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Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
---|---|---|---|---|---|
Standard Chartered Plc | LSE:STAN | London | Ordinary Share | GB0004082847 | ORD USD0.50 |
Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
---|---|---|---|---|---|---|---|---|---|---|
9.20 | 1.37% | 680.60 | 680.80 | 681.20 | 685.60 | 676.00 | 677.20 | 7,753,844 | 16:35:23 |
Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
---|---|---|---|---|---|
Commercial Banks, Nec | 18.02B | 3.47B | 1.2403 | 5.49 | 19.05B |
TIDMSTAN
RNS Number : 5490D
Standard Chartered PLC
29 October 2020
Standard Chartered PLC - 3Q'20 Results
Table of contents Performance highlights 1 ---------------------------------------------------- Statement of results 2 ---------------------------------------------------- Group Chief Financial Officer's review 3 ---------------------------------------------------- Supplementary financial information 11 ---------------------------------------------------- Underlying versus statutory results reconciliations 28 ---------------------------------------------------- Risk review 34 ---------------------------------------------------- Capital review 39 ---------------------------------------------------- Financial statements 44 ---------------------------------------------------- Other supplementary financial information 49 ----------------------------------------------------
Forward-looking statements
This document may contain 'forward-looking statements' that are based on current expectations or beliefs, as well as assumptions about future events. These forward-looking statements can be identified by the fact that they do not relate only to historical or current facts. Forward-looking statements often use words such as 'may', 'could', 'will', 'expect', 'intend', 'estimate', 'anticipate', 'believe', 'plan', 'seek', 'continue' or other words of similar meaning.
By their very nature, forward-looking statements are subject to known and unknown risks and uncertainties and can be affected by other factors that could cause actual results, and the Group's plans and objectives, to differ materially from those expressed or implied in the forward-looking statements. Recipients should not place reliance on, and are cautioned about relying on, any forward-looking statements. There are several factors which could cause actual results to differ materially from those expressed or implied in forward looking statements. The factors that could cause actual results to differ materially from those described in the forward-looking statements include (but are not limited to) changes in global, political, economic, business, competitive, market and regulatory forces or conditions, future exchange and interest rates, changes in tax rates, future business combinations or dispositions and other factors specific to the Group. Any forward-looking statement contained in this document is based on past or current trends and/or activities of the Group and should not be taken as a representation that such trends or activities will continue in the future.
No statement in this document is intended to be a profit forecast or to imply that the earnings of the Group for the current year or future years will necessarily match or exceed the historical or published earnings of the Group. Each forward-looking statement speaks only as of the date of the particular statement. Except as required by any applicable laws or regulations, the Group expressly disclaims any obligation to revise or update any forward-looking statement contained within this document, regardless of whether those statements are affected as a result of new information, future events or otherwise.
Please refer to the Group's 2019 Annual Report and the 2020 Half-Year Report for a discussion of certain risks and factors that could cause actual results, and the Group's plans and objectives, to differ materially from those expressed or implied in the forward-looking statements.
Nothing in this document shall constitute, in any jurisdiction, an offer or solicitation to sell or purchase any securities or other financial instruments, nor shall it constitute a recommendation or advice in respect of any securities or other financial instruments or any other matter.
Unless another currency is specified, the word 'dollar' or symbol '$' in this document means US dollar and the word 'cent' or symbol 'c' means one-hundredth of one US dollar.
The information within this report is unaudited.
Unless the context requires, within this document, 'China' refers to the People's Republic of China and, for the purposes of this document only, excludes Hong Kong Special Administrative Region (Hong Kong), Macau Special Administrative Region (Macau) and Taiwan. 'Korea' or 'South Korea' refers to the Republic of Korea. Greater China & North Asia (GCNA) includes China, Hong Kong, Japan, Korea, Macau and Taiwan; ASEAN & South Asia (ASA) includes Australia, Bangladesh, Brunei, Cambodia, India, Indonesia, Laos, Malaysia, Myanmar, Nepal, Philippines, Singapore, Sri Lanka, Thailand and Vietnam; and Africa & Middle East (AME) includes Bahrain, Egypt, Iraq, Jordan, Lebanon, Oman, Pakistan, Qatar, Saudi Arabia and the United Arab Emirates (UAE).
Within the tables in this report, blank spaces indicate that the number is not disclosed, dashes indicate that the number is zero and nm stands for not meaningful.
Standard Chartered PLC is incorporated in England and Wales with limited liability. Standard Chartered PLC is headquartered in London. The Group's head office provides guidance on governance and regulatory standards. Standard Chartered PLC stock codes are: HKSE 02888 and LSE STAN.LN.
All figures are presented on an underlying basis and comparisons are made to 2019 on a reported currency basis, unless otherwise stated. A reconciliation of restructuring and other items excluded from underlying results is set out on page 28.
Bill Winters, Group Chief Executive, said:
"Our transformation is allowing us to weather the macroeconomic storm in good shape. Our Wealth Management and Financial Markets businesses have good momentum, we are controlling costs to fund innovation, and we believe we are well provided against credit impairment. Lower interest rates continue to impact income but we remain well-positioned to meet our financial targets, albeit with some delay. We are further streamlining our organisation to sharpen focus on our retail business, more effectively leverage our unique network, and drive efficiencies."
Update on strategic priorities
-- We are creating a single pan-Asia region to more effectively deliver our network there
-- We will combine our operations that serve individuals to grow our affluent business ...
-- ... and sharpen the focus on transforming and disrupting with digital. Our virtual bank Mox is now live in Hong Kong
-- These organisation changes will also support initiatives to improve productivity
-- Profit in our four large optimisation markets has improved 16% on a constant currency basis year-to-date
-- We are driving sustainability where it matters most: 86% of our sustainable finance assets are in some of the least developed markets
Selected information concerning financial performance (3Q'20 unless otherwise stated)
-- Income lower as previously guided due to interest rates: down 12% to $3.5bn; down 11% constant currency (ccy)
- Income down 10% on a like-for-like basis: at ccy and excluding $36m negative movement in DVA
- Continued recovery in Wealth Management and momentum in Financial Markets offset by interest rate headwinds
-- Net interest margin (NIM) down 38bps to 1.23%; 5bps lower compared to 2Q'20
- Impact of lower rates in the quarter mostly offset by improvement in liability mix and pricing
- Average NIM expected to stabilise slightly below the current level over the next two quarters
-- Expenses of $2.5bn improved 1% YoY; broadly flat ccy
-- Credit impairment of $353m up $74m YoY but lower for second consecutive quarter
- Stage 1 and 2 impairment of $109m (2Q'20: $217m)
- Stage 3 impairment up 9% YoY to $244m (2Q'20: $394m)
- Net stage 3 plus credit grade 12 exposures up $0.8bn since 30.06.20; early alerts reduced $1.0bn to $13.4bn
-- Return on tangible equity down 450bps to 4.4%
- Pre-provision operating profit down 30% to $1.0bn due to lower income; down 28% ccy and ex-DVA
- Underlying profit before tax down 40% to $0.7bn driven by lower income; down 39% ccy and ex-DVA
- Statutory profit before tax down 61% to $0.4bn, includes $231m goodwill impairment in UAE and Indonesia
-- Risk-weighted assets of $267bn up $4bn since 30.06.20
- Negative credit migration and FX movements partly offset by RCF repayments and lower counterparty credit risk
-- The Group remains strongly capitalised and highly liquid
- Common equity tier 1 ratio 14.4% above the top of the 13-14% target range (30.06.20: 14.3%)
- Asset-to-deposit ratio 63.8% (30.06.20: 62.7%); liquidity coverage ratio 142% (30.06.20: 149%)
- Continue to target higher quality deposits: individual CASA up 8% since 30.06.20
-- Earnings per share down 13.0c or 49% to 13.6c
Outlook
We expect similar fourth quarter seasonality to last year, and anticipate client demand to increase over the course of 2021 as more of the markets in which we operate start to come out of recession. The impact of the significant reduction in interest rates that occurred earlier this year should be fully reflected over the next two quarters with the net interest margin stabilising slightly below the current level in that timeframe.
In this protracted low interest rate environment, we will continue to optimise the drivers of our net interest income and are increasingly focusing on generating more fee-based income, particularly from our Financial Markets and Wealth Management businesses that have good momentum. We will continue to reduce operating expenses wherever possible so that we can maximise our investment in digital capabilities; as previously guided we expect expenses to be below $10 billion in both 2020 and 2021.
Our third quarter credit impairment outcome reinforces our previous view that our impairment costs should be lower in the second half of 2020 than in the first half. The expected economic recovery next year would support asset quality improvement, although we anticipate some sectors and markets will face continuing challenges.
On 25 February 2021 we will release our full-year 2020 results and will provide an update on the progress we are making on our strategic priorities in the context of the prevailing macroeconomic outlook. Given our strong capital position the Board will consider at that time resuming shareholder returns, subject to consultation with our regulators.
Statement of results
For the three months ended 30 September 2020
3 months 3 months ended 30.09.20 ended 30.09.19 Change(1) $million $million % ------------------------------------------------------- --------------- --------------- --------- Underlying performance Operating income 3,519 3,978 (12) Operating expenses (including UK bank levy) (2,480) (2,501) 1 Credit impairment (353) (279) (27) Other impairment (15) (5) (200) Profit from associates and joint ventures 74 45 64 Profit before taxation 745 1,238 (40) Profit/(loss) attributable to ordinary shareholders(2) 428 857 (50) Return on ordinary shareholders' tangible equity (%) 4.4 8.9 (450)bps Cost to income ratio (%) 70.5 62.9 (760)bps ------------------------------------------------------- --------------- --------------- --------- Statutory performance Operating income 3,506 3,959 (11) Operating expenses (2,515) (2,567) 2 Credit impairment (358) (280) (28) Goodwill impairment (231) - nm Other impairment (33) (60) 45 Profit from associates and joint ventures 66 53 25 Profit before taxation 435 1,105 (61) Taxation (274) (333) 18 Profit for the period 161 772 (79) Profit/(loss) attributable to parent company shareholders 154 761 (80) Profit/(loss) attributable to ordinary shareholders(2) 123 725 (83) Return on ordinary shareholders' tangible equity (%) 1.3 7.5 (620)bps Cost to income ratio (%) 71.7 64.8 (690)bps ------------------------------------------------------- --------------- --------------- --------- Balance sheet and capital Total assets 754,429 734,800 3 Total equity 50,570 50,696 - Average tangible equity attributable to ordinary shareholders(2) 38,934 38,379 1 Loans and advances to customers 281,380 269,703 4 Customer accounts 417,517 387,857 8 Risk-weighted assets 266,664 268,668 (1) Total capital 57,051 54,940 4 Total capital (%) 21.4 20.4 100bps Common Equity Tier 1 38,449 36,386 6 Common Equity Tier 1 ratio (%) 14.4 13.5 90bps Net Interest Margin (%) (adjusted) 1.23 1.61 (38)bps Advances-to-deposits ratio (%)(3) 63.8 65.6 (1.8) Liquidity coverage ratio (%) 142 133 9 UK leverage ratio (%) 5.2 5.1 10bps ------------------------------------------------------- --------------- --------------- --------- Information per ordinary share Cents Cents Cents Earnings per share - underlying(4) 13.6 26.6 (13.0) - statutory(4) 3.9 22.5 (18.6) Net asset value per share(5) 1,405 1,358 47 Tangible net asset value per share(5) 1,249 1,199 50 Number of ordinary shares at period end (millions) 3,149 3,195 (1) ------------------------------------------------------- --------------- --------------- ---------
1 Variance is better/(worse) other than assets, liabilities and risk-weighted assets
2 Profit/(loss) attributable to ordinary shareholders is after the deduction of dividends payable to the holders of non-cumulative redeemable preference shares and Additional Tier 1 securities classified as equity
3 When calculating this ratio, total loans and advances to customers excludes reverse repurchase agreements and other similar secured lending, excludes approved balances held with central banks, confirmed as repayable at the point of stress and includes loans and advances to customers held at fair value through profit and loss. Total customer accounts includes customer accounts held at fair value through profit or loss.
4 Represents the underlying or statutory earnings divided by the basic weighted average number of shares
5 Calculated on period end net asset value, tangible net asset value and number of shares
Group Chief Financial Officer's review
The Group delivered a resilient performance in challenging conditions in the third quarter of 2020
Summary of financial performance
Constant Constant Constant Currency Currency Currency 3Q'20 3Q'19 Change Change(1) 2Q'20 Change Change(1) YTD'20 YTD'19 Change Change(1) $million $million % % $million % % $million $million % % -------------- ---------- ---------- ------ ---------- ------ --------- ---------- ---------- ------ --------- Net Interest income 1,620 1,937 (16) (16) 1,660 (2) (3) 5,122 5,799 (12) (10) Other income 1,899 2,041 (7) (7) 2,060 (8) (9) 6,444 5,875 10 11 -------------- ---------- ---------- ------ --------- ---------- ------ --------- ---------- ---------- ------ --------- Underlying operating income 3,519 3,978 (12) (11) 3,720 (5) (6) 11,566 11,674 (1) - Underlying operating expenses (2,480) (2,501) 1 - (2,355) (5) (3) (7,193) (7,470) 4 1 -------------- ---------- ---------- ------ --------- ---------- ------ --------- ---------- ---------- ------ --------- Underlying operating profit before impairment and taxation 1,039 1,477 (30) (30) 1,365 (24) (24) 4,373 4,204 4 4 Credit impairment (353) (279) (27) (32) (611) 42 42 (1,920) (533) nm(2) nm(2) Other impairment (15) (5) (200) nm(2) (42) 64 64 97 (26) nm(2) nm(2) Profit from associates and joint ventures 74 45 64 61 21 nm(2) nm(2) 150 202 (26) (26) -------------- ---------- ---------- ------ --------- ---------- ------ --------- ---------- ---------- ------ --------- Underlying profit before taxation 745 1,238 (40) (41) 733 2 2 2,700 3,847 (30) (30) Restructuring (44) (123) 64 64 2 nm(2) nm(2) (134) (137) 2 1 Goodwill impairment & other items (266) (10) nm(2) nm(2) 6 nm(2) nm(2) (504) (191) (164) (163) -------------- ---------- ---------- ------ --------- ---------- ------ --------- ---------- ---------- ------ --------- Statutory profit before
taxation 435 1,105 (61) (62) 741 (41) (41) 2,062 3,519 (41) (42) Taxation (274) (333) 18 16 (192) (43) (39) (835) (1,251) 33 32 -------------- ---------- ---------- ------ --------- ---------- ------ --------- ---------- ---------- ------ --------- Profit for the period 161 772 (79) (80) 549 (71) (71) 1,227 2,268 (46) (48) -------------- ---------- ---------- ------ --------- ---------- ------ --------- ---------- ---------- ------ --------- Net interest margin (%) 1.23 1.61 1.28 1.34 1.64 Underlying return on tangible equity (%) 4.4 8.9 3.5 5.5 8.6 Underlying earnings per share (cents) 13.6 26.6 10.4 49.5 75.7 Statutory return on tangible equity (%) 1.3 7.5 3.6 3.3 6.8 Statutory earnings per share (cents) 3.9 22.5 10.8 29.7 60.5 -------------- ---------- ---------- ------ --------- ---------- ------ --------- ---------- ---------- ------ ---------
1 Comparisons presented on the basis of the current period's transactional currency rate, ensuring like-for-like currency rates between the two periods
2 Not meaningful
The Group delivered a resilient performance in challenging conditions in the third quarter of 2020, with lower interest rates partially offset by strong underlying performances in several products and markets, good cost control and an encouraging sequential improvement in credit impairment. Income declined 12 per cent - impacted by lower interest rates - and expenses including continued investment were 1 per cent lower compared to 3Q'19. Credit impairment increased 27 per cent but reduced for the second consecutive quarter despite the extraordinary external environment. Underlying profit declined 40 per cent reflecting higher impairments and a 38 basis point decline in net interest margin.
The Group remains strongly capitalised and highly liquid with a CET1 ratio of 14.4 per cent - above the top of the medium-term target range - an assets-to-deposits ratio of 63.8 per cent and a liquidity coverage ratio of 142 per cent.
All commentary that follows is on an underlying basis and comparisons are made to the equivalent period in 2019 on a reported currency basis, unless otherwise stated.
-- Operating income declined 12 per cent and was down 10 per cent on a constant currency basis and excluding a $36 million negative movement in the debit valuation adjustment (DVA). The impact of lower interest rates was partially offset by strong performances in Wealth Management and Financial Markets
-- Net interest income decreased 16 per cent with increased volumes more than offset by a 24 per cent (38 basis points) decline in net interest margin
-- Other income decreased 7 per cent, or 5 per cent excluding the negative impact of movements in DVA, with a strong performance in Wealth Management and Financial Markets offset by a $157 million reduction in Treasury. On a statutory basis, fees and commissions have increased 3 per cent
-- Operating expenses were 1 per cent lower and broadly flat on a constant currency basis, absorbing continued investment into strategic initiatives. The cost-to-income ratio increased 7 percentage points to 70 per cent excluding DVA, due to the impact of the significantly lower interest rate environment on net interest income
-- Credit impairment increased by $74 million to $353 million but was lower for a second consecutive quarter, down $258 million compared to 2Q'20. Stage 1 and 2 impairments of $109 million doubled and included a $77 million management overlay. Impairments of Stage 3 assets were up 9 per cent
-- Other impairment of $15 million was primarily driven by impairment charges relating to aircraft
-- Profit from associates and joint ventures was up 64 per cent to $74 million. The Group now recognises its share of profits of its associate China Bohai Bank based upon its most recently available quarterly results: for 3Q'20 reporting purposes this was based on a 19.99 per cent share of China Bohai Bank's 2Q'20 performance, historically the strongest quarter of the year. The Group's share of China Bohai Bank reduced to 16.26 per cent in the third quarter and this will be the share of profit that is reported in future quarters
-- Underlying profit before tax decreased 40 per cent. Charges relating to goodwill impairment, restructuring and other items increased $177 million to $310 million, primarily relating to $231 million of goodwill impairment in UAE ($204 million) and Indonesia ($27 million) due to a lower GDP growth outlook, and a $35 million dilution loss relating to the initial public offering of the Group's associate, China Bohai Bank
-- Taxation was $274 million on a statutory basis with an underlying year-to-date effective tax rate of 31.3 per cent up from the prior year rate of 28.1 per cent reflecting a non-repeat of prior year tax adjustments and lower profits increasing the impact of non-deductible expenses
-- Underlying return on tangible equity declined by 450 basis points to 4.4 per cent, with the impact of reduced profits partly offset by lower tangible equity reflecting the dividends paid and share buy-back programmes completed since 1H'19
Operating income by product
Constant Constant Constant Currency Currency Currency 3Q'20 3Q'19 Change Change(1) 2Q'20 Change Change(1) YTD'20 YTD'19 Change Change(1) $million $million % % $million % % $million $million % % --------------- ---------- ---------- ------ ---------- ------ --------- ---------- ---------- ------ --------- Transaction Banking 665 887 (25) (25) 721 (8) (8) 2,186 2,665 (18) (17) ---------- ---------- ------ --------- ---------- ------ --------- ---------- ---------- ------ --------- Trade 255 282 (10) (9) 230 11 11 745 841 (11) (10) Cash Management 410 605 (32) (32) 491 (16) (17) 1,441 1,824 (21) (20) ---------- ---------- ------ --------- ---------- ------ --------- ---------- ---------- ------ --------- Financial Markets 909 877 4 5 970 (6) (7) 3,157 2,542 24 27 ---------- ---------- ------ --------- ---------- ------ --------- ---------- ---------- ------ --------- Foreign Exchange 266 261 2 3 343 (22) (23) 1,024 863 19 21 Rates 201 176 14 16 339 (41) (41) 918 533 72 77 Commodities 60 39 54 50 82 (27) (27) 186 128 45 44 Credit and Capital Markets 188 167 13 15 250 (25) (25) 464 452 3 4 Capital Structuring Distribution Group 91 87 5 6 52 75 77 204 243 (16) (14) DVA (22) 14 nm(2) nm(2) (201) 89 89 82 (28) nm(2) nm(2) Securities Services 79 88 (10) (8) 79 - - 242 258 (6) (4) Other Financial Markets 46 45 2 2 26 77 59 37 93 (60) (59) ---------- ---------- ------ --------- ---------- ------ --------- ---------- ---------- ------ --------- Corporate Finance 284 281 1 3 269 6 4 831 815 2 4 Lending and Portfolio Management 222 201 10 12 232 (4) (5) 649 585 11 13 Wealth Management 568 488 16 16 434 31 30 1,532 1,464 5 5 Retail Products 859 975 (12) (11) 913 (6) (7) 2,718 2,902 (6) (5) ---------- ---------- ------ --------- ---------- ------ --------- ---------- ---------- ------ --------- CCPL and other unsecured lending 309 315 (2) (1) 295 5 3 908 940 (3) (2) Deposits 301 510 (41) (40) 413 (27) (27) 1,186 1,505 (21) (20) Mortgage and Auto 211 123 72 69 169 25 23 516 381 35 37 Other Retail Products 38 27 41 50 36 6 8 108 76 42 47
---------- ---------- ------ --------- ---------- ------ --------- ---------- ---------- ------ --------- Treasury 40 335 (88) (88) 178 (78) (78) 543 894 (39) (39) Other (28) (66) 58 45 3 nm(2) nm(2) (50) (193) 74 73 --------------- ---------- ---------- ------ --------- ---------- ------ --------- ---------- ---------- ------ --------- Total underlying operating income 3,519 3,978 (12) (11) 3,720 (5) (6) 11,566 11,674 (1) - --------------- ---------- ---------- ------ --------- ---------- ------ --------- ---------- ---------- ------ ---------
1 Comparisons presented on the basis of the current period's transactional currency rate, ensuring like-for-like currency rates between the two periods
2 Not meaningful
Transaction Banking income was down 25 per cent. Cash Management declined 32 per cent as double-digit volume growth was more than offset by declining margins given the lower interest rate environment. Trade declined 10 per cent with lower balances reflecting a significant reduction in global trade volumes resulting from the COVID-19 pandemic.
Financial Markets income grew 4 per cent or 8 per cent excluding DVA, despite significantly lower levels of market volatility than in the first half of this year, reflecting the impact of improvements made to the business model in recent years as well as increased hedging and investment activity by clients. There was double-digit growth in Rates, Commodities, Credit and Capital Markets while Foreign Exchange income was up slightly. Income from Securities Services declined 10 per cent due to lower margins partly offset by higher volumes.
Corporate Finance income was up 1 per cent reflecting increased balances primarily in Leveraged Structured Solutions.
Lending and Portfolio Management income was up 10 per cent with improved margins and increased volumes in Corporate Lending.
