatic developments producing social instability or legal uncertainty which in turn may affect demand for our products and services; and the effects of competition in the markets where we operate including increased competition from non-bank financial services companies, including securities firms; and
•
factors specific to HSBC, including our success in adequately identifying the risks we face, such as the incidence of loan losses or delinquency, and managing those risks (through account management, hedging and other techniques). Effective risk management depends on, among other things, our ability through stress testing and other techniques to prepare for events that cannot be captured by the statistical models we use; our success in addressing operational, legal and regulatory, and litigation challenges, notably compliance with the Deferred Prosecution Agreement with US authorities; and the other risks and uncertainties we identify in 'top and emerging risks' on pages 16 and 17 of the Interim Report 2016.

For further information contact:
Investor Relations
 
Media Relations
UK - Richard O'Connor
 
UK - Heidi Ashley
Email: investorrelations@hsbc.com
 
Tel: +44 (0) 20 7992 2045
Hong Kong - Hugh Pye
 
Hong Kong - Gareth Hewett
Tel: +852 2822 4908
 
Tel: +852 2822 4929


HSBC HOLDINGS PLC
13
Earnings Release - 3Q16 (continued)


Summary consolidated income statement
 
 
Nine months ended
 
Quarter ended
 
 
30 Sep 
 2016

 
30 Sep 
 2015

 
30 Sep 
 2016

 
30 Jun 
 2016

 
30 Sep 
 2015

 
 
$m

 
$m

 
$m

 
$m

 
$m

 
 
 
 
 
 
 
 
 
 
 
Net interest income
 
22,945

 
24,472

 
7,185

 
7,847

 
8,028

Net fee income
 
9,848

 
11,234

 
3,262

 
3,389

 
3,509

Net trading income
 
7,555

 
7,315

 
2,231

 
2,488

 
2,742

 
 
 
 
 
 
 
 
 
 
 
Changes in fair value of long-term debt issued and related derivatives
 
(1,402
)
 
1,947

 
(1,672
)
 
(420
)
 
623

Net income/(expense) from other financial instruments designated at fair value
 
1,150

 
(165
)
 
859

 
286

 
(1,507
)
 
 
 
 
 
 
 
 
 
 
 
Net income/(expense) from financial instruments designated at fair value
 
(252
)
 
1,782

 
(813
)
 
(134
)
 
(884
)
Gains less losses from financial investments
 
1,271

 
2,048

 
306

 
773

 
174

Dividend income
 
78

 
96

 
14

 
36

 
28

Net insurance premium income
 
7,891

 
8,100

 
2,535

 
2,441

 
2,493

Other operating income/(expense)
 
(847
)
 
1,107

 
(1,491
)
 
472

 
271

 
 
 
 
 
 
 
 
 
 
 
Total operating income
 
48,489

 
56,154

 
13,229

 
17,312

 
16,361

 
 
 
 
 
 
 
 
 
 
 
Net insurance claims and benefits paid and movement in liabilities to policyholders
 
(9,507
)
 
(8,126
)
 
(3,717
)
 
(2,818
)
 
(1,276
)
 
 
 
 
 
 
 
 
 
 
 
Net operating income before loan impairment charges and other
credit risk provisions
 
38,982

 
48,028

 
9,512

 
14,494

 
15,085

Loan impairment charges and other credit risk provisions
 
(2,932
)
 
(2,077
)
 
(566
)
 
(1,205
)
 
(638
)
 
 
 
 
 
 
 
 
 
 
 
Net operating income
 
36,050

 
45,951

 
8,946

 
13,289

 
14,447

Total operating expenses
 
(27,349
)
 
(28,226
)
 
(8,721
)
 
(10,364
)
 
(9,039
)
 
 
 
 
 
 
 
 
 
 
 
Operating profit
 
8,701

 
17,725

 
225

 
2,925

 
5,408

Share of profit in associates and joint ventures
 
1,856

 
2,000

 
618

 
683

 
689

 
 
 
 
 
 
 
 
 
 
 
Profit before tax
 
10,557

 
19,725

 
843

 
3,608

 
6,097

Tax expense
 
(3,094
)
 
(3,541
)
 
(803
)
 
(720
)
 
(634
)
 
 
 
 
 
 
 
 
 
 
 
Profit after tax
 
7,463

 
16,184

 
40

 
2,888

 
5,463

 
 
 
 
 
 
 
 
 
 
 
Profit/(loss) attributable to shareholders of the parent company
 
6,708

 
14,847

 
(204
)
 
2,611

 
5,229

Profit attributable to non-controlling interests
 
755

 
1,337

 
244

 
277

 
234

 
 
 
 
 
 
 
 
 
 
 
 
 
$

 
$

 
$

 
$

 
$

 
 
 
 
 
 
 
 
 
 
 
Basic earnings per ordinary share
 
0.29

 
0.73

 
(0.03)

 
0.13

 
0.25

Diluted earnings per ordinary share
 
0.29

 
0.72

 
(0.03)

 
0.12

 
0.25

Dividend per ordinary share (in respect of the period)
 
0.30

 
0.30

 
0.10

 
0.10

 
0.10

 
 
 
 
 
 
 
 
 
 
 
 
 
%

 
%

 
%

 
%

 
%

 
 
 
 
 
 
 
 
 
 
 
Return on average ordinary shareholders' equity (annualised)
 
4.4

 
10.7

 
(1.4
)
 
5.7

 
10.9

Pre-tax return on average risk-weighted assets (annualised)
 
1.3

 
2.2

 
0.3

 
1.3

 
2.1

Cost efficiency ratio
 
70.2

 
58.8

 
91.7

 
71.5

 
59.9




HSBC HOLDINGS PLC
14
Earnings Release - 3Q16 (continued)


Summary consolidated balance sheet
 
 
At
 
 
30 Sep  
 2016

 
30 Jun  
 2016

 
31 Dec 
 2015

 
 
$m

 
$m

 
$m

Assets
 
 
 
 
 
 
Cash and balances at central banks
 
120,270

 
128,272

 
98,934

Trading assets
 
293,253

 
280,295

 
224,837

Financial assets designated at fair value
 
25,285

 
23,901

 
23,852

Derivatives
 
334,411

 
369,942

 
288,476

Loans and advances to banks
 
95,579

 
92,199

 
90,401

Loans and advances to customers
 
880,851

 
887,556

 
924,454

Reverse repurchase agreements - non-trading
 
192,061

 
187,826

 
146,255

Financial investments
 
455,681

 
441,399

 
428,955

Assets held for sale
 
2,036

 
50,305

 
43,900

Other assets
 
157,834

 
146,454

 
139,592

 
 
 
 
 
 
 
Total assets
 
2,557,261

 
2,608,149

 
2,409,656

 
 
 
 
 
 
 
Liabilities and Equity
 
 
 
 
 
 
Liabilities
 
 
 
 
 
 
Deposits by banks
 
71,525

 
69,900

 
54,371

Customer accounts
 
1,296,444

 
1,290,958

 
1,289,586

Repurchase agreements - non-trading
 
108,500

 
98,342

 
80,400

Trading liabilities
 
208,507

 
188,698

 
141,614

Financial liabilities designated at fair value
 
88,003

 
78,882

 
66,408

Derivatives
 
329,098

 
368,414

 
281,071

Debt securities in issue
 
71,650

 
87,673

 
88,949

Liabilities under insurance contracts
 
76,131

 
73,416

 
69,938

Liabilities of disposal groups held for sale
 
853

 
43,705

 
36,840

Other liabilities
 
111,238

 
109,864

 
102,961

 
 
 
 
 
 
 
Total liabilities
 
2,361,949

 
2,409,852

 
2,212,138

 
 
 
 
 
 
 
Equity
 
 
 
 
 
 
Total shareholders' equity
 
188,108

 
191,257

 
188,460

Non-controlling interests
 
7,204

 
7,040

 
9,058

 
 
 
 
 
 
 
Total equity
 
195,312

 
198,297

 
197,518

 
 
 
 
 
 
 
Total liabilities and equity
 
2,557,261

 
2,608,149

 
2,409,656

 
 
 
 
 
 
 
Ratio of customer advances to customer accounts
 
67.9
%
 
68.8
%
 
71.7
%


HSBC HOLDINGS PLC
15
Earnings Release - 3Q16 (continued)


Capital


Transitional own funds disclosure
 
 
 
At
 
 
 
30 Sep

 
30 Jun

 
31 Dec

Ref*

 
 
2016

 
2016

 
2015

 
 
 
$m

 
$m

 
$m

 
 
 
 
 
 
 
 
6

Common equity tier 1 capital before regulatory adjustments
 
163,320

 
166,118

 
164,183

28

Total regulatory adjustments to common equity tier 1
 
(37,483
)
 
(35,448
)
 
(33,320
)
 
 
 
 
 
 
 
 
29

Common equity tier 1 capital1 
 
125,837

 
130,670

 
130,863

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
36

Additional tier 1 capital before regulatory adjustments
 
21,786

 
21,784

 
22,621

43

Total regulatory adjustments to additional tier 1 capital
 
(158
)
 
(142
)
 
(181
)
 
 
 
 
 
 
 
 
44

Additional tier 1 capital
 
21,628

 
21,642

 
22,440

 
 
 
 
 
 
 
 
45

Tier 1 capital
 
147,465

 
152,312

 
153,303

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
51

Tier 2 capital before regulatory adjustments
 
34,588

 
34,849

 
36,852

57

Total regulatory adjustments to tier 2 capital
 
(433
)
 
(368
)
 
(322
)
 
 
 
 
 
 
 
 
58

Tier 2 capital
 
34,155

 
34,481

 
36,530

 
 
 
 
 
 
 
 
59

Total capital
 
181,620

 
186,793

 
189,833

 
 
 
 
 
 
 
 
60

Total risk-weighted assets
 
904,062

 
1,082,184

 
1,102,995

 
 
 
 
 
 
 
 
 
Capital ratios and buffers
 
%

 
%

 
%

61

Common equity tier 1 ratio
 
13.9

 
12.1

 
11.9

62

Tier 1 ratio
 
16.3

 
14.1

 
13.9

63

Total capital ratio
 
20.1

 
17.3

 
17.2

*
The references identify the lines prescribed in the EBA template.
1
Since 1 January 2015 the CRD IV transitional CET1 and end point CET1 capital ratios have been aligned for HSBC Holdings plc. Transitional provisions continue to apply for additional tier 1 and tier 2 capital.
Capital
Our CET1 capital ratio increased to 13.9%.
Following a recent clarification of policy by the PRA, at 30 September 2016 the regulatory treatment of our investment in BoCom changed from proportional consolidation of RWAs to a deduction from capital (subject to regulatory thresholds). The change in treatment resulted in net reported RWAs related to the BoCom investment decreasing by $120.9bn, with a threshold deduction from capital of $5.6bn. The net impact on our reported CET1 ratio at 30 September 2016 was an increase of 104 basis points. The revised regulatory treatment is more consistent with our financial reporting treatment of BoCom, aligning with the equity method of accounting, and better reflects our relationship with BoCom, including the nature of our obligations and financial commitments.
CET1 capital decreased in the quarter by $4.8bn, due to:
•
$5.6bn from the change in treatment of BoCom;
•
the share buy-back of $2.5bn; and
•
unfavourable foreign currency translation differences of $1.3bn.
These decreases were partly offset:
•
by $2.4bn from the sale of our activities in Brazil; and
•
$1.3bn of capital generation through profits, from ongoing activities, net of dividends and scrip.
Our 2016 Pillar 2A requirement as per the PRA's Individual Capital Guidance based on a point in time assessment is 2.9% of RWAs, of which 1.6% is met by CET1.
 
RWAs
RWAs decreased in the quarter by $178.1bn, of which $6.2bn was due to foreign currency translation differences. The decrease was primarily from the change of regulatory treatment of our investment in BoCom. RWA initiatives reduced RWAs by $57.2bn, partly offset by book size movements increasing RWAs by $5.2bn.
The following comments describe RWA movements in the quarter, excluding foreign currency translation differences.
RWA initiatives
The main drivers of these reductions were:
•
$39.5bn from the sale of our activities in Brazil;
•
$2.4bn through the continued reduction in GB&M Legacy Credit and US run-off portfolios; and
•
$15.3bn as a result of reduced exposures, refined calculations and process improvements.
Book size
Book size movements increased RWAs by $5.2bn, principally from:
•
increased corporate lending in GB&M and CMB in Europe, increasing RWAs by $4.3bn, partly offset by a decline in trade related products and corporate lending in North America and MENA reducing RWAs by $2.8bn;
•
increased central bank balances and deposits and government debt securities in Asia, MENA and North America by $3.4bn; and



HSBC HOLDINGS PLC
16
Earnings Release - 3Q16 (continued)


•
financial market movements and client-driven activity, which increased market risk and counterparty credit risk by $1.1bn.
 
Methodology and policy
The reduction in RWAs relating to methodology and policy changes was mainly driven by the change of regulatory treatment of our investment in BoCom.




