REG - HSBC Holdings PLC - Annual Financial Report - Part 12
21/02/2024 16:45
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RNS Number : 9516D HSBC Holdings PLC 21 February 2024
Shareholder information
Contents
435 Fourth interim dividend for 2023
435 Interim dividends for 2024
435 Other equity instruments
435 2023 Annual General Meeting
436 Earnings releases and interim results
436 Shareholder enquiries and communications
437 Stock symbols
437 Investor relations
437 Where more information about HSBC is available
438 Taxation of shares and dividends
439 Approach to ESG reporting
441 Cautionary statement regarding forward-looking statements
443 Certain defined terms
444 Abbreviations
This section gives important information for our shareholders, including
contact information. It also includes an overview of key abbreviations and
terminology used throughout the Annual Report and Accounts.
A glossary of terms used in the Annual Report and Accounts can be found in the
Investors section of www.hsbc.com.
Fourth interim dividend for 2023
The Directors have approved a fourth interim dividend for 2023 of $0.31 per
ordinary share. Information on the currencies in which shareholders may elect
to have the cash dividend paid can be viewed at www.hsbc.com/investors. The
interim dividend will be paid in cash. The timetable for the interim dividend
is:
Announcement 21 February 2024
Shares quoted ex-dividend in London, Hong Kong and Bermuda and American 7 March 2024
Depositary Shares ('ADS') quoted ex-dividend in New York
Record date - London, Hong Kong, New York, Bermuda(1) 8 March 2024
Mailing of Annual Report and Accounts 2023 and/or Strategic Report 2023 22 March 2024
Final date for dividend election changes including Investor Centre electronic 11 April 2024
instructions and revocations of standing instructions for dividend elections
Exchange rate determined for payment of dividends in pounds sterling and Hong 15 April 2024
Kong dollars
Payment date 25 April 2024
1 Removals to and from the Overseas Branch register of shareholders in
Hong Kong will not be permitted on this date.
1
Interim dividends for 2024
For the financial year 2023, the Group reverted to paying quarterly dividends,
and achieved a dividend payout ratio of 50% of reported earnings per ordinary
share ('EPS'), in line with our published target for 2023 and 2024. EPS for
this purpose excludes material notable items and related impacts (including
those associated with the sale of our retail banking operations in France, the
agreed sale of our banking business in Canada and our acquisition of SVB UK).
The Board has adopted a dividend policy designed to provide sustainable cash
dividends, while retaining the flexibility to invest and grow the business in
the future, supplemented by additional shareholder distributions, if
appropriate.
Dividends are approved in US dollars and, at the election of the shareholder,
paid in cash in one of, or in a combination of, US dollars, pounds sterling
and Hong Kong dollars.
Other equity instruments
Additional tier 1 capital - contingent convertible securities
HSBC continues to issue contingent convertible securities that are included in
its capital base as fully CRR II-compliant additional tier 1 capital
securities. For further details on these securities, see Note 33 on the
financial statements.
HSBC issued $2,000m 8.000% perpetual contingent convertible securities on 7
March 2023.
2023 Annual General Meeting
With the exception of the shareholder requisitioned Resolutions 16, 17 and 18,
which the Board recommended that shareholders vote against, all resolutions
considered at the 2023 AGM held at 11:00am on 5 May 2023 at The Eastside
Rooms, 2 Woodcock Street, Birmingham, B7 4BL, UK, were passed on a poll.
Earnings releases and interim results
First and third quarter results for 2024 will be released on 30 April 2024 and
29 October 2024, respectively. The interim results for the six months to 30
June 2024 will be issued on 31 July 2024.
Shareholder enquiries and communications
Enquiries
Any enquiries relating to shareholdings on the share register (for example,
transfers of shares, changes of name or address, lost share certificates or
dividend cheques) should be sent to the Registrars at the address given below.
The Registrars offer an online facility, Investor Centre, which enables
shareholders to manage their shareholding electronically.
Principal Register: Computershare Investor Services PLC Telephone: +44 (0) 370 702 0137
The Pavilions, Bridgwater Road, Bristol, BS99 6ZZ, United Kingdom www.investorcentre.co.uk/contactus
Investor Centre: www.investorcentre.co.uk
Hong Kong Overseas Branch Register: Computershare Hong Kong Investor Services Limited Telephone: +852 2862 8555 hsbc.ecom@computershare.com.hk
Rooms 1712-1716, 17th Floor Hopewell Centre, 183 Queen's Road East, Hong Kong Investor Centre: www.investorcentre.com/hk
Bermuda Overseas Branch Register: Investor Relations Team hbbm.shareholder.services@hsbc.bm
HSBC Bank Bermuda Limited, 37 Front Street, Hamilton, HM 11, Bermuda Investor Centre: www.investorcentre.com/bm
ADS Depositary: The Bank of New York Mellon Telephone (US): +1 877 283 5786
Shareowner Services, P.O. Box 43006, Providence RI 02940-3078, USA Telephone (International): +1 201 680 6825
shrrelations@cpushareownerservices.com www.mybnymdr.com
If you have elected to receive general shareholder communications directly
from HSBC Holdings, it is important to remember that your main contact for all
matters relating to your investment remains the registered shareholder, or
custodian or broker, who administers the investment on your behalf. Therefore,
any changes or queries relating to your personal details and holding
(including any administration of it) must continue to be directed to your
existing contact at your investment manager or custodian or broker. HSBC
Holdings cannot guarantee dealing with matters directed to it in error.
Shareholders who wish to receive a hard copy of the Annual Report and Accounts
2023 should contact HSBC's Registrars. Please visit
www.hsbc.com/investors/investor-contacts for further information. You can also
download an online version of the report from www.hsbc.com.
Electronic communications
Shareholders may at any time choose to receive corporate communications in
printed form or to receive notifications of their availability on HSBC's
website. To receive notifications of the availability of a corporate
communication on HSBC's website by email, or revoke or amend an instruction to
receive such notifications by email, go to
www.hsbc.com/investors/shareholder-information/manage-your-shareholding. If
you received a notification of the availability of this document on HSBC's
website and would like to receive a printed copy, or if you would like to
receive future corporate communications in printed form, please write or send
an email (quoting your shareholder reference number) to the appropriate
Registrars at the address given above. Printed copies will be provided without
charge.
Chinese translation
A Chinese translation of the Annual Report and Accounts 2023 will be available
upon request after 22 March 2024 from the Registrars (contact details above).
Please also contact the Registrars if you wish to receive Chinese translations
of future documents, or if you have received a Chinese translation of this
document and do not wish to receive them in future.
