Full Year 2021 HSBC Holdings PLC Earnings Call
Okay.
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Yeah.
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[noise] good morning in London, it's great to see everybody in the room with US today. Thank you for coming.
Good afternoon to everyone watching and listening in Hong Kong and elsewhere.
Even will take you through while Q4 numbers very shortly but I'd like to begin with a summary of how we delivered against our strategic plan in 2021.
As you know.
We refreshed our core purpose as an organization a year ago.
Okay enough a world of opportunity draws heavily on H S. P CS past.
But it also encapsulates what we need to focus on to succeed now and in the future.
By keeping all purpose.
The values that underpin it suddenly mind.
We delivered good progress against our four strategic pillars.
Focus on our strengths did.
Did you size or scale.
All of us for growth.
Transitions and eight zero.
And this has contributed to a strong financial performance.
Which was supported by the global economic recovery.
Starting now with a few highlights.
I'm pleased with the progress we've made on both our transformation and growth agenda.
And I want to pay tribute to the whole HSBC team for the job they've done in 2021.
Underlying growth in key revenue streams came through strongly.
In Q4 to offset the drag effect of declining rights.
Resulting in reported revenue growth of 2% in the quarter.
Couples we tell wins from higher interest rates.
This provides strong revenue momentum for the future.
We're also one on all way through a number of a nice exits and acquisitions.
Not materially alter our capital allocation.
Areas, where we have distinctive competitive advantage.
Reported profits before tax for the full year were up 115% to $18 $9 billion.
All regions were profitable.
I used to lead the way with $12 $2 billion of reported profits.
Including $1 $1 billion from India.
Up $19 million on the year.
That was also strong contributions of $2 $2 billion of adjusted profits from our non ring fence Bank operations.
In the U K and Europe .
Our $900 million of adjusted profits from the U S business.
I was also pleased.
There was strong fee income growth across all businesses.
With overall, which overall was above pre COVID-19 levels.
Plus international accounts opening and commercial banking was up 13%.
And trade balances were up 23% overall.
And today stand higher.
Pre COVID-19 levels.
We increased spending on technology and performance related fly high.
But I'm pleased we kept cost stable.
Able to do so due to the savings from our transformation programs, which are ahead of plan.
If rates follow the path currently implied by the market.
We now expect to reach at least 10% rote see in 'twenty two 'twenty three.
That's a year earlier than we had previously signaled.
We took a charge unexpected credit losses in Q4.
Primarily due to changing market conditions in the mainland China commercial real estate sector.
Human will go into this in more detail.
But I am pleased to say, we have seen some positive movements in market segment sentiments since the year end.
Finally, we have a nice full year dividends of 25 cents per share up 67%.
As well as our intention to initiate an incremental share buyback.
Up to $1 billion.
On top of the existing buyback of up to $2 billion.
Earlier in the year.
This slide sets out how this translates into progress against our ambitions.
It shows good progress in key areas revenue growth for the year as a whole was impacted by the low interest rate environment.
Particularly in Asia, where we experienced a love of Highball rights in 2021.
But we turned the corner in Q4 as net interest income grew year on year for the first time since the pandemic began.
In all our global businesses grew fee income in 2020 , one by high single digits.
Costs were down slightly year on year, I mean expect 2022 adjusted costs should be stable on that position.
Rosie was eight 3%.
Capital ratio remained strong at 15, 8%.
And we expect to move into all CET, one target range of 14% to 14.5% in 2022.
And we made over $104 billion of RW I say, it's across the group over the last two years.
Against our original three year target of $110 billion.
Given this progress we now expect to achieve $120 billion of cumulative RTW I say by the end of this year.
The next slides go through key metrics on our four strategic pillars.
The first pillar is focused on our strengths.
Which is about capitalizing on the unique advantages we have as an institution.
Wealth and personal banking is one of those areas, particularly in Asia.
Our investment in people technology and capabilities, yielding strong returns.
We had a strong year in net invested assets, especially in Asia.
Greatly helped by a strong flow of referrals from our wholesale banking clients.
This is an inherent strategic advantage that we are investing in.
Overall wealth balances grew to $1 seven trillion dollars.
Let me say not funds under management increased by 5%.
Supported by more than 30, new asset management products in Asia.
Asia wealth revenue also grew by 10% mainly due to the improved improvement in equity markets and customer sentiment.
While we also saw strong mortgage growth in Hong Kong and the U K.
Finally on this slide I was pleased that the value of new insurance business in Asia in Q4.
It was higher than the same period in both 2019 and 2018.
This is the cumulative effect of a significant investment program and turnaround in that business over the last three to four years.
It is also particularly encouraging.
Given the border between Hong Kong and mainland China remains closed.
Slide five focuses on wholesale banking.
We saw strong fee income growth across our wholesale franchisees, even us we exited clients and shrunk our capital base in global banking and markets.
This offset lower trading income when compared to the exceptionally strong performance we saw in 2020.
International connectivity remains key to our strategy.
As I said earlier trade balances were up 23% overall and above pre COVID-19 levels.
<unk> balances were up $54 billion or 8% year on year to over $750 billion.
And collaboration revenues were also up 8%.
With referrals between commercial banking and.
In global banking and markets up 12%.
I've been pleased with the way the global banking and markets has performed for the past two years, even while we've been repositioning that business.
Adjusted all do anyways would that 10%.
We continue to transfer our resources, mainly from Europe into Asia, and the Middle East.
Slide six shows how we've exited non strategic businesses in the west.
While accelerating customer acquisition in the east.
I'm pleased by the progress we've made in transforming the U S and Continental Europe business.
But also by the good profit performance in 2021.
The transactions for the side of the U S retail business have closed on schedule in the last two weeks.
Meanwhile, we expect to close the sale of our French retail business in the second half of 2023.
We also accelerated the development of our Asia wealth capabilities through the acquisition of accessing the pool, which was completed earlier this month on schedule.
The acquisition of LNC investment management in India, which we hope to complete towards the end of this year.
On regulatory approval to take full ownership of our HSBC life joint venture.
In China.
Oh on top of the organic buildout of our pinnacle business in mainland China.
Which continues ahead of schedule.
Yeah.
Slide seven looks at our second pillar digitize at scale.
Which is about making it easier for our customers to bank with us.
Making our processes more efficient.
We've continued to invest heavily in technology.
While managing costs.
Spending around $6 billion in 2021.
Which is equivalent to around 19% of our adjusted operating expenses.
Which was up one percentage point on the prior year.
Our ambition is to keep increasing technology spending.