Wealth Management income was up 16 per cent and while market sentiment remains fragile, it has noticeably improved in many of the Group's larger markets, supplemented by clients increasingly using digital channels. There was a particularly strong sales performance in FX, equities and structured notes driving income excluding bancassurance up 17 per cent. Bancassurance income, which year-to-date is just over a quarter of total Wealth Management income, was 14 per cent higher compared to 3Q'19 as a result of a $53 million accelerated recognition of an annual bancassurance bonus within Retail Banking, which was booked in the second quarter in the prior year. The bonus booking is broadly flat on a year-to-date basis.
Retail Products income reduced 12 per cent on a reported basis and was down 11 per cent on a constant currency basis. Deposits income declined 41 per cent as margin compression more than offset increased volumes. Increases in margins and volumes led to 72 per cent growth across Mortgages & Auto and a 41 per cent increase in Other Retail Products. Credit Cards & Personal Loans income was down 2 per cent with new sales showing signs of recovery to pre-COVID-19 levels in some of the Group's markets.
Treasury income declined 88 per cent, broadly split equally across net interest income and other income. The decline in net interest income reflects reduced returns on deployed assets within Treasury Markets. The reduction in other income is due to a $67 million negative movement in hedging ineffectiveness, including hedge mark-to-market losses incurred in 3Q'20, reduced FX swap income and lower realisation gains. Treasury income declined 78 per cent on the second quarter with $84 million lower realisation gains, negative movements in hedging ineffectiveness and lower FX swap income partly offset by increased interest income where interest paid for external funding reduced more quickly than the returns on deployed assets.
Profit before tax by client segment and geographic region
Constant Constant Constant Currency Currency Currency 3Q'20 3Q'19 Change Change(1) 2Q'20 Change Change(1) YTD'20 YTD'19 Change Change(1) $million $million % % $million % % $million $million % % -------------- ---------- ---------- ------ ---------- ------ --------- ---------- ---------- ------ --------- Corporate & Institutional Banking 525 589 (11) (12) 476 10 8 1,657 1,886 (12) (12) Retail Banking 257 300 (14) (15) 93 176 177 583 924 (37) (37) Commercial Banking 19 116 (84) (84) 80 (76) (75) 201 453 (56) (55) Private Banking 17 (3) nm(2) nm(2) 19 (11) (6) 73 97 (25) (26) Central & other items (segment) (73) 236 (131) (128) 65 nm(2) nm(2) 186 487 (62) (64) -------------- ---------- ---------- ------ --------- ---------- ------ --------- ---------- ---------- ------ --------- Underlying profit before taxation 745 1,238 (40) (41) 733 2 2 2,700 3,847 (30) (30) -------------- ---------- ---------- ------ --------- ---------- ------ --------- ---------- ---------- ------ --------- Greater China & North Asia 578 610 (5) (6) 484 19 18 1,712 1,939 (12) (11) ASEAN & South Asia 243 242 - 1 89 173 160 699 1,002 (30) (30) Africa & Middle East 11 147 (93) (94) 43 (74) (80) 101 588 (83) (82) Europe & Americas 37 62 (40) (50) 255 (85) (85) 393 75 nm(2) nm(2) Central & other items (region) (124) 177 (170) (168) (138) 10 17 (205) 243 (184) (179) -------------- ---------- ---------- ------ --------- ---------- ------ --------- ---------- ---------- ------ --------- Underlying profit before taxation 745 1,238 (40) (41) 733 2 2 2,700 3,847 (30) (30) -------------- ---------- ---------- ------ --------- ---------- ------ --------- ---------- ---------- ------ ---------
1 Comparisons presented on the basis of the current period's transactional currency rate, ensuring like-for-like currency rates between the two periods
2 Not meaningful
Corporate & Institutional Banking income declined 6 per cent with the low interest rate environment leading to a 33 per cent decline in Cash Management more than offsetting an 8 per cent increase in Financial Markets excluding the impact of negative movements in DVA. Lower expenses and lower credit impairments partly offset the income reduction resulting in profits down 11 per cent or 5 per cent excluding DVA. Retail Banking income declined 2 per cent and 1 per cent on a constant currency basis. Higher impairments, including a management overlay of $48 million, was the primary driver of a 14 per cent reduction in profit. Commercial Banking income reduced 12 per cent, which along with impairments more than tripling resulted in profit declining 84 per cent. Private Banking profit was $17 million, an increase of $20 million with lower expenses and impairments partly offset by a 11 per cent reduction in income. Central & other items (segment) recorded a loss of $73 million as income decreased 95 per cent reflecting the impact of both the depressed interest rate environment and lower non-interest income within Treasury.
Greater China & North Asia income declined 7 per cent partly offset by a near two-thirds reduction in impairments which meant profits were down 5 per cent. ASEAN & South Asia profits were flat with a 5 per cent decline in income offset by lower expenses and impairments. Africa & Middle East continues to experience difficult conditions that included the effect of low oil prices in the period, with profits down 93 per cent after a $127 million increase in credit impairments, over half of which was the result of an overlay. Income was down 4 per cent but was up 1 per cent on a constant currency basis. Europe & Americas income decreased 9 per cent and was down 5 per cent excluding the impact of negative movements in DVA, which along with higher impairments resulted in profits declining 40 per cent. Central & other items (region) recorded a loss of $124 million with income declining $230 million due to negative movements in hedge ineffectiveness and lower returns paid to Treasury on the equity provided to the regions in a falling interest rate environment.
Adjusted net interest income and margin
3Q'20 3Q'19(1) Change(2) 2Q'20 Change(2) YTD'20 YTD'19(1) Change(2) $million $million % $million % $million $million % ------------------------- ---------- ---------- ---------- --------- ---------- ---------- --------- Adjusted net interest income(3) 1,626 2,025 (20) 1,688 (4) 5,245 6,029 (13) Average interest-earning assets 524,921 499,260 5 531,131 (1) 522,251 490,293 7 Average interest-bearing liabilities 477,688 453,815 5 479,053 - 473,778 441,029 7 ------------------------- ---------- ---------- --------- ---------- --------- ---------- ---------- --------- Gross yield (%)(4) 2.07 3.30 (123) 2.37 (30) 2.46 3.40 (94) Rate paid (%)(4) 0.92 1.86 (94) 1.21 (29) 1.23 1.95 (72) Net yield (%)(4) 1.15 1.44 (29) 1.16 (1) 1.23 1.45 (22) Net interest margin (%)(4,5) 1.23 1.61 (38) 1.28 (5) 1.34 1.64 (30) ------------------------- ---------- ---------- --------- ---------- --------- ---------- ---------- ---------
1 The Group in 2019 changed its accounting policy for net interest income and the basis of preparation of its net interest margin to better reflect the underlying performance of its banking book. See notes to the financial statements in the 2019 Annual Report for further details.
2 Variance is better/(worse) other than assets and liabilities which is increase/(decrease)
3 Adjusted net interest income is statutory net interest income less funding costs for the trading book
4 Change is the basis points (bps) difference between the two periods rather than the percentage change
5 Adjusted net interest income divided by average interest-earning assets, annualized
Adjusted net interest income was down 20 per cent driven by a 24 per cent decline in net interest margin that fell 38 basis points year-on-year and 5 basis points compared to 2Q'20:
-- Average interest-earning assets decreased 1 per cent in the quarter, driven by a decline in Treasury Markets assets. Gross yields declined 30 basis points compared with the average in the prior quarter and predominantly reflected the flow-through of declining interest rates in the second half of 2019 and those that occurred in the first quarter of 2020
-- Average interest-bearing liabilities were broadly flat in the quarter despite the Group rolling off expensive term deposits. The deposit mix improved with a reduction in Corporate and Retail Banking time deposits and growth in individual current accounts. The rate paid on liabilities decreased 29 basis points compared with the average in the prior quarter reflecting interest rate movements, repricing liabilities lower and a shift in deposit mix
Credit risk summary
Income Statement
3Q'20 3Q'19 Change(1) 2Q'20 Change(1) YTD'20 YTD'19 Change(1) $million $million % $million % $million $million % ------------------------- ---------- ---------- ---------- --------- ---------- ---------- --------- Total credit impairment 353 279 27 611 (42) 1,920 533 260 Of which stage 1 and 2 109 55 98 217 (50) 777 137 467 Of which stage 3 244 224 9 394 (38) 1,143 396 189 ------------------------- ---------- ---------- --------- ---------- --------- ---------- ---------- ---------
1 Variance is increase/(decrease) comparing current reporting period to prior reporting periods
Balance sheet
30.09.20 30.06.20 Change(1) 31.12.19 Change(1) 30.09.19(2) Change(1) $million $million % $million % $million % ------------------------------------ ---------- ---------- --------- ---------- --------- ----------- --------- Gross loans and advances to customers(3) 288,046 282,826 2 274,306 5 275,832 4 ---------- ---------- --------- ---------- --------- ----------- --------- Of which stage 1 251,113 250,278 - 246,149 2 249,123 1 Of which stage 2 27,597 23,739 16 20,759 33 18,928 46 Of which stage 3 9,336 8,809 6 7,398 26 7,781 20 ---------- ---------- --------- ---------- --------- ----------- --------- Expected credit loss provisions (6,666) (6,513) 2 (5,783) 15 (6,130) 9 ---------- ---------- --------- ---------- --------- ----------- --------- Of which stage 1 (571) (476) 20 (402) 42 (373) 53 Of which stage 2 (706) (780) (9) (377) 87 (373) 89 Of which stage 3 (5,389) (5,257) 3 (5,004) 8 (5,384) - ---------- ---------- --------- ---------- --------- ----------- --------- Net loans and advances to customers 281,380 276,313 2 268,523 5 269,703 4 ---------- ---------- --------- ---------- --------- ----------- --------- Of which stage 1 250,542 249,802 - 245,747 2 248,750 1 Of which stage 2 26,891 22,959 17 20,382 32 18,555 45 Of which stage 3 3,947 3,552 11 2,394 65 2,398 65 ---------- ---------- --------- ---------- --------- ----------- --------- Cover ratio of stage 3 before/after 58 / 60 / (2) / 68 / (10) 69 / (11) collateral (%)(4) 76 80 (4) 85 / (9) 86 / (10) Credit grade 12 accounts ($million) 1,954 1,519 29 1,605 22 1,556 26 Early alerts ($million) 13,407 14,406 (7) 5,271 154 4,468 200 Investment grade corporate exposures (%)(4) 59 57 2 61 (2) 63 (4) ------------------------------------ ---------- ---------- --------- ---------- --------- ----------- ---------
1 Variance is increase/(decrease) comparing current reporting period to prior reporting periods
2 3Q'19 Stage 3 balances, provisions and cover ratios have been restated to include interest due but unpaid together with equivalent credit impairment charge
3 Includes reverse repurchase agreements and other similar secured lending held at amortised cost of $4,330 million at 30 September 2020, $4,383 million at 30 June 2020, $1,469 million at 31 December 2019 and $6,132 million at 30 September 2019
4 Change is the percentage points difference between the two points rather than the percentage change
Asset quality remained broadly stable in the third quarter, with high-risk assets remaining at elevated levels due to the impact of COVID-19 on the economic environment. There has been no further deterioration in the negative economic outlook in the third quarter in many of the markets in which the Group operates and these markets are expected to help drive the global economy out of recession in 2021.
Credit impairment increased by $74 million to $353 million compared to 3Q'19 but was $258 million lower in 3Q'20 than in 2Q'20.
Stage 1 and 2 impairments of $109 million were double the level in 3Q'19 but were half the level recorded in 2Q'20 and included a further management overlay of $77 million. The overlay was taken to reflect the latest macroeconomic outlook not captured in the modelled outcome of Corporate & Institutional Banking and the potential impact to delinquencies and flow rates in Retail Banking of extensions to payment relief schemes in some markets as well as the ending of these schemes in India and Malaysia in 3Q'20.
Stage 3 impairments were up 9 per cent to $244 million reflecting the impact of COVID-19 induced macroeconomic deterioration on Retail Banking portfolios and Commercial Banking clients but were down $150 million on the previous quarter.
Gross stage 3 loans and advances to customers of $9.3 billion were up 6 per cent compared with 30 June 2020 primarily due to increased inflows in Corporate & Institutional Banking. These credit-impaired loans represented 3.2 per cent of gross loans and advances, an increase of 13 basis points compared with 30 June 2020.
The Stage 3 cover ratio of 58 per cent was down 2 percentage points compared with the position as at 30 June 2020, and the cover ratio post collateral at 76 per cent was down 4 percentage points, mainly reflecting new inflows into stage 3 where the Group is confident that it has a low probability of a significant loss.
Credit grade 12 balances have increased 29 per cent since 30 June 2020 primarily from new inflows from Early Alert accounts.
Early Alert accounts of $13.4 billion have reduced by $1 billion since 30 June 2020, with 80 per cent of the decline relating to downgrades in the Aviation and Metals & Mining sectors. The Group is continuing to monitor its exposures in the Aviation, Metals & Mining and Oil & Gas sectors particularly carefully, given the unusual stresses caused by the effects of COVID-19 including low oil prices.
The proportion of investment grade corporate exposures has increased since 30 June 2020 by 2 percentage points to 59 per cent.
Restructuring, goodwill impairment and other items
3Q'20 3Q'19 2Q'20 ------------------------------ -------------------------- -------------------------- -------------------------- Restructuring Other items Restructuring Other items Restructuring Other items $million $million $million $million $million $million ------------------------------ ------------- ----------- ------------- ----------- ------------- ----------- Operating income 22 (35) (19) - 38 6 Operating expenses (35) - (44) (22) (25) - Credit impairment (5) - (1) - (3) - Goodwill impairment - (231) - - - - Other impairment (18) - (55) - (15) - Profit from associates and joint ventures (8) - (4) 12 7 - ------------------------------ ------------- ----------- ------------- ----------- ------------- ----------- Profit/(loss) before taxation (44) (266) (123) (10) 2 6 ------------------------------ ------------- ----------- ------------- ----------- ------------- -----------
The Group's statutory performance is adjusted for profits or losses of a capital nature, amounts consequent to investment transactions driven by strategic intent, other infrequent and/or exceptional transactions that are significant or material in the context of the Group's normal business earnings for the period and items which management and investors would ordinarily identify separately when assessing underlying performance period-by period.
Other items of $266 million relates mainly to $231 million of goodwill impairment in UAE ($204 million) and Indonesia ($27 million) due to both a worsening GDP growth outlook and lower interest rate environment. Other items also includes a $35 million dilution loss relating to the initial public offering of the Group's associate China Bohai Bank. Restructuring charges of $44 million primarily reflect redundancy related charges as well as impairments from the Group's discontinued ship leasing business.
Balance sheet and liquidity
30.09.20 30.06.20 Change 31.12.19 Change(1) 30.09.19 Change(1) $million $million % $million % $million % ---------------------------------- ---------- ---------- ------ ---------- --------- ---------- --------- Assets Loans and advances to banks 49,040 50,499 (3) 53,549 (8) 60,743 (19) Loans and advances to customers 281,380 276,313 2 268,523 5 269,703 4 Other assets 424,009 414,773 2 398,326 6 404,354 5 ---------------------------------- ---------- ---------- ------ ---------- --------- ---------- --------- Total assets 754,429 741,585 2 720,398 5 734,800 3 ---------------------------------- ---------- ---------- ------ ---------- --------- ---------- --------- Liabilities Deposits by banks 28,138 28,986 (3) 28,562 (1) 32,603 (14) Customer accounts 417,517 421,153 (1) 405,357 3 387,857 8 Other liabilities 258,204 241,549 7 235,818 9 263,644 (2) ---------------------------------- ---------- ---------- ------ ---------- --------- ---------- --------- Total liabilities 703,859 691,688 2 669,737 5 684,104 3 ---------------------------------- ---------- ---------- ------ ---------- --------- ---------- --------- Equity 50,570 49,897 1 50,661 - 50,696 - ---------------------------------- ---------- ---------- ------ ---------- --------- ---------- --------- Total equity and liabilities 754,429 741,585 2 720,398 5 734,800 3 ---------------------------------- ---------- ---------- ------ ---------- --------- ---------- --------- Advances-to-deposits ratio (%)(2) 63.8% 62.7% 64.2% 65.6% Liquidity coverage ratio (%) 142% 149% 144% 133% ---------------------------------- ---------- ---------- ------ ---------- --------- ---------- ---------
1 Variance is increase/(decrease)comparing current reporting period to prior reporting periods
2 The Group now excludes $14,363 million held with central banks (30.06.20: $13,595 million, 31.12.19: $9,109 million, 30.09.19: $10,632 million) that has been confirmed as repayable at the point of stress
The Group's balance sheet remains strong, liquid and well diversified:
-- Loans and advances to customers increased 2 per cent since 30 June 2020 to $281 billion driven mainly by growth in Retail Mortgages within Greater China & North Asia and Corporate Lending which in part benefited from a temporary increase in balances relating to upcoming initial public offerings in Hong Kong
-- Customer accounts of $418 billion decreased 1 per cent since 30 June 2020 with an increase in operating account balances within Retail Banking current accounts more than offset by a reduction in Corporate and Retail Banking time deposits
-- Other assets increased 2 per cent since 30 June 2020 driven by increased balances at central banks and reverse repurchase agreements. Other liabilities increased 7 per cent from increased repurchase agreements and issued debt securities
The advances-to-deposits ratio increased to 63.8 per cent from 62.7 per cent at 30 June 2020. The liquidity coverage ratio reduced from 149 per cent to 142 per cent as the Group unwound some of the liquidity actions undertaken while funding markets were stressed earlier in the year and remains well above the minimum regulatory requirement of 100 per cent.
Risk-weighted assets
30.09.20 30.06.20 Change(1) 31.12.19 Change(1) 30.09.19 Change(1) $million $million % $million % $million % ----------------- ---------- ---------- --------- ---------- --------- ---------- --------- By risk type Credit risk 217,720 213,136 2 215,664 1 218,198 - Operational risk 26,800 26,800 - 27,620 (3) 27,620 (3) Market risk 22,144 22,616 (2) 20,806 6 22,850 (3) ----------------- ---------- ---------- --------- ---------- --------- ---------- --------- Total RWAs 266,664 262,552 2 264,090 1 268,668 (1) ----------------- ---------- ---------- --------- ---------- --------- ---------- ---------
1 Variance is increase/(decrease) comparing current reporting period to prior reporting periods
Total risk-weighted assets (RWA) increased 2 per cent or $4 billion since 30 June 2020 to $267 billion:
-- Credit Risk RWA increased by $4.6 billion in the third quarter to $217.7 billion driven by negative credit migration of $5.2 billion from the impact of economic disruption related to COVID-19. FX movements of $2.2 billion were offset by a $1.4 billion reduction in counterparty credit risk and a $0.9 billion reduction in revolving credit facilities
-- Operational Risk RWA remained stable at $26.8 billion
-- Market Risk RWA decreased by $0.5 billion to $22.1 billion primarily due to a decline in positions capitalised under standardised rules
Capital base and ratios
30.09.20 30.06.20 Change(1) 31.12.19 Change(1) 30.09.19 Change(1) $million $million % $million % $million % --------------------------------- ---------- ---------- --------- ---------- --------- ---------- --------- CET1 capital 38,449 37,625 2 36,513 5 36,386 6 Additional Tier 1 capital (AT1) 5,611 5,612 - 7,164 (22) 7,153 (22) --------------------------------- ---------- ---------- --------- ---------- --------- ---------- --------- Tier 1 capital 44,060 43,237 2 43,677 1 43,539 1 Tier 2 capital 12,991 13,231 (2) 12,288 6 11,401 14 --------------------------------- ---------- ---------- --------- ---------- --------- ---------- ---------
Total capital 57,051 56,468 1 55,965 2 54,940 4 --------------------------------- ---------- ---------- --------- ---------- --------- ---------- --------- CET1 capital ratio end point (%)(2) 14.4 14.3 0.1 13.8 0.6 13.5 0.9 Total capital ratio transitional (%)(2) 21.4 21.5 (0.1) 21.2 0.2 20.4 1.0 UK leverage ratio (%)(2) 5.2 5.2 - 5.2 - 5.1 0.1 --------------------------------- ---------- ---------- --------- ---------- --------- ---------- ---------
1 Variance is increase/(decrease) comparing current reporting period to prior reporting periods
2 Change is percentage points difference between two points rather than percentage change
The Group is well capitalised with low leverage and high levels of loss-absorbing capacity. Its capital metrics remain well above regulatory thresholds.
The Group's CET1 ratio of 14.4 per cent was 9 basis points higher than as at 30 June 2020, over four percentage points above the Group's latest regulatory minimum of 10.0 per cent and above the top of the 13-14 per cent medium-term target range. The impact on credit RWAs from negative credit migration was a 29 basis point reduction in the CET1 ratio. This was more than offset by the impact of other movements including profit accretion in the quarter, the favourable impact of FX on reserves as well as lower RWA on derivatives and revolving credit facilities. Excluding the impact of IFRS 9 or analogous ECLs transitional arrangements, the Group's CET1 ratio is 14.3 per cent.
The Group's UK leverage ratio of 5.2 per cent is flat to the ratio at 30 June 2020. The Group's leverage ratio remains significantly above its minimum requirement of 3.7 per cent.
The Group continues to target a CET1 ratio of 13-14 per cent in the medium-term.
Outlook
We expect similar fourth quarter seasonality to last year, and anticipate client demand to increase over the course of 2021 as more of the markets in which we operate start to come out of recession. The impact of the significant reduction in interest rates that occurred earlier this year should be fully reflected over the next two quarters with the net interest margin stabilising slightly below the current level in that timeframe.
In this protracted low interest rate environment, we will continue to optimise the drivers of our net interest income and are increasingly focusing on generating more fee-based income, particularly from our Financial Markets and Wealth Management businesses that have good momentum. We will continue to reduce operating expenses wherever possible so that we can maximise our investment in digital capabilities; as previously guided we expect expenses to be below $10 billion in both 2020 and 2021.
Our third quarter credit impairment outcome reinforces our previous view that our impairment costs should be lower in the second half of 2020 than in the first half. The expected economic recovery next year would support asset quality improvement, although we anticipate some sectors and markets will face continuing challenges.
On 25 February 2021 we will release our full-year 2020 results and will provide an update on the progress we are making on our strategic priorities in the context of the prevailing macroeconomic outlook. Given our strong capital position the Board will consider at that time resuming shareholder returns, subject to consultation with our regulators.
