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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 | |
---|---|---|---|---|---|---|---|---|---|---|
-1.40 | -0.21% | 681.40 | 682.40 | 682.80 | 692.60 | 680.40 | 691.00 | 6,863,408 | 16:35:01 |
Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
---|---|---|---|---|---|
Commercial Banks, Nec | 18.02B | 3.47B | 1.2403 | 5.51 | 19.1B |
TIDMSTAN
RNS Number : 0027R
Standard Chartered PLC
02 November 2021
Standard Chartered PLC - third quarter 2021 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 25 ---------------------------------------------------- ---- Risk review 31 ---------------------------------------------------- ---- Capital review 36 ---------------------------------------------------- ---- Financial statements 41 ---------------------------------------------------- ---- Other supplementary financial information 46 ---------------------------------------------------- ----
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 2020 Annual Report and the 2021 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. Asia includes Australia, Bangladesh, Brunei, Cambodia, Mainland China, Hong Kong, India, Indonesia, Japan, Korea, Laos, Macau, Malaysia, Myanmar, Nepal, Philippines, Singapore, Sri Lanka, Taiwan, Thailand and Vietnam; Africa & Middle East (AME) includes Angola, Bahrain, Botswana, Cameroon, Cote d'Ivoire, Egypt, The Gambia, Ghana, Iraq, Jordan, Kenya, Lebanon, Mauritius, Nigeria, Oman, Pakistan, Qatar, Saudi Arabia, Sierra Leone, South Africa, Tanzania, the United Arab Emirates (UAE), Uganda, Zambia and Zimbabwe; and Europe & Americas (EA) includes Argentina, Brazil, Colombia, Falkland Islands, France, Germany, Ireland, Jersey, Poland, Sweden, Turkey, the UK and the US.
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.
Standard Chartered PLC - third quarter 2021 performance highlights
All figures are presented on an underlying basis and comparisons are made to the third quarter 2020 on a reported currency basis, unless otherwise stated. A reconciliation of restructuring and other items excluded from underlying results is set out on pages 25-30.
Bill Winters, Group Chief Executive, said:
"We delivered a return to top-line growth in the third quarter and achieved further progress against our strategic priorities, with strong performance in our Financial Markets and Trade businesses and ongoing positive momentum in Wealth Management. We continue to transform how we serve our customers in the world's most dynamic markets through innovation, partnerships and new ventures. Last week, we were also pleased to deliver on our sustainability commitment to set out a clear path to achieve net zero by 2050."
Update on strategic priorities
-- Primary performance measure return on tangible equity improved 270bps to 7.1%
-- Continued good progress on strategic priorities
- Network: The proportion of digital transactions in our Corporate, Commercial & Institutional business is up 9%pts in 2021 to 50%
- Sustainability: Year-to-date Sustainable Finance income has more than doubled YoY
- Affluent: Net New Money of $11bn for the first nine months of the year, more than 70% higher YoY,
- Mass retail: Continued growth in sales executed digitally by our clients, up 7%pts in 2021 to 76%
Selected information concerning financial performance (3Q'21 unless otherwise stated)
-- Income 7% higher at $3.8bn, up 5% at constant currency (ccy) and excluding normalisation adjustments
- Trade income up 13% at ccy and excluding normalising adjustments, the strongest quarter since 1Q'18
- Strong performance in Financial Markets, up 4% at ccy and excluding normalising adjustments
- Wealth Management ex-Bancassurance up 3% and up 18% YoY for the nine months to September
- Net interest margin (NIM) in 3Q'21 of 1.23%, up 1bp on 2Q'21, benefiting from a 7bps or $96m IFRS9 interest income adjustment
-- Expenses increased 5% to $2.6bn, up 3% at ccy, and flat compared to 2Q'21
- Positive income-to-cost jaws of 3% at ccy excluding DVA
-- Credit impairment of $107m, down $246m YoY; up $174m QoQ
- CCIB $24m, with no significant new exposures in 3Q'21 and a small reduction in management overlay from $170m to $166m
- CPBB $74m, with no change in management overlay remaining stable at $140m
- High-risk assets: reduced for the fifth consecutive quarter in 3Q'21, down $1.5bn in the quarter and down $6.1bn YoY
-- Underlying profit before tax up 44% to $1.1bn; statutory profit before tax up 129% to $1.0bn
-- Tax charge of $229m: underlying year-to-date effective tax rate of 23.5% down 7.8%pts due to change in geographic mix and higher profits diluting the impact of non-deductible costs
-- Earnings per share increased 9.5 cents or 70% to 23.1 cents
-- The Group's balance sheet continues to grow and remains strong, liquid and well diversified
- Customer loans and advances up 2% or $4bn since 30.06.21 and up 7% since 31.12.20
- Advances-to-deposit ratio 61.9% (30.06.21: 64.0%); liquidity coverage ratio 145% (30.06.21: 146%)
-- Risk-weighted assets (RWA) of $268bn down 5% or $13bn since 30.06.21 and broadly flat to 31.12.20
- Credit RWA down $10bn in 3Q'21: asset growth offset by model changes, improvement in asset quality, asset mix changes and FX
- Market risk RWA down $3bn in 3Q'21: reduced charges for Internal Models Approach (IMA) risks not in Value at Risk (VaR)
-- The Group remains strongly capitalised
- Common equity tier 1 (CET 1) ratio 14.6% (30.06.21: 14.1%), above the 13-14% target range; includes 34 bps software relief which will cease from 01.01.2022
- An update on capital management actions will be provided at FY'21 results
Outlook
The economic recovery from the COVID-19 pandemic has continued to be uneven and punctuated by supply-chain disruption. However, we are encouraged by robust levels of export growth across many of our markets in Asia. Against this backdrop:
-- We continue to expect FY'21 income to be similar to that achieved in FY'20 on a constant currency basis, with 4Q'21 being sequentially lower, reflecting seasonality comparable to prior years, and normalising for the IFRS9 interest income adjustment. Strong underlying business momentum throughout 2021 should enable income growth to return to our 5-7% guidance range from FY'22
-- We continue to expect FY'21 operating expenses, including the impact of currency translation and performance-related pay, to be at or below $10.4bn
-- Excluding the impact of any unforeseeable events, we expect credit impairment to remain at low levels in 4Q'21
-- We expect FY'21 CET1 to be around the top of the 13-14% target range on a pro-forma basis, excluding software relief
Page 1
Statement of results
3 months ended 3 months ended 30.09.21 30.09.20 Change(1) $million $million % ----------------------------------------------------------------- --------------- ---------- --------- Underlying performance Operating income 3,765 3,519 7 Operating expenses (2,594) (2,480) (5) Credit impairment (107) (353) 70 Other impairment (35) (15) (133) Profit from associates and joint ventures 46 74 (38) Profit before taxation 1,075 745 44 Profit attributable to ordinary shareholders(2) 716 428 67 Return on ordinary shareholders' tangible equity (%) 7.1 4.4 270bps Cost-to-income ratio (%) 68.9 70.5 160bps ----------------------------------------------------------------- --------------- ---------- --------- Statutory performance Operating income 3,764 3,506 7 Operating expenses (2,647) (2,515) (5) Credit impairment (108) (358) 70 Goodwill impairment - (231) 100 Other impairment (59) (33) (78.79) Profit from associates and joint ventures 46 66 (30) Profit before taxation 996 435 129 Taxation (229) (274) 16 Profit for the period 767 161 376 Profit attributable to parent company shareholders 763 154 395 Profit attributable to ordinary shareholders(2) 644 123 424 Return on ordinary shareholders' tangible equity (%) 6.4 1.3 510bps Cost-to-income ratio (%) 70.3 71.7 140bps Net Interest Margin (%) (adjusted) 1.23 1.23 (0)bps ----------------------------------------------------------------- --------------- ---------- --------- 30.09.21 30.09.20 Change(1) Balance sheet and capital $million $million % ----------------------------------------------------------------- --------------- ---------- --------- Total assets 817,102 754,429 8 Total equity 53,335 50,570 5 Average tangible equity attributable to ordinary shareholders(2) 39,948 38,934 3 Loans and advances to customers 302,493 281,380 8 Customer accounts 453,260 417,517 9 Risk-weighted assets 267,555 266,664 - Total capital 58,871 57,051 3 Total capital (%) 22.0 21.4 60bps Common Equity Tier 1 39,167 38,449 2 Common Equity Tier 1 ratio (%) 14.6 14.4 20bps Advances-to-deposits ratio (%)(3) 61.9 63.8 (1.9) Liquidity coverage ratio (%) 145 142 3 UK leverage ratio (%) 5.1 5.2 (10)bps ----------------------------------------------------------------- --------------- ---------- --------- Information per ordinary share Cents Cents Cents Earnings per share - underlying(4) 23.1 13.6 9.5 - statutory(4) 20.7 3.9 16.8 Net asset value per share(5) 1,468 1,405 63 Tangible net asset value per share(5) 1,294 1,249 45 Number of ordinary shares at period end (millions) 3,078 3,149 (2) ----------------------------------------------------------------- --------------- ---------- ---------
1 Variance is better/(worse) other than assets, liabilities and risk-weighted assets. Change is percentage points difference between two points rather than percentage change for total capital ratio (%), common equity tier 1 ratio (%), net interest margin (%), advances-to-deposits ratio (%), liquidity coverage ratio (%), UK leverage ratio (%). Change is cents difference between two points rather than percentage change for earnings per share, net asset value per share and tangible net asset value per share
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 include 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. Result represents three months ended the reporting period.
5 Calculated on period end net asset value, tangible net asset value and number of shares
Page 2
Group Chief Financial Officer's review
The Group delivered a strong performance in 3Q'21
Summary of financial performance
Constant Constant Constant currency currency currency 3Q'21 3Q'20 Change change(1) 2Q'21 Change change(1) YTD'21 YTD'20 Change change(1) $million $million % % $million % % $million $million % % -------------- ---------- ---------- ------ ---------- ------ ---------- ---------- ------ Net interest income 1,735 1,620 7 6 1,713 1 2 5,110 5,122 - (2) Other income 2,030 1,899 7 7 1,976 3 4 6,273 6,444 (3) (4) -------------- ---------- ---------- ------ --------- ---------- ------ --------- ---------- ---------- ------ --------- Underlying operating income 3,765 3,519 7 7 3,689 2 3 11,383 11,566 (2) (3) Other operating expenses (2,594) (2,480) (5) (3) (2,592) - (1) (7,680) (7,193) (7) (4) UK bank levy - - nm(3) nm(3) (6) 100 100 (6) - nm(3) nm(3) Underlying operating expenses (2,594) (2,480) (5) (3) (2,598) - (1) (7,686) (7,193) (7) (4) -------------- ---------- ---------- ------ --------- ---------- ------ --------- ---------- ---------- ------ --------- Underlying operating profit before impairment
and taxation 1,171 1,039 13 16 1,091 7 8 3,697 4,373 (15) (14) Credit impairment (107) (353) 70 71 67 nm(3) nm(3) (60) (1,920) 97 97 Other impairment (35) (15) (133) (150) (9) nm(3) nm(3) (60) 97 (162) (162) Profit from associates and joint ventures 46 74 (38) (38) 87 (47) (47) 180 150 20 21 -------------- ---------- ---------- ------ --------- ---------- ------ --------- ---------- ---------- ------ --------- Underlying profit before taxation 1,075 745 44 50 1,236 (13) (13) 3,757 2,700 39 43 Restructuring (99) (44) (125) (122) (90) (10) (11) (222) (134) (66) (65) Goodwill impairment - (231) 100 100 - nm(3) nm(3) - (489) 100 100 Other items 20 (35) nm(3) 157 - nm(3) nm(3) 20 (15) nm(3) nm(3) -------------- ---------- ---------- ------ --------- ---------- ------ --------- ---------- ---------- ------ --------- Statutory profit before taxation 996 435 129 146 1,146 (13) (13) 3,555 2,062 72 79 Taxation (229) (274) 16 17 (317) 28 27 (860) (835) (3) (2) -------------- ---------- ---------- ------ --------- ---------- ------ --------- ---------- ---------- ------ --------- Profit for the period 767 161 nm(3) nm(3) 829 (8) (7) 2,695 1,227 120 137 -------------- ---------- ---------- ------ --------- ---------- ------ --------- ---------- ---------- ------ --------- Net interest margin (%)(2) 1.23 1.23 - 1.22 1 1.23 1.34 (11) Underlying return on tangible equity (%)(2) 7.1 4.4 270 7.8 (70) 8.6 5.5 310 Underlying earnings per share (cents) 23.1 13.6 70 24.8 (7) 81.4 49.5 64 Statutory return on tangible equity (%)(2) 6.4 1.3 510 7.0 (60) 7.9 3.3 460 Statutory earnings per share (cents) 20.7 3.9 nm(3) 22.1 (6) 75.6 29.7 155 -------------- ---------- ---------- ------ --------- ---------- ------ --------- ---------- ---------- ------ ---------
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 Change is the basis points (bps) difference between the two periods rather than the percentage change
3 Not meaningful
The Group delivered a strong performance in the third quarter of 2021, in what remained challenging conditions, with underlying profit before tax improving 44 per cent. Income returned to growth, increasing 5 per cent, on a constant currency basis and excluding normalisation adjustments, with continued strong underlying business momentum more than offsetting the impact of a 7 basis point decline in net interest margin on a normalised basis. Expenses grew 3 per cent at constant currency, mainly from increased investment in strategic initiatives. Credit impairment charges remain at low levels reflecting the improving economic backdrop. The Group remains well capitalised and highly liquid with a common equity tier 1 (CET1) ratio of 14.6 per cent, above the 13 to 14 per cent target range, with an advances-to-deposits ratio of 61.9 per cent and a liquidity coverage ratio of 145 per cent.
All commentary that follows is on an underlying basis and comparisons are made to the equivalent period in 2020 on a reported currency basis, unless otherwise stated.
-- Operating income increased 7 per cent and was up 5 per cent on a constant currency basis and excluding normalisation adjustments. The impact of the lower underlying net interest margin was more than offset by balance sheet growth and strong performances in Financial Markets and Trade
-- Net interest income increased 7 per cent, benefiting from a positive $96 million IFRS9 interest income catch-up adjustment in respect of interest earned on historically impaired assets. Excluding this adjustment, net interest income increased 1 per cent with a 6 per cent increase in average interest-earning assets, partly offset by a 7 basis points decline in the normalised net interest margin. Excluding the impact of IFRS9 adjustments in both the second and third quarter, net interest income was flat quarter-on-quarter while the net interest margin declined 1 basis point to 116 basis points on a normalised basis
-- Other income increased 7 per cent and 9 per cent excluding the positive impact of a $21 million increase in DVA and the non-repeat of a $53 million accelerated recognition of an annual Bancassurance bonus in 3Q'20, with broad-based growth across multiple products
Page 3
Group Chief Financial Officer's review continued
-- Operating expenses were up 5 per cent, and up 3 per cent on a constant currency basis, reflecting an increase in performance-related pay accruals and sustained increased investment into transformational digital initiatives. The cost-to-income ratio excluding DVA decreased 1 percentage point to 69 per cent
-- Credit impairment declined by $246 million to $107 million. There was a $30 million charge in stage 1 and 2 impairment including a $25 million release of the judgemental management overlay relating to stage 1 and 2 loans. Impairment of stage 3 assets of $77 million were down $167 million, with no significant new exposures in the quarter, and included a $12 million charge in relation to the IFRS9 interest income catch-up adjustment and a $21 million increase in the management overlay relating to stage 3. The management overlay was broadly stable in the quarter and now totals $306 million
-- Other impairment increased by $20 million with a $35 million charge in the quarter, mainly relating to the aviation lease portfolio
-- Profit from associates and joint ventures was down 38 per cent to $46 million, reflecting the reduction in the Group's shareholding in China Bohai Bank from 19.99 per cent to 16.26 per cent
-- Charges relating to restructuring, goodwill impairment and other items decreased $231 million to $79 million, with higher restructuring costs more than offsetting a non-repeat of $231 million goodwill impairment primarily relating to UAE booked in 3Q'20
-- Taxation was $229 million on a statutory basis, with an underlying year-to-date effective tax rate of 23.5 per cent, down from the prior year rate of 31.3 per cent, reflecting a change in the geographic mix of profits and higher profits diluting the impact of non-deductible costs
-- Underlying return on tangible equity increased by 270 basis points to 7.1 per cent due to higher profits partly offset by increased tangible equity, reflecting the net impact of profit accretion partly offset by shareholder distributions
Operating income by product
Constant Constant Constant currency currency currency 3Q'21 3Q'20 Change change(1) 2Q'21 Change change(1) YTD'21 YTD'20 Change change(1) $million $million % % $million % % $million $million % % --------------- ---------- ---------- ------ ---------- ------ ---------- ---------- ------ Transaction Banking 645 665 (3) (4) 637 1 2 1,925 2,186 (12) (13) ---------- ---------- ------ --------- ---------- ------ --------- ---------- ---------- ------ --------- Trade 300 255 18 17 291 3 3 868 745 17 16 Cash Management 345 410 (16) (16) 346 - 1 1,057 1,441 (27) (27) ---------- ---------- ------ --------- ---------- ------ --------- ---------- ---------- ------ --------- Financial Markets 1,315 1,185 11 10 1,270 4 4 3,905 3,955 (1) (2) ---------- ---------- ------ --------- ---------- ------ --------- ---------- ---------- ------ --------- Macro Trading 540 518 4 4 571 (5) (5) 1,783 2,097 (15) (16) Credit Markets 522 464 13 12 495 5 6 1,458 1,207 21 20 Credit Trading 144 129 12 11 102 41 41 377 285 32 31 Financing Solutions & Issuance 378 335 13 13 393 (4) (3) 1,081 922 17 16 Structured Finance 156 101 54 53 120 30 30 375 281 33 32 Financing & Securities
Services 98 124 (21) (22) 85 15 9 291 288 1 (1) DVA (1) (22) 95 95 (1) - 50 (2) 82 (102) (102) ---------- ---------- ------ --------- ---------- ------ --------- ---------- ---------- ------ --------- Lending & Portfolio Management 278 226 23 22 253 10 11 764 666 15 13 Wealth Management 559 572 (2) (3) 554 1 1 1,759 1,548 14 12 Retail Products 828 859 (4) (5) 846 (2) (1) 2,523 2,718 (7) (9) ---------- ---------- ------ --------- ---------- ------ --------- ---------- ---------- ------ --------- Credit Cards & Personal Loans (CCPL) & other unsecured lending 316 309 2 1 320 (1) - 956 908 5 3 Deposits 205 301 (32) (32) 209 (2) (1) 647 1,186 (45) (46) Mortgage & Auto 260 211 23 21 268 (3) (1) 775 516 50 45 Other Retail Products 47 38 24 21 49 (4) (6) 145 108 34 33 ---------- ---------- ------ --------- ---------- ------ --------- ---------- ---------- ------ --------- Treasury 149 40 nm(2) nm(2) 137 9 9 543 543 - (1) Other (9) (28) 68 89 (8) (13) 69 (36) (50) 28 27 --------------- ---------- ---------- ------ --------- ---------- ------ --------- ---------- ---------- ------ --------- Total underlying operating income 3,765 3,519 7 7 3,689 2 3 11,383 11,566 (2) (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 Not meaningful
Following an organisational restructure that came into effect on 1 January 2021, the Group's Financial Markets business has been expanded and reorganised, with the Group integrating the majority of its Corporate Finance business within Financial Markets. The remaining elements of the Group's Corporate Finance business - primarily M&A Advisory - have been transferred into Lending & Portfolio Management.
Transaction Banking income was down 3 per cent. Cash Management declined 16 per cent as double-digit volume growth and increased fee income was more than offset by margin compression due to the lower interest rate environment despite repricing initiatives. Trade increased 18 per cent primarily due to double-digit growth in balances.
