TIDMHSBA
RNS Number : 3482U
HSBC Holdings PLC
01 August 2022
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1 August 2022
HSBC HOLDINGS PLC
2022 INTERIM RESULTS - HIGHLIGHTS
Noel Quinn, Group Chief Executive, said:
"Our first-half performance reflects the continued impact of our
strategy, with gathering revenue momentum and tight cost control.
The progress that we've made growing and transforming HSBC means we
are in a strong position as we enter the current rates cycle. We
are confident of achieving a return on tangible equity of at least
12% from 2023 onwards, which would represent our best returns in a
decade.
As a result, we are providing more specific dividend payout
ratio guidance of around 50% for 2023 and 2024. We understand and
appreciate the importance of dividends to all of our shareholders.
We will aim to restore the dividend to pre-Covid-19 levels as soon
as possible. We also intend to revert to quarterly dividends in
2023."
Financial performance (1H22 vs 1H21)
-- Reported profit after tax increased by $0.8bn to $9.2bn. This
included a $1.8bn gain on the recognition of a deferred tax asset
from historical losses, as a result of improved profit forecasts
for the UK tax group, which has accelerated the expected
utilisation of these losses. Reported profit before tax decreased
by $1.7bn to $9.2bn, reflecting a net charge for expected credit
losses and other credit impairment charges ('ECL'), compared with a
net release in 1H21. Adjusted profit before tax fell by $0.9bn to
$10.7bn.
-- Reported revenue decreased marginally to $25.2bn, primarily
due to foreign currency translation impacts and 1H22 losses on
planned business disposals. Adjusted revenue increased by 4% to
$25.7bn, driven by higher net interest income, reflecting interest
rate rises and balance sheet growth, and strong growth in revenue
from Global Foreign Exchange in Global Banking and Markets ('GBM').
This was partly offset by unfavourable market impacts in insurance
manufacturing in Wealth and Personal Banking ('WPB').
-- Reported ECL were a net charge of $1.1bn, reflecting stage 3
charges of $0.8bn, as well as additional allowances to reflect
heightened economic uncertainty and inflation, in part offset by
the release of most of our remaining Covid-19 reserves. This
compared with a $0.7bn net release in 1H21.
-- Reported operating expenses decreased by 4%, primarily due to
foreign currency translation impacts. The reduction also reflected
the impact of our cost-saving initiatives and a lower
performance-related pay accrual, which partly offset increased
investment and inflationary impacts. Adjusted operating expenses
decreased by 1%.
-- Return on average tangible equity ('RoTE') (annualised) of
9.9% increased by 0.5 percentage points compared with 1H21,
including a 2.3 percentage point annualised impact of the deferred
tax asset gain.
-- Common equity tier 1 ('CET1') ratio of 13.6% decreased by 2.2
percentage points from 31 December 2021. This reflected a reduction
in CET1 capital of $16.8bn, which included a $4.8bn valuation loss
in equity from financial instruments as yield curves steepened, and
a $13.4bn increase in risk-weighted assets ('RWAs') primarily from
1Q22 regulatory changes. The reduction also included the share
buy-back of up to $1bn announced at our full-year 2021 results.
-- The Board has approved an interim dividend for 1H22 of $0.09
per ordinary share, to be paid in cash.
Financial performance (2Q22 vs 2Q21)
-- Reported profit after tax of $5.8bn, including a $1.8bn
deferred tax gain. Reported profit before tax was stable at $5.0bn.
Net ECL charges compared with 2Q21 net ECL releases, with this
impact broadly offset by a reduction in operating expenses and
revenue growth. Adjusted profit before tax increased by 13% to
$6.0bn.
-- Reported revenue increased by 2% to $12.8bn, primarily
reflecting interest rate rises, partly offset by an adverse
movement in market impacts in insurance manufacturing in WPB,
foreign currency translation impacts and losses on planned business
disposals. Adjusted revenue increased by 12% to $13.1bn.
-- Net interest margin ('NIM') of 1.35% rose by 9 basis points ('bps') from 1Q22.
-- Reported operating expenses were 5% lower, due to foreign
currency translation impacts. The impact of our cost-saving
initiatives and continued cost discipline mitigated increased
investment and inflation. Adjusted operating expenses were stable
at $7.5bn.
-- The increase in adjusted revenue of 12% while maintaining
stable adjusted operating expenses resulted in adjusted jaws of
12%.
-- Customer lending was $27bn lower in 2Q22, on a reported
basis, due to foreign currency translation impacts. Adjusted
customer lending increased by $14bn with growth across all
regions.
Outlook for 2022
-- The revenue outlook remains positive. Based on the current
market consensus for global central bank rates and our continued
mid-single-digit percentage lending growth expectations for 2022,
we would expect net interest income of at least $31bn for 2022 and
at least $37bn for 2023(1) (based on average June rates of foreign
exchange).
-- We continue to expect our ECL charges to normalise towards
30bps of average loans in 2022, recognising the possible risk of
further deterioration in the consensus economic outlook.
-- We remain confident in our ability to deliver 2022 adjusted
operating expenses in line with 2021, despite inflationary
pressures. We now aim to deliver 2023 adjusted cost growth of
around 2%, compared with 2022(1) , and intend to maintain strict
cost discipline thereafter.
-- With profit generation and continued RWA actions, we aim to
manage back to within our 14% to 14.5% CET1 target range during the
first half of 2023. While further share buy-backs remain unlikely
in 2022, for future years we expect to return to shareholders
excess capital over and above what is required for executing the
strategy. The forecast loss on the disposal of our French retail
operations is expected to impact our CET1 ratio by approximately
30bps in the second half of 2022.
-- The impact of our growth and transformation programmes over
the last two years has given us the confidence to update our
returns guidance. Subject to the current path implied by the market
for global policy rates, we are now targeting a RoTE of at least
12% from 2023 onwards, noting continued macroeconomic
uncertainty.
-- Given the current returns trajectory, we expect a dividend
payout ratio of around 50% for 2023 and 2024. We also intend to
revert to paying quarterly dividends in 2023, although we expect
the quarterly dividend for the first three quarters to initially be
reinstated at a lower level than the historical quarterly dividend
of $0.10 per share paid up to the end of 2019.
1 Based on current accounting standards. The implementation of
IFRS 17 on 1 January 2023 will result in certain insurance costs
being presented as a deduction to reported revenue with a resultant
reduction in reported operating expenses
Key financial metrics
Half-year to
30 Jun 30 Jun 31 Dec
2022 2021 2021
--------------------------- --------------------------- ----------------------------- -----------------------------
Reported results
--------------------------- --------------------------- ----------------------------- -----------------------------
Reported revenue ($m) 25,236 25,551 24,001
--------------------------- --------------------------- ----------------------------- -----------------------------
Reported profit before tax
($m) 9,176 10,839 8,067
--------------------------- --------------------------- ----------------------------- -----------------------------
Reported profit after tax
($m) 9,215 8,422 6,271
--------------------------- --------------------------- ----------------------------- -----------------------------
Profit attributable to the
ordinary shareholders
of the parent company ($m) 8,289 7,276 5,331
--------------------------- --------------------------- ----------------------------- -----------------------------
Cost efficiency ratio (%) 65.1 66.9 73.1
--------------------------- --------------------------- ----------------------------- -----------------------------
Net interest margin (%)(1) 1.30 1.21 1.20
--------------------------- --------------------------- ----------------------------- -----------------------------
Basic earnings per share
($) 0.42 0.36 0.26
--------------------------- --------------------------- ----------------------------- -----------------------------
Diluted earnings per share
($) 0.41 0.36 0.26
--------------------------- --------------------------- ----------------------------- -----------------------------
Alternative performance
measures
--------------------------- --------------------------- ----------------------------- -----------------------------
Adjusted revenue ($m) 25,690 24,734 23,577
--------------------------- --------------------------- ----------------------------- -----------------------------
Adjusted profit before tax
($m) 10,673 11,538 9,681
Adjusted cost efficiency
ratio (%) 59.9 62.7 65.5
--------------------------- --------------------------- ----------------------------- -----------------------------
Expected credit losses and
other credit impairment
charges ('ECL')
(annualised) as % of
average gross
loans and advances to
customers (%) 0.21 (0.14) (0.03)
--------------------------- --------------------------- ----------------------------- -----------------------------
Return on average ordinary
shareholders' equity
(annualised) (%)(1) 9.7 8.4 7.1
--------------------------- --------------------------- ----------------------------- -----------------------------
Return on average tangible
equity (annualised)
(%)(1,2) 9.9 9.4 8.3
--------------------------- --------------------------- ----------------------------- -----------------------------
At
30 Jun 30 Jun 31 Dec
2022 2021 2021
--------------------------- --------------------------- ----------------------------- -----------------------------
Balance sheet
--------------------------- --------------------------- ----------------------------- -----------------------------
Total assets ($m) 2,985,420 2,976,005 2,957,939
--------------------------- --------------------------- ----------------------------- -----------------------------
Net loans and advances to
customers ($m) 1,028,356 1,059,511 1,045,814
--------------------------- --------------------------- ----------------------------- -----------------------------
Customer accounts ($m) 1,651,301 1,669,091 1,710,574
--------------------------- --------------------------- ----------------------------- -----------------------------
Average interest-earning
assets ($m) 2,233,321 2,188,991 2,209,513
--------------------------- --------------------------- ----------------------------- -----------------------------
Loans and advances to
customers as % of customer
accounts (%) 62.3 63.5 61.1
--------------------------- --------------------------- ----------------------------- -----------------------------
Total shareholders' equity
($m) 188,382 198,218 198,250
--------------------------- --------------------------- ----------------------------- -----------------------------
Tangible ordinary
shareholders' equity ($m) 148,308 157,985 158,193
--------------------------- --------------------------- ----------------------------- -----------------------------
Net asset value per
ordinary share at period
end
($) 8.41 8.69 8.76
--------------------------- --------------------------- ----------------------------- -----------------------------
Tangible net asset value
per ordinary share at
period end ($) 7.48 7.81 7.88
--------------------------- --------------------------- ----------------------------- -----------------------------
Capital, leverage and
liquidity
--------------------------- --------------------------- ----------------------------- -----------------------------
Common equity tier 1
capital ratio (%)(3,4) 13.6 15.6 15.8
--------------------------- --------------------------- ----------------------------- -----------------------------
Risk-weighted assets
($m)(3,4) 851,743 862,292 838,263
--------------------------- --------------------------- ----------------------------- -----------------------------
Total capital ratio
(%)(3,4) 18.6 21.0 21.2
--------------------------- --------------------------- ----------------------------- -----------------------------
Leverage ratio (%)(3,4) 5.5 5.3 5.2
--------------------------- --------------------------- ----------------------------- -----------------------------
High-quality liquid assets
(liquidity value) ($bn)(4) 656.6 659.3 717.0
--------------------------- --------------------------- ----------------------------- -----------------------------
Liquidity coverage ratio
(%)(4) 134 134 138
--------------------------- --------------------------- ----------------------------- -----------------------------
Share count
--------------------------- --------------------------- ----------------------------- -----------------------------
Period end basic number of
$0.50 ordinary shares
outstanding (millions) 19,819 20,223 20,073
--------------------------- --------------------------- ----------------------------- -----------------------------
Period end basic number of
$0.50 ordinary shares
outstanding and dilutive
potential ordinary shares
(millions) 19,949 20,315 20,189
--------------------------- --------------------------- ----------------------------- -----------------------------
Average basic number of
$0.50 ordinary shares
outstanding
(millions) 19,954 20,211 20,183
--------------------------- --------------------------- ----------------------------- -----------------------------
Dividend per ordinary share
(in respect of the
period) ($) 0.09 0.07 0.18
--------------------------- --------------------------- ----------------------------- -----------------------------
For reconciliations of our reported results to an adjusted
basis, including lists of significant items, see page 37 of the
Interim Report 2022. Definitions and calculation of other
alternative performance measures are included in our
'Reconciliation of alternative performance measures' on page 56 of
the Interim Report 2022.
1 For these metrics, half-year to 31 December 2021 is calculated
on a full-year basis and not a 2H21 basis.
2 Profit attributable to ordinary shareholders, excluding
impairment of goodwill and other intangible assets and changes in
present value of in-force insurance contracts ('PVIF') (net of
tax), divided by average ordinary shareholders' equity excluding
goodwill, PVIF and other intangible assets (net of deferred
tax).
3 Unless otherwise stated, regulatory capital ratios and
requirements are based on the transitional arrangements of the
Capital Requirements Regulation in force at the time. These include
the regulatory transitional arrangements for IFRS 9 'Financial
Instruments', which are explained further on page 94 of the Interim
Report 2022. The leverage ratio is calculated using the end point
definition of capital and the IFRS 9 regulatory transitional
arrangements, in line with the UK leverage rules that were
implemented on 1 January 2022, and excludes central bank claims.
Comparatives for 2021 are reported based on the disclosure rules in
force at that time, and include claims on central banks. References
to EU regulations and directives (including technical standards)
should, as applicable, be read as references to the UK's version of
such regulation and/or directive, as onshored into UK law under the
European Union (Withdrawal) Act 2018, and subsequently amended
under UK law.
4 Regulatory numbers and ratios are as presented at the date of
reporting. Small changes may exist between these numbers and ratios
and those subsequently submitted in regulatory filings. Where
differences are significant, we will restate comparatives.
Highlights
Half-year to
30 Jun 30 Jun
2022 2021
$m $m
----------------------------------------------------------- ---------------------------- ---------------------------
Reported
----------------------------------------------------------- ---------------------------- ---------------------------
Revenue(1) 25,236 25,551
----------------------------------------------------------- ---------------------------- ---------------------------
Change in expected credit losses and other credit
impairment
charges (1,090) 719
----------------------------------------------------------- ---------------------------- ---------------------------
Operating expenses (16,419) (17,087)
----------------------------------------------------------- ---------------------------- ---------------------------
Share of profit in associates and joint ventures 1,449 1,656
----------------------------------------------------------- ---------------------------- ---------------------------
Profit before tax 9,176 10,839
----------------------------------------------------------- ---------------------------- ---------------------------
Tax (expense)/credit 39 (2,417)
----------------------------------------------------------- ---------------------------- ---------------------------
Profit after tax 9,215 8,422
----------------------------------------------------------- ---------------------------- ---------------------------
Adjusted(2)
----------------------------------------------------------- ---------------------------- ---------------------------
Revenue(1,3) 25,690 24,734
----------------------------------------------------------- ---------------------------- ---------------------------
Change in expected credit losses and other credit
impairment
charges (1,090) 675
----------------------------------------------------------- ---------------------------- ---------------------------
Operating expenses (15,376) (15,520)
----------------------------------------------------------- ---------------------------- ---------------------------
Share of profit in associates and joint ventures 1,449 1,649
----------------------------------------------------------- ---------------------------- ---------------------------
Profit before tax 10,673 11,538
----------------------------------------------------------- ---------------------------- ---------------------------
Tax (expense)/credit (1,962) (2,455)
----------------------------------------------------------- ---------------------------- ---------------------------
Profit after tax 8,711 9,083
Significant items affecting adjusted performance
----------------------------------------------------------- ---------------------------- ---------------------------
Revenue
----------------------------------------------------------- ---------------------------- ---------------------------
Customer redress programmes (14) 18
----------------------------------------------------------- ---------------------------- ---------------------------
Disposals, acquisitions and investment in new businesses(3) (288) -
----------------------------------------------------------- ---------------------------- ---------------------------
Fair value movements on financial instruments(4) (220) (194)
----------------------------------------------------------- ---------------------------- ---------------------------
Restructuring and other related costs(5) 68 (70)
----------------------------------------------------------- ---------------------------- ---------------------------
Operating expenses
Customer redress programmes 6 (17)
----------------------------------------------------------- ---------------------------- ---------------------------
Impairment of goodwill and other intangibles (9) -
Restructuring and other related costs (1,040) (848)
Tax expense/(credit)
----------------------------------------------------------- ---------------------------- ---------------------------
Tax charge/(credit) on significant items (236) (153)
----------------------------------------------------------- ---------------------------- ---------------------------
Recognition of losses on HSBC Holdings (1,765) -
----------------------------------------------------------- ---------------------------- ---------------------------
1 Net operating income before change in expected credit losses
and other credit impairment charges, also referred to as
revenue.