《2023 年報及賬目》備有中譯本，各界人士可於2024年3月22日之後，向上列股份登記處索閱。
閣下如欲於日後收取相關文件的中譯本，或已收到本文件的中譯本但不希望繼續收取有關譯本，均請聯絡股份登記處。
Stock symbols
HSBC Holdings ordinary shares trade under the following stock symbols:
London Stock Exchange HSBA(*) New York Stock Exchange (ADS) HSBC
Hong Kong Stock Exchange 5 Bermuda Stock Exchange HSBC.BH
∗ HSBC's Primary market
Investor relations
Enquiries relating to HSBC's strategy or operations may be directed to:
Neil Sankoff, Global Head of Investor Relations Yafei Tian, Head of Investor Relations, Asia-Pacific
HSBC Holdings plc The Hongkong and Shanghai Banking
8 Canada Square Corporation Limited
London E14 5HQ 1 Queen's Road Central
United Kingdom Hong Kong
Telephone: +44 (0) 20 7991 5072 Telephone: +852 2899 8909
Email: investorrelations@hsbc.com Email: investorrelations@hsbc.com.hk
Where more information about HSBC is available
The Annual Report and Accounts 2023 and other information on HSBC may be
downloaded from HSBC's website: www.hsbc.com.
Reports, statements and information that HSBC Holdings files with the
Securities and Exchange Commission are available at www.sec.gov. Investors can
also request hard copies of these documents upon payment of a duplicating fee
by writing to the SEC at the Office of Investor Education and Advocacy, 100 F
Street N.E., Washington, DC 20549-0213 or by emailing PublicInfo@sec.gov.
Investors should call the Commission at (1) 202 551 8090 if they require
further assistance. Investors may also obtain the reports and other
information that HSBC Holdings files at www.nyse.com (telephone number (1) 212
656 3000).
HM Treasury has transposed the requirements set out under CRD IV and issued
the Capital Requirements Country-by-Country Reporting Regulations 2013. The
legislation requires HSBC Holdings to publish additional information in
respect of the year ended 31 December 2023 by 31 December 2024. This
information will be available on HSBC's website: www.hsbc.com/tax.
Taxation of shares and dividends
Taxation - UK residents
The following is a summary, under current law (unless otherwise noted) and the
current published practice of HM Revenue and Customs ('HMRC'), of certain UK
tax considerations that are likely to be material to the ownership and
disposition of HSBC Holdings ordinary shares. The summary does not purport to
be a comprehensive description of all the tax considerations that may be
relevant to a holder of shares. In particular, the summary deals with
shareholders who are resident solely in the UK for UK tax purposes and only
with holders who hold the shares as investments and who are the beneficial
owners of the shares, and does not address the tax treatment of certain
classes of holders such as dealers in securities. Holders and prospective
purchasers should consult their own advisers regarding the tax consequences of
an investment in shares in light of their particular circumstances, including
the effect of any national, state or local laws.
Taxation of dividends
Currently, no tax is withheld from dividends paid by HSBC Holdings.
UK resident individuals
UK resident individuals are generally entitled to a tax-free annual allowance
in respect of dividends received. The amount of the allowance for the tax year
beginning 6 April 2023 is £1,000. To the extent that dividend income received
by an individual in the relevant tax year does not exceed the allowance, a nil
tax rate will apply. Dividend income in excess of this allowance will be taxed
at 8.75% for basic rate taxpayers, 33.75% for higher rate taxpayers and 39.35%
for additional rate taxpayers.
UK resident companies
Shareholders that are within the charge to UK corporation tax should
generally be entitled to an exemption from UK corporation tax on any dividends
received from HSBC Holdings. However, the exemptions are not comprehensive and
are subject to anti-avoidance rules.
If the conditions for exemption are not met or cease to be satisfied, or a
shareholder within the charge to UK corporation tax elects for an otherwise
exempt dividend to be taxable, the shareholder will be subject to UK
corporation tax on dividends received from HSBC Holdings at the rate of
corporation tax applicable to that shareholder.
Taxation of capital gains
The computation of the capital gains tax liability arising on disposals of
shares in HSBC Holdings by shareholders subject to UK tax on capital gains can
be complex, partly depending on whether, for example, the shares were
purchased since April 1991, acquired in 1991 in exchange for shares in The
Hongkong and Shanghai Banking Corporation Limited, or acquired subsequent to
1991 in exchange for shares in other companies.
For capital gains tax purposes, the acquisition cost for ordinary shares is
adjusted to take account of subsequent rights and capitalisation issues. Any
capital gain arising on a disposal of shares in HSBC Holdings by a UK company
may also be adjusted to take account of indexation allowance if the shares
were acquired before 1 January 2018, although the level of indexation
allowance that is given in calculating the gain would be frozen at the value
that would have been applied to a disposal of those shares in December 2017.
If in doubt, shareholders are recommended to consult their professional
advisers.
Stamp duty and stamp duty reserve tax
Transfers of shares by a written instrument of transfer generally will be
subject to UK stamp duty at the rate of 0.5% of the consideration paid for the
transfer (rounded up to the next £5), and such stamp duty is generally
payable by the transferee. An agreement to transfer shares, or any interest
therein, normally will give rise to a charge to stamp duty reserve tax at the
rate of 0.5% of the consideration. However, provided an instrument of transfer
of the shares is executed pursuant to the agreement and duly stamped before
the date on which the stamp duty reserve tax becomes payable, under
the current published practice of HMRC it will not be necessary to pay the
stamp duty reserve tax, nor to apply for such tax to be cancelled. Stamp duty
reserve tax is generally payable by the transferee.
Paperless transfers of shares within CREST, the UK's paperless share transfer
system, are liable to stamp duty reserve tax at the rate of 0.5% of the
consideration. In CREST transactions, the tax is calculated and payment made
automatically. Deposits of shares into CREST generally will not be subject to
stamp duty reserve tax, unless the transfer into CREST is itself for
consideration. Until 31 December 2023, the charge to stamp duty reserve tax at
1.5% on the issue of shares (and transfers integral to capital raising) to a
depositary receipt issuer or a clearance service was incompatible with
European Union law as retained in the UK following the UK's departure from the
European Union, and was not imposed by HMRC. If the UK Finance Bill 2023-24 is
enacted in the form it stands as at the date hereof, that 1.5% charge will be
repealed with retrospective effect from 1 January 2024.
Taxation - US residents
The following is a summary, under current law, of the principal UK tax and US
federal income tax considerations that are likely to be material to the
ownership and disposition of shares or American Depositary Shares ('ADSs') by
a holder that is a US holder, as defined below, and who is not resident in the
UK for UK tax purposes.
The summary does not purport to be a comprehensive description of all of the
tax considerations that may be relevant to a holder of shares or ADSs. In
particular, the summary deals only with US holders that hold shares or ADSs as
capital assets, and does not address the tax treatment of holders that are
subject to special tax rules. These include banks, tax-exempt entities,
insurance companies, dealers in securities or currencies, persons that hold
shares or ADSs as part of an integrated investment (including a 'straddle' or
'hedge') comprised of a share or ADS and one or more other positions, and
persons that own directly or indirectly 10% or more (by vote or value) of the
stock of HSBC Holdings. This discussion is based on laws, treaties, judicial
decisions and regulatory interpretations in effect on the date hereof, all of
which are subject to change.
For the purposes of this discussion, a 'US holder' is a beneficial holder that
is a citizen or resident of the United States, a US domestic corporation or
otherwise is subject to US federal income taxes on a net income basis in
respect thereof.
Holders and prospective purchasers should consult their own advisers regarding
the tax consequences of an investment in shares or ADSs in light of their
particular circumstances, including the effect of any national, state or local
laws.