Page 4
Group Chief Financial Officer's review continued
Financial Markets income increased 11 per cent or 4 per cent excluding DVA and the impact of the IFRS9 interest income catch-up adjustment. Macro Trading increased 4 per cent with higher Foreign Exchange (FX) and Commodities income partly offset by lower Rates income. Credit Markets income increased 13 per cent with Financing Solutions & Issuance benefiting from growth in origination and distribution activities along with the IFRS9 income adjustments. Structured Finance was up 54 per cent due to trading and other gains within Aviation Finance, while negative movements in XVA resulted in Financing & Security Services income reducing by 21 per cent.
Lending and Portfolio Management income was up 23 per cent with half of the growth due to the impact of the IFRS9 interest income catch-up adjustment. Underlying growth of 11 per cent reflected a doubling of fee income, primarily from M&A Advisory and higher margins.
Wealth Management was down 2 per cent, primarily due to a $53 million accelerated recognition of an annual Bancassurance bonus in 3Q'20 which was not repeated in 3Q'21. This resulted in a 15 per cent decline in Bancassurance income, which is currently around a quarter of total Wealth Management income. Excluding Bancassurance, Wealth Management underlying growth was 3 per cent, with double-digit growth in Funds, Structured Notes and Wealth Lending.
Retail Products income reduced 4 per cent on a reported basis and was down 5 per cent on a constant currency basis. Deposits income declined 32 per cent as margin compression more than offset increased volumes and improved balance sheet mix. Balance sheet growth and increased margins led to 23 per cent growth across Mortgages & Auto and a 24 per cent increase in Other Retail Products. Credit Cards & Personal Loans income increased 2 per cent with improved personal loan margins and increased fees.
Treasury income more than tripled to $149 million, with two-thirds of the increase from higher net interest income. The remaining increase is primarily due to a non-repeat of prior period negative movements in hedge ineffectiveness.
Underlying profit before tax by client segment and geographic region
Constant Constant Constant currency currency currency 3Q'21 3Q'20 Change change(1) 2Q'21 Change change(1) YTD'21 YTD'20 Change change(1) $million $million % % $million % % $million $million % % -------------- ---------- ---------- ------ ---------- ------ ---------- ---------- ------ Corporate, Commercial & Institutional Banking 868 521 67 70 936 (7) (7) 2,689 1,800 49 51 Consumer, Private & Business Banking 259 297 (13) (13) 299 (13) (12) 1,037 714 45 46 Central & other items (segment) (52) (73) 29 44 1 nm(2) nm(2) 31 186 (83) (78) -------------- ---------- ---------- ------ --------- ---------- ------ --------- ---------- ---------- ------ --------- Underlying profit before taxation 1,075 745 44 50 1,236 (13) (13) 3,757 2,700 39 43 -------------- ---------- ---------- ------ --------- ---------- ------ --------- ---------- ---------- ------ --------- Asia 927 821 13 13 1,005 (8) (7) 3,166 2,411 31 30 Africa & Middle East 222 11 nm(2) nm(2) 285 (22) (21) 697 101 nm(2) nm(2) Europe & Americas 161 37 nm(2) nm(2) 104 55 54 498 393 27 29 Central & other items (region) (235) (124) (90) (66) (158) (49) (52) (604) (205) (195) (121) -------------- ---------- ---------- ------ --------- ---------- ------ --------- ---------- ---------- ------ --------- Underlying profit before taxation 1,075 745 44 50 1,236 (13) (13) 3,757 2,700 39 43 -------------- ---------- ---------- ------ --------- ---------- ------ --------- ---------- ---------- ------ ---------
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
Following an organisational restructure that came into effect on 1 January 2021, the new structure results in the creation of two new client segments: Corporate, Commercial & Institutional Banking, serving larger companies and institutions, and Consumer, Private & Business Banking, serving individual and business banking clients. From a regional perspective, Greater China & North Asia and ASEAN & South Asia have been combined to form a single Asia region.
Corporate, Commercial & Institutional Banking profit increased 67 per cent, due to lower credit impairment and income growth. Income increased 9 per cent, or 3 per cent excluding the impact of IFRS9 interest income catch-up adjustment and movements in DVA.
Consumer, Private & Business Banking profit decreased 13 per cent reflecting lower income and increased expenses driven by investment in digital initiatives offset by lower impairment. Adjusting for the $53 million accelerated recognition of an annual Bancassurance bonus in 3Q'20, income increased 1 per cent and profits increased 6 per cent.
Central & other items (segment) losses reduced by approximately a quarter to $52 million with income up $96 million on the back of stronger Treasury performance, partly offset by lower Associates profit share as well as increased expenses and impairment.
Asia profits increased 13 per cent with a 5 per cent increase in income and $73 million lower credit impairment more than offset by a 4 per cent increase in expenses. The benefit from the IFRS9 interest income catch-up was broadly offset by the non-repeat of the accelerated recognition of an annual Bancassurance bonus in 3Q'20. There was double-digit income growth in India, China, South Korea and Singapore while Hong Kong income was flat.
Africa & Middle East profits increased from $11 million to $222 million primarily due to a $119 million reduction in impairment. Income was up 11 per cent and increased 4 per cent excluding the benefit of the IFRS9 income adjustment while costs increased 6 per cent.
Europe & Americas income increased 22 per cent, with strong double-digit growth in Financial Markets, which along with $23 million lower impairment, resulted in profits increasing more than four-fold.
Page 5
Group Chief Financial Officer's review continued
Central & other items (region) recorded a loss of $235 million with increased expenses reflecting an increase in performance-related pay accruals and an increase in investment spend in digital ventures while income declined $36 million due to lower returns paid to Treasury on the equity provided to the regions in a lower interest rate environment.
Adjusted net interest income and margin
3Q'21 3Q'20 Change(1) 2Q'21 Change(1) YTD'21 YTD'20 Change(1) $million $million % $million % $million $million % ------------------------- ---------- ---------- ---------- ---------- ---------- Adjusted net interest income(2) 1,732 1,626 7 1,705 2 5,107 5,245 (3) Average interest-earning assets 557,416 524,921 6 558,089 - 557,283 522,251 7 Average interest-bearing liabilities 512,406 477,688 7 517,939 (1) 513,333 473,778 8 ------------------------- ---------- ---------- --------- ---------- --------- ---------- ---------- --------- Gross yield (%)(3) 1.84 2.07 (23) 1.86 (2) 1.85 2.46 (61) Rate paid (%)(3) 0.66 0.92 (26) 0.69 (3) 0.68 1.23 (55) Net yield (%)(3) 1.18 1.15 3 1.17 1 1.17 1.23 (6) ------------------------- ---------- ---------- --------- ---------- --------- ---------- ---------- --------- Net interest margin (%)(3,4) 1.23 1.23 - 1.22 1 1.23 1.34 (11) ------------------------- ---------- ---------- --------- ---------- --------- ---------- ---------- ---------
1 Variance is better/(worse) other than assets and liabilities which is increase/(decrease)
2 Adjusted net interest income is statutory net interest income less funding costs for the trading book and financial guarantee fees on interest-earning assets
3 Change is the basis points (bps) difference between the two periods rather than the percentage change
4 Adjusted net interest income divided by average interest-earning assets, annualised
Adjusted net interest income increased 7 per cent and 1 per cent excluding the benefit of a $96 million IFRS9 interest income catch-up adjustment. On a headline basis, adjusted net interest income was up 2 per cent quarter-on-quarter but was flat excluding the IFRS9 income adjustment (2Q'21: $73 million). The net interest margin on a headline basis was flat year-on-year and up 1 basis point quarter-on-quarter. Excluding the IFRS9 income adjustment, net interest margin on a normalised basis was 116 basis points in the third quarter, down 7 basis points year-on-year and down 1 basis point quarter-on-quarter:
-- Average interest-earning assets were flat in the quarter, with reduced balances in Treasury Markets offsetting growth in Mortgages, Wealth Management and Trade. Gross yields declined 2 basis points compared with the average in the prior quarter, and were down 4 basis points excluding the impact of the IFRS9 income adjustment, reflecting the impact of further falls in HIBOR and a shift from credit cards to lower yielding personal loans
-- Average interest-bearing liabilities declined 1 per cent in the quarter. The deposit mix continued to improve with a reduction in Retail Products time deposits and growth in corporate operating accounts. The rate paid on liabilities decreased 3 basis points compared with the average in the prior quarter, reflecting interest rate movements, repricing initiatives and improvement in the liability mix
Credit risk summary
Income statement
3Q'21 3Q'20 Change(1) 2Q'21 Change(1) YTD'21 YTD'20 Change(1) $million $million % $million % $million $million % ------------------------- ---------- ---------- --------- ---------- --------- ---------- ---------- --------- Total credit impairment charge/(release) 107 353 (70) (67) (260) 60 1,920 (97) ---------- ---------- --------- ---------- --------- ---------- ---------- --------- Of which stage 1 and 2 30 109 (72) (70) (143) (75) 777 (110) Of which stage 3 77 244 (68) 3 2,467 135 1,143 (88) ------------------------- ---------- ---------- --------- ---------- --------- ---------- ---------- ---------
1 Variance is increase/(decrease) comparing current reporting period to prior reporting periods
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Group Chief Financial Officer's review continued
Balance sheet
30.09.21 30.06.21 Change(1) 31.12.20 Change(1) 30.09.20 Change(1) $million $million % $million % $million % ------------------------------------- ---------- ---------- --------- ---------- --------- ---------- --------- Gross loans and advances to customers(2) 308,083 303,982 1 288,312 7 288,046 7 ---------- ---------- --------- ---------- --------- ---------- --------- Of which stage 1 284,140 277,290 2 256,437 11 251,113 13 Of which stage 2 15,759 17,634 (11) 22,661 (30) 27,597 (43) Of which stage 3 8,184 9,058 (10) 9,214 (11) 9,336 (12) ---------- ---------- --------- ---------- --------- ---------- --------- Expected credit loss provisions (5,590) (5,979) (7) (6,613) (15) (6,666) (16) ---------- ---------- --------- ---------- --------- ---------- --------- Of which stage 1 (411) (447) (8) (534) (23) (571) (28) Of which stage 2 (535) (544) (2) (738) (28) (706) (24) Of which stage 3 (4,644) (4,988) (7) (5,341) (13) (5,389) (14) ---------- ---------- --------- ---------- --------- ---------- --------- Net loans and advances to customers 302,493 298,003 2 281,699 7 281,380 8 ---------- ---------- --------- ---------- --------- ---------- --------- Of which stage 1 283,729 276,843 2 255,903 11 250,542 13 Of which stage 2 15,224 17,090 (11) 21,923 (31) 26,891 (43) Of which stage 3 3,540 4,070 (13) 3,873 (9) 3,947 (10) ---------- ---------- --------- ---------- --------- ---------- --------- Cover ratio of stage 3 before/after 57 / 55 / 58 / (1) / 58 / (1) / collateral (%)(3) 77 75 2 / 2 76 1 76 1 Credit grade 12 accounts ($million) 2,175 1,623 34 2,164 1 1,954 11 Early alerts ($million) 7,478 8,970 (17) 10,692 (30) 13,407 (44) Investment grade corporate exposures (%)(3) 68 63 5 62 6 59 9 ------------------------------------- ---------- ---------- --------- ---------- --------- ---------- ---------
1 Variance is increase/(decrease) comparing current reporting period to prior reporting periods
2 Includes reverse repurchase agreements and other similar secured lending held at amortised cost of $8,836 million at 30 September 2021, $4,584 million at 30 June 2021, $2,919 million at 31 December 2020 and $4,330 million at 30 September 2020
3 Change is the percentage points difference between the two points rather than the percentage change
While credit risk remains elevated, we have seen improvements in a number of metrics with high-risk assets lower for the fifth successive quarter, and the overall portfolio remains stable and resilient. The Group is well-positioned to support our clients as economies recover but continues to remain vigilant to the continued impact of COVID-19 including vaccination progress and the likelihood of uneven economic recovery across markets and industries.
Credit impairment was a $107 million charge in the quarter, with a $30 million charge relating to stage 1 and 2 impairment and a $77 million charge relating to stage 3 impairment.
The $30 million charge in stage 1 and 2 impairment reflects the impact of a sovereign ratings downgrade in one of our smaller markets and changes in the macroeconomic variables used in the expected credit loss (ECL) models partly offset by a $25 million release of the judgemental stage 1 and 2 management overlay. The management overlay relating to stage 1 and 2 assets totals $277 million as at 30 September 2021.
Stage 3 impairment of $77 million primarily relate to charge-offs within Consumer, Private & Business Banking (CPBB) with no significant new exposures within Corporate, Commercial & Institutional Banking (CCIB) in the quarter. There was a $12 million charge relating to the catch-up of interest earned on historically impaired assets and a $21 million increase in the management overlay of stage 3 assets in CPBB, to a total overlay of $29 million.
Gross stage 3 loans and advances to customers of $8.2 billion were 10 per cent lower compared to 30 June 2021, primarily due to repayments and write-offs more than offsetting new inflows, which were 87 per cent lower in CCIB, compared to the previous quarter. Credit-impaired loans represented 2.7 per cent of gross loans and advances, a decrease of 32 basis points compared
to 30 June 2021.
The stage 3 cover ratio of 57 per cent was up 2 percentage points compared with the position as at 30 June 2021, and the cover ratio post collateral at 77 per cent also increased by 2 percentage points, both benefiting from significant repayments on stage 3 assets with low levels of provisions.
Credit grade 12 balances have increased by $0.5 billion since 30 June 2021, mainly due to the sovereign ratings downgrade partly offset by client upgrades and repayments.
Early Alert accounts of $7.5 billion have reduced by $1.5 billion since 30 June 2021, reflecting the net impact of downgrades into credit grade 12 including the sovereign ratings downgrade, exposure reductions and regularisations of accounts back into non-high-risk categories. Excluding the Aviation sector, Early Alert accounts are now broadly in-line with pre-COVID-19 levels. 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, as well as its exposure to Commercial Real Estate, which, with a total exposure of $18.5 billion is just 6 per cent of the Group's total loans and advances to customers. The recent rises in commodity prices have eased credit pressure for certain sectors.
The proportion of investment grade corporate exposures has increased by 5 percentage points since 30 June 2021 to 68 per cent.
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Group Chief Financial Officer's review continued
Restructuring, goodwill impairment and other items
3Q'21 3Q'20 2Q'21 ----------------------------------- ----------------------------------- ----------------------------------- Goodwill Other Goodwill Other Goodwill Other Restructuring Impairment items Restructuring Impairment items Restructuring Impairment items $million $million $million $million $million $million $million $million $million -------------- ------------- ---------- -------- ------------- ---------- -------- ------------- ---------- -------- Operating income (21) - 20 22 - (35) - - - Operating expenses (53) - - (35) - - (95) - - Credit impairment (1) - - (5) - - 1 - - Other impairment (24) - - (18) (231) - (3) - - Profit from associates and joint ventures - - - (8) - - 7 - - -------------- ------------- ---------- -------- ------------- ---------- -------- ------------- ---------- -------- Profit/(loss) before taxation (99) - 20 (44) (231) (35) (90) - - -------------- ------------- ---------- -------- ------------- ---------- -------- ------------- ---------- --------
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.
Restructuring charges of $99 million primarily relate to the discontinued Principal Finance business, redundancies, and impairment on property as the Group adapts to new ways of working post-pandemic. Other items include a $20 million fair-value gain relating to a SC Ventures investment.
Balance sheet and liquidity
30.09.21 30.06.21 Change 31.12.20 Change(1) 30.09.20 Change(1) $million $million % $million % $million % ---------------------------------- ---------- ---------- ------ ---------- --------- ---------- --------- Assets Loans and advances to banks 45,754 45,188 1 44,347 3 49,040 (7) Loans and advances to customers 302,493 298,003 2 281,699 7 281,380 8 Other assets 468,855 452,719 4 463,004 1 424,009 11 ---------------------------------- ---------- ---------- ------ ---------- --------- ---------- --------- Total assets 817,102 795,910 3 789,050 4 754,429 8 ---------------------------------- ---------- ---------- ------ ---------- --------- ---------- --------- Liabilities Deposits by banks 34,480 30,567 13 30,255 14 28,138 23 Customer accounts 453,260 441,147 3 439,339 3 417,517 9 Other liabilities 276,027 271,339 2 268,727 3 258,204 7 ---------------------------------- ---------- ---------- ------ ---------- --------- ---------- --------- Total liabilities 763,767 743,053 3 738,321 3 703,859 9 ---------------------------------- ---------- ---------- ------ ---------- --------- ---------- --------- Equity 53,335 52,857 1 50,729 5 50,570 5 ---------------------------------- ---------- ---------- ------ ---------- --------- ---------- --------- Total equity and liabilities 817,102 795,910 3 789,050 4 754,429 8 ---------------------------------- ---------- ---------- ------ ---------- --------- ---------- --------- Advances-to-deposits ratio (%)(2) 61.9% 64.0% 61.1% 63.8% Liquidity coverage ratio (%) 145% 146% 143% 142% ---------------------------------- ---------- ---------- ------ ---------- --------- ---------- ---------
1 Variance is increase/(decrease)comparing current reporting period to prior reporting periods
2 The Group now excludes $16,986 million held with central banks (30.06.21: $16,213 million, 31.12.20: $14,296 million, 30.09.20: $14,363 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 2021 to $302 billion despite the impact of adverse FX movements. The majority of the growth was due to growth in Financial Markets. Underlying growth in Retail Mortgage balances was predominately offset by negative FX movements, while the completion of loan syndications in progress at 30 June 2021 led to a reduction in the corporate lending book
-- Customer accounts of $453 billion increased 3 per cent since 30 June 2021, primarily driven by an increase in corporate operating account balances while retail deposits remained broadly stable despite being negatively impacted by FX movements
-- Other assets increased 4 per cent since 30 June 2021 with increased unsettled trade balances, balances at central banks and investment securities. Other liabilities increased 2 per cent from increased repurchase agreements, partly offset by a reduction in issued debt securities
The advances-to-deposits ratio reduced to 61.9 per cent from 64.0 per cent at 30 June 2021, reflecting the strong growth in customer accounts in the quarter. The point-in-time liquidity coverage ratio (LCR) decreased 1 percentage point to 145 per cent and remains well above the minimum regulatory requirement of 100 per cent.
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Group Chief Financial Officer's review continued
Risk-weighted assets
30.09.21 30.06.21 Change(1) 31.12.20 Change(1) 30.09.20 Change(1) $million $million % $million % $million % --------------------------------- ---------- ---------- --------- ---------- --------- ---------- --------- By risk type Credit risk 219,628 229,348 (4) 220,441 - 217,720 1 Operational risk 27,116 27,116 - 26,800 1 26,800 1 Market risk 20,811 23,763 (12) 21,593 (4) 22,144 (6) --------------------------------- ---------- ---------- --------- ---------- --------- ---------- --------- Total risk-weighted assets (RWA) 267,555 280,227 (5) 268,834 - 266,664 - --------------------------------- ---------- ---------- --------- ---------- --------- ---------- ---------
1 Variance is increase/(decrease) comparing current reporting period to prior reporting periods
Total risk-weighted assets (RWA) decreased 5 per cent or $12.7 billion since 30 June 2021 to $267.6 billion:
-- Credit risk RWA decreased by $9.7 billion in the third quarter to $219.6 billion, with asset growth more than offset by the benefit of model upgrades relating to Korea personal loans, improvements in asset quality including actions concerning specific stage 3 exposures, the impact of lower RWA density and FX
-- Operational risk RWA remained unchanged at $27.1 billion
-- Market risk RWA decreased by $3.0 billion to $20.8 billion due to reduced internal models approach (IMA) positions and charges for IMA risks not in value at risk (VaR)
Capital base and ratios
30.09.21 30.06.21 Change(1) 31.12.20 Change(1) 30.09.20 Change(1) $million $million % $million % $million % -------------------------------- ---------- ---------- --------- ---------- --------- ---------- --------- CET1 capital 39,167 39,589 (1) 38,779 1 38,449 2 Additional Tier 1 capital (AT1) 6,791 6,293 8 5,612 21 5,611 21 -------------------------------- ---------- ---------- --------- ---------- --------- ---------- --------- Tier 1 capital 45,958 45,882 - 44,391 4 44,060 4 Tier 2 capital 12,913 13,279 (3) 12,657 2 12,991 (1) -------------------------------- ---------- ---------- --------- ---------- --------- ---------- --------- Total capital 58,871 59,161 - 57,048 3 57,051 3 -------------------------------- ---------- ---------- --------- ---------- --------- ---------- --------- CET1 capital ratio (%)(2) 14.6 14.1 0.5 14.4 0.2 14.4 0.2 Total capital ratio (%)(2) 22.0 21.1 0.9 21.2 0.8 21.4 0.6 UK leverage ratio (%)(2) 5.1 5.2 (0.1) 5.2 (0.1) 5.2 (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's CET1 ratio of 14.6 per cent was 51 basis points higher than at 30 June 2021, 4.6 percentage points above the Group's current regulatory minimum of 10.0 per cent and above the 13-14 per cent medium-term target range.