2 Adjusted performance 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.
3 Includes losses from classifying businesses as held-for-sale
as part of a broader restructuring of our European business.
4 Includes fair value movements on non-qualifying hedges and
debt valuation adjustments on derivatives.
5 Comprises losses associated with the RWA reduction commitments
and gains we made at our business update in February 2020.
Review by Noel Quinn, Group Chief Executive
We are now two and a half years into our transformation
programme to make HSBC fit for the future. We still have more work
to do in the second half of this year - but we are now much better
positioned to meet the needs of our international customers and to
deliver higher returns for our shareholders.
The key to delivering our ambitions, now and in the future, is
to grow and transform HSBC at the same time. That was the focus of
the transformation programme we announced in February 2020, and of
the updated strategy we launched in February 2021. The progress we
have made in both regards gives us a strong starting point as we
enter the current interest rate cycle.
Our transformation agenda has been based around three things:
reshaping our portfolio, increasing our capital efficiency and
tightly managing our costs. In 2021, we accelerated this agenda in
response to Covid-19, under four strategic pillars: focus on our
strengths, digitise at scale, energise for growth, and lead the
transition to net zero.
In reshaping our portfolio, we have exited - or are exiting -
non-strategic businesses in the West and reallocated capital
towards areas of growth in Asia and the Middle East. In the first
half of 2022, we completed our acquisition of AXA Singapore,
increased our stake in HSBC Qianhai Securities to 90%, took full
ownership of our HSBC Life China insurance business, and agreed to
sell our businesses in Greece and Russia, subject to regulatory
approvals.
In terms of capital efficiency, our risk-weighted asset
reduction programme had reached $104bn by the end of 2021, against
a target of $110bn by the end of 2022. We have now reached a
cumulative total of $114bn of risk-weighted asset savings, and the
acceleration of restructuring across our US and Europe businesses
means we are on track to reach at least $120bn of savings by the
end of this year.
We continue to invest in areas of strength. Our investment to
boost our Asia wealth product and platform capabilities helped us
to attract strong levels of net new invested assets, and to grow
the value of new business in our insurance franchise in Asia by 41%
on last year's first-half. We achieved both of these despite the
temporary closure of parts of our branch network due to Covid-19
restrictions in Hong Kong.
Finally, we have continued to manage our cost base with
discipline. Our sustained investment to digitise HSBC at scale has
helped make us a more agile and efficient organisation. Our hybrid
working model has enabled us to reduce our office real estate
footprint by around a third since the start of 2020. At the same
time, rising customer demand for digital products and services has
enabled us to keep reducing and adapting our branch network in
response to changing customer behaviour.
Our cost reduction programmes remain on track. We have more to
do before December - particularly to further simplify the
organisation - but I remain committed to achieving stable adjusted
costs in 2022 compared with last year, despite rising
inflation.
International
As a result of this work, HSBC is now a more international
business, focused on serving international customers alongside our
strong domestic franchises in Hong Kong and the UK. Serving
customers across borders is what we do best. It is how we can best
help them to grow, and, we believe, the fastest way to accelerate
returns for our shareholders.
HSBC has been internationally focused since it was founded 157
years ago to support trade between East and West. When we refreshed
our purpose 18 months ago, we spoke to tens of thousands of our
customers, colleagues and other stakeholders as we considered who
we are and what we do. Our refreshed purpose - 'opening up a world
of opportunity' - underlined that our internationalism remains the
most defining characteristic of our identity.
Our strength as a well connected, global institution is the main
reason our wholesale clients choose to bank with us and we are
determined to capitalise on the advantages our network gives us. As
part of this, we are exiting domestic wholesale client
relationships where returns are sub-standard in order to focus on
meeting the needs of international customers. We have repositioned
our US and Europe businesses in the same vein, completing the sale
of our US domestic mass market retail business in the first half of
the year, and remaining on track to complete the sale of our French
retail business in 2023.
This strategy is serving our customers and investors well. Even
as trade flows have changed and supply chains have shifted
post-pandemic, we have maintained our leadership in global trade
because our global network means we can go wherever trade goes. We
built on this further in the first-half, growing trade balances by
$5bn or 6% in a challenging global environment. We were also named
'Best Bank for Trade Finance' by Euromoney in July.
In a low interest-rate environment, our international network
was also a key factor in the good returns generated by our other
leading franchises. More than three quarters of our wholesale
client revenue is connected to our international network, and just
under half of our wholesale client business is cross-border. Our
ability to connect clients in the West with high-returning
opportunities in the East remains a key differentiator.
In Commercial Banking, adjusted revenue grew by 14% compared
with last year's first-half, with international business a strong
contributor. In particular, we saw adjusted revenue growth of 20%
in Global Trade and Receivables Finance, and of 42% in Global
Liquidity and Cash Management.
In Global Banking and Markets, adjusted revenue was up 4% on the
same period last year, due in part to a good performance in
transaction banking. In addition, the volume of client business
booked in Asia and the Middle East from clients managed in Europe
and the Americas grew by 8% on last year's first-half, underlining
the importance of our ability to connect global clients and
investors to those regions.
In Wealth and Personal Banking, we grew the number of customers
classed as international by 5%, compared with last year's
first-half. These include customers we bank in more than one
market, and customers who come from a country or territory other
than the market in which they now bank. According to our analysis,
the average international customer generates around double the
revenue of the average domestic customer. This is both our fastest
growing customer segment, and our most commercially attractive.
Financial performance
Our first-half performance reflected much of the progress we
have made since 2020, with good organic growth across the business
and tight cost control. In addition, increased net interest income
reflected rising global interest rates, with further policy rate
rises anticipated over the coming months.
Overall, the Group delivered $9.2bn of reported profit before
tax and $10.7bn of adjusted profit before tax in the first half of
the year. Although this was lower than in the first half of 2021,
it reflected a more normalised level of expected credit losses
compared with the Covid-19 releases made last year, as well as the
macroeconomic impact of the Russia-Ukraine war.
All our regions were profitable in the first-half. This included
a strong performance from HSBC UK, which delivered adjusted profits
of $2.5bn, up 15% on the first half of last year. Our Asia business
delivered adjusted profits of $6.3bn, despite the impact of
Covid-19 in some of our biggest markets.
Adjusted revenue was up 4%, including growth of 15% in net
interest income compared with last year's first-half. Market
impacts meant wealth revenue was lower compared with the same
period last year, although our insurance business performed well.
In Commercial Banking, adjusted trade revenue was up 20% on the
prior year. Lending balances were up in all businesses in the
first-half, underlining that conversion of our business pipelines
remains strong.
Adjusted operating expenses fell by 1%, mainly as a result of
our cost-saving initiatives and a lower performance-related pay
accrual. We achieved this in spite of growing inflationary
pressures and rising investments in technology and our Asia Wealth
business.
Our CET1 ratio at the end of the first-half was 13.6%, down from
15.8% at the end of 2021. This reflected losses on financial
instruments held as hedges to our exposure to interest rate
movements, and an increase in RWAs due to regulatory changes and
foreign exchange movements. We expect to be back within our 14% to
14.5% CET1 target range in the first half of 2023.
We have announced an interim dividend of $0.09 per share, up
$0.02 per share on the first half of 2021. We have also now
completed both the $2bn buy-back programme we announced in 2021,
and the further $1bn buy-back we announced at our annual results in
February.
Outlook
The revenue outlook has improved further since our full-year
2021 results, despite the uncertain macroeconomic environment.
In February, based on the implied market consensus policy rates
at the time, we expected to deliver a return on tangible equity of
at least 10% for 2023. We expect to make further progress with our
growth and transformation plans in the second half of 2022, and
believe we can restrict cost growth to around 2% in 2023, despite
inflationary pressures. Subject to the path currently being implied
by the market for policy rates, we are now confident of achieving a
return on tangible equity of at least 12% from 2023 onwards.
As a result of this higher returns trajectory, we are also able
to provide more specific guidance around dividends. We now expect
to deliver an improved payout ratio of around 50% for 2023 and
2024, subject to achieving our performance targets. We also intend
to revert to paying quarterly dividends from the start of 2023. We
remain committed to enabling our shareholders to benefit from the
growing returns that our strategy is delivering.
Transition to net zero
The transition to net zero is a core part of our strategy, both
now and for the long term. Given our scale and footprint, we know
we have a major role to play in enabling the transition to a net
zero global economy. I am unequivocal about my own personal
commitment to this agenda, and that commitment is shared by the
Board and the senior management team. The urgent need to transition
the global economy to net zero is going to change the industrial
landscape completely. The overwhelming majority of our clients
understand this, and are actively planning and undertaking their
own transitions. It stands to reason that financing the new
business models and climate technologies they need presents a huge
commercial opportunity for HSBC.
I am pleased that we have continued to make good progress
towards our ambition of providing and facilitating between $750bn
and $1tn of sustainable finance and investment by 2030. By the end
of June, our cumulative total for sustainable finance and
investment since 2019 was more than $170.8bn. Earlier this year, we
published interim targets for on-balance sheet financed emissions
in the oil and gas, and power and utilities sectors. We also
committed to publish our first bank-wide climate transition plan in
2023, to phase down fossil fuel financing in line with
science-based targets, and to review and update our financing and
investment policies critical to net zero. These concrete actions
can have a significant impact in reducing global emissions and will
help ensure that HSBC remains a global climate leader.
Our people
Everything we have achieved over the last six months - and
everything we want to achieve over the next six months and beyond -
rests on the hard work, commitment and tireless efforts of my
colleagues around the world.
I am especially grateful to my colleagues for managing
considerable uncertainty and disruption in the first half of the
year, particularly those in Hong Kong and mainland China, who have
managed the impact of Covid-19 restrictions on our customers and
communities; in Sri Lanka, who have continued to deliver for our
customers during the current economic and political crisis; and in
Poland and eastern Europe, who have been volunteering to help those
directly impacted by the Russia-Ukraine war.
I am grateful too for the support that my colleagues have
offered to customers impacted by the ongoing cost of living crisis
gripping many of the world's major economies. These are testing
times for many of those who bank with us and we are committed to
helping support them through this difficult period.
My colleagues represent the very best of HSBC, and I am proud of
all they have done - and are doing - to support our customers,
communities and each other.
Noel Quinn
Group Chief Executive
1 August 2022
Financial summary
Half-year to
30 Jun 30 Jun 31 Dec
2022 2021 2021
$m $m $m
----------------------------------------- ----------------------- ------------------------ ------------------------
For the period
----------------------------------------- ----------------------- ------------------------ ------------------------
Profit before tax 9,176 10,839 8,067
----------------------------------------- ----------------------- ------------------------ ------------------------
Profit attributable to:
----------------------------------------- ----------------------- ------------------------ ------------------------
- ordinary shareholders of the parent
company 8,289 7,276 5,331
----------------------------------------- ----------------------- ------------------------ ------------------------
Dividends on ordinary shares(1) 3,576 3,059 1,421
----------------------------------------- ----------------------- ------------------------ ------------------------
At the period end
----------------------------------------- ----------------------- ------------------------ ------------------------
Total shareholders' equity 188,382 198,218 198,250
----------------------------------------- ----------------------- ------------------------ ------------------------
Total regulatory capital 158,519 181,122 177,786
----------------------------------------- ----------------------- ------------------------ ------------------------
Customer accounts 1,651,301 1,669,091 1,710,574
----------------------------------------- ----------------------- ------------------------ ------------------------
Total assets 2,985,420 2,976,005 2,957,939
----------------------------------------- ----------------------- ------------------------ ------------------------
Risk-weighted assets 851,743 862,292 838,263
----------------------------------------- ----------------------- ------------------------ ------------------------
Per ordinary share $ $ $
----------------------------------------- ----------------------- ------------------------ ------------------------
Basic earnings 0.42 0.36 0.26
----------------------------------------- ----------------------- ------------------------ ------------------------
Dividend per ordinary share (paid in the
period)(1) 0.18 0.15 0.07
----------------------------------------- ----------------------- ------------------------ ------------------------
Net asset value(2) 8.41 8.69 8.76
----------------------------------------- ----------------------- ------------------------ ------------------------
1 Second interim dividend of $0.18 per ordinary share in respect
of the financial year ending 31 December 2021, paid in April
2022.
2 The definition of net asset value per ordinary share is total
shareholders equity, less non-cumulative preference shares and
capital securities, divided by the number of ordinary shares in
issue, excluding own shares held by the company, including those
purchased and held in treasury.