So more than 21% of our operating expenses by 20 to 25.
This investment provides us with significant operating leverage.
We grow with the business in the future.
It is also enabling us to deploy solutions at scale globally.
To further leverage agile work in and cloud technology.
While our usage of both agile and cloud increased in 2021.
We have ambitions to drive further growth in the used to come.
Digital penetration levels have also increased.
With today, 84% of trade transactions.
Globally initiated through digital channels.
58% increase in the share of digital payments made through H S. B C net marble.
By wholesale customers.
And 43% of retail customers are now mobile active.
Although this figure was up five percentage points from the prior year I still see a significant opportunity to grow that much further.
Our third strategic pillar is about creating a dynamic inclusive co.
Culture, where people want to work and they feel empowered.
In our most recent stuff survey our employee engagement score was 72%.
Unchanged on 2020.
But encouragingly five percentage points up on 2019.
And four percentage points above the financial services benchmark.
We're aiming to build a more diverse business.
We were pleased to exceed our target of 30% of women in leadership roles globally in 2020.
And we set ourselves a new target of 35% by 2025.
We've also made progress on ethnicity representation.
Especially for black colleagues.
But we still have a way to go to get to where we want to be a need to be on both of these measures.
And we're helping our colleagues to develop future ready skills over 115000 colleagues use the new degreed learning platform last year.
With the average time spent on training our full time employee up 16%.
The pressures of Covid.
An increasing share of this time was spent some areas like digital data and sustainability all of which are essential for our future.
I also want to add that another important part of our culture.
Is that we remain cost conscious.
I'm absolutely determined we won't go back to the days when rising interest rates loosen our grip on costs.
Slide nine looks at the transition plants and at zero.
Our fourth pillar.
Our ambition is to provide and facilitate between 750 billion and one trillion dollars of.
Stable financing and investment by 2030.
I truly believe this will enable us to play a leading role in the transition.
And we've made a very strong start.
Since the beginning of 2020, we've provided and facilitated $127 billion of sustainable financing and investment to our clients.
We are committed to working with our clients.
To develop valleys.
Science based transition plans to understand sector by sector client by client how do we move to net zero by 2050.
These transition plans and the targets within them must be predicated on the science relevant to the individual sectors.
We will use them as a basis for further engagement and decision making.
Including how do we drive change within our portfolio construct.
As part of this process, we have today disclosed interim targets for on balance sheet financed emissions in the oil and gas and power and utility sectors.
In the year ahead, we plan to search engines entering targets for financed emissions across a range of other sectors.
And we will work on our climate transition plan, which will be published in 2023.
I will bring together in one place how we embed on net zero targets into our strategy our processes, our policies and our governance informed by bottom up transition plans.
I'm pleased by the progress we've made reducing greenhouse gas emissions gas emissions from our own operations.
Combination of less travel.
And sustainable energy deals enabled us to have our scope wallet sculpture of emissions.
Compared to 2000 2019.
Sorry 2019.
As the World Normalizes, we have to be clear, though we do not expect our routes in that zero to be linear.
But we do believe that many of these changes are embedded for future years.
The rule there is more to do but I'm pleased with the progress we've made so far.
I'll now hand over to you and for the Q4 numbers.
Thanks, Noel and good morning, or afternoon overland no great to see so many of you in the room today with us.
We had another good quarter of reported.
Our reported pretax profits of $3 $7 billion up 92% on last year's fourth quarter. Adjusted revenues were modestly up on last year's fourth quarter.
This reinforces what I said at the third quarter, we think we're now past the trough in revenues.
<unk> were $415 billion net charge in the quarter operating expenses were down $800 million on last year's fourth quarter due to lower bank Levy and continuing good cost discipline.
Our return on tangible equity for 2021 was eight 3% our core tier one ratio remained strong at 15, 8% tangible net asset value per share of $7 88 was up seven saying, it's almost third quarter.
We've announced full year 2021 dividends of 25 cents per share that's up 67% on the prior year. We also intend to initiate an incremental buyback of up to $1 billion. This will begin after the buyback of up to $2 billion is completed in April .
Turning to slide 11, as a headline we're pleased with our lending and fee income growth that we're now seeing lending balances were up 1% overall in the third quarter underlying this was 5% growth.
For our personal and commercial banking businesses combined.
Evelyn to $38 billion in title.
Which was partially offset by planned reductions in global banking and markets.
There was strong lending growth and wealth and personal banking at 27 billion or 6% on the fourth quarter of last year, reflecting another strong mortgage performance in the U K and Hong Kong.
Lending was up $11 billion in commercial banking, mainly in trade and term lending in Asia.
Fee income increased by 5% versus the fourth quarter of 2020 within us commercial banking increased fee income by 15%, reflecting good volume growth and repositioning in some areas towards fee income.
On the next slide despite the impact of a lot of Reits.
We've been seeing a recovery in revenues for commercial banking for a few quarters now and that's continued in the fourth quarter.
Global banking and markets had another good quarter, driven primarily by good performance in FX and capital markets and advisory.
And we saw our fifth quarter of year on year revenue growth in personal banking since the onset of COVID-19.
And in wealth strong new business growth was offset by adverse insurance market impacts.
Tonight for the current quarter, we expect some weakness in our Asian wealth revenues.
As highlighted previously our revenues will be impacted by the adoption of <unk> 17 in 2023.
We continue to expect an initial downward adjustment to our insurance profits of around <unk>.
As we said at the third quarter, we are planning for and around $3 billion adjustment to our insurances tangible equity.
And we intend to provide further detail on our for our 17 in the third quarter of this year.
On slide 13, net interest income was $6 $8 billion up 3% against the third quarter on a reported basis.
This was mainly driven by high yields on customer loans as well as underlying asset growth.
On rights.
The net interest margin was 119 basis points.
On the third quarter with higher asset yields offset by changes in the asset mix.
Based on the current interest rate expectations for 'twenty 'twenty. Two we expect net interest income to now growing materially with fair the material growth in 2023.
We think we've given you the building blocks to model us, including modeling the sensitivity is right cause shift.
Turning to slide 14, and recognizing the high of gearing, we have to a better rate environment I wanted to say a few words and I disclosed interest rate sensitivity analysis. As a reminder, our high interest rate sensitivity is driven by a balance sheet structure, namely at deposit surplus of around seven.
$101 billion and the short tenure of our lending portfolio has been tried franchise.
For illustration purposes tables, now, let's say my simplified past three right for all interest bearing deposits in reality for the first few rate rises we lost saying when.
I assume we'll see a lower pass through right rising towards or above 50% of rates continue to rise.
