TIDMHSBA
RNS Number : 9828X
HSBC Holdings PLC
02 May 2023
2 MAY 2023
HSBC HOLDINGS PLC
1Q23 EARNINGS RELEASE
Noel Quinn, Group Chief Executive, said:
"Our strong first quarter performance provides further evidence
that our strategy is working. Our profits were spread across our
major geographies, and all three global businesses performed well
as we continued to meet our customers' needs through our
internationally connected franchises. Our return on tangible equity
was 19.3%, excluding the impact of strategic transactions. As a
result, we have announced our first quarterly dividend since 2019
of $0.10 per share, as well as a share buy-back of up to $2bn. With
the good momentum we have in our business, we expect to have
substantial future distribution capacity for dividends and share
buy-backs.
We remain focused on continuing to improve our performance and
maintaining tight cost discipline, but we also saw an opportunity
to invest in SVB UK to accelerate our growth plans. For 158 years,
HSBC has banked the entrepreneurs who have created today's
industrial base. With the SVB UK acquisition, we have access to
more of the entrepreneurs in the technology and life sciences
sectors who will create the businesses of tomorrow. We believe
they're a natural fit for HSBC, and that we're uniquely placed to
take them global."
Financial performance (1Q23 vs. 1Q22)
-- Profit before tax rose by $8.7bn to $12.9bn. This included a
$2.1bn reversal of an impairment relating to the planned sale of
our retail banking operations in France, as the completion of the
transaction has become less certain, and a provisional gain of
$1.5bn on the acquisition of Silicon Valley Bank UK Limited ('SVB
UK') in March. On a constant currency basis, profit before tax
increased by $9.0bn to $12.9bn. Profit after tax increased by
$7.6bn to $11.0bn.
-- Revenue increased by 64% to $20.2bn. The increase was driven
by higher net interest income in all of our global businesses due
to interest rate rises. It also included the gains related to the
transactions in France and the UK. On a constant currency basis,
revenue rose by 74% to $20.2bn.
-- Net interest margin ('NIM') of 1.69% increased by 50 basis
points ('bps') compared with 1Q22, and by 1bps compared with
4Q22.
-- Expected credit losses and other credit impairment charges
('ECL') of $0.4bn were down by $0.2bn. The reduced 1Q23 charge
reflected a favourable change in the probability weightings of
economic scenarios and a low stage 3 charge of $0.4bn. The 1Q22
charge reflected economic uncertainty mainly due to the
Russia-Ukraine war and inflationary pressures.
-- Operating expenses of $7.6bn were $0.6bn or 7% lower than in
1Q22. The reduction was primarily due to lower restructuring and
other related costs following the completion of our cost-saving
programme at the end of 2022, and ongoing cost discipline. Higher
technology costs and the impacts of rising inflation continued to
affect our operating expenses. On a constant currency basis, and
excluding notable items and the impact of retranslating the 1Q22
results of hyperinflationary economies at constant currency,
operating expenses rose by 2%.
-- Customer lending balances increased by $40bn in the quarter.
On a constant currency basis, lending balances grew by $32bn,
mainly as $25bn of balances associated with our retail banking
operations in France were reclassified from held for sale during
the period. In addition, the growth included $7bn of additional
balances following our acquisition of SVB UK during the quarter.
Excluding these factors, customer lending was stable.
-- Customer accounts increased by $34bn in the quarter. On a
constant currency basis, customer accounts increased by $21bn,
mainly as $23bn of balances associated with our retail banking
operations in France were reclassified from held for sale during
the period. In addition, our acquisition of SVB UK resulted in
growth of $8bn. Excluding these factors, deposits fell by $10bn or
0.6%, reflecting outflows in HSBC UK as customers utilised surplus
deposits, as well as in Commercial Banking ('CMB') and Global
Banking and Markets ('GBM') in Hong Kong.
-- Common equity tier 1 ('CET1') capital ratio of 14.7%
increased by 0.5 percentage points compared with 4Q22, which was
driven by capital generation net of the dividend accrual and
included an approximately 25bps impact from the reversal of an
impairment on the planned sale of our retail banking operations in
France. The acquisition of SVB UK had a minimal impact on the CET1
ratio.
-- The Board has approved a first interim dividend of $0.10 per
share. We also intend to initiate a share buy-back of up to $2bn,
which we expect to commence following our 2023 Annual General
Meeting ('AGM'). The share buy-back is expected to have an
approximately 25bps impact on the CET1 capital ratio.
-- From 1 January 2023, we adopted IFRS 17 'Insurance
Contracts', which replaced IFRS 4 'Insurance Contracts'.
Comparative data have been restated. For further details of our
adoption of IFRS 17, see page 3.
Outlook
-- We remain confident of achieving our return on average
tangible equity ('RoTE') target of at least 12% for 2023 onwards,
which is not dependent on the impact of material acquisitions and
disposals. Our 1Q23 annualised RoTE of 27.4% included the
annualised impact of our provisional gain on the acquisition of SVB
UK and the reversal of an impairment on the planned sale of our
retail banking operations in France. After excluding these
transactions, annualised RoTE was 19.3%. The annualised RoTE in the
first quarter is likely to be higher than in other quarters due to
revenue seasonality, and as we do not expect certain favourable tax
impacts to recur in subsequent quarters.
-- Based on the current market consensus for global central bank
rates, our net interest income expectations are unchanged from our
full-year guidance. After including an approximately $2bn reduction
due to the implementation of IFRS 17 'Insurance Contracts', we
expect to achieve net interest income of at least $34bn in 2023.
While the interest rate outlook remains positive, we expect
continued pressure from increased migration to term deposits as
interest rates rise.
-- We continue to use a range of 30bps to 40bps of average loans
for planning our ECL charges over the medium to long term. While
the ECL charge in 1Q23 was relatively benign, given current
macroeconomic uncertainty we maintain the guidance provided at our
full-year 2022 results of around 40bps of average gross loans in
2023 (including lending balances transferred to held for sale). We
continue to monitor risks related to our exposures in mainland
China's commercial real estate sector.
-- We remain highly focused on maintaining cost discipline. Our
acquisition of SVB UK, and the related investments internationally,
are expected to add approximately 1% to the Group's operating
expenses. This is in addition to our 2023 target of keeping cost
growth to approximately 3%, excluding the impact of foreign
currency translation differences, notable items and the impact of
retranslating the 2022 results of hyperinflationary economies at
constant currency. We expect the up to $300m severance costs
announced at our 2022 full-year results to be concentrated in the
second quarter of 2023, with the benefits expected to be realised
towards the end of 2023 and into 2024.
-- Our current intention is to manage the CET1 ratio within our
medium-term target range of 14% to 14.5%, with a dividend payout
ratio of 50% for 2023 and 2024, excluding material notable items.
Given the strength of our capital position, we have announced a
first interim dividend of $0.10 per share and intend to initiate a
share buy-back of up to $2bn, which we expect to commence following
our 2023 AGM, subject to approval of the relevant resolutions. Our
intention is for this to be completed in around three months,
although with an expected contractual term of five months. Further
buy-backs for 2023 and beyond will be subject to appropriate
capital levels. Our capital distributions are independent of both
the reversal of the impairment of our retail banking operations in
France and our provisional gain on the acquisition of SVB UK.
--
Business highlights
Our strategy
HSBC's purpose is 'Opening up a world of opportunity'. Our
strategy, announced in February 2021, aims to deliver against our
purpose and our ambition of being the preferred international
financial partner for our clients. It has four key pillars:
-- focus on our strengths - investing in the areas where we see
significant opportunities for growth;
-- digitise at scale - increasing our investment in technology
to improve how we serve customers and increase efficiency;
-- energise for growth - building a strong culture, introducing
simpler ways of working, and by equipping staff with the future
skills they need; and
-- transition to net zero - becoming a net zero bank and helping
our customers capture the opportunities presented by the transition
to a net zero future.
Our strategy is based on transforming our business and services
to customers to create a strengthened platform for enhanced growth
and returns on a sustainable basis, across the interest rate cycle.
We have taken actions to grow non-interest revenue, increase
capital allocation to Asia-Pacific, exit non-core businesses in the
West, reduce risk-weighted assets ahead of target, and maintain
strict cost discipline despite inflation and significant investment
in technology. We are committed to ensuring that shareholders share
the benefits of improved performance. We have established a
dividend payout ratio of 50% for 2023 and 2024, excluding material
significant items, and are confident that we will return the
dividend per share to pre-Covid-19 levels.
While interest rates remain elevated in most of our major
markets, current market expectations indicate that policy
tightening may be close to its peak, and global inflation appears
to be levelling out. Notwithstanding these factors, during the
first quarter of 2023 the banking industry experienced a period of
turbulence, although we continued to demonstrate a strong capital
and liquidity position, which resulted in the interim dividend we
have announced and the buy-back we expect to commence following our
2023 AGM.
Strategic transactions
During 1Q23, the unexpected interest rate rises in France
resulted in the completion of the planned sale of our retail
operations in France becoming less certain, as the capital required
to be held by the purchaser at completion of the transaction will
increase significantly. If the transaction does proceed, it is
expected that the closing will be delayed. As a result we are
required to change the accounting classification of our retail
banking operations in France to no longer be classified as held for
sale. We remain committed to pursuing the sale, providing
appropriate terms can be agreed, and to supporting our clients and
colleagues in France at all times.
In March 2023, we acquired SVB UK. This acquisition strengthens
our CMB franchise and enhances our ability to serve innovative and
fast-growing firms in the technology and life science sectors in
the UK, and internationally.
The plan to sell our banking business in Canada remains a key
priority, as we reshape the organisation to focus on our
international customer base. The transaction is now expected to
complete in the first quarter of 2024 to ensure a smooth
transition, and we continue to classify these operations as held
for sale. We remain committed to consider the payment of a special
dividend of $0.21 per share as a priority use of the proceeds in
the first half of 2024. The remaining proceeds will accrue into
CET1 capital, we intend to use excess capital to supplement share
buy-backs.
For further details of the financial impacts of these
transactions, see 'Strategic transactions' on page 4.
ESG highlights
We continue to make progress on our net zero ambition, including
on our net zero transition plan which we expect to publish in 2023.
This plan will provide further details of our strategic approach to
net zero, and how we plan to transform our organisation and execute
on our commercial ambition.
In December 2022, we published an updated energy policy, which
covers our approach for the wider energy sector. We also updated
our thermal coal phase-out policy with new financed emissions
targets, and extended the policy to exclude finance for the
specific purposes of new metallurgical coal mines.
In 2022, we requested and assessed transition plans for EU and
OECD managed clients in scope of our thermal coal phase-out policy.
We also requested and are assessing transition plans for our major
oil and gas clients. In 2023, we expect to complete assessments for
remaining clients in scope of our thermal coal phase-out policy and
for major oil and gas, and power and utilities clients globally, as
well as other clients in EU and OECD markets in scope of our energy
policy.
We have set on-balance sheet 2030 financed emissions targets for
the following sectors: oil and gas; power and utilities; cement;
iron, steel and aluminium; aviation; automotive; and thermal coal.
We also plan to extend our analysis to four new sectors - shipping,
agriculture, commercial real estate and residential real estate -
and set baselines and targets for those in future disclosures.
We have made progress on our disclosures related to thermal coal
exposures and facilitated emissions. We expect that our updated
thermal coal exposures will be made available for reporting as soon
as practicable in 2023, although this remains dependent on the
availability and quality of data. We plan to publish our
facilitated emissions from our capital markets activities, through
our underwriting in debt and equity capital markets and syndicated
lending, for the oil and gas, and power and utilities sectors for
2019 and 2020, as soon as practicable in 2023. We also plan to set
targets for facilitated emissions once the PCAF standard for
capital markets is published, which is expected in 2023 .
Basis of preparation
IFRS 17 'Insurance Contracts'
On 1 January 2023, HSBC adopted IFRS 17 'Insurance Contracts'.
As required by the standard, the Group applied the requirements
retrospectively with comparative data previously published under
IFRS 4 'Insurance Contracts' restated from the 1 January 2022
transition date. Under IFRS 17 there is no present value of
in-force business ('PVIF') asset recognised up front. Instead the
measurement of the insurance contract liability takes into account
fulfilment cash flows and a contractual service margin representing
the unearned profit. In contrast to the Group's previous IFRS 4
accounting where profits are recognised up front, under IFRS 17
they are deferred and systematically recognised in revenue as
services are provided over the life of the contract. The
contractual service margin also includes attributable cost, which
had previously been expensed as incurred and which is now
incorporated within the insurance liability measurement and
recognised over the life of the contract.
The impact of the transition was a reduction of $159m on the
Group's 1Q22 reported revenue and a reduction of $22m to reported
profit before tax. Revenue in 1Q22 included adverse market impacts
in Wealth and Personal Banking ('WPB') of $275m, which are largely
absorbed by the contractual service margin under IFRS 17. The
Group's total equity reduced by $10.5bn to $196.3bn on the
transition at 1 January 2022 and tangible equity reduced by $2.4bn
to $155.8bn. For further details, see our Report on Transition to
IFRS 17 'Insurance Contracts' at www.hsbc.com/investors.
Changes to our reporting framework
On 1 January 2023, we updated our financial reporting framework.
We no longer report 'adjusted' results, which exclude the impact of
both foreign currency translation differences and significant
items. Instead, we compute constant currency performance by
adjusting comparative reported results only for the effects of
foreign currency translation differences between the relevant
periods. This will enable users to understand the impact of foreign
currency translation differences on the Group's performance. We
separately disclose 'notable items', which are components of our
income statement that management would consider as outside the
normal course of business and generally non-recurring in nature.
While our primary segmental reporting by global business remains
unchanged, effective from 1 January 2023, the Group changed the
supplementary presentation of results from geographical regions to
main legal entities to better reflect the Group's structure.
Cost target
At our full-year 2022 results, we set a target for our
'adjusted' operating expenses of approximately 3% growth for 2023
compared with 2022. Under our new reporting framework we no longer
present 'adjusted' results. The exception to this is for operating
expenses, where we will adjust reported results for notable items
and the period-on-period effects of foreign currency translation
differences. We also exclude the impact of re-translating
comparative period financial information at the latest rates of
foreign exchange in hyperinflationary economies, which is not
within our control. We consider that this measure provides useful
information to investors by quantifying and excluding the items
that management considered when setting and assessing cost-related
targets.
Resegmentation
In the first quarter of 2023, following an internal review to
assess which global businesses were best suited to serve our
customers' respective needs, a portfolio of our Global Banking
customers within our entities in Latin America was transferred from
GBM to CMB for reporting purposes. Comparative data have been
re-presented accordingly. Similar smaller transfers from GBM to CMB
were also undertaken within our entities in Australia and
Indonesia, where comparative data have not been re-presented.
Notes
-- Income statement comparisons, unless stated otherwise, are
between the quarter ended 31 March 2023 and the quarter ended 31
March 2022. Balance sheet comparisons, unless otherwise stated, are
between balances at 31 March 2023 and the corresponding balances at
31 December 2022.
-- The financial information on which this Earnings Release is
based is unaudited. Other than the adoption of IFRS 17 described
above, it has been prepared in accordance with our significant
accounting policies as described on pages 335 to 348 of our Annual
Report and Accounts 2022.
Strategic transactions
France
During 1Q23, the completion of the planned transaction to sell
our retail banking operations in France became less certain. This
was due to an unexpected rise in interest rates in France, which
will increase the amount of capital required by the buyer on
completion of the transaction. Given the completion of the sale has
become less certain, we are required to change the accounting
classification of our retail banking operations in France to be no
longer classified as held for sale. This has resulted in a $2.1bn
reversal of the previously recognised impairment in respect of the
sale of our retail banking operations in France. The previously
recognised $0.4bn impairment of goodwill has not been reversed.
Silicon Valley Bank UK Limited
In March 2023, HSBC UK acquired SVB UK. The acquisition will be
funded from existing resources and brings the staff, assets and
liabilities of SVB UK into the HSBC portfolio.
On acquisition, we performed a preliminary assessment of the
fair value of the assets and liabilities purchased. We established
an opening balance sheet on 13 March 2023 and applied the result of
the fair value assessment, which resulted in a reduction in net
assets of $0.2bn. The provisional gain on acquisition of $1,511m
represents the difference between the consideration paid of GBP1
and the net assets acquired. This gain could change as further due
diligence is performed. At 31 March 2023, the funding provided to
SVB UK by HSBC UK was $2.8bn. After initial deposit outflows
following our acquisition of SVB UK, deposits are now stabilising,
and client exits have been minimal.
Gain on acquisition
At
---------------------------
13 Mar
2023
$m
Assets acquired 11,490
------------------------------------------------------------ ---------------------------
Liabilities acquired (9,747)
------------------------------------------------------------ ---------------------------
Fair value and other revaluation adjustments on acquisition (232)
------------------------------------------------------------ ---------------------------
Fair value of net assets acquired 1,511
------------------------------------------------------------ ---------------------------
Amounts above have been translated at rates of foreign exchange
on 13 March 2023.
Canada
In November 2022, we announced the planned sale of our banking
business in Canada. We regularly reassess the progress of our
strategic transactions and continue to classify this business as
held for sale. However, we now expect the transaction to complete
in 1Q24.
Key financial metrics
Quarter ended
---------------------------------------------------------------------------------------
31 Mar 31 Dec 31 Mar
2023 2022 2022
----------------------------- --------------------------- --------------------------- -----------------------------
Reported results
Profit before tax ($m) 12,886 5,049 4,144
----------------------------- --------------------------- --------------------------- -----------------------------
Profit after tax ($m) 11,026 4,661 3,432
Cost efficiency ratio (%) 37.6 60.3 66.5
----------------------------- --------------------------- --------------------------- -----------------------------
Net interest margin (%) 1.69 1.68 1.19
----------------------------- --------------------------- --------------------------- -----------------------------
Basic earnings per share
($)(1) 0.52 0.22 0.14
----------------------------- --------------------------- --------------------------- -----------------------------
Diluted earnings per share
($)(1) 0.52 0.22 0.14
----------------------------- --------------------------- --------------------------- -----------------------------
Dividend per ordinary share
(in respect of the
period) ($) 0.10 0.23 -
Alternative performance
measures
Constant currency profit
before tax ($m) 12,886 5,146 3,838
----------------------------- --------------------------- --------------------------- -----------------------------
Constant currency cost
efficiency ratio (%) 37.6 60.4 66.6
----------------------------- --------------------------- --------------------------- -----------------------------
Expected credit losses and
other credit impairment
charges (annualised) as % of
average gross loans
and advances to customers
(%) 0.18 0.59 0.25
----------------------------- --------------------------- --------------------------- -----------------------------
Expected credit losses and
other credit impairment
charges (annualised) as % of
average gross loans
and advances to customers,
including held for
sale (%)(2) 0.17 0.56 0.25
----------------------------- --------------------------- --------------------------- -----------------------------
Return on average ordinary
shareholders' equity
(annualised) (%) 25.5 11.3 6.7
----------------------------- --------------------------- --------------------------- -----------------------------
Return on average tangible
equity (annualised)
(%) 27.4 12.3 7.2
----------------------------- --------------------------- --------------------------- -----------------------------
Return on average tangible
equity excluding strategic
transactions (annualised)
(%)(3) 19.3 12.3 7.2
----------------------------- --------------------------- --------------------------- -----------------------------
Constant currency operating
expenses excluding
notable items ($m) (4) (7,525) (7,798) (7,351)
----------------------------- --------------------------- --------------------------- -----------------------------
At
-----------------------------------------------------------------------------------
31 Mar 31 Dec 31 Mar
2023 2022 2022
--------------------------------- ------------------------- --------------------------- ---------------------------
Balance sheet
--------------------------------- ------------------------- --------------------------- ---------------------------
Total assets ($m) 2,989,696 2,949,286 3,011,588
--------------------------------- ------------------------- --------------------------- ---------------------------
Net loans and advances to
customers ($m) 963,394 923,561 1,054,073
--------------------------------- ------------------------- --------------------------- ---------------------------
Customer accounts ($m) 1,604,099 1,570,303 1,709,685
--------------------------------- ------------------------- --------------------------- ---------------------------
Average interest-earning assets,
year to date
($m) (5) 2,152,893 2,143,754 2,200,896
--------------------------------- ------------------------- --------------------------- ---------------------------
Loans and advances to customers
as % of customer
accounts (%) 60.1 58.8 61.7
--------------------------------- ------------------------- --------------------------- ---------------------------
Total shareholders' equity ($m) 190,095 177,833 187,076
--------------------------------- ------------------------- --------------------------- ---------------------------
Tangible ordinary shareholders'
equity ($m) 159,458 146,927 153,747
--------------------------------- ------------------------- --------------------------- ---------------------------
Net asset value per ordinary
share at period
end ($) 8.65 8.01 8.25
--------------------------------- ------------------------- --------------------------- ---------------------------
Tangible net asset value per
ordinary share at
period end ($) 8.08 7.44 7.70
--------------------------------- ------------------------- --------------------------- ---------------------------
Capital, leverage and liquidity
--------------------------------- ------------------------- --------------------------- ---------------------------
Common equity tier 1 capital
ratio (%)(6) 14.7 14.2 14.1
--------------------------------- ------------------------- --------------------------- ---------------------------
Risk-weighted assets ($m)(6,7) 854,434 839,720 862,318
--------------------------------- ------------------------- --------------------------- ---------------------------
Total capital ratio (%)(6,7) 19.8 19.3 19.2
--------------------------------- ------------------------- --------------------------- ---------------------------
Leverage ratio (%)(6,7) 5.8 5.8 5.7
--------------------------------- ------------------------- --------------------------- ---------------------------
High-quality liquid assets
(liquidity value)
($bn)(7,8) 634.9 647.0 688.3
--------------------------------- ------------------------- --------------------------- ---------------------------
Liquidity coverage ratio (%)(7,8) 132 132 137
--------------------------------- ------------------------- --------------------------- ---------------------------
Share count
--------------------------------- ------------------------- --------------------------- ---------------------------
Period end basic number of $0.50
ordinary shares
outstanding (millions) 19,736 19,739 19,968
--------------------------------- ------------------------- --------------------------- ---------------------------
Period end basic number of $0.50
ordinary shares
outstanding and dilutive
potential ordinary shares
(millions) 19,903 19,878 20,134
--------------------------------- ------------------------- --------------------------- ---------------------------
Average basic number of $0.50
ordinary shares
outstanding (millions) 19,724 19,738 20,024
--------------------------------- ------------------------- --------------------------- ---------------------------
For reconciliation and analysis of our reported results on a
constant currency basis, including lists of notable items, see page
34. Definitions and calculations of other alternative performance
measures are included in 'Alternative performance measures' on page
31.
1 At 1Q23, earnings per share included the impact of the
provisional gain recognised in respect of the acquisition of SVB UK
of $0.08 (4Q22: nil; 1Q22: nil); the reversal of the impairment
loss related to the planned sale of the retail banking operations
in France of $0.08 (4Q22: nil; 1Q22: nil); and gains in relation to
the planned sale of the banking business in Canada of $0.01 (4Q22:
$0.01; 1Q22 nil). Additionally, the earnings per share at 4Q22
included the impact of recognition of certain tax assets of $0.01
(1Q23: nil; 1Q22: nil).
2 Includes average gross loans and advances to customers
reported within 'assets held for sale'.
3 Excludes impacts of the reversal of the impairment loss of
$1.6bn (net of tax) relating to the planned sale of the retail
banking operations in France, recognised in 3Q22, which is no
longer classified as held for sale, and the provisional gain of
$1.5bn recognised in respect of the acquisition of SVB UK.
4 Excluding the impact of retranslating prior year costs of
hyperinflationary economies at constant currency FX.
5 Average interest earning assets for 31 December 2022 are
stated on a year-to-date basis, which differs from the
quarter-to-date basis of $2,116,018m presented in the 'net interest
margin' section on page 12.
6 Unless otherwise stated, regulatory capital ratios and
requirements are based on the transitional arrangements of the
Capital Requirements Regulation in force at the time. Leverage
metrics exclude central bank claims in accordance with the
Prudential Regulation Authority's ('PRA') UK leverage framework.
References to EU regulations and directives (including technical
standards) should, as applicable, be read as references to the UK's
version of such regulation or directive, as onshored into UK law
under the European Union (Withdrawal) Act 2018, and as may be
subsequently amended under UK law.
7 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 in subsequent
periods.
8 The liquidity coverage ratio is based on the average month-end
value over the preceding 12 months.
Contents
1 Highlights 20 Risk
2 - Business highlights 20 - Approach to risk management
3 - Basis of preparation 20 - Geopolitical and macroeconomic
risks
4 - Strategic transactions 21 - Ibor transition
5 - Key financial metrics 21 - Credit risk
6 Financial summary 28 - Capital risk
6 - Constant currency performance 31 Alternative performance measures
8 - Distribution of results by 43 - Second interim dividend for
global business and legal entity 2022
9 - Income statement commentary 43 - First interim dividend for
2023
- Summary consolidated balance
13 sheet 43 - Dividend on preference shares
- Investor relations/media relations
13 - Balance sheet commentary 44 contacts
- Cautionary statement regarding
16 - Global businesses 44 forward-looking statements
46 - Abbreviations
HSBC Holdings plc will be conducting a trading update conference
call with analysts and investors today to coincide with the
publication of its Earnings Release. The call will take place at
07.30am BST. Details of how to participate in the call and the live
audio webcast can be found at www.hsbc.com/investors.
About HSBC
HSBC Holdings plc
HSBC Holdings plc, the parent company of HSBC, is headquartered
in London. HSBC serves customers worldwide from offices in 62
countries and territories. With assets of $2,990bn at 31 March
2023, HSBC is one of the world's largest banking and financial
services organisations.
Financial summary
Constant currency performance
Constant currency performance is computed by adjusting reported
results for the effects of foreign currency translation
differences, which distort period-on-period comparisons.
We consider constant currency performance to provide useful
information for investors by aligning internal and external
reporting, and reflecting how management assesses period-on-period
performance.
Foreign currency translation differences
Foreign currency translation differences reflect the movements
of the US dollar against most major currencies. We exclude them to
derive constant currency data, allowing us to assess balance sheet
and income statement performance on a like-for-like basis and to
better understand the underlying trends in the business.
Foreign currency translation differences
Foreign currency translation differences for 1Q23 are computed by retranslating
into US dollars for non-US dollar branches, subsidiaries, joint ventures
and associates:
* the income statements for 4Q22 and 1Q22 at the
average rate of exchange for 1Q23; and
* the closing prior period balance sheets at the
prevailing rates of exchange at 31 March 2023.
No adjustment has been made to the exchange rates used to translate
foreign currency-denominated assets and liabilities into the functional
currencies of any HSBC branches, subsidiaries, joint ventures or associates.
The constant currency data of HSBC's Argentina subsidiaries has not
been adjusted further for the impacts of hyperinflation. Since 1 June
2022, Türkiye has been deemed a hyperinflationary economy for
accounting purposes. HSBC has an operating entity in Türkiye and
the constant currency data has not been adjusted further for the impacts
of hyperinflation. When reference is made to foreign currency translation
differences in tables or commentaries, comparative data reported in
the functional currencies of HSBC's operations have been translated
at the appropriate exchange rates applied in the current period on
the basis described above.
================================================================================
Notable items
We separately disclose 'notable items', which are components of
our income statement that management would consider as outside the
normal course of business and generally non-recurring in
nature.
The tables on pages 35 to 41 detail the effects of notable items
on each of our global business segments and legal entities during
1Q23, 4Q22 and 1Q22.
Global business performance
The Group Chief Executive, supported by the rest of the Group
Executive Committee ('GEC'), is considered to be the Chief
Operating Decision Maker ('CODM') for the purposes of identifying
the Group's reportable segments.
