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HSBC Continental Europe
Universal registration document and Annual Financial
Report 2024

Universal Registration Document and Annual Financial Report 2024 | 1

Contents
4 | Highlights
5 | Presentation of activities and strategy
13 | Consolidated Results
21 | Other information
22 | Corporate Governance report
52 | Statutory Auditors‘ special report on related-party agreements
55 | Sustainability Statement
164 | Risk
240 | Consolidated financial statements
248 | Notes on the consolidated financial statements
323 | Statutory Auditors’ report on the consolidated financial statements
328 | Parent company financial statements
333 | Notes on the parent company financial statements
359 | Statutory Auditors‘ report on the financial statements
366 | HSBC Continental Europe’s principal subsidiaries and investment policy
370 | Proposed resolutions to the Ordinary General Meeting to be held on 24 March 2025
371 | Information on HSBC Continental Europe and its share capital
375 | Persons responsible for the Universal Registration Document and for auditing the financial statements
377 | Cross-reference table
380 | Network of offices

2 | Universal Registration Document and Annual Financial Report 2024

Presentation of information

Presentation of information
This Universal Registration Document was filed on 19 February 2025 with the Autorité des Marchés Financiers (‘AMF’), as the competent
authority under Regulation (EU) n°2017/1129, without prior approval in accordance with Article 9 of that Regulation.
The Universal Registration Document may be used for the purposes of an offer to the public of securities or the admission of securities to
trading on a regulated market if supplemented by a securities prospectus and if necessary, a summary of and any amendments to the Universal
Registration Document. These documents are subject to approval by the AMF according to Regulation (UE) n°2017/1129.

Declaration (Annex II – 1.2)
The current Universal Registration Document was filed with the Autorité des Marchés Financiers (‘AMF’), as the competent authority under
Regulation (EU) n°2017/1129, without prior approval in accordance with Article 9 of that Regulation.
The current Universal Registration Document may be used for the purposes of an offer to the public of securities or the admission of securities
to trading on a regulated market if it is approved by the AMF including any amendments, and supplemented by a securities prospectus and a
summary hereof as approved according to the regulation (UE) n°2017/1129.

Reference to the Registration Document
This document, named Universal Registration Document, refers to the Universal Registration Document (Annual Report and Accounts) filed with
the AMF on 1 March 2024 under reference number D.24-0076.

Cautionary statement regarding forward-looking statements
The Universal Registration Document 2024 contains a number of forward-looking statements with respect to HSBC Continental Europe’s
contribution to the HSBC Group’s ESG ambitions, targets, commitments, and HSBC Continental Europe’s climate-related pathways, processes
and plans, and the methodologies and scenarios it uses, or intend to use, to assess its progress in relation to these (‘ESG-related forward-
looking statements’).
Statements that are not historical facts, including statements about the HSBC Group’s beliefs and expectations, are forward-looking statements.
Words such as ‘expects’, ‘anticipates’, ‘intends’, ‘plans’, ‘believes’, ‘seeks’, ‘estimates’, ‘potential’ and ‘reasonably possible’, variations of these
words and similar expressions are intended to identify forward looking statements. These statements are based on current plans, estimates and
projections, and therefore no undue reliance should be placed on them. Forward-looking statements apply only as of the date they are made.
HSBC Continental Europe 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 statement. Forward-looking statements involve inherent risks and uncertainties.
Readers are cautioned that a number of factors, including ESG-related factors, could cause actual results to differ, in some instances materially,
from those anticipated or implied in any forward-looking statement.
In preparing the ESG-related information contained in the Universal Registration Document 2024, HSBC Continental Europe has made a number
of judgements, estimations and assumptions, and the processes and issues involved are complex. HSBC Continental Europe has used ESG
(including climate) data, models and methodologies that HSBC Continental Europe considers, as of the date on which they were used, to be
appropriate and suitable to understand and assess climate change risk and its impact, to analyse financed emissions and operational and supply
chain emissions, to set ESG-related targets and to evaluate the classification of sustainable finance and investments. However, these data,
models and methodologies are often new, are rapidly evolving and are not of the same standard as those available in the context of other
financial information, nor are they subject to the same or equivalent disclosure standards, historical reference points, benchmarks or globally
accepted accounting principles. In particular, it is not possible to rely on historical data as a strong indicator of future trajectories in the case of
climate change and its evolution. Outputs of models, processed data and methodologies are also likely to be affected by underlying data quality,
which can be hard to assess and HSBC Continental Europe expects industry guidance, market practice, and regulations in this field to continue
to change. HSBC Continental Europe also faces challenges in relation to its ability to access data on a timely basis, lack of consistency and
comparability between data that is available and its ability to collect and process relevant data. Consequently, the ESG-related forward-looking
statements and ESG metrics disclosed in the Universal Registration Document 2024 carry an additional degree of inherent risk and uncertainty.
Due to the unpredictable evolution of climate change and its future impact and the uncertainty of future policy and market response to ESG-
related issues and the effectiveness of any such response, HSBC Continental Europe may have to re-evaluate its progress towards the HSBC
Group’s ESG ambitions, targets and commitments in the future, update the methodologies it uses or alter its approach to ESG (including
climate) analysis and may be required to amend, update and recalculate its ESG disclosures and assessments in the future, as market practice
and data quality and availability develop.

Universal Registration Document and Annual Financial Report 2024 | 3

No assurance can be given by or on behalf of HSBC Continental Europe as to the likelihood of the achievement or reasonableness of any
projections, estimates, forecasts, ambitions, targets, commitments, prospects or returns contained herein. Readers are cautioned that a number
of factors, both external and those specific to HSBC Continental Europe, could cause actual achievements, results, performance or other future
events or conditions to differ, in some cases materially, from those stated, implied and/or reflected in any ESG-related forward-looking
statement or metric due to a variety of risks, uncertainties and other factors (including without limitation those referred to below):
– Climate change projection risk: this includes, for example, the evolution of climate change and its impacts, changes in the scientific
assessment of climate change impacts, transition pathways and future risk exposure and limitations of climate scenario forecasts;
– ESG projection risk: ESG metrics are complex and are still subject to development. In addition, the scenarios employed in relation to them,
and the models that analyse them have limitations that are sensitive to key assumptions and parameters, which are themselves subject to
some uncertainty, and cannot fully capture all of the potential effects of climate, policy and technology-driven outcomes;
– Data availability, accuracy, verifiability and data gaps: HSBC Continental Europe’s disclosures are limited by the availability of high quality data
in some areas and its own ability to timely collect and process such data as required. Where data is not available for all sectors or
consistently year on year, there may be an impact to its data quality scores. While HSBC Continental Europe expects its data quality scores
to improve over time, as companies continue to expand their disclosures to meet growing regulatory and stakeholder expectations, there
may be unexpected fluctuations within sectors year on year, and/or differences between the data quality scores between sectors. Any such
changes in the availability and quality of data over time, or HSBC Continental Europe’s ability to collect and process such data, could result in
revisions to reported data going forward, including on financed emissions, meaning that such data may not be reconcilable or comparable
year-on year;
– Developing methodologies and scenarios: the methodologies and scenarios HSBC Continental Europe uses to assess financed emissions
and set ESG-related targets may develop over time in line with market practice, regulation and/or developments in science, where applicable.
Such developments could result in revisions to reported data, including on financed emissions or the classification of sustainable finance and
investments, meaning that data outputs may not be reconcilable or comparable year-on year; and
– Risk management capabilities: global actions, including HSBC Continental Europe’s own actions, may not be effective in transitioning to net
zero and in managing relevant ESG risks, including in particular climate, nature-related and human rights risks, each of which can impact
HSBC Continental Europe both directly and indirectly through its customers, and which may result in potential financial and non-financial
impacts to HSBC Continental Europe. In particular:
– HSBC Group may not be able to achieve i ts ESG ambitions, targets and commitments (including with respect to the positions set forth in
its thermal coal phase-out policy and its energy policy, and its targets to reduce its on-balance sheet financed emissions and, where
applicable, facilitated emissions in its portfolio of selected high-emitting sectors), which may result in its failure to achieve some or all of
the expected outcomes of its strategic priorities; and
– HSBC Continental Europe may not be able to develop sustainable finance and ESG-related products consistent with the evolving
expectations of its regulators, and its capacity to measure the environmental and social impacts from its financing activity may diminish
(including as a result of data and model limitations and changes in methodologies), which may affect HSBC Continental Europe
contributing to the HSBC Group’s ability to achieve its ESG ambitions, targets and commitments, including its net zero ambition, its
targets to reduce its on-balance sheet financed emissions and, where applicable, facilitated emissions in its portfolio of selected high-
emitting sectors and the positions set forth in its thermal coal phase-out policy and energy policy, and increase the risk of greenwashing.
Any forward-looking statements made by or on behalf of HSBC Continental Europe speak only as of the date they are made. HSBC Continental
Europe expressly disclaims any obligation to revise or update these ESG forward-looking statements, other than as expressly required by
applicable law.
The HSBC Group’s data dictionaries and methodologies for preparing the above ESG-related metrics and third-party limited assurance reports
can be found on: www.hsbc.com/who-we-are/esg-and-responsible-business/esg-reporting-centre.

4 | Universal Registration Document and Annual Financial Report 2024

Highlights

Highlights

For the year (€m) | 31 Dec 2024 | 31 Dec 2023 1
Net operating income before change in expected credit losses and other credit risk provisions in respect of continuing operations 2 | 3,349 | 3,720
Profit/(loss) before tax in respect of continuing operations | 930 | 1,325
Profit/(loss) for the year 3 | 603 | 908
Profit/(loss) attributable to shareholders of the parent company 3 | 568 | 883
At year end (€m) |  |
Total equity attributable to shareholders of the parent company | 14,642 | 12,342
Total assets | 265,008 | 282,977
Risk-weighted assets 4 | 63,297 | 59,515
Loans and advances to customers (net of impairment allowances) | 51,288 | 50,127
Customer accounts 5 | 97,065 | 93,890
Capital ratios %4 |  |
Common equity tier 1 | 18.8 | 15.7
Total Tier 1 | 21.1 | 18.2
Total capital | 23.5 | 20.7
Leverage Ratio | 5.4 | 4.2
Liquidity Ratios % |  |
Liquidity Coverage Ratio (‘LCR’)6 | 150 | 158
Net stable Funding Ratio (‘NSFR‘)6 | 137 | 141
Performance, efficiency and other ratios % |  |
Return on average ordinary shareholders’ equity 3,7 | 4.3 | 7.2
Pre-tax return on average risk-weighted assets 3,7 | 1.7 | 2.1
Cost efficiency ratio in respect of continuing operations 8 | 69.3 | 60.5
Ratio of customer advances to customer accounts | 52.8 | 53.4

1 In compliance with IFRS 5 standards, the comparatives have been represented to reflect discontinued operations related to the planned sale of the life insurance
business in France. This also includes discontinued operations related to the sale of the retail banking operations in France.
2 Net operating income before change in expected credit losses and other credit risk provisions is also referred to as revenue.
3 Balances are disclosed in respect of continuing and discontinued operations. Refer to Note 2 of the consolidated financial statements.
4 CET1 capital and RWAs (material holding) for Dec 23 has been restated to reflect the payment of AT1 dividends.
5 Following a customer classification error, the comparatives as at 31 December 2023 have been represented by EUR 1.4 billion between ’Deposits by banks’ and
’Customer accounts’.
6 In accordance with Capital Requirements Regulation ('CRR II') guidelines, the LCR is computed as a 12-month average and the NSFR as at period-end.
Additionally, the components of the LCR calculation have been represented to comply with EBA reporting requirements.
7 Definitions and calculations of other alternative performance measures are included in our ‘Reconciliation of alternative performance measures’ on page 20.
8 Cost efficiency is defined as total operating expenses divided by net operating income before change in expected credit losses and other credit risk provisions.

Performance highlights
At HSBC our ambition is to be the preferred and most trusted
international financial partner for our clients. In Continental Europe,
we are focused on serving corporate and institutional clients with a
particular focus on connecting them to international markets,
financing and facilitating trade within Europe and between Europe
and the rest of the world. We also serve international high and
ultra-high net worth clients of the HSBC Group through our private
banking business in Luxembourg.
In the second half of 2024, we accelerated our strategy by signing
an agreement to sell our private banking business in Germany and
a Memorandum of Understanding for the planned sale of our life
insurance business in France.
Our results in 2024 reflected growth in wholesale transaction
banking and financing, offset by the impact of lower interest rates
and our ongoing business transformation.
Profit before tax was EUR 930 million in 2024.
Net operating income before change in expected credit losses
and other credit impairment charge s was EUR 3,349 million,
down from EUR 3,720 million in 2023, driven by lower net interest
income following the sale of the retail banking operations in
France.
Commercial Banking revenues were down compared to last year,
driven by lower margins on customer deposits in Global Payment
Solutions, while Global Banking revenues were higher due to
growth in Investment Banking. Revenues in Markets and
Securities Services were stable, with growth in Equities and
Securities Financing offset by lower client activity in Global Debt
Markets.
Change in expected credit losses and other credit impairment
charges was a charge of EUR 97 million, compared with a charge
of EUR 145 million in 2023. The cost of risk fell to 19 basis points,
with the decrease compared to last year driven by lower stage 3
provisions, particularly in Global Banking.
Operating expenses were EUR 2,322 million, up from EUR 2,250
million in 2023, driven by the full-year consolidation of the financial
results of HSBC Private Bank (Luxembourg) S.A. and higher
infrastructure and technology costs. The increase was partly offset
by the end of the build-up of the Single Resolution Fund.
Profit after tax for the period was EUR 603 million in 2024, down
from EUR 908 million in 2023, and included the write-down of
French deferred tax assets for EUR 150 million.

Universal Registration Document and Annual Financial Report 2024 | 5

Presentation of activities and
strategy
About HSBC Group
With assets of USD 3.0 trillion and operations in 58 countries and
territories at 31 December 2024, HSBC is one of the largest banking
and financial services organisations in the world. Approximately 41
million customers bank with the HSBC Group and the HSBC Group
employs around 211,000 full-time equivalent staff.
HSBC's purpose and ambition
Guided by its purpose of opening up a world of opportunity', HSBC's
ambition is to be the preferred and most trusted international financial
partner and create shareholder value.
HSBC's business focus and strategic
priorities
During 2024, HSBC continued to implement its strategy, aligned to its
purpose, values and ambition.
In 2024, the HSBC Group served its customers through three global
businesses (Wealth and Personal Banking, Commercial Banking and
Global Banking and Markets) which focused on delivering growth in
areas where the HSBC Group has distinctive capabilities and
significant opportunities. Our 2024 operating segment results are
presented on this basis.
On 22 October 2024, HSBC Holdings plc announced that the HSBC
Group would simplify its organisational structure to help accelerate
delivery against its strategic priorities.
Effective 1 January 2025, the HSBC Group will operate through four
new businesses:
– Hong Kong
– UK
– Corporate and Institutional Banking ('CIB')
– International Wealth and Premier Banking ('IWPB')
HSBC's priorities
– Focus on our customers, delivering high satisfaction;
– Drive long-term growth by focusing on our strengths, increasing
our leadership and market share in the areas where we can
generate attractive returns; and
– Simplify our structure and operating model. Reshape and
rationalise our portfolio, to meet the needs of a fast-changing
world.
HSBC's values
HSBC's values define it as an organisation and are key to its long-term
success.
– We value difference
– We succeed together
– We take responsibility
– We get it done
HSBC in Europe
Europe is an important part of the global economy, accounting for
roughly 40 per cent of global trade and one-quarter of global Gross
Domestic Product ('GDP'). Europe is the largest trading region in the
world and Asia is Europe’s biggest and fastest growing external
trading partner (UNCTAD, IMF 2024).
HSBC Bank plc facilitates trade within Europe and between Europe
and other jurisdictions where the HSBC Group has a presence. HSBC
Bank plc exists to open up a world of opportunity for its customers by
connecting them to international markets. HSBC Bank plc is well
positioned to capitalise on this opportunity and play a pivotal role for
the HSBC Group.
H SBC Bank plc is the parent company of HSBC Continental Europe
and is one of Europe’s largest banking and financial services
organisations. HSBC Bank plc has assets of £727 billion at
31 December 2024, and employs around 10,700 people. HSBC Bank
plc is responsible for HSBC’s European business, apart from UK retail
and most UK commercial banking activity which, post ring-fencing, is
managed by HSBC UK Bank plc. HSBC Bank plc is present in 18
markets in Europe and operates as one integrated business with two
main hubs in London and Paris.
The London hub consists of the UK non-ring fenced bank, which
provides overall governance and management for the Europe region
as a whole and is a global centre of excellence for wholesale banking
for the HSBC Group.
HSBC Continental Europe is the dedicated Intermediate Parent
Undertak ing ('IPU') ) and principal HSBC bank entity for the European
Union and comprises the Paris hub and its European Union (‘EU’)
branches (Belgium, Czech Republic, Germany, Ireland, Italy,
Luxembourg, Netherlands, Poland, Spain, Sweden) as well as bank
subsidiaries in Malta (HSBC Bank Malta p.l.c.) and Luxembourg
(HSBC Private Bank (Luxembourg) S.A.).
HSBC Bank Plc’s strategy
HSBC Bank plc’s ambition is to be the leading international
transaction and financing bank for corporates and institutions
supporting our clients' cross-border needs, complemented by a
targeted wealth business, with an efficient operating model and a
robust control framework (see global businesses on page 7).

6 | Universal Registration Document and Annual Financial Report 2024

Presentation of activities and strategy

About HSBC Continental Europe
HSBC in Continental Europe
The European Union is home to some of the best performing, forward
thinking companies, ranging from entrepreneurial start-ups to
multinational corporates. The EU is also one of the world’s largest
trading blocs set in a dynamic market of approximately 450 million
consumers. Europe’s largest goods trade corridor is with Asia
(Eurostat, 2024); and Europe–United States is the largest bilateral
trade and investment relationship in the world (European
Commission, 2024).
HSBC Continental Europe (also referred to as the Bank) has a clear
and focused strategy that is consistent with the HSBC’s strategy:
building the leading international wholesale bank in Continental
Europe complemented by a targeted wealth and private banking
offering.
HSBC strategy implemented in
Continental Europe
Within this framework, HSBC Continental Europe’s ambition is based
on the following key principles.
Reshaping and focusing
HSBC Continental Europe is building a leaner, simpler bank with
a sharper strategic focus and an ambition to grow. HSBC
Continental Europe's franchise has been redesigned to support the
needs of international clients, streamlining its participation model and
refining product and service capabilities in support of our ambition to
be a leader in Corporate and Institutional Banking. In delivering against
its strategy, HSBC Continental Europe focuses on its strengths, and
this has been recognised by the market.
Euromoney, has named HSBC as Best Bank for Transaction Services
in Western Europe, in recognition of our commitment to drive better
outcomes for our customers as a leading international cash
management and payments provider.
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.
Additionally, HSBC Continental Europe’s subsidiaries, HSBC
Assurances Vie (France) and HSBC Global Asset Management
(France), have entered into distribution agreements with the buyer.
In accordance with the terms of the sale, HSBC Continental Europe
retained a portfolio of EUR 7.1 billion of home and other loans at the
time of the sale. During the fourth quarter of 2024 HSBC Continental
Europe began to actively market this retained loan portfolio for sale.
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 Wealth and Personal Banking ('WPB') to
Corporate Centre, with effect from 1 January 2024.
On 11 September 2024, HSBC Bank Malta p.l.c. (‘HSBC Malta’)
informed its Shareholders that HSBC Holdings plc had informed the
Board of Directors of HSBC Malta that it will undertake a strategic
review of its indirect 70.03 per cent shareholding in HSBC Malta. The
review is at an early stage and no decisions have been made.
On 23 September 2024, following a strategic review, HSBC
Continental Europe announced that it had signed 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.
On 29 November 2024, HSBC Continental Europe completed the sale
of its shares in HSBC Epargne Entreprise to Natixis Interépargne. A
commercial agreement is now in place between Natixis Interépargne
and HSBC Global Asset Management (France).
On 20 December 2024, following a strategic review of its French
Insurance business, HSBC Continental Europe signed a Memorandum
of Understanding with Matmut Société d'Assurance Mutuelle for the
planned sale of life insurance business in France for EUR 925 million.
The planned sale is subject to the finalisation of information and
consultation processes with the parties’ respective employees’ works
councils. Completion of the planned sale would also be subject to
obtaining relevant regulatory and competition approvals and is
expected to occur in the second half of 2025.
For further details on disposals please see note 1.3 in the ‘Notes on the
consolidated financial statements’.
Improving operational excellence
HSBC Continental Europe continues to transform it operations,
focusing on customer experience whilst driving long-term growth.
The Bank remains focused on its core strengths in transaction
banking. Within Global Trade Solutions ('GTS') Europe, we aim to help
make trade easier, faster and safer while seeking to deliver
sustainable and profitable growth. The focus is on future-proofing
solutions and digitising client services and modernising technology
which reduces system issues that impact the client experience.
During 2024, HSBC Continental Europe deployed enhancements to
HSBCnet, the Bank’s digital channel and its Application Programming
Interface (API) driving automation and embedded finance solutions.
HSBC Continental Europe continues to support our clients opting to
use bank agnostic platforms that provide trade finance solutions. At
the end of 2024, 70% of trade transactions across all channels within
HSBC Continental Europe were conducted digitally and we continue
to see an increase in clients adopting digital solutions.
Within Global Payments Solutions ('GPS'), in the first half of 2024
improvements have been made to self service functionality in
HSBCnet such as SEPA ('Single Euro Payments Area') payments in
France, Germany, Belgium and Italy and central bank account
validation (‘C-BAV’) across the region, allowing clients to more easily
identify the recipient of a payment. Enhancements have also been
deployed in several EU markets to aid staff in processing and
resolving client queries more efficiently.
Within Global Banking and Markets ('GBM'), HSBC Continental
Europe continues to invest in building capabilities in digital assets and
currencies via HSBC's digital asset platform, HSBC Orion. Following
the launch of the platform in Luxembourg in 2023, Deloitte awarded
HSBC Orion ‘Platform Enabler of the Year’ in March 2024. In
November 2024 HSBC Orion was connected to the Banque de
France’s DL3S platform, enabling settlement of digital bonds using
wholesale central bank digital currency.
Private Banking remains committed to enhancing its digital offering,
with improved internal platforms and client facing digital capabilities to
support the delivery of excellent client service.

Universal Registration Document and Annual Financial Report 2024 | 7

In the second quarter of 2024 the Dynamic Risk Assessment (‘DRA’)
tool was implemented in Malta and France. The DRA tool is a key part
of HSBC's Financial Crime control framework, enabling more precise
detection of financial crime through the use of AI and machine
learning. In the fourth quarter of 2024 HSBC Continental Europe
deployed the Global Social Network Analysis tool ('GSNA') in Ireland,
Malta, Poland and Spain. GSNA is replacing HSBC’s former
correspondent banking transaction monitoring detection system.
Further GSNA deployments are scheduled for 2025.
HSBC Continental Europe’s approach to technology and operations is
aligned to the HSBC Group which is also transforming its operations
to elevate the customer experience using AI, machine learning and
automation to deliver faster, more personalised and seamless service.
Our Global Businesses in 2024
During 2024, HSBC Continental Europe managed its products and
services through its three global businesses: Global Banking and
Markets, which comprises three reportable segments Markets &
Securities Services, Global Banking, and GBM Other, Commercial
Banking, and Wealth and Personal Banking; and the Corporate Centre
(comprising certain legacy assets, central stewardship costs, and
interests in its associates and joint ventures). These segments are
supported by Digital Business Services, and 11 global functions,
including Risk, Finance, Compliance, Legal, and Human Resources.
Global Banking and Markets (‘GBM’)
Markets & Securities Services ('MSS')
MSS is a product group, operating from 10 European countries with
the hub in Paris, that supports all HSBC’s clients, from Global Banking
to Commercial Banking, Wealth and Private Banking.
The business offers clients a range of products and services across
asset classes and geographies, through dedicated sales, trading,
research and digital and data (Quants) teams. We provide corporate
and institutional clients with access to products and services in
Foreign Exchange (Cash and Derivatives), Global Debt Markets
(Primary Fixed Income, Market Making and Structured products),
Equities (Cash and Derivatives including Warrants) and Securities
Financing (Fixed Income Repo, Equity Finance and Client Clearing).
Additionally, our Securities Services business provides our clients
with global solutions in the areas of securities safekeeping, clearing
and depository services and is one of the leader in the German
domestic market.
The MSS Continental European business plays a key role in providing
cross-asset services, bridging emerging and developed markets, and
collaborating with other global businesses to provide clients across
the Group with bespoke products and solutions that support their
growth and net zero ambitions. MSS in HSBC Continental Europe is
the Group's strategic platform for euro-denominated rates products,
with its Treasury Securities expertise and primary dealer position in
the debt markets. It has also built extensive risk management
capacities, in particular for Equities products in European stocks.
MSS continues to invest in technology and digital transformation with
dedicated Quants teams in Equities and Rates to enhance our clients’
experience and improve our operational efficiency.
Global Banking ('GB')
GB delivers tailored financial solutions to major government,
corporate, financial institution and institutional clients worldwide,
opening up opportunities through the strength of its global network
and product expertise.
GB provides a comprehensive suite of services including leverage and
acquisition financing, advisory, capital markets, issuer services, trade
services and global payment services.
Operating across HSBC Continental Europe's markets, Global Banking
teams take a client-centric approach bringing together relationship and
product expertise to deliver financial solutions customised to suit
clients’ growth ambitions and financial objectives. GB works closely
with its business partners in all business lines, to provide a range of
products and seamless services to meet the needs of wholesale
clients. GB in HSBC Continental Europe operates as an integral part of
the global business and contributes significant revenues to other
regions through its client base in Continental Europe, and in turn
receives business from HSBC’s clients in other regions. In Continental
Europe, GB's objective is to be a leading bank in transaction banking
and a key partner to our clients for advisory, financing and capital
markets transactions.
GBM Other
GBM Other comprises activities that are outside of the perimeter of
MSS and GB, primarily Principal Investments ('PI') and GBM’s share
of the Bank’s Treasury function.
HSBC Continental Europe's PI portfolio comprises two elements;
(i) investments in third party private equity funds; and (ii) legacy direct
investments. PI in HSBC Continental Europe is focused on reducing
the portfolio size in line with HSBC Group's risk appetite and strategy.
Commercial Banking (‘CMB’)
CMB has a clear strategy to be the leading international corporate
bank in Europe. We connect our Continental European customers to
our global network of relationship managers and product specialists to
support their growth ambitions internationally, and we support global
multinationals with growing their European subsidiaries through our
Continental Europe based team of relationship managers and product
specialists. Commercial Banking Continental Europe contributes
significant revenues to other regions through our European client
base and draws benefit from the client network managed outside
Europe.
Our product range facilitates tailoring solutions to meet clients’
requirements across lending and transactional banking, supported by
strong collaboration with Global Banking and Markets to deliver
expertise in markets and investment banking products. Our Global
Payments Solutions and Global Trade Solutions teams also provide
treasury and trade finance solutions to Global Banking clients.

8 | Universal Registration Document and Annual Financial Report 2024

Presentation of activities and strategy

Wealth and Personal Banking (‘WPB’)
WPB supports customers across HSBC Continental Europe with their
financial needs through Wealth Management, Insurance, Asset
Management, and Private Banking. In addition, HSBC Continental
Europe provides Retail Banking services in Malta through its
subsidiary HSBC Malta p.l.c. Following the sale on 1 January 2024 of
its retail banking operations in France, HSBC Continental Europe
continues to support clients in France with their financial needs
through a focused proposition in Insurance, Asset Management and
Private Banking.
In Malta, in addition to asset management and insurance products,
HSBC Continental Europe continues to offer its core retail proposition,
with a full suite of products including personal banking products, such
as current and savings accounts, wealth management, insurance,
mortgages and unsecured loans, credit cards, debit cards and local
and international payment services.
HSBC Continental Europe's Private Banking business serves high net
worth and ultra-high net worth international clients of the Group with
investment management, private wealth solutions, and bespoke
lending for customers with more sophisticated and international
requirements. HSBC's primary booking centre in Europe is HSBC
Private Bank (Luxembourg) S.A.
HSBC Continental Europe offers a range of insurance products
through its subsidiaries in France and Malta. The Insurance business
in France, HSBC Assurances Vie (France), offers a wide range of
insurance solutions and services designed to meet the needs of
individuals, professionals, and businesses in terms of life insurance,
retirement savings, credit protection insurance and personal
protection. Following the sale of the French retail banking activity to
CCF on 1 January 2024, CCF is now the main distributor of HSBC
Assurances Vie (France)'s products in France.
HSBC Continental Europe has Asset Management businesses in
France, Germany and Malta which work to unlock sustainable
investment opportunities for investors. The Asset Management
business serves clients in France, Germany, Malta, Belgium Spain,
Greece, Italy, Luxembourg, Netherlands, Portugal, Switzerland,
Austria and Nordics, through its subsidiaries in France, Germany,
Malta and manages assets for a range of clients, from large
institutional investors to commercial and corporate clients, financial
intermediaries, retail and private banking clients.
Please see page 263 for detail of the planned sale of the private
b anking business in Germany signed on 20 September 2024 and the
Memorandum of Understanding signed on the 20 December 2024 for
planned sale of life insurance business in France.

Universal Registration Document and Annual Financial Report 2024 | 9

Opening up a world of opportunities
Our history

Creation of Banque Suisse et Francaise
u | Founded by Ernest Meja and Benjamin Rossier
u | Developed as a commercial bank in France
u | Adopted the name Credit Commercial de France in 1917 following the merger 'Mith Maison Aynard et Fils and Caisse de Credit de Nice

Building a strong universal French bank
u | HSBC Group acquired CCF in 2000 and listed on the Paris Stock Exchange
u | Established a strong platform in one of the main European markets in the Eurozone
u | CCF SA became HSBC France in November 2005

Repositioning our activities
u | Focused wholesale activities on strategic international clients and relevant product proposition
u | Prepared for the disposal of French retail operations in France
u | Acquired HSBC Malta, HSBC Germany and HSBC Private Bank (Luxembourg) S.A. to become the Group’s European Intermediate Undertaking (‘IPU’)
u | Disposal of HSBC Continental Europe’s branch operations in Greece

1894
1900-
2000
2000-
10
2018-
21
2024-
26
2022-
23

Development of CCF
u | Grew externally through the acquisition of other banks in the first half of the century
u | Expanded the number of branches (200+) during the sixties

Fulfilling our European mission
u | From HSBC France to HSBC Continental Europe following the UK departure from the European Union (client migration, product setup, and legal entity restructuring)
u | Ambition to be the leading international wholesale bank in Europe, focused on clients that value our network

Towards growth…
u | Disposal of HSBC Continental Europe’s retail operations in France on 1 January 2024
u | Signed agreement with BNP Paribas for the planned sale of the private banking business in Germany
u | MoU signed with Matmut SAM for the planned sale of life insurance business in France
u | Continuing to support the growth of the international corporate and institutional bank

Our resources

u | c. 519,000 clients 1 from personal banking customers, small and medium companies to corporate clients
u | c. 7,544 employees 2 supporting our customers through our expertise and know-how
u | Future Skills and Resilience programmes

u | AA- / A1 / A+ top ratings from the three main rating agencies
u | 130 years of expertise in France*
u | Presence in 12 countries supporting clients across borders

u | Sustainable multi- partnerships in ESG
u | Dedicated Sustainable Finance origination and structuring team

u | 2,049 IT applications 3 of which 69 per cent are Group applications
u | Eco-responsible headquarters
u | Effective and compliant Business Continuity Lifecycle Controls

u | €3,349m Net Operating Income 4
u | 18.8 per cent CET1 ratio with a solid financial structure
u | €265bn total assets

Our commitments
Sustainability
Supporting the transition to net zero is a key
priority for HSBC.
We believe the transition to net zero will help
make the global economy stronger and more
resilient against mounting climate impacts. We
believe supporting our customers’ transition both
benefits their business and helps generate long-
term financial returns for our shareholders.
Acting Responsibly
Focused on operating a strong and sustainable
business, putting the customer first, valuing good
governance, and giving our stakeholders
confidence in how we do what we do.
Our conduct approach guides us to do the right
thing and to focus on the impact we have on our
customers and the financial markets in which we
operate. Customer experience is at the heart of
how we operate. We aim to act responsibly and
with integrity across the value chain.
Financial Crime
Help protect the integrity of the global financial
system.
We have made, and continue to make, significant
investments in our ability to detect, deter, and
prevent financial crime.
We value
differences
We succeed
together
Our Values
We take
responsibility
We get it
done
Our
ambition
Be the preferred
international
financial partner
for our clients,
supporting them
and the sustained
success of our
communities
1 c. 482,363 active cus tomers in WPB and c. 37,082 Wholesale
clients.
2 Aligned to Table of Average number of persons employed by
HSBC Continental Europe during the year, page 280.
3 1,410 apps consumed from the Group, 639 apps owned in the
country in 2024.
4 Net operating income before change in expected credit losses
and other credit impairment charges, in respect of continuing
operations in accordance with IFRS 5.
HSBC Continental Europe

10 | Universal Registration Document and Annual Financial Report 2024

Presentation of activities and strategy

Opening up a world of opportunities
Our added value for clients
We want our clients to achieve their goals, building
together a better and sustainable future through
responsible and innovative financial solutions:
Network and
Balance Sheet
Committing our
balance sheet
and providing
access to
high growth
markets
Grow their activities
in the European single market
Transaction
Banking
Providing products to
help clients trade and
invest internationally
Client Experience
and Expertise
Making life easier for our
clients while helping them
develop a sustainable
future
Access
international markets

In Continental Europe, WPB serves customers – from individuals to high-net-worth families – with their financial needs through
u | Private Banking
u | Retail Banking
u | Wealth Management
u | Insurance
u | Asset Management

CMB has a clear strategy to be the leading international corporate bank in Europe. CMB helps connect European customers to HSBC’s international network and product specialists, supporting their growth ambitions and targets:
u | Working capital, term loans
u | Treasury and Trade solutions
u | Expertise in Financing in collaboration with our GB and MSS colleagues

WPB
CMB
GB
MSS
Our clients and products 1

GB delivers tailored financial solutions to major government, corporate and institutional clients worldwide. GB provides a comprehensive suite of services, including:
u | Corporate Banking
u | Advisory, Capital Markets & Issuer Services
u | Trade and Payment solutions in collaboration with the GTS and GPS teams

MSS is a product group that services all of the Bank’s clients. MSS offers clients a range of services across asset classes and geographies supported by dedicated sales, traders and research teams:
u | Global Debt Markets
u | Equities
u | FX
u | Emerging Markets Rates and Commodities

Sustainable
Finance
Act Responsibly
Governance and
Security
Client
Satisfaction
Employability
and Inclusion
$124.9bn contribution to
Group’s sustainable
finance 2030 ambition 2
96.8 per cent of internal
staff completed training on
Conduct and Financial
Crime risk
98 per cent of suppliers
signed the code of Conduct
in the renewal process
98.3 per cent controls
assessed effective and
compliant
0 cybersecurity incident
over the last 12 months
Market Leader and Best
in Service for Trade
Finance in four European
markets award
Western Europe's Best
bank for transaction services
by Euromoney
2.4 per cent attrition rate 3 in
our talent pool
28.8 per cent representation
of women in senior executive
positions
*Only applies to France geographical perimeter
Our impact
1
2
3
4
5
HSBC Continental Europe
1 GBM Other: activities outside of the MSS and GB perimeter,
primarily Principal Investments and GBM’s share of the Bank’s
Markets Treasury function.
2 Cumulative contribution to Group target since 2020 of USD
124.9bn representing 32 per cent of total Group progress (in its
ambition to provide between USD 750 billion and USD 1,000 billion
in financing and investment).
Obtained a certification of Top
Employer by the Top Employers
Institute for its commitment to
promoting an inclusive and
supportive company culture
co

Universal Registration Document and Annual Financial Report 2024 | 11

Geopolitical, economic and regulatory background and outlook
E conomic background
Global
Global economic activity was resilient in 2024, led by the services
sector while manufacturing activity was by contrast, comparatively
weak.
Regionally, the US economy outperformed, on the back of robust
consumer demand. Concerns about recession risks and the strength
of the labour market emerged in the first half of the year, with the
unemployment rate rising from 3.7 per cent in January to 4.2 per cent
in July. However, this rate stabilised in the second half of the year,
ending up at 4.1 per cent in December 2024. In mainland China,
activity data was more sluggish, with the property sector remaining a
key drag on domestic demand. However, Chinese exports remained
relatively dynamic and provided a key support to Gross Domestic
Product 'GDP' growth. In Europe, economic activity was relatively
subdued, but the picture was quite diverse across the different
countries.
Global inflation has generally continued to recede in 2024 but at a
slower pace and in a less linear way than in the previous year. The
factors that drove disinflation in 2023 (easing supply constraints,
fading energy shock and favourable base effects) have become less
prominent and services inflation remained relatively sticky in many
countries, reflecting the persistent tightness in labour markets.
Against that backdrop, the progress on disinflation has been much
more mixed between countries.
That said, progress on disinflation still led most major central banks to
start their easing cycles in 2024, even if they largely continued to act
with caution. Among developed economies, the Swiss National Bank
delivered a first rate cut of 25 basis points in March. It was followed
by the European Central Bank in June, the Bank of England in August
and the Federal Reserve in September. The ECB and the Federal
Reserve have lowered their policy rates by a total of 100 basis points
in 2024. The Bank of England was more prudent and cut its policy rate
by 50 basis points. G reater confidence on the sustainability of the rise
in inflation and wages led the Bank of Japan to exit its negative rates
policy, by raising its policy rate by 35 basis points in 2024, from -0.10
per cent to 0.25 per cent.
Eurozone
Eurozone GDP grew albeit at a very low level in the three first
quarters of 2024 (0.3 per cent on average per quarter). However, this
evolution masked very mixed trends for the largest countries.
The German economy has remained behind others, as its industrial
sector has continued to be hurt by cyclical factors (weak external
demand, especially from China) but also more structural
developments (relative increase in energy costs, difficult transition
towards electric vehicles for the automotive sector). Moreover, there
have been some signs that the weakness in the manufacturing sector
may start to affect services amid a softening labour market.
In contrast, Spain has been a strong performer, with GDP growth
exceeding 0.8 per cent per quarter in each of the three first quarters
of the year. The Spanish economy benefited from a buoyant services
sector on the back of robust tourism activity and strong job creation.
Besides, the manufacturing sector also performed well, helped by
lower energy costs relative to several other European countries
thanks higher reliance on renewable energy.
France has been in an intermediary position. Economic growth was
resilient in the three first quarters of the year, helped by a recovery in
net trade (led in particular by the aeronautic sector).
The Olympic Games in Paris also provided a temporary boost to
economic activity during the summer. At this stage, there have been
little signs of economic slowdown caused by the rise in uncertainty
on the political and fiscal situation, following the dissolution of the
National Assembly and the lack of clear majority emerging after the
snap legislative elections held in June and July. However, towards the
end of the year, some leading indicators pointed to a marked drop in
economic confidence, both for businesses and households.
Eurozone annual inflation fell from 5.5 per cent in 2023 to 2.4 per cent
in 2024. The core measure (excluding food, alcohol, tobacco and
energy) dropped from 5.0 per cent to 2.9 per cent. However, the path
of disinflation was non-linear. Inflation decreased to 2.4 per cent year-
on-year in December 2024, from 2.9 per cent one year ago. But it
reached a trough of 1.7 per cent in September, before picking up due
to energy prices. At the same time, core inflation fell to 2.7per cent in
December 2024 from 3.4 per cent one year ago.
Progress on disinflation allowed the ECB to start its easing cycle in
June, in cutting all its key policy rates by 25 basis points (from 4.00
per cent to 3.75 per cent for the key deposit rate). Thereafter, the
ECB lowered again its policy rates by 25 basis points in September,
October and December, leading to a deposit rate of 3.00 per cent at
the end of the year.
Economic outlook
Policy uncertainty for 2025
The numerous national elections held in 2024 led to a very uncertain
global economic backdrop for 2025. The US economic policy remains
the main source of uncertainty, given the victory of Donald Trump and
the clean sweep of the Republican party at the November elections.
Donald Trump pledged for significant economic changes, including tax
cuts, higher trade tariffs and restrictions on immigration flows. Some
measures have been announced by decree soon after the US
presidential inauguration on 20 January. However, a fiscal reform is
not expected to be passed before the second quarter of 2025.
Sweeping increases in US tariffs could have a significant negative
impact on trade in the rest of the world, especially in China. However,
Chinese authorities have opened the door to new stimulus measures
to support domestic demand, via looser monetary and fiscal policy.
Support to the housing market should also continue to be increased.
In Europe, the return of EU fiscal rules means that countries should
start consolidating their public finances in 2025, after several years of
fiscal expansion through the pandemic and energy crisis. However,
risks of fiscal slippage remain significant, particularly in the countries
facing larger adjustment. The fiscal outlook in France is especially
difficult to predict, given the uncertain political environment. The
public deficit target for this year has already been revised to 5.4 per
cent of GDP, instead of 5 per cent targeted by the previous
government. Conversely, fiscal policy could become more
expansionary in Germany, after the federal elections planned on
23 February.
Outside of the EU, a new fiscal framework allowed the UK
government to announce a large package of spending, investment
and taxes in October 2024. However, any disappointment on growth
or any increase in rates could force further fiscal restraint for the
government.

12 | Universal Registration Document and Annual Financial Report 2024

Presentation of activities and strategy

Growth risks
The central scenario of HSBC's economists assumes global GDP
growth will remain steady at 2.7 per cent in 2025. However,
prospects of higher tariffs led them to cut their growth forecast for
world export volume from 3.5 per cent to 1.9 per cent. Regionally, the
US economy could continue to outperform, with US GDP growth
decelerating to 2.2per cent (from 2.8 per cent in 2024), still remaining
above potential growth expectations. However, growth could be even
stronger if the planned fiscal stimulus proved to be more significant
than expected. In mainland China, stronger support measures should
not prevent GDP growth from slowing to 4.5per cent in 2025 (from
4.9 per cent in 2024). However, an escalation in trade tensions with
the US (and possibly elsewhere in case of trade diversion) represents
a significant downside risk for Chinese economic activity.
In the eurozone, GDP growth is expected to improve moderately to
0.9 per cent in 2025, from 0.7 per cent in 2024 reflecting a pickup in
consumer demand, led by the improvement in real wages. That said,
political uncertainty in some countries like France and Germany could
lead consumers to remain cautious. GDP growth is expected to
decelerate to 0.7 per cent in France and to remain subdued in
Germany (at 0.3 per cent). In contrast, Spanish growth is expected to
remain quite strong, at 2.6 per cent in 2025 (from 3.1 per cent in
2024).
Central banks' actions
The lack of visibility on economic policies is also leading to a very
uncertain backdrop for major central banks. In the US, the Fed already
signalled in December 2024 a more cautious stance on rate cuts
expected in 2025, due to latest data on inflation and the labour
market. Some policies enacted by the Trump administration, such as
trade tariffs, immigration restrictions or fiscal stimulus, could lead to
higher inflation risks. If such risks materialise, the Federal Reserve
could adopt an even more cautious stance. HSBC economists expect
the Federal Reserve to cut further its policy rate by 75 basis points in
2025 but risks are biased toward smaller cuts given the inflation risks
posed by the measures pledged by Donald Trump.
In the eurozone, rate cuts from the ECB look more certain, given the
more fragile growth outlook. However, the absence of widespread
recession and the stickiness of services inflation should still lead the
ECB to remain cautious. HSBC economists expect the ECB to
maintain the pace of 25 basis points cuts at every meeting until April,
when the key deposit rate would reach 2.25 per cent, a level that
would be close to estimates of the neutral rate. There is a risk that if
downside risks on growth materialise, further rate cuts from the ECB
could be required.
Regulatory environment
Basel III Reforms
The revised Capital Requirements Regulation (‘CRR3’) implementing
the Basel 3 reforms package entered into force in the EU on the
1 January 2025. The reforms introduce substantial changes to the
methodologies that banks are required to follow to calculate risk-
weighted assets for credit, operational and credit valuation
adjustment risks. They also includes an output floor that caps the
benefit from using internal models, which is being phased in over a
five-year transitional period. Over the coming years, the EBA is also
set to deliver around 140 mandates aimed at developing a suite of
regulatory standards, guidelines, and reports for the sector.
The European Commission (‘EC’) has elected to delay the
implementation of the market risk elements of the package until
1 January 2026.
HSBC Continental Europe will also be affected by the implementation
of the Basel 3 reforms in the UK to the extent it contributes to the
HSBC Group’s consolidated capital requirements. In the UK, the
Prudential Regulation Authority has postponed the implementation
timeline of the Basel 3 Reforms to 1 January 2027.
Capital Requirements Directive
In June 2024, the European Commission enacted a series of
amendments to the Capital Requirements Directive (‘CRD VI’). The
amending legislation introduces new regulatory requirements for ESG
and cryptoasset-related risks across the prudential framework, some
adaptations to Pillar 2 and capital buffer requirements to account for
the changes to Pillar 1 requirements subsequent to CRR3. It also
includes additional supervisory powers for national supervisors,
particularly restrictions on cross-border activities provided by non-EU
banking entities to EU-based clients, subject to certain exemptions.
EU member states have until the 10 January 2026 to transpose the
CRD VI rules into national law, and an additional one-year transition
period for provisions relating to cross-border services and third-
country branches.
Capital buffers
In December 2024, the Haut Conseil de Stabilité Financière
maintained the countercyclical capital buffer rate at 1 per cent. HSBC
Continental Europe retained its designation as an Other Systemically
Important Institution with an applicable capital buffer rate of 0.25 per
cent.
Environmental, social and governance (‘ESG’) risks
Guidelines on the management of ESG risks
The EU’s Basel 3 reforms package includes rules related to the
management of ESG risks and, in January 2025, the EBA published its
final guidelines on the management of ESG risks as part of its
mandate set out in the EBA’s roadmap on sustainable finance. The
guidelines apply from 11 January 2026 and set out the minimum
standards and reference methodologies for banks for the
identification, measurement, management, and monitoring of ESG
risks, including through plans aimed at ensuring their resilience in the
short, medium and long term. The guidelines also specify
requirements regarding the internal processes and ESG risk
management arrangements in accordance with the CRD VI.
Additionally, the EBA has launched a consultation on draft guidelines
for ESG scenario analysis to complement its guidelines on the
management of ESG risks.
EU Corporate Sustainability Reporting Directive ('CSRD')
The CSRD entered into force in January 2023 and broadened the
scope of application of the Accounting Directive in the EU and also
includes non-EU entities, subject to meeting certain criteria. Under
the CSRD, EU and certain non-EU entities are expected to report
sustainability information in accordance with the European
Sustainability Reporting Standards (‘ESRS’) that were enacted in
December 2023 with an effective date of 1 January 2024. In addition,
the CSRD mandates the EC to adopt sustainability reporting standards
for non-EU Groups (‘NESRS’) by 30 June 2026. Non-EU Groups with
significant operations in the EU that meet certain threshold criteria are
expected to report under the NESRS from 2029 for the financial year
2028.
In November 2024, EFRAG as technical advisor to the EC published a
first working draft of the NESRS with a consultation period expected
to begin in Q1 2025 and final draft standards expected to be delivered
to the EC by the end of 2025.

Universal Registration Document and Annual Financial Report 2024 | 13

Consolidated Results
Use of alternative performance measures
HSBC Continental Europe's reported results are prepared in
accordance with International Financial Reporting Standards (‘IFRS
Accounting Standards’) as detailed in the Financial Statements
starting on page 240.
In measuring our performance, the financial measures that we use
include those derived from our reported results in order to eliminate
factors that distort period-on-period comparisons.
These are considered alternative performance measures. All
alternative performance measures are described and reconciled to the
closest reported financial measure when used.
The global business segmental results are presented in accordance
with IFRS 8 ‘Operating Segments’.

Consolidated income statement

| 31 Dec 2024 | 31 Dec 2023 1
| €m | €m
Continuing operations |  |
Net interest income | 1,498 | 2,191
Net fee income | 1,214 | 1,194
Net income from financial instruments held for trading or managed on a fair value basis | 484 | 259
Net income from assets and liabilities of insurance businesses, including related derivatives, measured at fair value through profit and loss | 40 | 36
Changes in fair value of long-term debt and related derivatives | 3 | 16
Changes in fair value of other financial instruments mandatorily measured at fair value through profit and loss | 63 | 14
Gains less losses from financial investments | (2) | 1
Insurance finance income/(expense) | (38) | (31)
Insurance service result | 18 | 11
Gains/(losses) recognised on assets held for sale | (11) | —
Other operating income/(expense) | 80 | 29
Net operating income before change in expected credit losses and other credit impairment charges 2 | 3,349 | 3,720
Change in expected credit losses and other credit impairment charges | (97) | (145)
Net operating income | 3,252 | 3,575
Total operating expenses | (2,322) | (2,250)
Profit/(loss) before tax | 930 | 1,325
Tax expense | (406) | (346)
Profit/(loss) after tax in respect of continuing operations | 524 | 979
Profit/(loss) after tax in respect of discontinued operations | 79 | (71)
Profit/(loss) for the period | 603 | 908
– shareholders of the parent company | 568 | 883
– non-controlling interests in respect of continuing operations | 35 | 25
– non-controlling interests in respect of discontinued operations | — | —

1 In compliance with IFRS 5 standards, the comparatives have been represented to reflect discontinued operations related to the planned sale of the life insurance
business in France. This also includes discontinued operations related to the sale of the retail banking operations in France.
2 Net operating income before change in expected credit losses and other credit impairment charges is also referred to as revenue.

14 | Universal Registration Document and Annual Financial Report 2024

HSBC Continental Europe Consolidated Results

Continuing Operations
Net interest income was EUR 1,498 million in 2024, down from
EUR 2,191 million in the previous year driven by the impact of the
sale of retail banking operations in France, coupled with increasing
interest expense on customer deposits in Global Payment Solutions.
Net fee income was EUR 1,214 million in 2024, increasing from
EUR 1,194 million in 2023, due to the acquisition of HSBC Private
Bank (Luxembourg) S.A. and higher Investment Banking fees.
Net income from financial instruments held for trading or
managed on a fair value basis was EUR 484 million in 2024, up
from EUR 259 million in 2023. The increase reflected market volatility
and changes in interest rates impacting derivatives.
Net income from assets and liabilities of insurance businesses,
including related derivatives, measured at fair value through
profit and loss was a EUR 40 million gain, up f rom a gain of
EUR 36 million in 2023.
Changes in fair value of long-term debt and related derivatives
were EUR 3 million in 2024, down from EUR 16 million in 2023 due to
the impact of interest rates movements.
Changes in fair value of other financial instruments mandatorily
measured at fair value through profit and loss totaled
EUR 63 million in 2024 compared to EUR 14 million in 2023, due to
fair value gains on equity holdings, and the transaction in Commercial
Banking of a participation note in the second half of 2024.
Gains less losses from financial investments were a loss of
EUR 2 million, compared to a EUR 1 million gain in 2023.
I nsurance finance expense was EUR 38 million in 2024, up from an
expense of EUR 31 million in 2023.
Insurance Service result was EUR 18 million in 2024, up from
EUR 11 million in 2023.
Losses recognised on assets held for sale were EUR 11 million in
2024, compared to nil in 2023 reflecting the sale of employee savings
account keeping and custody activities.
Other operating income was EUR 80 million, up from
EUR 29 million in the prior year coming from the release of unused
provisions following the completion of the sale of the retail banking
operations in France in Q1 2024 and the sale of the branch operations
in Greece.
Net operating income before change in expected credit losses
and other credit impairment charges was EUR 3,349 million, down
from EUR 3,720 million in 2023.
Change in expected credit losses and other credit impairment
charges was a net charge of EUR 97 million compared to a net
charge of EUR 145 million in 2023, primarily driven by lower stage 3
provisions.
Operating expenses amounted to EUR 2,322 million in 2024, up
from EUR 2,250 million in 2023, mainly driven by the full-year
consolidation of the financial results of HSBC Private Bank
(Luxembourg) S.A. partly offset by the end of the build-up of the
Single Resolution Fund.
Profit before tax for continuing operations was EUR 930 million in
2024, com pared to EUR 1,325 m illion in the prior year.
Profit after tax for the period in respect of continuing operations
decreased from EUR 979 million in 2023 to EUR 524 million in 2024,
including the impact of the write-down of deferred tax assets in
France.
Profit attributable to shareholders of the parent company in 2024
was EUR 568 million.
Discontinued Operations
Net operating income in discontinued operations was a gain of
EUR 124 million compared to EUR 315 million in 2023.
Op erating expenses were EUR 24 million compared to EUR 382
million in 2023.
Profit before tax was EUR 100 million compared to a EUR 67 million
loss in the prior year.

Income statement by global business (continuing operations)

| At 31 Dec 2024
| Wealth and Personal Banking | Commercial Banking | Markets and Securities Services | Global Banking | GBM Other | Corporate Centre | Total
| €m | €m | €m | €m | €m | €m | €m
Net operating income before change in expected credit losses and other credit impairment charges | 445 | 1,363 | 801 | 774 | 31 | (65) | 3,349
– of which: net interest income/(expense) | 175 | 946 | 225 | 412 | (12) | (248) | 1,498
Change in expected credit losses and other credit impairment charges | 7 | (113) | — | 14 | — | (5) | (97)
Net operating income | 452 | 1,250 | 801 | 788 | 31 | (70) | 3,252
Total operating expenses | (389) | (665) | (714) | (428) | (61) | (65) | (2,322)
Profit/(loss) before tax | 63 | 585 | 87 | 360 | (30) | (135) | 930

Universal Registration Document and Annual Financial Report 2024 | 15

Income statement by global business (continuing operations) (continued)
| At 31 Dec 2023 1
| Wealth and Personal Banking | Commercial Banking | Markets and Securities Services | Global Banking | GBM Other | Corporate Centre | Total
| €m | €m | €m | €m | €m | €m | €m
Net operating income before change in expected credit losses and other credit impairment charges | 615 | 1,444 | 803 | 764 | 33 | 61 | 3,720
– of which: net interest income/(expense) | 383 | 1,049 | 183 | 453 | 19 | 104 | 2,191
Change in expected credit losses and other credit impairment charges | 5 | (88) | 1 | (63) | (1) | 1 | (145)
Net operating income | 620 | 1,356 | 804 | 701 | 32 | 62 | 3,575
Total operating expenses | (435) | (594) | (730) | (380) | (23) | (88) | (2,250)
Profit/(loss) before tax | 185 | 762 | 74 | 321 | 9 | (26) | 1,325

1 In compliance with IFRS 5 standards, the comparatives have been represented to reflect discontinued operations related to the planned sale of the life insurance
business in France. This also includes discontinued operations related to the sale of the retail banking operations in France.
Profit before tax for continuing operations was EUR 930 million in
2024, compared with EUR 1,325 million in 2023.
Revenue for continuing operations was EUR 3,349 million in 2024,
down from EUR 3,720 million in 2023, driven by lower net interest
income following the sale of the retail banking operations in France.
Commercial Banking revenues were down compared to last year,
driven by lower margins on customer deposits in Global Payment
Solutions, while Global Banking revenues were higher due to growth
in Investment Banking. Revenues in Markets and Securities Services
were stable, with growth in Equities and Securities Financing offset
by lower client activity in Global Debt Markets.
Change in expected credit losses and other credit impairment
charges was a net charge EUR 97 million in 2024, compared with a
net charge of EUR 145 million in 2023. The cost of risk fell to 19 bps,
with the decrease compared to last year driven by lower stage 3
provisions, particularly in Global Banking.
Operating expenses were EUR 2,322 million in 2024, up from EUR
2,250 million in 2023, driven by the full-year consolidation of the
financial results of HSBC Private Bank (Luxembourg) S.A. and higher
infrastructure and technology costs. The increase was partly offset by
the end of the build-up of the Single Resolution Fund.
Wealth and Personal Banking
Profit before tax was EUR 63 million in 2024, down from
EUR 185 million in 2023.
Revenue was EUR 445 million in 2024, down from EUR 615 million in
prior year. This included the loss on sale related to the employee
savings account keeping and custody activities. The remaining
variance was driven by lower net interest income f ollowing the sale of
retail banking operations in Franc e, the impact of the sale of the
branch operations in Greece, partly offset by the acquisition of HSBC
Private Bank (Luxembourg) S.A.
Change in expected credit losses and other credit impairment
charges were a net release of EUR 7 million in 2024, compared to a
net release of EUR 5 million in 2023.
Operating expenses were EUR 389 million in 2024, down from
EUR 435 million in 2023 driven by the impact of the sale of the Retail
Bank in France and the Branch operations in Greece, partly offset by
the full-year consolidation of the financial results of HSBC Private
Bank (Luxembourg) S.A.
Loans and advances to customers were EUR 4.3 billion at the end of
December 2024 compared to EUR 11.6 billion as of December 2023
due to the reclassification of the retained mortgages portfolio from
Wealth and Personal Banking to Corporate Centre in 2024.
Customer accounts were EUR 7.1 billion in 2024, compared to
EUR 9.5 billion as of December 2023 driven by the classification of
the private banking business in Germany as held for sale.
Commercial Banking
Profit before tax was EUR 585 million in 2024, compared to
EUR 762 million in the prior year.
Revenue was EUR 1,363 million in 2024, down from
EUR 1,444 million in 2023, mainly due to reductions in net interest
income on deposits.
Change in expected credit losses and other credit impairment
charges was a net charge of EUR 113 million in 2024, compared with
a net charge of EUR 88 million in 2023. The change was driven by
higher stage 3 provisions.
Operating expenses were EUR 665 million, up from EUR 594 million
in 2023, due to increases in technology and support function costs.
Loans and advances to customers were EUR 24.9 billion at December
2024 compared to EUR 24.8 billion at December 2023.
Deposits were EUR 45.7 billion at December 2024, increasing from
EUR 39.4 billion in December 2023.

16 | Universal Registration Document and Annual Financial Report 2024

HSBC Continental Europe Consolidated Results

Markets and Securities Services
Profit before tax was EUR 87 million in 2024 compared to
EUR 74 million in 2023.
Revenue was EUR 801 million in 2024 compared to EUR 803 million
in prior year. Lower revenues in Global Debt Markets were offset by
higher revenues in Securities Financing and Equity derivatives.
Operating expenses were EUR 714 million in 2024, down compared
to EUR 730 million in the prior year, driven by the end of the build-up
of the Single Resolution Fund, partly offset by technology and support
function costs.
Customer deposits were EUR 16.2 billion at December 2024
compared to EUR 17.4 billion at December 2023 driven by a decrease
in Securities Services customer deposits.
Global Banking
Profit before tax was EUR 360 million in 2024, compared to
EUR 321 million in prior year.
Revenue was EUR 774 million in 2024, increasing from
EUR 764 million in 2023. Higher Investment Banking revenues were
partly offset by a reduction in net interest income.
Change in expected credit losses and other credit impairment
charges was a net release of EUR 14 million in 2024, compared with
a net charge of EUR 63 million in 2023 driven by release of provisions.
Operating expenses were EUR 428 million in 2024 compared to
EUR 380 million in prior year due to the non-recurrence of impairment
releases booked in 2023 and higher infrastructure costs.
Loans and advances to customers were EUR 13.6 billion at December
2024 compared to EUR 13.0 billion at December 2023.
Customer deposits were EUR 23.2 billion at December 2024
compared to EUR 24.5 billion at December 2023.
GBM Other
Loss before tax was EUR 30 million, compared to a gain of
EUR 9 million in 2023.
Revenue was EUR 31 million in 2024 compared to EUR 33 million in
2023.
Operating expenses were EUR 61 million in 2024, up from
EUR 23 million in 2023 coming from project related technology costs.
Corporate Centre
Loss before tax was EUR 135 million in 2024 compared to a EUR 26
million loss in 2023.
Revenue was a loss of EUR 65 million in 2024 compared to a gain of
EUR 61 million in 2023, driven by interest expense offset by fair value
impacts on hedging of the retained mortgages following the sale of
the retail banking operations in France.
Operating expenses were EUR 65 million in 2024 compared with
EUR 88 million in 2023 due to a reduction in project costs.

Consolidated balance sheet

| At
| 31 Dec 2024 | 31 Dec 2023
| €m | €m
Total assets | 265,008 | 282,977
Cash and balances at central banks | 48,907 | 56,894
Trading assets | 22,853 | 17,249
Financial assets designated and otherwise mandatorily measured at fair value through profit and loss | 1,563 | 13,590
Derivatives | 43,251 | 45,522
Loans and advances to banks | 5,703 | 5,816
Loans and advances to customers | 51,288 | 50,127
Reverse repurchase agreements – non-trading | 25,764 | 24,490
Financial investments | 20,740 | 22,608
Other assets | 19,462 | 23,470
Assets held for sale | 25,477 | 23,211
Total liabilities | 250,177 | 270,469
Deposits by banks 1 | 11,820 | 10,261
Customer accounts 1 | 97,065 | 93,890
Repurchase agreements – non-trading | 12,344 | 11,153
Trading liabilities | 16,480 | 19,877
Financial liabilities designated at fair value | 9,906 | 9,696
Derivatives | 41,857 | 43,630
Debt securities in issue | 15,257 | 12,909
Liabilities under insurance contracts | 518 | 21,035
Other liabilities | 20,212 | 24,201
Liabilities of disposal groups held for sale | 24,718 | 23,817
Total equity | 14,831 | 12,508
Total shareholders’ equity | 14,642 | 12,342
Non-controlling interests | 189 | 166

1 Following a customer classification error, the comparatives as at 31 December 2023 have been represented by EUR 1.4 billion between ’Deposits by banks’ and
’Customer accounts’.
1 This includes the impact of the sale of our retail banking operations in France.

Universal Registration Document and Annual Financial Report 2024 | 17

Assets
Total assets were EUR 265.0 billion at December 2024, down from
EUR 283.0 billion at December 2023.
Trading assets increased from EUR 17.2 billion at December 2023 to
EUR 22.9 billion at December 2024 reflecting increased client activity
in bonds and equities.
Financial assets measured at fair value through profit and loss were
EUR 1.6 billion at December 2024, down compared to
EUR 13.6 billion in the prior year, primarily driven by the classification
of the French life insurance business as held for sale.
Derivatives were EUR 43.3 billion in 2024, down from EUR 45.5 billion
in 2023 as a result of mark-to-market movements notably on foreign
exchange contracts and interest rate swaps.
Loans and advances to customers were EUR 51.3 billion in 2024
compared to EUR 50.1 billion in 2023 driven by money market
placements and overdrafts, partly offset by the amortisation of the
retained mortgages portfolio and the classification as held for sale of
the private banking business in Germany.
Reverse repurchase agreements – non-trading – of EUR 25.8 billion in
2024 increased from EUR 24.5 billion in 2023 reflecting increased
lending to clients.
Financial investments were EUR 20.7 billion at December 2024
compared to EUR 22.6 billion in 2023 as a result of the held for sale
classification of the French life insurance business partly offset by
bonds purchased, notably in France.
Assets held for sale were EUR 25.5 billion at December 2024
compared to EUR 23.2 billion in 2023. 2024 balances relate to the
French life insurance business and the private banking business in
Germany. 2023 balances relate to the sale of the retail banking
operations in France, completed in January 2024.
Liabilities
Total liabilities were EUR 250.2 billion at December 2024, down from
EUR 270.5 billion at December 2023.
Customer accounts were EUR 97.1 billion at December 2024, up
compared to EUR 93.9 billion at December 2023 driven by higher
deposits, partly offset by the classification of the private banking
business in Germany as held for sale.
Repurchase agreements – non trading – increased from
EUR 11.2 billion in 2023 to EUR 12.3 billion in 2024 reflecting
increased positions with banks.
Trading liabilities were EUR 16.5 billion in 2024, down from
EUR 19.9 billion in 2023 d riven by bond trading volumes.
Derivatives were EUR 41.9 billion in 2024, decreased from
EUR 43.6 billion in prior year as a result of mark-to-market
movements on interest rate swaps.
Debt securities in issue were EUR 15.3 billion in 2024, up from
EUR 12.9 billion in prior year due to the issuance of deposit
certificates and senior non-preferred debt during the year.
Liabilities under insurance contracts were EUR 0.5 billion in 2024,
down from EUR 21.0 billion in 2023 largely driven by the held for sale
classification of the French life insurance business.
Liabilities of disposal groups held for sale increased from
EUR 23.8 billion to EUR 24.7 billion at December 2024. 2024 balances
relate to the French life insurance business and the private banking
business in Germany. 2023 balances relate to the sale of the retail
banking operations in France, completed in January 2024.
Equity
Shareholders’ equity stood at EUR 14.6 billion, up from
EUR 12.3 billion in 2023, mainly driven by the profit generated and
capital securities i ssued in 2024.
The CET1 (Common Equity Tier 1) ratio was 18.8 per cent
at December 2024 and the total capital ratio was 23.5 per cent.
Liquidity and funding
Outstanding medium and long-term funding and the bank’s main
financing transactions in 2024 are presented in the liquidity and
financing management section on pages 215 to 216.
The average short-term ratio (liquidity coverage ratio or 'LCR') was
150 per cent and the average long-term ratio (net stable funding ratio
or 'NSFR') was 137 per cent 1.

Balance Sheet Information
| Wealth and Personal Banking | Commercial Banking | Markets and Securities Services | Global Banking | GBM Other | Corporate Centre | Total
| €m | €m | €m | €m | €m | €m | €m
At 31 Dec 2024 |  |  |  |  |  |  |
Loans and advances to customers | 4,267 | 24,930 | 1,823 | 13,560 | 24 | 6,684 | 51,288
Loans and advances to customers classified as held for sale 1 | 298 | — | — | — | — | — | 298
Customers accounts | 7,055 | 45,686 | 16,243 | 23,218 | 5,284 | (421) | 97,065
Customers accounts classified as held for sale 1 | 2,010 | — | — | — | — | — | 2,010

18 | Universal Registration Document and Annual Financial Report 2024

HSBC Continental Europe Consolidated Results

Balance Sheet Information (continued)
| Wealth and Personal Banking | Commercial Banking | Markets and Securities Services | Global Banking | GBM Other | Corporate Centre | Total
| €m | €m | €m | €m | €m | €m | €m
At 31 Dec 2023 |  |  |  |  |  |  |
Loans and advances to customers | 11,556 | 24,789 | 656 | 13,018 | 84 | 24 | 50,127
Loans and advances to customers classified as held for sale | 12,691 | — | — | — | — | — | 12,691
Customers accounts 2 | 9,463 | 39,438 | 17,350 | 24,504 | 3,379 | (244) | 93,890
Customers accounts classified as held for sale | 20,058 | — | 109 | — | — | — | 20,167

1 Includes loans and advances and customers accounts related to the planned sale of the private banking business in Germany.
2 Following a customer classification error, the comparatives as at 31 December 2023 have been represented by EUR 1.4 billion between ’Deposits by banks’ and
’Customer accounts’.

Revenue by country (continuing operations)

| At 31 Dec 2024
| Wealth and Personal Banking | Commercial Banking | Markets and Securities Services | Global Banking | GBM Other | Corporate Centre | Total
| €m | €m | €m | €m | €m | €m | €m
France | 91 | 565 | 171 | 523 | 1 | (71) | 1,280
Germany | 124 | 302 | 443 | 94 | 22 | 1 | 986
EEA Branches | 1 | 419 | 187 | 133 | 21 | 4 | 765
Malta and Other Countries | 229 | 77 | — | 24 | (13) | 1 | 318
Revenue 1 | 445 | 1,363 | 801 | 774 | 31 | (65) | 3,349

| At 31 Dec 2023 3
France | 287 | 593 | 231 | 495 | (8) | 62 | 1,660
Germany | 129 | 296 | 400 | 114 | 21 | 2 | 962
EEA Branches | 20 | 491 | 169 | 155 | 19 | (3) | 851
Malta and Other Countries 2 | 179 | 64 | 3 | — | 1 | — | 247
Revenue 1 | 615 | 1,444 | 803 | 764 | 33 | 61 | 3,720

1 Net operating income before change in expected credit losses and other credit impairment charges, also referred to as revenue.
2 ’Other countries’ include net operating income of HSBC Private Bank (Luxembourg) S.A. post its acquisition on 2 November 2023.
3 In compliance with IFRS 5 standards, the comparatives have been represented to reflect discontinued operations related to the planned sale of the life insurance
business in France. This also includes discontinued operations related to the sale of the retail banking operations in France.

Net Interest Margin
Net interest margin is calculated by dividing net interest income as reported in the income statement by the average balance of interest-earning
assets.
Average balances are based on daily averages for the principal areas of our banking activities with monthly or less frequent averages are used
elsewhere.

Net Interest Income
| 2024 | 2023 1
| €m | €m
Interest income | 8,288 | 7,307
Interest expense | (6,790) | (5,116)
Net interest income from continuing operations | 1,498 | 2,191
Net interest income from discontinued operations | 225 | 200
Net interest income | 1,723 | 2,391
Average interest-earning Assets | 178,548 | 190,847
| % | %
Net interest margin 2 | 0.97 | 1.25

1 In compliance with IFRS 5 standards, the comparatives have been represented to reflect discontinued operations related to the planned sale of the life insurance
business in France. This also includes discontinued operations related to the sale of the retail banking operations in France.
2 Net interest margin is net interest income expressed as an annualised percentage of average interest-earning assets.

Universal Registration Document and Annual Financial Report 2024 | 19

Summary of interest income by asset type
| 2024 | 2023
| Average balance | Interest income 1 | Yield 2 | Average balance | Interest income 1 | Yield 2
| €m | €m | % | €m | €m | %
Short term funds and loans and advances to banks | 54,314 | 1,862 | 3.43 | 69,254 | 2,536 | 3.66
Loans and advances to customers | 51,580 | 2,413 | 4.68 | 57,168 | 2,106 | 3.68
Reverse repurchase agreements – non- trading 3 | 30,753 | 2,499 | 8.13 | 23,251 | 1,565 | 6.73
Financial investments | 25,874 | 953 | 3.68 | 19,918 | 645 | 3.24
Other interest-earning assets | 16,027 | 785 | 4.90 | 21,256 | 956 | 4.50
Total interest-earning assets | 178,548 | 8,512 | 4.77 | 190,847 | 7,808 | 4.09
Trading assets and financial assets designated or mandatorily measured at fair value 4 | 22,718 | 510 | 2.24 | 16,754 | 351 | 2.10
Expected credit losses provision | (607) |  |  | (814) |  |
Non-interest-earning assets | 80,359 |  |  | 88,893 |  |
Total | 281,018 | 9,022 | 3.21 | 295,680 | 8,159 | 2.76

1 Balances are disclosed in respect of continuing and discontinued operations.
2 Yield has been calculated taking into account negative interest on assets recognised as interest expense in the income statement.
3 The average balances for repurchase and reverse repurchase agreements include net amounts where the criteria for offsetting are met, resulting in a lower net
balance reported with a higher yield and cost of funds.
4 Interest income arising from trading assets is included within net trading activities in the income statement.

Summary of interest expense by type of liability and equity
| 2024 | 2023
| Average balance | Interest expense 1 | Cost 2 | Average balances | Interest expense 1 | Cost 2
| €m | €m | % | €m | €m | %
Deposits by banks | 13,623 | 503 | 3.69 | 12,385 | 460 | 3.71
Customer accounts | 61,566 | 2,579 | 4.19 | 62,040 | 2,156 | 3.48
Repurchase agreements – non- trading 3 | 17,521 | 1,953 | 11.15 | 12,201 | 1,140 | 9.34
Debt Securities in issue – non- trading | 20,126 | 995 | 4.94 | 17,465 | 714 | 4.09
Other interest-bearing liabilities | 16,903 | 759 | 4.49 | 23,697 | 947 | 4.00
Total interest-bearing liabilities | 129,739 | 6,789 | 5.23 | 127,788 | 5,417 | 4.24
Trading liabilities and financial liabilities designated at fair value (excluding own debt issued)3 | 28,153 | 694 | 2.47 | 25,548 | 587 | 2.30
Non-interest-bearing current accounts | 30,669 |  |  | 37,625 |  |
Total equity and other non-interest bearing liabilities | 92,457 |  |  | 104,719 |  |
Total | 281,018 | 7,483 | 2.66 | 295,680 | 6,004 | 2.03

1 Balances are disclosed in respect of continuing and discontinued operations.
2 Cost has been calculated taking into account negative interest on liabilities recognised as interest income in the income statement.
3 The average balances for repurchase and reverse repurchase agreements include net amounts where the criteria for offsetting are met, resulting in a lower net
balance reported with a higher yield and cost of funds.
4 Interest expense arising from trading liabilities is included within net trading activities in the income statement.

Post-balance sheet events
There has been no significant event between 31 December 2024 and the date of approval of these financial statements by the Board of
Directors which would require an adjustment or additional disclosure in the financial statements.

20 | Universal Registration Document and Annual Financial Report 2024

HSBC Continental Europe Consolidated Results

Historical data (unaudited)
| 2024 | 2023 | 2022 | 2021 | 2020
| €m | €m | €m | €m | €m
HSBC Continental Europe |  |  |  |  |
Profit before tax 1 | 1,030 | 1,258 | (1,689) | 285 | (945)
Profit attributable to shareholders 1 | 568 | 883 | (1,092) | 269 | (1,022)
At 31 Dec |  |  |  |  |
Shareholders’ equity | 14,642 | 12,342 | 11,358 | 7,667 | 7,434
Loans and advances to customers and banks 2 | 56,991 | 55,943 | 49,573 | 66,444 | 63,006
Customer accounts and deposits by banks 3 | 108,885 | 104,151 | 94,874 | 88,692 | 78,597
Total Balance Sheet | 265,008 | 282,977 | 279,081 | 222,664 | 237,099
Number of employees (full-time equivalents)4,5,6 | 6,739 | 9,969 | 10,408 | 7,451 | 8,517
Ratios 7 |  |  |  |  |
– Total capital ratio (%) | 23.5 | 20.7 | 20.2 | 16.5 | 17.3
– Common Equity Tier One Ratio (%) | 18.8 | 15.7 | 15.3 | 12.0 | 12.6
– Cost efficiency ratio (reported basis) (%) | 69.3 | 60.5 | 82.9 | 86.6 | 130.9

1 Balances are disclosed in respect of continuing and discontinued operations.
2 Loans and advances to customers and banks classified as held for sale are not included. Refer to Note 2 of the consolidated financial statements.
3 Customer accounts and deposits by banks classified as held for sale are not included. Refer to Note 2 of the consolidated financial statements.
4 Includes employees of HSBC Private Bank (Luxembourg) S.A. with effect from 2 November 2023 and excludes employees of Greece operations with effect from
28 July 2023.
5 The increase in 2022 is due to acquisition of HSBC Germany and HSBC Malta with effect from 30 November 2022.
6 2023 number of employees includes employees of retail banking operations in France which has been classified as discontinued operations.
7 CET1 capital and RWAs (material holding) for Dec 2023 has been restated to reflect the payment of AT1 dividends.

Reconciliation of alternative performance measures
Return on average ordinary shareholders’ equity and pre-tax return on average
risk-weighted assets
Return on average ordinary shareholders’ equity is calculated by
dividing profit attributable to the ordinary shareholders of the
parent company (‘reported results’) by average ordinary
shareholders’ equity (‘reported equity’) for the period. The
adjustment to reported results and reported equity excludes
amounts attributable to non-controlling interests and holders of
other equity instruments (additional tier 1 capital).
Pre-tax return on average risk-weighted assets is calculated by
dividing profit before tax by average risk-weighted assets for the
period.

Return on average shareholders’ equity and pre-tax return on average risk-weighted assets |  |
| At
| 31 Dec 2024 | 31 Dec 2023 1
| €m | €m
Profit |  |
Profit/(loss) before tax in respect of continuing operations | 930 | 1,325
Profit/(loss) before tax in respect of discontinued operation | 100 | (67)
Profit/(loss) before tax | 1,030 | 1,258
Profit/(loss) attributable to the ordinary shareholders of the parent company 2 | 485 | 805
Equity |  |
Average ordinary shareholders’ equity | 11,314 | 11,221
Risk-weighted assets |  |
Average risk-weighted assets 3 | 61,600 | 59,307
Ratio % |  |
Return on average ordinary shareholders’ equity | 4.3 | 7.2
Pre-tax return on average risk-weighted assets | 1.7 | 2.1

1 In compliance with IFRS 5 standards, the comparatives have been represented to reflect discontinued operations related to the planned sale of the life insurance
business in France. This also includes discontinued operations related to the sale of the retail banking operations in France.
2 This excludes amounts attributable to non-controlling interests and holders of other equity instruments (additional tier 1 capital).
3 CET1 capital and RWAs (material holding) for Dec 2023 has been restated to reflect the payment of AT1 dividends.

Credit ratings
HSBC Continental Europe is rated by three major agencies: Standard & Poor’s, Moody’s and FitchRatings.

As at 31 December 2024 | Standard & Poor’s | Moody’s | FitchRatings
Long-term Senior preferred | A+ | A1 | AA-
Outlook | Stable | Stable | Stable
Short term | A-1 | P-1 | F1+

There were no changes to HSBC Continental Europe's ratings during the year 2024. Annual review meetings with rating agencies were held in
April and May 2024.

Universal Registration Document and Annual Financial Report 2024 | 21

Other information
Information on supplier payable amounts schedule
(Articles L. 441-14 and D. 441-6 of the French Commercial code)

Article D.441–6–I: Received invoices by HSBC Continental Europe subject to late payment delays at year-end
| 0 day (for information) | 1 to 30 days | 31 to 60 days | 61 to 90 days | over 91 days | Total (1 day and more)
(A) Late payment buckets
Number of invoices, of which: | 7,328 |  | 2,180
– payable to third-party | 5,782 |  |  |  |  | 1,055
– payable to HSBC Group entities 1 | 1,546 |  |  |  |  | 1,125
Amount of invoices including VAT (in €k), of which: | 181,701 | 67,850 | 17,919 | 9,897 | 57,703 | 153,369
– payable to third-party | 73,796 | 41,337 | 2,385 | 1,264 | 761 | 45,747
– payable to HSBC Group entities 1 | 107,905 | 26,513 | 15,534 | 8,633 | 56,942 | 107,622
Percentage of total purchasing in the year | 12% | 5% | 1% | 1% | 4% | 11%
(B) Invoices excluded from (A) in respect of litigations or not accounted
Number of invoices excluded, of which: | 919 |  |  |  |  |
– payable to third-party | 815 |  |  |  |  |
– payable to HSBC Group entities 1 | 104 |  |  |  |  |
Amount of excluded invoices including VAT (in €k), of which: | 29,125 |  |  |  |  |
– payable to third-party | 12,242 |  |  |  |  |
– payable to HSBC Group entities 1 | 16,883 |  |  |  |  |
(C) Suppliers' payment terms (contractual or legal terms)
Payment terms used to assess the late payments | Contractual terms: from immediate payment to 261 days

1 Excluding transactions between HSBC Continental Europe and its branches.

Information on client receivable amounts schedule
(Articles L. 441-14 and D. 441-6 of the French Commercial code)

Article D.441–6–I: Issued invoices by HSBC Continental Europe subject to late payment delays at year-end
| 0 day (for information) | 1 to 30 days | 31 to 60 days | 61 to 90 days | over 91 days | Total (1 day and more)
(A) Late payment buckets
Number of invoices, of which: | 223 |  | 1,996
– receivable from third-party | 53 |  |  |  |  | 1,492
– receivable from HSBC Group entities 1 | 170 |  |  |  |  | 504
Amount of invoices excluding VAT (in €k), of which: | 11,397 | 18,675 | 7,893 | 4,060 | 16,755 | 47,384
– receivable from third-party | 1,398 | 11,510 | 3,407 | 2,255 | 10,479 | 27,651
– receivable from HSBC Group entities 1 | 9,999 | 7,165 | 4,486 | 1,805 | 6,276 | 19,733
Percentage of total revenue of the year (%) | 0.42% | 0.68% | 0.29% | 0.15% | 0.61% | 1.74%
(B) Invoices excluded from (A) in respect of litigations or not accounted
Number of invoices excluded, of which: | — |
– receivable from third-party | — |  |  |  |  |
– receivable from HSBC Group entities 1 | — |  |  |  |  |
Amount of excluded invoices excluding VAT (in €k), of which: | — |
– receivable from third-party | — |  |  |  |  |
– receivable from HSBC Group entities 1 | — |  |  |  |  |
(C) Clients' payment terms (contractual or legal terms)
Payment terms used to assess the late payments | Contractual terms: 30 days

1 Excluding transactions between HSBC Continental Europe and its branches.
This information does not include banking transactions and certain related transactions as HSBC Continental Europe considers that they do not
fall within the scope of the information to be produced.

22 | Universal Registration Document and Annual Financial Report 2024

Corporate Governance report

Corporate Governance report
Under article L. 225-37 of the French Commercial Code, the Board of
Directors presents to the shareholders’ general meeting a report on
Corporate Governance attached to the management report referred to
in article L. 225-100 of the French Commercial Code.
This report was submitted to the Nomination and Corporate
Governance Committee for the part relating to Corporate Governance
and to the Remuneration Committee for the part relating to
remuneration at their meetings held on 30 January 2025.

Corporate governance bodies and regime
Governance bodies structure

|  |  |  |  |  |  |  |  |  |  |  |  |  | HSBC Continental Europe Board of Directors |  |  |  |
|  |  |  |  |  |  |  |  |  |  |  |  |  | p |  |  |  |
|  |  |  |  |  |  | u | Risk Committee |  |  |  |  |  |  | Remuneration Committee
|  |  |  |  |  |  |  |  | u | Audit Committee |  |  |  |  |  |  | Nomination and Corporate Governance Committee
|  |  |  |  |  |  |  |  |  |  |  |  |  | General Management |  |  |  |
|  |  |  |  |  |  |  |  |  |  |  |  |  | p |  |  |  |
|  |  |  | Risk Management Meeting |  |  |  |  |  | u | Executive Committee |  |  |
|  |  |  |  | p |  |  |  |  |  |  |  | p |  |  |
|  |  |  |  |  |  |  |  |  | Asset and Liability Committee |  |  |  |  |  |
Non-Financial Risks |  | Financial Risks |  |  | Businesses' Risk Committees and international locations |  | Ad hoc and cross- risk Committees |  |  | Businesses' Committees |  |  |
Forums and Working Groups |  |  |  |

This Corporate Governance report includes detailed information on:
– Membership, duties and work of the Board of Directors on pages
23 to 34;
– Membership, duties and work of the Board Committees on pages
34 to 38; and
– General Management and Executive Committee membership on
pages 38 and 39.
Risks, issues or other matters requiring attention from the
management body may be escalated through line management, or
through the committee structure described above.
In particular regarding the information flow on risk, the HSBC
Continental Europe Risk Management Meeting, which is chaired by
the Chief Risk Officer and includes the Chief Executive Officer, the
Deputy Chief Executive Officers and the other members of the
Executive Committee, is the overarching Committee overseeing risk
management and permanent control.
Relevant information, in particular on risk, is shared on a quarterly
basis with the Board and its Audit and Risk Committees by the Bank’s
senior management.
Corporate Governance code
As permitted under article L. 22-10-10 of the French Commercial
Code, HSBC Continental Europe has decided not to make reference
to a corporate governance code worked out by representative
business organisations. The reasons for this are threefold:
– As a bank, HSBC Continental Europe is a highly regulated entity,
including regarding its corporate governance, and is under the
supervision of the European Central Bank, that controls HSBC
Continental Europe's compliance with applicable regulation. This
ensures that high standards of governance, common to all
European banks under the supervision of the European Central
Bank, are applied with HSBC Continental Europe.

Universal Registration Document and Annual Financial Report 2024 | 23

– HSBC Continental Europe does not have any publicly traded stocks
in issuance.
– As a 99.9 per cent owned subsidiary of the HSBC Group, HSBC
Continental Europe, like all entities of the HSBC Group, is
committed to applying high standards of corporate governance.
The HSBC Group has a comprehensive set of principles, policies
and procedures, influenced by the UK Corporate Governance
Code, which includes requirements in terms of the independence,
composition and effectiveness of the Board of Directors, in order
to ensure that the HSBC Group is well managed, with appropriate
oversight and control. HSBC Continental Europe adhered to these
principles, policies and procedures all along 2024.
Information on governance structure, the Chairman’s role, Board
composition, functioning, organisation and work, and on Executive
Directors’ compensation are presented in the relevant sections of this
report.

Board of Directors
Board of Directors’ internal rules
The Board of Directors’ internal rules were first established in 1996,
and have been updated several times since their implementation. The
Board last reviewed and updated these internal rules at its meeting
held on 7 February 2025.
The Board’s internal rules define the composition, the duty and the
conducting of the Board meetings and the information to the Board of
Directors. They indicate the main duties and arrangements for
exercising the function of Chairman, Chief Executive Officer and
Deputy Chief Executive Officers (the latter two functions making up
the Company's management body in its management function or
'dirigeants effectifs').
Furthermore, the Board’s internal rules define, in accordance with the
HSBC Group rules, the duties and responsibilities of the Audit
Committee, the Risk Committee, the Nomination and Corporate
Governance Committee and the Remuneration Committee (as
stipulated below in the parts related to each of these Committees’
assignments). They also incorporate ethical rules and rules regarding
conflicts of interests prevention and management to be followed by
the Directors of HSBC Continental Europe, setting out their rights and
duties.
Changes in the Board composition
Changes occurred during 2024
The Nomination and Corporate Governance Committee reviewed the
position of the Director whose term of office expired at the Annual
General Meeting on 25 March 2024, Carola von Schmettow.
The Board decided to propose the noting of the expiration of her term
of office, which was approved by the shareholders at the Annual
General Meeting held on 25 March 2024.
Moreover, upon recommendation of the Nomination and Corporate
Governance Committee, the Board further decided to propose the
appointment of a new Director: Kerstin Lopatta, which was approved
by the shareholders at the General Meeting held on 11 October 2024.
This appointment was made for three years and will expire at the
2027 Annual General Meeting approving the 2026 annual financial
accounts.
Finally, further to the sale of the French Retail Banking business, two
Directors elected by HSBC Continental Europe employees transferred
to CCF (formerly My Money Group) on 6 February 20 24: Ludovic
Bénard and Elisabeth Moussi. As they are no longer employed by
HSBC Continental Europe, their mandates automatically ended at the
same date. Ludovic Bénard has been replaced by Emmanuelle
Vigneron, while the other seat will remain vacant until the end of the
mandate on 26 September 2025. The term of office of Emmanuelle
Vigneron will expire on 26 September 2025.
Changes planned for the first quarter of 2025
Pursuant to the governance rules of the HSBC Group regarding the
length of presence of Directors on Group entities' boards, the terms
of office of Paule Cellard, Dominique Perrier, Arnaud Poupart-Lafarge,
and Eric Strutz will not be renewed at the 2025 Annual General
Meeting. Moreover, Stephen O'Connor will not stand for renewal. On
the proposal of the Nomination and Corporate Governance
Committee, the Board of Directors decided to submit the
appointments of Monika Rast and Xavier Martiré as Directors for
approval of the General Meeting on 24 March 2025.
Chair of the Board of Directors
Duties of the Chairman of the Board
The Chairman of the Board has a duty to ensure the proper
functioning of HSBC Continental Europe’s governing bodies. In
particular, he conducts the work of the Board and coordinates it with
that of the specialised Committees. He ensures that the Directors are
in a position to perform their duty, and in particular, ensures that they
are in possession of all the information they require for the discharge
of their duty.
Presentation of the Chairman of the Board of
Directors

Jean Beunardeau Chairman of the Board of Directors

Member of the Nomination and Corporate Governance Committee
First elected: 2008 as a Director and 2021 as Chairman of the Board.
Last re-elected: 2023. Term ends: 2026.
Principal position: Chairman of the Board, HSBC Continental Europe.
Vice Chairman Global Banking Europe.
Other directorships in the HSBC Group: Chairman of the Board,
HSBC Global Asset Management (France). Vice Chairman and
Director, HSBC Assurances Vie (France). Director, Valeurs Mobilières
Elysées.
Other directorships outside of the HSBC Group: Member of the
Supervisory Board, Société Anonyme des Galeries Lafayette.
Chairman, L'offrande Musicale (formerly Académie France-Chine).
Treasurer, Association du Golf de Saint-Cloud. Member of the Great
Council, Cercle de l'Union Interalliée. Member of the Board, Fondation
Schlumberger pour l'Education et la Recherche (since June 2024).
Number of positions held within the meaning of L. 511-52 of the
French Monetary and Financial Code: two directorships as member of
a Board of Directors or a Supervisory Board.
Skills and experience: Born in 1962. Graduated from Ecole
Polytechnique, Telecom Engineer and Master of Economics, he
began his career at the Ministry of Finance, at the Forecasting
Department then at the Treasury. He became Technical Advisor to the
Prime Minister in 1995.
2 Director standing for re-election at the Annual General Meeting to be held on 24 March 2025.

24 | Universal Registration Document and Annual Financial Report 2024

Corporate Governance report

He joined HSBC Continental Europe in 1997 in Corporate Finance and
became Managing Director in 2000. He was appointed Co-Head of
Corporate Investment Banking and Markets, mainly in charge of
Corporate and Investment Banking in 2004.He was appointed Senior
Corporate Vice-President in 2005 and then Head of Global Banking
and Markets of HSBC Continental Europe in 2007. In 2010, he was
appointed Deputy Chief Executive Officer, in addition to his role as
Head of Global Banking and Markets France. The same year, he was
appointed Head of Global Banking, Continental Europe, HSBC Group.
His direct responsibilities within Global Banking and Markets ended in
2019. From 2012 to 2021, he was Chief Executive Officer of HSBC
Continental Europe. Since 2021, he has been Chairman of the Board
of Directors of HSBC Continental Europe and Vice Chairman Global
Banking Europe.

2023 | Directorships in the HSBC Group: Chairman of the Board: HSBC Continental Europe, HSBC Global Asset Management (France). Director and Vice Chairman: HSBC Assurances Vie (France). Director: Valeurs Mobilières Elysées. Directorships outside of the HSBC Group: Member of the Supervisory Board: Société Anonyme des Galeries Lafayette. Chairman: Académie France-Chine. Treasurer: Association du Golf de Saint-Cloud. Member of the Great Council: Cercle de l'Union Interalliée.
2022 | Directorships in the HSBC Group: Chairman of the Board: HSBC Continental Europe, HSBC Global Asset Management (France). Director and Vice Chairman: HSBC Assurances Vie (France). Director: Valeurs Mobilières Elysées. Directorships outside of the HSBC Group: Member of the Supervisory Board: Société Anonyme des Galeries Lafayette. Chairman: Académie France-Chine. Treasurer: Association du Golf de Saint-Cloud. Member of the Great Council: Cercle de l'Union Interalliée.
2021 | Directorships in the HSBC Group: Chairman of the Board: HSBC Continental Europe. HSBC Global Asset Management (France). Director and Vice Chairman: HSBC Assurances Vie (France). Director: Valeurs Mobilières Elysées. Directorships outside of the HSBC Group: Member of the Supervisory Board: Société Anonyme des Galeries Lafayette. Chairman: Académie France-Chine. Treasurer: Association du Golf de Saint-Cloud. Member of the Great Council: Cercle de l'Union Interalliée.
2020 | Directorships in the HSBC Group: Director and Chief Executive Officer: HSBC Continental Europe. Chairman of the Board: HSBC Global Asset Management (France). Director and Vice Chairman :HSBC Assurances Vie (France). Director: Valeurs Mobilières Elysées. Chairman: Fondation HSBC pour l'Education. Directorships outside of the HSBC Group: Member of the Supervisory Board: Société Anonyme des Galeries Lafayette,Chairman: Académie France-Chine. Director, Fondation de France (permanent representative of HSBC Continental Europe). Treasurer: Association du Golf de Saint-Cloud. Member of the Great Council: Cercle de l'Union Interalliée.

Composition of the Board as of
31 December 2024
On 31 December 2024, the Board of Directors comprised
15 Directors, of which 12 were appointed by the Shareholders’
General Meeting and three were elected by employees. A
representative of the Social and Economic Council attends Board
meetings, without voting rights.
The Directors elected by Shareholders’ General Meeting or by
employees have a three-year term of office.
The Board membership complies with the policies the Board had
implemented on the assessment of the suitability of members of the
management body and key function holders and on diversity.
Presentation of the Directors as of
31 December 2024

Andrew Wild Director and Chief Executive Officer

First elected: 2021. Last re-elected: 2022. Term ends: 2025 2.
Principal position: Chief Executive Officer, HSBC Continental
Europe.
Other directorships in the HSBC Group: Member of the
Supervisory Committee, HSBC Bank plc Paris Branch. Directorship
expired in 2024: Vice-Chairman and Director, HSBC Assurances Vie
(France) (until March 2024).
Other directorships outside of the HSBC Group: Member of the
Supervisory Board representing HSBC Continental Europe, Fonds de
Garantie des Dépôts et de Résolution (since March 2024).
Number of positions held within the meaning of L. 511-52 of the
French Monetary and Financial Code: one directorship as executive.
Skills and experience: Born in 1970. British nationality. Graduate of
the Business School of the University of Nottingham. He is also
qualified as a chartered accountant. He joined the HSBC Group in
2005, after having been, in particular, Senior Manager Transaction
Services at KPMG then, Corporate Finance Director at KPMG
Corporate Finance. In 2008, he was appointed Deputy Head of
Commercial Banking of HSBC in France. In 2011, he was appointed
Global Head of Corporate, Business Banking and Products of
Commercial Banking, HSBC Group, then he became, in 2013, Global
Head of Mid-Market and Business Banking of Commercial Banking,
HSBC Group. He was Deputy Chief Executive Officer, Deputy to the
Chief Executive Officer of HSBC Continental Europe from 2015 to
2021 and Director of HSBC Continental Europe from 2015 to 2019.
He was Head of Commercial Banking in France from 2015 to 2018
and Head of Commercial Banking, Europe from 2017 to 2021. He has
been the Chief Executive Officer of HSBC Continental Europe since
2021 and Member of the Executive Committee of HSBC Bank plc
since 2018.

2023 | Directorships in the HSBC Group: Director and Chief Executive Director: HSBC Continental Europe. Vice Chairman and Director: HSBC Assurances Vie (France). Member of the Supervisory Committee: HSBC Bank plc Paris Branch.

3 Listed company

Universal Registration Document and Annual Financial Report 2024 | 25

2022 | Directorships in the HSBC Group: Director and Chief Executive Director: HSBC Continental Europe. Vice Chairman and Director: HSBC Assurances Vie (France). Member of the Supervisory Committee: HSBC Bank plc Paris Branch. Directorships outside the HSBC Group: Treasurer: Association Française des Banques. Chairman: Group of Banks under foreign control in France, Fédération Bancaire Française.
2021 | Directorships in the HSBC Group: Director and Chief Executive Officer: HSBC Continental Europe. Vice Chairman and Director: HSBC Assurances Vie (France). Member of the Supervisory Committee: HSBC Bank plc Paris Branch. Directorships outside the HSBC Group: Treasurer: Association Française des Banques. Chairman: Group of Banks under foreign control in France, Fédération Bancaire Française.
2020 | Directorships in the HSBC Group: Deputy Chief Executive Office: HSBC Continental Europe. Directorships outside the HSBC Group: Treasurer: Association Française des Banques. Chairman: Group of Banks under foreign control in France, Fédération Bancaire Française.

Irina Aggelidakis Director elected by employees

First elected: 2022. Term ends: 2025.
Principal position: Administrative Officer within the Social and
Economic Council - Management of the HSBC Continental Europe's
sport association.
Number of positions held within the meaning of L. 511-52 of the
French Monetary and Financial Code: one directorship as member of
a Board of Directors or a Supervisory Board.
Skills and experience: Born in 1971. Greek and French nationalities.
Graduated with a Professional Certificate in 'Banking' and of a BTS in
Advertising Measures and Communication. Since she joined HSBC
Continental Europe in 2008, she held the positions of Back-Office
Manager in the Commitments Department then Middle-Office
Manager in the Collection Department within the Retail Banking.
Since 2019, she has been Administrative Officer within the Social and
Economic Council in charge of the HSBC Continental Europe's sport
association management.

2023 | Directorship in the HSBC Group: Director elected by employees: HSBC Continental Europe.
2022 | Directorship in the HSBC Group: Director elected by employees: HSBC Continental Europe.
2021 | _
2020 | _

Paule Cellard Independent Director

First elected: 2017. Last re-elected: 2022. Term ends: 2025.
Other directorships: Director, Somfy 3.
Number of positions held within the meaning of L. 511-52 of the
French Monetary and Financial Code: Two directorships as member
of a Board of Directors or a Supervisory Board.
Skills and experience: Born in 1955. Graduated from the Ecole
Supérieure de Commerce de Paris (‘ESCP’ Europe). Degree in
International Law from the University Paris II-Assas and Corporate
Director Certificate from the French Institute of Directors, issued by
the Institut d'Etudes Politiques de Paris.
After having held various operational responsibilities within
Investment Banking and Markets activities at Banque Indosuez, at the
Chase Manhattan Bank and then at Crédit Agricole Group, she was
Head of the central team of Calyon’s Inspection Générale between
2000 and 2005, Chief Executive Officer of Gestion Privée Indosuez
between 2006 and 2009, and subsequently Global Head of
Compliance for Crédit Agricole Corporate and Investment Bank until
2013, when she retired. Since 2013, she has been holding several
directorships in boards and board committees.

2023 | Directorship in the HSBC Group: Independent Director: HSBC Continental Europe. Directorships outside of the HSBC Group: Director : Somfy.
2022 | Directorship in the HSBC Group: Independent Director: HSBC Continental Europe. Directorships outside of the HSBC Group: Member of the Supervisory Board: Damartex. Director Somfy.

2021 | Directorship in the HSBC Group: Independent Director: HSBC Continental Europe. Directorships outside of the HSBC Group: Member of the Supervisory Board: Damartex. Director: Somfy,CA Indosuez Wealth Management (Europe).
2020 | Directorship in the HSBC Group: Independent Director: HSBC Continental Europe. Directorships outside of the HSBC Group: Director: CA Indosuez Wealth Management (Europe). Member of the Supervisory Board: Damartex, Somfy.

Pablo Forero Independent Director

Member of the Risk Committee and since 1 Juanuary 2025, Chairman
of the Risk Committee, Member of the Audit Committee (since
1 January 2025) and Member of the Remuneration Committee (since
9 February 2024).
First elected: 2023. Term ends: 2026.

26 | Universal Registration Document and Annual Financial Report 2024

Corporate Governance report

Other directorships: Chairman of the Board of Directors, CaixaBank
Asset Management SGC. Director, Grupo Jose De Mello. Member of
the Executive Board, Camara de Comercio e Industria Luso-
Espanhola.
Number of positions held within the meaning of L. 511-52 of the
French Monetary and Financial Code: Three directorships as member
of a Board of Directors or a Supervisory Board.
Skills and experience: Born in 1956. Spanish nationality. Graduated
with a Bachelor in Macroeconomics from the Autonomous University
of Madrid. From 2017 until 2020, he was the Chief executive Officer
and Vice-Chairman of Banco BPI S.A. From 2009 to 2016, in
CaixaBank S.A. he was Chief Information Officer then Chief Officer
for Treasury, Capital Markets and Asset allocation for two years and
finally Chief Risk Officer during three years. Before that he was from
1990 to 1997 Head of Asset Management at JP Morgan in Madrid
then he assumed various senior roles with JP Morgan Asset
Management in London during 1998 and 1999. At the beginning of his
career in 1981, he worked in the Audit Department of Arthur
Andersen & Co for three years then became Head of Markets and
ALCO at Manufacturers Hanover Trust Co. during five years.

2023 | Directorship in the HSBC Group: Independent Director: HSBC Continental Europe. Directorships outside of the HSBC Group: Chairman of the Board of Directors: CaixaBank Asset Management SGC. Director: Grupo Jose De Mello. Member of the Executive Board: Camara de Comercio e Industria Luso-Espanhola.
2022 | –
2021 | –
2020 | –

Deirdre Hannigan Independent Director

Chairman of the Audit Committee and Member of the Risk
Committee
First elected: 2023.Term ends: 2026.
Other directorships: Director and since December 2024, Chair,
Dublin City University Education Trust. Director, New Ireland
Assurance Company plc (since April 2024).
Number of positions held within the meaning of L. 511-52 of the
French Monetary and Financial Code: two directorships as member of
a Board of Directors or a Supervisory Board.
Skills and experience: Born in 1960. Irish nationality. Graduated with
a Master of Business Studies from the University College Dublin. She
is a qualified accountant and a chartered director of the Institute of
Directors. From 2017 until 2022, Deirdre Hannigan was the Group
Chief Risk Officer and a member of the Executive Management team
of AIB Group Plc. She joined AIB from the National Treasury
Management Agency where she was Chief Risk Officer during two
years. Before that, she held a number of senior international risk
management roles with GE Capital and progressively senior roles in
Bank of Ireland, primarily in Strategy and Risk Management. Previous
to that, she worked in Retail and Corporate Banking with AIB and
Rabobank.

2023 | Directorship in the HSBC Group: Independent Director: HSBC Continental Europe. Directorships outside of the HSBC Group: Director: Dublin City University Education Trust.

2022 | –
2021 | –
2020 | –

Kerstin Lopatta Independent Director

Member of the Audit Committee
First elected: 2024. Term ends: 2027.
Other directorships: Member of the Supervisory Board, Eurokai
GmbH &Co KGaA, Freenet AG. Vice Chair of the Sustainability
Reporting Board and Special Liaison to the ISSB, European Financial
Reporting Advisory Group (EFRAG). Member of the Sustainability
Reporting Technical Committee, Accounting Standards Committee of
Germany (ASCG). Member of the Sustainable Finance Council,
German Ministry of Finance.
Number of positions held within the meaning of L. 511-52 of the
French Monetary and Financial Code: Three directorships as member
of a Board of Directors or a Supervisory Board.
Skills and experience:
Born in 1969. German nationality. Diploma in Business and
Economics from the Leibniz University in Hanover and Ph.D. at the
Chair of Business Administration, Auditing and Corporate Governance
from Goethe University in Frankfurt. She is a Professional Supervisory
Board Member of the German Stock Exchange and an EFFAS
Certified ESG Analyst® (CESGA). She is professor of Financial
Accounting, Auditing and Sustainability at the University of Hamburg,
adjunct professor at the Faculty of Law, Economics and Finance at
the University of Luxembourg, and affiliated with City University of
Hong Kong as a visiting professor. Before embarking on her academic
career, she worked as a consultant both within Deloitte & Touche
GmbH Hanover and Mannheim and Feix Steuerberatungsgesellschaft
Hanover.

2023 | –
2022 | –
2021 | –
2020 | –

Stephen O'Connor Vice-Chairman and Independent Director

Member of the Nomination and Corporate Governance Committee
First elected: 2021. Last re-elected 2022. Term ends: 2025.
Other directorship in the HSBC Group: Chairman, HSBC Bank plc.
Other directorships outside the HSBC Group: Director, FICC
Markets Standards. Chairman and Founder, Quantile Technologies
Limited. Board Directorship expired in 2024: Director, London Stock
Exchange plc.
Number of positions held within the meaning of L. 511-52 of the
French Monetary and Financial Code: two directorships as member of
a Board of Directors or a Supervisory Board.
Skills and experience: Born in 1961. British nationality. BSc in
Mechanical Engineering from Imperial College and Chartered
Accountant. After starting his career with PwC, he held various
positions in Markets activities, in particular derivatives, at Morgan
Stanley from 1988 to 2013.

Universal Registration Document and Annual Financial Report 2024 | 27

He was the non-executive Chairman of OTC Deriv LTD from 2001 to
2011 and of International Swaps and Derivatives Association ('ISDA')
from 2009 to 2014.
From 2013 to 2021, he was a member of the Board of the London
Stock Exchange Group where he also served as Chairman of the
Board Risk Committee and as a Member of the Audit and
Nominations Committees. He founded Quantile Technologies Ltd in
2015, where he is the Chair. Since 2018, he has been Chairman of the
Board and Chairman of the Nominations, Remuneration and
Governance Committee of HSBC Bank plc.

2023 | Directorships in the HSBC Group: Independent Director: HSBC Continental Europe. Chairman: HSBC Bank plc. Directorships outside of the HSBC Group: Chairman and Founder: Quantile Technologies Limited. Director: London Stock Exchange plc, FICC Markets Standards Board.

2022 | Directorships in the HSBC Group: Independent Director: HSBC Continental Europe. Chairman: HSBC Bank plc. Directorships outside of the HSBC Group: Chairman and Founder: Quantile Technologies Limited. Director: London Stock Exchange Group plc, London Stock Exchange plc, FICC Markets Standards Board.
2021 | –
2020 | –

Pascale Peluso Director elected by employees

First elected: 2022. Term ends: 2025.
Principal position: Chief Operating Officer – Principal Investment
Support and Head of Affiliates and Participations Department HSBC
Continental Europe.
Number of positions held within the meaning of L. 511-52 of the
French Monetary and Financial Code: one directorship as member of
a Board of Directors or a Supervisory Board.
Skills and experience: Born in 1967. Graduated with a Master's
Degree in Law, Economics and Management for Professional
Purposes, major in Finance and with the Certification of the French
Financial Market Authority. She joined HSBC in 1989. From 1993 to
2010, she was Head of Securities Back-Office at HSBC Securities
(France). Since 2011, she has been Chief Operating Officer – Principal
Investment Support of HSBC Continental Europe. She was also
appointed Head of the Subsidiairies and Investments Department in
2012 and Chief Financial Officer of HSBC Real Estate Leasing (France)
in 2018.

2023 | Directorship in the HSBC Group: Director elected by employees: HSBC Continental Europe.
2022 | Directorship in the HSBC Group: Director elected by employees: HSBC Continental Europe.
2021 | –
2020 | –

Dominique Perrier Independent Director

Member of the Audit Committee
First elected: 2018. Last re-elected: 2022. Term ends: 2025.
Other directorships: Director, NaturaBuy. Chairman, Moncey
Arbitrage et Conseil. Manager, YP Con seil. Co-manager, Perrier/
Giroire Communication.
Number of positions held within the meaning of L. 511-52 of the
French Monetary and Financial Code: one directorship as executive
and two directorships as member of a Board of Directors or a
Supervisory Board.
Skills and experience: Born in 1954. Graduated from the French
Business School ESSEC and Certified Public Accountant. Mediator
certified by Ecole Professionnelle de la Médiation et de la
Négociation. After practising as external auditor at Peat Marwick and
then, from 1988, as an audit and consulting partner at
PricewaterhouseCoopers Audit (‘PwC’), she took over the
development of PwC Dispute Analysis and Investigation department
from 2001 to 2016. From 2004 to 2008, she also managed the PwC
Restructuring activities. Retired since 2017, she intervenes, on the
one hand, as an independent director and, on the other hand, as
arbitrator, independent expert and mediator.

2023 | Directorship in the HSBC Group: Independent Director: HSBC Continental Europe. Directorships outside of the HSBC Group: Chairman: Moncey Arbitrage et Conseil. Director: NaturaBuy. Manager: YP Conseil. Co-manager : Perrier/Giroire Communication.
2022 | Directorship in the HSBC Group: Independent Director: HSBC Continental Europe. Directorships outside of the HSBC Group: Chairman: Moncey Arbitrage et Conseil. Director: NaturaBuy. Manager: YP Conseil.
2021 | Directorship in the HSBC Group: Independent Director: HSBC Continental Europe. Directorships outside of the HSBC Group: Chairman: Moncey Arbitrage et Conseil. Director: NaturaBuy. Manager: YP Conseil.
2020 | Directorship in the HSBC Group: Independent Director: HSBC Continental Europe. Directorships outside of the HSBC Group: Chairman: Moncey Arbitrage et Conseil. Director: NaturaBuy.

Arnaud Poupart-Lafarge Independent Director

Chairman of the Nomination and Corporate Governance Committee
and Chairman of the Remuneration Committee.
First elected: 2016. Last re-elected: 2022. Term ends: 2025.
4 Listed Company.

28 | Universal Registration Document and Annual Financial Report 2024

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Principal position: Chief Executive Officer, Galliance (until 1 January
2025). Chief Executive Officer, Elivia (since September 2024).
Number of positions held within the meaning of L. 511-52 of the
French Monetary and Financial Code: one directorship as executive
and one directorship as member of a Board of Directors or a
Supervisory Board.
Skills and Experience: Born in 1965. Engineer graduated from the
Ecole Polytechnique and the Ecole Nationale des Ponts et Chaussées.
Holds a Master of Science in Engineering Management from Stanford
University. Within the ArcelorMittal group, led operations in Europe,
Africa and CIS; member of the Management Council of the
ArcelorMittal group until 2013. Managing Director of Nexans from
2014 to 2018, after joining the company in 2013 as Director of
Operations. From 2019 to 2022, President of Racilia.
He was the CEO of Galliance from 2020 until 1 January 2025 and has
been the VCEO of Elivia since September 2024.

2023 | Directorship in the HSBC Group: Independent Director: HSBC Continental Europe. Directorship outside of the HSBC Group: Chief Executive Officer: Galliance.
2022 | Directorship in the HSBC Group: Independent Director: HSBC Continental Europe. Directorship outside of the HSBC Group: Chief Executive Officer: Galliance.
2021 | Directorship in the HSBC Group: Independent Director: HSBC Continental Europe. Directorships outside of the HSBC Group: Chairman: Racilia. Chief Executive Officer: Galliance.
2020 | Directorship in the HSBC Group: Independent Director: HSBC Continental Europe. Directorships outside of the HSBC Group: Chairman: Racilia. Chief Executive Officer: Galliance.

Lucile Ribot Independent Director

Member of the Audit Committee
First elected: 2016. Last re-elected: 2023. Term ends: 2026.
Other directorships: Director, Imerys 4. Director, Kaufman & Broad
SA 4.
Number of positions held within the meaning of L. 511-52 of the
French Monetary and Financial Code: three directorships as member
of a Board of Directors or a Supervisory Board.
Skills and experience: Born in 1966. Graduated from the Ecole des
Hautes Etudes Commerciales de Paris (‘HEC’). Senior Audit Manager
at Arthur Andersen (audit and consulting) from 1989 to 1994. She
joined the Fives Group in 1995 as a Group Financial Controller. From
1996 to 1997, Chief Financial and Administrative Officer of the
subsidiary Fives Solios. From 1998 to 2017, Chief Financial Officer of
Fives and Member of the Management Board from 2002 to 2017.

2023 | Directorship in the HSBC Group: Independent Director: HSBC Continental Europe. Directorships outside of the HSBC Group: Director: Imerys, Kaufman & Broad SA.

2022 | Directorship in the HSBC Group: Independent Director: HSBC Continental Europe. Directorships outside of the HSBC Group: Director: Imerys, Kaufman & Broad SA.
2021 | Directorship in the HSBC Group: Independent Director: HSBC Continental Europe. Directorships outside of the HSBC Group: Director: Imerys, Kaufman & Broad SA.
2020 | Directorship in the HSBC Group: Independent Director: HSBC Continental Europe. Directorships outside of the HSBC Group: Director: Imerys, Kaufman & Broad SA. Member of the Supervisory Committee: Acropole Holding SAS, Siaci Saint Honoré.

Eric Strutz Independent Director

Member of the Risk Committee since 1 January 2025, Chairman of
the Risk Committee (until 31 December 2024) and Member of the
Audit Committee (until 31 December 2024).
First elected: 2022. Term ends: 2025.
Other directorship in the HSBC Group: Director, HSBC Bank plc.
Other directorships outside the HSBC Group: M ember of the
Board of Directors, Global Blue Group Holding AG. Member of the
Advisory Council, Luxembourg Investment Company 261 S.à.r.l.
Member of the Foundation Council Stiftung Tumorforschung Kopf-
Hals.
Number of positions held within the meaning of L. 511-52 of the
French Monetary and Financial Code: three directorships as member
of a Board of Directors or a Supervisory Board.
Skills and experience: Born in 1964. German nationality. Graduated of
a Bachelor Degree and a Doctorate from the University of St. Gallen,
in Switzerland, and an MBA in Finance from the University of Chicago,
USA. Eric Strutz started his carrier at Boston Consulting Group in
1993, where he was Consultant then a Director from 2000. He joined
Commerzbank in 2001 as Group Head of Strategy, and was Chief
Financial Officer from 2003 to 2012, and Member of the Management
Board from 2004 to 2012. From 2015 to August 2023, he was
Member of the Supervisory Board and Chairman of the Audit
Committee of HSBC Trinkaus & Burkhardt GmbH. He has been an
independent non-executive Director, Chairman of the Risk
Committee, Member of the Audit Committee and of the Nomination,
Remuneration and Corporate Governance Committee of HSBC Bank
plc since 2016.

2023 | Directorships in the HSBC Group: Director: HSBC Continental Europe. Director, HSBC Bank plc. Other directorships outside the HSBC Group: M ember of the Board of Directors, Global Blue Group Holding AG. Member of the Advisory Council, Luxembourg Investment Company 261 S.à.r.l. Member of the Foundation Council Stiftung Tumorforschung Kopf-Hals.

5 Director standing for re-election at the Annual General Meeting to be held on 24 March 2025.

Universal Registration Document and Annual Financial Report 2024 | 29

2022 | Directorships in the HSBC Group: Director: HSBC Continental Europe. Director, HSBC Bank plc. Member of the Supervisory Board, HSBC Trinkaus & Burkhardt GmbH. Other directorships outside the HSBC Group: M ember of the Board of Directors, Global Blue Group Holding AG. Member of the Advisory Council, Luxembourg Investment Company 261 S.à.r.l. Member of the Foundation Council Stiftung Tumorforschung Kopf-Hals.
2021 | –
2020 | –

Michaël Trabbia Independent Director

Member of the Risk Committee
First elected: 2022. Term ends: 2025 5.
Principal position: Executive Vice President and Chief Executive
Officer Orange Wholesale, Orange Group.
Other directorships: Chairman, Orange Concessions. Chairman, Bleu
(since March 2024). Director, Totem. Director, Nordnet. Chairman of
the Supervisory Committee, FT Marine.
Number of positions held within the meaning of L. 511-52 of the
French Monetary and Financial Code: Two directorships as member
of a Board of Directors or a Supervisory Board.
Skills and Experience: Born in 1976. Graduated of Ecole
Polytechnique and of Télécom ParisTech, and holding a Master’s of
Advanced Studies in Industrial Economics. Michaël Trabbia began his
career in 2001 at ARCEP (French National Regulatory Authority for
telecommunications and posts) where he was notably in charge of
the allocation and control of the mobile licences. In 2004, he was
appointed Technical Advisor to the cabinet of the Minister for
European Affairs, before joining the cabinet of the Minister for
Regional Development as Advisor for "ICT and Europe" in 2005. In
2007, he joined TDF (a french network and infrastructure operator) as
Head of Strategy and Development. In 2009, he was appointed
Deputy Chief of Staff to the Minister of Industry and Head of
"Industrial Sectors Policy", before joining the Orange Group in 2011
where he was the Group’s Director (SVP) for Corporate Public Affairs.
He then became in 2014 Chief of Staff for the Chairman and Chief
Executive Officer of Orange, and Secretary of the Group’s Executive
Committee. From 2016 to 2020, Michaël Trabbia served as Chief
Executive Officer of Orange Belgium and was then Chief Technology
and Innovation Officer and Group Head of Innovation from 2020 to
2023. He has been the CEO Wholesale of Orange Group since 2023.

2023 | Directorships in the HSBC Group: Director: HSBC Continental Europe. Directorships outside of the HSBC Group: Chairman Orange Concessions,Director,Totem, Nordnet. Chairman of the Supervisory Committee, FT Marine.

2022 | Directorships in the HSBC Group : Director: HSBC Continental Europe. Directorships outside of the HSBC Group: Chairman of the Board, Viaccess SA. Chairman of the Board, Sofrecom. Chairman of the Board, Soft@home. Director, Nordnet. Director, BuyIn S.A. Board Member, GSMA.
2021 | –
2020 | –

Emmanuelle Vigneron Director elected by by employees

Member of the Remuneration Committee
First elected: 2024. Term ends: 2025.
Principal position: Equity Analyst, Mid Cap Value & Growth, HSBC
Continental Europe.
Number of positions held within the meaning of L. 511-52 of the
French Monetary and Financial Code: One directorship as member of
a Board of Directors or a Supervisory Board.
Skills and experience: Born in 1974. Master’s degree in Bank and
Finance from the University of Paris-Sorbonne. Graduate of the CFAF.
Since she joined HSBC Continental Europe in 2006, she has held
various positions as Financial Analyst.

2023 | -
2022 | –
2021 | –
2020 | –

Board diversity
The diversity policy of the management body aims at reaching a
balance and a complementarity of age, gender, geographic,
professional and educational experience, independence, seniority in
the mandate and representation of employees.
The profiles of the Directors are diverse and complementary and
cover the spectrum of business lines and risks associated with the
activities of HSBC Continental Europe. According to the Articles of
Association, the Board of Directors includes four members elected by
the employees.
The Board includes six different nationalities and two-thirds of
Directors have international experience. As at 31 December 2024, the
average age of the Directors in office is 59.6, slightly higher than 55.9
at 31 December 2023, and their average tenure in the function is 4.9
years, slightly higher than 4.1 in 2023. Excluding Directors elected by
employees, the Board comprises five women and seven men, i.e. 42
per cent of women and 58 per cent of men.
Independent Directors
With respect to the criteria on independence defined in the guidelines
on the assessment of the suitability of members of the management
body issued by the European Banking Authority ('EBA') and the
European Securities and Markets Authority (‘ESMA’) and by the HSBC
Group, the Board of Directors determines, on appointment and
annually thereafter, whether each non-executive Director may be
considered as independent.

30 | Universal Registration Document and Annual Financial Report 2024

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To do this, it examines whether there are relationships or
circumstances which are likely to affect, or could appear to affect, the
Director’s judgement. The Board should record its reasons if it
determines that a Director is independent notwithstanding the
existence of relationships or circumstances which may appear
relevant to its determination. As at 31 December 2024, ten Directors
can be deemed indepen dent, i.e. 67 per cent of all Directors.
Board evaluation
Pursuant to HSBC Group's policy, a Board evaluation was conducted
internally in December 2024, under the responsibility of the
Nomination and Corporate Governance.
Committee and on the basis of a questionnaire covering the following
themes:
– for the Board: strategy, risk and financial performance; Board and
committee composition and structure; management performance;
corporate culture and conduct; meeting materials and process; role
of Company Secretary; Director self-assessment, training and
succession; and Board behaviours, culture and effectiveness.
– for each of the Board Committees: committee performance;
committee composition and structure; management performance
and succession; meeting materials and process; and Committee
behaviours, culture and effectiveness.
Results of this evaluation and the update on main actions
implemented further to the evaluation conducted the year before
were discussed by each of the Board Committes and then by the
Board of Directors at its meeting of 7 February 2025.
The overall opinion regarding the Board and its Committees as well as
their effectiveness remains broadly positive. Actions were discussed
and decided upon by each Board Committee in relation to their
activities and by the Board. These actions related for example to
training, Board Committees membership, the involvement of the
Board in developing the strategy, and wider support to the Board.
Directors’ training and information
As required by the Board’s internal rules, Directors receive the
information they need to fulfil their duties and may ask to receive any
documents they deem useful.
In particular, the Board and the Board Committees may ask for a
presentation on a particular subject or issue at a future meeting.
According to the policy on training of the management body's
members, all new Directors, when taking up duty, receive an
information pack on HSBC Continental Europe, including legal
information about the company and the role of Directors, as well as
the latest Universal Registration Document.
In addition, the Company Secretary organises, for the new Director’s
benefit and depending on his/her needs and priorities, a programme
of training sessions with HSBC Continental Europe’s main executives
in the business lines and functions. Directors in office are also able to
attend these sessions. Thus, in 2024, induction programmes were
organised for the new Director elected by employees and then for the
new independent Director, with some training sessions delivered in
late 2024 and the remaining scheduled in 2025.
In addition, ten training sessions were organised during the year for
the entire Board: four on ESG-related topics, three on technology and
data issues, two on recovery and resolution, and one on IFRS17.
A deep dive on credit models was also organised jointly for the
Boards of both HSBC Continental Europe and HSBC Bank plc.
Furthermore, Directors completed training, during the year, in the
form of e-learning on risk management, health and safety, wellbeing,
protective security and sustainability, anti-money laundering, terrorist
financing, proliferation financing, sanctions, fraud, tax transparency,
anti-bribery and corruption, insider threat, data, cybersecurity, bullying,
harassment, discrimination and retaliation and regulatory conduct.
Meetings of the Board of Directors and of the Board’s Committees
are also used as an opportunity to provide Directors with information
that is essential for them to carry out their duties, and to update their
knowledge.
Moreover, the HSBC Group is also organising sessions, focusing on
independent non-executive directors and Board chairs. For example,
the Chairman of the Board and the independent non-executive
directors were invited to attend a Global NED Update in September
2024. In 2024, the HSBC Group launched a Bank Chair Programme,
involving the chairs of boards and boards committees across the
HSBC Group's entities. The Chairman of the Board and the
Chairpersons of the Audit and Risk Committees regularly attend
sessions bringing together their counterparts from the main European
entities.
Directors’ remuneration
The maximum total remuneration payable each year to Directors was
fixed at EUR 1.8 million, as decided by the Ordinary General Meeting
of 25 March 2024.
This remuneration is allocated according to the following rules,
decided by the Board of Directors at its meeting on 20 July 2023:
– each Director is allocated an annual flat fee of EUR 65,000, paid at
the conclusion of the Annual General Meeting;
– the additional annual flat fee paid to Board Committees members
amounts to;
– EUR 40,000 for the Chair of the Audit Committee;
– EUR 45,000 for the Chair of the Risk Committee;
– EUR 25,000 for the members of the Audit Committee and of the
Risk Committee;
– EUR 13,000 for the Chair of the Nomination and Corporate
Governance Committee;
– EUR 11,000 for the members of the Nomination and Corporate
Governance Committee;
– EUR 10,000 for the Chair of the Remuneration Committee; and
– EUR 8,500 for the members of the Remuneration Committee.
Furthermore, within the HSBC Group, it is customary for Directors
performing other executive duties in the Group and Executive
Directors to renounce their remuneration in respect of their
directorships held in HSBC Group companies. Directors and Executive
Directors of HSBC Continental Europe and its subsidiaries adhere to
this recommendation.
In 2024, in respect of 2023, Jean Beunardeau and Andrew Wild
renounced the payment of their remuneration in respect of their
directorship in HSBC Continental Europe. It also has to be noted that,
since his appointment as Chairman of the Board of Directors as of 15
July 2021, Jean Beunardeau has received compensation solely for his
role as Vice Chairman Global Banking Europe, which includes

Universal Registration Document and Annual Financial Report 2024 | 31

eligibility to a defined benefits supplementary pension scheme, and
does not receive compensation in the context of his role as Chairman
of the Board and as Director.
Moreover, in order to comply with the rules applied by the HSBC
Group, the Directors’ attendance record is not taken into account in
calculating Directors’ remuneration.
The total Directors’ remuneration net of social contributions, income
tax prepayment and withholding tax to be paid in 2025 in respect of
2024 amounts to EUR 0.89 million, to be compared to EUR 0.69
million paid in 2024 in respect of 2023.

Remunerations paid to Non-Executive Directors by HSBC Continental Europe, the companies it controls and the companies which control it (the HSBC Group)
| Remuneration in respect of the directorship paid in 2023 in respect of 2022 | Remuneration in respect of the directorship paid in 2024 in respect of 2023 | Other compensation paid in 2023 1 | Other compensation paid in 2024 1
Directors performing their principal position in an entity of the HSBC Group |  |  |  |
Jean Beunardeau | — | — | EUR 2,208,729 | EUR 2,164,631
Directors elected by the employees |  |  |  |
Irina Aggelidakis 2,3 | EUR 10,350 | EUR 41,400 | — | —
Ludovic Bénard 2,3,4 | EUR 10,350 | EUR 47,852 | — | —
Christine D'Amore 3,5 | EUR 36,329 | EUR 36,329 | — | —
Elisabeth Moussi 2,3,4 | EUR 10,350 | EUR 41,400 | — | —
Pascale Peluso 2,3 | EUR 10,350 | EUR 41,400 | — | —
Lucie Thalamas Dit Barathe 3,5 | EUR 31,050 | — | — | —
Angélique Terrazzino 5 | EUR 31,050 | — | — | —
Directors not performing executive duties within the HSBC Group 6 |  |  |  |
Paule Cellard | EUR 55,650 | EUR 55,650 | — | —
Pablo Forero 7 | — | EUR 15,478 |  |
Deirdre Hannigan 8 | — | EUR 46,216 |  |
Lindsay Gordon 9 | EUR 19,207 | — | — | —
Philippe Houzé 9 | EUR 10,208 | — | — | —
Thierry Moulonguet 9 | EUR 15,458 | — | — | —
Stephen O'Connor | EUR 263,733 10 | EUR 262,420 11 | — | —
Dominique Perrier | EUR 49,700 | EUR 49,700 | — | —
Arnaud Poupart-Lafarge | EUR 48,563 | EUR 49,000 | — | —
Lucile Ribot | EUR 69,096 | EUR 61,950 | — | —
Eric Strutz 12 | EUR 289,073 13 | EUR 247,438 14 | — | —
Carola von Schmettow 15 | EUR 43,600 | EUR 43,600 | — | —
Brigitte Taittinger 9 | EUR 7,292 | — | — | —
Michaël Trabbia 12 | EUR 39,346 | EUR 49,700 | — | —

1 Fixed and other fixed remuneration, variable remuneration and benefits in kind.
2 Election by employees on 26 September 2022.
3 Renounced remuneration to the benefit of a trade union organisation, net of social contributions.
4 End of Directorship on 6 February 2025.
5 End of Directorship on 26 September 2022.
6 Amounts paid net of social contributions, income tax prepayment, and, where applicable, withholding tax.
7 Appointed on 6 October 2023.
8 Appointed on 30 June 2023.
9 End of Directorship on 11 March 2022.
10 Of which EUR 49,468 paid by HSBC Continental Europe.
11 Of which EUR 51,012 paid by HSBC Continental Europe.
12 Appointment on 11 March 2022.
13 Of which EUR 73,175 paid by HSBC Continental Europe.
14 Of which EUR 92,432 paid by HSBC Continental Europe.
15 End of Directorship on 25 March 2024.

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Duties and procedures of the Board of
Directors
The Board internal rules govern the Board’s functioning and include
the main duties under the Board’s responsibility. The Board's
functioning takes into account HSBC Continental Europe’s position as
a 99.9 per cent held subsidiary of the HSBC Group. Under its internal
rules, the Board:
– constructively challenges the strategy and determines strategic
orientations, on the basis of the strategy formulated by General
Management, and oversees and monitors their implementation. It
approves strategic investments/divestments and all transactions
liable to impact earnings significantly;
– oversees and monitors management decision-making and actions
and provides effective oversight of the effective managers and
constructively challenges and critically reviews proposals and
information provided by the effective managers, as well as their
decisions;
– oversees and monitors that HSBC Continental Europe’s strategic
objectives, organisational structure and risk strategy, including its
risk appetite and risk management framework, as well as other
policies (e.g. remuneration policy) and the disclosure framework
are implemented consistently;
– monitors and supervises major risks and reviews regular risk
management reports, setting out the risks involved in the HSBC
Continental Europe’s business and results;
– monitors that the risk culture is implemented consistently;
– sets HSBC Continental Europe’s values and principles and
oversees the implementation and maintenance of a code of
conduct or similar and effective policies to identify, manage and
mitigate actual and potential conflicts of interests;
– oversees the integrity of financial information and reporting, and
the internal control framework, including an effective and sound
risk management framework;
– ensures that the heads of internal control functions, namely the
Chief Risk Officer, the Chief Compliance Officer and the Head of
Internal Audit, are able to act independently and, regardless of the
responsibility to report to other internal bodies, business lines or
units, can raise concerns and warn the Board where necessary
when adverse risk developments affect or may affect the
institution;
– deliberates on all questions pertaining to its legal and regulatory
obligations and those stemming from its Articles of Association;
and
– cares about HSBC Group's reputation in Continental Europe.
In the week prior to the meeting, the Directors receive the meeting
file, including the agenda, the draft minutes of the previous Board
meeting and supporting papers to the agenda items to be discussed
at the meeting. When certain items are of high confidentiality or
cannot be disclosed in advance, the necessary documents are
provided immediately before or during the meeting. Furthermore,
Directors are regularly advised of significant events regarding the
company and receive the relevant documents.
Board of Directors’ work
The Board of Directors met 13 times during 2024. The average
attendance rate was 91 per cent, compared to 12 meetings with an
average attendance rate of 90 per cent in 2023:
– 9 February 2024 (attendance rate: 100 per cent);
– 20 February 2024 (attendance rate: 87 per cent);
– 25 March 2024 (attendance rate: 87 per cent);
– 23 April 2024 (attendance rate: 100 per cent);
– 13 May 2024 (attendance rate: 93 per cent);
– 28 June 2024 (attendance rate: 93 per cent);
– 19 July 2024 (attendance rate: 86 per cent);
– 30 July 2024 (attendance rate: 86 per cent);
– 20 September 2024 (attendance rate: 86 per cent);
– 24 October 2024 (attendance rate: 100 per cent);
– 12 November 2024 (attendance rate: 87 per cent);
– 6 December 2024 (attendance rate: 87 per cent); and
– 12 December 2024 (attendance rate: 87 per cent).
Businesses and strategy
At each of its meetings, the Board monitored the progress of the
strategy and ensured the current and future sustainability of the
business model. It was also given detailed presentations on specific
parts of the business to ensure a proper oversight from the Board.
From a context perspective, the Board was given geopolitical and
macroeconomic updates to support its discussions.
In order to increase its involvement in the assessment and validation
of the strategy and associated transformation projects, the Board
decided, at its meeting of 9 February 2024, to establish a Strategy
Forum to support the decisions relating to strategy to be made by the
Board.
Throughout 2024, the Board continued to take decisions to build a
leaner, simpler bank with a sharper strategic focus and an ambition to
grow and to oversee the implementa tion of the execution of the
strategic initiatives. The main decisions included the following:
– on 13 May 2024, the Board approved the sale of the shares held
by HSBC Continental Europe in HSBC Epargne Entreprise to
Natixis Interépargne;
– on 20 September 2024, following a strategic review, the Board
approved the disposal of the private banking business of HSBC
Continental Europe in Germany to BNP Paribas, subject to the
Works Council negotiations and regulatory approval;
– in accordance with the terms of the sale of the retail banking
operations on 1 January 2024, HSBC Continental Europe retained
a portfolio of EUR 7.1 billion at the time of sale, consisting of
home and certain other loans. At its meeting of 24 October, the
Board endorsed the launch of marketing the sale of this portfolio,
which was announced by the HSBC Group on 29 October 2024;
and
– on 12 December 2024, following a strategic review, the Board
approved the disposal of the French Insurance business to
Matmut SAM, subject to the parties’ information and consultation
processes with their respective employees’ works councils and
relevant regulatory and competition approvals.
The Board paid particular attention to the human resources risk and
people engagement in the context of transformation.
Furthermore, the Board reviewed and approved the technology
strategy HSBC Continental Europe sustainability and monitored its
implementation. Moreover, the Board member designated to oversee
IT topics, due to his expertise in this area, reported to the Board at
each quarterly meeting of the Board.
6 Details on related-party agreements are available on page 39.

Universal Registration Document and Annual Financial Report 2024 | 33

Technology
In 2024, the Board discussed in detail technology related topics,
including the strategy and its execution, operational resilience,
budget.
In addition to the presentations from management, the Board
received regular verbal reports by its member who had been tasked
with a specific oversight over IT.
ESG
In 2024, the Board reviewed the sustainability strategy of HSBC
Continental Europe and was regularly updated on climate-related and
environmental risks and on the double materiality assessment
process.
The Board reviewed the governance framework for ESG, including the
roles and responsibilities of the Board and its Committees with
respect to ESG strategy and oversight and the executive governance.
Considering the increasing importance of ESG across the board and in
order to enhance its knowledge in this area, the Board decided, at its
meeting of 20 September 2024, to appoint Kerstin Lopatta as an
expert with extensive experience in sustainability, including reporting.
She has been designated by the Board to oversee ESG topics and
reports to the Board on these topics. Since her appointment, she has
focused her attention on the implementation of the Corporate
Sustainability Reporting Directive ('CSRD'), and in particular the first
CSRD report to be published in 2025.
The Board decided to propose to the shareholders to appoint PwC as
the sustainability statutory auditor in relation with the CSRD report.
People and Culture
In 2024, the Board discussed the People strategy and the Culture
plan.
Finance
At each of its quarterly meetings, the Board reviewed the financial
performance and changes in the balance sheet of HSBC Continental
Europe. For each period considered, it heard the conclusions of the
Statutory Auditors, who were invited to attend all Board meetings. In
addition, the Board reviewed the quarterly, half-yearly and annual
financial statements and signed off on the half-yearly and annual
financial statements.
At its meeting on 6 December 2024, the Board reviewed and
approved the budget and the capital and liquidity plans for 2025, after
preliminary version presented at its meeting on 24 October 2024.
The Board was informed of developments in regulatory capital and
regulatory ratios, in particular capital, liquidity, solvency and leverage
ratios as well as projections on these matters.
The Board also reviewed and approved the dividend policy, the
Internal Capital Adequacy Assessment Process (‘ICAAP’) and the
Internal Liquidity Adequacy Assessment Process (‘ILAAP’) reports,
and the stress testing framework.
The Board reviewed and approved non-audit services rendered by the
Statutory Auditors as necessary.
Finally, the Board monitored the progress of work on recovery and
resolution planning and approved the recovery plan before its
submission to the European Central Bank.
Risk management
At each quarterly meeting, the Board reviewed the HSBC Continental
Europe group’s risk position, financial as well as non-financial risks.
For this purpose, it is supported in particular by the core risk reports
(risk map, top and emerging risks and risk appetite statement) and by
the reports given at the meetings by the Chief Risk Officer and the
Chair of the Risk Committee.
In addition, it reviewed updates to the risk management framework
and policies and reviewed certain risk appetite metrics and thresholds
during the year.
The Directors have also access to the Risk Committee’s supporting
documentation.
The Board reviewed and approved where necessary the annual
reports on internal control and on the organisation of the financial
crime internal control system, sent to the Autorité de contrôle
prudentiel et de résolution ('ACPR').
The work of Internal Audit, in particular the reports that were the
subject of an adverse rating and the evolution in the number of open
recommendations, as well as the resources of Internal Audit were
discussed regularly, in particular by the Audit Committee. In addition,
the Head of Internal Audit presented his annual report to the Board at
its meeting on 9 February 2024. The Board reviewed and approved
the Internal Audit Plan for 2025 at its meeting 6 December 2024.
Regulatory environment and supervision
The Board received regular reports on the changes in the regulatory
landscape and how they were managed by HSBC Continental Europe.
In addition, the Board closely followed the engagements with the
various supervisors and in particular the findings of their assessments
and inspection missions.
On 9 February 2024, the Joint Supervisory Team of the European
Central Bank and the ACPR presented to the Board the results of their
work carried out in 2023 and their priorities, expectations and
supervisory programme for 2024, enabling an exchange of views with
the Directors.
Governance
The Board deliberated, notably on the basis of the work of the
Remuneration and Nomination and Corporate Governance
Committees, on the various subjects that fall under its responsibility,
in accordance with the laws and regulations in force, in particular with
regard to remuneration and assessment of the suitability of the
management body, composition of the Board and specialised Board
committees, training of the management body, management of
conflicts of interests, Board performance, and delegation of authority
framework.
The Board also reviewed and updated the corporate governance
policies for which it is responsible. It also examined the updates of
the governance rules applying to HSBC Group entities (Subsidiary
Accountability Framework).
The Board approved the reports of the Board of Directors to the
General Meeting and on corporate governance for the 2023 financial
year, the half-yearly report of the Board at 30 June 2024 as well as
the publications relating to the annual and half-yearly results.
During 2024 financial year, the Board did not authorise any new
related-party agreements. The Board examined the agreements
entered into and authorised by the Board during previous financial
years and whose execution has continued, in accordance with Article
L. 225-40-1 of the French Commercial Code 6.
The work of the Board Committees was set out in regular, detailed
reports from their respective Chairpersons and was debated during
Board meetings. In this regard, the Board was kept informed at each
meeting about the main topics discussed, recommendations, and
points of action identified by the Committee.

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Finally, at each Board meeting, a report was given on the action
points requested by the Board at previous meetings, with specific
presentations where necessary.

Board Committees
The Board is assisted by four specialised Committees: Audit
Committee, Risk Committee, Nomination and Corporate Governance
Committee and Remuneration Committee. Their duties are defined in
the Board’s internal rules.
Audit Committee

Composition of the Audit Committee
Chairperson |
Deirdre Hannigan (independent) | Appointed in 2023
Members |
Pablo Forero (independent) | Appointed on 1 January 2025
Kerstin Lopatta (independent) | Appointed in 2024
Dominique Perrier (independent) | Appointed in 2019
Lucile Ribot (independent) | Appointed in 2017 (Chair from 2022 to 2023)
Eric Strutz (independent) | From 2022 to 31 December 2024

Further to his appointment as Chairman of the Risk Committee from
1 January 2025, Pablo Forero was appointed as a Member of the
Audit Committee from the same date, replacing Eric Strutz.
The Audit Committee members are highly qualified in banking,
financial, accounting, sustainability reporting and control areas, as
they serve or have in the past served as Audit Committee member,
Chief Financial Officer, Chief Risk Officer, including for banks, Expert
with regulatory advisory bodies or as Statutory Auditor. Cross-
membership of the Audit and Risk Committees Chairs ensures an
appropriate interaction between both committees.
Audit Committee’s duties
The Audit Committee is accountable to the Board. The Committee
oversees and advises the Board on matters relating to the budget,
financial reporting, internal control of financial information, capital and
liquidity ratios to support the Risk Committee, the dividend policy and
capital allocation, management of the Finance function and Internal
Audit.
The Committee in particular reviews:
– the integrity of the financial statements, formal announcements
and disclosures relating to financial performance;
– the effectiveness of Internal Audit and the external audit process;
and
– the effectiveness of internal financial control systems.
The Committee and its Chair had the opportunity to meet the
Statutory Auditors and the Head of Internal Audit regularly, including
in private sessions to ensure that there are no unresolved issues or
concerns. In carrying out these duties and responsibilities, the
Committee may consult any adviser or expert as it deems
appropriate.
To give itself sufficient time to review the accounts before they are
reviewed by the Board, the Audit Committee meets a few days
before the Board insofar as possible.
Lastly, at the request of the HSBC Bank plc’s Audit Committee, the
HSBC Continental Europe’s Audit Committee Chairperson provides a
half-yearly certificate to the Audit Committee Chairman of HSBC Bank
plc, HSBC Continental Europe’s direct shareholder, confirming, in
particular, that the accounts were reviewed by the Committee and
that the internal control system of financial reporting appears to be
appropriate.
Audit Committee’s work in 2024
The Audit Committee met six times in 2024, with an attendance rate
of 100 per cent, compared to seven meetings with an attendance rate
of 100 per cent in 2023:
– 7 February 2024;
– 19 February 2024;
– 22 April 2024;
– 17 July 2024;
– 29 July 2024; and
– 18 October 2024.
Each meeting was also attended by the Statutory Auditors, the Chief
Financial Officer, the Chief Accounting Officer, the Head of Internal
Audit and the Chief Risk Officer. The Chief Executive Officer and the
Deputy Chief Executive Officer also attended Committee meetings to
answer any questions. HSBC Continental Europe executives also
attend Committee meetings covering any subjects falling under their
responsibility.
The first aspect of the Committee’s work involved an in-depth review
of the annual, half-yearly and quarterly financial statements prior to
their presentation to the Board. The Audit Committee reviewed the
parent company and consolidated accounts, as well as the
publications relating to the annual results. The Committee was
informed by the Finance Department of the main accounting and tax
points of attention and discussed the choices made by the company
in drawing up its financial statements and verified the adequacy of
provisions for identified risks, especially provisions for credit risk.
The Committee paid particular attention to accounting incidents and
the related remediation work, sustainability reporting under the EU
Taxonomy, Pillar 3 and in preparation for the first disclosure of the
CSRD report.
Throughout the year, the Committee remained attentive to monitoring
the cost base, including technology spend.
The Committee recommended to the Board the renewal of financial
statutory auditors, as well as the appointment of a sustainability
statutory auditor in relation with the CSRD report.
The Committee was also informed of the Finance system strategy
and of changes in the organisation of the Finance department.
The second area of the Committee’s work concerned controls. To this
end, the Statutory Auditors reported on matters requiring particular
attention at the time of preparing t he financial statements. Every
quarter, the Statutory Auditors presented th eir diligences on the
financial statements. The Committee discussed the Statutory
Audit ors’ audit programme and independence, approved the fees paid
in 2024 by t he HSBC Continental Europe group to its Statutory
Auditors. The Committee reviewed and authorised as necessary the
non-audit services rendered by the Statutory Auditors.
The Committee was also informed of the risks and results of controls
conducted on financial statements, in particular regarding the
deficiencies identified by these controls and progress in action plans.
At its meeting on 17 July 2024, the Committee was given a
presentation on the framework in place regarding whistleblowing and
its results.
At its meeting on 18 October 2024, the Committee examined the list
of related-party agreements authorised previously by the Board and
still in force and made recommendations to the Board regarding the
list update.

Universal Registration Document and Annual Financial Report 2024 | 35

The third aspect of the Committee work concerned the detailed
review, at each of its quarterly meetings, of Internal Audit activities. It
reviewed the findings of the main audit duties, notably those calling
for particular attention. The Committee remained extremely attentive
to the proper implementation of the audit recommendations and to
the evolution of the human resources of Internal Audit. It has also
approved the 2024 annual audit plan.
Throughout 2024, the Committee received reports from the
subsidiaries' Chairs of Audit Committees.
The Chairperson of the Audit Committee reported to the Board, on a
regular basis and when necessary, on the key points discussed during
Audit Committee meetings and on recommendations formulated by
the Audit Committee.
Risk Committee

Composition of the Risk Committee
Chairman |
Eric Strutz (independent) | From 2022 until on 31 December 2024. Member since 1 January 2025
Members |
Pablo Forero Calderon (independent) | Appointed in 2023, Chairman since 1 January 2025
Deirdre Hannigan (independent) | Appointed in 2023
Michaël Trabbia (independent) | Appointed in 2022

On 1 January 2025, Pablo Forero was appointed as Chairman,
succeeding Eric Strutz who remains a Member.
The Committee members are highly qualified in the banking, financial,
risk, including technology, and internal control areas, as they serve or
have in the past served in the capacity of Group Chief Financial
Officer, Group Chief Risk Officer, Chief Executive Officer, including of
banking entities, with operational responsibilities within a Global
Banking activities or as Head of internal audit and compliance of a
bank, Risk Committee member or Head of Innovation and
Technology.
Cross-membership of the Audit and Risk Committees Chairs allows to
ensure an appropriate interaction between both committees.
Risk Committee’s duties
The Risk Committee is accountable to the Board. The Committee
oversees and advises the Board on risk related matters impacting
HSBC Continental Europe and its subsidiaries, including risk
governance and internal control systems (other than internal controls
over financial reporting).
The Committee collaborates with other Board Committees whose
activities may have an impact on the risk strategy (in particular, Audit
and Remuneration Committees) and regularly communicates with the
HSBC Continental Europe’s internal control functions, in particular the
risk management function.
The Committee meets the Chief Risk Officer in private at least twice
per year to ensure that there are no unresolved issues or concerns.
In carrying out these duties and responsibilities, the Committee may
consult any adviser or expert as it deems appropriate.
At the request of the HSBC Bank plc’s Risk Committee, the HSBC
Continental Europe’s Risk Committee Chairman provides a half-yearly
certificate to the Risk Committee Chairman of HSBC Bank plc,
confirming, in particular, that the Committee examined the reports on
risks and that no matter was brought to its attention other than those
described in the supports.
Risk Committee’s work in 2024
The Risk Committee met six times in 2024,with an average
attendance rate of 96 per cent, compared to six meetings with an
attendance rate of 100 per cent in 2023:
– 7 February 2024 (attendance rate: 100 per cent);
– 15 March 2024 (attendance rate: 100 per cent);
– 22 April 2024 (attendance rate: 75 per cent);
– 21 June 2024 (attendance rate: 100 per cent);
– 18 July 2024 (attendance rate: 100 per cent); and
– 18 October 2024 (attendance rate: 100 per cent).
Each meeting was also attended by the Statutory Auditors, the Chief
Risk Officer, the Chief Financial Officer and the Head of Internal Audit.
The Chief Executive Officer and the Deputy Chief Executive Officer
attended Committee meetings to answer any questions. HSBC
Continental Europe executives also attend Committee meetings for
subjects falling under their responsibility.
At the end of its quarterly meetings, the Risk Committee held
regularly in camera sessions without HSBC Continental Europe
management attending and, if applicable, with the Head of Internal
Audit or the Chief Risk Officer only.
In 2024, the Committee paid particular attention to monitoring the
economic and geopolitical context, as well as to HSBC Continental
Europe's transformation projects, their management and the risks
they entail. Liquidity management, models, data and cybersecurity
were also particularly in the focus of the Committee.
In line with its usual work, the Committee approved HSBC
Continental Europe’s risk appetite for 2024 and its subsequent
updates, and then examined, at each of its meetings, the monitoring
dashboard, in particular indicators which were not in line with the
thresholds that had been set. It also reviewed and approved the risk
tolerance framework.
In addition to a summary on risks given by the Chief Risk Officer, the
Committee monitored, at each of its quarterly meetings, the risk
profile of HSBC Continental Europe through the risk map and the
review of top and emerging risks, as well as their assessment and the
action plans which had been identified.
The Committee was informed of the changes to the risk management
framework.
At each quarterly meeting, the Committee received reports on
specific lines of business or subsidiaries from Heads of those areas or
Chief Risk Officers and from Chairs of subsidiaries’ Risk Committees.
The Risk Committee also continued to carry out the usual review of
financial risks, each of the individuals in charge of controlling such
risks reported to the Committee, in particular concerning:
– Credit risk, with an individual review of major exposures, changes
in outstanding credit and non-performing loans by businesses,
changes in risk-weighted assets and the evolution of the cost of
risk, worrying exposures and sectors and leveraged exposures.
The Committee was informed of the communications with the
supervisory authorities on credit;
– Market risk, including trends compared with limits, changes in
exposure, the setting of limits, changes in market activities’ risk-
weighted assets and the results of internal stress tests. Particular
attention was also paid to the impact of the French snap
parliamentary election on HSBC Continental Europe's market
activity, and to the evolution of spreads on sovereign debt;

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– Liquidity, capital and interest rate in the banking book risks. In
particular, the Committee examined and approved the Internal
Capital Adequacy Assessment Process (‘ICAAP’) and Internal
Liquidity Adequacy Assessment Process (‘ILAAP’) reports, as well
as the capital and liquidity plans and their execution afterwards;
and
– Stress testing, including the work carried out, the framework, the
results of these tests and the actions taken to reduce their impact.
Likewise, at each meeting, the Risk Committee continued to carry out
a review of non-financial risks, each of the individuals in charge of
controlling such risks reported to the Committee, in particular
concerning:
– Risk models, in particular with the monitoring of progress made in
the programme in this area and of reviews on models performed
by supervisory authorities, as well as their impact on risk-weighted
assets and the content and implementation of the
recommendations issued by the various internal and external
controlling bodies;
– Data management, in particular regarding HSBC Continental
Europe's compliance with BCBS 239 requirements;
– Operational incidents and losses and progress and action plans
relating to the non-financial risks management framework;
– Resilience risk and HSBC Continental Europe's preparation to
implement the Digital Operational Resilience Act (DORA), as well
as cybersecurity, business continuity and outsourcing risk;
– IT and technology risk, with a focus on the execution of IT
transformation projects;
– Compliance risk (see below);
– ESG risks, including greenwashing risk and climate risk in
connection with the stress testing;
– Legal risks, included emerging risks, and legal disputes; and
– Human Resources risks.
With regard to both financial and non-financial risks, the Committee
was informed of the impact of climate-related and environmental risks
weighing on these risks.
In relation to permanent control, the Committee endorsed the
permanent control plan for 2024 and was informed regularly of the
progress made towards this plan and the main areas of weakness
identified, as well as the action plans drawn up to deal with them.
In accordance with the French Government Order of 3 November
2014 as modified, the Committee was informed of the changes to the
management framework for outsourced services, in particular those
deemed essential, whether these services be sub-contracted within
the HSBC Group or to external suppliers, as well as the results of
controls carried out on outsourced essential services.
In the area of compliance risk management, the Committee took note
of the quarterly reports, which set out the main new matters and
update on those already detailed in the course of previous meetings.
In particular, the Committee closely followed the evolution of the
transaction monitoring, the system and tools, the implementation of
recommendations issued by the various control bodies in terms of
compliance, as well as exchanges with the control and supervisory
authorities and missions carried out by the latter in these areas. The
Committee approved the annual reports to the ACPR on internal
control and on the organisation of the financial crime compliance
framework.
The Committee was informed of communications with supervisory
and control authorities and of the conclusions of their various
assessments, audits and reviews, and received reports and follow-up
letters and replies to them in relation to these assignments, as well as
action plans initiated to implement their recommendations.
The Committee was informed of the works performed by HSBC
Continental Europe regarding recovery and resolution planning and
carried out as part of the HSBC Group's obligations towards the
Prudential Regulation Authority or of its own obligations towards the
ECB and the Single Resolution Board. In particular, the Committee
examined the draft recovery plan.
In relation to other governance matters, the Committee reviewed the
remuneration policy.
The Chairman of the Risk Committee reported, on a regular basis and
when necessary, on the key points discussed during Risk Committee
meetings and on recommendations formulated by the Risk
Committee.
Joint sessions of the Audit and Risk
Committees
The Audit Committee and the Risk Committee held one joint session
on 4 December 2024 with a 100 per cent attendance rate to review,
endorse and recommend for the Board's approval the draft budget,
the draft capital and funding plans and the draft Internal Audit plan for
2025. The Committees were also presented with an update on the
report project under the CSRD, including the outcome of the Double
Materiality Analysis. They endorsed and recommended for the
Board's approval the list of Impacts, Risks and Opportunities which
HSBC Continental Europe considers as material.
Nomination and Corporate
Governance Committee

Composition of the Nomination and Corporate Governance Committee
Chairman |
Arnaud Poupart-Lafarge (independent) | Appointed in 2022 (Member from 2020 to 2022)
Members |
Jean Beunardeau | Appointed in 2021
Stephen O'Connor (independent) | Appointed in 2022

In accordance with the Governance rules applicable to the HSBC
Group entities, at least half of the Nomination and Corporate
Governance Committee’s membership are independent non-
executive, non-employee Directors.
Nomination and Corporate Governance
Committee’s duties
The Nomination and Corporate Governance Committee reports and is
accountable to the Board. The Committee is responsible for:
– Regularly reviewing the composition of the Board and Board
Committees and leading the process for nomination to the Board
of Directors and Board Committees;
– Overseeing the planning and candidates assessment process to
ensure succession plans are in place for the Board and General
Management;
– Overseeing the process of assessing the individual and collective
suitability of the Board of Directors, the Board Committees and the
General Management;
– Overseeing the process by which the Board, its Committees and
individual Directors assess their effectiveness; and
– Overseeing the application of the governance framework of the
HSBC Group for its subsidiaries.
In carrying out these duties and responsibilities, the Committee may
consult any adviser or expert as it deems appropriate.

Universal Registration Document and Annual Financial Report 2024 | 37

Nomination and Corporate Governance
Committee’s work in 2024
The Committee met four times in 2024, with an attendance rate of
100 per cent, compared to five meetings with also an attendance rate
of 100 per cent in 2023.
Its main work comprised:
– the monitoring of the individual and collective suitability of the
management body pursuant to the suitability assessment policy
and assessments and reassessments required by the criteria
defined in this policy;
– succession plans for the Board, the General Management and the
Executive Committee;
– the identification process of new independent non-executive
directors that led to a proposal to the Board on the appointment of
one Director at the General Meeting of 11 October 2024;
– the composition of the Board Committees;
– the Board effectiveness review;
– the follow-up of interactions with supervisors and their
recommendations, on topics falling under the Committee's
responsibility;
– the follow-up of the implementation of findings raised by Internal
Audit of corporate governance;
– examining the revision of governance rules applying to the HSBC
Group entities (Subsidiary Accountability Framework) and the
compliance of HSBC Continental Europe with it;
– reports from chairs of nomination committees of certain
subsidiaries, review of the succession plans of the main
subsidiaries of HSBC Continental Europe and endorsing
appointments to these boards;
– the review of the updated register of potential situations of conflict
of interest, and of the results of the controls in place regarding
potential conflict of interest situations;
– the review of the first part of the report on corporate governance
for the 2023 financial year;
– the review and proposals to the Board for updating the Board
policies relating to topics falling under the Committee's
responsibility; and
– the draft guide on governance and risk culture issued by the ECB.
The Chairman of the Nomination and Corporate Governance
Committee reported to the Board on its work regularly and when
necessary. All of the Committee’s work was submitted to the Board
for approval.
Remuneration Committee

Composition of the Remuneration Committee
Chairman |
Arnaud Poupart-Lafarge (independent) | Appointed in 2022 (Member from 2020 to 2022)
Member |
Pablo Forero | Appointed in 2024
Emmanuelle Vigneron | Appointed in 2024

In accordance with the Governance rules applicable to the HSBC
Group entities, at least two members of the Remuneration
Committee are independent non-executive Directors. In addition, a
Director elected by the employees is a member of the Remuneration
Committee.
Remuneration Committee’s duties
The Remuneration Committee has non-executive responsibility for
matters related to remuneration and advises the Board on these
matters. In exercising this responsibility, it is responsible for:
– supporting the Board in overseeing the implementation and
operation of the compensation framework in place for HSBC
Continental Europe’s remuneration in conjunction with that of the
HSBC’s Group, as approved by the Group Remuneration
Committee and with regulatory requirements;
– ensuring this framework does not contravene any local
regulations;
– ensuring this framework is aligned with risk appetite, strategy,
culture and values, and long-term interests of HSBC Continental
Europe; and
– ensuring this framework is appropriate in order to attract, retain
and motivate people with the qualities required to contribute to the
success of HSBC Continental Europe.
The Committee collaborates with other Board committees whose
activities may have an impact on the design and proper functioning of
remuneration policies and practices (in particular, the Risk
Committee).
The Committee’s recommendations on Executive Directors’
remuneration are presented to the Board after prior approval by the
Remuneration Committee of HSBC Holdings plc or are then
submitted for approval. Moreover, in carrying out these duties and
responsibilities, the Committee may consult any adviser or expert as
it deems appropriate.
Remuneration Committee’s work in 2024
The Remuneration Committee met twice in 2024 with an attendance
rate of 100 per cent, compared to three times in 2023 with an
attendance rate of 100 per cent. Its main work comprised:
– the review of the general remuneration policy, taking into account
regulations concerning compensation, in particular
– the process to identify the material risk takers,
– the feedback or findings from the supervisors and the second and
third lines of defence,
– risk control and the contribution of the Risk and Compliance
functions to the process for determining variable compensations,
– the review of the identified cases of employees, as not entirely
complying with the risk and compliance rules and impacts on their
remuneration,
– the review of the rules and remuneration for employees defined as
risk takers;
– the review of the 20 highest remunerations in respect of the 2023
year;
– compensation proposals for the Chief Risk Officer and the Chief
Compliance Officer;
– proposals to approve, in agreement with HSBC Holdings plc, the
terms of the remuneration of Andrew Wild and Christopher Davies
in respect of 2023 and setting out the fixed and variable elements
of their remuneration and the number of shares to be awarded to
them (see section ‘Executive Directors’ compensation’);
– compensation proposal for Joseph Swithenbank as new Deputy
Chief Executive Officer effective from 1 March 2024;
– the review of the remuneration of the Directors of certain
subsidiaries; and
– the review of the section of the corporate governance report on
remuneration.

38 | Universal Registration Document and Annual Financial Report 2024

Corporate Governance report

The Chairman of the Remuneration Committee reported to the Board
on its work and on recommendations formulated by the Committee.
All of the Committee’s work was submitted to the Board for approval.

General Management
Since 2007, HSBC Continental Europe’s Board of Directors has
chosen to separate the functions of Chairman of the Board and Chief
Executive Officer. This choice has been maintained since then and is
furthermore in compliance with regulatory obligations for credit
institutions.
Organisation of the General
Management
General Management leads the Company and acts as its
representative vis-a-vis third parties. General Management comprises
three Effective Managers ("Dirigeants effectifs"), i.e. the Chief
Executive Officer, Andrew Wild, who is assisted by two Deputy Chief
Executive Officers ("Directeurs Généraux Délégués"), Christopher
Davies and Joseph Swithenbank.
Joseph Swithenbank was appointed on 9 February 2024 by the Board
of Directors as Deputy Chief Executive Officer (Directeur Général
Délégué) and Dirigeant effectif of HSBC Continental Europe effective
1 March 2024, in addition to his existing responsibilities as Chief
Financial Officer of HSBC Continental Europe.
Chief Executive Officer’s powers
The Chief Executive Officer has the widest powers to act on the
Company’s behalf in all circumstances within the limits of its
corporate object, and subject to those powers expressly conferred by
law on the collective body of shareholders and on the Board of
Directors. At present, there are no specific restrictions on the Chief
Executive Officer’s powers set by the Board or by the Articles of
Association, but decisions involving the strategic orientation of the
Company's activities and investments/divestments are submitted to
the Board of Directors for approval according to the Board Internal
rules.
Furthermore, the Board of Directors has delegated powers to issue
bonds to Andrew Wild (Chief Executive Officer), Christopher Davies
(Deputy Chief Executive Officer), Joseph Swithenbank (Deputy Chief
Executive Officer) and a certain number of HSBC Continental Europe
Markets officers.
The current Delegation of Authorities Framework was put in place
across the HSBC Group in 2023 and was amended in 2024.
Moreover, a person with delegated powers may not individually
commit HSBC Continental Europe to sums above EUR 1.5 million.
There are specific delegated powers concerning credit and market
risk.
Presentation of the members of
General Management
The biography of the Chief Executive Officer, Andrew Wild, is
available on page 24.

Christopher Davies Deputy Chief Executive Officer ("Directeur Général Délégué")

Principal position: Deputy Chief Executive Officer and Head of
Transformation, HSBC Continental Europe.
Other directorships in the HSBC Group: Director, HSBC Bank
Bermuda Limited. Directorship expired in 2024: Chairman, HSBC
Bank (RR) (Limited Liability Company).
Number of positions held within the meaning of L. 511-52 of the
French Monetary and Financial Code: one directorship as executive.
Skills and experience: Born in 1962. British nationality. Masters (MA)
degree in French and German literature and languages from the
University of Oxford and graduate of the Chartered Institute of
Bankers. Since he joined HSBC in 1985, he has served in various
senior roles across the main HSBC's major business lines, principally
in the United Kingdom, the United States and China.
Thus, he was Head of Commercial banking North America from 2007
to 2011 then Deputy Chief Executive Officer of HSBC Bank (China)
Company Limited from 2011 to 2013. from 2013 to 2020, he has
been Chief Executive Officer International Europe of HSBC Bank plc.
He was appointed as Deputy Chief Executive Officer of HSBC
Continental Europe in 2019, and Head of Transformation in 2021.

2023 | Directorships in the HSBC Group: Deputy Chief Executive Officer: HSBC Continental Europe. Chairman: HSBC Bank (RR) (Limited Liability Company). Director: HSBC Bank Bermuda Limited.
2022 | Directorships in the HSBC Group: Deputy Chief Executive Officer: HSBC Continental Europe. Chairman: HSBC Bank (RR) (Limited Liability Company). Director: HSBC Bank Bermuda Limited.
2021 | Directorships in the HSBC Group: Deputy Chief Executive Officer: HSBC Continental Europe. Chairman: HSBC Bank (RR) (Limited Liability Company). Director: HSBC Bank Bermuda Limited, HSBC Europe B.V, Midcorp Limited.

