REG - HSBC Holdings PLC - HSBC Holdings plc Earnings Release 3Q24
29/10/2024 07:00
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RNS Number : 9689J HSBC Holdings PLC 29 October 2024
29 October 2024
HSBC Holdings plc Earnings Release 3Q24
Georges Elhedery, Group Chief Executive, said:
"We delivered another good quarter, which shows that our strategy is working.
There was strong revenue growth and good performances in Wealth and Wholesale
Transaction Banking. Our strong organic capital generation enables us to
announce a further $4.8bn of distributions in respect of the third quarter,
which bring the total distributions announced so far in 2024 to $18.4bn.
I'm committed to building on this strong platform for growth. HSBC is a highly
connected, global business and the plans we set out last week aim to increase
our leadership and market share in areas where we have competitive advantage,
deliver best-in-class products and service excellence to our customers, and
create a simpler, more dynamic, more agile organisation with clearer lines of
accountability and faster decision-making. We will begin to implement these
plans immediately and will share further details as part of a business update
alongside our full-year results in February."
Financial performance in 3Q24
- Profit before tax increased by $0.8bn to $8.5bn compared with 3Q23,
primarily due to revenue growth in Wealth and Personal Banking ('WPB'), and in
Foreign Exchange, Equities and Global Debt Markets in Global Banking and
Markets ('GBM'). Profit before tax in 3Q24 included a $0.3bn loss on the early
redemption of legacy securities. The 3Q23 period included $0.6bn of disposal
losses relating to Treasury repositioning and risk management, which was
partly offset by a $0.2bn gain on foreign exchange hedges relating to the
disposal of our banking business in Canada. Profit after tax of $6.7bn was
$0.5bn higher than in 3Q23.
- Constant currency profit before tax excluding notable items
increased by $0.8bn to $8.7bn compared with 3Q23, as revenue growth and lower
expected credit losses and other impairment charges ('ECL') were partly offset
by a rise in operating expenses. This included a $0.2bn adverse impact from
strategic transactions.
- Revenue increased by $0.8bn or 5% to $17.0bn compared with 3Q23. The
growth in revenue reflected higher customer activity in our Wealth products in
WPB, supported by volatile market conditions, and in Foreign Exchange,
Equities and Global Debt Markets in GBM. Revenue in 3Q24 included a $0.3bn
loss on the early redemption of legacy securities and a loss of $0.1bn from
Treasury repositioning and risk management actions. On a constant currency
basis, revenue rose by 7% to $17.0bn compared with 3Q23.
- Net interest income ('NII') of $7.6bn fell by $1.6bn compared with
3Q23, reflecting reductions due to business disposals, higher interest expense
on liabilities and a loss on the early redemption of legacy securities. It
also included an increase in funding costs associated with redeployment of our
commercial surplus into the trading book, where the related revenue is
recognised in 'net income from financial instruments held for trading or
managed on a fair value basis'. Banking net interest income ('banking NII')
fell by $1.0bn or 9% compared with 3Q23, as increased deployment of our
commercial surplus to the trading book only partly mitigated the reductions in
NII. NII fell by $0.6bn compared with 2Q24, while the funding costs associated
with funding the trading book increased by $0.3bn, which resulted in a fall in
banking NII of $0.3bn.
- Net interest margin ('NIM') of 1.46% decreased by 24 basis points
('bps') compared with 3Q23, mainly due to higher interest expense on
liabilities because of higher interest rates. NIM decreased by 16bps compared
with 2Q24, reflecting higher interest expense on liabilities and an impact
from the early redemption of legacy securities.
- ECL of $1.0bn were $0.1bn lower than in 3Q23, primarily reflecting
lower charges in the mainland China commercial real estate sector in
Commercial Banking ('CMB') and GBM, in part offset by an increase in ECL
charges in WPB. ECL in 3Q24 comprised charges in CMB and GBM of $0.5bn,
including against exposures in the onshore Hong Kong commercial real estate
($0.1bn) and mainland China commercial real estate sectors ($0.1bn), while
charges in WPB of $0.5bn primarily related to our legal entities in Mexico,
Hong Kong and in HSBC UK.
- Operating expenses of $8.1bn were $0.2bn or 2% higher than in 3Q23.
The growth was primarily due to higher spend and investment in technology and
the impacts of inflation, in part mitigated by continued cost discipline and
the impact of our disposals in Canada and France. Target basis operating
expenses were $0.4bn or 5% higher than in 3Q23, while they fell by 1% compared
with 2Q24 driven by lower marketing costs and a lower performance-related pay
accrual.
- Customer lending balances increased by $30bn compared with 2Q24. On
a constant currency basis, lending balances increased by $2bn, including
growth in WPB and CMB, notably in HSBC UK, while term lending balances
decreased in GBM, notably in our main legal entity in Asia.
- Customer accounts increased by $67bn compared with 2Q24. On a
constant currency basis, customer accounts increased by $20bn, mainly in our
legal entity in Hong Kong due to an increase in term deposits prior to
interest rate reductions and from short-term inflows into customer accounts
amid equity market volatility. Deposits in GBM were broadly stable as an
outflow of a large short-term deposit from a single client was partly offset
by balance growth, notably in our legal entities in mainland China and the US.
- Common equity tier 1 ('CET1') capital ratio of 15.2% increased by
0.2 percentage points compared with 2Q24, mainly driven by capital generation,
partly offset by the share buy-back announced at our interim results and an
increase in risk-weighted assets ('RWAs').
- The Board has approved a third interim dividend of $0.10 per share.
On 25 October 2024, we completed the $3bn share buy-back announced at our
interim results. We now intend to initiate a share buy-back of up to $3bn,
which we expect to complete within the four-month period before our 2024
full-year results announcement.
-
Financial performance in 9M24
- Profit before tax increased by $0.7bn to $30.0bn compared with 9M23,
including a $0.2bn net favourable revenue impact of notable items relating to
gains and losses recognised on certain strategic transactions. Profit after
tax increased by $0.1bn to $24.4bn compared with 9M23.
- In 9M24, we completed the disposal of our banking business in
Canada, recognising a gain of $4.8bn. We also recognised a $1.2bn impairment
following the classification of our business in Argentina as held for sale.
Results in 9M23 included the impact of a $2.1bn reversal of an impairment
relating to the sale of our retail banking operations in France, which was
subsequently reinstated in 4Q23 prior to completion, and a $1.6bn gain
recognised on the acquisition of Silicon Valley Bank UK Limited ('SVB UK'). In
addition, the 9M24 period included a $0.3bn loss on the early redemption of
legacy securities, while 9M23 included $0.6bn of disposal losses relating to
Treasury repositioning and risk management.
- Constant currency profit before tax excluding notable items
increased by $0.7bn to $26.8bn compared with 9M23, as revenue growth and lower
ECL charges were partly offset by a rise in operating expenses.
- Revenue increased by $1.3bn or 2% to $54.3bn compared with 9M23,
including the gains and losses on certain strategic transactions described
above and a $0.3bn loss on the early redemption of legacy securities. The
growth in revenue reflected the impact of higher customer activity in our
Wealth products in WPB, and in Equities and Securities Financing in GBM.
- NII of $24.5bn fell by $3.0bn compared with 9M23, reflecting
reductions due to business disposals, higher interest expense in part due to
deposit migration, and higher funding costs associated with the redeployment
of our commercial surplus to the trading book, where the related revenue is
recognised in 'net income from financial instruments held for trading or
managed on a fair value basis'. Banking NII fell by $0.5bn or 2% compared with
9M23, as increased deployment of our commercial surplus to the trading book
only partly mitigated the reductions in NII, including the adverse impact of
foreign currency translation differences.
- Constant currency revenue excluding notable items rose by $1.7bn to
$50.9bn compared with 9M23, notably in Wealth in WPB, and in Equities and
Securities Financing in GBM.
- NIM of 1.57% decreased by 13bps compared with 9M23 due to higher
interest expense on liabilities because of higher interest rates and increased
deployment of our commercial surplus to the trading book.
- ECL were $2.1bn, a reduction of $0.4bn compared with 9M23. The
reduction included lower charges relating to exposures in the commercial real
estate sector in mainland China, and lower charges in HSBC UK, partly offset
by higher ECL charges in WPB, notably against unsecured lending in our legal
entity in Mexico. Annualised ECL charges were 28bps of average gross loans,
including loans and advances classified as held for sale.
- Operating expenses increased by $1.0bn or 4% to $24.4bn compared
with 9M23, mainly due to higher spend and investment in technology and the
impacts of inflation, while the performance-related pay accrual was higher
than in 9M23. These increases were partly offset by reductions related to our
business disposals in Canada and France. Target basis operating expenses rose
by $1.4bn or 6% compared with 9M23. Target basis operating expenses are
measured on a constant currency basis, excluding notable items, the impact of
retranslating the results of hyperinflationary economies at constant currency,
and the direct costs from the sales of our French retail banking operations
and our banking business in Canada.
Outlook
- Our guidance remains unchanged from that set out at our Interim
results on 31 July 2024.
- We continue to target a mid-teens return on average tangible equity
('RoTE') in 2024 and 2025, excluding the impact of notable items, while
acknowledging the outlook for interest rates has changed, and been volatile,
since our 1H24 results announcement in July.
- Our banking NII guidance of around $43bn for 2024 remains unchanged
and we continue to target cost growth of approximately 5% for 2024 compared
with 2023, on a target basis. ECL charges as a percentage of average gross
loans in 2024 are expected 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-October 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.
- We continue to make progress on reshaping the Group. We expect to
complete the sale of our business in Argentina in 4Q24. On completion,
cumulative foreign currency translation reserves and other reserves will
recycle to the income statement. These impacts have already been recognised in
capital. At 30 September 2024, foreign currency translation reserve and other
reserve losses stood at $5.1bn.
· 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.
Contents
1 Group Chief Executive statement 25 - Global Banking and Markets - constant currency basis
1 Financial performance in 3Q24 28 - Corporate Centre - constant currency basis
2 Financial performance in 9M24 30 Supplementary financial information
2 Outlook 30 - Reported and constant currency results
3 Business highlights 31 - Global businesses
5 Financial summary 38 - Legal entities
5 - Use of alternative performance measures 44 Alternative performance measures
6 - Key financial measures: basis of preparation 44 - Use of alternative performance measures
7 - Disposal groups and business acquisitions 44 - Alternative performance measure definitions
9 - Key financial metrics 48 Risk
10 - Summary consolidated income statement 48 - Managing risk
11 - Distribution of results by global business and legal entity 49 - Credit risk
12 - Income statement commentary 61 - Capital risk
17 - Summary consolidated balance sheet 65 Additional information
18 - Balance sheet commentary 65 - Dividends
20 Global businesses 66 - Investor relations/media relations contacts
20 - Wealth and Personal Banking - constant currency basis 66 - Cautionary statement regarding forward-looking statements
23 - Commercial Banking - constant currency basis 68 - Abbreviations
Presentation to investors and analysts
HSBC Holdings plc will be conducting a trading update conference call with
analysts and investors today to coincide with the publication of this Earnings
Release 3Q24. The call will take place at 07.45am GMT. Details of how to
participate in the call and the live audio webcast can be found at
www.hsbc.com/investors.
About HSBC
HSBC Holdings plc, the parent company of HSBC, is headquartered in London.
With assets of $3.1tn at 30 September 2024, HSBC is one of the world's largest
banking and financial services organisations.
Our strategy
HSBC's purpose is 'Opening up a world of opportunity'. Our strategy supports
our ambition of being the preferred international financial partner for our
clients, centred around four key areas.
- Focus - maintain leadership in scale markets, double-down on
international connectivity, diversify our revenue and maintain cost discipline
and reshape our portfolio;
- Digitise - deliver seamless customer experience, ensure resilience
and security, embrace disruptive technologies and partner with innovators, and
automate and simplify at scale;
- Energise - inspire leaders to drive performance and delivery, unlock
our edge to enable success, deliver a unique and exceptional colleague
experience and prepare our workforce for the future;
- Transition - support our customers, embed net zero into the way we
operate, partner for systemic change, become net zero in our own operations
and supply chain by 2030, and our financed emissions by 2050.
Business highlights
We continue to target a mid-teens RoTE in 2024 and 2025, excluding the impact
of notable items, while acknowledging the outlook for interest rates has
changed, and been volatile, since our 1H24 results announcement in July. We
remain focused on growth opportunities within our strategy that play to our
strengths, while maintaining tight cost discipline and continuing to invest in
growth and efficiency.
Growth opportunities include further expanding our international businesses,
diversification of our revenue, including building our wealth business,
especially in Asia, continuing to grow in our home markets in Hong Kong and
the UK, and also the diversification of our profit generation across the other
markets in which we operate.
We have continued to demonstrate strategic progress during 9M24. At
30 September 2024, wealth balances were $1.9tn, an increase of 15% compared
with the same period last year. Within this we have attracted net new invested
assets of $59bn in the first nine months of 2024, with $49bn booked in Asia.
Revenue in Wealth was up $0.9bn or 16% on a constant currency basis, with an
increase in Asia of 27%. There was a strong performance in our insurance
business, which was up 28%, and growth in insurance manufacturing new business
contractual service margin in WPB of $0.8bn, up 58% compared with 9M23. We
grew mortgage lending balances by $5bn since 31 December 2023 on a constant
currency basis, notably in HSBC UK. In addition, we generated revenue of
$19.8bn from transaction banking during 9M24, which was broadly stable
compared with 9M23. This reflected growth in Global Payments Solutions ('GPS')
in both CMB and GBM, across both NII and net fee income, which was broadly
offset by lower revenue in Global Foreign Exchange.
On 24 September 2024, the People's Bank of China, National Financial
Regulatory Administration and China Securities Regulatory Commission announced
several policies aimed at promoting growth and economic development. These
included monetary stimulus, property market support and capital market
strengthening measures, as well as measures to recapitalise the largest
commercial banks. These measures resulted in elevated volatility at the end of
3Q24, which resulted in an increase in client activity, notably in Wealth,
Equities, and Global Foreign Exchange in Hong Kong. We continue to monitor the
impact of these measures into the fourth quarter.
We remain focused on maintaining tight cost discipline and generating cost
savings that will help enable us to invest in technology to improve customer
experience while also increasing efficiency and resilience. We also have an
ambition to build a stronger performance culture, improving our colleague
experience and preparing our workforce for the future. Finally, we also see
commercial opportunities in helping to finance the new economy and in
supporting the significant investment needs of our customers in the transition
to net zero, as well as the importance of helping to mitigate the rising
financial and wider societal risks posed by climate change.
We continue to make progress on reshaping the Group for growth. So far in
2024, we have completed the sales of our retail banking operations in France,
our banking business in Canada and our business in Russia. In addition, we
announced the planned sales of our business in Argentina and our operations in
Armenia, which we expect to complete in the fourth quarter of 2024. We also
completed the acquisition of SilkRoad Property Partners Group in Singapore and
Citi's retail wealth management portfolio in mainland China. We have also
announced divestments in our private banking business in Germany and our
business in South Africa, and we have launched a strategic review of our
business in Malta. The review is at an early stage and no decisions have been
made.
For further details of these transactions, see 'Disposal groups and
business acquisitions' on page 7.
On 22 October 2024, we announced that we are simplifying our organisational
structure to accelerate delivery against our strategic priorities. Effective 1
January 2025, the Group will operate through four businesses: Hong Kong, UK,
Corporate and Institutional Banking, and International Wealth and Premier
Banking. The Group's functions will be realigned to support the four new
businesses. Our strategic priorities remain unchanged. These changes are aimed
at increasing focus on leadership and market share in the areas where we have
clear competitive advantages, creating a simpler organisation with clarity of
accountability and faster decision-making, and reducing the duplication of
processes that are built into our current matrix structure. We expect to share
further details of these changes at our 2024 annual results, expected to be
announced on 19 February 2025.
ESG update
We have continued with our implementation plan to embed net zero into the way
we support our customers, the way we operate as an organisation and how we
partner externally in support of systemic change. We seek to harness our
strengths and capabilities in the areas where we believe we can best support
large-scale emissions reductions, transitioning industry, catalysing the new
economy and decarbonising supply chains.
We published our Net Zero Transition plan on 25 January 2024, and in
accordance with the Transition Plan Taskforce guidance, we are performing our
annual review in 4Q24. An update will be provided in our Annual Report and
Accounts 2024.
Financial summary
Notes
- Income statement comparisons, unless stated otherwise, are between
the quarter ended 30 September 2024 and the quarter ended 30 September 2023.
Balance sheet comparisons, unless otherwise stated, are between balances at 30
September 2024 and the corresponding balances at 31 December 2023.
- The financial information on which this Earnings Release 3Q24
is based is unaudited. It has been prepared in accordance with our material
accounting policies as described on pages 341 to 354 of the Annual Report and
Accounts 2023.
Use of alternative performance measures
Our reported results are prepared in accordance with IFRS Accounting Standards
as detailed in our financial statements starting on page 329 of the Annual
Report and Accounts 2023.
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 Earnings Release 3Q24 is described below.
Definitions and calculations of other alternative performance measures are
included in 'Alternative performance measures' on page 44. All alternative
performance measures are reconciled to the closest reported performance
measure.
Constant currency performance
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.
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 and material 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. From 1H24, we now disclose
'profit before tax excluding notable items' and 'revenue excluding notable
items'. We have introduced these new measures due to the significant impact of
notable items on the Group's results. We consider profit before tax excluding
notable items and revenue excluding notable items as useful information in
understanding period-on-period performance.
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.
The tables on pages 31 to 34 and pages 38 to 43 detail the effects of
notable items on each of our global business segments and legal entities in
9M24, 9M23, 3Q24, 2Q24 and 3Q23.
Impact of strategic transactions
To aid the understanding of our results, we separately disclose the impact of
strategic transactions classified as material notable items on the results of
the Group and our global businesses. At 3Q24, strategic transactions
classified as material notable items in current and comparative periods
comprise the disposal of our retail banking operations in France, the disposal
of our banking business in Canada, the planned sale of our business in
Argentina and the acquisition of SVB UK.
The impacts of strategic transactions include the gains or losses on
classification to held for sale or on acquisition and all other related
notable items. They also include the distorting impact between the periods of
the operating income statement results related to acquisitions and disposals
that affect period-on-period comparisons. This is computed by including the
operating income statement results of each business in any period for which
there are no results in the comparative period. We consider the monthly
impacts of distorting income statement results when calculating the impact of
strategic transactions.
See page 36 for supplementary analysis of the impact of strategic
transactions.
Constant currency revenue and profit before tax excluding notable items
We separately report 'constant currency revenue excluding notable items' and
'constant currency profit before tax excluding notable items', which exclude
the impact of notable items and the impact of foreign exchange translation. We
consider that these measures provide useful information to investors as they
remove items that distort period-on-period comparisons.
For a reconciliation of constant currency revenue excluding notable
items and constant currency profit before tax excluding notable items to
reported revenue and reported profit before tax respectively, see page 45.
Constant currency revenue and profit before tax excluding notable items and
the impact of strategic transactions
To aid the understanding of our results, we separately disclose 'constant
currency revenue excluding notable items and the impact of strategic
transactions' and 'constant currency profit before tax excluding notable items
and the impact of strategic transactions'. These measures exclude the impact
of strategic transactions classified as material notable items from constant
currency revenue and profit before tax excluding notable items. At 3Q24,
strategic transactions classified as material notable items in current and
comparative periods comprise the disposals of our retail banking operations in
France and our banking business in Canada, the planned sale of our business in
Argentina and the acquisition of SVB UK.
The impacts quoted include the gains or losses on classification to held for
sale or acquisition and all other related notable items. They also include the
distorting impact between the periods of the operating income statement
results related to acquisitions and disposals that affect period-on-period
comparisons. This is computed by including the operating income statement
results of each business in any period for which there are no results in the
comparative period. We consider the monthly impacts of distorting income
statement results when calculating the impact of strategic transactions.
For a reconciliation of constant currency revenue excluding notable
items and strategic transactions and constant currency profit before tax
excluding notable items and strategic transactions to reported revenue and
reported profit before tax respectively, see page 45.
Foreign currency translation differences
Foreign currency translation differences reflect the movements of the US
dollar against most major currencies during 2024. We exclude them to derive
constant currency data, allowing us to assess balance sheet and income
statement performance on a like-for-like basis and to better understand the
underlying trends in the business.
Foreign currency translation differences for 9M24 and 3Q24 are computed by
retranslating into US dollars for non-US dollar branches, subsidiaries, joint
ventures and associates:
- the income statement for 9M23 at the average rate of exchange for
9M24;
- the income statement for the quarterly periods at the average rate
of exchange for 3Q24;
- the closing prior period balance sheets at the prevailing rates of
exchange on 30 September 2024.
No adjustment has been made to the exchange rates used to translate foreign
currency-denominated assets and liabilities into the functional currencies of
any HSBC branches, subsidiaries, joint ventures or associates. The constant
currency data of our operations in Argentina and Türkiye has not been
adjusted further for the impacts of hyperinflation. When reference is made to
foreign currency translation differences in tables or commentaries,
comparative data reported in the functional currencies of HSBC's operations
has been translated at the appropriate exchange rates applied in the current
period on the basis described above.
Global business performance
The Group Chief Executive, supported by the rest of the Group Executive
Committee ('GEC'), is considered to be the Chief Operating Decision Maker
('CODM') for the purposes of identifying the Group's reportable segments.
The Group Chief Executive and the rest of the GEC review operating activity on
a number of bases, including by global business and legal entities. Our global
businesses - Wealth and Personal Banking, Commercial Banking and Global
Banking and Markets - along with Corporate Centre - are our reportable
segments under IFRS 8 'Operating Segments'. Global business results are
assessed by the CODM on the basis of constant currency performance, which
removes the effects of currency translation impacts from reported results.
Therefore, we present these results on a constant currency basis.
As required by IFRS 8, reconciliations of the constant currency results to the
Group's reported results are presented on page 30. Supplementary
reconciliations of constant currency to reported results by global business
are presented on pages 31 to 34 for information purposes.
Management view of revenue on a constant currency basis
Our global business segment commentary includes tables that provide breakdowns
of revenue on a constant currency basis by major product. These reflect the
basis on which revenue performance of the businesses is assessed and managed.
Key financial measures: basis of preparation
Return on average tangible equity excluding notable items
From 1 January 2024, we revised the adjustments made to our adjusted RoTE
measure. Prior to this we adjusted RoTE for the impact of strategic
transactions and the impairment of our investment in Bank of Communications
Co., Limited ('BoCom'), whereas from 1 January 2024 we have excluded all
notable items. This was intended to improve alignment with the treatment of
notable items in our other income statement disclosures. RoTE excluding
notable items has been re-presented for 3Q23 and 9M23 on the revised basis and
we no longer disclose RoTE excluding strategic transactions and the impairment
of BoCom. The calculation for RoTE excluding notable items adjusts the 'profit
attributable to ordinary shareholders, excluding goodwill and other intangible
assets impairment' for the post-tax impact of notable items. It also adjusts
the 'average tangible equity' for the post-tax impact of notable items in each
period, which remain as adjusting items for all relevant periods within that
calendar year.
For a reconciliation from return on equity to RoTE excluding notable items,
see page 45. We continue to target a RoTE excluding notable items in the
mid-teens for both 2024 and 2025. We do not reconcile our forward RoTE
guidance to the equivalent reported measure.
Banking net interest income
Banking NII adjusts our NII, primarily for the impact of funding trading and
fair value activities reported in interest expense. It represents the Group's
banking revenue that is directly impacted by changes in interest rates. We use
this measure to determine the deployment of our commercial surplus, and to
help optimise our structural hedging and risk management actions.
For more information on banking NII, see page 16.
Target basis operating expenses
Target basis operating expenses is computed by excluding the direct cost
impact of our retail banking operations in France and Canada banking business
disposals from the 2023 baseline. It is measured on a constant currency basis
and excludes notable items and the impact of retranslating the prior year
results of hyperinflationary economies at constant currency, which we consider
to be outside of our control. We consider target basis operating expenses to
provide useful information to investors by quantifying and excluding the
notable items that management considered when setting and assessing
cost-related targets. For a reconciliation of reported operating expenses to
target basis operating expenses, see page 47.
In 2024, we are targeting cost growth of approximately 5% compared with 2023
on a target basis. This target reflects our current business plan for 2024,
and includes an increase in staff compensation, higher technology spend and
investment for growth and efficiency, in part mitigated by cost savings from
actions taken during 2023. We do not reconcile our forward target basis
operating expenses guidance to reported operating expenses.
Dividend payout ratio target basis
Given our current returns trajectory, we are targeting a dividend payout ratio
target basis of 50% for 2024. For the purposes of computing our dividend
payout ratio target basis, we exclude from earnings per share material notable
items and related impacts. Material notable items are components of our income
statement that management would consider as outside the normal course of
business and generally non-recurring in nature, which are excluded from our
dividend payout ratio calculation and our earnings per share measure, along
with related impacts.
Material notable items for the dividend payout ratio target basis comprise the
impacts of the sales of our banking business in Canada and our retail banking
operations in France, the gain following the acquisition of SVB UK, the
impacts of the planned sale of our business in Argentina and the impairment of
BoCom. We also exclude HSBC Bank Canada's financial results from the 30 June
2022 net asset reference date until completion, as the gain on sale was
recognised through a combination of the consolidation of HSBC Bank Canada's
results into the Group's results since this date, and the remaining gain on
sale was recognised at completion, inclusive of the recycling of related
reserves and fair value gains on related hedges. Following the completion of
the sale of our banking business in Canada, the Board approved a special
dividend of $0.21 per share, which was paid in June 2024, alongside the first
interim dividend.
For a reconciliation of basic earnings per share to basic earnings per
share excluding material notable items and related impacts, see page 47. We
do not reconcile our forward dividend payout ratio target basis guidance to
the reported dividend payout ratio.
Disposal groups and business acquisitions
France retail banking operations
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'). The sale also included HSBC Continental Europe's 100% ownership
interest in HSBC SFH (France) and its 3% ownership interest in Crédit
Logement.
Upon completion and in accordance with the terms of the sale, HSBC Continental
Europe received a €0.1bn ($0.1bn) profit participation interest in the
ultimate holding company of My Money Group. The associated impacts on initial
recognition of this stake at fair value were recognised as part of the pre-tax
loss on disposal in 2023, upon the reclassification of the disposal group as
held for sale. In accordance with the terms of the sale, HSBC Continental
Europe retained a portfolio of €7.1bn ($7.9bn) at the time of sale,
consisting of home and certain other loans, and the CCF brand, which it
licensed to the buyer under a long-term licence agreement. Additionally, HSBC
Continental Europe's subsidiaries, HSBC Assurances Vie (France) and HSBC
Global Asset Management (France), have entered into distribution agreements
with the buyer.
The customer lending balances and associated income statement impacts of the
portfolio of retained loans, together with the profit participation interest
and the licence agreement of the CCF brand, were reclassified from WPB to
Corporate Centre, with effect from 1 January 2024.
During the fourth quarter of 2024, we intend to begin actively marketing the
retained portfolio for sale. As a result, we expect to reclassify the
portfolio to a hold-to-collect-and-sell business model and measure it
prospectively from the first quarter of 2025 at fair value through other
comprehensive income, unless a sale is completed during the fourth quarter. On
the reclassification date, we expect to recognise an estimated $1bn fair value
pre-tax loss in other comprehensive income on the remeasurement of the
financial instruments, equivalent to an estimated 10bps reduction in the
Group's CET1 ratio. The valuation of this portfolio of loans may be
substantially different in the event of a sale due to entity and deal-specific
factors, including funding costs and the value of customer relationships. Upon
completion of a sale, the cumulative fair value changes recognised through
other comprehensive income, which would reflect the terms of an agreed sale,
would reclassify to the income statement.
Canada banking business
On 28 March 2024, HSBC Overseas Holdings (UK) Limited, a direct subsidiary of
HSBC Holdings plc, completed the sale of HSBC Bank Canada to the Royal Bank of
Canada.
The completion of the transaction resulted in a gain on sale of $4.8bn
inclusive of recycling of $0.6bn in foreign currency translation reserve
losses and $0.4bn in other reserves losses. The gain on sale also included
$0.3bn in fair value gains recognised on the related foreign exchange hedges
in the first quarter of 2024. There was no tax on the gain recognised at
completion due to the substantial shareholding exemption rule in the UK.
Following the completion of this transaction, the Board approved a special
dividend of $0.21 per share, which was paid in June 2024 alongside the first
interim dividend of 2024.
Argentina business
On 9 April 2024, HSBC Latin America B.V. entered into a binding agreement to
sell its business in Argentina to Grupo Financiero Galicia ('Galicia').
Galicia will acquire all of HSBC Argentina's business covering banking, asset
management and insurance, together with $100m of subordinated debt issued by
HSBC Argentina and held by HSBC Latin America Holdings (UK) Limited for a base
consideration of $550m. The consideration will be adjusted for the results of
the business and fair value gains or losses on HSBC Argentina's securities
portfolios during the period between 31 December 2023 and closing. HSBC
expects to receive the purchase consideration in a combination of cash and
Galicia's American Depositary Receipts ('ADRs'), with such ADRs representing
less than a 10% economic interest in Galicia. The transaction is expected to
be completed in the fourth quarter of 2024. At 31 March 2024, given the
advanced stage of agreement on deal terms and that completion was expected in
12 months, our investment in HSBC Argentina met the criteria to be classified
as held for sale in accordance with IFRS 5. At 30 September 2024, total
assets of $6.8bn and total liabilities of $4.9bn were classified as held for
sale, and we recognised a $1.2bn pre-tax loss in 9M24. There was no tax
deduction on the loss recognised. At closing, expected in the fourth quarter
of 2024, cumulative foreign currency translation reserves and other reserves
will recycle to the income statement. At 30 September 2024, foreign currency
translation reserve and other reserve losses stood at $5.1bn. Between signing
and closing, the loss on sale will vary by changes in the net asset value of
the disposed business and associated hyperinflation and foreign currency
translation, and the fair value of consideration including price adjustments
and migration costs.
