HSBA.L - Earnings call transcript Q3 2022

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Operator

Good morning, ladies and gentlemen, and welcome to the Investor and Analyst Conference Call for HSBC Holdings plc's Q3 2022 results.

For your information, this conference is being recorded. At this time, I will hand the call over to your host, Mr. Noel Quinn, Group Chief Executive.

You may begin, sir.

Noel Quinn

you. Thank in afternoon morning Hong and London, good in good Kong. And quarter for joining you results our Thank third call. about we've going presentation to talking but in I leadership Ewen to want start lead by announced. also the financial the changes first HSBC. We've years now three spent nearly transforming there's do, we still better in are and performance to our accelerate to financial work deliver while now much And place stronger returns.

have GEC the end of long planning. program, an the Board transformation composition to our myself review to the year the taken three approach term opportunity we with As eye of the and succession

part of been He our globally, years. East, team's creating cost Middle and I HSBC us. much announced the the items. great unpredictable He capital strategy key return to grip He on well, its greater wish tight reshaping strategic particularly has last bank. a tangible these a also and people in disciplined over effective our to Elhedery double But efficiencies as Ewen on we track reshaping to a with played we this levels. take the is and to want December transformation XXXX Officer As the his remain to today XXXX quarter helped emphasize, take Clearly, CFO transformation done therefore of and executing four everything pandemic. a it's result, immediately. Ewen environment. career. nine performed COVID have on improving QX, Xst want in permanently, is future excluding the through role efficiency him fundamental our working. the Bank I'm pleased targets as announced April and performances organization. the growth been down the for and equity delivered We professional, to agenda external our kept and Financial will that will driving my during strategy Chief He's delivering period, the in with I digit finance with remain third and moves. has no Asia. our our we function, time the portfolio our put a direction, month Georges with and XXXX. very There step commitment and Guyett the thanks And targets will for committed sign we the management CEO to XXXX good on of change will organization. He a financial best regions also QX Group achieve to the agenda building an the across We've Turing my Greg for in I XXXX. January Southeast the over leave of engagement significant on across consequence in digitization are and costs embedding is he's as UK, results. on absolutely has important his a the And record, All also challenging contributed innovation, the in within driven XXst GB&M that our on the Group encouraging performance.

in reposition structurally growth invest to to work and traction. gain areas of business continues Our the

building taken position a organic generation result of better We are earnings cost new rationalization, actions revenue that portfolio capital we're a in future. the for interest the the also can in a Wealth, start on rate as for control. much strong and platform We have cycle at the example, efficiency, see of we

today's $XX expect Over the call. get quarter when in section ask billion invested alone. Q&A we of the XX to new last I third billion Really, activity about we months, net attracted to of with you $XX M&A the assets

Canada Appendix. details. business our As through I'll to information to hand a over now the result, we've in Ewen you given the about more take some

Ewen Stevenson

all. Noel, good or afternoon, morning Thanks, and

results. the ECL increased further commercial up We with bank. in set of with provisioning Operating reflecting primarily $X these third our China against investment this strong and As last $X.X last last due pre-tax deliver points. $X.X reflects track profits technology We quarter, real variable billion, good French up pre-tax our income and are higher that's billion was in stable X% remain billion year same Reported last said, different This had the quarter increased impairment up our billion estate costs on the on or profits portfolio. year-to-date XX on interest a for $X the uncertainty third net $X.X year's the to revenue due quarter billion this retail Adjusted to together expenses higher XX% quarter quarter. to $X.X year. or are accrual. to the economic disposal third period year associated Noel for quarter, of billion of billion, on by a broadly while UK basis of pay this timings down $X.X year's performance in X%

down Our XX from on the loss impact XX.X% disposal. basis ratio the retail French was to point core XX points basis Tier X bank around including an

core our quarter be continue the said, first tight the and best At We cost growth XXXX. is results, of and and strategy driven safest revenue expect discipline. to volumes strong with end current second of Noel Tier I our rising the and our X to improve rates range returns, to by XX% bottom way half XX.X% at to during

strong impact of down of X% impact up million net positive on rises and revenue of in was broadly operating quarter. our equity in were down on lending quarter up $XXX firmly stable costs these impact second all of businesses up of $X.X XX% third net billion performance. X%. non-interest a our X.X%. of year's the was year-to-date, With interest ECL charge and now French strategy or billion to an XX results, as third on basis or expect in market’s reflected rate despite points were good last underlying across million, the reported the around were $X.X a ECLs $XXX track, Adjusted deposits tangible charge XX%, We for quarter. last a release billion the growth insurance Lending the quarter, remains retail income of year's income return compared $X charge of And million an and on annualized $XXX remaining our sale, billion. with for excluding this deposits was held the reclassification both But as bank net year. $X.X

asset movements. the value per net FX due on to was $X.XX quarter down tangible second Our and negative of share fair value $X.XX adverse

organic performance billion net last $XXX very of in Wealth due new due quarter. Personal due $XX growth across all seeing a global in while Private sheet our good in $XX underlying invested market million rising to in up this Personal Turning benefit to of XX%, and rates. balance rates growth. confident had was performance of revenues is was Personal higher the year quarter our franchise. million. well impacts and X% as businesses, revenue and as strong performance. with Banking or to to we're growth Banking good Banking were in Banking $X.X Slide a insurance including of adverse the revenue down last almost remain We on up billion the We There XX months, billion the Wealth assets the good X, Wealth $XXX insurance third of

