TIDMHSBA
RNS Number : 9028H
HSBC Holdings PLC
01 August 2023
Financial summary
Contents
28 Changes to presentation from
1 January 2023
28 Use of alternative performance
measures
29 Summary consolidated income statement
30 Distribution of results by global
business and legal entity
31 Income statement commentary
31 Net interest income
34 Tax expense
35 Summary consolidated balance
sheet
37 Balance sheet commentary compared
with 31 December 2022
Changes to presentation from 1 January 2023
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.
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 ('CSM')
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
CSM 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.
In conjunction with the implementation of IFRS 17, the Group has
made use of the option to re-designate to fair value through profit
or loss assets that were previously held at amortised cost
totalling $55.1bn, and assets previously held at fair value through
other comprehensive income totalling $1.1bn. The re-designation of
amortised cost assets generated a net increase to assets of $4.9bn
because the fair value measurement on transition was higher than
the previous amortised cost carrying amount.
The impact of the transition was a reduction of $0.7bn on the
Group's 1H22 reported revenue and a reduction of $0.4bn on 1H22
reported profit before tax. The Group's total equity at 1 January
2022 reduced by $10.5bn to $196.3bn on the transition, and tangible
equity reduced by $2.4bn to $155.8bn. For further details of our
adoption of IFRS 17, see our Report on Transition to IFRS 17
'Insurance Contracts' at www.hsbc.com/investors and Note 16
'Effects of adoption of IFRS 17' on page 137.
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. While our new reporting framework no longer
presents 'adjusted' results, we make an exception 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 we consider
to be outside of our control, and the incremental costs associated
with our acquisition of SVB UK and related international
investments. We consider that this target basis operating expense
measure provides useful information to investors by quantifying and
excluding the items that management considered separately 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.
Use of alternative performance measures
Our reported results are prepared in accordance with IFRSs as
detailed in the interim condensed financial statements starting on
page 108.
To measure our performance, we supplement our IFRSs figures with
non-IFRSs measures, which constitute alternative performance
measures under European Securities and Markets Authority guidance
and non-GAAP financial measures defined in and presented in
accordance with US Securities and Exchange Commission rules and
regulations. These measures include those derived from our reported
results that eliminate factors that distort period-on-period
comparisons. The 'constant currency performance' measure used in
this report is described below. Definitions and calculations of
other alternative performance measures are included in our
'Reconciliation of alternative performance measures' on page 57.
All alternative performance measures are reconciled to the closest
reported performance measure.
The global business segmental results are presented on a
constant currency basis in accordance with IFRS 8 'Operating
Segments' as detailed in Note 5: 'Segmental analysis' on page
118.
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.
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 39 to 40 and pages 51 to 54 detail the
effects of notable items on each of our global business segments,
legal entities and selected countries/territories in 1H23 and
1H22.
Foreign currency translation differences
Foreign currency translation differences reflect the movements
of the US dollar against most major currencies during 2023.
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 for the half-year to 30
June 2023 are computed by retranslating into US dollars for non-US
dollar branches, subsidiaries, joint ventures and associates:
- the income statement for the half-year to 30 June 2022 at the
average rate of exchange for the half-year to 30 June 2023; and
- the balance sheets at 30 June 2022 and 31 December 2022 at the
prevailing rates of exchange on 30 June 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 have 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
have 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.
Summary consolidated income statement
Half-year to(1)
30 Jun 30 Jun
2023 2022
$m $m
------------------------------------------------------------ ---------------------------- --------------------------
Net interest income 18,264 13,385
------------------------------------------------------------ ---------------------------- --------------------------
Net fee income 6,085 6,228
------------------------------------------------------------ ---------------------------- --------------------------
Net income from financial instruments held for trading
or managed on a fair value basis 8,112 4,856
------------------------------------------------------------ ---------------------------- --------------------------
Net income/(expense) from assets and liabilities of
insurance
businesses, including related derivatives, measured at
fair value through profit or loss 4,304 (11,849)
------------------------------------------------------------ ---------------------------- --------------------------
Insurance finance income/(expense) (4,234) 11,773
------------------------------------------------------------ ---------------------------- --------------------------
Insurance service result 524 370
------------------------------------------------------------ ---------------------------- --------------------------
Gain on acquisitions(2) 1,507 -
------------------------------------------------------------ ---------------------------- --------------------------
Reversal of impairment loss relating to the planned sale 2,130 -
of our retail banking operations in France(3)
------------------------------------------------------------ ---------------------------- --------------------------
Other operating income 184 (218)
------------------------------------------------------------ ---------------------------- --------------------------
Net operating income before change in expected credit
losses and other credit impairment charges(4) 36,876 24,545
------------------------------------------------------------ ---------------------------- --------------------------
Change in expected credit losses and other credit impairment
charges (1,345) (1,087)
------------------------------------------------------------ ---------------------------- --------------------------
Net operating income 35,531 23,458
------------------------------------------------------------ ---------------------------- --------------------------
Total operating expenses (15,457) (16,127)
------------------------------------------------------------ ---------------------------- --------------------------
Operating profit 20,074 7,331
------------------------------------------------------------ ---------------------------- --------------------------
Share of profit in associates and joint ventures 1,583 1,449
------------------------------------------------------------ ---------------------------- --------------------------
Profit before tax 21,657 8,780
------------------------------------------------------------ ---------------------------- --------------------------
Tax (charge)/credit (3,586) 151
------------------------------------------------------------ ---------------------------- --------------------------
Profit for the period 18,071 8,931
------------------------------------------------------------ ---------------------------- --------------------------
Attributable to:
------------------------------------------------------------ ---------------------------- --------------------------
- ordinary shareholders of the parent company 16,966 7,966
- other equity holders 542 626
------------------------------------------------------------ ---------------------------- --------------------------
- non-controlling interests 563 339
------------------------------------------------------------ ---------------------------- --------------------------
Profit for the period 18,071 8,931
------------------------------------------------------------ ---------------------------- --------------------------
$ $
------------------------------------------------------------ ---------------------------- --------------------------
Basic earnings per share 0.86 0.40
------------------------------------------------------------ ---------------------------- --------------------------
Diluted earnings per share 0.86 0.40
------------------------------------------------------------ ---------------------------- --------------------------
Dividend per ordinary share (paid in the period)(5) 0.33 0.18
------------------------------------------------------------ ---------------------------- --------------------------
% %
------------------------------------------------------------ ---------------------------- --------------------------
Post-tax return on average total assets (annualised) 1.2 0.6
------------------------------------------------------------ ---------------------------- --------------------------
Return on average ordinary shareholders' equity (annualised) 20.8 9.9
------------------------------------------------------------ ---------------------------- --------------------------
Return on average tangible equity (annualised) 22.4 10.6
------------------------------------------------------------ ---------------------------- --------------------------
1 From 1 January 2023, we adopted IFRS 17 'Insurance Contracts',
which replaced IFRS 4 'Insurance Contracts'. Comparative data have
been restated accordingly.
2 Provisional gain of $1.5bn recognised in respect of the acquisition of SVB UK.
3 Reversal of the $2.1bn impairment loss relating to the planned
sale of our retail banking operations in France, which is no longer
classified as held for sale.
4 Net operating income before change in expected credit losses
and other credit impairment charges, also referred to as
revenue.
5 The $0.33 dividend paid during the period consisted of a
second interim dividend of $0.23 per ordinary share in respect of
the financial year ended 31 December 2022 paid in April 2023 and a
first interim dividend of $0.10 per ordinary share in respect of
the financial year ending 31 December 2023.
Distribution of results by global business and legal entity
Distribution of results by global business
Half year to
-------------------------------------------------
30 Jun 30 Jun
2023 2022
$m $m
------------------------------------------- ------------------------ -----------------------
Constant currency revenue(1)
------------------------------------------- ------------------------ -----------------------
Wealth and Personal Banking 16,200 10,058
------------------------------------------- ------------------------ -----------------------
Commercial Banking(2) 12,216 7,055
------------------------------------------- ------------------------ -----------------------
Global Banking and Markets(2) 8,501 7,459
------------------------------------------- ------------------------ -----------------------
Corporate Centre (41) (925)
------------------------------------------- ------------------------ -----------------------
Total 36,876 23,647
------------------------------------------- ------------------------ -----------------------
Constant currency profit/(loss) before tax
------------------------------------------- ------------------------ -----------------------
Wealth and Personal Banking 8,592 2,487
------------------------------------------- ------------------------ -----------------------
Commercial Banking(2) 7,939 3,432
------------------------------------------- ------------------------ -----------------------
Global Banking and Markets(2) 3,580 2,692
------------------------------------------- ------------------------ -----------------------
Corporate Centre 1,546 (207)
------------------------------------------- ------------------------ -----------------------
Total 21,657 8,404
------------------------------------------- ------------------------ -----------------------
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 entities 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
Half year to
------------------------------------------------
30 Jun 30 Jun
2023 2022
$m $m
---------------------------------------------------------- ----------------------- -----------------------
Reported profit/(loss) before tax
---------------------------------------------------------- ----------------------- -----------------------
HSBC UK Bank plc 4,791 2,270
---------------------------------------------------------- ----------------------- -----------------------
HSBC Bank plc 3,498 252
---------------------------------------------------------- ----------------------- -----------------------
The Hongkong and Shanghai Banking Corporation Limited 10,917 5,734
---------------------------------------------------------- ----------------------- -----------------------
HSBC Bank Middle East Limited 673 378
---------------------------------------------------------- ----------------------- -----------------------
HSBC North America Holdings Inc. 701 424
---------------------------------------------------------- ----------------------- -----------------------
HSBC Bank Canada 475 385
---------------------------------------------------------- ----------------------- -----------------------
Grupo Financiero HSBC, S.A. de C.V. 436 239
---------------------------------------------------------- ----------------------- -----------------------
Other trading entities(1) 1,282 532
---------------------------------------------------------- ----------------------- -----------------------
- of which: other Middle East entities (including Oman,
Türkiye, Egypt and Saudi Arabia) 420 264
---------------------------------------------------------- ----------------------- -----------------------
- of which: Saudi Awwal Bank 272 117
---------------------------------------------------------- ----------------------- -----------------------
Holding companies, shared service centres and intra-Group
eliminations (1,116) (1,434)
---------------------------------------------------------- ----------------------- -----------------------
Total 21,657 8,780
---------------------------------------------------------- ----------------------- -----------------------
Constant currency profit/(loss) before tax
---------------------------------------------------------- ----------------------- -----------------------
HSBC UK Bank plc 4,791 2,159
---------------------------------------------------------- ----------------------- -----------------------
HSBC Bank plc 3,498 295
---------------------------------------------------------- ----------------------- -----------------------
The Hongkong and Shanghai Banking Corporation Limited 10,917 5,531
---------------------------------------------------------- ----------------------- -----------------------
HSBC Bank Middle East Limited 673 379
---------------------------------------------------------- ----------------------- -----------------------
HSBC North America Holdings Inc. 701 423
---------------------------------------------------------- ----------------------- -----------------------
HSBC Bank Canada 475 363
---------------------------------------------------------- ----------------------- -----------------------
Grupo Financiero HSBC, S.A. de C.V. 436 267
---------------------------------------------------------- ----------------------- -----------------------
Other trading entities(1) 1,282 455
---------------------------------------------------------- ----------------------- -----------------------
- of which: other Middle East entities (including Oman,
Türkiye, Egypt and Saudi Arabia) 420 198
---------------------------------------------------------- ----------------------- -----------------------
- of which: Saudi Awwal Bank 272 117
---------------------------------------------------------- ----------------------- -----------------------
Holding companies, shared service centres and intra-Group
eliminations (1,116) (1,468)
---------------------------------------------------------- ----------------------- -----------------------
Total 21,657 8,404
---------------------------------------------------------- ----------------------- -----------------------
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 56 for a fuller picture of the Middle East, North
Africa and Türkiye ('MENAT') regional performance.
Income statement commentary
For further financial performance data of our global business
segments, see pages 39 to 48. For further financial performance
data by major legal entity, see pages 49 to 55.
Net interest income
Half-year to Quarter to
------------------------------------------------------------ -------------------------------------------------------------------------------------------
30 Jun 30 Jun 30 Jun 31 Mar 30 Jun
2023 2022 2023 2023 2022
$m $m $m $m $m
----------------- ----------------------------- ----------------------------- ----------------------------- ----------------------------- -----------------------------
Interest income 46,955 19,788 24,863 22,092 10,643
----------------- ----------------------------- ----------------------------- ----------------------------- ----------------------------- -----------------------------
Interest expense (28,691) (6,403) (15,558) (13,133) (3,733)
----------------- ----------------------------- ----------------------------- ----------------------------- ----------------------------- -----------------------------
Net interest
income 18,264 13,385 9,305 8,959 6,910
----------------- ----------------------------- ----------------------------- ----------------------------- ----------------------------- -----------------------------
Average
interest-earning
assets 2,162,662 2,174,796 2,172,324 2,152,893 2,148,983
----------------- ----------------------------- ----------------------------- ----------------------------- ----------------------------- -----------------------------
% %% %%
----------------- ----------------------------- ----------------------------- ---------------------------- ----------------------------- ----------------------------
Gross interest
yield(1) 4.38 1.83 4.59 4.16 1.99
----------------- ----------------------------- ----------------------------- ----------------------------- ----------------------------- -----------------------------
Less: gross
interest
payable(1) (3.12) (0.71) (3.33) (2.91) (0.83)
----------------- ----------------------------- ----------------------------- ----------------------------- ----------------------------- -----------------------------
Net interest
spread(2) 1.26 1.12 1.26 1.25 1.16
----------------- ----------------------------- ----------------------------- ----------------------------- ----------------------------- -----------------------------
Net interest
margin(3) 1.70 1.24 1.72 1.69 1.29
----------------- ----------------------------- ----------------------------- ----------------------------- ----------------------------- -----------------------------
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 liabilities.
3 Net interest margin is net interest income expressed as an annualised percentage of AIEA.
Banking net interest income
Banking net interest income is defined as Group net interest
income after deducting:
- the internal cost to fund trading and fair value net assets
for which associated revenue is reported in 'Net income from
financial instruments held for trading or managed on a fair value
basis', also referred to as 'trading and fair value income'. These
funding costs reflect proxy overnight or term interest rates as
applied by internal funds transfer pricing;
- the funding cost of foreign exchange swaps in Markets
Treasury, where an offsetting income or loss is recorded in trading
and fair value income. These instruments are used to manage foreign
currency deployment and funding in our entities; and
- third-party net interest income in our insurance business.
In our segmental disclosures, the funding costs of trading and
fair value net assets are predominantly recorded in GBM in 'net
income from financial instruments held for trading or managed on a
fair value basis'. On consolidation, this funding is eliminated in
Corporate Centre, resulting in an increase in the funding cost
reported in net interest income with an equivalent offsetting
increase in 'net income from financial instruments held for trading
or managed on a fair value basis' in this segment. During 2Q23 we
implemented a consistent reporting approach across the 14 most
material entities that contribute to our trading and fair value net
assets, which resulted in an increase to the 1H23 associated
funding costs reported through the intersegment elimination in
Corporate Centre of approximately $0.4bn, recognised in 2Q23. In
the consolidated Group results, the cost to fund these trading and
fair value net assets is reported in net interest income.
The internally allocated funding cost of $3.8bn, which was
incurred in 1H23 to generate trading and fair value income, related
to trading, fair value and associated net asset balances
predominantly in GBM. At 30 June 2023, these stood at approximately
$130bn. We expect these centrally allocated funding costs to be at
least $7bn in 2023.