The primary driver of the increase in the CET1 ratio was the decrease in RWA, principally from favourable model changes, asset quality improvements, a reduction in RWA density and lower market risk RWA, which in aggregate resulted in an increase in the CET1 ratio of approximately 60 basis points. Profits in the quarter contributed approximately 30 basis points of CET1 accretion in the quarter.
There was a 3 basis points increase in the value of the revised treatment of software assets in CET1, reflecting an increase in capitalised software assets. The total benefit to CET1 from the revised treatment of software assets is now 34 basis points. The Prudential Regulatory Authority (PRA) has confirmed that qualifying software assets will be deducted from CET1 from 1 January 2022.
The Group spent $251 million purchasing 40 million ordinary shares of $0.50 each, representing a volume-weighted average price per share of GBP4.54. These shares were subsequently cancelled, reducing the total issued share capital by 1.3 per cent and the CET1 ratio by 9 basis points.
The Group is accruing a foreseeable dividend in respect of the final 2021 ordinary share dividend in the third quarter. This is not an indication of the Group's final 2021 ordinary share dividend, which will be proposed by the Board at the presentation of the 2021 full-year results.
The Group's Pillar 2A requirement is expected to increase in the fourth quarter by a total of 38 basis points, of which 22 basis points must be held in CET1. Accordingly, the Group's minimum CET1 requirement is expected to increase to 10.2 per cent from 10.0 per cent.
The Group will also be subject to a regulatory change in the treatment of structural FX risk in the fourth quarter. Structural FX risk is currently assessed through the Group's Pillar 2A requirement. The PRA has clarified that this should be a Pillar 1 requirement and therefore requires the Group to risk-weight its unhedged structural FX positions. The Group currently expects this change to result in between $3 billion to $4 billion of additional market risk RWA in the fourth quarter post hedging which would reduce the CET1 ratio by between 15 and 20 basis points on a pro-forma basis. The Group may benefit from a subsequent reduction in its Pillar 2A requirement reflecting the move of structural FX risk from Pillar 2A to Pillar 1.
The Group's UK leverage ratio of 5.1 per cent is slightly lower than the 5.2 per cent ratio as at 30 June 2021. The Group's leverage ratio remains significantly above its minimum requirement of 3.7 per cent.
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Group Chief Financial Officer's review continued
Outlook
The economic recovery from the COVID-19 pandemic has continued to be uneven and punctuated by supply-chain disruption. However, we are encouraged by robust levels of export growth across many of our markets in Asia. Against this backdrop:
-- We continue to expect FY'21 income to be similar to that achieved in FY'20 on a constant currency basis, with 4Q'21 being sequentially lower, reflecting seasonality comparable to prior years, and normalising for the IFRS9 interest income adjustment. Strong underlying business momentum throughout 2021 should enable income growth to return to our 5-7% guidance range from FY'22
-- We continue to expect FY'21 operating expenses, including the impact of currency translation and performance-related pay, to be at or below $10.4 billion
-- Excluding the impact of any unforeseeable events, we expect credit impairment to remain at low levels in 4Q'21
-- We expect FY'21 CET1 to be around the top of the 13-14 per cent target range on a pro-forma basis, excluding software relief
Andy Halford
Group Chief Financial Officer
2 November 2021
Page 10
Supplementary financial information
Underlying performance by client segment
3Q'21 ------------------------------------------------- Consumer, Corporate, Private Central Commercial & & & Institutional Business other Banking Banking items Total $million $million $million $million -------------------------------------------------------------- ---------------- --------- --------- --------- Operating income 2,226 1,430 109 3,765 ---------------- --------- --------- --------- External 2,115 1,348 302 3,765 Inter-segment 111 82 (193) - ---------------- --------- --------- --------- Operating expenses (1,304) (1,097) (193) (2,594) -------------------------------------------------------------- ---------------- --------- --------- --------- Operating profit/(loss) before impairment losses and taxation 922 333 (84) 1,171 Credit impairment (24) (74) (9) (107) Other impairment (30) - (5) (35) Profit from associates and joint ventures - - 46 46
-------------------------------------------------------------- ---------------- --------- --------- --------- Underlying profit/(loss) before taxation 868 259 (52) 1,075 Restructuring (32) (10) (57) (99) Goodwill impairment - - - - Other Items - - 20 20 -------------------------------------------------------------- ---------------- --------- --------- --------- Statutory profit/(loss) before taxation 836 249 (89) 996 -------------------------------------------------------------- ---------------- --------- --------- --------- Total assets 390,837 138,546 287,719 817,102 Of which: loans and advances to customers 197,121 135,375 31,272 363,768 ---------------- --------- --------- --------- loans and advances to customers 137,936 135,293 29,264 302,493 loans held at fair value through profit or loss (FVTPL) 59,185 82 2,008 61,275 ---------------- --------- --------- --------- Total liabilities 468,431 180,188 115,148 763,767 Of which: customer accounts(2) 320,516 175,999 16,477 512,992 Risk-weighted assets 162,016 52,587 52,952 267,555 Underlying return on tangible equity (%) 10.6 9.9 (6.7) 7.1 Cost-to-income ratio (%) 58.6 76.7 177.1 68.9 -------------------------------------------------------------- ---------------- --------- --------- --------- 3Q'20 --------------------------------------------------- Consumer, Corporate, Private Central Commercial & & & Institutional Business other Banking(1) Banking(1) items Total $million $million $million $million -------------------------------------------------------------- ---------------- ----------- --------- --------- Operating income 2,044 1,462 13 3,519 ---------------- ----------- --------- --------- External 1,975 1,266 278 3,519 Inter-segment 69 196 (265) - ---------------- ----------- --------- --------- Operating expenses (1,281) (1,039) (160) (2,480) -------------------------------------------------------------- ---------------- ----------- --------- --------- Operating profit/(loss) before impairment losses and taxation 763 423 (147) 1,039 Credit impairment (230) (126) 3 (353) Other impairment (12) - (3) (15) Profit from associates and joint ventures - - 74 74 -------------------------------------------------------------- ---------------- ----------- --------- --------- Underlying profit/(loss) before taxation 521 297 (73) 745 Restructuring (18) (12) (14) (44) Goodwill impairment - - (231) (231) Other Items - - (35) (35) -------------------------------------------------------------- ---------------- ----------- --------- --------- Statutory profit/(loss) before taxation 503 285 (353) 435 -------------------------------------------------------------- ---------------- ----------- --------- --------- Total assets 371,535 124,901 257,993 754,429 Of which: loans and advances to customers 194,368 122,356 19,087 335,811 ---------------- ----------- --------- --------- loans and advances to customers 140,109 122,196 19,075 281,380 loans held at fair value through profit or loss (FVTPL) 54,259 160 12 54,431 ---------------- ----------- --------- --------- Total liabilities 447,304 171,919 84,636 703,859 Of which: customer accounts(2) 297,051 168,300 6,694 472,045 Risk-weighted assets 168,907 51,096 46,661 266,664 Underlying return on tangible equity (%) 6.1 11.5 (9.3) 4.4 Cost-to-income ratio (%) 62.7 71.1 nm(3) 70.5 -------------------------------------------------------------- ---------------- ----------- --------- ---------
1 Following the Group's change in organisational structure, there has been an integration of Corporate & Institutional Banking and Commercial Banking to Corporate, Commercial & Institutional Banking; Private Banking and Retail Banking to Consumer, Private & Business Banking. Further, certain clients have been moved between the two new client segments. Prior period has been restated
2 Customer accounts includes FVTPL and repurchase agreements
3 Not meaningful
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Supplementary financial information continued
Corporate, Commercial & Institutional Banking(1)
Constant Constant Constant currency currency currency 3Q'21 3Q'20 Change(3) change(2,3) 2Q'21 Change(3) change(2,3) YTD'21 YTD'20 Change(3) change(2,3) $million $million % % $million % % $million $million % % --------------- ---------- ---------- --------- ---------- --------- ---------- ---------- --------- Operating income 2,226 2,044 9 8 2,131 4 5 6,518 6,699 (3) (4) Transaction Banking 625 642 (3) (3) 615 2 2 1,862 2,115 (12) (13) ---------- ---------- --------- ----------- ---------- --------- ----------- ---------- ---------- --------- ----------- Trade 288 244 18 17 278 4 4 831 714 16 16 Cash Management 337 398 (15) (16) 337 - - 1,031 1,401 (26) (27) ---------- ---------- --------- ----------- ---------- --------- ----------- ---------- ---------- --------- ----------- Financial Markets 1,315 1,185 11 10 1,270 4 4 3,905 3,955 (1) (2) ---------- ---------- --------- ----------- ---------- --------- ----------- ---------- ---------- --------- ----------- Macro Trading 540 518 4 4 571 (5) (5) 1,783 2,097 (15) (16) Credit Markets 522 464 13 12 495 5 6 1,458 1,207 21 20 Credit Trading 144 129 12 11 102 41 41 377 285 32 31 Financing Solutions & Issuance 378 335 13 13 393 (4) (3) 1,081 922 17 16 Structured
Finance 156 101 54 53 120 30 30 375 281 33 32 Financing & Securities Services 98 124 (21) (22) 85 15 9 291 288 1 (1) DVA (1) (22) 95 95 (1) - 50 (2) 82 (102) (102) ---------- ---------- --------- ----------- ---------- --------- ----------- ---------- ---------- --------- ----------- Lending & Portfolio Management 268 217 24 23 243 10 12 734 638 15 13 Wealth Management 1 - nm nm - nm nm 1 - nm nm Retail Products - - nm nm - nm nm - 1 (100) (100) ---------- ---------- --------- ----------- ---------- --------- ----------- ---------- ---------- --------- ----------- Deposits 1 - nm nm - nm nm 1 1 - (100) ---------- ---------- --------- ----------- ---------- --------- ----------- ---------- ---------- --------- ----------- Other 17 - nm nm 3 nm nm 16 (10) nm nm Operating expenses (1,304) (1,281) (2) - (1,294) (1) (1) (3,886) (3,665) (6) (4) --------------- ---------- ---------- --------- ----------- ---------- --------- ----------- ---------- ---------- --------- ----------- Operating profit before impairment losses and taxation 922 763 21 22 837 10 10 2,632 3,034 (13) (13) Credit impairment (24) (230) 90 90 108 (122) (121) 112 (1,337) 108 108 Other impairment (30) (12) (150) (164) (9) nm (190) (55) 103 (153) (153) --------------- ---------- ---------- --------- ----------- ---------- --------- ----------- ---------- ---------- --------- ----------- Underlying profit before taxation 868 521 67 70 936 (7) (7) 2,689 1,800 49 51 Restructuring (32) (18) (78) (68) (39) 18 20 (70) (92) 24 24 --------------- ---------- ---------- --------- ----------- ---------- --------- ----------- ---------- ---------- --------- ----------- Statutory profit before taxation 836 503 66 70 897 (7) (6) 2,619 1,708 53 56 --------------- ---------- ---------- --------- ----------- ---------- --------- ----------- ---------- ---------- --------- ----------- Total assets 390,837 371,535 5 5 387,689 1 1 390,837 371,535 5 5 Of which: loans and advances to customers(4) 197,121 194,368 1 1 197,732 - - 197,121 194,368 1 1 Total liabilities 468,431 447,304 5 5 452,449 4 4 468,431 447,304 5 5 Of which: customer accounts(4) 320,516 297,051 8 8 307,619 4 5 320,516 297,051 8 8 Risk-weighted assets 162,016 168,907 (4) nm 174,613 (7) nm 162,016 168,907 (4) nm Underlying return on risk weighted assets (%)(5) 2.0 1.2 80bps nm 2.2 (20)bps nm 2.1 1.4 70bps nm Underlying return on tangible equity (%)(5) 10.6 6.1 450bps nm 11.2 (60)bps nm 11.0 7.1 390bps nm Cost-to-income ratio (%)(6) 58.6 62.7 4.1 4.7 60.7 2.1 2.1 59.6 54.7 (4.9) (4.2) --------------- ---------- ---------- --------- ----------- ---------- --------- ----------- ---------- ---------- --------- -----------
1 Following the Group's change in organisational structure, there has been an integration of Corporate & Institutional Banking and Commercial Banking to Corporate, Commercial & Institutional Banking; Private Banking and Retail Banking to Consumer, Private & Business Banking. Further, certain clients have been moved between the two new client segments. Prior periods have been restated
2 Comparisons presented on the basis of the current period's transactional currency rate, ensuring like-for-like currency rates between the two periods
3 Variance is better/(worse) other than risk-weighted assets, assets and liabilities which is increase/(decrease)
4 Loans and advances to customers includes FVTPL and customer accounts includes FVTPL and repurchase agreements
5 Change is the basis points (bps) difference between the two periods rather than the percentage change
6 Change is the percentage points difference between the two periods rather than the percentage change
7 Not meaningful
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Supplementary financial information continued
Performance highlights
-- Underlying profit before tax of $868 million was up 67 per cent driven by lower credit impairment and an improvement in income, which included a $94 million benefit in the quarter relating to a IFRS9 interest income catch-up adjustment, partially offset by higher expenses
-- Underlying operating income of $2,226 million increased 9 per cent and was up 3 per cent excluding both DVA and the IFRS9 interest income catch-up adjustment, both primarily in Financial Markets, mainly due to an increase in Lending and Trade income as global demand continues to recover from COVID-19 related impacts
-- Loans and advances to customers were flat since 30 June 2021
-- Risk-weighted assets down $13 billion since 30 June 2021 mainly as a result of decreased credit risk RWA, with asset growth more than offset by reductions from lower RWA density, improvements in asset quality including actions concerning specific stage 3 exposures and FX
-- Return on tangible equity (RoTE) increased to 10.6 per cent from 6.1 per cent
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Supplementary financial information continued
Consumer, Private & Business Banking(1)
Constant Constant Constant currency currency currency 3Q'21 3Q'20 Change(3) change(2,3) 2Q'21 Change(3) change(2,3) YTD'21 YTD'20 Change(3) change(2,3) $million $million % % $million % % $million $million % % ---------------- ---------- ---------- --------- ---------- --------- ---------- ---------- --------- Operating income 1,430 1,462 (2) (3) 1,438 (1) - 4,399 4,371 1 (1) Transaction Banking 20 23 (13) (9) 22 (9) - 63 71 (11) (13) ---------- ---------- --------- ----------- ---------- --------- ----------- ---------- ---------- --------- ----------- Trade 12 11 9 9 13 (8) (8) 37 31 19 16 ---------- ---------- --------- ----------- ---------- --------- ----------- ---------- ---------- --------- ----------- Cash Management 8 12 (33) (25) 9 (11) 13 26 40 (35) (35) Lending & Portfolio Management 10 9 11 - 10 - - 30 28 7 3 Wealth Management 558 572 (2) (3) 554 1 1 1,758 1,548 14 12 Retail Products 828 859 (4) (5) 846 (2) (1) 2,523 2,717 (7) (9) CCPL & other unsecured lending 316 309 2 1 320 (1) - 956 908 5 3 Deposits 204 301 (32) (32) 209 (2) (1) 646 1,185 (45) (46) Mortgage & Auto 260 211 23 21 268 (3) (1) 775 516 50 45 Other Retail Products 48 38 26 21 49 (2) (6) 146 108 35 33 ---------- ---------- --------- ----------- ---------- --------- ----------- ---------- ---------- --------- -----------
Other 14 (1) nm nm 6 133 133 25 7 nm nm Operating expenses (1,097) (1,039) (6) (4) (1,093) - (1) (3,195) (3,080) (4) (1) ---------------- ---------- ---------- --------- ----------- ---------- --------- ----------- ---------- ---------- --------- ----------- Operating profit before impairment losses and taxation 333 423 (21) (21) 345 (3) (2) 1,204 1,291 (7) (7) Credit impairment (74) (126) 41 41 (46) (61) (57) (167) (576) 71 72 Other impairment - - nm nm - nm nm - (1) 100 100 ---------------- ---------- ---------- --------- ----------- ---------- --------- ----------- ---------- ---------- --------- ----------- Underlying profit before taxation 259 297 (13) (13) 299 (13) (12) 1,037 714 45 46 Restructuring (10) (12) 17 - (13) 23 8 (32) (18) (78) (94) ---------------- ---------- ---------- --------- ----------- ---------- --------- ----------- ---------- ---------- --------- ----------- Statutory profit before taxation 249 285 (13) (13) 286 (13) (12) 1,005 696 44 45 ---------------- ---------- ---------- --------- ----------- ---------- --------- ----------- ---------- ---------- --------- ----------- Total assets 138,546 124,901 11 11 137,452 1 2 138,546 124,901 11 11 Of which: loans and advances to customers(4) 135,375 122,356 11 11 134,291 1 2 135,375 122,356 11 11 Total liabilities 180,188 171,919 5 5 179,967 - 1 180,188 171,919 5 5 Of which: customer accounts(4) 175,999 168,300 5 4 175,556 - 1 175,999 168,300 5 4 Risk-weighted assets 52,587 51,096 3 nm 56,164 (6) nm 52,587 51,096 3 nm Underlying return on risk weighted assets (%)(5) 1.9 2.3 (40)bps nm 2.1 (20)bps nm 2.5 1.9 60bps nm Underlying return on tangible equity (%)(5) 9.9 11.5 (160)bps nm 11.0 (110)bps nm 13.0 9.3 370bps nm Cost-to-income ratio (%)(6) 76.7 71.1 (5.6) (5.4) 76.0 (0.7) (0.7) 72.6 70.5 (2.1) (1.8) ---------------- ---------- ---------- --------- ----------- ---------- --------- ----------- ---------- ---------- --------- -----------
1 Following the Group's change in organisational structure, there has been an integration of Corporate & Institutional Banking and Commercial Banking to Corporate, Commercial & Institutional Banking; Private Banking and Retail Banking to Consumer, Private & Business Banking. Further, certain clients have been moved between the two new client segments. Prior periods have been restated
2 Comparisons presented on the basis of the current period's transactional currency rate, ensuring like-for-like currency rates between the two periods
3 Variance is better/(worse) other than risk-weighted assets, assets and liabilities which is increase/(decrease)
4 Loans and advances to customers includes FVTPL and customer accounts includes FVTPL and repurchase agreements
5 Change is the basis points (bps) difference between the two periods rather than the percentage change
6 Change is the percentage points difference between the two periods rather than the percentage change
7 Not meaningful
Performance highlights
-- Underlying profit before tax of $259 million was down 13 per cent driven by lower income and higher expenses, partially offset by lower credit impairment, but was up 6 per cent excluding a $53 million accelerated recognition of an annual Bancassurance bonus in 3Q'20
-- Underlying operating income of $1,430 million was down 2 per cent, mainly due to the impact of lower interest rates on Retail Deposits, offset by the continued strong performance in Mortgage & Auto income in Asia, but was up 1 per cent excluding a $53 million accelerated recognition of an annual Bancassurance bonus in 3Q'20
-- Loans and advances to customers increased 1 per cent (up 2 per cent on a constant currency basis) since 30 June 2021
-- Return on tangible equity (RoTE) decreased from 11.5 per cent to 9.9 per cent
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Supplementary financial information continued
Central & other items (segment)
