REG - HSBC Holdings PLC - HSBC Holdings plc 2024 Interim Results
31/07/2024 07:00
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RNS Number : 5444Y HSBC Holdings PLC 31 July 2024
HSBC HOLDINGS PLC
2024 Interim results
Noel Quinn, Group Chief Executive, said:
"After delivering record profits in 2023, we had another strong profit
performance in the first half of 2024, which is further evidence that our
strategy is working. Our investment in Wealth is delivering higher, more
diversified revenue and we continue to grow our core international and scale
businesses, all of which helped us to provide $13.7bn of distributions in
respect of the first half. We are confident that we have the right strategy
and model to grow revenue, even in a lower interest rate environment, and are
therefore providing new guidance of a mid-teens return on average tangible
equity in 2025.
I have always been immensely proud of the heritage of this bank and the
strategic role it plays in the world. My aim when I took this job was to
deliver financial performance to match our standing. Working together, I
believe we have done that and created a strong platform for growth."
Financial performance in 1H24
- Profit before tax of $21.6bn was stable compared with 1H23, including
a $0.2bn net favourable revenue impact of notable items relating to gains and
losses recognised on certain strategic transactions. Profit after tax of
$17.7bn was $0.4bn or 2% lower compared with 1H23.
- In 1H24, we completed the disposal of our banking business in Canada,
recognising a gain of $4.8bn. We also recognised an impairment of $1.2bn
following the classification of our business in Argentina as held for sale.
Results in 1H23 included the impact of a $2.1bn reversal of an impairment
relating to the sale of our retail banking operations in France and a $1.5bn
gain recognised on the acquisition of Silicon Valley Bank UK Limited ('SVB
UK').
- Constant currency profit before tax excluding notable items was stable
at $18.1bn compared with 1H23, as revenue growth and lower expected credit
losses and other impairment charges ('ECL') were offset by a rise in operating
expenses.
- Revenue rose by $0.4bn or 1% to $37.3bn compared with 1H23, including
the gains and losses on certain strategic transactions described above. Net
interest income ('NII') fell by $1.4bn, as growth in HSBC UK and a number of
other markets was more than offset by reductions due to business disposals,
deposit migration, and redeployment into the trading book in HSBC Bank plc and
our main entity in Hong Kong. The increase in funding costs associated with
funding the trading book resulted in an increase in banking net interest
income ('banking NII') of $0.3bn or 1%.
- Revenue growth also reflected the impact of higher customer activity
in our Wealth products in Wealth and Personal Banking ('WPB'), and in Equities
and Securities Financing in Global Banking and Markets ('GBM'). Constant
currency revenue excluding notable items rose by 2% to $33.7bn, primarily due
to growth in Wealth in WPB, in Equities and Securities Financing in GBM, as
well as an increase in Global Payment Solutions ('GPS').
- Net interest margin ('NIM') of 1.62% decreased by 8 basis points
('bps') compared with 1H23, reflecting a rise in the funding cost of average
interest-bearing liabilities.
- ECL charges were $1.1bn, a reduction of $0.3bn compared with 1H23. The
reduction reflected a release of stage 3 allowances in GBM in HSBC Bank plc,
lower ECL in Commercial Banking ('CMB') in HSBC UK, and lower charges in the
commercial real estate sector in mainland China. In WPB, ECL charges were
broadly stable as a release of allowances in the UK was offset by higher
charges in Mexico, reflecting unemployment trends and growth in our unsecured
portfolio. Annualised ECL were 22bps of average gross loans, including a 4bps
reduction due to the inclusion of loans and advances classified as held for
sale.
- Operating expenses of $16.3bn were $0.8bn or 5% higher than in 1H23,
mainly due to higher technology spend and investment, inflationary pressures
and an increase in the performance-related pay accrual. Target basis operating
expenses rose by 7% compared with 1H23. 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 France retail banking operations and our
banking business in Canada.
- Customer lending balances of $938bn were stable on a reported basis,
and increased by $12bn on a constant currency basis, compared with
31 December 2023. Growth included higher balances in HSBC Bank plc in both
CMB and GBM, and higher term lending in CMB in our entities in mainland China
and India. In addition, mortgage balances increased in HSBC UK in WPB.
- Customer accounts of $1.6tn fell by $18bn on a reported basis, and
increased by $3bn on a constant currency basis compared with 31 December
2023, notably in GBM reflecting growth in time deposit balances in Asia. The
increase in GBM included a short-term deposit from a single corporate
customer.
- Common equity tier 1 ('CET1') capital ratio of 15.0% rose by 0.2
percentage points compared with 4Q23, driven by a reduction in risk-weighted
assets ('RWAs'), partly offset by a reduction in our CET1 capital.
- The Board has approved a second interim dividend of $0.10 per share.
We also intend to initiate a share buy-back of up to $3bn, which we expect to
complete within three months.
Financial performance in 2Q24
- Reported profit before tax increased by $0.1bn to $8.9bn compared with
2Q23, due to a lower ECL charge, which more than offset higher operating
expenses and lower revenue. On a constant currency basis, profit before tax
increased by $0.4bn or 4%.
- Revenue fell by $0.2bn to $16.5bn compared with 2Q23, notably as 2Q23
included the operating results of France and Canada for which sales completed
in 1Q24. In addition, 2Q24 included a loss related to the recycling of
reserves following the completion of the sale of our business in Russia. This
was partly offset by growth in Securities Financing and Equities in GBM and
from Wealth in WPB.
- ECL of $0.3bn decreased by $0.6bn, reflecting lower charges in 2Q24 in
the commercial real estate sector in mainland China, compared with 2Q23, as
well as a reduction in charges in HSBC UK, and the release of stage 3
allowances in GBM in HSBC Bank plc.
- Operating expenses of $8.1bn rose by $0.3bn or 3%, due to higher
technology costs, including investment, the 2Q23 reversal of historical asset
impairments, which did not recur, and inflationary impacts. This was partly
offset by reductions following the completion of disposals in Canada and
France.
- Customer lending increased by $5bn compared with 1Q24 on a reported
basis and by $8bn on a constant currency basis. The growth was mainly from
CMB, notably in our entities in mainland China and India, and in WPB from
mortgage balance growth in HSBC UK and our entity in the US.
- Customer accounts increased by $24bn compared with 1Q24 on a reported
basis and by $27bn on a constant currency basis. The increase was across all
businesses, primarily in Asia. The increase included a short-term deposit from
a single corporate customer.
Outlook
- We will now target a return on average tangible equity ('RoTE'),
excluding the impact of notable items, in the mid-teens for both 2024 and
2025.
- Based upon our current forecasts, we expect banking NII of around
$43bn in 2024. This guidance remains dependent on the path of interest rates
globally.
- While loan growth was 1% in 1H24, revenue has continued to benefit
from elevated interest rates. Over the medium to long term, we continue to
expect mid-single digit year-on-year percentage growth in customer lending.
- We are reiterating our cost growth guidance of approximately 5% for
2024 compared with 2023, on a target basis, and now expect ECL charges as a
percentage of average gross loans in 2024 to be within our medium-term
planning range of 30bps to 40bps (including customer lending balances
transferred to held for sale).
- Our guidance reflects our current outlook for the global macroeconomic
environment, including customer and financial markets activity. This includes
our modelling of a number of market dependent factors, such as market-implied
interest rates (as of mid-July 2024), as well as customer behaviour and
activity levels.
- We intend to manage our CET1 capital ratio within our medium-term
target range of 14% to 14.5%, with a dividend payout ratio target basis of 50%
for 2024, which excludes material notable items and related impacts.
- Note: we do not reconcile our forward guidance on RoTE excluding
notable items, target basis operating expenses, dividend payout ratio target
basis or banking NII to their equivalent reported measures.