Distribution of results by global business
Adjusted profit before tax
Half-year to
---------------------------------------------------------------------------------------------------------------------------------
30 Jun 2022 30 Jun 2021 31 Dec 2021
$m % $m % $m %
----------- --------------------- ------------------ ----------------------- ----------------- ----------------------- -----------------
Wealth and
Personal
Banking 2,946 27.6 3,751 32.5 3,104 32.1
----------- --------------------- ------------------ ----------------------- ----------------- ----------------------- -----------------
Commercial
Banking 3,578 33.5 3,211 27.8 3,241 33.5
----------- --------------------- ------------------ ----------------------- ----------------- ----------------------- -----------------
Global
Banking
and
Markets 2,879 27.0 3,199 27.8 1,967 20.3
----------- --------------------- ------------------ ----------------------- ----------------- ----------------------- -----------------
Corporate
Centre 1,270 11.9 1,377 11.9 1,369 14.1
----------- --------------------- ------------------ ----------------------- ----------------- ----------------------- -----------------
Profit
before tax 10,673 100.0 11,538 100.0 9,681 100.0
----------- --------------------- ------------------ ----------------------- ----------------- ----------------------- -----------------
Distribution of results by geographical region
Reported profit/(loss) before tax
Half-year to
---------------------------------------------------------------------------------------------------------------------------------------------------
30 Jun 2022 30 Jun 2021 31 Dec 2021
$m % $m % $m %
-------- ------------------------ ------------------ ------------------------- ----------------- ------------------------- ----------------------------
Europe 883 9.6 1,968 18.2 1,811 22.4
-------- ------------------------ ------------------ ------------------------- ----------------- ------------------------- ----------------------------
Asia 6,300 68.7 6,936 64.0 5,313 65.9
-------- ------------------------ ------------------ ------------------------- ----------------- ------------------------- ----------------------------
Middle
East
and
North
Africa 748 8.2 723 6.7 700 8.7
-------- ------------------------ ------------------ ------------------------- ----------------- ------------------------- ----------------------------
North
America 858 9.4 805 7.4 569 7.0
-------- ------------------------ ------------------ ------------------------- ----------------- ------------------------- ----------------------------
Latin
America 387 4.1 407 3.7 (326) (4.0)
Profit
before
tax 9,176 100.0 10,839 100.0 8,067 100.0
-------- ------------------------ ------------------ ------------------------- ----------------- ------------------------- ----------------------------
HSBC adjusted profit before tax and balance sheet data
Half-year to 30 Jun 2022
--------------------------------------------------------------------------------------------------------------------------------------
Global
Wealth Banking
and Personal Commercial and Corporate
Banking Banking Markets Centre Total
$m $m $m $m $m
Net operating
income/(expense)
before
change in expected
credit losses and
other credit
impairment
charges(1) 10,922 7,217 7,841 (290) 25,690
--------------------- -------------------------- ------------------------- ------------------------ -------------------------- -------------------------
- external 10,569 7,281 8,867 (1,027) 25,690
---------------------
- inter-segment 353 (64) (1,026) 737 -
--------------------- -------------------------- ------------------------- ------------------------ --------------------------
of which: net
interest
income/(expense) 7,658 5,007 2,296 (496) 14,465
--------------------- -------------------------- ------------------------- ------------------------ -------------------------- -------------------------
Change in expected
credit losses and
other credit
impairment
(charges)/recoveries (573) (288) (227) (2) (1,090)
--------------------- -------------------------- ------------------------- ------------------------ -------------------------- -------------------------
Net operating
income/(expense) 10,349 6,929 7,614 (292) 24,600
--------------------- -------------------------- ------------------------- ------------------------ -------------------------- -------------------------
Total operating
expenses (7,411) (3,351) (4,735) 121 (15,376)
--------------------- -------------------------- ------------------------- ------------------------ -------------------------- -------------------------
Operating
profit/(loss) 2,938 3,578 2,879 (171) 9,224
--------------------- -------------------------- ------------------------- ------------------------ -------------------------- -------------------------
Share of profit in
associates and joint
ventures 8 - - 1,441 1,449
--------------------- -------------------------- ------------------------- ------------------------ -------------------------- -------------------------
Adjusted profit
before tax 2,946 3,578 2,879 1,270 10,673
--------------------- -------------------------- ------------------------- ------------------------ -------------------------- -------------------------
% % % % %
--------------------- -------------------------- ------------------------- ------------------------ -------------------------- -------------------------
Share of HSBC's
adjusted profit
before
tax 27.6 33.5 27.0 11.9 100.0
--------------------- -------------------------- ------------------------- ------------------------ -------------------------- -------------------------
Adjusted cost
efficiency ratio 67.9 46.4 60.4 41.7 59.9
--------------------- -------------------------- ------------------------- ------------------------ -------------------------- -------------------------
Adjusted balance $m $m $m $m $m
sheet data
--------------------- -------------------------- ------------------------- ------------------------ -------------------------- -------------------------
Loans and advances to
customers (net) 475,464 348,253 204,097 542 1,028,356
--------------------- -------------------------- ------------------------- ------------------------ -------------------------- -------------------------
Interests in
associates and joint
ventures 484 14 121 28,827 29,446
--------------------- -------------------------- ------------------------- ------------------------ -------------------------- -------------------------
Total external assets 882,490 619,490 1,318,425 165,015 2,985,420
--------------------- -------------------------- ------------------------- ------------------------ -------------------------- -------------------------
Customer accounts 836,026 479,680 335,033 562 1,651,301
--------------------- -------------------------- ------------------------- ------------------------ -------------------------- -------------------------
Adjusted
risk-weighted
assets(2) 186,154 341,935 241,077 82,577 851,743
--------------------- -------------------------- ------------------------- ------------------------ -------------------------- -------------------------
Half-year to 30 Jun 2021
Net operating income
before change
in expected credit
losses and other
credit impairment
charges(1) 10,980 6,353 7,518 (117) 24,734
--------------------- ------------------------- --------------------------- ------------------------ -------------------------- -------------------------
- external 10,782 6,326 8,305 (679) 24,734
---------------------
- inter-segment 198 27 (787) 562 -
--------------------- ------------------------- --------------------------- ------------------------ --------------------------
of which: net
interest
income/(expense) 6,807 4,172 1,937 (374) 12,542
--------------------- ------------------------- --------------------------- ------------------------ -------------------------- -------------------------
Change in expected
credit losses and
other credit
impairment
(charges)/recoveries 38 228 405 4 675
--------------------- ------------------------- --------------------------- ------------------------ -------------------------- -------------------------
Net operating
income/(expense) 11,018 6,581 7,923 (113) 25,409
--------------------- ------------------------- --------------------------- ------------------------ -------------------------- -------------------------
Total operating
expenses (7,277) (3,371) (4,724) (148) (15,520)
--------------------- ------------------------- --------------------------- ------------------------ -------------------------- -------------------------
Operating
profit/(loss) 3,741 3,210 3,199 (261) 9,889
--------------------- ------------------------- --------------------------- ------------------------ -------------------------- -------------------------
Share of profit in
associates and joint
ventures 10 1 - 1,638 1,649
--------------------- ------------------------- --------------------------- ------------------------ -------------------------- -------------------------
Adjusted profit
before tax 3,751 3,211 3,199 1,377 11,538
--------------------- ------------------------- --------------------------- ------------------------ -------------------------- -------------------------
%% %% %
--------------------- ------------------------- -------------------------- ------------------------ ------------------------- -------------------------
Share of HSBC's
adjusted profit
before
tax 32.5 27.8 27.7 12.0 100.0
--------------------- ------------------------- --------------------------- ------------------------ -------------------------- -------------------------
Adjusted cost
efficiency ratio 66.3 53.1 62.9 (126.5) 62.7
--------------------- ------------------------- --------------------------- ------------------------ -------------------------- -------------------------
Adjusted balance $m $m $m $m $m
sheet data
--------------------- ------------------------- --------------------------- ------------------------ -------------------------- -------------------------
Loans and advances to
customers (net) 458,573 329,873 205,044 1,065 994,555
--------------------- ------------------------- --------------------------- ------------------------ -------------------------- -------------------------
Interests in
associates and joint
ventures 467 15 121 27,315 27,918
--------------------- ------------------------- --------------------------- ------------------------ -------------------------- -------------------------
Total external assets 859,383 581,741 1,164,916 184,436 2,790,476
--------------------- ------------------------- --------------------------- ------------------------ -------------------------- -------------------------
Customer accounts 793,277 455,006 316,865 794 1,565,942
--------------------- ------------------------- --------------------------- ------------------------ -------------------------- -------------------------
Adjusted
risk-weighted
assets(2) 175,621 311,126 244,007 88,192 818,946
--------------------- ------------------------- --------------------------- ------------------------ -------------------------- -------------------------
1 Net operating income before change in expected credit losses
and other credit impairment charges, also referred to as
revenue.
2 Adjusted risk-weighted assets are calculated using reported
risk-weighted assets adjusted for the effects of currency
translation differences and significant items.
HSBC adjusted profit before tax and balance sheet data (continued)
Half-year to 31 Dec 2021
---------------------------------------------------------------------------------------------------------------------------------------
Global
Wealth Banking
and Personal Commercial and Corporate
Banking Banking Markets Centre Total
$m $m $m $m $m
--------------------- ------------------------- ------------------------- ------------------------- --------------------------- -------------------------
Net operating
income/(expense)
before
change in expected
credit losses and
other credit
impairment
charges(1) 10,439 6,556 6,878 (296) 23,577
--------------------- ------------------------- ------------------------- ------------------------- --------------------------- -------------------------
- external 10,354 6,460 7,676 (913) 23,577
---------------------
- inter-segment 85 96 (798) 617 -
--------------------- ------------------------- ------------------------- ------------------------- ---------------------------
of which: net
interest
income/(expense) 6,955 4,387 2,032 (353) 13,021
--------------------- ------------------------- ------------------------- ------------------------- --------------------------- -------------------------
Change in expected
credit losses and
other credit
impairment
(charges)/recoveries 215 40 (80) (1) 174
--------------------- ------------------------- ------------------------- ------------------------- --------------------------- -------------------------
Net operating
income/(expense) 10,654 6,596 6,798 (297) 23,751
--------------------- ------------------------- ------------------------- ------------------------- --------------------------- -------------------------
Total operating
expenses (7,574) (3,355) (4,831) 313 (15,447)
--------------------- ------------------------- ------------------------- ------------------------- --------------------------- -------------------------
Operating
profit/(loss) 3,080 3,241 1,967 16 8,304
--------------------- ------------------------- ------------------------- ------------------------- --------------------------- -------------------------
Share of profit in
associates and joint
ventures 24 - - 1,353 1,377
--------------------- ------------------------- ------------------------- ------------------------- --------------------------- -------------------------
Adjusted profit
before tax 3,104 3,241 1,967 1,369 9,681
--------------------- ------------------------- ------------------------- ------------------------- --------------------------- -------------------------
%% %% %
--------------------- ------------------------- ------------------------ ------------------------- -------------------------- -------------------------
Share of HSBC's
adjusted profit
before
tax 32.1 33.5 20.3 14.1 100.0
--------------------- ------------------------- ------------------------- ------------------------- --------------------------- -------------------------
Adjusted cost
efficiency ratio 72.6 51.2 70.2 105.7 65.5
--------------------- ------------------------- ------------------------- ------------------------- --------------------------- -------------------------
Adjusted balance $m $m $m $m $m
sheet data
--------------------- ------------------------- ------------------------- ------------------------- --------------------------- -------------------------
Loans and advances to
customers (net) 462,452 332,710 198,854 686 994,702
--------------------- ------------------------- ------------------------- ------------------------- --------------------------- -------------------------
Interests in
associates and joint
ventures 490 13 119 27,938 28,560
--------------------- ------------------------- ------------------------- ------------------------- --------------------------- -------------------------
Total external assets 889,349 589,834 1,157,478 175,688 2,812,349
--------------------- ------------------------- ------------------------- ------------------------- --------------------------- -------------------------
Customer accounts 820,564 481,781 324,239 590 1,627,174
--------------------- ------------------------- ------------------------- ------------------------- --------------------------- -------------------------
Adjusted
risk-weighted
assets(2) 171,022 316,443 228,263 89,543 805,271
--------------------- ------------------------- ------------------------- ------------------------- --------------------------- -------------------------
1 Net operating income before change in expected credit losses
and other credit impairment charges, also referred to as
revenue.
2 Adjusted risk-weighted assets are calculated using reported
risk-weighted assets adjusted for the effects of currency
translation differences and significant items.
Consolidated income statement
Half-year to
------------------------------------------------------------------------------------
30 Jun 30 Jun 31 Dec
2022 2021 2021
$m $m $m
-------------------------------- -------------------------- ---------------------------- --------------------------
Net interest income 14,451 13,098 13,391
-------------------------------- -------------------------- ---------------------------- --------------------------
- interest income 20,855 17,960 18,228
--------------------------------
- interest expense (6,404) (4,862) (4,837)
-------------------------------- -------------------------- ----------------------------
Net fee income 6,064 6,674 6,423
-------------------------------- -------------------------- ---------------------------- --------------------------
- fee income 7,949 8,458 8,330
--------------------------------
- fee expense (1,885) (1,784) (1,907)
-------------------------------- -------------------------- ----------------------------
Net income from financial
instruments held for
trading or managed on a fair
value basis 4,921 4,184 3,560
-------------------------------- -------------------------- ---------------------------- --------------------------
Net income/(expense) from assets
and liabilities
of insurance businesses,
including related derivatives,
measured at fair value through
profit or loss (3,051) 2,795 1,258
-------------------------------- -------------------------- ---------------------------- --------------------------
Change in fair value of
designated debt and related
derivatives (158) (67) (115)
-------------------------------- -------------------------- ---------------------------- --------------------------
Changes in fair value of other
financial instruments
mandatorily measured at fair
value through profit
or loss 68 548 250
-------------------------------- -------------------------- ---------------------------- --------------------------
Gains less losses from financial
investments 21 433 136
-------------------------------- -------------------------- ---------------------------- --------------------------
Net insurance premium income 7,646 5,663 5,207
-------------------------------- -------------------------- ---------------------------- --------------------------
Other operating income 723 155 347
-------------------------------- -------------------------- ---------------------------- --------------------------
Total operating income 30,685 33,483 30,457
-------------------------------- -------------------------- ---------------------------- --------------------------
Net insurance claims and
benefits paid and movement
in liabilities to policyholders (5,449) (7,932) (6,456)
-------------------------------- -------------------------- ---------------------------- --------------------------
Net operating income before
change in expected
credit losses and other credit
impairment charges 25,236 25,551 24,001
-------------------------------- -------------------------- ---------------------------- --------------------------
Change in expected credit losses
and other credit
impairment charges (1,090) 719 209
-------------------------------- -------------------------- ---------------------------- --------------------------
Net operating income 24,146 26,270 24,210
-------------------------------- -------------------------- ---------------------------- --------------------------
Employee compensation and
benefits (9,071) (9,610) (9,132)
-------------------------------- -------------------------- ---------------------------- --------------------------
General and administrative
expenses (5,445) (5,675) (5,917)
-------------------------------- -------------------------- ---------------------------- --------------------------
Depreciation and impairment of
property, plant
and equipment and right-of-use
assets (1,075) (1,160) (1,101)
-------------------------------- -------------------------- ---------------------------- --------------------------
Amortisation and impairment of
intangible assets (828) (642) (796)
-------------------------------- -------------------------- ---------------------------- --------------------------
Goodwill impairment - - (587)
-------------------------------- -------------------------- ---------------------------- --------------------------
Total operating expenses (16,419) (17,087) (17,533)
-------------------------------- -------------------------- ---------------------------- --------------------------
Operating profit 7,727 9,183 6,677
-------------------------------- -------------------------- ---------------------------- --------------------------
Share of profit in associates