2020 | Directorships in the HSBC Group: Deputy Chief Executive Officer: HSBC Continental Europe. Chairman: HSBC Bank (RR) (Limited Liability Company). Director: HSBC Bank Bermuda Limited, HSBC Europe B.V, Midcorp Limited.
2019 | Directorships in the HSBC Group: Deputy Chief Executive Officer: HSBC Continental Europe. Chairman: HSBC Bank (RR) (Limited Liability Company). Director: HSBC Bank Bermuda Limited, HSBC Bank Malta p.l.c., HSBC Europe B.V, Midcorp Limited. Member of the Supervisory Board: HSBC Bank Polska S.A.

Joseph Swithenbank Deputy Chief Executive Officer ("Directeur Général Délégué")

Principal position: Deputy Chief Executive Officer (since 1 March
2024) and Chief Financial Officer, HSBC Continental Europe.
Number of positions held within the meaning of L. 511-52 of the
French Monetary and Financial Code: one directorship as executive.
Skills and experience: Born in 1984. US and British nationalities.
MBA from London Business School and B.S. Accounting & Finance
from Wake Forest University (North Carolina, USA).
He was appointed as Deputy Chief Executive Officer of HSBC
Continental Europe on 1 March 2024, in addition to his role as Chief
Financial Officer that he has held since January 2021. Prior to this
role, he was Global Head of Business Performance for Commercial
Banking from 2017 to 2021. Before joining HSBC, he spent 12 years
at General Electric, most recently as Financial Controller for GE Capital
International. He also held positions in audit, treasury and operational
finance at General Electric in the US and Europe.

2023 | -
2022 | –
2021 | –
2020 | –

Universal Registration Document and Annual Financial Report 2024 | 39

Executive Committee
The General Management is assisted by an Executive Committee
whose membership was as follows as at 31 January 2025:

Andrew Wild | Chief Executive Officer
Christopher Davies | Deputy Chief Executive Officer, Head of Transformation
Joseph Swithenbank | Deputy Chief Executive Officer, Chief Financial Officer
Andrew Beane | Head of Commercial Banking
Laurence Bogni-Bartholmé | Head of ESG Execution
Isabelle Bourcier | Head of Asset Management, France
Marwan Dagher | Head of Markets and Securities Services
François Essertel | Head of Private Banking
Eric Emoré | Head of Wealth and Personal Banking
Geoffrey Fichte | Chief Executive Officer, Malta
Lisa Hicks | Head of Strategy and Planning
Marc de Lapérouse | Head of Legal
Fredun Mazaheri | Chief Risk Officer
François Mongin | Head of Internal Audit
Camille Olléon | Head of Human Resources
Geneviève Penin | Head of Corporate Governance & Secretariat and Company Secretary
Antoine Pfister | Chief Compliance Officer
Laurence Rogier | Head of Insurance, France
Michael Schleef | Chief Executive Officer, Germany
Anna Tavano | Head of Banking
Olfert de Wit | Chief Operating Officer

Every year, HSBC Continental Europe reviews succession plans for
Executive Committee members and roles considered as key with
clear rules guiding this exercise in order to have robust succession
plans, promoting gender balance as well as internal promotion. It is
required to have at least one emergency successor and a female
successor for each of these roles. The succession plans were
reviewed in 2024 on these bases, including in respect of the
members of the Executive Committee. Additional information on the
diversity policy are available in the chapter on Sustainability on page
55.

Additional information
Agreements governed by article
L. 225-38 of the French Commercial
Code
Article L. 225-38 of the French Commercial Code requires that any
agreement entered into directly or indirectly between a company and
its Chief Executive Officer or one of its Directors or Deputy Chief
Executive Officers, or between a company and one of its
shareholders owning at least 10 per cent of the voting rights, or, in
the case of a corporate shareholder, the company which controls it,
must first be authorised by the Board of Directors and subsequently
approved at the Annual General Meeting of shareholders. It also
prohibits certain types of agreements between those parties, such as
loans or guarantees.
During its meeting on 24 October 2024 the Board conducted its
annual review of agreements already entered into that it had
authorised previously and which are still in force.
Agreement authorised in 2024
N o new agreements subject to the provisions of article L. 225-38 of
the French Commercial Code were approved by the HSBC
Continental Europe’s Board of Directors during 2024.
Agreements entered into in prior years and
still in force and effect during 2024
– the agreements between HSBC Continental Europe and its direct
99.99 per cent shareholder, HSBC Bank plc through its Paris
Branch, namely: a pooling of resources agreement designed to
provide the parties with various services relating to their activities
at cost, an agreement for the provision of services covering
various activities and a group tax relief agreement, entered into in
2001;
– the agreement renewed in 2015 between HSBC Holdings plc and
HSBC Continental Europe, granting HSBC Continental Europe and
its subsidiaries use at no charge of the HSBC brand;
– the indemnity agreement entered into in 2019 between HSBC
Continental Europe and HSBC Bank plc and HSBC UK Bank plc in
order to cover HSBC Bank plc and HSBC UK Bank plc for any
amount that they may have to pay under obligations in which they
remain debtors to the beneficiaries, that is clients having entered
into a relationship with HSBC Continental Europe as HSBC Bank
plc and HSBC UK Bank plc would no longer be authorised to
provide certain international trade instruments and services to
companies located in the European Economic Area after the exit of
United Kingdom from the European Union;
– the agreement (Side Letter), entered into in 2021, by HSBC
Continental Europe with HSBC Global Services (Hong Kong)
Limited, HSBC Global Services (UK) Limited, HSBC Group
Management Services Limited, HSBC Global Services Limited, and
HSBC Service Delivery (Polska) sp. z o.o. and in which HSBC
Holdings plc, a company controlling HSBC Bank plc, shareholder
company of HSBC Continental Europe and owning more than 10
per cent of the voting rights, is indirectly interested. This
agreement relates to the pre-payment by HSBC Continental
Europe to five ServCo HSBC Group entities of four months'
charges for the services provided, in order to meet contingency
funding requirements to ensure Operational Continuity in
Resolution ('OCiR'). The purpose of the contingency funding is to
ensure the availability of sufficient financial resources in the
Group’s Services Companies to safeguard the provision of
services that the HSBC Group relies on throughout a stress or
resolution event;
– the Domination and Profit and Loss Transfer Agreements entered
into in 2023 between HSBC Continental Europe and HSBC
Trinkaus & Burkhardt GmbH relating to the acquisition of 100 per
cent of HSBC Trinkaus & Burkhardt GmbH by HSBC Continental
Europe S.A., Germany from HSBC Bank plc;
– the Domination and Profit and Loss Transfer Agreements entered
into in 2023 between HSBC Continental Europe and HSBC Service
Company Germany GmbH relating to the acquisition of 100 per
cent of HSBC Service Company Germany GmbH by HSBC
Continental Europe S.A., Germany from HSBC Trinkaus &
Burkhardt Gesellschaft für Bankbeteiligungen GmbH; and
– the reactivation from 2021 of the employment agreement of Jean
Beunardeau, Chairman of the Board, which had been suspended
since his appointment as Deputy Chief Executive Officer in 2010.

40 | Universal Registration Document and Annual Financial Report 2024

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Additional information about the members of the management body
Ethics
The policy of the management body on conflicts of interests annexed
to the Board’s internal rules covers situational and transactional
conflicts of interests and includes in particular a list of questions to
assist the Directors in identifying situations of conflicts of interests,
examples of situations that may or may not give rise to a conflict of
interest, a procedure dealing with the declaration of a potential
conflict of interests, a procedure to guide the Board when considering
such a declaration, as well as mitigating measures and controls
regarding identified situations of potential conflicts of interests.
In order to strengthen the conflict of interests avoidance mechanism,
Directors must seek authorisation from the Board before accepting a
mandate or position in a company or organisation outside the HSBC
Group and a process of authorisation, review and possible withdrawal
of authorisation by the Board is in place.
Situations of potential conflicts of interests between the duties of
Board members, including Executive Directors, with respect to HSBC
Continental Europe and their private interests and/or other duties are
appropriately managed through mitigating measures whose
effectiveness is controlled half-yearly.
To the knowledge of HSBC Continental Europe, there is:
– no family relationship between Board members, including
Executive Directors, of HSBC Continental Europe; and
– no arrangement or understanding with a shareholder, a customer,
a supplier or other pursuant to which one of the Board members,
including Executive Directors, was selected.
Absence of convictions
To the knowledge of HSBC Continental Europe, in the last five years,
none of the Board members currently in office, including Executive
Directors, have been the subject of a conviction for fraud, bankruptcy,
receivership, liquidation or put into administration, official public
incrimination and/or sanction pronounced by statutory or regulatory
authorities, or have been disqualified by a court from acting as a
member of an administrative, management or supervisory body of an
issuer or from acting in the management or conduct of the affairs of
an issuer.
Shareholders’ general meeting
Meetings are open to all shareholders. They are convened and
transact business in accordance with the provisions of the law and
regulations in force.
According to article 21 of the Articles of Association, all shareholders,
whatever the number of shares they own, are entitled to attend
General Meetings and to take part in the deliberations, personally or
through a representative, provided their shares are paid up in full for
payments that are due and are registered on an account in their own
name no later than midnight, Paris time, on the second business day
preceding the General Meeting. However, the author of the notice to
attend has the option at all times to reduce this period of time, as he
sees fit.
All shareholders can also vote by correspondence using a form which
can be sent to them in accordance with the conditions specified by
the notice to attend the Meeting.
The Board of Directors can decide that shareholders will be allowed to
take part and vote in all General Meetings by video conference or by
any means of telecommunications making it possible to identify them
in accordance with the applicable legal and regulatory provisions.

Delegations given by the Shareholders’ meeting to increase the share capital |
| With pre-emptive rights
Issue of shares for cash or by capitalising reserves |
Date of authority | 25 March 2024
Expiry date | May 25, 2026
Maximum nominal amount | EUR 500 million
Used amount | EUR 0 million

Compensation
Compensation and benefits of Executive Directors
Remuneration package
The remuneration of Executive Directors is adopted each year by the
Board of Directors upon the recommendation by the Remuneration
Committee, and approved by the Remuneration Committee of HSBC
Holdings plc. It includes a fixed component and a variable component.
The fixed component is determined considering external market
practices with the help, if needed, of specialist consulting firms and
HSBC Group internal benchmarks.
The variable component is determined in particular on the basis of the
overall variable pay pool and according to the individual performance
of the Executive Director measured annually and based on completion
of objectives embedded in a balanced scorecards and supported by a
set of indicators. There are financial indicators focused on revenues
growth, costs control, return on capital (RoTE), customers deposits,
loans, non financial indicators linked to sustainability related risks as
carbon path reduction at HSBC Continental Europe level and for our
clients, development of sustainable finance or more generally related
to risk management as audits follow up, control of operational risks,
appropriate application of conduct principles and few qualitative
indicators such as successful achievement of reorganization projects,
customer satisfaction, improvement of data quality, increase of
employees' engagement index, women representativity in the
organisation, improvement of inclusion index,etc.
In parallel the variable component also takes account of market trends
and, if necessary, changes in regulations. In accordance with
regulation, this variable component is paid partly in non-deferred and
partly in deferred remuneration and partly in cash and partly in shares.
Deputy Chief Executive Officer as Head of transformation and Deputy
Chief Executive Officer as Chief Financial Officer may also have
specific objectives related to their respective role.
7 Tables numbers refer to table models provided by the Autorité des marchés financiers in its 10 December 2009, as amended lastly on 13 April 2015,
recommendation 2009-16 concerning the guide for compiling registration documents.

Universal Registration Document and Annual Financial Report 2024 | 41

Award of shares
In 2024, Executive Directors benefited from the allocation of shares in
HSBC Holdings plc in accordance with the HSBC Group’s general
policy.
With respect to 2024, HSBC Continental Europe Executive Directors
received, as part of their variable remuneration, Restricted Shares, for
which the only criterion is to be with the company at award date.
Supplementary pension scheme
The current and former Executive Directors of HSBC Continental
Europe have a defined benefits supplementary pension scheme. This
plan guarantees members a pre-determined absolute supplementary
pension income based on their length of service. In the event that the
beneficiary dies, 60 per cent of this pension is payable to the surviving
spouse. It is increased every year in line with the average rate applied
to the French State pension scheme.
As at 31 December 2024, Andrew Wild had accrued pension rights
representing 4.2 p er cent of his 2024 fixed remuneration and 1.8 per
cent of his 2024 total remuneration.
Joseph Swithenbank had accrued pension rights representing 2.5 per
cent of his 2024 fixed remuneration and 1.2 per cent of his 2024 total
remuneration. Christopher Davies is not entitled to this pension
scheme, since he takes benefit of a UK pension schemes linked to its
employment contract.
Remuneration
The remuneration of Andrew Wild as Chief Executive Officer of HSBC
Continental Europe, and of Christopher Davies and Joseph
Swithenbank as Deputy Chief Executive Officers of HSBC Continental
Europe are detailed on next pages.
The following information is published in accordance with the
provisions of article L. 225-102-1, paragraphs 1, 2 and 3 and article L.
225-184 of the French Commercial Code.It concerns remuneration
paid by HSBC Continental Europe, the companies it controls and the
companies that control it (the HSBC Group). The remuneration of the
Executive Directors below is presented in accordance with the
Autorité des marchés financiers recommendations of December
2009 7. Tables 4, 5 and 9 of this recommendation are not applicable.
Summary of compensation awarded to each Executive Director

Chief Executive Officer 1
| 2021 | 2022 | 2023 | 2024
| Compensation awarded in 2021 | Compensation awarded in 2022 | Compensation awarded in 2023 | Compensation awarded in 2024
| € | € | € | €
Andrew Wild |  |  |  |
Fixed remuneration | 528,760 | 573,300 | 573,300 | 623,300
Fixed Pay Allowance ‘Material Risk Taker’2,3 | 202,821 | 326,700 | 326,700 | 376,700
Variable remuneration in cash | 107,100 | 125,811 | 200,000 | 259,211
Variable remuneration in shares 4 | 107,100 | 125,811 | 200,000 | 259,211
Deferred variable remuneration in cash 5 | 71,400 | 188,717 | 300,000 | 388,817
Deferred remuneration in shares without performance conditions 6 | 71,400 | 188,717 | 300,000 | 388,817
Directors‘ fees 7 | — | — | — | —
Benefits in kind 8 | 3,250 | 14,638 | 15,328 | 15,574
Total | 1,091,831 | 1,543,694 | 1,915,328 | 2,311,630

Chief Executive Officer 1
| 2021 | 2022 | 2023 | 2024
| Compensation for 2021 | Compensation for 2022 | Compensation for 2023 | Compensation for 2024
| € | € | € | €
Andrew Wild |  |  |  |
Fixed remuneration | 528,760 | 573,300 | 573,300 | 623,300
Fixed Pay Allowance ‘Material Risk Taker’2,3 | 202,821 | 326,700 | 326,700 | 376,700
Variable remuneration in cash | 125,811 | 200,000 | 259,211 | 259,211
Variable remuneration in shares 4 | 125,811 | 200,000 | 259,211 | 259,211
Deferred variable remuneration in cash 5 | 188,717 | 300,000 | 388,817 | 388,817
Deferred remuneration in shares without performance conditions 6 | 188,717 | 300,000 | 388,817 | 388,817
Directors‘ fees 7 | — | — | — | —
Benefits in kind 8 | 3,250 | 14,638 | 15,238 | 15,574
Total | 1,363,887 | 1,914,638 | 2,211,294 | 2,311,630

1 Deputy Chief Executive Officer since 1 March 2015 and Chief Executive Officer from 15 July 2021.
2 Fixed Pay Allowance awarded to certain ‘Material Risk Takers’.
3 Fixed Pay Allowance awarded in form of cash on a monthly basis.
4 Shares that vest immediately and are subject to a 12 months‘ retention period.
5 Variable remuneration in cash deferred over five years (20 per cent per year will vest from year n+1).
6 Variable remuneration in shares without performance conditions deferred over five years (20 per cent per year from year n+1) and subject to a 12 months‘
retention period.
7 Renounced the payment of his Directors' fees by HSBC Continental Europe (see page 30).
8 Company car and accommodation allowance. As Chief Executive Officer, he is also entitled to a medical cover and tax assistance.

42 | Universal Registration Document and Annual Financial Report 2024

Corporate Governance report

Deputy Chief Executive Officer 1
| 2021 | 2022 | 2023 | 2024
| Compensation awarded in 2021 | Compensation awarded in 2022 | Compensation awarded in 2023 | Compensation awarded in 2024
| € | € | € | €
Christopher Davies |  |  |  |
Fixed remuneration | 526,248 | 541,481 | 528,674 | 541,642
Fixed Pay Allowance ‘Material Risk Taker’2,3 | 89,231 | 91,539 | 89,412 | 91,606
Variable remuneration in cash | 130,500 | 155,957 | 153,000 | 165,000
Variable remuneration in shares 4 | 130,500 | 155,957 | 153,000 | 165,000
Deferred variable remuneration in cash 5 | 87,000 | 103,971 | 102,000 | 110,000
Deferred remuneration in shares without performance conditions 6 | 87,000 | 103,971 | 102,000 | 110,000
Directors‘ fees 7 | — | — | — | —
Benefits in kind 8 | — | — | — | —
Total | 1,050,479 | 1,152,876 | 1,128,086 | 1,183,248

Deputy Chief Executive Officer 1
| 2021 | 2022 | 2023 | 2024
| Compensation for 2021 | Compensation for 2022 | Compensation for 2023 | Compensation for 2024
| € | € | € | €
Christopher Davies |  |  |  |
Fixed remuneration | 526,248 | 541,481 | 528,674 | 541,642
Fixed Pay Allowance ‘Material Risk Taker’2,3 | 89,231 | 91,539 | 89,412 | 91,606
Variable remuneration in cash | 155,957 | 153,000 | 165,000 | 153,000
Variable remuneration in shares 4 | 155,957 | 153,000 | 165,000 | 153,000
Deferred variable remuneration in cash 5 | 103,971 | 102,000 | 110,000 | 102,000
Deferred remuneration in shares without performance conditions 6 | 103,971 | 102,000 | 110,000 | 102,000
Directors‘ fees 7 | — | — | — | —
Benefits in kind 8 | — | — | — | —
Total | 1,135,334 | 1,143,020 | 1,168,086 | 1,143,248

1 Deputy Chief Executive Officer since 8 February 2019.
2 Fixed Pay Allowance awarded to certain ‘Material Risk Takers’.
3 Fixed Pay Allowance awarded in form of cash on a monthly basis.
4 Shares that vest immediately and are subject to a 12 months‘ retention period.
5 Variable remuneration in cash deferred over four years (25 per cent per year will vest from year n+1).
6 Variable remuneration in shares without performance conditions deferred over four years (25 per cent per year from year n+1) and subject to a 12 months‘
retention period.
7 As non Director he is not entitled to Directors' fees (see page 30).
8 Is entitled to an annual cost of living allowance, an accommodation allowance, a travel allowance, a medical cover and tax assistance.

Deputy Chief Executive Officer 1
| 2021 | 2022 | 2023 | 2024
| Compensation awarded in 2021 | Compensation awarded in 2022 | Compensation awarded in 2023 | Compensation awarded in 2024
| € | € | € | €
Joseph Swithenbank |  |  |  |
Fixed remuneration | — | — | — | 250,000
Fixed Pay Allowance ‘Material Risk Taker’2,3 | — | — | — | —
Variable remuneration in cash | — | — | — | —
Variable remuneration in shares 4 | — | — | — | —
Deferred variable remuneration in cash 5 | — | — | — | —
Deferred remuneration in shares without performance conditions 6 | — | — | — | —
Directors‘ fees 7 | — | — | — | —
Benefits in kind 8 | — | — | — | 2,956
Total | — | — | — | 252,956

Universal Registration Document and Annual Financial Report 2024 | 43

Deputy Chief Executive Officer 1
| 2021 | 2022 | 2023 | 2024
| Compensation for 2021 | Compensation for 2022 | Compensation for 2023 | Compensation for 2024
| € | € | € | €
Joseph Swithenbank |  |  |  |
Fixed remuneration | — | — | — | 250,000
Fixed Pay Allowance ‘Material Risk Taker’2,3 | — | — | — | —
Variable remuneration in cash | — | — | — | 97,950
Variable remuneration in shares 4 | — | — | — | 97,950
Deferred variable remuneration in cash 5 | — | — | — | 65,300
Deferred remuneration in shares without performance conditions 6 | — | — | — | 65,300
Directors‘ fees 7 | — | — | — | —
Benefits in kind 8 | — | — | — | 2,956
Total | — | — | — | 579,456

1 Deputy Chief Executive Officer since 1st March 2024. Fixed remuneration and benefits in kind are taken into account for 10 months in 2024. Variable
remuneration is taken into account in full from performance year 2024.
2 Fixed Pay Allowance awarded to certain ‘Material Risk Takers’.
3 Fixed Pay Allowance awarded in form of cash on a monthly basis.
4 Shares that vest immediately and are subject to a 12 months‘ retention period.
5 Variable remuneration in cash deferred over five years (20 per cent per year will vest from year n+1).
6 Variable remuneration in shares without performance conditions deferred over five years (20 per cent per year from year n+1) and subject to a 12 months‘
retention period.
7 As non Director he is not entitled to Directors' fees (see page 30).
8 Company car.
Shares awarded to each Executive Director in 2025 in respect of 2024 (Table 6)

HSBC Holdings plc shares without performance conditions (Table 6)
| Date of award | Number of shares awarded | Value of the shares at grant | Vesting date | Date of availability
Andrew Wild | 4 March 2025 | ND | EUR 388,817 | 20% on each following dates: | 20% on each following dates:
|  |  |  | March 2026 | March 2027
|  |  |  | March 2027 | March 2028
|  |  |  | March 2028 | March 2029
|  |  |  | March 2029 | March 2030
|  |  |  | March 2030 | March 2031
Andrew Wild | 4 March 2025 | ND | EUR 259,211 | March 2025 | March 2026
Christopher Davies | 4 March 2025 | ND | EUR 102,000 | 25% on each following dates: | 25% on each following dates:
|  |  |  | March 2026 | March 2027
|  |  |  | March 2027 | March 2028
|  |  |  | March 2028 | March 2029
|  |  |  | March 2029 | March 2030
Christopher Davies | 4 March 2025 | ND | EUR 153,000 | March 2025 | March 2026
Joseph Swithenbank | 4 March 2025 | ND | EUR 65,300 | 20% on each following dates: | 20% on each following dates:
|  |  |  | March 2026 | March 2027
|  |  |  | March 2027 | March 2028
|  |  |  | March 2028 | March 2029
|  |  |  | March 2029 | March 2030
|  |  |  | March 2030 | March 2031
Joseph Swithenbank | 4 March 2025 | ND | EUR 97,950 | March 2025 | March 2026

Performance shares which became available for each Executive Director in 2024 (Table 7)
| Date of award | Number of shares which became available during the year | Vesting conditions
None |  |  |

44 | Universal Registration Document and Annual Financial Report 2024

Corporate Governance report

HSBC Holdings plc shares vested for each Executive Director in 2024 (Table 8)
| Date of award | Number of shares vested 1 | Vesting conditions (in case of special conditions)
Andrew Wild | 25/3/2019 | 2,936 | —
Andrew Wild | 24/2/2020 | 3,238 | —
Andrew Wild | 1/3/2021 | 3,448 | —
Andrew Wild | 28/2/2022 | 6,826 | —
Andrew Wild | 27/2/2023 | 9,631 | —
Andrew Wild | 26/2/2024 | 37,062 | —
Christopher Davies | 25/3/2019 | 3,519 | —
Christopher Davies | 24/2/2020 | 3,976 | —
Christopher Davies | 1/3/2021 | 4,202 | —
Christopher Davies | 28/2/2022 | 6,826 | —
Christopher Davies | 27/2/2023 | 9,631 | —
Christopher Davies | 26/2/2024 | 24,048 | —

1 Part of the deferred shares awarded under the UK plan in 2019, 2020, 2021, 2022 and 2023 were vested in 2024. The immediate shares awarded in 2024 were
vested for 100 per cent in 2024. All these shares, immediate or deferred, are subject to a 12 months retention period after vesting.

HSBC Holdings plc shares, without performance conditions, awarded in 2024 in respect of 2023, to the 10 employees (excluding Executive Directors) whose number of awarded shares is the highest (Table 10)
| Date of award | Number of shares awarded | Value of the shares at grant | Vesting date 1 | Date of availability 1
Total value of the 10 highest awards of shares (employees or former employees) | 26/2/2024 | 594,865 | EUR 4,160,371 | March 2024 for 100% or March 2026 for 66% and March 2027 for 34% or March 2025 to 2028 for 25% per year or March 2025 to 2029 for 20% per year | 12 months after the award

1 Part of the shares awarded to employees considered as Material Risk Takers (see page 47) vests immediately and is available for sale twelve months after
vesting.

HSBC Holdings plc shares, without performance conditions, awarded in 2025 in respect of 2024, to the 10 employees (excluding Executive Directors) whose number of awarded shares is the highest
| Date of award | Number of shares awarded | Value of the shares at grant | Vesting date 1 | Date of availability 1
Total value of the 10 highest awards of shares (employees or former employees) | 4/3/2025 | ND | EUR 3,992,090 | March 2025 for 100% or March 2027 for 66% and March 2028 for 34% or March 2026 to 2029 for 25% per year or March 2026, to March 2030 for 20% per year | 12 months after the award

1 Part of the shares awarded to employees considered as Material Risk Takers (see page 47) vests immediately and is available for sale twelve months after
vesting.

HSBC Holdings plc shares, without performance conditions, vested in 2024, for the 10 highest employees (excluding Executive Directors) split per year of award
| Number of shares vested 1 | Vesting dates
Total number of the 10 highest shares that vested in 2024 | 537,341 |
– of which award 2019 | 30,504 | 13.03.2024
award 2020 | 33,140 | 12.03.2024
award 2021 | 80,522 | 14.03.2024
award 2022 | 104,434 | 13.03.2024
award 2023 | 49,296 | 14.03.2024
award 2024 | 239,445 | 26.02.2024

1 The shares awarded are available,for sale twelve months after vesting.

Universal Registration Document and Annual Financial Report 2024 | 45

Other information required by the Corporate Governance Code (Table 2) |
Executive Director | Employment contract | HSBC Continental Europe supplementary pension scheme 1 | Compensation or benefits due or that may be due upon termination or change in duties | Compensation due under terms of non- compete agreement | Participation in the share capital of the company and quantity of shares held
Function
First appointed
Term ends
Andrew Wild |  |  |  |  |
Chief Executive Officer |  |  |  |  |
15 July 2021 | Suspended | Yes | No | No | No
Christopher Davies |  |  |  |  |
Deputy Chief Executive Officer |  |  |  |  |
8 February 2019 | Not applicable | No | No | No | No
Joseph Swithenbank |  |  |  |  |
Deputy Chief Executive Officer |  |  |  |  |
1st March 2024 | Suspended | Yes | No | No | No

1 See page 40.
Company remuneration policy
As HSBC Continental Europe is part of an international banking group,
its remuneration policy is defined at the level of the parent company.
As part of a delegation by the HSBC Group’s Board of Directors, the
HSBC Group’s Remuneration Committee is responsible for approving
the remuneration policy for the HSBC Group as a whole.
The remuneration policy in place in HSBC Continental Europe falls
within the framework of this global policy, while also ensuring that it
complies with local regulations, in particular Capital Requirement
Directive V ('CRDV') for the bank, Alternative Investment Fund
Management ('AIFM'), and Undertakings for Collective Investments in
Transferable Securities ('UCITS') for our Asset Management
companies, Investment Firm Directive ('IFD') and Investment Firm
Regulation (IFR) for our Investment companies and Solvency II for our
Insurance companies. In accordance with the article L 511-74 of the
Code Monétaire et Financier, the remuneration policy is submitted to
an independent audit, once a year, performed by the Internal Audit
department or risk permanent control team. The remuneration policy
is also approved by the local Risk and Regulatory Compliance
departments.
Governance
In accordance with local regulation, HSBC Continental Europe has set
up a dedicated governance structure which on several bodies.The
Board of Directors of HSBC Continental Europe, in its supervisory
function, approves, adopts and reviews at least once a year the
general principles of the remuneration policy and controls its
implementation and approves the remuneration of the members of
the management body in its management function.
The Remuneration Committee, composed of 2 independent non-
executive Directors and a staff representative, prepares the decisions
concerning the remuneration and remuneration principles to be
adopted by the Board of Directors, gives his view on the bank’s
policies and practices concerning compensation, ensuring that risk
and compliance dimensions are dully taken into account. Its scope of
review covers all aspects of remuneration policies and practices in
place within the company, although with a more in-depth review
concerning professionals whose activities have a significant impact on
the risk profile of the business, Heads of internal control function and
Executive Directors.
In this context, it reviews the remuneration policy by ensuring its
consistency with general principles of the HSBC Group's
remuneration policy, with the specific directives set by the global
business lines, its compliance with local standards in force and with
recommendations of banking supervisory bodies in France such as
the Autorité de Contrôle Prudentiel et de Résolution, the European
Central Bank, the Autorité des Marchés Financiers and the Fédération
Bancaire Française.
It evaluates the mechanisms and systems adopted to ensure that the
remuneration system takes due account of all types of risk and
liquidity and equity levels and that the overall remuneration policy is
consistent and promotes sound and effective risk management and is
consistent with HSBC Continental Europe's economic strategy,
objectives, culture and values, risk culture and long-term interests.
It reviews variable pay pools allocated by the global business lines to
local teams with regards to global performance of the business lines
and relative performance of local teams.
It reviews the identification process of identified staff and approves
the corresponding list.
It reviews the 20 highest compensation package in collaboration with
the HSBC Group's decision-making bodies and global business lines.
It reviews the synthesis of individual breaches with respect to
internal rules in terms of credit, compliance, reputation and social
risks.
Finally it reviews the remuneration of any Executive Directors, of the
Chief Risk Officer of the Chief Compliance Officer and submits its
recommendations to the Board.
Main characteristics of the remuneration policy
This remuneration policy strives to achieve the following strategic
goals:
– To comply with the company's strategy and objectives, the long-
term sustainable interests and results of the company as a whole,
and its risk profile. This approach aims not to encourage risk-taking
that is not aligned with the risk acceptance level approved by the
HSBC Group or that could negatively impact the company or the
HSBC Group's capital;
– To implement a remuneration policy that takes into account
sustainability risks, particularly in the environmental field, in terms
of governance and diversity and inclusion;
– To ensure that there are no conflicts of interest when
implementing and executing the variable pay policy;
– To establish remuneration budgets (for fixed and variable pay) that
ensure a prudent balance between sound and effective
management of financial results and risks and an appropriate level
of capital;

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– To set bonus pools linked to the sustainable financial performance
of the HSBC Group and each of the business lines/functions at
global, regional and local level, business competitiveness and the
prudent management of risks for the HSBC Group and its various
business lines;
– To offer competitive remuneration packages and neutral from a
gender perspective;
– To ensure that the remuneration policy is based on the principle of
equal pay for men and women for the same work or work of equal
value;
– To adopt a total remuneration approach by clearly distinguishing
between the fixed remuneration elements (basic salary, fixed
allowances, etc.), the variable remuneration elements
(discretionary and/or collective variable remuneration) and any
allowances paid in the event of departure from the company which
must correspond to actual performance assessed over time and
must not under any circumstances reward the failure;
– To establish a balanced and sufficient level of fixed remuneration
that does not cause employees to be abnormally dependent on
their variable pay;
– To apply a discretionary approach that allows for judgement in
assessing individual performance and setting the level of variable
pay individually with regard to the performance rating, rather than
an automatic approach based on formulae that could encourage
inappropriate behaviour in terms of risk-taking and/or unsuitable
sales to our clients;
– To defer a significant portion of variable pay in the form of financial
instruments (HSBC Holdings Shares) in order to better align
variable pay with the HSBC Group's performance, help retain our
employees and meet our regulatory obligations; and
– Not to implement methods or instruments to circumvent
regulatory principles in terms of variable pay.
Principles applicable to fixed pay
The base salary mainly rewards skills, expertise, technical know-how,
the level of responsibility and seniority in the position. In this context,
any potential increase may be justified by increased skills, expertise,
by an internal promotion with new scope of responsibilities, by a
growth in the size of the managed teams, by an increased influence
on the organisation, by a lack of internal o external competitiveness.
These increases, either selective or collective, have to comply with
the annual fixed pay budget, with any guidelines on a maximum level
and must not be promised by anticipation.
Principles applicable to variable pay
The first step is to set the variable pay pool that will be allocated to
the different business lines and functions with regards to their
performance and their contribution to the HSBC Group and business
lines' global performance.
The variable pay pool is set primarily at HSBC Group level, taking into
account its sustainable financial performance and commercial
competitiveness overall and in each of its business lines, its global
performance in terms of risk management, its affordability to fund
this pool with its own results and its market position.
The HSBC Group variable pay pool is expected to reflect Group
performance, based on a range of financial, non-financial and
contextual factors. The HSBC Group uses a countercyclical funding
methodology, with both a floor and a ceiling, with the payout ratio
generally reducing as performance increases to avoid pro-cyclicality.
The floor recognises that even in challenging times, remaining
competitive is important. The ceiling recognises that at higher levels
of performance it is not always necessary to continue to increase the
variable pay pool, thereby limiting the risk of inappropriate behaviour
to drive financial performance.
The main quantitative and qualitative performance and risk metrics
used for assessment of performance include:
– HSBC Group and business unit financial performance, taking into
account contextual factors driving performance, and capital
requirements;
– current and future risks, taking into consideration performance
against the risk appetite, financial and resourcing plan and global
conduct outcomes; and
– fines, penalties and provisions for customer redress, which are
automatically included in the Committee’s definition of profit for
determining the pool.
Variable pay pools on a global basis and by business lines are
reviewed and approved by the Group Chief Risk Officer, the Group
Chief Executive Officer, the Group Chief Financial Officer, the Group
Chief Financial Officer and the Group Remuneration Committee.
Once approved, these variable pay pools are allocated, for each
business/segment/product/function by regions and countries
depending on their respective performance and contribution. Local
performances are measured through: financial metrics such as profit
before tax, growth in revenue, costs control, evolution in profitability
through, in particular, return on tangible equity; and through non-
financial metrics linked to sustainable risks such as reduction of
carbon path, development of sustainable finance and to risk
management focused in particular on improvement of financial crime
risk culture, implementation of regulator or Audit recommendations,
operational risk management, appropriate application of ‘Conduct’
principles in order to act in the interest of customers, being compliant
with financial markets integrity and avoiding any conflict of interests.
Lastly the performance measure is based on more generic indicators
such as customer experience improvement, implementation of
reorganisation and transformation projects, growth in women
representation among senior roles in the organisation, employee
engagement score, inclusion index. These indicators are included in
performance scorecard and are analysed by comparison with
objectives set at the start of the year.
With regards to individual allocation, from Performance Year 2024, a
new remuneration approach has been introduced in order to
determine individual variable pay for great part of the population.
Using internal and external data, a pay mix ratio (variable pay
compared to fixed pay) has been calculated for clusters of employees
with the same role in the same business/function, the same grade
and the same localisation. Based on this pay mix, a target variable pay
is communicated at the start of the year to employees. At year end,
this target variable pay is adjusted, up or down, taking into
consideration overall performance of the Group, performance of the
Business/Function employee belongs to and finally individual
performance.
For Senior Executives and employees in front lines roles in Global
Banking, Market and Securities Services and Asset Management, the
variable pay remains fully discretionary and linked only to the
individual performance.

Universal Registration Document and Annual Financial Report 2024 | 47

This new approach applies to all HSBC Continental Europe countries
from Performance Year 2024 except for France, Malta and Spain
where it will be introduced in Performance Year 2025 and e xcept for
Germany and Malta wi th no implementation date defined yet.
Regarding individual performance of each employee, it is assessed
throughout the year through routine discussions and feedback, and,
more formally, at the end of the year during the annual performance
assessment. The employee's individual performance is assessed by
the manager using the following three ratings scale:
– " Oustanding"
– " Performing"
– " Off track”
Subject to local regulations, from 2024 onwards, employees must
comply with a minimum standard on behaviour/conduct against HSBC
values (Gateway approach). If they do not comply, their performance
is considered as off track and they are not eligible to receive any
variable pay.
The individual performance assessment is based on the achievement
of objectives set by the manager at the beginning of the year. These
objectives can include, according to the role and the position in the
organisation:
– financial indicators (revenue growth, cost control, increase in profit
before tax, etc.);
– indicators related to sustainability risks (carbon footprint reduction,
development of sustainable finance, facilitated financing to help
clients transition to carbon neutral, upskilling on environmental
issues, etc.);
– indicators related to healthy risk management (respect of
compliance and internal control rules, quality of sales or service,
control of operational risks, monitoring of audit issues, etc.); and
– indicators related to inclusion (gender representation in the
Executive Committee, number of women executive directors or
with the highest internal grades (GC B3 and Managing Director),
inclusive approach in recruitment, etc.).
The indicators underpinning these objectives depend on the position
held and the level of responsibility and are reviewed in comparison
with the objectives for the year which are formalised, at the start of
each year, in the employees' annual performance scorecards. The aim
of the three-level performance measurement scale is to facilitate
differentiation on variable pay, based on the performance score and
efforts in relation to the targets set at the beginning of the year.
In addition the Control Functions contribute to the final calculation of
variable pay under the Incentivising Compliance process, in the event
of non-compliance with internal rules or exceptional actions/
achievements, In such situations, variable pay may be reduced,
capped or increased.
Lastly, a ‘malus’ policy applies to all employees receiving deferred
bonuses. This allows the HSBC Group’s Remuneration Committee to
cancel, reduce or amend all or part of bonuses awarded on the basis
of the employee’s behaviour or factors justifying such action.
To be also noted that all vested awards are subject to the HSBC
Group ‘Clawback’ policy. This allows, in case of breaches, to recover
full or partial part of vested cash or shares.
Regarding guaranteed bonuses they are no more awarded since
2020. They have been replaced by New Hire Indicative Variable Pay
still highly exceptional, limited to one year and only in a high profile
hiring context.
Finally, r egarding severance payments, they follow legal or collective
bargaining agreements' rules.
It should be noted that beyond the Material Risk Takers population
(see below), the great proportion of the company’s senior managers
are affected by the minimum deferral compensation rules s defined
by the HSBC Group which, for 2024, provide for deferred
compensation in the form of shares of between 10 per cent and 30
per cent of variable compensation, with three years vesting rules and
no retention period.
Remuneration policy applicable to Risk takers
CRD V
The following information is published in accordance with article 266
of the order of 3 November 2014 on internal control of banking sector
companies, based on articles L. 511-64, L. 511-71 and L. 511-72 of
the French Monetary and Financial Code and article 450 of (‘UE’)
regulation 575/2013.
In compliance with the rules under CRD V directive, some employee
categories ('Identified Staff') are subject to specific rules regarding
structure and award of variable pay. These employees, considered to
have an impact on the entity’s risk profile (‘Material Risk Takers’), are
identified on the basis of qualitative and quantitative criteria defined
by the European Banking Authority. Pursuant to these criteria, 320
employees have been identified at Group and local level in 2024 (304
excluding double counting).
For this population, variable remuneration is limited to twice the fixed
remuneration (ratio at 100% for Malta Material Risk Takers), ,
according to the decision made by HSBC Continental Europe
shareholders’ Annual General Meeting held on
23 May 2014. In order to maintain the competitiveness of Material
Risk Takers remuneration, Group has modified the remuneration of
several of them by allocating a monthly fixed pay allowance linked to
their function. In addition their variable remuneration is deferred by 40
per cent and even by 60 per cent for the highest variable. Finally,
variable remuneration granted in the form of shares accounts for 50
per cent of variable remuneration granted; this 50 per cent applies to
both the deferred component and to its immediately paid fraction.
It should be noted that if the variable remuneration amount is equal or
lower than 1/3 of total remuneration and equal and lower than EUR
50,000, the variable remuneration is granted in cash immediately paid.
For French employees, the deferred share-based portion is not vested
by the employee until after either a period of two years for 50 per
cent, three years for 25 per cent and after four years for the remaining
25 per cent or a period of two years for 40 per cent, three years for 20
per cent, four years for 20 per cent and five years for the remaining
20 per cent. This is furthermore subject to a one-year retention period
(starting from vesting. In addition there is a prohibition on hedging it.
For our employees working in our European branches or subsidiaries,
deferred shares vest either over four years of 25 per cent each or
over five years of 20 per cent each.
AIFM/UCITS
With effect from 1 January 2017, management companies under
certain conditions are governed by the UCITS Directive in addition to
the Alternative Investment Funds Management (‘AIFM’) Directive
already in place since 1 January 2015.
In accordance with these Directives, categories of employees of
HSBC Global Asset Management (France) and HSBC REIM (France)
are subject to specific rules in term of variable remuneration. The
employees concerned, are those whose professional activity has a
significant impact on the risk profile of the management company or
its alternative investment funds.

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In 2024, a total of 62 risk takers have been identified risk takers AIFM/
UCITS within HSBC Global Asset Management (France), HSBC REIM
(France) and INKA Internationale Kapitalanlagegesellschaft mbH
(Germany) (60 excluding double counting).
For this population, subject to having a variable remuneration of more
than EUR 200,000 and representing more than 30 per cent of fixed
pay, variable remuneration is 40 per cent deferred if it is lower than
GBP 500,000 and 60 per cent deferred for variable remuneration of
more or equal to GBP 500,000.
For risk takers with a variable remuneration deferred at 40 per cent,
the variable remuneration is composed as follows:
50 per cent in immediate cash,10 per cent in cash variable indexed on
the funds’ performance, 40 per cent in cash variable deferred one-
fourth over four years and indexed on the funds performance. For risk
takers with a variable remuneration deferred at 60 per cent, the
variable remuneration is composed as follows: 40 per cent in
immediate cash,10 per cent in deferred cash that vest in four annual
tranches, 50 per cent in cash variable deferred one- third over four
years and indexed on the fund's performance. The variable awarded
in indexed cash, both the non deferred and deferred part, is subject to
a 12 months retention period after vesting. Risk takers who do not
meet the conditions above are subject to HSBC Group deferral
standard rules.
Solvency II
In accordance with this Solvency II Directive, categories of employees
of HSBC Assurances Vie (France) and HSBC Life Insurance Malta
identified as risk takers are subject to specific rules in term of variable
remuneration. In 2024, 38 employees have been identified as risk
takers under Solvency II (37 excluding double counting).
For this population, a part of their variable remuneration is deferred.
This deferred part comprises shares that totally vest after a three
years vesting period and that is applied under specific conditions
described below:
– 60 per cent of the variable remuneration is deferred when its total
amount is equal or above GBP 500,000; and
– 40 per cent of the variable remuneration is deferred when its total
amount is under GBP 500,000.
However, risk takers whose variable remuneration is lower than GBP
500,000 (or an equivalent amount in local currency) and whose
variable remuneration is under 1/3 of their total compensation, are
considered as ‘de minimis’. On this basis, they are subject to HSBC
Group deferral standard rules, which means a deferral between 10
per cent to 50 per cent according to the level of their variable.
IFD/IFR
Investment companies are subject to UE 2019 / 2023 Investment
Firm Regulation ('IFD') and UE 2019 / 2034 Investment Firm Directive
('IFR') Directives.
Pursuant to these directives, categories of employees ('Identified
Staff') from HSBC Epargne Entreprise and HSBC Global Asset
Management Germany are subject to specific rules in terms of
variable remuneration. The employees concerned are those whose
professional activity has a significant impact on the risk profile of the
company.
In 2024, 16 employees have been identified under IFD/IFR directives
in HSBC Epargne Entreprise and HSBC Global Asset Management
Germany.
For this population, subject to having a variable pay above EUR 50,000
and representing more than 1/3 of the total remuneration, the variable
pay is 40 per cent deferred if it is lower than GBP 500,000 and 60 per
cent deferred if it is higher than GBP 500,000. The deferred par of the
variable pay is awarded in the form of shares, has a 4 years vesting
period and is subject to a 12 months retention period.

In accordance with CRD V Directive
Consolidated quantitative information about compensation paid to
executive members and financial market professionals, whose
activities have a material impact on the company’s risk exposure.
Amounts are expressed in EUR and correspond to gross salary
(excluding employer social security contributions and before
deduction of payroll costs).
Remunerations awarded to overall staff

| Full time Equivalent 2024 1 | Total remuneration 2024
€
Executive members | 3 | 4,065,803
Wealth and Personal Banking | 1,314 | 126,132,249
Commercial Banking | 1,252 | 120,152,484
Markets and Securities Services | 1,311 | 164,802,342
Global Banking | 362 | 75,731,165
Corporate Centre | 2,498 | 225,064,619
Total | 6,739 | 715,948,661

1 Staff as of 31 December 2024 excluding trainees and pre-retirements (CFCS).

Universal Registration Document and Annual Financial Report 2024 | 49

Remuneration awarded to Executive members and professionals whose roles
have a significant impact on risk profile of the company

Total remuneration: distribution between fixed pay and variable pay
| Number of people concerned | Total remuneration 2024 | Total fixed pay | Total variable pay
| € | € | €
Executive members | 3 | 4,065,803 | 1,933,248 | 2,132,555
Wealth and Personal Banking | 32 | 13,024,666 | 7,680,047 | 5,344,619
Commercial Banking | 16 | 7,181,085 | 3,981,827 | 3,199,259
Markets and Securities Services | 60 | 27,951,963 | 14,107,574 | 13,844,389
Global Banking | 19 | 16,326,243 | 8,350,356 | 7,975,887
Corporate Centre | 146 | 29,185,464 | 21,241,492 | 7,943,972
Total | 276 | 97,735,223 | 57,294,544 | 40,440,681

Note:Table excludes 28 Non Executive Directors with no remuneration.

Total variable pay: distribution between payments in cash and payments in shares
| Payments in cash | Payments in shares | Total variable pay
| € | € | €
Executive members | 1,066,278 | 1,066,278 | 2,132,555
Wealth and Personal Banking | 2,789,709 | 2,554,910 | 5,344,619
Commercial Banking | 1,665,316 | 1,533,943 | 3,199,259
Markets and Securities Services | 7,088,623 | 6,755,766 | 13,844,389
Global Banking | 3,987,943 | 3,987,943 | 7,975,887
Corporate Centre | 4,919,207 | 3,024,765 | 7,943,972
Total | 21,517,075 | 18,923,606 | 40,440,681

Note:Table excludes 28 Non Executive Directors with no remuneration.

Total variable pay: distribution between non deferred and deferred amount
| Non-deferred amount | Deferred amount | Total variable pay
| € | € | €
Executive members | 1,020,322 | 1,112,233 | 2,132,555
Wealth and Personal Banking | 2,906,705 | 2,437,914 | 5,344,619
Commercial Banking | 1,815,719 | 1,383,539 | 3,199,259
Markets and Securities Services | 7,665,477 | 6,178,912 | 13,844,389
Global Banking | 4,121,792 | 3,854,095 | 7,975,887
Corporate Centre | 5,402,160 | 2,541,812 | 7,943,972
Total | 22,932,175 | 17,508,506 | 40,440,681

Note:Table excludes 28 Non Executive Directors with no remuneration.

Total deferred variable pay: distribution between payments in cash and payments in shares
| Payments in cash | Payments in shares | Total deferred variable pay
| € | € | €
Executive members | 556,117 | 556,117 | 1,112,233
Wealth and Personal Banking | 814,301 | 1,623,613 | 2,437,914
Commercial Banking | 691,770 | 691,770 | 1,383,539
Markets and Securities Services | 3,089,456 | 3,089,456 | 6,178,912
Global Banking | 1,927,048 | 1,927,048 | 3,854,095
Corporate Centre | 1,236,651 | 1,305,162 | 2,541,812
Total | 8,315,342 | 9,193,165 | 17,508,506

Note:Table excludes 28 Non Executive Directors with no remuneration.

50 | Universal Registration Document and Annual Financial Report 2024

Corporate Governance report

Amount of unvested deferred variable pay in respect of previous financial years
| Amount of unvested deferred variable pay in respect of previous financial years
| €
Executive members | 3,202,455
Wealth and Personal Banking | 6,340,575
Commercial Banking | 3,376,716
Markets and Securities Services | 14,717,373
Global Banking | 14,608,088
Corporate Centre | 7,113,219
Total | 49,358,426

This table shows outstanding deferred variable pay corresponding to
total unvested deferred remuneration before 31 December 2024, i.e.
variable pay that has been awarded but not yet paid (cash) or
delivered (shares) and which is still subject to a future ‘malus’
mechanism or early departure.
Shares and equivalent instruments are valued on the share value as at
31 December 2024. Outstanding vested variable pay in respect of
prior year can be impacted by departures from the company.

Amounts paid in respect of hiring (guaranteed variable)1
| Number of people concerned | Amount paid in respect of hiring (guaranteed variable)
| €
Executive members | — | —
Wealth and Personal Banking | — | —
Commercial Banking | — | —
Markets and Securities Services | — | —
Global Banking | — | —
Corporate Centre | — | —
Total | — | —

1 No guaranteed variable paid in respect of hiring.

Amount of severance payments |  |
| Number of people concerned | Amount of severance decided and paid in year n
| €
Executive members | — | —
Wealth and Personal Banking | — | —
Commercial Banking | 1 | 384,302
Markets and Securities Services | — | —
Global Banking | — | —
Corporate Centre | 2 | 383,648
Total | 3 | 767,950

Contributions to defined benefit plan 1
| Number of people concerned | Contribution to defined benefit plan
| €
Executive members | — | —
Wealth and Personal Banking | — | —
Commercial Banking | — | —
Markets and Securities Services | — | —
Global Banking | — | —
Corporate Centre | — | —
Total | — | —

1 No contributions paid to defined benefit plan.

Universal Registration Document and Annual Financial Report 2024 | 51

Information on highest remunerations

Total remuneration
| Number of Material Risk Takers
Between EUR 1 million and EUR 1.5 million excluded | 11
Between EUR 1.5 million and EUR 2 million excluded | 5
Between EUR 2 million and EUR 2.5 million excluded | 1
Total | 17

In accordance with AIFM/UCITS and IFD/IFR Directives
Consolidated quantitative information about compensation paid to
executive members and financial market professionals, whose
activities have a material impact on the company’s risk exposure in
the entities HSBC Global Asset Management (France),
HSBC REIM (France),INKA Internationale Kapitalanlagegesellschaft
mbH (Germany), HSBC Epargne Entreprise and HSBC Asset
Management (Germany). Amounts are expressed in EUR and
correspond to gross salary (excluding employer social security
contributions and before deduction of payroll costs).

HSBC Global Asset Management (France), HSBC REIM (France) and INKA (Germany)
| Total fixed pay | Total variable pay | Total remuneration
| € | € | €
Total of Employees (number: 619) | 52,077,421 | 15,289,101 | 67,366,522
Including employees who have a significant impact on the risk profile AIFMD (number: 60)1 | 10,580,490 | 7,640,360 | 18,220,850
Including Senior Managers (number: 24) | 4,507,883 | 2,975,413 | 7,483,296

1 Including 6 employees who are already in the CRD V material risk takers.

HSBC Epargne Entreprise (France) and HSBC Asset Management (Germany)
| Total fixed pay | Total variable pay | Total remuneration
| € | € | €
Total of Employees (number: 114) | 14,236,491 | 5,268,574 | 19,505,065
Including employees who have a significant impact on the risk profile IFD/IFR (number: 16)1 | 3,513,320 | 2,220,142 | 5,733,462
Including Senior Managers (number: 9) | 2,222,933 | 1,730,284 | 3,953,217

1 Including 2 employees who are already in the AIFM/UCITS material risk takers.
In accordance with Solvency II Directive
Consolidated quantitative information about compensation paid to
employees identified as Solvency II staff in the entities HSBC
Assurances Vie (France) and HSBC Life Insurance Malta.
Amounts are expressed in EUR and correspond to gross salary
(excluding employer social security contributions and before
deduction of payroll costs).

| Total fixed pay | Total variable pay | Total remuneration
| € | € | €
Employees identifies as Solvency II staff (number: 37)1 | 6,779,918 | 4,475,894 | 11,255,812

1 Including 24 employees who are already in the CRD V material risk takers.

52 | Universal Registration Document and Annual Financial Report 2024

Statutory Auditors’ s pecial report on related-party agreements

PricewaterhouseCoopers Audit | BDO Paris
63 rue de Villiers | 43-47 avenue de la Grande Armée
92208 Neuilly-sur-Seine Cedex, France | 75116 Paris, France

Statutory Auditors’ special report
on related-party agreements
(Annual General Meeting for the approval of the financial statements for the year ended 31 December 2024)
HSBC Continental Europe
38, avenue Kléber
75116 Paris
To the Shareholders,
In our capacity as Statutory Auditors of HSBC Continental Europe, we hereby report to you on related-party agreements.
It is our responsibility to report to shareholders, based on the information provided to us, on the main terms and conditions of the agreements
that have been disclosed to us or that we may have identified as part of our engagement, as well as the reasons given as to why they are
beneficial for the Company, without commenting on their relevance or substance or identifying any undisclosed agreements. Under the
provisions of article R.225-31 of the French Commercial Code (Code de commerce), it is the responsibility of the shareholders to determine
whether the agreements are appropriate and should be approved.
Where applicable, it is also our responsibility to provide shareholders with the information required by article R.225-31 of the French Commercial
Code in relation to the implementation during the year of agreements already approved by the Annual General Meeting.
We performed the procedures that we deemed necessary in accordance with professional standards applicable in France to such engagements.
These procedures consisted in verifying that the information provided to us is consistent with the underlying documents.

Agreements to be submitted for the approval of the Annual General Meeting
Agreements authorised and entered into during the year
In accordance with article L.225-38 of the French Commercial Code, we have not been informed of any agreements authorized during the past
financial year that were subject to prior approval by your board of directors.
Agreements authorised and entered into since the year-end
We have not been informed of any authorised agreements on the exercise and concluded since the close of the last financial year, which have
been subject to the prior authorisation of yo ur board of directors.
Agreements already approved by the Annual General Meeting
Agreements approved in prior years:
a)that were implemented during the year
In accordance with article R.225-30 of the French Commercial Code, we were informed of the following agreements, approved by the Annual
General Meeting in prior years, which were implemented during the year.
With HSBC Bank plc Paris Branch (a company controlling HSBC Continental Europe and owning more than 10 per cent of the voting
rights)
Two agreements concluded in 2001 between your company and HSBC Bank p.l.c. Paris Branch also continued their effects in 2024:
– A shared services agreement to provide its members, at cost, with various services related to the two companies’ business activities.
Under the terms of this agreement, the income recorded in 2024 amounted to EUR 0.8 million.
– A tax consolidation agreement between HSBC Bank plc Paris Branch and the Company.
Under the terms of this agreement, tax income of EUR 39.85 million was recorded in 2024.

Universal Registration Document and Annual Financial Report 2024 | 53

With HSBC Holdings plc, a company controlling a shareholder company of HSBC Continental Europe and owning more than 10 per
cent of the voting rights
The agreement renewed in 2015 provides for the free use of the HSBC brand by the Company and its subsidiaries. This agreement had no
impact on the 2024 financial statements.
With HSBC Global Services (Hong Kong) Limited, HSBC Global Services (UK) Limited, HSBC Group Management Services Limited,
HSBC Global Services Limited, and HSBC Service Delivery (Polska) sp. z o.o., (a company in which HSBC Holdings plc, the controlling
company of HSBC Bank plc, a shareholder company of HSBC Continental Europe and owning more than 10 per cent of the voting
rights, has an indirect interest).
The agreement (Side Letter) entered into on 29 September 2021 with HSBC Global Services (Hong Kong) Limited, HSBC Global Services (UK)
Limited, HSBC Group Management Services Limited, HSBC Global Services Limited, and HSBC Service Delivery (Polska) sp. z o.o. relates to the
prepayment by HSBC Continental Europe to five of the Group's Services Companies of four months’ charges for the services provided in order
to meet contingency funding requirements to ensure Operational Continuity in Resolution (OCiR). The purpose of the contingency fund is to
ensure the availability of sufficient financial resources in the Group's Services Companies (ServCos) to safeguard the provision of services that
the HSBC Group relies on throughout a stress or resolution event.
Under the terms of this agreement, the prepayments recorded on the Company's statement of financial position amounted to EUR 180 million
in 2024 financial statements.
With HSBC Trinkaus & Burkhardt GmbH, a company controlled by HSBC Bank plc, a shareholder company of HSBC Continental
Europe and owning more than 10per cent of the voting rights
The Domination and Profit and Loss Agreement, entered into on January 4, 2023, with HSBC Trinkaus & Burkhardt GmbH, an entity under the
control of HSBC Bank plc, a significant shareholder of HSBC Continental Europe with over 10 per cent of the voting rights, was part of the
acquisition strategy to secure 100per cent ownership of HSBC Trinkaus & Burkhardt GmbH by HSBC Continental Europe S.A., Germany (the
German branch of HSBC Continental Europe). This agreement received the Board's approval during its meeting on October 14, 2022.
In 2024, this agreement facilitated the transfer of an exceptional loss amounting to EUR 0.6 million, as recorded by HSBC Trinkaus & Burkhardt
GmbH, to HSBC Continental Europe S.A., Germany, your company's branch in Germany.
With HSBC Service Company Germany GmbH, which is indirectly controlled by HSBC Bank plc, a shareholder company of HSBC
Continental Europe and owning more than 10 per cent of the voting rights
The Domination and Profit and Loss Transfer Agreement, entered into on 4 January 2023 with HSBC Service Company Germany GmbH, a
company indirectly controlled by HSBC Bank plc, a significant shareholder of HSBC Continental Europe with over 10 per cent of the voting
rights, relates to the acquisition of the entirety of shares in HSBC Service Company Germany GmbH held by HSBC Trinkaus & Burkhardt
Gesellschaft für Bankbeteiligungen GmbH by HSBC Continental Europe S.A., Germany (the German branch of HSBC Continental Europe). This
agreement was approved by the Board in its meeting on 14th October 2022.
In 2024, the effect of this agreement was the transfer of a net profit of EUR 1 million recorded by HSBC Service Company Germany GmbH to
HSBC Continental Europe S.A., Germany, the German branch of your entity.
With Jean Beunardeau, Chairman of the Board of Directors
Reinstatement, as of 15 July 2021, of Jean Beunardeau's employment contract, which had been suspended since his appointment as Deputy
Managing Director on 1 February 2010. This agreement was authorised by the Board of Directors at its meeting on 9 June 2021 and was
entered into on 19 July 2021.
This agreement resulted in a payment of EUR 2,164,631 during the relevant period.
b)that were not implemented during the year
In addition, we were informed that the following agreement, approved by the Annual General Meeting in previous years, remained in force but
was not implemented during the year.
With HSBC Bank plc and HSBC UK Bank plc, (a company controlling HSBC Continental Europe and a shareholder company controlling
HSBC Continental Europe respectively, and owning more than 10 per cent of the voting rights)
The indemnity agreement entered into in 2019 between HSBC Continental Europe and HSBC Bank plc and HSBC UK Bank plc in order to
indemnify HSBC Bank plc and HSBC UK Bank for any costs that they may still be required to pay pursuant to their obligations to their
beneficiaries, who have become customers of HSBC Continental Europe, HSBC Bank plc and HSBC UK Bank plc whilst no longer having
authorisation to supply certain international commercial tools and services (“Trade”) to companies situated in the European Economic Area
(EEA) after the United Kingdom left the European Union.
Under the terms of this agreement, no income was recorded in 2024.

54 | Universal Registration Document and Annual Financial Report 2024

Statutory Auditors’ s pecial report on related-party agreements

With HSBC Bank plc Paris Branch (a company controlling HSBC Continental Europe and owning more than 10 per cent of the voting
rights)
A shared services agreement entered into in 2001 to provide its members, at cost, with various services related to the two companies’ business
activities.
This rule between HBCE and HSBC Bank PLC Paris Branch ceased to exist from 1 January 2023 due to the establishment of the VAT group,
which does not include HSBC Bank PLC Paris Branch.

Executed in Neuilly-sur-Seine and Paris, on 19 February 2025
The Statutory Auditors
PricewaterhouseCoopers Audit | BDO Paris
Agnès Hussherr | Vincent Génibrel

Universal Registration Document and Annual Financial Report 2024 | 55

Sustainability Statement

Contents
55 | Sustainability Statement
73 | Environmental
73 | Climate change
82 | Nature
85 | EU Taxonomy economic performance indicators
90 | Social
100 | Governance
110 | Appendix

Background to the sustainability
statement
This sustainability statement has been prepared for the first time by
HSBC Continental Europe under the local transposition of the EU’s
Corporate Sustainability Reporting Directive (‘CSRD’) in accordance
with the European Sustainability Reporting Standards (‘ESRS’). As
2024 marked the first year of implementation, the process of
implementation has been subject to several limitations and
challenges, including uncertainties with the interpretation of the new
rules, the lack of sector-specific guidance and established best
practices, as well as limitations in the availability, consistency, and
quality of data.
Given this context, HSBC Continental Europe has focused on the
implementation of the mandatory requirements under the ESRS as
applicable.
– With respect to the double materiality assessment ('DMA') and
value chain, HSBC Continental Europe faced limitations in data
availability, consistency, and quality, as well as in the maturity of
valuation methodologies. The DMA involved significant
judgements, assumptions, and estimates, as detailed in the
relevant sections of this statement. Subject to any future
regulatory changes or expectations, the result of the DMA may be
re-assessed to consider the evolving data, methodologies,
regulatory requirements, and sector-specific guidance, where
applicable.
– Methodologies, data, scenarios and industry standards that have
been used may evolve over time in line with market practice,
regulation and developments in science, where applicable. Any
such developments in methodologies and scenarios, and changes
in the availability, accuracy, and verifiability of data over time and
our ability to collect and process such data could result in revisions
to our internal measurement frameworks as well as reported data
going forward, including on financed emissions, meaning that
such data may not be reconcilable or comparable year-on-year.
– With respect to the EU Taxonomy, HSBC Continental Europe has
not disclosed certain information, where considered to be not
material or relevant. Please see section ‘EU Taxonomy economic
performance indicators’ on page 85 for further details.
The statement is prepared at a consolidated level (i.e. including its
subsidiaries and branches), using the same consolidation principles as
those applied in its financial statements to ensure consistency and
comparability across both reports. It includes HSBC Assurances Vie
(France) and the Private Banking business in Germany, classified as
‘held for sale’. The Bank has conducted materiality assessment for
these entities and identified no changes to the DMA outcome. For
further details refer to ‘Note 2 Assets held for sale, liabilities of
disposals groups held for sale and discontinued operations’ on page
263.
HSBC Continental Europe has relied on the exemption for
undertakings based in an EU member state to not disclose impending
developments or matters in the course of negotiation, under articles
19a(3) and 29a(3) of Directive 2013/34/EU (as transposed into French
law).
HSBC Continental Europe's approach to sustainability reporting will
continue to evolve to consider alignment with future regulatory
requirements, industry guidance, best practices, and
recommendations.
Limited assurance is performed by PricewaterhouseCoopers Audit
(‘PwC’), who are one of the external auditors to HSBC Continental
Europe. Refer to the Independent Auditors’ Report on page 106.

Strategy, business model and value
creation
Strategy
The HSBC Group is one of the largest banking and financial services
organisations in the world. Guided by its purpose of ‘Opening up a
world of opportunity’, the HSBC Group's ambition is to be the
preferred international financial partner for its clients.
HSBC Continental Europe is the Group’s banking hub in the European
Union. HSBC Continental Europe has a clear and focused strategy
that is consistent with the HSBC Group’s strategy: to build the
leading international wholesale bank in Continental Europe
complemented by a targeted wealth and private banking offering.
For more information on the HSBC Group and its strategy
implemented in Continental Europe, refer to the ‘Presentation of
Activities and Strategy’ section on page 5.
Incorporating sustainability into our strategy
HSBC Continental Europe’s approach to sustainability is aligned with
that of the HSBC Group, focusing on creating long-term value for its
customers and wider stakeholders. The HSBC Group focuses its
efforts on three areas: the transition to net zero, building inclusion
and resilience, and acting responsibly.
Transition to net zero
In October 2020, the HSBC Group announced its ambition to become
a net zero bank by 2050. The HSBC Group believes supporting its
customers’ transition both benefits their business and helps generate
long-term financial returns for its shareholders.
HSBC Group is further developing its approach to nature, which
builds on the outline that was set out in its net zero transition plan.
This includes considering how to: understand its exposure to nature;
manage nature-related risks and impacts; support its customers,
including financing and investing in nature-related solutions; and build
nature-related skills, data capacities and partnerships.
HSBC Group is taking steps to embed its approach to nature
alongside delivery of its net zero implementation plans and it
continues to test and scale approaches to financing and investing in
biodiversity and nature.

56 | Universal Registration Document and Annual Financial Report 2024

Sustainability Statement

Building inclusion and resilience
To help create long-term value for all stakeholders, the HSBC Group
focuses on fostering inclusion and building resilience for its
employees, its customers and the communities it operates within.
For employees, the HSBC Group focuses on creating an inclusive,
healthy and rewarding environment as this helps to attract, develop
and retain the best talent, and the HSBC Group supports its resilience
through access to wellbeing and learning resources.
The HSBC Group strives to provide an inclusive and accessible
banking experience for its customers. The HSBC Group does this by
providing resources that help manage customers’ finances, and
services that help customers protect what they value.
Acting responsibly
The HSBC Group is focused on operating a strong and sustainable
business that puts the customer first, values good governance, and
gives its stakeholders confidence in how the HSBC Group does what
it does. Its conduct approach guides the HSBC Group to do the right
thing and to focus on the impact it has on its customers and the
financial markets in which it operates.
Customer experience is at the heart of how the HSBC Group
operates. The HSBC Group aims to act responsibly and with integrity
across the value chain.
In line with the HSBC Group Net Zero Transition Plan, the Bank
intends to use its strengths as an organisation to help deliver a
broader impact on decarbonisation. This includes: the way that it
supports its customers, both through customer engagement and the
provision of financing solutions; the way that it operates as an
organisation, including risk management, policies, governance and
own operations; and how it partners externally in support of systemic
change.
Business model
In 2024, HSBC Continental Europe managed its products and
services through its global business lines: Global Banking and
Markets (comprising of three reportable segments: Markets and
Securities Services, Global Banking, and GBM Other), Commercial
Banking, Wealth and Personal Banking (comprising asset
management, insurance and private banking), and the Corporate
Centre (comprising certain legacy assets, central stewardship costs,
and interests in its associates and joint ventures). These global
businesses are supported by Digital Business Services, and 11 global
functions, including Risk, Finance, Compliance, Legal, Human
Resources and Sustainability.
Products offered by HSBC Continental Europe include deposit
accounts, loans, payment solutions, trade finance, asset
management, insurance and other bespoke products tailored to
clients’ requirements. HSBC Continental Europe also offers
sustainability focused products such as green loans, social loans,
sustainability-linked loans, green, social and sustainability bonds
among others.
For more information on the HSBC Continental Europe’s business model,
refer to the ‘Our Global Businesses’ section on page 7.
From a geographical perspective, HSBC Continental Europe
comprises the Paris hub including the French subsidiaries and its
European Union (‘EU’) branches (Belgium, Czech Republic, Germany,
Ireland, Italy, Luxembourg, Netherlands, Poland, Spain, Sweden) and
subsidiaries in Luxembourg (HSBC Private Bank (Luxembourg) S.A.)
and in Malta (HSBC Bank Malta p.l.c.).
For information on the headcount of HSBC Continental Europe employees
by geographical area, see ‘Characteristics of HSBC Continental Europe’s
workforce’ on page 91.
Value Creation
HSBC Continental Europe aims to create value for all stakeholders by
harnessing its resources to deliver responsible and innovative
financial solutions for its clients. The below tables outline the key
inputs, outputs and stakeholders in HSBC Continental Europe’s value
chain.

Inputs | Outputs
Financial – Funds to operate as a business and provide products and services to customers obtained through funding from shareholders and liquidity providers | – Financial stability and growth – Ability to invest in new projects and initiatives – Revenue generation and profitability
Intellectual – Intellectual property, brand and other specific knowledge that allows the Bank to operate competitively – Investment in innovation and product development | – Development of new products and services – Strengthened brand reputation and market presence – Competitive advantage through innovation
Human – Employees’ time, skills and expertise – Investment in workforce training and development | – Skilled and knowledgeable workforce – Improved employee performance and productivity – Higher employee satisfaction and retention
Social – Relationships with stakeholders that enhance the wellbeing of the wider society in which the Bank operates – Maintained through ongoing stakeholder engagement | – Stronger community ties and trust – Positive social impact and community initiatives – Improved stakeholder relationships and collaboration
Natural – Consumption of energy, water and other natural resources | – Efficient use of natural resources – Implementation of sustainable practices and technologies – Reduction in environmental footprint

Universal Registration Document and Annual Financial Report 2024 | 57

Material sustainability impacts, risks and opportunities
The double materiality assessment process
HSBC Continental Europe carried out its first DMA in 2024 to identify
and assess sustainability-related impacts, risks and opportunities
('IROs') that are material to the Bank. These IRO form the basis of
the information in this report. The DMA was a multi-step process as
defined below:
Step 1: Understanding the business context
As a foundation for the assessment, the first step of the DMA was an
analysis of HSBC Continental Europe’s operations and business
relationships across its value chain, including identifying the key
stakeholders potentially impacted by its activities. This assessment
included reviewing internal documents and external sources such as
Ecovadis and Sustainalytics reports to create value chain maps and
pinpoint key stakeholder groups. The process considered all
geographies in which the Bank operates, and all core products and
services offered by the Bank and its subsidiaries.
The value chain was mapped for key business lines, including Global
Banking and Markets, Commercial Banking and Wealth and Personal
Banking which includes Private Banking, Insurance and Asset
Management.
Step 2: Identifying potentially material
sustainability matters
This was followed by a data and information gathering exercise to
define a preliminary ‘long list’ of sustainability matters that could be
material for the Bank. In addition to the suggested sustainability
matters included within the ESRS Application Requirement 16 ('AR
16'), other international standards and frameworks, including the
Sustainability Accounting Standards Board (‘SASB’), Global Reporting
Initiative (‘GRI’), Taskforce on Climate-related Financial Disclosures
('TCFD'), Taskforce on Nature-related Financial Disclosures ('TNFD')
and United Nations Environment Programme- Finance Initiative
('UNEP–FI') Impact Radar were reviewed to identify any additional
sector-specific topics that may be relevant across HSBC Continental
Europe’s value chain. This was further supplemented with reviews of
CDP (formerly Carbon Disclosure Project) disclosures and ESG ratings
and additional inputs gathered through stakeholder interviews and
feedback. Finally, this preliminary list was validated through peer
benchmarking to finalise the topics and matters to be assessed for
materiality.
Step 3: Assessing the impact and financial
materiality of sustainability matters
The assessment of the impact and financial materiality of this long list
of topics involved two independent processes: one with internal
subject matter experts and one with the key stakeholder groups
defined in the first step.
Subject matter expert consultation
Subject matter experts and professionals from relevant areas of the
Bank were appointed to evaluate the list of sustainability matters
based on expert judgment. To aid their assessment, they consulted
internal data, as well as the existing HSBC Group and Continental
Europe reporting and risk assessments. The Exploring Natural Capital
Opportunities, Risks and Exposure (‘ENCORE’ 2024 version) tool and
the salient human rights assessment were also key inputs that
informed their assessment of nature and social topics respectively.
The following criteria were used to guide the assessment and
prioritisation of different sustainability matters. Each parameter was
assigned a scoring scale which was then consolidated into a final
materiality score and a materiality threshold applied.

Materiality assessment | Parameter | Definition
Impact | Scale | How grave the negative impact is or how beneficial the positive impact is for people or the environment
| Scope | How widespread an impact could be
| Irremediability (for negative impacts) | Whether and to what extent the negative impacts could be remediated
| Likelihood (for potential impacts) | Probability of occurrence
Financial | Magnitude | Potential size of a financial effect (risk or opportunity)
Likelihood | Probability of occurrence

As part of the assessment process, the interlinkage between impacts
and dependencies as drivers to risks and opportunities were taken
into account, by considering potential risks which could arise from
negative impacts and opportunities from positive impacts.
Impacts were assessed on a gross basis, meaning without
considering any mitigating actions. For potential impacts related to
social and business conduct, likelihood was assessed by taking into
consideration mitigating actions.
Direct and indirect stakeholder engagement
To capture the perspectives of key stakeholder groups, internal
stakeholders were engaged directly whilst the views of key external
groups were represented by internal proxies, with sufficient expertise
and knowledge to represent those groups. Concurrently, external
stakeholders were engaged through various channels and their
insights informed the Bank’s understanding of the relevant issues
faced by its affected stakeholders and of the importance for the users
of sustainability information. In addition to leveraging this proxy
stakeholder input, third party information sources were selected to
identify items of importance to external stakeholders, and further
inform the final stakeholder engagement assessment for each
sustainability matter.

58 | Universal Registration Document and Annual Financial Report 2024

Sustainability Statement

Stakeholder groups and method of engagement/proxy information
Stakeholder Group | Stakeholder Engagement (through interview) | Proxy Information (desktop research)
Wholesale customers and suppliers | Indirect engagement through interviews with business lines | ESG rating providers and customers’ and suppliers’ annual and sustainability reports
Retail customers | — | Risk analytics provider, which grades ESG risks across the globe
Employees | Indirect engagement through interviews with HR | HSBC workforce engagement papers and snapshot survey results
Communities and NGOs | Indirect engagement through interviews with Sustainability teams | HSBC NGO engagement reports and internal tools
Regulators, governments and investors | Indirect engagement through interviews with Compliance | Financial institutions peer review and HSBC reporting frameworks
Indirect engagement through interviews with Investor Relations
Nature | N/A | Risk analytics provider, which grades nature related risks across the globe

Due to data constraints, the assessment only considered direct
contractual relationships and did not include the value chain of HSBC
Continental Europe’s clients and suppliers. U nless otherwise
specified in the report, the DMA did not cover indirect contractual
relationships.
Aggregation and calibration of material sustainability matters
The outcomes of these two assessments were compared and
calibrated in order to determine any matters for which there was a
divergent view of materiality between SMEs and stakeholders. In
such cases, further detailed analysis was carried out with the
respective SMEs, and a final determination made based on all
available inputs and documentation.
This consolidated list of material sustainability matters was then
benchmarked using two primary inputs:
– Internal review and challenge by internal governance functions,
including th e Executive Committee.
– Review by an external partne r, a strategic advisory firm delivering
sustainable finance training and client support.
Step 4: Identifying material IROs
Following the SME assessment in Step 3, a list of IROs was
developed for each sustainability matter (including those identified as
non-material), with input from relevant business and functions. SMEs
then assessed the materiality of each IRO, validating the IRO
descriptions, mapping them to the value chain, and confirming the
classification of impacts as either actual or potential.
For IROs pertaining to non-material matters, the SME review was
used to confirm that they had been correctly considered as non-
material, thereby validating the original sustainability matter-level
assessment. After this IRO-level assessment, a further refinement
step was carried out to identify possible consolidation and
disaggregation opportunities.
Consolidation was considered where there were similarities in
descriptions or common drivers in particular parts of the value chain,
while disaggregation was considered in cases where there was
conflation between different geographies, organisations, lines of
business or time horizons.
1 Refers to colleagues who are at career band GCB 3 and above.
Step 5: Validation and sign-off
A series of workshops were conducted, by ESRS topic, to facilitate
the assessment and review by senior management 1 along with the
respective SMEs. All material IROs from the SME assessment were
discussed during the workshops for further opportunity to consolidate
or disaggregate. In some instances, materiality was reassessed
considering senior management inputs and subject to SME review
and challenge. A final workshop was then conducted to review and
validate the final IRO list collectively. The final list of material IROs
was then presented to the Executive Committee and Board of
Directors for approval.
Notes on methodology and process
ESG risk management capabilities have been enhanced over the year
and progress continues to be made to embed sustainability into the
Bank's daily activities, strategy and risk management practices.
This assessment was conducted based on the most up to date
understanding and data available at the time of the assessment. It is
important to recognise that the financial and sustainability landscape
is inherently dynamic and subject to change. As such, this is a point-
in-time view that is expected to evolve over time.
The identification of the most material risks related to ESG across
HSBC Continental Europe was performed in line with the HSBC
Group Risk Framework including the Risk Management Framework
('RMF'), applicable to all risks across the organisation. The
identification and assessment of these risks also relies on risk
management tools such as appetite for risk, risk mapping, emerging
risk, horizon scanning and stress testing and scenario analysis.
Certain limitations were encountered while conducting the DMA
particularly around availability of data. This warranted the use of
assumptions and proxies where appropriate as covered in the
respective detailed sections of the disclosure.

Universal Registration Document and Annual Financial Report 2024 | 59

List of material IROs
HSBC Continental Europe identified 27 material IROs through the DMA, which includes 4 entity specific IROs. Below is an overview of these,
with further details available in the relevant sections of this report on 'Climate change' page 73, 'Biodiversity and Ecosystems' page 82, 'Social'
page 90, 'Governance' page 100.

ESRS | Description | Impact Materiality | Financial Materiality
Risk | Opportunity
E1 – Climate change | Impact on climate change | u |  |
Impact on energy | u |  |
Reputational risk (including the risk of greenwashing) associated with misstatements and misalignment with targets |  | u |
Deterioration in credit worthiness of customers and valuations of investments due to climate change |  | u |
Regulatory compliance and legal risk that could arise from failure to comply with climate related regulations |  | u |
Opportunity for sustainable finance and investment |  |  | u
E4 – Biodiversity and Ecosystems | Impact on biodiversity driven by climate change | u |  |
Impact on ecosystem services | u |  |
S1 – Own Workforce | Building an inclusive workforce | u |  |
Career growth and progression | u |  |
Productive and skilled workforce |  |  | u
Work-life balance | u |  |
Active social dialogue | u |  |
Right to privacy | u |  |
Compliance with data protection laws |  | u |
Secure employment | u |  |
S4 – Consumers and end-users | Right to privacy | u |  |
Compliance with data protection laws |  | u |
G1 – Business Conduct | Responsible corporate culture | u |  |
Conduct risk |  | u |
Speak-up culture |  |  | u
Anti-bribery and corruption | u |  |
Sanctions compliance (Entity Specific) | u |  |
Anti-money laundering (Entity Specific) | u |  |
Regulatory and reputational risk (financial crime) |  | u |
Cybersecurity (Entity Specific) | u |  |
Cybersecurity (Entity Specific) |  | u |

The current financial effects of
material risks and opportunities
Following the conclusion of the DMA, HSBC Continental Europe
carried out an analysis to understand if any of the material risks and
opportunities had given rise to a financial impact during the current
reporting period.
This process involved mapping the identified risks and opportunities
to any potential financial impact on HSBC Continental Europe’s
statement of financial position, financial performance, and cash flow,
to establish the key line items to be assessed.
This was followed by a data sourcing and analysis exercise across
each of the topic areas where a potentially known and observable
impact has been identified, to assess the financial effect of the
material risks and opportunities during the reporting period. From this
analysis HSBC Continental Europe noted that none of the material
risks or opportunities had a material financial effect in the current
reporting period.
Resilience of the strategy and
business model
The DMA exercise shows the wide range of material sustainability
impacts and risks to which HSBC Continental Europe is exposed,
either directly or indirectly through its relationships with customers
and other stakeholders. It also shows the opportunities that are
available to the Bank.
I n respect of these sustainability matters, HSBC Continental Europe
endeavours to ensure its strategy and business model, including the
products and services provided to its customers and risk
management processes, are adapted to regulatory requirements,
stakeholders, and market expectations, which continue to evolve. In
doing so, the Bank aims to ensure its ongoing operational resilience
and to safeguard its ability to continue providing critical products and
services to its customers, affiliates, and counterparties.
Identifying key resilience risks
HSBC Continental Europe uses a comprehensive risk management
framework across its organisation and across all risk types,
underpinned by its culture and values.This framework outlines the
key principles, policies, and practices that the Bank employs to
manage material risks, both financial and non-financial. As part of this
framework, the Bank uses a top and emerging risks process to
provide a forward-looking view of issues with the potential to
threaten the execution of its strategy or operations over the medium
to long term. It updates its top and emerging risks as necessary,
considering both internally driven and externally driven factors.

60 | Universal Registration Document and Annual Financial Report 2024

Sustainability Statement

The main resilience risks for HSBC Continental Europe in 2024 were
technology and cyber security risk, data risk and third party risk. The
approach to risk management, including resilience risk, is detailed in
section 'Risk Management Framework' on page 166.
Ensuring business continuity
The Bank has a well-established business continuity and Incident
Management programme in place designed to protect its staff,
assets, processes, and customers in the event of an interruption to
normal business activities. Business continuity plans cover
interruption scenarios including communicable disease, unavailability
of staff, unavailability of buildings, unavailability of IT services and
unavailability of key third party suppliers.
Business impact analysis and business continuity plans are signed off
as fit for purpose by each department head and are updated annually,
or more frequently in case of material changes in their structure or
processes. Regular testing is carried out to ensure business
continuity plans remain accurate, relevant, and fit for purpose.
For HSBC Continental Europe’s departments categorised as critical,
100 per cent of business continuity plans were up to date at the end
of the year and overall business continuity lifecycle controls (business
impact analysis, plans and exercises) for the region have been
assessed as effective and compliant against a target appetite of 95
per cent completion – reaching a compliance of 100 per cent.
Resilience of the business model in relation to
environmental risks
Stress testing is the primary mechanism through which the Bank is
able to gain forward-looking insights into the resilience of its strategy
and business model. The overall approach that HSBC Continental
Europe adopts to Stress Testing is described in section 'Stress
Testing' on page 166. The stress testing program also includes
scenario analysis on the climate and nature risks faced by HSBC
Continental Europe (see 'Testing the resilience of the strategy and
business model in relation to climate change' and 'Testing the
resilience of the strategy and business model in relation to nature
risk' below).
In 2024, HSBC Continental Europe carried out stress tests covering
systemic and idiosyncratic shocks over the short-term horizon
(including as part of the local recovery plans and for specific risk
portfolios), the impact of macroeconomic downturns over the five-
year planning horizon (including the impact of different interest rate
paths) and potential transition and physical risk shocks from climate
and nature risk impacts under short-, medium- and long-term
horizons.
In all cases, stress test impacts were measured on the profit and loss
account, r isk-weighted assets and capital, and the outcomes were
presented to the HSBC Continental Europe Risk Committee.
These exercises help the Bank to gain a better understanding of its
potential resilience risks and feed into the determination of
appropriate capital buffers to ensure the Bank’s financial resilience
and ability to absorb shocks including those relating to its material
sustainability matters.
Impacts from climate scenario analysis were analysed across three
distinct timeframes and allow HSBC Continental Europe to monitor
potential risks to capital and its progress towards contributing to the
HSBC Group’s Net Zero Transition Plan. The scenario analysis covers
impacts over the short term up to 2025; the medium term from 2026
to 2035; and long term from 2036 to 2050. The nature of the
scenarios, HSBC Continental Europe’s developing capabilities, and
limitations of the analysis lead to outcomes that are indicative of
climate change headwinds, although they are not a direct forecast.
Developments in climate science, data, methodology and scenario
analysis techniques continue to shape the Bank’s approach and
therefore conclusions of the analysis may change over time.
Testing the resilience of the strategy and
business model in relation to climate change
HSBC Continental Europe performs a scenario analysis exercise
which supports the assessment of the overarching strategic
resilience of HSBC Continental Europe’s business models in relation
to climate change.
The exercise is focused on the Bank’s downstream (financed)
emissions. In the 2024 climate scenario analysis exercise, five
scenarios were explored that were created to examine the potential
impacts from climate for HSBC Continental Europe. The 2024
exercise primarily focused on credit risk and non-financial risk
exposures. Climate scenario analysis was also used to assess the
impacts on other risks including traded market risk, treasury risk,
pension risk and insurance risk.
Climate risk scenarios
Climate scenario analysis focuses on the impacts on HSBC
Continental Europe’s customers across a range of potential climate
scenarios. The 2024 scenarios were internally created using external
publicly available scenarios as a reference, including those produced
by the Network for Greening the Financial System (‘NGFS’), the
Intergovernmental Panel on Climate Change (‘IPCC’) and the
International Energy Agency. Using these external scenarios as a
template, the scenarios were adapted by incorporating the unique
climate risks and vulnerabilities to which the Bank and its customers
across different business sectors and regions are exposed to within
the context of evolving policies and emerging climate risks. The
scenarios vary by severity to analyse how climate risks could impact
the Bank's portfolios.
The scenarios utilised to assess climate change impacts were:
– the Below 2 Degrees scenario, which is consistent with the Paris
Agreement where net zero is achieved, but beyond the 2050
scenario horizon. It assumes that there will be an orderly and
gradual rise in the stringency of climate policies over time.
– the Current Commitments scenario, which assumes that there is a
slower-than-required transition to a net-zero economy, which is
reflective of the current pace of transition. The scenario is
anchored to existing governmental committed policies. This slow
transition scenario helps HSBC Continental Europe to inform the
actions it needs to take to reach the HSBC Group’s net zero
ambition while operating in a world that is not on a net zero
pathway.
– the Delayed Transition Risk scenario, which assumes that climate
action is delayed until 2030 with a late disorderly transition to net
zero but stringent and rapid enough to meet net zero by 2030,
accentuating disorderly transition risks. This scenario allows HSBC
Continental Europe to stress test severe but plausible transition
risk impacts over the medium and long-term time horizons.
– the Downside Physical Risk scenario, which is a stressed scenario
that contains significant global warming and physical risk events. It
also assumes that current climate policies are preserved but new
decarbonisation policies fail to be introduced and global warming
continues. This scenario allows HSBC Continental Europe to

Universal Registration Document and Annual Financial Report 2024 | 61

assess physical risks associated with climate change over the
long-term horizon.
– the Severe Climate Stress scenario, with near term disorderly
climate action triggered by unprecedented global weather events
which leads to a short, sharp economic recession. In this scenario,
which is assessed in the horizon up to 2030, extreme physical
events pivot the public view on climate and the transition to net
zero accelerates. This extreme stress scenario is used to test
HSBC Continental Europe’s capital resilience to extreme and very
unlikely events, combining downside climate and macroeconomic
risks.

+Physical risk Transition Risk+

| Climate Scenarios |
| Downside Physical | Severe Climate | Current Commitments | Below 2 Degrees | Delayed Transition
Scenario outcomes | Rise in global temperatures by 2100 (vs pre-industrial levels) | 4.2°C |  | N/A | 2.4˚c |  | 1.7˚c |  | 1.6˚c |
Rise in European temperatures by 2100 (relative to global increases) | Higher | p | N/A | Higher | p | Lower | q | Similar | u
| End of horizon | 2050 | 2030 | 2050 | 2050 | 2050
Underlying assumptions based on global averages | European and Global Climate Actions | Already implemented polices only | Rapid and disorderly transition | All currently pledged policies | Gradually rising stringency of policies | Rapid and disorderly transition
Assumed pace of technology change and adoption | Slow change | Accelerated progress | Limited progress | Moderate change | Accelerates from 2030
Assumed socioeconomic impact | Very high | Very high | Moderate | Moderate to High | Very high
Assumed European carbon price | 2030 | 2050 | 2030 | 2030 | 2050 | 2030 | 2050 | 2030 | 2050
25 | 20 | 990 | 93 | 179 | 119 | 242 | 93 | 1281
Scenario risk characteristics | Climate risk | Physical | p | Higher | p | Higher | u | Moderate | q | Lower | q | Lower
Transition | q | Lower | p | Higher | u | Moderate | p | Higher | p | Higher

Portfolio scope and methodology
The assessment of scenario outcomes is largely focused on credit
risk, examining the capability of the Bank’s clients to absorb the cost
of transition and physical risk events. The internal climate scenario
analysis uses models to assess how transition and physical risks may
impact HSBC Continental Europe’s portfolios under different
scenarios. The models for the Bank’s wholesale portfolios are
focused on transition risk factors and incorporate a range of climate-
specific metrics that could have an impact on customers, including
expected production volumes, revenue, costs and capital
expenditure. For the commercial real estate portfolio, the Bank’s
models are focused on physical risk factors, including property
locations, perils and insurance coverage when assessing the overall
credit risk impact to the portfolio.
Beyond credit risk, the analysis also covers other risks HSBC
Continental Europe may face as a result of climate change, including
treasury risk, pension risk, insurance risk and non-financial risk.
Impacts observed during the scenario analysis exercise were minimal
across these risk types.
Outcome of climate scenario analysis
The modelled outputs from the internal climate scenario analysis
exercise suggest that HSBC Continental Europe’s wholesale portfolio
could see increases in credit losses due to climate change. Overall,
these increases are expected to remain low in the short term but
could grow in the medium term particularly under scenarios such as
the Below 2 Degrees scenario where clients exposed to transition
risk in HSBC Continental Europe's portfolio are most impacted.
HSBC Continental Europe continues to look for ways of enhancing
methodology to improve the effectiveness of its climate scenario
analysis by incorporating lessons learnt from previous exercises and
feedback from key stakeholders, including regulators. There are
industry-wide limitations, particularly on data availability, although the
models are designed to produce outputs that can support HSBC
Continental Europe's assessment of the level of its climate resilience.
Model outputs are driven by the quality and presence of client
transition plans, the competitive environment limiting the ability to
pass on carbon costs, the current emissions of HSBC Continental
Europe’s customers and, the amount of capital expenditure required
for the transition.
The analysis of HSBC Continental Europe’s commercial real estate
portfolio revealed that climate physical risks pose limited additional
impacts to credit risk in the short to medium term. The largest
portfolio is in France where coastal inundation and riverine flooding is
a key physical risk peril within certain regions of the country. The
diversified nature of the portfolio helps to mitigate the levels of credit
deterioration.
While climate-related losses for HSBC Continental Europe are
expected to remain limited in the short term, they are likely to
increase compared with the counterfactual scenario, that experiences
no climate change impacts, in the medium and longer term. This is
largely driven by the transition to a net zero economy. Climate-related
losses can be mitigated through active management approaches,
which include identifying new climate-related business opportunities
and adapting lending portfolios to reduce exposure to climate risks
and losses. HSBC Continental Europe continues to enhance its
methodology to improve the effectiveness of its climate scenario
analysis.

62 | Universal Registration Document and Annual Financial Report 2024

Sustainability Statement

There are industry-wide limitations, particularly on data availability,
although HSBC Continental Europe’s models are designed to produce
outputs that can support the assessment of the level of HSBC
Continental Europe’s climate resilience.
The nature of the scenarios, HSBC Continental Europe’s developing
capabilities, and limitations of the analysis led to outcomes that are
indicative of climate change headwinds, although they are not a direct
forecast. Developments in climate science, data, methodology and
scenario analysis techniques will help HSBC Continental Europe to
shape its approach further, in partnership with the HSBC Group. It
therefore expects this view to change over time.
Testing the resilience of the strategy and
business model in relation to nature risk
In 2024, HSBC Continental Europe conducted a nature scenario
analysis exercise focused on the wholesale lending portfolio, which is
part of the Bank’s downstream value chain, and the impact of nature
events on a limited range of counterparties in key sectors exposed to
nature risk up to 2050. Modelling covered 25 per cent of the highest
risk climate sectors a nd has identified limited financial impacts from
nature risk for HSBC Continental Europe.
Due to the limited industry development and availability of external
data, nature scenario analysis remains nascent and further work to
expand and enhance the analysis will be conducted in future years.
Nature risk scenarios
HSBC Continental Europe has developed three scenarios, expanding
on the existing climate scenarios with nature variables sourced from
available third-party frameworks and publications as follows:
– Nature Destruction scenario where policy responses remain
largely absent and physical risks intensify.
– Nature Baseline scenario with a gradual shift of public and policy
attention towards nature risks.
– Nature Positive scenario where orderly action is taken with a
concerted global effort to restore biodiversity and sustainable
practices.
Outcome of nature risk scenario analysis
Overall, the results were impacted by the very limited number of
nature-focused transition plans from many of the Bank’s clients and
from the early stage of industry thinking around nature risk. The
results do not currently indicate that the current business model and
strategy will not remain resilient in respect of nature-related risks.
Results in the Nature Destruction scenario were primarily driven by a
nature based macroeconomic shock, which resulted in reductions in
lending. In the Nature Positive scenario, the results were driven by
transition risk following impacts from nature-related government
policies.
Overall resilience to environmental risks
The conclusions of HSBC Continental Europe’s scenario analysis are
in line with the conclusions published by the EBA as a result of the
‘Fit for 55’ regulatory exercise carried out in 2024. The results of the
scenario analysis exercises reveal that climate change and nature
impacts on their own do not reveal material risks to HSBC
Continental Europe’s resilience and strategy in the short to medium-
term, however, could act as a contributing factor which worsens the
impacts of a wider macroeconomic shock.
Scenario analysis supports the Bank in identifying how to mitigate
potential climate-related losses through active management
approaches, which include identifying new climate-related business
opportunities and adapting its portfolios to reduce exposure to
climate risks. In line with the HSBC Group’s net zero ambition, HSBC
Continental Europe will continue to work with its clients around the
development of their transition plans. This will support future
improvements to the Bank’s scenario analysis capabilities enhancing
how it assesses the resilience of its business models to both climate
change and nature risk.
Further details on the mitigating actions taken by HSBC Continental Europe
can be found in the 'Managing climate-related risks' section of this
disclosure.
Risk management and internal
controls over sustainability reporting
Risk management and internal controls over sustainability reporting
are covered in HSBC Continental Europe’s comprehensive risk
management framework. This framework is used across all risk types
and outlines the key principles, policies and practices that the Bank
employs in managing material risks, both financial and non-financial.
Refer to the 'Risk Management Framework' section on page 166.
Sustainability reporting is covered within HSBC Continental Europe’s
risk management framework under the taxonomy financial reporting
risk. In 2023 the scope of financial reporting risk was expanded to
explicitly include oversight over accuracy and completeness of
sustainability reporting and the risk appetite statement was updated
to reference the sustainability disclosures. Internal controls were also
updated to incorporate requirements for addressing the risk of
misstatement in sustainability reporting.
To support this, a framework was developed to guide control
implementation over sustainability reporting disclosures, which
includes areas such as data governance, and risk assessment:
– A process to gather climate-related and environment data for risk
management was developed. In particular, the ESG Data Utility is
responsible for addressing ESG data challenges and ensuring that
associated risks are properly managed. The ESG Data Utility
primarily covers the production of data and related management
information. The Bank also relies on both third-party data vendors
and counterparty data to meet its sustainability reporting and
disclosure requirements. Controls are performed to validate
accuracy, completeness, and consistency of data.
– A number of forums support the oversight of the control
environment for sustainability reporting and disclosures. These
include the Audit Committee, the ESG Disclosure Committee, and
the Prudential Policy Interpretation Working Group (‘PPIWG’),
among others. The PPIWG oversees the appropriate and
consistent interpretation of prudential regulatory rules, regulatory
guidance, principles, technical standards and other requirements,
including those in relation to sustainability reporting and disclosure
requirements.
As the landscape for sustainability disclosures develops, HSBC
Continental Europe continues to focus on horizon scanning and
interpretation of relevant external reporting requirements, to ensure a
timely response for producing the required disclosures. As the
volume and nature of these requirements continue to evolve, the
level of risk is heightened. Part of HSBC Continental Europe's
response to this heightened risk includes undertaking a range of
assurance procedures over these disclosures.

Universal Registration Document and Annual Financial Report 2024 | 63

HSBC Continental Europe recognises the importance of sustainability
disclosures and the quality of data underpinning them. The Bank also
acknowledges that the internal processes to support ESG disclosures
are in the process of being developed and currently rely on manual
sourcing and categorisation of data. Certain aspects of HSBC
Continental Europe's sustainability disclosures are subject to
enhanced verification and assurance procedures including the first,
second and third line of defence.
Assurance review assists in reducing the risk of restatement,
although it cannot be fully eliminated given the challenges in data,
evolving methodologies and emerging standards.
HSBC Continental Europe aims to continue to enhance the approach
in line with external expectations.

Stakeholders in the value chain
HSBC Continental Europe recognises that its ability to succeed and
create long-term value is interconnected with the interests and views
of key stakeholder groups across all parts of its value chain. This
includes both direct business relationships and indirect interactions
through intermediaries and other stakeholders.

Upstream Value Chain
Stakeholder type | Description
Shareholders, such as: – Institutional investors – Retail investors | Provide capital to the Bank. As a 99.9 per cent owned subsidiary of the HSBC Group, HSBC Continental considers the HSBC Group’s institutional and retail investors within this stakeholder group.
Funding and liquidity providers, including: – Depositors – Small-Medium Enterprises – Corporate and institutional clients – Bondholders | Attract funding that enables the Bank to offer lending and other financial products and services.
Rating agencies, both: – Credit ratings agencies – ESG ratings agencies | Provide credit and ESG ratings to investors and to the Bank.
Suppliers (including their workforce), comprising: – Technology providers – Card networks – Buildings service providers – Professional services | Provide goods and services that are critical for the Bank's ongoing operations.
Government, Regulators and Tax Authorities including: – Banking regulators – Regulators with oversight of sustainability-related matters Tax and local government authorities | Supervise the Bank to ensure its compliance with the relevant rules and standards.

Own Operations
Stakeholder type | Description
Workforce | Employees: individuals who are directly employed by the Bank on a full-time or part-time basis. Contractors: individuals who are engaged by HSBC Continental Europe on a temporary basis to deliver a specific service. Consultants: individuals contracted by HSBC Continental Europe from a consultancy company, professional services company or on a self-employed basis, to provide advice, guidance, or expertise. Internal Service Providers: individuals who are part of the HSBC Group but not directly employed by HSBC Continental Europe, such as employees of Global Technology Centres (‘GTC’) and Global Service Centres (‘GSC’). External Service Providers: individuals who are employed by a third-party company contracted by HSBC Continental Europe to provide a specific service e.g. payroll providers.
Social partners | Unions and works councils.
Board members | Governance body responsible for setting the strategy, overseeing and monitoring its implementation, including the risk strategy.

64 | Universal Registration Document and Annual Financial Report 2024

Sustainability Statement

Downstream Value Chain
Stakeholder type | Description
Customers of the Bank, including Corporate, Institutional, Public Sector and Retail | Utilise the Bank’s products and services.
Distributors, including third-party payment processors and business partners | Distribute the Bank’s products and services to facilitate market penetration.
Intermediaries between the bank and buyers or sellers of products or services. | Intermediaries between the Bank and buyers or sellers of products or services.
Local communities, including charities and non-profit organisations | Groups potentially affected by the Bank’s operations. This group includes customers of the Bank's clients and the wider community that could be potentially impacted, including trade unions and social partners, civil society and non-governmental organisations (‘NGOs’), analysts, academics and silent stakeholders such as ‘nature’.
Workers in the value chain, specifically employees of clients | The nature of the relationship can be either direct or indirect, depending on where in the value chain these workers and their employers are located. For the purposes of this report, this group includes workers of distributors and business partners, including corporate clients or workers in their value chains, which are or could be impacted through business relationships.

Engaging with stakeholders to inform our strategy
HSBC Continental Europe is committed to ongoing engagement with
its key stakeholders through a variety of channels. The table below
shows how HSBC Continental Europe interacts regularly with its
primary stakeholder groups to gain insights of their views. While it is
not an exhaustive list, it represents the main focus areas for
engagement and the main outcomes.

Stakeholder Group | Key Areas of Interest | Engagement Approach | Purpose | Outcomes
Investors (existing and potential) | – Financial performance – Strategy execution – Progress against sustainability ambition | – AGMs – Virtual and in-person meetings – Conferences | – Understanding the needs of shareholders and investors on an ongoing basis | – HSBC Continental Europe’s strategic direction is in line with the expectations of those who provide capital and funding
Employees | – Remuneration and other benefits – Wellbeing – Corporate culture and job security – Training and skills development | – Annual Snapshot survey – Exchange meetings with senior management – Leadership summits – Speak-up channels, including global whistleblowing platform, HSBC Confidential | – Understanding the interests and views of employees on an ongoing basis – Understanding the factors that drive employee satisfaction and retention | – Enables HSBC Continental Europe to attract and retain talent to execute on its strategy
Suppliers | – Responsible supply chain management practices – Geopolitical impacts – Support in implementing sustainability requirements | – Virtual and in-person meetings – Supplier management platform – Third party onsite audits – Supplier day events | – To conduct supplier vetting, due diligence and monitor service delivery – To maintain relationships and provide capacity building – To set out the Bank’s ambitions and areas of focus on the environment, inclusion and human rights and outline the minimum standards expected of suppliers | – Continued service quality and customer service, as well as ensuring compliance with the HSBC’s supplier Code of Conduct – Identify and mitigate the risk of human rights violations within the value chain – Supports HSBC Continental Europe on its path to net zero

Universal Registration Document and Annual Financial Report 2024 | 65

Stakeholder Group | Key Areas of Interest | Engagement Approach | Purpose | Outcomes
Customers | – Access to products and services – Customer support – Availability of sustainable products and services – Pricing and value for money | – Customer meetings – Transition Engagement Questionnaires – Feedback through the Net Promoter Score (‘NPS’) – Complaints handling | – Understanding customer’s banking needs – For wholesale clients, understanding their net zero transition plans | – Customer satisfaction, ongoing product development and innovation, and delivery on the Bank’s strategy
Nature | – Mitigating adverse impacts arising from Nature related sustainability matters | – Indirectly through customers and NGOs – External scientific sources e.g. ENCORE and country geospatial data | – To understand the Bank’s impact on nature | – Enables the Bank to monitor nature related impacts and risks over time and adjust its strategy and business model as required
Communities and Non- Governmental Organisations (NGOs) | – Community outreach and support – Investing in the next generation, supporting vulnerable communities – Inclusion – Net zero transition | – Active engagement in philanthropy through the Corporate Sustainability team and volunteering employees. – Reactive engagement where relevant for HSBC Continental Europe (e.g. in response to NGO publications or direct NGOs queries) – Targeted engagement with NGOs selected within the structuration of an ESG-linked loan, an ESG-related product or a client event. | – To understand ways HSBC Continental Europe can support the communities in which it operates on an ongoing basis. – To gain new perspective on trends that might affect the financial sector. | – Positive impact on communities – Improved employee engagement – Insights on the communities in which the Bank operates
Regulators / Government | – Strategy execution – Compliance with regulations and guidance – Application of sustainability regulation, guidance and risk management | – Virtual and in-person meetings – Responding to consultations individually and jointly via industry bodies – On-site inspections | – Input into the policy landscape – Enabling their supervision of the Bank / financial sector | – Ensures HSBC Continental Europe’s regulatory compliance and financial stability

For information on how the interests and views of stakeholders have been
incorporated into the DMA, see ‘The double materiality assessment
process’ section, on page 57.
HSBC Continental Europe takes part in ongoing shareholder
engagement to understand and discuss the key topics from their
perspective. These conversations inform the approach to disclosures
and may result in the enhancement of the disclosures.
Both the Board of Directors and General Management as well as the
Executive Committee of HSBC Continental Europe receive updates
on sustainability-related topics from the relevant business owners
and functions formally during their regular meetings. Where relevant,
these updates include information about the views and interests of
affected stakeholders. For detailed information on the Bank's
governance of sustainability matters, refer to the following section
'Governance of sustainability matters'.

Governance of sustainability matters
C omposition and expertise of the
Board and the General Management
related to sustainability matters
HSBC Continental Europe’s Board of Directors and General
Management provide the foundation for its commitment to strong
governance and oversight of sustainability matters. By bringing
together a diverse mix of expertise, perspectives, and experiences,
these bodies define and ensure the effective oversight of the
s trategy and operations while fostering accountability and innovation.

66 | Universal Registration Document and Annual Financial Report 2024

Sustainability Statement

As of December 2024, the Board is made up of 15 directors, one of
which is an executive member and the remaining 14 are non-
executive members. From a gender perspective, there are eight
women (53 per cent) and seven men (47 per cent).
The General Management comprises three Effective Managers
(‘Dirigeants effectifs’), i.e. the Chief Executive Officer (‘CEO’),
Andrew Wild, who is assisted by two Deputy Chief Executive
Officers (‘Directeurs Généraux Délégués’), Christopher Davies and
Joseph Swithenbank. From a gender perspective, there are three
men (100 per cent).
For further information about the composition of HSBC Continental
Europe’s governance bodies refer to the 'Corporate Governance
Report' section on page 22, including the information on the
representation of employees and independence of Board members
(on page 29).
The experience of the members of HSBC Continental Europe’s Board
and General Management covers all sectors, products and
geographic locations of the Bank. The Board is regularly engaged on
sustainability topics through presentations during regular meetings,
interactive workshops and continuous education programmes,
including mandatory training to stay at the forefront of evolving global
topics. For a detailed description of the experience of each Board and
General Management member, refer to the 'Corporate Governance
Report' on page 22.
To further enhance the Board’s expertise to oversee sustainability
matters, the shareholders’ meeting on 11 October 2024 appointed a
new independent non-executive director to the Board of HSBC
Continental Europe: Kerstin Lopatta. She brings deep and extensive
sustainability reporting skills and expertise to the Board, in particular
given her experience with the European Financial Reporting Advisory
Group (‘EFRAG’). As a member of the Board’s Audit Committee, she
advises on key areas relating to sustainability, including the approach
to ESG reporting.
The General Management can also access sustainability experts in
the HSBC Group Sustainability Centre of Excellence, who are
represented in HSBC Continental Europe Corporate Sustainability
function, which reports to the Head of ESG Execution. The Head of
ESG Execution sits on the Sustainability Execution Group (‘SEG’) and
on the Risk Management Meeting (‘RMM’).
R oles and responsibilities of the
Board and the General Management
related to sustainability matters
Sustainability matters are integral to monitoring and guiding the
strategy, to ensure the long-term viability of the business model. As
such, the Board of Directors and the General Management integrate
sustainability considerations into strategy setting, business decisions,
and risk management processes.
The Board of Directors
The Board holds collective responsibility for overseeing sustainability
matters including the Bank’s tracking of progress towards ambitions.
This role is being formalised in its t erms of reference. The Board is
regularly updated on sustainability topics at its quarterly meetings,
including with advice provided by management to the Risk
Committee, and Audit committee on relevant sustainability matters.
The Board also sets HSBC Continental Europe’s values and principles
and oversees the implementation and maintenance of a code of
conduct or similar and effective policies to identify and manage
matters related to business conduct.
The General Management
The General Management leads the Bank and acts as its
representative towards third parties. It is comprised of the three
Effective Managers listed in the section above. In particular, the Chief
Executive Officer has the widest powers to act on the Bank’s behalf
in all circumstances within the limits of its corporate object and of the
internal delegation of authorities framework, and subject to those
powers expressly conferred by law on the collective body of
shareholders and on the Board of Directors.
The HSBC Continental Europe CEO is responsible for implementing
processes, controls, and procedures to monitor, manage, and
address sustainability matters effectively. Those responsibilities are
delegated to three functions, all of them reporting to the HSBC
Continental Europe CEO:
– The Head of ESG E xecution, in charge of ESG strategy and
transformation.
– The Chief Financial Officer (‘CFO’), in charge of financial reporting,
including sustainability reporting, as per the EBA Guidelines on
internal governance (EBA/GL/2017/11).
– The Chief Risk Officer (‘CRO’), in charge of risk management,
including sustainability risks, as per the EBA Guidelines on internal
governance (EBA/GL/2017/11).
These responsibilities are exercised through committees and forums,
including the following:
– Sustainability Execution Group (‘SEG’): The overarching executive
committee responsible f or setting out and executing the ESG
strategy of HSBC Continental Europe and supervising the
implementation of ESG regulations. It is chaired by the HSBC
Continental Europe CEO and the Head of ESG Execution, and
includes all HSBC Continental Europe Executive Committee
members as members including the CFO and CRO. The SEG
reports to the HSBC Continental Europe Executive Committee and
to the Risk Management Meeting.
– Climate and ESG Risks Oversight Forum (‘CESGROF’): A
governance forum established to provide senior oversight of all
risk activities related to the management of climate and ESG risks
across HSBC Continental Europe. The forum provides
recommendations and decisions on sustainable finance and
supports the Chief Risk Officer’s individual accountability for the
oversight of enterprise risks as set out in the Group Risk
Management Framework ('RMF'). The forum aims to ensure
adequate focus on risks associated with climate and
environmental changes, ESG criteria, and compliance with
European and French regulations. The CESGROF is chaired by the
HSBC Continental Europe Head of Enterprise Risk Management
and includes the HSBC Continental Europe CEO and CRO as
members. It informs the HSBC Continental Europe Risk
Management Meeting, the HSBC Continental Europe SEG as
required.
– ESG Disclosure Steering Committee: The executive committee
responsible for overseeing and monitoring the delivery of external
ESG disclosures for HSBC Continental Europe and its subsidiaries.
It is chaired by the HSBC Continental Europe CFO. The ESG
Disclosure Steering Committee reports locally into the SEG.

Universal Registration Document and Annual Financial Report 2024 | 67

The respective roles and responsibilities are defined in the terms of
reference of each governance forum.
Controls used to manage sustainability matters and inform the
General Management include the ESG Key Management Information
(‘KMIs‘) and the Climate and Nature Risk Appetite Statement metrics
(‘RAS‘). The KMIs on climate and nature risks are important metrics
to measure the evolution of the sustainability strategy across HSBC
Continental Europe on areas such as people/culture, regulatory, and
own operations. They are reported quarterly to the CESGROF,
monthly to the SEG and on a semi-annual basis at the HSBC
Continental Europe Risk Management Meeting. The sustainability-
related RAS metrics reflect the aggregate level of c limate and nature
risk that HSBC Continental Europe is willing to assume within its risk
capacity, in line with its business model, to achieve its strategic
sustainability objectives. Each RAS metric has an appetite and
tolerance threshold against which the metric is measured and
monitored. RAS metrics are reported quarterly to the CESGROF, the
HSBC Continental Europe Risk Management Meeting and the Risk
Committee.
Embedding the Double Materiality
Assessment into HSBC Continental Europe’s
governance
In 2024, HSBC Continental Europe carried out its first Double
Materiality Assessment. The General Management closely monitored
the progress of the DMA through regular workshops, the monthly
SEG and the Executive Committee. Management informed the Board
at its regular meetings of the DMA process and of the principles
guiding the assessment, and submitted the final list of material
impacts, risks, and opportunities, which the Board approved. For
further information on the DMA process, including the list of material
IROs, see ‘The double materiality assessment process’ on page 57.
Integrating sustainability criteria into
compensation
HSBC Continental Europe’s approach to remuneration seeks to
incentivise its employees to deliver on its business strategy, including
key sustainability matters. As a subsidiary of the HSBC Group, the
general principles of HSBC Continental Europe’s remuneration policy,
which applies to all employees, including General Management, are
aligned with the broader framework approved by the HSBC Group’s
remuneration committee, while also ensuring compliance with local
r egulations. The section 'Company remuneration policy' within the
Corporate Governance Report outlines the role of the HSBC Group
Remuneration Committee in setting the policy and the interaction
between HSBC Continental Europe and the HSBC Group (refer to
page 40 for more details).
Variable compensation
The overall variable remuneration pools determined each year are
based on the achievement of objectives set at the start of the year.
As of 2024, this includes sustainability-related goals such as the
HSBC Group’s net zero ambition and key social KPIs such as
employee engagement and inclusion index scores, and
representation of women in senior leadership roles. In addition, they
take into account current and future sustainability-related risks
embedded in the RAS. There is not a fixed percentage of
remuneration tied to these targets, but rather they are among the
criteria considered as part of an overall assessment of business
performance.
The variable compensation offered to individuals is based on the
achievement of the assigned objectives. This assessment is a key
element to set the level of performance, and the corresponding
variable pay awarded to the employee.
Assigned objectives were consistent with the strategic aims of the
business and included sustainability-related objectives. These were
assigned at different levels of the organisation, in business lines or
functions, and if appropriate cascaded to teams, managers or even
individuals.
In 2024, all employees across HSBC Continental Europe were
assigned an objective to complete at least two climate-related
training modules out of eleven modules proposed, in order to raise
collective awareness and understanding of climate risks. All people
managers across HSBC Continental Europe were also assigned an
inclusion related objective. The completion of these sustainability
goals forms part of the annual performance assessment which
determines the associated performance rating basis of the individual
variable remuneration. I n addition, the profit-sharing agreement for
France, signed in 2024, includes three sustainability-related
objectives, focused on energy, water and paper consumption.
Executive compensation
Goals focused on driving a positive and inclusive culture, along with
goals related to transition to net zero, are assigned to members of
the Executive Committee, including the General Management. The
completion of these goals forms part of the annual performance
assessment which determines their performance rating (outstanding,
performing, or off-track) that directly impacts executive pay decisions,
especially variable remuneration.
The CEO and the two Deputy CEOs (the 'General Management')
have been assigned individual sustainability objectives in their annual
incentive scorecards. There were six objectives assigned in 2024 to
the HSBC Continental Europe CEO and the Deputy CEO in charge of
transformation, each carrying a 5 per cent weighting. The
achievement of these objectives was assessed using both qualitative
and quantitative performance indicators:
– Representation of women in senior leadership roles.
– Employee engagement index score.
– Employee inclusion index score.
– Volume of sustainable finance and investment.
– Progress towards achieving the net zero ambition in operations by
2030.
– HSBC Continental Europe’s contribution to the Group
Sustainability Execution Programme, the Group-wide programme
to enable the delivery of the sustainability agenda.
For the CFO appointed Deputy CEO in the course of the year, there
were three objectives assigned in 2024:
– Representation of women in senior leadership roles.
– Employee inclusion index score.
– Delivery of external ESG reporting commitments in 2024,
development of a plan for ESG data and implementation of CSRD
with required controls for HSBC Continental Europe.
As with all staff, Board members elected by employees we re
assigned the objective of completing climate-related training. Apart
from the Board members elected by employees, there was no
variable component to the remuneration of the non-executive
members of the HSBC Continental Europe Board of Directors.

68 | Universal Registration Document and Annual Financial Report 2024

Sustainability Statement

Additional mandatory disclosures under CSRD
Following the completion of its DMA, HSBC Continental Europe
mapped the mandatory disclosure requirements and data points
within the ESRS to its material IROs to assess the materiality of
information. Where no linkage was found between a specific
requirement and a material IRO, the information in that disclosure
requirement or data point has not been disclosed. In addition to this,
the Bank has adopted all the phase-in available as per Appendix 'B' of
ESRS 2.
In line with this assessment, the tables below li st all of the ESRS
disclosure requirements across ESRS 2 and the five topical standards
which are deemed material to HSBC Continental Europe. Some
disclosure requirements, covered in the Bank's 'Universal registration
document' are incorporated by reference as indicated in the table
below.

ESRS 2 General Information
Disclosure Requirement | Name of Disclosure Requirement | Incorporated by reference | Section | Page
BP-1 and BP-2 | General basis for preparation of the sustainability statement & Disclosures in relation to specific circumstances | N | Background to the sustainability statement | 55
Additional notes on the preparation of this statement – estimation and time horizons | 72
GOV-1 | The role of the administrative, management and supervisory bodies | Y | Governance of sustainability matters | 65
GOV-2 | Information provided to and sustainability matters addressed by the undertaking’s administrative, management and supervisory bodies
GOV-3 | Integration of sustainability-related performance in incentive schemes | N | Integrating sustainability criteria into compensation | 67
GOV-4 | Statement on sustainability due diligence | N | Statement on due diligence | 72
GOV-5 | Risk management and internal controls over sustainability reporting | N | Risk management and internal controls over sustainability reporting | 62
SBM-1 | Strategy, business model and value chain (products, markets, customers) | Y | Strategy, business model and value creation | 55
SBM-2 | Interests and views of stakeholders | N | Engaging with stakeholders to inform our strategy | 64
SBM-3 | Material impacts, risks and opportunities and their interaction with strategy and business model | N | Material sustainability impacts, risks and opportunities | 57
IRO-1 | Description of the process to identify and assess material impacts, risks and opportunities | N | The double materiality assessment process | 57
IRO-2 | Disclosure requirements in ESRS covered by the undertaking’s sustainability statement | N | Additional mandatory disclosures under CSRD | 68
MDR-PAT | Minimum Disclosure Requirements pertaining to Policies, Actions and Targets | These requirements are disclosed in the respective topical standards sections

Environment Standard – E1 Climate Change |  |
Disclosure Requirement | Name of Disclosure Requirement | Incorporated by reference | Section | Page
ESRS 2, GOV-3 | Integration of sustainability-related performance in incentive schemes | N | Integrating sustainability criteria into compensation | 67
ESRS 2, SBM-3 | Material impacts, risks and opportunities, and their interaction with strategy and business model | N | Testing the resilience of the strategy and business model in relation to climate change | 60
ESRS 2, IRO-1 | Description of the processes to identify and assess material climate-related impact, risks and opportunities | N | Climate change-related impacts, risks and opportunities | 73
E1-1 | Transition plan for climate change mitigation | N | Addressing climate-related impacts, risks and opportunities through policies and actions | 76
E1-2 | Policies related to climate change mitigation and adaptation | N | Addressing climate-related impacts, risks and opportunities through policies and actions | 76
E1-3 | Actions and resources in relation to climate change policies | N | Addressing climate-related impacts, risks and opportunities through policies and actions | 76
E1-4 | Targets related to climate change mitigation and adaptation | N | Embedding the transition to net zero in the way the Bank operates | 78
E1-5 | Energy consumption and mix | N | Energy consumption and mix | 80
E1-6 | Gross Scopes 1, 2, 3 and Total GHG emissions | N | Greenhouse gas emissions | 78

Universal Registration Document and Annual Financial Report 2024 | 69

Environment Standard – E4 Biodiversity and Ecosystems |  |
Disclosure Requirement | Name of Disclosure Requirement | Incorporated by reference | Section | Page
ESRS 2, SBM-3 | Material impacts, risks and opportunities, and their interaction with strategy and business model | N | Biodiversity and ecosystems-related impacts, risks and opportunities | 82
ESRS 2, IRO-1 | Description of the processes to identify and assess material biodiversity and ecosystem-related impact, risks, and opportunities | N | Biodiversity and ecosystems-related impacts, risks and opportunities | 82
E4-1 | Transition plan and consideration of biodiversity and ecosystems in strategy and business model | N | Strategy, business model and value creation | 55
N | Testing the resilience of the strategy and business model in relation to nature risk | 60
E4-2 | Policies related to biodiversity and ecosystem | N | Policies | 83
E4-3 | Actions and resources related to biodiversity and ecosystem | N | Actions | 84
E4-4 | Targets related to biodiversity and ecosystem | N | Targets | 84

Social Standard – S1 Own Workforce |  |
Disclosure Requirement | Name of Disclosure Requirement | Incorporated by reference | Section | Page
ESRS 2 SBM-2 | Interests and views of stakeholders | N | Engaging with stakeholders to inform our strategy | 64
ESRS 2, SBM-3 | Material impacts, risks and opportunities, and their interaction with strategy and business model | N | Social impacts, risks and opportunities | 90
S1-1 | Policies related to own workforce | N | HSBC Continental Europe’s workforce | 91
S1-2 | Processes for engaging with own workers and workers’ representatives about impacts | N | Being a responsible employer | 92
S1-3 | Processes to remediate negative impacts and channels for own workers to raise concerns | N | Creating secure employment for employees | 97
S1-4 | Taking action on material impacts on own workforce, and approaches to mitigating material risks and pursuing material opportunities related to own workforce, and effectiveness of those actions | N | Employment Practices and Relations Policy | 93
S1-5 | Targets related to managing material negative impacts, advancing positive impacts, and managing material risks and opportunities | N | Setting ambitions for inclusion | 95
S1-6 | Characteristics of the company’s employees | N | Characteristics of HSBC Continental Europe’s workforce | 91
S1-8 | Collective bargaining coverage and social dialogue | N | Fostering social dialogue | 93
S1-9 | Diversity metrics | N | Metrics | 95
S1-16 | Compensation metrics (pay gap and total compensation) | N | Gender pay gap and remuneration ratio | 96

Social Standard – S4 Consumers and end users |  |
Disclosure Requirement | Name of Disclosure Requirement | Incorporated by reference | Section | Page
ESRS 2,SBM-3 | Material impacts, risks and opportunities and their interaction with strategy and business model | N | Protecting customer and employee data | 97
S4-1 | Policies related to consumers and end-users | N | Protecting customer and employee data | 97
S4-2 | Processes for engaging with consumers and end-users about impacts | N | Privacy notices | 99
S4-3 | Processes to remediate negative impacts and channels for consumers and end-users to raise concerns | N | Handling data related incidents | 99
S4-4 | Taking action on material impacts on consumers and end- users, and approaches to managing material risks and pursuing material opportunities related to consumers and end- users, and effectiveness of those actions

70 | Universal Registration Document and Annual Financial Report 2024

Sustainability Statement

Governance Standard – G1 Business Conduct |  |
Disclosure Requirement | Name of Disclosure Requirement | Incorporated by reference | Section | Page
ESRS 2, GOV-1 | The role of the administrative, supervisory and management bodies | N | The Board of Directors | 66
ESRS 2, IRO-1 | Description of the processes to identify and assess material impacts, risks and opportunities | N | Governance impacts, risks and opportunities | 100
G1-1 | Corporate culture and Business conduct policies | N | Business conduct | 100
Corporate culture | 100
Whistleblowing and ‘Speak-up’ culture | 102
G1-3 | Prevention and detection of corruption and bribery | N | Global Financial Crime Policy | 104
G1-4 | Confirmed incidents of corruption or bribery | N | Investigating credible incidents | 104

Data points that derive from other EU legislation
The table below includes all of the datapoints that derive from other EU legislation as listed in ESRS 2 appendix B.

Data point | SFDR | Pillar 3 | Benchmark Regulation | EU Climate Law | Section | Page
Board's gender diversity | u |  |  |  | Gender representation in senior leadership | 96
Percentage of board members who are independent | u |  |  |  | Corporate Governance Report | 65
Statement on due diligence | u |  |  |  | Statement on due diligence | 72
Involvement in activities related to fossil fuel activities | u |  |  |  | Not applicable 1 |
Involvement in activities related to chemical production | u |  |  |  | Not applicable 1 |
Involvement in activities related to controversial weapons | u |  |  |  | Not applicable 1 |
Involvement in activities related to cultivation and production of tobacco | u |  |  |  | Not applicable 1 |
Transition plan to reach climate neutrality by 2050 |  |  |  | u | Not applicable 2 |
Undertakings excluded from Paris-aligned Benchmarks |  | u | u |  | Not applicable 2 |
GHG emission reduction targets | u | u | u |  | Not applicable 2 |
Energy consumption and mix | u |  |  |  | Energy consumption and mix | 80
Energy consumption from fossil sources disaggregated by sources (only high climate impact sectors) | u |  |  |  | Not applicable 2 |
Energy intensity associated with activities in high climate impact sectors | u |  |  |  | Not applicable 2 |
Gross Scope 1, 2, 3 and Total GHG emissions | u | u | u |  | Total emissions | 80
Gross GHG emissions intensity | u | u | u |  | GHG intensity based on net revenue | 80
GHG removals and carbon credits |  |  |  | u | Not applicable 2 |
Exposure of the benchmark portfolio to climate-related physical risks |  |  | u |  | Not applicable 3 |
Disaggregation of monetary amounts by acute and chronic physical risk; Location of significant assets at material physical risk |  | u |  |  | Not applicable 3 |
Breakdown of the carrying value of its real estate assets by energy- efficiency classes |  | u |  |  | Not applicable 3 |
Degree of exposure of the portfolio to climate-related opportunities |  |  | u |  | Not applicable 3 |
Amount of each pollutant listed in Annex II of the E-PRTR Regulation emitted to air, water and soil | u |  |  |  | Not applicable 4 |
Water and marine resources | u |  |  |  | Not applicable 4 |
Dedicated policy | u |  |  |  | Not applicable 4 |
Sustainable oceans and seas | u |  |  |  | Not applicable 4 |
Total water recycled and reused | u |  |  |  | Not applicable 4 |
Total water consumption in m3 per net revenue on own operations | u |  |  |  | Not applicable 4 |
Activities negatively affecting biodiversity-sensitive areas | u |  |  |  | Not applicable 4 |
Land degradation, desertification, soil sealing to disclosure rules on sustainable investments | u |  |  |  | Not applicable 4 |

Universal Registration Document and Annual Financial Report 2024 | 71

Data point | SFDR | Pillar 3 | Benchmark Regulation | EU Climate Law | Section | Page
Natural species and protected areas | u |  |  |  | Not applicable 4 |
Sustainable land / agriculture practices or policies | u |  |  |  | Not applicable 4 |
Sustainable oceans / seas practices or policies | u |  |  |  | Not applicable 4 |
Policies to address deforestation | u |  |  |  | Not applicable 4 |
Non-recycled waste | u |  |  |  | Not applicable 4 |
Hazardous waste and radioactive waste | u |  |  |  | Not applicable 4 |
Risk of incidents of forced labour | u |  |  |  | Not applicable 4 |
Risk of incidents of child labour | u |  |  |  | Not applicable 4 |
Human rights policy commitments | u |  |  |  | Not applicable 4 |
Due diligence policies on issues addressed by the fundamental International Labor Organisation Conventions 1 to 8 |  |  | u |  | HSBC Human Rights Statement | 93
Processes and measures for preventing trafficking in human beings | u |  |  |  | Not applicable 2 |
Workplace accident prevention policy or management system | u |  |  |  | Not applicable 2 |
Grievance/complaints handling mechanisms | u |  |  |  | Whistleblowing and ‘Speak-up’ culture | 102
Number of fatalities and number and rate of work-related accidents | u |  | u |  | Not applicable 4 |
Number of days lost to injuries, accidents, fatalities or illness | u |  |  |  | Not applicable 4 |
Unadjusted gender pay gap | u |  | u |  | Gender pay gap and remuneration ratio | 96
Excessive CEO pay ratio | u |  |  |  | Gender pay gap and remuneration ratio | 96
Incidents of discrimination | u |  |  |  | Not applicable 4 |
Non-respect of UNGPs on Business and Human Rights and OECD | u |  | u |  | Not applicable 4 |
Significant risk of child labour or forced labour in the value chain | u |  |  |  | Not applicable 4 |
Human rights policy commitments | u |  |  |  | Not applicable 4 |
Policies related to value chain workers | u |  |  |  | Not applicable 4 |
Non-respect of UNGPs on Business and Human Rights principles and OECD guidelines | u |  | u |  | Not applicable 4 |
Due diligence policies on issues addressed by the fundamental International Labor Organisation Conventions 1 to 8 |  |  | u |  | Not applicable 4 |
Human rights issues and incidents connected to its upstream and downstream value chain | u |  |  |  | Not applicable 4 |
Human rights policy commitments | u |  |  |  | Not applicable 4 |
Non-respect of UNGPs on Business and Human Rights, ILO principles or and OECD guidelines | u |  | u |  | Not applicable 4 |
Human rights issues and incidents | u |  |  |  | Not applicable 4 |
Policies related to consumers and end-users | u |  |  |  | Protecting customer and employee data | 97
Non-respect of UNGPs on Business and Human Rights and OECD guidelines | u |  |  |
Human rights issues and incidents | u |  |  |  | Not applicable 2 |
United Nations Convention against Corruption | u |  |  |  | Not applicable 2 |
Protection of whistleblowers | u |  |  |  | Not applicable 2 |
Fines for violation of anti-corruption and anti-bribery laws | u |  | u |  | Approach to mitigating financial crime | 104
Standards of anti-corruption and anti-bribery | u |  |  |  | Approach to mitigating financial crime | 104

1 Not applicable for Financial Institutions.
2 Not applicable during the reporting year.
3 Adopting phase-in provision.
4 Not material as per DMA.

72 | Universal Registration Document and Annual Financial Report 2024

Sustainability Statement

Statement on due diligence
Due diligence is integral to HSBC Continental Europe operations, ensuring compliance, accuracy, and transparency in every aspect. The Bank
has conducted thorough due diligence process for all the disclosures presented in the Sustainability Statement.
The below table provides a mapping of the information provided in its sustainability statement about the due diligence process.

Core elements of due diligence | Sections in the sustainability statement | Page
a) Embedding due diligence in strategy and business model | Strategy and business model | 55
b) Engaging with affected stakeholders in all key steps of the due diligence | Engaging with affected stakeholders to inform our strategy | 64
c) Identifying and assessing adverse impacts | Material sustainability risks, impacts and opportunities | 57
d) Taking actions to address those adverse impacts | Respective sections of the Climate and Social where actions and tracking of effectiveness are disclosed. | 76, 77, 78, 93, 95, 95, 95
e) Tracking the effectiveness of these efforts and communicating

Additional notes on the preparation of this statement – estimation and time
horizons
HSBC Continental Europe has used estimates for the reporting of
Scope 3 emissions, based on widely accepted frameworks and
industry standards available at the time of reporting. Such metrics
may be subject to a high level of measurement uncertainty due to
data challenges, evolving methodologies and emerging standards.
The effective measurement, governance and reporting of Scope 3
emissions relies heavily on the availability and quality of external data.
The Bank's internal processes to support ESG disclosures continue to
be developed and currently partly rely on manual sourcing and
categorisation of data. This, coupled with diverse external data
sources and complex structures, further complicates data
consolidation. Methodologies, data, scenarios and industry standards
may evolve over time in line with market practice, regulation or
developments in science, and where applicable, HSBC Continental
Europe aims to continue to review its approach.
As data improves and coverage expands, estimates can be replaced
with reported figures.
HSBC Continental Europe uses the following three distinct
timeframes for qualitative assessment to assess its financial
materiality on c limate and nature sustainability matters:
– Short term up to 2026.
– Medium term from 2027 to 2035.
– Long term from 2036 to 2050.
The quantitative DMA for Nature on HSBC Continental Europe’s
wholesale, liquidity and traded risk portfolios utilises ENCORE
materiality scores which uses 1 year timeframe.

Universal Registration Document and Annual Financial Report 2024 | 73

Environmental
Climate change
In October 2020, the HSBC Group announced its ambition to become
a net zero bank by 2050. As a material subsidiary of the HSBC Group,
HSBC Continental Europe actively contributes to the achievement of
the Group’s ambition by managing its own emissions, providing and
facilitating sustainable finance and investment for clients, and
investing in the scaling up of emerging climate technologies.
Transition plan for climate change
In January 2024, HSBC Group published its first Net Zero Transition
Plan, covering HSBC Holdings plc and its subsidiaries, which includes
HSBC Continental Europe.
The HSBC Group Net Zero Transition Plan took into consideration the
guidance available at the time, including recommendations set out in
the Glasgow Financial Alliance for Net Zero’s (‘GFANZ’) Financial
Institution Net-zero Transition Plans framework and the UK Transition
Plan Taskforce’s (‘TPT’) draft framework, published in November
2022.
HSBC Continental Europe does not have an entity-level transition plan
under the relevant ESRS and continues to review its approach to
transition planning in line with regulatory requirements, available
guidance, and industry practice. HSBC Continental Europe is taking
entity-level actions to contribute to the HSBC Group Net Zero
Transition Plan. This includes: the way that it supports its customers,
both through customer engagement and the provision of financing
solutions (refer to page 76); the way that it operates as an
organisation, including risk management (refer to page 165), policies
(refer to page 76) and own operations (refer to page 78), and how it
partners externally in support of systemic change (refer to page 77).
Climate change-related impacts, risks
and opportunities
HSBC Continental Europe has identified six material climate change
related IROs through its DMA, which are connected to its own
operations, upstream and downstream value chain.

Impact / Risk / Opportunity | Description | Time Horizon | Value Chain Segment or Own Operations
Impact | Impact on climate change Through its downstream financing and investing activities the Bank has exposure to high-emitting sectors, such as fossil fuels, power utilities, infrastructure, transportation and heavy industry. The emissions from these sectors result in adverse climate impacts, accelerating global warming and complicating efforts to cap global temperature rises. | Short / Medium / Long Term | Downstream
Impact | Impact on energy Through its downstream financing and investing activities the Bank is exposed to energy-intensive sectors, such as power utilities, infrastructure, transportation and heavy industry. These sectors have a fossil fuel driven energy mix which can be a challenge to transition and could have a negative impact on the overall transition to a more sustainable energy mix. | Short / Medium / Long Term | Downstream
Risk | Reputational risk (including the risk of greenwashing) associated with misstatements and misalignment with targets HSBC Continental Europe’s key stakeholders - such as investors, customers, regulators, and society at large - are placing growing importance on its alignment with climate objectives and expect the Bank to effectively manage climate-related risks. Misrepresentation or failure to meet these expectations could expose the Bank to reputational damage, greenwashing risk and litigation. | Short Term | Own Operations Upstream Downstream
Risk | Deterioration in credit worthiness of customers and valuations of investments due to climate change HSBC Continental Europe may be affected by climate-related transition risk through its business activities such as exposure to carbon intensive borrowers that may find it challenging to transition, thus threatening the long term viability of their business models and impacting their credit worthiness and/or market value. This may lead to a risk of credit losses across lending and investment activities, and impacts on asset valuations and capital. HSBC Continental Europe may also be affected by climate-related physical risk through its business activities, such as exposure to borrowers in regions vulnerable to acute and chronic climate events, resulting in disruption of businesses and stranded assets. This exposure may also result in elevated credit risk across financing activities, and impacts on asset valuations and capital. | Short Term (Insurance) Medium / Long Term (Wholesale) | Downstream
Risk | Regulatory compliance and legal risk could arise from failure to comply with climate-related regulations HSBC Continental Europe must comply with an increasing number of climate related regulations and reporting requirements. Non-compliance or failure to accurately report could result in reputational, regulatory compliance and legal risks. | Short / Medium / Long Term | Own Operations Upstream Downstream
Opportunity | Opportunity for sustainable finance and investment The transition to a sustainable and resilient economy presents the bank with a growth opportunity. By integrating ESG principles across its products and services, the Bank has the opportunity to meet the rising demand for sustainable finance and investments thereby improving financial performance through increased market share and access to new client segments. | Short / Medium Term | Downstream

1 HSBC Asset Management in context of the section 'Assessment of the materiality through HSBC Continental Europe’s value chain' includes HSBC Global Asset
Management (France), HSBC Global Asset Management (Deutschland) GmbH and HSBC Global Asset Management (Malta) Ltd.
2 HSBC INKA (Internationale Kapitalanlagegesellschaft mbH) a subsidiary of HSBC Continental Europe S.A., Germany, specialises in fund administration with an
AIF and UCITs management license by Federal Financial Supervisory Authority (BaFin), operating in Germany.

74 | Universal Registration Document and Annual Financial Report 2024

Environmental

HSBC Continental Europe utilised both qualitative and quantitative
methods to identify and assess its climate change-related IROs,
including climate scenario analysis and stress testing. These
assessments were designed to help HSBC Continental Europe
understand where it may have material impact on climate change,
both directly and indirectly, and how climate risks or opportunities
may impact its operations, financial performance, stability, and
reputation. See ‘Resilience of the business model in relation to
environmental risks’, page 60 for full details of the Bank’s climate-
related scenario analysis programme.
The tools and parameters used to assess climate change-related
IROs varied by business line, given the differences in how each of
these areas may impact, or may be impacted by climate change.
Given the enduring nature of greenhouse gas emissions, all impacts
associated with climate change were designated as ‘difficult to
remedy’ or ‘long-term to remedy’.
Assessment of materiality through HSBC
Continental Europe’s value chain
Wholesale Banking (Commercial Banking and Global Banking
and Markets)
Through its downstream wholesale banking activities, HSBC
Continental Europe has exposure to high-emitting sectors, such as
fossil fuels, power and utilities, infrastructure, transportation, and
heavy industry. This may pose both physical and transitional risks for
HSBC Continental Europe and its clients. See 'ESG Risks' section,
page 226 for more information.
For wholesale clients with the highest exposure to potential climate
risk, HSBC Continental Europe uses a Transition Engagement
Questionnaire (‘TEQ’) to gather and assess information about the
alignment of its clients’ business model, approach to net zero and
their exposure to and management of physical and transition risk. See
'Supporting customers' transition in high emitting sectors', page 76
for more information. To assess the impacts of its wholesale loan
portfolio on climate change, HSBC Continental Europe leveraged the
information gathered through the TEQ process along with the client's
greenhouse gas ('GHG') emissions data. Where emissions data was
unavailable, proxy analysis and estimated data points were used to
complete the assessment.
Climate-related financial risk was assessed both qualitatively and
quantitatively to gain insight into the long-term effect of transition and
physical risk across the wholesale banking portfolio. The qualitative
assessment was performed using the ESG score, which is derived
from both qualitative and quantitative datasets, along with outputs
from the climate scenario analysis. See 'Climate Risk Scenarios',
page 60 for more information. It considers how climate risks may
impact principal risk types associated with wholesale banking
including financial and non-financial risks. The climate scenario
analysis was further used to perform the quantitative assessment of
climate risk.
Market risk
The potential impact of climate risk on the Bank’s market risk has
been assessed with a review performed of each traditional financial
risk type (Equity, Foreign Exchange (FX), Interest Rate, Credit Spread
notably).
Climate events can expose the Bank to potential losses from
financing high-risk geographies affected by tighter regulations or
extreme weather events, as well as from fluctuating asset values tied
to carbon-intensive sectors.
Therefore, HSBC Continental Europe performed its financial
materiality assessment on its traded book based on a country
analysis for the physical risks and a sector analysis for the transition
risks. Internal and external data sources, including climate studies and
published indexes from international bodies, were used to make
these country and sector analyses.
Liquidity risk
HSBC Continental Europe undertook an assessment to understand
the impact that climate risk may have on its liquidity position. This
assessment was made up of two components:
– Qualitative assessment: to understand the potential impact that a
climate risk event may have for each liquidity risk driver, over a
short-term horizon.
– Quantitative assessment: to identify the potential impacts of
climate transition risk on the two main liquidity risk drivers
(deposits outflow and committed facilities drawdown), the
analysis was completed with an internal climate liquidity stress
testing which assessed the impact of a potential greenwashing
event on HSBC Continental Europe’s liquidity position impacting
notably deposits and undrawn commitments from high-risk
sectors, over a 90-day scenario.
Wealth and Personal Banking (‘WPB’)
Transition and physical risks were considered across this portfolio
with a focus on unsecured property with a low energy performance
grade and financial risks resulting from chronic or acute climate
events assessed as exposure to six natural hazards: subsidence,
wildfire, flood, wind, sea level rise and temperature.
The same approach has been applied for assessing the transition and
physical risks impacts on the HSBC Private Bank (Luxembourg) S.A.
credit portfolio with a limitation of the natural hazard assessed
(wildfires, flood, subsidence, water stress and biodiversity hotspots)
due to data availability.
HSBC Bank Malta p.l.c has assessed transition and physical risk for
its retail mortgage portfolio. For the transition risk assessment, the
properties' energy performance certificate ratings are captured and
the energy performance distribution across the portfolio is monitored.
For the physical risk assessment, flood risk is considered for both sea
level rise and flash floods, in addition to other environmental risks
such as water stress, biodiversity hotspots, air quality and untreated
wastewater.
HSBC Continental Europe has downstream investment activities
across multiple parts of its WPB business, namely HSBC Asset
Managemen t 1, INKA 2 within Global Banking and Markets and the
savings business within HSBC In surance (HSBC Assurances Vie). The

Universal Registration Document and Annual Financial Report 2024 | 75

primary driver of climate impact in these businesses is exposure
within their portfolios to high-emitting sectors, such as fossil fuels,
power utilities, infrastructure, transportation, and heavy industry.
As with Wholesale Banking activities, these financed emissions may
result in adverse climate impacts.
To assess these impacts, HSBC Asset Management and HSBC INKA
leveraged the MSCI Impact Materiality Assessment, which highlights
the most material negative and positive impacts for 163 Global
Industry Classification Standard (‘GICS’) sub-industries across ESRS
subtopics. This provided a binary view of the materiality of a given
topic based on the sector/industry breakdown of the client assets
under management (‘AuM’).
Neither HSBC Asset Management nor INKA is directly exposed to
financial risks such as market risk, credit risk or liquidity risk since
risks and/or opportunities related to their investing activities would
primarily impact their clients' investments. HSBC Asset Management
and INKA monitor and manage such risks and opportunities on behalf
of their clients’ investments. However, qualitative results of the Risk
and Control Assessments for Non-Financial Risks were considered in
the DMA assessment.
HSBC Assurances Vie (France) used the financed emissions of its
Life Insurance and Pensions business to assess whether its
investment activities have a material impact on climate change,
taking both carbon intensity and carbon footprint into consideration.
To monitor GHG emissions from non-linked assets, the company
evaluated the level of avoided carbon emissions and measured the
implicit temperature increase in the portfolio by 2050.
To assess financial risks, HSBC Assurances Vie (France) leveraged
the climate risk assessment model from the 2024 climate stress test
exercise covering the insurance sector performed by the French
Prudential Supervisory and Resolution Authority (‘ACPR’). The test
considered four distinct scenarios, developed from the narratives and
data published by the NGFS. For physical risk, these scenarios ranged
from the ‘Ambitious’ 1.5°C-aligned scenario, to the ‘Pessimistic’
scenario which assumes climate action is limited to current policies
resulting in temperatures rising by more than 3 degrees by 2100. For
transition risk, the scenarios covered both an ‘Orderly Transition’
scenario, based on the NGFS Net Zero 2050, and a ‘Disorderly
Transition’ scenario assuming limited climate action over the next
few years, followed by a sharp acceleration of climate measures
between 2030 and 2035, leading to temperatures below 2°C by 2100.
The assessment of climate-related impact on non-financial risks, such
as compliance risk, resilience risk, financial reporting risk or legal risk,
is performed on an annual basis across HSBC Assurances Vie
(France), Asset Management and INKA to ensure the identification of
potential material climate-related risks faced by each business.
HSBC Continental Europe’s own operations
The impacts of HSBC Continental Europe’s operations on climate
change were assessed using scope 1 and scope 2 GHG emissions as
a measure, particularly from energy use in its buildings and data
centres and the heating, ventilation, and air conditioning (‘HVAC’)
systems used to cool or heat its premises. In addition, select scope 3
emissions from its upstream value chain were also considered,
including business travel and those relating to purchased goods and
services from suppliers and capital goods.
To identify and assess potential climate risks to its operations, the
Bank leveraged the findings from the operational risk assessment in
the 2024 study. This study applied two Representative Concentration
Pathway (‘RCP’) climate scenarios: the high emission ‘RCP 8.5’
‘climate action limited to current policies, leading to extreme global
warming with global temperatures increasing by greater than 4.2°C
by 2100, and the intermediate ‘RCP 4.5’ (climate action based on
existing and expected commitments) leading to global temperature
rises of 2.4°C by 2100.
The assessment considered the potential effect of both physical
climate hazards–such as extreme temperatures, drought, water
stress, wildfire, and fluvial and pluvial flooding, tropical cyclone—and
transition risks, including those related to policy and legal, technology,
reputation, and market dynamics, on estimated asset values of HSBC
Continental Europe’s owned properties.
As a credit institution and Public Interest Entity, HSBC Continental
Europe is particularly exposed to reputational and regulatory
compliance risks. This is driven by increasing expectation, and
scrutiny from investors, customers, regulators and wider society
regarding the Bank’s activities and their alignment with national and
international climate goals, as well as those set by the HSBC Group.
As such, these risks were considered during the qualitative
materiality assessment. See ‘The double materiality assessment
process’, page 57, for more details. This risk identification and
assessment process was also supported in 2024 by an internal
scenario analysis performed to identify and evaluate the impact of
climate change on the business under Financial Reporting and
Regulatory Compliance risks (Greenwashing) and Resilience risks
(Physical). See 'Non-Financial Risk' section of the Risk report of
Universal Registration Document and Annual Financial Report 2024,
page 218, for more details.
HSBC Continental Europe’s supply chain
The HSBC Group undertook an assessment of its suppliers’ carbon
emissions including HSBC Continental Europe's suppliers and is
encouraging its largest suppliers to make their own net zero
commitments, and to disclose their emissions via the CDP (formerly
the Carbon Disclosure Project) supply chain programme.
Improvement in the measurement, quality and reporting of HSBC
Continental Europe supply chain emissions data continue to generate
insights to drive targeted reduction activities.
HSBC Group has engaged with its 300 highest-emitting suppliers to
collaborate and identify emissions reduction opportunities based on
supplier maturity levels. Third-Party risk materiality is also assessed
on a yearly basis by considering the impact resulting from a climate
risk event which may occur in the next 12 months.
3 HSBC Continental Europe's actions are not reliant on specific resources and not attributed to financed emissions reductions, as doing so could result in
overstated impacts, including risk of greenwashing and double counting.
4 Global Management Selection (‘GMS’) refers to the process of selection of the unit linked funds related to HSBC Assurances Vie (France) savings and
retirement product offer and for the quantitative and qualitative analysis of the ESG criteria declared by assets manager. GMS analyses in detail the policy of the
asset manager, unit linked and related management policy.

76 | Universal Registration Document and Annual Financial Report 2024

Environmental

Addressing climate-related impacts, risks and opportunities through policies
and actions
Supporting customers’ transition in high emitting sectors 3
HSBC Continental Europe recognises that it has an important role to
play in supporting the transition to a net zero global economy.
As a financial institution, HSBC Continental Europe is focused on
making choices that do not just deliver progress towards portfolio
emissions targets, but also lead to a meaningful impact on emissions
reduction in the real economy. This means supporting customers in
high emitting sectors whose transformation is key to a net zero
economy.
HSBC Continental Europe applies, where relevant, the HSBC Group’s
sustainability risk policies, which form part of the HSBC Group’s
broader risk management framework and are important mechanisms
for managing risks, including delivering the Group’s net zero ambition.
They focus on mitigating reputational, credit, legal and other risks
related to the Bank's customers’ environmental and social impacts.
Senior members of the HSBC Group Risk and Compliance function
have oversight of the development and implementation of
sustainability risk policies across global businesses and functions. In
addition, senior members of HSBC Continental Europe’s Risk
function oversee the implementation of these policies for the entity.
Thermal Coal Phase-Out policy
The Thermal Coal Phase-Out Policy aims to support thermal coal
phase-out aligned to science-based pathways. The policy seeks to
achieve two primary objectives:
– Phasing out the financing of thermal coal-fired power and thermal
coal mining by 2030 in markets in the EU and the Organisation for
Economic Co-operation and Development ('OECD'), and by 2040
in other markets.
– Supporting the HSBC Group's clients, including emerging
economy clients, to meet growing energy demand whilst
transitioning energy systems from coal towards a clean energy
future.
Energy policy
The Energy Policy outlines the HSBC Group’s ambition to support and
finance the energy transition. This policy covers oil and gas (including
conventional and unconventional oil and gas, methane emissions, and
activities in environmentally and socially critical areas), hydrogen,
power generation, nuclear, renewables and hydropower, biomass
energy and energy from waste. The policy seeks to achieve three
inter-related objectives:
– Driving global greenhouse gas emissions reductions, both to
achieve a net zero in the HSBC Group's portfolio and to support
the transition to a net zero global energy future.
– Enabling a resilient and orderly energy transition, helping to build
energy security in the long term.
– Supporting a just and affordable transition, recognising the local
realities in all the communities served.
In addition, the HSBC Asset Management business has its own
policies on Energy and Thermal Coal that apply to investment
products it manages. Where it does not have full portfolio discretion,
commitments included in these policies are subject to client, fund
director and regulatory approval.
The Energy Policy and Thermal Coal Policy are reviewed at least
annually to consider changes in relevant external factors. Oversight of
the application of these policies is conducted as part of Asset
Management’s governance and risk framework.
– The Energy Policy aims to engage and assess the transition plans
of the oil and gas, and power and utilities companies for listed
issuers responsible for around 70 per cent of relevant emissions
based upon all listed equity and corporate fixed income under its
direct investment control and managed within its major
investment hubs.
– The Thermal Coal Policy is developed in support of the transition
from coal-fired power and thermal coal mining (‘thermal coal’)
within the 2030/40 timelines set out in the HSBC Group’s Thermal
Coal Phase-Out Policy and is intended to help meet the dual
objectives of phasing out thermal coal within science-based
timeframes and of energy transition in more coal-reliant
economies.
Engaging with clients to deepen understanding of and
support their transition plans
In wholesale banking, HSBC Continental Europe seeks to actively
engage with its clients on their climate strategies and risks. In 2024,
it pursued this strategic dialogue with its higher transition risk and/or
largest corporate customers through the completion of a TEQ
performed annually. This questionnaire contains specific, climate-
focused questions to support HSBC Continental Europe in
understanding the level of climate risk in each client’s business and
their transition strategy. Commercial Banking and Global Banking are
using the data collected to engage with their clients and identif y
additional business opportunities that could support their transition to
net zero.
In 2024, nature-related questions were introduced to the TEQ to
cover topics including pollution, water, biodiversity, resource use and
circular economy.
Providing climate focused unit linked offerings
HSBC Assurances Vie (France) offers a wide range of unit linked
funds in its saving and retirement insurance contracts, more than half
of which are related to climate, environment and social actions. This
ESG offer is enriched every year.
Due to the nature of its business, HSBC Assurances Vie (France)
relies on Global Management Selection 4, which conducts due
diligence on unit linked offers. The business will continue to provide
these thematic funds going forward and will aim to provide more
where approval is received.

Universal Registration Document and Annual Financial Report 2024 | 77

Engagement with priority issuers on climate topics
In 2024, Asset Management continued developing its engagement
strategy for priority issuers based on their contribution and materiality
to financed emissions (typically the top emitting issuers) and by
setting company level engagement plans.
This approach will enable the business to support issuers along their
transition journey and show improvement in their alignment
classifications over time, whilst also helping support the reduction in
emissions intensity of portfolios.
Implementing fund rules
HSBC INKA has implemented specific investment rules in several
funds, for example, exclusions with regards to coal and in some
cases other fossil energy sources.
Funds can also apply rules with regards to carbon reduction, invest in
target funds which are classified according to Articles 8 or 9 of the
Sustainable Finance Disclosure Regulation ('SFDR') or invest in
sustainable bonds. The business plans to continue to implement
further ESG criteria in fund rules over the coming years.
Stewardship
When exercising its voting rights on management proposals, member
re-elections and executive remuneration, HSBC INKA considers
investee companies’ approaches to climate change based on its
Voting Policy, considering BVI voting rules (German fund industry
association) and Glass Lewis ESG voting rules.
During 2024, HSBC INKA’s Voting Policy was considered when
dealing with investee companies and will continue to be
implemented when exercising the voting rights over the coming
years.
Partnering for systemic change
Throughout 2024, HSBC Continental Europe continued to engage in
commercial partnerships with third parties to help support its
customers on their transition journey. This included a partnership with
ESG ratings provider EcoVadis in France, to help wholesale banking
clients to understand and develop plans to reduce their scope 3
emissions through scoring.
Commercial Banking has been expanding its partnership and
developing ESG Directory, a vetted list of third-party ESG service
providers to help customers navigating in the evolving sustainability
landscape. While already available in France, the directory focuses on
key areas where customers need support, such as setting strategy,
disclosing against regulatory frameworks, assessing supply chains,
assessing physical risk and second party opinion and energy
efficiency.
Managing climate-related risks
Climate-related risks may affect HSBC Continental Europe either
directly, or through its relationships with its customers. This includes
potential risks arising as a result of the HSBC Group’s net zero
ambition, which could lead to reputational concerns, and potential
legal and/or regulatory action if it is perceived to mislead stakeholders
on business activities or if the Group fails to achieve its stated net
zero targets.
As outlined in section 'Risk Management', page 165, climate risk has
been integrated into the Bank’s risk taxonomy and risk management
framework through policies and controls for the existing risks where
appropriate. HSBC Continental Europe applies, where relevant, HSBC
Group policies to mitigate climate risks.
Aligned with the policy objectives, HSBC Continental Europe also
takes action to manage these risks.
Reputational risk policy
The Reputational Risk Policy is aimed at managing the sources and
drivers of reputational risk that may be encountered through the
Bank’s business activities.
The policy seeks to achieve three primary objectives:
– Potential reputational risks are identified and escalated as
appropriate.
– Roles and responsibilities relating to reputational risk management
are clearly defined, understood, and embedded.
– Senior management have visibility and oversight over reputational
risks.
The policy applies to all employees at HSBC Continental Europe. At a
senior level, the Chief Risk Officer is accountable for assessing and
deciding reputational risk cases and the Chief Executive Officer owns
and is accountable for the management and mitigation of any residual
reputational risk.
Financial reporting risk policy
The Financial Reporting Risk Policy outlines the minimum
requirements to address financial reporting risk, including the risk of
misstatement in externally driven climate-related reporting and
disclosures.
The purpose of this policy is to ensure consistent and appropriate
interpretation, measurement, and presentation of financial
information in relevant reports. This includes compliance with
applicable legal and regulatory frameworks which require HSBC
Continental Europe to publish financial reports and disclosures.
The policy establishes the overriding financial reporting guidelines
applicable to HSBC Continental Europe. It is owned by the Group
Chief Financial Officer as the Global Risk Steward and its
implementation is managed by HSBC Continental Europe’s Financial
Controller for the entity.
Wholesale credit risk policies
The Wholesale Credit Risk policies establish guidelines and criteria to
manage and mitigate the risks associated with providing credit to
wholesale clients. This includes wholesale credit risk driven by
climate transition and physical risks that HSBC Continental Europe
has identified as material through its DMA.
Within these policies, HSBC Continental Europe references its
wholesale credit risk assessment. The objective is to ensure that
credit extended to wholesale clients and counterparties aligns with
the Bank’s risk appetite approved by the Board. This includes
sustainability considerations, requiring wholesale credit risk
assessments (with stated exceptions) to evaluate clients’ exposure to
transition and physical risks associated with climate change.
Ownership and management of the policy sits with the Head of
Wholesale Credit Risk Oversight, at global and entity level.
Risk analysis and modelling for climate risks
HSBC Continental Europe continues to develop its climate risk
management capabilities, including scenario analysis and embedding
climate risk into wholesale credit processes.
5 Scope 1, 2 and Scope 3 category 6 emissions data covers all HSBC Continental Europe entities, located in markets that are onboarded on HSBC’s climate
reporting tool: France, Germany, and Malta. Data covers entities that are not consolidated under HSBC Continental Europe, but they share premises with HSBC
Continental Europe entities so cannot be excluded such as HSBC Global Services (UK) Paris Branch, HSBC Bank plc, Paris Branch, HSBC Global Service UK Ltd
– Malta Branch.

78 | Universal Registration Document and Annual Financial Report 2024

Environmental

The Bank performs annual scenario analysis to understand the
climate risks that may directly affect the business. For more detail on
how the Bank conducts this analysis see page 60.
In addition, HSBC Assurances Vie (France) conducts an annual review
of operational risks, with associated controls mapped to specific risk
categories. Within each category, climate risks are analysed.
For each identified risk, a probability of occurrence and potential
impact are assessed based on a scenario representing the most
severe situation that could occur in the next 12 months. These
assessments are reviewed by the second line of defence, including
Risk management and internal controls over sustainability reporting
Risk, Legal and Compliance. In 2024, this analysis did not materially
change the company's estimate of non-financial risks.
Addressing regulatory compliance risk
HSBC Continental Europe aligns its actions within the general
regulatory framework outlined in the section ‘Regulatory Compliance’
on page 224 and has adapted it to incorporate climate-related
regulatory compliance requirements.
Financing the shift to a sustainable economy
In 2020, the HSBC Group announced its ambition to provide between
USD 750 billion to USD 1 trillion in sustainable financing and
investment by 2030. This ambition aims to help promote green,
sustainable and socially-focused business, as well as sustainable
investing products and solutions.
Since 1 January 2020, HSBC Continental Europe’s cumulative
contribution to the HSBC Group target amounted to USD124.9 bn on
31 December 2024, which represents 32 per cent of the HSBC
Group's total progress to date.
Embedding the transition to net zero in the
way the Bank operates
The HSBC Group has the ambition to become a net zero bank by
2050, which includes its operations. In order to contribute to the
HSBC Group's ambition, HSBC Continental Europe is focused on key
objectives:
Reducing greenhouse gas emissions
In Germany and France, the office buildings are operated with the
vast majority of electricity consumption being obtained from
renewable energy sources. Further plans are in place to increase the
amount of renewable electricity consumption across HSBC
Continental Europe. In addition, HSBC Continental Europe continues
its efforts to reduce overall travel emissions year on year.
Improving energy efficiency
In Malta, major work on the construction project named HSBC HUB
was completed in 2024. As part of the HSBC HUB project, a number
of net zero initiatives were delivered, such as the reduction of floor
space by 30 per cent through hybrid working and the introduction of
energy saving installations.
Additionally in France, a local tracker is used to monitor energy
consumption by comparing invoice data with climate index metrics.
Following energy audits in 2023, HSBC Continental Europe
implemented an action plan that allowed the Bank to better track and
understand usage, reducing total energy consumption in its head
office building on avenue Kleber in Paris by 15 per cent from 2023 to
2024.
Partnering with suppliers
The HSBC Continental Europe adopted the CDP to help companies
report their environmental impact. Since 2024, additional data
sources have been incorporated to complement existing CDP data to
improve measurement, quality and reporting of the supply chain
emissions data. HSBC Continental Europe aims to deepen
collaboration with suppliers, and support those without public
disclosures or emissions reduction plans through education and
engagement. Efforts have been focused on building partnerships with
larger suppliers to drive change in shared supply chains through
scaled solutions, including industry initiatives.
Measuring progress
In October 2020, the HSBC Group announced its ambition to become
a net zero bank by 2050. It seeks to analyse and track its financed
emissions through specific RAS and KMIs. HSBC Continental Europe
is taking entity-level actions to contribute to the HSBC Group’s
ambition. It is also increasingly assessing its corporate customers’
transition risks, outlined in 'Climate and Environmental risks
management', page 226. HSBC Continental Europe continues to
review its approach to entity-level targets in line with regulatory
expectations or requirements, available guidance, and industry
practice.
Greenhouse gas emissions
HSBC Continental Europe considered the requirements of the
Greenhouse Gas Protocol Corporate Value Chain (Scope 3)
Accounting and Reporting Standard (Version 2011) and the calculation
guidance set out in the Partnership for Carbon Accounting Financial
(‘PCAF’) specifically Part A ‘Financed Emissions’.
The GHG Corporate Standard classifies the direct and indirect
emissions into three scopes.
Scope 1 represents the Bank’s direct emissions. Scope 2 represents
the indirect emissions resulting from the Bank’s use of electricity and
energy to run its business. Scope 3 represents indirect emissions
attributed to upstream and downstream activities. HSBC Continental
Europe’s upstream activities include business travel and emissions
from its supply chain including procurement of goods and services
and related transport. Downstream activities include those related to
investments and including financed emissions. Under the protocol,
scope 3 emissions are broken down into 15 categories, of which
HSBC Continental Europe discloses emissions data for three related
to upstream activities. These are: purchased goods and services
(category 1); capital goods (category 2); and business travel (category
6). HSBC Continental Europe also reports data on downstream
activities for financed emissions (category 15).
Scope 1 and scope 2 emissions
Scope 1 and 2 emissions represent the GHG emissions associated
with HSBC Continental Europe’s operations. The emissions data is
extracted using the HSBC Group’s environmental tool Metrix. Data
covers a 12-month period ending on September 30 and is gathered
for the three key markets 5: France, Germany, and Malta.