Key financial metrics
Half-year to
30 Jun 2024 30 Jun 2023
Reported results
Profit before tax ($m) 21,556 21,657
Profit after tax ($m) 17,665 18,071
Cost efficiency ratio (%) 43.7 41.9
Net interest margin (%) 1.62 1.70
Basic earnings per share ($) 0.89 0.86
Diluted earnings per share ($) 0.88 0.86
Dividend per ordinary share (in respect of the period) ($)(1) 0.20 0.20
Alternative performance measures
Constant currency profit before tax ($m) 21,556 21,472
Constant currency cost efficiency ratio (%) 43.7 41.8
Constant currency revenue excluding notable items ($m) 33,721 33,075
Constant currency profit before tax excluding notable items ($m) 18,067 18,117
Constant currency revenue excluding notable items and strategic transactions 33,543 32,462
($m)
Constant currency profit before tax excluding notable items and strategic 17,975 17,969
transactions ($m)
Expected credit losses and other credit impairment charges (annualised) as % 0.23 0.28
of average gross loans and advances to customers (%)
Expected credit losses and other credit impairment charges (annualised) as % 0.22 0.26
of average gross loans and advances to customers, including held for sale (%)
Basic earnings per share excluding material notable items and related impacts 0.68 0.70
($)
Return on average ordinary shareholders' equity (annualised) (%) 19.8 20.8
Return on average tangible equity (annualised) (%) 21.4 22.4
Return on average tangible equity excluding notable items (annualised) (%) 17.0 18.5
Target basis operating expenses ($m) 16,052 14,983
At
30 Jun 2024 31 Dec 2023
Balance sheet
Total assets ($m) 2,975,003 3,038,677
Net loans and advances to customers ($m) 938,257 938,535
Customer accounts ($m) 1,593,834 1,611,647
Average interest-earning assets, year to date ($m) 2,097,866 2,161,746
Loans and advances to customers as % of customer accounts (%) 58.9 58.2
Total shareholders' equity ($m) 183,293 185,329
Tangible ordinary shareholders' equity ($m) 153,109 155,710
Net asset value per ordinary share at period end ($) 8.97 8.82
Tangible net asset value per ordinary share at period end ($) 8.35 8.19
Capital, leverage and liquidity
Common equity tier 1 capital ratio (%)(2) 15.0 14.8
Risk-weighted assets ($m)(2,3) 835,118 854,114
Total capital ratio (%)(2,3) 20.6 20.0
Leverage ratio (%)(2,3) 5.7 5.6
High-quality liquid assets (liquidity value, average) ($m)(3,4) 646,052 647,505
Liquidity coverage ratio (average) (%)(3,4,5) 137 136
Share count
Period end basic number of $0.50 ordinary shares outstanding (millions) 18,330 19,006
Period end basic number of $0.50 ordinary shares outstanding and dilutive 18,456 19,135
potential ordinary shares (millions)
Average basic number of $0.50 ordinary shares outstanding (millions) 18,666 19,478
For reconciliations of our reported results to a constant currency basis,
including lists of notable items, see page 40 of the Interim Report 2024. For
detail on other alternative performance measures, including definitions and
calculations, see 'Reconciliation of alternative performance measures' on
pages 56 to 61 of the Interim Report 2024.
1 Dividend per ordinary share for half year to 30 June 2024 excludes 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 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.
3 Regulatory numbers and ratios are as presented at the date of
reporting. Small changes may exist between these numbers and ratios and those
subsequently submitted in regulatory filings. Where differences are
significant, we may restate in subsequent periods.
4 The liquidity coverage ratio is based on the average value of the
preceding 12 months.
5 We have enhanced our calculation processes during 1H24. As Group LCR
is reported as a 12-month average, the benefit of these changes will be
recognised incrementally over the coming year starting from 30 June 2024.
Highlights
Half-year to
30 Jun 2024 30 Jun 2023
$m $m
Reported
Revenue(1,2,3,4) 37,292 36,876
Change in expected credit losses and other credit impairment charges (1,066) (1,345)
Operating expenses (16,296) (15,457)
Share of profit in associates and joint ventures 1,626 1,583
Profit before tax 21,556 21,657
Tax (charge)/credit (3,891) (3,586)
Profit after tax 17,665 18,071
Constant currency(5)
Revenue(1,2,3,4) 37,292 36,502
Change in expected credit losses and other credit impairment charges (1,066) (1,317)
Operating expenses (16,296) (15,244)
Share of profit in associates and joint ventures 1,626 1,531
Profit before tax 21,556 21,472
Tax (charge)/credit (3,891) (3,514)
Profit after tax 17,665 17,958
Notable items
Revenue
Disposals, acquisitions and related costs(2,3,4) 3,571 3,321
Fair value movements on financial instruments(6) - 15
Operating expenses
Disposals, acquisitions and related costs (101) (118)
Restructuring and other related costs(7) 19 47
Tax
Tax (charge)/credit on notable items 14 (500)
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 Includes the reversal of a $2.1bn impairment loss relating to the
sale of our retail banking operations in France in 1Q23.
3 Includes a $4.8bn gain on disposal of our banking business in Canada,
inclusive of a $0.3bn gain on the foreign exchange hedging of the sale
proceeds, the recycling of $0.6bn in foreign currency translation reserve
losses and $0.4bn of other reserves recycling losses. This is partly offset by
a $1.2bn impairment recognised in relation to the planned sale of our business
in Argentina.
4 Includes the gain of $1.5bn recognised in respect of the acquisition
of SVB UK in 1Q23.
5 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.
6 Fair value movements on non-qualifying hedges in HSBC Holdings.
7 Relates to reversals of restructuring provisions recognised during
2022.
Review by Noel Quinn, Group Chief Executive
After achieving a record profit performance in 2023, we had a strong first
half financial performance that reflected our strategy execution and revenue
diversification over the past five years. We remain confident that we can
deliver attractive returns, even in a lower interest rate environment, as a
result of macroeconomic trends that play to our strengths, market-leading
businesses connecting high-growth markets that we are continuing to invest in,
and ongoing cost discipline. As a result, we are providing new guidance of a
mid-teens return on average tangible equity, excluding the impact of notable
items, in 2025.
Over the last 18 months, HSBC's business model has delivered our highest
return on average tangible equity for more than a decade. We continued to
perform well in our home markets of Hong Kong and the UK - the two pillars
upon which our bank is built. The international wholesale banking business
that we have built on top of these pillars is mature and differentiated, and
has substantial scale. It remains our biggest competitive advantage and is
supported by leading transaction banking products and services in global
trade, payments and foreign exchange. Finally, we are growing and investing in
our international retail and wealth business to sit alongside this, which is
helping to diversify revenue.
Each of these strengths contributed to a good revenue performance in the first
half of 2024, supported by higher interest rates. Our strategy is working and
providing attractive returns for our shareholders. We have announced a second
interim dividend of $0.10 per share, further to the first interim dividend of
$0.10 per share and the special dividend of $0.21 paid in June. We are also
today announcing a share buy-back of up to $3bn, further to the now completed
$3bn share buy-back announced at our first quarter results. This means that we
are announcing a further $4.8bn in distributions with these results, taking
the amount of capital distributed in respect of the last 18 months to $34.4bn.
As we look ahead, the path of interest rates and the outcomes of elections are
amongst the factors that will shape the global operating environment. The
progress that has been made reducing inflation has enabled central banks to
start cutting interest rates. Although we expect a cautious approach, we have
reduced our sensitivity to interest rates. 2024 will also be the biggest
election year on record, as more than 4 billion people have an opportunity to
go to the polls. The US election result will be watched particularly closely
considering the potential for policy change based on the result and the impact
this could have beyond its borders. We will continue to monitor these
situations.
Continued strong financial performance
The first half saw another strong profit performance, driven by growth in our
scale businesses and in areas where we have been investing. There was strong
revenue growth in Wealth, transaction banking revenue remained stable and
wholesale lending increased again in the second quarter, on a constant
currency basis, after growing in the first quarter.
Profit before tax for the first half was $21.6bn, which was stable compared
with the first half of 2023. This included a $4.8bn gain on the sale of our
banking operations in Canada, partly offset by a $1.2bn impairment related to
the planned sale of our banking operations in Argentina, which was announced
in the first half. The prior year also included a $2.1bn reversal of an
impairment relating to the sale of our retail banking operations in France and
a $1.5bn gain recognised on the acquisition of SVB UK.
Revenue increased by $0.4bn or 1% to $37.3bn, including the aforementioned
acquisition and disposal impacts, driven mainly by higher banking net interest
income. We achieved an annualised return on average tangible equity of 21.4%,
or 17% excluding notable items.
Our three global businesses continued to perform well. In Wealth and Personal
Banking, profit before tax of $6.5bn was $2.2bn lower than in 2023 on a
constant currency basis, primarily due to the non-recurrence of a $2.1bn
reversal last year of an impairment relating to the sale of our retail banking
operations in France and $0.1bn of profit before tax in the prior period from
our Canadian banking operations. Wealth revenue of $4.3bn was 12% higher than
the first half of last year, driven by increases in investment distribution
and Global Private Banking, as well as growth in asset management and life
insurance.
In Commercial Banking, profit before tax of $6.5bn was down by $1.5bn on a
constant currency basis, primarily due to the non-recurrence of a $1.6bn gain
last year on the acquisition of SVB UK. Overall performance remained good,
with revenue benefiting from the higher rates environment, growth in
transaction banking and higher collaboration revenue.
Global Banking and Markets delivered a good performance. Revenue grew by 5% on
a constant currency basis, with good growth in areas like Equities and
Securities Financing, while still benefiting from the interest rate
environment.
First half operating expenses of $16.3bn were around 5% higher than in 2023,
mainly due to higher technology costs including investments, inflationary
pressures and different phasing of the accrual of performance-related pay
compared with 2023. On a target basis, operating expenses were 7% higher than
the same period last year. As we expect the overall amount of
performance-related pay for 2024 not to be materially different to 2023, we
expect lower performance-related pay accrual in the second half. We are
therefore reconfirming our cost growth guidance of approximately 5% for 2024
compared with 2023, on a target basis.
ECL and other credit impairment charges for the first half were $1.1bn, which
was a $0.3bn decrease on the first half of 2023. We now expect ECLs as a
percentage of average gross loans in 2024 to be back within our medium-term
planning range of 30bps to 40bps. Our CET1 ratio at the end of the first half
was 15.0%.
Our first half banking net interest income performance and the improved net
interest income outlook mean that we are upgrading our 2024 banking net
interest income guidance from at least $41bn to around $43bn.
Further opportunities to grow revenue
We also expect to deliver a return on average tangible equity in the mid-teens
for 2024 and 2025, excluding the impact of notable items. Clearly there are
downside risks to net interest income when interest rates fall, but we're
confident that we have the levers to achieve these targets.