Half-year to Quarter to
-------------------------------------------------- ----------------------------------------------------------------------------
30 Jun 30 Jun 30 Jun 31 Mar 30 Jun
2023 2022 2023 2023 2022
$bn $bn $bn $bn $bn
------------ ------------------------ ------------------------ ------------------------ ------------------------ ------------------------
Net interest
income 18.3 13.4 9.3 9.0 6.9
Banking book
funding
costs used
to
generate
'net income
from
financial
instruments
held for
trading or
managed
on a fair
value
basis' 3.8 0.4 2.4 1.4 0.3
------------ ------------------------ ------------------------ ------------------------ ------------------------ ------------------------
Third-party
net
interest
income from
insurance (0.2) (0.2) (0.1) (0.1) (0.1)
------------ ------------------------ ------------------------ ------------------------ ------------------------ ------------------------
Banking net
interest
income 21.9 13.6 11.6 10.3 7.1
------------ ------------------------ ------------------------ ------------------------ ------------------------ ------------------------
Summary of interest income by type of asset
Half-year to Full-year to
--------------------------------------------------------------
30 Jun 2023 30 Jun 2022 31 Dec 2022
--------------------------------------------- --------------------------------------------------------------- --------------------------------------------------------------
Average Interest Average Interest Average Interest
balance income Yield balance income Yield balance income Yield
$m $m % $m $m % $m $m %
----------------- -------------- ------------- -------------- ------------------------------ --------------- -------------- ------------------------------ -------------- --------------
Short-term funds
and loans
and advances to
banks 425,103 6,961 3.30 457,709 1,344 0.59 445,657 5,577 1.25
----------------- -------------- ------------- -------------- ------------------------------ --------------- -------------- ------------------------------ -------------- --------------
Loans and
advances to
customers 954,171 22,747 4.81 1,054,657 13,848 2.65 1,022,320 32,543 3.18
----------------- -------------- ------------- -------------- ------------------------------ --------------- -------------- ------------------------------ -------------- --------------
Reverse
repurchase
agreements
- non-trading 239,945 6,173 5.19 228,231 1,093 0.97 231,058 4,886 2.11
----------------- -------------- ------------- -------------- ------------------------------ --------------- -------------- ------------------------------ -------------- --------------
Financial
investments 382,384 7,378 3.89 384,368 2,838 1.49 372,702 7,704 2.07
----------------- -------------- ------------- -------------- ------------------------------ --------------- -------------- ------------------------------ -------------- --------------
Other
interest-earning
assets 161,059 3,696 4.63 49,831 665 2.69 72,017 2,116 2.94
----------------- -------------- ------------- -------------- ------------------------------ --------------- -------------- ------------------------------ -------------- --------------
Total
interest-earning
assets 2,162,662 46,955 4.38 2,174,796 19,788 1.83 2,143,754 52,826 2.46
----------------- -------------- ------------- -------------- ------------------------------ --------------- -------------- ------------------------------ -------------- --------------
Summary of interest expense by type of liability
Half-year to Full-year to
---------------------------------------------------------------
30 Jun 2023 30 Jun 2022 31 Dec 2022
---------------------------------------------- --------------------------------------------------------------- ---------------------------------------------------------------
Average Interest Average Interest Average Interest
balance expense Cost balance expense Cost balance expense Cost
$m $m % $m $m % $m $m %
----------------- --------------- ------------- -------------- ------------------------------ --------------- -------------- ------------------------------ --------------- --------------
Deposits by
banks(1) 61,901 1,117 3.64 82,232 195 0.48 75,739 770 1.02
----------------- --------------- ------------- -------------- ------------------------------ --------------- -------------- ------------------------------ --------------- --------------
Customer
accounts(2) 1,317,536 14,722 2.25 1,369,088 2,834 0.42 1,342,342 10,903 0.81
----------------- --------------- ------------- -------------- ------------------------------ --------------- -------------- ------------------------------ --------------- --------------
Repurchase
agreements
- non-trading 134,936 4,550 6.80 122,883 584 0.96 118,308 3,085 2.61
----------------- --------------- ------------- -------------- ------------------------------ --------------- -------------- ------------------------------ --------------- --------------
Debt securities
in issue
- non-trading 181,682 5,199 5.77 182,067 2,053 2.27 179,776 5,608 3.12
----------------- --------------- ------------- -------------- ------------------------------ --------------- -------------- ------------------------------ --------------- --------------
Other
interest-bearing
liabilities 157,218 3,103 3.98 70,948 737 2.10 87,965 2,083 2.37
----------------- --------------- ------------- -------------- ------------------------------ --------------- -------------- ------------------------------ --------------- --------------
Total
interest-bearing
liabilities 1,853,273 28,691 3.12 1,827,218 6,403 0.71 1,804,130 22,449 1.24
----------------- --------------- ------------- -------------- ------------------------------ --------------- -------------- ------------------------------ --------------- --------------
1 Including interest-bearing bank deposits only.
2 Including interest-bearing customer accounts only.
Net interest income ('NII') for 1H23 was $18.3bn, an increase of
$4.9bn or 36% compared with 1H22. This reflected higher average
market interest rates across the major currencies compared with
1H22 .
Excluding the unfavourable impact of foreign currency
translation differences, NII increased by $5.4bn or 42%.
NII for 2Q23 was $9.3bn, up 35% compared with 2Q22, and up 4%
compared with 1Q23. This was driven by the impact of higher market
interest rates across our asset book, notably in the UK and our
main legal entities in Asia. This was partly offset by higher
funding costs across our liability book, which included the impact
of deposit migration mainly in our main legal entities in Asia and
Europe.
We have introduced a new banking net interest income metric,
which is derived by deducting the centrally allocated funding cost
to generate trading and fair value income. These funding costs were
$3.8bn in 1H23, an increase of $3.4bn compared with 1H22. Banking
net interest income also deducts third-party net interest income
related to our insurance business, which was $0.2bn in 1H23,
broadly stable compared with 1H22.
In 1H23, banking net interest income of $21.9bn was up $8.3bn or
61% compared with 1H22. The growth in banking net interest income
was in all of our global businesses, mainly in WPB (up $3.6bn),
reflecting wider margins and growth in mortgages and unsecured
lending, excluding the impact of transfers to held for sale. It
also grew in CMB (up $3.3bn) and GBM (up $1.4bn), notably from
wider deposit margins in Global Payments Solutions.
Net interest margin ('NIM') of 1.70% was 46 basis points ('bps')
higher compared with 1H22, as the rise in the yield on AIEA of
254bps was partly offset by the rise in the funding cost of average
interest-bearing liabilities of 242bps. The increase in NIM in 1H23
included the unfavourable impact of foreign currency translation
differences. Excluding this, NIM increased by 48bps.
NIM for 2Q23 was 1.72%, up 43bps year-on-year, and up 3bps
compared with the previous quarter, predominantly driven by the
impact of higher market interest rates.
Interest income of $47bn increased by $27.2bn, compared with
1H22. This was primarily due to higher average interest rates,
partly offset by a reduction in term lending of $41bn,
predominantly in our main legal entities in Asia and Europe, and a
reduction in central bank placements of $38bn, notably in our main
legal entities in the UK and the US. The central bank placements
declined due to the reduction in deposit balances. The change in
interest income included $0.9bn from the adverse effect of foreign
currency translation differences. Excluding this, interest income
increased by $28.1bn.
Interest income of $24.9bn in 2Q23 was up $14.2bn compared with
2Q22, and up $2.8bn compared with 1Q23. This was predominantly
driven by the impact of higher market interest rates, partly offset
by a reduction in term lending and central bank placements.
Interest expense of $28.7bn increased by $22.3bn or 348%
compared with 1H22. This reflected an increase in funding costs of
242bps, mainly due to the impact of higher interest rates on our
liabilities. In addition, money market deposits increased by $42bn
and 'repurchase agreements - non-trading' balances rose by $12bn,
mainly in Asia, compounded by the impact of deposit migration,
notably in Asia and Europe. The rise in interest expense included
the favourable effects of foreign currency translation differences
of $0.3bn. Excluding this, interest expense increased by
$22.6bn.
Interest expense of $15.6bn in 2Q23 was up $11.8bn compared with
2Q22, and up $2.5bn compared with 1Q23. This was predominantly
driven by the impact of higher market interest rates, and the
impact of deposit migration. Net fee income of $6.1bn was $0.1bn
lower than in 1H22, and included a $0.1bn adverse impact from
foreign currency translation differences. On a constant currency
basis, net fee income was broadly unchanged as an increase in CMB
was largely offset by a reduction in GBM.
In CMB, fee income grew, mainly in cards and account services as
customer activity increased.
In GBM, fee income fell in broking income in our main entities
in Europe and Hong Kong, and corporate finance income was lower in
Europe and the US as clients' refinancing activities fell. These
reductions were mitigated by growth in underwriting fees in Europe
due to the completion of a number of debt capital markets deals in
1H23.
In WPB, fee income was broadly stable, excluding the impact of
foreign currency translation differences. Income from broking and
funds under management fell, notably in Hong Kong, reflecting
weaker equity markets and muted customer sentiment. This reduction
was partly offset by higher cards income, notably in our main
entity in Hong Kong and also in Mexico, as customer spending
increased. The growth in cards activity resulted in a rise in fee
expense.
Net income from financial instruments held for trading or
managed on a fair value basis of $8.1bn was $3.3bn higher. There
was a favourable movement on non-qualifying hedges in Corporate
Centre of $0.3bn due to the non-recurrence of fair value losses in
1H22, and higher income in CMB, reflecting increased collaboration
revenue with GBM, mainly in Global Foreign Exchange.
In GBM, trading and fair value income fell by $0.7bn, which was
inclusive of an increase of $3.4bn relating to internally allocated
funding costs. Trading activity decreased in Equities, as customer
demand was muted, although this was partly offset by Global Debt
Markets and Global Foreign Exchange.
Net income from assets and liabilities of insurance businesses,
including related derivatives, measured at fair value through
profit or loss of $4.3bn compared with a net expense of $11.8bn in
1H22. This increase was mainly in Hong Kong and France, primarily
reflecting favourable fair value movements on both debt and equity
securities in the portfolio.
This favourable movement resulted in a corresponding movement in
insurance finance expense, which has an offsetting impact for the
related liabilities to policyholders.
Insurance finance expense of $4.2bn compared with an income of
$11.8bn in 1H22, reflecting the impact of investment returns on
underlying assets on the value of liabilities to policyholders,
which moves inversely with 'net income from assets and liabilities
of insurance businesses, including related derivatives, measured at
fair value through profit or loss'.
Insurance service result of $0.5bn increased by $0.2bn compared
with 1H22, primarily due to an increase in the release of the
contractual service margin ('CSM'). This primarily reflected a
higher CSM balance from higher new business written, favourable
experience variances and updates to lapse rate assumptions, as well
as the impact of interest rates on the CSM duration profile. The
increase also reflected a reduction in losses from onerous
contracts.
Under IFRS 17, the measurement of the insurance contract
liability takes into account fulfilment cash flows and a CSM
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
CSM 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.
Gain on acquisitions of $1.5bn related to the provisional gain
recognised in respect of the acquisition of Silicon Valley Bank UK
Limited in 1Q23.
Reversal of impairment loss relating to the planned sale of our
retail banking operations in France was $2.1bn, as the sale became
less certain during 1Q23. In June, we agreed new terms for the sale
of these operations that will involve HSBC retaining a portfolio of
home and other loans. The parties are aiming to complete the
transaction on 1 January 2024, subject to information and
consultation processes with respective works councils and
regulatory approvals, with an estimated pre-tax loss of up to
$2.2bn expected to be recognised in the second half of 2023 upon
reclassification to held for sale.
Change in expected credit losses and other credit impairment
charges ('ECL') of $1.3bn were $0.3bn higher than in 1H22.
The 1H23 charge included stage 3 charges of $1.1bn. There were
charges of $0.3bn related to the commercial real estate sector in
mainland China and charges in CMB in the UK. The 1H23 charge
reflected a more stable outlook in most markets, although
inflationary pressures remain.
In 1H22, ECL included charges of $0.3bn relating to the
commercial real estate sector in mainland China, as well as
Russia-related exposures. It also included additional stage 1 and
stage 2 allowances to reflect heightened levels of economic
uncertainty and inflationary pressures, in part offset by the
release of most of our remaining Covid-19-related allowances.
For further details on the calculation of ECL, including the
measurement uncertainties and significant judgements applied to
such calculations, the impact of economic scenarios and management
judgemental adjustments, see pages 69 to 77.
Operating expenses
Half-year to
30 Jun 30 Jun
2023 2022
$m $m
------------------------------------------- -------------------------- -------------------------
Gross employee compensation and benefits 9,433 9,326
------------------------------------------- -------------------------- -------------------------
Capitalised wages and salaries (479) (430)
Property and equipment 2,047 2,419
------------------------------------------- -------------------------- -------------------------
Amortisation and impairment of intangibles 809 822
Legal proceedings and regulatory matters 56 94
------------------------------------------- -------------------------- -------------------------
Other operating expenses(1) 3,591 3,896
------------------------------------------- -------------------------- -------------------------
Reported operating expenses 15,457 16,127
------------------------------------------- -------------------------- -------------------------
Currency translation (595)
------------------------------------------- -------------------------- -------------------------
Constant currency operating expenses 15,457 15,532
------------------------------------------- -------------------------- -------------------------
1 Other operating expenses includes professional fees,
contractor costs, transaction taxes, marketing and travel. The
decrease was driven by favourable currency translation differences
and lower restructuring and other related costs following the
completion of our cost-saving programme at the end of 2022.
Staff numbers (full-time equivalents)
At
30 Jun 30 Jun 31 Dec
2023 2022 2022
---------------------------- ------------------------ ------------------------ ------------------------
Global businesses
---------------------------- ------------------------ ------------------------ ------------------------
Wealth and Personal Banking 129,188 127,638 128,764
---------------------------- ------------------------ ------------------------ ------------------------
Commercial Banking 46,006 44,183 43,640
---------------------------- ------------------------ ------------------------ ------------------------
Global Banking and Markets 46,247 46,624 46,435
---------------------------- ------------------------ ------------------------ ------------------------
Corporate Centre 323 421 360
---------------------------- ------------------------ ------------------------ ------------------------
Total staff numbers 221,764 218,866 219,199
---------------------------- ------------------------ ------------------------ ------------------------
Operating expenses of $15.5bn were $0.7bn or 4% lower than in
1H22, mainly due to the non-recurrence of restructuring and other
related costs of $1.1bn, following the completion of our
cost-saving programme, which concluded at the end of 2022. The
reduction also included a $0.2bn impact from the reversal of
historical asset impairments, the impact of our continued cost
discipline and favourable foreign currency translation differences
between the periods of $0.6bn.
These factors were partly offset by higher technology spend of
$0.5bn, an increase in our performance-related pay accrual of
$0.2bn and severance payments of $0.2bn. Our operating expenses
also rose due to the impact of higher inflation and incremental
costs following our acquisition of SVB UK.
We continue to target operating expense growth of approximately
3% for 2023, excluding the impact of foreign currency translation
differences, notable items and the impact of retranslating the 2022
results of hyperinflationary economies at constant currency. Our
target also excludes the impact of our acquisition of SVB UK, and
the related investments internationally, which are expected to add
approximately 1% to the Group's operating expenses.
While we remain committed to disciplined cost management, we
expect continued pressure from persistently high levels of
inflation. In addition, the impact of the proposed special
assessment from the Federal Deposit Insurance Corporation in the US
is not expected to be known until the second half of the year.
The number of employees expressed in full-time equivalent staff
('FTEs') at 30 June 2023 was 221,764, an increase of 2,565 from 31
December 2022. Additionally, the number of contractors at 30 June
2023 was 5,198, a decrease of 849 from 31 December 2022.
Share of profit in associates and joint ventures of $1.6bn was
$0.1bn or 9% higher, reflecting an increase in the share of profit
from Saudi Awwal Bank ('SAB') and Bank of Communications Co.,
Limited ('BoCom').
In relation to BoCom, we continue to be subject to a risk of
impairment in the carrying value of our investment. We have
performed an impairment test on the carrying amount of our
investment and confirmed there was no impairment at 30 June 2023.
For further details of our impairment review process, see Note 10
on the interim condensed financial statements.
Tax expense
Tax
Half-year to
--------------------------------------------------
30 Jun 30 Jun
2023 2022
$m $m
-------------------------------------- ---------------------- --------------------------
Tax (charge)/credit
-------------------------------------- ---------------------- --------------------------
Reported (3,586) 151
-------------------------------------- ---------------------- --------------------------
Currency translation 76
-------------------------------------- ---------------------- --------------------------
Constant currency tax (charge)/credit (3,586) 227
-------------------------------------- ---------------------- --------------------------
Notable items
Half-year to
----------------------------------------------------
30 Jun 30 Jun
2023 2022
$m $m
------------------------------------- ------------------------- -------------------------
Tax
------------------------------------- ------------------------- -------------------------
Tax (charge)/credit on notable items (500) 242
------------------------------------- ------------------------- -------------------------
Recognition of losses - 2,082
------------------------------------- ------------------------- -------------------------
Uncertain tax positions 427 (317)
------------------------------------- ------------------------- -------------------------
Tax in 1H23 was a charge of $3.6bn, representing an effective
tax rate of 16.6%. The effective tax rate for 1H23 was reduced by
1.9 percentage points by the non-taxable provisional gain
recognised on the acquisition of SVB UK and by 2.0 percentage
points by the release of provisions for uncertain tax positions. A
deferred tax charge of $0.4bn was recorded on the temporary
difference in tax and accounting treatment relating to the planned
sale of our retail banking operations in France. The resulting
deferred tax liability will reverse upon classification as held for
sale.
Tax in 1H22 was a credit of $151m. This was mainly due to a
$2.1bn credit arising from the recognition of a deferred tax asset
on historical tax losses of HSBC Holdings as a result of improved
profit forecasts for the UK tax group and a charge of $0.3bn for
uncertain tax positions. Excluding these items, the effective tax
rate for 1H22 was 18.4%.
Summary consolidated balance sheet
At(1)
-----------------------------------------------
30 Jun 31 Dec
2023 2022
$m $m
------------------------------------------------------ ---------------------- -----------------------
Assets
------------------------------------------------------ ---------------------- -----------------------
Cash and balances at central banks 307,733 327,002
------------------------------------------------------ ---------------------- -----------------------
Trading assets 255,387 218,093
------------------------------------------------------ ---------------------- -----------------------
Financial assets designated and otherwise mandatorily
measured at fair value through profit or loss 104,303 100,101
------------------------------------------------------ ---------------------- -----------------------
Derivatives 272,595 284,159
------------------------------------------------------ ---------------------- -----------------------
Loans and advances to banks 100,921 104,475
------------------------------------------------------ ---------------------- -----------------------
Loans and advances to customers 959,558 923,561
------------------------------------------------------ ---------------------- -----------------------
Reverse repurchase agreements - non-trading 258,056 253,754
------------------------------------------------------ ---------------------- -----------------------
Financial investments 407,933 364,726
------------------------------------------------------ ---------------------- -----------------------
Assets held for sale 95,480 115,919
------------------------------------------------------ ---------------------- -----------------------
Other assets 279,510 257,496
------------------------------------------------------ ---------------------- -----------------------
Total assets 3,041,476 2,949,286
------------------------------------------------------ ---------------------- -----------------------
Liabilities and equity
------------------------------------------------------ ---------------------- -----------------------
Liabilities
------------------------------------------------------ ---------------------- -----------------------
Deposits by banks 68,709 66,722
------------------------------------------------------ ---------------------- -----------------------
Customer accounts 1,595,769 1,570,303
------------------------------------------------------ ---------------------- -----------------------
Repurchase agreements - non-trading 170,110 127,747
------------------------------------------------------ ---------------------- -----------------------
Trading liabilities 81,228 72,353
------------------------------------------------------ ---------------------- -----------------------
Financial liabilities designated at fair value 139,618 127,321
------------------------------------------------------ ---------------------- -----------------------
Derivatives 269,560 285,762
------------------------------------------------------ ---------------------- -----------------------
Debt securities in issue 85,471 78,149
------------------------------------------------------ ---------------------- -----------------------
Insurance contract liabilities 115,756 108,816
------------------------------------------------------ ---------------------- -----------------------
Liabilities of disposal groups held for sale 87,241 114,597
------------------------------------------------------ ---------------------- -----------------------
Other liabilities 236,363 212,319
------------------------------------------------------ ---------------------- -----------------------
Total liabilities 2,849,825 2,764,089
------------------------------------------------------ ---------------------- -----------------------
Equity
------------------------------------------------------ ---------------------- -----------------------
Total shareholders' equity 184,170 177,833
------------------------------------------------------ ---------------------- -----------------------
Non-controlling interests 7,481 7,364
------------------------------------------------------ ---------------------- -----------------------
Total equity 191,651 185,197
------------------------------------------------------ ---------------------- -----------------------
Total liabilities and equity 3,041,476 2,949,286
------------------------------------------------------ ---------------------- -----------------------
1 From 1 January 2023, we adopted IFRS 17 'Insurance Contracts',
which replaced IFRS 4 'Insurance Contracts'. Comparative data have
been restated accordingly.