Other disposals
On 30 May 2024, HSBC Europe BV, a wholly-owned subsidiary of HSBC Bank plc,
completed the sale of its business in Russia - HSBC Bank (RR) (Limited
Liability Company) - to Expobank. Foreign currency translation reserve losses
of $0.1bn were recognised in the income statement upon completion. On 6
February 2024, following a strategic review of our operations in Armenia, HSBC
Europe BV reached an agreement for the sale of HSBC Bank Armenia to
Ardshinbank. This resulted in a loss on classification to held for sale of
$0.1bn. The transaction is subject to regulatory approvals. As part of this
transaction, all staff members of HSBC Armenia will transfer to Ardshinbank at
completion, and the transfer will include all customer relationships held by
HSBC Armenia at that time. The transaction is expected to complete in the
fourth quarter of 2024. 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 in Mauritius to Absa Bank
(Mauritius) Limited, a wholly-owned subsidiary of Absa Group Limited. The
financial impact of the sale was not significant for the Group. On 23
September 2024, HSBC Continental Europe reached an agreement to sell its
private banking business in Germany to BNP Paribas. This sale, which remains
subject to governmental approvals and works council consultation, is expected
to be completed in the second half of 2025. At 30 September 2024, total assets
of $2.7bn and total liabilities of $2.7bn met the criteria to be classified as
held for sale in accordance with IFRS 5. The sale is expected to generate an
estimated pre-tax gain on disposal of $0.2bn, which will be recognised on
completion, expected in the third quarter of 2025. On 30 September 2024, HSBC
reached an agreement to sell its business in South Africa to local lender
FirstRand Bank Ltd. The transaction is expected to be completed in the fourth
quarter of 2025 and is subject to regulatory and government approvals. At
closing, cumulative foreign currency translation reserves and other reserves
will recycle to the income statement. At 30 September 2024, foreign currency
translation reserve and other reserve losses stood at $0.2bn. In September
2024, HSBC launched a strategic review of its shareholding in HSBC Bank Malta
p.l.c. The review is at an early stage and no decisions have been made.
Business acquisitions
In October 2023, HSBC Global Asset Management Singapore Limited, a
wholly-owned subsidiary of The Hongkong and Shanghai Banking Corporation
Limited, entered into an agreement to acquire 100% of the shares of Silkroad
Property Partners Pte Ltd ('Silkroad') and for HSBC Global Asset Management
Limited to acquire Silkroad's affiliated General Partner entities. Silkroad is
a Singapore headquartered Asia-Pacific-focused, real estate investment
manager. The acquisition was completed on 31 January 2024.
In October 2023, HSBC Bank (China) Company Limited, a wholly-owned subsidiary
of The Hongkong and Shanghai Banking Corporation Limited, entered into an
agreement to acquire Citibank China's retail wealth management portfolio in
mainland China. The portfolio comprises assets under management and deposits
and the associated wealth customers. The acquisition was completed on 7 June
2024.
Key financial metrics
Nine months ended Quarter ended
30 Sep 2024 30 Sep 2023 30 Sep 2024 30 Jun 2024 30 Sep 2023
Reported results
Profit before tax ($m) 30,032 29,371 8,476 8,906 7,714
Profit after tax ($m) 24,414 24,337 6,749 6,828 6,266
Revenue ($m) 54,290 53,037 16,998 16,540 16,161
Cost efficiency ratio (%) 45.0 44.2 47.9 49.2 49.3
Net interest margin (%) 1.57 1.70 1.46 1.62 1.70
Basic earnings per share ($) 1.23 1.15 0.34 0.35 0.29
Diluted earnings per share ($) 1.22 1.14 0.34 0.34 0.29
Dividend per ordinary share (in respect of the period) ($)(1) 0.30 0.30 0.10 0.10 0.10
Alternative performance measures
Constant currency profit before tax ($m) 30,032 29,095 8,476 8,979 7,624
Constant currency revenue ($m) 54,290 52,389 16,998 16,656 15,887
Constant currency cost efficiency ratio (%) 45.0 44.0 47.9 49.3 49.2
Constant currency revenue excluding notable items ($m) 50,930 49,226 17,209 16,820 16,150
Constant currency profit before tax excluding notable items ($m) 26,799 26,051 8,732 9,176 7,935
Constant currency revenue excluding notable items and strategic transactions 50,752 48,004 17,209 16,819 15,591
($m)
Constant currency profit before tax excluding notable items and strategic 26,709 25,637 8,732 9,177 7,701
transactions ($m)
Expected credit losses and other credit impairment charges (annualised) as a % 0.28 0.32 0.40 0.13 0.42
of average gross loans and advances to customers (%)
Expected credit losses and other credit impairment charges (annualised) as a % 0.28 0.30 0.40 0.13 0.39
of average gross loans and advances to customers, including held for sale (%)
Basic earnings per share excluding material notable items and related impacts 1.02 0.97 0.34 0.35 0.27
($)
Return on average ordinary shareholders' equity (annualised) (%) 17.9 18.3 14.4 15.2 13.5
Return on average tangible equity (annualised) (%) 19.3 19.7 15.5 16.3 14.6
Return on average tangible equity excluding notable items (annualised) (%) 16.7 17.5 15.9 17.1 15.0
Target basis operating expenses ($m) 24,150 22,711 8,098 8,194 7,729
At
30 Sep 2024 30 Jun 2024 31 Dec 2023
Balance sheet
Total assets ($m) 3,098,621 2,975,003 3,038,677
Net loans and advances to customers ($m) 968,653 938,257 938,535
Customer accounts ($m) 1,660,715 1,593,834 1,611,647
Average interest-earning assets, year to date ($m) 2,094,585 2,097,866 2,161,746
Loans and advances to customers as % of customer accounts (%) 58.3 58.9 58.2
Total shareholders' equity ($m) 192,754 183,293 185,329
Tangible ordinary shareholders' equity ($m) 161,880 153,109 155,710
Net asset value per ordinary share at period end ($) 9.66 8.97 8.82
Tangible net asset value per ordinary share at period end ($) 9.00 8.35 8.19
Capital, leverage and liquidity
Common equity tier 1 capital ratio (%)(2,3) 15.2 15.0 14.8
Risk-weighted assets ($m)(2,3) 863,923 835,118 854,114
Total capital ratio (%)(2,3) 20.8 20.6 20.0
Leverage ratio (%)(2,3) 5.7 5.7 5.6
High-quality liquid assets (liquidity value) ($m)(3,4) 649,199 646,052 647,505
Liquidity coverage ratio (%)(3,4,5) 137 137 136
Share count
Period end basic number of $0.50 ordinary shares outstanding (millions) 17,982 18,330 19,006
Period end basic number of $0.50 ordinary shares outstanding and dilutive 18,119 18,456 19,135
potential ordinary shares (millions)
Average basic number of $0.50 ordinary shares outstanding (millions) 18,493 18,666 19,478
For reconciliations of our reported results to a constant currency
basis, including lists of notable items, see page 30. Definitions and
calculations of other alternative performance measures are included in
'Alternative performance measures' on page 44.
1 The amount for the nine months ended 30 September 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 enhanced our calculation processes during 1H24. As the Group
liquidity coverage ratio is reported as a 12-month average, the benefit of
these changes is being recognised incrementally over the year starting from 30
June 2024.
Summary consolidated income statement
Nine months ended Quarter ended
30 Sep 2024 30 Sep 2023 30 Sep 2024 30 Jun 2024 30 Sep 2023
$m $m $m $m $m
Net interest income(1) 24,548 27,512 7,637 8,258 9,248
Net fee income 9,322 9,088 3,122 3,054 3,003
Net income from financial instruments held for trading or managed on a fair 15,814 12,564 5,298 5,110 4,452
value basis(2)
Net income from assets and liabilities of insurance businesses, including 7,889 1,738 5,513 1,084 (2,566)
related derivatives, measured at fair value through profit or loss
Insurance finance expense (7,948) (1,703) (5,462) (1,159) 2,531
Insurance service result 1,001 696 339 356 172
Gain on acquisition(3) - 1,593 - - 86
Gain less impairment relating to sale of business operations(4) 3,328 2,130 72 (161) -
Other operating (expense)/income 336 (581) 479 (2) (765)
Net operating income before change in expected credit losses and other credit 54,290 53,037 16,998 16,540 16,161
impairment charges(5)
Change in expected credit losses and other credit impairment charges (2,052) (2,416) (986) (346) (1,071)
Net operating income 52,238 50,621 16,012 16,194 15,090
Total operating expenses excluding impairment of goodwill and other intangible (24,388) (23,720) (8,138) (8,100) (7,967)
assets
(Impairment)/reversal of impairment of goodwill and other intangible assets (51) 295 (5) (45) (1)
Operating profit 27,799 27,196 7,869 8,049 7,122
Share of profit in associates and joint ventures 2,233 2,175 607 857 592
Profit before tax 30,032 29,371 8,476 8,906 7,714
Tax expense (5,618) (5,034) (1,727) (2,078) (1,448)
Profit after tax 24,414 24,337 6,749 6,828 6,266
Attributable to:
- ordinary shareholders of the parent company 22,720 22,585 6,134 6,403 5,619
- other equity holders 908 976 382 125 434
- non-controlling interests 786 776 233 300 213
Profit after tax 24,414 24,337 6,749 6,828 6,266
$ $ $ $ $
Basic earnings per share 1.23 1.15 0.34 0.35 0.29
Diluted earnings per share 1.22 1.14 0.34 0.34 0.29
Dividend per ordinary share (paid in the period) 0.51 0.43 0.10 0.10 0.10
% % % % %
Return on average ordinary shareholders' equity (annualised) 17.9 18.3 14.4 15.2 13.5
Return on average tangible equity (annualised) 19.3 19.7 15.5 16.3 14.6
Cost efficiency ratio 45.0 44.2 47.9 49.2 49.3
1 Includes a $283m loss in 3Q24 related to the early redemption of
legacy securities.
2 Includes a $255m gain (9M23: $284m loss) on the foreign exchange
hedging of the proceeds from the sale of our banking business in Canada.
3 Gain recognised in respect of the acquisition of SVB UK.
4 For the nine months ending 30 September 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 but excluding the $255m
gain on the foreign exchange hedging (see footnote 2 above), 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.
5 Net operating income before change in expected credit losses and
other credit impairment charges, also referred to as revenue.
Distribution of results by global business and legal entity
Distribution of results by global business
Nine months ended Quarter ended
30 Sep 2024 30 Sep 2023 30 Sep 2024 30 Jun 2024 30 Sep 2023
$m $m $m $m $m
Constant currency revenue(1)
Wealth and Personal Banking(2) 21,723 22,678 7,411 7,162 6,584
Commercial Banking 16,284 17,378 5,388 5,406 5,292
Global Banking and Markets 13,154 12,154 4,412 4,333 3,833
Corporate Centre(2) 3,129 179 (213) (245) 178
Total 54,290 52,389 16,998 16,656 15,887
Constant currency profit/(loss) before tax
Wealth and Personal Banking(2) 9,684 11,403 3,226 3,304 2,778
Commercial Banking 9,464 10,730 3,001 3,210 2,797
Global Banking and Markets 5,662 4,670 1,849 1,804 1,261
Corporate Centre(2) 5,222 2,292 400 661 788
Total 30,032 29,095 8,476 8,979 7,624
1 Constant currency net operating income before change in expected
credit losses and other credit impairment charges including the effects of
foreign currency translation differences, also referred to as constant
currency revenue.
2 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
Nine months ended Quarter ended
30 Sep 2024 30 Sep 2023 30 Sep 2024 30 Jun 2024 30 Sep 2023
$m $m $m $m $m
Reported profit/(loss) before tax
HSBC UK Bank plc 5,555 6,569 1,821 1,923 1,778
HSBC Bank plc 2,437 4,405 1,001 739 907
The Hongkong and Shanghai Banking Corporation Limited 16,005 15,000 5,112 5,436 4,083
HSBC Bank Middle East Limited 867 1,023 331 253 350
HSBC North America Holdings Inc. 446 886 23 170 185
HSBC Bank Canada 186 695 - - 220
Grupo Financiero HSBC, S.A. de C.V. 682 658 216 280 222
Other trading entities(1) 1,477 1,740 443 644 458
- of which: other Middle East entities (including Oman, Türkiye, Egypt and 629 542 218 197 120
Saudi Arabia)
- of which: Saudi Awwal Bank 464 391 147 172 118
Holding companies, shared service centres and intra-Group eliminations(2) 2,377 (1,605) (471) (539) (489)
Total 30,032 29,371 8,476 8,906 7,714
Constant currency profit/(loss) before tax
HSBC UK Bank plc 5,555 6,766 1,821 1,980 1,827
HSBC Bank plc 2,437 4,465 1,001 755 926
The Hongkong and Shanghai Banking Corporation Limited 16,005 14,880 5,112 5,475 4,098
HSBC Bank Middle East Limited 867 1,024 331 254 351
HSBC North America Holdings Inc. 446 887 23 170 185
HSBC Bank Canada 186 688 - - 216
Grupo Financiero HSBC, S.A. de C.V. 682 662 216 255 200
Other trading entities(1) 1,477 1,329 443 629 306
- of which: other Middle East entities (including Oman, Türkiye, Egypt and 629 408 218 192 73
Saudi Arabia)
- of which: Saudi Awwal Bank 464 391 147 171 118
Holding companies, shared service centres and intra-Group eliminations(2) 2,377 (1,606) (471) (539) (485)
Total 30,032 29,095 8,476 8,979 7,624
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 43 for a fuller picture of the
Middle East, North Africa and Türkiye ('MENAT') 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.
Tables showing constant currency profit before tax by global business
and legal entity are presented to support the commentary on constant currency
performance on pages 13 and 15.
The tables on pages 31 to 43 reconcile reported to constant currency
results for each of our global business segments and legal entities.
Income statement commentary
3Q24 compared with 3Q23 - reported results
Movement in reported profit compared with 3Q23
Quarter ended
Variance
3Q24 vs. 3Q23
30 Sep 2024 30 Sep 2023 of which strategic transactions(1)
$m $m $m % $m
Revenue 16,998 16,161 837 5
(811)
ECL (986) (1,071) 85 8
19
Operating expenses (8,143) (7,968) (175) (2)
338
Share of profit/(loss) from associates and JVs 607 592 15 3
-
Profit before tax 8,476 7,714 762 10
(454)
Tax expense (1,727) (1,448) (279) (19)
Profit after tax 6,749 6,266 483 8
1 For details, see 'Strategic transactions supplementary analysis' on
page 36.
Notable items
Quarter ended
30 Sep 2024 30 Sep 2023
$m $m
Revenue
Disposals, acquisitions and related costs 72 310
Fair value movements on financial instruments(1) - -
Disposal losses on Markets Treasury repositioning - (578)
Early redemption of legacy securities (283) -
Currency translation on revenue notable items - 5
Operating expenses
Disposals, acquisitions and related costs (48) (79)
Restructuring and other related costs 3 30
Currency translation on operating expenses notable items - -
1 Fair value movements on non-qualifying hedges in HSBC Holdings.
Reported profit
Reported profit before tax of $8.5bn was $0.8bn higher than in 3Q23. This
primarily reflected an increase in revenue from a strong performance in Wealth
in WPB and higher revenue in Global Foreign Exchange, Equities and Global Debt
Markets in GBM, which mitigated a reduction in NII.
Revenue also benefited from a net favourable impact from notable items. These
included disposal losses in 3Q23 of $0.6bn relating to repositioning and risk
management, partly offset by the adverse effects of a $0.2bn gain in 3Q23 on
foreign exchange hedges relating to the disposal of our banking business in
Canada, which did not recur. In 3Q24, these included a $0.3bn loss on the
early redemption of legacy securities. In addition, revenue in 3Q24 included a
loss of $0.1bn from Treasury repositioning and risk management.
The rise in revenue was partly offset by higher reported operating expenses
due to higher spend and investment in technology, as well as from inflationary
pressures.
Reported profit after tax of $6.7bn was $0.5bn higher than in 3Q23.
Reported revenue
Reported revenue of $17.0bn was $0.8bn or 5% higher than in 3Q23 reflecting
higher wealth revenue in WPB, notably from a strong performance in life
insurance, Global Private Banking and investment distribution, as well as
revenue growth in Global Foreign Exchange, Equities and Global Debt Markets in
GBM, as increased market volatility led to higher client activity. These
factors were partly offset by a loss of $0.1bn in 3Q24 from Treasury
repositioning and risk management, and the impact of our disposals in Canada
and France. The increase in revenue also included the favourable impact from
notable items described above.
NII fell by $1.6bn compared with 3Q23 and included an adverse impact of
foreign currency translation differences of $0.4bn. The reduction reflected
the impact of deposit migration since 3Q23 and the loss on the early
redemption of legacy securities in 3Q24 of $0.3bn. The fall in NII also
included $0.7bn higher funding costs associated with the redeployment of our
commercial surplus into the trading book, where the associated revenue is
recognised in 'net income on financial instruments held for trading or managed
on a fair value basis'. These reductions were in part mitigated by higher NII
in Markets Treasury due to reinvestments in our portfolio at higher yields.
Banking NII of $10.6bn fell by $0.9bn, as increased deployment of our
commercial surplus to the trading book only partly mitigated the reductions in
NII.
Reported ECL
Reported ECL of $1.0bn were $0.1bn lower than in 3Q23, notably due to a lower
level of stage 3 charges against exposures in the commercial real estate
sector in mainland China in CMB and GBM, partly offset by an increase in ECL
charges of $0.2bn in WPB. ECL in 3Q24 comprised charges in CMB and GBM of
$0.5bn, including against exposures in the onshore Hong Kong commercial real
estate ($0.1bn) and mainland China commercial real estate sectors ($0.1bn). In
WPB, ECL included charges of $0.2bn in our legal entity in Mexico, which were
broadly stable compared with 2Q24, primarily related to our unsecured lending
book, reflecting portfolio growth. In addition, ECL in WPB included charges in
HSBC UK and our main entity in Hong Kong.
For further details of the calculation of ECL, including the
measurement uncertainties and significant judgements applied to such
calculations, the impact of the economic scenarios and management judgemental
adjustments, see pages 51 to 58.
Reported operating expenses
Reported operating expenses of $8.1bn were $0.2bn or 2% higher. This mainly
reflected higher spend and investment in technology and the impacts of
inflation, while the performance-related pay accrual was broadly stable. These
increases were partly offset by continued cost discipline, reductions
following the completion of disposals in Canada and France and a favourable
impact from foreign currency translation differences of $0.1bn.
Reported share of profit from associates and JVs
Reported share of profit from associates and joint ventures of $0.6bn was $15m
or 3% higher. This included a higher share of profit from Saudi Awwal Bank
('SAB').
Tax expense
Tax in 3Q24 was a charge of $1.7bn, representing an effective tax rate of
20.4%. The effective tax rate for 3Q24 was increased by provisions for
uncertain tax positions and a tax charge arising under the Global Minimum Tax
regime. Tax in 3Q23 was a charge of $1.4bn, representing an effective tax rate
of 18.8%.
Third interim dividend for 2024
On 29 October 2024, the Board announced a third interim dividend for 2024 of
$0.10 per ordinary share. For further details, see page 66.
3Q24 compared with 3Q23 - constant currency basis
Movement in profit before tax compared with 3Q23 - on a constant currency
basis
Quarter ended
Variance
3Q24 vs. 3Q23
30 Sep 2024 30 Sep 2023 of which strategic transactions(1)
$m $m $m % $m
Revenue 16,998 15,887 1,111 7
(806)
ECL (986) (1,038) 52 5
19
Operating expenses (8,143) (7,823) (320) (4)
336
Share of profit from associates and JVs 607 598 9 2
-
Profit before tax 8,476 7,624 852 11
(451)
1 For details, see 'Strategic transactions supplementary analysis' on
page 36.
Profit before tax of $8.5bn was $0.9bn higher than in 3Q23, on a constant
currency basis, as growth in revenue was partly offset by higher operating
expenses.
Revenue increased by $1.1bn or 7% on a constant currency basis, and included a
reduction of $0.8bn relating to the impact of strategic transactions. Revenue
growth was driven by Wealth in WPB and in Global Foreign Exchange, Equities
and Global Debt Markets in GBM. A reduction in NII reflected deposit
migration, a loss on the early redemption of legacy securities in 3Q24, and
higher funding costs associated with the redeployment of our commercial
surplus into the trading book, where the related revenue is recognised in 'net
income on financial instruments held for trading or managed on a fair value
basis'. Banking NII fell by $0.5bn, as increased deployment of our commercial
surplus to the trading book only partly mitigated the reductions in NII.
ECL charges of $1.0bn were $0.1bn lower on a constant currency basis, notably
reflecting a reduction in charges relating to exposures in the commercial real
estate sector in mainland China in CMB and GBM, partly offset by higher
charges in WPB. ECL in 3Q24 included charges against exposures in the onshore
Hong Kong commercial real estate sector of $0.1bn and in the mainland China
commercial real estate sector of $0.1bn. In addition, WPB included charges in
our legal entity in Mexico, which were broadly stable compared with 2Q24,
primarily in our unsecured lending book, reflecting portfolio growth, and
higher charges in HSBC UK and our main entity in Hong Kong.
Operating expenses increased by $0.3bn or 4% on a constant currency basis,
mainly driven by continued spend and investment in technology and the impacts
of inflation, while the performance-related pay accrual was broadly stable.
These increases were partly offset by continued cost discipline and reductions
following the completion of disposals in Canada and France. Target basis
operating expenses were $0.4bn or 5% higher than in 3Q23, while they fell by
1% compared with 2Q24, mainly due to a reduction in marketing costs and a
lower performance-related pay accrual.
9M24 compared with 9M23 - reported results
Movement in reported profit compared with 9M23
Nine months ended
Variance
9M24 vs. 9M23
30 Sep 2024 30 Sep 2023 of which strategic transactions(1)
$m $m $m % $m
Revenue 54,290 53,037 1,253 2
(901)
ECL (2,052) (2,416) 364 15
52
Operating expenses (24,439) (23,425) (1,014) (4)
723
Share of profit from associates and JVs less impairment 2,233 2,175 58 3
-
Profit before tax 30,032 29,371 661 2
(126)
Tax expense (5,618) (5,034) (584) (12)
Profit after tax 24,414 24,337 77 -
1 For details, see 'Strategic transactions supplementary analysis' on
page 36.
Notable items
Nine months ended
30 Sep 2024 30 Sep 2023
$m $m
Revenue
Disposals, acquisitions and related costs 3,643 3,631
Fair value movements on financial instruments(1) - 15
Disposal losses on Markets Treasury repositioning - (578)
Early redemption of legacy securities (283)
Currency translation on revenue notable items - 96
Operating expenses
Disposals, acquisitions and related costs (149) (197)
Restructuring and other related costs 22 77
Currency translation on operating expenses notable items - -
1 Fair value movements on non-qualifying hedges in HSBC Holdings.
Reported profit
Reported profit before tax of $30.0bn was $0.7bn or 2% higher reflecting
revenue growth and lower ECL, partly offset by higher operating expenses. The
growth in revenue included a net favourable impact of notable items. These
primarily comprised the disposal of our banking business in Canada,
recognising a gain of $4.8bn, inclusive of fair value gains on related hedging
and recycling of related reserves. This was partly offset by a $1.2bn
impairment following the classification of our business in Argentina as held
for sale, the impact of a $2.1bn reversal in 9M23 of an impairment relating to
the sale of our retail banking operations in France, and a $1.6bn gain
recognised on the acquisition of SVB UK in 9M23.
In addition, notable items included a $0.3bn loss in 9M24 related to the early
redemption of legacy securities, while 9M23 included disposal losses of $0.6bn
relating to Treasury repositioning and risk management.
Reported profit after tax of $24.4bn was $0.1bn higher than in 9M23.
Reported revenue
Reported revenue of $54.3bn was $1.3bn or 2% higher, which included a net
favourable impact of $0.3bn of notable items described above.
The growth in revenue also reflected the impact of higher customer activity
across our Wealth products in WPB, while in Equities and Securities Financing
in GBM market volatility led to higher client activity.
NII of $24.5bn fell by $3.0bn, and included the adverse impact of foreign
currency translation differences of $1.0bn and the impact from the early
redemption of legacy securities of $0.3bn. The reduction included the effects
of our business disposals in Canada and France. The fall in NII also reflected
the impact of deposit migration and an increase of $2.5bn in funding costs
associated with the redeployment of our commercial surplus into the trading
book, where the related revenue is recognised in 'net income on financial
instruments held for trading or managed on a fair value basis'. These
reductions were in part mitigated by higher NII in Markets Treasury due to
reinvestments in our portfolio at higher yields. Banking NII of $32.8bn fell
by $0.5bn or 2%, as increased deployment of our commercial surplus to the
trading book only partly mitigated the reductions in NII.
Reported ECL
Reported ECL charges of $2.1bn were $0.4bn lower. This included lower stage 3
charges, notably reflecting a reduction in charges relating to the commercial
real estate sector in mainland China, which contributed to lower ECL in both
CMB and GBM, and lower charges in CMB in HSBC UK. ECL in GBM also benefited
from a release of stage 3 allowances in HSBC Bank plc related to a single
client. These reductions were partly offset by higher charges in WPB, mainly
in our legal entity in Mexico, reflecting growth in our unsecured lending
portfolio and unemployment trends.
Reported operating expenses
Reported operating expenses of $24.4bn were $1.0bn or 4% higher, including
favourable foreign currency translation differences between the periods of
$0.4bn. The increase reflected higher spend and investment in technology,
inflationary impacts and a higher performance-related pay accrual, which
reflects a change in the phasing relative to 9M23, the non-recurrence of a
$0.2bn impact from the reversal of historical asset impairments in 9M23, and
higher bank levies in 9M24.
These factors were partly offset by the impact of disposals in Canada and
France, continued cost discipline and favourable foreign currency translation
differences between the periods of $0.4bn.
The number of employees expressed in full-time equivalent staff ('FTE') at 30
September 2024 was 215,180, a decrease of 5,681 compared with 31 December
2023, primarily reflecting the completion of the sale of our banking business
in Canada and our retail banking operations in France. The number of
contractors at 30 September 2024 was 4,453, a decrease of 223.
Reported share of profit from associates and JVs
Reported share of profit from associates and joint ventures of $2.2bn was
$0.1bn higher. This included an increase in the share of profit from SAB.
Tax expense
Tax in 9M24 was a charge of $5.6bn, representing an effective tax rate of
18.7%. The effective tax rate for 9M24 was reduced by the non-taxable gain on
the sale of our banking business in Canada and increased by the non-deductible
loss recorded on the planned sale of our business in Argentina. Excluding
these items, the effective rate for 9M24 was 21.1%. Tax in 9M23 was a charge
of $5.0bn, representing an effective tax rate of 17.1%. The effective tax rate
for 9M23 was reduced by 1.5 percentage points by the non-taxable provisional
gain on the acquisition of SVB UK and by 1.4 percentage points by the release
of provisions for uncertain tax positions.
9M24 compared with 9M23 - constant currency basis
Movement in profit before tax compared with 9M23 - on a constant currency
basis
Nine months ended
Variance
9M24 vs. 9M23
30 Sep 2024 30 Sep 2023 of which strategic transactions(1)
$m $m $m % $m
Revenue 54,290 52,389 1,901 4
(978)
ECL (2,052) (2,355) 303 13 52
Operating expenses (24,439) (23,067) (1,372) (6)
717
Share of profit from associates and JVs less impairment 2,233 2,128 105 5 -
Profit before tax 30,032 29,095 937 3
(209)
1 For details, see 'Strategic transactions supplementary analysis' on
page 36.
Profit before tax of $30.0bn was $0.9bn higher than in 9M23 on a constant
currency basis. Constant currency profit before tax excluding notable items of
$26.8bn was $0.7bn or 3% higher.
Revenue increased by $1.9bn or 4% on a constant currency basis, and included a
$1.0bn adverse impact from strategic transactions. The growth in revenue
reflected the impact of higher customer activity in our Wealth products in
WPB, and in Equities and Securities Financing in GBM. NII fell due to business
disposals, deposit migration and a loss on the early redemption of legacy
securities in 3Q24. The reduction also included higher funding costs
associated with the redeployment of our commercial surplus into the trading
book, where the related revenue is recognised in 'net income on financial
instruments held for trading or managed on a fair value basis'. On a constant
currency basis, banking NII increased by $0.5bn or 1%.
ECL charges were $0.3bn lower on a constant currency basis, primarily due to a
reduction in stage 3 charges in relation to exposures in the commercial real
estate sector in mainland China which contributed to lower ECL in both CMB and
GBM, and lower charges in CMB in HSBC UK. These reductions were partly offset
by higher charges in WPB reflecting growth in unsecured lending in our legal
entity in Mexico and unemployment trends.
Operating expenses increased by $1.4bn or 6% on a constant currency basis,
primarily reflecting higher spend and investment in technology, inflationary
impacts and a higher performance-related pay accrual, partly offset by
continued cost discipline. Target basis operating expenses rose by $1.4bn or
6% compared with 9M23.
Net interest income
Nine months ended Quarter ended
30 Sep 2024 30 Sep 2023 30 Sep 2024 30 Jun 2024 30 Sep 2023
$m $m $m $m $m
Interest income 82,627 74,154 27,255 27,107 27,198
Interest expense (58,079) (46,642) (19,618) (18,849) (17,950)
Net interest income 24,548 27,512 7,637 8,258 9,248
Average interest-earning assets 2,094,585 2,160,881 2,088,100 2,055,283 2,157,370
% % % % %
Gross interest yield(1) 5.27 4.59 5.19 5.30 5.00
Less: gross interest payable(1) (4.08) (3.35) (4.07) (4.05) (3.80)
Net interest spread(2) 1.19 1.24 1.12 1.25 1.20
Net interest margin(3) 1.57 1.70 1.46 1.62 1.70
1 Gross interest yield is the average annualised interest rate earned
on average interest-earning assets ('AIEA'). Gross interest payable is the
average annualised interest cost as a percentage of average interest-bearing
liabilities ('AIBL').
2 Net interest spread is the difference between the average annualised
interest rate earned on AIEA, net of amortised premiums and loan fees, and the
average annualised interest rate payable on average interest-bearing funds.
3 Net interest margin is net interest income expressed as an
annualised percentage of AIEA.
Net interest income
NII for 9M24 was $24.5bn, a decrease of $3bn or 11% compared with 9M23. The
reduction was mainly due to the deployment of commercial surplus into the
trading book, for which the associated revenue is reported in 'net income on
financial instruments held for trading or managed on a fair value basis'. The
fall also reflected business disposals, a $0.3bn loss in 9M24 related to the
early redemption of legacy securities, and a reduction of $0.2bn reflecting a
reclassification made in 4Q23 of cash flow hedge revenue between NII and
non-NII. These decreases were partly offset by growth in HSBC UK due to
improved margins and the acquisition of SVB UK in 1Q23. Excluding the
unfavourable impact of foreign currency translation differences, NII decreased
by $2bn or 8%.