The Group Chief Executive and the rest of the GEC review
operating activity on a number of bases, including by global
business and legal entities. Our global businesses - Wealth and
Personal Banking, Commercial Banking and Global Banking and Markets
- along with Corporate Centre are our reportable segments under
IFRS 8 'Operating Segments'. Global business results are assessed
by the CODM on the basis of constant currency performance, which
removes the effects of currency translation impacts from reported
results. Therefore, we present these results on a constant currency
basis.
As required by IFRS 8, reconciliations of the constant currency
results to the Group's reported results are presented on page 34.
Supplementary reconciliations of constant currency to reported
results by global business are presented on pages 35 to 37 for
information purposes.
Management view of revenue on a constant currency basis
Our global business segment commentary includes tables that
provide breakdowns of revenue on a constant currency basis by major
product. These reflect the basis on which revenue performance of
the businesses is assessed and managed.
Summary consolidated income statement
Quarter ended(1)
---------------------------------------------------------------------------------
31 Mar 31 Dec 31 Mar
2023 2022 2022
$m $m $m
----------------------------------- -------------------------- ------------------------- --------------------------
Net interest income 8,959 8,986 6,475
----------------------------------- -------------------------- ------------------------- --------------------------
Net fee income 3,004 2,690 3,210
----------------------------------- -------------------------- ------------------------- --------------------------
Net income from financial
instruments held for trading
or managed on a fair value basis 4,112 2,662 2,281
----------------------------------- -------------------------- ------------------------- --------------------------
Net income/(expense) from assets
and liabilities
of insurance businesses, including
related derivatives,
measured at fair value through
profit or loss 3,894 2,281 (5,886)
----------------------------------- -------------------------- ------------------------- --------------------------
Changes in fair value of designated
debt and related
derivatives(2) 117 23 (78)
----------------------------------- -------------------------- ------------------------- --------------------------
Changes in fair value of other
financial instruments
mandatorily measured at fair value
through profit
or loss 77 38 72
----------------------------------- -------------------------- ------------------------- --------------------------
Gains less losses from financial
investments 11 (84) 43
Insurance finance income/(expense) (3,912) (2,151) 5,786
----------------------------------- -------------------------- ------------------------- --------------------------
Insurance service result 284 239 219
Gain on acquisitions(3) 1,511 - -
----------------------------------- -------------------------- ------------------------- --------------------------
Reversal of impairment loss 2,130 - -
relating to the planned
sale of our retail banking
operations in France(4)
----------------------------------- -------------------------- ------------------------- --------------------------
Other operating income/(expense) (16) (117) 183
Net operating income before change
in expected
credit losses and other credit
impairment charges(5) 20,171 14,567 12,305
----------------------------------- -------------------------- ------------------------- --------------------------
Change in expected credit losses
and other credit
impairment charges (432) (1,430) (639)
Net operating income 19,739 13,137 11,666
----------------------------------- -------------------------- ------------------------- --------------------------
Total operating expenses excluding
impairment of
goodwill and other intangible
assets (7,588) (8,717) (8,173)
----------------------------------- -------------------------- ------------------------- --------------------------
Impairment of goodwill and other
intangible assets 2 (64) (5)
----------------------------------- -------------------------- ------------------------- --------------------------
Operating profit 12,153 4,356 3,488
----------------------------------- -------------------------- ------------------------- --------------------------
Share of profit in associates and
joint ventures 733 693 656
----------------------------------- -------------------------- ------------------------- --------------------------
Profit before tax 12,886 5,049 4,144
----------------------------------- -------------------------- ------------------------- --------------------------
Tax expense (1,860) (388) (712)
----------------------------------- -------------------------- ------------------------- --------------------------
Profit after tax 11,026 4,661 3,432
----------------------------------- -------------------------- ------------------------- --------------------------
Attributable to:
----------------------------------- -------------------------- ------------------------- --------------------------
- ordinary shareholders of the
parent company 10,327 4,378 2,755
----------------------------------- -------------------------- ------------------------- --------------------------
- preference shareholders of the - - -
parent company
----------------------------------- -------------------------- ------------------------- --------------------------
- other equity holders 418 124 488
----------------------------------- -------------------------- ------------------------- --------------------------
- non-controlling interests 281 159 189
----------------------------------- -------------------------- ------------------------- --------------------------
Profit after tax 11,026 4,661 3,432
----------------------------------- -------------------------- ------------------------- --------------------------
$ $$
----------------------------------- -------------------------- ------------------------- -------------------------
Basic earnings per share 0.52 0.22 0.14
----------------------------------- -------------------------- ------------------------- --------------------------
Diluted earnings per share 0.52 0.22 0.14
----------------------------------- -------------------------- ------------------------- --------------------------
Dividend per ordinary share (paid - - -
in the period)
----------------------------------- -------------------------- ------------------------- --------------------------
% %%
----------------------------------- -------------------------- ------------------------- -------------------------
Return on average ordinary
shareholders' equity
(annualised) 25.5 11.3 6.7
----------------------------------- -------------------------- ------------------------- --------------------------
Return on average tangible equity
(annualised) 27.4 12.3 7.2
Cost efficiency ratio 37.6 60.3 66.5
----------------------------------- -------------------------- ------------------------- --------------------------
1 From 1 January 2023, we adopted IFRS 17 'Insurance Contracts',
which replaced IFRS 4 'Insurance Contracts'. Comparative data have
been
re-presented accordingly.
2 The debt instruments, issued for funding purposes, are
designated under the fair value option to reduce an accounting
mismatch.
3 Provisional gain of $1.5bn recognised in respect of the acquisition of SVB UK.
4 Reversal of the $2.1bn impairment loss relating to the planned
sale of the retail banking operations in France, recognised in
3Q22, which is no longer classified as held for sale.
5 Net operating income before change in expected credit losses
and other credit impairment charges, also referred to as
revenue.
Distribution of results by global business and legal entity
Distribution of results by global business
Quarter ended
----------------------------------------------------------------------------
31 Mar 31 Dec 31 Mar
2023 2022 2022
$m $m $m
---------------------------------------- ------------------------ ----------------------- -------------------------
Constant currency revenue(1)
---------------------------------------- ------------------------ ----------------------- -------------------------
Wealth and Personal Banking 8,983 6,932 4,948
---------------------------------------- ------------------------ ----------------------- -------------------------
Commercial Banking(2) 6,675 4,856 3,347
---------------------------------------- ------------------------ ----------------------- -------------------------
Global Banking and Markets(2) 4,440 3,404 3,703
---------------------------------------- ------------------------ ----------------------- -------------------------
Corporate Centre 73 (349) (426)
---------------------------------------- ------------------------ ----------------------- -------------------------
Total 20,171 14,843 11,572
---------------------------------------- ------------------------ ----------------------- -------------------------
Constant currency profit/(loss) before
tax
---------------------------------------- ------------------------ ----------------------- -------------------------
Wealth and Personal Banking 5,271 2,872 1,108
---------------------------------------- ------------------------ ----------------------- -------------------------
Commercial Banking(2) 4,812 2,021 1,668
---------------------------------------- ------------------------ ----------------------- -------------------------
Global Banking and Markets(2) 2,040 625 1,094
---------------------------------------- ------------------------ ----------------------- -------------------------
Corporate Centre 763 (372) (32)
---------------------------------------- ------------------------ ----------------------- -------------------------
Total 12,886 5,146 3,838
---------------------------------------- ------------------------ ----------------------- -------------------------
1 Constant currency net operating income before change in
expected credit losses and other credit impairment charges
including the effects of foreign currency translation differences,
also referred to as constant currency revenue.
2 In the first quarter of 2023, following an internal review to
assess which global businesses were best suited to serve our
customers' respective needs, a portfolio of our customers within
our markets in Latin America was transferred from GBM to CMB for
reporting purposes. Comparative data have been re-presented
accordingly.
Distribution of results by legal entity
Quarter ended
------------------------------------------------------------------------------
31 Mar 31 Dec 31 Mar
2023 2022 2022
$m $m $m
-------------------------------------- ----------------------- ------------------------- --------------------------
Reported profit/(loss) before tax
-------------------------------------- ----------------------- ------------------------- --------------------------
HSBC UK Bank plc 3,131 1,140 1,170
-------------------------------------- ----------------------- ------------------------- --------------------------
HSBC Bank plc 2,714 (356) (23)
-------------------------------------- ----------------------- ------------------------- --------------------------
The Hongkong and Shanghai Banking
Corporation Limited 5,849 3,753 2,765
-------------------------------------- ----------------------- ------------------------- --------------------------
HSBC Bank Middle East Limited 377 179 182
-------------------------------------- ----------------------- ------------------------- --------------------------
HSBC North America Holdings Inc. 307 84 310
-------------------------------------- ----------------------- ------------------------- --------------------------
HSBC Bank Canada 239 219 231
-------------------------------------- ----------------------- ------------------------- --------------------------
Grupo Financiero HSBC, S.A. de C.V. 215 140 113
-------------------------------------- ----------------------- ------------------------- --------------------------
Other trading entities(1) 493 438 262
-------------------------------------- ----------------------- ------------------------- --------------------------
- of which: other Middle East entities
(Oman, Türkiye,
Egypt, Saudi Arabia) 139 150 210
-------------------------------------- ----------------------- ------------------------- --------------------------
- of which: Saudi Awwal Bank 110 133 (2)
-------------------------------------- ----------------------- ------------------------- --------------------------
Holding companies, shared service
centres and intra-group
eliminations (439) (548) (866)
-------------------------------------- ----------------------- ------------------------- --------------------------
Total 12,886 5,049 4,144
-------------------------------------- ----------------------- ------------------------- --------------------------
Constant currency profit before tax
-------------------------------------- ----------------------- ------------------------- --------------------------
HSBC UK Bank plc 3,131 1,182 1,060
-------------------------------------- ----------------------- ------------------------- --------------------------
HSBC Bank plc 2,714 (332) (11)
-------------------------------------- ----------------------- ------------------------- --------------------------
The Hongkong and Shanghai Banking
Corporation Limited 5,849 3,810 2,649
-------------------------------------- ----------------------- ------------------------- --------------------------
HSBC Bank Middle East Limited 377 179 181
-------------------------------------- ----------------------- ------------------------- --------------------------
HSBC North America Holdings Inc. 307 84 310
-------------------------------------- ----------------------- ------------------------- --------------------------
HSBC Bank Canada 239 220 216
-------------------------------------- ----------------------- ------------------------- --------------------------
Grupo Financiero HSBC, S.A. de C.V. 215 147 124
-------------------------------------- ----------------------- ------------------------- --------------------------
Other trading entities(1) 493 396 198
-------------------------------------- ----------------------- ------------------------- --------------------------
- of which: other Middle East entities
(Oman, Türkiye,
Egypt, Saudi Arabia) 139 124 154
-------------------------------------- ----------------------- ------------------------- --------------------------
- of which: Saudi Awwal Bank 110 133 (2)
-------------------------------------- ----------------------- ------------------------- --------------------------
Holding companies, shared service
centres and intra-group
eliminations (439) (540) (889)
-------------------------------------- ----------------------- ------------------------- --------------------------
Total 12,886 5,146 3,838
-------------------------------------- ----------------------- ------------------------- --------------------------
1 Other trading entities includes the results of entities
located in Oman, Türkiye, Egypt and Saudi Arabia (including our
share of the results of Saudi Awwal Bank) which do not consolidate
into HSBC Bank Middle East Limited. Supplementary analysis is
provided on page 42 for a fuller picture of the MENA regional
performance.
Tables showing constant currency profit before tax by global
business and legal entity are presented to support the commentary
on constant currency performance on pages 10 and 11.
The tables on pages 35 to 41 reconcile reported to constant
currency results for each of our global business segments and legal
entities.
Income statement commentary
Group
1Q23 compared with 1Q22 - reported results
Movement in reported profit compared with 1Q22
Quarter ended
---------------------------
31 Mar 31 Mar Variance
---------------------------------------------------------------
2023 2022 1Q23 vs. 1Q22 Impact
of FX
$m $m $m % %
-------------- ------------------------ ------------------------- -------------------------- ------ ---------------------------
Revenue 20,171 12,305 7,866 64 (10)
-------------- ------------------------ ------------------------- -------------------------- ------ ---------------------------
ECL (432) (639) 207 32 1
-------------- ------------------------ ------------------------- -------------------------- ------ ---------------------------
Operating
expenses (7,586) (8,178) 592 7 6
-------------- ------------------------ ------------------------- -------------------------- ------ ---------------------------
Share of
profit/(loss)
from
associates
and JVs 733 656 77 12 (9)
-------------- ------------------------ ------------------------- -------------------------- ------ ---------------------------
Profit before
tax 12,886 4,144 8,742 >100 -
-------------- ------------------------ ------------------------- -------------------------- ------ ---------------------------
Tax expense (1,860) (712) (1,148) >(100)
-------------- ------------------------ ------------------------- -------------------------- ------ ---------------------------
Profit after
tax 11,026 3,432 7,594 >100
-------------- ------------------------ ------------------------- -------------------------- ------ ---------------------------
Notable items
Quarter ended
------------------------------------------------------
31 Mar 31 Mar
2023 2022
$m $m
--------------------------------------------------- -------------------------- --------------------------
Revenue
--------------------------------------------------- -------------------------- --------------------------
- disposals, acquisitions and related costs 3,562 -
--------------------------------------------------- -------------------------- --------------------------
- fair value movements on financial instruments(1) 15 (200)
--------------------------------------------------- -------------------------- --------------------------
- restructuring and other related costs - 80
--------------------------------------------------- -------------------------- --------------------------
Operating expenses
--------------------------------------------------- -------------------------- --------------------------
- disposals, acquisitions and related costs (61) -
--------------------------------------------------- -------------------------- --------------------------
- restructuring and other related costs - (451)
--------------------------------------------------- -------------------------- --------------------------
1 Fair value movements on non-qualifying hedges in HSBC Holdings.
Reported profit
Reported profit after tax of $11.0bn was $7.6bn higher than in
1Q22.
Reported profit before tax of $12.9bn was $8.7bn higher, which
included a $2.1bn reversal of an impairment relating to the planned
sale of our retail banking operations in France, and a provisional
gain of $1.5bn recognised on the acquisition of SVB UK. The
increase also included continued growth in net interest income,
reflecting the impact of interest rate rises. Reported operating
expenses were lower, mainly reflecting reduced restructuring and
other related costs following the completion of our cost-saving
programme. Reported ECL charges were also lower, reflecting a
favourable change in the probability weightings of economic
scenarios, as well as low levels of stage 3 charges.
Reported revenue
Reported revenue of $20.2bn was $7.9bn or 64% higher, and
included a reversal of an impairment relating to the planned sale
of our retail banking operations in France and a provisional gain
on the acquisition of SVB UK, as described above.
The increase also reflected the impact of interest rate rises,
mainly in Global Payments Solutions ('GPS') in Commercial Banking
('CMB') and Global Banking and Markets ('GBM'), and in Personal
Banking and Global Private Banking in Wealth and Personal Banking
('WPB'). In GBM, higher Global Foreign Exchange revenue reflected
increased client activity and market volatility, while growth in
Global Debt Markets revenue reflected favourable market conditions
and a better trading performance.
These increases were partly offset by lower Credit and Lending
revenue in CMB, primarily driven by margin compression, and by
lower revenue in GBM, reflecting disciplined balance sheet
management. Additionally, revenue fell in Markets Treasury from
lower net interest income due to the impact of rising interest
rates on our funding costs and flattening yield curves, as well as
from lower disposal gains related to risk management activities.
This revenue is allocated to our global businesses.
The increase in reported revenue compared with 1Q22 included an
adverse impact of foreign currency translation differences between
the periods of $0.7bn.
Reported ECL
Reported ECL of $0.4bn were $0.2bn or 32% lower than in 1Q22. In
1Q23, the ECL charge reflected a favourable change in the
probability weightings of economic scenarios, as well as low levels
of stage 3 charges of $0.4bn. The ECL charge in 1Q22 included
allowances related to the Russia-Ukraine war and heightened
inflationary risks, as well as allowances related to direct Russia
exposures and the commercial real estate sector in mainland
China.
Reported operating expenses
Reported operating expenses of $7.6bn were $0.6bn or 7% lower,
mainly reflecting a reduction in restructuring and other related
costs following the completion of our cost-saving programme, which
concluded at the end of 2022, and from ongoing cost discipline.
These were partly offset by a rise in technology costs, continued
inflationary impacts, investment in wealth in Asia and higher
operations costs due to business volume growth.
The reduction in reported operating expenses compared with 1Q22
included a favourable impact of foreign currency translation
differences between the periods of $0.5bn.
Reported share of profit from associates and JVs
Reported share of profit from associates and joint ventures of
$0.7bn was $0.1bn or 12% higher than in 1Q22, primarily driven by a
higher share of profit from Saudi Awwal Bank ('SAB'), formerly The
Saudi British Bank.
Tax expense
Tax in 1Q23 was a charge of $1.9bn, representing an effective
tax rate of 14.4%, which was 3.0 percentage points lower than the
effective tax rate of 17.4% for 1Q22. The effective tax rate for
1Q23 was decreased by 3.2 percentage points by the non-taxable
provisional gain on the acquisition of SVB UK and by 3.3 percentage
points by the release of provisions for uncertain tax positions.
The effective tax rate for 1Q22 was decreased by 4.4 percentage
points by the impact of remeasuring deferred tax balances for a
change in the UK statutory tax rate. Excluding these items, the
effective tax rate was 20.9% for 1Q23 and 21.8% for 1Q22.
In 1Q23, we adjusted our annualised RoTE of 27.4% to exclude the
impact of the reversal of an impairment relating to the planned
sale of our retail banking operations in France and the provisional
gain of $1.5bn on the acquisition of SVB UK. This resulted in a
RoTE of 19.3%. The release of provisions for uncertain tax
positions in 1Q23 had an approximately 1 percentage point
favourable impact on the Group's RoTE.
First interim dividend for 2023
On 2 May 2023, the Board announced a first interim dividend for
2023 of $0.10 per ordinary share. For further details, see page
43.
Group
1Q23 compared with 1Q22 - constant currency basis
Movement in profit before tax compared with 1Q22 - on a constant currency
basis
Quarter ended
31 Mar 31 Mar Variance
------------------------------
2023 2022 1Q23 vs. 1Q22
$m $m $m %
--------------------------------- ------------------------ ------------------------- ------------------------ ----
Revenue 20,171 11,572 8,599 74
--------------------------------- ------------------------ ------------------------- ------------------------ ----
ECL (432) (632) 200 32
--------------------------------- ------------------------ ------------------------- ------------------------ ----
Operating expenses (7,586) (7,712) 126 2
--------------------------------- ------------------------ ------------------------- ------------------------ ----
Share of profit from associates
and JVs 733 610 123 20
--------------------------------- ------------------------ ------------------------- ------------------------ ----
Profit before tax 12,886 3,838 9,048 >100
--------------------------------- ------------------------ ------------------------- ------------------------ ----
Profit before tax of $12.9bn was $9.0bn higher than in 1Q22 on a
constant currency basis. Revenue increased by $8.6bn or 74%, and
included a $2.1bn reversal of an impairment relating to the planned
sale of our retail banking operations in France, and a provisional
gain of $1.5bn recognised on the acquisition of SVB UK. The
increase in revenue was also due to higher net interest income
reflecting the impact of global interest rates rises and revenue
growth in Markets and Securities Services ('MSS') in GBM. ECL
charges were $0.2bn lower, and operating expenses decreased by
$0.1bn or 2%, mainly driven by a reduction in restructuring and
other related costs following the completion of our cost-saving
programme at the end of 2022, which more than offset cost growth in
technology and inflationary impacts. The impact of retranslating
the prior year results of our operations in hyperinflationary
economies at 1Q23 average rates of foreign exchange resulted in
cost growth of $59m.
Group
1Q23 compared with 4Q22 - reported results
Movement in reported profit compared with 4Q22
Quarter ended
----------------------------------------------------------------------------------------- --------------------------
31 Mar 31 Dec Variance Impact
of FX
------------------------------------ --------------------------
2023 2022 1Q23 vs. 4Q22
$m $m $m % %
----------- ------------------------ ------------------------- -------------------------- -------- --------------------------
Revenue 20,171 14,567 5,604 38 2
----------- ------------------------ ------------------------- -------------------------- -------- --------------------------
ECL (432) (1,430) 998 70 -
----------- ------------------------ ------------------------- -------------------------- -------- --------------------------
Operating
expenses (7,586) (8,781) 1,195 14 (1)
----------- ------------------------ ------------------------- -------------------------- -------- --------------------------
Share of
profit
from
associates
and
JVs 733 693 40 6 4
----------- ------------------------ ------------------------- -------------------------- -------- --------------------------
Profit
before tax 12,886 5,049 7,837 >100 5
----------- ------------------------ ------------------------- -------------------------- -------- --------------------------
Tax expense (1,860) (388) (1,472) >(100)
----------- ------------------------ ------------------------- -------------------------- -------- --------------------------
Profit
after tax 11,026 4,661 6,365 >100
----------- ------------------------ ------------------------- -------------------------- -------- --------------------------
Notable items
Quarter ended
31 Mar 31 Dec
2023 2022
$m $m
--------------------------------------------------- -------------------------- ----------------------------
Revenue
--------------------------------------------------- -------------------------- ----------------------------
- disposals, acquisitions and related costs 3,562 (71)
--------------------------------------------------- -------------------------- ----------------------------
- fair value movements on financial instruments(1) 15 35
--------------------------------------------------- -------------------------- ----------------------------
- restructuring and other related costs - (284)
--------------------------------------------------- -------------------------- ----------------------------
Operating expenses
--------------------------------------------------- -------------------------- ----------------------------
- disposals, acquisitions and related costs (61) (9)
--------------------------------------------------- -------------------------- ----------------------------
- restructuring and other related costs - (1,160)
--------------------------------------------------- -------------------------- ----------------------------
1 Fair value movements on non-qualifying hedges in HSBC Holdings.
Reported profit
Reported profit after tax of $11.0bn was $6.4bn higher than in
4Q22.
Reported profit before tax of $12.9bn was $7.8bn higher. The
increase reflected higher revenue, which included a $2.1bn reversal
of an impairment relating to the planned sale of our retail banking
operations in France, and a provisional gain of $1.5bn recognised
on the acquisition of SVB UK. Revenue also increased in GBM's MSS
business. Reported operating expenses decreased, primarily
reflecting a reduction in restructuring and other related costs and
a lower performance-related pay accrual, while lower ECL reflected
a favourable change in the probability weightings of economic
scenarios, and lower stage 3 charges.
Reported revenue
Reported revenue of $20.2bn was $5.6bn or 38% higher, driven by
a reversal of an impairment relating to the planned sale of our
retail banking operations in France and a provisional gain on the
acquisition of SVB UK, as described above. The growth also
reflected an increase in client activity and market volatility
resulting in revenue growth in GBM's MSS business, notably in
Global Foreign Exchange and Global Debt Markets, as well as higher
Capital Markets and Advisory revenue. In GBM, there was also a
favourable movement in credit and funding valuation adjustments. In
WPB, wealth revenue increased, partly reflecting the rise in
customer activity following the reopening of the mainland China
border.
These increases were partly offset by a marginal fall in net
interest income, notably in WPB from the migration of deposits from
current and savings accounts to term deposits in our main entity in
Hong Kong. However, net interest income grew in GPS in CMB and GBM
as rising interest rates continued to benefit deposit margins.
Reported ECL
Reported ECL of $0.4bn were $1.0bn lower. The 1Q23 charge
reflected a favourable change in the probability weightings of
economic scenarios, as well as low levels of stage 3 charges of
$0.4bn. This compared with a charge of $1.4bn in 4Q22, which
included stage 3 charges related to the commercial real estate
sector in mainland China and charges relating to a worsening global
economic outlook.
For further details of the calculation of ECL, including the
measurement uncertainties and significant judgements applied to
such calculations, the impact of the economic scenarios and
management judgemental adjustments, see pages 23 to 26.
Reported operating expenses
Reported operating expenses of $7.6bn were $1.2bn or 14% lower,
primarily due to a reduction in restructuring and other related
costs following the completion of our cost-saving programme and a
lower performance-related pay accrual. These reductions were partly
offset by an increase in technology costs.
The number of employees expressed in full-time equivalent staff
('FTE') at 31 March 2023 was 221,656, an increase of 2,456 compared
with 31 December 2022. The number of contractors at 31 March 2023
was 5,564, a decrease of 483 due to the completion of our
cost-saving programme.
Reported share of profit from associates and JVs
Reported share of profit from associates and joint ventures of
$0.7bn was $40m or 6% higher, primarily from an increase in the
share of profit from Bank of Communications Co., Limited
('BoCom').
Group
1Q23 compared with 4Q22 - constant currency basis
Movement in profit before tax compared with 4Q22 - on a constant currency
basis
Quarter ended
31 Mar 31 Dec Variance
----------------------------------------
2023 2022 1Q23 vs. 4Q22
$m $m $m %
------------------------ ------------------------ ------------------------ -------------------------- ------------
Revenue 20,171 14,843 5,328 36
------------------------ ------------------------ ------------------------ -------------------------- ------------
ECL (432) (1,455) 1,023 70
------------------------ ------------------------ ------------------------ -------------------------- ------------
Operating expenses (7,586) (8,958) 1,372 15
------------------------ ------------------------ ------------------------ -------------------------- ------------
Share of profit from
associates and JVs 733 716 17 2
------------------------ ------------------------ ------------------------ -------------------------- ------------
Profit before tax 12,886 5,146 7,740 150
------------------------ ------------------------ ------------------------ -------------------------- ------------
Profit before tax of $12.9bn was $7.7bn higher than in 4Q22 on a
constant currency basis. Growth reflected an increase in revenue of
$5.3bn or 36%, primarily driven by a $2.1bn reversal of an
impairment relating to the planned sale of our retail banking
operations in France, and a provisional gain of $1.5bn recognised
on the acquisition of SVB UK. In addition, the increase in revenue
included growth in MSS in GBM and Wealth in WPB. The reduction in
operating expenses of $1.4bn or 15% reflected lower restructuring
and other related costs following the completion of our cost-saving
programme, and a lower performance-related pay accrual, while a
$1.0bn reduction in ECL was mainly as 4Q22 included an increase in
stage 3 charges related to the commercial real estate sector in
mainland China.
Net interest margin
Quarter ended
-------------------------------------------------------------------------------------------
31 Mar 31 Dec 31 Mar
2023 2022 2022
$m $m $m
------------------------- ----------------------------- ----------------------------- -----------------------------
Net interest income 8,959 8,986 6,475
------------------------- ----------------------------- ----------------------------- -----------------------------
Average interest-earning
assets 2,152,893 2,116,018 2,200,896
------------------------- ----------------------------- ----------------------------- -----------------------------
% %%
------------------------- ----------------------------- ----------------------------- ----------------------------
Gross interest yield(1) 4.16 3.55 1.69
------------------------- ----------------------------- ----------------------------- -----------------------------
Less: gross interest
payable(1) (2.91) (2.21) (0.59)
------------------------- ----------------------------- ----------------------------- -----------------------------
Net interest spread(2) 1.25 1.34 1.10
------------------------- ----------------------------- ----------------------------- -----------------------------
Net interest margin(3) 1.69 1.68 1.19
------------------------- ----------------------------- ----------------------------- -----------------------------
1 Gross interest yield is the average annualised interest rate
earned on average interest-earning assets ('AIEA'). Gross interest
payable is the average annualised interest cost as a percentage of
average interest-bearing liabilities.
2 Net interest spread is the difference between the average
annualised interest rate earned on AIEA, net of amortised premiums
and loan fees, and the average annualised interest rate payable on
average interest-bearing funds.
3 Net interest margin is net interest income expressed as an annualised percentage of AIEA.
Net interest margin ('NIM') of 1.69% was 50 basis points ('bps')
higher compared with 1Q22, driven by higher market interest rates.
