PARIS--(BUSINESS WIRE)--Regulatory News:
Interim results 2018
On 3 August 2018, HSBC France’s Board of Directors approved the bank’s consolidated financial statements for the first half of 2018.
HSBC France continues to deploy its strategy based on a universal banking model, with the support of the HSBC Group. HSBC France’s performance in the first half of 2018 was achieved in an environment of gradually improving economic growth both in France and abroad. However, historically low interest rates in Europe continues to have an impact on the net interest margin.
Reported consolidated profit before tax was EUR10m, a sharp decrease from the EUR196m recorded in the first half of 2017. The result of the first half of 2018 is particularly affected by low revenues in fixed income activities against the backdrop of strong variation in volatility levels and low liquidity in Euro rates markets. Half year results also reflect the impact of ongoing low interest rates on the profitability of retail banking in France.
Reported net operating income before change in expected credit losses and other credit impairment charges was EUR903m, from EUR1,034m in the first half of 2017. Revenue was strongly burdened by a weak customer demand and margin compression on Eurozone sovereign debt markets. However, HSBC maintains its positions, ranking third in European government debt for sovereign, supranational, agency and local authority issuers1.
Change in expected credit losses and other credit impairment charges were EUR15m versus a net reversal of EUR4m in the first half of 2017. At 0.05%, the cost of risk2 remains historically low.
Operating expenses totalled EUR878m in the first half of 2018, compared with EUR842m for the same period in 2017. The EUR36m increase includes expenses related to the Greek branch (EUR28m) and the increase in the single resolution fund contribution (EUR9m). Moreover, HSBC France is continuing its programme of spending and investment in IT infrastructure, digital banking and the fight against financial crime.
Reported profit attributable to shareholders of the parent company was EUR20m for the half year to 30 June 2018, compared with EUR126m in the first half of 2017.
The consolidated balance sheet of HSBC France showed total assets of EUR172.1bn at 30 June 2018, versus EUR167.5bn at 31 December 2017. The increase was mainly due to lower settlement accounts in capital markets activities at end-2017 and the new Greek branch accounts for EUR1.8bn.
At 30 June 2018, HSBC France had a 169% liquidity coverage ratio (LCR)3 and a 112% net stable funding ratio (NSFR)4. The bank recorded a fully loaded common equity tier 1 (CET1) ratio of 12.2% and a fully loaded total capital ratio of 15.2%. The fully loaded leverage ratio was 3.5%.
Post balance sheet event
Within the framework of the
structural change detailed below, HSBC France carried out on
25 July 2018 a EUR100m capital increase, of which EUR6.2m share capital,
wholly subscribed by HSBC Bank plc Paris branch.
Change of ownership of HSBC Bank plc European branches, operations and subsidiaries
As political and regulatory change in Europe continues, it is important that HSBC organises its business in a way that supports its pan-European proposition for customers. To achieve this, HSBC France:
- Acquired on 1 August 2018 two European subsidiaries, HSBC Polska Bank SA in Poland and HSBC Institutional Trust Services (Ireland) DAC in Ireland, direct and indirect subsidiaries of HSBC Bank plc respectively;
- Will acquire the activities of seven European branches (in Belgium, the Czech Republic, Ireland, Italy, Luxembourg, the Netherlands and Spain) from HSBC Bank plc. The acquisition of these activities is expected to be completed during the first quarter of 2019.
These HSBC businesses currently service both Global Banking and Markets and Commercial Banking customers. In particular, HSBC businesses in Ireland and Luxembourg provide securities services to fund and corporate customers.
These changes have been and will be approved by the appropriate supervisory authorities and the relevant Boards of Directors.
All entities and activities acquired and to be acquired had a combined profit before tax of US$203m (EUR168m) in 2017, and a total balance sheet of US$15.1bn (EUR13.0bn) at 31 December 2017.
HSBC France is a 99.99% subsidiary of HSBC Bank plc. This restructuring, internal to HSBC Bank plc, will not impact the capital ratios of HSBC France.
────────────────────────
Appendix
Interim accounts were subject to a limited review by the statutory auditors.
Summary consolidated income statement
Half year to | ||||||
in EUR million | 30-June-2018 | 30-June-2017 | 31-Dec-2017 | |||
Net interest income | 500 | 532 | 516 | |||
Net fee income | 286 | 291 | 283 | |||
Net income from financial instruments held for trading or managed |
59 | 187 | 104 | |||
Other operating income/expense | 58 | 24 | (30) | |||
Net operating income before change in expected credit losses |
903 | 1,034 | 873 | |||
Change in expected credit losses and other credit impairment |
(15) | 4 | (85) | |||
Total operating expenses | (878) | (842) | (765) | |||
Profit before tax 1,2 | 10 | 196 | 23 | |||
Tax expense 2 | 10 | (71) | 28 | |||
Profit for the period 2 | 20 | 125 | 51 | |||
Profit attributable to shareholders of the parent company | 20 | 126 | 51 | |||
Profit attributable to non-controlling interests | — | (1) | — |
1 The group adopted IFRS 9 on 1 January 2018.
Comparative information has not been restated.
