REG - HSBC Holdings PLC - HSBC Holdings 2024 Results
19/02/2025 07:00
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RNS Number : 6198X HSBC Holdings PLC 19 February 2025
19 February 2025
HSBC Holdings plc 2024 results
Georges Elhedery, Group CEO, said:
"Our strong 2024 performance provides firm financial foundations upon which to
build for the future, as we prioritise delivering sustainable strategic growth
and the best outcomes for our customers. Since becoming CEO, I have focused on
simplifying how we operate and injected energy and intent into the way we
deliver our strategy. We are creating a simple, more agile, focused bank built
on our core strengths. We continue to take deliberate and decisive steps. This
includes creating four complementary, clearly differentiated businesses,
aligning our structure to our strategy and reshaping our portfolio at pace and
with purpose. I have put in place a smaller, core team of exceptionally
talented leaders driven by a growth orientated mindset and a firm focus on
dynamically managing our costs and capital. We are embedding this approach
across the organisation to ensure we are continually focused on these two
important principles. Each targeted action we are taking is designed to unlock
HSBC's full potential. We look to the future with confidence and clarity of
purpose."
2024 financial performance (vs 2023)
- Profit before tax rose by $2.0bn to $32.3bn, including a $1.0bn net
favourable impact from notable items. In 2024, these included a gain of $4.8bn
on the disposal of our banking business in Canada, the impacts of the disposal
of our business in Argentina, comprising a $1.0bn loss on disposal, and the
recycling of foreign currency reserve losses and other reserves of $5.2bn. In
2023, notable items included an impairment of $3.0bn on our associate, Bank of
Communications Co., Limited ('BoCom'), disposal losses of $1.0bn on Treasury
repositioning and risk management and a $1.6bn gain recognised on the
acquisition of Silicon Valley Bank UK Limited ('SVB UK'). Profit after tax
increased by $0.4bn to $25.0bn.
- Constant currency profit before tax excluding notable items increased
by $1.4bn to $34.1bn, primarily reflecting revenue growth in Wealth and
Personal Banking ('WPB') and Global Banking and Markets ('GBM'), partly offset
by a rise in operating expenses, in line with our cost growth targets.
- Revenue of $65.9bn was stable. There was growth in revenue from higher
customer activity in Wealth in WPB, and in Equities and Securities Financing
in GBM. In addition, 2023 included disposal losses of $1.0bn related to
Treasury repositioning and risk management. This was offset by the net adverse
impact of certain strategic transactions described above, as well as a $0.2bn
loss on the early redemption of legacy securities.
- Constant currency revenue excluding notable items rose by $2.9bn to
$67.4bn.
- Net interest income ('NII') decreased by $3.1bn, reflecting the impact
of business disposals and higher funding costs associated with the
redeployment of our commercial surplus to the trading book, where the related
revenue is recognised in 'net income from financial instruments held for
trading or managed on a fair value basis', partly offset by higher NII in HSBC
UK, reflecting the benefit of our structural hedge. Banking NII of $43.7bn
fell by $0.4bn or 1% compared with 2023, as increased deployment of our
commercial surplus to the trading book only partly mitigated the reductions in
NII.
- Net interest margin ('NIM') of 1.56% decreased by 10 basis points
('bps'), mainly due to increased deployment of our commercial surplus to the
trading book.
- Expected credit losses and other credit impairment charges ('ECL') of
$3.4bn were stable. ECL were $1.8bn in Commercial Banking ('CMB') and $0.2bn
in GBM. This included stage 3 charges relating to the commercial real estate
sector in mainland China ($0.4bn), the onshore Hong Kong real estate sector
($0.1bn), and a charge related to a single CMB customer in the UK. ECL in WPB
were $1.3bn and primarily related to our legal entities in Mexico, Hong Kong
and the UK. ECL were 36bps of average gross loans, including loans and
advances classified as held for sale (2023: 32bps).
- Operating expenses grew by $1.0bn or 3% to $33.0bn, mainly due to
higher spend and investment in technology and the impacts of inflation, partly
offset by reductions related to our business disposals in Canada and France,
and from lower levies in the UK and the US.
- Target basis operating expenses rose by 5%, in line with our cost
growth target. This increase primarily reflected higher spend and investment
in technology, and the impact of inflation. This is measured on a constant
currency basis, excluding notable items, the impact of retranslating the prior
year results of hyperinflationary economies at constant currency, and the
direct costs from the sales of our French retail banking operations and our
banking business in Canada.
- Customer lending balances fell by $8bn on a reported basis but rose by
$14bn on a constant currency basis. Growth included lending balance growth in
CMB and higher mortgage balances in WPB.
- Customer accounts rose by $43bn on a reported basis, and $75bn on a
constant currency basis, with growth across all of our global businesses,
primarily in Asia.
- Common equity tier 1 ('CET1') capital ratio of 14.9% rose by 0.1 of a
percentage point, mainly due to capital generation and a reduction in RWAs
through strategic transactions, offset by dividends, share buy-backs and
organic balance sheet growth.
- The Board has approved a fourth interim dividend of $0.36 per share,
resulting in a total of $0.87 per share in respect of 2024, inclusive of a
special dividend of $0.21 per share. We also intend to initiate a share
buy-back of up to $2bn, which we expect to complete by our first quarter 2025
results announcement.
4Q24 financial performance (vs 4Q23)
- Reported profit before tax up $1.3bn to $2.3bn. The increase reflected
the non-recurrence of an impairment charge in 4Q23 of $3.0bn relating to the
investment in our associate BoCom. This was partly offset by a reduction in
revenue, which included the recycling of foreign currency losses and other
reserves of $5.2bn recognised following the completion of sale of our business
in Argentina in 4Q24, while 4Q23 included the impact of an impairment relating
to the sale of our retail banking operations in France of $2.0bn as we
reclassified these operations as held for sale. On a constant currency basis,
profit before tax up $1.5bn to $2.3bn. Reported profit after tax up $0.4bn to
$0.6bn.
- Reported revenue down 11% to $11.6bn, due to the recycling of foreign
currency losses and other reserves relating to the sale of our business in
Argentina, as mentioned above. This was partly offset by the non-recurrence of
a 4Q23 impairment relating to the sale of our retail banking operations in
France, disposal losses relating to Treasury repositioning and risk
management, and the impact of hyperinflationary accounting in Argentina. In
addition, revenue increased in Wealth in WPB and in Markets and Securities
Services ('MSS') in GBM. Constant currency revenue excluding notable items
increased by $1.2bn to $16.5bn.
- Reported ECL up $0.3bn to $1.4bn. ECL in 4Q24 comprised charges in CMB
of $0.8bn, primarily related to stage 3 exposures which included charges
relating to the commercial real estate sector in mainland China of $0.2bn and
a charge relating to a single exposure in the UK. Charges in WPB of $0.4bn
were concentrated in our legal entities in Mexico and Hong Kong.
- Reported operating expenses stable at $8.6bn, as higher spend and
investment in technology and inflation were broadly offset by lower levies in
the UK and the US, a reduction in performance related pay and lower costs due
to the impact of our disposals in Canada and France.
Outlook
- We have announced measures to simplify the Group and we are focused on
opportunities that build on our strong platform for growth.
- We are now targeting a mid-teens return on average tangible equity
('RoTE') in each of the three years from 2025 to 2027 excluding notable items,
while acknowledging the outlook for interest rates remains volatile and
uncertain, particularly in the medium term.
- We expect banking NII of around $42bn in 2025. Our current expectation
reflects modelling of a number of market-dependent factors. If changes in
these factors impact the output of our modelling, we would update our
expectation for 2025 Banking NII in future quarterly results announcements.
- We retain a Group-wide focus on cost discipline. We are targeting
growth in target basis operating expenses of approximately 3% in 2025 compared
with 2024.
- Our target basis operating expenses for 2025 excludes the direct cost
impact of the business disposals in Canada and Argentina, notable items and
the impact of retranslating the prior year results of hyperinflationary
economies at constant currency.
- Our cost target includes the impact of simplification-related saves
associated with our announced reorganisation, which aims to generate
approximately $0.3bn of cost reductions in 2025, with a commitment to an
annualised reduction of $1.5bn in our cost base expected by the end of 2026.
To deliver these reductions, we plan to incur severance and other up-front
costs of $1.8bn over 2025 and 2026, which will be classified as notable items.
We are focused on opportunities where we have a clear competitive advantage
and accretive returns, and we aim to redeploy around $1.5bn of additional
costs from non-strategic activities into these areas, over the medium term.
- We expect ECL charges as a percentage of average gross loans to
continue to be within our medium-term planning range of 30bps to 40bps in 2025
(including lending held for sale balances).
- Over the medium to long term, we continue to expect mid-single digit
percentage growth for year-on-year customer lending balances.
- We expect double-digit percentage average annual growth in fee and
other income in Wealth over the medium-term.
- We intend to continue to manage the CET1 capital ratio within our
medium-term target range of 14% to 14.5%, with a dividend payout ratio target
basis of 50% for 2025, excluding material notable items and related impacts.
Our targets and expectations reflect our current outlook for the global
macroeconomic environment and market-dependent factors, such as market-implied
interest rates (as of mid-January 2025) and rates of foreign exchange, as well
as customer behaviour and activity levels.
We do not reconcile our forward guidance on RoTE excluding the impact of
notable items, target basis operating expenses, dividend payout ratio target
basis or banking NII to their equivalent reported measures.
Key financial metrics
For the year ended
Reported results 2024 2023 2022
Profit before tax ($m) 32,309 30,348 17,058
Profit after tax ($m) 24,999 24,559 16,249
Revenue ($m) 65,854 66,058 50,620
Cost efficiency ratio (%) 50.2 48.5 64.6
Net interest margin (%) 1.56 1.66 1.42
Basic earnings per share ($) 1.25 1.15 0.72
Diluted earnings per share ($) 1.24 1.14 0.72
Dividend per ordinary share (in respect of the period) ($)(1) 0.87 0.61 0.32
Dividend payout ratio (%)(2) 50 50 44
Alternative performance measures
Constant currency profit before tax ($m) 32,309 29,903 16,302
Constant currency revenue ($m) 65,854 64,912 49,587
Constant currency cost efficiency ratio (%) 50.2 48.5 65.0
Constant currency profit before tax excluding notable items ($m) 34,122 32,680 23,057
Constant currency revenue excluding notable items ($m) 67,434 64,489 53,383
Constant currency profit before tax excluding notable items and strategic 34,037 32,217 N/A
transactions ($m)
Constant currency revenue excluding notable items and strategic transactions 67,256 63,043 N/A
($m)
Expected credit losses and other credit impairment charges ('ECL') as % of 0.36 0.34 0.36
average gross loans and advances to customers (%)
Expected credit losses and other credit impairment charges ('ECL') as % of 0.36 0.32 0.36
average gross loans and advances to customers, including held for sale (%)
Basic earnings per share excluding material notable items and related impacts 1.31 1.22 N/A
($)
Return on average ordinary shareholders' equity (%) 13.6 13.6 9.0
Return on average tangible equity (%) 14.6 14.6 10.0
Return on average tangible equity excluding notable items (%) 16.0 16.2 11.8
Target basis operating expenses ($m) 32,648 31,074 N/A
At 31 December
Balance sheet 2024 2023 2022
Total assets ($m) 3,017,048 3,038,677 2,949,286
Net loans and advances to customers ($m) 930,658 938,535 923,561
Customer accounts ($m) 1,654,955 1,611,647 1,570,303
Average interest-earning assets ($m) 2,099,285 2,161,746 2,143,758
Loans and advances to customers as % of customer accounts (%) 56.2 58.2 58.8
Total shareholders' equity ($m) 184,973 185,329 177,833
Tangible ordinary shareholders' equity ($m) 154,295 155,710 146,927
Net asset value per ordinary share at period end ($) 9.26 8.82 8.01
Tangible net asset value per ordinary share at period end ($) 8.61 8.19 7.44
Capital, leverage and liquidity
Common equity tier 1 capital ratio (%)(3,4) 14.9 14.8 14.2
Risk-weighted assets ($m)(3,4) 838,254 854,114 839,720
Total capital ratio (%)(3,4) 20.6 20.0 19.3
Leverage ratio (%)(3,4) 5.6 5.6 5.8
High-quality liquid assets (liquidity value) ($m)(4,5) 649,210 647,505 647,046
Liquidity coverage ratio (%)(4,5,6) 138 136 132
Net stable funding ratio (%)(4,5,6,7) 143 138 141
Share count
Period end basic number of $0.50 ordinary shares outstanding, after deducting 17,918 19,006 19,739
own shares held (millions)
Period end basic number of $0.50 ordinary shares outstanding and dilutive 18,062 19,135 19,876
potential ordinary shares, after deducting own shares held (millions)
Average basic number of $0.50 ordinary shares outstanding, after deducting own 18,357 19,478 19,849
shares held (millions)
For reconciliation and analysis of our reported results on a constant
currency basis, including lists of notable items, see page 99 of the Annual
Report and Accounts 2024. Definitions and calculations of other alternative
performance measures are included in 'Reconciliation of alternative
performance measures' on page 120 of the Annual Report and Accounts 2024.
1 In 2024, dividend per share includes the special dividend of $0.21 per
ordinary share arising from the proceeds of the sale of our banking business
in Canada to Royal Bank of Canada.
2 In 2024 and 2023, our dividend payout ratio was adjusted for material
notable items and related impacts, including all associated income statement
impacts relating to those items. In 2022, our dividend payout ratio was
adjusted for the loss on classification to held for sale of our retail banking
business in France, items relating to the sale of our banking business in
Canada, and the recognition of certain deferred tax assets.
3 Unless otherwise stated, regulatory capital ratios and requirements
are based on the transitional arrangements of the Capital Requirements
Regulation in force at the time. References to EU regulations and directives
(including technical standards) should, as applicable, be read as references
to the UK's version of such regulation or directive, as onshored into UK law
under the European Union (Withdrawal) Act 2018, and as may be subsequently
amended under UK law.