HSBC HOLDINGS PLC
17
Earnings Release - 3Q16 (continued)


Risk-weighted assets
RWA movement by geographical region by key driver
 
 
Credit risk, counterparty credit risk and operational risk
 
 
 
 
 
 
Europe2

 
Asia

 
MENA2

 
North
America

 
Latin
America

 
Market risk

 
Total RWAs

 
 
$bn

 
$bn

 
$bn

 
$bn

 
$bn

 
$bn

 
$bn

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
RWAs at 1 Jul 2016
 
290.6

 
437.6

 
67.4

 
167.4

 
77.4

 
41.8

 
1,082.2

RWA movements
 
 
 
 
 
 
 
 
 
 
 
 
 
 
RWA initiatives
 
(1.9
)
 
(5.0
)
 
(1.0
)
 
(7.5
)
 
(39.6
)
 
(2.2
)
 
(57.2
)
Foreign exchange movement
 
(4.2
)
 
(0.3
)
 
(0.2
)
 
(0.2
)
 
(1.3
)
 
-

 
(6.2
)
Acquisitions and disposals
 
-

 
-

 
-

 
-

 
-

 
-

 
-

Book size1
 
4.8

 
1.5

 
(1.1
)
 
(3.8
)
 
0.5

 
3.3

 
5.2

Book quality
 
(1.0
)
 
-

 
0.4

 
0.3

 
0.3

 
-

 
-

Model updates
 
-

 
-

 
-

 
-

 
-

 
-

 
-

- portfolios moving onto IRB approach
 
-

 
-

 
-

 
-

 
-

 
-

 
-

- new/updated models
 
-

 
-

 
-

 
-

 
-

 
-

 
-

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Methodology and policy
 
0.5

 
(119.7
)
 
(0.1
)
 
(0.1
)
 
(0.5
)
 
-

 
(119.9
)
- internal updates
 
1.6

 
0.5

 
(0.1
)
 
(0.1
)
 
(0.2
)
 
-

 
1.7

- external updates - regulatory
 
(1.1
)
 
(120.2
)
 
-

 
-

 
(0.3
)
 
-

 
(121.6
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total RWA movement
 
(1.8
)
 
(123.5
)
 
(2.0
)
 
(11.3
)
 
(40.6
)
 
1.1

 
(178.1
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
RWAs at 30 Sep 2016
 
288.8

 
314.1

 
65.4

 
156.1

 
36.8

 
42.9

 
904.1

1
Book size now includes market risk movements previously categorised as movements in risk levels.
2
In 3Q16, HSBC Bank plc executed a management services agreement, transferring its governance responsibilities over HSBC Bank A.S. (Turkey) to HSBC Bank Middle East Limited to leverage the strong commercial ties between Turkey and MENA. Comparative data for Europe and MENA have been re-presented accordingly.
RWA movement by global businesses by key driver
 
 
Credit risk, counterparty credit risk and operational risk
 
 
 
 
 
 
Principal
RBWM

 
RBWM
(US run-off
portfolio)

 
Total
RBWM

 
CMB

 
GB&M

 
GPB

 
Other

 
Market risk

 
Total RWAs

 
 
$bn

 
$bn

 
$bn

 
$bn

 
$bn

 
$bn

 
$bn

 
$bn

 
$bn

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
RWAs at 1 Jul 2016
 
148.9

 
27.2

 
176.1

 
414.8

 
395.6

 
18.5

 
35.4

 
41.8

 
1,082.2

RWA movements
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
RWA initiatives
 
(8.2
)
 
(3.6
)
 
(11.8
)
 
(21.4
)
 
(21.5
)
 
-

 
(0.3
)
 
(2.2
)
 
(57.2
)
Foreign exchange movement
 
(1.1
)
 
-

 
(1.1
)
 
(3.1
)
 
(1.8
)
 
(0.1
)
 
(0.1
)
 
-

 
(6.2
)
Acquisitions and disposals
 
-

 
-

 
-

 
-

 
-

 
-

 
-

 
-

 
-

Book size1
    
 
1.1

 
-

 
1.1

 
2.3

 
(1.7
)
 
(0.3
)
 
0.5

 
3.3

 
5.2

Book quality
 
(0.5
)
 
-

 
(0.5
)
 
0.7

 
(0.2
)
 
(0.1
)
 
0.1

 
-

 
-

Model updates
 
-

 
-

 
-

 
-

 
-

 
-

 
-

 
-

 
-

- portfolios moving onto IRB approach
 
-

 
-

 
-

 
-

 
-

 
-

 
-

 
-

 
-

- new/updated models
 
-

 
-

 
-

 
-

 
-

 
-

 
-

 
-

 
-

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Methodology and policy
 
(17.9
)
 
-

 
(17.9
)
 
(87.9
)
 
(29.3
)
 
-

 
15.2

 
-

 
(119.9
)
- internal updates
 
1.5

 
-

 
1.5

 
2.3

 
(0.4
)
 
-

 
(1.7
)
 
-

 
1.7

- external updates - regulatory
 
(19.4
)
 
-

 
(19.4
)
 
(90.2
)
 
(28.9
)
 
-

 
16.9

 
-

 
(121.6
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total RWA movement
 
(26.6
)
 
(3.6
)
 
(30.2
)
 
(109.4
)
 
(54.5
)
 
(0.5
)
 
15.4

 
1.1

 
(178.1
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
RWAs at 30 Sep 2016
 
122.3

 
23.6

 
145.9

 
305.4

 
341.1

 
18.0

 
50.8

 
42.9

 
904.1

1
Book size now includes market risk movements previously categorised as movements in risk levels.

HSBC HOLDINGS PLC
18
Earnings Release - 3Q16 (continued)



RWAs by risk type
 
 
RWAs at

 
Capital
required1 at

 
 
30 Sep 
 2016

 
30 Sep 
 2016

 
 
   $bn

 
   $bn

 
 
 
 
 
Credit risk
 
686.8

 
55.0

Standardised approach
 
175.0

 
14.0

IRB foundation approach
 
27.1

 
2.2

IRB advanced approach
 
484.7

 
38.8

Counterparty credit risk
 
70.0

 
5.5

Standardised approach
 
18.3

 
1.4

- CCR standardised approach
 
2.3

 
0.2

- Credit valuation adjustment
 
14.3

 
1.1

- Central counterparty
 
1.7

 
0.1

Advanced approach
 
51.7

 
4.1

- CCR IRB approach
 
46.6

 
3.7

- Credit valuation adjustment
 
5.1

 
0.4

Market risk
 
42.9

 
3.5

Internal model based
 
37.8

 
3.0

- VaR
 
7.5

 
0.6

- Stressed VaR
 
10.0

 
0.8

- Incremental risk charge
 
11.8

 
0.9

- Other VaR and stressed VaR
 
8.5

 
0.7

Standardised approach
 
5.1

 
0.5

- Interest rate positions risk
 
1.9

 
0.2

- Foreign exchange position risk
 
0.4

 
-

- Equity position risk
 
0.7

 
0.1

- Commodity position risk
 
-

 
-

- Securitisation
 
2.1

 
0.2

- Options
 
-

 
-

Operational risk
 
104.4

 
8.4

At 30 Sep 2016
 
904.1

 
72.4

1
'Capital required' represents the Pillar 1 capital charge at 8% of RWAs.

HSBC HOLDINGS PLC
19
Earnings Release - 3Q16 (continued)


RWAs by geographical region
 
 
Europe2

 
Asia

 
MENA2

 
North
America

 
Latin
America

 
Total

 
 
$bn

 
$bn

 
$bn

 
$bn

 
$bn

 
$bn

 
 
 
 
 
 
 
 
 
 
 
 
 
IRB approach
 
176.8

 
197.7

 
21.7

 
110.4

 
5.2

 
511.8

- IRB advanced approach
 
159.4

 
197.7

 
12.0

 
110.4

 
5.2

 
484.7

- IRB foundation approach
 
17.4

 
-

 
9.7

 
-

 
-

 
27.1

Standardised approach
 
40.7

 
64.5

 
34.5

 
17.9

 
17.4

 
175.0

Credit risk
 
217.5

 
262.2

 
56.2

 
128.3

 
22.6

 
686.8

Counterparty credit risk
 
38.1

 
15.3

 
1.5

 
13.8

 
1.3

 
70.0

Market risk1
 
29.8

 
24.4

 
3.2

 
8.0

 
0.8

 
42.9

Operational risk
 
33.2

 
36.6

 
7.7

 
14.0

 
12.9

 
104.4

 
 
 
 
 
 
 
 
 
 
 
 
 
At 30 Sep 2016
 
318.6

 
338.5

 
68.6

 
164.1

 
37.6

 
904.1

1
RWAs are non-additive across geographical regions due to market risk diversification effects within the Group.
2
In 3Q16, HSBC Bank plc executed a management services agreement, transferring its governance responsibilities over HSBC Bank A.S. (Turkey) to HSBC Bank Middle East Limited to leverage the strong commercial ties between Turkey and MENA. Comparative data for Europe and MENA have been re-presented accordingly.

RWAs by global business
 
 
Principal
RBWM

 
RBWM
(US run-off
portfolio)

 
Total
RBWM

 
CMB

 
GB&M

 
GPB

 
Other

 
Total

 
 
$bn

 
$bn

 
$bn

 
$bn

 
$bn

 
$bn

 
$bn

 
$bn

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
IRB approach
 
54.8

 
17.4

 
72.2

 
219.5

 
201.8

 
7.3

 
11.0

 
511.8

- IRB advanced approach
 
54.8

 
17.4

 
72.2

 
200.4

 
194.7

 
7.3

 
10.1

 
484.7

- IRB foundation approach
 
-

 
-

 
-

 
19.1

 
7.1

 
-

 
0.9

 
27.1

Standardised approach
 
33.5

 
3.8

 
37.3

 
58.1

 
31.4

 
7.0

 
41.2

 
175.0

Credit risk
 
88.3

 
21.2

 
109.5

 
277.6

 
233.2

 
14.3

 
52.2

 
686.8

Counterparty credit risk
 
-

 
-

 
-

 
-

 
69.5

 
0.2

 
0.3

 
70.0

Market risk
 
-

 
-

 
-

 
-

 
42.6

 
-

 
0.3

 
42.9

Operational risk
 
34.0

 
2.4

 
36.4

 
27.8

 
38.4

 
3.5

 
(1.7
)
 
104.4

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
At 30 Sep 2016
 
122.3

 
23.6

 
145.9

 
305.4

 
383.7

 
18.0

 
51.1

 
904.1


Leverage
Leverage ratio
 
 
 
At
 
 
 
30 Sep

 
30 Jun

 
31 Dec

 
 
 
2016

 
2016

 
2015

Ref*
 
 
$bn

 
$bn

 
$bn

 
 
 
 
 
 
 
 
21
Total leverage ratio exposure
 
2,529

 
2,788

 
2,794

20
Tier 1 capital (end point)
 
137

 
142

 
140

 
 
 
 
 
 
 
 
22
Leverage ratio
 
5.4
%
 
5.1
%
 
5.0
%
 
 
 
 
 
 
 
 
EU-23
Choice on transitional arrangements for the definition of the capital measure
 
Fully phased in

 
Fully phased in

 
Fully phased in

 
Total leverage ratio exposure - quarterly average
 
2,672

 
2,819

 
2,869

 
Leverage ratio - quarterly average
 
5.3
%
 
5.1
%
 
5.0
%
*
The references identify the lines prescribed in the EBA template.
Our leverage ratio calculated on the CRR basis was 5.4% at 30 September 2016, up from 5.1% at 30 June 2016. This was mainly due to a reduction in the exposure measure resulting from the change in regulatory treatment of our investment in BoCom.
The Group's UK leverage ratio on a modified basis, excluding qualifying central bank balances, was 5.6%. This modification to the leverage ratio exposure measure was made following recommendations by the Bank of England's Financial Policy Committee.

 
The Financial Policy Committee has stated that it intends to re-calibrate the leverage ratio in 2017 to take account of this modification. Any uplift in HSBC's UK leverage ratio should be considered in this context.
At 30 September 2016, our UK minimum leverage ratio requirement of 3% was supplemented by an additional leverage ratio buffer of 0.2% that translates to a value of $6bn, and a countercyclical leverage ratio buffer which results in no capital impact. We comfortably exceeded these leverage requirements.



HSBC HOLDINGS PLC
20
Earnings Release - 3Q16 (continued)


Summary information - global businesses
Retail Banking and Wealth Management
 
 
Nine months ended
 
Quarter ended
 
 
30 Sep 
 2016

 
30 Sep 
 2015

 
30 Sep 
 2016

 
30 Jun 
 2016

 
30 Sep 
 2015

 
 
$m

 
$m

 
$m

 
$m

 
$m

Net operating income before loan impairment charges
and other credit risk provisions
 
15,306

 
17,912

 
4,189

 
5,957

 
5,470

Loan impairment charges and other credit risk provisions
 
(1,483
)
 
(1,396
)
 
(363
)
 
(539
)
 
(462
)
 
 
 
 
 
 
 
 
 
 
 
Net operating income
 
13,823

 
16,516

 
3,826

 
5,418

 
5,008

Total operating expenses
 
(11,463
)
 
(12,308
)
 
(3,655
)
 
(4,276
)
 
(3,954
)
 
 
 
 
 
 
 
 
 
 
 
Operating profit
 
2,360

 
4,208

 
171

 
1,142

 
1,054

Share of profit in associates and joint ventures
 
288

 
314

 
95

 
107

 
106

 
 
 
 
 
 
 
 
 
 
 
Profit before tax
 
2,648

 
4,522

 
266

 
1,249

 
1,160

 
 
 
 
 
 
 
 
 
 
 
Profit before tax related to:
 
 
 
 
 
 
 
 
 
 
- Principal RBWM
 
3,338

 
4,698

 
380

 
1,708

 
1,181

- US run-off portfolio
 
(690
)
 
(176
)
 
(114
)
 
(459
)
 
(21
)
 
 
 
 
 
 
 
 
 
 
 
 
 
%

 
%

 
%

 
%

 
%

 
 
 
 
 
 
 
 
 
 
 
Cost efficiency ratio
 
74.9

 
68.7

 
87.3

 
71.8

 
72.3

Reported pre-tax RoRWA (annualised)
 
2.0

 
3.0

 
0.7

 
2.8

 
2.3

 
 
 
 
 
 
 
 
 
 
 
 
 
$m

 
$m

 
$m

 
$m

 
$m

 
 
 
 
 
 
 
 
 
 
 
Adjusted profit before tax - Principal RBWM1
 
4,761

 
4,954

 
1,747

 
1,502

 
1,356

1
Excludes the US run-off portfolio. Adjusted profit before tax of the US run-off portfolio was $147m for 9M16 (9M15: $368m) and $52m for 3Q16 (2Q16: $71m; 3Q15: $154m).