Selected financial information
At
30 Jun 31 Dec
2023 2022
$m $m
------------------------------------------------------------ -------------- ---------------------
Called up share capital 10,073 10,147
------------------------------------------------------------ -------------- ---------------------
Capital resources(1) 170,021 162,423
------------------------------------------------------------ -------------- ---------------------
Undated subordinated loan capital 918 1,967
------------------------------------------------------------ -------------- ---------------------
Preferred securities and dated subordinated loan capital(2) 32,810 29,921
------------------------------------------------------------ -------------- ---------------------
Risk-weighted assets 859,545 839,720
------------------------------------------------------------ -------------- ---------------------
Total shareholders' equity 184,170 177,833
------------------------------------------------------------ -------------- ---------------------
Less: preference shares and other equity instruments (19,392) (19,746)
------------------------------------------------------------ -------------- ---------------------
Total ordinary shareholders' equity 164,778 158,087
------------------------------------------------------------ -------------- ---------------------
Less: goodwill and intangible assets (net of tax) (11,544) (11,160)
------------------------------------------------------------ -------------- ---------------------
Tangible ordinary shareholders' equity 153,234 146,927
------------------------------------------------------------ -------------- ---------------------
Financial statistics
------------------------------------------------------------ -------------- ---------------------
Loans and advances to customers as a percentage of customer
accounts (%) 60.1 58.8
------------------------------------------------------------ -------------- ---------------------
Average total shareholders' equity to average total assets
(%) 5.91 5.98
------------------------------------------------------------ -------------- ---------------------
Net asset value per ordinary share at period end ($)(3) 8.44 8.01
------------------------------------------------------------ -------------- ---------------------
Tangible net asset value per ordinary share at period
end ($)(4) 7.84 7.44
------------------------------------------------------------ -------------- ---------------------
Tangible net asset value per fully diluted ordinary share
at period end ($) 7.79 7.39
------------------------------------------------------------ -------------- ---------------------
Number of $0.50 ordinary shares in issue (millions) 20,147 20,294
------------------------------------------------------------ -------------- ---------------------
Basic number of $0.50 ordinary shares outstanding (millions) 19,534 19,739
------------------------------------------------------------ -------------- ---------------------
Basic number of $0.50 ordinary shares outstanding and
dilutive potential ordinary shares (millions) 19,679 19,876
------------------------------------------------------------ -------------- ---------------------
Closing foreign exchange translation rates to $:
------------------------------------------------------------ -------------- ---------------------
$1: GBP 0.786 0.830
------------------------------------------------------------ -------------- ---------------------
$1: EUR 0.915 0.937
------------------------------------------------------------ -------------- ---------------------
1 Capital resources are total regulatory capital, the
calculation of which is set out on page 95.
2 Including perpetual preferred securities.
3 The definition of net asset value per ordinary share is total
shareholders' equity, less non-cumulative preference shares and
capital securities, divided by the number of ordinary shares in
issue, excluding own shares held by the company, including those
purchased and held in treasury.
4 The definition of tangible net asset value per ordinary share
is total ordinary shareholder's equity excluding goodwill and other
intangible assets (net of deferred tax), divided by the number of
basic ordinary shares in issue, excluding own shares held by the
company, including those purchased and held in treasury.
A more detailed consolidated balance sheet is contained in the
interim condensed financial statements on page 110.
Combined view of customer lending and customer deposits
At
-----------------------------------------------------
30 June 31 Dec
2023 2022
$m $m
------------------------------------------------------------ ------------------------- --------------------------
Loans and advances to customers 959,558 923,561
------------------------------------------------------------ ------------------------- --------------------------
- of which HSBC Innovation Bank Limited (formerly SVB 7,040 -
UK)
------------------------------------------------------------ ------------------------- --------------------------
Loans and advances to customers of disposal groups reported
in 'Assets held for sale' 59,210 80,576
------------------------------------------------------------ ------------------------- --------------------------
* banking business in Canada 55,932 55,197
------------------------------------------------------------
* retail banking operations in France - 25,029
------------------------------------------------------------
* other 3,278 350
------------------------------------------------------------ -------------------------
Non-current assets held for sale(1) 659 112
------------------------------------------------------------ ------------------------- --------------------------
Combined customer lending 1,019,427 1,004,249
------------------------------------------------------------ ------------------------- --------------------------
Currency translation - 15,070
------------------------------------------------------------ ------------------------- --------------------------
Combined customer lending at constant currency 1,019,427 1,019,319
------------------------------------------------------------ ------------------------- --------------------------
Customer accounts 1,595,769 1,570,303
------------------------------------------------------------ ------------------------- --------------------------
- of which HSBC Innovation Bank Limited (formerly SVB 7,220 -
UK)
------------------------------------------------------------ ------------------------- --------------------------
Customer accounts reported in 'Liabilities of disposal
groups held for sale' 66,154 85,274
------------------------------------------------------------ ------------------------- --------------------------
* banking business in Canada 59,813 60,606
------------------------------------------------------------
* retail banking operations in France - 22,348
------------------------------------------------------------
* other 6,341 2,320
------------------------------------------------------------ -------------------------
Combined customer deposits 1,661,923 1,655,577
------------------------------------------------------------ ------------------------- --------------------------
Currency translation - 24,227
------------------------------------------------------------ ------------------------- --------------------------
Combined customer deposits at constant currency 1,661,923 1,679,803
------------------------------------------------------------ ------------------------- --------------------------
1 Largely relates to US commercial real estate loans classified
as held for sale at 30 June 2023.
Balance sheet commentary compared with 31 December 2022
At 30 June 2023, our total assets were $3.0tn, an increase of
$92bn or 3% on a reported basis, and $46bn or 2% on a constant
currency basis.
Our asset base included higher financial investments as we
increased our holdings of treasury bills and debt securities, and a
rise in trading assets in HSBC Bank plc and Hong Kong. In addition,
there was growth in loans and advances to customers due to
reclassifications from 'assets held for sale', while higher other
assets reflected seasonal reductions in settlement accounts at 31
December 2022. These increases were partly offset by reductions in
cash and balances at central banks and lower derivative assets.
Our ratio of loans and advances to customers as a percentage of
customer accounts of 60% was broadly in line with 31 December
2022.
Assets
Cash and balances at central banks decreased by $19bn or 6%,
mainly in HSBC UK due to a fall in customer accounts and an
increase in financial investments, and in HSBC Bank plc as we
manage liquidity in the context of developing market conditions.
This was partly offset by favourable foreign currency translation
differences of $11bn.
Trading assets rose by $37bn or 17%, reflecting an increase in
holdings of debt and equity securities, particularly in our main
legal entities in Europe and Hong Kong.
Derivative assets decreased by $12bn or 4%, reflecting a
reduction in foreign exchange contracts, mainly in HSBC Bank plc,
as a result of lower client demand and foreign exchange rate
movements. This was partly offset by favourable foreign currency
translation differences of $11bn. The decrease in derivative assets
was consistent with the fall in derivative liabilities, as the
underlying risk is broadly matched.
Loans and advances to customers of $1.0tn were $36bn higher on a
reported basis. This included:
- a favourable impact from foreign currency translation differences of $13bn;
- an increase from the reclassification of $26bn of lending
balances, on a constant currency basis, that were classified as
'assets held for sale' at 31 December 2022 relating to the planned
sale of our retail banking operations in France;
- an increase in lending balances through the acquisition of SVB UK of $7bn; and
- a decrease from the classification of $3bn of lending balances
to 'assets held for sale' relating to the planned merger of our
business in Oman.
Excluding these factors, customer lending balances were $7bn
lower, reflecting the following movements:
Customer lending balances decreased in GBM by $12bn, including
the transfer of a portfolio of Global Banking clients to CMB in our
legal entities in Australia and Indonesia. The reduction also
reflected lower term lending, mainly in our legal entities in Hong
Kong (down $4bn) and HSBC Bank plc (down $3bn), reflecting muted
demand and repayments.
In CMB, customer lending was $2bn lower, reflecting a decrease
in term lending balances, notably in our main legal entities in
Hong Kong and the UK. This was partly offset by the transfer of a
portfolio of Global Banking clients to CMB referred to above and an
increase in overdraft balances, primarily in HSBC Bank plc and HSBC
UK.
In WPB, customer lending balances increased by $8bn, mainly from
higher mortgage balances, notably in our legal entities in Hong
Kong (up $4bn), the UK (up $1bn), Mexico (up $1bn) and Australia
(up $1bn).
Financial investments increased by $43bn or 12%, mainly as we
increased our holdings of treasury bills and debt securities in
most of our key legal entities, notably in Hong Kong and
Europe.
Assets held for sale decreased by $20bn or 18%, from the
reclassification of asset balances from 'assets held for sale'
relating to the planned sale of retail banking operations in
France, partly offset by the transfer of asset balances in Oman
into 'assets held for sale'.
Other assets grew by $22bn or 9%, primarily due to an increase
of $18bn in settlement accounts in HSBC Bank plc, from higher
trading activity, compared with the seasonal reduction in December
2022.
Liabilities
Customer accounts of $1.6tn increased by $25bn on a reported
basis. This included:
- a favourable impact from foreign currency translation differences of $22bn;
- an increase from the reclassification of $23bn of customer
account balances, on a constant currency basis, that were
classified as 'liabilities of disposal groups held for sale' at 31
December 2022 relating to the planned sale of our retail banking
operations in France;
- an increase in customer accounts through the acquisition of SVB UK of $7bn; and
- a decrease from the classification of $5bn of customer account
balances to 'liabilities of disposal groups held for sale' relating
to the planned merger of our business in Oman.
Excluding these factors, customer accounts were $22bn lower,
reflecting the following movements:
In GBM, customer accounts were $16bn lower, including the
transfer of a portfolio of Global Banking clients to CMB in our
legal entities in Australia and Indonesia. The reduction also
reflected lower interest-bearing and non-interest-bearing balances,
notably in HSBC Bank plc and in our main legal entities in Hong
Kong and the US.
In CMB, customer accounts decreased by $4bn, reflecting net
outflows in HSBC UK and in our main legal entity in Hong Kong.
These reductions were partly offset by the transfer of a portfolio
of Global Banking clients to CMB referred to above and growth in
our main legal entity in the US.
Customer accounts decreased in WPB by $2bn, primarily driven by
a reduction in HSBC UK of $9bn, reflecting higher cost of living
and competitive pressures. They also fell in Hong Kong (down $3bn)
and the US (down $3bn). These reductions were partly offset by
growth in a number of other markets, notably HSBC Bank plc and
Singapore.
Financial liabilities designated at fair value increased by
$12bn or 10%, primarily due to an increase in debt securities in
issue, together with the reclassification of liability balances
from 'liabilities of disposal groups held for sale' relating to the
planned sale of our retail banking operations in France.
Repurchase agreements - non trading increased by $42bn or 33%,
primarily in our main legal entities in Hong Kong, Europe and the
US as client demand increased.
Derivative liabilities decreased by $16bn or 6%, which is
consistent with the decrease in derivative assets, since the
underlying risk is broadly matched.
Liabilities of disposal groups held for sale decreased by $27bn
or 24%, notably from the reclassification of liability balances
from 'liabilities of disposal groups held for sale' relating to the
planned sales of our retail banking operations in France, partly
offset by the transfer of liability balances in Oman into
'liabilities of disposal groups held for sale'.
Other liabilities increased by $24bn or 11%, notably from a rise
of $23bn in settlement accounts in our main legal entities in
Europe, Hong Kong, Mexico and the US from an increase in trading
activity, compared with the seasonal reduction in December
2022.
Equity
Total shareholders' equity , including non-controlling
interests, increased by $6bn or 3% compared with 31 December
2022.
Profits generated of $18bn were partly offset by dividends paid
of $8bn and the impact of our up to $2bn share buy-back announced
at our 1Q23 results in May 2023, as well as net losses through
other comprehensive income ('OCI') of $1bn and other movements of
$1bn.
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 30 June 2023, we had recognised a cumulative unrealised loss
reserve through other comprehensive income of $6.5bn, of which a
pre-tax unrealised loss of $6.2bn related to these
hold-to-collect-and-sell positions, reflecting a $0.3bn pre-tax
gain in 1H23, inclusive of movements on related fair value hedges.
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 30 June
2023, there was a cumulative unrealised loss of $3.5bn. Within
this, $2.8bn related to debt instruments held to manage our
interest rate exposure, representing a $0.9bn deterioration during
1H23.
Customer accounts by country/territory
At
30 Jun 31 Dec
2023 2022
$m $m
--------------------- ----------------- -----------------
UK 508,052 493,028
--------------------- ----------------- -----------------
France 60,283 33,726
--------------------- ----------------- -----------------
Germany 25,445 28,949
--------------------- ----------------- -----------------
Switzerland 4,081 5,167
--------------------- ----------------- -----------------
Hong Kong 529,574 542,543
--------------------- ----------------- -----------------
Singapore 68,189 61,475
--------------------- ----------------- -----------------
Mainland China 53,835 56,948
--------------------- ----------------- -----------------
Australia 28,189 28,506
--------------------- ----------------- -----------------
India 24,147 22,636
--------------------- ----------------- -----------------
Malaysia 15,207 16,008
--------------------- ----------------- -----------------
Taiwan 15,219 15,316
--------------------- ----------------- -----------------
Indonesia 5,728 5,840
--------------------- ----------------- -----------------
United Arab Emirates 24,469 23,331
--------------------- ----------------- -----------------
Egypt 5,265 6,045
--------------------- ----------------- -----------------
Türkiye 3,953 3,497
--------------------- ----------------- -----------------
US 99,303 100,404
Mexico 28,402 25,531
--------------------- ----------------- -----------------
Other 96,428 101,353
--------------------- ----------------- -----------------
At end of period 1,595,769 1,570,303
--------------------- ----------------- -----------------
Risk-weighted assets
Risk-weighted assets ('RWAs') rose by $19.8bn during the first
half of the year. Excluding foreign currency translation
differences, RWAs increased by $15.4bn, largely as a result of the
following:
- a $19.7bn increase due to asset size movements. This was
predominantly driven by a $9.0bn movement in credit risk, mainly
attributable to sovereign exposures, in Argentina, Asia and North
America and growth in retail mortgages, notably in Hong Kong; a
$6.6bn increase from heightened market volatility on market risk
RWAs, including hedges related to the agreed sale of our banking
business in Canada; and a $3.5bn increase from mark-to-market
movements in counterparty credit risk mainly in HSBC Bank plc, Asia
and Mexico; and
- a $9.6bn increase through the acquisition of SVB UK.
These were partly offset by:
- a $11.5bn decrease due to changes in methodology and policy,
including a $7.7bn fall due to a regulatory change to the Hong Kong
Monetary Authority's risk-weight floor for residential mortgages,
which became effective 1 January 2023 and further decreases
attributed to risk parameter refinements.
-
Global businesses
Contents
39 Summary
39 Basis of preparation
39 Supplementary analysis of constant
currency results and notable
items by global business
42 Reconciliation of reported risk-weighted
assets to constant currency risk-weighted
assets
42 Supplementary tables for WPB
Summary
The Group Chief Executive, supported by the rest of the Group
Executive Committee ('GEC'), reviews 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', and are presented below and in Note 5: 'Segmental
analysis' on page 118.
Descriptions of the global businesses are provided in the
Overview section on pages 17 to 24.
Basis of preparation
The Group Chief Executive, supported
by the rest of the GEC, is considered
the Chief Operating Decision Maker
('CODM') for the purposes of identifying
the Group's reportable segments.
Global business results are assessed
by the CODM on the basis of constant
currency 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.
Constant currency performance information
for 1H22 is presented as described
on page 28.
As required by IFRS 8, reconciliations
of the total constant currency global
business results to the Group's
reported results are presented on
page 119.
Supplementary reconciliations from
reported to constant currency results
by global business are presented
on pages 39 to 40 for information
purposes.
Global business performance is also
assessed using return on tangible
equity ('RoTE'). A reconciliation
of global business RoTE to the Group's
RoTE is provided on page 57.
Our operations are closely integrated
and, accordingly, the presentation
of data includes internal allocations
of certain items of income and expense.
These allocations include the costs
of certain support services and
global functions to the extent that
they can be meaningfully attributed
to global businesses and legal entities.
While such allocations have been
made on a systematic and consistent
basis, they necessarily involve
a degree of subjectivity. Costs
that are not allocated to global
businesses are included in Corporate
Centre.
Where relevant, income and expense
amounts presented include the results
of inter-segment funding along with
inter-company and inter-business
line transactions. All such transactions
are undertaken on arm's length terms.
The intra-Group elimination items
for the global businesses are presented
in Corporate Centre.