Andy Halford
Group Chief Financial Officer
29 October 2020
Supplementary financial information
Underlying performance by client segment
3Q'20 --------------------------------- ------------------------------------------------------------------------ Central Corporate & & Institutional Retail Commercial Private other Banking Banking Banking Banking items Total $million $million $million $million $million $million --------------------------------- ---------------- --------- ---------- --------- --------- --------- Operating income 1,735 1,301 341 129 13 3,519 ---------------- --------- ---------- --------- --------- --------- External 1,680 1,148 320 93 278 3,519 Inter-segment 55 153 21 36 (265) - ---------------- --------- ---------- --------- --------- --------- Operating expenses (1,066) (915) (225) (114) (160) (2,480) --------------------------------- ---------------- --------- ---------- --------- --------- --------- Operating profit/(loss) before impairment losses and taxation 669 386 116 15 (147) 1,039 Credit impairment (132) (129) (97) 2 3 (353) Other impairment (12) - - - (3) (15) Profit from associates and joint ventures - - - - 74 74 --------------------------------- ---------------- --------- ---------- --------- --------- --------- Underlying profit/(loss) before taxation 525 257 19 17 (73) 745 Restructuring (12) (11) (6) (1) (14) (44) Goodwill impairment & other items - - - - (266) (266) --------------------------------- ---------------- --------- ---------- --------- --------- --------- Statutory profit/(loss) before taxation 513 246 13 16 (353) 435 --------------------------------- ---------------- --------- ---------- --------- --------- --------- Total assets 338,690 111,275 32,845 13,626 257,993 754,429 Of which: loans and advances to customers(1) 167,015 108,828 27,353 13,528 19,087 335,811 Total liabilities 402,786 153,278 44,518 18,641 84,636 703,859 Of which: customer accounts(2) 255,631 149,793 41,420 18,507 6,694 472,045 Risk-weighted assets 138,412 44,845 30,495 6,251 46,661 266,664 Underlying return on tangible equity (%) 7.4 11.3 1.3 5.3 (9.3) 4.4 Cost to income ratio (%) 61.4 70.3 66.0 88.4 nm 70.5 --------------------------------- ---------------- --------- ---------- --------- --------- --------- 3Q'19 --------------------------------- ------------------------------------------------------------------------ Central Corporate & & Institutional Retail Commercial Private other Banking Banking Banking Banking items Total $million $million $million $million $million $million --------------------------------- ---------------- --------- ---------- --------- --------- --------- Operating income 1,848 1,323 388 145 274 3,978 ---------------- --------- ---------- --------- --------- --------- External 1,892 1,074 395 86 531 3,978 Inter-segment (44) 249 (7) 59 (257) - ---------------- --------- ---------- --------- --------- --------- Operating expenses (1,098) (941) (244) (134) (84) (2,501) --------------------------------- ---------------- --------- ---------- --------- --------- --------- Operating profit before impairment losses and taxation 750 382 144 11 190 1,477 Credit impairment (153) (82) (28) (14) (2) (279) Other impairment (8) - - - 3 (5) Profit from associates and joint ventures - - - - 45 45 --------------------------------- ---------------- --------- ---------- --------- --------- --------- Underlying profit/(loss) before taxation 589 300 116 (3) 236 1,238 Restructuring (105) (8) - (4) (6) (123)
Other items - - - - (10) (10) --------------------------------- ---------------- --------- ---------- --------- --------- --------- Statutory profit/(loss) before taxation 484 292 116 (7) 220 1,105 --------------------------------- ---------------- --------- ---------- --------- --------- --------- Total assets 351,672 105,467 34,048 15,143 228,470 734,800 Of which: loans and advances to customers(1) 157,380 103,369 29,057 15,007 13,757 318,570 Total liabilities 401,954 143,390 39,300 18,696 80,764 684,104 Of which: customer accounts(2) 241,811 139,875 36,634 18,547 11,367 448,234 Risk-weighted assets 134,388 42,777 32,152 6,649 52,702 268,668 Underlying return on tangible equity (%) 8.6 13.9 7.0 (0.9) 7.7 8.9 Cost to income ratio (%) 59.4 71.1 62.9 92.4 30.7 62.9 --------------------------------- ---------------- --------- ---------- --------- --------- ---------
1 Loans and advances to customers includes FVTPL
2 Customer accounts includes FVTPL and repurchase agreements
Corporate & Institutional Banking
Constant Constant Constant currency currency currency 3Q'20 3Q'19 Change(2) change(1) 2Q'20 Change(2) change(1) YTD'20 YTD'19 Change(2) change(1) $million $million % % $million % % $million $million % % ------------------ ---------- ---------- --------- --------- ---------- --------- --------- ---------- ---------- --------- --------- Operating income 1,735 1,848 (6) (5) 1,833 (5) (6) 5,722 5,382 6 8 Transaction Banking 484 662 (27) (26) 531 (9) (9) 1,604 1,985 (19) (18) ---------- ---------- --------- --------- ---------- --------- --------- ---------- ---------- --------- --------- Trade 162 181 (10) (9) 146 11 13 472 533 (11) (11) Cash Management 322 481 (33) (33) 385 (16) (17) 1,132 1,452 (22) (21) ---------- ---------- --------- --------- ---------- --------- --------- ---------- ---------- --------- --------- Financial Markets 830 801 4 5 897 (7) (9) 2,911 2,280 28 30 ---------- ---------- --------- --------- ---------- --------- --------- ---------- ---------- --------- --------- Foreign Exchange 228 217 5 6 302 (25) (25) 892 720 24 26 Rates 197 168 17 20 328 (40) (41) 892 506 76 81 Commodities 53 34 56 51 76 (30) (30) 164 107 53 53 Credit and Capital Markets 179 163 10 11 245 (27) (27) 439 426 3 4 Capital Structuring Distribution Group 76 79 (4) (3) 47 62 64 180 220 (18) (16) DVA (22) 14 nm nm (201) 89 89 82 (28) nm nm Securities Services 79 88 (10) (8) 79 - - 242 258 (6) (4) Other Financial Markets 40 38 5 11 21 90 86 20 71 (72) (71) ---------- ---------- --------- --------- ---------- --------- --------- ---------- ---------- --------- --------- Corporate Finance 256 248 3 5 245 4 3 752 726 4 6 Lending and Portfolio Management 161 143 13 12 168 (4) (7) 465 408 14 16 Other 4 (6) 167 180 (8) 150 150 (10) (17) 41 29 Operating expenses (1,066) (1,098) 3 2 (1,004) (6) (5) (3,051) (3,200) 5 3 ------------------ ---------- ---------- --------- --------- ---------- --------- --------- ---------- ---------- --------- --------- Operating profit before impairment losses and taxation 669 750 (11) (10) 829 (19) (20) 2,671 2,182 22 23 Credit impairment (132) (153) 14 7 (315) 58 57 (1,117) (269) nm nm Other impairment (12) (8) (50) (71) (38) 68 68 103 (27) nm nm ------------------ ---------- ---------- --------- --------- ---------- --------- --------- ---------- ---------- --------- --------- Underlying profit before taxation 525 589 (11) (12) 476 10 8 1,657 1,886 (12) (12) Restructuring (12) (105) 89 89 6 nm nm (68) (82) 17 15 ------------------ ---------- ---------- --------- --------- ---------- --------- --------- ---------- ---------- --------- --------- Statutory profit before taxation 513 484 6 5 482 6 4 1,589 1,804 (12) (12) ------------------ ---------- ---------- --------- --------- ---------- --------- --------- ---------- ---------- --------- --------- Total assets 338,690 351,672 (4) (3) 336,623 1 - 338,690 351,672 (4) (3) Of which: loans and advances to customers(5) 167,015 157,380 6 7 164,392 2 1 167,015 157,380 6 7 Total liabilities 402,786 401,954 - 1 402,920 - (1) 402,786 401,954 - 1 Of which: customer accounts(6) 255,631 241,811 6 7 257,512 (1) (2) 255,631 241,811 6 7 Risk-weighted assets 138,412 134,388 3 nm 137,150 1 nm 138,412 134,388 3 nm Underlying return on risk-weighted assets (%)(3) 1.5 1.7 (20)bps nm 1.4 10bps nm 1.6 1.9 (30)bps nm Underlying return on tangible equity (%)(3) 7.4 8.6 (120)bps nm 6.8 60bps nm 8.0 9.4 (140)bps nm Cost to income ratio (%)(4) 61.4 59.4 (2.0) (2.2) 54.8 (6.6) (6.6) 53.3 59.5 6.2 5.7 ------------------ ---------- ---------- --------- --------- ---------- --------- --------- ---------- ---------- --------- ---------
1 Comparisons presented on the basis of the current period's transactional currency rate, ensuring like-for-like currency rates between the two periods
2 Variance is better/(worse) other than risk-weighted assets, assets and liabilities which is increase/(decrease)
3 Change is the basis points (bps) difference between the two periods rather than the percentage change
4 Change is the percentage points difference between the two periods rather than the percentage change
5 Loans and advances to customers includes FVTPL
6 Customer accounts includes FVTPL and repurchase agreements
7 Not meaningful
Performance highlights
-- Underlying profit before taxation of $525 million was down 11 per cent driven by lower income, partially offset by lower expenses and lower impairments
-- Operating income of $1,735 million was down 6 per cent (down 3 per cent on a constant currency basis excluding the debit valuation adjustment) primarily as a result of lower Cash Management income due to the low interest rate environment
-- Good balance sheet momentum with loans and advances to customers up 2 per cent since 30 June 2020
-- Risk-weighted assets up $1 billion since 30 June 2020 as a result of increased Credit RWA
-- RoTE decreased 120 basis points to 7.4 per cent
Retail Banking
Constant Constant Constant currency currency currency 3Q'20 3Q'19 Change(2) change(1) 2Q'20 Change(2) change(1) YTD'20 YTD'19 Change(2) change(1) $million $million % % $million % % $million $million % % --------------- ---------- ---------- --------- --------- ---------- --------- --------- ---------- ---------- --------- --------- Operating income 1,301 1,323 (2) (1) 1,216 7 6 3,838 3,926 (2) (1) Transaction Banking 5 5 - - 4 25 - 14 14 - - ---------- ---------- --------- --------- ---------- --------- --------- ---------- ---------- --------- --------- Trade 5 5 - - 4 25 - 14 14 - - ---------- ---------- --------- --------- ---------- --------- --------- ---------- ---------- --------- --------- Wealth Management 471 395 19 19 346 36 35 1,231 1,175 5 5 Retail Products 825 921 (10) (10) 862 (4) (5) 2,585 2,736 (6) (4) ---------- ---------- --------- --------- ---------- --------- --------- ---------- ---------- --------- --------- CCPL and other unsecured lending 309 315 (2) (1) 295 5 3 908 940 (3) (2) Deposits 276 464 (41) (40) 372 (26) (26) 1,079 1,364 (21) (19) Mortgage and Auto 202 115 76 75 159 27 25 490 356 38 40 Other Retail Products 38 27 41 48 36 6 11 108 76 42 45 ---------- ---------- --------- --------- ---------- --------- --------- ---------- ---------- --------- --------- Other - 2 (100) (133) 4 (100) (125) 8 1 nm nm Operating expenses (915) (941) 3 2 (889) (3) (2) (2,695) (2,766) 3 1 --------------- ---------- ---------- --------- --------- ---------- --------- --------- ---------- ---------- --------- --------- Operating profit before impairment losses and taxation 386 382 1 - 327 18 17 1,143 1,160 (1) (1) Credit impairment (129) (82) (57) (56) (233) 45 46 (559) (236) (137) (141) Other impairment - - nm nm (1) 100 100 (1) - nm nm --------------- ---------- ---------- --------- --------- ---------- --------- --------- ---------- ---------- --------- --------- Underlying profit before taxation 257 300 (14) (15) 93 176 177 583 924 (37) (37) Restructuring (11) (8) (38) (57) - nm nm (14) (9) (56) (88) --------------- ---------- ---------- --------- --------- ---------- --------- --------- ---------- ---------- --------- --------- Statutory profit before taxation 246 292 (16) (17) 93 165 166 569 915 (38) (38) --------------- ---------- ---------- --------- --------- ---------- --------- --------- ---------- ---------- --------- --------- Total assets 111,275 105,467 6 4 107,327 4 2 111,275 105,467 6 4 Of which: loans and advances to customers(5) 108,828 103,369 5 4 105,085 4 2 108,828 103,369 5 4 Total liabilities 153,278 143,390 7 6 149,422 3 1 153,278 143,390 7 6 Of which: customer accounts(6) 149,793 139,875 7 6 146,088 3 1 149,793 139,875 7 6 Risk-weighted assets 44,845 42,777 5 nm 44,186 1 nm 44,845 42,777 5 nm Underlying return on risk-weighted assets (%)(3) 2.3 2.8 (50)bps nm 0.8 150bps nm 1.7 2.9 (120)bps nm Underlying return on tangible equity (%)(3) 11.3 13.9 (260)bps nm 4.2 710bps nm 8.7 14.5 (580)bps nm Cost to income ratio (%)(4) 70.3 71.1 0.8 0.4 73.1 2.8 2.9 70.2 70.5 0.3 (0.1) --------------- ---------- ---------- --------- --------- ---------- --------- --------- ---------- ---------- --------- ---------
1 Comparisons presented on the basis of the current period's transactional currency rate, ensuring like-for-like currency rates between the two periods
2 Variance is better/(worse) other than risk-weighted assets, assets and liabilities which is increase/(decrease)
3 Change is the basis points (bps) difference between the two periods rather than the percentage change
4 Change is the percentage points difference between the two periods rather than the percentage change
5 Loans and advances to customers includes FVTPL
6 Customer accounts includes FVTPL and repurchase agreements
7 Not meaningful
Performance highlights
-- Underlying profit before taxation of $257 million was down 14 per cent predominantly driven by lower income and higher impairments, including a management overlay of $48 million, partially offset by lower expenses
-- Operating income of $1,301 million was down 2 per cent, and was down 1 per cent on a constant currency basis, in challenging conditions, with a 2 per cent increase in Greater China & North Asia more than offset by a 10 per cent decline (down 5 per cent on a constant currency basis) in Africa & Middle East and a 4 per cent decline in ASEAN & South Asia
-- Good balance sheet momentum with loans and advances to customers up 4 per cent and customer accounts up 3 per cent since 30 June 2020
-- RoTE decreased from 13.9 per cent to 11.3 per cent, but was up 710 basis points since 30 June 2020
Commercial Banking
Constant Constant Constant currency currency currency 3Q'20 3Q'19 Change(2) change(1) 2Q'20 Change(2) change(1) YTD'20 YTD'19 Change(2) change(1) $million $million % % $million % % $million $million % % ------------------ ---------- ---------- --------- --------- ---------- --------- --------- ---------- ---------- --------- --------- Operating income 341 388 (12) (11) 350 (3) (3) 1,081 1,199 (10) (8) Transaction Banking 175 220 (20) (20) 186 (6) (6) 567 666 (15) (14) ---------- ---------- --------- --------- ---------- --------- --------- ---------- ---------- --------- --------- Trade 87 96 (9) (7) 80 9 7 258 294 (12) (11) Cash Management 88 124 (29) (29) 106 (17) (17) 309 372 (17) (16) ---------- ---------- --------- --------- ---------- --------- --------- ---------- ---------- --------- --------- Financial Markets 79 76 4 5 73 8 7 246 262 (6) (4) ---------- ---------- --------- --------- ---------- --------- --------- ---------- ---------- --------- --------- Foreign Exchange 38 44 (14) (9) 41 (7) (5) 132 143 (8) (5) Rates 4 8 (50) (44) 11 (64) (55) 26 27 (4) (4) Commodities 7 5 40 40 6 17 17 22 21 5 - Credit and Capital Markets 9 4 125 200 5 80 80 25 26 (4) - Capital Structuring Distribution
Group 15 8 88 88 5 200 200 24 23 4 4 Other Financial Markets 6 7 (14) (43) 5 20 (33) 17 22 (23) (15) ---------- ---------- --------- --------- ---------- --------- --------- ---------- ---------- --------- --------- Corporate Finance 28 33 (15) (15) 24 17 8 79 87 (9) (7) Lending and Portfolio Management 61 58 5 11 64 (5) - 184 177 4 6 Wealth Management 1 - nm (100) - nm nm 1 1 - (100) Retail Products 1 2 (50) (50) 1 - - 4 5 (20) - ---------- ---------- --------- --------- ---------- --------- --------- ---------- ---------- --------- --------- Deposits 1 2 (50) (50) 1 - - 4 5 (20) - ---------- ---------- --------- --------- ---------- --------- --------- ---------- ---------- --------- --------- Other (4) (1) nm nm 2 nm nm - 1 (100) nm Operating expenses (225) (244) 8 6 (212) (6) (4) (646) (689) 6 4 ------------------ ---------- ---------- --------- --------- ---------- --------- --------- ---------- ---------- --------- --------- Operating profit before impairment losses and taxation 116 144 (19) (20) 138 (16) (14) 435 510 (15) (14) Credit impairment (97) (28) nm nm (58) (67) (67) (234) (57) nm nm ------------------ ---------- ---------- --------- --------- ---------- --------- --------- ---------- ---------- --------- --------- Underlying profit before taxation 19 116 (84) (84) 80 (76) (75) 201 453 (56) (55) Restructuring (6) - nm nm (4) (50) (75) (24) - nm nm ------------------ ---------- ---------- --------- --------- ---------- --------- --------- ---------- ---------- --------- --------- Statutory profit before taxation 13 116 (89) (90) 76 (83) (84) 177 453 (61) (61) ------------------ ---------- ---------- --------- --------- ---------- --------- --------- ---------- ---------- --------- --------- Total assets 32,845 34,048 (4) (4) 33,158 (1) (2) 32,845 34,048 (4) (4) Of which: loans and advances to customers(5) 27,353 29,057 (6) (6) 28,151 (3) (4) 27,353 29,057 (6) (6) Total liabilities 44,518 39,300 13 12 43,578 2 1 44,518 39,300 13 12 Of which: customer accounts(6) 41,420 36,634 13 12 40,507 2 1 41,420 36,634 13 12 Risk-weighted assets 30,495 32,152 (5) nm 30,856 (1) nm 30,495 32,152 (5) nm Underlying return on risk-weighted assets (%)(3) 0.2 1.4 (120)bps nm 1.0 (80)bps nm 0.9 1.8 (90)bps nm Underlying return on tangible equity (%)(3) 1.3 7.0 (570)bps nm 5.1 (380)bps nm 4.3 8.8 (450)bps nm Cost to income ratio (%)(4) 66.0 62.9 (3.1) (3.8) 60.6 (5.4) (4.3) 59.8 57.5 (2.3) (2.5) ------------------ ---------- ---------- --------- --------- ---------- --------- --------- ---------- ---------- --------- ---------
1 Comparisons presented on the basis of the current period's transactional currency rate, ensuring like-for-like currency rates between the two periods
2 Variance is better/(worse) other than risk-weighted assets, assets and liabilities which is increase/(decrease)
3 Change is the basis points (bps) difference between the two periods rather than the percentage change
4 Change is the percentage points difference between the two periods rather than the percentage change
5 Loans and advances to customers includes FVTPL
6 Customer accounts includes FVTPL and repurchase agreements
7 Not meaningful
Performance highlights
-- Underlying profit before taxation of $19 million was down 84 per cent mainly due to lower income and impairments more than tripling, partially offset by lower expenses
-- Operating income of $341 million was down 12 per cent predominantly driven by Transaction Banking due to the low interest rate environment and a slowdown in global trade volumes. Income was down 16 per cent in Africa & Middle East, down 12 per cent in Greater China & North Asia and down 10 per cent in ASEAN & South Asia
-- RoTE decreased from 7.0 per cent to 1.3 per cent
Private Banking
Constant Constant Constant currency currency currency 3Q'20 3Q'19 Change(2) change(1) 2Q'20 Change(2) change(1) YTD'20 YTD'19 Change(2) change(1) $million $million % % $million % % $million $million % % --------------- ---------- ---------- --------- --------- ---------- --------- --------- ---------- ---------- --------- --------- Operating income 129 145 (11) (11) 138 (7) (8) 429 451 (5) (5) Transaction Banking 1 - nm nm - nm nm 1 - nm nm ---------- ---------- --------- --------- ---------- --------- --------- ---------- ---------- --------- --------- Trade 1 - nm nm - nm nm 1 - nm nm ---------- ---------- --------- --------- ---------- --------- --------- ---------- ---------- --------- --------- Corporate Finance - - nm nm - nm nm - 2 (100) (100) Wealth Management 96 93 3 4 88 9 8 300 288 4 5 Retail Products 33 52 (37) (38) 50 (34) (36) 129 161 (20) (20) ---------- ---------- --------- --------- ---------- --------- --------- ---------- ---------- --------- --------- Deposits 24 44 (45) (45) 40 (40) (40) 103 136 (24) (24) Mortgage and Auto 9 8 13 - 10 (10) (10) 26 25 4 - ---------- ---------- --------- --------- ---------- --------- --------- ---------- ---------- --------- --------- Other (1) - nm nm - nm nm (1) - nm nm Operating expenses (114) (134) 15 16 (115) 1 3 (353) (387) 9 8 --------------- ---------- ---------- --------- --------- ---------- --------- --------- ---------- ---------- --------- --------- Operating profit before impairment losses and taxation 15 11 36 67 23 (35) (32) 76 64 19 17 Credit impairment 2 (14) 114 114 (4) 150 150 (3) 33 (109) (109) --------------- ---------- ---------- --------- --------- ---------- --------- --------- ---------- ---------- --------- --------- Underlying profit/(loss) before taxation 17 (3) nm nm 19 (11) (6) 73 97 (25) (26) Restructuring (1) (4) 75 100 (1) - 100 (4) (5) 20 50 --------------- ---------- ---------- --------- --------- ---------- --------- --------- ---------- ---------- --------- --------- Statutory profit/(loss) before taxation 16 (7) nm nm 18 (11) 6 69 92 (25) (24) --------------- ---------- ---------- --------- --------- ---------- --------- --------- ---------- ---------- --------- ---------
Total assets 13,626 15,143 (10) (11) 13,202 3 2 13,626 15,143 (10) (11) Of which: loans and advances to customers(5) 13,528 15,007 (10) (11) 13,097 3 2 13,528 15,007 (10) (11) Total liabilities 18,641 18,696 - (2) 18,842 (1) (2) 18,641 18,696 - (2) Of which: customer accounts(6) 18,507 18,547 - (2) 18,725 (1) (2) 18,507 18,547 - (2) Risk-weighted assets 6,251 6,649 (6) nm 6,128 2 nm 6,251 6,649 (6) nm Underlying return on risk-weighted assets (%)(3) 1.1 (0.2) 130bps nm 1.2 (10)bps nm 1.5 2.0 (50)bps nm Underlying return on tangible equity (%)(3) 5.3 (0.9) 620bps nm 5.9 (60)bps nm 7.4 10.0 (260)bps nm Cost to income ratio (%)(4) 88.4 92.4 4.0 5.5 83.3 (5.1) (4.1) 82.3 85.8 3.5 3.3 --------------- ---------- ---------- --------- --------- ---------- --------- --------- ---------- ---------- --------- ---------
1 Comparisons presented on the basis of the current period's transactional currency rate, ensuring like-for-like currency rates between the two periods
2 Variance is better/(worse) other than risk-weighted assets, assets and liabilities which is increase/(decrease)
3 Change is the basis points (bps) difference between the two periods rather than the percentage change
4 Change is the percentage points difference between the two periods rather than the percentage change
5 Loans and advances to customers includes FVTPL
6 Customer accounts includes FVTPL and repurchase agreements
7 Not meaningful
Performance highlights
-- Underlying profit before taxation of $17 million was up $20 million, with lower income more than offset by lower expenses and one-off credit impairment provision included in the previous year
-- Operating income of $129 million was down 11 per cent, primarily due to a decline in Retail Deposits partly mitigated by continued resilient performance from Wealth Management
-- Assets under management at $67 billion was up 6 per cent since 30 June 2020 mainly from Net New Money inflow and positive market valuation
-- RoTE increased from (0.9) per cent to 5.3 per cent following the return to profitability