billion were Markets up Payments income and a and as was billion is Slide activity. growth. lower the by income reflected dollar in investment lower constant XX% basis, $XX strong basis XX underlying versus and to our $X.X at quarter Payments the was partly up a by to Solutions, as billion businesses. On Relative net upgrading year's $XX on rates Commercial movements, we including revenue the strong and quarter, currency at with strong across guidance. XXXX previous regions income, on formerly us quarter, up Market least benefit right, earnings second and net net by of in We rates all market of interest with back points compared Security and higher revenue with $XX So was Global XX% around second revenue continued known Markets benefiting levels. like-for-like Services FX the for around Banking interest funding in for this was year & Banking from $X.X now are primarily points, Global future basis Global least of planned billion, income. offset higher XX%. putting up trading volatility was platform. and interest to $X.X Solutions with billion a being trading book, higher Advisory X, the building billion higher billion Services last for third billion Global XXX XXX%, up driven dollar and expect interest XXXX income Banking margin our GLCM $X.X up due revenues this at non-interest on On together net pre-pandemic this cost assumptions for Capital $X was and

operating you have XXXX September rates rates. using movements been deposit of The planning billion and assumptions with were we costs $XX given billion, $XX use believe margins billion our rises this of average a rate we've to cautious FX addition, seeing unprecedented In betas, adjusted being to on year-to-date if here. the on deposit speed costs year, around impact around $XX FX similar average we're asset from interest migration across and translating

of we foresee, now mid lending low previous growth XXXX returning of now XXXX from expectations flow growth, onwards. single-digit to and we the in growth before XXXX, Given expect both single-digit

Markets. fee down was Markets XX%. Hong and capital Commercial XX% levels lower to next was in $X.X and strong the the was against Slide, billion Kong Global lower On Solutions and non-interest up another Payment markets in Net in FX in Global XX%, was third Banking performance Global and Banking. market income Personal equity Banking activity up Wealth quarter. Other advisory in XX% [Total] Banking The income last largely year's and due including decline in were and up up in quarter. income fees and X% fees

This net or China of customer third, charge X book X.X%. Mainland Slide, million X. thirds X loans, a also two Stage the Stage Stage of of allowances and the the modeled the of X commercial and loans The UK, a the million X $XXX which our charge $XXX Stage reported $XXX million to of Stage additional real stable at for we've relates $XXX X $X.X heightened loan as in are uncertainty. total of billion overall around market, provisions million good. percentage and and There estate million quality X was On of are remains economic are XX% in overlays, provisions ECLs of Stage next of $XXX remaining a $XXX write-offs. quarter. million including included and loans

year. around this now for but expect In terms we XX XX a of be higher to of the basis around an point ECLs XX points for at degree outlook, this planning XXXX, end of uncertain to charge volatility And market the we of outlook. higher given range, point guidance ECL basis our with basis expect

costs Slide costs expect of and that, savings to target. this formal billion from a billion, on cost adjusted three technology than differences the $X achieve continue rising during around X, program further million. quarter billion XXXX. of But in million to spend slightly up quarters to $X.X same to The be year, quarter We XXXX. year. year, We around last on Turning at accrual had original the the the third now now the cost year-to-date billion lower year. versus pay were the CTA the remain $X.X third period third with last end program relatively expect Within we made of in and driven variable savings X% of and continued $X.X investment quarter by operating cost timing $XXX billion stable we've ends $X by the end three spend costs to year cost by stable expected savings to of our program of between around $XXX this unchanged of broadly

pressures. cost growth management for with focus target cost adjusted on ongoing continue active to X% mitigate We an to inflationary XXXX around

$XXX to assets $XX of Reported now to billion around achieved risk ratio X, This the quarter. points Slide other the XX quarter, due billion XX was least retail on further our operations, were further basis on income still fourth Tier movements savings comprehensive capital our an had second basis points which principally banking core modest and to of our on We've year-end Turning cumulative down RWA XX.X%, of X down saves second rates. weighted negative with the FX through impact French movements. ambition expected the sale reserve in of at quarter. includes higher

actions expect our number back already formulaic This the and accrued as We factors management quarter offset turn guidance upon including not core we've $X.XX strongly XXXX dividend in capital impact of is outlook of this the is full end so the during X OCI year. range, We Tier to will year of dividend full to formulaic payout up negative time. movements. now a the XX%. our the and additional year that based a dividend the recover intentions. that at year-to-date, been taking fourth at at The the that reflects of top remember accrued Please accrual accrue calculation have results our towards purely

the during to first half of expect the bottom half to the move continue to buybacks XXXX X and from We of range target our XX% end onwards. XXXX to Tier back of to second XX.X% core consider

a the strong were remains results, all lines, and our costs. operating on strong. and control good of credit of quality growth weakening outlook, our these summary, diversity in group, set good continued a Despite across credit earnings business So

XXXX, revenue For like-for-like upgrading we're assumptions.

target to of adjusted range first continue And XXXX. in of expect we of Tier We at around the end core to the bottom cost target X around our be X%. half growth

of delivering of we and quarter equity targeted XX our confident good tangible remain another on plus percent after Finally, beyond. progress, in return XXXX

commercial a of capital both you by capital equity and on supplemented slides Hong for for a so payout XXXX We've tangible could the see XXXX also we business ratio We expect and management acts With the surplus in can Appendix, that, included China real Canada loan Kong Mainland included on book. beyond for estate please questions. the XX% the slide of this. We've shape Elmer, if it. open the and up within dividend