HSBC Holdings incurs the liability
of the UK bank levy, with the cost
being recharged to its UK operating
subsidiaries. The current year expense
will be reflected in the fourth
quarter as it is assessed on our
balance sheet position as at 31
December.
The results of main legal entities
are presented on a reported and
constant currency basis, including
HSBC UK Bank plc, HSBC Bank plc,
The Hong Kong and Shanghai Banking
Corporation Limited, HSBC Bank Middle
East Limited, HSBC North America
Holdings Inc. and Grupo Financiero
HSBC, S.A. de C.V.
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 entities in Latin America
was transferred from GBM to CMB
for reporting purposes. Comparative
data have been re-presented accordingly.
Similar smaller transfers from Global
Banking and Markets to Commercial
Banking were also undertaken within
our entities in Australia and Indonesia,
where comparative data have not
been re-presented.
=========================================
Supplementary analysis of constant currency results and notable
items by global business
Constant currency results(1)
Half-year to 30 Jun 2023
--------------------------------------------------------------------------------------------------------------------------------------
Wealth Global
and Banking
Personal Commercial and Corporate
Banking Banking(3) Markets(3) Centre Total
$m $m $m $m $m
----------- ------------------------- --------------------------- ------------------------- --------------------------- ----------------------
Revenue(2) 16,200 12,216 8,501 (41) 36,876
----------- ------------------------- --------------------------- ------------------------- --------------------------- ----------------------
ECL (502) (704) (136) (3) (1,345)
----------- ------------------------- --------------------------- ------------------------- --------------------------- ----------------------
Operating
expenses (7,141) (3,572) (4,785) 41 (15,457)
----------- ------------------------- --------------------------- ------------------------- --------------------------- ----------------------
Share of
profit in
associates
and
joint
ventures 35 (1) - 1,549 1,583
----------- ------------------------- --------------------------- ------------------------- --------------------------- ----------------------
Profit
before tax 8,592 7,939 3,580 1,546 21,657
----------- ------------------------- --------------------------- ------------------------- --------------------------- ----------------------
Loans and
advances
to
customers
(net) 463,836 319,246 176,182 294 959,558
----------- ------------------------- --------------------------- ------------------------- --------------------------- ----------------------
Customer
accounts 809,864 472,146 313,126 633 1,595,769
----------- ------------------------- --------------------------- ------------------------- --------------------------- ----------------------
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 entities in Latin America was transferred from GBM to CMB for
reporting purposes. Comparative data have been re-presented
accordingly.
Notable items
Half-year to 30 Jun 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) 2,034 1,507 - (220) 3,321
--------------- -------------------------- -------------------------- --------------------------- -------------------------- --------------------------
Fair value
movements on
financial
instruments(3) - - - 15 15
Operating
expenses
--------------- -------------------------- -------------------------- --------------------------- -------------------------- --------------------------
Disposals,
acquisitions
and related
costs (23) (15) 3 (83) (118)
Restructuring
and other
related
costs(4) - 29 - 18 47
--------------- -------------------------- -------------------------- --------------------------- -------------------------- --------------------------
1 Includes the reversal of a $2.1bn impairment loss relating to
the planned sale of our retail banking operations in France, 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 In 2Q23, we recognised $47m of reversals relating to
restructuring provisions recognised during 2022.
Reconciliation of reported results to constant currency results - global
businesses
Half-year to 30 Jun 2022
---------------------------------------------------------------------------------------------------------------------------------------------
Wealth Global
and Banking
Personal Commercial and Corporate
Banking Banking(2) Markets(2) Centre Total
$m $m $m $m $m
-------------- --------------------------- --------------------------- -------------------------- --------------------------- --------------------------
Revenue(1)
-------------- --------------------------- --------------------------- -------------------------- --------------------------- --------------------------
Reported 10,322 7,324 7,793 (894) 24,545
-------------- --------------------------- --------------------------- -------------------------- --------------------------- --------------------------
Currency
translation (264) (269) (334) (31) (898)
-------------- --------------------------- --------------------------- -------------------------- --------------------------- --------------------------
Constant
currency 10,058 7,055 7,459 (925) 23,647
-------------- --------------------------- --------------------------- -------------------------- --------------------------- --------------------------
ECL
-------------- --------------------------- --------------------------- -------------------------- --------------------------- --------------------------
Reported (571) (279) (234) (3) (1,087)
-------------- --------------------------- --------------------------- -------------------------- --------------------------- --------------------------
Currency
translation (13) 1 24 1 13
-------------- --------------------------- --------------------------- -------------------------- --------------------------- --------------------------
Constant
currency (584) (278) (210) (2) (1,074)
-------------- --------------------------- --------------------------- -------------------------- --------------------------- --------------------------
Operating
expenses
-------------- --------------------------- --------------------------- -------------------------- --------------------------- --------------------------
Reported (7,216) (3,485) (4,736) (690) (16,127)
-------------- --------------------------- --------------------------- -------------------------- --------------------------- --------------------------
Currency
translation 221 140 179 55 595
-------------- --------------------------- --------------------------- -------------------------- --------------------------- --------------------------
Constant
currency (6,995) (3,345) (4,557) (635) (15,532)
-------------- --------------------------- --------------------------- -------------------------- --------------------------- --------------------------
Share of
profit in
associates and
joint ventures
-------------- --------------------------- --------------------------- -------------------------- --------------------------- --------------------------
Reported 8 - - 1,441 1,449
-------------- --------------------------- --------------------------- -------------------------- --------------------------- --------------------------
Currency
translation - - - (86) (86)
-------------- --------------------------- --------------------------- -------------------------- --------------------------- --------------------------
Constant
currency 8 - - 1,355 1,363
-------------- --------------------------- --------------------------- -------------------------- --------------------------- --------------------------
Profit/(loss)
before tax
-------------- --------------------------- --------------------------- -------------------------- --------------------------- --------------------------
Reported 2,543 3,560 2,823 (146) 8,780
-------------- --------------------------- --------------------------- -------------------------- --------------------------- --------------------------
Currency
translation (56) (128) (131) (61) (376)
-------------- --------------------------- --------------------------- -------------------------- --------------------------- --------------------------
Constant
currency 2,487 3,432 2,692 (207) 8,404
-------------- --------------------------- --------------------------- -------------------------- --------------------------- --------------------------
Loans and
advances to
customers
(net)
-------------- --------------------------- --------------------------- -------------------------- --------------------------- --------------------------
Reported 474,181 352,136 200,163 541 1,027,021
-------------- --------------------------- --------------------------- -------------------------- --------------------------- --------------------------
Currency
translation 8,781 2,137 (81) 16 10,853
-------------- --------------------------- --------------------------- -------------------------- --------------------------- --------------------------
Constant
currency 482,962 354,273 200,082 557 1,037,874
-------------- --------------------------- --------------------------- -------------------------- --------------------------- --------------------------
Customer
accounts
-------------- --------------------------- --------------------------- -------------------------- --------------------------- --------------------------
Reported 836,026 484,626 330,087 562 1,651,301
-------------- --------------------------- --------------------------- -------------------------- --------------------------- --------------------------
Currency
translation 10,948 6,489 2,386 27 19,850
-------------- --------------------------- --------------------------- -------------------------- --------------------------- --------------------------
Constant
currency 846,974 491,115 332,473 589 1,671,151
-------------- --------------------------- --------------------------- -------------------------- --------------------------- --------------------------
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 entities in Latin America was transferred from GBM to CMB for
reporting purposes. Comparative data have been re-presented
accordingly.
Notable items (continued)
Half-year to 30 Jun 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(1) - - - (288) (288)
--------------- -------------------------- -------------------------- -------------------------- ---------------------------- --------------------------
Fair value
movements on
financial
instruments(2) - - - (371) (371)
--------------- -------------------------- -------------------------- -------------------------- ---------------------------- --------------------------
Restructuring
and other
related
costs(3) 93 - (26) 1 68
--------------- -------------------------- -------------------------- -------------------------- ---------------------------- --------------------------
Operating
expenses
Restructuring
and other
related costs (113) (66) (87) (774) (1,040)
--------------- -------------------------- -------------------------- -------------------------- ---------------------------- --------------------------
1 Includes losses from classifying businesses as held for sale
as part of a broader restructuring of our European business.
2 Fair value movements on non-qualifying hedges in HSBC Holdings.
3 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
At 30 Jun 2023
------------------------------------------------------------------------------------------------------------------------------------------------------
Wealth Global
and Banking
Personal Commercial and Corporate
Banking Banking(1) Markets(1) Centre Total
$bn $bn $bn $bn $bn
-------------- -------------------------------------- -------------------------- -------------------------- -------------------------- --------------------------
Risk-weighted
assets
-------------- -------------------------------------- -------------------------- -------------------------- -------------------------- --------------------------
Reported 186.6 353.8 227.0 92.1 859.5
Constant
currency 186.6 353.8 227.0 92.1 859.5
-------------- -------------------------------------- -------------------------- -------------------------- -------------------------- --------------------------
At 30 Jun 2022
Risk-weighted
assets
-------------- -------------------------------------- -------------------------- -------------------------- -------------------------- --------------------------
Reported 186.1 348.9 234.1 82.6 851.7
-------------- -------------------------------------- -------------------------- -------------------------- -------------------------- --------------------------
Currency
translation 1.2 (1.3) (1.9) (0.2) (2.2)
Constant
currency 187.3 347.6 232.2 82.4 849.5
-------------- -------------------------------------- -------------------------- -------------------------- -------------------------- --------------------------
At 31 Dec 2022
Risk-weighted
assets
-------------- ------------------------------------ -------------------------- -------------------------- -------------------------- --------------------------
Reported 182.9 342.4 225.9 88.5 839.7
-------------- ------------------------------------ -------------------------- -------------------------- -------------------------- --------------------------
Currency
translation 2.1 2.7 (0.6) - 4.2
Constant
currency 185.0 345.1 225.3 88.5 843.9
-------------- ------------------------------------ -------------------------- -------------------------- -------------------------- --------------------------
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 entities in Latin America was transferred from GBM to CMB for
reporting purposes. Comparative data have been re-presented
accordingly.
Supplementary tables for WPB
WPB performance by business unit (constant currency)
A breakdown of WPB by business unit is presented below to
reflect the basis of how the revenue performance of the business
units is assessed and managed.
WPB - summary (constant currency basis)
Consists of
Global
Total Banking Life Private Asset
WPB operations insurance Banking management
$m $m $m $m $m
----------------- ---------------------------- ---------------------------- ---------------------------- ---------------------------- -----------------------------
Half-year to 30
Jun 2023
----------------- ---------------------------- ---------------------------- ---------------------------- ---------------------------- -----------------------------
Net operating
income before
change
in expected
credit losses
and other
credit
impairment
charges(1) 16,200 13,560 875 1,141 624
----------------- ---------------------------- ---------------------------- ---------------------------- ---------------------------- -----------------------------
- net interest
income/(expense) 10,299 9,587 137 580 (5)
-----------------
- net fee income 2,692 1,636 79 393 584
-----------------
- other income 3,209 2,337 659 168 45
----------------- ---------------------------- ---------------------------- ---------------------------- ----------------------------
ECL (502) (501) (3) 2 -
----------------- ---------------------------- ---------------------------- ---------------------------- ---------------------------- -----------------------------
Net operating
income 15,698 13,059 872 1,143 624
----------------- ---------------------------- ---------------------------- ---------------------------- ---------------------------- -----------------------------
Total operating
expenses (7,141) (5,557) (351) (778) (455)
----------------- ---------------------------- ---------------------------- ---------------------------- ---------------------------- -----------------------------
Operating profit 8,557 7,502 521 365 169
----------------- ---------------------------- ---------------------------- ---------------------------- ---------------------------- -----------------------------
Share of profit
in associates
and
joint ventures 35 7 28 - -
----------------- ---------------------------- ---------------------------- ---------------------------- ---------------------------- -----------------------------
Profit before tax 8,592 7,509 549 365 169
----------------- ---------------------------- ---------------------------- ---------------------------- ---------------------------- -----------------------------
Half-year to 30
Jun 2022(2)
----------------- ---------------------------- ---------------------------- ---------------------------- ---------------------------- -----------------------------
Net operating
income before
change
in expected
credit losses
and other
credit
impairment
charges(1) 10,058 7,939 651 941 527
----------------- ---------------------------- ---------------------------- ---------------------------- ---------------------------- -----------------------------
- net interest
income/(expense) 6,493 5,932 175 387 (1)
-----------------
- net fee income 2,706 1,650 83 424 549
-----------------
- other
income/(expense) 859 357 393 130 (21)
----------------- ---------------------------- ---------------------------- ---------------------------- ----------------------------
ECL (584) (576) (4) (4) -
----------------- ---------------------------- ---------------------------- ---------------------------- ---------------------------- -----------------------------
Net operating
income 9,474 7,363 647 937 527
----------------- ---------------------------- ---------------------------- ---------------------------- ---------------------------- -----------------------------
Total operating
expenses (6,995) (5,518) (391) (678) (408)
----------------- ---------------------------- ---------------------------- ---------------------------- ---------------------------- -----------------------------
Operating profit 2,479 1,845 256 259 119
----------------- ---------------------------- ---------------------------- ---------------------------- ---------------------------- -----------------------------
Share of profit
in associates
and
joint ventures 8 5 3 - -
----------------- ---------------------------- ---------------------------- ---------------------------- ---------------------------- -----------------------------
Profit before tax 2,487 1,850 259 259 119
----------------- ---------------------------- ---------------------------- ---------------------------- ---------------------------- -----------------------------
1 Net operating income before change in expected credit losses
and other credit impairment charges, also referred to as
revenue.
2 From 1 January 2023, we adopted IFRS 17 'Insurance Contracts',
which replaced IFRS 4 'Insurance Contracts'. Comparative data have
been restated accordingly.
Life insurance business performance
The following table provides an analysis of the performance of
our life insurance business for the period. It comprises income
earned by our insurance manufacturing operations within our WPB
business, as well as income earned and costs incurred within our
Wealth insurance distribution channels and consolidation and
inter-company elimination entries.
Results of WPB's life insurance business unit (constant currency basis)
Half-year to 30 Jun
2023
-----------------------------------------------------------------------------------------
Insurance Wealth
manufac-turing insurance Life
operations and other(1) insurance
$m $m $m
Net interest income 136 1 137
--------------------------- ---------------------------- ---------------------------- -----------------------------
Net fee income/(expense) (25) 104 79
--------------------------- ---------------------------- ---------------------------- -----------------------------
Other income 651 8 659
--------------------------- ---------------------------- ---------------------------- -----------------------------
- insurance service results 558 (25) 533
---------------------------
- net investment returns
(excluding net interest
income) 4 - 4
---------------------------
- other income 89 33 122
--------------------------- ---------------------------- ----------------------------
Net operating income before
change in expected
credit losses and other
credit impairment
charges(2) 762 113 875
--------------------------- ---------------------------- ---------------------------- -----------------------------
ECL (3) - (3)
--------------------------- ---------------------------- ---------------------------- -----------------------------
Net operating income 759 113 872
--------------------------- ---------------------------- ---------------------------- -----------------------------
Total operating expenses (266) (85) (351)
--------------------------- ---------------------------- ---------------------------- -----------------------------
Operating profit 493 28 521
--------------------------- ---------------------------- ---------------------------- -----------------------------
Share of profit/(loss) in
associates and joint
ventures 28 - 28
--------------------------- ---------------------------- ---------------------------- -----------------------------
Profit before tax 521 28 549
--------------------------- ---------------------------- ---------------------------- -----------------------------
Half-year to 30 Jun
2022(3)
Net interest income 175 - 175
--------------------------- ---------------------------- ---------------------------- -----------------------------
Net fee income/(expense) (17) 100 83
--------------------------- ---------------------------- ---------------------------- -----------------------------
Other income 393 - 393
--------------------------- ---------------------------- ---------------------------- -----------------------------
- insurance service results 378 (3) 375
---------------------------
- net investment returns
(excluding net interest
income) (126) (5) (131)
---------------------------
- other income 141 8 149
--------------------------- ---------------------------- ----------------------------
Net operating income before
change in expected
credit losses and other
credit impairment
charges(2) 551 100 651
ECL (5) 1 (4)
--------------------------- ---------------------------- ---------------------------- -----------------------------
Net operating income 546 101 647
--------------------------- ---------------------------- ---------------------------- -----------------------------
Total operating expenses (261) (130) (391)
--------------------------- ---------------------------- ---------------------------- -----------------------------
Operating profit 285 (29) 256
--------------------------- ---------------------------- ---------------------------- -----------------------------
Share of profit/(loss) in
associates and joint
ventures 3 - 3
--------------------------- ---------------------------- ---------------------------- -----------------------------
Profit before tax 288 (29) 259
--------------------------- ---------------------------- ---------------------------- -----------------------------
1 'Wealth insurance and other' includes fee income earned and
operating expenses incurred within our Wealth distribution
channels. It also includes the IFRS 17 consolidation entries
arising from transactions between our insurance manufacturing
operations and Wealth distribution channels and with the wider
Group, as well as allocations of central costs benefiting life
insurance.
2 Net operating income before change in expected credit losses
and other credit impairment charges, also referred to as
revenue.
3 From 1 January 2023, we adopted IFRS 17 'Insurance Contracts',
which replaced IFRS 4 'Insurance Contracts'. Comparative data have
been restated accordingly.
WPB insurance manufacturing (constant currency basis)
The following table shows the results of our insurance
manufacturing operations for our WPB business and for all global
business segments in aggregate.