4 Regulatory numbers and ratios are as presented at the date of
reporting. Small changes may exist between these numbers and ratios and those
submitted in regulatory filings. Where differences are significant, we may
restate in subsequent periods.
5 The liquidity coverage ratio is based on the average value of the
preceding 12 months. The net stable funding ratio is based on the average
value of four preceding quarters.
6 We enhanced our liquidity consolidation process in 2Q24 by revising
provisions that addressed historical limitations. As our Group LCR and NSFR
are reported on an average basis, the benefit of these changes incrementally
increased our LCR and NSFR by circa 3% and 11% during the year, respectively.
Compared to year ended 31 December 2023, the increase in LCR was mainly driven
by these enhancements. The associated NSFR increase driven by these changes
was partly offset by higher required stable funding primarily due to a rise in
financial investments and derivatives activities.
7 We have enhanced our calculation processes during 1Q24 and our NSFR
comparatives have been restated.
Highlights
Year ended 31 Dec
2024 2023
$m $m
Reported
Revenue(1,3) 65,854 66,058
Change in expected credit losses and other credit impairment charges (3,414) (3,447)
Operating expenses(5) (33,043) (32,070)
Share of profit in associates and joint ventures less impairment(6) 2,912 (193)
Profit before tax 32,309 30,348
Tax charge (7,310) (5,789)
Profit after tax 24,999 24,559
Constant currency(2)
Revenue(1,3) 65,854 64,912
Change in expected credit losses and other credit impairment charges (3,414) (3,259)
Operating expenses(5) (33,043) (31,494)
Share of profit in associates and joint ventures less impairment(6) 2,912 (256)
Profit before tax 32,309 29,903
Tax charge (7,310) (5,567)
Profit after tax 24,999 24,336
Notable items
Revenue
Disposals, acquisitions and related costs(3,4) (1,343) 1,298
Fair value movements on financial instruments - 14
Disposal losses on Markets Treasury repositioning - (977)
Early redemption of legacy securities (237) -
Operating expenses
Disposals, acquisitions and investment in new businesses (199) (321)
Restructuring and other related costs(5) (34) 136
Impairment of interest in associate(6) - (3,000)
Tax
Tax credit on notable items 108 207
Uncertain tax positions - 427
1 Net operating income before change in expected credit losses and other
credit impairment charges, also referred to as revenue.
2 Constant currency performance is computed by adjusting reported
results of comparative periods for the effects of foreign currency translation
differences, which distort period-on-period comparisons.
3 The amount in 2024 includes a $1.0bn loss on disposal and a $5.2bn
loss on the recycling in foreign currency translation reserve losses and other
reserves arising on sale of our business in Argentina.This was partly offset
by a gain of $4.8bn gain on disposal of our banking business in Canada,
inclusive of a $0.3bn gain on the foreign exchange hedging of the sales
proceeds, the recycling of $0.6bn in foreign currency translation reserve
losses and $0.4bn of other reserves losses.
4 The amount in 2023 includes the gain of $1.6bn recognised in respect
of the acquisition of SVB UK and the impact of the sale of our retail banking
operations in France.
5 Amounts relate to restructuring provisions recognised in 2024 and
reversals of restructuring provisions recognised during 2022.
6 Relates to an impairment loss of $3.0bn recognised in respect of the
Group's investment in BoCom. See Note 18 on page 401 to 402 of the Annual
Report and Accounts 2024.
Group Chairman's shareholder letter
In 2024, global economic growth was mixed. In the West, the US remained an
outperformer, while growth across Europe was disappointing. In Asia and the
Middle East, there was broadly steady growth. With inflation falling and with
signs of the labour market softening, the US Federal Reserve was able to start
cutting rates, as did most advanced economies.
This was against a backdrop of significant geopolitical uncertainty,
heightened by numerous and consequential elections across the world. The war
in Ukraine, now entering its fourth year, and the conflicts and continuing
tensions in the Middle East, have had a tragic human impact. Our thoughts are
with all those who have suffered and continue to experience the devastating
consequences.
In this context, our focus is on our customers, leveraging our global network
to help them navigate the challenges and capture the opportunities that
emerge. That approach, combined with the disciplined execution of our
strategy, delivered another strong financial performance and increased returns
in 2024.
And we are very well positioned for the future.
HSBC's 160(th) Anniversary
2025 will mark HSBC's 160(th) anniversary.
In 1865, HSBC's founders started out with a clear and simple objective: to
establish a bank in Hong Kong and Shanghai that would facilitate local and
international trade, connecting East and West, and the many places in-between.
That objective is as relevant and significant today as it was then.
2024 progress and performance
In 2024, we delivered profit before tax of $32.3bn - an increase of $2.0bn
compared with 2023. Our return on average tangible equity was 14.6%, or 16%
excluding the impact of notable items.
We delivered increased returns for our shareholders. The Board approved a
fourth quarterly dividend of $0.36 per share, bringing the total dividend
announced for 2024 to $0.87 per share. This includes the special dividend of
$0.21 per share that was paid in June following the completion of the sale of
HSBC Bank Canada. In addition, we announced three share buy-backs in respect
of 2024 worth a total of $9bn. And today, we announced a further share
buy-back of up to $2bn.
Since the start of 2023, we have repurchased 11% of the issued share count.
Combined with our sustained levels of profitability, this led to greater
earnings and dividends per share for our shareholders.
Dividends paid in 2024, together with a more than 20% increase in the share
price, delivered a total shareholder return for the year of more than 30%.
Our performance demonstrates that our strategy is working. To maintain, and
indeed accelerate, the momentum, we are being very deliberate in creating
investment capacity for priority areas, focusing on long-term strategic
growth.
Optimising cost and capital allocation, we completed the sale of our
businesses in Canada, Russia, Argentina, and Armenia, as well as our retail
banking operations in France and Mauritius. We announced the planned sale of
our business in South Africa and of our private banking business in Germany,
as well as the planned sale of our life insurance business in France.
In parallel, our strategic investments are yielding significant results. In
Wealth, for instance, revenue grew by 18% in 2024, including a 21% increase in
fee and other income. The continued inflow of Net New Invested Assets and
growth in total customers point to the material upside opportunity. In Hong
Kong, for instance, we added approximately 800k new-to-bank customers.
At the same time, we secured multiple additional licences to expand our
operations in mainland China. In India, we received an approval earlier this
year to open bank branches in 20 new cities that are at the centre of the
expanding wealth and international opportunity.
We will continue to focus on and invest in growth opportunities where we have
a clear competitive advantage.
Leadership and Board Changes
Following Noel Quinn's decision to retire as Group Chief Executive, the Board
ran a rigorous and robust process to appoint his successor.
I would like to once again pay tribute to Noel's exceptional leadership and
thank him for his unwavering commitment and dedication to HSBC during his 37
years of service. We wish him the very best in all of his future endeavours.
In September, Georges Elhedery became our Group Chief Executive. He brings a
wealth of experience and an outstanding track record of delivery, achieved
over a career spent working in Asia, the Middle East and Europe.
In a little over five months, he has already made his mark.
From 1 January 2025, we began operating through four businesses: Hong Kong,
the UK, Corporate and Institutional Banking, and International Wealth and
Premier Banking. The objective is to create a simpler and more dynamic
organisation - with faster decision-making and clear lines of accountability.
Georges was succeeded as Group Chief Financial Officer by Pam Kaur, who joined
the Board as an Executive Director, having previously served as Group Chief
Risk and Compliance Officer.
At the 2024 Annual General Meeting ('AGM'), David Nish retired from the Board.
David made invaluable contributions over eight years, particularly as Chair of
the Group Audit Committee and as Senior Independent Director. Ann Godbehere
took over as Senior Independent Director. Ann's extensive financial services
experience, over a 30-year career spanning insurance, retail and private
banking, and wealth management, positions her very well for this role. Brendan
Nelson took over as Chair of the Group Audit Committee. His UK and
international financial and auditing expertise and experience are enormously
valuable.
In 2024, the Board held meetings in mainland China, Dubai, Singapore, New
York, and London. On each occasion, we had the privilege and pleasure to meet
with valued clients, government officials, regulators, and colleagues.
Our AGM in London and the Informal Meeting of our Hong Kong Shareholders
provided substantive opportunities to engage with our shareholders, on
important issues related to the Group.
Global outlook
The economic outlook remains uncertain with potential downside risks to global
growth from trade frictions and supply chain disruptions. Inflation has
declined but is proving stubborn and could be impacted by oil and gas prices,
as well as any trade tariffs.
Global growth is expected to remain fairly stable in 2025, with the US still
likely to remain the major engine of growth. However, policy priorities are
adding to uncertainties regarding growth prospects around the world. Already,
it appears that the improvement in world trade growth may be starting to
falter.
In China, the package of fiscal and monetary measures announced in the final
quarter of 2024 was welcome and helped it reach its annual target of 'around
5%' GDP growth. Aided by its transformation to a consumption-led and
innovation-focused economic model, we expect it to deliver a comparable
performance in 2025. Hong Kong should also continue to expand, with its growth
directly linked to mainland China.
Elsewhere in Asia, changing supply chains and resilient local demand helped to
drive growth in a number of markets, including India. Over the longer term,
the demographic dividend will benefit countries like India and markets across
South and Southeast Asia.
As this happens, we also continue to see great potential in the fast-growing
corridor between Asia and the Middle East, where strong demographics combine
with large scale capital spending on infrastructure and further
diversification, which are set to continue.
In Europe, with inflation pressures easing and interest rates on a downward
trajectory, consumer spending should rise. As a result, we expect the Eurozone
to expand this year. Meanwhile, the new UK government is pursuing a pro-growth
agenda, which we fully support.
Our people
I want to end by expressing the Board's immense appreciation and gratitude to
all our colleagues for driving our Group forward.
All that we delivered in 2024 was only made possible by their sustained
efforts, energies, and execution focus. They are the lifeblood of the HSBC
Group, serving our customers and creating value for shareholders.
Sir Mark E Tucker
Group Chairman
19 February 2025
Group CEO's shareholder letter
Dear fellow shareholders,
The opportunity to lead HSBC is a privilege. Even more so as we celebrate our
160th anniversary. Like each of my predecessors, I see my responsibility as
delivering sustainable strategic growth for our shareholders. This begins by
putting our customers at the centre of everything we do. Our financial
strength, international network, heritage, and brand mean we build upon firm
foundations.
We look to the future with confidence.
We begin from a position of strength, which is reinforced by our 2024
performance. During the year, we delivered a return on average tangible equity
('RoTE') of 14.6%. This includes several notable items, in particular related
to strategic disposals. Excluding these, our RoTE was 16.0%, achieving our
'mid-teens' target. Our common equity tier 1 ('CET1') capital ratio was 14.9%,
reflecting our long-standing financial strength. With our continued focus on
cost discipline, we managed cost growth on our target basis of around 5%,
which was in line with our targeted cost growth. This strong performance
enabled us to announce $26.9 billion in returns to our shareholders through
dividends and share buy-backs, which we expect to remain central to our
strategy.
Simple, more agile, focused
The world in which we operate is changing quickly. We are adapting to help our
customers navigate new complexities. By doing so, we will open up a world of
opportunity as we serve their needs, delivering on our strategy.
Since assuming the role in September, I have focused on injecting energy and
intent into the way we deliver our strategy. We are being more agile in the
way we allocate our resources and invest to prepare for the future. That
includes retiring non-strategic assets and embracing the productive power of
new technologies and tools to modernise HSBC and enhance the way we serve our
customers.
We have renewed vigour in finding the efficiencies that will optimise our
resource allocation, be that geographical, business line or balance sheet.
This will enhance the way we actively and dynamically manage costs and
capital, and target investments.
We will be guided by three overarching priorities:
- Focus on our customers, delivering high levels of satisfaction;
- Drive long-term growth by focusing on our strengths, increasing our
leadership and market share in the areas where we can generate attractive
returns;
- Simplify our structure and operating model. Reshape and rationalise
our portfolio, to meet the needs of a fast-changing world.
To achieve this, I have put in place a smaller, core team of exceptionally
talented leaders. They are each committed to fostering a culture of excellence
for our colleagues, driven by a growth-orientated mindset. HSBC's many
talented colleagues around the world are key to delivering the exceptional
customer experience that will drive our future growth.
We have also simplified the organisation in two important ways.
First, by moving away from a complex matrix governance structure built around
three business lines and five geographical regions to create four new
businesses. Each firmly rooted in our core strengths:
- Corporate and Institutional Banking, which combines our two
wholesale businesses;
- International Wealth and Premier Banking, to focus on accelerating
the build out of our global wealth proposition;
- Our two home markets of Hong Kong and the UK, where we have scale
and market-leading positions.
HSBC's supporting infrastructure is being simplified and realigned to enable
these four businesses to grow.
Simply put, we are aligning our structure to our strategy.
Second, we are significantly improving our operating model, led by a tighter
team at the Group Operating Committee, that will:
- Provide clarity of accountability, empower colleagues to make faster
decisions and accelerate the pace at which we generate greater productivity;
- Make HSBC simple, with fewer management lines and layers, and less
committees, designed to reduce bureaucracy, create closer collaboration,
emphasise teamwork, and facilitate the flow of ideas and innovation;
- Adapt quickly to the factors that are shaping the economies and
industries in which our customers operate;
- Sharpen and strengthen our focus on capital efficiency and firm-wide
risk management.
This will create a step change in the way we work, the way we serve customers
and the way we generate sustainable strategic growth, driving higher returns
for our shareholders.
In short, unlocking HSBC's full potential.
Designed to deliver strong, sustainable strategic growth
For 160 years, HSBC has been defined by its financial strength and
international network. Both remain enablers of everything we do. What is
changing is the clarity, speed and intensity with which we are repositioning
HSBC around our four complementary, clearly differentiated businesses.
Corporate and Institutional Banking ('CIB') is an international wholesale bank
with significant competitive advantages. It has a powerful deposit franchise
with financing capabilities supported by the strength of our balance sheet and
our network. It has the products and skills required to serve the global
banking needs of international corporate clients, particularly in transaction
banking where we continue to invest. This positions us to better capture
global and intra-regional flows as supply chains reconfigure, new trade routes
emerge, economies grow, and customers' expectations of financial services
evolve.