The first lever is leveraging our international connectivity. We have a strong
international wholesale franchise. After a softer year in 2023, international
trade volumes are forecast to grow more quickly this year and next. As the
world's leading trade finance bank and the third-largest bank for global
foreign exchange revenue since 2021, we expect to capitalise on this. To
illustrate this growth potential, we grew wholesale multi-jurisdictional
client revenue by 4% in the first half of 2024, on a constant currency basis
and excluding HSBC Bank Canada, from $9.4bn to $9.7bn.
Increasing global mobility amongst retail customers is also driving demand for
innovative cross-border banking solutions. This helped us to grow
international customers within Wealth and Personal Banking by 11%, bringing
the total to 7m customers. Revenue from these customers also grew by 6% in the
first half. We believe that there is still significant untapped potential
amongst international wholesale and retail customers.
The second lever is maintaining our leadership in our home markets. Our leading businesses in Hong Kong and the UK - two of the biggest global financial centres - both grew profits before tax in the first half, helped by their strong international connectivity with the rest of the Group. In Hong Kong, our scale and connectivity are delivering good profitability and enabling us to capture new opportunities. In the first half, 345,000 new-to-bank customers opened accounts as we continued to capitalise on the significant inflows into Hong Kong as customers seek higher yields and quality products. In the UK, we grew international customers by 8% to 2.7m, underlining the differentiated nature of our UK business compared to other UK banks. Signs of economic recovery were also underlined by growth in customer lending of 2% compared with the first half of 2023. We remain confident in our ability to grow further in these two critical markets.
The third lever is investing to diversify revenue. Over the last five years,
we have taken a number of actions to reduce our sensitivity to interest rates
and create the bank of the future. Building our wealth business, especially in
Asia, to capitalise on increasing affluence has been one of the key
priorities. As a result of this, wealth revenue was up 12% in the first half,
while we attracted $32.4bn of net new invested assets. Payments is another
fee-based business that we are investing in to capitalise on the expected
increase in global payments revenue. We are the number two bank globally by
payments revenue, up from top four in 2022, with a market share of 4.8%
in 2023 compared with 3.6% in the prior year. HSBC was also named 'World's
Best Bank for Payments and Treasury' by Euromoney, which was one of 33 awards
given to the bank in 2024 that also included 'Best Bank in Asia' and 'World's
Best Bank for Sustainable Finance'.
Through HSBC Innovation Banking, we are building a global proposition that can
help us to become known as the go-to bank for innovation companies. Revenue
from the new proposition increased by 4% in the second quarter and we have
onboarded almost 600 new-to-bank innovation companies globally since the
acquisition of SVB UK.
Thank you
As I prepare to hand on the leadership of HSBC to Georges Elhedery in
September, I would like to place on record what an enormous privilege it has
been to lead this great institution. I never imagined when I started my career
37 years ago that I would have the honour of becoming Group Chief Executive. I
have always been immensely proud of the heritage of this bank and the
strategic role it plays in the world. My aim when I took this job was to
deliver financial performance to match our standing. Working together, I
believe we have done that and created a strong platform for growth.
The success of our transformation programme is evident in the improved returns
that we have delivered. Since I became Group Chief Executive, we have returned
$36bn of dividends and $18bn of share buy-backs to our shareholders, inclusive
of the distributions we have announced with these results, while also
successfully navigating the global pandemic.
This would not have been possible without the support and backing of the
Board, my Group Executive Committee colleagues and, of course, the whole HSBC
team. I have been very fortunate to work with many talented, dedicated and
committed people during my career. I would like to thank them wholeheartedly
for their friendship and partnership - and I wish continued success to
Georges, and to all those who will write the next chapter in the story of this
great bank.
Noel Quinn
Group Chief Executive
31 July 2024
Financial summary
Half-year to
30 Jun 2024 30 Jun 2023
$m $m
For the period
Profit before tax 21,556 21,657
Profit attributable to:
- ordinary shareholders of the parent company 16,586 16,966
Dividends on ordinary shares(1) 11,691 6,591
At the period end
Total shareholders' equity 183,293 184,170
Total regulatory capital 172,084 170,021
Customer accounts 1,593,834 1,595,769
Total assets 2,975,003 3,041,476
Risk-weighted assets 835,118 859,545
Per ordinary share $ $
Basic earnings 0.89 0.86
Dividend per ordinary share (paid in the period)(1) 0.62 0.33
Net asset value(2) 8.97 8.44
1 The $0.62 dividend paid during the period consisted of a fourth
interim dividend of $0.31 per ordinary share in respect of the financial year
ended 31 December 2023 paid in April 2024, a first interim dividend of $0.10
per ordinary share in respect of the financial year ending 31 December 2024
and a special dividend of $0.21 per ordinary share from the Canada sale
proceeds.
2 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.
Distribution of results by global business
Constant currency profit before tax
Half-year to
30 Jun 2024 30 Jun 2023
$m % $m %
Wealth and Personal Banking 6,458 30.0 8,626 40.2
Commercial Banking 6,463 30.0 7,933 36.9
Global Banking and Markets 3,813 17.7 3,409 15.9
Corporate Centre(1) 4,822 22.3 1,504 7.0
Profit before tax 21,556 100.0 21,472 100.0
1 On 1 January 2024, HSBC Continental Europe completed the sale of its
retail banking operations in France to CCF, a subsidiary of Promontoria MMB
SAS ('My Money Group'). With effect from this date, we have prospectively
reclassified the portfolio of retained loans, profit participation interest
and licence agreement of the CCF brand from WPB to Corporate Centre.
Distribution of results by legal entity
Reported profit/(loss) before tax
Half-year to
30 Jun 2024 30 Jun 2023
$m % $m %
HSBC UK Bank plc 3,734 17.3 4,791 22.1
HSBC Bank plc 1,436 6.7 3,498 16.2
The Hongkong and Shanghai Banking Corporation Limited 10,893 50.5 10,917 50.4
HSBC Bank Middle East Limited 536 2.5 673 3.1
HSBC North America Holdings Inc. 423 2.0 701 3.2
HSBC Bank Canada 186 0.9 475 2.2
Grupo Financiero HSBC, S.A. de C.V. 466 2.2 436 2.0
Other trading entities(1) 1,034 4.7 1,282 6.0
- of which: other Middle East entities (including Oman, Türkiye, Egypt and 411 1.9 420 1.9
Saudi Arabia)
- of which: Saudi Awwal Bank 317 1.5 272 1.3
Holding companies, shared service centres and intra-Group eliminations(2) 2,848 13.2 (1,116) (5.2)
Profit before tax 21,556 100.0 21,657 100.0
1 Other trading entities includes the results of entities located in
Oman (pre merger with Sohar International Bank SAOG in August 2023), Türkiye,
Egypt and Saudi Arabia (including our share of the results of Saudi Awwal
Bank) which do not consolidate into HSBC Bank Middle East Limited.
Supplementary analysis is provided on page 56 of the Interim Report 2024 for a
fuller picture of the Middle East, North Africa and Türkiye regional
performance.
2 Includes a $4.8bn gain on disposal of our banking business in
Canada, inclusive of a $0.3bn gain on the foreign exchange hedging of the sale
proceeds, the recycling of $0.6bn in foreign currency translation reserve
losses and $0.4bn of other reserves recycling losses. This is partly offset by
a $1.2bn impairment recognised in relation to the planned sale of our business
in Argentina.
HSBC constant currency profit before tax and balance sheet data
Half-year to 30 Jun 2024
Wealth and Personal Banking Commercial Global Corporate Centre Total
Banking Banking and
Markets
$m $m $m $m $m
Net operating income/(expense) before change in expected credit losses and 14,312 10,896 8,742 3,342 37,292
other credit impairment charges(1)
- external 10,166 11,217 15,377 532 37,292
- inter-segment 4,146 (321) (6,635) 2,810 -
- of which: net interest income/(expense)(2) 10,231 8,799 3,710 (5,829) 16,911
Change in expected credit losses and other credit impairment charges (476) (573) (11) (6) (1,066)
Net operating income 13,836 10,323 8,731 3,336 36,226
Total operating expenses (7,406) (3,861) (4,918) (111) (16,296)
Operating profit 6,430 6,462 3,813 3,225 19,930
Share of profit in associates and joint ventures 28 1 - 1,597 1,626
Constant currency profit before tax 6,458 6,463 3,813 4,822 21,556
% % % % %
Share of HSBC's constant currency profit before tax 30.0 30.0 17.7 22.3 100.0
Constant currency cost efficiency ratio 51.7 35.4 56.3 3.3 43.7
Constant currency balance sheet data $m $m $m $m $m
Loans and advances to customers (net) 445,882 310,356 174,376 7,643 938,257
Interests in associates and joint ventures 567 25 111 27,762 28,465
Total external assets 864,948 597,808 1,365,439 146,808 2,975,003
Customer accounts 794,807 467,362 331,269 396 1,593,834
Constant currency risk-weighted assets(3) 182,508 335,692 225,145 91,773 835,118
Half-year to 30 Jun 2023
Net operating income before change in expected credit losses and other credit 16,095 12,086 8,321 - 36,502
impairment charges(1)
- external 12,317 12,730 13,714 (2,259) 36,502
- inter-segment 3,778 (644) (5,393) 2,259 -
- of which: net interest income/(expense)(2) 10,130 8,073 3,401 (3,877) 17,727
Change in expected credit losses and other credit impairment charges (484) (694) (136) (3) (1,317)
Net operating income/(expense) 15,611 11,392 8,185 (3) 35,185
Total operating expenses (7,020) (3,458) (4,776) 10 (15,244)
Operating profit 8,591 7,934 3,409 7 19,941
Share of profit/(loss) in associates and joint ventures 35 (1) - 1,497 1,531
Constant currency profit before tax 8,626 7,933 3,409 1,504 21,472
% % % % %
Share of HSBC's constant currency profit before tax 40.2 36.9 15.9 7.0 100.0
Constant currency cost efficiency ratio 43.6 28.6 57.4 - 41.8
Constant currency balance sheet data $m $m $m $m $m
Loans and advances to customers (net) 460,395 315,271 175,055 293 951,014
Interests in associates and joint ventures 551 22 105 28,856 29,534
Total external assets 891,675 644,672 1,325,327 150,047 3,011,721
Customer accounts 803,962 466,302 309,526 628 1,580,418
Constant currency risk-weighted assets(3) 181,464 345,043 224,239 91,526 842,272
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 the Corporate Centre includes
$5.5bn (1H23: $3.8bn) 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 Constant currency risk-weighted assets are calculated using reported
risk-weighted assets adjusted for the effects of currency translation
differences.