Principal RBWM: management view of adjusted revenue
 
 
Nine months ended
 
Quarter ended
 
 
30 Sep 
 2016

 
30 Sep 
 2015

 
30 Sep 
 2016

 
30 Jun 
 2016

 
30 Sep 
 2015

 
 
$m

 
$m

 
$m

 
$m

 
$m

 
 
 
 
 
 
 
 
 
 
 
Current accounts, savings and deposits
 
4,035

 
3,737

 
1,307

 
1,346

 
1,231

Wealth products
 
3,937

 
4,505

 
1,500

 
1,288

 
1,191

Investment distribution1
 
2,251

 
2,622

 
804

 
730

 
784

Life insurance manufacturing
 
968

 
1,136

 
442

 
331

 
168

Asset Management
 
718

 
747

 
254

 
227

 
239

 
 
 
 
 
 
 
 
 
 
 
Personal lending
 
5,814

 
5,986

 
1,883

 
1,878

 
1,956

Mortgages
 
1,980

 
2,033

 
636

 
641

 
670

Credit cards
 
2,379

 
2,536

 
773

 
761

 
821

Other personal lending2
 
1,455

 
1,417

 
474

 
476

 
465

 
 
 
 
 
 
 
 
 
 
 
Other3
 
607

 
440

 
266

 
164

 
182

 
 
 
 
 
 
 
 
 
 
 
Revenue
 
14,393

 
14,668

 
4,956

 
4,676

 
4,560

1
'Investment distribution' includes Investments, comprising mutual funds (HSBC manufactured and third-party), structured products and securities trading, and Wealth insurance distribution, comprising HSBC manufactured and third-party life, pension and investment insurance products.
2
'Other personal lending' includes personal non-residential closed-end loans and personal overdrafts.
3
'Other' mainly includes the distribution and manufacturing (where applicable) of retail and credit protection insurance.



HSBC HOLDINGS PLC
21
Earnings Release - 3Q16 (continued)


Commercial Banking
 
 
Nine months ended
 
Quarter ended
 
 
30 Sep 
 2016

 
30 Sep 
 2015

 
30 Sep 
 2016

 
30 Jun 
 2016

 
30 Sep 
 2015

 
 
$m

 
$m

 
$m

 
$m

 
$m

Net operating income before loan impairment charges
and other credit risk provisions
 
10,320

 
11,236

 
2,811

 
3,886

 
3,702

Loan impairment charges and other credit risk provisions
 
(1,077
)
 
(757
)
 
(244
)
 
(443
)
 
(246
)
 
 
 
 
 
 
 
 
 
 
 
Net operating income
 
9,243

 
10,479

 
2,567

 
3,443

 
3,456

Total operating expenses
 
(4,558
)
 
(4,997
)
 
(1,415
)
 
(1,619
)
 
(1,676
)
 
 
 
 
 
 
 
 
 
 
 
Operating profit
 
4,685

 
5,482

 
1,152

 
1,824

 
1,780

Share of profit in associates and joint ventures
 
1,154

 
1,267

 
383

 
430

 
446

 
 
 
 
 
 
 
 
 
 
 
Profit before tax
 
5,839

 
6,749

 
1,535

 
2,254

 
2,226

 
 
 
 
 
 
 
 
 
 
 
 
 
%

 
%

 
%

 
%

 
%

 
 
 
 
 
 
 
 
 
 
 
Cost efficiency ratio
 
44.2

 
44.5

 
50.3

 
41.7

 
45.3

Reported pre-tax RoRWA (annualised)
 
2.0

 
2.1

 
1.7

 
2.2

 
2.0


Management view of adjusted revenue
 
 
Nine months ended
 
Quarter ended
 
 
30 Sep 
 2016

 
30 Sep 
 2015

 
30 Sep 
 2016

 
30 Jun 
 2016

 
30 Sep 
 2015

 
 
$m

 
$m

 
$m

 
$m

 
$m

 
 
 
 
 
 
 
 
 
 
 
Global Trade and Receivables Finance
 
1,477

 
1,634

 
479

 
484

 
548

Credit and Lending
 
4,044

 
3,991

 
1,326

 
1,319

 
1,355

Global Liquidity and Cash Management
 
3,368

 
3,233

 
1,101

 
1,103

 
1,080

Markets products, Insurance and Investments and other
 
1,454

 
1,306

 
446

 
495

 
358

 
 
 
 
 
 
 
 
 
 
 
Revenue
 
10,343

 
10,164

 
3,352

 
3,401

 
3,341



HSBC HOLDINGS PLC
22
Earnings Release - 3Q16 (continued)


Global Banking and Markets
 
 
Nine months ended
 
Quarter ended
 
 
30 Sep 
 2016

 
30 Sep 
 2015

 
30 Sep 
 2016

 
30 Jun 
 2016

 
30 Sep 
 2015

 
 
$m

 
$m

 
$m

 
$m

 
$m

Net operating income before loan impairment charges
and other credit risk provisions
 
12,927

 
14,786

 
4,014

 
4,447

 
4,525

Loan impairment (charges)/recoveries and other credit risk provisions
 
(385
)
 
90

 
40

 
(232
)
 
79

 
 
 
 
 
 
 
 
 
 
 
Net operating income
 
12,542

 
14,876

 
4,054

 
4,215

 
4,604

Total operating expenses
 
(6,976
)
 
(8,385
)
 
(2,227
)
 
(2,471
)
 
(2,595
)
 
 
 
 
 
 
 
 
 
 
 
Operating profit
 
5,566

 
6,491

 
1,827

 
1,744

 
2,009

Share of profit in associates and joint ventures
 
401

 
404

 
134

 
141

 
132

 
 
 
 
 
 
 
 
 
 
 
Profit before tax
 
5,967

 
6,895

 
1,961

 
1,885

 
2,141

 
 
 
 
 
 
 
 
 
 
 
 
 
%

 
%

 
%

 
%

 
%

 
 
 
 
 
 
 
 
 
 
 
Cost efficiency ratio
 
54.0

 
56.7

 
55.5

 
55.6

 
57.3

Reported pre-tax RoRWA (annualised)
 
1.9

 
1.9

 
1.9

 
1.7

 
1.8



Management view of adjusted revenue
 
 
Nine months ended
 
Quarter ended
 
 
30 Sep 
 2016

 
30 Sep 
 2015

 
30 Sep 
 2016

 
30 Jun 
 2016

 
30 Sep 
 2015

 
 
$m

 
$m

 
$m

 
$m

 
$m

 
 
 
 
 
 
 
 
 
 
 
Markets
 
5,190

 
5,457

 
1,736

 
1,760

 
1,391

Legacy Credit
 
26

 
91

 
125

 
(55
)
 
(5
)
Credit
 
728

 
547

 
225

 
332

 
71

Rates
 
1,595

 
1,280

 
541

 
535

 
359

Foreign Exchange
 
2,085

 
2,143

 
658

 
690

 
633

Equities
 
756

 
1,396

 
187

 
258

 
333

 
 
 
 
 
 
 
 
 
 
 
Capital Financing
 
2,658

 
2,688

 
933

 
854

 
924

Global Liquidity and Cash Management
 
1,357

 
1,246

 
457

 
440

 
409

Securities Services
 
1,191

 
1,233

 
412

 
393

 
406

Global Trade and Receivables Finance
 
489

 
487

 
163

 
161

 
164

Balance Sheet Management
 
2,217

 
2,176

 
726

 
756

 
693

Principal Investments
 
168

 
172

 
173

 
(4
)
 
46

Other1
 
(208
)
 
(65
)
 
(95
)
 
(79
)
 
(53
)
 
 
 
 
 
 
 
 
 
 
 
Revenue
 
13,062

 
13,394

 
4,505

 
4,281

 
3,980

1
'Other' in GB&M includes net interest earned on free capital held in the global business not assigned to products and gains resulting from business disposals. Within the management view of total operating income, notional tax credits are allocated to the businesses to reflect the economic benefit generated by certain activities which is not reflected within operating income, such as notional credits on income earned from tax-exempt investments where the economic benefit of the activity is reflected in tax expense. In order to reflect the total operating income on an IFRS basis, the offset to these tax credits is included within 'Other'.


HSBC HOLDINGS PLC
23
Earnings Release - 3Q16 (continued)


Global Private Banking

 
 
Nine months ended
 
Quarter ended
 
 
30 Sep 
 2016

 
30 Sep 
 2015

 
30 Sep 
 2016

 
30 Jun 
 2016

 
30 Sep 
 2015

 
 
$m

 
$m

 
$m

 
$m

 
$m

Net operating income before loan impairment charges and other credit risk provisions
 
1,435

 
1,685

 
462

 
486

 
508

Loan impairment (charges)/recoveries and other credit risk provisions
 
10

 
(9
)
 
(1
)
 
11

 
(4
)
 
 
 
 
 
 
 
 
 
 
 
Net operating income
 
1,445

 
1,676

 
461

 
497

 
504

Total operating expenses
 
(1,858
)
 
(1,427
)
 
(313
)
 
(1,166
)
 
(426
)
 
 
 
 
 
 
 
 
 
 
 
Operating profit
 
(413
)
 
249

 
148

 
(669
)
 
78

Share of profit in associates and joint ventures
 
7

 
12

 
3

 
2

 
3

 
 
 
 
 
 
 
 
 
 
 
Profit/(loss) before tax
 
(406
)
 
261

 
151

 
(667
)
 
81

 
 
 
 
 
 
 
 
 
 
 
 
 
%

 
%

 
%

 
%

 
%

 
 
 
 
 
 
 
 
 
 
 
Cost efficiency ratio
 
129.5

 
84.7

 
67.7

 
239.9

 
83.9

Reported pre-tax RoRWA (annualised)
 
(2.9
)
 
1.7

 
3.3

 
(14.2
)
 
1.5


Client assets1 by geography
 
 
Quarter ended
 
 
30 Sep 
 2016

 
30 Jun 
 2016

 
31 Mar 
 2016

 
31 Dec 
 2015

 
30 Sep 
 2015

 
 
$bn

 
$bn

 
$bn

 
$bn

 
$bn

 
 
 
 
 
 
 
 
 
 
 
Europe
 
158

 
159

 
163

 
168

 
170

Asia
 
112

 
108

 
108

 
112

 
106

North America
 
42

 
41

 
62

 
61

 
62

Latin America
 
3

 
9

 
8

 
8

 
8

 
 
 
 
 
 
 
 
 
 
 
Total
 
315

 
317

 
341

 
349

 
346

1
'Client assets' are translated at the rates of exchange applicable for their respective period-ends, with the effects of currency translation reported separately. The main components of client assets are funds under management, which are not reported on the Group's balance sheet and customer deposits, which are reported on the Group's balance sheet.
Client assets1 
 
 
Quarter ended
 
 
30 Sep 
 2016

 
30 Jun 
 2016

 
31 Mar 
 2016

 
31 Dec 
 2015

 
30 Sep 
 2015

 
 
$bn

 
$bn

 
$bn

 
$bn

 
$bn

 
 
 
 
 
 
 
 
 
 
 
Opening balance
 
317

 
341

 
349

 
346

 
370

Net new money
 
(4
)
 
(1
)
 
(5
)
 
(1
)
 
3

Of which: areas targeted for growth
 
-

 
1

 
4

 
2

 
6

Value change
 
6

 
-

 
(6
)
 
6

 
(14
)
Exchange and other
 
(4
)
 
(23
)
 
3

 
(2
)
 
(13
)
 
 
 
 
 
 
 
 
 
 
 
Closing balance
 
315

 
317

 
341

 
349

 
346

1
'Client assets' are translated at the rates of exchange applicable for their respective period-ends, with the effects of currency translation reported separately. The main components of client assets are funds under management, which are not reported on the Group's balance sheet and customer deposits, which are reported on the Group's balance sheet.

HSBC HOLDINGS PLC
24
Earnings Release - 3Q16 (continued)

Other1 
 
 
Nine months ended
 
Quarter ended
 
 
30 Sep 
 2016

 
30 Sep 
 2015

 
30 Sep 
 2016

 
30 Jun 
 2016

 
30 Sep 
 2015

 
 
$m

 
$m

 
$m

 
$m

 
$m

Net operating income before loan impairment charges and other credit risk provisions
 
3,524

 
7,227

 
(504
)
 
1,370

 
2,540

- of which: effect of changes in own credit spread on the fair value of long-term debt issued
 
(144
)
 
1,775

 
(1,370
)
 
75

 
1,125

Loan impairment recoveries/(charges) and other credit risk provisions
 
3

 
(5
)
 
2

 
(2
)
 
(5
)
 
 
 
 
 
 
 
 
 
 
 
Net operating income
 
3,527

 
7,222

 
(502
)
 
1,368

 
2,535

Total operating expenses
 
(7,024
)
 
(5,927
)
 
(2,571
)
 
(2,484
)
 
(2,048
)
 
 
 
 
 
 
 
 
 
 
 
Operating profit/(loss)
 
(3,497
)
 
1,295

 
(3,073
)
 
(1,116
)
 
487

Share of profit in associates and joint ventures
 
6

 
3

 
3

 
3

 
2

 
 
 
 
 
 
 
 
 
 
 
Profit/(loss) before tax
 
(3,491
)
 
1,298

 
(3,070
)
 
(1,113
)
 
489

1
The main items reported under 'Other' are the results of HSBC's holding company and financing operations, which include net interest earned on free capital held centrally, operating costs incurred by the head office operations in providing stewardship and central management services to HSBC, along with the costs incurred by the Group Service Centres and Shared Service Organisations and associated recoveries. The results also include unallocated investment activities, centrally held investment companies and certain property transactions. In addition, 'Other' also includes part of the movement in the fair value of long-term debt designated at fair value (the remainder of the Group's movement on own debt is included in GB&M).