The yield on AIEA increased by 247bps, partly offset by a 232bps
rise in the funding cost of average interest-bearing liabilities.
The increase in NIM in 1Q23 included the adverse impact of foreign
currency translation differences. Excluding these, NIM increased by
52bps.
In 1Q23, net interest income included a $1.4bn interest expense
representing a component of centrally allocated funding costs
associated with generating 'net income from financial instruments
held for trading or managed on a fair value basis'. This compared
with an interest expense of $0.1bn in 1Q22 and $1.3bn in 4Q22.
NIM was up 1bps compared with 4Q22, predominantly driven by
improved asset yields as a result of higher interest rates in most
of our markets, partly offset by lower margins in Asia due to
higher term deposit migration and a reduction in the Hong Kong
Interbank Offered Rate ('HIBOR'). The increase in NIM in 1Q23
included the adverse impact of foreign currency translation
differences. Excluding these, NIM increased by 2bps compared with
4Q22.
The impact of the adoption of IFRS 17 'Insurance Contracts' was
a reduction in net interest income in 4Q22 of $592m and $62bn lower
AIEA. This had a dilutive impact on our NIM, which fell by 6bps
from 1.74% to 1.68%. The impact of IFRS 17 is dilutive due to the
fact that these AIEA are funded primarily by policyholders' funds
and not by interest-bearing liabilities.
Summary consolidated balance sheet
At(1)
-----------------------------------------------
31 Mar 31 Dec
2023 2022
$m $m
------------------------------------------------------ ---------------------- -----------------------
Assets
------------------------------------------------------ ---------------------- -----------------------
Cash and balances at central banks 327,554 327,002
------------------------------------------------------ ---------------------- -----------------------
Trading assets 228,429 218,093
------------------------------------------------------ ---------------------- -----------------------
Financial assets designated and otherwise mandatorily
measured at fair value through profit or loss 103,659 100,101
Derivatives 237,200 284,159
------------------------------------------------------ ---------------------- -----------------------
Loans and advances to banks 110,721 104,475
------------------------------------------------------ ---------------------- -----------------------
Loans and advances to customers 963,394 923,561
------------------------------------------------------ ---------------------- -----------------------
Reverse repurchase agreements - non-trading 260,688 253,754
------------------------------------------------------ ---------------------- -----------------------
Financial investments 390,351 364,726
------------------------------------------------------ ---------------------- -----------------------
Assets held for sale 90,059 115,919
------------------------------------------------------ ---------------------- -----------------------
Other assets 277,641 257,496
------------------------------------------------------ ---------------------- -----------------------
Total assets 2,989,696 2,949,286
------------------------------------------------------ ---------------------- -----------------------
Liabilities and equity
------------------------------------------------------ ---------------------- -----------------------
Liabilities
------------------------------------------------------ ---------------------- -----------------------
Deposits by banks 75,513 66,722
------------------------------------------------------ ---------------------- -----------------------
Customer accounts 1,604,099 1,570,303
------------------------------------------------------ ---------------------- -----------------------
Repurchase agreements - non-trading 139,694 127,747
------------------------------------------------------ ---------------------- -----------------------
Trading liabilities 77,340 72,353
------------------------------------------------------ ---------------------- -----------------------
Financial liabilities designated at fair value 146,617 127,321
------------------------------------------------------ ---------------------- -----------------------
Derivatives 237,493 285,762
------------------------------------------------------ ---------------------- -----------------------
Debt securities in issue 85,351 78,149
------------------------------------------------------ ---------------------- -----------------------
Insurance contract liabilities 114,626 108,816
------------------------------------------------------ ---------------------- -----------------------
Liabilities of disposal groups held for sale 84,057 114,597
------------------------------------------------------ ---------------------- -----------------------
Other liabilities 227,383 212,319
------------------------------------------------------ ---------------------- -----------------------
Total liabilities 2,792,173 2,764,089
------------------------------------------------------ ---------------------- -----------------------
Equity
------------------------------------------------------ ---------------------- -----------------------
Total shareholders' equity 190,095 177,833
------------------------------------------------------ ---------------------- -----------------------
Non-controlling interests 7,428 7,364
------------------------------------------------------ ---------------------- -----------------------
Total equity 197,523 185,197
------------------------------------------------------ ---------------------- -----------------------
Total liabilities and equity 2,989,696 2,949,286
------------------------------------------------------ ---------------------- -----------------------
1 From 1 January 2023, we adopted IFRS 17 'Insurance Contracts',
which replaced IFRS 4 'Insurance Contracts'. Comparative data have
been
re-presented accordingly.
Balance sheet commentary
Balance sheet - 31 March 2023 compared with 31 December 2022
At 31 March 2023, our total assets of $3.0tn were $40bn higher
on a reported basis and included favourable effects of foreign
currency translation differences of $26bn. On a constant currency
basis, total assets were $15bn higher due to growth in financial
investments, a seasonal increase in settlement accounts as
customers aim to settle their trades at 31 December, and growth in
lending balances following the acquisition of SVB UK. These
increases were partly offset by lower derivative asset balances
reflecting adverse revaluation movements on foreign exchange and
interest rate contracts.
Loans and advances to customers as a percentage of customer
accounts was 60.1%, which was higher than 58.8% at 31 December
2022.
Combined view of customer lending and customer deposits
At
-----------------------------------------------------
31 Mar 31 Dec
2023 2022
$m $m
------------------------------------------------------------ ------------------------- --------------------------
Loans and advances to customers 963,394 923,561
------------------------------------------------------------ ------------------------- --------------------------
- of which Silicon Valley Bank UK Limited 7,349 -
------------------------------------------------------------ ------------------------- --------------------------
Loans and advances to customers of disposal groups reported
in 'Assets held for sale' 55,742 80,576
------------------------------------------------------------ ------------------------- --------------------------
* Canada 55,404 55,197
------------------------------------------------------------
* France retail banking operations - 25,029
------------------------------------------------------------
* other 338 350
------------------------------------------------------------ -------------------------
Combined customer lending 1,019,136 1,004,137
------------------------------------------------------------ ------------------------- --------------------------
Currency translation - 8,622
------------------------------------------------------------ ------------------------- --------------------------
Combined customer lending at constant currency 1,019,136 1,012,759
------------------------------------------------------------ ------------------------- --------------------------
Customer accounts 1,604,099 1,570,303
------------------------------------------------------------ ------------------------- --------------------------
- of which Silicon Valley Bank UK Limited 8,478 -
------------------------------------------------------------ ------------------------- --------------------------
Customer accounts reported in 'Liabilities of disposal
groups held for sale' 61,909 85,274
------------------------------------------------------------ ------------------------- --------------------------
* Canada 59,735 60,606
------------------------------------------------------------
* France retail banking operations - 22,348
------------------------------------------------------------
* other 2,174 2,320
------------------------------------------------------------ -------------------------
Combined customer deposits 1,666,008 1,655,577
------------------------------------------------------------ ------------------------- --------------------------
Currency translation - 13,005
------------------------------------------------------------ ------------------------- --------------------------
Combined customer deposits at constant currency 1,666,008 1,668,582
------------------------------------------------------------ ------------------------- --------------------------
Loans and advances to customers
Loans and advances to customers of $1.0tn were $40bn higher on a
reported basis. This included the following items:
-- adverse effects of foreign currency translation differences of $8bn;
-- an increase from the reclassification of $25bn of lending
balances from 'assets held for sale' relating to the planned sale
of our retail banking operations in France; and
-- an increase in lending balances through the acquisition of SVB UK of $7bn.
Excluding these factors, customer lending balances remained
broadly stable, reflecting the following movements:
In WPB, customer lending increased by $3bn, primarily from
mortgage balance growth in Hong Kong, Australia and Singapore.
In CMB, customer lending was $1bn higher, including the transfer
of a portfolio of Global Banking clients to CMB in our legal
entities in Australia and Indonesia. This was partly offset by
lower balances in our legal entity in Hong Kong.
In GBM, lending fell by $5bn, including the transfer of a
portfolio of Global Banking clients to CMB referred to above. The
reduction also reflected lower term lending in our main legal
entity in Asia, partly offset by an increase in overdraft balances
in HSBC Bank plc.
Customer accounts
Customer accounts of $1.6tn increased by $34bn on a reported
basis. This included the following items:
-- adverse effects of foreign currency translation differences of $12bn;
-- an increase from the reclassification of $23bn of customer
account balances from 'liabilities of disposal groups held for
sale' relating to the planned sale of our retail banking operations
in France; and
-- an increase in customer accounts through the acquisition of SVB UK of $8bn.
Excluding these factors, customer accounts fell by $10bn,
reflecting the following movements:
In WPB, customer accounts rose by $3bn, notably due to an
increase in our entity in Hong Kong driven by higher term deposit
balances, partly offset by a decrease in interest-bearing current
accounts. There were also net outflows in HSBC UK.
In CMB, the reduction in customer accounts of $6bn reflected net
outflows in our legal entities in Hong Kong, HSBC UK and HSBC Bank
plc. These factors were partly offset by the impact of a transfer
of a portfolio of Global Banking clients to CMB in our legal
entities in Australia and Indonesia.
In GBM, customer accounts decreased by $7bn, including the
transfer of clients to CMB referred to above. The reduction also
included lower interest-bearing and non-interest-bearing balances
in our Hong Kong entity, partly offset by balance growth in HSBC
Bank plc.
Financial investments
As part of our interest rate hedging strategy, we hold a
portfolio of debt instruments, reported within financial
investments, which are classified as hold-to-collect-and-sell. As a
result, the change in value of these instruments is recognised
through 'debt instruments at fair value through other comprehensive
income' in equity.
At 31 March 2023, we had recognised a cumulative unrealised loss
of $5.9bn on these hold-to-collect-and-sell positions through other
comprehensive income , which included a $0.6bn gain in 1Q23,
inclusive of movements on related fair value hedges. This excluded
insurance assets. Overall, the Group is positively exposed to
rising interest rates through net interest income, although there
is an adverse impact on our capital base in the early stages of a
rising interest rate environment due to the fair value of
hold-to-collect-and-sell instruments. After the initial negative
effect materialising through reserves, the net interest income of
the Group is expected to result in a net benefit over time,
provided policy rates follow market implied rates.
Over time, these adverse movements will unwind as the
instruments reach maturity, although not all will necessarily be
held to maturity.
We also hold a portfolio of financial investments measured at
amortised cost, which are classified as hold-to-collect. At 31
March 2023, there was a cumulative unrealised loss of $1.4bn
related to this portfolio, excluding insurance assets. During 1Q23
there was a $0.5bn improvement in the unrealised loss balance. At
31 December 2022, a significant portion of this portfolio was
related to our insurance business, which after the adoption of IFRS
17 is now classified as fair value through profit and loss.
Risk-weighted assets - 31 March 2023 compared with 31 December
2022
Risk-weighted assets ('RWAs') rose by $14.7bn during the
quarter, including an increase of $3.4bn from foreign currency
translation differences. Excluding foreign currency translation
differences, RWAs increased by $11.3bn. This was primarily due
to:
-- a $11.3bn asset size increase, primarily due to growth in
sovereign exposures and retail lending, additional RWAs related to
HSBC Canada disposal hedges, and higher structural foreign exchange
exposures on market risk RWAs; and
-- a $9.6bn increase through the acquisition of SVB UK.
These were partly offset by:
-- a $7.0bn drop in RWAs due to methodology and policy changes,
which included a $7.7bn fall due to a regulatory change related to
the risk weighting of residential mortgages in Hong Kong, partly
offset by changes to risk weights on certain exposures in our
associate SAB; and
-- a $2.3bn decrease driven by portfolio mix changes in our global businesses.
--
Global businesses
Wealth and Personal Banking - constant currency basis
Management view of revenue
Quarter ended
------------------------------------------------------------------------------------------------------------------------------------------
31 Mar 31 Dec 31 Mar Variance
--------------------------------------------------------
2023 2022 2022 1Q23 vs. 1Q22
$m $m $m $m %
---------------- ------------------------ -------------------------- -------------------------- --------------------------- ---------------------------
Wealth 1,961 1,794 1,735 226 13
---------------- ------------------------ -------------------------- -------------------------- --------------------------- ---------------------------
- investment
distribution 636 553 635 1 -
---------------- ---------------------------
- Global Private
Banking 571 522 453 118 26
---------------- ---------------------------
net interest
income 293 295 167 126 75
---------------- ---------------------------
non-interest
income 278 227 286 (8) (3)
---------------- ---------------------------
- life insurance 448 425 381 67 18
---------------- ---------------------------
- asset
management 306 294 266 40 15
---------------- ------------------------ -------------------------- -------------------------- --------------------------- ---------------------------
Personal Banking 4,967 5,069 3,033 1,934 64
---------------- ------------------------ -------------------------- -------------------------- --------------------------- ---------------------------
- net interest
income 4,659 4,743 2,722 1,937 71
---------------- ---------------------------
- non-interest
income 308 326 311 (3) (1)
---------------- ------------------------ -------------------------- -------------------------- --------------------------- ---------------------------
Other(1) 2,055 69 180 1,875 >100
---------------- ------------------------ -------------------------- -------------------------- --------------------------- ---------------------------
- of which:
reversal of
impairment
loss relating
to the planned
sale
of our retail
banking
operations in
France 2,021 - - 2,021 -
---------------- ------------------------ -------------------------- -------------------------- --------------------------- ---------------------------
Net operating
income(2) 8,983 6,932 4,948 4,035 82
---------------- ------------------------ -------------------------- -------------------------- --------------------------- ---------------------------
RoTE
(annualised)(3)
(%) 50.2 13.8 10.3
---------------- ------------------------ -------------------------- -------------------------- --------------------------- ---------------------------
1 'Other' includes Markets Treasury, HSBC Holdings interest
expense and hyperinflation. It also includes the distribution and
manufacturing (where applicable) of retail and credit protection
insurance, disposal gains and other non-product-specific
income.
2 'Net operating income' means net operating income before
change in expected credit losses and other credit impairment
charges (also referred to as 'revenue').
3 RoTE (annualised) in 1Q23 included a 21.3 percentage point
favourable impact of the reversal of the impairment losses relating
to the planned sale of our retail banking operations in France.
RoTE for the 31 December 2022 period represents the full-year RoTE
for 2022.
Notable items
Quarter ended
31 Mar 31 Dec 31 Mar
2023 2022 2022
$m $m $m
-------------------------------- -------------------------- ---------------------------- --------------------------
Revenue
-------------------------------- -------------------------- ---------------------------- --------------------------
- disposals, acquisitions and
related costs 2,021 (7) -
-------------------------------- -------------------------- ---------------------------- --------------------------
- fair value movements on - - -
financial instruments
-------------------------------- -------------------------- ---------------------------- --------------------------
- restructuring and other
related costs - - 93
-------------------------------- -------------------------- ---------------------------- --------------------------
Operating expenses
-------------------------------- -------------------------- ---------------------------- --------------------------
- disposals, acquisitions and
related costs (21) (3) -
-------------------------------- -------------------------- ---------------------------- --------------------------
- restructuring and other
related costs - (182) (53)
-------------------------------- -------------------------- ---------------------------- --------------------------
1Q23 compared with 1Q22
Profit before tax of $5.3bn was $4.2bn higher than in 1Q22 on a
constant currency basis, including a $2.0bn reversal of an
impairment relating to the sale of our retail banking operations in
France. The growth in profit before tax also included an increase
in revenue of $1.9bn in Personal Banking from higher net interest
income due to rising interest rates, higher wealth revenue of
$0.2bn, a reduction of $26m in operating expenses and a fall in ECL
of $0.1bn .
Revenue of $9.0bn was $4.0bn or 82% higher on a constant
currency basis. This included the impact of a reversal of an
impairment relating to the planned sale of our retail banking
operations in France included within 'Other'. There was also strong
growth in Personal Banking net interest income of $1.9bn from
rising interest rates and balance sheet growth, a rise of $0.1bn in
Global Private Banking net interest income and a $0.1bn increase in
revenue in life insurance. These were partly offset by a reduction
in revenue allocated from Corporate Centre of $0.2bn, including
from Markets Treasury.
In Wealth, revenue of $2.0bn was up $0.2bn or 13%.
-- Global Private Banking revenue was $0.1bn or 26% higher due
to the positive impact of rising interest rates on net interest
income.
-- Life insurance revenue rose by $0.1bn or 18%. The new
business contractual service margin written of $0.4bn in 1Q23 was
up $0.1bn, mainly in Hong Kong due in part to the mainland China
border reopening and the launch of new products in 1Q23. Under IFRS
17, the future profits from new business are capitalised in the
contractual service margin, and not recognised immediately in the
income statement, as was the case for the value of new business
measure under IFRS 4.
In Personal Banking, revenue of $5.0bn was up $1.9bn or 64%.
-- Net interest income was $1.9bn or 71% higher due to the
benefit of interest rate rises and wider margins. This was
supported by moderate lending growth in HSBC UK, and our main legal
entities in Asia, Mexico, the US and the Middle East. Mortgage
lending rose in HSBC UK by $7bn and in our main legal entity in
Asia by $3bn. Compared with 1Q22, retail deposit balances in our
main legal entity in Asia increased by $4bn or 1%, offset by a
reduction of $5bn or 2% in retail deposits in HSBC UK.
Other revenue increased by $1.9bn , mainly due to a $2.0bn
reversal of the impairment relating to the planned sale of our
retail banking operations in France.
ECL were $0.2bn, compared with $0.3bn in 1Q22. The reduction in
the charge was primarily in HSBC UK due to a favourable shift in
economic scenario probability weightings, while 1Q22 included
charges related to the Russia-Ukraine conflict and inflationary
pressures.
Operating expenses of $3.5bn were 1% lower on a constant
currency basis, reflecting ongoing cost discipline and a reduction
in the number of branches. These were partly offset by continued
investments, notably in wealth in Asia, and the impact of higher
inflation.
Commercial Banking - constant currency basis
Management view of revenue
Quarter ended
------------------------------------------------------------------------------------------------------------------------------------------
31 Mar 31 Dec 31 Mar Variance
--------------------------------------------------------
2023 2022 2022 1Q23 vs. 1Q22
$m $m $m $m %
---------------- ------------------------ -------------------------- -------------------------- --------------------------- ---------------------------
Global Trade and
Receivables
Finance 510 507 518 (8) (2)
---------------- ------------------------ -------------------------- -------------------------- --------------------------- ---------------------------
Credit and
Lending 1,364 1,396 1,431 (67) (5)
---------------- ------------------------ -------------------------- -------------------------- --------------------------- ---------------------------
Global Payments
Solutions 2,911 2,677 984 1,927 >100
---------------- ------------------------ -------------------------- -------------------------- --------------------------- ---------------------------
GBM products,
Insurance and
Investments,
and Other(1) 1,890 276 414 1,476 >100
---------------- ------------------------ -------------------------- -------------------------- --------------------------- ---------------------------
- of which:
share of
revenue from
Markets and
Securities
Services and
Banking
products 337 280 301 36 12
---------------- ------------------------ -------------------------- -------------------------- --------------------------- ---------------------------
- of which:
provisional
gain on the
acquisition of
Silicon Valley
Bank
UK Limited 1,511 - - 1,511 -
---------------- ------------------------ -------------------------- -------------------------- --------------------------- ---------------------------
Net operating
income(2) 6,675 4,856 3,347 3,328 99
---------------- ------------------------ -------------------------- -------------------------- --------------------------- ---------------------------
RoTE
(annualised)(3)
(%) 36.1 13.7 12.0
---------------- ------------------------ -------------------------- -------------------------- --------------------------- ---------------------------
1 Includes CMB's share of revenue from the sale of Markets and
Securities Services and Banking products to CMB customers. GBM's
share of revenue from the sale of these products to CMB customers
is included within the corresponding lines of the GBM management
view of revenue. Also includes allocated revenue from Markets
Treasury, HSBC Holdings interest expense and hyperinflation.
2 'Net operating income' means net operating income before
change in expected credit losses and other credit impairment
charges (also referred to as 'revenue').
3 RoTE (annualised) in 1Q23 included a 13.3 percentage point
favourable impact of the provisional gain on the acquisition of
Silicon Valley Bank UK Limited. RoTE for the 31 December 2022
period represents the full-year RoTE for 2022.
Notable items
Quarter ended
31 Mar 31 Dec 31 Mar
2023 2022 2022
$m $m $m
---------------------------------- -------------------------- -------------------------- --------------------------
Revenue
---------------------------------- -------------------------- -------------------------- --------------------------
- disposals, acquisitions and 1,511 - -
related costs
- restructuring and other related - (15) -
costs
---------------------------------- -------------------------- -------------------------- --------------------------
Operating expenses
- restructuring and other related
costs - (142) (30)
---------------------------------- -------------------------- -------------------------- --------------------------
1Q23 compared with 1Q22
Profit before tax of $4.8bn was $3.1bn higher than in 1Q22 on a
constant currency basis. This was driven by an increase in revenue
across all our main legal entities, primarily from a $1.9bn or 282%
increase in Global Payments Solutions ('GPS') net interest income.
It also included a provisional gain of $1.5bn from HSBC UK's
acquisition of SVB UK. These were partly offset by a net ECL charge
compared with a net release of ECL in 1Q22, while operating
expenses remained broadly stable.
Revenue of $6.7bn was $3.3bn or 99% higher on a constant
currency basis:
-- In GPS, revenue increased by $1.9bn, with growth in all main
legal entities driven by an increase in margins reflecting interest
rate rises and business actions while average balances were broadly
flat. There was also a 14% increase in fee income, notably in cards
and payments, with growth across most of our main legal entities,
notably in the UK.
-- In Global Trade and Receivables Finance ('GTRF'), revenue was
broadly stable. There were lower balances reflecting the softer
trade cycle, notably in our main legal entity in Asia, while
balances increased in HSBC UK. This was largely offset by higher
margins and a 2% increase in fee income.
-- In Credit and Lending, revenue decreased by $0.1bn or 5%,
notably in the Asia and European legal entities, primarily due to
higher funding costs.
-- In GBM products, Insurance and Investments, and Other,
revenue increased by $1.5bn, primarily reflecting the provisional
gain of $1.5bn on the acquisition of SVB UK, and a 12% increase in
collaboration revenue from GBM products, notably Foreign Exchange.
These were partly offset by a fall of $0.3bn from revenue allocated
from Corporate Centre, notably Markets Treasury revenue and the
adverse impacts of hyperinflation accounting.
ECL were a net charge of $0.2bn, compared with a net release of
$7m in 1Q22 on a constant currency basis. The charge in 1Q23,
primarily related to stage 3 charges, was partly offset by a net
release of stage 1 and stage 2 allowances reflecting a favourable
shift in economic scenario probability weightings. The net release
in 1Q22 primarily reflected the release of Covid-19-related
allowances.
Operating expenses of $1.7bn were broadly stable on a constant
currency basis. The continued investment in technology and higher
transactional costs resulting from business growth were largely
mitigated by the impact of our continued cost discipline around
hiring and lower discretionary expenditure.
Global Banking and Markets - constant currency basis
Management view of revenue
Quarter ended
-------------------------------------------------------------------------------------------------------------------------------------------------
31 Mar 31 Dec 31 Mar Variance
--------------------------------------------------------
2023 2022 2022 1Q23 vs. 1Q22
$m $m $m $m %
------------- --------------------------- ---------------------------- ---------------------------- --------------------------- ---------------------------
Markets and
Securities
Services 2,558 1,955 2,275 283 12
------------- --------------------------- ---------------------------- ---------------------------- --------------------------- ---------------------------
- Securities
Services 585 583 460 125 27
------------- ---------------------------
- Global Debt
Markets 350 163 197 153 78
------------- ---------------------------
- Global
Foreign
Exchange 1,219 958 1,019 200 20
------------- ---------------------------
- Equities 143 136 396 (253) (64)
------------- ---------------------------
- Securities
Financing 261 213 210 51 24
------------- ---------------------------
- Credit and
funding
valuation
adjustments - (98) (7) 7 100
------------- --------------------------- ---------------------------- ---------------------------- --------------------------- ---------------------------
Banking 2,132 1,940 1,483 649 44
------------- --------------------------- ---------------------------- ---------------------------- --------------------------- ---------------------------
- Global
Trade and
Receivables
Finance 179 175 164 15 9
------------- ---------------------------
- Global
Payments
Solutions 1,075 1,046 459 616 >100
------------- ---------------------------
- Credit and
Lending 498 515 543 (45) (8)
------------- ---------------------------
- Capital
Markets and
Advisory 306 125 275 31 11
------------- ---------------------------
- Other(1) 74 79 42 32 76
------------- --------------------------- ---------------------------- ---------------------------- --------------------------- ---------------------------
GBM Other (250) (491) (55) (195) >(100)
------------- --------------------------- ---------------------------- ---------------------------- --------------------------- ---------------------------
- Principal
Investments (4) (3) 57 (61) >(100)
------------- ---------------------------
- Other(2) (246) (488) (112) (134) >(100)
------------- --------------------------- ---------------------------- ---------------------------- --------------------------- ---------------------------
Net operating
income(3) 4,440 3,404 3,703 737 20
------------- --------------------------- ---------------------------- ---------------------------- --------------------------- ---------------------------
RoTE
(annualised)
(%)(4) 15.5 9.8 8.7
------------- --------------------------- ---------------------------- ---------------------------- --------------------------- ---------------------------
1 Includes portfolio management, earnings on capital and other
capital allocations on all Banking products.
2 Includes notional tax credits and Markets Treasury, HSBC
Holdings interest expense and hyperinflation.
3 'Net operating income' means net operating income before
change in expected credit losses and other credit impairment
charges (also referred to as 'revenue').
4 RoTE for the 31 December 2022 period represents the full-year RoTE for 2022.
Notable items
Quarter ended
31 Mar 31 Dec 31 Mar
2023 2022 2022
$m $m $m
-------------------------------- ---------------------------- -------------------------- --------------------------
Revenue
- restructuring and other
related costs - (123) (15)
-------------------------------- ---------------------------- -------------------------- --------------------------
Operating expenses
-------------------------------- ---------------------------- -------------------------- --------------------------
- disposals, acquisitions and 3 - -
related costs
-------------------------------- ---------------------------- -------------------------- --------------------------
- restructuring and other
related costs - (115) (38)
-------------------------------- ---------------------------- -------------------------- --------------------------
1Q23 compared with 1Q22
Profit before tax of $2.0bn was $0.9bn or 86% higher than in
1Q22 on a constant currency basis. This was driven by an increase
in revenue of $0.7bn or 20%, notably from higher net interest
income in GPS, strong performances across various asset classes in
Markets and Securities Services and a lower ECL charge. Operating
expenses increased marginally.
Revenue of $4.4bn was $0.7bn or 20% higher on a constant
currency basis.
In Markets and Securities Services, revenue increased by $0.3bn
or 12%.
-- In Global Debt Markets, revenue increased by $0.2bn or 78%
from favourable market conditions and a better trading performance.
The 1Q22 period was impacted by challenging market conditions and
muted primary activity.
-- In Global Foreign Exchange, revenue growth of $0.2bn or 20%
reflected strong client hedging activity driven by market-wide
volatility related to inflation and interest rate expectations.
-- In Securities Services, revenue grew by $0.1bn or 27% from
higher net interest income as global interest rates rose. This was
partly offset by reduced fee income from lower market levels.
-- In Securities Financing, revenue increased by $0.1bn or 24%,
driven by favourable market conditions and a strong prime trading
performance.
-- In Equities, revenue fell by $0.3bn or 64% in the context of
a strong 1Q22, and due to lower client volumes in 1Q23.
In Banking, revenue increased by $0.6bn or 44%.
-- In GPS, revenue increased by $0.6bn, driven by margin growth
from rising global interest rates and as a result of business
pricing actions.