Consolidated income statement
Half-year to
30 Jun 2024 30 Jun 2023
$m $m
Net interest income 16,911 18,264
- interest income 55,372 46,955
- interest expense (38,461) (28,691)
Net fee income 6,200 6,085
- fee income 8,158 7,947
- fee expense (1,958) (1,862)
Net income from financial instruments held for trading or managed on a fair 10,516 8,112
value basis(1)
Net income from assets and liabilities of insurance businesses, including 2,376 4,304
related derivatives, measured at fair value through profit or loss
Insurance finance expense (2,486) (4,234)
Insurance service result 662 524
- insurance service revenue 1,310 1,104
- insurance service expense (648) (580)
Gain on acquisition(2) - 1,507
Gain less impairment relating to sale of business operations(3) 3,256 2,130
Other operating (expense)/income (143) 184
Net operating income before change in expected credit losses and other credit 37,292 36,876
impairment charges(4)
Change in expected credit losses and other credit impairment charges (1,066) (1,345)
Net operating income 36,226 35,531
Employee compensation and benefits (9,192) (8,954)
General and administrative expenses (5,135) (4,912)
Depreciation and impairment of property, plant and equipment and right-of-use (867) (782)
assets
Amortisation and impairment of intangible assets (1,102) (809)
Total operating expenses (16,296) (15,457)
Operating profit 19,930 20,074
Share of profit in associates and joint ventures 1,626 1,583
Profit before tax 21,556 21,657
Tax expense (3,891) (3,586)
Profit after tax 17,665 18,071
Attributable to:
- ordinary shareholders of the parent company 16,586 16,966
- other equity holders 526 542
- non-controlling interests 553 563
Profit after tax 17,665 18,071
$ $
Basic earnings per ordinary share 0.89 0.86
Diluted earnings per ordinary share 0.88 0.86
1 Includes a $255m gain (1H23: $284m loss) on the foreign exchange
hedging of the proceeds from the sale of our banking business in Canada.
2 Gain recognised in respect of the acquisition of SVB UK.
3 In the first half of 2024, a gain of $4.6bn inclusive of the
recycling of $0.6bn in foreign currency translation reserve losses and $0.4bn
of other reserves recycling losses on the sale of our banking business in
Canada, and an impairment loss of $1.2bn relating to the planned sale of our
business in Argentina was recognised. In the first quarter of 2023, the $2.1bn
reversal of the held for sale classification was recognised relating to the
sale of our retail banking operations in France.
4 Net operating income before change in expected credit losses and
other credit impairment charges, also referred to as revenue.
Consolidated statement of comprehensive income
Half-year to
30 Jun 2024 30 Jun 2023
$m $m
Profit for the period 17,665 18,071
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 (213) 549
- fair value (losses)/gains (378) 804
- fair value gains transferred to the income statement on disposal (24) (63)
- expected credit losses/(recoveries) recognised in the income statement 13 (3)
- disposal of subsidiary 90 -
- income taxes 86 (189)
Cash flow hedges (710) (1,062)
- fair value losses (612) (1,700)
- fair value (gains)/losses reclassified to the income statement (673) 227
- disposal of subsidiary 262 -
- income taxes 313 411
Share of other comprehensive income/(expense) of associates and joint ventures 211 101
- share for the period 211 101
Net finance income/(expense) from insurance contracts 17 (101)
- before income taxes 23 (136)
- income taxes (6) 35
Exchange differences (2,588) (347)
- foreign exchange losses reclassified to the income statement on disposal 648 -
of a foreign operation
- other exchange differences (3,236) (347)
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) 146 (112)
- before income taxes 178 (105)
- income taxes (32) (7)
Changes in fair value of financial liabilities designated at fair value upon (283) (653)
initial recognition arising from changes in own credit risk
- before income taxes (372) (867)
- income taxes 89 214
Equity instruments designated at fair value through other comprehensive income 41 7
- fair value gains 62 7
- income taxes (21) -
Effects of hyperinflation 892 578
Other comprehensive expense for the period, net of tax (2,482) (1,039)
Total comprehensive income for the period 15,183 17,032
Attributable to:
- ordinary shareholders of the parent company 14,131 15,986
- other equity holders 526 542
- non-controlling interests 526 504
Total comprehensive income for the period 15,183 17,032
Consolidated balance sheet
At
30 Jun 2024 31 Dec 2023
$m $m
Assets
Cash and balances at central banks 277,112 285,868
Items in the course of collection from other banks 9,977 6,342
Hong Kong Government certificates of indebtedness 43,026 42,024
Trading assets 331,307 289,159
Financial assets designated and otherwise mandatorily measured at fair value 117,014 110,643
through profit or loss
Derivatives 219,269 229,714
Loans and advances to banks 102,057 112,902
Loans and advances to customers 938,257 938,535
Reverse repurchase agreements - non-trading 230,189 252,217
Financial investments 467,356 442,763
Assets held for sale 5,821 114,134
Prepayments, accrued income and other assets 184,303 165,255
Current tax assets 1,308 1,536
Interests in associates and joint ventures 28,465 27,344
Goodwill and intangible assets 12,161 12,487
Deferred tax assets 7,381 7,754
Total assets 2,975,003 3,038,677
Liabilities
Hong Kong currency notes in circulation 43,026 42,024
Deposits by banks 82,435 73,163
Customer accounts 1,593,834 1,611,647
Repurchase agreements - non-trading 202,770 172,100
Items in the course of transmission to other banks 10,482 7,295
Trading liabilities 77,455 73,150
Financial liabilities designated at fair value 140,800 141,426
Derivatives 217,096 234,772
Debt securities in issue 98,158 93,917
Liabilities of disposal groups held for sale 5,041 108,406
Accruals, deferred income and other liabilities 157,171 136,606
Current tax liabilities 2,837 2,777
Insurance contract liabilities 125,252 120,851
Provisions 1,536 1,741
Deferred tax liabilities 1,186 1,238
Subordinated liabilities 25,510 24,954
Total liabilities 2,784,589 2,846,067
Equity
Called up share capital 9,310 9,631
Share premium account 14,808 14,738
Other equity instruments 18,825 17,719
Other reserves (14,930) (8,907)
Retained earnings 155,280 152,148
Total shareholders' equity 183,293 185,329
Non-controlling interests 7,121 7,281
Total equity 190,414 192,610
Total liabilities and equity 2,975,003 3,038,677
Consolidated statement of changes in equity
Other reserves
Called up share Other Cash Foreign Merger and other Insurance Retained Total share-holders' equity Non- Total equity
capital equity Financial assets at FVOCI reserve flow exchange reserves finance earnings controlling
and share premium instru-ments hedging reserve reserve(1) interests
reserve
$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 period - - - - - - - 17,112 17,112 553 17,665
Other comprehensive income (net of tax) - - (164) (691) (2,551) 5 (10) 956 (2,455) (27) (2,482)
- debt instruments at fair value through other comprehensive - - (313) - - - - - (313) 10 (303)
income
- equity instruments designated at fair value through other - - 35 - - - - - 35 6 41
comprehensive
income
- cash flow hedges - - - (970) - - - - (970) (2) (972)
- changes in fair value of financial liabilities designated at - - - - - - - (283) (283) - (283)
fair value
upon initial recognition arising from changes in own credit
risk
- property revaluation - - - - - 5 - - 5 - 5
- remeasurement of defined benefit asset/liability - - - - - - - 136 136 10 146
- share of other comprehensive income of associates and joint - - - - - - - 211 211 - 211
ventures
- effects of hyperinflation - - - - - - - 892 892 - 892
- foreign exchange losses reclassified to income statement on - - - - 648 - - - 648 - 648
disposal of a
foreign operation
- other reserves reclassified - - 90 262 - - - - 352 - 352
to income statement on
disposal of a foreign
operation
- insurance finance income/ - - - - - - 17 - 17 - 17
(expense) recognised in other comprehensive income
- other exchange differences - - 24 17 (3,199) - (27) - (3,185) (51) (3,236)
Total comprehensive income for the period - - (164) (691) (2,551) 5 (10) 18,068 14,657 526 15,183
Shares issued under employee remuneration and share plans 75 - - - - - - (75) - - -
Capital securities issued(2) - 1,106 - - - - - - 1,106 - 1,106
Dividends to shareholders - - - - - - - (12,217) (12,217) (468) (12,685)
Cost of share-based payment arrangements - - - - - - - 274 274 - 274
Transfers(3) - - - - - (2,945) - 2,945 - - -