NII for 3Q24 was $7.6bn, down 17% compared with 3Q23, and down 9% compared
with 2Q24. The year-on-year decline was driven by a rise in the interest
expense of average interest-bearing liabilities ('AIBL') due to higher
interest rates. The decline against 2Q24 reflected a rise in the interest
expense related to AIBL, which included a $0.3bn adverse impact from the early
redemption of legacy securities.
Net interest margin
NIM for 9M24 of 1.57% was 13 basis points ('bps') lower compared with 9M23,
reflecting a higher interest expense related to AIBL, including the impact of
deposit migration, the increased deployment of our commercial surplus to the
trading book, and the $0.3bn loss on the early redemption of legacy
securities. These reductions were mitigated by an increase in gross asset
yields due to higher interest rates. Excluding the adverse effect of foreign
currency translation differences, NIM declined by 12bps.
NIM for 3Q24 was 1.46%, 24bps lower year-on-year, and down 16bps compared with
the previous quarter, primarily reflecting the impact of higher interest
expense related to AIBL, the early redemption of legacy securities and the
impact of deployment of our commercial surplus to the trading book.
Interest income and interest expense
Interest income for 9M24 of $82.6bn increased by $8.5bn compared with 9M23,
primarily due to higher asset yields. Excluding the adverse effect of foreign
currency translation differences of $1.7bn, interest income increased by
$10.2bn.
Interest income of $27.3bn in 3Q24 was up $0.1bn compared with both 3Q23 and
2Q24.
Interest expense for 9M24 of $58.1bn increased by $11.4bn or 24% compared with
9M23. This was primarily driven by a rise in interest rates, deposit migration
and the impact of the early redemption of legacy securities of $0.3bn.
Excluding the favourable effects of foreign currency translation differences
of $0.8bn, interest expense increased by $12.2bn.
Interest expense of $19.6bn in 3Q24 was up $1.7bn compared with 3Q23, and
$0.8bn higher compared with 2Q24. The increase compared with 3Q23 was mainly
driven by deposit migration and the impact of the early redemption of legacy
securities. The increase compared with 2Q24 was driven by an increase in AIBL
and the impact of the early redemption of legacy securities.
Banking net interest income
Banking NII is an alternative performance measure, and is defined as Group NII
after deducting:
- the internal cost to fund trading and fair value net assets for
which associated revenue is reported in 'Net income from financial instruments
held for trading or managed on a fair value basis', also referred to as
'trading and fair value income'. These funding costs reflect proxy overnight
or term interest rates as applied by internal funds transfer pricing;
- the funding costs of foreign exchange swaps in Markets Treasury,
where an offsetting income or loss is recorded in trading and fair value
income. These instruments are used to manage foreign currency deployment and
funding in our entities; and
- third-party NII in our insurance business.
In our segmental disclosures, the funding costs of trading and fair value net
assets are predominantly recorded in GBM in 'net income from financial
instruments held for trading or managed on a fair value basis'. On
consolidation, this funding is eliminated in Corporate Centre, resulting in an
increase in the funding costs reported in NII with an equivalent offsetting
increase in 'net income from financial instruments held for trading or managed
on a fair value basis' in this segment. In the consolidated Group results, the
cost to fund these trading and fair value net assets is reported in NII.
Banking NII was $32.8bn in 9M24. The funding costs associated with generating
trading and fair value income were $8.6bn, an increase of $2.5bn compared with
9M23, primarily reflecting growth in net trading and fair value assets.
Banking NII also deducts third-party NII related to our insurance business,
which was $0.3bn, broadly stable compared with 9M23. The movement in banking
NII also included a $0.3bn loss in 9M24 related to the early redemption of
legacy securities and a reduction of $0.2bn reflecting a reclassification made
in 4Q23 of cash flow hedge revenue between NII and non-NII.
The internally allocated funding to generate trading and fair value income was
approximately $210bn at 30 September 2024, a rise of approximately $80bn since
30 September 2023, and an increase of approximately $2bn since 30 June 2024.
This relates to trading, fair value and associated net asset balances
predominantly in GBM. The increase reflected management decisions on the
deployment of our commercial surplus.
Banking net interest income
Nine months ended Quarter ended
30 Sep 2024 30 Sep 2023 30 Sep 2024 30 Jun 2024 30 Sep 2023
$bn $bn $bn $bn $bn
Net interest income 24.5 27.5 7.6 8.2 9.2
Banking book funding costs used to generate 'net income from financial 8.6 6.1 3.1 2.8 2.4
instruments held for trading or managed on a fair value basis'
Third-party net interest income from insurance (0.3) (0.3) (0.1) (0.1) (0.1)
Banking net interest income 32.8 33.3 10.6 10.9 11.5
- of which:
The Hongkong and Shanghai Banking Corporation Limited 16.2 16.5 5.5 5.3 5.8
HSBC UK Bank plc 7.7 7.2 2.6 2.5 2.5
HSBC Bank plc 3.4 3.4 1.2 1.2 1.2
Summary consolidated balance sheet
At
30 Sep 2024 30 Jun 2024 31 Dec 2023
$m $m $m
Assets
Cash and balances at central banks 252,310 277,112 285,868
Trading assets 349,904 331,307 289,159
Financial assets designated and otherwise mandatorily measured at fair value 126,372 117,014 110,643
through profit or loss
Derivatives 232,439 219,269 229,714
Loans and advances to banks 117,514 102,057 112,902
Loans and advances to customers 968,653 938,257 938,535
Reverse repurchase agreements - non-trading 263,387 230,189 252,217
Financial investments 490,503 467,356 442,763
Assets held for sale 9,182 5,821 114,134
Other assets 288,357 286,621 262,742
Total assets 3,098,621 2,975,003 3,038,677
Liabilities
Deposits by banks 89,337 82,435 73,163
Customer accounts 1,660,715 1,593,834 1,611,647
Repurchase agreements - non-trading 202,510 202,770 172,100
Trading liabilities 75,917 77,455 73,150
Financial liabilities designated at fair value 146,600 140,800 141,426
Derivatives 239,836 217,096 234,772
Debt securities in issue 103,414 98,158 93,917
Insurance contract liabilities 133,155 125,252 120,851
Liabilities of disposal groups held for sale 8,202 5,041 108,406
Other liabilities 238,910 241,748 216,635
Total liabilities 2,898,596 2,784,589 2,846,067
Equity
Total shareholders' equity 192,754 183,293 185,329
Non-controlling interests 7,271 7,121 7,281
Total equity 200,025 190,414 192,610
Total liabilities and equity 3,098,621 2,975,003 3,038,677
Balance sheet commentary
Balance sheet - 30 September 2024 compared with 30 June 2024
At 30 September 2024, our total assets of $3.1tn were $124bn higher on a
reported basis and included favourable effects of foreign currency translation
differences of $85bn. On a constant currency basis, total assets were $39bn
higher, driven by an increase in reverse repurchase agreements, growth in
loans and advances to banks, and higher financial investments balances. These
were partly offset by lower cash and balances at central banks.
Loans and advances to customers as a percentage of customer accounts were
58.3%, compared with 58.9% at 30 June 2024.
Combined view of customer lending and customer deposits
At
30 Sep 2024 30 Jun 2024 31 Dec 2023
$m $m $m
Loans and advances to customers 968,653 938,257 938,535
Loans and advances to customers of disposal groups reported in 'Assets held 2,693 2,253 73,285
for sale'
- banking business in Canada - - 56,129
- retail banking operations in France - - 16,902
- business in Argentina 1,913 1,559
- operations in Armenia 438 478 -
- private banking business in Germany 326 -
- other 15 216 254
Non-current assets held for sale 161 160 92
Combined customer lending 971,507 940,670 1,011,912
Currency translation - 28,254 13,722
Combined customer lending at constant currency 971,507 968,924 1,025,633
Customer accounts 1,660,715 1,593,834 1,611,647
Customer accounts reported in 'Liabilities of disposal groups held for sale' 7,140 4,037 85,950
- banking business in Canada - - 63,001
- retail banking operations in France - - 22,307
- business in Argentina 3,902 3,077
- operations in Armenia 440 457 -
- private banking business in Germany 2,679 -
- other 119 503 643
Combined customer deposits 1,667,855 1,597,871 1,697,597
Currency translation - 47,020 24,339
Combined customer deposits at constant currency 1,667,855 1,644,891 1,721,936
Loans and advances to customers
Loans and advances to customers of $1.0tn were $30bn higher on a reported
basis. This included favourable effects of foreign currency translation
differences of $28bn, mainly in HSBC UK. Excluding foreign currency
translation differences, customer lending balances increased by $2bn. The
increase primarily reflected growth in WPB, notably in HSBC UK, and in CMB,
partly offset by a reduction in GBM.
In WPB, customer lending increased by $3bn. This was driven by continued
growth in mortgage lending balances, notably in HSBC UK and our legal entity
in the US.
In CMB, customer lending increased by $3bn. This was driven by growth in term
lending in HSBC UK, HSBC Bank plc and in our legal entities in the Middle
East, Australia, Mexico, Singapore and India. This was partly offset by lower
term lending balances in our legal entities in Hong Kong and the US.
In GBM, lending decreased by $4bn, primarily reflecting lower term lending,
notably in our main legal entities in Hong Kong, Singapore, the US and
mainland China, as well as in HSBC Bank plc. This was partly offset by growth
in overdraft balances in our main legal entity in Hong Kong, as well as in
HSBC Bank plc and the US.
We continue to expect mid-single digit annual percentage customer lending
growth over the medium to long term.
Customer accounts
Customer accounts of $1.7tn increased by $67bn on a reported basis. This
included favourable effects of foreign currency translation differences of
$47bn, mainly in HSBC UK. Excluding foreign currency translation differences,
customer accounts rose by $20bn.
In WPB, customer accounts rose by $15bn, primarily in our legal entity in Hong
Kong reflecting an increase in term deposits prior to interest rate reductions
and short-term inflows into customer accounts amid equity market volatility.
This increase was partly offset by a decrease in HSBC Bank plc, notably
reflecting the reclassification of deposit balances associated with the
planned sale of our private banking business in Germany.
In CMB, the increase in customer accounts of $6bn reflected balance growth in
our main legal entities in the US and Hong Kong. In addition, 3Q24 included
short-term deposits in HSBC UK and our legal entity in the US, which were
subsequently withdrawn in early October.
In GBM, customer accounts remained broadly stable as a reduction in HSBC Bank
plc reflecting the withdrawal of a short-term deposit held at 30 June 2024 was
mostly offset by balance growth, notably in our legal entities in mainland
China and the US.
Financial investments
As part of our interest rate hedging strategy, we hold a portfolio of debt
instruments, reported within financial investments, which are classified as
hold-to-collect-and-sell. As a result, the change in value of these
instruments is recognised through 'debt instruments at fair value through
other comprehensive income' in equity.
At 30 September 2024, we had recognised a pre-tax cumulative unrealised loss
reserve through other comprehensive income of $2.3bn related to these
hold-to-collect-and-sell positions, excluding investments held in our
insurance business. This reflected a $1.9bn pre-tax gain in 3Q24, inclusive of
movements on related fair value hedges. During 3Q24, we recognised a loss of
$0.1bn in the income statement in relation to Treasury repositioning and risk
management actions in this portfolio. Overall, the Group is positively exposed
to rising interest rates through NII, although there is an adverse impact on
our capital base in the early stages of a rising interest rate environment due
to the fair value of hold-to-collect-and-sell instruments. Over time, these
adverse movements will unwind as the instruments reach maturity, although not
all will necessarily be held to maturity, or as interest rates begin to fall.
We also hold a portfolio of financial investments measured at amortised cost,
which are classified as hold-to-collect. At 30 September 2024, the debt
instruments within this portfolio, excluding those held in our insurance
business, that are held to manage our interest rate exposure had a fair value
broadly in line with their carrying value, representing a $2.2bn improvement
during 3Q24.
Bank of Communications Co., Limited
On 24 September 2024, the People's Bank of China, National Financial
Regulatory Administration and China Securities Regulatory Commission announced
several policies aimed at promoting growth and economic development. These
included monetary stimulus, property market support and capital market
strengthening measures, as well as measures to recapitalise the largest
commercial banks. We are monitoring these developments and their potential
impacts, including on the carrying value of our stake in the Bank of
Communications Co., Limited ('BoCom'). The range of possible outcomes,
including the possible impact of the announced measures, remains broad and
uncertain and could impact on our ongoing impairment assessments. These
developments may have the potential to have a significant impact on the
Group's reported earnings, but would be expected to have an immaterial impact
on HSBC's capital, capital ratios and its distribution capability. As at 30
September 2024, the carrying value of the investment was $22.7bn (30 June
2024: $22.1bn), and its fair value was $10.8bn (30 June 2024: $11.1bn), with
no additional impairment recognised during the quarter. At 31 December 2023,
we recognised an impairment of $3bn against the carrying value of our
investment in BoCom, which had no material impact on HSBC's capital, capital
ratios and no impact on 2023 dividends or share buy-backs.
Risk-weighted assets - 30 September 2024 compared with 30 June 2024
Risk-weighted assets ('RWAs') increased by $28.8bn during 3Q24. Excluding an
increase of $14.8bn from foreign currency translation differences, RWAs rose
by $14.0bn, largely as a result of:
- an $11.8bn increase primarily driven by a rise in corporate
exposures, notably in HSBC UK Bank plc, SAB and Asia, and higher sovereign
exposures, mainly in Asia. Additionally, there was a rise in securities
financing exposures in counterparty credit risk, notably in HSBC Bank plc; and
- a $4.2bn increase mainly from unfavourable credit risk rating
migrations in Asia, including in the Hong Kong commercial real estate sector,
and the US.
These increases were partly offset by:
- a $1.1bn decline primarily due to a $2.2bn change to the financial
institutions model and a $0.8bn decrease due to credit risk parameter
refinements, offset by methodology changes notably in Asia, HSBC UK Bank plc
and the US.
Global businesses
Wealth and Personal Banking - constant currency basis
Results - on a constant currency basis
Nine months ended
Variance
9M24 vs. 9M23
30 Sep 2024 30 Sep 2023 of which strategic transactions(1)
$m $m $m % $m
Revenue 21,723 22,678 (955) (4)
(2,671)
ECL (926) (692) (234) (34)
11
Operating expenses (11,156) (10,629) (527) (5)
574
Share of profit/(loss) from associates and JVs 43 46 (3) (7)
-
Profit before tax 9,684 11,403 (1,719) (15)
(2,086)
1 Impact of strategic transactions classified as material notable
items. For further details, see 'Strategic transactions supplementary
analysis' on page 36.
Management view of revenue
Nine months ended
30 Sep 2024 30 Sep 2023 Variance
9M2
4
vs.
9M2
3
of which strategic transactions(4)
$m $m $m % $m
Wealth 6,696 5,772 924 16
(153)
- investment distribution 2,198 1,955 243 12
(116)
- Global Private Banking 1,996 1,729 267 15
-
net interest income 895 885 10 1
-
non-interest income 1,101 844 257 30
-
- life insurance 1,474 1,150 324 28
-
- asset management 1,028 938 90 10
(37)
Personal Banking 14,559 15,362 (803) (5)
(496)
- net interest income 13,521 14,400 (879) (6)
(426)
- non-interest income 1,038 962 76 8
(70)
Other(1) 468 1,544 (1,076) (70)
(2,022)
- of which: impairment (loss)/reversal relating to the sale of our retail 55 2,058 (2,003) (97)
banking operations in France (2,003)
Net operating income(2) 21,723 22,678 (955) (4)
(2,671)
RoTE (annualised)(3) (%) 30.4 37.3
1 'Other' includes Markets Treasury, HSBC Holdings interest expense
and hyperinflation. It also includes the distribution and manufacturing (where
applicable) of retail and credit protection insurance, disposal gains and
other non-product-specific income.
2 'Net operating income' means net operating income before change in
expected credit losses and other credit impairment charges (also referred to
as 'revenue').
3 RoTE (annualised) in 9M23 included a 6.6 percentage point favourable
impact from the reversal of the impairment losses relating to the sale of our
retail banking operations in France.
4 Impact of strategic transactions classified as material notable
items. For further details, see 'Strategic transactions supplementary
analysis' on page 36.
Notable items
Nine months ended Quarter ended
30 Sep 2024 30 Sep 2023 30 Sep 2024 30 Sep 2023
$m $m $m $m
Revenue
Disposals, acquisitions and related costs 55 2,034 - -
Disposal losses on Markets Treasury repositioning - (253) - (253)
Currency translation on revenue notable items - 21 - (3)
Operating expenses
Disposals, acquisitions and related costs - (26) - (3)
Restructuring and other related costs 5 16 1 16
Currency translation on operating expenses notable items - - - -
9M24 compared with 9M23
Profit before tax of $9.7bn was $1.7bn lower than in 9M23 on a constant
currency basis. The reduction was due to the non-recurrence of a $2.1bn
reversal in 9M23 of an impairment relating to the sale of our retail banking
operations in France, although it was subsequently reinstated in 4Q23 and the
sale completed on 1 January 2024. In addition, the decrease reflected a $0.2bn
reduction due to the sale of our banking business in Canada, which completed
in 1Q24. NII was stable compared with 9M23, while fee income increased by 10%.
Operating expenses grew by $0.5bn and there was an increase in ECL of $0.2bn.
Revenue of $21.7bn was $1.0bn or 4% lower on a constant currency basis. This
included the impact of a reversal of an impairment relating to the sale of our
retail banking operations in France included within 'Other'. Wealth performed
strongly, up $0.9bn, as we continued to execute on our strategy. This included
double-digit percentage growth in life insurance, Global Private Banking,
investment distribution and asset management. This was partly offset by a
reduction in Personal Banking NII of $0.9bn, due to the impact of the
disposals in France and Canada mentioned above and margin compression due to
lower interest rates, partly offset by balance sheet and non-NII growth.
In Wealth, revenue of $6.7bn was up $0.9bn or 16%.
- Global Private Banking revenue was $0.3bn or 15% higher, driven by a
strong performance in brokerage and trading in our entities in Asia.
- Investment distribution revenue grew by $0.2bn, or 12%, driven by
higher sales of mutual funds, structured products and bonds due to our
continued investment in Wealth and improved market sentiment, notably in our
entities in Asia.
- Asset management revenue was $0.1bn or 10% higher, driven by an
increase in assets under management due to inflows and positive market
movements. This was partly offset by a reduction in revenue due to the sale of
our banking business in Canada.
- Life insurance revenue was $0.3bn or 28% higher. The growth included
an increase in earnings from contractual service margin ('CSM') release,
largely due to continued growth in the CSM balance. The year-on-year increase
in revenue also included the impact of corrections to historical valuation
estimates in 9M23. Insurance manufacturing new business CSM of $2.1bn was 58%
higher than in 9M23, mainly in our legal entities in Hong Kong.
In Personal Banking, revenue of $14.6bn was down $0.8bn or 5%.
- Net interest income was $0.9bn or 6% lower due to the impact of the
sales in France and Canada and narrower margins. Compared with 9M23, lending
balances fell by $14bn due to the sale of our retail banking operations in
France, which was a $25bn reduction with $8bn retained in Corporate Centre.
Mortgage lending balances rose in HSBC UK and our legal entity in the US.
Unsecured lending balances increased, notably in HSBC UK and our legal
entities in Asia. Deposit balances fell by $2bn, mainly due to the sale of our
retail banking operations in France (down $24bn), partly offset by growth in
our main legal entities in Hong Kong and mainland China.
Other revenue decreased by $1.1bn, mainly due to the non-recurrence of a
$2.1bn reversal in 9M23 of an impairment relating to the sale of our retail
banking operations in France. This was partly offset by a $0.6bn increase in
revenue allocated from Markets Treasury, the non-recurrence of a loss on sale
of our business in New Zealand in 9M23 of $0.1bn and higher interest income
earned on own capital.
ECL were $0.9bn, an increase of $0.2bn compared with 9M23 on a constant
currency basis, reflecting higher charges in our legal entity in Mexico,
mainly in our unsecured portfolio, due to portfolio growth and unemployment
trends.
Operating expenses of $11.2bn were 5% higher on a constant currency basis,
reflecting continued investments in Wealth in Asia, higher spend and
investment in technology, a higher performance-related pay accrual, and from
the impact of inflation. These were partly offset by continued cost discipline
and the impact of the disposals in France and Canada.
3Q24 compared with 3Q23
Results - on a constant currency basis
Quarter ended
Variance
3Q24 vs. 3Q23
30 Sep 2024 30 Sep 2023 of which strategic transactions(1)
$m $m $m % $m
Revenue 7,411 6,584 827 13
(283)
ECL (450) (208) (242) >(100)
6
Operating expenses (3,750) (3,609) (141) (4)
212
Share of profit/(loss) from associates and JVs 15 11 4 36
-
Profit before tax 3,226 2,778 448 16
(65)
1 Impact of strategic transactions classified as material notable
items. For further details, see 'Strategic transactions supplementary
analysis' on page 36.
Management view of revenue
Quarter ended
30 Sep 2024 30 Sep 2023 Variance
3Q2
4
vs.
3Q2
3
of which strategic transactions(3)
$m $m $m % $m
Wealth 2,360 1,882 478 25
(72)
- investment distribution 762 681 81 12
(53)
- Global Private Banking 669 581 88 15
-
net interest income 297 299 (2) (1)
-
non-interest income 372 282 90 32
-
- life insurance 562 299 263 88
-
- asset management 367 321 46 14
(19)
Personal Banking 4,870 5,201 (331) (6)
(238)
- net interest income 4,519 4,892 (373) (8)
(210)
- non-interest income 351 309 42 14
(28)
Other(1) 181 (499) 680 >100
27
- of which: impairment (loss)/reversal relating to the sale of our retail - - -
banking operations in France
Net operating income(2) 7,411 6,584 827 13
(283)
1 'Other' includes Markets Treasury, HSBC Holdings interest expense
and hyperinflation. It also includes the distribution and manufacturing (where
applicable) of retail and credit protection insurance, disposal gains and
other non-product-specific income.
2 'Net operating income' means net operating income before change in
expected credit losses and other credit impairment charges (also referred to
as 'revenue').
3 Impact of strategic transactions classified as material notable
items. For further details, see 'Strategic transactions supplementary
analysis' on page 36.
Profit before tax of $3.2bn was $0.4bn higher than in 3Q23 on a constant
currency basis, primarily reflecting a strong revenue performance, up $0.8bn
on a constant currency basis. This included the adverse impact of strategic
transactions of $0.3bn. In Wealth, revenue increased by 25%, with double-digit
growth in all products. This was partly offset by a decrease in Personal
Banking income of $0.3bn, mainly due to the $0.2bn impact of the disposals in
France and Canada. ECL of $0.5bn were $0.2bn higher compared with 3Q23 on a
constant currency basis, mainly driven by releases due to improvements in
macroeconomic scenarios in 3Q23, primarily in HSBC UK, and portfolio growth in
our legal entities in Mexico and Hong Kong. Operating expenses of $3.8bn were
$0.1bn or 4% higher on a constant currency basis, mainly due to continued
investment in Wealth in Asia, higher spend and investment in technology, and
inflationary pressures, which were in part mitigated by continued cost
discipline and the impact of the disposals in France and Canada.
Commercial Banking - constant currency basis
Results - on a constant currency basis
Nine months ended
Variance
9M24 vs. 9M23
30 Sep 2024 30 Sep 2023 of which strategic transactions(1)
$m $m $m % $m
Revenue 16,284 17,378 (1,094) (6)
(1,932)
ECL (1,041) (1,356) 315 23
47
Operating expenses (5,780) (5,291) (489) (9)
103
Share of profit/(loss) from associates and JVs 1 (1) 2 >100
-
Profit before tax 9,464 10,730 (1,266) (12)
(1,782)
1 Impact of strategic transactions classified as material notable
items. For further details, see 'Strategic transactions supplementary
analysis' on page 36.
Management view of revenue
Nine months ended
Variance
9M24 vs. 9M23
30 Sep 2024 30 Sep 2023 of which strategic transactions(5)
$m $m $m % $m
Global Trade Solutions 1,479 1,501 (22) (1)
(24)
Credit and Lending 3,957 4,005 (48) (1)
(158)
Global Payments Solutions 8,962 8,988 (26) -
(115)
GBM products, Insurance and Investments, and Other(1) 1,886 2,884 (998) (35)
(1,635)
- of which: share of revenue from Markets and Securities Services and 1,014 977 37 4
Banking products
- of which: gain on the acquisition of Silicon Valley Bank UK Limited - 1,661 (1,661) (100)
(1,661)
Net operating income(2) 16,284 17,378 (1,094) (6)
(1,932)
- of which: transaction banking(3) 11,177 11,223 (46) -
RoTE (annualised)(4) (%) 21.1 25.8
1 Includes a gain on the acquisition of SVB UK and CMB's share of
revenue from the sale of Markets and Securities Services ('MSS') and Banking
products to CMB customers. GBM's share of revenue from the sale of these
products to CMB customers is included within the corresponding lines of the
GBM management view of revenue. Also includes allocated revenue from Markets
Treasury, HSBC Holdings interest expense and hyperinflation.
2 'Net operating income' means net operating income before change in
expected credit losses and other credit impairment charges (also referred to
as 'revenue').
3 Transaction banking comprises Global Trade Solutions ('GTS'), GPS
and CMB's share of Global Foreign Exchange (shown within 'share of revenue
from Markets and Securities Services and Banking products').
4 RoTE (annualised) in 9M23 included a 4.3 percentage point favourable
impact from the provisional gain on the acquisition of SVB UK.
5 Impact of strategic transactions classified as material notable
items. For further details, see 'Strategic transactions supplementary
analysis' on page 36.
Notable items
Nine months ended Quarter ended
30 Sep 2024 30 Sep 2023 30 Sep 2024 30 Sep 2023
$m $m $m $m
Revenue
Disposals, acquisitions and related costs - 1,593 - 86
Disposal losses on Markets Treasury repositioning - (190) - (190)
Currency translation on revenue notable items - 65 - -
Operating expenses
Disposals, acquisitions and related costs 2 (30) - (15)
Restructuring and other related costs 3 30 - 1
Currency translation on operating expenses notable items - - - -
9M24 compared with 9M23
Profit before tax of $9.5bn was $1.3bn lower than in 9M23 on a constant
currency basis. This was largely due to a reduction in revenue following the
non-recurrence of a $1.7bn gain recognised in 9M23 on the acquisition of SVB
UK, the impact of the disposal of our banking business in Canada, as well as
higher operating expenses. The reduction in profit before tax was partly
offset by lower ECL.
Revenue of $16.3bn was $1.1bn or 6% lower on a constant currency basis. This
was primarily due to the non-recurrence of a $1.7bn gain recognised in 9M23 on
the acquisition of SVB UK. It also included an adverse impact of $0.3bn from
strategic transactions, notably in relation to the disposal of our banking
business in Canada. These were partly offset by an increase in NII due to the
higher interest rate environment, growth in transaction banking fee income and
higher revenue from currency volatility in Argentina.
- In GTS, revenue was down $22m or 1%, mainly due to the impact of the
disposal of our banking business in Canada, as well as the impacts of the
softer trade cycle, which notably resulted in lower revenue in our legal
entity in Hong Kong. This was partly offset by growth in transaction banking
fee income.
- In Credit and Lending, revenue decreased by $48m or 1%, due to the
impact of the disposal of our banking business in Canada and lower balances
reflecting muted demand from customers, notably in our legal entities in Asia.
- In GPS, revenue was down $26m or 0.3%, reflecting the impact of the
disposal of our banking business in Canada, and a decrease in our main legal
entities in Asia driven by lower margins. This was partly offset by a 1%
increase in fee income resulting from business initiatives, repricing and
transaction growth, particularly in international payments. There was also
higher revenue in our entity in Argentina due to currency volatility.
- In GBM products, Insurance and Investments, and Other, revenue
decreased by $1.0bn, largely due to the non-recurrence of a $1.7bn gain
recognised in 9M23 on the acquisition of SVB UK. These adverse impacts were
partly offset by higher revenue from Markets Treasury and interest income on
own capital and higher GBM collaboration revenue.
ECL charges of $1.0bn were $0.3bn lower than in 9M23 on a constant currency
basis. The charge in 9M24 reflected lower charges in our legal entities in
Asia and the UK, and lower charges related to the commercial real estate
sector in mainland China. These reductions were partly offset by new stage 3
charges in our legal entity in the Middle East.
Operating expenses of $5.8bn were $0.5bn or 9% higher than in 9M23 on a
constant currency basis. The increase reflected currency volatility in
Argentina, incremental costs in IVB following the acquisition of SVB UK,
higher spend and investment in technology, and inflationary impacts. These
increases were in part mitigated by continued cost discipline and the impact
of the sale of our banking business in Canada.
3Q24 compared with 3Q23
Quarter ended
Variance
3Q24 vs. 3Q23
30 Sep 2024 30 Sep 2023 of which strategic transactions(1)
$m $m $m % $m
Revenue 5,388 5,292 96 2
(311)
ECL (468) (662) 194 29
14
Operating expenses (1,919) (1,833) (86) (5)
88
Share of profit/(loss) from associates and JVs - - - -
-
Profit before tax 3,001 2,797 204 7
(209)
1 Impact of strategic transactions classified as material notable
items. For further details, see 'Strategic transactions supplementary
analysis' on page 36.
Management view of revenue
Quarter ended
Variance
3Q24 vs. 3Q23
30 Sep 2024 30 Sep 2023 of which strategic transactions(4)
$m $m $m % $m
Global Trade Solutions 509 505 4 1
(13)
Credit and Lending 1,306 1,311 (5) -
(117)
Global Payments Solutions 2,946 3,131 (185) (6)
(83)
GBM products, Insurance and Investments, and Other(1) 627 345 282 82
(98)
- of which: share of revenue from Markets and Securities Services and 338 323 15 5
Banking products
- of which: gain on the acquisition of Silicon Valley Bank UK Limited - 89 (89) (100)
(89)
Net operating income(2) 5,388 5,292 96 2
(311)
- of which: transaction banking(3) 3,710 3,881 (171) (4)
1 Includes a gain on the acquisition of SVB UK and CMB's share of
revenue from the sale of MSS and Banking products to CMB customers. GBM's
share of revenue from the sale of these products to CMB customers is included
within the corresponding lines of the GBM management view of revenue. Also
includes allocated revenue from Markets Treasury, HSBC Holdings interest
expense and hyperinflation.