Yeah.
On the next slide where we reported a net charge of $450 million of ECL was in the quarter. This.
This included stage two charges, primarily relating to commercial real estate in mainland China are.
A substantial part of which is booked in Hong Kong.
That's now says there has been some positive sentiment since the year end. We expect this to begin to help ease the current chart tightened liquidity for the sector.
Stage three charges remained low in the quarter also included COVID-19 related releases.
We're continuing to hold around $600 million of cave at 19 uplift to stage, one and C. E C L reserves.
Until about 15% of the initial reserve.
The overall quality of our loan book remains good stage III loans as a percentage of types of lines are stable at around one 8%.
We expect E sales to normalize towards 30 basis points of average loans in 2022 with upside from potential COVID-19 releases in the first half of 2022.
Potential risks and continued uncertainty in mainland China commercial real estate.
Turning to slide 16 fourth quarter adjusted operating costs, excluding the bank Levy were modestly down on the same period last year.
2021 costs were broadly stable on 2020 as per our third quarter guidance.
The fourth quarter performance was driven by continued good cost control together with a lower performance related pay accrual in the quarter relative to the fourth quarter last year.
The bank Levy came in at $116 million. This was lower than expected due to an offsetting credit for bank levy fees paid in prior years.
We expect the bank levy to normalize at around $300 million per year from this year onwards.
We made a further $600 million of cost program savings during the fourth quarter.
With an associated cost to achieve of around $600 million.
Turning to the next slide in the first two years of our three year cost program, we've achieved savings of $3 $3 billion.
With team lots of costs to achieve spend to date of $3 $6 billion.
We now expect to see exceed our overall target of five to $5 $5 billion of cost savings with at least a further $2 billion of cost savings in 2022 and at least a further $500 million of savings in 2023.
We expect to fully utilize our $7 billion cost to achieve budget by the end of 2022. So it plays model a final cost you achieve spend of $3 $4 billion. This year.
Despite inflationary pressures Nolan I ought to match it to continuing to deliver tight cost control.
For 2022, we aim to keep adjusted costs again broadly stable and in 'twenty to 'twenty three we intend to manage adjusted cost growth to.
With that in a zero to 2% range.
A few things Tonight for 'twenty, 'twenty three costs and beyond.
Lastly on recent M&A activity, we expect the net impact to be broadly neutral on costs in 2023 and.
And modestly positive in 2024, following the completion of the sale of our French retail bank in the second half of 2023.
Secondly that won't be a reduction in operating costs as a result of the shift to eye for 17.
But also an associated reduction in revenues.
And thirdly from 2023 on which we intend to move away from reported.
Adjusted numbers with any further restructuring costs absorbed up off the line.
And any large distorting items disclosed on the notable items.
Turning to capital on Slide 18, our core tier one ratio was 15, 8% down 10 basis points on the third quarter.
Reported risk weighted assets were down.
$1 billion, almost third quarter risk.
Risk weighted asset size, and improving asset quality offsetting risk weighted asset Christ from lending and regulatory change.
Cumulative risk rather than asset saves in our $104 billion against the three year target of $110 billion by the end of 2022.
Given this progress we now have an ambition to achieve $120 billion of cumulative risk weighted asset size by this year end.
On the next slide we're expecting to be within our core tier one ratio of 14 to 14, 5% during this year.
As shown on this table, we expect around 125 basis points of total impact during 2022 from.
From notable items, including regulatory change and M&A.
A large part of which will be in the first quarter.
It will also include the planned sale of five French retail banking in the third quarter.
Once within a 14 to 14, 5% range, we intend to actively manage to be within this range.
But please recognize that due to normal capital volatility you could see us above or below this range in some quarters.
In addition, and in line with PRA regulatory guidance, the dividend will accrue at 55% of reported profits for each quarter of 2022. This is not a signal of future dividend intentions.
And finally for clarity and I think buyback programs. The $2 billion buyback program that is currently underway has to complete by 20th of April under its six month regulatory authorization.
The AGM in late April we intend to then launch the billion dollar buyback program that we announced today.
So to conclude in the context of a continued challenged macro environment. These were a good set of fourth quarter and full year 2021 results.
Heading into this year with strong core momentum under pinned by increasingly robust growth.
And continued tight cost discipline.
If the current rates outlook is maintained we are on track to deliver a return on tangible equity of at least 10% in 2023, that's a year earlier than our expectations at the third quarter, and finally, and importantly healthy capital distributions have now been restored.
With that Matson can we please open it up for questions in the room and on the line.
And rich, it's coming up the host Q&A. Thank you.
Thank you Mr. Stevenson, if you would like to ask a question today on the line. Please press star one on your telephone keypad. Please ensure that the mute function on your telephone is switched off if you find your question has been answer you may remove yourself from the queue by pressing <unk> once.
Once again to ask a question. Please press star one please ensure that the mute function on your telephone is switched off.
The first questions will be taken in the room. So I will now hand over to Mr. Richard O'connor.
Yes, good morning, everybody.
First street from the arguments you're afraid to say it if you could just give your name and institution. Please.
Over to round in the front row to start with if you wait for the Mic. Please.
Hi, Good morning, It's Raul Sinha from JP Morgan Thanks for doing this in person.
Couple of questions for me to start firstly on the NIM.
I was just wondering if you could unpack.
The moving parts across the big parts of the franchise. So if you look at etch, perhaps name. It's broadly stable. If you look at the U K name is down quarter on quarter.
What is driving this sort of weakness in the U K and then how do you think mortgage pricing will impact that going forward I think we can do a number of them. It's about the name going forwards.
And then the second question is just coming back to the cost discussion, perhaps more Florida I think it was.
Quite interested in your comments about the historical slippage in costs when rates have gone up with HSBC.
And I guess one of the things that is different. This time is inflation is obviously moving up. So I was wondering if you could talk a little bit about how you're managing inflation. What what are you seeing in terms of inflation across the bank and how you're managing that.
Medium term within your house brands. Thank you.
Do you want to go first yeah.
Look on NIM I'm sure there'll be a few questions on that.
The.
In terms of what we're saying look at in a U K I think what you predominantly saying is is that sort of mix shift towards our mortgages at the moment impacting NIM together with continued a very healthy liquidity levels.
We do think over time, what we'll say is a recovery in some of the other line books, particularly.
Unsecured.
So you should begin to see yet, but and improving shift in the asset mix together with them.
Significant benefits coming through from rate rises that.
Yeah as you can see in our interest rate sensitivity tables.
Sterling is.