Constant Constant Constant currency currency currency 3Q'21 3Q'20 Change(2) change(1,2) 2Q'21 Change(2) change(1,2) YTD'21 YTD'20 Change(2) change(1,2) $million $million % % $million % % $million $million % % --------------- ---------- ---------- --------- ---------- --------- ---------- ---------- --------- Operating income 109 13 nm nm 120 (9) (3) 466 496 (6) (7) Treasury 149 40 nm nm 137 9 9 543 543 - (1) Other (40) (27) (48) (6) (17) (135) (71) (77) (47) (64) (69) Operating expenses (193) (160) (21) (15) (211) 9 4 (605) (448) (35) (20) --------------- ---------- ---------- --------- ----------- ---------- --------- ----------- ---------- ---------- --------- ----------- Operating profit/(loss) before impairment losses and taxation (84) (147) 43 49 (91) 8 5 (139) 48 nm nm Credit impairment (9) 3 nm nm 5 nm nm (5) (7) 29 - Other impairment (5) (3) (67) (100) - nm nm (5) (5) - - Profit from associates and joint ventures 46 74 (38) (38) 87 (47) (47) 180 150 20 21 --------------- ---------- ---------- --------- ----------- ---------- --------- ----------- ---------- ---------- --------- ----------- Underlying profit/(loss) before taxation (52) (73) 29 43 1 nm nm 31 186 (83) (78) Restructuring (57) (14) nm nm (38) (50) (50) (120) (24) nm nm Goodwill impairment - (231) 100 100 - nm nm - (489) 100 100 Other items 20 (35) 157 157 - nm nm 20 (15) nm nm --------------- ---------- ---------- --------- ----------- ---------- --------- ----------- ---------- ---------- --------- ----------- Statutory profit/(loss) before taxation (89) (353) 75 76 (37) (141) (156) (69) (342) 80 82 --------------- ---------- ---------- --------- ----------- ---------- --------- ----------- ---------- ---------- --------- ----------- Total assets 287,719 257,993 12 12 270,769 6 7 287,719 257,993 12 12 Of which: loans and advances to customers(3) 31,272 19,087 64 63 23,153 35 37 31,272 19,087 64 63 Total liabilities 115,148 84,636 36 36 110,637 4 4 115,148 84,636 36 36 Of which: customer accounts(3) 16,477 6,694 146 146 8,417 96 97 16,477 6,694 146 146 Risk-weighted assets 52,952 46,661 13 nm 49,450 7 nm 52,952 46,661 13 nm Underlying return on risk weighted assets (%)(4) (0.4) (0.6) 20bps nm - (40)bps nm 0.1 0.5 (40)bps nm Underlying return on tangible equity (%)(4) (6.7) (9.3) 260bps nm (9.3) 260bps nm (4.7) (5.0) 30bps nm Cost-to-income ratio (%) (excluding UK
bank levy)(5) 177.1 nm nm nm 170.8 (6.3) (2.8) 128.5 90.3 (38.2) (29.2) --------------- ---------- ---------- --------- ----------- ---------- --------- ----------- ---------- ---------- --------- -----------
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 Loans and advances to customers includes FVTPL and customer accounts includes FVTPL and repurchase agreements
4 Change is the basis points (bps) difference between the two periods rather than the percentage change
5 Change is the percentage points difference between the two periods rather than the percentage change
6 Not meaningful
Performance highlights
-- Underlying loss before tax of $52 million compared to 3Q'20 loss of $73 million primarily due to increased Treasury income partly offset by lower Associates profit share as well as increased expenses and impairment
-- Expenses increased 21 per cent with an increase in performance-related pay accruals
-- Profit from associates and joint ventures, was down 38 per cent to $46 million primarily reflecting the reduction in the Group's reduced shareholding in China Bohai Bank from 19.99 per cent to 16.26 per cent
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Supplementary financial information continued
Underlying performance by region
3Q'21 Africa Central & Europe & Middle & other Asia East Americas items Total $million $million $million $million $million -------------------------------------------------------------- --------- --------- --------- --------- --------- Operating income 2,629 657 514 (35) 3,765 Operating expenses (1,661) (401) (350) (182) (2,594) -------------------------------------------------------------- --------- --------- --------- --------- --------- Operating profit/(loss) before impairment losses and taxation 968 256 164 (217) 1,171 Credit impairment (84) (33) 11 (1) (107) Other impairment (2) (1) (14) (18) (35) Profit from associates and joint ventures 45 - - 1 46 -------------------------------------------------------------- --------- --------- --------- --------- --------- Underlying profit/(loss) before taxation 927 222 161 (235) 1,075 Restructuring (36) (7) (27) (29) (99) Goodwill impairment - - - - - Other items - - - 20 20 -------------------------------------------------------------- --------- --------- --------- --------- --------- Statutory profit/(loss) before taxation 891 215 134 (244) 996 -------------------------------------------------------------- --------- --------- --------- --------- --------- Total assets 475,407 56,609 275,427 9,659 817,102 Of which: loans and advances to customers 263,296 28,415 72,057 - 363,768 --------- --------- --------- --------- --------- loans and advances to customers 246,226 25,914 30,353 - 302,493 loans held at fair value through profit or loss (FVTPL) 17,070 2,501 41,704 - 61,275 --------- --------- --------- --------- --------- Total liabilities 428,911 40,276 228,363 66,217 763,767 Of which: customer accounts(2) 343,425 33,307 136,260 - 512,992 Risk-weighted assets 172,205 49,040 48,476 (2,166) 267,555 Cost-to-income ratio (%) 63.2 61.0 68.1 nm(3) 68.9 -------------------------------------------------------------- --------- --------- --------- --------- --------- 3Q'20 ---------------------------------------------------------- Africa Europe Central & & & Middle other Asia(1) East Americas items Total $million $million $million $million $million ---------------------------------------------------------- ---------- ---------- ---------- ---------- ---------- Operating income 2,505 590 423 1 3,519 Operating expenses (1,601) (426) (360) (93) (2,480) ---------------------------------------------------------- ---------- ---------- ---------- ---------- ---------- Operating profit/(loss) before impairment losses and taxation 904 164 63 (92) 1,039 Credit impairment (157) (154) (37) (5) (353) Other impairment - 1 11 (27) (15) Profit from associates and joint ventures 74 - - - 74 ---------------------------------------------------------- ---------- ---------- ---------- ---------- ---------- Underlying profit/(loss) before taxation 821 11 37 (124) 745 Restructuring (22) (11) (8) (3) (44) Goodwill impairment - - - (231) (231) Other items (35) - - - (35) ---------------------------------------------------------- ---------- ---------- ---------- ---------- ---------- Statutory profit/(loss) before taxation 764 - 29 (358) 435 ---------------------------------------------------------- ---------- ---------- ---------- ---------- ---------- Total assets 449,081 61,472 233,772 10,104 754,429 Of which: loans and advances to customers 237,138 31,408 67,265 - 335,811 ---------- ---------- ---------- ---------- ---------- loans and advances to customers 224,338 29,567 27,475 - 281,380 loans held at fair value through profit or loss (FVTPL) 12,800 1,841 39,790 - 54,431 ---------- ---------- ---------- ---------- ---------- Total liabilities 397,411 40,275 225,332 40,841 703,859 Of which: customer accounts(2) 316,667 32,630 122,748 - 472,045 Risk-weighted assets 172,986 52,524 43,818 (2,664) 266,664 Cost-to-income ratio (%) 63.9 72.2 85.1 nm(3) 70.5 ---------------------------------------------------------- ---------- ---------- ---------- ---------- ----------
1 Following the Group's change in organisational structure, there has been an integration of Greater China & North Asia and ASEAN & South Asia to Asia. Prior period has been restated
2 Customer accounts includes FVTPL and repurchase agreements
3 Not meaningful
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Supplementary financial information continued
Asia(1)
Constant Constant Constant currency currency currency 3Q'21 3Q'20 Change(3) change(2,3) 2Q'21 Change(3) change(2,3) YTD'21 YTD'20 Change(3) change(2,3) $million $million % % $million % % $million $million % % --------------- ---------- ---------- --------- ---------- --------- ---------- ---------- --------- Operating income 2,629 2,505 5 4 2,646 (1) - 8,092 8,025 1 (1) Operating expenses (1,661) (1,601) (4) (2) (1,726) 4 3 (4,959) (4,628) (7) (4) --------------- ---------- ---------- --------- ----------- ---------- --------- ----------- ---------- ---------- --------- ----------- Operating profit before impairment losses and taxation 968 904 7 7 920 5 6 3,133 3,397 (8) (9) Credit impairment (84) (157) 46 46 11 nm nm (131) (1,284) 90 90 Other impairment (2) - nm nm (15) 87 88 (17) 150 (111) (111) Profit from associates and joint ventures 45 74 (39) (39) 89 (49) (48) 181 148 22 22 --------------- ---------- ---------- --------- ----------- ---------- --------- ----------- ---------- ---------- --------- ----------- Underlying profit before taxation 927 821 13 13 1,005 (8) (7) 3,166 2,411 31 30 Restructuring (36) (22) (64) (48) (22) (64) (48) (63) (72) 13 15 Other items - (35) 100 100 - nm nm - (35) 100 100 --------------- ---------- ---------- --------- ----------- ---------- --------- ----------- ---------- ---------- --------- ----------- Statutory profit before taxation 891 764 17 17 983 (9) (8) 3,103 2,304 35 34 --------------- ---------- ---------- --------- ----------- ---------- --------- ----------- ---------- ---------- --------- ----------- Total assets 475,407 449,081 6 6 467,933 2 3 475,407 449,081 6 6 Of which: loans and advances to customers(4) 263,296 237,138 11 11 255,630 3 4 263,296 237,138 11 11 Total liabilities 428,911 397,411 8 8 418,583 2 3 428,911 397,411 8 8 Of which: customer accounts(4) 343,425 316,667 8 8 334,639 3 4 343,425 316,667 8 8 Risk-weighted assets 172,205 172,986 - nm 182,172 (5) nm 172,205 172,986 - nm Cost-to-income ratio (%)(5) 63.2 63.9 0.7 1.1 65.2 2.0 2.1 61.3 57.7 (3.6) (3.3) --------------- ---------- ---------- --------- ----------- ---------- --------- ----------- ---------- ---------- --------- -----------
1 Following the Group's change in organisational structure, there has been an integration of Greater China & North Asia and ASEAN & South Asia to Asia. Prior periods have been restated
2 Comparisons presented on the basis of the current period's transactional currency rate, ensuring like-for-like currency rates between the two periods
3 Variance is better/(worse) other than risk-weighted assets, assets and liabilities which is increase/(decrease)
4 Loans and advances to customers includes FVTPL and customer accounts includes FVTPL and repurchase agreements
5 Change is the percentage points difference between the two periods rather than the percentage change
6 Not meaningful
Performance highlights
-- Underlying profit before tax of $927 million was up 13 per cent as significantly lower credit impairment and higher income more than offset the higher expenses
-- Underlying operating income of $2,629 million was up 5 per cent, with the benefit from the IFRS9 interest income catch-up broadly offset by the non-repeat of the accelerated recognition of an annual Bancassurance bonus in 3Q'20.
-- Loans and advances to customers were up 3 per cent since 30 June 2021, driven by growth in Trade in Hong Kong and Korea, Lending in Hong Kong and Mortgages in Korea, Hong Kong, and Singapore
-- Risk-weighted assets were down $10 billion since 30 June 2021, mainly from Korea and India driven by model changes and improvements in asset quality following client repayments
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Supplementary financial information continued
Africa & Middle East
Constant Constant Constant currency currency currency 3Q'21 3Q'20 Change(2) change(1,2) 2Q'21 Change(2) change(1,2) YTD'21 YTD'20 Change(2) change(1,2) $million $million % % $million % % $million $million % % --------------- ---------- ---------- --------- ---------- --------- ---------- ---------- --------- Operating income 657 590 11 12 660 - - 1,907 1,845 3 4 Operating expenses (401) (426) 6 7 (422) 5 4 (1,216) (1,219) - 1 --------------- ---------- ---------- --------- ----------- ---------- --------- ----------- ---------- ---------- --------- ----------- Operating profit before impairment losses and taxation 256 164 56 65 238 8 7 691 626 10 15 Credit impairment (33) (154) 79 81 47 (170) (167) 7 (524) 101 102 Other impairment (1) 1 (200) (200) - nm nm (1) (1) - - --------------- ---------- ---------- --------- ----------- ---------- --------- ----------- ---------- ---------- --------- ----------- Underlying profit before taxation 222 11 nm nm 285 (22.1) (21) 697 101 nm nm Restructuring (7) (11) 36 11 (2) nm (167) (10) (20) 50 44 --------------- ---------- ---------- --------- ----------- ---------- --------- ----------- ---------- ---------- --------- ----------- Statutory profit before taxation 215 - nm nm 283 (2.1) (0.9) 687 81 nm nm --------------- ---------- ---------- --------- ----------- ---------- --------- ----------- ---------- ---------- --------- ----------- Total assets 56,609 61,472 (8) (8) 57,797 (2) (1) 56,609 61,472 (8) (8) Of which: loans and advances to customers(3) 28,415 31,408 (10) (10) 29,825 (5) (4) 28,415 31,408 (10) (10) Total liabilities 40,276 40,275 - - 39,464 2 3 40,276 40,275 - - Of which: customer accounts(3) 33,307 32,630 2 2 32,847 1 3 33,307 32,630 2 2 Risk-weighted assets 49,040 52,524 (7) nm(5) 52,596 (7) nm(5) 49,040 52,524 (7) nm(5) Cost-to-income ratio (%)(4) 61.0 72.2 11.2 12.5 63.9 2.9 2.6 63.8 66.1 2.3 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 Loans and advances to customers includes FVTPL and customer accounts includes FVTPL and repurchase agreements
4 Change is the percentage points difference between the two periods rather than the percentage change
5 Not meaningful
Performance highlights
-- Underlying profit before tax of $222 million was significantly higher driven by reduced credit impairment, higher income, and lower expenses
-- Underlying operating income of $657 million was 11 per cent higher and was up 5 per cent on a constant currency basis excluding the $41 million benefit in the quarter relating to the IFRS9 interest income catch-up adjustment, mainly due to growth in Financial Markets and Wealth Management
-- Loans and advances to customers were down 5 per cent, while customer accounts were up 1 per cent since 30 June 2021
-- Risk-weighted assets were down $4 billion since 30 June 2021
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Supplementary financial information continued
Europe & Americas
Constant Constant Constant currency currency currency 3Q'21 3Q'20 Change(2) change(1,2) 2Q'21 Change(2) change(1,2) YTD'21 YTD'20 Change(2) change(1,2) $million $million % % $million % % $million $million % % --------------- ---------- ---------- --------- ---------- --------- ---------- ---------- --------- Operating income 514 423 22 21 443 16 17 1,507 1,518 (1) (2) Operating expenses (350) (360) 3 4 (359) 3 2 (1,075) (1,021) (5) (3) --------------- ---------- ---------- --------- ----------- ---------- --------- ----------- ---------- ---------- --------- ----------- Operating profit before impairment losses and taxation 164 63 160 165 84 95 95 432 497 (13) (12) Credit impairment 11 (37) 130 126 15 (27) (29) 73 (117) 162 161 Other impairment (14) 11 nm nm 5 nm nm (7) 13 (154) (154) --------------- ---------- ---------- --------- ----------- ---------- --------- ----------- ---------- ---------- --------- ----------- Underlying profit before taxation 161 37 nm nm 104 55 54 498 393 27 29 Restructuring (27) (8) nm nm (1) nm nm (47) (18) (161) (161) --------------- ---------- ---------- --------- ----------- ---------- --------- ----------- ---------- ---------- --------- ----------- Statutory profit before taxation 134 29 nm nm 103 30 27 451 375 20 23 --------------- ---------- ---------- --------- ----------- ---------- --------- ----------- ---------- ---------- --------- ----------- Total assets 275,427 233,772 18 18 261,041 6 6 275,427 233,772 18 18 Of which: loans and advances to customers(3) 72,057 67,265 7 7 69,721 3 4 72,057 67,265 7 7 Total liabilities 228,363 225,332 1 1 213,713 7 7 228,363 225,332 1 1 Of which: customer accounts(3) 136,260 122,748 11 11 124,106 10 10 136,260 122,748 11 11 Risk-weighted assets 48,476 43,818 11 nm(5) 48,556 - nm(5) 48,476 43,818 11 nm(5) Cost-to-income ratio (%)(4) 68.1 85.1 17.0 17.3 81.0 12.9 12.8 71.3 67.3 (4.0) (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 Loans and advances to customers includes FVTPL and customer accounts includes FVTPL and repurchase agreements
4 Change is the percentage points difference between the two periods rather than the percentage change
5 Not meaningful
Performance highlights
-- Underlying profit before tax quadrupled to $161 million, driven by higher income, lower expenses, and lower impairment
-- Underlying operating income of $514 million was up 22 per cent driven by increased Financial Markets income and Trade as global trade activity continues to improve from the peak of the pandemic
-- Loans and advances to customers grew 3 per cent since 30 June 2021, while customer accounts grew 10 per cent
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Supplementary financial information continued
Central & other items (region)
Constant Constant Constant currency currency currency 3Q'21 3Q'20 Change(2) change(1,2) 2Q'21 Change(2) change(1,2) YTD'21 YTD'20 Change(2) change(1,2) $million $million % % $million % % $million $million % % --------------- ---------- ---------- --------- ---------- --------- ---------- ---------- --------- Operating income (35) 1 nm nm (60) 42 46 (123) 178 (169) (169) Operating expenses (182) (93) (96) (71) (91) (100) (111) (436) (325) (34) (12) --------------- ---------- ---------- --------- ----------- ---------- --------- ----------- ---------- ---------- --------- ----------- Operating loss before impairment losses and taxation (217) (92) (136) (103) (151) (44) (47) (559) (147) nm (162) Credit impairment (1) (5) 80 100 (6) 83 100 (9) 5 nm nm Other impairment (18) (27) 33 36 1 nm nm (35) (65) 46 46 Profit from associates and joint ventures 1 - nm 200 (2) 150 200 (1) 2 (150) (200) --------------- ---------- ---------- --------- ----------- ---------- --------- ----------- ---------- ---------- --------- ----------- Underlying loss before taxation (235) (124) (90) (66) (158) (49) (52) (604) (205) (195) (121) Restructuring (29) (3) nm nm (65) 55 53 (102) (24) nm nm Goodwill impairment - (231) 100 100 - nm nm - (489) 100 100 Other items 20 - nm nm - nm nm 20 20 - - --------------- ---------- ---------- --------- ----------- ---------- --------- ----------- ---------- ---------- --------- ----------- Statutory loss before taxation (244) (358) 32 35 (223) (9) (12) (686) (698) 2 10 --------------- ---------- ---------- --------- ----------- ---------- --------- ----------- ---------- ---------- --------- ----------- Total assets 9,659 10,104 (4) (4) 9,139 6 6 9,659 10,104 (4) (4) Total liabilities 66,217 40,841 62 62 71,293 (7) (7) 66,217 40,841 62 62 Risk-weighted assets (2,166) (2,664) 19 nm (3,097) 30 nm (2,166) (2,664) 19 nm Cost-to-income ratio (%) (excluding UK bank levy)(3) nm nm nm nm nm(4) nm nm nm nm nm nm --------------- ---------- ---------- --------- ----------- ---------- --------- ----------- ---------- ---------- --------- -----------
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 tax of $235 million compared to 3Q'20 loss of $124 million, with income declining $36 million due to lower returns paid to Treasury on the equity provided to the regions in a lower interest rate environment and increased expenses reflecting an increase in performance-related pay accruals and an increase in investment spend in digital ventures
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Supplementary financial information continued
Underlying performance by key market
3Q'21 ------------------------------------------------------------------------------------------------- Hong Kong Korea China Singapore India Indonesia UAE UK US $million $million $million $million $million $million $million $million $million ------------------- --------- --------- --------- --------- --------- --------- --------- --------- --------- Operating income 846 270 271 435 392 51 144 190 214 Operating expenses (507) (173) (184) (264) (186) (44) (90) (163) (126) ------------------- --------- --------- --------- --------- --------- --------- --------- --------- --------- Operating profit before impairment losses and taxation 339 97 87 171 206 7 54 27 88 Credit impairment (4) (15) (4) 21 (20) (1) 1 11 3 Other impairment - - - (1) - - - 22 - Profit from associates and joint ventures - - 46 - - - - (1) - ------------------- --------- --------- --------- --------- --------- --------- --------- --------- --------- Underlying profit before taxation 335 82 129 191 186 6 55 59 91 ------------------- --------- --------- --------- --------- --------- --------- --------- --------- --------- Total assets employed 177,271 65,976 36,182 92,456 29,200 4,947 18,896 185,498 75,029 Of which: loans and advances to customers(1) 88,452 45,993 17,698 57,575 16,234 2,038 9,373 49,901 17,478 Total liabilities employed 167,434 57,062 33,501 90,726 21,144 3,794 14,462 138,547 76,600 Of which: customer accounts(1) 138,644 44,687 25,566 69,508 15,597 2,583 11,542 84,562 43,502 Cost-to-income ratio (%) 59.9 64.1 67.9 60.7 47.4 86.3 62.5 85.8 58.9 ------------------- --------- --------- --------- --------- --------- --------- --------- --------- ---------
1 Loans and advances to customers includes FVTPL and customer accounts includes FVTPL and repurchase agreements
