Reported results
Operating income of $8,495 million is down 8 per cent from H1 2014, primarily driven by currency translation, business divestments and mark to market valuations
Profit before tax of $1,824 million is down 44 per cent from H1 2014 as adverse loan impairment trends continued to impact performance
Disciplined capital and balance sheet management has resulted in customer advances down 2 per cent to $282 billion, customer deposits down 6 per cent to $389 billion and risk weighted assets (RWA) down 5 per cent to $326 billion
Performance metrics
Normalised earnings per share declined 50 per cent to 48.7 cents from 96.5 cents in H1 2014
Normalised return on ordinary shareholders' equity of 5.4 per cent (H1 2014: 10.4 per cent)
Dividend per share reduced by 50 per cent to 14.4 cents per share (H1 2014: 28.8 cents)
Capital and liquidity metrics
Common Equity Tier 1 (CET1) of 11.5 per cent on a CRD IV end point basis (2014: 10.7 per cent)
Advances to deposits ratio of 72.6 per cent (2014: 69.7 per cent)
Liquid asset ratio of 31.4 per cent (2014: 32.2 per cent)
Key messages
Management actions focused on increasing end point CET1, up 80 basis points (bps), adversely impacting return on equity
Continued adverse loan impairment trends in India and commodities more than offset improvement in Retail Clients' loan impairment
Corporate and Institutional Clients - growth in high returning clients and products has been offset by increased impairment and tight RWA management
Retail Clients operating profit up 14 per cent with improved performance in Korea
Strong balance sheet with healthy liquidity, leverage and capital ratios
Programme of actions
Now within the CET1 11 - 12 per cent range, six months ahead of the year end
Well on track to deliver cost saves in excess of $400 million in 2015 and also $25-30 billion saves in low returning RWA by 2016
Actively de-risking the business - Retail unsecured down 9 per cent, Commodities exposure down 11 per cent and Top 20 corporate exposures down 11 per cent since year end 2014
Progress on simplifying the Group - announced new management team and simpler organisational structure
Completed business exits including Consumer Finance businesses in Hong Kong, China and Korea, generating net disposal gains of $219 million and releasing capital
Commenting on these results, the Chairman, Sir John Peace, said:
"We have delivered good progress on our target of strengthening the Group's capital ratio and will continue to do so. However, these actions have also impacted our return on equity, and combined with a disappointing earnings performance and the current near term outlook for the Group, the Board has decided to reduce the dividend by 50 per cent. The Board and newly announced Management Team are committed to build a business that will deliver significantly better returns for our shareholders."
Commenting on these results, the Group Chief Executive, Bill Winters, said:
"Today's results show the Group has some very real challenges, but they are fixable and it is important to remember that there is a strong business at the heart of the Group. The newly announced Management Team, together with all of our staff, are determined to get the Group back on track."