Results of insurance manufacturing operations(1,2,3)
Half-year to
30 Jun 30 Jun
2023 2022
----------------------------------------------------
All All global
global businesses
WPB businesses WPB
$m $m $m $m
-------------------------------------------- ------------------------ ------------------------ ------------------------- -------------------------
Net interest income 136 155 175 187
-------------------------------------------- ------------------------ ------------------------ ------------------------- -------------------------
Net fee expense (25) (18) (17) (9)
-------------------------------------------- ------------------------ ------------------------ ------------------------- -------------------------
Other income 651 643 393 378
-------------------------------------------- ------------------------ ------------------------ ------------------------- -------------------------
Insurance service result 558 557 378 378
-------------------------------------------- ------------------------ ------------------------ ------------------------- -------------------------
* release of contractual service margin 524 524 431 431
--------------------------------------------
* risk adjustment release 19 19 22 22
--------------------------------------------
* experience variance and other 2 1 29 29
--------------------------------------------
* loss from onerous contracts 13 13 (104) (104)
-------------------------------------------- ------------------------ ------------------------ -------------------------
Net investment returns (excluding net
interest
income)(4) 4 - (126) (128)
-------------------------------------------- ------------------------ ------------------------ ------------------------- -------------------------
* insurance finance income/(expense) (4,236) (4,235) 11,765 11,767
--------------------------------------------
* other investment income 4,240 4,235 (11,891) (11,895)
-------------------------------------------- ------------------------ ------------------------ -------------------------
Other operating income 89 86 141 128
-------------------------------------------- ------------------------ ------------------------ ------------------------- -------------------------
Net operating income before change in
expected
credit losses and other credit impairment
charges(5) 762 780 551 556
-------------------------------------------- ------------------------ ------------------------ ------------------------- -------------------------
Change in expected credit losses and other
credit impairment charges (3) (3) (5) (4)
-------------------------------------------- ------------------------ ------------------------ ------------------------- -------------------------
Net operating income 759 777 546 552
-------------------------------------------- ------------------------ ------------------------ ------------------------- -------------------------
Total operating expenses (266) (270) (261) (250)
-------------------------------------------- ------------------------ ------------------------ ------------------------- -------------------------
Operating profit 493 507 285 302
-------------------------------------------- ------------------------ ------------------------ ------------------------- -------------------------
Share of profit in associates and joint
ventures 28 28 3 3
-------------------------------------------- ------------------------ ------------------------ ------------------------- -------------------------
Profit before tax of insurance business
operations(6) 521 535 288 305
Additional information
-------------------------------------------- ------------------------ ------------------------ ------------------------- -------------------------
Insurance manufacturing new business
contractual
service margin (reported basis) 747 747 599 599
Consolidated Group new business contractual
service margin (reported basis) 811 811 637 637
-------------------------------------------- ------------------------ ------------------------ ------------------------- -------------------------
Annualised new business premiums of
insurance
manufacturing operations 1,861 1,890 1,274 1,314
-------------------------------------------- ------------------------ ------------------------ ------------------------- -------------------------
1 From 1 January 2023, we adopted IFRS 17 'Insurance Contracts',
which replaced IFRS 4 'Insurance Contracts'. Comparative data have
been restated accordingly.
2 Constant currency results are derived by adjusting for
period-on-period effects of foreign currency translation
differences. The impact of foreign currency translation differences
on 'All global businesses' profit before tax was nil for 1H22.
3 The results presented for insurance manufacturing operations
are shown before elimination of inter-company transactions with
HSBC non-insurance operations. The 'All global businesses' result
consists primarily of WPB business, as well as a small proportion
of CMB business.
4 Net investment return for all global businesses for the
half-year to 30 June 2023 was $155m (30 June 2022: $59m), which
consisted of net interest income, net income/(expenses) on assets
held at fair value through profit or loss, and insurance finance
income/(expense).
5 Net operating income before change in expected credit losses
and other credit impairment charges, also referred to as
revenue.
6 The effect on insurance manufacturing operations of applying
hyperinflation accounting in Argentina resulted in a decrease in
WPB revenue in 1H23 of $27m (1H22: decrease of $13m) and a decrease
in WPB profit before tax in 1H23 of $27m (1H22: decrease of
$13m).
Insurance manufacturing
The following commentary, unless otherwise stated, relates to
the constant currency results for 'All global businesses'.
Profit before tax of $0.5bn increased by $0.2bn compared with
1H22. This primarily reflected the following:
- Insurance service result of $0.6bn in 1H23 increased by $0.2bn
compared with 1H22. This was driven by an increase to the release
of CSM of $0.1bn as a result of a higher closing CSM balance from
the effect of new business written, favourable experience
variances, and updates to lapse rate assumptions impacting the CSM
measurement, as well as the impact of higher interest rates on the
CSM duration profile. The improved insurance service result also
reflected a reduction to losses from onerous contracts of $0.1bn,
mainly in Hong Kong and Singapore, in part due to improved economic
conditions in 1H23.
- Net investment return (excluding net interest income)
increased by $0.1bn, with higher asset returns in 1H23 compared
with losses in the prior period.
Insurance equity plus CSM net of tax represents a measure of our
insurance manufacturing operations' net asset value plus the future
earnings from in-force business. At 30 June 2023, insurance equity
plus CSM net of tax on a reported basis was $16,310m (31 December
2022: $14,646m; 30 June 2022: $14,663m).
At 30 June 2023, Insurance equity plus CSM net of tax was
calculated as insurance manufacturing operations equity of $7,661m
plus CSM of $10,571m less tax of $1,922m. At 31 December 2022, it
was calculated as insurance manufacturing operations equity of
$7,236m plus CSM of $9,058m less tax of $1,648m. At 30 June 2022,
it was calculated as insurance manufacturing operations equity of
$7,116m plus CSM of $9,233m less tax of $1,686m.
Manufacturing value of new business
Insurance manufacturing value of new business is a non-GAAP
alternative performance measure that provides information about
value generation from new business sold during the period. It is
conceptually similar to the value of new business metric previously
reported by the insurance business under IFRS 4 'Insurance
Contracts', although it is not equivalent to the previously
disclosed measure that was calculated as the incremental present
value of in-force business ('PVIF') intangible asset generated from
new business written. Since transitioning to IFRS 17, insurance
manufacturing value of new business is a metric used internally to
measure the long-term profitability of new business sold and its
disclosure supports the consistent communication of this
performance measure, albeit on a new calculation basis. Insurance
manufacturing value of new business is calculated as the sum of the
IFRS 17 new business CSM and loss component adjusted for:
- a full attribution of expenses incurred within our
manufacturing operations. IFRS 17 considers only directly
attributable acquisition expenses within the new business CSM
measurement; and
- long-term asset spreads expected to be generated over the
contract term. Under IFRS 17, new business CSM is in contrast
calculated on a risk neutral basis.
Insurance manufacturing value of new business is measured before
tax and after inclusion of the impact of reinsurance. Insurance
manufacturing value of new business amounts for previous periods
have not been disclosed as their preparation was not practicable
without unreasonable operational burden and expense. This reflects
the fact that the further work required to prepare comparative
information extends beyond the principal aim of the IFRS 17
programme to date of implementing the mandatory reporting
requirements of IFRS 17. Comparative information will be provided
with 2023 full-year information.
Insurance manufacturing value of new business
Half-year
to
------------------------
30 Jun
2023
------------------------
$m
---------------------------------------------------------------------- ------------------------
Insurance manufacturing operations new business contractual
service margin and loss component(1) 740
---------------------------------------------------------------------- ------------------------
Inclusion of incremental expenses not attributable to the contractual
service margin (143)
---------------------------------------------------------------------- ------------------------
Long-term asset spreads 195
---------------------------------------------------------------------- ------------------------
Insurance manufacturing value of new business 792
---------------------------------------------------------------------- ------------------------
1 Insurance manufacturing new business contractual service
margin was $747m and the loss component was $(7)m.
WPB: Wealth balances
The following table shows the wealth balances, which include
invested assets and wealth deposits. Invested assets comprise
customer assets either managed by our Asset Management business
or by external third-party investment managers, as well as
self-directed investments by our customers.
WPB - reported wealth balances(1)
Half-year to
----------------------------------------------------------------------------------
30 Jun 30 Jun 31 Dec
2023 2022 2022
$bn $bn $bn
---------------------------------- -------------------------- -------------------------- --------------------------
Global Private Banking client
assets 341 311 312
---------------------------------- -------------------------- -------------------------- --------------------------
- managed by Global Asset
Management 64 57 57
----------------------------------
- external managers, direct
securities and other 277 254 255
---------------------------------- -------------------------- --------------------------
Retail wealth balances 372 393 363
---------------------------------- -------------------------- -------------------------- --------------------------
- managed by Global Asset
Management 207 218 198
----------------------------------
- external managers, direct
securities and other 165 175 165
---------------------------------- -------------------------- --------------------------
Asset Management third-party
distribution 384 310 340
---------------------------------- -------------------------- -------------------------- --------------------------
Reported invested assets(1) 1,097 1,014 1,015
---------------------------------- -------------------------- -------------------------- --------------------------
Wealth deposits (Premier, Jade and
Global Private
Banking)(2) 533 542 503
---------------------------------- -------------------------- -------------------------- --------------------------
Total reported wealth balances 1,630 1,556 1,518
---------------------------------- -------------------------- -------------------------- --------------------------
1 Invested assets are not reported on the Group's balance sheet,
except where it is deemed that we are acting as principal rather
than agent in our role as investment manager.
2 Premier and Global Private Banking deposits, which include
Prestige deposits in Hang Seng Bank, form part of the total WPB
customer accounts balance of $810bn (30 June 2022: $836bn; 31
December 2022: $779bn) on page 39.
Asset Management: Funds under management
The following table shows the funds under management of our
Asset Management business. Funds under management represents assets
managed, either actively or passively, on behalf of our
customers.
Asset Management - reported funds under management(1)
Half-year to
30 Jun 30 Jun 31 Dec
2023 2022 2022
$bn $bn $bn
----------------------------- --------------------------- ---------------------------- ----------------------------
Opening balance 595 630 585
----------------------------- --------------------------- ---------------------------- ----------------------------
Net new invested assets 9 20 25
----------------------------- --------------------------- ---------------------------- ----------------------------
Net market movements 15 (33) (3)
----------------------------- --------------------------- ---------------------------- ----------------------------
Foreign exchange and others 9 (32) (12)
Closing balance 628 585 595
----------------------------- --------------------------- ---------------------------- ----------------------------
Asset Management - reported funds under management by legal entities
At
30 Jun 30 Jun 31 Dec
2023 2022 2022
$bn $bn $bn
HSBC Bank plc 141 134 134
----------------------------- --------------------------- ---------------------------- ----------------------------
The Hongkong and Shanghai
Banking Corporation Limited 188 166 184
HSBC North America Holdings
Inc. 55 69 60
----------------------------- --------------------------- ---------------------------- ----------------------------
HSBC Bank Canada - 15 -
----------------------------- --------------------------- ---------------------------- ----------------------------
Grupo Financiero HSBC, S.A.
de C.V. 11 8 8
----------------------------- --------------------------- ---------------------------- ----------------------------
Other trading entities(2) 233 193 209
Closing balance 628 585 595
----------------------------- --------------------------- ---------------------------- ----------------------------
1 Funds under management are not reported on the Group's balance
sheet, except where it is deemed that we are acting as principal
rather than agent in our role as investment manager.
2 Funds under management of $164m related to our Asset
Management entity in the UK are reported under 'other trading
entities' in the table above.
At 30 June 2023, Asset Management funds under management were
$628bn, an increase of $33bn or 6% compared with 31 December 2022.
The increase was driven by favourable market performances and net
new invested assets received, notably in the UK and Hong Kong.
We delivered robust net new invested assets of $9bn, primarily
from passive investment products, developed market fixed income and
private equity investment products, and benefited from a favourable
impact of foreign currency translation differences.
Global Private Banking client assets(1)
The following table shows the client assets of our Global
Private Banking business.
Global Private Banking - reported client assets(2)
Half-year to
30 Jun 30 Jun 31 Dec
2023 2022 2022
$bn $bn $bn
------------------------------ -------------------------- ---------------------------- ----------------------------
Opening balance 383 423 382
------------------------------ -------------------------- ---------------------------- ----------------------------
Net new invested assets 17 13 4
------------------------------ -------------------------- ---------------------------- ----------------------------
Increase/(decrease) in
deposits 3 (2) 1
------------------------------ -------------------------- ---------------------------- ----------------------------
Net market movements 14 (43) (10)
Foreign exchange and others 2 (9) 6
------------------------------ -------------------------- ---------------------------- ----------------------------
Closing balance 419 382 383
------------------------------ -------------------------- ---------------------------- ----------------------------
Global Private Banking - reported client assets by legal entities
At
30 Jun 30 Jun 31 Dec
2023 2022 2022
$bn $bn $bn
--------------------------------- --------------------------- -------------------------- --------------------------
HSBC UK Bank plc 29 27 28
--------------------------------- --------------------------- -------------------------- --------------------------
HSBC Bank plc 62 67 58
--------------------------------- --------------------------- -------------------------- --------------------------
The Hongkong and Shanghai Banking
Corporation Limited 187 167 174
HSBC North America Holdings Inc. 65 61 56
Grupo Financiero HSBC, S.A. de 2 - -
C.V.
--------------------------------- --------------------------- -------------------------- --------------------------
Other trading entities 74 60 67
Closing balance 419 382 383
--------------------------------- --------------------------- -------------------------- --------------------------
1 Client assets are translated at the rates of exchange
applicable for their respective period-ends, with the effects of
currency translation reported separately.
2 Client assets are not reported on the Group's balance sheet,
except where it is deemed that we are acting as principal rather
than agent in our role as investment manager. Customer deposits
included in these client assets are recorded on our balance
sheet.
Retail invested assets
The following table shows the invested assets of our retail
customers. These comprise customer assets either managed by our
Asset Management business or by external third-party investment
managers as well as self-directed investments by our customers.
Retail invested assets are not reported on the Group's balance
sheet, except where it is deemed that we are acting as principal
rather than agent in our role as investment manager.
Retail invested assets
Half-year to
30 Jun 30 Jun 31 Dec
2023 2022 2022
$bn $bn $bn
----------------------------- --------------------------- ---------------------------- ----------------------------
Opening balance 363 434 393
----------------------------- --------------------------- ---------------------------- ----------------------------
Net new invested assets(1) 14 12 14
----------------------------- --------------------------- ---------------------------- ----------------------------
Net market movements 6 (32) (15)
----------------------------- --------------------------- ---------------------------- ----------------------------
Foreign exchange and others (11) (21) (29)
----------------------------- --------------------------- ---------------------------- ----------------------------
Closing balance 372 393 363
----------------------------- --------------------------- ---------------------------- ----------------------------
Retail invested assets by legal entities
At
30 Jun 30 Jun 31 Dec
2023 2022 2022
$bn $bn $bn
----------------------------- --------------------------- ---------------------------- ----------------------------
HSBC UK Bank plc 29 27 27
----------------------------- --------------------------- ---------------------------- ----------------------------
HSBC Bank plc 36 34 27
----------------------------- --------------------------- ---------------------------- ----------------------------
The Hongkong and Shanghai
Banking Corporation Limited 280 283 284
----------------------------- --------------------------- ---------------------------- ----------------------------
HSBC Bank Middle East Limited 3 2 2
----------------------------- --------------------------- ---------------------------- ----------------------------
HSBC North America Holdings
Inc. 13 11 12
----------------------------- --------------------------- ---------------------------- ----------------------------
HSBC Bank Canada - 26 -
----------------------------- --------------------------- ---------------------------- ----------------------------
Grupo Financiero HSBC, S.A.
de C.V. 8 7 7
----------------------------- --------------------------- ---------------------------- ----------------------------
Other trading entities 3 3 4
Closing balance 372 393 363
----------------------------- --------------------------- ---------------------------- ----------------------------
1 'Retail net new invested assets' covers nine markets,
comprising Hong Kong including Hang Seng Bank (Hong Kong), mainland
China, Malaysia, Singapore, HSBC UK, UAE, the US, Canada and
Mexico. The 'net new invested assets' related to all other
geographies is reported in 'Foreign exchange and other'.
WPB invested assets
'Net new invested assets' represents the net customer inflows
from retail invested assets, Asset Management third-party
distribution and Global Private Banking invested assets. It
excludes all customer
deposits. The 'net new invested assets' in the table below is
non-additive from the tables above, as net new invested assets
managed by Asset Management that are generated by retail clients or
Global Private Banking will be recorded in both businesses.
WPB: Invested assets
Half-year to
30 Jun 30 Jun 31 Dec
2023 2022 2022
$bn $bn $bn
----------------------------- --------------------------- ---------------------------- ----------------------------
Opening balance 1,015 1,119 1,014
----------------------------- --------------------------- ---------------------------- ----------------------------
Net new invested assets 34 39 41
----------------------------- --------------------------- ---------------------------- ----------------------------
Net market movements 29 (90) (28)
----------------------------- --------------------------- ---------------------------- ----------------------------
Foreign exchange and others 19 (54) (12)
----------------------------- --------------------------- ---------------------------- ----------------------------
Closing balance 1,097 1,014 1,015
----------------------------- --------------------------- ---------------------------- ----------------------------
WPB: Net new invested assets by legal entities
At
30 Jun 30 Jun 31 Dec
2023 2022 2022
$bn $bn $bn
----------------------------- --------------------------- ---------------------------- ----------------------------
HSBC UK Bank plc 0 1 1
----------------------------- --------------------------- ---------------------------- ----------------------------
HSBC Bank plc 1 2 4
----------------------------- --------------------------- ---------------------------- ----------------------------
The Hongkong and Shanghai
Banking Corporation Limited 27 22 37
----------------------------- --------------------------- ---------------------------- ----------------------------
HSBC Bank Middle East Limited 0 0 0
----------------------------- --------------------------- ---------------------------- ----------------------------
HSBC North America Holdings
Inc. (7) 17 (9)
----------------------------- --------------------------- ---------------------------- ----------------------------
HSBC Bank Canada - 0 (1)
----------------------------- --------------------------- ---------------------------- ----------------------------
Grupo Financiero HSBC, S.A.
de C.V. 1 0 1
----------------------------- --------------------------- ---------------------------- ----------------------------
Other trading entities 12 (3) 8
Total 34 39 41
----------------------------- --------------------------- ---------------------------- ----------------------------
Legal entities
Contents
49 Analysis of reported results
by legal entities
51 Summary information - legal entities
and selected countries
55 Analysis by country/territory
On 1 January 2023, we updated our financial reporting framework
and changed the supplementary presentation of results from
geographical regions to main legal entities to better reflect the
Group's structure.
