REG - HSBC Holdings PLC - Half Year Report - 2023 Interim Report - Part 2
01/08/2023 16:30
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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 8,112 4,856
value basis
Net income/(expense) from assets and liabilities of insurance businesses, 4,304 (11,849)
including related derivatives, measured at fair value through profit or loss
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 of our retail banking 2,130 -
operations in France(3)
Other operating income 184 (218)
Net operating income before change in expected credit losses and other credit 36,876 24,545
impairment charges(4)
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 420 264
Saudi Arabia)
- 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 420 198
Saudi Arabia)
- 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 3.8 0.4 2.4 1.4 0.3
instruments held for trading or managed on a fair value basis'
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 Yield Average Interest Yield Average Interest Yield
balance
income
balance
income
balance
income
$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 13,848 2.65 32,543 3.18
1,054,657 1,022,320
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 19,788 1.83 52,826 2.46
2,174,796 2,143,754
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 Cost Average Interest Cost Average Interest Cost
balance
expense
balance
expense
balance
expense
$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 2,834 0.42 10,903 0.81
1,369,088 1,342,342
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 6,403 0.71 22,449 1.24
1,827,218 1,804,130
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 104,303 100,101
through profit or loss
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 19,679 19,876
ordinary shares (millions)
Closing foreign exchange translation rates to $:
$1: £ 0.786 0.830
$1: € 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 UK) 7,040 -
Loans and advances to customers of disposal groups reported in 'Assets held 59,210 80,576
for sale'
- 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 UK) 7,220 -
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 and Commercial Global Corporate Total
Personal Banking(3) Banking and Centre
Banking Markets(3)
$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 and Personal Banking Commercial Banking Global Corporate Centre Total
Banking and Markets
$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 and Commercial Global Corporate Total
Personal Banking(2) Banking and Centre
Banking Markets(2)
$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 and Personal Commercial Banking Global Corporate Total
Banking Banking and Markets Centre
$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 and Commercial Global Corporate Total
Personal Banking(1) Banking and Centre
Banking Markets(1)
$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)
Total Consists of
WPB
Banking Life insurance Global Private Asset
operations 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 16,200 13,560 875 1,141 624
impairment charges(1)
- 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 10,058 7,939 651 941 527
impairment charges(1)
- 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 manufac-turing operations Wealth insurance and other(1) Life 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 762 113 875
impairment charges(2)
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) 100 83
(17)
Other income 393 - 393
- insurance service results 378 375
(3)
- 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 551 100 651
impairment charges(2)
ECL 1
(5) (4)
Net operating income 546 101 647
Total operating expenses
(261) (130) (391)
Operating profit 285 256
(29)
Share of profit/(loss) in associates and joint ventures 3 - 3
Profit before tax 288 259
(29)
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
WPB All global WPB All global
businesses businesses
$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 762 780 551 556
impairment charges(5)
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 747 747 599 599
basis)
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 740
loss component(1)
Inclusion of incremental expenses not attributable to the contractual service (143)
margin
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 C.V. 2 - -
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
HSBC UK Bank plc HSBC Bank plc The Hongkong and Shanghai Banking Corporation Limited HSBC Bank Middle East Limited HSBC North America Holdings Inc. HSBC Bank Canada Grupo Financiero HSBC, S.A. de C.V. Other trading entities Holding companies, shared service centres and intra Total
-Group eliminations
$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 235 2,053 4,740 212 380 50 226 494 (278) 8,112
or managed on a fair
value basis
Net income/(expense) from assets and liabilities of - 782 3,446 - - - 3 83 (10) 4,304
insurance businesses,
including related derivatives, measured at fair value
through profit and loss
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 7,389 6,703 16,533 1,198 2,142 1,008 1,574 2,217 (1,888) 36,876
losses and other credit
impairment charges(2)
Change in expected credit losses and other credit (418) (73) (456) - (62) (11) (264) (71) 10 (1,345)
impairment charges
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 data $m $m $m $m $m $m $m $m $m $m
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
HSBC UK Bank plc HSBC Bank plc The Hongkong and Shanghai Banking Corporation Limited HSBC Bank Middle East Limited HSBC North America Holdings Inc. HSBC Bank Canada Grupo Financiero HSBC, S.A. de C.V. Other trading entities Holding companies, shared service centres and intra Total