2Q'21 ------------------------------------------------------------------------------------------------- Hong Kong Korea China Singapore India Indonesia UAE UK US $million $million $million $million $million $million $million $million $million ------------------- --------- --------- --------- --------- --------- --------- --------- --------- --------- Operating income 895 296 268 361 301 47 139 187 197 Operating expenses (495) (202) (192) (285) (181) (48) (87) (166) (140) ------------------- --------- --------- --------- --------- --------- --------- --------- --------- --------- Operating profit/(loss) before impairment losses and taxation 400 94 76 76 120 (1) 52 21 57 Credit impairment (16) (5) (23) 34 53 5 30 (8) (1) Other impairment (16) - - - - - - 28 - Profit from associates and joint ventures - - 88 - - - - - - ------------------- --------- --------- --------- --------- --------- --------- --------- --------- --------- Underlying profit before taxation 368 89 141 110 173 4 82 41 56 ------------------- --------- --------- --------- --------- --------- --------- --------- --------- --------- Total assets employed 172,431 66,476 39,738 88,779 28,882 4,877 18,961 180,913 64,471 Of which: loans and advances to customers(1) 86,230 43,537 18,499 56,440 14,611 2,058 9,998 48,283 16,733 Total liabilities employed 162,983 57,206 34,658 86,302 20,674 3,567 13,856 130,551 69,891 Of which: customer accounts(1) 133,956 45,637 25,635 66,750 14,819 2,523 11,012 76,725 39,189 Cost-to-income ratio (%) 55.3 68.2 71.6 78.9 60.1 102.1 62.6 88.8 71.1 ------------------- --------- --------- --------- --------- --------- --------- --------- --------- ---------
1 Loans and advances to customers includes FVTPL and customer accounts includes FVTPL and repurchase agreements
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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(1) 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 ------------------- --------- --------- --------- --------- --------- --------- --------- --------- ---------
1 Loans and advances to customers includes FVTPL and customer accounts includes FVTPL and repurchase agreements
Quarterly underlying operating income by product
3Q'21 2Q'21 1Q'21 4Q'20 3Q'20 2Q'20 1Q'20 4Q'19 $million $million $million $million $million $million $million $million ---------------------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- Transaction Banking 645 637 643 652 665 721 800 834 ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- Trade 300 291 277 249 255 230 260 259 Cash Management 345 346 366 403 410 491 540 575 ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- Financial Markets 1,315 1,270 1,320 957 1,185 1,230 1,540 1,038 ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- Macro Trading 540 571 672 435 518 754 825 458 Credit Markets 522 495 441 414 464 476 267 376 Credit Trading 144 102 131 119 129 181 (25) 83 Financing Solutions & Issuance 378 393 310 295 335 295 292 293 Structured Finance 156 120 99 101 101 88 92 160 Financing & Securities Services 98 85 108 76 124 113 51 116 DVA (1) (1) - (69) (22) (201) 305 (72) ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- Lending & Portfolio Management 278 253 233 218 226 235 205 207 Wealth Management 559 554 646 442 572 440 536 415 Retail Products 828 846 849 848 859 913 946 960 ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- CCPL & other unsecured lending 316 320 320 303 309 295 304 311 Deposits 205 209 233 271 301 413 472 484 Mortgage & Auto 260 268 247 234 211 169 136 130 Other Retail Products 47 49 49 40 38 36 34 35 ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- Treasury 149 137 257 92 40 178 325 196 Other (9) (8) (19) (10) (28) 3 (25) (53) ---------------------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- Total underlying operating income 3,765 3,689 3,929 3,199 3,519 3,720 4,327 3,597 ---------------------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ----------
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Supplementary financial information continued
Earnings per ordinary share
3Q'21 3Q'20 Change 2Q'21 Change YTD'21 YTD'20 Change $million $million % $million % $million $million % ---------------------------------- ---------- ---------- ---------- ---------- ---------- Profit/(loss) for the period attributable to equity holders 767 161 nm(1) 829 (7) 2,695 1,227 120 ---------------------------------- ---------- ---------- ------ ---------- ------ ---------- ---------- ------ Non-controlling interest (4) (7) 43 (6) 33 (18) (25) 28 Dividend payable on preference shares and AT1 classified as equity (119) (31) nm(1) (132) 10 (315) (263) (20) ---------------------------------- ---------- ---------- ------ ---------- ------ ---------- ---------- ------ Profit/(loss) for the period attributable to ordinary shareholders 644 123 nm(1) 691 (7) 2,362 939 152 ---------------------------------- ---------- ---------- ------ ---------- ------ ---------- ---------- ------ Items normalised: Provision for regulatory matters - - nm(1) - nm(1) - (14) nm(1) Restructuring 99 44 125 90 10 222 134 66 Goodwill impairment - 231 nm(1) - nm(1) - 489 nm(1) Net (gain)/loss on sale of businesses (20) 35 nm(1) - nm(1) (20) 29 nm(1) Tax on normalised items (7) (5) (40) (8) 13 (22) (11) (100) ---------------------------------- ---------- ---------- ------ ---------- ------ ---------- ---------- ------ Underlying profit/(loss) 716 428 67 773 (7) 2,542 1,566 62 ---------------------------------- ---------- ---------- ------ ---------- ------ ---------- ---------- ------ Basic - Weighted average number of shares (millions) 3,105 3,151 nm(1) 3,121 nm(1) 3,124 3,162 nm1 Diluted - Weighted average number of shares (millions) 3,152 3,192 nm(1) 3,169 nm(1) 3,174 3,200 nm1 Basic earnings per ordinary share (cents)(2) 20.7 3.9 16.8 22.1 (1.4) 75.6 29.7 45.9 ---------------------------------- ---------- ---------- ------ ---------- ------ ---------- ---------- ------ Diluted earnings per ordinary share (cents)(2) 20.4 3.9 16.5 21.8 (1.4) 74.4 29.3 45.1 ---------------------------------- ---------- ---------- ------ ---------- ------ ---------- ---------- ------ Underlying basic earnings per ordinary share (cents)(2) 23.1 13.6 9.5 24.8 (1.7) 81.4 49.5 31.9 ---------------------------------- ---------- ---------- ------ ---------- ------ ---------- ---------- ------ Underlying diluted earnings per ordinary share (cents)(2) 22.7 13.4 9.3 24.4 (1.7) 80.1 48.9 31.2 ---------------------------------- ---------- ---------- ------ ---------- ------ ---------- ---------- ------
1 Not meaningful
2 Change is the percentage points difference between the two periods rather than the percentage change
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Supplementary financial information continued
Return on tangible equity (RoTE)
3Q'21 3Q'20 Change 2Q'21 Change YTD'21 YTD'20 Change $million $million % $million % $million $million % --------------------------------- ---------- ---------- ---------- ---------- ---------- Average parent company Shareholders' Equity 46,709 45,400 3 46,460 - 46,399 44,845 3 Less Preference share premium (1,494) (1,494) - (1,494) - (1,494) (1,494) - Less Average intangible assets (5,267) (4,972) - (5,129) (3) (5,155) (5,008) (3) --------------------------------- ---------- ---------- ------ ---------- ------- ---------- ---------- ------ Average Ordinary Shareholders' Tangible Equity 39,948 38,934 3 39,837 - 39,750 38,343 4 --------------------------------- ---------- ---------- ------ ---------- ------- ---------- ---------- ------ Profit/(loss) for the period attributable to equity holders 767 161 nm(1) 829 (7) 2,695 1,227 120 --------------------------------- ---------- ---------- ------ ---------- ------- ---------- ---------- ------ Non-controlling interests (4) (7) 43 (6) 33 (18) (25) 28 Dividend payable on preference shares and AT1 classified as equity (119) (31) nm(1) (132) 10 (315) (263) (20) --------------------------------- ---------- ---------- ------ ---------- ------- ---------- ---------- ------ Profit/(loss) for the period attributable to ordinary shareholders 644 123 nm(1) 691 (7) 2,362 939 152
--------------------------------- ---------- ---------- ------ ---------- ------- ---------- ---------- ------ Items normalised: Provision for regulatory matters - - nm(1) - nm(1) - (14) nm(1) Restructuring 99 44 125 90 10 222 134 66 Goodwill Impairment - 231 nm(1) - nm(1) - 489 nm(1) Net (gain)/loss on sale of businesses (20) 35 nm(1) - nm(1) (20) 29 nm(1) Tax on normalised items (7) (5) (40) (8) 13 (22) (11) (100) --------------------------------- ---------- ---------- ------ ---------- ------- ---------- ---------- ------ Underlying profit for the period attributable to ordinary shareholders 716 428 67 773 (7) 2,542 1,566 62 --------------------------------- ---------- ---------- ------ ---------- ------- ---------- ---------- ------ Underlying Return on Tangible Equity 7.1% 4.4% 270bps 7.8% (70)bps 8.6% 5.5% 310bps --------------------------------- ---------- ---------- ------ ---------- ------- ---------- ---------- ------ Statutory Return on Tangible Equity 6.4% 1.3% 510bps 7.0% (60)bps 7.9% 3.3% 460bps --------------------------------- ---------- ---------- ------ ---------- ------- ---------- ---------- ------
1 Not meaningful
Net tangible asset value per share
30.09.21 30.09.20 Change 30.06.21 Change 31.12.20 Change $million $million % $million % $million % ---------------------------------------------- ---------- ---------- ---------- ------ ---------- ------ Parent company shareholders equity 46,666 45,743 2 46,752 - 45,886 2 Less Preference share premium (1,494) (1,494) - (1,494) - (1,494) - Less Intangible assets (5,347) (4,916) (9) (5,187) (3) (5,063) (6) ---------------------------------------------- ---------- ---------- ------ ---------- ------ ---------- ------ Net shareholders tangible equity 39,825 39,333 1 40,071 (1) 39,329 1 ---------------------------------------------- ---------- ---------- ------ ---------- ------ ---------- ------ Ordinary shares in issue, excluding own shares (millions) 3,078 3,149 (2) 3,119 (1) 3,150 (2) ---------------------------------------------- ---------- ---------- ------ ---------- ------ ---------- ------ Net Tangible Asset Value per share (cents)(1) 1,294 1,249 45 1,285 9 1,249 45 ---------------------------------------------- ---------- ---------- ------ ---------- ------ ---------- ------
1 Change is cents difference between the two periods rather than percentage change
Page 24
Underlying versus statutory results reconciliations
Reconciliations between underlying and statutory results are set out in the tables below:
Operating income by client segment
3Q'21 ------------------------------------------------- Consumer, Corporate, Private Central Commercial & & & Institutional Business other Banking Banking items Total $million $million $million $million ---------------------------- ---------------- --------- --------- --------- Underlying operating income 2,226 1,430 109 3,765 Restructuring (12) - (9) (21) Other items - - 20 20 ---------------------------- ---------------- --------- --------- --------- Statutory operating income 2,214 1,430 120 3,764 ---------------------------- ---------------- --------- --------- --------- 3Q'20 --------------------------------------------------- Consumer, Corporate, Private Central Commercial & & & Institutional Business other Banking(1) Banking(1) items Total $million $million $million $million ---------------------------- ---------------- ----------- --------- --------- Underlying operating income 2,044 1,462 13 3,519 Restructuring 21 - 1 22 Other items - - (35) (35) ---------------------------- ---------------- ----------- --------- --------- Statutory operating income 2,065 1,462 (21) 3,506 ---------------------------- ---------------- ----------- --------- ---------
1 Following the Group's change in organisational structure, there has been an integration of Corporate & Institutional Banking and Commercial Banking to Corporate, Commercial & Institutional Banking; Private Banking and Retail Banking to Consumer, Private & Business Banking. Further, certain clients have been moved between the two new client segments. Prior period has been restated
Operating income by region
3Q'21 ----------------------------------------------------- Africa Central & Europe & Middle & other Asia East Americas items Total $million $million $million $million $million ---------------------------- --------- --------- --------- --------- --------- Underlying operating income 2,629 657 514 (35) 3,765 Restructuring - - - (21) (21) Other items - - - 20 20 ---------------------------- --------- --------- --------- --------- --------- Statutory operating income 2,629 657 514 (36) 3,764 ---------------------------- --------- --------- --------- --------- --------- 3Q'20 ---------------------------------------------------------- Africa Europe Central & & & Middle other Asia(1) East Americas items Total $million $million $million $million $million ---------------------------- ---------- ---------- ---------- ---------- ---------- Underlying operating income 2,505 590 423 1 3,519 Restructuring 19 3 - - 22 Other items (35) - - - (35) ---------------------------- ---------- ---------- ---------- ---------- ---------- Statutory operating income 2,489 593 423 1 3,506 ---------------------------- ---------- ---------- ---------- ---------- ----------
1 Following the Group's change in organisational structure, there has been an integration of Greater China & North Asia and ASEAN & South Asia to Asia. Prior period has been restated
Page 25
Underlying versus statutory results reconciliations continued
Profit before taxation
3Q'21 ---------------------------------------------------------------------------------- Net gain on businesses Provision disposed/ for regulatory Goodwill held Underlying matters Restructuring impairment for sale Statutory $million $million $million $million $million $million ---------------------------------- ---------- --------------- ------------- ----------- -------------- --------- Operating income 3,765 - (21) - 20 3,764
Operating expenses (2,594) - (53) - - (2,647) ---------------------------------- ---------- --------------- ------------- ----------- -------------- --------- Operating profit/(loss) before impairment losses and taxation 1,171 - (74) - 20 1,117 Credit impairment (107) - (1) - - (108) Other impairment (35) - (24) - - (59) Profit from associates and joint ventures 46 - - - - 46 ---------------------------------- ---------- --------------- ------------- ----------- -------------- --------- Profit/(loss) before taxation 1,075 - (99) - 20 996 ---------------------------------- ---------- --------------- ------------- ----------- -------------- --------- 3Q'20 ---------------------------------------------------------------------------------- Net loss on businesses Provision disposed/ for regulatory Goodwill held Underlying matters Restructuring impairment for sale Statutory $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) (231) (35) 435 ---------------------------------- ---------- --------------- ------------- ----------- -------------- ---------
Page 26
Underlying versus statutory results reconciliations continued
Profit before taxation by client segment
3Q'21 ------------------------------------------------- Consumer, Corporate, Private Central Commercial & & & Institutional Business other Banking Banking items Total $million $million $million $million -------------------------------------------------------------- ---------------- --------- --------- --------- Operating income 2,226 1,430 109 3,765 ---------------- --------- --------- --------- External 2,115 1,348 302 3,765 Inter-segment 111 82 (193) - ---------------- --------- --------- --------- Operating expenses (1,304) (1,097) (193) (2,594) -------------------------------------------------------------- ---------------- --------- --------- --------- Operating profit/(loss) before impairment losses and taxation 922 333 (84) 1,171 Credit impairment (24) (74) (9) (107) Other impairment (30) - (5) (35) Profit from associates and joint ventures - - 46 46 -------------------------------------------------------------- ---------------- --------- --------- --------- Underlying profit/(loss) before taxation 868 259 (52) 1,075 Restructuring (32) (10) (57) (99) Goodwill impairment - - - - Other items - - 20 20 -------------------------------------------------------------- ---------------- --------- --------- --------- Statutory profit/(loss) before taxation 836 249 (89) 996 -------------------------------------------------------------- ---------------- --------- --------- --------- 3Q'20 --------------------------------------------------- Consumer, Corporate, Private Central Commercial & & & Institutional Business other Banking(1) Banking(1) items Total $million $million $million $million -------------------------------------------------------------- ---------------- ----------- --------- --------- Operating income 2,044 1,462 13 3,519 ---------------- ----------- --------- --------- External 1,975 1,266 278 3,519 Inter-segment 69 196 (265) - ---------------- ----------- --------- --------- Operating expenses (1,281) (1,039) (160) (2,480) -------------------------------------------------------------- ---------------- ----------- --------- --------- Operating profit/(loss) before impairment losses and taxation 763 423 (147) 1,039 Credit impairment (230) (126) 3 (353) Other impairment (12) - (3) (15) Profit from associates and joint ventures - - 74 74 -------------------------------------------------------------- ---------------- ----------- --------- --------- Underlying profit/(loss) before taxation 521 297 (73) 745 Restructuring (18) (12) (14) (44) Goodwill impairment - - (231) (231) Other items - - (35) (35) -------------------------------------------------------------- ---------------- ----------- --------- --------- Statutory profit/(loss) before taxation 503 285 (353) 435 -------------------------------------------------------------- ---------------- ----------- --------- ---------
1 Following the Group's change in organisational structure, there has been an integration of Corporate & Institutional Banking and Commercial Banking to Corporate, Commercial & Institutional Banking; Private Banking and Retail Banking to Consumer, Private & Business Banking. Further, certain clients have been moved between the two new client segments. Prior period has been restated
Page 27
Underlying versus statutory results reconciliations continued
Profit before taxation by region
3Q'21 ----------------------------------------------------- Africa Central & Europe & Middle & other Asia East Americas items Total $million $million $million $million $million -------------------------------------------------------------- --------- --------- --------- --------- --------- Operating income 2,629 657 514 (35) 3,765 Operating expenses (1,661) (401) (350) (182) (2,594) -------------------------------------------------------------- --------- --------- --------- --------- --------- Operating profit/(loss) before impairment losses and taxation 968 256 164 (217) 1,171 Credit impairment (84) (33) 11 (1) (107) Other impairment (2) (1) (14) (18) (35) Profit from associates and joint ventures 45 - - 1 46 -------------------------------------------------------------- --------- --------- --------- --------- --------- Underlying profit/(loss) before taxation 927 222 161 (235) 1,075 Restructuring (36) (7) (27) (29) (99) Goodwill impairment - - - - - Other items - - - 20 20 -------------------------------------------------------------- --------- --------- --------- --------- --------- Statutory profit/(loss) before taxation 891 215 134 (244) 996 -------------------------------------------------------------- --------- --------- --------- --------- --------- 3Q'20 ---------------------------------------------------------- Africa Europe Central & & & Middle other Asia(1) East Americas items Total $million $million $million $million $million ---------------------------------------------------------- ---------- ---------- ---------- ---------- ---------- Operating income 2,505 590 423 1 3,519 Operating expenses (1,601) (426) (360) (93) (2,480) ---------------------------------------------------------- ---------- ---------- ---------- ---------- ---------- Operating profit/(loss) before impairment losses and taxation 904 164 63 (92) 1,039 Credit impairment (157) (154) (37) (5) (353) Other impairment - 1 11 (27) (15) Profit from associates and joint ventures 74 - - - 74 ---------------------------------------------------------- ---------- ---------- ---------- ---------- ---------- Underlying profit/(loss) before taxation 821 11 37 (124) 745 Restructuring (22) (11) (8) (3) (44) Goodwill impairment - - - (231) (231) Other items (35) - - - (35) ---------------------------------------------------------- ---------- ---------- ---------- ---------- ---------- Statutory profit/(loss) before taxation 764 - 29 (358) 435 ---------------------------------------------------------- ---------- ---------- ---------- ---------- ----------