HSBC HOLDINGS PLC
25
Earnings Release - 3Q16 (continued)


Summary information - geographical regions
Europe
 
 
Nine months ended
 
Quarter ended
 
 
30 Sep 
 2016

 
30 Sep
20151

 
30 Sep 
 2016

 
30 Jun
20161

 
30 Sep
20151

 
 
$m

 
$m

 
$m

 
$m

 
$m

Net operating income before loan impairment charges and other credit risk provisions
 
13,881

 
17,014

 
3,023

 
5,222

 
5,874

Loan impairment charges and other credit risk provisions
 
(386
)
 
(213
)
 
(44
)
 
(192
)
 
(22
)
 
 
 
 
 
 
 
 
 
 
 
Net operating income
 
13,495

 
16,801

 
2,979

 
5,030

 
5,852

Total operating expenses
 
(13,524
)
 
(13,006
)
 
(4,594
)
 
(5,141
)
 
(4,275
)
 
 
 
 
 
 
 
 
 
 
 
Operating profit/(loss)
 
(29
)
 
3,795

 
(1,615
)
 
(111
)
 
1,577

Share of profit in associates and joint ventures
 
(3
)
 
6

 
(2
)
 
(2
)
 
4

 
 
 
 
 
 
 
 
 
 
 
Profit/(loss) before tax
 
(32
)
 
3,801

 
(1,617
)
 
(113
)
 
1,581

 
 
 
 
 
 
 
 
 
 
 
 
 
%

 
%

 
%

 
%

 
%

Cost efficiency ratio
 
97.4

 
76.4

 
152.0

 
98.4

 
72.8

Reported pre-tax RoRWA (annualised)1
 
-

 
1.4

 
(2.0
)
 
(0.1
)
 
1.8


Profit/(loss) before tax by global business
 
 
Nine months ended
 
Quarter ended
 
 
30 Sep 
 2016

 
30 Sep
20151

 
30 Sep 
 2016

 
30 Jun
20161

 
30 Sep
20151

 
 
$m

 
$m

 
$m

 
$m

 
$m

 
 
 
 
 
 
 
 
 
 
 
Retail Banking and Wealth Management
 
719

 
1,298

 
(189
)
 
656

 
363

Commercial Banking
 
1,878

 
1,929

 
553

 
760

 
653

Global Banking and Markets
 
1,291

 
1,090

 
755

 
212

 
234

Global Private Banking
 
(725
)
 
(15
)
 
20

 
(764
)
 
9

Other
 
(3,195
)
 
(501
)
 
(2,756
)
 
(977
)
 
322

 
 
 
 
 
 
 
 
 
 
 
Profit/(loss) before tax
 
(32
)
 
3,801

 
(1,617
)
 
(113
)
 
1,581

1
In 3Q16, HSBC Bank plc executed a management services agreement, transferring its governance responsibilities over HSBC Bank A.S. (Turkey) to HSBC Bank Middle East Limited to leverage the strong commercial ties between Turkey and MENA. Comparative data for Europe and MENA have been re-presented accordingly.

Reported and adjusted UK profit/(loss) before tax
 
 
Nine months ended
 
Quarter ended
 
 
30 Sep 
 2016

 
30 Sep 
 2015

 
30 Sep 
 2016

 
30 Jun 
 2016

 
30 Sep 
 2015

 
 
$m

 
$m

 
$m

 
$m

 
$m

 
 
 
 
 
 
 
 
 
 
 
Reported profit/(loss) before tax
 
223

 
2,781

 
(1,754
)
 
390

 
1,356

 
 
 
 
 
 
 
 
 
 
 
Adjusted profit before tax
 
2,018

 
2,368

 
559

 
643

 
614



HSBC HOLDINGS PLC
26
Earnings Release - 3Q16 (continued)


Asia
 
 
Nine months ended
 
Quarter ended
 
 
30 Sep 
 2016

 
30 Sep 
 2015

 
30 Sep 
 2016

 
30 Jun 
 2016

 
30 Sep 
 2015

 
 
$m

 
$m

 
$m

 
$m

 
$m

Net operating income before loan impairment charges and other credit risk provisions
 
17,751

 
19,843

 
5,999

 
5,919

 
5,778

Loan impairment charges and other credit risk provisions
 
(552
)
 
(365
)
 
(208
)
 
(154
)
 
(119
)
 
 
 
 
 
 
 
 
 
 
 
Net operating income
 
17,199

 
19,478

 
5,791

 
5,765

 
5,659

Total operating expenses
 
(7,887
)
 
(8,126
)
 
(2,642
)
 
(2,702
)
 
(2,669
)
 
 
 
 
 
 
 
 
 
 
 
Operating profit
 
9,312

 
11,352

 
3,149

 
3,063

 
2,990

Share of profit in associates and joint ventures
 
1,503

 
1,596

 
511

 
562

 
558

 
 
 
 
 
 
 
 
 
 
 
Profit before tax
 
10,815

 
12,948

 
3,660

 
3,625

 
3,548

 
 
 
 
 
 
 
 
 
 
 
 
 
%

 
%

 
%

 
%

 
%

Cost efficiency ratio
 
44.4

 
41.0

 
44.0

 
45.6

 
46.2

Reported pre-tax RoRWA (annualised)
 
3.4

 
3.5

 
3.6

 
3.2

 
2.9


Profit/(loss) before tax by global business
 
 
Nine months ended
 
Quarter ended
 
 
30 Sep 
 2016

 
30 Sep 
 2015

 
30 Sep 
 2016

 
30 Jun 
 2016

 
30 Sep 
 2015

 
 
$m

 
$m

 
$m

 
$m

 
$m

 
 
 
 
 
 
 
 
 
 
 
Retail Banking and Wealth Management
 
3,382

 
3,432

 
1,301

 
1,060

 
901

Commercial Banking
 
3,509

 
3,623

 
1,153

 
1,213

 
1,219

Global Banking and Markets
 
3,648

 
3,962

 
1,136

 
1,271

 
1,279

Global Private Banking
 
237

 
209

 
114

 
57

 
53

Other
 
39

 
1,722

 
(44
)
 
24

 
96

 
 
 
 
 
 
 
 
 
 
 
Profit before tax
 
10,815

 
12,948

 
3,660

 
3,625

 
3,548


Reported and adjusted Hong Kong profit before tax
 
 
Nine months ended
 
Quarter ended
 
 
30 Sep 
 2016

 
30 Sep 
 2015

 
30 Sep 
 2016

 
30 Jun 
 2016

 
30 Sep 
 2015

 
 
$m

 
$m

 
$m

 
$m

 
$m

 
 
 
 
 
 
 
 
 
 
 
Reported profit before tax
 
6,366

 
8,050

 
2,196

 
2,081

 
1,817

 
 
 
 
 
 
 
 
 
 
 
Adjusted profit before tax
 
6,440

 
6,651

 
2,230

 
2,138

 
1,802



HSBC HOLDINGS PLC
27
Earnings Release - 3Q16 (continued)


Middle East and North Africa
 
 
Nine months ended
 
Quarter ended
 
 
30 Sep 
 2016

 
30 Sep
20151

 
30 Sep 
 2016

 
30 Jun
20161


30 Sep
20151

 
 
$m

 
$m

 
$m

 
$m

 
$m

Net operating income before loan impairment charges and other credit risk provisions
 
2,337

 
2,405

 
725

 
775

 
779

Loan impairment charges and other credit risk provisions
 
(184
)
 
(272
)
 
(88
)
 
(49
)
 
(144
)
 
 
 
 
 
 
 
 
 
 
 
Net operating income
 
2,153

 
2,133

 
637

 
726

 
635

Total operating expenses
 
(1,206
)
 
(1,297
)
 
(419
)
 
(381
)
 
(418
)
 
 
 
 
 
 
 
 
 
 
 
Operating profit
 
947

 
836

 
218

 
345

 
217

Share of profit in associates and joint ventures
 
361

 
396

 
111

 
125

 
129

 
 
 
 
 
 
 
 
 
 
 
Profit before tax
 
1,308

 
1,232

 
329

 
470

 
346

 
 
 
 
 
 
 
 
 
 
 
 
 
%

 
%

 
%

 
%

 
%

Cost efficiency ratio
 
51.6

 
53.9

 
57.8

 
49.2

 
53.7

Reported pre-tax RoRWA (annualised)1
 
2.5

 
2.2

 
1.9

 
2.7

 
1.9


Profit/(loss) before tax by global business
 
 
Nine months ended
 
Quarter ended
 
 
30 Sep 
 2016

 
30 Sep
20151

 
30 Sep 
 2016

 
30 Jun
20161


30 Sep
20151

 
 
$m

 
$m

 
$m

 
$m

 
$m

 
 
 
 
 
 
 
 
 
 
 
Retail Banking and Wealth Management
 
109

 
92

 
3

 
50

 
(8
)
Commercial Banking
 
442

 
404

 
119

 
162

 
120

Global Banking and Markets
 
824

 
751

 
260

 
263

 
232

Global Private Banking
 
7

 
14

 
1

 
3

 
5

Other
 
(74
)
 
(29
)
 
(54
)
 
(8
)
 
(3
)
 
 
 
 
 
 
 
 
 
 
 
Profit before tax
 
1,308

 
1,232

 
329

 
470

 
346

1
In 3Q16, HSBC Bank plc executed a management services agreement, transferring its governance responsibilities over HSBC Bank A.S. (Turkey) to HSBC Bank Middle East Limited to leverage the strong commercial ties between Turkey and MENA. Comparative data for Europe and MENA have been re-presented accordingly.


HSBC HOLDINGS PLC
28
Earnings Release - 3Q16 (continued)


North America
 
 
Nine months ended
 
Quarter ended
 
 
30 Sep 
 2016

 
30 Sep 
 2015

 
30 Sep 
 2016

 
30 Jun 
 2016

 
30 Sep 
 2015

 
 
$m

 
$m

 
$m

 
$m

 
$m

Net operating income before loan impairment charges and other credit risk provisions
 
5,532

 
6,065

 
1,580

 
1,958

 
1,939

Loan impairment charges and other credit risk provisions
 
(705
)
 
(217
)
 
(88
)
 
(289
)
 
(64
)
 
 
 
 
 
 
 
 
 
 
 
Net operating income
 
4,827

 
5,848

 
1,492

 
1,669

 
1,875

Total operating expenses
 
(4,707
)
 
(4,682
)
 
(1,424
)
 
(1,981
)
 
(1,395
)
 
 
 
 
 
 
 
 
 
 
 
Operating profit/(loss)
 
120

 
1,166

 
68

 
(312
)
 
480

Share of profit/(loss) in associates and joint ventures
 
(4
)
 
3

 
(2
)
 
(2
)
 
(1
)
 
 
 
 
 
 
 
 
 
 
 
Profit/(loss) before tax
 
116

 
1,169

 
66

 
(314
)
 
479

 
 
 
 
 
 
 
 
 
 
 
 
 
%

 
%

 
%

 
%

 
%

Cost efficiency ratio
 
85.1

 
77.2

 
90.1

 
101.2

 
71.9

Reported pre-tax RoRWA (annualised)
 
0.1

 
0.7

 
0.2

 
(0.7
)
 
0.9


Profit/(loss) before tax by global business
 
 
Nine months ended
 
Quarter ended
 
 
30 Sep 
 2016

 
30 Sep 
 2015

 
30 Sep 
 2016

 
30 Jun 
 2016

 
30 Sep 
 2015

 
 
$m

 
$m

 
$m

 
$m

 
$m

 
 
 
 
 
 
 
 
 
 
 
Retail Banking and Wealth Management
 
(644
)
 
(168
)
 
(129
)
 
(428
)
 
4

Principal RBWM
 
46

 
8

 
(15
)
 
31

 
25

Run-off portfolio
 
(690
)
 
(176
)
 
(114
)
 
(459
)
 
(21
)
Commercial Banking
 
515

 
595

 
205

 
151

 
172

Global Banking and Markets
 
330

 
564

 
171

 
34

 
208

Global Private Banking
 
73

 
50

 
20

 
34

 
13

Other
 
(158
)
 
128

 
(201
)
 
(105
)
 
82

 
 
 
 
 
 
 
 
 
 
 
Profit/(loss) before tax
 
116

 
1,169

 
66

 
(314
)
 
479


HSBC HOLDINGS PLC
29
Earnings Release - 3Q16 (continued)


Latin America
 
 
Nine months ended
 
Quarter ended
 
 
30 Sep 
 2016

 
30 Sep 
 2015

 
30 Sep 
 2016

 
30 Jun 
 2016

 
30 Sep 
 2015

 
 