My sensitive currency.
Yeah in Hong Kong I don't think there's anything particular to call out in terms of asset mix again.
I think the main thing the main source of debate I think in Hong Kong looking out is.
Yeah, obviously, you know the Hong Kong dollar is pegged to U S dollars, Yeah, just how quickly if we are seeing.
And when we do see a rising U S rates environment, how quickly that will translate into a rising highball.
I think if you go back over time, typically theres been about a three month lag period.
I think given the growing at the moment that that might elongate it out a bit but we would certainly think you know in the coming months, we will start to see a very material recovery in hydro all coming as well.
Oh cost no.
On costs.
We've managed to contain the costs up slightly down in 2021 relative to 2021 because frankly, we took a $3 $3 billion of transformation costs in the first to use of the transformation program that has allowed us to fund increased investment in tech. It's allowed us to fund an increase in the variable pay pool.
'twenty, one run relative to 20 or 31%.
And if you look at the V. P pool, it's up 31% on twin C is up 5% on a 2019, so avi people in 2021 .
Still inflated over 19, but we managed to keep the cost flat.
Not even said we were also planning a further 2 billion of cost takeout. This year as part of that transformation program and another half a billion in the year after.
Not we believe gives us the cushion necessary to recycle that cost transformation into investment in check and into investment in people, whilst keeping the overall cost base flat.
'twenty two.
And within a range of low to 2% thereafter in 2023.
And we've got good line of sight on the cost side. So I think it's manageable and achievable well, we really want is the revenue momentum we have on an underlying level.
Complemented by the interest rate curve is coming all the way to actually flow through into returns not to flow through into cost.
He told me to try and enhance the returns of the business, which is why we are pulling forward. The return target by year Thompson, who we want to go beyond that.
And I don't want the cost to take away from that achievement.
The other thing that we.
Hum during Covid is obviously the benefit of them sit in activity. That's just fundamentally changed as a result of Covid side.
Yeah. If you go back two years, we were spending $400 million on travel and entertainment.
That was less than $60 million last year, we expect it to recover but we say, we're not going to rely on travel costs to return to see.
It's capped at 50% of what it was pre COVID-19 .
Yeah, we've announced that we're going to get out to 40% of our non.
Non branch based commercial real estate.
Yeah, we've done about half of that so far but again I think kind of it and the fact that we are going to adopt hybrid with them on a payment devices opens up a significant opportunity.
Now Hot Desking, and I know that Sierra has gone on.
Stoller and a whole bunch of printers out of the building to make it harder for us to print but.
For those of you who hot desk, you certainly don't want any paper at the end of the day, because then you'd have to store it.
So I think yeah, and then you've got this big shift in digital engagement from our customer base has gone on through Covid.
Particularly in some cohorts of the customer base like the elderly who previously would not that digitally engaged and again I think that will open up further cost opportunities for us and at some of those cost opportunities I think that of health.
Offset the inflationary pressure that we wouldn't have seen previously.
To give you. An example on that if I can just Richard if you allow me.
Trade transformation, we embarked upon the digitalization program of all trade platform, where the biggest trade bank in the world as you know, we fundamentally re platform that business over the past four years also bolt on technology.
Consequence of that trade revenue for the full year last year was up 9% trade balances up.
Over a 23%.
If you look at Q4 on Q4 trade revenue was up around about 20%. So there's momentum in the trade in the revenue, but what it's also done is has increased our NPS schools. We've now got a positive M. P. S and trade of 69, we didn't have that four years ago if.
If you also look at what he has done for cost we've got a 26% reduction.
In our baseline baseline head kinds that existed in 2017, when we started that program. So if you look at it from whatever angle facilitation revenue growth because we're more competitive we've got new product capability.
That's a customer service as evidenced in the M. P. S at a lower cost to serve as evidenced in the head counting trade.
That's why we're putting more money into the digitalization agenda and that's the impact you can have on the business and I think that's why we could recycle some of those cost savings into inflation and inflation needs of the remaining employee base.
Richard Yes.
Jud for next and then afterwards.
It's starting to move.
Yeah.
Hi, Thanks, It's Joe Dickerson from Jefferies.
Just a quick question on the buyback. So is this something you want to make a recurring feature of your capital return because if rates.
Do what do you think they'll do a to get to your 10% return on tangible equity you'll generate a lot of capital. So is this something that you want to do on a quarterly basis 1 billion a quarter or what is there what's the thought process around creating regulate.
Some regular cadence to buybacks.
Yeah.
Well I'll just sort of broaden the question that I think Joe I mean.
Yeah, our primary tool of distributions as dividends and we've sort of been clear that we're going to pay within a.
40% to 55% payout ratio. This year, we were right at the very bottom end of that range at a 40% payout ratio I think that reflected yeah. Our view on the sustainability of particularly the ECL line, where we had significant write backs this year.
So I think going forward you should expect certainly for 'twenty two our expectation is that will be higher off on that payout range.
Then last year.
In terms of buybacks you know we.
Pointed out today that if you would just sort of effectively if you want normalize our core tier one today for items that we now use at a coming such as regulatory change the name and I.
The 15 point to age is probably closer to $14 five today for that 125 basis points of adjustments we pointed out.
Yes, we do.
Yeah, and then you've got for this year I think.
Yeah, so the natural growth in the business, where we said we're targeting mid single digit line guys.
We've pointed out that we still think we call it $14 billion or more to do with Oh that'd be great.
Saves.
We've got the dividend.
We've got the incremental billion dollars buyback that we announced today.
We do still expect there to be some inorganic activity.
Yes, we are.
It will be similar to what we've done small bolt on deals.
I think consensus for this year sitting about $2 billion of buybacks. So I think we're reasonably comfortable with that consensus at the moment.
But we do intend overall to actively manage our capital base as we said.
But you know for this year I think we're sort of comfortable with where consensus is currently sit but you Shouldnt view. This buyback program as some sort of in perpetuity buyback program will use it to manage surplus capital.
Thank you.
And then I've been told me if that's okay.
Good morning, Oh email Keenan at credit Suisse. Thank you for the presentation today I've got two questions. Please.
So one of the right rate sensitivity and then just a second one on the outlook for acquisitions and divestments.
So firstly on rate sensitivity. Thank you for the disclosure on the deposit beta.
I was wondering if you could help us with how much.
Discretion H SBC has over its deposit pricing.
In places like Hong Kong, and I guess with the idea being that yet.
Yeah.
The surplus deposit position is quite good and the benefit from rate hikes might be much more than the guidance employees.
Earlier on than that later on.