Share buy-backs(4) - - - - - - - (5,019) (5,019) - (5,019)
Cancellation of shares (326) - - - - 326 - - - - -
Other movements - - 4 - - 3 - (844) (837) (218) (1,055)
At 30 Jun 2024 24,118 18,825 (3,667) (1,724) (36,304) 25,990 775 155,280 183,293 7,121 190,414
Consolidated statement of changes in equity (continued)
Other reserves
Called up Other Financial assets at FVOCI reserve Cash Foreign exchange reserve Merger and other reserves Insurance Retained Total Non- Total
share capital equity flow finance earnings share- controlling equity
and share premium instru- hedging reserve(1) holders' interests
ments reserve 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 period - - - - - - - 17,508 17,508 563 18,071
Other comprehensive income (net of tax) - - 560 (1,077) (271) 1 (101) (92) (980) (59) (1,039)
- debt instruments at fair value through other comprehensive - - 546 - - - - - 546 3 549
income
- equity instruments designated at fair value through other - - 14 - - - - - 14 7
comprehensive (7)
income
- cash flow hedges - - - (1,077) - - - - (1,077) 15 (1,062)
- changes in fair value of financial liabilities designated at - - - - - - - (654) (654) 1 (653)
fair value
upon initial recognition arising from changes in own credit
risk
- property revaluation - - - - - 1 - - 1 - 1
- remeasurement of defined benefit asset/liability - - - - - - - (117) (117) 5 (112)
- share of other comprehensive income of associates and joint - - - - - - - 101 101 - 101
ventures
- effects of hyperinflation - - - - - - - 578 578 - 578
- insurance finance income/ (expense) recognised in other - - - - - - (101) - (101) - (101)
comprehensive
income
- other exchange differences - - - - (271) - - - (271) (76) (347)
Total comprehensive income for the period - - 560 (1,077) (271) 1 (101) 17,416 16,528 504 17,032
Shares issued under employee remuneration and share plans 78 - - - - - - (78) - - -
Capital securities issued - 1,996 - - - - - - 1,996 - 1,996
Dividends to shareholders - - - - - - - (7,133) (7,133) (375) (7,508)
Redemption of securities - (2,350) - - - - - - (2,350) - (2,350)
Cost of share-based payment arrangements - - - - - - - 228 228 - 228
Share buy-backs - - - - - - - (2,007) (2,007) - (2,007)
Cancellation of shares (79) - - - - 79 - - - - -
Other movements - - 6 - - 1 - (932) (925) (12) (937)
At 30 Jun 2023 24,810 19,392 (6,472) (4,885) (32,846) 33,290 978 149,903 184,170 7,481 191,651
Consolidated statement of changes in equity (continued)
Other reserves
Called up Other Financial assets at FVOCI reserve Cash Foreign exchange reserve Merger and other reserves Insurance Retained Total Non- Total
share capital equity flow finance earnings share- controlling equity
and share premium instru- hedging reserve(1) holders' interests
ments reserve equity
$m $m $m $m $m $m $m $m $m $m $m
At 1 Jul 2023 24,810 19,392 (6,472) (4,885) (32,846) 33,290 978 149,903 184,170 7,481 191,651
Profit for the period - - - - - - - 6,025 6,025 463 6,488
Other comprehensive income (net of tax) - - 1,842 4,107 60 - (270) 206 5,945 77 6,022
- debt instruments at fair value through other comprehensive income - - 2,028 - - - - - 2,028 22 2,050
- equity instruments designated at fair value through other comprehensive - - (107) - - - - - (107) (20) (127)
income
- cash flow hedges - - - 3,996 - - - - 3,996 19 4,015
- changes in fair value of financial liabilities designated at fair value - - - - - - - (566) (566) - (566)
upon initial recognition arising from changes in own credit risk
- property revaluation - - - - - - - - - - -
- remeasurement of defined benefit asset/liability - - - - - - - (200) (200) (2) (202)
- share of other comprehensive income of associates and joint ventures - - - - - - - (54) (54) - (54)
- effects of hyperinflation - - - - - - - 1,026 1,026 - 1,026
- insurance finance income/ (expense) recognised in other comprehensive - - - - - - (263) - (263) - (263)
income
- other exchange differences - - (79) 111 60 - (7) - 85 58 143
Total comprehensive income for the period - - 1,842 4,107 60 - (270) 6,231 11,970 540 12,510
Shares issued under employee remuneration and share plans 1 - - - - - - (1) - - -
Dividends to shareholders - - - - - - - (4,460) (4,460) (228) (4,688)
Redemption of securities - (1,673) - - - - - 20 (1,653) - (1,653)
Cost of share-based payment arrangements - - - - - - - 254 254 - 254
Transfers - - - - - (5,130) - 5,130 - - -
Share buy-backs - - - - - - - (5,018) (5,018) - (5,018)
Cancellation of shares (442) - - - - 442 - - - - -
Other movements - - 1,123 (255) (967) (1) 77 89 66 (512) (446)
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 The insurance finance reserve reflects the impact of 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').
2 In June 2024, HSBC Holdings issued SGD1,500m of contingent convertible
securities on which there were SGD15m of external issue costs.
3 At 30 June 2024, an impairment of $2,945m of HSBC Overseas Holdings
(UK) Limited was recognised post sale of our banking business in Canada,
resulting in a permitted transfer from the merger reserve to retained
earnings.
4 In February 2024, HSBC Holdings announced a share buy-back of up to
$2.0bn, which concluded in March 2024. Additionally, in April 2024, HSBC
Holdings announced another share buy-back of up to $3.0bn, which was completed
in July 2024.
Consolidated statement of cash flows
Half-year to
30 Jun 2024 30 Jun 2023
$m $m
Profit before tax 21,556 21,657
Adjustments for non-cash items:
Depreciation, amortisation and impairment 1,969 1,591
Net gain from investing activities (34) (41)
Share of profit in associates and joint ventures (1,626) (1,583)
Net gain on acquisition/disposal of subsidiaries, businesses, associates and (3,199) (3,604)
joint ventures
Change in expected credit losses gross of recoveries and other credit 1,192 1,482
impairment charges
Provisions including pensions 15 148
Share-based payment expense 274 228
Other non-cash items included in profit before tax (4,237) (1,661)
Elimination of exchange differences(1) 18,406 (6,558)
Change in operating assets(2) (41,493) (52,745)
Change in operating liabilities 36,486 72,836
Dividends received from associates 130 124
Contributions paid to defined benefit plans (76) (87)
Tax paid (2,664) (1,664)
Net cash from operating activities 26,699 30,123
Purchase of financial investments (259,999) (298,182)
Proceeds from the sale and maturity of financial investments 223,443 263,838
Net cash flows from the purchase and sale of property, plant and equipment (464) (329)
Net investment in intangible assets (1,058) (1,123)
Net cash inflow on acquisition/disposal of subsidiaries, businesses, 9,891 1,243
associates and joint ventures(3)
Net cash outflow on acquisition/disposal of subsidiaries, businesses, (10,612) (15)
associates and joint ventures(3)
Net cash from investing activities (38,799) (34,568)
Issue of ordinary share capital and other equity instruments 1,106 1,996
Cancellation of shares (5,330) (1,273)
Net sales/(purchases) of own shares for market-making and investment purposes (494) (823)
Redemption of preference shares and other equity instruments - (2,350)
Subordinated loan capital issued 2,611 2,744
Subordinated loan capital repaid (2,000) (1,044)
Dividends paid to shareholders of the parent company and non-controlling (12,685) (7,508)
interests
Net cash from financing activities (16,792) (8,258)
Net decrease in cash and cash equivalents (28,892) (12,703)
Cash and cash equivalents at the beginning of the period 490,933 521,671
Exchange differences in respect of cash and cash equivalents (13,057) 8,565
Cash and cash equivalents at the end of the period(4) 448,984 517,533
Interest received was $54,197m (1H23: $46,817m), interest paid was $41,254m
(1H23: $29,222m) and dividends received (excluding dividends received from
associates, which are presented separately above) were $1,231m (1H23: $751m).
1 Adjustments 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 Includes net settlement of the foreign exchange hedge of the
proceeds from the sale of our banking business in Canada, with a $255m gain in
1H24 (1H23: $284m loss).
3 The 'Net cash inflow on acquisition/disposal of subsidiaries,
businesses, associates and joint ventures' includes $9.3bn of net cash inflow
on the sale of our banking business in Canada in March 2024. In 1H23, it
included $1.2bn of net cash inflow on acquisition of Silicon Valley Bank UK
Limited in March 2023. The 'Net cash outflow on acquisition/disposal of
subsidiaries, businesses, associates and joint ventures includes $10.6bn of
net cash outflow on the sale of our retail banking operations in France in
January 2024.