-- Credit and Lending revenue decreased by $45m or 8%,
reflecting disciplined balance sheet management.
-- Capital Markets and Advisory revenue, which includes Issuer
Services, increased by $31m or 11%.
In GBM Other, Principal Investments revenue declined by $0.1bn,
as 1Q23 included lower revaluation gains compared with 1Q22. There
was also a $0.1bn reduction in revenue allocated from Corporate
Centre, notably Markets Treasury revenue and the adverse impacts of
hyperinflationary accounting.
ECL were $32m in 1Q23, reflecting a favourable shift in economic
scenario probability weightings. This compared with ECL of $0.3bn
in 1Q22 on a constant currency basis, primarily from the
deterioration in the economic outlook due to the Russia-Ukraine war
and inflationary pressures.
Operating expenses of $2.4bn increased by $0.1bn or 2% on a
constant currency basis from the impact of inflation, which was
partly offset by disciplined cost management.
Corporate Centre - constant currency basis
Management view of revenue
Quarter ended
-----------------------------------------------------------------------------------------------------------------------
31 Mar 31 Dec 31 Mar Variance
--------------------------------
2023 2022 2022 1Q23 vs. 1Q22
$m $m $m $m %
------------- --------------------------- -------------------------- ---------------------------- -------------------------- ----
Central
Treasury(1) 101 (12) (189) 290 >100
------------- --------------------------- -------------------------- ---------------------------- -------------------------- ----
Legacy
portfolios (2) (170) (19) 17 0
------------- --------------------------- -------------------------- ---------------------------- -------------------------- ----
Other(2,3) (26) (167) (218) 192 0
------------- --------------------------- -------------------------- ---------------------------- -------------------------- ----
Net operating
income(4) 73 (349) (426) 499 >100
------------- --------------------------- -------------------------- ---------------------------- -------------------------- ----
RoTE
(annualised)
(%)(5) 11.1 2.8 (1.9)
------------- --------------------------- -------------------------- ---------------------------- -------------------------- ----
1 Central Treasury comprises valuation differences on issued
long-term debt and associated swaps.
2 Other comprises consolidation adjustments, funding charges on
property and technology assets, revaluation gains and losses on
investment properties and property disposals and other revenue
items not allocated to global businesses.
3 Revenue from Markets Treasury, HSBC Holdings net interest
expense and hyperinflation are allocated out to the global
businesses, to align them better with their revenue and expense.
The total Markets Treasury revenue component of this allocation for
1Q23 was $243m (1Q22: $472m; 4Q22: $298m).
4 'Net operating income' means net operating income before
change in expected credit losses and other credit impairment
charges (also referred to as 'revenue').
5 RoTE for the 31 December 2022 period represents the full-year RoTE for 2022.
Notable items
Quarter ended
31 Mar 31 Dec 31 Mar
2023 2022 2022
$m $m $m
------------------------------ -------------------------- ---------------------------- ----------------------------
Revenue
------------------------------ -------------------------- ---------------------------- ----------------------------
- disposals, acquisitions and
related costs 30 (64) -
------------------------------ -------------------------- ---------------------------- ----------------------------
- fair value movements on
financial instruments(1) 15 35 (200)
------------------------------ -------------------------- ---------------------------- ----------------------------
- restructuring and other
related costs - (146) 2
------------------------------ -------------------------- ---------------------------- ----------------------------
Operating expenses
------------------------------ -------------------------- ---------------------------- ----------------------------
- disposals, acquisitions and
related costs (43) (6) -
------------------------------ -------------------------- ---------------------------- ----------------------------
- restructuring and other
related costs - (721) (330)
------------------------------ -------------------------- ---------------------------- ----------------------------
1 Fair value movements on non-qualifying hedges in HSBC Holdings.
1Q23 compared with 1Q22
Profit before tax of $0.8bn was $0.8bn higher than in 1Q22 on a
constant currency basis. This increase primarily reflected the
non-recurrence of adverse fair value movements on financial
instruments and lower restructuring and other related costs,
together with an increase in the share of profit from associates
and joint ventures.
Revenue was $0.5bn higher on a constant currency basis. This
reflected the non-recurrence of adverse fair value movements on
financial instruments and favourable valuation differences on
long-term debt and associated swaps in Central Treasury (up
$0.3bn), and transactional foreign currency-related valuation
gains. These were partly offset by adverse fair value movements in
1Q23 of $0.1bn relating to the foreign exchange hedging of the
proceeds from the planned sale of our banking business in
Canada.
Operating expenses decreased by $0.2bn or 89% on a constant
currency basis, primarily driven by lower restructuring and other
related costs following the completion of our cost-saving programme
at the end of 2022.
Share of profit from associates and joint ventures of $0.7bn
increased by $0.1bn or 19% on a constant currency basis, primarily
driven by an increase in the share of profit from SAB.
Risk
Approach to risk management
We aim to use a comprehensive risk management approach across
the organisation and across all risk types, underpinned by our
culture and values. This is outlined in our risk management
framework, including the key principles and practices that we
employ in managing material risks, both financial and
non-financial. The framework fosters continual monitoring, promotes
risk awareness and encourages sound operational and strategic
decision making. It also supports a consistent approach to
identifying, assessing, managing and reporting the risks we accept
and incur in our activities. We continue to actively review and
develop our risk management framework, and enhance our approach to
managing risk with clear accountabilities.
We operate a wide-ranging stress testing programme, which is a
valuable forward-looking risk management tool that forms a key
component of our risk management, capital and liquidity planning.
Stress testing provides senior management with key insights into
the impacts of severely adverse conditions and events on the Group,
and helps provide confidence to regulators on the Group's financial
stability.
We plan to run an internal climate scenario analysis in the
second half of 2023 as we continue to develop our capabilities and
methodologies for analysing the challenges and opportunities of
climate change to our net zero strategy, as well as to inform
capital planning and risk appetite.
At 31 March 2023, our CET1 ratio increased to 14.7%, from 14.2%
at 31 December 2022, and our liquidity coverage ratio ('LCR') was
132%.
Geopolitical and macroeconomic risks
The Russia-Ukraine war has continued to have far-reaching
geopolitical and economic implications. It has resulted in the
imposition of significant sanctions and trade restrictions against
Russia by the UK, the US and the EU, as well as other countries.
Russia has implemented certain countermeasures in response.
The relationship between China and several countries, including
the UK and the US, also continues to remain complex. The UK, the
US, the EU and other countries have imposed various sanctions and
trade restrictions on Chinese persons and companies. In response
China has imposed sanctions and introduced new laws and trade
restrictions that could impact the Group and its customers. Further
sanctions or counter-sanctions, whether in connection with Russia
or China, may affect the Group and its customers by creating
regulatory, reputational and market risks.
Amid rising inflation, central banks in both developed and
emerging markets tightened monetary policy in 2022. Interest rates
continued to increase in the first quarter of 2023, although
following uncertainty concerning the US and Swiss banking sectors,
market expectations indicate that policy tightening may be close to
its peak. Global inflation appears to be levelling out, although
recent unexpected oil output reductions have resulted in continued
uncertainty.
Fiscal deficits are likely to remain high in both developed and
emerging markets as public spending is extended to provide help to
vulnerable households and businesses, against a backdrop of slower
growth, high energy prices and higher interest rates. This could
increase the strains on highly leveraged sovereigns, corporates and
households. While the average maturity of sovereign debt in
developed markets has lengthened, rising interest rates may
eventually bring into question the sustainability of debt levels in
some countries. Among emerging markets, countries that need to
refinance maturing US dollar-denominated debt, in the context of a
strong dollar, higher interest rates and greater risk aversion, may
face increasing difficulties.
The Chinese government has progressively introduced policy
measures that helped increase liquidity and the supply of credit to
the mainland China commercial real estate sector. A recovery in
Chinese domestic demand for residential real estate and improved
customer sentiment are necessary developments to support the
ongoing health of the sector. There are some early but growing
signs of stabilisation in property transaction volumes and prices
in mainland China, but the benefits of the positive developments
appear to be favouring state-owned enterprises and the stronger
privately owned enterprises in the sector. We will continue to
monitor the sector closely, notably the risk of real estate sector
defaults and payment extension requests, along with the associated
impact on market sentiment. We expect the restructuring of the
China commercial real estate sector and resolution of the impacts
to be protracted.
Our businesses continue to consider the impact of the increasing
cost of living on our retail customers. We are engaging closely
with our key regulators to help ensure we continue to meet their
expectations of financial institutions' activities at a time of
market volatility.
During the first quarter of 2023, there was an improvement in
the economic outlook compared with 31 December 2022. While our
approach to macroeconomic scenarios remained unchanged, inflation
and interest rate risks are still key concerns for most markets.
Management adjustments to ECL were applied to reflect persisting
uncertainty in certain sectors driven by these risks, where these
were not fully captured by our models.
We continue to monitor, and seek to manage, the potential
implications of all the above developments on our customers and our
business.
Ibor transition
The publication of sterling, Swiss franc, euro and Japanese yen
Libor interest rate benchmarks, as well as Euro Overnight Index
Average ('Eonia'), ceased from the end of 2021. Our interbank
offered rate ('Ibor') transition programme - which is tasked with
the development of new near risk-free rate ('RFR') products and the
transition of legacy Ibor products - continues to support the
transition of a limited number of remaining contracts that
reference three-month sterling Libor, which will continue to be
published using a 'synthetic' interest rate methodology until 31
March 2024.
Prior to the cessation of the publication of US dollar Libor
from 30 June 2023, we have implemented the majority of required
processes, technology and RFR product capabilities throughout the
Group. We have participated in Libor to RFR market conversion
events and are steadily progressing with the transition of legacy
US dollar Libor and other demising Ibor contracts. Some US dollar
Libor contracts that are proving more difficult to transition may
be aided by the April 2023 announcement from the UK Financial
Conduct Authority that ICE Benchmark Administration Limited will be
compelled to publish one-month, three-month and six-month US dollar
Libor settings using an alternative methodology until 30 September
2024.
We continue to be exposed to risks associated with Ibor
transition, which include regulatory compliance risk, resilience
risk, financial reporting risk, legal risk, model risk and market
risk. The level of these key risks is diminishing in line with our
process implementation and the transition of our legacy contracts.
We have implemented mitigating controls, where required, and
continue to actively manage and monitor these risks.
Credit risk
Summary of credit risk
At 31 March 2023, gross loans and advances to customers and
banks of $1,086bn increased by $46.3bn on a reported basis. This
included:
-- an increase from the reclassification of $22.6bn of personal
loans and advances to customers from 'assets held for sale', as the
completion of the planned sale of our retail banking operations in
France has become less certain and no longer meets the definition
of held for sale;
-- favourable foreign exchange movements of $8.1bn; and
-- an increase in wholesale loans and advances to customers of
$7.4bn, and loans and advances to banks of $1.0bn through the
acquisition of SVB UK in March.
Excluding these factors, loans and advances to customers and
banks increased by $7.2bn, mainly driven by wholesale lending in
France (up $4.0bn) and personal lending in Asia, particularly Hong
Kong (up $2.3bn).
At 31 March 2023, the allowance for ECL of $12.7bn comprised
$12.1bn in respect of assets held at amortised cost, $0.4bn in
respect of loan commitments and financial guarantees, and $0.2bn in
respect of debt instruments measured at fair value through other
comprehensive income ('FVOCI').
On a reported basis, the allowance for ECL increased by $0.1bn
including adverse foreign exchange movements of $0.1bn. Allowances
for ECL in wholesale and personal loans and advances to customers
were broadly unchanged.
The ECL charge for the first three months of 2023 of $0.4bn,
inclusive of recoveries, was driven by an improved economic
outlook, reduced uncertainty and low levels of stage 3 charges. The
ECL charge comprised: $0.2bn in respect of wholesale lending, of
which the stage 3 charge was $0.3bn, and $0.2bn in respect of
personal lending, of which the stage 3 charge was $0.2bn.
Summary of financial instruments to which the impairment requirements
in IFRS 9 are applied
At 31 Mar 2023 At 31 Dec 2022
------------------------------------------------------------------------ --------------------------------------------------------------------
Gross carrying/nominal Allowance Gross carrying/nominal Allowance
amount for amount for
ECL(1) ECL(1)
$m $m $m $m
--------------- --------------------------------- ------------------------------------- ----------------------------- -------------------------------------
Loans and
advances to
customers at
amortised cost 975,052 (11,658) 935,008 (11,447)
Loans and
advances to
banks at
amortised
cost 110,795 (74) 104,544 (69)
--------------- --------------------------------- ------------------------------------- ----------------------------- -------------------------------------
Other financial
assets
measured at
amortised cost 975,596 (403) 954,934 (493)
--------------- --------------------------------- ------------------------------------- ----------------------------- -------------------------------------
- cash and
balances at
central banks 327,556 (2) 327,005 (3)
---------------
- items in the
course of
collection
from other
banks 6,577 - 7,297 -
---------------
- Hong Kong
Government
certificates
of
indebtedness 43,009 - 43,787 -
---------------
- reverse
repurchase
agreements -
non-trading 260,688 - 253,754 -
---------------
- financial
investments 131,379 (24) 109,086 (20)
---------------
- assets held
for sale(2) 76,810 (324) 102,556 (415)
---------------
- other
assets(3) 129,577 (53) 111,449 (55)
--------------- --------------------------------- ------------------------------------- -----------------------------
Total gross
carrying
amount
on-balance
sheet 2,061,443 (12,135) 1,994,486 (12,009)
--------------- --------------------------------- ------------------------------------- ----------------------------- -------------------------------------
Loan and other
credit-related
commitments 638,382 (361) 618,788 (386)
Financial
guarantees 18,586 (51) 18,783 (52)
Total nominal
amount
off-balance
sheet(4) 656,968 (412) 637,571 (438)
--------------- --------------------------------- ------------------------------------- ----------------------------- -------------------------------------
2,718,411 (12,547) 2,632,057 (12,447)
--------------- --------------------------------- ------------------------------------- ----------------------------- -------------------------------------
Memorandum Memorandum
Fair allowance Fair allowance
value for ECL(5) value for ECL(5)
$m $m $m $m
--------------- --------------------------------- ------------------------------------- ----------------------------- -------------------------------------
Debt
instruments
measured at
fair
value through
other
comprehensive
income
('FVOCI') 267,615 (132) 265,147 (126)
--------------- --------------------------------- ------------------------------------- ----------------------------- -------------------------------------
1 The total ECL is recognised in the loss allowance for the
financial asset unless the total ECL exceeds the gross carrying
amount of the financial asset, in which case the ECL is recognised
as a provision.
2 Includes $74,108m gross carrying amounts and $256m allowances
for ECL related to the planned sale of our banking business in
Canada (31 December 2022: $74,482m and $254m), and nil gross
carrying amounts and nil allowances for ECL related to the planned
sale of our retail banking operations in France (31 December 2022:
$25,267m and $92m).
3 Includes only those financial instruments that are subject to
the impairment requirements of IFRS 9. 'Other assets' as presented
within the summary consolidated balance sheet on page 13 comprises
both financial and non-financial assets, including cash collateral
and settlement accounts.
4 Represents the maximum amount at risk should the contracts be
fully drawn upon and clients default.
5 Debt instruments measured at FVOCI continue to be measured at
fair value with the allowance for ECL as a memorandum item. Change
in ECL is recognised in 'Change in expected credit losses and other
credit impairment charges' in the income statement.
Summary of credit risk (excluding debt instruments measured at FVOCI)
by stage distribution and ECL coverage at 31 March 2023
Gross carrying/nominal Allowance for ECL ECL coverage %
amount(1)
--------------------------------------------------------------------------------------------------------- ------------------------------------------------------------------
Stage Stage Stage POCI(2) Total Stage Stage Stage POCI(2) Total Stage Stage Stage POCI(2) Total
1 2 3 1 2 3 1 2 3
$m $m $m $m $m $m $m $m $m $m % % % % %
--------------- ------------------------------- ----------- -------------- ---------- ------------------------------- ---------------- -------------- -------------- ---------- ------------------------------- ---------- ---------- -------------- -------------- ----------
Loans
and advances
to customers
at amortised
cost 820,931 134,075 19,959 87 975,052 (1,169) (3,407) (7,047) (35) (11,658) 0.1 2.5 35.3 40.2 1.2
Loans
and advances
to banks
at amortised
cost 109,340 1,373 82 - 110,795 (18) (34) (22) - (74) - 2.5 26.8 - 0.1
--------------- ------------------------------- ----------- -------------- ---------- ------------------------------- ---------------- -------------- -------------- ---------- ------------------------------- ---------- ---------- -------------- -------------- ----------
Other
financial
assets
measured
at amortised
cost 958,782 16,262 552 - 975,596 (93) (154) (156) - (403) - 0.9 28.3 - -
--------------- ------------------------------- ----------- -------------- ---------- ------------------------------- ---------------- -------------- -------------- ---------- ------------------------------- ---------- ---------- -------------- -------------- ----------
Loan
and other
credit-related
commit-ments 604,824 32,049 1,509 - 638,382 (139) (155) (67) - (361) - 0.5 4.4 - 0.1
Financial
guarantees 15,856 2,521 209 - 18,586 (7) (11) (33) - (51) - 0.4 15.8 - 0.3
At 31
Mar 2023 2,509,733 186,280 22,311 87 2,718,411 (1,426) (3,761) (7,325) (35) (12,547) 0.1 2.0 32.8 40.2 0.5
--------------- ------------------------------- ----------- -------------- ---------- ------------------------------- ---------------- -------------- -------------- ---------- ------------------------------- ---------- ---------- -------------- -------------- ----------
1 Represents the maximum amount at risk should the contracts be
fully drawn upon and clients default.
2 Purchased or originated credit-impaired ('POCI').
Summary of credit risk (excluding debt instruments measured at FVOCI)
by stage distribution and ECL coverage at 31 December 2022
Gross carrying/nominal Allowance for ECL ECL coverage %
amount(1)
-------------------------------------------------------------------------------------------------------- ------------------------------------------------------------------------------------------------- ------------------------------------------------------------------
Stage Stage Stage POCI(2) Total Stage Stage Stage POCI(2) Total Stage Stage Stage POCI(2) Total
1 2 3 1 2 3 1 2 3
$m $m $m $m $m $m $m $m $m $m % % % % %
--------------- ------------------------------ ----------- --------------- ---------- ------------------------------ ---------------- --------------- --------------- ------------ ------------------------------- ---------- ---------- -------------- -------------- ----------
Loans
and advances
to customers
at amortised
cost 776,299 139,076 19,504 129 935,008 (1,092) (3,488) (6,829) (38) (11,447) 0.1 2.5 35.0 29.5 1.2
Loans
and advances
to banks
at amortised
cost 102,723 1,739 82 - 104,544 (18) (29) (22) - (69) - 1.7 26.8 - 0.1
--------------- ------------------------------ ----------- --------------- ---------- ------------------------------ ---------------- --------------- --------------- ------------ ------------------------------- ---------- ---------- -------------- -------------- ----------
Other
financial
assets
measured
at amortised
cost 938,798 15,339 797 - 954,934 (95) (165) (233) - (493) - 1.1 29.2 - 0.1
--------------- ------------------------------ ----------- --------------- ---------- ------------------------------ ---------------- --------------- --------------- ------------ ------------------------------- ---------- ---------- -------------- -------------- ----------
Loan
and other
credit-related
commit-ments 583,383 34,033 1,372 - 618,788 (141) (180) (65) - (386) - 0.5 4.7 - 0.1
Financial
guarantees 16,071 2,463 249 - 18,783 (6) (13) (33) - (52) - 0.5 13.3 - 0.3
At 31
Dec 2022 2,417,274 192,650 22,004 129 2,632,057 (1,352) (3,875) (7,182) (38) (12,447) 0.1 2.0 32.6 29.5 0.5
--------------- ------------------------------ ----------- --------------- ---------- ------------------------------ ---------------- --------------- --------------- ------------ ------------------------------- ---------- ---------- -------------- -------------- ----------
1 Represents the maximum amount at risk should the contracts be
fully drawn upon and clients default.
2 Purchased or originated credit-impaired ('POCI').
Measurement uncertainty and sensitivity analysis of ECL
estimates
The recognition and measurement of ECL involves the use of
significant judgement and estimation. We form multiple economic
scenarios based on economic forecasts, apply these assumptions to
credit risk models to estimate future credit losses, and
probability weight the results to determine an unbiased ECL
estimate. Management judgemental adjustments are used to address
late-breaking events, data and model limitations, model
deficiencies and expert credit judgements.
At 31 March 2023, management recognised an overall improvement
of the economic outlook and a reduction in uncertainty, which
consequently decreased weightings on the outer scenarios.
Methodology
At 31 March 2023, four economic scenarios were used to capture
the uncertain nature of the economic environment and to articulate
management's view of the range of potential outcomes.
Of those four scenarios, the Central scenario is drawn from
consensus forecasts. The Upside and Downside scenarios are created
from distributional forecast estimates. The fourth scenario, the
Downside 2, represents management's view of severe downside risks.
Scenarios produced to calculate ECL are aligned to HSBC's top and
emerging risks.
Description of economic scenarios
The economic assumptions presented in this section have been
formed by HSBC with reference to external forecasts, specifically
for the purpose of calculating ECL.
The outlook for the global economy has improved since the fourth
quarter, with data on economic activity in the first few months of
the year, particularly from labour markets, proving more resilient
than had previously been expected. This has led to an upward
adjustment to growth expectations for 2023 in our major markets.
Growth is nonetheless expected to slow in 2023 relative to 2022 in
advanced economies, and remain below trend. High inflation and
tighter monetary policy are squeezing households' real disposable
incomes and driving a slowdown in activity across interest
rate-sensitive sectors, particularly the housing market. For many
markets in Asia, growth is forecast to improve from a trough in
2022 following the removal of stringent pandemic-related public
health policy measures and reopening of borders.
Across most of our key markets, inflation is forecast to have
peaked, with indications that it has already started to moderate in
some markets amid lower energy prices and the easing of supply
chain disruptions. Significantly, that means global central banks
are also forecast to be near the end of the current tightening
cycle, with interest rates expected to peak in the coming months
across most of our major markets.
The risks to the economic outlook are captured in the outer
scenarios. Upside and Downside scenarios are constructed to reflect
the economic consequences from the crystallisation of a number of
macroeconomic and financial risks. Risks to the Central scenario
include inflation and monetary policy. Geopolitical risks also
present downside threats, which include an escalating
Russia-Ukraine war, continued differences between the US and China
over a range of strategic issues and the evolution of the UK's
relationship with the EU.
The four global scenarios used for calculating ECL at 31 March
2023 are the consensus Central scenario, the consensus Upside
scenario, the consensus Downside scenario and the Downside 2
scenario.
-- The consensus Central scenario: This scenario features an
initial period of below-trend GDP growth in most markets as
inflation and tighter monetary policy cause a squeeze on business
margins and households' real disposable income. Growth returns to
its long-term expected trend in later years as central banks bring
inflation back to target.
-- The consensus Upside scenario: This scenario features
stronger economic activity in the near term, compared with the
consensus Central scenario. In this scenario, growth accelerates,
inflation falls at a faster rate, unemployment falls further, and
equity markets and house prices see stronger gains than in the
Central scenario.
-- The consensus Downside scenario: This scenario features
weaker economic activity compared with the Central scenario, driven
by a temporary supply shock that causes a sharp rise in inflation
and interest rates above the Central scenario, and leads to a
moderate global recession. In this scenario, GDP contracts,
unemployment rises, and equity markets and house prices fall.
-- The Downside 2 scenario: This scenario reflects management's
view of the tail end of the economic distribution. It incorporates
the simultaneous crystallisation of a number of risks that drive
inflation and interest rates substantially higher than in the
Central scenario in the near term. The narrative features an
escalation of geopolitical risks and worsening of supply chain
disruptions. As a result, inflation and interest rates are expected
to rise significantly, causing a deep global recession with a rapid
increase in unemployment and sharp falls in asset prices.
Both the consensus Downside and the Downside 2 scenarios are
global in nature, and while they differ in severity, they assume
that the key risks to HSBC, listed above, crystallise
simultaneously.