Central & other items (segment)
Constant Constant Constant currency currency currency 3Q'20 3Q'19 Change(2) change(1) 2Q'20 Change(2) change(1) YTD'20 YTD'19 Change(2) change(1) $million $million % % $million % % $million $million % % --------------- ---------- ---------- --------- ---------- --------- --------- ---------- ---------- --------- --------- Operating income 13 274 (95) (96) 183 (93) (95) 496 716 (31) (30) Treasury 40 335 (88) (88) 178 (78) (78) 543 894 (39) (39) Other (27) (61) 56 43 5 nm nm (47) (178) 74 73 Operating expenses (160) (84) (90) (104) (135) (19) (6) (448) (428) (5) (13) --------------- ---------- ---------- --------- --------- ---------- --------- --------- ---------- ---------- --------- --------- Operating profit/(loss) before impairment losses and taxation (147) 190 (177) (170) 48 nm nm 48 288 (83) (85) Credit impairment 3 (2) nm 200 (1) nm nm (7) (4) (75) (133) Other impairment (3) 3 (200) (200) (3) - - (5) 1 nm nm Profit from associates and joint ventures 74 45 64 61 21 nm nm 150 202 (26) (26) --------------- ---------- ---------- --------- --------- ---------- --------- --------- ---------- ---------- --------- --------- Underlying profit/(loss) before taxation (73) 236 (131) (128) 65 nm nm 186 487 (62) (64) Restructuring (14) (6) (133) (114) 1 nm nm (24) (41) 41 41 Goodwill impairment & other items (266) (10) nm nm 6 nm nm (504) (191) (164) (163) --------------- ---------- ---------- --------- --------- ---------- --------- --------- ---------- ---------- --------- --------- Statutory profit/(loss) before taxation (353) 220 nm nm 72 nm nm (342) 255 nm nm --------------- ---------- ---------- --------- --------- ---------- --------- --------- ---------- ---------- --------- --------- Total assets 257,993 228,470 13 12 251,275 3 2 257,993 228,470 13 12 Of which: loans and advances to customers(5) 19,087 13,757 39 37 17,440 9 7 19,087 13,757 39 37 Total liabilities 84,636 80,764 5 4 76,926 10 9 84,636 80,764 5 4 Of which: customer accounts(6) 6,694 11,367 (41) (41) 6,632 1 (1) 6,694 11,367 (41) (41) Risk-weighted assets 46,661 52,702 (11) nm 44,232 5 nm 46,661 52,702 (11) nm Underlying return on risk-weighted assets (%)(3) (0.6) 1.8 (240)bps nm 0.6 (120)bps nm 0.5 1.2 (70)bps nm Underlying return on tangible equity (%)(3) (9.3) 7.7 nm nm (9.9) 60bps nm (5.0) 1.1 (610)bps nm Cost to income ratio (%) (excluding UK bank levy)(4) nm 30.7 nm nm 73.8 nm nm 90.3 59.8 (30.5) (34.8) --------------- ---------- ---------- --------- --------- ---------- --------- --------- ---------- ---------- --------- ---------
1 Comparisons presented on the basis of the current period's transactional currency rate, ensuring like-for-like currency rates between the two periods
2 Variance is better/(worse) other than risk-weighted assets, assets and liabilities which is increase/(decrease)
3 Change is the basis points (bps) difference between the two periods rather than the percentage change
4 Change is the percentage points difference between the two periods rather than the percentage change
5 Loans and advances to customers includes FVTPL
6 Customer accounts includes FVTPL and repurchase agreements
7 Not meaningful
Performance highlights
-- Treasury income declined 88 per cent broadly split equally across net interest income and other income. The decline in net interest income reflects reduced returns on deployed assets within Treasury Markets. The reduction in other income is due to a $67 million negative movement in hedging ineffectiveness, including hedge mark-to-market losses incurred in 3Q'20, reduced FX swap income and lower realisation gains
-- Expenses increased $76 million mainly as a result of several one-off costs including leave encashment provisions and regulatory related costs
-- Profit from associates and joint ventures was up 64 per cent to $74 million. The Group now recognises its share of profits of its associate China Bohai Bank based upon its most recently available quarterly results: for 3Q'20 reporting purposes this was based on a 19.99 per cent share of China Bohai Bank's 2Q'20 performance, historically the strongest quarter of the year. The Group's share of China Bohai Bank reduced to 16.26 per cent in the third quarter and this will be the share that is reported in future quarters
Underlying performance by region
3Q'20 --------------------------------- ------------------------------------------------------------------- Africa Central Greater ASEAN & & Europe & China & South Middle & other North Asia Asia East Americas items Total $million $million $million $million $million $million --------------------------------- ----------- --------- ---------- --------- --------- --------- Operating income 1,471 1,034 590 423 1 3,519 Operating expenses (938) (663) (426) (360) (93) (2,480) --------------------------------- ----------- --------- ---------- --------- --------- --------- Operating profit/(loss) before impairment losses and taxation 533 371 164 63 (92) 1,039 Credit impairment (29) (128) (154) (37) (5) (353) Other impairment - - 1 11 (27) (15) Profit from associates and joint ventures 74 - - - - 74 --------------------------------- ----------- --------- ---------- --------- --------- --------- Underlying profit/(loss) before taxation 578 243 11 37 (124) 745 Restructuring (15) (7) (11) (8) (3) (44) Goodwill impairment & other items (35) - - - (231) (266) --------------------------------- ----------- --------- ---------- --------- --------- --------- Statutory profit/(loss) before taxation 528 236 - 29 (358) 435 --------------------------------- ----------- --------- ---------- --------- --------- --------- Total assets 298,430 150,651 61,472 233,772 10,104 754,429 Of which: loans and advances to customers(1) 150,598 86,540 31,408 67,265 - 335,811 Total liabilities 266,617 130,794 40,275 225,332 40,841 703,859 Of which: customer accounts(2) 215,291 101,376 32,630 122,748 - 472,045 Risk-weighted assets 92,863 80,123 52,524 43,818 (2,664) 266,664 Cost to income ratio (%) 63.8 64.1 72.2 85.1 nm 70.5 --------------------------------- ----------- --------- ---------- --------- --------- --------- 3Q'19 --------------------------------- ------------------------------------------------------------------- Africa Central Greater ASEAN & & Europe & China & South Middle & other North Asia Asia East Americas items Total $million $million $million $million $million $million --------------------------------- ----------- --------- ---------- --------- --------- --------- Operating income 1,578 1,085 617 467 231 3,978 Operating expenses (944) (671) (443) (390) (53) (2,501) --------------------------------- ----------- --------- ---------- --------- --------- --------- Operating profit before impairment losses and taxation 634 414 174 77 178 1,477 Credit impairment (70) (172) (27) (15) 5 (279) Other impairment 3 - - - (8) (5) Profit from associates and joint ventures 43 - - - 2 45 --------------------------------- ----------- --------- ---------- --------- --------- --------- Underlying profit before taxation 610 242 147 62 177 1,238 Restructuring (51) 1 (5) (6) (62) (123) Other items - 12 - - (22) (10) --------------------------------- ----------- --------- ---------- --------- --------- --------- Statutory profit before taxation 559 255 142 56 93 1,105 --------------------------------- ----------- --------- ---------- --------- --------- --------- Total assets 273,854 150,947 57,696 240,925 11,378 734,800 Of which: loans and advances to customers(1) 134,775 83,866 29,243 70,686 - 318,570 Total liabilities 237,881 127,451 35,995 244,799 37,978 684,104 Of which: customer accounts(2) 190,716 97,478 28,958 131,082 - 448,234 Risk-weighted assets 86,367 91,668 49,865 44,423 (3,655) 268,668 Cost to income ratio (%) 59.8 61.8 71.8 83.5 22.9 62.9 --------------------------------- ----------- --------- ---------- --------- --------- ---------
1 Loans and advances to customers includes FVTPL
2 Customer accounts includes FVTPL and repurchase agreements
Greater China & North Asia
Constant Constant Constant currency currency currency 3Q'20 3Q'19 Change(2) change(1) 2Q'20 Change(2) change(3) YTD'20 YTD'19 Change(2) change(1) $million $million % % $million % % $million $million % % --------------- ---------- ---------- --------- ---------- --------- --------- ---------- ---------- --------- --------- Operating income 1,471 1,578 (7) (8) 1,448 2 - 4,615 4,658 (1) (1) Operating expenses (938) (944) 1 2 (880) (7) (6) (2,718) (2,770) 2 2 --------------- ---------- ---------- --------- --------- ---------- --------- --------- ---------- ---------- --------- --------- Operating profit before impairment losses and taxation 533 634 (16) (17) 568 (6) (8) 1,897 1,888 - 1 Credit impairment (29) (70) 59 60 (91) 68 70 (318) (140) (127) (127) Other impairment - 3 (100) (100) (14) 100 100 (15) (5) (200) nm Profit from associates and joint ventures 74 43 72 70 21 nm nm 148 196 (24) (25) --------------- ---------- ---------- --------- --------- ---------- --------- --------- ---------- ---------- --------- --------- Underlying profit before taxation 578 610 (5) (6) 484 19 18 1,712 1,939 (12) (11) Restructuring (15) (51) 71 71 7 nm nm (58) (54) (7) (9) Other items (35) - nm nm - nm nm (35) - nm nm --------------- ---------- ---------- --------- --------- ---------- --------- --------- ---------- ---------- --------- --------- Statutory profit before taxation 528 559 (6) (6) 491 8 7 1,619 1,885 (14) (14) --------------- ---------- ---------- --------- --------- ---------- --------- --------- ---------- ---------- --------- --------- Total assets 298,430 273,854 9 7 289,352 3 2 298,430 273,854 9 7 Of which: loans and advances to customers(4) 150,598 134,775 12 10 144,794 4 3 150,598 134,775 12 10 Total liabilities 266,617 237,881 12 10 258,322 3 2 266,617 237,881 12 10 Of which: customer accounts(5) 215,291 190,716 13 11 214,586 - (1) 215,291 190,716 13 11 Risk-weighted assets 92,863 86,367 8 nm 89,139 4 nm 92,863 86,367 8 nm Cost to income ratio
(%)(3) 63.8 59.8 (4.0) (3.9) 60.8 (0.1) (3.2) 58.9 59.5 0.6 0.7 --------------- ---------- ---------- --------- --------- ---------- --------- --------- ---------- ---------- --------- ---------
1 Comparisons presented on the basis of the current period's transactional currency rate, ensuring like-for-like currency rates between the two periods
2 Variance is better/(worse) other than risk-weighted assets, assets and liabilities which is increase/(decrease)
3 Change is the percentage points difference between the two periods rather than the percentage change
4 Loans and advances to customers includes FVTPL
5 Customer accounts includes FVTPL and repurchase agreements
6 Not meaningful
Performance highlights
-- Underlying profit before taxation of $578 million was down 5 per cent driven by lower income, partly offset by a near two-thirds reduction in impairments and lower expenses
-- Operating income of $1,471 million was down 7 per cent, predominantly driven by a weaker performance in Cash Management and Retail Deposits due to the low interest rate environment, partially offsetting by strong performance in Wealth Management and Financial Markets
-- Loans and advances to customers were up 4 per cent since 30 June 2020, predominantly driven by Corporate Lending in Hong Kong and Retail Mortgages in Korea and Hong Kong
-- Risk-weighted assets were up $4 billion since 30 June 2020, driven by Credit RWA (predominantly Corporate & Institutional Banking) broadly in line with asset growth
ASEAN & South Asia
Constant Constant Constant currency currency currency 3Q'20 3Q'19 Change(2) change(1) 2Q'20 Change(2) change(1) YTD'20 YTD'19 Change(2) change(1) $million $million % % $million % % $million $million % % --------------- ---------- ---------- --------- ---------- --------- --------- ---------- ---------- --------- --------- Operating income 1,034 1,085 (5) (3) 1,099 (6) (8) 3,410 3,221 6 8 Operating expenses (663) (671) 1 (1) (622) (7) (4) (1,910) (1,963) 3 - --------------- ---------- ---------- --------- --------- ---------- --------- --------- ---------- ---------- --------- --------- Operating profit before impairment losses and taxation 371 414 (10) (9) 477 (22) (24) 1,500 1,258 19 21 Credit impairment (128) (172) 26 24 (387) 67 68 (966) (256) nm nm Other impairment - - nm nm (1) 100 100 165 - nm nm --------------- ---------- ---------- --------- --------- ---------- --------- --------- ---------- ---------- --------- --------- Underlying profit before taxation 243 242 - 1 89 173 160 699 1,002 (30) (30) Restructuring (7) 1 nm nm (7) - (14) (14) (15) 7 - Other items - 12 (100) (100) - nm nm - 35 (100) (100) --------------- ---------- ---------- --------- --------- ---------- --------- --------- ---------- ---------- --------- --------- Statutory profit before taxation 236 255 (7) (7) 82 188 171 685 1,022 (33) (33) --------------- ---------- ---------- --------- --------- ---------- --------- --------- ---------- ---------- --------- --------- Total assets 150,651 150,947 - - 154,508 (2) (4) 150,651 150,947 - - Of which: loans and advances to customers(4) 86,540 83,866 3 3 84,949 2 - 86,540 83,866 3 3 Total liabilities 130,794 127,451 3 3 131,993 (1) (2) 130,794 127,451 3 3 Of which: customer accounts(5) 101,376 97,478 4 4 100,324 1 - 101,376 97,478 4 4 Risk-weighted assets 80,123 91,668 (13) nm 80,040 - nm 80,123 91,668 (13) nm Cost to income ratio(%)(3) 64.1 61.8 (2.3) (2.4) 56.6 - (7.4) 56.0 60.9 4.9 4.6 --------------- ---------- ---------- --------- --------- ---------- --------- --------- ---------- ---------- --------- ---------
1 Comparisons presented on the basis of the current period's transactional currency rate, ensuring like-for-like currency rates between the two periods
2 Variance is better/(worse) other than risk-weighted assets, assets and liabilities which is increase/(decrease)
3 Change is the percentage points difference between the two periods rather than the percentage change
4 Loans and advances to customers includes FVTPL
5 Customer accounts includes FVTPL and repurchase agreements
6 Not meaningful
Performance highlights
-- Underlying profit before taxation of $243 million was broadly flat year-on-year, with lower income offset by reduced credit impairment and lower expenses
-- Operating income of $1,034 million was 5 per cent lower (down 2 per cent on a constant currency basis excluding the debit valuation adjustment), predominantly driven by declines across Private Banking, Commercial Banking and Retail Banking due to margin compression partially offset by an increase in Corporate & Institutional Banking due to a strong performance in Financial Markets
-- Loans and advances to customers grew 2 per cent since 30 June 2020 and customer accounts were up 1 per cent. Risk-weighted assets remained flat since 30 June 2020
Africa & Middle East
Constant Constant Constant currency currency currency 3Q'20 3Q'19 Change(2) change(1) 2Q'20 Change(2) change(1) YTD'20 YTD'19 Change(2) change(1) $million $million % % $million % % $million $million % % --------------- ---------- ---------- --------- ---------- --------- --------- ---------- ---------- --------- --------- Operating income 590 617 (4) 1 594 (1) - 1,845 1,957 (6) (1) Operating expenses (426) (443) 4 (3) (390) (9) (9) (1,219) (1,293) 6 - --------------- ---------- ---------- --------- --------- ---------- --------- --------- ---------- ---------- --------- --------- Operating profit before impairment losses and taxation 164 174 (6) (5) 204 (20) (17) 626 664 (6) (3) Credit impairment (154) (27) nm nm (159) 3 (2) (524) (76) nm nm Other impairment 1 - nm nm (2) 150 150 (1) - nm nm --------------- ---------- ---------- --------- --------- ---------- --------- --------- ---------- ---------- --------- --------- Underlying profit before taxation 11 147 (93) (94) 43 (74) (80) 101 588 (83) (82) Restructuring (11) (5) (120) (67) (2) nm nm (20) (7) (186) (171) --------------- ---------- ---------- --------- --------- ---------- --------- --------- ---------- ---------- --------- --------- Statutory profit before taxation - 142 (100) (101) 41 (100) (102) 81 581 (86) (86) --------------- ---------- ---------- --------- --------- ---------- --------- --------- ---------- ---------- --------- --------- Total assets 61,472 57,696 7 10 63,927 (4) (4) 61,472 57,696 7 10 Of which: loans and advances to customers(4) 31,408 29,243 7 10 33,083 (5) (5) 31,408 29,243 7 10 Total liabilities 40,275 35,995 12 14 40,740 (1) (2) 40,275 35,995 12 14 Of which: customer accounts(5) 32,630 28,958 13 15 32,530 - - 32,630 28,958 13 15 Risk-weighted assets 52,524 49,865 5 nm 52,009 1 nm 52,524 49,865 5 nm Cost to income
ratio(%)(3) 72.2 71.8 (0.4) (1.6) 65.7 (6.5) (5.8) 66.1 66.1 - (0.7) --------------- ---------- ---------- --------- --------- ---------- --------- --------- ---------- ---------- --------- ---------
1 Comparisons presented on the basis of the current period's transactional currency rate, ensuring like-for-like currency rates between the two periods
2 Variance is better/(worse) other than risk-weighted assets, assets and liabilities which is increase/(decrease)
3 Change is the percentage points difference between the two periods rather than the percentage change
4 Loans and advances to customers includes FVTPL
5 Customer accounts includes FVTPL and repurchase agreements
6 Not meaningful
Performance highlights
-- Underlying profit before taxation of $11 million was 93 per cent lower year-on-year reflecting the impact of a $127 million increase in credit impairments, of which over half was the result of a management overlay in response to continued difficult macroeconomic conditions
-- Operating income of $590 million was down 4 per cent but up 1 per cent on a constant currency basis impacted by the low interest rate environment while continued cost discipline has resulted in expenses down 4 per cent, reflecting the gains from the digital strategy
-- Customer accounts remained flat since 30 June 2020 and loans and advances to customers reduced 5 per cent
Europe & Americas
Constant Constant Constant currency currency currency 3Q'20 3Q'19 Change(2) change(1) 2Q'20 Change(2) change(1) YTD'20 YTD'19 Change(2) change(1) $million $million % % $million % % $million $million % % --------------- ---------- ---------- --------- ---------- --------- --------- ---------- ---------- --------- --------- Operating income 423 467 (9) (13) 549 (23) (24) 1,518 1,261 20 19 Operating expenses (360) (390) 8 9 (318) (13) (11) (1,021) (1,105) 8 7 --------------- ---------- ---------- --------- --------- ---------- --------- --------- ---------- ---------- --------- --------- Operating profit before impairment losses and taxation 63 77 (18) (30) 231 (73) (72) 497 156 nm 184 Credit impairment (37) (15) (147) (164) 22 nm nm (117) (81) (44) (48) Other impairment 11 - nm nm 2 nm nm 13 - nm nm --------------- ---------- ---------- --------- --------- ---------- --------- --------- ---------- ---------- --------- --------- Underlying profit before taxation 37 62 (40) (50) 255 (85) (85) 393 75 nm nm Restructuring (8) (6) (33) (29) 4 nm nm (18) (21) 14 19 --------------- ---------- ---------- --------- --------- ---------- --------- --------- ---------- ---------- --------- --------- Statutory profit before taxation 29 56 (48) (58) 259 (89) (89) 375 54 nm nm --------------- ---------- ---------- --------- --------- ---------- --------- --------- ---------- ---------- --------- --------- Total assets 233,772 240,925 (3) (2) 223,226 5 4 233,772 240,925 (3) (2) Of which: loans and advances to customers(4) 67,265 70,686 (5) (4) 65,339 3 2 67,265 70,686 (5) (4) Total liabilities 225,332 244,799 (8) (6) 217,300 4 3 225,332 244,799 (8) (6) Of which: customer accounts(5) 122,748 131,082 (6) (3) 122,024 1 - 122,748 131,082 (6) (3) Risk-weighted assets 43,818 44,423 (1) nm 44,326 (1) nm 43,818 44,423 (1) nm Cost to income ratio (%)(3) 85.1 83.5 (1.6) (3.7) 57.9 (27.2) (26.6) 67.3 87.6 20.3 18.9 --------------- ---------- ---------- --------- --------- ---------- --------- --------- ---------- ---------- --------- ---------
1 Comparisons presented on the basis of the current period's transactional currency rate, ensuring like-for-like currency rates between the two periods
2 Variance is better/(worse) other than risk-weighted assets, assets and liabilities which is increase/(decrease)
3 Change is the percentage points difference between the two periods rather than the percentage change
4 Loans and advances to customers includes FVTPL
5 Customer accounts includes FVTPL and repurchase agreements
6 Not meaningful
Performance highlights
-- Underlying profit before taxation of $37 million was down 50 per cent on a constant currency basis (28 per cent on a constant currency basis excluding the debit valuation adjustment) driven by Cash Management and Retail Products due to the low interest rate environment, partially offset by an expense reduction of 8 per cent and income growth in Financial Markets and Corporate Finance
-- Loans and advances to customers grew 3 per cent since 30 June 2020 and customer accounts grew 1 per cent
Central & other items (region)
Constant Constant Constant currency currency currency 3Q'20 3Q'19 Change(2) change(1) 2Q'20 Change(2) change(1) YTD'20 YTD'19 Change(2) change(1) $million $million % % $million % % $million $million % % -------------- ---------- ---------- --------- ---------- --------- --------- ---------- ---------- --------- --------- Operating income 1 231 (100) (100) 30 (97) (97) 178 577 (69) (69) Operating expenses (93) (53) (75) (84) (145) 36 42 (325) (339) 4 (5) -------------- ---------- ---------- --------- --------- ---------- --------- --------- ---------- ---------- --------- --------- Operating profit/(loss) before impairment losses and taxation (92) 178 (152) (148) (115) 20 29 (147) 238 (162) (158) Credit impairment (5) 5 (200) nm 4 nm nm 5 20 (75) (75) Other impairment (27) (8) nm nm (27) - (4) (65) (21) nm nm Profit from associates and joint ventures - 2 (100) (150) - nm nm 2 6 (67) (80) -------------- ---------- ---------- --------- --------- ---------- --------- --------- ---------- ---------- --------- --------- Underlying profit/(loss) before taxation (124) 177 (170) (168) (138) 10 17 (205) 243 (184) (179) Restructuring (3) (62) 95 95 - nm nm (24) (40) 40 36 Goodwill impairment & other items (231) (22) nm nm 6 nm nm (469) (226) (108) (108) -------------- ---------- ---------- --------- --------- ---------- --------- --------- ---------- ---------- --------- --------- Statutory profit/(loss) before taxation (358) 93 nm nm (132) (171) (150) (698) (23) nm nm -------------- ---------- ---------- --------- --------- ---------- --------- --------- ---------- ---------- --------- --------- Total assets 10,104 11,378 (11) (12) 10,572 (4) (5) 10,104 11,378 (11) (12) Total liabilities 40,841 37,978 8 8 43,333 (6) (6) 40,841 37,978 8 8 Risk-weighted assets (2,664) (3,655) 27 nm (2,962) 10 nm (2,664) (3,655) 27 nm Cost to income ratio (%) (excluding UK bank levy)(3) nm 22.9 nm nm 483.3 nm nm 182.6 58.8 (123.8) (132.2) -------------- ---------- ---------- --------- --------- ---------- --------- --------- ---------- ---------- --------- ---------