The future economy will require financing and investment in sectors such as
advanced technologies, specifically digitalisation, computing and generative
AI, as well as clean energy and healthcare. CIB is well positioned to
facilitate this by helping entrepreneurs to secure the capital they need to
build the businesses of the future and by supporting our customers as they
look to decarbonise.
International Wealth and Premier Banking ('IWPB') is ideally placed to capture
the increasing number of affluent and high-net-worth customers. Especially
those with international banking needs who seek new investment opportunities
to help them to protect and grow their wealth. Our recognised brand, financial
strength and complementary footprints across Asia and the Middle East serve to
reinforce HSBC's position in the world's fastest-growing wealth markets. We
also have an asset management business with distinct specialism in both
regions offering customers access to investment opportunities across asset
classes.
The Hong Kong and UK businesses give us strong platforms in our home markets.
We serve personal banking customers and small and medium enterprises in these
businesses. In Hong Kong specifically, where HSBC was founded, Hang Seng Bank,
a customer-centric community bank, is a strategically important investment of
the HSBC Group, which enhances the strength of our franchise and
market-leading position. We also have a fast-growing insurance manufacturing
business in Hong Kong, leveraging the inflows that are propelling Hong Kong to
become the leading international wealth hub. In the UK, we have a leading
retail, commercial and innovation-focused bank which continues to build market
share.
Customers in Hong Kong and the UK with global banking needs will be able to
access the power of our international network through our CIB and IWPB
businesses, that are anchored in these two leading international financial
centres.
Delivering on our priorities to customers and shareholders
HSBC is a highly connected, global organisation. Our international network is
a significant differentiator.
By refocusing on our core strengths, we are creating a simple, more agile,
focused organisation structured to better serve our customers and deliver for
our shareholders.
We have taken the first deliberate and decisive steps. We continue to move at
pace and with a relentless focus on actively managing our costs. Not as a one
off, but as an embedded mindset.
How we deliver on our three priorities is equally important. We are instilling
a culture of excellence, leadership and accountability throughout the firm. We
are also undergoing a comprehensive transformation of our operations,
modernising our infrastructure, and investing in technology such as AI,
generative AI, data and analytics. This will enhance customer experience as
well as drive operational excellence.
The aim being to create a refocused, reinvigorated HSBC, firmly rooted in four
complementary businesses with the ambition to generate high levels of total
shareholder returns.
Today's actions define a confident future
I am confident about our future and what we can achieve.
As we celebrate our 160(th) anniversary, our history and heritage stand us in
good stead. In so many ways, adapting to new economic realities and
technologies is what we have always done. It brings out the best in our people
and culture, especially when acting as a trusted advisor to our customers as
they navigate the world's economic uncertainties and look towards new
opportunities.
As we look to the future, our strategic priorities are clear, our leadership
team is now in place, supported by a simplified structure that enables action.
We have clarity on who we are and what we seek to achieve. We are driven by a
precision of purpose that guides the way we do business, the values we uphold
and the way we serve our customers, colleagues and communities.
We are prioritising a high-performance culture where employees are passionate
about what they can achieve and rewarded for their strong customer focus,
skills, ambition and initiative. We will invest in our people, one of our most
valuable assets, providing them with expansive career opportunities and
supporting them in developing future-focused skills, establishing HSBC as an
employer of choice and a great place to work.
A strong culture and effective leadership will be key to our long-term
success.
I would like to thank all of my colleagues for their valuable contributions to
our results. It is a privilege to work with such talented people. Their
dedication, commitment, and desire to deliver for our customers differentiates
HSBC and is key to delivering long-term growth.
The actions we are taking will have clear and tangible impact. Our ambition is
to unlock HSBC's full potential for the benefit of all our stakeholders,
provide excellent customer outcomes that enhance our franchise and brand,
generating the strategic growth that will deliver attractive returns for you,
our shareholders.
Georges Elhedery
Group CEO
19 February 2025
Financial summary
Year ended 31 December
2024 2023
$m $m
For the year
Profit before tax 32,309 30,348
Profit attributable to:
- ordinary shareholders of the parent company 22,917 22,432
Dividends on ordinary shares 15,348 10,492
At 31 December
2024 2023
$m $m
Total shareholders' equity 184,973 185,329
Total regulatory capital 172,386 171,204
Customer accounts 1,654,955 1,611,647
Total assets 3,017,048 3,038,677
Risk-weighted assets 838,254 854,114
Per ordinary share $ $
Basic earnings per share 1.25 1.15
Dividend per ordinary share (in respect of the period) 0.87 0.61
Dividends per ordinary share (paid in the period) 0.82 0.53
Net asset value per ordinary share at period end(1) 9.26 8.82
Tangible net asset value per ordinary share at period end(2) 8.61 8.19
Share information
Number of $0.50 ordinary shares in issue (millions) 17,947 19,263
Basic number of $0.50 ordinary shares outstanding (millions) 17,918 19,006
Basic number of $0.50 ordinary shares outstanding and dilutive potential 18,062 19,135
ordinary shares (millions)
1 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.
2 The definition of tangible net asset value per ordinary share is
total ordinary shareholders' 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.
Distribution of results by global business
Constant currency profit/(loss) before tax
Year ended 31 Dec
2024 2023
$m % $m %
Wealth and Personal Banking 12,182 37.7 11,625 38.9
Commercial Banking 11,860 36.7 13,155 44.0
Global Banking and Markets 7,063 21.9 5,582 18.7
Corporate Centre 1,204 3.7 (459) (1.6)
Profit before tax 32,309 100.0 29,903 100.0
Distribution of results by legal entity
Reported profit/(loss) before tax
Year ended 31 Dec
2024 2023
$m % $m %
HSBC UK Bank plc 7,213 22.2 8,270 27.2
HSBC Bank plc 2,645 8.2 2,639 8.7
The Hongkong and Shanghai Banking Corporation Limited 20,470 63.4 16,167 53.3
HSBC Bank Middle East Limited 1,114 3.4 1,239 4.1
HSBC North America Holdings Inc. 832 2.6 518 1.7
HSBC Bank Canada 186 0.6 871 2.9
Grupo Financiero HSBC, S.A. de C.V. 730 2.3 805 2.6
Other trading entities(1) 1,829 5.7 2,359 7.8
- of which: other Middle East entities (including Oman, Türkiye, Egypt and 833 2.6 748 2.5
Saudi Arabia)
- of which: Saudi Awwal Bank 596 1.8 538 1.8
Holding companies, shared service centres and intra-Group eliminations (2,710) (8.4) (2,520) (8.3)
Profit before tax 32,309 100.0 30,348 100.0
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 120 in the Annual Report and
Accounts 2024 for a fuller picture of the MENAT regional performance.
HSBC constant currency profit before tax and balance sheet data
2024
Wealth and Commercial Banking Global Banking and Markets Corporate Centre Total
Personal
Banking
$m $m $m $m $m
Net operating income/(expense) before change in expected credit losses and 28,674 21,580 17,529 (1,929) 65,854
other credit impairment charges(1)
- external 20,460 21,565 30,698 (6,869) 65,854
- inter-segment 8,214 15 (13,169) 4,940 -
of which: net interest income/(expense)(2) 20,352 17,261 7,488 (12,368) 32,733
Change in expected credit losses and other credit impairment charges (1,335) (1,815) (235) (29) (3,414)
Net operating income/(expense) 27,339 19,765 17,294 (1,958) 62,440
Total operating expenses (15,204) (7,906) (10,231) 298 (33,043)
Operating profit/(loss) 12,135 11,859 7,063 (1,660) 29,397
Share of profit in associates and joint ventures less impairment 47 1 - 2,864 2,912
Constant currency profit/(loss) before tax 12,182 11,860 7,063 1,204 32,309
% % % % %
Share of HSBC's constant currency profit before tax 37.7 36.7 21.9 3.7 100.0
Constant currency cost efficiency ratio 53.0 36.6 58.4 15.4 50.2
Constant currency balance sheet data $m $m $m $m $m
Loans and advances to customers (net) 447,085 306,926 169,516 7,131 930,658
Interests in associates and joint ventures 558 25 108 28,218 28,909
Total external assets 890,080 603,841 1,388,845 134,282 3,017,048
Customer accounts 823,267 490,475 340,898 315 1,654,955
Constant currency risk-weighted assets(4) 181,131 337,874 231,878 87,371 838,254
2023
Net operating income/(expense) before change in expected credit losses and 26,848 22,396 15,771 (103) 64,912
other credit impairment charges(1)
- external 18,669 23,686 27,618 (5,061) 64,912
- inter-segment 8,179 (1,290) (11,847) 4,958 -
of which: net interest income/(expense)(2) 19,902 16,289 6,860 (8,899) 34,152
Change in expected credit losses and other credit impairment charges (935) (2,006) (317) (1) (3,259)
Net operating income/(expense) 25,913 20,390 15,454 (104) 61,653
Total operating expenses (14,352) (7,234) (9,872) (36) (31,494)
Operating profit/(loss) 11,561 13,156 5,582 (140) 30,159
Share of profit/(loss) in associates and joint ventures(3) 64 (1) - (319) (256)
Constant currency profit/(loss) before tax 11,625 13,155 5,582 (459) 29,903
% % % % %
Share of HSBC's constant currency profit before tax 38.9 44.0 18.7 (1.6) 100.0
Constant currency cost efficiency ratio 53.5 32.3 62.6 (35.0) 48.5
Constant currency balance sheet data $m $m $m $m $m
Loans and advances to customers (net) 444,856 301,103 170,868 262 917,089
Interests in associates and joint ventures 539 23 107 26,226 26,895
Total external assets 915,062 613,124 1,298,065 146,296 2,972,547
Customer accounts 792,710 465,095 321,226 582 1,579,613
Constant currency risk-weighted assets(4) 186,163 341,930 213,655 87,093 828,841
1 Net operating income before change in expected credit losses and
other credit impairment charges, also referred to as revenue.
2 Net interest expense recognised in Corporate Centre includes $11.4bn
(2023: $8.7bn) of interest expense in relation to the internal cost to fund
trading and fair value net assets; and the funding cost of foreign exchange
swaps in our Markets Treasury function.
3 Includes an impairment loss of $3.0bn recognised in respect of the
Group's investment in BoCom in 2023.
4 Constant currency risk-weighted assets are calculated using reported
risk-weighted assets adjusted for the effects of currency translation
differences.
Consolidated income statement
for the year ended 31 December 2024
2024 2023
$m $m
Net interest income 32,733 35,796
- interest income(1,2) 108,631 100,868
- interest expense(3) (75,898) (65,072)
Net fee income 12,301 11,845
- fee income 16,266 15,616
- fee expense (3,965) (3,771)
Net income from financial instruments held for trading or managed on a fair 21,116 16,661
value basis(4)
Net income/(expense) from assets and liabilities of insurance businesses, 5,901 7,887
including related derivatives, measured at fair value through profit or loss
Insurance finance (expense)/income (5,978) (7,809)
Insurance service result 1,310 1,078
- insurance revenue 2,752 2,259
- insurance service expense (1,442) (1,181)
Gain on acquisition(5) - 1,591
Gains/(losses) recognised on sale of business operations(6) (1,752) (61)
Other operating income/(expense)(7) 223 (930)
Net operating income before change in expected credit losses and other credit 65,854 66,058
impairment charges(8)
Change in expected credit losses and other credit impairment charges (3,414) (3,447)
Net operating income 62,440 62,611
Employee compensation and benefits (18,465) (18,220)
General and administrative expenses (10,498) (10,383)
Depreciation and impairment of property, plant and equipment and right-of-use (1,845) (1,640)
assets(9)
Amortisation and impairment of intangible assets (2,235) (1,827)
Total operating expenses (33,043) (32,070)
Operating profit 29,397 30,541
Share of profit in associates and joint ventures 2,912 2,807
Impairment of interest in associate - (3,000)
Profit before tax 32,309 30,348
Tax expense (7,310) (5,789)
Profit for the year 24,999 24,559
Attributable to:
- ordinary shareholders of the parent company 22,917 22,432
- other equity holders 1,062 1,101
- non-controlling interests 1,020 1,026
Profit for the year 24,999 24,559
$ $
Basic earnings per ordinary share 1.25 1.15
Diluted earnings per ordinary share 1.24 1.14
1 Interest income includes $93,388m (2023: $88,657m) of interest
recognised on financial assets measured at amortised cost and $15,273m (2023:
$12,134m) of interest recognised on financial assets measured at fair value
through other comprehensive income. It also includes a net $237m loss related
to the early redemption of legacy securities.
2 Interest income is calculated using the effective interest method
and comprises interest recognised on financial assets measured at either
amortised cost or fair value through other comprehensive income.
3 Interest expense includes $72,594m (2023: $62,095m) of interest on
financial instruments, excluding interest on debt instruments issued by HSBC
for funding purposes that are designated under the fair value option to reduce
an accounting mismatch and on derivatives managed in conjunction with those
debt instruments included in interest expense.
4 Includes a $255m gain (2023: $315m loss) on the foreign exchange
hedging of the proceeds from the sale of our banking business in Canada and a
$114m mark-to-market gain (2023:nil) on interest rate hedging of the portfolio
of retained loans post sale of our retail banking business in France.
5 Gain recognised in respect of the acquisition of SVB UK.
6 This line item has been updated to include amounts from Other
operating income relating to all sales of business operations; in the 2023
Annual Report and Accounts, this line item only reflected the disposal of our
France retail banking business. The amount in 2024 includes a $1.0bn loss on
disposal and a $5.2bn loss on the recycling in foreign currency translation
reserve losses and other reserves arising on sale of our business in
Argentina. This was partly offset by a gain of $4.6bn, inclusive of the
recycling of $0.6bn in foreign currency translation reserve losses and $0.4bn
of other reserves losses but excluding the $255m gain on the foreign exchange
hedging (see footnote 4 above) on the sale of our banking business in Canada.
The amount in 2023 primarily reflected losses due to restrictions impacting
the recoverability of assets in Russia, partly offset by a gain on sale of our
retail banking operations in France.