Any US federal tax advice included in the Annual Report and Accounts 2023 is
for informational purposes only. It was not intended or written to be used,
and cannot be used, for the purpose of avoiding US federal tax penalties.
Taxation of dividends
Currently, no tax is withheld from dividends paid by HSBC Holdings. For US tax
purposes, a US holder must include cash dividends paid on the shares or ADSs
in ordinary income on the date that such holder or the ADS depositary receives
them, translating dividends paid in UK pounds sterling into US dollars using
the exchange rate in effect on the date of receipt. A US holder that elects to
receive shares in lieu of a cash dividend must include in ordinary income the
fair market value of such shares on the dividend payment date, and the tax
basis of those shares will equal such fair market value.
Subject to certain exceptions for positions that are held for less than 61
days, and subject to a foreign corporation being considered a 'qualified
foreign corporation' (which includes not being classified for US federal
income tax purposes as a passive foreign investment company), certain
dividends ('qualified dividends') received by an individual US holder
generally will be subject to US taxation at preferential rates.
Based on the company's audited financial statements and relevant market and
shareholder data, HSBC Holdings does not believe that it was a passive
investment company for its 2023 taxable year and does not anticipate becoming
a passive foreign investment company in 2024 or the foreseeable future.
Accordingly, dividends paid on the shares or ADSs generally should be eligible
for qualified dividends treatment.
Taxation of capital gains
Gains realised by a US holder on the sale or other disposition of shares or
ADSs normally will not be subject to UK taxation unless at the time of the
sale or other disposition the holder carries on a trade, profession or
vocation in the UK through a branch or agency or permanent establishment and
the shares or ADSs are or have been used, held or acquired for the purposes of
such trade, profession, vocation, branch or agency or permanent establishment.
Such gains will be included in income for US tax purposes, and will be
long-term capital gains if the shares or ADSs were held for more than one
year. A long-term capital gain realised by an individual US holder generally
will be subject to US tax at preferential rates.
Inheritance tax
Shares or ADSs held by an individual whose domicile is determined to be the US
for the purposes of the United States-United Kingdom Double Taxation
Convention relating to estate and gift taxes (the 'Estate Tax Treaty') and who
is not for such purposes a national of the UK will not, provided any US
federal estate or gift tax chargeable has been paid, be subject to UK
inheritance tax on the individual's death or on a lifetime transfer of shares
or ADSs except in certain cases where the shares or ADSs (i) are comprised in
a settlement (unless, at the time of the settlement, the settlor was domiciled
in the US and was not a national of the UK), (ii) are part of the business
property of a UK permanent establishment of an enterprise, or (iii) pertain to
a UK fixed base of an individual used for the performance of independent
personal services. In such cases, the Estate Tax Treaty generally provides a
credit against US federal tax liability for the amount of any tax paid in the
UK in a case where the shares or ADSs are subject to both UK inheritance tax
and to US federal estate or gift tax.
Stamp duty and stamp duty reserve tax - ADSs
If shares are transferred to a clearance service or American Depositary
Receipt ('ADR') issuer (which will include a transfer of shares to the
depositary) UK stamp duty and/or stamp duty reserve tax will be payable unless
the UK Finance Bill 2023-24 is enacted in the form it stands as at the date
hereof and the transfer is, or is treated as being, in the course of a capital
raising arrangement. The stamp duty or stamp duty reserve tax is generally
payable on the consideration for the transfer and is payable at the aggregate
rate of 1.5%.
The amount of stamp duty reserve tax payable on such a transfer will be
reduced by any stamp duty paid in connection with the same transfer.
No stamp duty will be payable on the transfer of, or agreement to transfer, an
ADS, provided that the ADR and any separate instrument of transfer or written
agreement to transfer remain at all times outside the UK, and provided further
that any such transfer or written agreement to transfer is not executed in the
UK. No stamp duty reserve tax will be payable on a transfer of, or agreement
to transfer, an ADS effected by the transfer of an ADR.
US information reporting and backup withholding tax
Distributions made on shares or ADSs and proceeds from the sale of shares or
ADSs that are paid within the US, or through certain financial intermediaries
to US holders, are subject to US information reporting and may be subject to a
US 'backup' withholding tax. General exceptions to this rule happen when the
US holder: establishes that it is a corporation (other than an S corporation)
or other exempt holder; or provides a correct taxpayer identification number,
certifies that no loss of exemption from backup withholding has occurred and
otherwise complies with the applicable requirements of the backup withholding
rules. Holders that are not US persons (as defined in the US Internal Revenue
Code of 1986, as amended) generally are not subject to US information
reporting or
backup withholding tax, but may be required to comply with applicable
certification procedures to establish that they are not US persons in order to
avoid the application of such US information reporting requirements or backup
withholding tax to payments received within the US or through certain
financial intermediaries.
Approach to ESG reporting
The information set out in the ESG review on pages 41 to 98, taken together
with other information relating to ESG issues included in this Annual Report
and Accounts 2023, aims to provide key ESG information and data relevant to
our operations for the year ended 31 December 2023. The data is compiled for
the financial year 1 January to 31 December 2023 unless otherwise specified.
Measurement techniques and calculations are explained next to data tables
where necessary. There are no significant changes from the previous reporting
period in terms of scope, boundary or measurement of our reporting of ESG
matters. Where relevant, rationale is provided for any restatement of
information or data that has been previously published. We have also
considered our obligations under the Environmental, Social and Governance
Reporting Guide contained in Appendix C2 to The Rules Governing the Listing of
Securities on the Stock Exchange of Hong Kong Limited ('ESG Guide') and under
LR9.8.6R(8) of the Financial Conduct Authority's ('FCA') Listing Rules. We
will continue to develop and refine our reporting and disclosures on ESG
matters in line with feedback received from our investors and other
stakeholders, and in view of our obligations under the ESG Guide and the FCA's
Listing Rules.
ESG Guide
We comply with the 'comply or explain' provisions in the ESG Guide, save for
certain items, which we describe in more detail below:
- A1(b) on relevant laws/regulations relating to air and greenhouse
gas emissions, discharges into water and land, and generation of hazardous and
non-hazardous waste, and on emissions: taking into account the nature of our
business, we do not believe that there are relevant laws and regulations in
these areas that have significant impacts on our operations. Nevertheless, we
are fully compliant with our publication of information regarding scope 1 and
2 carbon emissions, while we only partially publish information on scope 3
carbon emissions, as the data required for that publication is not yet fully
available.
- A1.3 on total hazardous waste produced, A1.4 on total non-hazardous
waste produced: Taking into account the nature of our business, we do not
consider hazardous waste to be a material issue for our stakeholders. As such,
we report only on total waste produced, which includes hazardous and
non-hazardous waste.
- A1.6 on handling hazardous and non-hazardous waste: Taking into
account the nature of our business, we do not consider this to be a material
issue for our stakeholders. Notwithstanding this, we continue to focus on the
reduction and recycling of all waste. Building on the success of our previous
operational environmental strategy, we are continuing to seek to identify key
opportunities where we can lessen our wider environmental impact, including
waste management. For further details, please see our ESG review on page 63.
- A2.4 on sourcing water issue and water efficiency target: Taking
into account the nature of our business, we do not consider this to be a
material issue for our stakeholders. Notwithstanding this, we have implemented
measures to further reduce water consumption through the installation of flow
restrictors, auto-taps and low or zero flush sanitary fittings and continue to
track our water consumption.