Universal Registration Document and Annual Financial Report 2024 | 79

Scope 3 emissions categories 1, 2 and 6
Emissions from business travel (category 6) are tracked similarly to
Scope 1 and 2 emissions, using the HSBC Group's environmental
reporting tool for the 12-month period ending on September 30. Data
covers HSBC Continental Europe’s operations in France, Germany,
and Malta.
HSBC Continental Europe’s supply chain emissions (categories 1 and
2) are calculated using a spend-based method under Greenhouse Gas
Protocol supplemented by supplier emissions data obtained through
CDP.
In the absence of reported emissions data for a supplier, or if the
supplier is not within the HSBC Group's 500 largest suppliers,
emissions are estimated using actual and modelled data from an
external provider.
If such data is not available, the revenue-based CDP industry average
for the supplier's primary activity is applied to derive the associated
emissions. Spend data covers the period from October 2023 till
September 2024.
Scope 3 emissions category 15
Financed emissions link the financing HSBC Continental Europe
provides to its customers and their activities in the real economy and
provides an indication of the associated GHG emissions. They form
part of HSBC Continental Europe’s scope 3 emissions, which
includes emissions associated with the use of a company’s products
and services.
The DMA assessment has concluded that climate change mitigation
impact is material – for wholesale, insurance, and asset management.
As per ESRS, only material topics have been considered for
disclosure.
To determine the scope of activities for reporting, HSBC Continental
Europe considered the specified minimum boundary defined in the
GHG Protocol.
The amounts reported for financed emissions include the wholesale
banking book for known and unknown use of proceeds and where
data was available to make the assessment. This enables the scope
of activities to align with Pillar 3 disclosures on Financed emissions.
To calculate annual on-balance sheet financed emissions, HSBC
Continental Europe used drawn balances as of 31 December 2024
related to wholesale loans and advances to customers (corporate
loans) and financial assets that are not insurance related (corporate
debt). It represents a total of EUR 33.2 billion.
HSBC Continental Europe recognises that the methodology and data
used to assess financed emissions are new and evolving and HSBC
Continental Europe expects industry guidance, market practices, and
regulations to continue to change in the coming years, and may
enable the Bank to review and consider the scope of reporting for
other types of investments including the additional asset classes and
activities listed as optional or not addressed in the GHG Protocol such
as managed investments and client services, other investments or
financial services (for example, insurance contracts, credit
guarantees, pension funds), sovereigns, financial institutions and
retail lending.
Data and methodology limitations
The methodologies and data used to assess financed emissions
continue to evolve alongside changes to industry guidance, market
practice and regulation. Most clients do not yet report emissions data
at the granular subsidiary level and the full scope of GHG emissions
required in the analysis, in particular scope 3 emissions.
In the absence of client-reported emissions at the required granularity
covering all scopes of emissions, HSBC Continental Europe has
estimated emissions using proxies based on industry averages.
These industry averages may be defined at country, region or globally
based on the data available to calculate emission factors and may not
be country specific. Given financed emissions data is reliant on
industry averages, this may fluctuate year on year as data availability
and granularity improves.
To calculate the industry averages for financed emissions, there is a
reliance on external third-party vendor data sets and given the multi-
year lag noted for emissions availability, HSBC Continental Europe
has used emissions data from 2022 with a regional deflator to bridge
to financial reporting year of 2024.
Financed emissions have been calculated at the obligor level where
Nomenclature of Economic Activities ('NACE') code granularity exists
using industry averages, and where NACE code is unavailable, a
weighted average portfolio emission factor has been applied. For
HSBC Continental Europe, financed emissions are calculated at the
individual obligor level and this may therefore differ between the
counterparty group sectors used for financed emissions reporting at
the HSBC Group leve l.
Additionally, the financing activities are treated as general corporate
purposes (i.e. unknown use of proceeds as defined by GHG Protocol)
due to data availability and limitations.
All parts of the value chain and all scopes of emissions have been
taken into account for financed emissions, and this may result in
double counting between sectors. Double counting occurs when
GHG emissions are counted more than once in financed emissions
analysis and cannot be avoided.
The methodology and approach to the scope of these calculations for
HSBC Continental Europe is not aligned with the HSBC Group
methodology and emissions figures will differ. This is to ensure
alignment with reporting requirements to expand coverage across a
wider range of sectors for disclosure purposes rather than focusing
on target setting on specific sectors, which is currently done at the
HSBC Group level.
Evolving approach
HSBC Continental Europe’s approach will evolve based on data and
methodology improvements as well as future alignment with updated
industry guidance for methodologies. As data improves and coverage
expands, estimates can be replaced with reported figures.

80 | Universal Registration Document and Annual Financial Report 2024

Environmental

Total Emissions
| 2024
tCO2e | Primary data source %
Scope 1 GHG Emissions |  |  |
Gross Scope 1 GHG Emissions | tCO2e | 2,631 | N/A
Scope 2 GHG Emissions |  |  |
Gross Location-based Scope 2 GHG Emissions | tCO2e | 2,818 | N/A
Gross Market-based Scope 2 GHG Emissions | tCO2e | 1,252 | N/A
Scope 3 GHG emissions |  |  |
Category 1: Purchased goods and services | tCO2e,% | 38,141 | 8
Category 2: Capital goods | tCO2e,% | 621 | 26
Category 6: Business travel | tCO2e,% | 2,902 | 100
Category 15: Investments (Financed Emissions) | tCO2e,% | 20,902,030 | 0
Total Gross Scope 3 GHG Emissions | tCO2e,% | 20,943,694 | 0
Total GHG emissions |  |  |
Total GHG Emissions (location-based) | tCO2e | 20,949,143 | N/A
Total GHG Emissions (market-based) | tCO2e | 20,947,577 | N/A

GHG intensity is based on HSBC Continental Europe's total net revenue.
For more details on the GHG Emissions calculation and methodology please refer to page 78.

GHG intensity based on net revenue
|  | 2024
Total GHG Emissions (location-based) per net revenue | (tCO2e/ EUR) | 0.01
Total GHG Emissions (market-based) per net revenue | (tCO2e/ EUR) | 0.01

Alignment of GHG emissions intensity to financial reporting
Net Revenue used to calculate GHG intensity | Million EUR | 3,252
Net Revenue (other) | Million EUR | —
Total net revenue (in financial statements) | Million EUR | 3,252

Contribution to the HSBC Group’s sustainable finance and investment 2030 ambition since 1 January 2020
The table below shows HSBC Continental Europe’s cumulative contribution to the HSBC Group’s sustainable finance and investment 2030
ambition since 1 January 2020 1,2,3

|  | 2020 | 2021 | 2022 | 2023 | 2024
Total | $bn | 16.4 | 47.4 | 76.0 | 101.2 | 124.9

1 The 2024 data in this table has been prepared in accordance with the the HSBC Group’s Sustainable Finance and Investment Data Dictionary 2024, which
includes green, social and sustainability activities. The amounts provided and facilitated include: the limits agreed for balance sheet-related transactions
provided, the proportional share of facilitated capital markets/advisory activities and the net new flows of sustainable investments within assets under
management.
2 For green, social, and other sustainable use of proceeds, the capital markets products are aligned to the International Capital Markets Association's ('ICMA')
Green Bond Principles, Social Bond Principles or Sustainability Bond Guidelines or the Climate Bonds Initiative as applicable. The lending labelled products are
aligned to the Green Loan Principles ('GLP') or Social Loan Principles of the Loan Market Association ('LMA'), Asia-Pacific Loan Market Association ('APLMA')
and the Loan Syndications and Trading Association ('LSTA’) as applicable; or for sustainable trade instruments, are aligned to HSBC's internal sustainable trade
instrument principles which are based on the GLP and reference the UN SDGs. Also included are facilities where HSBC identifies that the use of proceeds
would meet eligibility criteria as defined and approved by appropriate governance committees, but these are not labelled or marketed as green or social.
3 Data is presented in US dollars, as it is calculated at the HSBC Group level.
Energy consumption and mix
In addition to measuring emissions, HSBC Continental Europe
monitors its energy consumption as part of its effort to support the
Group’s net zero ambition.
Energy consumption data is reported for electricity, primary fuel
sources and locally generated energy sources with measurements
obtained via meters where possible and compiled from service
provider invoices. If metered data is only partially available or not
available, energy consumption may be calculated based on a
comparable property, extrapolation of cost per unit or estimates using
floor area or other published industry baselines.

Universal Registration Document and Annual Financial Report 2024 | 81

Energy consumption and mix 1
|  | 2024
Nuclear energy consumption |  |
Consumption from nuclear sources | MWh | —
Share of energy consumption from nuclear sources in total energy consumption | % | —
Renewable energy consumption |  |
Fuel consumption for renewable sources, including biomass | MWh | —
Consumption of purchased or acquired electricity, heat, steam, and cooling from renewable sources | MWh | 13,156
The consumption of self-generated non-fuel renewable energy | MWh | 189
Total renewable energy consumption | MWh | 13,346
Share of renewable sources in total energy consumption | % | 67
Total energy consumption | MWh | 19,837
Renewable energy production |  |
Renewable energy production – Self generated | MWh | 189

1 Energy consumption and mix data covers all HSBC Continental Europe entities, located in markets that are onboarded on HSBC’s climate reporting tool: France,
Germany, and Malta. Data covers entities that are not consolidated under HSBC Continental Europe, but they share premises with HSBC Continental Europe
entities so cannot be excluded such as HSBC Global Services (UK) Paris Branch, HSBC Bank plc, Paris Branch, HSBC Global Service UK Ltd – Malta Branch.
Data covers a 12-month period ending on September 30.
Exposures towards sectors that highly contribute to climate change
HSBC Continental Europe in its Capital and Risk Management Pillar 3
Disclosures, outlines its exposures towards non-financial corporates,
including loans and advances, debt securities and equity instruments
classified in the accounting portfolios in the banking book excluding
financial assets held for trading or held for sale assets.
The table below sets out the same aggregated exposure towards
sectors which highly contribute to climate change.
This exposure helps the Bank track performance and effectiveness of
its climate change related material IRO's.
Refer to HSBC Continental Europe's Q4 2024 Capital and Risk
Management Pillar 3 Disclosures for d etailed break-up of this
exposure.

Exposures towards sectors that highly contribute to climate change 1
|  | 2024
Gross carrying amount | Million EUR | 21,213

1 In accordance with the Commission delegated regulation (EU) 2020/1818 supplementing regulation (EU) 2016/1011 as regards minimum standards for EU
Climate Transition Benchmarks and EU Paris-aligned Benchmarks -Climate Benchmark Standards Regulation - Recital 6: Sectors listed in Sections A to H and
Section L of Annex I to Regulation (EC) No 1893/2006.

82 | Universal Registration Document and Annual Financial Report 2024

Environmental

Nature
The world cannot solve the climate crisis without addressing the
nature crisis. HSBC recognises the importance of safeguarding nature
and the important role of nature in a net zero transition.
HSBC Continental Europe has identified two material nature-related
impacts through its DMA, which are connected to its wholesale
lending activities. The assessment did not identify any material
negative impacts relating to land degradation, desertification, and soil
sealing. Financial risk was not considered to be material.
HSBC Continental Europe is still at early stage of understanding and
taking actions to address its nature-related impacts, with nature
currently considered as a broad thematic.
Recognising that climate change is one of the drivers of biodiversity
loss, see 'Addressing climate-related impacts, risks and opportunities
through policies and actions', page 76 for the actions the Bank is
taking to manage its climate-related IROs.
Biodiversity and ecosystems-related impacts, risks and opportunities

Impact / Risk / Opportunity | Description | Time Horizon | Value Chain Segment or Own Operations
Impact | Impact on biodiversity driven by climate change By virtue of its financing activities, the Bank has exposure to sectors that contribute to climate change. The effects of climate change, such as rising temperatures, increased frequency of extreme weather events, and changes in precipitation patterns may contribute to habitat destruction, wildlife decline and species extinction resulting in biodiversity loss. | Long-Term* | Downstream
Impact | Impact on ecosystem services Through its financing activities, the Bank has exposure to sectors such as energy, power utilities, heavy manufacturing, transportation, and agriculture. These sectors are recognised for their potential to impact ecosystem services. | Long-Term* | Downstream

*Time horizons will be updated as the Bank develops its a pproach to nature and with the enhancement of data availability and quality.
HSBC Continental Europe used a range of risk management
frameworks and tools, alongside internal and third-party data sets, to
identify and assess the nature-related IROs within its value chain. As
with climate, the approach varied across the different areas of its
business.
The impact and dependency that an organisation has on nature is
highly location-dependent, and accurately determining the scale
requires granular, site-specific data which is not currently available for
the Bank’s value chain. Due to these nature-related data coverage
and quality gaps, a high degree of estimation has been required to
carry out the DMA for nature. As a result, consultations with local
communities in its value chain were not feasible. HSBC Continental
Europe expects that its analysis of nature-related IROs will evolve as
data availability and quality, methodologies and industry practice
improve over tim e.
Assessment of materiality through HSBC
Continental Europe’s value chain
HSBC Continental Europe’s Downstream Value Chain
Wholesale Banking (Commercial Banking and Global Banking
and Markets)
As a financial institution, HSBC Continental Europe’s primary impact
on nature may arise from its downstream financing activities,
specifically wholesale lending. Through the capital provided to its
clients HSBC Continental Europe may indirectly impact a number of
aspects of the natural world. Visibility to the impacts associated with
these financing activities is limited, with many clients not yet able to
assess and disclose their own impacts and dependencies on nature
as a result of the lack of transparency and data availability in their own
supply chains, and many still overcoming the complexities of
understanding the downstream effects of their products and
services. This is expected to improve as more companies disclose
their nature-related impacts and dependencies in line with new
reporting requirements.
As a proxy for granular, location-specific client data, HSBC
Continental Europe assessed its wholesale lending portfolio
considering the sectors in which clients operate and the country in
which they are primarily based.
To determine sector-level impact materiality, HSBC Continental
Europe used the ENCORE tool, developed by the Natural Capital
Finance Alliance in partnership with the UN. The tool provides a view
of the nature-related impacts and dependencies across different sub-
sectors applying pressure and dependency scores in each case,
based on how the sectors interact with natural resources and
ecosystems. HSBC Continental Europe then weighted these scores
to bring country specificity using inputs derived from a range of
publicly available data sources on the state of nature at a country
level.
The result was a combined ‘nature score’, which was then used
along with HSBC Continental Europe’s wholesale credit exposures to
determine where it potentially has material nature-related impacts.
Nature-related risk associated with the wholesale lending portfolio
was assessed over the short-, medium- and long-term using a
combination of quantitative and qualitative approaches. This included
using the results from the ENCORE assessment along with the
output from the nature-related risk management approach. See
‘Testing the resilience of the strategy and business model in relation
to nature risk’ on page 62 and for the results of a nature scenario
analysis, see ‘Outcome of nature risk scenario analysis’ on page 62.
Nature-related opportunities for wholesale banking were assessed by
looking at the pipeline of wholesale lending opportunities over the
next 12 months and using the Risk Prioritisation Matrix (‘RPM’)
approach to assess the materiality of nature-related financing
opportunities.
Traded and Market risk
As part of supporting Markets and Securities Services customers
with their sustainability and transition needs focused on nature, the
measurement of risk sensitivities for FX, Interest Rates, Credit
Spreads and Equity was introduced in 2024 in addition to climate.

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The risk assessment of nature-related impacts and dependencies
across traded and market risks activities was carried out over the
short-, medium- and long-term using the ENCORE tool and a
qualitative risk assessment. This was complemented by an internal
nature scenario analysis used for all trading books which was
designed on the basis that human activity draws down natural capital
assets at unsustainable rate.
Liquidity Risk
HSBC Continental Europe undertook an assessment to understand
the impact that nature risk may have on its liquidity position. This
assessment was made up of 2 components:
– Qualitative assessment: to understand the potential impact that a
nature risk event may have for each liquidity risk driver, over a
short-term horizon.
– Quantitative assessment: to look at the impact on the two main
liquidity risk drivers (deposits outflow and committed facilities
drawdown) under a nature risk scenario.
Wealth and Private Banking ('WPB')
HSBC Assurance Vie (France) uses HSBC Global Asset Management
(France) to manage more than two thirds of its non-linked assets and
the majority of linked assets. As such, the Insurance company
benefits from HSBC Asset manager’s expertise and KPIs
methodologies.
The insurance company based its assessment of its nature-related
impacts on the results of a review of the biodiversity footprint of a
part of its non-linked asset portfolio. Its Asset manager uses Iceberg
Data Lab’s methodology to quantify the impact of its investments/
underwriting practices on nature, considering key pressures including
air pollution, water pollution, land use change and climate change
caused by GHG emissions.
HSBC Assurance Vie (France) has not developed its own nature score
to evaluate the financial risks associated with biodiversity loss and
environmental degradation. In its place, it relied on the results of the
2024 qualitative assessment of how nature-related risks can be a
driver of or affect existing non-financial risk categories, to inform its
materiality assessment.
The process for assessing the material impacts and dependencies on
nature from Retail and Private banking, HSBC Asset Management
and INKA was the same as the process described in 'Wealth and
Personal Banking (‘WPB’)' under 'Assessment of the materiality
through HSBC Continental Europe's value chain' section on page 74.
HSBC Continental Europe's Own operations
Nature-related IROs from HSBC Continental Europe’s own operations
may arise from business activities at its office locations. HSBC
Continental Europe conducted a screening of its office locations to
identify potential impacts related to water, biodiversity and waste.
This involved an assessment of the proximity of each of HSBC
Continental Europe’s sites to key biodiversity areas, world heritage
sites and areas of water stress. The Bank has not directly assessed
the potential impact on threatened species, land degradation,
desertification and soil sealing from its own operations, however it
has used proximity to key biodiversity areas as a proxy for this.
The assessment concluded that none of HSBC Continental Europe’s
sites have a material negative impact on nature or contribute to the
deterioration of natural habitats. This is due to the nature of its
business activities at these locations i.e. commercial offices with
relatively low water usage and limited contribution to local pollution
levels. As such it has not been necessary to implement biodiversity
mitigation measures.
To identify and measure the risk associated with nature events for
HSBC Continental Europe’s own operations, third-party data was
used to assess physical and operational risks arising from water
stress and climate change at its buildings, including offices, branches
and data centres.
Other nature-related risks, such as dependency on biodiversity and
ecosystem services (other than water availability) were not assessed.
This was due to lack of available data, proxies and methodologies.
HSBC Continental Europe's supply chain
The Bank undertook an assessment of biodiversity and nature risks to
better understand the nature-related impacts and risks in its global
supply chain. The assessment was undertaken in 4 steps:
– Identification of nature-related impacts and dependencies in each
of HSBC’s procurement categories.
– Identification of the biodiversity risks related to these impacts and
dependencies at the country level.
– Identification for each procurement category of the risks and
opportunities for procurement and the possible steps that could
be taken to address risks and opportunities.
– Development of a risk rating for each of the procurement
categories.
Addressing Biodiversity and Ecosystems-
related impacts through policies, actions and
targets
Policies
HSBC Continental Europe applies the HSBC Group’s sustainability
risk policies to its relevant financing activities. HSBC Group's
sustainability risk policies focus on mitigating reputational, credit,
legal and other risks related to our customers’ environmental and
social impacts and impose restrictions on certain financing activities
that may have material negative impacts on nature. The HSBC
Group's forestry and agricultural commodities policies focus
specifically on the upstream impacts of key agricultural commodities
including palm oil, timber, soy and cattle. HSBC Group also require
palm oil customers to obtain certification under the Roundtable on
Sustainable Palm Oil. The Group’ sustainability risk policies also
impose certain restrictions, for example through its World Heritage
and Ramsar Wetlands policy, on financing activities in
environmentally and socially critical areas.
Given the interconnectedness between climate and nature, the
Group’s net zero-aligned sustainability risk policies, the thermal coal
phase-out policy and the energy policy, are also important
mechanisms for helping to manage climate-related risks. For further
details of the Bank’s climate-related policies and actions, see
'Addressing climate-related impacts, risks and opportunities through
policies and actions', page 76.
In addition to the Group sustainability risk policies, HSBC Continental
Europe has developed guidance for the management of nature-
related risks across its wholesale lending activities. This includes
guidance for considering how nature-related physical and transition
risks may impact the credit risk management process and a
monitoring process to help detect and manage pockets of risks
resulting from nature-related impacts and dependencies.

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Actions
Developing an approach to nature
In 2024, HSBC Continental Europe contributed to the ongoing
development of the HSBC Group’s approach to nature, which builds
on the outline approach set out in the Group’s n et zero transition
plan, published in January 2024.
This included considering how to: understand its exposure to nature;
manage nature-related risks and impacts; support its customers,
including financing and investing in nature-related solutions; and
building nature-related skills, data capabilities and partnerships.
Managing the impact of the Bank's own
operations
HSBC Continental Europe supports the HSBC Group's efforts to
minimise the impact on nature from its own operations and supply
chain, and seeks to ensure that, where possible, its premises do not
adversely affect the environment or natural resources through its
leasing, design, construction and operational standards. The main
focus areas for this are GHG emission reduction, water consumption,
waste and paper usage.
The HSBC Group has been working to embed effective biodiversity
and nature risk management within global procurement procedures
and processes, including considering how it engages with it s
suppliers to help drive performance.
Managing nature-related risks
HSBC Continental Europe has not identified any material nature-
related financial risks through its DMA process. However, given the
interconnectedness between nature and climate change, the risk
posed by nature degradation to the global economy and the
remaining potential for nature loss to pose risks to HSBC Continental
Europe, it has developed a nature-related risks management
approach and nature scenario analysis capabilities. Building off the
HSBC Group climate risk approach, the nature-related risks approach
aims to effectively identify and manage nature-related risks that may
impact the Bank’s operations, financial performance and reputation.
The approach sets out high level principles and guidance for how
nature-related risks should be managed through the existing HSBC
risk taxonomy and in line with the ‘three lines of defence’
responsibilities described in the Group RMF.
The identification and assessment of nature-related risks using this
approach is reviewed at least annually and is expected to continue to
evolve with the growing availability of data from sustainability
disclosures.
Wholesale client engagement
HSBC Continental Europe’s TEQ supports engagement on net zero
and sustainability-related matters with key corporate customers. For
more information on the TEQ see 'Engaging with clients to deepen
understanding of and support their transition plans' on the page 76. In
2024, the TEQ was expanded to include nature-related questions,
including but not limited to questions related to biodiversity.
The Bank is working towards using the data gathered through the
TEQ to better understand HSBC Continental Europe’s corporate
clients’ exposure to nature-related impacts, risks and opportunities
and the actions being taken to manage them.
Partnering for systemic change
Collective action across the private and public sectors and civil
society is key to enable the systemic change required to protect and
restore nature. HSBC Continental Europe has been involved in a
number of partnerships which focus on scaling nature-based
solutions. These partnerships, funded through its own philanthropic
spending, help drive action and develop industry practice across the
public and private sector. In 2024, HSBC Continental Europe
partnered with:
– ONF - Agir pour la Forêt fund, on multiple biodiversity conservation
programmes aiming to raise awareness on Nature-Based
Solutions among the Bank’s employees through volunteering
outdoor fieldwork (360 participants in 2024); and additionally on a
project to support a research programme around forest resilience
and testing new trees species able to develop under warmer and
drier climates.
– Earthworm Foundation, through the HSBC Climate Solutions
Partnership global philanthropic program, on 'Living Soils', a
programme dedicated to regenerative agriculture and intended to
promote agricultural practices that respect the earth and
contribute to capturing carbon.
Nature-related training
HSBC Continental Europe recognises the need to build understanding
and awareness of nature-related issues across its business. In 2024,
to support the implementation of the nature-related risks approach,
specific training was deployed to members of the first and second
line of defence involved in risk identification and management. In
addition, all relationship managers within the wholesale and credit
advisory functions were required to complete mandatory training on
the potential nature-related issues that could impact their clients and
associated financing. Training was delivered through online modules,
workshops, leadership development and sharing on-the-ground
experience from deals and customer interactions.
HSBC Continental Europe Board members also received nature-
related upskilling as part of their mandatory training curriculum. In
2024, sessions included an overview of nature-related impacts and
dependencies, HSBC Continental Europe’s approach to nature-related
risks management, and the actions being taken to start to address
nature across multiple business areas.
Targets
At present, HSBC Continental Europe does not have entity-level
nature-related targets. This is due to the nascent nature of this topic
for the Bank and the limitations in the quality and availability of
nature-related data. As noted above, the Bank expects to continue to
evolve its DMA process as data improves and will consider how to
set nature-related targets once it has sufficient confidence in the
outputs of the analysis. HSBC Continental Europe has however
defined a number of metrics to support the implementation of the
nature-related risks approach and to monitor the delivery of some of
its nature-related actions.

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EU Taxonomy economic performance indicators 1
Climate change mitigation and
climate change adaptation objectives
and the remaining environmental
objectives
In order to meet the European Union’s climate and energy targets for
2030, the European Commission ('EC') has created the EU Taxonomy
classification system for environmentally sustainable economic
activities. The EU Taxonomy provides companies, investors and
policymakers with appropriate definitions for which economic
activities can be considered environmentally sustainable. In 2021, the
EC adopted the Delegated Act Supplementing Article 8 of the
Taxonomy Regulation (‘the Disclosures Delegated Act’)2,3 followed by
an amendment to the Delegated Act in 2022 to include certain energy
sectors and in 2023 the EC amended the Disclosures Delegated Act
to align the disclosure requirements with the Environmental
Delegated Act. Under these regulations, HSBC Continental Europe is
therefore required to provide information to investors about the
environmental performance of the Bank's assets and economic
activities.
The disclosures presented provide information on alignment of
economic activities (i.e. disclosure of the key performance indicators)
where Taxonomy ‘eligible’ economic activities are assessed to
determine whether they are environmentally sustainable (i.e.
Taxonomy ‘aligned’) against technical screening criteria.
Scope of consolidation
The Taxonomy KPIs presented in the tables are based on exposures
and balances within HSBC Continental Europe’s prudential scope of
consolidation as at 31 December 2024. Subsidiaries engaged in
insurance activities are treated as investment subsidiary, and the
insurance activities are excluded from the prudential scope of
consolidation.
KPI: Green Asset Ratio ('GAR')
The GAR is a ratio calculated as the percentage of EU taxonomy-
aligned assets as a proportion of total covered assets.
The numerator of the GAR includes loans and advances, debt
securities, equities and repossessed collateral financing taxonomy-
aligned economic activities based on turnover KPI and CapEx KPI of
underlying assets.
The denominator of the GAR includes total loans and advances, total
debt securities, total equities and total repossessed collaterals and all
other covered on-balance sheet assets.
The calculation of KPIs for off-balance sheet exposures include
financial guarantees granted by the Bank and assets under
management. Other off-balance sheet exposures such as
commitments are excluded from the calculation.
Total Covered assets
The calculation of the Taxonomy on-balance sheet KPIs include on-
balance sheet exposures covering loans and advances, debt
securities and equity instruments not held for trading and
repossessed collateral. This includes exposures to undertakings such
as large EU banks, asset managers, insurance companies and issuers
that are in scope of Articles 19a or 29a of Directive 2013/34/EU 4
('NFRD/CSRD').
Retail exposures except for the mortgage lending portfolios and
credit consumption loans for cars are excluded from the Taxonomy
framework and not assessed for Taxonomy eligibility. On this basis,
these exposures are included within the category of 'Other assets'.
Taxonomy-eligible and aligned
economic activities
Taxonomy-eligible economic activities are those activities which can
be assessed as environmentally sustainable. Taxonomy-aligned
economic activities are those activities which have been assessed as
environmentally sustainable.
Eligibility and alignment related disclosures shall be based on
information provided by the counterparty. This includes exposures to
undertakings subject to the NFRD where the use of proceeds is
known such as green lending and green bonds.
Exposure to green bonds and debt securities issued by non-NFRD
undertakings have also been assessed for eligibility and alignment
based on the specific use of proceeds. However, green bonds issued
by central governments, central banks and supranationals are
excluded from the scope of the GAR.
Eligibility and alignment of general lending exposures have been
assessed using the turnover and CapEx eligibility and alignment ratios
published in the most recently available annual reports by the Bank’s
counterparties in scope of NFRD.
Exposures to multi-lateral development banks have been classified as
credit institutions in accordance with EU Taxonomy regulation and
have been assessed for Taxonomy eligibility and alignment
accordingly.
Retail loans collateralised by residential immovable property, building
renovation loans, and motor vehicle loans are assessed for eligibility
and alignment based on the use of proceeds.
In all tables, ‘Environmentally sustainable assets’ refers to Taxonomy
aligned assets.
Taxonomy non-eligible economic
activities
Taxonomy non-eligible economic activities are those activities which
cannot be assessed as environmentally sustainable.

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Assets excluded from the numerator
for GAR calculation (covered in the
denominator)
Exposures to undertakings not in scope of
NFRD/CSRD 4
Exposures to undertakings that are not obliged to publish Non-
Financial Reporting information have been excluded from the
assessment of Taxonomy-eligible economic activities. These
exposures are excluded from the numerator of the GAR but included
in the denominator.
Derivatives
Derivatives in the banking book are excluded from the numerator but
included in the denominator of the total GAR.
On demand interbank loans
On demand interbank loans are on-demand loan exposures with other
credit institutions. These are excluded from the numerator but
included in the denominator of the total GAR.
Cash and cash-related assets
Cash and cash-related assets are excluded from the numerator but
included in the denominator except for cash with central banks which
is not covered by the GAR calculation.
Other assets
HSBC Assurance Vie (France) is a subsidiary carrying out insurance
activities and has been classified as held for sale at 31 December
2024. The investment in HSBC Assurance Vie (France) that was
previously included as an equity instrument has been reported as part
of 'Other assets' and excluded from the eligibility assessment.
Other assets also include other retail exposures not covered by the
Taxonomy framework, cash, tangible and intangible assets, all of
which are excluded from the Taxonomy framework and therefore
cannot be assessed for Taxonomy eligibility. Lending to or financing
of local governments where the use of proceeds is unknown (i.e.
general-purpose lending) is also excluded from the numerator and
these exposures have been included as part of Other assets. Other
assets are included in the total assets used in the denominator for
the calculation of the ratios.
Assets not covered for GAR
calculation
Assets not covered in the GAR calculation are excluded from both the
numerator and denominator.
Central governments and supranational
issuers
Exposures to central governments and supranational issuers are out
of scope for the GAR calculation.
Central banks
Exposures to central banks includes cash held and all other banking
exposures with central banks. These are out of scope for the GAR
calculation.
Trading book
The trading portfolio, including trading derivatives, is out of scope for
the GAR calculation.
Reporting as a group
Since December 2024, HSBC Continental Europe was no longer
regarded as a financial conglomerate, therefore not subject to any
supplementary supervision. Consequently, disclosure of KPIs by
business segment or a weighted average KPI has not been disclosed.
Therefore, the reporting by HSBC Continental Europe is prepared
based on its principal business activity as a credit institution.
HSBC Continental Europe's GAR
HSBC Continental Europe is in the early stages of integrating EU
Taxonomy considerations into its broader climate strategy. HSBC
Continental Europe is beginning to track and report green project
finance lending, including assessing alignment against the EU
Taxonomy.
HSBC Continental Europe aims to support customers who are at
differing stages in their transition journey, focusing first on the
sectors and customers with the highest emissions and transition
risks, and evolving and expanding efforts over time; for example,
supporting clients in high emissive sectors to reduce their GHG
emissions. Consequently, not all sustainable finance provided by the
Bank, and in particular transition finance, will meet the strict criteria
for EU Taxonomy alignment.
The composition of the HSBC Continental Europe’s banking book is a
key driver of the Green Asset Ratio (‘GAR’). With Non-Financial
Reporting Directive ('NFRD') counterparties only making up a fraction
of the overall book and following the sale of the majority of the retail
mortgage portfolio on 1 January 2024, most exposures are outside
the scope of eligibility assessment under the EU Taxonomy
framework. Furthermore, for those exposures where the use of
proceeds is known to be applied to eligible activities, such as green
bonds and property-related lending, data limitations result in limited
ability to comprehensively assess against the alignment criteria.
As the scope of the EU Taxonomy expands to cover counterparties
reporting under the Corporate Sustainability Reporting Directive
('CSRD'), and as data capabilities and market data availability
improves, it is expected that reporting and strategy will evolve.
For further information on HSBC Continental Europe’s ESG strategy, please
refer to ‘Strategy, business model and value creation’ on page 55.
Data limitations
HSBC Continental Europe is dependent on several data sources to
determine exposures subject to NFRD and calculate Taxonomy ratios.
Availability of data and improvements in data quality over time, as
firms adopt the Taxonomy requirements for their own disclosures,
could lead to differences in the data reported in future years as
compared to the current year.
The Bank will continue to engage with customers, market data
providers and standard setters to improve the quality and
completeness of Taxonomy data as the Bank develops its capabilities
to assess the Taxonomy alignment of its portfolios.
Eligibility and alignment by environmental
objective
The taxonomy eligibility split by Climate Change Mitigation (CCM) and
Climate Change Adaptation (CCA) was reported for the first time by
non-financial counterparties from 1 January 2024 making information
available for HSBC Continental Europe to use in its assessment and
reporting for the year ended 31 December 2024.

Universal Registration Document and Annual Financial Report 2024 | 87

For the Bank’s financial counterparties, the eligibility split by
environmental objective is based on counterparty reported data
where relevant counterparty information is available.
Where the split by environmental objective is not available, eligibility
and alignment reported by the counterparty is defaulted to CCM,
except in the case of insurers where it is defaulted to CCA.
C ounterparty eligibility and alignment data
HSBC Continental Europe is highly reliant on published counterparty
eligibility and alignment ratios to assess eligibility and alignment of
exposures. The Bank places reliance on third party data vendors to
collect the eligibility and alignment data used in KPI calculations. A
number of checks and controls are operated to validate any data used
and this has identified that counterparty data quality and consistency
is variable. Controls in place include checking for template
mathematical accuracy, checking for incomplete data, and checking
for consistency of calculations across counterparties.
To consistently report the Bank's Taxonomy eligibility and alignment
of exposures there is a dependency on counterparty KPIs. However,
some counterparties calculate ratios using a different calculation
methodology and, in these cases, where sufficient information is
available to do so, the data is normalised so that data between
counterparties is comparable and can be used consistently across
calculations. For example, data is corrected in the case of double
counting and reported under one objective only. Total alignment is
calculated as a sum of alignment by objective, as opposed to total
alignment reported, to ensure that the data sums correctly. Where a
counterparty has not reported eligibility data and solely reported
alignment, it has been assumed that eligibility matches the alignment
KPIs.
HSBC Continental Europe has a dependency on counterparty
information to make an assessment for EU Taxonomy eligibility and
alignment, where this information is incomplete and deemed not
reliable, it has been excluded from the numerator of the Bank’s GAR
calculation.
KPIs of financial counterparties
In accordance with the requirements under the EU Taxonomy,
insurance undertakings, investment firms and financial
conglomerates are required to disclose weighted average KPIs which
should be used by the Bank in assessing the eligibility and alignment
of exposures to relevant counterparties.
Where the disclosure of weighted average KPIs by financial
counterparties was not available or where more than one set of KPIs
has been reported, the approach set out below was followed. In
addition, the sector classification is reported in accordance with
FinRep reporting.
– Financial conglomerates: Green Asset Ratios or if not available,
non-life underwriting KPIs, or if not available Green Investment
KPIs.
– Credit institutions: Green Asset Ratios or if not available Green
Investment KPIs.
– Insurance undertakings: non-life underwriting KPIs or if not
available Green Investment KPIs.
– Investment companies: Green Asset Ratios – dealing on own
account.
– Asset managers: Green Investment Ratios.
Where weighted average KPIs were disclosed by counterparties, they
were not sufficiently granular for the Bank to satisfy its disclosure
requirements. For example, only alignment may be reported with no
split by objective. In these cases, the weighted average KPIs are
used but the same assumptions are applied as for other cases of
missing counterparty data as described above.
Exposures subject to the NFRD/CSRD 4
The CSRD came into force in January 2023 and strengthens the
existing rules on non-financial reporting introduced in the Accounting
Directive by the 2014 Non-financial Reporting Directive ('NFRD'). It
also broadened the scope for EU entities and includes non-EU
entities, subject to meeting certain criteria. Under the CSRD, entities
that satisfy the criteria for the first year of reporting and with more
than 500 employees during the financial year are expected to report
for the 2024 financial year end.
Due to data limitations, it has not been possible to assess all the
criteria required to determine the NFRD/CSRD status. Instead,
reliance has been placed upon data provided by third party vendors.
To treat a counterparty as NFRD, the counterparty must be assessed
as being incorporated in the European Union or European Economic
Area, and have reported EU Taxonomy eligibility data. Where
counterparties have been identified as reporting voluntary data only,
or where the data vendor can only provide estimated data, the
counterparty is treated as non NFRD.
For NFRD counterparties that have taken the exemption to report at
subsidiary level because they are included in the consolidated
reporting of their parent, the parent’s Taxonomy KPIs have not been
relied upon unless the parent undertaking has clearly stated that the
relevant subsidiary has taken the exemption option to report
Taxonomy KPIs. Where it has not been possible to identify the NFRD
status of the counterparty, the exposure has been included in the
non-NFRD section of the template.
Household exposures
Loans to households collateralised by residential property and loans
to households for building renovations have been assessed as eligible
under the Climate Change Mitigation objective in accordance with the
definition of activities 7.1 to 7.7 in the Climate Delegated Act. Loans
to households for the purchase of motor vehicles, where granted
after 1 January 2022, have been assessed as eligible under the
Climate Change Mitigation objective in accordance with the definition
of activity 6.5 of the Climate Delegated Act. However, there is
insufficient data available to fully assess any of these exposures for
alignment against the technical screening criteria and, in particular,
the do no significant harm criteria.
Non-climate environmental objectives
In 2023, the EC enacted into law the Commission Delegated
Regulation (EU) 2023/2486 (‘Environmental Delegated Act’) and
amendments to the Disclosures Delegated Act introducing new
reporting requirements for the four remaining environmental
objectives i.e. i) Sustainable use and protection of water and marine
resources; ii) transition to a circular economy; iii) pollution prevention
and control; iv) protection and restoration of biodiversity and
ecosystems. This requires both financial and non-financial
undertakings to disclose Taxonomy-eligibility information for the
remaining environmental objectives from 1 January 2024.

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In accordance with Article 8 (4) of the Disclosure Delegated Act,
financial undertakings shall use the most recently available data and
key performance indicators of their counterparties to calculate their
own key performance indicators. Although both financial and non-
financial undertakings are required to disclose the proportion in
covered assets of exposures to Taxonomy non-eligible and
Taxonomy-eligible economic activities for the four non-climate
environmental objectives, in practice the data is often in a non-
standardised format or incomplete. For many financial counterparties,
since the timing for the introduction of these new disclosure
requirements coincided with the application timeline for non-financial
undertakings, the required counterparty data was not available at the
time of reporting to allow financial counterparties to report under
mandatory disclosures.
To ensure counterparty data used is standardised and there is no
double counting across objectives, HSBC Continental Europe has only
used eligibility data for the four non-climate environmental objectives
where it has been populated within the EU Taxonomy templates of
the Bank’s non-financial counterparties. HSBC Continental Europe’s
exposures to Taxonomy-eligible economic activities for the four non-
climate environmental objectives have been presented in the relevant
eligibility columns of the tables. The total eligible amount across all
six environmental objectives is presented in the total Taxonomy-
eligible column.
The proportion in total covered assets of exposures to Taxonomy
non-eligible economic activities across all six environmental
objectives is 6.3 per cent based on Turnover and 6.1 per cent based
on CapEx.
Financial undertakings are required to disclose KPIs for Taxonomy
aligned activities covering the economic activities set out in the
Environmental Delegated Act from 1 January 2026. Therefore, the
columns requiring alignment information related to the remaining
environmental objectives have been excluded in all tables.
In all tables presented, the total columns report eligible exposures
across all six environmental objectives. The total columns for
environmentally sustainable (aligned) exposures, only report against
the Climate Change Mitigation and Climate Change Adaptation
objectives.
The summary of KPIs (Template 0) is provided in the following table.
All other EU Taxonomy templates are provided in the appendices.
1 Taxonomy Regulation (EU) 2020/852.
2 Commission Delegated Regulation (EU) 2021/2178 supplementing
Taxonomy Regulation.
3 Commission Delegated Regulation (EU) 2023/2486 supplementing
Taxonomy Regulation and amending Disclosures Delegated Act.
4 The CSRD amends the Non-Financial Reporting Directive (NFRD) 2014/95/
EU and the Accounting Directive 2013/34/EU.

Universal Registration Document and Annual Financial Report 2024 | 89

Summary of KPIs (Template 0)
This table sets out a summary of KPIs required to be disclosed by
HSBC Continental Europe as a credit institution, under Article 8 of the
Taxonomy regulation.
The table disclosed is provided in Annex VI to the Disclosures
Delegated Act but has been modified by adding additional columns
and clarifying column headings to clearly distinguish KPIs calculated
using counterparty Turnover ratios versus KPIs calculated using
counterparty CapEx ratios, both of which are required to be reported
by credit institutions.
As the Trading book KPI and Fees and Commissions KPI are required
to be disclosed from 1 January 2026, the applicable rows for these
KPIs have not been included in the Summary table.

Summary of KPIs to be disclosed by credit institutions under Article 8 Taxonomy Regulation
|  | 2024
Million EUR | Total environmen tally sustainable assets (Based on Turnover) | KPI Based on Turnover KPI of the counterparty | Total environmen tally sustainable assets (Based on CapEx) | KPI Based on CapEx KPI of the counterparty | % coverage (over total assets) | % of assets excluded from the numerator of the GAR (Article 7 (2) and (3) and Section 1.1.2. of Annex V) | % of assets excluded from the denominato r of the GAR (Article 7 (1)) and Section 1.2.4 of Annex V)
Main KPI | Green asset ratio (GAR) stock | 440 | 0.40% | 790 | 0.72% | 45.28 | 36.85 | 54.72
| Total environmen tally sustainable assets (Based on Turnover) | KPI Based on Turnover KPI of the counterparty | Total environmen tally sustainable assets (Based on CapEx) | KPI Based on CapEx KPI of the counterparty | % coverage (over total assets) | % of assets excluded from the numerator of the GAR (Article 7 (2) and (3) and Section 1.1.2. of Annex V) | % of assets excluded from the denominato r of the GAR (Article 7 (1)) and Section 1.2.4 of Annex V)
Additional KPIs | GAR (flow) | 14 | 0.03% | 40 | 0.10% | 18.58 | 65.49 | 15.94
| Financial guarantees | 33 | 1.71% | 36 | 1.83% |  |  |
| Assets under management | 3,378 | 1.05% | 5,130 | 1.59% |  |  |

|  | 2023
Million EUR | Total environment ally sustainable assets (Based on Turnover) | KPI Based on Turnover KPI of the counterparty | Total environment ally sustainable assets (Based on CapEx) | KPI Based on CapEx KPI of the counterparty | % coverage (over total assets) | % of assets excluded from the numerator of the GAR (Article 7 (2) and (3) and Section 1.1.2. of Annex V) | % of assets excluded from the denominator of the GAR (Article 7 (1)) and Section 1.2.4 of Annex V)
Main KPI | Green asset ratio (GAR) stock | 159 | 0.13% | 355 | 0.28% | 47.69 | 40.84 | 52.31
Additional KPIs | Total environment ally sustainable assets (Based on Turnover) | KPI Based on Turnover KPI of the counterparty | Total environment ally sustainable assets (Based on CapEx) | KPI Based on CapEx KPI of the counterparty | % coverage (over total assets) | % of assets excluded from the numerator of the GAR (Article 7 (2) and (3) and Section 1.1.2. of Annex V) | % of assets excluded from the denominator of the GAR (Article 7 (1)) and Section 1.2.4 of Annex V)
| Financial guarantees | 31 | 2.01% | 25 | 1.60% |  |  |
| Assets under management | 3,366 | 0.79% | 6,055 | 1.42% |  |  |

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Social

Social
HSBC Continental Europe is committed to operating a responsible,
socially focused business. This goes beyond meeting regulatory
requirements to focus on building strong relationships with its
workforce and customers based on trust.
The Bank promotes an inclusive, safe and rewarding workplace
where employees treat others with dignity and respect. HSBC Group
and HSBC Continental Europe have adopted policies and practices to
safeguard the wellbeing of their workforce and support them in
achieving their personal and professional goals.
This approach goes hand in hand with resilience and allows the Bank
to focus on delivering products, services and education that support
customers and communities.
HSBC Continental Europe has identified ten social-related IROs
connected to inclusion, data privacy, training and skills development,
social dialogue, secure employment and work-life balance through its
DMA. The Bank's material negative impacts are considered industry
wide challenges in the region HSBC Continental Europe operates.
The following sections address these material IROs in turn, as well as
how the Bank is acting to build inclusion and resilience in its
business.

Social impacts, risks and opportunities

Impact / Risk / Opportunity | Description | Time Horizon | Value Chain Segment or Own Operations
Own workforce
Impact | Active social dialogue Through internal dialogue and engagement, facilitated by regular surveys and exchanges with management, HSBC Continental Europe ensures that employees' interests and concerns are effectively represented and incorporated into its strategy. This collaborative approach strengthens employee trust and wellbeing. | Short / Medium / Long Term | Own operations
Impact | Building an inclusive workforce As part of its core values of embracing inclusion and collaborative success, the Bank fosters a culture that promotes equal opportunities for all. This approach aims at ultimately enhancing a sense of inclusion across the organisation. | Short / Medium / Long Term | Own operations
Impact | Career growth and progression HSBC Continental Europe's high-quality training and skills development programmes have a positive impact on employees. These programmes boost employee confidence, enabling them to excel in their roles and advance in their careers. | Short / Medium / Long Term | Own operations
Opportunity | Productive and skilled workforce Strong training and skills development supports employee engagement and productivity, retention and recruitment, enhancing customer delivery and the Bank's competitive advantage | Short / Medium / Long Term | Own operations
Impact | Secure employment Ongoing business transformation may cause concerns about job security and increased stress for employees due to divestitures and changes in the operating model of HSBC Continental Europe. | Short Term | Own operations
Impact | Work-life balance HSBC Continental Europe is active in an industry where certain businesses are culturally exposed to high workload, which may have the potential to lead to extended working hours, resulting in insufficient rest, reduced morale, and a heightened risk of mental health issues among employees. | Short / Medium / Long Term | Own operations
Impact | Right to privacy Improper handling of data may result in exposure of employees' personal data, potentially leading to a negative impact on wellbeing or financial loss. | Short / Medium / Long Term | Own operations
Risk | Compliance with data protection laws Failure to comply with data protection laws such as the General Data Protection Regulation ('GDPR') may give rise to regulatory fines, penalties and reputational damage. | Short / Medium / Long Term | Own operations
Customers
Impact | Right to privacy Each person has a fundamental right to privacy, and any unauthorised access to personal information could lead to serious consequences such as identity theft, financial losses and reputational damage. Similarly, the unauthorised disclosure of business data could affect customers’ competitive standing and increase their vulnerability to fraudulent activities. | Short / Medium / Long Term | Downstream
Risk | Compliance with data protection laws Improper handling of data and lack of robust security measures may lead to potential data breaches or breaches of regulations. This may result in fines, penalties, reputational damage and loss of client trust which is crucial to the Bank's business model. | Short / Medium / Long Term | Downstream

Universal Registration Document and Annual Financial Report 2024 | 91

HSBC Continental Europe’s workforce
HSBC Continental Europe relies on its workforce to meet its strategic
objectives and deliver its purpose of ‘Opening up a world of
opportunity’. HSBC Continental Europe approach acknowledges that
its workforce is not only central to operational effectiveness, but also
a key determinant in realising its strategic objectives and sustaining
its business model. HSBC Continental Europe aims to create a
workplace that will help attract, retain and motivate employees so
they can deliver for customers across countries and territories.
In 2024, HSBC Continental Europe obtained a Top Employer
certification for HSBC Continental Europe as an entity and six of its
markets (France, Germany, Italy, Luxembourg, Poland and Spain),
delivered by the Top Employers Institute f or the commitment and
actions towards promoting an inclusive and supportive company
culture.
HSBC Continental Europe’s Human Resources (‘HR’) department
facilitates talent management, employees’ mobility, and defines
frameworks to support employee performance management, as well
as learning and development.
The Human Resources Function also partners with businesses and
functions to establish minimum standards for employee relations,
industrial relations, payroll and personnel administration, people
capabilities, hiring, and inclusion. It consists of approximatively 210
employees located primarily in the Paris hub, with some employees
in all HSBC Continental Europe countries.
Characteristics of HSBC Continental
Europe’s workforce
HSBC Continental Europe’s workforce comprises a diverse group of
individuals who contribute to its operations. The workforce consists
of employees (including fixed-term contracts and interns), internal and
external service providers, contractors, and consultants, which are
described in the section ‘Stakeholders in the value chain’ on page 63.

Breakdown of employees by gender, country and contract type
Metric | HSBC Continental Europe
Total number of employees by headcount | 8,421
By gender |
Male | 4,402
Female | 4,019
By country |
France | 3,739
Germany | 2,825
Malta | 962
Others | 895

Metric | HSBC Continental Europe
By employment type and gender |
Permanent employees | 7,173
Male | 3,612
Female | 3,561
Temporary employees | 1,248
Male | 790
Female | 458
Rate of YTD voluntary turnover in the reporting period | 4.6%

HSBC Continental Europe appli es HSBC Group’s global standards to
summarise its employees’ characteristics and considers country-
specific rules and regulations for each of the entities in its perimeter.
The metrics should be considered in the context of the following
information:
– HSBC Continental Europe’s employee turnover figures reflect the
sale of the French Retail Banking Network in 2024; 3,854
employees left HSBC Continental Europe in 2024, equating to a
2024 turnover rate of 53%. These figures are not representative of
the typical trends that HSBC Continental Europe faces and do not
reflect the underlying stability.
– The voluntary turnover rate is defined as the number of voluntary
employee leavers since the beginning of the year, as a percentage
of the average employee headcount for the year-to-date period.
The 2024 YTD employee voluntary turnover rate is 4.6 per cent,
representing a 2.9 points decrease compared to 2023.
– Employee numbers are based on active headcount data as of
31 December 2024.
– Temporary employees refer to interns, fixed-term contracts,
consultants and external service providers.
– All the countries, where number of employees are 50 or more
representing at least 10 per cent of the total employees, have
been disclosed separately.
– All employees who did not report their gender were incorporated
into the ‘Male’ gender category.
– Average numb er of employees during the 2024 financial year can
be found on 'Note 6 – Employee compensation and benefit' of the
financial statements.
Employee engagement
Employee engagement is an essential part of building a healthy
workplace at HSBC Continental Europe. The Bank encourages
employees to speak up directly and collectively about their
experiences at work. The leadership team and managers provide
employees with channels for dialogue and the means to speak.
Feedback from employees is discussed widely, including executive
leadership at HSBC Continental Europe, and informs decision making.
Policies are developed, based on the feedback received, to support
the wellbeing and interest of employees. HSBC Continental Europe
Head of Human Resources is accountable for employee engagement.

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Social

As part of the DMA, HSBC Continental Europe has taken into
consideration people that could be particularly affected by certain
IROs when it was deemed relevant. This includes consideration of
employees’ self-reported characteristics where legally permitted,
such as gender, age, or disa bilities. Such considerations were
primarily reflected in the severity assessment of impacts, based on
available employee data.
HSBC Continental Europe can analyse employee sentiment, as
captured by the Snapshot survey, according to business line,
function, geography, and certain employee characteristics, including
gender, age band, and if the employee is a parent or caregiver.
Further, under the sponsorship of a member of the leadership team,
the Employee Resource Groups (‘ERGs’) bring employees with
shared interests together while offering a way for HSBC Continental
Europe to understand employees' needs and views.
Direct engagement with employees
‘Snapshot’ survey
The annual ‘Snapshot’ survey is the primary way in which HSBC
Continental Europe captures employee feedback. The survey allows
the Bank to hear directly from its workforce, evaluate employee
engagement, and assess employees’ perception of key themes
relating to strategy, communication, customer experience, culture,
working methods and to track and assess the effectiveness of the
actions and initiatives. It is centrally coordinated by the Group
Employee Listening team which sits in the Group Human Resources
function.
HSBC Continental Europe tracks the effectiveness of employee
engagement through the Snapshot survey response rate, as well as
through the level of positive responses to questions related to
employees’ motivation. The 2024 survey achieved an increased
response rate by 13 points, up to 70 per cent in HSBC Continental
Europe. Insights from the survey are shared with and discussed by
the Executive Committee to inform strategic plans and are provided
directly to people managers, when there are more than 10 responses
on their teams.
Human Resources also supports teams to have conversations about
their feedback through the provision of interactive dashboards, action
planning tools and discussion guides.
Performance and reward survey
HSBC Continental Europe complements its Snapshot survey with an
annual performance and reward survey. The survey captures
feedback relating to the annual performance of employees and pay
review cycle and provides valuable insight into how well the Bank is
meeting employee needs and expectations on compensation,
development and professional growth.
Employee Resource Groups
HSBC’s ERGs foster an inclusive culture and contribute significantly
to the experience of many employees. They operate at different
scales, including well established chapters across HSBC Continental
Europe markets, and are led by employees with a range of shared
values, identities, interests and goals. Most groups are sponsored by
a member of HSBC Continental Europe’s leadership team, ensuring
there is a direct link between leadership and employees. ERGs are
governed by a global charter but yet engage in initiatives and events
targeted at the regions and countries in which they operate.
Additional engagement channels
Employee feedback is additionally captured through several ad hoc
channels:
– ‘Exchange’ programme: agenda-free consultation meetings where
employees are able to discuss any issues directly with a
representative of senior leadership.
– Voluntary inclusion survey: voluntary survey in France and
Germany that captures employee sentiment about inclusion and
aligns to regulatory requirements.
– Targeted listening activities: feedback sessions focused on key
moments in employees’ careers, such as the onboarding
experience from the perspective of new joiners and hiring
managers.
Engagement and communication through
representative bodies
HSBC Continental Europe encourages active social dialogue with
workers’ representative organisations to ensure that employees’
perspectives and concerns are heard. The Bank considers that open
social dialogue helps bolster employee wellbeing, recruitment,
retention and satisfaction.

Being a responsible employer
The HSBC Group has set policies and procedures that define the
minimum control requirements with which all employees are required
to comply to ensure that the organisation is managed effectively and
safely. They are aligned with the Bank’s purpose, built taking into
account employee interests where possible and implemented in
compliance with local work-related requirements and practices.
Unless otherwise stated, these policies and associated procedures
are contained in Global Functions and Global Business Functional
Instruction Manuals which are available to all HSBC Continental
Europe employ ees on the intranet.
HSBC Continental Europe adheres to applicable laws, rules and
regulations across countries in which it operates, as well as policies
defined at HSBC Group and local level.
People Management Policy
The HSBC Group People Management (‘PM’) Policy sets out the
practices that managers must follow to support their employees and
help maintain an environment where employees can thrive. The PM
Policy sets expectations relating to matters such as inclusion, as well
as learning and development.
This policy applies globally to all global businesses, functions and
geographies. All HSBC Group employees and other worker groups
have a responsibility to adhere to and enforce this policy. The Group
Chief People and Governance Officer has oversight of the policy
across all global business and functions. The HSBC Continental
Europe Head of Human Resources is accountable for its
implementation across the Bank.
To build and safeguard HSBC’s desired culture, people managers are
expected to:
– Ensure that the workplace environment reinforces the Bank's
values to enable everyone to be at their best, to achieve its
strategic objectives and serve the needs of its customers,
employees and communities.
– Have a representative and inclusive workforce that will help the
Bank adapt to achieve its strategy and purpose.
– Listen to employee feedback, identify areas of improvement and
address issues with appropriate action.

Universal Registration Document and Annual Financial Report 2024 | 93

To support the implementation of this policy, controls are put in
place. Such controls include the ‘Pay Equity Review’, which is
performed to ensure pay decisions are fair and free from bias across
under-represented groups of employees.
HSBC Human Rights Statement
HSBC Continental Europe adheres to HSBC Group’s Human Rights
Statement, which describes the ways in which HSBC Group seeks to
meet its responsibility to respect human rights. HSBC Group’s
approach is guided by the United Nations Guiding Principles on
Business and Human Rights (‘UNGPs’) and the OECD Guidelines for
Multinational Enterprises on Responsible Business Conduct.
As per the HSBC Hu man Rights Statement, HSBC Continental
Europe requires all its employees to treat others with dignity and
respect. The Bank has zero tolerance for harassment or u nlawful
discriminatio n, including discrimination connected to age, race,
ethnicity or nationality, religion or faith, caste, skin colour, mental or
physical health conditions, disability, pregnancy, gender, gender
expression, gender identity, sexual orientation, marital status or other
domestic circumstances, employment status, and working hours or
other flexible working arrangements.
HSBC Continental Europe’s employees are made aware of their
employment rights through a variety of channels, including written
employment contracts and policies, and procedures in employee
handbooks and on employee websites. Employees of the Bank are
trained on a range of human rights-related topics, including but not
limited to inclusion, b ullying and harassment, and data privacy. In
addition, employees receive regular training as part of the HSBC
Group’s broader financial crime control framework, covering anti-
money laundering, anti-bribery and corruption, and financial sanctions
and export controls. Each of these intersects with human rights risk.
HSBC Continental Europe addresses human rights grievances and
provides suitable means for affected individuals or communities to
communicate concerns through its speak-up channels. The Bank
does not tolerate retaliation against anyone who raises concerns and
takes appropriate action in cases where employees act in violation of
the Human Rights Statement. See the ‘Whistleblowing and speak-up
culture’ section on page 102 for further details on speak-up channels.
Health and Safety Policy
HSBC Continental Europe is devoted to providing a safe and healthy
working environment for all its workforce abiding by the HSBC
Group's Health and Safety Policy. H SBC Continental Europe deploys
the policy at best in a balance with local regulations and to meet legal
requirements wherever it operates and, where reasonably practical,
exceed them.
Health and safety performance is subject to ongoing monitoring and
assurance to ensure the Bank maintains compliance with applicable
laws and regulations.
Everyone at the Bank has a responsibility for helping to create a
healthy and safe working environment. Employees are expected to
take ownership of their safety and are encouraged and empowered
to report any concerns.
Chief Operating Officers have overall responsibility for ensuring that
the correct policies, procedures and safeguards are put into practice.
HSBC Continental Europe is committed to supporting positive mental
health for its people. Every employee has a responsibility to help
make HSBC a workplace where people feel supported and are
empowered to take ownership of their own mental health. HSBC
Continental Europe is committed to meeting recognized good
practice standards. The Bank's approach to employee wellbeing is in
line with the World Health Organization (‘WHO’) Healthy Workplace
Model, and where available, local good practice.
Supplier Code of Conduct
HSBC Continental Europe strives to ensure that contractors,
consultants and external service providers employed by third parties
act in accordance with the Bank’s culture and strategic priorities. This
is primarily managed through the Supplier Code of Conduc t, a Group-
wide code which defines the minimum standards to all entities
globally. Commitment to this Supplier Code of Conduct is formalised
with clauses in supplier contracts which support the right to audit and
act if breach is discovered. The Bank's su ppliers are required to
reiterate their adherence to this code at regular intervals or at least
when renewing the contract. Suppliers unable to approve the Code of
Conduct are required to provide HSBC Continental Europe with an
eligible alternative. At the end of 2024, 97.8 per cent of HSBC
Continental Europe's suppliers have approved the Supplier Code of
Conduct.
Fostering social dialogue
HSBC Continental Europe is committed to fostering social dialogue
across its organisation. The Bank ensures that employee wellbeing,
interests and concerns are well represented and integrated into
appropriate initiatives through active social dialogue with employee
representatives bodies.
Employment Practices and Relations Policy
The HSBC Group’s overarching Employment Practices and Relations
(‘EPR’) Policy defines the minimum standards with which all
employees are required to comply to meet regulatory obligations and
fulfil the Bank’s responsibility to its workforce. The EPR Policy sets
out mandatory workforce requirements, including but not limited to
inclusion requirement s and minimum pay thresholds. The EPR Policy
also ensures that poor employee behaviour is effectively managed.
The EPR policy additionally commits HSBC Continental Europe to
respecting individuals’ right to freedom of association and to forming
recognised employee representative bodies, in compliance with local
legal requirements and recognised agreements. Where changes in
strategy or in its operations may give rise to adverse impacts on
employee wellbeing, the Bank engages in appropriate consultation
with employees and representative bodies to find appropriate
solutions.
The EPR policy applies to all geographies, global businesses and
functions, employees and worker representative groups.

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Social

The Group Chief People & Governance Officer has oversight over the
implementation of the EPR Policy globally.
In addition, HSBC Continental Europe implements country-level
policies providing for market-specific arrangements.
– In France, an agreement has been signed that defines the
framework for setting up employees representative bodies, their
remit, and resources, and has been supplemented by an
agreement on trade union organisations, which also defines
measures to support and enhance the career paths of employees
representatives.
– In Poland, a policy is in place which promotes social dialogue
between employees and management by encouraging employees
to raise concerns through employee representatives.
The HSBC Continental Europe Head of Human Resources has
oversight of the implementation of the policy for HSBC Continental
Europe, and the implementation accountability at country level is with
the local Head of Human Resources.
Approach to social dialogue
HSBC Continental Europe maintains a structured approach to social
dialogue across its European offices in compliance with all applicable
local union and employee representation-related requirements.
The Bank engages in social dialogue with relevant employee
representatives across all countries within HSBC Continental Europe.
Meetings are held in compliance with local requirements.
The overarching aim of these sessions is to provide clear
communication channels for employees to communicate with senior
management.
The Bank is committed to continue engaging in constructive social
dialogue to ensure that employee perspectives and experiences
receive appropriate consideration.
European Works Council
HSBC Continental Europe and its employees reached an agreement
to establish a European Works Council (‘EWC’) to provide
representation for the Bank’s employees in addition to existing
employee representative bodies. The EWC is informed and consulted
about significant transnational matters such as the economic and
financial situation of the Bank and its subsidiaries. The EWC has
access to data concerning production and sales within the perimeter
of the EEA Member States where HSBC Continental Europe
operates. T he EWC does not aim to replace existing employees'
representative bodies at the Bank and bargaining unit level
throughout Europe, which continue to operate in accordance with
local legal requirements. The EWC does not interfere with bargaining
and consultation procedures established by existing representative
bodies.
Metrics
In 2024, 76 per cent of employees in HSBC Continental Europe’s
workforce are covered by local collective bargaining agreements and
81 per cent are represented by local workers’ representatives.

Percentage of Total employees covered by collective bargaining agreements and workers’ representatives.
Metric | HSBC Continental Europe (%)
Total employees covered by collective bargaining agreements |
By EEA country: France | 100
By EEA country: Germany | 44
By EEA country: Malta | 99
By EEA country: Others | 46
Total employees covered by workers’ representatives |
By EEA country: France | 100
By EEA country: Germany | 44
By EEA country: Malta | 99
By EEA country: Others | 91

Building an inclusive workforce
HSBC Continental Europe strives to create an equal opportunity
culture that helps to foster inclusion and prevent discrimination.
HSBC Continental Europe uses the policies and guidelines
established by the HSBC Group as the foundation of its efforts. The
key element of creating an equal and supportive environment for all is
the People Management Policy (see the ‘Being a responsible
employer’ section, page 92). It defines the critical role managers are
expected to play in fostering a values-driven, inclusive workplace,
supporting strategic objectives, and actively addressing employee
feedback to improve performance and meeting the needs of
customers, employees and communities.
The procedures and controls which support the implementation of
this policy require HSBC Continental Europe to periodically review its
strategy and tailor local implementation efforts to the needs and
priorities of its people and any jurisdictional requirements, and
aspirations, whilst also remaining consistent with HSBC Group’s
approach. This policy is supplemented by the following policies which
address more specific matters.
Vulnerable Employees Policy
As part of HSBC Continental Europe ambition to fostering an inclusive
workplace, the Bank complie s with Directive 2000/78/EC, which
establishes a general framework for the equal treatment of those
with disabilities in employment and occupation, fostering an
environment where all employees are treated fairly and equitably.
HSBC Continental Europe does this through the HSBC Group
Vulnerable Employees Policy, which outlines the necessary steps to
be taken to maintain a safe work environment for those with impaired
movement, hearing or vision, who are more at risk in the work
environment. Where a new or existing member of employee informs
the Bank of a disability or a medical condition that may pose a risk to
their health and/or safety in the workplace, managers must arrange
an assessment of the hazards to which they are exposed and
determine a safe system of work for them. The assessment is
tailored to the individual in question, establishing safe systems of
work, and also including the completion of a personal emergency
evacuation plan.

Universal Registration Document and Annual Financial Report 2024 | 95

The Group Chief Operating Officer is responsible for the
implementation of this policy globally, supported by the HSBC
Continental Europe Chief Operating Officer.
Digital Accessibility Policy
All internal and external facing digital applications that are created or
updated by HSBC Continental Europ e must c omply with the HSBC
Group Accessibility Standards. This ensures that digital experiences
and applications comply with local disability, discrimination, and
equality regulations. This policy is owned by the Group Head of
Digital Experience & Accessibility.
Training
In recognition of the importance of awareness as the first step to
create an inclusive environment, HSBC Continental Europe continues
to educate its workforce on unconscious bias.
The primary training delivered by the Bank on this topic is 'The Code
of Conduct & Me' which was launched in 2023 to raise awareness of
workplace bias and discrimination at work. This is reinforced by the
People Manager Excellence Programme, which focuses on the role
and expectations of managers, how to design and organise work,
how to nurture a productive team environment, and covers the
importance of an inclusive management within the 'Your People' and
'Your Team' modules.
In addition, the Bank runs regular inclusion workshops to enhance
mutual understanding, cultural knowledge and support employees in
navigating local nuances. For example, Germany focused on how to
successfully balance parenting and work life, which is an important
topic in a country where many mothers work part-time due to their
work and family structure.
France has set up 'La Fresque de la Diversité', which is a collective
intelligence workshop that allows employees to experiment with the
cognitive mechanisms that are present in their relationships with
others from an inclusion perspective.
Employee-led initiatives
The 8 Employee Resource Groups present across HSBC Continental
Europe actively contribute to maintaining an inclusive culture.
Collectively, they have identified priorities areas: sexual orientation,
gender, support for working parents, ethnicity, disability, and
intergenerational inclusion, and focus their activities in the region on
these priority topics where it is compliant to local regulations.
The effectiveness of these initiatives is tracked through the Snapshot
and Inclusion surveys.
Setting ambitions for inclusion
The HSBC Group has set an ambition of having 35 per cent of senior
leadership positions held by women in 2025 following the
achievement of its previous ambition of reaching 30 per cent by
2020. HSBC Group is on track to meet its 2025 ambition, with 34.6
per cent of senior leadership roles held by women at the end of 2024.
HSBC's Group Inclusion team distribute individual ambitions among
Group Executive Committee members as part of their annual
performance scorecards. Such ambitions are defined i n each
performance scorecard by analysing current women representation
levels, team size, geographical composition, and industry trends. This
approach aligns with practices in the financial services sector.
To contribute to HSBC Group’s ambition, HSBC Continental Europe
equally has an ambition for greater representation of women in senior
leadership positions. In 2024, HSBC Continental Europe achieved
28.8 per cent representation of women in senior leadership roles
(exceeding its ambition by 0.7 points.).
Metrics
HSBC Continental Europe monitors the following metrics.

Gender representation in senior leadership
Metric | HSBC Continental Europe
Male (Number) | 451
Male (%) | 71.2
Female (Number) | 182
Female (%) | 28.8

HSBC Continental Europe has applied the HSBC Group’s global
standards to summarise its gender representation metrics. The
metrics should be considered in the context of the following
information: All employees who have not declared their gender have
been incorporated into the ‘Male’ gender category. Senior leadership
is considered GCB 3 and above in the Bank 'Global Career Band'
structure.

Employees by age group | HSBC Continental Europe
Metric | Number | %
By age distribution |  |
<=29 | 708 | 10%
30-49 | 3,996 | 56%
>=50 | 2,469 | 34%

HSBC Continental Europe has applied the HSBC Group’s global standards to summarise its age distribution metrics. The metric is reflective of
permanent employees only.

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Gender pay gap and remuneration ratio
Based on the population covered under the annual pay review cycle
(a headcount of 7,292), the Bank has identified, on fixed pay, a 25 per
cent gap on median and a 29 per cent gap on mean and, on t otal
Compensation, a 27 per cent gap on median and a 36 per cent gap on
mean. This is driven by the higher proportion of men in senior roles in
Global Banking and Markets, Asset Management and Private Bank.
There are also several senior, head office roles held by men.

Gender pay gap distribution
HSBC Continental Europe | Fixed pay | Total compensation
Global Career Band | Total | Male | Female | Mean | Median | Mean | Median
GM | 2 | 2 | 0 |  |  |  |
MD | 122 | 97 | 25 | 20% | 11% | 19% | 11%
3 | 520 | 361 | 159 | 10% | 9% | 15% | 16%
4 | 1804 | 1119 | 685 | 12% | 10% | 14% | 13%
5 | 2236 | 1177 | 1059 | 8% | 9% | 8% | 8%
6 | 1531 | 633 | 898 | 9% | 12% | 10% | 9%
7 | 867 | 233 | 634 | (1)% | 3% | (2)% | 3%
8 | 210 | 73 | 137 | (9)% | (16)% | (9)% | (15)%
Overall gap | 7292 | 3695 | 3597 | 29% | 25% | 36% | 27%

All employees in the pay review at 30 th September 2024 were considered in the gender pay gap and total compensation ratio calculations. The
gender pay gap calculation only includes employees who had disclosed their gender by this date. The annual remuneration ratio of the highest
compensation package, which is of HSBC Continental Europe’s Chief Executive Officer to the median annual remuneration of all employees is
14 at fixed pay and 30 at total compensation level.

Developing skills and creating opportunities
HSBC Continental Europe aims to equip employees with the skills
that they need to perform well in their role, enhance their career
development and meet their professional goals. This approach is
fundamental to fostering a high-performing, motivated workforce and
driving the Bank’s long-term success. HSBC Continental Europe
primarily supports employees’ personal and professional growth
through high-quality training and learning programmes.
HSBC Continental Europe’s efforts to provide continuous training and
skills development opportunities for all employees are governed by
the People Management Policy (see 'Being a responsible employer'
on page 92). People managers are responsible for conducting a
capability gap analysis to identify and resolve learning needs,
implement performance and development processes to support
development and carry out talent reviews.
Mandatory Training
Mandatory training is the primary mechanism for the Bank to
communicate minimum standards for safe and efficient operations
(see ‘Business Conduct’ section on page 101). All employees,
consultants, contractors and service providers must complete this
training on an annual basis to maintain regulatory and statutory
compliance.
The Procedure for Managing and Completing Mandated Learning
Activities guides the development, deployment and governance of
this training. The Procedure lays out the roles and responsibilities of
different global functions, including but not limited to Group Human
Resources and Risk Stewards, to ensure the timely and effective
provision of necessary resources to all employees. At HSBC Group
level, t he Group Chief People & Governance Officer oversees this
procedure across all business and functions. HSBC Continental
Europe’s Head of Human Resources is accountable for the
implementation of this procedure in HSBC Continental Europe.
Effectiveness of the procedure is monitored through training
completion rates, with each business and function having on-demand
access to completion data. Managers can track their teams’ progress
through a dedicated dashboard and are responsible for reminding
their direct reports to complete mandatory training on time and to
follow escalation processes for non-compliance.
Learning platforms
HSBC Continental Europe’s workforce has access to a number of
learning platforms, through which they can explore a wide range of
training and development materials and courses and manage their
own professional development and career goals. These include,
HSBC University, Degreed, Careers Academy and the HSBC Talent
Marketplace.
Future Skills and People Management
Excellence Programme
HSBC Continental Europe has rolled out two specialist training
programmes designed to strengthen the adaptability and agility of its
workforce. The Future Skills curriculum provides skills that help to
enable employees, with a particular focus on soft and transversal
skills. The People Manager Excellence Programme was redesigned in
2023 to provide tailored support to managers at all levels to develop
managerial skills and foster growth and inclusive leadership.
HSBC Continental Europe continues to encourage employees to use
the integrated Degreed training platform and take time regularly to
explore these learning opportunities to support their self-
development.
Mentoring programme
A mentoring programme is available, allowing employees to connect
with another employees from across the HSBC Continental Europe
network. The scheme has been in place since 2020 and matches
participants with a senior leader, based on their stated learning or
development objectives.

Universal Registration Document and Annual Financial Report 2024 | 97

The relationships developed as part of this programme increase
employee engagement and support employees’ career prospects,
which may improve employee retention. In addition, dedicated
mentoring programs are launched to develop and engage targeted
population across Business and Functions.

Creating secure employment for
employees
HSBC Continental Europe makes strategic decisions on its business
model, including resource allocation, to ensure the best possible
support for its customers whilst aligning to its strategy. The Bank
recognises that any changes in the business or operating model may
have an impact on employees' physical, mental and financial
wellbeing.
HSBC Continental Europe follows the G roup-wide Employment
Practices and Relations Policy and all applicable local employment
requirements to minimise adverse impacts on employees (see the
‘Fostering social dialogue’ section on page 93 for additional details on
how the Bank accounts for employee concerns).
The Collective Redundancies Directive (98/59/EC) and the Transfer of
Undertaking Directive (2001/23/EC), require HSBC Continental Europe
to consult with employees' representatives prior to making decisions
on redundancies to ensure that employee feedback is considered and
that necessary adjustments are made.
HSBC Continental Europe has implemented actions to prevent any
potential negative impact of business transformation on affected
employees:
– Where potential business transformation may result in a potential
negative impact on employees, HSBC Continental Europe would
implement actions to anticipate and, where necessary, mitigate
the potential impact.
– The Bank would proactively communicate with employees about
potential upcoming changes, ensuring they remain well-informed
and prepared. This approach fosters a culture of trust and open
dialogue.
– HSBC Continental Europe would also be committed to providing
employees with support and resources to navigate potential
transformation. Support measures would be developed through
collaborative discussions with employee representatives, working
groups, and consultations with managers and employees,
ensuring a comprehensive and inclusive approach.

Promoting work-life balance
HSBC C ontinental Europe is active in an industry where certain
businesses are culturally exposed to high workload. As a result,
HSBC Continental Europe's workforce may face challenges in
balancing workload and personal time. The Bank seeks to mitigate
the potential negative physical and mental health effects of
insufficient personal time an d recovery for employees.
HSBC Continental Europe is committed to supporting employees in
striking a balance between their work and personal life. The Bank has
embedded hybrid working and flexible leave policies in its business.
Policies relating to working models can be found on the internal
website. The benefits offered in these policies, including family-
focused benefits, parental leave and flexible working arrangements,
often exceed local minimum regulatory requirements.
Annual surveys are used to monitor employees’ perception of these
benefits. The Bank defines action plans when required to align with
the needs of the workforce.
Policies to support work-life balance
Parental leave
HSBC Group’s Employment Practices and Relations Policy ensures
that all employees are entitled to and have access to maternity and
paternity leave. HSBC Continental Europe abides by the policy and
recognises the importance of family and complies with, or in some
jurisdictions (such as France and the Netherlands) often exceeds, the
minimum requirements of the Directive on Work-Life Balance for
Parents and Carers (Directive 2019/1158), which consists of the
following:
– Each employee has an individual right to four months of paid
parental leave.
– Fathers are entitled to at least 10 working days’ paternity leave
when their child is born.
– Pregnant women are entitled to at least 14 weeks’ maternity leave
before and/or after birth, including at least two compulsory weeks
to be taken after birth.
HSBC Continental Europe Head of Human Resources is accountable
for the implementation of parental leave policies across the Bank.
Flexible working and employee assistance
HSBC Continental Europe actively fosters and promotes a healthy
balance between professional and personal responsibilities through
its flexible working hours, family support, caregiver programmes.
The Bank also provides leave for other life events, such as exams and
moving house. HSBC Continental Europe aims to support the mental
health and wellbeing of its employees through hybrid working
conditions.
HSBC Continental Europe aims to create an environment where
employees feel empowered to manage their time effectively. The
Bank has adopted the following actions:
– Annual email campaigns to remind employees of their core leave
entitlements, e.g. 10 consecutive days in France, and encourage
regular breaks to promote rest and recovery.
– Learning programmes that equip employees with the skills to
succeed in flexible work environments, fostering collaboration,
productivity, and a strong organisational culture. These
programmes are accessible to managers and employees via the
Degreed platform.
– The HSBC Continental Europe’s Head of Human Resources is
accountable for implementation of flexible working arrangements
across the Bank.

Protecting customer and employee
data
In order to deliver its full suite of products and services to its
customers, the Bank handles vast amounts of personal and business
data.

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Social

Protecting this data is fundamental to the Bank’s duties to its
customers, ensuring both their privacy and the integrity of its
operations. This responsibility reflects a broader challenge across the
industry where data protection has become crucial to maintaining
trust and resilience across an increasingly complex regulatory and
technological environment.
HSBC Continental Europe acknowledges the potential impact on its
customers that could arise from data privacy breaches. This could be
in the form of identity theft, financial loss, reputational damage,
security threats and possible discrimination from a breach of
customers' personal data, as well as affecting customers’
competitive position and increasing the risk of fraud from leaked data.
HSBC Continental Europe serves a large number of customers across
the European Union and other regions, requiring the processing of
large amounts of personal information, and recognises the
responsibility that comes with this.
Data privacy is not a matter limited to customer relationships, but one
that could also impact the Bank's workforce. Improper data
protection or data management risks the exposure of personal or
private information, which could affect an employee’s psychological,
emotional and even financial wellbeing.
HSBC Continental Europe proactively integrates data privacy
considerations into its initiatives, projects and processing activities,
formalised through Data Privacy Impact Assessments which evaluate
potential risks and identify appropriate safeguards to mitigate any
negative impacts on individuals. By embedding data privacy principles
across core operations, the Bank ensures that the protection of
personal information, and responsible data management remain
central to its long-term business strategy.
Given the vital importance of careful data management and
protection to the entire organisation, the management of data privacy
matters is governed centrally by the HSBC Group. HSBC Continental
Europe adheres to the stringent data protection policies and
guidelines set by the HSBC Group, as well as complying with all
applicable EU and local regulations and laws on privacy and protection
across its entities. This includes the General Data Protection
Regulation. All data protection policies are designed to equally
safeguard the interest of employees and customers.
Unless otherwise stated, the global policies and procedures below
are contained in Global Function and Global Business Functional
Instruction Manuals available on the intranet to all HSBC Continental
Europe’s employees and on all its websites for accessibility to its
customers.
Governance of data risk management
All business must be conducted in compliance with the HSBC Data
Privacy Principles, which are outlined in the Group Code of Conduct
(see ‘Corporate culture’ section for more details, page 101).
The Principles define the fundamental standards of transparency,
fairness and lawfulness which must be upheld when handling and
using any data collected, generated, held and processed by the Bank.
This includes information about any and all transactions in which the
Bank is involved, including but not limited to information relating to
customer accounts and matters relating to business or personal
affairs, and also extends to its dealings, procedures, policies,
decisions, systems and other confidential matters. Any breaches,
including unauthorised 'browsing' of accounts, can lead to disciplinary
action, including dismissal.
HSBC Continental Europe has three lines of defense that work
together to manage risks related to data privacy: firstly, the Data and
Architecture Office, followed by the Data Protection Officers and the
Data Privacy Risk Stewards and finally Internal Audit Function.
Group Data Risk Policy
HSBC Continental Europe adheres to the HSBC Group Data Risk
Policy in order to mitigate the risk of a data processing failure or any
breach of these principles, on either the part of the Bank or a third-
party. The policy sets out key data processes and controls that all
markets, lines of business, functions and legal entities must put in
place to reduce the likelihood and impact of risk e vents. mitigate the
risk of potential legal and financial repercussions and ultimately
reinforce the trust that customers, employees, and remaining
stakeholders place in HSBC Continental Europe.
The Group Head of Regulatory Data Enhancement is responsible for
this policy at a global level. In addition, each local line of business
within HSBC Continental Europe has identified an individual
responsible for its effective implementation.
Data privacy risk is one of the four data risks covered by the Data
Risk Policy. The Control Framework, specific to data privacy, covers
six key areas: data processing, internal and external data transfers,
privacy impact assessments, consent and choice, privacy notices and
the rights of individuals. It details requirements for risk assessments
which apply to all high-risk processing activities, in adherence to the
GDPR requirements, as well as the Bank’s approach to regular audits
and testing.
Electronic Communications Policy
The HSBC Group Electronic Communications Policy, which applies to
all employees, requires all written electronic business
communications to be sent through approved channels or
applications which have an appropriate level of security. This policy
sets the minimum standards for all devices regardless of device type
or ownership, the location of the device or the method of network
connection used to access the platform on which the electronic
communication is transmitted.
Details of what is permitted by employees when undertaking written
electronic business communications on approved business platforms,
whether internal, with a customer or with a third party are outlined in
the policy.
All HSBC Continental Europe lines of business and functions have a
responsibility to implement and maintain relevant procedures and
controls to identify, monitor and manage the risk associated with
electronic communications. This includes the exclusive use of secure
platforms to undertake business communications, to lower the risk of
data being compromised and decrease the likelihood of a privacy
breach.

Universal Registration Document and Annual Financial Report 2024 | 99

These policies are also designed to fulfil the Bank’s legal
requirements to record, retain and produce electronic
communications and where necessary, enable it to disclose them to
regulators, law enforcement, courts and/or other third parties.
The Group Head of Regulatory Compliance is responsible for both
polices within the HSBC Group while the HSBC Continental Europe’s
Chief Compliance Officer is in charge of its implementation across
the Bank.
Keeping individuals informed of their
rights
Privacy notices
HSBC Continental Europe ensures that individuals are fully informed
about the potential impact that sharing personal data may have on
their right to privacy. The primary channel of communication is
through the use of privacy notices and statements shown directly to
data subjects, including individual customers, employees, external
staff and job candidates, before they share any information with the
Bank.
This can be in the form of pop-up notifications and banners, a link to
the full privacy policy, or a written privacy statement. HSBC
Continental Europe’s commitments to data privacy are also publicly
available through its website.
These statements contain valuable information about how the Bank
collects, uses and protects personal data, its processing standards,
and how individuals can control their information and exercise their
data privacy rights.
As a matter of compliance, both the Data and Architecture Office and
the Legal Privacy and Data Protection Officers are responsible for
ensuring these statements are up to date and visible to all data
subjects.
Handling data related incidents
HSBC Continental Europe strives to prevent data-related incidents,
but recognises that the risk cannot fully be eliminated.
Therefore, in case of a data breach or violation, HSBC Continental
Europe has a process in place to evaluate the severity of the incident,
in line with its legal and regulatory requirements, and where
necessary, to notify data protection authorities.
This involves an assessment of the severity of the breach, which
determines whether regulators and individuals need to be notified,
the communication of the breach to senior internal stakeholders and
the definition, implementation and oversight of a remedial action plan
and the oversight of the action plan’s operation.
The number of data subject requests which misses the response
Service Level Agreement and the number of regulatory personal data
breaches notifications that misses the Service Level Agreement with
zero appetite threshold are continuously monitored to assess the
effectiveness of the Bank’s actions. During 2024, there was no
significant data breach that led to a high residual risk for the private
life of an individual.
HSBC Continental Europe engages with individuals who want to
exercise their GDPR-related rights, to ensure they receive the correct
information in a timely manner. To raise a request or specific concern,
individuals can contact the HSBC Continental Europe Data Protection
Office directly, by post or through a dedicated email address, the
details of which are shared in all public privacy notices and
statements. Clients are also able to contact any relationship manager
with their concerns or queries.
The Bank must respond to individual customer requests within 30
days. Failure to do so will breach the response timeline imposed by
the GDPR and may lead to regulatory actions. HS BC Continental
Europe's compliance with the 30 day timeline is closely monitored by
its Data Protection Officer.
To ensure these requirements are met, and that HSBC Continental
Europe is sufficiently providing for the rights of all individual data
subject, every line of business has assigned a control owner who is in
charge of monitoring and reporting the number of requests received
and confirming whether all of them were addressed effectively and in
a timely manner, as required by law.

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Governance

Governance
HSBC Continental Europe’s success relies on good business conduct,
including a culture of doing the right thing, high standards of
accountability, integrity in financial markets, and resilience across its
digital, physical, and operational footprint. Good business conduct is
about collectively taking responsibility and individually being
accountable and recognising the real impact the Bank’s actions have
on customers and the financial markets in which it operates.
HSBC Continental Europe requires that its employees act with the
utmost integrity and honesty in all professional interactions with
colleagues, customers, regulators, and vendors in the work
environment, at social or corporate events, or when using electronic
communications, technology or social media platforms.
The Bank asks its employees and associated persons to speak-up
about breaches of its code of conduct or any unethical or illegal
behaviour where it is lawful to do so. Directors and employees must
act to deter, detect, and protect against such behaviours and report
all instances where they know or have a reasonable concern that an
offence has been committed.
HSBC Continental Europe has identified nine material business
conduct related IROs through its DMA, which are connected to its
own operations and its downstream value chain. The following
subsections address these material IROs as well as how the Bank is
acting to promote high standard of governance.

Governance impacts, risks and opportunities

Impact / Risk / Opportunity | Description | Time Horizon | Value Chain Segment or Own operations
Impact | Responsible corporate culture HSBC Continental Europe is focused on operating a strong and sustainable business that puts the customer first, values good governance, and gives its stakeholders confidence in how the HSBC Group does what it does. This in turn has a positive impact on customers, employees and society. | Short / Medium/ Long Term | Own operations
Risk | Conduct risk Ineffective conduct risk management may result in financial, regulatory and reputational risks. | Short / Medium/ Long Term | Own operations
Opportunity | Speak-up culture HSBC encourages a speak-up culture where individuals can raise any concerns about wrongdoing or unethical practices, thereby upholding the Bank's commitment to integrity and responsible business conduct. | Short / Medium/ Long Term | Own operations
Impact | Anti-bribery and corruption Preventing corruption and bribery is essential. Failure to do so may negatively affect economic growth and standards of living, and undermine long-term sustainable development and social equality. | Long term | Own operations
Impact | Sanctions compliance (Entity Specific) Compliance with international sanctions and export controls is critical to the role that HSBC Continental Europe plays in the financial system. Failure to do so may exacerbate human rights violations or conflicts, and enable oppressive regimes at a human cost. | Medium/ Long Term | Own operations
Impact | Anti-money laundering (Entity Specific) As a financial institution, implementing robust anti-money laundering policies and procedures is essential. Without such measures, the broader economic and political landscape may be compromised, allowing illicit activities to thrive. | Medium/ Long Term | Own operations
Risk | Regulatory and reputational risk from financial crime HSBC Continental Europe operates in a complex regulatory framework, necessitating strict adherence to numerous laws and regulations designed to prevent financial crime. Failure to achieve effective compliance may result in adverse regulatory, financial, and reputational consequences. | Medium/ Long Term | Own operations
Impact | Cybersecurity (Entity Specific) As cyber-attacks continue to evolve, failure to protect HSBC Continental Europe's operations may result in the loss of sensitive data, disruption for the Bank’s customers and its business, or financial loss. This may have a negative impact on the Bank’s customers and its reputation, among other risks. | Short / Medium/ Long Term | Downstream
Risk | Cybersecurity (Entity Specific) The availability, security and stability of core systems and data are important preconditions for HSBC Continental Europe to fulfil its strategy. The Bank may face potential operational disruptions, financial penalties, and reputational damage if it fails to maintain adequate cybersecurity controls or comply with evolving regulations. | Short / Medium/ Long Term | Own operations

With regards to business conduct matters, HSBC Continental Europe
followed a qualitative approach to assessing its material topics and
IROs, in line with that described in ‘The double materiality
assessment process’, page 57. This involved SME input from various
business functions, Risk Stewards and the First Line of Defence.
Unless otherwise stated, the business conduct assessment process
and its outcomes apply to all the markets in which HSBC Continental
Europe operates, and all activities undertaken by the Bank in the
reporting period. Where possible, HSBC Continental Europe
e valuated potential future risks and opportunities over short-,
medium- and long-term time horizons.

Universal Registration Document and Annual Financial Report 2024 | 101

Business conduct
HSBC Continental Europe aims to promote good business conduct in
all that it does. In order to establish good governance across all its
activities, policies and actions are largely centralised at HSBC Group
level and implemented by HSBC Continental Europe. Where
applicable, HSBC Group policies are supplemented by country-
specific policies and initiatives to address local requirements. The
Bank takes action with respect to corporate culture, whistleblowing,
financial crime and cybersecurity in line with the material topics
identified.
All HSBC Continental Europe employees are required to complete
Global Mandatory Training on corporate culture, whistleblowing,
financial crime and cybersecurity on an annual basis. Mandatory
training is also deployed on risk and compliance topics, including
business conduct, to embed skills and understanding in order to
strengthen the company's risk culture and reinforce the expected
attitude towards risk expected of all employees as described in the
Bank's risk policies. Employees are additionally required to complete
region- or country-specific training where required by local legal
requirements. Managers must ensure that their direct reports
complete all assigned learning before the due date, as well as
monitor team completion rates and follow the manager guidance on
extenuating circumstances for late or non-completed training.
The Global Mandatory Training programme is mandatory for all HSBC
employees globally and it is delivered in three 'Trimesters' throughout
the year. Trimester one focuses on how the employees can more
effectively manage challenges related to risk management,
sustainability, health and safety and wellbeing. Trimester two focuses
on f inancial crime risk. That is, the risk that products and services will
be exploited by criminals outside HSBC, but also by colleagues who
may use their privileged knowledge and access to commit crime or
assist others to do so. Trimester three focuses on b usiness conduct
related topics, including whistleblowing.
The Global Mandatory Training is a key element of t he Bank’s
Financial Crime Framework and contributes to promote a strong risk
management culture. This training provides awareness of the key
financial crimes HSBC Continental Europe may encounter, including
money laundering, tax evasion, sanctions, evasion and bribery and
corruption ('AB&C'). The completion rate for this training was 96.8
per cent as of 2024. Additionally, HSBC Continental Europe’s staff in
High-Risk Roles (‘HRR staff’) receives targeted anti-bribery and
corruption, anti-money laundering and sanctions compliance training.
HRR staff includes, but is not limited to, the Chief Executive Officer,
the Chief Risk Officers, senior managers who are members of
relevant governance committee (e.g. local Executive Committees),
relevant functional staff within Financial Cri me, Legal staff involved in
provision of AB&C- and AML-related legal advice, and relationship
managers operating in high-risk sectors or managing high-risk
customers. To comply with AFA (Agence Française Anticorruption,
the French AB&C regulator) requirements, a dedicated training
curriculum, 'AB&C HRR Training', has been designed and deployed to
all HRR staff across the Bank, with completion rate 91.76 per cent as
of 2024.
On top of Global Mandatory Training, HSBC Continental Europe
provides a quarterly mandatory training dedicated to the countries'
CEOs.
It comprises of a 60-minutes virtual classroom containing a deep dive
into Financial Crime risks topics. Additionally, every three years,
Deputy CEOs and Board Members take part on the Enterprise Risk
Leadership Programme (‘ERLP’), which aims to prepare the audience
to make future-focused decisions that balance risk and growth.

Corporate culture
HSBC Continental Europe’s business is shaped by the Bank’s
purpose and values and a desire to create sustainable long-term value
for stakeholders. Together with more formal policies and tools, the
Bank’s values provide a clear path to achieving its purpose and
delivering its strategy.
Framework for acting responsibly
The Framework for acting responsibly is a set of values that
represents strong foundations for HSBC to deliver fair outcomes for
customers and to maintain orderly, and transparency on financial
markets. It guides HSBC to do the right thing and to recognise the
real impact it has for customers and the financial markets in which it
operates. It is part of HSBC’s purpose and values and good decision-
making, governing the outcomes to be achieved for our customers
and markets. It recognises cultural and behavioural drivers of good
outcomes and applies across all risk disciplines, operational
processes and technologies. It is available on the HSBC Group
website and it is i mplemented in the internal framework based on the
HSBC Book and the Risk Management Framework.
Acting responsibly helps to focus on the impact HSBC Continental
Europe has on its customers and on financial markets. The Bank is
focused on operating a strong and sustainable business that puts the
customer first, values good governance, and gives its stakeholders
confidence in what the Bank does.
The approach concentrates on five clear outcomes:
– Understanding customers’ needs.
– Providing products and services that offer a fair exchange of value.
– Serving customers’ ongoing needs, and put it right in case of
mistake.
– Acting with integrity in the financial markets HSBC Continental
Europe operates in.
– Operating with resilience and security to avoid harm to customers
and markets.
The key factors in creating the right environment to enable the
c ustomer and market outc omes to be achieved are:
– Culture and behaviour.
– Strategy and decision-making.
– Governance and reporting.
The approach is embedded into the way HSBC Continental Europe
develops, distributes, structures and executes products and services.
The approach to product design and development – including how
products are advertised – is set out in HSBC Continental Europe
policies and provides a clear basis from which strategic product and
service decisions can be made.

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Governance

Global businesses take the following approach:
– Carrying out robust testing and risk assessment during the design
and development of a product to establish whether there is an
identifiable need in the market.
– Considering the complexity of products and the possible financial
risks to customers when determining the target market.
– Offering a carefully selected range of products that are managed
as product offerings, thus helping to ensure that they continue to
meet customers’ needs and deliver fair value for money.
– Regularly reviewing products to help ensure they remain relevant
and perform in line with expectations.
The Framework for acting responsibly is a key area of focus for HSBC
Continental Europe to ensure that behavioural expectations and good
conduct outcomes are being achieved with multiple initiatives.
Conduct-related performance is covered by the quarterly HSBC
Continental Europe’s Conduct and Values Committee ('CVC'), chaired
by the HSBC Continental Europe CEO and attended by Executive
Committee members. It is responsible for carrying out decisions and
for ensuring that the issues linked to acting responsibly are
appropriately tracked within the quarterly CVC structure. The
quarterly HSBC Continental Europe Conduct and Values Committee
provide decision-making and guidance in respect of the Bank's
framework and regulatory compliance risk and takes responsibility for
the tracking of escalated issues.
Code of Conduct
All employees are required to abide by the HSBC Group Code of
Conduct (‘the Group Code’). Regional and country codes must be
aligned to the Group Code to the extent permitted by local law and
regulation. In France, employees are required to abide by the local
Code of Conduct, in compliance with country-level regulatory
requirements.
The Group Code outlines HSBC Group values, minimum ethical
standards, and business principles that govern how the Bank
operates. The Group Code is made accessible to all employees
internally, and staff additionally receive communications on
compliance with the Group Code from senior leadership and the
Human Resources De partment. The HSBC Continental Europe CEO
is responsible for ensuring compliance with the Group Code across
the Bank. The HSBC Continental Europe Human Resources
department oversees the day-to-day implementation of the Group
Code and monitors its compliance.
All of the policies and procedures that govern corporate culture are
continually reviewed and improved, with consideration given to
stakeholder feedback. In 2024, all lines of business and functions of
HSBC Continental Europe completed a Conduct self-assessment to
ensure alignment with the HSBC Group’s Purpose-Led Conduct
Approach.
Acting to ensure fair outcomes
Investigating business conduct complaints
HSBC Continental Europe’s Human Resources team handles internal
complaints and personal conduct cases where breaches in policy
have been alleged or have ma terialised.
All employees at HSBC Continental Europe have access to
appropriate channels to raise concerns relating to themselves or
others.
Ensuring appropriate behaviours
Human Resources ensures that adjustments to variable pay and
ratings due to poor behaviour are captured in the compensation
systems, and that the adjustment is fair, consistent, and
proportionate to the conduct framework. Human Resources may
additionally be involved in investigations resulting from HSBC
Confidential complaints and appeals. Human Resources abide by the
Global Employee Relations ('ER') Investigation Framework to ensure
that investigations are conducted fairly and thoroughly.

Whistleblowing and ‘Speak-up’
culture
HSBC Continental Europe is committed to fostering a speak-up
culture. The goal of the speak-up culture is to enable all staff to work
in a psychologically safe environment where people feel comfortable
and able to speak-up not only to raise concerns, but also to bring
innovation and creativity to facilitate change without fear of reprisal or
retaliation. One of the biggest advantages of open communication
and a speak-up culture is the ability to reduce risks and prevent
potential breaches of the Bank’s code of conduct. When employees
feel empowered to raise concerns, organisations can act on them
before a problem becomes a greater threat.
Speak-up Channels
The Bank has established speak-up channels to implement its speak-
up culture. These channels are available to all employees via an
internal web portal and through escalations to line managers. Senior
leadership promotes the speak-up culture and awareness of reporting
channels through regular communication and awareness initiatives
aimed at employees. Alerts and reports received through speak-up
channels are actioned promptly by independent teams from
Compliance, Financial Crime or Human Resources.
HSBC Confidential
Where concerns cannot be handled through other speak-up channels,
the Bank ensures that all employees and people in relationship with
HSBC, including subcontractors and suppliers, have access to the
Bank’s global whistleblowing channel, 'HSBC Confidential'. HSBC
Confidential is accessible at all times through independent third-party
hotlines and a web portal available in multiple languages.
Independent teams within the Compliance function handle reports at
either the local or Group level depending on countries. Concerns are
investigated proportionately and independently, with action taken
where appropriat e. HSBC Continental Europe is committed to
ensuring investigations are carried out within a reasonable timeframe
and that feedback is provided to the reporter promptly.

Universal Registration Document and Annual Financial Report 2024 | 103

Whistleblowing Policy
HSBC Continental Europe follows the HSBC Group Whistleblowing
Policy which aims to prevent and correct all instances of unethical
and illegal behaviours by:
– Establishing minimum risk management and control requirements
to report unethical and illegal activities.
–Setting out procedures to ensure that reporting channels are
operated in a secure manner that ensure the identity of the
reporting person and any third party mentioned in the report is
protected, and prevent access thereto by non-authorised staff
members.
–Defining procedures to investigate whistleblowing reports and, if
necessary, report the whistleblowing alerts to competent
authorities.
All whistleblowing investigators who are in charge of whistleblowing
cases must complete training provided by the Whistleblowing
Oversight Team (‘WOT’) or other agreed training. The training must
cover the requirements set out in the Whistleblowing Policy,
applicable laws and regulations and areas covered by the
investigations manuals. Records that training has been completed by
relevant parties must be kept by the Investigation Functions.
HSBC Continental Europe's Chief Compliance Officer (‘CCO’) has
ultimate authority over the implementation of the Whistleblowing
Policy and a dedicated, independent team attached to t he
Compliance department has oversight of its implementation. Key
information relating to whistleblowing at the Bank and the outcomes
of investigations into whistleblowing reports are escalated to the
aforementioned team in Compliance and the CCO. The Global
Whistleblowing Policy is available to all employees via the HSBC
Group’s intranet.
HSBC Continental Europe ensures that any failure to comply with
regulatory requirements related to whistleblowing is managed
appropriately, and strives to protect whistleblowers from any form of
retaliation. It does this through ensuring the confidentiality of these
channels and the anonymity of those who use them, thereby
protecting reporters from adverse repercussions. The Bank
safeguards the rights of reporters by prohibiting any suspensions, lay-
offs, demotions or withholding of promotions, transfer of duties,
withholding of training, and any other administrative or punitive
measure from the Bank directly in response to whistleblowing.
Investigations
Independent risk teams carry out independent investigations to verify
all reports related to unethical or illegal allegations. These
investigations are fair and in-depth, and carried out within reasonable
or regulatory timeframes.
HSBC Continental Europe tracks the efficiency of its policies and
actions with respect to corporate culture, conduct risk and speak-up
channels (including protection of whistleblowers):
– The volume of cases received and the anonymity rate.
– The number of alerts fully processed using existing reporting
channels.
– The number of open cases under investigation and the associated
level of risk.
The quarterly Whistleblowing Oversight Committee reports on the
effectiveness of whistleblowing arrangements across HSBC
Continental Europe, including branches and subsidiaries.
The HSBC Continental Europe Audit Committee is responsible for
overseeing the local implementation of the procedures to ensure
confidentiality, protection and fair treatment of whistleblowers. The
HSBC Continental Europe Chief Compliance Officer provides a bi-
annual report to the HSBC Continental Europe Audit Committee.

Preventing financial crime
Financial crime risk is the risk of knowingly or unknowingly helping
parties to commit or to further illegal activity through HSBC, notably
m oney lau ndering, terrorist, and proliferation of weapons of massive
destruction financing, tax evasion, bribery and corruption, non-respect
of international sanctions, fraud, and market abuse. Financial crime
risk arises from day-to-day banking operations involving customers,
third parties and employees.
HSBC Continental Europe is committed to acting with integrity and
conducting its global business activities in compliance with financial
crime laws, regulations and regulatory guidance everywhere it
operates. Compliance with financial crime laws and regulations, as
well as the Bank’s internal policies and procedures, allows HSBC
Continental Europe to fulfil its obligations to all its stakeholders,
safeguard its reputation, and safeguard the global financial system.
Global Financial Crime Policy
The Global Financial Crime (‘FC’) Policy is the primary policy
established by the HSBC Group to manage financial crime-related
risks, including anti-bribery and corruption , fraud, tax evasion, anti-
money laundering (‘AML’), terrorist financing, proliferation financing,
and sanctions and export control compliance. The Global FC Policy is
driven by the requirements in the Bank’s home markets, all of which
are signatories of the UN Convention on Corruption and have
therefore undertaken to have relevant laws in place. In addition to the
Global FC Policy, HSBC Continental Europe has adopted several local
FC Policies across its branches and subsidiaries, including the entity-
wide HSBC Continental Europe FC Policy, and country-specific FC
policies where this is required to meet local legal requirements.
The FC Policy requires all employees in the HSBC Group’s wholly-or
majority-owned or controlled legal entities to adhere to minimum risk
management and control requirements to detect, analyse, investigate
and mitigate the risk of the HSBC Group facilitating or being used to
facilitate financial crime, including:
– Group-wide minimum customer due diligence requirements and
enhanced due diligence on customers assessed as higher risk,
and processes designed to monitor customer transactions for the
purpose of identifying suspicious activity.
– The use of specific tools to minimise the risk of financial crime,
e.g. all staff are required to use the Group-approved gifts and
entertainment register tool, 'GER2', prior to exchanging or
receiving gifts from customers, third parties and public officials
where the gift value surpasses thresholds defined in the Bank’s
financial cri me policy.

104 | Universal Registration Document and Annual Financial Report 2024

Governance

– Controls to verify that minimum due diligence procedures have
been followed, specifically by requiring that checks are recorded in
HSBC Group’s internal system.
– Rejecting transactions, freezing assets or refusing to provide
services under circumstances defined by local legal requirements.
The FC Policy is published in the Compliance Functional Instruction
Manual, which is available to all HSBC employees. Furthermore, an
External Sanctions Policy Statement has been published on the HSBC
Group’s public website.
HSBC Continental Europe’s Head of Financial Crime is responsible for
the implementation of financial crime policies across the Bank. This is
overseen by the Group Head of Financial Crime, the Group Money
Laundering Reporting Officer and the Group Chief Risk and
Compliance Officer. HSBC Continental Europe performs an
Enterprise-Wide Risk Assessment (‘EWRA’) to assess bribery and
corruption, sanctions and anti-money laundering risks every year, in
addition to contributing to the Group-wide EWRA.
Approach to mitigating financial
crime
Preventative measures and controls against
financial crime
During 2024, HSBC Continental Europe has continued its efforts to
combat financial crime and reduce the impact of such crimes on the
organisation, customers, and communities. HSBC Continental Europe
continues to invest in capabilities to fight financial crime. Examples
include the application of advanced analytics and AI, improvements in
the Bank’s transaction screening capabilities, and enhancements in
the Bank’s digital assets and currencies capabilities.
All staff are required to comply with financial crime-related controls
and risk management procedures at all times. HSBC Continental
Europe manages financial crime using a three line of defense model.
The Bank’s First Line of Defence reviews and records FC risk through
approved systems in partnership with Risk Stewards within the
Second Line of Defence. The Second Line of Defence then reviews
and challenges controls recorded in Helios. The Third Line of Defence
undertakes independent reviews of existing policies and procedures
to ensure that HSBC Continental Europe is compliant with relevant
regulations, and that inefficiencies in governance are addressed by
the first and second lines of defence.
The effectiveness of the controls are regularly monitored via the Risk
and Control Assessments that are updated frequently, and at least
annually.
HSBC Continental staff in high-risk roles receive targeted financial
crime training. See the ‘Business Conduct’ section on page 101 for
the full detail of financial crime-related trainings, coverage and
completion rates.
Financial crime-related controls are assessed through key
performance indicators using automated management information
and analytics.
Investigating credible incidents
Independent teams from Compliance, Financial Crime, Audit and
Human Resources conduct investigations into all credible allegations
of bribery and corruption, money laundering, sanctions violations and
any other kind of financial crime.
The outcomes of these investigations are escalated to the HSBC
Continental Europe’s Head of Financial Crime, and where necessary
relevant cases are reported to relevant authorities.
Compliance may pursue several courses of action outlined in the
guidance depending on the severity of the incident, actions taken can
vary from sending policy reminder to staff, and issuing a breach
notification to the employee's line manager, which is recorded in the
performance evaluation. Policy breaches are recorded as
management information and must be subject to a corrective action
plan. Policy breaches are tracked and reported on until corrective
actions have been completed and in rare instances, severe breaches
can contribute to the termination of employment. During 2024, there
was no instance of conviction or fine for violation of anti-corruption
and anti-bribery laws.
Subject to regulatory exceptions, all Directors, employees and
contractors and consultants’ workers are required to co-operate with
any legitimate lawful government, regulatory or internal investigation.
They are expected to provide the maximum level of cooperation by,
among other things, being available to those conducting the
investigation and by providing any materials requested in a timely
manner.

Safeguarding data - Cybersecurity
HSBC Continental Europe operates in an extensive and complex
technology landscape. Cyberattacks may be directed at the Bank or at
its suppliers and contractors. The Bank follows internal policies and
procedures, as well as applicable data protection, electronic
communications and confidentiality laws and regulations to ensure a
consistent global approach to cybersecurity.
Cybersecurity Framework
All employees are required to abide by the Cybersecurity Framework,
which defines the minimum standards and controls to safeguard
customers, colleagues, and connected persons, including: the Group-
wide ‘defence in depth’ approach involving multiple security layers;
minimum business and technical controls to help prevent, detect and
mitigate cyber threats; procedures for the prompt assessment of the
severity of data breaches where such breaches occur, with rapid
notification of the impacted individuals and competent authorities in
compliance with all applicable law; and the procedures for
cybersecurity incident response.
HSBC Continental Europe’s Chief Information Security Officer
(‘CISO’) is responsible for making sure the Group Cybersecurity
Framework is properly implemented across the Bank. The
Cybersecurity Framework is available to all employees on HSBC
Group’s intranet.
Key performance indicators, control effectiveness, and other matters
related to cybersecurity, including cyber incidents, are presented on a
monthly basis to the Bank’s Cybersecurity Steering Committee as
well as the IT Risk and Control Management Meeting to facilitate
ongoing awareness of the cybersecurity control framework.
6 Significant cybersecurity incidents are the ones classified as moderate, major or extreme according to the HSBC Continental Europe Risk Prioritization Matrix.

Universal Registration Document and Annual Financial Report 2024 | 105

Preventative measures and controls
HSBC Continental Europe has adopted preventative measures to
minimise cybersecurity risks, with which all staff are expected to
comply, in particular staff in the three lines of defence.
HSBC Continental Europe continuously upgrades relevant IT systems
and invests in mitigating the potential threats of emerging
technologies. The Bank regularly updates and improves its software
solutions, including Cloud security, identity and access management,
metrics and data analytics, and third-party security reviews. The
Bank’s cyber intelligence and threat analysis team continually
evaluates threat levels for the most prevalent cyber-attack types and
their potential outcomes, and tests controls to help reduce the
likelihood and impact of advanced malware, data leakage, exposure
through third parties and security vulnerabilities. In addition, HSBC
Continental Europe proactively collaborates with regulators to
participate in regular testing activities.
HSBC Continental Europe hosts an annual Cyber Awareness Month
for all colleagues covering topics such as online safety at home,
social media safety, safe hybrid working, and cyber incidents and
response. HSBC Group’s dedicated cybersecurity training and
awareness team provides a wide range of education and guidance to
both customers and HSBC Continental Europe staff about how to
identify and prevent online fraud.
HSBC Continental Europe has developed metrics to manage its
compliance objectives and to measure its cybersecurity controls’
performance, among which the number of significant cybersecurity
incident s 6 that occur over a period of 12 months. In 2024, no
significant cybersecurity incidents were recorded.
Where performance on key metrics is unsatisfactory or would put the
Bank at risk of non-compliance with regulatory obligations, the issue
is escalated both within HSBC Continental Europe to its Risk
Committee and Managing body. In addition, HSBC Continental
Europe reports and reviews cyber risk and control effectiveness at
the HSBC Continental Europe Executive Committee and Board level
to help ensure there is appropriate visibility and governance of the
risk and its mitigating actions.
Response to cyber threats
Dedicated teams at HSBC Continental Europe, led by the HSBC
Continental Europe's CISO, take swift action in case of serious
identity theft, misappropriation of funds, damage to personal or
professional reputation, threats to personal security and
discrimination resulting from cyber-attacks. In the event of incidents,
the Bank’s CISO and relevant local CISOs are informed by the
security operations team and engage in cybersecurity incident
response protocols. To date, none of these attacks have had a
material impact on the Bank’s business or operations.

106 | Universal Registration Document and Annual Financial Report 2024

Governance

Report on the certification of sustainability information and verification of the
disclosure requirements under article 8 of Regulation (EU) 2020/852
(For the year ended 31 December 2024)
HSBC Continental Europe
38, avenue Kléber
75116 Paris
To the Shareholders,
This report is issued in our capacity as Statutory Auditors of HSBC Continental Europe. It covers the sustainability information and the
information required by article 8 of Regulation (EU) 2020/852, relating to the financial year ended 31 December 2024 and included in the
sustainability statement in the Group’s management report.
Pursuant to article L.233-28-4 of the French Commercial Code (Code de commerce), HSBC Continental Europe is required to include the above
mentioned information in a separate section of the Group's management report. This information has been prepared in the context of the first-
time application of the aforementioned articles, a context characterised by uncertainties regarding the interpretation of the legal texts, the use
of significant estimates, the absence of established practices and frameworks, in particular for the double materiality assessment, and an
evolving internal control system. It provides an understanding of the impact of the Group’s activity on sustainability matters, as well as the way
in which these matters influence the development of its business, performance and position. Sustainability matters include environmental,
social and corporate governance matters.
Pursuant to II of article L.821-54 of the aforementioned Code, our responsibility is to carry out the procedures necessary to issue a conclusion,
expressing limited assurance, on:
– compliance with the sustainability reporting standards adopted pursuant to Article 29ter of Directive (EU) 2013/34 of the European
Parliament and of the Council of 14 December 2022 (hereinafter ESRS for European Sustainability Reporting Standards) of the process
implemented by HSBC Continental Europe to determine the information reported, and compliance with the requirement to consult the social
and economic committee provided for in the sixth paragraph of article L.2312-17 of the French Labour Code (Code du travail);
– compliance of the information included in the sustainability statement with the requirements of article L.233-28-4 of the French Commercial
Code, including with the ESRS; and
– compliance with the requirements set out in article 8 of Regulation (EU) 2020/852.
This engagement is carried out in compliance with the ethical rules, including those on independence, and quality control, prescribed by the
French Commercial Code.
It is also governed by the H2A guidelines on limited assurance engagements on the certification of sustainability information and verification of
disclosure requirements set out in article 8 of Regulation (EU) 2020/852.
In the three separate parts of the report that follow, we present, for each of the parts covered by our engagement, the nature of the procedures
we carried out, the conclusions we drew from these procedures and, in support of these conclusions, the elements to which we paid particular
attention and the procedures we carried out with regards to these elements. We draw your attention to the fact that we do not express a
conclusion on any of these elements taken in isolation and that the procedures described should be considered in the overall context of the
formation of the conclusions issued in respect of each of the three parts of our engagement.
Finally, where it was deemed necessary to draw your attention to one or more items of sustainability information provided by HSBC Continental
Europe in the Group management report, we have included an emphasis of matter paragraph hereafter.
The limits of our engagement
As the purpose of our engagement is to provide limited assurance, the nature (choice of techniques), extent (scope) and timing of the
procedures are less than those required to obtain reasonable assurance.
Furthermore, this engagement does not provide a guarantee regarding the viability or the quality of the management of HSBC Continental
Europe, in particular it does not provide an assessment of the relevance of the choices made by HSBC Continental Europe in terms of action
plans, targets, policies, scenario analyses and transition plans, that extends beyond compliance with the ESRS reporting requirements.
It does, however, allow us to express conclusions regarding the process for determining the sustainability information to be reported, the
sustainability information itself, and the information reported pursuant to article 8 of Regulation (EU) 2020/852, as to the absence of
identification or, on the contrary, the identification of errors, omissions or inconsistencies of such importance that they would be likely to
influence the decisions that readers of the information subject to this engagement might make.
Our engagement does not cover any comparative data.

Universal Registration Document and Annual Financial Report 2024 | 107

Compliance with the ESRS of the process implemented by HSBC Continental Europe to determine the information reported, and
compliance with the requirement to consult the social and economic committee provided for in the sixth paragraph of article
L.2312-17 of the French Labour Code.
Nature of procedures carried out
Our procedures consisted in verifying that:
– the process defined and implemented by HSBC Continental Europe has enabled it, in accordance with the ESRS, to identify and assess its
impacts, risks and opportunities related to sustainability matters, and to identify the material impacts, risks and opportunities that are
disclosed in the Group’s sustainability statement; and
– the information provided on this process also complies with the ESRS.
We also checked compliance with the requirement to consult the social and economic committee.
Conclusion of the procedures carried out
On the basis of the procedures we have carried out, we have not identified any material errors, omissions or inconsistencies regarding the
compliance of the process implemented by HSBC Continental Europe with the ESRS.
Concerning the consultation of the social and economic committee provided for in the sixth paragraph of article L.2312-17 of the French Labour
Code, we inform you that at the date of this report this consultation has not yet taken place.
Elements that received particular attention
– Concerning the identification of stakeholders
Information concerning the identification of stakeholders is provided in the 'Stakeholders in the value chain' section of the Group’s sustainability
statement.
We spoke to management and inspected the documentation available.
We also assessed the consistency of the main stakeholders identified by the Group with the nature of its activities and its geographical
location, taking into account its business relationships and value chain.
– Concerning the identification of impacts, risks and opportunities
Information concerning the identification of impacts, risks and opportunities can be found in the 'Material sustainability impacts, risks and
opportunities' section of the Group’s sustainability statement.
We have reviewed the Group’s process for identifying actual and potential impacts (positive and negative), risks and opportunities ('IROs') in
relation to the sustainability issues set out in paragraph AR 16 of ESRS 1 'Application requirements' and those specific to the Group, as
presented in the 'Material sustainability impacts, risks and opportunities' section of the Group’s sustainability statement.
In particular, we assessed the approach taken by the Group to determine its impacts and dependencies, which may be a source of risks or
opportunities.
We reviewed the list of IROs identified by the Group, including a description of their distribution in the Group's own operations and value chain,
as well as their time horizon (short, medium or long term), and we assessed the consistency of this list with our knowledge of the Group and,
where applicable, with the risk analyses it has carried out.
– Concerning the assessment of impact materiality and financial materiality
Information on the assessment of impact materiality and financial materiality is provided in the 'Material sustainability impacts, risks and
opportunities' section of the Group’s sustainability statement.
Through interviews with management and inspection of the available documentation, we obtained an understanding of the impact materiality
and financial materiality assessment process implemented by the Group, and assessed its compliance with the criteria defined by ESRS 1.
In particular, we assessed the way in which the Group has established and applied the materiality criteria defined by ESRS 1 to determine the
material information disclosed (i) in respect of indicators relating to material IROs identified in accordance with the relevant topical ESRS and (ii)
in respect of information that is specific to the Group.
Compliance of the sustainability information included in the sustainability statement in the Group management report with the
requirements of article L.233-28-4 of the French Commercial Code, including the ESRS
Nature of procedures carried out
Our procedures consisted in verifying that, in accordance with legal and regulatory requirements, including the ESRS:
– the disclosures provided provide an understanding of the general basis for the preparation and governance of the sustainability information
included in the 'Governance of sustainability matters' section of the Group’s sustainability statement, including the general basis for
determining the information relating to the value chain and the exemptions from disclosures used;
– the presentation of this information ensures its readability and understandability;
– the scope chosen by HSBC Continental Europe for providing this information is appropriate; and
– on the basis of a selection, based on our analysis of the risks of non-compliance of the information provided and the expectations of users,
this information does not contain any material errors, omissions or inconsistencies, i.e., that are likely to influence the judgement or
decisions of the users of this information.

108 | Universal Registration Document and Annual Financial Report 2024

Governance

Conclusion of the procedures carried out
Based on the procedures we have carried out, we have not identified materials errors, omissions or inconsistencies regarding the compliance
of the sustainability information included in the 'Governance of sustainable development issues' section of the Group’s sustainability statement
with the requirements of article L.233-28-4 of the French Commercial Code, including the ESRS.
Emphasis of matter
Without qualifying the conclusion expressed above, we draw your attention to the 'Greenhouse Gas Emissions' section of the Group’s
sustainability statement, which sets out the scope used to calculate financed emissions relating to the value chain (category 15 of Scope 3
under the GHG Protocol), as well as the limitations relating to the availability of data and the methodology used for the estimates made.
Elements that received particular attention
Information disclosed relating to greenhouse gas emissions (ESRS E1) can be found in the 'Greenhouse gas emissions' section of the Group’s
sustainability statement.
The elements to which we paid particular attention concerning the compliance of this information with the ESRS are presented below.
Our audit procedures mainly consisted in:
– asking what internal control and risk management procedures the Group has put in place to ensure the compliance of the disclosed
information;
– concerning financed emissions (Scope 3, category 15 of the GHG Protocol):
– reviewing the methodology used to calculate the estimated data and the sources of information on which these estimates are based;
– gaining an understanding of the scope of assets covered by the calculation of financed emissions and assessing its justification with
regard to the reference framework applied as described in the Group’s sustainability statement and management report;
– verifying that the basis for calculating financed emissions corresponds to the scope of assets covered as described in the sustainability
statement and reconciling it with the consolidated balance sheet;
– assessing the appropriateness of the sectoral proxies used by the Group and verifying, on the basis of samples, that they are correctly
used;
– verifying the mathematical accuracy of the calculation of financed emissions, on the basis of samples.
– concerning Scope 1, 2 and 3 emissions (category 1, 2 and 6) from the Group’s own operations:
– reviewing the approach used to compile the inventory of greenhouse gas emissions used by the Group to draw up its greenhouse gas
emissions statement;
– assessing the appropriateness of the emission factors used and checking the calculation of the relevant conversions;
– verifying, on the basis of samples, the underlying data used to draw up the greenhouse gas emissions statement, together with the
supporting documents, as well as the mathematical accuracy of the calculations used to prepare the estimated emissions.
Compliance with the reporting requirements set out in article 8 of Regulation (EU) 2020/852
Nature of procedures carried out
Our procedures consisted in verifying the process implemented by HSBC Continental Europe to determine the eligible and aligned nature of the
activities of the entities included in the consolidation.
They also involved verifying the information reported pursuant to article 8 of Regulation (EU) 2020/852, which involves checking (i) compliance
with the rules governing the presentation of this information to ensure that it is readable and understandable and (ii) on the basis of a selection,
the absence of material errors, omissions or inconsistencies in the information provided, i.e., information likely to influence the judgement or
decisions of users of this information.
Conclusion of the procedures carried out
Based on the procedures we have carried out, we have not identified any material errors, omissions or inconsistencies in relation to compliance
with the requirements of article 8 of Regulation (EU) 2020/852.
Elements that received particular attention
We established that there were no such elements to address in our report.
Neuilly-sur-Seine, 19 February 2025
The Statutory Auditor
PricewaterhouseCoopers Audit

Universal Registration Document and Annual Financial Report 2024 | 109

PricewaterhouseCoopers Audit
Agnès Hussherr |
Partner |

110 | Universal Registration Document and Annual Financial Report 2024

Appendix

Appendix
Assets for the calculation of GAR (Template 1)
This table presents assets used in the calculation of the GAR
analysed by counterparty type and asset class. Total assets are
further categorised between covered assets in the numerator,
covered assets in the denominator, and assets excluded from the
GAR calculation, with eligible and aligned covered assets presented
by environmental objective. This table is provided in Annex VI to the
Disclosures Delegated Act. One row has been added and a minor
amendment made to the row 48 label to clarify where GAR assets
form the numerator or denominator of the KPI.
The table has been duplicated to present the information separately
based on Turnover and CapEx KPIs as reported by the Bank's
counterparties.
As a proportion of total taxonomy eligible exposures, taxonomy
aligned enabling activities represents 1.06 per cent based on
counterparty turnover KPI and 1.62 per cent based on counterparty
CapEx KPI.
The gross carrying amount reported excludes impairment allowances
for all banking exposures. As a result, Total Assets reported in this
table is not comparable to Total Assets reported in the Bank's
balance sheet with the difference due to impairment allowances on
banking exposures.
Row 34 'SMEs and NFCs (other than SMEs) not subject to NFRD
disclosure obligations' includes non-NFRD financial and non-financial
undertakings in the EU, whether or not they are classified as SMEs.
Financial guarantees represent financial guarantees granted by the
Bank to support an underlying loan or debt security. The assessment
of eligibility and alignment is based on the reported KPIs of the
obligor in relation to the underlying loan since information on specific
use of proceeds for these loans is not available.
The gross carrying amount presented for financial guarantees and
assets under management forms the denominator of the respective
KPIs and includes exposures with both NFRD and non-NFRD
counterparties while excluding exposures to central governments,
central banks and supranational issuers.
1 The ‘Total’ column in the table includes exposures towards taxonomy
relevant sectors (Taxonomy-eligible) for all six environmental objectives
(CCM, CCA, WTR, CE, PPC and BIO) and includes environmentally
sustainable exposures (Taxonomy-aligned) for the two climate objectives
only (CCM and CCA).

Assets for the calculation of GAR-Based on Counterparty Turnover
|  | 2024
|  | a | b | c | d | e | f | g | h | i | j | k | o | s | w | ab | ac | ad | ae | af
Mn EUR | Disclosure reference date T
Total [gross] carry- ing amo- unt | Climate Change Mitigation (CCM) | Climate Change Adaptation (CCA) | Water and marine resources (WTR) | Circular economy (CE) | Pollution (PPC) | Biodiversity and Ecosystems (BIO) | TOTAL (CCM + CCA + WTR + CE + PPC + BIO)1
of which towards taxonomy relevant sectors (Taxonomy- eligible) | of which towards taxonomy relevant sectors (Taxonomy- eligible) | of which towards taxonomy relevant sectors (Taxonomy- eligible) | of which towards taxonomy relevant sectors (Taxonomy- eligible)
| of which environmentally sustainable (Taxonomy- aligned) |  | of which environmentally sustainable (Taxonomy- aligned) |  |  |  |  |  | of which environmentally sustainable (Taxonomy-aligned)
|  | of which Use of Proceeds | of which transitional | of which enabling |  |  | of which Use of Proceeds | of which enabling |  |  |  |  |  |  | of which Use of Proceeds | of which transitional | of which enabling
| GAR – Covered assets in both numerator and denominator |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
1 | Loans and advances, debt securities and equity instruments not HfT eligible for GAR calculation | 20,478 | 12,496 | 433 | — | 19 | 139 | 253 | 7 | — | 5 | 1 | 147 | 638 | 1 | 13,536 | 440 | — | 18 | 144
2 | Financial undertakings | 7,170 | 2,465 | 95 | — | — | 1 | 26 | 2 | — | — | — | — | — | — | 2,491 | 97 | — | — | 1

Universal Registration Document and Annual Financial Report 2024 | 111

Assets for the calculation of GAR-Based on Counterparty Turnover (continued)
|  | 2024
|  | a | b | c | d | e | f | g | h | i | j | k | o | s | w | ab | ac | ad | ae | af
Mn EUR | Disclosure reference date T
Total [gross] carry- ing amo- unt | Climate Change Mitigation (CCM) | Climate Change Adaptation (CCA) | Water and marine resources (WTR) | Circular economy (CE) | Pollution (PPC) | Biodiversity and Ecosystems (BIO) | TOTAL (CCM + CCA + WTR + CE + PPC + BIO)1
of which towards taxonomy relevant sectors (Taxonomy- eligible) | of which towards taxonomy relevant sectors (Taxonomy- eligible) | of which towards taxonomy relevant sectors (Taxonomy- eligible) | of which towards taxonomy relevant sectors (Taxonomy- eligible)
| of which environmentally sustainable (Taxonomy- aligned) |  | of which environmentally sustainable (Taxonomy- aligned) |  |  |  |  |  | of which environmentally sustainable (Taxonomy-aligned)
|  | of which Use of Proceeds | of which transitional | of which enabling |  |  | of which Use of Proceeds | of which enabling |  |  |  |  |  |  | of which Use of Proceeds | of which transitional | of which enabling
3 | Credit institutions | 6,577 | 2,463 | 94 | — | — | — | 9 | 2 | — | — | — | — | — | — | 2,472 | 96 | — | — | —
4 | Loans and advances | 5,764 | 1,989 | 90 | — | — | — | 9 | 2 | — | — | — | — | — | — | 1,998 | 92 | — | — | —
5 | Debt securities, including UoP | 813 | 474 | 4 | — | — | — | — | — | — | — | — | — | — | — | 474 | 4 | — | — | —
6 | Equity instruments | — | — | — |  | — | — | — | — |  | — | — | — | — | — | — | — |  | — | —
7 | Other financial corporations | 593 | 2 | 1 | — | — | 1 | 17 | — | — | — | — | — | — | — | 19 | 1 | — | — | 1
8 | of which investment firms | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | —
9 | Loans and advances | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | —
10 | Debt securities, including UoP | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | —
11 | Equity instruments | — | — | — |  | — | — | — | — |  | — | — | — | — | — | — | — |  | — | —
12 | of which management companies | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | —
13 | Loans and advances | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | —
14 | Debt securities, including UoP | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | —

112 | Universal Registration Document and Annual Financial Report 2024

Appendix

Assets for the calculation of GAR-Based on Counterparty Turnover (continued)
|  | 2024
|  | a | b | c | d | e | f | g | h | i | j | k | o | s | w | ab | ac | ad | ae | af
Mn EUR | Disclosure reference date T
Total [gross] carry- ing amo- unt | Climate Change Mitigation (CCM) | Climate Change Adaptation (CCA) | Water and marine resources (WTR) | Circular economy (CE) | Pollution (PPC) | Biodiversity and Ecosystems (BIO) | TOTAL (CCM + CCA + WTR + CE + PPC + BIO)1
of which towards taxonomy relevant sectors (Taxonomy- eligible) | of which towards taxonomy relevant sectors (Taxonomy- eligible) | of which towards taxonomy relevant sectors (Taxonomy- eligible) | of which towards taxonomy relevant sectors (Taxonomy- eligible)
| of which environmentally sustainable (Taxonomy- aligned) |  | of which environmentally sustainable (Taxonomy- aligned) |  |  |  |  |  | of which environmentally sustainable (Taxonomy-aligned)
|  | of which Use of Proceeds | of which transitional | of which enabling |  |  | of which Use of Proceeds | of which enabling |  |  |  |  |  |  | of which Use of Proceeds | of which transitional | of which enabling
15 | Equity instruments | — | — | — |  | — | — | — | — |  | — | — | — | — | — | — | — |  | — | —
16 | of which insurance undertakings | 497 | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | —
17 | Loans and advances | 497 | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | —
18 | Debt securities, including UoP | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | —
19 | Equity instruments | — | — | — |  | — | — | — | — |  | — | — | — | — | — | — | — |  | — | —
20 | Non-financial undertakings | 3,977 | 758 | 337 | — | 19 | 138 | 227 | 5 | — | 5 | 1 | 147 | 638 | 1 | 1,772 | 342 | — | 18 | 143
21 | Loans and advances | 3,928 | 751 | 333 | — | 19 | 136 | 227 | 5 | — | 5 | 1 | 146 | 637 | 1 | 1,763 | 338 | — | 18 | 141
22 | Debt securities, including UoP | 36 | 6 | 4 | — | — | 2 | — | — | — | — | — | 1 | 1 | — | 8 | 4 | — | — | 2
23 | Equity instruments | 13 | 1 | — |  | — | — | — | — |  | — | — | — | — | — | 1 | — |  | — | —
24 | Households | 9,134 | 9,130 | 1 | — | — | — | — | — | — | — |  | — |  |  | 9,130 | 1 | — | — | —
25 | of which loans collateralised by residential immovable property | 9,111 | 9,112 | 1 | — | — | — | — | — | — | — |  | — |  |  | 9,112 | 1 | — | — | —
26 | of which building renovation loans | 3 | 3 | — | — | — | — | — | — | — | — |  | — |  |  | 3 | — | — | — | —
27 | of which motor vehicle loans | 20 | 15 | — | — | — | — |  |  |  |  |  |  |  |  | 15 | — | — | — | —

Universal Registration Document and Annual Financial Report 2024 | 113

Assets for the calculation of GAR-Based on Counterparty Turnover (continued)
|  | 2024
|  | a | b | c | d | e | f | g | h | i | j | k | o | s | w | ab | ac | ad | ae | af
Mn EUR | Disclosure reference date T
Total [gross] carry- ing amo- unt | Climate Change Mitigation (CCM) | Climate Change Adaptation (CCA) | Water and marine resources (WTR) | Circular economy (CE) | Pollution (PPC) | Biodiversity and Ecosystems (BIO) | TOTAL (CCM + CCA + WTR + CE + PPC + BIO)1
of which towards taxonomy relevant sectors (Taxonomy- eligible) | of which towards taxonomy relevant sectors (Taxonomy- eligible) | of which towards taxonomy relevant sectors (Taxonomy- eligible) | of which towards taxonomy relevant sectors (Taxonomy- eligible)
| of which environmentally sustainable (Taxonomy- aligned) |  | of which environmentally sustainable (Taxonomy- aligned) |  |  |  |  |  | of which environmentally sustainable (Taxonomy-aligned)
|  | of which Use of Proceeds | of which transitional | of which enabling |  |  | of which Use of Proceeds | of which enabling |  |  |  |  |  |  | of which Use of Proceeds | of which transitional | of which enabling
28 | Local governments financing | 194 | 141 | — | — | — | — | — | — | — | — | — | — | — | — | 141 | — | — | — | —
29 | Housing financing | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | —
30 | Other local government financing | 194 | 141 | — | — | — | — | — | — | — | — | — | — | — | — | 141 | — | — | — | —
31 | Collateral obtained by taking possession: residential and commercial immovable properties | 3 | 2 | — | — | — | — | — | — | — | — | — | — | — | — | 2 | — | — | — | —
| Total GAR assets (in the numerator) | 20,478 | 12,496 | 433 | — | 19 | 139 | 253 | 7 | — | 5 | 1 | 147 | 638 | 1 | 13,536 | 440 | — | 18 | 144
32 | Assets excluded from the numerator for GAR calculation (covered in the denominator) | 89,440 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
33 | Financial and Non-financial undertakings | 63,538 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
34 | SMEs and NFCs (other than SMEs) not subject to NFRD disclosure obligations | 46,419 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
35 | Loans and advances | 43,330 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
36 | of which loans collateralised by commercial immovable property | 4,670 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
37 | of which building renovation loans | 8 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |

114 | Universal Registration Document and Annual Financial Report 2024

Appendix

Assets for the calculation of GAR-Based on Counterparty Turnover (continued)
|  | 2024
|  | a | b | c | d | e | f | g | h | i | j | k | o | s | w | ab | ac | ad | ae | af
Mn EUR | Disclosure reference date T
Total [gross] carry- ing amo- unt | Climate Change Mitigation (CCM) | Climate Change Adaptation (CCA) | Water and marine resources (WTR) | Circular economy (CE) | Pollution (PPC) | Biodiversity and Ecosystems (BIO) | TOTAL (CCM + CCA + WTR + CE + PPC + BIO)1
of which towards taxonomy relevant sectors (Taxonomy- eligible) | of which towards taxonomy relevant sectors (Taxonomy- eligible) | of which towards taxonomy relevant sectors (Taxonomy- eligible) | of which towards taxonomy relevant sectors (Taxonomy- eligible)
| of which environmentally sustainable (Taxonomy- aligned) |  | of which environmentally sustainable (Taxonomy- aligned) |  |  |  |  |  | of which environmentally sustainable (Taxonomy-aligned)
|  | of which Use of Proceeds | of which transitional | of which enabling |  |  | of which Use of Proceeds | of which enabling |  |  |  |  |  |  | of which Use of Proceeds | of which transitional | of which enabling
38 | Debt securities | 2,847 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
39 | Equity instruments | 242 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
40 | Non-EU country counterparties not subject to NFRD disclosure obligations | 17,120 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
41 | Loans and advances | 15,013 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
42 | Debt securities | 2,106 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
43 | Equity instruments | 1 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
44 | Derivatives | 98 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
45 | On demand interbank loans | 1,857 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
46 | Cash and cash-related assets | 53 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
47 | Other categories of assets (e.g. Goodwill, commodities etc.) | 23,894 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
48 | Total GAR assets (in the denominator) | 109,918 | 12,496 | 433 | — | 19 | 139 | 253 | 7 | — | 5 | 1 | 147 | 638 | 1 | 13,536 | 440 | — | 18 | 144
49 | Assets not covered for GAR calculation | 132,827 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
50 | Central governments and Supranational issuers | 14,367 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
51 | Central banks exposure | 52,454 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
52 | Trading book | 66,006 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |

Universal Registration Document and Annual Financial Report 2024 | 115

Assets for the calculation of GAR-Based on Counterparty Turnover (continued)
|  | 2024
|  | a | b | c | d | e | f | g | h | i | j | k | o | s | w | ab | ac | ad | ae | af
Mn EUR | Disclosure reference date T
Total [gross] carry- ing amo- unt | Climate Change Mitigation (CCM) | Climate Change Adaptation (CCA) | Water and marine resources (WTR) | Circular economy (CE) | Pollution (PPC) | Biodiversity and Ecosystems (BIO) | TOTAL (CCM + CCA + WTR + CE + PPC + BIO)1
of which towards taxonomy relevant sectors (Taxonomy- eligible) | of which towards taxonomy relevant sectors (Taxonomy- eligible) | of which towards taxonomy relevant sectors (Taxonomy- eligible) | of which towards taxonomy relevant sectors (Taxonomy- eligible)
| of which environmentally sustainable (Taxonomy- aligned) |  | of which environmentally sustainable (Taxonomy- aligned) |  |  |  |  |  | of which environmentally sustainable (Taxonomy-aligned)
|  | of which Use of Proceeds | of which transitional | of which enabling |  |  | of which Use of Proceeds | of which enabling |  |  |  |  |  |  | of which Use of Proceeds | of which transitional | of which enabling
53 | Total assets | 242,745 | 12,496 | 433 | — | 19 | 139 | 253 | 7 | — | 5 | 1 | 147 | 638 | 1 | 13,536 | 440 | — | 18 | 144
Off-balance sheet exposures – Undertakings subject to NFRD disclosure obligations
54 | Financial guarantees | 1,949 | 94 | 33 | — | — | 8 | — | — | — | — | — | 11 | 2 | — | 107 | 33 | — | — | 8
55 | Assets under management | 322,592 | 14,718 | 3,311 | — | 170 | 1,678 | 1,004 | 67 | — | 5 | 21 | 858 | 1,143 | 27 | 17,771 | 3,378 | — | 170 | 1,683
56 | of which debt securities | 128,296 | 5,957 | 1,949 | — | 117 | 818 | 234 | 12 | — | — | 14 | 202 | 94 | 18 | 6,519 | 1,961 | — | 117 | 818
57 | of which equity instruments | 70,277 | 5,976 | 1,361 | — | 53 | 860 | 768 | 55 | — | 5 | 8 | 656 | 1,049 | 10 | 8,467 | 1,416 | — | 53 | 865

Assets for the calculation of GAR-Based on Counterparty Turnover (continued)
|  | 2023
|  | a | b | c | d | e | f | g | h | i | j | ab | ac | ad | ae | af
Mn EUR | Disclosure reference date T-1
Total gross carrying amount | Climate Change Mitigation (CCM) | Climate Change Adaptation (CCA) | TOTAL (CCM + CCA)
of which towards taxonomy relevant sectors (Taxonomy-eligible) | of which towards taxonomy relevant sectors (Taxonomy- eligible) | of which towards taxonomy relevant sectors (Taxonomy-eligible)
| of which environmentally sustainable (Taxonomy-aligned) |  | of which environmentally sustainable (Taxonomy- aligned) |  | of which environmentally sustainable (Taxonomy-aligned)
|  | of which Use of Proceeds | of which transitional | of which enabling |  |  | of which Use of Proceeds | of which enabling |  |  | of which Use of Proceeds | of which transitional | of which enabling
| GAR – Covered assets in both numerator and denominator |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
1 | Loans and advances, debt securities and equity instruments not HfT eligible for GAR calculation | 17,906 |  | 149 | — | 20 | 31 |  | 10 | — | — | 10,753 | 159 | — | 20 | 31
2 | Financial undertakings | 5,200 |  | — | — | — | — |  | — | — | — | 259 | — | — | — | —
3 | Credit institutions | 5,078 |  | — | — | — | — |  | — | — | — | 259 | — | — | — | —
4 | Loans and advances | 4,598 |  | — | — | — | — |  | — | — | — | — | — | — | — | —
5 | Debt securities, including UoP | 480 |  | — | — | — | — |  | — | — | — | 259 | — | — | — | —

116 | Universal Registration Document and Annual Financial Report 2024

Appendix

Assets for the calculation of GAR-Based on Counterparty Turnover (continued)
|  | 2023
|  | a | b | c | d | e | f | g | h | i | j | ab | ac | ad | ae | af
Mn EUR | Disclosure reference date T-1
Total gross carrying amount | Climate Change Mitigation (CCM) | Climate Change Adaptation (CCA) | TOTAL (CCM + CCA)
of which towards taxonomy relevant sectors (Taxonomy-eligible) | of which towards taxonomy relevant sectors (Taxonomy- eligible) | of which towards taxonomy relevant sectors (Taxonomy-eligible)
| of which environmentally sustainable (Taxonomy-aligned) |  | of which environmentally sustainable (Taxonomy- aligned) |  | of which environmentally sustainable (Taxonomy-aligned)
|  | of which Use of Proceeds | of which transitional | of which enabling |  |  | of which Use of Proceeds | of which enabling |  |  | of which Use of Proceeds | of which transitional | of which enabling
6 | Equity instruments | — |  | — |  | — | — |  | — |  | — | — | — |  | — | —
7 | Other financial corporations | 122 |  | — | — | — | — |  | — | — | — | — | — | — | — | —
8 | – of which: investment firms | 2 |  | — | — | — | — |  | — | — | — | — | — | — | — | —
9 | Loans and advances | 2 |  | — | — | — | — |  | — | — | — | — | — | — | — | —
10 | Debt securities, including UoP | — |  | — | — | — | — |  | — | — | — | — | — | — | — | —
11 | Equity instruments | — |  | — |  | — | — |  | — |  | — | — | — |  | — | —
12 | – of which: management companies | — |  | — | — | — | — |  | — | — | — | — | — | — | — | —
13 | Loans and advances | — |  | — | — | — | — |  | — | — | — | — | — | — | — | —
14 | Debt securities, including UoP | — |  | — | — | — | — |  | — | — | — | — | — | — | — | —
15 | Equity instruments | — |  | — |  | — | — |  | — |  | — | — | — |  | — | —
16 | – of which: insurance undertakings | — |  | — | — | — | — |  | — | — | — | — | — | — | — | —
17 | Loans and advances | — |  | — | — | — | — |  | — | — | — | — | — | — | — | —
18 | Debt securities, including UoP | — |  | — | — | — | — |  | — | — | — | — | — | — | — | —
19 | Equity instruments | — |  | — |  | — | — |  | — |  | — | — | — |  | — | —
20 | Non-financial undertakings | 2,780 |  | 149 | — | 20 | 31 |  | 10 | — | — | 578 | 159 | — | 20 | 31
21 | Loans and advances | 2,721 |  | 137 | — | 18 | 27 |  | 10 | — | — | 564 | 147 | — | 18 | 27
22 | Debt securities, including UoP | 51 |  | 9 | — | 2 | 1 |  | — | — | — | 11 | 9 | — | 2 | 1
23 | Equity instruments | 8 |  | 3 |  | — | 3 |  | — |  | — | 3 | 3 |  | — | 3
24 | Households | 9,799 |  | — | — | — | — |  | — | — | — | 9,789 | — | — | — | —
25 | – of which: loans collateralised by residential immovable property | 9,776 |  | — | — | — | — |  | — | — | — | 9,776 | — | — | — | —
26 | – of which: building renovation loans | 2 |  | — | — | — | — |  | — | — | — | 2 | — | — | — | —
27 | – of which: motor vehicle loans | 21 |  | — | — | — | — |  |  |  |  | 11 | — | — | — | —
28 | Local governments financing | 124 |  | — | — | — | — |  | — | — | — | 124 | — | — | — | —
29 | Housing financing | — |  | — | — | — | — |  | — | — | — | — | — | — | — | —
30 | Other local government financing | 124 |  | — | — | — | — |  | — | — | — | 124 | — | — | — | —
31 | Collateral obtained by taking possession: residential and commercial immovable properties | 3 |  | — | — | — | — |  | — | — | — | 3 | — | — | — | —
| Total GAR assets (in the numerator) | 17,906 |  | 149 | — | 20 | 31 |  | 10 | — | — | 10,753 | 159 | — | 20 | 31
32 | Assets excluded from the numerator for GAR calculation (covered in the denominator) | 106,925 |  |  |  |  |  |  |  |  |  |  |  |  |  |
33 | Financial and Non- financial undertakings | 61,804 |  |  |  |  |  |  |  |  |  |  |  |  |  |

Universal Registration Document and Annual Financial Report 2024 | 117

Assets for the calculation of GAR-Based on Counterparty Turnover (continued)
|  | 2023
|  | a | b | c | d | e | f | g | h | i | j | ab | ac | ad | ae | af
Mn EUR | Disclosure reference date T-1
Total gross carrying amount | Climate Change Mitigation (CCM) | Climate Change Adaptation (CCA) | TOTAL (CCM + CCA)
of which towards taxonomy relevant sectors (Taxonomy-eligible) | of which towards taxonomy relevant sectors (Taxonomy- eligible) | of which towards taxonomy relevant sectors (Taxonomy-eligible)
| of which environmentally sustainable (Taxonomy-aligned) |  | of which environmentally sustainable (Taxonomy- aligned) |  | of which environmentally sustainable (Taxonomy-aligned)
|  | of which Use of Proceeds | of which transitional | of which enabling |  |  | of which Use of Proceeds | of which enabling |  |  | of which Use of Proceeds | of which transitional | of which enabling
34 | SMEs and NFCs (other than SMEs) not subject to NFRD disclosure obligations | 51,676 |  |  |  |  |  |  |  |  |  |  |  |  |  |
35 | Loans and advances | 48,602 |  |  |  |  |  |  |  |  |  |  |  |  |  |
36 | – of which:loans collateralised by commercial immovable property | 3,973 |  |  |  |  |  |  |  |  |  |  |  |  |  |
37 | – of which: building renovation loans | 5 |  |  |  |  |  |  |  |  |  |  |  |  |  |
38 | Debt securities | 2,910 |  |  |  |  |  |  |  |  |  |  |  |  |  |
39 | Equity instruments | 164 |  |  |  |  |  |  |  |  |  |  |  |  |  |
40 | Non-EU country counterparties not subject to NFRD disclosure obligations | 10,128 |  |  |  |  |  |  |  |  |  |  |  |  |  |
41 | Loans and advances | 9,083 |  |  |  |  |  |  |  |  |  |  |  |  |  |
42 | Debt securities | 1,043 |  |  |  |  |  |  |  |  |  |  |  |  |  |
43 | Equity instruments | 1 |  |  |  |  |  |  |  |  |  |  |  |  |  |
44 | Derivatives | 169 |  |  |  |  |  |  |  |  |  |  |  |  |  |
45 | On demand interbank loans | 2,034 |  |  |  |  |  |  |  |  |  |  |  |  |  |
46 | Cash and cash-related assets | 102 |  |  |  |  |  |  |  |  |  |  |  |  |  |
47 | Other categories of assets (e.g. Goodwill, commodities etc.) | 42,816 |  |  |  |  |  |  |  |  |  |  |  |  |  |
48 | Total GAR assets (in the denominator) | 124,831 |  |  |  |  |  |  |  |  |  |  |  |  |  |
49 | Assets not covered for GAR calculation | 136,951 |  |  |  |  |  |  |  |  |  |  |  |  |  |
50 | Central governments and Supranational issuers | 9,974 |  |  |  |  |  |  |  |  |  |  |  |  |  |
51 | Central banks exposure | 64,425 |  |  |  |  |  |  |  |  |  |  |  |  |  |
52 | Trading book | 62,552 |  |  |  |  |  |  |  |  |  |  |  |  |  |
53 | Total assets | 261,782 |  |  |  |  |  |  |  |  |  |  |  |  |  |
Off-balance sheet exposures – Undertakings subject to NFRD disclosure obligations
54 | Financial guarantees | 1,552 |  | 31 | — | 1 | 4 |  | — | — | — | 37 | 31 | — | 1 | 4
55 | Assets under management | 426,676 |  | 3,283 | — | 305 | 2,037 |  | 83 | — | 6 | 13,101 | 3,366 | — | 305 | 2,043
56 | – of which: debt securities | 159,685 |  | 2,325 | — | 257 | 1,375 |  | 37 | — | 2 | 4,953 | 2,362 | — | 257 | 1,377
57 | – of which: equity instruments | 82,635 |  | 950 | — | 48 | 658 |  | 46 | — | 4 | 4,826 | 996 | — | 48 | 662

118 | Universal Registration Document and Annual Financial Report 2024

Appendix

Assets for the calculation of GAR-Based on Counterparty CapEx
|  | 2024
|  | a | b | c | d | e | f | g | h | i | j | k | o | s | w | ab | ac | ad | ae | af
Mn EUR | Disclosure reference date T
Total [gross] carry- ing amo- unt | Climate Change Mitigation (CCM) | Climate Change Adaptation (CCA) | Water and marine resources (WTR) | Circular economy (CE) | Pollution (PPC) | Biodiversity and Ecosystems (BIO) | TOTAL (CCM + CCA + WTR + CE + PPC + BIO)1
of which towards taxonomy relevant sectors (Taxonomy- eligible) | of which towards taxonomy relevant sectors (Taxonomy- eligible) | of which towards taxonomy relevant sectors (Taxonomy- eligible) | Of which towards taxonomy relevant sectors (Taxonomy- eligible)
| of which environmentally sustainable (Taxonomy-aligned) |  | of which environmentally sustainable (Taxonomy- aligned) |  |  |  |  |  | of which environmentally sustainable (Taxonomy-aligned)
|  | of which Use of Proceeds | of which transitional | of which enabling |  |  | of which Use of Proceeds | of which enabling |  |  |  |  |  |  | of which Use of Proceeds | of which transitional | of which enabling
| GAR – Covered assets in both numerator and denominator |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
1 | Loans and advances, debt securities and equity instruments not HfT eligible for GAR calculation | 20,478 | 13,124 | 775 | — | 55 | 217 | 372 | 15 | — | 7 | 1 | 83 | 238 | — | 13,818 | 790 | — | 55 | 224
2 | Financial undertakings | 7,170 | 2,456 | 117 | — | 2 | 5 | 11 | 1 | — | — | — | — | — | — | 2,467 | 118 | — | 2 | 5
3 | Credit institutions | 6,577 | 2,433 | 109 | — | — | — | 11 | 1 | — | — | — | — | — | — | 2,444 | 110 | — | — | —
4 | Loans and advances | 5,764 | 1,966 | 104 | — | — | — | 11 | 1 | — | — | — | — | — | — | 1,977 | 105 | — | — | —
5 | Debt securities, including UoP | 813 | 467 | 5 | — | — | — | — | — | — | — | — | — | — | — | 467 | 5 | — | — | —
6 | Equity instruments | — | — | — |  | — | — | — | — |  | — | — | — | — | — | — | — |  | — | —
7 | Other financial corporations | 593 | 23 | 8 | — | 2 | 5 | — | — | — | — | — | — | — | — | 23 | 8 | — | 2 | 5
8 | of which investment firms | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | —
9 | Loans and advances | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | —

Universal Registration Document and Annual Financial Report 2024 | 119

Assets for the calculation of GAR-Based on Counterparty CapEx (continued)
|  | 2024
|  | a | b | c | d | e | f | g | h | i | j | k | o | s | w | ab | ac | ad | ae | af
Mn EUR | Disclosure reference date T
Total [gross] carry- ing amo- unt | Climate Change Mitigation (CCM) | Climate Change Adaptation (CCA) | Water and marine resources (WTR) | Circular economy (CE) | Pollution (PPC) | Biodiversity and Ecosystems (BIO) | TOTAL (CCM + CCA + WTR + CE + PPC + BIO)1
of which towards taxonomy relevant sectors (Taxonomy- eligible) | of which towards taxonomy relevant sectors (Taxonomy- eligible) | of which towards taxonomy relevant sectors (Taxonomy- eligible) | Of which towards taxonomy relevant sectors (Taxonomy- eligible)
| of which environmentally sustainable (Taxonomy-aligned) |  | of which environmentally sustainable (Taxonomy- aligned) |  |  |  |  |  | of which environmentally sustainable (Taxonomy-aligned)
|  | of which Use of Proceeds | of which transitional | of which enabling |  |  | of which Use of Proceeds | of which enabling |  |  |  |  |  |  | of which Use of Proceeds | of which transitional | of which enabling
10 | Debt securities, including UoP | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | —
11 | Equity instruments | — | — | — |  | — | — | — | — |  | — | — | — | — | — | — | — |  | — | —
12 | of which management companies | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | —
13 | Loans and advances | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | —
14 | Debt securities, including UoP | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | —
15 | Equity instruments | — | — | — |  | — | — | — | — |  | — | — | — | — | — | — | — |  | — | —
16 | of which insurance undertakings | 497 | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | —
17 | Loans and advances | 497 | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | —
18 | Debt securities, including UoP | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | —
19 | Equity instruments | — | — | — |  | — | — | — | — |  | — | — | — | — | — | — | — |  | — | —
20 | Non-financial undertakings | 3,977 | 1,396 | 658 | — | 53 | 212 | 361 | 14 | — | 7 | 1 | 83 | 238 | — | 2,079 | 672 | — | 53 | 219
21 | Loans and advances | 3,928 | 1,380 | 651 | — | 52 | 210 | 361 | 14 | — | 7 | 1 | 82 | 237 | — | 2,061 | 665 | — | 52 | 217

120 | Universal Registration Document and Annual Financial Report 2024

Appendix

Assets for the calculation of GAR-Based on Counterparty CapEx (continued)
|  | 2024
|  | a | b | c | d | e | f | g | h | i | j | k | o | s | w | ab | ac | ad | ae | af
Mn EUR | Disclosure reference date T
Total [gross] carry- ing amo- unt | Climate Change Mitigation (CCM) | Climate Change Adaptation (CCA) | Water and marine resources (WTR) | Circular economy (CE) | Pollution (PPC) | Biodiversity and Ecosystems (BIO) | TOTAL (CCM + CCA + WTR + CE + PPC + BIO)1
of which towards taxonomy relevant sectors (Taxonomy- eligible) | of which towards taxonomy relevant sectors (Taxonomy- eligible) | of which towards taxonomy relevant sectors (Taxonomy- eligible) | Of which towards taxonomy relevant sectors (Taxonomy- eligible)
| of which environmentally sustainable (Taxonomy-aligned) |  | of which environmentally sustainable (Taxonomy- aligned) |  |  |  |  |  | of which environmentally sustainable (Taxonomy-aligned)
|  | of which Use of Proceeds | of which transitional | of which enabling |  |  | of which Use of Proceeds | of which enabling |  |  |  |  |  |  | of which Use of Proceeds | of which transitional | of which enabling
22 | Debt securities, including UoP | 36 | 8 | 5 | — | 1 | 2 | — | — | — | — | — | 1 | 1 | — | 10 | 5 | — | 1 | 2
23 | Equity instruments | 13 | 8 | 2 |  | — | — | — | — |  | — | — | — | — | — | 8 | 2 |  | — | —
24 | Households | 9,134 | 9,129 | — | — | — | — | — | — | — | — |  | — |  |  | 9,129 | — | — | — | —
25 | of which loans collateralised by residential immovable property | 9,111 | 9,111 | — | — | — | — | — | — | — | — |  | — |  |  | 9,111 | — | — | — | —
26 | of which building renovation loans | 3 | 3 | — | — | — | — | — | — | — | — |  | — |  |  | 3 | — | — | — | —
27 | of which motor vehicle loans | 20 | 15 | — | — | — | — |  |  |  |  |  |  |  |  | 15 | — | — | — | —
28 | Local governments financing | 194 | 141 | — | — | — | — | — | — | — | — | — | — | — | — | 141 | — | — | — | —
29 | Housing financing | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | —
30 | Other local government financing | 194 | 141 | — | — | — | — | — | — | — | — | — | — | — | — | 141 | — | — | — | —
31 | Collateral obtained by taking possession: residential and commercial immovable properties | 3 | 2 | — | — | — | — | — | — | — | — | — | — | — | — | 2 | — | — | — | —
| Total GAR assets (in the numerator) | 20,478 | 13,124 | 775 | — | 55 | 217 | 372 | 15 | — | 7 | 1 | 83 | 238 | — | 13,818 | 790 | — | 55 | 224

Universal Registration Document and Annual Financial Report 2024 | 121

Assets for the calculation of GAR-Based on Counterparty CapEx (continued)
|  | 2024
|  | a | b | c | d | e | f | g | h | i | j | k | o | s | w | ab | ac | ad | ae | af
Mn EUR | Disclosure reference date T
Total [gross] carry- ing amo- unt | Climate Change Mitigation (CCM) | Climate Change Adaptation (CCA) | Water and marine resources (WTR) | Circular economy (CE) | Pollution (PPC) | Biodiversity and Ecosystems (BIO) | TOTAL (CCM + CCA + WTR + CE + PPC + BIO)1
of which towards taxonomy relevant sectors (Taxonomy- eligible) | of which towards taxonomy relevant sectors (Taxonomy- eligible) | of which towards taxonomy relevant sectors (Taxonomy- eligible) | Of which towards taxonomy relevant sectors (Taxonomy- eligible)
| of which environmentally sustainable (Taxonomy-aligned) |  | of which environmentally sustainable (Taxonomy- aligned) |  |  |  |  |  | of which environmentally sustainable (Taxonomy-aligned)
|  | of which Use of Proceeds | of which transitional | of which enabling |  |  | of which Use of Proceeds | of which enabling |  |  |  |  |  |  | of which Use of Proceeds | of which transitional | of which enabling
32 | Assets excluded from the numerator for GAR calculation (covered in the denominator) | 89,440 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
33 | Financial and Non-financial undertakings | 63,538 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
34 | SMEs and NFCs (other than SMEs) not subject to NFRD disclosure obligations | 46,419 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
35 | Loans and advances | 43,330 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
36 | of which loans collateralised by commercial immovable property | 4,670 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
37 | of which building renovation loans | 8 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
38 | Debt securities | 2,847 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
39 | Equity instruments | 242 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
40 | Non-EU country counterparties not subject to NFRD disclosure obligations | 17,120 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
41 | Loans and advances | 15,013 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
42 | Debt securities | 2,106 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |

122 | Universal Registration Document and Annual Financial Report 2024

Appendix

Assets for the calculation of GAR-Based on Counterparty CapEx (continued)
|  | 2024
|  | a | b | c | d | e | f | g | h | i | j | k | o | s | w | ab | ac | ad | ae | af
Mn EUR | Disclosure reference date T
Total [gross] carry- ing amo- unt | Climate Change Mitigation (CCM) | Climate Change Adaptation (CCA) | Water and marine resources (WTR) | Circular economy (CE) | Pollution (PPC) | Biodiversity and Ecosystems (BIO) | TOTAL (CCM + CCA + WTR + CE + PPC + BIO)1
of which towards taxonomy relevant sectors (Taxonomy- eligible) | of which towards taxonomy relevant sectors (Taxonomy- eligible) | of which towards taxonomy relevant sectors (Taxonomy- eligible) | Of which towards taxonomy relevant sectors (Taxonomy- eligible)
| of which environmentally sustainable (Taxonomy-aligned) |  | of which environmentally sustainable (Taxonomy- aligned) |  |  |  |  |  | of which environmentally sustainable (Taxonomy-aligned)
|  | of which Use of Proceeds | of which transitional | of which enabling |  |  | of which Use of Proceeds | of which enabling |  |  |  |  |  |  | of which Use of Proceeds | of which transitional | of which enabling
43 | Equity instruments | 1 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
44 | Derivatives | 98 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
45 | On demand interbank loans | 1,857 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
46 | Cash and cash-related assets | 53 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
47 | Other categories of assets (e.g. Goodwill, commodities etc.) | 23,894 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
48 | Total GAR assets (in the denominator) | 109,918 | 13,124 | 775 | — | 55 | 217 | 372 | 15 | — | 7 | 1 | 83 | 238 | — | 13,818 | 790 | — | 55 | 224
49 | Assets not covered for GAR calculation | 132,827 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
50 | Central governments and Supranational issuers | 14,367 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
51 | Central banks exposure | 52,454 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
52 | Trading book | 66,006 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
53 | Total assets | 242,745 | 13,124 | 775 | — | 55 | 217 | 372 | 15 | — | 7 | 1 | 83 | 238 | — | 13,818 | 790 | — | 55 | 224
Off-balance sheet exposures – Undertakings subject to NFRD disclosure obligations
54 | Financial guarantees | 1,949 | 110 | 36 | — | 2 | 9 | — | — | — | — | — | 1 | — | — | 111 | 36 | — | 2 | 9
55 | Assets under management | 322,592 | 17,699 | 5,126 | — | 364 | 2,271 | 71 | 4 | — | 2 | 38 | 520 | 704 | 8 | 19,040 | 5,130 | — | 364 | 2,273
56 | of which debt securities | 128,296 | 6,777 | 2,615 | — | 191 | 1,009 | 25 | 1 | — | — | 32 | 124 | 87 | 4 | 7,049 | 2,616 | — | 191 | 1,009
57 | of which equity instruments | 70,277 | 8,137 | 2,511 | — | 173 | 1,262 | 46 | 3 | — | 2 | 5 | 396 | 618 | 3 | 9,205 | 2,514 | — | 173 | 1,264

Universal Registration Document and Annual Financial Report 2024 | 123

Assets for the calculation of GAR-Based on Counterparty CapEx (continued)
|  | 2023
|  | a | b | c | d | e | f | g | h | i | j | ab | ac | ad | ae | af
Mn EUR | Disclosure reference date T-1
Total gross carrying amount | Climate Change Mitigation (CCM) | Climate Change Adaptation (CCA) | TOTAL (CCM + CCA)
of which towards taxonomy relevant sectors (Taxonomy-eligible) | of which towards taxonomy relevant sectors (Taxonomy- eligible) | of which towards taxonomy relevant sectors (Taxonomy-eligible)
| of which environmentally sustainable (Taxonomy- aligned) |  | of which environmentally sustainable (Taxonomy-aligned) |  | of which environmentally sustainable (Taxonomy- aligned)
|  | of which Use of Proceeds | of which transitional | of which enabling |  |  | of which Use of Proceeds | of which enabling |  |  | of which Use of Proceeds | of which transitional | of which enabling
| GAR – Covered assets in both numerator and denominator |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
1 | Loans and advances, debt securities and equity instruments not HfT eligible for GAR calculation | 17,906 |  | 338 | — | 23 | 53 |  | 18 | — | 6 | 11,050 | 356 | — | 23 | 59
2 | Financial undertakings | 5,200 |  | — | — | — | — |  | — | — | — | 259 | — | — | — | —
3 | Credit institutions | 5,078 |  | — | — | — | — |  | — | — | — | 259 | — | — | — | —
4 | Loans and advances | 4,598 |  | — | — | — | — |  | — | — | — | — | — | — | — | —
5 | Debt securities, including UoP | 480 |  | — | — | — | — |  | — | — | — | 259 | — | — | — | —
6 | Equity instruments | — |  | — |  | — | — |  | — |  | — | — | — |  | — | —
7 | Other financial corporations | 122 |  | — | — | — | — |  | — | — | — | — | — | — | — | —
8 | – of which: investment firms | 2 |  | — | — | — | — |  | — | — | — | — | — | — | — | —
9 | Loans and advances | 2 |  | — | — | — | — |  | — | — | — | — | — | — | — | —
10 | Debt securities, including UoP | — |  | — | — | — | — |  | — | — | — | — | — | — | — | —
11 | Equity instruments | — |  | — |  | — | — |  | — |  | — | — | — |  | — | —
12 | – of which: management companies | — |  | — | — | — | — |  | — | — | — | — | — | — | — | —
13 | Loans and advances | — |  | — | — | — | — |  | — | — | — | — | — | — | — | —
14 | Debt securities, including UoP | — |  | — | — | — | — |  | — | — | — | — | — | — | — | —
15 | Equity instruments | — |  | — |  | — | — |  | — |  | — | — | — |  | — | —
16 | – of which: insurance undertakings | — |  | — | — | — | — |  | — | — | — | — | — | — | — | —
17 | Loans and advances | — |  | — | — | — | — |  | — | — | — | — | — | — | — | —
18 | Debt securities, including UoP | — |  | — | — | — | — |  | — | — | — | — | — | — | — | —
19 | Equity instruments | — |  | — |  | — | — |  | — |  | — | — | — |  | — | —
20 | Non-financial undertakings | 2,780 |  | 338 | — | 23 | 53 |  | 18 | — | 6 | 875 | 356 | — | 23 | 59
21 | Loans and advances | 2,721 |  | 318 | — | 22 | 47 |  | 18 | — | 6 | 852 | 336 | — | 22 | 53
22 | Debt securities, including UoP | 51 |  | 16 | — | 1 | 3 |  | — | — | — | 19 | 16 | — | 1 | 3
23 | Equity instruments | 8 |  | 4 |  | — | 3 |  | — |  | — | 4 | 4 |  | — | 3
24 | Households | 9,799 |  | — | — | — | — |  | — | — | — | 9,789 | — | — | — | —
25 | – of which: loans collateralised by residential immovable property | 9,776 |  | — | — | — | — |  | — | — | — | 9,776 | — | — | — | —
26 | – of which: building renovation loans | 2 |  | — | — | — | — |  | — | — | — | 2 | — | — | — | —
27 | – of which: motor vehicle loans | 21 |  | — | — | — | — |  |  |  |  | 11 | — | — | — | —
28 | Local governments financing | 124 |  | — | — | — | — |  | — | — | — | 124 | — | — | — | —
29 | Housing financing | — |  | — | — | — | — |  | — | — | — | — | — | — | — | —
30 | Other local government financing | 124 |  | — | — | — | — |  | — | — | — | 124 | — | — | — | —
31 | Collateral obtained by taking possession: residential and commercial immovable properties | 3 |  | — | — | — | — |  | — | — | — | 3 | — | — | — | —

124 | Universal Registration Document and Annual Financial Report 2024

Appendix

Assets for the calculation of GAR-Based on Counterparty CapEx (continued)
|  | 2023
|  | a | b | c | d | e | f | g | h | i | j | ab | ac | ad | ae | af
Mn EUR | Disclosure reference date T-1
Total gross carrying amount | Climate Change Mitigation (CCM) | Climate Change Adaptation (CCA) | TOTAL (CCM + CCA)
of which towards taxonomy relevant sectors (Taxonomy-eligible) | of which towards taxonomy relevant sectors (Taxonomy- eligible) | of which towards taxonomy relevant sectors (Taxonomy-eligible)
| of which environmentally sustainable (Taxonomy- aligned) |  | of which environmentally sustainable (Taxonomy-aligned) |  | of which environmentally sustainable (Taxonomy- aligned)
|  | of which Use of Proceeds | of which transitional | of which enabling |  |  | of which Use of Proceeds | of which enabling |  |  | of which Use of Proceeds | of which transitional | of which enabling
| Total GAR assets (in the numerator) | 17,906 |  | 338 | — | 23 | 53 |  | 18 | — | 6 | 11,050 | 356 | — | 23 | 59
32 | Assets excluded from the numerator for GAR calculation (covered in the denominator) | 106,925 |  |  |  |  |  |  |  |  |  |  |  |  |  |
33 | Financial and Non-financial undertakings | 61,804 |  |  |  |  |  |  |  |  |  |  |  |  |  |
34 | SMEs and NFCs (other than SMEs) not subject to NFRD disclosure obligations | 51,676 |  |  |  |  |  |  |  |  |  |  |  |  |  |
35 | Loans and advances | 48,602 |  |  |  |  |  |  |  |  |  |  |  |  |  |
36 | – of which: loans collateralised by commercial immovable property | 3,973 |  |  |  |  |  |  |  |  |  |  |  |  |  |
37 | – of which: building renovation loans | 5 |  |  |  |  |  |  |  |  |  |  |  |  |  |
38 | Debt securities | 2,910 |  |  |  |  |  |  |  |  |  |  |  |  |  |
39 | Equity instruments | 164 |  |  |  |  |  |  |  |  |  |  |  |  |  |
40 | Non-EU country counterparties not subject to NFRD disclosure obligations | 10,128 |  |  |  |  |  |  |  |  |  |  |  |  |  |
41 | Loans and advances | 9,083 |  |  |  |  |  |  |  |  |  |  |  |  |  |
42 | Debt securities | 1,043 |  |  |  |  |  |  |  |  |  |  |  |  |  |
43 | Equity instruments | 1 |  |  |  |  |  |  |  |  |  |  |  |  |  |
44 | Derivatives | 169 |  |  |  |  |  |  |  |  |  |  |  |  |  |
45 | On demand interbank loans | 2,034 |  |  |  |  |  |  |  |  |  |  |  |  |  |
46 | Cash and cash-related assets | 102 |  |  |  |  |  |  |  |  |  |  |  |  |  |
47 | Other categories of assets (e.g. Goodwill, commodities etc.) | 42,816 |  |  |  |  |  |  |  |  |  |  |  |  |  |
48 | Total GAR assets (in the denominator) | 124,831 |  |  |  |  |  |  |  |  |  |  |  |  |  |
49 | Assets not covered for GAR calculation | 136,951 |  |  |  |  |  |  |  |  |  |  |  |  |  |
50 | Central governments and Supranational issuers | 9,974 |  |  |  |  |  |  |  |  |  |  |  |  |  |
51 | Central banks exposure | 64,425 |  |  |  |  |  |  |  |  |  |  |  |  |  |
52 | Trading book | 62,552 |  |  |  |  |  |  |  |  |  |  |  |  |  |
53 | Total assets | 261,782 |  |  |  |  |  |  |  |  |  |  |  |  |  |
Off-balance sheet exposures – Undertakings subject to NFRD disclosure obligations
54 | Financial guarantees | 1,552 |  | 25 | — | 1 | 4 |  | — | — | — | 45 | 25 | — | 1 | 4
55 | Assets under management | 426,676 |  | 5,760 | — | 448 | 2,998 |  | 295 | — | 2 | 17,564 | 6,055 | — | 448 | 3,000
56 | – of which:debt securities | 159,685 |  | 3,856 | — | 337 | 1,966 |  | 221 | — | — | 7,218 | 4,077 | — | 337 | 1,966
57 | – of which: equity instruments | 82,635 |  | 1,884 | — | 110 | 1,020 |  | 74 | — | 1 | 7,019 | 1,958 | — | 110 | 1,021

Universal Registration Document and Annual Financial Report 2024 | 125

GAR Sector information (Template 2)
This table presents eligible and aligned exposures in the banking book
to non-financial counterparties, broken down by sector of economic
activities based on NACE code of the principal activity of the
immediate counterparty. The values reported under gross carrying
amount represents the taxonomy-eligible amount. The NACE code
determining the sector classification of the counterparty represents
the principal activity of the counterparty whether Taxonomy eligible or
not. Consequently, there may be inclusion of some sectors with a
NACE code which is associated with a non-eligible activity in the EU
Taxonomy framework, but where there is some aligned exposure
based on non-principal activities.
The table has been duplicated to present the information separately
based on Turnover and CapEx KPIs as reported by the Bank's
counterparties.
1 The ‘Total’ column in the table includes exposures towards taxonomy
relevant sectors (Taxonomy-eligible) for all six environmental objectives
(CCM, CCA, WTR, CE, PPC and BIO) and includes environmentally
sustainable exposures (Taxonomy-aligned) for the two climate objectives
only (CCM and CCA).

