At a glance
Key highlights
- Dividend resumed: interim dividend of US$0.15; earnings per share of US$0.19 (2019: US$0.30)
- Impacted by COVID-19: reported profit before tax $8.8bn (2019: US$13.3bn); adjusted profit before tax US$12.1bn (2019: $22.1bn); adjusted revenue $50.4bn (2019: US$54.9bn)
- Pandemic support: over US$26bn of relief provided to individuals; US$52bn to businesses
- Continued cost reduction: adjusted operating expenses down 3% to US$31.5bn (2019: US$32.5bn)
- Increased capital strength: 2020 CET 1 Ratio of 15.9% (2019: 14.7%); total assets grew to $2,984bn (2019: $2,715bn)
- Opening up a world of opportunity: plan to focus on our strengths, digitise at scale, energise for growth
- Transition to net zero: plan to support our clients with $750bn to $1tn of financing and investment by 2030
For year ended 31 December 2020
At 31 December 2020
Group Chief Executive’s review
“In 2020, HSBC had a very clear mandate – to provide stability in a highly unstable environment for our customers, communities and colleagues. I believe we achieved that in spite of the many challenges presented by the COVID-19 pandemic and heightened geopolitical uncertainty.
Our people delivered an exceptional level of support for our customers in very tough circumstances, while our strong balance sheet and liquidity gave reassurance to those who rely on us. We achieved this while delivering a solid financial performance in the context of the pandemic – particularly in Asia – and laying firm foundations for our future growth.”
Noel Quinn, HSBC Group Chief Executive
23 February 2021
Our strategy
With continued delivery against our February 2020 commitments, we are now in the next stage of our strategic plan, which responds to the significant shifts during the year and aligns to our purpose, values and ambition.
We intend to increase our focus on areas where we are strongest. We aim to increase and accelerate our investments in technology to enhance the capabilities we provide to customers and improve efficiency to drive down our cost base. We also intend to continue the transformation of our underperforming businesses. As part of our climate ambitions, we have set out our plans to capture the opportunities presented by the transition to a low-carbon economy.
Our strategy includes accelerating the shift of capital to areas, principally Asia and wealth, that have demonstrated the highest returns and where we have sustainable advantage through scale. Our international network remains a key competitive advantage and we will continue to support cross-border banking flows between major trade corridors. Supported by these shifts, we are aiming to reach mid single-digit revenue growth in the medium to long term, with a higher proportion of our revenue from fee and insurance income.
Our strategy
Our strategy supports our ambition of being the preferred international financial partner for our clients.
Our global businesses
Wealth and Personal Banking
We serve more than 38 million customers across the full spectrum from retail customers to ultra high net worth individuals and their families.
In 2020:
- We supported our customers throughout the pandemic with payment holidays and by keeping 70-90 per cent of our branches open
- We launched HSBC Pinnacle, a new financial planning business in mainland China, which brings insurance solutions and wealth services directly to customers
- Our mortgage book grew 9 per cent in the UK and 5 per cent in Hong Kong
- Wealth balances were $1.6tn at 31 December 2020, up 12 per cent from 31 December 2019
Commercial Banking
We support over 1.3 million business customers in 53 countries and territories, ranging from small enterprises focused primarily on their domestic markets to large companies operating globally.
In 2020:
- We continued to support our customers’ liquidity and working capital needs, growing deposit balances, while our ongoing investment in technology enabled us to support customers under exceptionally challenging conditions
- Adjusted customer deposits grew by $73.2bn
- International account openings increased by 8%
- We delivered around $13bn of RWA reductions as part of our transformation programme
Global Banking & Markets
We support major government, corporate and institutional clients worldwide. Our product specialists deliver a comprehensive range of transaction banking, financing, advisory, capital markets and risk management services.
In 2020:
- We generated 49% of our adjusted revenue in Asia
- Management actions delivered gross RWA reductions of $37bn globally
- Adjusted revenue was $15.3bn, up from $14.9bn in 2019
- A strong Global Markets performance more than offset the impact of lower global interest rates and adverse movements in credit and funding valuation adjustments
Financial targets
Adjusted operating expenses in 2020
In February 2020, we announced a plan to substantially reduce the cost base and accelerate the pace of change, with the aim of becoming leaner, simpler and more competitive. In 2020, our adjusted operating expenses were $31.5bn, a reduction of 3% compared with 2019.
Our adjusted cost target for 2022 will remain $31bn. This reflects a further reduction in our cost base, which has been broadly offset by the adverse impact of foreign currency translation due to the weakening US dollar towards the end of 2020.
We now plan to deliver $5bn to $5.5bn of cost saves for 2020 to 2022, while spending around $7bn in costs to achieve.
In the medium to long term, we aim to drive positive operating leverage by growing revenue while maintaining a broadly stable cost base.
Gross RWA reductions
To improve the return profile of the Group, we have targeted a gross RWA reduction of more than $100bn by 2022, mainly in low-returning parts of the Group.
In 2020, we achieved gross RWA reductions of $51.5bn, taking our cumulative RWA reductions to $61.1bn.
Return on average tangible equity (RoTE)
In our business update set out in February 2020, the Group targeted a reported RoTE in the range of 10% to 12% in 2022.
Our RoTE for 2020 was 3.1%, a reduction of 530 basis points from 2019, primarily reflecting higher expected credit losses and other credit impairment charges (ECL) and a reduction in revenue. Given the significant changes in our operating environment during 2020, we no longer expect to reach our RoTE target of between 10% and 12% in 2022, as originally planned.
We have adapted our strategy with an intention to increase investment in our areas of strength to generate mid-single-digit revenue growth, mainly from fees and volumes. We intend to drive further reductions in our cost base by 2022 and aim for broadly stable costs thereafter. As we progress with our transformation of our underperforming businesses, we also expect to optimise the capital allocation across the Group. Collectively through these actions, together with a normalisation in our ECL charge closer to levels seen prior to the COVID-19 pandemic, we will now target a RoTE of greater than or equal to 10% in the medium term.
ESG review
HSBC published its environmental, social and governance (ESG) review 2020 as part of its Annual Report and Accounts on 23 February 2021.
The ESG review outlines action the bank is taking to meet its wider responsibilities towards customers, communities and other stakeholders around the world. It covers areas including customer satisfaction, conduct, digital and technology and the future of work.
It also sets out how we will measure our progress on our ambition to become a net zero bank by 2050, and summarises our performance against key non-financial targets and metrics.
To read more about our ESG disclosures, please go to pages 42-75 of our Annual Report and Accounts.