Analysis of reported results by legal entities
HSBC reported profit/(loss) before tax and balance sheet data
Half-year to 30 Jun 2023
Holding
companies,
The Hongkong HSBC HSBC Grupo shared
and Shanghai Bank North Financiero service
HSBC HSBC Banking Middle America HSBC HSBC, Other centres
UK Bank Bank Corporation East Holdings Bank S.A. trading and intra-Group
plc plc Limited Limited Inc. Canada de C.V. entities eliminations Total
$m $m $m $m $m $m $m $m $m $m
-------------------- ----------------- ---------------- ------------------------ -------------- ----------------- -------------- ---------------------- --------------- ---------------------------- -----------------
Net interest income 4,779 1,407 8,398 764 933 663 998 1,424 (1,102) 18,264
-------------------- ----------------- ---------------- ------------------------ -------------- ----------------- -------------- ---------------------- --------------- ---------------------------- -----------------
Net fee income 801 832 2,555 243 624 284 274 565 (93) 6,085
-------------------- ----------------- ---------------- ------------------------ -------------- ----------------- -------------- ---------------------- --------------- ---------------------------- -----------------
Net income from
financial
instruments
held for trading
or managed on a
fair value basis 235 2,053 4,740 212 380 50 226 494 (278) 8,112
-------------------- ----------------- ---------------- ------------------------ -------------- ----------------- -------------- ---------------------- --------------- ---------------------------- -----------------
Net income/(expense)
from assets and
liabilities of
insurance
businesses,
including related
derivatives,
measured
at fair value
through
profit and loss - 782 3,446 - - - 3 83 (10) 4,304
Insurance finance
income/(expense) - (780) (3,402) - - - - (64) 12 (4,234)
-------------------- ----------------- ---------------- ------------------------ -------------- ----------------- -------------- ---------------------- --------------- ---------------------------- -----------------
Insurance service
result - 91 399 - - - 41 4 (11) 524
-------------------- ----------------- ---------------- ------------------------ -------------- ----------------- -------------- ---------------------- --------------- ---------------------------- -----------------
Other
income/(expense)(1) 1,574 2,318 397 (21) 205 11 32 (289) (406) 3,821
-------------------- ----------------- ---------------- ------------------------ -------------- ----------------- -------------- ---------------------- --------------- ---------------------------- -----------------
Net operating
income before
change
in expected credit
losses and other
credit impairment
charges(2) 7,389 6,703 16,533 1,198 2,142 1,008 1,574 2,217 (1,888) 36,876
-------------------- ----------------- ---------------- ------------------------ -------------- ----------------- -------------- ---------------------- --------------- ---------------------------- -----------------
Change in expected
credit losses and
other credit
impairment
charges (418) (73) (456) - (62) (11) (264) (71) 10 (1,345)
-------------------- ----------------- ---------------- ------------------------ -------------- ----------------- -------------- ---------------------- --------------- ---------------------------- -----------------
Net operating
income 6,971 6,630 16,077 1,198 2,080 997 1,310 2,146 (1,878) 35,531
-------------------- ----------------- ---------------- ------------------------ -------------- ----------------- -------------- ---------------------- --------------- ---------------------------- -----------------
Total operating
expenses (2,180) (3,089) (6,507) (525) (1,379) (522) (880) (1,139) 764 (15,457)
Operating profit 4,791 3,541 9,570 673 701 475 430 1,007 (1,114) 20,074
-------------------- ----------------- ---------------- ------------------------ -------------- ----------------- -------------- ---------------------- --------------- ---------------------------- -----------------
Share of
profit/(loss)
in associates and
joint ventures - (43) 1,347 - - - 6 275 (2) 1,583
-------------------- ----------------- ---------------- ------------------------ -------------- ----------------- -------------- ---------------------- --------------- ---------------------------- -----------------
Profit before
tax 4,791 3,498 10,917 673 701 475 436 1,282 (1,116) 21,657
-------------------- ----------------- ---------------- ------------------------ -------------- ----------------- -------------- ---------------------- --------------- ---------------------------- -----------------
% % % % % % % % % %
-------------------- ----------------- ---------------- ------------------------ -------------- ----------------- -------------- ---------------------- --------------- ---------------------------- -----------------
Share of HSBC's
profit before tax 22.1 16.2 50.4 3.1 3.2 2.2 2.0 5.9 (5.1) 100.0
-------------------- ----------------- ---------------- ------------------------ -------------- ----------------- -------------- ---------------------- --------------- ---------------------------- -----------------
Cost efficiency
ratio 29.5 46.1 39.4 43.8 64.4 51.8 55.9 51.4 40.6 41.9
-------------------- ----------------- ---------------- ------------------------ -------------- ----------------- -------------- ---------------------- --------------- ---------------------------- -----------------
Balance sheet $m $m $m $m $m $m $m $m $m $m
data
-------------------- ----------------- ---------------- ------------------------ -------------- ----------------- -------------- ---------------------- --------------- ---------------------------- -----------------
Loans and advances
to customers (net) 266,694 112,408 464,546 18,804 53,410 - 24,507 19,189 - 959,558
Total assets 425,833 920,578 1,318,640 51,664 251,755 91,646 46,382 66,548 (131,570) 3,041,476
-------------------- ----------------- ---------------- ------------------------ -------------- ----------------- -------------- ---------------------- --------------- ---------------------------- -----------------
Customer accounts 345,835 282,041 775,430 31,262 99,303 - 28,402 33,313 183 1,595,769
Risk-weighted
assets(3,4) 125,782 127,402 391,470 24,187 73,140 31,382 30,657 66,317 11,285 859,545
-------------------- ----------------- ---------------- ------------------------ -------------- ----------------- -------------- ---------------------- --------------- ---------------------------- -----------------
HSBC reported profit/(loss) before tax and balance sheet data (continued)
Half-year to 30 Jun 2022
-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
Holding
companies,
The Hongkong HSBC HSBC Grupo shared
and Shanghai Bank North Financiero service
HSBC HSBC Banking Middle America HSBC HSBC, Other centres
UK Bank Bank Corporation East Holdings Bank S.A. trading and intra-Group
plc plc Limited Limited Inc. Canada de C.V. entities eliminations Total
$m $m $m $m $m $m $m $m $m $m
-------------------- ------------------ ----------------- ------------------------- --------------- ------------------ -------------- --------------------- ---------------- ----------------------------- ------------------------------
Net interest income 3,563 1,285 5,766 353 896 555 871 884 (788) 13,385
-------------------- ------------------ ----------------- ------------------------- --------------- ------------------ -------------- --------------------- ---------------- ----------------------------- ------------------------------
Net fee income 774 858 2,636 239 679 308 218 557 (41) 6,228
-------------------- ------------------ ----------------- ------------------------- --------------- ------------------ -------------- --------------------- ---------------- ----------------------------- ------------------------------
Net income from
financial
instruments
held for trading
or managed on a
fair value basis 224 2,001 2,273 195 237 40 136 280 (530) 4,856
-------------------- ------------------ ----------------- ------------------------- --------------- ------------------ -------------- --------------------- ---------------- ----------------------------- ------------------------------
Net income/(expense)
from assets and
liabilities of
insurance
businesses,
including
related
derivatives,
measured at fair
value through
profit
and loss - (1,707) (10,130) - - - (10) 2 (4) (11,849)
Insurance finance
income - 1,503 10,253 - - - 1 16 - 11,773
-------------------- ------------------ ----------------- ------------------------- --------------- ------------------ -------------- --------------------- ---------------- ----------------------------- ------------------------------
Insurance service
result - 79 287 - - - 13 (8) (1) 370
-------------------- ------------------ ----------------- ------------------------- --------------- ------------------ -------------- --------------------- ---------------- ----------------------------- ------------------------------
Other
income/(expense)(1) 96 (193) 229 13 328 16 36 (241) (502) (218)
-------------------- ------------------ ----------------- ------------------------- --------------- ------------------ -------------- --------------------- ---------------- ----------------------------- ------------------------------
Net operating income
before change in
expected credit
losses and other
credit impairment
charges(2) 4,657 3,826 11,314 800 2,140 919 1,265 1,490 (1,866) 24,545
-------------------- ------------------ ----------------- ------------------------- --------------- ------------------ -------------- --------------------- ---------------- ----------------------------- ------------------------------
Change in expected
credit losses and
other credit
impairment
charges (48) (252) (528) 68 (21) (31) (243) (34) 2 (1,087)
-------------------- ------------------ ----------------- ------------------------- --------------- ------------------ -------------- --------------------- ---------------- ----------------------------- ------------------------------
Net operating income 4,609 3,574 10,786 868 2,119 888 1,022 1,456 (1,864) 23,458
-------------------- ------------------ ----------------- ------------------------- --------------- ------------------ -------------- --------------------- ---------------- ----------------------------- ------------------------------
Total operating
expenses (2,339) (3,294) (6,403) (490) (1,695) (503) (788) (1,046) 431 (16,127)
Operating profit 2,270 280 4,383 378 424 385 234 410 (1,433) 7,331
-------------------- ------------------ ----------------- ------------------------- --------------- ------------------ -------------- --------------------- ---------------- ----------------------------- ------------------------------
Share of profit
in associates and
joint ventures - (28) 1,351 - - - 5 122 (1) 1,449
-------------------- ------------------ ----------------- ------------------------- --------------- ------------------ -------------- --------------------- ---------------- ----------------------------- ------------------------------
Profit before tax 2,270 252 5,734 378 424 385 239 532 (1,434) 8,780
-------------------- ------------------ ----------------- ------------------------- --------------- ------------------ -------------- --------------------- ---------------- ----------------------------- ------------------------------
%% %% %% %% %%
-------------------- ------------------ ---------------- ------------------------- -------------- ------------------ ------------- --------------------- --------------- ----------------------------- -----------------------------
Share of HSBC's
profit before tax 25.9 2.9 65.3 4.3 4.8 4.4 2.7 6.1 (16.4) 100.0
-------------------- ------------------ ----------------- ------------------------- --------------- ------------------ -------------- --------------------- ---------------- ----------------------------- ------------------------------
Cost efficiency
ratio 50.2 86.1 56.6 61.3 79.2 54.7 62.3 70.2 23.1 65.7
-------------------- ------------------ ----------------- ------------------------- --------------- ------------------ -------------- --------------------- ---------------- ----------------------------- ------------------------------
Balance sheet data $m $m $m $m $m $m $m $m $m $m
-------------------- ------------------ ----------------- ------------------------- --------------- ------------------ -------------- --------------------- ---------------- ----------------------------- ------------------------------
Loans and advances
to customers (net) 245,310 114,905 491,213 20,658 56,819 57,550 18,996 21,569 1 1,027,021
Total assets 423,703 862,478 1,295,484 48,944 262,701 96,830 37,218 68,330 (125,207) 2,970,481
-------------------- ------------------ ----------------- ------------------------- --------------- ------------------ -------------- --------------------- ---------------- ----------------------------- ------------------------------
Customer accounts 347,845 267,788 779,153 28,960 101,137 58,241 23,659 44,517 1 1,651,301
Risk-weighted
assets(3,4) 109,943 139,873 408,110 22,922 77,428 31,870 24,998 59,491 4,526 851,743
-------------------- ------------------ ----------------- ------------------------- --------------- ------------------ -------------- --------------------- ---------------- ----------------------------- ------------------------------
1 Other income/(expense) in this context comprises gain on
acquisitions, reversal of impairment loss relating to the planned
sale of our retail banking operations in France and other operating
income.
2 Net operating income before change in expected credit losses
and other credit impairment charges, also referred to as
revenue.
3 Risk-weighted assets are non-additive across the principal
entities due to market risk diversification effects within the
Group.
4 Balances are on a third-party Group consolidated basis.
Summary information - legal entities and selected countries
Legal entity reported and constant currency results(1)
Half-year to 30 Jun 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) 7,389 6,703 16,533 1,198 2,142 1,008 1,574 2,217 (1,888) 36,876
-------------- ---------------- ---------------- ------------------- -------------- ------------------ -------------- ----------------------- ---------------- --------------------------- -------------------------------
ECL (418) (73) (456) - (62) (11) (264) (71) 10 (1,345)
-------------- ---------------- ---------------- ------------------- -------------- ------------------ -------------- ----------------------- ---------------- --------------------------- -------------------------------
Operating
expenses (2,180) (3,089) (6,507) (525) (1,379) (522) (880) (1,139) 764 (15,457)
-------------- ---------------- ---------------- ------------------- -------------- ------------------ -------------- ----------------------- ---------------- --------------------------- -------------------------------
Share of
profit
in associates
and
joint
ventures - (43) 1,347 - - - 6 275 (2) 1,583
-------------- ---------------- ---------------- ------------------- -------------- ------------------ -------------- ----------------------- ---------------- --------------------------- -------------------------------
Profit/(loss)
before
tax 4,791 3,498 10,917 673 701 475 436 1,282 (1,116) 21,657
-------------- ---------------- ---------------- ------------------- -------------- ------------------ -------------- ----------------------- ---------------- --------------------------- -------------------------------
Loans and
advances
to customers
(net) 266,694 112,408 464,546 18,804 53,410 - 24,507 19,189 - 959,558
-------------- ---------------- ---------------- ------------------- -------------- ------------------ -------------- ----------------------- ---------------- --------------------------- -------------------------------
Customer
accounts 345,835 282,041 775,430 31,262 99,303 - 28,402 33,313 183 1,595,769
-------------- ---------------- ---------------- ------------------- -------------- ------------------ -------------- ----------------------- ---------------- --------------------------- -------------------------------
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 the Group's reported profit before tax of
$692m. Supplementary analysis is provided on page 56 to provide a
fuller picture of the MENAT regional performance.
3 Net operating income before change in expected credit losses
and other credit impairment charges, also referred to as
revenue.
Legal entity results: notable items
Half-year to 30 Jun 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) 1,507 2,101 - - - - - - (287) 3,321
--------------- ----------------- --------------- ----------------------- ------------- ------------------- ------------- -------------------- ------------- --------------------------- --------------
Fair value
movements
on financial
instruments(3) - - - - - - - - 15 15
Operating
expenses
--------------- ----------------- --------------- ----------------------- ------------- ------------------- ------------- -------------------- ------------- --------------------------- --------------
Disposals,
acquisitions
and related
costs (15) (45) - - (2) (54) - - (2) (118)
Restructuring
and
other related
costs(4) - - - - - - - - 47 47
--------------- ----------------- --------------- ----------------------- ------------- ------------------- ------------- -------------------- ------------- --------------------------- --------------
1 Includes the reversal of a $2.1bn impairment loss relating to
the planned sale of our retail banking operations in France, 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 In 2Q23, we recognised $47m of reversals relating to
restructuring provisions recognised during 2022.
Country results(1)
Half-year to 30 Jun 2023
---------------------------------------------------------------------------------------------------------------------------------------
Hong Mainland
UK(2) Kong China US Mexico
$m $m $m $m $m
-------------- ------------------------- ------------------------- ------------------------- ------------------------- ---------------------------
Revenue(3) 10,478 10,574 2,030 2,090 1,574
-------------- ------------------------- ------------------------- ------------------------- ------------------------- ---------------------------
ECL (484) (489) 24 (62) (264)
-------------- ------------------------- ------------------------- ------------------------- ------------------------- ---------------------------
Operating
expenses (5,851) (3,964) (1,314) (1,379) (880)
-------------- ------------------------- ------------------------- ------------------------- ------------------------- ---------------------------
Share of
profit/(loss)
in associates
and joint
ventures (44) 16 1,318 - 6
-------------- ------------------------- ------------------------- ------------------------- ------------------------- ---------------------------
Profit before
tax 4,099 6,137 2,058 649 436
-------------- ------------------------- ------------------------- ------------------------- ------------------------- ---------------------------
Loans and
advances to
customers
(net) 305,923 288,917 45,694 53,410 24,507
-------------- ------------------------- ------------------------- ------------------------- ------------------------- ---------------------------
Customer
accounts 508,052 529,574 53,835 99,303 28,402
-------------- ------------------------- ------------------------- ------------------------- ------------------------- ---------------------------
1 In the current period, constant currency results are equal to
reported, as there is no currency translation.
2 UK includes HSBC UK Bank plc (ring-fenced bank) and HSBC Bank plc (non-ring-fenced bank).
3 Net operating income before change in expected credit losses
and other credit impairment charges, also referred to as
revenue.