- A2.5 on packaging material, B6(b) on issues related to health and
safety and labelling relating to products and services provided, B6.1 on
percentage of total products sold or shipped subject to recalls for safety and
health reasons and B6.4 in recall procedures: Taking into account the nature
of our business, we do not consider these to be material issues for our
stakeholders.
This is aligned with the materiality reporting principle that is set out in
the ESG Guide. See 'How we decide what to measure' on page 43 for further
information on how we determine what matters are material to our stakeholders.
TCFD recommendations and recommended disclosures
As noted on page 17, we have considered our 'comply or explain' obligation
under both the UK's Financial Conduct Authority's Listing Rules and Sections
414 CA and 414CB of the UK Companies Act 2006, and confirm that we have made
disclosures consistent with the TCFD Recommendations and Recommended
Disclosures, including its annexes and supplemental guidance, save for certain
items, which we summarise below:
Targets setting
Metrics and targets (c) relating to short-term targets: For financed emissions
we do not plan to set 2025 targets. We set targets in line with the Net-Zero
Banking Alliance ('NZBA') guidelines by setting 2030 targets. While the NZBA
define 2030 as intermediate, we use different time horizons for climate risk
management. We define short term as time periods up to 2025; medium term is
between 2026 and 2035; and long term is between 2036 and 2050. In 2023, we
disclose interim 2030 financed emissions targets for seven sectors comprising
five on-balance sheet and two combined financed emissions targets, as we
outline on page 18. For the shipping sector, we have taken a decision not to
set a standalone financed emissions target. The decision follows a reduction
in our exposure to the sector after the strategic sale of part of our European
shipping portfolio. This aligns with NZBA guidelines on sector inclusion for
target setting. We have now set combined on-balance sheet financed emissions
and facilitated emissions targets for two emissions-intensive sectors: oil and
gas, and power and utilities, and report the combined progress for both
sectors. We intend to review the financed emissions baselines and targets
annually and restate where relevant, to help ensure that they are aligned with
market practice and current climate science. For further details on the
restatements and targets and progress of financed emissions, see section 'Our
approach to financed emissions recalculations' and 'Targets and Progress' on
page 56 and 57.
Metrics and targets (c) relating to capital deployment target: We do not
currently disclose a target for capital deployment. In relation to capital
deployment, since 2015, we have issued more than $2bn of our own green bonds
and structured green bonds with the capital invested into a variety of green
projects, including: green buildings, renewable energy and clean
transportation projects. In 2023, we further progressed our internal review
and enhancement of the green bond framework, with further refinement including
internal and external review to be undertaken in 2024. This will be subject to
continuous review and monitoring to ensure that they remain up to date and
reflect updated standards, taxonomies and best practices. Any such
developments in standards, taxonomies and best practices over time could
result in revisions in our reporting going forward and lead to differences
year-on-year as compared to prior years. See the HSBC Green Bond Report for
further information.
Metrics and targets (c) relating to internal carbon pricing target: We do not
currently disclose internal carbon pricing target due to transitional
challenges such as developing the appropriate systems and processes, but we
considered carbon prices as an input for our climate scenario analysis
exercise. We expect to further enhance the disclosure in the medium term as
more data becomes available.
Impacts on financial planning and performance
Strategy (b) relating to financial planning and performance: We have used
climate scenarios to inform our organisation's business, strategy and
financial planning. In 2023, we continued to incorporate certain aspects of
sustainable finance and financed emissions within our financial planning
process. We do not fully disclose impacts from climate-related opportunities
on financial planning and performance including on revenue, costs and the
balance sheet, quantitative scenario analysis, detailed climate risk exposures
for all sectors and geographies or physical risk metrics. This is due to
transitional challenges in relation to data limitations, although nascent work
is ongoing in these areas. We expect these data limitations to be addressed in
the medium term as more reliable data becomes available and technology
solutions are implemented.
Strategy (b) related to transition plan: We published our Group-wide net zero
transition plan in January 2024. In this plan, we provided an overview of our
approach to net zero and the actions we are taking to help meet our ambitions.
We want to be clear about our approach, the change underway today and what we
plan to do in the future. We also want to be transparent about where there are
still unresolved issues and uncertainties. We are still developing our
disclosures, including considerations of possible additional data in relation
to our financial plans, budgets, and related financial approach for the
implementation of the transition plan in the medium term (e.g. amount of
capital and other expenditures supporting our decarbonisation strategy).
Metrics and targets (a) relating to internal carbon prices and climate-related
opportunities metrics: We do not currently disclose internal carbon prices due
to transitional challenges such as data challenges. But we considered carbon
prices as an input for our climate scenario analysis exercise. In addition, we
do not currently fully disclose the proportion of revenue or proportion of
assets, capital deployment or other business activities aligned with
climate-related opportunities, including revenue from products and services
designed for a low-carbon economy, forward-looking metrics consistent with our
business or strategic planning time horizons. In relation to sustainable
finance revenue and assets we are disclosing certain elements. We expect the
data and system limitations related to financial planning and performance, and
climate-related opportunities metrics to be addressed in the medium term as
more reliable data becomes available and technology solutions are implemented.
We expect to further enhance this disclosure in the medium term.
Impacts of transition and physical risk
Strategy (c) relating to quantitative scenario analysis: We do not currently
fully disclose the impacts of transition and physical risk quantitatively, due
to transitional challenges including data limitations and evolving science and
methodologies. In 2023, we have disclosed the impairment impacts for our
wholesale, retail and commercial real estate portfolios in different climate
scenarios. In addition, we have disclosed losses on our retail mortgage book
under three scenarios and flood depths for specific markets. For our wholesale
book, we have disclosed potential implications on our expected credit losses
for 11 sectors under two scenarios. We have also disclosed a heat map showing
how we expect the risks to evolve over time.
Metrics and targets (a) relating to detailed climate-related risk exposure
metrics for physical and transition risks: We do not fully disclose metrics
used to assess the impact of climate-related physical (chronic) and
transitions (policy and legal, technology and market) risks on retail lending,
parts of wholesale lending and other financial intermediary business
activities (specifically credit exposure, equity and debt holdings, or trading
positions, each broken down by industry, geography, credit quality and average
tenor). We are aiming to develop the appropriate systems, data and processes
to provide these disclosures in future years. We disclose the exposure to six
high transition risk wholesale sectors and the flood risk exposure and Energy
Performance Certificate breakdown for the UK portfolio.
Metrics and targets (c) on targets related to physical risk: We do not
currently disclose targets used to measure and manage physical risk. This is
due to transitional challenges including data limitations of physical risk
metrics. For retail, we do not use targets to measure and manage physical
risk. In 2023 we introduced internally a global 'soft trigger' monitoring and
review process for physical risk exposure where a market reaches or exceeds a
set threshold, as this ensures markets are actively considering their balance
sheet risk exposure to peril events. We also consider physical and transition
risk as an input for our climate scenario analysis exercise.
We expect to further enhance our disclosures as our data, quantitative
scenario analysis, risk metrics and physical risk targets evolve, and
technology solutions are implemented in the medium term.