and joint ventures 1,449 1,656 1,390
-------------------------------- -------------------------- ---------------------------- --------------------------
Profit before tax 9,176 10,839 8,067
-------------------------------- -------------------------- ---------------------------- --------------------------
Tax credit/(charge) 39 (2,417) (1,796)
-------------------------------- -------------------------- ---------------------------- --------------------------
Profit for the period 9,215 8,422 6,271
-------------------------------- -------------------------- ---------------------------- --------------------------
Attributable to:
-------------------------------- -------------------------- ---------------------------- --------------------------
- ordinary shareholders of the
parent company 8,289 7,276 5,331
--------------------------------
- preference shareholders of the - 7 -
parent company
--------------------------------
- other equity holders 626 666 637
--------------------------------
- non-controlling interests 300 473 303
-------------------------------- -------------------------- ----------------------------
Profit for the period 9,215 8,422 6,271
-------------------------------- -------------------------- ---------------------------- --------------------------
$ $ $
-------------------------------- -------------------------- ---------------------------- --------------------------
Basic earnings per ordinary
share 0.42 0.36 0.26
-------------------------------- -------------------------- ---------------------------- --------------------------
Diluted earnings per ordinary
share 0.41 0.36 0.26
-------------------------------- -------------------------- ---------------------------- --------------------------
Consolidated statement of comprehensive income
Half-year to
--------------------------------------------------------------------------------------
30 Jun 30 Jun 31 Dec
2022 2021 2021
$m $m $m
------------------------------ -------------------------- ---------------------------- ----------------------------
Profit for the period 9,215 8,422 6,271
------------------------------ -------------------------- ---------------------------- ----------------------------
Other comprehensive
income/(expense)
------------------------------ -------------------------- ---------------------------- ----------------------------
Items that will be
reclassified subsequently to
profit or loss when specific
conditions are met:
------------------------------ -------------------------- ---------------------------- ----------------------------
Debt instruments at fair value
through other comprehensive
income (4,907) (1,368) (771)
------------------------------ -------------------------- ---------------------------- ----------------------------
- fair value losses (6,328) (1,392) (878)
------------------------------
- fair value gains transferred
to the income statement
on disposal (53) (375) (89)
------------------------------
- expected credit
recoveries/(losses)
recognised
in the income statement 20 (26) (23)
------------------------------
- income taxes 1,454 425 219
------------------------------ -------------------------- ----------------------------
Cash flow hedges (2,063) (238) (426)
------------------------------ -------------------------- ---------------------------- ----------------------------
- fair value gains/(losses) (1,646) 877 (282)
------------------------------
- fair value gains
reclassified to the income
statement (1,127) (1,195) (319)
------------------------------
- income taxes and other
movements 710 80 175
------------------------------ -------------------------- ----------------------------
Share of other comprehensive
income/(expense) of
associates and joint ventures (141) 104 (1)
------------------------------ -------------------------- ---------------------------- ----------------------------
- share for the period (141) 104 (1)
Exchange differences (8,521) (449) (1,944)
Items that will not be
reclassified subsequently
to profit or loss:
------------------------------ -------------------------- ---------------------------- ----------------------------
Remeasurement of defined
benefit asset/(liability) 95 (747) 473
------------------------------ -------------------------- ---------------------------- ----------------------------
- before income taxes (132) (775) 668
------------------------------
- income taxes 227 28 (195)
------------------------------ -------------------------- ----------------------------
Changes in fair value of
financial liabilities
designated at fair value upon
initial recognition
arising from changes in own
credit risk 2,263 155 376
------------------------------ -------------------------- ---------------------------- ----------------------------
- before income taxes 3,030 (2) 514
------------------------------
- income taxes (767) 157 (138)
------------------------------ -------------------------- ----------------------------
Equity instruments designated
at fair value through
other comprehensive income 158 (348) (98)
------------------------------ -------------------------- ---------------------------- ----------------------------
- fair value gains/(losses) 158 (345) (98)
------------------------------
- income taxes - (3) -
------------------------------ -------------------------- ----------------------------
Effects of hyperinflation 417 166 149
------------------------------ -------------------------- ---------------------------- ----------------------------
Other comprehensive
income/(expense) for the
period,
net of tax (12,699) (2,725) (2,242)
------------------------------ -------------------------- ---------------------------- ----------------------------
Total comprehensive
(expense)/income for the
period (3,484) 5,697 4,029
------------------------------ -------------------------- ---------------------------- ----------------------------
Attributable to:
------------------------------ -------------------------- ---------------------------- ----------------------------
- ordinary shareholders of the
parent company (4,246) 4,612 3,153
------------------------------
- preference shareholders of - 7 -
the parent company
------------------------------
- other equity holders 626 666 637
------------------------------
- non-controlling interests 136 412 239
------------------------------ -------------------------- ----------------------------
Total comprehensive
(expense)/income for the
period (3,484) 5,697 4,029
------------------------------ -------------------------- ---------------------------- ----------------------------
Consolidated balance sheet
At
---------------------------------------------------
30 Jun 31 Dec
2022 2021
$m $m
------------------------------------------------------ ------------------------ -------------------------
Assets
------------------------------------------------------ ------------------------ -------------------------
Cash and balances at central banks 363,608 403,018
------------------------------------------------------ ------------------------ -------------------------
Items in the course of collection from other banks 8,073 4,136
------------------------------------------------------ ------------------------ -------------------------
Hong Kong Government certificates of indebtedness 43,866 42,578
------------------------------------------------------ ------------------------ -------------------------
Trading assets 217,350 248,842
------------------------------------------------------ ------------------------ -------------------------
Financial assets designated and otherwise mandatorily
measured at fair value through profit or loss 45,873 49,804
------------------------------------------------------ ------------------------ -------------------------
Derivatives 262,923 196,882
------------------------------------------------------ ------------------------ -------------------------
Loans and advances to banks 96,429 83,136
------------------------------------------------------ ------------------------ -------------------------
Loans and advances to customers 1,028,356 1,045,814
------------------------------------------------------ ------------------------ -------------------------
Reverse repurchase agreements - non-trading 244,451 241,648
------------------------------------------------------ ------------------------ -------------------------
Financial investments 430,796 446,274
------------------------------------------------------ ------------------------ -------------------------
Prepayments, accrued income and other assets 185,823 139,982
------------------------------------------------------ ------------------------ -------------------------
Current tax assets 1,151 970
------------------------------------------------------ ------------------------ -------------------------
Interests in associates and joint ventures 29,446 29,609
------------------------------------------------------ ------------------------ -------------------------
Goodwill and intangible assets 21,625 20,622
------------------------------------------------------ ------------------------ -------------------------
Deferred tax assets 5,650 4,624
------------------------------------------------------ ------------------------ -------------------------
Total assets 2,985,420 2,957,939
------------------------------------------------------ ------------------------ -------------------------
Liabilities and equity
------------------------------------------------------ ------------------------ -------------------------
Liabilities
------------------------------------------------------ ------------------------ -------------------------
Hong Kong currency notes in circulation 43,866 42,578
------------------------------------------------------ ------------------------ -------------------------
Deposits by banks 105,275 101,152
------------------------------------------------------ ------------------------ -------------------------
Customer accounts 1,651,301 1,710,574
------------------------------------------------------ ------------------------ -------------------------
Repurchase agreements - non-trading 129,707 126,670
------------------------------------------------------ ------------------------ -------------------------
Items in the course of transmission to other banks 9,673 5,214
------------------------------------------------------ ------------------------ -------------------------
Trading liabilities 80,569 84,904
------------------------------------------------------ ------------------------ -------------------------
Financial liabilities designated at fair value 126,006 145,502
------------------------------------------------------ ------------------------ -------------------------
Derivatives 251,469 191,064
------------------------------------------------------ ------------------------ -------------------------
Debt securities in issue 87,944 78,557
------------------------------------------------------ ------------------------ -------------------------
Accruals, deferred income and other liabilities 163,600 123,778
------------------------------------------------------ ------------------------ -------------------------
Current tax liabilities 685 698
------------------------------------------------------ ------------------------ -------------------------
Liabilities under insurance contracts 113,130 112,745
------------------------------------------------------ ------------------------ -------------------------
Provisions 1,900 2,566
------------------------------------------------------ ------------------------ -------------------------
Deferred tax liabilities 2,894 4,673
------------------------------------------------------ ------------------------ -------------------------
Subordinated liabilities 20,711 20,487
------------------------------------------------------ ------------------------ -------------------------
Total liabilities 2,788,730 2,751,162
------------------------------------------------------ ------------------------ -------------------------
Equity
------------------------------------------------------ ------------------------ -------------------------
Called up share capital 10,188 10,316
------------------------------------------------------ ------------------------ -------------------------
Share premium account 14,662 14,602
------------------------------------------------------ ------------------------ -------------------------
Other equity instruments 21,691 22,414
------------------------------------------------------ ------------------------ -------------------------
Other reserves (8,576) 6,460
------------------------------------------------------ ------------------------ -------------------------
Retained earnings 150,417 144,458
------------------------------------------------------ ------------------------ -------------------------
Total shareholders' equity 188,382 198,250
------------------------------------------------------ ------------------------ -------------------------
Non-controlling interests 8,308 8,527
------------------------------------------------------ ------------------------ -------------------------
Total equity 196,690 206,777
------------------------------------------------------ ------------------------ -------------------------
Total liabilities and equity 2,985,420 2,957,939
------------------------------------------------------ ------------------------ -------------------------
Consolidated statement of cash flows
Half-year to
30 Jun 30 Jun 31 Dec
2022 2021 2021
$m $m $m
------------------------------- -------------------------- ---------------------------- ---------------------------
Profit before tax 9,176 10,839 8,067
------------------------------- -------------------------- ---------------------------- ---------------------------
Adjustments for non-cash items:
------------------------------- -------------------------- ---------------------------- ---------------------------
Depreciation, amortisation and
impairment 1,903 1,802 2,484
------------------------------- -------------------------- ---------------------------- ---------------------------
Net (gain)/loss from investing
activities 174 (485) (162)
------------------------------- -------------------------- ---------------------------- ---------------------------
Share of profits in associates
and joint ventures (1,449) (1,656) (1,390)
------------------------------- -------------------------- ---------------------------- ---------------------------
Gain on acquisition of (71) - -
subsidiary
------------------------------- -------------------------- ---------------------------- ---------------------------
Change in expected credit
losses gross of recoveries
and other credit impairment
charges 1,246 (484) (35)
------------------------------- -------------------------- ---------------------------- ---------------------------
Provisions including pensions 208 301 762
------------------------------- -------------------------- ---------------------------- ---------------------------
Share-based payment expense 177 254 213
------------------------------- -------------------------- ---------------------------- ---------------------------
Other non-cash items included
in profit before
tax (866) 205 305
------------------------------- -------------------------- ---------------------------- ---------------------------
Change in operating assets 15,987 (3,811) (232)
------------------------------- -------------------------- ---------------------------- ---------------------------
Change in operating liabilities (27,501) 49,015 22,161
------------------------------- -------------------------- ---------------------------- ---------------------------
Elimination of exchange
differences(1) 49,417 5,212 13,725
------------------------------- -------------------------- ---------------------------- ---------------------------
Dividends received from
associates 60 10 798
------------------------------- -------------------------- ---------------------------- ---------------------------
Contributions paid to defined
benefit plans (102) (342) (167)
------------------------------- -------------------------- ---------------------------- ---------------------------
Tax paid (1,264) (997) (2,080)
------------------------------- -------------------------- ---------------------------- ---------------------------
Net cash from operating
activities 47,095 59,863 44,449
------------------------------- -------------------------- ---------------------------- ---------------------------
Purchase of financial
investments (271,382) (263,198) (229,844)
------------------------------- -------------------------- ---------------------------- ---------------------------
Proceeds from the sale and
maturity of financial
investments 248,983 298,596 222,594
------------------------------- -------------------------- ---------------------------- ---------------------------
Net cash flows from the
purchase and sale of property,
plant and equipment (590) (375) (711)
------------------------------- -------------------------- ---------------------------- ---------------------------
Net cash flows from
(purchase)/disposal of
customer
and loan portfolios (3,756) 1,063 1,996
------------------------------- -------------------------- ---------------------------- ---------------------------
Net investment in intangible
assets (1,240) (1,011) (1,468)
------------------------------- -------------------------- ---------------------------- ---------------------------
Net cash flow on
(acquisition)/disposal of
subsidiaries,
businesses, associates and
joint ventures (525) (84) (22)
------------------------------- -------------------------- ---------------------------- ---------------------------
Net cash from investing
activities (28,510) 34,991 (7,455)
------------------------------- -------------------------- ---------------------------- ---------------------------
Issue of ordinary share capital - 1,996 -
and other equity
instruments
------------------------------- -------------------------- ---------------------------- ---------------------------
Cancellation of shares (1,840) - (707)
------------------------------- -------------------------- ---------------------------- ---------------------------
Net sales/(purchases) of own
shares for market-making
and investment purposes (443) 1 (1,387)
------------------------------- -------------------------- ---------------------------- ---------------------------
Purchase of non-controlling (197) - -
interest in subsidiary
------------------------------- -------------------------- ---------------------------- ---------------------------
Redemption of preference shares
and other equity
instruments (723) (3,450) -
------------------------------- -------------------------- ---------------------------- ---------------------------
Subordinated loan capital 2,659 - -
issued
------------------------------- -------------------------- ---------------------------- ---------------------------
Subordinated loan capital
repaid (11) (852) (12)
------------------------------- -------------------------- ---------------------------- ---------------------------
Dividends paid to shareholders
of the parent company
and non-controlling interests (4,497) (4,121) (2,262)
------------------------------- -------------------------- ---------------------------- ---------------------------
Net cash from financing
activities (5,052) (6,426) (4,368)
------------------------------- -------------------------- ---------------------------- ---------------------------
Net increase in cash and cash
equivalents 13,533 88,428 32,626
------------------------------- -------------------------- ---------------------------- ---------------------------
Cash and cash equivalents at
the beginning of the
period 574,032 468,323 551,933
------------------------------- -------------------------- ---------------------------- ---------------------------
Exchange differences in respect
of cash and cash
equivalents (40,243) (4,818) (10,527)
------------------------------- -------------------------- ---------------------------- ---------------------------
Cash and cash equivalents at
the end of the period 547,322 551,933 574,032
------------------------------- -------------------------- ---------------------------- ---------------------------
Interest received was $22,011m (1H21: $19,761m; 2H21: $20,414m),
interest paid was $7,146m (1H21: $6,552m; 2H21: $6,143m) and
dividends received (excluding dividends received from associates,
which are presented separately above) were $800m (1H21: $801m;
2H21: $1,097m).
1 Adjustments to bring changes between opening and closing
balance sheet amounts to average rates. This is not done on a
line-by-line basis, as details cannot be determined without
unreasonable expense.
