HSBC HOLDINGS(US:HSBC)2020-08-03 14:13Financial Data and Key Metrics Changes - The company reported pretax profits of $1.1 billion, down 82% year-on-year, with adjusted profits down 57% [10][32] - Expected credit losses (ECLs) were $3.8 billion, reflecting a significant increase from the first quarter, driven by updated economic guidance [10][35] - The capital ratio improved to 15%, indicating a strong capital position [12][48] Business Line Data and Key Metrics Changes - Wealth and Personal Banking revenues decreased by 12%, with Retail Banking revenues falling by $809 million due to lower interest rates [37] - Global Banking and Markets revenues increased by 24%, with Global Markets growing by 55% and fixed income franchises up 79% [9][38] - Commercial Banking revenues were down 14%, primarily due to lower margins and volumes in Trade Finance [37] Market Data and Key Metrics Changes - Asia businesses contributed $3.6 billion in reported pretax profit, demonstrating resilience amid challenges [9] - Asia lending increased by 1% and deposits rose by 7% over the last 12 months [14] - The company granted around $30 billion in debt relief to personal lending customers and over $52 billion to wholesale customers [16][17] Company Strategy and Development Direction - The company plans to accelerate its transformation in response to the pandemic, focusing on cost reductions and operational efficiency [6][22] - There is a commitment to reducing risk-weighted assets (RWAs) and reallocating capital towards the Asian franchise [53] - The company aims to enhance its wealth management business, particularly in Asia, with a focus on digital transformation [27][29] Management's Comments on Operating Environment and Future Outlook - The management acknowledged the unpredictable environment due to COVID-19 and geopolitical tensions, particularly between the U.S. and China [4][8] - There is cautious optimism regarding the recovery of customer activity and the potential for improved profitability in 2021 [62] - The company expects continued pressure on net interest income due to low interest rates, with a significant impact anticipated in 2021 [40][76] Other Important Information - The company has seen a substantial increase in digital engagement, with mobile app downloads up 157% and mobile payments up over 200% year-on-year [19] - The company maintained a strong balance sheet with $133 billion in deposit growth during the first half [21] Q&A Session Summary Question: What could be potential offsets to the tougher revenue outlook? - Management highlighted strong performance in the U.S. business and ongoing transformation efforts, including branch closures and cost reductions [58][60] Question: Should most of the credit migration occur this year? - Management indicated that credit migration is expected to peak this year, with a potential reversal in 2021 [65] Question: Can you provide more color on net interest income guidance? - Management confirmed no change in net interest income guidance, but cautioned about the impact of lower interest rates [72][74] Question: How do you expect U.S.-China tensions to impact profitability? - Management noted that the first half performance was primarily impacted by COVID-19, with no significant effects from geopolitical tensions [91][123] Question: How do you balance customer satisfaction with shareholder returns? - Management emphasized the importance of digital transformation and cost structure adjustments to improve returns while maintaining customer satisfaction [108][110]