1 Comparisons presented on the basis of the current period's transactional currency rate, ensuring like-for-like currency rates between the two periods
2 Variance is better/(worse) other than risk-weighted assets, assets and liabilities which is increase/(decrease)
3 Change is the percentage points difference between the two periods rather than the percentage change
4 Not meaningful
Performance highlights
-- Underlying loss before taxation of $124 million down from a $177 million profit in 3Q'19, driven by lower net interest income in Treasury Capital due to the low interest rate environment, higher expenses and higher other impairments primarily driven by impairment relating to aircraft
Retail Banking
3Q'20 ----------------------------------- ------------------------------------------------------- Africa Greater ASEAN & & Europe China & South Middle & North Asia Asia East Americas Total $million $million $million $million $million ----------------------------------- ----------- --------- --------- --------- --------- Operating income 785 353 157 6 1,301 Operating expenses (511) (261) (138) (5) (915) ----------------------------------- ----------- --------- --------- --------- --------- Operating profit before impairment losses and taxation 274 92 19 1 386 Credit impairment (15) (63) (48) (3) (129) ----------------------------------- ----------- --------- --------- --------- --------- Underlying profit/(loss) before taxation 259 29 (29) (2) 257 Restructuring (1) (2) (8) - (11) ----------------------------------- ----------- --------- --------- --------- --------- Statutory profit/(loss) before taxation 258 27 (37) (2) 246 ----------------------------------- ----------- --------- --------- --------- --------- Loans and advances to customers including FVTPL 76,315 27,244 4,748 521 108,828 Customer accounts including FVTPL and repurchase agreements 102,864 36,640 9,283 1,006 149,793 ----------------------------------- ----------- --------- --------- --------- --------- 3Q'19 ----------------------------------- ------------------------------------------------------- Africa Greater ASEAN & & Europe China & South Middle & North Asia Asia East Americas Total $million $million $million $million $million ----------------------------------- ----------- --------- --------- --------- --------- Operating income 770 369 175 9 1,323 Operating expenses (497) (276) (163) (5) (941) ----------------------------------- ----------- --------- --------- --------- --------- Operating profit before impairment losses and taxation 273 93 12 4 382 Credit impairment (43) (29) (10) - (82) ----------------------------------- ----------- --------- --------- --------- --------- Underlying profit before taxation 230 64 2 4 300 Restructuring (4) - (4) - (8) ----------------------------------- ----------- --------- --------- --------- --------- Statutory profit/(loss) before taxation 226 64 (2) 4 292 ----------------------------------- ----------- --------- --------- --------- --------- Loans and advances to customers including FVTPL 69,808 27,714 5,337 510 103,369 Customer accounts including FVTPL and repurchase agreements 96,000 34,455 8,387 1,033 139,875 ----------------------------------- ----------- --------- --------- --------- ---------
Commercial Banking
3Q'20 ------------------------------------------ -------------------------------------------- Africa Greater ASEAN & & China & South Middle North Asia Asia East Total $million $million $million $million ------------------------------------------ ----------- --------- --------- --------- Operating income 123 149 69 341 Operating expenses (85) (90) (50) (225) ------------------------------------------ ----------- --------- --------- --------- Operating profit before impairment losses and taxation 38 59 19 116 Credit impairment (9) (46) (42) (97) ------------------------------------------ ----------- --------- --------- --------- Underlying profit/(loss) before taxation 29 13 (23) 19 Restructuring (5) (1) - (6) ------------------------------------------ ----------- --------- --------- --------- Statutory profit/(loss) before taxation 24 12 (23) 13 ------------------------------------------ ----------- --------- --------- --------- Loans and advances to customers including FVTPL 13,428 9,757 4,168 27,353 Customer accounts including FVTPL and repurchase agreements 23,796 13,880 3,744 41,420 ------------------------------------------ ----------- --------- --------- --------- 3Q'19 ------------------------------------------ -------------------------------------------- Africa Greater ASEAN & & China & South Middle North Asia Asia East Total $million $million $million $million ------------------------------------------ ----------- --------- --------- --------- Operating income 140 166 82 388 Operating expenses (97) (91) (56) (244) ------------------------------------------ ----------- --------- --------- --------- Operating profit before impairment losses and taxation 43 75 26 144 Credit impairment (7) (15) (6) (28) ------------------------------------------ ----------- --------- --------- --------- Underlying profit before taxation 36 60 20 116 Restructuring (2) 2 - - ------------------------------------------ ----------- --------- --------- --------- Statutory profit before taxation 34 62 20 116 ------------------------------------------ ----------- --------- --------- --------- Loans and advances to customers including FVTPL 13,388 10,723 4,946 29,057 Customer accounts including FVTPL and repurchase agreements 20,130 13,136 3,368 36,634 ------------------------------------------ ----------- --------- --------- ---------
Underlying performance by key market
3Q'20 ------------------- ------------------------------------------------------------------------------------------------- Hong Kong Korea China Singapore India Indonesia UAE UK US $million $million $million $million $million $million $million $million $million ------------------- --------- --------- --------- --------- --------- --------- --------- --------- --------- Operating income 842 243 231 380 287 59 137 203 174 Operating expenses (483) (183) (163) (241) (174) (39) (103) (184) (135) ------------------- --------- --------- --------- --------- --------- --------- --------- --------- --------- Operating profit before impairment losses and taxation 359 60 68 139 113 20 34 19 39
Credit impairment (27) (8) 1 (12) (18) (11) (73) (46) 11 Other impairment - - - - - - - 12 - Profit from associates and joint ventures - - 74 - - - - - - ------------------- --------- --------- --------- --------- --------- --------- --------- --------- --------- Underlying profit/(loss) before taxation 332 52 143 127 95 9 (39) (15) 50 ------------------- --------- --------- --------- --------- --------- --------- --------- --------- --------- Total assets employed 167,971 60,223 36,614 84,548 28,139 5,081 21,940 157,167 62,079 Of which: loans and advances to customers(1) 81,175 38,908 16,562 51,674 15,348 2,394 11,074 43,804 19,699 Total liabilities employed 157,611 52,560 30,394 81,822 19,629 3,449 14,224 150,049 64,411 Of which: customer accounts(2) 128,328 40,715 23,727 62,976 14,860 2,513 11,488 79,203 37,350 Cost to income ratio (%) 57.4 75.3 70.6 63.4 60.6 66.1 75.2 90.6 77.6 ------------------- --------- --------- --------- --------- --------- --------- --------- --------- --------- 2Q'20 ------------------- ------------------------------------------------------------------------------------------------- Hong Kong Korea China Singapore India Indonesia UAE UK US $million $million $million $million $million $million $million $million $million ------------------- --------- --------- --------- --------- --------- --------- --------- --------- --------- Operating income 873 227 199 415 315 52 159 237 260 Operating expenses (466) (171) (148) (236) (155) (41) (95) (158) (120) ------------------- --------- --------- --------- --------- --------- --------- --------- --------- --------- Operating profit before impairment losses and taxation 407 56 51 179 160 11 64 79 140 Credit impairment (66) (4) (19) (151) (72) (50) (76) 10 14 Other impairment (14) - - - - - - 2 - Profit from associates and joint ventures - - 21 - - - - - - ------------------- --------- --------- --------- --------- --------- --------- --------- --------- --------- Underlying profit/(loss) before taxation 327 52 53 28 88 (39) (12) 91 154 ------------------- --------- --------- --------- --------- --------- --------- --------- --------- --------- Total assets employed 161,959 59,516 35,142 86,599 28,907 5,154 23,331 149,632 62,010 Of which: loans and advances to customers(1) 77,549 37,347 16,240 49,959 15,057 2,398 11,737 41,611 19,270 Total liabilities employed 150,645 52,033 29,938 82,231 19,631 3,537 15,835 142,100 65,853 Of which: customer accounts(2) 126,463 42,937 23,125 62,667 13,906 2,324 12,223 81,179 36,043 Cost to income ratio (%) 53.4 75.3 74.4 56.9 49.2 78.8 59.7 66.7 46.2 ------------------- --------- --------- --------- --------- --------- --------- --------- --------- --------- 3Q'19 ------------------- ------------------------------------------------------------------------------------------------- Hong Kong Korea China Singapore India Indonesia UAE UK US $million $million $million $million $million $million $million $million $million ------------------- --------- --------- --------- --------- --------- --------- --------- --------- --------- Operating income 958 247 221 421 264 73 150 218 194 Operating expenses (486) (189) (172) (242) (169) (47) (111) (200) (150) ------------------- --------- --------- --------- --------- --------- --------- --------- --------- --------- Operating profit before impairment losses and taxation 472 58 49 179 95 26 39 18 44 Credit impairment (22) (19) (24) (37) (68) (57) 10 (20) 6 Other impairment 3 - - - - - - - - Profit from associates and joint ventures - - 44 - - - - - - ------------------- --------- --------- --------- --------- --------- --------- --------- --------- --------- Underlying profit/(loss) before taxation 453 39 69 142 27 (31) 49 (2) 50 ------------------- --------- --------- --------- --------- --------- --------- --------- --------- --------- Total assets employed 159,317 51,915 30,602 85,587 29,562 4,781 20,193 177,142 54,311 Of which: loans and advances to customers(1) 73,773 33,460 15,029 48,540 15,911 2,343 10,509 52,699 15,742 Total liabilities employed 142,076 44,934 25,347 80,918 19,815 3,153 13,191 180,704 54,721 Of which: customer accounts(2) 116,110 34,829 20,028 61,221 14,935 2,113 10,065 99,662 26,781 Cost to income ratio (%) 50.7 76.5 77.8 57.5 64.0 64.4 74.0 91.7 77.3 ------------------- --------- --------- --------- --------- --------- --------- --------- --------- ---------
1 Loans and advances to customers includes FVTPL
2 Customer accounts includes FVTPL and repurchase agreements
Quarterly underlying operating income by product
3Q'20 2Q'20 1Q'20 4Q'19(1) 3Q'19(1) 2Q'19(1) 1Q'19(1) 4Q'18 $million $million $million $million $million $million $million $million ---------------------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- Transaction Banking 665 721 800 834 887 901 877 861 ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- Trade 255 230 260 259 282 282 277 257 Cash Management 410 491 540 575 605 619 600 604 ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- Financial Markets 909 970 1,278 716 877 834 831 661 ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- Foreign Exchange 266 343 415 264 261 304 298 232 Rates 201 339 378 163 176 136 221 63 Commodities 60 82 44 37 39 44 45 50 Credit and Capital Markets 188 250 26 125 167 145 140 83 Capital Structuring Distribution Group 91 52 61 86 87 74 82 91 DVA (22) (201) 305 (72) 14 11 (53) 46 Securities Services 79 79 84 85 88 87 83 81 Other Financial Markets 46 26 (35) 28 45 33 15 15 ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- Corporate Finance 284 269 278 328 281 272 262 370 Lending and Portfolio Management 222 232 195 201 201 197 187 181 Wealth Management 568 434 530 415 488 511 465 343 Retail Products 859 913 946 960 975 976 951 925
---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- CCPL and other unsecured lending 309 295 304 311 315 320 305 294 Deposits 301 413 472 484 510 501 494 481 Mortgage and Auto 211 169 136 130 123 129 129 127 Other Retail Products 38 36 34 35 27 26 23 23 ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- Treasury 40 178 325 196 335 251 308 253 Other (28) 3 (25) (53) (66) (59) (68) 1 ---------------------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- Total underlying operating income 3,519 3,720 4,327 3,597 3,978 3,883 3,813 3,595 ---------------------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ----------
1 Following a reorganisation of certain clients, there has been a reclassification of balances across products. Prior periods have been restated from 1Q'19
Earnings per ordinary share
3Q'20 3Q'19 Change 2Q'20 Change YTD'20 YTD'19 Change $million $million % $million % $million $million % ------------------------------- ---------- ---------- ---------- ------ ---------- ---------- ------ Profit for the period attributable to equity holders 161 772 (79) 549 (71) 1,227 2,268 (46) ------------------------------- ---------- ---------- ------ ---------- ------ ---------- ---------- ------ Non-controlling interest (7) (11) 36 (11) 36 (25) (30) 17 Dividend payable on preference shares and AT1 classified as equity (31) (36) 14 (199) 84 (263) (257) (2) ------------------------------- ---------- ---------- ------ ---------- ------ ---------- ---------- ------ Profit for the period attributable to ordinary shareholders 123 725 (83) 339 (64) 939 1,981 (53) ------------------------------- ---------- ---------- ------ ---------- ------ ---------- ---------- ------ Items normalised: Provision for regulatory matters - 22 nm(1) - nm(1) (14) 226 nm(1) Restructuring 44 123 (64) (2) nm(1) 134 137 (2) Profit from associates and joint ventures - (12) nm(1) - nm(1) - (35) nm(1) Gains arising on repurchase of subordinated liabilities - - nm(1) - nm(1) - - nm(1) Goodwill impairment 231 - nm(1) - nm(1) 489 - nm(1) Net loss on sale of businesses 35 - nm(1) (6) nm(1) 29 - nm(1) Tax on normalised items (5) (1) nm(1) (3) (67) (11) 171 nm(1) ------------------------------- ---------- ---------- ------ ---------- ------ ---------- ---------- ------ Underlying profit 428 857 (50) 328 30 1,566 2,480 (37) ------------------------------- ---------- ---------- ------ ---------- ------ ---------- ---------- ------ Basic - Weighted average number of shares (millions) 3,151 3,220 nm(1) 3,150 nm(1) 3,162 3,275 nm(1) Diluted - Weighted average number of shares (millions) 3,192 3,258 nm(1) 3,190 nm(1) 3,200 3,312 nm(1) Basic earnings per ordinary share (cents) (2) 3.9 22.5 (18.6) 10.8 (6.9) 29.7 60.5 (30.8) ------------------------------- ---------- ---------- ------ ---------- ------ ---------- ---------- ------ Diluted earnings per ordinary share (cents) (2) 3.9 22.3 (18.4) 10.6 (6.7) 29.3 59.8 (30.5) ------------------------------- ---------- ---------- ------ ---------- ------ ---------- ---------- ------ Underlying basic earnings per ordinary share (cents) (2) 13.6 26.6 (13.0) 10.4 3.2 49.5 75.7 (26.2) ------------------------------- ---------- ---------- ------ ---------- ------ ---------- ---------- ------ Underlying diluted earnings per ordinary share (cents) (2) 13.4 26.3 (12.9) 10.3 3.1 48.9 74.9 (26.0) ------------------------------- ---------- ---------- ------ ---------- ------ ---------- ---------- ------ 1 Not meaningful
2 Change is the percentage points difference between the two periods rather than the percentage change
Return on Tangible Equity
3Q'20 3Q'19 Change 2Q'20 Change YTD'20 YTD'19 Change $million $million % $million % $million $million % ------------------------------- ---------- ---------- ---------- ------ ---------- ---------- ------ Average parent company shareholders' equity 45,400 44,970 1 44,623 (2) 44,845 45,298 (1) Less Preference share premium (1,494) (1,494) - (1,494) - (1,494) (1,494) - Less Average intangible assets (4,972) (5,097) 2 (4,960) - (5,008) (5,097) 2 ------------------------------- ---------- ---------- ------ ---------- ------ ---------- ---------- ------ Average Ordinary Shareholders' Tangible Equity 38,934 38,379 1 38,169 (2) 38,343 38,707 (1) ------------------------------- ---------- ---------- ------ ---------- ------ ---------- ---------- ------ Profit for the period attributable to equity holders 161 772 (79) 549 nm(1) 1,227 2,268 (46) ------------------------------- ---------- ---------- ------ ---------- ------ ---------- ---------- ------ Non-controlling interests (7) (11) 36 (11) (57) (25) (30) 17 Dividend payable on preference shares and AT1 classified as equity (31) (36) 14 (199) nm(1) (263) (257) (2) ------------------------------- ---------- ---------- ------ ---------- ------ ---------- ---------- ------ Profit for the period attributable to ordinary shareholders 123 725 (83) 339 176 939 1,981 (53) ------------------------------- ---------- ---------- ------ ---------- ------ ---------- ---------- ------ Items normalised: Provision for regulatory matters - 22 nm(1) - nm(1) (14) 226 nm(1) Restructuring 44 123 (64) (2) nm(1) 134 137 (2) Profit from associates and joint ventures - (12) nm(1) - nm(1) - (35) nm(1) Goodwill Impairment 231 - nm(1) - nm(1) 489 - nm(1) Net loss on sale of businesses 35 - nm(1) (6) nm(1) 29 - nm(1) Tax on normalised items (5) (1) nm(1) (3) 40 (11) 171 nm(1) ------------------------------- ---------- ---------- ------ ---------- ------ ---------- ---------- ------ Underlying profit for the period attributable to ordinary shareholders 428 857 (50) 328 (23) 1,566 2,480 (37) ------------------------------- ---------- ---------- ------ ---------- ------ ---------- ---------- ------ Underlying return on tangible (450) (310) equity 4.4% 8.9% bps 3.5% 90 bps 5.5% 8.6% bps ------------------------------- ---------- ---------- ------ ---------- ------ ---------- ---------- ------ Statutory return on tangible (620) (230) (350) equity 1.3% 7.5% bps 3.6% bps 3.3% 6.8% bps ------------------------------- ---------- ---------- ------ ---------- ------ ---------- ---------- ------
1 Not meaningful
Net Tangible Asset Value per Share
30.09.20 30.09.19 Change 30.06.20 Change 31.12.19 Change $million $million % $million % $million % ------------------------------------ ---------- ---------- ---------- ------ ---------- ------ Parent company shareholders' equity 45,743 44,872 2 45,058 2 44,835 2 Less Preference share premium (1,494) (1,494) - (1,494) - (1,494) - Less Intangible assets (4,916) (5,083) 3 (5,029) 2 (5,290) 7 ------------------------------------ ---------- ---------- ------ ---------- ------ ---------- ------ Net shareholders tangible equity 39,333 38,295 3 38,535 2 38,051 3 ------------------------------------ ---------- ---------- ------ ---------- ------ ---------- ------ Ordinary shares in issue, excluding own shares (millions) 3,149 3,195 (1) 3,148 - 3,191 (1) ------------------------------------ ---------- ---------- ------ ---------- ------ ---------- ------ Net Tangible Asset Value per share (cents) 1,249 1,199 50.0 1,224 25.0 1,192 5 ------------------------------------ ---------- ---------- ------ ---------- ------ ---------- ------
Underlying versus statutory results reconciliations
Reconciliations between underlying and statutory results are set out in the tables below:
Operating income by client segment
3Q'20 ---------------------------- ------------------------------------------------------------------------ Central Corporate & & Institutional Retail Commercial Private other Banking Banking Banking Banking items Total $million $million $million $million $million $million ---------------------------- ---------------- --------- ---------- --------- --------- --------- Underlying operating income 1,735 1,301 341 129 13 3,519 Restructuring 14 - 7 - 1 22 Other items - - - - (35) (35) ---------------------------- ---------------- --------- ---------- --------- --------- --------- Statutory operating income 1,749 1,301 348 129 (21) 3,506 ---------------------------- ---------------- --------- ---------- --------- --------- --------- 3Q'19 ---------------------------- ------------------------------------------------------------------------ Central Corporate & & Institutional Retail Commercial Private other Banking Banking Banking Banking items Total $million $million $million $million $million $million ---------------------------- ---------------- --------- ---------- --------- --------- --------- Underlying operating income 1,848 1,323 388 145 274 3,978 Restructuring (20) - 1 - - (19) ---------------------------- ---------------- --------- ---------- --------- --------- --------- Statutory operating income 1,828 1,323 389 145 274 3,959 ---------------------------- ---------------- --------- ---------- --------- --------- ---------
Operating income by region
3Q'20 ---------------------------- ------------------------------------------------------------------- Africa Central Greater ASEAN & & Europe & China & South Middle & other North Asia Asia East Americas items Total $million $million $million $million $million $million ---------------------------- ----------- --------- ---------- --------- --------- --------- Underlying operating income 1,471 1,034 590 423 1 3,519 Restructuring 19 - 3 - - 22 Other items (35) - - - - (35) ---------------------------- ----------- --------- ---------- --------- --------- --------- Statutory operating income 1,455 1,034 593 423 1 3,506 ---------------------------- ----------- --------- ---------- --------- --------- --------- 3Q'19 ---------------------------- ------------------------------------------------------------------- Africa Central Greater ASEAN & & Europe & China & South Middle & other North Asia Asia East Americas items Total $million $million $million $million $million $million ---------------------------- ----------- --------- ---------- --------- --------- --------- Underlying operating income 1,578 1,085 617 467 231 3,978 Restructuring 20 1 - - (40) (19) ---------------------------- ----------- --------- ---------- --------- --------- --------- Statutory operating income 1,598 1,086 617 467 191 3,959 ---------------------------- ----------- --------- ---------- --------- --------- ---------
Profit before taxation (PBT)
3Q'20 --------------------- ----------------------------------------------------------------------------------------------- Share of profits Net loss of on businesses PT Bank Provision disposed/ Permata for regulatory held Goodwill Tbk joint Underlying matters Restructuring for sale impairment venture Statutory $million $million $million $million $million $million $million --------------------- ---------- --------------- ------------- -------------- ----------- ----------- --------- Operating income 3,519 - 22 (35) - - 3,506 Operating expenses (2,480) - (35) - - - (2,515) --------------------- ---------- --------------- ------------- -------------- ----------- ----------- --------- Operating profit/(loss) before impairment losses and taxation 1,039 - (13) (35) - - 991 Credit impairment (353) - (5) - - - (358) Other impairment (15) - (18) - (231) - (264) Profit from associates and joint ventures 74 - (8) - - - 66 --------------------- ---------- --------------- ------------- -------------- ----------- ----------- --------- Profit/(loss) before taxation 745 - (44) (35) (231) - 435 --------------------- ---------- --------------- ------------- -------------- ----------- ----------- --------- 3Q'19 --------------------- ----------------------------------------------------------------------------------------------- Share of profits Net loss of