2 From
1 January 2018, certain financial liabilities which contain both deposit
and derivative components are classified as 'Financial liabilities
designated at fair value'. These were previously included in ‘Trading
liabilities’. As a consequence, changes in fair value of these
instruments attributable to changes in own credit risk are recognised in
other comprehensive income rather than profit or loss from this date.
Comparative data have not been restated. For the half-year to 30 June
2017, a restatement would have increased ‘Net income from financial
instruments held for trading or managed on a fair value basis’ by EUR 48
million (half-year to 31 December 2017:EUR 38 million) and increased tax
expense by EUR 17 million (half-year to 31 December 2017: EUR 13
million), with an equivalent net decrease in other comprehensive income.
3
In 2017 'Change in expected credit loss and other credit impairment
charges' includes loan impairment charges.
Non-GAAP financial measures
To make it easier to understand the performance review relating to the Group and its subsidiaries, HSBC has elected to supplement the accounting data published with a presentation of the main lines of business accounts on an ‘adjusted’ basis.
This approach consists of restating published figures for the effect of changes in perimeter and currency variations between the two periods under review, together with certain ’significant items’, which are listed and quantified below where they concern HSBC France.
Half year to | ||||||
in EUR million |
30-June- |
30-June- |
31-Dec.- |
|||
Reported revenue | 903 | 1,034 | 873 | |||
Significant revenue items | (3) | 15 | 9 | |||
– debit valuation adjustment | (3) | 20 | 8 | |||
– fair value movement on non-qualifying hedges | — | (5) | 1 | |||
Adjusted revenue | 900 | 1,049 | 882 | |||
Reported operating expenses | (878) | (842) | (765) | |||
Significant cost items | 24 | 51 | 39 | |||
– costs to achieve | — | 51 | 30 | |||
– costs associated with the UK’s exit from the EU | 24 | — | 9 | |||
Adjusted operating expenses | (854) | (791) | (726) | |||
Reported profit/(loss) before tax | 10 | 196 | 23 | |||
Significant revenue items | (3) | 15 | 9 | |||
Significant cost items | 24 | 51 | 39 | |||
Adjusted profit/(loss) before tax | 31 | 262 | 71 | |||
Net impact on reported profit and loss | (21) | (66) | (48) |
Adjusted results by business line
Half year to 30 June 2018 | ||||||||||||
in EUR million |
Retail |
Commercial |
Global |
Private |
Corporate |
Total | ||||||
Net operating income before change in expected |
406 | 259 | 218 | 27 | (10) | 900 | ||||||
Change in expected credit losses and other credit |
(3) | (12) | (3) | 1 | 2 | (15) | ||||||
Total operating expenses | (409) | (185) | (211) | (23) | (26) | (854) | ||||||
Adjusted profit before tax | (6) | 62 | 4 | 5 | (34) | 31 | ||||||
Half year to 30 June 2017 | ||||||||||||
Net operating income before change in expected |
416 | 260 | 375 | 25 | (27) | 1,049 | ||||||
Change in expected credit losses and other credit |
(5) | 3 | 7 | (1) | — | 4 | ||||||
Total operating expenses | (376) | (175) | (203) | (21) | (16) | (791) | ||||||
Adjusted profit before tax | 35 | 88 | 179 | 3 | (43) | 262 | ||||||
Half year to 31 December 2017 | ||||||||||||
Net operating income before change in expected |
345 | 258 | 282 | 24 | (27) | 882 | ||||||
Change in expected credit losses and other credit |
(6) | 4 | (83) | — | — | (85) | ||||||
Total operating expenses | (368) | (170) | (161) | (22) | (5) | (726) | ||||||
Adjusted profit before tax | (29) | 92 | 38 | 2 | (32) | 71 |
Note to editors:
HSBC in France
HSBC France joined the HSBC Group in 2000 and
is headquartered in Paris. Serving customers from around 310 offices
across France and employing around 9,000 employees, HSBC France conducts
activities in Retail Banking and Wealth Management, Commercial Banking,
Global Banking and Markets and Global Private Banking.
HSBC Holdings plc
HSBC Holdings plc, the parent company of
the HSBC Group, is headquartered in London. The Group serves customers
worldwide from around 3,800 offices in 66 countries and territories in
Europe, Asia, North and Latin America, and the Middle East and North
Africa. With assets of US$2,607bn at 30 June 2018, HSBC is one of the
world’s largest banking and financial services organisations.
1 Source : Bloomberg – Euro SSA – 1st half 2018
2
Annualised expected credit losses on stage 3 and purchased or originated
credit-impaired assets to total end-of-period outstanding loan portfolio
3
Computed in respect of the EU Delegated act
4
Computed in respect of BCBS 295 guidelines