1 Following the Group's change in organisational structure, there has been an integration of Greater China & North Asia and ASEAN & South Asia to Asia. Prior period has been restated
Page 28
Underlying versus statutory results reconciliations continued
Return on tangible equity (RoTE)
3Q'21 ------------------------------------------- Consumer, Corporate, Private Central Commercial & & & Institutional Business other Banking Banking Items Total % % % % --------------------------------------------------------- ---------------- --------- ------- ----- Underlying RoTE 10.6 9.9 (6.7) 7.1 Provision for regulatory matters - - - - Restructuring Of which: Income (0.2) - (0.5) (0.2) Of which: Expenses (0.4) (0.5) (1.1) (0.5) Of which: Credit impairment - - - - Of which: Other impairment - - (1.4) (0.2) Of which: Profit from associates and joint ventures - - - - Goodwill impairment - - - - Net gain on businesses disposed/held for sale - - 1.0 0.2 Tax on normalised items 0.2 0.1 - - --------------------------------------------------------- ---------------- --------- ------- ----- Statutory RoTE 10.2 9.5 (8.7) 6.4 --------------------------------------------------------- ---------------- --------- ------- ----- 3Q'20 ---------------------------------------------- Consumer, Private & Central Business & Corporate, Commercial & Institutional other Banking(1) Banking(1) Items Total % % % % --------------------------------------------------------- ---------------- ------------ ------- ----- Underlying RoTE 6.1 11.5 (9.3) 4.4 Provision for regulatory matters - - - - Restructuring Of which: Income 0.3 - - 0.2 Of which: Expenses (0.3) (0.6) (0.4) (0.4)
Of which: Credit impairment (0.1) - - (0.1) Of which: Other impairment (0.3) - - (0.2) Of which: Profit from associates and joint ventures - - (0.5) (0.1) Goodwill impairment - - (13.4) (2.4) Net loss on businesses disposed/held for sale - - (2.0) (0.4) Tax on normalised items 0.1 0.2 (0.1) 0.3 --------------------------------------------------------- ---------------- ------------ ------- ----- Statutory RoTE 5.8 11.1 (25.7) 1.3 --------------------------------------------------------- ---------------- ------------ ------- -----
1 Following the Group's change in organisational structure, there has been an integration of Corporate & Institutional Banking and Commercial Banking to Corporate, Commercial & Institutional Banking; Private Banking and Retail Banking to Consumer, Private & Business Banking. Further, certain clients have been moved between the two new client segments. Prior period has been restated
Page 29
Underlying versus statutory results reconciliations continued
Earnings per ordinary share (EPS)
3Q'21 ------------------------------------------------------------------------------------------------------------- Gains arising on repurchase Provision Profit of senior Net gain 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 716 - (99) - - 20 - 7 644 Basic - Weighted average number of shares (millions) 3,105 3,105 Basic earnings per ordinary share (cents) 23.1 20.7 ------------- ---------- ---------- ------------- --------- ------------ ---------- ---------- ---------- --------- 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 ------------- ---------- ---------- ------------- --------- ------------ ---------- ---------- ---------- ---------
Page 30
Risk review
Credit quality by client segment
30.09.21 --------------------------------------------------------------------------------------- Customers ------------------------------------------------- Consumer, Corporate, Private Central Commercial & & & Institutional Business other Customer Undrawn Financial Banks Banking Banking items Total commitments guarantees Amortised cost $million $million $million $million $million $million $million ----------------------------- --------- ---------------- --------- --------- --------- ------------ ----------- Stage 1 45,042 123,108 132,872 28,160 284,140 145,383 53,517 --------- ---------------- --------- --------- --------- ------------ ----------- - Strong 34,102 73,563 127,499 28,010 229,072 128,243 35,812 - Satisfactory 10,940 49,545 5,373 150 55,068 17,140 17,705 --------- ---------------- --------- --------- --------- ------------ ----------- Stage 2 730 13,513 2,080 166 15,759 9,979 2,616 --------- ---------------- --------- --------- --------- ------------ ----------- - Strong 115 2,133 1,432 - 3,565 3,180 367 - Satisfactory 42 9,944 295 - 10,239 5,742 1,680 - Higher risk 573 1,436 353 166 1,955 1,057 569 --------- ---------------- --------- --------- --------- ------------ ----------- Of which (stage 2): - Less than 30 days past due 2 142 291 - 433 - - - More than 30 days past due 23 18 357 - 375 - - Stage 3, credit-impaired financial assets - 6,503 1,681 - 8,184 14 939 ----------------------------- --------- ---------------- --------- --------- --------- ------------ ----------- Gross balance(1) 45,772 143,124 136,633 28,326 308,083 155,376 57,072 ----------------------------- --------- ---------------- --------- --------- --------- ------------ ----------- Stage 1 (11) (51) (358) (2) (411) (33) (8) --------- ---------------- --------- --------- --------- ------------ ----------- - Strong (3) (12) (287) (2) (301) (20) (2) - Satisfactory (8) (39) (71) - (110) (13) (6) --------- ---------------- --------- --------- --------- ------------ ----------- Stage 2 (7) (367) (168) - (535) (63) (30) --------- ---------------- --------- --------- --------- ------------ ----------- - Strong - (34) (89) - (123) (4) (7) - Satisfactory (3) (234) (30) - (264) (47) (13) - Higher risk (4) (99) (49) - (148) (12) (10) --------- ---------------- --------- --------- --------- ------------ ----------- Of which (stage 2): - Less than 30 days past due - (3) (30) - (33) - - - More than 30 days past due - (3) (49) - (52) - - Stage 3, credit-impaired
financial assets - (3,837) (807) - (4,644) - (211) ----------------------------- --------- ---------------- --------- --------- --------- ------------ ----------- Total credit impairment (18) (4,255) (1,333) (2) (5,590) (96) (249) ----------------------------- --------- ---------------- --------- --------- --------- ------------ ----------- Net carrying value 45,754 138,869 135,300 28,324 302,493 ----------------------------- --------- ---------------- --------- --------- --------- ------------ ----------- Stage 1 0.0% 0.0% 0.3% 0.0% 0.1% 0.0% 0.0% --------- ---------------- --------- --------- --------- ------------ ----------- - Strong 0.0% 0.0% 0.2% 0.0% 0.1% 0.0% 0.0% - Satisfactory 0.1% 0.1% 1.3% 0.0% 0.2% 0.1% 0.0% --------- ---------------- --------- --------- --------- ------------ ----------- Stage 2 1.0% 2.7% 8.1% 0.0% 3.4% 0.6% 1.1% --------- ---------------- --------- --------- --------- ------------ ----------- - Strong 0.0% 1.6% 6.2% 0.0% 3.5% 0.1% 1.9% - Satisfactory 7.1% 2.4% 10.2% 0.0% 2.6% 0.8% 0.8% - Higher risk 0.7% 6.9% 13.9% 0.0% 7.6% 1.1% 1.8% --------- ---------------- --------- --------- --------- ------------ ----------- Of which (stage 2): - Less than 30 days past due 0.0% 2.1% 10.3% 0.0% 7.6% 0.0% 0.0% - More than 30 days past due 0.0% 16.7% 13.7% 0.0% 13.9% 0.0% 0.0% Stage 3, credit-impaired financial assets (S3) 0.0% 59.0% 48.0% 0.0% 56.7% 0.0% 22.5% ----------------------------- --------- ---------------- --------- --------- --------- ------------ ----------- Cover ratio 0.0% 3.0% 1.0% 0.0% 1.8% 0.1% 0.4% ----------------------------- --------- ---------------- --------- --------- --------- ------------ ----------- Fair value through profit or loss (FVTPL) ----------------------------- --------- ---------------- --------- --------- --------- ------------ ----------- Performing 21,832 59,115 82 2,008 61,205 - - --------- ---------------- --------- --------- --------- ------------ ----------- - Strong 18,092 40,077 82 2,005 42,164 - - - Satisfactory 3,740 19,038 - 3 19,041 - - - Higher risk - - - - - - - --------- ---------------- --------- --------- --------- ------------ ----------- Defaulted (CG13-14) - 70 - - 70 - - ----------------------------- --------- ---------------- --------- --------- --------- ------------ ----------- Gross balance (FVTPL)(2) 21,832 59,185 82 2,008 61,275 - - ----------------------------- --------- ---------------- --------- --------- --------- ------------ ----------- Net carrying value (incl FVTPL) 67,586 198,054 135,382 30,332 363,768 - - ----------------------------- --------- ---------------- --------- --------- --------- ------------ -----------
1 Loans and advances includes reverse repurchase agreements and other similar secured lending of $8,836 million under Customers and of $501 million under Banks, held at amortised cost
2 Loans and advances includes reverse repurchase agreements and other similar secured lending of $51,687 million under Customers and of $17,723 million under Banks, held at fair value through profit or loss
Page 31
Risk review continued
30.06.21 ----------------------------------------------------------------------------------------- Customers --------------------------------------------------- Corporate, Consumer, Central Commercial Private & & Institutional & Business other Customer Undrawn Financial Banks Banking Banking items Total commitments Guarantees Amortised cost $million $million $million $million $million $million $million --------------------------- --------- ---------------- ----------- --------- --------- ------------ ----------- Stage 1 44,989 124,382 131,690 21,218 277,290 139,795 51,171 --------- ---------------- ----------- --------- --------- ------------ ----------- - Strong 33,591 74,198 126,179 21,019 221,396 120,626 34,374 - Satisfactory 11,398 50,184 5,511 199 55,894 19,169 16,797 --------- ---------------- ----------- --------- --------- ------------ ----------- Stage 2 212 15,440 2,194 - 17,634 10,620 2,585 --------- ---------------- ----------- --------- --------- ------------ ----------- - Strong 120 2,138 1,491 - 3,629 4,181 485 - Satisfactory 62 11,709 323 - 12,032 5,369 1,602 - Higher risk 30 1,593 380 - 1,973 1,070 498 --------- ---------------- ----------- --------- --------- ------------ ----------- Of which (stage 2): - Less than 30 days past due - 175 319 - 494 - - - More than 30 days past due - 170 384 - 554 - - Stage 3, credit-impaired financial assets - 7,430 1,628 - 9,058 6 920 --------------------------- --------- ---------------- ----------- --------- --------- ------------ ----------- Gross balance(1) 45,201 147,252 135,512 21,218 303,982 150,421 54,676 --------------------------- --------- ---------------- ----------- --------- --------- ------------ ----------- Stage 1 (11) (74) (371) (2) (447) (31) (20) --------- ---------------- ----------- --------- --------- ------------ ----------- - Strong (3) (24) (310) (2) (336) (18) (13) - Satisfactory (8) (50) (61) - (111) (13) (7) --------- ---------------- ----------- --------- --------- ------------ ----------- Stage 2 (2) (357) (187) - (544) (48) (27) --------- ---------------- ----------- --------- --------- ------------ ----------- - Strong - (44) (90) - (134) (6) (1) - Satisfactory (2) (217) (35) - (252) (31) (14) - Higher risk - (96) (62) - (158) (11) (12) --------- ---------------- ----------- --------- --------- ------------ ----------- Of which (stage 2): - Less than 30 days past due - - (35) - (35) - - - More than 30 days past due - (8) (62) - (70) - - Stage 3, credit-impaired financial assets - (4,230) (758) - (4,988) (1) (191) --------------------------- --------- ---------------- ----------- --------- --------- ------------ ----------- Total credit impairment (13) (4,661) (1,316) (2) (5,979) (80) (238) --------------------------- --------- ---------------- ----------- --------- --------- ------------ -----------
Net carrying value 45,188 142,591 134,196 21,216 298,003 --------------------------- --------- ---------------- ----------- --------- --------- ------------ ----------- Stage 1 0.0% 0.1% 0.3% 0.0% 0.2% 0.0% 0.0% --------- ---------------- ----------- --------- --------- ------------ ----------- - Strong 0.0% 0.0% 0.2% 0.0% 0.2% 0.0% 0.0% - Satisfactory 0.1% 0.1% 1.1% 0.0% 0.2% 0.1% 0.0% --------- ---------------- ----------- --------- --------- ------------ ----------- Stage 2 0.9% 2.3% 8.5% 0.0% 3.1% 0.5% 1.0% --------- ---------------- ----------- --------- --------- ------------ ----------- - Strong 0.0% 2.1% 6.0% 0.0% 3.7% 0.1% 0.2% - Satisfactory 3.2% 1.9% 10.8% 0.0% 2.1% 0.6% 0.9% - Higher risk 0.0% 6.0% 16.3% 0.0% 8.0% 1.0% 2.4% --------- ---------------- ----------- --------- --------- ------------ ----------- Of which (stage 2): - Less than 30 days past due 0.0% 0.0% 11.0% 0.0% 7.1% 0.0% 0.0% - More than 30 days past due 0.0% 4.7% 16.1% 0.0% 12.6% 0.0% 0.0% Stage 3, credit-impaired financial assets (S3) 0.0% 56.9% 46.6% 0.0% 55.1% 16.7% 20.8% --------------------------- --------- ---------------- ----------- --------- --------- ------------ ----------- Cover ratio 0.0% 3.2% 1.0% 0.0% 2.0% 0.1% 0.4% --------------------------- --------- ---------------- ----------- --------- --------- ------------ ----------- Fair value through profit or loss (FVTPL) --------------------------- --------- ---------------- ----------- --------- --------- ------------ ----------- Performing 22,388 56,448 99 547 57,094 - - --------- ---------------- ----------- --------- --------- ------------ ----------- - Strong 18,919 37,076 98 544 37,718 - - - Satisfactory 3,469 19,357 1 3 19,361 - - - Higher risk - 15 - - 15 - - --------- ---------------- ----------- --------- --------- ------------ ----------- Defaulted (CG13-14) - 79 - - 79 - - --------------------------- --------- ---------------- ----------- --------- --------- ------------ ----------- Gross balance (FVTPL)(2) 22,388 56,527 99 547 57,173 - - --------------------------- --------- ---------------- ----------- --------- --------- ------------ ----------- Net carrying value (incl FVTPL) 67,576 199,118 134,295 21,763 355,176 - - --------------------------- --------- ---------------- ----------- --------- --------- ------------ -----------
1 Loans and advances includes reverse repurchase agreements and other similar secured lending of $4,584 million under Customers and of $620 million under Banks, held at amortised cost
2 Loans and advances includes reverse repurchase agreements and other similar secured lending of $46,788 million under Customers and of $17,563 million under Banks, held at fair value through profit or loss
Page 32
Risk review continued
Credit impairment charge (restated)(1)
9 months ended 30.09.21 9 months ended 30.09.20 ---------------------------------- ---------------------------------- Stage 1 Stage 1 & 2 Stage 3 Total & 2 Stage 3 Total $million $million $million $million $million $million ---------------------------------------------- ---------- ---------- ---------- ---------- ---------- ---------- Ongoing business portfolio Corporate, Commercial & Institutional Banking(1) (51) (61) (112) 446 891 1,337 Consumer, Private & Business Banking(1) (30) 197 167 322 254 576 Central & others 6 (1) 5 9 (2) 7 ---------------------------------------------- ---------- ---------- ---------- ---------- ---------- ---------- Credit impairment charge (75) 135 60 777 1,143 1,920 Restructuring business portfolio Others (3) - (3) - 14 14 ---------------------------------------------- ---------- ---------- ---------- ---------- ---------- ---------- Credit impairment charge (3) - (3) - 14 14 Total credit impairment charge (78) 135 57 777 1,157 1,934 ---------------------------------------------- ---------- ---------- ---------- ---------- ---------- ----------
1 Following the Group's change in organisational structure, there has been an integration of Corporate & Institutional Banking and Commercial Banking to Corporate, Commercial & Institutional Banking; Private Banking and Retail Banking to Consumer, Private & Business Banking. Further, certain clients have been moved between the two new client segments. Prior period has been restated
COVID-19 relief measures
Africa & Middle Asia East Europe & Americas Outstanding % of Outstanding % of Outstanding % of Outstanding % of Segment $million portfolio(1) $million portfolio(1) $million portfolio(1) $million portfolio(1) -------------- ----------- ------------ ----------- ----------- ------------ ----------- ------------ Credit card & Personal loans 235 2% 69 1% 166 8% Mortgages & Auto 672 1% 660 1% 12 1% Business Banking 371 4% 371 4% -------------- ----------- ------------ ----------- ------------ ----------- ------------ ----------- ------------ Total Consumer, Private & Business Banking 1,278 1% 1,100 1% 178 6% -------------- ----------- ------------ ----------- ------------ ----------- ------------ ----------- ------------ Corporate, Commercial & Institutional Banking 675 457 208 10 -------------- ----------- ------------ ----------- ------------ ----------- ------------ ----------- ------------ Total at 30 September 2021 1,953 1% 1,557 386 10 -------------- ----------- ------------ ----------- ------------ ----------- ------------ ----------- ------------
1 Percentage of portfolio represents the outstanding amount as a percentage of the gross loans and advances to banks and customers by product and segment and total loans and advances to banks and customers
Page 33
Risk review continued
Vulnerable sectors
Maximum Exposure
30.09.21 ----------------------------------------------------------------------------------------------------- Maximum Total on on-balance Undrawn Financial & sheet exposure commitments guarantees off-balance (net of (net of (net of sheet credit Net on-balance credit credit Net off-balance net impairment) Collateral sheet exposure impairment) impairment) sheet exposure exposure Amortised Cost $million $million $million $million $million $million $million --------------- -------------- ---------- -------------- ------------ ------------ --------------- ------------ Industry:
Aviation(1) 3,798 2,164 1,634 1,233 456 1,689 3,323 Commodity Traders 9,708 350 9,358 2,365 6,418 8,783 18,141 Metals & Mining 3,811 558 3,253 2,822 687 3,509 6,762 Commercial Real Estate 18,506 6,395 12,111 6,403 279 6,682 18,793 Hotels & Tourism 2,435 981 1,454 1,258 112 1,370 2,824 Oil & Gas 7,350 1,146 6,204 8,132 5,625 13,757 19,961 --------------- -------------- ---------- -------------- ------------ ------------ --------------- ------------ Total 45,608 11,594 34,014 22,213 13,577 35,790 69,804 --------------- -------------- ---------- -------------- ------------ ------------ --------------- ------------ Total Corporate, Commercial & Institutional Banking 138,869 26,268 112,601 93,435 49,344 142,779 255,380 --------------- -------------- ---------- -------------- ------------ ------------ --------------- ------------ Total Group 348,247 136,005 212,242 155,280 56,823 212,103 424,345 --------------- -------------- ---------- -------------- ------------ ------------ --------------- ------------ 30.06.21 ----------------------------------------------------------------------------------------------------- Maximum Total on on-balance Undrawn Financial & sheet exposure commitments guarantees off-balance (net of (net of (net of sheet credit Net on-balance credit credit Net off-balance net impairment) Collateral sheet exposure impairment) impairment) sheet exposure exposure Amortised Cost $million $million $million $million $million $million $million --------------- -------------- ---------- -------------- ------------ ------------ --------------- ------------ Industry: Aviation(1) 4,033 2,068 1,965 1,422 455 1,877 3,842 Commodity Traders 9,732 594 9,138 1,800 5,554 7,354 16,492 Metals & Mining 4,138 415 3,723 2,774 708 3,482 7,205 Commercial Real Estate 18,904 7,985 10,919 5,197 298 5,495 16,414 Hotels & Tourism 2,585 1,150 1,435 1,262 98 1,360 2,795 Oil & Gas 8,590 981 7,609 7,236 4,925 12,161 19,770 --------------- -------------- ---------- -------------- ------------ ------------ --------------- ------------ Total 47,982 13,193 34,789 19,691 12,038 31,729 66,518 --------------- -------------- ---------- -------------- ------------ ------------ --------------- ------------ Total Corporate, Commercial & Institutional Banking 142,591 27,730 114,861 86,568 47,471 134,039 248,900 --------------- -------------- ---------- -------------- ------------ ------------ --------------- ------------ Total Group 343,191 134,731 208,460 150,341 54,438 204,779 413,239 --------------- -------------- ---------- -------------- ------------ ------------ --------------- ------------
1 In addition to the aviation sector loan exposures, the Group owns $3.3 billion (30 June 2021: $3.4 billion) of aircraft under operating leases.