7 Other operating income/(expense) includes a loss on net monetary
positions of $1,187m (2023: $1,667m) as a result of applying IAS 29 'Financial
Reporting in Hyperinflationary Economies'.
8 Net operating income before change in expected credit losses and
other credit impairment charges also referred to as revenue.
9 Includes depreciation of the right-of-use assets of $711m (2023:
$663m).
Consolidated statement of comprehensive income
for the year ended 31 December 2024
2024 2023
$m $m
Profit for the year 24,999 24,559
Other comprehensive income/(expense)
Items that will be reclassified subsequently to profit or loss when specific
conditions are met:
Debt instruments at fair value through other comprehensive income 163 2,599
- fair value gains/(losses) 41 2,381
- fair value losses/(gains) transferred to the income statement on disposal 69 905
- expected credit (recoveries)/losses recognised in the income statement (6) 59
- disposal of subsidiary 85 -
- income taxes (26) (746)
Cash flow hedges (52) 2,953
- fair value gains/(losses) (282) 2,534
- fair value (gains)/losses reclassified to the income statement (135) 1,463
- disposal of subsidiary 262 -
- income taxes 103 (1,044)
Share of other comprehensive income/(expense) of associates and joint ventures 462 47
- share for the year 462 47
Net finance income/(expenses) from insurance contracts (142) (364)
- before income taxes (191) (491)
- income taxes 49 127
Exchange differences 833 (204)
- foreign exchange losses reclassified to the income statement on disposal 5,816 -
of a foreign operation
- other exchange differences (4,983) (204)
Items that will not be reclassified subsequently to profit or loss:
Fair value gains on property revaluation 5 1
Remeasurement of defined benefit asset/(liability) (228) (314)
- before income taxes (342) (413)
- income taxes 114 99
Changes in fair value of financial liabilities designated at fair value upon (439) (1,219)
initial recognition arising from changes in own credit risk
- before income taxes (579) (1,617)
- income taxes 140 398
Equity instruments designated at fair value through other comprehensive income 99 (120)
- fair value gains/(losses) 141 (120)
- income taxes (42) -
Effects of hyperinflation 1,239 1,604
Other comprehensive income/(expense) for the year, net of tax 1,940 4,983
Total comprehensive income/(expense) for the year 26,939 29,542
Attributable to:
- ordinary shareholders of the parent company 24,833 27,397
- other equity holders 1,062 1,101
- non-controlling interests 1,044 1,044
Total comprehensive income/(expense) for the year 26,939 29,542
Consolidated balance sheet
at 31 December 2024
At
31 Dec 2024 31 Dec 2023
$m $m
Assets
Cash and balances at central banks 267,674 285,868
Hong Kong Government certificates of indebtedness 42,293 42,024
Trading assets 314,842 289,159
Financial assets designated and otherwise mandatorily measured at fair value 115,769 110,643
through profit or loss
Derivatives 268,637 229,714
Loans and advances to banks 102,039 112,902
Loans and advances to customers 930,658 938,535
Reverse repurchase agreements - non-trading 252,549 252,217
Financial investments 493,166 442,763
Assets held for sale 27,234 114,134
Prepayments, accrued income and other assets(1) 152,740 171,597
Current tax assets 1,313 1,536
Interests in associates and joint ventures 28,909 27,344
Goodwill and intangible assets 12,384 12,487
Deferred tax assets 6,841 7,754
Total assets 3,017,048 3,038,677
Liabilities
Hong Kong currency notes in circulation 42,293 42,024
Deposits by banks 73,997 73,163
Customer accounts 1,654,955 1,611,647
Repurchase agreements - non-trading 180,880 172,100
Trading liabilities 65,982 73,150
Financial liabilities designated at fair value 138,727 141,426
Derivatives 264,448 234,772
Debt securities in issue 105,785 93,917
Liabilities of disposal groups held for sale 29,011 108,406
Accruals, deferred income and other liabilities(1) 130,340 143,901
Current tax liabilities 1,729 2,777
Insurance contract liabilities 107,629 120,851
Provisions 1,724 1,741
Deferred tax liabilities 1,317 1,238
Subordinated liabilities 25,958 24,954
Total liabilities 2,824,775 2,846,067
Equity
Called up share capital 8,973 9,631
Share premium account 14,810 14,738
Other equity instruments 19,070 17,719
Other reserves (10,282) (8,907)
Retained earnings 152,402 152,148
Total shareholders' equity 184,973 185,329
Non-controlling interests 7,300 7,281
Total equity 192,273 192,610
Total liabilities and equity 3,017,048 3,038,677
1 In 2023 'Items in the course of collection from other banks'
($6.3bn) were presented on the face of the balance sheet but are now reported
within 'Prepayments, accrued income and other assets' in the Annual Report and
Accounts 2024. Similarly, 'Items in the course of transmission to other banks'
($7.3bn) are now presented within 'Accruals, deferred income and other
liabilities'.
Consolidated statement of changes in equity
for the year ended 31 December 2024
Other reserves
Called up Other Financial Cash Foreign Merger Insurance Retained earnings Total Non- Total
share capital equity assets at flow exchange and other finance (1,4) share- controlling equity
and share instru-ments FVOCI hedging reserve reserves(1,2) reserve(3) holders' interests
premium reserve reserve equity
$m $m $m $m $m $m $m $m $m $m $m
At 1 Jan 2024 24,369 17,719 (3,507) (1,033) (33,753) 28,601 785 152,148 185,329 7,281
192,610
Profit for the year - - - - - - - 23,979 23,979 1,020 24,999
Other comprehensive income (net of tax) - - 259 (46) 863 5 (183) 1,018 1,916 24 1,940
- debt instruments at fair value through other comprehensive - - 62 - - - - - 62 16 78
income
- equity instruments designated at fair value through other - - 75 - - - - - 75 24 99
comprehensive
income
- cash flow hedges - - - (312) - - - - (312) (2) (314)
- changes in fair value of financial liabilities designated at - - - - - - - (439) (439) - (439)
fair value
upon initial recognition arising from changes in own credit risk
- property revaluation - - - - - 5 - - 5 - 5
- remeasurement of defined benefit asset/liability - - - - - - - (244) (244) 16 (228)
- share of other comprehensive income of associates and joint - - - - - - - 462 462 - 462
ventures
- effects of hyperinflation - - - - - - - 1,239 1,239 - 1,239
- foreign exchange reclassified to income statement on disposal - - - - 5,816 - - - 5,816 - 5,816
of a foreign
operation(5)
- other reserves reclassified to income statement on disposal of - - 85 262 - - - - 347 - 347
a foreign
operation
- insurance finance income/(expense) recognised in other - - - - - - (142) - (142) - (142)
comprehensive
income
- exchange differences - - 37 4 (4,953) - (41) - (4,953) (30) (4,983)
Total comprehensive income for the year - - 259 (46) 863 5 (183) 24,997 25,895 1,044 26,939
Shares issued under employee remuneration and share plans 77 - - - - - - (77) - - -
Capital securities issued(6) - 3,601 - - - - - - 3,601 - 3,601
Dividends to shareholders - - - - - - - (16,410) (16,410) (690) (17,100)
Redemption of securities(7) - (2,250) - - - - - - (2,250) - (2,250)
Transfers(8) - - - - - (2,945) - 2,945 - - -
Cost of share-based payment arrangements - - - - - - - 529 529 - 529
Share buy-back(9) - - - - - - - (11,043) (11,043) - (11,043)
Cancellation of shares (663) - - - - 663 - - - - -
Other movements - - 2 - 3 4 - (687) (678) (335) (1,013)
At 31 Dec 2024 23,783 19,070 (3,246) (1,079) (32,887) 26,328 602 152,402 184,973 7,300
192,273
Consolidated statement of changes in equity (continued)
for the year ended 31 December 2023
Other reserves
Called up share capital and share premium Other Financial assets at FVOCI reserve Cash flow Foreign Merger Insurance Retained Total Non- Total
earnings
equity hedging exchange and other reserves(1,2) finance
share- controlling equity
(1,4)
instru-ments reserve reserve reserve(3) holders' interests
equity
$m $m $m $m $m $m $m $m $m $m $m
At 1 Jan 2023 24,811 19,746 (7,038) (3,808) (32,575) 33,209 1,079 142,409 177,833 7,364 185,197
Profit for the year - - - - - - - 23,533 23,533 1,026 24,559
Other comprehensive income (net of tax) - - 2,402 3,030 (211) 1 (371) 114 4,965 18 4,983
- debt instruments at fair value through other comprehensive - - 2,574 - - - - - 2,574 25 2,599
income
- equity instruments designated at fair value through other - - (93) - - - - - (93) (27) (120)
comprehensive
income
- cash flow hedges - - - 2,919 - - - - 2,919 34 2,953
- changes in fair value of financial liabilities designated at - - - - - - - (1,220) (1,220) 1 (1,219)
fair value
upon initial recognition arising from changes in own credit risk
- property revaluation - - - - - 1 - - 1 - 1
- remeasurement of defined benefit asset/liability - - - - - - - (317) (317) 3 (314)
- share of other comprehensive income of associates and joint - - - - - - 47 47 - 47
ventures
- effects of hyperinflation - - - - - - - 1,604 1,604 - 1,604
- insurance finance income/(expense) recognised in other - - - - - - (364) - (364) - (364)
comprehensive
income
- exchange differences - - (79) 111 (211) - (7) - (186) (18) (204)
Total comprehensive income for the year - - 2,402 3,030 (211) 1 (371) 23,647 28,498 1,044 29,542
Shares issued under employee remuneration and share plans 79 - - - - - - (79) - - -
Capital securities issued - 1,996 - - - - - - 1,996 - 1,996
Dividends to shareholders - - - - - - - (11,593) (11,593) (603) (12,196)
Redemption of securities - (4,023) - - - - - 20 (4,003) - (4,003)
Transfers(8) - - - - - (5,130) - 5,130 - - -
Cost of share-based payment arrangements - - - - - - - 482 482 - 482
Share buy-back - - - - - - - (7,025) (7,025) - (7,025)
Cancellation of shares (521) - - - - 521 - - - - -
Other movements - - 1,129 (255) (967) - 77 (843) (859) (524) (1,383)
At 31 Dec 2023 24,369 17,719 (3,507) (1,033) (33,753) 28,601 785 152,148 185,329 7,281 192,610
1 Cumulative goodwill amounting to $5,138m was charged against
reserves in respect of acquisitions of subsidiaries prior to 1 January 1998,
including $3,469m charged against the merger reserve arising on the
acquisition of HSBC Bank plc. The balance of $1,669m was charged against
retained earnings.
2 Statutory share premium relief under section 131 of the Companies
Act 1985 was taken in respect of the acquisition of HSBC Bank plc in 1992,
HSBC Continental Europe in 2000 and HSBC Finance Corporation in 2003, and the
shares issued were recorded at their nominal value only. In HSBC's
consolidated financial statements, the fair value differences of $8,290m in
respect of HSBC Continental Europe and $12,768m in respect of HSBC Finance
Corporation were recognised in the merger reserve. The merger reserve created
on the acquisition of HSBC Finance Corporation subsequently became attached to
HSBC Overseas Holdings (UK) Limited, following a number of intra-Group
reorganisations, and has since been transferred to retained earnings as part
of the impairment recognised in respect of HSBC Overseas Holding (UK) Limited.
During 2009, pursuant to section 131 of the Companies Act 1985, statutory
share premium relief was taken in respect of the rights issue and $15,796m was
recognised in the merger reserve.
3 The insurance finance reserve reflects the impact of the adoption of
the other comprehensive income option for our insurance business in France.
Underlying assets supporting these contracts are measured at fair value
through other comprehensive income. Under this option, only the amount that
matches income or expenses recognised in profit or loss on underlying items is
included in finance income or expenses, resulting in the elimination of income
statement accounting mismatches. The remaining amount of finance income or
expenses for these insurance contracts is recognised in other comprehensive
income ('OCI').
4 At 31 December 2024, retained earnings included 28,744,609 own
shares held. These include own shares held within HSBC's insurance business's
retirement funds for the benefit of policyholders or beneficiaries within
employee trusts for the settlement of shares expected to be delivered under
employee share schemes or bonus plans, and the market-making activities in
Markets and Securities Services.
5 At 31 December 2024, accumulated foreign currency translation
reserve losses of $5,816m were recycled to the income statement, including
$5,166m upon completion of the sale of our business in Argentina and $564m
upon completion of the sale of our banking business in Canada.
6 HSBC Holdings issued SGD1,500m 5.250% contingent convertible
securities in June 2024, and a further $1,350m 6.875% and $1,150m 6.950%
contingent convertible securities in September 2024. All instruments were
recorded net of issuance costs.
7 In September 2024, HSBC Holdings redeemed its $2,250m 6.375%
contingent convertible securities.
8 At 31 December 2024, an impairment of $11,442m (2023: $5,512m) of
HSBC Overseas Holdings (UK) Limited was recognised, resulting in a permitted
transfer of $2,945m (2023: $5,130m) from the remaining historical merger
reserve to retained earnings, and a realisation of nil share-based payment
reserve (2023: $382m) within retained earnings.
9 HSBC Holdings announced the following share buy-backs during the
year: a share buy-back of up to $2.0bn in February 2024, which was completed
in April 2024; a share buy-back of up to $3.0bn in April 2024, which was
completed in July 2024; a share buy-back of up to $3.0bn in July 2024, which
was completed in October 2024; and a share buy-back of up to $3.0bn in October
2024, which was completed in February 2025.