The range of macroeconomic projections across the various
scenarios is shown in the table below:
Macroeconomic projections in key markets
Central Consensus Consensus Downside
scenario Upside scenario Downside scenario 2
scenario
-------------------------------------------------------------------
Five-year Five-year Best Five-year Worst Five-year Worst
average 2023 2024 2025 average outcome average outcome average outcome
------------- ---------- ---------------------------- ---------------------------- ---------- ---------- ------------------------ ---------------------------- ------------------------------------- ---------------------------- -------------------------------------
Hong Kong
------------- ---------- ---------------------------- ---------------------------- ---------- ---------- ---------------- ------ ---------------------------- ----------------------------- ------ ---------------------------- ----------------------------- ------
GDP growth
rate (%) 3.0 3.2 3.3 2.8 4.4 11.0 (4Q23) 1.4 (1.1) (2Q23) 0.8 (7.5) (1Q24)
------------- ---------- ---------------------------- ---------------------------- ---------- ---------- ---------------- ------ ---------------------------- ----------------------------- ------ ---------------------------- ----------------------------- ------
Unemployment
rate
(%) 3.4 3.4 3.3 3.5 3.2 2.7 (1Q24) 4.1 4.9 (1Q25) 5.1 5.6 (1Q25)
------------- ---------- ---------------------------- ---------------------------- ---------- ---------- ---------------- ------ ---------------------------- ----------------------------- ------ ---------------------------- ----------------------------- ------
House price
growth
(%) 0.8 (8.9) 1.5 1.7 1.5 4.4 (3Q24) 0.0 (12.7) (2Q23) (4.2) (13.3) (2Q23)
------------- ---------- ---------------------------- ---------------------------- ---------- ---------- ---------------- ------ ---------------------------- ----------------------------- ------ ---------------------------- ----------------------------- ------
Inflation
rate (%) 2.1 2.1 2.1 2.1 1.9 0.4 (1Q24) 2.2 0.7 (1Q25) 2.3 1.0 (1Q25)
------------- ---------- ---------------------------- ---------------------------- ---------- ---------- ---------------- ------ ---------------------------- ----------------------------- ------ ---------------------------- ----------------------------- ------
4.3 (1Q24) 4.8 (1Q24)
------------- ---------- ---------------------------- ---------------------------- ---------- ---------- ---------------- ------ ---------------------------- ----------------------------- ------ ---------------------------- ----------------------------- ------
Probability
(%) 75 10 10 5
------------- ---------------------------------------------------------------------------------- ------------------------------------ ------------------------------------------------------------------- -------------------------------------------------------------------
Mainland
China
------------- ---------- ---------------------------- ---------------------------- ---------- ---------- ---------------- ------ ---------------------------- ----------------------------- ------ ---------------------------- ----------------------------- ------
GDP growth
rate (%) 4.7 5.1 5.0 4.6 6.0 10.7 (1Q24) 3.6 2.2 (3Q23) 2.5 (3.4) (1Q24)
------------- ---------- ---------------------------- ---------------------------- ---------- ---------- ---------------- ------ ---------------------------- ----------------------------- ------ ---------------------------- ----------------------------- ------
Unemployment
rate
(%) 5.0 5.3 5.0 5.0 4.9 4.8 (1Q25) 5.3 5.9 (3Q23) 6.2 6.8 (1Q25)
------------- ---------- ---------------------------- ---------------------------- ---------- ---------- ---------------- ------ ---------------------------- ----------------------------- ------ ---------------------------- ----------------------------- ------
House price
growth
(%) 3.4 0.6 4.3 4.0 4.5 7.8 (3Q24) 2.4 (0.4) (2Q23) 0.0 (17.4) (1Q24)
------------- ---------- ---------------------------- ---------------------------- ---------- ---------- ---------------- ------ ---------------------------- ----------------------------- ------ ---------------------------- ----------------------------- ------
Inflation
rate (%) 2.2 2.3 2.3 2.3 2.0 0.9 (2Q24) 2.2 0.8 (1Q25) 2.3 1.1 (1Q25)
------------- ---------- ---------------------------- ---------------------------- ---------- ---------- ---------------- ------ ---------------------------- ----------------------------- ------ ---------------------------- ----------------------------- ------
5.0 (4Q23) 5.4 (1Q24)
------------- ---------- ---------------------------- ---------------------------- ---------- ---------- ---------------- ------ ---------------------------- ----------------------------- ------ ---------------------------- ----------------------------- ------
Probability
(%) 75 10 10 5
------------- ---------------------------------------------------------------------------------- ------------------------------------ ------------------------------------------------------------------- -------------------------------------------------------------------
UK
------------- ---------- ---------------------------- ---------------------------- ---------- ---------- ---------------- ------ ---------------------------- ----------------------------- ------ ---------------------------- ----------------------------- ------
GDP growth
rate (%) 1.1 (0.9) 0.8 1.8 1.9 3.3 (1Q25) 0.3 (2.5) (4Q23) 0.3 (6.5) (1Q24)
------------- ---------- ---------------------------- ---------------------------- ---------- ---------- ---------------- ------ ---------------------------- ----------------------------- ------ ---------------------------- ----------------------------- ------
Unemployment
rate
(%) 4.4 4.4 4.8 4.3 3.7 2.8 (1Q25) 5.1 6.6 (2Q24) 7.8 9.4 (3Q24)
------------- ---------- ---------------------------- ---------------------------- ---------- ---------- ---------------- ------ ---------------------------- ----------------------------- ------ ---------------------------- ----------------------------- ------
House price
growth
(%) 0.1 0.2 (4.6) 1.0 1.3 2.8 (2Q23) (1.6) (11.3) (2Q24) (5.1) (23.5) (2Q24)
------------- ---------- ---------------------------- ---------------------------- ---------- ---------- ---------------- ------ ---------------------------- ----------------------------- ------ ---------------------------- ----------------------------- ------
Inflation
rate (%) 2.7 6.8 2.7 2.0 2.4 1.0 (3Q24) 2.8 0.4 (1Q25) 2.3 (2.3) (3Q24)
------------- ---------- ---------------------------- ---------------------------- ---------- ---------- ---------------- ------ ---------------------------- ----------------------------- ------ ---------------------------- ----------------------------- ------
7.5 (3Q23) 11.9 (3Q23)
------------- ---------- ---------------------------- ---------------------------- ---------- ---------- ---------------- ------ ---------------------------- ----------------------------- ------ ---------------------------- ----------------------------- ------
Probability
(%) 70 5 20 5
------------- ---------------------------------------------------------------------------------- ------------------------------------ ------------------------------------------------------------------- -------------------------------------------------------------------
US
------------- ---------- ---------------------------- ---------------------------- ---------- ---------- ---------------- ------ ---------------------------- ----------------------------- ------ ---------------------------- ----------------------------- ------
GDP growth
rate (%) 1.6 0.7 1.1 2.1 2.6 3.5 (1Q25) 0.7 (2.7) (4Q23) 1.1 (3.8) (1Q24)
------------- ---------- ---------------------------- ---------------------------- ---------- ---------- ---------------- ------ ---------------------------- ----------------------------- ------ ---------------------------- ----------------------------- ------
Unemployment
rate
(%) 4.2 4.0 4.6 4.3 3.6 3.1 (4Q23) 4.8 6.0 (1Q24) 7.8 9.5 (1Q25)
------------- ---------- ---------------------------- ---------------------------- ---------- ---------- ---------------- ------ ---------------------------- ----------------------------- ------ ---------------------------- ----------------------------- ------
House price
growth
(%) 1.2 (0.9) (0.9) 2.5 3.1 6.2 (4Q24) 0.6 (5.0) (4Q23) (1.0) (18.3) (1Q24)
------------- ---------- ---------------------------- ---------------------------- ---------- ---------- ---------------- ------ ---------------------------- ----------------------------- ------ ---------------------------- ----------------------------- ------
Inflation
rate (%) 2.5 3.9 2.6 2.3 2.2 1.2 (1Q24) 2.5 0.9 (1Q25) 2.5 0.5 (1Q25)
------------- ---------- ---------------------------- ---------------------------- ---------- ---------- ---------------- ------ ---------------------------- ----------------------------- ------ ---------------------------- ----------------------------- ------
5.1 (1Q24) 5.7 (1Q24)
------------- ---------- ---------------------------- ---------------------------- ---------- ---------- ---------------- ------ ---------------------------- ----------------------------- ------ ---------------------------- ----------------------------- ------
Probability
(%) 75 5 15 5
------------- ---------------------------------------------------------------------------------- ------------------------------------ ------------------------------------------------------------------- -------------------------------------------------------------------
Note: The 'worst' or the 'best' outcome refers to the quarter
that is either the trough or peak in the respective variable, in
the first two years of the
scenario. For inflation, in the consensus Upside scenario, lower
inflation is interpreted as the 'best' outcome. Due to the nature
of the shock to inflation in the Downside scenarios, both the
lowest and highest point is shown in the tables.
At 31 March 2023, the consensus Upside and Central scenarios for
mainland China had a combined weighting of 85% (31 December 2022:
75%). In Hong Kong, the combined weighting of the consensus Upside
and Central scenarios was 85% (31 December 2022: 75%). For the UK,
the combined weighting of the consensus Upside and Central
scenarios was 75% (31 December 2022: 65%), and in the US the
combined weighting for the consensus Upside and Central scenarios
was 80% (31 December 2022: 75%).
Management judgemental adjustments
In the context of IFRS 9, management judgemental adjustments are
typically short-term increases or decreases to the modelled ECL at
either a customer, segment or portfolio level to account for
late-breaking events, model and data limitations and deficiencies,
and expert credit judgement applied following management review and
challenge. This includes refining model inputs and outputs and
using adjustments to ECL based on management judgement and higher
level quantitative analysis for impacts that are difficult to
model. The effects of management judgemental adjustments are
considered for both balances and ECL when determining whether or
not a significant increase in credit risk has occurred and is
allocated to a stage where appropriate. This is in accordance with
the internal adjustments framework.
Management judgemental adjustments are reviewed under the
governance process for IFRS 9 (as detailed in the section 'Credit
risk management' on page 145 of the Annual Report and Accounts
2022).
Review and challenge focuses on the rationale and quantum of the
adjustments with a further review carried out by the second line of
defence where significant. For some management judgemental
adjustments, internal frameworks establish the conditions under
which these adjustments should no longer be required and as such
are considered as part of the governance process. This internal
governance process allows management judgemental adjustments to be
reviewed regularly and, where possible, to reduce the reliance on
these through model recalibration or redevelopment, as appropriate.
The drivers of management judgemental adjustments continue to
evolve with the economic environment and as new risks emerge.
At 31 March 2023, management judgemental adjustments decreased
by $0.2bn compared with 31 December 2022. Adjustments reflected the
uncertainty related to high inflation, elevated interest rates and
sector-specific risks. In the retail portfolio, within other
macroeconomic-related adjustments there was a $0.3bn reduction to
ECL to account for model oversensitivity in Latin America.
Management judgemental adjustments made in estimating the
scenario-weighted reported ECL at 31 March 2023 are set out in the
following table.
Management judgemental adjustments to ECL at 31 March 2023(1)
Retail Wholesale Total
$bn $bn $bn
Banks, sovereigns,
government entities and
low-risk
counterparties 0.1 0.1
------------------------- ----------------------------- ----------------------------- -----------------------------
Corporate lending
adjustments 0.4 0.4
------------------------- ----------------------------- ----------------------------- -----------------------------
Retail lending
inflation-related
adjustments 0.2 0.2
------------------------- ----------------------------- ----------------------------- -----------------------------
Other
macroeconomic-related
adjustments (0.2) (0.2)
------------------------- ----------------------------- ----------------------------- -----------------------------
Other retail lending
adjustments 0.2 0.2
------------------------- ----------------------------- ----------------------------- -----------------------------
Total 0.1 0.5 0.6
------------------------- ----------------------------- ----------------------------- -----------------------------
Management judgemental adjustments to ECL at 31 December 2022(1)
Retail Wholesale Total
$bn $bn $bn
Banks, sovereigns, - -
government entities and
low-risk
counterparties
------------------------- ----------------------------- ----------------------------- -----------------------------
Corporate lending
adjustments 0.5 0.5
------------------------- ----------------------------- ----------------------------- -----------------------------
Retail lending
inflation-related
adjustments 0.1 0.1
------------------------- ----------------------------- ----------------------------- -----------------------------
Other
macroeconomic-related
adjustments 0.1 0.1
------------------------- ----------------------------- ----------------------------- -----------------------------
Other retail lending
adjustments 0.2 0.2
------------------------- ----------------------------- ----------------------------- -----------------------------
Total 0.3 0.5 0.8
------------------------- ----------------------------- ----------------------------- -----------------------------
1 Management judgemental adjustments presented in the table
reflect increases or (decreases) to ECL, respectively.
In the wholesale portfolio, management judgemental adjustments
were an increase to modelled ECL of $0.5bn at 31 March 2023 (31
December 2022: $0.5bn increase). Adjustments to corporate exposures
increased modelled ECL by $0.4bn at 31 March 2023 (31 December
2022: $0.5bn increase). The largest adjustment was observed in the
real estate sector, including adjustments to reflect the
uncertainty of the higher-risk Chinese commercial real estate
exposures, booked in Hong Kong.
In the retail portfolio, management judgemental adjustments were
an ECL increase to modelled ECL of $0.1bn at 31 March 2023 (31
December 2022: $0.3bn increase). Retail lending inflation-related
adjustments increased compared with 31 December 2022, and were
predominantly in the UK. Other retail lending adjustments remained
stable.
Economic scenarios sensitivity analysis of ECL estimates
Management considered the sensitivity of the ECL outcome against
the economic forecasts as part of the ECL governance process by
recalculating the ECL under each scenario described above for
selected portfolios, applying a 100% weighting to each scenario in
turn. The weighting is reflected in both the determination of a
significant increase in credit risk and the measurement of the
resulting ECL.
The ECL calculated for the Upside and Downside scenarios should
not be taken to represent the upper and lower limits of possible
ECL outcomes. The impact of defaults that might occur in the future
under different economic scenarios is captured by recalculating ECL
for loans at the balance sheet date.
There is a particularly high degree of estimation uncertainty in
numbers representing more severe risk scenarios when assigned a
100% weighting.
For wholesale credit risk exposures, the sensitivity analysis
excludes ECL and financial instruments related to defaulted (stage
3) obligors. It is generally impracticable to separate the effect
of macroeconomic factors in individual assessments of obligors in
default. The measurement of stage 3 ECL is relatively more
sensitive to credit factors specific to the obligor than future
economic scenarios, and loans to defaulted obligors are a small
portion of the overall wholesale lending exposure, even if
representing the majority of the allowance for ECL. Therefore, the
sensitivity analysis to macroeconomic scenarios does not capture
the residual estimation risk arising from wholesale stage 3
exposures. Due to the range and specificity of the credit factors
to which the ECL is sensitive, it is not possible to provide a
meaningful alternative sensitivity analysis for a consistent set of
risks across all defaulted obligors.
For retail credit risk exposures, the sensitivity analysis
includes ECL for loans and advances to customers related to
defaulted obligors. This is because the retail ECL for secured
mortgage portfolios including loans in all stages is sensitive to
macroeconomic variables.
Group ECL sensitivity results
The ECL impact of the scenarios and judgemental management
adjustments are highly sensitive to movements in economic
forecasts. If the Group ECL balance (excluding wholesale stage 3,
which is assessed individually) was estimated solely on the basis
of the consensus Central scenario, consensus Upside scenario,
consensus Downside scenario or the Downside 2 scenario at 31 March
2023, it would increase/(decrease) as presented in the below
sensitivity table.
Retail(1) Wholesale(2)
Total Group ECL at 31 March 2023 $bn $bn
--------------------------------- -------------------------------- --------------------------------
Reported ECL 3.1 3.0
--------------------------------- -------------------------------- --------------------------------
Scenarios
--------------------------------- -------------------------------- --------------------------------
100% consensus Central scenario (0.2) (0.3)
--------------------------------- -------------------------------- --------------------------------
100% consensus Upside scenario (0.5) (0.9)
--------------------------------- -------------------------------- --------------------------------
100% consensus Downside scenario 0.4 0.7
--------------------------------- -------------------------------- --------------------------------
100% Downside 2 scenario 1.6 6.0
--------------------------------- -------------------------------- --------------------------------
Retail(1) Wholesale(2)
Total Group ECL at 31 December 2022 $bn $bn
------------------------------------ -------------------------------- --------------------------------
Reported ECL 3.0 3.1
------------------------------------ -------------------------------- --------------------------------
Scenarios
------------------------------------ -------------------------------- --------------------------------
100% consensus Central scenario (0.2) (0.5)
------------------------------------ -------------------------------- --------------------------------
100% consensus Upside scenario (0.6) (1.1)
------------------------------------ -------------------------------- --------------------------------
100% consensus Downside scenario 0.4 0.8
------------------------------------ -------------------------------- --------------------------------
100% Downside 2 scenario 1.8 5.5
------------------------------------ -------------------------------- --------------------------------
1 ECL sensitivities exclude portfolios utilising less complex modelling approaches.
2 Includes low credit-risk financial instruments, such as debt
instruments at FVOCI, which have high carrying values but low ECL
under all the scenarios.
At 31 March 2023, the Group reported ECL remained flat compared
with 31 December 2022, reflecting a modest decrease in reported ECL
for the wholesale portfolio, offset by an equally modest increase
in reported ECL for the retail portfolio. The 100% weighted ECL
across the consensus scenarios also reflected immaterial changes
for the retail portfolio. The Downside 2 scenario impact was higher
in the wholesale portfolio, compared with 31 December 2022, mostly
due to the increase in the combined weighting of the consensus
Upside and Central scenarios, and increased impact of the Downside
2 scenario ECL in the UK. The Downside 2 scenario impact was lower
in the retail portfolio, primarily due to model refinements in
certain markets.
Personal lending
Total personal lending for loans and advances to customers by stage
distribution
Gross carrying amount Allowance for ECL
----------------------------------------------------------------------- ------------------------------------------------------------------------------
Stage Stage Stage Total Stage Stage Stage Total
1 2 3 1 2 3
$m $m $m $m $m $m $m $m
By legal
entity
------------ --------------- ----------------- ------------------ --------------- ------------------ ------------------ ------------------ ------------------
HSBC UK Bank
plc 138,422 32,499 1,050 171,971 (135) (644) (256) (1,035)
------------ --------------- ----------------- ------------------ --------------- ------------------ ------------------ ------------------ ------------------
HSBC Bank
plc 26,310 3,218 336 29,864 (16) (30) (105) (151)
------------ --------------- ----------------- ------------------ --------------- ------------------ ------------------ ------------------ ------------------
The Hong
Kong and
Shanghai
Banking
Corporation
Limited 187,212 8,771 1,036 197,019 (144) (378) (184) (706)
------------ --------------- ----------------- ------------------ --------------- ------------------ ------------------ ------------------ ------------------
HSBC Bank
Middle East
Limited 3,582 176 76 3,834 (30) (37) (46) (113)
------------ --------------- ----------------- ------------------ --------------- ------------------ ------------------ ------------------ ------------------
HSBC North
America
Holdings
Inc. 17,026 356 287 17,669 (12) (19) (15) (46)
Grupo
Financiero
HSBC, S.A.
de C.V. 10,506 1,406 479 12,391 (208) (390) (208) (806)
------------ --------------- ----------------- ------------------ --------------- ------------------ ------------------ ------------------ ------------------
Other
trading
entities 11,509 499 325 12,333 (30) (43) (96) (169)
At 31 Mar
2023 394,567 46,925 3,589 445,081 (575) (1,541) (910) (3,026)
------------ --------------- ----------------- ------------------ --------------- ------------------ ------------------ ------------------ ------------------
By legal
entity
------------ --------------- ----------------- ------------------- --------------- ------------------- ------------------- -------------------- -------------------
HSBC UK Bank
plc 128,590 37,394 1,012 166,996 (135) (688) (227) (1,050)
------------ --------------- ----------------- ------------------- --------------- ------------------- ------------------- -------------------- -------------------
HSBC Bank
plc 6,377 740 127 7,244 (10) (18) (38) (66)
------------ --------------- ----------------- ------------------- --------------- ------------------- ------------------- -------------------- -------------------
The Hong
Kong and
Shanghai
Banking
Corporation
Limited 185,723 8,698 1,117 195,538 (138) (362) (187) (687)
------------ --------------- ----------------- ------------------- --------------- ------------------- ------------------- -------------------- -------------------
HSBC Bank
Middle East
Limited 3,657 184 86 3,927 (26) (37) (52) (115)
------------ --------------- ----------------- ------------------- --------------- ------------------- ------------------- -------------------- -------------------
HSBC North
America
Holdings
Inc. 16,906 375 270 17,551 (12) (23) (6) (41)
Grupo
Financiero
HSBC, S.A.
de C.V. 9,542 1,099 377 11,018 (213) (331) (194) (738)
------------ --------------- ----------------- ------------------- --------------- ------------------- ------------------- -------------------- -------------------
Other
trading
entities 11,882 376 350 12,608 (27) (45) (101) (173)
At 31 Dec
2022 362,677 48,866 3,339 414,882 (561) (1,504) (805) (2,870)
------------ --------------- ----------------- ------------------- --------------- ------------------- ------------------- -------------------- -------------------
At 31 March 2023, total personal lending for loans and advances
to customers of $445bn increased by $30.2bn compared with 31
December 2022. This increase included favourable foreign exchange
movements of $4.6bn. Excluding foreign exchange movements, the
increase was primarily due to $22.6bn from the recognition of our
retail banking operations in France being no longer classified as
held for sale. In addition, our personal lending increased by
$2.3bn in Hong Kong, $0.6bn in Australia and $0.4bn in the UK,
partly offset by a $0.5bn decrease in mainland China.
Stage 2 personal lending balances in HSBC UK of $32.5bn
decreased by $4.9bn compared with 31 December 2022. The transfer to
stage 1 balances was largely explained by refinement of significant
increase in credit risk ('SICR') criteria to be more responsive to
changes in credit risk from origination.
Wholesale lending
Total wholesale lending for loans and advances to banks and customers
at amortised cost
Gross carrying amount Allowance for ECL
------------------------------------------------------------------------- ----------------------------------------------------------------------------------------
Stage Stage Stage POCI Total Stage Stage Stage POCI Total
1 2 3 1 2 3
$m $m $m $m $m $m $m $m $m $m
By legal
entity
------------ ----------- ------------ -------------- ----------------- ----------- ----------------- ---------------- ---------------- ----------------- --------------
HSBC UK Bank
plc 72,841 19,565 4,368 - 96,774 (233) (427) (628) - (1,288)
------------ ----------- ------------ -------------- ----------------- ----------- ----------------- ---------------- ---------------- ----------------- --------------
HSBC Bank
plc 91,005 9,920 2,926 3 103,854 (66) (151) (1,151) - (1,368)
------------ ----------- ------------ -------------- ----------------- ----------- ----------------- ---------------- ---------------- ----------------- --------------
The Hong
Kong and
Shanghai
Banking
Corporation
Limited 293,465 45,707 6,903 65 346,140 (197) (1,007) (3,179) (23) (4,406)
------------ ----------- ------------ -------------- ----------------- ----------- ----------------- ---------------- ---------------- ----------------- --------------
HSBC Bank
Middle East
Limited 22,967 1,593 944 4 25,508 (9) (13) (695) (3) (720)
------------ ----------- ------------ -------------- ----------------- ----------- ----------------- ---------------- ---------------- ----------------- --------------
HSBC North
America
Holdings
Inc. 30,443 7,304 243 - 37,990 (31) (204) (19) - (254)
Grupo
Financiero
HSBC,
S.A. de
C.V. 11,676 1,477 419 - 13,572 (47) (62) (233) - (342)
------------ ----------- ------------ -------------- ----------------- ----------- ----------------- ---------------- ---------------- ----------------- --------------
Other
trading
entities 13,307 2,957 649 15 16,928 (29) (36) (254) (9) (328)
At 31 Mar
2023 535,704 88,523 16,452 87 640,766 (612) (1,900) (6,159) (35) (8,706)
------------ ----------- ------------ -------------- ----------------- ----------- ----------------- ---------------- ---------------- ----------------- --------------
By legal
entity
------------ ------------- ------------- -------------- ------------------ ----------- ---------------- ---------------- ---------------- ------------------ ---------------
HSBC UK Bank
plc 64,930 18,856 4,439 28 88,253 (165) (445) (643) (1) (1,254)
------------ ------------- ------------- -------------- ------------------ ----------- ---------------- ---------------- ---------------- ------------------ ---------------
HSBC Bank
plc 83,174 9,175 2,631 3 94,983 (56) (181) (1,075) - (1,312)
------------ ------------- ------------- -------------- ------------------ ----------- ---------------- ---------------- ---------------- ------------------ ---------------
The Hong
Kong and
Shanghai
Banking
Corporation
Limited 292,022 50,708 6,934 80 349,744 (216) (1,074) (3,125) (24) (4,439)
------------ ------------- ------------- -------------- ------------------ ----------- ---------------- ---------------- ---------------- ------------------ ---------------
HSBC Bank
Middle East
Limited 21,922 1,777 946 4 24,649 (11) (21) (684) (3) (719)
------------ ------------- ------------- -------------- ------------------ ----------- ---------------- ---------------- ---------------- ------------------ ---------------
HSBC North
America
Holdings
Inc. 30,816 6,861 211 - 37,888 (24) (194) (22) - (240)
Grupo
Financiero
HSBC,
S.A. de
C.V. 9,969 1,979 399 - 12,347 (48) (62) (225) - (335)
Other
trading
entities 13,512 2,593 687 14 16,806 (29) (36) (272) (10) (347)
At 31 Dec
2022 516,345 91,949 16,247 129 624,670 (549) (2,013) (6,046) (38) (8,646)
------------ ------------- ------------- -------------- ------------------ ----------- ---------------- ---------------- ---------------- ------------------ ---------------
Capital risk
Capital overview
Capital adequacy metrics
At
31 Mar 31 Dec
2023 2022
------------------------------------------- ------------------------ -----------------
Risk-weighted assets ('RWAs') ($bn)
------------------------------------------- ------------------------ -----------------
Credit risk(1) 690.4 679.1
------------------------------------------- ------------------------ -----------------
Counterparty credit(1) 36.2 37.1
------------------------------------------- ------------------------ -----------------
Market risk 40.9 37.6
------------------------------------------- ------------------------ -----------------
Operational risk 86.9 85.9
------------------------------------------- ------------------------ -----------------
Total risk-weighted assets 854.4 839.7
------------------------------------------- ------------------------ -----------------
Capital on a transitional basis ($bn)
------------------------------------------- ------------------------ -----------------
Common equity tier 1 ('CET1') capital 125.7 119.3
Tier 1 capital 145.1 139.1
Total capital 169.6 162.4
Capital ratios on a transitional basis (%)
------------------------------------------- ------------------------ -----------------
Common equity tier 1 ratio 14.7 14.2
Tier 1 ratio 17.0 16.6
Total capital ratio 19.8 19.3
Capital on an end point basis ($bn)
------------------------------------------- ------------------------ -----------------
Common equity tier 1 ('CET1') capital 125.7 119.3
------------------------------------------- ------------------------ -----------------
Tier 1 capital 145.1 139.1
------------------------------------------- ------------------------ -----------------
Total capital 164.2 157.2
------------------------------------------- ------------------------ -----------------
Capital ratios on an end point basis (%)
------------------------------------------- ------------------------ -----------------
Common equity tier 1 ratio 14.7 14.2
------------------------------------------- ------------------------ -----------------
Tier 1 ratio 17.0 16.6
------------------------------------------- ------------------------ -----------------
Total capital ratio 19.2 18.7
Liquidity coverage ratio ('LCR')
------------------------------------------- ------------------------ -----------------
Total high-quality liquid assets ($bn) 634.9 647.0
------------------------------------------- ------------------------ -----------------
Total net cash outflow ($bn) 481.7 490.8
------------------------------------------- ------------------------ -----------------
LCR ratio (%) 131.8 131.8
------------------------------------------- ------------------------ -----------------
1 From 1 January 2023, RWAs related to free deliveries have been
allocated to credit risk, having previously been classified under
counterparty credit risk.
References to EU regulations and directives (including technical
standards) should, as applicable, be read as references to the UK's
version of such regulation or directive, as onshored into UK law
under the European Union (Withdrawal) Act 2018, and as may be
subsequently amended under UK law.
Capital figures and ratios in the previous table are calculated
in accordance with the revised Capital Requirements Regulation and
Directive, as implemented ('CRR II'). The table presents them under
the transitional arrangements in CRR II for capital instruments and
after their expiry, known as the end point.
Capital
At 31 March 2023, our CET1 capital ratio increased to 14.7% from
14.2% at 31 December 2022, reflecting an increase in CET1 capital
of $6.4bn, partly offset by an increase in RWAs of $14.7bn. The key
drivers of the overall rise in our CET1 ratio during the quarter
were:
-- a 0.5 percentage point increase from the $3.7bn capital
generation through profits less dividends;
-- a 0.3 percentage point increase from the reversal of the
impairment relating to the planned sale of our retail banking
operations in France, and the provisional gain on the acquisition
of SVB UK; and
-- a 0.1 percentage point increase driven by regulatory change
that reduced the risk weighting of residential mortgages in Hong
Kong.
These movements were partly offset by a 0.4 percentage point
fall in the CET1 ratio, driven primarily by an increase in the
underlying RWAs and deductions for investments in financial sector
entities, intangible assets and excess expected loss.
Our Pillar 2A requirement, set by the PRA's Individual Capital
Requirement based on a point-in-time assessment, was equivalent to
2.6% of RWAs, of which 1.5% was required to be met by CET1.
Throughout 1Q23 we complied with the PRA's regulatory capital
adequacy requirement.
Leverage
Leverage ratio(1)
At
31 Mar 31 Dec
2023 2022
$bn $bn
------------------------------ ---------------------- -----------------------
Tier 1 capital 145.1 139.1
------------------------------ ---------------------- -----------------------
Total leverage ratio exposure 2,486.1 2,417.2
------------------------------ ---------------------- -----------------------
% %
------------------------------ ---------------------- -----------------------
Leverage ratio 5.8 5.8
------------------------------ ---------------------- -----------------------
1 Leverage ratio calculation is in line with the PRA's UK
leverage rules. This includes IFRS 9 transitional arrangement and
excludes central bank claims. At 31 March 2023, the IFRS 9 add-back
to CET1 capital and the related tax charge were immaterial.
Our leverage ratio was 5.8% at 31 March 2023, broadly unchanged
from 31 December 2022. The increase in tier 1 capital was offset by
a rise in the leverage exposure, primarily due to growth in the
balance sheet.
At 31 March 2023, our UK minimum leverage ratio requirement of
3.25% was supplemented by a leverage ratio buffer of 0.9%, which
consists of an additional leverage ratio buffer of 0.7% and a
countercyclical leverage ratio buffer of 0.2%. These buffers
translated into capital values of $17.4bn and $5.0bn, respectively.
We exceeded these leverage requirements.