Page 34
Risk review continued
Loans and advances by stage
30.09.21 ------------------------------------------------------------------------------------------------------------------------------ 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 1,636 - 1,636 1,979 (16) 1,963 256 (57) 199 3,871 (73) 3,798 Commodity Traders 9,186 (2) 9,184 208 (5) 203 977 (656) 321 10,371 (663) 9,708 Metals & Mining 3,279 - 3,279 447 (24) 423 225 (116) 109 3,951 (140) 3,811 Commercial Real Estate 16,898 (10) 16,888 1,384 (16) 1,368 442 (192) 250 18,724 (218) 18,506 Hotels & Tourism 1,199 - 1,199 1,124 (27) 1,097 189 (50) 139 2,512 (77) 2,435 Oil & Gas 5,592 (6) 5,586 1,528 (53) 1,475 505 (216) 289 7,625 (275) 7,350 -------------- -------- ---------- -------- -------- ---------- -------- -------- ---------- -------- -------- ---------- -------- Total 37,790 (18) 37,772 6,670 (141) 6,529 2,594 (1,287) 1,307 47,054 (1,446) 45,608 -------------- -------- ---------- -------- -------- ---------- -------- -------- ---------- -------- -------- ---------- -------- Total Corporate, Commercial & Institutional Banking 123,108 (51) 123,057 13,513 (367) 13,146 6,503 (3,837) 2,666 143,124 (4,255) 138,869 -------------- -------- ---------- -------- -------- ---------- -------- -------- ---------- -------- -------- ---------- -------- Total Group 329,182 (422) 328,760 16,489 (542) 15,947 8,184 (4,644) 3,540 353,855 (5,608) 348,247 -------------- -------- ---------- -------- -------- ---------- -------- -------- ---------- -------- -------- ---------- -------- 30.06.21 ------------------------------------------------------------------------------------------------------------------------------ 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 1,992 - 1,992 1,887 (11) 1,876 225 (60) 165 4,104 (71) 4,033 Commodity Traders 9,346 (3) 9,343 240 (2) 238 842 (691) 151 10,428 (696) 9,732 Metals & Mining 3,337 (3) 3,334 714 (25) 689 210 (95) 115 4,261 (123) 4,138 Commercial Real Estate 16,995 (17) 16,978 1,720 (20) 1,700 434 (208) 226 19,149 (245) 18,904 Hotels & Tourism 1,188 (1) 1,187 1,336 (40) 1,296 136 (34) 102 2,660 (75) 2,585 Oil & Gas 6,821 (4) 6,817 1,587 (58) 1,529 469 (225) 244 8,877 (287) 8,590 -------------- -------- ---------- -------- -------- ---------- -------- -------- ---------- -------- -------- ---------- --------
Total 39,679 (28) 39,651 7,484 (156) 7,328 2,316 (1,313) 1,003 49,479 (1,497) 47,982 -------------- -------- ---------- -------- -------- ---------- -------- -------- ---------- -------- -------- ---------- -------- Total Corporate, Commercial & Institutional Banking 124,382 (74) 124,308 15,440 (357) 15,083 7,430 (4,230) 3,200 147,252 (4,661) 142,591 -------------- -------- ---------- -------- -------- ---------- -------- -------- ---------- -------- -------- ---------- -------- Total Group 322,279 (458) 321,821 17,846 (546) 17,300 9,058 (4,988) 4,070 349,183 (5,992) 343,191 -------------- -------- ---------- -------- -------- ---------- -------- -------- ---------- -------- -------- ---------- --------
Page 35
Capital review
Capital ratios
30.09.21 30.06.21 Change(4) 31.12.20 Change(4) --------------- -------- -------- --------- -------- --------- CET1 14.6% 14.1% 0.5 14.4% 0.2 Tier 1 capital 17.2% 16.4% 0.8 16.5% 0.7 Total capital 22.0% 21.1% 0.9 21.2% 0.8 --------------- -------- -------- --------- -------- ---------
CRD Capital base(1)
30.09.21 30.06.21 Change(5) 31.12.20 Change(5) $million $million % $million % ------------------------------------------------------------ ---------- ---------- --------- ---------- --------- CET1 instruments and reserves Capital instruments and the related share premium accounts 5,528 5,548 - 5,564 (1) ---------- ---------- --------- ---------- --------- Of which: share premium accounts 3,989 3,989 - 3,989 - ---------- ---------- --------- ---------- --------- Retained earnings(2) 25,210 25,695 (2) 25,723 (2) Accumulated other comprehensive income (and other reserves) 11,936 12,278 (3) 12,688 (6) Non-controlling interests (amount allowed in consolidated CET1) 197 191 3 180 9 Independently reviewed interim and year-end profits 2,691 1,924 40 718 275 Foreseeable dividends (744) (315) (136) (481) (55) ------------------------------------------------------------ ---------- ---------- --------- ---------- --------- CET1 capital before regulatory adjustments 44,818 45,321 (1) 44,392 1 ------------------------------------------------------------ ---------- ---------- --------- ---------- --------- CET1 regulatory adjustments - Additional value adjustments (prudential valuation adjustments) (569) (632) 10 (490) (16) Intangible assets (net of related tax liability)(3) (4,164) (4,072) (2) (4,274) 3 Deferred tax assets that rely on future profitability (excludes those arising from temporary differences) (152) (109) (39) (138) (10) Fair value reserves related to net losses on cash flow hedges 24 38 (37) 52 (54) Deduction of amounts resulting from the calculation of excess expected loss (696) (864) 19 (701) 1 Net gains on liabilities at fair value resulting from changes in own credit risk 45 53 (15) 52 (13) Defined-benefit pension fund assets (62) (60) (3) (40) (55) Fair value gains arising from the institution's own credit risk related to derivative liabilities (45) (46) 2 (48) 6 Exposure amounts which could qualify for risk weighting of 1250% (32) (40) 20 (26) (23) ------------------------------------------------------------ ---------- ---------- --------- ---------- --------- Total regulatory adjustments to CET1 (5,651) (5,732) 1 (5,613) (1) ------------------------------------------------------------ ---------- ---------- --------- ---------- --------- CET1 capital 39,167 39,589 (1) 38,779 1 ------------------------------------------------------------ ---------- ---------- --------- ---------- --------- Additional Tier 1 capital (AT1) instruments 6,811 6,313 8 5,632 21 ------------------------------------------------------------ ---------- ---------- --------- ---------- --------- AT1 regulatory adjustments (20) (20) - (20) - ------------------------------------------------------------ ---------- ---------- --------- ---------- --------- Tier 1 capital 45,958 45,882 - 44,391 4 ------------------------------------------------------------ ---------- ---------- --------- ---------- --------- - ---------- ---------- --------- ---------- --------- Tier 2 capital instruments 12,943 13,309 (3) 12,687 2 Tier 2 regulatory adjustments (30) (30) - (30) - ---------- ---------- --------- ---------- --------- Tier 2 capital 12,913 13,279 (3) 12,657 2 ------------------------------------------------------------ ---------- ---------- --------- ---------- --------- Total capital 58,871 59,161 - 57,048 3 ------------------------------------------------------------ ---------- ---------- --------- ---------- --------- Total risk-weighted assets 267,555 280,227 (5) 268,834 - ------------------------------------------------------------ ---------- ---------- --------- ---------- ---------
1 CRD capital is prepared on the regulatory scope of consolidation
2 Retained earnings includes IFRS9 capital relief (transitional) of $278 million, including dynamic relief of $67 million
3 Deduction for intangible assets includes software deduction relief of $1,054 million as the CRR 'Quick Fix' measures
4 Change is percentage points difference between two points rather than percentage change
5 Variance is increase/(decrease) comparing current reporting period to prior reporting periods
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Capital review continued
Movement in total capital
9 months ended Year ended 30.09.21 31.12.20 $million $million ---------------------------------------------------------------------------------------------- ---------- ---------- CET1 at 1 January 38,779 36,513 Ordinary shares issued in the period and share premium - - Share buy-back (506) (242) Profit for the period 2,691 718 Foreseeable dividends deducted from CET1 (744) (481) Difference between dividends paid and foreseeable dividends (209) 476 Movement in goodwill and other intangible assets 110 1,044 Foreign currency translation differences (625) 700 Non-controlling interests 17 (543) Movement in eligible other comprehensive income (117) 324 Deferred tax assets that rely on future profitability (14) (9)
Decrease/(increase) in excess expected loss 5 121 Additional value adjustments (prudential valuation adjustment) (79) 125 IFRS 9 transitional impact on regulatory reserves including day one (116) 35 Exposure amounts which could qualify for risk weighting (6) 36 Fair value gains arising from the institution's own Credit Risk related to derivative liabilities 3 (10) Other (22) (28) ---------------------------------------------------------------------------------------------- ---------- ---------- CET1 at 30 September/31 December 39,167 38,779 ---------------------------------------------------------------------------------------------- ---------- ---------- AT1 at 1 January 5,612 7,164 Net issuances (redemptions) 1,736 (995) Foreign currency translation difference (3) 8 Excess on AT1 grandfathered limit (ineligible) (554) (565) ---------------------------------------------------------------------------------------------- ---------- ---------- AT1 at 30 September/31 December 6,791 5,612 ---------------------------------------------------------------------------------------------- ---------- ---------- Tier 2 capital at 1 January 12,657 12,288 Regulatory amortisation (779) (463) Net issuances (redemptions) 638 (69) Foreign currency translation difference (158) 257 Tier 2 ineligible minority interest 1 82 Recognition of ineligible AT1 554 565 Other - (3) ---------------------------------------------------------------------------------------------- ---------- ---------- Tier 2 capital at 30 September/31 December 12,913 12,657 ---------------------------------------------------------------------------------------------- ---------- ---------- Total capital at 30 September/31 December 58,871 57,048 ---------------------------------------------------------------------------------------------- ---------- ----------
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Capital review continued
Risk-weighted assets by business
30.09.21 --------------------------------------------- Credit Operational Market risk risk risk Total risk $million $million $million $million ---------------------------------------------- --------- ----------- --------- ---------- Corporate, Commercial & Institutional Banking 124,699 16,595 20,722 162,016 Consumer, Private & Business Banking 44,083 8,504 - 52,587 Central & other items 50,846 2,017 89 52,952 ---------------------------------------------- --------- ----------- --------- ---------- Total risk-weighted assets 219,628 27,116 20,811 267,555 ---------------------------------------------- --------- ----------- --------- ---------- 30.06.21 --------------------------------------------- Credit Operational Market risk risk risk Total risk $million $million $million $million ---------------------------------------------- --------- ----------- --------- ---------- Corporate, Commercial & Institutional Banking 134,328 16,595 23,690 174,613 Consumer, Private & Business Banking 47,660 8,504 - 56,164 Central & other items 47,360 2,017 73 49,450 ---------------------------------------------- --------- ----------- --------- ---------- Total risk-weighted assets 229,348 27,116 23,763 280,227 ---------------------------------------------- --------- ----------- --------- ---------- 31.12.20(1) --------------------------------------------- Credit Operational Market risk risk risk Total risk $million $million $million $million ---------------------------------------------- --------- ----------- --------- ---------- Corporate, Commercial & Institutional Banking 127,663 15,963 21,465 165,091 Consumer, Private & Business Banking 44,755 8,338 - 53,093 Central & other items 48,023 2,499 128 50,650 ---------------------------------------------- --------- ----------- --------- ---------- Total risk-weighted assets 220,441 26,800 21,593 268,834 ---------------------------------------------- --------- ----------- --------- ----------
1 Following the Group's change in organisational structure, there has been an integration of Corporate & Institutional Banking and Commercial Banking to Corporate, Commercial & Institutional Banking; Private Banking and Retail Banking to Consumer, Private & Business Banking. Prior period has been restated.
Risk-weighted assets by geographic region
30.09.21 30.06.21 Change(1) 31.12.20(2) Change(1) $million $million % $million % --------------------------- ---------- ---------- --------- ----------- --------- Asia 172,205 182,172 (5) 174,283 (1) Africa & Middle East 49,040 52,596 (7) 51,149 (4) Europe & Americas 48,476 48,556 - 45,758 6 Central & other items (2,166) (3,097) 30 (2,356) 8 --------------------------- ---------- ---------- --------- ----------- --------- Total risk-weighted assets 267,555 280,227 (5) 268,834 - --------------------------- ---------- ---------- --------- ----------- ---------
1 Variance is increase/(decrease) comparing current reporting period to prior reporting periods
2 Following the Group's change in organisational structure, there has been an integration of Greater China & North Asia and ASEAN & South Asia to Asia. Prior period has been restated
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Capital review continued
Movement in risk-weighted assets
Credit risk ------------------------------------------------- Consumer, Corporate, Private Central Commercial & & & Institutional Business other Operational Market Total Banking Banking items Total risk risk risk $million $million $million $million $million $million $million -------------------------------- ---------------- --------- --------- --------- ----------- --------- --------- At 31 December 2019 123,667 42,819 49,178 215,664 27,620 20,806 264,090 -------------------------------- ---------------- --------- --------- --------- ----------- --------- --------- At 01 January 2020(1) 123,611 42,875 49,178 215,664 27,620 20,806 264,090 Assets (decline)/growth (9,743) 520 3,711 (5,512) - - (5,512) Asset quality 12,190 323 2,409 14,922 - - 14,922 Risk-weighted assets efficiencies (71) - - (71) - - (71) Model, methodology and policy
changes 247 134 661 1,042 - (1,500) (458) Disposals - - (7,859) (7,859) (1,003) (159) (9,021) Foreign currency translation 1,429 903 (77) 2,255 - - 2,255 Other, including non-credit risk movements - - - - 183 2,446 2,629 -------------------------------- ---------------- --------- --------- --------- ----------- --------- --------- At 31 December 2020 127,663 44,755 48,023 220,441 26,800 21,593 268,834 -------------------------------- ---------------- --------- --------- --------- ----------- --------- --------- Assets (decline)/growth 999 4,729 3,944 9,672 - - 9,672 Asset quality (1,790) (461) (60) (2,311) - - (2,311) Risk-weighted assets efficiencies (415) (30) (657) (1,102) - - (1,102) Model, methodology and policy changes - (3,701) - (3,701) - - (3,701) Acquisitions/Disposals - - - - - - - Foreign currency translation (1,758) (1,209) (781) (3,748) - - (3,748) Other, including non-credit risk movements - - 377 377 316 (782) (89) -------------------------------- ---------------- --------- --------- --------- ----------- --------- --------- At 30 September 2021 124,699 44,083 50,846 219,628 27,116 20,811 267,555 -------------------------------- ---------------- --------- --------- --------- ----------- --------- ---------
1 Following a reorganisation of certain clients, there has been a reclassification of balances across client segments. 1 January 2020 balances have been restated.