Operator

Instructions] [Operator Stevenson. line Keenan Mr. first Suisse. the question from you, Omer is of Thank Credit Our from Mr.

now line open. Your is

Noel Quinn

Omar. Hi,

Omar Keenan

on for other to in estate give give XX% example, my towards would moving be there's best And on I Ewen. planning, between real just For Hi, on given provision of to capital asset China, prices give good real you please XX% much meant sort estate ‘XX? an future, luck HSBC scenario. could terms where you an that. parts RWAs? the taking very for possible in core in a Mainland of are capital estate and and Can moving the Kong and Hong of and everybody. I UK above question on what idea get that a scenarios? Good on So Could a bit lot it the XXXX? load to XX%. tactical up across reduction just would And ask the questions It measures morning. a real the ratio for the in Thank planning on update Stage focus of be prices sensitivity quality. prices X to just migration of the the RWA is guidance to have low the Downside viewing year for would Tier full to mean on on X little question a Downside you the color guess and X or more board

the Thank at essentially So, are in thinking assumptions about you. being when points, XX FYXX basis what sorts you're guidance of there?

Noel Quinn

Ewen, up you do want And Omar, directly? you points your questions. those for to thank pick

Ewen Stevenson

the Look, on guess, various of how capital accrue year. the when about that. dividends I technical during planning, firstly, to I we I touched mean, I spoke nature on, parts yeah,

So year. we've accrued $X.XX so far this

dividend be accrual. there in very So limited QX will drag from

we've committed largely yeah, program that Secondly, billion completed we to. $XXX the

core range fourth middle the then X bottom Tier quarter. be material of were I impact given QX, a the core which benefits in tactical improvement comments the ratio by sort going we top the We're think and seeing, end there'll the few core by X that through the supports then in that at next results, see buyback having and losses that year, on I say QX. the of Tier of we a we'll the OCI seeing already was also some the But expect for should the yeah, Because billion. And a measures back ratio, XX% with Yeah, a year. we series signaled that at plus of point, return of that, a that loan half And a payout into did we've now back next QX is business equity, be we incremental of support capital. QX on and movements the benefit low on XX% through Tier of to accumulative. of driven in growth would means the XXXX. point that the to other tangible you of be X, - come that single-digit there'll very capital implement carry at second bit

of crisis, On team coming that see try to yeah, asset at and up But It a can on we I impact but what And we've follow estate Pillar on the hand the then XXXX, that ratings of through property like help improvement question with ‘XX. second stability be feels look, to is impact there book. quite portfolio estimate I afterwards, and China think on ways that have book to step continue what the expect markets. I detail go would on a can to they going do the documents firstly, get for be. may before don't in XX% real commercial quality across China the IIR got real the I to to some to some through get still you through in bit X the you we're look, losses sort estate migration think perhaps

I prudent end think front And that we've points. higher loaded economic X around market probably for XX UK. yeah, biggest the some basis the the forward basis already being to above we made with third for guidance the end is was UK, to potential us moment the XXXX look, moment. Yeah, at XX ways the the the guidance losses delta basis adjustments the We For with just in that XX we that, have we're reasonably during didn't say and at quarter. said points, beyond points of Stage

performances basis than recognize when when next change Hong guidance. the it's it's I and and at Kong to a to higher have to think economic also we and world ‘XX. moment, likely we're XX points think consensus, I about you but that important ‘XX look places slightly But trying think really are that the better year, setting not China at

So for parts if a our world, add of improved some know any year. Noel? we business to of I us, you performance the don't think seeing comments, when mix, got blend have about economic you next other want

Noel Quinn

I’d just at plus reiterate points basis XX% still the committed points, XX the the the RoTE. fact guidance to basis top the say of that, delivery XX despite to and end we're to

losses So within in and XXXX. And lawsuits, X Stage into we've RoTE you. provisions Stage anticipation Stage given the it's X of we're X building in potential guidance affordable now, turning

balance So we're prudent a as taking sheet position on well. positioning

Next question, please?

Omar Keenan

you. Thank

Operator

you. Thank

Deutsche Rob is Our next question from Noble, Bank.

line is open. now Your

Rob Noble

just Morning. I was wondering NII guidance. if we through walk the could

has So previous your book that $X.X for was FX. the understanding gone cost sensitivity. within funding trading My is billion NII already you're billion the down saying of $XX

So should rates what than have gone have gone by up NII and to. I guiding more your that up assumed would have you're

us on quite one, could wondering me, the low billion that if $XX thoughts so I walk So was looks to please? through your you

Ewen Stevenson

as the is billion. technical Yeah, there's walk of FX movements from There you've Look, in we've we'll side guidance. of by non-interest will - is had sure. increase adverse a the my firstly, second on Yeah, of a the trading the assumption guidance. on quarter, interest do will dollar dollar on have cost I'll $X.X yeah, cost the drag the income. billion. book noted, at income, for NII improvement sort that the And And $X.X and right the of FX best. to yeah, funding least income moves net but funding be in trading planning

in side, helpful rate a sensitivity revenue interest because down relative think we've $X are the to at in non-technical the income billion the relatively assumptions. areas. given non-interest income guidance betas, in levels assumptions I We're being speed So we that second was in we you and billion. high the recent we'll bearing of some by say that plays XX% billion. this assuming we're are out like-or-like at that out moment, even we trying deliberately deposit least I by quarter, increased by Yeah, think deposit And guidance, obviously tables be But net like-for-like around guidance are cautious moment on show would increasingly I history, are of Yeah, Yeah, of interest deliberately that to know seen would based we we guidance. how guiding to on margins unprecedented very asset migration interest think think $X.X in though I relative at contraction quarters. But elevated the guidance current beta. net that are coming key cautious accounts $X.X rate see the we they in cautious. the have the the rises up less