And then secondly on.
The outlook for acquisitions and divestments.
You've completed the three bolt on acquisitions that you said you would do and you've also completed so that he signed the exit from the French and U S retail business.
Could you comment on how the footprint now looks like.
And yeah, I guess just bearing in mind that there's a bit of easement in Mexico with Citigroup is doing and whether there's more potential for bolt ons, whether we could see more inorganic activity at HSBC.
Ewen do you want to take a right first.
Yeah look on the right sensitivity I think yeah. As we said we would certainly assume that for the first few rate rises that deposit beta is going to be less.
Less than 50% I mean, it he can.
It's a matter of public record.
Intentions are in the U K, we've announced a series of deposit increases.
As of the first of March.
Yeah, they would imply a deposit beta well below 50% for the rate rises that we've seen.
Yeah, Hong Kong, we are the market leader in the market.
Yeah, we yeah, we would expect it to be.
Some increase in deposit rates, but again I think pool.
There's 50 or so rate rises that deposit beta as we would expect to be well below 50%.
So that just to explain that.
We did change the table this quarter previously we had a sort of average 50% deposit beta but it varied by market.
You can see for example is the Hong Kong sensitivity has come down and that type of relative to Q3. The reason for that is because we have effectively increased the deposit beta or up to 50%. We just thought that was easier for you because it gave a consistent places fee to then make your own assumptions.
Just one of the.
I want to know and I'm sure you've got it in your analysis on that is.
And I was talking to somebody earlier about my my.
My liking of cash.
It's it's positive, particularly when you're bringing in via our operating accounts.
A lot of the cash deposits, we bring in is not paid for deposits through savings cats is operating accounts through G. L. C M through postal banking through wealth management and.
And therefore.
We were able to see is a higher probability.
The ability to hold onto interest rate rises because we also.
Focused on bringing in operating accounts, that's the pure paid for deposits.
Hum.
That's particularly true in our Asia franchise.
Where we've drawn in a lot of balance sheet via G LCM business.
Cash in a digital sense.
Yeah.
[laughter].
There's one there's one attribute I've I've carried with me for 34 years from what he purpose, which is get a caching for sometime Linda.
So old fashioned.
Quick question on M&A.
I'll take the Oh listen.
We're pleased with the progress we've made on that were pleased with the disposal.
Decisions on the U S and on France.
Mike has done an excellent job and his team in the U S on executing on time on schedule and driving out costs as a consequence of that.
I really congratulate him on that we're on track for completion of more complex disposal program on the French retail business, hence it will complete in 2023, but we knew that to be the case.
<unk> are progressing well on that.
On the bolt ons are going well, we're still looking we're observing other opportunities in the market, particularly in Asia, particularly associated with wealth and for wealth Reed insurance Hussey punishment.
A lot of wealth management.
Management capability.
As and when any of those become a reality you if they do become a reality, we'll let you know at that point in time, but we still active looking at opportunities.
On the acquisition side.
Stress, it's bolt on.
And so maybe to answer your specific question on Mexico, No. We're not looking to acquire in Mexico, we have a good business in Mexico.
And produce returns on tangible equity last year of around about 13% something.
Within the wealth business and retail business in Mexico is higher inherent returns.
We've got an organic growth model with.
We had previously guided the market, who will review that at all.
Our M&A activity would be primarily focused on Asia.
Sean.
<unk>.
Excuse me for all those online who you just heard me sneeze very sorry about that.
And they saw Covid obviously.
So I think we've got a very clear focus on where we want to bolt ons to be to be folks though.
Thank you Tom and then I'll take one from.
Your line is.
So thank you very much it's Tom Rayner from Numis.
Could I just have to place just sticking with the rate sensitivity initially.
The thing I'm most interested in is how quickly will the sensitivity sort of fade away. Once you go beyond 100 basis points move because I guess, you're going to see pass through rates, increasing as rates rise also I imagine there'd be some asset spreads issues such as in the Hong Kong mortgage market with sort of cap space is prime is.
So I was just.
Wonder if you could give us a bit more color on how things that when you go beyond the 100 and I have a second question on costs and if you want it now.
Yeah, the guidance of zero to 2% from 2023, I'm, just wondering what's going to sort of determine where about she land in that range, whether you're running a sort of jaws target. If you like so if revenue was strong that youll be at the upper end and if revenue disappoints, you'll be looking to hold it down at the bottom is that that youre thinking there.
Yes.
Yeah.
Oh right sensitivity above 100 basis points, it's not a question, we often get asked but I'm pleased we're getting off.
The I mean, if you'd look at.
Yeah, I mean, I guess going back to where we were in 2019.
Yeah. The NIM at the time was 158 basis points.
It fell to 120 last year.
We lost I thought about $7 billion of net interest income.
The book, the average interest, earning assets bigger than where it was back in 19.
Right.
You're right in some markets like Hong Kong.
Relationships with the prime rate, which does.
That's not to factor heavily and once rates rise by more than honored by six points.
I'm sorry.
When you I would look at the trajectory of what happened from instead of 19 321 and then.
It's not quite analogous because sterling rights are going to be much of his time.
But try and draw some comparisons from that as you do your modeling.
On costs, we're certainly not targeting that jaws number.
It's hard to target jaws, when you've got rising interest rates and he doesn't want the benefit of those rising interest rates to get reflected into rising costs.
I think it just highlights a decent degree of uncertainty is way we are on inflation.
Yeah, we are when you go out into 2023.
Yeah, we've got.
Yeah, the impact of M&A that we've highlighted that also be the one off from our for our 17, which will take costs down that's not in that guidance.
You do have to model that.
We know that we've got at least half a billion dollars of cost savings coming through from the cost programs that we're running.
We are going to have to yeah, we're getting rid of the cost to achieve program in 2022. So it's definitely finishing at the end of this year. So any restructuring costs will be absorbed above the line.
I would say in addition to that cost guidance, because we are comparing sort of what we call adjusted to adjusted Yeah.
Typically at the moment, we're having about half a billion dollars of other costs that would be in cigar items being sort of large.
Litigation costs and.
Yeah, when we sell businesses and stuff the losses on sale of that so yeah.
In addition to that adjusted cost guidance typically there's about half a billion dollars or so of other items, which will be on top of that.
And just put it told me it's a good question, but just put it into context so.
It's hard to predict how inflation will move forward over the next year or two.
There's likely to be inflation there.
Somewhere between.
Low cost increases on a like for like basis $600 million Institute said.
Relative to if you will.
If you roll the clock back in U.