Consolidated statement of cash flows
for the year ended 31 December 2024
2024 2023
$m $m
Profit before tax 32,309 30,348
Adjustments for non-cash items:
Depreciation, amortisation and impairment 4,080 3,466
Net loss from investing activities 180 1,213
Share of profit in associates and joint ventures (2,912) (2,807)
Impairment of interest in associate - 3,000
(Gain)/loss on acquisition/disposal of subsidiaries, businesses, associates 1,704 (1,775)
and joint ventures
Change in expected credit losses gross of recoveries and other credit 3,674 3,717
impairment charges
Provisions including pensions 299 266
Share-based payment expense 529 482
Other non-cash items included in profit before tax (5,290) (4,299)
Elimination of exchange differences(1) 26,734 (10,678)
Changes in operating assets and liabilities
Change in net trading securities and derivatives (41,385) (63,247)
Change in loans and advances to banks and customers 7,275 (14,145)
Change in reverse repurchase agreements - non-trading (4,227) (2,095)
Change in financial assets designated and otherwise mandatorily measured at (20,662) (9,994)
fair value
Change in other assets 7,685 (10,254)
Change in deposits by banks and customer accounts 44,237 45,021
Change in repurchase agreements - non-trading 8,700 43,366
Change in debt securities in issue 11,942 11,945
Change in financial liabilities designated at fair value (2,248) 10,097
Change in other liabilities (1,603) 8,742
Dividends received from associates 1,062 1,067
Contributions paid to defined benefit plans (167) (208)
Tax paid (6,611) (4,117)
Net cash from operating activities 65,305 39,111
Purchase of financial investments (523,454) (563,561)
Proceeds from the sale and maturity of financial investments 453,502 504,174
Net cash flows from the purchase and sale of property, plant and equipment (1,344) (1,145)
Net cash flows from disposal of loan portfolio and customer accounts - 623
Net investment in intangible assets (2,542) (2,550)
Net cash inflow on acquisition/disposal of subsidiaries, businesses, 9,891 1,239
associates and joint ventures(2)
Net cash outflow on acquisition/disposal of subsidiaries, businesses, (12,617) (1,692)
associates and joint ventures(3)
Net cash from investing activities (76,564) (62,912)
Issue of ordinary share capital and other equity instruments 3,602 1,996
Cancellation of shares (11,348) (5,812)
Net purchases of own shares for market-making and investment purposes (541) (614)
Net cash flow from change in stake of subsidiaries - (19)
Redemption of preference shares and other equity instruments (3,433) (4,003)
Subordinated loan capital issued 4,361 5,237
Subordinated loan capital repaid(4) (2,000) (2,147)
Dividends paid to shareholders of the parent company and non-controlling (17,100) (12,196)
interests
Net cash from financing activities (26,459) (17,558)
Net decrease in cash and cash equivalents (37,718) (41,359)
Cash and cash equivalents at 1 Jan 490,933 521,671
Exchange differences in respect of cash and cash equivalents (18,275) 10,621
Cash and cash equivalents at 31 Dec(5) 434,940 490,933
Cash and cash equivalents comprise:
- cash and balances at central banks 267,674 285,868
- loans and advances to banks of one month or less 69,803 76,620
- reverse repurchase agreements with banks of one month or less 58,290 64,341
- treasury bills, other bills and certificates of deposit less than three 27,307 33,303
months(7)
- cash collateral, net settlement accounts and items in course of collection 9,827 14,866
from/transmission to other banks
- cash and cash equivalents held for sale(6) 2,039 15,935
Cash and cash equivalents at 31 Dec(5) 434,940 490,933
Interest received was $110,106m (2023: $98,910m), interest paid was $81,680m
(2023: $65,980m) and dividends received (excluding dividends received from
associates, which are presented separately above) were $2,812m (2023:
$1,869m).
1 Adjustment to bring changes between opening and closing balance
sheet amounts to average rates. This is not done on a line-by-line basis, as
details cannot be determined without unreasonable expense.
2 This includes $9.3bn from the sale of our banking business in
Canada.
3 This includes $10.6bn from the sale of our retail banking business
in France and $1.8bn from the sale of our business in Argentina.
4 Subordinated liabilities changes during the year are attributable to
repayments of $(2.0)bn (2023: $(2.1)bn) of securities. Non-cash changes during
the year included foreign exchange gains/losses of $1.6bn gain (2023: $0.6bn
loss) and fair value gains/losses of $1.0bn gain (2023: $0.8bn loss).
5 At 31 December 2024, $50.4bn (2023: $61.8bn) was not available for
use by HSBC due to a range of restrictions, including currency exchange and
other restrictions.
6 Includes $1.9bn (2023: $5.6bn) of cash and balances at central banks
and $0.1bn (2023: $10.5bn) of loans and advances to banks of one month or
less. There is nil balance in 2024 for reverse repurchase agreements with
banks of one month or less (2023: $0.2bn) and cash collateral, net settlement
accounts and items in course of collection from / transition to other banks
(2023: $(0.4)bn).
7 The amount in this line is included in the 'Financial investments'
and 'Financial assets designated and otherwise mandatorily measured at fair
value through profit or loss' line items in the Consolidated balance sheet on
page 14.
1 Basis of preparation and material accounting policies
The basis of preparation and summary of material accounting policies
applicable to the consolidated financial statements of HSBC and the separate
financial statements of HSBC Holdings can be found in Note 1, or the relevant
Note, in the Financial Statements in the Annual Report and Accounts 2024.
(a) Compliance with International Financial Reporting Standards
The consolidated financial statements of HSBC and the separate financial
statements of HSBC Holdings comply with UK-adopted international accounting
standards and with the requirements of the Companies Act 2006, and have also
applied international financial reporting standards adopted pursuant to
Regulation (EC) No 1606/2002 as it applies in the European Union. These
financial statements are also prepared in accordance with International
Financial Reporting Standards as issued by the International Accounting
Standards Board ('IFRS Accounting Standards'), including interpretations
issued by the IFRS Interpretations Committee, as there are no applicable
differences from IFRS Accounting Standards for the periods presented. There
were no unendorsed standards effective for the year ended 31 December 2024
affecting these consolidated and separate financial statements.
IFRS Accounting Standards adopted during the year ended 31 December 2024
There were no new standards, amendments to standards or interpretations that
had an effect on these financial statements. Accounting policies have been
applied consistently.
(b) Differences between IFRS Accounting Standards and Hong Kong Financial
Reporting Standards
There are no significant differences between IFRS Accounting Standards and
Hong Kong Financial Reporting Standards in terms of their application to HSBC,
and consequently there would be no significant differences had the financial
statements been prepared in accordance with Hong Kong Financial Reporting
Standards. The 'Notes on the financial statements', taken together with the
'Report of the Directors' in the Annual Report and Accounts 2024, include the
aggregate of all disclosures necessary to satisfy IFRS Accounting Standards
and Hong Kong Financial Reporting Standards.
(c) Going concern
The financial statements are prepared on a going concern basis, as the
Directors are satisfied that the Group and parent company have the resources
to continue in business for the foreseeable future. In making this assessment,
the Directors have considered a wide range of information relating to present
and future conditions, including future projections of profitability,
liquidity, capital requirements and capital resources.
These considerations include stressed scenarios that reflect the uncertainty
in the macroeconomic environment following uncertain inflation, rapidly
changing interest rates, slower Chinese economic activity, and disrupted
supply chains as a result of the Russia-Ukraine war, conflict in the Middle
East and US-China tensions. They also included other top and emerging risks,
including climate change, as well as the related impacts on profitability,
capital and liquidity.
2 Tax
Tax expense
2024 2023
$m $m
Current tax(1) 6,115 5,718
- for this year 5,863 5,737
- adjustments in respect of prior years 31 (19)
- Pillar 2 and qualifying domestic top-up taxes 221 -
Deferred tax 1,195 71
- origination and reversal of temporary differences 1,288 19
- effect of changes in tax rates (2) 17
- adjustments in respect of prior years (91) 35
Year ended 31 Dec(2) 7,310 5,789
1 Current tax included Hong Kong profits tax of $1,615m (2023:
$1,328m). The Hong Kong tax rate applying to the profits of subsidiaries
assessable in Hong Kong was 16.5% (2023: 16.5%).
2 In addition to amounts recorded in the income statement, a tax
credit of $12m (2023: credit of $41m) was recorded directly to equity.
Tax reconciliation
The tax charged to the income statement differs from the tax charge that would
apply if all profits had been taxed at the UK corporation tax rate as follows:
2024 2023
$m % $m %
Profit before tax 32,309 30,348
Tax expense
Taxation at UK corporation tax rate of 25.0% (2023: 23.5%) 8,077 25.0 7,132 23.5
Impact of differently taxed overseas profits in overseas locations (1,351) (4.2) (612) (2.0)
UK banking surcharge 215 0.7 350 1.2
Items increasing tax charge in 2024:
- tax impact of sale of HSBC Argentina 1,536 4.8 - -
- local taxes and overseas withholding taxes 584 1.8 419 1.4
- movements in unrecognised deferred tax 259 0.7 (22) (0.1)
- impacts of hyperinflation 327 1.0 348 1.1
- other permanent disallowables 344 1.0 227 0.7
- Global Minimum Tax top-up charge 221 0.7 - -
- bank levy 73 0.2 112 0.4
- movements in provisions for uncertain tax positions 38 0.1 (472) (1.6)
- impact of changes in tax rates 6 - 17 0.1
- impairment of interest in associate - - 705 2.3
Items reducing tax charge in 2024:
- non-taxable gain on disposal of HSBC Canada (1,174) (3.6) - -
- non-taxable income and gains (1,079) (3.3) (1,189) (3.9)
- effect of profits in associates and joint ventures (456) (1.4) (571) (1.9)
- deductions for AT1 coupon payments (249) (0.8) (229) (0.7)
- adjustments in respect of prior period (46) (0.1) 16 0.1
- tax impact of sale of French retail banking business (15) - - -
- accounting gain on acquisition of SVB UK - - (442) (1.5)
Year ended 31 Dec 7,310 22.6 5,789 19.1
The Group's profits are taxed at different rates depending on the country or
territory in which the profits arise. The key applicable tax rates for 2024
include Hong Kong (16.5%), the US (21%) and the UK (25%). If the Group's
profits were taxed at the statutory rates of the countries in which the
profits arose, then the tax rate for the year would have been 21.4% (2023:
22.6%).
The effective tax rate for the year of 22.6% was higher than in the previous
year (2023: 19.1%). The effective tax rate for the year was reduced by 3.6% by
the non-taxable gain arising on the disposal of HSBC Canada, increased by 4.8%
by the non-deductible loss arising on the disposal of HSBC Argentina,
increased by 70.0% by movements in unrecognised deferred tax, primarily
relating to French tax losses, and increased by 70.0% by the Group's Pillar 2
Global Minimum Tax charge. The effective tax rate for 2023 was increased by
2.3% by the non-taxable impairment of the Group's investment in BoCom, reduced
by 1.6% by the release of provisions for uncertain tax positions and reduced
by 1.5% by the non-taxable accounting gain on the acquisition of SVB UK.
In July 2023, the UK enacted legislation to introduce the 'Pillar Two' global
minimum tax model rules of the OECD's Inclusive Framework on Base Erosion and
Profit Shifting ('BEPS') and a UK qualified domestic minimum top-up tax, with
effect from 1 January 2024. Under the Pillar Two rules, a top-up tax liability
arises where the Group's effective tax rate in a jurisdiction is below 15%.
The Group has recorded a Pillar Two global minimum tax charge of $221m for the
period, primarily related to the non-taxation of dividends and income on
government bonds in Hong Kong (which have the effect of reducing the effective
tax rate from the statutory rate of 16.5% to below 15%) and low or nil
statutory tax rates in jurisdictions such as Bermuda and the Channel Islands.
For the current period, this tax expense will be substantially payable in the
UK by HSBC Holdings.
Many jurisdictions have introduced or announced the introduction of domestic
minimum tax rules that are closely aligned to the OECD's Pillar Two model
rules, as well as new or amended corporate income tax rules, with effect from
2024 or 2025. As and when such taxes are introduced, they will have the effect
of increasing local tax liabilities, eliminating or reducing the top-up tax
liability payable in the UK by HSBC Holdings in respect of those
jurisdictions. Hong Kong, Bermuda and the Channel Islands have introduced such
new tax rules with effect from 1 January 2025.
Accounting for taxes involves some estimation because tax law is uncertain and
its application requires a degree of judgement, which authorities may dispute.
Liabilities are recognised based on best estimates of the probable outcome,
taking into account external advice where appropriate. Exposures relating to
legacy tax cases were reassessed during 2024, resulting in a charge of $38m to
the income statement. We do not expect significant liabilities to arise in
excess of the amounts provided. HSBC only recognises current and deferred tax
assets where recovery is probable.
Movement of deferred tax assets and liabilities
Loan Unused tax Financial assets at FVOCI Cash flow hedges Retirement obligations Other Total
impairment losses and
provisions tax credits
$m $m $m $m $m $m $m
Assets 1,158 4,544 876 419 - 2,933 9,930
Liabilities - - - - (1,814) (1,600) (3,414)
At 1 Jan 2024 1,158 4,544 876 419 (1,814) 1,333 6,516
Income statement (74) (640) 100 - (85) (431) (1,130)
Other comprehensive income - - (49) 84 114 189 338
Foreign exchange and other adjustments (14) (40) (311) (61) 18 208 (200)
At 31 Dec 2024 1,070 3,864 616 442 (1,767) 1,299 5,524
Assets(1) 1,070 3,864 616 442 - 2,906 8,898
Liabilities(1) - - - - (1,767) (1,607) (3,374)
Assets 1,062 4,397 850 1,271 - 3,048 10,628
Liabilities - - - - (1,673) (1,567) (3,240)
At 1 Jan 2023 1,062 4,397 850 1,271 (1,673) 1,481 7,388
Income statement 102 541 1
(39) (114) (562) (71)
Other comprehensive income - - 99 399 (1,074)
(598) (974)
Foreign exchange and other adjustments 135 45 83 121 15 273
(126)
At 31 Dec 2023 1,158 4,544 876 419 (1,814) 1,333 6,516
Assets(1) 1,158 4,544 876 419 - 2,933 9,930
Liabilities(1) - - - - (1,814) (1,600) (3,414)
1 After netting off balances within countries, the balances as
disclosed in the accounts are as follows: deferred tax assets of $6,841m
(2023: $7,754m) and deferred tax liabilities of $1,317m (2023: $1,238m).
