Financial performance (vs. 3Q19)
• Reported profit after tax down 46% to $2.0bn and reported profit before tax down 36% to $3.1bn, mainly from lower
revenue. Results in 3Q20 included our share of an impairment of goodwill by our associate, The Saudi British Bank ('SABB'), of $0.5bn.
Adjusted profit before tax down 21% to $4.3bn.
• Our operations in Asia continued to perform resiliently with reported profit before tax in 3Q20 of $3.2bn, despite interest
rate headwinds.
• Reported revenue down 11% to $11.9bn, reflecting the impact of interest rate reductions on our deposit franchises across all
global businesses, partly offset by favourable market impacts in life insurance manufacturing. Reported revenue was also partly offset
by a favourable movement in credit and funding valuation adjustments and higher revenue in Global Markets.
• Net interest margin ('NIM') of 1.20%, down 36 basis points ('bps') from 3Q19. NIM was down 13bps from 2Q20, reflecting
the continuing impact of interest rate reductions due to the Covid-19 outbreak.
• Reported expected credit losses and other credit impairment charges (‘ECL’) down $0.1bn to $0.8bn. The 3Q20 charge
reflected a stabilisation of the forward economic outlook from 2Q20, while wholesale stage 3 charges were in part offset by increased
releases related to historical default cases.
• Reported operating expenses down 1% and adjusted operating expenses down 3%, despite continued investment, due to
the impact of our cost-saving initiatives, reduced discretionary expenditure and a lower performance-related pay accrual.
• Common equity tier 1 capital (‘CET1’) ratio of 15.6%, up 0.6% from 15.0% at 2Q20, reflecting a decrease in RWAs (on a
constant currency basis), capital generation through profits and foreign currency translation differences.
And later on dividends;
Based on our results for 2020 and our forecasts for 2021, the Board will consider whether to pay a conservative dividend for
2020. Any such dividend would be dependent on the economic outlook in early 2021, and be subject to regulatory consultation. A
final determination is expected to be made and communicated in February 2021 with our 2020 full-year results. We also expect to
communicate our revised policy for dividends for 2021 and beyond at the same time.
Noel Quinn, Group Chief Executive, said:
“These were promising results against a backdrop of the continuing impacts of Covid-19 on the global economy. I'm pleased with the
significantly lower credit losses in the quarter, and we are moving at pace to adapt our business model to a protracted low interest rate
environment. We are accelerating the transformation of the Group, moving our focus from interest-rate sensitive business lines towards
fee-generating businesses, and further reducing our operating costs. We also intend to increase our rate of investment in Asia,
particularly in wealth, the Greater Bay Area, south Asia, trade finance and sustainable finance.
The Group’s capital and liquidity ratios strengthened further in the quarter despite the challenging economic conditions. A decision on
whether to pay a dividend for the 2020 financial year will depend on economic conditions in early 2021, and be subject to regulatory
consultation. We will seek to pay a conservative dividend if circumstances allow.”
Item downloadable here; https://www.hsbc.com/investors/results- ... ouncements
nb The share rose 5% on Hong Kong market on this release.
Ian.