You rolled in the interest rate effect that we lost 7 billion.
So the north <unk> two is relatively insensitive, whether its no one or two relative to what could be.
Six or $7 billion of incremental revenue by that time.
I think what we're trying to signal very clearly is we're not looking to have an explosion in costs, just because interest rates are going to come through.
To contain it in the north to 2% range.
These are reasonable.
Reasonably flat cost base relative to what could be happening on revenue.
I mean, if you look at consensus that has existed a couple of weeks ago.
Yes, it was about a $6 billion increase in <unk> or 12% increase in revenues from 'twenty one through 'twenty three.
And we're saying we're going to keep cost growth to 2% over that period and I think 23 consensus that it was a couple of weeks ago was understated because it hasnt fully reflected the impact of rate rises.
So the rate rises in that consensus a few weeks ago is inconsistent with today's.
Cook.
You just take those numbers, you've got very very material, which of what's coming through.
Okay.
I'll open the lines to hopefully Jason Napier of UBS.
Good morning, Thank you for taking my questions. The first one is around that.
Gross numbers or no you just shared.
So I'll just focus on net interest income.
Annualized in the fourth quarter at 27 billion.
5% loan growth gets you to 28, and a half and half the rates given that you've given today on the beach or that's too high.
CNI over $30 billion in 2022, and the same math would get you.
At a minimum 35 or six in 'twenty two 'twenty three.
Even in the past you've.
It helped us with the blend to expectations around the NII I'm sure you don't want the market to get too carried away, but it appears to me that on the simple loan growth and rate gearing numbers, you've provided the consensus should be.
Substantially higher two 3 billion for this year and maybe three for next year. That's the first one.
Second question is around the the.
The shape of the group from a capital perspective.
It's just the <unk> way savings work has been has been done.
And yet the TNF share if it's Asia is roughly stable at about 42% of the group and I just wondered with.
The restructuring of balance sheets, and the moving of capital around the group.
Shouldnt lead to faster <unk> growth in the years ahead or was it really more about taking capital out of low return.
Destinations.
Should we be expecting us to foster growth innovation now that the cancer can that's been freed up from its past uses.
Yes.
I'll take the second question.
Do you want to touch.
On.
You know I hate forecasting that interesting Calvin.
But anyway I'll do my best to.
Talk about the I I did think Jason.
We think that in Hawaii, new mask, but you are a bit choppy on 2022.
Yeah, we think that consensus.
Which was that.
Yeah, We had yes, we think consensus for 2022 which we had a $28 7 billion was understated.
But not by the magnitude that you were talking about.
And consensus was published average consensus was 31.9 for 'twenty three we think that is more meaningfully understated.
And I don't know where the Jason how you factor then think things like the continued I W. Ay rundown program.
Cause if you look at what's basically implied with what's right at asset growth this year.
If we're talking about mid single digits, we're saying 3% of that is coming from regulatory change. So that's just sort of need you know call. It two percentage points of net increase which is underlying volume growth yet less the odd otherwise we're running off.
But so I modestly understated for 'twenty, two more materially understand if the 23.
On your second point, the shape of the group I'd probably draw your attention to two slides in the deck, the slide 28 and <unk>.
Slides 30.
Slide 28.
It's a new piece of information I don't think we've previously disclosed but what it shows for wholesale banking.
He's the Interconnectivity of the group. So if you look at the percentage of client revenue in house wholesale banking.
That has an international connectivity those clients bank with us in multiple geographies.
Percentage is 77%.
Now what you've seen the reporting currencies, where we book it in the legal entity. So you see legal entity booking in Asia.
And you'll see legal entity booking in Europe , and the U S.
But so much of what we book in Europe , and the U S is connected to our business in Asia, and the Middle East and.
And what we tried to give you and that is in wholesale banking films.
Essentially 70%, 77% of all revenue from clients in wholesale banking.
Some form of cross border connectivity.
But you'll see the revenue booked in multiple legal entities. So I think your analysis on how much capital is Asia related relative Sudan Asia is a bit distorted when you look at it at a legal entity basis and if you then go to slide 30, what Youll see from J P N M.
Is 40% of the revenue.
Booked in the east on a legal entity balance sheets in the east.
Emojis from western clients.
So.
40% to Greg in Georgia as revenue.
Essentially gets booked in the east but originates from clients, we think in Europe . The U K the U S in the west.
I'm not again, if you look at it purely on a legal entity basis, Youll see European and U S balance sheet and say why are they so capital heavy.
Cause their feature of business into our operations in Asia.
The middle East.
Yes, Jason I think in addition to what Noel has just been through I mean, if he got back to what we announced a couple of years ago about this yeah 100 odd billion of reduction in the west than redeployment in the east.
What we've seen over the last couple of years I think is a very successful execution of the first part of that.
I that we're now in a dish went out in excess of what we started out with.
I thought the redeployment in the east has been slowed down as a result of Covid. So we do think that that redeployment right will now pick up as the Asian economies are progressively come out of Covid.
We'll take another question from the line.
Have you been Toms from RBC.
Yeah.
Good morning, and thank you for taking my questions. Two please firstly on mortgage market share in the U K picked up significantly in Q4 and.
Do you intend to keep being aggressive in terms of pricing and growth in the U K and then secondly, if you could talk about the provisions for Chinese commercial way to stay in the quarter can you just give us some flavor on what youre seeing on the ground with respect to Chinese Cree and is it still the indirect exposure that that keeps you awake at night.
Thank you.
Ewen do you want to take the mortgage okay. So.
Yeah, I fly in market share in the quarter I think it was 9.3, our stock share is seven five I.
I think as you all know yeah, we still feel structurally underweight in UK mortgages.
<unk> share of current accounts by value I think has ticked up to just under 15% now.
Yeah, we still feel.
Structurally underweight mortgages I don't think we describe our pricing is aggressive we don't necessarily aspire to be in the top three of the best buy tables.
But we do think we can continue to take market share by bought stock share. I think are notable feature of what we saw in the market, which you'll all be familiar with us.
So this was the fifth quarter for quite a while I think we're a front book margins were below.
Back book margins.
And have continued to drop a bit in Q1 as well.
Yeah, we've also seen a significant increase in risk.
Risk weighted assets for U K mortgages from the beginning of this year.
We still think we're earning returns are comfortably above the cost of capital at this point.
But you know conditions are competitive at the moment in the UK mortgage market.
Yeah, and on China real estate.
There was no doubt that in Q4.
The level of market uncertainty increased on the level of contagion risk all not whole sector of commercial real estate in China increase relative to Q Q2 Q3.