In applying judgement in recognising deferred tax assets, management has
assessed all relevant information, including future business profit
projections and the track record of meeting forecasts. Management's assessment
of the likely availability of future taxable profits against which to recover
deferred tax assets is based on the most recent financial forecasts approved
by management, which cover a five-year period and are extrapolated where
necessary, and takes into consideration the reversal of existing taxable
temporary differences and past business performance. When forecasts are
extrapolated beyond five years, a number of different scenarios are
considered, reflecting different downward risk adjustments, in order to assess
the sensitivity of our recognition and measurement conclusions in the context
of such longer-term forecasts.
The Group's net deferred tax asset of $5.5bn (2023: $6.5bn) included $2.6bn
(2022: $3.3bn) of deferred tax assets relating to the UK, $3.0bn (2023:
$3.1bn) of deferred tax assets relating to the US and a net deferred asset of
$0.5bn (2023: $0.9bn) in France.
The UK deferred tax asset of $2.6bn excluded a $1.8bn deferred tax liability
arising on the UK pension scheme surplus, the reversal of which is not taken
into account when estimating future taxable profit due to the level of
uncertainty as to the timing and manner of its reversal. The UK deferred tax
assets are supported by forecasts of taxable profit, also taking into
consideration the history of profitability in the relevant businesses. The
majority of the deferred tax asset relates to tax attributes which do not
expire and are forecast to be recovered within 3 years and as such are less
sensitive to changes in long-term profit forecasts.
The net US deferred tax asset of $3.0bn included $1.2bn related to US tax
losses, of which $0.9bn expire in 10 to 15 years. Management expects the US
deferred tax asset to be substantially recovered within 13 years, with the
majority recovered in the first five years.
The net deferred tax asset in France of $0.5bn included $0.5bn related to tax
losses, which are expected to be substantially recovered within
12 years. Unused tax losses with a tax value of $0.2bn have not been
recognised due to the absence of convincing evidence regarding the
availability of sufficient future taxable profits against which to recover
them.
Unrecognised deferred tax
The amount of gross temporary differences, unused tax losses and tax credits
for which no deferred tax asset is recognised in the balance sheet was $11.0bn
(2023: $10.4bn). This amount included unused US state tax losses of $3.8bn
(2023: $4.0) for which there is insufficient evidence of future taxable
profits to support recognition, and unused UK tax losses of $0.7bn (2023: nil)
for which there is insufficient evidence of future taxable profits to support
recognition, and unused UK tax losses of $3.5bn (2023: $4.5bn), which arose
prior to 1 April 2017 and can only be recovered against future taxable profits
of HSBC Holdings. No deferred tax was recognised on these losses due to the
absence of convincing evidence regarding the availability of sufficient future
taxable profits against which to recover them. Deferred tax asset recognition
is reassessed at each balance sheet date based on the available evidence. Of
the total amounts on which deferred tax was not recognised, $6.0bn (2023:
$5.1bn) had no expiry date, $1.0bn (2023: $0.5bn) was scheduled to expire
within 10 years and the remaining balance is expected to expire after 10
years.
Deferred tax is not recognised in respect of the Group's investments in
subsidiaries and branches where HSBC is able to control the timing of
remittance or other realisation and where remittance or realisation is not
probable in the foreseeable future. The aggregate temporary differences
relating to unrecognised deferred tax liabilities arising on investments in
subsidiaries and branches was $15.2bn (2023: $14.4bn) and the corresponding
unrecognised deferred tax liability was $0.7bn (2023: $0.7bn).
3 Dividends
Dividends to shareholders of the parent company
2024 2023
Per Total Per Total
share share
$ $m $ $m
Dividends paid on ordinary shares
In respect of previous year:
- second interim dividend - - 0.23 4,589
- fourth interim dividend 0.31 5,872
In respect of current year:
- first interim dividend 0.10 1,877 0.10 2,001
- special dividend 0.21 3,942 - -
- second interim dividend 0.10 1,852 0.10 1,956
- third interim dividend 0.10 1,805 0.10 1,946
Total 0.82 15,348 0.53 10,492
Total coupons on capital securities classified as equity 1,062 1,101
Dividends to shareholders 16,410 11,593
On 6 January 2025, HSBC paid a coupon on its €1,250m subordinated capital
securities, representing a total distribution of €30m ($31m). No liability
was recorded in the balance sheet at 31 December 2024 in respect of this
coupon payment.
Fourth interim dividend for 2024
On 19 February 2025, the Directors approved a fourth interim dividend in
respect of the financial year ended 31 December 2024 of $0.36 per ordinary
share (the 'dividend'), an expected distribution of approximately $6.4bn. The
dividend will be payable on 25 April 2025 to holders of record on the
Principal Register in the UK, the Hong Kong Overseas Branch Register or the
Bermuda Overseas Branch Register on 7 March 2025. No liability was recorded
in the financial statements in respect of the fourth interim dividend for
2024.
The dividend will be payable in US dollars, or in pounds sterling or Hong Kong
dollars at the forward exchange rates quoted by HSBC Bank plc in London at or
about 11.00am on 14 April 2025. The ordinary shares in London, Hong Kong and
Bermuda will be quoted ex-dividend on 6 March 2025. American Depositary Shares
('ADSs') in New York will be quoted ex-dividend on 7 March 2025.
The default currency on the Principal Register in the UK is pounds sterling,
and dividends can also be paid in Hong Kong dollars or US dollars, or a
combination of these currencies. International shareholders can register to
join the Global Dividend Service to receive dividends in their local
currencies. Please register and read the terms and conditions at
www.investorcentre.co.uk. UK shareholders can also register their pounds
sterling bank mandates at www.investorcentre.co.uk.
The default currency on the Hong Kong Overseas Branch Register is Hong Kong
dollars, and dividends can also be paid in US dollars or pounds sterling, or a
combination of these currencies. Shareholders can arrange for direct credit of
Hong Kong dollar cash dividends into their bank account, or arrange to send US
dollar or pounds sterling cheques to the credit of their bank account.
Shareholders can register for these services at www.investorcentre.com/hk.
Shareholders can also download a dividend currency election form from
www.hsbc.com/dividends, www.investorcentre.com/hk, or www.hkexnews.hk.
The default currency on the Bermuda Overseas Branch Register is US dollars,
and dividends can also be paid in Hong Kong dollars or pounds sterling, or a
combination of these currencies. Shareholders can change their dividend
currency election by contacting the Bermuda investor relations team.
Shareholders can download a dividend currency election form from
www.hsbc.com/dividends.
Changes to currency elections must be received by 10 April 2025 to be
effective for this dividend.
The dividend will be payable on ADSs, each of which represents five ordinary
shares, on 25 April 2025 to holders of record on 7 March 2025. The dividend
of $1.80 per ADS will be payable by the depositary in US dollars.
Alternatively, the cash dividend may be invested in additional ADSs by
participants in the dividend reinvestment plan operated by the depositary.
Elections must be received by 4 April 2025.
Any person who has acquired ordinary shares registered on the Principal
Register in the UK, the Hong Kong Overseas Branch Register or the Bermuda
Overseas Branch Register but who has not lodged the share transfer with the
Principal Registrar in the UK, Hong Kong Overseas Branch Registrar or Bermuda
Overseas Branch Registrar should do so before 4.00pm local time on 7 March
2025 in order to receive the dividend.
Ordinary shares may not be removed from or transferred to the Principal
Register in the UK, the Hong Kong Overseas Branch Register or the Bermuda
Overseas Branch Register on 7 March 2025. Any person wishing to remove
ordinary shares to or from each register must do so before 4.00pm local time
on 6 March 2025.
Shares repurchased under HSBC Holdings plc buy-backs, which have not yet been
cancelled from the Hong Kong custodians' CCASS account as at the record date,
will not be eligible for the dividend.
Transfers of ADSs must be lodged with the depositary by 11.00am on 7 March
2025 in order to receive the dividend. ADS holders who receive a cash dividend
will be charged a fee, which will be deducted by the depositary, of $0.005 per
ADS per cash dividend.
4 Earnings per share
Basic earnings per ordinary share is calculated by dividing the profit
attributable to ordinary shareholders of the parent company by the weighted
average number of ordinary shares outstanding, after deducting own shares
held. Diluted earnings per ordinary share is calculated by dividing the basic
earnings, which require no adjustment for the effects of dilutive potential
ordinary shares, by the weighted average number of ordinary shares
outstanding, excluding own shares held, plus the weighted average number of
ordinary shares that would be issued on conversion of dilutive potential
ordinary shares.
Basic and diluted earnings per share
2024 2023
Profit Number of shares Per share Profit Number of shares Per share
$m (millions) $ $m (millions) $
Basic(1) 22,917 18,357 1.25 22,432 19,478 1.15
Effect of dilutive potential ordinary shares 128 122
Diluted(1) 22,917 18,485 1.24 22,432 19,600 1.14
1 Weighted average number of ordinary shares outstanding (basic) or
assuming dilution (diluted) after deducting own shares held.
The number of anti-dilutive employee share options excluded from the weighted
average number of dilutive potential ordinary shares was Nil (2023: 23
million).
5 Constant currency balance sheet reconciliation
At
31 Dec 2024 31 Dec 2023
Reported and constant currency Constant currency Currency translation Reported
$m $m $m $m
Loans and advances to customers (net) 930,658 917,089 21,446 938,535
Interests in associates and joint ventures 28,909 26,895 449 27,344
Total external assets 3,017,048 2,972,547 66,130 3,038,677
Customer accounts 1,654,955 1,579,613 32,034 1,611,647
6 Reported and constant currency results(1)
Year ended
2024 2023
$m $m
Revenue(2)
Reported 65,854 66,058
Currency translation - (1,146)
Constant currency 65,854 64,912
Change in expected credit losses and other credit impairment charges
Reported (3,414) (3,447)
Currency translation - 188
Constant currency (3,414) (3,259)
Operating expenses
Reported (33,043) (32,070)
Currency translation - 576
Constant currency (33,043) (31,494)
Share of profit in associates and joint ventures less impairment
Reported(3) 2,912 (193)
Currency translation - (63)
Constant currency 2,912 (256)
Profit before tax
Reported 32,309 30,348
Currency translation - (445)
Constant currency 32,309 29,903
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 Amounts in 2023 relate to an impairment loss of $3.0bn recognised in
respect of the Group's investment in BoCom. See Note 18 on page 402 of the
Annual Report and Accounts 2024.
Notable items
Year ended
2024 2023
$m $m
Revenue
Disposals, acquisitions and related costs(1) (1,343) 1,298
Fair value movements on financial instruments(2) - 14
Restructuring and other related costs - -
Disposal losses on Markets Treasury repositioning - (977)
Operating expenses
Disposals, acquisitions and related costs (199) (321)
Restructuring and other related costs(3) (34) 136
Impairment of interest in associate(4) - (3,000)
Tax
Tax credit on notable items 108 207
Uncertain tax positions - 427
1 Amounts in 2024 include a $1.0bn loss on disposal and a $5.2bn loss
on the recycling in foreign currency translation reserve losses and other
reserves arising on sale of our business in Argentina. This is partly offset
by $4.8bn gain on disposal of our banking business in Canada, inclusive of a
$0.3bn gain on the foreign exchange hedging of the sales proceeds, the
recycling of $0.6bn in foreign currency translation reserve losses and $0.4bn
of other reserves losses.
2 Fair value movements on non-qualifying hedges in HSBC Holdings.
3 Amounts relate to restructuring provisions recognised in 2024 and
reversals of restructuring provisions recognised during 2022.
4 Amounts in 2023 relate to an impairment loss of $3.0bn recognised in
respect of the Group's investment in BoCom. See Note 18 on page 402 of the
Annual Report and Accounts 2024.
7 Contingent liabilities, contractual commitments and guarantees
2024 2023
$m $m
Guarantees and other contingent liabilities:
- financial guarantees 16,998 17,009
- performance and other guarantees 92,723 94,277
- other contingent liabilities 298 636
At 31 Dec 110,019 111,922
Commitments(1):
- documentary credits and short-term trade-related transactions 7,096 7,818
- forward asset purchases and forward deposits placed 61,017 78,535
- standby facilities, credit lines and other commitments to lend 793,465 810,797
At 31 Dec 861,578 897,150
1 Includes $619,367m of commitments at 31 December 2024 (31 December
2023: $661,015m), to which the impairment requirements in IFRS 9 are applied
where HSBC has become party to an irrevocable commitment.
The preceding table discloses the nominal principal amounts of off-balance
sheet liabilities and commitments for the Group, which represent the maximum
amounts at risk should the contracts be fully drawn upon and the clients
default. As a significant portion of guarantees and commitments are expected
to expire without being drawn upon, the total of the nominal principal amounts
is not indicative of future liquidity requirements. The expected credit loss
provision relating to guarantees and commitments under IFRS 9 is disclosed in
Note 28 of the Annual Report and Accounts 2024.
The majority of the guarantees have a term of less than one year, while
guarantees with terms of more than one year are subject to HSBC's annual
credit review process.
Contingent liabilities arising from legal proceedings, regulatory and other
matters against Group companies are excluded from this note but are disclosed
in Notes 28 and 35 of the Annual Report and Accounts 2024.
Financial Services Compensation Scheme
The Financial Services Compensation Scheme ('FSCS') provides compensation, up
to certain limits, to eligible customers of financial services firms that are
unable, or likely to be unable, to pay claims against them. The FSCS may
impose a further levy on the Group to the extent the industry levies imposed
to date are not sufficient to cover the compensation due to customers in any
future possible collapse. The ultimate FSCS levy to the industry as a result
of a collapse cannot be estimated reliably. It is dependent on various
uncertain factors including the potential recovery of assets by the FSCS,
changes in the level of protected products (including deposits and
investments) and the population of FSCS members at the time.
Associates
HSBC's share of associates' contingent liabilities, contractual commitments
and guarantees amounted to $74.5bn at 31 December 2024 (2023: $69.9bn). No
matters arose where HSBC was severally liable.
8 Legal proceedings and regulatory matters
HSBC is party to legal proceedings and regulatory matters in a number of
jurisdictions arising out of its normal business operations. Apart from the
matters described below, HSBC considers that none of these matters are
material. The recognition of provisions is determined in accordance with the
accounting policies set out in Note 1 of the Annual Report and Accounts 2024.