4 Includes $1.7bn (1H23: $7.5bn) of cash and cash equivalents
classified as held for sale.
1 Basis of preparation and material accounting policies
(a) Compliance with International Financial Reporting Standards
Our interim condensed consolidated financial statements have been prepared on
the basis of the policies set out in the 2023 annual financial statements.
They have also been prepared in accordance with IAS 34 'Interim Financial
Reporting' as adopted by the UK, IAS 34 'Interim Financial Reporting' as
issued by the International Accounting Standards Board ('IASB'), IAS 34
'Interim Financial Reporting' as adopted by the EU, and the Disclosure
Guidance and Transparency Rules sourcebook of the UK's Financial Conduct
Authority. Therefore, they include an explanation of events and transactions
that are significant to an understanding of the changes in HSBC's financial
position and performance since the end of 2023.
The interim condensed consolidated financial statements should be read in
conjunction with the Annual Report and Accounts 2023, which was prepared in
accordance with UK-adopted international accounting standards in conformity
with the requirements of the Companies Act 2006 and international financial
reporting standards adopted pursuant to Regulation (EC) No 1606/2002 as it
applies in the European Union. The interim condensed consolidated financial
statements were also prepared in accordance with International Financial
Reporting Standards ('IFRS Accounting Standards') as issued by the IASB,
including interpretations issued by the IFRS Interpretations Committee.
At 30 June 2024, there were no IFRS Accounting Standards effective for the
half-year to 30 June 2024 affecting these financial statements that were not
approved for adoption in the UK by the UK Endorsement Board. There was no
difference between IFRS Accounting Standards adopted by the UK, IFRS
Accounting Standards as adopted by the EU, and IFRS Accounting Standards
issued by the IASB in terms of their application to HSBC.
Standards applied during the half-year to 30 June 2024
There were no new standards or amendments to standards that had an effect on
the interim condensed consolidated financial statements.
(b) Use of estimates and judgements
Management believes that the critical estimates and judgements applicable to
the Group are those that relate to impairment of amortised cost and FVOCI debt
financial assets, the valuation of financial instruments, deferred tax assets,
provisions, interests in associates, impairment of goodwill and non-financial
assets, and post-employment benefit plans.
Other than in respect of non-current assets and disposal groups held for sale,
there were no material changes in the current period to any of the critical
estimates and judgements disclosed in 2023, which are stated on pages 101 and
343 to 354 of the Annual Report and Accounts 2023.
(c) Composition of the Group
In the first half of 2024 the sales of the retail banking operations in
France, the banking business in Canada, and the business in Russia completed.
There were no other material changes in the composition of the Group in the
half-year to 30 June 2024.
For further details of future business acquisitions and disposals, see Note 15
'Assets held for sale, liabilities of disposal groups held for sale and
business acquisitions' in the Interim Report 2024.
(d) Future accounting developments
Amendments to IAS 21 'Lack of Exchangeability'
In August 2023, the IASB published amendments to IAS 21 'Lack of
Exchangeability' effective from 1 January 2025. The Group is undertaking an
assessment of the potential impact, which is not expected to be significant.
Amendments to IFRS 9 'Financial Instruments' and IFRS 7 'Financial
Instruments: Disclosures'
In May 2024, the IASB issued amendments to IFRS 9 'Financial Instruments' and
IFRS 7 'Financial Instruments: Disclosures', effective for annual reporting
periods beginning on, or after, 1 January 2026. In addition to guidance as to
when certain financial liabilities can be deemed settled when using an
electronic payment system, the amendments also provide further clarification
regarding the classification of financial assets that contain contractual
terms that change the timing or amount of contractual cash flows, including
those arising from ESG-related contingencies, and financial assets with
certain non-recourse features. The Group is undertaking an assessment of the
potential impact.
IFRS 18 'Presentation and Disclosure in Financial Statements'
In April 2024, the IASB issued IFRS 18 'Presentation and Disclosure in
Financial Statements', effective for annual reporting periods beginning on or
after 1 January 2027. The new accounting standard aims to give users of
financial statements more transparent and comparable information about an
entity's financial performance. It will replace IAS 1 'Presentation of
Financial Statements' but carries over many requirements from that IFRS
Accounting Standard unchanged. In addition, there are three sets of new
requirements relating to the structure of the income statement,
management-defined performance measures and the aggregation and disaggregation
of financial information.
While IFRS 18 will not change recognition criteria or measurement bases, it
might have a significant impact on presenting information in the financial
statements, in particular the income statement. HSBC are currently assessing
any impacts as well as data readiness before developing a more detailed
implementation plan.
(e) 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, cash
flows, capital requirements and capital resources. These considerations
include stressed scenarios, as well as considering potential impacts from
other top and emerging risks, and the related impact on profitability, capital
and liquidity.
(f) Accounting policies
The accounting policies that we applied for the interim condensed consolidated
financial statements are consistent with those described on pages 341 to 354
of the Annual Report and Accounts 2023, as are the methods of computation.
2 Dividends
On 31 July 2024, the Directors approved a second interim dividend for 2024 of
$0.10 per ordinary share in respect of the financial year ending 31 December
2024. This distribution amounts to approximately $1.849bn and will be payable
on 27 September 2024. No liability is recognised in the financial statements
in respect of these dividends.
Dividends paid to shareholders of HSBC Holdings plc
Half-year to
30 Jun 2024 30 Jun 2023
Per share Total Per share Total
$ $m $ $m
Dividends paid on ordinary shares
In respect of previous year:
- second interim dividend - - 0.23 4,590
- 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 - -
Total 0.62 11,691 0.33 6,591
Total coupons on capital securities classified as equity 526 542
Dividends to shareholders 12,217 7,133
Second interim dividend for 2024
On 31 July 2024, the Directors approved a second interim dividend in respect
of the financial year ending 31 December 2024 of $0.10 per ordinary share (the
'dividend'), a distribution of approximately $1.849bn. The dividend will be
payable on 27 September 2024 to holders of record on the Principal Register in
the UK, the Hong Kong Overseas Branch Register or the Bermuda Overseas Branch
Register on 16 August 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 16 September 2024. The ordinary shares in London, Hong Kong
and Bermuda will be quoted ex-dividend on 15 August 2024. American Depositary
Shares ('ADSs') in New York will be quoted ex-dividend on 16 August 2024.
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 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 pound 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 12 September 2024 to be
effective for this dividend.
The dividend will be payable on ADSs, each of which represents five ordinary
shares, on 27 September 2024 to holders of record on 16 August 2024. The
dividend of $0.50 per ADS will be payable by the depositary in US dollars.
Alternatively, the cash dividend may be invested in additional ADSs by
participants in the dividend reinvestment plan operated by the depositary.
Elections must be received by 6 September 2024.
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 16 August
2024 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 16 August 2024. Any person wishing to remove
ordinary shares to or from each register must do so before 4.00pm local time
on 15 August 2024.
Transfer of ADSs must be lodged with the depositary by 11.00am on 16 August
2024 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.
Dividend on preference share
A quarterly dividend of £0.01 per Series A sterling preference share is
payable on 15 March, 17 June, 16 September and 16 December 2024 for the
quarter then ended at the sole and absolute discretion of the Board of HSBC
Holdings plc. Accordingly, the Board of HSBC Holdings plc has approved a
quarterly dividend to be payable on 16 September 2024 to holders of record on
30 August 2024.
3 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, excluding 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
Half-year to
30 Jun 2024 30 Jun 2023
Profit Number Amount per share Profit Number Amount per share
of shares of shares
$m (millions) $ $m (millions) $
Basic(1) 16,586 18,666 0.89 16,966 19,693 0.86
Effect of dilutive potential ordinary shares 120 136
Diluted(1) 16,586 18,786 0.88 16,966 19,829 0.86
1 Weighted average number of ordinary shares outstanding (basic) or
assuming dilution (diluted).
4 Constant currency balance sheet reconciliation
At 30 Jun 2024 At 30 June 2023 At 31 Dec 2023
Reported and constant currency Constant currency Currency translation Reported Constant currency Currency translation Reported
$m $m $m $m $m $m $m
Loans and advances to customers (net) 938,257 951,014 (8,544) 959,558 925,791 (12,744) 938,535
Interests in associates and joint ventures 28,465 29,534 (12) 29,546 26,967 (377) 27,344
Total external assets 2,975,003 3,011,721 (29,755) 3,041,476 2,997,845 (40,832) 3,038,677
Customer accounts 1,593,834 1,580,418 (15,351) 1,595,769 1,590,533 (21,114) 1,611,647
Customer accounts
5 Reported and constant currency results(1)
Half-year to
30 Jun 2024 30 Jun 2023
$m $m
Revenue(2)
Reported 37,292 36,876
Currency translation (374)
Constant currency 37,292 36,502
Change in expected credit losses and other credit impairment charges
Reported (1,066) (1,345)
Currency translation 28
Constant currency (1,066) (1,317)
Operating expenses
Reported (16,296) (15,457)
Currency translation 213
Constant currency (16,296) (15,244)
Share of profit in associates and joint ventures
Reported 1,626 1,583
Currency translation (52)
Constant currency 1,626 1,531
Profit before tax
Reported 21,556 21,657
Currency translation (185)
Constant currency 21,556 21,472
Profit after tax
Reported 17,665 18,071
Currency translation (113)
Constant currency 17,665 17,958
1 In the current period constant currency results are equal to
reported as there is no currency translation.