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Capital review continued
UK leverage ratio
30.09.21 30.06.21 Change(3) 31.12.20 Change(3) $million $million % $million % ----------------------------------------------------- ---------- ---------- --------- ---------- --------- Tier 1 capital (transitional) 45,958 45,882 - 44,391 4 Additional Tier 1 capital subject to phase out (557) (557) - (1,114) 50 ----------------------------------------------------- ---------- ---------- --------- ---------- --------- Tier 1 capital (end point)(1) 45,401 45,325 - 43,277 5 ----------------------------------------------------- ---------- ---------- --------- ---------- --------- Derivative financial instruments 52,668 52,254 1 69,467 (24) Derivative cash collateral 10,639 9,832 8 11,759 (10) Securities financing transactions (SFTs) 78,747 69,555 13 67,570 17 Loans and advances and other assets 675,048 664,269 2 640,254 5 ----------------------------------------------------- ---------- ---------- --------- ---------- --------- Total on-balance sheet assets 817,102 795,910 3 789,050 4 Regulatory consolidation adjustments(2) (72,047) (67,508) (7) (60,059) (20) Derivatives adjustments - - ---------- ---------- --------- ---------- --------- Derivatives netting (33,996) (33,043) (3) (44,257) 23 Adjustments to cash collateral (18,089) (16,784) (8) (21,278) 15 Net written credit protection 1,551 1,505 3 1,284 21 Potential future exposure on derivatives 51,199 49,471 3 42,410 21 ---------- ---------- --------- ---------- --------- Total derivatives adjustments 665 1,149 (42) (21,841) 103 Counterparty risk leverage exposure measure for SFTs 14,711 9,178 60 4,969 196 Off-balance sheet items 135,572 133,785 1 128,167 6 Regulatory deductions from Tier 1 capital (5,584) (5,682) 2 (5,521) (1) ----------------------------------------------------- ---------- ---------- --------- ---------- --------- UK leverage exposure (end point) 890,419 866,832 3 834,765 7 UK leverage ratio (end point)(4) 5.1% 5.2% (0.1) 5.2% (0.1) ----------------------------------------------------- ---------- ---------- --------- ---------- --------- UK leverage exposure quarterly average 873,156 879,678 (1) 837,147 4 UK leverage ratio quarterly average(4) 5.2% 5.1% 0.1 5.2% - ----------------------------------------------------- ---------- ---------- --------- ---------- --------- Countercyclical leverage ratio buffer(4) 0.1% 0.1% - 0.0% 0.1 G-SII additional leverage ratio buffer(4) 0.4% 0.4% - 0.4% - ----------------------------------------------------- ---------- ---------- --------- ---------- ---------
1 Tier 1 Capital (end point) is adjusted only for Grandfathered Additional Tier 1 instruments
2 Includes adjustment for qualifying central bank claims
3 Variance is increase/(decrease) comparing current reporting period to prior reporting periods
4 Change is the percentage point difference between the two periods, rather than the percentage change
Page 40
Financial statements
Condensed consolidated interim income statement
For the nine months ended 30 September 2021
9 months 9 months ended ended 30.09.21 30.09.20 $million $million ------------------------------------------------------------- ---------- ---------- Interest income 7,704 9,604 Interest expense (2,601) (4,507) ------------------------------------------------------------- ---------- ---------- Net interest income 5,103 5,097 ---------- ---------- Fees and commission income 3,432 2,941 Fees and commission expense (583) (465) ---------- ---------- Net fee and commission income 2,849 2,476 Net trading income 2,762 3,003 Other operating income 678 1,029 ------------------------------------------------------------- ---------- ---------- Operating income 11,392 11,605 ---------- ---------- Staff costs (5,670) (5,094) Premises costs (282) (274) General administrative expenses (1,025) (992) Depreciation and amortisation (891) (903) ---------- ---------- Operating expenses (7,868) (7,263) ------------------------------------------------------------- ---------- ---------- Operating profit before impairment losses and taxation 3,524 4,342 Credit impairment (57) (1,934) Goodwill, property, plant and equipment and other impairment (99) (487) Profit from associates and joint ventures 187 141 ------------------------------------------------------------- ---------- ---------- Profit before taxation 3,555 2,062 Taxation (860) (835) ------------------------------------------------------------- ---------- ---------- Profit for the period 2,695 1,227 ------------------------------------------------------------- ---------- ---------- Profit attributable to:
Non-controlling interests 18 25 Parent company shareholders 2,677 1,202 ------------------------------------------------------------- ---------- ---------- Profit for the period 2,695 1,227 ------------------------------------------------------------- ---------- ---------- cents cents ------------------------------------------------------------- ---------- ---------- Earnings per share: Basic earnings per ordinary share 75.6 29.7 Diluted earnings per ordinary share 74.4 29.3 ------------------------------------------------------------- ---------- ----------
Page 41
Financial statements continued
Condensed consolidated interim statement of comprehensive income
For the nine months ended 30 September 2021
9 months 9 months ended ended 30.09.21 30.09.20 $million $million -------------------------------------------------------------------------------------------- ---------- ---------- Profit for the period 2,695 1,227 Other comprehensive (loss)/income Items that will not be reclassified to income statement: 227 1 ---------- ---------- Own credit gains on financial liabilities designated at fair value through profit or loss 7 21 Equity instruments at fair value through other comprehensive income 152 65 Actuarial gains/(losses) on retirement benefit obligations 128 (52) Taxation relating to components of other comprehensive income (60) (33) ---------- ---------- Items that may be reclassified subsequently to income statement: (896) 192 Exchange differences on translation of foreign operations: ---------- ---------- Net losses taken to equity (781) (248) Net gains/(losses) on net investment hedges 151 (20) Reclassified to income statement on sale of joint venture - 246 Share of other comprehensive income/(loss) from associates and joint ventures 3 (20) Debt instruments at fair value through other comprehensive income: Net valuation (losses)/gains taken to equity (202) 852 Reclassified to income statement (164) (562) Net impact of expected credit losses 8 8 Cash flow hedges: Net gains/(losses) taken to equity 15 (45) Reclassified to income statement 17 14 Taxation relating to components of other comprehensive income 57 (33) ---------- ---------- Other comprehensive (loss)/income for the period, net of taxation (669) 193 -------------------------------------------------------------------------------------------- ---------- ---------- Total comprehensive income for the period 2,026 1,420 -------------------------------------------------------------------------------------------- ---------- ---------- Total comprehensive income attributable to: Non-controlling interests 14 19 Parent company shareholders 2,012 1,401 -------------------------------------------------------------------------------------------- ---------- ---------- Total comprehensive income for the period 2,026 1,420 -------------------------------------------------------------------------------------------- ---------- ----------
Page 42
Financial statements continued
Condensed consolidated interim balance sheet
As at 30 September 2021
30.09.21 31.12.20 $million $million ---------------------------------------------------------------- ---------- ---------- Assets Cash and balances at central banks 75,617 66,712 Financial assets held at fair value through profit or loss 112,782 106,787 Derivative financial instruments 52,668 69,467 Loans and advances to banks 45,754 44,347 Loans and advances to customers 302,493 281,699 Investment securities 152,422 153,315 Other assets 57,681 48,688 Current tax assets 629 808 Prepayments and accrued income 2,114 2,122 Interests in associates and joint ventures 2,334 2,162 Goodwill and intangible assets 5,347 5,063 Property, plant and equipment 5,860 6,515 Deferred tax assets 837 919 Assets classified as held for sale 564 446 ---------------------------------------------------------------- ---------- ---------- Total assets 817,102 789,050 ---------------------------------------------------------------- ---------- ---------- Liabilities Deposits by banks 34,480 30,255 Customer accounts 453,260 439,339 Repurchase agreements and other similar secured borrowing 11,569 1,903 Financial liabilities held at fair value through profit or loss 76,252 68,373 Derivative financial instruments 52,130 71,533 Debt securities in issue 53,424 55,550 Other liabilities 59,618 47,904 Current tax liabilities 375 660 Accruals and deferred income 4,314 4,546 Subordinated liabilities and other borrowed funds 16,819 16,654 Deferred tax liabilities 748 695 Provisions for liabilities and charges 446 466 Retirement benefit obligations 332 443 ---------------------------------------------------------------- ---------- ---------- Total liabilities 763,767 738,321 ---------------------------------------------------------------- ---------- ---------- Equity Share capital and share premium account 7,022 7,058 Other reserves 11,936 12,688 Retained earnings 27,708 26,140 ---------------------------------------------------------------- ---------- ---------- Total parent company shareholders' equity 46,666 45,886 Other equity instruments 6,254 4,518 ---------------------------------------------------------------- ---------- ---------- Total equity excluding non-controlling interests 52,920 50,404 Non-controlling interests 415 325 ---------------------------------------------------------------- ---------- ---------- Total equity 53,335 50,729 ---------------------------------------------------------------- ---------- ---------- Total equity and liabilities 817,102 789,050 ---------------------------------------------------------------- ---------- ----------
Page 43
Financial statements continued
Condensed consolidated statement of changes in equity
For the nine months ended 30 September 2021
Fair value Fair value through other comprehensive income reserve through other comprehensive income reserve Ordinary share capital and share premium account Preference share capital and share premium account Capital and merger reserves(1) Own credit adjustment reserve - debt - equity Cash flow hedge reserve Translation reserve Retained earnings Parent company shareholders' equity Other equity instruments Non-controlling interests Total $million $million $million $million $million $million $million $million $million $million $million $million $million -------------- ------------------------------------------------ -------------------------------------------------- ------------------------------ ----------------------------- -------------------------------------------- -------------------------------------------- ----------------------- ------------------- ----------------- ----------------------------------- ------------------------ ------------------------- ---------- As at 1 January 2020 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 - - - - - - - - 724 724 - 27 751 Other comprehensive (loss)/income - - - (54) 332 (2) 7 631 11(2) 925 - (12) 913 Distributions - - - - - - - - - - - (20) (20) Other equity instruments issued, net of expenses - - - - - - - - - - 992 - 992 Redemption of other equity instruments - - - - - - - - (13) (13) (1,987) - (2,000) Treasury shares net movement - - - - - - - - (90) (90) - - (90) Share option expense, net of taxation - - - - - - - - 133 133 - - 133 Dividends on preference shares and AT1 securities - - - - - - - - (395) (395) - - (395) Share buy-back(3) (20) - 20 - - - - - (242) (242) - - (242) Other movements - - - - - - - 69 (60)(4) 9 - 17(5) 26 -------------- ------------------------------------------------ -------------------------------------------------- ------------------------------ ----------------------------- -------------------------------------------- -------------------------------------------- ----------------------- ------------------- ----------------- ----------------------------------- ------------------------ ------------------------- ---------- As at 31 December 2020 5,564 1,494 17,207 (52) 529 148 (52) (5,092) 26,140 45,886 4,518 325 50,729 -------------- ------------------------------------------------ -------------------------------------------------- ------------------------------ ----------------------------- -------------------------------------------- -------------------------------------------- ----------------------- ------------------- ----------------- ----------------------------------- ------------------------ ------------------------- ---------- Profit for the period - - - - - - - - 2,677 2,677 - 18 2,695 Other comprehensive income/(loss) - - - 7 (295) 94 28 (625) 126(2) (665) - (4) (669) Distributions - - - - - - - - - - - (25) (25) Other equity instruments issued, net of expenses - - - - - - - - - - 2,728 - 2,728 Redemption of other equity
instruments - - - - - - - - (50) (50) (992) - (1,042) Treasury shares net movement - - - - - - - - (136) (136) - - (136) Share option expense, net of taxation - - - - - - - - 128 128 - - 128 Dividends on ordinary shares - - - - - - - - (375) (375) - - (375) Dividends on preference shares and AT1 securities - - - - - - - - (315) (315) - - (315) Share buy-back(6,7) (39) - 39 - - - - - (506) (506) - - (506) Other movements 3 - - - - - - - 19(8) 22 - 101(9) 123 -------------- ------------------------------------------------ -------------------------------------------------- ------------------------------ ----------------------------- -------------------------------------------- -------------------------------------------- ----------------------- ------------------- ----------------- ----------------------------------- ------------------------ ------------------------- ---------- As at 30 September 2021 5,528 1,494 17,246 (45) 234 242 (24) (5,717) 27,708 46,666 6,254 415 53,335 -------------- ------------------------------------------------ -------------------------------------------------- ------------------------------ ----------------------------- -------------------------------------------- -------------------------------------------- ----------------------- ------------------- ----------------- ----------------------------------- ------------------------ ------------------------- ----------
1 Includes capital reserve of $5 million, capital redemption reserve of $130 million and merger reserve of $17,111 million
2 Comprises actuarial gain, net of taxation, and share from associates and joint ventures $126 million ($11 million for the year ended 31 December 2020)
3 On 28 February 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 per cent 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 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
4 Includes $69 million related to prior period adjustments to reclass FX movements from translation reserve to retained earnings ($45 million related to FX movements of the hedging instruments for net investment hedges and $24 million related to FX movements for monetary items, which were considered structural positions), and $9 million increase related to revenue reserves of PT Bank Permata Tbk
5 Movement related to non-controlling interest from Mox Bank Limited
6 On 25 February 2021, 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 $19 million, and the total consideration paid was $255 million (including $1.5 million of fees and stamp duty). The total number of shares purchased was 37,148,399 representing 1.18 per cent of the ordinary shares in issue. The nominal value of the shares was transferred from the share capital to the capital redemption reserve account
7 On 3 August 2021, 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 $251 million (including $1.5 million of fees and stamp duty). The total number of shares purchased was 39,914,763 representing 1.28 per cent of the ordinary shares in issue. The nominal value of the shares was transferred from the share capital to the capital redemption reserve account
8 Movement mainly related to increase in non-controlling interest from SC Digital Solutions (SG) Ltd
9 Movements related to non-controlling interest from Mox Bank Limited ($21 million), SC Digital Solutions (SG) Ltd ($55 million), Currency Fair Ltd ($22 million)
Page 44
Financial statements continued
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 2021. 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 the Group's accounting policies. The Group's significant accounting policies are described in the Annual Report 2020, which have been prepared in accordance with international accounting standards in conformity with the requirements of the Companies Act 2006 and International Financial Reporting Standards adopted pursuant to Regulation (EC) No. 1606/2002 as it applies in the European Union (EU). The Group's Annual Report 2021 will be prepared in accordance with United Kingdom (UK) adopted international accounting standards.
The interim financial information does not constitute a full or condensed set of financial statements under IAS 34 'Interim Financial Reporting' as contained in UK-adopted international accounting standards. The interim financial information has been prepared in accordance with the recognition and measurement principles, but not the disclosure requirements under UK-adopted international accounting standards.
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 2020, 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.
Comparatives
The Group meets the criteria to offset its derivative assets and liabilities and the related variation margin for the Group's (house) trades cleared with LCH Forexclear. The impact of this as at 30 September 2021 is a decrease in the derivative assets and other assets (variation margin) of $1.6 bn and derivative liabilities of $1.6bn. Prior period comparative information have not been restated as the effect would not be material. The impact at 31 December 2020 would have been a decrease in the derivative assets of $1.8bn, derivative liabilities and other liabilities (variation margin) of $1.8bn.
Going concern
The directors have assessed the Group's ability to continue as a going concern. This assessment has been made
having considered the impact of COVID-19, macroeconomic and geopolitical headwinds, including:
-- A review of the Group Corporate Plan
-- An assessment of the actual performance to date, loan book quality, credit impairment, legal, regulatory and compliance matters, and the annual budget
-- Consideration of stress testing performed, including both the Bank of England annual stress test and a Group Recovery and Resolution Plan (RRP) as submitted to the PRA, which demonstrate that the Group has sufficient capital and liquidity to continue as a going concern and meet minimum regulatory capital and liquidity requirements
-- Analysis of the capital, funding and liquidity position of the Group, including the capital, liquidity and leverage ratios
-- The level of debt in issue, including redemptions and issuances during the year, debt falling due for repayment in the next 12 months and further planned debt issuances, including the appetite in the market for the Group's debt
-- A detailed review of all principal and emerging risks
Based on the analysis performed, the directors confirm they are satisfied that the Group has adequate resources to continue in business for the period from 2 November 2021 to 2 November 2022. For this reason, the Group continues to adopt the going concern basis of accounting for preparing the financial statements.
Page 45
Other supplementary financial information
Average balance sheets and yields
Average assets
9 months ended 30.09.21 ---------------------------------------------------------------- Average Average Gross yield non-interest interest interest earning earning Interest earning Gross yield balance balance income balance total balance $million $million $million % % ---------------------------------------------------- ------------- --------- --------- ----------- -------------- Cash and balances at central banks 22,945 57,362 69 0.16 0.11 Gross loans and advances to banks 23,512 46,091 369 1.07 0.71 Gross loans and advances to customers 54,632 306,924 5,721 2.49 2.12 Impairment provisions against loans and advances to banks and customers - (6,374) - - - Investment securities 31,746 153,280 1,545 1.35 1.12 Property, plant and equipment and intangible assets 8,916 - - - - Prepayments, accrued income and other assets 110,815 - - - - Investment associates and joint ventures 2,297 - - - - ---------------------------------------------------- ------------- --------- --------- ----------- -------------- Total average assets 254,863 557,283 7,704 1.85 1.27 ---------------------------------------------------- ------------- --------- --------- ----------- -------------- 6 months ended 30.06.21 ---------------------------------------------------------------- Average Average Gross yield non-interest interest interest earning earning Interest earning Gross yield balance balance income balance total balance $million $million $million % % ---------------------------------------------------- ------------- --------- --------- ----------- -------------- Cash and balances at central banks 23,174 56,473 42 0.15 0.11 Gross loans and advances to banks 22,809 46,623 247 1.07 0.72 Gross loans and advances to customers 53,335 305,302 3,780 2.50 2.13 Impairment provisions against loans and advances to banks and customers - (6,451) - - - Investment securities 31,605 155,268 1,053 1.37 1.14 Property, plant and equipment and intangible assets 8,960 - - - - Prepayments, accrued income and other assets 113,672 - - - - Investment associates and joint ventures 2,267 - - - - ---------------------------------------------------- ------------- --------- --------- ----------- -------------- Total average assets 255,822 557,215 5,122 1.85 1.27 ---------------------------------------------------- ------------- --------- --------- ----------- -------------- 9 months ended 30.09.20 ---------------------------------------------------------------- Average Average Gross yield non-interest interest interest earning earning Interest earning Gross yield balance balance income balance total balance $million $million $million % % ---------------------------------------------------- ------------- --------- --------- ----------- -------------- Cash and balances at central banks 17,051 41,386 93 0.30 0.21 Gross loans and advances to banks 28,221 54,750 646 1.58 1.04 Gross loans and advances to customers 50,504 289,387 6,663 3.08 2.62 Impairment provisions against loans and advances to banks and customers - (6,341) - - - Investment securities 27,775 143,069 2,202 2.06 1.72 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 1.66 ---------------------------------------------------- ------------- --------- --------- ----------- --------------
Page 46
Other supplementary financial information continued
Average liabilities
9 months ended 30.09.21 -------------------------------------------------------------- Average Average Rate paid non-interest interest interest bearing bearing Interest bearing Rate paid balance balance expense balance total balance $million $million $million % % ---------------------------------------------------- ------------- --------- --------- --------- -------------- Deposits by banks 19,094 26,530 104 0.52 0.30 Customer accounts: Current accounts and savings deposits 49,937 259,389 608 0.31 0.26 Time and other deposits 52,444 149,719 1,046 0.93 0.69 Debt securities in issue 6,337 60,006 425 0.95 0.86 Accruals, deferred income and other liabilities 115,108 1,164 40 4.59 0.05 Subordinated liabilities and other borrowed funds - 16,525 378 3.06 3.06 Non-controlling interests 370 - - - - Shareholders' funds 51,662 - - - -
---------------------------------------------------- ------------- --------- --------- --------- -------------- 294,952 513,333 2,601 0.68 0.43 ---------------------------------------------------- ------------- --------- --------- --------- -------------- Adjustment for Financial Markets funding costs (77) ---------------------------------------------------- ------------- --------- --------- --------- -------------- Financial guarantee fees on interest earning assets 73 ---------------------------------------------------- ------------- --------- --------- --------- -------------- Total average liabilities and shareholders' funds 294,952 513,333 2,597 0.68 0.43 ---------------------------------------------------- ------------- --------- --------- --------- -------------- 6 months ended 30.06.21 -------------------------------------------------------------- Average Average Rate paid non-interest interest interest bearing bearing Interest bearing Rate paid balance balance expense balance total balance $million $million $million % % ---------------------------------------------------- ------------- --------- --------- --------- -------------- Deposits by banks 17,261 26,599 74 0.56 0.34 Customer accounts: Current accounts and savings deposits 48,934 257,233 388 0.30 0.26 Time and other deposits 53,606 151,262 733 0.98 0.72 Debt securities in issue 6,129 61,232 284 0.94 0.85 Accruals, deferred income and other liabilities 118,293 1,093 27 4.98 0.05 Subordinated liabilities and other borrowed funds - 16,386 246 3.03 3.03 Non-controlling interests 330 - - - - Shareholders' funds 51,085 - - - - ---------------------------------------------------- ------------- --------- --------- --------- -------------- 295,638 513,805 1,752 0.69 0.44 ---------------------------------------------------- ------------- --------- --------- --------- -------------- Adjustment for Financial Markets funding costs (52) ---------------------------------------------------- ------------- --------- --------- --------- -------------- Financial guarantee fees on interest earning assets 47 ---------------------------------------------------- ------------- --------- --------- --------- -------------- Total average liabilities and shareholders' funds 295,638 513,805 1,747 0.69 0.44 ---------------------------------------------------- ------------- --------- --------- --------- --------------
Page 47
Other supplementary financial information continued
9 months ended 30.09.20 -------------------------------------------------------------- Average Average Rate paid non-interest interest interest bearing bearing Interest bearing Rate paid balance balance expense balance total balance $million $million $million % % ---------------------------------------------------- ------------- --------- --------- --------- -------------- Deposits by banks 18,435 26,206 271 1.38 0.81 Customer accounts: Current accounts and savings deposits 42,123 219,054 995 0.61 0.51 Time and other deposits 58,750 158,579 2,028 1.71 1.25 Debt securities in issue 7,083 52,493 670 1.70 1.50 Accruals, deferred income and other liabilities 119,134 1,204 45 4.99 0.05 Subordinated liabilities and other borrowed funds - 16,242 498 4.10 4.10 Non-controlling interests 309 - - - - Shareholders' funds 50,306 - - - - ---------------------------------------------------- ------------- --------- --------- --------- -------------- 296,140 473,778 4,507 1.27 0.78 ---------------------------------------------------- ------------- --------- --------- --------- -------------- Adjustment for Financial Markets funding costs (148) ---------------------------------------------------- ------------- --------- --------- --------- -------------- Financial guarantee fees on interest earning assets - ---------------------------------------------------- ------------- --------- --------- --------- -------------- Total average liabilities and shareholders' funds 296,140 473,778 4,359 1.23 0.76 ---------------------------------------------------- ------------- --------- --------- --------- --------------
Page 48
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: +44 (0)370 702 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: +44 (0)370 702 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:
Gregg Powell, Head of Investor Relations
+852 2820 3050
LSE Stock code: STAN.LN
HKSE Stock code: 02888
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