At a glance
We were profitable in every region this year with good progress on our strategic targets.
Highlights
- Second interim dividend of 18 US cents per share, making a total for 2021 of 25 US cents per share, 67% higher than FY20
- Intend to initiate an incremental share buy-back of up to $1bn, to commence after the up-to-$2bn buy-back already in progress has concluded
- Reported profit before tax increased by 115% compared with FY20
- Sustainable finance and investment provided and facilitated since 1 January 2020 reaches $127bn, towards our ambition of $750bn to $1tn by 2030
- Adjusted operating expenses down 1% to $32.1bn, as cost saves offset higher investment
- Return on average tangible equity was 8.3%; we expect to reach our target for at least 10% in FY23, a year earlier than previously expected, provided policy rates follow the current implied market consensus
- Risk-weighted asset reductions reached a cumulative $104bn; we now expect to exceed our target of $110bn by FY22
Group Chief Executive
“We made good progress against our strategy in 2021, which contributed to a strong financial performance that was supported by the global economic recovery. All of our regions were profitable and we saw growth in the fourth quarter of 2021 in many of our business lines.
We have good momentum coming into 2022 and are confident that we can continue to execute against our strategy. We also remain cognisant of the potential impact that further Covid-19-related uncertainty and continued inflation might have on us and our clients.”
Noel Quinn, HSBC Group Chief Executive
22 February 2022
Progress against our ambitions
| 2021 | 2020 | Ambitions | |
|---|---|---|---|
| Adjusted revenue growth, year-on-year | (3.2)% | (8.3)% | Mid-single digits medium to long-term |
| Adjusted costs | $32.1bn | $32.4bn | FY22 adjusted costs in line with FY21 |
| Reported RoTE | 8.3% | 3.1% | >10% by FY23 |
| Group CET1 ratio | 15.8% | 15.9% | c. 14–14.5% medium term |
| Cumulative RWA saves | $104bn | $61bn | >$120bn by FY22 |
| Adjusted fee income and insurance as a % of adjusted revenue | 33% | 28% | c.35% medium to long-term |
Note: We define medium term as three to four years and long term as five to six years, commencing 1 January 2020.
Financial performance
Financial performance in 2021 was supported by the improved economic outlook and resultant release in ECL allowances, which materially improved our profitability.
We were profitable in every region with our Asia operations contributing $12.2bn to reported profit before tax and other markets demonstrating material recovery.
Our adjusted operating expenses fell, despite inflationary pressures, as continued investment was mitigated by ongoing cost-saving initiatives.
Our customer lending balances were up $8bn on a reported basis, driven by growth in mortgage balances, mainly in the UK and Hong Kong. Net new invested assets in our wealth business grew by 21% globally and 138% in Asia.
Reported revenue fell, mainly from the lower interest rate environment and a strong performance in 2020 in Markets and Securities Services. However, revenue in our wealth and trade businesses grew, as did our trade lending, which is now higher than pre-pandemic levels.
We carry good business momentum into 2022 in most areas and expect mid-single-digit lending growth over the year, in the context of a significantly more positive interest rate outlook. Our efforts to date pave the way for us to execute on the growth opportunities across our businesses and leverage our international network.
Strategic progress
A year ago, we refreshed our core purpose as an organisation. ‘Opening up a world of opportunity’ has been embraced by our entire business globally, serving as the driving force behind all of our pursuits. This approach encapsulates what we need to focus on to succeed now and in the future.
We made good progress in 2021, progressing further with our strategic priorities by boosting our wealth management services in Asia, digitising capabilities, celebrating diversity and supporting the transition to a low-carbon future.
In Asia, we continued to enhance our wealth proposition including through the launch of HSBC Greater Bay Area Connect and more than 30 new asset management products across the region. We received regulatory approval to acquire the remaining 50% stake in HSBC Life China, our joint venture insurance company in mainland China. We also announced acquisitions in Singapore, which completed in February, and in India to develop our wealth capabilities across the region.
To improve our customer experience, we spent $6bn on technology last year. We launched new products and services that make it easier for our customers to bank with us, and allow us to focus our efforts on serving them.
We have taken further steps to create a dynamic and inclusive culture and surpassed our target for 30% women in leadership roles globally in 2020. Our new target is 35% by 2025.
Mobilising the transition to a global net zero economy is central to our business and we remain committed to transform our own operations and supply chains to net zero by 2030.
Climate ambition
The opportunities of the future will be defined by the single greatest challenge of our time – the need to make the low-carbon transition. To seize those opportunities, we must change, adapt, invest and innovate.
In 2021, we continued to support our customers in the transition to net zero and a sustainable future by providing and facilitating $83 billion in sustainable finance and investment, taking our cumulative total to $127 billion as we pursue our ambition of $750 billion to $1 trillion by 2030.
In total, our global green, social, sustainable and sustainability-linked bond issuance reached $46.8 billion in 2021. That’s almost triple our output from 2019, and represents a market share of 5%.
Since 2019, we’ve reduced our own greenhouse gas emissions by around 50%, a strong start to our net zero goal for our own operations and supply chain by 2030.
At the COP26 meeting in Glasgow, we were one of over 100 public and private organisations behind the launch of FAST-Infra, a labelling system that aims to increase investor confidence in the sustainability credentials of projects in emerging markets.
In line with our commitment to develop and publish plans on a sector-by-sector basis, we have set financed emission targets for our oil and gas, and power and utilities portfolios.
The industrial landscape of the world is being transformed by the transition to net zero and we’re determined to play a leading role in driving this change.
2022 outlook
The progress we made in 2021 means that HSBC is well placed to open up a world of opportunity for our customers as the economic recovery continues.
Our work to digitise HSBC and to play a leading role in the net zero transition has continued at pace. There is more to do, but good momentum exists across our businesses.
Our size and global reach mean our actions can have a significant impact. We are committed to doing business responsibly, and thinking for the long term. This is key to delivering our strategy.
There are also still significant challenges ahead, stemming from the uncertainty caused by the spread of the Omicron variant, and potentially other variants in the future.
We remain supportive of our customers as they navigate through the ongoing impacts of COVID-19.
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