-Group eliminations
$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 224 2,001 2,273 195 237 40 136 280 (530) 4,856
trading or managed on a fair
value basis
Net income/(expense) from assets and liabilities of - (1,707) (10,130) - - - (10) 2 (4) (11,849)
insurance businesses,
including related derivatives, measured at fair value
through profit and loss
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 4,657 3,826 11,314 800 2,140 919 1,265 1,490 (1,866) 24,545
losses and other credit
impairment charges(2)
Change in expected credit losses and other credit (48) (252) (528) 68 (21) (31) (243) (34) 2 (1,087)
impairment charges
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 results¹
Half-year to 30 Jun 2023
HSBC UK Bank plc HSBC Bank plc The Hongkong and Shanghai Banking Corpo- HSBC Bank Middle East Limited HSBC North America Holdings Inc. HSBC Bank Canada Grupo Other trading entities(2) Holding Total
ration Limited Financiero companies,
HSBC, S.A. shared
de C.V. service
centres and
intra-Group
eliminations
$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
HSBC UK Bank plc HSBC Bank plc The Hongkong and Shanghai Banking Corpo- HSBC Bank Middle East Limited HSBC North America Holdings Inc. HSBC Bank Canada Grupo Other trading entities Holding Total
ration Limited Financiero companies,
HSBC, S.A. shared
de C.V. service
centres and
intra-Group
eliminations
$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
UK(2) Hong Mainland US Mexico
Kong China
$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
UK(1) Hong Mainland US Mexico
Kong China
$m $m $m $m $m
Revenue
Disposals, acquisitions and related costs(2) 1,220 - - - -
Fair value movements on financial instruments(3) 15 - - - -
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
HSBC UK Bank plc HSBC Bank plc The Hongkong and Shanghai Banking Corpo- HSBC Bank Middle East Limited HSBC North America Holdings Inc. HSBC Bank Canada Grupo Other trading entities(1) Holding Total
ration Limited Financiero companies,
HSBC, S.A. shared
de C.V. service
centres and
intra-Group
eliminations
$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
HSBC UK Bank plc HSBC Bank plc The Hongkong and HSBC Bank Middle East Limited HSBC North America Holdings Inc. HSBC Bank Canada Grupo Other trading entities Holding Total
Shanghai Financiero companies,
Banking HSBC, S.A. shared
Corporation de C.V. service
Limited centres and
intra-Group
eliminations
$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
UK(1) Hong Mainland US Mexico
Kong China
$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
UK(1) Hong Mainland US Mexico
Kong China
$m $m $m $m $m
Revenue
Fair value movements on financial instruments(2) (371) - - - -
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 Commercial Global Banking Corporate Total
Personal Banking Banking(1) and Markets(1) Centre
$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 1,203 365 2,115
(54)
- of which: HSBC UK Bank plc (ring-fenced bank) 843 1,515 71 2,270
(159)
- of which: HSBC Bank plc (non-ring-fenced bank) 99 113 264 268
(208)
- of which: Holdings and other 732
(341) (425) (389) (423)
France 143 53 88
(45) (63)
Germany 4 36 93 69
(64)
Switzerland 11
(42) (1) (13) (45)
Hong Kong 1,375 547 518 2,278
(162)
Australia 60 84 91 213
(22)
India 33 156 324 132 645
Indonesia 8 44 52 102
(2)
Mainland China 137 310 1,548 1,957
(38)
Malaysia 45 34 115 179
(15)
Singapore 52 73 144 249
(20)
Taiwan 19 15 68 95
(7)
Egypt 48 15 94 154
(3)
UAE 38 76 187 262
(39)
Saudi Arabia 12 - 54 117 183
US 92 220 255 406
(161)
Canada 98 263 54 390
(25)
Mexico 95 179 18 237
(55)
Other 35 377 448 (1,657)
(797)
Half-year to 30 Jun 2022 2,543 3,560 2,823 8,780
(146)
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 16,995 8,003
intangible assets impairment
Impact of strategic transactions(1) (3,117) -
Profit attributable to the ordinary shareholders, excluding goodwill, other 13,878 8,003
intangible assets impairment and strategic transactions
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 18.5 10.6
(annualised)
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 and Commercial Global Corporate Total
Personal Banking Banking and Centre
Banking Markets
$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, (428) (293) (275) (109) (1,105)
non-controlling interests
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 8,780
(146)
Tax expense 1,937 151
(473) (926) (387)
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 187 148 37
(21) (277)
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 % 0.28 0.21
of average gross loans and advances to customers
Expected credit losses and other credit impairment charges (annualised) as % 0.26 0.21
of average gross loans and advances to customers, including held for sale
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)
- disposals, acquisitions and related costs (118) -
- restructuring and other related costs(1) 47 (1,040)
Excluding the impact of SVB UK and related international investments (67) -
Currency translation(2) (564)
Excluding the impact of retranslating prior year costs of hyperinflationary 160
economies at a constant currency foreign exchange rate
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 of our retail banking (1,629) -
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 - (2,082)
Holdings
Profit attributable to ordinary shareholders of company excluding material 13,776 5,884
notable items
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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