Risk-weighted assets
RWAs by global business
Corporate
WPB CMB(1) GBM(1) Centre Total
$bn $bn $bn $bn $bn
------------- -------------------------- -------------------------- ------------------------ -------------------------- ------------------------
Credit risk 147.3 324.0 139.6 79.5 690.4
------------- -------------------------- -------------------------- ------------------------ -------------------------- ------------------------
Counterparty
credit risk 1.0 0.9 32.5 1.8 36.2
------------- -------------------------- -------------------------- ------------------------ -------------------------- ------------------------
Market risk 1.8 1.3 23.8 14.0 40.9
------------- -------------------------- -------------------------- ------------------------ -------------------------- ------------------------
Operational
risk 31.3 26.9 29.3 (0.6) 86.9
------------- -------------------------- -------------------------- ------------------------ -------------------------- ------------------------
At 31 Mar
2023 181.4 353.1 225.2 94.7 854.4
------------- -------------------------- -------------------------- ------------------------ -------------------------- ------------------------
At 31 Dec
2022 182.9 342.4 225.9 88.5 839.7
------------- -------------------------- -------------------------- ------------------------ -------------------------- ------------------------
1 In the first quarter of 2023, following an internal review to
assess which global businesses were best suited to serve our
customers' respective needs, a portfolio of our customers within
our markets in Latin America was transferred from GBM to CMB for
reporting purposes. Comparative data have been re-presented
accordingly.
RWA movement by global business by key driver
Credit risk, counterparty
credit risk
and operational risk
Corporate Market Total
WPB CMB(1) GBM(1) Centre risk RWAs
$bn $bn $bn $bn $bn $bn
------------- -------------------------- -------------------------- -------------------------- -------------------------- -------------------------- --------------------------
RWAs at 1 Jan
2023 181.2 341.3 202.3 77.3 37.6 839.7
Asset size 2.8 (1.9) 1.9 4.7 3.8 11.3
------------- -------------------------- -------------------------- -------------------------- -------------------------- -------------------------- --------------------------
Asset quality - (0.6) (0.8) (0.9) - (2.3)
------------- -------------------------- -------------------------- -------------------------- -------------------------- -------------------------- --------------------------
Model updates (0.3) - - - - (0.3)
Methodology
and policy (5.2) 1.5 (2.2) (0.5) (0.6) (7.0)
Acquisitions
and
disposals - 9.5 - - 0.1 9.6
------------- -------------------------- -------------------------- -------------------------- -------------------------- -------------------------- --------------------------
Foreign
exchange
movements(2) 1.1 2.0 0.2 0.1 - 3.4
------------- -------------------------- -------------------------- -------------------------- -------------------------- -------------------------- --------------------------
Total RWA
movement (1.6) 10.5 (0.9) 3.4 3.3 14.7
------------- -------------------------- -------------------------- -------------------------- -------------------------- -------------------------- --------------------------
RWAs at 31
Mar 2023 179.6 351.8 201.4 80.7 40.9 854.4
------------- -------------------------- -------------------------- -------------------------- -------------------------- -------------------------- --------------------------
1 In the first quarter of 2023, following an internal review to
assess which global businesses were best suited to serve our
customers' respective needs, a portfolio of our customers within
our markets in Latin America was transferred from GBM to CMB for
reporting purposes. Comparative data have been re-presented
accordingly.
2 Foreign exchange movements in this disclosure are computed by
retranslating the RWAs into US dollars based on the underlying
transactional currencies.
Excluding an increase in RWAs of $3.4bn due to foreign currency
translation differences, RWAs increased by $11.3bn, predominantly
due to the acquisition of SVB UK, and RWA asset size growth in
Corporate Centre and WPB. This was partly offset by reductions due
to a regulatory change related to the risk weighting of residential
mortgages in Hong Kong.
Asset size
Corporate Centre and WPB RWAs rose by $7.5bn, mainly due to
higher thresholds for the recognition of significant investments in
financial sector entities and sovereign exposures across our legal
entities. Retail lending and mortgage growth in Hong Kong also
contributed to the increase in WPB RWAs. The $3.8bn rise in market
risk RWAs mainly reflected additional RWAs related to HSBC Canada
disposal hedges and higher structural foreign exchange exposures.
GBM RWAs rose by $1.9bn, largely due to an increase in counterparty
credit risk of $1.2bn driven by mark-to-market movements, and
higher sovereign exposures in Argentina and Mexico. The $1.9bn
decrease in CMB RWAs partly offset these movements, reflecting
lower corporate lending mainly in Hong Kong and HSBC Bank plc, and
a fall in debt securities in Mexico.
Asset quality
The decrease of $2.3bn RWAs was primarily driven by portfolio
mix changes, mainly in Hong Kong and mainland China, which were
partly offset by unfavourable movements in Egypt and North
America.
Model updates
The $0.3bn fall in RWAs was mainly due to the application of a
new model for premium financing and wealth portfolio lending in
Asia.
Methodology and policy
Regulatory changes related to the risk weighting of residential
mortgages in Hong Kong led to a $7.7bn fall in RWAs in WPB. This
was partly offset by increases related to risk parameter
refinements and changes to risk weights on certain exposures in our
associate SAB.
Allocation methodology changes related to investments in
insurance subsidiaries led to a transfer of RWAs from Corporate
Centre to WPB. In addition, the transfer of Global Banking clients
in Australia and Indonesia increased RWAs in CMB, and decreased
RWAs in GBM.
Acquisitions and disposals
The acquisition of SVB UK led to an RWA increase of $9.6bn.
Regulatory and other developments
In November 2022, the Prudential Regulation Authority ('PRA')
issued a consultation on the UK implementation of Basel 3.1 with a
proposed implementation date of 1 January 2025. For further
details, see page 6 of the Group's Pillar 3 Disclosures at 31
December 2022. We currently do not foresee a material net impact on
our ratios from the initial implementation. The RWA output floor
under Basel 3.1 is proposed to be subject to a five-year
transitional provision. Any impact from the output floor would be
towards the end of the transition period.
Regulatory transitional arrangements for IFRS 9 'Financial
Instruments'
We have adopted the regulatory transitional arrangements in CRR
II for IFRS 9, including paragraph four of article 473a. These
allow banks to add back to their capital base a proportion of the
impact that IFRS 9 has upon their loan loss allowances. Our capital
and ratios are presented under these arrangements throughout the
tables in this section, including the end point figures. At 31
March 2023, the add-back to CET1 capital and the related tax charge
were immaterial.
For further details, refer to our Pillar 3 Disclosures at 31
March 2023, which is expected to be published on or around 10 May
2023.
Alternative performance measures
Use of alternative performance measures
Our reported results are prepared in accordance with IFRSs as
detailed in our financial statements starting on page 324 of our
Annual Report and Accounts 2022. We use a combination of reported
and alternative performance measures, including those derived from
our reported results that eliminate factors that distort
period-on-period comparisons. These are considered alternative
performance measures (non-GAAP financial measures).
The following information details the adjustments made to the
reported results and the calculation of other alternative
performance measures. All alternative performance measures are
reconciled to the closest reported performance measure.
On 1 January 2023, HSBC adopted IFRS 17 'Insurance Contracts'.
As required by the standard, the Group applied the requirements
retrospectively with comparative data previously published under
IFRS 4 'Insurance Contracts' restated from the 1 January 2022
transition date.
Return on average ordinary shareholders' equity and return on
average tangible equity
Return on average ordinary shareholders' equity ('RoE') is
computed by taking profit attributable to the ordinary shareholders
of the parent company ('reported results'), divided by average
ordinary shareholders' equity ('reported equity') for the period.
The adjustment to reported results and reported equity excludes
amounts attributable to non-controlling interests and holders of
preference shares and other equity instruments.
Return on average tangible equity ('RoTE') is computed by
adjusting reported results for impairment of goodwill and other
intangible assets (net of tax), divided by average reported equity
adjusted for goodwill and intangibles for the period.
We provide RoTE ratios in addition to RoE as a way of assessing
our performance, which is closely aligned to our capital
position.
Return on average ordinary shareholders' equity and return on average
tangible equity
Quarter ended
------------------------------------------------------------------------------
31 Mar 31 Dec 31 Mar
2023 2022 2022
$m $m $m
-------------------------------------- ---------------------- -------------------------- --------------------------
Profit
-------------------------------------- ---------------------- -------------------------- --------------------------
Profit attributable to the ordinary
shareholders
of the parent company 10,327 4,378 2,755
-------------------------------------- ---------------------- -------------------------- --------------------------
Impairment of goodwill and other
intangible assets
(net of tax) 18 554
Profit attributable to the ordinary
shareholders,
excluding goodwill and other
intangible assets
impairment 10,345 4,433 2,759
-------------------------------------- ---------------------- -------------------------- --------------------------
Impact of strategic transactions(1) (3,121) - -
-------------------------------------- ---------------------- -------------------------- --------------------------
Profit attributable to the ordinary
shareholders,
excluding goodwill, other intangible
assets impairment
and strategic transactions 7,224 4,433 2,759
-------------------------------------- ---------------------- -------------------------- --------------------------
Equity
-------------------------------------- ---------------------- -------------------------- --------------------------
Average ordinary shareholders' equity 164,395 153,379 165,632
-------------------------------------- ---------------------- -------------------------- --------------------------
Effect of goodwill and other
intangibles (net of
deferred tax) (11,202) (10,699) (10,864)
-------------------------------------- ---------------------- -------------------------- --------------------------
Average tangible equity 153,193 142,680 154,768
-------------------------------------- ---------------------- -------------------------- --------------------------
Average impact of strategic (1,577)
transactions - -
-------------------------------------- ---------------------- -------------------------- --------------------------
Average tangible equity excluding
strategic transactions 151,616 142,680 154,768
-------------------------------------- ---------------------- -------------------------- --------------------------
Ratio % %%
-------------------------------------- ---------------------- -------------------------- -------------------------
Return on average ordinary
shareholders' equity
(annualised) 25.5 11.3 6.7
-------------------------------------- ---------------------- -------------------------- --------------------------
Return on average tangible equity
(annualised) 27.4 12.3 7.2
-------------------------------------- ---------------------- -------------------------- --------------------------
Return on average tangible equity
excluding strategic
transactions (annualised) 19.3 12.3 7.2
-------------------------------------- ---------------------- -------------------------- --------------------------
1 Includes the reversal of $1.6bn (net of tax) impairment loss
relating to the planned sale of the retail banking operations in
France, recognised in 3Q22, which is no longer classified as held
for sale, and the provisional gain of $1.5bn recognised in respect
of the acquisition of SVB UK.
Return on average tangible equity by global business
Quarter ended 31 Mar 2023
Wealth Global
and Personal Banking
Banking Commercial and Corporate
Banking(1) Markets(1) Centre Total
$m $m $m $m $m
---------------- --------------------------- -------------------------- ------------------------ -------------------------- ---------------------------
Profit before
tax 5,271 4,812 2,040 763 12,886
---------------- --------------------------- -------------------------- ------------------------ -------------------------- ---------------------------
Tax expense (1,172) (792) (465) 569 (1,860)
---------------- --------------------------- -------------------------- ------------------------ -------------------------- ---------------------------
Profit after tax 4,099 4,020 1,575 1,332 11,026
---------------- --------------------------- -------------------------- ------------------------ -------------------------- ---------------------------
Less
attributable
to: preference
shareholders,
other equity
holders,
non-controlling
interests (247) (175) (209) (68) (699)
---------------- --------------------------- -------------------------- ------------------------ -------------------------- ---------------------------
Profit
attributable to
ordinary
shareholders
of the parent
company 3,852 3,845 1,366 1,264 10,327
Other
adjustments 3 92 132 (209) 18
---------------- --------------------------- -------------------------- ------------------------ -------------------------- ---------------------------
Profit
attributable to
ordinary
shareholders 3,855 3,937 1,498 1,055 10,345
---------------- --------------------------- -------------------------- ------------------------ -------------------------- ---------------------------
Average tangible
shareholders'
equity 31,129 44,188 39,174 38,702 153,193
---------------- --------------------------- -------------------------- ------------------------ -------------------------- ---------------------------
RoTE (%) 50.2 36.1 15.5 11.1 27.4
---------------- --------------------------- -------------------------- ------------------------ -------------------------- ---------------------------
Quarter ended 31 Mar 2022
---------------- ------------------------------------------------------------------------------------------------------------------------------------------
Profit before
tax 1,161 1,794 1,177 12 4,144
---------------- --------------------------- -------------------------- ------------------------ -------------------------- ---------------------------
Tax expense (189) (447) (263) 187 (712)
---------------- --------------------------- -------------------------- ------------------------ -------------------------- ---------------------------
Profit after tax 972 1,347 914 199 3,432
---------------- --------------------------- -------------------------- ------------------------ -------------------------- ---------------------------
Less
attributable
to: preference
shareholders,
other equity
holders,
non-controlling
interests (189) (135) (194) (159) (677)
---------------- --------------------------- -------------------------- ------------------------ -------------------------- ---------------------------
Profit
attributable to
ordinary
shareholders
of the parent
company 783 1,212 720 40 2,755
Other
adjustments 7 62 159 (224) 4
---------------- --------------------------- -------------------------- ------------------------ -------------------------- ---------------------------
Profit
attributable to
ordinary
shareholders 790 1,274 879 (184) 2,759
---------------- --------------------------- -------------------------- ------------------------ -------------------------- ---------------------------
Average tangible
shareholders'
equity
(2) 30,946 43,099 40,871 39,852 154,768
---------------- --------------------------- -------------------------- ------------------------ -------------------------- ---------------------------
RoTE (%) 10.3 12.0 8.7 (1.9) 7.2
---------------- --------------------------- -------------------------- ------------------------ -------------------------- ---------------------------
1 In the first quarter of 2023, following an internal review to
assess which global businesses were best suited to serve our
customers' respective needs, a portfolio of our customers within
our markets in Latin America was transferred from GBM to CMB for
reporting purposes. Comparative data have been re-presented
accordingly.
2 From 1 January 2023, we have revised our methodology for
allocating tangible equity to the global businesses following a
review of capital consumption drivers. Comparative data have been
re-presented accordingly.
Net asset value and tangible net asset value per ordinary
share
Net asset value per ordinary share is total shareholders' equity
less non-cumulative preference shares and capital securities
('total ordinary shareholders' equity'), divided by the number of
ordinary shares in issue excluding shares that the company has
purchased and are held in treasury.
Tangible net asset value per ordinary share is total ordinary
shareholders' equity excluding goodwill and other intangible assets
(net of deferred tax) ('tangible ordinary shareholders' equity'),
divided by the number of basic ordinary shares in issue excluding
shares that the company has purchased and are held in treasury.
Net asset value and tangible net asset value per ordinary share
At
-------------------------------------------------------------------------
31 Mar 31 Dec 31 Mar
2023 2022 2022
$m $m $m
------------------------------------------- --------------------- ------------------------ ------------------------
Total shareholders' equity 190,095 177,833 187,076
------------------------------------------- --------------------- ------------------------ ------------------------
Preference shares and other equity
instruments (19,392) (19,746) (22,414)
------------------------------------------- --------------------- ------------------------ ------------------------
Total ordinary shareholders' equity 170,703 158,087 164,662
------------------------------------------- --------------------- ------------------------ ------------------------
Goodwill and intangible assets (net of
deferred
tax) (11,245) (11,160) (10,915)
------------------------------------------- --------------------- ------------------------ ------------------------
Tangible ordinary shareholders' equity 159,458 146,927 153,747
------------------------------------------- --------------------- ------------------------ ------------------------
Basic number of $0.50 ordinary shares
outstanding 19,736 19,739 19,968
Value per share $ $ $
------------------------------------------- --------------------- ------------------------ ------------------------
Net asset value per ordinary share 8.65 8.01 8.25
------------------------------------------- --------------------- ------------------------ ------------------------
Tangible net asset value per ordinary share 8.08 7.44 7.70
------------------------------------------- --------------------- ------------------------ ------------------------
Expected credit losses and other credit impairment charges as %
of average gross loans and advances to customers
Expected credit losses and other credit impairment charges
('ECL') as % of average gross loans and advances to customers is
the annualised constant currency ECL divided by constant currency
average gross loans and advances to customers for the period.
The constant currency numbers are derived by adjusting reported
ECL and average loans and advances to customers for the effects of
foreign currency translation differences.
Expected credit losses and other credit impairment charges as % of
average gross loans and advances to customers
Quarter ended
31 Mar 31 Dec 31 Mar
2023 2022 2022
$m $m $m
---------------------------------- ------------------------ -------------------------- ----------------------------
Expected credit losses and other
credit impairment
charges (432) (1,430) (639)
---------------------------------- ------------------------ -------------------------- ----------------------------
Currency translation (25) 7
---------------------------------- ------------------------ -------------------------- ----------------------------
Constant currency (432) (1,455) (632)
---------------------------------- ------------------------ -------------------------- ----------------------------
Average gross loans and advances
to customers 955,030 955,827 1,061,295
---------------------------------- ------------------------ -------------------------- ----------------------------
Currency translation 4,079 27,155 (42,153)
---------------------------------- ------------------------ -------------------------- ----------------------------
Constant currency 959,109 982,982 1,019,142
---------------------------------- ------------------------ -------------------------- ----------------------------
Average gross loans and advances
to customers,
including held for sale 1,023,531 1,008,209 1,062,507
---------------------------------- ------------------------ -------------------------- ----------------------------
Currency translation 4,378 28,808 (41,513)
---------------------------------- ------------------------ -------------------------- ----------------------------
Constant currency 1,027,909 1,037,017 1,020,994
Ratios % %%
---------------------------------- ------------------------ -------------------------- ---------------------------
Expected credit losses and other
credit impairment
charges (annualised) as % of
average gross loans
and advances to customers 0.18 0.59 0.25
---------------------------------- ------------------------ -------------------------- ----------------------------
Expected credit losses and other
credit impairment
charges (annualised) as % of
average gross loans
and advances to customers,
including held for sale 0.17 0.56 0.25
---------------------------------- ------------------------ -------------------------- ----------------------------
Constant currency operating expenses excluding notable items
Constant currency operating expenses excluding notable items is
computed by excluding the impact of notable items and foreign
exchange translation impacts from reported results. We consider
this measure to provide useful information to investors by
quantifying and excluding the notable items that management
considered when setting and assessing cost-related targets.
Constant currency operating expenses excluding notable items
Quarter ended
------------------------------------------------------------------------------------
31 Mar 31 Dec 31 Mar
2023 2022 2022
$m $m $m
-------------------------------- -------------------------- ---------------------------- --------------------------
Reported operating expenses (7,586) (8,781) (8,178)
-------------------------------- -------------------------- ---------------------------- --------------------------
Notable items 61 1,169 451
-------------------------------- -------------------------- ---------------------------- --------------------------
- disposals, acquisitions and
related costs 61 9 -
- restructuring and other
related costs - 1,160 451
Currency translation(1) (147) 435
-------------------------------- -------------------------- ---------------------------- --------------------------
Excluding the impact of
retranslating prior year
costs of hyperinflationary
economies at constant
currency FX (39) (59)
-------------------------------- -------------------------- ---------------------------- --------------------------
Constant currency operating
expenses excluding
notable items (7,525) (7,798) (7,351)
-------------------------------- -------------------------- ---------------------------- --------------------------
1 Currency translation on reported operating expenses, excluding
currency translation on notable items.
Reported and constant currency results
Reported and constant currency results(1)
Quarter ended
31 Mar 31 Dec 31 Mar
2023 2022 2022
$m $m $m
---------------------------------- ------------------------ -------------------------- ----------------------------
Revenue(2)
---------------------------------- ------------------------ -------------------------- ----------------------------
Reported 20,171 14,567 12,305
---------------------------------- ------------------------ -------------------------- ----------------------------
Currency translation 276 (733)
---------------------------------- ------------------------ -------------------------- ----------------------------
Constant currency 20,171 14,843 11,572
---------------------------------- ------------------------ -------------------------- ----------------------------
Change in expected credit losses
and other credit
impairment charges
---------------------------------- ------------------------ -------------------------- ----------------------------
Reported (432) (1,430) (639)
---------------------------------- ------------------------ -------------------------- ----------------------------
Currency translation (25) 7
---------------------------------- ------------------------ -------------------------- ----------------------------
Constant currency (432) (1,455) (632)
---------------------------------- ------------------------ -------------------------- ----------------------------
Operating expenses
---------------------------------- ------------------------ -------------------------- ----------------------------
Reported (7,586) (8,781) (8,178)
---------------------------------- ------------------------ -------------------------- ----------------------------
Currency translation (177) 466
---------------------------------- ------------------------ -------------------------- ----------------------------
Constant currency (7,586) (8,958) (7,712)
---------------------------------- ------------------------ -------------------------- ----------------------------
Share of profit in associates and
joint ventures
---------------------------------- ------------------------ -------------------------- ----------------------------
Reported 733 693 656
---------------------------------- ------------------------ -------------------------- ----------------------------
Currency translation 23 (46)
---------------------------------- ------------------------ -------------------------- ----------------------------
Constant currency 733 716 610
---------------------------------- ------------------------ -------------------------- ----------------------------
Profit before tax
---------------------------------- ------------------------ -------------------------- ----------------------------
Reported 12,886 5,049 4,144
---------------------------------- ------------------------ -------------------------- ----------------------------
Currency translation 97 (306)
---------------------------------- ------------------------ -------------------------- ----------------------------
Constant currency 12,886 5,146 3,838
---------------------------------- ------------------------ -------------------------- ----------------------------
Profit after tax
---------------------------------- ------------------------ -------------------------- ----------------------------
Reported 11,026 4,661 3,432
---------------------------------- ------------------------ -------------------------- ----------------------------
Currency translation 109 (367)
---------------------------------- ------------------------ -------------------------- ----------------------------
Constant currency 11,026 4,770 3,065
---------------------------------- ------------------------ -------------------------- ----------------------------
Loans and advances to customers
(net)
---------------------------------- ------------------------ -------------------------- ----------------------------
Reported 963,394 923,561 1,054,073
---------------------------------- ------------------------ -------------------------- ----------------------------
Currency translation 8,026 (36,052)
---------------------------------- ------------------------ -------------------------- ----------------------------
Constant currency 963,394 931,587 1,018,021
---------------------------------- ------------------------ -------------------------- ----------------------------
Customer accounts
---------------------------------- ------------------------ -------------------------- ----------------------------
Reported 1,604,099 1,570,303 1,709,685
---------------------------------- ------------------------ -------------------------- ----------------------------
Currency translation 12,415 (54,435)
---------------------------------- ------------------------ -------------------------- ----------------------------
Constant currency 1,604,099 1,582,718 1,655,250
---------------------------------- ------------------------ -------------------------- ----------------------------
1 In the current period constant currency results are equal to
reported as there is no currency translation.
2 Net operating income before change in expected credit losses
and other credit impairment charges, also referred to as
revenue.
Notable items
Quarter ended
31 Mar 31 Dec 31 Mar
2023 2022 2022
$m $m $m
Revenue
-------------------------------- -------------------------- ---------------------------- --------------------------
- disposals, acquisitions and
related costs(1,2) 3,562 (71) -
-------------------------------- -------------------------- ---------------------------- --------------------------
- fair value movements on
financial instruments(3) 15 35 (200)
-------------------------------- -------------------------- ---------------------------- --------------------------
- restructuring and other
related costs(4) - (284) 80
-------------------------------- -------------------------- ---------------------------- --------------------------
Operating expenses
-------------------------------- -------------------------- ---------------------------- --------------------------
- disposals, acquisitions and
related costs (61) (9) -
- restructuring and other
related costs - (1,160) (451)
-------------------------------- -------------------------- ---------------------------- --------------------------
Tax
-------------------------------- -------------------------- ---------------------------- --------------------------
- tax (charge)/credit on notable
items (492) 166 64
-------------------------------- -------------------------- ---------------------------- --------------------------
- recognition of losses - 251 -
-------------------------------- -------------------------- ---------------------------- --------------------------
- uncertain tax positions 427 175 -
-------------------------------- -------------------------- ---------------------------- --------------------------
1 Includes the reversal of $2.1bn impairment loss relating to
the planned sale of the retail banking operations in France,
recognised in 3Q22, which is no longer classified as held for
sale.
2 Includes the provisional gain of $1.5bn recognised in respect of the acquisition of SVB UK.
3 Fair value movements on non-qualifying hedges in HSBC Holdings.
4 Comprises gains and losses relating to the business update in
February 2020, including losses associated with the RWA reduction
programme.
Summary information - global businesses
Supplementary analysis of constant currency results and notable
items by global business
Constant currency results(1)
Quarter ended 31 Mar 2023
----------------------------------------------------------------------------------------------------------------------------------------
Wealth Global
and Banking
Personal Commercial and Corporate
Banking Banking(3) Markets(3) Centre Total
$m $m $m $m $m
----------- -------------------------- ------------------------- -------------------------- --------------------------- ------------------------
Revenue(2) 8,983 6,675 4,440 73 20,171
----------- -------------------------- ------------------------- -------------------------- --------------------------- ------------------------
ECL (246) (151) (32) (3) (432)
----------- -------------------------- ------------------------- -------------------------- --------------------------- ------------------------
Operating
expenses (3,483) (1,712) (2,368) (23) (7,586)
----------- -------------------------- ------------------------- -------------------------- --------------------------- ------------------------
Share of
profit in
associates
and
joint
ventures 17 - - 716 733
----------- -------------------------- ------------------------- -------------------------- --------------------------- ------------------------
Profit
before tax 5,271 4,812 2,040 763 12,886
----------- -------------------------- ------------------------- -------------------------- --------------------------- ------------------------
Loans and
advances
to
customers
(net) 455,266 323,268 184,492 368 963,394
----------- -------------------------- ------------------------- -------------------------- --------------------------- ------------------------
Customer
accounts 809,830 471,187 322,443 639 1,604,099
----------- -------------------------- ------------------------- -------------------------- --------------------------- ------------------------
1 In the current period constant currency results are equal to
reported as there is no currency translation.
2 Net operating income before change in expected credit losses
and other credit impairment charges, also referred to as
revenue.
3 In the first quarter of 2023, following an internal review to
assess which global businesses were best suited to serve our
customers' respective needs, a portfolio of our customers within
our markets in Latin America was transferred from GBM to CMB for
reporting purposes. Comparative data have been re-presented
accordingly.
Notable items
Quarter ended 31 Mar 2023
------------------------------------------------------------------------------------------------------------------------------------------
Wealth Global
and Personal Commercial Banking Corporate
Banking Banking and Markets Centre Total
$m $m $m $m $m
Revenue
--------------- -------------------------- ------------------------- --------------------------- -------------------------- --------------------------
- disposals,
acquisitions
and related
costs(1,2) 2,021 1,511 - 30 3,562
--------------- -------------------------- ------------------------- --------------------------- -------------------------- --------------------------
- fair value
movements on
financial
instruments(3) - - - 15 15
Operating
expenses
--------------- -------------------------- ------------------------- --------------------------- -------------------------- --------------------------
- disposals,
acquisitions
and related
costs (21) - 3 (43) (61)
--------------- -------------------------- ------------------------- --------------------------- -------------------------- --------------------------
1 Includes the reversal of $2.1bn impairment loss relating to
the planned sale of the retail banking operations in France,
recognised in 3Q22, which is no longer classified as held for
sale.