Country results: notable items
Half-year to 30 Jun 2023
----------------------------------------------------------------------------------------------------------------------------------------
Hong Mainland
UK(1) Kong China US Mexico
$m $m $m $m $m
--------------- -------------------------- ------------------------- ------------------------- --------------------------- -------------------------
Revenue
--------------- -------------------------- ------------------------- ------------------------- --------------------------- -------------------------
Disposals, 1,220 - - - -
acquisitions
and related
costs(2)
--------------- -------------------------- ------------------------- ------------------------- --------------------------- -------------------------
Fair value 15 - - - -
movements on
financial
instruments(3)
Operating
expenses
--------------- -------------------------- ------------------------- ------------------------- --------------------------- -------------------------
Disposals,
acquisitions
and related
costs (12) - - (2) -
--------------- -------------------------- ------------------------- ------------------------- --------------------------- -------------------------
1 UK includes HSBC UK Bank plc (ring-fenced bank) and HSBC Bank plc (non-ring-fenced bank).
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 reported and constant currency results (continued)
Half-year to 30 Jun 2022
The Holding
Hongkong companies,
and shared
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(1) eliminations Total
$m $m $m $m $m $m $m $m $m $m
-------------- --------------------- --------------------- --------------------- --------------------- --------------------- --------------------- --------------------- --------------------- -------------------------- -------------------
Revenue(2)
-------------- --------------------- --------------------- --------------------- --------------------- --------------------- --------------------- --------------------- --------------------- -------------------------- -------------------
Reported 4,657 3,826 11,314 800 2,140 919 1,265 1,490 (1,866) 24,545
-------------- --------------------- --------------------- --------------------- --------------------- --------------------- --------------------- --------------------- --------------------- -------------------------- -------------------
Currency
translation (216) (92) (234) 1 - (51) 149 (299) (156) (898)
-------------- --------------------- --------------------- --------------------- --------------------- --------------------- --------------------- --------------------- --------------------- -------------------------- -------------------
Constant
currency 4,441 3,734 11,080 801 2,140 868 1,414 1,191 (2,022) 23,647
-------------- --------------------- --------------------- --------------------- --------------------- --------------------- --------------------- --------------------- --------------------- -------------------------- -------------------
ECL
-------------- --------------------- --------------------- --------------------- --------------------- --------------------- --------------------- --------------------- --------------------- -------------------------- -------------------
Reported (48) (252) (528) 68 (21) (31) (243) (34) 2 (1,087)
-------------- --------------------- --------------------- --------------------- --------------------- --------------------- --------------------- --------------------- --------------------- -------------------------- -------------------
Currency
translation (8) 21 7 - - 1 (29) 21 - 13
-------------- --------------------- --------------------- --------------------- --------------------- --------------------- --------------------- --------------------- --------------------- -------------------------- -------------------
Constant
currency (56) (231) (521) 68 (21) (30) (272) (13) 2 (1,074)
-------------- --------------------- --------------------- --------------------- --------------------- --------------------- --------------------- --------------------- --------------------- -------------------------- -------------------
Operating
expenses
-------------- --------------------- --------------------- --------------------- --------------------- --------------------- --------------------- --------------------- --------------------- -------------------------- -------------------
Reported (2,339) (3,294) (6,403) (490) (1,695) (503) (788) (1,046) 431 (16,127)
-------------- --------------------- --------------------- --------------------- --------------------- --------------------- --------------------- --------------------- --------------------- -------------------------- -------------------
Currency
translation 113 112 112 - (1) 28 (92) 200 123 595
-------------- --------------------- --------------------- --------------------- --------------------- --------------------- --------------------- --------------------- --------------------- -------------------------- -------------------
Constant
currency (2,226) (3,182) (6,291) (490) (1,696) (475) (880) (846) 554 (15,532)
-------------- --------------------- --------------------- --------------------- --------------------- --------------------- --------------------- --------------------- --------------------- -------------------------- -------------------
Share of
profit/(loss)
in associates
and joint
ventures
-------------- --------------------- --------------------- --------------------- --------------------- --------------------- --------------------- --------------------- --------------------- -------------------------- -------------------
Reported - (28) 1,351 - - - 5 122 (1) 1,449
-------------- --------------------- --------------------- --------------------- --------------------- --------------------- --------------------- --------------------- --------------------- -------------------------- -------------------
Currency
translation - 2 (88) - - - - 1 (1) (86)
-------------- --------------------- --------------------- --------------------- --------------------- --------------------- --------------------- --------------------- --------------------- -------------------------- -------------------
Constant
currency - (26) 1,263 - - - 5 123 (2) 1,363
-------------- --------------------- --------------------- --------------------- --------------------- --------------------- --------------------- --------------------- --------------------- -------------------------- -------------------
Profit/(loss)
before tax
-------------- --------------------- --------------------- --------------------- --------------------- --------------------- --------------------- --------------------- --------------------- -------------------------- -------------------
Reported 2,270 252 5,734 378 424 385 239 532 (1,434) 8,780
-------------- --------------------- --------------------- --------------------- --------------------- --------------------- --------------------- --------------------- --------------------- -------------------------- -------------------
Currency
translation (111) 43 (203) 1 (1) (22) 28 (77) (34) (376)
-------------- --------------------- --------------------- --------------------- --------------------- --------------------- --------------------- --------------------- --------------------- -------------------------- -------------------
Constant
currency 2,159 295 5,531 379 423 363 267 455 (1,468) 8,404
-------------- --------------------- --------------------- --------------------- --------------------- --------------------- --------------------- --------------------- --------------------- -------------------------- -------------------
Loans and
advances
to customers
(net)
-------------- --------------------- --------------------- --------------------- --------------------- --------------------- --------------------- --------------------- --------------------- -------------------------- -------------------
Reported 245,310 114,905 491,213 20,658 56,819 57,550 18,996 21,569 1 1,027,021
-------------- --------------------- --------------------- --------------------- --------------------- --------------------- --------------------- --------------------- --------------------- -------------------------- -------------------
Currency
translation 11,292 5,332 (6,106) 36 - (1,347) 3,412 (1,765) (1) 10,853
-------------- --------------------- --------------------- --------------------- --------------------- --------------------- --------------------- --------------------- --------------------- -------------------------- -------------------
Constant
currency 256,602 120,237 485,107 20,694 56,819 56,203 22,408 19,804 - 1,037,874
-------------- --------------------- --------------------- --------------------- --------------------- --------------------- --------------------- --------------------- --------------------- -------------------------- -------------------
Customer
accounts
-------------- --------------------- --------------------- --------------------- --------------------- --------------------- --------------------- --------------------- --------------------- -------------------------- -------------------
Reported 347,845 267,788 779,153 28,960 101,137 58,241 23,659 44,517 1 1,651,301
-------------- --------------------- --------------------- --------------------- --------------------- --------------------- --------------------- --------------------- --------------------- -------------------------- -------------------
Currency
translation 16,011 11,905 (5,774) 51 - (1,363) 4,250 (5,228) (2) 19,850
-------------- --------------------- --------------------- --------------------- --------------------- --------------------- --------------------- --------------------- --------------------- -------------------------- -------------------
Constant
currency 363,856 279,693 773,379 29,011 101,137 56,878 27,909 39,289 (1) 1,671,151
-------------- --------------------- --------------------- --------------------- --------------------- --------------------- --------------------- --------------------- --------------------- -------------------------- -------------------
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 the Group's reported profit before tax of
$381m and constant currency profit before tax of $315m.
Supplementary analysis is provided on page 56 to provide a fuller
picture of the MENAT regional performance.
2 Net operating income before change in expected credit losses
and other credit impairment charges, also referred to as
revenue.
Legal entity results: notable items (continued)
Half-year to 30 Jun 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(1) - (278) - - - - - - (10) (288)
--------------- --------------------- -------------------- ------------------------ -------------------- -------------------- -------------------- ----------------------- ------------------- -------------------------- -------------------
Fair value
movements on
financial
instruments(2) - - - - - - - - (371) (371)
--------------- --------------------- -------------------- ------------------------ -------------------- -------------------- -------------------- ----------------------- ------------------- -------------------------- -------------------
Restructuring
and other
related
costs(3) 1 (21) 4 - 96 - (1) - (11) 68
--------------- --------------------- -------------------- ------------------------ -------------------- -------------------- -------------------- ----------------------- ------------------- -------------------------- -------------------
Operating
expenses
Restructuring
and other
related
costs (212) (250) (227) (19) (126) (22) (36) (39) (109) (1,040)
--------------- --------------------- -------------------- ------------------------ -------------------- -------------------- -------------------- ----------------------- ------------------- -------------------------- -------------------
1 Includes losses from classifying businesses as held for sale
as part of a broader restructuring of our European business.
2 Fair value movements on non-qualifying hedges in HSBC Holdings.
3 Comprises gains and losses relating to the business update in
February 2020, including losses associated with the RWA reduction
programme.
Country results (continued)
Half-year to 30 Jun 2022
--------------------------------------------------------------------------------------------------------------------------------------------------
Hong Mainland
UK(1) Kong China US Mexico
$m $m $m $m $m
-------------- ---------------------------- ---------------------------- -------------------------- ---------------------------- ----------------------------
Revenue(2)
-------------- ---------------------------- ---------------------------- -------------------------- ---------------------------- ----------------------------
Reported 8,805 6,604 2,108 2,122 1,265
-------------- ---------------------------- ---------------------------- -------------------------- ---------------------------- ----------------------------
Currency
translation (424) (9) (137) - 149
-------------- ---------------------------- ---------------------------- -------------------------- ---------------------------- ----------------------------
Constant
currency 8,381 6,595 1,971 2,122 1,414
-------------- ---------------------------- ---------------------------- -------------------------- ---------------------------- ----------------------------
ECL
-------------- ---------------------------- ---------------------------- -------------------------- ---------------------------- ----------------------------
Reported (196) (418) (138) (21) (243)
-------------- ---------------------------- ---------------------------- -------------------------- ---------------------------- ----------------------------
Currency
translation - - 11 - (29)
-------------- ---------------------------- ---------------------------- -------------------------- ---------------------------- ----------------------------
Constant
currency (196) (418) (127) (21) (272)
-------------- ---------------------------- ---------------------------- -------------------------- ---------------------------- ----------------------------
Operating
expenses
-------------- ---------------------------- ---------------------------- -------------------------- ---------------------------- ----------------------------
Reported (6,471) (3,907) (1,356) (1,695) (789)
-------------- ---------------------------- ---------------------------- -------------------------- ---------------------------- ----------------------------
Currency
translation 300 6 89 (1) (91)
-------------- ---------------------------- ---------------------------- -------------------------- ---------------------------- ----------------------------
Constant
currency (6,171) (3,901) (1,267) (1,696) (880)
-------------- ---------------------------- ---------------------------- -------------------------- ---------------------------- ----------------------------
Share of
profit/(loss)
in associates
and joint
ventures
-------------- ---------------------------- ---------------------------- -------------------------- ---------------------------- ----------------------------
Reported (23) (1) 1,343 - 4
-------------- ---------------------------- ---------------------------- -------------------------- ---------------------------- ----------------------------
Currency
translation 2 - (87) - 1
-------------- ---------------------------- ---------------------------- -------------------------- ---------------------------- ----------------------------
Constant
currency (21) (1) 1,256 - 5
-------------- ---------------------------- ---------------------------- -------------------------- ---------------------------- ----------------------------
Profit before
tax
-------------- ---------------------------- ---------------------------- -------------------------- ---------------------------- ----------------------------
Reported 2,115 2,278 1,957 406 237
-------------- ---------------------------- ---------------------------- -------------------------- ---------------------------- ----------------------------
Currency
translation (122) (3) (124) (1) 30
-------------- ---------------------------- ---------------------------- -------------------------- ---------------------------- ----------------------------
Constant
currency 1,993 2,275 1,833 405 267
-------------- ---------------------------- ---------------------------- -------------------------- ---------------------------- ----------------------------
Loans and
advances to
customers
(net)
-------------- ---------------------------- ---------------------------- -------------------------- ---------------------------- ----------------------------
Reported 285,097 309,445 52,922 56,819 18,996
-------------- ---------------------------- ---------------------------- -------------------------- ---------------------------- ----------------------------
Currency
translation 13,123 430 (4,123) - 3,412
-------------- ---------------------------- ---------------------------- -------------------------- ---------------------------- ----------------------------
Constant
currency 298,220 309,875 48,799 56,819 22,408
-------------- ---------------------------- ---------------------------- -------------------------- ---------------------------- ----------------------------
Customer
accounts
-------------- ---------------------------- ---------------------------- -------------------------- ---------------------------- ----------------------------
Reported 505,195 543,400 55,580 101,137 23,659
-------------- ---------------------------- ---------------------------- -------------------------- ---------------------------- ----------------------------
Currency
translation 23,255 756 (4,330) - 4,250
-------------- ---------------------------- ---------------------------- -------------------------- ---------------------------- ----------------------------
Constant
currency 528,450 544,156 51,250 101,137 27,909
-------------- ---------------------------- ---------------------------- -------------------------- ---------------------------- ----------------------------
1 UK includes HSBC UK Bank plc (ring-fenced bank) and HSBC Bank plc (non-ring-fenced bank).
2 Net operating income before change in expected credit losses
and other credit impairment charges, also referred to as
revenue.
Country results: notable items (continued)
Half-year to 30 Jun 2022
-------------------------------------------------------------------------------------------------------------------------------------------
Hong Mainland
UK(1) Kong China US Mexico
$m $m $m $m $m
--------------- ------------------------- -------------------------- -------------------------- -------------------------- ----------------------------
Revenue
Fair value (371) - - - -
movements on
financial
instruments(2)
--------------- ------------------------- -------------------------- -------------------------- -------------------------- ----------------------------
Restructuring
and other
related
costs(3) 205 (40) 36 97 (2)
--------------- ------------------------- -------------------------- -------------------------- -------------------------- ----------------------------
Operating
expenses
Restructuring
and other
related costs (699) (132) (15) (127) (36)
--------------- ------------------------- -------------------------- -------------------------- -------------------------- ----------------------------
1 UK includes HSBC UK Bank plc (ring-fenced bank) and HSBC Bank plc (non-ring-fenced bank).
2 Fair value movements on non-qualifying hedges in HSBC Holdings.
3 Comprises gains and losses relating to the business update in
February 2020, including losses associated with RWA reduction
commitments.
Analysis by country/territory
Profit/(loss) before tax by country/territory within global businesses
Wealth
and Global
Personal Commercial Banking Corporate
Banking Banking(1) and Markets(1) Centre Total
$m $m $m $m $m
----------------- --------------------------- -------------------------- -------------------------------- --------------------------- --------------------------
UK(2) 1,341 2,789 (115) 84 4,099
----------------- --------------------------- -------------------------- -------------------------------- --------------------------- --------------------------
- of which: HSBC
UK Bank plc
(ring-fenced
bank) 1,520 3,171 69 31 4,791
-----------------
- of which: HSBC
Bank plc
(non-ring-fenced
bank) 460 382 592 (186) 1,248
-----------------
- of which:
Holdings and
other (639) (764) (776) 239 (1,940)
----------------- --------------------------- -------------------------- -------------------------------- ---------------------------
France 2,019 192 41 51 2,303
----------------- --------------------------- -------------------------- -------------------------------- --------------------------- --------------------------
Germany 20 77 65 (2) 160
----------------- --------------------------- -------------------------- -------------------------------- --------------------------- --------------------------
Switzerland 28 15 - 8 51
----------------- --------------------------- -------------------------- -------------------------------- --------------------------- --------------------------
Hong Kong 3,567 1,816 881 (127) 6,137
----------------- --------------------------- -------------------------- -------------------------------- --------------------------- --------------------------
Australia 102 157 40 (18) 281
----------------- --------------------------- -------------------------- -------------------------------- --------------------------- --------------------------
India 35 209 408 114 766
----------------- --------------------------- -------------------------- -------------------------------- --------------------------- --------------------------
Indonesia 16 57 39 (2) 110
----------------- --------------------------- -------------------------- -------------------------------- --------------------------- --------------------------
Mainland China (12) 245 374 1,451 2,058
----------------- --------------------------- -------------------------- -------------------------------- --------------------------- --------------------------
Malaysia 55 74 109 (6) 232
----------------- --------------------------- -------------------------- -------------------------------- --------------------------- --------------------------
Singapore 255 233 248 (17) 719
----------------- --------------------------- -------------------------- -------------------------------- --------------------------- --------------------------
Taiwan 61 39 98 (5) 193
----------------- --------------------------- -------------------------- -------------------------------- --------------------------- --------------------------
Egypt 65 44 121 (16) 214
----------------- --------------------------- -------------------------- -------------------------------- --------------------------- --------------------------
UAE 175 135 208 (49) 469
----------------- --------------------------- -------------------------- -------------------------------- --------------------------- --------------------------
Saudi Arabia - - 53 273 326
----------------- --------------------------- -------------------------- -------------------------------- --------------------------- --------------------------
US 259 347 153 (110) 649
----------------- --------------------------- -------------------------- -------------------------------- --------------------------- --------------------------
Canada 167 299 68 (54) 480
----------------- --------------------------- -------------------------- -------------------------------- --------------------------- --------------------------
Mexico 196 263 11 (34) 436
----------------- --------------------------- -------------------------- -------------------------------- --------------------------- --------------------------
Other(3) 243 948 778 5 1,974
----------------- --------------------------- -------------------------- -------------------------------- --------------------------- --------------------------
Half-year to 30
Jun 2023 8,592 7,939 3,580 1,546 21,657
----------------- --------------------------- -------------------------- -------------------------------- --------------------------- --------------------------
UK(2) 601 1,203 (54) 365 2,115
----------------- --------------------------- -------------------------- -------------------------------- --------------------------- --------------------------
- of which: HSBC
UK Bank plc
(ring-fenced
bank) 843 1,515 71 (159) 2,270
-----------------
- of which: HSBC
Bank plc
(non-ring-fenced
bank) 99 113 264 (208) 268
-----------------
- of which:
Holdings and
other (341) (425) (389) 732 (423)
----------------- --------------------------- -------------------------- -------------------------------- ---------------------------
France (45) 143 53 (63) 88
----------------- --------------------------- -------------------------- -------------------------------- --------------------------- --------------------------
Germany 4 36 93 (64) 69
----------------- --------------------------- -------------------------- -------------------------------- --------------------------- --------------------------
Switzerland 11 (42) (1) (13) (45)
----------------- --------------------------- -------------------------- -------------------------------- --------------------------- --------------------------
Hong Kong 1,375 547 518 (162) 2,278
----------------- --------------------------- -------------------------- -------------------------------- --------------------------- --------------------------
Australia 60 84 91 (22) 213
----------------- --------------------------- -------------------------- -------------------------------- --------------------------- --------------------------
India 33 156 324 132 645
----------------- --------------------------- -------------------------- -------------------------------- --------------------------- --------------------------
Indonesia 8 44 52 (2) 102
----------------- --------------------------- -------------------------- -------------------------------- --------------------------- --------------------------
Mainland China (38) 137 310 1,548 1,957
----------------- --------------------------- -------------------------- -------------------------------- --------------------------- --------------------------
Malaysia 45 34 115 (15) 179
----------------- --------------------------- -------------------------- -------------------------------- --------------------------- --------------------------
Singapore 52 73 144 (20) 249
----------------- --------------------------- -------------------------- -------------------------------- --------------------------- --------------------------
Taiwan 19 15 68 (7) 95
----------------- --------------------------- -------------------------- -------------------------------- --------------------------- --------------------------
Egypt 48 15 94 (3) 154
----------------- --------------------------- -------------------------- -------------------------------- --------------------------- --------------------------
UAE 38 76 187 (39) 262
----------------- --------------------------- -------------------------- -------------------------------- --------------------------- --------------------------
Saudi Arabia 12 - 54 117 183
----------------- --------------------------- -------------------------- -------------------------------- --------------------------- --------------------------
US 92 220 255 (161) 406
----------------- --------------------------- -------------------------- -------------------------------- --------------------------- --------------------------
Canada 98 263 54 (25) 390
----------------- --------------------------- -------------------------- -------------------------------- --------------------------- --------------------------
Mexico 95 179 18 (55) 237
----------------- --------------------------- -------------------------- -------------------------------- --------------------------- --------------------------
Other 35 377 448 (1,657) (797)
----------------- --------------------------- -------------------------- -------------------------------- --------------------------- --------------------------
Half-year to 30
Jun 2022 2,543 3,560 2,823 (146) 8,780
----------------- --------------------------- -------------------------- -------------------------------- --------------------------- --------------------------
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 entities in Latin America was transferred from GBM to CMB for
reporting purposes. Comparative data have been re-presented
accordingly.