2 'Net operating income' means net operating income before change in
expected credit losses and other credit impairment charges (also referred to
as 'revenue').
3 Transaction banking comprises GTS, GPS and CMB's share of Global
Foreign Exchange (shown within 'share of revenue from Markets and Securities
Services and Banking products').
4 Impact of strategic transactions classified as material notable
items. For further details, see 'Strategic transactions supplementary
analysis' on page 36.
Profit before tax of $3.0bn was $0.2bn or 7% higher than in 3Q23 on a constant
currency basis, primarily due to lower ECL charges relating to the commercial
real estate sector in mainland China. Revenue increased by $0.1bn on a
constant currency basis, mainly driven by growth in transaction banking fees,
an increase in Markets Treasury income and from currency volatility in
Argentina. This was partly offset by a reduction in revenue due to the sale of
our banking business in Canada and lower GPS revenue reflecting lower margins.
Operating expenses were $0.1bn higher on a constant currency basis, mainly
driven by higher spend and investment in technology, currency volatility in
Argentina and inflationary impacts, partly offset by continued cost discipline
and the impact of the sale of our banking business in Canada.
Global Banking and Markets - constant currency basis
Results - on a constant currency basis
Nine months ended
Variance
9M24 vs. 9M23
30 Sep 2024 30 Sep 2023 of which strategic transactions(1)
$m $m $m % $m
Revenue 13,154 12,154 1,000 8
(105)
ECL (58) (304) 246 81
(6)
Operating expenses (7,434) (7,180) (254) (4)
47
Share of profit/(loss) from associates and JVs - - - -
-
Profit before tax 5,662 4,670 992 21
(64)
1 Impact of strategic transactions classified as material notable
items. For further details, see 'Strategic transactions supplementary
analysis' on page 36.
Management view of revenue
Nine months ended
Variance
9M24 vs. 9M23
30 Sep 2024 30 Sep 2023 of which strategic transactions(6)
$m $m $m % $m
Markets and Securities Services 7,272 6,762 510 8
(36)
- Securities Services 1,700 1,748 (48) (3)
-
- Global Debt Markets 813 750 63 8
(7)
- Global Foreign Exchange 3,028 3,076 (48) (2)
(25)
- Equities 718 404 314 78
(1)
- Securities Financing 1,047 816 231 28
(3)
- Credit and funding valuation adjustments (34) (32) (2) (6)
(1)
Banking 6,471 6,374 97 2
(82)
- Global Trade Solutions 522 496 26 5
(8)
- Global Payments Solutions 3,364 3,287 77 2
(47)
- Credit and Lending 1,354 1,489 (135) (9)
(11)
- Investment Banking(1) 819 817 2 -
(5)
- Other(2) 412 285 127 45
(11)
GBM Other (589) (982) 393 40
13
- Principal Investments 67 14 53 >100
-
- Other(3) (656) (996) 340 34
13
Net operating income(4) 13,154 12,154 1,000 8
(105)
- of which: transaction banking(5) 8,614 8,607 7 -
RoTE (annualised) (%) 13.8 12.9
1 From 1 January 2024, we renamed 'Capital Markets and Advisory' as
'Investment Banking' to better reflect our purpose and offering.
2 Includes portfolio management, earnings on capital and other capital
allocations on all Banking products.
3 Includes notional tax credits and Markets Treasury, HSBC Holdings
interest expense and hyperinflation.
4 'Net operating income' means net operating income before change in
expected credit losses and other credit impairment charges (also referred to
as 'revenue').
5 Transaction banking comprises Securities Services, Global Foreign
Exchange (net of revenue shared with CMB), GTS and GPS.
6 Impact of strategic transactions classified as material notable
items. For further details, see 'Strategic transactions supplementary
analysis' on page 36.
Notable items
Nine months ended Quarter ended
30 Sep 2024 30 Sep 2023 30 Sep 2024 30 Sep 2023
$m $m $m $m
Revenue
Disposals, acquisitions and related costs (14) - - -
Disposal losses on Markets Treasury repositioning - (135) - (135)
Currency translation on revenue notable items - (2) - (2)
Operating expenses
Disposals, acquisitions and related costs - 3 - -
Restructuring and other related costs 3 4 - 4
Currency translation on operating expenses notable items - - - -
9M24 compared with 9M23
Profit before tax of $5.7bn was $1.0bn or 21% higher than in 9M23 on a
constant currency basis. This was driven by an increase in revenue of $1.0bn
or 8%, notably from strong performances in Equities and Securities Financing.
In addition, ECL charges decreased compared with 9M23, while operating
expenses increased by $0.3bn.
Revenue of $13.2bn was $1.0bn or 8% higher on a constant currency basis.
In Markets and Securities Services ('MSS'), revenue increased by $0.5bn or 8%.
- In Securities Services, revenue decreased by $48m or 3% from
divestments within our fund administration business.
- In Global Debt Markets, revenue rose by $63m or 8%, driven by
emerging markets credit and structured financing as well as higher volumes in
primary markets.
- In Global Foreign Exchange, revenue fell by $48m or 2% compared with
a strong performance in 9M23, due to continued market volatility offset by
margin compression.
- In Equities, revenue increased by $0.3bn or 78% reflecting increased
client activity supported by market conditions versus a comparatively weak
9M23.
- In Securities Financing, revenue rose by $0.2bn or 28%, driven by
onboarding of US Prime clients and strong demand in institutional financing.
In Banking, revenue increased by $0.1bn or 2%.
- In GPS, revenue increased by $0.1bn or 2%, driven by wider spreads
and fee performance resulting from business initiatives, repricing and
transaction growth.
- In Credit and Lending, revenue decreased by $0.1bn or 9% reflecting
continued muted client demand.
In GBM Other, revenue increased by $0.4bn or 40% reflecting higher Markets
Treasury revenue and valuation gains in Principal Investments.
ECL of $0.1bn in 9M24 decreased by $0.2bn compared with charges of $0.3bn in
9M23 on a constant currency basis. The 9M24 period included a release related
to a single client.
Operating expenses of $7.4bn increased by $0.3bn or 4% on a constant currency
basis, due to the impact of inflation and higher spend and investment in
technology, partly mitigated by continued cost discipline.
3Q24 compared with 3Q23
Results - on a constant currency basis
Quarter ended
Variance
3Q24 vs. 3Q23
30 Sep 2024 30 Sep 2023 of which strategic transactions(1)
$m $m $m % $m
Revenue 4,412 3,833 579 15
(54)
ECL (47) (168) 121 72
(1)
Operating expenses (2,516) (2,404) (112) (5)
23
Share of profit/(loss) from associates and JVs - - - -
-
Profit before tax 1,849 1,261 588 47
(32)
1 Impact of strategic transactions classified as material notable
items. For further details, see 'Strategic transactions supplementary
analysis' on page 36.
Management view of revenue
Quarter ended
Variance
3Q24 vs. 3Q23
30 Sep 2024 30 Sep 2023 of which strategic transactions(6)
$m $m $m % $m
Markets and Securities Services 2,448 2,134 314 15
(20)
- Securities Services 564 605 (41) (7)
-
- Global Debt Markets 259 159 100 63
(5)
- Global Foreign Exchange 1,060 909 151 17
(13)
- Equities 272 169 103 61
(1)
- Securities Financing 316 304 12 4
(2)
- Credit and funding valuation adjustments (23) (12) (11) (92)
-
Banking 2,171 2,144 27 1
(43)
- Global Trade Solutions 175 162 13 8
(4)
- Global Payments Solutions 1,118 1,114 4 -
(24)
- Credit and Lending 466 508 (42) (8)
(5)
- Investment Banking(1) 275 256 19 7
(2)
- Other(2) 137 104 33 32
(8)
GBM Other (207) (445) 238 53
9
- Principal Investments 38 1 37 >100
-
- Other(3) (245) (446) 201 45
9
Net operating income(4) 4,412 3,833 579 15
(54)
- of which: transaction banking(5) 2,917 2,790 127 5
1 From 1 January 2024, we renamed 'Capital Markets and Advisory' as
'Investment Banking' to better reflect our purpose and offering.
2 Includes portfolio management, earnings on capital and other capital
allocations on all Banking products.
3 Includes notional tax credits and Markets Treasury, HSBC Holdings
interest expense and hyperinflation.
4 'Net operating income' means net operating income before change in
expected credit losses and other credit impairment charges (also referred to
as 'revenue').
5 Transaction banking comprises Securities Services, Global Foreign
Exchange (net of revenue shared with CMB), GTS and GPS.
6 Impact of strategic transactions classified as material notable
items. For further details, see 'Strategic transactions supplementary
analysis' on page 36.
Profit before tax of $1.8bn was $0.6bn or 47% higher than in 3Q23 on a
constant currency basis. Revenue was $0.6bn or 15% higher on a constant
currency basis, mainly from growth in Global Foreign Exchange as client-driven
transactions remained elevated across Cash FX and Emerging Markets Rates.
Global Debt Markets also increased, from strong primary issuances driving
client flow across developed and emerging markets, as well as higher revenue
from secondary trading, and Equities revenue grew due to higher client
activity in Asia wealth products. In addition, there was higher revenue
allocated from Markets Treasury. These were partly offset by a decrease in
Credit and Lending due to repayments as clients accessed attractive capital
markets financing. ECL of $0.1bn were 72% lower than in 3Q23 on a constant
currency basis. Operating expenses were $0.1bn or 5% higher on a constant
currency basis, due to the impact of inflation and higher spend and investment
in technology, partly offset by continued cost discipline.
Corporate Centre - constant currency basis
Results - on a constant currency basis
Nine months ended
Variance
9M24 vs. 9M23
30 Sep 2024 30 Sep 2024 of which strategic transactions(1)
$m $m $m % $m
Revenue 3,129 179 2,950 >100
3,731
ECL (27) (3) (24) >(100)
-
Operating expenses (69) 33 (102) >(100)
(7)
Share of profit from associates and JVs less impairment 2,189 2,083 106 5
-
Profit before tax 5,222 2,292 2,930 >100
3,723
1 Impact of strategic transactions classified as material notable
items. For further details, see 'Strategic transactions supplementary
analysis' on page 36.
Management view of revenue
Nine months ended
Variance
9M24 vs. 9M23
30 Sep 2024 30 Sep 2023 of which strategic transactions(6)
$m $m $m % $m
Central Treasury(1) 42 97 (55) (57)
-
Legacy portfolios 23 (3) 26 >100 -
Other(2,3) 3,064 85 2,979 >100
3,731
- of which: gain on the sale of our banking business in Canada and 4,795 (74) 4,869 >100
associated hedges(4) 4,869
- of which: impairment loss relating to the planned sale of our business in (1,151) - (1,151) (100)
Argentina (1,151)
Net operating income(5) 3,129 179 2,950 >100
3,731
RoTE (annualised) (%) 14.4 7.3
1 Central Treasury comprises valuation differences on issued long-term
debt and associated swaps and fair value movements on financial instruments.
2 Other comprises gains and losses on certain planned disposals,
funding charges on property and technology assets, the results of the retained
retail loan portfolio in France, revaluation gains and losses on investment
properties and property disposals, as well as consolidation adjustments and
other revenue items not allocated to global businesses.
3 Revenue from Markets Treasury, HSBC Holdings net interest expense
and hyperinflation are allocated out to the global businesses, to align them
better with their revenue and expense. The total Markets Treasury revenue
component of this allocation for 9M24 was $1,199m (9M23: $(184)m). 9M24
included a loss of $0.1bn from Treasury repositioning and risk management
actions.
4 Includes fair value gains/(losses) on the foreign exchange hedging
of the proceeds of the sale and the recycling of reserves.
5 'Net operating income' means net operating income before change in
expected credit losses and other credit impairment charges (also referred to
as 'revenue').
6 Impact of strategic transactions classified as material notable
items. For further details, see 'Strategic transactions supplementary
analysis' on page 36.
Notable items
Nine months ended Quarter ended
30 Sep 2024 30 Sep 2023 30 Sep 2024 30 Sep 2023
$m $m $m $m
Revenue
Disposals, acquisitions and related costs(1) 3,602 4 72 224
Fair value movements on financial instruments(2) - 15 - -
Early redemption of legacy securities (283) (283)
Currency translation on revenue notable items - 12 - 10
Operating expenses
Disposals, acquisitions and related costs (151) (144) (48) (61)
Restructuring and other related costs 11 27 2 9
Currency translation on operating expenses notable items - - - -
1 Includes fair value movements on the foreign exchange hedging of the
proceeds of the sale of our banking business in Canada and recycling of
reserves and the loss on classification to held for sale of our banking
business in Argentina.
2 Fair value movements on non-qualifying hedges in HSBC Holdings.
9M24 compared with 9M23
Profit before tax of $5.2bn was $2.9bn higher than in 9M23 on a constant
currency basis, primarily reflecting the impact of certain acquisitions and
disposals, including the gain on the sale of our banking business in Canada
and an impairment relating to the planned disposal of our business in
Argentina.
Revenue of $3.1bn was $3.0bn higher on a constant currency basis, primarily
due to the impact of notable items. In 9M24, these included a $4.8bn gain on
the sale of our banking business in Canada, inclusive of fair value gains on
related hedging and recycling of related reserves. These were partly offset by
a $1.2bn impairment recognised following the classification of our business in
Argentina as held for sale, and a loss of $0.1bn related to the recycling of
reserves following the completion of the sale of our business in Russia. In
addition, 9M24 also included a $0.3bn loss on the early redemption of legacy
securities. In 9M23, notable items included a favourable $0.1bn impact
following the reversal of an impairment related to the sale of our retail
banking operations in France. The increase in revenue was partly offset by
adverse fair value movements on financial instruments in Central Treasury and
structural hedges, a reduction following the transfer of the retained French
retail portfolio from WPB, revaluation losses on investment properties in Hong
Kong and an impairment of $0.1bn following the classification of our
operations in Armenia to held for sale.
Operating expenses increased by $0.1bn on a constant currency basis. This
included the impact of levies, as well as restructuring and other related
costs.
Share of profit from associates and joint ventures of $2.2bn increased by
$0.1bn or 5% on a constant currency basis, which included an increase in share
of profit from SAB.
3Q24 compared with 3Q23
Results - on a constant currency basis
Quarter ended
Variance
3Q24 vs. 3Q23
30 Sep 2024 30 Sep 2023 of which strategic transactions(1)
$m $m $m % $m
Revenue (213) 178 (391) >(100)
(159)
ECL (21) - (21) -
-
Operating expenses 42 23 19 83
13
Share of profit/(loss) from associates and JVs less impairment 592 587 5 1
-
Profit before tax 400 788 (388) (49)
(145)
1 Impact of strategic transactions classified as material notable
items. For further details, see 'Strategic transactions supplementary
analysis' on page 36.
Management view of revenue
Quarter ended
Variance
3Q24 vs. 3Q23
30 Sep 2024 30 Sep 2023 of which strategic transactions(6)
$m $m $m % $m
Central Treasury(1) 68 17 51 >100
-
Legacy portfolios 9 8 1 13 -
Other(2,3) (290) 153 (443) >(100)
(159)
- of which: gain on the sale of our banking business in Canada and - 214 (214) (100)
associated hedges(4) (214)
- of which: impairment loss relating to the planned sale of our business in 31 - 31 >100
Argentina 31
Net operating income(5) (213) 178 (391) >(100)
(159)
1 Central Treasury comprises valuation differences on issued long-term
debt and associated swaps and fair value movements on financial instruments.
2 Other comprises gains and losses on certain planned disposals,
funding charges on property and technology assets, the results of the retained
retail loan portfolio in France, revaluation gains and losses on investment
properties and property disposals, as well as consolidation adjustments and
other revenue items not allocated to global businesses.
3 Revenue from Markets Treasury, HSBC Holdings net interest expense
and hyperinflation are allocated out to the global businesses, to align them
better with their revenue and expense. The total Markets Treasury revenue
component of this allocation for 3Q24 was $313m (3Q23: $(546)m). 3Q24 included
a loss of $0.1bn from Treasury repositioning and risk management actions.
4 Includes fair value gains/(losses) on the foreign exchange hedging
of the proceeds of the sale and the recycling of reserves.
5 'Net operating income' means net operating income before change in
expected credit losses and other credit impairment charges (also referred to
as 'revenue').
6 Impact of strategic transactions classified as material notable
items. For further details, see 'Strategic transactions supplementary
analysis' on page 36.
Profit before tax of $0.4bn was $0.4bn or 49% lower than in 3Q23 on a constant
currency basis, primarily due to a reduction in revenue. This was mainly due
to a $0.3bn loss on the early redemption of legacy securities, as well as the
non-recurrence of fair value gains of $0.2bn in 3Q23 relating to the foreign
exchange hedging of the proceeds from the sale of our banking business in
Canada. Lower revenue also reflected a reduction following the transfer of the
retained France retail portfolio from WPB. The reduction in revenue was partly
offset by favourable fair value movements on structural hedges, the reduction
in the impairment related to the planned sale of our business in Argentina and
the non-recurrence of losses following the merger of HSBC Bank Oman with Sohar
International.
Supplementary financial information
Reported and constant currency results
Reported and constant currency results(1)
Nine months ended Quarter ended
30 Sep 2024 30 Sep 2023 30 Sep 2024 30 Jun 2024 30 Sep 2023
$m $m $m $m $m
Revenue(2)
Reported 54,290 53,037 16,998 16,540 16,161
Currency translation (648) 116 (274)
Constant currency 54,290 52,389 16,998 16,656 15,887
Change in expected credit losses and other credit impairment charges
Reported (2,052) (2,416) (986) (346) (1,071)
Currency translation 61 20 33
Constant currency (2,052) (2,355) (986) (326) (1,038)
Operating expenses
Reported (24,439) (23,425) (8,143) (8,145) (7,968)
Currency translation 358 (69) 145
Constant currency (24,439) (23,067) (8,143) (8,214) (7,823)
Share of profit in associates and joint ventures
Reported 2,233 2,175 607 857 592
Currency translation (47) 6 6
Constant currency 2,233 2,128 607 863 598
Profit before tax
Reported 30,032 29,371 8,476 8,906 7,714
Currency translation (276) 73 (90)
Constant currency 30,032 29,095 8,476 8,979 7,624
Profit after tax
Reported 24,414 24,337 6,749 6,828 6,266
Currency translation (131) 53 (16)
Constant currency 24,414 24,206 6,749 6,881 6,250
Loans and advances to customers (net)
Reported 968,653 935,750 968,653 938,257 935,750
Currency translation 39,391 28,254 39,391
Constant currency 968,653 975,141 968,653 966,511 975,141
Customer accounts
Reported 1,660,715 1,563,127 1,660,715 1,593,834 1,563,127
Currency translation 61,945 47,020 61,945
Constant currency 1,660,715 1,625,072 1,660,715 1,640,854 1,625,072
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
Nine months ended Quarter ended
30 Sep 2024 30 Sep 2023 30 Sep 2024 30 Jun 2024 30 Sep 2023
$m $m $m $m $m
Revenue
Disposals, acquisitions and related costs(1,2,3,4) 3,643 3,631 72 (161) 310
Fair value movements on financial instruments(5) - 15 - - -
Disposal losses on Markets Treasury repositioning - (578) - - (578)
Early redemption of legacy securities (283) - (283) - -
Operating expenses
Disposals, acquisitions and related costs (149) (197) (48) (38) (79)
Restructuring and other related costs(6) 22 77 3 6 30
Tax
Tax (charge)/credit on notable items 94 (374) 81 6 127
Uncertain tax positions - 427 - - -
1 Includes the impacts of the sale of our retail banking operations in
France.
2 Includes a gain of $1.6bn recognised in respect of the acquisition
of SVB UK.
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 fair value movements on the foreign exchange hedging of the
proceeds from the sale of our banking business in Canada.
5 Fair value movements on non-qualifying hedges in HSBC Holdings.
6 Relates to reversals of restructuring provisions recognised during
2022.
Global businesses
Supplementary analysis of constant currency results and notable items by
global business
Global business results - on a constant currency basis(1)
Nine months ended 30 Sep 2024
Wealth and Commercial Global Corporate Total
Personal Banking Banking and Centre(2)
Banking(2) Markets
$m $m $m $m $m
Revenue(3) 21,723 16,284 13,154 3,129 54,290
ECL (926) (1,041) (58) (27) (2,052)
Operating expenses (11,156) (5,780) (7,434) (69) (24,439)
Share of profit in associates and joint ventures 43 1 - 2,189 2,233
Profit before tax 9,684 9,464 5,662 5,222 30,032
Loans and advances to customers (net) 463,324 322,090 175,439 7,800 968,653
Customer accounts 830,785 487,484 342,072 374 1,660,715
1 In the current period, constant currency results are equal to
reported, as there is no currency translation.
2 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.
3 Net operating income before change in expected credit losses and
other credit impairment charges, also referred to as revenue.
Notable items
Nine months ended 30 Sep 2024
Wealth and Personal Banking Commercial Banking Global Corporate Centre Total
Banking and Markets
$m $m $m $m $m
Revenue
Disposals, acquisitions and related costs(1) 55 - (14) 3,602 3,643
Early redemption of legacy securities - - - (283) (283)
Operating expenses
Disposals, acquisitions and related costs - 2 - (151) (149)
Restructuring and other related costs(2) 5 3 3 11 22
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 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.
2 Relates to reversals of restructuring provisions recognised during
2022.
Global business results - on a constant currency basis (continued)
Nine months ended 30 Sep 2023
Wealth and Commercial Global Corporate Total
Personal
Centre
Banking Banking Banking and
Markets
$m $m $m $m $m
Revenue(1)
Reported 22,919 17,640 12,388 90 53,037
Currency translation (241) (262) (234) 89 (648)
Constant currency 22,678 17,378 12,154 179 52,389
ECL
Reported (738) (1,372) (302) (4) (2,416)
Currency translation 46 16 (2) 1 61
Constant currency (692) (1,356) (304) (3) (2,355)
Operating expenses
Reported (10,858) (5,480) (7,182) 95 (23,425)
Currency translation 229 189 2 (62) 358
Constant currency (10,629) (5,291) (7,180) 33 (23,067)
Share of profit/(loss) in associates and joint ventures
Reported 46 (1) - 2,130 2,175
Currency translation - - - (47) (47)
Constant currency 46 (1) - 2,083 2,128
Profit before tax
Reported 11,369 10,787 4,904 2,311 29,371
Currency translation 34 (57) (234) (19) (276)
Constant currency 11,403 10,730 4,670 2,292 29,095
Loans and advances to customers (net)
Reported 455,354 307,048 173,064 284 935,750
Currency translation 21,973 11,183 6,225 10 39,391
Constant currency 477,327 318,231 179,289 294 975,141
Customer accounts
Reported 792,928 459,945 309,785 469 1,563,127
Currency translation 29,913 17,348 14,650 34 61,945
Constant currency 822,841 477,293 324,435 503 1,625,072
1 Net operating income before change in expected credit losses and
other credit impairment charges, also referred to as revenue.
Notable items (continued)
Nine months ended 30 Sep 2023
Wealth and Personal Commercial Banking Global Corporate Total
Banking Banking and Markets Centre
$m $m $m $m $m
Revenue
Disposals, acquisitions and related costs(1,2,3) 2,034 1,593 - 4 3,631
Fair value movements on financial instruments(4) - - - 15 15
Disposal losses on Markets Treasury repositioning (253) (190) (135) - (578)
Operating expenses
Disposals, acquisitions and related costs (26) (30) 3 (144) (197)
Restructuring and other related costs(5) 16 30 4 27 77
1 Includes the reversal of a $2.1bn impairment loss relating to the
sale of our retail banking operations in France.
2 Includes the gain of $1.6bn recognised in respect of the acquisition
of SVB UK.
3 Includes fair value movements on the foreign exchange hedging of the
proceeds from the sale of our banking business in Canada.
4 Fair value movements on non-qualifying hedges in HSBC Holdings.
5 Relates to reversals of restructuring provisions recognised during
2022.
Global business results - on a constant currency basis (continued)(1)
Quarter ended 30 Sep 2024
Wealth and Personal Banking(2) Commercial Global Banking and Markets Corporate Total
Banking Centre(2)
$m $m $m $m $m
Revenue(3) 7,411 5,388 4,412 (213) 16,998
ECL (450) (468) (47) (21) (986)
Operating expenses (3,750) (1,919) (2,516) 42 (8,143)
Share of profit in associates and joint ventures 15 - - 592 607
Profit before tax 3,226 3,001 1,849 400 8,476
Loans and advances to customers (net) 463,324 322,090 175,439 7,800 968,653
Customer accounts 830,785 487,484 342,072 374 1,660,715
1 In the current period, constant currency results are equal to
reported as there is no currency translation.
2 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.
3 Net operating income before change in expected credit losses and
other credit impairment charges, also referred to as revenue.
Notable items (continued)
Quarter ended 30 Sep 2024
Wealth and Personal Banking Commercial Banking Global Corporate Centre Total
Banking and Markets
$m $m $m $m $m
Revenue
Disposals, acquisitions and related costs - - - 72 72
Early redemption of legacy securities - - - (283) (283)
Operating expenses
Disposals, acquisitions and related costs - - - (48) (48)
Restructuring and other related costs(1) 1 - - 2 3
1 Relates to reversals of restructuring provisions recognised during
2022.
Global business results - on a constant currency basis (continued)
Quarter ended 30 Jun 2024
Wealth and Commercial Global Corporate Total
Personal Banking Banking and Centre(2)
Banking(2) Markets
$m $m $m $m $m
Revenue(1)
Reported 7,148 5,364 4,287 (259) 16,540
Currency translation 14 42 46 14 116
Constant currency 7,162 5,406 4,333 (245) 16,656
ECL
Reported (175) (193) 22 - (346)
Currency translation 21 (4) 3 - 20
Constant currency (154) (197) 25 - (326)
Operating expenses
Reported (3,711) (1,989) (2,521) 76 (8,145)
Currency translation (8) (10) (33) (18) (69)
Constant currency (3,719) (1,999) (2,554) 58 (8,214)
Share of profit in associates and joint ventures
Reported 15 1 - 841 857
Currency translation - (1) - 7 6
Constant currency 15 - - 848 863
Profit before tax
Reported 3,277 3,183 1,788 658 8,906
Currency translation 27 27 16 3 73
Constant currency 3,304 3,210 1,804 661 8,979
Loans and advances to customers (net)
Reported 445,882 310,356 174,376 7,643 938,257
Currency translation 14,279 8,838 4,824 313 28,254
Constant currency 460,161 319,194 179,200 7,956 966,511
Customer accounts
Reported 794,807 467,362 331,269 396 1,593,834
Currency translation 21,334 13,740 11,929 17 47,020
Constant currency 816,141 481,102 343,198 413 1,640,854
1 Net operating income before change in expected credit losses and
other credit impairment charges, also referred to as revenue.
2 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.
Notable items (continued)
Quarter ended 30 Jun 2024
Wealth and Personal Commercial Banking Global Corporate Total
Banking Banking and Markets Centre
$m $m $m $m $m
Revenue
Disposals, acquisitions and related costs 2 - (14) (149) (161)
Operating expenses
Disposals, acquisitions and related costs 1 3 - (42) (38)
Restructuring and other related costs(1) 2 2 1 1 6
1 Relates to reversals of restructuring provisions recognised during
2022.
Global business results - on a constant currency basis (continued)
Quarter ended 30 Sep 2023
Wealth and Commercial Global Corporate Total
Personal
Centre
Banking Banking Banking and
Markets
$m $m $m $m $m
Revenue(1)
Reported 6,719 5,424 3,887 131 16,161
Currency translation (135) (132) (54) 47 (274)
Constant currency 6,584 5,292 3,833 178 15,887
ECL
Reported (236) (668) (166) (1) (1,071)
Currency translation 28 6 (2) 1 33
Constant currency (208) (662) (168) - (1,038)
Operating expenses
Reported (3,717) (1,908) (2,397) 54 (7,968)
Currency translation 108 75 (7) (31) 145
Constant currency (3,609) (1,833) (2,404) 23 (7,823)
Share of profit in associates and joint ventures
Reported 11 - - 581 592
Currency translation - - - 6 6
Constant currency 11 - - 587 598
Profit before tax
Reported 2,777 2,848 1,324 765 7,714
Currency translation 1 (51) (63) 23 (90)
Constant currency 2,778 2,797 1,261 788 7,624
Loans and advances to customers (net)
Reported 455,354 307,048 173,064 284 935,750
Currency translation 21,973 11,183 6,225 10 39,391
Constant currency 477,327 318,231 179,289 294 975,141
Customer accounts
Reported 792,928 459,945 309,785 469 1,563,127
Currency translation 29,913 17,348 14,650 34 61,945
Constant currency 822,841 477,293 324,435 503 1,625,072
1 Net operating income before change in expected credit losses and
other credit impairment charges, also referred to as revenue.
Notable items (continued)
Quarter ended 30 Sep 2023
Wealth and Personal Commercial Banking Global Corporate Total
Banking Banking and Markets Centre
$m $m $m $m $m
Revenue
Disposals, acquisitions and related costs(1) - 86 - 224 310
Disposal losses on Markets Treasury repositioning (253) (190) (135) - (578)
Operating expenses
Disposals, acquisitions and related costs (3) (15) - (61) (79)
Restructuring and other related costs(2) 16 1 4 9 30
1 Includes fair value movements on the foreign exchange hedging of the
proceeds from the sale of our banking business in Canada.
2 Relates to reversals of restructuring provisions recognised during
2022.
Reconciliation of reported risk-weighted assets to constant currency
risk-weighted assets
The following table reconciles reported and constant currency RWAs.