on businesses PT Bank Provision disposed/ Permata for regulatory held Goodwill Tbk joint Underlying matters Restructuring for sale impairment venture Statutory $million $million $million $million $million $million $million --------------------- ---------- --------------- ------------- -------------- ----------- ----------- --------- Operating income 3,978 - (19) - - - 3,959 Operating expenses (2,501) (22) (44) - - - (2,567) --------------------- ---------- --------------- ------------- -------------- ----------- ----------- --------- Operating profit/(loss) before impairment losses and taxation 1,477 (22) (63) - - - 1,392 Credit impairment (279) - (1) - - - (280) Other impairment (5) - (55) - - - (60) Profit from associates and joint ventures 45 - (4) - - 12 53 --------------------- ---------- --------------- ------------- -------------- ----------- ----------- --------- Profit/(loss) before taxation 1,238 (22) (123) - - 12 1,105 --------------------- ---------- --------------- ------------- -------------- ----------- ----------- ---------
Profit before taxation (PBT) by client segment
3Q'20 -------------------------- ------------------------------------------------------------------------ Central Corporate & & Institutional Retail Commercial Private other Banking Banking Banking Banking items Total $million $million $million $million $million $million -------------------------- ---------------- --------- ---------- --------- --------- --------- Operating income 1,735 1,301 341 129 13 3,519 ---------------- --------- ---------- --------- --------- --------- External 1,680 1,148 320 93 278 3,519 Inter-segment 55 153 21 36 (265) - ---------------- --------- ---------- --------- --------- --------- Operating expenses (1,066) (915) (225) (114) (160) (2,480) -------------------------- ---------------- --------- ---------- --------- --------- --------- Operating profit/(loss) before impairment losses and taxation 669 386 116 15 (147) 1,039 Credit impairment (132) (129) (97) 2 3 (353) Other impairment (12) - - - (3) (15) Profit from associates and joint ventures - - - - 74 74 -------------------------- ---------------- --------- ---------- --------- --------- --------- Underlying profit/(loss) before taxation 525 257 19 17 (73) 745 Restructuring (12) (11) (6) (1) (14) (44) Goodwill impairment & other items - - - - (266) (266) -------------------------- ---------------- --------- ---------- --------- --------- --------- Statutory profit/(loss) before taxation 513 246 13 16 (353) 435 -------------------------- ---------------- --------- ---------- --------- --------- --------- 3Q'19 ------------------------- ------------------------------------------------------------------------ Central Corporate & & Institutional Retail Commercial Private other Banking Banking Banking Banking items Total $million $million $million $million $million $million ------------------------- ---------------- --------- ---------- --------- --------- --------- Operating income 1,848 1,323 388 145 274 3,978 ---------------- --------- ---------- --------- --------- --------- External 1,892 1,074 395 86 531 3,978 Inter-segment (44) 249 (7) 59 (257) - ---------------- --------- ---------- --------- --------- --------- Operating expenses (1,098) (941) (244) (134) (84) (2,501) ------------------------- ---------------- --------- ---------- --------- --------- --------- Operating profit before impairment losses and taxation 750 382 144 11 190 1,477 Credit impairment (153) (82) (28) (14) (2) (279) Other impairment (8) - - - 3 (5) Profit from associates and joint ventures - - - - 45 45 ------------------------- ---------------- --------- ---------- --------- --------- --------- Underlying profit/(loss) before taxation 589 300 116 (3) 236 1,238 Restructuring (105) (8) - (4) (6) (123) Other items - - - - (10) (10) ------------------------- ---------------- --------- ---------- --------- --------- --------- Statutory profit/(loss) before taxation 484 292 116 (7) 220 1,105 ------------------------- ---------------- --------- ---------- --------- --------- ---------
Profit before taxation (PBT) by region
3Q'20 -------------------------- ------------------------------------------------------------------- Africa Central Greater ASEAN & & Europe & China & South Middle & other North Asia Asia East Americas items Total $million $million $million $million $million $million -------------------------- ----------- --------- ---------- --------- --------- --------- Operating income 1,471 1,034 590 423 1 3,519 Operating expenses (938) (663) (426) (360) (93) (2,480) -------------------------- ----------- --------- ---------- --------- --------- --------- Operating profit/(loss) before impairment losses and taxation 533 371 164 63 (92) 1,039 Credit impairment (29) (128) (154) (37) (5) (353) Other impairment - - 1 11 (27) (15) Profit from associates and joint ventures 74 - - - - 74 -------------------------- ----------- --------- ---------- --------- --------- --------- Underlying profit/(loss) before taxation 578 243 11 37 (124) 745 Restructuring (15) (7) (11) (8) (3) (44) Goodwill impairment & other items (35) - - - (231) (266) -------------------------- ----------- --------- ---------- --------- --------- --------- Statutory profit/(loss) before taxation 528 236 - 29 (358) 435 -------------------------- ----------- --------- ---------- --------- --------- --------- 3Q'19 ------------------------- ------------------------------------------------------------------- Africa Central Greater ASEAN & & Europe & China & South Middle & other
North Asia Asia East Americas items Total $million $million $million $million $million $million ------------------------- ----------- --------- ---------- --------- --------- --------- Operating income 1,578 1,085 617 467 231 3,978 Operating expenses (944) (671) (443) (390) (53) (2,501) ------------------------- ----------- --------- ---------- --------- --------- --------- Operating profit before impairment losses and taxation 634 414 174 77 178 1,477 Credit impairment (70) (172) (27) (15) 5 (279) Other impairment 3 - - - (8) (5) Profit from associates and joint ventures 43 - - - 2 45 ------------------------- ----------- --------- ---------- --------- --------- --------- Underlying profit before taxation 610 242 147 62 177 1,238 Restructuring (51) 1 (5) (6) (62) (123) Other items - 12 - - (22) (10) ------------------------- ----------- --------- ---------- --------- --------- --------- Statutory profit before taxation 559 255 142 56 93 1,105 ------------------------- ----------- --------- ---------- --------- --------- ---------
Return on tangible equity (RoTE)
3Q'20 ------------------------------------ ---------------------------------------------------------------- Central Corporate & & Institutional Retail Commercial Private other Banking Banking Banking Banking items Total % % % % % % ------------------------------------ ---------------- -------- ---------- -------- ------- ----- Underlying RoTE 7.4 11.3 1.3 5.3 (9.3) 4.4 Restructuring Of which: Income 0.3 - 0.6 - - 0.2 Of which: Expenses (0.2) (0.7) (0.8) - (0.4) (0.4) Of which: Credit impairment - - (0.4) - - (0.1) Of which: Other impairment (0.3) - (0.1) - - (0.2) Of which: Profit from associates and joint ventures - - - - (0.5) (0.1) Net loss on businesses disposed/held for sale - - - - (2.0) (0.4) Goodwill impairment - - - - (13.4) (2.4) Tax on normalised items 0.1 0.3 0.2 (0.1) (0.1) 0.3 ------------------------------------ ---------------- -------- ---------- -------- ------- ----- Statutory RoTE 7.3 10.9 0.8 5.2 (25.7) 1.3 ------------------------------------ ---------------- -------- ---------- -------- ------- ----- 3Q'19 ------------------------------------ ---------------------------------------------------------------- Central Corporate & & Institutional Retail Commercial Private other Banking Banking Banking Banking items Total % % % % % % ------------------------------------ ---------------- -------- ---------- -------- ------- ----- Underlying RoTE 8.6 13.9 7.0 (0.9) 7.7 8.9 Provision for regulatory matters - - - - (1.3) (0.2) Restructuring Of which: Income (0.4) - 0.1 - - (0.2) Of which: Expenses (0.5) (0.5) (0.3) (2.1) (0.2) (0.5) Of which: Credit impairment (0.1) - 0.2 - - - Of which: Other impairment (1.1) - - - - (0.6) Of which: Profit from associates and joint ventures - - - - (0.2) - Share of profits of PT Bank Permata Tbk joint venture - - - - 0.7 0.1 Tax on normalised items 0.6 0.1 - 0.4 (1.7) - ------------------------------------ ---------------- -------- ---------- -------- ------- ----- Statutory RoTE 7.1 13.5 7.0 (2.6) 5.0 7.5 ------------------------------------ ---------------- -------- ---------- -------- ------- -----
Earnings per ordinary share (EPS)
3Q'20 ------------- ------------------------------------------------------------------------------------------------------------- Gains arising on repurchase Provision Profit of senior Net loss for from and on sale Tax on regulatory joint subordinated of Goodwill normalised Underlying matters Restructuring venture liabilities businesses impairment items Statutory $ million $ million $ million $ million $ million $ million $ million $ million $ million ------------- ---------- ---------- ------------- --------- ------------ ---------- ---------- ---------- --------- Profit for the year attributable to ordinary shareholders 428 - (44) - - (35) (231) 5 123 Basic - Weighted average number of shares (millions) 3,151 3,151 Basic earnings per ordinary share (cents) 13.6 3.9 ------------- ---------- ---------- ------------- --------- ------------ ---------- ---------- ---------- --------- 3Q'19 ------------- ------------------------------------------------------------------------------------------------------------- Gains arising on repurchase Provision Profit of senior Net loss for from and on sale Tax on regulatory joint subordinated of Goodwill normalised Underlying matters Restructuring venture liabilities businesses impairment items Statutory $ million $ million $ million $ million $ million $ million $ million $ million $ million ------------- ---------- ---------- ------------- --------- ------------ ---------- ---------- ---------- --------- Profit for the year attributable to ordinary shareholders 857 (22) (123) 12 - - - 1 725 Basic - Weighted average number of shares (millions) 3,220 3,220 Basic earnings per ordinary share (cents) 26.6 22.5 ------------- ---------- ---------- ------------- --------- ------------ ---------- ---------- ---------- ---------
Risk review
Credit quality by client segment
30.09.20 ---------------- ---------------------------------------------------------------------------------------------------- Customers -------- ------------------------------------------------------------------ ---------- ---------- Corporate & Central Institutional Retail Commercial Private & other Customer Undrawn Financial Banks Banking Banking Banking Banking items Total commitment Guarantees Amortised cost $million $million $million $million $million $million $million $million $million ---------------- -------- ------------- -------- ---------- -------- -------- --------- ---------- ---------- Stage 1 48,225 93,532 106,043 19,351 13,064 19,123 251,113 136,868 42,351 -------- ------------- -------- ---------- -------- -------- --------- ---------- ---------- - Strong 38,906 57,098 104,900 5,247 8,940 18,751 194,936 117,931 29,759 - Satisfactory 9,319 36,434 1,143 14,104 4,124 372 56,177 18,937 12,592 -------- ------------- -------- ---------- -------- -------- --------- ---------- ---------- Stage 2 828 19,956 2,739 4,693 209 - 27,597 13,504 4,635 -------- ------------- -------- ---------- -------- -------- --------- ---------- ---------- - Strong 206 4,768 1,975 421 205 - 7,369 6,446 1,005 - Satisfactory 622 13,795 346 3,711 4 - 17,856 6,569 3,261 - Higher risk - 1,393 418 561 - - 2,372 489 369 -------- ------------- -------- ---------- -------- -------- --------- ---------- ---------- Of which (stage 2): - Less than 30 days past due - 60 346 45 - - 451 - - - More than 30 days past due 25 121 418 88 13 - 640 - - Stage 3, credit-impaired financial assets - 5,796 1,114 2,077 347 2 9,336 10 666 ---------------- -------- ------------- -------- ---------- -------- -------- --------- ---------- ---------- Gross balance(1) 49,053 119,284 109,896 26,121 13,620 19,125 288,046 150,382 47,652 ---------------- -------- ------------- -------- ---------- -------- -------- --------- ---------- ---------- Stage 1 (7) (102) (430) (28) (11) - (571) (47) (20) -------- ------------- -------- ---------- -------- -------- --------- ---------- ---------- - Strong (3) (44) (229) (2) (8) - (283) (23) (11) - Satisfactory (4) (58) (201) (26) (3) - (288) (24) (9) -------- ------------- -------- ---------- -------- -------- --------- ---------- ---------- Stage 2 (6) (399) (205) (101) (1) - (706) (94) (33) -------- ------------- -------- ---------- -------- -------- --------- ---------- ---------- - Strong (2) (86) (85) (6) (1) - (178) (27) (6) - Satisfactory (4) (232) (69) (73) - - (374) (56) (21) - Higher risk - (81) (51) (22) - - (154) (11) (6) -------- ------------- -------- ---------- -------- -------- --------- ---------- ---------- Of which (stage 2): - Less than 30 days past due - (13) (69) (8) - - (90) - - - More than 30 days past due - (5) (51) (2) - - (58) - - Stage 3, credit-impaired financial assets - (3,210) (512) (1,508) (157) (2) (5,389) - (169) ---------------- -------- ------------- -------- ---------- -------- -------- --------- ---------- ---------- Total credit impairment (13) (3,711) (1,147) (1,637) (169) (2) (6,666) (141) (222) ---------------- -------- ------------- -------- ---------- -------- -------- --------- ---------- ---------- Net carrying value 49,040 115,573 108,749 24,484 13,451 19,123 281,380 ---------------- -------- ------------- -------- ---------- -------- -------- --------- ---------- ---------- Stage 1 0.0% 0.1% 0.4% 0.1% 0.1% 0.0% 0.2% 0.0% 0.0% -------- ------------- -------- ---------- -------- -------- --------- ---------- ---------- - Strong 0.0% 0.1% 0.2% 0.0% 0.1% 0.0% 0.1% 0.0% 0.0% - Satisfactory 0.0% 0.2% 17.6% 0.2% 0.1% 0.0% 0.5% 0.1% 0.1% -------- ------------- -------- ---------- -------- -------- --------- ---------- ---------- Stage 2 0.7% 2.0% 7.5% 2.2% 0.5% 0.0% 2.6% 0.7% 0.7% -------- ------------- -------- ---------- -------- -------- --------- ---------- ---------- - Strong 1.0% 1.8% 4.3% 1.4% 0.5% 0.0% 2.4% 0.4% 0.6% - Satisfactory 0.6% 1.7% 19.9% 2.0% 0.0% 0.0% 2.1% 0.9% 0.6% - Higher risk 0.0% 5.8% 12.2% 3.9% 0.0% 0.0% 6.5% 2.2% 1.6% -------- ------------- -------- ---------- -------- -------- --------- ---------- ---------- Of which (stage 2): - Less than 30 days past due 0.0% 21.7% 19.9% 17.8% 0.0% 0.0% 20.0% 0.0% 0.0% - More than 30 days past due 0.0% 4.1% 12.2% 2.3% 0.0% 0.0% 9.1% 0.0% 0.0% Stage 3, credit-impaired financial assets 0.0% 55.4% 46.0% 72.6% 45.2% 100.0% 57.7% 0.0% 25.4% ---------------- -------- ------------- -------- ---------- -------- -------- --------- ---------- ---------- Cover ratio 0.0% 3.1% 1.0% 6.3% 1.2% 0.0% 2.3% 0.1% 0.5% ---------------- -------- ------------- -------- ---------- -------- -------- --------- ---------- ---------- Fair value through profit or loss ---------------- -------- ------------- -------- ---------- -------- -------- --------- ---------- ---------- Performing 20,734 51,285 160 2,929 - 12 54,386 - - -------- ------------- -------- ---------- -------- -------- --------- ---------- ---------- - Strong 17,365 25,637 158 2,207 - 7 28,009 - - - Satisfactory 3,369 25,607 1 703 - 5 26,316 - - - Higher risk - 41 1 19 - - 61 - - -------- ------------- -------- ---------- -------- -------- --------- ---------- ---------- Defaulted (CG13-14) - 36 - 9 - - 45 - - ---------------- -------- ------------- -------- ---------- -------- -------- --------- ---------- ---------- Gross balance (FVTPL)(2) 20,734 51,321 160 2,938 - 12 54,431 - - ---------------- -------- ------------- -------- ---------- -------- -------- --------- ---------- ---------- Net carrying value (incl FVTPL) 69,774 166,894 108,909 27,422 13,451 19,135 335,811 ---------------- -------- ------------- -------- ---------- -------- -------- --------- ---------- ----------
1 Loans and advances includes reverse repurchase agreements and other similar secured lending of $4,330 million under Customers and of $783 million under Banks, held at amortised cost
2 Loans and advances includes reverse repurchase agreements and other similar secured lending of $45,168 million under Customers and of $18,005 million under Banks, held at fair value through profit or loss
30.06.20 ---------------- ---------------------------------------------------------------------------------------------------- Customers -------- ------------------------------------------------------------------ ---------- ---------- Corporate Central & & Institutional Retail Commercial Private other Customer Undrawn Financial Banks Banking Banking Banking Banking items Total commitment Guarantees Amortised cost $million $million $million $million $million $million $million $million $million ---------------- -------- ------------- -------- ---------- -------- -------- --------- ---------- ---------- Stage 1 50,146 97,794 101,523 20,916 12,599 17,446 250,278 134,605 37,408 -------- ------------- -------- ---------- -------- -------- --------- ---------- ---------- - Strong 41,317 61,090 100,456 6,097 9,232 17,213 194,088 115,218 25,727 - Satisfactory 8,829 36,704 1,067 14,819 3,367 233 56,190 19,387 11,681 -------- ------------- -------- ---------- -------- -------- --------- ---------- ---------- Stage 2 349 15,765 3,515 4,256 199 4 23,739 9,280 4,205 -------- ------------- -------- ---------- -------- -------- --------- ---------- ---------- - Strong 31 4,347 2,630 307 195 - 7,479 3,682 1,065 - Satisfactory 301 10,469 406 3,400 4 - 14,279 5,255 2,845 - Higher risk 17 949 479 549 - 4 1,981 343 295 -------- ------------- -------- ---------- -------- -------- --------- ---------- ---------- Of which (stage 2): - Less than 30 days past due - 272 406 119 - - 797 - - - More than 30 days past due 35 58 479 34 4 - 575 - - Stage 3, credit-impaired financial assets 13 5,364 1,067 2,004 372 2 8,809 28 621 ---------------- -------- ------------- -------- ---------- -------- -------- --------- ---------- ---------- Gross balance(1) 50,508 118,923 106,105 27,176 13,170 17,452 282,826 143,913 42,234 ---------------- -------- ------------- -------- ---------- -------- -------- --------- ---------- ---------- Stage 1 (3) (62) (371) (31) (11) (1) (476) (44) (16) -------- ------------- -------- ---------- -------- -------- --------- ---------- ---------- - Strong - (37) (228) (4) (8) - (277) (22) (9) - Satisfactory (3) (25) (143) (27) (3) (1) (199) (22) (7) -------- ------------- -------- ---------- -------- -------- --------- ---------- ---------- Stage 2 (2) (424) (242) (114) - - (780) (72) (39) -------- ------------- -------- ---------- -------- -------- --------- ---------- ---------- - Strong - (74) (99) (8) - - (181) (24) (7) - Satisfactory (2) (312) (74) (83) - - (469) (41) (27) - Higher risk - (38) (69) (23) - - (130) (7) (5) -------- ------------- -------- ---------- -------- -------- --------- ---------- ---------- Of which (stage 2): - Less than 30 days past due - (13) (74) (8) - - (95) - - - More than 30 days past due - (22) (69) (16) - - (107) - - Stage 3, credit-impaired financial assets (4) (3,129) (492) (1,476) (158) (2) (5,257) (1) (182) ---------------- -------- ------------- -------- ---------- -------- -------- --------- ---------- ---------- Total credit impairment (9) (3,615) (1,105) (1,621) (169) (3) (6,513) (117) (237) ---------------- -------- ------------- -------- ---------- -------- -------- --------- ---------- ---------- Net carrying value 50,499 115,308 105,000 25,555 13,001 17,449 276,313 ---------------- -------- ------------- -------- ---------- -------- -------- --------- ---------- ---------- Stage 1 0.0% 0.1% 0.4% 0.1% 0.1% 0.0% 0.2% 0.0% 0.0% -------- ------------- -------- ---------- -------- -------- --------- ---------- ---------- - Strong 0.0% 0.1% 0.2% 0.1% 0.1% 0.0% 0.1% 0.0% 0.0% - Satisfactory 0.0% 0.1% 13.4% 0.2% 0.1% 0.4% 0.4% 0.1% 0.1% -------- ------------- -------- ---------- -------- -------- --------- ---------- ---------- Stage 2 0.6% 2.7% 6.9% 2.7% 0.0% 0.0% 3.3% 0.8% 0.9% -------- ------------- -------- ---------- -------- -------- --------- ---------- ---------- - Strong 0.0% 1.7% 3.8% 2.6% 0.0% 0.0% 2.4% 0.7% 0.7% - Satisfactory 0.7% 3.0% 18.2% 2.4% 0.0% 0.0% 3.3% 0.8% 0.9% - Higher risk 0.0% 4.0% 14.4% 4.2% 0.0% 0.0% 6.6% 2.0% 1.7% -------- ------------- -------- ---------- -------- -------- --------- ---------- ---------- Of which (stage 2): - Less than 30 days past due 0.0% 4.8% 18.2% 6.7% 0.0% 0.0% 11.9% 0.0% 0.0% - More than 30 days past due 0.0% 37.9% 14.4% 47.1% 0.0% 0.0% 18.6% 0.0% 0.0% Stage 3, credit-impaired financial assets 30.8% 58.3% 46.1% 73.7% 42.5% 100.0% 59.7% 3.6% 29.3% ---------------- -------- ------------- -------- ---------- -------- -------- --------- ---------- ---------- Cover ratio 0.0% 3.0% 1.0% 6.0% 1.3% 0.0% 2.3% 0.1% 0.6% ---------------- -------- ------------- -------- ---------- -------- -------- --------- ---------- ---------- Fair value through profit or loss ---------------- -------- ------------- -------- ---------- -------- -------- --------- ---------- ---------- Performing 19,939 48,951 182 2,650 - 15 51,798 - - -------- ------------- -------- ---------- -------- -------- --------- ---------- ---------- - Strong 16,807 26,961 179 2,008 - 9 29,157 - - - Satisfactory 3,132 21,988 2 615 - 6 22,611 - - - Higher risk - 2 1 27 - - 30 - - -------- ------------- -------- ---------- -------- -------- --------- ---------- ---------- Defaulted (CG13-14) - 45 - 9 - - 54 - - ---------------- -------- ------------- -------- ---------- -------- -------- --------- ---------- ---------- Gross balance (FVTPL)(2) 19,939 48,996 182 2,659 - 15 51,852 - - ---------------- -------- ------------- -------- ---------- -------- -------- --------- ---------- ---------- Net carrying value (incl FVTPL) 70,438 164,304 105,182 28,214 13,001 17,464 328,165 ---------------- -------- ------------- -------- ---------- -------- -------- --------- ---------- ----------
1 Loans and advances includes reverse repurchase agreements and other similar secured lending of $4,383 million under Customers and of $1,893 million under Banks, held at amortised cost
