TIDMHSBA
RNS Number : 3708S
HSBC Holdings PLC
09 March 2023
9 March 2023
HSBC LIFE - IFRS 17 TEACH-IN FOR INVESTORS AND ANALYSTS
HSBC Holdings plc (together with its subsidiaries, 'the Group')
will hold an event today where it will outline the expected
implications of the implementation of IFRS 17 'Insurance Contracts'
on its financial statements and outlook. The update will also
include detail on the strategy of HSBC Life.
Key messages and financial data will include [1] :
-- While IFRS 17 will change the timing of profit recognition,
it does not change the economics of the insurance business and
decreases the volatility of Group RoTE.
-- Across both the Group and Insurance business there is no expected impact on the regulatory capital/solvency position, the lifetime expected profit of insurance contracts, or dividend and cash generation.
-- When compared to the Group's financial results for the six
months ended 30 June 2022 on an IFRS 4 basis, it is estimated that
if applied to the same period, IFRS 17 would have resulted in(2)
:
o Group reported revenue down $0.7bn (3%), of which NII down
$1.1bn and non-interest income up $0.4bn;
o Group reported costs down $0.3bn (2%);
o Group reported profit before tax down $0.4bn (4%); and
o Insurance manufacturing reported profit before tax down $0.3bn
(c.50%)
-- At transition from 1 January 2022, the Group's total equity
is estimated to reduce by $10.5bn and tangible equity is expected
to reduce by $2.4bn as a new contractual service margin ('CSM')
liability is created. 'IFRS 17 Equity + CSM' of $14.7bn on
transition is the Insurance equity together with the CSM, net of
related tax and represents the net asset value and expected future
earnings of the in-force insurance business.
-- The Group's FY23 net interest income is expected to be
c.$2.3bn lower than the equivalent guidance on an IFRS 4 basis,
with minimal expected impact on other key Group financial targets
and guidance.
A transition document with quarterly IFRS 17 comparatives for
FY22 is expected to be provided alongside the Group's 1Q 2023
results publication on 2 May 2023.
The event will open at 08:00 GMT / 16:00 HKT and be hosted by
Greg Hingston (CEO, HSBC Global Insurance and Partnerships) and
Alistair Chamberlain (CFO, HSBC Wealth and Insurance).
Copies of the presentation will be available to view and
download prior to the beginning of the event at
www.hsbc.com/investors/investor-events-and-presentations
ends/more
Investor enquiries to:
UK - Richard O'Connor +44 (0) 20 7991 6590
HK - Mark Phin +852 2822 4908
Media enquiries to:
Gillian James +44 (0) 20 7992 0516
Note to editors:
HSBC Holdings plc
HSBC Holdings plc, the parent company of the HSBC Group, is
headquartered in London. HSBC serves customers worldwide from
offices in 62 countries and territories in our geographical
regions: Europe, Asia, North America, Latin America, the Middle
East and North Africa. With assets of US$ 2,967 bn at 31 December
2022, HSBC is one of the world's largest banking and financial
services organisations.
This news release may contain projections, estimates, forecasts,
targets, opinions, prospects, results, returns and forward-looking
statements with respect to the financial condition, results of
operations, capital position, strategy and business of the Group
which can be identified by the use of forward-looking terminology
such as 'may', 'will', 'should', 'expect', 'anticipate', 'project',
'plan', 'estimate', 'seek', 'intend', 'target', 'believe',
'potential' and 'reasonably possible' or the negatives thereof or
other variations thereon or comparable terminology (together,
'forward-looking statements'), including any financial, investment
and capital targets described herein. Any such forward-looking
statements are not a reliable indicator of future performance, as
they may involve significant stated or implied assumptions and
subjective judgements which may or may not prove to be correct.
There can be no assurance that any of the matters set out in
forward-looking statements are attainable, will actually occur or
will be realised or are complete or accurate. The assumptions and
judgments may prove to be incorrect and involve known and unknown
risks, uncertainties, contingencies and other important factors,
many of which are outside the control of the Group. Actual
achievements, results, performance or other future events or
conditions may differ materially from those stated, implied and/or
reflected in any forward-looking statements due to a variety of
risks, uncertainties and other factors (including without
limitation those which are referable to general market or economic
conditions, regulatory changes, geopolitical tensions such as the
Russia-Ukraine war, the impact of the Covid-19 pandemic or as a
result of data limitations and changes in applicable methodologies
in relation to ESG related matters). Any such forward-looking
statements are based on the beliefs, expectations and opinions of
the Group at the date the statements are made, and the Group does
not assume, and hereby disclaims, any obligation or duty to update,
revise or supplement them if circumstances or management's beliefs,
expectations or opinions should change. For these reasons,
recipients should not place reliance on, and are cautioned about
relying on, any forward-looking statements. No representations or
warranties, expressed or implied, are given by or on behalf of the
Group as to the achievement or reasonableness of any projections,
estimates, forecasts, targets, commitments, ambitions, prospects or
returns contained herein. Additional detailed information
concerning important factors that could cause actual results to
differ materially from this news release is available in our Annual
Report and Accounts for the fiscal year ended 31 December 2021
filed with the Securities and Exchange Commission (the 'SEC') on
Form 20-F on 23 February 2022 (the '2021 Form 20-F') and our Annual
Report and Accounts for the fiscal year ended 31 December 2022
available at www.hsbc.com and filed with the SEC on Form 20-F on 22
February 2023 (the '2022 Form 20-F').
This news release contains non-IFRS measures used by management
internally that constitute alternative performance measures under
European Securities and Markets Authority guidance and non-GAAP
financial measures defined in and presented in accordance with SEC
rules and regulations ('Alternative Performance Measures'). The
primary Alternative Performance Measures we use are presented on an
'adjusted performance' basis which is computed by adjusting
reported results for the period-on-period effects of foreign
currency translation differences and significant items which
distort period-on-period comparisons. Significant items are those
items which management and investors would ordinarily identify and
consider separately when assessing performance in order to better
understand the underlying trends in the business. Reconciliations
between Alternative Performance Measures and the most directly
comparable measures under IFRS are provided in our 2021 Form 20-F
and our 2022 Form 20-F, each of which are available at
www.hsbc.com.
ends/all
[1] The above estimates are on the basis of the implementation
work performed to date. These estimates are based on accounting
policies, assumptions, judgements and estimation techniques that
remain subject to change.
(2) The estimated impact in dollars from the application of IFRS
17 is equal for both reported and adjusted income statement lines
for the Group and Insurance.
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END
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