$m

 
$m

 
$m

 
$m

 
$m

Net operating income before loan impairment charges and other credit risk provisions
 
1,960

 
5,167

 
(965
)
 
1,506

 
1,609

Loan impairment charges and other credit risk provisions
 
(1,105
)
 
(1,010
)
 
(138
)
 
(521
)
 
(289
)
 
 
 
 
 
 
 
 
 
 
 
Net operating income
 
855

 
4,157

 
(1,103
)
 
985

 
1,320

Total operating expenses
 
(2,504
)
 
(3,581
)
 
(492
)
 
(1,045
)
 
(1,176
)
 
 
 
 
 
 
 
 
 
 
 
Operating profit/(loss)
 
(1,649
)
 
576

 
(1,595
)
 
(60
)
 
144

Share of loss in associates and joint ventures
 
(1
)
 
(1
)
 
-

 
-

 
(1
)
 
 
 
 
 
 
 
 
 
 
 
Profit/(loss) before tax
 
(1,650
)
 
575

 
(1,595
)
 
(60
)
 
143

 
 
 
 
 
 
 
 
 
 
 
 
 
%

 
%

 
%

 
%

 
%

Cost efficiency ratio
 
127.8

 
69.3

 
(51.0
)
 
69.4

 
73.1

Reported pre-tax RoRWA (annualised)
 
(3.3
)
 
0.9

 
(10.9
)
 
(0.3
)
 
0.7


Profit/(loss) before tax by global business
 
 
Nine months ended
 
Quarter ended
 
 
30 Sep 
 2016

 
30 Sep 
 2015

 
30 Sep 
 2016

 
30 Jun 
 2016

 
30 Sep 
 2015

 
 
$m

 
$m

 
$m

 
$m

 
$m

 
 
 
 
 
 
 
 
 
 
 
Retail Banking and Wealth Management
 
(918
)
 
(132
)
 
(720
)
 
(89
)
 
(100
)
Commercial Banking
 
(505
)
 
198

 
(495
)
 
(32
)
 
62

Global Banking and Markets
 
(126
)
 
528

 
(361
)
 
105

 
188

Global Private Banking
 
2

 
3

 
(4
)
 
3

 
1

Other
 
(103
)
 
(22
)
 
(15
)
 
(47
)
 
(8
)
 
 
 
 
 
 
 
 
 
 
 
Profit/(loss) before tax
 
(1,650
)
 
575

 
(1,595
)
 
(60
)
 
143


HSBC HOLDINGS PLC
30
Earnings Release - 3Q16 (continued)


Appendix - selected information
Reconciliation of reported results to adjusted performance - geographical regions
 
 
Nine months ended 30 Sep 2016
 
 
Europe

 
Asia

 
MENA

 
North
America

 
Latin
America

 
Total

 
UK

 
Hong
Kong

 
 
$m

 
$m

 
$m

 
$m

 
$m

 
$m

 
$m

 
$m

Revenue
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Reported1
 
13,881

 
17,751

 
2,337

 
5,532

 
1,960

 
38,982

 
10,369

 
10,700

Significant items
 
(165
)
 
(23
)
 
(13
)
 
64

 
308

 
171

 
(100
)
 
(11
)
- DVA on derivative contracts
 
(106
)
 
(29
)
 
-

 
2

 
37

 
(96
)
 
(108
)
 
(29
)
- fair value movements on non-qualifying hedges
 
260

 
18

 
-

 
109

 
(2
)
 
385

 
221

 
25

-  loss on sale of several tranches of real estate secured accounts in the US
 
-

 
-

 
-

 
51

 
-

 
51

 
-

 
-

- gain on disposal of our membership interest in Visa Europe
 
(573
)
 
-

 
(11
)
 
-

 
-

 
(584
)
 
(441
)
 
-

- own credit spread
 
256

 
(12
)
 
(2
)
 
(98
)
 
-

 
144

 
230

 
(7
)
-  releases arising from the ongoing review of compliance with the UK Consumer Credit Act
 
(2
)
 
-

 
-

 
-

 
-

 
(2
)
 
(2
)
 
-

- loss and trading results from disposed-of operations in Brazil2
 
-

 
-

 
-

 
-

 
273

 
273

 
-

 
-

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Adjusted1
 
13,716

 
17,728

 
2,324

 
5,596

 
2,268

 
39,153

 
10,269

 
10,689

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
LICs
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Reported
 
(386
)
 
(552
)
 
(184
)
 
(705
)
 
(1,105
)
 
(2,932
)
 
(240
)
 
(231
)
Significant items
 
-

 
-

 
-

 
-

 
748

 
748

 
-

 
-

- trading results from disposed-of operations in Brazil2
 
-

 
-

 
-

 
-

 
748

 
748

 
-

 
-

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Adjusted
 
(386
)
 
(552
)
 
(184
)
 
(705
)
 
(357
)
 
(2,184
)
 
(240
)
 
(231
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Operating expenses
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Reported1
 
(13,524
)
 
(7,887
)
 
(1,206
)
 
(4,707
)
 
(2,504
)
 
(27,349
)
 
(9,902
)
 
(4,122
)
Significant items
 
2,950

 
215

 
75

 
887

 
1,077

 
5,204

 
1,895

 
85

- costs to achieve
 
1,377

 
262

 
75

 
300

 
18

 
2,032

 
1,187

 
132

- costs to establish UK ring-fenced bank
 
147

 
-

 
-

 
-

 
-

 
147

 
147

 
-

- impairment of GPB - Europe goodwill
 
800

 
-

 
-

 
-

 
-

 
800

 
-

 
-

- regulatory provisions in GPB
 
1

 
(47
)
 
-

 
-

 
-

 
(46
)
 
-

 
(47
)
- settlements and provisions in connection with legal matters
 
136

 
-

 
-

 
587

 
-

 
723

 
72

 
-

- UK customer redress programmes
 
489

 
-

 
-

 
-

 
-

 
489

 
489

 
-

- trading results from disposed-of operations in Brazil2
 
-

 
-

 
-

 
-

 
1,059

 
1,059

 
-

 
-

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Adjusted1
 
(10,574
)
 
(7,672
)
 
(1,131
)
 
(3,820
)
 
(1,427
)
 
(22,145
)
 
(8,007
)
 
(4,037
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Share of profit/(loss) in associates and joint ventures
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Reported
 
(3
)
 
1,503

 
361

 
(4
)
 
(1
)
 
1,856

 
(4
)
 
19

Significant items
 
-

 
-

 
-

 
-

 
1

 
1

 
-

 
-

- trading results from disposed-of operations in Brazil2
 
-

 
-

 
-

 
-

 
1

 
1

 
-

 
-

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Adjusted
 
(3
)
 
1,503

 
361

 
(4
)
 
-

 
1,857

 
(4
)
 
19

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Profit before tax
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Reported
 
(32
)
 
10,815

 
1,308

 
116

 
(1,650
)
 
10,557

 
223

 
6,366

Significant items
 
2,785

 
192

 
62

 
951

 
2,134

 
6,124

 
1,795

 
74

- revenue
 
(165
)
 
(23
)
 
(13
)
 
64

 
308

 
171

 
(100
)
 
(11
)
- LICs
 
-

 
-

 
-

 
-

 
748

 
748

 
-

 
-

- operating expenses
 
2,950

 
215

 
75

 
887

 
1,077

 
5,204

 
1,895

 
85

- share in profit of associates
 
-

 
-

 
-

 
-

 
1

 
1

 
-

 
-

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Adjusted
 
2,753

 
11,007

 
1,370

 
1,067

 
484

 
16,681

 
2,018

 
6,440

1
Amounts are non-additive across geographical regions due to inter-company transactions within the Group.
2
Includes loss on disposal and trading results of operations in Brazil, which were sold on 1 July 2016. The amount of the loss on disposal included in revenue is $1,743m. Trading results do not include 'DVA on derivative contracts', 'costs to achieve' and 'restructuring and other related costs' significant items. These significant items are included in the respective line items above, with a total adjustment of $36m.

HSBC HOLDINGS PLC
31
Earnings Release - 3Q16 (continued)


Reconciliation of reported results to adjusted performance - geographical regions (continued)
 
 
Nine months ended 30 Sep 2015
 
 
Europe3

 
Asia

 
MENA3

 
North
America

 
Latin
America

 
Total

 
UK

 
Hong
Kong

 
 
$m

 
$m

 
$m

 
$m

 
$m

 
$m

 
$m

 
$m

Revenue
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Reported1
 
17,014

 
19,843

 
2,405

 
6,065

 
5,167

 
48,028

 
12,962

 
12,408

Currency translation1
 
(1,007
)
 
(267
)
 
(96
)
 
(59
)
 
(842
)
 
(2,233
)
 
(975
)
 
(18
)
Significant items
 
(1,505
)
 
(1,486
)
 
(11
)
 
(119
)
 
(2,580
)
 
(5,701
)
 
(1,429
)
 
(1,397
)
- DVA on derivative contracts
 
(167
)
 
(119
)
 
(1
)
 
(37
)
 
(92
)
 
(416
)
 
(135
)
 
(27
)
- fair value movements on non-qualifying hedges
 
196

 
2

 
-

 
154

 
1

 
353

 
196

 
3

- gain on the partial sale of shareholding in Industrial Bank
 
-

 
(1,372
)
 
-

 
-

 
-

 
(1,372
)
 
-

 
(1,372
)
- own credit spread
 
(1,532
)
 
3

 
(10
)
 
(236
)
 
-

 
(1,775
)
 
(1,488
)
 
(1
)
- releases arising from the ongoing review of compliance with the UK Consumer Credit Act
 
(2
)
 
-

 
-

 
-

 
-

 
(2
)
 
(2
)
 
-

- trading results from disposed-of operations in Brazil2
 
-

 
-

 
-

 
-

 
(2,489
)
 
(2,489
)
 
-

 
-

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Adjusted1
 
14,502

 
18,090

 
2,298

 
5,887

 
1,745

 
40,094

 
10,558

 
10,993

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
LICs
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Reported
 
(213
)
 
(365
)
 
(272
)
 
(217
)
 
(1,010
)
 
(2,077
)
 
(52
)
 
(119
)
Currency translation
 
(1
)
 
7

 
13

 
3

 
133

 
155

 
3

 
1

Significant items
 
-

 
-

 
-

 
-

 
609

 
609

 
-

 
-

- trading results from disposed-of operations in Brazil2
 
-

 
-

 
-

 
-

 
609

 
609

 
-

 
-

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Adjusted
 
(214
)
 
(358
)
 
(259
)
 
(214
)
 
(268
)
 
(1,313
)
 
(49
)
 
(118
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Operating expenses
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Reported1
 
(13,006
)
 
(8,126
)
 
(1,297
)
 
(4,682
)
 
(3,581
)
 
(28,226
)
 
(10,135
)
 
(4,261
)
Currency translation1
 
736

 
155

 
50

 
31

 
542

 
1,476

 
709

 
5

Significant items
 
1,458

 
15

 
2

 
436

 
1,805

 
3,716

 
1,279

 
10

- costs to achieve
 
89

 
7

 
1

 
38

 
30

 
165

 
82

 
4

- costs to establish UK ring-fenced bank
 
28

 
-

 
-

 
-

 
-

 
28

 
28

 
-

- regulatory provisions in GPB
 
154

 
-

 
-

 
-

 
-

 
154

 
-

 
-

- restructuring and other related costs
 
68

 
8

 
1

 
34

 
6

 
117

 
50

 
6

- settlements and provisions in connection with legal matters
 
915

 
-

 
-

 
364

 
-

 
1,279

 
915

 
-

- UK customer redress programmes
 
204

 
-

 
-

 
-

 
-

 
204

 
204

 
-

- trading results from disposed-of operations in Brazil2
 
-

 
-

 
-

 
-

 
1,769

 
1,769

 
-

 
-

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Adjusted1
 
(10,812
)
 
(7,956
)
 
(1,245
)
 
(4,215
)
 
(1,234
)
 
(23,034
)
 
(8,147
)
 
(4,246
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Share of profit/(loss) in associates and joint ventures
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Reported
 
6

 
1,596

 
396

 
3

 
(1
)
 
2,000

 
6

 
22

Currency translation
 
-

 
(86
)
 
-

 
-

 
-

 
(86
)
 
-

 
-

Significant items
 
-

 
-

 
-

 
-

 
1

 
1

 
-

 
-

- trading results from disposed-of operations in Brazil2
 
-

 
-

 
-

 
-

 
1

 
1

 
-

 
-

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Adjusted
 
6

 
1,510

 
396

 
3

 
-

 
1,915

 
6

 
22

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Profit before tax
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Reported
 
3,801

 
12,948

 
1,232

 
1,169

 
575

 
19,725

 
2,781

 
8,050

Currency translation
 
(272
)
 
(191
)
 
(33
)
 
(25
)
 
(167
)
 
(688
)
 
(263
)
 
(12
)
Significant items
 
(47
)
 
(1,471
)
 
(9
)
 
317

 
(165
)
 
(1,375
)
 
(150
)
 
(1,387
)
- revenue
 
(1,505
)
 
(1,486
)
 
(11
)
 
(119
)
 
(2,580
)
 
(5,701
)
 
(1,429
)
 
(1,397
)
- LICs
 
-

 
-

 
-

 
-

 
609

 
609

 
-

 
-

- operating expenses
 
1,458

 
15

 
2

 
436

 
1,805

 
3,716

 
1,279

 
10

- share in profit of associates
 
-

 
-

 
-

 
-

 
1

 
1

 
-

 
-

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Adjusted
 
3,482

 
11,286

 
1,190

 
1,461

 
243

 
17,662

 
2,368

 
6,651

1
Amounts are non-additive across geographical regions due to inter-company transactions within the Group.
2
Includes foreign currency translation of operations in Brazil, which were sold on 1 July 2016. These are $(321)m in revenue, $78m in LICs and $208m in operating expenses. Trading results do not include 'DVA on derivative contracts', 'costs to achieve' and 'restructuring and other related costs' significant items. These significant items are included in the respective line items above, with a total adjustment of $(54)m.
3
In 3Q16, HSBC Bank plc executed a management services agreement, transferring its governance responsibilities over HSBC Bank A.S. (Turkey) to HSBC Bank Middle East Limited to leverage the strong commercial ties between Turkey and MENA. Comparative data for Europe and MENA have been re-presented accordingly.