Consolidated statement of changes in equity
Other reserves
---------------------------------------------------------------------------
Called
up share
capital Financial Cash Merger
and Other assets flow Foreign and Total Non-
share equity Retained at FVOCI hedging exchange other share-holders' controlling Total
premium instru-ments earnings reserve reserve reserve reserves equity interests equity
$m $m $m $m $m $m $m $m $m $m
At 1 Jan 2022 24,918 22,414 144,458 (634) (197) (22,769) 30,060 198,250 8,527 206,777
------------------------------------------------------------ ----------------- -------------- ------------------- --------------------- ---------------- ------------------ -------------- ------------------ --------------------- ------------------
Profit for the period - - 8,915 - - - - 8,915 300 9,215
------------------------------------------------------------ ----------------- -------------- ------------------- --------------------- ---------------- ------------------ -------------- ------------------ --------------------- ------------------
Other comprehensive
income (net of tax) - - 2,637 (4,723) (2,035) (8,414) - (12,535) (164) (12,699)
------------------------------------------------------------ ----------------- -------------- ------------------- --------------------- ---------------- ------------------ -------------- ------------------ --------------------- ------------------
* debt instruments at fair value through other
comprehensive income - - - (4,844) - - - (4,844) (63) (4,907)
------------------------------------------------------------
* equity instruments designated at fair value through
other comprehensive income - - - 121 - - - 121 37 158
------------------------------------------------------------
- cash flow hedges - - - - (2,035) - - (2,035) (28) (2,063)
------------------------------------------------------------
* changes in fair value of financial liabilities
designated at fair value upon initial recognition
arising from changes in own credit risk - - 2,263 - - - - 2,263 - 2,263
------------------------------------------------------------
* remeasurement of defined benefit asset/liability - - 98 - - - - 98 (3) 95
------------------------------------------------------------
* share of other comprehensive income of associates and
joint ventures - - (141) - - - - (141) - (141)
- effects of hyperinflation - - 417 - - - - 417 - 417
------------------------------------------------------------
- exchange differences - - - - - (8,414) - (8,414) (107) (8,521)
------------------------------------------------------------ ----------------- -------------- ------------------- --------------------- ---------------- ------------------ -------------- ------------------ ---------------------
Total comprehensive
income for the period - - 11,552 (4,723) (2,035) (8,414) - (3,620) 136 (3,484)
------------------------------------------------------------ ----------------- -------------- ------------------- --------------------- ---------------- ------------------ -------------- ------------------ --------------------- ------------------
Shares issued under
employee remuneration
and share plans 65 - (65) - - - - - - -
Dividends to shareholders - - (4,202) - - - - (4,202) (295) (4,497)
------------------------------------------------------------ ----------------- -------------- ------------------- --------------------- ---------------- ------------------ -------------- ------------------ --------------------- ------------------
Redemption of securities - (723) - - - - - (723) - (723)
Cost of share-based
payment arrangements - - 177 - - - - 177 - 177
------------------------------------------------------------ ----------------- -------------- ------------------- --------------------- ---------------- ------------------ -------------- ------------------ --------------------- ------------------
Cancellation of shares(4) (133) - (1,000) - - - 133 (1,000) - (1,000)
Other movements - - (503) 3 - - - (500) (60) (560)
------------------------------------------------------------ ----------------- -------------- ------------------- --------------------- ---------------- ------------------ -------------- ------------------ --------------------- ------------------
At 30 Jun 2022 24,850 21,691 150,417 (5,354) (2,232) (31,183) 30,193 188,382 8,308 196,690
------------------------------------------------------------ ----------------- -------------- ------------------- --------------------- ---------------- ------------------ -------------- ------------------ --------------------- ------------------
At 1 Jan 2021 24,624 22,414 140,572 1,816 457 (20,375) 26,935 196,443 8,552 204,995
------------------------------------------------------------ ----------------- -------------- ------------------- --------------------- ---------------- ------------------ -------------- ------------------ --------------------- ------------------
Profit for the period - - 7,949 - - - - 7,949 473 8,422
------------------------------------------------------------ ----------------- -------------- ------------------- --------------------- ---------------- ------------------ -------------- ------------------ --------------------- ------------------
Other comprehensive
income (net of tax) - - (337) (1,629) (234) (464) - (2,664) (61) (2,725)
------------------------------------------------------------ ----------------- -------------- ------------------- --------------------- ---------------- ------------------ -------------- ------------------ --------------------- ------------------
* debt instruments at fair value through other
comprehensive income - - - (1,351) - - - (1,351) (17) (1,368)
------------------------------------------------------------
* equity instruments designated at fair value through
other comprehensive income - - - (278) - - - (278) (70) (348)
------------------------------------------------------------
- cash flow hedges - - - - (234) - - (234) (4) (238)
------------------------------------------------------------
* changes in fair value of financial liabilities
designated at fair value upon initial recognition
arising from changes in own credit risk - - 155 - - - - 155 - 155
------------------------------------------------------------
* remeasurement of defined benefit asset/liability - - (762) - - - - (762) 15 (747)
------------------------------------------------------------
* share of other comprehensive income of associates and
joint ventures - - 104 - - - - 104 - 104
- effects of hyperinflation - - 166 - - - - 166 - 166
------------------------------------------------------------
- exchange differences - - - - - (464) - (464) 15 (449)
------------------------------------------------------------ ----------------- -------------- ------------------- --------------------- ---------------- ------------------ -------------- ------------------ ---------------------
Total comprehensive
income for the period - - 7,612 (1,629) (234) (464) - 5,285 412 5,697
------------------------------------------------------------ ----------------- -------------- ------------------- --------------------- ---------------- ------------------ -------------- ------------------ --------------------- ------------------
Shares issued under
employee remuneration
and share plans 352 - (335) - - - - 17 - 17
Capital securities
issued(1) - 2,000 (4) - - - - 1,996 - 1,996
------------------------------------------------------------ ----------------- -------------- ------------------- --------------------- ---------------- ------------------ -------------- ------------------ --------------------- ------------------
Dividends to shareholders - - (3,732) - - - - (3,732) (389) (4,121)
------------------------------------------------------------ ----------------- -------------- ------------------- --------------------- ---------------- ------------------ -------------- ------------------ --------------------- ------------------
Redemption of securities(2) - (2,000) - - - - - (2,000) - (2,000)
------------------------------------------------------------ ----------------- -------------- ------------------- --------------------- ---------------- ------------------ -------------- ------------------ --------------------- ------------------
Cost of share-based
payment arrangements - - 254 - - - - 254 - 254
Other movements - - (48) 3 - - - (45) (29) (74)
------------------------------------------------------------ ----------------- -------------- ------------------- --------------------- ---------------- ------------------ -------------- ------------------ --------------------- ------------------
At 30 Jun 2021 24,976 22,414 144,319 190 223 (20,839) 26,935 198,218 8,546 206,764
------------------------------------------------------------ ----------------- -------------- ------------------- --------------------- ---------------- ------------------ -------------- ------------------ --------------------- ------------------
Consolidated statement of changes in equity (continued)
Other reserves
--------------------------------------------------------------------------
Called
up
share
capital Other Financial Cash Merger Total
and equity assets flow Foreign and share- Non-
share instru- Retained at FVOCI hedging exchange other holders' controlling Total
premium ments earnings reserve reserve reserve reserves equity interests equity
$m $m $m $m $m $m $m $m $m $m
------------------------------------------------------------ -------------------- --------------- ------------------ -------------------- ---------------- ------------------ -------------- -------------------- -------------------- -------------------
At 1 Jul 2021 24,976 22,414 144,319 190 223 (20,839) 26,935 198,218 8,546 206,764
------------------------------------------------------------ -------------------- --------------- ------------------ -------------------- ---------------- ------------------ -------------- -------------------- -------------------- -------------------
Profit for the period - - 5,968 - - - - 5,968 303 6,271
------------------------------------------------------------ -------------------- --------------- ------------------ -------------------- ---------------- ------------------ -------------- -------------------- -------------------- -------------------
Other comprehensive
income
(net of tax) - - 998 (826) (420) (1,930) - (2,178) (64) (2,242)
------------------------------------------------------------ -------------------- --------------- ------------------ -------------------- ---------------- ------------------ -------------- -------------------- -------------------- -------------------
* debt instruments at fair value through other
comprehensive income - - - (754) - - - (754) (17) (771)
------------------------------------------------------------
* equity instruments designated at fair value through
other comprehensive income - - - (72) - - - (72) (26) (98)
------------------------------------------------------------
- cash flow hedges - - - - (420) - - (420) (6) (426)
------------------------------------------------------------
* changes in fair value of financial liabilities
designated at fair value upon initial recognition
arising from changes in own credit risk - - 376 - - - - 376 - 376
------------------------------------------------------------
* remeasurement of defined benefit asset/liability - - 474 - - - - 474 (1) 473
------------------------------------------------------------
* share of other comprehensive income of associates and
joint ventures - - (1) - - - - (1) - (1)
- effects of hyperinflation - - 149 - - - - 149 - 149
------------------------------------------------------------
- exchange differences - - - - - (1,930) - (1,930) (14) (1,944)
------------------------------------------------------------ -------------------- --------------- ------------------ -------------------- ---------------- ------------------ -------------- -------------------- --------------------
Total comprehensive
income for the period - - 6,966 (826) (420) (1,930) - 3,790 239 4,029
------------------------------------------------------------ -------------------- --------------- ------------------ -------------------- ---------------- ------------------ -------------- -------------------- -------------------- -------------------
Shares issued under
employee remuneration
and share plans 2 - (1) - - - - 1 - 1
Dividends to shareholders - - (2,058) - - - - (2,058) (204) (2,262)
Transfers(3) - - (3,065) - - - 3,065 - - -
------------------------------------------------------------ -------------------- --------------- ------------------ -------------------- ---------------- ------------------ -------------- -------------------- -------------------- -------------------
Cost of share-based
payment arrangements - - 213 - - - - 213 - 213
------------------------------------------------------------ -------------------- --------------- ------------------ -------------------- ---------------- ------------------ -------------- -------------------- -------------------- -------------------
Cancellation of shares (60) - (2,004) - - - 60 (2,004) - (2,004)
------------------------------------------------------------ -------------------- --------------- ------------------ -------------------- ---------------- ------------------ -------------- -------------------- -------------------- -------------------
Other movements - - 88 2 - - - 90 (54) 36
------------------------------------------------------------ -------------------- --------------- ------------------ -------------------- ---------------- ------------------ -------------- -------------------- -------------------- -------------------
At 31 Dec 2021 24,918 22,414 144,458 (634) (197) (22,769) 30,060 198,250 8,527 206,777
------------------------------------------------------------ -------------------- --------------- ------------------ -------------------- ---------------- ------------------ -------------- -------------------- -------------------- -------------------
1 In 2021, HSBC Holdings issued $2,000m of additional tier 1
instruments on which there were $4m of external issue costs.
2 During 2021, HSBC Holdings redeemed $2,000m 6.875% perpetual
subordinated contingent convertible securities.
3 Permitted transfers from the merger reserve to retained
earnings were made when the investment in HSBC Overseas Holdings
(UK) Limited was previously impaired.
4 HSBC announced a share buy-back of $2.0bn in 2021 which was
completed in April 2022. Additionally, HSBC announced a share
buy-back of up to $1.0bn in February 2022, which concluded on 28
July 2022. At 30 June 2022, 264,942,444 ordinary shares had been
purchased and cancelled, representing a nominal value of $133m,
which has been transferred from share capital to capital redemption
reserve within merger and other reserves.
1 Basis of preparation and significant accounting policies
--------------------------------------------------------
(a) Compliance with International Financial Reporting Standards
Our interim condensed consolidated financial statements have
been prepared on the basis of the policies set out in the 2021
annual financial statements and in accordance with IAS 34 'Interim
Financial Reporting' as adopted by the UK, IAS 34 'Interim
Financial Reporting' as issued by the International Accounting
Standards Board ('IASB'), IAS 34 'Interim Financial Reporting' as
adopted by the EU, and the Disclosure Guidance and Transparency
Rules sourcebook of the UK's Financial Conduct Authority.
Therefore, they include an explanation of events and transactions
that are significant to an understanding of the changes in HSBC's
financial position and performance since the end of 2021.
These financial statements should be read in conjunction with
the Annual Report and Accounts 2021, which were prepared in
accordance with UK-adopted international accounting standards in
conformity with the requirements of the Companies Act 2006 and
international financial reporting standards adopted pursuant to
Regulation (EC) No 1606/2002 as it applies in the European Union.
These financial statements were also prepared in accordance with
International Financial Reporting Standards ('IFRSs') as issued by
the IASB, including interpretations issued by the IFRS
Interpretations Committee.
At 30 June 2022, there were no unendorsed standards effective
for the half-year to 30 June 2022 affecting these financial
statements, and there was no difference between IFRSs adopted by
the UK, IFRSs as adopted by the EU, and IFRSs issued by the IASB in
terms of their application to HSBC.
Standards applied during the half-year to 30 June 2022
There were no new standards or amendments to standards that had
an effect on these interim condensed financial statements.
(b) Use of estimates and judgements
Management believes that our critical accounting estimates and
judgements are those that relate to impairment of amortised cost
and FVOCI debt financial assets, the valuation of financial
instruments, deferred tax assets, provisions, interests in
associates, impairment of goodwill and non-financial assets, and
post-employment benefit plans. Management's judgement with respect
to the recognition of a deferred tax asset on the historical tax
losses of HSBC Holdings changed during the period and a deferred
tax asset of $1.8bn was recognised at 1H22. Management's view is
that improved profit forecasts for the UK, which reflect higher
market interest rates and expectations of future increases, as well
as the results for 1H22, represent convincing evidence that
sufficient future taxable profits will be available to support
recognition of the deferred tax asset. The improved forecasts
reduced the expected recovery period of these tax losses, reducing
the estimation uncertainty such that recognition of a deferred tax
asset was considered appropriate.
Apart from the above deferred tax matter and estimates relating
to ECL impairment, there were no material changes in the current
period to any of the other critical accounting estimates and
judgements disclosed in 2021, which are stated on pages 90 and 319
of the Annual Report and Accounts 2021.
(c) Composition of the Group
There were no material changes in the composition of the Group
in the half-year to 30 June 2022. For further details of future
business acquisitions and disposals, see Note 8 'Business
acquisitions and disposals'.
(d) Future accounting developments
IFRS 17 'Insurance Contracts' was issued in May 2017, with
amendments to the standard issued in June 2020 and December 2021.
It has been adopted in its entirety for use in the UK. IFRS 17 has
been adopted by the EU subject to certain optional exemptions,
except for the December 2021 requirements which are pending
adoption.
The standard sets out the requirements that an entity should
apply in accounting for insurance contracts it issues and
reinsurance contracts it holds. Following the amendments, IFRS 17
will be effective from 1 January 2023. The Group is in the process
of implementing IFRS 17. Industry practice and interpretation of
the standard are still developing. Therefore, the likely impact of
its implementation remains uncertain. However, compared with the
Group's current accounting policy for insurance, there will be no
present value of in-force long-term insurance business ('PVIF')
asset recognised. Instead, the estimated future profit will be
included in the measurement of the insurance contract liability as
the contractual service margin and gradually recognised in revenue
as services are provided over the duration of the insurance
contract.
(e) Going concern
The financial statements are prepared on a going concern basis,
as the Directors are satisfied that the Group and parent company
have the resources to continue in business for the foreseeable
future. In making this assessment, the Directors have considered a
wide range of information relating to present and future
conditions, including future projections of profitability, cash
flows, capital requirements and capital resources. These
considerations include stressed scenarios, as well as considering
potential impacts from other top and emerging risks, and the
related impact on profitability, capital and liquidity.
(f) Accounting policies
The accounting policies that we applied for these interim
condensed consolidated financial statements are consistent with
those described on pages 318 to 328 of the Annual Report and
Accounts 2021, as are the methods of computation.
2 Dividends
---------
On 1 August 2022, the Directors approved an interim dividend for
the 2022 half-year of $0.09 per ordinary share in respect of the
financial year ending 31 December 2022. This distribution amounts
to approximately $1,800m and will be payable on 29 September 2022.
No liability is recognised in the financial statements in respect
of these dividends.
Dividends paid to shareholders of HSBC Holdings plc
Half-year to
------------------------------------------------------------------------------------------------------------------------------------------------------------------
30 Jun 2022 30 Jun 2021 31 Dec 2021
---------------------------------------------------- ------------------------------------------------------ ----------------------------------------------------
Per Settled Per Settled Per Settled
share Total in scrip share Total in scrip share Total in scrip
$ $m $m $ $m $m $ $m $m
----------------------- ---------------- ---------------- ---------------- ---------------- ------------------ ---------------- ---------------- ---------------- ----------------
Dividends paid on
ordinary
shares
----------------------- ---------------- ---------------- ---------------- ---------------- ------------------ ---------------- ---------------- ---------------- ----------------
In respect of previous
year:
----------------------- ---------------- ---------------- ---------------- ---------------- ------------------ ---------------- ---------------- ---------------- ----------------
- interim dividend - - - 0.15 3,059 - - - -
----------------------- ---------------- ---------------- ---------------- ---------------- ------------------ ---------------- ---------------- ---------------- ----------------
- second interim
dividend 0.18 3,576 - - - - - - -
----------------------- ---------------- ---------------- ---------------- ---------------- ------------------ ---------------- ---------------- ---------------- ----------------
In respect of current
year:
----------------------- ---------------- ---------------- ---------------- ---------------- ------------------ ---------------- ---------------- ---------------- ----------------
* interim dividend - - - - - - 0.07 1,421 -
Total 0.18 3,576 - 0.15 3,059 - 0.07 1,421 -
----------------------- ---------------- ---------------- ---------------- ---------------- ------------------ ---------------- ---------------- ---------------- ----------------
Total dividends on
preference
shares classified as
equity
(paid quarterly)(1) - - 4.99 7 - -
----------------------- ---------------- ---------------- ---------------- ---------------- ------------------ ---------------- ---------------- ---------------- ----------------
Total coupons on
capital
securities classified
as
equity 626 666 637
----------------------- ---------------- ---------------- ---------------- ---------------- ------------------ ---------------- ---------------- ---------------- ----------------
Dividends to
shareholders 4,202 3,732 2,058
----------------------- ---------------- ---------------- ---------------- ---------------- ------------------ ---------------- ---------------- ---------------- ----------------
1 HSBC Holdings called $1,450m 6.20% non-cumulative US dollar
preference shares on 10 December 2020. The security was redeemed
and cancelled on 13 January 2021.
