HSBC Holdings plc (NYSE:HSBC) Q1 2024 Earnings Call Transcript

It remains a very important customer franchise for us. It remains a very important market for us, and we continue gaining market share. I mean, we continue gaining market share in mortgages with a 10% new business market share when our back book now market share has moved or our kind of overall portfolio market shares moved from 7% to 8%. We are a 25% market share in SME lending. And obviously, we continue investing in this business. You can look at the ring-fenced bank cost growth and how much we can support cost and investment growth for their infants bank within our overall circa 5% cost growth. So, all this demonstrates the confidence we have in our business in the U.K., our client activity in the U.K. and the outlook for the U.K. If I move to Argentina, I wish I could give you a trend for Argentina, then the way it works is the numbers balloon with hyperinflation, and then they kind of they shrink with devaluation, and it depends how they manifest themselves over month-over-month.

Q4 last year has seen hyperinflation to some level, but they have seen a massive devaluation. If you recall, in December, we’ve seen more than 50% currency devaluation. That’s contributed to a disinflation of the amount that Banking Argentina brought to Q4. And then this quarter is exactly the opposite. We’ve seen 6% devaluation only, but we’ve seen 54% inflation, and that will just inflate the numbers. So, it will be volatile quarter-on-quarter. And our best estimate for the full year is that it may average out to what it averaged out over the last year, which is around €1 billion. Now just looking at the overall Argentina, if you take in the nonbanking NII, you take in the cost base, et cetera, last year’s Argentina contribution to our PBT was $0.2 billion.

Just to put it in perspective, this is about $0.01 earnings per share or 0.5% dividend per share. Therefore, I think as you look at the full year ’24, that’s the quantum that Argentina volatility will create. So, it should not distract you from the way you’re forecasting the bank’s outcomes.

Andrew Coombs: I guess just to follow up on this. In a scenario whereby you didn’t have any devaluation of peso. Inflation was a more moderate normal amount? And what would the NII contribution be under that more kind of BAU scenario a quarter for Argentina?

Georges Elhedery: Look, again, it’s a difficult one to say. But if you just do the arithmetic of our €1 billion expected for the full year, of which already €0.5 billion has manifested in the first quarter, a smooth out outcome would be the other $0.5 billion phased out evenly over three quarters. But that’s a highly volatile number. So, I wouldn’t use it as a for [indiscernible].

Operator: Thank you, ladies and gentlemen. That ends today’s webinar. You may now disconnect your line, and enjoy the rest of your day.