HSBC HOLDINGS PLC
32
Earnings Release - 3Q16 (continued)


Reconciliation of reported results to adjusted performance - geographical regions (continued)
 
 
Quarter ended 30 Sep 2016
 
 
Europe

 
Asia

 
MENA

 
North
America

 
Latin
America

 
Total

 
UK

 
Hong
Kong

 
 
$m

 
$m

 
$m

 
$m

 
$m

 
$m

 
$m

 
$m

Revenue
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Reported1
 
3,023

 
5,999

 
725

 
1,580

 
(965
)
 
9,512

 
1,919

 
3,639

Significant items
 
1,346

 
43

 
3

 
138

 
1,745

 
3,275

 
1,291

 
11

-  DVA on derivative contracts
 
4

 
34

 
-

 
15

 
2

 
55

 
(8
)
 
(4
)
- fair value movements on
non-qualifying hedges
 
(17
)
 
5

 
-

 
-

 
-

 
(12
)
 
(18
)
 
9

-  loss on sale of several tranches of real estate secured accounts in the US
 
-

 
-

 
-

 
119

 
-

 
119

 
-

 
-

- own credit spread
 
1,359

 
4

 
3

 
4

 
-

 
1,370

 
1,317

 
6

- loss on disposal of operations in Brazil
 
-

 
-

 
-

 
-

 
1,743

 
1,743

 
-

 
-

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Adjusted1
 
4,369

 
6,042

 
728

 
1,718

 
780

 
12,787

 
3,210

 
3,650

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
LICs
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Reported
 
(44
)
 
(208
)
 
(88
)
 
(88
)
 
(138
)
 
(566
)
 
21

 
(88
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Adjusted
 
(44
)
 
(208
)
 
(88
)
 
(88
)
 
(138
)
 
(566
)
 
21

 
(88
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Operating expenses
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Reported1
 
(4,594
)
 
(2,642
)
 
(419
)
 
(1,424
)
 
(492
)
 
(8,721
)
 
(3,692
)
 
(1,362
)
Significant items
 
1,134

 
101

 
47

 
179

 
12

 
1,473

 
1,022

 
23

- costs to achieve
 
628

 
148

 
47

 
179

 
12

 
1,014

 
513

 
70

- costs to establish UK ring-fenced bank
 
53

 
-

 
-

 
-

 
-

 
53

 
53

 
-

- regulatory provisions in GPB
 
(3
)
 
(47
)
 
-

 
-

 
-

 
(50
)
 
-

 
(47
)
- UK customer redress programmes
 
456

 
-

 
-

 
-

 
-

 
456

 
456

 
-

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Adjusted1
 
(3,460
)
 
(2,541
)
 
(372
)
 
(1,245
)
 
(480
)
 
(7,248
)
 
(2,670
)
 
(1,339
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Share of profit/(loss) in associates and joint ventures
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Reported
 
(2
)
 
511

 
111

 
(2
)
 
-

 
618

 
(2
)
 
7

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Adjusted
 
(2
)
 
511

 
111

 
(2
)
 
-

 
618

 
(2
)
 
7

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Profit/(loss) before tax
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Reported
 
(1,617
)
 
3,660

 
329

 
66

 
(1,595
)
 
843

 
(1,754
)
 
2,196

Significant items
 
2,480

 
144

 
50

 
317

 
1,757

 
4,748

 
2,313

 
34

- revenue
 
1,346

 
43

 
3

 
138

 
1,745

 
3,275

 
1,291

 
11

- operating expenses
 
1,134

 
101

 
47

 
179

 
12

 
1,473

 
1,022

 
23

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Adjusted
 
863

 
3,804

 
379

 
383

 
162

 
5,591

 
559

 
2,230

1
Amounts are non-additive across geographical regions due to inter-company transactions within the Group.


HSBC HOLDINGS PLC
33
Earnings Release - 3Q16 (continued)


Reconciliation of reported results to adjusted performance - geographical regions (continued)
 
 
Quarter ended 30 Sep 2015
 
 
Europe3

 
Asia

 
MENA3

 
North
America

 
Latin
America

 
Total

 
UK

 
Hong
Kong

 
 
$m

 
$m

 
$m

 
$m

 
$m

 
$m

 
$m

 
$m

Revenue
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Reported1
 
5,874

 
5,778

 
779

 
1,939

 
1,609

 
15,085

 
4,716

 
3,278

Currency translation1
 
(547
)
 
(15
)
 
(22
)
 
1

 
(83
)
 
(658
)
 
(547
)
 
(3
)
Significant items
 
(925
)
 
(67
)
 
(8
)
 
38

 
(937
)
 
(1,899
)
 
(890
)
 
(17
)
-  DVA on derivative contracts
 
(88
)
 
(69
)
 
-

 
(15
)
 
(79
)
 
(251
)
 
(68
)
 
(13
)
- fair value movements on non-qualifying hedges
 
173

 
2

 
-

 
133

 
-

 
308

 
152

 
(2
)
- loss on sale of several tranches of real estate secured accounts in the US
 
-

 
-

 
-

 
17

 
-

 
17

 
-

 
-

- own credit spread
 
(1,020
)
 
-

 
(8
)
 
(97
)
 
-

 
(1,125
)
 
(984
)
 
(2
)
- provisions arising from the ongoing review of compliance with the UK Consumer Credit Act
 
10

 
-

 
-

 
-

 
-

 
10

 
10

 
-

- trading results from disposed-of operations in Brazil2
 
-

 
-

 
-

 
-

 
(858
)
 
(858
)
 
-

 
-

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Adjusted1
 
4,402

 
5,696

 
749

 
1,978

 
589

 
12,528

 
3,279

 
3,258

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
LICs
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Reported
 
(22
)
 
(119
)
 
(144
)
 
(64
)
 
(289
)
 
(638
)
 
20

 
(62
)
Currency translation
 
(1
)
 
-

 
2

 
-

 
(4
)
 
(3
)
 
(2
)
 
-

Significant items
 
-

 
-

 
-

 
-

 
207

 
207

 
-

 
-

- trading results from disposed-of operations in Brazil2
 
-

 
-

 
-

 
-

 
207

 
207

 
-

 
-

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Adjusted
 
(23
)
 
(119
)
 
(142
)
 
(64
)
 
(86
)
 
(434
)
 
18

 
(62
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Operating expenses
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Reported1
 
(4,275
)
 
(2,669
)
 
(418
)
 
(1,395
)
 
(1,176
)
 
(9,039
)
 
(3,382
)
 
(1,405
)
Currency translation1
 
385

 
8

 
9

 
-

 
43

 
437

 
383

 
1

Significant items
 
326

 
7

 
1

 
38

 
716

 
1,088

 
312

 
4

- costs to achieve
 
89

 
7

 
1

 
38

 
30

 
165

 
82

 
4

- costs to establish UK ring-fenced bank
 
28

 
-

 
-

 
-

 
-

 
28

 
28

 
-

- regulatory provisions in GPB
 
7

 
-

 
-

 
-

 
-

 
7

 
-

 
-

- settlements and provisions in connection with legal matters
 
135

 
-

 
-

 
-

 
-

 
135

 
135

 
-

- UK customer redress programmes
 
67

 
-

 
-

 
-

 
-

 
67

 
67

 
-

- trading results from disposed-of operations in Brazil2
 
-

 
-

 
-

 
-

 
686

 
686

 
-

 
-

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Adjusted1
 
(3,564
)
 
(2,654
)
 
(408
)
 
(1,357
)
 
(417
)
 
(7,514
)
 
(2,687
)
 
(1,400
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Share of profit/(loss) in associates and joint ventures
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Reported
 
4

 
558

 
129

 
(1
)
 
(1
)
 
689

 
2

 
6

Currency translation
 
-

 
(30
)
 
-

 
-

 
1

 
(29
)
 
2

 
-

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Adjusted
 
4

 
528

 
129

 
(1
)
 
-

 
660

 
4

 
6

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Profit before tax
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Reported
 
1,581

 
3,548

 
346

 
479

 
143

 
6,097

 
1,356

 
1,817

Currency translation
 
(163
)
 
(37
)
 
(11
)
 
1

 
(43
)
 
(253
)
 
(164
)
 
(2
)
Significant items
 
(599
)
 
(60
)
 
(7
)
 
76

 
(14
)
 
(604
)
 
(578
)
 
(13
)
- revenue
 
(925
)
 
(67
)
 
(8
)
 
38

 
(937
)
 
(1,899
)
 
(890
)
 
(17
)
- LICs
 
-

 
-

 
-

 
-

 
207

 
207

 
-

 
-

- operating expenses
 
326

 
7

 
1

 
38

 
716

 
1,088

 
312

 
4

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Adjusted
 
819

 
3,451

 
328

 
556

 
86

 
5,240

 
614

 
1,802

1
Amounts are non-additive across geographical regions due to inter-company transactions within the Group.
2
Includes foreign currency translation of operations in Brazil, which were sold on 1 July 2016. These are $78m in revenue, $(17)m in LICs and $(58)m in operating expenses. Trading results do not include 'DVA on derivative contracts', 'costs to achieve' and 'restructuring and other related costs' significant items. These significant items are included in the respective line items above, with a total adjustment of $(46)m.
3
In 3Q16, HSBC Bank plc executed a management services agreement, transferring its governance responsibilities over HSBC Bank A.S. (Turkey) to HSBC Bank Middle East Limited to leverage the strong commercial ties between Turkey and MENA. Comparative data for Europe and MENA have been re-presented accordingly.

HSBC HOLDINGS PLC
34
Earnings Release - 3Q16 (continued)




HSBC HOLDINGS PLC
35
Earnings Release - 3Q16 (continued)



Reconciliation of reported results to adjusted performance - global businesses
 
 
Nine months ended 30 Sep 2016
 
 
RBWM

 
CMB

 
GB&M

 
GPB

 
Other

 
Total

 
 
$m

 
$m

 
$m

 
$m

 
$m

 
$m

Revenue
 
 
 
 
 
 
 
 
 
 
 
 
Reported1
 
15,306

 
10,320

 
12,927

 
1,435

 
3,524

 
38,982

Significant items1
 
(345
)
 
23

 
135

 
(9
)
 
350

 
171

- DVA on derivative contracts
 
-

 
-

 
(96
)
 
-

 
-

 
(96
)
- fair value movements on non-qualifying hedges
 
176

 
-

 
32

 
-

 
177

 
385

-  loss on sale of several tranches of real estate secured accounts in the US
 
51

 
-

 
-

 
-

 
-

 
51

- gain on disposal of our membership interest in Visa Europe
 
(354
)
 
(230
)
 
-

 
-

 
-

 
(584
)
- own credit spread
 
-

 
-

 
-

 
-

 
144

 
144

- provisions/(releases) arising from the ongoing review of compliance with the UK Consumer Credit Act
 
-

 
-

 
-

 
(2
)
 
-

 
(2
)
- loss and trading results from disposed-of operations in Brazil1,2
 
(218
)
 
253

 
199

 
(7
)
 
29

 
273

 
 
 
 
 
 
 
 
 
 
 
 
 
Adjusted1
 
14,961

 
10,343

 
13,062

 
1,426

 
3,874

 
39,153

 
 
 
 
 
 
 
 
 
 
 
 
 
LICs
 
 
 
 
 
 
 
 
 
 
 
 
Reported
 
(1,483
)
 
(1,077
)
 
(385
)
 
10

 
3

 
(2,932
)
Significant items
 
461

 
273

 
14

 
-

 
-

 
748

- trading results from disposed-of operations in Brazil2
 
461

 
273

 
14

 
-

 
-

 
748

 
 
 
 
 
 
 
 
 
 
 
 
 
Adjusted
 
(1,022
)
 
(804
)
 
(371
)
 
10

 
3

 
(2,184
)
 
 
 
 
 
 
 
 
 
 
 
 
 
Operating expenses
 
 
 
 
 
 
 
 
 
 
 
 
Reported1
 
(11,463
)
 
(4,558
)
 
(6,976
)
 
(1,858
)
 
(7,024
)
 
(27,349
)
Significant items1
 
2,144

 
227

 
390

 
766

 
1,694

 
5,204

- costs to achieve
 
313

 
48

 
142

 
6

 
1,523

 
2,032

- costs to establish UK ring-fenced bank
 
1

 
1

 
-

 
-

 
145

 
147

- impairment of GPB - Europe goodwill
 
-

 
-

 
-

 
800

 
-

 
800

- regulatory provisions in GPB
 
-

 
-

 
-

 
(48
)
 
2

 
(46
)
- settlements and provisions in connection with legal matters
 
587

 
-

 
136

 
-

 
-

 
723

- UK customer redress programmes
 
438

 
23

 
28

 
-

 
-

 
489

- trading results from disposed-of operations in Brazil1,2
 
805

 
155

 
84

 
8

 
24

 
1,059

 
 