And therefore, we thought it wise and prudent.
It's a model in additional stage, one and stage two provisions to reflect the uncertainty that refinancing risk and liquidity risk.
We've seen the market conditions ease a bit at the start of 2022.
We think that is likely to have a benefit.
On the risk position on commercial real estate in China.
We will tell it is still too early to tell how it'll play out.
It's affected pretty much every private C. All recline in China.
As Ewen said we have.
A mixture of.
And so we see no sector run about.
70% and 70%, 30% or so 70%.
P O.
<unk>.
Time will tell as to whether that sector, how small losses come in or.
We will not but we thought it wise to model in some additional provisions based on that level of uncertainty.
We think the one thing I'll also say, we still standby the facts, we have good quality clients, but we know for a long time.
Operating into one to two cities with good properties.
But the sector as a whole has a level of uncertainty over it that's affecting all of them.
Given that.
Yes, all of that thinking that Noel has just been through is behind our guidance when you've talked to that.
<unk> 30 basis points of each.
E C L provisions for this year.
Yeah I would note is probably more conservative guidance than it was in current consensus.
The uncertainty oversee all reis within 30 basis points.
Okay.
Over to that side.
Yeah.
Yeah. Good morning, it's Aman <unk> from Barclays.
I would have to tease one back on rate sensitivity.
Hmm.
One thing that's always.
Kind of a found remarkable for a number of quarters now is how low your USD rate sensitivity is I think.
Even on the updated deposit pass through assumption.
You know relative to the 460 billion USD of deposits I think that you can employ from <unk>.
Slide 27, why is that rate sensitivity service, so love out of the U S does it imply a lot of hedging.
Is there something you can kind of help us understand that.
And second would it be an aspiration for wealth management.
Note the cautious guidance in relation to Q1.
I guess I'm, specifically thinking about the border between Hong Kong and China reopening is.
Is there any way you could help us quantify what the potential benefit could be.
If we are to rediscover pre COVID-19 level of activity for that business I mean.
It looks like the onshore Hong Kong.
Humans franchisees has done really well last year, so maybe there's a bit of easing there, but anything you can help us put some numbers to that would be really helpful. Thank you.
Yes.
In the U S dollar.
Effectively an accounting mismatch, which is driving that lack of sensitivity and that part of the.
Our funding base in the U S is used to fund the trading book.
So yeah in a rising rate environment, the benefit from an accounting the accounting benefit on the revenue side guys to trading income.
At so you don't get that normal.
Sensitivity that you would expect.
Hum.
I think on.
<unk>.
Would a reopening if you go back to 2019.
I think about 40% of our new business sales.
On insurance, where.
To mainland Chinese.
Yeah keep the keep the current profile of the domestic business in Hong Kong.
And I've seen going back to 2019 levels.
<unk>.
As that border remittance.
So it's just not first rate sensitivity point, then is that is that additional rate sensitivity that goes through noninterest income were you saying.
That actually.
Yes that would be a conclusion of that like I thought it would be yeah.
So I think.
Okay. Thank you.
We.
We pivoted a bit in the slide but I just I just do want to reemphasize because it was such an important plank of our strategy Asia wealth.
Just draw some stuffs.
Okay.
Net new invested assets in our wealth business was up 21% year on year last year.
Despite a bit of a slowdown in Q4, but for the full year it was up 21%.
Trade.
Wealth balances was up 5% invested assets of wealth was up 7%. So the net new money was up 21%, but the overall balance balance sheet invested assets was up 7% asset management was up 5% year on year as full year full year.
And wealth revenues were up 10% so.
First thing in Pinnacle 3000 people over the next few years, so we want to drive stronger domestic grocery and China stronger domestic grocery and Hong Kong and then connect with him through the likes of wealth connect and stop connect.
That's where I think we got the I sit on the case you can say when the border opens up.
So I think there's still a strong underlying growth for the medium term.
And although signaling a softening in Q1.
There's a strong track record of the Hong Kong economy bouncing back and I think that's what will happen at some point later this year.
Thank you.
Right.
And then we passed my behind Okay Guy.
Morning thinks it's a guy stubbings from being paperbacks and the first question was Ah back on incomes of the building and the last question. Thanks for the comments already own net interest income and I'm sort of reflecting on where consensus I guess, so other operating income.
It sounds like it can be a tough starts at 29th June you'd refrain from giving guidance with this year on on revenues versus the the medium term double digit guidance. Just wondering if he you'll sense. He says essentially a bit of a give back to be an outside.
This year from some of those trends on although I appreciate it very difficult to judge in this environment, but any color. There would you say that very much they short issue and indeed that could be potential catch up on that line is the environment normalizes. So any distortion is really isolated to 2022 I mean, indeed, your medium time guidance for it to be.
35% of groups suggested a rapid pace of growth to come through at some point in the future.
And then the second question was just song Koston and thanks for Coney out the restart she's gonna be above the line from 2023 I think that's a very helpful development It'll show it goes against what we're seeing a number of banks in terms of talking about permanently higher restructuring type costs, then maybe we've expected in the in the past and in that context.
Nor to 2% cost scribe favorite two years it looks like a you know a very good good targets to hit if you do indeed nice to reach that just wondering what gives you confidence you can do that if you know, they're all still suck investment type actions, we aren't inflation environment. I mean is it just a sense of the the amount of rum right Cos sase coming through the business give you that.
Significant company you can't deliver that thank you.
[noise] yeah on.
Not an interesting I guess I haven't made the same comments vs consensus the that that should be it and but luckily and he wasn't just yeah. We've had a couple of things going on physically we've had weak markets in Asia, which is impacting both the insurance M. G U.
The market impact and also impacting equity breakage, we've now what about half of the branch network temporary closed in Hong Kong.
At the direction of each Guy may as a result of COVID-19 restrictions.
Yeah keep one is typically best quarter of selling wealth product and a lot of that is sold through the branch network.
Yeah.
Yeah, we've looked at what's happened in every other market with I'm a grown it's being a three month thing and then the economies of reopen again. So yeah. We do think it is short dated in nature.
Yeah, and and we're sort of not trying to regard to twenty-three at this point you know I do think there could be some disappointment in wealth and he won but by the time you get back into Q2 with Hong Kong reopening, we should see a ray rapid recovery.
So it was the chicken.
Second clip Costco.
Cause.
Mm.
Why are we confident on north to yes, I, but we we've done yeah. If you go back to 2018.
You know the back into the year that I joined.