Interim dividend for the 2022 half-year
On 1 August 2022, the Directors approved an interim dividend for
the 2022 half-year of $0.09 per ordinary share in respect of the
financial year ending 31 December 2022. The dividend will be
payable on 29 September 2022 to holders on the Principal Register
in the UK, the Hong Kong Overseas Branch Register or the Bermuda
Overseas Branch Register on 19 August 2022.
The dividend will be payable in US dollars, or in pounds
sterling or Hong Kong dollars at the forward exchange rates quoted
by HSBC Bank plc in London at or about 11.00am on 19 September
2022, or a combination of these currencies. Particulars of these
arrangements will be sent to shareholders on or about 26 August
2022 and changes to currency elections must be received by 15
September 2022. The ordinary shares in London, Hong Kong and
Bermuda, and American Depositary Shares ('ADSs') in New York will
be quoted ex-dividend on 18 August 2022. As announced on 23
February 2021, the Group has decided to discontinue the scrip
dividend option.
The dividend will be payable on ADSs, each of which represents
five ordinary shares, on 29 September 2022 to holders of record on
19 August 2022. The dividend of $0.45 per ADS will be payable by
the depositary in US dollars. Alternatively, the cash dividend may
be invested in additional ADSs by participants in the dividend
reinvestment plan operated by the depositary. Elections must be
received by 9 September 2022.
Any person who has acquired ordinary shares registered on the
Principal Register in the UK, the Hong Kong Overseas Branch
Register or the Bermuda Overseas Branch Register but who has not
lodged the share transfer with the Principal Registrar in the UK,
Hong Kong Overseas Branch Registrar or Bermuda Overseas Branch
registrar should do so before 4.00pm local time on 19 August 2022
in order to receive the dividend.
Ordinary shares may not be removed from or transferred to the
Principal Register in the UK, the Hong Kong Overseas Branch
Register or the Bermuda Overseas Branch Register on 19 August 2022.
Any person wishing to remove ordinary shares to or from each
register must do so before 4.00pm local time on 18 August 2022.
Transfer of ADSs must be lodged with the depositary by 11.00 am
on 19 August 2022 in order to receive the dividend. ADS holders who
receive a cash dividend will be charged a fee, which will be
deducted by the depositary, of $0.005 per ADS per cash
dividend.
Dividend on preference share
A quarterly dividend of GBP0.01 per Series A sterling preference
share is payable on 15 March, 15 June, 15 September and 15 December
2022 for the quarter then ended at the sole and absolute discretion
of the Board of HSBC Holdings plc. Accordingly, the Board of HSBC
Holdings plc has approved a quarterly dividend to be payable on 15
September 2022 to holders of record on 31 August 2022.
3 Earnings per share
------------------
Basic earnings per ordinary share is calculated by dividing the
profit attributable to ordinary shareholders of the parent company
by the weighted average number of ordinary shares outstanding,
excluding own shares held. Diluted earnings per ordinary share is
calculated by dividing the basic earnings, which require no
adjustment for the effects of dilutive potential ordinary shares,
by the weighted average number of ordinary shares outstanding,
excluding own shares held, plus the weighted average number of
ordinary shares that would be issued on conversion of dilutive
potential ordinary shares.
Profit attributable to ordinary shareholders of the parent company
Half-year to
-------------------------------------------------------------
30 30 Jun 31 Dec
Jun
2022 2021 2021
$m $m $m
------------------------------------------------------- ------------------ --------------------- ------------------
Profit attributable to shareholders of the parent
company 8,915 7,949 5,968
------------------------------------------------------- ------------------ --------------------- ------------------
Dividend payable on preference shares classified as - (7) -
equity
------------------------------------------------------- ------------------ --------------------- ------------------
Coupon payable on capital securities classified as
equity (626) (666) (637)
------------------------------------------------------- ------------------ --------------------- ------------------
Profit attributable to ordinary shareholders of the
parent company 8,289 7,276 5,331
------------------------------------------------------- ------------------ --------------------- ------------------
Basic and diluted earnings per share
Half-year to
------------------------------------------------------------------------------------------------------------------------------------------------------------
30 Jun 2022 30 Jun 2021 31 Dec 2021
-------------------------------------------- ------------------------------------------------------- -----------------------------------------------------
Number Amount Amount Amount
of per Number per Number per
Profit shares share Profit of shares share Profit of shares share
$m (millions) $ $m (millions) $ $m (millions) $
----------- -------- ---------------- ---------------- --------------- ------------------- ----------------- --------------- ----------------- -----------------
Basic(1) 8,289 19,954 0.42 7,276 20,211 0.36 5,331 20,183 0.26
----------- -------- ---------------- ---------------- --------------- ------------------- ----------------- --------------- ----------------- -----------------
Effect of
dilutive
potential
ordinary
shares 130 97 103
----------- -------- ---------------- ---------------- --------------- ------------------- ----------------- --------------- ----------------- -----------------
Diluted(1) 8,289 20,084 0.41 7,276 20,308 0.36 5,331 20,286 0.26
----------- -------- ---------------- ---------------- --------------- ------------------- ----------------- --------------- ----------------- -----------------
1 Weighted average number of ordinary shares outstanding (basic)
or assuming dilution (diluted).
4 Adjusted balance sheet reconciliation
-------------------------------------
At
---------------------------------------------------------------------------------------------------------------------------------------------------------------------------
30 Jun 2022 31 Dec 2021
---------------------------------------- ---------------------------------------------------------------------------------------------------------------------------------
Reported Adjusted Currency translation Reported
and adjusted
$m $m $m $m
----------- ---------------------------------------- ----------------------------------------- ------------------------------------------- -----------------------------------------
Loans and
advances
to
customers
(net) 1,028,356 994,702 51,112 1,045,814
----------- ---------------------------------------- ----------------------------------------- ------------------------------------------- -----------------------------------------
Interests 29,446 28,560 1,049 29,609
in
associates
and joint
ventures
----------- ---------------------------------------- ----------------------------------------- ------------------------------------------- -----------------------------------------
Total
external
assets 2,985,420 2,812,349 145,590 2,957,939
----------- ---------------------------------------- ----------------------------------------- ------------------------------------------- -----------------------------------------
Customer 1,651,301 1,627,174 83,400 1,710,574
accounts
----------- ---------------------------------------- ----------------------------------------- ------------------------------------------- -----------------------------------------
5 Reconciliation of reported and adjusted items
---------------------------------------------
Half-year to
------------------------------------------------------------------------------------
30 Jun 30 Jun 31 Dec
2022 2021 2021
$m $m $m
-------------------------------- -------------------------- --------------------------- ---------------------------
Revenue(1)
-------------------------------- -------------------------- --------------------------- ---------------------------
Reported 25,236 25,551 24,001
-------------------------------- -------------------------- --------------------------- ---------------------------
Currency translation (1,069) (711)
-------------------------------- -------------------------- --------------------------- ---------------------------
Significant items 454 252 287
-------------------------------- -------------------------- --------------------------- ---------------------------
- customer redress programmes 14 (18) 7
--------------------------------
- disposals, acquisitions and 288 - -
investment in new
businesses(2)
--------------------------------
- fair value movements on
financial instruments(3) 220 194 48
--------------------------------
- restructuring and other
related costs(4) (68) 70 237
--------------------------------
- currency translation on
significant items 6 (5)
-------------------------------- -------------------------- ---------------------------
Adjusted 25,690 24,734 23,577
-------------------------------- -------------------------- --------------------------- ---------------------------
ECL
-------------------------------- -------------------------- --------------------------- ---------------------------
Reported (1,090) 719 209
-------------------------------- -------------------------- --------------------------- ---------------------------
Currency translation (44) (35)
-------------------------------- -------------------------- --------------------------- ---------------------------
Adjusted (1,090) 675 174
-------------------------------- -------------------------- --------------------------- ---------------------------
Operating expenses
-------------------------------- -------------------------- --------------------------- ---------------------------
Reported (16,419) (17,087) (17,533)
-------------------------------- -------------------------- --------------------------- ---------------------------
Currency translation 749 510
-------------------------------- -------------------------- --------------------------- ---------------------------
Significant items 1,043 818 1,576
- customer redress programmes (6) 17 32
- impairment of goodwill and
other intangibles 9 - 587
- restructuring and other
related costs 1,040 848 988
- currency translation on
significant items (47) (31)
-------------------------------- -------------------------- ---------------------------
Adjusted (15,376) (15,520) (15,447)
-------------------------------- -------------------------- --------------------------- ---------------------------
Share of profit in associates
and joint ventures
-------------------------------- -------------------------- --------------------------- ---------------------------
Reported 1,449 1,656 1,390
-------------------------------- -------------------------- --------------------------- ---------------------------
Currency translation (7) (13)
Adjusted 1,449 1,649 1,377
-------------------------------- -------------------------- --------------------------- ---------------------------
Profit before tax
-------------------------------- -------------------------- --------------------------- ---------------------------
Reported 9,176 10,839 8,067
-------------------------------- -------------------------- --------------------------- ---------------------------
Currency translation (371) (249)
-------------------------------- -------------------------- --------------------------- ---------------------------
Significant items 1,497 1,070 1,863
-------------------------------- -------------------------- --------------------------- ---------------------------
- revenue 454 252 287
--------------------------------
- operating expenses 1,043 818 1,576
Adjusted profit before tax 10,673 11,538 9,681
-------------------------------- -------------------------- --------------------------- ---------------------------
Reported tax (charge)/ credit 39 (2,417) (1,796)
-------------------------------- -------------------------- --------------------------- ---------------------------
Currency translation 109 53
-------------------------------- -------------------------- --------------------------- ---------------------------
Tax significant items (2,001) (147) (167)
-------------------------------- -------------------------- --------------------------- ---------------------------
- tax charge/(credit) on
significant items (236) (153) (173)
--------------------------------
- recognition of losses on HSBC (1,765) - -
Holdings
--------------------------------
- currency translation on
significant items 6 6
-------------------------------- -------------------------- ---------------------------
Adjusted profit after tax 8,711 9,083 7,771
-------------------------------- -------------------------- --------------------------- ---------------------------
1 Net operating income before change in expected credit losses
and other credit impairment charges, also referred to as
revenue.
2 Includes losses from classifying businesses as held-for-sale
as part of a broader restructuring of our European business.
3 Includes fair value movements on non-qualifying hedges and
debt valuation adjustments on derivatives.
4 Comprises gains and losses relating to the business update in
February 2020, including losses associated with the RWA reduction
commitments.
6 Contingent liabilities, contractual commitments and guarantees
--------------------------------------------------------------
At
---------------------------------------------------------
30 Jun 31 Dec
2022 2021
$m $m
----------------------------------------------------------- --------------------------- ----------------------------
Guarantees and contingent liabilities:
----------------------------------------------------------- --------------------------- ----------------------------
- financial guarantees 17,586 27,795
----------------------------------------------------------- --------------------------- ----------------------------
* performance and other guarantees 84,103 85,534
----------------------------------------------------------- --------------------------- ----------------------------
* other contingent liabilities 816 858
----------------------------------------------------------- --------------------------- ----------------------------
At the end of the period 102,505 114,187
----------------------------------------------------------- --------------------------- ----------------------------
Commitments:(1)
----------------------------------------------------------- --------------------------- ----------------------------
* documentary credits and short-term trade-related
transactions 9,972 8,827
----------------------------------------------------------- --------------------------- ----------------------------
* forward asset purchases and forward deposits placed 76,144 47,184
----------------------------------------------------------- --------------------------- ----------------------------
* standby facilities, credit lines and other
commitments to lend 740,313 759,463
----------------------------------------------------------- --------------------------- ----------------------------
At the end of the period 826,429 815,474
----------------------------------------------------------- --------------------------- ----------------------------
1 Includes $633,091m of commitments at 30 June 2022 (31 December
2021: $627,637m), to which the impairment requirements in IFRS 9
are applied where HSBC has become party to an irrevocable
commitment.
Contingent liabilities arising from legal proceedings and
regulatory and other matters against Group companies are excluded
from this note but are disclosed in Note 7 below and Notes 11 and
13 of the Interim Report 2022.
7 Legal proceedings and regulatory matters
----------------------------------------
HSBC is party to legal proceedings and regulatory matters in a
number of jurisdictions arising out of its normal business
operations. Apart from the matters described below, HSBC considers
that none of these matters are material. The recognition of
provisions is determined in accordance with the accounting policies
set out in Note 1 of the Annual Report and Accounts 2021. While the
outcomes of legal proceedings and regulatory matters are inherently
uncertain, management believes that, based on the information
available to it, appropriate provisions have been made in respect
of these matters as at 30 June 2022 (see Note 11) of the Interim
Report 2022. Where an individual provision is material, the fact
that a provision has been made is stated and quantified, except to
the extent that doing so would be seriously prejudicial. Any
provision recognised does not constitute an admission of wrongdoing
or legal liability. It is not practicable to provide an aggregate
estimate of potential liability for our legal proceedings and
regulatory matters as a class of contingent liabilities.
Bernard L. Madoff Investment Securities LLC
Various non-US HSBC companies provided custodial, administration
and similar services to a number of funds incorporated outside the
US whose assets were invested with Bernard L. Madoff Investment
Securities LLC ('Madoff Securities'). Based on information provided
by Madoff Securities as at 30 November 2008, the purported
aggregate value of these funds was $8.4bn, including fictitious
profits reported by Madoff. Based on information available to HSBC,
the funds' actual transfers to Madoff Securities minus their actual
withdrawals from Madoff Securities during the time HSBC serviced
the funds are estimated to have totalled approximately $4bn.
Various HSBC companies have been named as defendants in lawsuits
arising out of Madoff Securities' fraud.
US litigation: The Madoff Securities Trustee has brought
lawsuits against various HSBC companies and others in the US
Bankruptcy Court for the Southern District of New York (the 'US
Bankruptcy Court'), seeking recovery of transfers from Madoff
Securities to HSBC in an amount not yet pleaded or determined.
Following an initial dismissal of certain claims, which was later
reversed on appeal, the cases were remanded to the US Bankruptcy
Court, where they are now pending.
Fairfield Sentry Limited, Fairfield Sigma Limited and Fairfield
Lambda Limited (together, 'Fairfield') (in liquidation since July
2009) have brought a lawsuit in the US against fund shareholders,
including HSBC companies that acted as nominees for clients,
seeking restitution of redemption payments. In December 2018, the
US Bankruptcy Court dismissed certain claims by the Fairfield
liquidators and granted a motion by the liquidators to file amended
complaints. In May 2019, the liquidators appealed certain issues
from the US Bankruptcy Court to the US District Court for the
Southern District of New York (the 'New York District Court'), and
these appeals remain pending.
In January 2020, the Fairfield liquidators filed amended
complaints on the claims remaining in the US Bankruptcy Court. In
December 2020, the US Bankruptcy Court dismissed the majority of
those claims. In March 2021, the liquidators and defendants
appealed the US Bankruptcy Court's decision to the New York
District Court, and these appeals are currently pending. In May
2022, the liquidators voluntarily dismissed their claims against
HSBC Bank USA N.A. ('HSBC Bank USA') in the US Bankruptcy Court.
Meanwhile, proceedings before the US Bankruptcy Court with respect
to the remaining claims and other HSBC companies that were not
dismissed are ongoing.
UK litigation: The Madoff Securities Trustee has filed a claim
against various HSBC companies in the High Court of England and
Wales, seeking recovery of transfers from Madoff Securities to HSBC
in an amount not yet pleaded or determined. The deadline for
service of the claim has been extended to September 2022 for
UK-based defendants and November 2022 for all other defendants.