2 Loans and advances includes reverse repurchase agreements and other similar secured lending of $41,399 million under Customers and of $17,603 million under Banks, held at fair value through profit or loss
Credit impairment charge
9 months ended 30.09.20 9 months ended 30.09.19 --------------------------- ---------------------------------- ---------------------------------- Stage 1 Stage 1 & 2 Stage 3 Total & 2 Stage 3 Total(1) $million $million $million $million $million $million --------------------------- ---------- ---------- ---------- ---------- ---------- ---------- Ongoing business portfolio Corporate & Institutional Banking 364 753 1,117 11 258 269 Retail Banking 324 235 559 129 107 236 Commercial Banking 81 153 234 (8) 65 57 Private Banking (1) 4 3 1 (34) (33) Central & Others 9 (2) 7 4 - 4 --------------------------- ---------- ---------- ---------- ---------- ---------- ---------- Credit impairment charge 777 1,143 1,920 137 396 533 Restructuring business portfolio Liquidation portfolio - - - - - - Others - 14 14 - 1 1 --------------------------- ---------- ---------- ---------- ---------- ---------- ---------- Credit impairment charge - 14 14 - 1 1 --------------------------- ---------- ---------- ---------- ---------- ---------- ---------- Total credit impairment charge 777 1,157 1,934 137 397 534 --------------------------- ---------- ---------- ---------- ---------- ---------- ----------
COVID-19 relief measures
Greater China & ASEAN & South Africa & Europe & Applications(1) North Asia Asia Middle East Americas -------------- --------------------------------- ---------------------- ---------------------- ---------------------- ---------------------- Received Approved % of Approved % of Approved % of Approved % of Approved % of Segment $million $million portfolio(2) $million portfolio(2) $million portfolio(2) $million portfolio(2) $million portfolio(2) -------------- -------- -------- ------------- -------- ------------ -------- ------------ -------- ------------ -------- ------------ Credit Card 91 91 2% 1 0% 63 3% 27 10% Personal loans 441 347 4% 23 0% 56 5% 267 16% Mortgages & auto 3,251 2,358 3% 547 1% 1,344 8% 468 19% Business banking 756 558 7% 175 5% 373 9% 10 7% Wealth management 2 2 0% - - 2 - - - -------------- -------- -------- ------------- -------- ------------ -------- ------------ -------- ------------ -------- ------------ Total Retail Banking 4,541 3,355 3% 746 1% 1,838 7% 771 15% -------------- -------- -------- ------------- -------- ------------ -------- ------------ -------- ------------ -------- ------------ Corporate & Institutional Banking 2,286 1% 119 1,244 670 253 -------------- -------- -------- ------------- -------- ------------ -------- ------------ -------- ------------ -------- ------------ Commercial Banking 4,179 16% 1,608 1,864 619 88 -------------- -------- -------- ------------- -------- ------------ -------- ------------ -------- ------------ -------- ------------ Total at 30 September 2020 9,820 3% 2,473 4,946 2,060 341 -------------- -------- -------- ------------- -------- ------------ -------- ------------ -------- ------------ -------- ------------ Retail Banking 8,879 8% 584 1% 7,386 28% 909 17% Corporate & Institutional Banking 1,802 1% 389 991 155 268 Commercial Banking 3,804 14% 1,573 1,601 542 88 -------------- -------- -------- ------------- -------- ------------ -------- ------------ -------- ------------ -------- ------------ Total at 30 June 2020 14,485 4% 2,546 9,978 1,606 356 -------------- -------- -------- ------------- -------- ------------ -------- ------------ -------- ------------ -------- ------------
1 The difference between applications received and approved primarily relates to those markets that have compulsory relief schemes in place where customers have chosen to opt out
2 Percentage of portfolio represents the approved amounts as a percentage of gross loans and advances to banks and customers by product segment and total loans and advances to banks and customers at 30 September 2020 and 30 June 2020
Vulnerable sectors
Maximum Exposure
30.09.20 ----------------------- --------------------------------------------------------------------------------------------- Maximum On Balance Total Sheet Financial On & Exposure Net On Undrawn Guarantees Net Off Off (net Balance Commitments(net (net Balance Balance of credit Sheet of credit of credit Sheet Sheet impairment) Collateral Exposure impairment) impairment) Exposure Net Exposure Amortised Cost $million $million $million $million $million $million $million ----------------------- ------------ ---------- --------- ---------------- ------------ --------- ------------- Industry: Aviation 4,347 2,169 2,178 955 555 1,510 3,688 Commodity Traders 8,786 519 8,267 2,791 3,123 5,914 14,181 Metals & Mining 5,031 898 4,133 2,075 1,853 3,928 8,061 Commercial Real Estate 18,186 7,672 10,514 4,726 345 5,071 15,585 Hotels & Tourism 2,560 1,072 1,488 1,230 141 1,371 2,859 Oil & Gas 8,703 1,180 7,523 9,387 4,865 14,252 21,775 ----------------------- ------------ ---------- --------- ---------------- ------------ --------- ------------- Total 47,613 13,510 34,103 21,164 10,882 32,046 66,149 ----------------------- ------------ ---------- --------- ---------------- ------------ --------- ------------- Total Corporate & Institutional Banking and Commercial Banking 140,057 29,234 110,823 90,732 40,930 131,662 242,485 ----------------------- ------------ ---------- --------- ---------------- ------------ --------- ------------- Total Retail, Private Banking and Other Segments 190,363 97,039 93,324 59,509 6,500 66,009 159,333 ----------------------- ------------ ---------- --------- ---------------- ------------ --------- ------------- Total Group 330,420 126,273 204,147 150,241 47,430 197,671 401,818 ----------------------- ------------ ---------- --------- ---------------- ------------ --------- ------------- 30.06.20 --------------------------- ----------------------------------------------------------------------------------------- Maximum On Balance Total Sheet Undrawn Financial On & Exposure Net On Commitments Guarantees Net Off Off
(net Balance (net (net Balance Balance of credit Sheet of credit of credit Sheet Sheet impairment) Collateral Exposure impairment) impairment) Exposure Net Exposure Amortised Cost $million $million $million $million $million $million $million --------------------------- ------------ ---------- --------- ------------ ------------ --------- ------------- Industry: Aviation 4,509 2,213 2,296 602 509 1,111 3,407 Commodity Traders 9,610 631 8,979 2,963 3,132 6,095 15,074 Metals & Mining 5,260 831 4,429 2,529 632 3,161 7,590 Commercial Real Estate 18,265 7,413 10,852 5,911 384 6,295 17,147 Hotels & Tourism 2,873 1,135 1,738 1,550 146 1,696 3,434 Oil & Gas 8,782 2,794 5,988 8,044 5,642 13,686 19,674 --------------------------- ------------ ---------- --------- ------------ ------------ --------- ------------- Total 49,299 15,017 34,282 21,599 10,445 32,044 66,326 --------------------------- ------------ ---------- --------- ------------ ------------ --------- ------------- Total Corporate & Institutional Banking and Commercial Banking 140,863 29,789 111,074 85,112 35,679 120,791 231,865 --------------------------- ------------ ---------- --------- ------------ ------------ --------- ------------- Total Retail, Private Banking and Other Segments 185,949 98,775 87,174 58,684 6,318 65,002 152,176 --------------------------- ------------ ---------- --------- ------------ ------------ --------- ------------- Total Group 326,812 128,564 198,248 143,796 41,997 185,793 384,041 --------------------------- ------------ ---------- --------- ------------ ------------ --------- -------------
Loans and advances by stage
30.09.20 -------------- -------------------------------------------------------------------------------------------------------------------- Stage 1 Stage 2 Stage 3 Total -------------------- ------------------------------ ------------------------------ ------------------------------ -------- Total Net Total Net Total Net Total Net Gross Credit Carrying Gross Credit Carrying Gross Credit Carrying Gross Credit Carrying Amortised Balance Impairment Amount Balance Impairment Amount Balance Impairment Amount Balance Impairment Amount Cost $million $million $million $million $million $million $million $million $million $million $million $million -------------- -------- ---------- -------- -------- ---------- -------- -------- ---------- -------- -------- ---------- -------- Industry: Aviation 2,118 (1) 2,117 1,993 (12) 1,981 294 (45) 249 4,405 (58) 4,347 Commodity Traders 8,204 (15) 8,189 428 (10) 418 937 (758) 179 9,569 (783) 8,786 Metals & Mining 3,730 (4) 3,726 1,194 (9) 1,185 263 (143) 120 5,187 (156) 5,031 Commercial Real Estate 13,559 (18) 13,541 4,443 (41) 4,402 402 (159) 243 18,404 (218) 18,186 Hotels & Tourism 1,123 (2) 1,121 1,373 (33) 1,340 134 (35) 99 2,630 (70) 2,560 Oil & Gas 6,903 (8) 6,895 1,663 (80) 1,583 468 (243) 225 9,034 (331) 8,703 -------------- -------- ---------- -------- -------- ---------- -------- -------- ---------- -------- -------- ---------- -------- Total 35,637 (48) 35,589 11,094 (185) 10,909 2,498 (1,383) 1,115 49,229 (1,616) 47,613 -------------- -------- ---------- -------- -------- ---------- -------- -------- ---------- -------- -------- ---------- -------- Total Corporate & Institutional Banking and Commercial Banking 111,283 (130) 112,753 24,649 (500) 24,149 7,873 (4,718) 3,155 145,405 (5,348) 140,057 -------------- -------- ---------- -------- -------- ---------- -------- -------- ---------- -------- -------- ---------- -------- Total Retail, Private Banking and Other Segments 186,455 (450) 186,005 3,776 (208) 3,568 1,463 (673) 790 191,694 (1,331) 190,363 -------------- -------- ---------- -------- -------- ---------- -------- -------- ---------- -------- -------- ---------- -------- Total Group 299,338 (580) 298,758 28,425 (708) 27,717 9,336 (5,391) 3,945 337,099 (6,679) 330,420 -------------- -------- ---------- -------- -------- ---------- -------- -------- ---------- -------- -------- ---------- -------- 30.06.20 -------------- ------------------------------------------------------------------------------------------------------------------------------ Stage 1 Stage 2 Stage 3 Total ------------------------------ ------------------------------ ------------------------------ ------------------------------ Total Net Total Net Total Net Total Net Gross Credit Carrying Gross Credit Carrying Gross Credit Carrying Gross Credit Carrying Balance Impairment Amount Balance Impairment Amount Balance Impairment Amount Balance Impairment Amount Amortised Cost $million $million $million $million $million $million $million $million $million $million $million $million -------------- -------- ---------- -------- -------- ---------- -------- -------- ---------- -------- -------- ---------- -------- Industry: Aviation 2,216 - 2,216 2,100 (25) 2,075 256 (38) 218 4,572 (63) 4,509 Commodity Traders 8,890 (14) 8,876 525 (11) 514 760 (540) 220 10,175 (565) 9,610 Metals & Mining 4,193 (4) 4,189 1,003 (31) 972 240 (141) 99 5,436 (176) 5,260 Commercial Real Estate 16,154 (22) 16,132 1,932 (40) 1,892 397 (156) 241 18,483 (218) 18,265 Hotels & Tourism 1,926 (2) 1,924 927 (45) 882 92 (25) 67 2,945 (72) 2,873 Oil & Gas 6,750 (5) 6,745 1,773 (80) 1,693 574 (230) 344 9,097 (315) 8,782 -------------- -------- ---------- -------- -------- ---------- -------- -------- ---------- -------- -------- ---------- -------- Total 40,129 (47) 40,082 8,260 (232) 8,028 2,319 (1,130) 1,189 50,708 (1,409) 49,299 -------------- -------- ---------- -------- -------- ---------- -------- -------- ---------- -------- -------- ---------- -------- Total Corporate & Institutional Banking and Commercial Banking 118,710 (93) 118,617 20,021 (538) 19,483 7,368 (4,605) 2,763 146,099 (5,236) 140,863 -------------- -------- ---------- -------- -------- ---------- -------- -------- ---------- -------- -------- ---------- -------- Total Retail, Private Banking and Other Segments 181,714 (386) 181,328 4,067 (244) 3,823 1,454 (656) 798 187,235 (1,286) 185,949 -------------- -------- ---------- -------- -------- ---------- -------- -------- ---------- -------- -------- ---------- -------- Total Group 300,424 (479) 299,945 24,088 (782) 23,306 8,822 (5,261) 3,561 333,334 (6,522) 326,812 -------------- -------- ---------- -------- -------- ---------- -------- -------- ---------- -------- -------- ---------- --------
Capital review
Capital ratios
30.09.20 30.06.20 31.12.19 --------------- -------- -------- -------- CET1 14.4% 14.3% 13.8% Tier 1 capital 16.5% 16.5% 16.5% Total capital 21.4% 21.5% 21.2% --------------- -------- -------- --------
CRD IV Capital base(1)
30.09.20 30.06.20 31.12.19 $million $million $million ------------------------------------------------------ ---------- ---------- ---------- CET1 instruments and reserves Capital instruments and the related share premium accounts 5,564 5,564 5,584 Of which: share premium accounts 3,989 3,989 3,989 Retained earnings(2) 25,748 25,798 24,044 Accumulated other comprehensive income (and other reserves) 12,037 11,431 11,685 Non-controlling interests (amount allowed in consolidated CET1) 170 170 723 Independently reviewed interim and year-end profits 1,203 1,050 2,301 Foreseeable dividends (228) (163) (871) ------------------------------------------------------ ---------- ---------- ---------- CET1 capital before regulatory adjustments 44,494 43,850 43,466 ------------------------------------------------------ ---------- ---------- ---------- CET1 regulatory adjustments Additional value adjustments (prudential valuation adjustments) (508) (527) (615) Intangible assets (net of related tax liability) (4,821) (4,938) (5,318) Deferred tax assets that rely on future profitability (excludes those arising from temporary differences) (76) (129) (129) Fair value reserves related to net losses on cash flow hedges 71 121 59 Deduction of amounts resulting from the calculation of excess expected loss (553) (572) (822) Net gains on liabilities at fair value resulting from changes in own credit risk (15) (15) (2) Defined-benefit pension fund assets (6) (7) (26) Fair value gains arising from the institution's own credit risk related to derivative liabilities (110) (128) (38) Exposure amounts which could qualify for risk weighting of 1250% (27) (30) (62) ------------------------------------------------------ ---------- ---------- ---------- Total regulatory adjustments to CET1 (6,045) (6,225) (6,953) ------------------------------------------------------ ---------- ---------- ---------- CET1 capital 38,449 37,625 36,513 ------------------------------------------------------ ---------- ---------- ---------- Additional Tier 1 capital (AT1) instruments 5,631 5,632 7,184 ------------------------------------------------------ ---------- ---------- ---------- AT1 regulatory adjustments (20) (20) (20) ------------------------------------------------------ ---------- ---------- ---------- Tier 1 capital 44,060 43,237 43,677 ------------------------------------------------------ ---------- ---------- ---------- Tier 2 capital instruments 13,021 13,261 12,318 Tier 2 regulatory adjustments (30) (30) (30) Tier 2 capital 12,991 13,231 12,288 ------------------------------------------------------ ---------- ---------- ---------- Total capital 57,051 56,468 55,965 ------------------------------------------------------ ---------- ---------- ---------- Total risk-weighted assets (unaudited) 266,664 262,552 264,090 ------------------------------------------------------ ---------- ---------- ----------
1 CRD IV capital is prepared on the regulatory scope of consolidation
2 Retained earnings includes IFRS9 capital relief (transitional) of $388 million, including dynamic relief of $92 million
Movement in total capital
9 months Year ended ended 30.09.20 31.12.19 $million $million --------------------------------------------------------------- --------------- ---------- CET1 at 1 January 36,513 36,717 Ordinary shares issued in the period and share premium - 25 Share buy-back (242) (1,006) Profit for the period 1,203 2,301 Foreseeable dividends deducted from CET1 (228) (871) Difference between dividends paid and foreseeable dividends 608 (641) Movement in goodwill and other intangible assets 497 (172) Foreign currency translation differences 75 (180) Non-controlling interests (553) 37 Movement in eligible other comprehensive income 148 284 Deferred tax assets that rely on future profitability 53 (14) Decrease/(increase) in excess expected loss 269 53 Additional value adjustments (prudential valuation adjustment) 107 (51) IFRS 9 day one transitional impact on regulatory reserves 29 (43) Exposure amounts which could qualify for risk weighting 35 61 Fair value gains arising from the institution's own Credit Risk related to derivative liabilities (72) - Other 7 13 --------------------------------------------------------------- --------------- ---------- CET1 at 30 September/31 December 38,449 36,513 --------------------------------------------------------------- --------------- ---------- AT1 at 1 January 7,164 6,684 Issuances net of redemptions (995) 552 Foreign currency translation difference (6) 9 Excess on AT1 grandfathered limit (ineligible) (552) (81) --------------------------------------------------------------- --------------- ---------- AT1 at 30 September/31 December 5,611 7,164 --------------------------------------------------------------- --------------- ---------- Tier 2 capital at 1 January 12,288 12,295 Regulatory amortisation (160) (1,111) Issuances net of redemptions 83 1,000 Foreign currency translation difference 158 (12) Tier 2 ineligible minority interest 70 31 Recognition of ineligible AT1 552 81 Other - 4 --------------------------------------------------------------- --------------- ---------- Tier 2 capital at 30 September/31 December 12,991 12,288 --------------------------------------------------------------- --------------- ---------- Total capital at 30 September/31 December 57,051 55,965 --------------------------------------------------------------- --------------- ----------
Risk-weighted assets by business
30.09.20 ---------------------------------- --------------------------------------------- Credit Operational Market risk risk risk Total risk $million $million $million $million ---------------------------------- --------- ----------- --------- ---------- Corporate & Institutional Banking 103,116 13,153 22,143 138,412 Retail Banking 37,270 7,575 - 44,845 Commercial Banking 27,685 2,810 - 30,495 Private Banking 5,488 763 - 6,251 Central & other items 44,161 2,499 1 46,661 ---------------------------------- --------- ----------- --------- ---------- Total risk-weighted assets 217,720 26,800 22,144 266,664 ---------------------------------- --------- ----------- --------- ---------- 30.06.20 ---------------------------------- --------------------------------------------- Credit Operational Market risk risk risk Total risk
$million $million $million $million ---------------------------------- --------- ----------- --------- ---------- Corporate & Institutional Banking 101,651 13,153 22,346 137,150 Retail Banking 36,611 7,575 - 44,186 Commercial Banking 28,046 2,810 - 30,856 Private Banking 5,365 763 - 6,128 Central & other items 41,463 2,499 270 44,232 ---------------------------------- --------- ----------- --------- ---------- Total risk-weighted assets 213,136 26,800 22,616 262,552 ---------------------------------- --------- ----------- --------- ---------- 31.12.19 ---------------------------------- --------------------------------------------- Credit Operational Market risk risk risk Total risk $million $million $million $million ---------------------------------- --------- ----------- --------- ---------- Corporate & Institutional Banking 95,261 13,261 20,562 129,084 Retail Banking 37,194 7,314 - 44,508 Commercial Banking 28,350 2,626 - 30,976 Private Banking 5,681 728 - 6,409 Central & other items 49,178 3,691 244 53,113 ---------------------------------- --------- ----------- --------- ---------- Total risk-weighted assets 215,664 27,620 20,806 264,090 ---------------------------------- --------- ----------- --------- ----------
Risk-weighted assets by geographic region
30.09.20 30.06.20 31.12.19 $million $million $million --------------------------- ---------- ---------- ---------- Greater China & North Asia 92,863 89,139 85,695 ASEAN & South Asia 80,123 80,040 88,942 Africa & Middle East 52,524 52,009 49,244 Europe & Americas 43,818 44,326 43,945 Central & other items (2,664) (2,962) (3,736) --------------------------- ---------- ---------- ---------- Total risk-weighted assets 266,664 262,552 264,090 --------------------------- ---------- ---------- ----------
Movement in risk-weighted assets
Credit risk ----------------- ----------------------------------------------------------------- ----------- -------- --------- Corporate Central & & Institutional Retail Commercial Private other Operational Market Total Banking Banking Banking Banking items Total risk risk risk $million $million $million $million $million $million $million $million $million ----------------- ------------- -------- ---------- -------- -------- -------- ----------- -------- --------- At 01 January 2019 96,954 35,545 27,711 5,103 45,825 211,138 28,050 19,109 258,297 Assets (decline)/growth 1,303 1,020 (557) 528 4,093 6,387 - - 6,387 Net credit migration 2,565 832 (642) 8 607 3,370 - - 3,370 Risk-weighted assets efficiencies (1,112) (33) (403) - (2,404) (3,952) - - (3,952) Model, methodology and policy changes (904) (7) - - 1,400 489 - 500 989 Disposals (397) - (441) - - (838) - - (838) Foreign currency translation (182) (219) (228) 42 (343) (930) - - (930) Other non-credit risk movements - - - - - - (430) 1,197 767 ----------------- ------------- -------- ---------- -------- -------- -------- ----------- -------- --------- At 31 December 2019 98,227 37,138 25,440 5,681 49,178 215,664 27,620 20,806 264,090 ----------------- ------------- -------- ---------- -------- -------- -------- ----------- -------- --------- At 01 January 2020(1) 95,261 37,194 28,350 5,681 49,178 215,664 27,620 20,806 264,090 Assets (decline)/growth (3,348) 265 (1,231) (185) 2,832 (1,667) - - (1,667) Net credit migration 10,884 (191) 665 (1) 823 12,180 - - 12,180 Risk-weighted assets efficiencies (230) - 89 - - (141) - - (141) Model, methodology and policy changes 667 241 - - - 908 - (1,400) (492) Disposals - - - - (7,859) (7,859) (1,003) (159) (9,021) Foreign currency translation (118) (239) (188) (7) (813) (1,365) - - (1,365) Other non-credit risk movements - - - - - - 183 2,897 3,080 ----------------- ------------- -------- ---------- -------- -------- -------- ----------- -------- --------- At 30 September 2020 103,116 37,270 27,685 5,488 44,161 217,720 26,800 22,144 266,664 ----------------- ------------- -------- ---------- -------- -------- -------- ----------- -------- ---------
1 Following a reorganisation of certain clients, there has been a reclassification of balances across client segments. 1 January 2020 balances have been restated.
