HSBC (HSBA) Fixed Income Call summary

Financial performance and guidance

• Profit before tax for 1H24 was $21.6bn, stable year-on-year, with $18.1bn excluding notable items; included a $4.8bn gain from the Canada sale and a $1.2bn impairment on Argentina held for sale.

• Reported revenue for 1H24 was $37.3bn, up 1% year-on-year; revenue excluding notable items rose 2% to $33.7bn.

• Return on average tangible equity (ROTE) was 17% excluding notable items, annualised 21.4% including them; guidance targets mid-teens ROTE for 2024 and 2025.

• Banking net interest income (NII) for 2024 is now expected to be around $43bn, upgraded from at least $41bn previously.

• CET1 ratio stands at 15.0%, above the 14-14.5% target range, with further capital distributions and a $3bn share buy-back announced.

Strategic progress and business reshaping

• Completed sales of Canadian, French retail, and Russian businesses; Argentina and Armenia exits are pending.

• Exited non-strategic markets, saving $128bn in gross RWA since 2020.

• Acquired SilkRoad Property Partners in Singapore and Citi's retail wealth management portfolio in mainland China.

• Focused on core franchises in Hong Kong, the UK, and international wholesale and wealth activities.

• Special dividend of $0.21 per share paid in June 2024 following the Canada sale.

Business segment performance

• Wealth and Personal Banking: Profit before tax $6.5bn, with 12% YoY revenue growth and strong net new invested assets, especially in Asia.

• Commercial Banking: Profit before tax $6.5bn, with solid transaction banking growth and nearly 600 new innovation banking clients onboarded.

• Global Banking and Markets: Profit before tax $3.8bn, revenue up 5% on strong Equities and Securities Financing.

• Home markets (Hong Kong and UK) saw profit growth, with Hong Kong PBT up 1% and UK PBT up 11% YoY (excluding SVB UK gain).

• Customer loans and deposits grew for the second consecutive quarter, up 1% and 2% respectively since 1Q24.