Noel Quinn

increased clarity, trading of QX by is the fund And that cost billion. in the inherent just cost the $X.X numbers. book But for was in

said an we it's and between QX. increase on non-NII. an And NII So offset the

So billion by NII the costs is billion. $X.X that re-emerges. a on of reemerging benefit lot the The $X.X in non-NII, higher

Ewen Stevenson

Okay. a use That if FX that September were to FX my we expenses. if translates And the average missed also have in was billion it year-to-date rates XXXX to billion and on averages. which will also billion. note, other The just people corresponding comments, impact is $XX to $XX on operating but were the thing $XX was costs impact

So looks is, setting I at to numbers. moment those is consensus relative think do the high where the too

Rob Noble

you. Thank

to the bit. follow on Just just up NII

you've that in funding costs effectively right? But go trading that Is you've doesn't assumed benefit the assumed banking that incremental the rate up. all So book at from QX. book rises

Ewen Stevenson

individual, I migration, you again, yeah, within answer I assumptions more deposit our implicitly, think legal think, the at that's deposit that if very say, And But broadly assumptions, assumptions and those correct. entity nuanced level. I cautious moment, go in the to planning as betas, think is asset Yeah, and I across margins.

Hong during the fourth in the towards of In them some we still think of probably there's Kong, quarter, think. getting I I other them. expansion are further taking think, markets, I

Rob Noble

Alright, much. very you thank

Operator

you. Thank

Dickerson next Our question is Jefferies. from from Joseph

Your line now is open.

Joseph Dickerson

HKMA for my you for tell on little discuss Thank dollar defending you the how outlook, you you to instance, has strengthening about would can us that then question. could standpoint? credit plays be liquidity the thanks. Kong cost If what chance billion a peg. of HKD a footprint. I things for could the XXX it the those particularly think a been a taking active weakening event bank for relatedly, Many of, I help and couple in the that two morning. dimensions, good in would Ewen, in us dimension a cited credit guess, a from And if look, It's not credit a be the is peg Hi, just zero terms in helpful? consequences Asia down break. And through your to Hong - interbank from bit

Noel Quinn

Ewen, HKMA believe first, then peg not any can, question take that's me to not we envisage. risk We second peg capabilities all. the you I is and if a sufficient at the We a peg, scenario and that I the the there have think take let first. believe do defend the to

Joseph Dickerson

Thanks.

Ewen Stevenson

think impact part there's in the across dollar question, when we Yeah, we Asia, Joe, in Sri apart a stronger smaller of on region. for example, the meaningful us any strengthening at yeah, on now macro the across has But in related. dollar potentially we - all at quality not on yeah, credit material US impact don't portfolio level, from don't that the first we dollar sort think that's as from big a markets, look look mean, of the out I But Lanka.

Joseph Dickerson

points. on It's helpful both you. very Thank

Noel Quinn

please? question, Next

Operator

Thank you.

of from Kunwar question Our from Fahed is line Redburn. next the

Your line open. is

Noel Quinn

Fahed. Hi, you. Thank

Fahed Kunwar

luck your future with taking good career. for Thanks questions, my Ewen and

a at back X.X%, $XXX of the I'm the And just you lot have as to your taking the provisions much which same couple at sure probably treating CRE would on a overlay, UK but overlay if customers, overall one when this your if first was about delinquencies. look million XQ than and my a reserved understanding pretty just Just from million it’s $XXX the FYXX. you're me, I flat go loans ratio at underlying and look is coverage is questions up on expected rather are to of I that impairments.

CETX from hasn't moving that on delinquencies? coverage when from XX% other And CETX an first parts, half earlier your migration on guidance underlying you or my than question, to when half losses, write-off first that we up a greater just that So than obviously you be That'd stepped have about second in would from migration, talk some why ratio greater factored ‘XX, falling question, be my Thank XX% CRE loan question. you from that potential increased risk saw within higher risk if one ‘XX? guidance you. following

Ewen Stevenson

result of on can And we've Yeah, factored would as Yeah, ratings the outlook be that. look X question. second impact the on the our are outlook macro IFRS scenarios. you yeah, from a a on in clearly view assumptions what see economic on the what what migration is our and

mean into clearly and it it's of migration to question So there capital - ratings I on the our element build answer is your on an forecasts. On level. markets, macro that, guess within in some hard that I impairments, RWA we question forecasts a

back level provisions, my the estate in around COVID commercial on and on putting back of now portfolio the real the to UK, increased we're China, at of but provisioning again, the we yeah, - On and struggling year have provisions had that we the sort of portfolio. of that definitely sort I'm then the against the And, overall get head putting because beginning the of on. that takeoff of

we the start off of I the took the UK we at more think on year. net-net, than put

on were they the you follow the year. So, provisioning we're of with but moment, to look, on of higher two think IR at the portfolios at I levels that beginning team up I'll on focused where get most the than specifics. the are But sort the

Noel Quinn

And think well. impacts up there I the follow But some on balance that. can on currency IR are sheet as the

Fahed Kunwar

guys. Thanks,

Operator

Thank you.

next - from Our is question

Noel Quinn

please? question, Next

Operator

Thank you.

next Citi. from Yafei Tian Our from is question

open. Your line is

Ewen Stevenson

morning. Hi,

Noel Quinn

Morning.