GAR-Based on Counterparty Turnover
|  | 2024
|  | a | b | c | d | e | f | g | h | i | m | q | u | y | z | aa | ab
| Breakdown by sector – NACE 4 digits level (code and label) | Climate Change Mitigation (CCM) | Climate Change Adaptation (CCA) | Water and marine resources (WTR) | Circular economy (CE) | Pollution (PPC) | Biodiversity and Ecosystems (BIO) | TOTAL (CCM + CCA + WTR + CE + PPC + BIO)1
| Non- Financial corporates (Subject to NFRD) | SMEs and other NFC not subject to NFRD | Non- Financial corporates (Subject to NFRD) | SMEs and other NFC not subject to NFRD | Non-Financial corporates (Subject to NFRD) | Non-Financial corporates (Subject to NFRD) | SMEs and other NFC not subject to NFRD
| [Gross] carrying amount | [Gross] carrying amount | [Gross] carrying amount | [Gross] carrying amount | [Gross] carrying amount | [Gross] carrying amount | [Gross] carrying amount
| Mn EUR | of which environmentally sustainable (CCM) | Mn EUR | of which environmentally sustainable (CCM) | Mn EUR | of which environmentally sustainable (CCA) | Mn EUR | of which environmentally sustainable (CCA) | Mn EUR | Mn EUR | Mn EUR | Mn EUR | Mn EUR | of which environmentally sustainable (CCM + CCA + WTR + CE + PPC + BIO) | Mn EUR | of which environmentally sustainable (CCM + CCA + WTR + CE + PPC + BIO)
1 | B06.10 – Extraction of crude petroleum | 8 | 1 |  |  | — | — |  |  | — | — | — | — | 8 | 1 |  |
2 | B08.99 – Other mining and quarrying n.e.c. | 1 | — |  |  | — | — |  |  | — | — | — | — | 1 | — |  |
3 | C17.11 – Manufacture of pulp | 11 | 11 |  |  | — | — |  |  | — | — | — | — | 11 | 11 |  |
4 | C19.20 – Manufacture of refined petroleum products | 2 | — |  |  | — | — |  |  | — | — | — | — | 2 | — |  |
5 | C20.13 – Manufacture of other inorganic basic chemicals | 1 | — |  |  | — | — |  |  | — | — | — | — | 1 | — |  |
6 | C21.20 – Manufacture of pharmaceutical preparations | — | — |  |  | — | — |  |  | — | 2 | 636 | — | 638 | — |  |
7 | C22.29 – Manufacture of other plastic products | — | — |  |  | — | — |  |  | — | 2 | — | — | 2 | — |  |
8 | C23.51 – Manufacture of cement | 14 | 1 |  |  | — | — |  |  | — | — | — | — | 14 | 1 |  |
9 | C26.11 – Manufacture of electronic components | 17 | 9 |  |  | — | — |  |  | — | — | — | — | 17 | 9 |  |
10 | C26.60 – Manufacture of irradiation, electromedical and electrotherapeutic equipment | — | — |  |  | — | — |  |  | — | 48 | — | — | 48 | — |  |
11 | C27.20 – Manufacture of batteries and accumulators | 3 | — |  |  | — | — |  |  | — | — | — | — | 3 | — |  |

126 | Universal Registration Document and Annual Financial Report 2024

Appendix

GAR-Based on Counterparty Turnover (continued)
|  | 2024
|  | a | b | c | d | e | f | g | h | i | m | q | u | y | z | aa | ab
| Breakdown by sector – NACE 4 digits level (code and label) | Climate Change Mitigation (CCM) | Climate Change Adaptation (CCA) | Water and marine resources (WTR) | Circular economy (CE) | Pollution (PPC) | Biodiversity and Ecosystems (BIO) | TOTAL (CCM + CCA + WTR + CE + PPC + BIO)1
| Non- Financial corporates (Subject to NFRD) | SMEs and other NFC not subject to NFRD | Non- Financial corporates (Subject to NFRD) | SMEs and other NFC not subject to NFRD | Non-Financial corporates (Subject to NFRD) | Non-Financial corporates (Subject to NFRD) | SMEs and other NFC not subject to NFRD
| [Gross] carrying amount | [Gross] carrying amount | [Gross] carrying amount | [Gross] carrying amount | [Gross] carrying amount | [Gross] carrying amount | [Gross] carrying amount
| Mn EUR | of which environmentally sustainable (CCM) | Mn EUR | of which environmentally sustainable (CCM) | Mn EUR | of which environmentally sustainable (CCA) | Mn EUR | of which environmentally sustainable (CCA) | Mn EUR | Mn EUR | Mn EUR | Mn EUR | Mn EUR | of which environmentally sustainable (CCM + CCA + WTR + CE + PPC + BIO) | Mn EUR | of which environmentally sustainable (CCM + CCA + WTR + CE + PPC + BIO)
12 | C28.22 – Manufacture of lifting and handling equipment | 13 | 13 |  |  | — | — |  |  | — | 6 | — | — | 19 | 13 |  |
13 | C28.99 – Manufacture of other special-purpose machinery n.e.c. | 7 | — |  |  | — | — |  |  | — | — | — | — | 7 | — |  |
14 | C29.10 – Manufacture of motor vehicles | 7 | 1 |  |  | — | — |  |  | — | 1 | — | — | 8 | 1 |  |
15 | C29.32 – Manufacture of other parts and accessories for motor vehicles | 1 | — |  |  | — | — |  |  | — | — | — | — | 1 | — |  |
16 | C30.20 – Manufacture of railway locomotives and rolling stock | 6 | 3 |  |  | — | — |  |  | — | — | — | — | 6 | 3 |  |
17 | C30.91 – Manufacture of motorcycles | 2 | — |  |  | — | 1 |  |  | — | — | — | — | 2 | 1 |  |
18 | C32.50 – Manufacture of medical and dental instruments and supplies | 0 | — |  |  | — | — |  |  | — | 4 | — | — | 4 | — |  |
19 | C32.99 – Other manufacturing n.e.c. | 0 | — |  |  | — | — |  |  | — | 1 | — | — | 1 | — |  |
20 | D35.11 – Production of electricity | 86 | 66 |  |  | — | — |  |  | — | — | — | — | 86 | 66 |  |
21 | E38.11 – Collection of non-hazardous waste | 2 | — |  |  | — | — |  |  | — | — | — | — | 2 | — |  |
22 | F41.20 – Construction of residential and non- residential buildings | 4 | 2 |  |  | — | — |  |  | — | — | — | — | 4 | 2 |  |
23 | F42.11 – Construction of roads and motorways | 13 | 1 |  |  | — | — |  |  | — | — | — | — | 13 | 1 |  |
24 | G46.21 – Wholesale of grain, unmanufactured tobacco, seeds and animal feeds | 3 | 3 |  |  | — | — |  |  | — | 1 | — | — | 4 | 3 |  |
25 | G46.62 – Wholesale of machine tools | 105 | 46 |  |  | — | — |  |  | — | — | — | — | 105 | 46 |  |
26 | G46.63 – Wholesale of mining, construction and civil engineering machinery | 1 | — |  |  | — | — |  |  | — | — | — | — | 1 | — |  |
27 | H50.20 – Sea and coastal freight water transport | 36 | — |  |  | — | — |  |  | — | — | — | — | 36 | — |  |

Universal Registration Document and Annual Financial Report 2024 | 127

GAR-Based on Counterparty Turnover (continued)
|  | 2024
|  | a | b | c | d | e | f | g | h | i | m | q | u | y | z | aa | ab
| Breakdown by sector – NACE 4 digits level (code and label) | Climate Change Mitigation (CCM) | Climate Change Adaptation (CCA) | Water and marine resources (WTR) | Circular economy (CE) | Pollution (PPC) | Biodiversity and Ecosystems (BIO) | TOTAL (CCM + CCA + WTR + CE + PPC + BIO)1
| Non- Financial corporates (Subject to NFRD) | SMEs and other NFC not subject to NFRD | Non- Financial corporates (Subject to NFRD) | SMEs and other NFC not subject to NFRD | Non-Financial corporates (Subject to NFRD) | Non-Financial corporates (Subject to NFRD) | SMEs and other NFC not subject to NFRD
| [Gross] carrying amount | [Gross] carrying amount | [Gross] carrying amount | [Gross] carrying amount | [Gross] carrying amount | [Gross] carrying amount | [Gross] carrying amount
| Mn EUR | of which environmentally sustainable (CCM) | Mn EUR | of which environmentally sustainable (CCM) | Mn EUR | of which environmentally sustainable (CCA) | Mn EUR | of which environmentally sustainable (CCA) | Mn EUR | Mn EUR | Mn EUR | Mn EUR | Mn EUR | of which environmentally sustainable (CCM + CCA + WTR + CE + PPC + BIO) | Mn EUR | of which environmentally sustainable (CCM + CCA + WTR + CE + PPC + BIO)
28 | H52.29 – Other transportation support activities | — | — |  |  | 1 | — |  |  | — | — | — | — | 1 | — |  |
29 | I55.10 – Hotels and similar accommodation | 4 | — |  |  | — | — |  |  | — | — | — | — | 4 | — |  |
30 | J58.21 – Publishing of computer games | 1 | — |  |  | — | — |  |  | — | — | — | — | 1 | — |  |
31 | J61.10 – Wired telecommunications activities | — | 2 |  |  | — | — |  |  | — | 1 | — | — | 1 | 2 |  |
32 | J62.01 – Computer programming activities | 1 | — |  |  | — | — |  |  | — | — | — | — | 1 | — |  |
33 | J62.02 – Computer consultancy activities | 1 | — |  |  | — | — |  |  | — | — | — | — | 1 | — |  |
34 | J62.09 – Other information technology and computer service activities | 14 | — |  |  | — | — |  |  | — | — | — | — | 14 | — |  |
35 | J63.11 – Data processing, hosting and related activities | — | — |  |  | 1 | — |  |  | — | — | — | — | 1 | — |  |
36 | K64.20 – Activities of holding companies | 117 | 66 |  |  | 1 | — |  |  | 1 | 52 | — | — | 171 | 66 |  |
37 | L68.20 – Renting and operating of own or leased real estate | 226 | 93 |  |  | 3 | — |  |  | — | — | — | — | 229 | 93 |  |
38 | M70.10 – Activities of head offices | 35 | 13 |  |  | 221 | 4 |  |  | — | 19 | 2 | 1 | 278 | 17 |  |
39 | M70.22 – Business and other management consultancy activities | 6 | — |  |  | — | — |  |  | — | — | — | — | 6 | — |  |
40 | M71.12 – Engineering activities and related technical consultancy | 7 | 6 |  |  | — | — |  |  | — | 9 | — | — | 16 | 6 |  |
41 | M73.11 – Advertising agencies | 2 | — |  |  | — | — |  |  | — | — | — | — | 2 | — |  |
42 | N79.12 – Tour operator activities | 1 | — |  |  | — | — |  |  | — | — | — | — | 1 | — |  |
43 | S96.09 – Other personal service activities n.e.c. | — | — |  |  | — | — |  |  | — | 1 | — | — | 1 | — |  |

128 | Universal Registration Document and Annual Financial Report 2024

Appendix

GAR-Based on Counterparty CapEx
|  | 2024
|  | a | b | c | d | e | f | g | h | i | m | q | u | y | z | aa | ab
| Breakdown by sector - NACE 4 digits level (code and label) | Climate Change Mitigation (CCM) | Climate Change Adaptation (CCA) | Water and marine resources (WTR) | Circular economy (CE) | Pollution (PPC) | Biodi-versity and Ecosystems (BIO) | TOTAL (CCM + CCA + WTR + CE + PPC + BIO)1
| Non- Financial corporates (Subject to NFRD) | SMEs and other NFC not subject to NFRD | Non- Financial corporates (Subject to NFRD) | SMEs and other NFC not subject to NFRD | Non-Financial corporates (Subject to NFRD) | Non-Financial corporates (Subject to NFRD) | SMEs and other NFC not subject to NFRD
| [Gross] carrying amount | [Gross] carrying amount | [Gross] carrying amount | [Gross] carrying amount | [Gross] carrying amount | [Gross] carrying amount | [Gross] carrying amount
| Mn EUR | of which environmentally sustainable (CCM) | Mn EUR | of which environmentally sustainable (CCM) | Mn EUR | of which environmentally sustainable (CCA) | Mn EUR | of which environmentally sustainable (CCA) | Mn EUR | Mn EUR | Mn EUR | Mn EUR | Mn EUR | of which environmentally sustainable (CCM + CCA + WTR + CE + PPC + BIO) | Mn EUR | of which environmentally sustainable (CCM + CCA + WTR + CE + PPC + BIO)
1 | B06.10 – Extraction of crude petroleum | 37 | 31 |  |  | — | — |  |  | — | — | — | — | 37 | 31 |  |
2 | B08.99 – Other mining and quarrying n.e.c. | 1 | — |  |  | — | — |  |  | — | — | — | — | 1 | — |  |
3 | C11.05 – Manufacture of beer | 1 | — |  |  | — | — |  |  | — | — | — | — | 1 | — |  |
4 | C17.11 – Manufacture of pulp | 24 | 22 |  |  | — | — |  |  | — | 7 | — | — | 31 | 22 |  |
5 | C19.20 – Manufacture of refined petroleum products | 6 | 3 |  |  | — | — |  |  | — | — | — | — | 6 | 3 |  |
6 | C20.13 – Manufacture of other inorganic basic chemicals | 1 | — |  |  | — | — |  |  | — | — | — | — | 1 | — |  |
7 | C21.20 – Manufacture of pharmaceutical preparations | 119 | 1 |  |  | — | — |  |  | — | — | 237 | — | 356 | 1 |  |
8 | C22.29 – Manufacture of other plastic products | — | — |  |  | — | — |  |  | — | 2 | — | — | 2 | — |  |
9 | C23.41 – Manufacture of ceramic household and ornamental articles | 2 | — |  |  | — | — |  |  | — | — | — | — | 2 | — |  |
10 | C23.51 – Manufacture of cement | 18 | 6 |  |  | — | — |  |  | — | — | — | — | 18 | 6 |  |
11 | C26.11 – Manufacture of electronic components | 24 | 8 |  |  | — | — |  |  | — | — | — | — | 24 | 8 |  |
12 | C26.60 – Manufacture of irradiation, electromedical and electrotherapeutic equipment | 28 | — |  |  | — | — |  |  | — | 6 | — | — | 34 | — |  |
13 | C27.20 – Manufacture of batteries and accumulators | 2 | — |  |  | — | — |  |  | — | — | — | — | 2 | — |  |
14 | C28.22 – Manufacture of lifting and handling equipment | 22 | 13 |  |  | — | — |  |  | — | 7 | — | — | 29 | 13 |  |

Universal Registration Document and Annual Financial Report 2024 | 129

GAR-Based on Counterparty CapEx (continued)
|  | 2024
|  | a | b | c | d | e | f | g | h | i | m | q | u | y | z | aa | ab
| Breakdown by sector - NACE 4 digits level (code and label) | Climate Change Mitigation (CCM) | Climate Change Adaptation (CCA) | Water and marine resources (WTR) | Circular economy (CE) | Pollution (PPC) | Biodi-versity and Ecosystems (BIO) | TOTAL (CCM + CCA + WTR + CE + PPC + BIO)1
| Non- Financial corporates (Subject to NFRD) | SMEs and other NFC not subject to NFRD | Non- Financial corporates (Subject to NFRD) | SMEs and other NFC not subject to NFRD | Non-Financial corporates (Subject to NFRD) | Non-Financial corporates (Subject to NFRD) | SMEs and other NFC not subject to NFRD
| [Gross] carrying amount | [Gross] carrying amount | [Gross] carrying amount | [Gross] carrying amount | [Gross] carrying amount | [Gross] carrying amount | [Gross] carrying amount
| Mn EUR | of which environmentally sustainable (CCM) | Mn EUR | of which environmentally sustainable (CCM) | Mn EUR | of which environmentally sustainable (CCA) | Mn EUR | of which environmentally sustainable (CCA) | Mn EUR | Mn EUR | Mn EUR | Mn EUR | Mn EUR | of which environmentally sustainable (CCM + CCA + WTR + CE + PPC + BIO) | Mn EUR | of which environmentally sustainable (CCM + CCA + WTR + CE + PPC + BIO)
15 | C28.92 – Manufacture of machinery for mining, quarrying and construction | 1 | — |  |  | — | 1 |  |  | — | — | — | — | 1 | 1 |  |
16 | C28.99 – Manufacture of other special- purpose machinery n.e.c. | 8 | — |  |  | — | — |  |  | — | — | — | — | 8 | — |  |
17 | C29.10 – Manufacture of motor vehicles | 12 | 3 |  |  | — | — |  |  | — | — | — | — | 12 | 3 |  |
18 | C29.32 – Manufacture of other parts and accessories for motor vehicles | 7 | 4 |  |  | — | — |  |  | — | — | — | — | 7 | 4 |  |
19 | C30.20 – Manufacture of railway locomotives and rolling stock | 5 | 3 |  |  | — | — |  |  | — | — | — | — | 5 | 3 |  |
20 | C30.91 – Manufacture of motorcycles | 2 | — |  |  | — | — |  |  | — | — | — | — | 2 | — |  |
21 | C32.50 – Manufacture of medical and dental instruments and supplies | 7 | — |  |  | — | — |  |  | — | 1 | — | — | 8 | — |  |
22 | C32.99 – Other manufacturing n.e.c. | 8 | 1 |  |  | — | — |  |  | — | — | — | — | 8 | 1 |  |
23 | D35.11 – Production of electricity | 123 | 81 |  |  | — | — |  |  | — | — | — | — | 123 | 81 |  |
24 | E38.11 – Collection of non-hazardous waste | 1 | — |  |  | — | — |  |  | — | — | — | — | 1 | — |  |
25 | F41.20 – Construction of residential and non- residential buildings | 4 | 1 |  |  | — | — |  |  | — | — | — | — | 4 | 1 |  |
26 | F42.11 – Construction of roads and motorways | 7 | 2 |  |  | — | — |  |  | — | — | — | — | 7 | 2 |  |
27 | G46.21 – Wholesale of grain, unmanufactured tobacco, seeds and animal feeds | 33 | 31 |  |  | — | — |  |  | — | — | — | — | 33 | 31 |  |
28 | G46.62 – Wholesale of machine tools | 136 | 105 |  |  | — | — |  |  | — | — | — | — | 136 | 105 |  |

130 | Universal Registration Document and Annual Financial Report 2024

Appendix

GAR-Based on Counterparty CapEx (continued)
|  | 2024
|  | a | b | c | d | e | f | g | h | i | m | q | u | y | z | aa | ab
| Breakdown by sector - NACE 4 digits level (code and label) | Climate Change Mitigation (CCM) | Climate Change Adaptation (CCA) | Water and marine resources (WTR) | Circular economy (CE) | Pollution (PPC) | Biodi-versity and Ecosystems (BIO) | TOTAL (CCM + CCA + WTR + CE + PPC + BIO)1
| Non- Financial corporates (Subject to NFRD) | SMEs and other NFC not subject to NFRD | Non- Financial corporates (Subject to NFRD) | SMEs and other NFC not subject to NFRD | Non-Financial corporates (Subject to NFRD) | Non-Financial corporates (Subject to NFRD) | SMEs and other NFC not subject to NFRD
| [Gross] carrying amount | [Gross] carrying amount | [Gross] carrying amount | [Gross] carrying amount | [Gross] carrying amount | [Gross] carrying amount | [Gross] carrying amount
| Mn EUR | of which environmentally sustainable (CCM) | Mn EUR | of which environmentally sustainable (CCM) | Mn EUR | of which environmentally sustainable (CCA) | Mn EUR | of which environmentally sustainable (CCA) | Mn EUR | Mn EUR | Mn EUR | Mn EUR | Mn EUR | of which environmentally sustainable (CCM + CCA + WTR + CE + PPC + BIO) | Mn EUR | of which environmentally sustainable (CCM + CCA + WTR + CE + PPC + BIO)
29 | G46.63 – Wholesale of mining, construction and civil engineering machinery | 2 | — |  |  | — | — |  |  | — | — | — | — | 2 | — |  |
30 | G46.66 – Wholesale of other office machinery and equipment | 6 | — |  |  | — | — |  |  | — | — | — | — | 6 | — |  |
31 | G46.72 – Wholesale of metals and metal ores | 4 | — |  |  | — | — |  |  | — | — | — | — | 4 | — |  |
32 | G46.75 – Wholesale of chemical products | — | — |  |  | 1 | — |  |  | — | — | — | — | 1 | — |  |
33 | G47.19 – Other retail sale in non-specialised stores | 2 | — |  |  | — | — |  |  | — | — | — | — | 2 | — |  |
34 | G47.72 – Retail sale of footwear and leather goods in specialised stores | 4 | — |  |  | — | — |  |  | — | — | — | — | 4 | — |  |
35 | H50.20 – Sea and coastal freight water transport | 36 | 2 |  |  | — | — |  |  | — | — | — | — | 36 | 2 |  |
36 | H52.29 – Other transportation support activities | — | — |  |  | 1 | — |  |  | — | — | — | — | 1 | — |  |
37 | I55.10 – Hotels and similar accommodation | 4 | — |  |  | — | — |  |  | — | — | — | — | 4 | — |  |
38 | J58.21 – Publishing of computer games | 1 | — |  |  | — | — |  |  | — | — | — | — | 1 | — |  |
39 | J58.29 – Other software publishing | 47 | 29 |  |  | — | — |  |  | — | — | — | — | 47 | 29 |  |
40 | J62.01 – Computer programming activities | 1 | — |  |  | — | — |  |  | — | — | — | — | 1 | — |  |
41 | J62.02 – Computer consultancy activities | 49 | 11 |  |  | — | — |  |  | — | — | — | — | 49 | 11 |  |
42 | J62.09 – Other information technology and computer service activities | 6 | — |  |  | — | — |  |  | — | — | — | — | 6 | — |  |
43 | J63.11 – Data processing, hosting and related activities | 1 | — |  |  | 1 | — |  |  | — | — | — | — | 2 | — |  |

Universal Registration Document and Annual Financial Report 2024 | 131

GAR-Based on Counterparty CapEx (continued)
|  | 2024
|  | a | b | c | d | e | f | g | h | i | m | q | u | y | z | aa | ab
| Breakdown by sector - NACE 4 digits level (code and label) | Climate Change Mitigation (CCM) | Climate Change Adaptation (CCA) | Water and marine resources (WTR) | Circular economy (CE) | Pollution (PPC) | Biodi-versity and Ecosystems (BIO) | TOTAL (CCM + CCA + WTR + CE + PPC + BIO)1
| Non- Financial corporates (Subject to NFRD) | SMEs and other NFC not subject to NFRD | Non- Financial corporates (Subject to NFRD) | SMEs and other NFC not subject to NFRD | Non-Financial corporates (Subject to NFRD) | Non-Financial corporates (Subject to NFRD) | SMEs and other NFC not subject to NFRD
| [Gross] carrying amount | [Gross] carrying amount | [Gross] carrying amount | [Gross] carrying amount | [Gross] carrying amount | [Gross] carrying amount | [Gross] carrying amount
| Mn EUR | of which environmentally sustainable (CCM) | Mn EUR | of which environmentally sustainable (CCM) | Mn EUR | of which environmentally sustainable (CCA) | Mn EUR | of which environmentally sustainable (CCA) | Mn EUR | Mn EUR | Mn EUR | Mn EUR | Mn EUR | of which environmentally sustainable (CCM + CCA + WTR + CE + PPC + BIO) | Mn EUR | of which environmentally sustainable (CCM + CCA + WTR + CE + PPC + BIO)
44 | K64.20 – Activities of holding companies | 187 | 94 |  |  | — | — |  |  | 1 | 29 | — | — | 217 | 94 |  |
45 | L68.20 – Renting and operating of own or leased real estate | 236 | 184 |  |  | — | — |  |  | — | — | — | — | 236 | 184 |  |
46 | M70.10 – Activities of head offices | 93 | 18 |  |  | 335 | 7 |  |  | — | 30 | 1 | — | 459 | 25 |  |
47 | M70.22 – Business and other management consultancy activities | 21 | — |  |  | 23 | 6 |  |  | — | — | — | — | 44 | 6 |  |
48 | M71.12 – Engineering activities and related technical consultancy | 13 | 4 |  |  | — | — |  |  | — | — | — | — | 13 | 4 |  |
49 | M73.11 – Advertising agencies | 18 | 1 |  |  | — | — |  |  | — | — | — | — | 18 | 1 |  |
50 | N77.29 – Renting and leasing of other personal and household goods | 1 | — |  |  | — | — |  |  | — | — | — | — | 1 | — |  |
51 | N79.12 – Tour operator activities | 14 | — |  |  | — | — |  |  | — | — | — | — | 14 | — |  |
52 | N82.99 – Other business support service activities n.e.c. | 3 | — |  |  | — | — |  |  | — | — | — | — | 3 | — |  |
53 | Q86.90 – Other human health activities | 3 | — |  |  | — | — |  |  | — | — | — | — | 3 | — |  |
54 | R92.00 – Gambling and betting activities | 5 | — |  |  | — | — |  |  | — | — | — | — | 5 | — |  |
55 | S96.09 – Other personal service activities n.e.c. | — | — |  |  | — | — |  |  | — | 1 | — | — | 1 | — |  |

132 | Universal Registration Document and Annual Financial Report 2024

Appendix

GAR KPI stock (Template 3)
This table presents eligible and aligned exposures as a proportion of total covered assets by Taxonomy environmental objective. The table has
been duplicated to present the information separately based on Turnover and CapEx KPIs as reported by the Bank's counterparties.
1 The ‘Total’ column in the table includes exposures towards taxonomy relevant sectors (Taxonomy-eligible) for all six environmental objectives (CCM, CCA, WTR,
CE, PPC and BIO) and includes environmentally sustainable exposures (Taxonomy-aligned) for the two climate objectives only (CCM and CCA).

GAR KPI stock – Based on Counterparty Turnover
|  | 2024
|  | a | b | c | d | e | f | g | h | i | j | n | r | v | aa | ab | ac | ad | ae | af
% (compared to total covered assets in the denominator) | Disclosure reference date T
Climate Change Mitigation (CCM) | Climate Change Adaptation (CCA) | Water and marine resources (WTR) | Circular economy (CE) | Pollution (PPC) | Biodiversity and Ecosystems (BIO) | TOTAL (CCM + CCA + WTR + CE + PPC + BIO) 1 |
Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy- eligible) | Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy- eligible) | Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy-eligible) | Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy-eligible) | Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy-eligible) | Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy-eligible) | Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy-eligible) | Proportion of total assets covered
| Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy- aligned) |  | Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy- aligned) |  | Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy- aligned)
|  | of which Use of Proceeds | of which transitional | of which enabling |  |  | of which Use of Proceeds | of which enabling |  |  | of which Use of Proceeds | of which transitional | of which enabling
|  | % | % | % | % | % | % | % | % | % | % | % | % | % | % | % | % | % | % | %
| GAR – Covered assets in both numerator and denominator |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
1 | Loans and advances, debt securities and equity instruments not HfT eligible for GAR calculation | 11.37 | 0.39 | — | 0.02 | 0.13 | 0.23 | 0.01 | — | — | — | 0.13 | 0.58 | — | 12.31 | 0.40 | — | 0.02 | 0.13 | 8.44
2 | Financial undertakings | 2.24 | 0.08 | — | — | — | 0.03 | — | — | — | — | — | — | — | 2.27 | 0.08 | — | — | — | 2.95
3 | Credit institutions | 2.24 | 0.08 | — | — | — | 0.02 | — | — | — | — | — | — | — | 2.26 | 0.08 | — | — | — | 2.71
4 | Loans and advances | 1.81 | 0.08 | — | — | — | 0.02 | — | — | — | — | — | — | — | 1.83 | 0.08 | — | — | — | 2.37
5 | Debt securities, including UoP | 0.43 | — | — | — | — | — | — | — | — | — | — | — | — | 0.43 | — | — | — | — | 0.34
6 | Equity instruments | — | — |  | — | — | — | — |  | — | — | — | — | — | — | — |  | — | — | —
7 | Other financial corporations | — | — | — | — | — | 0.01 | — | — | — | — | — | — | — | 0.01 | — | — | — | — | 0.24
8 | – of which: investment firms | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | —
9 | Loans and advances | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | —

Universal Registration Document and Annual Financial Report 2024 | 133

GAR KPI stock – Based on Counterparty Turnover (continued)
|  | 2024
|  | a | b | c | d | e | f | g | h | i | j | n | r | v | aa | ab | ac | ad | ae | af
% (compared to total covered assets in the denominator) | Disclosure reference date T
Climate Change Mitigation (CCM) | Climate Change Adaptation (CCA) | Water and marine resources (WTR) | Circular economy (CE) | Pollution (PPC) | Biodiversity and Ecosystems (BIO) | TOTAL (CCM + CCA + WTR + CE + PPC + BIO) 1 |
Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy- eligible) | Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy- eligible) | Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy-eligible) | Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy-eligible) | Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy-eligible) | Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy-eligible) | Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy-eligible) | Proportion of total assets covered
| Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy- aligned) |  | Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy- aligned) |  | Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy- aligned)
|  | of which Use of Proceeds | of which transitional | of which enabling |  |  | of which Use of Proceeds | of which enabling |  |  | of which Use of Proceeds | of which transitional | of which enabling
|  | % | % | % | % | % | % | % | % | % | % | % | % | % | % | % | % | % | % | %
10 | Debt securities, including UoP | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | —
11 | Equity instruments | — | — |  | — | — | — | — |  | — | — | — | — | — | — | — |  | — | — | —
12 | – of which: management companies | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | —
13 | Loans and advances | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | —
14 | Debt securities, including UoP | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | —
15 | Equity instruments | — | — |  | — | — | — | — |  | — | — | — | — | — | — | — |  | — | — | —
16 | – of which: insurance undertakings | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | 0.20
17 | Loans and advances | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | 0.20
18 | Debt securities, including UoP | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | —
19 | Equity instruments | — | — |  | — | — | — | — |  | — | — | — | — | — | — | — |  | — | — | —
20 | Non-financial undertakings | 0.69 | 0.31 | — | 0.02 | 0.13 | 0.20 | 0.01 | — | — | — | 0.13 | 0.58 | — | 1.60 | 0.32 | — | 0.02 | 0.13 | 1.64
21 | Loans and advances | 0.68 | 0.31 | — | 0.02 | 0.13 | 0.20 | 0.01 | — | — | — | 0.13 | 0.58 | — | 1.59 | 0.32 | — | 0.02 | 0.13 | 1.62
22 | Debt securities, including UoP | 0.01 | — | — | — | — | — | — | — | — | — | — | — | — | 0.01 | — | — | — | — | 0.01
23 | Equity instruments | — | — |  | — | — | — | — |  | — | — | — | — | — | — | — |  | — | — | 0.01
24 | Households | 8.31 | — | — | — | — | — | — | — | — |  | — |  |  | 8.31 | — | — | — | — | 3.75

134 | Universal Registration Document and Annual Financial Report 2024

Appendix

GAR KPI stock – Based on Counterparty Turnover (continued)
|  | 2024
|  | a | b | c | d | e | f | g | h | i | j | n | r | v | aa | ab | ac | ad | ae | af
% (compared to total covered assets in the denominator) | Disclosure reference date T
Climate Change Mitigation (CCM) | Climate Change Adaptation (CCA) | Water and marine resources (WTR) | Circular economy (CE) | Pollution (PPC) | Biodiversity and Ecosystems (BIO) | TOTAL (CCM + CCA + WTR + CE + PPC + BIO) 1 |
Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy- eligible) | Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy- eligible) | Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy-eligible) | Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy-eligible) | Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy-eligible) | Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy-eligible) | Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy-eligible) | Proportion of total assets covered
| Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy- aligned) |  | Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy- aligned) |  | Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy- aligned)
|  | of which Use of Proceeds | of which transitional | of which enabling |  |  | of which Use of Proceeds | of which enabling |  |  | of which Use of Proceeds | of which transitional | of which enabling
|  | % | % | % | % | % | % | % | % | % | % | % | % | % | % | % | % | % | % | %
25 | – of which: loans collateralised by residential immovable property | 8.30 | — | — | — | — | — | — | — | — |  | — |  |  | 8.30 | — | — | — | — | 3.74
26 | – of which: building renovation loans | — | — | — | — | — | — | — | — | — |  | — |  |  | — | — | — | — | — | —
27 | – of which: motor vehicle loans | 0.01 | — | — | — | — |  |  |  |  |  |  |  |  | 0.01 | — | — | — | — | 0.01
28 | Local governments financing | 0.13 | — | — | — | — | — | — | — | — | — | — | — | — | 0.13 | — | — | — | — | 0.10
29 | Housing financing | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | —
30 | Other local government financing | 0.13 | — | — | — | — | — | — | — | — | — | — | — | — | 0.13 | — | — | — | — | 0.10
31 | Collateral obtained by taking possession: residential and commercial immovable properties | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | —
32 | Total GAR assets | 11.37 | 0.39 | — | 0.02 | 0.13 | 0.23 | 0.01 | — | — | — | 0.13 | 0.58 | — | 12.31 | 0.40 | — | 0.02 | 0.13 | 45.28

Universal Registration Document and Annual Financial Report 2024 | 135

GAR KPI stock – Based on Counterparty Turnover (continued)
|  | 2023
|  | a | b | c | d | e | f | g | h | i | aa | ab | ac | ad | ae | af
% (compared to total covered assets in the denominator) | Disclosure reference date T-1
Climate Change Mitigation (CCM) | Climate Change Adaptation (CCA) | TOTAL (CCM + CCA) |
Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy-eligible) | Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy- eligible) | Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy-eligible) | Proportion of total assets covered
| Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy- aligned) |  | Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy- aligned) |  | Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy- aligned)
|  | of which Use of Proceeds | of which transitional | of which enabling |  |  | of which Use of Proceeds | of which enabling |  |  | of which Use of Proceeds | of which transitional | of which enabling
|  | % | % | % | % | % | % | % | % | % | % | % | % | % | % | %
| GAR – Covered assets in both numerator and denominator |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
1 | Loans and advances, debt securities and equity instruments not HfT eligible for GAR calculation |  | 0.12 | — | 0.01 | 0.02 |  | 0.01 | — | — | 8.60 | 0.13 | — | 0.01 | 0.02 | 6.83
2 | Financial undertakings |  | — | — | — | — |  | — | — | — | 0.21 | — | — | — | — | 1.99
3 | Credit institutions |  | — | — | — | — |  | — | — | — | 0.21 | — | — | — | — | 1.94
4 | Loans and advances |  | — | — | — | — |  | — | — | — | — | — | — | — | — | 1.76
5 | Debt securities, including UoP |  | — | — | — | — |  | — | — | — | 0.21 | — | — | — | — | 0.18
6 | Equity instruments |  | — |  | — | — |  | — |  | — | — | — |  | — | — | —
7 | Other financial corporations |  | — | — | — | — |  | — | — | — | — | — | — | — | — | 0.05
8 | – of which: investment firms |  | — | — | — | — |  | — | — | — | — | — | — | — | — | —
9 | Loans and advances |  | — | — | — | — |  | — | — | — | — | — | — | — | — | —
10 | Debt securities, including UoP |  | — | — | — | — |  | — | — | — | — | — | — | — | — | —
11 | Equity instruments |  | — |  | — | — |  | — |  | — | — | — |  | — | — | —
12 | – of which: management companies |  | — | — | — | — |  | — | — | — | — | — | — | — | — | —
13 | Loans and advances |  | — | — | — | — |  | — | — | — | — | — | — | — | — | —
14 | Debt securities, including UoP |  | — | — | — | — |  | — | — | — | — | — | — | — | — | —
15 | Equity instruments |  | — |  | — | — |  | — |  | — | — | — |  | — | — | —
16 | – of which: insurance undertakings |  | — | — | — | — |  | — | — | — | — | — | — | — | — | —
17 | Loans and advances |  | — | — | — | — |  | — | — | — | — | — | — | — | — | —
18 | Debt securities, including UoP |  | — | — | — | — |  | — | — | — | — | — | — | — | — | —
19 | Equity instruments |  | — |  | — | — |  | — |  | — | — | — |  | — | — | —
20 | Non-financial undertakings |  | 0.12 | — | 0.01 | 0.02 |  | 0.01 | — | — | 0.46 | 0.13 | — | 0.01 | 0.02 | 1.06
21 | Loans and advances |  | 0.11 | — | 0.01 | 0.02 |  | 0.01 | — | — | 0.45 | 0.12 | — | 0.01 | 0.02 | 1.04
22 | Debt securities, including UoP |  | 0.01 | — | — | — |  | — | — | — | 0.01 | 0.01 | — | — | — | 0.02

136 | Universal Registration Document and Annual Financial Report 2024

Appendix

GAR KPI stock – Based on Counterparty Turnover (continued)
|  | 2023
|  | a | b | c | d | e | f | g | h | i | aa | ab | ac | ad | ae | af
% (compared to total covered assets in the denominator) | Disclosure reference date T-1
Climate Change Mitigation (CCM) | Climate Change Adaptation (CCA) | TOTAL (CCM + CCA) |
Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy-eligible) | Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy- eligible) | Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy-eligible) | Proportion of total assets covered
| Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy- aligned) |  | Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy- aligned) |  | Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy- aligned)
|  | of which Use of Proceeds | of which transitional | of which enabling |  |  | of which Use of Proceeds | of which enabling |  |  | of which Use of Proceeds | of which transitional | of which enabling
|  | % | % | % | % | % | % | % | % | % | % | % | % | % | % | %
23 | Equity instruments |  | — |  | — | — |  | — |  | — | — | — |  | — | — | —
24 | Households |  | — | — | — | — |  | — | — | — | 7.83 | — | — | — | — | 3.73
25 | – of which: loans collateralised by residential immovable property |  | — | — | — | — |  | — | — | — | 7.83 | — | — | — | — | 3.73
26 | – of which: building renovation loans |  | — | — | — | — |  | — | — | — | — | — | — | — | — | —
27 | – of which: motor vehicle loans |  | — | — | — | — |  |  |  |  |  |  |  |  |  |
28 | Local governments financing |  | — | — | — | — |  | — | — | — | 0.10 | — | — | — | — | 0.05
29 | Housing financing |  | — | — | — | — |  | — | — | — | — | — | — | — | — | —
30 | Other local government financing |  | — | — | — | — |  | — | — | — | 0.10 | — | — | — | — | 0.05
31 | Collateral obtained by taking possession: residential and commercial immovable properties |  | — | — | — | — |  | — | — | — | — | — | — | — | — | —
32 | Total GAR assets |  | 0.12 | — | 0.01 | 0.02 |  | 0.01 | — | — | 8.60 | 0.13 | — | 0.01 | 0.02 | 47.69

Universal Registration Document and Annual Financial Report 2024 | 137

GAR KPI stock – Based on Counterparty CapEx
|  | 2024
|  | a | b | c | d | e | f | g | h | i | j | n | r | v | aa | ab | ac | ad | ae | af
% (compared to total covered assets in the denominator) | Disclosure reference date T
Climate Change Mitigation (CCM) | Climate Change Adaptation (CCA) | Water and marine resources (WTR) | Circular economy (CE) | Pollution (PPC) | Biodiversity and Ecosystems (BIO) | TOTAL (CCM + CCA + WTR + CE + PPC + BIO) 1 |
Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy- eligible) | Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy-eligible) | Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy-eligible) | Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy-eligible) | Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy-eligible) | Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy-eligible) | Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy-eligible) | Proportion of total assets covered
| Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy-aligned) |  | Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy- aligned) |  | Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy-aligned)
|  | of which Use of Proceeds | of which transitional | of which enabling |  |  | of which Use of Proceeds | of which enabling |  |  | of which Use of Proceeds | of which transitional | of which enabling
|  | % | % | % | % | % | % | % | % | % | % | % | % | % | % | % | % | % | % | %
| GAR – Covered assets in both numerator and denominator |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
1 | Loans and advances, debt securities and equity instruments not HfT eligible for GAR calculation | 11.93 | 0.71 | — | 0.05 | 0.20 | 0.34 | 0.01 | — | 0.01 | — | 0.08 | 0.22 | — | 12.57 | 0.72 | — | 0.05 | 0.21 | 8.44
2 | Financial undertakings | 2.23 | 0.11 | — | — | — | 0.01 | — | — | — | — | — | — | — | 2.24 | 0.11 | — | — | — | 2.96
3 | Credit institutions | 2.21 | 0.11 | — | — | — | 0.01 | — | — | — | — | — | — | — | 2.22 | 0.11 | — | — | — | 2.71
4 | Loans and advances | 1.78 | 0.11 | — | — | — | 0.01 | — | — | — | — | — | — | — | 1.79 | 0.11 | — | — | — | 2.37
5 | Debt securities, including UoP | 0.43 | — | — | — | — | — | — | — | — | — | — | — | — | 0.43 | — | — | — | — | 0.34
6 | Equity instruments | — | — |  | — | — | — | — |  | — | — | — | — | — | — | — |  | — | — | —
7 | Other financial corporations | 0.02 | — | — | — | — | — | — | — | — | — | — | — | — | 0.02 |  | — | — | — | 0.25
8 | – of which: investment firms | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | —
9 | Loans and advances | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | —
10 | Debt securities, including UoP | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | —
11 | Equity instruments | — | — |  | — | — | — | — |  | — | — | — | — | — | — | — |  | — | — | —
12 | – of which: management companies | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | —
13 | Loans and advances | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | —
14 | Debt securities, including UoP | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | —

138 | Universal Registration Document and Annual Financial Report 2024

Appendix

GAR KPI stock – Based on Counterparty CapEx (continued)
|  | 2024
|  | a | b | c | d | e | f | g | h | i | j | n | r | v | aa | ab | ac | ad | ae | af
% (compared to total covered assets in the denominator) | Disclosure reference date T
Climate Change Mitigation (CCM) | Climate Change Adaptation (CCA) | Water and marine resources (WTR) | Circular economy (CE) | Pollution (PPC) | Biodiversity and Ecosystems (BIO) | TOTAL (CCM + CCA + WTR + CE + PPC + BIO) 1 |
Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy- eligible) | Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy-eligible) | Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy-eligible) | Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy-eligible) | Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy-eligible) | Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy-eligible) | Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy-eligible) | Proportion of total assets covered
| Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy-aligned) |  | Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy- aligned) |  | Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy-aligned)
|  | of which Use of Proceeds | of which transitional | of which enabling |  |  | of which Use of Proceeds | of which enabling |  |  | of which Use of Proceeds | of which transitional | of which enabling
|  | % | % | % | % | % | % | % | % | % | % | % | % | % | % | % | % | % | % | %
15 | Equity instruments | — | — |  | — | — | — | — |  | — | — | — | — | — | — | — |  | — | — | —
16 | – of which: insurance undertakings | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | 0.20
17 | Loans and advances | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | 0.20
18 | Debt securities, including UoP | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | —
19 | Equity instruments | — | — |  | — | — | — | — |  | — | — | — | — | — | — | — |  | — | — | —
20 | Non-financial undertakings | 1.27 | 0.60 | — | 0.05 | 0.20 | 0.33 | 0.01 | — | 0.01 | — | 0.08 | 0.22 | — | 1.90 | 0.61 | — | 0.05 | 0.21 | 1.64
21 | Loans and advances | 1.25 | 0.60 | — | 0.05 | 0.20 | 0.33 | 0.01 | — | 0.01 | — | 0.08 | 0.22 | — | 1.88 | 0.61 | — | 0.05 | 0.21 | 1.62
22 | Debt securities, including UoP | 0.01 | — | — | — | — | — | — | — | — | — | — | — | — | 0.01 | — | — | — | — | 0.01
23 | Equity instruments | 0.01 | — |  | — | — | — | — |  | — | — | — | — | — | 0.01 | — |  | — | — | 0.01
24 | Households | 8.30 | — | — | — | — | — | — | — | — |  | — |  |  | 8.30 | — | — | — | — | 3.76
25 | – of which: loans collateralised by residential immovable property | 8.29 | — | — | — | — | — | — | — | — |  | — |  |  | 8.29 | — | — | — | — | 3.75
26 | – of which: building renovation loans | — | — | — | — | — | — | — | — | — |  | — |  |  | — | — | — | — | — | —
27 | – of which: motor vehicle loans | 0.01 | — | — | — | — |  |  |  |  |  |  |  |  | 0.01 | — | — | — | — | 0.01
28 | Local governments financing | 0.13 | — | — | — | — | — | — | — | — | — | — | — | — | 0.13 | — | — | — | — | 0.08
29 | Housing financing | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | —
30 | Other local government financing | 0.13 | — | — | — | — | — | — | — | — | — | — | — | — | 0.13 | — | — | — | — | 0.08

Universal Registration Document and Annual Financial Report 2024 | 139

GAR KPI stock – Based on Counterparty CapEx (continued)
|  | 2024
|  | a | b | c | d | e | f | g | h | i | j | n | r | v | aa | ab | ac | ad | ae | af
% (compared to total covered assets in the denominator) | Disclosure reference date T
Climate Change Mitigation (CCM) | Climate Change Adaptation (CCA) | Water and marine resources (WTR) | Circular economy (CE) | Pollution (PPC) | Biodiversity and Ecosystems (BIO) | TOTAL (CCM + CCA + WTR + CE + PPC + BIO) 1 |
Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy- eligible) | Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy-eligible) | Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy-eligible) | Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy-eligible) | Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy-eligible) | Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy-eligible) | Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy-eligible) | Proportion of total assets covered
| Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy-aligned) |  | Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy- aligned) |  | Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy-aligned)
|  | of which Use of Proceeds | of which transitional | of which enabling |  |  | of which Use of Proceeds | of which enabling |  |  | of which Use of Proceeds | of which transitional | of which enabling
|  | % | % | % | % | % | % | % | % | % | % | % | % | % | % | % | % | % | % | %
31 | Collateral obtained by taking possession: residential and commercial immovable properties | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | —
32 | Total GAR assets | 11.93 | 0.71 | — | 0.05 | 0.20 | 0.34 | 0.01 | — | 0.01 | — | 0.08 | 0.22 | — | 12.57 | 0.72 | — | 0.05 | 0.21 | 45.28

140 | Universal Registration Document and Annual Financial Report 2024

Appendix

GAR KPI stock – Based on Counterparty CapEx (continued)
|  | 2023
|  | a | b | c | d | e | f | g | h | i | aa | ab | ac | ad | ae | af
% (compared to total covered assets in the denominator) | Disclosure reference date T-1
Climate Change Mitigation (CCM) | Climate Change Adaptation (CCA) | TOTAL (CCM + CCA) |
Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy-eligible) | Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy- eligible) | Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy-eligible) | Proportion of total assets covered
| Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy- aligned) |  | Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy- aligned) |  | Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy- aligned)
|  | of which Use of Proceeds | of which transitional | of which enabling |  |  | of which Use of Proceeds | of which enabling |  |  | of which Use of Proceeds | of which transitional | of which enabling
|  | % | % | % | % | % | % | % | % | % | % | % | % | % | % | %
| GAR – Covered assets in both numerator and denominator |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
1 | Loans and advances, debt securities and equity instruments not HfT eligible for GAR calculation |  | 0.26 | — | 0.02 | 0.04 |  | 0.01 | — | 0.01 | 8.84 | 0.27 | — | 0.02 | 0.05 | 6.83
2 | Financial undertakings |  | — | — | — | — |  | — | — | — | 0.21 | — | — | — | — | 1.99
3 | Credit institutions |  | — | — | — | — |  | — | — | — | 0.21 | — | — | — | — | 1.94
4 | Loans and advances |  | — | — | — | — |  | — | — | — | — | — | — | — | — | 1.76
5 | Debt securities, including UoP |  | — | — | — | — |  | — | — | — | 0.21 | — | — | — | — | 0.18
6 | Equity instruments |  | — |  | — | — |  | — |  | — | — | — |  | — | — | —
7 | Other financial corporations |  | — | — | — | — |  | — | — | — | — | — | — | — | — | 0.05
8 | – of which: investment firms |  | — | — | — | — |  | — | — | — | — | — | — | — | — | —
9 | Loans and advances |  | — | — | — | — |  | — | — | — | — | — | — | — | — | —
10 | Debt securities, including UoP |  | — | — | — | — |  | — | — | — | — | — | — | — | — | —
11 | Equity instruments |  | — |  | — | — |  | — |  | — | — | — |  | — | — | —
12 | – of which: management companies |  | — | — | — | — |  | — | — | — | — | — | — | — | — | —
13 | Loans and advances |  | — | — | — | — |  | — | — | — | — | — | — | — | — | —
14 | Debt securities, including UoP |  | — | — | — | — |  | — | — | — | — | — | — | — | — | —
15 | Equity instruments |  | — |  | — | — |  | — |  | — | — | — |  | — | — | —
16 | – of which: insurance undertakings |  | — | — | — | — |  | — | — | — | — | — | — | — | — | —
17 | Loans and advances |  | — | — | — | — |  | — | — | — | — | — | — | — | — | —
18 | Debt securities, including UoP |  | — | — | — | — |  | — | — | — | — | — | — | — | — | —
19 | Equity instruments |  | — |  | — | — |  | — |  | — | — | — |  | — | — | —
20 | Non-financial undertakings |  | 0.26 | — | 0.02 | 0.04 |  | 0.01 | — | 0.01 | 0.70 | 0.27 | — | 0.02 | 0.05 | 1.06
21 | Loans and advances |  | 0.25 | — | 0.02 | 0.04 |  | 0.01 | — | 0.01 | 0.68 | 0.26 | — | 0.02 | 0.05 | 1.04
22 | Debt securities, including UoP |  | 0.01 | — | — | — |  | — | — | — | 0.02 | 0.01 | — | — | — | 0.02
23 | Equity instruments |  | — |  | — | — |  | — |  | — | — | — |  | — | — | —
24 | Households |  | — | — | — | — |  | — | — | — | 7.83 | — | — | — | — | 3.73
25 | – of which: loans collateralised by residential immovable property |  | — | — | — | — |  | — | — | — | 7.83 | — | — | — | — | 3.73
26 | – of which: building renovation loans |  | — | — | — | — |  | — | — | — | — | — | — | — | — | —

Universal Registration Document and Annual Financial Report 2024 | 141

GAR KPI stock – Based on Counterparty CapEx (continued)
|  | 2023
|  | a | b | c | d | e | f | g | h | i | aa | ab | ac | ad | ae | af
% (compared to total covered assets in the denominator) | Disclosure reference date T-1
Climate Change Mitigation (CCM) | Climate Change Adaptation (CCA) | TOTAL (CCM + CCA) |
Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy-eligible) | Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy- eligible) | Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy-eligible) | Proportion of total assets covered
| Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy- aligned) |  | Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy- aligned) |  | Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy- aligned)
|  | of which Use of Proceeds | of which transitional | of which enabling |  |  | of which Use of Proceeds | of which enabling |  |  | of which Use of Proceeds | of which transitional | of which enabling
|  | % | % | % | % | % | % | % | % | % | % | % | % | % | % | %
27 | – of which: motor vehicle loans |  | — | — | — | — |  |  |  |  |  |  |  |  |  |
28 | Local governments financing |  | — | — | — | — |  | — | — | — | 0.10 | — | — | — | — | 0.05
29 | Housing financing |  | — | — | — | — |  | — | — | — | — | — | — | — | — | —
30 | Other local government financing |  | — | — | — | — |  | — | — | — | 0.10 | — | — | — | — | 0.05
31 | Collateral obtained by taking possession: residential and commercial immovable properties |  | — | — | — | — |  | — | — | — | — | — | — | — | — | —
32 | Total GAR assets |  | 0.26 | — | 0.02 | 0.04 |  | 0.01 | — | 0.01 | 8.84 | 0.27 | — | 0.02 | 0.05 | 47.69

GAR KPI flow (Template 4)
This table presents the flow of eligible and aligned exposures as a
proportion of total new covered assets by Taxonomy environmental
objective.
In accordance with the regulatory guidance, flow is defined as the
gross carrying amount of newly incurred exposures (i.e. new loans
and advances, debt securities, equity instruments) that have been
incurred during the year, without deducting the amounts of loan
repayments or disposals of debt securities or equity instruments that
have occurred during the year. Institutions should therefore not
compute the numerator and the denominator of the flow KPI as
exposures on the disclosure reference date (T) minus exposures on
the disclosure reference date (T-1).
Due to data challenges for certain asset classes, the approach set out
below was followed. Firstly, where loan signature dates and
origination amounts are available, the gross carrying amount of newly
incurred exposures by transaction or customer is calculated without
deducting repayments or disposals. As the starting point to identify
new loans granted during the year is the stock of loans at
31 December 2024, it is possible that some loans both granted and
repaid during 2024 have not been accounted for in the flow. To
identify the date that loans have been granted, the signature date
currently available is used. Some renegotiated loans may have a
different signature date than the original loan.
Where signature dates and origination amounts are not available, flow
is calculated as the exposure at date (T) minus the exposure at date
(T-1) by individual transaction or customer or internal sub-
classification level, defaulting to zero where the result is negative.
This approach is also used for overdrafts and other revolving credit
facilities, as multiple drawings and repayments in the period could
result in a disproportionately high gross flow which is a multiple of
that of the stock, and in any case, it is not practicable or possible to
identify every individual drawing through the year.
To calculate total new covered assets and total new assets, it is
necessary to calculate the flow for items that are not explicit line
items in the flow template such as derivatives. For such items, the
flow is calculated based on the exposure at date (T) minus exposure
at date (T-1) at a total asset class level, defaulting to zero where the
result is negative.
Due to data and operational limitations, the flow template for 2023
was not disclosed.
1 The ‘Total’ column in the table includes exposures towards taxonomy
relevant sectors (Taxonomy-eligible) for all six environmental objectives
(CCM, CCA, WTR, CE, PPC and BIO) and includes environmentally
sustainable exposures (Taxonomy-aligned) for the two climate objectives
only (CCM and CCA).

142 | Universal Registration Document and Annual Financial Report 2024

Appendix

GAR KPI Flow – Based on Counterparty Turnover
|  | 2024
|  | a | b | c | d | e | f | g | h | i | j | n | r | v | aa | ab | ac | ad | ae | af
% (compared to total covered assets in the denominator) | Disclosure reference date T
Climate Change Mitigation (CCM) | Climate Change Adaptation (CCA) | Water and marine resources (WTR) | Circular economy (CE) | Pollution (PPC) | Biodiversity and Ecosystems (BIO) | TOTAL (CCM + CCA + WTR + CE + PPC + BIO)1 |
Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy-eligible) | Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy-eligible) | Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy-eligible) | Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy-eligible) | Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy-eligible) | Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy-eligible) | Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy- eligible) | Proportion of total assets covered
| Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy-aligned) |  | Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy- aligned) |  | Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy-aligned)
|  | of which Use of Proceeds | of which transitional | of which enabling |  |  | of which Use of Proceeds | of which enabling |  |  | of which Use of Proceeds | of which transitional | of which enabling
|  | % | % | % | % | % | % | % | % | % | % | % | % | % | % | % | % | % | % | %
| GAR – Covered assets in both numerator and denominator |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
1 | Loans and advances, debt securities and equity instruments not HfT eligible for GAR calculation | 1.33 | 0.03 | — | — | 0.02 | 0.01 | — | — | — | — | 0.01 | — | — | 1.35 | 0.03 | — | — | 0.02 | 18.58
2 | Financial undertakings | 0.77 | — | — | — | — | 0.01 | — | — | — | — | — | — | — | 0.78 | — | — | — | — | 11.64
3 | Credit institutions | 0.77 | — | — | — | — | — | — | — | — | — | — | — | — | 0.77 | — | — | — | — | 10.54
4 | Loans and advances | 0.07 | — | — | — | — | — | — | — | — | — | — | — | — | 0.07 | — | — | — | — | 9.50
5 | Debt securities, including UoP | 0.70 | — | — | — | — | — | — | — | — | — | — | — | — | 0.70 | — | — | — | — | 1.04
6 | Equity instruments | — | — |  | — | — | — | — |  | — | — | — | — | — | — | — |  | — | — | —
7 | Other financial corporations | — | — | — | — | — | 0.01 | — | — | — | — | — | — | — | 0.01 | — | — | — | — | 1.10
8 | – of which: investment firms | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | —
9 | Loans and advances | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | —
10 | Debt securities, including UoP | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | —

Universal Registration Document and Annual Financial Report 2024 | 143

GAR KPI Flow – Based on Counterparty Turnover (continued)
|  | 2024
|  | a | b | c | d | e | f | g | h | i | j | n | r | v | aa | ab | ac | ad | ae | af
% (compared to total covered assets in the denominator) | Disclosure reference date T
Climate Change Mitigation (CCM) | Climate Change Adaptation (CCA) | Water and marine resources (WTR) | Circular economy (CE) | Pollution (PPC) | Biodiversity and Ecosystems (BIO) | TOTAL (CCM + CCA + WTR + CE + PPC + BIO)1 |
Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy-eligible) | Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy-eligible) | Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy-eligible) | Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy-eligible) | Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy-eligible) | Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy-eligible) | Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy- eligible) | Proportion of total assets covered
| Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy-aligned) |  | Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy- aligned) |  | Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy-aligned)
|  | of which Use of Proceeds | of which transitional | of which enabling |  |  | of which Use of Proceeds | of which enabling |  |  | of which Use of Proceeds | of which transitional | of which enabling
|  | % | % | % | % | % | % | % | % | % | % | % | % | % | % | % | % | % | % | %
11 | Equity instruments | — | — |  | — | — | — | — |  | — | — | — | — | — | — | — |  | — | — | —
12 | – of which: management companies | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | —
13 | Loans and advances | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | —
14 | Debt securities, including UoP | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | —
15 | Equity instruments | — | — |  | — | — | — | — |  | — | — | — | — | — | — | — |  | — | — | —
16 | – of which: insurance undertakings | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | 1.01
17 | Loans and advances | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | 1.01
18 | Debt securities, including UoP | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | —
19 | Equity instruments | — | — |  | — | — | — | — |  | — | — | — | — | — | — | — |  | — | — | —
20 | Non-financial undertakings | 0.09 | 0.03 | — | — | 0.02 | — | — | — | — | — | 0.01 | — | — | 0.10 | 0.03 | — | — | 0.02 | 6.44
21 | Loans and advances | 0.09 | 0.03 | — | — | 0.02 | — | — | — | — | — | 0.01 | — | — | 0.10 | 0.03 | — | — | 0.02 | 6.42
22 | Debt securities, including UoP | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | —
23 | Equity instruments | — | — |  | — | — | — | — |  | — | — | — | — | — | — | — |  | — | — | 0.02
24 | Households | 0.43 | — | — | — | — | — | — | — | — |  | — |  |  | 0.43 | — | — | — | — | 0.36

144 | Universal Registration Document and Annual Financial Report 2024

Appendix

GAR KPI Flow – Based on Counterparty Turnover (continued)
|  | 2024
|  | a | b | c | d | e | f | g | h | i | j | n | r | v | aa | ab | ac | ad | ae | af
% (compared to total covered assets in the denominator) | Disclosure reference date T
Climate Change Mitigation (CCM) | Climate Change Adaptation (CCA) | Water and marine resources (WTR) | Circular economy (CE) | Pollution (PPC) | Biodiversity and Ecosystems (BIO) | TOTAL (CCM + CCA + WTR + CE + PPC + BIO)1 |
Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy-eligible) | Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy-eligible) | Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy-eligible) | Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy-eligible) | Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy-eligible) | Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy-eligible) | Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy- eligible) | Proportion of total assets covered
| Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy-aligned) |  | Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy- aligned) |  | Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy-aligned)
|  | of which Use of Proceeds | of which transitional | of which enabling |  |  | of which Use of Proceeds | of which enabling |  |  | of which Use of Proceeds | of which transitional | of which enabling
|  | % | % | % | % | % | % | % | % | % | % | % | % | % | % | % | % | % | % | %
25 | – of which: loans collateralised by residential immovable property | 0.41 | — | — | — | — | — | — | — | — |  | — |  |  | 0.41 | — | — | — | — | 0.35
26 | – of which: building renovation loans | — | — | — | — | — | — | — | — | — |  | — |  |  | — | — | — | — | — | —
27 | – of which: motor vehicle loans | 0.02 | — | — | — | — |  |  |  |  |  |  |  |  | 0.02 | — | — | — | — | 0.01
28 | Local governments financing | 0.04 | — | — | — | — | — | — | — | — | — | — | — | — | 0.04 | — | — | — | — | 0.14
29 | Housing financing | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | —
30 | Other local government financing | 0.04 | — | — | — | — | — | — | — | — | — | — | — | — | 0.04 | — | — | — | — | 0.14
31 | Collateral obtained by taking possession: residential and commercial immovable properties | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | —
32 | Total GAR assets | 1.33 | 0.03 | — | — | 0.02 | 0.01 | — | — | — | — | 0.01 | — | — | 1.35 | 0.03 | — | — | 0.02 | 18.58

Universal Registration Document and Annual Financial Report 2024 | 145

GAR KPI Flow – Based on Counterparty CapEx
|  | 2024
|  | a | b | c | d | e | f | g | h | i | j | k | l | m | aa | ab | ac | ad | ae | af
% (compared to total covered assets in the denominator) | Disclosure reference date T
Climate Change Mitigation (CCM) | Climate Change Adaptation (CCA) | Water and marine resources (WTR) | Circular economy (CE) | Pollution (PPC) | Biodiversity and Ecosystems (BIO) | TOTAL (CCM + CCA + WTR + CE + PPC + BIO)1 |
Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy-eligible) | Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy-eligible) | Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy-eligible) | Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy-eligible) | Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy-eligible) | Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy-eligible) | Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy-eligible) | Proportion of total assets cove-red
| Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy-aligned) |  | Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy- aligned) |  | Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy-aligned)
|  | of which Use of Proceeds | of which transitional | of which enabling |  |  | of which Use of Proceeds | of which enabling |  |  | of which Use of Proceeds | of which transitional | of which enabling
|  | % | % | % | % | % | % | % | % | % | % | % | % | % | % | % | % | % | % | %
| GAR – Covered assets in both numerator and denominator |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
1 | Loans and advances, debt securities and equity instruments not HfT eligible for GAR calculation | 1.45 | 0.10 | — | — | 0.04 | — | — | — | — | — | — | — | — | 1.45 | 0.10 | — | — | 0.04 | 18.58
2 | Financial undertakings | 0.77 | — | — | — | — | — | — | — | — | — | — | — | — | 0.77 | — | — | — | — | 11.63
3 | Credit institutions | 0.76 | — | — | — | — | — | — | — | — | — | — | — | — | 0.76 | — | — | — | — | 10.53
4 | Loans and advances | 0.07 | — | — | — | — | — | — | — | — | — | — | — | — | 0.07 | — | — | — | — | 9.49
5 | Debt securities, including UoP | 0.69 | — | — | — | — | — | — | — | — | — | — | — | — | 0.69 | — | — | — | — | 1.04
6 | Equity instruments | — | — |  | — | — | — | — |  | — | — | — | — | — | — | — |  | — | — | —
7 | Other financial corporations | 0.01 | — | — | — | — | — | — | — | — | — | — | — | — | 0.01 | — | — | — | — | 1.10
8 | – of which: investment firms | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | —
9 | Loans and advances | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | —
10 | Debt securities, including UoP | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | —
11 | Equity instruments | — | — |  | — | — | — | — |  | — | — | — | — | — | — | — |  | — | — | —

146 | Universal Registration Document and Annual Financial Report 2024

Appendix

GAR KPI Flow – Based on Counterparty CapEx (continued)
|  | 2024
|  | a | b | c | d | e | f | g | h | i | j | k | l | m | aa | ab | ac | ad | ae | af
% (compared to total covered assets in the denominator) | Disclosure reference date T
Climate Change Mitigation (CCM) | Climate Change Adaptation (CCA) | Water and marine resources (WTR) | Circular economy (CE) | Pollution (PPC) | Biodiversity and Ecosystems (BIO) | TOTAL (CCM + CCA + WTR + CE + PPC + BIO)1 |
Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy-eligible) | Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy-eligible) | Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy-eligible) | Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy-eligible) | Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy-eligible) | Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy-eligible) | Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy-eligible) | Proportion of total assets cove-red
| Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy-aligned) |  | Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy- aligned) |  | Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy-aligned)
|  | of which Use of Proceeds | of which transitional | of which enabling |  |  | of which Use of Proceeds | of which enabling |  |  | of which Use of Proceeds | of which transitional | of which enabling
|  | % | % | % | % | % | % | % | % | % | % | % | % | % | % | % | % | % | % | %
12 | – of which: management companies | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | —
13 | Loans and advances | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | —
14 | Debt securities, including UoP | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | —
15 | Equity instruments | — | — |  | — | — | — | — |  | — | — | — | — | — | — | — |  | — | — | —
16 | – of which: insurance undertakings | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | 1.01
17 | Loans and advances | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | 1.01
18 | Debt securities, including UoP | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | —
19 | Equity instruments | — | — |  | — | — | — | — |  | — | — | — | — | — | — | — |  | — | — | —
20 | Non-financial undertakings | 0.21 | 0.10 | — | — | 0.04 | — | — | — | — | — | — | — | — | 0.21 | 0.10 | — | — | 0.04 | 6.45
21 | Loans and advances | 0.21 | 0.10 | — | — | 0.04 | — | — | — | — | — | — | — | — | 0.21 | 0.10 | — | — | 0.04 | 6.43
22 | Debt securities, including UoP | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | —
23 | Equity instruments | — | — |  | — | — | — | — |  | — | — | — | — | — | — | — |  | — | — | 0.02
24 | Households | 0.43 | — | — | — | — | — | — | — | — |  | — |  |  | 0.43 | — | — | — | — | 0.36
25 | – of which: loans collateralised by residential immovable property | 0.41 | — | — | — | — | — | — | — | — |  | — |  |  | 0.41 | — | — | — | — | 0.35

Universal Registration Document and Annual Financial Report 2024 | 147

GAR KPI Flow – Based on Counterparty CapEx (continued)
|  | 2024
|  | a | b | c | d | e | f | g | h | i | j | k | l | m | aa | ab | ac | ad | ae | af
% (compared to total covered assets in the denominator) | Disclosure reference date T
Climate Change Mitigation (CCM) | Climate Change Adaptation (CCA) | Water and marine resources (WTR) | Circular economy (CE) | Pollution (PPC) | Biodiversity and Ecosystems (BIO) | TOTAL (CCM + CCA + WTR + CE + PPC + BIO)1 |
Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy-eligible) | Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy-eligible) | Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy-eligible) | Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy-eligible) | Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy-eligible) | Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy-eligible) | Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy-eligible) | Proportion of total assets cove-red
| Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy-aligned) |  | Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy- aligned) |  | Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy-aligned)
|  | of which Use of Proceeds | of which transitional | of which enabling |  |  | of which Use of Proceeds | of which enabling |  |  | of which Use of Proceeds | of which transitional | of which enabling
|  | % | % | % | % | % | % | % | % | % | % | % | % | % | % | % | % | % | % | %
26 | – of which: building renovation loans | — | — | — | — | — | — | — | — | — |  | — |  |  | — | — | — | — | — | —
27 | – of which: motor vehicle loans | 0.02 | — | — | — | — |  |  |  |  |  |  |  |  | 0.02 | — | — | — | — | 0.01
28 | Local governments financing | 0.04 | — | — | — | — | — | — | — | — | — | — | — | — | 0.04 | — | — | — | — | 0.14
29 | Housing financing | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | —
30 | Other local government financing | 0.04 | — | — | — | — | — | — | — | — | — | — | — | — | 0.04 | — | — | — | — | 0.14
31 | Collateral obtained by taking possession: residential and commercial immovable properties | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | —
32 | Total GAR assets | 1.45 | 0.10 | — | — | 0.04 | — | — | — | — | — | — | — | — | 1.45 | 0.10 | — | — | 0.04 | 18.58

148 | Universal Registration Document and Annual Financial Report 2024

Appendix

KPI off-balance sheet exposures (Template 5)
This table presents eligible and aligned off-balance sheet exposures
as a proportion of all financial guarantees or total assets under
management as applicable.
For these funds managed by HSBC Continental Europe, a look
through to the underlying investments has been undertaken to
identify those investments that are subject to NFRD where eligibility
and alignment can be assessed. Where the underlying investments
are themselves funds and where information regarding these funds
has not been made available, these funds are treated as non-NFRD.
For the managed funds where possible, the proportion of debt and
equity has been calculated, and the eligibility and alignment
assessment performed, based on the underlying investments as at
31 December 2024. However, for some funds where this information
is not yet available, the latest available 2024 data from September
2024 onwards has been used.
The KPI for assets under management includes assets where HSBC
Continental Europe has delegated portfolio management of the
assets to another financial undertaking. For these portfolios, limited
data is available regarding the underlying instruments making up the
funds. Assets for which the portfolio management has been
delegated to the Bank by another financial undertaking are not
included.
The table has been duplicated to present the information separately
based on Turnover and CapEx KPIs as reported by the Bank's
counterparties.
This table has also been duplicated to present the information
separately based on the flow of financial guarantees and assets under
management.
As for the on-balance sheet flow presented in Template 4, the
methodology to calculate flow for assets under management aims to
calculate new exposures by gross carrying amount, and not compute
the flow as exposures on the disclosure reference date (T) minus
exposures on the disclosure reference date (T-1). The methodology
applied is dependent on data availability across the funds being
managed by HSBC Continental Europe. For the majority of funds,
where data availability allows, flow has been calculated as units
purchased through the year by individual ISIN or legal entity identifier,
multiplied by actual purchase price for each respective unit. Where
this is not possible, the next approach applied is to calculate flow as
total units purchased through the year by individual ISIN or legal
entity identifier multiplied by a proxy price based on the year end
market value. For a small number of funds, where the previous two
approaches were not possible, flow has been calculated as number
of units at (T) minus number of units at (T-1), multiplied by a proxy
price based on the year end market value.
For funds where data for the full year was not available at the time of
reporting, data was extrapolated by grossing up to 12 months of flow
based on a minimum of 9 months actual flow data.
1 The ‘Total’ column in the table includes exposures towards taxonomy
relevant sectors (Taxonomy-eligible) for all six environmental objectives
(CCM, CCA, WTR, CE, PPC and BIO) and includes environmentally
sustainable exposures (Taxonomy-aligned) for the two climate objectives
only (CCM and CCA).

KPI off-balance sheet exposures – Based on Counterparty Turnover – (Stock)
|  | 2024
|  | a | b | c | d | e | f | g | h | i | j | n | r | v | aa | ab | ac | ad | ae
% (compared to total eligible off-balance sheet assets) | Disclosure reference date T
Climate Change Mitigation (CCM) | Climate Change Adaptation (CCA) | Water and marine resources (WTR) | Circular economy (CE) | Pollution (PPC) | Biodiversity and Ecosystems (BIO) | TOTAL (CCM + CCA + WTR + CE + PPC + BIO)1
Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy- eligible) | Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy-eligible) | Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy-eligible) | Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy-eligible) | Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy-eligible) | Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy-eligible) | Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy- eligible)
| Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy- aligned) |  | Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy- aligned) |  | Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy- aligned)
|  | of which Use of Proceeds | of which transitional | of which enabling |  |  | of which Use of Proceeds | of which enabling |  |  | of which Use of Proceeds | of which transitional | of which enabling
% | % | % | % | % | % | % | % | % | % | % | % | % | % | % | % | % | %
1 | Financial guarantees (FinGuar KPI) | 4.77 | 1.71 | — | — | 0.39 | — | — | — | — | — | 0.58 | 0.12 | — | 5.47 | 1.71 | — | — | 0.39
2 | Assets under management (AuM KPI) | 4.56 | 1.03 | — | 0.05 | 0.52 | 0.31 | 0.02 | — | — | 0.01 | 0.27 | 0.35 | 0.01 | 5.51 | 1.05 | — | 0.05 | 0.52

Universal Registration Document and Annual Financial Report 2024 | 149

KPI off-balance sheet exposures – Based on Counterparty Turnover – (Stock) (continued)
|  | 2023
|  | a | b | c | d | e | f | g | h | i | aa | ab | ac | ad | ae
% (compared to total eligible off- balance sheet assets) | Disclosure reference date T
Climate Change Mitigation (CCM) | Climate Change Adaptation (CCA) | TOTAL (CCM + CCA)
Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy- eligible) | Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy-eligible) | Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy-eligible)
| Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy-aligned) |  | Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy- aligned) |  | Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy-aligned)
|  | of which Use of Proceeds | of which transitional | of which enabling |  |  | of which Use of Proceeds | of which enabling |  |  | of which Use of Proceeds | of which transitional | of which enabling
% | % | % | % | % | % | % | % | % | % | % | % | % | %
1 | Financial guarantees (FinGuar KPI) |  | 2.01 | — | 0.04 | 0.27 |  | — | — | — | 2.41 | 2.01 | — | 0.04 | 0.27
2 | Assets under management (AuM KPI) |  | 0.77 | — | 0.07 | 0.48 |  | 0.02 | — | — | 3.07 | 0.79 | — | 0.07 | 0.48

KPI off-balance sheet exposures – Based on Counterparty CapEx – (Stock)
|  | 2024
|  | a | b | c | d | e | f | g | h | i | j | k | l | m | aa | ab | ac | ad | ae
% (compared to total eligible off-balance sheet assets) | Disclosure reference date T
Climate Change Mitigation (CCM) | Climate Change Adaptation (CCA) | Water and marine resources (WTR) | Circular economy (CE) | Pollution (PPC) | Biodiversity and Ecosystems (BIO) | TOTAL (CCM + CCA + WTR + CE + PPC + BIO)1
Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy- eligible) | Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy- eligible) | Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy-eligible) | Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy-eligible) | Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy-eligible) | Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy-eligible) | Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy- eligible)
| Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy- aligned) |  | Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy- aligned) |  | Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy- aligned)
|  | of which Use of Proceeds | of which transitional | of which enabling |  |  | of which Use of Proceeds | of which enabling |  |  | of which Use of Proceeds | of which transitional | of which enabling
% | % | % | % | % | % | % | % | % | % | % | % | % | % | % | % | % | %
1 | Financial guarantees (FinGuar KPI) | 5.66 | 1.83 | — | 0.12 | 0.44 | — | — | — | — | 0.03 | 0.04 | 0.01 | — | 5.74 | 1.83 | — | 0.12 | 0.44
2 | Assets under management (AuM KPI) | 5.49 | 1.59 | — | 0.11 | 0.70 | 0.02 | — | — | — | 0.01 | 0.16 | 0.22 | — | 5.90 | 1.59 | — | 0.11 | 0.70

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KPI off-balance sheet exposures – Based on Counterparty CapEx – (Stock) (continued)
|  | 2023
|  | a | b | c | d | e | f | g | h | i | aa | ab | ac | ad | ae
% (compared to total eligible off- balance sheet assets) | Disclosure reference date T-1
Climate Change Mitigation (CCM) | Climate Change Adaptation (CCA) | TOTAL (CCM + CCA)
Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy- eligible) | Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy-eligible) | Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy-eligible)
| Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy-aligned) |  | Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy- aligned) |  | Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy-aligned)
|  | of which Use of Proceeds | of which transitional | of which enabling |  |  | of which Use of Proceeds | of which enabling |  |  | of which Use of Proceeds | of which transitional | of which enabling
% | % | % | % | % | % | % | % | % | % | % | % | % | %
1 | Financial guarantees (FinGuar KPI) |  | 1.59 | — | 0.04 | 0.23 |  | — | — | — | 2.87 | 1.59 | — | 0.04 | 0.23
2 | Assets under management (AuM KPI) |  | 1.35 | — | 0.10 | 0.70 |  | 0.07 | — | — | 4.12 | 1.42 | — | 0.10 | 0.70

KPI off-balance sheet exposures – Based on Counterparty Turnover – (Flow)
|  | 2024
|  | a | b | c | d | e | f | g | h | i | j | k | l | m | aa | ab | ac | ad | ae
% (compared to total eligible off-balance sheet assets) | Disclosure reference date T
Climate Change Mitigation (CCM) | Climate Change Adaptation (CCA) | Water and marine resources (WTR) | Circular economy (CE) | Pollution (PPC) | Biodiversity and Ecosystems (BIO) | TOTAL (CCM + CCA + WTR + CE + PPC + BIO)1
Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy- eligible) | Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy- eligible) | Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy-eligible) | Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy-eligible) | Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy-eligible) | Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy-eligible) | Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy- eligible)
| Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy- aligned) |  | Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy- aligned) |  | Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy- aligned)
|  | of which Use of Proceeds | of which transitional | of which enabling |  |  | of which Use of Proceeds | of which enabling |  |  | of which Use of Proceeds | of which transitional | of which enabling
% | % | % | % | % | % | % | % | % | % | % | % | % | % | % | % | % | %
1 | Financial guarantees (FinGuar KPI) | 6.23 | 1.10 | — | 0.00 | 0.44 | — | — | — | — | — | 1.06 | — | — | 7.29 | 1.10 | — | 0.00 | 0.44
2 | Assets under management (AuM KPI) | 0.74 | 0.23 | — | 0.01 | 0.11 | 0.01 | — | — | — | — | 0.02 | 0.01 | — | 0.78 | 0.23 | — | 0.01 | 0.11

Universal Registration Document and Annual Financial Report 2024 | 151

KPI off-balance sheet exposures – Based on Counterparty CapEx – (Flow)
|  | 2024
|  | a | b | c | d | e | f | g | h | i | j | k | l | m | aa | ab | ac | ad | ae
% (compared to total eligible off-balance sheet assets) | Disclosure reference date T
Climate Change Mitigation (CCM) | Climate Change Adaptation (CCA) | Water and marine resources (WTR) | Circular economy (CE) | Pollution (PPC) | Biodiversity and Ecosystems (BIO) | TOTAL (CCM + CCA + WTR + CE + PPC + BIO)1
Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy- eligible) | Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy- eligible) | Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy-eligible) | Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy-eligible) | Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy-eligible) | Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy-eligible) | Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy- eligible)
| Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy- aligned) |  | Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy- aligned) |  | Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy- aligned)
|  | of which Use of Proceeds | of which transitional | of which enabling |  |  | of which Use of Proceeds | of which enabling |  |  | of which Use of Proceeds | of which transitional | of which enabling
% | % | % | % | % | % | % | % | % | % | % | % | % | % | % | % | % | %
1 | Financial guarantees (FinGuar KPI) | 7.58 | 1.50 | — | 0.21 | 0.52 | — | — | — | — | 0.05 | 0.08 | 0.01 | — | 7.72 | 1.50 | — | 0.21 | 0.52
2 | Assets under management (AuM KPI) | 0.81 | 0.29 | — | 0.02 | 0.12 | — | — | — | — | — | 0.01 | 0.01 | — | 0.83 | 0.29 | — | 0.02 | 0.12

Nuclear and fossil gas - related activities (Template 1)
This table presents HSBC Continental Europe’s exposures to Nuclear and Gas activities and has been prepared based on counterparties’
Nuclear and Gas disclosures.
This table has been duplicated to present information separately based on on-balance sheet exposures and off-balance sheet exposures. The
off-balance sheet exposures comprise financial guarantees and assets under management.

Template 1 Nuclear and fossil gas related activities
| 2024
Row | Nuclear energy related activities | YES/NO
1 | The undertaking carries out, funds or has exposures to research, development, demonstration and deployment of innovative electricity generation facilities that produce energy from nuclear processes with minimal waste from the fuel cycle. | YES
2 | The undertaking carries out, funds or has exposures to construction and safe operation of new nuclear installations to produce electricity or process heat, including for the purposes of district heating or industrial processes such as hydrogen production, as well as their safety upgrades, using best available technologies. | YES
3 | The undertaking carries out, funds or has exposures to safe operation of existing nuclear installations that produce electricity or process heat, including for the purposes of district heating or industrial processes such as hydrogen production from nuclear energy, as well as their safety upgrades. | YES
| Fossil gas related activities |
4 | The undertaking carries out, funds or has exposures to construction or operation of electricity generation facilities that produce electricity using fossil gaseous fuels. | YES
5 | The undertaking carries out, funds or has exposures to construction, refurbishment, and operation of combined heat/cool and power generation facilities using fossil gaseous fuels. | YES
6 | The undertaking carries out, funds or has exposures to construction, refurbishment and operation of heat generation facilities that produce heat/cool using fossil gaseous fuels. | YES

152 | Universal Registration Document and Annual Financial Report 2024

Appendix

Template 1 Nuclear and fossil gas related activities – Assets under management and Financial guarantees
| 2024
Row | Nuclear energy related activities | YES/NO
1 | The undertaking carries out, funds or has exposures to research, development, demonstration and deployment of innovative electricity generation facilities that produce energy from nuclear processes with minimal waste from the fuel cycle. | YES
2 | The undertaking carries out, funds or has exposures to construction and safe operation of new nuclear installations to produce electricity or process heat, including for the purposes of district heating or industrial processes such as hydrogen production, as well as their safety upgrades, using best available technologies. | YES
3 | The undertaking carries out, funds or has exposures to safe operation of existing nuclear installations that produce electricity or process heat, including for the purposes of district heating or industrial processes such as hydrogen production from nuclear energy, as well as their safety upgrades. | YES
| Fossil gas related activities |
4 | The undertaking carries out, funds or has exposures to construction or operation of electricity generation facilities that produce electricity using fossil gaseous fuels. | YES
5 | The undertaking carries out, funds or has exposures to construction, refurbishment, and operation of combined heat/cool and power generation facilities using fossil gaseous fuels | YES
6 | The undertaking carries out, funds or has exposures to construction, refurbishment and operation of heat generation facilities that produce heat/cool using fossil gaseous fuels. | YES

The following tables present HSBC Continental Europe’s exposures
to Nuclear and Gas activities 4.26 to 4.31, as defined in Commission
Delegated Regulation (EU) 2022/1214, covering Taxonomy aligned
activities (denominator and numerator) and Taxonomy eligible but not
aligned activities respectively. They have been prepared based on the
Bank's counterparties’ Nuclear and Gas disclosures.
The tables have been duplicated to present the information
separately based on Turnover and CapEx KPIs as reported by the
Bank's counterparties.
The tables have also been duplicated to present information
separately based on on-balance sheet exposures and assets under
management.
Nuclear and fossil gas - related activities (Template 2)

Template 2 Taxonomy-aligned economic activities (denominator) – Based on Counterparty Turnover-On balance sheet Stock KPI
|  | 2024
Row | Economic activities | Amount and proportion (the information is to be presented in monetary amounts and as percentages)
CCM + CCA | Climate change mitigation (CCM) | Climate change adaptation (CCA)
Amount | % | Amount | % | Amount | %
1 | Amount and proportion of taxonomy-aligned economic activity referred to in Section 4.26 of Annexes I and II to Delegated Regulation 2021/2139 in the denominator of the applicable KPI | — | — | — | — | — | —
2 | Amount and proportion of taxonomy-aligned economic activity referred to in Section 4.27 of Annexes I and II to Delegated Regulation 2021/2139 in the denominator of the applicable KPI | 1 | — | 1 | — | — | —
3 | Amount and proportion of taxonomy-aligned economic activity referred to in Section 4.28 of Annexes I and II to Delegated Regulation 2021/2139 in the denominator of the applicable KPI | 1 | — | 1 | — | — | —
4 | Amount and proportion of taxonomy-aligned economic activity referred to in Section 4.29 of Annexes I and II to Delegated Regulation 2021/2139 in the denominator of the applicable KPI | — | — | — | — | — | —
5 | Amount and proportion of taxonomy-aligned economic activity referred to in Section 4.30 of Annexes I and II to Delegated Regulation 2021/2139 in the denominator of the applicable KPI | — | — | — | — | — | —
6 | Amount and proportion of taxonomy-aligned economic activity referred to in Section 4.31 of Annexes I and II to Delegated Regulation 2021/2139 in the denominator of the applicable KPI | — | — | — | — | — | —
7 | Amount and proportion of other taxonomy-aligned economic activities not referred to in rows 1 to 6 above in the denominator of the applicable KPI | 438 | 0.40 | 431 | 0.39 | 7 | 0.01
8 | Total applicable KPI | 109,918 | 0.40 | 109,918 | 0.39 | 109,918 | 0.01

Universal Registration Document and Annual Financial Report 2024 | 153

Template 2 Taxonomy-aligned economic activities (denominator) – Based on Counterparty Capex-On balance sheet Stock KPI
|  | 2024
Row | Economic activities | Amount and proportion (the information is to be presented in monetary amounts and as percentages)
CCM + CCA | Climate change mitigation (CCM) | Climate change adaptation (CCA)
Amount | % | Amount | % | Amount | %
1 | Amount and proportion of taxonomy-aligned economic activity referred to in Section 4.26 of Annexes I and II to Delegated Regulation 2021/2139 in the denominator of the applicable KPI | — | — | — | — | — | —
2 | Amount and proportion of taxonomy-aligned economic activity referred to in Section 4.27 of Annexes I and II to Delegated Regulation 2021/2139 in the denominator of the applicable KPI | — | — | — | — | — | —
3 | Amount and proportion of taxonomy-aligned economic activity referred to in Section 4.28 of Annexes I and II to Delegated Regulation 2021/2139 in the denominator of the applicable KPI | — | — | — | — | — | —
4 | Amount and proportion of taxonomy-aligned economic activity referred to in Section 4.29 of Annexes I and II to Delegated Regulation 2021/2139 in the denominator of the applicable KPI | — | — | — | — | — | —
5 | Amount and proportion of taxonomy-aligned economic activity referred to in Section 4.30 of Annexes I and II to Delegated Regulation 2021/2139 in the denominator of the applicable KPI | — | — | — | — | — | —
6 | Amount and proportion of taxonomy-aligned economic activity referred to in Section 4.31 of Annexes I and II to Delegated Regulation 2021/2139 in the denominator of the applicable KPI | — | — | — | — | — | —
7 | Amount and proportion of other taxonomy-aligned economic activities not referred to in rows 1 to 6 above in the denominator of the applicable KPI | 789 | 0.72 | 774 | 0.71 | 15 | 0.01
8 | Total applicable KPI | 109,918 | 0.72 | 109,918 | 0.71 | 109,918 | 0.01

Template 2 Taxonomy-aligned economic activities (denominator) – Based on Counterparty Turnover- Assets under management-Stock
|  | 2024
Row | Economic activities | Amount and proportion (the information is to be presented in monetary amounts and as percentages)
CCM + CCA | Climate change mitigation (CCM) | Climate change adaptation (CCA)
Amount (Mn EUR) | % | Amount (Mn EUR) | % | Amount (Mn EUR) | %
1 | Amount and proportion of taxonomy-aligned economic activity referred to in Section 4.26 of Annexes I and II to Delegated Regulation 2021/2139 in the denominator of the applicable KPI | — | — | — | — |  | —
2 | Amount and proportion of taxonomy-aligned economic activity referred to in Section 4.27 of Annexes I and II to Delegated Regulation 2021/2139 in the denominator of the applicable KPI | 1 | — | 1 | — | — | —
3 | Amount and proportion of taxonomy-aligned economic activity referred to in Section 4.28 of Annexes I and II to Delegated Regulation 2021/2139 in the denominator of the applicable KPI | 142 | 0.04 | 142 | 0.04 | — | —
4 | Amount and proportion of taxonomy-aligned economic activity referred to in Section 4.29 of Annexes I and II to Delegated Regulation 2021/2139 in the denominator of the applicable KPI | — | — | — | — | — | —
5 | Amount and proportion of taxonomy-aligned economic activity referred to in Section 4.30 of Annexes I and II to Delegated Regulation 2021/2139 in the denominator of the applicable KPI | 1 | — | 1 | — | — | —
6 | Amount and proportion of taxonomy-aligned economic activity referred to in Section 4.31 of Annexes I and II to Delegated Regulation 2021/2139 in the denominator of the applicable KPI | 1 | — | 1 | — | — | —
7 | Amount and proportion of other taxonomy-aligned economic activities not referred to in rows 1 to 6 above in the denominator of the applicable KPI | 3,232 | 1.01 | 3,165 | 0.99 | 67 | 0.02
8 | Total applicable KPI | 322,592 | 1.05 | 322,592 | 1.03 | 322,592 | 0.02

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Template 2 Taxonomy-aligned economic activities (denominator) – Based on Counterparty Capex- Assets under management-Stock
|  | 2024
Row | Economic activities | Amount and proportion (the information is to be presented in monetary amounts and as percentages)
CCM + CCA | Climate change mitigation (CCM) | Climate change adaptation (CCA)
Amount (Mn EUR) | % | Amount (Mn EUR) | % | Amount (Mn EUR) | %
1 | Amount and proportion of taxonomy-aligned economic activity referred to in Section 4.26 of Annexes I and II to Delegated Regulation 2021/2139 in the denominator of the applicable KPI | — | — | — | — |  |
2 | Amount and proportion of taxonomy-aligned economic activity referred to in Section 4.27 of Annexes I and II to Delegated Regulation 2021/2139 in the denominator of the applicable KPI | 19 | 0.01 | 19 | 0.01 |  |
3 | Amount and proportion of taxonomy-aligned economic activity referred to in Section 4.28 of Annexes I and II to Delegated Regulation 2021/2139 in the denominator of the applicable KPI | 115 | 0.04 | 115 | 0.04 |  |
4 | Amount and proportion of taxonomy-aligned economic activity referred to in Section 4.29 of Annexes I and II to Delegated Regulation 2021/2139 in the denominator of the applicable KPI | 2 | — | 2 | — |  |
5 | Amount and proportion of taxonomy-aligned economic activity referred to in Section 4.30 of Annexes I and II to Delegated Regulation 2021/2139 in the denominator of the applicable KPI | 7 | — | 7 | — |  |
6 | Amount and proportion of taxonomy-aligned economic activity referred to in Section 4.31 of Annexes I and II to Delegated Regulation 2021/2139 in the denominator of the applicable KPI | 1 | — | 1 | — |  |
7 | Amount and proportion of other taxonomy-aligned economic activities not referred to in rows 1 to 6 above in the denominator of the applicable KPI | 4,987 | 1.54 | 4,983 | 1.54 | 4 | —
8 | Total applicable KPI | 322,592 | 1.59 | 322,592 | 1.59 | 322,592 | —

Universal Registration Document and Annual Financial Report 2024 | 155

Nuclear and fossil gas - related activities (Template 3)

Template 3 Taxonomy-aligned economic activities (numerator) – Based on Counterparty Turnover -On balance sheet Stock KPI
|  | 2024
Row | Economic activities | Amount and proportion (the information is to be presented in monetary amounts and as percentages)
(CCM + CCA) | Climate change mitigation (CCM) | Climate change adaptation (CCA)
Amount | % | Amount | % | Amount | %
1 | Amount and proportion of taxonomy-aligned economic activity referred to in Section 4.26 of Annexes I and II to Delegated Regulation 2021/2139 in the numerator of the applicable KPI | — | — | — | — | — | —
2 | Amount and proportion of taxonomy-aligned economic activity referred to in Section 4.27 of Annexes I and II to Delegated Regulation 2021/2139 in the numerator of the applicable KPI | 1 | 0.22 | 1 | 0.22 | — | —
3 | Amount and proportion of taxonomy-aligned economic activity referred to in Section 4.28 of Annexes I and II to Delegated Regulation 2021/2139 in the numerator of the applicable KPI | 1 | 0.23 | 1 | 0.23 | — | —
4 | Amount and proportion of taxonomy-aligned economic activity referred to in Section 4.29 of Annexes I and II to Delegated Regulation 2021/2139 in the numerator of the applicable KPI | — | — | — | — | — | —
5 | Amount and proportion of taxonomy-aligned economic activity referred to in Section 4.30 of Annexes I and II to Delegated Regulation 2021/2139 in the numerator of the applicable KPI | — | — | — | — | — | —
6 | Amount and proportion of taxonomy-aligned economic activity referred to in Section 4.31 of Annexes I and II to Delegated Regulation 2021/2139 in the numerator of the applicable KPI | — | — | — | — | — | —
7 | Amount and proportion of other taxonomy-aligned economic activities not referred to in rows 1 to 6 above in the numerator of the applicable KPI | 438 | 99.55 | 431 | 99.55 | 7 | 100.00
8 | Total amount and proportion of taxonomy-aligned economic activities in the numerator of the applicable KPI | 440 | 100.00 | 433 | 100.00 | 7 | 100.00

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Template 3 Taxonomy-aligned economic activities (numerator) – Based on Counterparty Capex-On balance sheet Stock KPI
|  | 2024
Row | Economic activities | Amount and proportion (the information is to be presented in monetary amounts and as percentages)
(CCM + CCA) | Climate change mitigation (CCM) | Climate change adaptation (CCA)
Amount | % | Amount | % | Amount | %
1 | Amount and proportion of taxonomy-aligned economic activity referred to in Section 4.26 of Annexes I and II to Delegated Regulation 2021/2139 in the numerator of the applicable KPI | — | — | — | — | — | —
2 | Amount and proportion of taxonomy-aligned economic activity referred to in Section 4.27 of Annexes I and II to Delegated Regulation 2021/2139 in the numerator of the applicable KPI | — | — | — | — | — | —
3 | Amount and proportion of taxonomy-aligned economic activity referred to in Section 4.28 of Annexes I and II to Delegated Regulation 2021/2139 in the numerator of the applicable KPI | — | — | — | — | — | —
4 | Amount and proportion of taxonomy-aligned economic activity referred to in Section 4.29 of Annexes I and II to Delegated Regulation 2021/2139 in the numerator of the applicable KPI | — | — | — | — | — | —
5 | Amount and proportion of taxonomy-aligned economic activity referred to in Section 4.30 of Annexes I and II to Delegated Regulation 2021/2139 in the numerator of the applicable KPI | — | — | — | — | — | —
6 | Amount and proportion of taxonomy-aligned economic activity referred to in Section 4.31 of Annexes I and II to Delegated Regulation 2021/2139 in the numerator of the applicable KPI | — | — | — | — | — | —
7 | Amount and proportion of other taxonomy-aligned economic activities not referred to in rows 1 to 6 above in the numerator of the applicable KPI | 790 | 100.00 | 775 | 100.00 | 15 | 100.00
8 | Total amount and proportion of taxonomy-aligned economic activities in the numerator of the applicable KPI | 790 | 100.00 | 775 | 100.00 | 15 | 100.00

Template 3 Taxonomy-aligned economic activities (numerator) – Based on Counterparty Turnover- Assets under management-Stock
|  | 2024
Row | Economic activities | Amount and proportion (the information is to be presented in monetary amounts and as percentages)
(CCM + CCA) | Climate change mitigation (CCM) | Climate change adaptation (CCA)
Amount | % | Amount | % | Amount | %
1 | Amount and proportion of taxonomy-aligned economic activity referred to in Section 4.26 of Annexes I and II to Delegated Regulation 2021/2139 in the numerator of the applicable KPI | — | — | — | — |  | —
2 | Amount and proportion of taxonomy-aligned economic activity referred to in Section 4.27 of Annexes I and II to Delegated Regulation 2021/2139 in the numerator of the applicable KPI | 1 | 0.03 | 1 | 0.03 | — | —
3 | Amount and proportion of taxonomy-aligned economic activity referred to in Section 4.28 of Annexes I and II to Delegated Regulation 2021/2139 in the numerator of the applicable KPI | 142 | 4.21 | 142 | 4.29 | — | —
4 | Amount and proportion of taxonomy-aligned economic activity referred to in Section 4.29 of Annexes I and II to Delegated Regulation 2021/2139 in the numerator of the applicable KPI | — | — | — | — | — | —
5 | Amount and proportion of taxonomy-aligned economic activity referred to in Section 4.30 of Annexes I and II to Delegated Regulation 2021/2139 in the numerator of the applicable KPI | 1 | 0.03 | 1 | 0.03 | — | —
6 | Amount and proportion of taxonomy-aligned economic activity referred to in Section 4.31 of Annexes I and II to Delegated Regulation 2021/2139 in the numerator of the applicable KPI | 1 | 0.03 | 1 | 0.03 | — | —
7 | Amount and proportion of other taxonomy-aligned economic activities not referred to in rows 1 to 6 above in the numerator of the applicable KPI | 3,233 | 95.70 | 3,165 | 95.62 | 67 | 100.00
8 | Total amount and proportion of taxonomy-aligned economic activities in the numerator of the applicable KPI | 3378 | 100.00 | 3310 | 100.00 | 67 | 100.00

Universal Registration Document and Annual Financial Report 2024 | 157

Template 3 Taxonomy-aligned economic activities (numerator) – Based on Counterparty Capex- Assets under management-Stock
|  | 2024
Row | Economic activities | Amount and proportion (the information is to be presented in monetary amounts and as percentages)
(CCM + CCA) | Climate change mitigation (CCM) | Climate change adaptation (CCA)
Amount | % | Amount | % | Amount | %
1 | Amount and proportion of taxonomy-aligned economic activity referred to in Section 4.26 of Annexes I and II to Delegated Regulation 2021/2139 in the numerator of the applicable KPI | — | — | — | — |  | —
2 | Amount and proportion of taxonomy-aligned economic activity referred to in Section 4.27 of Annexes I and II to Delegated Regulation 2021/2139 in the numerator of the applicable KPI | 19 | 0.37 | 19 | 0.37 |  | —
3 | Amount and proportion of taxonomy-aligned economic activity referred to in Section 4.28 of Annexes I and II to Delegated Regulation 2021/2139 in the numerator of the applicable KPI | 115 | 2.24 | 115 | 2.24 |  | —
4 | Amount and proportion of taxonomy-aligned economic activity referred to in Section 4.29 of Annexes I and II to Delegated Regulation 2021/2139 in the numerator of the applicable KPI | 2 | 0.04 | 2 | 0.04 |  | —
5 | Amount and proportion of taxonomy-aligned economic activity referred to in Section 4.30 of Annexes I and II to Delegated Regulation 2021/2139 in the numerator of the applicable KPI | 7 | 0.13 | 7 | 0.13 |  | —
6 | Amount and proportion of taxonomy-aligned economic activity referred to in Section 4.31 of Annexes I and II to Delegated Regulation 2021/2139 in the numerator of the applicable KPI | 1 | 0.02 | 1 | 0.02 |  | —
7 | Amount and proportion of other taxonomy-aligned economic activities not referred to in rows 1 to 6 above in the numerator of the applicable KPI | 4,986 | 97.20 | 4,982 | 97.20 | 4 | 100
8 | Total amount and proportion of taxonomy-aligned economic activities in the numerator of the applicable KPI | 5,130 | 100.00 | 5,126 | 100.00 | 4 | 100

158 | Universal Registration Document and Annual Financial Report 2024

Appendix

Nuclear and fossil gas - related activities (Template 4)

Template 4 Taxonomy-eligible but not taxonomy-aligned economic activities – Based on Counterparty Turnover-On balance sheet Stock KPI
|  | 2024
Row | Economic activities | Proportion (the information is to be presented in monetary amounts and as percentages)
(CCM + CCA) | Climate change mitigation (CCM) | Climate change adaptation (CCA)
Amount | % | Amount | % | Amount | %
1 | Amount and proportion of taxonomy-eligible but not taxonomy-aligned economic activity referred to in Section 4.26 of Annexes I and II to Delegated Regulation 2021/2139 in the denominator of the applicable KPI | — | — | — | — | — | —
2 | Amount and proportion of taxonomy-eligible but not taxonomy-aligned economic activity referred to in Section 4.27 of Annexes I and II to Delegated Regulation 2021/2139 in the denominator of the applicable KPI | — | — | — | — | — | —
3 | Amount and proportion of taxonomy-eligible but not taxonomy-aligned economic activity referred to in Section 4.28 of Annexes I and II to Delegated Regulation 2021/2139 in the denominator of the applicable KPI | — | — | — | — | — | —
4 | Amount and proportion of taxonomy-eligible but not taxonomy-aligned economic activity referred to in Section 4.29 of Annexes I and II to Delegated Regulation 2021/2139 in the denominator of the applicable KPI | 3 | — | 3 | — | — | —
5 | Amount and proportion of taxonomy-eligible but not taxonomy-aligned economic activity referred to in Section 4.30 of Annexes I and II to Delegated Regulation 2021/2139 in the denominator of the applicable KPI | 1 | — | 1 | — | — | —
6 | Amount and proportion of taxonomy-eligible but not taxonomy-aligned economic activity referred to in Section 4.31 of Annexes I and II to Delegated Regulation 2021/2139 in the denominator of the applicable KPI | — | — | — | — | — | —
7 | Amount and proportion of other taxonomy-eligible but not taxonomy-aligned economic activities not referred to in rows 1 to 6 above in the denominator of the applicable KPI | 13,093 | 11.91 | 13,093 | 11.91 | 13,096 | 11.91
8 | Total amount and proportion of taxonomy eligible but not taxonomy-aligned economic activities in the denominator of the applicable KPI | 13,096 | 11.91 | 13,096 | 11.91 | 13,096 | 11.91

Universal Registration Document and Annual Financial Report 2024 | 159

Template 4 Taxonomy-eligible but not taxonomy-aligned economic activities – Based on Counterparty Capex-On balance sheet Stock KPI
|  | 2024
Row | Economic activities | Proportion (the information is to be presented in monetary amounts and as percentages)
(CCM + CCA) | Climate change mitigation (CCM) | Climate change adaptation (CCA)
Amount | % | Amount | % | Amount | %
1 | Amount and proportion of taxonomy-eligible but not taxonomy-aligned economic activity referred to in Section 4.26 of Annexes I and II to Delegated Regulation 2021/2139 in the denominator of the applicable KPI | — | — | — | — | — | —
2 | Amount and proportion of taxonomy-eligible but not taxonomy-aligned economic activity referred to in Section 4.27 of Annexes I and II to Delegated Regulation 2021/2139 in the denominator of the applicable KPI | — | — | — | — | — | —
3 | Amount and proportion of taxonomy-eligible but not taxonomy-aligned economic activity referred to in Section 4.28 of Annexes I and II to Delegated Regulation 2021/2139 in the denominator of the applicable KPI | — | — | — | — | — | —
4 | Amount and proportion of taxonomy-eligible but not taxonomy-aligned economic activity referred to in Section 4.29 of Annexes I and II to Delegated Regulation 2021/2139 in the denominator of the applicable KPI | 3 | — | 3 | — | — | —
5 | Amount and proportion of taxonomy-eligible but not taxonomy-aligned economic activity referred to in Section 4.30 of Annexes I and II to Delegated Regulation 2021/2139 in the denominator of the applicable KPI | 1 | — | 1 | — | — | —
6 | Amount and proportion of taxonomy-eligible but not taxonomy-aligned economic activity referred to in Section 4.31 of Annexes I and II to Delegated Regulation 2021/2139 in the denominator of the applicable KPI | — | — | — | — | — | —
7 | Amount and proportion of other taxonomy-eligible but not taxonomy-aligned economic activities not referred to in rows 1 to 6 above in the denominator of the applicable KPI | 13,024 | 11.85 | 13,024 | 11.85 | 13,028 | 11.85
8 | Total amount and proportion of taxonomy eligible but not taxonomy-aligned economic activities in the denominator of the applicable KPI | 13,028 | 11.85 | 13,028 | 11.85 | 13,028 | 11.85

160 | Universal Registration Document and Annual Financial Report 2024

Appendix

Template 4 Taxonomy-eligible but not taxonomy-aligned economic activities – Based on Counterparty Turnover- Assets under management- Stock
|  | 2024
Row | Economic activities | Proportion (the information is to be presented in monetary amounts and as percentages)
(CCM + CCA) | Climate change mitigation (CCM) | Climate change adaptation (CCA)
Amount | % | Amount | % | Amount | %
1 | Amount and proportion of taxonomy-eligible but not taxonomy-aligned economic activity referred to in Section 4.26 of Annexes I and II to Delegated Regulation 2021/2139 in the denominator of the applicable KPI | — | — | — | — | — | —
2 | Amount and proportion of taxonomy-eligible but not taxonomy-aligned economic activity referred to in Section 4.27 of Annexes I and II to Delegated Regulation 2021/2139 in the denominator of the applicable KPI | 1 | — | 1 | — | — | —
3 | Amount and proportion of taxonomy-eligible but not taxonomy-aligned economic activity referred to in Section 4.28 of Annexes I and II to Delegated Regulation 2021/2139 in the denominator of the applicable KPI | 2 | — | 2 | — | — | —
4 | Amount and proportion of taxonomy-eligible but not taxonomy-aligned economic activity referred to in Section 4.29 of Annexes I and II to Delegated Regulation 2021/2139 in the denominator of the applicable KPI | 103 | 0.03 | 103 | 0.03 | — | —
5 | Amount and proportion of taxonomy-eligible but not taxonomy-aligned economic activity referred to in Section 4.30 of Annexes I and II to Delegated Regulation 2021/2139 in the denominator of the applicable KPI | 23 | 0.01 | 23 | 0.01 | — | —
6 | Amount and proportion of taxonomy-eligible but not taxonomy-aligned economic activity referred to in Section 4.31 of Annexes I and II to Delegated Regulation 2021/2139 in the denominator of the applicable KPI | 1 | — | 1 | — | — | —
7 | Amount and proportion of other taxonomy-eligible but not taxonomy-aligned economic activities not referred to in rows 1 to 6 above in the denominator of the applicable KPI | 14,264 | 4.42 | 11,277 | 3.50 | 937 | 0.29
8 | Total amount and proportion of taxonomy eligible but not taxonomy-aligned economic activities in the denominator of the applicable KPI | 14,394 | 4.46 | 11,407 | 3.54 | 937 | 0.29

Universal Registration Document and Annual Financial Report 2024 | 161

Template 4 Taxonomy-eligible but not taxonomy-aligned economic activities – Based on Counterparty Capex- Assets under management-Stock
|  | 2024
Row | Economic activities | Proportion (the information is to be presented in monetary amounts and as percentages)
(CCM + CCA) | Climate change mitigation (CCM) | Climate change adaptation (CCA)
Amount | % | Amount | % | Amount | %
1 | Amount and proportion of taxonomy-eligible but not taxonomy-aligned economic activity referred to in Section 4.26 of Annexes I and II to Delegated Regulation 2021/2139 in the denominator of the applicable KPI | — | — | — | — | — | —
2 | Amount and proportion of taxonomy-eligible but not taxonomy-aligned economic activity referred to in Section 4.27 of Annexes I and II to Delegated Regulation 2021/2139 in the denominator of the applicable KPI | — | — | — | — | — | —
3 | Amount and proportion of taxonomy-eligible but not taxonomy-aligned economic activity referred to in Section 4.28 of Annexes I and II to Delegated Regulation 2021/2139 in the denominator of the applicable KPI | 1 | — | 1 | — | — | —
4 | Amount and proportion of taxonomy-eligible but not taxonomy-aligned economic activity referred to in Section 4.29 of Annexes I and II to Delegated Regulation 2021/2139 in the denominator of the applicable KPI | 48 | 0.01 | 48 | 0.01 | — | —
5 | Amount and proportion of taxonomy-eligible but not taxonomy-aligned economic activity referred to in Section 4.30 of Annexes I and II to Delegated Regulation 2021/2139 in the denominator of the applicable KPI | 5 | — | 5 | — | — | —
6 | Amount and proportion of taxonomy-eligible but not taxonomy-aligned economic activity referred to in Section 4.31 of Annexes I and II to Delegated Regulation 2021/2139 in the denominator of the applicable KPI | — | — | — | — | — | —
7 | Amount and proportion of other taxonomy-eligible but not taxonomy-aligned economic activities not referred to in rows 1 to 6 above in the denominator of the applicable KPI | 13,855 | 4.30 | 12,519 | 3.89 | 67 | 0.02
8 | Total amount and proportion of taxonomy eligible but not taxonomy-aligned economic activities in the denominator of the applicable KPI | 13,909 | 4.31 | 12,573 | 3.90 | 67 | 0.02

Nuclear and fossil gas - related activities (Template 5)
This table presents HSBC Continental Europe’s exposures to non-eligible Nuclear and Gas activities.
The table has been duplicated to present the information separately based on Turnover and CapEx KPIs as reported by the Bank's
counterparties.
The table has also been duplicated to present information separately based on on-balance sheet exposures and assets under management.

Template 5 Taxonomy non-eligible economic activities – Based on Counterparty Turnover-On balance sheet Stock KPI
|  | 2024
Row | Economic activities | Amount | %
1 | Amount and proportion of economic activity referred to in row 1 of Template 1 that is taxonomy-non-eligible in accordance with Section 4.26 of Annexes I and II to Delegated Regulation 2021/2139 in the denominator of the applicable KPI | — | —
2 | Amount and proportion of economic activity referred to in row 2 of Template 1 that is taxonomy-non-eligible in accordance with Section 4.27 of Annexes I and II to Delegated Regulation 2021/2139 in the denominator of the applicable KPI | 1 | —
3 | Amount and proportion of economic activity referred to in row 3 of Template 1 that is taxonomy-non-eligible in accordance with Section 4.28 of Annexes I and II to Delegated Regulation 2021/2139 in the denominator of the applicable KPI | — | —
4 | Amount and proportion of economic activity referred to in row 4 of Template 1 that is taxonomy-non-eligible in accordance with Section 4.29 of Annexes I and II to Delegated Regulation 2021/2139 in the denominator of the applicable KPI | — | —
5 | Amount and proportion of economic activity referred to in row 5 of Template 1 that is taxonomy-non-eligible in accordance with Section 4.30 of Annexes I and II to Delegated Regulation 2021/2139 in the denominator of the applicable KPI | — | —
6 | Amount and proportion of economic activity referred to in row 6 of Template 1 that is taxonomy-non-eligible in accordance with Section 4.31 of Annexes I and II to Delegated Regulation 2021/2139 in the denominator of the applicable KPI | — | —
7 | Amount and proportion of other taxonomy-non-eligible economic activities not referred to in rows 1 to 6 above in the denominator of the applicable KPI | 6,941 | 6.32
8 | Total amount and proportion of taxonomy-non-eligible economic activities in the denominator of the applicable KPI | 6,942 | 6.32

162 | Universal Registration Document and Annual Financial Report 2024

Appendix

Template 5 Taxonomy non-eligible economic activities – Based on Counterparty Capex-On balance sheet Stock KPI
|  | 2024
Row | Economic activities | Amount | %
1 | Amount and proportion of economic activity referred to in row 1 of Template 1 that is taxonomy-non-eligible in accordance with Section 4.26 of Annexes I and II to Delegated Regulation 2021/2139 in the denominator of the applicable KPI | — | —
2 | Amount and proportion of economic activity referred to in row 2 of Template 1 that is taxonomy-non-eligible in accordance with Section 4.27 of Annexes I and II to Delegated Regulation 2021/2139 in the denominator of the applicable KPI | — | —
3 | Amount and proportion of economic activity referred to in row 3 of Template 1 that is taxonomy-non-eligible in accordance with Section 4.28 of Annexes I and II to Delegated Regulation 2021/2139 in the denominator of the applicable KPI | — | —
4 | Amount and proportion of economic activity referred to in row 4 of Template 1 that is taxonomy-non-eligible in accordance with Section 4.29 of Annexes I and II to Delegated Regulation 2021/2139 in the denominator of the applicable KPI | — | —
5 | Amount and proportion of economic activity referred to in row 5 of Template 1 that is taxonomy-non-eligible in accordance with Section 4.30 of Annexes I and II to Delegated Regulation 2021/2139 in the denominator of the applicable KPI | — | —
6 | Amount and proportion of economic activity referred to in row 6 of Template 1 that is taxonomy-non-eligible in accordance with Section 4.31 of Annexes I and II to Delegated Regulation 2021/2139 in the denominator of the applicable KPI | — | —
7 | Amount and proportion of other taxonomy-non-eligible economic activities not referred to in rows 1 to 6 above in the denominator of the applicable KPI | 6,660 | 6.06
8 | Total amount and proportion of taxonomy-non-eligible economic activities in the denominator of the applicable KPI | 6,660 | 6.06

Template 5 Taxonomy non-eligible economic activities – Based on Counterparty Turnover- Assets under management-Stock
|  | 2024
Row | Economic activities | Amount | %
1 | Amount and proportion of economic activity referred to in row 1 of Template 1 that is taxonomy-non-eligible in accordance with Section 4.26 of Annexes I and II to Delegated Regulation 2021/2139 in the denominator of the applicable KPI | — | —
2 | Amount and proportion of economic activity referred to in row 2 of Template 1 that is taxonomy-non-eligible in accordance with Section 4.27 of Annexes I and II to Delegated Regulation 2021/2139 in the denominator of the applicable KPI | — | —
3 | Amount and proportion of economic activity referred to in row 3 of Template 1 that is taxonomy-non-eligible in accordance with Section 4.28 of Annexes I and II to Delegated Regulation 2021/2139 in the denominator of the applicable KPI | 33 | 0.01
4 | Amount and proportion of economic activity referred to in row 4 of Template 1 that is taxonomy-non-eligible in accordance with Section 4.29 of Annexes I and II to Delegated Regulation 2021/2139 in the denominator of the applicable KPI | — | —
5 | Amount and proportion of economic activity referred to in row 5 of Template 1 that is taxonomy-non-eligible in accordance with Section 4.30 of Annexes I and II to Delegated Regulation 2021/2139 in the denominator of the applicable KPI | — | —
6 | Amount and proportion of economic activity referred to in row 6 of Template 1 that is taxonomy-non-eligible in accordance with Section 4.31 of Annexes I and II to Delegated Regulation 2021/2139 in the denominator of the applicable KPI | — | —
7 | Amount and proportion of other taxonomy-non-eligible economic activities not referred to in rows 1 to 6 above in the denominator of the applicable KPI | 304,788 | 94.48
8 | Total amount and proportion of taxonomy-non-eligible economic activities in the denominator of the applicable KPI | 304,821 | 94.49

Universal Registration Document and Annual Financial Report 2024 | 163

Template 5 Taxonomy non-eligible economic activities – Based on Counterparty Capex- Assets under management-Stock
|  | 2024
Row | Economic activities | Amount | %
1 | Amount and proportion of economic activity referred to in row 1 of Template 1 that is taxonomy-non-eligible in accordance with Section 4.26 of Annexes I and II to Delegated Regulation 2021/2139 in the denominator of the applicable KPI | — | —
2 | Amount and proportion of economic activity referred to in row 2 of Template 1 that is taxonomy-non-eligible in accordance with Section 4.27 of Annexes I and II to Delegated Regulation 2021/2139 in the denominator of the applicable KPI | 116 | 0.04
3 | Amount and proportion of economic activity referred to in row 3 of Template 1 that is taxonomy-non-eligible in accordance with Section 4.28 of Annexes I and II to Delegated Regulation 2021/2139 in the denominator of the applicable KPI | 22 | 0.01
4 | Amount and proportion of economic activity referred to in row 4 of Template 1 that is taxonomy-non-eligible in accordance with Section 4.29 of Annexes I and II to Delegated Regulation 2021/2139 in the denominator of the applicable KPI | — | —
5 | Amount and proportion of economic activity referred to in row 5 of Template 1 that is taxonomy-non-eligible in accordance with Section 4.30 of Annexes I and II to Delegated Regulation 2021/2139 in the denominator of the applicable KPI | — | —
6 | Amount and proportion of economic activity referred to in row 6 of Template 1 that is taxonomy-non-eligible in accordance with Section 4.31 of Annexes I and II to Delegated Regulation 2021/2139 in the denominator of the applicable KPI | — | —
7 | Amount and proportion of other taxonomy-non-eligible economic activities not referred to in rows 1 to 6 above in the denominator of the applicable KPI | 303,415 | 94.05
8 | Total amount and proportion of taxonomy-non-eligible economic activities in the denominator of the applicable KPI | 303,553 | 94.10

On balance sheet exposures to nuclear and gas activities as a
proportion of total covered assets are deemed not material,
therefore, negligible on-balance sheet flow is implied. Tables 2-5
related to the flow of newly incurred exposures have not been
disclosed.
Assets under management for nuclear and gas activities as a
proportion of total assets under management are deemed not
material, therefore, a negligible flow is implied. Tables 2-5 related to
the flow of newly incurred exposures have not been disclosed.
Financial guarantee exposures for nuclear and gas activities are
deemed not material. Therefore tables 2-5 for both stock and flow
have not been disclosed.

164 | Universal registration document and Annual Financial Report 2024

Risk

Risk

Contents
164 | Key highlights
165 | Approach to managing risk
165 | Risk appetite
165 | Risk management
169 | Key developments and risk profile
170 | Risk factors
181 | Financial risk
207 | Credit and counterparty credit risk
208 | Market risk
211 | Treasury risk
218 | Non financial risk
218 | Operational risk
221 | Resilience risk
222 | Model risk
223 | Legal risks and litigation management
224 | Compliance
226 | Climate and environmental risks management
236 | Other risks
236 | Reputational risk management
236 | Insurable risk coverage
237 | Periodic control
239 | Tax risk

All Pillar 3 and regulatory documentation is available on the Internet.
Key highlights

Principal Regulatory Ratios (non audited)
| At
| 31 Dec 2024 | 31 Dec 2023 4
| % | %
Capital Ratios |  |
Common equity tier 1 | 18.8 | 15.7
Total tier 1 | 21.1 | 18.2
Total capital | 23.5 | 20.7
Leverage Ratio | 5.4 | 4.2
Liquidity Ratios 1 |  |
Liquidity Coverage Ratio ("LCR")1,2 | 150 | 158
Net Stable Funding Ratio ("NSFR")1,3 | 137 | 141

1 In accordance with CRR II requirements, the LCR is disclosed as a 12 month
average and the NSFR as at period-end.
2 The components of the LCR calculation have been represented to comply
with EBA reporting requirements.
3 Dec 2023 includes the impact of the sale of our retail banking operations in
France.
4 CET1 capital for Dec 2023 has been restated to reflect the payment of AT1
dividends.

Risk-Weighted Assets – by Risk Type (non audited)
| RWAs | Capital required
| 2024 | 2023 | 2024 | 2023
| €m | €m | €m | €m
Credit Risk | 46,008 | 44,055 | 3,680 | 3,526
Counterparty Credit Risk | 6,815 | 5,280 | 545 | 422
Market Risk | 3,786 | 3,992 | 302 | 320
Operational Risk | 6,688 | 6,188 | 522 | 495
Total Risk-Weighted Assets | 63,297 | 59,515 | 5,049 | 4,763

Loan Impairment Charges/Impaired Loans
| At
| 31 Dec 2024 | 31 Dec 2023
(in million of euros/%) | €m | €m
Total Gross loans | 57,479 | 56,701
Total Impaired loans (B)1 | 1,613 | 1,658
Impaired loans % | 2.81% | 2.92%
Total loan impairment charge at 31 December | (97) | (145)
Impairment allowances (A)1 | (362) | (624)
Impairment ratio: A/B | 22.44% | 37.64%

1 Including only stage 3 and POCI.

Universal registration document and Annual Financial Report 2024 | 165

Approach to managing risk
HSBC Continental Europe's risk appeti te
HSBC Continental Europe’s risk appetite defines the level and types
of risk that we are willing to take, while informing the financial
planning process and guiding strategic decision making. HSBC
Continental Europe's risk appetite is defined as the aggregate level of
risk that the bank is comfortable to take to achieve its strategic
objectives. The Risk Appetite also provides a mechanism for non-
executive directors and executive directors to collectively establish
the bank’s willingness to engage in certain activities and assess these
activities.
Enterprise-wide application
HSBC Continental Europe's risk appetite is expressed holistically
through various risk management mechanisms and activities, in both
quantitative and qualitative terms.
The Board reviews and approves the risk appetite regularly to make
sure it remains fit for purpose, The risk appetite is considered,
developed and enhanced through the following principles:
– alignment with our strategy, purpose, values, external risk
– environment, reputational and customer needs;
– compliance with applicable laws, regulations and regulatory
priorities;
– forward looking insights into future risk exposure;
– sufficiency of available capital, liquidity and balance sheet leverage
to absorb the risks;
– capacity and capabilities of people to manage the landscape;
– functionality, capacity and resilience of available systems to
manage the risk landscape;
– effectiveness of the applicable control environment to mitigate
risk; and
– internally and externally disclosed commitments.
HSBC Continental Europe formally articulate its risk appetite through
its risk appetite statement ('RAS').
Setting out HSBC Continental Europe's risk appetite ensures that the
Bank agrees a suitable level of risk for its strategy. In this way, risk
appetite permits the financial planning process and helps senior
management of the bank to allocate capital to business activities,
services and products.
The RAS consists of qualitative statements and quantitative metrics,
covering financial and non-financial risks. It is fundamental to the
development of business line strategies, strategic and business
planning, and senior management balanced scorecards.
Performance against the RAS is reported to the Risk Management
Meeting ('RMM') to support targeted insight and discussion on
breaches of risk appetite and any associated mitigating actions. This
reporting allows risks to be promptly identified and mitigated, and
informs risk-adjusted remuneration to drive a strong risk culture.
Financial risks are defined as a risk of financial loss resulting from
business activities. Non-financial risks are defined as the risk of loss
resulting from people, inadequate or failed internal processes, data or
systems, or external events. These risks arise during the day-to-day
operations (including those undertaken by a third party of HSBC
Continental Europe's behalf), while taking financial risks. Non-financial
risks may have an impact on HSBC Continental Europe's
management of financial risks, for example, inaccurate financial
reporting may lead to unexpected capital or liquidity risk, or a trading
process failure may result in higher market risk taking.

Risk management
HSBC Continental Europe recognises that the primary role of risk
management is to protect its customers, business, colleagues,
shareholders and the communities that it serves, while ensuring that
HSBC Continental Europe is able to support its strategy and provide
sustainable growth. This is supported through its three lines of
defence model described on page 167.
In addition, HSBC Continental Europe recognises the importance of a
strong risk culture, which refers to its shared attitudes, values and
standards that shape behaviours including those related to risk
awareness, risk taking and risk management. All HSBC Continental
Europe's people are responsible for the management of risk, with
ultimate supervisory oversight residing with the Board.
The implementation of HSBC Continental Europe’s business strategy
remains a key focus. As HSBC Continental Europe’s implements
change initiatives, it actively manages the execution risks. HSBC
Continental Europe also performs periodic risk assessments, including
against strategies, to help ensure retention of key personnel for its
continued safe operation.
HSBC Continental Europe uses a comprehensive risk management
framework across the organisation and across all risk types,
underpinned by the HSBC Group’s culture and values. This framework
outlines the key principles, policies and practices that the bank
employs in managing material risks, both financial and non-financial.
The framework fosters continuous monitoring, promotes risk
awareness and encourages a sound operational and strategic
decision-making and escalation process. It also supports a consistent
approach to identifying, assessing, managing and reporting the risks
that HSBC Continental Europe accepts and incurs in its activities, with
clear accountabilities.
HSBC Continental Europe actively reviews and enhances its risk
management framework and its approach to managing risk, through
its activities with regard to: people and capabilities; governance;
reporting and management information; credit risk management
models; and data.
The Risk function is led by the Chief Risk Officer, who is responsible
for the risk management framework of HSBC Continental Europe.
This responsibility includes establishing risk policy, monitoring risk
profiles, and forward-looking risk identification and management. Risk
is made up of sub-functions covering all risks of HSBC Continental
Europe activities. The Risk function is part of the Second Line of
Defence, and is independent from commercial activities.

166 | Universal registration document and Annual Financial Report 2024

Risk

Stress testing
HSBC Continental Europe operates a comprehensive stress testing
program that supports its risk management and capital planning. It
includes execution of stress tests mandated by its regulators to
assess vulnerabilities in individual banks and/or the financial banking
sector under hypothetical adverse scenarios. The stress testing
program is supported by dedicated teams and infrastructure and is
overseen at the most senior levels of the bank, as stress test
outcomes are presented to the HSBC Continental Europe Risk
Committee and Board.
Stress testing assesses the capital and liquidity strength of the bank
through a rigorous examination of its resilience to external shocks. It
also helps it understand and mitigate risks, inform its decisions about
capital and liquidity levels (including the risk appetite statement) and
confirm the strength of its strategic and financial plans. As well as
undertaking regulatory-driven stress tests, HSBC Continental Europe
conducts its own internal stress tests, such as macroeconomic and
event-driven stress tests, concentration risk stress tests on specific
portfolios, market risk stress tests or reverse stress tests implying
potential extreme conditions that would make the business model of
the bank non-viable. Some of these internal stress tests are included
in the Recovery Plan that helps understand the likely outcomes of
adverse business or economic conditions and in the identification of
appropriate risk mitigating actions.
In 2024, HSBC Continental Europe performed a range of stress tests
within the stress testing program,and reported the results of these
stress tests to senior management. The macroeconomic internal
stress tests, conducted throughout 2024, considered combinations of
various potential impacts, in particular geopolitical tensions, financial
instability, interest rate shocks, deep recession, supply chain
disruption and operational risk.
Stress testing scenarios are usually centrally coordinated by HSBC
Risk and Finance teams, and broken down into regional and country
scenarios to ensure global consistency.
To have an appropriate coverage of the specific risks faced by HSBC
Continental Europe, scenarios specific to Continental Europe are also
developed by HSBC Continental Europe’s Risk and Finance teams,
with the support of expert panels.
Regulatory stress tests
Stress testing is also an important regulatory tool to assess the
resilience of the banking sector and of individual banks to adverse
economic or financial developments.
The results inform regulators of the capital adequacy of individual
institutions and can have an effect on minimum capital requirements,
and therefore the payment of dividends, going forward.
HSBC Continental Europe is subject to regulatory stress testing,
including the EU-wide stress test coordinated by the European
Banking Aut hority.
Risk management framework
The following diagram and descriptions summarise key aspects of the
risk management framework, which applies to HSBC Continental
Europe, including governance, structure, HSBC risk management
tools and risk culture, which together help align employee behaviour
with HSBC's risk appetite.

Key components of our risk management framework
HSBC Values and risk culture
Risk governance | Non-executive risk governance | The HSBC Continental Europe Board approves the risk appetite, plans and performance targets. It sets the ‘tone from the top’ and is advised by the HSBC Continental Europe Risk Committee.
Executive risk governance | The executive risk governance structure is responsible for the enterprise- wide management of all risks, including key policies and frameworks for the management of risk.
Roles and responsibilities | Three lines of defence model | The ‘three lines of defence’ model defines roles and responsibilities for risk management. An independent Risk function helps ensure the necessary balance in risk/return decisions).
Processes and tools | Risk appetite | HSBC Continental Europe has processes in place to identify/assess, monitor, manage and report risks to help ensure it remains within its risk appetite.
Enterprise-wide risk management tools
Active risk management: identification/assessment, monitoring, management and reporting
Internal controls | Policies and procedures | Policies and procedures define the minimum requirements for the controls required to manage the risks.
Control activities | Operational and resilience risk management defines minimum standards and processes for managing operational risks and internal controls.
Systems and infrastructure | HSBC Continental Europe has systems and/or processes that support the identification, capture and exchange of information to support risk management activities.

Universal Registration Document and Annual Financial Report 2024 | 167

Risk governance
The HSBC Continental Europe Risk Committee focuses on risk
governance and seeks to ensure a forward-looking view of risks and
their mitigation.
The Risk Committee is a committee of the Board and has
responsibility for oversight and advice to the Board in its supervision
of, amongst other things, the Bank’s risk appetite, tolerance and
strategy, systems of risk management, internal control and
compliance. Additionally, members of the Risk Committee attend
meetings of the bank’s Nomination, Remuneration and Governance
Committee at which the alignment of the reward structures to risk
appetite is considered.
In carrying out its responsibilities, the Risk Committee is closely
supported by the Chief Risk Officer, the Chief Financial Officer, the
Head of Internal Audit and the Chief Compliance Officer with other
business/functions for risks within their respective areas of
responsibility.
In addition to the role of the non-executive Risk Committee, the
HSBC Continental Europe Risk Management Meeting, is the
overarching executive management committee of both financial and
non-financial risk management.
Chaired by the Chief Risk Officer, the Risk Management Meeting met
7 times in 2024 in order to examine the major risks faced by HSBC
Continental Europe.
It reviews financial and non-financial risks for the HSBC Continental
Europe perimeter, including the risks linked to Digital Business
Services and the evolution of action plans put in place in order to
mitigate identified risks. The HSBC Continental Europe Risk
Management Meeting reports functionally to its European equivalent
in the HSBC Group: the HSBC Europe Risk Management Meeting,
and to the HSBC Continental Europe Risk Committee and Executive
Committee.
This framework is completed by dedicated risk forums and working
groups for specific risks in businesses and functions combining the
various levels of internal control, in order to manage, monitor and
control HSBC activities within HSBC Continental Europe.
Responsibility for managing both financial and non-financial risk,
including regulatory compliance and financial crime, lies with HSBC
Continental Europe employees. They are required to manage the risks
of the business and operational activities for which they are
responsible. HSBC Continental Europe maintains oversight of its risks
through the various Risk Stewards, as well as the accountability held
by the Chief Risk Officer.
HSBC Continental Europe has continued to strengthen the control
environment and its approach to the management of risk, as set out
in its risk management framework. HSBC Continental Europe’s
ongoing focus is on helping to ensure more effective oversight and
better end-to-end identification and management of financial and non-
financial risks. This is overseen by the Enterprise Risk Management
function.
Non-financial risk includes some of the most material risks HSBC
Continental Europe faces, such as Technology, Cyber and Security
Risks, Data Risk, Model Risk and the current geopolitical risks.
All of HSBC Continental Europe's activities are monitored and
managed to be compliant with local regulations and Group standards
and procedures.
The control framework
In compliance with the requirements of the French Order of
3 November 2014 modified on 25 February 2021 and the HSBC Group
requirements, a permanent control and risk management framework
has been established in HSBC Continental Europe.
The Chief Risk Officer and the Chief Compliance Officer of HSBC
Continental Europe are responsible for the permanent control within
HSBC Continental Europe's perimeter.
The key responsibility for control falls to the managers of the various
businesses and functions and Digital Business Services who must
ensure that primary controls are conducted in a proper manner.
Operational activities need to be covered by a second-level of
permanent control.
The HSBC Group risk taxonomy
To help ensure consistency and comparability in risk categorisation
across the Group, HSBC Continental Europe uses a standardised set
of risk types known as the HSBC risk taxonomy.
These are categorised as financial risks and non-financial risks. Non-
financial risk includes, but is not limited to, those risks captured under
the Basel definition for Operational Risk.
HSBC Continental Europe has five level 1 financial risk types and
seven level 1 non-financial risk types, as listed below:

Financial Risks | Non- Financial Risks
Treasury Risk | Financial Reporting and Tax Risk
Retail Credit Risk | Resilience Risk
Wholesale Credit Risk | Financial Crime Risk
Traded Risk | People Risk
Strategic Risk | Regulatory Compliance Risk
| Legal Risk
| Model Risk

Tools
In compliance with the French Order of 3 November 2014, modified
on 25 February 2021, referring to bank's permanent control system, a
framework is set up in each entity to monitor its risks.
Inherent and residual risks are assessed for each line of business,
activities and functions and are documented in an RCA (Risk and
Control Assessment) recorded in the HSBC Risk system (Helios).
Assessments are undertaken on an ongoing basis and whenever a
trigger event occurs requiring a reassessment of the risk and the
related control coverage.
The risk profile of all HSBC Continental Europe's activities is
presented formally at least annually by the First Line of Defence to
the Chief Risk Officer in attendance of the concerned Risk Stewards,
the Head of Operational and Resilience Risk function and Internal
Audit.
The objective of the exercise is to ensure that assessment and
management of non-financial risks is consistent across Businesses
and Functions and in line with the HSBC Risk Management
Framework as well as European and French regulation.
Three lines of defence
All of HSBC Continental Europe's people are responsible for
identifying and managing risk within the scope of their roles. Roles
are defined using the three lines of defence model, which takes into
account our business and functional structures as described below.

168 | Universal Registration Document and Annual Financial Report 2024

Risk

To create a robust control environment to manage risks, HSBC
Continental Europe uses an activity-based three lines of defence
model, whereby the activity a member of staff undertakes drives
which line they reside within. This model delineates management
accountabilities and responsibilities for risk management and the
control environment.
The model underpins the bank’s approach to manage risk by clarifying
responsibility, encouraging collaboration and enabling efficient
coordination of risk and control activities.
The three lines are summarised below:
– The First Line of Defence ('1LoD') owns the risks and is
responsible for identifying, recording, reporting and managing
them in line with risk appetite, and ensuring that the right controls
and assessments are in place to mitigate them.
– The Second Line of Defence ('2LoD') challenges the First Line of
Defence on effective risk management, and provides advice and
guidance and assurance of the First Line of Defence to ensure it is
managing risk effectively.The 2LoD is independent of the risk-
taking activities undertaken by the 1LoD as defined by the Article
14 of the French Order of 3 November 2014 modified on
25 February 2021. The 2LoD includes Assurance teams which are
dedicated to second level of permanent control activities for all
risks.
– the Third Line of Defence ('3LoD') is the Internal Audit function,
which provides independent assessment to senior management
and to the Audit Committee as to whether HSBC Continental
Europe's management, governance and internal control processes
are designed and operated effectively.
Permanent Control Activities
The permanent control activities are primarily based on first-level
controls carried out by the 1LoD composed by the Businesses,
Functions, and Digital Business Services ('DBS'), which are
responsible for their day-today activities and processes, the
management of the resulting non-financial risks, and the first-level
controls to mitigate those risks. The purpose of these first-level
controls is to ensure that all activities are conducted in accordance
with all internal, external and regulatory requirements.
An independent control framework owned by the 2LoD completes
this set of first-level controls. Key roles in the independent control
framework include:
– Risk Stewards, acting as subject matter expert who set policies
and oversee the 1LoD activities by risk type. They are responsible
for ensuring that their risk type is managed effectively. They
regularly review the « Risk and Control Assessment » through the
"Review and Challenge" module documented in the Helios Risk
Management Tool.
– Assurance teams implement and maintain an effective second
level of permanent control environment over 1LoD risks related
activities. They are responsible for developing an annual assurance
(permanent control) plan across all HSBC Continental Europe risk
types, to assess design and operating effectiveness of key
controls, to assess the completeness, accuracy and reliability of
the 1LoD RCAs, to perform independent deep dive reviews into
key risk areas aiming to assess compliance with Group procedures
and applicable regulations, to make recommendations for process
improvement, to follow up and assess the effectiveness of
corrective actions, and to report and escalate key concerns to
governance forums.
– Enterprise Risk Management risk is a combined risk stewardship
and oversight function, which ensures governance and
management of operational risk, resilience risk and operational
resilience through the delivery and embedding of effective
frameworks, and continuous oversight and assurance of end-to-
end processes, risks and controls. The effectiveness of 1LoD risk
and control owners, and 2LoD Risk Stewards in managing non-
financial risk processes and practices is reported through Risk
Management Meeting.
– number of committees, forums and working groups that examine
the results of controls and the main deficiencies.
To comply with the American Sarbanes-Oxley law (‘SOX’), the HSBC
Group has implemented since 2006 a framework for documenting
and assessing internal controls, with regard to the processes and
operations involved in drawing up financial statements.
HSBC Continental Europe’s Finance Department is responsible for
coordinating all SOX measures and summarising their results.
Twice a year, the ‘SOX 4 Way Meeting’, chaired by the Chief Financial
Officer, reviews:
– any SOX deficiencies revealed by the three lines of defence;
– the results of tests run by the Statutory Auditors; and
– action plans progress and status.
On a regular basis, HSBC Continental Europe’s Audit Committee and
the Risk Committee are informed about the results of controls carried
out for SOX compliance purposes and of progress made in the action
plans.
Risk culture
Risk culture in HSBC Continental Europe is defined as the shared
attitudes, beliefs, values and norms that shapes its behaviour. It is
also rooted in HSBC Continental Europe's purpose and shaped by its
values The behaviours underpinning HSBC Continental Europe's
values are designed to support a wide range of outcomes – including
a risk culture that is effective in managing risk and that leads to good
conduct outcomes.
HSBC uses clear and consistent employee communication on risk to
convey strategic messages and set the tone from senior
management and the Board. Mandatory training is also deployed on
risk and compliance topics, including conduct, to embed skills and
understanding in order to strengthen the company's risk culture and
reinforce the expected attitude to risk expected of all employees as
described in HSBC's risk policies.
The Conduct framework, deployed in 2015 and updated in 2021,
represents strong foundations for HSBC to deliver fair outcomes for
customers and to maintain orderly and transparency on financial
markets. The refreshed conduct framework was an opportunity to be
aligned with the refreshed Purpose and Values defined by ‘We take
responsibility’ to guide all stakeholders in acting appropriately in all
circumstances and to recognise the individual impact from employees
in relation to customers and financial markets in which HSBC

Universal Registration Document and Annual Financial Report 2024 | 169

operates. Training and communications are regularly deployed to
improve the staff understanding and awareness in addition of the
global mandatory training provided to all employees: ‘Conduct
matters’ e-learning. Everyone involved in business with or on behalf
of HSBC is required to act with high standards of personal integrity at
all times.
In 2024, HSBC Continental Europe employees continued to deepen
their knowledge and expertise on risk management through training
programmes, awareness sessions and dedicated communications.
These actions are key to ensure that all HSBC Continental Europe
teams are able to identify and understand the current challenges
against actual and emerging risks more globally such as ESG risks.
HSBC also developed and implemented a Risk Culture dashboard in
2024. This is a combined approach by Enterprise Risk Management,
Compliance and Human Resources concerning culture insights. It
includes the most important “Culture” metrics in one dashboard and
is sourced from a variety of underlying dashboards and reports. The
metrics are aligned to particular HSBC Values, with focus on “We
take responsibility “covering accountability and active risk
management, and “We value difference”, covering speak-Up and
Diversity and Inclusion. There is also a focus on “good customer
outcomes” so that the impact to customers can be considered.

Key developments and risk profile
In 2024, HSBC Continental Europe has continued to manage risks
related to macroeconomic and geopolitical uncertainties and develop
risk management capabilities through the continued enhancement of
the risk management framework.
HSBC Continental Europe has also retained its focus on risk
transformation and financial crime and continued to assess the
g roup’s operational resilience capability whilst prioritising the most
significant enterprise risks. HSBC Continental Europe has made
progress with and continue to develop capabilities to address key
risks. More specifically, it has sough t to enhance its risk management
in the following areas:
– HSBC Continental Europe continues to make progress with its
comprehensive regulatory reporting programme in seeking to
strengthen its processes,improve consistency and enhance
controls across regulatory reports. This programme remains a top
priority and continues to enhance data, transform the reporting
systems and uplift the control environment over the report
production process;
– Continued focus on HSBC Continental Europe’s technology and
cybersecurity controls to improve the resilience and security of its
technology services in response to the heightened external threat
environment.
– Changes in the credit risk organisation made in May 2024 to
ensure full alignment with the European Banking Authority
guidelines on internal governance to ensure that teams performing
operationally tasks need to be fully independent from teams that
perform risk management/control activities in the sense of control
functions;
– Implementation of a new governance framework concerning the
home loans portfolio (EUR 7.1 billion as of 31 December 2023 and
now reduced to EUR 6.7 billion as of 31 December 2024) retained
by HSBC Continental Europe which was originally part of the retail
banking operation in France sale;
– The quality of HSBC Continental Europe's strategic change
investment cases and control monitoring has improved, and are
transitioning to value streams and an integrated future state
architecture to enhance the delivery of complex transformation
portfolios and initiatives in HSBC Continental Europe.
– The enhancement of HSBC Continental Europe's model risk
framework in response to changes in regulation and external
factors. AI and machine learning models remain a key focus.
– The enhancement of HSBC Continental Europe's processes,
framework and controls to improve the oversight of its material
third parties with respect to financial stability to better manage its
supply chain and operational resilience. This also concerns the
automation and standardisation of the process, the outsourcing
register, the materiality and risk assessments, and the regulatory
notifications. HSBC Continental Europe will continue to assess and
manage its operational resilience;
– The enhancement of the Third-Party Risk Management
Framework, to comply with the latest regulatory requirement such
as the ongoing implementation of the Digital Operational
Resilience Act.
– Improvement of climate and nature related risk considerations
within HSBC Continental Europe risk management activities with
the enhancement of the process and policies to identify the risks
associated to climate and/or nature events, the strengthening of
internal climate scenario analysis with the running of a scenario
analysis on nature and the development of risk metrics to monitor
and manage exposures. These improvements support CSRD
deliverables related to the double materiality assessment of
climate change and nature related topics.
– By deploying industry-leading technology and advanced analytics
capabilities to improve its ability to identify suspicious activities
and prevent financial crime. HSBC Continental Europe will
continue to evaluate technological solutions to improve its
capabilities in the detection and prevention of financial crime; and
– Embedding the regulatory management framework, with new
State of Compliance reporting being implemented that leverages
the Group-wide regulatory horizon scanning and regulation
mapping capabilities;

170 | Universal Registration Document and Annual Financial Report 2024

Risk

Risk factors
HSBC Continental Europe has identified a series of risk factors that
cover the broad range of risks its businesses are exposed to. A
number of the risk factors have the potential to have a material
adverse effect on its business, prospects, financial condition, capital
position, reputation, results of operations and/or its customers. A
summary of these are presented below:

1 – Macroeconomic and geopolitical risks |  | 2 - Prudential, regulatory and legal risks to the business model of HSBC Continental Europe |  | 3 - Risks related to HSBC Continental Europe's operations |  | 4 - Risks related to HSBC Continental Europe's governance and internal control |  | 5 - Risks related to HSBC Continental Europe's business |  | 6 - Risks related to HSBC Continental Europe's financial statements
1.1 Current macroeconomic environment risk |  | 2.1 Changing regulatory and legal landscape risk |  | 3.1 Model risk |  | 4.1 Data management risk |  | 5.1 Credit quality risk |  | 6.1 Financial statements risk
1.2 Liquidity risk |  | 2.2 Tax risk |  | 3.2 Information technology systems risk |  | 4.2 Strategy risk |  | 5.2 Counterparty credit risk |  |
1.3 Market risk |  |  |  | 3.3 Cyber-security risk |  | 4.3 Data Privacy risk |  | 5.3 Insurance risk |  |
1.4 Environmental, Social and Governance risk |  |  |  | 3.4 Third party risk |  | 4.4 Financial crime risk |  | 5.4 People risk |  |
|  |  |  |  |  | 4.5 Risk management |  |  |  |

1 Macroeconomi c and geopolitical ris ks
1.1 Economic and market conditions may adversely
affect HSBC Continental Europe’s results.
Probability: Very Likely/Impact: High (unchanged from 1H24).
HSBC Continental Europe's earnings are affected by both global and
local economic, financial and geopolitical changes. Uncertain
economic conditions and volatile markets can create a challenging
operating environment for financial institutions.
In particular, HSBC Continental Europe has faced and may continue to
face the following challenges to its operations and operating model:
– The economic cycle: Deteriorating business, consumer or investor
confidence and lower levels of investment and productivity
growth, may lead to recession and lower client activity. Rapid
changes to the economic environment can also create challenging
operating conditions for financial institutions such as HSBC and
may affect its earnings and profits. A key source of uncertainty for
2025 and beyond comes from the expected shift in economic and
financial policies in the US under the administration of President
Trump. US tariff policy and other countries’ responses are likely to
have significant consequences for global growth outlook and
global trade, and may risk higher inflation and interest rate
expectations. Uncertainty over the extent and nature of Chinese
efforts to stimulate domestic growth and support a rebalancing of
the economy including property sector is also a source of potential
risk. Economic uncertainty for HSBC Continental Europe could also
be driven by the current political and economic situations in France
and Germany;
– Inflation and monetary policy: High inflation and interest rates can
have material impacts on HSBC Continental Europe's customers
as real purchasing power is eroded. Higher interest rates may
affect the credit rating of our customers and their ability to repay
debt. This could negatively impa ct HSBC Continental Europe's risk-
weighted assets (’RWAs’) and capital position, resulting in
increases in expected credit losses (“ECL”) charges and potential
liquidity stresses due to, amongst other factors, increased
customer drawdowns. There could be further adverse impacts on
the HSBC Continental Europe's income if higher rates were to
result in lower lending volumes and weaker insurance revenue.
Across most of HSBC Continental Europe's markets, high headline
inflation continued to subside through 2024 as the European
Central Bank enacted monetary easing in the second half of 2024.
However, uncertainty over US monetary policy trajectory,
specifically around additional trade barriers/tariffs and immigration,
has shifted the balance of risks around inflation and future interest
rate trajectory.
– Financial stability: Changing economic conditions and shifting
policy create a more uncertain and volatile environment for asset
markets. Accommodative financial conditions in the aftermath of
the pandemic may have increased vulnerabilities given the rise in
asset price valuations and the increase in debt levels. Changes to
asset prices can adversely affect HSBC by increasing the financial
vulnerability of customers and decreasing the value of collateral
and other claims.
– Fiscal policy and high levels of government debt: Through the
pandemic period, government debt levels across both developed
and emerging markets increased sharply, and in many cases left
growth and employment dependent on continued deficit spending.
Against the backdrop of higher interest rates, financial strains on
highly indebted sovereigns have increased and could bring debt

Universal Registration Document and Annual Financial Report 2024 | 171

sustainability into question. Where HSBC has exposure to such
s overeigns or related parties, it could incur losses. At the same
time, external sovereign ratings downgrades and/or a disorderly
increase in long-term government funding costs, could increase
the cost of funding for HSBC and/or limit access to market
funding, resulting in an adverse impact on interest margins and
liquidity.
– Geopolitical Risk : Geopolitical risks remain high. While supply
chains have largely adapted to the Russia-Ukraine and Middle East
conflicts, the disruption of key supply routes, particularly through
the Red Sea continued to add costs to global supply cost in 2024.
The risk of physical asset impairment, supply chain and market
disruption continues to pose challenges for certain customers and
certain businesses.
Adverse changes to economic, financial and geopolitical situation
could result in:
– Idiosyncratic losses: Impairment estimates attempt to capture the
effects of economic, financial and geopolitical risks in the
aggregate, but credit losses on specific exposures, with
idiosyncratic features that make them particularly susceptible to
the risks described above, may not be fully captured.
– Sector-wide impairment: Changing economic conditions, policies
and funding costs may give rise to a deterioration in specific
industries and sectors. In addition, certain sectors in various
countries may be targeted by material increases in trade tariffs,
with industry wide implications.
– Reduced credit demand: The demand for borrowing from
creditworthy customers may diminish during periods of recession
or where economic activity slows or remains subdued;
– A tightening of financial market conditions: HSBC Continental
Europe's ability to borrow from other financial institutions or to
engage in funding transactions may be adversely affected by
market disruption; and
– Goodwill and intangibles: There could also be adverse impacts on
other assets, goodwill and other intangible assets.
Provisioning against credit loss is conducted under the IFRS 9
‘Financial Instruments’ (IFRS 9 ) calculations of expected credit losses
('ECL'), which uses forward looking scenarios that incorporate the
economic and financial risks detailed above.
For fu rther details concerning HSBC Continental Europe's economic
scenarios including the Central Scenario – see section "Measurement
uncertainty and sensitivity analysis of ECL estimates" on page 191.
Central Banks are expected to continue to cut interest rates in 2025
as inflation converges towards Central bank targets.
Forecasts remain uncertain, and changing economic conditions and
the materialisation of key risks could reduce the accuracy of the
Central scenario. Forecasts in recent years have been sensitive to
changing economic and financial policy, changing supply chain
conditions, monetary policy expectations and the inflation outlook.
The relationship between economic factors and historical loss
experience is also subject to uncertainty and inconsistency. This may
require adjustments to modelled ECLs in cases where HSBC
determines that the model was unable to capture material underlying
risks.
For further d etails - see also Risk Factor 3.1 – "HSBC Continental Europe
could incur losses or be required to hold additional capital as a result of
model limitations or weaknesses" for additional details on how models have
been impacted by higher inflation and interest rates.
HSBC Continental Europe continually assesses the impact of
geopolitical and macroeconomic events.
For further details – see also sections ‘Economic background’ on page 11
and ‘Economic outlook’ on page 11.
Significant uncertainties remain in assessing the duration and impact
of the current macroeconomic environment.
1.2 Liquidity, or ready access to funds, is essential to its
businesses.
Probability: Unlikely/Impact: High (unchanged from 1H24).
HSBC Continental Europe's ability to borrow on a secured or
unsecured basis, and the cost of doing so, can be affected by
increases in interest rates or credit spreads, the availability of credit,
regulatory requirements relating to liquidity or the market perceptions
of risk relating to the wider HSBC Group, HSBC Continental Europe
specifically or the banking sector, including our perceived or actual
creditworthiness.
Current accounts and savings deposits payable on demand or at short
notice form a significant part of the Bank's funding and HSBC
Continental Europe places considerable importance on maintaining
their stability. For deposits, stability depends upon preserving investor
confidence in HSBC Continental Europe’s capital strength and
liquidity, and on comparable and transparent pricing.
Deposits have historically been a stable source of funding, even in
times of economic crisis, but under an extreme scenario this may not
be the case.
HSBC Continental Europe also accesses wholesale markets in order
to secure funding to align asset and liability balances, maturities and
currencies, and to contribute to the financing of its lending and market
activities.
An inability to obtain financing in the unsecured long-term or short-
term debt capital markets, or to access the secured lending markets,
could have a material adverse effect on our liquidity.
Non-favourable macroeconomic developments, market disruptions or
regulatory developments may increase the funding costs or challenge
the ability of HSBC Continental Europe to raise funds to support or
expand its businesses.
If the Bank were unable to raise funds through deposits and/or in the
capital markets, its liquidity position could be adversely affected. In
such an extreme scenario, it could be unable to meet deposit
withdrawals on demand or at their contractual maturity, to repay
maturing debt, or to meet its obligations under committed financing
facilities and insurance contracts or to fund new loans or investments.
The Bank may need to liquidate unencumbered assets to meet its
liabilities.

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Risk

In a time of reduced liquidity, HSBC Continental Europe may be
unable to sell some of its assets, or it may need to sell assets at
reduced prices, which in either case could materially adversely affect
its business, prospects, financial condition, capital position and results
of operations. It is difficult to predict with any degree of accuracy
changes in access to funds, and the extent of the potential
consequences.
Nevertheless, a number of mitigating actions and procedures –
including business actions and participation in the central bank
refinancing operations are in place in HSBC Continental Europe,
through its Contingency Funding Plan in order to address a potential
liquidity crisis. This will materially reduce the impact of this risk in
case of materialisation.
HSBC Continental Europe undertakes liquidity stress testing to test if
its risk appetite is adequate, to validate that it can continue to operate
under various stress scenarios that involve an analysis of the relevant
probable or severe area of risk to HSBC Continental Europe, and to
confirm that the stress assumptions within the Liquidity Coverage
Ratio scenario are appropriate and conservative enough for the
Group's business.
HSBC Continental Europe continues to rely on its daily internal stress
test metric, complementing the Liquidity Coverage Ratio (‘LCR’), for
the operational day-to-day management of the Bank’s liquidity
position. Moreover, several other different stress tests are run of
varying durations and nature, the assumptions and results of which
are reviewed by the Asset, Liability, and Capital Management
Committee (‘ALCO’) and presented through the Internal Liquidity
Adequacy Assessment Process to the Board.
1.3 Market fluctuations may reduce HSBC Continental Europe's
income or the value of its portfolios.
Probability: Likely/Impact: Medium (unchanged from 1H24)..
HSBC Continental Europe businesses are inherently subject to risks in
financial markets and in the wider economy, including changes in, and
increased volatility of, interest rates, inflation rates, credit spreads,
foreign exchange rates, equity and bond prices, and the risk that
customers act inconsistently with HSBC Continental Europe's
business, pricing, and hedging assumptions.
Market pricing can be volatile and ongoing market movements could
significantly affect a number of key areas. For example, banking and
trading activities are subject to interest rate risk, foreign exchange
risk, inflation risk and credit spread risk.
Changes in interest rate levels, interbank spreads over official rates
and yield curves affect the interest rate spread realised between
lending and borrowing costs. The risks of market volatility or changes
in margin levels remain high.
Competitive pressures on fixed rates or product terms for existing
loans and deposits sometimes restrict ability to change interest rates
applying to customers in response to changes in wholesale market
rates.
HSBC Continental Europe’s insurance businesses are exposed to the
risk that market fluctuations may cause mismatches to occur
between product liabilities and the investment assets that back them.
Market risks can affect our insurance products in a number of ways
depending upon the product and associated contract. For example,
mismatches between assets and liability yields and maturities give
rise to interest rate risk. Some of these risks are borne directly by the
customer and some are borne by the insurance businesses, with their
excess capital invested in the markets. Moreover, some insurance
contracts involve guarantees and options that increase in value in
adverse investment markets. There is a risk that the insurance
businesses could bear some of the cost of such guarantees and
options. The performance of the investment markets could thus have
a direct effect upon the value embedded in the insurance and
investment contracts and our operating results, financial condition and
prospects.
For further details - see also section ’Market risk in 2024’ on page 208.
As at 31 December 2024, Market Risk RWAs were EUR 3.786 billion
of which EUR 168 million were under the standardised approach and
EUR 3.618 billion under the Internal Model Approach (‘IMA’).
The standardised RWAs include EUR 168 million of Foreign exchange
risk. RWAs under IMA include EUR 565 million VaR RWAs, EUR
1.748 billion Stressed VaR RWAs, EUR 814 million of Incremental risk
charge RWAs and EUR 491 million other.
For further details - see Market Risk tables in the HSBC Continental Europe
Pillar 3 document.
1.4 HSBC Continental Europe is subject to financial and non-
financial risks associated with Environmental, Social and
Governance ('ESG') related matters, such as climate change,
nature-related risk, and human rights issues.
Probability: Likely/Impact: Medium.(unchanged from 1H24).
ESG related matters such as climate change, society’s impact on
nature and human rights issues bring risks to HSBC Continental
Europe’s business and customers in addition to the wider society. In
addition, if the Bank fails to meet evolving regulatory expectations or
requirements relating to these matters, this could have regulatory
compliance and reputational impacts.
Climate and nature-related risks could have both financial and non-
financial impacts on HSBC Continental Europe either directly or
indirectly through its business activities and relationships. Transition
risk can arise from the move to a low-carbon economy, such as
through policy, regulatory and technological changes. Physical risk can
arise through increasing severity and/or frequency of severe weather
or other climatic events, such as rising sea levels and flooding and
chronic shifts in weather patterns, which could affect HSBC
Continental Europe’s ability to conduct its day-to-day operations.
HSBC Continental Europe seeks to manage environmental risk
(including climate and nature related risks) across all its businesses
and functions in line with the Group-wide risk management
framework and the approaches developed to manage climate and
nature-related risks.
HSBC Continental Europe annual environmental risk materiality
assessment helps to understand how climate and/or nature risks may
impact HSBC’s risk taxonomy. The assessment considers short term,
( up to 2026), medium term (between 2027 and 2035), and long term,
(between 2036 and 2050). In summary, HSBC Continental Europe
may face:
– Credit losses if climate-related regulatory, legislative or
technological developments impact customers’ business models
or if extreme weather events disrupt or interrupt customers’
operations, resulting in financial difficulty for customers and/or
stranded assets, and impacting their ability to repay their debts.
Customers may find that their business models fail to align to a
net zero economy, or face disruption to their operations or a
deterioration in their assets as a result of extreme weather or
ecosystem services degradation.