2 Includes the provisional gain of $1.5bn recognised in respect of the acquisition of SVB UK.
3 Fair value movements on non-qualifying hedges in HSBC Holdings.
Reconciliation of reported results to constant currency results - global
businesses
Quarter ended 31 March 2022
Wealth Global
and Banking
Personal Commercial and Corporate
Banking Banking(2) Markets(2) Centre Total
$m $m $m $m $m
------------ ---------------------------- ---------------------------- -------------------------- ---------------------------- ----------------------------
Revenue(1)
------------ ---------------------------- ---------------------------- -------------------------- ---------------------------- ----------------------------
Reported 5,183 3,561 3,958 (397) 12,305
------------ ---------------------------- ---------------------------- -------------------------- ---------------------------- ----------------------------
Currency
translation (235) (214) (255) (29) (733)
------------ ---------------------------- ---------------------------- -------------------------- ---------------------------- ----------------------------
Constant
currency 4,948 3,347 3,703 (426) 11,572
------------ ---------------------------- ---------------------------- -------------------------- ---------------------------- ----------------------------
ECL
------------ ---------------------------- ---------------------------- -------------------------- ---------------------------- ----------------------------
Reported (341) 19 (315) (2) (639)
------------ ---------------------------- ---------------------------- -------------------------- ---------------------------- ----------------------------
Currency
translation 2 (12) 17 - 7
------------ ---------------------------- ---------------------------- -------------------------- ---------------------------- ----------------------------
Constant
currency (339) 7 (298) (2) (632)
------------ ---------------------------- ---------------------------- -------------------------- ---------------------------- ----------------------------
Operating
expenses
------------ ---------------------------- ---------------------------- -------------------------- ---------------------------- ----------------------------
Reported (3,689) (1,786) (2,466) (237) (8,178)
------------ ---------------------------- ---------------------------- -------------------------- ---------------------------- ----------------------------
Currency
translation 180 100 155 31 466
------------ ---------------------------- ---------------------------- -------------------------- ---------------------------- ----------------------------
Constant
currency (3,509) (1,686) (2,311) (206) (7,712)
------------ ---------------------------- ---------------------------- -------------------------- ---------------------------- ----------------------------
Share of
profit in
associates
and
joint
ventures
------------ ---------------------------- ---------------------------- -------------------------- ---------------------------- ----------------------------
Reported 8 - - 648 656
------------ ---------------------------- ---------------------------- -------------------------- ---------------------------- ----------------------------
Currency
translation - - - (46) (46)
------------ ---------------------------- ---------------------------- -------------------------- ---------------------------- ----------------------------
Constant
currency 8 - - 602 610
------------ ---------------------------- ---------------------------- -------------------------- ---------------------------- ----------------------------
Profit
before tax
------------ ---------------------------- ---------------------------- -------------------------- ---------------------------- ----------------------------
Reported 1,161 1,794 1,177 12 4,144
------------ ---------------------------- ---------------------------- -------------------------- ---------------------------- ----------------------------
Currency
translation (53) (126) (83) (44) (306)
------------ ---------------------------- ---------------------------- -------------------------- ---------------------------- ----------------------------
Constant
currency 1,108 1,668 1,094 (32) 3,838
------------ ---------------------------- ---------------------------- -------------------------- ---------------------------- ----------------------------
Loans and
advances to
customers
(net)
------------ ---------------------------- ---------------------------- -------------------------- ---------------------------- ----------------------------
Reported 486,387 358,806 208,454 426 1,054,073
------------ ---------------------------- ---------------------------- -------------------------- ---------------------------- ----------------------------
Currency
translation (17,117) (12,711) (6,215) (9) (36,052)
------------ ---------------------------- ---------------------------- -------------------------- ---------------------------- ----------------------------
Constant
currency 469,270 346,095 202,239 417 1,018,021
------------ ---------------------------- ---------------------------- -------------------------- ---------------------------- ----------------------------
Customer
accounts
------------ ---------------------------- ---------------------------- -------------------------- ---------------------------- ----------------------------
Reported 861,497 504,285 343,309 594 1,709,685
------------ ---------------------------- ---------------------------- -------------------------- ---------------------------- ----------------------------
Currency
translation (24,137) (16,171) (14,098) (29) (54,435)
------------ ---------------------------- ---------------------------- -------------------------- ---------------------------- ----------------------------
Constant
currency 837,360 488,114 329,211 565 1,655,250
------------ ---------------------------- ---------------------------- -------------------------- ---------------------------- ----------------------------
1 Net operating income before change in expected credit losses
and other credit impairment charges, also referred to as
revenue.
2 In the first quarter of 2023, following an internal review to
assess which global businesses were best suited to serve our
customers' respective needs, a portfolio of our customers within
our markets in Latin America was transferred from GBM to CMB for
reporting purposes. Comparative data have been re-presented
accordingly.
Notable items (continued)
Quarter ended 31 Mar 2022
--------------------------------------------------------------------------------------------------------------------------------------------
Wealth Global
and Personal Commercial Banking Corporate
Banking Banking and Markets Centre Total
$m $m $m $m $m
Revenue
- fair value
movements on
financial
instruments(1) - - - (200) (200)
--------------- -------------------------- -------------------------- -------------------------- ---------------------------- --------------------------
- restructuring
and other
related
costs(2) 93 - (15) 2 80
--------------- -------------------------- -------------------------- -------------------------- ---------------------------- --------------------------
Operating
expenses
- restructuring
and other
related
costs (53) (30) (38) (330) (451)
--------------- -------------------------- -------------------------- -------------------------- ---------------------------- --------------------------
1 Fair value movements on non-qualifying hedges in HSBC Holdings.
2 Comprises gains and losses relating to the business update in
February 2020, including losses associated with the RWA reduction
programme.
Reconciliation of reported results to constant currency results - global
businesses (continued)
Quarter ended 31 Dec 2022
------------------------------------------------------------------------------------------------------------------------------------------------
Wealth Global
and Banking
Personal Commercial and Corporate
Banking Banking(2) Markets(2) Centre Total
$m $m $m $m $m
-------------- ---------------------------- -------------------------- ---------------------------- ---------------------------- --------------------------
Revenue(1)
-------------- ---------------------------- -------------------------- ---------------------------- ---------------------------- --------------------------
Reported 6,834 4,787 3,335 (389) 14,567
-------------- ---------------------------- -------------------------- ---------------------------- ---------------------------- --------------------------
Currency
translation 98 69 69 40 276
-------------- ---------------------------- -------------------------- ---------------------------- ---------------------------- --------------------------
Constant
currency 6,932 4,856 3,404 (349) 14,843
-------------- ---------------------------- -------------------------- ---------------------------- ---------------------------- --------------------------
ECL
-------------- ---------------------------- -------------------------- ---------------------------- ---------------------------- --------------------------
Reported (261) (894) (267) (8) (1,430)
-------------- ---------------------------- -------------------------- ---------------------------- ---------------------------- --------------------------
Currency
translation (7) (14) (3) (1) (25)
-------------- ---------------------------- -------------------------- ---------------------------- ---------------------------- --------------------------
Constant
currency (268) (908) (270) (9) (1,455)
-------------- ---------------------------- -------------------------- ---------------------------- ---------------------------- --------------------------
Operating
expenses
-------------- ---------------------------- -------------------------- ---------------------------- ---------------------------- --------------------------
Reported (3,735) (1,899) (2,442) (705) (8,781)
-------------- ---------------------------- -------------------------- ---------------------------- ---------------------------- --------------------------
Currency
translation (65) (28) (65) (19) (177)
-------------- ---------------------------- -------------------------- ---------------------------- ---------------------------- --------------------------
Constant
currency (3,800) (1,927) (2,507) (724) (8,958)
-------------- ---------------------------- -------------------------- ---------------------------- ---------------------------- --------------------------
Share of
profit/(loss)
in associates
and joint
ventures
-------------- ---------------------------- -------------------------- ---------------------------- ---------------------------- --------------------------
Reported 8 - (2) 687 693
-------------- ---------------------------- -------------------------- ---------------------------- ---------------------------- --------------------------
Currency
translation - - - 23 23
-------------- ---------------------------- -------------------------- ---------------------------- ---------------------------- --------------------------
Constant
currency 8 - (2) 710 716
-------------- ---------------------------- -------------------------- ---------------------------- ---------------------------- --------------------------
Profit/(loss)
before tax
-------------- ---------------------------- -------------------------- ---------------------------- ---------------------------- --------------------------
Reported 2,846 1,994 624 (415) 5,049
-------------- ---------------------------- -------------------------- ---------------------------- ---------------------------- --------------------------
Currency
translation 26 27 1 43 97
-------------- ---------------------------- -------------------------- ---------------------------- ---------------------------- --------------------------
Constant
currency 2,872 2,021 625 (372) 5,146
-------------- ---------------------------- -------------------------- ---------------------------- ---------------------------- --------------------------
Loans and
advances to
customers
(net)
-------------- ---------------------------- -------------------------- ---------------------------- ---------------------------- --------------------------
Reported 422,309 311,957 188,940 355 923,561
-------------- ---------------------------- -------------------------- ---------------------------- ---------------------------- --------------------------
Currency
translation 4,673 2,752 598 3 8,026
-------------- ---------------------------- -------------------------- ---------------------------- ---------------------------- --------------------------
Constant
currency 426,982 314,709 189,538 358 931,587
-------------- ---------------------------- -------------------------- ---------------------------- ---------------------------- --------------------------
Customer
accounts
-------------- ---------------------------- -------------------------- ---------------------------- ---------------------------- --------------------------
Reported 779,310 463,928 326,630 435 1,570,303
-------------- ---------------------------- -------------------------- ---------------------------- ---------------------------- --------------------------
Currency
translation 5,173 4,412 2,819 11 12,415
-------------- ---------------------------- -------------------------- ---------------------------- ---------------------------- --------------------------
Constant
currency 784,483 468,340 329,449 446 1,582,718
-------------- ---------------------------- -------------------------- ---------------------------- ---------------------------- --------------------------
1 Net operating income before change in expected credit losses
and other credit impairment charges, also referred to as
revenue.
2 In the first quarter of 2023, following an internal review to
assess which global businesses were best suited to serve our
customers' respective needs, a portfolio of our customers within
our markets in Latin America was transferred from GBM to CMB for
reporting purposes. Comparative data have been re-presented
accordingly.
Notable items (continued)
Quarter ended 31 Dec 2022
------------------------------------------------------------------------------------------------------------------------------------------------
Wealth Global
and Personal Commercial Banking Corporate
Banking Banking and Markets Centre Total
$m $m $m $m $m
Revenue
--------------- ---------------------------- -------------------------- -------------------------- ---------------------------- ----------------------------
- disposals,
acquisitions
and related
costs (7) - - (64) (71)
--------------- ---------------------------- -------------------------- -------------------------- ---------------------------- ----------------------------
- fair value
movements on
financial
instruments(1) - - - 35 35
--------------- ---------------------------- -------------------------- -------------------------- ---------------------------- ----------------------------
- restructuring
and other
related
costs(2) - (15) (123) (146) (284)
--------------- ---------------------------- -------------------------- -------------------------- ---------------------------- ----------------------------
Operating
expenses
--------------- ---------------------------- -------------------------- -------------------------- ---------------------------- ----------------------------
- disposals,
acquisitions
and related
costs (3) - - (6) (9)
- restructuring
and other
related
costs (182) (142) (115) (721) (1,160)
--------------- ---------------------------- -------------------------- -------------------------- ---------------------------- ----------------------------
1 Fair value movements on non-qualifying hedges in HSBC Holdings.
2 Comprises gains and losses relating to the business update in
February 2020, including losses associated with the RWA reduction
programme.
Reconciliation of reported risk-weighted assets to constant
currency risk-weighted assets
The following table reconciles reported and constant currency
RWAs.
Reconciliation of reported risk-weighted assets to constant currency
risk-weighted assets
At 31 Mar 2023
------------------------------------------------------------------------------------------------------------------------------------------
Wealth Global
and Personal Commercial Banking Corporate
Banking Banking(1) and Markets(1) Centre Total
$bn $bn $bn $bn $bn
-------------- -------------------------- -------------------------- -------------------------- -------------------------- --------------------------
Risk-weighted
assets
-------------- -------------------------- -------------------------- -------------------------- -------------------------- --------------------------
Reported 181.4 353.1 225.2 94.7 854.4
Constant
currency 181.4 353.1 225.2 94.7 854.4
-------------- -------------------------- -------------------------- -------------------------- -------------------------- --------------------------
At 31 Dec 2022
-------------- ------------------------------------------------------------------------------------------------------------------------------------------
Risk-weighted
assets
-------------- -------------------------- -------------------------- -------------------------- -------------------------- --------------------------
Reported 182.9 342.4 225.9 88.5 839.7
-------------- -------------------------- -------------------------- -------------------------- -------------------------- --------------------------
Currency
translation 1.0 2.2 0.2 0.1 3.5
Constant
currency 183.9 344.6 226.1 88.6 843.2
-------------- -------------------------- -------------------------- -------------------------- -------------------------- --------------------------
At 31 Mar 2022
-------------- ------------------------------------------------------------------------------------------------------------------------------------------
Risk-weighted
assets
-------------- -------------------------- -------------------------- -------------------------- -------------------------- --------------------------
Reported 190.3 345.7 235.9 90.4 862.3
-------------- -------------------------- -------------------------- -------------------------- -------------------------- --------------------------
Currency
translation (6.0) (14.1) (6.7) (1.3) (28.1)
Constant
currency 184.3 331.6 229.2 89.1 834.2
-------------- -------------------------- -------------------------- -------------------------- -------------------------- --------------------------
1 In the first quarter of 2023, following an internal review to
assess which global businesses were best suited to serve our
customers' respective needs, a portfolio of our customers within
our markets in Latin America was transferred from GBM to CMB for
reporting purposes. Comparative data have been re-presented
accordingly.
Summary information - legal entity
Supplementary analysis of constant currency results and notable
items by legal entity
Legal entity results(1)
Quarter ended 31 Mar 2023
-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
Holding
The companies,
Hongkong shared
and Shanghai HSBC HSBC Grupo service
Banking Bank North Financiero centres
HSBC HSBC Corpo- Middle America HSBC HSBC, Other and
UK Bank Bank ration East Holdings Bank S.A. trading intra-group
plc plc Limited Limited Inc. Canada de C.V. entities(2) eliminations Total
$m $m $m $m $m $m $m $m $m $m
-------------- ----------------- ---------------- --------------------- --------------------- ------------------- ------------------- ----------------------- ---------------- --------------------------- ------------------
Revenue(3) 4,275 4,432 8,334 624 1,083 500 748 932 (757) 20,171
-------------- ----------------- ---------------- --------------------- --------------------- ------------------- ------------------- ----------------------- ---------------- --------------------------- ------------------
ECL (161) (18) (67) 7 (29) (1) (128) (35) - (432)
-------------- ----------------- ---------------- --------------------- --------------------- ------------------- ------------------- ----------------------- ---------------- --------------------------- ------------------
Operating
expenses (983) (1,657) (3,084) (254) (747) (260) (407) (512) 318 (7,586)
-------------- ----------------- ---------------- --------------------- --------------------- ------------------- ------------------- ----------------------- ---------------- --------------------------- ------------------
Share of
profit/(loss)
in associates
and joint
ventures - (43) 666 - - - 2 108 - 733
-------------- ----------------- ---------------- --------------------- --------------------- ------------------- ------------------- ----------------------- ---------------- --------------------------- ------------------
Profit/(loss)
before tax 3,131 2,714 5,849 377 307 239 215 493 (439) 12,886
-------------- ----------------- ---------------- --------------------- --------------------- ------------------- ------------------- ----------------------- ---------------- --------------------------- ------------------
Loans and
advances
to customers
(net) 258,758 117,858 468,924 18,829 54,374 - 22,728 21,923 - 963,394
-------------- ----------------- ---------------- --------------------- --------------------- ------------------- ------------------- ----------------------- ---------------- --------------------------- ------------------
Customer
accounts 343,803 281,557 778,853 30,994 101,537 - 27,153 40,041 161 1,604,099
-------------- ----------------- ---------------- --------------------- --------------------- ------------------- ------------------- ----------------------- ---------------- --------------------------- ------------------
1 In the current period, constant currency results are equal to
reported, as there is no currency translation.
2 Other trading entities includes the results of entities
located in Oman, Türkiye, Egypt and Saudi Arabia (including our
share of the results of Saudi Awwal Bank) which do not consolidate
into HSBC Bank Middle East Limited. These entities had an
aggregated impact on Group reported profit before tax of $249m.
Supplementary analysis is provided on page 42 to provide a fuller
picture of the MENA regional performance.
3 Net operating income before change in expected credit losses
and other credit impairment charges, also referred to as
revenue.
Notable items
Quarter ended 31 Mar 2023
----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
Holding
The companies,
Hongkong shared
and Shanghai HSBC HSBC Grupo service
Banking Bank North Financiero centres
HSBC HSBC Corpo- Middle America HSBC HSBC, Other and
UK Bank Bank ration East Holdings Bank S.A. trading intra-group
plc plc Limited Limited Inc. Canada de C.V. entities eliminations Total
$m $m $m $m $m $m $m $m $m $m
------------------------------------------------------- ------------------- ---------------- -------------------- ------------------- --------------------- ------------------ --------------------- --------------- ---------------------------- -------------------
Revenue
------------------------------------------------------- ------------------- ---------------- -------------------- ------------------- --------------------- ------------------ --------------------- --------------- ---------------------------- -------------------
* disposals, acquisitions and related costs(1,2) 1,511 2,107 - - - - - - (56) 3,562
------------------------------------------------------- ------------------- ---------------- -------------------- ------------------- --------------------- ------------------ --------------------- --------------- ---------------------------- -------------------
* fair value movements on financial instruments(3) - - - - - - - - 15 15
Operating expenses
------------------------------------------------------- ------------------- ---------------- -------------------- ------------------- --------------------- ------------------ --------------------- --------------- ---------------------------- -------------------
* disposals, acquisitions and related costs (8) (25) - - (1) (27) - - - (61)
------------------------------------------------------- ------------------- ---------------- -------------------- ------------------- --------------------- ------------------ --------------------- --------------- ---------------------------- -------------------
1 Includes the reversal of $2.1bn impairment loss relating to
the planned sale of the retail banking operations in France,
recognised in 3Q22, which is no longer classified as held for
sale.
2 Includes the provisional gain of $1.5bn recognised in respect of the acquisition of SVB UK.
3 Fair value movements on non-qualifying hedges in HSBC Holdings.
Legal entity results (continued)
Quarter ended 31 Mar 2022
--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
Holding
companies,
The Hongkong shared
and HSBC HSBC Grupo service
Shanghai Bank North Financiero centres
HSBC HSBC Banking Middle America HSBC HSBC, Other and
UK Bank Bank Corporation East Holdings Bank S.A. trading intra-group
plc plc Limited Limited Inc. Canada de C.V. entities(1) eliminations Total
$m $m $m $m $m $m $m $m $m $m
-------------- ---------------------- ---------------------- ------------------------ ---------------------- -------------------- ---------------------- ------------------------ -------------------- ---------------------------- --------------------
Revenue(2)
-------------- ---------------------- ---------------------- ------------------------ ---------------------- -------------------- ---------------------- ------------------------ -------------------- ---------------------------- --------------------
Reported 2,287 2,093 5,550 380 1,131 450 601 782 (969) 12,305
-------------- ---------------------- ---------------------- ------------------------ ---------------------- -------------------- ---------------------- ------------------------ -------------------- ---------------------------- --------------------
Currency
translation (214) (128) (146) - - (29) 60 (166) (110) (733)
-------------- ---------------------- ---------------------- ------------------------ ---------------------- -------------------- ---------------------- ------------------------ -------------------- ---------------------------- --------------------
Constant
currency 2,073 1,965 5,404 380 1,131 421 661 616 (1,079) 11,572
-------------- ---------------------- ---------------------- ------------------------ ---------------------- -------------------- ---------------------- ------------------------ -------------------- ---------------------------- --------------------
ECL
-------------- ---------------------- ---------------------- ------------------------ ---------------------- -------------------- ---------------------- ------------------------ -------------------- ---------------------------- --------------------
Reported 84 (262) (259) 47 25 33 (101) (7) (199) (639)
-------------- ---------------------- ---------------------- ------------------------ ---------------------- -------------------- ---------------------- ------------------------ -------------------- ---------------------------- --------------------
Currency
translation (8) 17 6 - - (2) (10) 5 (1) 7
-------------- ---------------------- ---------------------- ------------------------ ---------------------- -------------------- ---------------------- ------------------------ -------------------- ---------------------------- --------------------
Constant
currency 76 (245) (253) 47 25 31 (111) (2) (200) (632)
-------------- ---------------------- ---------------------- ------------------------ ---------------------- -------------------- ---------------------- ------------------------ -------------------- ---------------------------- --------------------
Operating
expenses
-------------- ---------------------- ---------------------- ------------------------ ---------------------- -------------------- ---------------------- ------------------------ -------------------- ---------------------------- --------------------
Reported (1,201) (1,827) (3,206) (245) (846) (252) (390) (514) 303 (8,178)
-------------- ---------------------- ---------------------- ------------------------ ---------------------- -------------------- ---------------------- ------------------------ -------------------- ---------------------------- --------------------
Currency
translation 112 120 73 (1) - 16 (39) 97 88 466
-------------- ---------------------- ---------------------- ------------------------ ---------------------- -------------------- ---------------------- ------------------------ -------------------- ---------------------------- --------------------
Constant
currency (1,089) (1,707) (3,133) (246) (846) (236) (429) (417) 391 (7,712)
-------------- ---------------------- ---------------------- ------------------------ ---------------------- -------------------- ---------------------- ------------------------ -------------------- ---------------------------- --------------------
Share of
profit/(loss)
in associates
and joint
ventures
-------------- ---------------------- ---------------------- ------------------------ ---------------------- -------------------- ---------------------- ------------------------ -------------------- ---------------------------- --------------------
Reported - (27) 680 - - - 3 1 (1) 656
-------------- ---------------------- ---------------------- ------------------------ ---------------------- -------------------- ---------------------- ------------------------ -------------------- ---------------------------- --------------------
Currency
translation - 3 (49) - - - - - - (46)
-------------- ---------------------- ---------------------- ------------------------ ---------------------- -------------------- ---------------------- ------------------------ -------------------- ---------------------------- --------------------
Constant
currency - (24) 631 - - - 3 1 (1) 610
-------------- ---------------------- ---------------------- ------------------------ ---------------------- -------------------- ---------------------- ------------------------ -------------------- ---------------------------- --------------------
Profit/(loss)
before tax
-------------- ---------------------- ---------------------- ------------------------ ---------------------- -------------------- ---------------------- ------------------------ -------------------- ---------------------------- --------------------
Reported 1,170 (23) 2,765 182 310 231 113 262 (866) 4,144
-------------- ---------------------- ---------------------- ------------------------ ---------------------- -------------------- ---------------------- ------------------------ -------------------- ---------------------------- --------------------
Currency
translation (110) 12 (116) (1) - (15) 11 (64) (23) (306)
-------------- ---------------------- ---------------------- ------------------------ ---------------------- -------------------- ---------------------- ------------------------ -------------------- ---------------------------- --------------------
Constant
currency 1,060 (11) 2,649 181 310 216 124 198 (889) 3,838
-------------- ---------------------- ---------------------- ------------------------ ---------------------- -------------------- ---------------------- ------------------------ -------------------- ---------------------------- --------------------
Loans and
advances
to customers
(net)
-------------- ---------------------- ---------------------- ------------------------ ---------------------- -------------------- ---------------------- ------------------------ -------------------- ---------------------------- --------------------
Reported 261,150 125,436 496,936 18,992 54,122 56,914 18,656 22,066 (199) 1,054,073
-------------- ---------------------- ---------------------- ------------------------ ---------------------- -------------------- ---------------------- ------------------------ -------------------- ---------------------------- --------------------
Currency
translation (15,178) (4,232) (12,218) 1 - (4,297) 2,008 (2,135) (1) (36,052)
-------------- ---------------------- ---------------------- ------------------------ ---------------------- -------------------- ---------------------- ------------------------ -------------------- ---------------------------- --------------------
Constant
currency 245,972 121,204 484,718 18,993 54,122 52,617 20,664 19,931 (200) 1,018,021
-------------- ---------------------- ---------------------- ------------------------ ---------------------- -------------------- ---------------------- ------------------------ -------------------- ---------------------------- --------------------
Customer
accounts
-------------- ---------------------- ---------------------- ------------------------ ---------------------- -------------------- ---------------------- ------------------------ -------------------- ---------------------------- --------------------
Reported 372,644 278,247 794,718 28,526 107,659 57,037 24,379 46,475 - 1,709,685
-------------- ---------------------- ---------------------- ------------------------ ---------------------- -------------------- ---------------------- ------------------------ -------------------- ---------------------------- --------------------
Currency
translation (21,659) (12,045) (13,433) (2) - (4,306) 2,625 (5,617) 2 (54,435)
-------------- ---------------------- ---------------------- ------------------------ ---------------------- -------------------- ---------------------- ------------------------ -------------------- ---------------------------- --------------------
Constant
currency 350,985 266,202 781,285 28,524 107,659 52,731 27,004 40,858 2 1,655,250
-------------- ---------------------- ---------------------- ------------------------ ---------------------- -------------------- ---------------------- ------------------------ -------------------- ---------------------------- --------------------
1 Other trading entities includes the results of entities
located in Oman, Türkiye, Egypt and Saudi Arabia (including our
share of the results of Saudi Awwal Bank) which do not consolidate
into HSBC Bank Middle East Limited. These entities had an
aggregated impact on Group reported profit before tax of $208m and
constant currency profit before tax of $152m. Supplementary
analysis is provided on page 42 to provide a fuller picture of the
MENA regional performance.
2 Net operating income before change in expected credit losses
and other credit impairment charges, also referred to as
revenue.
Notable items (continued)
Quarter ended 31 Mar 2022
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
Holding
companies,
The Hongkong shared
and HSBC HSBC Grupo service
Shanghai Bank North Financiero centres
HSBC HSBC Banking Middle America HSBC HSBC, Other and
UK Bank Bank Corporation East Holdings Bank S.A. trading intra-group
plc plc Limited Limited Inc. Canada de C.V. entities eliminations Total
$m $m $m $m $m $m $m $m $m $m
------------------------------------------------------- --------------------- -------------------- ------------------------ --------------------- -------------------- --------------------- ----------------------- ------------------- ---------------------------- -------------------
Revenue
* fair value movements on financial instruments(1) - - - - - - - - (200) (200)
------------------------------------------------------- --------------------- -------------------- ------------------------ --------------------- -------------------- --------------------- ----------------------- ------------------- ---------------------------- -------------------
* restructuring and other related costs(2) 1 (14) 5 - 97 - (1) - (8) 80
------------------------------------------------------- --------------------- -------------------- ------------------------ --------------------- -------------------- --------------------- ----------------------- ------------------- ---------------------------- -------------------
Operating expenses
* restructuring and other related costs (83) (113) (96) (9) (51) (9) (17) (29) (44) (451)
------------------------------------------------------- --------------------- -------------------- ------------------------ --------------------- -------------------- --------------------- ----------------------- ------------------- ---------------------------- -------------------
1 Fair value movements on non-qualifying hedges in HSBC Holdings.
2 Comprises gains and losses relating to the business update in
February 2020, including losses associated with the RWA reduction
programme.