2 Net operating income before change in expected credit losses and
other credit impairment charges, also referred to as revenue.
Notable items
Half-year to
30 Jun 2024 30 Jun 2023
$m $m
Revenue
Disposals, acquisitions and related costs(1,2) 3,571 3,321
Fair value movements on financial instruments(3) - 15
Operating expenses
Disposals, acquisitions and related costs (101) (118)
Restructuring and other related costs(4) 19 47
Tax
Tax (charge)/credit on notable items 14 (500)
Recognition of losses - -
Uncertain tax positions - 427
1 Includes a $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 recycling losses. This is partly
offset by a $1.2bn impairment recognised in relation to the planned sale of
our business in Argentina.
2 In the first quarter of 2023, the $2.1bn reversal of the held for
sale classification was recognised relating to the sale of our retail banking
operations in France and a gain of $1.5bn was recognised in respect of the
acquisition of SVB UK.
3 Fair value movements on non-qualifying hedges in HSBC Holdings.
4 Relates to reversals of restructuring provisions recognised during
2022.
6 Contingent liabilities, contractual commitments and guarantees
At
30 Jun 2024 31 Dec 2023
$m $m
Guarantees and other contingent liabilities:
- financial guarantees 16,343 17,009
- performance and other guarantees 91,275 94,277
- other contingent liabilities 543 636
At the end of the period 108,161 111,922
Commitments:(1)
- documentary credits and short-term trade-related transactions 7,169 7,818
- forward asset purchases and forward deposits placed 87,219 78,535
- standby facilities, credit lines and other commitments to lend 780,929 810,797
At the end of the period 875,317 897,150
1 Includes $638,635m of commitments at 30 June 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.
Contingent liabilities arising from legal proceedings and regulatory and other
matters against Group companies are excluded from this note but are disclosed
in Note 7 below and Notes 11 and 13 of the Interim Report 2024.
7 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 2023.
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 30
June 2024 (see Note 11 of the Interim Report 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.
US litigation: The Madoff Securities Trustee has brought lawsuits against
various HSBC companies and others, seeking recovery of alleged transfers from
Madoff Securities to HSBC 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 'US Bankruptcy Court').
Certain Fairfield entities (together, 'Fairfield') (in liquidation) have
brought a lawsuit in the US against fund shareholders, including HSBC
companies that acted as nominees for clients, seeking restitution of
redemption payments in the amount of $382m (plus interest). Fairfield's claims
against most of the HSBC companies have been dismissed by the US Bankruptcy
Court and the US District Court for the Southern District of New York, but
remain pending on appeal before the US Court of Appeals for the Second
Circuit. Fairfield's claims against HSBC Private Bank (Suisse) SA and HSBC
Securities Services Luxembourg ('HSSL') have not been dismissed and their
appeals are also pending before the US Court of Appeals for the Second
Circuit. Meanwhile, proceedings before the US Bankruptcy Court with respect to
the claims against HSBC Private Bank (Suisse) SA and HSSL are ongoing.
UK litigation: The Madoff Securities Trustee has filed a claim against various
HSBC companies in the High Court of England and Wales, seeking recovery of
transfers from Madoff Securities to HSBC. The claim has not yet been served
and the amount claimed has not been specified.
Luxembourg litigation: In 2009, Herald Fund SPC ('Herald') (in liquidation)
brought an action against HSSL before the Luxembourg District Court, seeking
restitution of cash and securities in the amount of $2.5bn (plus interest), or
damages in the amount of $2bn (plus interest). In 2018, HSBC Bank plc was
added to the claim and Herald increased the amount of the alleged damages
claim to $5.6bn (plus interest). The Luxembourg District Court has dismissed
Herald's securities restitution claim, but reserved Herald's cash restitution
and damages claims. Herald has appealed this dismissal to the Luxembourg Court
of Appeal, where the matter is pending.
Beginning in 2009, various HSBC companies have been named as defendants in a
number of actions brought by Alpha Prime Fund Limited 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.
Beginning in 2014, HSSL and the Luxembourg branch of HSBC Bank plc have been
named as defendants in a number of actions brought by Senator Fund SPC 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 the pending 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. In January 2023, the European Court of Justice dismissed an
appeal by HSBC and upheld the EC's findings on HSBC's liability. A separate
appeal by HSBC concerning the amount of the fine remains pending before the
General Court of the European Union.
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. A number of individual US dollar
Libor-related actions seeking damages 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.
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. The Competition Commission and HSBC Bank plc have
appealed to the Constitutional Court of South Africa.
Since 2015, various HSBC companies and other banks have been named as
defendants in a putative class action in the US District Court for the
Southern District of New York filed by a group of retail customers who dealt
in foreign exchange products. The plaintiffs allege that the defendants
conspired to manipulate foreign exchange rates and seek damages for
unspecified amounts. In May 2024, the US Court of Appeals for the Second
Circuit affirmed the dismissal of this action.
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.
Lawsuits alleging foreign exchange-related misconduct remain pending against
HSBC and other banks in courts in Brazil.
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. It is possible that additional civil actions
will be initiated against HSBC in relation to its historical foreign exchange
activities.
There are many factors that may affect the range of outcomes, and the
resulting financial impact, of the pending matters, 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 are defending a class action pending 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. The defendants have reached a
settlement-in-principle with the plaintiffs to resolve this action. The
settlement-in-principle remains subject to documentation and court approval.
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.
There are many factors that may affect the range of outcomes, and the
resulting financial impact, of the pending matters, which could be
significant.
Tax-related investigations
In March 2023, the French National Financial Prosecutor announced an
investigation into 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 ('CMA') has been
investigating HSBC and four other banks for suspected anti-competitive conduct
in relation to the historical trading of gilts and related derivatives. In May
2023, the CMA announced its case against HSBC Bank plc and HSBC Holdings; both
HSBC companies are contesting the CMA's allegations.
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. In September 2023, the defendants filed a motion to
dismiss which remains pending. It is possible that additional civil actions
will be initiated against HSBC in relation to its historical gilts 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.
UK collections and recoveries investigation
In 2019, the FCA began investigating HSBC Bank plc's, HSBC UK Bank plc's and
Marks and Spencer Financial Services plc's compliance with regulatory
standards relating to collections and recoveries operations in the UK between
2017 and 2018. In May 2024, the FCA concluded its investigation and imposed a
£6m fine on HSBC Bank plc, HSBC UK Bank plc and Marks and Spencer Financial
Services plc, which has been paid, and this matter is now closed.
Korean short selling indictment
In March 2024, the Korean Prosecutors' Office issued a criminal indictment
against The Hongkong and Shanghai Banking Corporation Limited 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. The Hongkong and
Shanghai Banking Corporation Limited is defending the action.
Silicon Valley Bank ('SVB') 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 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.
Film Finance litigation
In June 2020, two separate investor groups issued claims against HSBC UK Bank
plc (as successor to HSBC Private Bank (UK) Limited ('PBGB')) in the High
Court of England and Wales seeking damages for unspecified amounts in
connection with PBGB's role in the development of Eclipse film finance
schemes. In March 2024, HSBC UK Bank plc reached a settlement with the first
investor group. In April 2024, the High Court dismissed the second investor
group's claims, and this matter is now closed.
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. HSBC Bank USA has reached
settlements with a number of plaintiffs to resolve nearly all of these
lawsuits. The remaining two actions are 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.
There are many factors that may affect the range of outcomes, and the
resulting financial impact, of the pending matters, 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 damages for
unspecified amounts. In February 2024, the US Court of Appeals for the Second
Circuit reversed an earlier dismissal of this lawsuit. In May 2024, the
plaintiffs amended their complaint and this action is ongoing.
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.
Stanford litigation
Since 2009, HSBC Bank plc has been named as a defendant in numerous claims
filed in courts in the UK and the US arising from the collapse of Stanford
International Bank Ltd, for which it was a correspondent bank from 2003 to
2009. In February 2023, HSBC Bank plc reached settlements with the plaintiffs
to resolve the claims and these settlements have concluded.
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.
8 Events after the balance sheet date
On 6 July 2024, the Hongkong and Shanghai Banking Corporation Limited (acting
through its Mauritius Branch) completed the sale of its Wealth and Personal
Banking business to ABSA Bank (Mauritius) Limited, a wholly-owned subsidiary
of ABSA Bank Group Limited. The financial impact was not significant for the
Group.
A second interim dividend for 2024 of $0.10 per ordinary share in respect of
the financial year ending 31 December 2024 was approved by the Directors on
31 July 2024, as described in Note 2. On 31 July 2024, HSBC Holdings
announced a share buy-back to purchase its ordinary shares up to a maximum
consideration of $3.0bn, which is expected to commence shortly and complete
within three months.