Reconciliation of reported risk-weighted assets to constant currency
risk-weighted assets
At 30 Sep 2024
Wealth and Personal Banking Commercial Global Corporate Total
Centre
Banking Banking and Markets
$bn $bn $bn $bn $bn
Risk-weighted assets
Reported 191.7 348.6 232.2 91.4 863.9
Constant currency 191.7 348.6 232.2 91.4 863.9
At 30 Jun 2024
Risk-weighted assets
Reported 182.5 335.7 225.1 91.8 835.1
Currency translation 3.6 8.4 4.0 0.9 16.9
Constant currency 186.1 344.1 229.1 92.7 852.0
At 31 Mar 2024
Risk-weighted assets
Reported 182.2 337.8 222.7 89.9 832.6
Currency translation 2.2 5.9 3.4 0.8 12.3
Constant currency 184.4 343.7 226.1 90.7 844.9
Strategic transactions supplementary analysis
The following table presents the selected impacts of strategic transactions to
the Group and our global business segments. These comprise the strategic
transactions where the financial impacts of the acquisition or disposal have
qualified for material notable item treatment in our results. Material notable
items are a subset of notable items and categorisation is dependent on the
nature of each item in conjunction with the financial impact on the Group's
income statement. At 9M24, the disclosure includes the impacts from the
disposals of our retail banking operations in France and our banking business
in Canada, the planned sale of our business in Argentina and the acquisition
of SVB UK. The impacts quoted include those arising on the classification to
held for sale, on disposal or on acquisition, and all other related notable
items. Once a transaction has completed, the impact will also include the
operating income statement results of each business, which are not classified
as notable items, in any period for which there are no results in the
comparative period. We consider the monthly impact of distorting income
statement results when calculating the impact of strategic transactions.
Constant currency results
Nine months ended 30 Sep 2024
Wealth and Commercial Global Corporate Total
Personal
Centre
Banking Banking Banking and
Markets
$m $m $m $m $m
Revenue 54 179 - 3,752 3,985
ECL - (3) - - (3)
Operating expenses (7) (76) - (151) (234)
Share of profit in associates and joint ventures - - - - -
Profit before tax 47 100 - 3,601 3,748
- HSBC Innovation Banking(1) 100 - 100
- Retail banking operations in France 47 (2) 45
- Banking business in Canada 4,772 4,772
- Business in Argentina (1,169) (1,169)
of which: notable items
Revenue 55 - - 3,752 3,807
Profit before tax 54 3 - 3,601 3,658
of which: distorting impact of operating results between periods
Revenue (1) 179 - - 178
Profit/(loss) before tax (7) 97 - - 90
Nine months ended 30 Sep 2023
Revenue 2,725 2,111 105 22 4,963
ECL (11) (50) 6 - (55)
Operating expenses (581) (179) (47) (144) (951)
Share of profit in associates and joint ventures - - - - -
Profit/(loss) before tax 2,133 1,882 64 (122) 3,957
- HSBC Innovation Banking(1) 1,604 - 1,604
- Retail banking operations in France 1,968 33 2,001
- Banking business in Canada 165 278 64 (155) 352
- Business in Argentina -
of which: notable items
Revenue 2,058 1,661 - 22 3,741
Profit before tax 2,031 1,634 - (122) 3,543
of which: distorting impact of operating results between periods
Revenue 667 450 105 - 1,222
Profit before tax 102 248 64 - 414
1 Includes the impact of our acquisition of SVB UK, which in June 2023
changed its legal entity name to HSBC Innovation Bank Limited.
Constant currency results
Quarter ended 30 Sep 2024
Wealth and Commercial Global Corporate Total
Personal
Centre
Banking Banking Banking and
Markets
$m $m $m $m $m
Revenue - - - 73 73
ECL - - - - -
Operating expenses - - - (48) (48)
Share of profit in associates and joint ventures - - - - -
Profit before tax - - - 25 25
- HSBC Innovation Banking(1) - - -
- Retail banking operations in France - 2 2
- Banking business in Canada (1) (1)
- Business in Argentina 24 24
of which: notable items
Revenue - - - 73 73
Profit before tax - - - 25 25
of which: distorting impact of operating results between periods
Revenue - - - - -
Profit/(loss) before tax - - - - -
Quarter ended 30 Jun 2024
Revenue 3 - - (6) (3)
ECL - - - - -
Operating expenses (1) 3 - (42) (40)
Share of profit in associates and joint ventures - - - - -
Profit/(loss) before tax 2 3 - (48) (43)
- HSBC Innovation Banking(1) 3 - 3
- Retail banking operations in France 2 (3) (1)
- Banking business in Canada 9 9
- Business in Argentina (55) (55)
of which: notable items
Revenue 2 - - (6) (4)
Profit/(loss) before tax 3 3 - (48) (42)
of which: distorting impact of operating results between periods
Revenue 1 - - - 1
Profit/(loss) before tax (1) - - - (1)
Quarter ended 30 Sep 2023
Revenue 283 311 54 231 879
ECL (6) (14) 1 - (19)
Operating expenses (212) (88) (23) (61) (384)
Share of profit in associates and joint ventures - - - - -
Profit before tax 65 209 32 170 476
- HSBC Innovation Banking(1) 74 - 74
- Retail banking operations in France (12) (21) (33)
- Banking business in Canada 77 135 32 191 435
- Business in Argentina -
of which: notable items
Revenue - 89 - 231 320
Profit before tax (2) 74 - 170 242
of which: distorting impact of operating results between periods
Revenue 283 222 54 - 559
Profit before tax 67 135 32 - 234
1 Includes the impact of our acquisition of SVB UK, which in June 2023
changed its legal entity name to HSBC Innovation Bank Limited.
Legal entities
Supplementary analysis of constant currency results and notable items by legal
entity
Legal entity results - on a constant currency basis(1)
Nine months ended 30 Sep 2024
HSBC UK Bank plc HSBC Bank plc The Hongkong and Shanghai Banking Corporation Limited HSBC Bank Middle East Limited HSBC North America Holdings Inc. HSBC Bank Canada Grupo Other trading entities(2) Holding Total
Financiero
HSBC, S.A. companies,
de C.V.
shared
service
centres and
intra-Group
eliminations
$m $m $m $m $m $m $m $m $m $m
Revenue(3) 9,489 7,169 25,729 1,882 3,036 462 2,744 2,561 1,218 54,290
ECL (235) 63 (991) (134) (52) (40) (599) (71) 7 (2,052)
Operating expenses (3,699) (4,814) (10,470) (881) (2,538) (236) (1,475) (1,480) 1,154 (24,439)
Share of profit/(loss) in associates and joint ventures - 19 1,737 - - - 12 467 (2) 2,233
Profit before tax 5,555 2,437 16,005 867 446 186 682 1,477 2,377 30,032
Loans and advances to customers (net) 289,424 112,275 460,717 20,697 56,382 - 24,412 4,745 1 968,653
Customer accounts 357,874 298,583 835,925 33,543 98,379 - 26,655 9,731 25 1,660,715
1 In the current period, constant currency results are equal to
reported, as there is no currency translation.
2 Other trading entities includes the results of entities located in
Türkiye, Egypt and Saudi Arabia (including our share of the results of SAB)
which do not consolidate into HSBC Bank Middle East Limited. These entities
had an aggregated impact on Group reported profit before tax of $1,093m.
Supplementary analysis is provided on page 43 to give a fuller picture of the
MENAT regional performance.
3 Net operating income before change in expected credit losses and
other credit impairment charges, also referred to as revenue.
Notable items
Nine months ended 30 Sep 2024
HSBC UK Bank plc HSBC Bank plc The Hongkong and Shanghai Banking Corporation Limited HSBC Bank Middle East Limited HSBC North America Holdings Inc. HSBC Bank Canada Grupo Other trading entities Holding Total
Financiero
HSBC, S.A. companies,
de C.V.
shared
service
centres and
intra-Group
eliminations
$m $m $m $m $m $m $m $m $m $m
Revenue
Disposals, acquisitions and related costs(1) - (128) - - - - - (6) 3,777 3,643
Early redemption of legacy securities - - - - - - - - (283) (283)
Operating expenses
Disposals, acquisitions and related costs 3 (5) - - (21) (36) - (31) (59) (149)
Restructuring and other related costs(2) 5 11 - 2 - - - - 4 22
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 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.
2 Relates to reversals of restructuring provisions recognised during
2022.
Legal entity results - on a constant currency basis (continued)
Nine months ended 30 Sep 2023
HSBC UK Bank Plc HSBC Bank Plc The Hongkong and HSBC Bank Middle East Limited HSBC North America Holdings Inc. HSBC Bank Canada Grupo Other trading entities(1) Holding Total
Shanghai Financiero companies,
Banking HSBC, S.A. shared
Corporation de C.V. service
Limited centres and
intra-group
eliminations
$m $m $m $m $m $m $m $m $m $m
Revenue(2)
Reported 10,397 9,146 24,253 1,836 3,136 1,501 2,427 3,288 (2,947) 53,037
Currency translation 290 129 (124) 1 1 (17) 8 (1,008) 72 (648)
Constant currency 10,687 9,275 24,129 1,837 3,137 1,484 2,435 2,280 (2,875) 52,389
ECL
Reported (476) (153) (1,204) (6) (47) (31) (422) (107) 30 (2,416)
Currency translation (10) (2) 1 - - 1 - 73 (2) 61
Constant currency (486) (155) (1,203) (6) (47) (30) (422) (34) 28 (2,355)
Operating expenses
Reported (3,352) (4,536) (9,875) (807) (2,203) (775) (1,356) (1,836) 1,315 (23,425)
Currency translation (83) (66) 49 - - 9 (4) 524 (71) 358
Constant currency (3,435) (4,602) (9,826) (807) (2,203) (766) (1,360) (1,312) 1,244 (23,067)
Share of profit/(loss) in associates and joint ventures
Reported - (52) 1,826 - - - 9 395 (3) 2,175
Currency translation - (1) (46) - - - - - - (47)
Constant currency - (53) 1,780 - - - 9 395 (3) 2,128
Profit/(loss) before tax
Reported 6,569 4,405 15,000 1,023 886 695 658 1,740 (1,605) 29,371
Currency translation 197 60 (120) 1 1 (7) 4 (411) (1) (276)
Constant currency 6,766 4,465 14,880 1,024 887 688 662 1,329 (1,606) 29,095
Loans and advances to customers (net)
Reported 257,289 109,244 453,443 18,508 53,186 - 24,702 19,377 1 935,750
Currency translation 24,996 7,615 10,484 10 - - (2,856) (857) (1) 39,391
Constant currency 282,285 116,859 463,927 18,518 53,186 - 21,846 18,520 - 975,141
Customer accounts
Reported 324,526 269,493 766,225 31,030 99,427 - 28,412 43,911 103 1,563,127
Currency translation 31,527 21,201 15,798 30 - - (3,285) (3,325) (1) 61,945
Constant currency 356,053 290,694 782,023 31,060 99,427 - 25,127 40,586 102 1,625,072
1 Other trading entities includes the results of entities located in
Oman, Türkiye, Egypt and Saudi Arabia (including our share of the results of
SAB) which do not consolidate into HSBC Bank Middle East Limited. These
entities had an aggregated impact on Group reported profit before tax of $933m
and constant currency profit before tax of $799m. Supplementary analysis is
provided on page 43 to give a fuller picture of the MENAT regional
performance.
2 Net operating income before change in expected credit losses and
other credit impairment charges, also referred to as revenue.
Notable items (continued)
Nine months ended 30 Sep 2023
HSBC UK Bank Plc HSBC Bank Plc The Hongkong and Shanghai Banking Corporation Limited HSBC Bank Middle East Limited HSBC North America Holdings Inc. HSBC Bank Canada Grupo Other trading entities Holding Total
Financiero companies,
HSBC, S.A. shared
de C.V. service
centres and
intra-group
eliminations
$m $m $m $m $m $m $m $m $m $m
Revenue
Disposals, acquisitions and related costs(1,2,3) 1,593 2,098 - - - - - - (60) 3,631
Fair value movements on financial instruments(4) - - - - - - - - 15 15
Restructuring and other related costs(5) - 361 - - - - - - (361) -
Disposal losses on Markets Treasury repositioning (145) (94) (339) - - - - - - (578)
Operating expenses
Disposals, acquisitions and related costs (29) (68) - - (5) (81) - - (14) (197)
Restructuring and other related costs(6) 13 16 8 1 2 - 6 2 29 77
1 Includes the reversal of a $2.1bn impairment loss relating to the
sale of our retail banking operations in France.
2 Includes a gain of $1.6bn recognised in respect of the acquisition
of SVB UK.
3 Includes fair value movements on the foreign exchange hedging of the
proceeds from the sale of our banking business in Canada.
4 Fair value movements on non-qualifying hedges in HSBC Holdings.
5 Gain recognised as a result of intra-Group restructuring.
6 Relates to reversals of restructuring provisions recognised during
2022.
Legal entity results - on a constant currency basis(1) (continued)
Quarter ended 30 Sep 2024
HSBC UK Bank Plc HSBC Bank Plc The Hongkong and HSBC Bank Middle East Limited HSBC North America Holdings Inc. HSBC Bank Canada Grupo Other trading entities(2) Holding Total
Financiero companies,
Shanghai HSBC, S.A. shared
de C.V. service
Banking centres and
intra-group
Corporation eliminations
Limited
$m $m $m $m $m $m $m $m $m $m
Revenue(3) 3,259 2,676 8,764 626 901 - 902 826 (956) 16,998
ECL (173) (3) (536) (32) (19) - (213) (12) 2 (986)
Operating expenses (1,265) (1,671) (3,573) (263) (859) - (477) (519) 484 (8,143)
Share of profit/(loss) in associates and joint ventures - (1) 457 - - - 4 148 (1) 607
Profit/(loss) before tax 1,821 1,001 5,112 331 23 - 216 443 (471) 8,476
Loans and advances to customers (net) 289,424 112,275 460,717 20,697 56,382 - 24,412 4,745 1 968,653
Customer accounts 357,874 298,583 835,925 33,543 98,379 - 26,655 9,731 25 1,660,715
1 In the current period, constant currency results are equal to
reported, as there is no currency translation.
2 Other trading entities includes the results of entities located in
Oman, Türkiye, Egypt and Saudi Arabia (including our share of the results of
SAB) which do not consolidate into HSBC Bank Middle East Limited. These
entities had an aggregated impact on Group reported profit before tax of
$365m. Supplementary analysis is provided on page 43 to give a fuller picture
of the MENAT regional performance.
3 Net operating income before change in expected credit losses and
other credit impairment charges, also referred to as revenue.
Notable items (continued)
Quarter ended 30 Sep 2024
HSBC UK Bank Plc HSBC Bank Plc The Hongkong and Shanghai Banking Corporation Limited HSBC Bank Middle East Limited HSBC North America Holdings Inc. HSBC Bank Canada Grupo Other trading entities Holding Total
Financiero companies,
HSBC, S.A. shared
de C.V. service
centres and
intra-group
eliminations
$m $m $m $m $m $m $m $m $m $m
Revenue
Disposals, acquisitions and related costs - 3 - - - - - (6) 75 72
Early redemption of legacy securities - - - - - - - - (283) (283)
Operating expenses
Disposals, acquisitions and related costs - - - - (6) - - (30) (12) (48)
Restructuring and other related costs(1) 1 - - 2 - - - - - 3
1 Relates to reversals of restructuring provisions recognised during
2022.
Legal entity results - on a constant currency basis (continued)
Quarter ended 30 Jun 2024
HSBC UK Bank Plc HSBC Bank Plc The Hongkong and HSBC Bank Middle East Limited HSBC North America Holdings Inc. HSBC Bank Canada Grupo Other trading entities(1) Holding Total
Shanghai Financiero companies,
Banking HSBC, S.A. shared
Corporation de C.V. service
Limited centres and
intra-group
eliminations
$m $m $m $m $m $m $m $m $m $m
Revenue(2)
Reported 3,139 2,186 8,496 636 1,049 - 954 945 (865) 16,540
Currency translation 94 52 57 1 - - (84) (26) 22 116
Constant currency 3,233 2,238 8,553 637 1,049 - 870 919 (843) 16,656
ECL
Reported (10) 132 (184) (47) (40) - (210) 9 4 (346)
Currency translation - 4 - - - - 18 (2) - 20
Constant currency (10) 136 (184) (47) (40) - (192) 7 4 (326)
Operating expenses
Reported (1,206) (1,589) (3,545) (336) (839) - (468) (484) 322 (8,145)
Currency translation (37) (41) (25) - - - 41 13 (20) (69)
Constant currency (1,243) (1,630) (3,570) (336) (839) - (427) (471) 302 (8,214)
Share of profit/(loss) in associates and joint ventures
Reported - 10 669 - - - 4 174 - 857
Currency translation - 1 7 - - - - - (2) 6
Constant currency - 11 676 - - - 4 174 (2) 863
Profit/(loss) before tax
Reported 1,923 739 5,436 253 170 - 280 644 (539) 8,906
Currency translation 57 16 39 1 - - (25) (15) - 73
Constant currency 1,980 755 5,475 254 170 - 255 629 (539) 8,979
Loans and advances to customers (net)
Reported 270,262 107,957 453,642 20,506 55,809 - 25,449 4,632 - 938,257
Currency translation 15,754 5,287 9,102 4 - - (1,790) (103) - 28,254
Constant currency 286,016 113,244 462,744 20,510 55,809 - 23,659 4,529 - 966,511
Customer accounts
Reported 334,566 295,557 799,086 32,934 93,060 - 28,997 9,532 102 1,593,834
Currency translation 19,502 14,916 14,796 15 - - (2,039) (169) (1) 47,020
Constant currency 354,068 310,473 813,882 32,949 93,060 - 26,958 9,363 101 1,640,854
1 Other trading entities includes the results of entities located in
Türkiye, Egypt and Saudi Arabia (including our share of the results of SAB)
which do not consolidate into HSBC Bank Middle East Limited. These entities
had an aggregated impact on Group reported profit before tax of $369m and
constant currency profit before tax of $363m. Supplementary analysis is
provided on page 43 to give a fuller picture of the MENAT regional
performance.
2 Net operating income before change in expected credit losses and
other credit impairment charges, also referred to as revenue.
Notable items (continued)
Quarter ended 30 Jun 2024
HSBC UK Bank Plc HSBC Bank Plc The Hongkong and Shanghai Banking Corporation Limited HSBC Bank Middle East Limited HSBC North America Holdings Inc. HSBC Bank Canada Grupo Other trading entities Holding Total
Financiero companies,
HSBC, S.A. shared
de C.V. service
centres and
intra-group
eliminations
$m $m $m $m $m $m $m $m $m $m
Revenue
Disposals, acquisitions and related costs - (115) - - - - - - (46) (161)
Operating expenses
Disposals, acquisitions and related costs 3 - - - (8) - - (1) (32) (38)
Restructuring and other related costs(1) 1 2 - - - - - - 3 6
1 Relates to reversals of restructuring provisions recognised during
2022.
Legal entity results - on a constant currency basis (continued)
Quarter ended 30 Sep 2023
HSBC UK Bank Plc HSBC Bank Plc The Hongkong and HSBC Bank Middle East Limited HSBC North America Holdings Inc. HSBC Bank Canada Grupo Other trading entities(1) Holding Total
Shanghai Financiero companies,
Banking HSBC, S.A. shared
Corporation de C.V. service
Limited centres and
intra-group
eliminations
$m $m $m $m $m $m $m $m $m $m
Revenue(2)
Reported 3,008 2,443 7,720 638 994 493 853 1,071 (1,059) 16,161
Currency translation 82 47 24 1 - (9) (84) (375) 40 (274)
Constant currency 3,090 2,490 7,744 639 994 484 769 696 (1,019) 15,887
ECL
Reported (58) (80) (748) (6) 15 (20) (158) (36) 20 (1,071)
Currency translation (1) (1) (1) - - - 16 21 (1) 33
Constant currency (59) (81) (749) (6) 15 (20) (142) (15) 19 (1,038)
Operating expenses
Reported (1,172) (1,447) (3,368) (282) (824) (253) (476) (697) 551 (7,968)
Currency translation (32) (27) (13) - - 5 46 202 (36) 145
Constant currency (1,204) (1,474) (3,381) (282) (824) (248) (430) (495) 515 (7,823)
Share of profit/(loss) in associates and joint ventures
Reported - (9) 479 - - - 3 120 (1) 592
Currency translation - - 5 - - - - - 1 6
Constant currency - (9) 484 - - - 3 120 - 598
Profit/(loss) before tax
Reported 1,778 907 4,083 350 185 220 222 458 (489) 7,714
Currency translation 49 19 15 1 - (4) (22) (152) 4 (90)
Constant currency 1,827 926 4,098 351 185 216 200 306 (485) 7,624
Loans and advances to customers (net)
Reported 257,289 109,244 453,443 18,508 53,186 - 24,702 19,377 1 935,750
Currency translation 24,996 7,615 10,484 10 - - (2,856) (857) (1) 39,391
Constant currency 282,285 116,859 463,927 18,518 53,186 - 21,846 18,520 - 975,141
Customer accounts
Reported 324,526 269,493 766,225 31,030 99,427 - 28,412 43,911 103 1,563,127
Currency translation 31,527 21,201 15,798 30 - - (3,285) (3,325) (1) 61,945
Constant currency 356,053 290,694 782,023 31,060 99,427 - 25,127 40,586 102 1,625,072
1 Other trading entities includes the results of entities located in
Oman, Türkiye, Egypt and Saudi Arabia (including our share of the results of
SAB) which do not consolidate into HSBC Bank Middle East Limited. These
entities had an aggregated impact on Group reported profit before tax of $238m
and constant currency profit before tax of $191m. Supplementary analysis is
provided on page 43 to give a fuller picture of the MENAT regional
performance.
2 Net operating income before change in expected credit losses and
other credit impairment charges, also referred to as revenue.
Notable items (continued)
Quarter ended 30 Sep 2023
HSBC UK Bank Plc HSBC Bank Plc The Hongkong and Shanghai Banking Corporation Limited HSBC Bank Middle East Limited HSBC North America Holdings Inc. HSBC Bank Canada Grupo Other trading entities Holding Total
Financiero companies,
HSBC, S.A. shared
de C.V. service
centres and
intra-group
eliminations
$m $m $m $m $m $m $m $m $m $m
Revenue
Disposals, acquisitions and related costs(1) 86 (3) - - - - - - 227 310
Restructuring and other related costs(2) - 361 - - - - - - (361) -
Disposal losses on Markets Treasury repositioning (145) (94) (339) - - - - - - (578)
Operating expenses
Disposals, acquisitions and related costs (14) (23) - - (3) (27) - - (12) (79)
Restructuring and other related costs(3) 13 16 8 1 2 - 6 2 (18) 30
1 Includes fair value movements on the foreign exchange hedging of the
proceeds from the sale of our banking business in Canada.
2 Gain recognised as a result of intra-Group restructuring.
3 Relates to reversals of restructuring provisions recognised during
2022.
Middle East, North Africa and Türkiye supplementary information
The following tables show the reported results of our Middle East, North
Africa and Türkiye business operations on a regional basis (including results
of all the legal entities operating in the region and our share of the results
of SAB). They also show the profit before tax of each of the global
businesses.
Middle East, North Africa and Türkiye regional performance
Nine months ended Quarter ended
30 Sep 2024 30 Sep 2023 30 Sep 2024 30 Jun 2024 30 Sep 2023
$m $m $m $m $m
Revenue(1) 2,901 2,748 970 970 895
Change in expected credit losses and other credit impairment charges (154) (16) (33) (63) (13)
Operating expenses (1,259) (1,188) (393) (459) (414)
Share of profit in associates and joint ventures 464 391 147 171 118
Profit before tax 1,952 1,935 691 619 586
Loans and advances to customers (net) 23,458 21,392 23,458 23,237 21,392
Customer accounts 40,914 40,744 40,914 40,138 40,744
1 Net operating income before change in expected credit losses and
other credit impairment charges, also referred to as revenue.
Profit before tax by global business
Nine months ended Quarter ended
30 Sep 2024 30 Sep 2023 30 Sep 2024 30 Jun 2024 30 Sep 2023
$m $m $m $m $m
Wealth and Personal Banking 489 486 165 153 185
Commercial Banking 254 369 133 41 93
Global Banking and Markets 836 821 283 261 250
Corporate Centre 373 259 110 164 58
Total 1,952 1,935 691 619 586
Alternative performance measures
Use of alternative performance measures
Our reported results are prepared in accordance with IFRS Accounting Standards
as detailed in our financial statements starting on page 329 of the Annual
Report and Accounts 2023. We use a combination of reported and alternative
performance measures, including those derived from our reported results that
eliminate factors that distort period-on-period comparisons. These are
considered alternative performance measures (non-GAAP financial measures).
The following information details the adjustments made to the reported results
and the calculation of other alternative performance measures. All alternative
performance measures are reconciled to the closest reported performance
measure.
Alternative performance measure definitions
Alternative performance measure Definition
Constant currency revenue excluding notable items(1) Reported revenue excluding notable items and the impact of foreign exchange
translation(2)
Constant currency profit before tax excluding notable items(1) Reported profit before tax excluding notable items and the impact of foreign
exchange translation(2)
Constant currency revenue excluding notable items and strategic Reported revenue excluding notable items, strategic transactions and the
transactions(1) impact of foreign exchange translation(3)
Constant currency profit before tax excluding notable items and strategic Reported profit before tax excluding notable items, strategic transactions and
transactions(1) the impact of foreign exchange translation(3)
Return on average ordinary shareholders' equity ('RoE') Profit attributable to the ordinary shareholders
Average ordinary shareholders' equity
Return on average tangible equity ('RoTE') Profit attributable to the ordinary shareholders, excluding
impairment
of goodwill and other intangible assets
Average ordinary shareholders' equity adjusted for goodwill and intangibles
Return on average tangible equity ('RoTE') excluding notable items Profit attributable to the ordinary shareholders, excluding impairment of
goodwill and other intangible assets and notable items(2)
Average ordinary shareholders' equity adjusted for
goodwill
and intangibles and notable items(2)
Net asset value per ordinary share Total ordinary shareholders' equity(4)
Basic number of ordinary shares in issue excluding treasury shares
Tangible net asset value per ordinary share Tangible ordinary shareholders' equity(5)
Basic number of ordinary shares in issue excluding treasury shares
Expected credit losses and other credit impairment charges ('ECL') as a % of Annualised constant currency ECL(6)
average gross loans and advances to customers
Constant currency average gross loans and advances to customers(6)
Expected credit losses and other credit impairment charges ('ECL') as a % of Annualised constant currency ECL(6)
average gross loans and advances to customers, including held for sale
Constant currency average gross loans and advances to
customers, including held for
sale(6)
Target basis operating expenses Reported operating expenses excluding notable items, foreign
exchange translation and other excluded items(7)
Basic earnings per share excluding material notable items and related impacts Profit attributable to ordinary shareholders excluding material
notable items and related
impacts(8)
Weighted average number of ordinary shares
outstanding,
excluding own shares held
1 Constant currency performance is computed by adjusting reported
results for the effects of foreign currency translation differences, which
distort period-on-period comparisons.
2 For details of notable items, see 'Supplementary financial
information' on page 30.
3 For details of strategic transactions, see 'Strategic transactions
supplementary analysis' on page 36.
4 Total ordinary shareholders' equity is total shareholders' equity
less non-cumulative preference shares and capital securities.
5 Tangible ordinary shareholders' equity is total ordinary
shareholders' equity excluding goodwill and other intangible assets (net of
deferred tax).
6 The constant currency numbers are derived by adjusting reported ECL
and average loans and advances to customers for the effects of foreign
currency translation differences.
7 Other excluded items includes the impact of re-translating
comparative period financial information at the latest rates of foreign
exchange in hyperinflationary economies, which we consider to be outside of
our control, and the impact of the sale of our retail banking operations in
France and banking business in Canada.
8 For details of material notable items and related impacts, see page
47.
Constant currency revenue and profit before tax excluding notable items and
strategic transactions
Nine months ended Quarter ended
30 Sep 2024 30 Sep 2023 30 Sep 2024 30 Jun 2024 30 Sep 2023
$m $m $m $m $m
Revenue
Reported 54,290 53,037 16,998 16,540 16,161
Notable items 3,360 3,068 (211) (161) (268)
Reported revenue excluding notable items 50,930 49,969 17,209 16,701 16,429
Currency translation(1) (743) 119 (279)
Constant currency revenue excluding notable items 50,930 49,226 17,209 16,820 16,150
Constant currency impact of strategic transactions (distorting impact of 178 1,222 - 1 559
operating results between periods)(2)
Constant currency revenue excluding notable items and strategic transactions 50,752 48,004 17,209 16,819 15,591
Profit before tax
Reported 30,032 29,371 8,476 8,906 7,714
Notable items 3,233 2,948 (256) (193) (317)
Reported profit before tax excluding notable items 26,799 26,423 8,732 9,099 8,031
Currency translation(1) (372) 77 (96)
Constant currency profit before tax excluding notable items 26,799 26,051 8,732 9,176 7,935
Constant currency impact of strategic transactions (distorting impact of 90 414 - (1) 234
operating results between periods)(2)
Constant currency profit before tax excluding notable items and strategic 26,709 25,637 8,732 9,177 7,701
transactions
1 Currency translation on the reported balance excluding currency
translation on notable items.
2 For more details of strategic transactions, see 'Strategic
transactions supplementary analysis' on page 36.
To aid the understanding of our results, we disclose constant currency revenue
and profit before tax excluding notable items and the impact of strategic
transactions. The impacts of strategic transactions quoted include the
distorting impact between the periods of the operating income statement
results related to acquisitions and disposals that affect period-on-period
comparisons. Once a transaction has completed, the impact will include the
operating income statement results of each business, which are not classified
as notable items, in any period for which there are no results in the
comparative period. We consider the monthly impact of distorting income
statement results when calculating the impact of strategic transactions.
Return on average ordinary shareholders' equity, return on average tangible
equity and return on average tangible equity excluding notable items
Nine months ended Quarter ended
30 Sep 2024 30 Sep 2023 30 Sep 2024 30 Jun 2024 30 Sep 2023
$m $m $m $m $m
Profit/(loss) after tax
Profit/(loss) attributable to the ordinary shareholders of the parent company 22,720 22,585 6,134 6,403 5,619
Impairment of goodwill and other intangible assets (net of tax) 114 36 (9) 13 7
Profit/(loss) attributable to the ordinary shareholders, excluding goodwill 22,834 22,621 6,125 6,416 5,626
and other intangible assets impairment
Impact of notable items(1) (3,442) (3,037) 184 174 183
Profit attributable to the ordinary shareholders, excluding goodwill, other 19,392 19,584 6,309 6,590 5,809
intangible assets impairment and notable items
Equity
Average total shareholders' equity 188,140 183,704 188,023 187,239 183,445
Effect of average preference shares and other equity instruments (18,333) (19,062) (18,947) (18,272) (18,555)
Average ordinary shareholders' equity 169,807 164,642 169,076 168,967 164,890
Effect of goodwill and other intangibles (net of deferred tax) (11,631) (11,376) (11,582) (11,409) (11,549)
Average tangible equity 158,176 153,266 157,494 157,558 153,341
Average impact of notable items (3,035) (3,377) 110 (2,251) (67)
Average tangible equity excluding notable items 155,141 149,889 157,604 155,307 153,274
Ratio % % % % %
Return on average ordinary shareholders' equity (annualised) 17.9 18.3 14.4 15.2 13.5
Return on average tangible equity (annualised) 19.3 19.7 15.5 16.3 14.6
Return on average tangible equity excluding notable items (annualised) 16.7 17.5 15.9 17.1 15.0
1 For details of notable items please refer to 'Supplementary
financial information' on page 30.