We had Ah yeah, we grew costs at about five in off the scent that yeah. Yeah. We did exactly what went wrong not to do now which is we were trying to inflate the cost by is in line with rising rates.
Since then we've done an enormous amount of work till he should've been bid good costs discipline across the organization in a way that didn't exist three years ago.
You know, we've got a very well drilled cost program at the moment I would say you know is it just yeah. The investment that we're making into various parts of the bank and digitalization and automation and drive out huge potential cost savings in some areas yeah, if I look at what.
Trying to do in finance at the moment, we've got a big moved to take all of our reporting into a single day, just say on the cloud and run a little far reporting engines off the cloud you know, we think that can reduce operating costs and finance about 25% to 30% over the next three to four years and yeah. It's the same analogy.
No used in the front office with.
Tried to trade transformation that we've done in the last few years I.
I think I would yeah, we've got confidence as we look at the combination of ice investment programs going on.
In addition, you know we are continuing to effectively.
If he were to Qatar cost structure on a geographic basis. What you see is the mature markets are declining outside Europe U K U S Canada.
Which is allowing us to fund the Grace that we wanted to put on.
In the Middle East Asia and Mexico.
So you know, it's a complex mix of course actions going on across the organization, but we.
We do think that you know based on the work we've done Tonight is pretty good bottom up grounding for the cost targets. Yeah. We obviously don't put them out lightly because no. One I know that you will remind us if we miss them. So I'd I'd I'd say, we got the bottom up analysis, we got the benefit of a committee three year transformation program two years into it.
[noise] delivered what we said will.
We will continue that in your three this year.
So it's a combination of bottom up.
And frankly determination.
I want the revenue benefit to go into the return to go into the piano.
Law just to be spent on incremental costs.
And.
I'm trying to get a much more stable.
Cost base of the organization over time and not have it cyclical high.
Hi, Reitz high costs low rates locals.
Much rather have a.
A much more efficient machine.
Is constantly reengineer in itself.
And technology is playing a big role in it hence we spent more than $6 billion on tech last year.
If you take the guidance, we said that was 19th sense of our operating costs and we want to say, we're willing to take it north of 21% of operating costs.
If you roll up for it over a period of time over through you know two or three years.
That would take 6 billion up to 7 billion. So implicit in incremental I'd see investment is a reengineering involve fundamental processes.
We saw the impact of Digitization on trade, we've seen same thing and the payments Arena, we've got a similar program running on a wealth business reengineering.
Ah frontline Internet banking capability building one's roly globally get scaled globally. So.
That's what we're working on.
Richard There was one more in the.
For two more one troopers behind you and then and then since I've been here.
The white shirt, while they.
They both had their heads off.
Then Martin.
See if we can fit you in but we were we were like a rough up okay.
Okay, it's purely Muslim K B W and so thank God a presentation just two questions. One on income so well actually loan growth and really so.
You have to live with 1% loan growth and and 21. So what gives you the confidence that you are going to be able to do mid single digits and Ah in 22, given you know Hong Kong and China still very much sticking to zero Cal state policy, so sort of putting a laid on and on growth that and sort of related to that if.
You are thinking about mid single digit lone kraut, with and then and and a rising rate environment, why you're only targeting mid single digit and revenue growth and against would've building on the previous question.
So that's one revenue side and then on cause and you've talked a lot about digitization investment in technology and roughly what is it split between maintenance spend and innovation spend.
I'll come I'll do the lots of question on innovation of maintenance on.
My breath I think 2021 was heavily distorted by a couple of things, especially the impact of caving in the first half of the year, which I think had a significant dampening effect on line grows into first off I think what we've seen coming through now yeah.
We've had it in commercial for some time just continued quarter on quarter loan growth I think and reach out you know we're seeing very very good guys in what witches buys in the UK in Hong Kong. Despite what you referred to in Hong Kong Ah underlying libraries, there in the Bull would shake the continues to be very robust, but yeah.
The other big offset which is not is the rundown that we've seen.
In wholesale in global banking markets in particular, which is camping neck right right.
You know if you look at Q for the queue for grades right I think it doesn't take much to get that growth rate up on an annualized places the mid single digits right in C N b.
Q4 to cute four.
In Asia loans was.
Likes it.
Right.
If it's like trade.
Two four Q4.
Gross and the balance sheet in Sandy.
I think it was 29%.
So what you saw was a slow start in the first half of the year and then a pick up in the second half of the year trade grew faster earlier.
So Linda and some London started to pick up in the second half of the.
As economies came out of Covid. They first went to reactivate the supply chain.
And then they went to reactivate some of its own Linda I still think to lendings quite muted at the moment you know I don't think there's a huge amount of capital investment taken place, where we're starting to see some early signs of that come through in queue for.
I think we just have to wait and see how economic recovery continues in the first half of this year.
And then your other question on how much of the investment in technology is innovation versus maintenance.
That's how I I, it's it's Tom innovation can mean, many different things to many different people. So I don't use that term necessarily fool icy investment what I'm looking at is how much of that investment is fundamentally reengineer in the business as opposed to.
Doing care of maintenance on today's systems for regulatory reasons, and I think more and more of our technology's going into the reengineering space unless into the care of maintenance, we don't give a breakdown on that but I got a significant proportion of our investment.
So go over 50 per cent is going into the reengineering activities of the bank not just keeping the light salt and maintaining the existing systems, we're investing in reengineering.
Onsite tried as an example, we fundamentally replatformed the whole software base for trade.
So so we turning off the old and turned on the news turn it on the news.
And that has multiple benefits.
It lowers the ongoing running costs of technology. It lowers the ongoing running costs of the bank provides new product capability better customer experience better operational control.
We're doing that in many other areas as well.
I'm afraid we run out of time if I.
Members of the team will be if I ran outside for a cup of tea or coffee after to answer your question sorry about the the truth, where you didn't have taught him to get on but I don't know to <expletive> him to both of you because I know you had your hands over to know and I don't know if we're concluding remarks lift listen. Thank you very much for for attending today for all of your interests and your questions.
To sum up I'm pleased with our 2021 performance.
Particularly pleased with the return to revenue growth in queue for which I think bodes well for 2022.
We've got good cost control and which determines to maintain it.
Based on current interest rate assumptions, we would expect a rotary of at least 10% and 2023.
And a year earlier than previously planned.
We've made good progress executing against the key areas of our strategy on our transformation.
And I'm pleased that we were also able to provide our shareholders with health healthy capital returns this year.
Richard on that same are available to you. If you have any questions, but in the meantime, please stay safe and have a good day evening wherever you. Thank you very much.
[noise] [noise] [music].