 
 
 
 
 
 
 
 
 
 
 
Adjusted1
 
(9,319
)
 
(4,331
)
 
(6,586
)
 
(1,092
)
 
(5,330
)
 
(22,145
)
 
 
 
 
 
 
 
 
 
 
 
 
 
Share of profit in associates and joint ventures
 
 
 
 
 
 
 
 
 
 
 
 
Reported
 
288

 
1,154

 
401

 
7

 
6

 
1,856

Significant items
 
-

 
1

 
-

 
-

 
-

 
1

- trading results from disposed-of operations in Brazil2
 
-

 
1

 
-

 
-

 
-

 
1

 
 
 
 
 
 
 
 
 
 
 
 
 
Adjusted
 
288

 
1,155

 
401

 
7

 
6

 
1,857

 
 
 
 
 
 
 
 
 
 
 
 
 
Profit before tax
 
 
 
 
 
 
 
 
 
 
 
 
Reported
 
2,648

 
5,839

 
5,967

 
(406
)
 
(3,491
)
 
10,557

Significant items
 
2,260

 
524

 
539

 
757

 
2,044

 
6,124

- revenue1
 
(345
)
 
23

 
135

 
(9
)
 
350

 
171

- LICs
 
461

 
273

 
14

 
-

 
-

 
748

- operating expenses1
 
2,144

 
227

 
390

 
766

 
1,694

 
5,204

- share in profit of associates
 
-

 
1

 
-

 
-

 
-

 
1

 
 
 
 
 
 
 
 
 
 
 
 
 
Adjusted
 
4,908

 
6,363

 
6,506

 
351

 
(1,447
)
 
16,681

1
Amounts are non-additive across global businesses due to inter-company transactions within the Group.
2
Includes loss on disposal and trading results of operations in Brazil, which were sold on 1 July 2016. The amount of the loss on disposal is $1,743m. Trading results do not include 'DVA on derivative contracts', 'costs to achieve' and 'restructuring and other related costs' significant items. These significant items are included in the respective line items above, with a total adjustment of nil in RBWM, nil in CMB, $36m in GB&M, nil in GPB and nil in Other.


HSBC HOLDINGS PLC
36
Earnings Release - 3Q16 (continued)

Reconciliation of reported results to adjusted performance - global businesses (continued)
 
 
Nine months ended 30 Sep 2015
 
 
RBWM

 
CMB

 
GB&M

 
GPB

 
Other

 
Total

 
 
$m

 
$m

 
$m

 
$m

 
$m

 
$m

Revenue
 
 
 
 
 
 
 
 
 
 
 
 
Reported1
 
17,912

 
11,236

 
14,786

 
1,685

 
7,227

 
48,028

Currency translation1
 
(987
)
 
(577
)
 
(628
)
 
(41
)
 
(100
)
 
(2,233
)
Significant items1
 
(1,400
)
 
(495
)
 
(764
)
 
(45
)
 
(3,024
)
 
(5,701
)
- DVA on derivative contracts
 
-

 
-

 
(416
)
 
-

 
-

 
(416
)
- fair value movements on non-qualifying hedges
 
130

 
-

 
18

 
(1
)
 
206

 
353

- gain on the partial sale of shareholding in Industrial Bank
 
-

 
-

 
-

 
-

 
(1,372
)
 
(1,372
)
- own credit spread
 
-

 
-

 
-

 
-

 
(1,775
)
 
(1,775
)
- provisions/(releases) arising from the ongoing review of compliance with the UK Consumer Credit Act
 
22

 
-

 
-

 
(24
)
 
-

 
(2
)
- trading results from disposed-of operations in Brazil1,2
 
(1,552
)
 
(495
)
 
(366
)
 
(20
)
 
(83
)
 
(2,489
)
 
 
 
 
 
 
 
 
 
 
 
 
 
Adjusted1
 
15,525

 
10,164

 
13,394

 
1,599

 
4,103

 
40,094

 
 
 
 
 
 
 
 
 
 
 
 
 
LICs
 
 
 
 
 
 
 
 
 
 
 
 
Reported
 
(1,396
)
 
(757
)
 
90

 
(9
)
 
(5
)
 
(2,077
)
Currency translation
 
114

 
45

 
(6
)
 
1

 
1

 
155

Significant items
 
482

 
156

 
(29
)
 
-

 
-

 
609

- trading results from disposed-of operations in Brazil2
 
482

 
156

 
(29
)
 
-

 
-

 
609

 
 
 
 
 
 
 
 
 
 
 
 
 
Adjusted
 
(800
)
 
(556
)
 
55

 
(8
)
 
(4
)
 
(1,313
)
 
 
 
 
 
 
 
 
 
 
 
 
 
Operating expenses
 
 
 
 
 
 
 
 
 
 
 
 
Reported1
 
(12,308
)
 
(4,997
)
 
(8,385
)
 
(1,427
)
 
(5,927
)
 
(28,226
)
Currency translation1
 
739

 
252

 
412

 
33

 
140

 
1,476

Significant items1
 
1,864

 
360

 
1,121

 
190

 
208

 
3,716

- costs to achieve
 
56

 
13

 
20

 
1

 
75

 
165

- costs to establish UK ring-fenced bank
 
-

 
-

 
-

 
-

 
28

 
28

- regulatory provisions in GPB
 
-

 
-

 
-

 
154

 
-

 
154

- restructuring and other related costs
 
32

 
5

 
22

 
18

 
40

 
117

- settlements and provisions in connection with legal matters
 
350

 
-

 
929

 
-

 
-

 
1,279

- UK customer redress programmes
 
163

 
41

 
-

 
-

 
-

 
204

- trading results from disposed-of operations in Brazil1,2
 
1,263

 
301

 
150

 
17

 
65

 
1,769

 
 
 
 
 
 
 
 
 
 
 
 
 
Adjusted1
 
(9,705
)
 
(4,385
)
 
(6,852
)
 
(1,204
)
 
(5,579
)
 
(23,034
)
 
 
 
 
 
 
 
 
 
 
 
 
 
Share of profit in associates and joint ventures
 
 
 
 
 
 
 
 
 
 
 
 
Reported
 
314

 
1,267

 
404

 
12

 
3

 
2,000

Currency translation
 
(12
)
 
(63
)
 
(13
)
 
3

 
(1
)
 
(86
)
Significant items
 
-

 
1

 
-

 
-

 
-

 
1

- trading results from disposed-of operations in Brazil2
 
-

 
1

 
-

 
-

 
-

 
1


 
 
 
 
 
 
 
 
 
 
 
 
Adjusted
 
302

 
1,205

 
391

 
15

 
2

 
1,915

 
 
 
 
 
 
 
 
 
 
 
 
 
Profit before tax
 
 
 
 
 
 
 
 
 
 
 
 
Reported
 
4,522

 
6,749

 
6,895

 
261

 
1,298

 
19,725

Currency translation
 
(146
)
 
(343
)
 
(235
)
 
(4
)
 
40

 
(688
)
Significant items
 
946

 
22

 
328

 
145

 
(2,816
)
 
(1,375
)
- revenue1
 
(1,400
)
 
(495
)
 
(764
)
 
(45
)
 
(3,024
)
 
(5,701
)
- LICs
 
482

 
156

 
(29
)
 
-

 
-

 
609

- operating expenses1
 
1,864

 
360

 
1,121

 
190

 
208

 
3,716

- share in profit of associates
 
-

 
1

 
-

 
-

 
-

 
1

 
 
 
 
 
 
 
 
 
 
 
 
 
Adjusted
 
5,322

 
6,428

 
6,988

 
402

 
(1,478
)
 
17,662

1
Amounts are non-additive across global businesses due to inter-company transactions within the Group.
2
Includes foreign currency translation of operations in Brazil, which were sold on 1 July 2016. Foreign currency translation amounts included in revenue are $(204)m in RBWM, $(65)m in CMB, $(47)m in GB&M, $(2)m in GPB and $(8)m in Other. Foreign currency amounts included in LICs are $52m in RBWM, $24m in CMB, $2m in GB&M, nil in GPB and nil in Other. Foreign currency amounts included in operating expenses are $154m in RBWM, $32m in CMB, $19m in GB&M, $2m in GPB and $5m in Other. Trading results do not include 'DVA on derivative contracts', 'costs to achieve' and 'restructuring and other related costs' significant items. These significant items are included in the respective line items above, with a total adjustment of $28m in RBWM, $3m in CMB, $(86)m in GB&M, nil in GPB and $1m in Other.


HSBC HOLDINGS PLC
37
Earnings Release - 3Q16 (continued)

Reconciliation of reported results to adjusted performance - global businesses (continued)
 
Quarter ended 30 Sep 2016

 
RBWM

 
CMB

 
GB&M

 
GPB

 
Other

 
Total


 
$m

 
$m

 
$m

 
$m

 
$m

 
$m

Revenue
 
 
 
 
 
 
 
 
 
 
 
 
Reported1
 
4,189

 
2,811

 
4,014

 
462

 
(504
)
 
9,512

Significant items
 
923

 
541

 
491

 
5

 
1,315

 
3,275

- DVA on derivative contracts
 
-

 
-

 
55

 
-

 
-

 
55

- fair value movements on non-qualifying hedges
 
34

 
-

 
12

 
-

 
(58
)
 
(12
)
-  loss on sale of several tranches of real estate secured accounts in the US
 
119

 
-

 
-

 
-

 
-

 
119

- own credit spread
 
-

 
-

 
-

 
-

 
1,370

 
1,370

- loss on disposal of operations in Brazil
 
770

 
541

 
424

 
5

 
3

 
1,743

 
 
 
 
 
 
 
 
 
 
 
 
 
Adjusted1
 
5,112

 
3,352

 
4,505

 
467

 
811

 
12,787

 
 
 
 
 
 
 
 
 
 
 
 
 
LICs
 
 
 
 
 
 
 
 
 
 
 
 
Reported
 
(363
)
 
(244
)
 
40

 
(1
)
 
2

 
(566
)

 
 
 
 
 
 
 
 
 
 
 
 
Adjusted
 
(363
)
 
(244
)
 
40

 
(1
)
 
2

 
(566
)
 
 
 
 
 
 
 
 
 
 
 
 
 
Operating expenses
 
 
 
 
 
 
 
 
 
 
 
 
Reported1
 
(3,655
)
 
(1,415
)
 
(2,227
)
 
(313
)
 
(2,571
)
 
(8,721
)
Significant items
 
610

 
20

 
61

 
(47
)
 
829

 
1,473

- costs to achieve
 
171

 
11

 
51

 
1

 
780

 
1,014

- costs to establish UK ring-fenced bank
 
1

 
1

 
-

 
-

 
51

 
53

- regulatory provisions in GPB
 
-

 
-

 
-

 
(48
)
 
(2
)
 
(50
)
- UK customer redress programmes
 
438

 
8

 
10

 
-

 
-

 
456

 
 
 
 
 
 
 
 
 
 
 
 
 
Adjusted1
 
(3,045
)
 
(1,395
)
 
(2,166
)
 
(360
)
 
(1,742
)
 
(7,248
)

 
 
 
 
 
 
 
 
 
 
 
 
Share of profit in associates and joint ventures
 
 
 
 
 
 
 
 
 
 
 
 
Reported
 
95

 
383

 
134

 
3

 
3

 
618


 
 
 
 
 
 
 
 
 
 
 
 
Adjusted
 
95

 
383

 
134

 
3

 
3

 
618

 
 
 
 
 
 
 
 
 
 
 
 
 
Profit before tax
 
 
 
 
 
 
 
 
 
 
 
 
Reported
 
266

 
1,535

 
1,961

 
151

 
(3,070
)
 
843

Significant items
 
1,533

 
561

 
552

 
(42
)
 
2,144

 
4,748

- revenue
 
923

 
541

 
491

 
5

 
1,315

 
3,275

- operating expenses
 
610

 
20

 
61

 
(47
)
 
829

 
1,473

 
 
 
 
 
 
 
 
 
 
 
 
 
Adjusted
 
1,799

 
2,096

 
2,513

 
109

 
(926
)
 
5,591

1
Amounts are non-additive across global businesses due to inter-company transactions within the Group.
 
 
Quarter ended 30 Jun 2016
 
 
RBWM

 
CMB

 
GB&M

 
GPB

 
Other

 
Total

 
 
$m

 
$m

 
$m

 
$m

 
$m

 
$m

Revenue
 
 
 
 
 
 
 
 
 
 
 
 
Reported1
 
5,957

 
3,886

 
4,447

 
486

 
1,370

 
14,494

Currency translation
 
(107
)
 
(97
)
 
(82
)
 
(4
)
 
(14
)
 
(289
)
Significant items1
 
(994
)
 
(388
)
 
(86
)
 
(8
)
 
100

 
(1,367
)
-  DVA on derivative contracts
 
-

 
-

 
7

 
-

 
-

 
7

- fair value movements on non-qualifying hedges
 
(6
)
 
-

 
12

 
-

 
158

 
164

- gain on sale of several tranches of real estate secured accounts in the US
 
(68
)
 
-

 
-

 
-

 
-

 
(68
)
- gain on disposal of our membership interest in Visa Europe
 
(354
)
 
(230
)
 
-

 
-

 
-

 
(584
)
- own credit spread
 
-

 
-

 
-

 
-

 
(75
)
 
(75
)
- releases arising from the ongoing review of compliance with the UK Consumer Credit Act
 
-

 
-

 
-

 
(2
)
 
-

 
(2
)
- trading results from disposed-of operations in Brazil1,2
 
(566
)
 
(158
)
 
(105
)
 
(6
)
 
17

 
(809
)
 
 
 
 
 
 
 
 
 
 
 
 
 
Adjusted1
 
4,856

 
3,401

 
4,279

 
474

 
1,456

 
12,838

 
 
 
 
 
 
 
 
 
 
 
 
 
1
Amounts are non-additive across global businesses due to inter-company transactions within the Group.
2
Includes foreign currency translation of operations in Brazil, which were sold on 1 July 2016. Foreign currency translation amounts included in revenue are $42m in RBWM, $12m in CMB, $9m in GB&M, nil in GPB and $(1)m in Other. Trading results do not include the 'DVA on derivative contracts', significant item. This significant item is included in the respective line item above, with a total adjustment of nil in RBWM, nil in CMB,
$(9)m in GB&M, nil in GPB and nil in Other.