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– Trading losses if climate change results in changes to
macroeconomic and financial variables that negatively impact our
trading book exposures.
– Liquidity impacts in the form of deposit outflows due to changes in
customer behaviours driven by impacts to profitability/wealth or
due to reputational concerns relating to the progress made
towards HSBC climate related ambitions and targets.
– Impacts to its real estate portfolios due to changes to the climate,
the increase in the frequency and severity of extreme weather
events and the chronic shifts in weather patterns, which could
impact both property values and the ability of borrowers to afford
their mortgage payments and lead to reduced availability or
increased cost of insurance, including insurance that protects
property pledged as collateral of HSBC Continental Europe
mortgages.
– Increase in operational risk if extreme weather events impact
critical operations and premises.
– Regulatory compliance risk resulting from the increasing pace,
breadth and depth of climate and nature-related regulatory
expectations, including on the management of climate and nature
risks, and variations in climate-related reporting standards,
requiring implementation in short timeframes.
– Conduct risks in association with the increasing demand for
"green" or "sustainable" products where there are differing and
developing standards or taxonomies.
– Reputational risks arising from how the Bank decides to support
its customers in high-emitting sectors in their transition to net
zero, the preferences of different stakeholders in relation to HSBC
Group approach to the transition to net zero, and if insufficient
progress is made in achieving HSBC climate-related ambitions and
targets.
– Model risk, as the uncertain and evolving impacts of climate
change and data and methodology limitations present challenges
to creating reliable and accurate model outputs.
– increased reputational, regulatory compliance and legal risks as
HSBC Group makes progress towards its ESG-related ambitions
and targets, with stakeholders likely to place greater focus on its
actions, such as the development of ESG-related policies, our
disclosures and financing and investment decisions relating to its
ESG-related ambitions and targets.
HSBC Continental Europe may be exposed to additional risks if the
Bank:
– Fails to make sufficient progress towards HSBC ESG-related
ambitions and targets.
– Does not set adequate plans to execute those plans or adapt
those plans to changes in the external environment.
– Fails to manage the risks associated both with meeting and not
meeting its ESG-related target and ambitions.
– Does not meet evolving regulatory expectations and requirements
on the management of ESG risks.
– Knowingly or unknowingly, makes inaccurate, unclear, misleading,
or unsubstantiated claims regarding sustainability to its
stakeholders.
ESG-related litigation and regulatory enforcement risks may be also
faced, either directly if stakeholders think that HSBC Continental
Europe is not adequately managing climate, nature and broader ESG-
related risks, or indirectly, if its clients and customers are themselves
the subject of litigation, potentially resulting in the revaluation of client
assets.
HSBC Continental Europe may face reporting risk in relation to ESG
disclosures due to data and methodology limitations. Methodologies,
data, scena rios and industry standards that HSBC Continental Europe
has used may evolve over time in line with market practice, regulation
or developments in science, where applicable. Any such
developments in methodologies and scenarios, and changes in the
availability, accuracy and verifiability of data over time and the ability
to collect and process such data, exposes the Bank to financial
reporting risk in relation to its climate and ESG disclosures and could
result in revisions to its internal measurement frameworks as well as
reported data going forward, including on financed emissions,
meaning that such data may not be reconcilable or comparable year
on year.
Regulation and disclosure requirements in relation to human rights,
and environmental damage, are increasing. Businesses and third-
parties are expected to be transparent about their efforts to identify
and respond to the risk of negative human rights impacts and
environmental damage arising from their activities and relationships.
Failure to manage these risks may negatively impact people and
communities, which in turn may result in reputational, regulatory
compliance, financial or legal risks for HSBC Continental Europe.
In respect of all ESG-related risks, HSBC Continental Europe aims to
ensure that its strategy, its business model (including the products
and services provided to customers) and its risk management
processes, (including processes to measure and manage the various
financial and non-financial risks HSBC Continental Europe faced as a
result of ESG-related matters) are adapted to meet regulatory
requirements, stakeholder and market expectations, which continue
to evolve significantly and at pace.
If any of the above risks materialise, this could have financial and non-
financial impacts for HSBC Continental Europe which could, in turn,
have a material adverse effect on its business, financial condition,
results of operations, reputation, prospects, and strategy.

2 Prudential, regulatory and legal
risks to the business model of
HSBC Continental Europe
2.1 HSBC Continental Europe is subject to numerous new and
existing legislative and regulatory requirements, and the
risk of failure to comply with applicable regulations at least
temporarily.
Probability: Very Likely/Impact: High (unchanged from 1H24).
HSBC Continental Europe’s businesses are subject to ongoing
regulation and the associated regulatory risks, including the effects of
changes in the laws, regulations, policies, and voluntary codes of
practice in the markets in which it operates. Many of these changes
have an effect beyond the country in which they are enacted.
In recent years, regulators and governments have increasingly
focused on reforming both the prudential regulation of the financial
services industry and the ways in which the business of financial

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Risk

services is conducted. The measures taken include enhanced capital,
liquidity and funding requirements, the separation or prohibition of
certain activities by banks, changes in the operation of capital markets
activities, the introduction of tax levies and transaction taxes and
changes in compensation practices.
With regard to conduct, there is a focus on customers and markets,
payments and e-money, digital and artificial intelligence (‘AI’), and
ESG, including governance and operational resilience.
This is all set against increased geopolitical tensions which may limit
the development of consistent regulatory requirements, and the
evolving regulatory r esponse to the banking turmoil in 2023.
Specific areas where regulatory change and increased supervisory
expectations could have a material effect on HSBC Continental
Europe's business, financial condition, results of operations,
prospects, capital position, reputation and strategy include, but are
not limited to those listed below, grouped around prudential and non-
prudential themes.
Prudential and related issues
– Implementation of the Basel Committee on Banking Supervision‘s
reforms to the prudential framework, 'Basel 3.1', which includes
changes to the RWA approaches to credit risk, market risk,
operational risk, counterparty risk and credit valuation adjustments
and the application of an RWA output floor;
– Increased supervisory expectations arising from expanding and
increasingly complex regulatory reporting obligations, including
expectations on data integrity and associated governance and
controls;
– The possible impacts on some of our regulatory ratios, such as the
CET1 ratio, LCR and NSFR, arising from the programme initiated to
strengthen our global processes, improve consistency (through
data enhancement, transformation of the reporting systems and
an uplift to the control environment over the report production
process) and enhance controls across regulatory reports;
– Changes to the prudential framework following the several third-
party bank failures in 2023, for example in relation to liquidity or
interest rate risk in the banking book (‘IRRBB’);
– Requirements flowing from arrangements for the resolution
strategy of the Group and its individual operating entities that may
have different effects in different countries;
– Financial effects of climate risk and other ESG related changes
being incorporated within the global prudential framework,
including physical risks from climate change and the transition
risks resulting from a shift to a low carbon economy;
– Increasing regulatory expectations and requirements (for example,
the EU's Digital Operational Resilience Act) relating to various
aspects of operational resilience, including an increasing focus on
the response of institutions to operational disruptions; and
– Reviews of regulatory frameworks applicable to the wholesale
financial markets, in particular the reforms and other changes to
securitisation requirements.
Non-prudential and related issues
– Increasing focus by regulators, international bodies and other
policy makers, on how we conduct business, particularly around
the delivery of fair outcomes for customers, promoting effective
competition and ensuring the orderly and transparent operation of
financial markets;
– Supervisory and regulatory change focus on technology adoption
and digital delivery, underpinned by customer protection, including
the use of digital assets and currencies and wider financial
technology risks e.g. the EU‘s markets in Crypto-Assets
Regulation, which introduces a framework for regulating crypto-
assets;
– Increasing regulatory expectations and requirements around the
use of artificial intelligence (‘AI’) for example, the proposed EU AI
Act;
– Continuing supervisory and regulatory change focus globally on
payment services and related infrastructure;
– Ongoing expectations with respect to managing emerging financial
crime risks and its impact on customers, and implementing
increasingly complex and less predictable sanctions and trade
restrictions;
– Implementation of conduct and other measures as a result of
regulators’ focus on organisational culture, employee behaviour,
whistleblowing and diversity and inclusion;
– Requirements regarding remuneration arrangements and senior
management accountability;
– Changes in national or supra-national requirements regarding the
management of third-party risk;
– Increasing regulatory expectations of firms in relation to ESG-
related governance, risk management and disclosure frameworks
(e.g. the EU Corporate Sustainability Reporting Directive),
particularly relating to climate change, transition plans,
greenwashing and supply chain due diligence; and
– Regulatory focus on policies and controls related to the
unauthorised use by employees of electronic communications on
non-business platforms.
2.2 HSBC Continental Europe, its subsidiaries and its branches
are subject to tax-related risks in the countries in which they
are established.
Probability: Likely/Impact: Medium (unchanged from 1H24).
HSBC Continental Europe, its subsidiaries and its branches are
subject to the substance and interpretation of tax laws in all countries
in which they are established and therefore are subject to routine
reviews and audits by tax authorities in relation thereto.
The bank’s interpretation or application of these tax laws may differ
from those of the relevant tax authorities and HSBC Continental
Europe, its subsidiaries and its branches record provisions for
potential tax liabilities that may arise based on the amounts expected
to be paid to the tax authorities. The amounts ultimately paid may
differ materially from the amounts set aside in such provisions
depending on the ultimate resolution of such matters.
Due to major restructuring and reorganisation over recent years,
transfer pricing risk has increased for the Bank. In that respect, HSBC
Continental Europe ensures compliance with the relevant transfer
pricing rules in each location to mitigate the tax risk. However,
transfer pricing remains a subject of particular focus by the tax
authorities highlighted by the recent reforms which will further
strengthen the tax authorities’ powers. This requires monitoring in
view of the practice of the tax authorities to systematically verify the
principles applied by international groups carrying out intra-Group
transactions.
In March 2023, the French National Prosecutor announced an
investigation into a number of banks, including HSBC Continental
Europe and HSBC Bank plc, Paris Branch, in connection with alleged

Universal Registration Document and Annual Financial Report 2024 | 175

tax fraud related to the dividend withholding tax treatment of certain
trading activities. Based on the facts currently known, it is not
practicable at this time for HSBC to predict the resolution of these
matters, including the timing or any possible impact on HSBC, which
could be significant.
For further details - see Note 32 (section Tax-related investigations).
HSBC Continental Europe continue to monitor recent developments
in the French tax law to ensure it is able to comply with it in a timely
manner. Therefore, HSBC Continental Europe continues notably to
strengthen internal controls and to limit significantly activities on
French equity to avoid any tax risk related to this area.
It is also worth noting that tax rules are becoming increasing complex
and continue to evolve. Changes to international tax rules potentially
create additional risks for all banks including HSBC Continental
Europe.
On 20 June 2023, legislation was substantively enacted in the UK, the
jurisdiction of HSBC Continental Europe’s ultimate parent entity,
HSBC Holdings plc, to introduce the ‘Pillar Two’ global minimum tax
model rules of the OECD’s Inclusive Framework on Base Erosion and
Profit Shifting (‘BEPS’), with effect from 1 January 2024. At the year-
end 2023, legislation was also enacted in France to implement the
model rules, as well as a qualified domestic minimum top-up tax, with
effect from 1 January 2024. Similar rules have been also enacted
across Continental Europe, and notably in the location where HSBC
Continental Europe operates.
Under these rules, a top-up tax liability arises where the effective tax
rate of the Group’s operations in France, calculated based on
principles set out in the OECD’s Pillar Two model rules, is below 15
per cent.
Based on the outlook as of 31 December 2024, no top-up tax liabilities
are expected to arise in France nor in other location where HSBC
Continental Europe operates as a result of the effective tax rates
being above 15 per cent, except in Ireland where the effective tax
rate is below this minimum level of taxation. As a result, HSBC
Continental Europe is expecting a non-significant financial
consequence in Ireland.

3 Risks related to HSBC Continental
Europe's operations
3.1 HSBC Continental Europe could incur losses or be required
to hold additional capital as a result of model limitations or
weaknesses.
Probability: Very Likely/Impact: High (unchanged from 1H24).
HSBC Continental Europe uses models for a range of purposes in
managing its business, including regulatory capital calculations,
financial reporting, calculation of ECLs on an IFRS 9 basis, credit
approvals, stress testing, financial crime and fraud risk management.
HSBC could face adverse consequences as a result of decisions that
may lead to actions by management based on models that are poorly
developed, implemented or used, or as a result of the modelled
outcome being misunderstood or the use of such information for
purposes for which it was not designed or by limitations arising from
the uncertainty inherent in predicting or estimating future outcomes.
Risks arising from the use of models could have a material adverse
effect on HSBC Continental Europe’s business, financial condition,
results of operations, prospects, capital position and reputation.
Regulatory scrutiny and supervisory concerns over banks’ use of
models are considerable, particularly the internal models used in the
calculation of regulatory capital. If regulatory approval for key capital
models is not achieved in a timely manner or if those models are
subject to negative feedback from regulators, HSBC Continental
Europe could be required to hold additional capital.
Model risk remains a key area of focus given the regulatory scrutiny in
this area with local regulatory examinations taking place and further
developments in policy expected from the regulators.
The economic consequences of higher global inflation and significant
increases in interest rates have impacted the reliability of model
outputs beyond how IFRS 9 models have been built and calibrated to
operate. Consequently, IFRS 9 models under the current economic
conditions may generate outputs that do not accurately assess the
actual level of credit quality in all cases. In order to calculate more
realistic valuation of assets, compensating controls, such as post
model management adjustments based on expert judgement may be
required. Such compensating controls require a significant degree of
management judgment and assumptions. There is a risk that future
actual results may differ from such judgments and assumptions.
Longer term, the models are likely to require redevelopment to
consider the effects of changes in rates and financial markets.
For further details concerning risk weighted assets as at 31 December 2024
– see table: Overview of risk weighted exposure amounts in the HSBC
Continental Europe Pillar 3 document. These numbers are for a large part
computed using internal models.
Likewise, models are used to infer the fair value of some financial
instruments, such as over-the-counter derivatives (‘OTC’), whose
price cannot be directly observed on trading platforms: in these cases,
models compute a fair value by leveraging the prices of similar
observable financial instruments. These may be based on observable
inputs only (‘Level 2’ fair value accounting) or, in some cases, on
some unobservable inputs that have to be prudently estimated (‘Level
3’ fair value accounting).
For further details concerning fair values of financial instruments carried at
fair value as at 31 December 2024 – see Note 12 on page 289.
The adoption of more sophisticated modelling approaches including
artificial intelligence related risks and technology by both HSBC
Continental Europe and the financial services industry could also lead
to increased model risk that will have to be managed in compliance
with the EU AI Act.
HSBC Continental Europe’s commitment to changes to business
activities due to climate and sustainability challenges will also have an
impact on model risk going forward. Models will play an important
role in risk management and financial reporting of climate related
risks. Challenges such as uncertainty of the long-dated impacts of
climate change and lack of robust and high-quality climate related data
present challenges to creating reliable and accurate model outputs for
these models.
3.2 HSBC Continental Europe’s operations are highly dependent
on its information technology systems.
Probability: Likely/Impact: High (unchanged from 1H24).
HSBC Continental Europe operates in an extensive and complex
technology landscape, which must remain resilient in order to support
customers, the Group and markets globally. Risks arise where
technology is not understood, maintained, or developed appropriately.

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Risk

The reliability and security of HSBC Continental Europe’s information
technology infrastructure is crucial to the bank's operations and the
provision of financial services to its customers and protecting the
HSBC brand.
The effective functioning of HSBC Continental Europe’s payment
systems, financial control, risk management, credit analysis and
reporting, accounting, customer service and other information
technology systems, as well as the communication networks with the
main data processing centres, are important to HSBC Continental
Europe’s operations.
Critical system failure, extended service unavailability or a material
breach of data security, particularly of confidential customer data,
could compromise HSBC Continental Europe’s ability to serve its
customers. This could lead to breaches of regulations and could cause
long-term damage to its business and brand that could have a material
adverse effect on its business, financial condition, results of
operations, prospects and reputation.
In 2024, IT incidents with third parties were reported to local
regulators.
For further details - s ee also Risk Factor: HSBC Continental Europe’s
operations utilise third party and intra-Group suppliers and service providers.
HSBC is continuing to invest in strengthening the resilience of its
technology infrastructure and the further alignment of IT systems
across HSBC Continental Europe, ensuring an appropriate and
consistent control environment across the IT landscape.
There were no net operational losses related to information
technology in 2024 (EUR 0.4m in 2023).
3.3 HSBC Continental Europe remains susceptible to a wide
range of cyber security risks that impact and/or are
facilitated by technology.
Probability: Likely/Impact: High (unchanged from 1H24).
The threat of cyber incident remains a concern for HSBC Continental
Europe, as it does across the financial sector and other industries. As
cyber-threats continue to evolve, failure to protect HSBC Continental
Europe’s operations may result in disruption for its customers, and its
business, cause financial loss or loss of sensitive data. This could
have a negative impact on the bank’s customers, and its own
reputation, among other risks.
Adversaries attempt to achieve their objectives by compromising
HSBC and related third party systems. They use techniques that
include malware (including ransomware), exploitation of both known
and unpublished (zero-day) vulnerabilities in software, phishing emails,
distributed denial of service, as well as potentially physical
compromise of premises, or coercion of staff. Customers may also be
subject to these constantly evolving cyber-attack techniques. HSBC
Continental Europe, like other financial institutions, experiences
numerous attempts to compromise its cyber security. The Bank
expects to continue to be the target of such attacks in the future.
Cyber security risks will continue to increase, due to continued
increase of services delivered over the internet; increasing reliance on
internet-based products, applications and data storage; and an
increased use of hybrid working models by HSBC’s employees,
contractors, third party service providers and their sub-contractors.
A failure in HSBC’s adherence to its cyber security policies,
procedures or controls, employee wrongdoing, or human, governance
or technological error could also compromise HSBC Continental
Europe’s ability to defend against cyber-attacks. Should any of these
cyber security risks materialise, they could have a material adverse
effect on its customers, business, financial condition, results of
operations, prospects and reputation.
There have been no material cyber-related breaches that impacted
HSBC Continental Europe customers or operations in 2024 due to
controls in place despite numerous attacks being observed on a daily
basis. However, the risk remains that future cyber-related attacks,
either directly or via one of its suppliers, will have a material adverse
effect on HSBC Continental Europe's business, financial condition,
results of operations, prospects and reputation.
3.4 HSBC Continental Europe’s operations use third party and
intra-Group suppliers and service providers.
Probability: Likely/Impact: Medium (unchanged from 1H24).
In line with HSBC Continental Europe’s outsourcing and Information
and Communication Technology ('ICT') Third Party risk strategy, there
is reliance on external and intra-Group third parties to supply goods
and services. The activities outsourced are diverse and relate, for
example, to reporting, risk management and securities custody.
Digital Business Services, which supports all Global Businesses and
Global Functions, is the function with the highest number of material
outsourced services, mainly concerning intra-Group services. Internal
service providers are located on different continents which helps
ensure business continuity between the different locations. Among
the branches and subsidiaries of HSBC Continental Europe, France
(including the French subsidiaries) is the country that outsources the
most material services, followed by Malta and Luxembourg.
The use of third-party suppliers and service providers by financial
institutions is a particular focus of the regulators. This includes how
outsourcing decisions are made, how key relationships are managed
and our understanding of third-party dependencies and their impact
on service provision.
Risks arising from the use of third parties and from supply chains,
such as risks related to operational incidents, financial stability, cyber-
attacks and geopolitical tension are particularly important and
challenging to manage. The threat of cyber-attacks on our providers
and supply chain remains a concern for HSBC Continental Europe, as
it does across the entire financial sector as cyber events may result in
disruption for customers or impact the data shared.
The inadequate management of third party risk could impact HSBC
Continental Europe's ability to meet strategic, regulatory and client
expectations. This may lead to a range of impacts, including
regulatory censure, penalties or damage both to shareholder value
and to HSBC Continental Europe’s reputation. Any outsourcing of a
material service needs to be validated in the HSBC Continental
Europe Risk Management Meeting and then notified to regulators.
In 2024, HSBC Continental Europe continued to work on the
improvement on its Third-Party Management, on automation and
standardisation of the process with HSBC Group, covering the
outsourcing register, the outsourcing determination, the materiality
and risk assessments, and regulatory notification. From a regulatory
perspective, HSBC Continental Europe has focused on the
enhancement of its Third-Party Risk Management Framework, to
comply with the latest regulatory requirements such as the
implementation of the Digital Operational Resilience Act (‘DORA’).

Universal Registration Document and Annual Financial Report 2024 | 177

4 Risks related to HSBC Continental
E urope's governance and int ernal
control
4.1 HSBC data management may not be robust enough to
support the increasing data volume and evolving
regulations.
Probability: Very Likely/Impact: High (unchanged from 1H24).
As the HSBC Continental Europe becomes more data-driven and its
business processes move to digital channels, the volume of data that
the bank relies on has increased.
As a result, management of data (including data retention and
deletion, data quality, data privacy and data architecture) from creation
to destruction must be robust and designed to identify quality and
availability issues.
Inadequate data management could result in negative impacts to
customer service, business processes, or require manual intervention
to reduce the risk of errors in reporting to senior management,
executives or regulators. This could have a material adverse effect on
the Bank’s business, prospects, financial results and reputation.
HSBC Continental Europe did not suffer any significant data-related
incidents linked to increasing data volumes or evolving regulations in
2024.
Over recent years, the regulatory expectations related to data
management and data architecture have increased considerably.
Primarily driven by BCBS 239 – Principles for effective risk data
aggregation and risk reporting which sought to strengthen banks’ risk
data aggregation capabilities and internal risk reporting practices.
BCBS 239 has for objective to enhance the risk management and
decision making processes at banks.
4.2 The delivery of HSBC Continental Europe's strategy is
subject to execution risk
Probability: Likely/Impact: Medium.(unchanged from 1H24).
Effective management of transformation projects is required to
deliver the Group’s strategic priorities; both externally driven
programmes and key business initiatives to deliver growth,
operational resilience and efficiency outcomes.
The scale, complexity and, at times, concurrent demands of the
projects required to meet these can result in heightened execution
risk.
HSBC Continental Europe has a clear and focused strategy that is
consistent with the HSBC Group’s strategy.
For further details - see ‘HSBC strategy implemented in Continental Europe'
on page 6.
Within this framework, the strategy in Continental Europe is to focus
on customers that value the HSBC network, leveraging its strengths
in transaction banking, trade, capital markets and financing and
increasing the cross-business and synergies between the HSBC
Group’s different entities across the globe, while ensuring an efficient
operating model across HSBC Continental Europe’s operations.
HSBC Continental Europe continues to adapt its operating model,
implementing a number of programmes in support of the activities of
HSBC Continental Europe while ensuring compliance with regulatory
requirements.
The development and implementation of HSBC Continental Europe’s
strategy requires difficult, subjective and complex judgements,
including forecasts of economic conditions in Continental Europe but
also in other parts of the world. HSBC Continental Europe may fail to
correctly identify the relevant factors in making decisions as to capital
deployment and cost reduction.
HSBC Continental Europe may also encounter unpredictable changes
in the external environment that are unfavourable to its strategy. The
bank’s ability to execute strategic change may be limited by its
operational capacity, effectiveness of its change management
controls and instituting and maintaining appropriate transitional
arrangements and the potential for unforeseen changes in the market
and/or regulatory environment in which it operates.
Robust management of critical time-sensitive and resource intensive
projects is required to effectively deliver HSBC Continental Europe’s
strategic priorities. The cumulative impact of the collective change
initiatives in progress within HSBC Continental Europe has been
significant and has had a direct impact on HSBC Continental Europe’s
employees.
The global economic outlook also continues to remain uncertain.
Therefore, there remains a risk that, in the absence of an
improvement in economic conditions, HSBC Continental Europe’s
cost and investment actions may not be sufficient to achieve the
expected benefits.
The failure to successfully deliver or achieve the expected benefits of
the HSBC Continental Europe’s key strategic initiatives could have a
material adverse effect on its customers, the business it undertakes,
financial results and future prospects, operational resilience and
reputation.
Execution risk linked to ongoing projects is being managed and
tracked by a dedicated committee.
4.3 The increasing volume of personal data processing activities
and of cross-border data transfers may lead to significant
data privacy breaches.
Probability: Likely/Impact: Medium (unchanged from 1H24).
HSBC Continental Europe ‘s businesses and functions rely on the
processing of a large volume of personal data. These data are
increasingly processed in non-EU jurisdictions so as to fulfil
operational requirements.
Whilst the offshoring of personal data processing activities has
notable benefits, it also considerably increases the risk that the
personal data in question will be processed in a manner which is
incompatible with the high standards imposed by the General Data
Protection Regulation and the Schrems II judgment.
Whilst no significant incident relating to cross-border personal data
processing activities occurred in 2024, the Schrems II and GDPR risks
will remain topical in 2025.
Failure to comply with data privacy laws and other legislation in the
jurisdictions in which HSBC Continental Europe operates may result in
regulatory sanctions. Any of these failures could have a material
adverse effect on its business, financial condition, results of
operations, prospects, and reputation.
4.4 HSBC Continental Europe is subject to the risk of financial
crime and third parties may use the bank as a conduit for
illegal activities without its knowledge
Probability: Likely/Impact: Medium (unchanged from 1H24).
Financial crime risk is the risk that HSBC’s products and services will
be exploited for criminal activity. This includes fraud, bribery and
corruption, tax evasion, sanctions and export control violations,

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Risk

money laundering, terrorist financing and proliferation financing.
Financial crime risk arises from day-to-day banking operations
involving customers, third parties and employees.
Financial institutions remain under considerable regulatory scrutiny
regarding their ability to detect and prevent financial crime as we
operate in an ever changing environment due to increasingly complex
geopolitical tensions and macroeconomic factors as well as, evolving
financial crime regulations. In addition, the accessibility and increasing
sophistication of generative AI brings financial crime risks. While there
is potential for the technology to support financial crime detection,
there is also a risk that criminals use generative AI to perpetrate fraud,
particularly scams.
HSBC Continental Europe’s ability to manage financial crime risk is
dependent on the use and effectiveness of its financial crime risk
assessments, systems and controls. Weak or ineffective financial
crime processes and controls may risk HSBC inadvertently facilitating
financial crime which may result in regulatory investigation, sanction,
litigation, fines and reputational damage.
HSBC Continental Europe is required to comply with applicable
financial crime laws and regulations, and has adopted various
Financial Crime policies, procedures and controls aimed at preventing
the exploitation of HSBC's products and services for criminal activity.
Furthermore, annual Global financial crime mandatory training is
provided to all colleagues in HSBC Continental Europe, with additional
targeted training tailored to certain individuals.
Lastly, HSBC Continental Europe continues to make progress with
several key financial crime risk management initiatives such as with
the deployment of our intelligence-led, dynamic risk assessment
capability for customer account monitoring in France and Malta as
well as deploying a next generation capability to increase monitoring
coverage of correspondent banking activity. HSBC Continental Europe
remains focused on embedding these new tools and processes to be
operationally effective with an aim to decrease the time to detect
potential risks.
Sanctions and trade restrictions are complex. In particular the
significant sanctions and trade restrictions against Russia. In
December 2023, the US established a new secondary sanctions
regime, providing itself 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. This creates challenges associated with the detection or
prevention of third-party activities beyond HSBC’s control. The
imposition of such sanctions against any non-US HSBC entity could
result in significant adverse commercial, operational and reputational
consequences for HSBC.
For further details concerning tax related investigations - see note 32
(section Tax related investigations). Based on the facts currently known, it is
not practicable at this time for HSBC to predict the resolution of these
matters, including the timing or any possible impact on HSBC, which could
be significant.
4.5 HSBC Continental Europe's risk management measures may
not be successful.
Probability: Likely/Impact: Medium (unchanged from 1H24).
Risk management is an integral part of HSBC Continental Europe’s
activities. Risk represents the exposure to uncertainty and the
resulting variability of return. Specifically, risk equates to the adverse
effect on profitability or financial condition arising from different
sources of uncertainty, including but non exhaustively credit risk,
market risk, non-traded market risk, operational risk, insurance risk,
concentration risk, liquidity and funding risk, litigation risk, reputational
risk, strategic risk, pension risk and regulatory risk.
To manage its risks, HSBC Continental Europe uses a range of risk
tools amongst which:
– The Risk Map is an integrated risk management tool used to
assess, monitor and report current risk profile, including Risk
Drivers and Top Risks, of the Bank. It provides a point-in-time view
of the enterprise-wide risk profile across both financial and non-
financial risks against the risk appetite approved by the Board. A
Risk Driver is an issue or event that may cause risk to be outside
of appetite and a Top Risk is a Risk Driver that the Bank is
managing, which if not managed and mitigated has the potential to
have a material impact. Thematic Issues are broad, overarching
material matters that are driven by either internal (e.g. internal
operating environment) or external (macroeconomic factors/
regulatory demands) events or trends. They typically span multiple
Level 1 risk categories;
– The Risk Appetite Statement.
For further details concerning the Risk Appetite Statement - see section
"HSBC Continental Europe's risk appetite" on page 165.
Whilst HSBC Continental Europe employs a broad and diversified set
of risk monitoring and mitigation techniques, such methods and the
judgements that accompany their application cannot anticipate every
unfavourable event or the specifics and timing of every outcome.
Failure to manage risks appropriately could have a material adverse
effect on the businesses, financial condition, results of operations,
prospects, capital position, strategy and reputation of the bank.

5 Risks related to HSBC Continental
Europe's business
5.1 Risks concerning borrower credit quality are inherent in
HSBC Continental Europe's businesses.
Probability: Likely/Impact: High (unchanged from 1H24).
Risks arising from changes in credit quality and the recoverability of
loans and amounts due from borrowers and counterparties (e.g.
reinsurers and counterparties in derivative transactions) are inherent
in a wide range of HSBC Continental Europe's businesses.

Universal Registration Document and Annual Financial Report 2024 | 179

Adverse changes in the credit quality of HSBC Continental Europe's
borrowers and counterparties arising from a general deterioration in
economic conditions or systemic risks in the financial systems could
reduce the recoverability and value of HSBC Continental Europe's
assets, and result in increased credit losses.
HSBC Continental Europe estimates and recognises ECLs in its credit
exposure. This process, which is critical to HSBC Continental
Europe's results and financial condition, requires difficult, subjective
and complex judgements, including forecasts of how the economic
and geopolitical conditions, including the impact of sanctions, and
sector specific risks, might impair the ability of its borrowers to repay
their loans and the ability of other counterparties to meet their
obligations.
This assessment considers multiple alternative forward-looking
economic conditions (including Gross Domestic Product estimates)
and incorporates this into the ECL estimates to meet the
measurement objective of IFRS 9.
As is the case with any such assessments, HSBC Continental Europe
may fail to estimate accurately the effect of factors that are identified
or fail to identify other relevant factors. Further, the information HSBC
Continental Europe uses to assess the creditworthiness of its
counterparties may be inaccurate or incorrect.
Any failure by HSBC Continental Europe to accurately estimate the
ability of its counterparties to meet their obligations could have a
material adverse effect on its business, financial condition, results of
operations and prospects.
The level of any material adverse effect will depend on the number of
borrowers and the size of the exposures involved.
HSBC Continental Europe also continues to make use of its risk
identification and portfolio management processes, including an early
warning system to identify and monitor the most vulnerable
customers.
Refinancing risk and liquidity remain the key points of attention for the
wholesale portfolio, in the current/recent higher rate and slower GDP
growth environment. Extensive refinancing reviews and deep dive
sector reviews have been undertaken to identify any vulnerable
counterparties in order to establish specific actions where required.
A rolling program of sector reviews is in place. A refresh of the
Refinancing Risk Review initiative has been completed.
Single name and sector concentrations are within appetite.
Following the sale of retail business, the retained portfolio is in run
off. This portfolio is circa 95 per cent secured by Credit Logement and
has reduced to EUR 6.7 billion as at the end of December 2024
(compared to EUR 7.1 billion as at the end of December 2023).
For further details concerning RWAs as at 31 December 2024 – see table:
Overview of risk weighted exposure amounts in the HSBC Continental
Europe Pillar 3 document.
Change in expected credit losses and other credit impairment charges
was a net charge of EUR 97 million in 2024 compared to a net charge
of EUR 145 million in 2023, The fall was primarily driven by lower
stage 3 provisions.
5.2 HSBC Continental Europe has significant exposure to
counterparty risk.
Probability: Likely/Impact: High (unchanged from 1H24).
HSBC Continental Europe is exposed to counterparties that are
involved in virtually all major industries, and HSBC Continental Europe
routinely executes transactions with counterparties in financial
services, including central clearing counterparties, commercial banks,
investment banks, mutual funds, and other institutional clients. Many
of these transactions expose HSBC Continental Europe to credit risk
in the event of default by a counterparty or client.
HSBC Continental Europe’s ability to engage in routine transactions to
fund its operations and manage its risks could be materially adversely
affected by the actions and commercial soundness of other financial
services institutions. Financial institutions are necessarily
interdependent because of trading, clearing, counterparty or other
relationships. Consequently, a default by, or decline in market
confidence in, individual institutions, or anxiety about the financial
services industry generally, can lead to further individual and/or
systemic difficulties, defaults and losses.
Mandatory central clearing of OTC derivatives, including under the
EU’s European Market Infrastructure Regulation, poses risks to HSBC
Continental Europe. As a clearing member, HSBC Continental Europe
is required to underwrite losses incurred at a central counterparty by
the default of other clearing members and their clients. Increased
moves towards central clearing brings with it a further element of
interconnectedness between clearing members and clients that
HSBC Continental Europe believes may increase rather than reduce
its exposure to systemic risk. At the same time, HSBC Continental
Europe’s ability to manage such risk itself will be reduced because
control has been largely outsourced to central counterparties, and it is
unclear at present how, at a time of stress, regulators and resolution
authorities will intervene.
Where bilateral counterparty risk has been mitigated by taking
collateral, credit risk for HSBC Continental Europe may remain high if
the collateral held cannot be realised or has to be liquidated at prices
that are insufficient to recover the full amount of the transaction’s
exposure. There is a risk that collateral cannot be realised, including
situations where this arises by change of law that may influence
HSBC Continental Europe’s ability to foreclose on collateral or
otherwise enforce contractual rights.
Liquidity and concentration of the underlying market exposure or
collateral along with their potential correlation with the credit quality
of the counterparty (wrong way risk) are part of the keystones of
counterparty credit risk.
HSBC Continental Europe also has credit exposure arising from
mitigants, such as credit default swaps, and other credit derivatives,
each of which is carried at fair value. The risk of default by
counterparties to credit default swaps and other credit derivatives
used as mitigants affects the fair value of these instruments
depending on the valuation and the perceived credit risk of the
underlying instrument against which protection has been purchased.
Any such adjustments or fair value changes may have a material
adverse effect on the financial condition and results of operations of
HSBC Continental Europe.
Market events (such as the impact of the French parliament
dissolution in the summer of 2024) and their impacts on the portfolio
are closely monitored as part of HSBC Continental Europe's
counterparty credit risk management.
Stress testing is also a management tool used to review the HSBC
Continental Europe portfolio.
Risk management actions focus on collateral disputes and failed
payments.
As at 31 December 2024, Counterparty Risk RWAs were EUR 6.8
billion compared to EUR 5.3 billion as at 31 December 2023.
For further details - see RWAs as at 31 December 2024 – table: Overview of
risk weighted exposure amounts in the HSBC Continental Europe Pillar 3
document.

180 | Universal Registration Document and Annual Financial Report 2024

Risk

5.3 HSBC Continental Europe's insurance businesses are
subject to risks relating to insurance lapse risk and
changes in insurance customer behaviour.
Probability: Likely/Impact: High (unchanged from 1H24).
HSBC Continental Europe provides various life insurance products.
The cost of claims and benefits can be influenced by many factors,
including mortality and morbidity rates, lapse and surrender rates and,
if the policy has a savings element, the performance of assets to
support the liabilities. Unfavourable developments in any of these
factors could materially adversely affect HSBC Continental Europe’s
business, financial condition, results of operations and prospects.
In the current situation the main financial risk for HSBC Assurances
Vie (France) consists in a reduction in inflows and an increase in
lapses, which could result in negative net new money and liquidity
risk. Moreover, in case of important level of negative net new money
with the current level of interest rates, HSBC Assurances Vie (France)
could have to sell a part of its bond portfolio and thus realise a part of
its unrealised losses.
Mitigating actions are already in place in HSBC Assurances Vie
(France) as these risks were previously identified. A competitive
profit-sharing rate was delivered end of 2023 and commercial
campaigns were launched to accelerate the resumption of the
commercial activity. This risk was also mitigated thanks to the signing
of a reinsurance contract in January 2024. The commercial
performance recovered rapidly from the second quarter of 2024 and
the level of gross written premium in 2024 is higher than it was in
2023.
The proportion of cash and of short-term investments of the HSBC
Assurances Vie (France) portfolio were also managed accordingly and
all the liquidity indicators remained within risk appetite in 2024.
HSBC Life Assurance (Malta) Ltd is also exposed to lapse risk,
particularly to a one-event mass lapse. Lapses on the Protection
business could be driven by the economic environment thus
impacting HSBC Life Assurance (Malta) Ltd customer’s behaviour
toward allocating wealth toward insurance. The unit-linked book is
more sensitive to the volatility of the market and low return. Mass
lapses on this profitable business would reduce the expected profit.
There is also exposure to lower lapses on policies where the premium
no longer covers the cost of the risk, in particular for the old policies
and those with a long maturity.
5.4 HSBC Continental Europe relies on recruiting, retaining and
developing appropriate senior management and skilled
personnel .
Probability: Likely/Impact: Medium (Impact modified from High
since 1H24).
HSBC Continental Europe businesses, functions and entities may be
exposed to risks associated with capacity and capability combined
with changing requirements of our workforce skills, as well as the
need to comply with employment laws and regulations. Failure to
proactively identify and manage potential capacity and / or capability
risks may impact the delivery of the strategic objectives or lead to
regulatory sanctions or legal claims, it may as well lead to poor
customer outcomes. The risks are heightened during the current
period of organisational change. While it is understood that this may
potentially heighten the overall risk profile, controls are still deemed
appropriate, and no material challenges have been identified for now.
The risk will continue to be reviewed and assessed to identify
challenges and implement relevant actions.
Meeting the demand to recruit, retain and develop appropriate senior
management and skilled personnel remains subject to several
potential challenges. These include rapidly changing skill requirements
and ways of working and the evolving regulatory landscape. Ongoing
talent shortages in key markets, businesses and capabilities,
particularly where those with the scarce capabilities are globally
mobile, add to the complexity of the supply challenge. HSBC
Continental Europe's continued success and implementation of its
growth strategy depend in part on the retention of key members of its
management team and wider employee base, the availability of skilled
management in each of its businesses and functions, and the ability
to continue to attract, train, motivate and retain highly qualified
professionals, each of which may depend on factors beyond the
Bank’s control, including economic, market and regulatory conditions.
Furthermore, HSBC Continental Europe has ambition for greater
representation of women in senior leadership roles. If the Bank fails
to achieve this ambition, its ability to attract and retain qualified
professionals may be affected.
Various initiatives have been set to enhance employees’ engagement,
convey a common and positive culture and enable growth in 2024,
resulting in some improvements in HSBC Continental Europe’s key
indicators.
– HSBC Continental Europe’s attrition rate has been on a downward
trend since December 2022; however, it remains under close
monitoring in certain businesses and/or areas where it could
potentially lead to capacity and capability challenges. As of
31 December 2024, the overall annualised voluntary attrition rate
stood at 4.6 per cent, down 3.2 points year on year.
– Since achieving its ambition of having 30 per cent of senior
leadership positions held by women in 2020, HSBC Group set a
new ambition to reach 35 per cent by 2025. HSBC Group is on
track to meet its 2025 ambition, with 34.6 per cent of senior
leadership roles held by women at the end of 2024. To contribute
to HSBC Group’s ambition, HSBC Continental Europe equally has
an ambition for greater representation of women in senior
leadership positions. In 2024, HSBC Continental Europe achieved
28.8 per cent representation of women in senior leadership roles,
representing a year-on-year increase of 1.2 points, and exceeding
its ambition by 0.7 points.

6 Risks related to HSBC Continental
Europe's financial statements
6.1 HSBC Continental Europe’s financial statements are based
in part on judgements, estimates and assumptions that are
subject to uncertainty.
Probability: Unlikely/Impact: Medium ((unchanged from 1H24).
The preparation of financial statements requires management to
make judgements, estimates and assumptions that affect the
reported amounts of assets, liabilities, income and expenses. Due to
the inherent uncertainty in making estimates, particularly those
involving the use of complex models, actual results reported in future
periods could differ from those on which management’s estimates
are based.
Estimates, judgements, assumptions and models are continually
evaluated, and are based on historical experience and other factors,
including expectations of future events that are believed to be
reasonable under the prevailing circumstances.

Universal Registration Document and Annual Financial Report 2024 | 181

The impacts of revisions to accounting estimates are recognised in
the period in which the estimates are revised and in any future
periods affected. Accounting policies deemed critical to our results
and financial position are those that involve a high degree of
uncertainty and have a material impact on the financial statements. In
2024 these included expected credit losses, impairment of goodwill
and non-financial assets, measurement of financial instruments,
deferred tax assets, provisions, impairment of interests in associates,
or in investments in subsidiaries. As well as held for sale classification
and measurement.
The valuation of financial instruments measured at fair value can be
subjective, in particular where models are used that include
unobservable inputs. Given the uncertainty and subjectivity associated
with measuring such instruments, future outcomes may differ
materially from those assumed using information available at the
reporting date.
The effect of these differences on the future results of operations and
the future financial position of HSBC Continental Europe could be
material. If the judgement, estimates and assumptions HSBC
Continental Europe used in preparing its consolidated financial
statements are subsequently found to be materially different from
those assumed using information available at the reporting date, this
could affect its business, prospects, financial condition and results of
operations.
The measurement of expected credit losses requires the selection
and calibration of complex models and the use of estimates and
assumptions to incorporate relevant information about past events,
current conditions and forecasts of economic conditions. In addition,
significant judgement is involved in determining what is considered to
be significant increases in credit risk.
The assessment of whether goodwill and non-financial assets are
impaired, and the measurement of any impairment, involves the
application of judgement in determining key assumptions, including
discount rates, estimated cash flows for the periods for which
detailed cash flows are available and projecting the long-term pattern
of sustainable cash flows thereafter. The recognition and
measurement of deferred tax assets involves significant judgement
regarding the probability and sufficiency of future taxable profits,
taking into account the future reversal of existing taxable temporary
differences and tax planning strategies, including corporate
reorganisations.
The recognition and measurement of provisions involve significant
judgements due to the high degree of uncertainty in determining
whether a present obligation exists, and in estimating the probability
and amount of any outflows that may arise.
The assessment of the held for sale criteria involves significant
judgement with regards to classifying a sale as highly probable and
the anticipated timing for the sale to complete. The calculation of the
fair value less cost to sell as well as any related impairment loss is
subject to accounting estimates.

Financial risk
Credit & counterparty credit risk
Credit risk
Credit risk is the risk of financial loss if a customer or counterparty
fails to meet an obligation under a contract. Credit risk arises
principally from direct lending, trade finance and leasing business, but
also from certain other products, such as guarantees and derivatives.
Credit Risk Management
Key developments in 2024
There were no material changes to the policies and practices for the
management of credit risk in 2024. We continued to apply the
requirements of IFRS 9 ‘Financial Instruments’ within the Credit Risk
sub-function.
We actively managed the risks related to macroeconomic
uncertainties, including interest rates, inflation, fiscal and monetary
policy, broader geopolitical uncertainties and conflicts.
Governance and structure
We have established HSBC Group-wide credit risk management and
related IFRS 9 processes. We continue to assess the impact of
economic developments in key markets on specific customers,
customer segments or portfolios. As credit conditions change, we
take mitigating actions, including the revision of risk appetites or limits
and tenors, as appropriate. In addition, we continue to evaluate the
terms under which we provide credit facilities within the context of
individual customer requirements, the quality of the relationship, local
regulatory requirements, market practices and our local market
position.
Credit risk sub-function
(Audited)
Credit approval authorities are delegated by the Board to the Chief
Executive together with the authority to sub-delegate them. The
Credit risk sub-function in Risk is responsible for the key policies and
processes for managing credit risk, which include formulating credit
policies and risk rating frameworks, guiding the appetite for credit risk
exposures, undertaking independent reviews and objective
assessment of credit risk, and monitoring performance and
management of portfolios.
The principal objectives of our credit risk management are:
– to maintain across HSBC a strong culture of responsible lending
and a robust risk policy and control framework;
– to both partner and challenge global businesses in defining,
implementing and continually re-evaluating our risk appetite under
actual and scenario conditions; and
– to ensure there is independent, expert scrutiny of credit risks, their
costs and their mitigation.
Key risk management process
IFRS 9 ‘Financial Instruments’ process
The IFRS 9 process comprises three main areas: modelling and data;
implementation; and governance.
Modelling, data and forward economic guidance
The HSBC Group has established IFRS 9 modelling and data
processes in various geographies, which are subject to internal model
risk governance including independent review of significant model
developments.

182 | Universal Registration Document and Annual Financial Report 2024

Risk

We have a centralised process for generating unbiased and
independent global economic scenarios. Scenarios are subject to a
process of review and challenge by a dedicated central team, and
individually for each region. Each quarter, the scenarios and probability
weights are reviewed and checked for consistency with the economic
conjuncture and current economic and financial risks. These are
subject to final review and approval by senior management in a
Forward Economic Guidance Global Business Impairment Com mittee.
Implementation
A centralised impairment engine performs the expected credit losses
calculation using data, which is subject to a number of validation
checks and enhancements, from a variety of client, finance and risk
systems. Where possible, these checks and processes are performed
in a globally consistent and centralised manner.
Governance
Management review forums are established in order to review and
approve the impairment results. Regional management review forums
have representatives from Credit Risk and Finance. Required
members of the forums are the heads of Wholesale Credit, Market
Risk, and Wealth and Personal Banking Risk, as well as the global
business Chief Financial Officers and the Chief Accounting Officer.
Concentration of credit risk exposure
Concentrations of credit risk arise when a number of counterparties or
exposures have comparable economic characteristics, or are engaged
in similar activities, or operate in the same geographical areas/industry
sectors, so that their collective ability to meet contractual obligations
is uniformly affected by changes in economic, political or other
conditions.
HSBC Continental Europe uses a number of controls and measures to
minimise undue concentration of exposure in its portfolios across
industry, country and customer groups.
These include portfolio and counterparty limits, approval and review
controls, and stress testing.
Credit quality of financial instruments
The HSBC Group’s credit risk rating systems facilitates the internal
ratings-based approach under the Basel framework adopted by the
HSBC Group to support the calculation of our minimum credit
regulatory capital requirement.
The five credit quality classifications encompass a range of more
granular, internal credit rating grades assigned to wholesale and retail
customers, and the external rating, attributed by external agencies to
debt securities.
For debt securities and certain other financial instruments, external
ratings have been aligned to the five quality classifications based upon
the mapping of related Customer Risk Rating (‘CRR’) to external credit
rating.
Wholesale lending
The CRR 10-grade scale summarises a more granular underlying 23-
grade scale of obligor PD. All corporate customers are rated using the
10- or 23-grade scale, depending on the degree of sophistication of
the Basel approach adopted for the exposure.
Each CRR band is associated with an external rating grade by
reference to long-run default rates for that grade, represented by the
average of issuer-weighted historical default rates. This mapping
between internal and external ratings is indicative and may vary over
time.
Retail lending
Retail lending credit quality is based on a 12-month point-in-time
probability-weighted PD.

Credit quality classification
| Sovereign debt securities and bills | Other debt securities and bills | Wholesale lending and derivatives | Retail lending
| External credit rating | External credit rating | Internal credit rating 1 | 12-month Basel probability of default % | PD Band 2 | 12-month probability of default %
Strong | BBB and above | A- and above | CRR 1 to CRR 2 | 0 – 0.169 | band 1 to band 2 | 0.000 – 0.500
Good | BBB- to BB | BBB+ to BBB- | CRR 3 | 0.170 – 0.740 | band 3 | 0.501 – 1.500
Satisfactory | BB- to B and unrated | BB+ to B and unrated | CRR 4 to CRR 5 | 0.741 – 4.914 | band 4 to band 5 | 1.501 – 20.000
Sub-standard | B- to C | B- to C | CRR 6 to CRR 8 | 4.915 – 99.999 | band 6 | 20.001 – 99.999
Credit-impaired | Default | Default | CRR 9 to CRR 10 | 100 | band 7 | 100

1 Customer risk rating (‘CRR’).
2 12-month point-in-time (‘PIT’) probability weighted probability of default (‘PD’).

Universal Registration Document and Annual Financial Report 2024 | 183

Quality classification definitions – ‘Strong’: exposures demonstrate a strong capacity to meet financial commitments, with negligible or low probability of default and/or low levels of expected loss. – Good’: exposures require closer monitoring and demonstrate a good capacity to meet financial commitments, with low default risk. – ‘Satisfactory’: exposures require closer monitoring and demonstrate an average to fair capacity to meet financial commitments, with moderate default risk. – ‘Sub-standard’: exposures require varying degrees of special attention and default risk is of greater concern. – ‘Credit Impaired’: exposures have been assessed, individually or collectively, as impaired.

Distribution of financial instruments by credit quality
| Gross carrying/notional amount | Provision for ECL | Net
| Strong | Good | Satisfactory | Sub- standard | Credit impaired | Total
| €m | €m | €m | €m | €m | €m | €m | €m
In-scope for IFRS 9 |  |  |  |  |  |  |  |
Loans and advances to customers held at amortised cost | 18,103 | 11,526 | 18,331 | 2,202 | 1,613 | 51,775 | (487) | 51,288
– personal 1 | 9,374 | 481 | 252 | 23 | 108 | 10,238 | (45) | 10,193
– corporate and commercial | 6,624 | 9,422 | 14,107 | 2,088 | 1,496 | 33,737 | (432) | 33,305
– non-bank financial institutions | 2,105 | 1,623 | 3,972 | 91 | 9 | 7,800 | (10) | 7,790
Loans and advances to banks held at amortised cost | 4,682 | 127 | 895 | — | — | 5,704 | (1) | 5,703
Cash and balances at central banks | 48,907 | — | — | — | — | 48,907 | — | 48,907
Reverse repurchase agreements – non-trading | 22,742 | 2,929 | 93 | — | — | 25,764 | — | 25,764
Financial investments | 2,141 | — | 1,197 | — | — | 3,338 | — | 3,338
Assets held for sale 2 | 2,171 | 129 | 175 | — | — | 2,475 | — | 2,475
Prepayments, accrued income and other assets | 15,570 | 622 | 1,019 | 4 | 9 | 17,224 | — | 17,224
– endorsements and acceptances | — | — | 1 | — | — | 1 | — | 1
– accrued income and other | 15,570 | 622 | 1,018 | 4 | 9 | 17,223 | — | 17,223
Debt instruments measured at fair value through other comprehensive income 3'4 | 25,990 | 80 | 91 | — | — | 26,161 | (5) | 26,156
Out-of-scope for IFRS 9 |  |  |  |  |  |  |  |
Trading assets | 15,999 | 226 | 322 | 7 | 3 | 16,557 | — | 16,557
Other financial assets designated and otherwise mandatorily measured at fair value through profit or loss | 217 | 43 | 30 | — | — | 290 | — | 290
Derivatives | 41,315 | 1,046 | 847 | 31 | 12 | 43,251 | — | 43,251
Assets held for sale | 2,900 | — | — | — | — | 2,900 | — | 2,900
Total gross amount on balance sheet | 200,737 | 16,728 | 23,000 | 2,244 | 1,637 | 244,346 | (493) | 243,853
Percentage of total credit quality (%) | 82.2 | 6.8 | 9.4 | 0.9 | 0.7 | 100.0 |  |
Loan and other credit related commitments | 61,962 | 23,486 | 17,074 | 2,004 | 130 | 104,656 | (33) | 104,623
– loan and other credit related commitments for loans and advances to customers | 27,994 | 23,416 | 16,958 | 1,964 | 130 | 70,462 | (33) | 70,429
– loan and other credit related commitments for loans and advances to banks | 33,968 | 70 | 116 | 40 | — | 34,194 | — | 34,194
Financial guarantees | 1,011 | 473 | 384 | 38 | 44 | 1,950 | (7) | 1,943
In-scope for IFRS 9: Irrecoverable loan commitments and financial guarantees | 62,973 | 23,959 | 17,458 | 2,042 | 174 | 106,606 | (40) | 106,566
Loan and other credit related commitments | 2,817 | 2,376 | 910 | 53 | 8 | 6,164 | — | 6,164
Performance and other guarantees | 7,386 | 5,274 | 3,796 | 287 | 157 | 16,900 | (30) | 16,870
Out-of-scope for IFRS 9: Revocable loan commitments and non-financial guarantees | 10,203 | 7,650 | 4,706 | 340 | 165 | 23,064 | (30) | 23,034
Total nominal amount off-balance sheet | 73,176 | 31,609 | 22,164 | 2,382 | 339 | 129,670 | (70) | 129,600
At 31 Dec 2024 | 273,913 | 48,337 | 45,164 | 4,626 | 1,976 | 374,016 | (563) | 373,453

1 Includes retained portfolio of French home and other loans following the sale of retail banking operations in France, with carrying amount of EUR 6.7 billion as at
31 December 2024, of which EUR 6.3 billion guaranteed by Crédit Logement.
2 Includes planned sale of private banking business in Germany and life insurance business i n France. For further details on gross carrying amounts and allowances
for ECL related to assets held for sale, see ‘Assets held for sale’ on page 207.
3 Includes EUR 8.8 billion related to planned sale of the life insurance business in France classified as held for sale in 2024.
4 For the purposes of this disclosure gross carrying amount is defined as the amortised cost of a financial asset, before adjusting for any loss allowance. As such
the gross carrying amount of debt instruments at FVOCI as presented above will not reconcile to the balance sheet as it excludes fair value gains and losses.

184 | Universal Registration Document and Annual Financial Report 2024

Risk

Distribution of financial instruments by credit quality (continued)
| Gross carrying/notional amount | Provision for ECL | Net
| Strong | Good | Satisfactory | Sub- standard | Credit impaired | Total
| €m | €m | €m | €m | €m | €m | €m | €m
In-scope for IFRS 9 |  |  |  |  |  |  |  |
Loans and advances to customers held at amortised cost | 16,120 | 13,153 | 16,856 | 3,097 | 1,659 | 50,885 | (758) | 50,127
– personal 1 | 7,781 | 2,414 | 337 | 124 | 96 | 10,752 | (47) | 10,705
– corporate and commercial | 6,741 | 9,384 | 13,374 | 2,908 | 1,535 | 33,942 | (693) | 33,249
– non-bank financial institutions | 1,598 | 1,355 | 3,145 | 65 | 28 | 6,191 | (18) | 6,173
Loans and advances to banks held at amortised cost | 4,998 | 70 | 748 | — | — | 5,816 | — | 5,816
Cash and balances at central banks | 56,894 | — | — | — | — | 56,894 | — | 56,894
Reverse repurchase agreements – non-trading | 21,700 | 2,504 | 286 | — | — | 24,490 | — | 24,490
Financial investments | 1,740 | — | 7 | — | — | 1,747 | — | 1,747
Assets held for sale 2,3 | 22,305 | 1,419 | 981 | 109 | 180 | 24,994 | (74) | 24,920
Prepayments, accrued income and other assets | 18,283 | 595 | 1,256 | 16 | 13 | 20,163 | — | 20,163
– endorsements and acceptances | 7 | — | — | — | — | 7 | — | 7
– accrued income and other | 18,276 | 595 | 1,256 | 16 | 13 | 20,156 | — | 20,156
Debt instruments measured at fair value through other comprehensive income 4 | 19,147 | 2,348 | 188 | — | — | 21,683 | (5) | 21,678
Out-of-scope for IFRS 9 |  |  |  |  |  |  |  |
Trading assets | 13,897 | 195 | 347 | 2 | — | 14,441 | — | 14,441
Other financial assets designated and otherwise mandatorily measured at fair value through profit or loss | 2,195 | 59 | 14 | — | — | 2,268 | — | 2,268
Derivatives | 43,997 | 985 | 518 | 13 | 9 | 45,522 | — | 45,522
Assets held for sale | 69 | — | — | — | — | 69 | — | 69
Total gross amount on balance sheet | 221,345 | 21,328 | 21,201 | 3,237 | 1,861 | 268,972 | (837) | 268,135
Percentage of total credit quality (%) | 82.3 | 7.9 | 7.9 | 1.2 | 0.7 | 100.0 |  |
Loan and other credit related commitments | 69,971 | 22,930 | 11,919 | 1,155 | 184 | 106,159 | (24) | 106,135
– loan and other credit related commitments for loans and advances to customers | 29,134 | 22,627 | 11,758 | 1,155 | 184 | 64,858 | (24) | 64,834
– loan and other credit related commitments for loans and advances to banks | 40,837 | 303 | 161 | — | — | 41,301 | — | 41,301
Financial guarantees | 898 | 295 | 282 | 24 | 53 | 1,552 | (7) | 1,545
In-scope for IFRS 9: Irrecoverable loan commitments and financial guarantees | 70,869 | 23,225 | 12,201 | 1,179 | 237 | 107,711 | (31) | 107,680
Loan and other credit related commitments | 2,879 | 2,223 | 848 | 32 | 5 | 5,987 | — | 5,987
Performance and other guarantees | 5,808 | 4,836 | 3,862 | 522 | 233 | 15,261 | (27) | 15,234
Out-of-scope for IFRS 9: Revocable loan commitments and non-financial guarantees | 8,687 | 7,059 | 4,710 | 554 | 238 | 21,248 | (27) | 21,221
Total nominal amount off-balance sheet | 79,556 | 30,284 | 16,911 | 1,733 | 475 | 128,959 | (58) | 128,901
At 31 Dec 2023 | 300,901 | 51,612 | 38,112 | 4,970 | 2,336 | 397,931 | (895) | 397,036

1 As part of the sale of the retail banking operations in France, HSBC Continental Europe retained a portfolio of EUR 7.1 billion at the time of sale consisting of
home and certain other loans, of which EUR 6.7 billion guaranteed by Crédit Logement.
2 Of which EUR 9.5 billion guaranteed by Crédit Logement classified as held for sale as at 31 December 2023.
3 For further details on gross carrying amounts and allowances for ECL related to assets held for sale, see ‘Assets held for sale’ on page 207.
4 For the purposes of this disclosure gross carrying amount is defined as the amortised cost of a financial asset, before adjusting for any loss allowance. As such
the gross carrying amount of debt instruments at FVOCI as presented above will not reconcile to the balance sheet as it excludes fair value gains and losses.

Universal Registration Document and Annual Financial Report 2024 | 185

Distribution of financial instruments to which the impairment requirements in IFRS 9 are applied, by credit quality and stage allocation
| Gross carrying/notional amount | Provision for ECL | Net
| Strong | Good | Satisfactory | Sub- standard | Credit impaired | Total
| €m | €m | €m | €m | €m | €m | €m | €m
Loans and advances to customers at amortised cost | 18,103 | 11,526 | 18,331 | 2,202 | 1,613 | 51,775 | (487) | 51,288
– stage 1 | 17,855 | 11,156 | 15,665 | 895 | — | 45,571 | (40) | 45,531
– stage 2 | 248 | 370 | 2,666 | 1,307 | — | 4,591 | (85) | 4,506
– stage 3 | — | — | — | — | 1,612 | 1,612 | (362) | 1,250
– POCI | — | — | — | — | 1 | 1 | — | 1
Loans and advances to banks at amortised cost | 4,682 | 127 | 895 | — | — | 5,704 | (1) | 5,703
– stage 1 | 4,660 | 126 | 893 | — | — | 5,679 | (1) | 5,678
– stage 2 | 22 | 1 | 2 | — | — | 25 | — | 25
– stage 3 | — | — | — | — | — | — | — | —
– POCI | — | — | — | — | — | — | — | —
Other financial assets measured at amortised cost 1 | 91,531 | 3,680 | 2,484 | 4 | 9 | 97,708 | — | 97,708
– stage 1 | 91,531 | 3,656 | 2,480 | — | — | 97,667 | — | 97,667
– stage 2 | — | 24 | 4 | 4 | — | 32 | — | 32
– stage 3 | — | — | — | — | 9 | 9 | — | 9
– POCI | — | — | — | — | — | — | — | —
Loan and other credit-related commitments | 61,962 | 23,486 | 17,074 | 2,004 | 130 | 104,656 | (33) | 104,623
– stage 1 | 61,630 | 22,414 | 15,480 | 1,424 | — | 100,948 | (9) | 100,939
– stage 2 | 332 | 1,072 | 1,594 | 580 | — | 3,578 | (14) | 3,564
– stage 3 | — | — | — | — | 130 | 130 | (10) | 120
– POCI | — | — | — | — | — | — | — | —
Financial guarantees 2 | 1,011 | 473 | 384 | 38 | 44 | 1,950 | (7) | 1,943
– stage 1 | 1,011 | 465 | 374 | 6 | — | 1,856 | (1) | 1,855
– stage 2 | — | 8 | 10 | 32 | — | 50 | (2) | 48
– stage 3 | — | — | — | — | 44 | 44 | (4) | 40
– POCI | — | — | — | — | — | — | — | —
Total on balance sheet and off balance sheet excluding debt instrument at FVOCI | 177,289 | 39,292 | 39,168 | 4,248 | 1,796 | 261,793 | (528) | 261,265
Debt instruments at FVOCI 3,4 | 25,990 | 80 | 91 | — | — | 26,161 | (5) | 26,156
– stage 1 | 25,943 | 80 | 91 | — | — | 26,114 | (5) | 26,109
– stage 2 | 47 | — | — | — | — | 47 | — | 47
– stage 3 | — | — | — | — | — | — | — | —
– POCI | — | — | — | — | — | — | — | —
At 31 Dec 2024 | 203,279 | 39,372 | 39,259 | 4,248 | 1,796 | 287,954 | (533) | 287,421

1 Includes planned sale of private banking business in Germany and life insurance business i n France. For further details on gross carrying amounts and allowances
for ECL related to assets held for sale, see ‘Assets held for sale’ on page 207.
2 Excludes performance guarantee contracts to which the impairment requirements in IFRS 9 are not applied.
3 For the purposes of this disclosure gross carrying amount is defined as the amortised cost of a financial asset, before adjusting for any loss allowance. As such
the gross carrying amount of debt instruments at FVOCI as presented above will not reconcile to the balance sheet as it excludes fair value gains and losses.
4 Includes EUR 8.8 billion related to planned sale of the life insurance business in France classified as held for sale in 2024.

186 | Universal Registration Document and Annual Financial Report 2024

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Distribution of financial instruments to which the impairment requirements in IFRS 9 are applied, by credit quality and stage allocation (continued)
| Gross carrying/notional amount | Provision for ECL | Net
| Strong | Good | Satisfactory | Sub- standard | Credit impaired | Total
| €m | €m | €m | €m | €m | €m | €m | €m
Loans and advances to customers at amortised cost | 16,120 | 13,153 | 16,856 | 3,097 | 1,659 | 50,885 | (758) | 50,127
– stage 1 | 15,889 | 12,620 | 14,419 | 1,210 | — | 44,138 | (53) | 44,085
– stage 2 | 231 | 533 | 2,437 | 1,887 | — | 5,088 | (81) | 5,007
– stage 3 | — | — | — | — | 1,651 | 1,651 | (624) | 1,027
– POCI | — | — | — | — | 8 | 8 | — | 8
Loans and advances to banks at amortised cost | 4,998 | 70 | 748 | — | — | 5,816 | — | 5,816
– stage 1 | 4,976 | 69 | 667 | — | — | 5,712 | — | 5,712
– stage 2 | 22 | 1 | 81 | — | — | 104 | — | 104
– stage 3 | — | — | — | — | — | — | — | —
– POCI | — | — | — | — | — | — | — | —
Other financial assets measured at amortised cost 1 | 120,922 | 4,518 | 2,530 | 125 | 193 | 128,288 | (74) | 128,214
– stage 1 | 120,714 | 4,204 | 2,043 | 24 | — | 126,985 | (3) | 126,982
– stage 2 | 208 | 314 | 487 | 101 | — | 1,110 | (8) | 1,102
– stage 3 | — | — | — | — | 193 | 193 | (63) | 130
– POCI | — | — | — | — | — | — | — | —
Loan and other credit-related commitments | 69,971 | 22,930 | 11,919 | 1,155 | 184 | 106,159 | (24) | 106,135
– stage 1 | 69,369 | 22,270 | 10,600 | 789 | — | 103,028 | (8) | 103,020
– stage 2 | 602 | 660 | 1,319 | 366 | — | 2,947 | (9) | 2,938
– stage 3 | — | — | — | — | 184 | 184 | (7) | 177
– POCI | — | — | — | — | — | — | — | —
Financial guarantees 2 | 898 | 295 | 282 | 24 | 53 | 1,552 | (7) | 1,545
– stage 1 | 898 | 294 | 236 | 4 | — | 1,432 | (1) | 1,431
– stage 2 | — | 1 | 46 | 20 | — | 67 | (1) | 66
– stage 3 | — | — | — | — | 53 | 53 | (5) | 48
– POCI | — | — | — | — | — | — | — | —
Total on balance sheet and off balance sheet excluding debt instrument at FVOCI | 212,909 | 40,966 | 32,335 | 4,401 | 2,089 | 292,700 | (863) | 291,837
Debt instruments at FVOCI 3 | 19,147 | 2,348 | 188 | — | — | 21,683 | (5) | 21,678
– stage 1 | 19,101 | 2,348 | 183 | — | — | 21,632 | (5) | 21,627
– stage 2 | 46 | — | 5 | — | — | 51 | — | 51
– stage 3 | — | — | — | — | — | — | — | —
– POCI | — | — | — | — | — | — | — | —
At 31 Dec 2023 | 232,056 | 43,314 | 32,523 | 4,401 | 2,089 | 314,383 | (868) | 313,515

1 Includes held for sale exposures related to retail banking operations in France. For further details on gross carrying amounts and allowances for ECL related to
assets held for sale, see ‘Assets held for sale’ on page 207.
2 Excludes performance guarantee contracts to which the impairment requirements in IFRS 9 are not applied.
3 For the purposes of this disclosure gross carrying amount is defined as the amortised cost of a financial asset, before adjusting for any loss allowance. As such
the gross carrying amount of debt instruments at FVOCI as presented above will not reconcile to the balance sheet as it excludes fair value gains and losses.
Impairment assessment
Management regularly evaluates the adequacy of the established
allowances for impaired loans by conducting a detailed review of the
loan portfolio, comparing performance and delinquency statistics with
historical trends and assessing the impact of current economic
conditions.
Impaired loans – identification of loss events
The criteria used by HSBC Continental Europe to determine that a
loan is impaired includes:
– known cash flow difficulties experienced by the borrower;
– contractual payments of either principal or interest being past due
for more than 90 days;
– the probability that the borrower will enter bankruptcy or other
financial distress procedure;
– a concession granted to the borrower for economic or legal
reasons relating to the borrower’s financial difficulty that results in
forgiveness or postponement of principal, interest or fees; and
– a deterioration in the financial condition or outlook of the borrower
such that its ability to repay is considered doubtful.
Impairment of loans and advances
For details of HSBC Continental Europe's policy concerning
impairments of loans and advances, please refer to Note 1.2(i) on the
financial statements.

Universal Registration Document and Annual Financial Report 2024 | 187

Summary of credit risk
The disclosure below presents the gross carrying/nominal amount of
financial instruments to which the impairment requirements in IFRS 9
are applied and the associated allowance for ECL. Due to the forward-
looking nature of IFRS 9, the scope of financial instruments on which
ECL are recognised is greater than the scope of IAS 39. The following
tables show the allocation of loans and ECL allowance according to
the kind of loans and nature of counterparties.

Summary of financial instruments to which the impairment requirements in IFRS 9 are applied
| At 31 Dec 2024 | At 31 Dec 2023
| Gross carrying/ nominal amount | Provision for ECL 1 | Gross carrying/ nominal amount | Provision for ECL 1
| €m | €m | €m | €m
Loans and advances to customers at amortised cost 2 | 51,775 | (487) | 50,885 | (758)
Loans and advances to banks at amortised cost | 5,704 | (1) | 5,816 | —
Other financial assets measured at amortised costs: | 95,233 | — | 103,294 | —
– cash and balances at central banks | 48,907 | — | 56,894 | —
– reverse repurchase agreements – non-trading | 25,764 | — | 24,490 | —
– financial investments 3 | 3,338 | — | 1,747 | —
– prepayments, accrued income and other assets 4 | 17,224 | — | 20,163 | —
Assets held for sale 5 | 2,475 | — | 24,994 | (74)
Total gross carrying amount on balance sheet | 155,187 | (488) | 184,989 | (832)
Loans and other credit related commitments: | 104,656 | (33) | 106,159 | (24)
Financial guarantees 6: | 1,950 | (7) | 1,552 | (7)
Total nominal amount off-balance sheet 7 | 106,606 | (40) | 107,711 | (31)
Total nominal amount on balance sheet and off-balance sheet | 261,793 | (528) | 292,700 | (863)
| Fair value | Memorandum Provision for ECL 8 | Fair value | Memorandum Provision for ECL 8
| €m | €m | €m | €m
Debt instruments measured at Fair Value through Other Comprehensive Income (‘FVOCI’)9 | 25,567 | (5) | 20,832 | (5)

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 As part of the sale of the retail banking operations in France, HSBC Continental Europe retained a portfolio of EUR 7.1 billion at the time of sale consisting of
home and certain other loans, of which EUR 6.7 billion guaranteed by Crédit Logement. This portfolio has reduced to EUR 6.7 billion as at 31 December 2024, of
which EUR 6.3 billion are guaranteed by Crédit Logement.
3 Includes only financial investments measured at amortised cost. ‘Financial investments’ as presented within the consolidated balance sheet on page 243
includes financial assets measured at amortised cost and debt and equity instruments measured at fair value through other comprehensive income.
4 Includes only those financial instruments which are subject to the impairment requirements of IFRS 9. ‘Prepayments, accrued income and other assets’ as
presented within the consolidated balance sheet on page 243 comprises both financial and non-financial assets, including cash collateral and settlement
accounts. It also includes 'Items in the course of collection from other banks' which was presented separately in 2023.
5 Includes planned sale of private banking business in Germany and life insurance business in France .The comparatives includes EUR 9.5 billion guaranteed by
Crédit Logement classified as held for sale as at 31 December 2023, the sale of retail banking operation has been completed. For further details on gross carrying
amounts and allowances for ECL related to assets held for sale, see ‘Assets held for sale’ on page 207.
6 Excludes performance guarantee contracts to which the impairment requirements in IFRS 9 are not applied.
7 Represents the maximum amount at risk should the contracts be fully drawn upon and clients default.
8 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.
9 Includes EUR 8.2 billion related to planned sale of the life insurance business in France classified as held for sale in 2024.

188 | Universal Registration Document and Annual Financial Report 2024

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Summary of credit risk (excluding debt instruments measured at FVOCI) by stage distribution and ECL coverage by industry sector at 31 December 2024
| Gross carrying/nominal amount 1 | Provision for ECL | ECL coverage %
| Stage 1 | Stage 2 | Stage 3 | POCI | Total | 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 | % | % | % | % | %
Loans and advances to customers at amortised cost | 45,571 | 4,591 | 1,612 | 1 | 51,775 | (40) | (85) | (362) | — | (487) | 0.1 | 1.9 | 22.5 | — | 0.9
– personal 2 | 9,840 | 290 | 108 | — | 10,238 | (3) | (10) | (32) | — | (45) | — | 3.4 | 29.6 | — | 0.4
– corporate and commercial | 28,015 | 4,226 | 1,495 | 1 | 33,737 | (34) | (74) | (324) | — | (432) | 0.1 | 1.8 | 21.7 | — | 1.3
– non-bank financial institutions | 7,716 | 75 | 9 | — | 7,800 | (3) | (1) | (6) | — | (10) | — | 1.3 | 66.7 | — | 0.1
Loans and advances to banks at amortised cost | 5,679 | 25 | — | — | 5,704 | (1) | — | — | — | (1) | — | — | — | — | —
Other financial assets measured at amortised cost | 95,209 | 15 | 9 | — | 95,233 | — | — | — | — | — | — | — | — | — | —
Assets held for sale 3 | 2,458 | 17 | — | — | 2,475 | — | — | — | — | — | — | — | — | — | —
Loan and other credit- related commitments | 100,948 | 3,578 | 130 | — | 104,656 | (9) | (14) | (10) | — | (33) | — | 0.4 | 7.7 | — | —
– personal | 308 | 4 | — | — | 312 | — | — | — | — | — | — | — | — | — | —
– corporate and commercial | 50,394 | 3,545 | 130 | — | 54,069 | (8) | (14) | (10) | — | (32) | — | 0.4 | 7.7 | — | 0.1
– financial | 50,246 | 29 | — | — | 50,275 | (1) | — | — | — | (1) | — | — | — | — | —
Financial guarantees 4 | 1,856 | 50 | 44 | — | 1,950 | (1) | (2) | (4) | — | (7) | 0.1 | 4.0 | 9.1 | — | 0.4
– personal | 38 | — | — | — | 38 | — | — | — | — | — | — | — | — | — | —
– corporate and commercial | 837 | 46 | 44 | — | 927 | (1) | (2) | (4) | — | (7) | 0.1 | 4.3 | 9.1 | — | 0.8
– financial | 981 | 4 | — | — | 985 | — | — | — | — | — | — | — | — | — | —
At 31 Dec 2024 | 251,721 | 8,276 | 1,795 | 1 | 261,793 | (51) | (101) | (376) | — | (528) | — | 1.2 | 20.9 | — | 0.2

1 Represents the maximum amount at risk should the contracts be fully drawn upon and clients default.
2 Includes retained portfolio of French home and other loans following the sale of retail banking operations in France, with carrying amount of EUR 6.7 billion as at
31 December 2024, of which EUR 6.3 billion guaranteed by Crédit Logement.
3 Includes planned sale of private banking business in Germany and life insurance business in France. For further details on gross carrying amounts and allowances
for ECL related to assets held for sale, see ‘Assets held for sale’ on page 207.
4 Excludes performance guarantee contracts to which the impairment requirements in IFRS 9 are not applied.
Unless identified at an earlier stage, all financial assets are deemed to
have suffered a significant increase in credit risk when they are 30
days past due and are transferred from stage 1 to stage 2.
The disclosure below presents the ageing of stage 2 financial assets
by those less than 30 and greater than 30 days past due and therefore
presents those financial assets classified as stage 2 due to ageing (30
days past due) and those identified at an earlier stage (less than 30
days past due).
Past due financial instruments are those loans where customers have
failed to make payments in accordance with the contractual terms of
their facilities.

Stage 2 days past due analysis at 31 December 2024
| Gross carrying amount | Provision for ECL | ECL coverage %
| Stage 2 | of which: | of which: | Stage 2 | of which: | of which: | Stage 2 | of which: | of which:
| 1 to 29 DPD 1 | 30 and > DPD 1 | 1 to 29 DPD 1 | 30 and > DPD 1 | 1 to 29 DPD 1 | 30 and > DPD 1
| €m | €m | €m | €m | €m | €m | % | % | %
Loans and advances to customers at amortised cost | 4,591 | 55 | 42 | (85) | (2) | — | 1.9 | 3.6 | —
– personal | 290 | 49 | 7 | (10) | (2) | — | 3.4 | 4.1 | —
– corporate and commercial | 4,226 | 5 | 34 | (74) | — | — | 1.8 | — | —
– non-bank financial institutions | 75 | 1 | 1 | (1) | — | — | 1.3 | — | —
Loans and advances to banks at amortised cost | 25 | — | — | — | — | — | — | — | —
Other financial assets measured at amortised cost | 15 | — | — | — | — | — | — | — | —
Assets held for sale 2 | 17 | — | — | — | — | — | — | — | —

1 Days past due ('DPD'), amounts presented above are on contractual basis.
2 For further details on gross carrying amounts and allowances for ECL related to assets held for sale, see ‘Assets held for sale’ on page 207.

Universal Registration Document and Annual Financial Report 2024 | 189

Summary of credit risk (excluding debt instruments measured at FVOCI) by stage distribution and ECL coverage by industry sector at 31 December 2023 (continued)
| Gross carrying/nominal amount 1 | Provision for ECL | ECL coverage %
| Stage 1 | Stage 2 | Stage 3 | POCI | Total | 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 | % | % | % | % | %
Loans and advances to customers at amortised cost: | 44,138 | 5,088 | 1,651 | 8 | 50,885 | (53) | (81) | (624) | — | (758) | 0.1 | 1.6 | 37.8 | — | 1.5
– personal 2 | 10,129 | 526 | 97 | — | 10,752 | (9) | (10) | (28) | — | (47) | 0.1 | 1.9 | 28.9 | — | 0.4
– corporate and commercial | 28,007 | 4,401 | 1,526 | 8 | 33,942 | (42) | (67) | (584) | — | (693) | 0.1 | 1.5 | 38.3 | — | 2.0
– non-bank financial institutions | 6,002 | 161 | 28 | — | 6,191 | (2) | (4) | (12) | — | (18) | — | 2.5 | 42.9 | — | 0.3
Loans and advances to banks at amortised cost | 5,712 | 104 | — | — | 5,816 | — | — | — | — | — | — | — | — | — | —
Other financial assets measured at amortised cost | 103,246 | 35 | 13 | — | 103,294 | — | — | — | — | — | — | — | — | — | —
Assets held for sale 3,4 | 23,739 | 1,075 | 180 | — | 24,994 | (3) | (8) | (63) | — | (74) | — | 0.7 | 35.0 | — | 0.3
Loan and other credit-related commitments | 103,028 | 2,947 | 184 | — | 106,159 | (8) | (9) | (7) | — | (24) | — | 0.3 | 3.8 | — | —
– personal | 898 | 29 | 2 | — | 929 | — | — | — | — | — | — | — | — | — | —
– corporate and commercial | 49,962 | 2,767 | 172 | — | 52,901 | (8) | (8) | (7) | — | (23) | — | 0.3 | 4.1 | — | —
– financial | 52,168 | 151 | 10 | — | 52,329 | — | (1) | — | — | (1) | — | 0.7 | — | — | —
Financial guarantees 5 | 1,432 | 67 | 53 | — | 1,552 | (1) | (1) | (5) | — | (7) | 0.1 | 1.5 | 9.4 | — | 0.5
– personal | 37 | — | — | — | 37 | — | — | — | — | — | — | — | — | — | —
– corporate and commercial | 613 | 66 | 53 | — | 732 | (1) | (1) | (5) | — | (7) | 0.2 | 1.5 | 9.4 | — | 1.0
– financial | 782 | 1 | — | — | 783 | — | — | — | — | — | — | — | — | — | —
At 31 Dec 2023 | 281,295 | 9,316 | 2,081 | 8 | 292,700 | (65) | (99) | (699) | — | (863) | — | 1.1 | 33.6 | — | 0.3

1 Represents the maximum amount at risk should the contracts be fully drawn upon and customers default.
2 As part of the sale of the retail banking operations in France, HSBC Continental Europe retained a portfolio of EUR 7.1 billion at the time of sale consisting of
home and certain other loans, of which EUR 6.7 billion guaranteed by Crédit Logement.
3 Of which EUR 9.5 billion guaranteed by Crédit Logement classified as held for sale as at 31 December 2023.
4 For further details on gross carrying amounts and allowances for ECL related to assets held for sale, see ‘Assets held for sale’ on page 207.
5 Excludes performance guarantee contracts to which the impairment requirements in IFRS 9 are not applied.

Stage 2 days past due analysis at 31 December 2023 (continued)
| Gross carrying amount | Provision for ECL | ECL coverage %
| Stage 2 | of which: | of which: | Stage 2 | of which: | of which: | Stage 2 | of which: | of which:
| 1 to 29 DPD 1 | 30 and > DPD 1 | 1 to 29 DPD 1 | 30 and > DPD 1 | 1 to 29 DPD 1 | 30 and > DPD 1
| €m | €m | €m | €m | €m | €m | % | % | %
Loans and advances to customers at amortised cost | 5,088 | 76 | 245 | (81) | (2) | (1) | 1.6 | 2.6 | 0.4
– personal | 526 | 18 | 5 | (10) | (1) | (1) | 1.9 | 5.6 | 20.0
– corporate and commercial | 4,401 | 58 | 236 | (67) | (1) | — | 1.5 | 1.7 | —
– non-bank financial institutions | 161 | — | 4 | (4) | — | — | 2.5 | — | —
Loans and advances to banks at amortised cost | 104 | — | 12 | — | — | — | — | — | —
Other financial assets measured at amortised cost | 35 | — | — | — | — | — | — | — | —
Assets held for sale 2 | 1,075 | 16 | 11 | (8) | — | (0.3) | 0.7 | — | —

1 Days past due ('DPD'), amounts presented above are on contractual basis.
2 For further details on gross carrying amounts and allowances for ECL related to assets held for sale, see ‘Assets held for sale’ on page 207.

190 | Universal Registration Document and Annual Financial Report 2024

Risk

Stage 2 Decomposition at 31 December 2024
The following disclosure presents the stage 2 decomposition of gross
carrying amount and allowances for ECL for loans and advances to
customers.
The table below discloses the reason why an exposure moved into
stage 2 originally, and is therefore presented as a significant increase
in credit risk since origination.
The quantitative classification shows when the relevant reporting date
PD measure exceeds defined quantitative thresholds for retail and
wholesale exposures, as set out in Note 1.2 'Summary of significant
accounting policies',on page 249.
The Qualitative classification primarily accounts for CRR deterioration,
watch & worry and retail management judgemental adjustments.
For further details on our approach to the assessment of significant
increase in credit risk, see Note 1.2 'Summary of material accounting
policies' on pages 249.

Stage 2 Decomposition at 31 December 2024
| Gross carrying amount | Provision for ECL | ECL Coverage % Total
Loans and advances to customers | Personal | Corporate and commercial | Non-bank financial institutions | Total | Personal | Corporate and commercial | Non-bank financial institutions | Total
€m | €m | €m | €m | €m | €m | €m | €m | %
Quantitative | 281 | 1,931 | 20 | 2,232 | (10) | (31) | — | (41) | 1.8
Qualitative | 4 | 2,277 | 54 | 2,335 | — | (43) | (1) | (44) | 1.9
30 days past due backstop | 5 | 18 | 1 | 24 | — | — | — | — | —
Total Stage 2 | 290 | 4,226 | 75 | 4,591 | (10) | (74) | (1) | (85) | 1.9

Stage 2 Decomposition at 31 December 2023
| Gross carrying amount | Provision for ECL | ECL Coverage % Total
Loans and advances to customers | Personal | Corporate and commercial | Non-bank financial institutions | Total | Personal | Corporate and commercial | Non-bank financial institutions | Total
€m | €m | €m | €m | €m | €m | €m | €m | %
Quantitative | 471 | 1,956 | 39 | 2,466 | (5) | (39) | (2) | (46) | 1.9
Qualitative | 55 | 2,208 | 117 | 2,380 | (5) | (28) | (2) | (35) | 1.5
30 days past due backstop | — | 237 | 5 | 242 | — | — | — | — | —
Total stage 2 | 526 | 4,401 | 161 | 5,088 | (10) | (67) | (4) | (81) | 1.6

Maximum exposure to credit risk
The following table presents our maximum exposure before taking
account of any collateral held or other credit enhancements (unless
such enhancements meet accounting offsetting requirements). The
table excludes financial instruments whose carrying amount best
represents the net exposure to credit risk and it excludes equity
securities as they are not subject to credit risk. For the financial
assets recognised on the balance sheet, the maximum exposure to
credit risk equals their carrying amount; for financial guarantees and
other guarantees granted, it is the maximum amount that we would
have to pay if the guarantees were called upon. For loan
commitments and other credit-related commitments, it is generally
the full amount of the committed facilities.
The offset in the table relates to amounts where there is a legally
enforceable right of offset in the event of counterparty default and
where, as a result, there is a net exposure for credit risk purposes.
However, as there is no intention to settle these balances on a net
basis under normal circumstances, they do not qualify for net
presentation for accounting purposes. No offset has been applied to
off-balance sheet collateral. In the case of derivatives the offset
column also includes collateral received in cash and other financial
assets.

Universal Registration Document and Annual Financial Report 2024 | 191

Maximum exposure to credit risk
| At 31 Dec 2024
| Maximum exposure | Offset | Net
| €m | €m | €m
Loans and advances to customers held at amortised cost | 51,288 | — | 51,288
– personal 1 | 10,193 | — | 10,193
– corporate and commercial | 33,305 | — | 33,305
– non-bank financial institutions | 7,790 | — | 7,790
Loans and advances to banks at amortised cost | 5,703 | — | 5,703
Other financial assets held at amortised cost | 95,437 | (3,335) | 92,102
– cash and balances at central banks | 48,907 | — | 48,907
– reverse repurchase agreements – non-trading | 25,764 | (3,335) | 22,429
– financial investments | 3,338 | — | 3,338
– prepayments, accrued income and other assets | 17,428 | — | 17,428
Assets held for sale 2 | 25,477 | — | 25,477
Derivatives | 43,251 | (39,756) | 3,495
Total on-balance sheet exposure to credit risk | 221,156 | (43,091) | 178,065
Total off-balance sheet | 129,600 | — | 129,600
– financial and other guarantees 3 | 18,813 | — | 18,813
– loan and other credit-related commitments | 110,787 | — | 110,787
Total on and off-balance sheet amount | 350,756 | (43,091) | 307,665

1 Includes retained portfolio of French home and other loans following the sale of retail banking operations in France, with carrying amount of EUR 6.7 billion as at
31 December 2024, of which EUR 6.3 billion guaranteed by Crédit Logement.
2 Includes planned sale of private banking business in Germany and life insurance business i n France. For further details on gross carrying amounts and allowances
for ECL related to assets held for sale, see ‘Assets held for sale’ on page 207.
3'Financial and other guarantees' represents 'Financial guarantees' and 'Performance and other guarantees' as disclosed in Note 30.

Maximum exposure to credit risk (continued)
| At 31 Dec 2023
| Maximum exposure | Offset | Net
| €m | €m | €m
Loans and advances to customers held at amortised cost | 50,127 | — | 50,127
– personal 1 | 10,705 | — | 10,705
– corporate and commercial | 33,249 | — | 33,249
– non-bank financial institutions | 6,173 | — | 6,173
Loans and advances to banks at amortised cost | 5,816 | (50) | 5,766
Other financial assets held at amortised cost | 103,546 | (3,278) | 100,268
– cash and balances at central banks | 56,894 | — | 56,894
– reverse repurchase agreements – non-trading | 24,490 | (3,278) | 21,212
– financial investments | 1,747 | — | 1,747
– prepayments, accrued income and other assets | 20,415 | — | 20,415
Assets held for sale 2,3 | 23,211 | — | 23,211
Derivatives | 45,522 | (44,054) | 1,468
Total on-balance sheet exposure to credit risk | 228,222 | (47,382) | 180,840
Total off-balance sheet | 128,901 | — | 128,901
– financial and other guarantees 4 | 16,779 | — | 16,779
– loan and other credit-related commitments | 112,122 | — | 112,122
Total on and off-balance sheet amount | 357,123 | (47,382) | 309,741

1 As part of the sale of the retail banking operations in France, HSBC Continental Europe retained a portfolio of EUR 7.1 billion at the time of sale consisting of
home and certain other loans, of which EUR 6.7 billion guaranteed by Crédit Logement.
2 Of which EUR 9.5 billion guaranteed by Crédit Logement classified as held for sale as at 31 December 2023.
3 For further details on gross carrying amounts and allowances for ECL related to assets held for sale, see ‘Assets held for sale’ on page 207.
4 Financial and other guarantees' represents 'Financial guarantees' and 'Performance and other guarantees' as disclosed in Note 30.
Measurement uncertainty and sensitivity analysis of ECL estimates
The recognition and measurement of ECL involves the use of
judgement and estimation. HSBC Continental Europe forms multiple
economic scenarios, apply these forecasts to credit risk models to
estimate future credit losses and probability-weight the results to
determine an unbiased ECL estimate.
Management assessed the current economic environment, reviewed
the latest forecasts and discussed key risks before selecting the
appropriate economic scenarios and their weightings.
The Central scenario is constructed to reflect the latest
macroeconomic expectations. Outer scenario incorporate the
crystallisation of economic and geopolitical risks.
In the fourth quarter of 2024, scenarios were modified to reflect
heightened policy uncertainty following the US election. Due to the
lagged nature of consensus estimates, a modelled adjustment factor
was applied to the standard scenarios, with recent views on the
economic landscape and the consequences of increased global tariffs
and other policy changes. The effect was to lower growth
expectations in our major markets, while the impact on inflation and
interest rates was varied.
Management judgemental adjustments are used where modelled
ECL does not fully reflect the identified risks and related uncertainty,
or to capture significant late breaking events.

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At 31 December 2024, there was an increase in management
judgemental adjustments compared with 31 December 2023 as it
was considered that ECL modelled outcomes did not fully reflect the
key risks.
Methodology
At 31 December 2024, four scenarios were used to capture the latest
economic environment and to articulate management’s view of the
range of potential outcomes. Each scenario is updated with the latest
economic forecasts and distributional estimates each quarter.
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.
The Central scenario is deemed the 'most likely' scenario, and usually
attracts the largest probability weighting. It is created using
consensus forecasts, which is the average of a panel of external
forecasts.
The outer scenarios represent the tails of the distribution and are less
likely to occur. The consensus Upside and Downside scenarios are
created with reference to forecast probability distributions for select
markets that capture economists' views of the entire range of
outcomes. In the later years of these scenarios, projections revert to
long-term consensus trend expectations. Reversion to trend is done
with reference to historically observed quarterly changes in the values
of macroeconomic variables.
The fourth scenario, the Downside 2, represents management’s view
of severe downside risks. It is a globally consistent, narrative-driven
scenario, that explores a more extreme economic outcomes than
those captured by the consensus scenarios. In this scenario, variables
do not, by design, revert to long-term trend expectations and may
instead explore alternative states of equilibrium, where economic
variables move permanently away from past trends.
The consensus Downside and the consensus Upside scenarios are
each calibrated to be consistent with a 10 per cent probability. The
Downside 2 is calibrated to a 5 per cent probability. The Central
scenario is assigned the remaining 75 per cent. This weighting
scheme is deemed appropriate for the unbiased estimation of ECL in
most circumstances. However, management may depart from this
probability-based scenario weighting approach when the economic
outlook and forecasts are determined to be particularly uncertain and
risks are elevated.
For the fourth quarter of 2024, we assessed the consensus forecasts
and distributional estimates did not inadequately reflect the
consequences of the US election on the global economic outlook.
Forecasts lag and there is increased uncertainty as to how economic
policy will change and how tariffs will be implemented. As such,
scenarios have been constructed using the described standard
methodology and an adjustment, to account for policy changes
applied. The adjustment is based on a modelled update to the Central
scenario and incorporated a detailed narrative of US economic policy
proposals, including specific tariff rates. The modelled results were
then layered onto the Central scenario, which resulted in changes to
most variables. To quantify,the adjustment reduces GDP growth in
our key markets by between 30 and 50bps in the first two years of
the Central scenario forecast. Outer scenarios have been shifted in
parallel.
The scenario adjustment entailed no change in scenario probability
weights, which remained in-line with the Forward Economic Guidance
('FEG') framework. Uncertainties relating to the policy outlook have
been addressed in the scenarios directly. Measures of dispersion and
uncertainty have remained low but may reflect lags in the consensus
economic forecasting process.
Scenarios produced to calculate ECL are aligned to HSBC's top and
emerging risks.
Description of economic scenarios
The economic assumptions presented in this section have been
formed by HSBC with reference to external forecasts specifically for
the purpose of calculating ECL.
Forecasts may change and remain subject to uncertainty. Outer
scenarios are designed to capture the potential crystallisation of key
economic and financial risks and alternative paths for economic
variables.
In our key markets, the Central scenario incorporates potential
impacts from anticipated changes to US economic and trade
policy,including higher tariffs. The overall effect of the adjustment in
our key markets is to lower GDP and raise inflation and
unemployment estimates, relative to the consensus. Consequently,
GDP growth and unemployment forecasts have deteriorated in the
fourth quarter of 2024, compared with the fourth quarter of 2023.
With regards to monetary policy, the expected path for interest rates
in many of our markets is based on market futures. Interest rate
expectations have increased relative to the fourth quarter of 2023,
with fewer rate cuts forecast.
At the end of 2024, risks to the economic outlook included a number
of significant geopolitical issues. Within our Downside scenarios, the
economic consequences from the crystallisation of those risks are
captured by higher commodity and goods prices, the re-acceleration
of inflation, a further rise in interest rates and a global recession.
The scenarios used to calculate ECL are described below.
The consensus Central scenario
HSBC’s Central scenario reflects expectations for slower growth and
high inflation and unemployment across many of our key markets.
Expectation of lower GDP growth in many markets in 2025 are driven
by the assumed effects of higher tariffs, which impede trade flows
and deter investment. In the scenario, the US applies tariffs on key
trading partners. As a direct consequence of tariffs, trade growth is
reduced, which in turn weighs on GDP growth.Indirect consequences
from tariffs dampen growth elsewhere. Tariffs, or the threat of them,
increases uncertainty, leading to lower confidence and reduced
investment.
Tighter restrictions on immigration into the US are also expected to
reduce the size of the labour force, putting upward pressure on the
wage growth. At the same time, higher tariff rate drive US inflation. In
other markets higher inflation is also expected due to currency
depreciation and central banks are expected to slow the pace of
interest rate reduction as a result.
Global GDP is expected to grow by 2.6 per cent in 2025 in the Central
scenario and the average rate of global GDP growth is forecast to be
2.6 per cent over the five-year forecast period. This is below the
average growth rate over the five-year period prior to the onset of the
pandemic of 2.9 per cent.

Universal Registration Document and Annual Financial Report 2024 | 193

The key features of our Central scenario are:
– GDP growth rates across majority of our our main markets are
expected to slow down in 2025 and 2026, due to the
implementation of higher tariffs as well as underlying structural
weaknesses in some economies. The most significant slowdowns
in activity are expected to occur in the markets with the highest
trade dependence with the US. Elevated interest rates and higher
price levels are also expected to continue to weigh on some
consumer and corporate segments.
– In most markets, unemployment is expected to rise moderately as
economic activity slows, although it remains low by historical
standards.
– Inflation is is forecast to increase in several of our main markets,
as a result of tariffs, even as services price inflation is expected to
ease as wage growth moderates. However, inflation largely
remains within central banks’ target ranges from 2025.
– Housing market conditions remain mixed, with more muted price
growth in the UK and France.
– Challenging conditions are also forecasted to continue in certain
segments of the commercial property sector in a number of our
key markets. Structural changes to demand in the office segment
in particular has driven lower valuations.
– Policy interest rates in key markets are forecasted to gradually
decline further in 2025. In the longer term they are expected to
remain at a higher level than in recent years.
– The Brent crude oil price is forecasted to average USD 70 per
barrel over the projection period.
The Central scenario was first created with forecasts available in late
November, and reviewed continually until the end of December 2024.
In accordance with HSBC’s scenario framework, a probability weight
of 75 per cent has been assigned to the Central scenario for France.
The following table describes key macroeconomic variables in the
consensus Central scenario.

Consensus Central scenario 2025–2029 (as at 4Q24)
| France
GDP (annual average growth rate, %) |
2025 | 0.9
2026 | 0.9
2027 | 1.4
2028 | 1.5
2029 | 1.4
5-year average 1 | 1.2
Unemployment rate (%) |
2025 | 7.5
2026 | 7.3
2027 | 7.2
2028 | 7.0
2029 | 7.0
5-year average 1 | 7.2
House prices (annual average growth rate, %) |
2025 | 2.1
2026 | 4.4
2027 | 4.4
2028 | 3.8
2029 | 3.1
5-year average 1 | 3.6
Inflation (annual average growth rate, %) |
2025 | 1.2
2026 | 1.6
2027 | 2.0
2028 | 2.3
2029 | 2.2
5-year average 1 | 1.9
Central bank policy rate (annual average, %)2 |
2025 | 2.1
2026 | 1.8
2027 | 2.0
2028 | 2.0
2029 | 2.1
5-year average 1 | 2.0
Probability (%) | 75

1 The five-year average is calculated over a projected period of 20 quarters
from 1Q25 to 4Q29.

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The graph compares the respective Central scenario at the year end
2023 with current economic expectations at the end of 2024.
GDP growth: Comparison of central scenarios
France

4Q23 Central 5Y Average: 1.4%
4Q24 Central 5Y Average: 1.2%
Note: Real GDP shown as year-on-year percentage change.
The consensus Upside scenario
Compared with the Central scenario, the consensus Upside scenario
features stronger economic activity in the near term, before
converging to long-run trend expectations. It also incorporates a faster
fall in the rate of inflation than incorporated in the Central scenario.
The scenario is consistent with a number of key upside risk themes.
These include a faster fall in the rate of inflation that allows central
banks to reduce interest rates more quickly, an easing in financial
conditions, and a de-escalation in geopolitical tensions, as the Israel-
Hamas and Russia-Ukraine wars move towards conclusions, and the
US-China relationship improves.
The following table describes key macroeconomic variables for France
in the consensus Upside scenario.

Consensus Upside scenario 2025-2029 (as at 4Q24)
| % |
GDP level (%, start-to-peak)1 | 8.9 | (4Q29)
Unemployment rate (%, min)2 | 6.4 | (4Q26)
House price index (%, start-to-peak)1 | 22.8 | (4Q29)
Inflation rate (YoY % change, min)3 | 0.1 | (4Q25)
Central bank policy rate (%, min)2 | 1.4 | (3Q25)
Probability (%) | 10

1 Cumulative change to the highest level of the series during the 20-quarter
projection.
2 The lowest projected unemployment/or policy interest rate in the scenario.
3 The lowest projected year-on-year percentage change in inflation in the
scenario.
Downside scenarios
Downside scenarios explore the intensification and crystallisation of a
number of key economic and financial risks. These include a more
material escalation of tariff policies and geopolitical tensions which
disrupt key commodity and goods markets, causing inflation and
interest rates to rise and creating global recession.
As the geopolitical environment remains volatile and complex, risks
include:
– an increase in protectionist policies, as countries increasingly
impose retaliatory tariffs. This lowers investment, complicates
international supply chains, and impedes trade flows;
– broader and more prolonged conflicts in the Middle East and
between Russia and Ukraine, which further disrupts energy,
fertiliser and food supplies; and
– continued differences between the US and mainland China, which
could affect economic confidence and the global goods trade and
supply chains for critical technologies.
High inflation and higher interest rates also remain key risks. Should
tariffs increase significantly and geopolitical tensions escalate, energy
and food prices could rise and increase pressure on household
budgets and firms’ costs.Higher inflation and labour supply shortages
could also trigger a wage-price spiral and put sustained pressure on
household incomes and corporate margins. In turn, it raises the risk
that central banks react more forcefully leading to higher defaults and
a deep economic recession.
The consensus Downside scenario
In the consensus Downside scenario, economic activity is weaker
compared with the Central scenario. In this scenario, GDP declines,
unemployment rates rise and asset prices fall.
The scenario features an increase in tariffs over and above those
assumed in the Central scenario and an escalation of geopolitical
tensions, which causes a rise in inflation, as supply chain constraints
intensify and energy prices rise. The scenario also features a
temporary increase in interest rates above the Central scenario,
before the effects of weaker consumption demand begin to dominate
and commodity prices and inflation fall again.
The following table describes key macroeconomic variables for France
in the consensus Downside scenario.

Consensus Downside scenario 2025-2029 (as at 4Q24)
| % |
GDP level (%, start-to-peak)1 | (0.6) | (1Q26)
Unemployment rate (%, min)2 | 8.3 | (3Q25)
House price index (%, start-to-peak)1 | (0.3) | (1Q25)
Inflation rate (YoY % change, min)3 | 2.6 | (3Q25)
Central bank policy rate (%, min)2 | 3.2 | (1Q25)
Probability (%) | 10

1 Cumulative change to the lowest level of the series during the 20-quarter
projection.
2 The highest projected unemployment/or policy interest interest rate in the
scenario.
3 The highest projected year-on-year percentage change in inflation in the
scenario.
Downside 2 scenario
The Downside 2 scenario features a deep global recession and
reflects management’s view of the tail of the economic distribution. It
incorporates the crystallisation of a number of risks simultaneously,
including significant increases in tariffs globally and there is a further
escalation of geopolitical crises, which creates severe supply
disruptions to goods and energy markets. In the scenario, as inflation
surges and central banks tighten monetary policy further, confidence
evaporates.However, this impulse is assumed to prove short-lived, as
recession takes hold, causing a sharp fall in demand, leading
commodity prices to correct sharply and global price inflation to fall.

Universal Registration Document and Annual Financial Report 2024 | 195

The following table describes key macroeconomic variables for France
in the Downside 2 scenario.

Downside 2 scenario 2025-2029 (as at 4Q24)
| % |
GDP level (%, start-to-peak)1 | (7.9) | (2Q26)
Unemployment rate (%, min)2 | 10.4 | (1Q27)
House price index (%, start-to-peak)1 | (14.0) | (2Q27)
Inflation rate (YoY % change, min)3 | 7.6 | (2Q25)
Central bank policy rate (%, min)2 | 4.2 | (1Q25)
Probability (%) | 5

1 Cumulative change to the lowest level of the series during the 20-quarter
projection.
2 The highest projected unemployment/or policy interest rate in the scenario.
3 The highest projected year-on-year percentage change in inflation in the
scenario.
The following graphs show the historical and forecasted GDP growth
rate for the various economic scenarios in France.
GDP growth: Comparison between scenarios
France

Scenario weighting
Scenario weightings are calibrated to probabilities that are determined
with reference to consensus probability distributions. Management
may then choose to vary weights if they assess that the calibration
lags more recent events, or does not reflects their view of the
distribution of economic and geopolitical risk. Management’s view of
the scenarios and weights takes into consideration the relationship of
the consensus scenarios to both internal and external assessments of
risk.
In assessing the economic conjuncture, the level of risk and
uncertainty, management has considered both global and country-
specific factors.
In the fourth quarter of 2024, key consideration around uncertainty
focused on:
– US import tariffs and bilateral tariff escalations globally, and the
impact to trade and manufacturing supply chains;
– the impact of ongoing volatility in interest rate expectations on
household finances and businesses and the implications of recent
changes to monetary policy expectations on growth and
employment; and
– risks of an asset price correction given already elevated valuations
across different asset classes.
Although these factors are significant, management assessed that the
adjusted central scenario reflected there most likely future outcome
and the outer scenarios were sufficiently well calibrated to address
the crystallisation of more severe risks.
This led management to assign scenario probabilities that are aligned
to the standard scenario probability calibration framework. The Central
scenario was assigned a 75 per cent probability weighting.The
consensus Upside scenario was assigned a 10 per cent weighting,
and the consensus Downside scenario was given 10 per cent. The
Downside 2 was assigned a 5 per cent weighting.
In France, recent domestic political uncertainty is the main factor
weighing on reduced growth prospects and as with other European
markets, there are also assumed to be negative impacts stemming
from higher US tariffs.
The following table describes the probabilities assigned in each
scenario.

Scenario weigthings, %
4Q24 | Standard weight | France
Upside | 10.0 | 10.0
Central | 75.0 | 75.0
Downside | 10.0 | 10.0
Downside 2 | 5.0 | 5.0

At 31 December 2024, the consensus Upside and Central scenarios
had a combined weighting of 85 per cent, unchanged as at
31 December 2023.
Critical estimates and judgements
The calculation of ECL under IFRS 9 involves significant judgements,
assumptions and estimates at 31 December 2024. These included:
– the selection and configuration of economic scenarios, given the
constant change in economic conditions and distribution of
economic risks;
– the selection of scenarios to consider given the changing nature of
macroeconomic and geopolitical risks that the Bank and wider
economy face; and
– estimating the economic effects of those scenarios on ECL, where
similar observable historical conditions cannot be captured by the
credit risk models.
How economic scenarios are reflected in ECL
calculations
Models are used to reflect economic scenarios on ECL estimates. As
described above, modelled assumptions and linkages based on
historical information could not alone produce relevant information
under the conditions experienced in 2024, and management
judgemental adjustments were still required to support modelled
outcomes.
We have developed globally consistent methodologies for the
application of forward economic guidance into the calculation of ECL
for wholesale and retail credit risk. These standard approaches are
described below, followed by the management judgemental
adjustments made, including those to reflect the circumstances
experienced in 2024.
For HSBC Continental Europe wholesale portfolios, a global
methodology is used for the estimation of the term structure of
probability of default (‘PD’) and loss given default (‘LGD’). For PDs, we
consider the correlation of forward economic guidance to default
rates for a particular industry in a country. For LGD calculations, we
consider the correlation of forward economic guidance to collateral
values and realisation rates for a particular country and industry. PDs
and LGDs are estimated for the entire term structure of each
instrument.
For impaired loans, ECL estimates are derived based on discounted
cash flow (‘DCF’) calculations for internal forward-looking scenarios
specific to individual company circumstances (Note 1.2(i)). Probability-

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Risk

weighted outcomes are applied, and depending on materiality and
status of the incorporate borrower, the number of scenarios
considered will change. Where relevant for the case being assessed,
forward economic Guidance is incorporated as part of these
scenarios. LGD-driven proxy and modelled estimates are used for
certain less material cases.
For HSBC Continental Europe retail portfolios, the models are
predominantly based on historical observations and correlations with
default rates and collateral values.
For PD, the impact of economic scenarios is modelled for each
portfolio, using historical relationships between default rates and
macro-economic variables. These are included within IFRS 9 ECL
estimates using either economic response models or models that
contain internal, external and macro-economic variables. The
macroeconomic impact on PD is modelled over the period equal to
the remaining maturity of the underlying assets.
For LGD, the impact is modelled for mortgage portfolios by
forecasting future loan-to-value profiles for the remaining maturity of
the asset, using national level house price index forecasts and
applying the corresponding LGD expectation relative to the updated
forecast collateral values.
For unsecured retail portfolios historically observed recovery rates are
leveraged to measure loss. For both mortgages and unsecured, a
limited number of portfolios utilise a macroeconomic dependent
stressed LGD applied to the Alternative downside scenario.
Management judgemental adjustments
In the context of IFRS 9, management judgemental adjustments are
typically short-term increases or decreases to the modelled ECL at
either a customer, segment or portfolio level where management
believes ECL results 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 higher
level quantitative analysis for impacts that are difficult to model.
The effects of management judgemental adjustments are considered
for both balances and ECLs 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. 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.
Management judgemental adjustments made in estimating the
scenario-weighted reported ECL at 31 December 2023 are set out in
the following table.

Management judgemental adjustments to ECL at 31 December 2024 1
| Retail | Wholesale 2 | Total
| €m | €m | €m
Banks, sovereigns, government entities and low-risk counterparties | — | — | —
Corporate lending adjustments | — | 30 | 30
Other macroeconomic- related adjustments | — | — | —
Other retail lending adjustments | — | — | —
Total | — | 30 | 30

1 Management judgemental adjustments presented in the table reflect
increases or (decreases) to ECL respectively.
2 The wholesale portfolio corresponds to adjustments to the performing
portfolio (stage 1 and stage 2).
Management judgemental adjustments at 31 December 2024 are an
increase to ECL of EUR 30 million, driven by corporate lending
adjustments aiming to reflect heightened uncertainty to exposures in
automotive and industrial sectors in Germany.
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 per cent 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 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 tail risk scenarios when assigned a 100 per
cent weighting.
For wholesale credit risk exposures, the sensitivity analysis excludes
ECL and financial instruments related to defaulted (stage 3) obligors.
The measurement of stage 3 ECL is relatively more sensitive to credit
factors specific to the obligor than future economic scenarios, and
therefore effect of macroeconomic factors are not necessarily the key
consideration when performing individual assessment of ECL for
obligors in default. Loans to defaulted obligors are a small portion of
the overall wholesale lending exposure, even if representing the
majority of the allowance for ECL. 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 mortgage exposures, the sensitivity analysis includes ECL
for defaulted obligors of loans and advances. This is because the retail
ECL for secured mortgage portfolios including loans in all stages is
sensitive to macro-economic variables.

Universal Registration Document and Annual Financial Report 2024 | 197

Wholesale and retail sensitivity
The wholesale and retail sensitivity tables present the 100 per cent
weighted results for France. These exclude portfolios held by the
insurance business and small portfolios, and as such cannot be
directly compared with personal and wholesale lending presented in
other credit risk tables. In both the wholesale and retail analysis, the
comparative period results for Downside 2 scenarios are also not
directly comparable with the current period, because they reflect
different risks relative to the consensus scenarios for the period end.
The wholesale and retail sensitivity analysis is stated inclusive of
management judgmental adjustments, as appropriate to each
scenario.
For both retail and wholesale portfolios, the gross carrying amount of
financial instruments are the same under each scenario. For
exposures with similar risk profile and product characteristics, the
sensitivity impact is therefore largely the result of changes in
macroeconomic assumptions.
Wholesale analysis

IFRS9 ECL sensitivity to future economic conditions 1,2,3
ECL of loans and advances to customers | At 31 Dec 2024 | At 31 Dec 2023
€m | €m
Reported ECL | 77 | 90
Consensus Scenarios |  |
Central scenario | 76 | 93
Upside scenario | 67 | 83
Downside scenario | 92 | 114
Downside 2 scenario | 120 | 129
Gross carrying amount 2 | 137,341 | 163,956

1 ECL sensitivity includes off-balance sheet financial instruments. These are
subject to significant measurement uncertainty.
2 Includes low credit-risk financial instruments such as debt instruments at
FVOCI, which have high carrying amounts but low ECL under all the above
scenarios.
3 Excludes defaulted obligors. For a detailed breakdown of performing and
non-performing wholesale portfolio exposures, see page 202.
Retail analysis

IFRS9 ECL sensitivity to future economic conditions 1,2
ECL of loans and advances to customers | At 31 Dec 2024 | At 31 Dec 2023
€m | €m
Reported ECL | — | 85
Consensus Scenarios |  |
Central scenario | — | 85
Upside scenario | — | 83
Downside scenario | — | 86
Downside 2 scenario | — | 90
Gross carrying amount 2 | — | 19,790

1 ECL sensitivities exclude portfolio utilising less complex modelling
approaches.
2 Included balances and ECL which have been reclassified from 'loans and
advances to customers' to 'assets held for sale' in the balance-sheet at
31 December 2023. This also included any balances and ECL which
continue to be reported as personal lending in 'loans and advances to
customers' that are in accordance with the basis of inclusion for Retail
sensitivity analysis. Disposal of our Retail banking operations in France
completed on 1 January 2024.

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Reconciliation of changes in gross carrying/nominal amount and allowances for loans and
advances to banks and customers including loan commitments and financial guarantees
The following disclosure provides a reconciliation of the Group’s gross
carrying/nominal amount and allowances for loans and advances to
banks and customers including loan commitments and financial
guarantees. The transfers of financial instruments represents the
impact of stage transfers upon the gross carrying/nominal amount and
associated allowance for ECL.
The net remeasurement of ECL arising from stage transfers
represents the variation in ECL due to these transfers.

Reconciliation of changes in gross carrying/nominal amount and allowances for loans and advances to banks and customers including loan commitments and financial guarantees 1
| Non-credit impaired | Credit impaired |
| Stage 1 | Stage 2 | Stage 3 | POCI | Total
| Gross carrying/ nominal amount | Provision for ECL | Gross carrying/ nominal amount | Provision for ECL | Gross carrying/ nominal amount | Provision for ECL | Gross carrying/ nominal amount | Provision for ECL | Gross carrying/ nominal amount | Provision for ECL
| €m | €m | €m | €m | €m | €m | €m | €m | €m | €m
At 1 Jan 2024 | 113,743 | (61) | 8,206 | (91) | 1,889 | (637) | 7 | — | 123,845 | (789)
Transfers of financial instruments | (680) | (24) | 301 | 28 | 380 | (4) | — | — | 1 | —
– Transfers from Stage 1 to Stage 2 | (5,036) | 6 | 5,036 | (6) | — | — | — | — | — | —
– Transfers from Stage 2 to Stage 1 | 4,346 | (28) | (4,346) | 28 | — | — | — | — | — | —
– Transfers to Stage 3 | (99) | — | (570) | 8 | 670 | (8) | — | — | 1 | —
– Transfers from Stage 3 | 109 | (2) | 181 | (2) | (290) | 4 | — | — | — | —
Net remeasurement of ECL arising from transfer of stage | — | 18 | — | (18) | — | — | — | — | — | —
New financial assets originated or purchased | 32,039 | (31) | — | — | — | — | — | — | 32,039 | (31)
Asset derecognised (including final repayments) | (16,222) | 5 | (1,376) | 8 | (439) | 143 | — | — | (18,037) | 156
Changes to risk parameters – further lending/repayments | (9,722) | 28 | 1,131 | (20) | 303 | 113 | (6) | — | (8,294) | 121
Changes to risk parameters – credit quality | — | 15 | — | — | — | (357) | — | — | — | (342)
Changes to model used for ECL calculation | — | (3) | — | (7) | — | — | — | — | — | (10)
Assets written off | — | — | — | — | (224) | 224 | — | — | (224) | 224
Credit related modifications that resulted in derecognition | — | — | — | — | — | — | — | — | — | —
Foreign exchange | 9 | — | 5 | — | (2) | — | — | — | 12 | —
Others | 179 | 2 | (6) | (1) | (121) | 142 | — | — | 52 | 143
Assets classified as held for sale 2 | (419) | — | (17) | — | — | — | — | — | (436) | —
At 31 Dec 2024 | 118,927 | (51) | 8,244 | (101) | 1,786 | (376) | 1 | — | 128,958 | (528)
ECL release/(charge) for the period |  | 32 |  | (37) |  | (101) |  | — |  | (106)
Recoveries |  |  |  |  |  |  |  |  |  | —
Others |  |  |  |  |  |  |  |  |  | 12
Total ECL release/(charge) for the period |  |  |  |  |  |  |  |  |  | (94)

Universal Registration Document and Annual Financial Report 2024 | 199

| At 31 Dec 2024
| Gross carrying/ nominal amount | Provision for ECL | ECL release/ (charge)
| €m | €m | €m
As above | 128,958 | (528) | (94)
Other financial assets measured at amortised cost | 95,233 | — | —
Assets held for sale 3 | 2,475 | — | —
Non-trading reverse purchase agreement commitments | 35,127 | — | —
Performance and other guarantees not considered for IFRS 9 |  |  | (3)
Summary of financial instruments to which the impairment requirements in IFRS 9 are applied/Summary consolidated income statement | 261,793 | (528) | (97)
Debt instruments measured at FVOCI 4 | 25,567 | (5) | —
Total Provision for ECL/total income statement ECL charge for the period | 287,360 | (533) | (97)

1 Excludes performance guarantee contracts to which the impairment requirements in IFRS 9 are not applied.
2 Includes planned sale of private banking business in Germany and life insurance business i n France.
3 For further details on gross carrying amounts and allowances for ECL related to assets held for sale, see ‘Assets held fo r sale’ on page 207.
4 Includes EUR 8.2 billion related to planned sale of the life insurance business in France classified as held for sale in 2024.

Reconciliation of changes in gross carrying/nominal amount and allowances for loans and advances to banks and customers including loan commitments and financial guarantees 1 (continued)
| Non-credit impaired | Credit impaired |
| Stage 1 | Stage 2 | Stage 3 | POCI | Total
| Gross carrying/ nominal amount | Provision for ECL | Gross carrying/ nominal amount | Provision for ECL | Gross carrying/ nominal amount | Provision for ECL | Gross carrying/ nominal amount | Provision for ECL | Gross carrying/ nominal amount | Provision for ECL
| €m | €m | €m | €m | €m | €m | €m | €m | €m | €m
At 1 Jan 2023 | 102,710 | (40) | 13,075 | (142) | 1,888 | (697) | 2 | — | 117,675 | (879)
Transfers of financial instruments | 915 | (38) | (1,583) | 77 | 668 | (39) | — | — | — | —
– Transfers from Stage 1 to Stage 2 | (6,694) | 7 | 6,694 | (7) | — | — | — | — | — | —
– Transfers from Stage 2 to Stage 1 | 7,871 | (44) | (7,871) | 44 | — | — | — | — | — | —
– Transfers to Stage 3 | (281) | — | (471) | 41 | 752 | (41) | — | — | — | —
– Transfers from Stage 3 | 19 | (1) | 65 | (1) | (84) | 2 | — | — | — | —
Net remeasurement of ECL arising from transfer of stage | — | 33 | — | (12) | — | — | — | — | — | 21
New financial assets originated or purchased | 25,408 | (15) | — | — | — | — | 6 | — | 25,414 | (15)
Asset derecognised (including final repayments) | (18,678) | 2 | (1,741) | 7 | (256) | 43 | — | — | (20,675) | 52
Changes to risk parameters – further lending/repayments | 5,816 | 6 | (2,961) | (19) | (233) | 44 | (1) | — | 2,621 | 31
Changes to risk parameters – credit quality | — | (5) | — | 6 | — | (223) | — | — | — | (222)
Changes to model used for ECL calculation | — | — | — | — | — | — | — | — | — | —
Assets written off | — | — | — | — | (238) | 238 | — | — | (238) | 238
Credit related modifications that resulted in derecognition | — | — | — | — | (6) | — | — | — | (6) | —
Foreign exchange | 62 | — | 3 | — | (5) | 1 | — | — | 60 | 1
Others 2 | 291 | (1) | 287 | — | 27 | (4) | — | — | 605 | (5)
Assets classified as held for sale 3 | (2,781) | (3) | 1,126 | (8) | 44 | — | — | — | (1,611) | (11)
At 31 Dec 2023 | 113,743 | (61) | 8,206 | (91) | 1,889 | (637) | 7 | — | 123,845 | (789)
ECL release/(charge) for the period |  | 21 |  | (18) |  | (136) |  | — |  | (133)
Add: Recoveries |  |  |  |  |  |  |  |  |  | 3
Add/(less): Others |  |  |  |  |  |  |  |  |  | (8)
Total ECL release/(charge) for the period |  |  |  |  |  |  |  |  |  | (138)

200 | Universal Registration Document and Annual Financial Report 2024

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Reconciliation of changes in gross carrying/nominal amount and allowances for loans and advances to banks and customers including loan commitments and financial guarantees 1 (continued)
| At 31 Dec 2023
| Gross carrying/ nominal amount | Provision for ECL | ECL release/ (charge)
| €m | €m | €m
As above | 123,845 | (789) | (138)
Other financial assets measured at amortised cost | 103,294 | — | —
Assets held for sale 4 | 24,994 | (74) | —
Non-trading reverse purchase agreement commitments | 40,567 | — | —
Performance and other guarantees not considered for IFRS 9 |  |  | (13)
Summary of financial instruments to which the impairment requirements in IFRS 9 are applied/ Summary consolidated income statement | 292,700 | (863) | (151)
Debt instruments measured at FVOCI | 20,832 | (5) | 6
Total Provision for ECL/total income statement ECL charge for the period | 313,532 | (868) | (145)

1 Excludes performance guarantee contracts to which the impairment requirements in IFRS 9 are not applied.
2 Others- includes contribution related to the acquisition of HSBC Private Bank (Luxembourg) S.A. on 2 November 2023.
3 Includes re-classification to held for sale related to retail banking operations in France.
4 For further details on gross carrying amounts and allowances for ECL related to assets held for sale, see ‘Assets held for sale’ on page 207.
Credit impaired loans
HSBC determines that a financial instrument is credit-impaired and in
stage 3 by considering relevant objective evidence, primarily whether:
– contractual payments of either principal or interest are past due for
more than 90 days; and
– there are other indications that the borrower is unlikely to pay such
as that a concession has been granted to the borrower for
economic or legal reasons relating to the borrower’s financial
condition.
The loan is then considered to be in default. If such unlikeliness to pay
is not identified at an earlier stage, it is deemed to occur when an
exposure is 90 days past due, even where regulatory rules permit
default to be defined based on 180 days past due. Therefore the
definitions of credit-impaired and default are aligned as far as possible
so that Stage 3 represents all loans which are considered defaulted or
otherwise credit-impaired.
Forborne loans and forbearance
A range of forbearance strategies is employed in order to improve the
management of customer relationships by avoiding default, of the
customer where possible or the calling of guarantees obtained whilst
maximising the recoveries of the amounts due. They include
extended payment terms, a reduction in interest or principal
repayments, approved external debt management plans, debt
consolidations, the deferral of foreclosures and other forms of loan
modifications and re-ageing.
HSBC Continental Europe’s policies and practices are based on
criteria which seek to enable wherever possible that the repayment is
likely to continue. These typically involve the granting of revised loan
terms and conditions.
Loan forbearance is only granted in situations where the customer
has showed a willingness to repay their loan and is expected to be
able to meet the revised obligations.
The contractual terms of a loan may be modified for a number of
reasons, including changes in market conditions, customer retention
and other factors not related to the current or potential credit
deterioration of a customer. ‘Forbearance’ describes concessions
made on the contractual terms of a loan in response to an obligor’s
financial difficulties. We classify and report loans on which such
concessions have been granted as ‘forborne loans' when their
contractual payment terms have been modified as a result of serious
concerns on the capacity of the borrower to repay their contractual
outstandings.
Identifying forborne loans
Concessions, on loans made to customers, which do not affect the
payment structure or basis of repayment, such as temporary or
permanent waivers granted by the bank to take advantage of the non-
respect of financial or security covenants, do not directly provide
concessionary relief to customers in terms of their ability to service
obligations as they fall due and are therefore not included in this
classification.
For retail lending, our credit risk management policy sets out
restrictions on the number and frequency of forbearance, the
minimum period an account must have been opened before any
forbearance can be considered and the number of qualifying
payments that must be received. The application of this policy varies
according to the nature of the market, the product and the
management of customer relationships through the occurrence of
exceptional events.
Credit quality classification of forborne loans
Under IFRS, an entity is required to assess whether there is objective
evidence that financial assets are impaired at the end of each
reporting period. A loan is impaired and an impairment allowance is
recognised when there is objective evidence of a loss event that has
an effect on the cash flows of the loan which can be reliably
estimated.
A forborne loan is presented as impaired when:
– there has been a change in contractual cash flows as a result of a
concession which the lender would otherwise not consider; and
– it is probable that without the concession, the borrower would be
unable to meet contractual payment obligations in full.
This presentation applies unless the concession is insignificant and
there are no other indicators of impairment. The forborne loan will
continue to be disclosed as impaired, for at least one year and until
there is sufficient evidence to demonstrate a significant reduction in
the risk of non-payment of future cash flows, and there are no other
indicators of impairment. For loans that are assessed for impairment
on a collective basis, the evidence typically comprises a history of
payment performance against the original or revised terms, as
appropriate to the circumstances. For loans that are assessed for

Universal Registration Document and Annual Financial Report 2024 | 201

impairment on an individual basis, all available evidence is assessed
on a case-by-case basis.
For retail lending the minimum period of payment performance
required depends on the nature of loans in the portfolio, but is
typically not less than 12 months. Where portfolios have more
significant levels of forbearance activity the minimum repayment
performance period required may be substantially more.
Forborne loans and recognition of impairment allowances
For retail lending, forborne loans are segregated from other parts of
the loan portfolio for collective impairment assessment to reflect the
higher rates of losses often encountered in these segments.
In the corporate and commercial sectors, forborne loans are typically
assessed individually. Credit risk ratings are intrinsic to the
impairment assessment. A distressed restructuring is classified as an
impaired loan. The individual impairment assessment takes into
account the higher risk of the non-payment of future cash flows
inherent in forborne loans.

Forborne loans and advances to customers at amortised costs by stage allocation
| Performing Forborne | Non-Performing Forborne | Total
| Stage 1 | Stage 2 | Stage 3 | POCI |
| €m | €m | €m | €m | €m
Gross carrying amount |  |  |  |  |
Personal | — | 61 | 22 | — | 83
– first lien residential mortgages | — | 29 | 17 | — | 46
– guaranteed loans in respect of residential property | — | 32 | 5 | — | 37
– other personal lending which is secured | — | — | — | — | —
Wholesale | — | 1,357 | 1,034 | — | 2,391
– corporate and commercial | — | 1,352 | 1,030 | — | 2,382
– non-bank financial institutions | — | 5 | 4 | — | 9
At 31 Dec 2024 | — | 1,418 | 1,056 | — | 2,474
Provision for ECL |  |  |  |  | —
Personal | — | (2) | (3) | — | (5)
– first lien residential mortgages | — | (1) | (2) | — | (3)
– guaranteed loans in respect of residential property | — | (1) | (1) | — | (2)
– other personal lending which is secured | — | — | — | — | —
– other personal lending which is unsecured | — | — | — | — | —
Wholesale | — | (30) | (186) | — | (216)
– corporate and commercial | — | (30) | (186) | — | (216)
– non-bank financial institutions | — | — | — | — | —
At 31 Dec 2024 | — | (32) | (189) | — | (221)

Forborne loans and advances to customers at amortised costs by stage allocation (continued)
| Stage 1 | Stage 2 | Stage 3 | POCI | Total
| €m | €m | €m | €m | €m
Gross carrying amount |  |  |  |  |
Personal | — | 56 | 28 | — | 84
– first lien residential mortgages | — | 33 | 21 | — | 54
– guaranteed loans in respect of residential property | — | 22 | 7 | — | 29
– other personal lending which is secured | — | 1 | — | — | 1
Wholesale | — | 1,595 | 591 | — | 2,186
– corporate and commercial | — | 1,554 | 583 | — | 2,137
– non-bank financial institutions | — | 41 | 8 | — | 49
At 31 Dec 2023 | — | 1,651 | 619 | — | 2,270
Provision for ECL |  |  |  |  | —
Personal | — | (2) | (2) | — | (4)
– first lien residential mortgages | — | (2) | (2) | — | (4)
– other personal lending which is secured | — | — | — | — | —
– other personal lending which is unsecured | — | — | — | — | —
Wholesale | — | (12) | (155) | — | (167)
– corporate and commercial | — | (11) | (154) | — | (165)
– non-bank financial institutions | — | (1) | (1) | — | (2)
At 31 Dec 2023 | — | (14) | (157) | — | (171)

202 | Universal Registration Document and Annual Financial Report 2024

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Wholesale lending
This section presents further disclosures related to wholesale lending.
It provides details of the major countries, industries and customer
classification that are driving the change observed in wholesale loans
and advances to banks and customers.
Further granularity is also provided by stage, with data for our main
countries presented for gross loans and advances to banks and
customers, loan and other credit-related commitments and financial
guarantees.
The table below provides a breakdown by industry sector and stage of
the group’s gross carrying amount and allowances for ECL for
wholesale loans and advances to banks and customers.
Counterparties or exposures are classified when presenting
comparable economic characteristics, or engaged in similar activities
so that their collective ability to meet contractual obligations is
uniformly affected by changes in economic, political or other
conditions. Therefore, the industry classification does not adhere to
Nomenclature des Activités Économiques dans la Communauté
Européenne (‘NACE’), which is applicable to other financial regulatory
reporting.

Total wholesale lending for loans and advances to banks and customers by stage distribution |
| Gross carrying amount |  | Provision 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
Corporate and commercial | 28,015 | 4,226 | 1,495 | 1 | 33,737 | (34) | (74) | (324) | — | (432)
– Industrial | 7,421 | 741 | 470 | — | 8,632 | (7) | (30) | (56) | — | (93)
– Commercial, international trade | 14,415 | 2,878 | 788 | 1 | 18,082 | (19) | (35) | (234) | — | (288)
– Construction and real estate | 4,159 | 342 | 229 | — | 4,730 | (6) | (8) | (31) | — | (45)
– Governments | 1,084 | 38 | — | — | 1,122 | — | — | — | — | —
– Others | 936 | 227 | 8 | — | 1,171 | (2) | (1) | (3) | — | (6)
Non-bank financial institutions | 7,716 | 75 | 9 | — | 7,800 | (3) | (1) | (6) | — | (10)
Loans and advances to banks | 5,679 | 25 | — | — | 5,704 | (1) | — | — | — | (1)
At 31 Dec 2024 | 41,410 | 4,326 | 1,504 | 1 | 47,241 | (38) | (75) | (330) | — | (443)
By geography |  |  |  |  |  |  |  |  |  |
Continental Europe |  |  |  |  |  |  |  |  |  |
– of which: France | 30,631 | 3,147 | 1,030 | 1 | 34,809 | (24) | (38) | (185) | — | (247)
– of which: Germany | 5,770 | 872 | 355 | — | 6,997 | (4) | (35) | (109) | — | (148)
– of which: Other Countries | 5,009 | 307 | 119 | — | 5,435 | (10) | (2) | (36) | — | (48)

Total wholesale lending for loans and advances to banks and customers by stage distribution (continued)
| Gross carrying amount 1 |  | Provision 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
Corporate and commercial | 28,007 | 4,401 | 1,526 | 8 | 33,942 | (42) | (67) | (584) | — | (693)
– Industrial | 6,531 | 694 | 502 | — | 7,727 | (6) | (9) | (131) | — | (146)
– Commercial, international trade | 15,138 | 2,887 | 767 | 8 | 18,800 | (23) | (45) | (394) | — | (462)
– Construction and real estate | 4,493 | 447 | 173 | — | 5,113 | (11) | (9) | (34) | — | (54)
– Governments | 671 | 42 | — | — | 713 | — | — | — | — | —
– Others | 1,174 | 331 | 84 | — | 1,589 | (2) | (4) | (25) | — | (31)
Non-bank financial institutions | 6,002 | 161 | 28 | — | 6,191 | (2) | (4) | (12) | — | (18)
Loans and advances to banks | 5,712 | 104 | — | — | 5,816 | — | — | — | — | —
At 31 Dec 2023 | 39,721 | 4,666 | 1,554 | 8 | 45,949 | (44) | (71) | (596) | — | (711)
By geography 1 |  |  |  |  |  |  |  |  |  |
Continental Europe |  |  |  |  |  |  |  |  |  |
– of which: France | 27,684 | 2,957 | 1,256 | 8 | 31,905 | (31) | (47) | (498) | — | (576)
– of which: Germany | 6,488 | 1,052 | 140 | — | 7,680 | (3) | (18) | (46) | — | (67)
– of which: Other Countries | 5,549 | 657 | 158 | — | 6,364 | (10) | (6) | (52) | — | (68)

1 Includes contribution related to the acquisition of HSBC Private Bank (Luxembourg) S.A. on 2 November 2023.

Total wholesale lending for loans and other credit-related commitments and financial guarantees 1 by stage distribution |
| Nominal amount | Provision 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
Corporate and commercial | 51,231 | 3,591 | 174 | — | 54,996 | (9) | (16) | (14) | — | (39)
Financial | 51,227 | 33 | — | — | 51,260 | (1) | — | — | — | (1)
At 31 Dec 2024 | 102,458 | 3,624 | 174 | — | 106,256 | (10) | (16) | (14) | — | (40)
By geography |  |  |  |  |  |  |  |  |  |
Continental Europe |  |  |  |  |  |  |  |  |  |
– of which: France | 89,808 | 2,362 | 69 | — | 92,239 | (5) | (5) | (11) | — | (21)
– of which: Germany | 9,857 | 838 | 89 | — | 10,784 | (4) | (9) | — | — | (13)
– of which: Other Countries | 2,793 | 424 | 16 | — | 3,233 | (1) | (2) | (3) | — | (6)

1 Excludes performance guarantee contracts to which the impairment requirements in IFRS 9 are not applied.

Universal Registration Document and Annual Financial Report 2024 | 203

Total wholesale lending for loans and other credit-related commitments and financial guarantees 1 by stage distribution (continued)
| Nominal amount 2 | Provision 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
Corporate and commercial | 50,575 | 2,833 | 225 | — | 53,633 | (9) | (9) | (12) | — | (30)
Financial | 52,950 | 152 | 10 | — | 53,112 | — | (1) | — | — | (1)
At 31 Dec 2023 | 103,525 | 2,985 | 235 | — | 106,745 | (9) | (10) | (12) | — | (31)
By geography 2 |  |  |  |  |  |  |  |  |  |
Continental Europe |  |  |  |  |  |  |  |  |  |
– of which: France | 94,460 | 1,617 | 88 | — | 96,165 | (6) | (4) | (7) | — | (17)
– of which: Germany | 6,914 | 1,053 | 128 | — | 8,095 | (2) | (5) | — | — | (7)
– of which: Other Countries | 2,151 | 315 | 19 | — | 2,485 | (1) | (1) | (5) | — | (7)

1 Excludes performance guarantee contracts to which the impairment requirements in IFRS 9 are not applied.
2 Includes contribution related to the acquisition of HSBC Private Bank (Luxembourg) S.A. on 2 November 2023.

Wholesale lending: other corporate, commercial and financial (non-bank) loans and advances including loan commitments by level of collateral by stage
| 2024
| Total | of which:
| France
| Gross carrying/ nominal amount | ECL coverage | Gross carrying/ nominal amount | ECL coverage
| €m | % | €m | %
Stage 1 |  |  |  |
Not collateralised | 90,322 | — | 70,059 | —
Fully collateralised | 7,622 | (0.1) | 4,148 | —
LTV ratio: |  |  |  |
– less than 50% | 3,696 | (0.1) | 2,303 | 0.0
– 51% to 75% | 1,695 | (0.1) | 1,254 | (0.1)
– 76% to 90% | 760 | (0.2) | 287 | (0.1)
– 91% to 100% | 1,471 | (0.1) | 304 | 0.0
Partially collateralised (A): | 4,679 | — | 3,455 | —
– collateral value on A | 3,736 | — | 2,707 | —
Total | 102,623 | — | 77,662 | —
Stage 2 |  |  |  |
Not collateralised | 6,197 | (1.0) | 4,247 | (0.8)
Fully collateralised | 702 | (1.0) | 207 | (0.8)
LTV ratio: |  |  |  |
– less than 50% | 250 | (0.8) | 129 | (0.5)
– 51% to 75% | 60 | (1.3) | 54 | (1.1)
– 76% to 90% | 38 | (0.8) | 18 | (1.6)
– 91% to 100% | 354 | (1.1) | 6 | (1.9)
Partially collateralised (B): | 908 | (1.8) | 778 | (0.3)
– collateral value on B | 506 | — | 477 | —
Total | 7,807 | (1.1) | 5,232 | (0.7)
Stage 3 |  |  |  |
Not collateralised | 754 | (35.2) | 384 | (38.5)
Fully collateralised | 128 | (7.8) | 100 | (2.2)
LTV ratio: |  |  |  |
– less than 50% | 20 | (22.3) | 4 | (16.0)
– 51% to 75% | 15 | (27.4) | 5 | (13.2)
– 76% to 90% | 3 | (47.9) | 2 | (41.8)
– 91% to 100% | 90 | (0.1) | 89 | 0.0
Partially collateralised (C): | 559 | (6.2) | 439 | (3.8)
– collateral value on C | 174 | — | 91 | —
Total | 1,441 | (21.5) | 923 | (18.0)
POCI |  |  |  |
Not collateralised | 1 | (0.1) | 1 | (0.1)
Fully collateralised | — | — | — | —
LTV ratio: |  |  |  |
– less than 50% | — | — | — | —
– 51% to 75% | — | — | — | —
– 76% to 90% | — | — | — | —
– 91% to 100% | — | — | — | —
Partially collateralised (D): | — | — | — | —
– collateral value on D | — | — | — | —
Total | 1 | (0.1) | 1 | (0.1)
At 31 Dec 2024 | 111,872 | (0.4) | 83,818 | (0.3)

204 | Universal Registration Document and Annual Financial Report 2024

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Wholesale lending: other corporate, commercial and financial (non-bank) loans and advances including loan commitments by level of collateral by stage (continued)1
| 2023
| Total 2 | of which:
| France
| Gross carrying/ nominal amount | ECL coverage | Gross carrying/ nominal amount | ECL coverage
| €m | % | €m | %
Stage 1 |  |  |  |
Not collateralised | 85,938 | — | 67,951 | —
Fully collateralised | 5,174 | (0.1) | 2,430 | (0.1)
LTV ratio: |  |  |  |
– less than 50% | 2,268 | (0.2) | 1,205 | (0.1)
– 51% to 75% | 1,162 | (0.1) | 707 | (0.1)
– 76% to 90% | 557 | — | 100 | —
– 91% to 100% | 1,187 | (0.1) | 417 | —
Partially collateralised (A): | 4,286 | — | 3,498 | —
– collateral value on A | 3,358 |  | 2,784 |
Total | 95,398 | — | 73,879 | —
Stage 2 |  |  |  |
Not collateralised | 5,120 | (1.1) | 2,915 | (1.2)
Fully collateralised | 1,027 | (1.0) | 392 | (1.3)
LTV ratio: |  |  |  |
– less than 50% | 303 | (1.2) | 169 | (0.6)
– 51% to 75% | 179 | (1.0) | 132 | (0.8)
– 76% to 90% | 182 | (0.3) | 22 | —
– 91% to 100% | 363 | (1.2) | 70 | (4.3)
Partially collateralised (B): | 1,339 | (0.3) | 907 | (0.4)
– collateral value on B | 1,045 |  | 672 |
Total | 7,486 | (1.0) | 4,214 | (1.0)
Stage 3 |  |  |  |
Not collateralised | 1,067 | (47.7) | 821 | (53.8)
Fully collateralised | 82 | (23.7) | 30 | (16.7)
LTV ratio: |  |  |  |
– less than 50% | 30 | (23.3) | 13 | (15.4)
– 51% to 75% | 33 | (19.2) | 4 | (25.0)
– 76% to 90% | 12 | (16.7) | 10 | (10.0)
– 91% to 100% | 7 | (71.4) | 2 | (50.0)
Partially collateralised (C): | 461 | (9.9) | 387 | (8.3)
– collateral value on C | 153 |  | 98 |
Total | 1,610 | (35.6) | 1,237 | (38.7)
POCI |  |  |  |
Not collateralised | 7 | — | 7 | —
Fully collateralised | — | — | — | —
LTV ratio: |  |  |  |
– less than 50% | — | — | — | —
– 51% to 75% | — | — | — | —
– 76% to 90% | — | — | — | —
– 91% to 100% | — | — | — | —
Partially collateralised (D): | 1 | — | 1 | —
– collateral value on D | 1 |  | 1 | —
Total | 8 | — | 8 | —
At 31 Dec 2023 | 104,502 | (0.7) | 79,338 | (0.7)

1 Includes contribution related to the acquisition of HSBC Private Bank (Luxembourg) S.A. on 2 November 2023.
2 The year end 2023 comparatives have been restated to correctly reflect the collateralised buckets.

Universal Registration Document and Annual Financial Report 2024 | 205

Personal lending
Total personal lending
Personal lending mainly includes advances to individual customers for
asset purchases such as residential property where the loans in
France are secured by Crédit Logement Guarantee or by the assets
being acquired notably in Malta. We also offer in Malta consumer
lending products such as overdrafts and personal loans which are
mainly unsecured.

Total personal lending for loans and advances to customers at amortised costs by stage distribution
| Gross carrying amount |  | Provision 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
First lien residential mortgages | 2,747 | 121 | 77 | — | 2,945 | (2) | (8) | (22) | — | (32)
Other personal lending | 7,093 | 169 | 31 | — | 7,293 | (1) | (2) | (10) | — | (13)
– second lien residential mortgages | — | — | — | — | — | — | — | — | — | —
– guaranteed loans in respect of residential property | 6,142 | 167 | 17 | — | 6,326 | (1) | (2) | (3) | — | (6)
– other personal lending which is secured | 873 | — | 6 | — | 879 | — | — | — | — | —
– credit cards | 25 | 1 | — | — | 26 | — | — | — | — | —
– other personal lending which is unsecured | 53 | 1 | 8 | — | 62 | — | — | (7) | — | (7)
– motor vehicle finance | — | — | — | — | — | — | — | — | — | —
At 31 Dec 2024 | 9,840 | 290 | 108 | — | 10,238 | (3) | (10) | (32) | — | (45)

Total personal lending for loans and other credit-related commitments and financial guarantees 1 by stage distribution
| Gross carrying amount |  | Provision 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
Personal lending |  |  |  |  |  |  |  |  |  |
At 31 Dec 2024 | 346 | 4 | — | — | 350 | — | — | — | — | —

1 Excludes performance guarantee contracts to which the impairment requirements in IFRS 9 are not applied.

Total personal lending for loans and advances to customers at amortised costs by stage distribution 1,2
| Gross carrying amount | Provision 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
First lien residential mortgages | 2,857 | 142 | 77 | — | 3,076 | (8) | (8) | (22) | — | (38)
Other personal lending | 7,272 | 384 | 20 | — | 7,676 | (1) | (2) | (6) | — | (9)
– second lien residential mortgages | — | — | — | — | — | — | — | — | — | —
– guaranteed loans in respect of residential property | 6,331 | 361 | 11 | — | 6,703 | — | (1) | — | — | (1)
– other personal lending which is secured | 858 | 21 | 1 | — | 880 | (1) | — | — | — | (1)
– credit cards | 26 | 1 | — | — | 27 | — | (1) | — | — | (1)
– other personal lending which is unsecured | 57 | 1 | 8 | — | 66 | — | — | (6) | — | (6)
– motor vehicle finance | — | — | — | — | — | — | — | — | — | —
At 31 Dec 2023 | 10,129 | 526 | 97 | — | 10,752 | (9) | (10) | (28) | — | (47)

Total personal lending for loans and other credit-related commitments and financial guarantees 3 by stage distribution
| Gross carrying amount |  | Provision 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
Personal lending |  |  |  |  |  |  |  |  |  |
At 31 Dec 2023 | 935 | 29 | 2 | — | 966 | — | — | — | — | —

1 Balances at 31 December exclude amount classified as held for sale related to retail banking operations in France during the year. For further details on gross
carrying amounts and allowances for ECL related to assets held for sale, see ‘Assets held for sale’ on page 207.
2 Includes contribution related to the acquisition of HSBC Private Bank (Luxembourg) S.A. on 2 November 2023.
3 Excludes performance guarantee contracts to which the impairment requirements in IFRS 9 are not applied.
Mortgage lending
We offer a wide range of mortgage products designed to meet
customer needs, including capital repayment, bridge loans and
regulated loans. HSBC Continental Europe has specific LTV
thresholds and debt-to-income ratios in place for this type of lending,
which are compliant with the overall Group policy, strategy and risk
appetite.
Collateral and other credit enhancements held
The most common method of mitigating credit risk for personal
lending is to take collateral. For HSBC Continental Europe a mortgage
over the property is often taken to help secure claims. Another
common form of security is guarantees provided by a third-party
company; Crédit Logement (a Société de Financement regulated by
the French Regulator ACPR). Crédit Logement guarantees 100 per
cent of the amount of the residential real estate loan in case of
default. Loans may also be made against a pledge of eligible
marketable securities or cash.

206 | Universal Registration Document and Annual Financial Report 2024

Risk

The tables below show residential mortgage lending including off-
balance sheet loan commitments by level of collateral. They provide a
quantification of the value of fixed charges we hold over borrowers’
specific assets in the event of the borrower failing to meet its
contractual obligations.
The LTV ratio is calculated as the gross on-balance sheet carrying
amount of the loan and any off-balance sheet loan commitment at the
balance sheet date divided by the value of collateral.
The value of mortgage collateral is updated on a monthly basis using
the notary price index (‘INSEE’). In addition professional valuations are
obtained for high value mortgage loans (>EUR 3m) annually.
Valuations of financial collateral are updated on a daily basis for those
portfolios held by HSBC Continental Europe and on annual basis for
those held externally.
The collateral valuation excludes any cost adjustments linked to
obtaining and selling the collateral and, in particular, loans shown as
not collateralised or partly collateralised may also benefit from other
forms of credit mitigants.

Personal lending: residential mortgage loans including loan commitments by level of collateral
| 2024 | 2023
| Gross carrying/ nominal amount | ECL coverage | Gross carrying/ nominal amount 1 | ECL coverage
| €m | % | €m | %
Stage 1 |  |  |  |
Fully collateralised | 2,860 | (0.1) | 2,989 | (0.2)
LTV ratio: |  |  |  |
– less than 50% | 1,520 | — | 1,455 | (0.2)
– 51% to 60% | 644 | (0.1) | 642 | (0.3)
– 61% to 70% | 422 | (0.1) | 473 | (0.2)
– 71% to 80% | 203 | (0.1) | 293 | (0.3)
– 81% to 90% | 65 | (0.1) | 123 | —
– 91% to 100% | 6 | (0.6) | 3 | —
Partially collateralised (A): | 11 | (0.1) | 7 | —
LTV ratio: |  |  |  |
– 101% to 110% | 2 | (0.1) | 2 | —
– 111% to 120% | 2 | (0.2) | 2 | —
– greater than 120% | 7 | (0.1) | 3 | —
– collateral value on A | 6 |  | 6 |
Total | 2,871 | (0.1) | 2,996 | (0.2)
Stage 2 |  |  |  |
Fully collateralised | 124 | (5.0) | 140 | (5.7)
LTV ratio: |  |  |  |
– less than 50% | 87 | (4.7) | 89 | (4.5)
– 51% to 60% | 20 | (1.7) | 26 | (7.7)
– 61% to 70% | 10 | (10.6) | 15 | (6.7)
– 71% to 80% | 6 | (9.2) | 8 | (12.5)
– 81% to 90% | 1 | (13.3) | 2 | —
– 91% to 100% | — | — | — | —
Partially collateralised (B): | — | — | — | —
LTV ratio: |  |  |  |
– 101% to 110% | — | — | — | —
– 111% to 120% | — | — | — | —
– greater than 120% | — | — | — | —
– collateral value on B | — |  | — |
Total | 124 | (5.0) | 140 | (5.7)
Stage 3 |  |  |  |
Fully collateralised | 61 | (18.7) | 61 | (18.0)
LTV ratio: |  |  |  |
– less than 50% | 37 | (14.1) | 46 | (15.2)
– 51% to 60% | 20 | (19.4) | 7 | (14.3)
– 61% to 70% | 1 | (45.8) | 3 | (33.3)
– 71% to 80% | 2 | (44.5) | 2 | (50.0)
– 81% to 90% | — | — | 1 | —
– 91% to 100% | 1 | (89.1) | 2 | (50.0)
Partially collateralised (C): | 15 | (66.5) | 16 | (68.8)
LTV ratio: |  |  |  |
– 101% to 110% | — | — | — | —
– 111% to 120% | — | — | — | —
– greater than 120% | 15 | (66.9) | 16 | (68.8)
– collateral value on C | — |  | 16 |
Total | 76 | (28.1) | 77 | (28.6)
At 31 Dec | 3,071 | (1.0) | 3,213 | (1.2)

1 Includes contribution related to the acquisition of HSBC Private Bank (Luxembourg) S.A. on 2 November 2023.

Universal Registration Document and Annual Financial Report 2024 | 207

Financial assets at amortised cost classified as "Assets held for sale 1"
| Gross carrying amount | Provision for ECL | Net
| €m | €m | €m
Loans and advances to customers at amortised cost | 298 | — | 298
– stage 1 | 281 | — | 281
– stage 2 | 17 | — | 17
– stage 3 | — | — | —
– POCI | — | — | —
Loans and advances to banks at amortised cost | 139 | — | 139
– stage 1 | 139 | — | 139
– stage 2 | — | — | —
– stage 3 | — | — | —
– POCI | — | — | —
Other financial assets measured at amortised cost | 2,038 | — | 2,038
– stage 1 | 2,038 | — | 2,038
– stage 2 | — | — | —
– stage 3 | — | — | —
– POCI | — | — | —
At 31 Dec 2024 | 2,475 | — | 2,475

1 Includes planned sale of private banking business in Germany and life insurance business i n France.

Financial assets at amortised cost classified as "Assets held for sale 1"
| Gross carrying amount | Provision for ECL | Net
| €m | €m | €m
Loans and advances to customers at amortised cost | 12,765 | (74) | 12,691
– stage 1 | 11,512 | (3) | 11,509
– stage 2 | 1,074 | (8) | 1,066
– stage 3 | 179 | (63) | 116
– POCI | — | — | —
Loans and advances to banks at amortised cost | 11,900 | — | 11,900
– stage 1 | 11,900 | — | 11,900
– stage 2 | — | — | —
– stage 3 | — | — | —
– POCI | — | — | —
Other financial assets measured at amortised cost | 329 | — | 329
– stage 1 | 327 | — | 327
– stage 2 | 2 | — | 2
– stage 3 | — | — | —
– POCI | — | — | —
At 31 Dec 2023 | 24,994 | (74) | 24,920

1 Includes re-classification to held for sale related to retail banking operations in France.
Counterparty credit risk
Overview
Credit risk is the risk of financial loss if a customer or counterparty
fails to meet an obligation under a contract. Whenever there is a
chance that a counterparty will not pay an amount of money owed,
live up to a financial commitment or honour a claim, there is credit
risk. Many types of transactions present credit risk, counterparty
credit risk tackles the case of an indirect exposure via an Over-The-
Counter or Secured Financing Transaction ('OTC/SFT'): both parties
commit to make future payments, the amounts of which are
dependent on the market value of an underlying product (for example
the exchange rate between the U.S. dollar and the Japanese yen).
Key developments in 2024
There were no material changes to current policies and practices for
management of market risk in 2024.
Governance and Structure
Traded Risk has a specific team responsible for the measurement,
control and management of counterparty risk primarily as a Second
Line of Defence function. Traded Risk reports to the Chief Risk
Officer of HSBC Continental Europe.
The risk appetite framework for counterparty credit risk relies on two
types of limits:
– Counterparty-level limits which are approved by the Wholesale
Credit Officers; and
– Portfolio level limits which are established to monitor risk at an
aggregate level. HSBC Continental Europe has portfolio limits on
Wrong Way Risk, CVA, Financing and CCPs related metrics.
Key risk management processes
The Traded Credit Risk Management Meeting is the backbone of
CCR’s governance structure. During this monthly meeting, the
different CCR events per client and portfolio are discussed and
reviewed for further escalation to the HSBC Continental Europe RMM
as necessary. Outstanding issues are also reported to sales/
relationship managers, credit officers and to the Traded Risk Europe/
Group representatives.

208 | Universal Registration Document and Annual Financial Report 2024

Risk

Market risk
Overview
Market risk is the risk that movements in market factors, including
foreign exchange rates, interest rates, credit spreads and equity
prices will reduce HSBC Continental Europe’s income or the value of
its portfolios.
Exposure to market risk is separated into two portfolios.
Trading portfolios comprise positions arising from market-making and
warehousing of customer-derived positions.
Non-trading portfolios including Markets Treasury comprise positions
that primarily arise from the interest rate management of commercial
banking assets and liabilities, and financial investments designated as
Held-To-Collect-and-Sale (‘HTCS’).
Key developments in 2024
There were no material changes to current policies and practices for
the management of market risk in 2024.
Market risk governance
The following diagram summarizes the main business areas where
trading and non-trading market risks reside, and the market risk
measures used to monitor and limit exposures.

Risk types | Trading Risk | Non-trading Risk
– Foreign exchange – Interest rates – Credit spreads – Equities | – Interest rates – Credit spreads – Foreign exchange
Risk measure | Value at Risk | Sensitivity | Stress testing | Value at Risk | Sensitivity | Stress testing

Where appropriate, similar risk management policies and
measurement techniques are applied to both trading and non-trading
portfolios. The objective is to manage and control market risk
exposures to optimise return on risk while maintaining a market
profile consistent with the established risk appetite.
At the HSBC Group level, market risk is managed and controlled
through limits approved by the Risk Management Meeting for HSBC
Holdings plc. These limits are allocated across business lines and to
the HSBC Group’s legal entities. Each major operating entity,
including HSBC Continental Europe, has an independent market risk
management and control sub-function which is responsible for
measuring market risk exposures, monitoring and reporting these
exposures against the prescribed limits on a daily basis.
For HSBC Continental Europe, the Chief Risk Officer is responsible for
the management of the HSBC Continental Europe market risks limits,
the business lines it operates as well as its subsidiaries. The risks
mandates are also approved by the Chief Risk Officer within the risk
appetite limits approved by the HSBC Continental Europe Board.
Each operating entity is required to assess the market risks arising in
its business and to transfer them either to its local Markets and
Securities Services or Markets Treasury unit for management, or to
separate books managed under the supervision of the Asset Liability
Committees. The Traded Risk function enforces the controls around
trading in permissible instruments approved for each site as well as
following completion of the new product approval process. Traded
Risk also restricts trading in the more complex derivative products to
offices with appropriate levels of product expertise and robust control
systems.
Market risk in 2024
2024 was another intense year for financial markets. After a period of
a restrictive monetary policy and despite signs of a persisting inflation
in the first quarter of 2024 and increasing geopolitical tensions, the
Central Banks triggered a cycle of rates cut with both the Federal
Reserve and the European Central Bank decreasing their key rates by
100bps. While rates decreased over the year, European credit
spreads suffered under an increasing political uncertainty and a
gloomier economic outlook. The French snap election, in July, sent
the French spread against Germany to level unseen since the
European debt crisis. The outcome of the US election then drove the
credit spreads up across all European countries, driven by fears of
increasing deficits and debts in the year to come, in light of a potential
trade war. In the US, the brighter economic picture, with a robust
growth and positive employment numbers, and considering the
inflationary policy of Trump's administration, led the Federal Reserve
to reconsider its rate trajectory for 2025. In that context the US dollar
performed against other currencies, especially in the last quarter of
2024, while American equity indexes remained resilient and overall
performed over the year, with the technology industry driving the
upward trend.
Market risk measures
Market risk monitoring system
The objective is to manage and control market risk exposures while
maintaining a market profile consistent with our risk appetite. HSBC
Continental Europe uses a range of tools to monitor and limit market
risk exposures including sensitivity analysis, Value at Risk and stress
testing.
Sensitivity analysis
Sensitivity analysis measures the impact of individual market factor
movements on specific instruments or portfolios, including interest
rates, foreign exchange rates and equity prices, such as the effect of
a one basis point change in yield. HSBC uses sensitivity measures to
monitor the market risk positions within each risk type. Sensitivity
limits are set for portfolios, products and risk types, with the depth of
the market being one of the principal factors in determining the level
of limits set.
Value at risk
VaR is a technique that estimates the potential losses on risk
positions as a result of movements in market rates and prices over a
specified time horizon and to a given level of confidence. The use of
VaR is integrated into market risk management and is calculated for
all trading positions regardless of how HSBC Continental Europe
capitalises those exposures. Where there is not an approved internal
model, HSBC Continental Europe uses the rules prescribed by the
regulator to capitalise exposures.
In addition, HSBC Continental Europe calculates VaR for non-trading
portfolios in order to have a complete picture of risk. VaR is calculated
at a 99 per cent confidence level for a one-day holding period. Where
VaR is not explicitly computed, alternative tools like Stress Testing are
at use.
The VaR models are based predominantly on historical simulation.
These models derive plausible future scenarios from past series of
recorded market rates and prices, taking into account inter-
relationships between different markets and rates such as interest

Universal Registration Document and Annual Financial Report 2024 | 209

rates and foreign exchange rates. The models also incorporate the
effect of option features on the underlying exposures.
The historical simulation models used incorporate the following
features:
– Historical market rates and prices are calculated with reference to
foreign exchange rates, interest rates, equity prices and the
associated volatilities;
– Potential market movements utilised for VaR are calculated with
reference to data from the past two years; and
– VaR measures are calculated to a 99 per cent confidence level and
use a one-day holding period.
The nature of the VaR models means that an increase in observed
market volatility will most likely lead to an increase in VaR without any
changes in the underlying positions.
Although a valuable guide to risk, VaR should always be viewed in the
context of its limitations. For example:
– Use of historical data as a proxy for estimating future events may
not encompass all potential events, particularly those which are
extreme in nature;
– Use of a holding period assumes that all positions can be
liquidated or the risks offset during that period. This may not fully
reflect the market risk arising at times of severe illiquidity, when
the holding period may be insufficient to liquidate or hedge all
positions fully;
– Use of a 99 per cent confidence level by definition does not take
into account losses that might occur beyond this level of
confidence; and
– VaR is calculated on the basis of exposures outstanding at the
close of business and therefore does not necessarily reflect intra-
day exposures.
Stressed VaR
HSBC Continental Europe calculates a Stressed VaR. Like VaR, it is
calculated using historical simulations and a 99 per cent confidence
level. However, unlike VaR, Stressed VaR is based on a 10 day period
and a stressed period historical dataset. Stressed VaR can be rescaled
to a one-day equivalent holding period by dividing it by the square root
of 10.
Stress Testing
Stress testing is an important procedure that is integrated into the
market risk management toolkit to evaluate the potential impact on
portfolio values of more extreme, although plausible, events or
movements in a set of financial variables. In such scenarios, losses
can be much greater than those predicted by VaR modelling.
Market risk reverse stress tests are undertaken on the premise that
there is a fixed loss. The stress testing process identifies which
scenarios lead to this loss. The rationale behind the reverse stress
test is to understand scenarios which are beyond normal business
settings that could have contagion and systemic implications.
Stressed VaR and stress testing, together with reverse stress testing
and the management of gap risk, provide management with insights
regarding the ‘tail risk’ beyond VaR for which local appetite is limited.
Back-testing
The accuracy of VaR models is routinely validated by back-testing the
VaR metric against both actual and hypothetical profit and loss.
Hypothetical profit and loss excludes non-modelled items such as
fees, commissions and revenue of intra-day transactions. The
hypothetical profit and loss reflects the profit and loss that would be
realised if positions were held constant from the end of one trading
day to the end of the next. This measure of profit and loss does not
align with how risk is dynamically hedged, and is not therefore
necessarily indicative of the actual performance of the business.
The number of back-testing exceptions is used to gauge how well the
models are performing. It is considered as enhanced internal
monitoring of a VaR model if more than five profit exceptions or more
than five loss exceptions occur in a 250-day period.
Back-testing the VaR is performed at set levels of local entity
hierarchy.
Trading portfolios
Value at risk of the trading portfolios
The majority of HSBC Continental Europe total Valu e at Risk ('VaR')
and almost all trading VaR reside in Global Banking and Markets with
an amount of EUR 3.4 million as of 31 December 2024 compared
with EUR 5.3 million at 29 December 2023.