Yafei Tian

future your Ewen, And question. best you two career. for have morning, Hi, my questions. Thank and taking to all the I

The heard guidance and up and first to it making sure and just revenue follow one cost that correctly. I on is

first is So guess X% imply a really assuming over the that around currency Canada was RoE. is is market markets OP]? the HSBC that of is $X.X And higher revenue I Does moved guidance to a constant business. Canada that exit one. [the other profitable inflation. is $X.X higher. on billion second cost And billion hasn't Compared quite So you're question many that to making basis, guiding for actually pre-provision exiting, on then

what for want as just rationale moment? any exit? know, are strategically, at of you. And as I markets that the you understand the the that reviewing you're you is there HSBC, Thank to at So further footprint look

Noel Quinn

want if to the take take first the I'll Ewen, second. one,

Ewen Stevenson

Yeah.

our you've look on, $X.X a spot no cost in up billion, So, exactly constant guidance. revenues change basis, the thanks, on got currency guidance

- if you net So there on that on basis. be a $X.X the pre-tax should a even think on but on a today ECLs, And that the about level, after pre-provision increase. guidance our should we've a improvement be given billion ECLs, guidance still

Noel Quinn

explain on why And Canada, the of you. to options let Canada. we're alternative considering me as some Thank rationale on

they banks of had consider business all than holding in. view business, attribute would the buy connected that business, a looking shareholders follows: behalf than our good strong it. looking interest of supply other the international of by with we've it's point above value Canada between has is in absolutely capital are less the done return and X%. largely a significantly And performing strategic testing And to about correct, alternative around Rationale at have you're post-COVID. the to profit and capital on particularly in chain very is our operate many markets share that market this have And currently and point thirdly, in business, recovery as is, HSBC. of extremely Canadian in We the on our The greater business for finance time at of Wholesale well performed connectivity second, within a team an options. the is internationally strong options we're Banking, that to other cost we well value Firstly, domestic from the first, is considering job. our then stream our

probability that Our significantly low. market assessment right strategically, and said, share value is that be the as is that the will international there X% it’s is I we is connectivity accretive. of therefore And business in Particularly, that our a option. the category, relatively consider reasonable

given the serious me value for team, an other Canada question that's really others, have same look of strategic also the value But thought markets. Then consider we're importance. we've to excellent an management I asked emphasize the businesses, for I do the strategy and Canada. you alternative job. the at So why hands team as on, the in our relative And a that in always our in evaluation to management performance done clearly,

looking commencing do, we moment, process only a Canada. do on the So we're at at But that.

Now I anticipate question. can probably your second

share market same much now and X% if on me I where, Mexico. in somewhere that Mexico, a let depending And XX% we with start share I deal the a with line stronger analysis on or between do the So so position. Mexico, a market customer product the share of on have business analysis market segment,

strong We’ve I other is the international and relative have significant in upside that's moment. being international Mexican think an business bank competitors, that potential Mexico we as to achieved been an as bank enhanced. We our in at particularly believe our growth position true, as

with world, supply manufacturing in increase we do. it of believe business will between Thirdly, banking of by Mexico, Mexico, share And into US chain is therefore believe and And Banking base that rest we what as because actually very core shareholder the market services. we and a value US. the into the have a the strong interconnectivity volume Retail strong strong accretion opportunity, business the got the That's and that and of in Retail an we've of Corporate the result Mexico important in also potential at business holding connectivity we in between the position payroll in Mexico. our

and similar starting we're going stronger a to to continue position. - process Mexico, intention opportunities from Mexico. my think through we So And to not that business will have not good it's a on grow sell we

answer, Thank decision you a Canada, of that we comprehensive process. make was as on we hopefully, a you. will the final that and So reasonably on when outcome update

Yafei Tian

helpful. Thank you. It’s

Noel Quinn

question, please. Next

Operator

you. Thank

from from Our Tom question Rayner Numis. next is

open. is line Your

Tom Rayner

Yes.

Ewen Stevenson

Hi, Tom.

Tom Rayner

active said inflationary and the target, Because installing you just And XXXX? the going cost management. pretty Hi, Ewen. pointed please, cost to you've in chat that I the out, at need in next start Noel think target deliver and transformation in ask your key to Ewen, it's savings fairly on cost everyone was X% environment. discipline the Ewen terms cost of the I for given appreciate tough can there. Hi, I year, think it's a

is, hitting risk is the there is that more pairing guess investment I target CFO rather back that additional cost dependent Thank a my So question leaving, finding may you. become on the savings? than now

Noel Quinn

all I categorically, agenda to agenda. cost get Ewen at to I but can I'm target. I'm done that tremendous in will our cost be and discipline. that to committed driving on a discipline that share cost can into there I the job has no committed respond easing that absolutely very bank,

X%. further and that's and flow that of can identifying of As through that we savings the capacity a the know through we've in to We We'll cost past, X%, embarked a we've the cost challenging know further environment. got also additional already it's add high of a further about said in we coming savings upon opportunities, from also we're billion simplification, program transformation year, dollars But underlying target got know around to And organizational that's savings. inflation next we've headline digitization, through that equivalent X% change. X%, pay.

also the instilling sure the done committed be I'm make for I'm those work he's great So in environment Ewen to I all going the remain those to delivering bank, thank a going absolutely high that. is for committed of pretend disciplines but are and on disciplines will the easy, I inflation future. X% remain but to in not

there's weakening that in target. So no

Tom Rayner

Okay.

best and Okay, wishes thank do you Ewen you in next. whatever

Ewen Stevenson

Thanks Tom.