From 1 January 2024, we have revised the adjustments made to RoTE. Prior to
this, we adjusted RoTE for the impact of strategic transactions and the
impairment of our investment in BoCom, whereas from 1 January 2024 we have
excluded all notable items. This was intended to improve alignment with the
treatment of notable items in our other income statement disclosures.
Comparatives have been re-presented on the revised basis and we no longer
disclose RoTE excluding strategic transactions and the impairment of BoCom. On
this basis, we continue to target a RoTE excluding notable items in the
mid-teens for both 2024 and 2025.
Return on average tangible equity by global business
Nine months ended 30 Sep 2024
Wealth and Personal Commercial Global Corporate Total
Banking(1) Banking Banking and Centre(1)
Markets
$m $m $m $m $m
Profit before tax 9,684 9,464 5,662 5,222 30,032
Tax expense (1,765) (2,263) (1,286) (304) (5,618)
Profit after tax 7,919 7,201 4,376 4,918 24,414
Less attributable to: preference shareholders, other equity holders, (686) (445) (422) (141) (1,694)
non-controlling interests
Profit attributable to ordinary shareholders of the parent company 7,233 6,756 3,954 4,777 22,720
Other adjustments (115) 227 (165) 167 114
Profit attributable to ordinary shareholders 7,118 6,983 3,789 4,943 22,834
Average tangible shareholders' equity 31,271 44,302 36,637 45,966 158,176
RoTE (%) (annualised) 30.4 21.1 13.8 14.4 19.3
Nine months ended 30 Sep 2023
Profit before tax 11,369 10,787 4,904 2,311 29,371
Tax expense (2,242) (2,193) 326 (5,034)
(925)
Profit after tax 9,127 8,594 3,979 2,637 24,337
Less attributable to: preference shareholders, other equity holders, (1,752)
non-controlling interests (744) (419) (413) (176)
Profit attributable to ordinary shareholders of the parent company 8,383 8,175 3,566 2,461 22,585
Other adjustments 256 119 36
(160) (179)
Profit attributable to ordinary shareholders 8,223 8,431 3,685 2,282 22,621
Average tangible shareholders' equity 29,466 43,679 38,200 41,921 153,266
RoTE (%) (annualised) 37.3 25.8 12.9 7.3 19.7
1 With effect from 1 January 2024, following the sale of our retail
banking business in France, we have prospectively reclassified the portfolio
of retained loans, profit participation interest and licence agreement of the
CCF brand from WPB to Corporate Centre.
Net asset value and tangible net asset value per ordinary share
At
30 Sep 2024 30 Jun 2024 30 Sep 2023
$m $m $m
Total shareholders' equity 192,754 183,293 182,720
Preference shares and other equity instruments (19,070) (18,825) (17,719)
Total ordinary shareholders' equity 173,684 164,468 165,001
Goodwill and intangible assets (net of deferred tax) (11,804) (11,359) (11,554)
Tangible ordinary shareholders' equity 161,880 153,109 153,447
Basic number of $0.50 ordinary shares outstanding 17,982 18,330 19,275
Value per share $ $ $
Net asset value per ordinary share 9.66 8.97 8.56
Tangible net asset value per ordinary share 9.00 8.35 7.96
ECL and other credit impairment charges as a % of average gross loans and
advances to customers, and ECL and other credit impairment charges as a % of
average gross loans and advances to customers, including held for sale
Nine months ended Quarter ended
30 Sep 2024 30 Sep 2023 30 Sep 2024 30 Jun 2024 30 Sep 2023
$m $m $m $m $m
Expected credit losses and other credit impairment charges ('ECL') (2,052) (2,416) (986) (346) (1,071)
Currency translation 61 20 33
Constant currency (2,052) (2,355) (986) (326) (1,038)
Average gross loans and advances to customers 955,512 957,080 964,189 946,414 959,129
Currency translation 17,156 29,841 14,217 26,870 29,820
Constant currency 972,668 986,921 978,406 973,284 988,949
Average gross loans and advances to customers, including held for sale 975,646 1,020,441 966,713 948,515 1,017,351
Currency translation 16,796 29,888 14,174 26,758 29,207
Constant currency 992,442 1,050,329 980,887 975,273 1,046,558
Ratios % % % % %
Expected credit losses and other credit impairment charges (annualised) as a % 0.28 0.32 0.40 0.13 0.42
of average gross loans and advances to customers
Expected credit losses and other credit impairment charges (annualised) as a % 0.28 0.30 0.40 0.13 0.39
of average gross loans and advances to customers, including held for sale
Target basis operating expenses
Nine months ended Quarter ended
30 Sep 2024 30 Sep 2023 30 Sep 2024 30 Jun 2024 30 Sep 2023
$m $m $m $m $m
Reported operating expenses 24,439 23,425 8,143 8,145 7,968
Notable items (127) (120) (45) (32) (49)
- disposals, acquisitions and related costs (149) (197) (48) (38) (79)
- restructuring and other related costs(1) 22 77 3 6 30
Currency translation(2) (358) 69 (145)
Excluding the constant currency impact of the sale of our retail banking (162) (723) - - (230)
operations in France and banking business in Canada(3)
Excluding the impact of retranslating prior period costs of hyperinflationary 487 12 185
economies at constant currency foreign exchange rate
Target basis operating expenses 24,150 22,711 8,098 8,194 7,729
1 Relates to reversals of restructuring provisions recognised during
2022.
2 Currency translation on reported operating expenses, excluding
currency translation on notable items.
3 This represents the business as usual costs which are not classified
as notable items relating to our retail banking operations in France and
banking business in Canada, on a constant currency basis. This does not
include the disposal costs which relate to these transactions.
Target basis operating expenses for 2024 and for the 2023 comparative periods
differ from what we disclosed in our 2023 results, when we were comparing
against 2022 operating expenses. The 2023 target basis excluded the impact of
incremental costs associated with the acquisition of SVB UK, and the related
investments, whereas the 2024 target basis excludes the costs associated with
our retail banking operations in France and our banking business in Canada.
The exclusion of notable items and the impact of retranslating prior year
results of hyperinflationary economies at constant currency are excluded in
2024, which is consistent with the 2023 basis of preparation. We consider
target basis operating expenses to provide useful information to investors by
quantifying and excluding the notable items that management considered when
setting and assessing cost-related targets.
Basic earnings per share excluding material notable items and related impacts
Nine months ended Quarter ended
30 Sep 2024 30 Sep 2023 30 Sep 2024 30 Jun 2024 30 Sep 2023
$m $m $m $m $m
Profit attributable to shareholders of company 23,628 23,561 6,516 6,528 6,053
Coupon payable on capital securities classified as equity (908) (976) (382) (125) (434)
Profit attributable to ordinary shareholders of company 22,720 22,585 6,134 6,403 5,619
Gain on acquisition of SVB UK (2) (1,593) - (2) (86)
Impact of the sale of our retail banking operations in France (net of tax) (55) (1,629) (2) (1) -
Impact of the sale of our banking business in Canada(1) (4,953) (430) (4) (7) (376)
Impairment loss relating to the planned sale of our business in Argentina 1,162 - (30) 55 -
Profit attributable to ordinary shareholders of company excluding material 18,872 18,933 6,098 6,448 5,157
notable items and related impacts
Number of shares
Weighted average basic number of ordinary shares (millions) 18,493 19,596 18,151 18,509 19,404
Basic earnings per share ($) 1.23 1.15 0.34 0.35 0.29
Basic earnings per share excluding material notable items and related impacts 1.02 0.97 0.34 0.35 0.27
($)
1 Represents gain on sale of business in Canada recognised on
completion, inclusive of the earnings recognised by the banking business from
30 June 2022, the recycling of losses in foreign currency translation reserves
and other reserves, and gain on the foreign exchange hedging of the sale
proceeds.
Material notable items are a subset of notable items. Material notable items
are components of our income statement that management would consider as
outside the normal course of business and generally non-recurring in nature,
which are excluded from our dividend payout ratio calculation and our earnings
per share measure, along with related impacts. 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.
Related impacts include those items that do not qualify for designation as
notable items but whose adjustment is considered by management to be
appropriate for the purposes of determining the basis for our dividend payout
ratio calculation.
Material notable items in 3Q24 and comparative periods included the planned
sale of our business in Argentina, the sale of our retail banking operations
in France, the sale of our banking business in Canada, the gain following the
acquisition of SVB UK and the impairment of our investment in BoCom. In
determining this measure, we also excluded HSBC Bank Canada's financial
results from the 30 June 2022 net asset reference date until completion of the
sale, as the gain on sale was recognised through a combination of the
consolidation of HSBC Bank Canada's results in the Group's results since this
date, and the remaining gain on sale was recognised at completion. For the
planned sale of our business in Argentina, between signing and closing, the
loss on sale will vary by changes in the net asset value of the disposed
business and associated hyperinflation and foreign currency translation, and
in the fair value of consideration including price adjustments and migration
costs. There were no additional related impacts, and the ongoing profits from
HSBC Argentina will not be excluded from our basic earnings per share
excluding material notable items and related impacts.
Risk
Managing risk
HSBC's operations are subject to changes in economic and financial conditions
as well as geopolitical developments that could have a material impact on the
Group's operations and financial risks. We continuously review these factors
in all of our key markets and conduct regular reviews of economic risks and
expectations.
Continued growth in global economic activity was observed in the third quarter
of 2024, led by the US and China, with relatively slower growth in the EU. In
the US, performance was supported by sustained household spending, and the
services sector in particular. In mainland China, while domestic consumption
has been weak and activity by sector uneven, export growth and investment have
ensured that growth has so far remained close to the official target in 2024.
At the same time, authorities have announced measures to further support
private sector confidence and consumption. We will continue to monitor the
impact of these measures into the fourth quarter.
Inflation and high interest rates remain a key consideration for policymakers.
In the US and Europe, headline inflation has continued to trend downwards
towards Central Bank target rates, despite persistently higher services
prices. Progress in reducing inflation enabled both the US Federal Reserve and
the Bank of England to cut interest rates in the third quarter of 2024,
following the ECB's decision to cut rates in the second quarter of the year.
Markets anticipate further cuts over the remainder of 2024 and into 2025. In
mainland China, authorities have reduced the Loan Prime Rate to support
private sector borrowing as demand for loans has weakened.
Geopolitical tensions could impact the Group's operations and its risk profile
and continue to be a source of significant uncertainty, including the ongoing
conflicts between Russia and Ukraine and in the Middle East. The recent
escalation in the conflict between Israel and Hezbollah has raised uncertainty
in the region and led to renewed volatility in energy prices. The attacks on
commercial shipping in the Red Sea continue, contributing to higher shipping
costs and disruption to supply chains and, coupled with the risk of a
potential increase in oil prices, could lead to renewed inflationary
pressures.
Fiscal policy, deficits and public indebtedness also influence our risk
profile. Public spending as a proportion of GDP is likely to remain high for
most of our key economies with elevated spending focused on social welfare,
defence and climate transition initiatives. Against a backdrop of slower
economic growth and expectations for a higher interest rate environment in the
longer term, elevated borrowing costs could increase and adversely impact the
fiscal responses of highly-indebted sovereign issuers.
Sanctions and trade restrictions are monitored closely given their complexity
and pace of change. The US, the UK and the EU, as well as other countries,
have imposed significant sanctions and trade restrictions against Russia, with
new sanctions added during 2024 by the US, the UK and the EU. Additional
sanctions on Iran were imposed in the second and third quarters of 2024 in
response to the increase in tensions between Israel and Iran. The secondary
sanctions regime introduced by the US in December 2023 gives the US broad
discretion to impose severe sanctions on non-US banks that are knowingly, or
even unknowingly, engaged in certain transactions or services involving
Russia's military-industrial base. The US expanded the scope of these
secondary sanctions in June 2024 to apply to Russian and non-Russian persons
designated under the primary legal authority for Russian sanctions. The broad
scope of the discretionary powers embedded in the regime creates challenges
associated with the detection or prevention of third-party activities beyond
our control. The imposition of such sanctions against any non-US HSBC entity
could result in significant adverse commercial, operational and reputational
consequences for HSBC, including the restriction or termination of the non-US
HSBC entity's ability to access the US financial system and the freezing of
the entity's assets that are subject to US jurisdiction. In response to such
sanctions and trade restrictions, as well as asset flight, Russia has
implemented certain countermeasures, including the expropriation of certain
foreign assets.
Strategic competition has the potential to impact the Group's operations and
may pose financial risks. The relationships between China and several other
countries, including the US and the UK, remain complex. The US, the UK, the EU
and other countries have imposed various sanctions and trade restrictions on
Chinese individuals and companies. In response to earlier measures, China has
imposed its own sanctions, trade restrictions and other measures on persons
and entities in other countries, including recent sanctions on US firms
supplying arms to Taiwan. Supply chains remain vulnerable to a deterioration
in these bilateral relationships and this has resulted in efforts to de-risk
certain sectors with the reshoring of manufacturing activities, but the
approach of countries to strategic competition and engagement with China
continues to develop. Further sanctions or counter-sanctions may adversely
affect the Group, its customers and various markets.
Political changes may also have implications for policy. Elections could imply
uncertainty in some markets in response to shifting domestic and foreign
policy priorities. The UK, France, Mexico and several countries in Asia went
to the polls earlier this year, with the US set to follow in the fourth
quarter of 2024. The outcome of the US election in particular will be
monitored closely, given the potential for changes to economic, foreign and
trade policy that may have broader geopolitical implications.
The real estate sector faces challenging conditions in several of our major
markets. The Hong Kong residential and commercial real estate markets have
seen prices fall amid high inventory levels, low transactions and the higher
interest rate environment. In mainland China, similar excess of inventory, and
low confidence, have accelerated the fall in both commercial and residential
real estate prices, with few signs so far of a sustained recovery, despite a
series of reform proposals. We continue to closely monitor, and seek to
proactively manage, the potential implications of the real estate downturn for
our customers and commercial real estate portfolios.
All the above risks could also have an impact on our retail customers and we
continue to closely monitor the impact of inflation and the increased cost of
living to offer the right support to our customers in line with regulatory,
government and wider stakeholder expectations.
We engage closely with regulators to help ensure that we continue to meet
their expectations for the activities of financial institutions during times
of market volatility.
In addition, management adjustments to ECL were applied to reflect persisting
uncertainty in certain sectors, driven by macroeconomic and other sector
specific risks, which were not fully captured by our models.
We continue to monitor, and seek to manage, the potential implications of all
the above developments on our customers and our business. While the financial
performance of our operations varied in different geographies, our balance
sheet and liquidity remained strong. At 30 September 2024, our CET1 ratio
increased to 15.2%, from 15.0% at 30 June 2024, and our liquidity coverage
ratio ('LCR') was 137%.
Credit risk
Summary of credit risk
At 30 September 2024, gross loans and advances to customers and banks of
$1,097bn were $34.6bn higher on a reported basis compared with 31 December
2023. Loans and advances to customers increased by $30.0bn while loans and
advances to banks increased by $4.6bn. This included total favourable effects
of foreign currency translation differences of $14.7bn.
On a constant currency basis, the increase of $19.9bn was driven by an $8.0bn
rise in personal loans and advances to customers, mainly in HSBC UK (up
$4.2bn), our legal entities in the US (up $1.9bn), in Asia (up $1.4bn) and in
Mexico (up $0.5bn). There was also a $7.1bn rise in wholesale loans and
advances to customers, due to growth in HSBC Bank plc (up $4.7 bn) and HSBC UK
(up $1.7bn). It also included an increase of $4.8bn in loans and advances to
banks, mainly in our legal entities in Asia (up $5.4bn) and in the Middle East
(up $2.4bn), partly offset by lower balances in HSBC UK (down $3.4bn).
Loans and advances to banks and customers included a $2.0bn decrease due to
the reclassification of our business in Argentina, our private banking
business in Germany and our operations in Armenia to assets held for sale.
At 30 September 2024, the allowance for ECL of $11.6bn comprised $11.1bn in
respect of assets held at amortised cost, $0.4bn in respect of loan
commitments and financial guarantees, and $0.1bn in respect of debt
instruments measured at fair value through other comprehensive income
('FVOCI').
On a constant currency basis, the allowance for ECL in relation to loans and
advances to customers decreased by $0.1bn. This was attributable to:
- a $0.2bn decrease in personal loans and advances to customers,
observed in stages 1 and 2; and
- a $0.1bn increase in wholesale loans and advances to customers,
which included a $0.4bn increase in stage 3, offset by a $0.3bn decrease in
stages 1 and 2.
The ECL charge for the first nine months of 2024 was $2.1bn (9M23: $2.4bn),
inclusive of recoveries. The ECL charge comprised: $1.1bn in respect of
wholesale lending, of which the stage 3 charge was $0.8bn; $0.9bn in respect
of personal lending, of which the stage 3 charge was $0.7bn; and $0.1bn in
respect of other assets and debt instruments measured at FVOCI.
Wholesale lending charges were recognised mainly in our legal entities in Hong
Kong ($0.7bn). While the mainland China commercial real estate sector remained
subdued, there were limited new defaults and lower total ECL charges of $0.1bn
in 3Q24 and $0.2bn in 9M24. ECL charges in the Hong Kong commercial real
estate sector excluding exposure to mainland China borrowers of $0.1bn in 3Q24
and $0.1bn in 9M24, were also low due to the limited impact from defaults,
driven by the high level of collateralisation in the portfolio.
Summary of financial instruments to which the impairment requirements in IFRS
9 are applied
At 30 Sep 2024 At 31 Dec 2023
Gross carrying/nominal amount Allowance for Gross carrying/nominal amount Allowance for
ECL(1) ECL(1)
$m $m $m $m
Loans and advances to customers at amortised cost 979,612 (10,959) 949,609 (11,074)
Loans and advances to banks at amortised cost 117,525 (11) 112,917 (15)
Other financial assets measured at amortised cost 868,116 (145) 960,271 (422)
- cash and balances at central banks 252,310 - 285,868 -
- items in the course of collection from other banks 7,513 - 6,342 -
- Hong Kong Government certificates of indebtedness 42,591 - 42,024 -
- reverse repurchase agreements - non-trading 263,387 - 252,217 -
- financial investments 156,533 (10) 148,346 (20)
- assets held for sale(2) 7,389 (59) 103,186 (324)
- other assets(3) 138,393 (76) 122,288 (78)
Total gross carrying amount on-balance sheet 1,965,253 (11,115) 2,022,797 (11,511)
Loan and other credit-related commitments 672,892 (367) 661,015 (367)
Financial guarantees 17,215 (31) 17,009 (39)
Total nominal amount off-balance sheet(4) 690,107 (398) 678,024 (406)
2,655,360 (11,513) 2,700,821 (11,917)
Fair value Memorandum allowance for ECL(5) Fair value Memorandum
allowance for ECL(5)
$m $m $m $m
Debt instruments measured at fair value through other comprehensive income 333,771 (80) 302,348 (97)
('FVOCI')
1 The total ECL is recognised in the loss allowance for the financial
asset unless the total ECL exceeds the gross carrying amount of the financial
asset, in which case the ECL is recognised as a provision.
2 At 30 September 2024, the gross carrying amount comprised $3,660m of
loans and advances to customers and banks (31 December 2023: $84,075m) and
$3,729m of other financial assets at amortised cost (31 December 2023:
$19,111m) mainly from Argentina ($3.9bn), Germany ($2.7bn) and Armenia
($0.6bn). The corresponding allowance for ECL comprised $54m of loans and
advances to customers and banks (31 December 2023: $303m) and $5m of other
financial assets at amortised cost (31 December 2023: $21m). The significant
reduction is due to the completion of the sales of our banking business in
Canada in March 2024 and our retail banking operations in France in January
2024.
3 Includes only those financial instruments that are subject to the
impairment requirements of IFRS 9. 'Other assets' as presented within the
summary consolidated balance sheet on page 17 comprises both financial and
non-financial assets, including cash collateral and settlement accounts.
4 Represents the maximum amount at risk should the contracts be fully
drawn upon and clients default.
5 Debt instruments measured at FVOCI continue to be measured at fair
value with the allowance for ECL as a memorandum item. Change in ECL is
recognised in 'Change in expected credit losses and other credit impairment
charges' in the income statement.
Summary of credit risk (excluding debt instruments measured at FVOCI) by stage
distribution and ECL coverage at 30 September 2024
Gross carrying/nominal amount(1) Allowance for ECL ECL coverage %
Stage 1 Stage 2 Stage 3 POCI(2) Total Stage 1 Stage 2 Stage 3 POCI(2) Total Stage 1 Stage 2 Stage 3 POCI(2) Total
$m $m $m $m $m $m $m $m $m $m % % % % %
Loans and advances to customers at amortised 851,828 103,633 24,064 87 979,612 (1,086) (2,467) (7,364) (42) (10,959) 0.1 2.4 30.6 48.3 1.1
cost
Loans and advances to banks at amortised cost 117,279 244 2 - 117,525 (8) (1) (2) - (11) - 0.4 100.0 - -
Other financial assets measured at amortised 866,034 1,890 189 3 868,116 (85) (26) (34) - (145) - 1.4 18.0 - -
cost
Loan and other credit-related commit-ments 651,349 20,797 743 3 672,892 (160) (118) (89) - (367) - 0.6 12.0 - 0.1
Financial guarantees 15,361 1,581 273 - 17,215 (5) (9) (17) - (31) - 0.6 6.2 - 0.2
At 30 Sep 2024 128,145 25,271 93 (1,344) (2,621) (7,506) (42) (11,513) 0.1 2.0 29.7 45.2 0.4
2,501,851 2,655,360
1 Represents the maximum amount at risk should the contracts be fully
drawn upon and clients default.
2 Purchased or originated credit-impaired ('POCI').
Summary of credit risk (excluding debt instruments measured at FVOCI) by stage
distribution and ECL coverage at 31 December 2023
Gross carrying/nominal amount(1) Allowance for ECL ECL coverage %
Stage 1 Stage 2 Stage 3 POCI(2) Total Stage 1 Stage 2 Stage 3 POCI(2) Total Stage 1 Stage 2 Stage 3 POCI(2) Total
$m $m $m $m $m $m $m $m $m $m % % % % %
Loans and advances to customers at amortised 809,384 120,871 19,273 81 949,609 (1,130) (2,964) (6,950) (30) (11,074) 0.1 2.5 36.1 37.0 1.2
cost
Loans and advances to banks at amortised cost 111,479 1,436 2 - 112,917 (10) (3) (2) - (15) - 0.2 100.0 - -
Other financial assets measured at amortised 946,873 12,734 664 - 960,271 (109) (132) (181) - (422) - 1.0 27.3 - -
cost
Loan and other credit-related commit-ments 630,949 28,922 1,140 4 661,015 (153) (128) (86) - (367) - 0.4 7.5 - 0.1
Financial guarantees 14,746 1,879 384 - 17,009 (7) (7) (25) - (39) - 0.4 6.5 - 0.2
At 31 Dec 2023 165,842 21,463 85 (1,409) (3,234) (7,244) (30) (11,917) 0.1 2.0 33.8 35.3 0.4
2,513,431 2,700,821
1 Represents the maximum amount at risk should the contracts be fully
drawn upon and clients default.
2 Purchased or originated credit-impaired ('POCI').
Measurement uncertainty and sensitivity analysis of ECL estimates
The recognition and measurement of ECL involves the use of significant
judgement and estimation. We form multiple economic scenarios based on
economic forecasts and distributional estimates and apply these to credit risk
models to estimate future credit losses. The results are then
probability-weighted to determine an unbiased ECL estimate.
Management assessed the current economic environment, reviewed the latest
economic forecasts and discussed key risks before selecting the economic
scenarios and their weightings.
The Central scenario is constructed to reflect current macroeconomic
expectations. Outer scenarios incorporate the crystallisation of economic and
geopolitical risks, including those relating to future elections, the
Russia-Ukraine war, conflict in the Middle East and shipping disruptions in
the Red Sea.
Management judgemental adjustments are used where modelled allowance for ECL
does not fully reflect the identified risks and related uncertainty, or to
capture significant late-breaking events.
Methodology
At 30 September 2024, four economic scenarios were used to capture the latest
economic expectations and to articulate management's view of the range of
risks and potential outcomes. Scenarios are updated with the latest economic
forecasts and distributional estimates each quarter and the approach to
scenario generation has remained consistent with that taken in the fourth
quarter of 2023.
As at 30 September 2024, the escalation of conflict in the Middle East had no
significant impact on economic forecasts or oil price expectations used in the
3Q24 scenarios. We continue to monitor the situation in the region closely.
Three scenarios, the Upside, Central and Downside, are drawn from external
consensus forecasts, market data and distributional estimates of the entire
range of economic outcomes. The fourth scenario, the Downside 2, represents
management's view of severe downside risks.
Scenarios produced to calculate ECL are aligned to HSBC's top and emerging
risks.
Description of economic scenarios
Stronger than expected GDP growth in the first half of 2024 has resulted in
Central scenario forecasts being revised upwards for the remainder of the
year, specifically in the UK, France, the US, mainland China and Hong Kong. In
the US and Europe, the service sector has been an important driver of growth
as consumption has proved resilient to inflation and high interest rates. In
mainland China, economic growth has been supported by strong export sales but
despite various stimulus measures, domestic activity remains weak and growth,
by sector, is uneven. Authorities have increased fiscal and monetary support
to boost economic activity and to ensure growth remains close to the official
target. In Hong Kong, growth has been driven by strong government support and
investment, while household spending has remained weak.
Inflation has continued to moderate in several of our key markets, helped by
falling energy costs and stability in food prices, while services inflation
has remained higher across the US and Europe. Low inflation in mainland China
and Hong Kong has been driven by weak domestic demand, particularly
consumption. In the Central forecast, softer wage growth and services price
inflation are expected to sustain lower inflation across most of our key
markets. In mainland China, inflation in the Central scenario is forecast to
rise as stimulus measures lift consumption and spending. Lower inflation in
the US, UK and Euro Area is forecast to enable major central banks to reduce
policy rates further, particularly from 2025 onwards.
House price forecasts in Hong Kong and China have seen more significant
revisions in the third quarter of 2024 compared with the fourth quarter of
2023. In mainland China and Hong Kong, real estate prices have continued to
fall despite the delivery of supportive policy measures. Forecasts have been
revised down further. In mainland China, prolonged weak buyer confidence has
weighed on property sales and investment while in Hong Kong developers have
relied on discounting to clear out housing inventory. As a consequence,
forecasts have been revised lower. House price forecasts in the US and UK have
remained relatively more stable despite elevated interest rates, due to low
housing supply and low unemployment, which has acted to support moderate price
growth.
Risks to the Central outlook are captured in the outer scenarios. The Upside
and Downside scenarios are constructed to reflect the economic consequences
from the crystallisation of a number of key economic and financial risks.
Sources of forecast uncertainty include geopolitical tensions, inflation, and
the outlook for monetary policy. In particular, the Downside scenarios explore
the possibility that interest rates and inflation move higher than is forecast
in the Central scenario.
As the geopolitical environment remains volatile and complex, risks include a
broader and more prolonged conflict in the Middle East, a potential escalation
in the Russia-Ukraine war, and continued differences between the US and China
over a range of strategic issues. Election outcomes in major economies,
including the United States, could also deliver policies that are more adverse
to global trade growth and complicate international supply chains, leading to
greater trade frictions, higher costs and market instability.
The four global scenarios used for calculating ECL at 30 September 2024 were:
- The consensus Central scenario: This scenario features a slowdown in
global growth in 2024 before a gradual pick-up over the remainder of the
forecast horizon. Growth rates remain below the pre-Covid-19 pandemic average.
Unemployment is forecast to rise gradually amid weaker economic activity, but
is set to remain low by historic standards. Inflation is expected to continue
to ease back to central bank targets, allowing central banks to continue a
gradual easing of interest rates. Interest rates stay above their pre-pandemic
levels over the entire forecast horizon.
- The consensus Upside scenario: This scenario incorporates the
de-escalation of geopolitical tensions and a loosening of financial
conditions. In this scenario, growth accelerates, inflation falls at a faster
rate than in the Central scenario and unemployment declines. This enables
central banks to lower interest rates more quickly than in the Central
scenario. Asset prices, including housing, rise more quickly than in the
Central scenario.
- The consensus Downside scenario: This scenario features weaker
economic activity compared with the Central scenario, driven by a supply shock
that causes a rise in inflation and interest rates above the Central forecast.
In this scenario, GDP growth slows, unemployment rises, financial conditions
tighten, and equity markets and house prices fall.
- The Downside 2 scenario: This scenario reflects management's view of
the tail end of the economic distribution. It incorporates the simultaneous
crystallisation of a number of risks that leads to a deep global recession.
The narrative features an escalation of geopolitical risks, more significant
changes to the global tariff and trade order and a worsening of supply chain
disruptions. Inflation and interest rates are assumed to rise initially.
Unemployment also increases rapidly, asset prices fall, and defaults rise
significantly. As recession takes hold, commodity prices fall back and
inflation falls.
Both the consensus Downside and the Downside 2 scenarios are global in scope,
and while they differ in severity, they assume that the key risks to HSBC,
listed above, crystallise simultaneously.
The following tables describe key macroeconomic variables in the consensus
Central scenario, consensus Upside scenario, consensus Downside scenario and
Downside 2 scenario.