Cayman Islands litigation: In February 2013, Primeo Fund
('Primeo') (in liquidation since April 2009) brought an action
against HSBC Securities Services Luxembourg ('HSSL') and Bank of
Bermuda (Cayman) Limited (now known as HSBC Cayman Limited),
alleging breach of contract and breach of fiduciary duty and
claiming damages and equitable compensation. The trial concluded in
February 2017 and, in August 2017, the court dismissed all claims
against the defendants. In September 2017, Primeo appealed to the
Court of Appeal of the Cayman Islands and, in June 2019, the Court
of Appeal of the Cayman Islands dismissed Primeo's appeal. In
August 2019, Primeo filed a notice of appeal to the UK Privy
Council. Two hearings before the UK Privy Council took place during
2021. Judgment was given against HSBC in respect of the first
hearing and judgment is pending in respect of the second
hearing.
Luxembourg litigation: In April 2009, Herald Fund SPC ('Herald')
(in liquidation since July 2013) brought an action against HSSL
before the Luxembourg District Court, seeking restitution of cash
and securities that Herald purportedly lost because of Madoff
Securities' fraud, or money damages. The Luxembourg District Court
dismissed Herald's securities restitution claim, but reserved
Herald's cash restitution and money damages claims. Herald has
appealed this judgment to the Luxembourg Court of Appeal, where the
matter is pending. In late 2018, Herald brought additional claims
against HSSL and HSBC Bank plc before the Luxembourg District
Court, seeking further restitution and damages.
In October 2009, Alpha Prime Fund Limited ('Alpha Prime')
brought an action against HSSL before the Luxembourg District
Court, seeking the restitution of securities, or the cash
equivalent, or money damages. In December 2018, Alpha Prime brought
additional claims before the Luxembourg District Court seeking
damages against various HSBC companies. These matters are currently
pending before the Luxembourg District Court.
In December 2014, Senator Fund SPC ('Senator') brought an action
against HSSL before the Luxembourg District Court, seeking
restitution of securities, or the cash equivalent, or money
damages. In April 2015, Senator commenced a separate action against
the Luxembourg branch of HSBC Bank plc asserting identical claims
before the Luxembourg District Court. In December 2018, Senator
brought additional claims against HSSL and HSBC Bank plc Luxembourg
branch before the Luxembourg District Court, seeking restitution of
Senator's securities or money damages. These matters are currently
pending before the Luxembourg District Court.
There are many factors that may affect the range of possible
outcomes, and any resulting financial impact, of the various
Madoff-related proceedings described above, including but not
limited to the multiple jurisdictions in which the proceedings have
been brought. Based upon the information currently available,
management's estimate of the possible aggregate damages that might
arise as a result of all claims in the various Madoff-related
proceedings is around $600m, excluding costs and interest. Due to
uncertainties and limitations of this estimate, any possible
damages that might ultimately arise could differ significantly from
this amount.
Anti-money laundering and sanctions-related matters
In December 2012, HSBC Holdings entered into a number of
agreements, including an undertaking with the UK Financial Services
Authority (replaced with a Direction issued by the UK Financial
Conduct Authority ('FCA') in 2013 and again in 2020) as well as a
cease-and-desist order with the US Federal Reserve Board ('FRB'),
both of which contained certain forward-looking anti-money
laundering ('AML') and sanctions-related obligations. For several
years thereafter, HSBC retained a Skilled Person under section 166
of the Financial Services and Markets Act and an Independent
Consultant under the FRB cease-and-desist order to produce periodic
assessments of the Group's AML and sanctions compliance programme.
The Skilled Person completed its engagement in the second quarter
of 2021, and the FCA determined that no further Skilled Person work
is required. Separately, the Independent Consultant has completed
its latest review pursuant to the FRB cease-and-desist order, which
remains in place. The roles of each of the FCA Skilled Person and
the FRB Independent Consultant are discussed on page 209 of the
Annual Report and Accounts 2021.
Since November 2014, a number of lawsuits have been filed in
federal courts in the US against various HSBC companies and others
on behalf of plaintiffs who are, or are related to, victims of
terrorist attacks in the Middle East. In each case, it is alleged
that the defendants aided and abetted the unlawful conduct of
various sanctioned parties in violation of the US Anti-Terrorism
Act. Currently, nine actions remain pending in federal courts in
New York or the District of Columbia. The courts have granted
HSBC's motions to dismiss in five of these cases; appeals remain
pending in two cases, and the remaining three dismissals are also
subject to appeal. The four remaining actions are at an early
stage.
Based on the facts currently known, it is not practicable at
this time for HSBC to predict the resolution of these matters,
including the timing or any possible impact on HSBC, which could be
significant.
London interbank offered rates, European interbank offered rates
and other benchmark interest rate investigations and litigation
Euro interest rate derivatives: In December 2016, the European
Commission ('EC') issued a decision finding that HSBC, among other
banks, engaged in anti-competitive practices in connection with the
pricing of euro interest rate derivatives in early 2007. The EC
imposed a fine on HSBC based on a one-month infringement. In
September 2019, the General Court of the European Union (the
'General Court') issued a decision largely upholding the EC's
findings on liability but annulling the fine. HSBC and the EC both
appealed the General Court's decision to the European Court of
Justice (the 'Court of Justice'). In June 2021, the EC adopted a
new fining decision for an amount that was 5% less than the
previously annulled fine, and subsequently withdrew its appeal to
the Court of Justice. HSBC has appealed the EC's June 2021 fining
decision to the General Court, and its appeal to the Court of
Justice on liability also remains pending.
US dollar Libor: Beginning in 2011, HSBC and other panel banks
have been named as defendants in a number of private lawsuits filed
in the US with respect to the setting of US dollar Libor. The
complaints assert claims under various US laws, including US
antitrust and racketeering laws, the US Commodity Exchange Act ('US
CEA') and state law. The lawsuits include individual and putative
class actions, most of which have been transferred and/or
consolidated for pre-trial purposes before the New York District
Court. HSBC has reached class settlements with five groups of
plaintiffs, and the court has approved these settlements. HSBC has
also resolved several of the individual actions, although a number
of other US dollar Libor-related actions remain pending against
HSBC in the New York District Court.
Singapore interbank offered rate ('Sibor') and Singapore swap
offer rate ('SOR'): In 2016, HSBC and other panel banks were named
as defendants in a putative class action filed in the New York
District Court on behalf of persons who transacted in products
related to the Sibor and SOR benchmark rates. The complaint
alleges, among other things, misconduct related to these benchmark
rates in violation of US antitrust, commodities and racketeering
laws, and state law.
In October 2021, The Hongkong and Shanghai Banking Corporation
Limited reached a settlement in principle with the plaintiffs to
resolve this action, the agreement for which was executed in May
2022. The settlement received preliminary court approval in June
2022, and the final approval hearing is scheduled for November
2022.
There are many factors that may affect the range of outcomes,
and the resulting financial impact, of these matters, which could
be significant.
Foreign exchange-related investigations and litigation
In December 2021, the EC issued a settlement decision finding
that a number of banks, including HSBC, had engaged in
anti-competitive practices in an online chatroom between 2011 and
2012 in the foreign exchange spot market. The EC imposed a
EUR174.3m fine on HSBC in connection with this matter, which has
been paid.
In December 2016, Brazil's Administrative Council of Economic
Defense initiated an investigation into the onshore foreign
exchange market and identified a number of banks, including HSBC,
as subjects of its investigation.
In June 2020, the Competition Commission of South Africa, having
initially referred a complaint for proceedings before the South
African Competition Tribunal in February 2017, filed a revised
complaint against 28 financial institutions, including HSBC Bank
plc and HSBC Bank USA, for alleged anti-competitive behaviour in
the South African foreign exchange market. In December 2021, a
hearing on HSBC Bank plc's and HSBC Bank USA's applications to
dismiss the revised complaint took place before the South African
Competition Tribunal, where a decision remains pending.
Beginning in 2013, various HSBC companies and other banks have
been named as defendants in a number of putative class actions
filed in, or transferred to, the New York District Court arising
from allegations that the defendants conspired to manipulate
foreign exchange rates. HSBC has reached class settlements with two
groups of plaintiffs, including direct and indirect purchasers of
foreign exchange products, and the court has granted final approval
of these settlements. A putative class action by a group of retail
customers of foreign exchange products remains pending.
In November and December 2018, complaints alleging foreign
exchange-related misconduct were filed in the New York District
Court and the High Court of England and Wales against HSBC and
other defendants by certain plaintiffs that opted out of the direct
purchaser class action settlement in the US. The High Court claim
has since been transferred to the Competition Appeals Tribunal and
these matters remain pending. Additionally, lawsuits alleging
foreign exchange-related misconduct remain pending against HSBC and
other banks in courts in Brazil and Israel. It is possible that
additional civil actions will be initiated against HSBC in relation
to its historical foreign exchange activities.
Based on the facts currently known, it is not practicable at
this time for HSBC to predict the resolution of these matters,
including the timing or any possible impact on HSBC, which could be
significant.
Precious metals fix-related litigation
Gold: Beginning in March 2014, numerous putative class actions
were filed in the New York District Court and the US District
Courts for the District of New Jersey and the Northern District of
California, naming HSBC and other members of The London Gold Market
Fixing Limited as defendants. The complaints, which were
consolidated in the New York District Court, allege that, from
January 2004 to June 2013, the defendants conspired to manipulate
the price of gold and gold derivatives for their collective benefit
in violation of US antitrust laws, the US CEA and New York state
law. In October 2020, HSBC reached a settlement with the plaintiffs
to resolve the consolidated action, and the court granted final
approval of the settlement in May 2022.
Beginning in December 2015, numerous putative class actions
under Canadian law were filed in the Ontario and Quebec Superior
Courts of Justice against various HSBC companies and other
financial institutions. The plaintiffs allege that, among other
things, from January 2004 to March 2014, the defendants conspired
to manipulate the price of gold and gold derivatives in violation
of the Canadian Competition Act and common law. These actions are
ongoing.
Silver: Beginning in July 2014, numerous putative class actions
were filed in federal district courts in New York, naming HSBC and
other members of The London Silver Market Fixing Limited as
defendants. The complaints, which were consolidated in the New York
District Court, allege that, from January 2007 to December 2013,
the defendants conspired to manipulate the price of silver and
silver derivatives for their collective benefit in violation of US
antitrust laws, the US CEA and New York state law. In February
2022, following the conclusion of pre-class certification
discovery, the defendants filed a motion seeking to dismiss the
plaintiffs' antitrust claims, which remains pending.
In April 2016, two putative class actions under Canadian law
were filed in the Ontario and Quebec Superior Courts of Justice
against various HSBC companies and other financial institutions.
The plaintiffs in both actions allege that, from January 1999 to
August 2014, the defendants conspired to manipulate the price of
silver and silver derivatives in violation of the Canadian
Competition Act and common law. These actions are ongoing.
Platinum and palladium: Between late 2014 and early 2015,
numerous putative class actions were filed in the New York District
Court, naming HSBC and other members of The London Platinum and
Palladium Fixing Company Limited as defendants. The complaints
allege that, from January 2008 to November 2014, the defendants
conspired to manipulate the price of platinum group metals ('PGM')
and PGM-based financial products for their collective benefit in
violation of US antitrust laws and the US CEA. In March 2020, the
court granted the defendants' motion to dismiss the plaintiffs'
third amended complaint but granted the plaintiffs leave to
re-plead certain claims. The plaintiffs have filed an appeal.
Based on the facts currently known, it is not practicable at
this time for HSBC to predict the resolution of these matters,
including the timing or any possible impact on HSBC, which could be
significant.
Film finance litigation
In July and November 2015, two actions were brought by
individuals against HSBC Private Bank (UK) Limited ('PBGB') in the
High Court of England and Wales seeking damages on various alleged
grounds, including breach of duty to the claimants, in connection
with their participation in certain Ingenious film finance schemes.
In December 2018 and June 2019, two further actions were brought
against PBGB in the High Court of England and Wales by multiple
claimants in connection with lending provided by PBGB to third
parties in respect of certain Ingenious film finance schemes in
which the claimants participated. In January 2022, the parties
reached an agreement to resolve these disputes and, in February
2022, the actions against HSBC UK Bank plc (as successor to PBGB)
were discontinued.
In June 2020, two separate claims were issued against HSBC UK
Bank plc (as successor to PBGB) in the High Court of England and
Wales by two separate groups of investors in Eclipse film finance
schemes in connection with PBGB's role in the development of such
schemes. These actions are ongoing.
In April 2021, HSBC UK Bank plc (as successor to PBGB) was
served with a claim issued in the High Court of England and Wales
in connection with PBGB's role in the development of the Zeus film
finance schemes. This action is at an early stage.
There are many factors that may affect the range of outcomes,
and the resulting financial impact, of these matters, which could
be significant.
Other regulatory investigations, reviews and litigation
HSBC Holdings and/or certain of its affiliates are subject to a
number of other investigations and reviews by various regulators
and competition and law enforcement authorities, as well as
litigation, in connection with various matters relating to the
firm's businesses and operations, including:
-- investigations by tax administration, regulatory and law
enforcement authorities in Argentina, India and elsewhere in
connection with allegations of tax evasion or tax fraud, money
laundering and unlawful cross-border banking solicitation;
-- an investigation by the US Commodity Futures Trading
Commission regarding interest rate swap transactions related to
bond issuances, among other things;
-- investigations by US regulators concerning compliance with
records preservation requirements relating to the use of unapproved
electronic messaging platforms for business communications;
-- an investigation by the PRA in connection with depositor protection arrangements in the UK;
-- an investigation by the FCA in connection with collections
and recoveries operations in the UK;
-- an investigation by the UK Competition and Markets Authority
into potentially anti-competitive arrangements involving historical
trading activities relating to certain UK-based fixed income
products and related financial instruments;
-- a putative class action brought in the New York District
Court relating to the Mexican government bond market;
-- two group actions pending in the US courts and a claim issued
in the High Court of England and Wales in connection with HSBC Bank
plc's role as a correspondent bank to Stanford International Bank
Ltd from 2003 to 2009; and
-- litigation brought against various HSBC companies in the US
courts relating to residential mortgage-backed securities, based
primarily on (a) claims brought against HSBC Bank USA in connection
with its role as trustee on behalf of various securitisation
trusts; and (b) claims against several HSBC companies seeking that
the defendants repurchase various mortgage loans.
There are many factors that may affect the range of outcomes,
and the resulting financial impact, of these matters, which could
be significant.
8 Business acquisitions and disposals
-----------------------------------
Business acquisitions
The following recently announced acquisitions form part of our
strategy to become a market leader in Asian wealth management:
-- On 23 December 2021, HSBC Asset Management (India) Private
Ltd, a subsidiary of the Group, entered into an agreement with
L&T Finance Holdings Limited to fully acquire L&T
Investment Management Limited for $0.4bn. Completion is expected to
occur during 4Q22. L&T Investment Management Limited is a
wholly-owned subsidiary of L&T Finance Holdings Limited and the
investment manager of the L&T Mutual Fund, with assets under
management of $8.9bn at 31 May 2022 and over 2.4 million active
folios.
-- On 28 January 2022, HSBC Insurance (Asia-Pacific) Holdings
Limited, a subsidiary of the Group, notified the shareholders of
Canara HSBC Life Insurance Company Limited ('Canara HSBC') of its
intention to increase its shareholding in Canara HSBC up to 49%.
HSBC currently has a 26% shareholding, which is accounted for as an
associate. Any increase in shareholding is subject to agreement
with other shareholders in Canara HSBC, as well as internal and
regulatory approvals. Established in 2008, Canara HSBC is a life
insurance company based in India.