Scope 3 emissions disclosure
Metrics and targets (b) relating to scope 3 emissions metrics: We currently
disclose partial scope 3 greenhouse gas emissions including business travel,
supply chain and financed emissions. We currently disclose four out of 15
categories of scope 3 greenhouse gas emissions including business travel,
supply chain and financed emissions. In relation to financed emissions, we
publish on-balance sheet financed emissions for a number of sectors as
detailed on page 18. We also publish facilitated emissions for the oil and
gas, and power and utilities sectors. Future disclosures on financed emissions
and related risks are reliant on our customers publicly disclosing their
greenhouse gas emissions, targets and plans, and related risks. We recognise
the need to provide early transparency on climate disclosures but balance this
with the recognition that existing data and reporting processes require
significant enhancements.
Other matters
Strategy (b) relating to access to capital: We have considered the impact of
climate-related issues on our businesses, strategy and financial planning. Our
access to capital may be impacted by reputational concerns as a result of
climate action or inaction. In addition, if we are perceived to mislead
stakeholders on our business activities or if we fail to achieve our stated
net zero ambitions, we could face reputational damage, impacting our
revenue-generating ability and potentially our access to capital markets. We
expect to further enhance the disclosure in the medium term as more data
becomes available.
To manage these risks we have integrated climate risk into our existing risk
taxonomy, and incorporated it within the risk management framework through the
policies and controls for the existing risks where appropriate.
Metrics and targets (c) relating to water usage target: We have described the
targets used by the organisation to manage climate-related risks and
opportunities and performance against targets. However, taking into account
the nature of our business, we do not consider water usage to be a material
target for our business and, therefore, we have not included a target in this
year's disclosure.
With respect to our obligations under LR9.8.6R(8) of the FCA's Listing Rules,
as part of considering what to measure and publicly report, we perform an
assessment to ascertain the appropriate level of detail to be included in the
climate-related financial disclosures that are set out in our Annual Report
and Accounts. Our assessment takes into account factors such as the level of
our exposure to climate-related risks and opportunities, the scope and
objectives of our climate-related strategy, transitional challenges, and the
nature, size and complexity of our business. See 'How we decide what to
measure' on page 43 for further information.
Cautionary statement regarding forward-looking statements
This Annual Report and Accounts 2023 contains certain forward- looking
statements with respect to HSBC's financial condition; results of operations
and business, including the strategic priorities; financial, investment and
capital targets; and ESG targets, commitments and ambitions described herein.
Statements that are not historical facts, including statements about HSBC's
beliefs and expectations, are forward-looking statements. Words such as 'may',
'will', 'should', 'expects', 'targets', 'anticipates', 'intends', 'plans',
'believes', 'seeks', 'estimates', 'potential' and 'reasonably possible', or
the negative thereof, other variations thereon or similar expressions are
intended to identify forward-looking statements. These statements are based on
current plans, information, data, estimates and projections, and therefore
undue reliance should not be placed on them. Forward-looking statements speak
only as of the date they are made. HSBC makes no commitment to revise or
update any forward-looking statements to reflect events or circumstances
occurring or existing after the date of any forward-looking statements.
Written and/or oral forward-looking statements may also be made in the
periodic reports to the US Securities and Exchange Commission, summary
financial statements to shareholders, proxy statements, offering circulars and
prospectuses, press releases and other written materials, and in oral
statements made by HSBC's directors, officers or employees to third parties,
including financial analysts. Forward-looking statements involve inherent
risks and uncertainties. Readers are cautioned that a number of factors could
cause actual results to differ, in some instances materially, from those
anticipated or implied in any forward-looking statement. These include, but
are not limited to:
- changes in general economic conditions in the markets in which we
operate, such as new, continuing or deepening recessions, prolonged
inflationary pressures and fluctuations in employment levels and the
creditworthiness of customers beyond those factored into consensus forecasts;
the Russia-Ukraine war and the Israel-Hamas war and their impact on global
economies and the markets where HSBC operates, which could have a material
adverse effect on (among other things) our financial condition, results of
operations, prospects, liquidity, capital position and credit ratings;
deviations from the market and economic assumptions that form the basis for
our ECL measurements (including, without limitation, as a result of the
Russia-Ukraine war and the Israel-Hamas war, inflationary pressures, commodity
price changes, and ongoing developments in the commercial real estate sector
in mainland China); potential changes in HSBC's dividend policy; changes and
volatility in foreign exchange rates and interest rates levels, including the
accounting impact resulting from financial reporting in respect of
hyperinflationary economies; volatility in equity markets; lack of liquidity
in wholesale funding or capital markets, which may affect our ability to meet
our obligations under financing facilities or to fund new loans, investments
and businesses; geopolitical tensions or diplomatic developments producing
social instability or legal uncertainty, such as the Russia-Ukraine war or the
Israel-Hamas war (including the continuation and escalation thereof) and the
related imposition of sanctions and trade restrictions, supply chain
restrictions and disruptions, sustained increases in energy prices and key
commodity prices, claims of human rights violations, diplomatic tensions,
including between China and the US, the UK, the EU, India and other countries,
and developments in Hong Kong and Taiwan, alongside other potential areas of
tension, which may adversely affect HSBC by creating regulatory, reputational
and market risks; the efficacy of government, customer, and HSBC's actions in
managing and mitigating ESG risks, in particular climate risk, nature-related
risks and human rights risks, and in supporting the global transition to net
zero carbon emissions, each of which can impact HSBC both directly and
indirectly through our customers and which may result in potential financial
and non-financial impacts; illiquidity and downward price pressure in national
real estate markets; adverse changes in central banks' policies with respect
to the provision of liquidity support to financial markets; heightened market
concerns over sovereign creditworthiness in over-indebted countries; adverse
changes in the funding status of public or private defined benefit pensions;
societal shifts in customer financing and investment needs, including consumer
perception as to the continuing availability of credit; exposure to
counterparty risk, including third parties using us as a conduit for illegal
activities without our knowledge; the discontinuation of certain key Ibors and
the transition of the remaining legacy Ibor contracts to near risk-free
benchmark rates, which continues to expose HSBC to some financial and
non-financial risks; and price competition in the market segments we serve;
- changes in government policy and regulation, including the monetary,
interest rate and other policies of central banks and other regulatory
authorities in the principal markets in which we operate and the consequences
thereof (including, without limitation, actions taken as a result of the
impact of the Russia-Ukraine war on inflation); initiatives to change the
size, scope of activities and interconnectedness of financial institutions in
connection with the implementation of stricter regulation of financial
institutions in key markets worldwide; revised capital and liquidity
benchmarks, which could serve to deleverage bank balance sheets and lower
returns available from the current business model and portfolio mix; changes