Consensus Central scenario 4Q24-3Q29 (as at 3Q24)
UK US Hong Kong Mainland China France UAE Mexico
GDP (annual average growth rate, %)
2024 1.0 2.5 2.9 4.9 1.1 3.7 1.9
2025 1.4 1.7 2.7 4.4 1.2 4.2 1.7
2026 1.6 2.0 2.4 4.2 1.4 4.2 2.2
2027 1.7 1.9 2.3 3.9 1.3 3.7 2.2
2028 1.6 1.9 2.3 3.7 1.3 3.3 2.2
5-year average(1) 1.6 1.9 2.5 4.0 1.3 3.8 2.1
Unemployment rate (%)
2024 4.4 4.1 3.0 5.1 7.5 2.8 2.8
2025 4.8 4.4 2.9 5.1 7.4 2.7 3.2
2026 4.5 4.1 3.0 5.0 7.1 2.6 3.3
2027 4.6 4.0 2.9 5.0 7.0 2.6 3.4
2028 4.4 4.0 2.9 5.0 6.8 2.5 3.5
5-year average(1) 4.6 4.1 2.9 5.0 7.1 2.6 3.4
House prices (annual average growth rate, %)
2024 1.5 5.7 (12.3) (7.5) (3.7) 17.9 8.6
2025 1.7 3.9 (6.8) (4.4) 2.7 8.7 5.0
2026 3.6 3.0 4.8 (2.4) 4.4 4.9 4.0
2027 4.7 3.0 3.0 2.3 4.5 3.3 3.9
2028 3.5 2.9 2.5 3.2 4.0 1.9 3.9
5-year average(1) 3.2 3.2 0.5 (0.3) 3.5 4.8 4.3
Inflation (annual average growth rate, %)
2024 2.6 3.1 1.9 0.5 2.4 2.5 4.4
2025 2.2 2.4 2.1 1.4 1.8 2.1 3.7
2026 2.0 2.4 2.1 1.8 1.6 2.1 3.5
2027 2.0 2.3 2.2 1.8 1.9 2.0 3.4
2028 2.0 2.2 2.3 1.7 2.0 1.8 3.3
5-year average(1) 2.1 2.3 2.2 1.7 1.9 2.0 3.5
Central bank policy rate (annual average, %)(2)
2024 5.1 5.1 5.5 3.4 3.7 5.2 10.8
2025 4.2 3.6 4.0 3.3 2.5 3.6 9.1
2026 3.6 3.1 3.5 3.4 2.1 3.1 8.3
2027 3.5 3.1 3.4 3.5 2.2 3.1 8.0
2028 3.4 3.1 3.5 3.6 2.2 3.1 8.1
5-year average(1) 3.7 3.3 3.7 3.5 2.3 3.3 8.5
1 The five-year average is calculated over a projected period of 20
quarters from 4Q24 to 3Q29.
2 For mainland China, rate shown is the Loan Prime Rate.
Consensus Central scenario 2024-2028 (as at 4Q23)
UK US Hong Kong Mainland China France UAE Mexico
GDP (annual average growth rate, %)
2024 0.3 1.0 2.6 4.5 0.8 3.7 1.9
2025 1.2 1.8 2.7 4.4 1.5 4.0 2.2
2026 1.7 2.1 2.6 4.3 1.6 3.8 2.3
2027 1.6 2.0 2.6 3.8 1.5 3.4 2.4
2028 1.6 2.0 2.6 3.9 1.5 3.4 2.4
5-year average(1) 1.3 1.8 2.6 4.2 1.4 3.6 2.2
Unemployment rate (%)
2024 4.7 4.3 3.0 5.2 7.5 2.6 2.9
2025 4.6 4.2 3.0 5.1 7.3 2.6 2.9
2026 4.3 4.0 3.2 5.1 7.0 2.6 2.9
2027 4.2 4.0 3.2 5.1 6.8 2.6 2.9
2028 4.2 4.0 3.2 5.1 6.8 2.6 2.9
5-year average(1) 4.4 4.1 3.1 5.1 7.1 2.6 2.9
House prices (annual average growth rate, %)
2024 (5.5) 2.9 (6.6) (0.6) (1.0) 12.6 6.5
2025 0.1 2.7 (0.7) 1.1 2.4 7.7 4.2
2026 3.5 3.1 2.6 2.6 4.0 4.4 4.2
2027 3.0 2.7 2.8 4.0 4.4 2.6 4.0
2028 3.0 2.1 3.0 4.5 4.0 2.3 4.0
5-year average(1) 0.8 2.7 0.2 2.3 2.8 5.9 4.6
Inflation (annual average growth rate, %)
2024 3.2 2.7 2.1 1.8 2.7 2.3 4.2
2025 2.2 2.2 2.1 2.0 1.8 2.2 3.6
2026 2.2 2.3 2.2 2.1 1.7 2.1 3.5
2027 2.3 2.2 2.4 2.0 1.9 2.1 3.5
2028 2.3 2.2 2.4 2.0 2.1 2.1 3.5
5-year average(1) 2.4 2.3 2.2 2.0 2.0 2.1 3.7
Central bank policy rate (annual average, %)(2)
2024 5.0 5.0 5.4 3.2 3.6 5.1 10.4
2025 4.3 4.0 4.4 3.3 2.8 4.1 8.6
2026 3.9 3.7 4.1 3.5 2.6 3.7 7.9
2027 3.8 3.7 4.1 3.7 2.6 3.7 7.9
2028 3.7 3.8 4.1 3.9 2.7 3.8 8.1
5-year average(1) 4.1 4.1 4.4 3.5 2.9 4.1 8.6
1 The five-year average is calculated over a projected period of 20
quarters from 1Q24 to 4Q28.
2 For mainland China, rate shown is the Loan Prime Rate.
Consensus Upside scenario 4Q24-3Q29 (as at 3Q24)
UK US Hong Kong Mainland China France UAE Mexico
GDP level 11.9 (3Q29) 14.9 (3Q29) 21.5 (3Q29) 28.5 (3Q29) 9.2 (3Q29) 29.0 (3Q29) 16.6 (3Q29)
(%, start-to-peak)(1)
Unemployment rate 3.0 (3Q26) 3.3 (3Q26) 2.5 (3Q26) 4.5 (3Q26) 6.2 (3Q26) 2.2 (3Q26) 2.8 (2Q25)
(%, min)(2)
House price index 23.6 (3Q29) 25.6 (3Q29) 18.9 (3Q29) 5.4 (3Q29) 23.7 (3Q29) 27.9 (3Q29) 28.6 (3Q29)
(%, start-to-peak)(1)
Inflation rate 1.0 (4Q25) 0.5 (3Q25) 0.6 (3Q25) 0.0 (3Q25) 0.8 (3Q25) 0.7 (3Q25) 2.5 (4Q25)
(YoY % change, min)(3)
Central bank policy rate 3.4 (4Q28) 3.1 (1Q27) 3.4 (1Q27) 3.2 (3Q25) 1.9 (3Q25) 3.1 (1Q27) 7.3 (1Q26)
(%, min)(2)
1 Cumulative change to the highest level of the series during the
20-quarter projection.
2 Lowest projected unemployment or policy rate in the scenario. For
mainland China, the rate shown is the Loan Prime Rate.
3 Lowest projected year-on-year percentage change in inflation in the
scenario.
Consensus Upside scenario 2024-2028 (as at 4Q23)
UK US Hong Kong Mainland China France UAE Mexico
GDP level 10.8 (4Q28) 14.3 (4Q28) 21.8 (4Q28) 30.4 (4Q28) 10.4 (4Q28) 30.7 (4Q28) 17.8 (4Q28)
(%, start-to-peak)(1)
Unemployment rate 3.1 (4Q24) 3.1 (2Q25) 2.4 (3Q24) 4.8 (4Q25) 6.2 (4Q25) 2.0 (4Q25) 2.4 (3Q24)
(%, min)(2)
House price index 13.0 (4Q28) 21.9 (4Q28) 17.9 (4Q28) 19.7 (4Q28) 19.6 (4Q28) 34.2 (4Q28) 30.6 (4Q28)
(%, start-to-peak)(1)
Inflation rate 1.3 (2Q25) 1.4 (1Q25) 0.3 (4Q24) 0.6 (3Q24) 1.5 (3Q24) 1.4 (1Q25) 2.7 (1Q25)
(YoY % change, min)(3)
Central bank policy rate 3.7 (3Q28) 3.7 (2Q27) 4.1 (1Q27) 3.1 (3Q24) 2.6 (2Q26) 3.7 (1Q27) 7.8 (2Q25)
(%, min)(2)
1 Cumulative change to the highest level of the series during the
20-quarter projection.
2 Lowest projected unemployment or policy rate in the scenario. For
mainland China, the rate shown is the Loan Prime Rate.
3 Lowest projected year-on-year percentage change in inflation in the
scenario.
Consensus Downside scenario 4Q24-3Q29 (as at 3Q24)
UK US Hong Kong Mainland China France UAE Mexico
GDP level (0.6) (4Q26) (1.4) (2Q25) (1.8) (1Q26) (2.3) (2Q25) (0.5) (2Q25) 0.2 (4Q24) (2.0) (4Q25)
(%, start-to-trough)(1)
Unemployment rate 6.6 (3Q25) 5.4 (2Q25) 4.3 (2Q26) 6.4 (3Q26) 8.4 (2Q25) 3.6 (2Q25) 3.8 (4Q25)
(%, max)(2)
House price index (5.4) (4Q25) (0.3) (4Q24) (10.1) (4Q25) (14.2) (4Q26) (0.2) (1Q25) (0.2) (4Q24) 0.8 (4Q24)
(%, start-to-trough)(1)
Inflation rate 3.9 (3Q25) 3.9 (3Q25) 4.6 (2Q25) 2.6 (2Q25) 3.4 (1Q25) 3.0 (3Q25) 6.1 (3Q25)
(YoY % change, max)(3)
Central bank policy rate 5.3 (4Q24) 5.1 (4Q24) 5.5 (4Q24) 3.4 (4Q24) 3.8 (2Q25) 5.1 (4Q24) 11.6 (2Q25)
(%, max)(2)
1 Cumulative change to the lowest level of the series during the
20-quarter projection.
2 Highest projected unemployment or policy rate in the scenario. For
mainland China, the rate shown is the Loan Prime Rate.
3 Highest projected year-on-year percentage change in inflation in the
scenario.
Consensus Downside scenario 2024-2028 (as at 4Q23)
UK US Hong Kong Mainland China France UAE Mexico
GDP level (1.0) (2Q25) (1.4) (3Q24) (1.6) (3Q25) (1.5) (1Q24) (0.3) (2Q24) 1.4 (1Q24) (0.3) (4Q24)
(%, start-to-trough)(1)
Unemployment rate 6.4 (1Q25) 5.6 (4Q24) 4.7 (4Q25) 6.9 (4Q25) 8.5 (4Q24) 3.7 (4Q25) 3.5 (4Q25)
(%, max)(2)
House price index (12.0) (2Q25) (1.3) (3Q24) (9.6) (4Q24) (7.1) (3Q25) (1.2) (3Q24) 0.3 (1Q24) 1.2 (1Q24)
(%, start-to-trough)(1)
Inflation rate 4.1 (1Q24) 3.5 (4Q24) 3.8 (3Q24) 3.5 (4Q24) 3.8 (2Q24) 3.0 (1Q24) 6.5 (4Q24)
(YoY % change, max)(3)
Central bank policy rate 5.7 (1Q24) 5.6 (1Q24) 6.0 (1Q24) 3.2 (3Q24) 4.2 (1Q24) 5.7 (1Q24) 12.0 (3Q24)
(%, max)(2)
1 Cumulative change to the lowest level of the series during the
20-quarter projection.
2 Highest projected unemployment or policy rate in the scenario. For
mainland China, the rate shown is the Loan Prime Rate.
3 Highest projected year-on-year percentage change in inflation in the
scenario.
Downside 2 scenario 4Q24-3Q29 (as at 3Q24)
UK US Hong Kong Mainland China France UAE Mexico
GDP level (8.6) (1Q26) (4.1) (4Q25) (7.9) (1Q26) (7.8) (3Q25) (8.1) (4Q25) (6.6) (1Q26) (9.3) (2Q26)
(%, start-to-trough)(1)
Unemployment rate 8.3 (1Q26) 9.2 (4Q25) 6.3 (3Q25) 6.8 (3Q26) 10.2 (3Q26) 5.1 (2Q25) 5.4 (4Q25)
(%, max)(2)
House price index (28.2) (3Q26) (15.9) (3Q25) (40.2) (2Q27) (32.1) (4Q26) (14.0) (1Q27) (12.0) (1Q27) 0.8 (4Q24)
(%, start-to-trough)(1)
Inflation rate 9.9 (1Q25) 4.6 (3Q25) 5.0 (2Q25) 5.1 (3Q25) 8.4 (1Q25) 3.5 (2Q25) 6.6 (3Q25)
(YoY % change, max)(3)
Central bank policy rate 5.8 (4Q24) 5.9 (4Q24) 6.2 (4Q24) 3.9 (2Q25) 4.8 (4Q24) 5.9 (4Q24) 12.2 (2Q25)
(%, max)(2)
1 Cumulative change to the lowest level of the series during the
20-quarter projection.
2 Highest projected unemployment or policy rate in the scenario. For
mainland China, the rate shown is the Loan Prime Rate.
3 Highest projected year-on-year percentage change in inflation in
the scenario.
Downside 2 scenario 2024-2028 (as at 4Q23)
UK US Hong Kong Mainland China France UAE Mexico
GDP level (8.8) (2Q25) (4.6) (1Q25) (8.2) (1Q25) (6.4) (1Q25) (6.6) (1Q25) (4.9) (2Q25) (8.1) (2Q25)
(%, start-to-trough)(1)
Unemployment rate 8.4 (2Q25) 9.3 (2Q25) 6.4 (4Q24) 7.0 (4Q25) 10.2 (4Q25) 4.3 (3Q24) 4.9 (2Q25)
(%, max)(2)
House price index (30.2) (4Q25) (14.7) (4Q24) (32.8) (3Q26) (25.5) (4Q25) (14.5) (2Q26) (2.9) (4Q25) 1.2 (1Q24)
(%, start-to-trough)(1)
Inflation rate 10.1 (2Q24) 4.8 (2Q24) 4.1 (3Q24) 4.1 (4Q24) 8.6 (2Q24) 3.5 (2Q24) 7.0 (4Q24)
(YoY % change, max)(3)
Central bank policy rate 6.0 (1Q24) 6.1 (1Q24) 6.4 (1Q24) 4.1 (3Q24) 5.2 (1Q24) 6.1 (1Q24) 12.7 (3Q24)
(%, max)(2)
1 Cumulative change to the lowest level of the series during the
20-quarter projection.
2 Highest projected unemployment or policy rate in the scenario. For
mainland China, the rate shown is the Loan Prime Rate.
3 Highest projected year-on-year percentage change in inflation in the
scenario.
The following table describes the probabilities assigned in each scenario.
Scenario weightings, %
Standard weights UK US Hong Mainland China France UAE Mexico
Kong
3Q24
Upside 10 10 10 10 10 10 10 10
Central 75 75 75 75 75 75 75 75
Downside 10 10 10 10 10 10 10 10
Downside 2 5 5 5 5 5 5 5 5
4Q23
Upside 10 10 10 10 10 10 10 10
Central 75 75 75 75 75 75 75 75
Downside 10 10 10 10 10 10 10 10
Downside 2 5 5 5 5 5 5 5 5
At 30 September 2024, scenario weights are consistent with those applied in
the previous quarter and at 31 December 2023. The consensus Upside and Central
scenarios for all key markets have a combined weighting of 85%, with the
remaining 15% assigned to the two Downside scenarios. Management assessed that
forecast dispersion around the consensus estimate had remained stable and that
market measures of volatility had stayed low. Risks were deemed to be
adequately reflected in outer scenarios at their calibrated probability.
Management judgemental adjustments
In the context of IFRS 9, management judgemental adjustments are typically
short-term increases or decreases to the modelled allowance for ECL at either
a customer, segment or portfolio level where management believes allowances do
not sufficiently reflect the credit risk/expected credit losses at the
reporting date. These can relate to risks or uncertainties that are not
reflected in the models and/or to any late-breaking events with significant
uncertainty, subject to management review and challenge.
This includes refining model inputs and outputs and using adjustments to ECL
based on management judgement and quantitative analysis for impacts that are
difficult to model.
The effects of management judgemental adjustments are considered for both
balances and allowance for ECL when determining whether or not a significant
increase in credit risk has occurred and is allocated to a stage where
appropriate. This is in accordance with the internal adjustments framework.
Management judgemental adjustments are reviewed under the governance process
for IFRS 9, as detailed in the section 'Credit risk management' on page 147 of
the Annual Report and Accounts 2023.
Review and challenge focuses on the rationale and quantum of the adjustments
with a further review carried out by the second line of defence where
significant. For some management judgemental adjustments, internal frameworks
establish the conditions under which these adjustments should no longer be
required and as such are considered as part of the governance process. This
internal governance process allows management judgemental adjustments to be
reviewed regularly and, where possible, to reduce the reliance on these
through model recalibration or redevelopment, as appropriate.
The drivers of management judgemental adjustments continue to evolve with the
economic environment and as new risks emerge.
In addition to management judgemental adjustments there are also 'Other
adjustments', which are made to address process limitations, data/model
deficiencies and can also include, where appropriate, the impact of new models
where governance has sufficiently progressed to allow an accurate estimate of
ECL allowance to be incorporated into the total reported ECL.
'Management judgemental adjustments' and 'Other adjustments' constitute the
total value of adjustments to modelled allowance for ECL. For the wholesale
portfolio, defaulted exposures are assessed individually and management
judgemental adjustments are made only to the performing portfolio.
At 30 September 2024, there was a $0.4bn reduction in management judgemental
adjustments compared with 31 December 2023.
Management judgemental adjustments made in estimating the scenario-weighted
reported allowance for ECL at 30 September 2024 are set out in the following
table.
Management judgemental adjustments to ECL at 30 September 2024(1)
Retail Wholesale(2) Total
$bn $bn $bn
Modelled ECL (A)(3) 2.7 1.9 4.6
Banks, sovereigns, government entities and low-risk counterparties 0.0 0.0
Corporate lending adjustments 0.2 0.2
Inflation-related adjustments 0.0 0.0
Other credit judgements 0.1 0.1
Total management judgemental adjustments (B)(4) 0.1 0.2 0.3
Other adjustments (C)(5) (0.1) 0.1 0.0
Final ECL (A + B + C)(6) 2.7 2.2 4.9
Management judgemental adjustments to ECL at 31 December 2023(1,7)
Retail Wholesale(2) Total
$bn $bn $bn
Modelled ECL (A)(3) 2.6 2.4 5.0
Banks, sovereigns, government entities and low-risk counterparties 0.0 0.0
Corporate lending adjustments 0.1 0.1
Inflation-related adjustments 0.1 0.1
Other credit judgements 0.5 0.5
Total management judgemental adjustments (B)(4) 0.6 0.1 0.7
Other adjustments (C)(5) 0.0 0.0 0.0
Final ECL (A + B + C)(6) 3.2 2.5 5.7
1 Management judgemental adjustments presented in the table reflect
increases or (decreases) to allowance for ECL, respectively.
2 The wholesale portfolio corresponds to adjustments to the performing
portfolio (stage 1 and stage 2).
3 (A) refers to probability-weighted allowance for ECL before any
adjustments are applied.
4 (B) refers to adjustments that are applied where management believes
allowance for ECL does not sufficiently reflect the credit risk/expected
credit losses of any given portfolio at the reporting date. These can relate
to risks or uncertainties that are not reflected in the model and/or to any
late-breaking events.
5 (C) refers to adjustments to allowance for ECL made to address
process limitations, data/model deficiencies, and can also include, where
appropriate, the impact of new models where governance has sufficiently
progressed to allow an accurate estimate of ECL allowance to be incorporated
into the total reported ECL.
6 As presented within our internal credit risk governance (see page
147 of the Annual Report and Accounts 2023).
7 31 December 2023 includes the allowance for ECL related to the
Canada banking business and retail banking operations in France.
At 30 September 2024, wholesale management judgemental adjustments were an
increase to allowance for ECL of $0.2bn (31 December 2023: $0.1bn increase),
mostly to reflect heightened uncertainty in specific sectors and geographies,
including adjustments to exposures to the real estate sectors booked in Hong
Kong, mainland China and the US.
In the retail portfolio, management judgemental adjustments were an increase
to modelled ECL of $0.1bn at 30 September 2024 (31 December 2023: $0.6bn
increase). The decrease in management judgemental adjustments to ECL allowance
compared with 31 December 2023 was primarily attributed to the UK, where
performance continued to remain resilient and modelled ECL becomes more
reflective of expected credit performance.
Economic scenarios sensitivity analysis of ECL estimates
Management considered the sensitivity of the ECL outcome against the economic
forecasts as part of the ECL governance process by recalculating the ECL under
each scenario described above for selected portfolios, applying a 100%
weighting to each scenario in turn. The weighting is reflected in both the
determination of a significant increase in credit risk and the measurement of
the resulting ECL.
The allowance for ECL calculated for the Upside and Downside scenarios should
not be taken to represent the upper and lower limits of possible ECL outcomes.
The impact of defaults that might occur in the future under different economic
scenarios is captured by recalculating ECL for loans at the balance sheet
date.
There is a particularly high degree of estimation uncertainty in numbers
representing more severe risk scenarios when assigned a 100% weighting.
For wholesale credit risk exposures, the sensitivity analysis excludes
allowance for ECL and financial instruments related to defaulted (stage 3)
obligors. Loans to defaulted obligors are a small portion of the overall
wholesale lending exposure, even if representing the majority of the allowance
for ECL. The measurement of stage 3 ECL is relatively more sensitive to credit
factors specific to the obligor than future economic scenarios, and therefore
the effects of macroeconomic factors are not necessarily the key consideration
when performing individual assessments of allowances for obligors in default.
Due to the range and specificity of the credit factors to which the ECL is
sensitive, it is not possible to provide a meaningful alternative sensitivity
analysis for a consistent set of risks across all defaulted obligors.
For retail credit risk exposures, the sensitivity analysis includes ECL
allowance for loans and advances to customers related to defaulted obligors.
This is because the retail ECL allowance for secured mortgage portfolios,
including loans in all stages, is sensitive to macroeconomic variables.
Group ECL sensitivity results
The allowance for ECL of the scenarios and management judgemental adjustments
is highly sensitive to movements in economic forecasts. If the Group allowance
for ECL balance was estimated solely on the basis of the Central scenario,
Downside scenario or the Downside 2 scenario at 30 September 2024, it would
increase/(decrease) as presented in the below table.
Retail Wholesale(1)
Total Group ECL at 30 Sep 2024(2,3) $bn $bn
Reported ECL 2.5 2.2
Scenarios
100% consensus Central scenario (0.1) (0.2)
100% consensus Upside scenario (0.2) (0.6)
100% consensus Downside scenario 0.0 0.8
100% Downside 2 scenario 1.9 4.1
Total Group ECL at 31 Dec 2023(2,3)
Reported ECL 3.0 2.5
Scenarios
100% consensus Central scenario (0.1) (0.2)
100% consensus Upside scenario (0.5) (0.7)
100% consensus Downside scenario 0.4 0.8
100% Downside 2 scenario 2.1 4.5
1 Includes low credit-risk financial instruments, such as debt
instruments at FVOCI, which have high carrying values but low ECL under all
the scenarios.
2 ECL sensitivities exclude portfolios utilising less complex
modelling approaches for the retail portfolio and defaulted obligors for the
wholesale portfolio.
3 30 September 2024 excludes the Canada banking business, the sale of
which completed on 28 March 2024. 31 December 2023 includes the Canada banking
business. 30 September 2024 excludes the retained portfolio following the sale
of retail banking operations in France, which completed on 1 January 2024.
31 December 2023 includes all retail banking operations in France.
At 30 September 2024, the Group allowance for ECL decreased in the retail
portfolio by $0.5bn and decreased by $0.3bn in the wholesale portfolio,
compared with 31 December 2023. There was also a reduction in ECL sensitivity
across all scenarios within the retail and wholesale portfolios since 31
December 2023, primarily as a result of the sale of our Canada banking
business and sale of our retail banking operations in France during the first
half of 2024. This was the main driver of the decrease in Downside 2 ECL
sensitivity for the wholesale portfolio.
At 30 September 2024 the retail portfolio sensitivity of the allowance for ECL
across all scenarios was lower compared with 31 December 2023. This was due to
lower reported ECL levels, reduced macroeconomic forecast uncertainty,
reduction in management judgemental adjustments and the implementation of
revised models and model methodology across many of the portfolios. This
revised methodology maintains the higher sensitivity to the Downside 2
scenario while better reflecting the lower sensitivity to the consensus
scenarios.
Personal lending
Total personal lending for loans and advances to customers at amortised cost
by stage distribution
Gross carrying amount Allowance for ECL
Stage 1 Stage 2 Stage 3 Total Stage 1 Stage 2 Stage 3 Total
$m $m $m $m $m $m $m $m
By legal entity
HSBC UK Bank plc 158,071 36,533 1,258 195,862 (158) (344) (257) (759)
HSBC Bank plc(1) 24,251 1,574 337 26,162 (18) (24) (104) (146)
The Hongkong and Shanghai Banking Corporation Limited 195,828 6,328 1,165 203,321 (171) (370) (169) (710)
HSBC Bank Middle East Limited 3,597 140 49 3,786 (15) (27) (31) (73)
HSBC North America Holdings Inc. 20,032 490 350 20,872 (5) (13) (13) (31)
Grupo Financiero HSBC, S.A. de C.V. 11,565 1,214 632 13,411 (155) (396) (282) (833)
Other trading entities(1) 744 49 3 796 (6) (2) (2) (10)
At 30 Sep 2024 414,088 46,328 3,794 464,210 (528) (1,176) (858) (2,562)
By legal entity
HSBC UK Bank plc 146,354 35,190 1,218 182,762 (152) (490) (255) (897)
HSBC Bank plc 14,598 1,747 273 16,618 (24) (22) (91) (137)
The Hongkong and Shanghai Banking Corporation Limited 191,382 7,741 948 200,071 (165) (402) (162) (729)
HSBC Bank Middle East Limited 3,335 397 47 3,779 (19) (33) (36) (88)
HSBC North America Holdings Inc. 18,096 553 364 19,013 (5) (14) (16) (35)
Grupo Financiero HSBC, S.A. de C.V. 12,717 1,740 536 14,993 (197) (463) (273) (933)
Other trading entities 10,052 115 119 10,286 (17) (10) (21) (48)
At 31 Dec 2023 396,534 47,483 3,505 447,522 (579) (1,434) (854) (2,867)
1 At 31 December 2023, 'Other trading entities' included gross
carrying amount of $9,079m and allowances for ECL of $23m related to Private
Banking entities that were reclassified to HSBC Bank plc to continue the
process of simplifying our structure.
Wholesale lending
Total wholesale lending for loans and advances to banks and customers at
amortised cost by stage distribution
Gross carrying amount Allowance for ECL
Stage 1 Stage 2 Stage 3 POCI Total Stage 1 Stage 2 Stage 3 POCI Total
$m $m $m $m $m $m $m $m $m $m
By legal entity
HSBC UK Bank plc 84,676 13,908 3,820 - 102,404 (219) (407) (698) - (1,324)
HSBC Bank plc(1) 90,536 7,175 2,490 45 100,246 (66) (97) (770) (18) (951)
The Hongkong and Shanghai Banking Corporation Limited 301,325 28,384 11,985 37 341,731 (172) (605) (4,132) (23) (4,932)
HSBC Bank Middle East Limited 25,225 1,309 843 5 27,382 (27) (9) (477) (1) (514)
HSBC North America Holdings Inc. 31,302 5,028 550 - 36,880 (34) (126) (120) - (280)
Grupo Financiero HSBC, S.A. de C.V. 13,028 1,360 230 - 14,618 (36) (44) (132) - (212)
Other trading entities(1) 8,858 385 354 - 9,597 (12) (4) (179) - (195)
Holding companies, shared service centres and intra-Group eliminations 69 - - - 69 - - - - -
At 30 Sep 2024 555,019 57,549 20,272 87 632,927 (566) (1,292) (6,508) (42) (8,408)
By legal entity
HSBC UK Bank plc 76,793 18,735 3,769 - 99,297 (213) (474) (593) - (1,280)
HSBC Bank plc 82,025 8,452 2,673 40 93,190 (69) (138) (1,035) (7) (1,249)
The Hongkong and Shanghai Banking Corporation Limited 287,876 37,402 7,077 38 332,393 (185) (696) (3,349) (21) (4,251)
HSBC Bank Middle East Limited 21,927 1,598 894 3 24,422 (17) (11) (571) (2) (601)
HSBC North America Holdings Inc. 30,797 5,712 583 - 37,092 (24) (145) (127) - (296)
Grupo Financiero HSBC, S.A. de C.V. 13,714 1,186 382 - 15,282 (39) (56) (231) - (326)
Other trading entities 11,164 1,739 392 - 13,295 (14) (13) (192) - (219)
Holding companies, shared service centres and intra-Group eliminations 33 - - - 33 - - - - -
At 31 Dec 2023 524,329 74,824 15,770 81 615,004 (561) (1,533) (6,098) (30) (8,222)
1 At 31 December 2023, 'Other trading entities' included gross
carrying amount of $1,792m and allowances for ECL of $1m related to Private
Banking entities that were reclassified to HSBC Bank plc to continue the
process of simplifying our structure.
Commercial real estate
The following table presents the Group's exposure to borrowers classified in
the commercial real estate sector where the ultimate parent is based in
mainland China, as well as all commercial real estate exposures booked on
mainland China balance sheets. The exposures and allowances for ECL at 30
September 2024 are split by country/territory and credit quality.
Additionally, allowances for ECL are split by stage.
Commercial real estate financing refers to lending that focuses on commercial
development and investment in real estate and covers commercial, residential
and industrial assets. The exposures in the table are related to companies
whose primary activities are focused on these areas. The table also includes
financing provided to a corporate or financial entity for the purchase or
financing of a property that supports the overall operations of the business.
Such exposures are outside of our normal definition of commercial real estate,
as applied elsewhere in this Earnings Release 3Q24, but are provided here for
a more comprehensive view of our property exposures in mainland China.
Mainland China commercial real estate
Hong Kong Mainland China Rest of the Group Total
$m $m $m $m
Loans and advances to customers(1) 4,342 4,149 327 8,818
Guarantees issued and others(2) 16 69
47 6
Total mainland China commercial real estate exposure at 30 Sep 2024 4,389 4,165 333 8,887
Distribution of mainland China commercial real estate exposure by credit
quality
Strong 186 1,614 110 1,910
Good 542 872 1,415
1
Satisfactory 214 1,184 1,451
53
Sub-standard 817 150 150 1,117
Credit impaired 2,630 345 2,994
19
At 30 Sep 2024 4,389 4,165 333 8,887
Allowance for ECL by credit quality
Strong - (4) - (4)
Good - (4) - (4)
Satisfactory - (16) - (16)
Sub-standard (140) (26) (17) (183)
Credit impaired (1,780) (108) (3) (1,891)
At 30 Sep 2024 (1,920) (158) (20) (2,098)
Allowance for ECL by stage distribution
Stage 1 - (10) - (10)
Stage 2 (140) (40) (17) (197)
Stage 3 (1,778) (108) (3) (1,889)
POCI (2) - - (2)
At 30 Sep 2024 (1,920) (158) (20) (2,098)
ECL coverage % 43.7 3.8 6.0 23.6
1 Amounts represent gross carrying amount.
2 Amounts represent nominal amount for guarantees and other contingent
liabilities.