Tom Rayner

Thank you.

Operator

you. Thank

Ewen Stevenson

question Next please?

Operator

you. Thank

question next Our Autonomous. Manus from is from Costello

is open. line Your

Noel Quinn

Manus. Hi,

Manus Costello

a billion FX next the not base have growth the adjusted, $XX guys. rate, year-to-date the triple is to correct? the the morning X.X% that cost you is had year, on FX from I average couple, for of comes which, target clarify just as Good actually that $XX billion,

Ewen Stevenson

at I is end true of true around Yeah, would the rate the year, end it exchange we'll the that so September, by the whether around of only put Manus, was that that, remains is bouncing caution see.

Manus Costello

Sure.

Noel Quinn

on a basis. net adjusted it’s But

Ewen Stevenson

the that But is thesis correct.

to play games We will in FX that - trying with setting target. we're not

Manus Costello

wasn't You've why Hong mostly really taken related second away is the Kong a Hong clear the so risk you've much from or X% outlook it's so My could exposures When release entirely the given of to impairment that no, higher is that from of booked X% Could of your you've this be look your Kong billion your Yeah, about problem real Mainland is booked booked? And question Is given impairment starting morning, taking lending commercial Hong actually you're the current if way the far materially that the $XX number higher on disclosures, about booked booked in Kong are this your Hong Kong agreements worse? you? the taken I there in than with And $XXX structural China. accelerate much there's some exposures. additional Kong? at the estate Hong million impairment. the quarter point. kind

Ewen Stevenson

real China - in booked commercial portfolio, Manus. the Hong it's it's the offshore component Well Yeah. estate Kong of

is offshore of billion about and provided XX%, $X and definitely at book just mean so got billion disclosure that impaired, of it book. the substandard we've onshore the on onshore weaker Yeah, is billion look book of at I $XX you offshore the under So and over substandard, book. if from is exposure, just the the than is just memory, offshore. over The onshore X% we've would say, I $XX mid-year yeah, about on which on -

through providing that asset of going support lot yeah, portfolio. the liquidity for cases, quality onshore that's for for the So be book. are see different it's support of in definitely in lot lot very, regulatory a reasons whether considerations, offshore you can support to policy there some very a that China, in of the used can onshore And of portfolio, providing question liquidity a support a is

expect But don't Noel, total on $XX yeah, to it's further exposure just I bank, the do be you've X% that $X keep there a comments. in so billion but we against if we a is over know context, as have portfolio, provisioning got trillion other So to loan of book. offshore

Noel Quinn

evolving offshore has got the I our our not close high review. a to And measures therefore, the and we've what different book Tier relatively orientated a X, we've portfolio onshore policy the onshore book. picture keep But a think out just to got But work that Tier under business, clients city is benefit, but fair is an and quality the how still to X offshore. it's profile assessment. The that's risk onshore.

Manus Costello

got of effectively this measures Shall we not point access get any and now? to they're consider Is unsecured book you've book, at offshore unsecured, an to the if over it essentially the that questions to collateral? liquidity offshore able

Noel Quinn

to onshore it onshore book, Relative less the the is than secure book.

book? that's is is say measures not to statement. that fair it offshore fair So assessment. a a policy not benefit onshore the fair But Now that the will

company's I on much support command basis, ability support liquidity see onshore by to client think client offshore we that a have how to book. the service the

on dependent. complete will client between it wouldn't be have I by separation and off-shore, client a So

Ewen Stevenson

typically two. book security specific yeah, is describe is unsecured. security, that but wouldn't unsecured. properties, there and as secured book But not portfolio. yeah, Manus, I onshore has, Yeah, It it the against it's somewhere between offshore less definitely secured specific Yeah, not the sit it's those underpinning

Manus Costello

very Got Thank you much, guys. it.

Noel Quinn

Next question please?

Operator

you. Thank

is question Goldman Martin the line Next from Sachs. of Leitgeb from

open. Your line is

Ewen Stevenson

Martin. Hey,

Martin Leitgeb

reinsurance comments. the in markets, Good more one core you quality, on Hong two, benign on earlier year. questions. pass-throughs, bank and I morning. you just the of I were me, wondering, on in comments all over UK, just attrition Hey, and first you was Ewen, earlier with being asset of if - pass-throughs all have pass-throughs wondering, And have for years the compared good any I assumptions our have of in in and signs made thank your ramifications, the just collaboration And mortgage earlier one to rates terms meaningful forward? on your UK Kong, Ewen higher [indiscernible] let what could main your was And you the patience yielding to just what level? are wondering, UK terms Thank was started I the this have? of from that accounts? such to higher at most recently, a accounts I think rates will business of Is was higher current main headline which level think imply secondly, higher, have X%. could trend a into And asset rates is I quality, in has so mortgage pass-throughs mortgage wondering how’s just are and something increased for implications you. seen around going perspective,

Ewen Stevenson

Noel, do to you want go? me

Noel Quinn

Yeah, please. Ewen. Please,

Ewen Stevenson

sensitivity we've materially XX% we seen Martin, today. than that as assumptions have levels, are guess again, at get we've would they're And net guidance, I pass-through based on rates. higher - which here. But caution relevant cautious I what they have betas XX%, interest the think rising far. is the a in some and on go point, rate from to been, been to hence tables deposit in assumptions they look, so comment conservative deposit said, implied where higher why this think I and becoming to on on beta on using reasonably made increasingly on, I because expectations But less I our So below as

