HSBC 2015 Annual Report Download - page 29

Dividends per ordinary share
in respect of year
($)
0.51
0.50
0.49
2015
2014
2013
Adjusted jaws
(2015 year to date)
Key
1Q
2Q 3Q 4Q
Cost growth %
Revenue growth %
(2.9)%
(4.1)%
(3.7)%
(1.5)%
Total dividends declared
in respect of the year
($m)
10,000
9,583
9,18 0
2015
2014
2013
Return on equity
(%)
7.2
7.3
9.2
2015
2014
2013
Return on equity
Our medium-term target is to achieve a
return on equity (‘RoE’) of more than 10%.
This target is modelled on a CET1 ratio in
the range of 12% to 13%.
In 2015, we achieved an RoE of 7.2%
compared with 7.3% in 2014. The bank
levy and significant items, such as
fines, penalties, customer redress and
associated provisions, had a significant
effect on our 2015 RoE, reducing the
return achieved by 190 basis points.
Adjusted jaws
Our target is to grow revenue faster than
operating expenses on an adjusted basis.
This is referred to as positive jaws. In 2015,
we grew adjusted revenue by 0.9% whilst
our adjusted operating expenses rose by
4.6%. Jaws was therefore negative 3.7%.
Jaws for 2015 was affected by the
revenue performance in the second half
of the year. Adjusted revenue growth in
the first half of 2015 was 4.5% but fell in
the second half of 2015, reflecting the
economic environment, including slowing
GDP growth in China. This resulted in
overall revenue growth of 0.9% for 2015.
The increase in adjusted operating
expenses in 2015 included a $0.4bn
rise in the bank levy (to $1.4bn). Excluding
this increase, jaws in 2015 would have
been negative 2.8%. During the second
half of 2015, we made progress on our cost
saving plans set out at our Investor Update.
We reduced the growth rate in adjusted
operating expenses, down from 7.3% in
the first half of 2015 to 4.7% for the year.
Progressive dividend
In 2015, we increased the dividends
per ordinary share in respect of the year
to $0.51 from $0.50 in 2014.
Delivering on our Group financial targets
Target:
Positive
We calculate jaws on an
adjusted basis, excluding
currency translation and
significant items, as described
on page 48.
Target:
Progressive
We are committed to increasing the dividend
we pay to shareholders. This is measured
by dividends per ordinary share declared
in respect of the calendar year. Prospective
dividend growth remains dependent upon
the long-term overall profitability of the
Group and delivering further release of
less efficiently deployed capital. Actions
to address these points are core elements
of the Investor Update provided last June.
Understanding jaws
Jaws measures the difference between
revenue and cost growth rates.
Positive jaws is where the revenue growth
rate exceeds the cost growth rate.
2015 adjusted jaws:
-3.7%
For detailed information
on our financial performance,
see pages 50 to 60.
The strategic actions set out on
page 18 have been undertaken
to support our aim of achieving our
medium-term financial targets.
Target:
>10%
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HSBC HOLDINGS PLC
27
Financial overview