Legal entity results (continued)
Quarter ended 31 Dec 2022
---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
Holding
companies,
The Hongkong shared
and HSBC HSBC Grupo service
Shanghai Bank North Financiero centres
HSBC HSBC Banking Middle America HSBC HSBC, Other and
UK Bank Bank Corporation East Holdings Bank S.A. trading intra-group
plc plc Limited Limited Inc. Canada de C.V. entities(1) eliminations Total
$m $m $m $m $m $m $m $m $m $m
-------------- ---------------------- ---------------------- ------------------------ ------------------------ ------------------------ ------------------------ ------------------------ ----------------------- -------------------------- ------------------
Revenue(2)
-------------- ---------------------- ---------------------- ------------------------ ------------------------ ------------------------ ------------------------ ------------------------ ----------------------- -------------------------- ------------------
Reported 2,629 1,508 7,515 498 1,016 526 757 1,036 (918) 14,567
-------------- ---------------------- ---------------------- ------------------------ ------------------------ ------------------------ ------------------------ ------------------------ ----------------------- -------------------------- ------------------
Currency
translation 96 103 77 - - 2 42 (84) 40 276
-------------- ---------------------- ---------------------- ------------------------ ------------------------ ------------------------ ------------------------ ------------------------ ----------------------- -------------------------- ------------------
Constant
currency 2,725 1,611 7,592 498 1,016 528 799 952 (878) 14,843
-------------- ---------------------- ---------------------- ------------------------ ------------------------ ------------------------ ------------------------ ------------------------ ----------------------- -------------------------- ------------------
ECL
-------------- ---------------------- ---------------------- ------------------------ ------------------------ ------------------------ ------------------------ ------------------------ ----------------------- -------------------------- ------------------
Reported (236) (55) (901) (37) 1 (20) (173) (15) 6 (1,430)
-------------- ---------------------- ---------------------- ------------------------ ------------------------ ------------------------ ------------------------ ------------------------ ----------------------- -------------------------- ------------------
Currency
translation (9) (4) (3) - - - (10) 1 - (25)
-------------- ---------------------- ---------------------- ------------------------ ------------------------ ------------------------ ------------------------ ------------------------ ----------------------- -------------------------- ------------------
Constant
currency (245) (59) (904) (37) 1 (20) (183) (14) 6 (1,455)
-------------- ---------------------- ---------------------- ------------------------ ------------------------ ------------------------ ------------------------ ------------------------ ----------------------- -------------------------- ------------------
Operating
expenses
-------------- ---------------------- ---------------------- ------------------------ ------------------------ ------------------------ ------------------------ ------------------------ ----------------------- -------------------------- ------------------
Reported (1,253) (1,803) (3,420) (282) (933) (287) (449) (719) 365 (8,781)
-------------- ---------------------- ---------------------- ------------------------ ------------------------ ------------------------ ------------------------ ------------------------ ----------------------- -------------------------- ------------------
Currency
translation (45) (74) (40) - - (1) (25) 41 (33) (177)
-------------- ---------------------- ---------------------- ------------------------ ------------------------ ------------------------ ------------------------ ------------------------ ----------------------- -------------------------- ------------------
Constant
currency (1,298) (1,877) (3,460) (282) (933) (288) (474) (678) 332 (8,958)
-------------- ---------------------- ---------------------- ------------------------ ------------------------ ------------------------ ------------------------ ------------------------ ----------------------- -------------------------- ------------------
Share of
profit/(loss)
in associates
and joint
ventures
-------------- ---------------------- ---------------------- ------------------------ ------------------------ ------------------------ ------------------------ ------------------------ ----------------------- -------------------------- ------------------
Reported - (6) 559 - - - 5 136 (1) 693
-------------- ---------------------- ---------------------- ------------------------ ------------------------ ------------------------ ------------------------ ------------------------ ----------------------- -------------------------- ------------------
Currency
translation - (1) 23 - - - - - 1 23
-------------- ---------------------- ---------------------- ------------------------ ------------------------ ------------------------ ------------------------ ------------------------ ----------------------- -------------------------- ------------------
Constant
currency - (7) 582 - - - 5 136 - 716
-------------- ---------------------- ---------------------- ------------------------ ------------------------ ------------------------ ------------------------ ------------------------ ----------------------- -------------------------- ------------------
Profit/(loss)
before tax
-------------- ---------------------- ---------------------- ------------------------ ------------------------ ------------------------ ------------------------ ------------------------ ----------------------- -------------------------- ------------------
Reported 1,140 (356) 3,753 179 84 219 140 438 (548) 5,049
-------------- ---------------------- ---------------------- ------------------------ ------------------------ ------------------------ ------------------------ ------------------------ ----------------------- -------------------------- ------------------
Currency
translation 42 24 57 - - 1 7 (42) 8 97
-------------- ---------------------- ---------------------- ------------------------ ------------------------ ------------------------ ------------------------ ------------------------ ----------------------- -------------------------- ------------------
Constant
currency 1,182 (332) 3,810 179 84 220 147 396 (540) 5,146
-------------- ---------------------- ---------------------- ------------------------ ------------------------ ------------------------ ------------------------ ------------------------ ----------------------- -------------------------- ------------------
Loans and
advances
to customers
(net)
-------------- ---------------------- ---------------------- ------------------------ ------------------------ ------------------------ ------------------------ ------------------------ ----------------------- -------------------------- ------------------
Reported 245,921 86,964 473,985 19,762 54,159 - 20,446 22,325 (1) 923,561
-------------- ---------------------- ---------------------- ------------------------ ------------------------ ------------------------ ------------------------ ------------------------ ----------------------- -------------------------- ------------------
Currency
translation 6,665 1,932 (1,778) 4 - - 1,595 (394) 2 8,026
-------------- ---------------------- ---------------------- ------------------------ ------------------------ ------------------------ ------------------------ ------------------------ ----------------------- -------------------------- ------------------
Constant
currency 252,586 88,896 472,207 19,766 54,159 - 22,041 21,931 1 931,587
-------------- ---------------------- ---------------------- ------------------------ ------------------------ ------------------------ ------------------------ ------------------------ ----------------------- -------------------------- ------------------
Customer
accounts
-------------- ---------------------- ---------------------- ------------------------ ------------------------ ------------------------ ------------------------ ------------------------ ----------------------- -------------------------- ------------------
Reported 336,086 253,075 784,236 29,893 100,404 - 25,531 41,078 - 1,570,303
-------------- ---------------------- ---------------------- ------------------------ ------------------------ ------------------------ ------------------------ ------------------------ ----------------------- -------------------------- ------------------
Currency
translation 9,109 5,857 (2,886) 6 - - 1,993 (1,664) - 12,415
-------------- ---------------------- ---------------------- ------------------------ ------------------------ ------------------------ ------------------------ ------------------------ ----------------------- -------------------------- ------------------
Constant
currency 345,195 258,932 781,350 29,899 100,404 - 27,524 39,414 - 1,582,718
-------------- ---------------------- ---------------------- ------------------------ ------------------------ ------------------------ ------------------------ ------------------------ ----------------------- -------------------------- ------------------
1 Other trading entities includes the results of entities
located in Oman, Türkiye, Egypt and Saudi Arabia (including our
share of the results of Saudi Awwal Bank) which do not consolidate
into HSBC Bank Middle East Limited. These entities had an
aggregated impact on Group reported profit before tax of $283m and
constant currency profit before tax of $257m. Supplementary
analysis is provided on page 42 to provide a fuller picture of the
MENA regional performance.
2 Net operating income before change in expected credit losses
and other credit impairment charges, also referred to as
revenue.
Notable items (continued)
Quarter ended 31 Dec 2022
-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
Holding
companies,
The Hongkong shared
and HSBC HSBC Grupo service
Shanghai Bank North Financiero centres
HSBC HSBC Banking Middle America HSBC HSBC, Other and
UK Bank Bank Corporation East Holdings Bank S.A. trading intra-group
plc plc Limited Limited Inc. Canada de C.V. entities eliminations Total
$m $m $m $m $m $m $m $m $m $m
------------------------------------------------------- ------------------- ---------------------- ---------------------- ----------------------- ----------------------- ------------------------ ---------------------- ---------------------- ------------------------- -------------------
Revenue
------------------------------------------------------- ------------------- ---------------------- ---------------------- ----------------------- ----------------------- ------------------------ ---------------------- ---------------------- ------------------------- -------------------
* disposals, acquisitions and related costs - (11) - - - - - - (60) (71)
------------------------------------------------------- ------------------- ---------------------- ---------------------- ----------------------- ----------------------- ------------------------ ---------------------- ---------------------- ------------------------- -------------------
* fair value movements on financial instruments(1) - - - - - - - - 35 35
------------------------------------------------------- ------------------- ---------------------- ---------------------- ----------------------- ----------------------- ------------------------ ---------------------- ---------------------- ------------------------- -------------------
* restructuring and other related costs(2) - (243) 46 (13) 11 1 (15) - (71) (284)
------------------------------------------------------- ------------------- ---------------------- ---------------------- ----------------------- ----------------------- ------------------------ ---------------------- ---------------------- ------------------------- -------------------
Operating
expenses
------------------------------------------------------- ------------------- ---------------------- ---------------------- ----------------------- ----------------------- ------------------------ ---------------------- ---------------------- ------------------------- -------------------
* disposals, acquisitions and related costs - (9) - - - - - - - (9)
* restructuring and other related costs (193) (274) (339) (31) (198) (51) (49) (66) 41 (1,160)
------------------------------------------------------- ------------------- ---------------------- ---------------------- ----------------------- ----------------------- ------------------------ ---------------------- ---------------------- ------------------------- -------------------
1 Fair value movements on non-qualifying hedges in HSBC Holdings.
2 Comprises gains and losses relating to the business update in
February 2020, including losses associated with the RWA reduction
programme.
Middle East and North Africa supplementary information
The following tables show the results of our Middle East and
North Africa business operations on a regional basis (including
results of all the legal entities operating in the region and our
share of the results of Saudi Awwal Bank). It also shows the profit
before tax of each of the global businesses and Corporate
Centre.
Middle East and North Africa regional performance
Quarter ended
31 Mar 31 Dec 31 Mar
2023 2022 2022
$m $m $m
------------------------------- --------------------------- -------------------------- ----------------------------
Revenue(1) 899 810 724
------------------------------- --------------------------- -------------------------- ----------------------------
ECL (8) (35) 43
------------------------------- --------------------------- -------------------------- ----------------------------
Operating expenses (374) (449) (380)
------------------------------- --------------------------- -------------------------- ----------------------------
Share of profit/(loss) from
associates and joint
ventures 110 133 (2)
------------------------------- --------------------------- -------------------------- ----------------------------
Profit before tax 627 459 385
------------------------------- --------------------------- -------------------------- ----------------------------
Loans and advances to customers
(net) 25,160 26,475 26,708
------------------------------- --------------------------- -------------------------- ----------------------------
Customer accounts 45,830 43,933 43,873
------------------------------- --------------------------- -------------------------- ----------------------------
1 Net operating income before change in expected credit losses
and other credit impairment charges, also referred to as
revenue.
Profit before tax by global business
Quarter ended
----------------------------------------------------------------------------------
31 Mar 31 Dec 31 Mar
2023 2022 2022
$m $m $m
---------------------------- -------------------------- -------------------------- --------------------------
Wealth and Personal Banking 141 91 48
---------------------------- -------------------------- -------------------------- --------------------------
Commercial Banking 119 69 95
---------------------------- -------------------------- -------------------------- --------------------------
Global Banking and Markets 296 201 268
---------------------------- -------------------------- -------------------------- --------------------------
Corporate Centre 71 98 (26)
---------------------------- -------------------------- -------------------------- --------------------------
Total 627 459 385
---------------------------- -------------------------- -------------------------- --------------------------
Additional information
Second interim dividend for 2022
On 21 February 2023, the Directors approved a second interim
dividend for 2022 of $0.23 per ordinary share, which was paid on 27
April 2023 in cash. The sterling and Hong Kong dollar amounts of
approximately GBP0.185392 and HK$1.804399 were calculated using the
forward exchange rates quoted by HSBC Bank plc in London at or
about 11.00am on 17 April 2023.
First interim dividend for 2023
On 2 May 2023, the Directors approved a first interim dividend
in respect of the financial year ended 31 December 2023 of $0.10
per ordinary share, a distribution of approximately $2bn. The first
interim dividend for 2023 will be payable on 23 June 2023 to
holders on the Principal Register in the UK, the Hong Kong Overseas
Branch Register or the Bermuda Overseas Branch Register on 12 May
2023.
The first interim 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 12 June
2023, or a combination of these currencies. Particulars of these
arrangements will be sent to shareholders on or about 19 May 2023
and changes to currency elections must be received by 8 June 2023.
The ordinary shares in London, Hong Kong and Bermuda, and American
Depositary Shares ('ADSs') in New York will be quoted ex-dividend
on 11 May 2023.
The first interim dividend will be payable on ADSs, each of
which represents five ordinary shares, on 23 June 2023 to holders
of record on 12 May 2023. The first interim dividend of $0.50 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 2 June 2023.
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 or Bermuda Overseas Branch Registrar should do so before
4.00pm local time on 12 May 2023 in order to receive the first
interim dividend for 2023. 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
12 May 2023. Any person wishing to remove ordinary shares to or
from each register must do so before 4.00pm local time on 11 May
2023.
Transfers of ADSs must be lodged with the depositary by 11.00am
on 12 May 2023 in order to receive the first interim 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 shares
A quarterly dividend of GBP0.01 per Series A sterling preference
share is payable on 15 March, 15 June, 15 September and 15 December
2023 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
June 2023 to holders of record on 31 May 2023.
For and on behalf of
HSBC Holdings plc
Aileen Taylor
Group Company Secretary and Chief Governance Officer
The Board of Directors of HSBC Holdings plc as at the date of
this announcement comprises: Mark Tucker*, Geraldine Buckingham ,
Rachel Duan , Georges Elhedery, Carolyn Julie Fairbairn , James
Anthony Forese , Steven Guggenheimer , José Antonio Meade Kuribreña
, Kalpana Morparia , Eileen K Murray , David Nish , Noel Quinn, and
Jackson Tai .
* Non-executive Group Chairman
Independent non-executive Director
Investor relations/media relations contacts
For further information contact:
Investor Relations Media Relations
UK - Richard O'Connor UK - Gillian James
Telephone: +44 (0)20 Telephone: +44 (0)7584
7991 6590 404 238
Email: investorrelations@hsbc.com Email: pressoffice@hsbc.com
Hong Kong - Mark Phin UK - Kirsten Smart
Telephone: +852 2822 Telephone: +44 (0)7725
4908 733 311
Email: investorrelations@hsbc.com.hk Email: pressoffice@hsbc.com
Hong Kong - Aman Ullah
Telephone: +852 3941
1120
Email: aspmediarelations@hsbc.com.hk
Please click on the following link to view the associated data
pack:
http://www.rns-pdf.londonstockexchange.com/rns/9828X_1-2023-5-1.pdf
Cautionary statement regarding forward-looking statements
This Earnings Release 1Q23 contains certain forward-looking
statements with respect to HSBC's: financial condition; results of
operations and business, including the strategic priorities;
financial, investment and capital targets; and ESG targets,
commitments and ambitions described herein.
Statements that are not historical facts, including statements
about HSBC's beliefs and expectations, are forward-looking
statements. Words such as 'may', 'will', 'should', 'expects',
'targets', 'anticipates', 'intends', 'plans', 'believes', 'seeks',
'estimates', 'potential' and 'reasonably possible', or the negative
thereof, other variations thereon or similar expressions are
intended to identify forward-looking statements. These statements
are based on current plans, information, data, estimates and
projections, and therefore undue reliance should not be placed on
them. Forward-looking statements speak only as of the date they are
made. HSBC makes no commitment to revise or update any
forward-looking statements to reflect events or circumstances
occurring or existing after the date of any forward-looking
statements. Written and/or oral forward-looking statements may also
be made in the periodic reports to the US Securities and Exchange
Commission, summary financial statements to shareholders, proxy
statements, offering circulars and prospectuses, press releases and
other written materials, and in oral statements made by HSBC's
Directors, officers or employees to third parties, including
financial analysts. Forward-looking statements involve inherent
risks and uncertainties. Readers are cautioned that a number of
factors could cause actual results to differ, in some instances
materially, from those anticipated or implied in any
forward-looking statement.
These include, but are not limited to:
-- changes in general economic conditions in the markets in
which we operate, such as new, continuing or deepening recessions,
prolonged inflationary pressures and fluctuations in employment
levels and the creditworthiness of customers beyond those factored
into consensus forecasts (including, without limitation, as a
result of the Russia-Ukraine war and, to a lesser extent, the
Covid-19 pandemic); the Russia-Ukraine war and the Covid-19
pandemic and their impact on global economies and the markets where
HSBC operates, which could have a material adverse effect on (among
other things) our financial condition, results of operations,
prospects, liquidity, capital position and credit ratings;
deviations from the market and economic assumptions that form the
basis for our ECL measurements (including, without limitation, as a
result of the Russia-Ukraine war, inflationary pressures and the
Covid-19 pandemic); increased volatility in the financial services
and banking sector; potential changes in HSBC's dividend policy;
changes in foreign exchange rates and interest rates, including the
accounting impact resulting from financial reporting in respect of
hyperinflationary economies; volatility in equity markets; lack of
liquidity in wholesale funding or capital markets, which may affect
our ability to meet our obligations under financing facilities or
to fund new loans, investments and businesses; geopolitical
tensions or diplomatic developments producing social instability or
legal uncertainty, such as the Russia-Ukraine war (including the
continuation and escalation thereof) and the related imposition of
sanctions and trade restrictions, supply chain restrictions and
disruptions, sustained increases in energy prices and key commodity
prices, claims of human rights violations, diplomatic tensions,
including between China and the US, the UK, the EU, India and other
countries, and developments in Hong Kong and Taiwan, alongside
other potential areas of tension, which may adversely affect HSBC
by creating regulatory, reputational and market risks; the efficacy
of government, customer, and HSBC's actions in managing and
mitigating ESG risks, in particular climate risk, nature-related
risks and human rights risks, and in supporting the global
transition to net zero carbon emissions, each of which can impact
HSBC both directly and indirectly through our customers and which
may result in potential financial and non-financial impacts;
illiquidity and downward price pressure in national real estate
markets; adverse changes in central banks' policies with respect to
the provision of liquidity support to financial markets; heightened
market concerns over sovereign creditworthiness in over-indebted
countries; adverse changes in the funding status of public or
private defined benefit pensions; societal shifts in customer
financing and investment needs, including consumer perception as to
the continuing availability of credit; exposure to counterparty
risk, including third parties using us as a conduit for illegal
activities without our knowledge; the discontinuation of certain
key Ibors and the development of near risk-free benchmark rates, as
well as the transition of legacy Ibor contracts to near risk-free
benchmark rates, which exposes HSBC to material execution risks,
including in relation to the effectiveness of its Ibor remediation
strategy, and increases some financial and non-financial risks; and
price competition in the market segments we serve;
-- changes in government policy and regulation, including the
monetary, interest rate and other policies of central banks and
other regulatory authorities in the principal markets in which we
operate and the consequences thereof (including, without
limitation, actions taken as a result of the impact of the
Russia-Ukraine war on inflation and as a result of the Covid-19
pandemic); initiatives to change the size, scope of activities and
interconnectedness of financial institutions in connection with the
implementation of stricter regulation of financial institutions in
key markets worldwide; revised capital and liquidity benchmarks,
which could serve to deleverage bank balance sheets and lower
returns available from the current business model and portfolio
mix; changes to tax laws and tax rates applicable to HSBC,
including the imposition of levies or taxes designed to change
business mix and risk appetite; the practices, pricing or
responsibilities of financial institutions serving their consumer
markets; expropriation, nationalisation, confiscation of assets and
changes in legislation relating to foreign ownership; the UK's
relationship with the EU, which continues to be characterised by
uncertainty and political disagreement, particularly with respect
to the regulation of financial services, despite the signing of the
Trade and Cooperation Agreement between the UK and the EU; changes
in UK macroeconomic and fiscal policy, which may result in
fluctuations in the value of the pound sterling; general changes in
government policy that may significantly influence investor
decisions; the costs, effects and outcomes of regulatory reviews,
actions or litigation, including any additional compliance
requirements; and the effects of competition in the markets where
we operate including increased competition from non-bank financial
services companies; and
-- factors specific to HSBC, including our success in adequately
identifying the risks we face, such as the incidence of loan losses
or delinquency, and managing those risks (through account
management, hedging and other techniques); our ability to achieve
our financial, investment, capital and ESG targets, commitments and
ambitions (including with respect to the commitments set forth in
our thermal coal phase-out policy and our energy policy and our
targets to reduce our on-balance sheet financed emissions in eight
high-emitting sectors), which may result in our failure to achieve
any of the expected benefits of our strategic priorities; model
limitations or failure, including, without limitation, the impact
that high inflationary pressures, rising interest rates and the
consequences of the Covid-19 pandemic have had on the performance
and usage of financial models, which may require us to hold
additional capital, incur losses and/or use compensating controls,
such as judgemental post-model adjustments, to address model
limitations; changes to the judgements, estimates and assumptions
we base our financial statements on; changes in our ability to meet
the requirements of regulatory stress tests; a reduction in the
credit ratings assigned to us or any of our subsidiaries, which
could increase the cost or decrease the availability of our funding
and affect our liquidity position and net interest margin; changes
to the reliability and security of our data management, data
privacy, information and technology infrastructure, including
threats from cyber-attacks, which may impact our ability to service
clients and may result in financial loss, business disruption
and/or loss of customer services and data; the accuracy and
effective use of data, including internal management information
that may not have been independently verified; changes in insurance
customer behaviour and insurance claim rates; our dependence on
loan payments and dividends from subsidiaries to meet our
obligations; changes in our reporting frameworks and accounting
standards, including the recently announced reporting changes and
the implementation of IFRS 17 'Insurance Contracts', which may have
a material impact on the way we prepare our financial statements
and (with respect to IFRS 17) may negatively affect the
profitability of HSBC's insurance business; our success in
adequately integrating SVB UK into our CMB business; changes in our
ability to manage third-party, fraud and reputational risks
inherent in our operations; employee misconduct, which may result
in regulatory sanctions and/or reputational or financial harm;
changes in skill requirements, ways of working and talent
shortages, which may affect our ability to recruit and retain
senior management and diverse and skilled personnel; and changes in
our ability to develop sustainable finance and climate-related
products consistent with the evolving expectations of our
regulators, and our capacity to measure the climate impact from our
financing activity (including as a result of data limitations and
changes in methodologies), which may affect our ability to achieve
our climate ambition, our targets to reduce financed emissions in
our high-emitting sectors portfolio and the commitments set forth
in our thermal coal phase-out policy and our energy policy, and
increase the risk of greenwashing. Effective risk management
depends on, among other things, our ability through stress testing
and other techniques to prepare for events that cannot be captured
by the statistical models it uses; our success in addressing
operational, legal and regulatory, and litigation challenges; and
other risks and uncertainties we identify in 'Risks' on page 20 of
this Earnings Release 1Q23.
Additional detailed information concerning important factors,
including but not limited to ESG-related factors, that could cause
actual results to differ materially from those anticipated or
implied in any forward-looking statement in this Earnings Release
1Q23 is available in our Annual Report and Accounts for the fiscal
year ended 31 December 2022 which was filed with the SEC on Form
20-F on 22 February 2023.
Abbreviations
1Q22 First quarter of 2022
-------------- ------------------------------------------------------------
1Q23 First quarter of 2023
2Q23 Second quarter of 2023
4Q22 Fourth quarter of 2022
AGM Annual General Meeting
-------------- ------------------------------------------------------------
AIEA Average interest-earning assets
-------------- ------------------------------------------------------------
Basel III Basel Committee's reforms to strengthen global capital and
liquidity rules
-------------- ------------------------------------------------------------
Basel 3.1 Outstanding measures to be implemented from the Basel III
reforms
-------------- ------------------------------------------------------------
BoCom Bank of Communications Co., Limited, one of China's largest
banks
-------------- ------------------------------------------------------------
Bps Basis points. One basis point is equal to one-hundredth
of a percentage point
-------------- ------------------------------------------------------------
CET1 Common equity tier 1
-------------- ------------------------------------------------------------
CMB Commercial Banking, a global business
-------------- ------------------------------------------------------------
CODM Chief Operating Decision Maker
-------------- ------------------------------------------------------------
CSM Contractual service margin
-------------- ------------------------------------------------------------
Corporate Corporate Centre comprises Central Treasury, our legacy
Centre businesses, interests in our associates and joint ventures,
central stewardship costs and consolidation adjustments
-------------- ------------------------------------------------------------
CRR II Revised Capital Requirements Regulation and Directive, as
implemented
-------------- ------------------------------------------------------------
EBA European Banking Authority
-------------- ------------------------------------------------------------
ECL Expected credit losses. In the income statement, ECL is
recorded as a change in expected credit losses and other
credit impairment charges. In the balance sheet, ECL is
recorded as an allowance for financial instruments to which
only the impairment requirements in
IFRS 9 are applied
-------------- ------------------------------------------------------------
Eonia Euro Overnight Index Average
-------------- ------------------------------------------------------------
ESG Environmental, social and governance
-------------- ------------------------------------------------------------
EU European Union
-------------- ------------------------------------------------------------
FTE Full-time equivalent staff
-------------- ------------------------------------------------------------
FVOCI Fair value through other comprehensive income
-------------- ------------------------------------------------------------
FX Foreign exchange
-------------- ------------------------------------------------------------
GAAP Generally accepted accounting principles
-------------- ------------------------------------------------------------
GBM Global Banking and Markets, a global business
GDP Gross domestic product
-------------- ------------------------------------------------------------
GEC Group Executive Committee
-------------- ------------------------------------------------------------
GPS Global Payments Solutions, the business formerly known as
Global Liquidity and Cash Management
-------------- ------------------------------------------------------------
Group HSBC Holdings together with its subsidiary undertakings
-------------- ------------------------------------------------------------
GTRF Global Trade and Receivables Finance
-------------- ------------------------------------------------------------
Hong Kong Hong Kong Special Administrative Region of the People's
Republic of China
-------------- ------------------------------------------------------------
HSBC HSBC Holdings together with its subsidiary undertakings
-------------- ------------------------------------------------------------
HSBC Bank HSBC Bank plc, also known as the non-ring-fenced bank
plc
-------------- ------------------------------------------------------------
HSBC Holdings HSBC Holdings plc, the parent company of HSBC
-------------- ------------------------------------------------------------
HSBC UK HSBC UK Bank plc, also known as the ring-fenced bank
-------------- ------------------------------------------------------------
IAS International Accounting Standards
-------------- ------------------------------------------------------------
Ibor Interbank offered rate
-------------- ------------------------------------------------------------
IFRSs International Financial Reporting Standards
-------------- ------------------------------------------------------------
IRB Internal ratings-based
-------------- ------------------------------------------------------------
JV Joint venture
-------------- ------------------------------------------------------------
LCR Liquidity coverage ratio
-------------- ------------------------------------------------------------
Libor London interbank offered rate
-------------- ------------------------------------------------------------
Long term For our strategic goals, we define long term as five to
six years, commencing 1 January 2020
-------------- ------------------------------------------------------------
Mainland China People's Republic of China excluding Hong Kong and Macau
-------------- ------------------------------------------------------------
Medium term For our strategic goals, we define medium term as three
to five years, commencing 1 January 2020
-------------- ------------------------------------------------------------
MENA Middle East and North Africa, including Türkiye
-------------- ------------------------------------------------------------
MREL Minimum requirement for own funds and eligible liabilities
-------------- ------------------------------------------------------------
MSS Markets and Securities Services, HSBC's capital markets
and securities services businesses in Global Banking and
Markets
-------------- ------------------------------------------------------------
Net operating Net operating income before change in expected credit losses
income and other credit impairment charges, also referred to as
revenue
-------------- ------------------------------------------------------------
NIM Net interest margin
-------------- ------------------------------------------------------------
POCI Purchased or originated credit-impaired financial assets
-------------- ------------------------------------------------------------
PRA Prudential Regulation Authority (UK)
Revenue Net operating income before ECL
-------------- ------------------------------------------------------------
RFR Risk-free rate
-------------- ------------------------------------------------------------
RoE Return on average ordinary shareholders' equity
-------------- ------------------------------------------------------------
RoTE Return on average tangible equity
-------------- ------------------------------------------------------------
RWA Risk-weighted asset
-------------- ------------------------------------------------------------
SAB Saudi Awwal Bank, which was formed from the merger between
The Saudi British Bank and Alawwal Bank
-------------- ------------------------------------------------------------
SVB UK Silicon Valley Bank UK Limited
-------------- ------------------------------------------------------------
WPB Wealth and Personal Banking, a global business
-------------- ------------------------------------------------------------
$m/$bn/$tn United States dollar millions/billions/trillions. We report
in US dollars
-------------- ------------------------------------------------------------
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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