UK savings below Hong extent We non-interest we're to and year a now our asset a accounts. haven't bearing mix in just seeing of of Hong typically, has is averages Kong. current in yeah, where starting year of are. that trend accounts been deposit reminder, out the again, migration On we up and cycles, what sector quality, if book the again, non-interest And bit bearing pick see out But attrition, accounts Kong seen rates given migration current previous any are into well as five of is fixed. a you two looked in typically material

X%. on to rates impact are when the put rates through higher those they to roll book. the take Yeah, them stressed to up - of we will yeah, typically of that time So

scenarios. So IFRS yeah, X X at you you and at the look look modeling, and can and - if yeah X Downside

sensitivity, put given for adverse you when to want about potential look on. those stress UK. we think on analysis levels, to think we for we higher have at take more as rates put complacent are But our those you the not we we're today, most higher If we affordable, provisioning but customers, said outlook on on some the scenarios want were to it, if the of the loans

Martin Leitgeb

Thank you very much.

Operator

you. Thank

from is question Our from next Raul Sinha JPMorgan.

line is open. Your

Noel Quinn

Raul. Hi,

Raul Sinha

publicly. specific you reach start much share to and comments a to the can just the I on Good of one acquisitions? capital that's that Canada Would HSBC linked were my should you've Or should position generated think follow-up well. best afternoon, any historically, is I a reason that capital generate reaction of majority with everybody. might trying And you incoming be you returned understand questions from proceeds from M&A. in has your consider you about capital these to made excess? my is, if we if to for think Noel, you further wishes for expect think so and that I buybacks the deployment, I function to disposals. as various shareholders? commentary disposals this asked would taking and for Thank Mexico your Ewen around to How an

was And how - positioned if ground. guess around us I was the your obviously, buyback? you wondering we've obviously generated not a forward you. you developments see are in much remaining growth? arising challenging wondering thoughts in direct is any Management. you Thank of have from update just things Wealth disposal challenges link be a was is in and and any the I I I whether and still terms wondering, could recovery on for And recent been terms of so structural going willing capital or whether Wealth in share how business might question I Wealth expecting to proceeds just on while the subsequent a second Asia to

Noel Quinn

Thanks, Thank you. Raul.

deal first. very process still early me the Canada, on Let with It’s in at the right, Canada.

element, want want an hold on be capital. on use is there I a of But So of there to don't would don't proceeds. the to proceeds, too an be clearly, to element excess - definitive I expectation, significant

the benefit going So the to would Canada target then on excess that, on to in as have sitting we're into do load clearly range we group. disposal to you back our which of get were capital the of if without Canada, XX.X%, of XX% we top

stage, of for and XXXX Canada capital, we give the opportunities But Now, too assume profitable of future and no that much don't may emerge let to on we see it through would growth on beyond. that capital would on to capital target at intention us in have get proportion range, to for above I good excess growth. be a want that this good some our unless that hang retain but guidance process to over be reasonable available I fund distribution. would to that

market distribution it Kong reopened capital Asia, Management, reasonable form. the some in I think be a are So levels internationally. On back to expectation domestically Wealth I increasing. to the reopening, would Hong we're of Hong Kong on that market activity seeing some shareholders seeing We're expect think

think are for they better XXXX I prospects So throughout been XXXX. have far than the

the So I in to levels also increase. what is stabilization would But you'll expect hopefully equity activity see markets. more

the is market months, $XX continuing last we've at comments revenue And in suppressed increased even it to billion of that we That future to and I that stream. in in investment good and accumulate acquisition So platform you. as Wealth the but for acquisition, weren't operating what opening for earnings started new And we're what referenced as Banking, to We're during from use particularly net the Wealth And future the exactly time appetite expand been assets. stabilization future I see benefit a times will by Retail to the accounts, And bearing assets. has have to products. new net the given in build the that's a Wholesale Wealth investment same the earnings liken do there'd accumulated moment, about, accumulated activity appetite Thank growth. the to we're earnings from environment not and talked of that. not platform earning XX still been what getting deposit Wealth. non-interest an we alternative when yet accumulate. supportive, be to for a is, And on now situation good my a operating particularly did very doing growth levels the revenue in asset did continuing if I Asia, the the We they though investment producing we've $XX building suppressed, deposits, That at billion, we we is of think it continuing markets, platform in order Banking book. customer future. in are we're accounts,

Next question, please?

Operator

you. Thank

more We Rakkar question time Barclays. have one Aman from from for

open. Your line is

Aman Rakkar

morning Good gents.

Noel Quinn

Good morning.

Aman Rakkar

Ewen, just say - congratulations

Ewen Stevenson

Hi, morning, Aman.