210 | Universal Registration Document and Annual Financial Report 2024

Risk

HSBC Continental Europe Trading VaR by risk type
| Foreign exchange (‘FX’) and commodity | Interest rate (‘IR’) | Equity (‘EQ’) | Credit Spread (‘CS’) | Commodity | Portfolio Diversification | Total
| €m | €m | €m | €m | €m | €m | €m
Balance at 31 Dec 2024 | 1.36 | 2.20 | 1.91 | 0.91 | 0.37 | (3.33) | 3.41
Average | 0.78 | 4.74 | 2.35 | 1.11 | 0.07 | (3.16) | 5.88
Maximum | 1.55 | 11.11 | 4.59 | 1.86 | 0.54 | (5.33) | 12.94
Balance at 29 Dec 2023 | 0.84 | 4.61 | 1.88 | 0.60 | 0.04 | (2.71) | 5.26
Average | 0.98 | 5.98 | 2.16 | 1.14 | 0.07 | (3.34) | 6.92
Maximum | 1.92 | 9.56 | 3.87 | 2.07 | 0.25 | (6.58) | 11.79

HSBC Continental Europe 1D SVaR of the Trading portfolio
| €m
Average | 12.73
Maximum | 28.48
Minimum | 6.65
At 31 Dec 2024 | 10.69

Non-Trading portfolios
Non-trading VaR of HSBC Continental Europe includes the interest
rate risk of non-trading financial instruments held by the global
businesses and transferred into portfolios managed by Markets
Treasury or Asset, Liability and Capital Management functions. In
measuring, monitoring and managing risk in non-trading portfolios,
VaR is just one of the tools used. The management of interest rate
risk in the banking book is described further in ‘Non-trading interest
rate risk’ below, including the role of Markets Treasury. The local
control of market risk in the non-trading portfolios is based on
transferring the assessed market risk of non-trading assets and
liabilities created outside Markets Treasury or Markets, to the books
managed by Markets Treasury, provided the market risk can be
neutralised. The net exposure is typically managed by Markets
Treasury through the use interest rate swaps. Interest rate swaps
used by Markets Treasury are typically classified as either a fair value
hedge or a cash flow hedge and included within the local non-trading
VaR.
Any market risk that cannot be neutralised in the market is managed
by HSBC Continental Europe in segregated ALCO books.
HSBC Continental Europe Value at Risk of the non-trading portfolio

HSBC Continental Europe Total accrual VaR by risk type
| Foreign Exchange | Interest Rate | Equity | Credit Spread | Portfolio diversification | Total
| €m | €m | €m | €m | €m | €m
Balance at 31 Dec 2024 | 0.01 | 8.22 | 0.48 | 16.41 | (4.64) | 20.49
Average | 0.01 | 9.81 | 0.34 | 13.52 | (5.51) | 18.17
Maximum | 0.17 | 14.70 | 0.62 | 20.72 | (9.15) | 24.92
Balance at 29 Dec 2023 | 0.02 | 12.19 | 0.03 | 10.48 | (6.46) | 16.25
Average | 0.01 | 9.50 | 0.03 | 9.83 | (5.14) | 14.22
Maximum | 0.05 | 13.58 | 0.10 | 14.93 | (8.07) | 18.03

Universal Registration Document and Annual Financial Report 2024 | 211

Treasury risk
Overview
Treasury risk is the risk of having insufficient capital, liquidity or
funding resources to meet financial obligations and satisfy regulatory
requirements. Treasury risk also includes the risk to our earnings or
capital due to structural foreign exchange exposures and changes in
market interest rates.
Treasury risk arises from changes to the respective resources and risk
profiles driven by customer behaviour, management decisions or the
external environment.
Approach and policy
Our objective in the management of treasury risk is to maintain
appropriate levels of capital, liquidity and funding to support our
business strategy, and meet our regulatory and stress testing-related
requirements.This includes business as usual management as well as
recovery and resolution planning.
Our approach to treasury risk management is driven by our strategic
and organisational requirements, taking into account the regulatory,
economic and commercial environment. We aim to maintain a strong
capital and liquidity base to support the risks inherent in our business
in accordance with our strategy, meeting regulatory requirements at
all times.
Our policy is underpinned by our risk management framework, our
Internal Capital Adequacy Assessment Process and our Internal
Liquidity Adequacy Assessment Process. The risk framework
incorporates a number of measures aligned to our assessment of
risks for both internal and regulatory purposes.
These risks include credit, market, operational, pensions, structural
foreign exchange and interest rate risk in the banking book.
The ECB is the lead supervisor of the bank and sets the consolidated
regulatory capital requirements and receives information on the
capital and liquidity adequacy as well as on recovery planning. The
Single Resolution Board (‘SRB’) and the ACPR set the resolvability
requirements including the consolidated Minimum Required Eligible
Liabilities (‘MREL’) / Total Loss Absorbing Capacity (‘TLAC’) targets.
Governance
Capital, liquidity, interest rate risk in the banking book and non-trading
book foreign exchange risk are actively managed by the Treasury
function as the First Line of Defence. The Chief Financial Officer is
the risk owner for Treasury Risks. In this role, the Chief Financial
Officer is supported by the Asset and Liability Management
Committee. The Head of Treasury Risk Management is the
accountable Second Line of Defence risk steward for all Treasury
Risks. Ultimately, Treasury Risks are within the responsibility of the
Board and its Risk Committee.

212 | Universal Registration Document and Annual Financial Report 2024

Risk

Capital

Key metrics (KM1) (non audited)
|  | At
|  | 31 Dec 2024 | 31 Dec 2023 2
|  | €m | €m
| Available own funds (amounts) |  |
1 | Common Equity Tier 1 ('CET1') capital | 11,916 | 9,373
2 | Tier 1 capital | 13,359 | 10,819
3 | Total capital | 14,848 | 12,305
| Risk-weighted exposure amounts |  |
4 | Total risk-weighted exposure amount | 63,297 | 59,515
| Capital ratios (as a percentage of risk-weighted exposure amount) (%) |  |
5 | Common Equity Tier 1 ratio | 18.8 | 15.7
6 | Tier 1 ratio | 21.1 | 18.2
7 | Total capital ratio | 23.5 | 20.7
| Additional own funds requirements to address risks other than the risk of excessive leverage (%) (as a percentage of risk-weighted exposure amount) (%) |  |
EU-7a | Additional own funds requirements to address risks other than the risk of excessive leverage | 3.0 | 3.4
EU-7b | – of which: to be made up of CET1 capital (percentage points) | 1.7 | 1.9
EU-7c | to be made up of Tier 1 capital (percentage points) | 2.3 | 2.6
EU-7d | Supervisory review and evaluation process (‘SREP’) own funds requirements | 11.0 | 11.4
| Combined buffer and overall capital requirement (as a percentage of risk-weighted exposure amount) (%) |  |
8 | Capital conservation buffer | 2.5 | 2.5
EU-8a | Conservation buffer due to macro-prudential or systemic risk identified at the level of a Member State |  | —
9 | Institution-specific countercyclical capital buffer | 0.88 | 0.62
EU-9a | Systemic risk buffer | 0.02 | —
10 | Global Systemically Important Institution buffer |  | —
EU-10a | Other Systemically Important Institution buffer | 0.25 | 0.25
11 | Combined buffer requirement | 3.7 | 3.4
EU-11a | Overall capital requirements | 14.7 | 14.8
12 | CET1 available after meeting the total SREP own funds requirements | 12.5 | 8.3
| Leverage ratio |  |
13 | Total exposure measure | 245,648 | 257,480
14 | Leverage ratio (%) | 5.4 | 4.2
| Additional own funds requirements to address risks of excessive leverage (as a percentage of leverage ratio total exposure amount) (%) |  |
EU 14a | Additional own funds requirements to address the risk of excessive leverage | — | —
EU 14b | – of which: to be made up of CET1 capital (percentage points) | — | —
EU-14c | Total SREP leverage ratio requirements (%) | 3.0 | 3.0
| Leverage ratio buffer and overall leverage ratio requirement (as a percentage of total exposure measure) (%) |  |
EU-14d | Leverage ratio buffer requirement | — | —
EU-14e | Overall leverage ratio requirements | 3.0 | 3.0
| Liquidity Coverage Ratio ('LCR')1,3 |  |
15 | Total high-quality liquid assets ('HQLA') (Weighted value-average) | 75,513 | 76,282
EU-16a | Cash outflows – Total weighted value | 82,826 | 78,490
EU-16b | Cash inflows – Total weighted value | 32,299 | 30,152
16 | Total net cash outflows (adjusted value) | 50,527 | 48,339
17 | Liquidity coverage ratio (%) | 150 | 158
| Net Stable Funding Ratio ('NSFR')1,4 |  |
18 | Total available stable funding | 86,928 | 81,311
19 | Total required stable funding | 63,448 | 57,468
20 | NSFR ratio (%) | 137 | 141

*The references identify the lines prescribed in the EBA template that are applicable and where there is a value.
1 In line with CRR requirements LCR is disclosed as an average over 12 months, whereas NSFR is disclosed as at reporting date.
2 CET1 capital for Dec 23 has been restated to reflect the payment of AT1 dividends.
3 The components of the LCR calculation have been represented to comply with EBA reporting requirements.
4 For Dec 23, this includes the impact of the sale of our retail banking operations in France.

Universal Registration Document and Annual Financial Report 2024 | 213

Capital Management
HSBC Continental Europe’s objective in managing the Bank's capital
is to maintain appropriate levels of capital to support its business
strategy and meet regulatory requirements at all times.
HSBC Continental Europe manages its capital to ensure that it
exceeds current and expected future requirements. Throughout 2024,
HSBC Continental Europe complied with the ECB regulatory capital
adequacy requirements.
To achieve this, HSBC Continental Europe manages its capital within
the context of an annual capital plan, which is approved by the Board
and which determines the appropriate amount and mix of capital.
Complementing this capital plan regular forecasts of capital, leverage,
RWAs positions are produced throughout the year.
The policy on capital management is underpinned by the HSBC Group
capital management framework, which enables a consistent
management of the capital.
Each of HSBC Continental Europe’s subsidiaries subject to individual
regulatory capital requirements manages its own capital to support its
planned business growth and meet its local regulatory requirements.
Capital Measurement
HSBC Continental Europe is supervised by the Joint Supervisory
Team of the ECB and the ACPR. The ECB sets HSBC Continental
Europe’s capital requirements, in line with the regulatory framework.
The Basel III framework, like Basel II, is structured around three
‘pillars’: minimum capital requirements, supervisory review process
and market discipline. Basel III also introduces a number of capital
buffers, including the Capital Conservation Buffer (‘CCB’),
Countercyclical Buffer (‘CCyB’), and other systemic buffers such as
the Globally/Other Systematically Important Institutions (‘G-SII’/’O-SII’)
buffer. CRR and CRD legislations implemented Basel III in the EU.
The capital management framework defines regulatory capital and
economic capital as the two primary measures for the management
and control of capital.
Capital measures:
– Regulatory capital is the capital which HSBC Continental Europe is
required to hold in accordance with the rules established by
regulators; and
– Economic capital is the internally calculated capital requirement to
support risks to which HSBC Continental Europe is exposed and
forms a core part of the internal capital adequacy assessment
process.
Regulatory Capital
HSBC Continental Europe’s capital base is divided into three main
categories, namely Common Equity Tier 1, Additional Tier 1 and Tier
2, depending on their characteristics.
CET1 capital is the highest quality form of capital, comprising
shareholders’ equity and related non-controlling interests (subject to
limits). Under CRD/CRR various capital deductions and regulatory
adjustments are made against these items – these include deductions
for goodwill and intangible assets, deferred tax assets that rely on
future profitability as well as negative amounts resulting from the
calculation of expected loss amounts under IRB.
Additional Tier 1 capital comprises eligible non-common equity capital
securities such as Additional Tier 1 eligible subordinated debt as per
CRR, and any related share premium. Holdings of additional Tier 1
securities of financial sector entities are deducted from additional Tier
1 capital.
Tier 2 capital comprises eligible subordinated debt and any related
share premiums. Holdings of Tier 2 capital of financial sector entities
are deducted.
Regulatory Requirements
At the end of 2024, HSBC Continental Europe is required to meet on
a consolidated basis a minimum total capital ratio of at least
14.65 per cent. This Overall Capital Requirement (‘OCR’) is composed
of the 8 per cent minimum capital in respect of article 92.1 of the
575/2013 Regulation, the 2.5 per cent for the Capital Conservation
Buffer (CCB) in respect of article 129 of the 2013/36 Directive, the 0.9
per cent weighted Countercyclical Buffer (CCyB), the 0.25 per cent
Other Systematically Important Institution buffer (’O-SII‘) in force
since 1 January 2022 as per the decision from the ACPR and the 3.0
per cent Pillar 2 Requirement ('P2R').
The minimum capital requirement under Pillar 2 (‘P2R’) for HSBC
Continental Europe on a consolidated basis has been set at 3.0 per
cent Under CRD, the P2R should be held in the form of 56.25 per
cent of CET1 and 75 per cent of Tier 1, as a minimum.
As at 31 December 2024, the requirement in respect of Common
equity tier 1 is 9.84 per cent, excluding Pillar 2 guidance (‘P2G’).
Leverage Ratio
The leverage ratio was introduced into the Basel III framework as a
non-risk-based metric, to supplement risk-based capital requirements.
It aims to constrain the build-up of excessive leverage in the banking
sector, introducing additional safeguards against model risk and
measurement errors. The Basel III leverage ratio is a volume-based
measure calculated as Tier 1 capital divided by total on- and weighted
off-balance sheet exposures, allowing the exclusions of certain
exposures and the netting of exposures on certain market
instruments.
This ratio has been implemented in the EU for reporting and
disclosure purposes and has been set as a binding requirement since
June 2021.
Pillar 3 market discipline
Pillar 3 of the Basel regulatory framework is related to market
discipline and aims to make financial services firms more transparent
by requiring publication of wide-ranging information on their risks,
capital and management. HSBC Continental Europe’s Pillar 3
Disclosure is published on HSBC’s website, www.hsbc.com, under
‘Investors’ section.
Minimum Requirement for own funds and
Eligible Liabilities (‘MREL’) – Total Loss
Absorbing Capacity (‘TLAC’)
HSBC Continental Europe became subject to MREL requirements for
the first time on 30 March 2020 following receipt of decision from the
ACPR.

214 | Universal Registration Document and Annual Financial Report 2023

Risk

Following the end of the UK withdrawal from the European Union
transition period, HSBC Continental Europe became from 1 January
2021 a material subsidiary (CRR article 4.1.135) of a third-country G-
SII and therefore bound by internal TLAC requirements (CRR article
92b). In order to meet both the internal TLAC and MREL
requirements, HSBC Continental Europe has issued internal Senior
Non-Preferred bonds.
Overview of changes of own funds ratios

Composition of regulatory own funds (‘CC1’)1 (non audited) |
|  | At
|  | 31 Dec 2024 | 31 Dec 2023 2
Ref* |  | €m | €m
| Common equity tier 1 (‘CET1’) capital: instruments and reserves |  |
1 | Capital instruments and the related share premium accounts | 8,075 | 6,327
| – of which: share premium account | 6,747 | 5,264
2 | Retained earnings | 2,927 | 2,133
3 | Accumulated other comprehensive income (and other reserves) | 1,642 | 1,566
5 | Minority interests (amount allowed in consolidated CET1) | 103 | 90
5a | Independently reviewed interim net profits net of any foreseeable charge or dividend | 568 | 883
6 | Common equity tier 1 capital before regulatory adjustments | 13,315 | 10,999
28 | Total regulatory adjustments to Common Equity Tier 1 (‘CET1’) | (1,399) | (1,625)
29 | Common Equity Tier 1 (‘CET1’) capital | 11,916 | 9,373
36 | Additional tier 1 capital before regulatory adjustments | 1,443 | 1,445
43 | Total regulatory adjustments to Additional Tier 1 (‘AT1’) capital | — | —
44 | Additional Tier 1 (AT1) capital | 1,443 | 1,445
45 | Tier 1 capital (T1 = CET1 + AT1) | 13,359 | 10,819
51 | Tier 2 capital before regulatory adjustments | 1,908 | 1,906
57 | Total regulatory adjustments to tier 2 capital | (420) | (420)
58 | Tier 2 capital | 1,488 | 1,486
59 | Total capital (TC = T1 + T2) | 14,848 | 12,305

∗The references identify the lines prescribed in the EBA template that are applicable and where there is a value.
1 This row includes losses that have been recognised and deducted as they arose and were therefore not subject to an independent review.
2 CET1 capital for Dec 23 has been restated to reflect the payment of AT1 dividends.
The main movements of the own funds are detailed on the Note 1.3 ‘Significant events during the year’ of the HSBC Continental Europe's
Universal Registration Document 2024.

RWA movement by global business by key driver (non audited)
| Total RWA
| €m
RWAs at 1 Jan 2024 1 | 59,515
Asset size | 476
Asset quality | 953
Model updates | 4,230
Methodology and policy | (1,863)
Foreign exchange movement | (14)
Total RWA movement | 3,782
RWAs at 31 Dec 2024 | 63,297
RWAs by global business |
Markets & Securities Services | 11,515
Global Banking | 13,457
Global Banking and Markets Others | 3,929
Commercial Banking | 24,211
Wealth and Personal Banking | 6,563
Corporate Centre | 3,622

1 CET1 capital for Dec 2023 has been restated to reflect the payment of AT1 dividends.

Leverage Ratio at 31 December (non audited)
| At
| 31 Dec 2024 | 31 Dec 2023
| €m | €m
Tier 1 Capital | 13,359 | 10,819
Leverage Exposure | 245,648 | 257,480
Leverage ratio % | 5.4 | 4.2

Tier 1 capital increased from EUR 10,819 million to EUR 13,356 million during 2024. The Leverage exposure decreased from EUR 257.5 billion
to EUR 245.1 billio n as a result of the disposal of the retail banking operations.

Universal Registration Document and Annual Financial Report 2024 | 215

Liquidity and funding risk management
Liquidity and funding risk management
framework
Liquidity risk is the risk that HSBC Continental Europe does not have
sufficient financial resources to meet its obligations as they fall due,
or will have to access such resources at excessive cost. The risk
arises from mismatches in the timing of cash flows or when the
funding needed for illiquid asset positions cannot be obtained at the
expected terms as and when required.
HSBC Group has an internal liquidity and funding risk management
framework which aims to allow it to withstand liquidity stresses. It is
designed to be adaptable to changing business models, markets and
regulations. The management of liquidity and funding is undertaken in
compliance with the HSBC Group’s framework and with practices and
limits set through by the RMM and approved by the Board.
The elements of this framework are underpinned by a robust
governance framework, the two major elements of which are ALCO
and ILAAP.
The HSBC Group’s operating entities are predominantly defined on a
country basis to reflect the local management of liquidity and funding.
In this context, liquidity and funding risk is managed by HSBC
Continental Europe on a standalone basis with no implicit reliance
assumed on any other Group entity unless pre-committed.
HSBC Continental Europe’s policy is it should be self-sufficient in
funding its own activities.
The Liquidity Coverage Ratio, the Internal Liquidity Metric and the Net
Stable Funding Ratio are key components of the Liquidity and Funding
Risk Framework.
Liquidity and funding risk profile
Liquidity Coverage Ratio ('LCR')
The LCR aims to ensure that a bank has sufficient unencumbered
High Quality Liquid Asset ('HQLA') to meet its liquidity needs in a 30
calendar day liquidity stress scenario. At 31 December 2024, HSBC
Continental Europe remained within the LCR risk limits established by
the Board and above the regulatory minimum.
The following table displays the average 12 month LCR levels for
HSBC Continental Europe consolidated on the European Commission
LCR Delegated Regulation basis.

Liquidity coverage ratio (non audited)
| At
| 31 Dec 2024 | 31 Dec 2023
| % | %
HSBC Continental Europe | 150 | 158

Net Stable Funding Ratio ('NSFR')
The NSFR is defined as the ratio between the amount of stable
funding available and the amount of stable funding required. HSBC
Continental Europe's calibration of the NSFR is based on the CRR II
(Regulation EU 2019/876).
At 31 December 2024, HSBC Continental Europe's NSFR was within
the risk limits established by the Board and above the regulatory
minimum.
The table below displays the NSFR levels for HSBC Continental
Europe consolidated.

Net stable funding ratio (non audited)
| At
| 31 Dec 2024 | 31 Dec 2023
| % | %
HSBC Continental Europe 1 | 137 | 141

1 December 2023 NSFR included the impact of the sale of retail banking
operations in France.Both NSFR are value at reporting date.
Liquid assets
The table below shows the weighted liquidity value of assets
categorised as liquid, which is used for the purposes of calculating the
LCR. This reflects the stock of unencumbered liquid assets at the
reporting date, using the regulatory definition of liquid assets.

Liquid assets (non audited)
| Estimated liquidity value at
| 31 Dec 2024 | 31 Dec 2023
| €m | €m
Level 1 | 77,234 | 71,837
Level 2a | 2,366 | 938
Level 2b | 2,519 | 575

Level 1 liquid assets include HSBC Continental Europe balances with its central
banks (excluding non-withdrawable reserves) and notes and coins.
Sources of funding
Our primary sources of funding are customer accounts, repo and
wholesale issuances and capital instruments.
The following table analyses HSBC Continental Europe’s
consolidated balance sheet according to the assets that primarily
arise from operating activities and the sources of funding primarily
supporting these activities. Assets and liabilities that do not arise
from operating activities are presented as a net balancing source or
deployment of funds.
Wholesale funding markets are accessed by issuing senior debt
securities (publicly and privately) and borrowing from secured repo
markets against high-quality collateral, to align asset and liability
maturities, currency mismatches and to maintain a presence in local
wholesale markets.
The main financing transactions in 2024 are presented in the
Significant events during the year section on page 261.

216 | Universal Registration Document and Annual Financial Report 2024

Risk

Funding sources and uses |  |  |
| 2024 | 2023 |  |  | 2024 | 2023 |  |  |
| €m | €m |  |  | €m | €m |  |  |
Sources |  |  |  | Uses |  |  |  |  |
Customer accounts 1 | 97,065 | 93,890 |  | Loans and advances to customers | 51,288 | 50,127 |  |  |
Deposits by banks 1 | 11,820 | 10,261 |  | Loans and advances to banks | 5,703 | 5,816 |  |  |
Repurchase agreements – non-trading | 12,344 | 11,153 |  | Reverse repurchase agreements – non-trading | 25,764 | 24,490 |  |  |
Debt securities in issue | 15,257 | 12,909 |  | Assets held for sale | 25,477 | 23,211 |  |  |
Cash collateral, margin, settlement accounts and Items in the course of transmission to other banks | 14,775 | 17,011 |  | Cash collateral, margin, settlement accounts and Items in the course of collection from other banks | 15,321 | 17,985 |  |  |
Liabilities of disposal groups held for sale | 24,718 | 23,817 |  | Trading assets | 22,853 | 17,249 |  |  |
Subordinated liabilities | 1,941 | 1,951 |  | – reverse repos | 39 | 53 |  |  |
Financial liabilities designated at fair value | 9,906 | 9,696 |  | – stock borrowing | 186 | 61 |  |  |
Liabilities under insurance contracts | 518 | 21,035 |  | – other trading assets | 22,628 | 17,135 |  |  |
Trading liabilities | 16,480 | 19,877 |  | Financial investments | 20,740 | 22,608 |  |  |
– repos | — | 2 |  | Cash and balances with central banks | 48,907 | 56,894 |  |  |
– stock lending | 1 | 5 |  | Other balance sheet assets | 48,955 | 64,597 |  |  |
– other trading liabilities | 16,479 | 19,870 |  |  |  |  |  |  |
Total equity | 14,831 | 12,508 |  |  |  |  |  |  |
Other balance sheet liabilities | 45,353 | 48,869 |  |  |  |  |  |  |
At 31 Dec | 265,008 | 282,977 |  | At 31 Dec | 265,008 | 282,977 |  |  |

1 Following a customer classification error, the comparatives as at 31 December 2023 have been represented by EUR 1.4 billion between ’Deposits by banks' and
'Customer accounts’.
Contingent liquidity risk arising from committed lending facilities
HSBC Continental Europe provides committed facilities such as
standby facilities and committed backstop lines to its customers.
Undrawn commitments provided to conduits or external customers
are accounted for in the LCR and NSFR in line with the applicable
regulations, and are taken into account in the internal stress testing of
liquidity.

HSBC Continental Europe's contractual exposures as at 31 December monitored under the contingent liquidity risk structure
| At
| 31 Dec 2024 | 31 Dec 2023
| €m | €m
Commitments to customers |  |
– 5 largest 1 | 4,680 | 3,850

1 Sum of the undrawn balance of the five largest facilities excluding conduits.
Asset encumbrance and collateral management
An asset is defined as encumbered if it has been pledged as collateral
against an existing liability and, as a result, is no longer available to the
bank to secure funding, satisfy collateral needs or be sold to reduce
the funding requirement. Collateral is managed on an HSBC
Continental Europe basis consistent with the approach to managing
liquidity and funding. Available collateral held in an operating entity is
managed as a single consistent collateral pool from which the
operating
entity will seek to optimise the use of the available collateral. The
objective of this disclosure is to facilitate an understanding of instantly
available and unrestricted assets that could be used to support
potential future funding and collateral needs. The disclosure is not
designed to identify assets which would be available to meet the
claims of creditors or to predict assets that would be available to
creditors in the event of a resolution or bankruptcy.

Summary of assets available to support potential future funding and collateral needs (on- and off-balance sheet)
| 2024 | 2023
| €m | €m
Total on balance sheet assets as at 31 Dec | 265,008 | 282,977
Less: |  |
– reverse repo/stock borrowing receivables and derivatives assets | (69,239) | (70,126)
– other assets that cannot be pledged as collateral | (40,888) | (49,973)
Total on-balance sheet assets that can support funding and collateral needs as at 31 Dec | 154,881 | 162,878
Add: off-balance sheet assets |  |
– fair value of collateral received in relation to reverse repo/stock borrowing/derivatives that is available to sell or repledge | 61,419 | 48,999
Total assets that can support funding and collateral needs as at 31 Dec | 216,300 | 211,877
Less: |  |
– on-balance sheet assets pledged | (30,156) | (31,327)
– re-pledging of off-balance sheet collateral received in relation to reverse repo/stock borrowing/derivatives | (43,830) | (39,400)
Total assets available to support funding and collateral needs as at 31 Dec | 142,314 | 141,150

Universal Registration Document and Annual Financial Report 2024 | 217

Interest-rate risk of the banking book
Overview
Interest rate risk in the banking book is the risk of an adverse impact
to earnings or capital due to changes in market interest rates that
affect the bank's banking book positions. It is generated by our non-
traded assets and liabilities, specifically loans, deposits and financial
instruments that are not held for trading intent or held in order to
hedge positions held with trading intent. Interest rate risk that can be
economically hedged may be transferred to the Markets Treasury.
Hedging is generally executed through interest rate derivatives or
fixed-rate government bonds. Any interest rate risk that Markets
Treasury cannot economically hedge is not transferred and will remain
within the global business where the risks originate. Key metrics to
monitor and control IRRBB are projected Banking Net Interest Income
(‘BNII’) and Economic Value of Equity (‘EVE’) sensitivities under
varying interest rate scenarios.
Governance
Treasury monitors and controls interest rate risk in banking book. This
includes reviewing and challenging the global businesses prior to the
release of new products and proposed behavioural assumptions used
for hedging activities. Treasury is also responsible for maintaining and
updating the transfer pricing framework, informing the ALCO of the
banking book interest rate risk exposure and managing the balance
sheet in conjunction with Markets Treasury. Treasury and ALCO
perform oversight over the management of IRRBB. IRRBB is also
subject to independent oversight and challenge from Treasury Risk,
Internal Audit and Model governance.
Key risk Drivers
The bank’s interest rate risk in the banking book can be segregated
into the following drivers:
– Gap risk – also known as Duration Risk or Repricing Risk – arises
from the term structure of banking book instruments, and
describes the risk arising from the timing of instruments’ rate
changes. The extent of gap risk depends on whether changes to
the term structure of interest rates occur consistently across the
yield curve (parallel risk) or differentially by period (non-parallel
risk);
– Basis risk describes the impact of relative changes in interest rates
for financial instruments that have similar tenors but are priced
using different interest rate indices; and
– Option risk arises from option derivative positions or from optional
elements embedded in a bank’s assets, liabilities and/or off-
balance sheet items, where the bank or its customer can alter the
level and timing of their cash flows.
Banking Net Interest Income sensitivity
Banking NII Sensitivity analyses the sensitivity of our banking net
interest income to interest rate shocks. This metric, which was
introduced in our Annual Report and Accounts 2023, includes the
sensitivity coming from trading book assets funded by banking book
liabilities or vice versa. Banking NII Sensitivity is therefore a more
comprehensive measure than NII Sensitivity which was disclosed
previously and is aligned with the presentation of banking net interest
income as an alternative performance measure intended to
approximate the bank's banking revenue that is directly impacted by
changes in interest rates.
The sensitivities represent a hypothetical simulation of the base case
banking NII, assuming a static balance sheet (specifically no assumed
migration from current account to term deposits), and no
management actions from Treasury. This also incorporates the effect
of interest rate behaviouralisation, hypothetical managed rate product
pricing assumptions, prepayment of mortgages and deposit stability.
The sensitivity calculations exclude pensions, insurance exposures,
and our interest in associates.
A principal part of our management of non-traded interest rate risk is
to monitor the sensitivity of expected Banking Net Interest Income
under varying interest rate scenarios (simulation modelling), where all
other economic variables are held constant.
The sensitivity analysis performed in the case of a down-shock does
not include floors to market rates, and it does not include floors on
some wholesale assets and liabilities. However, floors have been
maintained for deposits and loans to customers where this is
contractual or where negative rates would not be applied.
Economic value of equity sensitivity
EVE represents the present value of the future banking book cash
flows that could be distributed to equity holders under a managed
run-off scenario. This equates to the current book value of equity plus
the present value of future NII in this scenario. EVE can be used to
assess the economic capital required to support interest rate risk in
the banking book. An EVE sensitivity represents the expected
movement in EVE due to pre-specified interest rate shocks, where all
other economic variables are held constant. HSBC Continental Europe
is required to monitor EVE sensitivities as a percentage of capital
resources.
Structural foreign exchange risk
Structural foreign exchange (SFX) risk arises from the capital invested
or net assets in a foreign operation (SFX exposure) together with any
associated hedging. A foreign operation is defined as a subsidiary,
associate, joint arrangement or branch of a reporting entity, the
activities of which are conducted in a currency other than that of the
reporting entity.
Unrealised gains or losses due to revaluations of structural foreign
exchange exposures are recognised in other comprehensive income,
whereas other unrealised gains or losses arising from revaluations of
foreign exchange positions are reflected in the income statement.
HSBC Continental Europe's structural foreign exchange exposures are
managed with the primary objective of ensuring, where practical, its
consolidated capital ratios and the capital ratios of individual banking
subsidiaries are largely protected from the effect of changes in
exchange rates.
Pension risk
Overview
HSBC provides future pension benefits on both defined contribution
basis and defined benefit basis in its European operations. Pension
risk refers to the financial and non-financial risk from the pension
plans offered to employees.
Most of the plans in HSBC Continental Europe are defined
contribution pension plans. In these plans the contributions that HSBC
is required to make are known, while the ultimate pension benefit will
vary, typically with investment returns achieved by investment
choices made by the employee. While the market risk to HSBC of
defined contribution plans is low, it is still exposed to operational and
reputational risk.

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In defined benefit pension plans, the level of pension benefit is
known. Therefore, the level of contributions required by HSBC will
vary due to a number of parameters, including:
– Investments delivering a return below that required to provide the
projected plan benefits;
– Prevailing economic environment leading to corporate failures,
thus triggering write-downs in asset values (both equity and debt);
– Change in interest rates, credit spreads or inflation, causing an
increase in the value of the plan liabilities; and
– Plan members living longer than expected (known as longevity
risk).
The most material pension plan in terms of risk exposure is the
defined benefit pension scheme run for the operations in Germany.
The scheme is separated via a Contractual Trust Arrangement. The
liabilities of the plan are covered by assets held in a pension fund.
Key Developments in 2024
There were no major changes regarding the pension risk
management processes in 2024.
Governance and Structure
Pension plans are run by local fiduciaries in line with local legislative
requirements and HSBC policies. As this is the case for the other
types of risk, pension risk follows the HSBC Risk Management
Framework, based on a three lines of defence model.
Funded defined benefit plans invest contributions in a range of
investments designed to limit the risk of assets failing to meet a
plan’s liabilities. Any changes in expected returns from the
investments may also change future contribution requirements. In
pursuit of these long-term objectives, an overall target allocation of
the defined benefit plan assets between asset classes is established.
In addition, each permitted asset class has its own benchmarks, such
as stock market or property valuation indices or liability
characteristics. The asset allocation and benchmarks are reviewed at
least once every three to five years and more frequently if required by
local legislation or circumstances. The process generally involves an
extensive asset and liability review.
Key Risk management processes
The financial risk from material defined benefit plans is subject to risk
indicators regarding the actual surplus or shortfall of assets versus
liabilities and the potential shortfall from future market movements.
The latter risk is assessed using an economic capital model that takes
into account potential variations on both pension assets and pension
liabilities in a one-in-200-year stress test. Scenario analysis and other
stress tests are also used to support pension risk management.

Non financial risk
Operational risk
Overview
In accordance with the French Order of 3 November 2014 modified
the 25 February 2021, operational risk is defined within the HSBC
Group as a risk event which materialises within HSBC due to:
– inadequate or failed internal processes, people, data and systems;
and
– external events, including Legal risk.
This risk includes notably external or internal fraud risk (article 324 of
EU regulation No. 575/2013), non-authorised activities, errors and
omissions (including events characterised by a low probability but
with a high operational loss in case of occurrence), and risks related to
models.
The risk of loss could be materialised under the seven risk categories
as defined in the HSBC Group taxonomy: Financial Reporting and Tax
Risk, Financial Crime and Fraud Risk, Regulatory Compliance Risk,
Legal Risk, Resilience Risk, Model Risk and People Risk.
Regulatory framework
Basel II regulatory dispositions require that banking institutions take
into account the operational risk management on three levels in terms
of:
– Capital requirements to take into account all banking risks and their
economic reality (Pillar I);
– Operational risk framework, meaning an implementation of an
internal framework to manage risks which should enhance the
prudential supervision by the national supervisors (Pillar II); and
– Information and financial communication on the matter, intended
to administrators, supervisory authorities and shareholders (Pillar
III).
Beyond regulatory requirements, managing operational risks and the
permanent evolution of the control framework depending on changing
activities and regulations to reduce losses is a priority for HSBC
Continental Europe and also improves customer experience in its daily
activities.
Operational Risk Management – Methodology
defined by the regulator
Regulators have defined three methods to calculate Operational Risk
capital requirements which are the following:
– Basic approach;
– Standardised approach; and
– Advanced approach.
Each method is linked to specific requirements in terms of risk
management and external information on the framework of which
implementation is a condition for the approach application.
Like HSBC Group, HSBC Continental Europe currently uses the
standardised approach for the calculation of operational risks.
This approach is based on the application of different ratios (beta-
factors which are 12 per cent, 15 per cent and 18 per cent) to the
average gross income (over three years) of each one of the eight
business lines defined by the CRR (Capital Requirement Regulation).
It implies that a method has to be determined to allocate the global
gross income to Basel business lines defined by the regulator. Among
qualitative criteria used for this method, the implementation of an
internal operational risk framework is required and needs to include
the following aspects:
– Regular inventory of operational losses;
– Potential operational risks identification for all entities;

Universal Registration Document and Annual Financial Report 2024 | 219

– Implementation of risk management processes, by defining and
implementing action plans to mitigate the risks and by monitoring
risk indicators;
– Implementation of an independent structure to manage those
risks; and
– Regular communication of information about the evolution of
these risks to the executive management.
Quantitative aspects (non audited)
The Finance department is in charge of calculating the capital
requirements related to operational risks and communicates it to the
Autorité de contrôle prudentiel et de résolution and the European
Central Bank.
First, the Net Banking Income (‘NBI’) is allocated to the eight business
lines defined by the CRR. Then, the capital requirement for each
business line is calculate using the relevant beta-factor. This task
involves splitting the NBI by activity.

| Regulatory Capital Charge %
Basel Lines of Business |
Corporate Finance | 18
Trading and Sales | 18
Retail Banking | 12
Commercial Banking | 15
Payments and Settlement | 18
Agency Services | 15
Asset Management | 12
Retail Brokerage | 12

Qualitative aspects
Enterprise Risk management tasks include the following activities:
– Definition and maintenance of risk appetite, policies and
frameworks;
– Day-to-day advice, guidance and review and challenge;
– Ongoing assurance activities, analysis and aggregation;
– Periodic assurance activities – targeted and specific reviews, and
deep-dives; and
– Operating Non-Financial Risk processes and controls.
Key developments in 2024
In 2024, Enterprise Risk Management supported the safe
transformation of HSBC Continental Europe, by monitoring closely
strategic change execution, while supporting businesses and
functions in managing the operational risk profile within appetite. Risk
culture and awareness has continued to be strengthened by non-
financial risk training and regular forums.
2024 has also been punctuated by the implementation of DORA
requirements including a revised incident reporting process, testing
framework and risk management requirements for Information and
Communication Technology ('ICT') and the Third Party Framework.
In addition, in 2024, an enhancement programme (RMFe: Risk
Management Framework enhancements) was put in place within
HSBC Continental Europe in order to extend the existing framework
on non-financial risks on financial risks. This programme was
established across 4 Financial Risk areas, including Treasury Risk,
focusing on review and documentation of front to back processes at
an appropriate level to allow for identification of material risks and
mapping of key controls.
Key deliverables for this RMFe programme for financial risks are:
– The Risk Taxonomy and Control Library ('RTCL'),
– A target operating model including definition of roles and
responsibilities,
– Implementation of Risk and Control assessment processes to
ensure ongoing monitoring and adequacy of controls.
Governance and structure
The Enterprise Risk Management function provides direction, insight
and challenge on the management of non-financial risks, along with
an overall assessment of the non-financial risk exposure versus Board
appetite.
It is supervised directly by the Chief Risk Officer, brings a holistic
vision of risks and it has a consolidation and harmonisation role and
provides an overview of the main operational risks to the executive
management, the Risk Committee and the HSBC Group, collaborating
with the other Risk Stewards in the Second Line of Defence on
critical subjects, such as risk maps reviews, the design and
monitoring of action plans, incident reporting, risk indicators and
control plans.
To ensure consistent monitoring of operational risks across the bank,
the Enterprise Risk Management function hosts at least 3 times a
year the HSBC Continental Europe Operational and Resilience Risk
forum. The purpose of this forum is to provide guidance and
supervision of non-financial risk management and permanent control.
Within this framework, it is responsible to:
– Examine transversal issues related to operational risk management
or methodological issues;
– Promote the risk culture and knowledge of operational risks by
facilitating exchanges between the stakeholders in the First,
Second and third lines of defence;
– Review the results of the analytical work carried out by the
Enterprise Risk Management function, such as Review and
Challenges, transversal risk tracking and reviews, or RCA and
incidents analysis; and
– Challenge significant First Line of Defence Incidents and Issues.
This framework is supported by forums and committees related to
permanent control and operational risks in businesses and functions,
that oversee oeprational risk management across all HSBC
Continental Europe.
The main deficiencies identified in those fora are escalated to the
HSBC Continental Europe Risk Management Meeting, which provides
a transverse vision of risks to the Chief Risk Officer (Chair of the
RMM), and to the other members of the HSBC Continental Europe
senior management.
Key risk management processes
Risk and Control Assessment
The implementation of Risk and Control Assessment is under the
responsibility of risk and control owners. The Chief Control Officer
teams coordinate the implementation and regular update of Risk and
Control Assessment.
The Risk and Control Assessment is based on an inherent risk
assessment, which corresponds to the most significant risk scenario
that can occur in the next 12 months without considering the control
in place, and the residual risk assessment, which corresponds to the
level of risk remaining considering the control system in place.

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The Risk Prioritisation Matrix ('RPM') is used for the assessment of
inherent and residual risks considering the likelihood and impacts
(financial, reputational, financial and customer).
Mapped risks are assessed on a scale of four levels: Very High, High,
Medium, and Low. This hierarchy of risks is a steering and decision-
making tool for senior management, as it supports the prioritisation of
plans for strengthening or modifying the framework. It is also used by
Assurance teams to develop second-level permanent control plans as
part of a risk-based approach.
The Risk and Control Assessment covers non-financial risks to which
entities are exposed and reflects key controls from the first level
along with the second level control framework that enable the bank to
mitigate the most significant risks. Updated are performed on a
continuous basis and based on triggers such as:
– Results of controls performed by operational teams;
– Results of independent controls done by Assurance teams from
the Second Line of defence;
– Recommendations and Review and Challenges from Risk
Stewards;
– Recommendations from periodic control reports, or third parties
reports (including regulators); and
– Internal or external events.
The Enterprise Risk Management function conducts regularly quality
reviews of material risks identified in RCAs. These reviews include
notably challenge of risk and control assessments and related
remediation actions.
Risk and Control Assessment for non-financial risks, for each business
and function are formally presented to the HSBC Continental Europe
Chief Risk Officer on an annual basis, in presence of the risk owners,
risk stewards and audit.
Incidents management and escalation
Major operational incidents linked to HSBC activities are reported to
the HSBC Continental Europe Risk Management Meeting on the
basis of information stored in the operational risk management
system, Helios. Helios manages in a centralised manner identification
and updating processes, operational losses reports and the follow-up
of action plans that aim to mitigate the main risks.
The Functional Instruction Manual categorises operational incidents
with respect to different natures and distinguishes the various impact
types associated with them. Following a significant incident, the root
cause is investigated through detailed analysis. This is to establish if
there are links between similar processes or controls and the cause,
or causes, of the original incident.
Operational risk losses: quantitative data starting from 2015

Operational losses from 2015 to end of 2024 per risk category(1) (in EUR million) (non audited)
| Ac- count- ing risk | Building Unavail- ability and work- place safety event 3 | People Risk | Fraud (Ex- ternal + In- ternal) 2 | Failure in other prin- cipal risk pro- cessing | Infor- mation, tech- nology, and cyber secu- rity risk | Legal risk | Trans- action pro- cessing 3 | Regu- latory com- pliance risk | Secu- rity of people and phys- ical assets event | Data risk 4 | Finan- cial report- ing and tax risk | Breach of fidu- ciary obliga- tions | Finan- cial Crime event | Model risk | Re- silience risk 3 | Total
2015 | 0.10 | — | 1.10 | 4.90 | 1.80 | — | 0.60 | 4.60 | 3.40 | — | 0.50 | — | — | — | — | — | 17.00
2016 | — | — | 0.60 | 11.10 | (0.20) | — | 0.10 | (15.70) | 36.20 | — | 0.30 | — | — | — | — | — | 32.40
2017 | — | 0.10 | 0.90 | 3.10 | 1.40 | — | — | 3.40 | 0.70 | — | 0.10 | 1.00 | — | — | — | — | 10.70
2018 | 7.83 | — | (0.07) | 2.40 | 0.68 | — | 0.70 | 3.36 | 2.00 | — | 0.10 | 0.40 | — | — | — | — | 17.40
2019 | — | 0.02 | 0.99 | 2.50 | 1.68 | 1.22 | (0.04) | 8.09 | (1.19) | — | — | 1.80 | 0.02 | — | — | — | 15.08
2020 | — | 0.04 | 0.27 | 2.32 | 1.35 | 0.22 | — | 54.32 | 2.70 | — | — | 0.09 | 0.01 | — | 17.11 | 3.28 | 81.70
2021 | — | — | 0.62 | 2.00 | 1.73 | — | (0.02) | 2.96 | 1.05 | — | — | 11.08 | — | 2.07 | — | 2.97 | 19.49
2022 | — | — | (0.02) | 0.51 | 5.85 | 0.07 | — | 4.09 | 4.04 | — | — | (10.77) | — | 0.60 | 0.05 | 3.95 | 3.70
2023 | — | 0.16 | 0.50 | 31.15 | 1.24 | 0.14 | (8.90) | 3.96 | (0.48) | — | — | 2.70 | — | 31.15 | — | 4.18 | 30.40
2024 | — | — | (0.94) | (0.50) | 1.33 | (0.89) | (4.16) | 8.83 | 2.62 | — | 0.46 | 2.06 | — | (0.46) | — | 8.59 | 9.04

1 Figures Source: Operational risk system Helios
2 Fraud (External and Internal) External and Internal Fraud included in financial crime since 2021.
3 Resilience risk include Building unavailability and work- place safety, Safety and Security, Information, technology, and cyber security risk, Data risk, Transaction
processing since 2021.
4 Data risk (previously: Systems and data integrity event)

Universal Registration Document and Annual Financial Report 2024 | 221

Number of financial impacts linked to internal events, per risk category(1) (non audited)
| Ac- count- ing risk | Building Unavail- ability and work- place safety event 3 | People Risk | Fraud (Ex- ternal + In- ternal) 2 | Failure in other prin- cipal risk pro- cessing | Informa- tion, tech- nology, and cyber security risk | Legal risk | Trans- action pro- cessing 3 | Regu- latory com- pliance risk | Secu- rity of people and phys- ical assets event | Data risk 4 | Finan- cial report- ing and tax risk | Breach of fidu- ciary obliga- tions | Finan- cial Crime event | Model risk | Re- silience risk 3 | Total
2015 | 1 | — | 57 | 158 | 40 | — | 17 | 149 | 56 | — | 7 | 2 | — | — | — | — | 487
2016 | — | — | 26 | 136 | 41 | — | 19 | 140 | 51 | — | 10 | — | — | — | — | — | 423
2017 | 1 | 1 | 33 | 117 | 32 | 1 | 5 | 248 | 41 | — | 7 | 3 | — | — | — | — | 489
2018 | 4 | — | 34 | 112 | 35 | — | 8 | 276 | 26 | — | 17 | 6 | — | — | — | — | 518
2019 | — | 1 | 38 | 103 | 63 | 8 | 2 | 194 | 27 | — | — | 9 | 10 | — | — | — | 455
2020 | — | 1 | 35 | 73 | 42 | 8 | — | 183 | 38 | — | — | 2 | 6 | — | 2 | 27 | 417
2021 | — | — | 34 | 66 | 52 | — | 8 | 170 | 68 | — | — | 6 | — | 68 | — | 171 | 407
2022 | — | — | 29 | 103 | 57 | 3 | 0 | 241 | 56 | — | — | 17 | — | 104 | 7 | 251 | 521
2023 | — | 5 | 33 | 240 | 37 | 10 | 9 | 352 | 70 | — | — | 13 | — | 240 | — | 380 | 782
2024 | — | 1 | 88 | 84 | 3 | 15 | 10 | 359 | 83 | — | 10 | 24 | — | 85 | — | 388 | 681

1 Figures Source: Operational risk system Helios
2 Fraud (External and Internal) External and Internal Fraud included in financial crime since 2021.
3 Resilience risk include Building unavailability and work- place safety, Safety and Security, Information, technology, and cyber security risk, Data risk, Transaction
processing since 2021.
4 Data risk (previously: Systems and data integrity event).

RWA and capital requirements related to operational risk to the end of 2024 (non audited)
(in EUR million) | RWAs | Capital requirements
HSBC Continental Europe | 6,688 | 535

Resilience risk
Overview
Resilience risk is the risk that the bank is unable to provide critical
services to its customers, affiliates and counterparties, as a result of
sustained and significant operational disruption. Resilience risk arises
from failures or inadequacies in processes, people, systems or
external events.
The main resilience risks for HSBC Continental Europe in 2024 are,
technology and cyber security, third party and data risks.
Technology and cyber security risk is the risk associated with
disruption to a business service as a result of error or failure of an IT
asset / IT service, or as a result of malicious activity impacting an IT
asset, IT service, or data (including cyber-attack).
Third party risk is the risk of failure to manage Internal and External
Third Parties through the engagement lifecycle leading to a failure to
meet our operational business requirements, impacting HSBC
customers and/or HSBC employees or causing regulatory breaches,
civil or monetary penalties or damage to shareholder value and
reputation.
Data risks include risk of failure in the processing of data by the bank
and its third parties (either on behalf of the bank or to deliver services
to the bank), that could lead to breach of applicable laws and
regulations, including Data Privacy Laws, and/or affect our ability to
provide services to our customers or protect their rights.
Key Developments in 2024
During 2024, the Enterprise Risk Management function, in the
Second Line of Defense, provided enhanced non-financial risk
steward oversight and independent challenges across the legal entity.
HSBC Group and HSBC Continental Europe carried out initiatives to
strengthen the management of resilience risks, notably via:
– Updated material risk taxonomy and control libraries and
assessments;
– Further embedded its governance and oversight of third party,
technology and cyber security as well as data risk management
including remediation programs in these areas;
– Enhanced focus on data risk to mature the control environment in
managing personal data and business data, as part of a multi-year
data strategy program; and
Specifically for third party risk and technology and cyber security risk:
– Enhanced focus on third party risk with the implementation of
DORA requirements on the third party framework, revised incident
reporting process, DORA testing framework and risk management
requirements for information and communication technology.
– Continued work with HSBC Continental Europe's suppliers,
financial infrastructure bodies and other non-traditional third
parties, in an effort to help reduce the threat of cyber-attacks
impacting its business services.

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– Strengthened the way third-party risk is overseen and managed
across all non-financial risks and enhanced processes, framework
and reporting capabilities to improve the control and oversight of
material third parties by global businesses and functions.
Specifically for data risk:
– Enhanced the control environment for risk data aggregation and
risk reporting and for the Artificial Intelligence services to meet
European Artificial Intelligence Act requirements.
Governance and structure
The Enterprise Risk Management function provides a Second Line of
Defense view across resilience risks: data, change execution, third
parties and supply chains; information, technology and cybersecurity;
payments and manual processing; physical security; business
interruption and incident response; facility availability, security and
safety.
All these risks are monitored through dedicated First Line of Defense
committees with an escalation path to the HSBC Continental Europe
Risk Management Meeting ('RMM').
The RMM chaired by the HSBC Continental Europe Chief Risk Officer
is the overarching committee to govern all risks in HSBC Continental
Europe with an escalation path to its counterpart at Regional level,
and to the Executive Committee and the Risk Committee of HSBC
Continental Europe.
Key risk management process
Operational resilience is our ability to anticipate, prevent, adapt,
respond to, recover and learn from operational disruption while
minimising customer and market impact. Resilience is determined by
assessing whether we are able to continue to provide our important
business services, within an agreed level.
HSBC Continental Europe achieves this by adopting and
implementing the HSBC Risk Management Framework. This includes
policies and procedures that define the control environment
implemented across the three lines of defense to manage resilience
risks ensuring the right balance of risk and return, through informed
decision-making and controlled risk-taking.
The bank manages the Resilience risks, through amongst other, the
Risk Appetite Statement and Risk Map. The Risk Appetite Statement
defines the level of risk, the bank would accept to take. It is defined
via qualitative and quantitative indicators with appetite and tolerance
thresholds.
The Risk map gives the aggregated Second Line of Defence opinion
at the entity level of the most material risks and how they are being
managed.
Training and awareness
HSBC Continental Europe understands the important role its people
play in protecting against cybersecurity, data management and third
party risks.
HSBC Continental Europe's mission is to equip every colleague with
the appropriate tools and behaviours they need to keep the
organisation and customers’ data safe. HSBC Continental Europe
provides cybersecurity training and awareness to its people, ranging
from its top executives to IT developers to front-line relationship
managers, and understands the important role of data management,
quality and protection, in order to meet regulatory expectations,
prevent harm to customers and unlock business opportunities via
digital initiatives. In 2024, all staff have been trained on data
protection and Artificial Intelligence.
HSBC Continental Europe has also provided training regarding the
new regulatory requirements concerning DORA.

Model risk
Overview
Model risk is the potential for adverse consequences from business
decisions informed by models, which can be exacerbated by errors in
methodology, design or the way they are used. Model risk arises in
both financial and non-financial contexts whenever business decision
making includes reliance on models.
Key developments in 2024
In 2024, HSBC Continental Europe continued to make improvements
in model risk management processes, amid regulatory changes in
model requirements. Key initiatives during the year included:
– Regulatory approval has been granted for key internal ratings-
based (‘IRB’) models used for credit risk, with some limitations
imposed by the ECB;
– The redevelopment, validation and regulatory submission of
internal model method ('IMM') models for counterparty credit risk.
These new models have been built to enhanced standards using
improved data as a result of investment in processes and systems;
– HSBC Continental Europe continued the remediation of regulatory
measures, in particular for internal model approach (‘IMA’),
internal model method (‘IMM’) and prudent valuation models;
– The models impacted by changes to alternative rate setting
mechanisms due to the Ibor transition were redeveloped, validated
and put into production;
– HSBC Continental Europe continued to embed, the governance
and oversight around model adjustments and related processes for
IFRS Accounting Standards models and Sarbanes-Oxley controls;
and
– HSBC Continental Europe continued to enhancing its model risk
management framework, including by strengthening staffing in the
areas of model development and model validation.
Governance and structure
The Model Risk Management function provides oversight to model
risk in HSBC Continental Europe by performing the following key
activities:
– Ensuring that model risk is managed within the approved appetite
levels;
– Providing assurance on the implementation of the model risk
policy;
– Monitoring regulatory developments impacting model risk; and
– Independently validating models, providing an objective, unbiased
and critical opinion on the suitability and soundness of models for
their intended use and the accuracy, relevance and completeness
of outputs used to inform business decisions..
Key risk management processes
Through its model risk management framework HSBC Continental
Europe aims to ensure that:
– All models used are identified and recorded in the central model
inventory.

Universal Registration Document and Annual Financial Report 2024 | 223

– Models are designed to be fit-for-purpose by understanding the
business requirements, applying appropriate modelling and
documentation standards, and through effective review and
challenge.
– Models are implemented accurately into the systems and
properly deployed to model users, enabling the identification and
management of risks from model usage.
– Models remain fit-for-purpose through ongoing monitoring,
assessments and independent validations. Change management
and model overlays are carried out in a controlled manner.
– Models that have reached the end of their useful life are properly
decommissioned.
Model Risk Management regularly reports on model risk matters to
the HSBC Continental Europe Risk Management Meeting and the
Risk Committee via the risk map, risk appetite metrics and dedicated
papers. Model Risk Management regularly reviews the effectiveness
of these processes to help ensure appropriate understanding and
ownership of model risk is embedded in the businesses and
functions.

Legal risks and litigation management
Overview
The HSBC Continental Europe Legal Department is responsible for
HSBC Continental Europe’s legal risk oversight as a Second Line of
Defence in helping HSBC Continental Europe businesses and
functions to prevent and control legal risk. As a First Line of Defence,
the Legal Department manages and controls its operational risks.
The Legal Department is in charge of litigation follow-up. The HSBC
Continental Europe Legal Department also supervises legal teams in
the HSBC Continental Europe subsidiaries and branches.
Key developments: Litigation
monitoring with regard to HSBC
Continental Europe entities
The status of the risks arising from significant litigation in progress
against HSBC Continental Europe is examined monthly by a
committee run by the Financial Controller, chaired by the Chief
Financial Officer and the Chief Risk Officer and is made up notably of
representatives of the Finance Department, the Credit Department
and the Legal Department. This committee decides the amount of
any litigation risk provision to be charged or written back.
Cases in progress as at 31 December 2024 involving legal risks likely
to have a significant effect on the financial situation of HSBC
Continental Europe are set out below.
The Apollonia case
As was the case for around 20 other banks, HSBC worked during a
limited period of time (from early 2006 to April 2007), and mainly in
one branch, with a financial adviser and estate agent, known as
Apollonia. The latter offered its clients (mainly independent
professionals) ‘turnkey’ tax efficient products of the Loueur Meublé
Professionnel (‘LMP’) (professional lessor of furnished
accommodations) type and for a small number of investors ‘Loi
Robien’ type tax efficient products.
Between April 2006 and April 2007, 184 property loan applications
were approved, for a total of EUR 29 million, bearing in mind that
different media have said the total amount of operations by Apollonia
with all banks purportedly reached around EUR 2 billion.
At the end of September 2008, HSBC Continental Europe became
aware of the use of inappropriate marketing methods by Apollonia.
Moreover, it appeared that most of the borrowers took out several
loans through Apollonia from various banks without notifying HSBC
Continental Europe.
HSBC Continental Europe is involved in the litigation as a civil law
party, giving it access to the criminal file. From this, it has become
apparent that a very large proportion of the authorisations signed by
the various buyers giving authority to sign purchase and sales deeds,
were not properly prepared by notaries, thereby giving rise to
counterclaims against loan reimbursement..
HSBC Continental Europe systematically files proceedings against
investors with loan repayments due but the hearings are often held in
abeyance because of the criminal proceedings underway, against
third parties (and not including HSBC Continental Europe). However,
in order to settle the financial aspects of the matter, without waiting
for the outcome of criminal proceedings, out-of-court settlements
have already been reached with some borrowers and talks are
continuing with other borrowers. Proceedings have also been
commenced against the notaries involved and their insurer MMA.
These proceedings have also been adjourned for the time being.
HSBC Bank Polska S.A.: ACTION Case
On 29 June 2018, HSBC Continental Europe acquired from HSBC
Bank plc 100 per cent of the shares of HSBC Bank Polska S.A.
Pursuant to the terms of the Sale and Purchase Agreement, HSBC
Continental Europe and/or its subsidiaries will be indemnified by
HSBC Bank plc in respect of certain liabilities relating to the activities
of HSBC Bank Polska S.A. prior to the acquisition of HSBC Bank
Polska S.A. including the following legal proceeding. In April 2017,
ACTION brought an action against HSBC Bank Polska S.A. alleging,
among other things, breach of a facility agreement and claiming
damages and indemnification for lost profits. The proceeding is
ongoing.
European interbank offered rates
investigations and litigation
See Note 32 of the consolidated financial statements with regard to
other significant legal proceedings and regulatory matters relating to
HSBC Group entities generally, including HSBC Continental Europe.
Tax-related investigations
See Note 32 of the consolidated financial statements with regard to
other significant legal proceedings and regulatory matters relating to
HSBC Group entities generally, including HSBC Continental Europe.
Other regulatory, civil law or arbitration
proceedings
To date, as far as HSBC Continental Europe is aware, it is not
threatened by any other regulatory, civil law or arbitration proceedings
that are in progress or threatened against it that might have, or over
the last 12 months have had, any significant effect on the financial
situation or the profitability of the company and/or of the HSBC
Group.
Governance
The Legal Department is responsible for running the Legal Risks
Forum which meets quarterly with representatives of all business
lines and functions to examine situations likely to give rise to specific
and significant legal risks. The Legal Department participates in the
Product Approval Committee, in the Enterprise Risk Management
Forum, the Regulatory Change Forum and in the Risk Management
Meeting of HSBC Continental Europe, and is involved in due diligence
procedures for market operations, structured transactions and any

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Risk

new acquisition (or disposal) of an entity or business by HSBC
Continental Europe.
The Legal Department is also responsible for managing risks, directly
or indirectly, connected with defence litigation matters. It is involved
in dealing with credit files requiring special management or in default.
The Legal Department monitors other risks that might have a legal
impact.
Key risk management processes
The Legal Risks Forum is chaired by the HSBC Continental Europe
General Counsel and ensures that the risk framework for legal risks
remains adequate in the face of changes in laws, regulations and
group organisation.
The Forum also examines the monitoring of incidents raised
previously, the results of implemented legal risk controls, along with
any new incidents and measures and actions taken.
This framework is effective and a detailed description of it is given in
an internal procedure.
A legal risk taxonomy has been defined to harmonise the
identification and control of legal risks within the HSBC Group. The
Legal Department is involved in the review and control of the legal
risks and controls assessed by the businesses and functions in their
various Risk and Control Assessments.

Compliance
Regulatory Compliance
Overview
Regulatory compliance risk is the risk associated with breaching our
duty to clients and other counterparties, inappropriate market conduct
and breaching related financial services regulatory standards.
Regulatory compliance risk arises from the failure to observe relevant
laws, codes, rules and regulations and can manifest itself in poor
market or customer outcomes and lead to fines, penalties and
reputational damage to our business.
Key developments in 2024
Regulatory horizon scanning and mapping capabilities continue to
evolve with the focus on enhanced connectivity to risk management
systems to support better traceability of regulatory obligations.
Climate risk has been integrated into regulatory compliance policies
and processes, with enhancements being made to the Product
Governance Framework and to controls, in order to ensure the
effective consideration of Climate risk, in particular Greenwashing
risk.
Governance and structure
The Chief Compliance Officer of HSBC Continental Europe reports
directly to the HSBC Continental Europe Chief Executive Officer and
Executive Committee as well as the supervisory body through the
Risk Committee and the Board of Directors in accordance with
Articles 30 and 31 of the French Order of 3 November 2014 modified
on 25 February 2021.
The Chief Compliance Officer carries out the roles of Head of
Compliance for Investment Services (‘RCSI’) for HSBC Continental
Europe in respect of Articles 312-1 and 312-2 of the General
Regulation of the AMF. The Heads of Compliance for Investment
Services (RCSI) for HSBC Continental Europe’s three Lines of
Business (Global Banking and Markets, Commercial Banking and
Wealth and Personal Banking) in respect of Articles 312-1 and 312-2
of the General Regulation of the AMF, as well as the different ‘RCSI’
or Heads of Compliance and Internal Control (‘RCCI’) for the legal
entities of HSBC Continental Europe, fall under the HSBC Continental
Europe Chief Compliance Officer’s responsibility. For the EU branches
of HSBC Continental Europe, the organisation principles described
above apply in a similar way.
The main formal risk governance body is the HSBC Continental
Europe Risk Management Meeting (RMM). The Continental Europe
Chief Compliance Officer is a member, and provides updates for
noting, discussion and approval. Conduct continues to be a key area
of focus for ensuring behavioural expectations and good conduct
outcomes are being achieved with multiple initiatives. Conduct-related
performance is covered by the quarterly Conduct and Values
Committee (CVC) chaired by the Chief Executive Officer and attended
by Executive Committee members. It is responsible for carrying out
decisions and for ensuring that the issues are appropriately tracked
within the Quarterly Conduct and Values Committee structure. The
Quarterly Conduct and Values Committee provides decision-making
and guidance in respect of conduct and regulatory compliance risk
and takes responsibility for the tracking of escalated issues.
Key risk management processes
HSBC Continental Europe has specific compliance examination
procedures, in accordance with the provisions of Articles 35 to 38 of
the French Order of 3 November 2014 modified on 25 February 2021
relating to the internal control systems of banks, as well as tools for
detecting and preventing non-compliance risks. These procedures and
tools are the subject of regular updates.
The Compliance function is engaged in setting policies, standards and
risk appetite to guide the management of regulatory compliance risks.
It also devises clear frameworks and support processes to mitigate
regulatory compliance risks. T he function provides oversight, review
and challenge to the country Chief Compliance Officers and their
teams to help them identify, assess and mitigate regulatory
compliance risks, where required. The regulatory compliance risk
policies are regularly reviewed. Policies and procedures require the
prompt identification and escalation of any actual or potential
regulatory breach. Relevant reportable events are escalated to the
HSBC Continental Europe RMM and Risk Committee, as appropriate.
Staff training and awareness
The Compliance function of HSBC, in conjunction with the training
department, draws up an annual mandatory staff training programme
covering compliance-related risks. Training sessions, classroom-based
or in the form of e-learning, are organised in the different businesses
and functions. These training activities include notably a focus on the
requirements of regulators and supervision authorities and the
importance of effective relationships with them.
In 2024 three mandatory training courses for all employees have been
delivered. Topics included a risk management, sustainable
development and carbon-neutral strategy, health and safety,
wellbeing, financial crime risk, cybersecurity, data management, and
destructive behaviours such as bullying or retaliation, in addition to
Conduct and integrity training. Mandatory training was rolled out to all
HSBC staff and had to be carried out within a given time frame. They
are part of the staff performance assessment.
Regulators and governments
HSBC Continental Europe proactively engages with regulators and
governments to facilitate strong relationships through virtual and in-
person meetings and by responding to consultations individually and
jointly via industry bodies. Under the consolidated approach to non-
compliance risks, the Compliance function ensures centralised

Universal Registration Document and Annual Financial Report 2024 | 225

monitoring of regulatory engagements within entities of HSBC
through the Regulatory Affairs team. HSBC Continental Europe
records the material regulatory engagements between HSBC, its
regulators and supervision authorities in a tool dedicated to the
supervision.
Financial Crime
Overview
Financial crime risk is the risk of knowingly or unknowingly helping
parties to commit or to further illegal activity through HSBC, notably
Money Laundering, terrorist, and proliferation of weapons of massive
destruction financing, tax evasion, bribery and corruption, non-respect
of international sanctions, fraud, and market abuse. Financial crime
risk arises from day-to-day banking operations involving customers,
third parties and employees.
Key developments in 2024
During 2024, HSBC Continental Europe has continued its efforts to
combat financial crime and reduce the impact of such crimes on the
organisation, customers, and communities. The Bank has been
committed to working in partnership with the wider industry and the
public sector in managing financial crime risk, protecting the integrity
of the financial system. HSBC has participated in numerous public-
private partnerships and information-sharing initiatives around the
Europe region.
There have also been several key regulatory developments. The EU
AML package proposed by the European Commission in 2021,
consisted of four material regulatory developments that have various
implementation dates and are being monitored:
– The creation of the new EU Anti-Money Laundering Authority
(AMLA), which will have supervisory powers over certain obliged
entities. On 13 December 2023, the Council and Parliament
r eached an agreement on the creation of this new authority;
– A regulation 2023/1113 replacing EU regulation 2015/847
regulation on transfer of funds, includes transfers of crypto-assets.
The regulation was published in 2023 with an implementation date
of 31 December 2024;
– The Anti-Money Laundering Regulation (AMLR), which was
published 31 May 2024 and requires implementation by July 2027;
– A directive on anti-money-laundering mechanisms (the “AML
Directive”).
The previous 12 months saw increased regulatory focus on sanctions,
sanctions evasion and controls employed by financial institutions (in
particular screening). The dynamic and complex external sanctions
environment has created challenges for financial institutions and their
customers to navigate; this contributes to the sanctions risk to HSBC
Continental Europe, which includes indirect risk from the activity of
customers. HSBC Continental Europe has a robust and embedded
sanctions compliance programme which is operationally effective.
The developments related to sanctions against Russia continued to be
a key area of attention during 2024. Up to fifteen packages of
sanctions (commercial and financial restrictions) have been
implemented. Their number and complexity raised the need to set up
continuous exchanges and discussion with the French Treasury and
Banking Federation. HSBC has enhanced its screening and non-
screening controls to aid the identification of potential sanctions risk
related to Russia, as well as risk arising from export control
restrictions. Notwithstanding the above, where necessary, HSBC has
enhanced existing sanctions policies, procedures, and controls in
order to mitigate the risk associated with Russia-related sanctions.
The external sanctions environment remains volatile and is being
closely monitored by the bank.
Governance and structure
The HSBC Continental Europe Head of Financial Crime and Money
Laundering Reporting Officer ('MLRO') reports directly to the Chief
Compliance Officer, who reports directly to the HSBC Continental
Europe Chief Executive Officer and Executive Committee as well as
the supervisory body through the Risk Committee and the Board of
Directors. The Chief Compliance Officer is a member of the HSBC
Continental Europe Risk Management Meeting (main formal risk
governance body) and the MLRO/Head of Financial Crime provides
updates for noting, discussion and approval.
Key risk management processes
HSBC Continental Europe has specific compliance examination
procedures, in accordance with the provisions of Articles 35 to 38 of
the French Order of 3 November 2014 modified on 25 February 2021
relating to the internal control systems of banks, as well as tools for
detecting and preventing non-compliance risks. These procedures and
tools are the subject of regular updates and upgrades. HSBC
Continental Europe is committed to acting with integrity and has built
a strong financial crime risk management framework across all its
businesses and the EU countries in which it operates. The Bank
complies with the law and regulation of all the markets in which it
operates applying consistently high financial crime prevention rules. In
cases where material differences exist between the law and
regulation, its policy adopts the highest standard while acknowledging
the primacy of local law. The Bank continues to assess the
effectiveness of its end-to-end financial crime risk management
framework and invest in enhancing its operational control capabilities
and technology solutions to deter and detect criminal activity. Finally,
the Bank also further strengthened its financial crime risk taxonomy,
control libraries, investigative and monitoring capabilities through
technology deployments.
The HSBC Continental Europe financial crime is engaged in setting up
standards, policies, and risk appetite to guide the management of
financial crime risks and support processes to mitigate them. The
HSBC Continental Europe financial crime provides oversight, review
and challenge to the Chief Compliance Officers and their teams in the
EU locations to help them identify, assess, and mitigate complex
financial crime matters, where required. The financial crime risk
policies are periodically reviewed and updated. They require a prompt
identification and escalation of any actual or potential regulatory
breach. Relevant reportable events are escalated to the HSBC
Continental Europe RMM and Risk Committee, as appropriate.
Staff training and awareness.
In 2024, three mandatory training courses for all employees have
been delivered and included (among others) topics related to financial
crime risk management, money laundering, tax evasion, sanctions,
fraud, bribery and corruption, terrorist financing and proliferation
financing.

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Risk

Climate and environmental risks
management
Overview
Climate change poses different risks to the stability of the financial
system and these risks are collectively referred to as ‘Climate risk’.
HSBC climate risk approach identifies two primary drivers of climate
risk:
– Physical risk - risk arising from the increased frequency and
severity of extreme weather events or perils, such as hurricanes
and floods, or chronic gradual shifts in weather patterns or sea
level rise; and
– Transition risk - risk arising from the process of moving to a net
zero economy, including changes in government policy and
legislation, technology, market demand, and reputational
implications triggered by a change in stakeholder expectations,
action or inaction.
In addition to these primary drivers of climate risk, there are the
following thematic issues related to climate risk which are most likely
to materialise in the form of reputational, regulatory compliance and
litigation risks have been identified.
– Net zero alignment risk, which arises from the risk of HSBC failing
to meet its net zero commitments or failing to meet external
expectations related to net zero because of inadequate ambition
and/or plans, poor execution, or inability to adapt to changes in
external environment; and
– The risk of greenwashing, which arises from the act of knowingly
or unknowingly making inaccurate, unclear, misleading or
unsubstantiated claims regarding sustainability to stakeholders of
the Bank.
Climate risk capabilities are developed across HSBC Continental
Europe’s businesses, by prioritising sectors, portfolios and
counterparties with the highest impacts. HSBC Continental Europe
continues to make progress in enhancing its climate risk capabilities,
and recognises it is a long-term iterative process.
HSBC Continental Europe may also be exposed to nature-related risks
beyond climate change.
Nature-related risk is defined as a potential threat posed to HSBC
Continental Europe linked to its organisation´s dependencies on
nature and its nature impact. Similar to climate change, nature-related
risk can be understood and managed through two main channels:
– Physical risk is driven by dependencies on nature and arises when
natural systems, and therefore their benefits to society are
compromised through human activity or otherwise; and
– Transition risk is driven by changes introduced to halt or reverse
damage to nature and arises when the changes required are costly
to businesses and/ or households.

Approach
The physical impacts of climate change, biodiversity loss and
ecosystem services degradation in addition to the transition to a net
zero economy can create significant financial risks for companies,
investors and the financial system.
HSBC Continental Europe may be affected by climate and nature-
related risks either directly or indirectly through its relationships with
customers, which could result in both financial and non-financial
impacts.
HSBC Continental Europe's climate and nature-related risk approach
aims to effectively manage material climate and nature-related risks
that could impact HSBC Continental Europe‘s operations, financial
performance and stability, and reputation. It is informed by the
evolving expectations of the regulatory banking environment.
HSBC climate risk approach and HSBC Continental Europe nature-
related risk approach are aligned to HSBC Group-wide risk
management framework and three lines of defence model, which
sets out how risks are identified, assessed and managed.
For further details of the three lines of defence framework, see page 167.

Universal Registration Document and Annual Financial Report 2024 | 227

The table below provides an overview of the climate and nature risk drivers and thematic issues considered within the HSBC Group climate risk
approach and HSBC Continental Europe nature-related risk approach.

Risk drivers | Details | Potential Impacts | Time horizons
Physical | Climate - Acute | Increased frequency and severity of weather events causing disruption to business operations | – Decreased real estate values – Decreased household income and wealth – Increased costs of legal and compliance – Increased public scrutiny – Decreased profitability – Lower asset performance | Short term Medium term Long term
Climate - Chronic | Longer-term shifts in climate patterns (e.g. sustained higher temperatures, sea level rise, shifting monsoons or chronic heat waves)
Nature- Acute | Increased severity of sudden and event-driven disruptions in natural systems (e.g. leak, accidental discharges such as oil spill, pest outbreaks) affecting loss of key species and crop productivity
Nature - Chronic | Gradual and long-term degradation of ecosystems causing reduced supply of natural stocks (e.g. crop yield) and quality of ecosystem services (e.g. clean water)
Transition | Policy and legal | Mandates on, and regulation of, existing products and services. Litigation from parties who have suffered from the effects of climate change and nature degradation
Technology | Replacement of existing products with lower emission options
End-demand (market) | Changing consumer demand from individuals and corporates
Reputational | Increased scrutiny following a change in stakeholder perceptions of climate and nature-related action or inaction

Thematic issues |
Net zero alignment risk | Net zero ambition risk | Failing to set or adapt HSBC net zero ambition and broader business strategy in alignment with key stakeholder expectations, latest scientific understanding and commercial objectives.
Net zero execution risk | Failing to meet HSBC net zero targets due to taking insufficient or ineffective actions, or due to the actions of clients, suppliers and other stakeholders.
Risk of greenwashing | Net zero reporting risk | Failing to report emissions baselines and targets, and performance against these accurately due to data, methodology and model limitations.
Firm | Making inaccurate, unclear, misleading, or unsubstantiated claims in relation to HSBC sustainability commitments and targets, as well as the reporting of its performance towards them.
Product | Making inaccurate, unclear, misleading or unsubstantiated claims in relation to products or services offered to clients that have stated sustainability objectives, characteristics, impacts or features.
Client | Making inaccurate, unclear, misleading or unsubstantiated claims as a consequence of bank's relationships with clients or transactions HSBC undertake with them, where their sustainability commitments or related performance are misrepresented or are not aligned to HSBC own commitments.

Climate and nature risk annual materiality assessment helps HSBC
Continental Europe to understand how climate and nature-related
risks may impact HSBC’s risk taxonomy. The assessment considers
short-term (up to 2026), medium-term (2027 – 2035) and long-term
(2036 – 2050) periods. The table below
provides a summary of how climate and nature risks may impact a
subset of HSBC Continental Europe’s principal risks.
In addition to this assessment, climate and nature-related risks are
considered in the risk factors reporting and scenario analysis
For further details, see ‘Environmental, Social and Governance ('ESG')’ on
page 172 and the s ection "Resilience of the strategy and business model" in
Sustainability Statement, page 68.

Climate/Nature risk drivers | Credit risk | Traded risk | Strategic risk including Reputational risk 1 | Regulatory compliance risk 1 | Resilience risk | Other financial and non- financial risk types
Physical risk | u | u |  |  | u | u
Transition risk | u | u | u | u | u | u

u | Relevant risk driver

1 HSBC climate risk approach identifies thematic risk issues such as HSBC net zero alignment risk and the risk of greenwashing, which could materialise in the
form of reputational, regulatory and litigation risks.

228 | Universal Registration Document and Annual Financial Report 2024

Risk

Key developments in 2024
ESG risk management capabilities have been enhanced over the year
and in particular for climate and nature.
The following outlines key developments in 2024:
– Nature-related risks management approach has been implemented
in addition to the climate risk one with specific guidance to support
the understanding of the risks associated to nature.
– Approach for managing HSBC net zero commitment in its
wholesale portfolio have started to be enhanced, through
developing portfolio steering capabilities and revenue
assessments.
– Approach for assessing the impact of climate change on capital,
focusing on credit, market and operational risks has been
enhanced.
– Internal climate scenario analysis has been enhanced, including
through improvements to input data and models (e.g. power
generation). For further details of scenario analysis, see section
'Resilience of the strategy and business model' on page 59 under
Sustainability Statement.
– First internal nature scenario analysis has been developed, building
up nature-related risks knowledge development and a foundational
modelling approach.
– Approach for managing and mitigating the risk of greenwashing
has been enhanced.
– Development of climate risk guidelines for relationship managers
to further embed climate risk considerations into credit risk
assessments.

Governance
ESG risk is considered within the existing HSBC Continental Europe
governance structure to ensure that Board and Senior management
have adequate oversight of ESG risk issues.
For further details on the HSBC Continental Europe’s ESG governance
structure, see Sustainability Statement page 55.
Risk appetite
Climate risk indicators form part of the HSBC Continental Europe’s
risk appetite statement and support the business in delivering HSBC
net zero ambition effectively and sustainably.
The climate risk appetite statement is approved and overseen by the
Board. Additional climate Key Management Information metrics
('KMI') are defined. Climate risk indicators are reported on a quarterly
basis for oversight by the CESGROF and the HSBC Continental
Europe SEG. Both RAS and KMI metrics are reported on a bi-annual
basis for oversight by HSBC Continental Europe Risk Management
Meeting and Risk Committee.

Policies, processes and controls
HSBC Continental Europe continues to integrate climate and Nature
risks into policies, processes and controls across many areas of the
organisation an d will continue to be updated as its climate and nature-
related risk management capabilities mature over time.
For further details on how environmental risk is managed in HSBC
Continental Europe, see Sustainability Statement – section 'Managing
climate-related risks' page 77 and 'Managing nature-related risks' Page 84.

Embedding climate and nature-
related risk approaches
Climate and nature-related risks are cross cutting risks which may
have far-reaching, complex, and nuanced impacts across the risk
taxonomy.
The table below provides further details on how the management of
climate and nature-related risks have been embedded over key risk
types.

Risk type | Approach
Wholesale Credit Risk | Similar to previous years, various tools and supporting information are used for the identification and assessment of climate risks (transition and physical risks) for HSBC Continental Europe’s wholesale corporate population at client and portfolio level. A key update for 2024 is the integration of nature risk in the materiality assessment for the wholesale corporate population. Although climate and nature are intrinsically linked, the approach is to start to isolate Nature specific effects by focusing on drivers and transmission channels that are not captured in the climate model. HSBC Continental Europe relationship managers engage with wholesale corporate customers with the highest climate risk characteristics through a Transition Engagement Questionnaire to assess the alignment of their business models to net zero and their exposure to transition and physical risks. The responses in the questionnaire are used to create a climate score for key corporate customers. A dedicated section on nature has been added to the Transition Engagement Questionnaire to capture information and data related to nature risks. This allows for the calculation of a nature score in addition to the climate score for HSBC Continental Europe key corporate customers. However, information and data on nature are still in the early stages. This is an initial approach that will need to be refined over time as data on nature becomes more granular. Credit policies require that relationship managers comment on climate risk factors in credit applications for new money requests and annual credit reviews. Therefore, climate risk guidelines have been developed to further embed climate risk considerations into credit risk assessments. HSBC credit policies also require manual credit risk rating overrides if climate and/or nature is deemed to have a material impact on credit risk, if not already captured under the original credit risk rating. Quarterly climate RAS metrics are in place to monitor the exposure of HSBC Continental Europe corporate lending portfolio to 6 high risk sectors. These metrics aim to balance HSBC Continental Europe strategy to support clients in transition while also ensuring that the overall portfolio climate profile does not deteriorate.

Universal Registration Document and Annual Financial Report 2024 | 229

Risk type | Approach
Retail Credit Risk | Climate and nature risks may impact retail credit risk through an increase in credit losses on HSBC Continental Europe's retail mortgage portfolio in France, primarily due to the impact of physical risk. The current climate and nature assessments, indicate that the France retail mortgage portfolio remains resilient to climate risk, with insurance coverage being a key loan covenant with 95 per cent of the portfolio secured by Credit Logement. Within the Retail mortgage portfolios (including France, Luxembourg and Malta), properties or areas with potentially heightened physical risk are identified and assessed locally with exposure monitored using risk indicators. A reduction in property value, higher insurance costs and insurance availability are potential future negative financial impacts for higher physical risk properties. Retail France Mortgage portfolio – Run off portfolio Physical Risk: assessment of the exposure to six natural hazards: subsidence, wildfire, flood, wind, sea level rise and temperature Subsidence represents the most significant hazard for the French territory and HSBC Continental Europe's retail portfolio. It was assessed that 16 per cent of the portfolio has high exposure to subsidence. Considering that 95 per cent of the portfolio is secured by Crédit Logement, it is finally assessed that only 2 per cent of the portfolio has high subsidence risk. For wildfire risk, 8 per cent of the portfolio is located in areas with high exposure (south-east of France mainly). When considering the guarantee associated with Crédit Logement, the proportion of the portfolio with high risk decreases to 2 per cent. Regarding flood risk, both marine submersion and river overflow were analysed. For both types, less than 1 per cent of the portfolio is located in areas with high exposure. When accounting for the Crédit Logement guarantee, the portfolio proportion at high risk reduces to less than 0.1 per cent. Transition Risk: Energy Performance Certificate (‘EPC’) ratings of individual properties from A (highest efficiency) through to G (least efficient) are commonly used as an indicator of transition risk in the France mortgage book.. The ratings were obtained through a third-party vendor estimate at the end of 2021. From 2022, the EPCs were obtained from origination system. 18 per cent of the properties’ rating remain unknown. 19.6 per cent of properties have a rating between A and C. The most common rating is D with a 35 per cent proportion of the portfolio. Finally, circa 27 per cent of properties are rated E, F, or G.
Treasury Risk | Treasury Risk Climate and nature risks could impact treasury-related risks through increased regulatory requirements or from changes to customer behaviour. From a liquidity and funding perspective, climate and nature risks could result in increased liquidity outflows in the immediate term (as the result of a natural disaster or reputational event, for example), or over the longer-term horizon, lower levels of stable funding from clients in sectors that are exposed to transition risks, for example. As part of the annual ICAAP, HSBC Continental Europe assesses the impact of climate change on capital, focusing on credit risk, market risk and operational risk and perform sensitivity analysis on the Internal Capital Planning Buffer. As part of the annual ILAAP, HSBC Continental Europe assesses how climate and nature risks could impact the entity’s liquidity position. As part of the Internal Climate Scenario Analysis (‘ICSA’), an exploratory scenario has been developed to understand the impact of a potential greenwashing event on the entity’s liquidity position impacting notably deposits and undrawn commitments from high risk sectors. HSBC Continental Europe also monitors its deposit base by sector to assess its funding exposure to high risk sectors. Climate-related topics that may impact Global Treasury are discussed at climate-related governance forums, including the Treasury Risk Management Climate Risk Oversight Forum and the Group Treasury Sustainability Committee. Insurance risk Climate risk could result in losses on HSBC Continental Europe insurance assets due to changes in macroeconomic parameters. HSBC has an evolving programme to support the identification and management of climate risk. To improve the assessment of the impact of climate risk on the profitability and the solvency of the company, a climate stress scenario was included in the ORSA process (Own Risk and Solvency Assessment). This scenario assesses the impact on the value of the assets of the company of an orderly transition scenario as this scenario appears to be the worst case scenario for the company due to the high level of exposure of our assets to the transition risk. This scenario also includes evolutions on the behaviour of the clients, with an increase in lapses. Pensions risk Climate risk could result in additional costs within HSBC’s defined benefit pension plans due to changes in the investment performance of the assets held to cover pension liabilities or through having to meet evolving regulatory requirements. Climate considerations are explicitly reflected in HSBC’s policies regarding the oversight of pension asset investments. HSBC also conducts an annual exercise to estimate the exposure of largest pension plans to climate risk.
Traded Risk | Climate risk may result in trading losses due to increases in market volatility and widening spreads from the macro and microeconomic impacts of transition and physical risks. Climate risks limits have been implemented in trading mandates at entity and desk levels to monitor exposure to climate-sensitive sectors and countries across different asset classes in the Markets and Securities Services (‘MSS‘) business. The market risk policies include specific climate risk control requirements, which ensure that climate risk limits and utilisations are monitored in the same way as market and traded credit risk exposures. Monthly stress testing is conducted to understand the vulnerabilities of the trading portfolio to various climate scenarios, which are refined on an annual basis, with the results reported to senior management. A specific scenario is used for quarterly economic capital assessment and to ensure the sufficient Pillar1 capital. The nature risk framework is following the same Risk Appetite Framework. The first Stress Testing result on Nature risk was made available at the end of 2024.
Reputational Risk | HSBC Continental Europe manages the reputational impact of climate risk through its broader reputational risk framework supported by sustainability risk policies and metrics. HSBC sustainability risk policies set out the Group's appetite for financing activities in certain sectors. HSBC's thermal coal phase out policy and energy policy both aim to drive down greenhouse emissions while supporting a just transition. HSBC Continental Europe's network of sustainability managers provide local policy guidance to relationship managers for the oversight of policy compliance and implementation over wholesale banking activities. HSBC Continental Europe supports the HSBC Group in achieving its financed emissions targets and has implemented key management indicators to monitor its contribution.

230 | Universal Registration Document and Annual Financial Report 2024

Risk

Risk type | Approach
Regulatory Compliance Risk | Regulatory Compliance is responsible for the oversight and management of climate-related risks that could cause breaches of HSBC Continental Europe's regulatory duties to customers and inappropriate market conduct, ensuring fair customer outcomes are achieved. Policies to incorporate considerations for ESG and climate risks have been updated, particularly in relation to new and ongoing product management, sales outcomes, and product marketing. To support key policies, the underlying control frameworks and processes have been enhanced. This includes the integration of greenwashing risk and controls considerations in the design of new products and product changes, as well as in relation to marketing materials. From a product sales perspective, key control principles have been established and desired outcomes throughout the sales lifecycle, encompassing the sales journey design, training and competence, supervision, sales quality, and governance. HSBC Continental Europe is also monitoring regulatory and legislative developments related to the ESG and climate agenda.
Resilience Risk | Resilience risks may potentially crystallise through physical climate risk impacts to HSBC Continental Europe buildings supporting service provision, or through physical and/or transition disruption to HSBC Continental Europe's third party supply chain relationships. Metrics to assess how physical risk may impact HSBC Continental Europe critical properties and to monitor progress against its contribution to HSBC Group own operations net zero ambitions have been implemented. Resilience risk policies, for example Information Technology and cyber security risk, are subject to continuous improvement to remain relevant to evolving climate risks.
Model Risk | Model risk in the ESG context refers to the uncertainties and complexities inherent in the modelling of the financial impact translation of climate-related changes and scenarios. Climate risk models are used for climate scenario analysis, risk management, and emissions reporting among other use cases. Climate risk modelling is at a nascent stage, with challenges - including limitations in data availability, consistency and quality - shared across the industry. HSBC Group has developed model risk procedures, applicable to HSBC Continental Europe, that set out the minimum control requirements for identifying, measuring and managing model risk for climate-related models. All identified climate-related models are subject to the internal model lifecycle controls and policy.
Financial Reporting Risk | The increase of ESG-related regulatory reporting requirements has an impact on financial reporting risk. The scope of financial reporting risk includes the accuracy and completeness of ESG and climate reporting. HSBC Continental Europe has no appetite for material errors in ESG disclosures,to be weighted with the evolving requirements and data availability. In addition, HSBC Continental Europe internal controls incorporate requirements for addressing the risk of misstatement in ESG and climate reporting. To support this, a framework is used to provide guidance on control implementation over ESG and climate reporting and disclosures, which includes areas such as process and data governance, and risk assessment. Financial Reporting Risk oversight activity for HSBC Continental Europe is increasing in response to the new requirements where the Framework has been applied over new disclosures such as the Corporate Sustainability Reporting Directive ('CSRD').

Challenges
Key challenges include:
– Diverse range of data sources and data structures needed for
climate and environmental related reporting creates data accuracy
and reliability risks.
– Data limitations on customer assets and supply chains, and
methodology gaps, which hinder HSBC Continental Europe’s
ability to assess physical risks accurately.
– Absence of industry-defined quantified nature scenarios on the
market with lack of relevant, accurate and granular data for many
nature-related effects.
– Guidance and methodologies around modelling nature-related risks
are still at an early stage.
– Industry-wide data gaps on customer emissions and transition plan
and methodology gaps, which limit HSBC Continental Europe’s
ability to assess transition risks accurately.
– Limitation of HSBC ‘s management of net zero alignment risk due
to known and unknown factors, including the limited accuracy and
reliability of data, emerging methodologies, and the need to
develop new tools to better inform decision making.

Universal Registration Document and Annual Financial Report 2024 | 231

France ‘Duty of Care’ act
Definition of HSBC Continental Europe's Duty of Care plan
A Duty of Care vigilance plan ('Plan') containing reasonable measures
to identify relevant risks and prevent serious human rights violations,
serious bodily injury, and environmental damage has been defined in
HSBC Continental Europe and implemented in accordance with
French law entered into force on 29 March 2017.
The Plan is supported by
– HSBC Group policies and statements, including:
–Diversity and Inclusion policy
–Health and Safety policy
–Mental Health policy
–Statement on Human Rights
–Modern Slave ry and Hum an Trafficking statement
–Whistleblowing statement
–HSBC statement on Nature
–Net Zero Transition Plan 2024
– HSBC Group Frameworks, including:
–HSBC Book
–Risk Management Framework
–Purpose-led Conduct Approach
–HSBC Purpose and Value
– Specific policies and statements, including:
–Supplier code of conduct
–Sustainability risk policies covering agricultural commodities,
energy, forestry, mining and metals, thermal coal and UNESCO
World heritage sites and Ramsar-designated wetlands; Equator
Principles also applied when financing relevant projects.
HSBC’s Principles for the Ethical Use of Data and Artificial Intelligence
include how the Bank seeks to respect the right to privacy while
making use of these technologies.
For further details of HSBC policies, see https://www.hsbc.com/who-we-are/
esg-and-responsible-business/managing-risk/sustainability-risk.
The HSBC Continental Europe Plan is reviewed regularly to ensure its
accuracy with HSBC's Purpose and Value and with how HSBC
Continental Europe aims to manage and mitigate risks and prevent
serious infringements of human rights and fundamental freedoms, to
safeguard the health and safety of individuals and to protect the
environment.
The Plan is monitored by the HSBC Continental Europe Duty of Care
Steering Committee chaired by HSBC Continental Europe's Chief Risk
Officer with the involvement of HSBC Continental Europe's Legal,
Regulatory Compliance, Human Resources, Procurement, Corporate
Sustainability and ESG Risk functions.
Within that geographical scope, the Plan covers risks related to HSBC
Continental Europe’s employees, banking activities (including
customers), as well as suppliers and subcontractors.
The risk associated with Duty of Care is incorporated within HSBC
Continental Europe existing policies, risks, and related controls in
place. The risk associated with Duty of Care law is assessed at least
annually, and where needed for material risk areas identified, HSBC
Continental Europe will take reasonable and proportionate steps to
address and enhance relevant policies and controls to manage this
risk.
The 2024 risk mapping exercise performed has not identified any
material deficiencies in this perimeter.

Duty of Care plan includes the
assessment of the risk related to the
following key themes:
Human rights and fundamental
freedom
Salient human rights
H SBC's approach is guided by the UN Guiding Principles on Business
and Human Rights ('UNGPs') and the OECD Guidelines for
Multinational Enterprises on Responsible Business Conduct. As
defined in HSBC Group’s Human Rights Statement, HSBC
Continental Europe is committed to safeguard human rights of its
workforce, across its activities and those of its business partners.
An extensive review of HSBC salient human rights issues conducted
in 2022 identified five human rights-related risks inherent to HSBC’s
business globally, and five types of activity through which such risks
might arise.

|  | HSBC activities
| Provider of products and services |
Inherent human rights risks | Employer | Buyer | Personal customers | Business customers | Investors 1
Right to decent work | Freedom from forced labour |  | u |  | u | u
Just and favourable conditions of work | u | u |  | u | u
Right to health and safety at work | u | u |  | u | u
Right to equality and freedom from discrimination | u | u | u | u | u
Right to privacy | u |  | u |  | u
Cultural and land rights |  | u |  | u | u
Right to dignity and justice | u | u | u | u | u

232 | Universal Registration Document and Annual Financial Report 2024

Risk

These areas of potential human rights risks identified are considered
in HSBC Continental Europe risk analysis.
In 2023, building on this assessment, practical guidance and training,
where relevant, was provided to colleagues within HSBC Continental
Europe on how to identify and manage human rights risk.
In 2024, focus was given to HSBC approach to human rights risk
management relating to the goods and services the Bank buy from
third parties and in respect of its business customers. Human rights
due diligence good practice guidance has been issued tailored to
procurement and corresponding high-level guidance for staff who
manage relationships with business customers.
In 2024, HSBC Group continued the process of adapting its risk
management procedures to reflect what has been learned from the
work on salient human rights issues and began embedding the
related guidance documents described above.
A human rights due diligence operating procedure for procurement
globally has been developed. The procedure describes the due
diligence process undertaken to identify suppliers where the risk of
adverse human rights impact is considered higher and the process to
be followed to review and mitigate the risk.
In-house capability on human rights continues to be developed with
the launch of further online resources for all staff and bespoke human
rights training for key colleagues, including those managing
relationships with suppliers and business customers, and those with
responsibility for overseeing risk management processes.
Sustainability risk policies support the management of human rights
risks linked to HSBC Continental Europe business customers
operating in sectors in which the risk of adverse human rights impact
is considered greater. HSBC sustainability risk policies consider
human rights issues such as forced labour, harmful or exploitative
child labour and land rights. They also consider workers’ rights, and
the health and safety of communities. Through HSBC membership of
international certification schemes, such as the Forestry Stewardship
Council, the Roundtable on Sustainable Palm Oil and the Equator
Principles, HSBC supports standards aimed at respecting human
rights.
HSBC’s sustainability risk policies are reviewed periodically to ensure
they reflect the Bank’s priorities, and continue to review their
implementation as they are applied in practice.
More information, see HSBC sustainability risk policies at http://
www.hsbc.com/who-we-are/esg-and-responsible-business/managing-risk/.
More information on the actions taken to respect the right to decent work,
see HSBC 2024 Annual Statement under the UK Modern Slavery Act at
www.hsbc.com/who-we-are/esg-andresponsible-business/modern-slavery-
act.
Employee inclusion
T o help create long-term value for its stakeholders, HSBC focuses on
fostering inclusion and building resilience for its colleagues.
HSBC Continental Europe equally recognises the importance of an
inclusive culture in empowering the organisation to enable the Bank’s
strategic ambition and a lasting societal impact.
Since achieving its ambition of having 30 per cent of senior leadership
positions held by women in 2020, HSBC Group set a new ambition to
reach 35 per cent by 2025. HSBC Group is on track to meet its 2025
ambition, with 34.6 per cent of senior leadership roles held by women
at the end of 2024.
To contribute to HSBC Group’s ambition, HSBC Continental Europe
equally has an ambition for greater representation of women in senior
leadership positions. In 2024, HSBC Continental Europe achieved 28.8
per cent representation of women in senior leadership roles,
representing a year-on-year increase of 1.2 points, and exceeding its
ambition by 0.7 points. HSBC Continental Europe also achieved a 2-
point increase in its employee inclusion index (to 73 per cent) in 2024,
as measured by the annual Snapshot survey.
Customer's voice
HSBC believes that financial services, when accessible and fair, can
reduce inequality and help more people access opportunities. HSBC
plays an active role in opening up a world of opportunity for
customers and communities, by supporting their financial well-being,
and removing barriers to accessing financial services.
HSBC Continental Europe remains committed to improving
customers’ experiences. In 2024, HSBC gathered feedback from over
one million customers across its three global businesses to help
understand its strengths and the areas the Bank needs to focus on.
HSBC has continued to embed its feedback system to better listen,
learn and act on its customers’ feedback and uses a net promoter
score ('NPS') and customer satisfaction to provide a consistent
measure of HSBC performance. NPS is measured by subtracting the
percentage of ‘detractors’ from the percentage of ‘promoters’.
‘Detractors’ are customers who provide a score of 0 to 6, and
‘promoters’ are customers who provide a score of 9 to 10 to the
question: ‘On a scale on 0 to 10, how likely is it that you would
recommend HSBC to a friend or colleague?’.
The complaint handing process was deployed in HSBC Continental
Europe registered in the Reclamation Service Tool and the Customer
Feedback Tool and identifies complaints related to ESG topics. The
sensitive claims associated to Duty of Care Law are failure to provide
advice concerning a product or a portfolio managed by the Bank,
which entail a regulatory risk, implicate an employee, a discrimination
concern, or a breach of confidentiality. In 2023 HSBC Continental
Europe implemented an ESG flag in order to identify and monitor all
complaints relating to Environmental, Social and Governance topics.
H ealth and safety
H SBC Continental Europe is committed to providing a safe working
environment for its employees, contractors, customers and visitors to
its premises as outlined in HSBC Health and Safety Policy. HSBC
Continental Europe is also committed to protect and ensure the
physical and mental health of its employees at their workplace or
when travelling for business purposes.
HSBC Group also follows several procedures to ensure health and
safety in the workplace:
– complies with regulatory requirements.
– identifies key risks through a risk assessment.
– conducts workplace inspections to ensure workplace safety.
– manages accidents and incidents and looks to mitigate risks to
reduce recurrence.
– provides training and awareness on key risks at HSBC Group.
– sets out clear roles and responsibilities for all stakeholders
involved in health and safety.
– consults with relevant parties on health and safety arrangements,
as appropriate.

Universal Registration Document and Annual Financial Report 2024 | 233

Together with the Health and Safety Policy, they form a framework
for a structured risk management approach to the assessment,
management, monitoring and review of health and safety risks.
More information, please refer to the Sustainability Statement page 55
Environmental impact
HSBC prevents, mitigates and controls its material impacts on the
environment in accordance with its sustainability risk policies and
statements.
This includes complying with regulations concerning waste
management, handling of hazardous materials and sourcing of raw
materials. Particular attention is risks relating to climate change and
its impacts on nature considering that nature and climate go hand in
hand.
The finance sector can help to counter the decline in biodiversity,
scaling up nature-related finance, implementing policies to help
eliminate commodity-driven deforestation, and investing in the
sustainable food and agricultural systems needed for net zero. To get
this right, HSBC is embedding nature considerations alongside net
zero.
Around one third of the emissions reductions required to limit global
warming in line with the Paris Agreement are linked to the land use
system and nature. HSBC is developing an approach to nature built on
the outline that was set out in HSBC net zero transition plan. This
includes considering how to: understand exposure to nature, manage
nature-related risks and impacts, support customers including
financing and investing in nature related solution; and build nature-
related skills, data capacities and partnerships. HSBC is taking step to
embed its approach to nature alongside delivery of its net zero
implementation plan.
Nature based solutions will play an important role in removing carbon
from the atmosphere. These methods include conserving and
restoring natural ecosystems and managing forests and agricultural
lands more sustainably. Such solutions can also help counter key
drivers of the biodiversity loss currently underway, and support action
to tackle wider drivers of nature loss, including deforestation,
overfishing, and waste.
In 2024, HSBC Continental Europe made progress in the
consideration of nature related risk in addition to climate risk by
implementing its nature-related risk management approach. HSBC
Continental Europe identified and assessed the materiality of climate
and nature-related risks across its activities and risks.
The management of environmental risk is also supported by:
– Imposing restriction through HSBC sustainability risk policies, on
certain financing activities that may have material negative impacts
on nature. Forestry and agricultural commodities policies, focus
specifically on the upstream impacts of the key agricultural
commodities of palm oil, timber, soy and cattle. These policies
require customers involved with these commodities to operate in
accordance with sustainable business principles. It is also required
to palm oil customers to obtain certification under the Roundtable
on Sustainability Palm Oil.
– Embedding nature into decision-making and customer
engagement: nature-related questions were included in 2024 into
HSBC Continental Europe’s client transition engagement
questionnaire to cover topics including pollution, water,
biodiversity, resource use and circular economy.
– Engaging with investee companies on biodiversity and natural
resources via HSBC Asset Management Group.
– Exploring how nature safeguarding mechanisms could be
incorporated into decision-making.
– Financing and investing in nature-related solutions. HSBC is testing
and scaling approaches to investing in biodiversity and nature.
– Managing HSBC Continental Europe's impacts on nature for its
own operations by being responsible steward and consumer of
natural resources.
– HSBC environmental and sustainability management policies seek
to ensure that HSBC properties including the HSBC Continental
Europe ones, continually reduce their overall direct impact on the
environment. Detailed design considerations documented in HSBC
Global Engineering Standards aim to reduce or avoid depletion of
critical resources such as energy, water, land and raw materials.

Suppliers and subcontractors’ risks
assessment
HSBC and HSBC Continental Europe are committed to the fair
treatment of the businesses who supply goods and services to HSBC
and expect them to operate with accountability, in line with HSBC
values.
HSBC has developed an approach for engaging with its 300 highest
emitting suppliers (covering 70 per cent of its supply chain emissions)
focusing on collaboration and identifying emission reduction
opportunities based on supplier maturity levels. A first Supply Chain
Decarbonisation Day has been convened in October 2024, to facilitate
in-depth discussion and the development of joint action plans with
HSBC highest emitting suppliers in technology, professional services,
and real estate sectors.
HSBC Continental Europe suppliers are required to meet the Bank’s
compliance and financial stability requirements, as well as to adhere
to strict environmental management principles and reduce their
impact on the environment in which they operate and to comply with
HSBC supplier code of conduct.
HSBC established Sustainable Procurement Mandatory Procedures to
help in identifying and escalating, where appropriate, human rights
issues in its supply chain, and to ensure that its suppliers observe the
human rights elements of HSBC code of conduct. This includes
enhanced procedures for human rights risk identification through the
introduction of a human rights residual risk questionnaire for
suppliers, and human rights supplier audit pilots to assess the
potential need for further supplier audits in the future.
HSBC supplier code of conduct was refreshed in 2024, setting out
ambitions and targets on the environment, diversity and human rights,
and outlines the minimum standards the Bank expects of its suppliers
on these issues. HSBC Continental Europe continues to formalise
adherence to the code with clauses in its supplier contracts, which
support the right to audit and act if a breach is discovered. At the end
of 2024, 97.8 per cent of HSBC Continental Europe’ contracted
suppliers had either confirmed adherence to the supplier code of
conduct, or provided their own alternative that was accepted by
HSBC Global Procurement function.
In addition, during the onboarding process the supplier is submitted to
a prequalification with an ESG questionnaire and a Reputational Risk

234 | Universal Registration Document and Annual Financial Report 2024

Risk

Index. The supplier which poses potential reputational risk in regards
of ESG criteria should be triggered into the relevant (local, regional, or
global business) Reputational Risk and Client Selection Committee
(RRCSC) to determine whether supplier can be engaged.
HSBC also defined an ESG questionnaire covering 3 main themes:
Environment Social Governance (‘ESG’) – General Data Protection
Regulation – Contractual Conditions – with 21 questions including 7
covering Duty of Care and human rights considerations.
Read more about the principles HSBC applies and HSBC supplier code of
conduct: www.hsbc.com/who-we-are/esg-and-responsible-business/
working-with-suppliers
More information, please refer to the Sustainability Statement page 55

Alert monitoring framework
Whistleblowing system
HSBC encourages a speak-up culture where individuals can raise any
concerns about wrongdoing or unethical conduct through the normal
reporting channels without fear of reprisal or retaliation. HSBC
provides several channels to speak-up, however it is recognised that
in certain circumstances it may be necessary for individuals to raise
concerns through more targeted and confidential channels.
HSBC strives to create a working environment in which people feel
free to share their concerns. Aware that certain circumstances require
specific discretion, it simplified its whistleblowing system in 2015 by
creating 'HSBC Confidential'. The arrangements are open to all people
in relationship with HSBC as required by the EU Directive 2019/137 of
23 October 2019 reinforcing whistleblower protection.
The arrangements can be used anonymously by the whistleblower
and are accessible, at any time. Since December 2020, concerns can
now be raised through an independent third party offering 24/7
hotlines and a web portal in multiple languages, including local
language and English. The arrangements are managed and supervised
by an independent team within the Compliance function locally or at
global level depending on countries.
It can be notably used to report facts or behaviours constituting a
violation of human rights and fundamental freedoms, the health and
safety of persons as well as the environment resulting from the
activities of HSBC Continental Europe as well as those of their
subcontractors or suppliers, in accordance with Law N° 2017-399 of
27 March 2017 relating to the duty of care of parent companies and
ordering companies.
Investigations are conducted confidentially, in depth and
independently by investigators who are trained and made aware of
the legislation/regulations applicable to whistleblowing arrangements.
Alerts received in three countries – France, Germany and Malta – are
managed locally while alerts sent by employees in other HSBC
Continental Europe branches are captured and processed by HSBC
Group in accordance with the processes in place.
There were 21 alerts received and admitted to the HSBC Confidential
alert system in 2024. This compares to 40 received in 2023. The
decrease in the volume of whistleblowing cases is primarily related to
the fall of the number of staff in France after the sale of the French
retail banking operations on 1 January 2024. The main theme
emerging from the alerts admitted was linked to Poor Management
Practices, Employee Behaviour Issues, and Bullying and Harassment
in the work environment.
Communication and awareness initiatives for employees are sent
periodically to encourage a “speak-up” culture within HSBC. In
November 2024, awareness sessions on HSBC Speaking Up and
Whistleblowing were delivered in France with a 48 per cent
participation rate. Other sessions are planned across HSBC
Continental Europe’s countries. Refresh training is delivered annually
to the Investigation teams who managed investigations related to
whistleblowing cases.
In accordance with the Law, all eligible persons can use the
whistleblowing channel, in addition to the usual channels, for raising
concerns without fear of retaliation, relating to the following matters:
– a crime or an offence (e.g. corruption, fraud, embezzlement,
harassment, discrimination, etc..).
– a violation or attempt to conceal a violation of an international
standard, law or settlement.
– a threat or serious prejudice to the general interest.
– a violation of human rights and fundamental freedoms, human
health and safety of the environment.
– any situation likely to generate a significant financial or reputational
risk for the Bank.
The whistleblowing oversight team for HSBC Continental Europe is
based in France within the HSBC Continental Europe Compliance
team which monitors activities relating to the whistleblowing
arrangements across the overall HSBC Continental Europe perimeter.
In France, HSBC Confidential is placed under the responsibility of
Compliance and under the supervision of the Audit Committee.
Investigations on raised cases are conducted, in a confidential, in
depth, and independent manner by investigators from different
departments, mainly from Compliance and Human Resources.
Controls are in place to maintain confidentiality and to protect
whistleblowers from the risk of retaliation.
In Malta, a local whistleblowing reporting policy is in place, which
provides an official and confidential channel for whistleblowing. The
whistleblowing channels, HSBC Confidential and HSBC Confidential
Malta are opened to all colleagues to raise concerns in line with local
laws. All whistleblowing reports received are investigated in a detailed
and independent manner and remedial action is taken where
appropriate. The oversight of the policy and arrangements falls within
the remit of the HSBC Bank Malta’s Audit Committee.
In Germany, HSBC Confidential as well as a local Ombudsman in
accordance with local law (Hinweisgeberschutzgesetz) are used. The
Ombudsman is an independent and impartial external attorney and is
available to all employees of HSBC Germany. Employees can raise
any concerns especially about breaches of legal/regulatory or internal
requirements through these channels, besides normal reporting
channels. Concerns can be raised anonymously. The alerts are
forwarded to the local Whistleblowing Team which is settled in
Compliance. Investigations are conducted in a confidential and
independent manner and actions are taken where necessary.
Employee conduct and harassment
H SBC encourages colleagues to speak up about poor behaviour or
things that do not seem right. HSBC Continental Europe measures
confidence to speak up via its Snapshot Speak Up Index, which is at
73 per cent in 2024, up by four points from 2023.
Mandatory procedures for handling and investigating employee
concerns are deployed, which include those for bullying and

Universal Registration Document and Annual Financial Report 2024 | 235

harassment. Cases are continually monitored from HSBC speak-up
channels, and data is reported to management committees to ensure
there is visibility at leadership level.
HSBC strive to improve awareness and education around poor
behaviours and strengthen its understanding and response to these
issues across all levels of the organisation. In 2024, to ensure
continued high-quality investigations into conduct concerns, six new
investigator training modules which aimed at the Human Resources
investigator community, have been introduced.
Training on bullying, harassment, discrimination and retaliation
continue to be delivered at least every other year in HSBC Global
Mandatory Training curriculum and as part of other learning resources,
including in People Manager training.
Between 2022 and 2024, there was a continuous decline in the
number of Personal Code of Conduct ('PCC') cases at HSBC
Continental Europe, from 99 in 2022 to 25 in 2024, with a stabilisation
in the number of cases related to Duty of Vigilance (only 1 each year
since 2022). The significant drop in the number of PCC cases in 2024
was mainly explained by the sale of the Retail Business in France.

Monitoring measures
Employee feedback
HSBC Continental Europe encourages employees to speak up directly
and collectively about their experiences working at the organisation.
The Bank aims to capture employee feedback in a variety of ways to
understand how colleagues feel about HSBC and to help to improve
the employee experience.
More information, please refer to the Sustainability Statement page 55.
Individual breaches identifications
HSBC Continental Europe has adopted a process for managing
inappropriate individual breaches . The process aims to identify all
situations in which rules and procedures are not complied with, and to
ensure that cases are treated consistently.
The breaches that HSBC Continental Europe seeks to identify include
cases of money laundering – which may involve activities such as
terrorist financing, human trafficking, or slavery – as well as cases
where the physical safety of staff members is jeopardised and cases
of harassment.
To deal with such situations, each of HSBC Continental Europe’s
business lines and main functions holds breach committee meetings.
For smaller functions and branches, ad-hoc committee meetings are
held if a breach occurs. The aim of these meetings is to assess the
risk level, the circumstances in which the breach occurred and the
level of the breach. If appropriate, sanctions are applied; remedial
action may also be taken to prevent the situation from recurring.
Monitoring indicators have also been adopted.
In 2024, one breach was dealt with in relation to the Duty of Care Act.
All credible allegations of human rights violations are investigated
through engagement with stakeholders when reported. They are then
raised directly with the client company by the Relationship Manager
and, if necessary, escalated to Senior Management both within HSBC
and at the client, up to the senior executive level. Where required,
individual customer relationships are referred to and reviewed by
Reputational Risk and Client Selection Committees on a case-by-case
basis. These reviews may decide to restrict or end a customer
relationship where it is unwilling or unable to meet HSBC’s standards,
including those relating to modern slavery and human trafficking.
Metrics & Regulatory Watch’s
Triggers
Key Risk Indicators have been developed, including litigations losses,
provision amounts and the number of litigation cases. These
indicators are integrated in a quarterly report in order to be monitored
by Legal Department.
A new ESG-related indicator, the number of litigation cases with ESG
consideration, is being developed to be implemented in 2025 and
reported in the HSBC Continental Europe Climate and ESG Risk
Oversight Forum.
The regulatory watch on litigation cases related to Duty of Care
includes emails alerts and regular updates from the international law
firm, on ESG litigation for Financial Institutions. This supports the
identification of trigger events to be considered when the reported
ESG litigations may apply across HSBC Continental Europe risk
cartography.

236 | Universal Registration Document and Annual Financial Report 2024

Risk

Other risks
Reputational risk management
Overview
HSBC defines reputational risk as the failure to meet stakeholders
expectations as a result of any event, behaviour, action or inaction,
either by HSBC itself, its employees or those with whom the Group is
associated, that might cause stakeholders to form a negative view of
HSBC including HSBC Continental Europe. Some drivers of
reputational risk are inherent to HSBC Continental Europe business
activities and decisions. This risk must be considered, managed, and/
or accepted in line with the HSBC Continental Europe’s strategy. The
main drivers of reputational risk may include, enterprise actions or
decisions, customers transactions and products, and third parties and
partnerships.
Stakeholders’ perceptions are key to reputational risk and may vary
between geographical regions and groups of stakeholders.
Key developments in 2024
In 2024, HSBC Continental Europe strengthened its reputational risk
management by extending the role of the senior reputational risk
manager who is responsible for reviewing and challenging First Line
of Defense activities, providing advice and guidance as a subject
matter expert.
Governance and structure
Reputational risk is managed in compliance with HSBC’s Risk
Management Framework and is governed through the Executive
committee.
The Reputational Risk and Client Selection Committees (‘RRCSC’) are
the decisioning fora which manage reputational risk across the Bank,
with escalation paths to counterparts at Group level and to the HSBC
Continental Europe Risk Management Meeting.
Businesses and functions own and are responsible for managing and
mitigating reputational risks associated with their respective activity.
This responsibility includes setting procedures in line with the HSBC
Group policy and escalating matters to the relevant RRCSC. HSBC
Continental Europe RRCSCs provide guidance, in respect of
reputational risk and customer selection matters, facilitate decision
making and ensure that issues are appropriately tracked and solved.
RRCSCs have an escalation path to the HSBC Continental Europe
Risk Management Meeting and to the HSBC Group Reputational Risk
Committee (GRRC).
Reputational risk is linked to Strategic Risk as a level 2 financial risk in
HSBC’ Risk Taxonomy and may occur across both non-financial and
financial risk types. Within HSBC Continental Europe’s perimeter,
some operational procedures have been implemented utilising a
reputational risk lens, including financial crime prevention, regulatory
compliance, conduct-related concerns, environmental impacts, human
rights matters and employee relations. In the Second Line of
Defence, given that reputational risks may arise from numerous risk
types in HSBC’s Risk Taxonomy, all risk stewards are ultimately
accountable for the oversight of any reputational risk for their
respective risk type. risk stewards are responsible for defining and
implementing, as necessary, the day-to-day management of
reputational risk for the risks under their responsibility with support
from the reputational risk teams.
Internal Audit provides independent assurance to management and to
the non-executive Risk and Audit Committees that reputational risk
management, governance and internal control processes are
designed and operating effectively.
Everyone at HSBC has the responsibility to identify potential
reputational risk and escalate as appropriate. HSBC Continental
Europe’ Chief Risk Officer is accountable for assessing and deciding
reputational risk cases within the HSBC Continental Europe legal
perimeter, and the Chief Executive Officer owns and is accountable
for the management and mitigation of any residual reputational risk,
including escalation to the Region or HSBC Group Reputational Risk
Committee ('GRRC'), as appropriate.

Insurable risk coverage
Overview
In certain circumstances, insurance can be used to reduce the
financial impact of residual risks belonging to an HSBC entity, or the
HSBC Group as a whole, should the risk materialise.
Risks that are capable of being insured are called ‘Insurable risks’ and
would typically include some of the Non-Financial Risks, mainly
People and Operational risks.
HSBC Continental Europe is covered through HSBC Group global
insurance programs placed by HSBC Holdings plc for major insurable
risks, to protect people, infrastructures and assets.
Main programmes include Directors and Officers liability insurance,
Civil and Cyber liability, Crime (theft or fraud from an employee or a
third-party), Property damages and business interruption.
Regulatory required local insurance policies are in place in each
country (such as, civil liability for licensed activities, employer’s
liability, construction works, or third-party liability motor insurance).
As a principle, levels of coverage and deductibles/retentions are in line
with:
– insurance market conditions, business practices and regulations;
– assets values; and
– potential impact on HSBC Continental Europe and HSBC Holdings
plc balance sheets, and risk appetite.
The total amount of insurance premiums paid in 2024 for Non-
Financial risks represents 0.26 per cent of HSBC Continental Europe
net operating income.
Key developments in 2024
In 2024, insured cover limit amounts continue to be set on an
‘extreme’ loss assumption, aiming to mitigate major financial impacts
on the Bank’s activities.
Key initiatives during this year included,
– HSBC Continental Europe property damage and business
interruption insurance, HSBC Continental Europe cover limits have
been adjusted based on the reinstatement value of the portfolio
exposure.

Universal Registration Document and Annual Financial Report 2024 | 237

– Under the Corporate Services (Real Estate) function’s coordination
and with the support of the Group insurance broker, the HSBC
Group continued to investigate and identify locations that may
experience potential climate change impacts, using total sums
insured, including HSBC Continental Europe sites.
– Regarding crime, civil and cyber liability insurance, entities can
adjust their own deductible levels per loss should the HSBC
Group’s deductible exceed the local entity’s risk appetite. An
annual review is taken, and in 2024, some HSBC Continental
Europe entities have adjusted their deductibles.
Governance and structure
At the HSBC Group level, the Insurable Risk Team is a Risk sub-
function who:
– Set the control framework for how insurance solutions are sourced
including the use of insurance intermediaries, and determine
where and how the HSBC Group’s Reinsurance Captive should be
involved.
– Purchase global insurance policies on HSBC Group’s and entities’
behalf, with the approval from the HSBC Group Board of Directors
and other relevant governance committees.
The function includes regional insurable risk managers, responsible to
cascade and embed the HSBC Group’s strategy in their geographies.
The Risk Management Meeting is updated on an annual basis,
concerning all applicable insurance policies and associated costs for
them to opine on the relevance of insurance covers in regard to their
risks.
Key risk management processes
Third parties, such as brokers, insurers and partners are chosen in
accordance with their expertise, financial strength and international
network, according to the HSBC Group’s procurement policies and
principles, and managed through the HSBC Group’s Third parties risk
management framework.
The key risk management processes developed by Insurable Risk to
minimise the risk of inappropriate global programme purchasing are:
– Engagement with key stakeholders on strategy and priorities and
ultimately structure, placement and binding concurrence.
– Receipt of professional advice prior to binding and post-renewal
reporting from the HSBC Group’s brokers.
– Placement options and renewal proposals are formally approved
by two individuals of appropriate seniority in all cases before
binding instructions are given to the broker.

Periodic control
Overview
In accordance with French ministerial order of 3 November 2014 (the
“Order”), significantly updated on 25 February 2021, concerning
internal control within financial institutions, and payment and
investment service providers, the role of Internal Audit is to provide
Executive Management and HSBC Continental Europe Board of
Directors objective assurance on risk management and the internal
control system implemented by the bank. Periodic controls on HSBC
Continental Europe aim to ascertain the compliance of operations, the
levels of risk actually incurred by the institution, due observance of
the procedures and the effectiveness and appropriateness of the
control frameworks, by means of independent investigations
conducted centrally by staff qualified for this purpose.
As part of HSBC Group’s risk management framework, Global Internal
Audit constitutes the Third Line of Defence, coming successively
behind the businesses and functions’ own First Line of Defence (Risk
Owners, Control Owners and Chief Control Officers) and the Second
Line of Defence teams (Enterprise Risk Management, Assurance
Teams and Risk Stewards). Whilst the First and Second Lines of
Defence are taken into account, Global Internal Audit has unlimited
scope to define its own programme of work. This freedom is based
on the fact that Internal Audit is responsible for providing Executive
Management and Board of Directors of the bank, independent
assurance on the risk exposure and level of control by management.
As such, Internal Audit pays attention, in the first instance, to the
evaluation of the compliance with the legislation applicable to the
audited area, secondly, to the correct application of rules and
procedures in force within HSBC Group and finally, that audited
activities remain within the defined appetite for exposure to the
associated risks.
In accordance with article 27 of the Order, the periodic control
framework applies to the entire HSBC Continental Europe company,
including its European branches and subsidiaries, as well as to
companies under exclusive or joint control.
Key developments in 2024
The purpose of Global Internal Audit is to find significant issues in the
bank, escalate them quickly and be heard in its messaging to
influence change.
All audit work is performed in accordance with HSBC Group’s audit
standards, as set out in the Audit Instruction Manual, which is
updated on a regular basis.
Different methodological changes have been introduced:
– Global Internal Audit should be proactive in understanding the
plans and activities of other HSBC assurance functions. Global
Internal Audit may also discuss appropriate parts of the annual
audit plan with relevant assurance functions to drive coordination
and ongoing review, so that stakeholders do not face multiple
audits / assurance reviews simultaneously.
– Relevant audits should incorporate conduct considerations with
reference to the Group’s Purpose Led Conduct Approach. This is
to enable Global Internal Audit to provide an independent view on
the embeddedness of conduct and whether good conduct
outcomes are being achieved across the Group.
– Medium Risk Audit Identified Issue (AII) should be validated at the
time of the closure request through a desktop review of closure
evidence.
– An enhanced risk assessment guidance for the audit entities,
based on the financial materiality and the other key risk drivers
(change, regulatory compliance, complexity, reputation and
conduct, and culture).
– Every AII must have a thematic root cause allocated in the
Strategic Audit Management System ('SAMS'), in accordance with
the HSBC taxonomy.

238 | Universal Registration Document and Annual Financial Report 2024

Risk

Governance and structure
Global Internal Audit is comprised of six global audit teams whose
role is to provide expert coverage of HSBC Group’s businesses and
functions:
– Wealth and Personal Banking ('WPB') audit;
– Commercial Banking ('CMB') audit;
– Global Banking and Markets ('GBM') audit;
– Risk and Finance audit;
– Compliance audit; and
– Digital and Business Services ('DBS') audit.
Global Internal Audit is also comprised of five regional audit teams:
– United Kingdom;
– Asia Pacific;
– Middle East North Africa and Turkey (‘MENAT’);
– Europe; and
– Americas.
The regional audit teams include country audit teams. Global Internal
Audit Continental Europe is of these teams, whose responsibility is to
cover the risks within the HSBC Continental Europe legal perimeter
(Belgium, Czech Republic, France, Germany, Ireland, Italy,
Luxembourg, Malta, Netherlands, Poland, Spain and Sweden),
supported by local teams in Germany, Luxembourg and Malta.
HSBC Continental Europe periodic control is therefore covered jointly
by different Global Internal Audit entities, functionally linked and
coordinated:
– Global Internal Audit Continental Europe, a general audit team
based in France, mainly auditing central functions, commercial
banking, banking operations, Information Technology and
strategically important projects. Global Internal Audit Continental
Europe is mainly split between business auditors and IT auditors;
– Local audit teams in Germany, Luxembourg and Malta; and
– The global teams, specialised by business and/or function, based
principally in London and in Hong Kong. Members of these global
teams are also located in Paris, for Global Banking and Markets
audit, Insurance audit, Asset Management audit, Model Risk audit
and Traded Risk audit.
Country audit teams have the detailed knowledge of local regulations
and environment enabling coverage to be adapted as appropriate, and
functionally reporting to the global audit function strengthens their
independence and ensures consistency between teams, all of whom
are held to the high standards defined and regularly updated in the
Audit Instruction Manual. The fact that all teams share a reporting line
into a global function helps collaboration and the sharing of best
practices.
Periodic controls on HSBC Continental Europe in 2024 have thus been
assured jointly by Global Internal Audit directly, by Global Internal
Audit Continental Europe or by both in concert, in accordance with the
service agreement, which is effective since April 2017.
The scopes of local audit and global audit converge and are
consolidated in the HSBC Continental Europe audit plan. In all cases,
as defined in the aforementioned Order, all audits on HSBC
Continental Europe are managed in coordination with the Head of
Global Internal Audit Continental Europe (Inspector General), who
oversees their consistency and efficiency.
The Head of Global Internal Audit Continental Europe reports to the
Head of Global Banking and Markets ('GBM') a nd Europe Internal
Audit and HSBC Continental Europe Audit Committee, and
administratively to the HSBC Continental Europe Chief Executive
Officer. Since 2017, in accordance with the Solvency II requirements,
one independent Senior Audit Manager is in charge of periodic control
for the insurance subsidiary of HSBC Continental Europe.
Finally, the HSBC Continental Europe Internal Audit function is a
member of the Inter‑Audit Committee (“Comité Inter-Inspections
Générales”), which assembles eight French banks together to
undertake common audits of vendors providing services to at least
four members, as required by title V, chapter II of the Order. This
approach to jointly audit common service providers is also mentioned
in the European Banking Authority) guidelines on outsourcing
arrangements that were issued in February 2019.
Key risk management processes
In addition to regular discussions held with Global Internal Audit, other
elements contribute to maintaining an independent and up to date
view of key risks within HSBC Continental Europe, in particular:
– The Inspector General participates in the HSBC Continental Europe
Executive Committee, the HSBC Continental Europe Risk
Management Meeting and the HSBC Continental Europe Audit
Committee and those of its subsidiaries in France;
– The Senior Audit Managers participate in the risk committees of
the different businesses and functions;
– Regular bilateral meetings, usually quarterly, are held between the
Inspector General, Global Internal Audit Continental Europe senior
management and the different heads of businesses and functions;
and
– Quarterly meetings are held between the Inspector General,
Global Internal Audit Continental Europe senior management and
the external auditors.
Audit reports are sent to the accountable executive, who is ultimately
responsible for ensuring that all findings are timely and properly
remediated. The HSBC Continental Europe Chief Executive Officer,
the HSBC Continental Europe Chief Risk Officer, the HSBC
Continental Europe Chief Operating Officer, the HSBC Continental
Europe Chief Compliance Officer and the HSBC Continental Europe
Head of Enterprise Risk Management receive a copy of all audit
reports.
Audit reports relating to HSBC Continental Europe and subject to an
adverse rating are always presented and commented by the Inspector
General during the HSBC Continental Europe Audit Committee.
This Committee also monitors outstanding action plans resulting from
very high, high and medium risk audit issues.
Global Internal Audit is validating the closure of the issues and the
actions. The level of validation that is needed will vary based on the
issue rating.

Universal Registration Document and Annual Financial Report 2024 | 239

Tax risk
Overview
The HSBC Group seeks to apply the spirit and the letter of the law in
all territories where it operates. In line with the Group's principles and
its own, HSBC Continental Europe ensures compliance with
applicable tax regulations across Continental Europe and payment of a
fair share of tax in the countries where it operates.
Therefore, HSBC Continental Europe does not undertake transactions
whose sole purpose is to abuse the tax system or otherwise employ
tax avoidance strategies, for example by artificially diverting profits to
low tax jurisdictions.
HSBC Continental Europe does not deal with customers who are not
tax transparent or who may want to use its products to avoid taxation.
HSBC Continental Europe will use tax incentives or opportunities for
obtaining tax efficiencies where these:
– Are aligned with the intended policy objectives of the relevant
government; and
– Are aligned with business or operational objectives.
Moreover, within the framework of intra-group transactions, HSBC
Continental Europe ensures that all the prices applied are in line with
arm's length principles, as defined by the OECD rules.
Key developments in 2024
HSBC continues to apply global initiatives to improve tax transparency
such as:
– The OECD Standard for Automatic Exchange of Financial Account
Information (also known as the Common Reporting Standard);
– The Foreign Account tax compliance Act (also known as FATCA);
– The Capital Requirements Directive IV (‘CRD IV’) Country by
Country reporting;
– The OECD Base Erosion and Profit Shifting (‘BEPS’) initiative pillars
1 and 2;
– DAC6 disclosure of aggressive operations;
– The Global Electronic system of Payment information (CESOP)
reporting; and
– The e-invoicing for VAT purposes.
Governance and structure
The Tax Department ("Direction des Affaires Fiscales") is composed
by tax experts located both in France and in Germany including a local
senior management, under the superv ision of the head of Tax for
Continental Europe.The Tax Department oversees tax risk as a
Second Line of Defence across Continental Europe, relying on local
tax experts and/or businesses.
In order to ensure a coherent tax policy and a risk management, the
Tax Department:
– defines the tax guidelines that businesses must follow to limit risk,
in line with the risk appetite;
– ensures that procedures and proper controls are in place to
mitigate tax risk;
– ensures that recommendations from Third Line of Defense and/or
any regulator relating to tax are followed; and
– has a proper information of all the major transactions and projects
to assess any potential tax implication/risk.
The Tax Department also assists different committees where tax
approval is requested and is part of due diligence process for new
products.
Key risk management process
Tax risk is managed in accordance with HSBC Continental Europe
Risk Management Framework which defines minimum standards and
processes, and the governance structure for the risk management
across HSBC Continental Europe.
Responsibility for minimising operational risk lies with all HSBC
employees. Specifically, all staff are required to manage operational
risks, including tax risks of the business and operational activities for
which they are responsible.
The Tax Policy covers three key risks:
– Tax payments – risk of failure to withhold, charge or pay taxes;
– Tax compliance – risk of failure to report and file accurate tax
returns including customer information; and
– Tax avoidance – risk that HSBC Continental Europe enters into
transactions on its own account or promotes products and
services to customers that are not consistent with the spirit of the
law (tax avoidance).
HSBC Continental Europe manages the three key tax risks by:
– Identifying the risks;
– Ensuring that the right controls are in place to prevent, manage
and reduce risk;
– Setting policy and guidelines for managing tax risks;
– Providing support and guidance to support the above policies; and
– Employing an experienced, professionally qualified in-house tax
team. The in-house tax team is supported by advice from external
advisers whenever in-house expertise is not available.
Global Internal Audit is responsible for providing independent
assurance that HSBC is managing tax risk effectively.

240 | Universal Registration Document and Annual Financial Report 2024

Consolidated financial statements

Consolidated financial statements

Contents
241 | Consolidated income statement
242 | Consolidated statement of comprehensive income
243 | Consolidated balance sheet
244 | Consolidated statement of changes in equity
246 | Consolidated statement of cash flows

Notes on the consolidated financial
statements

Contents
248 | 1 | Basis of preparation and material accounting policies
263 | 2 | Assets held for sale, liabilities of disposal group held for sale and discontinued operations
266 | 3 | Net fee income
267 | 4 | Net income/(expense) from financial instruments measured at fair value through profit or loss (continuing operations)
267 | 5 | Insurance business
279 | 6 | Employee compensation and benefits
284 | 7 | Auditors’ remuneration
285 | 8 | Tax
287 | 9 | Dividends
288 | 10 | Earnings per share
288 | 11 | Trading assets
289 | 12 | Fair values of financial instruments carried at fair value
297 | 13 | Fair values of financial instruments not carried at fair value
298 | 14 | Financial assets designated and otherwise mandatorily measured at fair value through profit or loss
298 | 15 | Derivatives
302 | 16 | Financial investments
302 | 17 | Assets pledged, collateral received and assets transferred
303 | 18 | Related information on foreign subsidiaries and branches country by country
304 | 19 | Structured entities
306 | 20 | Goodwill and intangible assets
308 | 21 | Prepayments, accrued income and other assets
309 | 22 | Trading liabilities
309 | 23 | Financial liabilities designated at fair value
310 | 24 | Accruals, deferred income and other liabilities
310 | 25 | Provisions
311 | 26 | Subordinated liabilities
312 | 27 | Maturity analysis of financial assets, liabilities and off-balance sheet commitments
314 | 28 | Offsetting of financial assets and financial liabilities
315 | 29 | Called up share capital and other equity instruments
315 | 30 | Contingent liabilities, contractual commitments and guarantees
316 | 31 | Finance lease receivables
317 | 32 | Legal proceedings and regulatory matters relating to HSBC group entities generally
318 | 33 | Related party transactions
320 | 34 | Events after the balance sheet date
321 | 35 | HSBC Continental Europe subsidiaries, joint ventures and associates
323 | Statutory Auditor’s report on the consolidated financial statements

Universal Registration Document and Annual Financial Report 2024 | 241

Consolidated income statement

for the year ended 31 December
|  | 2024 | 2023 1
| Notes | €m | €m
Continuing operations |  |  |
Net interest income |  | 1,498 | 2,191
– interest income |  | 8,288 | 7,307
– interest expense |  | (6,790) | (5,116)
Net fee income | 3 | 1,214 | 1,194
– fee income | 3 | 1,755 | 1,588
– fee expense | 3 | (541) | (394)
Net income/(expense) from financial instruments held for trading or managed on a fair value basis | 4 | 484 | 259
Net income/(expense) from assets and liabilities of insurance businesses, including related derivatives, measured at fair value through profit or loss | 4 | 40 | 36
Changes in fair value of designated debt and related derivatives | 4 | 3 | 16
Changes in fair value of other financial instruments mandatorily measured at fair value through profit or loss | 4 | 63 | 14
Gains less losses from financial investments |  | (2) | 1
Insurance finance income/(expense) | 5 | (38) | (31)
Insurance service result |  | 18 | 11
– insurance service revenue |  | 26 | 19
– insurance service expense |  | (8) | (8)
Gains/(losses) recognised on assets held for sale |  | (11) | —
Other operating income/(expense) |  | 80 | 29
Net operating income before change in expected credit losses and other credit impairment charges |  | 3,349 | 3,720
Change in expected credit losses and other credit impairment charges |  | (97) | (145)
Net operating income |  | 3,252 | 3,575
Total operating expenses |  | (2,322) | (2,250)
– employee compensation and benefits | 6 | (1,008) | (1,001)
– general and administrative expenses |  | (1,218) | (1,214)
– depreciation and impairment of property, plant and equipment and right of use assets |  | (61) | (12)
– amortisation and impairment of intangible assets and goodwill impairment | 20 | (35) | (23)
Profit/(loss) before tax |  | 930 | 1,325
Tax expense | 8 | (406) | (346)
Profit/(loss) after tax in respect of continuing operations |  | 524 | 979
Profit/(loss) after tax in respect of discontinued operations | 2 | 79 | (71)
Profit/(loss) for the year |  | 603 | 908
Attributable to: |  |  |
– shareholders of the parent company |  | 568 | 883
– non-controlling interests in respect of continuing operations |  | 35 | 25
– non-controlling interests in respect of discontinued operations | 2 | — | —
Basic earnings per ordinary share | 10 | 2.65 | 4.17
Diluted earnings per ordinary share | 10 | 2.65 | 4.17
Dividends per ordinary share | 9 | — | —

1 In compliance with IFRS 5 standards, the comparatives have been represented to reflect discontinued operations related to the planned sale of the life insurance
business in France. This also includes discontinued operations related to the sale of the retail banking operations in France.

242 | Universal Registration Document and Annual Financial Report 2024

Consolidated financial statements

Consolidated statement of comprehensive income

for the year ended 31 December
|  | 2024 | 2023 1
| Notes | €m | €m
Profit/(loss) for the period from continuing operations |  | 524 | 979
Other comprehensive income/(expense) |  |  |
Items that will be reclassified subsequently to profit or loss when specific conditions are met: |  |  |
Debt instruments at fair value though other comprehensive income: |  | 3 | 15
– fair value gains/(losses) |  | 3 | 25
– fair value (gains)/losses transferred to the income statement on disposal |  | 4 | (1)
– expected credit losses recognised in income statement |  | — | (1)
– income taxes |  | (4) | (8)
Cash flow hedges: |  | 86 | 168
– fair value gains/(losses)2 | 15 | (111) | 106
– fair value (gains)/losses reclassified to the income statement 2 | 15 | 228 | 121
– income taxes | 15 | (31) | (59)
Finance income/(expenses) from insurance contracts |  | — | —
– before income taxes |  | — | —
– income taxes |  | — | —
Exchange differences and other |  | 2 | 9
Items that will not be reclassified subsequently to profit or loss: |  |  | —
Remeasurement of defined benefit asset/liability: |  | 3 | (20)
– before income taxes | 6 | 5 | (30)
– income taxes |  | (2) | 10
Changes in fair value of financial liabilities designated at fair value upon initial recognition arising from changes in own credit risk: |  | (20) | (67)
– before income taxes | 23 | (26) | (84)
– income taxes |  | 6 | 17
Equity instruments designated at fair value through other comprehensive income: |  | (4) | (2)
– fair value gains/(losses) |  | (4) | (2)
– income taxes |  | — | —
Other comprehensive income/(expense) for the period, net of tax |  | 70 | 103
Total comprehensive income/(expense) for the period from continuing operations |  | 594 | 1,082
Total comprehensive income/(expense) for the period from discontinued operations | 2 | 90 | (41)
Attributable to: |  |  | —
– shareholders of the parent company |  | 648 | 1,013
– non-controlling interests in respect of continuing operations |  | 36 | 28
– non-controlling interests in respect of discontinued operations |  | — | —
Total comprehensive income/(expense) for the period |  | 684 | 1,041

1 In compliance with IFRS 5 standards, the comparatives have been represented to reflect discontinued operations related to the planned sale of the life insurance
business in France. This also includes discontinued operations related to the sale of the retail banking operations in France.
2 Following a presentation error in the consolidated statement of comprehensive income, the cash flow hedge reserve for the period ending 31 December 2023,
have been represented by EUR 119 million to reflect the net interest income on swaps in cash flow hedge. This representation does not impact the net interest
income for the period in the consolidated income statement and the presentation of the cash flow hedge reserve for the period and at the beginning or end of
the year in the consolidated statement of changes in equity.

Universal Registration Document and Annual Financial Report 2024 | 243

Consolidated balance sheet

at 31 December
|  | 2024 | 2023
| Notes | €m | €m
Assets |  |  |
Cash and balances at central banks |  | 48,907 | 56,894
Trading assets | 11 | 22,853 | 17,249
Financial assets designated and otherwise mandatorily measured at fair value through profit and loss | 14 | 1,563 | 13,590
Derivatives | 15 | 43,251 | 45,522
Loans and advances to banks 1 |  | 5,703 | 5,816
Loans and advances to customers 1 |  | 51,288 | 50,127
Reverse repurchase agreements – non-trading |  | 25,764 | 24,490
Financial investments | 16 | 20,740 | 22,608
Assets held for sale | 2 | 25,477 | 23,211
Prepayments, accrued income and other assets 2 | 21 | 17,998 | 21,726
Current tax assets |  | 595 | 599
Goodwill and intangible assets | 20 | 219 | 188
Deferred tax assets | 8 | 650 | 957
Total assets |  | 265,008 | 282,977
Liabilities |  |  |
Deposits by banks 3 |  | 11,820 | 10,261
Customer accounts 3 |  | 97,065 | 93,890
Repurchase agreements – non-trading |  | 12,344 | 11,153
Trading liabilities | 22 | 16,480 | 19,877
Financial liabilities designated at fair value | 23 | 9,906 | 9,696
Derivatives | 15 | 41,857 | 43,630
Debt securities in issue |  | 15,257 | 12,909
Liabilities of disposal groups held for sale | 2 | 24,718 | 23,817
Accruals, deferred income and other liabilities 2 | 24 | 17,848 | 21,789
Current tax liabilities |  | 236 | 211
Insurance Contract Liabilities | 5 | 518 | 21,035
Provisions | 25 | 184 | 245
Deferred tax liabilities | 8 | 3 | 5
Subordinated liabilities | 26 | 1,941 | 1,951
Total liabilities |  | 250,177 | 270,469
Equity |  |  |
Called up share capital | 29 | 1,328 | 1,062
Share premium account | 29 | 6,747 | 5,264
Other equity instruments | 9 | 1,430 | 1,433
Other reserves |  | 1,574 | 1,480
Retained earnings |  | 3,563 | 3,103
Total shareholders’ equity |  | 14,642 | 12,342
Non-controlling interests |  | 189 | 166
Total equity |  | 14,831 | 12,508
Total liabilities and equity |  | 265,008 | 282,977

1 The loans and advances to banks and customers include expected credit losses provided under IFRS 9. Further analysis of expected credit losses is disclosed in
the table 'Summary of financial instruments to which the impairment requirements in IFRS 9 are applied' under section ‘Credit Risk'.
2 In 2023 ‘Items in the course of collection from other banks’ EUR 273 million were presented on the face of the balance sheet but are now reported within
‘Prepayments, accrued income and other assets’ in the Universal Registration Document and Annual Financial Report 2024. Similarly, ‘Items in the course of
transmission to other banks’ EUR 320 million are presented within ‘Accruals, deferred income and other liabilities’.
3 Following a customer classification error, the comparatives as at 31 December 2023 have been represented by EUR 1.4 billion between ’Deposits by banks' and
'Customer accounts’.

244 | Universal Registration Document and Annual Financial Report 2024

Consolidated financial statements

Consolidated statement of changes in equity
for the year ended 31 December

|  |  |  | Other reserves |  |  |
| Called up share capital and share premium | Other equity instru- ments | Retained earnings | Financial assets at Fair Value through OCI reserve | Cash flow hedging reserve | Foreign exchange reserve | Merger reserve and other reserves | Insurance finance reserve | Total share- holders’ equity | Non- controlling interests | Total equity
| €m | €m | €m | €m | €m | €m | €m | €m | €m | €m | €m
At 1 Jan 2024 | 6,326 | 1,433 | 3,103 | (763) | (63) | (6) | 1,603 | 709 | 12,342 | 166 | 12,508
Profit/(loss) for the period from continuing operations | — | — | 489 | — | — | — | — | — | 489 | 35 | 524
Other comprehensive income/(expense) (net of tax) | — | — | (17) | (3) | 86 | 3 | — | — | 69 | 1 | 70
– debt instruments at fair value through other comprehensive income | — | — | — | 2 | — | — | — | — | 2 | 1 | 3
– equity instruments designated at fair value through other comprehensive income | — | — | — | (4) | — | — | — | — | (4) | — | (4)
– cash flow hedges | — | — | — | — | 86 | — | — | — | 86 | — | 86
– re-measurement of defined benefit asset/ liability | — | — | 3 | — | — | — | — | — | 3 | — | 3
– changes in fair value of financial liabilities designated at fair value due to movement in own credit risk | — | — | (20) | — | — | — | — | — | (20) | — | (20)
– 'Insurance finance income/(expense) recognised in other comprehensive income | — | — | — | — | — | — | — | — | — | — | —
– exchange differences | — | — | — | (1) | — | 3 | — | — | 2 | — | 2
Total comprehensive income/(expense) for the period from continuing operations | — | — | 472 | (3) | 86 | 3 | — | — | 558 | 36 | 594
Total comprehensive income/(expense) for the period from discontinued operations | — | — | 79 | 138 | — | 2 | — | (129) | 90 | — | 90
– capital securities issued during the period | 1,749 | (3) | — | — | — | — | — | — | 1,746 | — | 1,746
– dividends to shareholders 1 | — | — | (83) | — | — | — | — | — | (83) | (13) | (96)
– net impact of equity- settled share-based payments | — | — | — | — | — | — | — | — | — | — | —
– change in business combination and other movements | — | — | (8) | (10) | — | 1 | 6 | — | (11) | — | (11)
Total Other | 1,749 | (3) | (91) | (10) | — | 1 | 6 | — | 1,652 | (13) | 1,639
At 31 Dec 2024 | 8,075 | 1,430 | 3,563 | (638) | 23 | — | 1,609 | 580 | 14,642 | 189 | 14,831

1 Dividends corresponds to coupon payment on other equity instrument (AT1 capital) amounting to EUR 83 million.

Universal Registration Document and Annual Financial Report 2024 | 245

Consolidated statement of changes in equity (continued)
for the year ended 31 December 1

|  |  |  | Other reserves |  |  |
| Called up share capital and share premium | Other equity instru- ments | Retained earnings | Financial assets at Fair Value through OCI reserve | Cash flow hedging reserve | Foreign exchange reserve | Merger reserve and other reserves | Insurance finance reserve | Total share- holders’ equity | Non- controlling interests | Total equity
| €m | €m | €m | €m | €m | €m | €m | €m | €m | €m | €m
At 1 Jan 2023 | 6,326 | 1,433 | 2,338 | (1,136) | (231) | (13) | 1,592 | 1,049 | 11,358 | 146 | 11,504
Profit/(loss) for the period from continuing operations | — | — | 954 | — | — | — | — | — | 954 | 25 | 979
Other comprehensive income/(expense) (net of tax) | — | — | (87) | 10 | 168 | 9 | — | — | 100 | 3 | 103
– debt instruments at fair value through other comprehensive income | — | — | — | 12 | — | — | — | — | 12 | 3 | 15
– equity instruments designated at fair value through other comprehensive income | — | — | — | (2) | — | — | — | — | (2) | — | (2)
– cash flow hedges | — | — | — | — | 168 | — | — | — | 168 | — | 168
– re-measurement of defined benefit asset/ liability | — | — | (20) | — | — | — | — | — | (20) | — | (20)
– changes in fair value of financial liabilities designated at fair value due to movement in own credit risk | — | — | (67) | — | — | — | — | — | (67) | — | (67)
– 'Insurance finance income/(expense) recognised in other comprehensive income | — | — | — | — | — | — | — | — | — | — | —
– exchange differences and other | — | — | — | — | — | 9 | — | — | 9 | — | 9
Total comprehensive income/(expenses) for the period from continuing operations | — | — | 867 | 10 | 168 | 9 | — | — | 1,054 | 28 | 1,082
Total comprehensive income/(expense) for the period from discontinued operations | — | — | (65) | 366 | — | (2) | — | (340) | (41) | — | (41)
– capital securities issued | — | — | — | — | — | — | — | — | — | — | —
– dividends to shareholders 1 | — | — | (78) | — | — | — | — | — | (78) | (8) | (86)
– net impact of equity- settled share-based payments | — | — | — | — | — | — | — | — | — |  | —
– change in business combination and other movements 2 | — | — | 41 | (3) | — | — | 11 | — | 49 | — | 49
Total Other | — | — | (37) | (3) | — | — | 11 | — | (29) | (8) | (37)
At 31 Dec 2023 | 6,326 | 1,433 | 3,103 | (763) | (63) | (6) | 1,603 | 709 | 12,342 | 166 | 12,508

1 Dividends corresponds to coupon payment on other equity instrument (AT1 capital) amounting to EUR 78 million.
2 Change in business combination and other movements include EUR 51 million capital contribution related to the acquisition of HSBC Private Bank
(Luxembourg) S.A. on 2 November 2023 and towards allocation of profit for mandatory legal reserve EUR 11 million.

246 | Universal Registration Document and Annual Financial Report 2024

Consolidated financial statements

Consolidated statement of cash flows

for the year ended 31 December
|  | 2024 | 2023 1
| Notes | €m | €m
Continuing operations |  |  |
Profit/(loss) before tax |  | 930 | 1,325
Adjustments for non-cash items: |  | (337) | 438
– depreciation, amortisation and impairment of property plant and equipment, right of use and intangibles |  | 96 | 35
– net gain from investing activities |  | (1) | (1)
– change in expected credit losses gross of recoveries and other credit impairment charges |  | 107 | 145
– provisions including pensions |  | 9 | 33
– share-based payment expense | 6 | 22 | 15
– other non-cash items included in profit before tax |  | (80) | (31)
– elimination of exchange differences 2 |  | (490) | 242
Changes in operating assets and liabilities |  | (6,102) | (567)
– change in net trading securities and derivatives |  | (8,424) | 1,301
– change in loans and advances to banks and customers |  | (1,732) | 2,796
– change in reverse repurchase agreements – non-trading |  | (3,931) | (5,921)
– change in financial assets designated at fair value and otherwise mandatorily measured at fair value |  | (629) | 225
– change in other assets |  | 900 | (8,862)
– change in deposits by banks and customer accounts |  | 6,668 | 4,965
– change in repurchase agreements – non-trading |  | 1,191 | 4,498
– change in debt securities in issue |  | 2,348 | 6,048
– change in financial liabilities designated at fair value |  | 309 | 571
– change in other liabilities |  | (2,613) | (5,760)
– tax paid |  | (189) | (428)
Net cash from operating activities |  | (5,509) | 1,196
Purchase of financial investments |  | (9,956) | (6,990)
Proceeds from the sale and maturity of financial investments |  | 3,658 | 3,828
Net cash flows from the purchase and sale of property plant and equipment |  | (13) | (21)
Net investment in intangible assets |  | (69) | (53)
Net cash flow from business combination 3 |  | — | 611
Net cash flow on disposal of subsidiaries, business, associates and joint ventures 4 |  | (430) | (777)
Net cash from investing activities |  | (6,810) | (3,402)
Issue of ordinary share capital and other equity instruments | 29 | 1,745 | —
Subordinated loan capital issued | 26 | 500 | —
Subordinated loan capital repaid | 26 | (510) | (72)
Dividends paid to shareholders of the parent company | 9 | (83) | (78)
Dividends paid to non-controlling interests |  | (13) | (8)
Net cash from financing activities |  | 1,639 | (158)
Net cash from discontinued operations | 2 | (9,679) | 9,401
Net increase/(decrease) in cash and cash equivalents |  | (20,359) | 7,037
Cash and cash equivalents at beginning of the period |  | 95,623 | 88,749
Exchange differences in respect of cash and cash equivalents |  | 213 | (163)
Cash and cash equivalents at 31 Dec |  | 75,477 | 95,623

Universal Registration Document and Annual Financial Report 2024 | 247

Consolidated statement of cash flows (continued)

for the year ended 31 December
|  | 2024 | 2023 1
| Notes | €m | €m
Cash and cash equivalents comprise of:5 |  |  |
– cash and balances at central banks 6 |  | 48,907 | 56,894
– loans and advances to banks of one month or less |  | 4,572 | 5,001
– reverse repurchase agreement with banks of one month or less |  | 13,498 | 16,155
– cash collateral, net settlement accounts and items in course of collection from/transition to other banks |  | 6,534 | 8,042
– cash and cash equivalents held for sale/discontinued operations 4,7 |  | 1,966 | 9,531
Cash and cash equivalents at 31 Dec |  | 75,477 | 95,623

1 In compliance with IFRS 5 standards, the comparatives have been represented to reflect discontinued operations related to the planned sale of the life insurance
business in France. This also includes discontinued operations related to the sale of the retail banking operations in France.
2 Adjustment to bring changes between opening and closing balance sheet amounts to average rates. This is not done on a line-by-line basis, as details cannot be
determined without unreasonable expense.
3 EUR 195 million was paid in consideration for the acquisition of HSBC Private Bank (Luxembourg) S.A. on 2 November 2023. The cash and cash equivalent in the
subsidiary over which control was obtained, was EUR 0.8 billion.
4 Net cash flow on disposal for 2024 represents the net impact of EUR 0.4 billion additional cash paid on sale of retail banking operations in France in January 2024
(Out of the total sale proceeds of EUR 9.9 billion, EUR 9.5 billion was reclassified as held for sale at 31 December 2023 of which 'Loans and advances to banks’
for EUR 9.3 billion and ‘Cash and balances at central banks’ for EUR 0.2 billion) and EUR 38 million net on sale of HSBC Epargne Enterprise to Natixis
Interépargne in November 2024. Net cash flow on disposal for 2023 represents EUR 0.8 billion on sale of branch operations in Greece to Pancreta Bank SA on
28 July 2023.
5 Cash and cash equivalents as of 31 December 2023 includes EUR 287 million in respect of the planned sale of the life insurance business in France (loans and
advances to banks of one month or less EUR 265 million, net settlement accounts and cash collateral EUR 22 million).
6 At 31 December 2024, EUR 7.8 billion (2023: EUR 6.0 billion) was not available for use by HSBC Continental Europe due to a range of restrictions including
mandatory deposits and other restrictions.
7 At 31 December 2024, includes EUR 1.8 billion related to planned sale of Private Banking business in Germany (cash and balances at central banks EUR
1.8 billion) and EUR 139 million related to the planned sale of the life insurance business in France (loans and advances to banks of one month or less EUR
139 million).
Interest received was EUR 8,932 million of which discontinued operations was EUR 357 million (2023: EUR 7,898 million of which discontinued
operations was EUR 530 million). Interest paid was EUR 7,530 million of which discontinued operations was EUR 25 million) (2023: EUR
5,658 million of which discontinued operations was EUR 318 million). Dividends received EUR 43 million (2023: EUR 30 million).

248 | Universal Registration Document and Annual Financial Report 2024

Consolidated financial statements

Notes on the consolidated financial
statements
1 Basis of preparation and material accounting policies
The consolidated financial statements of HSBC Continental Europe are available upon request from the HSBC Continental Europe registered
office at 38 Avenue Kléber – 75116 Paris or on the websites www.hsbc.com and www.hsbc.fr.
These consolidated financial statements were approved by the Board of Directors on 18 February 2025.
1.1 Basis of preparation
(a)Compliance with International Financial Reporting Standards
The consolidated financial statements of HSBC Continental Europe have been prepared in accordance with IFRS Accounting Standards as
issued by the International Accounting Standards Board (‘IASB’), including interpretations issued by the IFRS Interpretations Committee, and as
endorsed by the European Union (‘EU’). There were no unendorsed standards effective for the year ended 31 December 2024 affecting these
consolidated financial statements.
I FRS Accounting S tandards adopted during the year ended 31 December 2024
There were no new standards, amendments to standards or interpretations that had an effect on these financial statements. Accounting policies
have been applied consistently.
(b)Future accounting developments
Minor amendments to IFRS Accounting Standards
The IASB has published a number of minor amendments to IFRS Accounting Standards that are effective from 1 January 2025. HSBC
Continental Europe expects they will have an insignificant effect, when adopted, on the consolidated financial statements.
Other amendments and new IFRS Accounting Standards
Amendments to IFRS 9 ‘Financial Instruments’ and IFRS 7 ‘Financial Instruments: Disclosures’
In May 2024, the IASB issued amendments to IFRS 9 ‘Financial Instruments’ and IFRS 7 ‘Financial Instruments: Disclosures’, effective for
annual reporting periods beginning on, or after, 1 January 2026. In addition to guidance as to when certain financial liabilities can be deemed
settled when using an electronic payment system, the amendments also provide further clarification regarding the classification of financial
assets that contain contractual terms that change the timing or amount of contractual cash flows, including those arising from ESG-related
contingencies, and financial assets with certain non-recourse features. HSBC Continental Europe is undertaking an assessment of the potential
impact.
IFRS 18 ‘Presentation and Disclosure in Financial Statements’
In April 2024, the IASB issued IFRS 18 ‘Presentation and Disclosure in Financial Statements’, effective for annual reporting periods beginning on
or after 1 January 2027. The new accounting standard aims to give users of financial statements more transparent and comparable information
about an entity’s financial performance. It will replace IAS 1 ‘Presentation of Financial Statements’ but carries over many requirements from that
IFRS Accounting Standard unchanged. In addition, there are three sets of new requirements relating to the structure of the income statement,
management-defined performance measures and the aggregation and disaggregation of financial information.
While IFRS 18 will not change recognition criteria or measurement bases, it may have an impact on presenting information in the financial
statements, in particular the income statement and to a lesser extent the cash flow statement. The HSBC Group is currently assessing impacts
and data readiness before developing a more detailed implementation plan.
(c)Foreign currencies
The functional currency of HSBC Continental Europe is euros which is also the presentational currency of HSBC Continental Europe's
consolidated financial statements.
Transactions in foreign currencies are recorded at the rate of exchange at the date of the transaction. Assets and liabilities denominated in
foreign currencies are translated at the rate of exchange at the balance sheet date except non-monetary assets and liabilities measured at
historical cost, which are translated using the rate of exchange at the initial transaction date. Exchange differences are included in other
comprehensive income or in the income statement depending on where the gain or loss on the underlying item is recognised.
In the consolidated financial statements, the assets and liabilities of branches, subsidiaries, joint ventures and associates whose functional
currency is not euros are translated into HSBC Continental Europe’s presentation currency at the rate of exchange at the balance sheet date,
while their results are translated into euros at the average rates of exchange for the reporting period.
Exchange differences arising are recognised in other comprehensive income. On disposal of a foreign operation, exchange differences
previously recognised in other comprehensive income are reclassified to the income statement.

Universal Registration Document and Annual Financial Report 2024 | 249

(d)Presentation of information
Certain disclosures required by IFRS Accounting Standards have been included in the audited sections of this Universal Registration Document
2024 as follows:
– disclosures concerning the nature and extent of risks relating to financial instruments other than insurance risk are included in the 'Risk'
section on pages 164 to 239 and the insurance risk in Note 5 ‘Insurance business’ on pages 267 to 279; and
– the 'Own funds' disclosure is included in the ‘Capital’ section on page 212.
Information related to results by business segments (‘IFRS 8’) are disclosed in the management report on pages 13 to 18.
(e)Critical estimates and judgements
The preparation of financial information requires the use of estimates and judgements about future conditions. In view of the inherent
uncertainties and the high level of subjectivity involved in the recognition or measurement of items, highlighted as the 'critical estimates and
judgements' in section 1.2 below, it is possible that the outcomes in the next financial year could differ from those on which management’s
estimates are based. This could result in materially different estimates and judgements from those reached by management for the purposes of
these financial statements. Management’s selection of HSBC Continental Europe’s accounting policies that contain critical estimates and
judgements reflects the materiality of the items to which the policies are applied and the high degree of judgement and estimation uncertainty
involved.
Management has considered the impact of climate-related risks on HSBC Continental Europe’s financial position and performance. While the
effects of climate change are a source of uncertainty, as at 31 December 2024 management did not consider there to be a material impact on
our critical judgements and estimates from the physical, transition and other climate-related risks in the short to medium term. In particular
management has considered the known and observable potential impacts of climate-related risks of associated judgements and estimates in
our value in use calculations.
(f)Going concern
The financial statements are prepared on a going concern basis, as the Directors are satisfied that HSBC Continental Europe and parent
company have the resources to continue in business for the foreseeable future. In making this assessment, the Directors have considered a
wide range of information relating to present and future conditions, including future projections of profitability, liquidity, capital requirements and
capital resources.
These considerations include stressed scenarios that reflect the uncertainty in the macroeconomic environment following, uncertain inflation,
rapidly changing interest rates, and disrupted supply chains as a result of the Russia-Ukraine war, conflict in the Middle East and US-China
tensions. They also included other top and emerging risks, including climate change, as well as the related impacts on profitability, capital and
liquidity.
1.2 Summary of material accounting policies
(a)Consolidation and related policies
Investments in subsidiaries
Where an entity is governed by voting rights, HSBC Continental Europe consolidates when it holds, directly or indirectly, the necessary voting
rights to pass resolutions by the governing body. In all other cases, the assessment of control is more complex and requires judgement of other
factors, including having exposure to variability of returns, power to direct relevant activities and whether power is held as agent or principal.
Business combinations are accounted for using the acquisition method. The amount of non-controlling interest is measured either at fair value or
at the non-controlling interest’s proportionate share of the acquiree’s identifiable net assets. This election is made for each business
combination.
The investments in subsidiaries are stated at cost less impairment losses.
Impairment testing is performed where there is an indication of impairment, by comparing the recoverable amount of a cash-generating unit
with its carrying amount.
Critical estimates and judgements
Investments in subsidiaries are tested for impairment when there is an indication that the investment may be impaired, which involves
estimations of value in use reflecting management’s best estimate of the future cash flows of the investment and the rates used to discount
these cash flows, both of which are subject to uncertain factors as follows:

Judgements | Estimates
– The accuracy of forecast cash flows is subject to a high degree of uncertainty in volatile market conditions. Where such circumstances are determined to exist, management re-tests for impairment more frequently than once a year when indicators of impairment exist. This ensures that the assumptions on which the cash flow forecasts are based continue to reflect current market conditions and management's best estimate of future business prospects. | – The future cash flows of each investment are sensitive to the cash flows projected for the periods for which detailed forecasts are available and to assumptions regarding the long-term pattern of sustainable cash flows thereafter. Forecasts are compared with actual performance and verifiable economic data, but they reflect management’s view of future business prospects at the time of the assessment. – The rates used to discount future expected cash flows can have a significant effect on their valuation, and are based on the costs of equity assigned to the investment. The cost of equity percentage is generally derived from a capital asset pricing model and the market implied cost of equity, which incorporates inputs reflecting a number of financial and economic variables, including the risk-free interest rate in the country concerned and a premium for the risk of the business being evaluated. These variables are subject to fluctuations in external market rates and economic conditions beyond management’s control.