9 Capital structure
Capital ratios
At
30 Jun 2024 31 Dec 2023
% %
Transitional basis
Common equity tier 1 ratio 15.0 14.8
Tier 1 ratio 17.3 16.9
Total capital ratio 20.6 20.0
End point basis
Common equity tier 1 ratio 15.0 14.8
Tier 1 ratio 17.3 16.9
Total capital ratio 20.1 19.6
Total regulatory capital and risk-weighted assets
At
30 Jun 2024 31 Dec 2023
$m $m
Transitional basis
Common equity tier 1 capital 125,293 126,501
Additional tier 1 capital 18,965 17,662
Tier 2 capital 27,826 27,041
Total regulatory capital 172,084 171,204
Risk-weighted assets 835,118 854,114
End point basis
Common equity tier 1 capital 125,293 126,501
Additional tier 1 capital 18,965 17,662
Tier 2 capital 23,886 22,894
Total regulatory capital 168,144 167,057
Risk-weighted assets 835,118 854,114
Leverage ratio(1)
At
30 Jun 2024 31 Dec 2023
$bn $bn
Tier 1 capital (leverage) 144.3 144.2
Total leverage ratio exposure 2,514.5 2,574.8
% %
Leverage ratio 5.7 5.6
1 Leverage ratio calculation is in line with the PRA's UK leverage rules.
This includes IFRS 9 transitional arrangement and excludes central bank
claims.
10 Statutory accounts
The information in this media release is unaudited and does not constitute
statutory accounts within the meaning of section 434 of the Companies Act
2006. The statutory accounts of HSBC Holdings plc for the year ended 31
December 2023 have been delivered to the Registrar of Companies in England and
Wales in accordance with section 447 of the Companies Act 2006. The Group's
auditor, PricewaterhouseCoopers LLP ('PwC') has reported on those accounts.
Its report was unqualified, did not include a reference to any matters to
which PwC drew attention by way of emphasis without qualifying its report and
did not contain a statement under section 498(2) or (3) of the Companies Act
2006.
The information in this media release does not constitute the unaudited
interim condensed consolidated financial statements which are contained in the
Interim Report 2024. The Interim Report 2024 was approved by the Board of
Directors on 31 July 2024. The unaudited interim condensed consolidated
financial statements included in the Interim Report 2024 have been reviewed by
the Group's auditor, PwC, in accordance with International Standard on Review
Engagements (UK) 2410, 'Review of Interim Financial Information Performed by
the Independent Auditor of the Entity' issued by the Financial Reporting
Council for use in the United Kingdom. The full report of its review, which
was unmodified, is included in the Interim Report 2024.
11 Dealings in HSBC Holdings listed securities
HSBC has policies and procedures that, except where permitted by statute and
regulation, prohibit it undertaking specified transactions in respect of its
securities listed on The Stock Exchange of Hong Kong Limited ('HKEx'). Except
for dealings as intermediaries or as trustees by subsidiaries of HSBC
Holdings, or in relation to HSBC Holdings ordinary share buy-backs, neither
HSBC Holdings nor any of its subsidiaries has purchased, sold or redeemed any
of its securities listed on HKEx during the half-year ended 30 June 2024.
12 Earnings release and final results
An earnings release for the three-month period ending 30 September 2024 is
expected to be issued on 29 October 2024. The results for the year to 31
December 2024 are expected to be announced on 19 February 2025.
13 Corporate governance
We are subject to corporate governance requirements in both the UK and Hong
Kong. Throughout the six months ended 30 June 2024, we complied with the
applicable provisions of the UK Corporate Governance Code, and also the
requirements of the Hong Kong Corporate Governance Code. The UK Corporate
Governance Code is available at www.frc.org.uk and the Hong Kong Corporate
Governance Code is available at www.hkex.com.hk. We note that the Financial
Reporting Council have issued a new UK Corporate Governance Code, which will
apply to financial reporting periods from 1 January 2025, and that The Stock
Exchange of Hong Kong Limited is currently consulting on changes to the Hong
Kong Corporate Governance Code. The Group will take the necessary actions to
ensure that we continue to be compliant with both Codes as the new provisions
come into force.
The Board 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 the HKEx, save that the HKEx has
granted waivers from strict compliance with the rules that take into account
accepted practices in the UK, particularly in respect of employee share plans.
All Directors have confirmed that they have complied with their obligations in
respect of transacting in Group securities throughout the period.
There have been no material changes to the information disclosed in the Annual
Report and Accounts 2023 in respect of the remuneration of employees,
remuneration policies, bonus and share option plans and training schemes.
Details of the number of employees are provided on page 34 of the Interim
Report 2024.
The Board of Directors of HSBC Holdings plc as at the date of this
announcement comprises:
Sir Mark Edward Tucker*, Noel Paul Quinn, Geraldine Joyce Buckingham(†),
Rachel Duan(†), Georges Bahjat Elhedery, Dame Carolyn Julie Fairbairn(†),
James Anthony Forese(†), Ann Frances Godbehere(†), Steven Craig
Guggenheimer(†), 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
14 Interim Report 2024
The Interim Report 2024 will be made available to shareholders on or about 23
August 2024. Copies of the Interim Report 2024 and this news release may be
obtained from Global Communications, HSBC Holdings plc, 8 Canada Square,
London E14 5HQ, United Kingdom; from Communications (Asia), The Hongkong and
Shanghai Banking Corporation Limited, 1 Queen's Road Central, Hong Kong; or
from US Communications, HSBC Bank USA, N.A., 1 West 39th Street, 9th Floor,
New York, NY 10018, USA. The Interim Report 2024 and this news release may
also be downloaded from the HSBC website, www.hsbc.com.
A Chinese translation of the Interim Report 2024 is available upon request
from Computershare Hong Kong Investor Services Limited, Rooms 1712-1716, 17th
Floor, Hopewell Centre, 183 Queen's Road East, Hong Kong.
The Interim Report 2024 will be available on The Stock Exchange of Hong Kong
Limited's website www.hkex.com.hk.
15 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 targets, commitments and ambitions 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,
increased volatility in interest rates and inflation levels and other
macroeconomic risks, geopolitical tensions such as the Russia-Ukraine war and
the Israel-Hamas war and potential further escalations, 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 2023 filed with the US
Securities and Exchange Commission (the 'SEC') on Form 20-F on 22 February
2024, our 1Q 2024 Earnings Release furnished to the SEC on Form 6-K on 30
April 2024 and our Interim Report 2024 for the six months ended 30 June 2024
which we expect to furnish to the SEC on Form 6-K on or around 31 July 2024.
16 Use of alternative performance measures
Our reported results are prepared in accordance with International Financial
Reporting Standards as issued by the International Accounting Standards Board
('IFRS Accounting Standards') as detailed in the interim condensed
consolidated financial statements starting on page 113 of the Interim Report
2024.
To measure our performance, we supplement our IFRS Accounting Standards
figures with non-IFRS Accounting Standards measures, which constitute
alternative performance measures under European Securities and Markets
Authority guidance and non-GAAP financial measures defined in and presented in
accordance with US Securities and Exchange Commission rules and regulations.
These measures include those derived from our reported results that eliminate
factors that distort period-on-period comparisons. The 'constant currency
performance' measure used in this report is described below. Definitions and
calculations of other alternative performance measures are included in
'Reconciliation of alternative performance measures' on pages 56 to 61 of the
Interim Report 2024, which is available at www.hsbc.com. All alternative
performance measures are reconciled to the closest reported performance
measure.
The global business segmental results are presented on a constant currency
basis in accordance with IFRS 8 'Operating Segments' as detailed in Note 5:
'Segmental analysis' on page 122 of the Interim Report 2024.
Constant currency performance
Constant currency performance is computed by adjusting reported results for
the effects of foreign currency translation differences, which distort
period-on-period comparisons.
We consider constant currency performance to provide useful information for
investors by aligning internal and external reporting, and reflecting how
management assesses period-on-period performance.
Notable items
We separately disclose 'notable items', which are components of our income
statement that management would consider as outside the normal course of
business and generally non-recurring in nature. Certain notable items are
classified as 'material notable items', which are a subset of notable items.
Categorisation as a material notable item is dependent on the nature of each
item in conjunction with the financial impact on the Group's income statement.
For further information on our use of alternative performance measures, see
pages 29 and 56 of the Interim Report 2024.
17 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 subsidiary undertakings. 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' and '$bn' represent
millions and billions (thousands of millions) of US dollars, respectively.
18 Investor Relations / Media Relations contacts
For further information contact:
Investor
Relations
Media Relations
UK - Neil
Sankoff
UK - Gillian James
Telephone: +44 (0)20 7991
5072
Telephone: +44 (0)7584 404
238
Email:
investorrelations@hsbc.com
Email: pressoffice@hsbc.com
Hong Kong - Yafei
Tian
UK - Kirsten Smart
Telephone: +852 2899
8909
Telephone: +44 (0)7725 733 311
Email:
investorrelations@hsbc.com.hk
Email: pressoffice@hsbc.com
Hong Kong - Aman Ullah
Telephone: +852 3941 1120
Email: aspmediarelations@hsbc.com.hk
Registered Office and Group Head Office
HSBC Holdings plc
8 Canada Square
London E14 5HQ
United Kingdom
Tel: +44(0)20 7991 8888
Web: www.hsbc.com
Incorporated in England with limited liability. Registered number 617987
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