While the outcomes of legal proceedings and regulatory matters are inherently
uncertain, management believes that, based on the information available to it,
appropriate provisions have been made in respect of these matters as at 31
December 2024 (see Note 28 of the Annual Report and Accounts 2024). Where an
individual provision is material, the fact that a provision has been made is
stated and quantified, except to the extent that doing so would be seriously
prejudicial. Any provision recognised does not constitute an admission of
wrongdoing or legal liability. It is not practicable to provide an aggregate
estimate of potential liability for our legal proceedings and regulatory
matters as a class of contingent liabilities.
Bernard L. Madoff Investment Securities LLC
Various non-US HSBC companies provided custodial, administration and similar
services to a number of funds incorporated outside the US whose assets were
invested with Bernard L. Madoff Investment Securities LLC ('Madoff
Securities'). Based on information provided by Madoff Securities as at 30
November 2008, the purported aggregate value of these funds was $8.4bn,
including fictitious profits reported by Madoff. Based on information
available to HSBC, the funds' actual transfers to Madoff Securities minus
their actual withdrawals from Madoff Securities during the time HSBC serviced
the funds are estimated to have totalled approximately $4bn. Various HSBC
companies have been named as defendants in lawsuits arising out of Madoff
Securities' fraud.
Trustee litigation: The Madoff Securities trustee (the 'Trustee') has brought
lawsuits in the US against various HSBC companies and others seeking recovery
of alleged transfers from Madoff Securities to the HSBC companies in the
amount of $543m (plus interest), and these lawsuits remain pending in the US
Bankruptcy Court for the Southern District of New York.
The Trustee has filed a claim against various HSBC companies in the High Court
of England and Wales seeking recovery of alleged transfers from Madoff
Securities to the HSBC companies. The claim has not yet been served and the
amount claimed has not been specified.
Fairfield Funds litigation: Fairfield Sentry Limited, Fairfield Sigma Limited
and Fairfield Lambda Limited (together, the 'Fairfield Funds') (in
liquidation) have brought lawsuits in the US against various HSBC companies
and others seeking recovery of alleged transfers from the Fairfield Funds to
the HSBC companies (that acted as nominees for clients) in the amount of $382m
(plus interest). Fairfield Funds' claims against most of the HSBC companies
have been dismissed, but remain pending on appeal before the US Court of
Appeals for the Second Circuit. Fairfield Funds' claims against HSBC Private
Bank (Suisse) SA ('PBRS') and HSBC Securities Services Luxembourg ('HSSL')
have not been dismissed and are ongoing before the US Bankruptcy Court for the
Southern District of New York. PBRS and HSSL have appealed the decision not to
dismiss them and these appeals are pending before the US Court of Appeals for
the Second Circuit.
Herald Fund SPC ('Herald') litigation: HSSL and HSBC Bank plc are defending an
action brought by Herald (in liquidation) before the Luxembourg District Court
seeking restitution of securities and cash in the amount of $2.5bn (plus
interest), or damages in the amount of $5.6bn (plus interest). In 2013, the
Luxembourg District Court dismissed Herald's securities restitution claim and
stayed the cash restitution and damages claims. In December 2024, the
Luxembourg Court of Appeal reversed the Luxembourg District Court's dismissal
and determined that Herald's claims for restitution of securities and cash
were founded in principle. HSSL has appealed this decision. Herald's claim
against HSBC Bank plc is pending.
Alpha Prime Fund Limited ('Alpha Prime') litigation: Various HSBC companies
are defending a number of actions brought by Alpha Prime in the Luxembourg
District Court seeking damages for alleged breach of contract and negligence
in the amount of $1.16bn (plus interest). These matters are currently pending
before the Luxembourg District Court.
In November 2024, Alpha Prime served various HSBC companies with a lawsuit
filed in the Bermuda Supreme Court seeking damages for unspecified amounts for
alleged breach of contract and negligence. This claim is currently stayed.
Senator Fund SPC ('Senator') litigation: HSSL and the Luxembourg branch of
HSBC Bank plc are defending a number of actions brought by Senator before the
Luxembourg District Court seeking restitution of securities in the amount of
$625m (plus interest), or damages in the amount of $188m (plus interest).
These matters are currently pending before the Luxembourg District Court.
Based on the facts currently known, it is not practicable at this time for
HSBC to predict the resolution of these matters, including the timing or any
possible impact on HSBC, which could be significant.
US Anti-Terrorism Act litigation
Since November 2014, a number of lawsuits have been filed in federal courts in
the US against various HSBC companies and others on behalf of plaintiffs who
are, or are related to, alleged victims of terrorist attacks in the Middle
East. In each case, it is alleged that the defendants aided and abetted the
unlawful conduct of various sanctioned parties in violation of the US
Anti-Terrorism Act, or provided banking services to customers alleged to have
connections to terrorism financing. Seven actions, which seek damages for
unspecified amounts, remain pending and HSBC's motions to dismiss have been
granted in three of these cases. These dismissals are subject to appeals
and/or the plaintiffs re-pleading their claims. The four other actions are at
an early stage.
Based on the facts currently known, it is not practicable at this time for
HSBC to predict the resolution of these matters, including the timing or any
possible impact on HSBC, which could be significant.
Interbank offered rates investigation and litigation
Euro interest rate derivatives: In December 2016, the European Commission
('EC') issued a decision finding that HSBC, among other banks, engaged in
anti-competitive practices in connection with the pricing of euro interest
rate derivatives, and the EC imposed a fine on HSBC based on a one-month
infringement in 2007. The fine was annulled in 2019 and a lower fine was
imposed in 2021, which has been paid. In January 2023, the European Court of
Justice dismissed an appeal by HSBC and upheld the EC's findings on HSBC's
liability. In November 2024, the General Court of the European Union rejected
a separate appeal by HSBC concerning the amount of the fine. This matter is
now closed.
US dollar Libor: Beginning in 2011, HSBC and other panel banks have been named
as defendants in a number of individual and putative class action lawsuits
filed in federal and state courts in the US with respect to the setting of US
dollar Libor. The complaints assert claims under various US federal and state
laws, including antitrust and racketeering laws and the Commodity Exchange Act
('US CEA'). HSBC has concluded class settlements with five groups of
plaintiffs, and several class action lawsuits brought by other groups of
plaintiffs have been voluntarily dismissed. Two individual US dollar
Libor-related actions seeking damages from HSBC for unspecified amounts remain
pending.
Based on the facts currently known, it is not practicable at this time for
HSBC to predict the resolution of the pending matters, including the timing or
any possible impact on HSBC, which could be significant.
Foreign exchange-related investigations and litigation
In December 2016, Brazil's Administrative Council of Economic Defense
initiated an investigation into the onshore foreign exchange market and
identified a number of banks, including HSBC, as subjects of its
investigation, which remains ongoing. Lawsuits alleging foreign
exchange-related misconduct remain pending against HSBC and other banks in
courts in Brazil.
Since 2017, HSBC Bank plc, among other financial institutions, has been
defending a complaint filed by the Competition Commission of South Africa
before the South African Competition Tribunal for alleged anti-competitive
behaviour in the South African foreign exchange market. In 2020, a revised
complaint was filed which also named HSBC Bank USA N.A. ('HSBC Bank USA') as a
defendant. In January 2024, the South African Competition Appeal Court
dismissed HSBC Bank USA from the revised complaint but denied HSBC Bank plc's
application to dismiss. Both the Competition Commission and HSBC Bank plc have
appealed to the Constitutional Court of South Africa.
HSBC Bank plc and HSBC Holdings have reached a settlement with plaintiffs in
Israel to resolve a class action filed in the local courts alleging foreign
exchange-related misconduct. The settlement remains subject to court approval.
In February 2024, HSBC Bank plc and HSBC Holdings were joined to an existing
claim brought in the UK Competition Appeals Tribunal against various other
banks alleging historical anti-competitive behaviour in the foreign exchange
market and seeking approximately £3bn in damages from all the defendants.
This matter is at an early stage.
Based on the facts currently known, it is not practicable at this time for
HSBC to predict the resolution of these matters, including the timing or any
possible impact on HSBC, which could be significant.
Precious metals fix-related litigation
US litigation: HSBC and other members of The London Silver Market Fixing
Limited are defending a class action pending in the US District Court for the
Southern District of New York alleging that, from January 2007 to December
2013, the defendants conspired to manipulate the price of silver and silver
derivatives for their collective benefit in violation of US antitrust laws,
the US CEA and New York state law. In May 2023, this action, which seeks
damages for unspecified amounts, was dismissed but remains pending on appeal.
HSBC and other members of The London Platinum and Palladium Fixing Company
Limited have been defending a class action in the US District Court for the
Southern District of New York alleging that, from January 2008 to November
2014, the defendants conspired to manipulate the price of platinum group
metals and related financial products for their collective benefit in
violation of US antitrust laws and the US CEA. In January 2025, the court
approved a settlement reached with the plaintiffs to resolve this action. This
matter is now closed.
Canada litigation: HSBC and other financial institutions are defending
putative class actions filed in the Ontario and Quebec Superior Courts of
Justice alleging that the defendants conspired to manipulate the price of
silver, gold and related derivatives in violation of the Canadian Competition
Act and common law. These actions each seek CA$1bn in damages plus CA$250m in
punitive damages. Two of the actions are proceeding and the others have been
stayed.
Based on the facts currently known, it is not practicable at this time for
HSBC to predict the resolution of the pending matters, including the timing or
any possible impact on HSBC, which could be significant.
Tax-related investigations
Since 2023, the French National Financial Prosecutor has been investigating a
number of banks, including HSBC Continental Europe and the Paris branch of
HSBC Bank plc, in connection with alleged tax fraud related to the dividend
withholding tax treatment of certain trading activities. HSBC Bank plc and the
German branch of HSBC Continental Europe also continue to cooperate with
investigations by the German public prosecutor into numerous financial
institutions and their employees, in connection with the dividend withholding
tax treatment of certain trading activities.
Based on the facts currently known, it is not practicable at this time for
HSBC to predict the resolution of these matters, including the timing or any
possible impact on HSBC, which could be significant.
Gilts trading investigation and litigation
Since 2018, the UK Competition and Markets Authority has been investigating
HSBC and four other banks for suspected anti-competitive conduct in relation
to the historical trading of gilts and related derivatives. This matter is
nearing conclusion. The impact on HSBC is not expected to be significant.
In June 2023, HSBC Bank plc and HSBC Securities (USA) Inc., among other banks,
were named as defendants in a putative class action filed in the US District
Court for the Southern District of New York by plaintiffs alleging
anti-competitive conduct in the gilts market and seeking damages for
unspecified amounts. Certain of the defendants, including HSBC Bank plc and
HSBC Securities (USA) Inc., have reached a settlement with the plaintiffs to
resolve this matter. The settlement remains subject to court approval. Based
on the facts currently known, it is not practicable at this time for HSBC to
predict the resolution of this matter, including the timing or any possible
impact on HSBC, which could be significant.
Korean short selling indictment
In March 2024, the Korean Prosecutors' Office issued a criminal indictment
against The Hongkong and Shanghai Banking Corporation Limited ('HBAP') and
three current and former employees for breaching short selling rules under the
Financial Investment Services and Capital Markets Act in connection with
trades carried out between August 2021 and December 2021. In February 2025,
the Korean court acquitted HBAP of all charges. The Korean Prosecutors' Office
has the right to appeal this decision. Proceedings against the individual
defendants have been suspended.
First Citizens litigation
In May 2023, First-Citizens Bank & Trust Company ('First Citizens')
brought a lawsuit in the US District Court for the Northern District of
California against various HSBC companies and seven US-based HSBC employees
who had previously worked for Silicon Valley Bank ('SVB'). The lawsuit seeks
$1bn in damages and alleges, among other things, that the various HSBC
companies conspired with the individual defendants to solicit employees from
First Citizens and that the individual defendants took confidential
information belonging to SVB and/or First Citizens. In July 2024, the court
dismissed several of First Citizens' claims and also dismissed certain
defendants for lack of jurisdiction, but allowed limited discovery into
whether some of these defendants may be subject to jurisdiction. The remaining
claims are proceeding against certain defendants.
Based on the facts currently known, it is not practicable at this time for
HSBC to predict the resolution of this matter, including the timing or any
possible impact on HSBC, which could be significant.
US mortgage securitisation litigation
Beginning in 2014, a number of lawsuits were filed in various state and
federal courts in the US against HSBC Bank USA, as a trustee of more than 280
mortgage securitisation trusts, seeking unspecified damages for losses in
collateral value allegedly sustained by the trusts. Nearly all of these
lawsuits have either been settled or dismissed; one action remains pending in
a New York state court.
HSBC Bank USA and certain of its affiliates continue to defend a mortgage loan
repurchase action seeking unspecified damages and specific performance brought
by the trustee of a mortgage securitisation trust in New York state court.
Based on the facts currently known, it is not practicable at this time for
HSBC to predict the resolution of these matters, including the timing or any
possible impact on HSBC, which could be significant.
Mexican government bond litigation
HSBC Mexico S.A. and other banks are named as defendants in a consolidated
putative class action pending in the US District Court for the Southern
District of New York alleging anti-competitive conduct in the Mexican
government bond market between 2010 and 2014 and seeking unspecified damages.
In January 2025, the court denied the defendants' motion to dismiss the
plaintiffs' third amended complaint, and this action is proceeding.
Based on the facts currently known, it is not practicable at this time for
HSBC to predict the resolution of this matter, including the timing or any
possible impact on HSBC, which could be significant.
Other regulatory investigations, reviews and litigation
HSBC Holdings and/or certain of its affiliates are also subject to a number of
other enquiries and examinations, requests for information, investigations and
reviews by various tax authorities, regulators, competition and law
enforcement authorities, as well as legal proceedings including litigation,
arbitration and other contentious proceedings, in connection with various
matters arising out of their businesses and operations.