2 UK includes results from the ultimate holding company, HSBC
Holdings plc, and the separately incorporated group of service
companies ('ServCo Group').
3 Corporate Centre includes inter-company debt eliminations of $62m.
Middle East, North Africa and Türkiye supplementary
information
The following tables show the results of our Middle East, North
Africa and Türkiye 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, North Africa and Türkiye regional performance
Half year to
-------------------------------------------------------
30 Jun 30 Jun
2023 2022
$m $m
------------------------------------------------------------- --------------------------- --------------------------
Revenue(1) 1,854 1,338
------------------------------------------------------------- --------------------------- --------------------------
Change in expected credit losses and other credit impairment
charges (4) 49
------------------------------------------------------------- --------------------------- --------------------------
Operating expenses (773) (756)
------------------------------------------------------------- --------------------------- --------------------------
Share of profit from associates and joint ventures 272 117
------------------------------------------------------------- --------------------------- --------------------------
Profit before tax 1,349 748
Loans and advances to customers (net)(2) 21,901 28,348
------------------------------------------------------------- --------------------------- --------------------------
Customer accounts(2) 40,480 44,008
------------------------------------------------------------- --------------------------- --------------------------
1 Net operating income before change in expected credit losses
and other credit impairment charges, also referred to as
revenue.
2 Loans and advances to customers of $2,975m have been
classified as 'Assets held for sale' and Customer accounts of
$4,878m have been classified as 'Liabilities of disposal groups
held for sale' at 30 June 2023, in respect of the planned merger of
our business in Oman .
Profit before tax by global business
Half year to
30 Jun 30 Jun
2023 2022
$m $m
---------------------------- ------------------------ --------------------------
Wealth and Personal Banking 301 114
---------------------------- ------------------------ --------------------------
Commercial Banking 276 120
---------------------------- ------------------------ --------------------------
Global Banking and Markets 571 442
---------------------------- ------------------------ --------------------------
Corporate Centre 201 72
---------------------------- ------------------------ --------------------------
Total 1,349 748
---------------------------- ------------------------ --------------------------
Reconciliation of alternative performance measures
Contents
57 Use of alternative performance
measures
57 Return on average ordinary shareholders'
equity and return on average
tangible equity
58 Net asset value and tangible
net asset value per ordinary
share
59 Post-tax return and average total
shareholders' equity on average
total assets
59 Expected credit losses and other
credit impairment charges as
% of average gross loans and
advances to customers
60 Target basis operating expenses
60 Earnings per share excluding
material notable items
Use of alternative performance measures
Our reported results are prepared in accordance with IFRSs as
detailed in our interim condensed financial statements starting on
page 108.
As described on page 28, 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
Half-year ended
----------------------------------------------------------------------
30 Jun 30 Jun
2023 2022
$m $m
---------------------------------------------- ---------------------------------- ----------------------------------
Profit
---------------------------------------------- ---------------------------------- ----------------------------------
Profit attributable to the ordinary
shareholders of
the parent company 16,966 7,966
---------------------------------------------- ---------------------------------- ----------------------------------
Impairment of goodwill and other intangible
assets
(net of tax) 29 37
---------------------------------------------- ---------------------------------- ----------------------------------
Profit attributable to ordinary shareholders,
excluding
goodwill and other intangible assets
impairment 16,995 8,003
---------------------------------------------- ---------------------------------- ----------------------------------
Impact of strategic transactions(1) (3,117) -
---------------------------------------------- ---------------------------------- ----------------------------------
Profit attributable to the ordinary
shareholders,
excluding goodwill, other intangible assets
impairment
and strategic transactions 13,878 8,003
---------------------------------------------- ---------------------------------- ----------------------------------
Equity
---------------------------------------------- ---------------------------------- ----------------------------------
Average total shareholders' equity 184,033 185,022
---------------------------------------------- ---------------------------------- ----------------------------------
Effect of average preference shares and other
equity
instruments (19,510) (22,173)
---------------------------------------------- ---------------------------------- ----------------------------------
Average ordinary shareholders' equity 164,523 162,849
---------------------------------------------- ---------------------------------- ----------------------------------
Effect of goodwill and other intangibles (net
of deferred
tax) (11,316) (10,845)
---------------------------------------------- ---------------------------------- ----------------------------------
Average tangible equity 153,207 152,004
---------------------------------------------- ---------------------------------- ----------------------------------
Average impact of strategic transactions (2,102) -
---------------------------------------------- ---------------------------------- ----------------------------------
Average tangible equity excluding strategic
transactions 151,105 152,004
---------------------------------------------- ---------------------------------- ----------------------------------
Ratio % %
---------------------------------------------- ---------------------------------- ----------------------------------
Return on average ordinary shareholders'
equity (annualised) 20.8 9.9
---------------------------------------------- ---------------------------------- ----------------------------------
Return on average tangible equity (annualised) 22.4 10.6
---------------------------------------------- ---------------------------------- ----------------------------------
Return on average tangible equity excluding
strategic
transactions (annualised) 18.5 10.6
---------------------------------------------- ---------------------------------- ----------------------------------
1 Includes the reversal of a $1.6bn (net of tax) impairment loss
relating to the planned sale of our retail banking operations in
France, 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
Half-year ended 30 Jun 2023
Wealth Global
and Banking
Personal Commercial and Corporate
Banking Banking Markets Centre Total
$m $m $m $m $m
---------------- -------------------------- ------------------------ ------------------------ ------------------------ --------------------------
Profit before
tax 8,592 7,939 3,580 1,546 21,657
---------------- -------------------------- ------------------------ ------------------------ ------------------------ --------------------------
Tax expense (1,740) (1,532) (683) 369 (3,586)
---------------- -------------------------- ------------------------ ------------------------ ------------------------ --------------------------
Profit after tax 6,852 6,407 2,897 1,915 18,071
---------------- -------------------------- ------------------------ ------------------------ ------------------------ --------------------------
Less
attributable
to: preference
shareholders,
other equity
holders,
non-controlling
interests (428) (293) (275) (109) (1,105)
---------------- -------------------------- ------------------------ ------------------------ ------------------------ --------------------------
Profit
attributable to
ordinary
shareholders
of the parent
company 6,424 6,114 2,622 1,806 16,966
Other
adjustments (91) 206 112 (198) 29
---------------- -------------------------- ------------------------ ------------------------ ------------------------ --------------------------
Profit
attributable to
ordinary
shareholders 6,333 6,320 2,734 1,608 16,995
---------------- -------------------------- ------------------------ ------------------------ ------------------------ --------------------------
Average tangible
shareholders'
equity 29,646 44,224 38,824 40,513 153,207
---------------- -------------------------- ------------------------ ------------------------ ------------------------ --------------------------
RoTE (%)
(annualised) 43.1 28.8 14.2 8.0 22.4
---------------- -------------------------- ------------------------ ------------------------ ------------------------ --------------------------
Half-year ended 30 Jun 2022
---------------- ------------------------------------------------------------------------------------------------------------------------------------
Profit before
tax 2,543 3,560 2,823 (146) 8,780
---------------- -------------------------- ------------------------ ------------------------ ------------------------ --------------------------
Tax expense (473) (926) (387) 1,937 151
---------------- -------------------------- ------------------------ ------------------------ ------------------------ --------------------------
Profit after tax 2,070 2,634 2,436 1,791 8,931
---------------- -------------------------- ------------------------ ------------------------ ------------------------ --------------------------
Less
attributable
to: preference
shareholders,
other equity
holders,
non-controlling
interests (316) (233) (273) (143) (965)
---------------- -------------------------- ------------------------ ------------------------ ------------------------ --------------------------
Profit
attributable to
ordinary
shareholders
of the parent
company 1,754 2,401 2,163 1,648 7,966
---------------- -------------------------- ------------------------ ------------------------ ------------------------ --------------------------
Other
adjustments (21) 187 148 (277) 37
---------------- -------------------------- ------------------------ ------------------------ ------------------------ --------------------------
Profit
attributable to
ordinary
shareholders 1,733 2,588 2,311 1,371 8,003
---------------- -------------------------- ------------------------ ------------------------ ------------------------ --------------------------
Average tangible
shareholders'
equity 30,507 42,880 40,603 38,014 152,004
---------------- -------------------------- ------------------------ ------------------------ ------------------------ --------------------------
RoTE (%)
(annualised) 11.5 12.2 11.5 7.3 10.6
---------------- -------------------------- ------------------------ ------------------------ ------------------------ --------------------------
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
-------------------------------------------------
30 Jun 31 Dec
2023 2022
$m $m
---------------------------------------------------------- ----------------------- ------------------------
Total shareholders' equity 184,170 177,833
---------------------------------------------------------- ----------------------- ------------------------
Preference shares and other equity instruments (19,392) (19,746)
---------------------------------------------------------- ----------------------- ------------------------
Total ordinary shareholders' equity 164,778 158,087
---------------------------------------------------------- ----------------------- ------------------------
Goodwill and intangible assets (net of deferred tax) (11,544) (11,160)
---------------------------------------------------------- ----------------------- ------------------------
Tangible ordinary shareholders' equity 153,234 146,927
---------------------------------------------------------- ----------------------- ------------------------
Basic number of $0.50 ordinary shares outstanding 19,534 19,739
---------------------------------------------------------- ----------------------- ------------------------
Value per share $ $
---------------------------------------------------------- ----------------------- ------------------------
Net asset value per ordinary share 8.44 8.01
---------------------------------------------------------- ----------------------- ------------------------
Tangible net asset value per ordinary share 7.84 7.44
---------------------------------------------------------- ----------------------- ------------------------
Post-tax return and average total shareholders' equity on
average total assets
Post-tax return on average total assets is profit after tax
divided by average total assets for the period. Average total
shareholders' equity to average total assets is average total
shareholders' equity divided by average total assets for the
period.
Post-tax return and average total shareholders' equity on average total
assets
Half-year ended
----------------------------------------------
30 Jun 30 Jun
2023 2022
$m $m
----------------------------------------------------------- --------------------- -----------------------
Profit after tax 18,071 8,931
----------------------------------------------------------- --------------------- -----------------------
Average total shareholders' equity 184,033 185,022
----------------------------------------------------------- --------------------- -----------------------
Average total assets 3,116,401 3,052,565
Ratio % %
----------------------------------------------------------- --------------------- -----------------------
Post-tax return on average total assets (annualised) 1.2 0.6
----------------------------------------------------------- --------------------- -----------------------
Average total shareholders' equity to average total assets 5.9 6.1
----------------------------------------------------------- --------------------- -----------------------
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
Half-year ended
--------------------------------------------------
30 Jun 30 Jun
2023 2022
$m $m
----------------------------------------------------------- ---------------------- --------------------------
Expected credit losses and other credit impairment charges
('ECL') (1,345) (1,087)
----------------------------------------------------------- ---------------------- --------------------------
Currency translation 13
----------------------------------------------------------- ---------------------- --------------------------
Constant currency (1,345) (1,074)
----------------------------------------------------------- ---------------------- --------------------------
Average gross loans and advances to customers 960,452 1,053,459
----------------------------------------------------------- ---------------------- --------------------------
Currency translation 6,276 (20,196)
----------------------------------------------------------- ---------------------- --------------------------
Constant currency 966,728 1,033,263
----------------------------------------------------------- ---------------------- --------------------------
Average gross loans and advances to customers, including
held for sale 1,026,201 1,054,420
----------------------------------------------------------- ---------------------- --------------------------
Currency translation 7,395 (20,189)
----------------------------------------------------------- ---------------------- --------------------------
Constant currency 1,033,596 1,034,231
----------------------------------------------------------- ---------------------- --------------------------
Ratios % %
----------------------------------------------------------- ---------------------- --------------------------
Expected credit losses and other credit impairment charges
(annualised) as % of average gross loans and advances
to customers 0.28 0.21
----------------------------------------------------------- ---------------------- --------------------------
Expected credit losses and other credit impairment charges
(annualised) as % of average gross loans and advances
to customers, including held for sale 0.26 0.21
----------------------------------------------------------- ---------------------- --------------------------
Target basis operating expenses
Target basis operating expenses is computed by excluding the
impact of notable items and foreign exchange translation impacts
from reported results. We also exclude the impact of re-translating
comparative period financial information at the latest rates of
foreign exchange in hyperinflationary economies, which we consider
to be outside of our control, and the incremental costs associated
with our acquisition of SVB UK and related international
investments. 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.
Target basis operating expenses
Half-year to
30 Jun 30 Jun
2023 2022
$m $m
--------------------------------------------------------- ------------------------- -------------------------
Reported operating expenses 15,457 16,127
--------------------------------------------------------- ------------------------- -------------------------
Notable items (71) (1,040)
--------------------------------------------------------- ------------------------- -------------------------
(118) -
* disposals, acquisitions and related costs
* restructuring and other related costs(1) 47 (1,040)
--------------------------------------------------------- -------------------------
Excluding the impact of SVB UK and related international (67) -
investments
--------------------------------------------------------- ------------------------- -------------------------
Currency translation(2) (564)
--------------------------------------------------------- ------------------------- -------------------------
Excluding the impact of retranslating prior year costs
of hyperinflationary economies at a constant currency
foreign exchange rate 160
--------------------------------------------------------- ------------------------- -------------------------
Target basis operating expenses 15,319 14,683
--------------------------------------------------------- ------------------------- -------------------------
1 In 2Q23, we recognised $47m of reversals relating to
restructuring provisions recognised during 2022.
2 Currency translation on reported operating expenses, excluding
currency translation on notable items.
Earnings per share excluding material notable items
Basic earnings per ordinary share excluding material notable
items is calculated by dividing the profit attributable to ordinary
shareholders of the parent company, excluding the impacts of
material M&A transactions and the 1H22 deferred tax adjustment
in HSBC Holdings, by the weighted average number of ordinary shares
outstanding, excluding own shares held.
Earnings per share excluding material notable items
Half-year to
30 Jun 30 Jun
2023 2022
$m $m
--------------------------------------------------------------- ------------------------- -------------------------
Profit attributable to shareholders of company 17,508 8,592
--------------------------------------------------------------- ------------------------- -------------------------
Coupon payable on capital securities classified as equity (542) (626)
--------------------------------------------------------------- ------------------------- -------------------------
Profit attributable to ordinary shareholders of company 16,966 7,966
--------------------------------------------------------------- ------------------------- -------------------------
Provisional gain on acquisition of SVB UK (1,507) -
--------------------------------------------------------------- ------------------------- -------------------------
Reversal of impairment loss relating to the planned sale (1,629) -
of our retail banking operations in France(1)
--------------------------------------------------------------- ------------------------- -------------------------
Impact of the agreed sale of our banking business in Canada(2) (54) -
--------------------------------------------------------------- ------------------------- -------------------------
Recognition of a deferred tax asset from historical tax
losses in HSBC Holdings - (2,082)
--------------------------------------------------------------- ------------------------- -------------------------
Profit attributable to ordinary shareholders of company
excluding material notable items 13,776 5,884
--------------------------------------------------------------- ------------------------- -------------------------
Number of shares
--------------------------------------------------------------- ------------------------- -------------------------
Basic number of ordinary shares (millions) 19,693 19,954
--------------------------------------------------------------- ------------------------- -------------------------
Basic earnings per share excluding material notable items 0.70 0.29
--------------------------------------------------------------- ------------------------- -------------------------
Basic earnings per share 0.86 0.40
--------------------------------------------------------------- ------------------------- -------------------------
1 Net of deferred tax of $501m.
2 Represents the earnings recognised by the banking business in
Canada, net of gains and losses on foreign exchange hedges held at
Group level, that will reduce the gain on sale recognised by the
Group on completion.
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END
IR FIFFTTIILIIV
(END) Dow Jones Newswires
August 01, 2023 11:30 ET (15:30 GMT)
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