-- On 11 February 2022, HSBC Insurance (Asia-Pacific) Holdings
Limited completed the acquisition of 100% of AXA Insurance Pte
Limited (AXA Singapore) for $0.5bn. A provisional gain on
acquisition of $0.1bn was recorded, reflecting the excess of the
fair value of net assets acquired (gross assets of $4.5bn and gross
liabilities of $3.9bn) over the acquisition price.
-- On 6 April 2022, The Hongkong and Shanghai Banking
Corporation Limited, a subsidiary of the Group, announced it had
increased its shareholding in HSBC Qianhai Securities Limited, a
partially-owned subsidiary, from 51% to 90%.
-- On 23 June 2022, HSBC Insurance (Asia) Limited, a subsidiary
of the Group, acquired the remaining 50% equity interest in HSBC
Life Insurance Company Limited. Headquartered in Shanghai, HSBC
Life Insurance Company Limited offers a comprehensive range of
insurance solutions covering annuity, whole life, critical illness
and unit-linked insurance products.
Business disposals
In 2021 and 2022, we accelerated the pace of execution on our
strategic ambition to be the preferred international financial
partner for our clients with the announcements of the planned sales
of our retail banking businesses in France and branch operations in
Greece, as well as the exit of domestic mass market retail banking
in the US. The planned sales in France and Greece are expected to
complete in 2023 and the US exit has since completed.
US retail banking business
On 26 May 2021, we announced our intention to exit our US mass
market retail banking business, including our Personal and Advance
propositions, as well as retail business banking, and rebranding
approximately 20 to 25 of our retail branches into international
wealth centres to serve our Premier and Jade customers. In
conjunction with the execution of this strategy, HSBC Bank USA,
N.A. entered into definitive sale agreements with Citizens Bank and
Cathay Bank to sell 90 of our retail branches along with
substantially all residential mortgage, unsecured and retail
business banking loans and all deposits in our branch network not
associated with our Premier, Jade and Private Banking customers. As
a result of entering into these sale agreements, assets and
liabilities related to the agreements were transferred to held for
sale during the second quarter of 2021.
In February 2022, we completed the sale of the branch disposal
group and recognised a net gain on sale of approximately $0.1bn,
which is subject to customary closing adjustments. Included in the
sale were $2.1bn of loans and advances to customers and $6.9bn of
customer accounts. Certain assets under management associated with
our mass market retail banking operations were also transferred.
The remaining branches not sold or rebranded have been closed.
Planned sale of the retail banking business in France
HSBC Continental Europe signed a framework agreement with
Promontoria MMB SAS ('My Money Group') and its subsidiary Banque
des Caraïbes SA, regarding the planned sale of HSBC Continental
Europe's retail banking business in France.
The sale, which is subject to regulatory approvals and the
satisfaction of other relevant conditions, includes: HSBC
Continental Europe's French retail banking business; the Crédit
Commercial de France ('CCF') brand; and HSBC Continental Europe's
100% ownership interest in HSBC SFH (France) and its 3% ownership
interest in Crédit Logement. The disposal group is currently
expected to be classified as held for sale in 2H22 and the sale
would generate an estimated loss before tax including related
transaction costs for the Group of $2.1bn, together with an
additional $0.5bn impairment of goodwill.
At 30 June 2022, a deferred tax liability of $0.4bn was
recognised as a consequence of the temporary difference in tax and
accounting treatment in respect of the provision for loss on
disposal, which was deductible in the French tax return in 2021 but
will be accounted for when the disposal group is classified as held
for sale in accordance with IFRS 5, at which time the deferred tax
liability will reverse. The vast majority of the estimated loss for
the write-down of the disposal group to fair value less costs to
sell will also be recognised when it is classified as held for
sale. Subsequently, the disposal group classified as held for sale
will be remeasured at the lower of carrying amount and fair value
less costs to sell at each reporting period. Any remaining gain or
loss not previously recognised will be recognised at closing, which
is currently anticipated to be in 2023.
At 30 June 2022, the disposal group included total assets of
$25.6bn.
Planned sale of the retail banking business in Greece
On 24 May 2022, HSBC Continental Europe signed a sale and
purchase agreement for the sale of its branch operations in Greece
to Pancreta Bank SA. Completion of the transaction is subject to
regulatory approval and is currently expected to occur in the first
half of 2023. At 30 June 2022, the disposal group included $0.4bn
of loans and advances to customers and $2.3bn of customer accounts
which met the criteria to be classified as held for sale. In 2Q22,
we recognised a loss of $0.1bn, including goodwill impairment, upon
reclassification as held for sale in accordance with IFRS 5.
Planned sale of the business in Russia
Following a strategic review of our business in Russia, HSBC
Europe BV (a wholly-owned subsidiary of HSBC Bank plc) has entered
into an agreement to sell its wholly-owned subsidiary HSBC Bank
(RR) (Limited Liability Company), subject to regulatory
approvals.
9 Events after the balance sheet date
-----------------------------------
In its assessment of events after the balance sheet date, HSBC
has considered and concluded that no material events have occurred
resulting in adjustments to the financial statements.
An interim dividend for the 2022 half-year in respect of the
financial year ending 31 December 2022 was approved by the
Directors on 1 August 2022, as described in Note 2.
10 Capital structure
-----------------
Capital ratios
--------------- ---------------------------
At
--------------------------------------------
30 Jun 31 Dec
2022 2021
% %
--------------------------- --------------- ---------------------------
Transitional basis
--------------------------- --------------- ---------------------------
Common equity tier 1 ratio 13.6 15.8
--------------------------- --------------- ---------------------------
Tier 1 ratio 16.1 18.6
--------------------------- --------------- ---------------------------
Total capital ratio 18.6 21.2
--------------------------- --------------- ---------------------------
End point basis
--------------------------- --------------- ---------------------------
Common equity tier 1 ratio 13.6 15.8
--------------------------- --------------- ---------------------------
Tier 1 ratio 16.1 18.5
--------------------------- --------------- ---------------------------
Total capital ratio 17.7 20.0
--------------------------- --------------- ---------------------------
Total regulatory capital and risk-weighted assets
----------------------- ------------------------
At
-------------------------------------------------
30 Jun 31 Dec
2022 2021
$m $m
-------------------------------------------------- ----------------------- ------------------------
Transitional basis
-------------------------------------------------- ----------------------- ------------------------
Common equity tier 1 capital 115,780 132,565
-------------------------------------------------- ----------------------- ------------------------
Additional tier 1 capital 21,734 23,727
-------------------------------------------------- ----------------------- ------------------------
Tier 2 capital 21,005 21,494
-------------------------------------------------- ----------------------- ------------------------
Total regulatory capital 158,519 177,786
-------------------------------------------------- ----------------------- ------------------------
Risk-weighted assets 851,743 838,263
-------------------------------------------------- ----------------------- ------------------------
End point basis
-------------------------------------------------- ----------------------- ------------------------
Common equity tier 1 capital 115,780 132,565
-------------------------------------------------- ----------------------- ------------------------
Additional tier 1 capital 21,734 22,421
-------------------------------------------------- ----------------------- ------------------------
Tier 2 capital 13,049 12,475
-------------------------------------------------- ----------------------- ------------------------
Total regulatory capital 150,563 167,461
-------------------------------------------------- ----------------------- ------------------------
Risk-weighted assets 851,743 838,263
-------------------------------------------------- ----------------------- ------------------------
Leverage ratio(1)
------------------------- ---------------------------
At
------------------------------------------------------
30 Jun 31 Dec
2022 2021
$bn $bn
------------------------------ ------------------------- ---------------------------
Tier 1 capital 137.5 155.0
------------------------------ ------------------------- ---------------------------
Total leverage ratio exposure 2,484.2 2,962.7
------------------------------ ------------------------- ---------------------------
% %
------------------------------ ------------------------- ---------------------------
Leverage ratio 5.5 5.2
------------------------------ ------------------------- ---------------------------
1 The CRR II regulatory transitional arrangements for IFRS 9 are
applied in the leverage ratio calculation. This calculation is in
line with the UK leverage rules that were implemented on 1 January
2022, and excludes central bank claims. Comparatives for 2021 are
reported based on the disclosure rules in force at that time, and
include claims on central banks.
Unless otherwise stated, all figures are calculated using the
EU's regulatory transitional arrangements for IFRS 9 'Financial
Instruments' in article 473a of the Capital Requirements
Regulation.
11 Statutory accounts
------------------
The information in this media release does not constitute
statutory accounts within the meaning of section 434 of the
Companies Act 2006. The statutory accounts for the year ended 31
December 2021 have been delivered to the Registrar of Companies in
England and Wales in accordance with section 447 of the Companies
Act 2006. The Group's auditors, PricewaterhouseCoopers LLP ('PwC'),
has reported on those accounts. Its report was unqualified, did not
include a reference to any matters to which PwC drew attention by
way of emphasis without qualifying its report and did not contain a
statement under section 498(2) or (3) of the Companies Act
2006.
The information in this media release does not constitute the
unaudited interim condensed financial statements which are
contained in the Interim Report 2022. The Interim Report 2022 was
approved by the Board of Directors on 1 August 2022. The unaudited
interim condensed financial statements have been reviewed by the
Group's auditor, PwC, in accordance with the guidance contained in
the International Standard on Review Engagements (UK and Ireland)
2410: Review of Interim Financial Information Performed by the
Independent Auditor of the Entity issued by the Auditing Practices
Board. The full report of its review, which was unmodified, is
included in the Interim Report 2022.
12 Dealings in HSBC Holdings plc listed securities
-----------------------------------------------
HSBC has policies and procedures that, except where permitted by
statute and regulation, prohibit it undertaking specified
transactions in respect of its securities listed on The Stock
Exchange of Hong Kong Limited ('HKEx'). Except for dealings as
intermediaries or as trustees by subsidiaries of HSBC Holdings, or
in relation to the HSBC Holdings ordinary share buy-back, neither
HSBC Holdings nor any of its subsidiaries has purchased, sold or
redeemed any of its securities listed on HKEx during the half-year
ended 30 June 2022.
13 Earnings release and final results
----------------------------------
An earnings release for the three-month period ending 30
September 2022 is expected to be issued on 25 October 2022. The
results for the year to 31 December 2022 are expected to be
announced on 21 February 2023.
14 Corporate governance
--------------------
We are subject to corporate governance requirements in both the
UK and Hong Kong. Throughout the six months ended 30 June 2022, we
complied with the applicable provisions of the UK Corporate
Governance Code, save to the extent referred to in the next
paragraph, and also the requirements of the Hong Kong Corporate
Governance Code. The UK Corporate Governance Code is available at
www.frc.org.uk and the Hong Kong Corporate Governance Code is
available at www.hkex.com.hk.
Dame Carolyn Fairbairn was appointed as Chair to the Group
Remuneration Committee on 29 April 2022. In approving Dame Carolyn
Fairbairn's appointment, the Board considered the UK Corporate
Governance Code expectation that the Chair has served at least 12
months as a member on the committee before assuming the position of
Chair. Given her previous experience as both a member and chair of
the remuneration committees of other UK listed companies, the Board
approved the appointment of Dame Carolyn Fairbairn as Chair.
Under the Hong Kong Code, the Group Audit Committee should be
responsible for the oversight of all risk management and internal
control systems, unless expressly addressed by a separate risk
committee. Our Group Risk Committee is responsible for oversight of
internal control, other than internal financial controls, and risk
management systems.
The Board has codified obligations for transactions in Group
securities in accordance with the requirements of the Market Abuse
Regulation and the rules governing the listing of securities on the
HKEx, save that the HKEx has granted waivers from strict compliance
with the rules that take into account accepted practices in the UK,
particularly in respect of employee share plans.
Following specific enquiries all Directors have confirmed that
they have complied with their obligations in respect of transacting
in Group securities throughout the period.
There have been no material changes to the information disclosed
in the Annual Report and Accounts 2021 in respect of the
remuneration of employees, remuneration policies, bonus and share
option plans and training schemes. Details of the number of
employees are provided on page 33 of the Interim Report 2022.
The Board of Directors of HSBC Holdings plc as at the date of
this announcement comprises:
Mark Tucker*, Geraldine Joyce Buckingham , Rachel Duan , Carolyn
Julie Fairbairn James Anthony Forese , Steven Guggenheimer , José
Antonio Meade Kuribreña , Eileen K Murray , David Nish , Noel
Quinn, Ewen Stevenson and Jackson Tai .
* Non-executive Group Chairman
Independent non-executive Director
15 Interim Report 2022
-------------------
The Interim Report 2022 will be made available to shareholders
on or about 26 August 2022. Copies of the Interim Report 2022 and
this news release may be obtained from Global Communications, HSBC
Holdings plc, 8 Canada Square, London E14 5HQ, United Kingdom; from
Communications (Asia), The Hongkong and Shanghai Banking
Corporation Limited, 1 Queen's Road Central, Hong Kong; or from US
Communications, HSBC Bank USA, N.A., 1 West 39th Street, 9th Floor,
New York, NY 10018, USA. The Interim Report 2022 and this news
release may also be downloaded from the HSBC website,
www.hsbc.com.
A Chinese translation of the Interim Report 2022 is available
upon request from Computershare Hong Kong Investor Services
Limited, Rooms 1712-1716, 17th Floor, Hopewell Centre, 183 Queen's
Road East, Hong Kong.
The Interim Report 2022 will be available on The Stock Exchange
of Hong Kong Limited's website www.hkex.com.hk.
16 Cautionary statement regarding forward-looking statements
---------------------------------------------------------
This news release may contain projections, estimates, forecasts,
targets, commitments, ambitions, 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', 'estimate', 'seek', 'intend',
'target' or 'believe' or the negatives thereof or other variations
thereon or comparable terminology (together, 'forward-looking
statements'), including the strategic priorities and any financial,
investment and capital targets and ESG targets/commitments
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, 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 2021 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,
our 1Q 2022 Earnings Release furnished to the SEC on Form 6-K on 26
April 2022, and our Interim Report 2022 for the six months ended 30
June 2022 which we expect to furnish to the SEC on Form 6-K on or
around 1 August 2022.
17 Use of alternative performance measures
---------------------------------------
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,
which is available at www.hsbc.com .
18 Certain defined terms
---------------------
Unless the context requires otherwise, 'HSBC Holdings' means
HSBC Holdings plc and 'HSBC', the 'Group', 'we', 'us' and 'our'
refer to HSBC Holdings together with its subsidiaries. Within this
document the Hong Kong Special Administrative Region of the
People's Republic of China is referred to as 'Hong Kong'. When used
in the terms 'shareholders' equity' and 'total shareholders'
equity', 'shareholders' means holders of HSBC Holdings ordinary
shares and those preference shares and capital securities issued by
HSBC Holdings classified as equity. The abbreviations '$m' and
'$bn' represent millions and billions (thousands of millions) of US
dollars, respectively.
19 Investor Relations / Media Relations contacts
---------------------------------------------
For further information contact:
Investor Relations Media Relations
UK - Richard O'Connor UK - Gillian James
Telephone: +44 (0)20 7991 6590 Telephone: +44 (0)20 7992 0516
Email: investorrelations@hsbc.com Email: pressoffice@hsbc.com
Hong Kong - Mark Phin UK - Heidi Ashley
Telephone: +852 2822 4908 Telephone: +44 (0)20 7992 2045
Email: investorrelations@hsbc.com.hk Email: pressoffice@hsbc.com
Hong Kong - Jessica Lee
Telephone: +852 2822 1268
Email: aspmediarelations@hsbc.com.hk
20 Registered Office and Group Head Office
---------------------------------------
8 Canada Square
London E14 5HQ
United Kingdom
Web: www.hsbc.com
Incorporated in England with limited liability. Registered
number 617987
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