HSBC HOLDINGS PLC
38
Earnings Release - 3Q16 (continued)

Reconciliation of reported results to adjusted performance - global businesses (continued)
 
Quarter ended 30 Sep 2015

 
RBWM

 
CMB

 
GB&M

 
GPB

 
Other

 
Total


 
$m

 
$m

 
$m

 
$m

 
$m

 
$m

Revenue
 
 
 
 
 
 
 
 
 
 
 
 
Reported1
 
5,470

 
3,702

 
4,525

 
508

 
2,540

 
15,085

Currency translation1
 
(261
)
 
(183
)
 
(179
)
 
(10
)
 
(48
)
 
(658
)
Significant items1
 
(368
)
 
(178
)
 
(366
)
 
(9
)
 
(986
)
 
(1,899
)
-  DVA on derivative contracts
 
-

 
-

 
(251
)
 
-

 
-

 
(251
)
- fair value movements on non-qualifying hedges
 
148

 
-

 
(4
)
 
(1
)
 
165

 
308

- loss on sale of several tranches of real estate secured accounts in the US
 
17

 
-

 
-

 
-

 
-

 
17

- own credit spread
 
-

 
-

 
-

 
-

 
(1,125
)
 
(1,125
)
- provisions arising from the ongoing review of compliance with the UK Consumer Credit Act
 
10

 
-

 
-

 
-

 
-

 
10

- trading results from disposed-of operations in Brazil1,2
 
(543
)
 
(178
)
 
(111
)
 
(8
)
 
(26
)
 
(858
)
 
 
 
 
 
 
 
 
 
 
 
 
 
Adjusted1
 
4,841

 
3,341

 
3,980

 
489

 
1,506

 
12,528

 
 
 
 
 
 
 
 
 
 
 
 
 
LICs
 
 
 
 
 
 
 
 
 
 
 
 
Reported
 
(462
)
 
(246
)
 
79

 
(4
)
 
(5
)
 
(638
)
Currency translation
 
(4
)
 
3

 
(5
)
 
1

 
2

 
(3
)
Significant items
 
198

 
37

 
(28
)
 
-

 
-

 
207

- trading results from disposed-of operations in Brazil2
 
198

 
37

 
(28
)
 
-

 
-

 
207

 
 
 
 
 
 
 
 
 
 
 
 
 
Adjusted
 
(268
)
 
(206
)
 
46

 
(3
)
 
(3
)
 
(434
)
 
 
 
 
 
 
 
 
 
 
 
 
 
Operating expenses
 
 
 
 
 
 
 
 
 
 
 
 
Reported1
 
(3,954
)
 
(1,676
)
 
(2,595
)
 
(426
)
 
(2,048
)
 
(9,039
)
Currency translation1
 
182

 
64

 
163

 
7

 
44

 
437

Significant items1
 
609

 
133

 
205

 
15

 
134

 
1,088

- costs to achieve
 
56

 
13

 
20

 
1

 
75

 
165

- costs to establish UK ring-fenced bank
 
-

 
-

 
-

 
-

 
28

 
28

- regulatory provisions in GPB
 
-

 
-

 
-

 
7

 
-

 
7

- settlements and provisions in connection with legal matters
 
-

 
-

 
135

 
-

 
-

 
135

- UK customer redress programmes
 
73

 
(6
)
 
-

 
-

 
-

 
67

- trading results from disposed-of operations in Brazil1,2
 
480

 
126

 
50

 
7

 
31

 
686

 
 
 
 
 
 
 
 
 
 
 
 
 
Adjusted1
 
(3,163
)
 
(1,479
)
 
(2,227
)
 
(404
)
 
(1,870
)
 
(7,514
)

 
 
 
 
 
 
 
 
 
 
 
 
Share of profit in associates and joint ventures
 
 
 
 
 
 
 
 
 
 
 
 
Reported
 
106

 
446

 
132

 
3

 
2

 
689

Currency translation
 
(6
)
 
(22
)
 
(5
)
 
1

 
3

 
(29
)
 
 
 
 
 
 
 
 
 
 
 
 
 
Adjusted
 
100

 
424

 
127

 
4

 
5

 
660

 
 
 
 
 
 
 
 
 
 
 
 
 
Profit before tax
 
 
 
 
 
 
 
 
 
 
 
 
Reported
 
1,160

 
2,226

 
2,141

 
81

 
489

 
6,097

Currency translation
 
(89
)
 
(138
)
 
(26
)
 
(1
)
 
1

 
(253
)
Significant items
 
439

 
(8
)
 
(189
)
 
6

 
(852
)
 
(604
)
- revenue1
 
(368
)
 
(178
)
 
(366
)
 
(9
)
 
(986
)
 
(1,899
)
- LICs
 
198

 
37

 
(28
)
 
-

 
-

 
207

- operating expenses1
 
609

 
133

 
205

 
15

 
134

 
1,088

 
 
 
 
 
 
 
 
 
 
 
 
 
Adjusted
 
1,510

 
2,080

 
1,926

 
86

 
(362
)
 
5,240

1
Amounts are non-additive across global businesses due to inter-company transactions within the Group.
2
Includes foreign currency translation of operations in Brazil, which were sold on 1 July 2016. Foreign currency translation amounts included in revenue are $45m in RBWM, $15m in CMB, $16m in GB&M, $1m in GPB and $2m in Other. Foreign currency amounts included in LICs are $(17)m in RBWM, $(3)m in CMB, $2m in GB&M, nil in GPB and nil in Other. Foreign currency amounts included in operating expenses are $(40)m in RBWM, $(11)m in CMB, $(4)m in GB&M, $(1)m in GPB and $(3)m in Other. Trading results do not include 'DVA on derivative contracts', 'costs to achieve' and 'restructuring and other related costs' significant items. These significant items are included in the respective line items above, with a total adjustment of $26m in RBWM, $3m in CMB, $(75)m in GB&M, nil in GPB and nil in Other.


HSBC HOLDINGS PLC
39
Earnings Release - 3Q16 (continued)


Gross loans and advances by industry sector and by geographical region
 
 
Europe1

 
Asia

 
MENA1

 
North America

 
Latin America

 
Total

 
As a %
of total gross loans
 
 
$m

 
$m

 
$m

 
$m

 
$m

 
$m

 
At 30 Sep 2016
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Personal
 
154,245

 
134,956

 
8,869

 
51,759

 
5,972

 
355,801

 
36.1
First lien residential mortgages
 
113,163

 
97,631

 
2,786

 
44,364

 
1,964

 
259,908

 
26.4
Other personal
 
41,082

 
37,325

 
6,083

 
7,395

 
4,008

 
95,893

 
9.7
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Wholesale
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Corporate and commercial
 
175,410

 
201,900

 
23,566

 
61,273

 
11,153

 
473,302

 
48.0
- manufacturing
 
32,803

 
32,858

 
3,713

 
16,000

 
2,634

 
88,008

 
8.9
- international trade and services
 
61,597

 
67,116

 
9,591

 
10,921

 
2,665

 
151,890

 
15.4
- commercial real estate
 
22,886

 
32,349

 
729

 
7,927

 
1,510

 
65,401

 
6.6
- other property-related
 
7,848

 
34,662

 
1,745

 
9,453

 
423

 
54,131

 
5.5
- government
 
3,016

 
2,205

 
1,567

 
385

 
575

 
7,748

 
0.8
- other commercial
 
47,260

 
32,710

 
6,221

 
16,587

 
3,346

 
106,124

 
10.8
Financial
 
47,966

 
79,319

 
12,164

 
12,775

 
3,986

 
156,210

 
15.9
- non-bank financial institutions
 
32,348

 
16,938

 
2,648

 
8,033

 
664

 
60,631

 
6.2
- banks
 
15,618

 
62,381

 
9,516

 
4,742

 
3,322

 
95,579

 
9.7
Total wholesale
 
223,376

 
281,219

 
35,730

 
74,048

 
15,139

 
629,512

 
63.9
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total gross loans and advances at 30 Sep 2016
 
377,621

 
416,175

 
44,599

 
125,807

 
21,111

 
985,313

 
100.0
Percentage of total gross loans and advances
 
38.3
%
 
42.3
%
 
4.5
%
 
12.8
%
 
2.1
%
 
100.0
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
At 30 Jun 2016
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Personal
 
156,716

 
134,416

 
9,168

 
53,433

 
5,981

 
359,714

 
36.4
First lien residential mortgages
 
115,222

 
96,304

 
2,787

 
45,687

 
1,976

 
261,976

 
26.5
Other personal
 
41,494

 
38,112

 
6,381

 
7,746

 
4,005

 
97,738

 
9.9
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Wholesale
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Corporate and commercial
 
175,567

 
203,162

 
25,510

 
63,347

 
11,373

 
478,959

 
48.4
- manufacturing
 
34,100

 
32,902

 
4,090

 
16,919

 
2,659

 
90,670

 
9.2
- international trade and services
 
58,004

 
68,347

 
10,681

 
11,549

 
2,637

 
151,218

 
15.3
- commercial real estate
 
23,133

 
31,505

 
741

 
8,077

 
1,266

 
64,722

 
6.5
- other property-related
 
7,471

 
34,987

 
1,820

 
9,448

 
441

 
54,167

 
5.5
- government
 
2,953

 
2,105

 
1,730

 
350

 
623

 
7,761

 
0.8
- other commercial
 
49,906

 
33,316

 
6,448

 
17,004

 
3,747

 
110,421

 
11.1
Financial
 
45,235

 
75,969

 
11,424

 
13,658

 
3,749

 
150,035

 
15.2
- non-bank financial institutions
 
30,234

 
16,466

 
2,760

 
7,615

 
761

 
57,836

 
5.9
- banks
 
15,001

 
59,503

 
8,664

 
6,043

 
2,988

 
92,199

 
9.3
Total wholesale
 
220,802

 
279,131

 
36,934

 
77,005

 
15,122

 
628,994

 
63.6
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total gross loans and advances at 30 Jun 2016
 
377,518

 
413,547

 
46,102

 
130,438

 
21,103

 
988,708

 
100.0
Percentage of total gross loans and advances
 
38.2
%
 
41.8
%
 
4.7
%
 
13.2
%
 
2.1
%
 
100.0
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
At 31 Dec 2015
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Personal
 
167,666

 
132,707

 
9,565

 
58,186

 
5,958

 
374,082

 
36.5
First lien residential mortgages
 
125,098

 
94,606

 
2,704

 
50,117

 
1,986

 
274,511

 
26.8
Other personal
 
42,568

 
38,101

 
6,861

 
8,069

 
3,972

 
99,571

 
9.7
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Wholesale
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Corporate and commercial
 
187,508

 
211,224

 
26,525

 
62,882

 
11,374

 
499,513

 
48.8
- manufacturing
 
36,623

 
34,272

 
4,884

 
17,507

 
2,572

 
95,858

 
9.4
- international trade and services
 
61,598

 
72,199

 
10,621

 
11,505

 
3,096

 
159,019

 
15.5
- commercial real estate
 
26,148

 
32,371

 
798

 
7,032

 
1,577

 
67,926

 
6.7
- other property-related
 
7,129

 
35,206

 
2,102

 
8,982

 
45

 
53,464

 
5.2
- government
 
3,653

 
1,132

 
1,695

 
203

 
772

 
7,455

 
0.7
- other commercial
 
52,357

 
36,044

 
6,425

 
17,653

 
3,312

 
115,791

 
11.3
Financial
 
50,446

 
68,321

 
11,762

 
16,308

 
3,996

 
150,833

 
14.7
- non-bank financial institutions
 
33,345

 
13,969

 
2,597

 
9,822

 
681

 
60,414

 
5.9
- banks
 
17,101

 
54,352

 
9,165

 
6,486

 
3,315

 
90,419

 
8.8
Total wholesale
 
237,954

 
279,545

 
38,287

 
79,190

 
15,370

 
650,346

 
63.5
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total gross loans and advances at 31 Dec 2015
 
405,620

 
412,252

 
47,852

 
137,376

 
21,328

 
1,024,428

 
100.0
Percentage of total gross loans and advances
 
39.6
%
 
40.3
%
 
4.6
%
 
13.4
%
 
2.1
%
 
100.0
%
 
 
1
In 3Q16, HSBC Bank plc executed a management services agreement, transferring its governance responsibilities over HSBC Bank A.S. (Turkey) to HSBC Bank Middle East Limited to leverage the strong commercial ties between Turkey and MENA. Comparative data for Europe and MENA have been re-presented accordingly.


HSBC HOLDINGS PLC

40

 

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This information is provided by RNS
The company news service from the London Stock Exchange
 
END
 
 
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