to tax laws and tax rates applicable to HSBC, including the imposition of
levies or taxes designed to change business mix and risk appetite; the
practices, pricing or responsibilities of financial institutions serving their
consumer markets; expropriation, nationalisation, confiscation of assets and
changes in legislation relating to foreign ownership; the UK's relationship
with the EU, which continues to be characterised by uncertainty and political
disagreement, despite the signing of the Trade and Cooperation Agreement
between the UK and the EU, particularly with respect to the potential
divergence of UK and EU law on the regulation of financial services; changes
in government approach and regulatory treatment in relation to ESG disclosures
and reporting requirements, and the current lack of a single standardised
regulatory approach to ESG across all sectors and markets; changes in UK
macroeconomic and fiscal policy, which may result in fluctuations in the value
of the pound sterling; general changes in government policy that may
significantly influence investor decisions; the costs, effects and outcomes of
regulatory reviews, actions or litigation, including any additional compliance
requirements; and the effects of competition in the markets where we operate
including increased competition from non-bank financial services companies;
and
- factors specific to HSBC, including our success in adequately
identifying the risks we face, such as the incidence of loan losses or
delinquency, and managing those risks (through account management, hedging and
other techniques); our ability to achieve our financial, investment, capital
and ESG targets, commitments and ambitions (including the positions set forth
in our thermal coal phase-out policy and our energy policy and our targets to
reduce our on-balance sheet financed emissions and, where applicable,
facilitated emissions in our portfolio of selected high-emitting sectors),
which may result in our failure to achieve any of the expected benefits of our
strategic priorities; evolving regulatory requirements and the development of
new technologies, including artificial intelligence, affecting how we manage
model risk; model limitations or failure, including, without limitation, the
impact that high inflationary pressures and rising interest rates have had on
the performance and usage of financial models, which may require us to hold
additional capital, incur losses and/or use compensating controls, such as
judgemental post-model adjustments, to address model limitations; changes to
the judgements, estimates and assumptions we base our financial statements on;
changes in our ability to meet the requirements of regulatory stress tests; a
reduction in the credit ratings assigned to us or any of our subsidiaries,
which could increase the cost or decrease the availability of our funding and
affect our liquidity position and net interest margin; changes to the
reliability and security of our data management, data privacy, information and
technology infrastructure, including threats from cyber-attacks, which may
impact our ability to service clients and may result in financial loss,
business disruption and/or loss of customer services and data; the accuracy
and effective use of data, including internal management information that may
not have been independently verified; changes in insurance customer behaviour
and insurance claim rates; our dependence on loan payments and dividends from
subsidiaries to meet our obligations; changes in our reporting frameworks and
accounting standards, which have had and may continue to have a material
impact on the way we prepare our financial statements; our ability to
successfully execute planned strategic acquisitions and disposals; our success
in adequately integrating acquired businesses into our business, including the
integration of SVB UK into our CMB business; changes in our ability to manage
third-party, fraud, financial crime and reputational risks inherent in our
operations; employee misconduct, which may result in regulatory sanctions
and/or reputational or financial harm; changes in skill requirements, ways of
working and talent shortages, which may affect our ability to recruit and
retain senior management and diverse and skilled personnel; and changes in our
ability to develop sustainable finance and ESG-related products consistent
with the evolving expectations of our regulators, and our capacity to measure
the environmental and social impacts from our financing activity (including as
a result of data limitations and changes in methodologies), which may affect
our ability to achieve our ESG ambitions, targets and commitments, including
our net zero ambition, our targets to reduce on-balance sheet financed
emissions and, where applicable, facilitated emissions in our portfolio of
selected high-emitting sectors and the positions set forth in our thermal coal
phase-out policy and our energy policy, and increase the risk of greenwashing.
Effective risk management depends on, among other things, our ability through
stress testing and other techniques to prepare for events that cannot be
captured by the statistical models it uses; our success in addressing
operational, legal and regulatory, and litigation challenges; and other risks
and uncertainties we identify in 'Top and emerging risks' on pages 140 to 144.
This Annual Report and Accounts 2023 contains a number of images, graphics,
infographics, text boxes and illustrative case studies and credentials which
aim to give a high-level overview of certain elements of our disclosures and
to improve accessibility for readers. These images, graphics, infographics,
text boxes and illustrative case studies and credentials are designed to be
read within the context of the Annual Report and Accounts 2023 as a whole.
Additional cautionary statement regarding ESG data, metrics and
forward-looking statements
The Annual Report and Accounts 2023 contains a number of forward-looking
statements (as defined above) with respect to HSBC's ESG targets, commitments,
ambitions, climate-related pathways, processes and plans, and the
methodologies and scenarios we use, or intend to use, to assess our progress
in relation to these ('ESG-related forward-looking statements').
In preparing the ESG-related information contained in the Annual Report and
Accounts 2023, HSBC has made a number of key judgements, estimations and
assumptions, and the processes and issues involved are complex. We have used
ESG (including climate) data, models and methodologies that we consider, as of
the date on which they were used, to be appropriate and suitable to understand
and assess climate change risk and its impact, to analyse financed emissions -
and operational and supply chain emissions, to set ESG-related targets and to
evaluate the classification of sustainable finance and investments. However,
these data, models and methodologies are often new, are rapidly evolving and
are not of the same standard as those available in the context of other
financial information, nor are they subject to the same or equivalent
disclosure standards, historical reference points, benchmarks or globally
accepted accounting principles. In particular, it is not possible to rely on
historical data as a strong indicator of future trajectories in the case of
climate change and its evolution. Outputs of models, processed data and
methodologies are also likely to be affected by underlying data quality, which
can be hard to assess and we expect industry guidance, market practice, and
regulations in this field to continue to change. We also face challenges in
relation to our ability to access data on a timely basis, lack of consistency
and comparability between data that is available and our ability to collect
and process relevant data. Consequently, the ESG-related forward-looking
statements and ESG metrics disclosed in the Annual Report and Accounts 2023
carry an additional degree of inherent risk and uncertainty.
Due to the unpredictable evolution of climate change and its future impact and
the uncertainty of future policy and market response to ESG-related issues and
the effectiveness of any such response, HSBC may have to re-evaluate its
progress towards its ESG ambitions, commitments and targets in the future,
update the methodologies it uses or alter its approach to ESG (including
climate) analysis and may be required to amend, update and recalculate its ESG
disclosures and assessments in the future, as market practice and data quality
and availability develop.
No assurance can be given by or on behalf of HSBC as to the likelihood of the
achievement or reasonableness of any projections, estimates, forecasts,
targets, commitments, ambitions, prospects or returns contained herein.