At the present time, HSBC does not expect the ultimate resolution of any of
these matters to be material to the Group's financial position; however, given
the uncertainties involved in legal proceedings and regulatory matters, there
can be no assurance regarding the eventual outcome of a particular matter or
matters.
9 Impairment of interest in associate
The Group maintains a 19.03% interest in Bank of Communications Co., Limited
('BoCom'). The Group's investment in BoCom is classified as an associate.
Significant influence in BoCom was established with consideration of all
relevant factors, including representation on BoCom's Board of Directors and
participation in a resource and experience sharing agreement ('RES'). Under
the RES, HSBC staff have been seconded to assist in the maintenance of BoCom's
financial and operating policies. Investments in associates are recognised
using the equity method of accounting in accordance with IAS 28 'Investments
in Associates and Joint Ventures', whereby the investment is initially
recognised at cost and adjusted thereafter for the post-acquisition change in
the Group's share of associate's net assets. An impairment test is required if
there is any indication of impairment or reversal.
At 31 December 2023, the Group performed an impairment test on the carrying
amount, which resulted in an impairment of $3.0bn, as the recoverable amount
as determined by a value in use ('VIU') calculation was lower than the
carrying amount. No further impairment was required for the year ended 31
December 2024.
If the Group did not have significant influence in BoCom, the investment would
be carried at fair value rather than the current carrying amount.
On 24 September 2024, the People's Bank of China, National Financial
Regulatory Administration and China Securities Regulatory Commission announced
several policies aimed at promoting growth and economic development. These
included monetary stimulus, property market support and capital market
strengthening measures, as well as measures to recapitalise the largest
commercial banks. In the absence of further details on how the
recapitalisation of the largest commercial banks may be enacted, there is no
change to the impairment test result at 31 December 2024. As further details
become available, the impairment test will be updated to reflect their impact
and may result in a change to the carrying value of our investment in BoCom.
These developments have the potential to impact on the Group's reported
earnings, but are unlikely to have an impact on HSBC's capital or capital
ratios.
We remain supportive of our relationship with BoCom and will consider any
broader implications on the carrying value of our investment as further
details become available.
At 31 December 2024, the carrying amount of the investment was $22.4bn (2023:
$21.2bn) with fair value of $11.6bn (2023: $8.8bn). The Group has concluded
there is no indication of further impairment (or indication that an impairment
may no longer exist or may have decreased) since 31 December 2023. As part of
this assessment, the Group updated the VIU calculation which supported that
there was no significant change to the 31 December 2023 impairment position.
As a result, no additional impairment to the carrying amount (or reversal of
impairment) was made at 31 December 2024.
For further details, see Note 18: Interests in associates and joint ventures
on page 401 of our Annual Report and Accounts 2024.
10 Events after the balance sheet date
A fourth interim dividend for 2024 of $0.36 per ordinary share (a distribution
of approximately $6.4bn was approved by the Directors after 31 December 2024.
On 19 February 2025, HSBC Holdings announced a share buy-back to purchase its
ordinary shares up to a maximum consideration of $2.0bn, which is expected to
commence shortly and complete by our first quarter 2025 results announcement.
On 30 January 2025, HSBC Holdings called $1,750m 2.999% fixed rate/floating
rate senior unsecured and $500m floating rate senior unsecured securities.
These securities are expected to be redeemed and cancelled on 10 March 2025.
On 7 February 2025, HSBC Holdings called $2,450m 6.375% perpetual subordinated
contingent convertible securities which are expected to be redeemed and
cancelled on 30 March 2025. The accounts were approved by the Board of
Directors on 19 February 2025 and authorised for issue.
11 Capital structure
Capital ratios
At 31 Dec
2024 2023
% %
Transitional basis
Common equity tier 1 ratio 14.9 14.8
Tier 1 ratio 17.2 16.9
Total capital ratio 20.6 20.0
End point basis
Common equity tier 1 ratio 14.9 14.8
Tier 1 ratio 17.2 16.9
Total capital ratio 20.1 19.6
Total regulatory capital and risk-weighted assets
At 31 Dec
2024 2023
$m $m
Transitional basis
Common equity tier 1 capital 124,911 126,501
Additional tier 1 capital 19,216 17,662
Tier 2 capital 28,259 27,041
Total regulatory capital 172,386 171,204
Risk-weighted assets 838,254 854,114
End point basis
Common equity tier 1 capital 124,911 126,501
Additional tier 1 capital 19,216 17,662
Tier 2 capital 24,401 22,894
Total regulatory capital 168,528 167,057
Risk-weighted assets 838,254 854,114
Leverage ratio
At 31 Dec
2024 2023
$bn $bn
Tier 1 capital 144.1 144.2
Total leverage ratio exposure 2,571.1 2,574.8
% %
Leverage ratio 5.6 5.6
12 Statutory accounts
The information in this news release does not constitute statutory accounts
within the meaning of section 434 of the Companies Act 2006 ('the Act'). The
statutory accounts for the year ended 31 December 2024 will be delivered to
the Registrar of Companies in England and Wales in accordance with section
441 of the Act. The auditor has reported on those accounts. Its report was
unqualified and did not contain a statement under section 498(2) or (3) of the
Act.
13 Dealings in HSBC Holdings plc listed securities
The Group has policies and procedures that, except where permitted by statute
and regulation, prohibit specified transactions in respect of its securities
listed on The Stock Exchange of Hong Kong Limited. Except for dealings as
intermediaries or as trustees by subsidiaries of HSBC Holdings, and purchases
by HSBC Holdings under the share buy-backs, neither HSBC Holdings nor any of
its subsidiaries has purchased, sold or redeemed any of its securities listed
on The Stock Exchange of Hong Kong Limited during the year ended 31 December
2024.
14 Interim dividends for 2025
As previously communicated, we established and achieved a target dividend
payout ratio of 50% of earnings per ordinary share ('EPS') for 2023 and 2024,
excluding the special dividend. EPS for this purpose excludes material notable
items and related impacts. Material notable items in 2023 and 2024 included
the sale of our businesses in Canada and Argentina, the sale of our retail
banking operations in France, the gain following the acquisition of SVB UK and
the impairment of our investment in BoCom. We also exclude HSBC Bank Canada's
financial results from the 30 June 2022 net asset reference date until
completion on 29 March 2024, as the gain on sale recognised through a
combination of the consolidation of HSBC Bank Canada's results in the Group's
results since this date, and the remaining gain on sale was recognised at
completion, inclusive of the recycling of related reserves and fair value
gains on related hedges.
The Board has adopted a dividend policy designed to provide sustainable cash
dividends, while retaining the flexibility to invest and grow the business in
the future, supplemented by additional shareholder distributions, if
appropriate. The Board has established a target dividend payout ratio of 50%
for 2025, subject to meeting capital requirements.
Dividends are approved in US dollars and, at the election of the shareholder,
paid in cash in one of, or in a combination of, US dollars, pounds sterling
and Hong Kong dollars.
15 Distributable reserves
As at 31 December 2024, the distributable reserves of HSBC Holdings were
$28.3bn, inclusive of $24.8bn in profits and other reserves movements
generated in 2024. As at the date of this news release, HSBC Holdings intends
to increase its distributable reserves subject to shareholder and court
approval. Shareholder approval will be sought at the 2025 Annual General
Meeting ('AGM'). The process will involve the conversion of the amount
standing to the credit of each of the share premium account ($14.8bn) and
capital redemption reserve ($1.8bn) as at 31 December 2024 into retained
earnings, and will have no impact on regulatory capital. Further information
will be included in the Notice of the 2025 AGM which will be circulated to
shareholders on 21 March 2025. The process is expected to complete by the end
of July 2025.
16 Earnings releases and interim results
First and third quarter results for 2025 will be released on 29 April 2025 and
28 October 2025, respectively. The interim results for the six months to 30
June 2025 will be issued on 30 July 2025.
17 Corporate governance codes
HSBC is subject to corporate governance requirements in both the UK and Hong
Kong. During 2024, HSBC complied with the provisions and requirements of both
the UK and Hong Kong Corporate Governance Codes.
Under the Hong Kong Corporate Governance Code, the audit committee should be
responsible for the oversight of all risk management and internal control
systems. During 2024, the Board approved changes to the scope of the Group
Audit Committee's responsibilities in relation to internal controls to extend
these to cover oversight of the effectiveness of all internal controls. HSBC's
Group Risk Committee retains oversight of internal controls relating to risk
management and risk management systems and provides input to the Group Audit
Committee on these.
HSBC Holdings has codified obligations for transactions in Group securities in
accordance with the requirements of the UK Market Abuse Regulation and the
rules governing the listing of securities on HKEx. The Group has been granted
certain waivers by HKEx from strict compliance with rules that take into
account accepted practices in the UK, particularly in respect of employee
share plans. During the year, all Directors were reminded of their obligations
in respect of transacting in HSBC Group securities. Following specific enquiry
all Directors have confirmed that they have complied with their obligations.
The Group Audit Committee has reviewed and provided assurance to support the
HSBC Holdings Board's approval and publication of the Annual Report and
Accounts 2024.
The Directors of HSBC Holdings plc as at the date of this announcement
comprise:
Sir Mark Edward Tucker*, Georges Bahjat Elhedery, Geraldine Joyce
Buckingham(†), Rachel Duan(†), Dame Carolyn Julie Fairbairn(†), James
Anthony Forese(†), Ann Frances Godbehere(†), Steven Craig
Guggenheimer(†), Manveen (Pam) Kaur, Dr José Antonio Meade Kuribreña(†),
Kalpana Jaisingh Morparia(†), Eileen K Murray(†), Brendan Robert
Nelson(†) and Swee Lian Teo(†).
* Non-executive Group Chairman
† Independent non-executive Director
18 Cautionary statement regarding forward-looking statements
This news release may contain projections, estimates, forecasts, targets,
commitments, ambitions, opinions, prospects, results, returns and
forward-looking statements with respect to the financial condition, results of
operations, capital position, ESG related matters, strategy and business of
the Group which can be identified by the use of forward-looking terminology
such as 'may', 'will', 'should', 'expect', 'anticipate', 'project',
'estimate', 'seek', 'intend', 'target', 'plan', 'believe', 'potential' or
'reasonably possible', or the negatives thereof or other variations thereon or
comparable terminology (together, 'forward-looking statements'), including the
strategic priorities and any financial, investment and capital targets and any
ESG ambitions, targets and commitments described herein.
Any such forward-looking statements are not a reliable indicator of future
performance, as they may involve significant stated or implied assumptions and
subjective judgements which may or may not prove to be correct. There can be
no assurance that any of the matters set out in forward-looking statements are
attainable, will actually occur or will be realised or are complete or
accurate. The assumptions and judgements may prove to be incorrect and involve
known and unknown risks, uncertainties, contingencies and other important
factors, many of which are outside the control of the Group.
Actual achievements, results, performance or other future events or conditions
may differ materially from those stated, implied and/or reflected in any
forward-looking statements due to a variety of risks, uncertainties and other
factors (including without limitation those which are referable to general
market or economic conditions, regulatory and government policy changes,
including in relation to trade and tariff policies, increased volatility in
interest rates and inflation levels and other macroeconomic risks,
geopolitical tensions such as the Russia-Ukraine war and the conflict in the
Middle East and potential resurgence, continuation or escalation thereof,
specific economic developments, such as the uncertain performance of the
commercial real estate sector in mainland China, or as a result of data
limitations and changes in applicable methodologies in relation to ESG related
matters).
Any such forward-looking statements are based on the beliefs, expectations and
opinions of the Group at the date the statements are made, and the Group does
not assume, and hereby disclaims, any obligation or duty to update, revise or
supplement them if circumstances or management's beliefs, expectations or
opinions should change. For these reasons, recipients should not place
reliance on, and are cautioned about relying on, any forward-looking
statements. No representations or warranties, expressed or implied, are given
by or on behalf of the Group as to the achievement or reasonableness of any
projections, estimates, forecasts, targets, commitments, ambitions, prospects
or returns contained herein.
Additional detailed information concerning important factors, including but
not limited to ESG related factors, that could cause actual results to differ
materially from this news release is available in our Annual Report and
Accounts for the fiscal year ended 31 December 2024, which we expect to file
with the U.S. Securities and Exchange Commission on Form 20-F on or around 20
February 2025.
19 Use of alternative performance measures
This news release contains non-IFRS measures used by management internally
that constitute alternative performance measures under European Securities and
Markets Authority guidance and non-GAAP financial measures defined in and
presented in accordance with US Securities and Exchange Commission rules and
regulations ('alternative performance measures'). The primary alternative
performance measures we use are presented on a 'constant currency' basis which
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. 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. Reconciliations between alternative performance
measures and the most directly comparable measures under IFRS are provided in
our Annual Report and Accounts 2024, which is available at www.hsbc.com.
20 Certain defined terms
Unless the context requires otherwise, 'HSBC Holdings' means HSBC Holdings plc
and 'HSBC', the 'Group', 'we', 'us' and 'our' refer to HSBC Holdings together
with its subsidiaries. Within this document the Hong Kong Special
Administrative Region of the People's Republic of China is referred to as
'Hong Kong'. When used in the terms 'shareholders' equity' and 'total
shareholders' equity', 'shareholders' means holders of HSBC Holdings ordinary
shares and those preference shares and capital securities issued by HSBC
Holdings classified as equity. The abbreviations '$m', '$bn' and '$tn'
represent millions, billions (thousands of millions) and trillions of US
dollars, respectively.
21 For further information contact:
Media Relations Investor Relations
UK - Gillian James UK - Neil Sankoff
Telephone: +44 (0)7584 404 238 Telephone: +44 (0) 20 7991 5072
Email: pressoffice@hsbc.com Email: investorrelations@hsbc.com
Hong Kong - Aman Ullah Hong Kong - Yafei Tian
Telephone: +852 3941 1120 Telephone: +852 2899 8909
Email: aspmediarelations@hsbc.com.hk Email: investorrelations@hsbc.com.hk
22 Registered Office and Group Head Office
8 Canada Square
London E14 5HQ
United Kingdom
Web: www.hsbc.com
Incorporated in England and Wales with limited liability. Registration number
617987
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