250 | Universal Registration Document and Annual Financial Report 2024

Notes on the consolidated financial statements

Goodwill
Goodwill is allocated to cash-generating units (‘CGUs’) for the purpose of impairment testing, which is undertaken at the lowest level at which
goodwill is monitored for internal management purposes. HSBC Continental Europe's CGUs are the global businesses within principal operating
entities. Impairment testing is performed once a year, or whenever there is an indication of impairment, by comparing the recoverable amount
of a CGU with its carrying amount.
Goodwill is included in a disposal group if the disposal group is a CGU to which goodwill has been allocated or it is an operation within such a
CGU.
Critical estimates and judgements
The review of goodwill and non-financial assets (see Note 1.2(n)) for impairment reflects management’s best estimate of the future cash flows
of the CGUs and the rates used to discount these cash flows, both of which are subject to uncertain factors as follows:

Judgements | Estimates
– The accuracy of forecast cash flows is subject to a high degree of uncertainty in volatile market conditions. Where such circumstances are determined to exist, management re-tests goodwill for impairment more frequently than once a year when indicators of impairment exist. This ensures that the assumptions on which the cash flow forecasts are based continue to reflect current market conditions and management's best estimate of future business prospects. | – The future cash flows of the CGUs are sensitive to the cash flows projected for the periods for which detailed forecasts are available and to assumptions regarding the long-term pattern of sustainable cash flows thereafter. Forecasts are compared with actual performance and verifiable economic data, but they reflect management’s view of future business prospects at the time of the assessment. – The rates used to discount future expected cash flows can have a significant effect on their valuation, and are based on the costs of capital assigned to individual CGUs. The cost of capital percentage is generally derived from a capital asset pricing model, which incorporates inputs reflecting a number of financial and economic variables, including the risk-free interest rate in the country concerned and a premium for the risk of the business being evaluated. These variables are subject to fluctuations in external market rates and economic conditions beyond management’s control. – Key assumptions used in estimating goodwill impairment and non-financial assets are described in Note 20.

HSBC Continental Europe sponsored structured entities
HSBC Continental Europe is considered to sponsor another entity if, in addition to ongoing involvement with the entity, it had a key role in
establishing that entity or in bringing together relevant counterparties so the transaction that is the purpose of the entity could occur. HSBC
Continental Europe is generally not considered a sponsor if the only involvement with the entity is merely administrative.
Interests in associates and joint arrangements
Joint arrangements are investments in which HSBC Continental Europe, together with one or more parties, has joint control. Depending on
HSBC Continental Europe’s rights and obligations, the joint arrangement is classified as either a joint operation or a joint venture. HSBC
Continental Europe classifies investments in entities over which it has significant influence, and those that are neither subsidiaries nor joint
arrangements, as associates.
HSBC Continental Europe recognises its share of the assets, liabilities and results in a joint operation. Investments in associates and interests in
joint ventures are recognised using the equity method. The attributable share of the results and reserves of joint ventures and associates is
included in the consolidated financial statements of HSBC Continental Europe based on either financial statements made up to 31 December or
pro-rated amounts adjusted for any material transactions or events occurring between the date the financial statements are available and
31 December.
Investments in associates and joint ventures are assessed at each reporting date and tested for impairment when there is an indication that the
investment may be impaired, by comparing the recoverable amount of the relevant investment to its carrying amount. Goodwill on acquisition of
interests in joint ventures and associates is not tested separately for impairment, but is assessed as part of the carrying amount of the
investment.
(b)Income and expense
Operating income
Interest income and expense
Interest income and expense for all financial instruments, excluding those classified as held for trading or designated at fair value are recognised
in ‘interest income’ and ‘interest expense’ in the income statement using the effective interest method. However, as an exception to this,
interest on debt instruments issued by HSBC Continental Europe for funding purposes that are designated under the fair value option to reduce
an accounting mismatch and on derivatives managed in conjunction with those debt instruments is included in interest expense.
Interest on credit-impaired financial assets is recognised by applying the effective interest rate to the amortised cost (i.e. gross carrying amount
of the asset less allowance for ECL).
Non-interest income and expense
HSBC Continental Europe generates fee income from services provided over time, such as account service and card fees, or when HSBC
Continental Europe delivers a specific transaction at a point in time such as broking services and import/export services. With the exception of
certain fund management and performance fees, all other fees are generated at a fixed price. Fund management and performance fees can be
variable depending on the size of the customer portfolio and HSBC Continental Europe performance as fund manager. Variable fees are
recognised when all uncertainties are resolved. Fee income is generally earned from short-term contracts with payment terms that do not
include a significant financing component.

Universal Registration Document and Annual Financial Report 2024 | 251

HSBC Continental Europe acts as principal in the majority of contracts with customers, with the exception of broking services. For most
brokerage trades HSBC Continental Europe acts as agent in the transaction and recognises broking income net of fees payable to other parties
in the arrangement.
HSBC Continental Europe recognises fees earned on transaction-based arrangements at a point in time when it has fully provided the service to
the customer. Where the contract requires services to be provided over time, income is recognised on a systematic basis over the life of the
agreement.
Where HSBC Continental Europe offers a package of services that contains multiple non-distinct performance obligations, such as those
included in account service packages, the promised services are treated as a single performance obligation. If a package of services contains
distinct performance obligations, the corresponding transaction price is allocated to each performance obligation based on the estimated stand-
alone selling prices.
Dividend income is recognised when the right to receive payment is established.
Net income/(expense) from financial instruments measured at fair value through profit or loss includes the following:
– ‘Net income from financial instruments held for trading or managed on a fair value basis’. This comprises net trading activities, which
includes all gains and losses from changes in the fair value of financial assets and financial liabilities held for trading and other financial
instruments managed on a fair value basis, together with the related interest income, interest expense and dividend income, excluding the
effect of changes in the credit risk of liabilities managed on a fair value basis. It also includes all gains and losses from changes in the fair
value of derivatives that are managed in conjunction with financial assets and liabilities measured at fair value through profit or loss.
– ‘Net income/(expense) from assets and liabilities of insurance businesses, including related derivatives, measured at fair value through profit
or loss’. This includes all gains and losses from changes in the fair value, together with related interest income, interest expense and
dividend income in respect of financial assets and liabilities measured at fair value through profit or loss; and those derivatives managed in
conjunction with the above that can be separately identifiable from other trading derivatives.
– ‘Changes in fair value of designated debt instruments and related derivatives’. Interest paid on the debt instruments and interest cash flows
on related derivatives is presented in interest expense where doing so reduces an accounting mismatch.
– ‘Changes in fair value of other financial instruments mandatorily measured at fair value through profit or loss’. This includes interest on
instruments that fail the SPPI test. See (d) below.
The accounting policies for insurance service result and insurance finance income/(expense) are disclosed in Note 1.2(j).
(c)Valuation of financial instruments
All financial instruments are initially recognised at fair value. Fair value is the price that would be received to sell an asset or paid to transfer a
liability in an orderly transaction between market participants at the measurement date. The fair value of a financial instrument on initial
recognition is generally its transaction price (that is, the fair value of the consideration given or received). However, if there is a difference
between the transaction price and the fair value of financial instruments whose fair value is based on a quoted price in an active market or a
valuation technique that uses only data from observable markets, HSBC Continental Europe recognises the difference as a trading gain or loss at
inception (a ‘day 1 gain or loss’). In all other cases, the entire day 1 gain or loss is deferred and recognised in the income statement over the life
of the transaction until the transaction matures, is closed out, the valuation inputs become observable or HSBC Continental Europe enters into
an offsetting transaction.
The fair value of financial instruments is generally measured on an individual basis. However, in cases where HSBC Continental Europe
manages a group of financial assets and liabilities according to its net market or credit risk exposure, the fair value of the group of financial
instruments is measured on a net basis but the underlying financial assets and liabilities are presented separately in the financial statements,
unless they satisfy the IFRS offsetting criteria. Financial instruments are classified into one of three fair value hierarchy levels, described in Note
12, ‘Fair values of financial instruments carried at fair value'.
Critical estimates and judgements
The majority of valuation techniques employ only observable market data. However, certain financial instruments are classified on the basis of
valuation techniques that feature one or more significant market inputs that are unobservable, and for them, the measurement of fair value is
more judgemental:

Judgements | Estimates
– An instrument in its entirety is classified as valued using significant unobservable inputs if, in the opinion of management, greater than 5 per cent of the instrument’s valuation is driven by unobservable inputs. – Unobservable’ in this context means that there is little or no current market data available from which to determine the price at which an arm’s length transaction would be likely to occur. It generally does not mean that there is no data available at all upon which to base a determination of fair value (consensus pricing data may, for example, be used). | – Details on HSBC Continental Europe’s level 3 financial instruments and the sensitivity of their valuation to the effect of applying reasonably possible alternative assumptions in determining their fair value are set out in Note 12.

(d)Financial instruments measured at amortised cost
Financial assets that are held to collect the contractual cash flows and which contain contractual terms that give rise on specified dates to cash
flows that are solely payments of principal and interest are measured at amortised cost. Such financial assets include most loans and advances
to banks and customers and some debt securities. In addition, most financial liabilities are measured at amortised cost. HSBC Continental
Europe accounts for regular way amortised cost financial instruments using trade date accounting. The carrying amount of these financial assets
at initial recognition includes any directly attributable transactions costs.

252 | Universal Registration Document and Annual Financial Report 2024

Notes on the consolidated financial statements

HSBC Continental Europe may commit to underwriting loans on fixed contractual terms for specified periods of time. When the loan arising
from the lending commitment is expected to be sold shortly after origination, the commitment to lend is recorded as a derivative. When HSBC
Continental Europe intends to hold the loan, the loan commitment is included in the impairment calculations set out below.
Financial assets are reclassified only when the business model for their management changes. Such changes, which are expected to be
infrequent, are determined by senior management as a result of external or internal changes and must be significant to operations and
demonstrable to external parties. Reclassifications are applied prospectively from the first day of the first reporting period following the change
of business model. Where a financial asset is reclassified out of the amortised cost measurement category and into the fair value through other
comprehensive income measurement category its fair value is measured at the date of reclassification. Any gain or loss arising from a difference
between the previous amortised cost and fair value is recognised in other comprehensive income. The effective interest rate and the
measurement of expected credit losses are not adjusted as a result of the reclassification.
Non-trading reverse repurchase, repurchase and similar agreements
When debt securities are sold subject to a commitment to repurchase them at a predetermined price (‘repos’), they remain on the balance
sheet and a liability is recorded in respect of the consideration received. Securities purchased under commitments to resell (‘reverse repos’) are
not recognised on the balance sheet and an asset is recorded in respect of the initial consideration paid. Non-trading repos and reverse repos
are measured at amortised cost. The difference between the sale and repurchase price or between the purchase and resale price is treated as
interest and recognised in net interest income over the life of the agreement.
Contracts that are economically equivalent to reverse repurchase or repurchase agreements (such as sales or purchases of debt securities
entered into together with total return swaps with the same counterparty) are accounted for similarly to, and presented together with, reverse
repurchase or repurchase agreements.
(e)Financial assets measured at fair value through other comprehensive income (‘FVOCI’)
Financial assets managed within a business model that is achieved by both collecting contractual cash flows and selling and which contain
contractual terms that give rise on specified dates to cash flows that are solely payments of principal and interest are measured at FVOCI.
These comprise primarily debt securities. They are recognised on the trade date when HSBC enters into contractual arrangements to purchase
and are generally derecognised when they are either sold or redeemed. They are subsequently remeasured at fair value with changes therein
(except for those relating to impairment, interest income and foreign currency exchange gains and losses) are recognised in other
comprehensive income until the assets are sold. Upon disposal, the cumulative gains or losses in other comprehensive income are recognised
in the income statement as ‘Gains less losses from financial investments’. Financial assets measured at FVOCI are included in the impairment
calculations set out below and impairment is recognised in profit or loss.
(f)Equity securities measured at fair value with fair value movements presented in other
comprehensive income (‘OCI’)
The equity securities for which fair value movements are shown in other comprehensive income are business facilitation and other similar
investments where HSBC holds the investments other than to generate a capital return. Dividends from such investments are recognised in
profit or loss. Gains or losses on the derecognition of these equity securities are not transferred to profit or loss. Otherwise, equity securities are
measured at fair value through profit or loss.
(g)Financial instruments designated at fair value through profit or loss
Financial instruments, other than those held for trading, are classified in this category if they meet one or more of the criteria set out below and
are so designated irrevocably at inception:
– The use of the designation removes or significantly reduces an accounting mismatch;
– A group of financial assets and liabilities or a group of financial liabilities is managed and its performance is evaluated on a fair value basis, in
accordance with a documented risk management or investment strategy; and
– The financial liability contains one or more non-closely related embedded derivatives.
Designated financial assets are recognised when HSBC Continental Europe enters into contracts with counterparties, which is generally on
trade date, and are normally derecognised when the rights to the cash flows expire or are transferred. Designated financial liabilities are
recognised when HSBC Continental Europe enters into contracts with counterparties, which is generally on settlement date, and are normally
derecognised when extinguished.
Subsequent changes in fair values are recognised in the income statement in ‘Net income from financial instruments held for trading or
managed on a fair value basis’ or ‘Net income/(expense) from assets and liabilities of insurance businesses, including related derivatives,
measured at fair value through profit or loss’ or ‘Changes in fair value of designated debt and related derivatives’ except for the effect of
changes in the liabilities' credit risk, which is presented in 'Other comprehensive income', unless that treatment would create or enlarge an
accounting mismatch in profit or loss.
Under the above criteria, the main classes of financial instruments designated by HSBC Continental Europe are:
– Debt instruments for funding purposes that are designated to reduce an accounting mismatch: The interest and/or foreign exchange
exposure on certain fixed-rate debt securities issued has been matched with the interest and/or foreign exchange exposure on certain swaps
as part of a documented risk management strategy.
– Financial assets and financial liabilities under unit-linked and non-linked investment contracts: A contract under which HSBC does not accept
significant insurance risk from another party is not classified as an insurance contract, other than investment contracts with discretionary
participation features (‘DPF’), but is accounted for as a financial liability. Customer liabilities under linked and certain non-linked investment
contracts issued by insurance subsidiaries are determined based on the fair value of the assets held in the linked funds or by a valuation
method. The related financial assets and liabilities are managed and reported to management on a fair value basis.

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– Designation at fair value of the financial assets and related liabilities allows changes in fair values to be recorded in the income statement and
presented in the same line.
– Financial liabilities that contain both deposit and derivative components: These financial liabilities are managed and their performance
evaluated on a fair value basis.
(h)Derivatives
Derivatives are financial instruments that derive their value from the price of underlying items such as equities, interest rates or other indices.
Derivatives are recognised initially and are subsequently measured at fair value through profit or loss. Derivatives are classified as assets when
their fair value is positive or as liabilities when their fair value is negative. This includes embedded derivatives in financial liabilities which are
bifurcated from the host contract when they meet the definition of a derivative on a stand-alone basis. Where the derivatives are managed with
debt securities issued by HSBC Continental Europe that are designated at fair value where doing so reduces an accounting mismatch, the
contractual interest is shown in ‘Interest expense’ together with the interest payable on the issued debt.
Hedge accounting
When derivatives are not part of fair value designated relationships, if held for risk management purposes they are designated in hedge
accounting relationships where the required criteria for documentation and hedge effectiveness are met. HSBC Continental Europe uses these
derivatives or, where allowed, other non-derivative hedging instruments in fair value hedges, cash flow hedges or hedges of net investments in
foreign operations as appropriate to the risk being hedged.
Fair value hedge
Fair value hedge accounting does not change the recording of gains and losses on derivatives and other hedging instruments, but results in
recognising changes in the fair value of the hedged assets or liabilities attributable to the hedged risk that would not otherwise be recognised in
the income statement. If a hedge relationship no longer meets the criteria for hedge accounting, hedge accounting is discontinued, and the
cumulative adjustment to the carrying amount of a hedged item for which the effective interest rate method is used is amortised to the income
statement on a recalculated effective interest rate, unless the hedged item has been derecognised, in which case it is recognised in the income
statement immediately.
Cash flow hedge
The effective portion of gains and losses on hedging instruments is recognised in other comprehensive income and the ineffective portion of
the change in fair value of derivative hedging instruments that are part of a cash flow hedge relationship is recognised immediately in the
income statement within ‘Net income from financial instruments held for trading or managed on a fair value basis’. The accumulated gains and
losses recognised in other comprehensive income are reclassified to the income statement in the same periods in which the hedged item
affects profit or loss. When a hedge relationship is discontinued, or partially discontinued, any cumulative gain or loss recognised in other
comprehensive income remains in equity until the forecast transaction is recognised in the income statement. When a forecast transaction is no
longer expected to occur, the cumulative gain or loss previously recognised in other comprehensive income is immediately reclassified to the
income statement.
Derivatives that do not qualify for hedge accounting
Non-qualifying hedges are derivatives entered into as economic hedges of assets and liabilities for which hedge accounting was not applied.
(i)Impairment of amortised cost and FVOCI financial assets
Expected credit losses are recognised for loans and advances to banks and customers, non-trading reverse repurchase agreements, other
financial assets held at amortised cost, debt instruments measured at fair value through other comprehensive income, and certain loan
commitments and financial guarantee contracts. At initial recognition, an allowance (or provision in the case of some loan commitments and
financial guarantees) is recognised for ECL resulting from possible default events within the next 12 months, or less, where the remaining life is
less than 12 months, (’12-month ECL’). In the event of a significant increase in credit risk, an allowance (or provision) is recognised for ECL
resulting from all possible default events over the expected life of the financial instrument (‘lifetime ECL’). Financial assets where 12-month ECL
is recognised are considered to be ‘stage 1’; financial assets which are considered to have experienced a significant increase in credit risk are in
‘stage 2’; and financial assets for which there is objective evidence of impairment, and so are considered to be in default or otherwise credit-
impaired are in ‘stage 3’. Purchased or originated credit-impaired financial assets ('POCI') are treated differently as set out below.
Credit-impaired (Stage 3)
HSBC Continental Europe determines that a financial instrument is credit-impaired and in Stage 3 by considering relevant objective evidence,
primarily whether:
– contractual payments of either principal or interest are past due for more than 90 days;
– there are other indications that the borrower is unlikely to pay such as that a concession has been granted to the borrower for economic or
legal reasons relating to the borrower’s financial condition; or
– the loan is otherwise considered to be in default.
If such unlikeliness to pay is not identified at an earlier stage, it is deemed to occur when an exposure is 90 days past due. Therefore, the
definitions of credit-impaired and default are aligned as far as possible so that stage 3 represents all loans that are considered defaulted or
otherwise credit-impaired.

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Interest income is recognised by applying the effective interest rate to the amortised cost (i.e. gross carrying amount less allowance for ECL).
Write-off
Financial assets (and the related impairment allowances) are normally written off, either partially or in full, when there is no realistic prospect of
recovery. Where loans are secured, this is generally after receipt of any proceeds from the realisation of security. In circumstances where the
net realisable value of any collateral has been determined and there is no reasonable expectation of further recovery, write-off may be earlier.
Forbearance
Loans are identified as forborne and classified as either performing or non-performing when HSBC Continental Europe modifies the contractual
terms due to financial difficulty of the borrower. Non-performing forborne loans are stage 3 and classified as non-performing until they meet the
curing criteria, as specified by applicable credit risk policy (for example, when the loan is no longer in default and no other indicators of default
have been present for at least 12 months). Any amount written off as a result of any modification of contractual terms upon entering
forbearance would not be reversed.
HSBC Continental Europe applies the EBA Guidelines on the application of definition of default for our retail portfolios, which affect credit risk
policies and our reporting in respect of the status of loans as credit impaired principally due to forbearance (or curing thereof). Further details are
provided under 'Forborne loans and advances' on pages 200 – 201.
Performing forborne loans are initially stage 2 and remain classified as forborne until they meet applicable curing criteria (for example, they
continue to not be in default and no other indicators of default are present for a period of at least 24 months). At this point, the loan is either
stage 1 or stage 2 as determined by comparing the risk of a default occurring at the reporting date (based on the modified contractual terms)
and the risk of a default occurring at initial recognition (based on the original, unmodified contractual terms).
A forborne loan is derecognised if the existing agreement is cancelled and a new agreement is made on substantially different terms, or if the
terms of an existing agreement are modified such that the forborne loan is a substantially different financial instrument. Any new loans that
arise following derecognition events in these circumstances would generally be classified as POCI and will continue to be disclosed as forborne.
Loan modifications other than forborne loans
Loan modifications that are not identified as forborne are considered to be commercial restructurings. Where a commercial restructuring results
in a modification (whether legalised through an amendment to the existing terms or the issuance of a new loan contract) such that HSBC’s
rights to the cash flows under the original contract have expired, the old loan is derecognised and the new loan is recognised at fair value. The
rights to cash flows are generally considered to have expired if the commercial restructuring is at market rates and no payment-related
concession has been provided. Modifications of certain higher credit risk wholesale loans are assessed for derecognition having regard to
changes in contractual terms that either individually or in combination are judged to result in a substantially different financial instrument.
Mandatory and general offer loan modifications that are not borrower-specific, for example market-wide customer relief programmes, generally
do not result in derecognition, but their stage allocation is determined considering all available and supportable information under our ECL
impairment policy. Changes made to these financial instruments that are economically equivalent and required by interest rate benchmark
reform do not result in the derecognition or a change in the carrying amount of the financial instrument, but instead require the effective interest
rate to be updated to reflect the change of the interest rate benchmark.
Significant increase in credit risk (Stage 2)
An assessment of whether credit risk has increased significantly since initial recognition is performed at each reporting period by considering
the change in the risk of default occurring over the remaining life of the financial instrument.
The assessment explicitly or implicitly compares the risk of default occurring at the reporting date compared with that at initial recognition,
taking into account reasonable and supportable information, including information about past events, current conditions and future economic
conditions. The assessment is unbiased, probability-weighted, and to the extent relevant, uses forward-looking information consistent with that
used in the measurement of ECL. The analysis of credit risk is multifactor. The determination of whether a specific factor is relevant and its
weight compared with other factors depends on the type of product, the characteristics of the financial instrument and the borrower, and the
geographical region. Therefore, it is not possible to provide a single set of criteria that will determine what is considered to be a significant
increase in credit risk and these criteria will differ for different types of lending, particularly between retail and wholesale.
However, unless identified at an earlier stage, all financial assets are deemed to have suffered a significant increase in credit risk when
30 days past due. In addition, wholesale loans that are individually assessed, which are typically corporate and commercial customers, and
included on a watch or worry list are included in stage 2.
For wholesale portfolios, the quantitative comparison assesses default risk using a lifetime probability of default ('PD'), which encompasses a
wide range of information including the obligor’s customer risk rating (‘CRR’), macro-economic condition forecasts and credit transition
probabilities. For origination CRRs up to 3.3, significant increase in credit risk is measured by comparing the average PD for the remaining term
estimated at origination with the equivalent estimation at reporting date. The quantitative measure of significance varies depending on the credit
quality at origination as follows:

Universal Registration Document and Annual Financial Report 2024 | 255

Origination CRR | Significance trigger – PD to increase by
0.1–1.2 | 15 bps
2.1–3.3 | 30 bps

For CRRs greater than 3.3 that are not impaired, a significant increase in credit risk is considered to have occurred when the origination PD has
doubled. The significance of changes in PD was informed by expert credit risk judgement, referenced to historical credit migrations and to
relative changes in external market rates.
For loans originated prior to the implementation of IFRS 9, the origination PD does not include adjustments to reflect expectations of future
macroeconomic conditions since these are not available without the use of hindsight. In the absence of this data, origination PD must be
approximated assuming through-the-cycle PDs and through-the-cycle migration probabilities, consistent with the instrument’s underlying
modelling approach and the CRR at origination.
For these loans, the quantitative comparison is supplemented with additional CRR deterioration based thresholds as set out in the table below:

Origination CRR | Additional significance criteria – Number of CRR grade notches deterioration required to identify as significant credit deterioration (stage 2) (> or equal to)
0.1 | 5 notches
1.1–4.2 | 4 notches
4.3–5.1 | 3 notches
5.2–7.1 | 2 notches
7.2–8.2 | 1 notch

Further information about the 23-grade scale used for CRR can be found on page 182.
For retail portfolios, default risk is assessed using a reporting date 12-month PD derived from internal models, which incorporate all available
information about the customer. This PD is adjusted for the effect of macroeconomic forecasts for periods longer than 12 months and is
considered to be a reasonable approximation of a lifetime PD measure. Retail exposures are first segmented into homogenous portfolios,
generally by country, product and brand. Within each portfolio, the stage 2 accounts are defined as accounts with an adjusted 12-month PD
greater than the average 12-month PD of loans in that portfolio 12 months before they become 30 days past due. The expert credit risk
judgement is that no prior increase in credit risk is significant. This portfolio-specific threshold therefore identifies loans with a PD higher than
would be expected from loans that are performing as originally expected and higher than that which would have been acceptable at origination.
It therefore approximates a comparison of origination to reporting date PDs.
HSBC Continental Europe continues to refine the retail transfer criteria approach for certain portfolios, as additional data becomes available, in
order to utilise a more relative approach. These enhancements take advantage of the increase in origination related data in the assessment of
significant increases in credit risk by comparing remaining lifetime PD to the comparable remaining term lifetime PD at origination based on
portfolio-specific origination segments.
Unimpaired and without significant increase in credit risk – (stage 1)
ECL resulting from default events that are possible within the next 12 months (’12-month ECL’) are recognised for financial instruments that
remain in stage 1.
Purchased or originated credit-impaired
Financial assets that are purchased or originated at a deep discount that reflects the incurred credit losses are considered to be POCI. This
population includes new financial instruments recognised in most cases following the derecognition of forborne loans. The amount of change in
lifetime ECL for a POCI loan is recognised in profit or loss until the POCI loan is derecognised, even if the lifetime ECL are less than the amount
of ECL included in the estimated cash flows on initial recognition.
Movement between stages
Financial assets can be transferred between the different categories (other than POCI) depending on their relative increase in credit risk since
initial recognition. Financial instruments are transferred out of stage 2 if their credit risk is no longer considered to be significantly increased
since initial recognition based on the assessments described above. In the case of non-performing forborne loans such financial instruments are
transferred out of stage 3 when they no longer exhibit any evidence of credit impairment and meet the curing criteria as described above.
Measurement of ECL
The assessment of credit risk, and the estimation of ECL, are unbiased and probability-weighted, and incorporate all available information which
is relevant to the assessment including information about past events, current conditions and reasonable and supportable forecasts of future
events and economic conditions at the reporting date. In addition, the estimation of ECL should take into account the time value of money and
considers other factors such as climate-related risks.
In general, HSBC Continental Europe calculates ECL using three main components, a probability of default ('PD'), a loss given default ('LGD')
and the exposure at default (‘EAD’).
The 12-month ECL is calculated by multiplying the 12-month PD, LGD and EAD. Lifetime ECL is calculated using the lifetime PD instead. The
12-month and lifetime PDs represent the probability of default occurring over the next 12 months and the remaining maturity of the instrument
respectively.

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Notes on the consolidated financial statements

The EAD represents the expected balance at default, taking into account the repayment of principal and interest from the balance sheet date to
the default event together with any expected drawdowns of committed facilities. The LGD represents expected losses on the EAD given the
event of default, taking into account, among other attributes, the mitigating effect of collateral value at the time it is expected to be realised and
the time value of money.
HSBC Continental Europe makes use of the IRB framework where possible, with recalibration to meet the differing IFRS 9 requirements as set
out in the following table:

Model | Regulatory capital | IFRS 9
PD | – Represents long-run average PD throughout a full economic cycle (for mortgage portfolios a hybrid approach, which sits between the extremes of point in time and through the cycle, is used for calculating long-run averages as required by the PRA) – Default backstop of 90+ days past due for all portfolios (includes unlikely to pay ('UTP') criteria in line with internal policy) – May be subject to a sovereign cap | – Represents current portfolio quality and performance, adjusted for the impact of multiple forward-looking macroeconomic scenarios – Default backstop of 90+ days past due for all portfolios (includes UTP criteria in line with internal policy)
EAD | – Cannot be lower than current balance | – Amortisation captured for term products – Future drawdown captured for revolving products
LGD | – Downturn LGD (consistent with losses HSBC Continental Europe would expect to suffer during a severe but plausible economic downturn) – Regulatory floors may apply to mitigate risk of underestimating downturn LGD due to lack of historical data – Discounted using appropriate index (minimum 9 per cent) – All collection costs included | – LGD based on recent portfolio performance data and includes the expected impact of future economic conditions such as change in the value of collateral – No floors applied, discounted using the original effective interest rate – Only costs associated with selling collateral and certain third- party costs are included
Other |  | – Discounted back from point of default to balance sheet date

While 12-month PDs are recalibrated from IRB models where possible, the lifetime PDs are determined by projecting the 12-month PD using a
term structure. For the wholesale methodology, the lifetime PD also takes into account credit migration, i.e. a customer migrating through the
CRR bands over its life.
The ECL for wholesale stage 3 is determined primarily on an individual basis using a discounted cash flow (‘DCF’) methodology. The expected
future cash flows are based on estimates as of the reporting date, reflecting reasonable and supportable assumptions and projections of future
recoveries and expected future receipts of interest.
Collateral is taken into account if it is likely that the recovery of the outstanding amount will include realisation of collateral based on its
estimated fair value of collateral at the time of expected realisation, less costs for obtaining and selling the collateral.
The cash flows are discounted at a reasonable approximation of the original effective interest rate. For significant cases, cash flows under up to
four different scenarios are probability-weighted by reference to the status of the borrower, economic scenarios applied more generally by
HSBC Continental Europe and judgement of in relation to the likelihood of the workout strategy succeeding or receivership being required. For
less significant cases where an individual assessment is undertaken, the effect of different economic scenarios and work-out strategies results
in an ECL calculation based on a most likely outcome which is adjusted to capture losses resulting from less likely but possible outcomes. For
certain less significant cases, the bank may use an LGD-based modelled approach to ECL assessment, which factors in a range of economic
scenarios.
Period over which ECL is measured
Expected credit loss is measured from the initial recognition of the financial asset. The maximum period considered when measuring ECL (be it
12-month or lifetime ECL) is the maximum contractual period over which HSBC Continental Europe is exposed to credit risk. However, where
the financial instrument includes both a drawn and undrawn commitment and the contractual ability to demand repayment and cancel the
undrawn commitment does not serve to limit HSBC Continental Europe exposure to credit risk to the contractual notice period, the contractual
period does not determine the maximum period considered. Instead, ECL is measured over the period HSBC Continental Europe remains
exposed to credit risk that is not mitigated by credit risk management actions. This applies to retail overdrafts and credit cards, where the period
is the average time taken for stage 2 exposures to default or close as performing accounts, determined on a portfolio basis and ranging from
between two and six years. In addition, for these facilities it is not possible to identify the ECL on the loan commitment component separately
from the financial asset component.
As a result, 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. For wholesale overdraft facilities, credit risk management actions are
taken no less frequently than on an annual basis.
Forward-looking economic inputs
HSBC Continental Europe applies multiple forward-looking global economic scenarios determined with reference to external forecast
distributions representative of its view of forecast economic conditions. This approach is considered sufficient to calculate unbiased expected
credit loss in most economic environments. In certain economic environments, additional analysis may be necessary and may result in additional
scenarios or adjustments, to reflect a range of possible economic outcomes sufficient for an unbiased estimate. The detailed methodology is
disclosed in 'Measurement uncertainty and sensitivity analysis of ECL estimates' on page 191.

Universal Registration Document and Annual Financial Report 2024 | 257

Critical estimates and judgements
The calculation of ECL under IFRS 9 requires HSBC Continental Europe to make a number of judgements, assumptions and estimates. The
most significant are set out below:

JUDGEMENTS – Defining what is considered to be a significant increase in credit risk. – Selecting and calibrating the PD, LGD and EAD models, which support the calculations, including making reasonable and supportable judgements about how models react to current and future economic conditions. – Selecting model inputs and economic forecasts, including determining whether sufficient and appropriately weighted economic forecasts are incorporated to calculate unbiased expected credit loss. – Making management judgemental adjustments to account for late breaking events, model and data limitations and deficiencies, and expert credit judgements. – Selecting applicable recovery strategies for certain wholesale credit-impaired loans.
ESTIMATES – The section ‘Measurement uncertainty and sensitivity analysis of ECL estimates’ on page 191 sets out the assumptions used in determining ECL and provides an indication of the sensitivity of the result to the application of different weightings being applied to different economic assumptions.

(j)Insurance contracts
A contract is classified as an insurance contract where the entity accepts significant insurance risk from another party by agreeing to
compensate that party if it is adversely affected by a specified uncertain future event. An insurance contract may also transfer financial risk, but
is accounted for as an insurance contract if the insurance risk is significant. In addition, HSBC Continental Europe issues investment contracts
with discretionary participation features ('DPF') which are also accounted under IFRS 17 ‘Insurance Contracts’.
Aggregation of insurance contracts
Individual insurance contracts that are managed together and subject to similar risks are identified as a portfolio. Contracts that are managed
together usually belong to the same product group, and have similar characteristics such as being subject to a similar pricing framework or
similar product management, and are issued by the same legal entity. If a contract is exposed to more than one risk, the dominant risk of the
contract is used to assess whether the contract features similar risks. Each portfolio is further separated by the contract’s expected profitability.
The portfolios are split by their profitability into: (i) contracts that are onerous at initial recognition; (ii) contracts that at initial recognition have no
significant possibility of becoming onerous subsequently; and (iii) the remaining contracts. These profitability groups are then divided by issue
date, with most contracts the HSBC Group issues after the transition date being grouped into calendar quarter or annual cohorts. For multi-
currency groups of contracts, the HSBC Group considers its groups of contracts as being denominated in a single currency. HSBC Continental
Europe did not elect to apply the annual cohorts exemption.
The measurement of the insurance contract liability is based on groups of insurance contracts as established at initial recognition, and will
include fulfilment cash flows as well as the CSM representing the unearned profit. The HSBC Group's accounting policy to update the estimates
used in the measurement on a year-to-date basis.
Fulfilment cash flows
The fulfilment cash flows comprise the following:
(i)Best estimates of future cash flows
The cash flows within the contract boundary of each contract in the HSBC Group include amounts expected to be collected from premiums and
payouts for claims, benefits and expenses, and are projected using a range of scenarios and assumptions in an unbiased way based on the
HSBC Group’s demographic and operating experience along with external mortality data where the HSBC Group’s own experience data is not
sufficiently large in size to be credible.
(ii)Adjustment for the time value of money and financial risks associated with the future cash flows
The estimates of future cash flows are adjusted to reflect the time value of money (i.e discounting) and the financial risks to derive an expected
present value. The HSBC Group generally makes use of stochastic modelling techniques in the estimation for products with options and
guarantees. A bottom-up approach is used to determine the discount rate to be applied to a given set of expected future cash flows. This is
derived as the sum of the risk-free yield and an illiquidity premium. The risk-free yield is determined based on observable market data, where
such markets are considered to be deep, liquid and transparent. When information is not available, management judgement is applied to
determine the appropriate risk-free yield. Illiquidity premiums reflect the liquidity characteristics of the associated insurance contracts.
(iii) Risk adjustment for non-financial risk
The risk adjustment reflects the compensation required for bearing the uncertainty about the amount and timing of future cash flows that arises
from non-financial risk. It is calculated as a 75th percentile level of stress over a one year period. The level of the stress is determined with
reference to external regulatory stresses and internal economic capital stresses. Furthermore, the risk adjustment calculated using a multi-year
approach will be published.
For the main insurance manufacturing entity in the HSBC Group, the one-year 75th percentile level of stress corresponds to the 60th percentile
(2023: 60th percentile) based on an ultimate view of risk over all future years.
The HSBC Group does not disaggregate changes in the risk adjustment between insurance service result (comprising insurance revenue and
insurance service expense) and insurance finance income or expenses. All changes are included in the insurance service result.

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Notes on the consolidated financial statements

Measurement models
The variable fee approach (‘VFA’) measurement model is used for most of the contracts issued by the HSBC Group, which is mandatory upon
meeting the following eligibility criteria at inception:
i. the contractual terms specify that the policyholder participates in a share of a clearly identified pool of underlying items;
ii. the HSBC Group expects to pay to the policyholder a substantial share of the fair value returns on the underlying items. The HSBC Group
considers that a substantial share is a majority of returns; and
iii. the HSBC Group expects a substantial proportion of any change in the amounts to be paid to the policyholder to vary with the change in fair
value of the underlying items. The HSBC Group considers that a substantial proportion is a majority proportion of change on a present value
probability weighted average of all scenarios.
For contracts measured under VFA, the other comprehensive income (‘OCI’) option is used. The OCI option is applied where the underlying
items held by the HSBC Group are not accounted for at fair value through profit or loss. Under this option, only the amount that matches income
or expenses recognised in profit or loss on underlying items is included in finance income or expenses for these insurance contracts, and hence
results in the elimination of accounting mismatches. The remaining amount of finance income or expenses for these insurance contracts issued
for the period is recognised in OCI. In addition, the risk mitigation option is used for a number of economic offsets against the instruments that
meet specific requirements.
The remaining contracts issued and the reinsurance contracts held are accounted for under the general measurement model (‘GMM’).
CSM and coverage units
The CSM represents the unearned profit and results in no income or expense at initial recognition when the g roup of contracts is profitable. The
CSM is adjusted at each subsequent reporting period for changes in fulfilment cash flows relating to future service (e.g. changes in non-
economic assumptions, including mortality and morbidity rates). For initial recognition of onerous groups of contracts and when groups of
contracts become onerous subsequently, losses are recognised in insurance service expense immediately.
For groups of contracts measured using the VFA, changes in the HSBC Group’s share of the underlying items, and economic experience and
economic assumption changes adjust the CSM, whereas these changes do not adjust the CSM under the GMM, but are recognised in profit or
loss as they arise. However, under the risk mitigation option for VFA contracts, the changes in the fulfilment cash flows and the changes in the
HSBC Group’s share in the fair value return on underlying items that the instruments mitigate are not adjusted in CSM but recognised in profit
or loss. The risk mitigating instruments are primarily reinsurance contracts held.
The CSM is systematically recognised in insurance revenue to reflect the insurance contract services provided, based on the coverage units of
the g roup of contracts. Coverage units are determined by the quantity of benefits and the expected coverage period of the contracts.
The HSBC Group identifies the quantity of the benefits provided as follows:
– Insurance coverage: this is based on the expected net policyholder insurance benefit at each period after allowance for decrements, where
net policyholder insurance benefit refers to the amount of sum assured less the fund value or surrender value.
– Investment services (including both investment-return service and investment-related service): this is based on a constant measure basis
which reflects the provision of access for the policyholder to the facility, the coverage unit being the number of insurance contracts.
For contracts that provide both insurance coverage and investment services, coverage units are weighted according to the expected present
value of the future cash outflows for each service.
Insurance service result
Insurance revenue reflects the consideration to which the HSBC Group expects to be entitled in exchange for the provision of coverage and
other insurance contract services (excluding any investment components). Insurance service expenses comprise the incurred claims and other
incurred insurance service expenses (excluding any investment components), and losses on onerous groups of contracts and reversals of
such losses.
Insurance finance income and expenses
Insurance finance income and expenses comprise the change in the carrying amount of the g roup of insurance contracts arising from the
effects of the time value of money, financial risk and changes therein. For VFA contracts, changes in the fair value of underlying items (excluding
additions and withdrawals) are recognised in insurance finance income or expenses, except where the OCI option applies as described above.
(k)Employee compensation and benefits
Share-based payments
HSBC Continental Europe enters into equity-settled share-based payment arrangements with its employees as compensation for the provision
of their services.
The vesting period for these schemes may commence before the legal grant date if the employees have started to render services in respect of
the award before the legal grant date, where there is a shared understanding of the terms and conditions of the arrangement. Expenses are
recognised when the employee starts to render service to which the award relates.
Cancellations result from the failure to meet a non-vesting condition during the vesting period, and are treated as an acceleration of vesting
recognised immediately in the income statement. Failure to meet a vesting condition by the employee is not treated as a cancellation, and the
amount of expense recognised for the award is adjusted to reflect the number of awards expected to vest.

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Post-employment benefit plans
HSBC Continental Europe operates a number of pension schemes including defined benefit, defined contribution and other post-employment
benefit schemes.
Payments to defined contribution schemes are charged as an expense as the employees render service.
Defined benefit pension obligations are calculated using the projected unit credit method. The net charge to the income statement mainly
comprises the service cost and the net interest on the net defined benefit asset or liability, and is presented in operating expenses.
Remeasurements of the net defined benefit asset or liability, which comprise actuarial gains and losses, return on plan assets (excluding
interest) and the effect of the asset ceiling (if any, excluding interest), are recognised immediately in other comprehensive income. The net
defined benefit asset or liability represents the present value of defined benefit obligations reduced by the fair value of plan assets, after
applying the asset ceiling test, where the net defined benefit surplus is limited to the present value of available refunds and reductions in future
contributions to the plan.
The costs of obligations arising from other post-employment plans are accounted for on the same basis as defined benefit pension plans.
(l)Tax
Income tax comprises current tax and deferred tax. Income tax is recognised in the income statement except to the extent that it relates to
items recognised in other comprehensive income or directly in equity, in which case the tax is recognised in the same statement in which the
related item appears.
Current tax is the tax expected to be payable on the taxable profit for the year and on any adjustment to tax payable in respect of previous years.
The HSBC Group provides for potential current tax liabilities that may arise on the basis of the amounts expected to be paid to the tax
authorities.
Deferred tax is recognised on temporary differences between the carrying amounts of assets and liabilities in the balance sheet, and the
amounts attributed to such assets and liabilities for tax purposes. Deferred tax is calculated using the tax rates expected to apply in the periods
as the assets will be realised or the liabilities settled.
In assessing the probability and sufficiency of future taxable profit, HSBC Continental Europe consider the availability of evidence to support the
recognition of deferred tax assets. Taking into account the inherent risks in long-term forecasting, including climate change-related, and drivers
of recent history of tax losses where applicable. HSBC Continental Europe also consider the future reversal of existing taxable temporary
differences and tax planning strategies, including corporate reorganisations.
Current and deferred tax are calculated based on tax rates and laws enacted, or substantively enacted, by the balance sheet date.
Critical estimates and judgements
The recognition of deferred tax assets depends on judgements and estimates.

JUDGEMENTS – Assessing the probability and sufficiency of future taxable profits, considering the availability of evidence to support the recognition of deferred tax assets taking into account the inherent risk in long term forecasting and drivers of recent history of tax losses where applicable taking into account the future reversal of existing taxable temporary differences and tax planning strategies including corporate reorganisations. Specific judgements supporting deferred tax assets are described in Note 8.
ESTIMATES – The recognition of deferred tax assets is sensitive to estimates of future cash flows projected for periods for which detailed forecasts are available and to assumptions regarding the long-term pattern of cash flows thereafter, on which forecasts of future taxable profit are based, and which affect the expected recovery periods and the pattern of utilisation of tax losses and tax credits.

(m)Provisions, contingent liabilities and guarantees
Provisions
Provisions are recognised when it is probable that an outflow of economic benefits will be required to settle a present legal or constructive
obligation that has arisen as a result of past events and for which a reliable estimate can be made.

260 | Universal Registration Document and Annual Financial Report 2024

Notes on the consolidated financial statements

Critical estimates and judgements
The recognition and measurement of provisions requires the HSBC Continental Europe to make a number of judgements, assumptions and
estimates. The most significant are set out below:

JUDGEMENTS – Determining whether a present obligation exists. Professional advice is taken on the assessment of litigation and similar obligations. – Provisions for legal proceedings and regulatory matters typically require a higher degree of judgement than other types of provisions. When matters are at an early stage, accounting judgements can be difficult because of the high degree of uncertainty associated with determining whether a present obligation exists, and estimating the probability and amount of any outflows that may arise. As matters progress, management and legal advisers evaluate on an ongoing basis whether provisions should be recognised, revising previous estimates as appropriate. At more advanced stages, it is typically easier to make estimates around a better defined set of possible outcomes.
ESTIMATES – Provisions for legal proceedings and regulatory matters remain very sensitive to the assumptions used in the estimate. There could be a wider range of possible outcomes for any pending legal proceedings, investigations or inquiries. As a result, it is often not practicable to quantify a range of possible outcomes for individual matters. It is also not practicable to meaningfully quantify ranges of potential outcomes in aggregate for these types of provisions because of the diverse nature and circumstances of such matters and the wide range of uncertainties involved.

Contingent liabilities, contractual commitments and guarantees
Contingent liabilities
Contingent liabilities, which include certain guarantees and letters of credit pledged as collateral security, and contingent liabilities related to
legal proceedings or regulatory matters, are not recognised in the financial statements but are disclosed unless the probability of settlement is
remote.
Financial guarantee contracts
Liabilities under financial guarantee contracts that are not classified as insurance contracts are recorded initially at their fair value, which is
generally the fee received or present value of the fee receivable.
(n)Impairment of non-financial assets
Software under development is tested for impairment at least annually. Other non-financial assets are property, plant and equipment, intangible
assets (excluding goodwill) and right-of-use assets. They are tested for impairment at the individual asset level when there is indication of
impairment at that level, or at the CGU level for assets that do not have a recoverable amount at the individual asset level. In addition,
impairment is also tested at the CGU level when there is indication of impairment at that level. For this purpose, CGUs are considered to be the
principal operating legal entities divided by global business.
Impairment testing compares the carrying amount of the non-financial asset or CGU with its recoverable amount, which is the higher of the fair
value less costs of disposal or the value in use. The carrying amount of a CGU comprises the carrying amount of its assets and liabilities,
including non-financial assets that are directly attributable to it and non-financial assets that can be allocated to it on a reasonable and consistent
basis. Non-financial assets that cannot be allocated to an individual CGU are tested for impairment at an appropriate grouping of CGUs.
The recoverable amount of the CGU is the higher of the fair value less costs of disposal of the CGU, which is determined by independent and
qualified valuers where relevant, and the value in use, which is calculated based on appropriate inputs (see Note 21). When the recoverable
amount of a CGU is less than its carrying amount, an impairment loss is recognised in the income statement to the extent that the impairment
can be allocated on a pro-rata basis to the non-financial assets by reducing their carrying amounts to the higher of their respective individual
recoverable amount or nil. Impairment is not allocated to the financial assets in a CGU.
Impairment losses recognised in prior periods for non-financial assets are reversed when there has been a change in the estimate used to
determine the recoverable amount. The impairment loss is reversed to the extent that the carrying amount of the non-financial assets would not
exceed the amount that would have been determined (net of amortisation or depreciation) had no impairment loss been recognised in prior
periods.
(o)Government grants
Government grants are assistance by government in the form of transfers of resources to an entity in return for past or future compliance with
certain conditions relating to the operating activities of the entity. The benefit of a government loan at a below market rate of interest is treated
as a government grant. The benefit of the below-market rate of interest is measured as the difference between the initial carrying value of the
loan recognised and the proceeds received. When identifying the costs for which the benefit of the loan is intended to compensate, the
conditions and obligations that have been, or must be, met are considered. Government grants are recognised when there is reasonable
assurance that the conditions attached with them will be complied with and that the grants will be received. Government grants are recognised
in profit or loss on a systematic basis over the periods in which the entity recognise as expense the related costs for which the grants are
intended to compensate.
Critical estimates and judgements

JUDGEMENTS – Determining whether there is reasonable assurance that the conditions attached with government grants will be complied with and that the grants will be received.

Universal Registration Document and Annual Financial Report 2024 | 261

(p)Non current assets and disposal groups held for sale and discontinued operations
HSBC Continental Europe classifies non-current assets or disposal groups (including assets and liabilities) as held for sale when their carrying
amounts will be recovered principally through sale rather than through continuing use. To be classified as held for sale, the non-current asset or
disposal group must be available for immediate sale in its present condition subject only to terms that are usual and customary for sales of such
assets or disposal groups, and the sale must be highly probable. For a sale to be highly probable, the appropriate level of management must be
committed to a plan to sell the asset (or disposal group) and an active programme to locate a buyer and complete the plan must have been
initiated. Further, the asset (or disposal group) must be actively marketed for sale at a price that is reasonable in relation to its current fair value.
In addition, the sale should be expected to qualify as a completed sale within one year from the date of classification and actions required to
complete the plan should indicate that it is unlikely that significant changes to the plan will be made or that the plan will be withdrawn.
Held-for-sale assets and disposal groups are measured at the lower of their carrying amount and fair value less costs to sell except for those
assets and liabilities that are not within the scope of the measurement requirements of IFRS 5. If the carrying amount of the non-current asset
(or disposal group) is greater than the fair value less costs to sell, an impairment loss for any initial or subsequent write down of the asset or
disposal group to fair value less costs to sell is recognised. Any such impairment loss is first allocated against the non-current assets that are in
scope of IFRS 5 for measurement. This first reduces the carrying amount of any goodwill allocated to the disposal group and then to the other
non-current assets of the disposal group pro rata on the basis of the carrying amount of each asset in the disposal group. Thereafter, any
impairment loss in excess of the carrying amount of the non-current assets in scope of IFRS 5 for measurement is recognised against the total
assets of the disposal group.
HSBC Continental Europe classifies a component of an entity as discontinued operation when it either has been disposed of or is classified as
held for sale and
– represents a separate major line of business or geographical area of operations;
– is part of a single co-ordinated plan to dispose of a separate major line of business or geographical area of operations; or
– is a subsidiary acquired exclusively with a view to resale.
After operations have been classified as discontinued, results will be reported as such in the income statement and cash flow statement.
Discontinued operations held for sale are measured in the same way as other disposal groups, that is, at the lower of carrying amount and fair
value less costs to sell.
Critical estimates and judgements
The classification as held for sale depends on certain judgements.

JUDGEMENTS Management judgement is required in determining whether the IFRS 5 held for sale criteria including whether a sale is highly probable and expected to complete within one year of classification. The exercise of judgement will normally consider the likelihood of successfully securing any necessary regulatory or political approvals which are almost always required for sales of banking businesses. For large and complex plans judgment will also include an assessment of the enforceability of any binding sale agreement, the nature and magnitude of any disincentives for non-performance, and the ability of the counterparty to undertake necessary pre-completion preparatory work, comply with conditions precedent, and otherwise be able to comply with contractual undertakings to achieve completion within the expected timescale. Once classified as held for sale, judgement is required to be applied on a continuous basis to ensure that classification remains appropriate in future accounting periods.

1.3 Significant events during the year
Business disposals
For details on business disposals refer to Note 2 ‘Assets held for sale, liabilities of disposal group held for sale and discontinued operations’. For
related accounting policies and judgements refer to Note 1.2 (p).
Sale of the retail banking operations in France
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 per cent ownership interest in HSBC SFH (France) and
its 3 per cent ownership interest in Crédit Logement.
Upon completion and in accordance with the terms of the sale, HSBC Continental Europe received a EUR 0.1 billion 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 EUR 7.1 billion at the time of sale, consisting of home and certain other loans, in respect
of which it may consider on-sale opportunities at a suitable time, 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 Wealth and Personal Banking to Corporate Centre, with effect from
1 January 2024.

262 | Universal Registration Document and Annual Financial Report 2024

Notes on the consolidated financial statements

During the fourth quarter of 2024, HSBC Continental Europe began the process of marketing the retained home and other loan portfolio for sale,
which had a carrying value of EUR 6.7 billion at 31 December 2024. As a result, HSBC Continental Europe reclassified the portfolio to a hold-to-
collect-and-sell business model from 1 January 2025 and will measure it prospectively from the first quarter of 2025 at fair value through other
comprehensive income. HSBC Continental Europe expects to recognise an estimated EUR 1 billion fair value pre-tax loss in other
comprehensive income on the remeasurement of the financial instruments. 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. In the event of a
sale, upon completion, 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. In December 2024, HSBC Continental Europe entered into non-qualifying economic
hedges, hedging interest rate risk on the portfolio and recognised a EUR 0.1 billion market-to-market gain year-to-date.
Sale of employee savings account keeping and custody activities
On 29 November 2024, HSBC Continental Europe completed the sale of HSBC Epargne Enterprise to Natixis Interépargne, a subsidiary of
Group BPCE.
The transaction included:
– the sale by HSBC Continental Europe, to Natixis Interépargne, of its subsidiary HSBC Epargne Entreprise;
– the conclusion of an agreement for the marketing of employee savings and retirement plans and services between HSBC Global Asset
Management (France) and Natixis Interépargne; and
– the voluntary transfer of staff dedicated to the employee savings’ account keeping and custody services to the new account manager,
Natixis Interépargne.
HSBC Global Asset Management (France), a subsidiary of HSBC Continental Europe, retained the design and distribution of the employee
savings and retirement offering, as well as the commercial relationship with clients, and will rely on Natixis Interépargne for the administration
and custody of client savings accounts.
Planned sale of life insurance business in France
On 20 December 2024, HSBC Continental Europe signed a Memorandum of Understanding ('MoU') for the planned sale of its French life
insurance business, HSBC Assurances Vie (France), to Matmut Société d’Assurance Mutuelle. The transaction, which is subject to regulatory
approvals and employee consultation, is expected to complete in the second half of 2025. The disposal group met the held for sale criteria at
31 December 2024, resulting in the reclassification of EUR 23.3 billion in assets and EUR 22.6 billion in liabilities to held for sale, and the
recognition of an immaterial loss on disposal.
The total pre-tax loss at completion is estimated at EUR 0.1 billion inclusive of migration costs and the recycling of cumulative foreign currency
translation reserves, insurance finance reserves and other reserves which stood at a net loss of EUR 34 million as at 31 December 2024.
Planned sale of Private Banking business in Germany
On 23 September 2024, HSBC Continental Europe announced that it had reached an agreement to sell its private banking business in Germany
to BNP Paribas S.A. and the disposal group met the held for sale criteria at 31 December 2024. This sale, which remains subject to works
council consultation, is expected to be completed in the second half of 2025.
The sale is expected to generate an estimated pre-tax gain on disposal of EUR 0.2 billion, which will be recognised on completion.
Planned sale of the hedge fund administration business operations
On 21 November 2023, HSBC Continental Europe entered into an exclusive agreement with BNP Paribas Securities Services to transfer all
HSBC’s hedge fund administration business to BNP Paribas entities in several markets, including Hong Kong, Singapore, Ireland, and
Luxembourg. The transfer of services will be offered to 25 clients globally and will involve the integration of certain employees within BNP
Paribas’ expert teams. The deal is expected to be completed by the end of March 2025, following the finalisation of client migrations.
Capital increase
Following the decision of the Extraordinary General Meeting of 6 December 2024, the total capital of HSBC Continental Europe was increased
by EUR 1,748 million on 20 December 2024, comprising of EUR 266 million in share capital, divided into 53,116,637 shares with a nominal value
of EUR 5 each.
Issuances and repayments
In January 2024, HSBC Continental Europe redeemed a Tier 2 Loan at the first call date five years before maturity for EUR 400 million and
issued a new Tier 2 loan to HSBC Bank plc with maturity of eleven years for a notional amount of EUR 400 million.
In March 2024, HSBC Continental Europe redeemed a Tier 2 Loan at the fourth call date almost four years before maturity for EUR 300 million
and issued a new Tier 2 loan to HSBC Bank plc with maturity of eleven years for a notional amount of EUR 300 million.
In March 2024, HSBC Continental Europe issued Senior Non Preferred Notes with maturity of seven years for a notional amount of EUR 500
million.
In May 2024 HSBC Continental Europe repaid EUR 1 billion of S enior Preferred Debt issued in May 2019.
In June 2024, HSBC Continental Europe redeemed a Tier 2 Loan at the first call date five years before maturity for EUR 100 million.
In June 2024, HSBC Continental Europe issued Senior Non Preferred Notes with maturity of seven years for a notional amount of EUR 800
million.

Universal Registration Document and Annual Financial Report 2024 | 263

In August 2024, HSBC Continental Europe redeemed a Tier 2 Loan issued in June 2014 to HSBC Bank plc at the first call date five years before
maturity for EUR 150 million.
In December 2024, HSBC Continental Europe redeemed an Additional Tier 1 Loan issued in December 2019 to HSBC Bank plc at the first call
date for EUR 250 million and issued a new Additional Tier 1 loan to HSBC Bank plc for a notional amount of EUR 250 million.
In December 2024, HSBC Continental Europe redeemed a Tier 2 Loan issued in December 2014 to HSBC Holdings plc at the first call date five
years before maturity for EUR 260 million and issued a new Tier 2 loan to HSBC Bank plc with maturity of twelve years for a notional amount of
EUR 500 million.
In December 2024, HSBC Continental Europe repaid EUR 800 million of Senior Non Preferred debt issued in December 2020 and December
2021 to HSBC Bank plc at their first call date one year before maturity.
In December 2024, HSBC Continental Europe issued Senior Non Preferred Notes to HSBC Bank plc with maturity of eight years for a notional
amount of EUR 400 million.
In December 2024, HSBC Continental Europe issued Senior Non Preferred Notes to HSBC Bank plc with maturity of nine years for a notional
amount of EUR 400 million.
Funding through Targeted Long-Term Refinancing Operation (‘TLTROs’)
In March 2024 HSBC Continental Europe repaid its final tranche of EUR 1.1 billion of Targeted Long-Term Refinancing Operations (‘TLTRO’).
Irrevocable Payment Commitments of Single Resolution Fund
Consistent with its peers, HSBC Continental Europe has reviewed its accounting treatment of certain cash deposits following a Court of Justice
of the European Union ruling issued on 25 October 2023 concerning the status of those deposits in the event of license withdrawal. HSBC
Continental Europe concluded that it’s accounting policy is not affected by the ruling. Specifically the cash deposit continues to be presented as
an asset, and the associated ‘Irrevocable Payment Commitment’ continues to be accounted for as an unrecognised contingent liability until such
future date that it becomes probable that an outflow will arise at which point a provision will be recognised. As at 31 December 2024, the cash
asset amounted to EUR 150 million, including EUR 10 million related to HSBC Germany.

2 Assets held for sale, liabilities of disposal groups held for sale and
discontinued operations

Held for sale at 31 December
| 2024 | 2023
| €m | €m
Held for sale at 31 December |  |
Disposal groups | 25,493 | 24,989
Impairment losses 1 | (19) | (1,783)
Non-current assets held for sale | 3 | 5
Assets held for sale | 25,477 | 23,211
Liabilities of disposal groups held for sale | 24,718 | 23,817

1 This represents impairment losses in excess of the carrying amount on the non-current assets, excluded from the measurement scope of IFRS 5. The Dec 2023
comparatives represent unallocated loss on sale of the retail banking operations in France, including profit participation interest.
Disposal groups
Planned sale of life insurance business in France
On 20 December 2024, HSBC Continental Europe signed a Memorandum of Understanding (MoU) for the planned sale of its French life
insurance business, HSBC Assurances Vie (France), to Matmut Société d’Assurance Mutuelle. The transaction, which is subject to regulatory
approvals and employee consultation, is expected to complete in the second half of 2025.
The total pre-tax loss at completion is estimated at EUR 0.1 billion inclusive of migration costs and the recycling of cumulative foreign currency
translation reserves, insurance finance reserves and other reserves which stood at a net loss of EUR 34 million as at 31 December 2024.
At 31 December 2024, the disposal group included EUR 23.3 billion of assets, EUR 22.6 billion of liabilities, which met the criteria to be
classified as held for sale.
Planned sale of Private Banking business in Germany
On 23 September 2024, HSBC Continental Europe announced that it had reached an agreement to sell its private banking business in Germany
to BNP Paribas S.A. This sale, which remains subject to works council consultation, is expected to be completed in the second half of 2025.
The sale is expected to generate an estimated pre-tax gain on disposal of EUR 0.2 billion, which will be recognised on completion.
At 31 December 2024, the disposal group included EUR 2.1 billion of assets and EUR 2.1 billion of liabilities, which met the criteria to be
classified as held for sale.

264 | Universal Registration Document and Annual Financial Report 2024

Notes on the consolidated financial statements

Planned sale of the hedge fund administration business operations
On 21 November 2023, HSBC Continental Europe entered into an exclusive agreement with BNP Paribas Securities Services to transfer all
HSBC’s hedge fund administration business to BNP Paribas entities in several markets, including Hong Kong, Singapore, Ireland, and
Luxembourg. The transfer of services will be offered to 25 clients globally and will involve the integration of certain employees within BNP
Paribas’ expert teams. The deal is expected to be completed by the end of March 2025, following the finalisation of client migrations.
As at 31 December 2023, the business was classified as held for sale in accordance with IFRS 5.
At 31 December 2024, the major classes of assets and associated liabilities of disposal groups held for sale, including allocated impairment
losses, were as follows:

| Life insurance business in France | Private banking business in Germany | Total
| €m | €m |
Assets of disposal group held for sale |  |  |
Cash and balances at central banks | — | 1,827 | 1,827
Financial assets designated and otherwise mandatorily measured at fair value through profit and loss | 14,034 | — | 14,034
Derivatives | 26 | — | 26
Loans and advances to banks | 139 | — | 139
Loans and advances to customers | — | 298 | 298
Financial investments 1 | 8,193 | — | 8,193
Insurance contract assets | 22 |  | 22
Prepayments, accrued income and other assets | 934 | 20 | 954
Total assets at 31 Dec 2024 | 23,348 | 2,145 | 25,493
Liabilities of disposal group held for sale |  |  |
Deposits by banks | — | — | —
Customer accounts | — | 2,010 | 2,010
Financial liabilities designated at fair value | 11 | 114 | 125
Derivatives | — | — | —
Debt securities in issue | — | — | —
Accruals, deferred income and other liabilities | 1,538 | 21 | 1,559
Insurance contract liabilities | 21,023 | — | 21,023
Provisions | 1 | — | 1
Total liabilities at 31 Dec 2024 | 22,573 | 2,145 | 24,718
Fair value of selected financial instruments which are not carried at fair value on balance sheet |  |  |
Loan and advances to customers | — | 300 | 300
Customers accounts | — | 2,010 | 2,010
Expected date of completion | Second half of 2025 | Second half of 2025 |
Operating segment | Wealth and Personal Banking | Wealth and Personal Banking |

1 Represents financial investments measured at fair value through other comprehensive income.

Universal Registration Document and Annual Financial Report 2024 | 265

Discontinued operations
Along with the above classification to held for sale, at the HSBC Continental Europe level, the planned sale of the life insurance business in
France also met the criteria of discontinued operations classification and presentation under IFRS 5. Accordingly, the profit/(loss) of the
discontinued operations amounting to EUR 0.1 billion (2023 : EUR 0.2 billion) has been reported separately in the income statement.
Upon being classified as held for sale in 2023, the sale of the retail banking operations in France met the criteria of discontinued operations
classification and presentation under IFRS 5. Accordingly the profit/(loss) of the discontinued operations as of December 2023 amounting to
EUR - 0.2 billion has been reported separately in the income statement.

Discontinued operations income statement
| 2024 | 2023 1
| €m | €m
Net operating income | 124 | 315
Total operating expenses | (24) | (382)
Profit/(loss) before tax | 100 | (67)
Tax expense | (21) | (4)
Profit/(loss) for the year | 79 | (71)
– non-controlling interests | — | —

1 In compliance with IFRS 5 standards, the comparatives have been represented to reflect discontinued operations related to the planned sale of the life insurance
business in France. This also includes discontinued operations related to the sale of the retail banking operations in France.
Other comprehensive income relating to discontinued operations is as follows:

| 2024 | 2023 1
| €m | €m
Profit/(loss) for the period in respect of discontinued operations | 79 | (71)
Items that will not be reclassified subsequently to profit or loss: |  |
Debt instruments at fair value though other comprehensive income | 138 | 366
Finance income/(expenses) from insurance contracts | (129) | (340)
Exchange differences and other | 2 | (2)
Remeasurement of defined benefit asset/liability | — | (2)
Changes in fair value of financial liabilities designated at fair value upon initial recognition arising from changes in own credit risk | — | 8
Other comprehensive income/(expense) for the period, net of tax in respect of discontinued operations 2 | 11 | 30
Total comprehensive income/(expense) for the period in respect of discontinued operations | 90 | (41)

1 In compliance with IFRS 5 standards, the comparatives have been represented to reflect discontinued operations related to the planned sale of the life insurance
business in France. This also includes discontinued operations related to the sale of the retail banking operations in France.
2 The cumulative losses recognised in other comprehensive income in respect of discontinued operations as at 31 December 2024 amounted at EUR 34 million
related to the planned sale of the life insurance business in France (2023 : EUR 45 million related to the planned sale of the life insurance business in
France and EUR 21 million related to the sale of retail banking operations in France).
The cash flows attributed to the discontinued operations are as follows:

| 2024 | 2023 1
| €m | €m
Cash and cash equivalents at beginning of the period | 9,818 | 417
Net cash from operating activities | (148) | 9,403
Net cash from investing activities | (9,531) | (2)
Net cash from financing activities | — | —
Net cash from discontinued operations | (9,679) | 9,401
– cash and cash equivalents from discontinued operations | 139 | 9,818

1 In compliance with IFRS 5 standards, the comparatives have been represented to reflect discontinued operations related to the planned sale of the life insurance
business in France. This also includes discontinued operations related to the sale of the retail banking operations in France.

266 | Universal Registration Document and Annual Financial Report 2024

Notes on the consolidated financial statements

3 Net fee income

Net fee income by product type (continuing operations)
| At
| 31 Dec 2024 | 31 Dec 2023 1
| Total | Total
| €m | €m
Account services | 161 | 156
Funds under management | 378 | 389
Cards | 16 | 15
Credit facilities | 254 | 227
Broking income | 236 | 219
Unit trusts | 1 | —
Imports/exports | 14 | 16
Remittances | 95 | 95
Underwriting | 173 | 133
Global custody | 96 | 100
Insurance agency commission | 6 | 3
Other 2 | 325 | 235
Fee income | 1,755 | 1,588
Less: fee expense | (541) | (394)
Net fee income | 1,214 | 1,194

1 In compliance with IFRS 5 standards, the comparatives have been represented to reflect discontinued operations related to the planned sale of the life insurance
business in France. This also includes discontinued operations related to the sale of the retail banking operations in France.
2 Other includes intercompany fees and third party fees not included in other categories.

Net fee income by global business (continuing operations)
| Wealth and Personal Banking | Commercial Banking | Markets and Securities Services | Global Banking | GBM Other | Corporate Centre | Total
| €m | €m | €m | €m | €m | €m | €m
At 31 Dec 2024 |  |  |  |  |  |  |
Fee income | 361 | 383 | 706 | 474 | 52 | (221) | 1,755
Less: fee expense | (105) | (31) | (471) | (106) | (42) | 214 | (541)
Net fee income | 256 | 352 | 235 | 368 | 10 | (7) | 1,214
At 31 Dec 2023 1 |  |  |  |  |  |  |
Fee income | 323 | 366 | 729 | 402 | 54 | (286) | 1,588
Less: fee expense | (98) | (19) | (450) | (72) | (35) | 280 | (394)
Net fee income | 225 | 347 | 279 | 330 | 19 | (6) | 1,194

1 In compliance with IFRS 5 standards, the comparatives have been represented to reflect discontinued operations related to the planned sale of the life insurance
business in France. This also includes discontinued operations related to the sale of the retail banking operations in France.
Net fee income includes EUR 540 million in fees earned on financial assets that are not at fair value through profit or loss (other than amounts
included in determining the effective interest rate) (2023: EUR 513 million), EUR 146 million in fees payable on financial liabilities that are not at
fair value through profit of loss (other than amounts included in determining the effective interest rate) (2023: EUR 165 million), EUR 474 million
in fees earned on trust and other fiduciary activities (2023: EUR 489 million) and EUR 22 million in fees payable relating to unit trust and other
fiduciary activities (2023: EUR 22 million).

Universal Registration Document and Annual Financial Report 2024 | 267

4 Net income/(expense) from financial instruments measured at fair value
through profit or loss (continuing operations)

| 2024 | 2023 1
| €m | €m
Net income/(expense) arising on: |  |
Net trading activities | 708 | 745
Other instruments designated and mandatorily measured at fair value and related derivatives | (224) | (486)
Net income/(expense) from financial instruments held for trading or managed on a fair value basis | 484 | 259
Financial assets held to meet liabilities under insurance and investment contracts | 40 | 36
Liabilities to customers under investment contracts | — | —
Net income/(expense) from assets and liabilities of insurance businesses, including related derivatives, measured at fair value through profit or loss | 40 | 36
Derivatives managed in conjunction with HSBC Continental Europe’s issued debt securities | 92 | 194
Other changes in fair value | (89) | (178)
Changes in fair value of designated debt and related derivatives | 3 | 16
Changes in fair value of other financial instruments mandatorily measured at fair value through profit or loss | 63 | 14
Year ended 31 Dec | 590 | 325

1 In compliance with IFRS 5 standards, the comparatives have been represented to reflect discontinued operations related to the planned sale of the life insurance
business in France. This also includes discontinued operations related to the sale of the retail banking operations in France.

5 Insurance business
The table below represents an analysis of the total insurance revenue and expenses recognised in the period:

Insurance Service result
| Year ended 31 Dec 2024 | Year ended 31 Dec 2023
| Life direct participating and Investment DPF contracts 1 | Life other contracts 2 | Total | Life direct participating and Investment DPF contracts 1 | Life other contracts 2 | Total
| €m | €m | €m | €m | €m | €m
Insurance revenue |  |  |  |  |  |
Amounts relating to changes in liabilities for remaining coverage | 175 | 56 | 231 | 174 | 65 | 239
– Contractual service margin recognised for services provided | 79 | 19 | 98 | 84 | 21 | 105
– Change in risk adjustment for non-financial risk for risk expired | 10 | 2 | 12 | 6 | 2 | 8
– Expected incurred claims and other insurance service expenses | 86 | 35 | 121 | 84 | 42 | 126
– Other | — | — | — | — | — | —
Recovery of insurance acquisition cash flows | 3 | 1 | 4 | 2 | 1 | 3
Total insurance revenue | 178 | 57 | 235 | 176 | 66 | 242
Insurance service expenses |  |  |  |  |  |
Incurred claims and other insurance service expenses | (81) | (36) | (117) | (85) | (27) | (112)
Losses and reversal of losses on onerous contracts | 1 | (1) | — | (2) | (2) | (4)
Amortisation of insurance acquisition cash flows | (3) | (1) | (4) | (2) | (1) | (3)
Adjustments to liabilities for incurred claims | — | 7 | 7 | — | 3 | 3
Total insurance service expenses | (83) | (31) | (114) | (89) | (27) | (116)
Total insurance service results | 95 | 26 | 121 | 87 | 39 | 126
– in respect of continuing operations | 10 | 8 | 18 | — | 11 | 11
– in respect of discontinued operations | 85 | 18 | 103 | 87 | 28 | 115

1'Life direct participating and investment DPF contracts' are substantially measured under the variable fee approach measurement model.
2'Life other contracts' are measured under the general measurement model.

268 | Universal Registration Document and Annual Financial Report 2024

Notes on the consolidated financial statements

Net investment return
| Year ended 31 Dec 2024 | Year ended 31 Dec 2023
| Life direct participating and Investment DPF contracts | Life other contracts | Total | Life direct participating and Investment DPF contracts | Life other contracts | Total
| €m | €m | €m | €m | €m | €m
Investment return |  |  |  |  |  |
Amounts recognised in profit or loss 1 | 865 | — | 865 | 1,197 | 3 | 1,200
Amounts recognised in OCI 2 | 174 | — | 174 | 461 | — | 461
Total investment return (memorandum) | 1,039 | — | 1,039 | 1,658 | 3 | 1,661
Net finance income/(expense) |  |  |  |  |  |
Changes in fair value of underlying items of direct participating contracts | (1,035) | — | (1,035) | (1,646) | — | (1,646)
Effect of risk mitigation option | (13) | — | (13) | — | — | —
Interest accreted | — | — | — | — | 1 | 1
Effect of changes in interest rates and other financial assumptions | — | (1) | (1) | — | — | —
Effect of measuring changes in estimates at current rates and adjusting the CSM at rates on initial recognition | — | — | — | — | (2) | (2)
Total net finance expenses from insurance contracts | (1,048) | (1) | (1,049) | (1,646) | (1) | (1,647)
Represented by: |  |  |  |  |  |
Amounts recognised in profit or loss | (874) | (1) | (875) | (1,187) | (1) | (1,188)
Amounts recognised in OCI | (174) | — | (174) | (459) | — | (459)
Total net investment results | (9) | (1) | (10) | 12 | 2 | 14
– in respect of continuing operations | 3 | (1) | 2 | 3 | 2 | 5
– in respect of discontinued operations | (12) | — | (12) | 9 | — | 9
Represented by: |  |  |  |  |  |
Amounts recognised in profit or loss | (9) | (1) | (10) | 10 | 2 | 12
Amounts recognised in OCI | — | — | — | 2 | — | 2

1 The investment returns ‘amounts recognised in profit and loss’ from assets that are backing insurance contract liabilities for the year ended
31 December 2024 included EUR 672 million (2023: EUR 989 million) reported under ‘Net income/(expense) from assets and liabilities of insurance businesses,
including related derivatives, measured at fair value through profit or loss’, EUR 196 million (2023: EUR 215 million) reported under ‘Net interest income’ and
EUR (2) million (2023: EUR (7) million) reported under Gain less losses from financial investments.
2 The investment returns ‘amounts recognised in OCI’ from assets backing insurance contract liabilities for the year ended 31 December 2024 included fair value
gains of EUR 174 million (2023: EUR 465 million gains) and EUR 0 million (2023: EUR (4) million) impairment on financial investments measured at FVOCI.

Reconciliation of amounts included in OCI for financial assets at FVOCI - Contracts measured under the modified retrospective approach
| 2024 | 2023
| €m | €m
Balance at 1 Jan | (606) | (912)
Net change in fair value | (143) | 419
Net amount reclassified to profit or loss | 3 | (6)
Related income tax | 36 | (107)
Foreign exchange and other | — | —
Balance at 31 Dec | (710) | (606)

Universal Registration Document and Annual Financial Report 2024 | 269

Movements in carrying amounts of insurance contracts - Analysis by remaining coverage and incurred claims
| Year ended 31 Dec 2024
| Life direct participating and Investment DPF | Other life contracts |
| Liabilities for remaining coverage: |  |  | Liabilities for remaining coverage: |  |  |
| Excluding loss component | Loss component | Incurred claims | Total | Excluding loss component | Loss component | Incurred claims | Total | Total
| €m | €m | €m | €m | €m | €m | €m | €m | €m
Opening assets | — | — | — | — | — | — | — | — | —
Opening liabilities | 20,939 | 2 | 1 | 20,942 | 57 | 3 | 33 | 93 | 21,035
Net opening balance 1 Jan 2024 | 20,939 | 2 | 1 | 20,942 | 57 | 3 | 33 | 93 | 21,035
Changes in the statement of profit or loss and OCI |  |  |  |  |  |  |  |  |
Insurance revenue |  |  |  |  |  |  |  |  |
Contract under fair value approach | (11) | — | — | (11) | (11) | — | — | (11) | (22)
Contracts under the modified retrospective approach | (131) | — | — | (131) | (16) | — | — | (16) | (147)
Other contracts 1 | (36) | — | — | (36) | (30) | — | — | (30) | (66)
Total insurance revenue | (178) | — | — | (178) | (57) | — | — | (57) | (235)
Insurance service expenses |  |  |  |  |  |  |  |  |
Incurred claims and other insurance service expenses | — | — | 81 | 81 | — | — | 37 | 37 | 118
Amortisation of insurance acquisition cash flows | 3 | — | — | 3 | 1 | — | — | 1 | 4
Losses and reversal of losses on onerous contracts | — | (1) | — | (1) | — | — | — | — | (1)
Adjustments to liabilities for incurred claims | — | — | — | — | — | — | (7) | (7) | (7)
Total insurance service expenses | 3 | (1) | 81 | 83 | 1 | — | 30 | 31 | 114
Investment components | (1,976) | — | 1,976 | — | — | — | — | — | —
Insurance service result | (2,151) | (1) | 2,057 | (95) | (56) | — | 30 | (26) | (121)
Net finance expenses from insurance contracts | 1,049 | — | — | 1,049 | — | — | — | — | 1,049
Other movements recognised in the statement of profit or loss and OCI | — | — | — | — | — | — | — | — | —
Effect of movements in exchange rates | — | — | — | — | — | — | — | — | —
Total changes in the statement of profit or loss and OCI | (1,102) | (1) | 2,057 | 954 | (56) | — | 30 | (26) | 928
Cash flows |  |  |  |  |  |  |  |  |
Premiums received | 1,683 | — | — | 1,683 | 60 | — | — | 60 | 1,743
Claims and other insurance service expenses paid | (58) | — | (2,054) | (2,112) | — | — | (32) | (32) | (2,144)
Insurance acquisition cash flows | (15) | — | — | (15) | (2) | — | — | (2) | (17)
Total cash flows | 1,610 | — | (2,054) | (444) | 58 | — | (32) | 26 | (418)
Liabilities of disposal groups held for sale | (20,985) | — | — | (20,985) | (9) | (2) | (27) | (38) | (21,023)
Other movements | — | (1) | (1) | (2) | 1 | (1) | (2) | (2) | (4)
Net closing balance 31 Dec 2024 | 462 | — | 3 | 465 | 51 | — | 2 | 53 | 518
Closing assets | — | — | — | — | — | — | — | — | —
Closing liabilities | 462 | — | 3 | 465 | 51 | — | 2 | 53 | 518
Net closing balance 31 Dec 2024 | 462 | — | 3 | 465 | 51 | — | 2 | 53 | 518

270 | Universal Registration Document and Annual Financial Report 2024

Notes on the consolidated financial statements

Movements in carrying amounts of insurance contracts - Analysis by remaining coverage and incurred claims (continued)
| Year ended 31 Dec 2023
| Life direct participating and Investment DPF | Other life contracts |
| Liabilities for remaining coverage: |  |  | Liabilities for remaining coverage: |  |  |
| Excluding loss component | Loss component | Incurred claims | Total | Excluding loss component | Loss component | Incurred claims | Total | Total
| €m | €m | €m | €m | €m | €m | €m | €m | €m
Opening assets | — | — | — | — | — | — | — | — | —
Opening liabilities | 20,331 | 1 | 1 | 20,333 | 58 | 1 | 41 | 100 | 20,433
Net opening balance 1 Jan 2023 | 20,331 | 1 | 1 | 20,333 | 58 | 1 | 41 | 100 | 20,433
Changes in the statement of profit or loss and OCI |  |  |  |  |  |  |  |  |
Insurance revenue |  |  |  |  |  |  |  |  |
Contract under fair value approach | (5) | — | — | (5) | (11) | — | — | (11) | (16)
Contracts under the modified retrospective approach | (138) | — | — | (138) | (19) | — | — | (19) | (157)
Other contracts 1 | (33) | — | — | (33) | (36) | — | — | (36) | (69)
Total insurance revenue | (176) | — | — | (176) | (66) | — | — | (66) | (242)
Insurance service expenses |  |  |  |  |  |  |  |  |
Incurred claims and other insurance service expenses | — | — | 86 | 86 | — | — | 27 | 27 | 113
Amortisation of insurance acquisition cash flows | 2 | — | — | 2 | 1 | — | — | 1 | 3
Losses and reversal of losses on onerous contracts | — | 1 | — | 1 | — | 2 | — | 2 | 3
Adjustments to liabilities for incurred claims | — | — | — | — | — | — | (3) | (3) | (3)
Total insurance service expenses | 2 | 1 | 86 | 89 | 1 | 2 | 24 | 27 | 116
Investment components | (2,010) | — | 2,010 | — | — | — | — | — | —
Insurance service result | (2,184) | 1 | 2,096 | (87) | (65) | 2 | 24 | (39) | (126)
Net finance expenses from insurance contracts | 1,646 | — | — | 1,646 | 1 | — | — | 1 | 1,647
Effect of movements in exchange rates | — | — | — | — | — | — | — | — | —
Total changes in the statement of profit or loss and OCI | (538) | 1 | 2,096 | 1,559 | (64) | 2 | 24 | (38) | 1,521
Cash flows |  |  |  |  |  |  |  |  |
Premiums received | 1,218 | — | — | 1,218 | 65 | 1 | — | 66 | 1,284
Claims and other insurance service expenses paid | (59) | — | (2,096) | (2,155) | — | — | (32) | (32) | (2,187)
Insurance acquisition cash flows | (13) | — | — | (13) | (3) | — | — | (3) | (16)
Total cash flows | 1,146 | — | (2,096) | (950) | 62 | 1 | (32) | 31 | (919)
Other movements | — | — | — | — | 1 | (1) | — | — | —
Net closing balance 31 Dec 2023 | 20,939 | 2 | 1 | 20,942 | 57 | 3 | 33 | 93 | 21,035
Closing assets | — | — | — | — | — | — | — | — | —
Closing liabilities | 20,939 | 2 | 1 | 20,942 | 57 | 3 | 33 | 93 | 21,035
Net closing balance 31 Dec 2023 | 20,939 | 2 | 1 | 20,942 | 57 | 3 | 33 | 93 | 21,035

1 Other contracts are those contracts measured by applying IFRS 17 from inception of the contracts. This includes contracts measured under the full retrospective
approach at Transition and contracts incepted after Transition.

Universal Registration Document and Annual Financial Report 2024 | 271

Movements in carrying amounts of insurance contracts - Analysis by measurement component |
| Insurance contracts - Life direct participating and investment discretionary participating contracts | Insurance contracts - Life Other contracts | Total
| 2024 | 2024
|  | Contractual service margin |  |  | Contractual service margin |
| Estimates of present value of future cash flows and risk adjustment 1 | Contracts under fair value approach | Contracts under modified retros- pective approach | Other contracts 2 | Total | Estimates of present value of future cash flows and risk adjustment 1 | Contract under fair value approach | Contracts under modified retros- pective approach | Other contracts 2 | Total
| €m | €m | €m | €m | €m | €m | €m | €m | €m | €m | €m
Opening assets | — | — | — | — | — | (1) | — | — | 1 | — | —
Opening liabilities | 20,080 | 10 | 645 | 207 | 20,942 | (1) | 48 | 16 | 30 | 93 | 21,035
Net opening balance 01 Jan 2024 | 20,080 | 10 | 645 | 207 | 20,942 | (2) | 48 | 16 | 31 | 93 | 21,035
Changes in the statement of profit or loss and OCI |  |  |  |  |  |  |  |  |  |  |
Changes that relate to current services |  |  |  |  |  |  |  |  |  |  |
CSM recognised for services provided | — | (8) | (55) | (16) | (79) | — | (5) | (5) | (9) | (19) | (98)
Change in risk adjustment for non- financial risk for risk expired | (10) | — | — | — | (10) | (2) | — | — | — | (2) | (12)
Experience adjustments | (5) | — | — | — | (5) | 2 | — | — | — | 2 | (3)
Other movements recognised in insurance service result | — | — | — | — | — | — | — | — | — | — | —
Changes that relate to future services |  |  |  |  |  |  |  |  |  |  |
Contracts initially recognised in the year | (37) | — | — | 37 | — | (10) | — | — | 10 | — | —
Changes in estimates that adjust the CSM | 26 | 9 | (5) | (30) | — | (3) | 2 | 7 | (6) | — | —
Changes in estimates that result in losses and reversal of losses on onerous contracts | (1) | — | — | — | (1) | — | — | — | — | — | (1)
Changes that relate to past services |  |  |  |  |  |  |  |  |  |  |
Adjustments to liabilities for incurred claims | — | — | — | — | — | (7) | — | — | — | (7) | (7)
Insurance service result | (27) | 1 | (60) | (9) | (95) | (20) | (3) | 2 | (5) | (26) | (121)
Net finance expenses from insurance contracts | 1,049 | — | — | — | 1,049 | — | — | — | — | — | 1,049
Other movements recognised in the statement of profit or loss and other comprehensive income | — | — | — | — | — | — | — | — | — | — | —
Effect of movements in exchange rates | — | — | — | — | — | — | — | — | — | — | —
Total changes in the statement of profit or loss and OCI | 1,022 | 1 | (60) | (9) | 954 | (20) | (3) | 2 | (5) | (26) | 928
Cash flows |  |  |  |  |  |  |  |  |  |  |
Premiums received | 1,683 | — | — | — | 1,683 | 60 | — | — | — | 60 | 1,743
Claims, other insurance service expenses paid (including investment components) and other cash flows | (2,112) | — | — | — | (2,112) | (32) | — | — | — | (32) | (2,144)

272 | Universal Registration Document and Annual Financial Report 2024

Notes on the consolidated financial statements

Movements in carrying amounts of insurance contracts - Analysis by measurement component |
| Insurance contracts - Life direct participating and investment discretionary participating contracts | Insurance contracts - Life Other contracts | Total
| 2024 | 2024
|  | Contractual service margin |  |  | Contractual service margin |
| Estimates of present value of future cash flows and risk adjustment 1 | Contracts under fair value approach | Contracts under modified retros- pective approach | Other contracts 2 | Total | Estimates of present value of future cash flows and risk adjustment 1 | Contract under fair value approach | Contracts under modified retros- pective approach | Other contracts 2 | Total
| €m | €m | €m | €m | €m | €m | €m | €m | €m | €m | €m
Insurance acquisition cash flows | (15) | — | — | — | (15) | (2) | — | — | — | (2) | (17)
Total cash flows | (444) | — | — | — | (444) | 26 | — | — | — | 26 | (418)
Liabilities of disposal groups held for sale | (20,206) | — | (587) | (192) | (20,985) | (5) | — | (19) | (14) | (38) | (21,023)
Other movements | 1 | (4) | 2 | (1) | (2) | (1) | — | 1 | (2) | (2) | (4)
Net closing balance 31 Dec 2024 | 453 | 7 | — | 5 | 465 | (2) | 45 | — | 10 | 53 | 518
Closing assets | — | — | — | — | — | — | — | — | — | — | —
Closing liabilities | 453 | 7 | — | 5 | 465 | (2) | 45 | — | 10 | 53 | 518
Net closing balance 31 Dec 2024 | 453 | 7 | — | 5 | 465 | (2) | 45 | — | 10 | 53 | 518

Universal Registration Document and Annual Financial Report 2024 | 273

Movements in carrying amounts of insurance contracts - Analysis by measurement component (continued)
| Insurance contracts - Life direct participating and investment discretionary participating contracts | Insurance contracts - Life Other contracts
| 2023 | 2023
|  | Contractual service margin |  |  | Contractual service margin |
| Estimates of present value of future cash flows and risk adjustment 1 | Contracts under fair value approach | Contracts under modified retros- pective approach | Other contracts 2 | Total | Estimates of present value of future cash flows and risk adjustment 1 | Contract under fair value approach | Contracts under modified retros- pective approach | Other contracts 2 | Total
| €m | €m | €m | €m | €m | €m | €m | €m | €m | €m
Opening assets | — | — | — | — | — | — | — | — | — | —
Opening liabilities | 19,361 | 8 | 741 | 223 | 20,333 | 13 | 45 | 17 | 25 | 100
Net opening balance 01 Jan 2023 | 19,361 | 8 | 741 | 223 | 20,333 | 13 | 45 | 17 | 25 | 100
Changes in the statement of profit or loss and OCI |  |  |  |  |  |  |  |  |  |
Changes that relate to current services |  |  |  |  |  |  |  |  |  |
CSM recognised for services provided | — | (2) | (65) | (18) | (85) | — | (6) | (6) | (9) | (21)
Change in risk adjustment for non- financial risk for risk expired | (6) | — | — | — | (6) | (2) | — | — | — | (2)
Experience adjustments | 2 | — | — | — | 2 | (14) | — | — | — | (14)
Changes that relate to future services |  |  |  |  |  |  |  |  |  |
Contracts initially recognised in the year | (32) | — | — | 32 | — | (4) | — | — | 5 | 1
Changes in estimates that adjust the CSM | 57 | 4 | (31) | (30) | — | (24) | 8 | 5 | 10 | (1)
Changes in estimates that result in losses and reversal of losses on onerous contracts | 2 | — | — | — | 2 | 1 | — | — | — | 1
Changes that relate to past services |  |  |  |  |  |  |  |  |  |
Adjustments to liabilities for incurred claims | — | — | — | — | — | (3) | — | — | — | (3)
Insurance service result | 23 | 2 | (96) | (16) | (87) | (46) | 2 | (1) | 6 | (39)
Net finance expenses from insurance contracts | 1,646 | — | — | — | 1,646 | — | 1 | — | — | 1
Effect of movements in exchange rates | — | — | — | — | — | — | — | — | — | —
Total changes in the statement of profit or loss and OCI | 1,669 | 2 | (96) | (16) | 1,559 | (46) | 3 | (1) | 6 | (38)
Cash flows |  |  |  |  |  |  |  |  |  |
Premiums received | 1,218 | — | — | — | 1,218 | 66 | — | — | — | 66
Claims, other insurance service expenses paid (including investment components) and other cash flows | (2,155) | — | — | — | (2,155) | (32) | — | — | — | (32)
Insurance acquisition cash flows | (13) | — | — | — | (13) | (3) | — | — | — | (3)
Total cash flows | (950) | — | — | — | (950) | 31 | — | — | — | 31
Other movements | — | — | — | — | — | — | — | — | — | —
Net closing balance 31 Dec 2023 | 20,080 | 10 | 645 | 207 | 20,942 | (2) | 48 | 16 | 31 | 93
Closing assets | — | — | — | — | — | (1) | — | — | 1 | —
Closing liabilities | 20,080 | 10 | 645 | 207 | 20,942 | (1) | 48 | 16 | 30 | 93
Net closing balance 31 Dec 2023 | 20,080 | 10 | 645 | 207 | 20,942 | (2) | 48 | 16 | 31 | 93

1 The estimates of present value of future cash flows for Insurance contracts with Life direct participating and investment discretionary participating contracts
includes risk adjustment of EUR 108 million (2023 EUR 108 million). Similarly the estimates of present value of future cash flows for Other Life insurance
contracts includes risk adjustment of EUR (2) million (2023 EUR (2) million).
2 Other contracts are those contracts measured by applying IFRS 17 from inception of the contracts. This includes contracts measured under the full retrospective
approach at Transition and contracts incepted after Transition.

274 | Universal Registration Document and Annual Financial Report 2024

Notes on the consolidated financial statements

Effect of contracts initially recognised in the year
| Year ended 31 Dec 2024 | Year ended 31 Dec 2023
| Profitable contracts issued | Onerous contracts issued | Total | Profitable contracts issued | Onerous contracts issued | Total
| €m | €m | €m | €m | €m | €m
Life direct participating and investment DPF contracts |  |  |  |  |  |
Estimates of present value of cash outflows | 1,150 | 3 | 1,153 | 931 | 1 | 932
– insurance acquisition cash flows | 11 | — | 11 | 11 | — | 11
– claims and other insurance service expenses payable | 1,139 | 3 | 1,142 | 920 | 1 | 921
Estimates of present value of cash inflows | (1,192) | (3) | (1,195) | (967) | (1) | (968)
Risk adjustment for non-financial risk | 5 | — | 5 | 4 | — | 4
Contractual service margin | 37 | — | 37 | 32 | — | 32
Losses recognised on initial recognition | — | — | — | — | — | —
Life other contracts |  |  |  |  |  |
Estimates of present value of cash outflows | 24 | 1 | 25 | 15 | 4 | 19
– insurance acquisition cash flows | — | — | — | 2 | — | 2
– claims and other insurance service expenses payable | 24 | 1 | 25 | 13 | 4 | 17
Estimates of present value of cash inflows | (35) | (1) | (36) | (21) | (3) | (24)
Risk adjustment for non-financial risk | 1 | — | 1 | 1 | — | 1
Contractual service margin | 10 | — | 10 | 5 | — | 5
Losses recognised on initial recognition | — | — | — | — | (1) | (1)

Present value of expected future cash flows of insurance contract liabilities and contractual service margin
| less than 1 year | 1-2 years | 2-3 years | 3-4 years | 4-5 years | 5-10 years | 10-20 years | Over 20 years | Total
2024 | €m | €m | €m | €m | €m | €m | €m | €m | €m
Insurance liability future cash flows 1 |  |  |  |  |  |  |  |  |
Life direct participating and investment DPF contracts | 24 | 1 | 21 | 15 | 19 | 66 | 153 | 150 | 449
Life other contracts | (5) | (7) | (6) | (5) | (4) | (14) | 2 | 32 | (7)
Insurance liability future cash flows at 31 Dec 2024 | 19 | (6) | 15 | 10 | 15 | 52 | 155 | 182 | 442
Remaining contractual service margin 1 |  |  |  |  |  |  |  |  |
Life direct participating and investment DPF contracts | 1 | 1 | 1 | 1 | 1 | 3 | 2 | 2 | 12
Life other contracts | 6 | 5 | 5 | 4 | 4 | 15 | 13 | 3 | 55
Remaining contractual service margin at 31 Dec 2024 | 7 | 6 | 6 | 5 | 5 | 18 | 15 | 5 | 67
2023 |  |  |  |  |  |  |  |  |
Insurance liability future cash flows |  |  |  |  |  |  |  |  |
Life direct participating and investment DPF contracts | 632 | 736 | 709 | 655 | 580 | 1,762 | (548) | 15,447 | 19,973
Life other contracts | (2) | (8) | (9) | (8) | (7) | (17) | 1 | 32 | (18)
Insurance liability future cash flows at 31 Dec 2023 | 630 | 728 | 700 | 647 | 573 | 1,745 | (547) | 15,479 | 19,955
Remaining contractual service margin |  |  |  |  |  |  |  |  |
Life direct participating and investment DPF contracts | 74 | 70 | 66 | 61 | 57 | 228 | 233 | 73 | 862
Life other contracts | 14 | 13 | 9 | 8 | 7 | 23 | 16 | 4 | 94
Remaining contractual service margin at 31 Dec 2023 | 88 | 83 | 75 | 69 | 64 | 251 | 249 | 77 | 956

1‘Insurance liability future cash flows’ and ‘Remaining contractual service margin’ at 31 Dec 2024 exclude the disposal group related to the planned sale of the life
insurance business in France.
Discount rates
The Group has elected to apply a bottom-up approach whereby the discount rate is derived using the risk-free rate adjusted for an illiquidity
premium as set out in the Summary of material accounting policies (j) Insurance contracts on page 257. The blended average of discount rates
used within our most material manufacturing entities are as follows:

France | Malta |
| EUR | EUR
At 31 December 2024 |  |
rate 10Y (%) | 2.97 | 2.27
rate 20Y (%) | 2.95 | 2.26
At 31 December 2023 |  |
rate 10Y (%) | 2.96 | 2.42
rate 20Y (%) | 2.97 | 2.40

Universal Registration Document and Annual Financial Report 2024 | 275

Sensitivity of HSBC’s insurance manufacturing subsidiaries to market risk factors 2
| At 31 Dec 2024 | At 31 Dec 2023
| Effect on profit after tax | Effect on CSM | Effect on total equity | Effect on profit after tax | Effect on CSM | Effect on total equity
| €m | €m | €m | €m | €m | €m
+100 basis point parallel shift in yield curves | 2 | 59 | (28) | (4) | 5 | (34)
–100 basis point parallel shift in yield curves | (8) | (135) | 22 | (1) | (67) | 27
+100 basis point shift in credit spreads | (5) | (21) | (35) | (4) | (39) | (35)
–100 basis point shift in credit spreads | 4 | 9 | 34 | 4 | 42 | 35
10% increase in growth assets 1 | 25 | 73 | 25 | 35 | 73 | 35
10% decrease in growth assets 1 | (25) | (71) | (25) | (34) | (72) | (34)
10% appreciation in foreign currencies against local functional currency | — | — | — | — | — | —
10% depreciation in foreign currencies against local functional currency | — | — | — | — | — | —

1'Growth assets' primarily comprise equity securities and investment properties and variability in growth asset fair value constitutes a market risk to HSBC's
insurance manufacturing subsidiaries.
2 Sensitivities presented for 'Insurance & Reinsurance Contracts' includes the impact of the sensitivity stress on underlying assets held to support insurance and
reinsurance contracts; sensitivities presented for ‘Financial Instruments’ includes the impact of the sensitivity stress on other financial instruments, primarily
shareholder assets.

Amounts Payable on Demand
| At 31 Dec 2024 1 | At 31 Dec 2023
| Amounts Payable on Demand | Carrying Amount for these Contracts | Amounts Payable on Demand | Carrying Amount for these Contracts
| €m | €m | €m | €m
Life direct participating and investment DPF contracts | 252 | 465 | 20,588 | 20,942
Life other contracts | — | 53 | — | 93
Total | 252 | 518 | 20,588 | 21,035

1 'Excludes the amounts of disposal group related to the planned sale of the life insurance business in Fr ance.

Sensitivity of HSBC’s insurance manufacturing subsidiaries to insurance risk factors |  |  |
| At 31 Dec 2024 | At 31 Dec 2023
| Effect on CSM 1 | Effect on profit after tax 1 | Effect on total equity 1 | Effect on CSM 1 | Effect on profit after tax 1 | Effect on total equity 1
| €m | €m | €m | €m | €m | €m
5% increase in mortality and/or morbidity rates | (12) | (1) | (1) | (14) | (1) | (1)
5% decrease in mortality and/or morbidity rates | 13 | 1 | 1 | 15 | 1 | 1
10% increase in lapse rates | (57) | (4) | (4) | (65) | (7) | (7)
10% decrease in lapse rates | 63 | 4 | 4 | 69 | 6 | 6
10% increase in expense rates | (27) | (2) | (2) | (24) | (2) | (2)
10% decrease in expense rates | 27 | 2 | 2 | 24 | 2 | 2

1 The ‘net’ sensitivities impacts are provided before considering the impacts of reinsurance contracts held as risk mitigation.

276 | Universal Registration Document and Annual Financial Report 2024

Notes on the consolidated financial statements

Risk management of Insurance operations
Key events during the year
The year 2024 was marked by a decline in inflation as well as the triggering of the easing of monetary policies. At the same time, geopolitical
conflicts have generated uncertainty, both in the real and financial spheres.
More specifically concerning HSBC Continental Europe, 2024 started with the sale of the French retail banking network to My Money Group /
CCF. The year ended with HSBC Continental Europe signing a Memorandum of Understanding regarding the planned sale of life insurance
business in France to Matmut Société d'Assurance Mutuelle.
On 11 September 2024, HSBC Bank Malta p.l.c. (‘HSBC Malta’) informed Shareholders that HSBC Holdings plc had informed the Board of
Directors of HSBC Malta that it will undertake a Strategic Review of its indirect 70.03% shareholding in HSBC Malta including its insurance
subsidiary.
Governance
The risk governance framework of HSBC Assurances Vie (France) is organised through several committees, whose responsibility is to manage
the exposure of the business to risks according to the limits defined in the risk appetite. The main committees of the risk governance
organization are the following:
– the Finance Risk and Control Management Meeting ('FRCMM') is responsible for the financial risk oversight (replaces the Financial Reporting
Committee jointly with the Actuarial Review Committee);
– the Actuarial Review Committee ('ARC') validates the assumptions, methodology and models used in financial reporting and reviews all
changes to these elements;
– the Model Management Meeting validates, controls and monitors the models used by the business;
– the Asset and Liabilities Committee manages asset-liability risk and monitors the economic and regulatory capital levels;
– the Investment Committee manages investment risks (market, credit and liquidity risks);
– the Insurance Risk Committee monitors insurance risks, including the lapse rate (redemption, mortality and morbidity), the reinsurance
strategy and the non-economic assumptions used in the models; and
– the Risk Management Meeting ('RMM').
The Risk Management Meeting’s responsibilities extend to all risks to which the Insurance business is exposed. The RMM uses the reports
from the other committees above. The RMM reports to the Audit and Risk Committee of HSBC Assurances Vie (France) with an escalation path
for issues and actions.
HSBC Life Assurance (Malta) Ltd has set up a Risk Governance Framework similar to HSBC Assurances Vie (France), in accordance with HSBC
Group Policies. The same committees as HSBC Assurances Vie (France) except for the Insurance Risk Committee, which is not mandatory
according to HSBC's governance, are accountable for following the insurance and finance risks within HSBC Life Assurance (Malta) Ltd. The role
of these committees is broadly aligned with the HSBC Assurances Vie (France) framework.
This section provides disclosures on the risks arising from insurance manufacturing operations including financial risks such as market risk,
credit risk, liquidity risk, and insurance risk.
Risks in the insurance manufacturing operations are managed within the insurance entities using methodologies and processes appropriate to
the insurance activities and are subject to oversight at HSBC Group Insurance level.
In addition, local subsidiary’s Asset and Liabilities Committee monitors and reviews the matching over time of the expected cash flows of
insurance assets and liabilities.
All insurance products, whether manufactured internally or by a third party, are subject to a product approval process prior to introduction.
HSBC Continental Europe’s model
HSBC Continental Europe changed its model since the 1 January 2024 with the sale of French retail banking activity to CCF which is under the
control of My Money Group. Following this sale, HSBC Continental Europe distributes the majority of its wealth and protection insurance
products through an external channel. This model differs from the previous one where HSBC Continental Europe had an integrated
bancassurance model with insurance products being principally commercialized for customers with whom the HSBC Group had a banking
relationship.
HSBC Continental Europe’s strategy concerning the insurance business is focused on life business and there is a diversification strategy
consisting in the sale of savings and protection contracts to mitigate risk. HSBC also diversifies its strategy within the savings business by
selling Unit Linked products along with Euro Funds.
Key financial risks
HSBC Continental Europe insurance businesses are exposed to a range of risks which can be categorized into:
– Market risk: risks arising from changes in the fair values of financial assets or their future cash flows from fluctuations in variables such as
interest rates, equity and growth asset prices;
– Credit risk: risk of financial loss following the failure of third parties to meet their obligations;
– Liquidity risk: risk of not being able to make payments to policyholders as they fall due as a result of insufficient assets that can be realised
as cash; and

Universal Registration Document and Annual Financial Report 2024 | 277

– Insurance underwriting risk: risk of affecting the company’s profitability or capital due to changes relating to expenses, mortality, morbidity
and lapses.
Regulatory requirements prescribe the type, quality and concentration of assets that HSBC Assurances Vie (France) and HSBC Life Assurance
(Malta) Ltd must maintain to meet insurance liabilities. These requirements complement the HSBC Group-wide policies.
The following table shows the composition of assets and liabilities by contract type:

Balance sheet of insurance manufacturing subsidiaries by type of contract
(Audited)
| Life Direct Participating and investment DPF contracts 1 | Life other 2 | Other contracts 3 | Shareholder assets and liabilities | Total
| €m | €m | €m | €m | €m
Financial assets | 1,167 | 39 | 105 | 106 | 1,417
– trading assets | — | — | — | — | —
– financial assets designated and otherwise mandatorily measured at fair value through profit or loss | 531 | 39 | 105 | 41 | 716
– derivatives | 5 | — | — | — | 5
– financial investments – at amortised cost | — | — | — | 1 | 1
– financial investments at fair value through other comprehensive income | — | — | — | — | —
– other financial assets 4 | 631 | — | — | 64 | 695
Insurance contract assets | — | — | — | — | —
Reinsurance contract assets | — | 3 | — | — | 3
Assets held for sale | 22,030 | — | — | 1,318 | 23,348
Other assets and investment properties | 11 | 1 | — | 32 | 44
Total assets at 31 Dec 2024 | 23,208 | 43 | 105 | 1,456 | 24,812
Liabilities under investment contracts designated at fair value | — | — | 167 | — | 167
Insurance contract liabilities | 464 | 53 | — | — | 517
Reinsurance contract liabilities | — | — | — | — | —
Deferred tax | — | — | — | — | —
Liabilities of disposal groups held for sale | 20,985 | 38 | — | 1,550 | 22,573
Other liabilities | — | — | — | 535 | 535
Total liabilities at 31 Dec 2024 | 21,449 | 91 | 167 | 2,085 | 23,792
Total equity at 31 Dec 2024 | — | — | — | 1,020 | 1,020
Total liabilities and equity at 31 Dec 2024 | 21,449 | 91 | 167 | 3,105 | 24,812

Financial assets | 22,057 | 37 | 96 | 1,214 | 23,404
– trading assets | — | — | — | — | —
– financial assets designated and otherwise mandatorily measured at fair value through profit or loss | 12,634 | 36 | 96 | 579 | 13,345
– derivatives | 106 | — | — | 5 | 111
– financial investments – at amortised cost | 251 | — | — | 17 | 268
– financial investments at fair value through other comprehensive income | 7,999 | — | — | 520 | 8,519
– other financial assets 4 | 1,067 | 1 | — | 93 | 1,161
Insurance contract assets | — | — | — | — | —
Reinsurance contract assets | — | 12 | — | — | 12
Other assets and investment properties | 861 | 1 | — | 93 | 955
Total assets at 31 Dec 2023 | 22,918 | 50 | 96 | 1,307 | 24,371
Liabilities under investment contracts designated at fair value | — | — | 167 | — | 167
Insurance contract liabilities | 20,942 | 93 | — | — | 21,035
Reinsurance contract liabilities | — | 4 | — | — | 4
Deferred tax | — | — | — | 2 | 2
Other liabilities | 2,113 | — | — | 68 | 2,181
Total liabilities at 31 Dec 2023 | 23,055 | 97 | 167 | 70 | 23,389
Total equity at 31 Dec 2023 | — | — | — | 982 | 982
Total liabilities and equity at 31 Dec 2023 | 23,055 | 97 | 167 | 1,052 | 24,371

1‘Life direct participating and investment DPF’ contracts are substantially measured under the variable fee approach measurement model.
2‘Life other’ contracts are measured under the general measurement model and mainly includes protection insurance contracts as well as reinsurance contracts.
The reinsurance contracts primarily provide diversification benefits over the life direct participating and investment discretionary participation feature (’DPF’)
contracts.
3‘Other contracts’ includes investment contracts for which HSBC does not bear significant insurance risk.
4'Other financial assets' comprise mainly loans and advances to banks, cash and intercompany balances with other non-insurance legal entities.
Considering the planned sale of life insurance business in France, EUR 23.3 billion of assets and EUR 22.6 billion of liabilities were reclassified
as "held for sale".

278 | Universal Registration Document and Annual Financial Report 2024

Notes on the consolidated financial statements

Market risk of insurance operations
Market risk is the risk of changes in market factors affecting the company’s capital or profit. Market factors include interest rates, equity and
growth assets and in a minor way foreign exchange rates.
The main features of products manufactured by the HSBC Group insurance manufacturing companies which generate market risk, and the
market risk to which these features expose the company, are discussed below.
Long-term insurance or investment products may incorporate benefits that are guaranteed. Interest rate risk arises to the extent that yields on
the assets supporting guaranteed investment returns could be lower than the investment returns implied by the guarantees payable to
policyholders.
The income from the insurance and investment contracts with Discretionary Participation Features (‘DPF’) is primarily invested in bonds; a
fraction is allocated to other asset classes – namely equity and growth assets – in order to provide customers with an enhanced potential yield.
Although, the risk of the latter is stronger than the one on debt securities. Therefore, insurance companies within HSBC Continental Europe set
limits on the maximum amount to be held on equity and growth assets.
The subsidiaries holding such type of product portfolio are at risk of falling market prices when discretionary bonuses cannot fully take it into
account. An increase in market volatility may also result in an increase in the value of the guarantee granted to the insured. HSBC Assurances
Vie (France) and HSBC Life Assurance (Malta) Ltd bear the shortfall if the yields on investments held to support contracts with guaranteed
benefits are less than the returns implied by the guaranteed benefits.
Market risk is also strongly correlated to underwriting risk and especially lapse risk. Long-term insurance and investment products typically
permit the policyholder to surrender the policy at any time. When the surrender value is not linked to the value realized from the sale of the
associated supporting assets, the subsidiary is exposed to market risk. Namely when customers seek to surrender their policies when asset
values are falling, assets may have to be sold at a loss to fund redemptions.
Foreign exchange risk is limited for HSBC Assurances Vie (France) and HSBC Life Assurance (Malta) Ltd. Liabilities are issued in local currency.
Therefore, both insurance companies limit their investments in assets presenting a currency risk in order to avoid mismatches between assets
and liabilities. This risk is borne only within investment funds since all direct investments are realised in local currency.
For unit-linked contracts, market risk is substantially borne by the policyholder, but market risk exposure typically remains as earned fees are
related to the market value of the linked assets.
Each insurance manufacturing subsidiary of the HSBC Group manages market risk by using some or all of the following techniques:
– For products with DPF, adjusting bonus rates to manage the liabilities to policyholders. The effect is that a significant portion of the market
risk is borne by the policyholder;
– Structuring asset portfolios to support liability cash flows;
– Using derivatives, to a limited extent, to protect against adverse market movements or better match liability cash flows;
– Periodically reviewing products identified as higher risk, which contain investment guarantees and embedded optionality features linked to
savings and investment products;
– Including features designed to mitigate market risk in new products; and
– Selling, to the extent possible, the investments whose risk is considered unacceptable.
In addition to these techniques, HSBC Assurances Vie (France) set up in January 2024 a new reinsurance treaty on DPF contracts. The treaty is
designed to reduce losses in French GAAP (Generally Accepted Accounting Principles) and therefore reduces not only market risk but all the
risks.
Credit risk of insurance operations
Credit risk is the risk of financial loss if a customer or counterparty fails to meet their obligation under a contract. It arises in two main areas for
our insurance manufacturers:
– Risk associated with credit spread volatility and default by debt security counterparties after investing premiums to generate a return for
policyholders and shareholders; and
– Risk of default by reinsurance counterparties and non-reimbursement for claims made after ceding insurance risk.
An assessment of creditworthiness of issuers and counterparties is performed basing itself primarily upon the opinion of HSBC Global Asset
Management, internationally recognized rating agencies and other publicly available information.
A number of tools are used to manage and monitor credit risk. These include a Credit Watch Report which contains a watch list of investments
with current credit concern, primarily investments that may be at risk of future impairment or where high concentrations to counterparties are
present in the investment portfolio. Sensitivities to credit spread risk are assessed and monitored regularly.

Universal Registration Document and Annual Financial Report 2024 | 279

Liquidity risk of insurance operations
Liquidity risk is the risk that an insurance company, though solvent, either does not have sufficient financial resources available to meet its
obligations when they fall due or can secure them only at excessive cost. Liquidity risk may be shared with policyholders for products with DPF.
Liquidity risk in insurance business is managed by cash flow matching and maintaining sufficient cash resources, investing in high credit-quality
investments with deep and liquid markets, monitoring investment concentrations and restricting them where appropriate, and establishing
committed contingency borrowing facilities.
Insurance underwriting risk
Insurance underwriting risk is the risk of loss through adverse experience, in either timing or amount, of insurance underwriting parameters
(non-economic assumptions). These parameters include mortality, morbidity, longevity, lapse and expense rates.
A principal risk faced by HSBC Assurances Vie (France) is that, over time, the costs of acquiring and administering a contract, of claims and of
benefits may exceed the aggregate amount of premiums received and investment income. The cost of claims and benefits can be influenced by
many factors, including mortality and morbidity experience, lapse and surrender rates.
In the current situation, with interest rates that are higher than the total return of assets, there is a risk of an increase in lapses. In the case of
massive lapses with the current level of interest rates HSBC Assurances Vie (France) would have to sell a part of its bond portfolio and thus
realize a part of its unrealized losses.
For contracts managed by HSBC Life Assurance (Malta) Ltd where death or morbidity is the insured risk, the most significant factor that could
increase the overall frequency of claims are epidemics or widespread changes in lifestyle resulting in earlier or more claims than expected.
HSBC Assurances Vie (France) mitigates insurance risk by using two main techniques which are diversification and reinsurance.
Diversification between savings and protection business allows to reduce mortality risk. Savings and pension business are mainly exposed to
longevity risk, whilst protection business Is mainly exposed to mortality risk.
Concerning reinsurance, HSBC Assurances Vie (France) has put in place treaties on the protection business with a mix of proportional and non-
proportional arrangements. This allows HSBC Assurances Vie (France) to mitigate both catastrophic events or circumstances and significant
individual claims. The new reinsurance treaty on savings reduces the risk of affecting the company’s profitability or capital.
HSBC Life Assurance (Malta) Ltd manages its insurance risk through strict underwriting limits and claims management; approval procedures for
new products and pricing reviews; close monitoring of reinsurance arrangements and monitoring of emerging issues. The Company’s
underwriting strategy is intended to ensure that the risks underwritten are well diversified in terms of type of risk and the level of insured
benefits. For example, the Company balances death risk across its portfolio. Medical selection is also included in the Company’s underwriting
procedures, with premium varied to reflect the health condition and family medical history of the applicants.
HSBC Life Assurance (Malta) Ltd protection business is reinsured under a stop-loss treaty where the company's risk is limited to the first €50k
for each life insured which strongly mitigates its underwriting risk.
HSBC Life Assurance (Malta) is also exposed to lapse risk and more precisely to a different trend of lapse on the different types of products. A
rise in lapses in profitable products would reduce the profits expected on the in-force book. There is however an exposure to lower lapses on
level cover policies where the premium doesn’t cover the cost of the risk anymore in the latter duration of the policies.

6 Employee compensation and benefits
Employee compensation and average number of employees

Employee compensation (continuing operations) |  |
| 2024 | 2023 1
| €m | €m
Wages and salaries | 779 | 783
Social security costs | 201 | 190
Post-employment benefits | 28 | 28
Year ended 31 Dec | 1,008 | 1,001

1 In compliance with IFRS 5 standards, the comparatives have been represented to reflect discontinued operations related to the planned sale of the life insurance
business in France. This also includes discontinued operations related to the sale of the retail banking operations in France.

280 | Universal Registration Document and Annual Financial Report 2024

Notes on the consolidated financial statements

Average number of persons employed by HSBC Continental Europe during the year
| 2024 | 2023
Wealth and Personal Banking | 1,399 | 4,500
Commercial Banking | 1,374 | 1,482
Market and Securities Services | 1,504 | 1,548
Global Banking | 401 | 413
GBM Other | 5 | 6
Corporate Centre | 19 | 18
Support functions and others 1 | 2,842 | 3,353
Year ended 31 Dec 2,3 | 7,544 | 11,320

1 Including pre-retirement ('CFCS') and expatriates.
2 Permanent contracts ('CDI') and fixed terms contracts ('CDD') within HSBC Continental Europe (including European branches) and its subsidiaries HSBC Global
Asset Management (France) and HSBC Assurances Vie (France).
3 2023 figures include employees of retail banking operations in France classified as discontinued operations as at 31 December 2023.
Share-based payments
HSBC Group policy
Since 2006, the general policy of the HSBC Group is to award shares instead of share options (except in the case of a country specific legal and
tax regulation).
The shares can be:
– ‘Group Performance Shares’ subject to performance conditions, granted only to Group Executives; and
– Restricted Shares’ without performance conditions, awarded to other employees, part of whose variable compensation is paid in the form of
HSBC shares.
Practice at HSBC Continental Europe
HSBC Continental Europe's employees are not granted Group Performance Shares which are reserved for Group Executives.
Employees for whom part of the variable compensation is deferred pursuant to Group rules are granted restricted shares. The same is true for
employees identified as risk takers who are subject to special rules regarding variable compensation, 50 per cent of which must be paid in
shares for both the immediate and deferred portions.
For employees under French contracts, these shares take the form of “French qualified shares”, which benefit from a special social and tax
regime.

Movement on 'Restricted Shares'
| Number
| (000s)
Outstanding at 1 Jan 2024 | 6,091
Granted during the year 1 | 3,921
Exercised during the year 2 | (3,432)
Movements of staff during the year 3 | (1,114)
Outstanding at 31 Dec 2024 | 5,466
– of which: exercisable | —
Weighted average remaining contractual life (years) | —
Outstanding at 1 Jan 2023 | 6,905
Granted during the year 1 | 3,940
Exercised during the year 2 | (3,626)
Movements of staff during the year 3 | (1,129)
Outstanding at 31 Dec 2023 | 6,091
– of which: exercisable | —
Weighted average remaining contractual life (years) | —

1 The weighted average price at grant date in 2024 was EUR 7.00 (2023: EUR 7.20).
2 The weighted average price at vesting date in 2024 was EUR 6.91 (2023: EUR 6.69).
3 Corresponds to the shares granted to Group employees who joined HSBC Continental Europe during the year net of shares granted to HSBC Continental Europe
employees who joined other Group entities, to the shares expired during the year and to the shares exercised during the year by employees no more present as
at 31 December 2024.
In 2024, EUR 9 million was charged to the income statement in respect of amortisation of the existing plans for HSBC in France (in 2023: EUR 8
million).
The vesting period for deferred share awards expected to be granted in 2025, in respect of the 2024 performance year, was determined to have
started on 1 January 2024.

Universal Registration Document and Annual Financial Report 2024 | 281

Employee share offering
In 2024, HSBC Continental Europe did not issue shares reserved for employees.

Income statement charge (continuing operations)
| 2024 | 2023
| €m | €m
Restricted share awards | 22 | 15
Savings related and other share option plans | — | —
Year ended 31 Dec | 22 | 15

Pension and other post-retirement benefits
HSBC Continental Europe operates a number of pension and other post-retirement benefit plans. These plans include both defined benefit and
defined contribution plans of which HSBC Germany Pension Plan is the most prominent.
HSBC Continental Europe pension plan in Germany
HSBC Germany Pension Plan is a final salary scheme and is calculated based on the employee length of service multiplied by a predefined
benefit accrual and earnings. The pension is paid when the benefit falls due and is a specified pension payment, lump-sum or combination
thereof. The plan is overseen by an independent corporate trustee, who has a fiduciary responsibility for the operation of the plan. Its assets are
held separately from the assets of the HSBC Group.
The strategic aim of the investment is to achieve, as continuously as possible, an increase in value over time. For this purpose, the fund invests
mainly in government bonds, corporate bonds, investment funds and equities. It invests predominantly in developed regions. Overall, emphasis
is placed on having a high degree of diversification.
Plan assets were created to fund the pension obligations and separated through what is known as a contractual trust agreement ('CTA'). HSBC
Trinkaus Vermögenstreuhänder e. V. and HSBC Trinkaus Mitarbeitertreuhänder e. V. assume the role of trustee. Active members of the trustee
are Bank employees.
The Bank regularly aims to comprehensively finance the committed benefits externally. There is no obligation to allocate contributions to the
CTA. The Bank is entitled to assets that are not needed to fund the committed benefits. No further additions to the plan assets are envisaged at
the present time.
In accordance with the Memorandum and Articles of Association, the revenues may only be used, for example, for pension payments or for
reinvestment. Similarly, withdrawals may only be made in accordance with the Memorandum and Articles of Association.
The latest measurement of the defined benefit obligation of the plan at 31 December 2024 was carried out by Hans-Peter Kieselmann (Fellow of
the German Association of Actuaries ('DAV')) and Helga Bader, at Willis Towers Watson GmbH, using the projected unit credit method. The next
measurement will have an effective date of 31 December 2025.
HSBC Continental Europe pension plan in France
HSBC Continental Europe pays each retiree in France a retiring indemnity. The amount is determined by the final earnings, the length of service
in the company at this date and the guarantees under collective and internal agreements. Those plans represent 59 per cent of all commitments
in France.
In addition, certain retired employees from the bank and HSBC Continental Europe Executive Directors are entitled to defined benefits pension
plan. These plans provide the payment of benefits from the date of retirement and represent roughly 36 per cent of all commitments in France.
The latest measurement of the defined benefit obligation of the plan at 31 December 2024 was carried out by SPAC Actuaries and the costs
recognised for funding these post-employment plans are determined using the p rojected unit credit method, with annual actuarial valuations
performed on each plan. The next measurement will have an effective date of 31 December 2025. Payments to defined contribution plans and
state-managed retirement benefit plans, where HSBC Continental Europe obligations under the plans are equivalent to a defined contribution
plan, are charged as an expense as they fall due.

282 | Universal Registration Document and Annual Financial Report 2024

Notes on the consolidated financial statements

Recognition of defined benefit plans

Net (assets)/liabilities recognised on the balance sheet in respect of defined benefit plans
| Fair value of plan assets | Present value of defined benefit obligations | Effect of limit on plan surpluses | Total
| €m | €m | €m | €m
Defined benefit pension plans | 399 | (407) | — | (8)
Defined benefit healthcare plans | — | — | — | —
At 31 Dec 2024 | 399 | (407) | — | (8)
Total employee benefit liabilities (within ‘Accruals, deferred income and other liabilities’) |  |  |  | (75)
Total employee benefit assets (within ‘Prepayments, accrued income and other assets’) |  |  |  | 66
Defined benefit pension plans | 393 | (421) | — | (28)
Defined benefit healthcare plans | — | — | — | —
At 31 Dec 2023 | 393 | (421) | — | (28)
Total employee benefit liabilities (within ‘Accruals, deferred income and other liabilities’) |  |  |  | (74)
Total employee benefit assets (within ‘Prepayments, accrued income and other assets’) |  |  |  | 46

Defined benefit pension plans

Net asset/(liability) under defined benefit pension plans
| Fair value of plan assets | Present value of defined benefit obligations | Net defined benefit asset/(liability)
| France & Other plans | Germany | France & Other plans | Germany | France & Other Plans | Germany
| €m | €m | €m | €m | €m | €m
At 1 Jan 2024 | 5 | 388 | (71) | (350) | (66) | 38
Service cost | — | — | (3) | (6) | (3) | (6)
– current service cost | — | — | (3) | (6) | (3) | (6)
– past service cost and gains/(losses) from settlements | — | — | — | — | — | —
Net interest income/(cost) on the net defined benefit asset/(liability) | — | 8 | (2) | (10) | (2) | (2)
Re-measurement effects recognised in other comprehensive income | — | (1) | (2) | 8 | (2) | 7
– return on plan assets (excluding interest income) | — | (1) | — | — | — | (1)
– actuarial gains/(losses) | — | — | (2) | 8 | (2) | 8
– other changes | — | — | — | — | — | —
Benefits paid | (1) | — | 5 | 14 | 4 | 14
Other movements 1,2 | — | — | 4 | 6 | 4 | 6
At 31 Dec 2024 | 4 | 395 | (69) | (338) | (65) | 57
At Jan 2023 | 5 | 458 | (65) | (403) | (60) | 55
Service cost | — | — | (1) | (8) | (1) | (8)
– current service cost | — | — | (3) | (9) | (3) | (9)
– past service cost and gains/(losses) from settlements | — | — | 2 | 1 | 2 | 1
Net interest income/(cost) on the net defined benefit asset/(liability) | — | 12 | (3) | (11) | (3) | 1
Re-measurement effects recognised in other comprehensive income | — | 7 | (5) | (34) | (5) | (27)
– return on plan assets (excluding interest income) | — | 7 | — | — | — | 7
– actuarial gains/(losses) | — | — | (5) | (34) | (5) | (34)
– other changes | — | — | — | — | — | —
Benefits paid | — | — | 8 | 14 | 8 | 14
Other movements 3,4 | — | (89) | (5) | 92 | (5) | 3
At 31 Dec 2023 | 5 | 388 | (71) | (350) | (66) | 38

1 Other movements in Germany pension plans include EUR 10 million of the defined benefit obligations related to the planned sale of the private banking business
in Germany reclassified to liabilities of disposal group held for sale.
2 Other movements in France and Other plans includes EUR 3 million of the defined benefit obligations related to the planned sale of life insurance business in
France reclassified to liabilities of disposal group held for sale.
3 Other movements in France & Other plans includes EUR 3 million of defined benefit obligations of HSBC Private Bank (Luxembourg) S.A. transferred to HSBC
Continental Europe as part of the acquisition and EUR 2 million of the defined benefit obligations related to retail banking operations in France reclassified to
liabilities of disposal group held for sale.
4 Other movements in Germany pension plans include reclassification of LAZK plan to long term employee benefits.

Universal Registration Document and Annual Financial Report 2024 | 283

HSBC Germany does not expect to make contributions to the HSBC Germany Pension Plan during 2025. Benefits expected to be paid from the
plans to retirees over each of the next five years, and in aggregate for the five years thereafter, are as follows:

Benefits expected to be paid from plans
| 2025 | 2026 | 2027 | 2028 | 2029 | 2030–2034
| €m | €m | €m | €m | €m | €m
France 1 | 8 | 6 | 5 | 5 | 5 | 23
Germany 2 | 16 | 13 | 14 | 14 | 15 | 83

1 The duration of the defined benefit obligation is 9 years for the principal plan under the disclosure assumptions adopted (2023: 9 years) and 9 years for all other
plans combined (2023: 9 years). The maturity of commitments remains at 11 years in 2024, as was the case in 2023.
2 The duration of the defined benefit obligation is 13.6 years for the HSBC Germany Pension Plan under the disclosure assumptions adopted (2023: 14.2).

Fair value of plan assets by asset classes
| At 31 Dec 2024 | At 31 Dec 2023
| Fair value | Quoted market price in active market | No quoted market price in active market | Thereof HSBC | Fair value | Quoted market price in active market | No quoted market price in active market | Thereof HSBC
| €m | €m | €m | €m | €m | €m | €m | €m
France and Other plans |  |  |  |  |  |  |  |
Fair value of plan assets | 4 | 4 | — | — | 5 | 5 | — | —
– equities | — | — | — | — | — | — | — | —
– bonds fixed income | 4 | 4 | — | — | 4 | 4 | — | —
– bonds indexed linked | — | — | — | — | — | — | — | —
– other | — | — | — | — | 1 | 1 | — | —
Germany |  |  |  |  |  |  |  |
Fair value of plan assets | 395 | 379 | 16 | — | 388 | 358 | 30 | —
– equities | 3 | 3 | — | — | 3 | 3 | — | —
– bonds fixed income | 258 | 258 | — | — | 225 | 225 | — | —
– bonds indexed linked | 8 | 8 | — | — | 8 | 8 | — | —
– other | 126 | 110 | 16 | — | 152 | 123 | 30 | —

Post-employment defined benefit plans’ principal actuarial assumptions
HSBC Continental Europe determines discount rates to be applied to its obligations in consultation with the plans' local actuaries, based upon
the current average yields of high quality (AA rated or equivalent) debt instruments, with maturities consistent with that of the defined benefit
obligations.

Key actuarial assumptions
| France | Germany
| Discount rate | Inflation rate | Rate of increase for pensions 1 | Rate of pay increase | Discount rate | Inflation rate | Rate of increase for pensions | Rate of pay increase
| % | % | % | % | % | % | % | %
At 31 Dec 2024 | 3.25 | 2.00 | 2.00 | 2.92 | 3.41 | 2.25 | 2.25 | 2.25
At 31 Dec 2023 | 3.10 | 2.00 | 2.00 | 2.95 | 3.17 | 2.25 | 2.25 | 2.25

1 In accordance with the social security law, the legal pensions growth rate will be revised to 2 per cent from January 2025.

284 | Universal Registration Document and Annual Financial Report 2024

Notes on the consolidated financial statements

Mortality tables and average life expectancy at age 60
| Mortality table | Life expectancy at age 60 for a male member currently: | Life expectancy at age 60 for a female member currently:
France | Aged 60 | Aged 60
At 31 Dec 2024 | TV–TD 2018 2020 | 23.14 | 27.58
At 31 Dec 2023 | TV–TD 2017 2019 | 23.29 | 27.67
Mortality tables and average life expectancy at age 60
| Mortality table | Life expectancy at age 60 for a male member currently: | Life expectancy at age 60 for a female member currently:
Germany | Aged 60 | Aged 40 | Aged 60 | Aged 40
At 31 Dec 2024 | RT 2018 G 1 | 25.5 | 28.5 | 29.2 | 31.5
At 31 Dec 2023 | RT 2018 G 1 | 25.4 | 28.3 | 29.1 | 31.3

1 Heubeck tables – RT 2018G – are generally accepted and used mortality tables for occupational pension plans in Germany taking into account future mortality
improvements and lighter mortality for higher-paid pensioners.
Actuarial assumption sensitivities
The following table shows the effect of changes in actuarial assumptions on the principal plans. The discount rate is sensitive to changes in
market conditions arising during the reporting period. The mortality rates used are sensitive to experience from the plan member profile.

| France | Germany
| Financial impact of increase | Financial impact of decrease | Financial impact of increase | Financial impact of decrease
| 2024 | 2023 | 2024 | 2023 | 2024 | 2023 | 2024 | 2023
| €m | €m | €m | €m | €m | €m | €m | €m
Discount rate – increase/decrease of 0.25% | (2) | (2) | 2 | 2 | (9) | (10) | 10 | 10
Inflation rate – increase/decrease of 0.25% | 1 | 1 | (1) | (1) | 7 | 8 | (8) | (7)
Pension payments and deferred pensions – increase/decrease of 0.25% | 1 | 1 | (1) | (1) | 7 | 7 | (7) | (7)
Pay – increase/decrease of 0.25% | 1 | 1 | (1) | (1) | 1 | 2 | (1) | (1)
Change in mortality – increase of 1 year | 1 | 1 | (1) | (1) | 10 | 11 | N/A | N/A

7 Auditors’ remuneration

| PricewaterhouseCoopers Audit France 1 | BDO Paris 1
| Amount (excluding VAT) |  | Amount (excluding VAT) |
| €k | % | €k | %
Fees for account certifications | 3,984 | 79 | 652 | 87
Fees related to the Corporate and Sustainability Report Directive (‘CSRD’) | 580 | 12 | — | —
Fees for other services provided to HSBC Continental Europe | 471 | 9 | 95 | 13
Year ended 31 Dec 2024 | 5,035 | 100 | 747 | 100
Fees for account certifications | 4,899 | 89 | 692 | 92
Fees related to the Corporate and Sustainability Report Directive (‘CSRD’) | — | — | — | —
Fees for other services provided to HSBC Continental Europe | 628 | 11 | 59 | 8
Year ended 31 Dec 2023 | 5,527 | 100 | 751 | 100

1 This Note is prepared in compliance with ANC regulation 2016-08, 2016-09, 2016-10 and 2016-11 and includes only the fees paid to PricewaterhouseCoopers
Audit France and BDO Paris.
Account certifications as of 31 December 2024 for PricewaterhouseCoopers Audit France and BDO Paris mainly concern statutory audit, legal,
or regulatory services. Services other than the account certification concern services related to internal control procedures (i.e. report ISAE
3402) for PricewaterhouseCoopers Audit France.

Universal Registration Document and Annual Financial Report 2024 | 285

8 Tax

Tax expense (continuing operations)
| 2024 | 2023 1
| €m | €m
Current tax | 179 | 257
Deferred tax | 227 | 89
– current year deferred tax | 212 | 91
– adjustment in respect of prior years deferred tax | 15 | (2)
– effect of change in tax rate on deferred tax |  | —
Year ended 31 Dec | 406 | 346

1 In compliance with IFRS 5 standards, the comparatives have been represented to reflect discontinued operations related to the planned sale of the life insurance
business in France. This also includes discontinued operations related to the sale of the retail banking operations in France.
HSBC Continental Europe's profits are taxed at different rates depending on the country in which the profits arise. The key applicable corporate
income tax rate is France and for fiscal year 2024 the rate is 25 per cent. The social contribution on profit (CSB at 3.3 per cent of the corporate
income tax) is maintained and is added to the corporate income tax. Consequently, the applicable tax rate for fiscal year 2024 for French entities
is 25.83 per cent (2023: 25.83 per cent).
The final effective tax rate varies depending on the contribution from entities outside of France, notably Germany which has an income tax rate
for fiscal year 2024 of 31.4 per cent and other European branches.
Tax risks
Following a tax audit in 2018 on fiscal years 2015 to 2018, HSBC Leasing France ("HLF") and its SPVs have been reassessed on the tax
treatment of provisions related to aircraft leasing transactions. Since then HLF continued to dispute these reassessments but French Tax
Authorities have rejected the claims filed by HSBC. Consequently, litigations before the court (Tribunal Administratif) have been initiated by
HSBC, notably during FY2024, for FYs 16 to 18 regarding proposal of reassessments of these SPVs.
Analysis of overall tax charge

Reconciliation of tax charge (credit) (continuing operations)
| 2024 | 2023 1
| Continuing tax charges (credit) | Continuing tax charges (credit)
| €m | % | €m | %
Profit/(loss) before tax | 930 |  | 1,326 |
Tax expense |  |  |  |
Taxation at French corporate tax rate | 240 | 25.7 | 342 | 25.8
Impact of differently taxed overseas profits in overseas locations | 5 | 0.4 | 1 | 0.1
Items impacting tax charge: |  |  |  |
– Permanent disallowables | 2 | 0.2 | 2 | 0.2
– Local taxes and overseas withholding taxes | 4 | 0.4 | 20 | 1.5
– Changes in tax rates | — | — | — | —
– Non-taxable income and gains subject to tax at a lower rate | (1) | — | (1) | (0.1)
– Adjustment in respect of prior years | (3) | (0.3) | 4 | 0.3
– Non-recognition of current period generated deferred tax on losses and credits | 27 | 2.9 | — | —
– Derecognition of recognised deferred tax on losses and credits | 150 | 16.1 | — | —
– Other exceptional adjustments 2 | 5 | 0.5 | — | —
– Other items 3 | (23) | (2.5) | (22) | (1.7)
Year ended 31 Dec | 406 | 43.7 | 346 | 26.1

1 In compliance with IFRS 5 standards, the comparatives have been represented to reflect discontinued operations related to the planned sale of the life insurance
business in France. This also includes discontinued operations related to the sale of the retail banking operations in France.
2 Represents the net non-deductible element on the loss on sale of the Retail Banking business and disposal of HSBC Epargne Entreprise business.
3 Majorly driven by AT1 dividends which are deductible in the French Tax regime in 202 4 similar to the year 2023.
The closing effective tax rate for 2024 of 43.7 per cent (2023: 26.1 per cent, adjusted to exclude HSBC insurance business) is higher than the
French current tax rate of 25.8 per cent (2023: 25.8 per cent). The higher effective tax rate largely reflects the impact of the EUR 150m write-
down of the Deferred Tax assets on France Tax Group Losses.

286 | Universal Registration Document and Annual Financial Report 2024

Notes on the consolidated financial statements

Movement of deferred tax assets and liabilities
| Retirement benefits | Loans impairment allowances | Financial assets at FVOCI | Goodwill and intangibles | Tax losses | Expenses /loss provisions | Other | Total
| €m | €m | €m | €m | €m | €m | €m | €m
Assets | 46 | 63 | 325 | 5 | 660 | 91 |  | 1,190
Liabilities | — | — | — | — | — | — | (238) | (238)
At 1 Jan 2024 | 46 | 63 | 325 | 5 | 660 | 91 | (238) | 952
Income statement (continuing operations) | (6) | (17) | — | (4) | (159) | (24) | (17) | (227)
Income statement (discontinued operations) |  |  | — |  |  |  | 12 | 12
Other comprehensive income (continuing operations) | (2) |  | (4) |  |  |  | (25) | (31)
Other comprehensive income (discontinued operations) | — |  | (47) |  |  |  | 46 | (1)
Equity |  |  |  |  |  | (26) |  | (26)
Foreign exchange and other adjustments 1 | (1) | 1 | (219) | 1 |  | (2) | 188 | (32)
At 31 Dec 2024 | 37 | 47 | 55 | 2 | 501 | 39 | (34) | 647
Assets | 37 | 47 | 55 | 2 | 501 | 39 |  | 681
Liabilities | — | — | — | — | — | — | (34) | (34)
Assets | 37 | 58 | 451 | 12 | 677 | 115 | — | 1,350
Liabilities | — | — | — | — | — | — | (250) | (250)
At 1 Jan 2023 2 | 37 | 58 | 451 | 12 | 677 | 115 | (250) | 1,100
Income statement (continuing operations) |  | 3 | — | (6) | (17) | 1 | (70) | (89)
Income statement (discontinued operations) | — | (2) | (1) | — | — | (27) | 21 | (9)
Other comprehensive income (continuing operations) | 10 | — | (8) | — | — | — | (42) | (40)
Other comprehensive income (discontinued operations) | (1) | — | (127) | — | — | — | 118 | (10)
Equity | — | — | — | — | — | — | — | —
Foreign exchange and other adjustments |  | 4 | 10 | (1) | — | 2 | (15) | —
At 31 Dec 2023 2 | 46 | 63 | 325 | 5 | 660 | 91 | (238) | 952
Assets 2 | 46 | 63 | 325 | 5 | 660 | 91 | — | 1,190
Liabilities 2 | — | — | — | — | — | — | (238) | (238)

1 The movement in this line reflects the reclassification as Held For Sale of the life insurance business in France.
2 In compliance with IFRS 5 standards, the comparatives have been represented to reflect discontinued operations related to the planned sale of the life insurance
business in France. This also includes discontinued operations related to the sale of the retail banking operations in France.
French tax group
At 31 December 2024, HSBC Continental Europe had a net DTA of EUR 647 million (2023: EUR 952 million) of which the French tax group
reported a net deferred tax asset of EUR 536 million (2023: EUR 798 million) including EUR 501 million (2023: EUR 652 million) in respect of tax
losses to be carried forward.
During 2024, management reassessed the likely availability of future taxable profits against which to recover the deferred tax assets of the
French tax group, taking into consideration the reversal of existing taxable temporary differences, the drivers of past business performance, and
management’s latest forecasts of future business performance, taking into account forecasting uncertainty. The assessment concluded the
write down of the DTA on tax losses of EUR 150 million during the year. These tax losses have no expiry date and the recognised tax losses are
forecast to be recovered in 10-13 years.
Unrecognised deferred tax
The Group has unrecognised deferred tax of EUR 177 million tax value (EUR 685 million gross value) at 31 December 2024 (2023: nil).

Universal Registration Document and Annual Financial Report 2024 | 287

CVAE
Since 2014, the CVAE contribution (cotisation sur la valeur ajoutée des entreprises) is included in ‘Income Tax’. In 2024, the current tax charge is
EUR 4 million (2023: EUR 9million) and the deferred tax charge is EUR 1 million (2023: deferred tax credit of EUR 1 million). Announced in the
2024 France Finance Act the CVAE rate will be reduced each year with full cancellation expected in 2030.

Tax expense (discontinued operations)
| 2024 | 2023 1
| Tax charge/(credit) on loss on discontinuance | Tax charge/(credit) on ordinary activities | Tax charge/(credit) on loss on discontinuance | Tax charge/(credit) on ordinary activities
| €m | €m | €m | €m
Profit/(loss) before tax | (19) | 119 | 143 | (210)
Current Tax | — | 33 | 12 | (17)
Deferred Tax charge/(credit) | (5) | (7) | 25 | (16)
Total tax charge | (5) | 26 | 37 | (33)

1 In compliance with IFRS 5 standards, the comparatives have been represented to reflect discontinued operations related to the planned sale of the life insurance
business in France. This also includes discontinued operations related to the sale of the retail banking operations in France.
HSBC Continental Europe French Retail operations is a separate major line of business and is treated as a CGU (cash generating unit) for
reporting and management perspective. The sale of retail operations meets the criteria of discontinued operations under IFRS 5 and,
accordingly, the tax expense associated with the loss on discontinuance and the ordinary activities of the discontinued operations are shown
above.

9 Dividends

Dividends to shareholders of the parent company
| 2024 | 2023
| Per share | Total | Per share | Total
| € | €m | € | €m
Dividends paid on ordinary shares |  |  |  |
In respect of previous year: |  |  |  |
– exceptional dividend | — | — | — | —
– dividend paid | — | — | — | —
In respect of current year: |  |  |  |
– first interim dividend | — | — | — | —
Total dividend paid to shareholders | — | — | — | —
Total coupons on capital instruments classified as equity |  | 83 |  | 78

Dividends related to 2024
The Board of Directors meeting held on 18 February 2025 proposed to the Ordinary General Meeting called on 24 March 2025, not to distribute
a dividend in respect of the year 2024.
Dividends related to 2023
On 25 March 2024, the Ordinary General Meeting approved the recommendation made by the Board of Directors, on 20 February 2024, not to
distribute a dividend in respect of the year 2023.

Dividends per share
| 2024 | 2023
| € | €
Dividends per share 1 | — | —

1 Coupons paid on other equity instruments are not included in the calculation of the dividends per share.

288 | Universal Registration Document and Annual Financial Report 2024

Notes on the consolidated financial statements

Other equity instruments

Total coupons on capital instruments classified as equity
|  | 2024 | 2023
| First call date | €m | €m
Perpetual subordinated capital instruments |  |  |
– EUR 200 million issued at 5.73% | May 2022 | 12 | 12
– EUR 300 million issued at 6.45%1 | March 2023 | 20 | 16
– EUR 250 million issued at 3.46%2 | December 2024 | 9 | 9
– EUR 250 million issued at 5.625%2 | December 2029 | — | —
– EUR 250 million issued at 3M Euribor+ 4.06% | March 2027 | 19 | 18
– EUR 235 million issued at 5Y Euro Swap Rate + 5.55% | January 2022 | 13 | 13
– EUR 200 million issued at 5.039% | January 2025 | 10 | 10
Total |  | 83 | 78

1 On 28 March 2023, the interest on the EUR 300 million perpetual subordinated security issued on 28 March 2018 at 4.00 per cent was revised to 6.45 per cent.
The instrument is callable on any date after the first call date.
2 On 18 December 2024, EUR 250 million instrument was redeemed and replaced with the instrument of the same nominal and the interest rate of 5.625%.

10 Earnings per share
Basic earnings per ordinary share were calculated by dividing the basic earnings of EUR 568 million by the weighted average number of ordinary
shares outstanding during the year, excluding own shares held, of 214,212,855 (full year 2023: earnings of EUR 883 million and 212,466,555
weighted average number of shares).
Diluted earnings per share were calculated by dividing the basic earnings, which require no adjustment for the dilutive of potential ordinary
shares (including share options outstanding not yet exercised), by the weighted average number of ordinary shares outstanding, excluding own
shares held, plus the weighted average number of ordinary shares that would be issued on ordinary conversion of all the potential dilutive
ordinary shares of 214,212,855 (full year 2023: 212,466,555 shares). At 31 December 2024, no potentially dilutive ordinary share had been
issued.

Basic and diluted earnings per share
| 2024 | 2023 1
| Profit/ (loss) | Number of shares | Per share | Profit/ (loss) | Number of shares | Per share
| €m | (million) | € | €m | (million) | €
Basic earnings per share | 568 | 214 | 2.65 | 883 | 212 | 4.17
Diluted earnings per share | 568 | 214 | 2.65 | 883 | 212 | 4.17
– Basic/Diluted earnings per ordinary share in respect of continuing operations | 489 | 214 | 2.28 | 954 | 212 | 4.50
– Basic/Diluted earnings per ordinary share in respect of discontinued operations | 79 | 214 | 0.37 | (71) | 212 | (0.33)

1 In compliance with IFRS 5 standards, the comparatives have been represented to reflect discontinued operations related to the planned sale of the life insurance
business in France. This also includes discontinued operations related to the sale of the retail banking operations in France.

11 Trading assets

|  | 2024 | 2023
|  | €m | €m
Treasury and other eligible bills |  | 1,231 | 524
Debt securities |  | 14,818 | 13,419
Equity securities |  | 6,297 | 2,809
Trading securities |  | 22,346 | 16,752
Loans and advances to banks |  | 184 | 99
Loans and advances to customers |  | 323 | 398
Year ended 31 Dec |  | 22,853 | 17,249

Universal Registration Document and Annual Financial Report 2024 | 289

12 Fair values of financial instruments carried at fair value
Control framework
Fair values are subject to a control framework designed to ensure that they are either determined, or validated, by a function independent of the
risk taker.
For all financial instruments where fair values are determined by reference to externally quoted prices or observable pricing inputs to models,
independent price determination or validation is utilised. In inactive markets, we source alternative market information to validate the financial
instrument’s fair value, with greater weight given to information that is considered to be more relevant and reliable. The factors that are
considered in this regard are, inter alia:
– the extent to which prices may be expected to represent genuine traded or tradeable prices;
– the degree of similarity between financial instruments;
– the degree of consistency between different sources;
– the process followed by the pricing provider to derive the data;
– the elapsed time between the date to which the market data relates and the balance sheet date; and
– the manner in which the data was sourced.
For fair values determined using valuation models, the control framework may include, as applicable, development or validation by independent
support function of: (i) the logic within valuation models; (ii) the inputs to these models; (iii) any adjustments required outside the valuation
models; and (iv) where possible, model outputs.
Valuation models are subject to a process of due diligence and calibration before becoming operational and are calibrated against external
market data on an ongoing basis.
Financial liabilities measured at fair value
In certain circumstances, HSBC Continental Europe records its own debt in issue at fair value, based on quoted prices in an active market for
the specific instrument. When quoted market prices are unavailable, the own debt in issue is valued using valuation techniques, the inputs for
which are based either on quoted prices in an inactive market for the instrument or are estimated by comparison with quoted prices in an active
market for similar instruments. In both cases, the fair value includes the effect of applying the credit spread that is appropriate to the HSBC
Continental Europe's liabilities.
Structured notes issued and certain other hybrid instruments are included within trading liabilities and are measured at fair value.The spread
applied to these instruments is derived from the spreads at which HSBC Continental Europe issues structured notes.
Fair value hierarchy
Fair values of financial assets and liabilities are determined according to the following hierarchy:
– Level 1 – Valuation technique using quoted market price: financial instruments with quoted prices for identical instruments in active markets
that HSBC Continental Europe can access at the measurement date.
– Level 2 – Valuation technique using observable inputs: financial instruments with quoted prices for similar instruments in active markets or
quoted prices for identical or similar instruments in inactive markets and financial instruments valued using models where all significant
inputs are observable.
– Level 3 – Valuation technique with significant unobservable inputs: financial instruments valued using valuation techniques where one or
more significant inputs are unobservable.

290 | Universal Registration Document and Annual Financial Report 2024

Notes on the consolidated financial statements

Breakdown of financial instruments recorded at fair value by level of fair value
measurement

Financial instruments carried at fair value and bases of valuation
| 2024 | 2023
| Level 1 – quoted market price | Level 2 – using observ- able inputs | Level 3 – with significant non- observable inputs | Total | Level 1 – quoted market price | Level 2 – using observ- able inputs | Level 3 – with significant non- observable inputs | Total
At 31 Dec | €m | €m | €m | €m | €m | €m | €m | €m
Assets |  |  |  |  |  |  |  |
Trading assets | 21,531 | 1,156 | 166 | 22,853 | 16,040 | 969 | 240 | 17,249
Financial assets designated and otherwise mandatorily measured at fair value through profit or loss | 719 | 592 | 252 | 1,563 | 4,269 | 7,149 | 2,172 | 13,590
Derivatives | 595 | 42,405 | 251 | 43,251 | 341 | 45,003 | 178 | 45,522
Financial investments | 11,918 | 4,396 | 1,088 | 17,402 | 10,733 | 9,331 | 797 | 20,861
Assets held for sale 1 | 5,415 | 13,870 | 2,968 | 22,253 | — | — | 69 | 69
Liabilities |  |  |  |  |  |  |  |
Trading liabilities | 16,200 | 280 | — | 16,480 | 18,944 | 933 | — | 19,877
Financial liabilities designated at fair value | 167 | 8,252 | 1,487 | 9,906 | 155 | 8,018 | 1,523 | 9,696
Derivatives | 714 | 40,862 | 281 | 41,857 | 531 | 42,843 | 256 | 43,630
Liabilities of disposal groups held for sale 1 | — | 125 | — | 125 | — | 2,145 | — | 2,145

1 The 2024 assets and liabilities held for sale include disposal group related to the planned sale of the life insurance business in France and the private banking
business in Germany. The 2023 assets and liabilities held for sale include disposal group related to the sale of retail banking operations in France.

Transfers between Level 1 and Level 2 fair values
| Assets | Liabilities
| Financial Investments | Trading assets | Designated and otherwise mandatorily measured at fair value through profit or loss | Derivatives | Trading Liabilities | Designated at fair value | Derivatives
| €m | €m | €m | €m | €m | €m | €m
At 31 Dec 2024 |  |  |  |  |  |  |
Transfers from Level 1 to Level 2 | 12 | 4 | — | — | 23 | — | —
Transfers from Level 2 to Level 1 | 37 | 2 | — | — | 35 | — | —
At 31 Dec 2023 |  |  |  |  |  |  |
Transfers from Level 1 to Level 2 | 29 | 2 | — | — | — | — | —
Transfers from Level 2 to Level 1 | 140 | 98 | — | — | 40 | — | —

.
Transfers between levels of the fair value hierarchy are deemed to occur at the end of each quarterly reporting period. Transfers into and out of
levels of the fair value hierarchy are normally attributable to observability of valuation inputs and price transparency.
Fair value adjustments
Fair value adjustments are adopted when we determine there are additional factors considered by market participants that are not incorporated
within the valuation model.
Movements in the level of fair value adjustments do not necessarily result in the recognition of profits or losses within the income statement,
such as when models are enhanced and fair value adjustments may no longer be required.
Bid-offer
IFRS 13 'Fair value measurement' requires use of the price within the bid-offer spread that is most representative of fair value. Valuation models
will typically generate mid-market values. The bid-offer adjustment reflects the extent to which bid-offer costs would be incurred if substantially
all residual net portfolio market risks were closed using available hedging instruments or by disposing of or unwinding the position.

Universal Registration Document and Annual Financial Report 2024 | 291

Uncertainty
Certain model inputs may be less readily determinable from market data, and/or the choice of model itself may be more subjective. In these
circumstances, an adjustment may be necessary to reflect the likelihood that market participants would adopt more conservative values for
uncertain parameters and/or model assumptions than those used in the valuation model.
Credit Valuation adjustment ('CVA')
The CVA is an adjustment to the valuation of over-the-counter ('OTC') derivative contracts to reflect the possibility that the counterparty may
default and that HSBC Continental Europe may not receive the full market value of the transactions.
Debit valuation adjustment ('DVA')
The DVA is an adjustment to the valuation of OTC derivative contracts to reflect the possibility that HSBC Continental Europe may default, and
that it may not pay the full market value of the transactions.
Funding fair value adjustment ('FFVA')
The FFVA is calculated by applying future market funding spreads to the expected future funding exposure of any uncollateralised component of
the OTC derivative portfolio. The expected future funding exposure is calculated by a simulation methodology, where available, and is adjusted
for events that may terminate the exposure, such as the default of HSBC Continental Europe or the counterparty. The FFVA and DVA are
calculated independently.
Model limitation
Models used for portfolio valuation purposes may be based upon a simplifying set of assumptions that do not capture all current and future
material market characteristics. In these circumstances, model limitation adjustments are adopted.
Inception profit (Day 1 P&L reserves)
Inception profit adjustments are adopted by HSBC Continental Europe when the fair value estimated by a valuation model is based on one or
more significant unobservable inputs.
Fair value valuation bases

Financial instruments measured at fair value using a valuation technique with significant unobservable inputs – Level 3
| Assets | Liabilities
| Financial Invest- ments | Trading assets | Designated and otherwise mandatorily measured at fair value through profit or loss | Derivatives | Total Assets | Trading liabilities | Designated at fair value | Derivatives | Total liabilities
| €m | €m | €m | €m | €m | €m | €m | €m | €m
At 31 Dec 2024 |  |  |  |  |  |  |  |  |
Private equity including strategic investments | 16 | 1 | 236 | — | 253 | — | 1 | — | 1
Structured notes | — | — | — | — | — | — | 1,483 | — | 1,483
Derivatives | — | — | — | 251 | 251 | — | — | 281 | 281
Other portfolios | 1,072 | 165 | 16 | — | 1,253 | — | 3 | — | 3
Total | 1,088 | 166 | 252 | 251 | 1,757 | — | 1,487 | 281 | 1,768
At 31 Dec 2023 |  |  |  |  |  |  |  |  |
Private equity including strategic investments | 13 | 1 | 1,918 | — | 1,932 | — | 523 | — | 523
Structured notes | — | — | — | — | — | — | 984 | — | 984
Derivatives | — | — | — | 178 | 178 | — | — | 256 | 256
Other portfolios | 784 | 239 | 254 | — | 1,277 | — | 16 | — | 16
Total | 797 | 240 | 2,172 | 178 | 3,387 | — | 1,523 | 256 | 1,779

Private equity including strategic investments
The investment’s fair value is estimated: on the basis of an analysis of the investee’s financial position and results, risk profile, prospects and
other factors; by reference to market valuations for similar entities quoted in an active market; the price at which similar companies have
changed ownership; or from published net asset values (‘NAVs’) received. If necessary, adjustments are made to the NAV of funds to obtain the
best estimate of fair value.
Structured notes
The fair value of Level 3 structured notes is derived from the fair value of the underlying debt security, and the fair value of the embedded
derivative is determined as described in the section below on derivatives. These structured notes comprise principally equity-linked notes and
rate-linked notes, issued by HSBC Continental Europe, which provide the counterparty with a return linked to the performance of equity
securities and other portfolios. Examples of the unobservable parameters include long-dated equity volatilities and correlations between equity
prices, and interest and foreign exchange rates.

292 | Universal Registration Document and Annual Financial Report 2024

Notes on the consolidated financial statements

Derivatives
Over-the-counter (i.e. non-exchange traded) derivatives valuation models calculate the present value of expected future cash flows, based upon
‘no-arbitrage’ principles. For many vanilla derivative products, such as interest rate swaps and European options, the modelling approaches used
are standard across the industry. For more complex derivative products, there may be some divergence in market practice. Inputs to valuation
models are determined from observable market data wherever possible, including prices available from exchanges, dealers, brokers or providers
of consensus pricing. Certain inputs may not be observable in the market directly, but can be determined from observable prices via model
calibration procedures. Finally, some inputs are not observable, but can generally be estimated from historic data or other sources.
Reconciliation of fair value measurements in Level 3 of the fair value hierarchy

Movement in Level 3 financial instruments
| Assets | Liabilities
| Financial Investments | Trading assets | Designated and otherwise mandatorily measured at fair value through profit or loss | Derivatives | Trading liabilities | Designaed at fair value | Derivatives
| €m | €m | €m | €m | €m | €m | €m
At 1 Jan 2024 | 797 | 240 | 2,172 | 178 | — | 1,523 | 256
Total gains/(losses) on assets and total (gains)/ losses on liabilities recognised in profit or loss | — | (2) | (15) | 161 | — | 131 | 156
– net income from financial instruments held for trading or managed on a fair value basis 1 | — | (2) | — | 161 | — | — | 156
– net income from assets and liabilities of insurance businesses, including related derivatives, measured at fair value through profit or loss | — | — | (41) | — | — | — | —
– changes in fair value of other financial instruments mandatorily measured at fair value through profit or loss | — | — | 26 | — | — | 131 | —
– gains less losses from financial investments at fair value through other comprehensive income | — | — | — | — | — | — | —
– expected credit loss charges and other credit impairment charges | — | — | — | — | — | — | —
– fair value gains transferred to the income statement on disposal | — | — | — | — | — | — | —
– exchange differences | — | — | — | — | — | — | —
Total gains/(losses) recognised in other comprehensive income | (10) | — | — | — | — | — | —
– financial investments: fair value gains/(losses) | (10) | — | — | — | — | — | —
– cash flow hedges: fair value gains/(losses) | — | — | — | — | — | — | —
– fair value gains transferred to the income statement on disposal | — | — | — | — | — | — | —
– exchange differences | — | — | — | — | — | — | —
Purchases | 1,222 | 11 | 339 | — | — | — | —
New issuances | — | — | — | — | — | 771 | —
Sales | (41) | (29) | (30) | — | — | — | —
Settlements 1 | (732) | (11) | (2,242) | (98) | — | (604) | (151)
Transfer out | (148) | (44) | (7) | (81) | — | (754) | (74)
Transfer in | — | 1 | 35 | 91 | — | 420 | 94
At 31 Dec 2024 | 1,088 | 166 | 252 | 251 | — | 1,487 | 281
Unrealised gains/(losses) recognised in profit or loss relating to assets and liabilities held at 31 Dec 2024 | — | (2) | 27 | 112 | — | (14) | (94)
– trading income/(expense) excluding net interest income | — | (2) | — | 112 | — | — | (94)
– net income/(expense) from other financial instruments designated at fair value | — | — | 27 | — | — | (14) | —

Universal Registration Document and Annual Financial Report 2024 | 293

Movement in Level 3 financial instruments (continued)
| Assets | Liabilities
| Financial Investments | Trading assets | Designated and otherwise mandatorily measured at fair value through profit or loss | Derivatives | Trading liabilities | Designa-ted at fair value | Derivatives
| €m | €m | €m | €m | €m | €m | €m
At 1 Jan 2023 | 1,262 | 654 | 2,242 | 194 | 14 | 1,484 | 377
Total gains/(losses) on assets and total (gains)/ losses on liabilities recognised in profit or loss | (3) | (3) | (84) | 275 | 4 | 54 | 166
– net income from financial instruments held for trading or managed on a fair value basis | — | (3) | — | 275 | 4 | — | 166
– changes in fair value of other financial instruments mandatorily measured at fair value through profit or loss | — | — | (84) | — | — | 54 | —
– gains less losses from financial investments at fair value through other comprehensive income | (3) | — | — | — | — | — | —
– expected credit loss charges and other credit impairment charges | — | — | — | — | — | — | —
– fair value gains transferred to the income statement on disposal | — | — | — | — | — | — | —
– exchange differences | — | — | — | — | — | — | —
Total gains/(losses) recognised in other comprehensive income | 32 | — | — | — | — | — | —
– financial investments: fair value gains/(losses) | 32 | — | — | — | — | — | —
– cash flow hedges: fair value gains/(losses) | — | — | — | — | — | — | —
– fair value gains transferred to the income statement on disposal | — | — | — | — | — | — | —
– exchange differences | — | — | — | — | — | — | —
Purchases | 59 | 87 | 78 | — | — | — | —
New issuances | — | 2 | — | — | 2 | 528 | —
Sales | (183) | (456) | (25) | — | — | (2) | —
Settlements 2 | (25) | (8) | — | (316) | (20) | (319) | (264)
Transfer out 3 | (473) | (82) | (39) | (30) | — | (243) | (55)
Transfer in | 128 | 46 | — | 55 | — | 21 | 32
At 31 Dec 2023 | 797 | 240 | 2,172 | 178 | — | 1,523 | 256
Unrealised gains/(losses) recognised in profit or loss relating to assets and liabilities held at 31 Dec 2023 | — | (1) | (85) | 54 | — | (43) | (15)
– trading income/(expense) excluding net interest income | — | (1) | — | 54 | — | — | (15)
– net income/(expense) from other financial instruments designated at fair value | — | — | (85) | — | — | (43) | —
– expected credit loss charges and other credit risk charges | — | — | — | — | — | — | —

1"Settlements" in 2024 includes re-classification to held for sale of financial investments of EUR 486 million and financial assets designated and otherwise
mandatorily measured at fair value through profit or loss of EUR 2.5 billion, related to the planned sale of the life insurance business in France.
2"Settlements" in 2023 includes re-classification to held for sale of financial investments of EUR 25 million related to retail banking operations in France.
3 Transfer out' in 2023 includes re-classification from Level 3 to Level 2 of Financial Investments of EUR 376 million related to the review of levelling assessment
on some of Insurance business.

294 | Universal Registration Document and Annual Financial Report 2024

Notes on the consolidated financial statements

Effects of changes in significant unobservable assumptions to reasonably possible alternatives

Sensitivity of Level 3 fair values to reasonably possible alternative assumptions
| At 31 Dec 2024 | At 31 Dec 2023
| Reflected in profit or loss | Reflected in other comprehensive Income | Reflected in profit or loss | Reflected in other comprehensive Income
| Favourable changes | Unfavourable changes | Favourable changes | Unfavourable changes | Favourable changes | Unfavourable changes | Favourable changes | Unfavourable changes
| €m | €m | €m | €m | €m | €m | €m | €m
Derivatives/trading assets/ trading liabilities 1 | 11 | (11) | — | — | 6 | (6) | — | —
Financial assets and liabilities designated and otherwise mandatorily measured at fair value | 22 | (22) | — | — | 110 | (110) | — | —
Financial investments | — | — | 3 | (6) | — | — | 17 | (20)
Total | 33 | (33) | 3 | (6) | 116 | (116) | 17 | (20)

1 Derivatives, trading assets and trading liabilities are presented as one category to reflect the manner in which these financial instruments are
risk-managed.

Sensitivity of Level 3 fair values to reasonably possible alternative assumptions by instrument type
| Reflected in profit or loss | Reflected in OCI
| Favourable changes | Unfavourable changes | Favourable changes | Unfavourable changes
| €m | €m | €m | €m
At 31 Dec 2024 |  |  |  |
Private equity including strategic investments | 15 | (15) | 1 | (1)
Structured notes | 7 | (7) | — | —
Derivatives | 10 | (10) | — | —
Other portfolios | 1 | (1) | 2 | (5)
Total | 33 | (33) | 3 | (6)
At 31 Dec 2023 |  |  |  |
Private equity including strategic investments | 103 | (103) | 1 | (1)
Structured notes | 1 | (1) | — | —
Derivatives | 4 | (4) | — | —
Other portfolios | 8 | (8) | 16 | (19)
Total | 116 | (116) | 17 | (20)

The sensitivity analysis aims to measure a range of fair values consistent with the application of a 95 per cent confidence interval.
Methodologies take account of the nature of the valuation technique employed, as well as the availability and reliability of observable proxy and
historical data.
When the fair value of a financial instrument is affected by more than one unobservable assumption, the above table reflects the most
favourable or most unfavourable change from varying the assumptions individually.