Readers are cautioned that a number of factors, both external and those
specific to HSBC, could cause actual achievements, results, performance or
other future events or conditions to differ, in some cases materially, from
those stated, implied and/or reflected in any ESG-related forward-looking
statement or metric due to a variety of risks, uncertainties and other factors
(including without limitation those referred to below):
- Climate change projection risk: this includes, for example, the
evolution of climate change and its impacts, changes in the scientific
assessment of climate change impacts, transition pathways and future risk
exposure and limitations of climate scenario forecasts;
- ESG projection risk: ESG metrics are complex and are still subject
to development. In addition, the scenarios employed in relation to them, and
the models that analyse them have limitations that are sensitive to key
assumptions and parameters, which are themselves subject to some uncertainty,
and cannot fully capture all of the potential effects of climate, policy and
technology-driven outcomes;
- Changes in the ESG regulatory landscape: this involves changes in
government approach and regulatory treatment in relation to ESG disclosures
and reporting requirements, and the current lack of a single standardised
regulatory approach to ESG across all sectors and markets;
- Variation in reporting standards: ESG reporting standards are still
developing and are not standardised or comparable across all sectors and
markets, new reporting standards in relation to different ESG metrics are
still emerging;
- Data availability, accuracy, verifiability and data gaps: our
disclosures are limited by the availability of high quality data in some areas
and our own ability to timely collect and process such data as required. Where
data is not available for all sectors or consistently year on year, there may
be an impact to our data quality scores. While we expect our data quality
scores to improve over time, as companies continue to expand their disclosures
to meet growing regulatory and stakeholder expectations, there may be
unexpected fluctuations within sectors year on year, and/or differences
between the data quality scores between sectors. Any such changes in the
availability and quality of data over time, or our ability to collect and
process such data, could result in revisions to reported data going forward,
including on financed emissions, meaning that such data may not be
reconcilable or comparable year-on year;
- Developing methodologies and scenarios: the methodologies and
scenarios HSBC uses to assess financed emissions and set ESG-related targets
may develop over time in line with market practice, regulation and/or
developments in science, where applicable. Such developments could result in
revisions to reported data, including on financed emissions or the
classification of sustainable finance and investments, meaning that data
outputs may not be reconcilable or comparable year-on year; and
- Risk management capabilities: global actions, including HSBC's own
actions, may not be effective in transitioning to net zero and in managing
relevant ESG risks, including in particular climate, nature-related and human
rights risks, each of which can impact HSBC both directly and indirectly
through our customers, and which may result in potential financial and
non-financial impacts to HBSC. In particular:
- we may not be able to achieve our ESG targets, commitments and
ambitions (including with respect to the positions set forth in our thermal
coal phase-out policy and our energy policy, and our targets to reduce our
on-balance sheet financed emissions and, where applicable, facilitated
emissions in our portfolio of selected high-emitting sectors), which may
result in our failure to achieve some or all of the expected benefits of our
strategic priorities; and
- we may not be able to develop sustainable finance and ESG-related
products consistent with the evolving expectations of our regulators, and our
capacity to measure the environmental and social impacts from our financing
activity may diminish (including as a result of data and model limitations and
changes in methodologies), which may affect our ability to achieve our ESG
targets, commitments and ambitions, including our net zero ambition, our
targets to reduce our on-balance sheet financed emissions and, where
applicable, facilitated emissions in our portfolio of selected high-emitting
sectors and the positions set forth in our thermal coal phase-out policy and
energy policy, and increase the risk of greenwashing.
Any forward-looking statements made by or on behalf of HSBC speak only as of
the date they are made. HSBC expressly disclaims any obligation to revise or
update these ESG forward-looking statements, other than as expressly required
by applicable law.
Written and/or oral ESG-related forward-looking statements may also be made in
our periodic reports to the US Securities and Exchange Commission, summary
financial statements to shareholders, proxy statements, offering circulars and
prospectuses, press releases and other written materials, and in oral
statements made by HSBC's Directors, officers or employees to third parties,
including financial analysts.
Our data dictionaries and methodologies for preparing the above ESG-related
metrics and third-party limited assurance reports can be found on:
www.hsbc.com/who-we-are/esg-and-responsible-business/esg-reporting-centre.
Certain defined terms
Unless the context requires otherwise, 'HSBC Holdings' means HSBC Holdings plc
and 'HSBC', the 'Group', 'we', 'us' and 'our' refer to HSBC Holdings together
with its subsidiaries. Within this document the Hong Kong Special
Administrative Region of the People's Republic of China is referred to as
'Hong Kong'.
When used in the terms 'shareholders' equity' and 'total shareholders'
equity', 'shareholders' means holders of HSBC Holdings ordinary shares and
those preference shares and capital securities issued by HSBC Holdings
classified as equity. The abbreviations '$m', '$bn' and '$tn' represent
millions, billions (thousands of millions) and trillions of US dollars,
respectively.
Abbreviations
Currencies
£ British pound sterling
CA$ Canadian dollar
€ Euro
HK$ Hong Kong dollar
MXN Mexican peso
RMB Chinese renminbi
SGD Singapore dollar
$ United States dollar
A
ABS¹ Asset-backed security
ADR American Depositary Receipt
ADS American Depositary Share
AGM Annual General Meeting
AI Artificial intelligence
AIEA Average interest-earning assets
ALCO Asset and Liability Management Committee
AML Anti-money laundering
AML DPA Five-year deferred prosecution agreement with the US Department of Justice,
entered into in December 2012
ANP Annualised new business premium
ASEAN Association of Southeast Asian Nations
AT1 Additional tier 1
B
Basel Committee Basel Committee on Banking Supervision
Basel II¹ 2006 Basel Capital Accord
Basel III¹ Basel Committee's reforms to strengthen global capital and liquidity rules
Basel 3.1 Outstanding measures to be implemented from the Basel III reforms
BEPS Base Erosion and Profit Shifting
BGF Business Growth Fund, an investment firm that provides growth capital for
small and mid-sized businesses in the UK and Ireland
BoCom Bank of Communications Co., Limited, one of China's largest banks
BoE Bank of England
Bps¹ Basis points. One basis point is equal to one-hundredth of a percentage point
BVI British Virgin Islands
C
CAPM Capital asset pricing model
CDS¹ Credit default swap
CEA Commodity Exchange Act (US)
CET1¹ Common equity tier 1
CGUs Cash-generating units
CMB Commercial Banking, a global business
CMC Capital maintenance charge
CODM Chief Operating Decision Maker
COSO 2013 Committee of Sponsoring Organizations of the Treadway Commission (US)
Corporate Centre Corporate Centre comprises Central Treasury, our legacy businesses, interests
in our associates and joint ventures, central stewardship costs and
consolidation adjustments
CP¹ Commercial paper
CRD IV¹ Capital Requirements Regulation and Directive
CRR¹ Customer risk rating
CRR II¹ The regulatory requirements of the Capital Requirements Regulation and
Directive, the CRR II regulation and the PRA Rulebook
CSA Credit support annex
CSM Contractual service margin
CVA¹ Credit valuation adjustment
D
Deferred shares Awards of deferred shares define the number of HSBC Holdings ordinary shares
to which the employee will become entitled, generally between one and seven
years from the date of the award, and normally subject to the individual
remaining in employment
DPD Days past due
DPF Discretionary participation feature of insurance and investment contracts
DVA¹ Debit valuation adjustment
E
EAD¹ Exposure at default
EBA European Banking Authority
EC European Commission
ECB European Central Bank
ECL Expected credit losses. In the income statement, ECL is recorded as a change
in expected credit losses and other credit impairment charges. In the balance
sheet, ECL is recorded as an allowance for financial instruments to which only
the impairment requirements in IFRS 9 are applied
EEA European Economic Area
Eonia Euro Overnight Index Average
EPC Energy performance certificate
EPS Earnings per ordinary share
ESG Environmental, social and governance
EU European Union
Euribor Euro interbank offered rate
EVE Economic value of equity
F
FAST-Infra Finance to Accelerate the Sustainable Transition-Infrastructure
FCA Financial Conduct Authority (UK)
FDIC Federal Deposit Insurance Corporation
FFVA Funding fair value adjustment estimation methodology on derivative contracts
FPA Fixed pay allowance
FRB Federal Reserve Board (US)
FRC Financial Reporting Council
FSCS Financial Services Compensation Scheme
FTE Full-time equivalent staff
FTSE Financial Times Stock Exchange index
FVOCI¹ Fair value through other comprehensive income
FX Foreign exchange
G
GAAP Generally accepted accounting principles
GAC Group Audit Committee
GBM Global Banking and Markets, a global business
GDP Gross domestic product
GEC Group Executive Committee
GFANZ Glasgow Financial Alliance for Net Zero
GMP Guaranteed minimum pension
GPS Global Payments Solutions, the business formerly known as Global Liquidity and
Cash Management
GPSP Group Performance Share Plan
GRC Group Risk Committee
Group HSBC Holdings together with its subsidiary undertakings
GTRF Global Trade and Receivables Finance
H
Hang Seng Bank Hang Seng Bank Limited, one of Hong Kong's largest banks
HKEx The Stock Exchange of Hong Kong Limited
HKMA Hong Kong Monetary Authority
HMRC HM Revenue and Customs
Holdings ALCO HSBC Holdings Asset and Liability Management Committee
Hong Kong Hong Kong Special Administrative Region of the People's Republic of China
HQLA High-quality liquid assets
HSBC HSBC Holdings together with its subsidiary undertakings
HSBC Bank plc HSBC Bank plc, also known as the non-ring-fenced bank
HSBC Bank Middle East HSBC Bank Middle East Limited
HSBC Bank USA HSBC Bank USA, N.A., HSBC's retail bank in the US
HSBC Canada The sub-group, HSBC Bank Canada, HSBC Trust Company Canada, HSBC Mortgage
Corporation Canada and HSBC Securities Canada, consolidated for liquidity
purposes
HSBC Continental Europe HSBC Continental Europe
HSBC Finance HSBC Finance Corporation, the US consumer finance company (formerly Household
International, Inc.)