Mainland China commercial real estate (continued)
Hong Kong Mainland China Rest of the Group Total
$m $m $m $m
Loans and advances to customers(1) 6,033 4,917 839 11,789
Guarantees issued and others(2) 255 66 37 358
Total mainland China commercial real estate exposure at 31 Dec 2023 6,288 4,983 876 12,147
Distribution of mainland China commercial real estate exposure by
credit quality
Strong 781 1,723 2,510
6
Good 604 953 421 1,978
Satisfactory 679 1,704 261 2,644
Sub-standard 1,298 327 188 1,813
Credit impaired 2,926 276 3,202
-
At 31 Dec 2023 6,288 4,983 876 12,147
Allowance for ECL by credit quality
Strong (3) (3)
- -
Good (5) (6)
- (1)
Satisfactory (27) (30)
(3) -
Sub-standard (66) (87) (16) (169)
Credit impaired (1,726) (125) (1,851)
-
At 31 Dec 2023 (1,795) (247) (17) (2,059)
Allowance for ECL by stage distribution
Stage 1 (10) (10)
- -
Stage 2 (69) (112) (17) (198)
Stage 3 (1,726) (125) (1,851)
-
At 31 Dec 2023 (1,795) (247) (17) (2,059)
ECL coverage % 28.5 5.0 1.9 17.0
1 Amounts represent gross carrying amount.
2 Amounts represent nominal amount for guarantees and other contingent
liabilities.
The table above shows that commercial real estate financing exposures were
$8.9bn at 30 September 2024, down from $12.1bn at 31 December 2023. The
reduction was mainly due to repayments by performing customers. Total 'credit
impaired' exposures at 30 September 2024 were stable, standing at $3.0bn, down
from $3.2bn at 31 December 2023.
Allowances for ECL are substantially against unsecured exposures. For secured
exposures, allowances for ECL are minimal, reflecting the nature and value of
the security held.
Facilities booked in Hong Kong continued to represent the largest proportion
of mainland China commercial real estate exposures, although total exposures
fell to $4.4bn, down by $1.9bn since 31 December 2023, as a result of
de-risking measures, repayments and write-offs. This portfolio remains
relatively higher risk, with $2.6bn (31 December 2023: $2.9bn) of exposures in
the 'credit impaired' category.
At 30 September 2024, the Group had allowances for ECL of $1.9bn (31 December
2023: $1.8bn) held against commercial real estate exposures for companies
whose ultimate parent is based in mainland China and which are booked in Hong
Kong. ECL coverage increased to 43.7% (31 December 2023: 28.5%) to reflect the
assessment of risk associated with this portfolio.
Approximately half of the performing exposure in the Hong Kong portfolio is
lending to state-owned enterprises and relatively strong privately-owned
enterprises. This is reflected in the relatively low allowance for ECL in this
part of the portfolio. Mainland China property market activity remains subdued
with housing demand yet to meaningfully recover. Stimulus measures introduced
in September 2024 nevertheless demonstrate the government's determination to
stabilise the sector, and while further policy support may be required, these
measures represent concerted government efforts to improve market confidence
and demand. We continue to monitor developments in the real estate sector
closely, including the extent to which government support measures are driving
a sustained stabilisation of property market fundamentals and financing
conditions.
The Group has additional exposures to mainland China commercial real estate as
a result of lending to multinational corporates booked outside of mainland
China, which is not incorporated in the table above.
Capital risk
Capital overview
Capital and liquidity adequacy metrics
At
30 Sep 2024 30 Jun 2024
Risk-weighted assets ('RWAs') ($bn)
Credit risk 690.0 664.1
Counterparty credit 37.6 36.8
Market risk 37.4 37.9
Operational risk 98.9 96.3
Total risk-weighted assets 863.9 835.1
Capital on a transitional basis ($bn)
Common equity tier 1 capital 131.4 125.3
Tier 1 capital 150.6 144.3
Total capital 179.8 172.1
Capital ratios on a transitional basis (%)
Common equity tier 1 ratio 15.2 15.0
Tier 1 ratio 17.4 17.3
Total capital ratio 20.8 20.6
Capital on an end point basis ($bn)
Common equity tier 1 capital 131.4 125.3
Tier 1 capital 150.6 144.3
Total capital 175.6 168.1
Capital ratios on an end point basis (%)
Common equity tier 1 ratio 15.2 15.0
Tier 1 ratio 17.4 17.3
Total capital ratio 20.3 20.1
Liquidity coverage ratio ('LCR')
Total high-quality liquid assets ($bn) 649.2 646.1
Total net cash outflow ($bn) 473.0 472.3
LCR (%)(1) 137 137
1 We enhanced our calculation processes during 1H24. As the Group LCR
is reported as a 12-month average, the benefit of these changes is being
recognised incrementally over the year starting from 30 June 2024.
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.
Capital figures and ratios in the previous table are calculated in accordance
with the regulatory requirements of the Capital Requirements Regulation and
Directive, the CRR II regulation and the Prudential Regulation Authority
('PRA') Rulebook ('CRR II'). The table presents them under the transitional
arrangements in CRR II for capital instruments and after their expiry, known
as the end point.
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.
Capital
At 30 September 2024, our CET1 capital ratio increased to 15.2% from 15.0% at
30 June 2024, driven by an increase in CET1 capital of $6.1bn, partly offset
by an increase in RWAs of $28.8bn.
The key drivers impacting the CET1 ratio were:
- a 0.3 percentage point increase from capital generation, mainly
through regulatory profits and other reserves, partly offset by dividends and
the share buy-back announced with our 2Q24 results;
- a 0.1 percentage point increase from the favourable impact of
foreign exchange fluctuations; and
- a 0.2 percentage point decrease driven by higher RWAs, mainly from
asset size and asset quality movements.
Our Pillar 2A requirement at 30 September 2024, as per the PRA's Individual
Capital Requirement based on a point-in-time assessment, was equivalent to
2.6% of RWAs, of which 1.5% was required to be met by CET1. Throughout 3Q24,
we complied with the PRA's regulatory capital adequacy requirement.
Leverage
Leverage ratio
At
30 Sep 2024 30 Jun 2024
$bn $bn
Tier 1 capital (leverage) 150.6 144.3
Total leverage ratio exposure 2,657.8 2,514.5
% %
Leverage ratio 5.7 5.7
Our leverage ratio was 5.7% at 30 September 2024, unchanged from 30 June 2024.
The increase in the leverage exposures led to a 0.3 percentage point fall in
the leverage ratio, primarily due to growth in the balance sheet, which was
offset by a 0.3 percentage point increase due to an increase in tier 1
capital.
At 30 September 2024, our UK minimum leverage ratio requirement of 3.25% was
supplemented by a leverage ratio buffer of 1.0%, which consists of an
additional leverage ratio buffer of 0.7% and a countercyclical leverage ratio
buffer of 0.3%. These buffers translated into capital values of $18.6bn and
$8.0bn respectively. We exceeded these leverage requirements throughout 3Q24.
Risk-weighted assets
RWAs by global business
WPB CMB GBM Corporate Total
Centre
RWAs
$bn $bn $bn $bn $bn
Credit risk 155.1 313.2 135.9 85.8 690.0
Counterparty credit risk 0.8 0.3 35.3 1.2 37.6
Market risk 1.7 1.4 27.7 6.6 37.4
Operational risk 34.1 33.7 33.3 (2.2) 98.9
At 30 Sep 2024 191.7 348.6 232.2 91.4 863.9
At 30 Jun 2024 182.5 335.7 225.1 91.8 835.1
RWAs by legal entities(1)
HSBC UK Bank plc HSBC Bank plc The Hongkong and Shanghai Banking Corporation Limited HSBC Bank Middle East Limited HSBC North America Holdings Inc HSBC Bank Canada Grupo Financiero HSBC, S.A. Other trading entities Holding companies, shared service centres and intra-Group eliminations(2) Total
de C.V.
RWAs
$bn $bn $bn $bn $bn $bn $bn $bn $bn $bn
Credit risk 121.4 76.9 326.6 19.6 63.6 - 24.1 49.1 8.7 690.0
Counterparty credit risk 0.3 20.1 10.6 0.5 3.6 - 0.5 2.0 - 37.6
Market risk(3) 0.2 25.0 27.2 1.6 3.0 - 0.8 1.8 2.5 37.4
Operational risk 18.9 18.8 47.2 3.7 7.2 - 4.5 4.7 (6.1) 98.9
At 30 Sep 2024 140.8 140.8 411.6 25.4 77.4 - 29.9 57.6 5.1 863.9
At 30 Jun 2024 131.5 137.1 401.2 26.1 76.8 - 31.3 55.0 4.9 835.1
1 Balances are on a third-party Group consolidated basis.
2 Balances include HSBC Bank Canada operational risk RWAs due to the
averaging calculation and will roll off over future reporting cycles.
3 Market risk RWAs are non-additive across the legal entities due to
diversification effects within the Group.
RWA movement by global business by key driver
Credit risk, counterparty credit risk Market Total
and operational risk risk RWAs
WPB CMB GBM Corporate
Centre
$bn $bn $bn $bn $bn $bn
RWAs at 1 Jul 2024 181.3 334.5 197.4 84.0 37.9 835.1
Asset size 3.7 5.9 1.6 1.3 (0.7) 11.8
Asset quality - 0.9 2.2 1.1 - 4.2
Model updates 1.6 0.6 - (3.3) - (1.1)
Methodology and policy - (1.9) - 0.9 0.2 (0.8)
Acquisitions and disposals (0.1) - - - - (0.1)
Foreign exchange movements(1) 3.5 7.2 3.3 0.8 - 14.8
Total RWA movement 8.7 12.7 7.1 0.8 (0.5) 28.8
RWAs at 30 Sep 2024 190.0 347.2 204.5 84.8 37.4 863.9
1 Credit risk foreign exchange movements in this disclosure are
computed by retranslating RWAs into US dollars based on the underlying
transactional currencies, and other movements in the table are presented on a
constant currency basis.
RWA movement by legal entities by key driver(1)
Credit risk, counterparty credit risk and operational risk
HSBC UK Bank plc HSBC Bank plc The Hongkong and Shanghai Banking Corporation Limited HSBC Bank Middle East Limited HSBC North America Holdings Inc HSBC Bank Canada Grupo Financiero HSBC, S.A. Other trading entities Holding companies, shared service centres and intra-Group eliminations Market risk Total RWAs
de C.V.
$bn $bn $bn $bn $bn $bn $bn $bn $bn $bn $bn
RWAs at 1 Jul 2024 131.3 111.6 372.0 23.5 73.1 - 30.5 53.5 1.7 37.9 835.1
Asset size 3.4 0.6 4.9 0.4 (0.1) - 0.4 2.7 0.2 (0.7) 11.8
Asset quality (0.1) 0.6 2.8 - 0.9 - - - - - 4.2
Model updates - (0.5) (0.2) (0.4) - - - - - - (1.1)
Methodology and policy (1.0) - (1.0) 0.2 0.4 - - - 0.4 0.2 (0.8)
Acquisitions and disposals - - (0.1) - - - - - - - (0.1)
Foreign exchange movements(2) 7.0 3.5 6.0 0.1 0.1 - (1.8) (0.4) 0.3 - 14.8
Total RWA movement 9.3 4.2 12.4 0.3 1.3 - (1.4) 2.3 0.9 (0.5) 28.8
RWAs at 30 Sep 2024 140.6 115.8 384.4 23.8 74.4 - 29.1 55.8 2.6 37.4 863.9
1 Balances are on a third-party Group consolidated basis.
2 Credit risk foreign exchange movements in this disclosure are
computed by retranslating RWAs into US dollars based on the underlying
transactional currencies, and other movements in the table are presented on a
constant currency basis.
RWAs increased by $28.8bn during 3Q24, including a rise of $14.8bn due to
foreign currency translation differences. The remaining $14.0bn increase in
RWAs was predominantly attributed to asset size and asset quality movements.
Asset size
CMB RWAs rose by $5.9bn, due to an increase in corporate lending, mainly in
HSBC UK Bank plc and Asia, and higher sovereign exposures in Asia.
WPB RWAs increased by $3.7bn, due to retail portfolio growth and an increase
in sovereign exposures in Asia and Other trading entities.
GBM RWAs increased by $1.6bn, primarily due to higher securities financing
exposures and an increased derivatives portfolio in counterparty credit risk,
notably in HSBC Bank plc. The increase was partly offset by a fall in
corporate exposures, primarily in Asia and the US.
Corporate Centre RWAs increased by $1.3bn, largely driven by movements related
to investments in associates from lending growth in SAB and our holding in
BoCom, reflected in Other trading entities and Asia respectively.
The $0.7bn decrease in market risk RWAs was mainly attributed to lower value
at risk and foreign exchange exposures, which was partly offset by a rise in
stressed value at risk, and a higher incremental risk charge from increased
positions.
Asset quality
The $4.2bn rise in RWAs was mainly due to unfavourable credit risk migrations
in Asia, including in the Hong Kong commercial real estate sector, and the US.
Model update
The $1.1bn fall in RWAs was mainly driven by a $2.2bn change to the financial
institutions models, partly offset by an increase in the post-model adjustment
for the Hong Kong mortgage model.
Methodology and policy
Credit risk parameter refinements offset by methodology changes, mainly in
Asia, HSBC UK Bank plc and the US, led to an RWA decrease of $0.8bn.
Regulatory and other developments
In the UK, the PRA published its second set of near-final rules on credit
risk, the output floor, and reporting and disclosure elements of Basel III
Reforms ('Basel 3.1') in September 2024. Near-final rules in relation to the
market risk, credit valuation adjustments, counterparty risk and operational
risk elements of the package were published by the PRA in December 2023. The
implementation date is delayed by a further six months to 1 January 2026,
with an output floor transitional period of four years until 31 December 2029.
We continue to assess the impact of Basel 3.1 standards on our capital,
including the recent release of more beneficial PRA near-final rules,
developments in the US and associated implementation challenges (including
data provision). We continue to expect that the impact on our CET1 ratio at 1
January 2026 will be immaterial.
The work by Basel on climate-related financial risks across all three pillars
of regulation, supervision and disclosure is ongoing. The initial work by
Basel concluded that climate risk drivers, including physical and transition
risks, can be captured in traditional financial risk categories such as
credit, market, operational and liquidity risks. As part of its wider efforts
to improve ESG risk coverage, Basel consulted in November 2023 on a Pillar 3
disclosures framework for climate-related financial risks with a proposed
effective date of 1 January 2026.
Regulatory transitional arrangements for IFRS 9 'Financial Instruments'
We have adopted the regulatory transitional arrangements of the Capital
Requirements Regulation for IFRS 9, including paragraph four of article 473a.
These allow banks to add back to their capital base a proportion of the impact
that IFRS 9 has upon their loan loss allowances. Our capital and ratios are
presented under these arrangements throughout the tables in this section,
including the end point figures.
For further details, see our Pillar 3 Disclosures at 30 September 2024,
which is expected to be published on or around 5 November 2024 at
www.hsbc.com/investors.
Additional information
Dividends
Second interim dividend for 2024
On 31 July 2024, the Directors approved a second interim dividend for 2024 of
$0.10 per ordinary share, which was paid on 27 September 2024 in cash. The
sterling and Hong Kong dollar amounts of approximately £0.075817 and
HK$0.779073 were calculated using the forward exchange rates quoted by HSBC
Bank plc in London at or about 11.00am on 16 September 2024.
Third interim dividend for 2024
On 29 October 2024, the Directors approved a third interim dividend in respect
of the financial year ending 31 December 2024 of $0.10 per ordinary share (the
'dividend'), a distribution of approximately $1.814bn. The dividend will be
payable on 19 December 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 8 November 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 9 December 2024. The ordinary shares in London, Hong Kong and
Bermuda will be quoted ex-dividend on 7 November 2024. American Depositary
Shares ('ADSs') in New York will be quoted ex-dividend on 8 November 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 5 December 2024 to be
effective for this dividend.
The dividend will be payable on ADSs, each of which represents five ordinary
shares, on 19 December 2024 to holders of record on 8 November 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 29 November 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 8 November
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 8 November 2024. Any person wishing to remove
ordinary shares to or from each register must do so before 4.00pm local time
on 7 November 2024.
Shares repurchased under HSBC Holdings plc buy-backs, which have not yet been
cancelled from the Hong Kong custodians CCASS account as at the record date,
will not be eligible for the dividend.
Transfers of ADSs must be lodged with the depositary by 11.00am on 8 November
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 shares
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 December 2024 to holders of record on
29 November 2024.
For and on behalf of
HSBC Holdings plc
Aileen Taylor
Company Secretary
The Board of Directors of HSBC Holdings plc as at the date of this
announcement comprises: Sir Mark Edward Tucker*, Georges Bahjat Elhedery,
Geraldine Joyce Buckingham(†), Rachel Duan(†), Dame Carolyn Julie
Fairbairn(†), James Anthony Forese(†), Ann Frances Godbehere(†), Steven
Craig Guggenheimer(†), 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
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
Cautionary statement regarding forward-looking statements
This Earnings Release 3Q24 contains certain forward-looking statements with
respect to HSBC's: financial condition; results of operations and business,
including the strategic priorities; financial, investment and capital targets;
and ESG targets, commitments and ambitions described herein.
Statements that are not historical facts, including statements about HSBC's
beliefs and expectations, are forward-looking statements. Words such as 'may',
'will', 'should', 'expects', 'targets', 'anticipates', 'intends', 'plans',
'believes', 'seeks', 'estimates', 'potential' and 'reasonably possible', or
the negative thereof, other variations thereon or similar expressions are
intended to identify forward-looking statements. These statements are based on
current plans, information, data, estimates and projections, and therefore
undue reliance should not be placed on them. Forward-looking statements speak
only as of the date they are made. HSBC makes no commitment to revise or
update any forward-looking statements to reflect events or circumstances
occurring or existing after the date of any forward-looking statements.
Written and/or oral forward-looking statements may also be made in the
periodic reports to the US Securities and Exchange Commission, summary
financial statements to shareholders, offering circulars and prospectuses,
press releases and other written materials, and in oral statements made by
HSBC's Directors, officers or employees to third parties, including financial
analysts.
Forward-looking statements involve inherent risks and uncertainties. Readers
are cautioned that a number of factors could cause actual results to differ,
in some instances materially, from those anticipated or implied in any
forward-looking statement.
These include, but are not limited to:
- changes in general economic conditions in the markets in which we
operate, such as new, continuing or deepening recessions, prolonged
inflationary pressures and fluctuations in employment levels and the
creditworthiness of customers beyond those factored into consensus forecasts;
the Russia-Ukraine war, the Israel-Hamas war and the broader conflict in the
Middle East and their impact on global economies and the markets where HSBC
operates, which could have a material adverse effect on (among other things)
our financial condition, results of operations, prospects, liquidity, capital
position and credit ratings; deviations from the market and economic
assumptions that form the basis for our ECL measurements (including, without
limitation, as a result of the Russia-Ukraine war, the Israel-Hamas war and
the broader conflict in the Middle East, inflationary pressures, commodity
price changes, and ongoing developments in the commercial real estate sector
in mainland China); potential changes in HSBC's dividend policy; changes and
volatility in foreign exchange rates and interest rates levels, including the
accounting impact resulting from financial reporting in respect of
hyperinflationary economies; volatility in equity markets; lack of liquidity
in wholesale funding or capital markets, which may affect our ability to meet
our obligations under financing facilities or to fund new loans, investments
and businesses; geopolitical tensions or diplomatic developments producing
social instability or legal uncertainty, such as the Russia-Ukraine war, the
Israel-Hamas war or the broader conflict in the Middle East (including the
continuation and escalation thereof) and the related imposition of sanctions
and trade restrictions, supply chain restrictions and disruptions, sustained
increases in energy prices and key commodity prices, claims of human rights
violations, diplomatic tensions, including between China and the US, the UK,
the EU, India and other countries, and developments in Hong Kong and Taiwan,
alongside other potential areas of tension, which may adversely affect HSBC by
creating regulatory, reputational and market risks; the efficacy of
government, customer, and HSBC's actions in managing and mitigating ESG risks,
in particular climate risk, nature-related risks and human rights risks, and
in supporting the global transition to net zero carbon emissions, each of
which can impact HSBC both directly and indirectly through our customers and
which may result in potential financial and non-financial impacts; illiquidity
and downward price pressure in national real estate markets; adverse changes
in central banks' policies with respect to the provision of liquidity support
to financial markets; heightened market concerns over sovereign
creditworthiness in over-indebted countries; adverse changes in the funding
status of public or private defined benefit pensions; societal shifts in
customer financing and investment needs, including consumer perception as to
the continuing availability of credit; exposure to counterparty risk,
including third parties using us as a conduit for illegal activities without
our knowledge; the discontinuation of certain key Ibors and the transition of
the remaining legacy Ibor contracts to near risk-free benchmark rates, which
continues to expose HSBC to some financial and non-financial risks; and price
competition in the market segments we serve;
- changes in government policy and regulation, including the monetary,
interest rate and other policies of central banks and other regulatory
authorities in the principal markets in which we operate and the consequences
thereof (including, without limitation, recent policies announced by Chinese
regulators and actions taken as a result of changes in government following
national elections in the jurisdictions where the Group operates); initiatives
to change the size, scope of activities and interconnectedness of financial
institutions in connection with the implementation of stricter regulation of
financial institutions in key markets worldwide; revised capital and liquidity
benchmarks, which could serve to deleverage bank balance sheets and lower
returns available from the current business model and portfolio mix; changes
to tax laws and tax rates applicable to HSBC, including the imposition of
levies or taxes designed to change business mix and risk appetite; the
practices, pricing or responsibilities of financial institutions serving their
consumer markets; expropriation, nationalisation, confiscation of assets and
changes in legislation relating to foreign ownership; the UK's relationship
with the EU, which continues to be characterised by uncertainty and political
disagreement, despite the signing of the Trade and Cooperation Agreement
between the UK and the EU, particularly with respect to the potential
divergence of UK and EU law on the regulation of financial services; changes
in government approach and regulatory treatment in relation to ESG disclosures
and reporting requirements, and the current lack of a single standardised
regulatory approach to ESG across all sectors and markets; changes in UK
macroeconomic and fiscal policy, which may result in fluctuations in the value
of the pound sterling; general changes in government policy (including,
without limitation, recent policies announced by Chinese regulators and
actions taken as a result of changes in government following national
elections in the jurisdictions where the Group operates) that may
significantly influence investor decisions; the costs, effects and outcomes of
regulatory reviews, actions or litigation, including any additional compliance
requirements; and the effects of competition in the markets where we operate
including increased competition from non-bank financial services companies;
and
- factors specific to HSBC, including our success in adequately
identifying the risks we face, such as the incidence of loan losses or
delinquency, and managing those risks (through account management, hedging and
other techniques); our ability to achieve our financial, investment, capital
and ESG targets, commitments and ambitions (including the positions set forth
in our thermal coal phase-out policy and our energy policy and our targets to
reduce our on-balance sheet financed emissions and, where applicable,
facilitated emissions in our portfolio of selected high-emitting sectors),
which may result in our failure to achieve any of the expected benefits of our
strategic priorities; evolving regulatory requirements and the development of
new technologies, including artificial intelligence, affecting how we manage
model risk; model limitations or failure, including, without limitation, the
impact that high inflationary pressures and rising interest rates have had on
the performance and usage of financial models, which may require us to hold
additional capital, incur losses and/or use compensating controls, such as
judgemental post-model adjustments, to address model limitations; changes to
the judgements, estimates and assumptions we base our financial statements on;
changes in our ability to meet the requirements of regulatory stress tests; a
reduction in the credit ratings assigned to us or any of our subsidiaries,
which could increase the cost or decrease the availability of our funding and
affect our liquidity position and net interest margin; changes to the
reliability and security of our data management, data privacy, information and
technology infrastructure, including threats from cyber-attacks, which may
impact our ability to service clients and may result in financial loss,
business disruption and/or loss of customer services and data; the accuracy
and effective use of data, including internal management information that may
not have been independently verified; changes in insurance customer behaviour
and insurance claim rates; our dependence on loan payments and dividends from
subsidiaries to meet our obligations; changes in our reporting frameworks and
accounting standards, which have had and may continue to have a material
impact on the way we prepare our financial statements; our ability to
successfully execute planned strategic acquisitions and disposals; our success
in adequately integrating acquired businesses into our business, including the
integration of SVB UK into our CMB business; changes in our ability to manage
third-party, fraud, financial crime and reputational risks inherent in our
operations; employee misconduct, which may result in regulatory sanctions
and/or reputational or financial harm; changes in skill requirements, ways of
working and talent shortages, which may affect our ability to recruit and
retain senior management and diverse and skilled personnel; and changes in our
ability to develop sustainable finance and ESG-related products consistent
with the evolving expectations of our regulators, and our capacity to measure
the environmental and social impacts from our financing activity (including as
a result of data limitations and changes in methodologies), which may affect
our ability to achieve our ESG ambitions, targets and commitments, including
our net zero ambition, our targets to reduce on-balance sheet financed
emissions and, where applicable, facilitated emissions in our portfolio of
selected high-emitting sectors and the positions set forth in our thermal coal
phase-out policy and our energy policy, and increase the risk of greenwashing.
Effective risk management depends on, among other things, our ability through
stress testing and other techniques to prepare for events that cannot be
captured by the statistical models it uses; our success in addressing
operational, legal and regulatory, and litigation challenges; and other risks
and uncertainties we identify in 'Risk - Managing risk' on page 48 of this
Earnings Release 3Q24.
Additional detailed information concerning important factors, including but
not limited to ESG-related factors, that could cause actual results to differ
materially from those anticipated or implied in any forward-looking statement
in this Earnings Release 3Q24 is available in our Annual Report and Accounts
for the fiscal year ended 31 December 2023, which was filed with the SEC on
Form 20-F on 22 February 2024.
Abbreviations
1H24 First half of 2024
1Q23 First quarter of 2023
1Q24 First quarter of 2024
2Q23 Second quarter of 2023
2Q24 Second quarter of 2024
3Q23 Third quarter of 2023
3Q24 Third quarter of 2024
4Q23 Fourth quarter of 2023
4Q24 Fourth quarter of 2024
9M23 First nine months of 2023
9M24 First nine months of 2024
ADR American Depositary Receipt
ADS American Depositary Share
AIBL Average interest-bearing liabilities
AIEA Average interest-earning assets
Banking NII Banking net interest income
Basel III Basel Committee's reforms to strengthen global capital and liquidity rules
Basel 3.1 Outstanding measures to be implemented from the Basel III reforms
BoCom Bank of Communications Co., Limited, one of China's largest banks
Bps Basis points. One basis point is equal to one-hundredth of a percentage point
CET1 Common equity tier 1
CMB Commercial Banking, a global business
CODM Chief Operating Decision Maker
Corporate Centre Corporate Centre comprises Central Treasury, our legacy businesses, interests
in our associates and joint ventures, central stewardship costs and
consolidation adjustments
CRR II The regulatory requirements of the Capital Requirements Regulation and
Directive, the CRR II regulation and the PRA Rulebook
CSM Contractual service margin
Dec December
EBA European Banking Authority
ECL Expected credit losses. In the income statement, ECL is recorded as a change
in expected credit losses and other credit impairment charges. In the balance
sheet, ECL is recorded as an allowance for financial instruments to which only
the impairment requirements in IFRS 9 are applied
ESG Environmental, social and governance
EU European Union
FDIC Federal Deposit Insurance Corporation
FTE Full-time equivalent staff
FVOCI Fair value through other comprehensive income
FX Foreign exchange
GAAP Generally accepted accounting principles
GBM Global Banking and Markets, a global business
GDP Gross domestic product
GEC Group Executive Committee
GPS Global Payments Solutions, the business formerly known as Global Liquidity and
Cash Management
Group HSBC Holdings together with its subsidiary undertakings
GTS Global Trade Solutions, the business formerly known as Global Trade and
Receivables Finance
Hong Kong Hong Kong Special Administrative Region of the People's Republic of China
HSBC HSBC Holdings together with its subsidiary undertakings
HSBC Bank plc HSBC Bank plc, also known as the non-ring-fenced bank
HSBC Holdings HSBC Holdings plc, the parent company of HSBC
HSBC UK HSBC UK Bank plc, also known as the ring-fenced bank
IAS International Accounting Standards
Ibor Interbank offered rate
IFRSs International Financial Reporting Standards
IVB HSBC Innovation Banking
Jun June
JV Joint venture
LCR Liquidity coverage ratio
Long term For our financial targets, we define long term as five to six years,
commencing 1 January 2024
Mainland China People's Republic of China excluding Hong Kong and Macau
Mar March
Medium term For our financial targets, we define medium term as three to four years,
commencing 1 January 2024
MENAT Middle East, North Africa and Türkiye
MSS Markets and Securities Services, HSBC's capital markets and securities
services businesses in Global Banking and Markets
Net operating income Net operating income before change in expected credit losses and other credit
impairment charges, also referred to as revenue
NII Net interest income
NIM Net interest margin
POCI Purchased or originated credit-impaired financial assets
PRA Prudential Regulation Authority (UK)
Revenue Net operating income before ECL
RoE Return on average ordinary shareholders' equity
RoTE Return on average tangible equity
RWA Risk-weighted asset
SAB Saudi Awwal Bank, which was formed from the merger between The Saudi British
Bank and Alawwal Bank
Sep September
SVB UK Silicon Valley Bank UK Limited, now HSBC Innovation Bank Limited
UAE United Arab Emirates
UK United Kingdom
US United States of America
WPB Wealth and Personal Banking, a global business
$m/$bn/$tn United States dollar millions/billions/trillions. We report in US dollars
Registered office and Group head office: 8 Canada Square, London, E14 5HQ,
United Kingdom
Web: www.hsbc.com
Incorporated in England with limited liability. Registered number 617987
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