UK leverage ratio
30.09.20 30.06.20 31.12.19 $million $million $million ------------------------------------------------ ---------- ---------- ---------- Tier 1 capital (transitional) 44,060 43,237 43,677 Additional Tier 1 capital subject to phase out (1,114) (1,114) (1,671) ------------------------------------------------ ---------- ---------- ---------- Tier 1 capital (end point) 42,946 42,123 42,006 ------------------------------------------------ ---------- ---------- ---------- Derivative financial instruments 52,961 52,227 47,212 Derivative cash collateral 8,682 9,716 9,169 Securities financing transactions (SFTs) 68,286 65,278 60,414 Loans and advances and other assets 624,500 614,364 603,603 ------------------------------------------------ ---------- ---------- ---------- Total on-balance sheet assets 754,429 741,585 720,398 Regulatory consolidation adjustments(1) (51,768) (47,271) (31,485) Derivatives adjustments ---------- ---------- ---------- Derivatives netting (30,799) (29,949) (32,852) Adjustments to cash collateral (17,179) (18,212) (11,853) Net written credit protection 1,724 1,711 1,650 Potential future exposure on derivatives 38,434 37,606 32,961 ---------- ---------- ---------- Total derivatives adjustments (7,820) (8,844) (10,094) Counterparty risk leverage exposure measure for SFTs 6,660 6,414 7,005 Off-balance sheet items 123,628 120,725 122,341 Regulatory deductions from Tier 1 capital (5,829) (6,013) (6,913) ------------------------------------------------ ---------- ---------- ---------- UK leverage exposure (end point) 819,300 806,596 801,252 UK leverage ratio (end point) 5.2% 5.2% 5.2% ------------------------------------------------ ---------- ---------- ---------- UK leverage exposure quarterly average 820,387 810,591 816,244 UK leverage ratio quarterly average 5.2% 5.0% 5.2% ------------------------------------------------ ---------- ---------- ---------- Countercyclical leverage ratio buffer 0.1% 0.0% 0.1% G-SII additional leverage ratio buffer 0.4% 0.4% 0.4% ------------------------------------------------ ---------- ---------- ----------
1 Includes adjustment for qualifying central bank claims
Financial statements
Condensed consolidated interim income statement
For the nine months ended 30 September 2020
restated(1) 9 months 9 months ended 30.09.20 ended 30.09.19 $million $million ------------------------------------------------------- --------------- ---------------- Interest income 9,604 12,464 Interest expense (4,507) (6,704) ------------------------------------------------------- --------------- ---------------- Net interest income 5,097 5,760 Fees and commission income 2,941 3,169 Fees and commission expense (465) (443) Net fee and commission income 2,476 2,726 Net trading income 3,003 2,695 Other operating income 1,029 608 ------------------------------------------------------- --------------- ---------------- Operating income 11,605 11,789 Staff costs (5,094) (5,330) Premises costs (274) (291) General administrative expenses (992) (1,343) Depreciation and amortisation (903) (901) Operating expenses (7,263) (7,865) ------------------------------------------------------- --------------- ---------------- Operating profit before impairment losses and taxation 4,342 3,924 Credit impairment (1,934) (534) Goodwill impairment (489) - Other impairment 2 (104) Profit from associates and joint ventures 141 233 ------------------------------------------------------- --------------- ---------------- Profit before taxation 2,062 3,519 Taxation (835) (1,251) ------------------------------------------------------- --------------- ---------------- Profit for the period 1,227 2,268 ------------------------------------------------------- --------------- ---------------- Profit attributable to: Non-controlling interests 25 30 Parent company shareholders 1,202 2,238 ------------------------------------------------------- --------------- ---------------- Profit for the period 1,227 2,268 ------------------------------------------------------- --------------- ---------------- cents cents ------------------------------------ ----- ----- Earnings per share: Basic earnings per ordinary share 29.7 60.5 Diluted earnings per ordinary share 29.3 59.8 ------------------------------------ ----- -----
1 Comparatives have been restated due to the Group changing its accounting policies for net interest income and net trading income for the year ended 31 December 2019. Refer to Note 1 in the Group's 2019 annual report.
Condensed consolidated interim statement of comprehensive income
For the nine months ended 30 September 2020
9 months 9 months ended 30.09.20 ended 30.09.19 $million $million ---------------------------------------------------------------- --------------- --------------- Profit for the period 1,227 2,268 Other comprehensive income/(loss) Items that will not be reclassified to income statement: 1 (420) --------------- --------------- Own credit gains/(losses) on financial liabilities designated at fair value through profit or loss 21 (386) Equity instruments at fair value through other comprehensive income 65 7 Actuarial losses on retirement benefit obligations (52) (89) Taxation relating to components of other comprehensive income (33) 48 --------------- --------------- Items that may be reclassified subsequently to income statement: 192 (328) Exchange differences on translation of foreign operations: --------------- --------------- Net losses taken to equity (248) (787) Net (losses)/gains on net investment hedges (20) 209 Reclassified to income statement on sale of joint venture 246 - Share of other comprehensive (loss)/income from associates and joint ventures (20) 16 Debt instruments at fair value through other comprehensive income: Net valuation gains taken to equity 852 484 Reclassified to income statement (562) (140) Net impact of expected credit losses 8 9 Cash flow hedges: Net losses taken to equity (45) (113) Reclassified to income statement 14 14 Taxation relating to components of other comprehensive income (33) (20) --------------- --------------- Other comprehensive income/(loss) for the period, net of taxation 193 (748) ---------------------------------------------------------------- --------------- --------------- Total comprehensive income for the period 1,420 1,520 ---------------------------------------------------------------- --------------- --------------- Total comprehensive income attributable to: Non-controlling interests 19 16 Parent company shareholders 1,401 1,504 ---------------------------------------------------------------- --------------- --------------- Total comprehensive income for the period 1,420 1,520 ---------------------------------------------------------------- --------------- ---------------
Condensed consolidated interim balance sheet
As at 30 September 2020
30.09.20 31.12.19 $million $million ---------------------------------------------------------- ---------- ---------- Assets Cash and balances at central banks 59,238 52,728 Financial assets held at fair value through profit or loss 102,354 92,818 Derivative financial instruments(1) 52,961 47,212 Loans and advances to banks 49,040 53,549 Loans and advances to customers 281,380 268,523 Investment securities 145,124 143,731 Other assets(1) 46,405 42,022 Current tax assets 752 539 Prepayments and accrued income 2,197 2,700 Interests in associates and joint ventures 2,083 1,908 Goodwill and intangible assets 4,916 5,290 Property, plant and equipment 6,606 6,220 Deferred tax assets 777 1,105 Assets classified as held for sale 596 2,053 ---------------------------------------------------------- ---------- ---------- Total assets 754,429 720,398 ---------------------------------------------------------- ---------- ---------- Liabilities Deposits by banks 28,138 28,562
Customer accounts 417,517 405,357 Repurchase agreements and other similar secured borrowing 2,346 1,935 Financial liabilities held at fair value through profit or loss 74,785 66,974 Derivative financial instruments(1) 52,376 48,484 Debt securities in issue 53,087 53,025 Other liabilities(1) 52,210 41,583 Current tax liabilities 683 703 Accruals and deferred income 4,309 5,369 Subordinated liabilities and other borrowed funds 16,737 16,207 Deferred tax liabilities 676 611 Provisions for liabilities and charges 440 449 Retirement benefit obligations 553 469 Liabilities included in disposal groups held for sale 2 9 ---------------------------------------------------------- ---------- ---------- Total liabilities 703,859 669,737 ---------------------------------------------------------- ---------- ---------- Equity Share capital and share premium account 7,058 7,078 Other reserves 12,037 11,685 Retained earnings 26,648 26,072 ---------------------------------------------------------- ---------- ---------- Total parent company shareholders' equity 45,743 44,835 Other equity instruments 4,518 5,513 ---------------------------------------------------------- ---------- ---------- Total equity excluding non-controlling interests 50,261 50,348 Non-controlling interests 309 313 ---------------------------------------------------------- ---------- ---------- Total equity 50,570 50,661 ---------------------------------------------------------- ---------- ---------- Total equity and liabilities 754,429 720,398 ---------------------------------------------------------- ---------- ----------
1 The Group has met the criteria to offset its derivative assets and liabilities and the related variation margin for trades cleared on behalf of clients with LCH SwapClear. This applies to both trades between the Group and the clients and between the Group and LCH SwapClear. The impact of this as at 30 September 2020 is a decrease in the derivative assets and derivative liabilities of $18.8bn. Prior periods have not been restated as the effect would not be material. The impact at 31 December 2019 would have been a decrease in the derivative assets and derivative liabilities of $8.7bn.
The Group has also met the criteria to derecognise initial margin for trades cleared on behalf of clients with LCH SwapClear. The impact of this as at 30 September 2020 is a decrease in other assets and other liabilities of $1.5bn. Prior periods have not been restated as the effect would not be material. The impact at 31 December 2019 would have been a decrease in other assets and other liabilities of $3.2bn.
Condensed consolidated statement of changes in equity
For the nine months ended 30 September 2020
Fair Fair Ordinary Preference value value share share through through capital capital other other and and Capital Own compre-hensive compre-hensive Cash Parent share share and credit income income flow company Other premium premium merger adjust-ment reserve reserve hedge Translation Retained share-holders' equity Non-controlling account account reserves reserve - debt - equity reserve reserve earnings equity instru--ments interests Total $million $million $million $million $million $million $million $million $million $million $million $million $million -------------- -------- ---------- --------- ----------- -------------- -------------- -------- ----------- --------- -------------- ------------- --------------- -------- As at 01 January 2019 5,617 1,494 17,129(1) 412 (161) 120 (10) (5,612) 26,129 45,118 4,961 273 50,352 Profit for the period - - - - - - - - 2,303 2,303 - 37 2,340 Other comprehensive (loss)/income - - - (410) 358 30 (49) (180) (132)(2) (383) - (17) (400) Distributions - - - - - - - - - - - (35) (35) Shares issued, net of expenses(3) 25(3) - - - - - - - - 25 - - 25 Other equity instruments issued, net of expenses - - - - - - - - - - 552 - 552 Treasury shares net movement - - - - - - - - (199) (199) - - (199) Share option expense, net of taxation - - - - - - - - 139 139 - - 139 Dividends on ordinary shares - - - - - - - - (720) (720) - - (720) Dividends on preference shares and AT1 securities - - - - - - - - (448) (448) - - (448) Share buy-back(4) (58) - 58 - - - - - (1,006) (1,006) - - (1,006) Other movements - - - - - - - - 6(5) 6 - 55(6) 61 -------------- -------- ---------- --------- ----------- -------------- -------------- -------- ----------- --------- -------------- ------------- --------------- -------- As at 31 December 2019 5,584 1,494 17,187 2 197 150 (59) (5,792) 26,072 44,835 5,513 313 50,661 Profit for the period - - - - - - - - 1,202 1,202 - 25 1,227 Other comprehensive income/(loss) - - - 13 241 17 (12) (22) (38)(2) 199 - (6) 193 Distributions - - - - - - - - - - - (23) (23) Other equity instruments issued, net of expenses - - - - - - - - - - 992 - 992 Redemption of other equity instruments - - - - - - - - (13) (13) (1,987) - (2,000) Treasury shares net movement - - - - - - - - (91) (91) - - (91) Share option expense, net of taxation - - - - - - - - 110 110 - - 110 Dividends on preference shares and AT1 securities - - - - - - - - (263) (263) - - (263) Share buy-back(7) (20) - 20 - - - - - (242) (242) - - (242) Other movements - - - - (2) - - 97 (8,9) (89)(8,9) 6 - - 6
-------------- -------- ---------- --------- ----------- -------------- -------------- -------- ----------- --------- -------------- ------------- --------------- -------- As at 30 September 2020 5,564 1,494 17,207 15 436 167 (71) (5,717) 26,648 45,743 4,518 309 50,570 -------------- -------- ---------- --------- ----------- -------------- -------------- -------- ----------- --------- -------------- ------------- --------------- --------
1 Includes capital reserve of $5 million, capital redemption reserve of $13 million and merger reserve of $17,111 million
2 Comprises actuarial loss, net of taxation, and share from associates and joint ventures $(38) million ($(132) million for the year ended 31 December 2019)
3 Comprises share capital of shares issued to fulfil discretionary awards $1 million, share capital of shares issued to fulfil employee share save options $1 million and share premium of shares issued to fulfil employee share save options exercised $23 million (nil for nine months ended 30 September 2020)
4 On 1 May 2019, the Group commenced a share buy-back of its ordinary shares of $0.50 each up to a maximum consideration of $1,000 million. Nominal value of share purchases is $58 million for the year ended 31 December 2019 and the total consideration paid was $1,006 million which includes share buy-back expenses of $6 million. The total number of shares purchased was 116,103,483 representing 3.51% of the ordinary shares in issue. The nominal value of the shares was transferred from the share capital to the capital redemption reserve account.
5 Comprises $10 million disposal of non-controlling interest of Phoon Huat Pte Ltd offset by $4 million withholding tax on capitalisation of revenue reserves for Standard Chartered Bank Ghana Limited
6 Comprises $72 million of non-controlling interest in SC Digital Solutions offset by $17 million disposal of non-controlling interest in Phoon Huat Pte Ltd, Sirat Holdings Limited and Ori Private Limited.
7 On 28 Feb 2020, the Group announced the buy-back programme for a share buy-back of its ordinary shares of $0.50 each. Nominal value of share purchases was $20 million, and the total consideration paid was $242 million. The total number of shares purchased was 40,029,585 representing 1.25% of the ordinary shares in issue. The nominal value of the shares was transferred from the share capital to the capital redemption reserve account. On the 1 April 2020, the Group announced that in response to a request from the Prudential Regulation Authority and as a consequence of the unprecedented challenges facing the world due to the COVID-19 pandemic, its board had decided after careful consideration to withdraw the recommendation to pay a final dividend for 2019 of 20 cents per ordinary share and to suspend the buy-back programme
8 Includes the foreign exchange movements for monetary items, which were considered structural positions, that were recognised in the translation reserve within equity rather than profit or loss. This adjustment amounting to $24 million relates to foreign exchange movements for periods prior to the comparative periods in these financial statements (2012 to 2017) and has been corrected by reclassifying the related translation reserve to retained earnings, all within equity
9 Includes the foreign exchange movements of the hedging instruments for net investment hedges that were overstated in the translation reserves within equity as opposed to being recorded in profit or loss. This adjustment amounting to $45m relates to foreign exchange movements for periods prior to the comparative periods in these financial statements (2010 to 2013) and has been corrected by reclassifying the related translation reserve to retained earnings, all within equity
Basis of preparation
This statement covers the results of Standard Chartered PLC together with its subsidiaries and equity accounted interest in associates and jointly controlled entities (the Group) for the nine months ended 30 September 2020. The financial information on which this statement is based, and the data set out in the appendix to this statement, are unaudited and have been prepared in accordance with Standard Chartered's accounting policies. The Group's significant accounting policies are described in the Annual Report 2019.
The interim financial information does not constitute a full set of financial statements under IAS 34 Interim Financial Reporting. The interim financial information has been prepared in accordance with the recognition and measurement principles, but not the disclosure requirements under International Financial Reporting Standards as adopted by the European Union. The interim financial information does not constitute a full set of financial statements under IAS 34 Interim Financial Reporting.
The information in this document does not comprise statutory accounts within the meaning of Section 434 of the Companies Act 2006. Statutory accounts for the year ended 31 December 2019, which contained an unqualified audit report under Section 495 of the Companies Act 2006 (which did not make any statements under Section 498 of the Companies Act 2006) have been delivered to the Registrar of Companies in accordance with Section 441 of the Companies Act 2006.
Going concern
The Directors made an assessment of the Group's ability to continue as a going concern, including the impact of COVID-19, and confirm they are satisfied that the Group has adequate resources to continue in business for a period at least twelve months from the date of signing of the interim financial information. For this reason, the Group continues to adopt the going concern basis of accounting for preparing the interim financial information.
Other supplementary financial information
Average balance sheets and yields
Average assets
9 months ended 30.09.20 --------------------------------------------- ------------------------------------------------ Average Average non-interest interest earning earning Interest balance balance income Gross yield $million $million $million % --------------------------------------------- ------------- --------- --------- ----------- Cash and balances at central banks 17,051 41,386 93 0.30 Gross loans and advances to banks 28,221 54,750 646 1.58 Gross loans and advances to customers 50,504 289,387 6,663 3.08 Impairment provisions against loans and advances to banks and customers - (6,341) - - Investment securities 27,775 143,069 2,202 2.06 Property, plant and equipment and intangible assets 10,235 - - - Prepayments, accrued income and other assets 113,718 - - - Investment associates and joint ventures 2,118 - - - --------------------------------------------- ------------- --------- --------- ----------- Total average assets 249,622 522,251 9,604 2.46 --------------------------------------------- ------------- --------- --------- ----------- 6 months ended 30.06.20 --------------------------------------------- ------------------------------------------------ Average Average non-interest interest earning earning Interest balance balance income Gross yield $million $million $million % --------------------------------------------- ------------- --------- --------- ----------- Cash and balances at central banks 16,378 40,718 77 0.38 Gross loans and advances to banks 27,489 56,444 479 1.71 Gross loans and advances to customers 49,747 287,800 4,755 3.32 Impairment provisions against loans and advances to banks and customers - (5,924) - - Investment securities 27,897 141,864 1,564 2.22 Property, plant and equipment and intangible assets 10,061 - - - Prepayments, accrued income and other assets 108,905 - - - Investment associates and joint ventures 2,140 - - - --------------------------------------------- ------------- --------- --------- ----------- Total average assets 242,617 520,902 6,875 2.65 --------------------------------------------- ------------- --------- --------- ----------- 9 months ended 30.09.19 --------------------------------------------- ------------------------------------------------ Average Average non-interest interest
earning earning Interest balance balance income Gross yield $million $million $million % --------------------------------------------- ------------- --------- --------- ----------- Cash and balances at central banks 17,739 29,366 266 1.21 Gross loans and advances to banks 26,286 61,850 1,385 2.99 Gross loans and advances to customers 49,503 272,217 8,125 3.99 Impairment provisions against loans and advances to banks and customers - (4,739) - - Investment securities 29,721 131,599 2,688 2.73 Property, plant and equipment and intangible assets 11,290 - - - Prepayments, accrued income and other assets 84,303 - - - Investment associates and joint ventures 2,575 - - - --------------------------------------------- ------------- --------- --------- ----------- Total average assets 221,417 490,293 12,464 3.40 --------------------------------------------- ------------- --------- --------- -----------
Average liabilities
9 months ended 30.09.20 ------------------------------------------------ ---------------------------------------------- Average Average non-interest interest bearing bearing Interest balance balance expense Rate paid $million $million $million % ------------------------------------------------ ------------- --------- --------- --------- Deposits by banks 18,435 26,206 271 1.38 Customer accounts: Current accounts and savings deposits 42,123 219,054 995 0.61 Time and other deposits 58,750 158,579 2,028 1.71 Debt securities in issue 7,083 52,493 670 1.70 Accruals, deferred income and other liabilities 119,134 1,204 45 4.99 Subordinated liabilities and other borrowed funds - 16,242 498 4.10 Non-controlling interests 309 - - - Shareholders' funds 50,306 - - - ------------------------------------------------ ------------- --------- --------- --------- 296,140 473,778 4,507 1.27 ------------------------------------------------ ------------- --------- --------- --------- Adjustment for Financial Markets funding costs (148) ------------------------------------------------ ------------- --------- --------- --------- Total average liabilities and shareholders' funds 296,140 473,778 4,359 1.23 ------------------------------------------------ ------------- --------- --------- --------- 6 months ended 30.06.20 ------------------------------------------------ ---------------------------------------------- Average Average non-interest interest bearing bearing Interest balance balance expense Rate paid $million $million $million % ------------------------------------------------ ------------- --------- --------- --------- Deposits by banks 17,764 26,055 235 1.81 Customer accounts: Current accounts and savings deposits 41,519 211,961 767 0.73 Time and other deposits 58,439 163,409 1,509 1.86 Debt securities in issue 7,535 53,141 485 1.84 Accruals, deferred income and other liabilities 114,116 1,204 31 5.18 Subordinated liabilities and other borrowed funds - 16,031 350 4.39 Non-controlling interests 317 - - - Shareholders' funds 49,963 - - - ------------------------------------------------ ------------- --------- --------- --------- 289,653 471,801 3,377 1.44 ------------------------------------------------ ------------- --------- --------- --------- Adjustment for Financial Markets funding costs (121) ------------------------------------------------ ------------- --------- --------- --------- Total average liabilities and shareholders' funds 289,653 471,801 3,256 1.39 ------------------------------------------------ ------------- --------- --------- --------- 9 months ended 30.09.19 ------------------------------------------------ ---------------------------------------------- Average Average non-interest interest bearing bearing Interest balance balance expense Rate paid $million $million $million % ------------------------------------------------ ------------- --------- --------- --------- Deposits by banks 16,819 28,303 570 2.69 Customer accounts: Current accounts and savings deposits 38,353 179,311 1,560 1.16 Time and other deposits 59,207 168,421 3,114 2.47 Debt securities in issue 9,192 48,733 843 2.31 Accruals, deferred income and other liabilities 95,492 1,356 39 3.85 Subordinated liabilities and other borrowed funds - 14,905 578 5.18 Non-controlling interests 298 - - - Shareholders' funds 50,228 - - - ------------------------------------------------ ------------- --------- --------- --------- 269,589 441,029 6,704 2.03 ------------------------------------------------ ------------- --------- --------- --------- Adjustment for Financial Markets funding costs (269) ------------------------------------------------ ------------- --------- --------- --------- Total average liabilities and shareholders' funds 269,589 441,029 6,435 1.95 ------------------------------------------------ ------------- --------- --------- ---------
CONTACT INFORMATION
Global headquarters
Standard Chartered Group
1 Basinghall Avenue
London, EC2V 5DD
United Kingdom
telephone: +44 (0)20 7885 8888
facsimile: +44 (0)20 7885 9999
Shareholder enquiries
ShareCare information
website: sc.com/shareholders
helpline: 0370 702 0138
ShareGift information
website: ShareGift.org
helpline: +44 (0)20 7930 3737
Registrar information
UK
Computershare Investor Services PLC
The Pavilions
Bridgwater Road
Bristol, BS99 6ZZ
Helpline: 0370 702 0138
Hong Kong
Computershare Hong Kong Investor Services Limited
17M Floor, Hopewell Centre
183 Queen's Road East
Wan Chai
Hong Kong
website: computershare.com/hk/investors
Chinese translation
Computershare Hong Kong Investor Services Limited
17M Floor, Hopewell Centre
183 Queen's Road East
Wan Chai
Hong Kong
Register for electronic communications website: investorcentre.co.uk
For further information, please contact:
Mark Stride, Head of Investor Relations
+44 (0) 20 7885 8596
LSE Stock code: STAN.LN
HKSE Stock code: 02888
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