HSBC Holdings HSBC Holdings plc, the parent company of HSBC
HSBC Private Bank (Suisse) HSBC Private Bank (Suisse) SA, HSBC's private bank in Switzerland
HSBC UK HSBC UK Bank plc, also known as the ring-fenced bank
HSBC USA The sub-group, HSBC USA Inc (the holding company of HSBC Bank USA) and HSBC
Bank USA, consolidated for liquidity purposes
HSI HSBC Securities (USA) Inc.
HSSL HSBC Securities Services (Luxembourg)
I
IAS International Accounting Standards
IASB International Accounting Standards Board
IBE Independent Board Evaluation
Ibor Interbank offered rate
ICAAP Internal capital adequacy assessment process
ICMA International Capital Market Association
IEA International Energy Agency
IFRS Accounting Standards International Financial Reporting Standards as issued by the International
Accounting Standards Board
ILAAP Internal liquidity adequacy assessment process
IMA Internal model approach
IMM Internal model method
IRB¹ Internal ratings-based
ISDA International Swaps and Derivatives Association
ISSB International Sustainability Standard Board
JV Joint venture
K
KMP Key Management Personnel
L
LCR Liquidity coverage ratio
LGBTQ+ Lesbian, gay, bisexual, transgender and queer. The plus sign denotes other
non-mainstream groups on the spectrums of sexual orientation and gender
identity
LGD¹ Loss given default
Libor London interbank offered rate
Long term For our financial targets, we define long term as five to six years,
commencing 1 January 2024
LTI Long-term incentive
LTV¹ Loan to value
M
Mainland China People's Republic of China excluding Hong Kong and Macau
Medium term For our financial targets, we define medium term as three to four years,
commencing 1 January 2024
MENAT Middle East, North Africa and Türkiye
MREL Minimum requirement for own funds and eligible liabilities
MRT¹ Material Risk Taker
MSS Markets and Securities Services, HSBC's capital markets and securities
services businesses in Global Banking and Markets
N
Net operating income Net operating income before change in expected credit losses and other credit
impairment charges
NGO Non-governmental organisation
NII Net interest income
NIM Net interest margin
NPS Net promoter score
NSFR Net stable funding ratio
NYSE New York Stock Exchange
NZBA Net-Zero Banking Alliance
O
OCI Other comprehensive income
OECD Organisation of Economic Co-operation and Development
OTC¹ Over-the-counter
P
PBT Profit before tax
PCAF Partnership for Carbon Accounting Financials
PD¹ Probability of default
Performance shares¹ Awards of HSBC Holdings ordinary shares under employee share plans that are
subject to corporate performance conditions
Ping An Ping An Insurance (Group) Company of China, Ltd, the second-largest life
insurer in the PRC
POCI Purchased or originated credit-impaired financial assets
PRA Prudential Regulation Authority (UK)
PRC People's Republic of China
Principal plan HSBC Bank (UK) Pension Scheme
PVIF Present value of in-force long-term insurance business and long-term
investment contracts with DPF
PwC The member firms of the PwC network, including PricewaterhouseCoopers LLP
R
RAS Risk appetite statement
Repo¹ Sale and repurchase transaction
Revenue Net operating income before ECL
Reverse repo Security purchased under commitments to sell
RNIV Risk not in VaR
RoE Return on average ordinary shareholders' equity
RoTE Return on average tangible equity
RWA¹ Risk-weighted asset
S
SAB Saudi Awwal Bank
SAPS Self-administered pension scheme
SASB Sustainability Accounting Standards Board
SBTi Science Based Targets initiative
SDG United Nation's Sustainable Development Goals
SEC Securities and Exchange Commission (US)
ServCo group Separately incorporated group of service companies established in response to
UK ring-fencing requirements
Sibor Singapore interbank offered rate
SIC Securities investment conduit
SME Small and medium-sized enterprise
Solitaire Solitaire Funding Limited, a special purpose entity managed by HSBC
SPE¹ Special purpose entity
SVB UK Silicon Valley Bank UK Limited, now HSBC Innovation Bank Limited
T
TCFD¹ Task Force on Climate-related Financial Disclosures
THBFIX Thai Baht Interest Rate Fixing
TNFD Taskforce on Nature-related Financial Disclosures
TSR¹ Total shareholder return
U
UAE United Arab Emirates
UK United Kingdom
UN United Nations
US United States of America
V
VaR¹ Value at risk
VIU Value in use
W
WEF World Economic Forum
WPB Wealth and Personal Banking, a global business
1 A full definition is included in the glossary to the Annual Report
and Accounts 2023 which is available at www.hsbc.com/investors.
HSBC Holdings plc
Incorporated in England on 1 January 1959 with
limited liability under the UK Companies Act
Registered in England: number 617987
Registered Office and Group Head Office
8 Canada Square
London E14 5HQ
United Kingdom
Telephone: 44 020 7991 8888
Facsimile: 44 020 7992 4880
Web: www.hsbc.com
Corporate Brokers
Morgan Stanley & Co. International plc
25 Cabot Square
London E14 4QA
United Kingdom
Bank of America Securities
2 King Edward Street
London EC1A 1HQ
United Kingdom
HSBC Bank plc
8 Canada Square
London E14 5HQ
United Kingdom
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HSBC Holdings plc
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