Aman Rakkar

am just symbol to front just what next. please? to you And mechanically do around year, Sorry look struggling I exit take billion of rate interest Can of. there's NII sitting this I than appreciate the guide come that's squeeze is greater really next I or billion do run annualized in hearing but guide in QX your forward two questions, for that income, next rate, to year, net sense I make run back that a year. guidance $XX NIM for $XX a was if to the

You wondered it. those months in and actually, on about your incremental please, talking no know, assumptions we're if absolutely XX%. of we're The update are kind which of And I'm the and the assuming us had understand you above of you're numbers that actually, IFRS behind be appreciate your implementation there's must rate exactly, mean, extent I to for some the mindful conservative? year. missing benefit away us basically help that from then secondly, more bit if you P&L? an that So, next extremely betas impact you Can you a on XX two something conservative. sit I I can must

And kind in will impact quite help guidance is you next QX healthy to place. work your You've asking that can is understand I of need some appreciated? NII before, the the add the to reason you income fee us $XXX you've actually out had, for I'm performance is really year The quite of there right help should costs? much the If with you're income given non-interest be of taking [clip]. us could think how a in us negatives because fees million understand at robust. consensus performance, in if IFRS that actually and I your be on annualizing mark-to-market XX, you I back

Ewen Stevenson

of IFRS Well in phase not look, still at than you that, in your modeling we're Yeah. forecast start on I X. based the able of terms with and and IFRS you some rather IFRS and yeah, IFRS of we're yeah, to on numbers IFRS moment an sort appreciate are to, of XX, we're our with at awkward giving yeah, some XX. guidance moment And, X the XX

we a the coming going a as to So down be to two earnings few be to of are but thirds. for world in couple expect give view that you by IFRS I we in what work we quarters think we XX But a position of reported sort the just sort of said ago, unsatisfactory around to quarters. quarters of repeat adjusted

need the a to be relatively around result billion. down MCU. to the $X minimal. out RoTE as I expect to the think, And as that part And impact impact of on we that TNAV that of you be of adjust net

RoTE, being on. around those internal latest is ‘XX looking So XX numbers basis yeah, are I impact at think, we're points worked the of sort still but of numbers on

unsatisfactory an all of position it's for appreciate you. I look, So,

can where We or clarity. are a clarity hard we as can we we as we'll market. the working provide can you And position update to when to get better

I top into income billion. to do $X.X you comments billion in that to guidance giving XX, math we're that the annualized uplift Just the an of on need four addition rate the get nine $XX is that of of the and on in trading think to times switch add the on that to for

to math. the on that period or So is year assumptions unprecedented be rises guidances results. that to $XX will facing other given of we back cautious relatively and next conservatism reason be for going find I'm you sharpness that billion talking seen. I place to generally of we've Noel think we’re sort the QX if think, that rate our would are of of in into genuinely But on be yeah, making. assumptions the revert can quarters. trying we just upgraded, about say couple the on Georges full we I are your at we we giving over And $XX.X And a And you then billion caution sure

Aman Rakkar

be tempted year your your the to you much. for of so non-interest for expectations you Would based income current Thank understanding next on guide momentum?

Ewen Stevenson

profit I non-interest guidance income and accused providing we'll be of we're point some think At a interest giving warning costs. when net on income, you

Aman Rakkar

you probably So won’t.

Ewen Stevenson

we so [comments] key the - And

Aman Rakkar

[cross-talk]. probably So

Ewen Stevenson

items. model to of those one you allow on may Yeah,

Noel Quinn

Yeah.

Aman Rakkar

fair. That’s

Noel Quinn

thing - the I But one

Aman Rakkar

Go on, yeah.

Noel Quinn

to - would you one say And thing I

Ewen Stevenson

mean, If line think you that, do the add need and the I think clearly you year. some $Xbillion this trends you in to when this of I Yeah, you I on about go benefited taking of if items income some insurance it, through about think back mean aside non-interest year, like-for-like MCU. other have think I

a significantly have lot when the you pluses and go through global banking of year. Some minuses underperformed, market’s in there's performance and P&L, this

think for billion a back to $X talked the the technical about think just depressed you I insurance we've add on pure MCU. Wealth conditions and But basis, need Wealth for this year. I even

Noel Quinn

view around capital a you and fee markets of as generation low declining. element of going trend in probability there. event of growth, fee whether fee fees And very seeing can And trend to GLCM, come continuation be seen both CMB you're or there's next to next into if and each don't some markets. non-NII, good markets. of as activity pick and We back But flow to on volatile going that have and Solutions the alternative strong see the that fees there's to and look growth continuing expectation year. as We've start a opportunity our a up GB&M. will underlying for investment of is Wealth back good be I my an back year. activity that growth an at that earlier, to we’re coming asset starts said markets Management, Yeah, Payments in suppressed have M&A some think in because I in that both classes. Global see global I I the activities the performance event-based there'd or

at So there of our goes year some to that but elements see fee going how but to unpredictable think are We'll have I be it's next stage. this performance are enduring.

Aman Rakkar

so you Thank much.

Noel Quinn

just With appreciate I'd remarks, I can that, if it. share some closing

and you. of just financial thanks good a to today rate no remain he's We for all there positive to tight to for least you XX% in you you, before. Georges people businesses, call that with Ewen and new the hit regard. thank support for with announced in your over or the ask and the year good To we've few team XXXX be And impacts speak to commitment on growth welcome I'll our new your had strategy past HSBC. and onwards. changes close, our and the my role, the assistance in results, consequence and a I the or years joining our in the wish another Thank to within wider myself, questions. as a we Have morning targets, want much all discipline not support that the me, XXXX reassure advice the gave January want Xst both will support given the he’s to in if Georges Firstly, all full into all reiterate today. entered cost again best the including that at he I of very him CEO I rises, I given four as role quarter role of to I RoTE to taking also of the from change summary control. comments, a personally, and continued underlying and he’s for bank guidance and cost afternoon. on track our done

Operator

XXXX concludes the you the for QX results. call Holdings ladies gentlemen. plc Thank HSBC and That

You you now may Thank much. disconnect. very

HSBC (HSBC) 25 Oct 222022 Q3 Earnings call transcript