Universal Registration Document and Annual Financial Report 2024 | 295

Key unobservable inputs to Level 3 financial instruments

Quantitative information about significant unobservable inputs in Level 3 valuations
| Fair value 1 |  |  | Full range of inputs
| Assets | Liabilities | Valuation technique | Key unobservable inputs | Lower | Higher
| €m | €m | % | %
At 31 Dec 2024 |  |  |  |  |  |
Private equity including strategic investments | 253 | 1 | Price - Net asset value | Current Value/Cost | — | 1
Asset-backed securities |  |  |  |  |  |
– CLO/CDO 2 | — | — | Market proxy | Bid quotes | — | —
– other ABSs | — | — |  |  |  |
Structured notes | — | 1,483 |  |  |  |
– equity-linked notes | — | 1,127 | Model – Option model | Equity volatility | 14 | 18
Model – Option model | Equity Correlation | 26 | 99
– FX-linked notes | — | — | Model – Option model | FX volatility | — | —
– other | — | 356 |  |  |  |
Derivatives | 251 | 281 |  |  |  |
Interest rate derivatives | 174 | 198 |  |  |  |
– securitisation swaps | 41 | 4 | Model – DCF 3 | Constant Prepayment Rate | 5 | 10
– long-dated swaptions | — | — | Model – Option model | IR volatility | — | —
– other | 133 | 194 |  |  |  |
Foreign exchange derivatives | 2 | 2 |  |  |  |
– foreign exchange options | 1 | 1 | Model – Option model | FX volatility | 4 | 14
– foreign exchange other | 1 | 1 |  |  |  |
Equity derivatives | 74 | 71 |  |  |  |
– long-dated single stock options | — | — | Model – Option model | Equity volatility | — | —
– other | 74 | 71 |  |  |  |
Credit derivatives | 1 | 10 |  |  |  |
– other | 1 | 10 |  |  |  |
Other portfolios | 1,253 | 3 |  |  |  |
– Bonds | 1,086 | — | Market proxy | Mid quotes |  |
– other | 167 | 3 |  |  |  |
Total Level 3 | 1,757 | 1,768 |  |  |  |
At 31 Dec 2023 |  |  |  |  |  |
Private equity including strategic investments | 1,932 | 523 | See notes below | See notes below | N/A | N/A
Asset-backed securities |  |  |  |  |  |
– CLO/CDO 2 | — | — | Market proxy | Bid quotes | — | —
– other ABSs | — | — |  |  |  |
Structured notes | — | 984 |  |  |  |
– equity-linked notes | — | 641 | Model – Option model | Equity volatility | 8 | 35
Model – Option model | Equity Correlation | 46 | 97
– FX-linked notes | — | — | Model – Option model | FX volatility | — | —
– other | — | 343 |  |  |  |
Derivatives | 178 | 256 |  |  |  |
Interest rate derivatives | 134 | 166 |  |  |  |
– securitisation swaps | 3 | 3 | Model – DCF 3 | Constant Prepayment Rate | 5 | 10
– long-dated swaptions | — | — | Model – Option model | IR volatility | — | —
– other | 131 | 163 |  |  |  |
Foreign exchange derivatives | 16 | 16 |  |  |  |
– foreign exchange options | 16 | 16 | Model – Option model | FX volatility | 4 | 17
Equity derivatives | 26 | 62 |  |  |  |
– long-dated single stock options | — | — | Model – Option model | Equity volatility | — | —
– other | 26 | 62 |  |  |  |
Credit derivatives | 2 | 12 |  |  |  |
– other | 2 | 12 |  |  |  |
Other portfolios | 1,277 | 16 |  |  |  |
Total Level 3 | 3,387 | 1,779 |  |  |  |

1 Including Level 3 balances with HSBC entities.
2 Collateralised Loan Obligation/Collateralised Debt Obligation.
3 Discounted cash flow.

296 | Universal Registration Document and Annual Financial Report 2024

Notes on the consolidated financial statements

Private equity including strategic investments
Given the bespoke nature of the analysis in respect of each holding, it is not practical to quote a range of key unobservable inputs. The key
unobservable inputs would be price and correlation. The valuation approach includes using a range of inputs that include company specific
financials, traded comparable companies multiples, published net asset values and qualitative assumptions, which are not directly comparable or
quantifiable.
Prepayment rates
Prepayment rates are a measure of the anticipated future speed at which a loan portfolio will be repaid in advance of the due date. They vary
according to the nature of the loan portfolio and expectations of future market conditions, and may be estimated using a variety of evidence,
such as prepayment rates implied from proxy observable security prices, current or historical prepayment rates and macroeconomic modelling.
Market proxy
Market proxy pricing may be used for an instrument for which specific market pricing is not available, but evidence is available in respect of
instruments that have some characteristics in common. In some cases it might be possible to identify a specific proxy, but more generally
evidence across a wider range of instruments will be used to understand the factors that influence current market pricing and the manner of
that influence.
Volatility
Volatility is a measure of the anticipated future variability of a market price. It varies by underlying reference market price, and by strike and
maturity of the option.
Certain volatilities, typically those of a longer-dated nature, are unobservable and estimated from observable data. The range of unobservable
volatilities reflects the wide variation in volatility inputs by reference market price. The core range is significantly narrower than the full range
because these examples with extreme volatilities occur relatively rarely within the HSBC Continental Europe portfolio.
Correlation
Correlation is a measure of the inter-relationship between two market prices, and is expressed as a number between minus one and one. It is
used to value more complex instruments where the payout is dependent upon more than one market price. There is a wide range of
instruments for which correlation is an input, and consequently a wide range of both same-asset correlations and cross-asset correlations is
used. In general, the range of same-asset correlations will be narrower than the range of cross-asset correlations.
Unobservable correlations may be estimated based upon a range of evidence, including consensus pricing services, HSBC Continental Europe
trade prices, proxy correlations and examination of historical price relationships. The range of unobservable correlations quoted in the table
reflects the wide variation in correlation inputs by market price pair.
Credit spread
Credit spread is the premium over a benchmark interest rate required by the market to accept lower credit quality. In a discounted cash flow
model, the credit spread increases the discount factors applied to future cash flows, thereby reducing the value of an asset. Credit spreads may
be implied from market prices and may not be observable in more illiquid markets.
Inter-relationships between key unobservable inputs
Key unobservable inputs to Level 3 financial instruments may not be independent of each other. As described above, market variables may be
correlated. This correlation typically reflects the manner in which different markets tend to react to macroeconomic or other events.
Furthermore, the effect of changing market variables on the HSBC Continental Europe portfolio will depend on its net risk position in respect of
each variable.

Universal Registration Document and Annual Financial Report 2024 | 297

13 Fair values of financial instruments not carried at fair value

Fair value of financial instruments not carried at fair value and basis of valuation
|  | Fair value
| Carrying amount | Level 1 – Quoted market price | Level 2 – Using observable inputs | Level 3 – Significant unobservable inputs | Total
| €m | €m | €m | €m | €m
At 31 Dec 2024 |  |  |  |  |
Assets |  |  |  |  |
Loans and advances to banks | 5,703 | — | 5,703 | — | 5,703
Loans and advances to customers 1 | 51,288 | — | — | 50,159 | 50,159
Reverse repurchase agreements – non-trading | 25,764 | — | 25,764 | — | 25,764
Financial investments – at amortised cost | 3,338 | 2,363 | 965 | — | 3,328
Liabilities |  |  |  |  |
Deposits by banks | 11,820 | — | 11,820 | — | 11,820
Customer accounts | 97,065 | — | 97,078 | — | 97,078
Repurchase agreements – non-trading | 12,344 | — | 12,344 | — | 12,344
Debt securities in issue | 15,257 | — | 15,367 | — | 15,367
Subordinated liabilities | 1,941 | — | 1,993 | — | 1,993
At 31 Dec 2023 |  |  |  |  |
Assets |  |  |  |  |
Loans and advances to banks | 5,816 | — | 5,816 | — | 5,816
Loans and advances to customers 1 | 50,127 | — | — | 49,547 | 49,547
Reverse repurchase agreements – non-trading | 24,490 | — | 24,490 | — | 24,490
Financial investments – at amortised cost | 1,747 | 884 | 860 | 3 | 1,747
Liabilities |  |  |  |  |
Deposits by banks 2 | 10,261 | — | 10,270 | — | 10,270
Customer accounts 2 | 93,890 | — | 94,036 | — | 94,036
Repurchase agreements – non-trading | 11,153 | — | 11,153 | — | 11,153
Debt securities in issue | 12,909 | — | 12,949 | — | 12,949
Subordinated liabilities | 1,951 | — | 1,986 | — | 1,986

1 Includes retained portfolio of French home and other loans following the sale of retail banking operations in France, with carrying amount of EUR 6.7 billion (EUR
7.1 billion as on 31 December 2023). We reclassified the portfolio to a hold-to-collect-and-sell business model from 1 January 2025 and will measure it
prospectively from the first quarter of 2025 at fair value through other comprehensive income. We expect to recognise an estimated EUR 1 billion fair value pre-
tax loss in other comprehensive income on the remeasurement of these financial instruments. 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.
2 Following a customer classification error, the comparatives as at 31 December 2023 have been represented by EUR 1.4 billion between ’Deposits by banks’ and
’Customer accounts’.
Other financial instruments not carried at fair value are typically short-term in nature and reprice to current market rates frequently. Accordingly,
their carrying amount is a reasonable approximation of fair value. This includes cash and balances at central banks which is measured at
amortised cost.
Valuation
The fair value measurement is HSBC Continental Europe's estimate of the price that would be received to sell an asset or paid to transfer a
liability in an orderly transaction between market participants at the measurement date. It does not reflect the economic benefits and costs
expected to flow from the instruments’ cash flows over their expected future lives. Other reporting entities may use different valuation
methodologies and assumptions in determining fair values for which no observable market prices are available.
Loans and advances to banks and customers
The fair value of loans and advances is based on observable market transactions, where available. In the absence of observable market
transactions, fair value is estimated using valuation models that incorporate a range of input assumptions. These assumptions may include value
estimates from third-party brokers which reflect over-the-counter trading activity; forward-looking discounted cash flow models using
assumptions which HSBC Continental Europe believes are consistent with those which would be used by market participants in valuing such
loans; and trading inputs from other market participants which includes observed primary and secondary trades.
Loans are grouped, as far as possible, into homogeneous groups and stratified by loans with similar characteristics to improve the accuracy of
estimated valuation outputs. The stratification of a loan book considers all material factors, including vintage, origination period, estimates of
future interest rates, prepayment speeds, delinquency rates, loan-to-value ratios, the quality of collateral, default probability, and internal credit
risk ratings.
The fair value of a loan reflects both loan impairments at the balance sheet date and estimates of market participants’ expectations of credit
losses over the life of the loans, and the fair value impact of repricing between origination and the balance sheet date.

298 | Universal Registration Document and Annual Financial Report 2024

Notes on the consolidated financial statements

Financial investments
The fair values of listed financial investments are determined using bid market prices. The fair values of unlisted financial investments are
determined using valuation techniques that incorporate the prices and future earnings streams of equivalent quoted securities.
Deposits by banks and customer accounts
Fair values are estimated using discounted cash flows, applying current rates offered for deposits of similar remaining maturities. The fair value
of a deposit repayable on demand is approximated by its carrying value.
Debt securities in issue and subordinated liabilities
Fair values are determined using quoted market prices at the balance sheet date where available, or by reference to quoted market prices for
similar instruments.
Repurchase and reverse repurchase agreements – non-trading
Fair values approximate carrying amounts as their balances are generally short dated.

14 Financial assets designated and otherwise mandatorily measured at fair
value through profit or loss

2024 | 2023 |
| Designated at fair value and otherwise mandatorily measured at fair value | Designated at fair value and otherwise mandatorily measured at fair value
| €m | €m
Securities | 1,039 | 13,590
– treasury and other eligible bills | 10 | —
– debt securities | 279 | 2,267
– equity securities | 750 | 11,323
Loans and advances to banks and customers | — | —
Other 1 | 524 | —
Year ended 31 Dec | 1,563 | 13,590

1 Includes default fund contribution.

15 Derivatives

Notional contract amounts and fair values of derivatives by product contract type held by HSBC Continental Europe
| Notional contract amount | Fair value – Assets | Fair value – Liabilities
| Trading | Hedging | Trading | Hedging | Total | Trading | Hedging | Total
| €m | €m | €m | €m | €m | €m | €m | €m
Foreign exchange | 1,307,338 | 261 | 15,988 | 9 | 15,997 | 15,794 | — | 15,794
Interest rate | 4,351,904 | 39,993 | 40,933 | 89 | 41,022 | 39,647 | 67 | 39,714
Equities | 135,643 | — | 948 | — | 948 | 1,025 | — | 1,025
Credit | 6,708 | — | 54 | — | 54 | 93 | — | 93
Commodity and other | 2,095 | — | 69 | — | 69 | 70 | — | 70
Gross total fair values | 5,803,688 | 40,254 | 57,992 | 98 | 58,090 | 56,629 | 67 | 56,696
Offset (Note 28) |  |  | (14,839) |  | (14,839) | (14,839) |  | (14,839)
At 31 Dec 2024 | 5,803,688 | 40,254 | 43,153 | 98 | 43,251 | 41,790 | 67 | 41,857
Foreign exchange | 1,053,255 | 9 | 11,683 | — | 11,683 | 12,015 | — | 12,015
Interest rate | 3,763,564 | 30,214 | 52,358 | 169 | 52,527 | 49,950 | 75 | 50,025
Equities | 84,491 | — | 620 | — | 620 | 874 | — | 874
Credit | 8,945 | — | 99 | — | 99 | 122 | — | 122
Commodity and other | 1,427 | — | 72 | — | 72 | 73 | — | 73
Gross total fair values | 4,911,682 | 30,223 | 64,832 | 169 | 65,001 | 63,034 | 75 | 63,109
Offset (Note 28) | — | — | (19,479) | — | (19,479) | (19,479) | — | (19,479)
At 31 Dec 2023 | 4,911,682 | 30,223 | 45,353 | 169 | 45,522 | 43,555 | 75 | 43,630

Universal Registration Document and Annual Financial Report 2024 | 299

The notional contract amounts of derivatives held for trading purposes and derivatives designated in hedge accounting relationships indicate the
nominal value of transactions outstanding at the balance sheet date; they do not represent amounts at risk.
Derivative asset and liability fair values decreased during 2024, driven mainly by yield curve movements and changes in foreign exchange rates.
Use of derivatives
HSBC Continental Europe undertakes derivatives activity for three primary purposes: to create risk management solutions for clients, to manage
the portfolio risks arising from client business and to manage and hedge our own risks.
Trading derivatives
Most of HSBC Continental Europe’s derivative transactions relate to sales and trading activities. Sales activities include the structuring and
marketing of derivative products to customers to enable them to take, transfer, modify or reduce current or expected risks. Trading activities
include market-making and risk management. Market-making entails quoting bid and offer prices to other market participants for the purpose of
generating revenues based on spread and volume. Risk management activity is undertaken to manage the risk arising from client transactions,
with the principal purpose of retaining client margin.
Derivatives valued using models with unobservable inputs
The difference between the fair value at initial recognition (the transaction price) and the value that would have been derived had the valuation
techniques used for subsequent measurement been applied at initial recognition, less subsequent releases, is in the following table:

Unamortised balance of derivatives valued using models with significant unobservable inputs
| 2024 | 2023
| €m | €m
Unamortised balance at 1 Jan | 4 | 8
Deferral on new transactions | — | 9
Recognised in the income statement during the year: | (2) | (13)
– amortisation | (2) | (10)
– subsequent to unobservable inputs becoming observable | — | —
– maturity, termination or offsetting derivative | — | (3)
– risk hedged | — | —
Exchange differences and other | — | —
At 31 Dec | 2 | 4

Hedge Accounting derivatives
HSBC Continental Europe uses derivatives (principally interest rate swaps) for hedging purposes in the management of its own asset and
liability portfolios and structural positions. This enables us to optimise the overall cost of accessing debt capital markets, and to mitigate the
market risk which would otherwise arise from structural imbalances in the maturity and other profiles of its assets and liabilities.
The accounting treatment of hedge transactions varies according to the nature of the instrument hedged and the type of hedge transactions.
Derivatives may qualify as hedges for accounting purposes if they are fair value hedges, or cash flow hedges, or hedges in net investment of
foreign operations. These are described under the relevant headings below.
Fair value hedges
HSBC Continental Europe’s fair value hedges principally consist of interest rate swaps that are used to protect against changes due to
movements in market interest rates in the fair value of fixed-rate long-term financial instruments of portfolio and fixed rates loans. For qualifying
fair value hedges, all changes in the fair value of the derivative and in the fair value of the item in relation to the risk being hedged are
recognised in the income statement. If the hedge relationship is terminated, the fair value adjustment to the hedged item continues to be
reported as part of the basis of the item and is amortised to the income statement as a yield adjustment over the remainder of the hedging
period.

Hedging instrument by hedged risk
| Hedging Instrument
|  | Carrying amount | Balance sheet presentation | Change in fair value
| Notional amount 1 | Assets | Liabilities
Hedged Risk | €m | €m | €m | €m
Interest rate 2 | 13,334 | 89 | 64 | Derivatives | (102)
At 31 Dec 2024 | 13,334 | 89 | 64 |  | (102)

Interest rate 2 | 10,819 | 165 | 52 | Derivatives | (374)
At 31 Dec 2023 | 10,819 | 165 | 52 |  | (374)

1 The notional contract amounts of derivatives designated in qualifying hedge accounting relationships indicate the nominal value of transactions outstanding at the
balance sheet date; they do not represent amounts at risk.
2 The hedged risk ‘interest rate’ includes inflation risk.

300 | Universal Registration Document and Annual Financial Report 2024

Notes on the consolidated financial statements

Hedged item by hedged risk
| Hedged Item | Ineffectiveness
| Carrying amount | Accumulated fair value hedge adjustments included in carrying amount | Balance sheet presentation | Change in fair value 1 | Recognised in profit and loss | Profit and loss presentation
| Assets | Liabilities | Assets | Liabilities
Hedged Risk | €m | €m | €m | €m | €m | €m
Interest rate 2 | 13,149 | — | 6 | — | Financial assets at fair value through other comprehensive income | 87 | (3) | Net income from financial instruments held for trading or managed on a fair value basis
— | — | — | — | L&A to Banks | —
435 | — | (8) | — | L&A to Customers | 12
— | — | — | — | Reverse repurchase agreements non- trading | —
— | — | — | — | HTC (Amortised Cost) | —
— | 33 | — | (4) | Debt securities in issue | —
— | — | — | — | Subordinated liabilities and deposits by Banks | —
At 31 Dec 2024 | 13,584 | 33 | (2) | (4) |  | 99 | (3) |

Interest rate 2 | 10,047 |  | (147) |  | Financial assets at fair value through other comprehensive income | 332 | (8) | Net income from financial instruments held for trading or managed on a fair value basis
— |  | — |  | L&A to Banks | —
668 |  | (17) |  | L&A to Customers | 20
— |  | — |  | Reverse repurchase agreements non- trading | 14
— | — | — | — | HTC (Amortised Cost) | —
— | 32 | — | (5) | Debt securities in issue | —
— | — | — | — | Subordinated liabilities and deposits by Banks | —
At 31 Dec 2023 | 10,715 | 32 | (164) | (5) |  | 366 | (8) |

1 Used in effectiveness assessment; comprising amount attributable to the designated hedged risk that can be a risk component.
2 The hedged risk ‘interest rate’ includes inflation risk.
Cash flow hedges
HSBC Continental Europe's cash flow hedging instruments consist principally of interest rate swaps and cross-currency swaps that are used to
manage the variability in future interest cash flows of non-trading financial assets and liabilities, arising due to changes in market interest rates
and foreign-currency basis.
HSBC Continental Europe applies macro cash flow hedging for interest-rate risk exposures on portfolios of replenishing current and forecasted
issuances of non-trading assets and liabilities that bear interest at variable rates, including rolling such instruments. The amounts and timing of
future cash flows, representing both principal and interest flows, are projected for each portfolio of financial assets and liabilities on the basis of
their contractual terms and other relevant factors, including estimates of prepayments and defaults. The aggregate cash flows representing both
principal balances and interest cash flows across all portfolios are used to determine the effectiveness and ineffectiveness. Macro cash flow
hedges are considered to be dynamic hedges.

Universal Registration Document and Annual Financial Report 2024 | 301

Hedging instrument by hedged risk
| Hedging Instrument | Hedged Item | Ineffectiveness
| Notional amount 1 | Carrying amount |  | Change in fair value 2 | Change in fair value 3,4 | Recognised in profit and loss | Profit and loss presentation
| Assets | Liabilities | Balance sheet presentation
Hedged Risk | €m | €m | €m | €m | €m | €m
Foreign currency | 261 | 9 | — | Derivatives | 2 | 2 | — | Net income from financial instruments held for trading or managed on a fair value basis
Interest rate | 26,659 | 1 | 3 | (104) | (113) | 9
At 31 Dec 2024 | 26,920 | 10 | 3 |  | (102) | (111) | 9 |

Foreign currency | 9 | — | — | Derivatives | — | — | — | Net income from financial instruments held for trading or managed on a fair value basis
Interest rate | 19,395 | 4 | 23 | 125 | 106 | 19
At 31 Dec 2023 | 19,404 | 4 | 23 |  | 125 | 106 | 19 |

1 The notional contract amounts of derivatives designated in qualifying hedge accounting relationships indicate the nominal value of transactions outstanding at the
balance sheet date; they do not represent amounts at risk.
2 Used in effectiveness testing; comprising the full fair value change of the hedging instrument not excluding any component.
3 Used in effectiveness assessment; comprising amount attributable to the designated hedged risk that can be a risk component.
4 Following a presentation error in the consolidated statement of comprehensive income, the cash flow hedge reserve for the period ending 31 December 2023,
have been represented by EUR 119 million to reflect the net interest income on swaps in cash flow hedge. This representation does not impact the net interest
income for the period in the consolidated income statement and the presentation of the cash flow hedge reserve for the period and at the beginning or end of
the year in the consolidated statement of changes in equity.
Sources of hedge ineffectiveness may arise from basis risk including, but not limited to timing differences between the hedged items and
hedging instruments, and hedges using instruments with a non-zero fair value.

Analysis of other comprehensive income by risk type
| Interest rate | Foreign Currency
| €m | €m
Cash flow hedging reserve at 1 Jan 2024 | (63) | —
Fair value gains/(losses) | (113) | 2
Fair value (gains)/losses reclassified from the cash flow hedge reserve to the income statement in respect of hedged items that has affected profit or loss | 230 | (2)
Income taxes | (31) | —
Others | — | —
Cash flow hedging reserve at 31 Dec 2024 | 23 | —

Cash flow hedging reserve at 1 Jan 2023 | (231) | —
Fair value gains/(losses)1 | 106 | —
Fair value (gains)/losses reclassified from the cash flow hedge reserve to the income statement in respect of hedged items that has affected profit or loss 1 | 121 | —
Income taxes | (59) | —
Others | — | —
Cash flow hedging reserve at 31 Dec 2023 | (63) | —

1 Following a presentation error in the consolidated statement of comprehensive income, the cash flow hedge reserve for the period ending 31 December 2023,
have been represented by EUR 119 million to reflect the net interest income on swaps in cash flow hedge. This representation does not impact the net interest
income for the period in the consolidated income statement and the presentation of the cash flow hedge reserve for the period and at the beginning or end of
the year in the consolidated statement of changes in equity.

302 | Universal Registration Document and Annual Financial Report 2024

Notes on the consolidated financial statements

16 Financial investments

Carrying amount of financial investments
| 2024 | 2023
| €m | €m
Financial investments measured at fair value through other comprehensive income | 17,402 | 20,861
– treasury and other eligible bills | 893 | 776
– debt securities | 16,074 | 19,664
– equity securities | 27 | 29
– other instruments | 408 | 392
Debt instruments measured at amortised cost | 3,338 | 1,747
– treasury and other eligible bills | — | —
– debt securities | 3,338 | 1,747
At 31 Dec | 20,740 | 22,608

Equity instruments measured at fair value through other comprehensive income
| 2024 | 2023
| Fair value | Dividends recognised | Fair value | Dividends recognised
Type of equity instruments | €m | €m | €m | €m
Business facilitation | 11 | 1 | 16 | —
Investments required by central institutions | 16 | — | 13 | —
Others | — | — | — | —
At 31 Dec | 27 | 1 | 29 | —

17 Assets pledged, collateral received and assets transferred
Assets pledged 1

Financial assets pledged as collateral
| 2024 | 2023
| €m | €m
Treasury bills and other eligible securities | 1,231 | 446
Loans and advances to customers | 759 | 2,290
Debt securities | 12,967 | 14,673
Equity securities | 363 | 671
Other | 14,836 | 13,247
Assets pledged at 31 Dec | 30,156 | 31,327

Assets pledged as collateral include all assets categorised as encumbered in the disclosure on page 216 except for assets held for sale.
The amount of assets pledged to secure liabilities may be greater than the book value of assets utilised as collateral. For example, in the case of
securitisations and covered bonds, the amount of liabilities issued, plus mandatory over-collateralisation, is less than the book value of the pool
of assets available for use as collateral. This is also the case where assets are placed with a custodian or a settlement agent that has a floating
charge over all the assets placed to secure any liabilities under settlement accounts.
These transactions are conducted under terms that are usual and customary to collateralised transactions including, where relevant, standard
securities lending and borrowing, repurchase agreements and derivative margining.
HSBC Continental Europe places both cash and non-cash collateral in relation to derivative transactions.

Financial assets pledged as collateral that the counterparty has the right to sell or repledge
| 2024 | 2023
| €m | €m
Trading assets | 13,575 | 12,587
Financial investments | 224 | 2,183
At 31 Dec | 13,799 | 14,770

Universal Registration Document and Annual Financial Report 2024 | 303

Collateral received 1
The fair value of financial assets accepted as collateral, relating primarily to standard securities lending, reverse repurchase agreements and
derivative margining, that HSBC Continental Europe is permitted to sell or repledge in the absence of default was EUR 61,419 million
at 31 December 2024 (EUR 48,999 million at 31 December 2023).
The fair value of any such collateral sold or repledged was EUR 43,830 million at 31 December 2024 (EUR 39,400 million at 31 December 2023).
HSBC Continental Europe is obliged to return equivalent securities.
These transactions are conducted under terms that are usual and customary to standard securities lending, reverse repurchase agreements and
derivative margining.
Assets transferred 1
The assets pledged include transfers to third parties that do not qualify for derecognition, notably secured borrowings such as debt securities
held by counterparties as collateral under repurchase agreements and equity securities lent under securities lending agreements, as well as
swaps of equity and debt securities. For secured borrowings, the transferred asset collateral continues to be recognised in full and a related
liability, reflecting HSBC Continental Europe’s obligation to repurchase the assets for a fixed price at a future date is also recognised on the
balance sheet. Where securities are swapped, the transferred asset continues to be recognised in full. There is no associated liability as the non-
cash collateral received is not recognised on the balance sheet. HSBC Continental Europe is unable to use, sell or pledge the transferred assets
for the duration of these transactions, and remains exposed to interest rate risk and credit risk on these pledged assets. The counterparty’s
recourse is not limited to the transferred assets.

Transferred financial assets not qualifying for full derecognition and associated financial liabilities
| Carrying amount of:
| Transferred assets | Associated liabilities
| €m | €m
Repurchase agreements | 10,834 | 10,837
Securities lending agreements | 2,965 | —
At 31 Dec 2024 | 13,799 | 10,837
Repurchase agreements | 12,885 | 12,734
Securities lending agreements | 1,885 | 5
At 31 Dec 2023 | 14,770 | 12,739

1 Excludes assets classified as held for sale.

18 Related information on foreign subsidiaries and branches country by
country
Related information on foreign subsidiaries and branches country by country required by the directive 2013/36/UE (‘CRD IV’) has been
transposed in article L. 511-45 of the French Monetary and Financial Code.

| At 31 Dec 2024
| Revenue (continuing operations)1 | Profit/(loss) Before Tax (continuing operations) | Current Tax (continuing operations) | Deferred Tax (continuing operations) | Public subsidies received | Number of employees (Full Time Equivalent)
| €m | €m | €m | €m | €m
HSBC Continental Europe | 3,349 | 930 | (179) | (227) | — | 6,739
– France | 1,280 | 109 | 31 | (231) | — | 2,837
– Belgium | 27 | 15 | (4) | — | — | 21
– Czech Republic | 27 | 13 | (3) | — | — | 48
– Greece | — | — | — | — | — | —
– Ireland | 177 | 135 | (16) | — | — | 112
– Italy | 50 | 18 | (5) | — | — | 61
– Luxembourg | 170 | 73 | (17) | — | — | 205
– Netherlands | 135 | 108 | (28) | — | — | 71
– Spain | 75 | 43 | (2) | (8) | — | 101
– Sweden | 9 | 2 | — | — | — | 22
– United Kingdom | — | — | — | — | — | —
– Poland | 94 | 67 | (12) | — | — | 92
– Germany | 987 | 196 | (73) | 14 | — | 2,155
– Malta | 263 | 163 | (49) | (6) | — | 860
– Others 4 | 55 | (12) | (1) | 4 | — | 154

304 | Universal Registration Document and Annual Financial Report 2024

Notes on the consolidated financial statements

| At 31 Dec 2023 2
| Revenue (continuing operations)1 | Profit/(loss) Before Tax (continuing operations) | Current Tax (continuing operations) | Deferred Tax (continuing operations) | Public subsidies received | Number of employees (Full Time Equivalent)3
| €m | €m | €m | €m | €m
HSBC Continental Europe | 3,720 | 1,325 | (257) | (89) | — | 9,969
– France | 1,660 | 381 | (25) | (45) | — | 5,996
– Belgium | 26 | 14 | (4) | — | — | 20
– Czech Republic | 35 | 20 | (4) | — | — | 51
– Greece | 33 | 5 | — | — | — | —
– Ireland | 195 | 147 | (15) | — | — | 108
– Italy | 40 | 11 | (3) | — | — | 59
– Luxembourg | 181 | 88 | (20) | (2) | — | 224
– Netherlands | 162 | 131 | (35) | — | — | 73
– Spain | 81 | 51 | (11) | (3) | — | 99
– Sweden | 5 | (1) | — | — | — | 16
– United Kingdom | — | — | — | — | — | —
– Poland | 93 | 63 | (11) | (1) | — | 96
– Germany | 962 | 295 | (84) | (37) | — | 2,195
– Malta | 234 | 135 | (45) | (3) | — | 853
– Others 4 | 13 | (15) | — | 2 | — | 179

1 Net operating income before change in expected credit losses and other credit impairment charges, also referred to as revenue.
2 In compliance with IFRS 5 standards, the comparatives have been represented to reflect discontinued operations related to the planned sale of the life insurance
business in France. This also includes discontinued operations related to the sale of the retail banking operations in France.
3 Includes employees of retail banking operations in France which has been classified as discontinued operations.
4 Others include HSBC Private Bank (Luxembourg) S.A. post its acquisition on 2 November 2023.
The list of subsidiaries by country detailing the names of entities, nature of activity and geographical location, is presented in the Note 35 on
pages 321 to 322. The addresses of main locations abroad are presented on page 380.

19 Structured entities
Consolidated structured entities by HSBC Continental Europe

Total assets of HSBC Continental Europe’s consolidated structured entities, split by entity type
| Conduits | Securitisations | HSBC managed funds | Other | Total
| €m | €m | €m | €m | €m
At 31 Dec 2024 | — | — | 5,028 | 509 | 5,537
At 31 Dec 2023 | — | — | 4,918 | 440 | 5,358

General policy
A structured entity is an entity designed so that voting or similar rights are not the dominant factor in deciding who controls the entity, for
example when any voting rights relate to administrative tasks only, and key activities are directed by contractual arrangements. Thus, these
entities have a limited scope of activities and a well-defined purpose.
Structured entities are assessed for consolidation in accordance with the accounting policy set out in Note 1.
HSBC Continental Europe is involved directly or indirectly with structured entities mainly through securitisation of financial assets, conduits and
investment funds.
Group arrangements that involve structured entities are authorised centrally when they are established to ensure appropriate purpose and
governance. The activities of structured entities administered by HSBC Continental Europe are closely monitored by senior management. HSBC
Continental Europe has involvement with both consolidated and unconsolidated structured entities, which may be established by the HSBC
Group or by a third party, detailed below.
Securitisations
HSBC Continental Europe has interests in consolidated securitisation vehicles through holding notes issued by these entities.
HSBC managed funds
HSBC Continental Europe together with other HSBC entities has established and managed a number of money market and non-money market
investment funds in order to offer its customer investment opportunities. Where it is deemed to be acting as principal rather than agent in its
role as investment manager, HSBC Continental Europe will control and hence consolidate these funds.
HSBC Continental Europe, as fund manager, may be entitled to receive management and performance fees based on the assets under
management. HSBC Continental Europe may also retain units in these funds.

Universal Registration Document and Annual Financial Report 2024 | 305

Non-HSBC managed funds
HSBC Continental Europe purchases and holds units of third party managed funds in order to facilitate business and meet customer needs.
HSBC Continental Europe sponsored structured entities
The amount of assets transferred to and income received from such sponsored entities during 2024 and 2023 was not significant.
Others
HSBC Continental Europe also enters into a number of transactions in the normal course of business, including asset and structured finance
transactions where it has control of the structured entity.
Unconsolidated structured entities by HSBC Continental Europe
The term ‘unconsolidated structured entities’ refers to all structured entities that are not controlled by the HSBC Group. It includes interests in
structured entities that are not consolidated. The HSBC Group enters into transactions with unconsolidated structured entities in the normal
course of business to facilitate customer transactions and for specific investment opportunities.
The table below shows the total assets of unconsolidated structured entities in which the HSBC Group has an interest at the reporting date, as
well as the HSBC Group’s maximum exposure to loss in relation to those interests.

Nature and risks associated with HSBC Continental Europe interests in unconsolidated structured entities
| Securitisations | HSBC managed funds | Non-HSBC managed funds | Other | Total
Total asset values of the entities (€m) |  |  |  |  |
0 – 500 | — | 101 | 120 | 3 | 224
500 – 2,000 | — | 18 | 49 | — | 67
2,000 – 5,000 | — | 8 | 25 | — | 33
5,000 – 25,000 | — | 5 | 12 | — | 17
25,000+ | — | 1 | 1 | — | 2
Number of entities at 31 Dec 2024 | — | 133 | 207 | 3 | 343
| €m | €m | €m | €m | €m
Total assets in relation to HSBC Continental Europe's interests in the unconsolidated structured entities | — | 4,139 | 1,873 | — | 6,012
– trading assets | — | 1 | — | — | 1
– financial assets designated and otherwise mandatorily measured at fair value | — | 248 | 14 | — | 262
– financial investments | — | 6 | — | — | 6
– assets held for sale 1 | — | 3,884 | 1,859 | — | 5,743
Total liabilities in relation to HSBC Continental Europe’s interests in the unconsolidated structured entities | — | 7 | — | — | 7
HSBC Continental Europe's maximum exposure at 31 Dec 2024 | — | 4,132 | 1,873 | — | 6,005
Total asset values of the entities (€m) |  |  |  |  |
0 – 500 | — | 119 | 114 | 3 | 236
500 – 2,000 | — | 28 | 64 | — | 92
2,000 – 5,000 | — | 10 | 28 | — | 38
5,000 – 25,000 | — | 6 | 15 | — | 21
25,000+ | — | 1 | — | — | 1
Number of entities at 31 Dec 2023 | — | 164 | 221 | 3 | 388
| €m | €m | €m | €m | €m
Total assets in relation to HSBC Continental Europe's interests in the unconsolidated structured entities | — | 4,089 | 2,061 | — | 6,150
– trading assets | — | 1 | — | — | 1
– financial assets designated and otherwise mandatorily measured at fair value | — | 4,082 | 2,061 | — | 6,143
– financial investments | — | 6 | — | — | 6
Total liabilities in relation to HSBC Continental Europe’s interests in the unconsolidated structured entities | — | 7 | — | — | 7
HSBC Continental Europe's maximum exposure at 31 Dec 2023 | — | 4,082 | 2,061 | — | 6,143

1 The 2024 assets held for sale include disposal group related to the planned sale of the life insurance business in France.

306 | Universal Registration Document and Annual Financial Report 2024

Notes on the consolidated financial statements

The maximum exposure to loss from HSBC Continental Europe’s interests in unconsolidated structured entities represents the maximum loss it
could incur as a result of its involvement with unconsolidated structured entities regardless of the probability of the loss being incurred.
– For commitments and guarantees, and written credit default swaps, the maximum exposure of HSBC Continental Europe to loss is the
notional amount of potential future losses.
– For retained and purchased investments and loans to unconsolidated structured entities, the maximum exposure of HSBC Continental
Europe loss is the carrying value of these interests at the balance sheet reporting date.
The maximum exposure to loss is stated gross of the effects of hedging and collateral arrangements entered into to mitigate HSBC Continental
Europe’s exposure to loss.

20 Goodwill and intangible assets

| 2024 | 2023
| €m | €m
Goodwill | 66 | 66
Other intangible assets | 153 | 122
At 31 Dec | 219 | 188

Goodwill

Movement analysis of goodwill
| 2024 | 2023
| €m | €m
Gross amount |  |
At 1 Jan | 441 | 441
Other 1 | (83) | —
At 31 Dec | 358 | 441
Accumulated impairment losses |  |
At 1 Jan | (375) | (375)
Other 1 | 83 | —
At 31 Dec | (292) | (375)
Net carrying amount at 31 Dec | 66 | 66

1"Other" in 2024 represents the amount of goodwill written off following the sale of retail operations in France.
Impairment testing
During 2024, impairment testing was performed and no impairment was recognised to the Asset Management goodwill.

Impairment results and key assumptions in VIU calculation
| Goodwill at 31 Dec 2024 | Discount rate | Growth rate beyond initial cash flow projections | Goodwill at 31 Dec 2023 | Discount rate | Growth rate beyond initial cash flow projections
| €m | % | % | €m | % | %
Asset Management | 66 | 10.9 | 1.9 | 66 | 10.4 | 1.9
Total goodwill in the CGUs 1 listed above | 66 |  |  | 66 |  |

1 Cash-Generating Units.
Other intangible assets
Other intangible assets include mortgage servicing rights, computer software, trade names, customer lists, core deposit relationships, credit
card customer relationships or other loan relationships. Computer software includes both purchased and internally generated software. The cost
of internally generated software comprises all directly attributable costs necessary to create, produce and prepare the software to be capable of
operating in the manner intended by management. Costs incurred in the ongoing maintenance of software are expensed immediately as
incurred.
Intangible assets are subject to impairment review if there are events or changes in circumstances that indicate that the carrying amount may
not be recoverable. Where:
– intangible assets have an indefinite useful life, or are not yet ready for use, they are tested for impairment annually. An intangible asset
recognised during the current period is tested before the end of the current year; and

Universal Registration Document and Annual Financial Report 2024 | 307

– intangible assets have a finite useful life, they are stated at cost less amortisation and accumulated impairment losses and are amortised
over their estimated useful lives. Estimated useful life is the lower of legal duration and expected useful life. The amortisation of mortgage
servicing rights is included within ‘Net fee income’.
Intangible assets with finite useful lives are amortised, generally on a straight-line basis, over their useful lives as follows:
– Trade names 10 years
– Internally generated software between 3 and 10 years
– Purchased software between 3 and 10 years
– Other generally 10 years.

The analysis of intangible assets movements at 31 December is as follows:
| Internally generated software | Purchased software | Other | Total
| €m | €m | €m | €m
Cost |  |  |  |
At 1 Jan 2024 | 446 | 115 | 13 | 574
Additions | 65 | 5 | — | 70
Disposals | (1) | — | — | (1)
Amount written off | (44) | (12) | (12) | (68)
Business combination and other changes 1 | (4) | (8) | — | (12)
At 31 Dec 2024 | 462 | 100 | 1 | 563
Accumulated amortisation and impairment |  |  |  |
At 1 Jan 2024 | (328) | (112) | (12) | (452)
Amortisation charge for the year | (30) | — | — | (30)
Impairment charge for the year | (3) | — | — | (3)
Reversal of Impairment | — | — | — | —
Amount written off | 44 | 12 | 12 | 68
Disposals | — | — | — | —
Business combination and other changes 1 | (1) | 8 | — | 7
At 31 Dec 2024 | (318) | (92) | — | (410)
Net carrying amount at 31 Dec 2024 | 144 | 8 | 1 | 153
Cost |  |  |  |
At 1 Jan 2023 | 393 | 111 | 12 | 516
Additions | 50 | 2 | 1 | 53
Disposals 2 | (25) | — | — | (25)
Amount written off | — | (1) | — | (1)
Business combination and other changes 1 | 28 | 3 | — | 31
At 31 Dec 2023 | 446 | 115 | 13 | 574
Accumulated amortisation and impairment |  |  |  | —
At 1 Jan 2023 | (323) | (107) | (12) | (442)
Amortisation charge for the year | (27) | (3) | — | (30)
Impairment charge for the year | (4) | — | — | (4)
Reversal of Impairment 3 | 11 | — | — | 11
Amount written off | — | — | — | —
Disposals 2 | 22 | 1 | — | 23
Business combination and other changes 1 | (7) | (3) | — | (10)
At 31 Dec 2023 | (328) | (112) | (12) | (452)
Net carrying amount at 31 Dec 2023 | 118 | 3 | 1 | 122

1 In the year 2024, business combination and other changes include reclassification to held for sale of the insurance business in France. In the year 2023, business
combination represents contribution related to the acquisition of HSBC Private Bank (Luxembourg) S.A. on 2 November 2023.
2 Disposals represents the sale of HSBC Continental Europe branch operations in Greece to Pancreta Bank SA on 28 July 2023.
3 In 2023, the reversal of impairment on the intangibles are driven by EUR 1 million in Commercial banking ('CMB') business and EUR 9 million in Global banking
('GB') business in France.

308 | Universal Registration Document and Annual Financial Report 2024

Notes on the consolidated financial statements

21 Prepayments, accrued income and other assets

| 2024 | 2023
| €m | €m
Cash collateral and margin receivables | 14,128 | 13,109
Settlement accounts and items in course of collection from other banks 2 | 1,193 | 4,876
Prepayments and accrued income | 1,089 | 1,129
Bullion | 3 | 3
Property plant and equipment | 134 | 862
Right of use assets 1 | 131 | 156
Reinsurance contract assets (Note 5) | 3 | 12
Employee benefit assets (Note 6) | 66 | 46
Endorsements and acceptances | 1 | 8
Other accounts | 1,250 | 1,525
At 31 Dec | 17,998 | 21,726

1 The net value of the right of use breaks down into EUR 388 million as gross value (2023: EUR 372 million) and EUR (257) million as depreciation and provisions
(2023: EUR (216) million).
2 In 2023 ‘Items in the course of collection from other banks’ EUR 273 million were presented on the face of the balance sheet but are now reported within
‘Prepayments, accrued income and other assets’ in the Universal Registration Document and Annual Financial Report 2024.
Prepayments, accrued income and other assets include EUR 17,165 million (2023: EUR 20,043 million) of financial assets, the majority of which
are measured at amortised cost.
Property, plant and equipment
Land and buildings are stated at historical cost, or fair value at the date of transition to IFRS, less any impairment losses and depreciation
calculated as per below:
– freehold land is not depreciated;
– acquisition-related expenses on buildings are expensed in the year in which they occur, same as preliminary costs; and
– depreciation of buildings is calculated over their estimated useful lives, which are generally between 25 to 75 years.
Equipment, fixtures and fittings (including equipment on operating leases where HSBC Continental Europe is the lessor) are stated at cost less
impairment losses and depreciation is calculated on a straight-line basis to write off the assets over their estimated useful lives, which are
generally between 5 to 25 years. HSBC Continental Europe holds certain properties as investments to earn rentals or for capital appreciation, or
both. Investment properties are included in the balance sheet at fair value with changes in fair value recognised in the income statement in the
period of change. Fair values are determined by independent professional valuers who apply recognised valuation techniques. Property, plant
and equipment is subject to review for impairment if there are events or changes in circumstances that indicate that the carrying amount may
not be recoverable.

| Freehold land and buildings 1 | Equipment, fixtures and fittings | Total
| €m | €m | €m
Cost or fair value |  |  |
At 1 Jan 2024 | 792 | 448 | 1,240
Additions at cost | 3 | 20 | 23
Fair value adjustments | (65) | — | (65)
Disposals | (6) | (40) | (46)
Transfers | — | — | —
Business combination and other changes | — | — | —
Reclassified as held for sale 2 | (661) | (4) | (665)
At 31 Dec 2024 | 63 | 424 | 487
Accumulated depreciation |  |  |
At 1 Jan 2024 | (27) | (351) | (378)
Depreciation charge for the year | — | (27) | (27)
Disposals | 3 | 39 | 42
Transfers | — | — | —
Impairment loss recognised | — | (4) | (4)
Reversal on impairment | — | 10 | 10
Business combination and other changes | — | — | —
Reclassified as held for sale 2 | — | 4 | 4
At 31 Dec 2024 | (24) | (329) | (353)
Net book value at 31 Dec 2024 | 39 | 95 | 134

Universal Registration Document and Annual Financial Report 2024 | 309

| Freehold land and buildings 1 | Equipment, fixtures and fittings | Total
| €m | €m | €m
Cost or fair value |  |  |
At 1 Jan 2023 | 785 | 456 | 1,241
Additions at cost | 8 | 16 | 24
Fair value adjustments | — | — | —
Disposals | (1) | (26) | (27)
Transfers | — | — | —
Business combination and other changes 3 | 2 | 9 | 11
Reclassified as held for sale 4 | (2) | (7) | (9)
At 31 Dec 2023 | 792 | 448 | 1,240
Accumulated depreciation |  |  |
At 1 Jan 2023 | (19) | (375) | (394)
Depreciation charge for the year | (1) | (35) | (36)
Disposals | 1 | 23 | 24
Transfers | — | — | —
Impairment loss recognised | (3) | (7) | (10)
Reversal on impairment | — | 41 | 41
Business combination and other changes 3 | (6) | (5) | (11)
Reclassified as held for sale 4 | 1 | 7 | 8
At 31 Dec 2023 | (27) | (351) | (378)
Net book value at 31 Dec 2023 | 765 | 97 | 862

1 Includes EUR 13 million of leasehold land and building for which the rights of use are considered sufficient to constitute control and for which there are
insignificant lease liabilities (2023: EUR 13 million). They are therefore presented as owned assets.
2 Represents reclassification to held for sale related to HSBC Assurances Vie (France) in the fourth quarter of 2024.
3 The year 2023 includes the acquisition of HSBC Private Bank (Luxembourg) S.A. on 2 November 2023.
4 Represents reclassification to held for sale related to retail banking operations in France in the fourth quarter of 2023.
Impairment Testing
Impairment of non-financial assets (including Tangible and Right of Use Assets) is assessed in accordance with our policy explained in Note
1.2(n) by comparing the net carrying amount of Cash Generate Units ('CGUs') with their recoverable amounts. No significant impairment was
recognised during the year. However, reversal of impairment net of depreciation catch-up of EUR 5 million (31 December 2023: EUR 23 million)
on Tangible assets (Gross EUR 10 million (31 December 2023: EUR 41 million), Depreciation catch-up EUR (5) million (31 December 2023: EUR
(18) million)) and EUR 6 million (31 December 2023: EUR 27 million) on Right of Use Assets (Gross EUR 14 million (31 December 2023: EUR 42
million), Depreciation catch-up EUR (8) million (31 December 2023: EUR (15) million)) was recognised during the year. The CGUs are considered
to be the global business within the principal operating entities, therefore the reversal of impairment net of depreciation catch-up are allocated
by EUR 7 million in Commercial Banking ('CMB') business (31 December 2023: EUR 32 million) and EUR 4 million Global Banking ('GB')
business (31 December 2023: EUR 18 million) in France.

22 Trading liabilities

| 2024 | 2023
| €m | €m
Deposits by banks 1 | — | 8
Customer accounts 1 | 1 | —
Other debt securities in issue | — | —
Other liabilities – net short positions in securities | 16,479 | 19,869
At 31 Dec | 16,480 | 19,877

1'Deposits by banks' and 'Customer accounts' include repos, stock lending and other amounts.

23 Financial liabilities designated at fair value

| 2024 | 2023
| €m | €m
Deposits by banks and customer accounts | 58 | 15
Liabilities to customers under investment contracts | 168 | 167
Debt securities in issue | 9,680 | 9,514
At 31 Dec | 9,906 | 9,696

310 | Universal Registration Document and Annual Financial Report 2024

Notes on the consolidated financial statements

At 31 December 2024 the carrying amount of financial liabilities designated at fair value was EUR (356) million lower than the contractual
amount at maturity (at 31 December 2023: EUR (497) million lower). At 31 December 2024, the cumulative amount of change in fair value
attributable to changes in credit risk was EUR (72) million (at 31 December 2023: EUR (125) million). In 2024, HSBC Continental Europe
recognised a variation of EUR (26) million in other comprehensive income in respect of HSBC Continental Europe's own credit risk
(at 31 December 2023: EUR (84) million).

24 Accruals, deferred income and other liabilities

| 2024 | 2023
| €m | €m
Cash collateral and margin payables | 13,528 | 15,446
Settlement accounts and items in the course of transmission to other banks 1 | 1,247 | 1,565
Accruals and deferred income | 1,137 | 1,176
Lease liabilities | 174 | 216
Employee benefit liabilities (Note 6) | 75 | 74
Endorsements and acceptances | 1 | 4
Reinsurance contract liabilities | — | 4
Other liabilities | 1,686 | 3,304
At 31 Dec | 17,848 | 21,789

1 In 2023 ‘Items in the course of transmission to other banks’ EUR 320 million were presented on the face of the balance sheet but are now reported within
‘Accruals, deferred income and other liabilities’ in the Universal Registration Document and Annual Financial Report 2024.
At 31 December 2024 Accruals, deferred income and other liabilities include EUR 17,052 million (at 31 December 2023: EUR 20,982 million), of
financial liabilities, the majority of which are measured at amortised cost.

25 Provisions
HSBC Continental Europe recognises a provision when the following three criteria are met:
– existence of a present obligation occurring from a past event;
– it is probable that an outflow of resources will be required to settle the obligation; and
– a reliable estimate of the amount can be made.

| Restructuring costs | Legal proceedings and regulatory matters | Customer remediation | Other provisions | Total
| €m | €m | €m | €m | €m
Provisions (excluding contractual commitments) |  |  |  |  |
At 1 Jan 2024 | 78 | 10 | 4 | 95 | 187
Additions | 3 | 3 | 1 | 22 | 29
Amounts utilised | (43) | (3) | — | (53) | (99)
Unused amounts reversed | (16) | (3) | (1) | (14) | (34)
Exchange and other movements | (1) | — | — | 32 | 31
At 31 Dec 2024 | 21 | 7 | 4 | 82 | 114
Contractual commitments 1 |  |  |  |  |
At 1 Jan 2024 |  |  |  |  | 58
Net change in expected credit loss provisions and other movements |  |  |  |  | 12
At 31 Dec 2024 |  |  |  |  | 70
Total provisions |  |  |  |  |
At 31 Dec 2023 |  |  |  |  | 245
At 31 Dec 2024 |  |  |  |  | 184

1 The contractual commitments provision includes off-balance sheet loan commitments and guarantees, for which expected credit losses are provided under IFRS
9. Further analysis of the movement in the expected credit loss is disclosed within the 'Reconciliation of changes in gross carrying/nominal amount and
allowances for loans and advances to banks and customers including loan commitments and financial guarantees' table under section ‘Credit Risk’.

Universal Registration Document and Annual Financial Report 2024 | 311

| Restructuring costs 1 | Legal proceedings and regulatory matters | Customer remediation | Other provisions | Total
| €m | €m | €m | €m | €m
Provisions (excluding contractual commitments) |  |  |  |  |
At 1 Jan 2023 | 121 | 19 | 4 | 79 | 223
Additions 1 | 19 | 5 | 1 | 52 | 77
Amounts utilised | (35) | (4) | — | (23) | (62)
Unused amounts reversed | (24) | (10) | (1) | (20) | (55)
Exchange and other movements | (3) | — | — | 7 | 4
At 31 Dec 2023 | 78 | 10 | 4 | 95 | 187
Contractual commitments 2 |  |  |  |  |
At 1 Jan 2023 |  |  |  |  | 63
Net change in expected credit loss provisions and other movements |  |  |  |  | (5)
At 31 Dec 2023 |  |  |  |  | 58
Total provisions |  |  |  |  |
At 31 Dec 2022 |  |  |  |  | 286
At 31 Dec 2023 |  |  |  |  | 245

1 On 9th October 2023, HSBC Continental Europe announced a voluntary redundancy plan ('Rupture Conventionelle Collective') impacting the Private banking
operations in the French branch of HSBC Private Bank (Luxembourg) S.A. A provision of EUR 11 million for restructuring costs was recorded as at
31st December 2023.
2 The contractual commitments provision includes off-balance sheet loan commitments and guarantees, for which expected credit losses are provided under IFRS
9. Further analysis of the movement in the expected credit loss is disclosed within the 'Reconciliation of changes in gross carrying/nominal amount and
allowances for loans and advances to banks and customers including loan commitments and financial guarantees' table under section ‘Credit Risk’.
Further details of ‘Legal proceedings and regulatory matters’ regarding the HSBC Group entities are set out in Note 32.

26 Subordinated liabilities
Subordinated liabilities are initially measured at fair value, which is the consideration received net of directly attributable transaction costs
incurred. Subsequent measurement is at amortised cost, using the effective interest rate method to amortise the difference between proceeds
net of directly attributable transaction costs and the redemption amount over the expected life of the debt, unless the instruments are
designated at fair value.

| 2024 | 2023
| €m | €m
At amortised cost | 1,941 | 1,951
Total at 31 Dec | 1,941 | 1,951

|  | Book value
|  | 2024 | 2023
|  | €m | €m
Tier 2 instruments issued by HSBC Continental Europe and its subsidiaries |  |
EUR 16 million | Undated subordinated variable rate notes | 16 | 16
EUR 300 million | Floating rate Subordinated Loan maturing 2028 | — | 300
EUR 400 million | Floating rate Subordinated Loan maturing 2029 | — | 400
EUR 100 million | Floating rate Subordinated Loan maturing 2029 | — | 100
EUR 260 million | Floating rate Subordinated Loan maturing 2029 | — | 260
EUR 500 million | Floating rate Subordinated Loan maturing 2030 | 500 | 500
EUR 150 million | Floating Rate Subordinated Loan maturing 2029 | — | 150
EUR 10 million | 4.21% Subordinated Loan maturing 2025 | 10 | 10
EUR 5 million | 4.21% Subordinated Loan maturing 2025 | 5 | 5
EUR 10 million | 5.50% Subordinated Loan maturing 2028 | 10 | 10
EUR 200 million | Floating Rate Subordinated Loan maturing 2034 | 200 | 200
EUR 400 million | Floating Rate Subordinated Loan maturing 2035 | 400 | —
EUR 300 million | Floating Rate Subordinated Loan maturing 2035 | 300 | —
EUR 500 million | Floating Rate Subordinated Loan maturing 2036 | 500 | —
At 31 Dec |  | 1,941 | 1,951

312 | Universal Registration Document and Annual Financial Report 2024

Notes on the consolidated financial statements

27 Maturity analysis of financial assets, liabilities and off-balance sheet
commitments
Contractual maturity of financial liabilities
The balances in the table below do not agree directly with those in the consolidated balance sheet as the table incorporates, on an undiscounted
basis, all cash flows relating to principal and future coupon payments (except for trading liabilities and derivatives not treated as hedging
derivatives).
Undiscounted cash flows payable in relation to hedging derivative liabilities are classified according to their contractual maturities. Trading
liabilities and derivatives not treated as hedging derivatives are included in the 'On demand' time bucket and not by contractual maturity.
In addition, loans and other credit-related commitments, financial guarantees and similar contracts are generally not recognised on the balance
sheet. The undiscounted cash flows potentially payable under financial guarantees and similar contracts are classified on the basis of the earliest
date they can be called.

Distribution of cash flows payable by maturity
| 2024
| Due not more than 1 month | Due over 1 month but not over 3 months | Due between 3 and 12 months | Due between 1 and 5 years | Due after 5 years | Total
| €m | €m | €m | €m | €m | €m
Deposits by banks | 10,284 | 58 | 242 | 979 | 382 | 11,945
Customer accounts | 89,069 | 4,502 | 3,166 | 378 | 107 | 97,222
Repurchase Agreements – non–trading | 11,262 | 823 | 303 | — | — | 12,388
Trading liabilities | 16,480 | — | — | — | — | 16,480
Financial liabilities designated at fair value | 305 | 428 | 1,377 | 5,336 | 3,207 | 10,653
Derivatives | 41,791 | — | — | 40 | 26 | 41,857
Debt securities in issue | 878 | 1,451 | 4,072 | 6,253 | 3,863 | 16,517
Subordinated liabilities | — | — | 522 | 240 | 1,422 | 2,184
Other financial liabilities | 16,220 | 102 | 304 | 136 | 27 | 16,789
Liabilities of disposal groups held for sale 1 | 2,037 | 124 | 111 | — | 1,396 | 3,668
Sub Total | 188,326 | 7,488 | 10,097 | 13,362 | 10,430 | 229,703
Loan and other credit-related commitments | 110,820 | — | — | — | — | 110,820
Financial guarantees 2 | 1,950 | — | — | — | — | 1,950
Total at 31 Dec 2024 | 301,096 | 7,488 | 10,097 | 13,362 | 10,430 | 342,473
Proportion of cash flows payable in period (%) | 88 | 2 | 3 | 4 | 3 |
| 2023
Deposits by banks 3 | 7,650 | 1,080 | 303 | 1,046 | 310 | 10,389
Customer accounts 3 | 82,144 | 7,193 | 4,284 | 381 | 91 | 94,093
Repurchase Agreements – non–trading | 10,423 | 556 | 199 | — | — | 11,178
Trading liabilities | 19,877 | — | — | — | — | 19,877
Financial liabilities designated at fair value | 477 | 507 | 2,680 | 4,266 | 2,440 | 10,370
Derivatives | 43,555 | — | — | 51 | 24 | 43,630
Debt securities in issue | 738 | 2,102 | 3,774 | 4,701 | 2,945 | 14,260
Subordinated liabilities | 401 | 2 | 109 | 929 | 740 | 2,181
Other financial liabilities | 18,651 | 84 | 429 | 157 | 1,379 | 20,700
Liabilities of disposal groups held for sale 1 | 17,887 | 693 | 1,647 | 2,467 | 1,288 | 23,982
Sub Total | 201,803 | 12,217 | 13,425 | 13,998 | 9,217 | 250,660
Loan and other credit-related commitments | 112,147 | — | — | — | — | 112,147
Financial guarantees 2 | 1,552 | — | — | — | — | 1,552
Total at 31 Dec 2023 | 315,502 | 12,217 | 13,425 | 13,998 | 9,217 | 364,359
Proportion of cash flows payable in period (%) | 87 | 3 | 4 | 4 | 2 |

1 The 2024 liabilities held for sale include disposal group related to the planned sale of the life insurance business in France and the private banking business in
Germany. The 2023 assets and liabilities held for sale include disposal group related to the sale of retail banking operations in France and sale of the hedge fund
administration business operations in HSBC Continental Europe.
2 Financial guarantees includes EUR 1.9 billion (2023: EUR 1.5 billion), for which expected credit losses are provided under IFRS 9. Further analysis of the
movement in the expected credit loss is disclosed within the 'Distribution of financial instruments by credit quality' table under section ‘Credit Risk'.
3 Following a customer classification error, the comparatives as at 31 December 2023 have been represented by EUR 1.4 billion between ’Deposits by banks’ and
’Customer accounts’.

Universal Registration Document and Annual Financial Report 2024 | 313

Maturity analysis of financial assets and liabilities
The following tables provides an analysis of financial assets and liabilities by residual contractual maturity at the balance sheet date. These
balances are included in the maturity analysis as follows:
– trading assets and liabilities (including trading derivatives but excluding reverse repos, repos and debt securities in issue) are included in the
‘Due within 1 year’ time bucket, because trading balances are typically held for short periods of time;
– financial assets and liabilities with no contractual maturity (such as equity securities) are included in the ‘Due after more than 1 year’ time
bucket. Undated or perpetual instruments are classified based on the contractual notice period which the counterparty of the instrument is
entitled to give. Where there is no contractual notice period, undated or perpetual contracts are included in the ‘Due after more than 1 year’
time bucket;
– financial instruments included within assets and liabilities of disposal groups held for sale are classified on the basis of the contractual
maturity of the underlying instruments and not on the basis of the disposal transaction; and
– liabilities under investment contracts are classified in accordance with their contractual maturity. Undated investment contracts are
included in the ‘Due after more than 1 year’ time bucket, however, such contracts are subject to surrender and transfer options by the
policyholders.

Maturity analysis of financial assets and financial liabilities |  |  |
| 2024 | 2023
| Due within 1 year | Due after more than 1 year | Total | Due within 1 year | Due after more than 1 year | Total
| €m | €m | €m | €m | €m | €m
Financial assets |  |  |  |  |  |
Cash and balances at central banks | 48,907 | — | 48,907 | 56,894 | — | 56,894
Trading assets | 22,840 | 13 | 22,853 | 17,233 | 16 | 17,249
Financial assets designated or otherwise mandatorily measured at fair value | 561 | 1,002 | 1,563 | 85 | 13,505 | 13,590
Derivatives | 43,162 | 89 | 43,251 | 45,357 | 165 | 45,522
Loans and advances to banks | 5,460 | 243 | 5,703 | 5,663 | 153 | 5,816
Loans and advances to customers | 18,058 | 33,230 | 51,288 | 17,045 | 33,082 | 50,127
Reverse repurchase agreements – non-trading | 25,647 | 117 | 25,764 | 24,334 | 156 | 24,490
Financial investments | 3,863 | 16,877 | 20,740 | 2,685 | 19,923 | 22,608
Assets held for sale 1 | 3,578 | 21,168 | 24,746 | 11,487 | 13,500 | 24,987
Other financial assets 2 | 17,000 | 349 | 17,349 | 19,984 | 332 | 20,316
Total at 31 Dec | 189,076 | 73,088 | 262,164 | 200,767 | 80,832 | 281,599
Financial liabilities |  |  |  |  |  |
Deposits by banks 3 | 10,564 | 1,256 | 11,820 | 9,014 | 1,247 | 10,261
Customer accounts 3 | 96,609 | 456 | 97,065 | 93,447 | 443 | 93,890
Repurchase agreements – non-trading | 12,344 | — | 12,344 | 11,153 | — | 11,153
Trading liabilities | 16,480 | — | 16,480 | 19,877 | — | 19,877
Financial liabilities designated at fair value | 1,980 | 7,926 | 9,906 | 3,637 | 6,059 | 9,696
Derivatives | 41,791 | 66 | 41,857 | 43,555 | 75 | 43,630
Debt securities in issue | 6,398 | 8,859 | 15,257 | 6,601 | 6,308 | 12,909
Liabilities of disposal groups held for sale 1 | 2,279 | 1,398 | 3,677 | 20,253 | 3,496 | 23,749
Other financial liabilities 2 | 17,104 | 315 | 17,419 | 19,768 | 1,534 | 21,302
Subordinated liabilities | 515 | 1,426 | 1,941 | 500 | 1,451 | 1,951
Total at 31 Dec | 206,064 | 21,702 | 227,766 | 227,805 | 20,613 | 248,418

1 The 2024 assets and liabilities held for sale include disposal group related to the planned sale of the life insurance business in France and the private banking
business in Germany. The 2023 assets and liabilities held for sale include disposal group related to the sale of retail banking operations in France and sale of the
hedge fund administration business operations in HSBC Continental Europe.
2 In 2023 ‘Items in the course of collection from other banks’ EUR 273 million were presented on the face of the Maturity analysis of financial assets and financial
liabilities but are now reported within ‘Other financial assets’ in the Universal Registration Document and Annual Financial Report 2024. Similarly, ‘Items in the
course of transmission to other banks’ EUR 320 million ar e presented within ‘Other financial liabilities’.
3 Following a customer classification error, the comparatives as at 31 December 2023 have been represented by EUR 1.4 billion between ’Deposits by banks’ and
’Customer accounts’.
Further information regarding HSBC Continental Europe’s liquidity and funding management is available in the Risk Management section page 215 and following.

314 | Universal Registration Document and Annual Financial Report 2024

Notes on the consolidated financial statements

28 Offsetting of financial assets and financial liabilities
Financial assets and financial liabilities are offset and the net amount is reported in the balance sheet when there is a legally enforceable right to
offset the recognised amounts and there is an intention to settle on a net basis, or realise the asset and settle the liability simultaneously (‘the
offset criteria’).
In the following table, the ‘Amounts not set off in the balance sheet’ include transactions where:
– the counterparty has an offsetting exposure with HSBC Continental Europe and a master netting or similar arrangement is in place with a
right of set off only in the event of default, insolvency or bankruptcy, or the offset criteria are not otherwise satisfied; and
– in the case of derivatives, reverse repurchase/repurchase, stock borrowing/lending and similar agreements, cash and non-cash collateral
(debt securities and equities) has been received/pledged to cover net exposure in the event of a default or other predetermined events.
The effect of over-collateralisation is excluded.
'Amounts not subject to enforceable master netting agreements’ include contracts executed in jurisdictions where the rights of set off may not
be upheld under the local bankruptcy laws, and transactions where a legal opinion evidencing enforceability of the right of offset may not have
been sought, or may have been unable to obtain.

Offsetting of financial assets and financial liabilities |  |
| Amounts subject to enforceable netting arrangements | Amounts not subject to enforceable netting arrangements 3 | Total
| Gross amounts | Amounts offset | Net amounts in the balance sheet | Amounts not offset in the balance sheet | Net amount
Financial Instruments including non-cash collateral | Cash collateral
| €m | €m | €m | €m | €m | €m | €m | €m
Financial assets |  |  |  |  |  |  |  |
Derivatives (Note 15)1 | 55,491 | (14,839) | 40,652 | (30,260) | (9,785) | 607 | 2,599 | 43,251
Reverse repos, stock borrowing and similar agreements classified as:2 | 62,970 | (37,167) | 25,803 | (25,587) | (216) | — | 186 | 25,989
– trading assets | 39 | — | 39 | (39) | — | — | 186 | 225
– non-trading assets | 62,931 | (37,167) | 25,764 | (25,548) | (216) | — | — | 25,764
At 31 Dec 2024 | 118,461 | (52,006) | 66,455 | (55,847) | (10,001) | 607 | 2,785 | 69,240
Derivatives (Note 15)1 | 64,558 | (19,479) | 45,079 | (34,097) | (10,170) | 812 | 443 | 45,522
Reverse repos, stock borrowing and similar agreements classified as:2 | 50,300 | (25,757) | 24,543 | (24,471) | (72) | — | 61 | 24,604
– trading assets | 53 | — | 53 | (53) | — | — | 61 | 114
– non-trading assets | 50,247 | (25,757) | 24,490 | (24,418) | (72) | — | — | 24,490
At 31 Dec 2023 | 114,858 | (45,236) | 69,622 | (58,568) | (10,242) | 812 | 504 | 70,126
Financial Liabilities |  |  |  |  |  |  |  |
Derivatives (Note 15)1 | 55,816 | (14,839) | 40,977 | (29,513) | (10,408) | 1,056 | 880 | 41,857
Repos, stock lending and similar agreements classified as:2 | 49,511 | (37,167) | 12,344 | (12,166) | (178) | — | 1 | 12,345
– trading liabilities | — | — | — | — | — | — | 1 | 1
– non-trading liabilities | 49,511 | (37,167) | 12,344 | (12,166) | (178) | — | — | 12,344
At 31 Dec 2024 | 105,327 | (52,006) | 53,321 | (41,679) | (10,586) | 1,056 | 881 | 54,202
Derivatives (Note 15)1 | 62,324 | (19,479) | 42,845 | (35,011) | (6,994) | 840 | 785 | 43,630
Repos, stock lending and similar agreements classified as:2 | 36,912 | (25,757) | 11,155 | (10,534) | (621) | — | 5 | 11,160
– trading liabilities | 2 | — | 2 | (2) | — | — | 5 | 7
– non-trading liabilities | 36,910 | (25,757) | 11,153 | (10,532) | (621) | — | — | 11,153
At 31 Dec 2023 | 99,236 | (45,236) | 54,000 | (45,545) | (7,615) | 840 | 790 | 54,790

1 At 31 December 2024, the amount of cash margin received that had been offset against the gross derivatives assets was EUR 720 million
(2023: EUR 852 million). The amount of cash margin paid that had been offset against the gross derivatives liabilities was EUR 1,592 million
(2023: EUR 3,300 million).
2 For the amount of repos, reverse repos, stock lending, stock borrowing and similar agreements recognised on the balance sheet within 'Trading Assets' and
'Trading Liabilities', see the 'Funding sources and uses' table on page 215.
3 These exposures continue to be secured by financial collateral, but HSBC Continental Europe may not have sought or been able to obtain a legal opinion
evidencing enforceability of the right of offset.

Universal Registration Document and Annual Financial Report 2024 | 315

29 Called up share capital and other equity instruments
Called up share capital and share premium
At 31 December 2024, HSBC Continental Europe's capital amounted to EUR 1,328 million divided into 265,583,192 ordinary shares with a
nominal value of EUR 5, fully paid up.

HSBC Continental Europe ordinary shares of EUR 5 each
| 2024 | 2023
| Number | €m | Number | €m
At 1 Jan | 212,466,555 | 1,062 | 212,466,555 | 1,062
Shares issued | 53,116,637 | 266 | — | —
At 31 Dec | 265,583,192 | 1,328 | 212,466,555 | 1,062

HSBC Continental Europe share premium
| 2024 | 2023
| €m | €m
At 31 Dec | 6,747 | 5,264

Total called up share capital and share premium
| 2024 | 2023
| €m | €m
At 31 Dec | 8,075 | 6,326

Other equity instruments
Additional tier 1 capital instruments

HSBC Continental Europe’s additional tier 1 capital instruments in issue which are accounted for as equity
|  | First call date | 2024 | 2023
|  | €m | €m
EUR 200 million | Perpetual Subordinated additional Tier 1 instruments issued in 2017 | 26/05/2022 | 200 | 200
EUR 300 million | Perpetual Subordinated additional Tier 1 instruments issued in 2018 | 28/03/2023 | 300 | 300
EUR 250 million | Perpetual Subordinated additional Tier 1 instruments issued in 2019 | 18/12/2024 | — | 250
EUR 250 million | Perpetual Subordinated additional Tier 1 instruments issued in 2022 | 24/03/2027 | 248 | 248
EUR 250 million | Perpetual Subordinated additional Tier 1 instruments issued in 2024 | 18/12/2029 | 247 | —
EUR 235 million | Perpetual Subordinated Resettable Additional Tier 1 instrument issued in 2016 | 01/01/2022 | 235 | 235
EUR 200 million | Perpetual Subordinated Resettable Additional Tier 1 instrument issued in 2019 | 01/01/2025 | 200 | 200
At 31 Dec |  | 1,430 | 1,433

30 Contingent liabilities, contractual commitments and guarantees
Contingent liabilities and commitments

| 2024 | 2023
| €m | €m
Guarantees and other contingent liabilities:1 |  |
– financial guarantees | 1,950 | 1,552
– performance and other guarantees | 16,899 | 15,261
– other contingent liabilities | 16 | 2
At 31 Dec | 18,865 | 16,815
Commitments:1,2 |  |
– documentary credits and short-term trade-related transactions | 1,099 | 1,192
– forward asset purchases and forward deposits placed | 35,132 | 40,573
– standby facilities, credit lines and other commitments to lend | 74,589 | 70,382
At 31 Dec | 110,820 | 112,147

1 Includes EUR 0.3 million guarantees and other contingent liabilities and EUR 454 million commitments related to private banking business in Germany at 31 Dec
2024 (2023 : EUR 80 million guarantees and other contingent liabilities and EUR 509 million commitments related to retail banking operations in France, and EUR
5 million commitments related to hedge fund administration business operations in France).
2 Includes EUR 104,656 million of commitments at 31 December 2024 (2023: EUR 106,159 million), to which the impairment requirements in IFRS 9 are applied
where HSBC Continental Europe has become party to an irrevocable commitment.
The amounts disclosed in the above table reflect HSBC Continental Europe’s maximum exposure under a large number of individual guarantee
undertakings. The risks and exposures arising from gua r antees are captured and managed in accordance with HSBC Continental Europe’s
overall credit risk management policies and procedures. Guarantees with terms of more than one year are subject to HSBC Continental
Europe’s annual credit review process. The total of the nominal principal amounts is not representative of future liquidity needs.

316 | Universal Registration Document and Annual Financial Report 2024

Notes on the consolidated financial statements

Guarantees
HSBC Continental Europe provides guarantees and similar undertakings on behalf of both third-party customers and other entities within the
HSBC Group. These guarantees are generally provided in the normal course of HSBC Continental Europe's banking business. The principal types
of guarantees provided, and the maximum potential amount of future payments which HSBC Continental Europe could be required to make at
31 December were as follows:

| 2024 | 2023
| In favour of third parties | In favour of other HSBC Group entities | In favour of third parties | In favour of other HSBC Group entities
| €m | €m | €m | €m
Guarantee type |  |  |  |
Financial guarantees contracts | 1,389 | 561 | 1,084 | 468
Performance and other guarantees | 15,551 | 1,348 | 14,006 | 1,255
At 31 Dec | 16,940 | 1,909 | 15,090 | 1,723

Financial guarantees include undertakings to fulfil the obligations of customers or group entities, should the obligated party fail to do so.
Financial guarantees also include stand-by letters of credit, which are financial guarantees given irrevocable obligations on the part of HSBC
Continental Europe to pay a third party when a customer fails to meet a commitment.
Performance guarantees include performance bonds, direct credit substitutes, stand-by letters of credit related to particular transactions which
are undertakings by which the requirement to make payment under the guarantee depends on the outcome of a future event which is
unconnected to the creditworthiness of the customer. Other guarantees includes bid bonds and another transaction-related guarantees which
are undertakings by which the requirement to make payment under the guarantee depends on the outcome of a future event which is
unconnected to the creditworthiness of the customer.
The amounts disclosed in the above table reflect HSBC Continental Europe’s maximum exposure under a large number of individual guarantee
undertakings. The risks and exposures arising from guarantees are captured and managed in accordance with our overall credit risk
management policies and procedures.
Guarantees with terms of more than one year are subject to the annual credit review process.
HSBC Continental Europe has no contingent liabilities or commitments in relation to joint ventures or associates, incurred jointly or otherwise.
The majority of the above guarantees have a term of more than one year. Those guarantees are subject to HSBC Continental Europe’s annual
credit review process.
When HSBC Continental Europe gives a guarantee on behalf of a customer, it retains the right to recover from that customer amounts paid
under the guarantee.

31 Finance lease receivables
HSBC Continental Europe leases a variety of assets to third parties under finance leases, including transport assets (such as aircraft), property
and general plant and machinery. At the end of lease terms, assets may be sold to third parties or leased for further terms. Rentals are
calculated to recover the cost of assets less their residual value, and earn finance income.

| 2024 | 2023
| Total future minimum payments | Unearned finance income | Present Value | Total future minimum payments | Unearned finance income | Present Value
| €m | €m | €m | €m | €m | €m
Lease receivables |  |  |  |  |  |
– No later than one year | 131 | (16) | 115 | 179 | (22) | 157
– Later than one year and no later than five years | 366 | (54) | 312 | 538 | (72) | 466
– One to two years | 111 | (16) | 95 | 247 | (26) | 221
– Two to three years | 96 | (14) | 82 | 108 | (17) | 91
– Three to four years | 90 | (12) | 78 | 115 | (15) | 100
– Four to five years | 69 | (12) | 57 | 68 | (14) | 54
– Later than five years | 291 | (22) | 269 | 359 | (33) | 326
Total at 31 Dec | 788 | (92) | 696 | 1,076 | (127) | 949

Universal Registration Document and Annual Financial Report 2024 | 317

32 Legal proceedings and regulatory matters relating to HSBC group entities
generally
HSBC Group entities, including HSBC Continental Europe, are party to various legal proceedings and regulatory matters arising out of their
normal business operations. Apart from the matters described below and in the section ‘Legal risks and litigation management’ on pages 223 to
224 of the Universal Registration Document 2024, HSBC Continental Europe considers that none of these matters is significant. HSBC
Continental Europe recognises a provision for a liability in relation to these matters when it is probable that an outflow of economic benefits will
be required to settle an obligation which has arisen as a result of past events, and for which a reliable estimate can be made of the amount of
the obligation. Any provision recognised does not constitute an admission of wrongdoing or legal liability. While the outcome of these matters is
inherently uncertain, management believes that, based on the information available to it, appropriate provisions, as necessary, have been made
in respect of such legal proceedings as at 31 December 2024.
Bernard L. Madoff Investment Securities LLC
Various non-US HSBC companies, including HSBC Institutional Trust Services (Ireland) DAC (‘HTIE’) and/or its subsidiary Somers Dublin DAC,
provided custodial, administration and similar services to a number of funds incorporated outside the US whose assets were invested with
Bernard L. Madoff Investment Securities LLC (‘Madoff Securities’).
On 1 August 2018, HSBC Continental Europe acquired from HSBC Bank plc 100 per cent of the shares of HTIE. Pursuant to the terms of the
Sale and Purchase Agreement, HSBC Continental Europe and/or its subsidiaries will be indemnified by HSBC Bank plc in respect of certain
liabilities relating to the activities of HTIE and/or Somers. (HTIE subsequently merged into HSBC Continental Europe Dublin Branch).
The Madoff-related proceeding in which HTIE and/or its subsidiary Somers Dublin DAC are involved is described below:
US litigation:
Madoff Securities is being liquidated in the US by a trustee who has brought lawsuits against various HSBC companies and others, seeking
recovery of alleged transfers from Madoff Securities to HSBC in the amount of USD 543m (plus interest). These lawsuits remain pending in the
US Bankruptcy Court for the Southern District of New York.
European interbank offered rates litigation
In December 2016, the European Commission (‘EC’) issued a decision finding that HSBC, among other banks, engaged in anti-competitive
practices in connection with the pricing of euro interest rate derivatives, and the EC imposed a fine on HSBC based on a one-month
infringement in 2007. The fine was annulled in 2019 and a lower fine was imposed in 2021, which has been paid. In January 2023, the European
Court of Justice dismissed an appeal by HSBC and upheld the EC's findings on HSBC's liability. In November 2024, the General Court of the
European Union rejected a separate appeal by HSBC concerning the amount of the fine. This matter is now closed.
Tax-related investigations
Since 2023, the French National Financial Prosecutor has been investigating a number of banks, including HSBC Continental Europe and the
Paris branch of HSBC Bank plc, in connection with alleged tax fraud related to the dividend withholding tax treatment of certain trading activities.
HSBC Bank plc and the German branch of HSBC Continental Europe also continue to cooperate with investigations by the German public
prosecutor into numerous financial institutions and their employees, in connection with the dividend withholding tax treatment of certain trading
activities.
Based on the facts currently known, it is not practicable at this time for HSBC to predict the resolution of these matters, including the timing or
any possible impact on HSBC, which could be significant.
Other regulatory investigations, reviews and litigation
HSBC Continental Europe and/or certain of its affiliates are also subject to a number of other enquiries and examinations, requests for
information, investigations and reviews by various tax authorities, regulators, competition and law enforcement authorities, as well as legal
proceedings including litigation and other contentious proceedings in connection with various matters arising out of its businesses and
operations.
At the present time, HSBC Continental Europe does not expect the ultimate resolution of any of these matters to be material to its financial
position. However, given the uncertainties involved in legal proceedings and regulatory matters, there can be no assurance regarding the
eventual outcome of a particular matter or matters.

318 | Universal Registration Document and Annual Financial Report 2024

Notes on the consolidated financial statements

33 Related party transactions
The ultimate parent company of the Group is HSBC Holdings plc, which is incorporated in the United Kingdom.
Copies of the Group financial statements may be obtained from the following address:
HSBC Holdings plc
8 Canada Square
London
E14 5HQ
All transactions were made in the ordinary course of business and on substantially the same terms, including interest rates and security, as for
comparable transactions with persons of a similar standing or, where applicable, with other employees. The transactions did not involve more
than the normal risk of repayment or present other unfavourable features.
Key Management Personnel
The table below sets out transactions which fall under IAS 24 ‘Related Party Disclosures’ between HSBC Continental Europe and the Key
Management Personnel of HSBC Continental Europe and on one hand, their respective spouses and children living in the family home, and on
the other hand, controlled companies.

Transactions and balances during the year with Key Management Personnel
| 2024 | 2023
| Number of persons | Balance at 31 Dec 2 | Highest amounts outstanding during year 2 | Number of persons | Balance at 31 Dec 2 | Highest amounts outstanding during year 2
|  | €k | €k |  | €k | €k
Key Management Personnel 1 |  |  |  |  |  |
Advances and credits | 20 | — | — | 17 | 146 | 535
Guarantees | 20 | — | — | 17 | — | —
Deposits | 20 | — | 480 | 17 | 6,632 | 13,178

1 Includes Key Management Personnel, close family members of Key Management Personnel and entities which are controlled or jointly controlled by Key
Management Personnel or their close family members.
2 The highest balance during the year and the balance at 31 December are considered to be the most significant information to show the transactions during the
year.
Compensation to the Key Management Personnel of HSBC Continental Europe under IAS 24 is disclosed as follows:

Compensation of Key Management Personnel
| 2024 | 2023
| €k | €k
Short-term employee benefits | 213 | 175
Post-employment benefits | 186 | 104
Other long-term employee benefits | — | —
Termination benefits | 84 | 60
Share-based payments | 923 | 755
At 31 Dec | 1,406 | 1,094

Shareholdings, options and other securities of Key Management Personnel
| 2024 | 2023
Number of options held over HSBC Holdings ordinary shares under employee share plans | — | —
Number of HSBC Holdings ordinary shares held beneficially and non-beneficially | 67,438 | 46,927
At 31 Dec | 67,438 | 46,927

The Corporate governance report also includes a detailed description of Directors’ remuneration (see page 41 and following).

Universal Registration Document and Annual Financial Report 2024 | 319

Transactions with other related parties
There is no significant amount due to joint ventures and associates.
Transactions detailed below include amounts due to/from HSBC Continental Europe and fellow subsidiaries of the HSBC Group.

Transactions and balances during the year with HSBC Bank plc, subsidiaries of HSBC Bank plc, HSBC Holdings plc and its subsidiaries 1
| 2024
| Due to/from HSBC Bank plc (Parent) | Due to/from subsidiaries of HSBC Bank plc | Due to/from HSBC Holding plc and its subsidiaries
| Highest balance during the year until 31 December | Balance at 31 December | Highest balance during the year until 31 December | Balance at 31 December | Highest balance during the year until 31 December | Balance at 31 December
| €m | €m | €m | €m | €m | €m
Assets |  |  |  |  |  |
Trading assets | 117 | 117 | — | — | 16 | —
Derivatives | 11,635 | 11,635 | 6 | 6 | 1,947 | 1,647
Financial assets designated and otherwise mandatorily measured at fair value through profit or loss | 52 | 50 | — | — | 31 | —
Loans and advances to banks | 1,297 | 1,230 | 481 | 442 | 1,440 | 537
Loans and advances to customers | — | — | 4 | — | 549 | 298
Financial investments | — | — | — | — | 223 | 95
Reverse repurchase agreements – non-trading | 3,654 | 2,413 | — | — | 3,984 | 3,712
Prepayments, accrued income and Other assets | 7,853 | 3,039 | 121 | 92 | 1,957 | 1,515
Total related party assets at 31 Dec | 24,608 | 18,484 | 612 | 540 | 10,147 | 7,804
Liabilities |  |  |  |  |  |
Trading liabilities | 2 | — | — | — | 2 | 1
Deposits by banks | 1,447 | 652 | 470 | 423 | 2,270 | 1,322
Customer accounts | — | — | 60 | 59 | 420 | 250
Derivatives | 13,869 | 13,869 | 5 | 1 | 2,816 | 2,816
Subordinated amount due | 1,900 | 1,900 | — | — | 260 | —
Repurchase agreements – non-trading | 4,578 | 1,717 | 19 | 19 | 764 | 165
Provisions, accruals, deferred income and other liabilities | 5,978 | 691 | 75 | 43 | 1,380 | 351
Total related party liabilities at 31 Dec | 27,774 | 18,829 | 629 | 545 | 7,912 | 4,905
Guarantees and commitments | 4,224 | 265 | 243 | 231 | 2,559 | 2,416
| 2023
Assets |  |  |  |  |  |
Trading assets | 59 | 57 | — | — | 16 | 16
Derivatives | 15,014 | 11,584 | — | — | 1,571 | 1,571
Financial assets designated and otherwise mandatorily measured at fair value through profit or loss | 287 | 50 | — | — | 30 | 30
Loans and advances to banks | 1,177 | 1,055 | 36 | 33 | 3,330 | 981
Loans and advances to customers | — | — | 4 | 2 | 477 | 292
Financial investments | — | — | — | — | 223 | 223
Reverse repurchase agreements – non-trading | 2,781 | 1,338 | — | — | 887 | 887
Prepayments,accrued income and Other assets | 7,661 | 1,403 | 115 | 94 | 2,397 | 833
Total related party assets at 31 Dec | 26,980 | 15,487 | 155 | 129 | 8,932 | 4,833
Liabilities |  |  |  |  |  |
Trading liabilities | 19 | 2 | — | — | 1 | 1
Financial liabilities designated at fair value | — | — | — | — | — | —
Deposits by banks | 2,262 | 1,358 | 364 | 364 | 3,324 | 766
Customer accounts | — | — | 49 | 43 | 202 | 141
Derivatives | 12,772 | 10,328 | — | — | 2,511 | 1,726
Subordinated amount due | 1,712 | 1,650 | — | — | 260 | 260
Repurchase agreements – non-trading | 4,578 | 4,578 | — | — | 1,121 | 51
Provisions, accruals, deferred income and other liabilities | 7,856 | 2,591 | 58 | 50 | 1,457 | 743
Total related party liabilities at 31 Dec | 29,199 | 20,508 | 471 | 457 | 8,876 | 3,688
Guarantees and commitments | 2,775 | 560 | 96 | 96 | 2,364 | 1,557

320 | Universal Registration Document and Annual Financial Report 2024

Notes on the consolidated financial statements

Transactions and balances during the year with HSBC Bank plc, subsidiaries of HSBC Bank plc, HSBC Holdings plc and its subsidiaries
| 2024 | 2023 1
| Due to/from HSBC Bank plc (Parent) | Due to/from subsidiaries of HSBC Bank plc | Due to/from HSBC Holding plc and its subsidiaries | Due to/from HSBC Bank plc (Parent) | Due to/from subsidiaries of HSBC Bank plc | Due to/from HSBC Holding plc and its subsidiaries
| €m | €m | €m | €m | €m | €m
Income Statement (continuing operations) |  |  |  |  |  |
Interest income | 478 | 6 | 135 | 188 | 1 | 91
Interest expense | 555 | 19 | 78 | 335 | 5 | 119
Fee income | 105 | 1 | 46 | 97 | 1 | 45
Fee expense | 100 | 2 | 37 | 71 | 1 | 25
Gains less losses from financial investments | — | — | 2 | — | — | —
Other operating income | 15 | 2 | 31 | 12 | 2 | 37
Dividend income | — | — | — | — | — | —
General and administrative expenses | 10 | 1 | 788 | 21 | — | 622

1 In compliance with IFRS 5 standards, the comparatives have been represented to reflect discontinued operations related to the planned sale of the life insurance
business in France. This also includes discontinued operations related to the sale of the retail banking operations in France.
The above outstanding balances arose in the ordinary course of business and on substantially the same terms, including interest rates and
security, as for comparable transactions with third-party counterparties.

34 Events after the balance sheet date
There has been no significant event between 31 December 2024 and the date of approval of these financial statements by the Board of
Directors which would require an adjustment or additional disclosure in the financial statements.

Universal Registration Document and Annual Financial Report 2024 | 321

35 HSBC Continental Europe subsidiaries, joint ventures and associates
HSBC Continental Europe classifies investments in entitie s which it controls as subsidiaries. HSBC Continental Europe consolidation policy is
described in Note 1.

Consolidated Subsidiaries | Country of incorporation or registration | Main line of business | HSBC Continental Europe interest (%)
|  |  | 2024 | 2023
Actions Monde et Emergent 1,5 | France | Financial company | 100.0 | 0.0
Actions Monde et Europe 1,5 | France | Financial company | 100.0 | 0.0
Beau Soleil Limited Partnership | Hong Kong | Financial company | 85.0 | 85.0
CCF & Partners Asset Management Limited | United Kingdom | Financial company | 100.0 | 100.0
Charterhouse Administrators (D.T) Limited | United Kingdom | Investment company | 100.0 | 100.0
Charterhouse Management Services Limited | United Kingdom | Investment company | 100.0 | 100.0
DEMPAR 1 | France | Financial company | 100.0 | 100.0
ERISA Actions Grandes Valeurs 5 | France | Financial company | 100.0 | 100.0
FCT HAV FI FLR 12-46 5 | France | Financial company | 97.0 | 100.0
Flandres Contentieux SA | France | Service company | 100.0 | 100.0
Foncière Elysées | France | Real estate company | 100.0 | 100.0
HLF | France | Commercial company | 100.0 | 100.0
HSBC Actions Europe Part 1,5 | France | Financial company | 51.5 | 0.0
HSBC Assurances Vie (France)5 | France | Insurance company | 100.0 | 100.0
HSBC Bank Malta p.l.c. | Malta | Financial company | 70.0 | 70.0
HSBC Epargne Entreprise (France)3 | France | Financial company | 0.0 | 100.0
HSBC Euro Protect 80 Plus Part C 5 | France | Financial company | 78.1 | 76.3
HSBC Europe Small Mid Cap 3,5 | France | Financial company | 0.0 | 55.9
HSBC Factoring (France) | France | Financial company | 100.0 | 100.0
HSBC GB Japan Eq Ind 5 | France | Financial company | 99.7 | 100.0
HSBC GIF-Eurolnd Gr-A 3,5 | France | Financial company | 30.4 | 55.2
HSBC GLB-US Equity Ind-Aceur 3,5 | France | Financial company | 40.2 | 87.0
HSBC Global Asset Management (Deutschland) GmbH | Germany | Asset Management | 100.0 | 100.0
HSBC Global Asset Management (France) | France | Asset management | 100.0 | 100.0
HSBC Global Asset Management (Malta) Limited | Malta | Asset management | 70.0 | 70.0
HSBC Global Infrastructur Debt FD Feeder 5 | France | Financial company | 100.0 | 56.8
HSBC Global Investment Funds Gem Equity 5 | France | Financial company | 56.5 | 59.6
HSBC Horizon 2034 2036 A 3D 1,5 | France | Financial company | 76.7 | 0.0
HSBC Life Assurance (Malta) Limited | Malta | Insurance company | 70.0 | 70.0
HSBC Mix Dynamique FCP3DEC 5 | France | Financial company | 58.1 | 56.7
HSBC Mul.Ass.St.Fact.S FCP3DEC 5 | France | Financial company | 100.0 | 100.0
HSBC Oblig Inflation Euro Ac 3,5 | France | Financial company | 0.0 | 58.5
HSBC Operational Services GmbH | Germany | Service Company | 100.0 | 100.0
HSBC Port-World Sel 5-Aheur 3,5 | France | Financial company | 48.9 | 50.4
HSBC Private Bank (Luxembourg) S.A | Luxembourg | Financial company | 100.0 | 100.0
HSBC Real Estate Leasing (France) | France | Financial company | 100.0 | 100.0
HSBC REIM (France) | France | Asset management | 100.0 | 100.0
HSBC Resp Inve Fd-Sri Dynamic Part Ac 5 | France | Financial company | 72.8 | 72.7
HSBC Resp Inves Funds-Sri Balanced Ac 5 | France | Financial company | 64.1 | 66.3
HSBC Resp Investment Funds Sri Global Equity 5 | France | Financial company | 61.8 | 70.0
HSBC Select Balanced Part A 3,5 | France | Financial company | 35.4 | 50.4
HSBC Select Dynamic A FCP 2DEC 5 | France | Financial company | 78.6 | 80.7
HSBC Select Equity A Fcp 4Dec 5 | France | Financial company | 84.0 | 85.5
HSBC Select Flexible Part A 5 | France | Financial company | 63.9 | 61.6
HSBC Service Company Germany GmbH | Germany | Service Company | 100.0 | 100.0
HSBC Services (France) | France | Financial company | 100.0 | 100.0
HSBC SFH (France)3 | France | Financial company | 0.0 | 100.0
HSBC Small Cap France 5 | France | Financial company | 52.7 | 50.9
HSBC Transaction Services GmbH | Germany | Service Company | 100.0 | 100.0
HSBC Trinkaus & Burkhardt (International) S.A. | Luxembourg | No active business | 100.0 | 100.0
HSBC Trinkaus & Burkhardt Gesellschaft fur Bankbeteiligungen mbH | Germany | Investment Company | 100.0 | 100.0
HSBC Trinkaus & Burkhardt GmbH | Germany | Financial Company | 100.0 | 100.0
HSBC Trinkaus Family Office GmbH | Germany | Service Company | 100.0 | 100.0
HSBC Trinkaus Real Estate GmbH | Germany | Real Estate Company | 100.0 | 100.0

322 | Universal Registration Document and Annual Financial Report 2024

Notes on the consolidated financial statements

Consolidated Subsidiaries | Country of incorporation or registration | Main line of business | HSBC Continental Europe interest (%)
|  |  | 2024 | 2023
HSBC World Equity Protect 80 5 | France | Financial company | 98.9 | 97.8
Internationale Kapitalanlagegesellschaft mit beschränkter Haftung | Germany | Service Company | 100.0 | 100.0
Keyser Ullmann Limited | United Kingdom | Investment company | 100.0 | 100.0
OPCVM8 – Erisa Diversifié N2 FCP 5 | France | Financial company | 100.0 | 100.0
OPCVM9 – Erisa Opportunités FCP 5 | France | Financial company | 100.0 | 100.0
SAF Baiyun | France | Financial company | 100.0 | 100.0
SAF Guangzhou | France | Financial company | 100.0 | 100.0
SAPC Ufipro Recouvrement | France | Service company | 99.9 | 99.9
SCI HSBC Assurances Immo 5 | France | Real estate company | 100.0 | 100.0
SFM | France | Commercial company | 100.0 | 100.0
SNC les Oliviers d’Antibes | France | Financial company | 60.0 | 60.0
Société Française et Suisse | France | Investment company | 100.0 | 100.0
Somers Dublin DAC | Ireland | Service company | 100.0 | 100.0
Sopingest | France | Financial company | 100.0 | 100.0
Trinkaus Europa Immobilien-Fonds Nr.3 Objekt Utrecht Verwaltungs-GmbH | Germany | Real Estate Company | 100.0 | 100.0
Trinkaus Immobilien-Fonds Geschaeftsfuehrungs-GmbH | Germany | Real Estate Company | 100.0 | 100.0
Trinkaus Immobilien-Fonds Verwaltungs-GmbH | Germany | Real Estate Company | 100.0 | 100.0
Trinkaus Private Equity Management GmbH | Germany | Asset Management | 100.0 | 100.0
Trinkaus Private Equity Verwaltungs GmbH | Germany | Asset Management | 100.0 | 100.0
Valeurs Mobilières Elysées | France | Investment company | 100.0 | 100.0
Associates | Country of incorporation or registration | Main line of business | HSBC Continental Europe interest (%)
|  |  | 2024 | 2023
HCM Holdings Ltd 2 | United Kingdom | Financial company | 0.0 | 51.0
Services Epargne Entreprise 3 | France | Service company | 0.0 | 14.2
Trinkaus Europa Immobilien-Fonds Nr. 7 Frankfurt Mertonviertel KG 4 | Germany | Real Estate Company | 41.0 | 41.0

1 Entrance in the perimeter.
2 Liquidation.
3 Exit from the perimeter.
4 The stake in the entity is impaired to zero for years.
5 The planned sale of life insurance business in France has been classified as held for sale in accordance with IFRS 5.

Non Consolidated Companies | Country of incorporation or registration | Reason of non-consolidation | HSBC Continental Europe interest (%)
|  |  | 2024 | 2023
CCF Finance Moyen Orient SAL | Lebanon | In the course of liquidation since 2002 | 99.9 | 99.9
CCF Holding Liban SAL | Lebanon | In the course of liquidation since 2002 | 75.0 | 75.0
FL FINANZ LEASING Gmbh | Germany | In the course of liquidation | 25.0 | 25.0
HSBC Private Markets Management SARL | Luxembourg | This entity does not meet the definition of subsidiary according to IFRS accounting standards. | 100.0 | 100.0
SNCB/M6 2007 A | France | Not consolidated in accordance with IFRS 10 | 100.0 | 100.0
SNCB/M6 2007 B | France | Not consolidated in accordance with IFRS 10 | 100.0 | 100.0
SNCB/M6 2008 A | France | Not consolidated in accordance with IFRS 10 | 100.0 | 100.0

Partnerships
As of 31 December 2024, the contribution of HSBC Middle East Leasing Partnership (‘MELP’) to the consolidated total assets of HSBC
Continental Europe w as EUR 89 million (2023: EUR 234 million) and EUR 9 million (2023: EUR 17 million) to the consolidated income statement.

Universal Registration Document and Annual Financial Report 2024 | 323

PricewaterhouseCoopers Audit | BDO Paris
63, rue de Villiers | 43-47, avenue de la Grande Armée
92208 Neuilly-sur-Seine Cedex, France | 75116 Paris, France

Statutory Auditors’ report on the
consolidated financial statements
(For the year ended 31 December 2024)
To the Shareholders,
HSBC Continental Europe
38, avenue Kléber
75116 Paris
Opinion
In compliance with the engagement entrusted to us by your Annual General Meeting, we have audited the accompanying consolidated financial
statements of HSBC Continental Europe for the year ended 31 December 2024.
In our opinion, the consolidated financial statements give a true and fair view of the assets and liabilities and of the financial position of the
Group at 31 December 2024 and of the results of its operations for the year then ended in accordance with International Financial Reporting
Standards as adopted by the European Union.
The audit opinion expressed above is consistent with our report to the Audit Committee.
Basis for opinion
Audit framework
We conducted our audit in accordance with professional standards applicable in France. We believe that the audit evidence we have obtained is
sufficient and appropriate to provide a basis for our opinion.
Our responsibilities under these standards are further described in the “Responsibilities of the Statutory Auditors relating to the audit of the
consolidated financial statements” section of our report.
Independence
We conducted our audit engagement in compliance with the independence rules provided for in the French Commercial Code (Code de
commerce) and the French Code of Ethics (Code de déontologie) for Statutory Auditors for the period from 1 January 2024 to the date of our
report, and, in particular, we did not provide any non-audit services prohibited by article 5(1) of Regulation (EU) No. 537/2014.
Justification of assessments – Key audit matters
In accordance with the requirements of articles L.821-53 and R.821-180 of the French Commercial Code relating to the justification of our
assessments, we inform you of the key audit matters relating to the risks of material misstatement that, in our professional judgement, were
the most significant in our audit of the consolidated financial statements, as well as how we addressed those risks.
These matters were addressed as part of our audit of the consolidated financial statements as a whole, and therefore contributed to the opinion
we formed as expressed above. We do not provide a separate opinion on specific items of the consolidated financial statements.

324 | Universal Registration Document and Annual Financial Report 2024

Statutory Auditors' report on the consolidated financial statements

Impairment of loans and advances to commercial customers
Description of risk | How our audit addressed this risk
Determining expected credit losses ('ECLs') calls on the judgement of management. The corresponding estimates are subject to a high degree of uncertainty, which has increased in the current economic environment with rising inflation, energy prices and decrease in interest rates. Management uses complex customised models to calculate ECLs. The type and scope of these adjustments vary depending on the company’s portfolio. They may or may not be based on models and the judgements of management. Assumptions are used to determine the risk inputs underlying the ECL estimates, including in particular forward-looking economic scenarios and their probability, business customer risk ratings (CRR) and the recoverability of the loans. We deemed this impairment to be a key audit matter as it requires significant judgement on the part of management when preparing the consolidated financial statements, particularly given the current economic climate. | Management has put in place controls designed to ensure the reliability of the calculation of ECLs. In this context, we tested the controls we deemed to be key to the audit in order to assess the relevance of the impairment losses recorded, in particular: – the examination and comparative review of several economic scenarios and their probability by a group of experts and an internal governance committee; – the effectiveness of the credit committees set up to assess and approve the estimated impairment, particularly the judgement exercised by management to determine the adjustments to be applied; – the validation and monitoring of models; – credit reviews to determine customer risk ratings of company portfolios; – the entry of critical data in the source systems, as well as the flow and transformation of the data between the source systems and the engine for calculating impairment losses. We called upon our experts to assess the reasonableness of the macro- economic variables forecasts, particularly regarding the estimated probability of various scenarios. They examined the sensitivity of expected credit losses to these assumptions. We also assessed the relevance of the model methodologies. Where expected credit losses were adjusted, we assessed the impairment losses determined by management and the supporting analysis. In addition, we assessed the level of ECLs using a sample of business customer loans, and the relevance of management’s judgement, particularly the level of customer risk ratings and expert valuations. We also assessed the disclosures on credit risk provided in the consolidated financial statements for the year ended 31 December 2024.

Impairment of loans and advances to commercial customers (non-financial company) stood at EUR 432 million at 31 December 2024.
See Note 1.1.d to the consolidated financial statements and the section entitled 'Distribution of financial instruments by credit quality' of the management report.

Recognition of deferred tax assets with respect to tax loss carryforwards
Description of risk | How our audit addressed this risk
Deferred tax assets on the French tax consolidation group amounted to EUR 538 million in HSBC Continental Europe's consolidated financial statements at 31 December 2024, of which EUR 501 million in deferred tax assets on tax loss carryforwards, after the recording in expenses of EUR 150 million in deferred tax asset on the losses of the French tax consolidation group. The valuation and recoverability of the deferred tax assets resulting from these tax loss carryforwards depend mainly on: – the taxable profit that HSBC Continental Europe expects to generate in the future; – the French tax legislation applicable to the recognition and use of deferred tax assets arising from HSBC Continental Europe’s tax loss carryforwards in France. The valuation and future use of deferred tax assets on tax loss carryforwards is based on significant judgements from management. These judgements relate primarily to forecasts of tax profit or loss, the duration of tax losses, and the feasible tax planning strategies available. Accordingly, given the significance of the amount of deferred tax assets at 31 December 2024 and the estimates and judgements made by management in recognising these deferred tax losses, we deemed them to be a key audit matter for HSBC Continental Europe's financial statements. | We performed the following procedures to validate the recoverability of deferred tax assets with respect to tax loss carryforwards: – we tested the controls in place with respect to the calculation and recognition of deferred tax assets on tax loss carryforwards; – we performed a critical review, with the help of our tax experts, of the assumptions used by management to estimate the recoverable amount of the estimated deferred tax assets on tax loss carryforwards at the year end. Our work consisted primarily in: – testing the key inputs used in the model for the recognition of deferred taxes, including cash flow forecasts for plans approved by the Board of Directors; – assessing management's estimates of forecasts of tax profit or loss by reviewing the temporary and permanent differences from prior years that are reflected in future forecasts; – comparing the assumptions used by management to estimate future tax profit or loss to determine the amount of deferred tax assets to be recognised with the assumptions used to determine future cash flows used in the various asset impairment tests; assessing the compliance of management's assumptions with existing and future tax laws and rules; – we tested the classification of deferred tax assets taking into account the existence of deferred tax liabilities; – assessing the estimates made by management concerning the recording in expenses of the deferred tax assets on the losses of the French tax consolidation group; – lastly, we assessed the appropriateness of the disclosures in the notes to the consolidated financial statements.

For more information, see Notes 1.2.l and 8 to the consolidated financial statements.

Universal Registration Document and Annual Financial Report 2024 | 325

Valuation of liabilities under directly participating life insurance contracts and investment contracts with discretionary participation features
Description of risk | How our audit addressed this risk
At 31 December 2024, insurance contract liabilities of EUR 518 million were recorded in the balance sheet, with a further EUR 21,023 million of insurance contract liabilities reclassified as "liabilities of disposal groups held for sale", see Note 5 – Insurance businesses to the consolidated financial statements. The valuation model based on the variable fee approach ('VFA') is used for directly participating life insurance contracts and investment contracts with discretionary participation features, which represent the vast majority of contracts issued by the Group, totalling EUR 465 million, including an amount of EUR20,985 million reclassified as liabilities of disposal groups held for sale. The estimate of these liabilities under IFRS 17 is based on: – the determination of the best estimate of the present value of future cash flows required to meet contractual obligations towards policyholders: The forecasting of these future cash flows involves assumptions about policyholder behaviour and management decisions. These estimated cash flows are discounted to reflect the time value of money based on a risk- free rate curve adjusted for an illiquidity risk premium; – the definition of the adjustment for non-financial risk, aimed at addressing the uncertainty about the amount and timing of future cash flows as insurance contracts are carried out. To assess this risk adjustment, the Group has chosen to use the Value at Risk (VAR) method. In particular, the Group used its judgement in choosing the corresponding confidence level and diversification level; – the contractual service margin represents the present value of future deferred profits attributable to the Group over the coverage period of profitable insurance contracts and is recorded in the income statement based on coverage units defined by the Group and appropriate for the groups of insurance contracts in question. Considering the long-term nature of insurance contract liabilities, their high sensitivity to economic and financial conditions, which may have an impact on policyholder behaviour, the significant management judgement involved in selecting data and assumptions, as well as the use of complex modelling techniques, we considered the valuation of technical provisions for insurance contracts valued using the VFA model to be a key audit matter. | With the assistance of our actuarial modelling specialists, we performed the following audit procedures: – reviewing the processes and methods defined by the Group’s management to determine, in accordance with the principles of IFRS 17, the best estimate of the present value of future cash flows required to settle contractual obligations towards policyholders under insurance contracts measured using the VFA model; – assessing the compliance of the accounting policies used by the Group with the provisions of IFRS 17; – assessing and testing the key controls put in place by management, including the information systems’ control environment used in data processing. In particular, we assessed the control procedures concerning the methods, judgements and key assumptions made by management. We also assessed the appropriateness of any changes in assumptions, inputs or actuarial modelling processes used in evaluating future cash flows; – testing, on a sample basis, the main methods, assumptions and inputs used for calculating estimates of the present value of future cash flows, the adjustment for non-financial risk and the contractual service margin. We assessed, on a sample basis, the reasonableness of these estimates; – testing, on a sample basis, the reliability of the underlying data used in forecast models and the calculation of the best estimate of the present value of future cash flows; – carrying out analytical procedures on the changes to identify, where appropriate, any significant inconsistent or unexpected variations; – assessing the appropriateness of the disclosures presented in the notes to the consolidated financial statements.

For more information, see Notes 1.2.j and 5 to the consolidated financial statements.
Specific verifications
As required by legal and regulatory provisions and in accordance with professional standards applicable in France, we have also performed the
specific verifications on the information pertaining to the Group presented in the Board of Directors’ management report.
We have no matters to report as to its fair presentation and its consistency with the consolidated financial statements.
Other verifications and information pursuant to legal and regulatory requirements
Presentation of the consolidated financial statements to be included in the annual financial report
In accordance with professional standards applicable to the Statutory Auditors’ procedures for annual and consolidated financial statements
presented according to the European single electronic reporting format, we have verified that the presentation of the consolidated financial
statements to be included in the annual financial report referred to in paragraph I of article L.451-1-2 of the French Monetary and Financial Code
(Code monétaire et financier) and prepared under the Chief Executive Officer’s responsibility, complies with this format, as defined by European
Delegated Regulation No. 2019/815 of 17 December 2018. As it relates to the consolidated financial statements, our work included verifying
that the markups in the financial statements comply with the format defined by the aforementioned Regulation.
On the basis of our work, we conclude that the presentation of the consolidated financial statements to be included in the annual financial report
complies, in all material respects, with the European single electronic reporting format.
It is not our responsibility to ensure that the consolidated financial statements to be included by the Company in the annual financial report filed
with the AMF correspond to those on which we carried out our work.
Appointment of the Statutory Auditors
We were appointed Statutory Auditors of HSBC Continental Europe by the Annual General Meetings held on 23 April 2015 for
PricewaterhouseCoopers Audit and on 10 May 2007 for BDO Paris.
At 31 December 2024, PricewaterhouseCoopers Audit and BDO Paris were in the tenth and the eighteenth consecutive year of their
engagement, respectively.

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Statutory Auditors' report on the consolidated financial statements

Responsibilities of management and those charged with governance for the consolidated
financial statements
Management is responsible for preparing consolidated financial statements giving a true and fair view in accordance with International Financial
Reporting Standards as adopted by the European Union and for implementing the internal control procedures it deems necessary for the
preparation of consolidated financial statements that are free of material misstatement, whether due to fraud or error.
In preparing the consolidated financial statements, management is responsible for assessing the Company’s ability to continue as a going
concern, disclosing, as applicable, matters related to going concern, and using the going concern basis of accounting, unless it expects to
liquidate the Company or to cease operations.
The Audit Committee is responsible for monitoring the financial reporting process and the effectiveness of internal control and risk management
systems, as well as, where applicable, any internal audit systems relating to accounting and financial reporting procedures.
The consolidated financial statements were approved by the Board of Directors.
Responsibilities of the Statutory Auditors relating to the audit of the consolidated financial
statements
Objective and audit approach
Our role is to issue a report on the consolidated financial statements. Our objective is to obtain reasonable assurance about whether the
consolidated financial statements as a whole are free of material misstatement. Reasonable assurance is a high level of assurance, but is not a
guarantee that an audit conducted in accordance with professional standards will always detect a material misstatement when it exists.
Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to
influence the economic decisions taken by users on the basis of these consolidated financial statements.
As specified in article L.821-55 of the French Commercial Code, our audit does not include assurance on the viability or quality of the Company’s
management.
As part of an audit conducted in accordance with professional standards applicable in France, the Statutory Auditors exercise professional
judgement throughout the audit.
They also:
– identify and assess the risks of material misstatement in the consolidated financial statements, whether due to fraud or error, design and
perform audit procedures in response to those risks, and obtain audit evidence considered to be sufficient and appropriate to provide a basis
for their opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud
may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control;
– obtain an understanding of the internal control procedures relevant to the audit in order to design audit procedures that are appropriate in the
circumstances, but not for the purpose of expressing an opinion on the effectiveness of the internal control;
– evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management and the
related disclosures in the notes to the consolidated financial statements;
– assess the appropriateness of management’s use of the going concern basis of accounting and, based on the audit evidence obtained,
whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Company’s ability to continue as a
going concern. This assessment is based on the audit evidence obtained up to the date of the audit report. However, future events or
conditions may cause the Company to cease to continue as a going concern. If the Statutory Auditors conclude that a material uncertainty
exists, they are required to draw attention in the audit report to the related disclosures in the consolidated financial statements or, if such
disclosures are not provided or are inadequate, to issue a qualified opinion or a disclaimer of opinion;
– evaluate the overall presentation of the consolidated financial statements and assess whether these statements represent the underlying
transactions and events in a manner that achieves fair presentation;
– obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the Group to
express an opinion on the consolidated financial statements. The Statutory Auditors are responsible for the management, supervision and
performance of the audit of the consolidated financial statements and for the opinion expressed thereon.
Report to the Audit Committee
We submit a report to the Audit Committee which includes, in particular, a description of the scope of the audit and the audit programme
implemented, as well as the results of our audit. We also report any significant deficiencies in internal control that we have identified regarding
the accounting and financial reporting procedures.
Our report to the Audit Committee includes the risks of material misstatement that, in our professional judgement, were the most significant in
the audit of the consolidated financial statements and which constitute the key audit matters that we are required to describe in this report.
We also provide the Audit Committee with the declaration provided for in article 6 of Regulation (EU) No. 537/2014, confirming our
independence within the meaning of the rules applicable in France, as defined in particular in articles L.821-27 to L.821-34 of the French
Commercial Code and in the French Code of Ethics for Statutory Auditors. Where appropriate, we discuss any risks to our independence and
the related safeguard measures with the Audit Committee.

Universal Registration Document and Annual Financial Report 2024 | 327

Neuilly-sur-Seine and Paris, 19 February 2025
The Statutory Auditors
PricewaterhouseCoopers Audit | BDO Paris
Agnès Hussherr | Vincent Génibrel

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Parent company financial statements

Parent company financial
statements

Contents
329 | Income statement
330 | Balance sheet
331 | Statement of reported net profit and movements in shareholders' funds
331 | 2024 Highlights

Notes on the parent company
financial statements

Contents
333 | 1 | Principal accounting policies
339 | 2 | Loans and advances to banks
339 | 3 | Loans and advances to customers
340 | 4 | Portfolio of trading, available-for-sale securities and held-to-maturity securities
342 | 5 | Investments in subsidiaries and equity securities held for long–term
343 | 6 | Intangible assets
343 | 7 | Tangible assets
344 | 8 | Loan impairment
344 | 9 | Other assets
345 | 10 | Prepayments and accrued income
345 | 11 | Deposits due to credit institutions
345 | 12 | Customer accounts
346 | 13 | Debt securities in issue
346 | 14 | Provisions
346 | 15 | Other liabilities
346 | 16 | Accruals and deferred income
347 | 17 | Subordinated debt
348 | 18 | Called up share capital
348 | 19 | Equity
349 | 20 | Pensions, post-employment benefits
350 | 21 | Off–balance sheet items
350 | 22 | Derivatives
351 | 23 | Net interest income
352 | 24 | Income from equities and other variable income securities
352 | 25 | Commissions received and commissions paid
352 | 26 | Gains or losses on trading securities
352 | 27 | Gains or losses on available-for-sale securities
353 | 28 | General operating expenses
353 | 29 | Gains or losses on disposals of fixed assets and long term investments
353 | 30 | Exceptional items
353 | 31 | Tax expense and deferred tax
355 | 32 | Legal proceedings and regulatory matters relating to HSBC Group entities
356 | 33 | Presence in non-cooperative states or territories
356 | 34 | Events after the balance sheet date
357 | 35 | Other information
359 | Statutory Auditors' report on the financial statements
364 | Allocation of net profit

Universal Registration Document and Annual Financial Report 2024 | 329

Income statement

(in million of euros) | Notes | 31 Dec 2024 | 31 Dec 2023
Income/(Expenses) |  |  |
Interest and similar income | 23 | 8,806 | 7,340
Interest and similar expenses | 23 | (7,944) | (5,675)
Finance leases income |  | 55 | 100
Finance leases expenses |  | (38) | (84)
Income from equities and other variable income securities | 24 | 619 | 740
Commissions received | 25 | 1,429 | 1,355
Commissions paid | 25 | (635) | (457)
Gains and losses on trading securities | 26 | 654 | 104
Gains or losses on available-for-sale securities | 27 | (90) | 17
Other banking operating income |  | 138 | 94
Other banking operating expenses |  | (28) | (32)
Net banking operating income |  | 2,966 | 3,503
General operating expenses | 28 | (1,791) | (2,013)
Depreciation, amortisation and impairment of tangible and intangible assets |  | 70 | (13)
Gross operating income |  | 1,245 | 1,476
Loan impairment charges | 8 | (117) | (186)
Net operating income |  | 1,128 | 1,290
Gains or losses on disposals of fixed assets and long term investments | 29 | (349) | 15
Profit/(loss) before tax |  | 779 | 1,305
Exceptional items | 30 | 13 | (405)
Income tax and deferred tax | 31 | (293) | (229)
Gains and losses from regulated provisions |  | — | —
Net profit/(loss) for the period |  | 499 | 671

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Balance sheet

Assets
(in million of euros) | Notes | 31 Dec 2024 | 31 Dec 2023
Cash and amounts due from central banks and post office banks |  | 50,946 | 66,640
Treasury bills and money-market instruments 1 | 4 | 27,426 | 21,823
Loans and advances to banks 2 | 2 | 22,634 | 25,311
Loans and advances to customers 3 | 3 | 53,373 | 60,521
Bonds and other fixed income securities 1 | 4 | 11,864 | 8,946
Equities and other variable income securities | 4 | 6,415 | 2,843
Investments in subsidiaries and equity securities held for long term | 5 | 62 | 88
Interests in affiliated parties | 5 | 1,878 | 2,112
Finance leases | 7 | 32 | 81
Intangible fixed assets | 6 | 113 | 82
Tangible fixed assets | 7 | 84 | 97
Other assets | 9 | 20,755 | 21,598
Prepayments and accrued income | 10 | 39,056 | 42,633
Total assets |  | 234,638 | 252,775
Off-balance sheet items |  |  |
Financial commitments given | 21 | 60,036 | 58,737
Guarantees and endorsements given | 21 | 19,273 | 17,485
Securities commitments (other commitments given) |  | 30,312 | 35,836

Liabilities
(in million of euros) | Notes | 31 Dec 2024 | 31 Dec 2023
Central bank and post office banks |  | 14 | 275
Deposits due to credit institutions 2 | 11 | 20,276 | 23,263
Customer accounts 3 | 12 | 97,977 | 108,308
Debt securities in issue | 13 | 25,821 | 23,417
Other liabilities 1 | 15 | 38,296 | 43,742
Accruals and deferred income | 16 | 36,563 | 38,690
Provisions for liabilities and charges | 14 | 270 | 1,896
Subordinated liabilities | 17 | 3,407 | 3,397
Share capital | 18 &19 | 1,328 | 1,062
Additional paid-in capital | 19 | 7,291 | 5,808
Reserves | 19 | 1,088 | 1,055
Special tax-allowable reserves |  | — | —
Retained earnings 4 | 19 | 1,808 | 1,191
Net profit/(loss) for the period | 19 | 499 | 671
Interim dividend |  | — | —
Total liabilities |  | 234,638 | 252,775
Off-balance sheet items |  |  |
Financial commitments received | 21 | 1,052 | 909
Guarantees and endorsements received | 21 | 7,379 | 19,044
Securities commitments (other commitments received) |  | 35,976 | 42,001

1 After the application of offsetting for assets and liabilities arising from securities borrowing transactions. Refer to Note 1, Note 4 and Note 15.
2 After the application of offsetting of repurchase and reverse repurchase agreements. Refer to Note 1, Note 2 and Note 11.
3 After the application of offsetting of repurchase and reverse repurchase agreements and regulated savings accounts against balances centralised at the Caisse
des Dépôts et Consignations. Refer to Note 1, Note 3 and Note 12.
4 Before proposed allocation submitted to Annual General Meeting for approval.

Universal Registration Document and Annual Financial Report 2024 | 331

Statement of reported net profit and movements in shareholders’ funds

(in million of euros) | 31 Dec 2024 | 31 Dec 2023
Net profit/(loss) for the period |  |
Total | 499 | 671
– per share (in euros)1 | 1.88 | 3
Movements in shareholders‘ funds (excluding the net profit of 2024) (after allocation of 2023 net profit) |  |
– change in revaluation reserve | — | —
– transfer to reserves and change in retained earnings | 671 | 275
– allocation of net profit for the previous year | 671 | 275
– appropriation of net profit | — | —
– restatement of opening retained earnings 2 | (20) | —
– change in special tax-allowable reserves | — | —
– acquisition/disposals 3 | — | 182
Change in shareholders’ funds | 651 | 457
– per share (in euros)1 | 2.45 | 2
Proposed dividend | — | —
– total | — | —
– per share (in euros)1 | — | —

1 Number of shares outstanding at year end: 265,583,192 in 2024 and 212,466,555 in 2023.
2 Retained earning adjustment on branches on previous year.
3 Includes the impact of integration of the German branch acquisition of HSBC Trinkaus & Burkhardt GmbH in June 2023.

2024 Highlights
Business review
Net banking operating income was EUR 2,966 million, reflecting a decrease of EUR 537 million compared to the previous year. This decrease
was primarily driven by lower net interest income following the sale of the retail banking operations in France and increasing interest expense
on customer deposits in Global Payment Solutions, partially offset by an increase in net interest income from the full-year integration of the
German branch's result in 2024.
General operating expenses were EUR 1,791 million, down by EUR 222 million compared to the previous year. The decrease of EUR 444
million was primarily due to the sale of the retail banking operations in France and the end of the build-up of the Single Resolution Fund ('SRF')
in 2024. These reductions were partially offset by an increase in expenses for EUR 222 million resulting from the full-year integration of the
German branch in 2024.
Depreciation, amortisation and impairment of tangible and intangible assets was a credit of EUR 70 million, a variation of EUR 83 million
compared to 2023, primarily driven by the reversal of impairment on goodwill and non-financial assets for EUR 116 million related to retail
banking business.
Loan impairment charges were EUR 117 million compared to EUR 186 million in 2023 mainly driven by decrease of net stage 3 charges by Eur
139mn in 2024 in France, offset by an increase in charge of EUR 70 million in the German branch.
Gains or losses on disposals of fixed assets and long term investments were a loss of EUR 349 million compared to a gain of EUR 15
million in 2023, primarily driven by the write-off of goodwill and non-financial assets for EUR 116 million related to the sale of the retail banking
operations in France in 2024 and the impairment of the Germany branch's investment in HSBC Trinkaus & Burkhardt GmbH for EUR 233 million
in 2024.
Exceptional gain comprised of EUR 13 million compared to a loss of EUR 405 million in last year. In 2023, German Branch made a payment of
EUR 434 million under Domination and Profit and Loss Transfer Agreement ('DPLTA') as part of the acquisition to cover the losses generated by
its subsidiary HSBC Trinkaus & Burkhardt GmbH. In 2024, the completion of the sale of retail banking business generated a gain of EUR 13
million majorly from net release of loss and disposal cost provisions.
Income and deferred taxes in 2024 represented a charge of EUR 293 million, an increase of EUR 64 million compared to 2023. This comprises
EUR 119 million of current tax, contributed by HSBC Continental Europe branches for EUR 160 million partially offset by a tax credit in HSBC
Continental Europe solo entity of EUR 41 million. The deferred tax expense of EUR 174 million reflects the EUR 150 million write down of
French deferred tax asset during 2024.
Net profit for t he period was EUR 499 million compared to a net profit of EUR 671 million in 2023.
At 31 December 2024, the total balance sheet of HSBC Continental Europe amounted to EUR 235 billion compared to EUR 253 billion on
31 December 2023.
Business disposals
Sale of the retail banking operations in France
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 per cent ownership interest in HSBC SFH (France) and
its 3 per cent ownership interest in Crédit Logement.

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Parent company financial statements

In accordance with the terms of the sale, HSBC Continental Europe retained a portfolio of EUR 7.1 billion consisting of home and certain other
loans, and the CCF brand, which it licensed to the buyer under a long-term licence agreement.
More details are provided in section 'Notes on the consolidated financial statements', please refer to note 1.3 Significant events during the year.
Changes of control
Capital increase
Following the capital increase resulting from the decision of the Extraordinary General Meeting of 6 December 2024 to increase the share
capital, the share capital of HSBC Continental Europe increased from EUR 1,062,332,775 to EUR 1,327,915,960 divided into 265,583,192 shares
with a nominal value of EUR 5 as of 20 December 2024.
Issuances and repayments
In January 2024, HSBC Continental Europe redeemed a Tier 2 Loan at the first call date five years before maturity for EUR 400 million and
issued a new Tier 2 loan to HSBC Bank plc with maturity of eleven years for a notional amount of EUR 400 million.
In March 2024, HSBC Continental Europe redeemed a Tier 2 Loan at the fourth call date almost four years before maturity for EUR 300 million
and issued a new Tier 2 loan to HSBC Bank plc with maturity of eleven years for a notional amount of EUR 300 million.
In March 2024, HSBC Continental Europe issued Senior Non Preferred Notes with maturity of seven years for a notional amount of EUR 500
million.
In May 2024 HSBC Continental Europe repaid EUR 1 billion of senior preferred debt issued in May 2019.
In June 2024, HSBC Continental Europe redeemed a Tier 2 Loan at the first call date five years before maturity for EUR 100 million.
In June 2024, HSBC Continental Europe issued Senior Non Preferred Notes with maturity of seven years for a notional amount of EUR 800
million.
In August 2024, HSBC Continental Europe redeemed a Tier 2 Loan issued in June 2014 to HSBC Bank plc at the first call date five years before
maturity for EUR 150 million.
In December 2024, HSBC Continental Europe redeemed an Additional Tier 1 Loan issued in December 2019 to HSBC Bank plc at the first call
date for EUR 250 million and issued a new Additional Tier 1 loan to HSBC Bank plc for a notional amount of EUR 250 million.
In December 2024, HSBC Continental Europe redeemed a Tier 2 Loan issued in December 2014 to HSBC Holdings plc at the first call date five
years before maturity for EUR 260 million and issued a new Tier 2 loan to HSBC Bank plc with maturity of twelve years for a notional amount of
EUR 500 million.
In December 2024, HSBC Continental Europe repaid EUR 800 million of senior preferred debt issued in December 2020 and December 2021 to
HSBC Bank plc at their first call date one year before maturity.
In December 2024, HSBC Continental Europe issued Senior Non Preferred Notes to HSBC Bank plc with maturity of eight years for a notional
amount of EUR 400 million.
In December 2024, HSBC Continental Europe issued Senior Non Preferred Notes to HSBC Bank plc with maturity of nine years for a notional
amount of EUR 400 million.

Universal Registration Document and Annual Financial Report 2024 | 333

Notes on the parent company
financial statements
1 Principal accounting policies
The financial st ate ments of HSBC Continental Europe are prepared in accordance with Regulations 2014-03 and 2014-07.
(a)Initial recognition and subsequent measurement of tangible and intangible
assets
HSBC Continental Europe applies the component approach in the recording and amortising of fixed assets.
HSBC Continental Europe complies with ANC Regulation 2014-03 for initial recognition, amortisation and impairment of tangible assets.
Investment property and operational building
For operating and investment fixed assets, HSBC Continental Europe adopted the components approach with the following minimum cap on
the useful lives and methods of the corresponding components:

Components | Periods and depreciation and amortisation methods
Infrastructure |
Building | 25 and 50 years on a straight-line basis
Civil engineering works | 25 years on a straight-line basis
Technical installations |
Air conditioning Ventilation Heating | 10 years on a straight-line basis
Electrical installations | 10 years on a straight-line basis
Telephone and electrical fittings | 10 years on a straight-line basis
Security fittings | 10 years on a straight-line basis
Fittings |
Improvements and internal fittings | 10 years on a straight-line basis

Goodwill
Acquired goodwill is subject to impairment on the basis of objective indicators.
Goodwill on merger
The goodwill is affected under the terms provided in accordance with the article 745-5 of regulation 2014-03 to the different concerned assets,
and recorded in the accounts under the rules set down in the article 745-7.
The goodwill is amortised or reported in the income statement, under the same rules and conditions as underlying assets to which it is
assigned. See Note 6.
Other fixed assets
For other fixed assets, depreciation periods are determined according to the remaining useful lives of the assets concerned:

Components | Periods and depreciation and amortisation methods
Office equipment | 5 years, reducing or straight-line basis
Furniture | 5 to 10 years, reducing or straight-line basis
IT hardware | 3 to 7 years, reducing or straight-line basis
Software | 3, 5 or 10 years, straight-line basis

Assets held under finance lease
The assets held under the leasing activity are recognised in accordance with the accounting rules defined by the notice n° 2006-C of
4 October 2016 issued by the Emergencies Committee, linked to the interpretation of the advisory opinion n° 2004-15 du 23 June 2004 of CNC,
relating to the definition, recognition and valuation of assets excluding from individual company accounts lease contracts according to IFRS16
within the scope of articles 211-1 to 224-4 from the regulation n° 2014-03 of ANC.
Assets held under leasing activity are amortised by using the straight-line method, over the actual duration of use but not exceeding the duration
of the rental contract.
The amortisation periods considered are as follows:
– furniture and office equipment: five years;
– computer equipment: three years; and
– tools and equipment: five to seven years.

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Notes on the parent company financial statements

Depreciation of fixed assets leased under finance leases are recognised as an expense on finance lease.
In the financial accounting, the outstanding financial contracts is substituted to the net leased fixed-assets. The difference between the
outstanding amounts of financial assets and the net book value of fixed assets is represented by the gross unearned finance income.
(b)Securities portfolio
Securities transactions are recognised in accordance with the principles set out in articles 2311-1 to 2391-1 of 2014-07 ANC regulation.
Securities are categorised as follows:
– trading account securities;
– available-for-sale securities;
– held-to-maturity securities;
– portfolio activity securities;
– other long-term securities; and
– interests in subsidiaries and associates.
Securities are recognised on the balance sheet at the date of settlement.
Trading securities
Trading securities are negotiable securities traded on an active market, originally acquired or sold with the intention of reselling or buying back
within short timescale and are held for market activities or form part of a global portfolio trading management.
On the date of acquisition, Trading securities are stated at acquisition price. At the balance sheet date, the securities are valued at the market
price, and changes in value are recognised through profit or loss.
Available for sale securities
Other investment securities are those securities not treated as trading account securities, neither portfolio activity securities nor as securities
covered by articles 2351-1, 2351-2 and 2351-3 of 2014-07 ANC regulation. These are acquired for the purposes of income and available for sale
within a relatively short timescale.
On the date of acquisition, they are recorded at acquisition price.
According to article 2332-3 of 2014-07 ANC regulation, when the acquisition price of fixed-income securities is higher than their redemption
price, the difference is amortised over the lifespan of the securities. When the acquisition price of fixed-income securities is lower than their
redemption price, the difference is recognised over the residual life of the securities. The amortization of these differences is carried out using
the actuarial method.
At the closing of the period, available-for-sale securities are valued individually at the lowest of their acquisition price or market value.
Unrealised losses give rise to the recognition of an impairment.
Investment securities
Fixed-income securities that were acquired for long term holding, and in principle till maturity, are categorised as held-to-maturity securities.
Portfolio activity securities are recognised on the date of acquisition at their purchase price.
Held-to-maturity securities are valued at historical cost.
According to article 2342-2 of 2014-07 ANC regulation, where the acquisition price of fixed income securities is greater than their redemption
value, the difference is amortised over the residual life of the securities. When the acquisition price of fixed-income securities is lower than their
redemption price, the difference is recognised over the residual life of the securities. The spreading of these differences is carried out using the
actuarial method.
At the closing date, unrealised losses arising from the difference between the book value, adjusted for amortisation and reversal of differences
described above, and the price of fixed income securities are not subject to the impairment, except if there is a strong probability that the
institution will not keep the securities until the maturity because a number of new circumstances and without depreciation prejudice to establish
in application of the Title 2 terms from the book II of current regulation, dealing with credit risk on securities, if there is any existence of the
issuer’s defaulted risk.
Unrealised gains are not recognised.
Portfolio activity securities
This category covers investments made under normal arrangements with the sole objective of making medium-term capital gains without
intention of investing in the long-term in the business of the issuing entity, nor of taking an active part in the management of its operations. This
is particularly the case for securities held in venture capital businesses.
Portfolio activity securities are initially recognised at their acquisition price and subsequently measured at the lower of their historical cost or
value-in-use. According to article 2352-4 of 2014-07 ANC regulation, each accounting period, the latent losses resulting from the difference
between the book value and the value in use, calculated line by line of securities, are subject to an impairment test without compensation with
the largest gains identified. The latent gains are not accounted for.

Universal Registration Document and Annual Financial Report 2024 | 335

Other long-term securities
‘Other long-term securities’ are equity shares and similar securities that HSBC Continental Europe intends to hold long term to derive a
satisfactory return within an undefined period of time, without however taking any part in managing the businesses in which the shares are
held, but with the intention of fostering long-term business relationships by creating a special link with the issuing companies. These securities
are accounted at their acquisition price with subsequent measurement at the lowest of their acquisition value or their value-in-use.
The methods for assessing value-in-use are explained in next section.
Interests in subsidiaries and associates
The heading ‘Interests in subsidiaries and associates’ regroups securities held long-term (equity interests) and holdings in subsidiaries (shares in
group companies).
According to article 2352-6 of 2014-07 ANC regulation, for other long term held securities, whether listed or not, the utility value takes into
account the intention of the entity to hold these securities until it has the capacity to fund part of its assets. Provided that their evolution does
not result from accidental circumstances; the elements that must be taken into account for this estimate include: profitability and perspective of
profitability, own capital, perspective of realization, economic situation, and the average course of the stock market in recent months.
Art in French for reference.
Selon l’article 2352-6 du règlement n° 2014-07 de l’ANC, pour les autres titres détenus à long terme, les titres de participation et parts dans les
entreprises liées, cotées ou non, la valeur d'utilité représente ce que l'entreprise accepterait de décaisser pour obtenir ces titres si elle avait à
les acquérir compte tenu de son objectif de détention. À condition que leur évolution ne résulte pas de circonstances accidentelles, les
éléments suivants peuvent être pris en compte pour cette estimation: rentabilité et perspective de rentabilité, capitaux propres, perspective de
réalisation, conjoncture économique, cours moyens de bourse des derniers mois.
Recognition of gains and losses
Gains or losses on trading securities are recorded under the heading ‘Gains and losses on trading securities’.
Gains or losses on sale and changes in impairment of available-for-sale securities are recorded under the heading ‘Gains or losses on available-
for-sale securities’.
Concerning the other securities, gains or losses on sale and impairment charges are recognised under the heading ‘Gains or losses on disposals
of long-term investments’ in the income statement.
Sale and repurchase agreements
Stock lending or temporary acquisition, governed for legal purposes by law no. 93-1444 of 31 December 1993, amended by law no. 2003-1311
of 30 December 2003, referred to as stock repurchase agreements, have no impact on the composition and valuation of the securities portfolio.
For accounting purposes, in accordance with article 2413-1 to 2413-4 of 2014-07 ANC regulation, they are considered as financing transactions,
cash movement balanced entries are recognised either as a loan or a deposit. Related income and expenses are recognised as interest.
Repurchase and reverse repurchase agreements
Repurchase transactions that do not fall within the scope of law no. 93-1444 are categorised under this heading in the balance sheet. Their
treatment for accounting purposes is similar to that described above for securities under sale and repurchase agreements.
A similar treatment is applied to:
– ‘Buy and sell back’ and ‘Sell and buy back’ transactions.
– Loans/borrowing of securities guaranteed by cash deposits.
Since 2020, repurchase and reserve repurchase transactions are presented on a net basis.
Securities lending and borrowing
Securities lending and borrowing transactions are recognised in accordance with the principles set out in the article 2361-2 of 2014-07 ANC
regulation.
In accordance with the provisions of Regulation 2020-10, securities borrowed are presented net of the corresponding liabilities.
(c)Loans and advances
Loans assessed individually
Non-performing and impaired loans
Non-performing loans and impaired loans are recorded in accordance with the article 2222-1 to 2222-2 of 2014-07 ANC regulation.
Non-performing loans include all types of receivables, including secured receivables (for which the bank held a collateral), for which there is a
risk that the bank will not recover in full or in part the contractual cash flows.
Loans and receivables are classified according to HSBC Continental Europe’s internal loan rating system. Performing loans have a rating of
between 1 and 8, non-performing loans have a rating of 9 and impaired loans, including doubtful loans not yet written off, have a rating of 10.
The following are therefore classified as non-performing loans:
– receivables overdue for more than three months for all types of loans and equipment leases, more than six months for property loans or
leases and more than nine months for loans to local government bodies;
– receivables having risk criteria; and

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– receivables deriving from debt restructuring for which the debtor is again in default.
HSBC Continental Europe applies the provisions of articles 2221-2 of 2014-07 ANC regulation on identifying overdrafts at risk of default. For
overdrafts, the overdue period starts when:
– the debtor exceeds an authorised limit that has been notified to him by HSBC Continental Europe; or
– the debtor is notified that the amount outstanding exceeds a limit set up by HSBC Continental Europe under its internal control system; or
– the debtor withdraws amounts without overdraft authorisation.
The downgrade to non-performing loans immediately leads to all amounts outstanding and commitments for that debtor that are in the same
category, according to contagion principle and, if applicable, the downgrade of counterparties belonging to the same group to non-performing
debtors, on a case-by-case assessment.
In application of the article 2221-8, 2231-3 of 2014-07 ANC regulation on accounting treatment of credit risk, HSBC Continental Europe has
introduced a specific system for dealing with restructured debt and impaired loan.
In application of the articles 2221-8 of 2014-07 ANC regulation, impaired loans are those for which the prospect of recovery is very remote and
for which a write-off is being considered. These include receivables which are long overdue or for which the contract has been terminated in
case of leasing, and also receivables that have been categorised as non-performing for more than one year, unless final write-off is not being
considered because of information on the prospects for recovery available at that stage. Interests on impaired loans are not recognised through
profit or loss until the date of actual payment.
Reclassification into performing loans
In application of the article 2221-5 of the 2014-07 ANC regulation, a loan that has been classified as non-performing may be reclassified as
performing when the original scheduled payments have been resumed without further incident.
In the case of restructured loans, the classification of doubtful exposure can be omitted, if the exposure complies firstly with the previous
condition, and, on the other hand, the counterparty risk is lifted.
Recognition of gains and losses
Charges for impairment against non-performing and impaired loans, included in the calculation of the banking result, are determined annually on
the basis of the non recovery risk assessment by analysing each loan individually. In application of the article 2231-2 of the 2014-07 ANC
regulation, impairment of non-performing and impaired loans has been calculated on the basis of the difference between the net present value
of expected future recoveries and the carrying amount of the loan. Impairment may not be less than the amount of unpaid, recognised interest
on the loan.
In the income statement, charges and releases of provisions, losses on irrecoverable receivables and recoveries on amortised receivables are
recognised in the ‘Loan impairment charges’ line.
Discount on restructured debt
In application of articles 2221-5 and 2231-3 of the 2014-07 ANC regulation, HSBC Continental Europe applies a specific system for dealing with
restructured debt.
On restructuring, any waived principal and interest, accrued or due, is written off.
Moreover, at the time of restructuring, a discount is provided for on the restructured debt for the difference between the present value of
initially anticipated contractual cash flows and the present value of future cash flows of principal and interest arising from the restructuring plan.
The discount rate used is the original effective interest rate for fixed interest loans, or the most recent effective rate before the restructuring
calculated in accordance with contractual terms for floating-rate loans.
This discount is recognised in the net cost of risk on restructuring and is then written back through net interest income over the remaining
period.
(d)Due to credit institutions and customer accounts
All liabilities towards banks and customers are recognised at amortised cost. These headings include repurchase transactions.
(e)Debt securities in issue
Debt securities are classified according to their nature: except subordinated securities, which are recorded under subordinated debt.
Accrued unpaid interest on these securities is recorded in the balance sheet in an accrued interest account with a corresponding amount
recognised in profit or loss.
Premiums or discounts related to bonds in issue are amortised on an actuarial basis over the life of the bond. Related fees are recognised over
the life of the bond on a straight-line basis.
(f)Provisions
In accordance with 2014-03 ANC regulation, provisions are registered where it is probable that an outflow of resources, without an at least
equivalent inflow being expected from the beneficiary (whether known or not), will be required to extinguish a legal or implicit obligation arising
from past events and where the amount of the obligation can be reliably estimated.

Universal Registration Document and Annual Financial Report 2024 | 337

Retirement and other benefit liabilities
HSBC Continental Europe has opted to adopt ANC recommendation 2013-02 on the rules for recognising and measuring obligations for
retirement and similar benefits.
HSBC Continental Europe provides some of its employees post-employment benefits such as pension plans and end of service benefits.
The costs recognised for funding these defined-benefit plans are determined using the projected unit credit method, with annual actuarial
valuations being performed on each plan.
Actuarial gains or losses are recognised immediately through profit or loss.
The current service costs and any past service costs, together with the expected return on scheme assets less the unwinding of the discount
on the scheme liabilities, are recognised as operating expenses.
The net defined-benefit liability recognised in the balance sheet represents the present value of the defined-benefit obligations adjusted for
unrecognised past service costs and reduced by the fair value of the scheme’s assets. Any resulting asset from this is limited to unrecognised
past service costs plus the present value of available refunds and reductions in future contributions to the plan.
Payments to defined-contribution plans and state-managed retirement benefit plans, where HSBC Continental Europe’s obligations under the
plans are equivalent to a defined-contribution plan, are charged as an expense as they fall due.
Provisions for French PEL and CEL home ownership plans and accounts
Home ownership accounts (‘CEL’) and home ownership plans (‘PEL’) are special financial instruments introduced by law no. 65-554 of
10 July 1965. They combine a savings phase and a lending phase which are inextricably linked, the lending phase being contingent to the
savings phase.
In accordance with articles 2621-1 to 2624-2 of 2014-07 ANC regulation on the accounting treatment of CEL and PEL home ownership plans and
accounts with banks and institutions authorised to receive home ownership funds and to grant home ownership loans, HSBC Continental
Europe has provisioned against the adverse consequences of PEL/CEL commitments in its individual company accounts.
PEL commitments are measured by series, without any offset between series. CEL commitments are considered as one single series, distinct
from the PEL series.
Provisions for the adverse consequences of these commitments are calculated using a model which takes into account:
– an estimate of future customer savings and credit behaviour, based on historical data; and
– the value of various market parameters, particularly interest rates and volatility, determined from data available at the date of assessment.
Provision for share-based payments
HSBC Group share plan
Share-based payments are payments based on shares issued by HSBC Holdings plc.
HSBC Continental Europe employees have the following advantages:
– From 2006, HSBC Holding plc implemented share plans on HSBC Holding plc shares.
– Employees can subscribe to HSBC Holdings plc shares within the employee share ownership plan.
Shares plan
HSBC Continental Europe grants bonus share plans to these employees for services rendered.
The expense is recognised in the income statement on the period between the granted date and the acquisition date.
The cancellation of expense may result due to the inability to meet acquisition conditions during the period of acquisition.
The amount recorded in the income statement corresponds to the shares finally acquired by the employees.
(g)Foreign exchange position
In accordance with the article 2711-1 to 2731-1 of 2014-07 ANC regulation, foreign currency exchange positions (asset and/or liabilities) are
remeasured at the end of period prevailing rate, with the corresponding gains or losses recognised in the bank operating income or expense.
It should be noted that the institutions subject to this standard recognize currency exchange transactions at spot rates, as well as other foreign
currency operations in the accounts opened and labelled in each of the currencies used. Are considered as spot foreign exchange transactions,
purchases or sales of currencies for which parties do not defer the outcome or only defer it because of the period of use.
At each accounting closure, the balance sheet's active, passive, and off-balance sheet items are evaluated at the exchange rate prevailing at the
closure date or the closest market rate prior to this date if more relevant. The market rate applicable to assets, liabilities and foreign exchange
commitments is the spot rate of the relevant currency. The market rate applicable to forward foreign exchange commitments is the remaining
forward rate of the relevant currency.

338 | Universal Registration Document and Annual Financial Report 2024

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(h)Forward foreign exchange contracts
Unsettled Forward exchange contracts at the closing of the period hedged by a corresponding spot transactions are valued at the period end
spot rate. Differences between spot and forward rates are recorded on a time-apportioned basis in the income statement. Outright forward
exchange contracts and those hedged by forward instruments are restated at the rate for the remaining period.
(i)Financial derivatives
The HSBC Continental Europe group operates on all financial instruments markets, whether on behalf of its customers or for the purposes of
hedging balance sheet items or for arbitration purposes.
Interest rate and currency options
Options are contracts reached between two parties by which one, the buyer, is granted the right to buy or to sell an actual asset or another
financial instrument called an ‘underlying asset’ at the expiry of a certain time period, at a price agreed at the time the contract was concluded.
Option contracts result in a premium being paid by the buyer to the seller. HSBC Continental Europe has interest rate and currency options.
The basic accounting treatment principles for these various products are identical.
On closing out the contract, the notional amount of the ‘underlying asset’, which is the subject of the option, is recorded as an off-balance sheet
item.
For income and expenses, a distinction is made between contracts for hedging, contracts entered into for market operations or for arbitration
purposes:
– the income and expenditure on hedging operations is reported symmetrically to the income and expenditure of the item being hedged;
– the consideration received or paid on termination/assignment of an interest rate/foreign exchange risk derivative is accounted immediately in
profit or loss. However, when a derivative originally met the defined conditions mentioned in points b) and c) of the article 2522-1 and that
derivative is terminated or assigned and potentially replaced by another contract or an equivalent instrument, the consideration received or
paid can be spread out in profit and loss pro rata temporise; and
– for market transactions, the positions are revalued at each period end. For transactions quoted on an organised or similar market within the
meaning of Articles 2511-1 to 2516-1 of Book II – Title 5 – Section 1 relating to the recognition of interest rate futures, Regulation No.
2014-07 of the ANC, changes in the value of positions are recognised through profit or loss, either by means of margin calls, or directly by
means of a mathematical calculation where the options are not quoted.
Interest-rate futures (tradable futures)
The accounting treatment is identical to that set out above for options.
Currency swaps and/or interest rates (swaps, FRAs)
Currency and/or interest rate swaps are recognised in accordance with the articles 2521-1 and 2529-1 of the 2014-07 ANC regulation.
The contracts are recorded separately depending whether their purpose is to:
– To hold a stand-alone open positions to take advantage of any beneficial changes in interest rates;
– To hedge, demonstrably from the outset, in accordance with the above-mentioned article 4 of CRBF regulation 88-02 as amended, interest-
rate risk affecting an item or a group of similar items or credit risk in the case of Credit Default Swaps (‘CDS’);
– To hedge and manage the entity’s overall interest rate risk on assets, liabilities and off-balance sheet items; and
– For trading inten.
On the accounting side, methodology varies depending on whether the transactions are for hedging or trading business purposes.
The results of the hedging of assets or liabilities are recorded pro rata temporise. This is particularly the case for swaps traded as part of the
asset/liability management of overall interest rate risk.
Income on positions managed as part of a trading portfolio of swaps is recognised at market value after a reduction to reflect counterparty risk
and future management expense.
The notional are recorded as off-balance-sheet items.
Offsetting rules
Offsetting rules are applied where it is established that reciprocal obligations are settled on a net basis with the same counterparty, currency
and maturity date, and where agreements are in place for which the right of offset can be exercised. When the conditions for offsetting are met,
the offsetting rules are applied to both derivatives exposures and related cash collateral.
Counterparty risk on derivatives
The fair value of contracts has to take into account counterparty risk linked to contracts.
The adjustment to value for counterparty risk is at least equal to the cost in equity determined under the terms of articles 2525-3 of 2014-07
ANC regulation.

Universal Registration Document and Annual Financial Report 2024 | 339

(j)Exceptional items
This line only includes profit and losses before tax which are generated or occur exceptionally and do not relate to the banking current activity
and where relevant, the correction of material errors identified.
(k)Deferred taxation
Deferred tax is recognised on temporary differences between the carrying amount of assets and liabilities in the balance sheet and the amount
attributed to such assets and liabilities for tax purposes. Deferred tax liabilities are generally recognised for all taxable temporary differences and
deferred tax assets are recognised to the extent it is probable that future taxable profits will be available against which deductible temporary
differences can be utilised.
Deferred tax is calculated using the tax rates expected to apply in the periods in which the assets will be realised or the liabilities settled.
(l)Segment reporting
This information is not available on the parent company accounts but details are provided on a consolidated basis on page 13 onward of the
management report.

2 Loans and advances to banks

Breakdown of outstanding loans by remaining contractual maturity
| 31 Dec 2024 | 31 Dec 2023
| €m | €m
Total after netting | 22,634 | 25,311
Loan and advance centralised at the ‘Caisse des Dépôts et Consignations’ presented net against regulated savings accounts 1 | 10 | 2,543
Netting on reverse repurchase agreements | 31,880 | 24,813
Total before netting - Gross | 54,524 | 52,667
On demand deposits | 3,051 | 2,749
Term deposits | 51,303 | 49,742
≤ 3 months | 49,735 | 45,750
> 3 months and ≤ 1 year | 103 | 528
> 1 year and ≤ 5 years | 1,238 | 3,222
> 5 years | 227 | 242
Accrued interests | 170 | 176
Total | 54,524 | 52,667
– of which: |  |
securities received under reverse repurchase agreements | 46,490 | 42,386
subordinated loans | — | 40

1 Mainly driven by the sale of the retail banking operations in France.

3 Loans and advances to customers

Breakdown of outstanding loans by type
| 31 Dec 2024 | 31 Dec 2023
| €m | €m
Total after netting | 53,373 | 60,521
Netting on reverse repurchase agreements | 5,287 | 944
Total before netting - Gross | 58,660 | 61,465
Commercial loans | 2,609 | 2,434
Overdraft | 3,420 | 3,520
Other customer facilities | 52,631 | 55,511
Total | 58,660 | 61,465
– of which: |  |
eligible loans for European Central Bank or Banque de France refinancing | 3,533 | 5,201
reverse repurchase agreements | 16,718 | 8,023

340 | Universal Registration Document and Annual Financial Report 2024

Notes on the parent company financial statements

Breakdown of outstanding loans by credit quality
| 31 Dec 2024 | 31 Dec 2023
| Performing loans | Non-performing loans | Impairment on non-performing loans | Total | Total
| €m | €m | €m | €m | €m
Retail loans | 5,977 | 30 | (10) | 5,997 | 16,344
Loans to financial customers | 5,616 | 154 | (46) | 5,724 | 4,588
Loans to non-financial customers | 28,936 | 1,247 | (278) | 29,905 | 32,180
Reverse repurchase agreements | 16,718 | — | — | 16,718 | 8,023
Accrued interests | 310 | 6 | — | 316 | 325
Total | 57,557 | 1,437 | (334) | 58,660 | 61,465
– of which: |  |  |  |  |
subordinated loans |  |  |  | — | —
gross non-performing loans |  |  |  | 1,360 | 1,387
gross impaired loans |  |  |  | 77 | 374
impairment on gross non-performing loans |  |  |  | (297) | (380)
impairment on gross impaired loans |  |  |  | (37) | (252)

Breakdown of outstanding loans by remaining contractual maturity
| 31 Dec 2024 | 31 Dec 2023
| €m | €m
Repayable on demand | 3,917 | 3,836
Term deposits | 54,427 | 57,304
≤ 3 months | 18,264 | 9,128
> 3 months and ≤ 1 year | 6,480 | 8,365
> 1 year and ≤ 5 years | 21,075 | 25,207
> 5 years | 8,608 | 14,604
Accrued interest | 316 | 325
Total | 58,660 | 61,465

4 Portfolios of trading, available-for-sale and held-to-maturity securities

| 31 Dec 2024 | 31 Dec 2023
| Carrying amount | Carrying amount
| €m | €m
Treasury bills and other eligible bills | 29,557 | 24,211
– Trading securities | 19,561 | 18,005
– Available-for-sale securities | 9,519 | 6,160
– Held-to-maturity securities | 399 | —
– Accrued interest | 78 | 46
– of which: securities borrowed presented net against corresponding liabilities | 2,131 | 2,388
Treasury bills and other eligible bills after netting | 27,426 | 21,823
Debt securities | 11,864 | 8,946
Trading account securities | 1,707 | 1,473
– quoted securities | 1,707 | 1,473
– unquoted bonds, interbank market securities and tradable debt securities | — | —
Available-for-sale securities | 9,280 | 7,013
– quoted bonds | 6,884 | 5,154
– unquoted bonds, interbank market securities and tradable debt securities | 2,396 | 1,859
Held-to-maturity securities | 812 | 425
– quoted bonds | — | 420
– unquoted bonds, interbank market securities and tradable debt securities | 812 | 5
Accrued interest | 65 | 35
– of which: |  |
subordinated debt | 100 | 100
securities borrowed | 101 | 170
Equity shares and similar & portfolio equities | 6,415 | 2,843
Trading account securities | 6,320 | 2,825
– quoted shares | 6,271 | 2,789
– unquoted shares and similar | 49 | 36
Available-for-sale securities | 85 | —
– quoted shares | — | —
– unquoted shares and similar | 85 | —
Portfolio activity securities | 10 | 18
– quoted portfolio activity shares | — | —
– unquoted portfolio activity shares | 10 | 18
Total | 47,836 | 36,000

Universal Registration Document and Annual Financial Report 2024 | 341

Breakdown by remaining contractual maturity of treasury bills and government bonds
| 31 Dec 2024 | 31 Dec 2023
| €m | €m
Treasury bills and other eligible bills |  |
≤ 3 months | 1,890 | 461
> 3 months and ≤ 1 year | 2,292 | 1,456
> 1 year and ≤ 5 years | 10,636 | 9,911
> 5 years | 14,661 | 12,337
Accrued interest | 78 | 46
Total | 29,557 | 24,211
Debt securities |  |
≤ 3 months | 2,292 | 2,394
> 3 months and ≤ 1 year | 1,389 | 200
> 1 year and ≤ 5 years | 5,865 | 4,700
> 5 years | 2,253 | 1,617
Accrued interest | 65 | 35
Total | 11,864 | 8,946

Estimated value of the portfolio of financial investments and portfolio equities
| 31 Dec 2024 | 31 Dec 2023
| Net carrying amount | Estimated | Net carrying amount | Estimated
| €m | €m | €m | €m
Treasury bills and other eligible bills | 9,519 | 9,640 | 6,160 | 6,347
Debt securities | 9,280 | 9,232 | 7,013 | 6,685
Equity shares and similar and other portfolio equities | 10 | 14 | 18 | 29
Total available-for-sale and portfolio activity securities (excluding related receivables) | 18,809 | 18,886 | 13,191 | 13,061

The financial investments portfolio is made up mainly of fixed income securities for which the interest-rate risk is usually hedged. The portfolio
valuation rules are given in Note 1b.

Unrealised gains and losses in financial investments and portfolio equities
| 31 Dec 2024
| Before provisions | Provisions | Net amount
| €m | €m | €m
Unrealised gains in available-for-sale and portfolio equities | 175 | 37 | 138
– treasury bills and other eligible bills | 145 | 29 | 116
– bonds and other fixed-income securities | 21 | 8 | 13
– equity shares and similar & portfolio equities | 9 | — | 9
Unrealised losses in available-for-sale and portfolio equities | 200 | 36 | 164
– treasury bills and other eligible bills | 97 | 21 | 76
– bonds and other fixed-income securities | 97 | 13 | 84
– equity shares and similar & portfolio equities | 6 | 2 | 4

Additional information on the securities in compliance with ANC 2014-07
regulation dated 26 November 2014
The premium (unamortised difference between the acquisition price and the redemption price of securities) of available-for-sale and held-to-
maturity securities amounted to EUR 93.8 million in 2024 and EUR 47.8 million in 2023.
No security was transferred from one portfolio to another portfolio in 2024 or in 2023. Also no held-to-maturity securities have been sold during
the period.

342 | Universal Registration Document and Annual Financial Report 2024

Notes on the parent company financial statements

5 Investments in subsidiaries, affiliates and equity securities held for long
term

| 31 Dec 2024 | 31 Dec 2023
| Net carrying amount | Net carrying amount
| €m | €m
Interests in subsidiaries and associates | 33 | 37
Listed securities | — | —
– banks | — | —
– others | — | —
Non-listed securities | 33 | 37
– banks | 6 | 6
– others | 27 | 31
Other long-term securities | 29 | 51
Listed securities | — | —
– banks | — | —
– others | — | —
Non-listed securities | 29 | 51
– banks | — | —
– others 1 | 29 | 51
Interests in group companies | 1,878 | 2,112
Listed securities | — | —
– banks | — | —
– others | — | —
Non-listed securities 2 | 1,878 | 2,112
– banks | 705 | 1,221
– others | 1,173 | 891
Accrued income |  |
Total | 1,940 | 2,200

| 31 Dec 2024 | 31 Dec 2023
| €m | €m
Gross amounts at 1 January (excluding advances and accrued income) | 2,493 | 2,930
Changes in the year: |  |
– acquisitions of securities/share issues | 22 | 449
– disposals/capital reductions 3 | (218) | (886)
– effect of foreign exchange differences | — | —
– other movements/merger | — | —
Gross amounts at 31 December (excluding advances and accrued interests) | 2,297 | 2,493
Impairments at 1 January | (294) | (286)
Changes in the year: |  |
– new allowances 4 | (235) | (8)
– release of allowances no longer required 5 | 172 | 1
– other movements | — | —
– effect of foreign exchange differences | — | —
Impairment at 31 December | (357) | (293)
Accrued income | — | —
Net book value including accrued interests | 1,940 | 2,200

1 This is related to a reduction of EUR 25 million linked to associate certificates of "Fonds de Garantie des dépôts et de Résolution ('FGDR')" related to the sale of
the retail banking operations in France.
2 In 2024, a customer correction has been realized with a reclassification from banks to others.
3 This includes the sale of investment in HSBC SFH (France) f or EUR 113 million, the sale of participation in Crédit Logement for EUR 39 million, the sale of FGDR
associate certificates for EUR 25 million, the sale of investment in HSBC Epargne Entreprise for EUR 30 million.
4 This pertains to an impairment provision in the German branch for EUR 233 million.
5 This is explained by the release of the impairment provision for the investment in HSBC SFH (France) for EUR 113 million, Crédit Logement for EUR 39 million
and HSBC Epargne Entreprise for EUR 16 million.

Universal Registration Document and Annual Financial Report 2024 | 343

6 Intangible assets

| 31 Dec 2024 | 31 Dec 2023
| €m | €m
Gross amounts at 1 Jan | 534 | 469
Changes in the year: |  |
– transfers and other movements | (4) | —
– fixed asset acquisitions | 58 | 95
– fixed asset disposals and other changes 1 | (124) | (30)
Gross amounts value at 31 Dec | 464 | 534
Amortisation at 1 January | 452 | 418
Changes in the year: |  |
– charges for the period for amortisation and impairment | 28 | 60
– transfers and other movements | — | —
– fixed asset disposals and other changes 1 | (129) | (26)
Amortisation at 31 Dec | 351 | 452
Net book value of intangible assets at 31 Dec | 113 | 82

1 Mainly driven by the sale of the retail banking operations in France.
Since 1 January 2016 and according to 2015-06 ANC regulation of 23 November 2015 which modifies 2014-03 ANC regulation, the goodwill is
recognised in a specific account in the relevant asset category after its affectation (art 745-6). The amortisation method and period are the same
as those applied to amortised assets it is linked to (art 745-7).
Goodwill is impaired when the current value of one or more underlying assets, to which a portion of it was affected, is lower than the carrying
amount of the asset(s) plus the attributed goodwill. The current value is the higher of the market value and the value-in-use (see articles 214-1 to
214-27 of 2015-06 ANC regulation).

Goodwill allocation of assets
| Gross amounts at 1 Jan 2024 | Increases | Decreases | Carrying amounts at 31 Dec 2024
| €m | €m | €m | €m
Intangible assets | — | — | — | —
Tangible assets | 4.0 | — | 4.0 | —
Financial assets 1 | 0.2 | — | — | 0.2
Total | 4.2 | — | 4.0 | 0.2

1 Included in Assets reported under Note 4 and Note 5.

7 Tangible assets

| 31 Dec 2024 | 31 Dec 2023
| €m | €m
Gross amounts at 1 Jan | 710 | 618
Changes in the year: |  |
– transfers and other movements | — | —
– fixed asset acquisitions | 8 | 112
– fixed asset disposals and other changes 1 | (327) | (20)
Carrying amount at 31 Dec | 391 | 710

| 31 Dec 2024 | 31 Dec 2023
| €m | €m
Depreciation at 1 January | 613 | 558
Changes in the year: |  |
– charges for the period for depreciation and impairment | 25 | 98
– transfers and other movements | — | 11
– fixed asset disposals and other changes 1 | (331) | (54)
Depreciation at 31 December | 307 | 613
Net carrying amount at 31 Dec | 84 | 97

1 Mainly driven by the sale of the retail banking operations in France.

344 | Universal Registration Document and Annual Financial Report 2024